I participate in a profit-sharing plan at work. If I retire at age 62, will I be able to withdraw the money tax-free, or must it be rolled over to another account or plan?

By Denise Appleby AAA
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The money in your profit-sharing account will be taxable when it is withdrawn from the account.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. Why were 401(k) plans created?

    Discover why consultant Ted Benna created 401(k) plans after noticing the Revenue Act of 1978 could be used to set up simple, ...
  2. What is the penalty for taking money out of my 401(k) before I'm 59 years old?

    Learn why withdrawing from a 401(k) plan before age 59 carries an extra 10 percent tax penalty. Only a few circumstances ...
  3. Can I still set up an SEP if one of my employees refuses to participate?

    You can establish the SEP IRA, even if the employee refuses to participant. However, you would need to establish an IRA for ...
  4. I want to close my IRA account. What percentage will I lose to tax?

    You can move the amount by means of a trustee-to-trustee transfer to another IRA, or roll over the amount to your 401(k). ...
RELATED TERMS
  1. Death Master File (DMF)

    Also known as Social Security Death Index. A list of people whose ...
  2. Stretch IRA

    An estate planning concept that is applied to extend the financial ...
  3. IRA Transfer

    The transfer of funds from an Individual Retirement Account (IRA) ...
  4. IRA Asset Will

    A document that specifies how the assets in an individual retirement ...
  5. Pay As You Go Pension Plan

    A retirement scheme where the plan beneficiaries decide how much ...
  6. Retirement Method of Depreciation

    An accounting procedure in which an asset is expensed for depreciation ...
comments powered by Disqus
Related Articles
  1. Power Of Attorney: Do You Need One?
    Retirement

    Power Of Attorney: Do You Need One?

  2. New Retirement Plan Limits For 2011
    Taxes

    New Retirement Plan Limits For 2011

  3. Don't Forget The Kids: Save For Their ...
    Savings

    Don't Forget The Kids: Save For Their ...

  4. The Income Property: Your Late-In-Life ...
    Home & Auto

    The Income Property: Your Late-In-Life ...

  5. Protecting Your Retirement Assets
    Retirement

    Protecting Your Retirement Assets

Trading Center