A:

The money in your profit-sharing account will be taxable when it is withdrawn from the account. You may leave the money in the plan (if the plan allows it) or roll over the balance to an IRA.

Most financial planners would recommend that you do not leave the funds in the profit-sharing plan after you leave the firm, as you run the risk of losing track of the funds. (To learn more, see Keeping Track Of Your Assets and Moving Your Plan Assets?.) Furthermore, IRAs usually allow more estate-planning flexibility than qualified plans (such as the profit-sharing plan).


This question was answered by Denise Appleby
(Contact Denise)

RELATED FAQS
  1. I have a profit-sharing plan with my former employer. I am now trying to buy a home. ...

    Profit-sharing plans are retirement plans with companies that give employees a percentage of the company's earnings. A profit-sharing ... Read Answer >>
  2. Can I roll the funds in an SEP-IRA over to a profit-sharing plan or self-directed ...

    Yes. Funds can be rolled over from an SEP IRA to a profit-sharing plan, provided the plan document that governs the profit-sharing ... Read Answer >>
Related Articles
  1. Investing

    4 Options for Your Old 401(k) If You Change Jobs

    These are the four options available for your old 401(k) when you leave a job.
  2. Trading

    3 Questions To Find Your Trading Plan

    Ask yourself these three questions to figure out which strategy is best for you.
  3. Financial Advisor

    Advising FAs: Explaining Estate Planning to a Client

    As the old saying goes, you can't take it with you. For this reason, it is important to have a current estate plan in place to protect your family and belongings.
  4. Financial Advisor

    Should You Roll Over Your Old 401(k)?

    You have four options when it comes to handling your a 401(k) from a job that you preparing to leave. Learn what those options are before making a choice.
  5. Retirement

    5 Myths That Could Hurt Your Retirement

    If you're making financial and lifestyle choices based on these retirement myths, you could be missing out on benefits that could give you a better future.
  6. Financial Advisor

    What Kind Of Financial Plan Makes Sense For You?

    Comprehensive financial plans can help people maximize their financial potential and make smart decisions. But how complex a plan do you really need?
  7. Small Business

    Plans The Small-Business Owner Can Establish

    Don't hesitate to adopt a smart plan for you and your employees.
  8. Retirement

    3 Common Excuses For Not Contributing To A Retirement Plan

    If you're not participating in your employer-sponsored retirement plan, there may be some easy solutions.
  9. Retirement

    What Happens to a 401(k) After You Leave Your Job?

    Find out what happens to your 401(k) after you leave your job. Learn about your five primary options, including cashing out and rolling over to a new plan.
  10. Financial Advisor

    What To Do With Forgotten 401(k) Plans

    Job hopping is more acceptable, but as a result, workers are leaving 401(k) plans behind. In order to maximize savings that may not make the most sense.
RELATED TERMS
  1. Profit-Sharing Plan

    A plan that gives employees a share in the profits of the company. ...
  2. Qualified Trust

    A tax-advantaged fiduciary relationship between an employer and ...
  3. Keogh Plan

    A tax deferred pension plan available to self-employed individuals ...
  4. 401(k) Plan

    A qualified plan established by employers to which eligible employees ...
  5. 529 Plan

    529 is a category of plans that provide tax advantages when saving ...
  6. Eligible Rollover Distribution

    A distribution from an IRA, qualified plan, 403(b) plan or 457 ...
Hot Definitions
  1. Protectionism

    Government actions and policies that restrict or restrain international trade, often done with the intent of protecting local ...
  2. Fiduciary

    A fiduciary is a person who acts on behalf of another person, or persons to manage assets.
  3. Demonetization

    Demonetization is the act of stripping a currency unit of its status as legal tender and is necessary whenever there is a ...
  4. Investment

    An asset or item that is purchased with the hope that it will generate income or appreciate in the future. In an economic ...
  5. Redlining

    The unethical practice whereby financial institutions make it extremely difficult or impossible for residents of poor inner-city ...
  6. Nonfarm Payroll

    A statistic researched, recorded and reported by the U.S. Bureau of Labor Statistics intended to represent the total number ...
Trading Center