IRA withdrawal

[uidteg369]

I am 66 and only receiving SSI, which is minimal, under 10,000.  My IRA is under 5000 and I was wondering if there is a consequence to closing out my IRA this year?

[Bsch4477]

No tax consequence for that withdrawal if what you posted is your only income. 

[DaveF1006]

It depends on how long you have owned your IRA and if it is a Roth IRA or a Traditional IRA. 

If it is a Roth IRA, then  5 years must have passed since the tax year of your first Roth IRA contribution before you can withdraw the earnings in the account tax-free. if you have earnings in addition to your contribution, then those earnings may be taxed if the five year holding period hasn't passed. If it is a Traditional IRA, the five-year holding period does not apply and an early withdrawal penalty will not be assessed since you are over the age of 59 1/2.

The good news is that if your only income for the year is your SSI and IRA, you will not owe regular income tax if you are filing single. If you file jointly with a spouse, you may need to pay taxes on the IRA distribution if combined with other income from that spouse if the income levels exceed the filing threshold for the year. Your SSI is never taxable. 

Please review your IRS filing requirements here for further information.

[jxinleblanc]

In additional to what's mentioned above, I'd like to add:   SSI (Supplemental Security Income) is designed for low-income individuals.  A distribution/withdrawal from your IRA is considered income, and may impact your SSI benefit.  This would not be a tax questions.  You need to find out details from SSA (the Social Security Administration).