Tax consequences of liquidating ira

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Roth IRAs do not receive the upfront tax break that other retirement accounts, such as Traditional IRAs and 401(k) plans, receive.

If you take money out after age 59 1/2 you won’t have to worry about any penalties, just the taxes.Despite the lack of a tax break today, a Roth IRA may end up being a great investment vehicle to minimize your taxes over a long period of time.The further out your retirement date, the greater the chance that personal income tax rates will increase (either because your income will have increased, or the federal government will have imposed higher rates, or both).Typically, once your employment ends, you have four options for your company-sponsored retirement assets: 1) Leave the money in your former employer's plan; 2) Roll the funds into a new employer's plan (assuming you continue to work); 3) Transfer the assets into an IRA account; or 4) Cash out the balance, paying the applicable taxes and penalties (which depend on your age and circumstances).Whether you are transitioning to a new employer or retiring from the workforce, you'll want to avoid some very common — — mistakes. ’ Upon leaving a company at age 55 or older, a former employee can take penalty-free withdrawals from their company-sponsored 401(k) account.

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