How Much Can I Borrow from My IRA for 60 Days? Understanding the Rollover Limits

The 60-day rollover rule is one of the most misunderstood provisions in retirement account management. If you're considering using IRA funds for short-term construction financing, you've probably asked: how much can I borrow from my IRA for 60 days? The surprising answer is that there's no dollar limit on 60-day rollovers. You can technically access your entire IRA balance.

However, before you start planning to use your retirement savings as a short-term construction loan, understand this: the IRS doesn't consider this "borrowing" at all. It's a distribution followed by a rollover contribution, and the rules governing this process are strict. Miss the 60-day deadline by even one day, and your entire distribution becomes a taxable event with potential penalties.

This guide explains exactly how much you can access through the 60-day rollover, the critical once-per-year limitation, and why construction financing alternatives often make more sense than risking your retirement security.

60-Day IRA Rollover Key Facts

These numbers reveal both the opportunity and the risk of the 60-day rollover strategy. While there's no ceiling on how much you can access, the annual frequency limit and strict deadline create significant constraints that every investor must understand before proceeding.

The Truth About IRA "Borrowing"

Let's clarify something important: you cannot technically borrow from an IRA. Unlike 401(k) plans, which permit participant loans of up to $50,000 or 50% of the vested balance, the IRS prohibits direct borrowing from Individual Retirement Accounts.

What the 60-day rollover provides is not a loan but rather temporary access to funds during a distribution-and-redeposit window. The IRS permits you to take a distribution from one IRA and roll it over to the same or another IRA within 60 calendar days without triggering taxes or penalties.

How This Creates "Borrowing" Capability

The practical effect resembles a short-term, interest-free loan:

1. You request a distribution from your IRA
2. You receive the funds (minus any withholding)
3. You use the money for up to 60 days
4. You redeposit the full original amount into an IRA
5. The transaction is treated as a non-taxable rollover

For construction purposes, this window can bridge a gap between needing funds and receiving other financing, cover earnest money that will be returned at closing, or provide temporary liquidity while a construction loan processes.

How Much Can You Actually Access?

The 60-day rollover has no dollar limit. Whether your IRA contains $50,000 or $5,000,000, you can take a distribution for the full amount and have 60 days to complete the rollover.

Your Effective Access Amount

While there's no regulatory cap, practical factors limit how much you actually receive:

Federal Tax Withholding: Traditional IRA custodians typically withhold 20% for federal taxes on distributions. If you request $100,000, you'll receive approximately $80,000 in hand.

State Tax Withholding: Many states require additional withholding, reducing your available funds further.

The Replacement Challenge: Here's the critical issue—you must redeposit the full original amount within 60 days, not just what you received. If you took a $100,000 distribution and received $80,000 after withholding, you still owe the IRA $100,000 for a complete rollover.

60-Day Rollover vs. Other IRA Access Methods

The 60-day rollover stands out for offering access to your full IRA balance, but the requirement to repay within 60 days makes it fundamentally different from other withdrawal options. Understanding these differences helps you choose the right strategy for your construction financing situation.

The Critical Once-Per-Year Rule

Perhaps the most important limitation on 60-day rollovers is the once-per-year rule. This regulation, often misunderstood, dramatically impacts how you can use this strategy.

How the Once-Per-Year Rule Works

Effective since 2015, IRS rules permit only one IRA-to-IRA rollover in any 12-month period. This limitation applies across all your IRAs combined, not per account.

Example: If you have three Traditional IRAs and one Roth IRA, completing a 60-day rollover from any one of these accounts starts a 12-month clock. You cannot perform another 60-day rollover from any IRA (including different accounts) until that year passes.

What This Means for Construction Financing

The once-per-year rule has significant implications:

• One Shot Per Year: If your construction project has multiple short-term funding gaps, you can only use the 60-day rollover strategy once annually.

• Planning Required: You need to time your rollover strategically. Using it for a small need early in your project means it's unavailable for larger needs later.

• No Do-Overs: If you complete a rollover and then encounter another funding gap six months later, you cannot use this strategy again.

