my question is, can I put the money I took out back into my rollover IRA within 60 days?
The short answer is yes. You have to be careful taking monies out of your IRRA or you will trigger income taxes. The way it works is this: You take the money out of your traditional or Roth IRA and then replace the cash (the same amount that you withdrew) within 60 days. If you do these things, the withdrawal of IRA money and subsequent redeposit is treated as a tax-free rollover transaction -- even though it's effectively the same as taking out and repaying a short-term loan from your IRA. Here are a few things to watch out for: The money you've withdrawn (borrowed) must be redeposit back into an IRA within 60 days. Otherwise, the withdrawal is treated as a taxable distribution, and you can't put the money back into your account. Also, you may owe state income tax, too. So avoid unnecessary stress by re-depositing the money with at least a day or two to spare. Just so you know, the 60-day period starts on the day after you receive the withdrawal (the borrowed amount). You must report the entire amount of any IRA withdrawal on line 15a of your Form 1040 for the year of the withdrawal. If you then re-deposit the amount tax-free you enter a taxable amount of zero on line 15b. Write Rollover next to line 15b. Now the IRS has been properly notified about your tax-free short-term IRA loan deal. Please confirm and consult with your CPA, we are not tax advisors. Given the potential tax traps, you may want to look for other alternatives before using this strategy to solve short-term cash flow problems. But done right, you won’t find a better deal. If you have additional questions please call Karp Capital for other financing and financial planning strategies.
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The short answer is that yes, unless there are specific investments that have surrender charges within your IRA, the IRA itself should impose no penalty for you to take money out. Additionally you can perform one "60 day rollover" on an annual basis. So, without knowing a great deal of specifics of caveats - the general broad brush answer to your question is yes, you should be able to re-deposit any monies you took out of your IRA without any taxes. If taxes were withheld, you'll likely have to file your tax return to get those back, however.
Jon Castle http://www.WealthGuards.com
Hi William - fellow Hoo here!
You're over the age of 59 1/2, so you're good to go. The only restriction is that you can't withdraw earnings (e.g. your profit) from a Roth within a 5 year period of when you contributed the funds which led to those earnings.
With regards to the question about the 60 day rule - you have to put the rolled over funds into the IRA within 60 days or the IRS will treat it as ordinary income.
According to the IRS website:
If the distribution from the qualified plan or IRA is paid to you, you have 60 days from the date of receipt to roll it over to another qualified plan or IRA. The IRS may waive the 60-day rollover requirement in certain situations. One-year waiting period for IRA rollovers: If you make a tax-free rollover of a distribution from an IRA, you generally cannot make another rollover from the same IRA within a one-year period. You also cannot make a rollover from the IRA to which the distribution was rolled over. IRA distributions paid to you are subject to 10% withholding unless you elect out of withholding or choose to have a different amount withheld. Withholding does not apply if the distribution is paid directly to another IRA trustee.
The above referenced information was obtained from reliable sources, however Lantern Wealth Advisors LLC and Lantern Investments, Inc. cannot guarantee its accuracy. The information presented herein is for presentation purposes only and is not intended to provide personal investment advice. Lantern Wealth Advisors LLC and Lantern Investments, Inc. do not provide tax, accounting or legal advice.
All excellent answers. Do check with your broker to make certain there will not be any charges to your investments due to early surrender, or, if there will be trading costs involved. He/She can also help you determine which investments in your portfolio would be most cost efficient for you to withdraw.
Hi William! I'm curious as to why you are considering taking out money, and then putting it back in within 60 days. You are not required to take out funds until you turn 70 1/2, so if you don't need the funds, consider leaving them in and avoiding paperwork. You may want to spend some time with a financial planner in your area reviewing your situation to be sure you are maximizing your retirement funds.
Jonathan is correct. As he stated, you can only do one rollover per year, but that is from any one account. If you own three IRA accounts, you could do one rollover from each account per year, for a total of three rollovers. So, if you anticipate the need to do another IRA rollover this year, you might consider returning the assets you withdraw to a new/second IRA account.
All excellent answers. You can get an exception to the one time 60 day rollover, but how much money are we talking about? Is it a few hundred dollars, or tens of thousands. If it is a relatively low amount, you might want to just call it a lesson learned.
I think you might need some investment advice, and it does not appear that they are equipped to provide it where you are. Sometimes penny wise is pound foolish. Seek advice from several professionals, as well as trusted friends.
As for opening another IRA, there is no advantage. You can only contribute IRA rollovers and earned income. Two accounts sitting in cash has no more value than one with the same amount.