Your IRA is meant to be used for your retirement. However, you’re not required to leave your IRA money untouched until you stop working.
* You can move money between IRAs as often as you wish as long as you use trustee-to-trustee transfers. That means having one IRA custodian transfer funds directly into another IRA. You might do this if you want to withdraw money from one mutual fund and put it into a fund run by another company, for instance.
* You also can move IRA money with indirect rollovers. That occurs when money flows out of one IRA, into your possession, and back into another IRA or into the same IRA. Such rollovers are allowed as long as the money goes back into a tax-advantaged retirement plan within 60 days. Such indirect rollovers are allowed once every 12 months per IRA.
Suppose that Carol Smith takes $15,000 from her traditional IRA to pay for home repairs. As long as she puts $15,000 back into her IRA within 60 days, no tax will be due. Any shortfall on the re-deposit will be subject to income tax and probably a 10 percent penalty if Carol is younger than 59 1/2. After a successful rollover, Carol must wait at least 12 months from the original withdrawal to start another rollover from that IRA.