How to Close a Traditional IRA
Once you retire, you might want to access the funds in your traditional IRA and eventually close the account. All the money you have contributed over the years might have grown to a nice nest egg. The biggest thing to remember is that when you begin withdrawing the money, it will be taxed.
Other People Are Reading
Instructions
-
-
1
Wait until you're 59 1/2 to begin withdrawing your money. This is the minimum age that you can begin withdrawing funds without paying an early-withdrawal penalty of 10 percent. You are already going to be paying taxes on the withdrawals so don't pay more than you have to pay in taxes.
-
2
Take "substantially equal periodic payments." This is an IRS terms to describe making annual withdrawals for at least five years until you reach age 59.5, whichever is longer. This a long way to take to close your account, but it would allow you to begin the process of closing your account well before your 60th birthday. The amount of the annual withdrawal is based on how much is in your account and how long you will need to make annual withdrawals from it.
-
-
3
Begin taking withdrawals before age 70 1/2. With a traditional IRA, you have to begin taking a required minimum distribution once you turn that age. The required minimum distribution will continue until the account balance is zero.
-
4
Make sure you won't be charged any extra fees for closing the account or rolling it over to another account. Follow the guidelines your account administrator has to avoid these fees.
-
5
Contact the account administrator to close the account. You will be sent any forms to close the account. When the paperwork is completed, the administrator will send you any remaining balance in the account.
-
1
