Non-Qualified Retirement Savings
When most people think of retirement savings, they think of 401k or 403b plans and the various types of IRAs. However, some people save money for retirement in other ways. Typically, money invested in regular bank accounts or brokerage accounts are not subject to withdrawal restrictions, and the full amount may be withdrawn at any time.
Employer-Sponsored Retirement Plans
Many employer-sponsored retirement plans such as 401k plans and 403b plans have provisions that prohibit the employee from withdrawing funds from the plan while employed with the company sponsoring the plan. Some plans offer an in-service withdrawal feature that allows an employee to take a percentage of their retirement savings out while still employed with the company. Any such withdrawals are subject to ordinary income taxes and, if made prior to age 59 1/2, a 10 percent penalty. In addition, defined benefit retirement plans, or pensions, may restrict the amount that may be removed from the plan or require that any withdrawals be made as periodic pension payments. Refer to your plan documentation for the specifics of your pension plan.
Individual Retirement Arrangements
Individual retirement accounts (IRAs) allow for withdrawals at any time. Withdrawals are not limited and the full amount may be withdrawn. However, with the exception of Roth IRAs, all withdrawals are taxable as ordinary income. In additional, all IRA types impose a 10 percent penalty on early withdrawals made by account owners under age 59 1/2. Roth IRAs allow tax-free withdrawals for people over age 59 1/2 as long as the account has been open and funded for at least five years.
Retirement Savings Withdrawals
With the exception of employer-sponsored plans that limit the amount that may be removed from the plan by employees, there is no limit on the amount of retirement savings you can withdraw. The money in retirement accounts is your money, so there are no limits on withdrawing it. However, it is important to consider the possible tax implications of any withdrawal, as they can cost a significant amount of money. The question isn't how much can you withdraw, but how much will a withdrawal cost you.