borrowing from ira

[FinanceDude]

I didn't realize I was talking to you.

For someone that's retired early, you sure have a lot of hostility in you.

 

[FinanceDude]

I'll try to douse some fires here. Everyone is right.

You can't borrow from an IRA under section 408 of the IRC. So as retire@40 alludes to, you don't want to use the words "borrow" and "ira" in the same sentence when talking to the IRA.

But, you can withdraw money from an IRA provided you put it back into an IRA within 60 days. This is considered to be a rollover, not a loan. So you use the money for what you want to use it for in the grace period you have to rollover an IRA into another. It is not a loan as a technical matter.

Martha, love the scooter avatar. Must be hard to get into that Wonder Woman costume everyday and save everyone...........

 

[Nords]

I didn't realize I was talking to you.

That would be a PM or an e-mail, not a post in a public forum.

For someone that's retired early, you sure have a lot of hostility in you.

Perhaps.

For someone who's self-employed and living their avocation, you sure seem to spend a lot of time here aggrandizing yourself to your audience. That sort of smarter-than-thou behavior kinda reminds me of JG and others who'd use the board as a pulpit to pontificate their purported knowledge instead of teaching or at least sharing with others. It's easy to spout a question that appears to imply wisdom & experience while making you look smarter than the rest of the crowd, but it's a bit more effort to back it up with an actual reference or link.

You ask a lot of questions-- but I notice that Martha and others end up actually answering them.

 

[FinanceDude]

Perhaps.

For someone who's self-employed and living their avocation, you sure seem to spend a lot of time here aggrandizing yourself to your audience. That sort of smarter-than-thou behavior kinda reminds me of JG and others who'd use the board as a pulpit to pontificate their purported knowledge instead of teaching or at least sharing with others. It's easy to spout a question that appears to imply wisdom & experience while making you look smarter than the rest of the crowd, but it's a bit more effort to back it up with an actual reference or link.

You ask a lot of questions-- but I notice that Martha and others end up actually answering them.

Always a link to JG...............

 

[HFWR]

Maybe JG is really Kevin Bacon...

 

[retire@40]

For someone who's self-employed and living their avocation, you sure seem to spend a lot of time here aggrandizing yourself to your audience. That sort of smarter-than-thou behavior kinda reminds me of JG and others who'd use the board as a pulpit to pontificate their purported knowledge instead of teaching or at least sharing with others. It's easy to spout a question that appears to imply wisdom & experience while making you look smarter than the rest of the crowd, but it's a bit more effort to back it up with an actual reference or link.

Maybe you should look yourself in the mirror.

I give simple answers and to the point.

I give an opinion, and you get hostile because I don't give a reference.

I give a reference, and you get hostile because I don't explain the reference.

You must be a tough guy to live with.

If you have noticed, I have stayed away from you for a long time. I recommend you do the same.

 

[Nords]

I give simple answers and to the point.
I give an opinion, and you get hostile because I don't give a reference.
I give a reference, and you get hostile because I don't explain the reference.

Well, I think that your answers responses are intended more to provoke than to elucidate. I used to see that behavior (from co-workers) that was classified as passive-aggressive-- not actually opposing the proposal but asking so many what-if questions and raising so many thoughtless issues that the result was disarray, disorder, and regrouping. Others would be assigned to tackle the problems & issues (and actually resolve them) while the co-worker was free to rocket off to disrupt the next project. Very disruptive.

But I agree-- you rarely seem to explain yourself, and that task seems to be left to others. For example you noticed that the poster's idea might not conform to the law, and unless you've memorized huge chunks of the IRC you presumably looked up the conflicting reference and its number. However you merely threw the question out there without the referenced verbiage or a link, even though you'd probably just looked at them and could have taken a little time & effort to include them.

You must be a tough guy to live with.

I'll leave that up to the board. I'm not offended by you as much as I'm offended by the behavior, with its implication that it's acceptable to toss the hand-grenade interrogatories into the discussion for your own amusement. But that's just my opinion.

If you have noticed, I have stayed away from you for a long time. I recommend you do the same.

I hadn't particularly noticed.

It's not about whether this board is big enough for the two of us-- it's about productively contributing without nitpicking or noodging...

 

[Martha]

Maybe you should look yourself in the mirror.

I give simple answers and to the point.

I give an opinion, and you get hostile because I don't give a reference.

I give a reference, and you get hostile because I don't explain the reference.

I sometimes bump heads with you, most often because of your style of posting. I enjoy a discussion or dispute about a tax or legal issue. For example, some time ago you and I disputed the effectiveness of a family limited partnership as a mechanism for shielding assets from creditors. Those kind of discussions are enjoyable. However, sometimes you will ask a question on a tax thread that raises an issue, and I am pretty sure you know the answer to your own question. You do that instead of explaining why the question and corresponding answer are important. Here is an example:

http://early-retirement.org/forums/index.php?topic=11539.msg210129#msg210129

There was another example on this thread when you raised IRC section 408 which you and I both know prohibits loans from IRAs.

On this particular thread, what you posted about borrowing from IRAs was absolutely right, but I feel that you knew that really wasn't what the posters meant, they meant using a loophole in the rollover rules to be able to use money in an IRA for a short period of time. So why didn't you just say directly what I said, that 408 of the IRC bars loans, but some people use the rollover rules to be able to have short term use of money. You could then go on to explain any risks.

Sometimes you take what people say literally, without helping them along not only with an answer, but with their question. Tax question like legal questions are hard to articulate at times. So not being absolutely straightforward when posting on those kinds of questions can cause a lot of unnecessary confusion.

