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You occasionally post a scheme to use unneeded, taxable IRA or 401k withdrawals by borrowing on your house and using the deductible interest to offset the taxes on this money. Plus, you use the borrowed money for other investments. I have been trying to understand the advantage of doing this, so please bear with me.

Let's say I have $1,000/year that I have to withdraw from my regular IRA, but don't need. I would pay regular income tax on this money. Let's say I can get a $10,000 10-year interest-only balloon home equity loan @ 10%. (I am trying to make the numbers easy). The $1,000 interest is offset by my $1,000 IRA money. I take the $10,000 and invest it. Now, the only way I can see that borrowing & investing the money makes sense is:
a) I make more than 10%/year on the invested money, or
b) I make 10%/year, but I get long-term capital gains, instead of dividends, interest, and/or short-term capital gains, and I pay less tax.

If I can't do the above, then I can't see going through the hassle. Also, I see a potential shortcoming in that I have committed myself to a long-term debt, to be paid by IRA income which may or may not be maintainable, depending on the investment.

Am I missing something, or is this analysis correct?

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