Can I use my IRA rollover as a 60-day loan?


Q. Can a 60-day indirect rollover distribution check be used as a 60-day loan? In other words, can one cash the rollover distribution check and use the money for 60 days before putting it into the rollover account? Or must the rollover check only be sent to the rollover account?
— Investor

A. The simple answer is yes.

Just be sure not to mess this up.

If the rollover check is issued payable to you directly, you may deposit it into your own checking or savings account and use it as an interest-free loan, said Steven Gallo, a certified public accountant and personal financial specialist with U.S. Financial Services in Fairfield.

However, you must be certain to have the identical amount deposited into an IRA account prior to 60 days from the original issue date of the check.

“In this case the amount coming from your old qualified plan is being handled as a distribution, which will not be taxed as long as it is deposited into a qualified account within the 60 days,” he said.

But if the rollover check coming from your old account is made payable to your new account — such as “IRA FBO John Smith” — you would not be able to deposit it into your ordinary account and it would therefore have to go directly to the new qualified account, Gallo said.

“In either case, be sure to get the funds deposited into a qualified account prior to the end of the 60-day period to avoid taxes and potential penalties,” he said.

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This story was originally published on March 31, 2022. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.