So, you've decided it's time to part ways with your Merrill Edge IRA. Whether you're consolidating accounts, seeking new investment opportunities, or simply simplifying your financial life, closing an IRA requires careful attention to detail to avoid unnecessary taxes or penalties. Don't worry, we're going to walk through this step-by-step, making sure you understand each stage of the process.
Closing an IRA isn't as simple as clicking a button (though some steps can be done online!). It involves understanding tax implications, potential fees, and the proper way to move or liquidate your assets. Let's get started on this journey together!
Step 1: Understand Why You're Closing Your IRA and What That Means
Before you do anything, take a moment to solidify your reason for closing the Merrill Edge IRA. This will directly influence the path you take and the potential consequences. Are you:
Transferring to another IRA at a different institution? This is often the most straightforward and tax-efficient method.
Rolling over funds into a 401(k) or other employer-sponsored plan? Similar to a transfer, but with specific rules for eligible plans.
Taking a direct distribution (cashing out)? Be very cautious here! This often leads to immediate tax liabilities and potential early withdrawal penalties if you're under 59 ½.
Liquidating assets for immediate use in retirement (age 59 ½ or older)? This is a qualified distribution, but still taxable as ordinary income for traditional IRAs.
Sub-heading: Key Considerations Before You Act
Tax Implications: For traditional IRAs, all distributions are taxed as ordinary income in the year they are withdrawn. If you're under 59 ½, you may also face a 10% early withdrawal penalty unless an exception applies (e.g., qualified first-time home purchase, higher education expenses, disability, birth/adoption of a child, medical expenses exceeding 7.5% of AGI, substantially equal periodic payments, or an IRS levy). Roth IRA distributions are tax-free and penalty-free if they are "qualified" (account open for 5 years AND you are 59 ½, disabled, or using for a first-time home purchase). Even non-qualified Roth distributions allow tax-free withdrawal of contributions.
Merrill Edge Fees: Merrill Edge generally charges a fee for a full account transfer out (often around $49.95 for retirement accounts). There might also be short-term trading fees if you sell mutual funds held for less than a certain period (e.g., 90 days).
Investment Liquidation: If you're not transferring "in kind" (meaning your actual investments like stocks, ETFs, and mutual funds are moved to the new institution), you will need to liquidate your holdings into cash within the Merrill Edge IRA before the closure or transfer can be completed.
Required Minimum Distributions (RMDs): If you've reached the age for RMDs (currently 73 for traditional IRAs), ensure you've taken your RMD for the current year before closing the account, especially if you're taking a full distribution or transferring to another IRA. Failure to do so can result in a hefty 50% penalty on the amount not withdrawn.
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| How To Close Merrill Edge Ira Account |
Step 2: Gather Your Account Information and Documents
This step is crucial for a smooth process. Having everything readily available will save you time and frustration.
Sub-heading: What You'll Need
Your Merrill Edge Account Number(s): This is your primary identifier.
Recent Account Statements: These will show your current holdings, balance, and any pending transactions.
Personal Identification: A government-issued photo ID (driver's license, passport) may be required, especially if you plan to visit a financial center.
Social Security Number: Essential for identification and tax purposes.
Contact Information: Ensure Merrill Edge has your updated mailing address, email, and phone number. They will use this to send final statements and confirmation of closure.
Beneficiary Information (if applicable): If you're transferring, you'll need this for your new account.
New Account Information (if transferring): The account number and routing information of the receiving institution.
Step 3: Determine Your Closure Method and Initiate Contact
Merrill Edge offers several ways to close your IRA, depending on your preference and the complexity of your situation.
QuickTip: Focus more on the ‘how’ than the ‘what’.
Sub-heading: Options for Initiating Closure
Online (for transfers): If you're transferring your IRA to another brokerage, the receiving institution often initiates the transfer request. This is usually the easiest method for transfers, as the new custodian handles most of the paperwork. You'll typically provide your Merrill Edge account information to the new brokerage, and they will submit the Automated Customer Account Transfer Service (ACATS) form.
By Phone: This is often the most direct way to discuss your options and clarify any specific concerns.
Call Merrill Edge customer service at 888.637.3343 (888.MER.EDGE).
Explain clearly that you wish to close your IRA account.
Be prepared to answer security questions to verify your identity.
They can guide you through the process, confirm any outstanding issues, and tell you what forms are needed.
In Person (at a Bank of America Financial Center): If you prefer face-to-face interaction or have a complex situation, visiting a Bank of America financial center (where Merrill Edge advisors are often available) can be helpful.
Be sure to bring all your necessary documents.
An advisor can assist with filling out forms and answer your questions directly.
By Mail: For certain types of closures, especially if you're requesting a direct distribution or if your account balance is high (e.g., over $25,000 for written requests for certain account types, which may require notarization), you might need to send a written request.
Contact Merrill Edge by phone first to confirm the exact address and any specific requirements for written correspondence.
Step 4: Handle Your Assets (Liquidation or Transfer In-Kind)
This is a critical step that determines how your investments are handled.
Sub-heading: Liquidation Explained
If you're cashing out or if the receiving institution cannot accept all your current investments "in kind," you'll need to sell your holdings within your Merrill Edge IRA.
Log in to your Merrill Edge account and navigate to your trading platform.
Sell all your securities (stocks, ETFs, mutual funds, etc.) to convert them into cash.
Be aware of any trading fees associated with these sales.
Allow enough time for trades to settle (typically 2 business days for most stocks and ETFs). The funds must be fully settled before they can be distributed or transferred.
