Form Std Fspsrv - Separation From Employment Withdrawal Request 401(A) Plan (Page 12 of 14) in pdf

402(f) NOTICE OF SPECIAL TAX RULES ON DISTRIBUTIONS

If I don’t do a rollover, will I have to pay the 10% additional income tax

on early distributions?

YOUR ROLLOVER OPTIONS

If you are under age 59½, you will have to pay the 10% additional income

You are receiving this notice because all or a portion of a payment you are

tax on early distributions for any payment from the Plan (including amounts

receiving from CCOERA 401(A) Plan (the “Plan”) is eligible to be rolled over

withheld for income tax) that you do not roll over, unless one of the

to an IRA or an employer plan. This notice is intended to help you decide

exceptions listed below applies. This tax is in addition to the regular income

whether to do such a rollover.

tax on the payment not rolled over.

This notice describes the rollover rules that apply to payments from the Plan

The 10% additional income tax does not apply to the following payments

that are not from a designated Roth account (a type of account with special

from the Plan:

tax rules in some employer plans). If you also receive a payment from a

• Payments made after you separate from service if you will be at least

designated Roth account in the Plan, you will be provided a different notice

age 55 in the year of the separation

for that payment, and the Plan administrator or the payor will tell you the

• Payments that start after you separate from service if paid at least

amount that is being paid from each account.

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

Rules that apply to most payments from a plan are described in the “General

beneficiary)

Information About Rollovers” section. Special rules that only apply in certain

• Payments from a governmental defined benefit pension plan made

circumstances are described in the “Special Rules and Options” section.

after you separate from service if you are a public safety employee

GENERAL INFORMATION ABOUT ROLLOVERS

and you are at least age 50 in the year of the separation

How can a rollover affect my taxes?

• Payments made due to disability

You will be taxed on a payment from the Plan if you do not roll it over. If you

• Payments after your death

are under age 59½ and do not do a rollover, you will also have to pay a 10%

• Payments of ESOP dividends

additional income tax on early distributions (unless an exception applies).

• Corrective distributions of contributions that exceed tax law limitations

However, if you do a rollover, you will not have to pay tax until you receive

• Cost of life insurance paid by the Plan

payments later and the 10% additional income tax will not apply if those

• Payments made directly to the government to satisfy a federal tax levy

payments are made after you are age 59½ (or if an exception applies).

• Payments made under a qualified domestic relations order (QDRO)

• Payments up to the amount of your deductible medical expenses

Where may I roll over the payment?

• Certain payments made while you are on active duty if you were a

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

member of a reserve component called to duty after September 11,

plan, section 403(b) plan, or governmental section 457(b) plan) that will

2001 for more than 179 days

• Payments of certain automatic enrollment contributions requested to

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

be withdrawn within 90 days of the first contribution.

from the IRA or employer plan (for example, no spousal consent rules apply

If I do a rollover to an IRA, will the 10% additional income tax apply to

to IRAs and IRAs may not provide loans). Further, the amount rolled over

early distributions from the IRA?

will become subject to the tax rules that apply to the IRA or employer plan.

If you receive a payment from an IRA when you are under age 59½, you

How do I do a rollover?

will have to pay the 10% additional income tax on early distributions from

There are two ways to do a rollover. You can do either a direct rollover or

the IRA, unless an exception applies. In general, the exceptions to the 10%

a 60-day rollover.

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

If you do a direct rollover, the Plan will make the payment directly to

are a few differences for payments from an IRA, including:

your IRA or an employer plan. You should contact the IRA sponsor or the

• There is no exception for payments after separation from service that

administrator of the employer plan for information on how to do a direct

are made after age 55.

rollover.

• The exception for qualified domestic relations orders (QDROs) does

If you do not do a direct rollover, you may still do a rollover by making a

not apply (although a special rule applies under which, as part of a

deposit into an IRA or eligible employer plan that will accept it. You will have

divorce or separation agreement, a tax-free transfer may be made

60 days after you receive the payment to make the deposit. If you do not do a

directly to an IRA of a spouse or former spouse).

direct rollover, the Plan is required to withhold 20% of the payment for federal

• The exception for payments made at least annually in equal or close

income taxes (up to the amount of cash and property received other than

to equal amounts over a specified period applies without regard to

employer stock). This means that, in order to roll over the entire payment in

whether you have had a separation from service.

a 60-day rollover, you must use other funds to make up for the 20% withheld.

• There are additional exceptions for (1) payments for qualified higher

If you do not roll over the entire amount of the payment, the portion not rolled

education expenses, (2) payments up to $10,000 used in a qualified

over will be taxed and will be subject to the 10% additional income tax on

first-time home purchase, and (3) payments for health insurance

early distributions if you are under age 59½ (unless an exception applies).

premiums after you have received unemployment compensation

How much may I roll over?

for 12 consecutive weeks (or would have been eligible to receive

If you wish to do a rollover, you may roll over all or part of the amount eligible

unemployment compensation but for self-employed status).

for rollover. Any payment from the Plan is eligible for rollover, except:

Will I owe State income taxes?

• Certain payments spread over a period of at least 10 years or over

This notice does not describe any State or local income tax rules (including

your life or life expectancy (or the lives or joint life expectancy of you

withholding rules).

and your beneficiary)

SPECIAL RULES AND OPTIONS

• Required minimum distributions after age 70½ (or after death)

If your payment includes after-tax contributions

• Hardship distributions

After-tax contributions included in a payment are not taxed. If a payment is

• ESOP dividends

only part of your benefit, an allocable portion of your after-tax contributions

• Corrective distributions of contributions that exceed tax law limitations

included in the payment, so you cannot take a payment of only after-

• Loans treated as deemed distributions (for example, loans in default

tax contributions. However, if you have pre-1987 after-tax contributions

due to missed payments before your employment ends)

maintained in a separate account, a special rule may apply to determine

• Cost of life insurance paid by the Plan

whether the after-tax contributions are included in a payment. In addition,

• Payments of certain automatic enrollment contributions requested to

special rules apply when you do a rollover, as described below.

be withdrawn within 90 days of the first enrollment.

• Amounts treated as distributed because of a prohibited allocation of S

You may roll over to an IRA a payment that includes after-tax contributions

corporation stock under an ESOP (also, there will generally be adverse

through either a direct rollover or a 60-day rollover. You must keep track of

tax consequences if you roll over a distribution of S corporation stock

the aggregate amount of the after-tax contributions in all of your IRAs (in

to an IRA).

order to determine your taxable income for later payments from the IRAs). If

The Plan administrator or the payor can tell you what portion of a payment

you do a direct rollover of only a portion of the amount paid from the Plan and

is eligible for rollover.

at the same time the rest 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-

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STD FSPSRV

07/31/17

98721-01

WITHDRAWAL

DOC ID: 492627235

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Page 12 of 14

Form Std Fspsrv - Separation From Employment Withdrawal Request 401(A) Plan Page 12

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