Withdrawing Money
What you need to know
Once you reach age 59½, you can withdraw all or part of the money from your 401(k) account, even if you’re still working. There are other scenarios under which you can withdraw money from your 401(k) before you turn 59½. You must take your first required distribution during the calendar year in which you reach age 73.
Need to change your beneficiary?
Just print out and complete a new Beneficiary Designation form, and send it to the Equity-League office.
When you can withdraw money
You may be eligible to withdraw or roll over some or all of your 401(k) account balances if you:
- Reach age 59½
- Become permanently and totally disabled (as defined by the Plan)
- Suffer a hardship, as defined by the IRS and the Plan, such as paying for medical care for yourself or a beneficiary, repairing your home after a natural disaster, avoiding eviction or foreclosure, and others
- Qualify for a termination withdrawal because you don’t work for at least 12 consecutive months in covered employment
- Qualify for a Birth or Adoption Distribution (QBAD). See About QBADs below.
You will pay a penalty on some types of withdrawals. For details on qualifying for and making withdrawals, see the Pension Plan and 401(k) Plan Summary Plan Description.
You must take your first required distribution during the calendar year in which you reach age 73.
To initiate a withdrawal, email ELBF, or call the office at (212) 869-9380 within New York City or toll-free at (800) 344-5220 outside the metro area.
About QBADs
Who Is Eligible for a “Qualified Birth or Adoption Distribution” (QBAD)?
You may take a QBA Distribution during the one-year period beginning on the date your child is born or legally adopted. Only the adoption of a child under the age of 18 or who is physically or mentally incapable of self-support would qualify for the distribution. However, the adoption of your spouse’s child (your stepchild) does not qualify for an adoption.
Please note that in order for the distribution to qualify as a QBAD, you must report the name, age, and taxpayer identification number of the new child (or disabled person) on your individual income tax return.
Are there limits that apply to QBADs?
Yes. There is a $5,000 limit per participant per child. Each parent may take a distribution of up to $5,000 per child; i.e., there is not a “family” limit. Additionally, the $5,000 individual limit is determined separately for each child. For example, assume a couple has twins. Each parent could withdraw up to $10,000 ($5,000 x two children) from his or her eligible retirement plan accounts. If both parents were participants in the Equity-League 401(k) Fund, they could each withdraw up to $10,000 from their 401(k) account.
What are the Tax Withholding and Reporting Requirements for a QBAD?
QBADs are subject to the 10% withholding rate for federal income taxes, unless you elect otherwise. As noted above, they are not subject to the 10% penalty for distributions before age 59 ½. They are also not treated as eligible rollover distributions.
John Hancock, the Plan’s Retirement Record Keeper, will report the amount of the distribution on a tax form known as a 1099-R by no later than January 31 of the year following the year of the distribution.
Can you repay a QBA Distribution?
Yes. You will have up to three years from the date the distribution is received to repay the QBAD should you elect to do so. However, in order to repay the distribution, you must either be employed in “Covered Employment” (work requiring or permitting contributions to the 401(k) Fund on your behalf) or have an account balance. The amount of the repayment cannot exceed the amount of the QBAD distribution.
Forms of payment
Everyone has different retirement income needs, so the Equity-League Benefit Funds 401(k) Plan offers several forms of benefit payment. Your payment options are determined by your age and other factors, such as your marital status.
For details about the forms of payment, review the Pension Plan and 401(k) Plan Summary Plan Description.
Lump sum
Rollover
Installments
Survivor benefits
If you die before receiving your 401(k) account balance, your spouse or other designated beneficiary is entitled to your remaining benefit. To name a beneficiary who is not your spouse, you must have written consent from your spouse.
Your surviving spouse or other beneficiary may receive your remaining 401(k) balance through a direct rollover, as a lump-sum payment, in multiple payments, or in installments.
If you have no surviving spouse and/or designated beneficiary, your account balance will be distributed to your family members or your estate. For details, review the Pension Plan and 401(k) Plan Summary Plan Description.