If you owe a debt and are short of funds, the IRS will allow IRA holders to take out an interest-free short-term loan from their IRA, called a “rollover.”
In order to avoid taxes and penalties, however, the loan must be repaid in full within 60 days – if not, the loan will be considered a distribution and will be fully taxed, and further, if you are not yet 59 ½ there will be an additional 10% early withdrawal penalty. IRA holders are only allowed one “rollover” loan per year.
There is an exception to this rule to help finance the purchase of a home. The IRS will allow a penalty-free withdrawal of up to $10,000 to be used toward a first-time home purchase.
If you have questions or need further information, consult your Financial Advisor or Tax Professional.
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