Retirement accounts are designed to supplement federal income sources such as Social Security when you reach retirement age. The Internal Revenue Service considers 59 1/2 years old as the retirement age. You can close a retirement account at any time, just be aware of any tax liabilities or account penalties for doing so. While you don't need any specific reason to close a retirement account at any time, there are some reasons that will exempt you from penalties.
Step 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.
Step 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.
Step 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.
Step 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).
Step 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.