How to Withdraw Money From Your Empower Account

Empower offers tools and accounts to help individuals manage their finances and save for life goals, including retirement planning, general investment accounts, and cash management. You may need to access funds from your Empower account for planned expenses, emergencies, or retirement. Understanding the withdrawal process is important for managing your financial resources.

Preparing for Your Withdrawal

Before initiating any withdrawal, identify your specific Empower account type. This dictates the rules, options, and potential tax implications. Empower offers various account types, including employer-sponsored retirement plans like 401(k)s, Individual Retirement Accounts (IRAs), and general investment accounts. Your account type influences available withdrawal methods and restrictions.

The reason for your withdrawal also plays a key role. For instance, retirement withdrawals have different guidelines than hardship withdrawals or accessing funds from a non-retirement account. Understanding your specific need clarifies suitable options and required documentation.

Gather necessary information beforehand. You will need personal identification details to verify your identity, such as your social security number. For direct deposit, accurate bank account information, including routing and account numbers, is essential. If the withdrawal is for a beneficiary due to a death, relevant beneficiary information and documentation, such as a death certificate, is necessary.

Understand the various withdrawal options available based on your account type. Common options include a lump sum, partial withdrawals, periodic payments, or a direct rollover to another qualified account. Knowing these choices allows you to make an informed decision when you begin the actual withdrawal process. For certain withdrawals, like hardship distributions, specific documentation proving financial need may be required.

Initiating Your Withdrawal Request

To initiate your withdrawal request, log into your Empower account and navigate to the section dedicated to withdrawals or transfers. This is often found under “Banking,” “Transfers,” or “My Accounts” on the dashboard.

Within the withdrawal section, input the specific details of your request. This includes the amount you wish to withdraw, the source account, and the destination bank account details for direct deposit. You will also confirm your chosen withdrawal type, such as a lump sum or partial withdrawal.

A review screen is presented, allowing you to double-check the accuracy of your request before submission. This is a final opportunity to ensure all details, especially bank account numbers and withdrawal amounts, are correct. After confirming the details, submit your request. Empower will provide an immediate on-screen confirmation, and an email confirmation will be sent to your registered email address.

Understanding Withdrawal Types and Tax Implications

The tax implications of withdrawing funds from an Empower account depend on the account type and the nature of contributions. Funds contributed to retirement accounts are generally either pre-tax or after-tax. Pre-tax contributions and their earnings are taxed as ordinary income upon withdrawal, while after-tax contributions (like those in a Roth account) are usually tax-free when distributed in retirement.

Withdrawals from traditional pre-tax retirement accounts, such as a 401(k) or traditional IRA, are generally subject to federal income tax at your ordinary income tax rate. If you are under age 59½, these withdrawals may incur an extra 10% federal early withdrawal penalty. However, several exceptions can allow you to avoid this penalty:
Withdrawals due to total and permanent disability.
Distributions to beneficiaries after the account holder’s death.
Distributions used for qualified higher education expenses.
A first-time home purchase (up to $10,000).
Unreimbursed medical expenses exceeding a certain percentage of adjusted gross income.
Distributions made as part of a series of substantially equal periodic payments.
Qualified disaster distributions.

For retirement accounts, transfer options carry different tax consequences. A direct rollover moves funds directly from your Empower account to another qualified retirement account or IRA, with no tax withholding or immediate tax implications.

An indirect rollover involves funds being distributed to you first. You then have 60 days to deposit them into another eligible retirement account. If you fail to complete the indirect rollover within this 60-day window, the distribution becomes taxable and may be subject to the 10% early withdrawal penalty if you are under age 59½. For indirect rollovers from employer-sponsored plans, a mandatory 20% federal income tax withholding is applied, even if you intend to roll over the full amount. You would need to use other funds to make up this 20% to roll over the entire original distribution amount and avoid it being treated as a taxable withdrawal.

When initiating a withdrawal, you have options to elect federal and state income tax withholding. This allows taxes to be withheld at the time of distribution, similar to a paycheck. However, the amount withheld may not cover your full tax liability, and you may still owe additional taxes when you file your annual tax return.

Withdrawals from non-retirement investment accounts are taxed differently. These withdrawals are considered a return of principal first, which is not taxed, followed by capital gains. Capital gains are taxed at either short-term or long-term rates depending on how long the investment was held. Empower, as the plan administrator or custodian, is responsible for reporting distributions to the IRS. For retirement account withdrawals, Empower issues Form 1099-R, which details the gross distribution, taxable amount, and any federal or state income tax withheld. This form is used for reporting your withdrawal on your annual income tax return.

Receiving Your Funds and Follow-Up

After submitting your withdrawal request, Empower begins processing. The time it takes for funds to be received varies by withdrawal type and delivery method. For direct deposits via Automated Clearing House (ACH), funds arrive in your linked bank account within 1 to 3 business days after Empower processes the request. If you opt for a physical check, delivery time will be longer due to mailing, adding several business days.

You can monitor the status of your withdrawal request through your Empower online account. The platform provides a transaction history or withdrawal status section where you can track the progress of your request.

Should any issues arise, such as funds not being received within the expected timeframe or an incorrect amount being deposited, contact Empower’s customer service promptly. They can investigate and provide guidance. Having your confirmation number and the date of your request available will assist them.

Maintaining thorough records of your withdrawal is important for tax purposes. Empower issues tax forms, such as Form 1099-R for retirement distributions, by the end of January of the year following the withdrawal. Keeping a copy of your withdrawal request, confirmation, and the tax forms received from Empower helps ensure accurate reporting on your income tax return.