Articles from The Mediator
Retirement Savings: Rollover Changes
Did you know that you can take money out of an IRA tax free and use it for any purpose, so long as you put it back into an IRA within 60 days? In the past, the IRS allowed each of us to do this once per year per IRA. So if you had five different IRA accounts, you were able to do this five times a year, once for each account.
This proved handy for people who were in a temporary cash crunch but had substantial IRA balances. They would make an IRA withdrawal, receive the funds, and use the money any way they liked. And so long as they put the money back into an IRA in 60 days, it was all tax free!
Now the IRS has changed the rule to limit this practice. In the past, the IRS allowed you to do this once a year for every separate IRA you owned. The new rule allows this only once per year per taxpayer. So each of us can do this only once a year, regardless of how many different IRA accounts we may own.
Of course, one downside of this practice remains — the money withdrawn usually does not earn a return while it is out of the IRA.