IRA withdrawal, can I put it back?

[Guest mark1967]

Took out 14,000 to buy a second home in March, it's august now, can I put back 14,000 or only the 3,000???

Mark

[Appleby]

Where does the '$3,000' come from mark?

If you took a distribution in March, you had to have completed the rollover contribution within 60-days after you received the distribution. Which means it is now too late…unless, you were unable to timely complete the rollover because of casualty, disaster, or other events beyond your reasonable control

[John G]

Appleby - note it says "second home". Do they even qualify? I thought it was a primary residence option only, but I can't find a reference with clear language.

[Appleby]

Good point John. I did notice that and in retrospect, I should have addressed it (instead of assuming that it was a given that was insinuated within my response). I stated “60-days” for the rollover because the distribution did not meet the requirements for a first time home. If it did (meet the requirements for a fist time home) the rollover period would have been increased (from 160) to 120-days.

[John G]

Mark, you may have been taking a distribution for a non-eligible transaction... it is not clear. If this was an IRA, depending upon your age, you may owe taxes and a 10% penalty. However, if this was a Roth you are allowed to take contributions out without penalty at any time, but different rules applies to income/gains depending upon your age. You did not provide enough facts to completely answer your question.

It sounds like you would like to deposit $3,000 back into your account. If you have not made any contribution in 2003, you may be eligible to do so now.

Since so much will depend upon your facts, dates and applicability issues I would highly recommend that you see a local accountant or tax professional to get this resolved.

[Guest mark1967]

Yes, It was a Roth IRA, took out 14,000 of the 16,000 in the account. Now that I have sold my first home, I have the cash available to build it back up. Sounds like I can not put it back in the IRA, so now I will look for other options.

thanks for all your help.

mark

[John G]

Mark, I wished you had posted earlier as there are better ways to solve the temporary need for cash to buy house #2. You could have looked to get a home equity loan based upon house #1. You could use margin borrowing power if your non-IRA assets were substantial. You could look to someone within your family to borrow the money for the short term - you would clearly offer a better interest rate than most folks are getting in money market funds or CDs. You could ask the home seller to take back a short term note, payable when you sell your first house. And, finally you could approach most banks and arrange for a "bridge loan" - a short term loan to cover a cash gap.

A good real estate representative should have suggested some of these options. Taking money out of a Roth should have been a last resort because it is difficult to put it back in.

I know the advice is too late for you, but others who read this thread may benefit from your transactions. Thanks for posting again.

[Guest mcdonnell]

Appleby,

"If it did (meet the requirements for a fist time home) the rollover period would have been increased (from 160) to 120-days."

Why do you state the 120 days to rollover? I don't see this in the regs or Proc. 2003-16.

[Appleby]

mcdonnell,

160 is a typo, it S/B 60.

Cite for extending the rollover period from 60 to 120 days, when the distribution was for the purpose of a first time home is [iRC § 72(t)(8)(E)]

[JAMES PATRICK]

I thought that the 120 days was only when the real estate deal fell through or was I reading more into it than I should have?

[Appleby]

You are right Jim.

The 120-days apply if the rollover contribution is being made because there was a delay or cancellation of the purchase or construction of the home .