SoReadyToRetire
Recycles dryer sheets
Hi. My widowed sister, age 60, has $120K left to pay on her mortgage.
Luckily, many years ago she bought stock in a company a friend started, inside of an IRA. That stock split, grew, split, grew, etc--and now she has enough to pay off her mortgage in that account.
I'm a huge advocate of paying off a mortgage asap--esp. when you're alone. So I'm encouraging her to sell all that stock and take the money out to pay off her house. It'll be a huge relief to her not to have that mortgage payment.
HOWEVER, here's the question--since the stock is inside an IRA, when she sells it and take the money out, will it be taxed as regular income? That's what I'm assuming. So the means she'll ALSO need to have the money for a tax bill on $120K at the end of this year--correct?
She makes $40K/year (still working--not FIREd). So I'm thinking figure out her personal tax rate, and add that amount to the amount needed to pay off the house, and she'll be all set--right? (Meaning don't sell the stock quite yet--got to wait for it to go up enough to pay the taxes too.)
Thoughts? Thanks.
Luckily, many years ago she bought stock in a company a friend started, inside of an IRA. That stock split, grew, split, grew, etc--and now she has enough to pay off her mortgage in that account.
I'm a huge advocate of paying off a mortgage asap--esp. when you're alone. So I'm encouraging her to sell all that stock and take the money out to pay off her house. It'll be a huge relief to her not to have that mortgage payment.
HOWEVER, here's the question--since the stock is inside an IRA, when she sells it and take the money out, will it be taxed as regular income? That's what I'm assuming. So the means she'll ALSO need to have the money for a tax bill on $120K at the end of this year--correct?
She makes $40K/year (still working--not FIREd). So I'm thinking figure out her personal tax rate, and add that amount to the amount needed to pay off the house, and she'll be all set--right? (Meaning don't sell the stock quite yet--got to wait for it to go up enough to pay the taxes too.)
Thoughts? Thanks.