Don’t Miss This Deadline! It Could Cost You…

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Lately I’ve had a few clients borrow money from their IRA account for a few months so they can complete a purchase transaction on a new property. Clients have typically used their IRA as a source of cash when they wanted to tie up a property before they sold their home. This can be very expensive if the timing is not right.

According to Mountain West IRA, the funds distributed should be paid back within 60 days – and not a day later. The day the money is transferred is calculated into the deadline as day one. Barbara Aue, CPA says this can be very costly if funds are returned after that time. If the borrower is over 59 1/2 years of age and doesn’t get the money returned within the 60 day deadline, the money is taxed as regular income. If the borrower is under 59 1/2, there are additional penalties. Luckily, my clients have not been penalized since they’ve returned the money to their IRA within the 60 day deadline.

One key to making the transaction go smoothly is to pick the right professionals. Consulting with your Real Estate Professional, Escrow Officer, Lender and CPA, before you borrow any money, may save you from paying unwanted taxes and penalties and allow you to keep your nest egg intact.

Elaine Abercrombie
Broker/Owner, SBAOR Past President, GREEN, SRES
elaine@afhomes.net
www.AbercrombieFineHomes.net

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