How to best access my money for large medical cost?

[Bracken_Joy]

Hello! After a long and miserable couple years getting to here, it turns out I need IVF. Infertility is completely non-covered by my insurance, so 100% has been and will be out of pocket. This thread is not to debate the merits of IVF- click out if you feel motivated to comment in that vein. We have a net worth of ~$192k, but all but about $20k of it is in retirement accounts or the house equity.

What I need to know is- what are my options for accessing money? We have a lot in a SEP IRA, a moderate amount in a 401k, and moderate amounts in both roth and traditional IRAs. We will of course use our savings first. But given that this could well be a $50k+ endeavor by the time stuff is said and done, I need a game plan.

A couple questions:
-does it make sense to stop contributing to my 401k and save that as cash, even with the tax consequence?
-related, can I somehow uncontribute my 2017 IRA contributions before tax time, and should I?
-what are the rules on borrowing against different accounts, and what sort of payback timeline do we have?
-does it make more sense to take a loan? We could HELOC the house, but I'm not sure how all that works, or we qualify for personal loans at ~7% from our credit union.

All of this may be moot if we borrow from family, but I want to have back up plans, since they haven't been 100% reliable with their promises in the past.

 Thank you for the help. Feel free to ask any clarifying questions.

[MDM]

Hello! After a long and miserable couple years getting to here, it turns out I need IVF. Infertility is completely non-covered by my insurance, so 100% has been and will be out of pocket. This thread is not to debate the merits of IVF- click out if you feel motivated to comment in that vein. We have a net worth of ~$192k, but all but about $20k of it is in retirement accounts or the house equity.

What I need to know is- what are my options for accessing money? We have a lot in a SEP IRA, a moderate amount in a 401k, and moderate amounts in both roth and traditional IRAs. We will of course use our savings first. But given that this could well be a $50k+ endeavor by the time stuff is said and done, I need a game plan.

A couple questions:
-does it make sense to stop contributing to my 401k and save that as cash, even with the tax consequence?
-related, can I somehow uncontribute my 2017 IRA contributions before tax time, and should I?
-what are the rules on borrowing against different accounts, and what sort of payback timeline do we have?
-does it make more sense to take a loan? We could HELOC the house, but I'm not sure how all that works, or we qualify for personal loans at ~7% from our credit union.

All of this may be moot if we borrow from family, but I want to have back up plans, since they haven't been 100% reliable with their promises in the past.

 Thank you for the help. Feel free to ask any clarifying questions.

After using taxable savings, the next easiest thing is withdrawing Roth contributions.  You could also recharacterize a 2017 traditional contribution to be a Roth contribution and then withdraw that.

You may also avoid the 10% penalty (but will have to pay normal tax) on traditional IRA distributions for the amount of unreimbursed medical expenses >7.5% AGI.

You could also consider a loan from your 401(k) plan.

Good luck!

[Freedom2016]

(((hugs))) I wish you well as you embark on this path.

This may not be realistic, but if you happen to live anywhere near MA you might consider moving into the state -- fertility treatments are covered by insurance here. I'm not sure which other states (if any) have mandated coverage but it might be worth researching? Could save you thousands.

I'm not much help on the other accessing $$$ fronts (sorry!).

[terran]

I don't suppose you have an HSA?

You can always withdraw your contributions (not gains) from Roth IRAs without tax or penalty.

You can withdraw from an IRA for any medical expenses over 7.5% of AGI. At least that's my interpretation of https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-tax-on-early-distributions -- you'll want to make sure IVF counts in case there's some restriction on elective procedures.

Since you can't get money back into retirement accounts, a home equity loan seems like a decent idea if you can afford the payment. Remember that the interest will not be tax deductible under the new tax bill. 

The only type of loan you can take against retirement accounts is a 401(k) loan if your employer's plan allows it. You'll need to look at your specific employer's policy to find out how that works for you. You usually have to pay back the whole thing if you leave employment, although the tax bill change it so they now have to give you at least until October of the year following when you stopped work.

Looks like you can undo an IRA contribution as long as you do it by the tax filing deadline for the year of the contribution: https://finance.zacks.com/can-ira-contributions-reversed-same-year-2098.html. Before you do this consider the tax implications of greater income last year vs greater income in 2018 since not contributing to your 401(k) in 2018 is effectively the same (in terms of reduced balance) as undoing the 2017 contribution. Of course, on the one hand spreading out the reduced tax deferment across years could help, and on the other your tax liability will likely be lower in 2018 thanks to the lower brackets. While I was writing this I see that MDM replied with the idea of recharacterizing the contribution to Roth, then withdrawing that, which I had thought of as well before finding the zacks article, but which seems to contradict the possibility of undoing contributions, so make sure you find more evidence to corroborate the zacks article (or talk with the administrator as they should know) before relying on it, because MDM is usually right. Even if undoing is possible, recharacterizing might be a better option since it keeps the money in a Roth IRA if you end up going another route and not needing it.

