Ira withdrawal to buy a house and then time frame to replace funds back into account without paying taxes

Submitted by Timothy Dalton on Thu, 2023-10-26 13:54

My name is Tim Dalton. I have a client who is a mail age 74 with $481,000 in a traditional IRA. He called me this morning saying he wants to buy a second home and would like to withdraw a large lump sum form his IRA account to buy the house. He asked me to find out how soon he must return the funds to his account to avoid paying taxes on the withdrawal. Thank you! Tim



Submitted by Alan - IRA critic on Thu, 2023-10-26 14:40

  • He has 60 days including weekends and holidays, but only if he did not rollover a prior distribution in the last 12 months. In that case, he could not roll back any of these amounts. Further, if he has not completed his RMD for 2023, the amount of the RMD would not be eligible for rollover.
  • Depending on how secure the source of replacement funding is, this is risky. If the rollover is not completed, his tax bill for 2023 could be much higher, particularly if he has already completed his RMD. This could also expose him to IRMAA surcharges in 2025.

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