Any reason not to cash out a small nuisance IRA?

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atikovi
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Any reason not to cash out a small nuisance IRA?

Post by atikovi »

Have $3,500 in an Alliant IRA that I can now take money out of. It's only earning 0.65% when I have some savings accounts over 1%. Annoying to keep track of $3 interest credit every month. Any reason to hold on to it? Taxes wouldn't be an issue.
ivk5
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Re: Any reason not to cash out a small nuisance IRA?

Post by ivk5 »

You could also combine it into another IRA, assuming this isn’t your only one.
ElJefeDelQueso
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Re: Any reason not to cash out a small nuisance IRA?

Post by ElJefeDelQueso »

atikovi wrote: Sun Sep 13, 2020 1:31 pm Have $3,500 in an Alliant IRA that I can now take money out of. It's only earning 0.65% when I have some savings accounts over 1%. Annoying to keep track of $3 interest credit every month. Any reason to hold on to it? Taxes wouldn't be an issue.
You could roll it over into a larger IRA, keep the tax advantaged space, invest in something else.
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atikovi
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Re: Any reason not to cash out a small nuisance IRA?

Post by atikovi »

This is the only IRA I have.
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Watty
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Re: Any reason not to cash out a small nuisance IRA?

Post by Watty »

The big question is if you are under 59.5 years old and would have to pay 10% penalty to withdraw the money.

Either way it makes no sense to cash it out unless you have some need for the money so you could spend it. It would make more sense to Roll the money into a Roth.

atikovi wrote: Sun Sep 13, 2020 1:31 pm Annoying to keep track of $3 interest credit every month.
Why do you have to do anything with that? You can likely set it to just be automatically reinvested.
Dontridetheindexdown
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Re: Any reason not to cash out a small nuisance IRA?

Post by Dontridetheindexdown »

You will pay the same tax if you withdraw it or you convert it to a Roth.

Why not convert to a Roth?
MathIsMyWayr
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Re: Any reason not to cash out a small nuisance IRA?

Post by MathIsMyWayr »

atikovi wrote: Sun Sep 13, 2020 1:31 pm Have $3,500 in an Alliant IRA that I can now take money out of. It's only earning 0.65% when I have some savings accounts over 1%. Annoying to keep track of $3 interest credit every month. Any reason to hold on to it? Taxes wouldn't be an issue.
Why do you have to keep track of interest earned in IRA? Can you roll it over to Vanguard or Fidelity and buy total stock index fund and forget about it?
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cheese_breath
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Re: Any reason not to cash out a small nuisance IRA?

Post by cheese_breath »

MathIsMyWayr wrote: Sun Sep 13, 2020 2:01 pm
atikovi wrote: Sun Sep 13, 2020 1:31 pm Have $3,500 in an Alliant IRA that I can now take money out of. It's only earning 0.65% when I have some savings accounts over 1%. Annoying to keep track of $3 interest credit every month. Any reason to hold on to it? Taxes wouldn't be an issue.
Why do you have to keep track of interest earned in IRA? Can you roll it over to Vanguard or Fidelity and buy total stock index fund and forget about it?
+1
TSM and let it grow until RMD is required.
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retiredjg
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Re: Any reason not to cash out a small nuisance IRA?

Post by retiredjg »

It makes no sense to me to cash it out when you can pay the same taxes (and no penalty) by rolling/converting it to Roth IRA. Invest it according to your tastes and let it sit. When you reach age 59.5, you may be very happy your Roth iRA has already finished its 5 year qualification clock.
MikeG62
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Re: Any reason not to cash out a small nuisance IRA?

Post by MikeG62 »

atikovi wrote: Sun Sep 13, 2020 1:35 pm This is the only IRA I have.
Can you roll it into your current workplace 401k plan?
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Stinky
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Re: Any reason not to cash out a small nuisance IRA?

Post by Stinky »

retiredjg wrote: Sun Sep 13, 2020 3:39 pm It makes no sense to me to cash it out when you can pay the same taxes (and no penalty) by rolling/converting it to Roth IRA. Invest it according to your tastes and let it sit. When you reach age 59.5, you may be very happy your Roth iRA has already finished its 5 year qualification clock.
This.

And don’t invest it in fixed income that is making only 0.65%. Put it in Total Stock Market fund. Forget about it until you’re retired.
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fyre4ce
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Re: Any reason not to cash out a small nuisance IRA?

Post by fyre4ce »

Agreed with others that you should either roll it over into a workplace retirement plan (eg 401k) or convert it to a Roth IRA. Cashing it out makes no sense unless you have some burning need for the money that can’t be satisfied another way.
Xrayman69
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Re: Any reason not to cash out a small nuisance IRA?

Post by Xrayman69 »

Stinky wrote: Sun Sep 13, 2020 3:50 pm
retiredjg wrote: Sun Sep 13, 2020 3:39 pm It makes no sense to me to cash it out when you can pay the same taxes (and no penalty) by rolling/converting it to Roth IRA. Invest it according to your tastes and let it sit. When you reach age 59.5, you may be very happy your Roth iRA has already finished its 5 year qualification clock.
This.

And don’t invest it in fixed income that is making only 0.65%. Put it in Total Stock Market fund. Forget about it until you’re retired.
+1.
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