How to Close an IRA

Closing an IRA account is different than closing most regular investment accounts. For starters, funds in an IRA account have generally never been taxed, so this alone requires additional planning. Additionally, depending on how you intend to close the account, certain specific procedures may need to be followed.

Instructions

1. Decide what you want to do with the money in your account. You can't close an IRA account that has money in it, so you must determine where you want your money to go. If you are going to close the account, you must either transfer it to another IRA account, or withdraw it, either to a taxable investment account or to your bank account.

2. Consult your tax and financial advisers. If you intend to withdraw your funds, you must first liquidate the assets in your account, something you may want to discuss with your financial adviser regarding the timing. Your withdrawal will most likely incur tax consequences, and possibly penalties, which you should discuss with a tax professional. If you are simply transferring your account, you still must discuss your plan with an adviser so you can set up a new account and complete the account transferring paperwork.

3. Call or write a letter to the firm that holds your account. Instruct that firm to close the account after all of your assets have either transferred out or withdrawn. Ask the firm to send some type of confirmation, such as a final statement or a formal letter, that shows your account as officially closed.

Resources

• The Internal Revenue Service