How to Cancel a Roth IRA Account
Putting money into a Roth individual retirement account gives you the opportunity to avoid paying taxes on investment earnings and then allows you to use that money tax-free when you retire. If you open a Roth IRA, contribute money to it and then later decide that you do not want to use the account anymore, you always have the option of closing out the account. The process for closing out your Roth IRA can vary from one broker to the next, but the basic process is usually the same.
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Instructions
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Contact your Roth IRA provider about closing your account. Some Roth IRA providers provide information about this on their websites. Other brokers will require you to contact them over the phone or in person to find out about closing your account.
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Fill out the appropriate forms to close your Roth IRA. In some cases, you will need to fill out a form in person with your broker. In other cases, you may be able to print out forms from the broker's website, fill them out and mail them in. On the form, you will provide personal information such as your Social Security number, your address and your name. You will typically have to check a box on the form to specify that you want to close out the account. After completing the forms, send them in to the broker.
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Determine if any of the money you are receiving is from investment earnings. When you take a distribution from your Roth IRA account that is comprised of money that you contributed, you will not have to pay taxes or penalties on the money. If some of the money is from investment returns, you have to pay taxes on the money as well as a 10 percent early distribution penalty. Once you receive your check, set aside the appropriate amount of money to pay any taxes or penalties.
Rolling Over Roth IRA
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Open a Roth IRA account with a new broker. If you are not happy with the fees or the service from your current off IRA provider, you may consider rolling the funds from your existing account over to another provider. To open your new account, find a broker you want to work with and then fill out the necessary paperwork. Let your new broker know that you will be transferring money from another broker.
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Complete a transfer form with your old broker. When you roll over your account to a new provider, the broker will have a specific form that will ask for account information for your new account. Once you complete the paperwork, your old broker will transfer the money directly to your new broker and you will not have to take possession of the money.
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Begin using the new Roth IRA to save for retirement. You may want to set up an automatic deposit feature, which transfers money from your bank account to the Roth IRA every month.
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Tips & Warnings
If you want to continue saving for retirement, consider using a direct rollover to a new broker after cancelling your account. This option helps you eliminate any early withdrawal fees or taxes as you never take possession of the money.
