Generally, the money in your Individual Account is not taxable until you actually receive it. When you receive the money in your Individual Account, you must report it as taxable income.
Federal law governs the withholding of income tax and tax-free rollovers. You will be given the opportunity to elect a direct transfer of the money in your Individual Account to another “eligible retirement plan” (as defined by law). An “eligible retirement plan” includes an individual retirement account (IRA) another qualified plan, a tax qualified annuity or qualified state or local government plan that accept rollovers.
Eligible Rollover Distributions
If you receive your Accumulated Share as a lump sum benefit or elect to receive your benefit in installments payable over a period of fewer than 120 months, you may be eligible for a direct rollover. By making a direct rollover into an eligible retirement plan, you avoid a 20% federal income tax withholding. If you elect to receive your lump sum payment without rolling it over, the Plan will withhold 20% of your benefit for federal taxes and any state income taxes that are required by law. If you are younger than age 59 1/2 when you receive your benefit, you may also be subject to 10% excise tax. The same rollover rules that apply to you also apply to your spouse in the event he or she elects to receive his or her survivor benefit as a lump sum benefit or in installments payable over a period of fewer than 120 months.
You (or your surviving spouse, if applicable) must complete the appropriate forms and inform the Fund Office of the name of the plan or the IRA to which you wish to directly transfer your benefit amount, as well as any other information that is necessary to make the transfer. The Plan will notify you of your right to make a “direct rollover” within the 180-day period prior to your effective date.
For federal income tax purposes, a distribution from this Plan to your surviving beneficiary who is not your spouse generally will be treated as taxable income to that beneficiary in the year it is distributed. However, the Plan permits a non-spouse beneficiary to elect to have the Plan directly transfer a Death Benefit to an Inherited IRA. An Inherited IRA is a special IRA your non-spouse beneficiary acquires specifically to accept direct transfers of death benefits. Subject to special IRS minimum distribution rules, your nonspouse beneficiary may be able to defer taxes on a portion of a direct trustee-to-trustee transfer to later tax periods. At the time your beneficiary applies for a Death Benefit, the Fund Office will notify him or her of the procedures for electing a direct trustee-totrustee transfer to an Inherited IRA.
To determine the best way for you to receive the money in your Individual Account and the tax consequences of any payments you receive, you should discuss your particular circumstances with a qualified tax advisor.