You can always roll money from one retirement account into an individual retirement account. Closing one is just a matter of completing some paperwork and possibly paying a fee. You also have to tell the bank how you want the funds paid out. The IRA trustee needs time to sell your investments and convert the assets to cash. This process may take 10 business days or more.
Contact your IRA trustee to let him know you want to close the account. The bank will tell you which forms to complete and whether it charges a closing fee. Let the bank know if you want a check by mail or an electronic deposit to your bank account.
Fill out the closing paperwork, sign it and return it to the bank with any required fee.
Report the distribution in the income section of Form 1040. The bank reports the taxable amount of the distribution to the IRS on Form 1099-R and mails you a copy of that form by January 31 of the following year.
- If you cash out and close the rollover account within five years of the rollover date, and before you reach age 59 1/2, you will have to pay a 10 percent penalty on the rollover principal. You'll also have to fork over income tax and penalty on the earnings.
- Can I Invest My Rollover IRA Assets in Anything I Want?
- How to Report an IRA Rollover on a Tax Return
- IRA Rollover Options
- Pros and Cons of a Roth IRA Rollover
- How to Make Deductible Contributions to a Rollover IRA
- Types of IRA Rollover Distributions
- The Time Limits for IRA or TSA Rollovers
- Is There a Time Limit on a Direct Rollover From 401(k) to IRA?
- Rules & Regulations Regarding IRA Rollovers & Transfers
- Tax Consequences of Ineligible Rollovers to an IRA