Join Early Retirement Today
Thread Tools Search this Thread Display Modes
Borrowing from IRA
Old 02-26-2020, 04:02 PM   #1
Recycles dryer sheets
Join Date: Mar 2011
Location: Mpls
Posts: 190
Borrowing from IRA

I'm in the process of buying a vacation home.

I was vacationing in the area that I purchased this town home, and I was trying to expedite the closing date. I didn't want to travel home, and then come back.

With interest rates low, I decided to take out a mortgage loan, and I didn't want to clear out all of my roth and cash accounts.

I was trying to expedite the loan approval process. I have access to advice from a financial advisor, because I keep about 25% of my retirement funds with him. He holds all of my wife's accounts, and my roth accounts.

He recommended that I borrow from my IRA account, pay cash at the closing, and then get a new loan set up to repay my IRA account within 60 days without a penalty.

I didn't know I could do this, and it seems to be working out very well. I'm assuming the loan I'm applying for is approved within 60 days.

I just thought I would let others know about this IRA rule. Maybe it is common knowledge, but I've never heard of it.

Take care,


JP.mpls is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 02-26-2020, 04:10 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 25,158
While there is no provision for "borrowing" from your IRA, what you FA says can be done essentially using the rules that allows one to withdraw from an IRA and then redeposit the money within 60 days.

The risk is that if your mortgage process gets hung up and you don't have your mortgage money within 60 days then you'll have to pay tax on the amount withdrawn and 10% penalty if you are under 59 1/2.

The other thing that might come into play is if you buy first then your mortgage changes from a purchase money mortgage to a cash-out mortgage and might be subject to different rules. Ask your lender.

I would not take the risk.

You shouldn't have to travel back to do a closing. We closed on our Florida condo from 1500 miles away.

If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 65/35/0 AA TBD
pb4uski is offline   Reply With Quote
Old 02-26-2020, 04:27 PM   #3
Recycles dryer sheets
Join Date: Mar 2011
Location: Mpls
Posts: 190
I agree that I don't have to be there to close, but I want to stay there for 4-6 weeks, and get my new town home all set up with necessities. I'm also in no hurry to return to Minnesota early.

I'm also over 59 and a half years old, so I don't have to worry about the extra penalty, just the extra income of the IRA withdrawal.

My backup plan if the loan doesn't get done in 60 days is to pull out $100K on my HELOC, and also move some cash back into the IRA.

I also agree with you, that there are some risks. Thanks for your comments.

JP.mpls is offline   Reply With Quote
Old 02-26-2020, 04:38 PM   #4
Thinks s/he gets paid by the post
Onward's Avatar
Join Date: Jul 2009
Posts: 1,821
It's a legitimate strategy/loophole. You can't have done, or do, another 60-day rollover (in ANY of your IRAs) within 12 months of this one.
And if I claim to be a wise man, it surely means that I don't know.
Onward is offline   Reply With Quote
Old 02-26-2020, 04:58 PM   #5
Thinks s/he gets paid by the post
Join Date: Aug 2004
Location: Laurel, MD
Posts: 4,838
Not sure it it's common knowledge, but it's pretty obvious and has been discussed here on the board for similar situations (RE purchase). I think in one case someone needed to pay cash up front in a seller's market.

The potential downfall is's market timing if you need more than whatever you are holding in a cash allocation. Changes in the equity market could alter what you are actually paying to expedite the purchase. It could cost you more or it could work out in your favor.
...with no reasonable expectation for ER, I'm just here auditing the AP class.Retired 8/1/15.
jazz4cash is offline   Reply With Quote
Old 02-28-2020, 03:52 AM   #6
Full time employment: Posting here.
Join Date: Mar 2005
Location: Punta Gorda, FL
Posts: 727
I plan on doing something similar. I close on my new house a couple of weeks before I close on my current home. When my current home closes I’ll put the money back into the IRA.

Hopefully there won’t be any delays in closing on my current hame. The buyers are paying cash, so hopefully the current downturn in the market won’t change their mind.

dm is offline   Reply With Quote

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
Borrowing against a pension for investing? Fireup2020 FIRE and Money 6 03-03-2007 01:31 PM
borrowing from ira lazygood4nothinbum FIRE and Money 45 02-28-2007 06:33 AM
Borrowing, Spending, Counterfeiting Editorial Mountain_Mike FIRE and Money 5 08-24-2005 12:28 AM
Borrowing money during retirement. proud_texan FIRE and Money 2 09-11-2003 05:05 PM
Borrowing from 401K vjmed1 Other topics 11 09-07-2003 02:49 PM

» Quick Links

All times are GMT -6. The time now is 01:39 AM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2020, vBulletin Solutions, Inc.