All Things Tax

All Things Tax

Like the title says, from the filing process and tax questions to tax policy and reform, you can search and share All Things Tax here. This is the place to find answers to all your general questions that don't fall under the other categories. And just a reminder: questions about software or online filing should be posted in DIY Products.

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Valued Pioneer
Posts: 3
Registered: ‎04-29-2018

IRA with withdrawal

I am planning to withdraw 10,000  from IRA towards my first home purchase down payment. In case there is need,  I am also planning use 60 day rollover loan facility. Will there be any conflict to avail these two facilities. Also, say if I withdraw 10,000 on May 10 towards first home purchase and make another withdraw on June 10 towards 60-day rollover loan, is the start day for this loan is June 10 or May 10? 

Council Member
Posts: 548
Registered: ‎04-06-2016

Re: IRA with withdrawal

I'd check with your IRA custodian.  If you can designate the first one as a distribution and then specifically designate the second as the rollover, then the 60-day rollover period should start the day the rollover transaction was initiated. If the IRA custodian doesn't let you designate which one is the rollover, I don't know how the start of the rollover period would be determined.

I'm not exactly sure what you're talking about when you say "60-day rollover loan".  Are you talking about a rollover paid to you by your IRA custodian and then you using the money for something until it has to be rolled over into an IRA before the end of the 60-day period?  If this is what you're talking about you need to be aware that the IRA custodian will be required to withhold 20% from the distribution, but that you're still responsible for rolling over the full amount.  See p 25 of Pub 590-A https://www.irs.gov/pub/irs-pdf/p590a.pdf .  (Rollovers are discussed starting on p 21.)

 

For example, if you want to take a $10,000 rollover distribution, your IRA custodian would be required to withhold $2,000 (20%), so you'd only receive $8,000.  However, you're still responsible for making the full rollover contribution of $10,000, even though you only actually received $8,000, before the 60-day rollover period expires if you want to avoid paying an early withdrawal penalty on the funds. If you only rollover the $8,000, you'll have to pay taxes and penalty on the $2,000 that you removed from the IRA and didn't rollover.

 

Karen