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Accessing Your IRA: What Nordson Employees Need to Know About Early Withdrawals

Healthcare Provider Update: Nordson offers a comprehensive benefits package to its U.S. employees, including medical, dental, vision, and prescription coverage. The company supports employee wellness through HSAs, FSAs, and a wellbeing program. Retirement benefits include both traditional and Roth 401(k) options, life insurance, and disability coverage. Nordson also provides paid time off, adoption reimbursement, and tuition assistance5. Healthcare costs in the United States are projected to continue rising through 2026, with insurers proposing significant premium increases for Affordable Care Act (ACA) plans. A recent analysis found that ACA insurers are seeking a median premium increase of 15% for 2026, marking the largest hike since 2018. This surge is attributed to factors such as the anticipated expiration of enhanced premium tax credits, rising medical costsincluding expensive medications and increased hospital staysand a shift in the risk pool towards higher-cost enrollees. Without the renewal of enhanced subsidies, out-of-pocket premiums for ACA marketplace enrollees could increase by more than 75% on average. Click here to learn more

'While early access to IRA funds may seem like a solution to immediate cash needs, Nordson employees should carefully consider the long-term impact of such withdrawals, as the penalties and lost compound growth can affect their retirement goals.' – Wesley Boudreaux, a representative of The Retirement Group, a division of Wealth Enhancement.

'Nordson employees should approach IRA withdrawals with caution. While accessing funds early may provide short-term relief, it can undermine long-term retirement growth and hinder future financial stability.' – Patrick Ray, a representative of The Retirement Group, a division of Wealth Enhancement.

In this article, we will discuss:

The restrictions on borrowing from an IRA and the IRS regulations governing IRA withdrawals.
Penalty-free options for accessing IRA funds before age 59½, including exceptions for specific situations.
The 60-day indirect rollover as a short-term loan alternative and 401k loans as another option for accessing retirement funds.

When facing unexpected financial difficulties, many people look to their retirement savings as a potential source of funding. Unlike 401k plans, loans are not permitted from individual retirement accounts (IRAs). Despite this, there are ways to access IRA funds before the age of 59½ without incurring penalties. Understanding the rules governing these withdrawals and exploring alternative options can help you make more informed decisions about your finances.

Important Takeaways:

- Loans against an IRA are not allowed, unlike a 401k.
- Withdrawals from an IRA before age 59½ can be made without penalties under certain circumstances.
- A 60-day indirect rollover can temporarily give you access to your IRA funds, potentially acting as an interest-free loan.

While retirement accounts like IRAs have restrictions to make sure they serve their long-term purpose, there are times when early access to IRA funds becomes necessary. Below, we explore the procedures and regulations surrounding early IRA withdrawals, along with options to potentially access funds without penalties or taxes.

Is It Possible to Borrow From Your IRA?

Unlike 401ks, IRAs do not offer the ability to borrow against your balance. The Internal Revenue Service (IRS) enforces regulations that prohibit direct loans from an IRA. In certain circumstances, you may be able to access IRA assets early; however, unless you qualify for an exception, this will result in taxes and penalties.

Early Access to Your IRA Funds

IRAs are intended to be long-term savings vehicles, so withdrawals made before age 59½ generally come with tax penalties. Once you reach age 59½, you can withdraw funds from your IRA, though they will be taxed as regular income if you have a traditional IRA. However, Roth IRAs have the potential for tax-free withdrawals, depending on specific conditions.

Besides taxes, early withdrawals typically incur a 10% penalty, but there are exceptions that allow penalty-free withdrawals.

Contributions to a Roth IRA

One of the advantages of Roth IRAs is the ability to withdraw contributions (but not earnings) tax-free at any time. Since contributions are made with after-tax dollars, only the principal is eligible for this rule. Earnings from those contributions must meet specific criteria to be withdrawn tax-free.

Options for Penalty-Free Withdrawals

While early withdrawals from an IRA usually come with penalties, the IRS allows penalty-free withdrawals in certain situations. Taxes on the amount withdrawn are still applicable, but there will be no penalty in these cases:

Disability: If you become disabled, you can access your IRA savings without penalty.
Qualified Higher Education Expenses: If you are using IRA funds for tuition, fees, and other educational costs, you may be able to avoid the 10% penalty, although taxes will still apply.
First-Time Homebuyers: You can withdraw up to $10,000 for the purchase of your first home, free of penalties, but taxes still apply.
Series of Equal Payments: Penalties are waived if IRA withdrawals are made over a five-year period in a series of substantially equal payments. The IRS determines the amount of these payments.
Unreimbursed Medical Expenses: If your medical expenses exceed 7.5% of your adjusted gross income, early withdrawals from your IRA can be made on a penalty-free basis.
Distributions to Qualified Military Reservists: If you're a qualified reservist called to active duty, you are exempt from the 10% early withdrawal penalty.

