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The money in your profit-sharing account will be taxable when it is withdrawn from the account.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 >>
  3. What types of plans allow catch-up contributions?

    Catch-up contributions can only be made to plans with salary deferral features.If you want to make catch-up contributions, ... Read Answer >>
Related Articles
  1. Retirement

    Catch-Up Contribution Options for Business Owners

    Business owners have several different options when it comes to catch-up contributions.
  2. 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.
  3. Retirement

    Should You Roll Over Your 401(k)?

    Before moving your retirement funds into another account, consider your options.
  4. Investing

    Delta's Unique Employee Structure and Its Logic Behind It (DAL)

    Find out if new profit sharing will affect the unionization efforts of Delta employees or if bigger raises keep employees happy in this unique workforce.
  5. Retirement

    How Small Business Owners Can Save More for Retirement

    A retirement planning strategy that can help small business owners keep more of their earnings.
  6. 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.
  7. Retirement

    Work in the Gig Economy? Don't Miss Out on Retirement Savings

    Here are 5 smart ways the self-employed can save for retirement. Don't miss out – and get financial advice before picking a strategy.
  8. 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.
  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.
RELATED TERMS
  1. Qualified Trust

    A tax-advantaged fiduciary relationship between an employer and ...
  2. 401(k) Plan

    A qualified plan established by employers to which eligible employees ...
  3. Cash Or Deferred Arrangement - CODA

    The method of funding any type of qualified profit-sharing or ...
  4. Eligible Rollover Distribution

    A distribution from an IRA, qualified plan, 403(b) plan or 457 ...
  5. IRA Plan

    A plan that individuals may establish to arrange and plan for ...
  6. Pension Plan

    A type of retirement plan, usually tax exempt, wherein an employer ...
Hot Definitions
  1. Floating Exchange Rate

    A country's exchange rate regime where its currency is set by the foreign-exchange market through supply and demand for that ...
  2. Taxes

    An involuntary fee levied on corporations or individuals that is enforced by a level of government in order to finance government ...
  3. Impaired Asset

    A company's asset that is worth less on the market than the value listed on the company's balance sheet. This will result ...
  4. Solvency Ratio

    One of many ratios used to measure a company's ability to meet long-term obligations. The solvency ratio measures the size ...
  5. Inelastic

    An economic term used to describe the situation in which the quantity of a good or service is unaffected when the price of ...
  6. Factors Of Production

    An economic term to describe the inputs that are used in the production of goods or services in the attempt to make an economic ...
Trading Center