Withdrawals/Rollovers That Are Permitted From 401(k) Accounts
You may be eligible to withdraw/rollover some or all of your 401(k) account balances if:
- You reach age 59 ½ (Normal Retirement Age), or
- You become permanently and totally disabled (as defined by the Plan), or
- You suffer a “hardship”, as defined by the IRS and the Plan (hardship withdrawals are not eligible for rollovers), or
- You qualify for a “Termination Withdrawal” because you don’t work for at least 12 consecutive months in “Covered Employment” (covered employment is any work under any collective bargaining agreement that permits salary deferrals, whether or not you elect to defer a portion of your salary to the Fund).
Requests for all of the above withdrawals must be filed at least 15 days prior to the proposed withdrawal date.
Why Are the Reasons For Withdrawals Limited?
401(K) accounts were created by law to assist workers in accumulating retirement savings, partly through favorable tax treatment. In return for their tax favored status, all 401(k) plans are required to place limitations on the ability to withdraw from these accounts, so that withdrawals are available only when one reaches retirement age, and in the event of a limited number of other hardships.
Normal Retirement Age Withdrawals
Once you have attained age 59½, you may withdraw all or a portion of monies in your 401(k) accounts, even if you are still employed. To make such a withdrawal, you must file a written request at least 15 days before the proposed withdrawal date.
You may obtain a withdrawal form from the Fund Office. Such withdrawals are subject to income tax, but are not subject to the federal excise tax that applies to pre-retirement age withdrawals (with the exception to withdrawals by those who become disabled – please see “Disability Withdrawals” below).
To apply, please submit all of the following to the Fund Office:
- A completed Withdrawal Request form, and,
- One of the items on our Proof of Age/Identification list
Disability Withdrawals
If you terminate employment before attaining age 59½ because you have become totally and permanently disabled (as defined by the Plan) you are entitled to withdraw all or a portion of your monies. You are considered totally and permanently disabled under the Plan if you have received an award from the Social Security Administration indicating that you are totally and permanently disabled.
Disability withdrawals are subject to income tax, but are not subject to a federal excise tax on early distribution. Depending on the circumstances, disability withdrawals may have tax advantages over normal retirement age withdrawals, which our staff can explain to you once they understand the circumstance surrounding your withdrawal.
To apply, please submit all of the following to the Fund Office:
- A completed Disability Withdrawal Request form, and,
- One of the items on our Proof of Age/Identification list, and,
- An “award” letter from the Social Security Administration issued within the past 12 months.
Hardship Withdrawals
You can qualify for a Hardship Withdrawal, if you incur expenses in connection a “hardship” (as defined by the IRS and the Plan):
- Medical Care for yourself, spouse, dependents, or primary beneficiary of the 401(k) Plan.
- Purchase of Primary Residence excluding mortgage payments.
- Tuition and Related Education Fees including room and board expenses, for the next 12 months for post-secondary education for yourself, spouse, dependents, or primary beneficiary of the 401(k) Plan.
- Prevention of Eviction or Foreclosure on your primary residence.
- Funerals of your parent, spouse, dependents, or primary beneficiary of the 401(k) Plan.
- Repair of Primary Residence as a result of a casualty as defined by the IRS (e.g., damage to your home that was directly attributed to natural disasters such as hurricanes or flood damage).
- Expenses and losses due to disaster: Expenses or losses you incurred on account of a disaster declared by the Federal Emergency Management Agency (FEMA) if at the time of the disaster you lived or worked in an area designated by FEMA for individual assistance with respect to the disaster.
*IRS Regulations do not permit a Hardship Withdrawal to be taken in the event you qualify for another withdrawal type available under the Plan (i.e. Normal Retirement, Termination of Employment, etc.).
Important Limitations on Hardship Withdrawals
Your hardship withdrawals are limited to the available balance in your 401(k) Account. For example, if you contributed elective deferrals and/or received employer contributions totaling $5,000.00, but you suffered a negative return of investments, and your account balance has been reduced to $4,000.00, then you are only eligible to withdraw $4,000.00.
