Borrowing from a SEP IRA

Discussion in 'Tax' started by Will, Dec 31, 2004.

  1. Will

    Will Guest

    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?
    Will, Dec 31, 2004
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  2. Will

    Herb Smith Guest

    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.
    Herb Smith, Jan 2, 2005
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  3. Will

    Barry Picker Guest

    Barry Picker, Jan 2, 2005
  4. No.
    David Woods, EA, ChFC, CLU, Jan 2, 2005
  5. Since you may NOT borrow from an IRA, this temporary
    withdrawal and payback within the days is not a loan. But
    can do, yes.
    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
    Harlan Lunsford, Jan 2, 2005
  6. Will


    Nov 29, 2016
    Likes Received:
    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?
    netrover, Nov 29, 2016
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