The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: neo von retorch 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?
-
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.
-
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.
-
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.
-
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.
-
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.
-
Depends on how long ago the contributions were made. You could just file an amended return (http://www.irs.gov/Help-&-Resources/Tools-&-FAQs/FAQs-for-Individuals/Frequently-Asked-Tax-Questions-&-Answers/IRS-Procedures/Amended-Returns-&-Form-1040X/Amended-Returns-&-Form-1040X) if it was within the time allowed.
-
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.