Withdrawing money from your IRA or other retirement account will subject you to normal taxation on the income and a 10 percent penalty for taking the money out before you turn 60. You will also need to report this money as income in the state of South Carolina on your state income taxes. South Carolina will expect income tax to be paid on any money borrowed from the account. Avoid paying penalties when borrowing money from your retirement account by paying the money back within 60 days. It might be an appropriate solution when you need a short-term loan.
Make a withdrawal from your retirement account. Keep careful records of the dates of all transactions. You will only have 60 days to return the money to your retirement account without incurring penalties. There are no restrictions on how you use the money, assuming you repay it on time and in full.
Re-deposit the money into the same IRA or another IRA. Deposit the same denomination. Give yourself a few extra days to make sure that the money is safely in place in your bank account on the 60th day.
Avoid taking another loan from the same retirement account for one full year. Two deductions from the same account will trigger all of the applicable South Carolina and federal tax implications.
Report the retirement withdrawal on your federal income tax form. Indicate that the withdrawal and deposit were a “rollover.”
Report the retirement withdrawal and deposit on your South Carolina state income taxes. Indicate that the transaction was a “rollover” on the form.
Some retirement plans allow personal loans for any reason. You withdraw the money and are required to pay it back in a pre-determined amount of time, sometimes as long as five years. The payments are made to yourself into your retirement account. You pay yourself back with interest in most cases. These loans are only good while you are still employed at your company, so if you are planning to quit your job, make sure you have repaid any loans against your retirement.
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