ANSWERS: 1
  • The Internal Revenue Service defines separation from employment as a situation in which someone no longer works at their place of employment due to a term limit, has been released from his job duties, or has been in an accident that has caused him to be disabled to perform any work duties.

    Term Limit

    There are academic positions and businesses that employ people for a certain number of months or years. Once their term limit is completed they can no longer work in that job position.

    Types

    People who are released from their job duties due to poor performance are separated from employment. When a place of business is not producing enough revenue to pay their employee a salary they release that employee from their place of employment.

    Disability

    Depending on an employee's benefits package with his place of employment or insurance policy, when an employee suffers from an accident that causes him to not be able to perform a job task he is considered disabled and is separated from employment.

    Pension Annuity

    People who are separated from their employment are able to withdraw money from their retirement plan.

    Considerations

    Depending on that person's circumstances, he may not be required to pay a tax penalty when withdrawing funds from his retirement plan if he had not reached the retirement age when he separated from his place of employment.

    Source:

    IRS: Publication 575

    IRS: Publication 907 - Tax Highlights for Persons with Disabilities

    More Information:

    UC Santa Cruz: Appendix: Separation from Employment FAQs

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