I have a Roth IRA with a balance of something like $150k. Say around $100k of that is contributions. Due to my income, I am ineligible to contribute to the Roth IRA, but I do maximize contributions to my 401(k) and traditional IRA. I also invest "extra" income in a brokerage account, but only have a ~$5k balance at present. I have something like 25 to 30 years remaining until I retire (no pension income). I am securely employed and believe it is very unlikely that I will lose my job or experience reduced income at any point prior to my retirement.
I'd like to make some home improvements to modernize my ~50-year-old house (my primary residence). I have something like $30k in cash in various accounts. I'd expect the cost of home improvements to be something like $60k (have not yet gotten any estimates, but figure that's a reasonable ballpark figure). I'd like to avoid spending cash on this in the unlikely event I lose my income or experience an emergency of some kind.
I have no intentions of selling in the near future. I'm quite happy with my home, throwback to the '70s aside. I'd just like to make the improvements for my own personal satisfaction and contentment with my property.
I have a recently (Dec-2020) refinanced 15-year mortgage at a low rate. A cash-out refinance would have been a way to get the cash to support this, but I decided against it. Loan-to-value ratio is something like 50% on the property. No other liens on the property.
I am mulling over withdrawing from my Roth IRA contributions to cover these home improvements. I realize I cannot ever replace this money in my IRA (since I already max out traditional IRA contributions), but am weighing simply "paying it back" in brokerage account investments.
I figure I can get a home equity loan at something like 7% to 8%, but am having trouble justifying why it wouldn't make sense to withdraw IRA money instead of getting a loan when I'm in a position to easily "pay it back" anyway. The total value of all my retirement accounts is something like $500k.
What are the pros and cons of this approach, or are there other more cost-efficient ways to get money to support these home improvements? I do itemize deductions in case that's a relevant consideration.
I am aware of all the bits and pieces, like capital gains taxes, investment return rates, interest rates, etc., but am having trouble putting them all together since it seems to me that there are too many variables and big numbers to determine the big picture within an acceptable degree of accuracy.
I'm open to any recommendations or viewpoints you have to share.