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Convert a Withdrawal to a Rollover?

I just did a $25,000 withdrawal from my employer SEP account.

1) My first question is..., If I decide to put that $25,000 into an IRA within 60 days, would that essentially change my 25K withdrawal to a 25K rollover? I kinda doubt it, but I thought I would ask.

2) My second question is..., If I told them the 25K was going to be a rollover to an IRA (within 60 days), would I have been able to classify it as a rollover instead of a withdrawal? And, of course, I assume that if I tried to do it as a rollover and I didn't end up depositing the money into an IRA within 60 days, that would change it from a rollover to a withdrawal.

The reason for all of this mumbo jumbo is that I needed 25K as a very short term loan until a property that I own is sold in the next 30 days. I hated having to take the money out of my SEP account and pay taxes on it. But, that just made me wonder, if had done option "2" above, and it worked and was legal, wouldn't that be a back door way of borrowing the money as a very short term loan?

I am over the age of 59 1/2 in case that matters.

Thanks.

Reply to
TomR
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In article you write:

There are transfers, direct rollovers, and 60-day rollovers. A direct rollover or transfer is sent directly from one custodian to another. A 60-day rollover goes to you, then to the second custodian within 60 days. So yes, if you deposit the $25K into another IRA within 60 days, it's a rollover. As far as I know there are no rules about what you do with the money during the 60 days.

The second IRA has to be one that's taxed on withdrawal, not a Roth, and you can only do one rollover per year.

Your SEP may have withheld taxes from the $25K, and it's up to you to make up the amount when you make the deposit. It'll wash out in the end since you'll get a credit for the withheld amount on your taxes.

The IRS has more details:

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Reply to
John Levine

I think they're required to withhold the taxes unless you do a direct rollover.

Reply to
Barry Margolin

The IRS webpage you didn't read that was linked from the article to which you were responding says that retirement plans have to withhold but you can tell IRAs not to.

Reply to
John Levine

Thanks everyone for your help. That's all good news for me!

I am glad that, if I decided to do so, I could change my withdrawal to a

60-day rollover by putting the funds back into an IRA within 60 days.

I am fairly sure that they gave me the option of having taxes withheld from the withdrawal. And, I think they said it would have to be 10% if I opted for that -- but I'm not sure. But, nevertheless, I did have them withhold

10% from my withdrawal.

Thanks again.

Reply to
TomR

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