Rules for liquidating an ira
It won’t be one of the qualified reasons for a withdrawal, but I figured it doesn’t matter as long as I place the money back into the IRA within 60 days.
You can’t borrow against your IRA account, but you can withdraw funds for 60 days without being subject to the 10 percent penalty tax.
However, liquidating your IRA early sometimes might be in your best interest.
Knowing the rules as to when you can liquidate, and the taxes and penalties that will result, can help you time your liquidation to your advantage and possibly avoid some of the penalties.
The earnings from your principal cannot normally be withdrawn prior to age 59½ without paying the 10% early withdrawal penalty.
Earnings can generally be withdrawn without penalties after age 59½, provided you meet the five-year rule (see below).
Ideally, you’d want to avoid the complication of the withdrawal being subject to withholding taxes.
Roth IRAs have the same requirement, and your Roth must be at least five years old when you liquidate it.
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Otherwise you may be tagged with a 10% early withdrawal penalty.
Several exceptions exist that enable Roth IRA plan participants to withdrawal cash from Roth IRA’s that otherwise would be subjected to ordinary income taxes, and the 10% early withdrawal penalty:(Visit this IRS web page for more information on Publication 590 are other unique “loopholes” that enable you to take money out of a Roth IRA without fear of incurring a tax penalty.
Most people open individual retirement accounts to save for retirement.