60 Day IRA Rollover Question

[GJ]

I know this is outside the spirit of the 60 day rule for IRA Rollovers, but
here goes anyway.
We sold a house which will close in 45 days. We want to write a check for
$30,000.00 as a good faith deposit on a new home.
We don't have the 30 grand without cashing in a bunch of investments I would
rather not cash in.
We do have 30+ grand in an IRA that has check writing privileges.
I would like to take the 30 grand from the IRA and deposit it into a bank
checking account and write a check for the good faith deposit.
When our home closes in 45 days replace the money in the IRA.
Taxes will not be taken out when I take the money from the IRA.
I am over 59.5 and younger than 70.5.
I would like an explanation of the accounting that takes place.
My feeling is that at the end of the year I will get a 1099 that represents
the 30K distribution.
How do I put the money back into the IRA? Surely it is not a contribution.
What is the accounting that cancels out the tax liability.

Clarification would be greatly appreciated.

JAW

[Avrum Lapin]

The IRA trustee will send you a 1099-R showing a $30K distribution.

When you do your taxes enter the $30K on line 16A
Enter $0 on 16B
Write the word rollover between 16A and 16B

when you write the $30K check on the IRA account may it payable to your
"regular" checking account. Then write a $30K check on your regular
account payable to the escrow service

In article <s7oFh.3967$Tg7.2125@trnddc03>, "GJ" >
wrote:

> I know this is outside the spirit of the 60 day rule for IRA Rollovers, but
> here goes anyway.
> We sold a house which will close in 45 days. We want to write a check for
> $30,000.00 as a good faith deposit on a new home.
> We don't have the 30 grand without cashing in a bunch of investments I would
> rather not cash in.
> We do have 30+ grand in an IRA that has check writing privileges.
> I would like to take the 30 grand from the IRA and deposit it into a bank
> checking account and write a check for the good faith deposit.
> When our home closes in 45 days replace the money in the IRA.
> Taxes will not be taken out when I take the money from the IRA.
> I am over 59.5 and younger than 70.5.
> I would like an explanation of the accounting that takes place.
> My feeling is that at the end of the year I will get a 1099 that represents
> the 30K distribution.
> How do I put the money back into the IRA? Surely it is not a contribution.
> What is the accounting that cancels out the tax liability.
>

[BeachBum]

"GJ" > wrote in message news:s7oFh.3967>
>We sold a house which will close in 45 days. We want to write a check for
>$30,000.00 as a good faith deposit on a new home.

> I would like to take the 30 grand from the IRA When our home closes in 45
> days replace the money in the IRA.

> I would like an explanation of the accounting that takes place.
> My feeling is that at the end of the year I will get a 1099 that
> represents the 30K distribution.

> How do I put the money back into the IRA? Surely it is not a
> contribution.
> What is the accounting that cancels out the tax liability.
>
> Clarification would be greatly appreciated.
>
I did the same thing in 2001 when I was 64 - took $26k out of a
traditional IRA and after receiving the proceeds from my previous
house I put the 26K back into an IRA within the 60 days. You will
get a 1099 which you report as a rollover on your income tax
return . When you redeposit the 30K just make sure you specify
that it is a rollover. I found the procedure simple and uncomplicated.

[Will Trice]

BeachBum wrote:

> I did the same thing in 2001 when I was 64 - took $26k out of a
> traditional IRA and after receiving the proceeds from my previous
> house I put the 26K back into an IRA within the 60 days. You will
> get a 1099 which you report as a rollover on your income tax
> return . When you redeposit the 30K just make sure you specify
> that it is a rollover. I found the procedure simple and uncomplicated.

To keep the IRS off your back, don't you have to re-deposit the rollover
funds into a new account, as opposed to taking it out of, and putting it
back into the same account? I thought I read that somewhere...

