Roth IRA Rollover (60 day variety)

[dandarc]

So, the short version is - within 4 to 6 weeks, I'll need $25K in cash to close on a house we just bought.

We run our cash pretty tight, so I don't currently just have $25K lying around anywhere convenient. I'd had thoughts of leaving investments plugged in and pulling this from some 0% direct-deposit cash advance offers I've got available on some CC's, but it occurred to me that doubling my outstanding CC debt might be a problem for closing the new mortgage. Existing balance is normal spend that we pay off every month / some 0% offers I did a while back that are on schedule to be paid-off in August - no interest being paid, but the credit report doesn't really convey that information. Of course, said new mortgage is $90,000 less than it could have been based on the pre-approval.

Option 2: I currently have $44K of Roth basis available ($12K from a Roth 401K trustee-to-trustee transfer to the IRAs in 2021 if that matters). Withdraw some or all of that (staying under the basis amount), then after closing on house, do some of the CC chicanery so I can return most of those funds to the Roth IRA more or less immediately. If this return of the funds gets done within 60 days, I think I can call this a rollover. I'd really prefer to keep investments invested of course, but a 30-60 day pause on 2-3% of our 'stache won't kill us.

And regardless of path taken, we're expecting to receive $50-100K net proceedswhenever our current house sells and that will allow catching up on any 0% CC balances remaining out there relatively easily.

Questions:

Is my understanding of rollover rules correct? Is it OK to take the withdrawal and only return a portion of it?

[terran]

Yes as long as you replace the money within 60 days and haven't done a similar rollover in the last 12 months then this will be an eligible 60-day rollover meaning no tax and no penalty. The fact that it's Roth and basis is irrelevant unless you don't actually manage to return the money within 60 days except that it would mean you also don't owe tax or penalty if you don't manage to return the money to an IRA within 60 days, but then you'll have less in an IRA and less basis.

[dandarc]

Right - so hypothetically, say I pull $40K out, but only put $30K back within the 60 days. Then $30K is a rollover and $10K is a withdrawal which happens to be from basis?

[terran]

Yes, if by basis you mean amounts contributed to a regular Roth IRA. If this was a backdoor Roth then taxable conversions from a particular year come out before non-taxable conversions and are subject to penalty if not at least 5 years old.

[dandarc]

Its all regular contributions - thanks for the info!