Worst case scenario, you can always withdraw and pay the 10% penalty.

I'd probably lean towards one of the loan options before one of the withdrawal or not contributing options since you can pay the loan back, but you can't get money back in accounts. Of course this assumes that you can afford to pay the loans back without reducing future contributions, otherwise it has the same effect plus the hassle and possibly added expense of taking out the loans. Also consider whether you're the type of person who will be stressed more by the loans than withdrawing from the accounts. I don't know much about IVF, but I imagine lower stress increases the likelihood of success, so may as well do everything you can to reduce the number of rounds you have to do.

Good luck!

Edit: to followup on Freedom2016's post, here are the states that require some type of coverage: https://attainivf.attainfertility.com/ivf-insurance

[Bracken_Joy]

Thank you guys so much! Yeah, 2018 will almost certainly be over 7.5% of AGI for medical expenses, because I've also already had a brain MRI with a rare earth metal contrast this year on my incredibly shitty health insurance. Waiting on the bill for that, but since my OOP max is $6800, I'm sure it'll all add up quick.

So let me check my understanding:
-If I can get a loan with a reasonable interest rate, that's probably a better idea than taking from my retirement accounts? Because of the tax advantaged status?
-Since 401k contributions lower AGI, I should keep contributing this year right? To make sure I hit the 7.5%?
-Barring all that, then I should look into penalty free withdrawls from my roth IRA?

I also forgot we have a post tax investment of ~$5k. It hasn't yet been invested for a year, I think that hits this summer. I'm assuming I want to avoid short term capital gains on that, and not sell until AFTER the one year mark? Where does this fall on priorities?

I guess I'm trying to figure out my "best to worst options" hierarchy for accessing these accounts. Thank you all SO much. There's obviously very little I can control in all this, so I'm trying to work on what I CAN control.

And thanks for the well wishes.

[SimpleCycle]

Hi @Bracken_Joy, you know I am rooting for everything to make this easier for you.  Hugs.

I would suggest looking at how much you can finance on a 0% introductory rate credit card and over what period of time.  Citi Simplicity is offering 0% for 18 months on purchases, and almost all RE offices will let you put IVF on a credit card.  The trick is seeing how much you are approved for, and what you will be able to pay off within 18 months.

We did decrease our retirement contributions when we were paying for IVF, because there simply was not enough money to go around.  We put in enough to get the match and funneled the rest toward our medical bills.

This is a little off topic from your question, but definitely ask about all the possible financial arrangements available at your clinic.  Some clinics offer shared risk plans, which are up to a certain number of cycles for a fixed price that is more than one cycle but less than the full number of cycles offered.  This can be a huge help if you are OOP but know you want to do multiple cycles if the first cycle doesn't work.

[Bracken_Joy]

Hi @Bracken_Joy, you know I am rooting for everything to make this easier for you.  Hugs.

I would suggest looking at how much you can finance on a 0% introductory rate credit card and over what period of time.  Citi Simplicity is offering 0% for 18 months on purchases, and almost all RE offices will let you put IVF on a credit card.  The trick is seeing how much you are approved for, and what you will be able to pay off within 18 months.

We did decrease our retirement contributions when we were paying for IVF, because there simply was not enough money to go around.  We put in enough to get the match and funneled the rest toward our medical bills.

This is a little off topic from your question, but definitely ask about all the possible financial arrangements available at your clinic.  Some clinics offer shared risk plans, which are up to a certain number of cycles for a fixed price that is more than one cycle but less than the full number of cycles offered.  This can be a huge help if you are OOP but know you want to do multiple cycles if the first cycle doesn't work.

I will definitely ask about the shared risk plans, but 1- I likely don't qualify due to my AMH levels (usually anything under 1 or 1.5 is disqualified, and I'm 0.83- although hoping they might make an exception since I'm so young?), and 2- I don't think either clinic I'm considering has one. I still plan on asking though, because maybe they just don't widely advertise?

As always, thank you for sharing your experience =) The 0% cards are a good idea but scare me, haha. I've never been good at carrying debt, but debt with rate deadlines like that freak me out. *sigh*. But then, so does spending this much money, but hey, I need to get over that too!

[FLBiker]

Personally, I'd probably do a HELOC if it was going to be at 4.5% or less (or so).  I hate pulling money out of retirement accounts.  But if that ends up being the way forward, so be it.  Having a kid (we've got a 2.5 year old) is awesome.

Best of luck!

