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Can I take out IRA money for 60 days?

Dear Tax Talk,
I have an IRA with $15,000 not invested. I want to put that money into another investment account. My adviser says it's OK, providing I return it to my IRA account in 60 days or less. He says there's no penalty or tax if I do it this way. Is this 60-day rule for real? -- Dianne

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Dear Dianne,
I am not sure you and your adviser are on the same page. First off, I'm not sure why you would have IRA money that is not invested. At a minimum, it should be in a money market account.

If you want to put money from an IRA into another investment account, you only need to see if that investment can be made by an IRA. It wouldn't be very productive to move money from your IRA for a 60-day investment, now would it? An IRA can be invested in most traditional investments, so unless you're looking at something exotic (such as rare stamps, artwork or fine wine), I'm sure you can move that money over in a direct rollover.

A direct rollover means that your current account is transferred over directly to the custodian of the new investment. Usually, this is handled by the new custodian of the account. While your adviser is right that you can withdraw your funds for 60 days without paying income tax or penalties, it doesn't sound like that is what you really have in mind.

Bankrate.com's corrections policy -- Posted: Aug. 18, 2005
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