Tax

Have a tax question? Ask a tax Expert

Ask an Expert,
Get an Answer ASAP!

question. May an individually now borrow from an IRA and with…

Customer Question
question. May an individually...
question. May an individually now borrow from an IRA and with repayment back of the loan within a short term period w/ interest and avoid any taxability of the use of the funds? My understanding is that an individual formerly could not borrow any funds from an IRA WITH OUT IT BEING TAXABLE?
Submitted: 8 years ago.Category: Tax
Show More
Show Less
Ask Your Own Tax Question
Answered in 4 minutes by:
6/17/2010
Tax Professional: Merlo, Accountant replied 8 years ago
Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9,783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
Verified

Hello JA Customer,

 

Loans are not allowed from IRA accounts as they are with some employer retirement accounts such as 401k plans.

 

When you withdraw money from an IRA account, it becomes taxable in the year the withdrawal is made, unless you roll over the funds within 60 days to the same IRA account or a new IRA account.

 

Some people use the 60 day rollover feature as a short term loan. In other words you could make a withdrawal from your IRA and as long as you redeposit those funds within 60 days to the same IRA or a new IRA account, then you would not be taxed on that withdrawal. 60 day rollovers can only be done once each year on each IRA account that you have.

 

Other than using that 60 day rollover option, no loans are permitted from an IRA.

 

If this was helpful please press the Accept button. It is the only way we receive any credit for helping with these questions.

 

Thank you JA Customer

 

 

Ask Your Own Tax Question
Was this answer helpful?

How JustAnswer works

step-image
Describe your issueThe assistant will guide you
step-image
Chat 1:1 with a tax professionalLicensed Experts are available 24/7
step-image
100% satisfaction guaranteeGet all the answers you need
Ask Merlo Your Own Question
Merlo
Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9,783
9,783 Satisfied Customers
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad

Merlo is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,338 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,512 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

PhillipsEsq.

PhillipsEsq.

Attorney-at-Law

59 satisfied customers

B.A., M.B.A, J.D.

Robin D.

Robin D.

Senior Tax Advisor 4

15,569 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,655 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

< Previous | Next >

Related Tax Questions
I am 65 I want to use IRA funds as a down payment for a new
I am 65 I want to use IRA funds as a down payment for a new primary residence. I hope to repay these funds within 60 days of escrow closing. However, it could take longer than 60 days to sell my curre… read more
taxmanrog
taxmanrog
Master\u0027s Degree
1,042 satisfied customers
I did a rollover from the 401k to the IRA for 50k. I purpose
I did a rollover from the 401k to the IRA for 50k. I purpose to withdraw another 50k from the 401k to pay the first 50k back within 60 days. Thus giving myself 120 days to complete a transaction.… read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,328 satisfied customers
Ref loan on 401k, my company has merged with another company
my company has merged with another company and I want to transfer my present 401k to the new company's 401k but I have loan on the present 401k plan … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
15,569 satisfied customers
I am going to take money out of my IRA down payment on a new
I am going to take money out of my IRA for a down payment on a new house. I then will sell my house I am living in and want to put the money back in my IRA. It will take longer than the 60 days for a … read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,328 satisfied customers
We have an S Corp. Common stock in the business is $ 100.
We have an S Corp. Common stock in the business is $ 100. We, personally, lent it substantial funds, at inception 2003, [< $250,000] with which it bought the assets of a small business. These loans… read more
keeperumiami
keeperumiami
Sr Financial & Tax Consultant
Bachelor\u0027s Degree
1 satisfied customers
I am purchasing a new residence which is due to close the end
I am purchasing a new residence which is due to close the end of June- if my present house does not sell and close by then I will have to take the money for closing from my IRA (~$60K)- per below, my … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I have a 401k with my current employer, but am changing jobs
I have a 401k with my current employer, but am changing jobs soon. I am considering taking a loan on my 401k before changing jobs. What is the IRS law regarding the amount of time you have to repay a … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
15,569 satisfied customers
On the 1120, where does one enter a loan made to an officer
On the 1120, where does one enter a loan made to an officer or third party for the purposes of generating future income through interest? It is not compensation as it is a loan, but not sure where to … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Hypothetically, if over years, a business owner takes multiple
Hypothetically, if over years, a business owner takes multiple loans from the company in the form of $5000 checks cashed. All kept on the books as loans to the stockholder and reported on the corporat… read more
emc011075
emc011075
Senior Tax Specialist
Bachelor's Degree
16 satisfied customers
. I am not a wealthy woman. I am 66 years old. Retired
Hello. I am not a wealthy woman. I am 66 years old. Retired from owning my own ad agency for 31 years. The corporation still exists, I still work with two non-profits occasionally, producing their tel… read more
abci168
abci168
Principal
27 satisfied customers
Im interested to know the IRS rules that pertain to borrowed
I'm interested to know the IRS rules that pertain to borrowed money. I understand that if an individual borrows money from a bank, the money he receives is not taxable, but the income he earns to repa… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
I am looking to use the 60-day rollover grace for an
I am looking to use the 60-day rollover grace period for an IRA to take a short-term loan. I am interested in the specifics of how the "once per year" provision works.… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
15,569 satisfied customers
Hi, I am considering borrowing around $60,000 from my Aunt
Hi, I am considering borrowing around $60,000 from my Aunt to finish paying off my mortgage. It would be set up as a legal document of course. I undertand that the IRS sets the interest rate that is a… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I rolled over my 401k retirement plan from my preveious employer
I rolled over my 401k retirement plan from my preveious employer into a new 401k plan which is in my own company Mannick Inc through the advise of my accountant and then from an advisor from Merril Ly… read more
Charles Greiner
Charles Greiner
Owner
Bachelor's Degree
2,436 satisfied customers
My wife & I retired two years ago on the Florida Retirement
My wife & I retired two years ago on the Florida Retirement System. My wife had a DROP account that was rolled into a TSA. While building our house we ran short and borrowed $40K from the account with… read more
RD
RD
Self Employed
Master's Degree
1,164 satisfied customers
Many of us who have 401-K deferred comp. programs through our
Many of us who have 401-K deferred comp. programs through our w-2 employer as our main retirement program have seen our account values drop 20-50%. Less than 8 years ago from 2000 to 2003 we experienc… read more
Bill
Bill
Master's Degree
2,278 satisfied customers
Is there a way to us 401k money before the age of ...
Is there a way to us 401k money before the age of 591/2 to invest in real estate for the purpose of a primary residence while avoiding taxes.… read more
MequonCPA
MequonCPA
CPA Firm Owner
Master's Degree
2,165 satisfied customers
If I borrow some money from a person and it is interest ...
If I borrow some money from a person and it is interest free, when I pay the money back does the person I borrowed it from have to pay taxes on it if they didn't charge me interest on it? Optional Inf… read more
RR
RR
12 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x