To apply, please submit all of the following to the Fund Office:
- A completed Hardship Withdrawal Request form, and,
- One of the items on our Proof of Age/Identification list,
- The applicable Hardship Documentation, and,
- A statement that the amount requested is not greater than you immediate financial need. However, you may request an additional amount over the hardship to pay anticipated federal, state or local income taxes or excise taxes due to the distribution.
Important Note: If you make a hardship withdrawal you may be subject to an early withdrawal excise tax, and are subject to federal, state and local income tax on the withdrawal as well.
Termination of Employment Withdrawals
You are entitled to withdraw all or a portion of your 401(k) account balances if you have not engaged in covered employment for 12 or more consecutive months and are not engaged in covered employment at the time your application is received. Any period for which you are paid salary under a collective bargaining agreement (an agreement that permits you to defer salary to the Fund) is considered covered employment, whether or not you are performing services during that period and whether or not you choose to defer.
To apply, please submit all of the following to the Fund Office:
- A completed Termination of Employment Withdrawal form, and,
- One of the items on our Proof of Age/Identification
Important Note: Termination of employment withdrawals may be subject to an early withdrawal excise tax, and are subject to federal, state and local income tax on the withdrawal as well.
Even if you are no longer working, you have the option of leaving some or all funds in your 401(k) account until the required distribution age of 72. The value of your account will, of course, fluctuate with changes in the market value of your investments.
Learning more about payment options
If you are eligible to withdraw funds in one of the situations described on this page, learn more how you may receive your withdrawal at our Forms of benefit payment page.
Everyone has different retirement income needs, so the Equity-League Benefit Funds 401(k) Plan offers several forms of benefit payment, as summarized on this page. Possible payment options include a lump sum benefit, a rollover, installments, an annuity, or a survivor benefit to your beneficiary. The options available to you are determined by your age and other factors.
To learn more about the tax implications of taking your 401(k) benefit, visit our Withdrawing money from your 401(k) account page. For complete information, please refer to the Equity-League Benefit Funds Pension Plan and 401(k) Plan Summary Plan Description.
You may choose to receive your Equity-League Benefit Funds 401(k) account balance in a lump-sum payment or payments. The benefit payment may be taken in cash, or, in some cases, through a rollover distribution to another eligible retirement plan.
You may choose to have all or part of a distribution from your 401(k) account rolled over into another eligible retirement account. Direct rollovers are not subject to income tax withholding. Additionally, you have up to 60 days after you receive a 401(k) distribution to roll it over to another account.
Several installment options are also available to you after you reach age 59½, or if you become disabled1.
- Fixed amount installments – You or your beneficiary receive payments of an amount chosen by you (or your beneficiary) every month, calendar quarter, semi-annually, or annually. Fixed amount payments will be issued until the account balance is exhausted.
- Fixed period installments – You or your beneficiary receive payments every month, calendar quarter, semiannually, or annually, for a period of time defined by you (or your beneficiary). The amount of each payment will be the account balance divided by the number of remaining payments for the chosen period until the account balance is exhausted.
- Lifetime installments – You or your beneficiary receive payments every month, calendar quarter, semiannually, or annually, for a period of time estimated to be your life expectancy2.
Taking a survivor benefit as a beneficiary
To learn more about how your spouse or other named beneficiary may receive your 401(k) benefit, visit our 401(k) survivor benefits page.
Questions?
For complete details about the Equity-League Pension and 401(k) Plan, refer to the Equity-League Benefit Funds Pension Plan and 401(k) Plan Summary Plan Description. If you have additional questions or need assistance, contact the Equity-League Benefit Services Department at (212) 869-9380 or outside the NY Metro area, at 1-800-344-5220 from 9:30 am to 5:30 pm ET