Sub-heading: Transfer In-Kind
If you're transferring to another institution and they can accept your investments as they are, you can opt for an "in-kind" transfer. This means your shares are moved from Merrill Edge to the new brokerage without being sold.
This typically avoids new trading fees.
Confirm with the receiving institution that they can hold all your specific securities. Some mutual funds or less common investments may not be transferable. If not, you'll need to liquidate those specific holdings.
Step 5: Complete Required Forms and Documentation
Merrill Edge will likely require specific forms to formally close your IRA.
Account Transfer Forms (for transfers): As mentioned, usually initiated by the receiving institution (ACATS).
Distribution Forms (for cash withdrawals): Merrill Edge has specific "One-Time Non-Retirement Distribution Forms" or similar documents. Ensure you select the option to "distribute the entire balance and close my account."
Signature Requirements: You may need to provide a wet signature on certain documents. If mailing, ensure legibility.
Notarization: For large sums (e.g., over $25,000 for mail-in requests for certain account types), a notarized signature might be required to prevent fraud.
Sub-heading: Double-Check Everything!
QuickTip: Keep a notepad handy.
Review all forms carefully before signing and submitting. Any errors can cause significant delays.
Make copies of everything for your records.
If sending by mail, consider using a trackable service (e.g., certified mail) for proof of delivery.
Step 6: Monitor the Process and Confirm Closure
Once you've submitted all the necessary paperwork, the waiting game begins.
Processing Time: Account closures and transfers can take time, typically anywhere from 5 to 10 business days for straightforward transfers, and potentially longer for complex situations or direct distributions.
Communication from Merrill Edge: Merrill Edge should notify you via email or mail once your account is officially closed.
Final Statement: You will receive a final statement in the mail. Review this carefully to ensure the balance is zero and there are no unexpected transactions.
Tax Forms: You will receive relevant tax forms (e.g., Form 1099-R for distributions) in the following tax year. Keep these for your tax records.
Sub-heading: What to Do If There Are Delays
Don't hesitate to follow up. Call Merrill Edge customer service if you haven't heard anything within the expected timeframe.
Have your account number and the date you submitted your request ready.
Step 7: Post-Closure Checklist
Congratulations! Your Merrill Edge IRA is closed. Now, a few final steps to ensure everything is in order.
Shred Old Documents: Once you've confirmed closure and saved digital copies, securely shred any old physical statements or documents related to the closed account.
Update Financial Plans: If you work with a financial advisor, inform them of the closure and any new account details. Update your personal financial tracking systems.
Tax Filing: Remember to account for any distributions or transfers when you file your taxes for the year. Consult a tax professional if you have any doubts.
10 Related FAQ Questions
How to initiate an IRA transfer from Merrill Edge to another firm?
To initiate an IRA transfer from Merrill Edge, the receiving institution (your new brokerage) typically handles the process by submitting an ACATS (Automated Customer Account Transfer Service) request to Merrill Edge. You'll provide your Merrill Edge account details to the new firm, and they will manage the transfer.
QuickTip: Look for lists — they simplify complex points.
How to avoid early withdrawal penalties when closing a Merrill Edge IRA?
To avoid early withdrawal penalties (the 10% additional tax), ensure you are 59 ½ or older when taking a distribution from a traditional IRA. Alternatively, transfer the funds directly to another IRA or qualified retirement plan, as this is not considered a taxable event. Certain hardship exceptions also apply.
How to find my Merrill Edge IRA account number?
Your Merrill Edge IRA account number can be found on your account statements (paper or electronic) or by logging into your Merrill Edge online account. You can also call Merrill Edge customer service, and they will verify your identity before providing it.
How to liquidate assets in my Merrill Edge IRA before closing?
To liquidate assets, log into your Merrill Edge online account and place "sell" orders for all your holdings (stocks, ETFs, mutual funds, etc.). Ensure you allow sufficient time for the trades to settle (typically T+2 for equities) before requesting the account closure or distribution.
How to check if my Merrill Edge IRA has any outstanding fees?
You can check for outstanding fees by reviewing your latest Merrill Edge account statement, logging into your online account and looking at the "Activity" or "Fees" section, or by calling Merrill Edge customer service directly. They can provide a detailed breakdown of any potential fees associated with closure.
Reminder: Save this article to read offline later.
How to get my final Merrill Edge IRA statement after closure?
Merrill Edge will typically mail your final account statement to your address on file shortly after the account is officially closed. Ensure your mailing address is up-to-date with them before initiating the closure process.
How to handle Required Minimum Distributions (RMDs) when closing a Merrill Edge IRA?
If you are of RMD age (currently 73 for traditional IRAs), you must take your RMD for the current year from your Merrill Edge IRA before closing the account or transferring the funds out, especially if you are taking a full distribution. Failure to do so can result in a 50% penalty on the undistributed RMD amount.
How to contact Merrill Edge customer service for IRA account closure?
You can contact Merrill Edge customer service for IRA account closure by calling their dedicated line at 888.637.3343 (888.MER.EDGE). Their representatives are available to assist with account-related inquiries.
How to know if my investments can be transferred "in kind" to another brokerage?
To determine if your investments can be transferred "in kind," you need to speak with the receiving institution (your new brokerage). They will have a list of securities they can accept. If they cannot accept certain investments, you will need to liquidate those specific holdings within your Merrill Edge IRA first.
How to ensure a tax-free rollover when closing a Merrill Edge IRA?
To ensure a tax-free rollover, arrange for a direct trustee-to-trustee transfer where funds move directly between Merrill Edge and your new IRA custodian. Avoid taking personal possession of the funds, as this can trigger a 60-day rollover rule and potential tax implications if not completed properly within the timeframe.
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