Financial/Retirement Professionals » Business Retirement Professionals

401(k) Plan Distributions

In order to take a distribution from a 401(k) a participant must have a qualifying event. Distributions are determined by the plan document. Distributions under a 401(k) may not begin until the participant:

» Attains age 59-1/2
» Separates from service
» Dies
» Becomes disabled
» In-service withdrawals, if allowed by plan document
» QDRO

It is important to note that a qualifying event does not mean full exemption from taxation or penalties. Individuals who take pre-tax monies out of a QP will be required to pay ordinary federal income tax according to their respective tax bracket. If the distribution does not satisfy a penalty exception, then a 10% IRS penalty for early withdrawal will be assessed in addition to ordinary federal income taxes.

The 10% IRS penalty for early withdrawal is primarily dependent upon an individual's age when the distribution is taken.