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December 27, 2016 | Print | Site Map | Help

Annuity Plan

Paying tax on the Individual Account

The amount credited to your Individual Account is not considered taxable income to you until you actually receive the money. When you are paid the money in your Individual Account, it then must be reported as taxable income, unless you elect to rollover the entire distribution into an Individual Retirement Account (IRA).

Since you may owe taxes on the money you withdraw, the federal government requires that if you are receiving certain types of benefits from the Plan, 20% must be withheld for income tax purposes. These types of benefits are: a lump sum payment, installment payments over a period of less than ten years, or certain death benefit payouts. However, these types of benefits are eligible for a “rollover” into an IRA or other-tax-exempt retirement plan willing to accept the distribution. (The distribution of a surviving spouse may not be rolled over into a tax-exempt retirement plan willing to accept the distribution.) If you roll over your benefits, and meet the requirements of the Internal Revenue Code, withholding is not mandatory. You will be given complete information when you apply for benefits and the opportunity to elect or reject rollover treatment if your benefit is subject to the 20% mandatory withholding.

In addition to regular Federal income tax, if you elect to receive payment of your Individual Account prior to age 59½, you may also be subject to an additional tax penalty for early distribution. Refer to the section entitled “EARLY DISTRIBUTION PENALTY” for additional information.

IMPORTANT: When you terminate your account, you could be dealing with substantial amounts of money. It is, therefore, very important that you discuss with a competent tax advisor the manner in which you should take the money out of your Individual Account. Serious tax consequences could result from the way that these payments are made to you. The Fund Office cannot advise you of the consequences as they apply to your specific circumstances.

References to specific section(s) of the Plan can be found in the Official Plan Document under Plan Documents on this website.

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(866) 894-3705


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