When Should You Cash Out an IRA?

Shawn Plummer

CEO, The Annuity Expert

Optimal Age for Withdrawing from an IRA

At Age 59 ½ or Older:

  • Reason: Avoid early withdrawal penalties.
  • Benefit: Full access to funds without the 10% IRS penalty.
  • Example: If you withdraw $10,000 at age 60, you avoid a $1,000 penalty.

Required Minimum Distributions (RMDs) at Age 73

Mandatory Withdrawals: Beginning at age 73, RMDs are required by law.

Tax Implications: Failure to take RMDs can result in hefty penalties.

Calculation: Based on life expectancy and account balance.

Related Reading: Are IRA Distributions Taxed as Regular Income?

IRA Withdrawal Scenarios

AgeWithdrawal TypePenaltyTax ImplicationExample Amount
58Early Withdrawal10%Taxable Income$10,000 – $1,000 Penalty
60Regular WithdrawalNoneTaxable IncomeFull $10,000 Available
73+RMDNoneTaxable IncomeVaries by Account Balance

Conclusion

Choosing the right time to cash out an IRA is crucial. Withdraw at age 59 ½ or older to avoid penalties and access your funds fully. After 73, RMDs become mandatory. Making informed decisions based on age and IRS rules ensures a financially stable retirement. Contact us today for a free quote.

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Shawn Plummer

CEO, The Annuity Expert

Shawn Plummer is a licensed financial professional, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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