1971 E. 4
th
Street, Suite 100, Santa Ana, CA 92705 VOICE: (714) 480-1364 FAX: (714) 480-1365 www.BenefitEquity.com
Participant Distribution Election Form
1. PARTICIPANT INFORMATION
Former Company/Plan Name: ______________________________________________________________________________________________
Payee Name: ______________________________________________
Address: Date of Birth:
Email:
Daytime Phone Number: ________________________________________ Payable Benefit: ___________________________________
INSTRUCTIONS: Please complete sections 1 – 5 (and section 7 if required) and carefully review the attached detailed explanation of these elections. After completion,
have the HR department of your former employer complete section 6, “Employer Authorization”. (Incomplete forms will be returned.) This form should be faxed or sent to
your former employer for completion who will then deliver to Benefit Equity, Inc. for processing.
2. PAYMENT & WITHHOLDING ELECTION OPTIONS
I elect to have my entire distribution paid directly to me less 20% Federal income tax withholding. ("Cash Out")
Please also withhold ____ % State income tax (2% for California Residents) (Skip to Section 4.)
I elect a Direct Rollover of my account. (Complete Section 3a.) Including Roth Contributions (Complete Section 3b.)
I elect to have $_________________ or _______ % (at least $ 500) paid in a Direct Rollover, and the remainder of my benefit paid to
me less 20% Federal withholding. (Complete Section 3a.) Including Roth Contributions (Complete Section 3b.)
I elect take a annuity commending now or at Normal Retirement Date.
3a. DIRECT ROLLOVER OF ACCOUNT
In making a Direct Rollover election, I certify that the receiving account is qualified to receive direct rollovers.
Specify to whom the rollover check should be made payable:
Name of Institution: Account # ________________________
Name of IRA Trustee/Custodian or Qualified Plan:_____________________________________________________________________
Address: ______________________________________________________________________________________________________
Is this a direct rollover to a Roth IRA?
YES NO
3b. ROTH PORTION OF DIRECT ROLLOVER (If Applicable)
Complete this section only if you are electing to rollover Roth funds from your account.
Specify to whom the rollover check should be made payable:
Name of Institution: Account # ________________________
Name of IRA Trustee/Custodian or Qualified Plan:_____________________________________________________________________
Address: ______________________________________________________________________________________________________
4. PAYMENT METHOD
How would you like the funds to be sent?
Check OR Electronic Fund Transfer
*
Direct Deposit to my account Checking
or Savings
OR
Wire - Verify with receiving bank if they accept wires and/or charge a fee.
Bank Name: _______________________________________________
City and State: _____________________________________________
Routing Number: ___________________________________________
Account Number: __________________________________________
*Please Note: If this option is not available for your account, your payment will be in the form of a check.
5. PARTICIPANT AUTHORIZATION
If you return this form in less than 30 days you will have waived the 30-day waiting period for direct rollover.
If neither box is checked, standard processing will prevail.
Standard Processing: Please process my distribution within 30 days. I understand “the Plan” may have a distribution fee that will be deducted
from my account.
Rush Processing: Please process my distribution within 10 days. I understand that an ADDITIONAL RUSH FEE of $30 will be deducted from
my account. (This fee includes an overnight mail charge to the participant’s address listed above - NO P.O. BOXES.)
Please note: All processing time frames are approximations based upon the receipt of all necessary forms in good order. Incomplete or unsigned forms will delay processing.
I understand the terms and conditions relating to the payment of taxable benefits from “the Plan” as explained in the “Special Tax Notice Regarding Plan Payments”. I also
understand that any assets that I have in my account will be liquidated once I submit this form and I agree to this liquidation in order to process my distribution. I certify that
the information I have provided above is true and correct to the best of my knowledge and that the Direct Rollover is an “Eligible Rollover Distribution” as defined in Code
section 401(a)(31)(D). I understand that the trustee of “the Plan” will rely on this information in making the distribution that I have requested. I hereby consent to payment
of my vested account balance.
