What are the consequences of cashing out my IRA?
Cashing out your account can seriously impact your future financial security. By taking your money out of the market, you remove the potential for your savings to generate investment income and benefit from compounding (where the earnings on your savings is reinvested to potentially earn even more). Also, if you cash out your account when the market is down, you may be selling your investments at a loss instead of allowing them to remain invested and potentially ride out the market’s fluctuations. If you cash out your account before age 59½, your account will incur a 10% penalty (on your savings and earnings if you have a Traditional IRA and on the earnings if you have a Roth IRA). See the following example for the high cost of cashing out a Traditional IRA before age 59½.
