Tapping an IRA to pay down expenses

I know EVERYONE says not to take money out of retirement accounts but here is my situation: My husband and I are twenty years away from retirement and we would like to tap my husband's IRA to pay down credit cards and help our two kids finish college. We are planning to refinance our interest only mortgage loan when it resets in 18 months and we think paying down the credit cards will improve our credit score and help us get a better rate when we refinance. I'm hoping that you can endorse my plan or at least tell me why it is not a good idea.

Two critical pieces of information are missing here -- how much do you have saved for retirement and how much are you thinking of withdrawing from the IRA. Since part of your motivation is to improve your credit score by paying down credit card debt, I am assuming that you owe a decent amount of money on the cards (paying off a few thousand dollars would not noticeably improve your credit score unless that was all that you owed). Also, paying for college educations is likely an expensive proposition so I am guessing that you would need to take out a good amount of money in order to pay down your credit cards and help two children finish college. That means that two decades of tax deferred growth on a potentially substantial withdrawal will be lost forever if you follow the plan you have outlined above. So far, I'm not leaning in your direction.

Since you know that EVERYONE says not to take money out of your IRA prior to retirement, you also likely know that you should NEVER sacrifice your own retirement security by paying for your children's college educations when your own retirement is not fully funded The old saying is that your kids can take out loans for college, but there aren't any loans for retirement. Have the kids take out loans for school and if you find yourself in the position of having extra cash, you can always help them out with their loan payments.

So, my advice is leave the money in the IRA and don't automatically assume that you have to pay down your debt to qualify for a refinance of your existing mortgage. Have you tried applying for a new mortgage? I would start there. When you apply for the mortgage, the lender will be able to tell you what your credit score is. Perhaps you will qualify for an attractive rate and maybe the rate would be the same whether you paid off some of the debt or not. If the score is too low to qualify for the best possible rate, ask the lender what score is required to qualify for the next best rate. Remember, there might be "no cost" ways to increase your credit score like closing down old accounts that you no longer use.