The Internal Revenue Service prohibits you from taking a loan from your individual retirement arrangement or even using it for collateral for a loan. However, if you have a short-term cash need that you know will be satisfied within 60 days, you might be able to use a short-term withdrawal from your IRA without penalty.
The IRS allows you to roll over money from your IRA to any qualified retirement plan, including the same IRA from which you took the distribution, within 60 days of the distribution. For example, if you take a distribution from your IRA, you can put it back within 60 days, and the IRS treats it as a permissible rollover, so you don't owe any extra taxes or penalties.
The IRS places limits on how often you can roll over money from a particular IRA. Once an IRA has been involved in a rollover, you can't initiate a rollover from that IRA for 12 months. For example, say you have three different IRAs. If you roll money from the first to the second, you can't take a 60-day withdrawal from either the first or the second IRA for 12 months. However, you could take a 60-day withdrawal from your third IRA.
When you perform a rollover, you have to report it on your income taxes even though it won't result in any taxable income. To report this, you must file your taxes using either Form 1040 or Form 1040A. First, report the amount you took out as a non-taxable IRA distribution. Next, report the amount you didn't redeposit within 60 days as a taxable IRA distribution -- you would report "0" if you redeposited the entire amount. Last, write "rollover" next to the taxable amount to indicate that you completed the rollover.
When you take a distribution from your IRA, money will be withheld from the distribution in order to cover the related federal income taxes unless you opt out. By itself, withholding isn't a problem because you will receive the excess withheld as a tax refund when you file your return at the end of the year. However, you're still responsible for making sure that the withheld amount gets redeposited within 60 days. For example, imagine you take a $15,000 IRA withdrawal and $3,000 is withheld for taxes, meaning you receive only $12,000. If you redeposit only $12,000, that extra $3,000 counts as an IRA distribution, subject to income taxes and early withdrawal penalties.
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