Can I Withdraw Money From My Pension Plan?

This is rarely an option, but the IRS does allow it. In general, you can’t withdraw money from a Pension Plan before you retire.

You also may not be able to make non-recurring withdrawals after retirement, unless it is a lump-sum settlement. If your plan allowed it, the IRS would treat it just like withdrawals from a 401(k). Withdrawals before 59 ½ would be penalized with a 10% early withdrawal tax.

Pension plans are not likely to allow this because plan assets are pooled together and have the singular purpose of paying retirement income to employees when they retire, for as long as they live, in most cases.

This is a huge liability, and while they are often willing to let pensioners exit the plan early by taking a lump-sum settlement, many non-recurring withdrawals would require significant paperwork and probably further expensive consultation with the actuary.

The exception to this would be if the plan had very few participants, since small partnerships and other small business are able to have a defined benefit plan. If the business had enough surplus assets on hand, and could perform the accounting etc. with relative simplicity, it could be arranged.

Can I Take a Periodic Distribution from my Pension Plan?
Will My Pension Payments Affect My Social Security Payments?