What is an in-service distribution?

Some 401(k) plans allow you to take a withdrawal from your contributions to your 401(k) while employed for any reason, often beginning at (but not before) age 59 ½. You may also be able to withdraw your funds that have been rolled in from an outside retirement account before age 59 ½. This in-service distribution can be rolled over to an IRA or another qualified plan, or cashed out. Participants may opt to use this distribution type to cover a current need, or diversify the tax and investment options they’re looking to use.

Please note that while the IRS permits plans to allow for in-service distributions, 401(k) plans are not required to offer this option. Your 401(k) plan’s Summary Plan Description (SPD) can provide more information on what types of withdrawals your plan allows, and you can see more information about distributions you may be eligible for by selecting your 401(k) account in the withdrawal flow here.

It is important to consult IRS guidelines or a financial professional prior to initiating an in-service distribution.