If I take $10K out of IRA for first time home purchase, use it and then come up with extra $10K within the next 4 months, can I put that $10K back into the IRA within the 120 day period (i.e,. basically get a 120 day interest free loan)?

On one hand, I would think no because the spirit of the law suggests that's not something that you are supposed to be able to do with an IRA.

On the other hand, one does have 120 days to put the $ back into the account should the house purchase fall through, and given that money is generally fungible, one could argue that one is indeed putting the same money back into the IRA.


1 Answer 1


No, the 120 days rule only applies in cases of delay or cancellation. If the purchase went through and you got additional money elsewhere - you cannot re-deposit the distribution back.

See IRC Sec. 72(t)(8)(E):

If any distribution from any individual retirement plan fails to meet the requirements of subparagraph (A) solely by reason of a delay or cancellation of the purchase or construction of the residence, the amount of the distribution may be contributed to an individual retirement plan as provided in section 408 (d)(3)(A)(i) (determined by substituting “120th day” for “60th day” in such section)

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