Exceptions to the Once-Per-Year Rule

The limitation applies specifically to indirect rollovers (where you receive the funds). These transactions do NOT count against your once-per-year limit:

• Trustee-to-Trustee Transfers: Moving funds directly between IRA custodians without taking possession
• 401(k) to IRA Rollovers: Moving employer plan funds to an IRA
• Roth Conversions: Converting Traditional IRA funds to a Roth IRA

These exceptions provide flexibility, but for construction purposes where you need actual cash in hand, the once-per-year rule remains a meaningful constraint.

What You Actually Receive After Withholding

This chart illustrates why the 60-day rollover requires careful planning. The 20% federal withholding means you receive significantly less than your distribution amount. For a $200,000 rollover, you'd only receive $160,000 in hand—yet you must return the full $200,000 within 60 days.

The Withholding Challenge

The withholding creates a mathematical problem for many investors:

Scenario: You need $150,000 for a construction bridge need. You request a $150,000 distribution.

• You receive: $120,000 (after 20% withholding)
• Amount short of your need: $30,000
• Amount you must return within 60 days: $150,000

To actually receive $150,000 in hand, you'd need to request approximately $187,500, and you'd need to return that full amount within 60 days.

Recovering the Withheld Amount

The 20% withheld isn't lost—you'll recover it as a tax refund when you file your return (assuming the rollover was completed). However, this creates a timing mismatch: you won't receive that refund for months or potentially over a year, depending on when you complete the rollover relative to tax filing season.

The 60-Day Timeline: No Extensions, No Exceptions

Understanding the absolute nature of the 60-day deadline is critical before using this strategy for construction financing.

Calendar Days, Not Business Days

The 60-day period counts calendar days, including weekends and holidays. If you receive your distribution on January 15th, day 60 falls on March 16th (or March 15th in a leap year). The deadline does not shift for weekends or holidays.

60-Day Rollover Timeline for Construction Use

This timeline shows how the 60-day window operates in practice. Notice that processing time on both ends—receiving the initial distribution and redepositing the funds—consumes part of your available window. Your actual usable period for the funds is shorter than 60 days.

What Happens If You Miss the Deadline?

Missing the 60-day deadline—even by one day—converts your entire distribution into a taxable event:

Immediate Consequences:

• Full distribution treated as ordinary income
• 10% early withdrawal penalty if under age 59.5
• State income taxes on the full amount
• Potential Medicare surtax for high earners

No Partial Credit: If you return 90% of the funds on day 65, you still face full taxation. The IRS does not recognize partial or late rollovers.

Consequences of Missing the 60-Day Deadline

On a $100,000 distribution where you miss the deadline, you could lose over $40,000 to taxes and penalties. This chart shows why the 60-day rule demands absolute certainty in your ability to complete the rollover on time.

IRS Hardship Waivers

The IRS can waive the 60-day deadline in very limited circumstances:

• Death, disability, or hospitalization
• Postal errors
• Errors by the financial institution
• Natural disasters affecting specific regions

These waivers require formal application and are not guaranteed. "I needed more time" or "my construction loan was delayed" are not qualifying reasons.

Using the 60-Day Rollover for Construction Financing

For those who understand the risks and proceed carefully, the 60-day rollover can serve specific construction financing purposes.

Appropriate Uses

Closing Cost Bridge: You've sold a property and the proceeds will arrive in 45 days, but you need to close on land or begin construction now. A 60-day rollover bridges this defined gap.

Earnest Money Deposit: You need to place $50,000 in earnest money on a land purchase. The earnest money will be returned if the deal falls through or applied to your purchase price at closing within 60 days.

Construction Loan Processing Gap: Your construction loan is approved but won't fund for 30 days. You need to pay the contractor now to maintain the schedule. The rollover covers this brief gap.

Down Payment Timing: You have funds arriving from a known source within 60 days but need to close today. The rollover bridges the timing mismatch.

Inappropriate Uses

Uncertain Timelines: Any situation where you're not confident funds will be available for redeposit within 60 days.

Ongoing Construction Costs: Multi-month draws, contractor payments over time, or extended project financing.

Speculative Funding: Using the funds while hoping an investment or sale will produce replacement capital.

Emergency Reserves: Tapping retirement funds as a general safety net without a specific repayment source.

Why Construction Loans Often Make More Sense

While the 60-day rollover provides access to retirement funds, professional construction financing typically serves builders and investors better. Consider these alternatives before risking your retirement security.

