Before you tap your IRA to pay for medical expenses, beware of these three traps. When you trigger a trap, the trap taps your wallet in the form of an ugly, nondeductible 10 percent penalty!
Lawmakers set three main traps that trigger the penalty. When you know about the traps, you can mitigate the penalty and in many cases avoid it altogether.
Keep in mind that you’ll still need to include the taxable IRA distributions in your taxable income. But avoiding that 10 percent penalty may save you thousands of dollars.
This article walks you through the three major traps when tapping your IRA to pay for medical expenses, with the goal of guiding you on a path to avoiding the penalties and helping your bottom line. ... Log in to view full article.