You can borrow from your IRA, but only through a specific 60-day rollover window—and if you miss it, the IRS treats the money as a withdrawal and taxes it

An IRA is not a savings account you can tap whenever you need cash. The IRS allows you to take money out temporarily through what's called a 60-day rollover, but this is a loan to yourself with a hard deadline. You withdraw the money, use it for whatever you need, and deposit it back into an IRA—any IRA, not necessarily the same one—within 60 calendar days. If you miss that window by even one day, the IRS counts it as a permanent withdrawal, and you owe income tax on the full amount plus a 10% early withdrawal penalty if you're under 59½.

This is not the same as a loan from a bank or a 401(k) loan. You are not borrowing against your IRA; you are temporarily removing money and racing to put it back. The clock starts the moment the money leaves your account.

Key Takeaways

  • A 60-day rollover lets you withdraw IRA money and redeposit it within 60 calendar days without tax or penalty, but missing the deadline triggers income tax and a 10% penalty if you're under 59½.
  • You can only do one 60-day rollover per IRA per 12-month period, so using this method twice in one year will disqualify the second withdrawal.
  • The money must go back into an IRA account—traditional, Roth, SEP, or SIMPLE—and your bank or brokerage will report the transaction to the IRS on Form 1099-R.
  • If you cannot repay the money within 60 days, a withdrawal is permanent and taxable, making this option risky for anything but short-term cash needs.

How the 60-day rollover actually works

When you contact your IRA custodian—your bank, brokerage, or investment firm—and request a withdrawal, they will ask whether you want a direct transfer to another IRA or a check made out to you. If you take the check, the custodian withholds 20% for federal income tax automatically. That 20% is held by the IRS, not by your custodian, and you will need to repay the full amount you withdrew, not just the 80% you received, to avoid tax consequences.

Example: You withdraw $10,000 from your traditional IRA. Your custodian sends you a check for $8,000 and withholds $2,000. You now have 60 days to deposit $10,000 back into an IRA. If you only deposit the $8,000 you received, the IRS treats the missing $2,000 as a taxable withdrawal, and you owe tax on it when you file your return. The $2,000 withheld is credited against your tax bill, but you may still owe more.

To avoid the 20% withholding, request a direct rollover instead. Your custodian transfers the money directly to the receiving IRA without sending you a check. No withholding occurs, and you have 60 days to complete the transfer. This is simpler and safer if your receiving institution can accept a direct rollover.

The 12-month rule that catches most people

The IRS allows only one 60-day rollover per IRA per 12-month period. This rule is strict and often misunderstood. If you do a rollover in January and another in March of the same year, the second one is treated as a taxable withdrawal, even if you repay it within 60 days.

The 12-month period runs from the date you withdrew the money, not from the calendar year. If you withdrew on March 15, you cannot do another rollover until March 16 of the next year. If you have multiple IRAs—a traditional IRA and a Roth IRA, for example—the rule applies to all of them combined. One rollover per person per 12 months, across all your IRAs.

This rule has no exceptions for hardship or emergency. If you need cash twice in one year, the second withdrawal is taxable. Many people discover this when they file their tax return and see an unexpected bill.

What happens if you miss the 60-day deadline

If you do not deposit the money back into an IRA within 60 calendar days, the withdrawal becomes permanent and taxable. You owe federal income tax on the full amount at your ordinary income tax rate. If you are under 59½, you also owe a 10% early withdrawal penalty on top of the income tax.

Example: You are 45 years old and withdraw $15,000 from your traditional IRA on January 1. You intend to repay it by March 1 but forget. On April 2, you realize the deadline has passed. The $15,000 is now a taxable withdrawal. If your tax bracket is 22%, you owe $3,300 in federal income tax plus $1,500 in penalty—$4,800 total. Your state may also tax the withdrawal. You cannot undo this by depositing the money later; the tax is owed regardless.

The IRS does not grant extensions for the 60-day window. Illness, travel, bank delays, or any other reason does not change the deadline. The only exception is if your custodian makes an error—for example, if they fail to process a rollover you requested in time. In that case, you can file Form 8329 with the IRS to request relief, but this is rare and requires documentation of the custodian's mistake.

