What are the tax consequences of taking a distribution in the form of Cash?
Cash distributions are subject to a mandatory 20% tax withholding by the employer. However, the distribution is taxable as ordinary income in the year that distribution is taken; therefore, if your tax bracket is higher than 20%, you will pay more taxes upon filing your Form 1040. You will receive a Form 1099-R in January of the year following the year in which the distribution takes place. In most cases, in Box 7 of Form 1099-R, the Distribution Code will be a 1, which indicates a premature distribution of plan funds. All premature distributions are subject to a 10% early withdrawal penalty by the IRS, which is paid when filing Form 1040. There are cases in which the 10% early withdrawal penalty does not apply. These are: distributions paid to participants who have reached age 59 1/2 (Code 7), distributions paid due to a death benefit (Code 4), and distributions paid as a result of a qualified Domestic Relations Order (Code 2). How can I get money out of my pension and/or profit shari
