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Click here or scroll down to respond to this candidatePage 1 of 8 Copyright 2023 Ascensus, LLC. All Rights Reserved.#Street Address NR-BD (12/2023)Candidate's Name
Important Information About Your Qualified Retirement Plan Distribution INTRODUCTIONAs a participant in your employers qualified retirement plan, you have accumulated a vested account balance. You may receive your vested account balance only if you incur a triggering event. You may incur a triggering event if: you are no longer working for your employer, you attain the normal retirement age indicated in the Plan, you become disabled under the Plans definition, your employer terminates the Plan, your Plan permits in-service distributions (may be limited to certain contribution sources), your Plan permits distributions during phased retirement (only applicable to certain plans and limited to participants that have attained the age specified in the Plan), or you incur a hardship (only applicable to certain plans and may be limited to certain contribution sources). However, you must refer to your Summary Plan Description to identify the specific triggering events which apply under your Plan. NOTE: Generally, payments from your employers qualified retirement plan must be delayed for a minimum of 30 days after you receive this notice, to allow you time to consider your distribution options. Although you are entitled to consider your distribution options for a period of 30 days, you may waive this 30 day notice requirement. If you are subject to the Retirement Equity Act (REA) notice requirements and you waive the 30 day notice requirement, your employer must wait seven days from the date you received this notice before commencing distributions. The law dictates the optional forms that your payments may take. The law also specifies how the different types of payments will be taxed. This notice summarizes your distribution options and illustrates the financial effect and the tax consequences of each distribution option. PART ONE of this notice describes the Plan payment options available to you. PART TWO describes the payment options for your beneficiary(ies). PART THREE contains a special tax notice, required by the IRS, that explains the tax treatment of your Plan payment that is not from a designated Roth account and describes the rollover options available to you. PART FOUR contains a special tax notice, required by the IRS, that explains the tax treatment of your Plan payment from a designated Roth account and describes the rollover options available to you. NOTE: The payment amounts indicated in this notice are only examples. You may obtain financial projections based upon your account balance by submitting a request, in writing, to the Plan administrator (usually the employer). PART ONE PAYMENT OPTIONS FOR PLAN PARTICIPANTSIMPORTANT NOTICE TO PARTICIPANTRead the following message before reviewing your options. Of the three options listed below, some may not be available to you and you must refer to your Summary Plan Description to identify the specific payment options that apply under your Plan.If your vested account balance does not exceed the Plans cashout level at the time of distribution, the Plan administrator generally may pay your distribution to you in a single cash payment, regardless of whether you consent to the distribution. A distribution made without your consent is called a cashout distribution. If your Plan allows for cashout distributions of amounts less than $7,000, a cashout distribution of an amount greater than $1,000 that is an eligible rollover distribution must be directly rolled over by the Plan administrator to an individual retirement account (IRA) chosen by the Plan administrator. You may subsequently transfer the IRA to another IRA provider, once the IRA has been established. However, if your vested account balance exceeds the Plans cashout level, you must generally consent to the form of payment, and therefore may, if you wish, postpone commencement of distributions from your account balance. Your employer intends for your Plan account to provide income to you during retirement. If you take a distribution prior to retiring or spend your retirement savings too quickly, you may not have sufficient income to live on in retirement. If you terminate employment and leave your money in the Plan, a share of the Plans administrative expenses may be charged to your account each year. Refer to your Plan administrator for an explanation of any administrative expenses that may be charged to the accounts of terminated participants. If you choose to roll over your vested account balance to an IRA or other eligible retirement plan, the distributing Plans investment options may not be available under the receiving retirement arrangement and the fees may differ from those charged to you if your balance remained in the Plan. Complete information concerning available investment options and fees currently charged by the Plan is available from your Plan administrator. Consult your financial advisor for a description of investments available to you outside of the Plan and any applicable fees associated with them. DISTRIBUTION OPTIONSOPTION I LUMP SUM PAYMENTYou may request a lump sum payment.A. LUMP SUM PAYMENT DEFINEDA lump sum payment is the payment of your entire vested account balance. B. FINANCIAL EFFECT AND TAX CONSEQUENCES OF A LUMP SUM PAYMENT Generally a lump sum payment is included in your income and taxed in the year of the distribution. Most lump sum payments are eligible rollover distributions and would, therefore, be subject to the 20% withholding rules unless directly rolled over to another plan or IRA. See Parts Three and Four of this notice for more information.OPTION II INSTALLMENT PAYMENTSYou may elect to receive your vested account balance in installment payments. Installment payments for a period of less than 10 years are generally eligible rollover distributions and would, therefore, be subject to the 20% withholding rules unless directly rolled over to another plan or IRA. See Parts Three and Four of this notice for more information.A. INSTALLMENT PAYMENTS DEFINEDInstallment payments are payments distributed to you in any amount you choose at intervals that you determine within limits set by the trustee or custodian. For example, the payments could be paid to you annually, semiannually, quarterly, or monthly. The payment schedule you choose cannot be longer than your single life expectancy or, if you have a beneficiary named, the joint life expectancy of you and your beneficiary. Page 2 of 8 Copyright 2023 Ascensus, LLC. All Rights Reserved.