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February 23, 2009

In-service Withdrawal

Your Guide

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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

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at http://irapublications.com. Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.

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