Withdrawal Credits, Pension Plan

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  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. 401(k) Plan

    A qualified plan established by employers to which eligible employees ...
  5. Defined-Benefit Plan

    An employer-sponsored retirement plan where employee benefits ...
  6. Employer's Liability Insurance

    A product for employers that protects them from major financial ...
Related Articles
  1. The Investing Risk Of Underfunded Pension ...
    Retirement

    The Investing Risk Of Underfunded Pension ...

  2. How To Save More For Your Retirement
    Taxes

    How To Save More For Your Retirement

  3. Pension Protection Act Of 2006 Becomes ...
    Retirement

    Pension Protection Act Of 2006 Becomes ...

  4. Who bears the investment risk in 401(k) ...
    Retirement

    Who bears the investment risk in 401(k) ...

comments powered by Disqus
Hot Definitions
  1. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  2. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  3. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  4. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  5. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
  6. Earnings Before Interest After Taxes - EBIAT

    A financial measure that is an indicator of a company's operating performance. EBIAT, which is equivalent to after-tax EBIT ...
Trading Center