[SimpleCycle]

Hi @Bracken_Joy, you know I am rooting for everything to make this easier for you.  Hugs.

I would suggest looking at how much you can finance on a 0% introductory rate credit card and over what period of time.  Citi Simplicity is offering 0% for 18 months on purchases, and almost all RE offices will let you put IVF on a credit card.  The trick is seeing how much you are approved for, and what you will be able to pay off within 18 months.

We did decrease our retirement contributions when we were paying for IVF, because there simply was not enough money to go around.  We put in enough to get the match and funneled the rest toward our medical bills.

This is a little off topic from your question, but definitely ask about all the possible financial arrangements available at your clinic.  Some clinics offer shared risk plans, which are up to a certain number of cycles for a fixed price that is more than one cycle but less than the full number of cycles offered.  This can be a huge help if you are OOP but know you want to do multiple cycles if the first cycle doesn't work.

I will definitely ask about the shared risk plans, but 1- I likely don't qualify due to my AMH levels (usually anything under 1 or 1.5 is disqualified, and I'm 0.83- although hoping they might make an exception since I'm so young?), and 2- I don't think either clinic I'm considering has one. I still plan on asking though, because maybe they just don't widely advertise?

As always, thank you for sharing your experience =) The 0% cards are a good idea but scare me, haha. I've never been good at carrying debt, but debt with rate deadlines like that freak me out. *sigh*. But then, so does spending this much money, but hey, I need to get over that too!

Yeah, the vary widely in their qualification requirements.  Some exclude DOR entirely, which is like "uh, that's why I need IVF".  Grrr.

I try to think of zero rate credit cards as "just another form of loan", but I understand that psychologically they are different.

In order, I would go something like:

1. Cash flow, including decreasing retirement contributions.
2. Zero interest credit card.
3. HELOC
4. Roth contributions
5. 401k loan
6. Loan through your fertility center or personal loan
7. Other IRA access options (amount exceeding 7.5% of AGI out of traditional IRA, regular old withdrawals with penalty)

[terran]

SimpleCycle's order looks pretty good, but I might make a few changes depending on the nuance's.

Cash flowing is obviously first if you can swing it, but I wouldn't say including reducing contributions. Reducing contributions is effectively the exact same thing as withdrawing from an IRA (if you can hit the 7.5% threshold), so it doesn't make sense to rank them so differently. Of course, there's the amount under the 7.5% threshold, and you should consider whether you'd rather have money in your 401k or IRA (based on available investment options).

I would probably rank the loan options above withdrawing roth contributions since you can't put 'em back, but only if you're confident you can afford to pay them (without reducing 401k contributions), and they don't add too much stress to your life. In other words, the loans are probably the "right" answer, but sometimes it's ok to make the "wrong" choice if it stresses you out less. You can always withdraw the roth contributions later to pay off the loan, so there's that bit of safety margin too. Don't plan on that since getting a loan will likely involve some hassle and/or closing costs and interest, but if you think you can cover the loan and the only thing stopping you is a small possibility that it might not work out, just remember that you can undo not taking out roth contributions (by taking them out to pay off the loan), but you can't undo taking out the contributions.

On the 7.5% thing -- that only matters if you plan to withdraw from your IRA, or if you itemize (since I think you can right that off your taxes under the new tax bill -- double check on that), but if you're going with one of the other options or you use the standard deduction it doesn't matter.

[orangepalm]

First of all, so sorry you're going through this. My wife and I also found out we'd need IVF to conceive not too long ago. Being the Mustachians that we are, we looked for cheaper alternatives than undergoing treatment in the US, so we went abroad (our insurance doesn't cover anything either). Maybe it's not something you're interested in doing and I see others have already commented on getting loans and the like, but we decided that for us medical tourism was the best option. Most of our money is also tied up the house and retirement accounts, so our situations are pretty similar. It's a bit of an unorthodox route but I wouldn't dismiss it as an option.

We looked at a lot of different countries, compared the costs and eventually settled on a clinic in Prague, the Czech Republic. The cost of a full IVF cycle including travel, meds, anesthesia, egg retrieval/transfer and freezing of the leftover embryos was less than we would have paid in the US for just the meds (less than $6,000). In my view, the care my wife received was everything as good as it would've been in the US.

Because there was so little information out there about IVF tourism, we started a blog, see my signature in case you're interested.

[Bracken_Joy]

First of all, so sorry you're going through this. My wife and I also found out we'd need IVF to conceive not too long ago. Being the Mustachians that we are, we looked for cheaper alternatives than undergoing treatment in the US, so we went abroad (our insurance doesn't cover anything either). Maybe it's not something you're interested in doing and I see others have already commented on getting loans and the like, but we decided that for us medical tourism was the best option. Most of our money is also tied up the house and retirement accounts, so our situations are pretty similar. It's a bit of an unorthodox route but I wouldn't dismiss it as an option.

