Fillable Withdrawal Application Rs 5014 (Page 2 of 4) in pdf

RS 5014 (Rev. 11/12) Page 2

sPEcIAl tAX notIcE REgARdIng REtIREmEnt systEm wIthdRAwAls

This notice contains important information you will need before you decide how to receive your withdrawal payment from the New York State and Local

Retirement Systems.

summARy

A withdrawal payment from the Retirement System consists of a taxable amount, and may also include a non-taxable amount. The taxable amount eligible

for “rollover” can be taken in one of two ways. You may have all or any portion of your taxable payment either 1) PAID IN A “DIRECT ROLLOVER” or 2) PAID

TO YOU. A rollover is a payment of the taxable portion of your Retirement System withdrawal to your individual retirement arrangement (IRA) or to another

employer plan. This choice will affect the tax you owe.

If you choose a DIRECT ROLLOVER:

◆ Your refund will not be taxed in the current year and no income tax will be withheld.

◆ Your refund will be made directly to your IRA or, if you choose, to another employer plan that accepts your rollover.

◆ Your refund will be taxed later when you take it out of the IRA or the employer plan.

If you choose to have your Retirement System withdrawal PAID TO YOU:

◆ You will receive only 80% of the taxable portion of the refund because the Retirement System is required to withhold 20% of the

taxable portion of the refund and send it to the IRS as income tax withholding to be credited against your taxes.

◆ Your payment will be taxed in the current year unless you roll it over. You may be able to use special tax rules that could reduce the

tax you owe. However, if you receive the payment before age 55, you also may have to pay an additional 10% tax.

◆ You can roll over the payment to your IRA or to another employer plan that accepts your rollover within 60 days of receiving the

payment. The amount rolled over will not be taxed until you take it out of the IRA or the other employer plan.

◆ If you want to roll over 100% of the payment to an IRA or another employer plan, you must find other money to replace the 20% that

was withheld. If you roll over only the 80% that you received, you will be taxed on the 20% that was withheld and is not rolled over.

moRE InfoRmAtIon

PAymEnts thAt cAn And cAnnot bE RollEd oVER

Payments from the Retirement System may be “eligible rollover distributions.” This means that they can be rolled over to an IRA or to another employer

plan that accepts rollovers. The Retirement System will tell you what portion of your payment is an eligible rollover distribution. The following types of

payments cannot be rolled over:

Non-taxable payments. In general only the “taxable portion” of your payment is an eligible rollover distribution. If you have made

“after tax” employee contributions to the Retirement System, these contributions will be non-taxable when they are paid to you and

they cannot be rolled over. (After-tax employee contributions generally are contributions you made from your own pay that were

already taxed.)

dIREct RolloVER

You can choose a direct rollover of all or any portion of your payment that is an “eligible rollover distribution” as described above, as long as it equals

$200 or more. In a direct rollover, the eligible rollover distribution is paid directly from the retirement system to an IRA or another employer plan

that accepts rollovers. If you choose a direct rollover, you are not taxed on a payment until you later take it out of the IRA or the employer plan.

Direct Rollover to an IRA. You can open an IRA to receive the direct rollover. (The term “IRA”, as used in this notice, includes

individual retirement accounts and individual retirement annuities.) If you choose to have your payment made directly to an IRA,

contact an IRA sponsor (usually a financial institution) to find out how to have your payment made in a direct rollover to an IRA at that

institution. If you are unsure of how to invest your money, you can temporarily establish an IRA to receive the payment. However,

in choosing an IRA you may wish to consider whether the IRA you choose will allow you to move all or a part of your payment to

another IRA at a later date without penalties or other limitations. See IRS Publication 590, Individual Retirement Arrangements for

more information on IRA’s (including limits on how often you can roll over between IRA’s).

Direct Rollover to a Plan. If you are employed by a new employer that has a plan and you want a direct rollover to that plan, ask

the administrator of that plan whether it will accept your rollover. If your new employer’s plan does not accept a rollover, you can

choose a direct rollover to an IRA.

PAymEnt PAId to you

If you have the payment made to you, it is subject to 20% income tax withholding. The payment is taxed in the year you receive it unless, within 60

days, you roll it over to an IRA or another plan that accepts rollovers. If you do not roll it over, special tax rules may apply.

Withdrawal Application Rs 5014 Page 2

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