#10482NR-BD (12/2023)B. FINANCIAL EFFECT AND TAX CONSEQUENCES OF INSTALLMENT PAYMENTS Generally, each installment payment will be included in your income in the year in which you receive it. For example, a participant who elects to receive $500 per month will include $6,000 ($500 x 12 months) in income each tax year. OPTION III ANNUITY CONTRACTYou may purchase an annuity contract with your vested account balance. This distribution option allows you to choose the type of annuity contract you wish to purchase. However, you cannot elect payments in the form of a life annuity. A. ANNUITY CONTRACT DEFINEDYou may use your vested account balance to purchase a term certain annuity or any other form of annuity except a life annuity. A term certain annuity would distribute dollars to you and your beneficiary for a specified number of years. B. FINANCIAL EFFECT AND TAX CONSEQUENCES OF THE ANNUITY If you elect to use your vested account balance to purchase a term certain annuity, payments will be made to you (and, if applicable, the beneficiary of your annuity) for a specified number of years. For example, assume a participant age 65 retires with a $10,000 account balance. A 10 year period certain annuity may provide him or her with a monthly payment equal to $106.07. Generally, each payment is included in income in the year it is received. The annuity will be provided by purchasing an annuity contract from an insurance company with your account balance under the plan. This example is an estimate and should not be viewed as an assurance that an insurer is able to provide the specific amount disclosed. PART TWO PAYMENT OPTIONS FOR BENEFICIARIES OF DECEASED PLAN PARTICIPANTS IMPORTANT NOTICE TO BENEFICIARYIf you are the designated beneficiary of a deceased participants vested account balance, you are eligible to receive a distribution. The form of the benefit depends on several factors including, but not limited to, the type of plan, the amount in the participants account, your relationship to the participant, and the participants date of death. Your options will also depend on whether you are an eligible designated beneficiary (a designated beneficiary who is 1) a spouse of the participant; 2) a child of the participant who is under the age of majority; 3) a beneficiary that is not more than 10 years younger than the participant; 4) disabled; or, 5) chronically ill). Of the options listed in Part One, above, some may not be available to you. If you have questions about your options contact the Plan administrator or seek tax or legal advice.OPTION I PARTICIPANTS ACCOUNT BALANCEIf the participants vested account balance was $7,000 or less at the time of distribution, the Plan administrator is required to pay your distribution to you in a single cash payment. If the participants vested account balance exceeded $7,000, you must consent to the form of payment. OPTION II TYPE OF PAYMENTYou may select Option I, II or III listed above. However, if you select the installment payment method described in Option II, the payment schedule you choose cannot be longer than your single life expectancy. The rollover option described in Parts Three and Four is available only if you are the spouse of the deceased participant. However, spouse and nonspouse beneficiaries may be able to directly roll over their balance to an inherited IRA as described in Parts Three and Four of this notice. PART THREE PAYMENTS NOT FROM A DESIGNATED ROTH ACCOUNT YOUR ROLLOVER OPTIONSYou are receiving this notice because all or a portion of a payment you are receiving from your retirement plan (the Plan) is eligible to be rolled over to an IRA or 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 that are not from a designated Roth account (a type of account in some employer plans that is subject to special tax rules). If you also receive a payment from a designated Roth account in the Plan, refer to Part Four of this notice for information on that payment, and the Plan administrator or the payor will tell you the amount that is being paid from each account. 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 ROLLOVERSHow can a rollover affect my taxes?You will be taxed on a payment from the Plan if you do not roll it over. If you are under age 59 and do not do a rollover, you will also have to pay a 10% additional income tax on early distributions (generally, distributions made before age 59 ), unless an exception applies. However, if you do a rollover, you will 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 59 (or if an exception to the 10% additional income tax applies).What types of retirement accounts and plans may accept my rollover? 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, IRAs are not subject to spousal consent rules 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. 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. You should contact the IRA sponsor 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 into an IRA or eligible employer plan that will accept it. Generally, 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 59 (unless an exception applies). Page 3 of 8 Copyright 2023 Ascensus, LLC. All Rights Reserved.#10482NR-BD (12/2023)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 joint lives or joint life expectancies of you and your beneficiary); Required minimum distributions after age 73 (if you were born after December 31, 1950), age 72 (if you were born after June 30, 1949 and before January 1, 1951), age 70 (if you were born before July 1, 1949), or after death; Hardship distributions; Payments of employee stock ownership plan (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 that you request to withdraw within 90 days of your first contribution; Amounts treated as distributed because of a prohibited allocation of S corporation stock under an ESOP (also, there generally will be adverse tax consequences if you roll over a distribution of S corporation stock to an IRA); and Distributions of certain premiums for health and accident insurance. The Plan administrator or the payor can tell you what portion of a payment is eligible for rollover. If I dont do a rollover, will I have to pay the 10% additional income tax on early distributions? If you are under age 59, 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 below applies. This tax applies to the part of the distribution that you must include in income and 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: 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 joint lives or joint life expectancies of you and your beneficiary); Payments from a governmental plan made after you