You must consider your options carefully when withdrawing money early from your pension. You may get hit with a 10-percent tax penalty from any early withdrawal before the age of 59 1/2. The only exceptions to this penalty are if you have been laid off or you leave your job at the age of 55. Another factor is based on the type of pension plan. Cash or deferred arrangement plans, such as a 401(k) or a profit-sharing pension, allow for early withdrawal. Defined benefit plans that give you a specified monthly benefit at retirement do not allow withdrawals under any circumstances. Always contact your employer or plan administrator about your options.
Fill out an Application For Withdrawal to withdraw funds early from your pension, depending upon your state regulations and employment policies. Complete part one by filling out your personal information such as your name, address, phone number and date of birth. Indicate what type of pension plan membership you are currently enrolled in and your member number. Provide your Social Security Number, your employer's name, the date and reason your employment was terminated.
Finish part one by answering the questions on whether you are currently receiving worker's compensation benefits and if you have a worker's compensation claim pending. If you are eligible for retirement at the date of filling out this application or within two years of the retirement age, you must agree to waive the lifetime monthly allowance and group life insurance to receive an early refund. Sign your name on the line if these standards apply to you.
Complete part two of the application concerning the taxable portion of your payment. Indicate whether you want a percentage of federal income tax withheld on the payment. You also have the options to roll over payments or the taxable portion of the payment. Indicate if the rollover should affect the entire payment, the entire taxable payment, a certain dollar amount of the taxable portion or the entire taxable portion and a certain amount of the nontaxable payment. Check the appropriate box on whether the rollover is for an IRA or an employer plan.
Sign part three indicating your selection regarding rollover and withheld federal income tax. Mail the form to the employer indicated on the form, who will fill out the remaining paperwork regarding the application.