60 Day IRA Rollover Question

I know this is outside the spirit of the 60 day rule for IRA Rollovers, but here goes anyway. We sold a house which will close in 45 days. We want to write a check for $30,000.00 as a good faith deposit on a new home. We don't have the 30 grand without cashing in a bunch of investments I would rather not cash in. We do have 30+ grand in an IRA that has check writing privileges. I would like to take the 30 grand from the IRA and deposit it into a bank checking account and write a check for the good faith deposit. When our home closes in 45 days replace the money in the IRA. Taxes will not be taken out when I take the money from the IRA. I am over 59.5 and younger than 70.5. I would like an explanation of the accounting that takes place. My feeling is that at the end of the year I will get a 1099 that represents the 30K distribution. How do I put the money back into the IRA? Surely it is not a contribution. What is the accounting that cancels out the tax liability.

Clarification would be greatly appreciated.

JAW

Reply to
GJ
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The IRA trustee will send you a 1099-R showing a $30K distribution.

When you do your taxes enter the $30K on line 16A Enter $0 on 16B Write the word rollover between 16A and 16B

when you write the $30K check > I know this is outside the spirit of the 60 day rule for IRA Rollovers, but

Reply to
Avrum Lapin

I did the same thing in 2001 when I was 64 - took $26k out of a traditional IRA and after receiving the proceeds from my previous house I put the 26K back into an IRA within the 60 days. You will get a 1099 which you report as a rollover on your income tax return . When you redeposit the 30K just make sure you specify that it is a rollover. I found the procedure simple and uncomplicated.

Reply to
BeachBum

To keep the IRS off your back, don't you have to re-deposit the rollover funds into a new account, as opposed to taking it out of, and putting it back into the same account? I thought I read that somewhere...

-Will

Reply to
Will Trice

That might be true of a "rollover", but the original question was on borrowing from your IRA. The IRA allows you to borrow your IRA money for up to 60 days once per year with no fees or penalties. The only trick is that it has to be back in

60 days. If you miss that for any reason, even if it was out of our control, it becomes a withdrawl with penalties and taxes.

-john-

Reply to
John A. Weeks III

Not true of a rollover:

"You can withdraw, tax free, all or part of the assets from one traditional IRA if you reinvest them within 60 days in the same or another traditional IRA."

IRS Pub 590:

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What differentiates "borrowing" under 60 days from "rolling over" within 60 days?

Also note that this may be done once per year per IRA, so if "you have two traditional IRAs, IRA-1 and IRA2, [and] you make a tax-free rollover of a distribution from IRA-1 into a new traditional IRA (IRA-3), [then] the rollover from IRA-1 into IRA-3 does not prevent you from making a tax-free rollover from IRA-2 into any other traditional IRA [within the same year]."

This quote is from the same section of Pub 590.

Not necessarily for events beyond your control: "The IRS may waive the

60-day requirement where the failure to do so would be against equity or good conscience, such as in the event of a casualty, disaster, or other event beyond your reasonable control."

Same section of Pub 590. Now relying upon the good graces of the IRS is not something I'd advise :-), but that's not the same as saying you can never go beyond 60 days.

Mark Freeland snipped-for-privacy@sbcglobal.net

Reply to
Mark Freeland

"You can withdraw, tax free, all or part of the assets from one traditional IRA if you reinvest them within 60 days in the same or another traditional IRA."

When they talk about Roth rollovers (page 125) the words "the same or" are omitted. Later paragraphs on that page stress "another"

Not much more in Pub 590

Reply to
Avrum Lapin

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