DSCR Construction Loans

Debt Service Coverage Ratio (DSCR) loans qualify borrowers based on property income potential rather than personal income. For investment property construction, DSCR loans offer:

• No tax return requirements
• Qualification based on projected rental income
• Your IRA continues its tax-advantaged growth
• Professional draw schedules and inspections
• Clear payment terms without rollover deadline pressure

Bridge Loans

Bridge loan programs are specifically designed for short-term financing needs—exactly the situations where you might consider a 60-day rollover:

• 12-24 month terms for interim financing
• Fast approval and funding
• Interest-only payments during construction
• Exit via sale or permanent financing
• No risk to retirement savings

The True Cost Comparison

Use our commercial mortgage calculator to compare scenarios:

60-Day Rollover Risk: If you take $200,000 from your IRA and miss the 60-day deadline, you could lose $80,000+ to taxes and penalties. Plus, that $200,000 no longer compounds tax-advantaged for decades.

Bridge Loan Cost: A 12-month bridge loan at 12% interest on $200,000 costs approximately $24,000 in interest—and your retirement savings remain intact and growing.

Protecting Your Retirement While Building

The 60-day rollover exists for legitimate rollover purposes, not as a construction financing mechanism. Before using this strategy, consider these protective measures.

Have Confirmed Replacement Funds

Never initiate a 60-day rollover without knowing exactly where the replacement funds will come from. "The construction loan should fund by then" is not sufficient certainty.

Build in Time Buffers

If you need funds for 30 days, don't plan to cut it close to day 60. Unexpected delays in wire transfers, custodian processing, or other factors can push you past the deadline.

Document Everything

Maintain records of:

• Distribution request dates
• Check or wire receipt dates
• How funds were used
• Redeposit dates and confirmation
• All related correspondence

Consult Tax and Financial Professionals

The consequences of mistakes are severe. Work with a CPA and financial advisor before executing any 60-day rollover strategy, especially for amounts that would create significant tax liability if the rollover fails.

Frequently Asked Questions

Can I do multiple 60-day rollovers from different IRAs in the same year?

No. The once-per-year rule applies across all your IRAs combined. One 60-day rollover from any IRA starts a 12-month waiting period before you can do another from any IRA.

What if I can only replace part of the distribution?

The portion you don't replace becomes a taxable distribution. If you took $100,000 and return $80,000, the remaining $20,000 is taxed as ordinary income plus early withdrawal penalties if applicable.

Does the 60-day rule apply to Roth IRAs?

Yes, Roth IRAs are subject to the same 60-day rollover rule and once-per-year limitation. However, Roth contributions can be withdrawn anytime without the rollover requirement.

Can I request that my IRA custodian not withhold taxes?

You can request reduced or no withholding in some cases, but many custodians apply standard 20% withholding regardless. Check with your specific custodian about their withholding policies and options.

What if my construction loan is delayed past 60 days?

You still must complete the rollover by day 60. Construction delays do not qualify for IRS hardship waivers. This is why the 60-day rollover is inappropriate for situations with uncertain timelines.

Ready to Explore Smarter Construction Financing?

The 60-day rollover offers unlimited access to your IRA balance—but the risks are substantial. The once-per-year rule limits how often you can use this strategy, and the inflexible deadline puts your retirement security at stake.

For most construction financing needs, professional loan products designed for builders and investors offer better solutions. DSCR loans work for investment properties without income documentation. Bridge loans provide the short-term capital you need without touching retirement accounts.

At Clear House Lending, we specialize in construction financing that builds your real estate portfolio while protecting your financial future. Our team can help you evaluate whether retirement account access makes sense for your situation—or whether better alternatives exist.

Contact our construction financing specialists to discuss your project. We'll help you understand all your options and structure financing that achieves your building goals without jeopardizing retirement security.

Ready to get started? Apply online today for pre-qualification, or schedule a consultation to discuss your specific construction financing needs.

Disclaimer: This article provides general information about IRA rollover rules and should not be considered tax, legal, or financial advice. IRA regulations are complex and subject to change. Individual circumstances vary significantly, and mistakes can result in substantial taxes and penalties. Consult with qualified tax advisors, financial planners, and legal professionals before making any decisions about retirement account distributions or construction financing strategies.