Since I won't be able to contribute to the ira with my New Zealand income, it doesn't make sense to me to keep the the ira around. If I did take the money out, I would put it in an investment account. I know there is a fee for early withdrawal, but I figure my account doesn't have that much money to make a huge dent with the fees! Please let me know what you think!
If you don't really need the money, I recommend keeping it in the IRA. You put it there for retirement, keep it that way. There isn't a problem with keeping the IRA and not contributing to it.
You could roll it over to another IRA Traditional account to one with more investment options.
If you take the money out you will lose 40-45% in taxes and penalties. As long as you are with an IRA trustee that has low fees and will not charge you extra for inactivity, I would leave the money alone to grow in value. If your current IRA provider has high fees or charges for inactivity, you can transfer your IRA to a low cost provider.
Make sure you keep the IRA trustee informed of your address, and you may need to send them a letter once in a while or access your account online so they won't think it's abandoned. (When funds are deemed to be "abandoned" they are turned over to the state where the IRA trustee does business, held for a further period of time (3-7 years) then they become state property.) So make sure you know how to let the trustee know the funds are not abandoned.
This may seem like a lot of extra work. But consider the math. If you leave the $7,000 alone for 20 years, it could be worth $27,000, and that money can probably be withdrawn tax-free if you are not a US citizen, you wait until you are older than 59-1/2, and you withdraw less than the personal exemption amount each year (currently $4050 but it gets adjusted for inflation). If you withdraw it now, pay the tax and penalties, and invest the rest, you might have $15,000 in 20 years. You lose almost $12,000 dollars, and the remaining $15,000 will be subject to whatever the NZ tax laws are.