How to Reverse IRA Distribution

You can change your mind about an IRA distribution without incurring taxes.

Polka Dot Images/Polka Dot/Getty Images

Taking money out of a traditional IRA is a taxable event no matter your age or the reason for the withdrawal. However, if you change your mind, there is a way to return the money to the IRA without incurring tax liability. The Internal Revenue Service considers return of funds to the account within 60 days a tax-free rollover. Take heed, however. You can only reverse an IRA contribution once in 12 months.

Step 1

Consult your IRA statement or phone the trustee to find the exact amount of the distribution. You must return exactly what you withdrew within the 60-day window to avoid taxation.

Step 2

Find the date of the original distribution. Count the number of calendar days until you find the 60th day.

Step 3

Put the money back in the account a week before the deadline. Processing time might delay posting of your deposit. On the 61st day, taxes -- and possibly penalties -- are triggered.

Step 4

Confirm that the transaction has posted to your account by the 60th day.