**I would generally keep the IRA and pay down the card by temporarily reducing 401(k) contributions above your employer’s match.** Given that you’re already contributing a healthy amount, that’s the first option I’d examine.

Assuming this is a fully pretax traditional rollover IRA, you’re under 59½, and no exception applies, a withdrawal generally incurs ordinary income tax plus a 10% early withdrawal tax. Paying credit card debt does not itself qualify for an exception. Your actual income tax cost depends on your marginal rates and state rules. [IRS withdrawal rules](https://www.irs.gov/taxtopics/tc557)

Using your assumed 35% combined income tax rate:

| Item | Amount |
|---|---:|
| IRA withdrawal | $3,500 |
| Income taxes at 35% | −$1,225 |
| Early withdrawal tax at 10% | −$350 |
| **Available for the card** | **$1,925** |
| **Card debt remaining** | **$1,075** |

So your arithmetic is right. You’d empty the IRA and still have roughly one-third of the card debt left. Also, withholding is only a tax prepayment: the amount your provider withholds may fall short of what you ultimately owe. [IRS withholding guidance](https://www.irs.gov/retirement-plans/plan-participant-employee-rollovers-of-retirement-plan-and-ira-distributions)

The main things you may be overlooking are:

- **The money can grow without new contributions.** Check what the IRA actually holds. If it’s sitting in cash, you can invest within the account without cashing it out.
- **Small balances can become meaningful.** At a hypothetical 7% annual return, $3,500 grows to about $26,600 over 30 years, before eventual withdrawal taxes. That return isn’t guaranteed.
- **You have another source of repayment money.** Temporarily redirecting contributions above the employer match toward high-interest debt can make sense. Reducing pretax contributions increases taxable pay, so your take-home increase will be smaller than the contribution reduction. Prioritizing high-interest debt is consistent with [Investor.gov guidance](https://www.investor.gov/introduction-investing/investing-basics/save-and-invest/pay-credit-cards-or-other-high-interest).

One nuance: you would generally owe income tax on a traditional IRA eventually anyway, so the entire 45% isn’t a new penalty. The extra 10%, the timing of taxes, and lost future growth are the key costs.

**The deciding factors are your card’s APR and how quickly you could repay it without withdrawing.** If you can clear it within several months by redirecting savings, I’d strongly favor leaving the IRA intact. If repayment would take years or you’re struggling to make minimum payments, a withdrawal deserves a closer comparison.

What’s the card’s APR, and how much could you pay toward it monthly while keeping the full employer match?