Plan Participant Signature: ____________________________________________ Date: ________________________________
Print Name: _________________________________________________________
6. EMPLOYER AUTHORIZATION
Participant’s Date of Termination: _________________________ Date of last payroll contribution: _________________________
Hours worked during the current plan year: Less than 500 500-999 1,000+
I certify the information given above is true and complete to the best of my knowledge. I understand the participant’s funds will be forwarded per the instructions directed by
the participant unless otherwise specified. In addition, I authorize the withdrawal and disbursement of this benefit according to the terms of this contract and “the Plan”. Please
distribute the funds according to the instructions on this “Participant Distribution Form” for the above named participant.
EMPLOYERS: Once you have completed this section, make a copy for your records and mail or fax to Benefit Equity, Inc. The fax number is (714) 480-1365. The mailing
address is 1971 E. 4
th
St. Suite 100, Santa Ana, CA 92705.
Authorized Plan Signature: ____________________________________________ Date: ________________________________
Print Name: _________________________________________________________
7. SPOUSAL CONSENT TO FORM OF DISTRIBUTION/WAIVER OF
QUALIFIED JOINT AND SURVIVOR BENEFIT (If Required)
Please have this section witnessed by a notary public OR an authorized representative of your former employer if you
are married and your account balance is over $5,000.
NOT MARRIED: I hereby certify that I am not now married and that there are no Plan benefits payable to a former spouse
under a qualified domestic relations order.
________________________
Participant's Signature Date
The date your spouse signs below must match the date on which his or her signature was notarized or witnessed. You must
obtain your spouse’s consent to elect a retirement option other than a Qualified Joint and Survivor Annuity. Your spouse’s consent
must be obtained no more than 180 days prior to the effective date in order to be effective.
I hereby voluntarily consent to the participant’s request for a disbursement as indicated on this form. I understand that by providing
such consent, with respect to all amounts the participant is hereby electing to receive, I am voluntarily waiving my right to receive a
survivor annuity which would otherwise be payable to me during my life and upon the participant’s death.
________________________
Participant's Spouse’s Signature Date
Statement of Notary
State of _____________) The consent to this request was subscribed and sworn to (or affirmed) to before me
on this___________ day of ____________, year ________________,
County of ____________) by_________________________________ (name of spouse) proved to me on the
basis of satisfactory evidence to be the person who appeared before me, who
affirmed that such consent represents his/her free and voluntary act.
Notary Public_____________________________ My commission expires___________________
-OR-
Statement of Plan Administrator
The spouse whose signature I have witnessed is known to me and signed this form in my presence.
________________________
Authorized Plan Signature Date
NOTARY SEAL
1
SPECIAL TAX NOTICE
YOUR ROLLOVER OPTIONS
You are receiving this notice because all or a portion of a payment you are receiving from the Plan is eligible to be rolled over to
either an IRA or an employer plan; or if your payment is from a designated Roth account, to a Roth IRA or designated Roth account
in an employer plan. This notice is intended to help you decide whether to do such a rollover.
This notice describes the rollover rules that apply to payments from the Plan. To the extent that the rules differ based on whether
the payment is from a Designated Roth Account or from an account that is Not a Designated Roth Account, those differences will be
identified in each section of this notice.
Rules that apply to most payments from a plan are described in the “General Information About Rollovers” section. Special rules that
only apply in certain circumstances are described in the “Special Rules and Options” section.
GENERAL INFORMATION ABOUT ROLLOVERS
How can a rollover affect my taxes?
Not a Designated Roth Account:
You will be taxed on a payment from the Plan if you do not roll it over. If you are under age 59½ and do not do a rollover, you will
also have to pay a 10% additional income tax on early distributions (unless an exception applies). However, if you do a rollover, you
may not have to pay tax until you receive payments later and the 10% additional income tax will not apply if those payments are
made after you are age 59½ (or if an exception applies). If you do a rollover to a Roth IRA, any amounts not previously included in
your income will be taxed currently (see the section below titled "If you roll over your payment to a Roth IRA (Not a Designated
Roth Account)").
Designated Roth Account:
After-tax contributions included in a payment from a designated Roth account are not taxed, but earnings might be taxed. The
tax treatment of earnings included in the payment depends on whether the payment is a qualified distribution. If a payment is
only part of your designated Roth account, the payment will include an allocable portion of the earnings in your designated
Roth account.
If the payment from the Plan is not a qualified distribution and you do not do a rollover to a Roth IRA or a designated Roth
account in an employer plan, you will be taxed on the earnings in the payment. If you are under age 59½, a 10% additional
income tax on early distributions will also apply to the earnings (unless an exception applies). However, if you do a rollover,
you will not have to pay taxes currently on the earnings and you will not have to pay taxes later on payments that are qualified
distributions.
