How to Cash out a Retirement

There are times in life when you need money, and you need it fast. One source many people turn to when they need cash in a hurry, is their retirement account savings. If you're cashing out your retirement account early (before 59 1/2 years old), there are steps you have to take to minimize any potential tax consequences associated with accessing retirement funds before you reach retirement age. Following these steps ensures you won't miss anything that may incur you additional penalties.

Step 1

Evaluate the type of retirement account. Talk with the investment firm advisor that holds your retirement account or review your account agreement to determine what type of retirement account you have—401k, IRA, ROTH IRA, etc. The type of account determines whether your contributions to the account were pre-tax, which determines the tax and other penalties you could be responsible for when cashing out the account early.

Step 2

Decide how much you want to cash out. Some retirement accounts allow you to access some of the funds, while other accounts might require you to cash out the entire account in order to access the funds. Speak with the investment firm that holds your account to get an idea of what your options are for accessing the money.

Step 3

Talk with your tax advisor. Have them calculate how much you will pay in early withdrawal and tax penalties (if any), to determine what the total amount is that you'll walk away with.

Step 4

Cash out the account. Contact the institution where your account is held and let the advisor know you want to cash it out. They will either send you the forms you need to complete or arrange for you to complete the forms in person in one of their branch locations.

Step 5

Wait to receive the funds. Depending on what the money in your retirement account is invested in, it can take a few days for the investments in the account to be sold and settled. Talk with your account advisor to find out how long it will take, and how you can arrange to receive the check.


Most early withdrawals from retirement accounts pay a 10 percent penalty. This does not include any tax penalties that might be incurred if your retirement contributions were made pre-tax.