Key Takeaways
- You can take money out of an IRA and put it back within 60 days without paying tax, but only once in any 12 months, and all of your IRAs count as one.
- A married 68-year-old with $100,800 of taxable income in 2026 who takes a second $50,000 IRA loan inside those 12 months would owe $11,000 of federal tax on it, at the 22% rate.
- The 12 months start on the day you receive the money, and the money you put back the second time can be taxed every year as an excess contribution.
- Direct trustee-to-trustee transfers between IRAs aren’t limited, so they’re the safer way to move IRA money.
Your IRA can double as a short-term loan to yourself: take the money out, put all of it back within 60 days, and you owe no tax on it. But you only get one of those in any 12 months, and a second one can mean a five-figure tax bill on money that’s already back in the account.
Chris Stein and Jim Saulnier went through the rule on the Nov. 4 episode of The Retirement and IRA Show, which covered IRA mistakes you can’t undo. It’s an easy one to trip over, especially if you have more than one IRA.
The second loan is the one that costs you
Let’s say you’re 68 and married, and you and your spouse have $100,800 of taxable income for 2026. Back in March, you found a condo before your old house had sold, so you took $50,000 out of your IRA to close on it, then put the money back in April when the sale went through. That’s a textbook 60-day rollover, and it costs you nothing in tax.
Now say you need cash again this month. You take $50,000 out of a different IRA at a different firm, and you put it back a few weeks later. It’s the same move you made in the spring, but this time the IRS won’t treat it as a rollover, since you’ve already used your one for the year.
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Every IRA you own counts as one
The IRS allows one rollover from an IRA to another IRA, or back into the same one, in any 12-month period, however many IRAs you have. Traditional, Roth, SEP and SIMPLE IRAs all count together. And the 12 months start on the day you receive the money, so in this example, you can’t make another rollover until March 2027.
Plenty of people miss it because the IRS used to read the rule differently. Stein said people with several IRAs would roll money from one account to the next as a string of short-term loans, until the IRS cracked down. Now, he said, there’s “no more of this gamesmanship where you have multiple IRA accounts at different custodians.”
The crackdown came out of the Tax Court’s 2014 Bobrow decision. The taxpayer in that case pointed to the IRS’s own Publication 590, which at the time said the limit applied to each IRA separately, and he lost on that point anyway. As Saulnier put the court’s answer: “it doesn’t matter what’s in publication 590.”
That second $50,000 comes with an $11,000 bill
Since the second withdrawal doesn’t qualify as a rollover, it’s a taxable distribution, and all $50,000 counts as income for 2026 (say it’s all pre-tax money from a traditional IRA). For married couples filing jointly, 2026’s 22% bracket covers taxable income over $100,800, up to $211,400. You’re already at $100,800, so the extra $50,000 takes you to $150,800, and every dollar of it is taxed at 22%.
That’s $50,000 times 22%, or $11,000 of federal income tax on money that’s back in your IRA. Ouch.
And there’s a second problem with the $50,000 you put back. Since it wasn’t a valid rollover, the IRS counts it as an excess contribution, which it can tax every year the money stays in the account.
Fortunately, there’s an easy way around it
The limit only covers money that comes out to you. The IRS’s Publication 590-A says trustee-to-trustee transfers between IRAs aren’t limited, and neither are conversions from a traditional IRA to a Roth. So if you’re consolidating accounts or switching firms before year-end, have the firms move the money directly, and you can do it as many times as you need to.
Using your IRA as a bridge loan is another story. Before you take a second one, find the date you received the first, and if it’s within the last 12 months, look for the cash somewhere else.
Frankly, I’d never take a second IRA loan inside the 12 months: $11,000 is a steep price for a few weeks of cash. And if your taxable income is above $161,400 before the second loan, you’d owe even more, since part of the $50,000 would land in the 24% bracket.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
