What are the penalties associated with closing an IRA retirement savings account?

Answer by  gleverance (720)

It depends largely on the financial institution. Many will charge their own fees in addition to the IRS imposed 10% early withdrawal penalty. If you still want to keep a retirement account, check to see if you can get the money as a loan instead.

Answer by  JennyBucks (63)

There are no penalties if the entire balance including accrued interest is moved to another IRA account or if you are older than 59 1/2. Penalties otherwise are a 10% penalty plus it is taxable.

Answer by  smf21 (19)

Depending on when close the IRA account you may not recieve a penalty. If you are of age, 59 1/2, you can take funds from the account without a penalty. If you are younger you will have to pay taxes on your distribution, and have a penatly of 10%.

Answer by  mangosteen (272)

There is a 10% early withdrawal fee (ie. you are not of retirement age), but this is waived for things like the purchase of a first home. 10% is significant, and you should try to avoid that at almost any cost - early withdrawal should really be a last resort.

Answer by  jpkbatl (85)

When closing a retirement account aware that laws change. The cost are a 10% tax on total assets and then income tax on the remaining balance.