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Ask Dr. Don

Borrowing from an IRA

Dear Dr. Don,
Can I get a loan against my IRA? Thank you in advance for taking the time to answer my question!
Julio Jiffy

Dear Julio,
You can't borrow against your IRA like you can in many 401(k) or 403(b) employer sponsored plans.

You can withdraw the money from your IRA account and then have 60 days to redeposit the money in the account or in a new IRA account. If the money doesn't find its way back into an IRA account within the 60-day period, it will be subject to taxes and penalties.

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Since the IRS looks at this as a nontaxable rollover, you can only use this 60-day provision once a year. The clock starts ticking on the date you receive the distribution, not the date you redeposit the money into an IRA account.

Prior to age 59 1/2 there are situations where you can withdraw the money without penalty. These exceptions are discussed in full in IRS Publication 590, Individual Retirement Arrangements, and are reproduced here:

  • You have unreimbursed medical expenses that are more then 7.5 percent of your adjusted gross income.
  • The distributions are not more than the cost of your medical insurance.
  • You are disabled.
  • You are the beneficiary of a deceased IRA owner.
  • You are receiving distributions in the form of an annuity.
  • The distributions are not more than your qualified higher education expenses.
  • You use the distributions to buy, build or rebuild a first home.
  • The distribution is due to an IRS levy of the qualified plan.

See that IRS publication for all the details and definitions concerning these exceptions.

-- Posted: March 8, 2002

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See Also
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