What does it mean when a distribution is made from a retirement plan?

When a distribution is made from a retirement plan, it refers to a withdrawal of funds from the plan. This process typically occurs when a plan participant decides to access the money that has been accumulated in their retirement account. Distributions can happen under various circumstances, such as reaching retirement age, termination of employment, or other qualifying events. The funds withdrawn from the retirement plan can have tax implications and may be subject to penalties if taken before a certain age. This concept is crucial for understanding how retirement plans operate, as it highlights the movement of money out of a savings vehicle intended for long-term growth and eventual retirement income.

In contrast, the other options reflect different aspects of retirement planning or processes that do not directly relate to the act of taking money out of a retirement plan. For example, depositing funds into a plan is the opposite of a distribution. The start of the retirement period can lead to distributions, but it doesn't define the act itself. Likewise, the closure of the retirement account would involve a final distribution, but not all distributions indicate that an account is being closed.