Roth IRA contributions versus earnings: different rules

If you have a Roth IRA, the rules are different. You can withdraw your contributions (the money you put in) at any time without tax or penalty, regardless of your age. This is not a rollover; it is a permanent withdrawal of your own money. Withdrawing contributions does not trigger the 60-day clock or the 12-month rule.

Withdrawing earnings (investment gains) from a Roth IRA before age 59½ is different. Earnings are subject to income tax and the 10% penalty unless you meet an exception, such as disability or a first-time home purchase. A 60-day rollover can be used for Roth earnings, but the same 60-day and 12-month rules apply.

If you are unsure whether your Roth balance is contributions or earnings, your custodian can tell you. Your annual Roth IRA statement should also break this down. Withdrawing contributions first is always the safer move if you need cash.

When a 401(k) loan might be a better option

If you have a 401(k) through your employer, borrowing from it is often safer than using a 60-day rollover. A 401(k) loan is an actual loan: you borrow money, pay it back with interest over a set schedule (usually 2 to 5 years), and there is no 60-day deadline or 12-month limit. If you leave your job, you typically have 60 days to repay the loan or it becomes a taxable withdrawal, but while you are employed, the loan is straightforward.

The downside is that not all employers offer 401(k) loans, and the interest you pay goes back into your own account, so it is not a cost to you the way bank interest is. However, if you need cash and have both a 401(k) and an IRA, checking whether your 401(k) allows loans is worth doing first. It removes the risk of missing a deadline or hitting the 12-month limit.

Alternatives if you need cash and cannot use a rollover

If you have already used your one rollover this year or cannot repay the money within 60 days, other options exist. A personal loan from a bank or credit union charges interest but has no tax penalty. A credit card cash advance is expensive but available immediately. Borrowing from family or friends avoids interest if you have that option.

If you are over 59½, you can withdraw from your IRA without penalty, though you still owe income tax. If you are under 59½ and face a genuine hardship—medical bills, foreclosure, or another emergency—some IRAs allow hardship withdrawals, though this is not a standard IRA feature and depends on your custodian's rules. Ask your custodian whether they offer this option.

For a traditional IRA, you can also withdraw money to pay for unreimbursed medical expenses that exceed 7.5% of your adjusted gross income, or to pay health insurance premiums if you are unemployed. These exceptions avoid the 10% penalty but not the income tax. A Roth IRA has additional exceptions for first-time home purchases (up to $10,000 lifetime) and education expenses.

Frequently Asked Questions

Can I borrow from my IRA and pay it back over time?

No. A 60-day rollover requires you to repay the full amount within 60 calendar days. If you cannot repay it all at once, the withdrawal is taxable. A 401(k) loan allows repayment over years, but an IRA does not.

What if my bank takes longer than 60 days to process the rollover?

The 60-day clock starts when you withdraw the money, not when the receiving bank receives it. If your bank is slow, you miss the deadline. To avoid this, request a direct rollover where your custodian transfers the money directly to the receiving IRA, bypassing you entirely.

Can I do a 60-day rollover from a Roth IRA to a traditional IRA?

Yes. You can roll over money from any IRA type to any other IRA type within 60 days. However, if you roll Roth earnings into a traditional IRA, those earnings become subject to tax when you withdraw them later, because traditional IRAs are taxed differently than Roths.

Do I have to report the rollover to the IRS?

Your custodian reports it on Form 1099-R. You report it on your tax return using Form 8606 (for Roth conversions) or by noting it as a rollover on your 1040. If you miss the 60-day deadline, the IRS will see the 1099-R and may assess tax and penalties automatically unless you file Form 8329 to request relief.

What if I withdraw from my IRA and deposit it into a regular savings account instead of another IRA?

That is a permanent withdrawal, not a rollover. The money is taxable and subject to the 10% penalty if you are under 59½. The 60-day window only applies if you deposit the money into an IRA.