Email FacebookTwitterMenu burgerClose thin

Ask An Advisor: I’m 65, Earning at My ‘Absolute Peak’ and Won’t Retire Soon. Should I Use My Roth IRA for a $30K Home Improvement Project?


I am 65 and at the absolute peak of my earnings. I’m also in the 35% tax bracket and am not looking to retire soon. I need $30,000 for a home project. I have enough to take it out of a nonqualified brokerage account but will pay capital gains taxes on what I liquidate. I’m thinking that the best place to take it from would be my Roth IRA so that I do not increase my tax bill. A home mortgage loan is not in the picture since I need this cash quickly. If you were to say no to the Roth withdrawal now, when is a good time to withdraw from the Roth IRA? Our kids are well off and don’t need it as a future inheritance.


While seeking to minimize the tax impact from this individual project is important, it’s not the only consideration as you decide which account the money should come from.

Before using your Roth IRA to cover the cost of the project on the grounds of short-term tax bill minimization, it is also critical to consider the long-term tax and financial planning implications of withdrawing from each account and when.

I can answer your question generally as it would apply to most taxpayers but will caution that it is best practice to consult a tax professional who thoroughly knows your full tax picture. (And if you need more help with your tax strategy, consider matching with a financial advisor with tax expertise.)

Examine Your Tax Situation

Ask An Advisor: I'm 65, Earning at My 'Absolute Peak' and Won't Retire Soon. Should I Use My Roth IRA for a $30K Home Improvement Project?

As you note, there would be no immediate tax implications if you withdraw the funds from your Roth IRA since you are past age 59 ½. Because you are in the 35% income tax bracket, the rate you pay on capital gains taxes from your taxable brokerage account will be either 15% or 20% depending on your tax filing status (married and filing jointly, single or head of household) and actual income.

Although it might seem safe to assume tax rates will be lower in retirement when you’re no longer receiving income from employment, I caution against this assumption. Current income tax rates are set to expire at the end of 2025, and they are relatively low by historical standards.

Consider a Taxable Withdrawal

Overall, if you are not close to the top of the 35% income tax bracket and would face a 15% capital gains tax, it might make sense to use your brokerage account for the withdrawal while you have income to support the current tax bill.

Furthermore, while the total value of your brokerage account might indicate that you will owe capital gains taxes on a withdrawal, you should review the individual holdings within the account and consider tax-loss harvesting opportunities.

Given the volatile market environment and the drawdowns most asset classes experienced in 2022, it’s possible that some holdings have declined in value below your original cost basis, depending on what you own and how long you have owned them. If that is the case, you could sell some of the assets that have lost value and use those realized losses to offset capital gains elsewhere in the account, thereby reducing your tax bill.

If tax loss harvesting is not an option, another strategy would be to gift appreciated securities to a charity. In doing so, you would avoid paying capital gains taxes and benefit from a tax deduction equal to the full market value of the gifted assets. The tax savings from this approach could help offset any tax burden associated with liquidating a portion of your taxable account for the home project. (And if you need help harvesting tax losses or gifting securities to charity, consider working with a financial advisor.)

The Purpose of a Roth IRA

Ask An Advisor: I'm 65, Earning at My 'Absolute Peak' and Won't Retire Soon. Should I Use My Roth IRA for a $30K Home Improvement Project?

So, why pay taxes on a withdrawal from your taxable account when a Roth IRA provides a tax-free source of funds? Because, generally speaking, it would defeat the purpose of a Roth IRA.

Roth IRAs are designed to provide tax-free income in retirement, not a tax-free source of general-purpose funds. Unless you expect to collect a pension or passive income when you retire, your main income sources will likely be Social Security and your savings, including your Roth IRA. Therefore, I believe with the information you’ve provided about your situation, it is unwise to tap a Roth IRA until retirement, even if preserving its value for the next generation is not a primary consideration.

Roth IRA contribution limits are already relatively low, and since you are above the income threshold to contribute, you can only do so through backdoor contributions. Your ability to capitalize on the power of a Roth IRA will be reduced if you withdraw valuable funds from it before retirement. Your savings will be more valuable in retirement if you allow the $30,000 in your Roth IRA to continue compounding tax-free compared to allowing the funds in the nonqualified brokerage account to accumulate taxable gains. (And for more help managing your retirement accounts, consider matching with a financial advisor.)

Bottom Line

On the surface, it may seem ideal to withdraw money from qualified accounts to minimize your current tax bill. However, you should consider the long-term tax implications of your withdrawal sequence and evaluate the purpose that each account plays in your overall financial plan. With taxes, there is no one-size-fits-all recommendation, and working with a professional will increase your likelihood of optimal results. Approaching a home improvement project — or any significant expense — in this manner will yield results that align best with your financial goals.

Tips for Finding a Financial Advisor

  • Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Consider a few advisors before settling on one. It’s important to make sure you find someone you trust to manage your money. As you consider your options, these are the questions you should ask an advisor to ensure you make the right choice.

Loraine Montanye, CFP®, AIF®, is a SmartAsset financial planning columnist and answers reader questions on personal finance topics. Got a question you’d like answered? Email and your question may be answered in a future column.

Loraine is a senior retirement plan advisor at DBR & CO. She has been compensated for this article. Additional resources from the author can be found at

Photo credit: ©, ©