- 1). Contact your IRA's custodian. This is the firm, usually a bank, brokerage or mutual fund company, that holds your IRA account. Tell them you would like to take money out of your IRA. You can withdraw money once or over the course of several distributions.
- 2). Prepare to pay applicable taxes. If you are age 59 and 1/2 or older and have held a Roth IRA account for at least five years, you receive all withdrawals tax-free. The IRS taxes the entire amount of traditional IRA distributions at your regular income tax rate, regardless of your age. If you are less than 59 and 1/2, and you are not taking a qualified distribution (see Tips section), the IRS levies an additional 10-percent tax penalty on early withdrawals. If you withdraw Roth IRA money before you have held the account for five years, the IRS taxes accumulated earnings, but not your original contributions.
- 3). Ask your custodian to withhold a certain percentage for taxes. If you are taking an early withdrawal that is subject to the 10-percent tax penalty, your custodian will automatically hold back 10 percent for the IRS. Otherwise, you can have the custodian withhold taxes before they send you your distribution, or even up with the IRS at tax time.
- 4). Direct your custodian as to how send you the money. Common options offered by most IRA custodians include a paper check or automatic bank transfer.
previous post
next post