When you need money, an IRA loan may come to mind. Technically, it’s not possible to borrow from your IRA. However, you can do a few things that act like an IRA loan for quick cash. Learn what your options are.
If you want to review the rules governing your account, check with the IRS or a tax advisor about taking an IRA loan.
You might also be able to borrow against balances in company retirement plans such as 401(k) plans. Your plan must allow loans, and you’re taking a few risks (including defaulting on the loan resulting in taxes and penalties). Work with your HR department and tax advisor to understand this technique.
Is an IRA Loan Allowed?
No. IRS rules dictate what you can do with IRAs and only allow 'distributions' from an account.If you want to review the rules governing your account, check with the IRS or a tax advisor about taking an IRA loan.
Alternatives to IRA Loans
Since you can’t do an IRA loan, you’ll have to try an alternative. You may be able to tap IRA assets using a 60 day rollover. You have to follow some strict IRS rules, but this technique can act like a short term IRA loan.You might also be able to borrow against balances in company retirement plans such as 401(k) plans. Your plan must allow loans, and you’re taking a few risks (including defaulting on the loan resulting in taxes and penalties). Work with your HR department and tax advisor to understand this technique.
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