First, you can not roll an inherited IRA into your own IRA. (Well, I guess you "can", but the IRS would disqualify the rollover and treat it as a total distribution.) An inherited IRA needs to be retitled so that it remains in the name of the deceased, something along the lines of "The IRA of lan0731's Mother (deceased mm/dd/yy) for the benefit of lan0731."
Any distributions from the inherited IRA would be subject to income tax (assuming that it is a traditional IRA and not a Roth IRA), but not to early distribution penalty. You will have to take a minimum annual distribution based upon your life expectancy. But you can take more than that amount if you wish, including all of it, at any time.
I would think long and hard about taking the total amount. You can have many more years of tax-deferred growth in the inherited IRA. And, if you take it all at once, it may push you into a higher tax bracket. With mortgage interest rates as low as they are now, you may well have greater growth in the IRA than your mortgage interest savings. As I tell my friends, it is easy to take money out of an IRA. It is tough to get money into an IRA.
