Many companies offer profit-sharing retirement plans as a benefit of working for the company. You invest retirement funds into the plan; hopefully, your investment grows so that you have more retirement money when you reach retirement age than you would have if you had not invested your funds. If you are laid off, your employer does not have to return your retirement investments until you reach the age of 59 1/2, although some plans provide for this possibility.

Pension Plans

The U.S. Department of Labor says that your former employer must give you your 401k distributions by the time you reach normal retirement age, but not necessarily before. Thus, if you have invested 401k funds in a profit-sharing plan, you will likely not receive them until you reach the age of 59 1/2, even if you terminate your employment long before that time.

Plan Policies

Whether you can receive your profit sharing money before you reach retirement age depends on the plan's policy. Some 401k plans contain a provision that you receive all of your contributions as a lump sum policy if you leave the company. However, you still may be subject to tax penalties if you take this option, even if the plan allows for it, so you should consult your tax professional before doing so.


If you terminate employment, particularly if you are laid off or fired rather than voluntarily leaving the company, you may have financial difficulties due to loss of income. In most cases, however, you may not want to take out money from your 401k unless you have no other choice, because you will have to pay a tax penalty of 10 percent and report the distribution as income on your taxes. You may qualify for a hardship distribution if you have severe financial problems, which may reduce some of the tax burden.


Instead of getting your profit sharing money in a lump sum distribution, you can roll it over into an IRA or into a 401k from a new job. Go to the bank to roll over your 401k to an IRA; if you want to roll funds over into a new 401k, talk to the plan manager for your new 401k once you begin working somewhere else. If you roll funds over, you will not pay tax penalties as long as you don't withdraw the funds prior to putting them in the new retirement account.