- The rules regarding withdrawing funds from your IRA apply whether you request a full withdrawal or only take a portion of the money. However, many investment firms will charge a fee to withdraw the full balance of your IRA. This fee can range from $50 to $100. Information regarding this fee is generally disclosed in the paperwork that comes with the IRA application form.
- The IRS considers 59 1/2 to be retirement age for the purposes of IRA withdrawals. If you take money from your IRA prior to this, you will be required to pay a 10 percent early withdrawal penalty, as well as ordinary income tax. If you hold a Roth IRA, you will pay these taxes and penalties on any earnings that are withdrawn. This does not apply to your contributions with a Roth, because the contributions are not tax-deductible.
- The IRS provides several options to have the early withdrawal penalty waived. These include the payment of any unreimbursed medical expenses that are more than 7.5 percent of your adjusted gross income for the year, as well as to pay insurance premiums if you are not covered by your employer. You may also waive the penalty if your are considered medically disabled, or need the money to pay for college expenses. The penalty may also be waived if you are purchasing your first home. In the event that penalties are waived, you would still be responsible for paying the taxes on the withdrawn funds.
- The IRS requires that you begin taking withdrawals from your IRA by the age of 70 1/2. This is referred to as the minimum required distribution (MRD). The specific amount of the MRD is determined by your life expectancy and the balance of the account as of December 31. If the full amount of the MRD is not withdrawn, then you are subject to a 50 percent penalty on the amount that should have been withdrawn.
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