Accessing Money from Employer-Sponsored Retirement Plan

As the name suggests, an employer-sponsored retirement plan is a plan that an employer sets up and maintains for its employees' retirement. A qualified retirement plan is an employer-sponsored retirement plan that receives special tax treatment under federal law. 401(k) plans and profit-sharing plans are common examples of qualified employer-sponsored retirement plans.) The tax benefits of a qualified plan generally include pretax contributions and tax-deferred growth of investment earnings. In return for such benefits, qualified plans generally must comply with specific federal rules set forth under the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code (IRC).

If your employer offers a qualified retirement plan and you have money in the plan, this may be a source of funds for college expenses. However, most financial professionals recommend tapping retirement accounts for college expenses only as a last resort.

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