60 Day IRA rollover questions

[TSO/ISPF]

Buying a house. Want to use a 60 day rollover to pay for part of the new house while waiting to sell existing home. Can I take 300K out of my IRA to cover that cost and pay it back within 60 days without incurring any taxes. Has anyone done this. The IRS examples can be confusing.

[Pballer]

Yes you can. Providing that you didn't do anything similar in the past 365 days.

[retiredguy123]

It's risky. You would be better off getting a short term bridge loan. But, if you do the rollover, make sure they don't withhold 20 percent for taxes.

[Haggar]

The original trustee will not code this an a rollover and use code G because this is not a trustee to trustee distribution. Make sure that you report to the IRS and attach proof to the return that this transaction was done on a timely and correct basis.

[CoachKandSportsguy]

The original trustee will not code this an a rollover and use code G because this is not a trustee to trustee distribution. Make sure that you report to the IRS and attach proof to the return that this transaction was done on a timely and correct basis.

Would this not be an issue with income taxes owed if the start date of the loan and the end date of the loan crossed tax years? This may be an issue with the 1099-R custodian form issued at year end if the loan is not paid off. .

[Pballer]

This is no big deal. I have done it several times when a bank was having a CD special and I couldn't wait for a time consuming trustee to trustee transfer. Just make sure you take it out in one transaction and put it back in one transaction. Specify 0 withholding. I do my taxes online and no proof documentation is required to be filed with your tax return.

[dewilson58]

Yes you can, but for $300k exposure............spend a couple bucks and talk to a Pro, not a Villager.

:beer3:

[petsetc]

This is a VERY RISKY move, especially if you are counting on the proceeds of the sale of your former home to pay it off. There is no forgiveness or extension of the EXACTLY 60 day period. You would be much better off taking a bridge loan, home equity loan, etc than doing this. Might cost a few more $ but nothing compared to the $$$$$$$$ if you go beyond the 60 days.

JMHO

[TSO/ISPF]

We will have our house on the market before we close on the new house. I will take the money a day or 2 before we close on the new home. My wife has an IRA we can use to extend the time to 120 days. If it takes that long to sell our existing home, then We will sell some taxable positions or use Roth to repay the loan to
her IRA. Sound feasible ? Bridge loan would be 3.5 to 4.5K to get at 9 percent interest only. Would like to avoid spending money on a loan if we have it in the bank. Trying to avoid the capital gains taxes or using Roth money but that's what it's there for. Probably should speak to a PRO. It does seem as though there are some pretty knowledgeable people on this Forum.

I believe the IRS defines this as an indirect rollover.

[Aces4]

We will have our house on the market before we close on the new house. I will take the money a day or 2 before we close on the new home. My wife has an IRA we can use to extend the time to 120 days. If it takes that long to sell our existing home, then We will sell some taxable positions or use Roth to repay the loan to
her IRA. Sound feasible ? Bridge loan would be 3.5 to 4.5K to get at 9 percent interest only. Would like to avoid spending money on a loan if we have it in the bank. Trying to avoid the capital gains taxes or using Roth money but that's what it's there for. Probably should speak to a PRO. It does seem as though there are some pretty knowledgeable people on this Forum.

I believe the IRS defines this as an indirect rollover.

Sounds like a well thought out plan to me. But I need to point out my hat does not read "Pro".
Good luck.

[MplsPete]

Is this beneficial?
For example, if the OP has, say, 3 million in various retirement accounts (not terribly unlikely) won't he eventually have to cash out 300k per year for RMD and pay the taxman?

(Asking more for me than thee.)

[JohnN]

Not a pro here either, but I think I'd opt for the bridge loan. You pay a bit of interest but no complications.

[CarlR33]

120 days seems long but if your buyer drags their feet on inspections, closing (30 days out because their home is selling),etc, etc. Regardless, you better keep an eye on the calendar.

[TSO/ISPF]

Is this beneficial?
For example, if the OP has, say, 3 million in various retirement accounts (not terribly unlikely) won't he eventually have to cash out 300k per year for RMD and pay the taxman?

(Asking more for me than thee.)

Have a 59k RMD this year so that will likely play in. Not sure how closely the IRS watches which quarter you pay taxes in. If I take the RMD in second quarter but pay taxes in the 4th quarter, do they really care? Bridge loan is last resort. We have equity positions with a lot of capital gains that could be sold and used in our Taxable account, or we could start using Roth funds. Trying to make the most of the Roths. Expecting to get 450 to 499 from existing home and moving into 710k Home. Need to fund the 710K at closing. Existing home will be on the market before closing on the new home. Tax avoidance as the saying goes. Not evasion. Want to avoid getting income to a point were Medicare costs more too.

[CoachKandSportsguy]

The plan looks executable, but, be sure you talk with Haggar, who responded early in the thread, he's a very good CPA tax man, and make sure that you know all the paperwork required, and that you have days to spare on the repayment. As long as you don't cross tax years, the IRA reported balances at year end will be reasonable between years, and there should not be any taxable income reported by your custodian on a 1099-R at year end.

That will be their red flag popping up. .

Good luck, and if you see bonnie or clyde, tell 'em they made a great movie

[PurvisT]

Yes, we did but our amount was much lower, we reinvested within 30 days and our CPA just completed our taxes with no tax due.

