1. Home
  2. Financial Planning
  3. IRA 60 day psuedo loan?

IRA 60 day psuedo loan?

How practical as a loan-to-yourself is the 60 day IRA rollover grace period? Assuming it is for a good reason and there will be no problem paying it back, how blatently loan-like can you expect to push this loophole with most administrators?

1) Can you likely just put it back in the same place as it came from? Or must do a swap of accounts between 2 currently patronized administrators, for instance?

2) How likely can you negotiate down withholding amounts below 20% or whatever (I hear you can try a W4 filing or something?). I understand this amount has to be replaced out-of-pocket until a year-end tax rebate.

3) How long can you expect to keep such a "loan" without burning up days that you really need for transfer logistics: (60 days) - (withdrawal period) - (deposit period) - (murphys law) = 30 or ?

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.

Reply to
dumbstruck
Loading thread data ...

I have done this several times to get cash for real estate closings.

I have always put the money back exactly where it came from. That made the paper trail so much easier to follow, and less likely for the IRS to think the withdrawl was taxable or the deposit was new money.

All I had to do was tell my broker that I was pulling the money out with the intent of depositing back within 60 days, and there was no withholding and not penalties.

You absolutely have to get the money back into your account within the 60 days. If you miss for any reason, even reasons out of your control, it becomes a taxable withdrawal. There are no fixes or do-overs here. To aid in getting the money in, I dropped off a cashiers check at the counter of the brokerage, and made sure to pick up my receipt. That eliminates mail and processing as errors, and it eliminates the float and back checks from biting you.

-john-

Reply to
John A. Weeks III

Unless you are subject to "backup withholding," which generally applies only to resident aliens, there is no requirement for the custodian to withhold any taxes from an IRA distribution. You probably are thinking of the manaitory withholding for distributions from

401(k) accounts that are paid to you instead of being rolled over into an IRA.

Dave

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.

Reply to
Dave Dodson

It's actually better if you put it back in the same place. You are allowed one 60 day rollover per year _per IRA_. But if you roll the money over from IRA-1 to IRA-2 (these are the terms used in IRS Pub 590), you "contaminate" IRA-2, and cannot do a 60-day rollover from that account for another year as well.

Pub 590 example:

formatting link
Mark Freeland snipped-for-privacy@nyc.rr.com

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.

Reply to
Mark Freeland

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.