What happens when I cash out an IRA?

Question

i just closed and transfered funds from an IRA account (that matured every three months) into my savings at my credit union.. the only reason i did this was because i opened another ROTH through fidelity.. and i wanted that to be my main IRA acct..

my question is what happens after i do this? i was told that the amount gets taxed as income at the end of the year..

WHICH AMOUNT ACTUALLY GETS TAXED? THE WHOLE THING? OR JUST THE DIVIDENDS?

Answer 1

Since a regular IRA has tax-deffered dollars, you are taxed on all of it if you withdraw it and don't roll it over into another IRA of any type. You also are penalized 10% of the value of the account if you are younger than 59 1/2.

Answer 2

depending on what type of IRA it is, you might get taxed on the amount you take out. roth you get taxed as you put in money. when you take it out, no big tax. but traditional, you don't get tax when you put it in, but when you take it out HUGE tax.