Things You'll Need:
- Retirement plan distribution paper work
- Pen
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Step 1
Once you've been laid off your old employer will typically send a distribution package to you explaining your distribution election options. If they do not, you may call them for this paperwork or if you have access to a computer download the distribution paperwork from the administrator's website.
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Step 2
It is your responsibility to read and understand your distribution election options: (1) Direct Rollover, (2) Lump sum payment, (3) Installments over a specified period of time, or (4) Postpone distribution
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Step 3
Option #1: Direct Rollover
Retirement assets are always payable to a new employers qualified plan or an IRA custodian, never an individual. This allows your retirement assets to stay tax deferred. -
Step 4
Option #2: Lump sum distribution
Is a one-time payment to the individual. The employer is required to withhold 20% automatically with this option. If you are under the age of 55 in the year in which you are terminated then you will also obtain a 10% IRS penalty for early distribution. -
Step 5
Option #3: Installments over a specified period of time
This will allow you to receive a periodic payments of your vested balance over a specified period o time. -
Step 6
Option #4: Postpone distribution
You may also have the right to postpone your retirement plan distribution if you have not reached your required beginning date (RBD*) or your vested balance is greater than $5000. If your vested balance is under $5000, you have 60 days to return your distribution election paperwork, otherwise, your old employer has the right to make a direct rollover of your assets into an IRA.
*April 1 following the later of the close of the calendar year in which you attain age 70 1/2
