Need a loan from your IRA?

Watch out if you plan to “borrow” from your IRA for short-term cash needs. Although your IRA cannot actually lend you money, you can borrow from it by withdrawing the funds and quickly restoring the identical amount to the account. The money must be returned within 60 days or the distribution is taxed and also is hit with a 10% early payout penalty if you have not yet reached age 59½. IRS frowns on waiving the 60-day period, as two recent private rulings show. In the first ruling, it denied a request for relief from a taxpayer who tapped his IRAs to pay off a mortgage on a rental property. He planned to replenish the accounts with the proceeds from the sale of another rental property, but the sale was delayed for almost six months because of zoning issues. In the other ruling, the Service refused to give more time to a widow who withdrew from her IRA to finance her move to a nursing home. She had intended to repay the funds to her IRA with the proceeds from the sale of her home, but the sale wasn’t completed within the 60-day period.