Accessing Funds: In-Service Withdrawals
This section contains information on how to process participant in-service withdrawals. As Plan Administrator, you may handle the following types of participant withdrawal requests:
- Age-based withdrawals while still employed (generally, at least age 591⁄2 or at retirement age as specified in the adoption agreement),
- Service-based withdrawals while still employed if allowed by your plan (certain service-based withdrawals require at least five years of participation in your plan),
- After-tax or rollover account withdrawals while still employed, and
- Qualified reservist distributions.
You will first need to determine if the participant meets the requirements for a withdrawal under the plan. You can do this by checking Article 7 of the plan document, as well as your plan’s adoption agreement.
Distribution options, taxes and penalties vary based on the participant’s age and reason for distribution.
For information on processing hardship withdrawals, see “Hardship Withdrawals.”
For information on loans, see “Loans.”
For information on processing distributions if the participant has separated from service or retired, see “Distributions.”
For information on processing a Required Minimum Distribution, see “Distributions.”
For information on processing a distribution for an alternate payee who received funds pursuant to a Qualified Domestic Relations Order, see “Distributions.”
For information on processing a death claim, see “Death Claims.”
Highlights In the chart below, you will find the steps to process an in-service withdrawal once a request for such withdrawal has been made by the participant.
|Steps for Receiving an In-Service Withdrawal||Plan |
|The Program’s Role|
|1. Determine if participant is eligible to request an in-service withdrawal; if so, send the In-Service Withdrawal Form along with a “Special Tax Notice Regarding Plan Payments,” “Notice of Benefit Payments,” and “Notice of Waiver of Annuity and Election of Alternate Benefit Payment Form” to participant||√|
|2. Decide what type of withdrawal to request and payment option||√|
|3. Complete and sign In-Service Withdrawal Form and send it to the Plan Administrator||√|
|4. Review, sign and send form to the Program||√|
|5. Process Form||√|
|6. Send check to participant||√|
|7. Send IRS Form 1099R to participant and IRS||√|