How to request a retirement distribution

How to request a retirement distribution

Retirement distributions transfer assets out of a retirement account to another account or third party. You can perform most retirement distributions online via check, wire, ACH, or internal transfer using the Move Money tools standard workflows on an IRA account.  First-time tax withholding elections can be set when you distribute the first time online through Move Money, as well as changed with subsequent transactions. 

Some retirement distributions from account types not supported by the Move Money tool Tooltip as well as distributions to beneficiaries of an estate require the use of forms.

All processes
  • Firm name and master account number
  • Schwab account number from which funds will be withdrawn and to which funds will be deposited, if applicable
  • Adobe® Reader® or Adobe Acrobat® 7.0 or higher (download the latest version on the Adobe website)
  • View Move Money security function*
In addition to the information above, the following may be required:
Using the Move Money tool
  • View Move Money access
  • For checks and internal cash transfers, Update Move Money access
  • For wires, Request Wire access
  • For ACH, Request MoneyLink‡ and Update MoneyLink
  • For internal position transfers: Request Journal Positions/Request Internal Position Transfers access
Using forms
  • For distributions from an individual 401(k), a completed Individual 401(k) Distribution Request Form
  • For distributions from a qualified retirement plan, a completed QRP/Keogh Distribution Request Form
  • For distributions from a 403(b)(7) Tooltip account, a completed 403(b)(7) Distribution Form

† Only assign the security function to users in your firm with authority to view withdrawal requests. 
‡ Only assign the security function to users in your firm with withdrawal authority.  
Contact your firm security administrator to provide you with the appropriate data access and function access on the Schwab Advisor Center® website. If you have questions about adding or removing users, contact Advisor Platform Support at 800-647-5465

Using the Move Money tool 
  1. Go to the Move Money tool in Schwab Advisor Center and select the account from which the funds will be withdrawn.
  2. For first distribution, be sure to enter the desired tax withholding election amounts, which will show as N/A until they’re established.
  3. Complete all applicable sections.
  4. Note that client authorization may be required on the transaction to confirm their approval of the tax withholding amount specified.
Using paper forms
  1. From the forms library in the Account Management tab of Schwab Advisor Center, select the applicable form for your situation.
  2. Fill in the details of the selected form, including the client’s account number from which the assets will be disbursed, the distribution reason, frequency, and distribution method. The federal and state tax withholding elections (TWE) Tooltip , if applicable, should be provided by the client.
  3. Print the form along with the accompanying information packet, and obtain the appropriate signatures from the plan administrator, participant, or participant’s spouse. Upload the form to DocuSign or send the signed forms to your Schwab service team via a Schwab Advisor Center service request.

The process to request a distribution from a retirement account to a beneficiary due to the death of the account holder has many variables.

Because of the complex reporting requirements based on IRS regulations, you should contact your service team to discuss the requirements for your specific situation to determine the documentation needed. Refer to the How to handle deceased clients' assets article for more information.

Once you have submitted your retirement distribution request:

  • For future changes to tax withholding elections, you can enter the new desired elections with the transaction setup in Move Money or you can complete the applicable tax withholding form. For IRAs, use the Tax Withholding Election Form for Individual Retirement Accounts (IRA TWE). For QRP, individual 401(k), and 403(b)(7) accounts, call your service team to obtain the Tax Withholding Election Form for Qualified Retirement Plan Accounts.
  • If you submit the distribution using forms, the normal processing time is 5 to 10 business days once all the paperwork is complete.
  • For requests submitted online, the confirmation page in the Move Money tool provides confirmation that your transaction has been submitted. You can monitor transaction progress by clicking “View Status” next to the transaction in the Account transactions table, including whether your client has eAuthorized the request.  If you need to Edit or Cancel the transaction, you can do so from the links on the same table. 
  • Within the master status view of the account, you can access the Move Money Activity Report, which displays all requests entered on a particular day by your firm or your service team, or any the client may have entered online.
  • If you submit the distribution through the Move Money tool, you can use eAuthorization to obtain end client approval as needed. The transaction will remain in pending status until the end client approves the distribution through Alliance. If end client approval is needed and you choose not to use eAuthorization, your transaction will remain in pending status until the letter of authorization you submit using Service Request is processed.
  • Schwab reports all distributions for each calendar year to the IRS on Form 1099-R, and the client must report plan distributions on Form 1040 when income taxes are filed.
  • If you have questions about filling out forms or using Schwab Advisor Center to submit retirement distributions, contact your service team.

Go to the forms library on Schwab Advisor Center and select the forms below.

Form: 403(b)(7) Distribution Form
Form: Affidavit of Domicile
Form: IRA Distribution Form
Form: Individual 401(k) Distribution Request Form

Form: Limited Power of Attorney (Investment Advisor LPOA)
Form: QRP/Keogh Distribution Request Form
Form: Tax Withholding Election Form for Individual Retirement Accounts (IRA TWE)
Form: Withdrawal Power and Trading Authorization Addendum to Limited Power of Attorney (LPOA)

Resource: How to support your clients on Schwab Alliance

 

If a retirement distribution is rejected, how am I notified?
For digitally submitted transactions, enroll in Move Money alerts to be informed of transaction failures.  Navigate to Accounts / Alerts and then click “Settings” in the upper right-hand corner to configure your alerts.  If you submitted a form that was rejected during manual processing, you can also view the reason and resubmit paperwork under Accounts/Activity in the Status section.

Do clients have to withhold taxes from a retirement account distribution?
Clients may choose not to have taxes withheld, but their documented consent for this is required per IRS Guidance, as there are situations that require them to pay federal and state income taxes on their retirement account distributions. Consult with a tax advisor for more information.

What documentation is required for a retirement distribution in the event of a divorce?
A Divorce Transfer form signed by both parties is required, along with a final divorce decree, signed by a judge, which clearly describes the division of property. Additional documentation may be requested by the retirement services team.

Does my service team handle all retirement distribution requests?
Due to the complexity of some retirement distributions, the Schwab Retirement Services Department handles all requests for individual 401(k), QRP, and Keogh distributions, while the Estate Distribution Services Department processes all death distributions.

How to handle deceased clients’ assets
How to submit a check request online
How to submit an internal transfer (journal) request online
How to submit an ACH transaction
How to submit an outbound wire transfer online
Introduction to individual 401(k) plans
Introduction to the Move Money tool
Introduction to qualified retirement plans (QRP)
Introduction to traditional IRAs
Tax withholding election (TWE) FAQs