25 Sep Should I take extra from my IRA instead of going into debt?

Q. I have an inherited IRA and I take RMDs every year. I’m thinking of making a large purchase and I don’t want to go into debt. If I take more from the inherited IRA, what should I expect for taxes? Should I have taxes withheld? Is there anything bad about this strategy?
— Uncertain

A. Congratulations for not wanting to get into debt.

Let’s break it down.

If you take more from your inherited IRA than you are required to under the inherited IRA Required Minimum Distribution rules, your tax bill will go up, said Bernie Kiely, a certified financial planner and certified public accountant with Kiely Capital Management in Morristown.

The easiest way to determine what the tax effect of the IRA distribution would be is to reach out to your 2024 income tax return preparer, he said.

They — or you — can pull up your 2024 tax return and remove your 2024 RMD. This would show you your taxes without the IRA distribution. Then your preparer — or you — could include the current year’s IRA distribution and the additional tax that would be due on it, Kiely said.

“When you withdraw the funds from your inherited IRA you should request that federal and state income taxes be withheld. This way you would avoid underpayment penalties and interest,” Kiely said.

“You ask if there is anything bad about your strategy – I say no. Go for it,” he said.

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This story was originally published in September 2025.

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