In today’s episode of Adam Talks, Adam Bergman, Esq. discusses the 60-day rollover rule, an underutilized way to gain tax-free, temporary access to your IRA funds.
How to Gain Access to Your IRA Funds Tax Free
In today’s podcast, Adam Bergman explains the 60-day IRA Rollover rule, which allows IRA owners to use their IRA cash or assets once a year for any purpose without being subject to tax or penalty. However, traditional IRA owners will be subject to tax and a 10% penalty if they withdraw funds before age 59 and a half. On the other hand, Roth IRA owners can withdraw Roth contributions anytime tax-free, but they have to wait until age 59 and a half and the Roth IRA must be open for at least five years to withdraw earnings tax free.
Bergman also discusses the 60-day rollover, an underrated option for short-term financial needs, in addition to hardship exceptions for education, medical expenses, and first-time home buyers. IRA owners can take cash or assets out of their IRA and return them within 60 days without being subject to tax or penalty. However, the 60-day rollover can only be done once every 12 months for all IRAs in the aggregate. If the 60-day rollover is missed, an automatic waiver or self-certification can be used to avoid tax and penalty.
Bergman emphasizes that IRA owners must return the same asset that was taken out within 60 days and must talk to their financial advisor before using the 60-day rollover. Furthermore, he highlights the home strategy, where IRA owners can take an in-kind distribution of a vacation property and use it for personal purposes for 60 days, then rent it out for the remaining 10 months, and the rental income will go back to their IRA without tax.
Bergman believes this is a brilliant idea, especially for those who have a beach house or winter home, but it will not work for those who need the vacation home for more than 60 days. The rest of the year, the home can be rented out, and Bergman encourages listeners to take advantage of this opportunity.
Finally, Bergman concludes by thanking listeners for spending time with him and reminds them that his weekly podcast drops every Wednesday. He also mentions that he is a Knicks’ fan and is excited about their recent playoff series win after a ten-year drought. Despite having a divided household of fans, he enjoys watching the games and encourages listeners to have an amazing rest of their day.
In summary, Mr. Bergman suggests the 60-day rollover as an option for short-term financial needs. He explains the rules and emphasizes the importance of talking to a financial advisor. Additionally, he highlights the home strategy for IRA owners with a vacation property in their account. He encourages listeners to take advantage of this opportunity but reminds them that it is not suitable for those who need the vacation home for more than 60 days.
To learn more about the strategy, check out the podcast!