separate from service if you are a qualified public safety employee and you (1) will be at least age 50 in the year of the separation or (2) have at least 25 years of service under the Plan; Payments from a tax-qualified plan or section 403(b) plan made after you separate from service if you provided firefighting services and you (1) will be at least age 50 in the year of the separation or (2) have at least 25 years of service under the Plan; 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 of up to $5,000 made to you from a defined contribution plan if the payment is a qualified birth or adoption distribution; Payments up to the amount of your deductible medical expenses (without regard to whether you itemize deductions for the taxable year); 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 that you request to withdraw within 90 days of your first contribution; Payments of up to $22,000 made in connection with federally-declared disasters; Phased retirement payments made to federal employees; Payments made on or after the date you are certified by a physician as terminally ill; Payments to domestic abuse victims, up to the lesser of (1) $10,000 (as adjusted for cost-of-living adjustments after 2024), or (2) 50% of your vested benefit; and Payments for emergency personal expenses, up to the lesser of (1) $1,000, or (2) the excess of your vested benefit over $1,000. 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 59, you will have to pay the 10% additional income tax on early distributions on the part of the distribution that you must include in income, 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: The exceptions for payments made after you separate from service if you will be at least age 55 in the year of the separation (or age 50 or following 25 years of service for qualified public safety employees and employees providing firefighting services) do not apply; 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); and 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.Additional exceptions apply for payments from an IRA, including: Payments for qualified higher education expenses; Payments up to $10,000 used in a qualified first-time home purchase; 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); and Payments of net income attributable to an excess contribution that is withdrawn by the tax return deadline for the year in which the contribution was made(including extensions).Will I owe State income taxes?This notice does not address any State or local income tax rules (including withholding rules). SPECIAL RULES AND OPTIONSIf your payment includes after-tax contributionsAfter-tax contributions included in a payment are not taxed. If you receive a partial payment of your total 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 the payment. In addition, special rules apply when you do a rollover, as described below.Page 4 of 8 Copyright 2023 Ascensus, LLC. All Rights Reserved.#10482NR-BD (12/2023)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 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 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.Similarly, if you do a 60-day rollover to an IRA of only a portion of a payment made to you, the portion 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, 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 miss the 60-day rollover deadlineGenerally, 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. Under certain circumstances, you may claim eligibility for a waiver of the 60-day rollover deadline by making a written self-certification. Otherwise, to apply for a waiver from the IRS, 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). If your payment includes employer stock that you do not roll over 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 59, disability, or the participants 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, generally, the Plan. The Plan administrator can tell you the amount of any net unrealized appreciation. 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 outstanding amount of the loan, typically when your employment ends. The offset amount is treated as a distribution to you at the time of the offset. Generally, you may roll over all or any portion of the offset amount. Any offset amount that is not rolled over will be taxed (including the 10% additional income tax on early distributions, unless an exception applies). You may roll over offset amounts to an IRA or an employer plan (if the terms of the employer plan permit the plan to receive plan loan offset rollovers). How long you have to complete the rollover depends on what kind of plan loan offset you have. If you have a qualified plan loan offset, you will have until your tax return due date (including extensions) for the tax year during which the offset occurs to complete your rollover. A qualified plan loan offset occurs when a plan loan in good standing is offset because your employer plan terminates, or because you sever from employment. If your plan loan offset occurs for any other reason(such as a failure to make level loan repayments that results in a deemed distribution), then, you have 60 days from the date the offset occurs to complete your rollover.If you were born on or before January 1, 1936If 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 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 59 (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 59 will be subject to the 10% additional income tax on early distributions (unless an exception applies). Other differences include 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 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 paid 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 IRAIf you roll over a payment from the Plan 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. In general, the 10% additional income tax on early distributions will not apply. However, if you take the amount rolled over out of the Roth IRA within the 5-year period that begins on January 1 of the year of the rollover, the 10% additional income tax will apply (unless an exception applies). 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 59 (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 IRS Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs). If you do a rollover to a designated Roth account in the Plan You cannot roll over a distribution to a designated Roth account in another employers plan. However, you can roll the distribution over into a designated Roth account in the distributing Plan. If you roll over a payment from the Plan 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 |
