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IRA for medical expenses?

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dismayed-100
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IRA for medical expenses?  Reply with quote  

I have a bad dental situation, and also some financial difficulties at the moment. My teeth are going to shatter, and I need braces. It is for malocclusion. I read people can sometimes cash an IRA in without penalty for "unreimbursed medical expenses". Does anybody here know if dental braces count?

I have a small $6500 IRA I could use for the purpose. The total costs for grafts, dental work I need, and the braces will be around $8000. I would rather take this small IRA than pay mass interest and stress my budget.

As far as the "assets" to claim for the tax purposes, about the only thing I have is my 6 year old car.

I know many of you would say cashing an IRA is not a good solution, but with my current finances none are.
Post Fri May 11, 2012 11:59 pm
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oldguy
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Even if you are allowed to cash in the $6500 w/o paying the 10% penalty, the state & federal taxes will take about $2000 of it. And, in all likelihood, you'll get hit with the $650 penalty, malocclusion is considered by some to be cosmetic. (And "shatter" seems a bit dramatic.)

In any case, the interest on the $8000 will be way cheaper tha the taxes on your $6500 - so IMO go with the loan.
Post Sat May 12, 2012 5:19 pm
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dismayed-100
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quote:
Originally posted by oldguy
Even if you are allowed to cash in the $6500 w/o paying the 10% penalty, the state & federal taxes will take about $2000 of it. And, in all likelihood, you'll get hit with the $650 penalty, malocclusion is considered by some to be cosmetic. (And "shatter" seems a bit dramatic.)

In any case, the interest on the $8000 will be way cheaper tha the taxes on your $6500 - so IMO go with the loan.


Shatter is not drastic. I have a porcelain crown that already shattered. My teeth are moving quickly enough there was initial concern that my bones could be shrinking/breaking down, and the pressure is building on certain teeth.
Post Sun May 13, 2012 12:39 pm
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dismayed-100
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I have another question related to this, but I don't know if it is a good option, and is something I have not read up on at all.

I have not contributed to the 401k at my current employer. I have everything in IRA's from former jobs. Would it be wise to swap some of the IRA money to the 401k and take a loan off of the 401k? Can I do that on a recently started 401k?
Post Mon May 21, 2012 10:03 pm
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oldguy
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No - you can't go from an IRA to a 401k.

You might want to get a second diagnosis - it sounds like someone may be trying to push you into some expensive procedures by using fear (shatter, shrinking/breaking bones). Some of these things can occur in a teenage growth spurt - but you mention 401k's from previous jobs, you probably aren't a teen?
Post Tue May 22, 2012 1:18 pm
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clydewolf
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quote:
Originally posted by dismayed-100

I have not contributed to the 401k at my current employer. I have everything in IRA's from former jobs. Would it be wise to swap some of the IRA money to the 401k and take a loan off of the 401k? Can I do that on a recently started 401k?

Dismayed-100,

You may be able to move your Traditional IRA to your employer's 401k plan.
Some 401k plans allow this some do not.
You need to ask the administrator for your 401k if you can -
1) Move IRA funds into the 401k.
2) Immediately take a loan on your then account balance.

But 401k loans are limited to the lesser of $50,000 or 1/2 your account balance.
In your situation the best you could do would be to borrow $3,250.

Oldguy did give you some good advice, get that second opinion.
Post Mon May 28, 2012 12:53 am
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sethm
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I suggest you meet with a certified financial planner or your plan administrator to discuss tapping into your IRA to pay medical expenses.
Post Sat Jul 14, 2012 8:41 am
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