In general, this won’t even be an option for many. Cash balance plans do not permit partial withdrawals. If you have separated from service at the employer, you can take your entire vested amount with you.

You can cash out your balance and pay income taxes on it, as well as a 10% IRS penalty if you’re younger than 59 ½. This penalty may also be avoided if you separated a from service after age 55; these rules are the same for 401(k)s and other qualified plans.

The smarter thing to do would probably be to roll the assets into a personal IRA. This avoids current taxation on the money and gives you the freedom to make partial withdrawals if you would like to, even though income taxes and the 10% penalty may apply to the withdrawn amount.

If you have not separated from service, you might be able to take a loan out of the plan based on your vested amount, but many cash balance plans do not have loan provisions in the plan document. The most likely scenario is that you will not be able to access these funds while employed with the plan sponsor and younger than 59 ½.

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