I'm trying to repay $8000 I borrowed from my IRA. It's telling me my contribution isn't permitted.

Forum|Forum|1 year ago
April 7, 2025
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I'm trying to repay $8000 I borrowed from my IRA. It's telling me my contribution isn't permitted because it's more than my earned income. My earned income is 0 because I'm living off of investment income. How can I correct this?

DaveF1006

IRA loans aren't permitted—so if you withdrew money from your IRA, it was likely a distribution, not a loan. Repaying that amount would be considered a contribution, subject to the usual IRS rules, including the requirement that you have earned income to contribute.

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sallyboscoAuthor

Thank you, but I don't understand that because, according to the IRS you are allowed to pay back an IRA distribution if it's done within 60 days.

MinhT1

If you did repay the distribution within 60 days then it is considered a rollover which is permitted. You have to indicate that this is a rollover in TurboTax and to your IRA administrator.

You do this in TurboTax Online when entering your form 1099-R.

Open your tax return
Click on Federal in the left-hand column, then on Wages & Income
Navigate to the list of income categories
Locate the section Retirement Plans and Social Security and click on the arrow on the right
Click Start next to IRAs, 401(k), Pension Plan Withdrawals (1099-R).
Enter your form 1099-R and follow the interview
When you arrive to the page Tell us if you moved the money through a rollover or conversion, click on the radio button I rolled over some or all of it to an IRA or other retirement account within the time limits (normally 60 days)