Taxes and Rollovers

The amount credited to your account and the earnings on your account are not considered taxable income to you until you actually receive the money. The form of payment you receive also affects the taxation of your account.

If you receive a lump sum payment, period certain payment of less than ten years, minimum annual payment of less than ten years, split distribution, and certain preretirement death benefit payments, the plan is required to withhold 20 percent for federal income tax. However, these types of payments are eligible for a rollover into an Individual Retirement Account (IRA) or eligible retirement plan willing to accept the benefits. If you roll over the benefits, and meet the requirements of the Internal Revenue Code (IRC), withholding is not mandatory. You will be given complete information when you apply for benefits, as well as the opportunity to elect a rollover.