If the payment from the Plan is a qualified distribution, you will not be taxed on any part of the payment even if you do not do a
rollover. If you do a rollover, you will not be taxed on the amount you roll over and any earnings on the amount you roll over will
not be taxed if paid later in a qualified distribution.
A qualified distribution from a designated Roth account in the Plan is a payment made after you are age 59½ (or after your
death or disability) and after you have had a designated Roth account in the Plan for at least 5 years. In applying the 5-year rule,
you count from January 1 of the year your first contribution was made to the designated Roth account. However, if you did a
direct rollover to a designated Roth account in the Plan from a designated Roth account in another employer plan, your
participation will count from January 1 of the year your first contribution was made to the designated Roth account in the Plan
or, if earlier, to the designated Roth account in the other employer plan.
Where may I roll over the payment?
Not a Designated Roth Account:
You may roll over the payment to either an IRA (an individual retirement account or individual retirement annuity) or an
employer plan (a tax-qualified plan, section 403(b) plan, or governmental section 457(b) plan) that will accept the rollover. The
rules of the IRA or employer plan that holds the rollover will determine your investment options, fees, and rights to payment
from the IRA or employer plan (for example, no spousal consent rules apply to IRAs and IRAs may not provide loans). Further,
the amount rolled over will become subject to the tax rules that apply to the IRA or employer plan.
If your plan provides for a Designated Roth Account, it may also allow in-plan Roth conversions of amounts not currently held
in the Designated Roth Account. See the section below titled “If your plan allows in-plan Roth conversions” for more
information.
Designated Roth Account:
You may roll over the payment to either a Roth IRA (a Roth individual retirement account or Roth individual retirement annuity)
or a Designated Roth Account in an employer plan (a tax-qualified plan, section 403(b) plan, or governmental section 457(b)
2
plan) that will accept the rollover. The rules of the Roth IRA or employer plan that holds the rollover will determine your
investment options, fees, and rights to payment from the Roth IRA or employer plan (for example, no spousal consent rules
apply to Roth IRAs and Roth IRAs may not provide loans). Further, the amount rolled over will become subject to the tax rules
that apply to the Roth IRA or the Designated Roth Account in the employer plan. In general, these tax rules are similar to those
described elsewhere in this notice, but differences include:
•
If you do a rollover to a Roth IRA, all of your Roth IRAs will be considered for purposes of determining whether you have
satisfied the 5-year rule (counting from January 1 of the year for which your first contribution was made to any of your
Roth IRAs).
•
If you do a rollover to a Roth IRA, you will not be required to take a distribution from the Roth IRA during your lifetime and
you must keep track of the aggregate amount of the after-tax contributions in all of your Roth IRAs (in order to determine
your taxable income for later Roth IRA payments that are not qualified distributions).
•
Eligible rollover distributions from a Roth IRA can only be rolled over to another Roth IRA.
How do I do a rollover?
There are two ways to do a rollover. You can do either a direct rollover or a 60-day rollover.
If you do a direct rollover, the Plan will make the payment directly to your IRA or an employer plan, or if your payment is from a
Designated Roth Account, to your Roth IRA or Designated Roth Account in an employer plan. You should contact the IRA or Roth
IRA custodian or the administrator of the employer plan for information on how to do a direct rollover.
If you do not do a direct rollover, you may still do a rollover by making a deposit within 60 days according to the rules below:
Not a Designated Roth Account:
You may make a deposit into an IRA or eligible employer plan that will accept it. You will have 60 days after you receive
the payment to make the deposit. If you do not do a direct rollover, the Plan is required to withhold 20% of the payment for
federal income taxes (up to the amount of cash and property received other than employer stock). This means that, in order
to roll over the entire payment in a 60-day rollover, you must use other funds to make up for the 20% withheld. If you do not
roll over the entire amount of the payment, the portion not rolled over will be taxed and will be subject to the 10% additional
income tax on early distributions if you are under age 59½ (unless an exception applies). If you do a rollover of only a
portion of the payment made to you, any nontaxable amounts are treated as being rolled over last.
