Taking Distributions from Your Account

When you take money out of your account (other than a withdrawal), it's called a distribution. There are two reasons for you to take a distribution from your plan account:

1. You change jobs.
2. You retire and begin to live off your savings.

Taking a distribution when you change jobs
If you leave your job, you'll have to decide what to do with the money in your retirement savings plan. Before you make your decision, speak with your tax advisor. Basically, you have three choices:

1. Leave your money where it is.
   Many plans allow you to leave your money in the plan even if you no longer work for the employer. If you subsequently join another plan, you'll need to monitor separate accounts and statements.
2. Roll over your plan balance directly to your new employer's plan, or an individual retirement account (IRA).
   If you request a direct rollover, where the plan administrator transfers the money directly without giving it to you first, you'll avoid taxes and penalties and your tax-deferred growth will continue without interruption. If you set this up as a "rollover IRA," you may be able to roll the money into another employer-sponsored retirement savings plan.
3. Take your money in cash.
   The plan administrator makes a check out to you and you get all of the money in your account. You'll owe taxes on the entire amount of the distribution. Your employer is required to withhold 20% of the distribution for income tax purposes. You still have the option of rolling the money over to another plan or an IRA, but you must do this within 60 days of receiving the distribution and you must roll over the entire distribution amount (including the 20% that was withheld) to avoid any taxes. That means making up the 20% difference out of your own pocket (depending on your tax circumstances you may be refunded the originally withheld 20% after you file your income taxes). You don't want to make a wrong move here, so see your tax advisor for advice.

* Note: The rules governing distribution provisions from this plan may be different than the rules applicable to the plan from which a rollover originated.

Taking distributions when you retire
If you retire, you may not be required to take distributions until the April 1st following the year you turn age 701/2 or retire, whichever is later. You'll owe income taxes on the money you receive from the plan. When you retire, your options are generally similar to those available when you change jobs. If the plan permits, you may do any of following:

1. Leave the money in the plan until you reach age 70-1/2, and then choose one of the options listed in number 3 below.
2. Request a direct rollover to an IRA.
3. Take your money in cash all at once, in installments (taking equal distributions monthly, quarterly, or annually for certain period of time), or take a portion in cash and leave the balance in the plan.

In addition to these three choices, you may be able to purchase an annuity that will regularly pay you a predetermined amount for the rest of your life.

* Note: The rules governing distribution provisions from this plan may be different than the rules applicable to the plan from which a rollover originated.