Can I return funds to my Traditional IRA after taking a distribution?

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May 2017
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You may take what is referred to as an IRA Rollover once every 12 months. And yes, you may return the funds to your traditional IRA as long as it is within the 60 day period. Once you have taken possession of your funds you only have 60 days to return the funds, otherwise you will be taxed on the distribution.

If you are under the age of 59.5 then you will also have a 10% early withdrawal penalty unless you qualify for an early withdrawal.*

*The distribution is not subject to the 10% early withdrawal penalty in the following scenarios:

1) After IRA owner reaches 59.5 years of age

2) After death of the IRA owner

3) Total and permanent disability of the IRA owner

4) Qualified higher education expenses

5) First time homebuyers up to $10,000

6) Amount of unreimbursed medical expenses 

7) Health insurance premiums paid while unemployed

8) Certain distributions to qualified military reservists called to duty

9) Rollovers: In-plan Roth rollovers or eligible distributions contributed to another retirement plan or IRA within 60 days

10) There is a little known section of the IRS tax code: Section 72t that allows you to take substantially equal periodic payments (SOSEPP) on an annual basis before the age of 59.5 without paying the 10% early withdrawal penalty. The IRS stipulates that you take money out of your IRA for five years or until the age of 59.5, whichever is longer.

May 2017
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