How to Request to Close an IRA Account
Individual retirement arrangement (IRA) accounts are designed to help workers save and prepare for their own financial futures. The federal tax code includes a number of tax breaks and other incentives designed to encourage job holders to put money aside in an IRA. The federal government also uses the tax code to discourage workers from taking their money out early, so it pays to research the tax ramifications of closing your IRA account before you make such a move.
Things You’ll Need
- IRA account statement
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Review the tax implications of your plan with a certified public accountant or financial planner. If you are younger than 59 1/2, closing your IRA could trigger a tax penalty in addition to ordinary income taxes on the amount you withdraw. You may be able to avoid that tax penalty under certain circumstances, and a tax expert can give you the guidance you need.
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Check the current balance of your IRA account online or over the telephone. Determine whether you need to liquidate the entire IRA or just part of it. If you want to maintain the IRA but are unhappy with the current administrator, you can roll the funds over to another IRA custodian.
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Contact the administrator of your IRA and let him know you wish to close your account. Give the representative instructions detailing whether you want to cash the account in and take the money or roll the funds over to another IRA.
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Complete any necessary paperwork to close your account. Keep copies of all paperwork related to closing your IRA. You will need this documentation when you file your taxes the following year.
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