[pm97504]

Is there a penalty for closing out an IRA under $5,000

[FrankK]

Yes. 10 percent of the total. The size of the fund makes no difference. In addition, you will have to pay state and federal income tax on the funds you withdraw.

[KISS]

If your withdrawing from your IRA's, then there is no penalty from the IRS or the institution.

[ebaines]

Hopefully this will clarify it for you:

If you are under 59-1/2 years of age you will have to pay a 10% early withdrawal penalty unless the withdrawal qualifies for one of the following exceptions:

•You have unreimbursed medical expenses that are more than 7.5% of your adjusted gross income.
•The distributions are not more than the cost of your medical insurance.
•You are disabled.
•You are the beneficiary of a deceased IRA owner.
•You are receiving distributions in the form of an annuity.
•The distributions are not more than your qualified higher education expenses.
•You use the distributions to buy, build, or rebuild a first home.
•The distribution is due to an IRS levy of the qualified plan.
•The distribution is a qualified reservist distribution.

In addition you have to pay income taxes on the withdrawal unless it's a withdrawal from a Roth IRA and you meet the reqiurement for minimal length of investment. If it's a traditional or rollover IRA account, then you have to include the amount of the withdrawal attributable to your pretax contributions and earnings as income. If you have any post-tax contributions (due to any non-tax deductible contributions you may have made) then a portion of the withdrawal will not be taxed. At the end of the tax year your IRA custodian will send you a 1099-R form that will show how much of the distribution is taxable, and also whether it qualifies for an exemption from the 10% early withdrawal penalty.

[tony1235]

Need to close ira to pay mortgage not working is there tax

[tony1235]

Is there no penalty on I am not working and need to pay mortgage

[DownUnder]

Did you not read what ebaines wrote? Excellent and correct information was given if you would read it. Stop posting the same question over and over again!