I think you know a lot about taxes and your posts on a thread about maximizing contributions to a simple IRA were great and to the point. That was helpful and I learned a lot on that thread. Your posts on that thread were simple and to the point. Not so much on this thread, where you and Saluki ended up arguing for no good reason.

 

[retire@40]

... you and Saluki ended up arguing for no good reason.

We did?

I thought it was a simple and friendly back and forth point and counterpoint with no name calling like you know who does.

 

[Martha]

But how did that help OP? If you know the answer, just give it up.

 

[retire@40]

I sometimes bump heads with you, most often because of your style of posting. I enjoy a discussion or dispute about a tax or legal issue. For example, some time ago you and I disputed the effectiveness of a family limited partnership as a mechanism for shielding assets from creditors. Those kind of discussions are enjoyable. However, sometimes you will ask a question on a tax thread that raises an issue, and I am pretty sure you know the answer to your own question. You do that instead of explaining why the question and corresponding answer are important. Here is an example:

http://early-retirement.org/forums/index.php?topic=11539.msg210129#msg210129

That example just looked like a factual statement followed by my simple question.

No name calling or diatribe from either me or that poster.

The poster responded to confirm what I thought was the answer, I agreed with him, and that was that. If he had responded with something I disagreed with, I would have followed up if I thought it was worth a follow-up.

Some people like to ramble on and on and on in their posts, but I don't tell them they have a lot of hot air. My style of posting is to be short and to the point which I think is easier on the eyes.

 

[retire@40]

But how did that help OP? If you know the answer, just give it up.

I did. Even in a humorous way by saying "Danger: Don't try this at home."

I followed up with "I know in reality, that is what is being done. But it really bothers me to see the words 'borrow' and 'IRA' in the same sentence. Put it this way, in an audit, I would never tell the IRS agent 'I just borrowed money from my IRA for less than 60 days.'"

Then I followed up with a reference to the Internal Revenue Code to back myself up. I never said it couldn't be done as it was, but that there are dangers in doing so, especially under audit using the "wrong" words.

I don't understand why any of the above would be so controversial. I don't see any name calling or hostility from me or other posters above (except you know who). I thought it was pretty constructive until someone decided to attack me instead of contributing to the thread.

 

[Martha]

Just so I can understand you better, did you know that they really were talking about using a rollover loophole to use the money for 60 days?

 

[retire@40]

Just so I can understand you better, did you know that they really were talking about using a rollover loophole to use the money for 60 days?

Yes.

 

[lazygood4nothinbum]

to answer my own question, i can not "borrow" from the inherited ira. as martha shows this would really be just a part (or loophole) of a rollover process. now i knew that an inherited ira can not be rolled over to a roth, but i didn't know that it also can not be rolled over, in the typical use of that term, anywhere. per a post on ed slott's irahelp forum: it can only go from custodian account to another custodian account directly. it can not pass from custodian to beneficiary to custodian like money from a personal ira can. so there would be no time during the transfer to "borrow."

in any case, i think i found a car in washington dc which is much less than the one i was worried about having cash for. i just need $59 bucks for the flight there. my auto industry friend tells me i have too much time on my hands. but what does early retirement mean to me? it means i have the time to fly 1000 miles to save $25k and to wind up with the yellow car that i really wanted in the first place.

 

[Martha]

Well, what kind of car is it?

 

[lazygood4nothinbum]

a 350z with under 4k miles & about $9k less than new. a 2005 which was last year they painted'm yellow. just now back from local dealer. test drove the 2007. problem is i didn't fall in love with it. don't know if it is a good roadtripping car. very little storage space and not very comfortable cockpit. also top is not insulated so a little noisy inside. sure do love the lines of that car though.

so then i went to look at a z4 which is about $50k new or $45k used (i like the ones with the bigger engines because i'm a gas hog at red lights--cheap thrills.) but it's kind of tight inside. not much arm room.

now i might be back at the new beemer 335 hardtop convertible due in april. only it's $55k and i might just kick myself in the ass if i spend that kind of money on a car.

pretty much my only other option is a mustang gt vertible which is a comfortable car, fast like i like'm and at a good price but it's american and, sad to say, i'm so sick of visiting the service center just because of that.

i think the only car that isn't a compromise is the bentley continental (only two of them passed me today on the way to the cheapo bmw dealer) but that $180k price tag was a part of someone else's inheritance, not mine.

gotta make decision soon because lease is soon expired. maybe i'll put off decision by leaving for thailand for a few months when lease expires and see how i take to riding on the back of elephants. they don't have to be fast off red lights; they just crush the competition.

 

[Martha]

And after you come back a scooter might seem speedy.

 

[FinanceDude]

And after you come back a scooter might seem speedy.

 

[lazygood4nothinbum]

and that's the er plan. a few years of road trips, parking overnight at motel 6's in an overly fast, too luxurious for me 335 vertible while i still got good reflexes and enjoy using them, followed by a few years on the cheap racing elephants throughout southeast asia and then i'm gonna hoist that scooter onto the boat deck of a 7-knot trawler, ending life in the slow lane, just enjoying the view going by.

 

[BigMoneyJim]

Interesting info. I'm also in a temporary cash flow crunch and have been debating whether to go with credit or IRA loan rollover. Credit seems to be a lot less hassle, less pitfalls for a theoretical minimum expense of 2 months' interest.

I also have a 401(k) that I thought I could take a loan from, but the initial answer is "no", and although Martha indicated I might be able to there is still the hassle of finding out for sure and then getting the trustee to believe it, and then there's the $100 loan fee.

So, credit it is. (Actually there may be another option, but there are a few "ifs" and it's too much to explain. In short it's my "accounts receivable".)