How to Close a Retirement Account
- 1). Call the retirement account custodian or plan administrator. The procedures are the same for an IRA, 401k, 403b or any other qualified retirement plan. Request a distribution form.
- 2). Fill out the distribution form completely for a "100 percent" distribution. The plan custodian will have your birth date on record and will automatically withhold 20 percent on distributions prior to age 59 1/2 unless you specify on the form that you qualify for a hardship distribution, are paying college expenses or using up to $10,000 for a home purchase or closing costs.
- 3). Sign the form and submit it to the custodian at the address listed on the form. Wait one to two weeks to receive your check.
- 4). Obtain the 1099-R in January in the year following your distribution. Confirm that the distributed amount is correct and that the distribution is properly coded. Normal distributions taken after age 59 1/2 have code 7 in box 2. Codes 1 and 2 refer to early distributions, the first with no known exception and the second with a known exception (such as the hardship distributions to prevent foreclosure).
- 5). Report the taxable income listed in the 1099-R on Line 15a of the IRS Form 1040 when filing your taxes to properly account for the income.
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