Designated Roth Account:
You may make a deposit within 60 days into a Roth IRA, whether the payment is a qualified or nonqualified distribution.
In addition, you can do a rollover by making a deposit within 60 days into a designated Roth account in an employer plan if
the payment is a nonqualified distribution and the rollover does not exceed the amount of the earnings in the payment. You
cannot do a 60-day rollover to an employer plan of any part of a qualified distribution. If you receive a distribution that
is a nonqualified distribution and you do not roll over an amount at least equal to the earnings allocable to the distribution,
you will be taxed on the amount of those earnings not rolled over, including the 10% additional income tax on early
distributions if you are under age 59½ (unless an exception applies). If you do a direct rollover of only a portion of the
amount paid from the Plan and a portion is paid to you at the same time, the portion directly rolled over consists first of
earnings.
If you do not do a direct rollover and the payment is not a qualified distribution, the Plan is required to withhold 20% of the
earnings for federal income taxes (up to the amount of cash and property received other than employer stock). This
means that, in order to roll over the entire payment in a 60-day rollover to a Roth IRA, you must use other funds to make
up for the 20% withheld.
How much may I roll over?
If you wish to do a rollover, you may roll over all or part of the amount eligible for
rollover. Any payment from the Plan is eligible for rollover, except:
•
Certain payments spread over a period of at least 10 years or over your life or life expectancy (or the lives or joint life
expectancy of you and your beneficiary)
•
Required minimum distributions after age 70½ (or after death)
•
Hardship distributions
•
ESOP dividends
•
Corrective distributions of contributions that exceed tax law limitations
•
Loans treated as deemed distributions (for example, loans in default due to missed payments before your employment
ends)
•
Cost of life insurance paid by the Plan
•
Payments of certain automatic enrollment contributions requested to be withdrawn within 90 days of the first contribution
•
Amounts treated as distributed because of a prohibited allocation of S corporation stock under an ESOP (also, there will
generally be adverse tax consequences if you roll over a distribution of S corporation stock to an IRA).
The Plan administrator or the payor can tell you what portion of a payment is eligible for rollover.
If I don’t do a rollover, will I have to pay the 10% additional income tax on early distributions?
This tax is in addition to the regular income tax on the payment not rolled over.
The 10% additional income tax does not apply to the following payments from the Plan:
3
•
Payments made after you separate from service if you will be at least age 55 in the year of the separation
•
Payments that start after you separate from service if paid at least annually in equal or close to equal amounts over your life or
life expectancy (or the lives or joint life expectancy of you and your beneficiary)
•
Payments from a governmental plan made after you separate from service if you are a public safety employee and you are
at least age 50 in the year of the separation
•
Payments made due to disability
•
Payments after your death
•
Payments of ESOP dividends
•
Corrective distributions of contributions that exceed tax law limitations
•
Cost of life insurance paid by the Plan
•
Payments made directly to the government to satisfy a federal tax levy
•
Payments made under a qualified domestic relations order (QDRO)
•
Payments up to the amount of your deductible medical expenses
•
Certain payments made while you are on active duty if you were a member of a reserve component called to duty after
September 11, 2001 for more than 179 days
•
Payments of certain automatic enrollment contributions requested to be withdrawn within 90 days of the first contribution.
Not a Designated Roth Account:
If you are under age 59½, you will have to pay the 10% additional income tax on early distributions for any payment from the
Plan (including amounts withheld for income tax) that you do not roll over, unless one of the exceptions listed above applies.
Designated Roth Account:
If a payment is not a qualified distribution and you are under age 59½, you will have to pay the 10% additional income tax on
early distributions with respect to the earnings allocated to the payment that you do not roll over (including amounts withheld
for income tax), unless one of the exceptions listed above applies.
If I do a rollover to an IRA, will the 10% additional income tax apply to early distributions from the IRA?
If you receive a payment from an IRA when you are under age 59½, you will have to pay the 10% additional income tax on early
distributions from the IRA, unless an exception applies. In general, the exceptions to the 10% additional income tax for early
distributions from an IRA are the same as the exceptions listed above for early distributions from a plan. However, there are a few
differences for payments from an IRA, including:
•
There is no exception for payments after separation from service that are made after age 55.
