In-service withdrawal

In-service withdrawal is a payment from retirement plan which is executed before the triggering event.

For example, if someone has retirement plan, that plan usually contains some triggers. It can be age (e.g. 65 years) or numer of working years (e.g. after 40 years of work). But in case of accident a person can become disabled or be fired. The most drastic example is death. In those situations retirement plan can provide some help - in-service withdrawal, a one-time or monthly payment.

Usually in-service withdrawal entails some consequences:

  • it can lower payments after the triggering event - your pension will be lower,
  • every withdrawal can be associated with some fee - you will receive lower in-service withdrawal,
  • penalty tax can apply in case of withdrawal before reaching some age (it can be lower than triggering age).

References

At work.png

This is an article stub.
If you are able to help improve this article, please feel free to edit it.