Encumbered funds are monies that are intentionally set aside to pay for future obligated or planned expenses, according to the Business Dictionary. Although encumbered funds are not released until the payment for the future expenses is due, the funds cannot be used for anything other than their specified purposes, according to the State of New York's Office of the State Comptroller.Know More
The State of New York's Office of the State Comptroller lists monthly lease agreements, monthly maintenance agreements and capital construction costs as common types of encumbered funds.
The purpose of encumbered funds is to predict cash outflow and avoid organizational overspending, according to the University of California, Riverside. Encumbered funds are written in accounting ledger books but are not included in actual funds balances because the payments have not yet been physically transferred. Once the encumbered funds are paid to a business, entity or organization, the encumbrance is reversed, and the funds are deducted from the organization's actual fund balance.
UC Riverside states that the formula for determining organizational cash outflow entails subtracting the actual funds and encumbered funds from the organization's budget. Sometimes, encumbered funds are put into a separate trust fund account that is set up specifically to hold the funds until their release date, according to Cornell University Law School.Learn more about Financial Planning
There are restrictions placed on 401(k) plans regarding access to funds at 59 1/2 years of age if the person is not yet retired from the company that offers the plan, reports About.com. Therefore, Wal-Mart employees should consult with the company benefits administrator concerning 401(k) rollovers or cashing out.Full Answer >
A vested interest in a retirement fund refers to the ability of an employee to gain access to funds in the retirement account at a later time. An employee has to wait for the vesting period to be over in order to gain access to the employer's contributions.Full Answer >
Contacting the financial institution where the funds are held is the first step, explains Bankrate. Withdrawing funds may result in significant tax penalties especially if done before the age of 59 1/2. After this age, retirees may be required to receive regular distributions from retirement accounts.Full Answer >
Retirees can begin withdrawing their funds at the age of 55 as long as they meet certain criteria, explains Jim Blankenship for Forbes. They must participate in a 401(k) with their current employer and leave the company during or after the year they turn 55.Full Answer >