Borrowing from a SEP IRA


W

Will

As I understand it, you can borrow from a SEP IRA once each
year if you pay back within a sixty day period. But unlike
a 401(k), you cannot do any long-term borrowing from a SEP
IRA. If you withdraw from a SEP IRA, hold the money for
more than sixty days, and pay the penalties due on holding
that money, is there any way you can at a later date at
least get the money returned back into the SEP IRA?
 
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H

Herb Smith

Will said:
As I understand it, you can borrow from a SEP IRA once each
year if you pay back within a sixty day period. But unlike
a 401(k), you cannot do any long-term borrowing from a SEP
IRA. If you withdraw from a SEP IRA, hold the money for
more than sixty days, and pay the penalties due on holding
that money, is there any way you can at a later date at
least get the money returned back into the SEP IRA?
Technically, "borrowing" from an IRA is a prohibited action
(as is using the IRA funds as collateral for a commercial
loan). However, the Code does allow you to make a "rollover"
(where you receive the cash) once in any 12-month period.
The "rollover" (back to the original IRA or to a different
custodian) within the 60 day period that begins on the date
you receive the money.

Miss the 60-day deadline and you have made a taxable
withdrawal from the IRA, with no provision available to
redeposit the funds into a tax-deferred account. If under
age 59-1/2 you may also be charged a 10% early withdrawal
surtax on the funds.
 
B

Barry Picker

Will said:
As I understand it, you can borrow from a SEP IRA once each
year if you pay back within a sixty day period. But unlike
a 401(k), you cannot do any long-term borrowing from a SEP
IRA. If you withdraw from a SEP IRA, hold the money for
more than sixty days, and pay the penalties due on holding
that money, is there any way you can at a later date at
least get the money returned back into the SEP IRA?
NO.
 
D

David Woods, EA, ChFC, CLU

Will said:
As I understand it, you can borrow from a SEP IRA once each
year if you pay back within a sixty day period. But unlike
a 401(k), you cannot do any long-term borrowing from a SEP
IRA. If you withdraw from a SEP IRA, hold the money for
more than sixty days, and pay the penalties due on holding
that money, is there any way you can at a later date at
least get the money returned back into the SEP IRA?
No.
 
H

Harlan Lunsford

Will said:
As I understand it, you can borrow from a SEP IRA once each
year if you pay back within a sixty day period.
Since you may NOT borrow from an IRA, this temporary
withdrawal and payback within the days is not a loan. But
can do, yes.
But unlike
a 401(k), you cannot do any long-term borrowing from a SEP
IRA. If you withdraw from a SEP IRA, hold the money for
more than sixty days, and pay the penalties due on holding
that money, is there any way you can at a later date at
least get the money returned back into the SEP IRA?
Nope. You take the money, and run. well, take the money,
pay the taxes and THEN run. The deed is done.

Just get to work again and start to contribute again.

Happy New ChEAr$,
Harlan Lunsford
 
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Joined
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Here's a question: I understand IRS allows you to withdraw from your SEP before age 591/2 and then rollover that amount to the same or other retirement account penalty free as long as it is done "within 60 days." What if you withdraw let's say $11k, and then mail a check back in that amount to the same account on day 55 but it gets posted by the investment firm on Day 61?
 

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