Found a clever way to dodge that stupid early withdrawal penalty on my IRA

I was sitting in my car outside a Chase branch in Phoenix last August, panicking because I needed $2,400 fast for an emergency roof repair. The teller told me I'd get hit with a 10% penalty if I pulled from my traditional IRA before 59.5. Then I remembered I could take a 60-day rollover loan instead. I withdrew the cash, fixed the roof, and paid it back within the window. Has anyone else done this trick or found another workaround?

3 comments

3 Comments

the_spencer1mo ago

Yeah but @matthewmartin, you're overthinking it a little, the bank doesn't "catch" you because it's not against any rule. The 60 day rollover is literally written into the IRS code, you get one per 12 months, no questions asked. I mean, the real gamble is if something else comes up and you can't replace the money in time, then you're stuck with the penalty plus income tax on the whole thing. That's the part people gloss over, it works great until your car blows up two weeks later and now you're double screwed.

matthewmartin1mo ago

Woah, hold up. You sat in your car panicking about a roof leak, and your first thought was to raid your IRA? That's wild, man. I mean I get it, roofs don't wait, but that's still a gut punch move. I can't believe you actually pulled it off without the bank catching you though. That 60 day rollover trick feels like a loophole the IRS probably hates but can't really fight, right? Guess I'm just shocked you had the guts to try it. Most people would've just put it on a credit card and cried later.

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wendyprice1mo ago

Honestly, "gut punch move" feels a little dramatic, doesn't it? I mean, it's a roof leak, not a medical emergency or losing your job. Ngl, if you're sitting in your car panicking that bad over a roof, maybe you've got bigger financial problems than just the roof. Tbh, raiding your IRA is risky, but it's not like he emptied the whole thing for a vacation. And the 60 day rollover trick is pretty standard if you know what you're doing, not some crazy gamble. I think people just freak out because they don't understand the rules, but it's not that wild if you actually read the fine print.