Distributions
Amounts withdrawn from IRAs , 401(k)s and other tax-deferred retirement accounts.
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In-service Withdrawal
Definition Withdrawal permitted when the participant does not meet one of the traditional triggering events. Under a 401(k) plan, an in-service withdrawal of elective contributions
Hardship Withdrawal or Hardship Distribution
Definition Withdrawal from a participant’s Retirement Savings account as a result of the participant experiencing a financial hardship. Hardship must be defined in the plan document,
Forward Averaging
Definition Also referred to as Income Averaging Tax treatment where lump-sum distributions from qualified plans are treated as if they were distributed averagely over a
Five-year Averaging
Definition Income averaging strategy used to determine taxes on a lump-sum distribution as if the distribution occurred over a five-year period, resulting in a reduction
Fair Market Value (FMV)
Definition The market value of a retirement account as of a particular date. In general, the fair market value of a plan’s assets is the
Early Withdrawal Penalty
Definition A penalty that applies to certificates of deposit (CD)s ( or time deposits) from which withdrawals are made before the maturity date. The penalty
Early Withdrawal
Definition Withdrawal that occurs from a certificate of deposit (CD) before the maturity date. An early withdrawal penalty is usually applied to CDs from which early withdrawals
Early distribution penalty exceptions
Definition A condition under which the early distribution penalty is waived. Some exceptions apply to IRAs only, some apply to qualified plans , 457(b) and
Early distribution Penalty
Definition Distributions that occur before the retirement account owner reaches age 59 ½ are subject to an early distribution penalty (or excise tax) of 10%,
