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The money in your profit-sharing account will be taxable when it is withdrawn from the account.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. My daughter would like to use some of her Roth IRA to pay for some current tuition ...

    This is a surprisingly complicated question, as it touches on the differences between traditional and Roth IRAs, as well ...
  2. Can an employer adopt a different type of retirement plan for each employee?

    Generally, any qualified retirement plan or IRA-based plan adopted by an employer must cover all eligible employees. Failure ...
  3. Can I close my existing Roth IRA and invest in a new Roth IRA at a different financial ...

    If If you withdraw your Roth IRA contribution, the amount will be tax and penalty free. If your initial contribution accrued ...
  4. If there are two plans and one is terminated, creating a distributable event, can ...

    It depends. If the loan is in good standing - the participant did not default on the loan and the loan meets other statutory ...
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. Distribution Rules For Inherited Retirement ...
    Taxes

    Distribution Rules For Inherited Retirement ...

  2. 5 Ways To Fund Your Retirement
    Retirement

    5 Ways To Fund Your Retirement

  3. Should You Roll Over Your 401(k)?
    Retirement

    Should You Roll Over Your 401(k)?

  4. Top 7 Estate Planning Mistakes
    Retirement

    Top 7 Estate Planning Mistakes

  5. Retirement: The One Thing Couples Shouldn't ...
    Retirement

    Retirement: The One Thing Couples Shouldn't ...

Trading Center