60 day IRA loan, churn possible?

idealguru said: Does this mean, if I have multiple IRA's then I can do this multiple times in a given year, provided I return the funds within 60 days?Yes, but only once with the money in each one. You can't fake-borrow the same money more than once in the year.

theman2 said:
On a more serious note OP, if you have a 401k and your plan allows it, you can take out 5 year loans of up to $50K and pay back interest and principal over that time period. I believe the loan is limited to something like 50% of your account balance before the loan.

Sure but if you lose your job for any reason then the loan becomes immediately payable in full and if you cant repay it then its considered a nonqualified distribution with 10% penalties and full marginal taxes.

InsuranceExpert said:
From IRA #1, she took the following payments, $3000 in February $4,000 in March, and $6,000 in November.

I just had her take money from her checking acount and send it to IRA #1 as a rollover. What's the most that she can roll over? I think that I know the answer, but I'd like to hear your opinion along with an explanation.

If I understand you correctly, she took out too much from the IRA #1 and wants to put money back in? In that case then just the $6k she took out in November she can claim it to be a rollover from the 60 day rule.

Your question is really poorly asked and I am not sure what you want to know. Why does it matter what the RMDs on IRA #1 would be if she took out 10x the RMD?

InsuranceExpert said: I'm not sure what you mean by "took out too much". There isn't a limit to what can be removed. I want her to put as much money back in as is possible.

Well if she took out more money of the IRA than she needed, and you are advising she put the money back into the IRA, then she "took out too much" because now the extra money has to sit in a savings account. Once you take a distribution from an IRA you cant say "Oops, nevermind I want to put it back in." Within 60 days you can say "oh no this wasn't a distribution, this was a rollover" but typically you are going to have to actually transfer it to a different IRA custodian than it was originally in because you can't roll it over back into itself (directly at least - you could always roll it over into a second account and then immediately back into the first although the custodians wont be happy to do this and may charge fees)

InsuranceExpert said: The RMD for IRA #1 is relevant because of the special rules for 2009 dealing with the ability to put back money due to RMD's. The answer to the question would be different if I said, "her RMD for 2009 was $20,000".

Is $6000 your final answer for your guess to this question?

I have never heard of this "putting money back" concept and am not familiar with it. Once you take a distribution, it's a distribution forever. No takebacks.

If this were my client, I would just advise her to put the $6k into Alliant CU Roth IRA at 2% and declare it a rollover. Then be more careful in future years with her planning to only remove what she actually needs from the IRA.

I would also advice my client to do a Roth IRA conversion with any money that could be done tax free. For example if the first $16k of her income is tax-free and she only takes $14k of traditional IRA distributions, then do a Roth IRA conversion of $2k because it's going to be done tax-free.

InsuranceExpert said: BBB, it can be rolled back to itself.

By "putting money back", I'm referring to the fact that the 60 days for rollovers was extended to November 30th for distributions up to the amount of an RMD for 2009.

I knew that RMDs were suspended for 2009 but didn't hear of this specific weirdness. I googled it and found

"If they do make a withdrawal in 2009 (that is not an RMD for 2008), they might be able to roll over the withdrawn amount into other eligible retirement plans."

The IRS memo I read didn't get any clearer than that. Perhaps you could phone the IRS and ask them. They are usually helpful or refer your client to an accountant.

If my math serves me, her IRA #1 has $25k in it?

I did run this by the client's CPA. I'm smart enough to know better than to give tax advice. The CPA agreed with what I thought was the answer, but I'm looking to see the opinions of others. I especially want to hear LH2004's opinion.