I am going to need a new car soon and I was curious if I can borrow against my IRA to pay for the majority of the car so I don't have to finance much. Also, can I borrow against my IRA to pay off debt. What are the advantages and disadvantages of doing this?

1 Answer 1


No. Borrowing is not allowed, but if you take a withdrawal, you have 60 days to deposit into another IRA account. This effectively creates a 60 day loan. Not what you're really looking for.

If you take this withdrawal and re-deposit to new account within 60 days, no problem. If not, you owe tax on the untaxed amount as well as a 10% penalty. This comes from IRS' Publication 590, I have the document memorized by substance, not page number.

  • Is there a penalty for taking a withdrawal and what happens if I don't put it back into another account and why can't it be the same account?
    – Xaisoft
    Commented Sep 15, 2011 at 17:58
  • I undated my response with the details. Commented Sep 15, 2011 at 18:12
  • Possibly worth noting that if you have a Roth IRA, you can withdraw your contributions (deposits) without penalty after a period of 5 years (I think?).
    – Jimmy
    Commented Sep 16, 2011 at 6:58
  • @jimmy - deposits from the Roth IRA may be withdrawn at any time. Growth/interest is subject to penalty before 59.5. Commented Jan 27, 2012 at 4:28
  • Note that even if you withdraw and re-deposit it within 60 days, when you withdraw it, they may withhold some taxes (e.g. 20%). When you re-deposit it, you will need to pay out of pocket the same amount you withdrew, which is more than the cash you got (since you never got the withheld tax part). You will only get the withheld part back when you file your taxes, which will be next year.
    – user102008
    Commented Mar 8, 2012 at 9:53

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