401k Withdrawal Rules

401k Withdrawal Rules - Plan Sponsors -
General Distribution Rules

Generally, distributions of elective deferrals cannot be made until one of the following occurs:

• The participant dies, becomes disabled, or otherwise has a severance from employment.



• The plan terminates and no successor defined contribution plan is established or maintained by the employer.



• The participant reaches age 59½ or incurs a financial hardship.

401k Withdrawal Rules - distributions may be

Depending on the terms of the plan, distributions may be:

• Nonperiodic, such as lump-sum distributions or



• Periodic, such as annuity or installment payments.

401k Withdrawal Rules - Circumstances

In certain circumstances, the plan administrator must obtain the participant’s consent before making a distribution. Generally, consent is required if the participant’s account balance exceeds $5,000. Depending on the type of benefit distribution provided for under the 401(k) plan, the plan may also require the consent of the participant’s spouse before making a distribution. A plan may provide that rollovers from other plans are not included in determining whether the participant’s account balance exceeds the $5,000 amount.

---

401k Withdrawal Rules - excess of $1,000

If a distribution in excess of $1,000 is made, and the participant (or designated beneficiary) does not elect to (i) receive the distribution directly or (ii) make an election to roll over the amount to an eligible retirement plan, the plan administrator must transfer the distribution to an individual retirement plan of a designated trustee or issuer and must notify the participant (or beneficiary) in writing that the distribution may be transferred to another individual retirement plan.

---

---

401k Withdrawal Rules

---

Home | Site-Map | Email Us