What is one restriction of pension plans regarding distributions?

Pension plans are governed by specific regulations designed to ensure that they provide sufficient benefits to participants upon retirement. One of the restrictions placed on pension plans is that they must adhere to minimum funding requirements. This means that plan sponsors are required to contribute a certain amount of money into the pension fund to ensure that it can meet its future obligations to retirees.

By mandating minimum funding levels, regulations help prevent underfunding, which could jeopardize the financial security of current and future retirees. This is a critical aspect of pension plan management, as it aims to protect the interests of plan participants, ensuring that they will receive their promised benefits when they reach retirement age.

The other options present conditions that are not true regarding pension plans. For example, pension plans do not allow any type of withdrawal at any time, they do not freely distribute amounts at retirement without restrictions, and they do not permit early tapping into contributions as is often seen in defined contribution plans like 401(k)s. These limitations underscore the structured nature of pension plans compared to other retirement savings options.