We looked at a lot of different countries, compared the costs and eventually settled on a clinic in Prague, the Czech Republic. The cost of a full IVF cycle including travel, meds, anesthesia, egg retrieval/transfer and freezing of the leftover embryos was less than we would have paid in the US for just the meds (less than $6,000). In my view, the care my wife received was everything as good as it would've been in the US.

Because there was so little information out there about IVF tourism, we started a blog, see my signature in case you're interested.

Thank you for the link. Honestly, I hadn't really considered it. How did it work to only go for 2 weeks? Were to able to get the meds ahead of time for the stims and so on? How would that work with a FET? Especially if you need genetic screening of blastocysts?

So my biggest concern with this idea is the possibility of embryo storage for future transfers. Given that I likely have a very short window of time I'm working with, if I *can* have any leftover embryos, that's obviously really important to preserve. I feel like that could quickly get into hairy territory with rights to genetic materials under different sets of laws and such? Any thoughts on this?

[orangepalm]

We ordered the first injections online (with a prescription from the clinic abroad) and arrived in Prague a day before the first scan. Some do the scans at home but with this being our first IVF attempt, we didn't want to risk anything going wrong.

Lots of people do PGS or PGD abroad. You can't do a fresh cycle if you do though, so you have to come back a second time for the FET. The embryos are yours and yours only (storage costs about $100 a year I believe) and I haven't come across anything unexpected in any of the consent forms we had to sign.

[Bracken_Joy]

We ordered the first injections online (with a prescription from the clinic abroad) and arrived in Prague a day before the first scan. Some do the scans at home but with this being our first IVF attempt, we didn't want to risk anything going wrong.

Lots of people do PGS or PGD abroad. You can't do a fresh cycle if you do though, so you have to come back a second time for the FET. The embryos are yours and yours only (storage costs about $100 a year I believe) and I haven't come across anything unexpected in any of the consent forms we had to sign.

Okay, that's all very good to know, thank you!

Ugh there is so much to consider with all this.

[ysette9]

As long as you are considering everything under the sun, would you or your partner consider looking for a job with better benefits? My husband’s company would have covered one full round of IVF for us. We were days away from signing up when I got my positive test, so I didn’t end up using that benefit, but at the time it was a huge deal since my work didn’t offer nearly as good benefits for fertility.

[Bracken_Joy]

As long as you are considering everything under the sun, would you or your partner consider looking for a job with better benefits? My husband’s company would have covered one full round of IVF for us. We were days away from signing up when I got my positive test, so I didn’t end up using that benefit, but at the time it was a huge deal since my work didn’t offer nearly as good benefits for fertility.

He certainly can't/shouldn't. The loss in earnings when he becomes partner finally WAY outweigh infertility benefits.

As for me, maybe? Part of the problem was finding out with the DOR what we need to move on this *now*. Last time my job search took my 6 months, and I live in an even smaller place now. I'm not ruling it out, and if I find out tomorrow the timeline is longer than I expected, that's pretty reasonable to try.

Even a place like starbucks, which offers IVF benefits though, gets eaten up really quickly the way insurances bill oftentimes- ex, they have the PRE insurance price of meds or procedures count toward your IVF benefit- so one round of IVF meds could eat up the entire benefit amount, even though its a $15k benefit. And most of them have a clause saying only after 3 IUIs. 3 IUIs would use up a ton of time we don't have. All that to say, sadly, those benefits when offered by employers often don't actually cover very much. Again, not discounting it, just armed with the knowledge that shit is shitty and trying to adjust my expectations accordingly.

[ysette9]

I figured it was a long shot, but it sounds like you are considering everything all the same.

You could always be one of those people who opens a Go Fund Me campaign! ;-)

[Bracken_Joy]

I figured it was a long shot, but it sounds like you are considering everything all the same.

You could always be one of those people who opens a Go Fund Me campaign! ;-)

Well, most likely this is all moot. Both husband and I have wealthy parents, plus one of my siblings already told me he has $50k earmarked for a loan for us =o So like, 99% sure we can borrow shittons of money for 0-2% interest. BUUUUUUUT there have also been some past incidences that make me a little worried the promised money will never appear, at least from my parents. So I may have some trust issues! Probably since it's both sides' first (and for the foreseeable future, only) shot at being grandparents though, the cash will be more reliable.

I realize I'm obscenely privileged to be able to afford IVF, period, much less have access to Family Money for loans. So I don't want to seem ungrateful. I also just really like being prepared so I see shit coming.

[ysette9]

Well, it is wise to not count on the gifts or goodness of others until it actually happens, so I think you are just being smart