You can move money from an IRA to a bank account, but the method matters—and so do the tax consequences
Yes, you can transfer money from an IRA to a bank account. The mechanics are straightforward: your IRA custodian (the bank, brokerage, or investment firm holding the account) moves the funds to your checking or savings account. What changes the outcome is why you're moving the money and how old you are. A withdrawal before age 59½ typically triggers a 10% early withdrawal penalty plus income tax on the amount you take out. A withdrawal at 59½ or later is taxed as income but avoids the penalty. A direct transfer between IRAs (called a rollover) moves money tax-free and penalty-free, but it doesn't land in a bank account—it goes to another retirement account.
The IRS treats an IRA withdrawal as a permanent removal of money from the retirement account. Once it hits your bank account, it's no longer sheltered from taxes. If you need the money temporarily or want to move it to another IRA, a rollover or transfer is usually the better path. If you need it permanently and you're under 59½, you'll pay the cost unless an exception applies.
Key Takeaways
- Withdrawals from a traditional IRA are taxed as ordinary income; withdrawals from a Roth IRA are tax-free if you're 59½ or older and the account has been open for at least five years.
- A 10% early withdrawal penalty applies to money taken out before age 59½, unless you meet a specific exception like disability, medical expenses, or a first-time home purchase (up to $10,000 lifetime).
- A direct transfer or rollover between IRAs avoids taxes and penalties but requires the money to stay in a retirement account, not land in a bank account.
- Your IRA custodian can process a withdrawal to your bank account in one to three business days; the IRS withholds 10% of the amount for federal income tax on traditional IRA withdrawals unless you opt out.
- If you withdraw money and change your mind within 60 days, you can roll it back into an IRA to avoid the tax hit, but you can only do this once per year per account.
How a withdrawal to your bank account works
When you request a withdrawal, your IRA custodian processes the request and sends the money to the bank account you specify. You provide your bank's routing number and your account number, and the transfer typically clears in one to three business days. The custodian will ask you to confirm the amount and may require a signature or electronic authorization.
For a traditional IRA, the custodian is required by law to withhold 10% of the withdrawal for federal income tax. If you withdraw $10,000, you receive $9,000 and the IRS gets $1,000. That withheld amount is credited toward your tax bill for the year, but it's not the full tax you'll owe—you'll owe ordinary income tax on the entire $10,000 when you file. If you're in the 22% tax bracket, you'll owe $2,200 total; the $1,000 withheld leaves you short $1,200 at tax time.
Roth IRA withdrawals work differently. If you're 59½ or older and your account has been open for at least five years, you can withdraw money tax-free and penalty-free. The custodian doesn't withhold anything. If you're younger or the account is newer, withdrawals of earnings (the investment gains) are taxed and penalized; withdrawals of contributions (the money you put in) are not.
Tax and penalty consequences by age and account type
| Scenario | Tax on Withdrawal | 10% Early Penalty | Notes |
|---|---|---|---|
| Traditional IRA, age under 59½ | Yes, ordinary income tax | Yes, unless exception applies | Exceptions: disability, medical expenses, first-time home (up to $10,000), substantially equal periodic payments (SEPP) |
| Traditional IRA, age 59½ or older | Yes, ordinary income tax | No | No penalty, but income tax still applies |
| Roth IRA, age under 59½, account less than 5 years old | Yes, on earnings only | Yes, on earnings only | Contributions can be withdrawn tax-free and penalty-free |
| Roth IRA, age 59½ or older, account 5+ years old | No | No | may have access to distribution; completely tax-free |
| Roth IRA, age under 59½, account 5+ years old | No on contributions; yes on earnings | No on contributions; yes on earnings | Contributions always tax-free; earnings taxed and penalized |
Exceptions to the early withdrawal penalty
The IRS allows you to withdraw from a traditional or Roth IRA before 59½ without the 10% penalty in specific situations. You still owe income tax on the withdrawal, but the penalty is waived.
Disability or death: If you become disabled (as defined by the IRS) or your beneficiary withdraws after your death, no penalty applies. You'll still owe income tax on a traditional IRA withdrawal.
Medical expenses: You can withdraw penalty-free to pay unreimbursed medical expenses that exceed 7.5% of your adjusted gross income. The amount must be withdrawn in the same year you pay the expenses.
First-time home purchase: You can withdraw up to $10,000 lifetime from a traditional or Roth IRA to buy, build, or rebuild a primary residence. This is a one-time limit across all your IRAs combined.
