IRA and taxes

L1: IRA and taxesMy mother died last year leaving an IRA account designating my brother and myself as beneficiaries. I am 41, he is 37. She had no other assets except for a house with a mortgage –my brother now lives in the house and pays the mortgage. She also left credit card debt. The IRA has already been divided between my brother and myself. Can anybody tell me if there is a way to take money (aside from the compulsory annual distribution) from the IRA to discharge my mother”s credit card debt without being penalized by the IRS? According to the calculators, using the amortized method, we can take $2,500 at the most, and would actually need closer to $7,000 each to pay of the debt.
2006-05-16 19:43, By: Karen, IP: [69.140.69.239]

L2: IRA and taxesThere is NO penalty on distributions from an inherited IRA, so you do not have to worry about that. You can use the RMD to apply to the debt if you wish, even though probate assets are usually used to pay estate debt. I don”t understand why you are using calculators based on life expectancy, because you can take out any amount you wish in excess of the RMD with no penalty. Of course, ordinary tax will be due on these distributions.
By using the IRA to pay off the debt, you are sacrificing the benefits of stretching the distributions. Perhaps your brother should look into a home equity loan to use to pay off the debt, and he will be able to deduct the interest on that loan.
2006-05-16 21:12, By: Alan S., IP: [24.116.165.157]