Comments on: “Borrowing” Money from an IRA http://www.fivecentnickel.com/2007/09/12/borrowing-money-from-an-ira/ personal finance tips, tricks, and commentary Sat, 21 Nov 2009 18:35:25 -0500 http://wordpress.org/?v=abc hourly 1 By: Jan http://www.fivecentnickel.com/2007/09/12/borrowing-money-from-an-ira/comment-page-1/#comment-135494 Jan Thu, 08 Oct 2009 19:16:49 +0000 http://www.fivecentnickel.com/2007/09/12/borrowing-money-from-an-ira/#comment-135494 IRA account holder can begin distribution at age 59 1/2 years old with no penalty however, there is a tax on withdrawls as ordinary income, in your case $17,000.00 because it was tax defered at the time of contribution to your IRA. If it is a ROTH IRA there is no tax on withdrawls since taxes were paid when you contributed. You should talk to your tax advisor to find out what tax bracket you are in. IRA account holder can begin distribution at age 59 1/2 years old with no penalty however, there is a tax on withdrawls as ordinary income, in your case $17,000.00 because it was tax defered at the time of contribution to your IRA. If it is a ROTH IRA there is no tax on withdrawls since taxes were paid when you contributed. You should talk to your tax advisor to find out what tax bracket you are in.

]]> By: Evelyn Dyer http://www.fivecentnickel.com/2007/09/12/borrowing-money-from-an-ira/comment-page-1/#comment-135468 Evelyn Dyer Thu, 08 Oct 2009 02:03:37 +0000 http://www.fivecentnickel.com/2007/09/12/borrowing-money-from-an-ira/#comment-135468 My husband is retired and 65 ,years old, I am on social security disability. We would like to withdraw $17,000 from our IRA account. Will we pay taxes on this? If so how much tax will we pay? My husband is retired and 65 ,years old, I am on social security disability. We would like to withdraw $17,000 from
our IRA account. Will we pay taxes on this? If so how much tax will we pay?

]]> By: Jan http://www.fivecentnickel.com/2007/09/12/borrowing-money-from-an-ira/comment-page-1/#comment-135101 Jan Mon, 21 Sep 2009 20:36:10 +0000 http://www.fivecentnickel.com/2007/09/12/borrowing-money-from-an-ira/#comment-135101 NEVER TAKE MONEY FROM AN IRA unless you are disabled and qualify for early withdrawl. The 60 day window is not worth the hassle from the IRS in paperwork proving you are within the time limit. If you need it that bad, take your lumps...10% penalty and taxes on ordinary income. NEVER TAKE MONEY FROM AN IRA unless you are disabled and qualify for early withdrawl. The 60 day window is not worth the hassle from the IRS in paperwork proving you are within the time limit. If you need it that bad, take your lumps…10% penalty and taxes on ordinary income.

]]> By: Kathy http://www.fivecentnickel.com/2007/09/12/borrowing-money-from-an-ira/comment-page-1/#comment-132633 Kathy Wed, 24 Jun 2009 22:55:35 +0000 http://www.fivecentnickel.com/2007/09/12/borrowing-money-from-an-ira/#comment-132633 we borrowed 20k from my IRA in Dec.2007 for a downpayment on a house. we paid it back January 2008. I didn't claim the withdrawl on my 2007 taxes because we paid it back within 60 days. But I just received a letter from the IRS claiming we owe 10K in taxes and penalties because of this withdrawl. Is that because we took it out in one year and paid it back in another. Or are we okay since it was paid back within 60 days. thank you. we borrowed 20k from my IRA in Dec.2007 for a downpayment on a house. we paid it back January 2008. I didn’t claim the withdrawl on my 2007 taxes because we paid it back within 60 days. But I just received a letter from the IRS claiming we owe 10K in taxes and penalties because of this withdrawl. Is that because we took it out in one year and paid it back in another. Or are we okay since it was paid back within 60 days.
thank you.

