Generally the plan has several available options for investing. There are substantial restrictions and tax penalties for withdrawals prior to retirement. In both cases, there is no tax consequence of the rollover and the plan continues to be tax deferred. The contributions and income earned on the account are deferred from income taxes until withdrawn at retirement. There are income tax penalties, and possible plan penalties for early withdrawals.
Some plans do permit loans.
An insurance or investment product where the sales charge is deducted at the beginning of the contract. Also see back-end load , no load , and low load . An agreement between the buyer and seller on the commodity exchange floor to buy or sell a specified amount of a commodity or other investment at a contracted price and on a specified future date. The value, at a given future date, of a series of deposits of money that are deposited at a predetermined interest rate. Time Value of Money .