Your logic is incorrect. The two transactions are entirely independent and governed by difference sections of the tax law.
First, if you withdraw funds, you have 60 days to return them to the same IRA, or to a different IRA. If you use a different IRA, this would be considered a direct or indirect rollover. If you keep the funds longer than 60 days, it is a taxable distribution (withdrawal).
Second and completely separately, you can make new contributions up to $7000 or up to the amount of your taxable compensation from working, if it is less than $7000.
A distribution taken in May (let's assume May 15) must be returned by July 15. You also have to notify the plan when making the deposit that it is a "returned distribution within 60 days" so they don't count it as a new contribution. The only time you get longer than 60 days is in the case of a "first time home purchase" where you must use the funds within 120 days. If you withdraw funds for a first time home purchase and the purchase does not go through, you have 120 days to return the contribution. Not all IRAs are willing to process a 120 return of distribution, so you have to make sure to let them know what you are doing in advance.
In short, I am asking if an IRA account when withdrawal are fully allowed, can be transacted like a saving account.
Absolutely not.