-Will

[John A. Weeks III]

In article >,
Will Trice > wrote:

> BeachBum wrote:
>
> > I did the same thing in 2001 when I was 64 - took $26k out of a
> > traditional IRA and after receiving the proceeds from my previous
> > house I put the 26K back into an IRA within the 60 days. You will
> > get a 1099 which you report as a rollover on your income tax
> > return . When you redeposit the 30K just make sure you specify
> > that it is a rollover. I found the procedure simple and uncomplicated.
>
> To keep the IRS off your back, don't you have to re-deposit the rollover
> funds into a new account, as opposed to taking it out of, and putting it
> back into the same account? I thought I read that somewhere...

That might be true of a "rollover", but the original question
was on borrowing from your IRA. The IRA allows you to borrow
your IRA money for up to 60 days once per year with no fees
or penalties. The only trick is that it has to be back in
60 days. If you miss that for any reason, even if it was out
of our control, it becomes a withdrawl with penalties and taxes.

-john-

--
================================================== ====================
John A. Weeks III 952-432-2708
Newave Communications http://www.johnweeks.com
================================================== ====================

[Mark Freeland]

"John A. Weeks III" > wrote in message
...
>> To keep the IRS off your back, don't you have to re-deposit the rollover
>> funds into a new account, as opposed to taking it out of, and putting it
>> back into the same account? I thought I read that somewhere...
>
> That might be true of a "rollover",

Not true of a rollover:

"You can withdraw, tax free, all or part of the assets from one traditional
IRA if you reinvest them within 60 days in the same or another traditional
IRA."

IRS Pub 590: http://www.irs.gov/publications/p590/ch01.html#d0e3292


> but the original question
> was on borrowing from your IRA. The IRA allows you to borrow
> your IRA money for up to 60 days once per year with no fees
> or penalties.

What differentiates "borrowing" under 60 days from "rolling over" within 60
days?

Also note that this may be done once per year per IRA, so if
"you have two traditional IRAs, IRA-1 and IRA2, [and] you make a tax-free
rollover of a distribution from IRA-1 into a new traditional IRA (IRA-3),
[then] the rollover from IRA-1 into IRA-3 does not prevent you from making a
tax-free rollover from IRA-2 into any other traditional IRA [within the same
year]."

This quote is from the same section of Pub 590.

> The only trick is that it has to be back in
> 60 days. If you miss that for any reason, even if it was out
> of our control, it becomes a withdrawl with penalties and taxes.

Not necessarily for events beyond your control: "The IRS may waive the
60-day requirement where the failure to do so would be against equity or
good conscience, such as in the event of a casualty, disaster, or other
event beyond your reasonable control."

Same section of Pub 590. Now relying upon the good graces of the IRS is not
something I'd advise :-), but that's not the same as saying you can never go
beyond 60 days.

Mark Freeland

[Avrum Lapin]

In article >,
"John A. Weeks III" > wrote:

> In article >,
> Will Trice > wrote:
>
> > BeachBum wrote:
> >
> > > I did the same thing in 2001 when I was 64 - took $26k out of a
> > > traditional IRA and after receiving the proceeds from my previous
> > > house I put the 26K back into an IRA within the 60 days. You will
> > > get a 1099 which you report as a rollover on your income tax
> > > return . When you redeposit the 30K just make sure you specify
> > > that it is a rollover. I found the procedure simple and uncomplicated.
> >
> > To keep the IRS off your back, don't you have to re-deposit the rollover
> > funds into a new account, as opposed to taking it out of, and putting it
> > back into the same account? I thought I read that somewhere...
>
> That might be true of a "rollover", but the original question
> was on borrowing from your IRA. The IRA allows you to borrow
> your IRA money for up to 60 days once per year with no fees
> or penalties. The only trick is that it has to be back in
> 60 days. If you miss that for any reason, even if it was out
> of our control, it becomes a withdrawl with penalties and taxes.
>
>\
>From IRS Pub 17, 2006 Tax Year, page 118 1st column about 3 inches down

"You can withdraw, tax free, all or part of the assets from one
traditional IRA if you reinvest them within 60 days in the same or
another traditional IRA."

When they talk about Roth rollovers (page 125) the words "the same or"
are omitted. Later paragraphs on that page stress "another"

Not much more in Pub 590