Save time with our cheat sheets, fact sheets, checklists & books!

February 23, 2009

In-service Withdrawal

Your Guide

Print

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
More

Keep Learning

Domestic abuse distribution

A domestic abuse distribution is one that is made to domestic abuse victim, during the 1-year period beginning on any date on which the individual

Eligible retirement plan

The term “eligible retirement plan”, means a retirement plan to which a rollover contribution can be made. These are: (i)an individual retirement account described in

Qualified See-Through Trust beneficiary

Definition A qualified trust beneficiary is a trust that satisfies the requirements so as to be treated as a designated beneficiary.   For retirement accounts inherited

Saver’s Credit

Definition Also known as the Saver’s Tax Credit: Nonrefundable tax credit available to eligible individuals who make contributions to their retirement account. The saver’s credit

Be among the first to know when

IRA Rules
Change