How to Cash Your Pension Before Retirement

Pension plans are defined benefits plans, meaning you don't elect to make contributions into the plan. Your employer makes all contributions and you usually "own" the money after five years in what's called a vesting plan. Pensions usually don't allow you to access funds prior to age 55, with full retirement benefits at 65. A cash balance pension is an exception that allows you to take distributions based on the accumulated cash value if your plan administrator allows for it.

Call the plan administrator at the number located on the pension statement. Ask whether your plan allows for early cash distributions.

Request a distribution form from the plan administrator if early distributions are allowed.


Complete the distribution form. Sign it and submit it back to the plan administrator. It takes about 10 days to process and receive a check.


Add the distributed amount to your gross income when filing your tax return on Line 15 of IRS Form 1040. Include Form 5329 if you're not yet 59 1/2 years of age to calculate the IRS 10 percent penalty for early distribution.