•
The exception for qualified domestic relations orders (QDROs) does not apply (although a special rule applies under which, as
part of a divorce or separation agreement, a tax-free transfer may be made directly to an IRA of a spouse or former spouse).
•
The exception for payments made at least annually in equal or close to equal amounts over a specified period applies without
regard to whether you have had a separation from service.
•
There are additional exceptions for (1) payments for qualified higher education expenses, (2) payments up to $10,000 used in
a qualified first-time home purchase, and (3) payments for health insurance premiums after you have received unemployment
compensation for 12 consecutive weeks (or would have been eligible to receive unemployment compensation but for self-
employed status).
If I do a rollover to a Roth IRA, will the 10% additional income tax apply to early distributions from the IRA?
If you receive a payment from a Roth IRA when you are under age 59½, you will have to pay the 10% additional income tax on early
distributions on the earnings paid from the Roth IRA, unless an exception applies or the payment is a qualified distribution. In general,
the exceptions to the 10% additional income tax for early distributions from a Roth IRA listed above are the same as the exceptions
for early distributions from a plan. However, there are a few differences for payments from a Roth IRA, including:
•
There is no special exception for payments after separation from service.
•
The exception for qualified domestic relations orders (QDROs) does not apply (although a special rule applies under which, as
part of a divorce or separation agreement, a tax-free transfer may be made directly to a Roth IRA of a spouse or former
spouse).
•
The exception for payments made at least annually in equal or close to equal amounts over a specified period applies without
regard to whether you have had a separation from service.
•
There are additional exceptions for (1) payments for qualified higher education expenses, (2) payments up to $10,000 used in
a qualified first-time home purchase, and (3) payments after you have received unemployment compensation for 12
consecutive weeks (or would have been eligible to receive unemployment compensation but for self-employed status).
Will I owe State income taxes?
This notice does not describe any State or local income tax rules (including withholding rules).
SPECIAL RULES AND OPTIONS
If your payment includes after-tax contributions (Not a Designated Roth Account)
After-tax contributions included in a payment are not taxed. If a payment is only part of your benefit, an allocable portion of your
after-tax contributions is included in the payment, so you cannot take a payment of only after-tax contributions. However
, if you have
pre-1987 after-tax contributions maintained in a separate account, a special rule may apply to determine whether the after-tax
contributions are included in a payment. In addition, special rules apply when you do a rollover, as described below.
4
You may roll over to an IRA a payment that includes after-tax contributions through either a direct rollover or a 60-day rollover. You
must keep track of the aggregate amount of the after-tax contributions in all of your IRAs (in order to determine your taxable income
for later payments from the IRAs). If you do a direct rollover of only a portion of the amount paid from the Plan and at the same time
the rest is paid to you, the portion directly rolled over consists first of the amount that would be taxable if not rolled over. For example,
assume you are receiving a distribution of $12,000, of which $2,000 is after-tax contributions. In this case, if you directly
roll over $10,000 to an IRA that is not a Roth IRA, no amount is taxable because the $2,000 amount not directly rolled over is treated
as being after-tax contributions. If you do a direct rollover of the entire amount paid from the Plan to two or more destinations
at the same time, you can choose which destination receives the after-tax contributions.
If you do a 60-day rollover to an IRA of only a portion of a payment made to you, the after-tax contributions are treated as rolled over
last. For example, assume you are receiving a distribution of $12,000, of which $2,000 is after-tax contributions, and no part of the
distribution is directly rolled over. In this case, if you roll over $10,000 to an IRA that is not a Roth IRA in a 60-day rollover, no amount
is taxable because the $2,000 amount not rolled over is treated as being after-tax contributions.
You may roll over to an employer plan all of a payment that includes after-tax contributions, but only through a direct rollover (and
only if the receiving plan separately accounts for after-tax contributions and is not a governmental section 457(b) plan). You can do
a 60-day rollover to an employer plan of part of a payment that includes after-tax contributions, but only up to the amount of the
payment that would be taxable if not rolled over. If you do a rollover of only a portion of the payment made to you, the nontaxable
amounts are treated as being rolled over last.
If you miss the 60-day rollover deadline
Generally, the 60-day rollover deadline cannot be extended. However, the IRS has the limited authority to waive the deadline under
certain extraordinary circumstances, such as when external events prevented you from completing the rollover by the 60-day
rollover deadline. To apply for a waiver, you must file a private letter ruling request with the IRS. Private letter ruling requests require
the payment of a nonrefundable user fee. For more information, see IRS Publication 590-A, Contributions to Individual Retirement
Arrangements (IRAs), and Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs), as applicable.
