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.

INVESTOPEDIA EXPLAINS '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. Systematic Withdrawal Schedule

    A method of withdrawing funds from an annuity account by which ...
  3. Distribution

    1. When trading volume is higher than that of the previous day ...
  4. Triggering Event

    1. A tangible or intangible barrier or occurrence that, once ...
  5. Direct Rollover

    A distribution of eligible rollover assets from a qualified plan, ...
  6. Withholding Tax

    1. Income tax withheld from employees' wages and paid directly ...
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 >>
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. Professionals

    New 401(k) Pension Rollover Rule: Pros and Cons

    Is the new rule allowing participants to roll their 401(k) balances into pensions a good idea?
  5. Retirement

    Strategies To Build Your Retirement Portfolio

    Retirement indexes are designed to estimate how much an investor would need to have saved today to generate annual income in retirement, starting at 65.
  6. Professionals

    Why Auto-Enrollment Will Save Your Retirement

    Savers need all the help they can get, even if it amounts to an offer they can't refuse. That's why the biggest improvement to 401(k)s is auto-enrollment.
  7. Professionals

    Retirement Planning Essentials for Your Clients

    You may have heard these retirement planning tips before, but has your client actually put them into action yet?
  8. Professionals

    Which Robo-Advisor is Right for You?

    Which robo-advisor is right for you? There are many factors to consider, including breadth of services, ease of use and cost.
  9. Investing Basics

    This Investment Strategy Could Be Your key To Success

    Goal-based investing seems like an obvious tactic. But many investors have only a vague idea what their goals are, much less how to achieve them.
  10. Taxes

    Before You Visit Your Tax Preparer: Do This

    The earlier you start preparing your tax records and documents, the more likely you are to have a smooth tax return experience – and all the tax benefits you're due.

You May Also Like

Hot Definitions
  1. Risk Averse

    A description of an investor who, when faced with two investments with a similar expected return (but different risks), will ...
  2. Fixed-Charge Coverage Ratio

    A ratio that indicates a firm's ability to satisfy fixed financing expenses, such as interest and leases. It is calculated ...
  3. Efficiency Ratio

    Ratios that are typically used to analyze how well a company uses its assets and liabilities internally. Efficiency Ratios ...
  4. Fixed Cost

    A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses ...
  5. Subsidy

    A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy ...
  6. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
Trading Center