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Can I pull out most of my assets from my IRA and use the cash as long as I replace it within a year?
Best Answer
2222 points
readytoretire answered 10 months ago …
Only as long as you want to pay Uncle Sam for the privilege. The rules for getting money out of an IRA (assuming you are under the age of 59 1/2) are that it must be redeposited into a qualified IRA account within 60 days of distribution, or you will owe taxes on the distribution. And the amount you contribute after 60 days is treated like a new contribution, so there are limits. And you would owe an additional 10% penalty tax on the distribution. And just to help you make up your mind, typically, companies that make a distribution will withhold income taxes on it, so you would have to make that up at the end of the sixty day period and recoup that at your annual filing, unless you do quarterly filing.
So the short answer is that unless you have something that you need the money for and that will only be a few weeks (as these things tend to drag out), leave the money in an IRA. Now you can transfer the money between companies without these issues, as long as you don't get in the middle of it (the funds transfer between companies, not one company to you to another company).
Answers
450 points
SallyG answered 10 months ago …
Actually, you can transfer the money yourself; I transferred money from a bank IRA to my Vanguard IRA by telling the bank to code it as a rollover (perhaps an "employee rollover"?). When I received the check from the bank, I sent it directly to Vanguard by registered mail. return receipt requested. Both companies will send me a form for income tax purposes, and I believe will notify the IRS, but there is no charge or penalty. I did this to avoid a wire transfer fee. (Yes, I am cheap.)
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896 points
jillybeansisme answered 10 months ago …
Depending on your age (or maybe that isn't even a factor here, but I'm not sure) you can do a 5 year distribution of equal proportions without a penalty, but under certain circumstances. I don't know much about it, so please contact your IRA holder and find out the details. You will incur taxes on the money and must continue the distributions for 5 years.
As I said, I don't know much about this but heard about it briefly from someone. I have not investigated it because I don't plan to take the money out for a long time.
