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In-service Withdrawal

Last Updated March 22, 2009

Definition

Withdrawal permitted when the participant does not meet one of the traditional triggering events.

Under a 401(k) plan, an in-service withdrawal of elective contributions may not be distributed before a triggering event occurs.

A plan may limit in-service withdrawals to hardship.

A plan can provide that participants can withdraw profit sharing contribution amounts before reaching age 59 ½, or experiencing any other triggering event . Cite: Treas. Reg. §1.401-1(b)(1)(ii)

Referring Cite

IRC §401(k)(2)(B)(ii), Treas. Reg. 1.401-1(b), Revenue Ruling 56-693, Revenue Ruling 68-24, Revenue Ruling 71-295, Revenue Ruling 74-55,

Additional Helpful Information

  • In-service withdrawals are limited to the participant’s vested balance.
  • In-service withdrawals are subject to the early distribution penalty
  • In-service withdrawals are not permitted from pension plans. Revenue Ruling 56-693