Nonperiodic Distribution

AAA

DEFINITION of 'Nonperiodic Distribution'

A type of employee retirement-plan distribution that is not considered a periodic distribution. Periodic distributions would include monthly payments, while nonperiodic payments would be one-time lump-sum payments.

Nonperiodic distributions that are paid directly to the employee will be subject to a 10% withholding tax unless the beneficiary elects to have no taxes withheld.

BREAKING DOWN 'Nonperiodic Distribution'

Nonperiodic distributions do not include IRA transfers and/or rollovers, systematic withdrawals or required minimum distributions. Only taxable distributions that are taken in cash are subject to the withholding tax.

The withholding rule is intended to discourage employees from raiding their retirement assets before they are retired.

RELATED TERMS
  1. Lump-Sum Payment

    A one-time payment for the total or partial value of an asset. ...
  2. Lump-Sum Distribution

    A one-time payment for the entire amount due, rather than breaking ...
  3. Qualified Distribution

    Distributions made from a Roth IRA that are tax and penalty free. ...
  4. Required Minimum Distribution - ...

    The amount that Traditional, SEP and SIMPLE IRA owners and qualified ...
  5. Triggering Event

    1. A tangible or intangible barrier or occurrence that, once ...
  6. Withholding Tax

    1. Income tax withheld from employees' wages and paid directly ...
Related Articles
  1. Taxes

    3 Retirement Account Rules To Know

    Stay up-to-date on regulation amendments to avoid penalties as well as take advantage of new opportunities.
  2. Retirement

    Avoiding Too Much Tax On Your Distributions

    IRA assets can't be taxed twice - find out how to avoid paying the second time around.
  3. Taxes

    9 Penalty-Free IRA Withdrawals

    If you need to take early distributions, find out which exemptions allow you to avoid expensive consequences.
  4. Retirement

    What's a 401(a) Plan?

    A 401(a) plan is a type of money-purchase retirement plan set up by an employer.
  5. Investing

    Build a Retirement Portfolio for a Different World

    When it comes to retirement rules of thumb, the financial industry is experiencing new guidelines and the new rules for navigating retirement.
  6. Investing

    Automating Your 401(k) is Easier Than You Think

    If you like automation, you should check out these features that many 401(k) plans offer.
  7. Retirement

    What's a Defined Contribution Plan?

    A defined contribution plan is a company retirement plan that specifies the amount of money contributed to it.
  8. Retirement

    Infographic: How Much Money Do You Need to Retire in Hawaii?

    In this infographic we break down cost of living in Honolulu, Hawaii in terms of taxes, rent, food and other expenses and offer comparison to the cost of living in New York, Los Angeles, San ...
  9. Term

    What are Pension Funds?

    A pension fund is a company-sponsored fund that provides income for employees in retirement.
  10. Investing Basics

    Understanding How Dividends Are Taxed

    Learn how dividends are taxed by the IRS, and understand the different types of dividend income as well as the capital gains tax rates.
RELATED FAQS
  1. What are the rules and reporting requirements for a rollover of a required minimum ...

    An RMD may be transferred between IRAs, but it may not be rolled over once distributed. If the RMD amount is rolled over ... Read Full Answer >>
  2. I've heard that workers who don't roll over their 401(k)s after retiring face some ...

    I am not sure to which government regulation your contact was referring. However, here is what I can tell you. In 2002, ... Read Full Answer >>
  3. My husband has a 401(k) account which is 100% vested with an $8,000 balance. We are ...

    Unfortunately, the conditions under which hardship withdrawals can be made from a qualified plan, including a 401(k) plan, ... Read Full Answer >>
  4. Are mutual funds considered retirement accounts?

    Unlike a 401(k) or Individual Retirement Account (IRA), mutual funds are not classified as retirement accounts. Employers ... Read Full Answer >>
  5. Can my IRA be garnished for child support?

    Though some states protect IRA savings from garnishment of any kind, most states lift this exemption in cases where the account ... Read Full Answer >>
  6. Can I use my IRA savings to start my own savings?

    While there is no legal reason why you cannot withdraw funds from your IRA to start a traditional savings account, it is ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Recession

    A significant decline in activity across the economy, lasting longer than a few months. It is visible in industrial production, ...
  2. Bubble Theory

    A school of thought that believes that the prices of assets can temporarily rise far above their true values and that these ...
  3. Stock Market Crash

    A rapid and often unanticipated drop in stock prices. A stock market crash can be the result of major catastrophic events, ...
  4. Financial Crisis

    A situation in which the value of financial institutions or assets drops rapidly. A financial crisis is often associated ...
  5. Election Period

    The period of time during which an investor who owns an extendable or retractable bond must indicate to the issuer whether ...
  6. Shanghai Stock Exchange

    The largest stock exchange in mainland China, the Shanghai Stock Exchange is a nonprofit organization run by the China Securities ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!