If your payment includes employer stock that you do not roll over
Not a Designated Roth Account:
If you do not do a rollover, you can apply a special rule to payments of employer stock (or other employer securities) that
are either attributable to after-tax contributions or paid in a lump sum after separation from service (or after age 59½,
disability, or the participant’s death). Under the special rule, the net unrealized appreciation on the stock will not be taxed
when distributed from the Plan and will be taxed at capital gain rates when you sell the stock. Net unrealized appreciation is
generally the increase in the value of employer stock after it was acquired by the Plan. If you do a rollover for a payment
that includes employer stock (for example, by selling the stock and rolling over the proceeds within 60 days of the
payment), the special rule relating to the distributed employer stock will not apply to any subsequent payments from the
IRA or employer plan. The Plan administrator can tell you the amount of any net unrealized appreciation.
Designated Roth Account:
If you receive a payment that is not a qualified distribution and you do not roll it over, you can apply a special rule to
payments of employer stock (or other employer securities) that are paid in a lump sum after separation from service (or
after age 59½, disability, or the participant’s death). Under the special rule, the net unrealized appreciation on the stock
included in the earnings in the payment will not be taxed when distributed to you from the Plan and will be taxed at capital
gain rates when you sell the stock. If you do a rollover to a Roth IRA for a nonqualified distribution that includes employer
stock (for example, by selling the stock and rolling over the proceeds within 60 days of the distribution), you will not have
any taxable income and the special rule relating to the distributed employer stock will not apply to any subsequent
payments from the Roth IRA or employer plan. Net unrealized appreciation is generally the increase in the value of the
employer stock after it was acquired by the Plan. If you receive a payment that is a qualified distribution that includes
employer stock and you do not roll it over, your basis in the stock (used to determine gain or loss when you later sell the
stock) will equal the fair market value of the stock at the time of the payment from the Plan.
If you have an outstanding loan that is being offset
If you have an outstanding loan from the Plan, your Plan benefit may be offset by the amount of the loan, typically when your
employment ends. The loan offset amount is treated as a distribution to you at the time of the offset.
Not a Designated Roth Account:
The outstanding loan will be taxed (including the 10% additional income tax on early distributions, unless an exception
applies) unless you do a 60-day rollover in the amount of the loan offset to an IRA or employer plan.
Designated Roth Account:
If the distribution is a nonqualified distribution, the earnings in the loan offset will be taxed (including the 10% additional
income tax on early distributions, unless an exception applies) unless you do a 60-day rollover in the amount of the
earnings in the loan offset to a Roth IRA or Designated Roth Account in an employer plan.
5
If you were born on or before January 1, 1936
If you were born on or before January 1, 1936 and receive a lump sum distribution that you do not roll over, special rules for
calculating the amount of the tax on the taxable portion of the payment might apply to you.
For more information, see IRS Publication 575, Pension and Annuity Income.
If your payment is from a governmental section 457(b) plan
If the Plan is a governmental section 457(b) plan, the same rules described elsewhere in this notice generally apply, allowing you to
roll over the payment to an IRA or an employer plan that accepts rollovers. One difference is that, if you do not do a rollover, you will
not have to pay the 10% additional income tax on early distributions from the Plan even if you are under age 59½ (unless the
payment is from a separate account holding rollover contributions that were made to the Plan from a tax-qualified plan, a section
403(b) plan, or an IRA). However, if you do a rollover to an IRA or to an employer plan that is not a governmental section 457(b)
plan, a later distribution made before age 59½ will be subject to the 10% additional income tax on early distributions (unless an
exception applies). Other differences are that you cannot do a rollover if the payment is due to an “unforeseeable emergency” and
the special rules under “If your payment includes employer stock that you do not roll over” and “If you were born on or before
January 1, 1936” do not apply.