]]> By: Mary http://www.fivecentnickel.com/2007/09/12/borrowing-money-from-an-ira/comment-page-1/#comment-116681 Mary Sat, 26 Apr 2008 02:13:31 +0000 http://www.fivecentnickel.com/2007/09/12/borrowing-money-from-an-ira/#comment-116681 We want to take out $150K from our $190K IRA to buy a bank owned property for cash that is not mortgageable because lenders consider it to be uninhabitable until repairs are made, but our financial advisor discouraged us from doing this and told us we would not be able to get that much out. Is there a limit to how much you can take? And is there an IRS regulation I can quote to him? We want to take out $150K from our $190K IRA to buy a bank owned property for cash that is not mortgageable because lenders consider it to be uninhabitable until repairs are made, but our financial advisor discouraged us from doing this and told us we would not be able to get that much out. Is there a limit to how much you can take? And is there an IRS regulation I can quote to him?

]]> By: Holger http://www.fivecentnickel.com/2007/09/12/borrowing-money-from-an-ira/comment-page-1/#comment-116386 Holger Fri, 11 Apr 2008 18:14:22 +0000 http://www.fivecentnickel.com/2007/09/12/borrowing-money-from-an-ira/#comment-116386 If you missed the 60 day window but you have the funds you withdrew from the IRA account, would you be able to return the money and not be penalized? Any advise would be appreciated. If you missed the 60 day window but you have the funds you withdrew from the IRA account, would you be able to return the money and not be penalized? Any advise would be appreciated.

]]> By: Lester http://www.fivecentnickel.com/2007/09/12/borrowing-money-from-an-ira/comment-page-1/#comment-114555 Lester Sat, 19 Jan 2008 21:36:24 +0000 http://www.fivecentnickel.com/2007/09/12/borrowing-money-from-an-ira/#comment-114555 I did this in 2007 as a short-term loan $20k and payed it all back within 60 days. However, I still received a 1099-R with distribution code 1 (early distribution) and Taxable Amount Not Determined box checked. I think I'm going to be struggling to get this fixed or pay taxes & penalties. And if I do pay taxes my money is back in the IRA so I didn't even get to use it. Yes, bad idea! Do you know the reporting requirements, if any, on a withdrawl put back in time? I did this in 2007 as a short-term loan $20k and payed it all back within 60 days. However, I still received a 1099-R with distribution code 1 (early distribution) and Taxable Amount Not Determined box checked. I think I’m going to be struggling to get this fixed or pay taxes & penalties. And if I do pay taxes my money is back in the IRA so I didn’t even get to use it. Yes, bad idea!

Do you know the reporting requirements, if any, on a withdrawl put back in time?

]]> By: Michael http://www.fivecentnickel.com/2007/09/12/borrowing-money-from-an-ira/comment-page-1/#comment-81813 Michael Tue, 18 Sep 2007 23:28:08 +0000 http://www.fivecentnickel.com/2007/09/12/borrowing-money-from-an-ira/#comment-81813 Interesting. I've been using my Roth IRA as a holding place for $10,000 of my house downpayment. I'd been concerned about losing what amounts to 2.5 years of contributions, but it seems like I may not have to lose it. As long as I get enough money back from the loan (or somehow manage to have free cash flow after buying a house) I can put the money back without having it "hit" my contribution cap for the year. Interesting. I’ve been using my Roth IRA as a holding place for $10,000 of my house downpayment. I’d been concerned about losing what amounts to 2.5 years of contributions, but it seems like I may not have to lose it. As long as I get enough money back from the loan (or somehow manage to have free cash flow after buying a house) I can put the money back without having it “hit” my contribution cap for the year.

