Withdrawing money from your Stash retirement account, such as a Traditional IRA or Roth IRA, involves several steps and considerations, particularly regarding tax implications and penalties. Here’s a step-by-step guide to help you navigate the process:
1. Understand the Type of Retirement Account
- Traditional IRA: Withdrawals are generally taxed as ordinary income, and if you’re under 59½, there may be a 10% early withdrawal penalty.
- Roth IRA: Contributions can be withdrawn tax- and penalty-free at any time, but earnings withdrawn before age 59½ may be subject to taxes and penalties unless certain conditions are met.
2. Log in to Your Stash Account
- Visit the Stash website or open the Stash app on your mobile device.
- Enter your login credentials to access your account.
3. Navigate to the Retirement Account
- Once logged in, find your retirement account (Traditional IRA or Roth IRA) within the Stash dashboard.
4. Initiate a Withdrawal
- Look for an option to “Withdraw” or “Transfer” funds. This might be found under the account details or settings.
- Select the amount you want to withdraw. Ensure that the amount aligns with your financial needs and consider any penalties or tax implications.
5. Confirm the Withdrawal
- Stash may ask you to confirm the details of your withdrawal, including the amount and the destination (e.g., your linked bank account).
- Follow any prompts to complete the process. You may need to answer security questions or provide additional authentication.
6. Tax Withholding (for Traditional IRA)
- If you’re withdrawing from a Traditional IRA, Stash may withhold a portion of your withdrawal for federal and state taxes. You’ll be given the option to choose the withholding amount or opt out, though you might owe taxes at year-end if you choose not to withhold.
7. Review and Submit
- Double-check the information for accuracy before submitting the withdrawal request.
- Submit the request, and Stash will process your withdrawal. The funds will typically be transferred to your linked bank account within a few business days.
8. Check for Penalties and Taxes
- Early Withdrawal Penalty: If you’re under 59½, you may face a 10% early withdrawal penalty for Traditional IRA withdrawals. Roth IRA withdrawals of earnings may also incur penalties unless specific conditions are met (e.g., first-time home purchase, qualified education expenses).
- Taxes: Traditional IRA withdrawals are subject to income tax. Roth IRA withdrawals of earnings are tax-free if the account has been open for at least five years and you are over 59½.
9. Keep Records
- After the withdrawal, make sure to keep all related documents, as you’ll need them for tax reporting. Stash will provide you with a 1099-R form for tax purposes.
10. Consult a Financial Advisor
- Before making any withdrawals, especially from a retirement account, it’s a good idea to consult with a financial advisor or tax professional. They can help you understand the implications and possibly suggest alternative strategies that might better suit your financial goals.
Final Thoughts
Withdrawing money from a Stash retirement account is straightforward, but the financial implications can be complex. Ensure that you’re aware of any penalties or taxes before you proceed, and always consider consulting with a professional to ensure that the withdrawal aligns with your long-term financial goals.