Substantially equal periodic payments (SEPP): If you set up a schedule of equal withdrawals based on your life expectancy (calculated using IRS tables), you can withdraw penalty-free at any age. Once you start, you must continue for at least five years or until age 59½, whichever is longer. Breaking the schedule triggers penalties on all prior withdrawals.
Roth IRA contributions: You can always withdraw the money you contributed to a Roth IRA, at any age, penalty-free and tax-free. Only earnings are subject to the penalty and tax.
Rollovers and transfers: keeping money in a retirement account
If you want to move money between IRAs without triggering taxes or penalties, a rollover or direct transfer keeps the funds in a retirement account. The money never touches your bank account.
A direct transfer (also called a trustee-to-trustee transfer) moves money from one IRA custodian to another. You contact your new custodian, they request the funds from your old custodian, and the money moves directly. No tax withholding, no penalties, no 60-day deadline. This is the cleanest method.
A rollover means you withdraw the money yourself and deposit it into another IRA within 60 days. The IRS withholds 10% of a traditional IRA rollover, so if you withdraw $10,000, you receive $9,000. You have 60 days to deposit the full $10,000 into the new IRA; if you only deposit the $9,000 you received, the missing $1,000 is treated as a withdrawal and taxed. You can only do one rollover per IRA per 12-month period. If you violate this rule, the IRS treats the second rollover as a taxable withdrawal.
If you withdraw money and realize you made a mistake, you can roll it back into an IRA within 60 days. This undoes the withdrawal and avoids the tax and penalty, but only if you haven't already used your one rollover for that 12-month period.
What happens to required minimum distributions
If you're 73 or older (as of 2023; this age increases over time), you must withdraw a minimum amount from your traditional IRA each year. This is called a required minimum distribution (RMD). The IRS calculates the amount based on your age and account balance. You can withdraw the RMD to your bank account, and it counts as a taxable withdrawal, but you don't owe the 10% early penalty because you're over 59½.
Roth IRAs don't require distributions during your lifetime, so you can leave the money untouched as long as you want. Your beneficiaries will face different rules after you die.
Timing and what to expect from your custodian
Once you request a withdrawal, your custodian typically processes it within one to three business days. Some custodians offer same-day processing for online requests. The money lands in your bank account within one to two additional business days, depending on your bank.
Your custodian will send you a Form 1099-R in January of the following year, reporting the withdrawal amount and any taxes withheld. You'll use this form when you file your tax return. If you withdrew from a traditional IRA, the full amount is reported as taxable income. If you withdrew from a Roth IRA, the form shows which portion is taxable (earnings) and which is not (contributions).
Keep records of the withdrawal request, the date the money left your IRA, and the date it arrived in your bank account. If you plan to roll the money back into an IRA, document the 60-day window carefully—the IRS counts calendar days, not business days.
Frequently Asked Questions
Can I withdraw from my IRA without paying taxes if I'm over 59½?
You won't owe the 10% early withdrawal penalty, but you will owe ordinary income tax on the withdrawal. For a traditional IRA, the entire amount is taxable. For a Roth IRA, withdrawals are tax-free if the account has been open for at least five years.
What if I withdraw money and want to put it back?
You have 60 days to roll the money back into an IRA. You can only do this once per IRA per 12-month period. If you miss the deadline or exceed the one-rollover limit, the withdrawal is treated as taxable income and subject to the 10% penalty if you're under 59½.
Does my bank charge a fee to receive an IRA withdrawal?
Most banks don't charge a fee to receive a wire transfer or ACH deposit. Your IRA custodian may charge a fee to process the withdrawal—typically $0 to $50, depending on the custodian. Check your custodian's fee schedule before requesting the withdrawal.
Can I withdraw from my IRA to pay off credit card debt?
Yes, you can withdraw for any reason, but you'll owe income tax and the 10% early penalty if you're under 59½ (unless an exception applies). Credit card debt doesn't may have access to as an exception. The tax and penalty often make this an expensive way to pay off debt.
What's the difference between a withdrawal and a transfer?
A withdrawal removes money from your IRA and sends it to your bank account; you owe taxes and possibly penalties. A transfer (direct transfer or rollover) moves money between retirement accounts without triggering taxes or penalties, as long as you follow the rules. Transfers keep the money sheltered from taxes.