Repaying early IRA withdrawal (without penalty) | Ed Slott and Company, LLC

Repaying early IRA withdrawal (without penalty)


I am 58 years old and had to take $20000 out of my IRA account in April 2020. Subsequently I was able to find a different source of funds and would like to repay this money to avoid the early withdrawal penalty. The 60 day period for repayment without a penalty is already over. My bank has no clue if or how the CARES Act affects this, hence I came to this forum to seek some guidance. I am unable to decipher the multitude of IRS publications to my satisfaction.

Thank you.

  • Under the federal disaster declaration made by the President as a result of the pandemic, the normal 60-day deadline to roll the distribution over has been extended to July 15, 2020 without any regard for the CARES Act.  However, a rollover based only on this extension would be subject to the one-rollover-per-12-months limitation.
  • Under the CARES Act, if you are an individual qualified to take a Coronavirus-Related Distribution, you have 3 years from the date of the distribution to repay the distribution, without any regard for the one-per-12-months rollover limitation.

  • You can roll this distribution back to your IRA, but no later than 7/15/2020, and in order to be able to do this you cannot have rolled over any other IRA distribution you took after April, 2019. This is the "one rollover per 12 months" limit.
  • Therefore, if you have not already used up your one rollover earlier, you have one week to get this done. This is authorized by IRS Notice 2020-23 (link below). See p 8 of the Notice which states that time limited deadlines after 4/1 are extended to 7/15. Originally, you deadline was 60 days from the distribution you took, so this relief gives you additional time, but only one week is left. Banks are not good at interpreting the rules, so all you can do is show them a copy of this Notice and direct them to p 8. If they still will not accept the rollover, you can roll it to another IRA you have or open one to accept the rollover, so you need to get on this right away.

Thank you. I had no idea there was a 2020-23 notice related to this. I only read the 2020-50.So assuming I meet the 7/15 deadline, I will owe no early withdrawal penalty for this early withdrawal?

Correct, except that you will also not owe any taxes or penalty. Unless you are in the lowest tax bracket, the taxes you would owe would be more than the penalty. Complete this rollover and you will not owe either tax or penalty.

Thank you very much.


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