TIPB
TAX ISSUES AND PLANNING FOR
PRE-RETIREMENT DISTRIBUTIONS
FROM QUALIFIED PLANS AND IRAS
Retirement plans are intended to provide retirement income, but in some cases, distributions before retirement may be necessary or desirable. This course discusses the various ways and means and reasons for distributions or use of retirement assets prior to retirement, including in-service distributions, distributions that occur when an employee changes employers, loans from qualified plans, and distributions under qualified domestic orders as well as the income-tax and penalty-tax rules for pre-retirement distributions.
Major topics include:
- Learning the vocabulary and terms of art associated with pre-retirement distributions;
- Knowing the rules and limitations of in-service distributions from qualified pension and profit-sharing plans, including the hardship rules for §401(k) distributions, the diversification requirements for employee stock ownership plans, and the distribution rules when changing employers prior to retirement other than because of death or disability;
- Applying the rules for the 10-percent early withdrawal additional tax, including knowing the distributions to which they apply and the exceptions to the rules;
- Mastering the rules regarding plan loans, including which plans may permit loans, the permitted loan terms, amounts, and payment rules, as well as the tax rules associated with failure to repay plan loans, and the types of loan transactions that are treated as prohibited transactions; and
- Acquiring a general familiarity with QDROs, including the nature of the payments and the tax rules as they apply to a spouse or former spouse as alternate payee and to someone other than the spouse as alternate payee.
CPE Credit: 2 hours, Taxes
Level of Knowledge: Intermediate
Prerequisites: None |
