How to Close a Rollover IRA Account
- 1). Decide on a transfer or a withdrawal. Rolling over your IRA to another tax-qualified account allows you to avoid paying tax on your IRA balance, but doesn't provide you immediate access to your money. Either way is a viable method for closing out your rollover IRA.
- 2). Submit the appropriate paperwork to your financial services firm. Most firms have an IRA distribution form that you must complete if you want to transfer or withdraw the funds in your IRA. If you are going to close your rollover IRA, you must empty the account of any assets, so you must choose one of these options. Some may also request a letter authorizing the closing of your account.
- 3). Get confirmation. Having an open IRA account may require you to pay fees, so verify in writing with the financial services firm holding your account that they did indeed close your account. Usually, firms will automatically send out a closing account statement showing a zero balance and the closure of the account.
- 4). Pay your taxes. If you rolled your money to another account, you may not have any tax consequences from your account closure. If you instead took any type of distribution, such as a check or an electronic transfer to your bank account, you must pay taxes on the value of your withdrawal. Don't forget the additional 10 percent penalty if you closed your account and took a distribution before age 59 1/2.