[ltcdfancher]

I just did the same thing…a number much less than $300K…to pay closing costs for our new Villages home. I pulled the money out using Fidelity’s on-line platform. It was too easy. Putting the money back in today with the help of my advisor; it’s not as straightforward when cash moves in the other direction.

We had a contract on our former home before we closed on The Villages home, so I wasn’t stressed about exceeding the 60-day deadline.

[rsmurano]

I’ve done this. You can take money out of your IRA once per year and put it back in without any penalty. I did this 7 years ago.

I was building a house and The mortgage company required that I take the money out of my IRA for the mortgage payment each month. I was paying cash for the house but when the mortgage company offered me $10k off the house if I took out a loan, I thought sure, then I would pay it off within a month. Then when they told me I had to pull it out of my ira, I told them it will cost me money so to close the deal, they gave me another $1500 off. I took the money out, took a picture of the withdrawal and the monthly occurrence of future payments, they approved it, I cancelled the monthly withdrawal and put the money back into the ira. No problem.

[bowlingal]

Why in the world are you asking on here? Go speak with an accountant or financial advisor. Don't you realize answers on these forums are about 80% wrong?

[sowilts]

Yes you can, but for $300k exposure............spend a couple bucks and talk to a Pro, not a Villager.

:beer3:
As always, Helpful advice. Agree 100 percent.

[retiredguy123]

Why in the world are you asking on here? Go speak with an accountant or financial advisor. Don't you realize answers on these forums are about 80% wrong?
Accountant? maybe. Financial advisor? no.

A better choice would be your IRA custodian. It is their responsibility to report IRA activity to the IRS.

[Haggar]

Accountant? maybe. Financial advisor? no.

A better choice would be your IRA custodian. It is their responsibility to report IRA activity to the IRS.

Do not rely upon your custodian/trustee/advisor. They should refer you to a tax practitioner. Most don't know the tax law or if you have IRA's in other accounts. Most advisors will advise you what your RMD should be but will not remind or advise you to take it out of their IRA or others. If they get a percentage of your portfolio they might advise you to take your RMD out to IRA's to preserve their advisory fee.

[merrymini]

And if your house doesn’t sell?

[Haggar]

Is this beneficial?
For example, if the OP has, say, 3 million in various retirement accounts (not terribly unlikely) won't he eventually have to cash out 300k per year for RMD and pay the taxman?

(Asking more for me than thee.)

RMD's are based on life expectancy. At age 73 you have to take out approximately 4% of the previous year end balance (based upon a 26.4 life expectancy) . The percentage goes up each year.

[Biskopski]

Buying a house. Want to use a 60 day rollover to pay for part of the new house while waiting to sell existing home. Can I take 300K out of my IRA to cover that cost and pay it back within 60 days without incurring any taxes. Has anyone done this. The IRS examples can be confusing.

Third Federal out of Ohio is licensed to do business in Florida. Last year they were offering an adjustable loan that cost you a total of $295 for the loan fees and all closing cost for the loan. Several loan terms of fixed rate for 6mo, 1 yr, 3yr adjustable loans. So if you think your home will sell in 6mo to 1 yr you refinance your current home, use those funds to structure your new purchase. Fast process and easier accounting to when you file your next tax return. Google Third Federal of Ohio for the loan details and to speak to a loan rep. Hope the program still available for you.

[RoadToad]

Yes you can, but for $300k exposure............spend a couple bucks and talk to a Pro, not a Villager.

:beer3:
Haggar IS a Pro..

[Birdrm]

The other option is to take out a mortgage with a recasting option. This is exactly what I did when I bought here. So my original loan was for let's just say $300k and then after 2 months I had the proceeds from my house sale and applied $120k to reduce my mortgage and payment.
This has to be included as an option with the mortgage and this way you do pay a larger mortgage payment the first few months but then the payment is adjusted with the new down payment to the mortgage. The other nice thing is the mortgage remains as recast for the entire length and you can apply a payment, I think the minimum is 10 or 20k but it would again reduce the mortgage payment.

[tomrdad@yahoo.com]

Buying a house. Want to use a 60 day rollover to pay for part of the new house while waiting to sell existing home. Can I take 300K out of my IRA to cover that cost and pay it back within 60 days without incurring any taxes. Has anyone done this. The IRS examples can be confusing.

Yes you can, I’ve done it before. Just keep in mind the 60-Day is 60 calendar days, including weekends, Sundays and holidays.

[seecapecod]

Buying a house. Want to use a 60 day rollover to pay for part of the new house while waiting to sell existing home. Can I take 300K out of my IRA to cover that cost and pay it back within 60 days without incurring any taxes. Has anyone done this. The IRS examples can be confusing.

I have and the window was 90 days to payback before incurring taxes as a distribution. Always check with the financial advisor for anything that may be different with your investment.

[Haggar]

I have and the window was 90 days to payback before incurring taxes as a distribution. Always check with the financial advisor for anything that may be different with your investment.

Window has always been 60 days. It's why I said in a previous post don't rely on your financial advisor.

[retiredguy123]

I have and the window was 90 days to payback before incurring taxes as a distribution. Always check with the financial advisor for anything that may be different with your investment.
The IRA rollover rule has always been 60 days. Even I knew that. I would fire your financial advisor.