Withdrawal Benefits
Candlefocus EditorWithdrawal benefits are an important part of any employer-sponsored retirement plan. In essence, withdrawal benefits allow individuals to take funds from their employer-sponsored retirement account when they leave that employer. As long as they are over the minimum retirement age, they are allowed to access the funds without incurring any tax penalties.
In order to ensure that these benefits are utilized correctly, it’s important to understand the applicable rules. Generally, those younger than the minimum retirement age are not eligible to claim their withdrawal benefits. Instead, these funds must be “rolled over” to another qualified retirement plan, or the individual may face tax penalties and other restrictions. On the other hand, those who are of age must still take certain steps in order to claim their withdrawal benefits, including filing the necessary paperwork and receiving the required authorization.
It’s also important to be aware of the impact of any company matching retirement contributions when taking withdrawal benefits. Generally, any funds that are vested will be included in withdrawal benefits. It’s important to ensure that all of these funds make it into the new retirement plan; otherwise, they may be subject to taxes upon withdrawal.
Withdrawal benefits are an important component of any employer-sponsored retirement plan. By taking the time to understand the rules and regulations associated with this type of benefit, individuals can ensure that they maximize their retirement savings and secure a more comfortable retirement. While it’s important to be aware of the tax implications of any given withdrawal, it’s also important to make sure that all of the funds are transferred correctly in order to ensure that their retirement savings remain intact.