I’m 67 and retired. What would be the consequences of using IRA funds to pay off my mortgage?

I am retired and 67 years old. Can I use my IRA money to pay off my mortgage? Will it affect my Social Security? 

Yes, it could affect you in many ways, including the following:

• If you withdraw a significant amount from the IRA, it could make a larger percentage of the Social Security taxable (up to 85%), and also move the income into a higher bracket.
• If the amount withdrawn is significant, it could affect the amount deducted for Medicare premiums in a later year.

Those are the two most common issues, based on my experience with clients. I suggest you consult a CPA for best practices regarding your situation. 

For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

Answered by: Joseph A. Pancerella, CPA, is managing director of Pancerella & Associates LLC in Reading, Pa.