Involuntary Cash-Out


DEFINITION of 'Involuntary Cash-Out'

Distributing the balance of a participant's retirement account under a qualified plan without the written consent of the participant, the participant's spouse or beneficiary.

BREAKING DOWN 'Involuntary Cash-Out'

Involuntary cash-out usually occurs if the participant's balance is no more than $5,000 and he or she is either no longer employed by the employer sponsoring the qualified plan, or has died. Effective Mar 28, 2005, a qualified plan must ensure either that cash-out balances between $1,000 and $5,000 are rolled to a Traditional IRA (by means of an automatic rollover), or that cash-outs will not occur if the participant's balance is more than $1,000.

  1. Vesting

    The process by which employees accrue non-forfeitable rights ...
  2. Distribution

    1. When trading volume is higher than that of the previous day ...
  3. Qualified Retirement Plan

    A plan that meets requirements of the Internal Revenue Code and ...
  4. Traditional IRA

    An individual retirement account (IRA) that allows individuals ...
  5. 401(k) Plan

    A qualified plan established by employers to which eligible employees ...
  6. Rollover

    A rollover is when you do the following: 1. Reinvest funds from ...
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  1. Can you have both a 401(k) and an IRA?

    Investors can have both a 401(k) and an individual retirement account (IRA) at the same time, and it is quite common to have ... Read Full Answer >>
  2. Are 401(k) contributions tax deductible?

    All contributions to qualified retirement plans such as 401(k)s reduce taxable income, which lowers the total taxes owed. ... Read Full Answer >>
  3. Are 401(k) rollovers taxable?

    401(k) rollovers are generally not taxable as long as the money goes into another qualifying plan, an individual retirement ... Read Full Answer >>
  4. Are catch-up contributions included in the 415 limit?

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  5. Can catch-up contributions be matched?

    Depending on the terms of your plan, catch-up contributions you make to 401(k)s or other qualified retirement savings plans ... Read Full Answer >>
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