Withdrawal

The IRS does not care what you are using the money for, whether a short term investment or funds to tide you over until you receive money from another source. The IRS is only concerned that the same amount of money be returned to an IRA account within 60 days. When making a withdrawal from your retirement account, make a note of the exact day of the transaction and the exact amount. The IRS allows you 60 days to return the money to the account. The money may be used for anything, as long as you have the ability to return the funds within the allotted time.

Deposit

When returning the money to the account, the funds may be deposited into the same IRA account or a new account. This allows you to modify your IRA accounts to a fund that is more profitable or has better benefits. Work closely with your financial advisor to understand the risks and benefits of all your investment choices.

When arranging the deposit, consult the bank's calendar for holidays and weekends. A bank holiday counts toward your 60-day grace period and may mean that you need to deposit the funds on the 59th day or sooner.

Tax Implications

The withdrawal and deposit can be recorded on your federal income taxes using Form 1040. The withdrawal is reported on line 15a of the 1040 tax form. Record the deposit on the following line. Write the word "rollover" in the margins of the tax form. This will fully disclose to the IRS that your have made both a withdrawal and a deposit from your IRA. If you fail to return the money within the time allowed by the IRS, you will be subject to a 10% penalty and the money you withdrew will be taxed as normal income.

Other Considerations

Do not take a loan from the same account for one full year. Two deductions from one account will require you to pay the applicable federal taxes.

There may be other loans available from your IRA depending on the type of IRA. Check with the IRA administrator to find out if your IRA account allows loans for emergencies or hardship. Some retirement accounts may even allow loans for up to a five-year period. Ask the administrator plenty of questions until you fully understand all of the rules for these transactions. Restrictions on new deposits or regularly scheduled contributions may be required.