My husband opened an educational IRA for his granddaughter 20 years ago. It has about $4000. She is not going to college and has cut off all contact with him over 5 years ago. He would like to close the account and do something else with the money. If the account is closed, is it subject to ordinary income tax plus 10% penalty? Does he simply need to contact the bank where the account is held, and then receive a tax form at the end of the year?
