60 Day IRA rollover questions
 

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

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.

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. .

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.

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

:beer3:

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

planning for that
 

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.

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.)

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

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.

rmd
 

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.

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