]]> By: MoneyNing http://www.fivecentnickel.com/2007/09/12/borrowing-money-from-an-ira/comment-page-1/#comment-80775 MoneyNing Mon, 17 Sep 2007 01:44:21 +0000 http://www.fivecentnickel.com/2007/09/12/borrowing-money-from-an-ira/#comment-80775 This is usually not a good idea since most people will probably abuse it! If you really have to borrow, remember that you should pay it back as soon as possible. This is usually not a good idea since most people will probably abuse it! If you really have to borrow, remember that you should pay it back as soon as possible.

]]> By: Melissa http://www.fivecentnickel.com/2007/09/12/borrowing-money-from-an-ira/comment-page-1/#comment-80304 Melissa Thu, 13 Sep 2007 12:36:33 +0000 http://www.fivecentnickel.com/2007/09/12/borrowing-money-from-an-ira/#comment-80304 My husband and I did this one time. We needed the money to bid on a house, then we got the loan for the house and put it all back. My husband and I did this one time. We needed the money to bid on a house, then we got the loan for the house and put it all back.

]]> By: dong http://www.fivecentnickel.com/2007/09/12/borrowing-money-from-an-ira/comment-page-1/#comment-80220 dong Thu, 13 Sep 2007 01:26:36 +0000 http://www.fivecentnickel.com/2007/09/12/borrowing-money-from-an-ira/#comment-80220 It can definitely make sense in certain circumstances. I just hate playing in the 60 day window. Just a straight rollover makes me nervous sometimes... It can definitely make sense in certain circumstances. I just hate playing in the 60 day window. Just a straight rollover makes me nervous sometimes…

]]> By: nickel http://www.fivecentnickel.com/2007/09/12/borrowing-money-from-an-ira/comment-page-1/#comment-80211 nickel Wed, 12 Sep 2007 21:22:15 +0000 http://www.fivecentnickel.com/2007/09/12/borrowing-money-from-an-ira/#comment-80211 ray: Assuming that you follow the rules, what you describe is nothing more than a rollover, which is exactly what the 60 day window was put into place for in the first place. ray: Assuming that you follow the rules, what you describe is nothing more than a rollover, which is exactly what the 60 day window was put into place for in the first place.

]]> By: ray http://www.fivecentnickel.com/2007/09/12/borrowing-money-from-an-ira/comment-page-1/#comment-80205 ray Wed, 12 Sep 2007 19:55:18 +0000 http://www.fivecentnickel.com/2007/09/12/borrowing-money-from-an-ira/#comment-80205 LET'S SAY YOU WITHDRAW 100,000 DOLLARS FROM AN EXISTING $200,000 IRA AND PUT THE $100,000 IN ANOTHER IRA. WOULD THAT BE POSSIBLE? LET’S SAY YOU WITHDRAW 100,000 DOLLARS FROM AN EXISTING $200,000 IRA AND PUT THE $100,000 IN ANOTHER IRA. WOULD THAT BE POSSIBLE?

]]> By: nickel http://www.fivecentnickel.com/2007/09/12/borrowing-money-from-an-ira/comment-page-1/#comment-80194 nickel Wed, 12 Sep 2007 18:28:39 +0000 http://www.fivecentnickel.com/2007/09/12/borrowing-money-from-an-ira/#comment-80194 Like I said, I'm not suggesting that this is a good idea. I'm just saying that it's possible. Depending on the circumstances, however, something like might be a far better strategy for bridging a rough patch than something like a payday loan or credit card cash advance. Like I said, I’m not suggesting that this is a good idea. I’m just saying that it’s possible. Depending on the circumstances, however, something like might be a far better strategy for bridging a rough patch than something like a payday loan or credit card cash advance.

]]> By: jim http://www.fivecentnickel.com/2007/09/12/borrowing-money-from-an-ira/comment-page-1/#comment-80193 jim Wed, 12 Sep 2007 18:24:53 +0000 http://www.fivecentnickel.com/2007/09/12/borrowing-money-from-an-ira/#comment-80193 Good thinking but it screams "bad idea" to me... Good thinking but it screams “bad idea” to me…

]]>