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There are clear tax penalties for pulling out of an IRA early. But, many people believe that when they retire they have to cash out that company IRA. On the contrary, your money is being invested and that money should stay in that IRA or rolled over to an outside IRA until you reach the age when there is no penalty.

The only time an IRA should be cashed out early is if the money will be reinvested in some other way that will yield a return higher than the tax implications and fees associated with the early disbursement.