Which account would you pull $ from first?

[Anonymous]

We have just closed on a fixer. We have cash to do the needed repairs (though not all the wanted repairs) but not a ton of cash above that. I think I know the answer to this, but in case we have a dire emergency before rebuilding cash reserves over the next year, where would you pull money from first to last, with most preferable first

1.) mutual fund I've held for about 10 years
2.) contributions to Roth ira held over 5 years
3.) tsp loan
4.) cashing out pension plan from state where we don't plan to return (taxes and penalty would be due)

The mutual fund is only about 8k. Is there any tax advantage to cashing it out in 2012 versus 2013?

[Anonymous]

mutual fund.

[Anonymous]

Roth IRA.

[Anonymous]

Under 1, 2, or 3 you are giving up whatever appreciation in the market you would get. Plus, under 1 you are paying taxes (although since mutual funds pay dividends every year you may owe less tax than you think), under 2 you are reducing the tax-free portion of your accounts (which you could make up later if you aren't contributing to the max anyway), and under 3 you need to pay it back and you need to pay it back immediately if you leave your job.

Looked at it that way, I'd probably do 2, 3, 1. Roth might be lower if you were contributing currently, and TSP might be lower if repaying the loan would put a crimp in your cash flow.

4 I would do first if you plan to cash it out and pay penalties someday, or last if you plan to wait and collect without penalties.

[Anonymous]

none

you can't afford what you are trying to do. You can borrow to do the renovation but you can;t borrow for retirement. borrow the money while you are in yoru prime earnign years.

[Anonymous]

Anonymous wrote:none

you can't afford what you are trying to do. You can borrow to do the renovation but you can;t borrow for retirement. borrow the money while you are in yoru prime earnign years.

I agree.

[Anonymous]

None. Fix only what absolutely needs done now (i.e. leaking roof) and slowly do it as you have the cash available (this is what we are doing)

[Anonymous]

PP OP is talking about in case of an emergency in the very near future where they run out of cash.