The wait for a check can seem like an eternity. Receiving cash from an IRA withdrawal can take a few days to several weeks, depending on the account custodian. You can do a few things to speed up the process if you need to cash out your individual retirement account.
Requesting a Withdrawal
When you tell your custodian the amount of money you want, be prepared for some paperwork. Many custodians have online account services in which you can make a few entries on a computer screen. Others may handle things with paper that must be faxed, emailed or snail-mailed back and forth. Check your custodian's requirements to see if you must provide proof of your identity.
Your custodian will also want to know how much, if any, withholding you'd like. Some automatically withhold 10 percent if you're younger than 59 1/2 because of Internal Revenue Service rules. You can normally request a waiver. But if your IRA balance is large, you may need to pay estimated taxes during the year to avoid a penalty for underpayment of income taxes when you file your return.
Scraping Up the Dough
Selling assets in your IRA can also slow down the process. It’s no problem if your account has a large cash balance, but otherwise it may take from one to three business days to settle a security sale. If you make the request after trading hours, you will have to wait until the next business day before your custodian can arrange the sale. You can normally cash out a mutual fund on a day's notice, but stocks and bonds have a settlement period of three business days. Precious metals may take longer to convert to cash, and selling real estate can drag on for months.
Getting the Money
Online IRA accounts normally offer electronic money transfers to and from your bank account. You can use this for withdrawals without waiting on the Postal Service, cutting several days out of the process. Your custodian may also offer check-writing and debit-card features in a money management account linked to your IRA. Withdrawals from a traditional IRA that you don't roll into a qualified account are taxable as regular income. If you're younger than age 59 1/2, you might also have to pay a 10 percent early withdrawal penalty on the amount you take out.
Rollovers and Transfers
If you want to move your withdrawal into another IRA or qualified plan, you can save time and taxes by requesting a trustee-to-trustee transfer. You'll need to tell both custodians of the assets you want to move and the account numbers. If you want to roll over an IRA through a withdrawal, you'll have 60 days to contribute the proceeds to the new account or face a tax bill and possibly an early withdrawal penalty. The IRS allows one rollover a year per IRA. If you want to close yours, you might get your money faster by withdrawing the cash and then asking the custodian to shut down the account.
- IRS: Publication 590, Individual Retirement Arrangements
- Securities and Exchange Commission: Settling Securities Transactions, T+3
- U.S. Securities and Exchange Commission. "Investor Bulletin: Custody of Your Investment Assets." Accessed July 28, 2020.
- The Clearing House. "The Custody Services of Banks," Page 16. Accessed July 28, 2020.
Eric Bank is a senior business, finance and real estate writer, freelancing since 2002. He has written thousands of articles about business, finance, insurance, real estate, investing, annuities, taxes, credit repair, accounting and student loans. Eric writes articles, blogs and SEO-friendly website content for dozens of clients worldwide, including get.com, badcredit.org and valuepenguin.com. Eric holds two Master's Degrees -- in Business Administration and in Finance. His website is ericbank.com.