An Indirect Rollover for 60 Days: A Short-Term Loan

Although IRAs do not permit direct loans, there may be a way to temporarily access your IRA funds via a 60-day indirect rollover. This strategy involves withdrawing money from your IRA with the intent to transfer it to another retirement account within 60 days. When you return the money within the specified time frame, this can function as an interest-free loan, potentially bypassing penalties and taxes.

However, a few considerations apply when using the 60-day rollover:

The 60-Day Rule: The IRS requires that the funds be rolled back into the same or another retirement account within 60 days. If you miss this deadline, the withdrawal becomes taxable and may incur penalties.
Withholding Taxes: Unless you specify otherwise, the IRA custodian may withhold taxes from the distribution.
Rollover Restrictions: Regardless of how many IRAs you have, you can only perform one rollover per IRA in a 12-month period.
Withdrawal Costs: If you don't roll over the entire distribution, the remaining balance will be subject to taxes and penalties. Additionally, the IRA custodian may charge transaction fees for the rollover.

Consider 401k Loans as an Alternative

Unlike IRAs, 401k plans allow for loans. If you have a 401k with Nordson, borrowing against your balance may be a simpler process than using an IRA. When you take a loan from your 401k, you are borrowing from yourself, and you will repay the loan with interest. However, if you leave your job, the loan may become due sooner than expected. The maximum loan amount is $50,000 or 50% of your vested 401k balance, whichever is lower.

It’s important to remember that loans from a 401k are considered taxable withdrawals, and penalties may be incurred if the loan isn’t repaid on time. Additionally, withdrawing funds from either your IRA or 401k can disrupt the compounding process, potentially affecting your long-term retirement goals.

The Bottom Line

While you cannot directly borrow from your IRA, methods such as the 60-day rollover offer a way to access funds temporarily. If you have a 401k through Nordson, that may provide another option, but both methods carry risks and fees. The best strategy is to use retirement savings for their intended purpose—long-term wealth accumulation—and steer clear of early withdrawals that can hinder your financial progress.

If you're considering tapping into your retirement accounts, be aware of the long-term impacts. A study by Fidelity Investments found that early withdrawals from retirement accounts could cost individuals hundreds of thousands of dollars in lost compound growth over their lifetime. ¹ Make sure to consider all your options, follow IRS rules, and consult a financial advisor to help mitigate penalties and taxes while allowing your retirement funds to continue growing.

Think of your IRA as a garden carefully cultivated for your retirement. While it might be tempting to harvest from it early, doing so can stunt its growth. Instead, use options like a 401k loan or a 60-day rollover to maintain your financial health, allowing your retirement garden to flourish for the years ahead.

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Sources:

1. Fidelity Investments. IRA Early Withdrawals: Penalties, Exceptions & Options. Fidelity Investments, ongoing updates. Fidelity.com .

2. Internal Revenue Service (IRS). Exceptions to Tax on Early Distributions. IRS, ongoing updates. IRS.gov .

3. Investopedia Staff. '10 Penalty-Free IRA Withdrawals.' Investopedia, 21.5 years ago. Investopedia.com .

4. Bankrate Staff. 'What Is the 60-Day Rollover Rule for Retirement Accounts?' Bankrate, 4 months ago. Bankrate.com .

5. Investopedia Staff. '401(k) Loans: Reasons to Borrow, Plus Rules and Regulations.' Investopedia, 16.9 years ago. Investopedia.com

How does the Nordson Corporation Salaried Employees Pension Plan calculate an employee's Accrued Benefit, and what factors need to be considered to ensure accurate pension benefits at retirement? Understanding the components that contribute to the calculation is crucial for employees planning their retirement through Nordson Corporation.

Accrued Benefit Calculation: Nordson Corporation calculates an employee’s Accrued Benefit based on the Final Average Monthly Pay, the number of Years of Benefit Service, and an estimate of the employee’s Social Security benefit. The formula used includes a reduction if an employee has less than 30 Years of Benefit Service(Nordson Corporation_Feb…).

What are the eligibility criteria for joining the Nordson Corporation Salaried Employees Pension Plan, and how can employees determine their vesting status as they approach retirement? It is essential for employees to be aware of the timelines and requirements necessary to fully benefit from the retirement plan offered by Nordson Corporation.

Eligibility Criteria: Employees become eligible for the Nordson Corporation Salaried Employees Pension Plan after completing a Year of Eligibility Service, which requires at least 1,000 hours of work annually. Vesting occurs after completing 5 Years of Vesting Service, ensuring full entitlement to benefits(Nordson Corporation_Feb…).

In what ways can employees at Nordson Corporation access information about their pension plan benefits, and what steps should they follow if they believe their claims for benefits were denied? Knowing the appropriate channels for receiving information can help employees navigate any discrepancies with their pension benefits.

