How to Borrow From an IRA & Put the Money Back in 60 Days

The Internal Revenue Service does not allow you to borrow money from your IRA. If an IRA is leveraged in any way, even if a portion of it is used as collateral, the entire IRA value is considered distributed, with taxes and penalties applied. However, a loophole allows you to take a distribution for a short-term financial need and return the money. This is the IRS's indirect rollover rule, and you have 60 days from the receipt of the check to return the money to the IRA.

Call the custodian of your IRA and request a distribution form. The custodian's number is located on the IRA statement.

Complete and submit the distribution form with the amount you need to access as a "net amount." There is automatic federal tax withholding of 20 percent from the distribution if you are not yet 59½. If you take a gross distribution of $10,000, the withholding means you will receive only $8,000, maybe less if there are any transaction fees from the custodian.

Use the money. It takes approximately three to 10 days to receive the check. Cash it like any other check.

Gather 100 percent of the distributed amount. This means the amount you received plus the 20 percent withheld for taxes.

Call the IRA custodian and ask for a rollover contribution form. This form ensures that the deposit is not deemed an excess contribution and penalized.

Write a check for the total amount, and send it to the IRA custodian. Note in the check memo that the amount is for a rollover contribution, and include the completed rollover contribution form.


  • You are allowed to perform a 60-day rollover once in 12 months.

    Employer-sponsored retirement plans allow loans up to 50 percent of a 401k or 403b plan's value. If you have one of these plans, consider a loan from it instead of borrowing from an IRA. There is no credit requirement, and you have up to five years to repay the money.