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
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.
According to a recent study by consulting firm Aon Hewitt (2), 90% of defined contribution plans allow in-service withdrawals from 401(k) plans, typically starting at age 59
Often times, in addition to post age 59 1/2 withdrawals, employer plans allow in-service withdrawals
or brokerage links that could give you access to more managers and/or professional money managers.
A participant loan is treated as a taxable distribution and likely to violate the prohibition on 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.
To eliminate this problem, 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.
Avoid taking in-service withdrawals
and loans to pay for short term needs, such as holiday gifts or other purchases, as doing so will require you to pay income taxes on withdrawals and penalties if you are not at least 59 1/2 years old.
money purchase pension plans) cannot offer in-service withdrawals
to participants, Sec.
Although most plans prohibit in-service withdrawals or hardship distributions before such company contribution accounts become fully vested, some plans do allow in-service distributions from the vested portion of a partially vested company account.
Plans that allow in-service withdrawals or hardship distributions from nonfully vested accounts should expressly include one of the formulas for recomputing a participant's vested benefit on his subsequent termination of employment.