If you are an eligible retired public safety officer and your pension payment is used to pay for health coverage or qualified
long-term care insurance
If the Plan is a governmental plan, you retired as a public safety officer, and your retirement was by reason of disability or was after
normal retirement age, you can exclude from your taxable income plan payments or, in the case of a payment from a Designated
Roth Account, nonqualified distributions, paid directly as premiums to an accident or health plan (or a qualified long-term care
insurance contract) that your employer maintains for you, your spouse, or your dependents, up to a maximum of $3,000 annually.
For this purpose, a public safety officer is a law enforcement officer, firefighter, chaplain, or member of a rescue squad or
ambulance crew.
If you roll over your payment to a Roth IRA (Not a Designated Roth Account)
If you roll over the payment to a Roth IRA, a special rule applies under which the amount of the payment rolled over (reduced by any
after-tax amounts) will be taxed. However, the 10% additional income tax on early distributions will not apply (unless you take the
amount rolled over out of the Roth IRA within 5 years, counting from January 1 of the year of the rollover).
If you roll over the payment to a Roth IRA, later payments from the Roth IRA that are qualified distributions will not be taxed
(including earnings after the rollover). A qualified distribution from a Roth IRA is a payment made after you are age 59½ (or after your
death or disability, or as a qualified first-time homebuyer distribution of up to $10,000) and after you have had a Roth IRA for at least
5 years. In applying this 5-year rule, you count from January 1 of the year for which your first contribution was made to a Roth
IRA. Payments from the Roth IRA that are not qualified distributions will be taxed to the extent of earnings after the rollover, including
the 10% additional income tax on early distributions (unless an exception applies). You do not have to take required minimum
distributions from a Roth IRA during your lifetime. For more information, see IRS Publication 590-A, Contributions to Individual
Retirement Arrangements (IRAs), and Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs),
as applicable.
You cannot roll over a payment from the Plan that is not from a Designated Roth Account to a Designated Roth Account in another
employer plan.
If your Plan allows in-plan Roth conversions
If your Plan allows in-plan Roth conversions, and you roll over the payment to a designated Roth account in the Plan, the amount of
the payment rolled over (reduced by any after-tax amounts directly rolled over) will be subject to income taxes. However, the 10%
additional tax on early distributions will not apply (unless you take the amount rolled over out of the designated Roth account within
the 5-year period that begins on January 1 of the year of the rollover).
If you roll over the payment to a designated Roth account in the Plan, later payments from the designated Roth account that are
qualified distributions will not be taxed (including earnings after the rollover). See the section titled “Designated Roth Account”
under the heading “General Information About Rollovers”, above, for more information on qualified distributions.
Your plan may provide for a special withdrawal option which is only available if you are electing an in-plan Roth conversion, in which
case the other rollover information in this notice is not applicable to that withdrawal.
If you are not a plan participant
Payments after death of the participant. If you receive a distribution after the participant’s death that you do not roll over, the
distribution will generally be taxed in the same manner described elsewhere in this notice.
However, the 10% additional income tax on early distributions and the special rules for public safety officers do not apply, and the
special rule described under the section “If you were born on or before January 1, 1936” applies only if the participant was born on
or before January 1, 1936.
If the payment is from a Designated Roth Account, whether the payment is a qualified distribution generally depends on when the
participant first made a contribution to the designated Roth account in the Plan.
If you are a surviving spouse. If you receive a payment from the Plan as the surviving spouse of a deceased participant,
you have the same rollover options that the participant would have had, as described elsewhere in this notice.
6
Not a Designated Roth Account:
If you choose to do a rollover to an IRA, you may treat the IRA as your own or as an inherited IRA.
An IRA you treat as your own is treated like any other IRA of yours, so that payments made to you before you
are age 59½ will be subject to the 10% additional income tax on early distributions (unless an exception
applies) and required minimum distributions from your IRA do not have to start until after you are age 70½.
If you treat the IRA as an inherited IRA, payments from the IRA will not be subject to the 10% additional income
tax on early distributions. However, if the participant had started taking required minimum distributions, you will
have to receive required minimum distributions from the inherited IRA. If the participant had not started taking
required minimum distributions from the Plan, you will not have to start receiving required minimum distributions
from the inherited IRA until the year the participant would have been age 70½.
Designated Roth Account:
If you choose to do a rollover to a Roth IRA, you may treat the Roth IRA as your own or as an inherited Roth
IRA. A Roth IRA you treat as your own is treated like any other Roth IRA of yours, so that you will not have to
receive any required minimum distributions during your lifetime and earnings paid to you in a nonqualified
distribution before you are age 59½ will be subject to the 10% additional income tax on early distributions
(unless an exception applies).
