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Returning Member
posted Apr 7, 2025 6:54:35 AM

I'm trying to repay $8000 I borrowed from my IRA. It's telling me my contribution isn't permitted.

I'm trying to repay $8000 I borrowed from my IRA. It's telling me my contribution isn't permitted because it's more than my earned income. My earned income is 0 because I'm living off of investment income. How can I correct this?

0 7 904
7 Replies
Expert Alumni
Apr 7, 2025 7:03:28 AM

IRA loans aren't permitted—so if you withdrew money from your IRA, it was likely a distribution, not a loan. Repaying that amount would be considered a contribution, subject to the usual IRS rules, including the requirement that you have earned income to contribute. 

 

 

 

Returning Member
Apr 7, 2025 7:06:03 AM

Thank you, but I don't understand that because, according to the IRS you are allowed to pay back an IRA distribution if it's done within 60 days.

Expert Alumni
Apr 7, 2025 7:12:46 AM

If you did repay the distribution within 60 days then it is considered a rollover which is permitted. You have to indicate that this is a rollover in TurboTax and to your IRA administrator.

 

You do this in TurboTax Online when entering your form 1099-R.

 

  1. Open your tax return
  2. Click on Federal in the left-hand column, then on Wages & Income
  3. Navigate to the list of income categories
  4. Locate the section Retirement Plans and Social Security and click on the arrow on the right
  5. Click Start next to IRAs, 401(k), Pension Plan Withdrawals (1099-R).
  6. Enter your form 1099-R and follow the interview
  7. When you arrive to the page Tell us if you moved the money through a rollover or conversion, click on the radio button I rolled over some or all of it to an IRA or other retirement account within the time limits (normally 60 days)

Returning Member
Apr 7, 2025 7:17:26 AM

Thank you! I followed those instructions exactly, and it's still telling me my contribution isn't permissible because I haven't met the earned income requirement.

Expert Alumni
Apr 7, 2025 7:21:03 AM

To clarify, did you receive and report a 1099R for the distribution and then report the rollover?

 

@sallybosco 

Returning Member
Apr 7, 2025 7:53:24 AM

Yes, I did. My brokerage firm tells me I won't receive the 5498 until May, but that the form is for my records only.

Expert Alumni
Apr 7, 2025 8:08:40 AM

Delete your 1099R completely.  Sign out or close the program  and then re-enter the form using the steps MinhT1 prescribes. See if this'll alleviate the issue.  

 

@sallybosco