How to Replace IRA Withdrawals

by Emily Weller, studioD

If you make a withdrawal from your IRA before you are 59 1/2, you can avoid the 10 percent early withdrawal penalty by replacing the exact amount of money in your account or by starting a new IRA within 60 days of the date of the withdrawal. Even if you replace the money into the same account, the Internal Revenue Service considers the withdrawal and return of the money to be a rollover.

Deposit the exact amount you withdrew into your current IRA following the procedures of your bank or broker. Another option is to open a new IRA at the same institution or a new one. Fill out the form required by the institution and fund the new IRA with the exact amount you withdrew from your other IRA. Open the new IRA or deposit into your old account within 60 days.

Contact your financial institution and inform them that your contribution was to replace a distribution you took no more than 60 days prior. You may need to complete additional paperwork, depending on your financial institution.

Record the amount of the withdrawal that you replaced, as well as any other distributions on Internal Revenue Service Form 1040, line 15a when you file your taxes for the year. Write the word "Rollover" on line 15b if you returned all the money to an IRA within the time limit. You will not owe taxes on the replaced funds.


  • When you withdraw the money, ask your bank or financial institution not to withhold taxes from the distribution. If taxes are withheld, you still must replace the entire amount. For example, if you withdraw $5,000 and $1,000 is withheld for tax, you must replace the full $5,000. Report the $1,000 withheld on your 1040.
  • You can only withdraw and replace money from an IRA within 60 days once a year.

Items you will need

  • Form 1040

About the Author

Based in Pennsylvania, Emily Weller has been writing professionally since 2007, when she began writing theater reviews Off-Off Broadway productions. Since then, she has written for TheNest, ModernMom and Rhode Island Home and Design magazine, among others. Weller attended CUNY/Brooklyn college and Temple University.

Photo Credits

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