60-day withdrawal from a Roth IRA
Dear Tax Talk,
Am I able to withdraw my contributions and earnings from a Roth IRA and redeposit them to my Roth within a 60-day timeframe without penalties? What are the rules for a 60-day withdrawal from a Roth IRA?
Yes, the IRS will allow you to withdraw, tax-free (bet you don’t hear that too often), all or part of the assets from one Roth IRA if you contribute them within 60 days to another Roth IRA. Please keep in mind that a rollover is not allowed from a Roth IRA to an employer retirement plan. Additionally, if you have an employee-designated Roth account, the rollover can only be made to another designated Roth account or to a Roth IRA.
Going forward, the five-year period used to determine qualified distributions does not change if you roll over from one Roth IRA to another Roth IRA. The five-year period begins with the first taxable year for which the contribution was made to the initial Roth IRA.
Ask the adviser
To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Taxpayers should seek professional advice based on their particular circumstances.