Tax Tip: Using In-Service Withdrawals for Planning Strategies

Do you have a 401(k) and want to use a portion of your funds for something else that is well suited to your planning goals and retirement needs? In-service withdrawals may be available from your 401(k) or other qualified retirement plan while you are still working and contributing to the plan.

In-service withdrawals may be directly transferred to an IRA or other qualified plan that offers you additional or alternative investment and retirement distribution options.

It is important to find out from the plan administrator what your plan’s limitations are before initiating an in-service withdrawal. There could be, for example, eligibility restrictions. This type of information should also be contained in your plan documents.

Using in-service withdrawals for planning strategies to help achieve your retirement goals can be great, but it is important to first discuss this option with your personal retirement distribution planning specialist or other professional advisor to help ensure this is appropriate for your situation.

*Keep in mind that an in-service withdrawal is not the same as a hardship withdrawal.