7.29 Withdrawals From Employer’s Qualified Retirement Plan Before Annuity Starting Date
You generally may not make tax-free withdrawals from your employer’s qualified retirement plan, qualified employee annuity plan, or 403(b) plan before the annuity starting date, even if your withdrawals are less than your investment. On a withdrawal before the annuity starting date, you must pay tax on a portion of the withdrawal unless the exceptions below apply. The portion of the withdrawal allocable to your investment is recovered tax free; the portion allocable to employer contributions and income earned on the contract is taxed. To compute the tax-free recovery, multiply the withdrawal by this fraction:
Your investment and vested benefit are determined as of the date of distribution.
Exceptions.
More favorable investment recovery rules are allowed in the following cases:
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