Author Topic: How To... Close A Small Traditional IRA?  (Read 2804 times)

neo von retorch

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How To... Close A Small Traditional IRA?
« on: July 11, 2014, 11:40:36 AM »
At my last job, I set up an IRA plan with them. I thought I'd have to create my own IRA so I created a Traditional IRA and put $1000 money in it as a seed... post-tax. As it turns out, when the setup was done, there was a second IRA (Simple IRA) and that's where my contributions and match went. So I have this extra little IRA, and I'd like to close it and put the money somewhere more useful. I suppose I'd be fine with rolling it into the Simple IRA if possible, or another IRA of some sort, but obviously it will be taxed when I withdraw in either of those cases.

Is there a way to close this and get the money out without paying a penalty or taxes?

Catbert

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Re: How To... Close A Small Traditional IRA?
« Reply #1 on: July 11, 2014, 12:32:37 PM »
Select a new brokerage or fund family that you want to transfer the IRA to (Vanguard is popular with many here, I use Fidelity).  Talk to them and most likely they can handle contacting your old/current IRA custodian.

Much better to do custodian-to-custodian transfer rather than have a check cut to you.  Let chance that you will screw it up and owe taxes/penalties.

neo von retorch

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Re: How To... Close A Small Traditional IRA?
« Reply #2 on: July 11, 2014, 12:40:27 PM »
Ha well it's at Vanguard. And I apparently can't just roll it over into the Simple IRA I have there. So I could draw it out and put it in an IRA elsewhere. Mostly I want to consolidate it, particularly if I can't get the money out tax/penalty free and have to leave it in an IRA somewhere.

matchewed

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Re: How To... Close A Small Traditional IRA?
« Reply #3 on: July 11, 2014, 12:41:47 PM »
Why not just keep it in a traditional IRA and then as you have funds which qualify for a traditional IRA (401k roll overs and such) add it to that account. Or you know, you could start contributing to it.

Trudie

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Re: How To... Close A Small Traditional IRA?
« Reply #4 on: July 11, 2014, 12:43:03 PM »
Make sure that when you do the transaction you specify that you want it to be a "qualified rollover" and NOT a withdrawal.  Otherwise you will incur taxes and penalties.  The investment company can help you do it properly.

neo von retorch

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Re: How To... Close A Small Traditional IRA?
« Reply #5 on: July 11, 2014, 12:43:49 PM »
Maybe the better question is: did I screw up since I put that $1000 in an IRA but didn't realize that contribution would've been tax deductible?

I don't care if it remains in "retirement" world but I would like to combine it with other "retirement" funds instead of having an orphan $1k account.

matchewed

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Re: How To... Close A Small Traditional IRA?
« Reply #6 on: July 11, 2014, 01:16:56 PM »
Depends on how long ago the contributions were made. You could just file an amended return if it was within the time allowed.

neo von retorch

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Re: How To... Close A Small Traditional IRA?
« Reply #7 on: July 11, 2014, 01:20:13 PM »
Just looked into it. Between having an employer contribution plan and hitting a certain level of AGI, I don't qualify for deducting those contributions. Would've been best had I never opened it, but it'll do. I'll just roll it into another.