WITHDRAWALS, DISTRIBUTIONS, AND BENEFITS
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This section covers common terms applied to the benefits of
? Benefit: A payment or
coverage that one receives upon reaching a certain age or fulfilling some
? Distribution: A payment of money from a
fund given to its beneficiary.
? Distribution option: A choice of how one
may receive distributions. Options may include a lump sum or schedule of
payments based on prevailing rates and life expectancy.
? Distribution requirement: A rule that
regulates how one may receive distributions. For example, traditional IRAs
require that distributions be started by age 70?.
? Premature distribution: A withdrawal of
funds from a plan before one's eligibility age or date.
? Withdrawal plan: A plan in which an
investor receives regular payments from the plan. The plan liquidates assets to
pay the required amount. Interest, dividends and capital gains dividends may
still be reinvested into the plan.
Our final section defines a few of the tax advantages of