At 71 She Took $80,000 Out of Her IRA to Close on the Condo Before Her House Sold. On Day 58 She Put It Back, and the IRS Never Counted a Dollar of It as Income

If you have a traditional IRA, you already have a short-term, interest-free bridge loan that most owners never use. Federal law lets you withdraw money from your IRA and put it back within 60 days without owing income tax. That is the 60-day IRA rollover rule. It lets a 71-year-old withdraw $80,000 to close on a condo, put it back on day 58 once her old house sells, and report none of it as income.

The rule carries extra weight when the housing market is dragging. Existing-home sales came in at an annualized 3.98M in August 2026, the lowest reading since October 2025, and when sales cool like that, anyone who buys before their old homes close may need cash on hand for a few weeks.

How a Withdrawal Becomes a Tax-Free Round Trip

An IRA withdrawal usually counts as ordinary income. If you deposit the full amount into the same IRA or another IRA within 60 days, the tax code treats it as a rollover instead, and it stays out of your income. You can use the money for anything during that window, and you don’t have to explain why. You can also put back only part of it. The part you return stays tax-free, and the rest is taxed.

Where the Rule Lives in the Tax Code

This rule comes from 26 U.S.C. § 408(d)(3)(A)(i). It keeps a withdrawal out of your income if the full amount goes into an IRA “not later than the 60th day after the day on which he receives the payment or distribution.” Section 408(d)(3)(D) allows partial rollovers. IRS Publication 590-A says you can withdraw “tax-free, all or part of the assets from one traditional IRA if you reinvest them within 60 days.”

Who Can Use It and Who Gets Shut Out

Any traditional IRA owner can use the rule, whatever their age or reason. At 71, she is still below the age when required minimum distributions (RMDs) start. Under SECURE 2.0, that age is 73 for anyone who turns 73 before January 1, 2033. This matters because you can never roll an RMD back into an IRA (§ 408(d)(3)(E)). Once you reach RMD age, you can only roll in money above your required amount.

If you inherited an IRA from anyone other than your spouse, you can’t use the rule at all under § 408(d)(3)(C). You’re also locked out if you did another IRA-to-IRA rollover in the past year.

How to Run the 60-Day Bridge

1. Make sure you haven’t done another indirect IRA rollover in the past 12 months, counting every IRA you own.
2. Request the withdrawal and choose your withholding. Unless you opt out, custodians withhold 10% from lump-sum IRA withdrawals (§ 3405(b)). On $80,000, that means $8,000 is withheld, and you receive $72,000.
3. Mark your deadline on a calendar. The 60 days start on the day you get the money.
4. Put back the full amount, using other cash to cover anything that was withheld. If you return only $72,000, the missing $8,000 counts as taxable income. The withheld tax becomes a credit when you file.
5. Keep your records. Your custodian will send a Form 1099-R showing the withdrawal. Report it as a rollover on your return so the taxable amount is zero.

Miss Day 60 and the Full Amount Becomes Taxable

People who try this tend to get caught by one of two traps, and the first is the deadline, which doesn’t budge no matter what else is going on. Publication 590-A says money not returned in time “Don’t qualify for tax-free rollover treatment” and is taxed in the year you took it out.

For a single filer in 2026, the 22% bracket starts at $50,400, and the 24% bracket starts at $105,700. An extra $80,000 of income can push you into those brackets fast. Because you’re over 59½, you won’t owe the 10% early-withdrawal penalty. The IRS can waive the deadline for events beyond your control, such as a casualty or disaster (§ 408(d)(3)(I)), but the IRS decides whether to grant that relief. (This is one of several IRS rules that quietly cost retirees real money, and we mapped the rest in a free guide here.)

The second trap is the once-a-year limit. Under § 408(d)(3)(B), you get one tax-free IRA-to-IRA rollover in any 1-year period, and the IRS counts all your IRAs together. That year begins on the date you receive the IRA distribution. A second indirect rollover inside that window is fully taxable. Direct trustee-to-trustee transfers, where the money moves between custodians without passing through you, don’t count toward the limit.

Opportunity cost also needs a line in the plan. While your money is tied up in the closing, it isn’t invested. For comparison, the national average 12-month CD rate was 1.73% in September 2026. Treasury and the IRS are also working on new SECURE 2.0 rollover procedures, announced in Notice 2026-49 on August 12, 2026. Ask your custodian how its process works before moving the money.

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