Can I borrow $500,000 from my IRA for 59 days even though I also borrowed $100,000 from my IRA via the Cares Act recently? No other borrowing. Thanks, Tom

[eilers345]

I'm 60 years old.

[Opus 17]

You can't borrow from an IRA.  What you are asking is, can you take a distribution and return it within 60 days (normal rule) even though you have already taken a $100,000 distribution under the CARES act (which can be returned over up to 3 years.)

The answer is yes.  However, remember that on a regular distribution (not covered by the CARES act) there is a mandatory 20% withholding, in this case, $100,000, so you get a check for $400,000.  But, you must put the entire $500,000 back within 60 days to count as a reversal of the distribution.  You have to come up with that last  $100,000 yourself, no matter where from.  If not, the $100,000 that you don't put back will be treated as a distribution subject to regular income tax plus a 10% penalty.  

You would get the $100,000 withholding back in your tax refund when you file your 2020 tax return to report the 1099-R with the $500,000 withdrawal and then report that you repaid it within 60 days.

[dmertz]

As with other types of disaster distributions, repayment of a coronavirus related distribution from an IRA is not considered to be a rollover with respect to the one-rollover- per-12-months limitation on rollovers from an IRA, so, assuming that you have done no other rollovers of either traditional or Roth IRA distributions made within the 12 months preceding the distribution of $500,000 from your IRA, the $500,000 distributed from your IRA can be rolled over by the 60th day following the date of that distribution.  Missing that deadline will result in the $500,000 being taxable and ineligible fro rollover.  Since you will be using the money for some purpose, the distribution will not qualify for any waiver of the 60-day deadline.

[Robert5977]

I',m retired and did a 40k distribution from my simple IRA. Within 60 days I did reverse this transaction with Vanguard. My 1099-R reflects the full distribution. So, how do I enter this into TurboTax so that the taxable portion of the distribution is 0? I tried using the Outstanding Rollover and Outstanding Recharacterization fields, but TurboTax still shows a full distribution (minus the basis portion). HELP! Thanks.

[ThomasM125]

@Robert5977

You should see a screen that says What did you do with the money from (name of pension company)? after you enter your form 1099-R. To which you need to indicate that you moved the funds to another retirement account and rolled it over to a traditional IRA or other retirement account. Then the distribution will not show as taxable on your tax return. See the following:

[Robert5977]

Thank you Thomas! Much appreciated