Although the participant may be eligible to withdraw the funds if a plan is terminated as a result of an acquisition or other similar transaction, this does not mean that the 10% penalty will be waived. However, the participant would qualify for an exception if he/she meets any of the requirements as listed under the Tax Code. Please see Page 29 of IRS Publication 575 for a list of exceptions.

For more insight, read Tough Times ... Should You Disturb Your Qualified Plan's Assets?

This question was answered by Denise Appleby
(Contact Denise)

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