If you treat the Roth IRA as an inherited Roth IRA, payments from the Roth IRA will not be subject to the 10%
additional income tax on early distributions. An inherited Roth IRA is subject to required minimum distributions.
If the participant had started taking required minimum distributions from the Plan, you will have to receive
required minimum distributions from the inherited Roth IRA. If the participant had not started taking required
minimum distributions, you will not have to start receiving required minimum distributions from the inherited
Roth IRA until the year the participant would have been age 70½.
If you are a surviving beneficiary other than a spouse. If you receive a payment from the Plan because of the
participant’s death and you are a designated beneficiary other than a surviving spouse, you have the option to do a direct
rollover to an inherited IRA or, if the payment is from a Designated Roth Account, you have the option to do a direct
rollover to an inherited Roth IRA. Payments from the inherited IRA, or from the inherited Roth IRA (even if made in a
nonqualified distribution) will not be subject to the 10% additional income tax on early distributions. You will have to
receive required minimum distributions from the inherited IRA and/or Roth IRA.
Payments under a qualified domestic relations order. If you are the spouse or former spouse of the participant who receives a
payment from the Plan under a qualified domestic relations order (QDRO), you generally have the same options the participant
would have (for example, you may roll over the payment as described in this notice). Payments under the QDRO will not be subject
to the 10% additional income tax on early distributions.
If you are a nonresident alien
If you are a nonresident alien and you do not do a direct rollover to a U.S. IRA or U.S. employer plan, instead of withholding 20%,
the Plan is generally required to withhold 30% of the payment for federal income taxes. If the amount withheld exceeds the amount
of tax you owe (as may happen if you do a 60-day rollover), you may request an income tax refund by filing Form 1040NR and
attaching your Form 1042-S. See Form W-8BEN for claiming that you are entitled to a reduced rate of withholding under an income
tax treaty. For more information, see also IRS Publication 519, U.S. Tax Guide for Aliens, and IRS Publication 515, Withholding of
Tax on Nonresident Aliens and Foreign Entities.
Other special rules
•
If a payment is one in a series of payments for less than 10 years, your choice whether to make a direct rollover will apply to all
later payments in the series (unless you make a different choice for later payments).
•
If your payments for the year are less than $200 (payments from Designated Roth Accounts and from accounts that are not
Designated Roth Accounts are not aggregated for purposes of the $200 limit), the Plan is not required to allow you to do a
direct rollover and is not required to withhold for federal income taxes. However, you may do a 60-day rollover.
•
Mandatory Cashout
Not a Designated Roth Account:
Unless you elect otherwise, a mandatory cashout of more than $1,000 (not including payments from a designated Roth
account in the Plan) will be directly rolled over to an IRA chosen by the Plan administrator. A mandatory cashout is a
payment from a plan to a participant made before age 62 (or normal retirement age, if later) and without consent, where
the participant’s benefit does not exceed $5,000 (not including any amounts held under the plan as a result of a prior
rollover made to the plan).
7
Designated Roth Account:
Unless you elect otherwise, a mandatory cashout from the designated Roth account in the Plan of more than $1,000 will
be directly rolled over to a Roth IRA chosen by the Plan administrator. A mandatory cashout is a payment from a plan to
a participant made before age 62 (or normal retirement age, if later) and without consent, where the participant’s benefit
does not exceed $5,000 (not including any amounts held under the plan as a result of a prior rollover made to the plan).
•
You may have special rollover rights if you recently served in the U.S. Armed Forces. For more information, see IRS
Publication 3, Armed Forces’ Tax Guide.
FOR MORE INFORMATION
You may wish to consult with the Plan administrator or payor, or a professional tax advisor, before taking a payment from the Plan.
Also, you can find more detailed information on the federal tax treatment of payments from employer plans in: IRS Publication 575,
Pension and Annuity Income; IRS Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs), and Publication
590-B, Distributions from Individual Retirement Arrangements (IRAs), and IRS Publication 571, Tax-Sheltered Annuity Plans
(403(b) Plans). These publications are available from a local IRS office, on the web at www.irs.gov, or by calling 1-800-TAX-FORM.
