Withdrawal Credits, Pension Plan


DEFINITION of 'Withdrawal Credits, Pension Plan'

The rights of an employee who has a qualified pension plan to cash out any accumulated benefits upon leaving an employer. Under a pension plan, through withdrawal credits, the employee may 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. The terms of vesting depend on the employer; however, maximum limits are set by legal statute.

BREAKING DOWN 'Withdrawal Credits, Pension Plan'

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.

  1. Fully Vested

    A person's right to the full amount of some type of benefit, ...
  2. Retirement

    When a person chooses to leave the workforce. The concept of ...
  3. Defined-Contribution Plan

    A retirement plan in which a certain amount or percentage of ...
  4. Defined-Benefit Plan

    An employer-sponsored retirement plan where employee benefits ...
  5. 401(k) Plan

    A qualified plan established by employers to which eligible employees ...
  6. W-2 Form

    The W-2 form reports an employee's annual wages and the amount ...
Related Articles
  1. Retirement

    The Investing Risk Of Underfunded Pension Plans

    Determine the risk to a company's EPS and financial condition resulting from an underfunded pension plan.
  2. Taxes

    How To Save More For Your Retirement

    The Economic Growth and Tax Relief Reconciliation Act of 2001 made it easier to prepare for the future. Will you be ready?
  3. Entrepreneurship

    Business Owners: A Guide To Qualified Retirement Plan Loans

    Thinking of adding a loan feature to your company's plan? Here's what you need to know.
  4. Retirement

    Pension Protection Act Of 2006 Becomes Law

    Learn how the passed bill can help you save more for retirement.
  5. Retirement

    Roth 401(k), 403(b): Which Is Right for You?

    Learn how to decide between a traditional or Roth version of the 401(k), 403(b) or 457(b) retirement plans to help you build your nest egg.
  6. Markets

    What Is the Labor Market Conditions Index?

    The Labor Market Conditions Index is a new Fed indicator to track labor statistics. How useful is it?
  7. Professionals

    How To Hire and Retain An Overqualified Candidate

    Understand how to hire and retain overqualified candidates by proactively seeking them out, discerning their motivations and then offering what they want.
  8. Retirement

    Is the New myRA Plan Right for You?

    The new myRA accounts seem to deliver on their promise of being “simple, safe and affordable.” Just be prepared for paltry annual returns.
  9. Retirement

    5 Reasons to Start a Business After You Retire

    It can be beneficial in any number of ways: mentally, occupationally and even financially.
  10. Investing Basics

    Fee-Only Financial Advisors: What You Need To Know

    Are you considering hiring a fee-only financial advisor or one who is compensated via commissions? Read this first.
  1. Who bears the investment risk in 401(k) plans?

    Who actually bears the investment risk in a pension plan depends on the type of pension plan that is employed. In a broad ... Read Full Answer >>
  2. When can catch-up contributions start?

    Most qualified retirement plans such as 401(k), 403(b) and SIMPLE 401(k) plans, as well as individual retirement accounts ... Read Full Answer >>
  3. 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 >>
  4. 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 >>
  5. Are catch-up contributions included in the 415 limit?

    Unlike regular employee deferrals, catch-up contributions are not included in the 415 limit. While there is an annual limit ... Read Full Answer >>
  6. 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 >>

You May Also Like

Hot Definitions
  1. Cyber Monday

    An expression used in online retailing to describe the Monday following U.S. Thanksgiving weekend. Cyber Monday is generally ...
  2. Bar Chart

    A style of chart used by some technical analysts, on which, as illustrated below, the top of the vertical line indicates ...
  3. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
  4. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  5. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  6. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
Trading Center