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When it comes to saving for the future, few options are as popular or as proven as an individual retirement arrangement (IRA). Thanks to their accessibility, flexibility, and tax advantages, IRAs are crucial to many retirement savings strategies.听

While IRAs are straightforward, the process of moving your hard-earned funds comes with several rules and conditions. You might ask questions like, 鈥淐an I transfer my IRA to a savings account?鈥� or 鈥淲hat penalties come with an early withdrawal?鈥� In this article, we鈥檒l examine what you need to know about IRA transfers so you can make the best financial decision. 

How does an IRA work?

An IRA is a long-term savings arrangement offering individuals tax-deferred or tax-free growth, depending on the type of account. Anyone currently earning income can contribute to an IRA鈥攅ven people with a 401(k) savings plan through their employer. The deposits within an IRA are typically invested in a range of financial products, including stocks, bonds, and mutual funds. 

To reap these tax advantages, you can choose between two types of IRA arrangements: Traditional and Roth IRAs. In a Traditional IRA, you鈥檒l contribute pretax dollars, reducing your immediate taxable income but increasing it in retirement when you withdraw the money. Roth IRAs don鈥檛 come with an immediate tax benefit鈥攜ou鈥檒l make contributions with after-tax dollars鈥攂ut as a result, you won鈥檛 owe taxes when it comes time to withdraw the money in retirement.  

Whether you have a Traditional or a Roth IRA or an IRA savings arrangement (or all of the above), there is a maximum combined contribution limit across all your . In 2025, the annual contribution limit is $7,000 if you鈥檙e under the age of 50 or $8,000 if you鈥檙e age 50 or older. 

Tip: If your income is too high, you will not be eligible to contribute to a Roth IRA. As of 2025, , the income limits are between $150,000 and $165,000 per year for a single tax filer and between $236,000 and $246,000 for those married and filing jointly. 

Can you withdraw money from an IRA? 

Because this money is meant for retirement, withdrawing from an IRA before age 59陆 may come with taxes and penalties. For example, if you take an early withdrawal from your Traditional IRA, you鈥檒l likely owe income tax on that amount and trigger a 10% penalty (unless your withdrawal is for one of the reasons considered to be an exception by the IRS).  

The rules for withdrawals from a Roth IRA are more forgiving, as you can withdraw all contributions to a Roth IRA at any time without taxes or penalties. You may owe taxes and penalties on the earnings, however, if you withdraw those funds before age 59陆 or before the IRA has been open for at least five years unless an exception applies.   

Make sure you understand the rules before making any early withdrawal from an IRA, and seek professional guidance as needed.

How to transfer funds from one IRA to another

As long as you transfer money from one Traditional IRA to another Traditional IRA鈥攐r from one Roth IRA to another Roth IRA鈥攜ou won鈥檛 trigger any income tax bill or penalties. To move your IRA鈥攁 process sometimes called a 鈥渞ollover鈥濃�攃ontact the financial institution where you hold your IRA and tell them where you want to move your funds. 

Keep in mind that transferring funds from a Traditional IRA into a Roth IRA may trigger an immediate tax bill but no early withdrawal penalty. Also, only one transfer may be made per 12-month period.听聽

Can you transfer your IRA to a savings account?  

What if you need early access to your IRA savings? Moving funds from an IRA to a traditional savings account typically counts as an early withdrawal, which means the money would be subject to the taxes and penalties we discussed before.  

A few exceptions may limit taxes and penalties when transferring your IRA to a savings account. For example, if you have a permanent disability, incur unreimbursed medical expenses beyond a set threshold, qualify for higher education expenses, or are a first-time homebuyer, you may be able to avoid the penalties that come with early withdrawals. 

However, these exceptions鈥攁nd a few others鈥攃ome with several qualifying factors and distribution rules, and it鈥檚 recommended that you consult with a financial expert before engaging in this kind of transfer of IRA funds. 

What are the long-term impacts of early withdrawal? 

Stick to your retirement strategy and avoid dipping into your IRA funds as much as possible. Early withdrawals typically come with a hefty penalty, and the additional taxes you pay can even negate the interest you’ve earned. 

An IRA is a valuable part of your retirement planning thanks to the tax advantages it offers. Leaving those funds alone to hopefully grow over time puts you on a path to having enough money during your retirement. 

Make IRAs part of your long-term financial goals

As you plan for retirement, funding an IRA can help set yourself up for long-term success. Which IRA you choose to fund and if, at some point, you opt to transfer your IRA to a different account will largely depend on your financial standing, your aversion to risk, and how close you are to retirement age. 

Whether an IRA is your primary means of saving for the future or just one of several tools in your savings plan, it can be a valuable way to help you achieve your retirement goals. 

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