IRA question

[Finance dummy]

First post so if this has been covered before I apologize. I need some cash that I can pay back within 60 days. I heard that you can take money out of your IRA and put it back in as long as you do it within 60 days. Can somebody tell me exactly how you go about doing this?

[maat55]

Here are the distribution regulations:


The portion of unreimbursed medical expenses that are more than 7.5% of adjusted gross income.
Distributions that are not more than the cost of medical insurance while unemployed
Disability (defined as not being able to engage in any substantial gainful activity)
Amounts distributed to beneficiaries of a deceased IRA owner.
Distributions in the form of an annuity, see Substantially equal periodic payments
Distributions that are not more than the qualified higher education expenses of the owner or their children or grandchildren
Distributions to buy, build, or rebuild a first home. ($10,000 lifetime maximum)
Distribution due to an IRS levy of the plan.

[disneysteve]

First post so if this has been covered before I apologize. I need some cash that I can pay back within 60 days. I heard that you can take money out of your IRA and put it back in as long as you do it within 60 days. Can somebody tell me exactly how you go about doing this?

I know that if you are transferring IRA funds from one company to another and have the check sent to you instead of doing a direct rollover, you have 60 days to complete the rollover before it is counted as a distribution, so I think that's what you are referring to. I'm not sure if you can take the money out of your current company and send it back to that same company within 60 days. I would call your current IRA provider and ask.

One warning, though. When the company pays the money directly to you, I believe they withhold 20% for taxes but you need to replace the full amount, so you'd have to make up the 20%. For example, if you tell them to cash out $10,000, they will send you a check for $8,000. To replace it, you'll have to send back $10,000. Then when you file your taxes, you'll account for that extra $2,000.

[Finance dummy]

I know that if you are transferring IRA funds from one company to another and have the check sent to you instead of doing a direct rollover, you have 60 days to complete the rollover before it is counted as a distribution, so I think that's what you are referring to. I'm not sure if you can take the money out of your current company and send it back to that same company within 60 days. I would call your current IRA provider and ask.

One warning, though. When the company pays the money directly to you, I believe they withhold 20% for taxes but you need to replace the full amount, so you'd have to make up the 20%. For example, if you tell them to cash out $10,000, they will send you a check for $8,000. To replace it, you'll have to send back $10,000. Then when you file your taxes, you'll account for that extra $2,000.

Yes this is what I am referring to. So do I just call my IRA, tell them I want to roll over funds to another IRA, and send the check to me? Can I do this if I haven't made and contributions to the IRA in a couple years? Can I take out an amount like $2000?

Thanks for the help

[disneysteve]

Yes this is what I am referring to. So do I just call my IRA, tell them I want to roll over funds to another IRA, and send the check to me? Can I do this if I haven't made and contributions to the IRA in a couple years? Can I take out an amount like $2000?

It doesn't matter when you last contributed to the account.

As I said, the one thing I'm not sure of is if you can take the money out and put it back in the same company. And don't forget about the withholding. If you need $2,000, you'll need to cash out $2,500 and then repay $2,500 or you'll get hit with a penalty.

Call your IRA company and find out the details.

[noppenbd]

I did this a few years ago during a rollover and I got a physical check for the entire amount of the IRA (they did not withhold the 20% because I asked them not to).


Just be aware that if you miss that deadline by even 1 day you will owe taxes and penalties on the whole amount you withdrew. I believe the clock starts when the check is cut (not when you receive it), but double-check that with the IRA provider.

[disneysteve]

I did this a few years ago during a rollover and I got a physical check for the entire amount of the IRA (they did not withhold the 20% because I asked them not to).


Just be aware that if you miss that deadline by even 1 day you will owe taxes and penalties on the whole amount you withdrew. I believe the clock starts when the check is cut (not when you receive it), but double-check that with the IRA provider.

If you can have them not do the 20%, that would be good.

And yes, the 60 days starts when they record the distribution, not when you receive it, and it definitely is a strict 60 days.

[mrpaseo]

I just want to mention (Mainly because no one else did) that you are venturing into some dangerous water borrowing from your IRA. You did not identify what you needed the money for but if there is even the slightest chance that you will not be able to repay (I mean any risk at all) then it might not be in your best interest to withdraw this money.

Good luck in your financial endeavor,
Ray