Early IRA withdrawal

Is it a traditional IRA or a Roth? You can take out the contributions from a roth tax and penalty free I believe. With a traditional I think you're taxed as ordinary income with a 10% penalty as well.

Correct, you can withdraw contributions, but not gains, from a Roth penalty free. Gains have differing rules depending on age...

It’s a traditional, obviously. But if it isn’t: he can only take his contributions out of a Roth tax/penalty free. Any gains are subject to a 10% penalty and tax (as ordinary income).

OP: penalty + tax is going to wipe out 30-50% of your little nest egg, depending on your bracket and state. You’d be better off going to a loan shark to pay off your credit card. Stop spending money. Get a second job if you have to.

If traditional IRA 10% penalty + ordinary income.

If the interest rate on the credit card is higher than the expected tax + penalty for the IRA withdrawal, this could be a winning move. Increased cash flow from no more cc payments could allow you to rebuild quickly as well

While most answers are accurate, I'm surprised that no one touched on the biggest advantage of an IRA which is the potential for tax-free growth. If the OP is young, that could be decades of growth.

The income tax cost is kind of a wash since you always have to pay it when you withdraw from a traditional IRA. Yes, the 10% penalty hurts but it's only $400 on a $4k balance. I think the lost opportunity for growth could be a bigger penalty in the end.

Best advice is to find a way to reduce spending or increase earnings to pay down the credit card debt. If you start robbing your retirement accounts, it is easy to keep robbing them.

Look into 72t withdrawals. There is a way to take your money out with no penalties.

Under $200 a year for a 45 year old. Hardly a viable option for this gent.

True, but if one of his other IRA’s has a large balance, it could work. In his post he referenced an old IRA so the assumption is that he has others.

OP,

You can't do SOMETHING to quickly raise $4,000? Deliver pizza at night, Door Dash? You could do Door Dash just on the weekends even.

Interest rates on credit cards are now 20%+ per annum. That’s $800 on a $4k balance. Liquidate the IRAand pay down the credit card balance

Nope. The tax hit will be 25%+.

I wouldn't reccommend that. The dude's got a massive overspending problem. Quit EVERYTHING that's not essential, get a 2nd or 3rd job and pay it off quickly, without touching retirement savings. Then be happy and continue NOT living beyond your means.

Early withdrawal from IRA seems like an extreme measure in this case. You didn't even mention what is your post-tax income and expenses, the starting point of any personal finance discussion.