Today when I got to work and opened up my computer I got the reminder that the “August 15th is IRA Day 59.”
And I’m happy that it’s not on my mind.
On June 15th I took out a large chunk of money from my retirement IRA. This was the “bridge loan” for the house down payment. Under the laws governing IRAs and 401(k)s I can take money out of the account — but only if I put that back into another tax-deferred account within 60 days. The intent on this was mainly to be able to move your money between accounts.
But there’s a loophole in the law: I can take the money out, use it for something, and then redeposit the money to the same account. The loophole has it’s own exception that says you can only do this trick once a year for each account.
But regardless… I was buying a house in Seattle that was scheduled to close on June 26th; I was selling a house in Solon that was scheduled to close on July 28th. You can see the dilemma. If I got out bigger loan then I would be out a crapload of extra cash over the course of time so while it was a possibility, it wasn’t an appealing one.
Enter the IRA “loan.”
I needed a window in the front to make sure the cash was safely in my account beforehand and I needed a window on the back to get it back to my IRA. The penalty for not doing that was steep: pay tax on the money (tax deferred, remember), a 10% penalty, and not having that in my retirement account.
The reminder was to make sure that got done.
This all hinged on the closing of the house in Solon and clearing the cash into my account. If the closing slipped, I’m kinda-sorta screwed. It’s a lot of important cash I’m playing with — and I’m not one to gamble for the most part. It led to some sleepless nights back in June.
But that’s not how it played out.
The Solon house sold on June 28th. Cash returned successfully a week after that.
I saw the reminder today and smiled. Sometimes things do work out without seeming like it’s climbing uphill the entire way.