Withdrawal Benefits

DEFINITION of 'Withdrawal Benefits'

The rights of an employee who has a qualified pension plan to cash-out any accumulated benefits upon leaving an employer. Withdrawal benefits under a defined contribution plan may allow the employee to have immediate rights to any contributions, plus any earnings on those contributions. The employee may not be entitled to receive any employer contributions unless he or she is vested. Under a defined benefit plan, most likely the benefits will stay with the retirement plan until you become eligible to receive them.

BREAKING DOWN 'Withdrawal Benefits'

If an employee is fully vested, he or she may elect to withdraw the accumulated benefits and be subject to certain tax liabilities and/or penalties, or transfer it to an Individual Retirement Account (IRA) or, in some cases, to another employer plan. Most employer and union sponsored retirement plans in private industry in the United States are governed by Federal laws in the Employee Retirement Income Security Act of 1974 (ERISA) and the internal Revenue Code. The terms of vesting depend on the employer; however, maximum limits are set by legal statute.

RELATED TERMS
  1. Withdrawal Credits, Pension Plan

    The rights of an employee who has a qualified pension plan to ...
  2. Employee Contribution Plan

    A company-sponsored retirement plan where employees may elect ...
  3. Qualified Retirement Plan

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

    The process by which employees accrue non-forfeitable rights ...
  5. Unconditional Vesting

    Pension benefits that are entitled to the employee without any ...
  6. Graduated Vesting

    The accelerated benefits employees receive as they increase the ...
Related Articles
  1. Entrepreneurship

    Plans The Small-Business Owner Can Establish

    Don't hesitate to adopt a smart plan for you and your employees.
  2. Term

    What's a Qualified Retirement Plan?

    Employers establish qualified retirement plans to help their employees save money.
  3. 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.
  4. Professionals

    Qualified Retirement Plans

    FINRA/NASAA Series 66: Section 4 Qualified Retirement Plans. This section discusses two types of qualified retirement plans, defined benefit and defined contribution plans.
  5. Professionals

    Types and Provisions of Qualified Plans

    Types and Provisions of Qualified Plans
  6. Economics

    What Does Vesting Mean?

    Vesting is the process of accruing non-forfeitable rights.
  7. Professionals

    Employee Sponsored Retirement Plans

    Employee Sponsored Retirement Plans. This section deals with ERISA considerations and some basic tenets: Fiduciary Responsibility, Eligibility, Vesting and Communication
  8. Taxes

    401(k) And Qualified Plans: Eligibility Requirements

    By Denise ApplebyAny business, including sole proprietorships, partnerships, corporations and government entities may adopt a qualified plan. An employee may not adopt a qualified plan, but an ...
  9. Professionals

    Qualified Plan Rules and Options

    Qualified Plan Rules and Options
  10. Professionals

    Qualified Retirement Plans

    NASAA Series 65: Section 14 Qualified Retirement Plans. In this section two types of qualified plans: defined benefit and defined contribution plans.
RELATED FAQS
  1. What are qualified retirement plan types?

    Understand the different types of qualified retirement plans and what they mean in terms of employee and employer contribution ... Read Answer >>
  2. How do I "vest" something?

    Vesting is a term usually related to pension plans that some employer's provide to their employees.An employer may make contributions ... Read Answer >>
  3. How does a defined benefit pension plan differ from a defined contribution plan?

    Learn the differences between defined benefit plans and defined contribution plans when reviewing employer-sponsored qualified ... Read Answer >>
  4. Based on the Employment Retirement Income Security Act (ERISA), a retirement plan ...

    The correct answer is b. With regard to eligibility, the plan must cover all employees 21 and older who have worked for the ... Read Answer >>
  5. How can an entrepreneur save for retirement?

    Learn about the retirement savings plan options for entrepreneurs and small business owners, including administration and ... Read Answer >>
  6. Is a 401(k) a qualified retirement plan?

    Examine the different types of qualified retirement plans, and discover if a 401(k) meets the definition of a qualified retirement ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center