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What are the Withdrawal Rules for My Money Purchase or Profit Sharing Plan?

The standard withdrawal rules for 401(k) accounts apply to these plans. Once you are age 59½, you may begin to make penalty-free withdrawals and only pay income taxes on the amount you withdraw.

If you decide to take out money before age 59½, you will have to pay a 10% penalty fee in addition to income taxes on the amount of your withdrawal. Of course, there are exceptions that would allow you to avoid this early withdrawal fee.

Once you turn 70½, you must begin to withdraw a minimum amount (determined by the IRS) unless you are still currently working at the company. If you are still working at the company and are over age 70 ½, you do not need to begin withdrawing the minimum amount until the year you retire. These mandatory withdrawals are known as Required Minimum Distributions, or RMDs.

How much should I withdraw from my retirement accounts once I retire?
What role does inflation play in my retirement planning?
How Can I Establish a Money Purchase/Profit Sharing Plan?

Keywords: household income, retirement accounts, RMDs, age 70 ½, 10% penalty, early withdrawals,