How to Close an IRA Account and Receive the Cash

An IRA is a type of retirement account where the money you deposit is not taxable until you take it out of the account. If you take money out of an IRA before a minimum age, which is currently 59 1/2, you will usually owe tax plus an added penalty. You can roll an IRA into another IRA without paying the tax penalty.

Early Withdrawal Penalty

An Individual Retirement Arrangement is a type of retirement account defined by U.S. tax law. You can put a certain amount of money into it each year and withdraw the funds when it's time to retire, paying tax only as you withdraw funds.

If you withdraw money before retirement age, you'll generally have to pay that tax, plus a 10 percent penalty tax. There are certain exceptions to the penalty, like if you're disabled, buying your first home or paying for certain medical expenses or health insurance while you're unemployed. Since those penalties add up, it's usually best to check with the IRS or a tax advisor before taking money out of an IRA early.

If you do want to withdraw money from your IRA, you can generally simply ask the institution that holds the account to send you a check or transfer the funds to another account, though it may be required to withhold taxes if you're below retirement age.

Roll It On Over

One circumstance in which you can withdraw money from an IRA without paying a penalty is rolling it over into another IRA, usually at another financial institution.

The easiest way to do this is usually having one institution send the money directly to another. Alternatively, the institution with the original account can send you a check, but it will be required to withhold tax from what it pays you. You'll have to deposit the money into the new IRA within 60 days or face a tax penalty and you will also have to make up the difference yourself, only getting the withheld tax back the next year when you file your return with the IRS.

There are also limits on how many rollovers you can do per year. Generally you can only do one rollover from a particular IRA account per tax year and you can't roll money into and out of the same IRA.

Many institutions will help you fill out the necessary forms and take other steps needed to roll over an IRA into their institutions.

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