Financial/Retirement Professionals » Business Retirement Professionals

MPP/PS Distributions

In order to take a distribution from a PSP/MPPP a participant must have a qualifying event.
Distributions under a PSP/MPPP may not begin until the participant:

» Attains normal retirement age (See Plan Document)
» Separates from service
» Dies
» Becomes disabled
» Plan terminates
» In-service withdrawals with restrictions

Unlike profit sharing plans, money purchase pension plans must provide that a participant may generally receive his or her account balance only upon retirement or some other separation of service event (i.e. death or disability). An employee may not withdraw any portion of his or her account while the employee is still employed unless the plan allows distributions at normal retirement age.

All amounts that are distributed to any participant that do not meet one of the following exceptions are subject to a 10% premature distribution penalty:

» Age 59-1/2
» Death
» Separation of service at or above age 55
» RMD (Required Minimum Distributions)
» Substantially equal periodic payments (72(t) – Must be separatedfrom service)
» IRS tax levy
» Qualified domestic relations order (QDRO)

Just because a participant has a qualifying event does not mean that they are exempt from the 10% penalty tax on distributions.

Distributions that are eligible for rollover are subject to the mandatory 20% withholding tax.