The IRS issues rules about the withholding of taxes from distributions from a 401(k) plan or other tax-qualified plans. These rules can and often do change from time to time. This chart is intended to provide a high-level summary of current IRS rules. You should review the plan documents as well, which also control whether certain distributions are allowed by your plan and any specific rules which may differ from the summary information presented in this chart. J.P. Morgan is not a law firm or tax advisor. We can not and do not provide any legal, tax, investment, or financial advice to any individual. We strongly encourage you to consult with a tax or other qualified financial professional before taking any type of distribution from your plan.
| Distribution Type | Federal Tax Withholding Rule | |||
| Eligible for Rollover for an IRA or other tax-qualified plan? | 10% Early Distribution Tax | Mandatory 20% Withholding | Participant May Waive Withholding of Taxes | |
| General | ||||
| Distribution due to IRS tax levy | N | N | Y | N |
| Distribution to Alternate Payee due to Qualified Domestic Relations Order ("QDRO") | Y | N | Y | N |
| In-Service Distribution | ||||
| Part of a series of substantially equal periodic payments made for the life (or life expectancy) of the employee or the joint lives of the employee and designated beneficiary | N | N | N | Y |
| Qualified Reservist Distribution | N | N | N | |
| Hardship Withdrawals | N | N | Y | Y |
| Distribution made to a participant pursuant to IRS or DOL correction rules | N | N | N | N/A |
| Coronavirus Related Distributions (ended 12/31/20) | Y | N | N | Y |
| Distribution due to specific emergencies and disasters (other than a hardship withdrawal) | N | N | Maybe (depending on specific FEMA guidance) | |
| Distribution of up to $5,000 for a qualified birth or adoption of a child | N | N | N | N |
| Permissive withdrawals from the Automatic Enrollment Plan | N | N | N | N |
| Loans | N | N | N | N |
| Disability | Y | N | N | N |
| Required Minimum Distribution ("RMD") | Y | N | Y | N |
| Any other type of in-service withdrawal this is permitted by the plan and not mentioned in any of the other categories above | Maybe | Y | Y | N |
| Separation of Services | ||||
| Terminating employee | Y | N | Y | N |
| Death | ||||
| Death Distributions (payment to a spouse or other designated beneficiary) | Y | N | Y | N |
| Death Distributions (payment to the non-spousal beneficiary) | N | N | Y | N |
| Retirement | ||||
| Normal Retirement Age (but other than an RMD) | Y | N | Y | N |
| Early Retirement | Y | Maybe - depends on the participant's age and plan rules | Y | N |
| Plan Termination | ||||
| Plan Termination | Y | N | Y | N |
| Conversions | ||||
| In-Plan Roth conversion to designated Roth account | N/A | N | N | N/A |
We hope you found the above information helpful. If you need further assistance, please get in touch with us at everyday401k.help@vestwell.com