Is it possible to pull money from Vanguard IRA to payoff rental

[Autumn Webb]

If so, what are the tax penalties? Is it possible to avoid tax penalties?

[Dmitriy Fomichenko]

Autumn,

By taking early distribution from your IRA you may end up paying up to 40-50% of the amount you take out in taxes and penalties. And then using what's left to payoff probably relatively low interest loan that you have on your rental and loosing interest write off deduction doesn't sound like a wise financial move...

Why don't you consider setting up a self-directed IRA, moving your Vanguard IRA in there and then invest passively in trust deeds (or some other alternative assets). You can get better return comparing with the stock market (10-15% is reasonable expectation) and with lower risk. But most importantly you will have all of your money work hard for you.