Liquidating a roth ira

15-Jul-2016 03:02

However, the IRS rules permit you to close out your Roth IRA any time, but discourage early withdrawals with additional taxes and penalties.

If you can take a qualified withdrawal, closing your Roth IRA won't cost you anything on your taxes other than the ink used to report the amount of the withdrawal because it all comes out tax-free.

Roth individual retirement accounts let you make after-tax contributions with the promise of tax-free distributions in retirement.

Roths make the most sense for people who anticipate paying a higher tax rate in their later years.

To take a qualified distribution, you must be 59 1/2 or older, permanently disabled or taking out up to ,000 to spend on a first home.

In addition, at least 5 years must have passed between the start of the tax year you made your first contribution and the withdrawal.

For example, say you've put ,000 in your Roth IRA and it's worth ,000 when you close it.If you have a change of heart, you better act fast.