Accessing Pension Information and Claiming: Employees can access their pension plan details through John Hancock’s website or phone service. If a benefit claim is denied, employees can follow the claims procedure outlined by Nordson, which includes submitting a written request and appealing decisions(Nordson Corporation_Feb…).

What options does Nordson Corporation provide for early retirement, and how can employees assess whether an early retirement is financially feasible for them? Understanding the implications of early retirement can significantly impact an employee's long-term financial security.

Early Retirement Options: Nordson Corporation offers early retirement options starting at age 55, with at least 5 years of vesting service. Benefits are reduced by 6% per year for each year that early retirement is taken before the Normal Retirement Date(Nordson Corporation_Feb…).

How does Nordson Corporation's pension plan ensure that employees receive monthly benefits post-retirement, and what are the different forms of payment available to retirees? Grasping the payment structures may help employees make informed decisions regarding their retirement income.

Monthly Benefit Payments: Employees retiring from Nordson Corporation can choose various payment methods, including a Life Annuity or a 50% Joint & Survivor Annuity for married participants. Payments start after the Normal Retirement Date or early retirement, depending on the selected option(Nordson Corporation_Feb…).

What rights do participants have under the Employee Retirement Income Security Act (ERISA) concerning their Nordson Corporation pension plan, and what should they do to enforce these rights effectively? Employees should be aware of their rights to protect themselves during the benefit claiming process.

ERISA Rights: Under ERISA, participants have the right to receive information about their benefits, file claims, and sue if benefits are denied. Plan fiduciaries must act in the best interest of employees, and participants are protected from retaliation for asserting their rights(Nordson Corporation_Feb…).

How does the termination or amendment of the Nordson Corporation Salaried Employees Pension Plan affect employees' accrued benefits, and what protections are in place? Awareness of these scenarios can help employees better plan their financial futures in relation to their pensions.

Plan Termination or Amendment: If the plan is terminated or amended, accrued benefits cannot be reduced, and employees’ benefits become 100% vested. This ensures that employees retain the benefits they have earned up to the point of the change(Nordson Corporation_Feb…).

In what situations might employees at Nordson Corporation lose their pension benefits, and what preventative actions can they take to ensure they remain eligible for these benefits? Understanding the risks involved in pension plans can aid employees in maintaining their retirement security.

Loss of Pension Benefits: Employees may lose pension benefits if they leave Nordson Corporation before vesting or fail to select appropriate survivor options. Keeping the Plan Administrator informed of current contact information is crucial to avoid losing benefits(Nordson Corporation_Feb…).

How can employees at Nordson Corporation address questions or concerns related to their retirement planning, and what resources are available for personalized assistance? Access to proper resources is vital for employees needing guidance throughout their retirement journey.

Retirement Planning Resources: Employees can contact the Plan Administrator or use John Hancock’s automated services to address questions about retirement planning. Personalized assistance is available for any specific pension-related inquiries(Nordson Corporation_Feb…).

What steps should employees take to contact Nordson Corporation or the Plan Administrator to get detailed information about their pension plan, and what should they include in their inquiries to ensure a comprehensive response? Effective communication techniques can significantly enhance employees' understanding of their benefits. These questions have been designed to help employees of Nordson Corporation navigate their pension plan and retirement effectively.

Contacting the Plan Administrator: Employees can contact Nordson Corporation or the Plan Administrator by calling the number listed in the Summary Plan Description. It’s advisable to provide detailed questions regarding benefit amounts, vesting status, or payment options to receive a thorough response(Nordson Corporation_Feb…).

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.

Pension Plan Name: Nordson Corporation Retirement Plan Qualification Criteria: Years of Service: Generally requires a minimum of 5 years. Age Qualification: Typically eligible at age 65. Pension Formula: Formula is based on a percentage of final average salary and years of service. 401(k) Plan Name: Nordson Corporation 401(k) Savings Plan Qualification Criteria: Employees are eligible to participate after completing 30 days of service. Company Contribution: Nordson matches employee contributions up to a certain percentage.

News: In early 2024, Nordson Corporation announced a significant restructuring plan, including a reduction of approximately 5% of its global workforce. This move was part of a broader strategy to streamline operations and improve overall efficiency. The company also updated its employee benefits package, including modifications to its pension and 401k plans. Specific changes included adjusting the company’s matching contributions and modifying pension benefit accrual rates.

Nordson Corporation (NDSN) provides stock options and RSUs to employees as part of their compensation packages. Stock options at Nordson Corporation (NDSN) are generally granted to senior executives and key employees based on performance and tenure. RSUs are also awarded to employees as a form of long-term incentive, typically vesting over a period of time.

Benefits Overview: Nordson's official site provides information on various health benefits including medical, dental, and vision insurance plans. Employees have access to comprehensive health coverage, which typically includes options for health savings accounts (HSAs) and flexible spending accounts (FSAs). Recent Updates: The company has updated its benefits plans over the years. Specific changes for 2022, 2023, and 2024 can be found in their annual benefits summaries or employee communications.