During the first two years they are in the plan, SIMPLE IRA participants owe a 25% penalty for
in-service withdrawals before age 59 1/2.
We permit
in-service withdrawals from the 403(b) but not the 401(a).
8221; Rachel will assist TriStar's clients and their employees with processing all requests for retirement plan loans, cash withdrawals, rollovers, required minimum distributions,
in-service withdrawals, hardship withdrawals, qualified domestic relations orders, and other daily administrative tasks.
1) Clients in your book of business over the age of 591/2 and still working: Discuss
in-service withdrawals.
Recent studies indicate that upwards of 90% of 401(k) plans permit
in-service withdrawals for nonhardship purposes once the client reaches age 591/2.
New 401(k) loan issuance transactions declined approximately 5% year-over-year, and total 401(k) hardship and
in-service withdrawals fell nearly 8% year-over-year.
Many savvy financial professionals are increasingly looking to
in-service withdrawals to help clients reduce that risk and provide for a more balanced retirement strategy.
This is a tremendous opportunity for advisors; they can show clients that not only does the employer-sponsored plan have options such as
in-service withdrawals, but also that they have the opportunity to convert all or a portion of the plan assets to a tax-free Roth IRA.
A participant loan is treated as a taxable distribution and likely to violate the prohibition on
in-service withdrawals.
Other plans may offer distribution options such as hardship and
in-service withdrawals.
A participant spouse who has reached age 59 1/2 and whose pension plan permits
in-service withdrawals may transfer funds from his qualified plan to an IRA to avoid ERISA's preemption of state community property laws.
We currently have Roth option; however, want to offer conversion option, but not
in-service withdrawals.
