In addition to understanding the specifics of your plan benefits, you should also know about the advantages of this plan, tax considerations, and other administrative and legal issues.
Tax Considerations When You Receive Benefits
Federal and state income tax must be withheld from the taxable portion of all plan benefits that you or your beneficiary receive, unless you or your beneficiary elect otherwise (but see the last paragraph of this section for an exception).
Under current federal law, ordinary income tax applies to taxable payments to you from your plan accounts. Qualified withdrawals from a Roth 403(b) contributions account are tax free.
A 10% penalty tax applies to all payments you receive before you reach age 59½, except payments in the form of an annuity. The 10% penalty tax does not apply if payments are received because of your death, disability, or early retirement at age 55 or older; or in connection with a Qualified Domestic Relations Order; or in amounts that do not exceed your tax-deductible medical expenses or certain amounts spent for health insurance in the event of your extended unemployment; or to qualified withdrawals from a Roth 403(b) contributions account.
You may be able to postpone payment of taxes if you are able to transfer or roll over your plan distribution to an IRA or another plan that accepts rollovers. All cash distributions from the plan except those payable as an annuity or in periodic installments for at least 10 years, those mandated by minimum distribution rules, and hardship withdrawal will be eligible for direct transfer to an IRA or another plan. If these distributions are not directly rolled over to an IRA (or to another employer plan that will accept them), they will be subject to mandatory 20% federal income tax withholding.
Payments to Others
Your rights under the Supplemental Retirement & Savings Plan cannot be assigned or used as collateral, and your accounts are not generally subject to garnishment. However, under federal law, the plan must honor a Qualified Domestic Relations Order from a court requiring payment to a divorced or separated spouse or for child support or a lien on your account for the payment of overdue taxes, or to satisfy certain other court orders. Upon request to Human Resources, a copy of the plan’s Qualified Domestic Relations Order Procedures is available at no cost.
Correction of Mistakes
If, due to a payroll processing or other error, the wrong amount is taken from your paycheck or contributed to your plan account, or if an adjustment is necessary to meet one of the tax law limits on contributions to your accounts, Human Resources has the right to correct the mistake or make the necessary adjustment. Any over-contribution amounts debited from your accounts will be repaid to you (less withholdings, if applicable).
Not Insured by PBGC
Supplemental Retirement & Savings Plan benefits are not guaranteed by the Pension Benefit Guaranty Corporation (PBGC), which does not cover plans such as this one with individual accounts for each participant. Upon termination of the plan, you would be eligible to receive the total amount in your accounts.