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I have a profit sharing plan with a former employer. How do I get the money from the profit sharing?

I have been search the company website and am unable to find where I need to go to get information on if this profit sharing certificate is still usable and how to cash it in.

Jun 24, 2017 by Cherl in  |  Flag
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Peter C. Karp Level 20

Hi Cherl

Companies do not usually post detailed information about their retirement plans on their website. You will need to call your previous employer and asked to speak to someone in the HR or Benefits Department. Let them know you are a former employee and want to know how to get a distribution from your Profit Sharing Plan. Keep in mind that Profit Sharing plans consist of employer contributions and typically have a vesting schedule so depending on the type of vesting schedule you may not receive 100% of those employer contributions. It would be helpful for you to also request a copy of the Summary Plan Description (SPD) which will explain all of the distribution options available to you. You should also be aware that if you do not rollover the proceeds to an IRA or your current employers retirement plan (if allowed) you may be subject to taxes as ordinary income, however you will need to check with your CPA or tax preparer as we do not provide tax advice. Best of luck on your search.

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Comment   |  Flag   |  Jun 29, 2017 from San Francisco, CA

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Herbert N Glass Level 18

I have answered many questions on BrightScope, but I think you will find my answer very simple to follow.

Simply call your ex-employer and ask to speak to the Benefit's Administrator, Accounting Department, or Profit Sharing Plan Administrator. If the receptionist doesn't know what you are talking about, ask to speak to the President or Owner of the company.

Whoever you eventually speak to, simply tell them you are a terminated employee and with to claim your Profit Sharing Account's money and ask them to help you. I am sure that they will know how and where to direct you to apply to get your money.

I hope this answer helps you.

Sincerely, Herbert Glass, Certified Pension Consultant Glass Retirement Strategies, Inc. Michigan

Comment   |  Flag   |  Jun 24, 2017 from Franklin, MI

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You will need to contact your former employer. They may manage the profit sharing plan or they may have another company manage it for them. If you can't get through to them, try searching on Brightscope.com, or contacting the Department of Labor. Retirement plans are required to file information about the plan with the Department of Labor.

Here are a few things you should know: 1. Sometimes they will just send the money out for you, but you will most likely be required to fill out a form and maybe even have it notarized. 2. This is money you have not paid tax on yet so you should consider your choices carefully. If you take the money out, you will owe federal income and maybe a state income tax on it too. It is usually best to have taxes withheld from a withdrawal up front. 3. To put off the taxes until later, you could choose to do a rollover to an IRA or another company retirement plan if you have one that will take in a rollover. I always recommend a "direct" rollover if possible. This means that the profit sharing plan sends the money directly to the new retirement plan account without you ever cashing a check. 4. You could do an "indirect" rollover to another retirement account by taking the money as a taxable withdrawal and then trying to undo the withdrawal by pushing that money into an IRA or a company retirement plan. There are about 100 ways to make a mistake with an indirect rollover so, as a rule, I try to avoid them. Or at least consult an expert when doing this. 5. If you are taking money out of the profit sharing plan (instead of rolling it over), you might owe a 10% penalty. Normally this age is 59 1/2, but sometimes it can be age 50 or 55 depending on the plan document. It is a good idea to ask whomever is running the profit sharing plan about this extra tax.

Comment   |  Flag   |  Jul 10, 2017

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