If you are currently employed by the Plan's Sponsor, your Plan provisions may allow for the following three withdrawal options (these are not available in all Plans, please review the Summary Plan Description for details on your Plan's withdrawal options while still employed):
1) Withdrawal due to Financial Hardship: Your Plan may permit Participants to take a hardship withdrawal due to an immediate and heavy financial need. Please review the Summary Plan Description for details. The withdrawal is limited to the amount necessary to satisfy that financial need, and you must certify as part of the application process that the immediate and heavy financial need cannot be relieved from liquid assets or any other resources reasonably available to you. Note: A financial need may be immediate and heavy even if it was reasonably foreseeable or voluntarily incurred. Hardship withdrawals may be taken from your own salary deferral dollars and any assets that you rolled into the Plan from another retirement account or Plan.
A Participant is considered to have an immediate and heavy financial need if the withdrawal is used to pay for any of the following:
Medical care expenses for the Participant, their spouse, dependents or beneficiary.
Costs directly related to the purchase of a Participant’s principal residence (excluding mortgage payments).
Tuition, related educational fees and room and board expenses for the next 12 months of postsecondary education for the Participant or the Participant’s spouse, children, dependents or beneficiary.
Payments necessary to prevent the eviction of the Participant from their principal residence or foreclosure on the mortgage on that residence.
Funeral expenses for the Participant, their spouse, children, dependents, or beneficiary.
Certain expenses to repair damage to the Participant’s principal residence that qualify for a casualty loss deduction for federal income tax purposes (see IRS publication 547
Expenses incurred as a result of a federally-declared disaster, such as hurricanes and wildfires.
The application form will require you to supply documentation in support of your claim for financial hardship consideration.
A 10% federal income tax withholding applies and will be withheld at the time of disbursement but you have the option to waive this withholding on the application form or increase the withholding amount beyond 10%. In addition, a 10% early-withdrawal penalty applies (as you are under the age of 59.5) but will not be withheld at the time of disbursement. You would be responsible to pay the 10% early-withdrawal penalty amount at the time that you file your income taxes for the year in which the withdrawal occurred. The 10% early-withdrawal penalty may be waived altogether in certain circumstances. For details, please visit: https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-tax-on-early-distributions
. Processing times for a hardship withdrawal range from 10 to 15 business days.
2) Loan Withdrawal: Your Plan may permit Participants to borrow the lesser of $50,000 or 50% of their vested account balance (reduced by the highest outstanding loan balance, if any, in the previous 12-month rolling period) to be repaid over a period of no more than 5 years (30 years if purchasing your primary residence) in equal installments through payroll deductions from net wages (after-tax dollars). Your Plan may permit you to have more than one active loan at a time. Please review the Summary Plan Description and Loan Policy for details. Unlike a loan from a bank, since you would be borrowing from your own retirement account, interest payments will be paid back into your retirement account. The loan interest rate for your Plan is disclosed in the Summary Plan Description/Loan Policy. There is a one-time loan initiation fee of $175 plus the custodial institution's check transmittal fees which are deducted from your account balance (not your loan proceeds). There are no ongoing loan maintenance fees. Loan payments must be made in accordance with an amortization schedule which follows your payroll schedule. Participants are not allowed to voluntarily suspend loan payments unless Plan provisions allow for bona fide leave of absence suspension of payments. No accelerated or additional payments will be accepted, but you may pay down the outstanding balance of your loan in one lump sum if you choose. If you default on your loan payments, the outstanding balance will be converted into taxable income for the year of the default. You will receive a Form 1099-R detailing the tax implications of your loan default. Processing times for a loan withdrawal range from 10 to 15 business days upon receipt of a complete loan application and the subsequently-issued promissory note. You may continue to make contributions to your retirement account while making loan payments.
3) In-Service Withdrawal: Withdrawals of vested retirement assets may be permitted by your Plan from specific Sources/ Money Types at a certain age. Please review the Summary Plan Description (SPD) for details
. A mandatory 20% federal income tax withholding will apply for any direct distributions paid to you or to a taxable financial account held in your name (such as a checking or savings account, or a brokerage account). A 10% early withdrawal penalty may apply (but not withheld) if you are under the age of 59.5. Again, the 10% early-withdrawal penalty may be waived altogether in certain circumstances. For details, please visit: https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-tax-on-early-distributions
. You may avoid taxes and penalties by rolling over your in-service withdrawal to another qualified retirement account or an IRA. Processing times for an-service withdrawal range from 10 to 15 business days.
If you are no longer employed by the Plan's Sponsor, you may take a total distribution of your full retirement account balance and have the proceeds paid directly to you or to a taxable financial account held in your name (such as a checking or savings account, or a brokerage account). The direct distribution option would incur taxes (20% federal tax withholding and state taxes where applicable) and the 10% early withdrawal penalty if you are under the age of 59.5 (see the hyperlink above to the IRS website for details on when you may be exempted from the 10% penalty). Rolling over your retirement assets from your Plan to another qualified retirement account or IRA may allow you to avoid taxes and penalties. Processing times for a separation from service distribution/rollover range from 10 to 15 business days.
Your Plan is enabled for online withdrawal requests where you may initiate your account distribution/rollover from your Participant Portal and avoid having to complete and sign paper or PDF forms and attach supporting documentation. Log on to your Participant account and visit the Loans & Withdrawals page to access the applicable withdrawal option for your Plan. If you are unable to initiate your distribution online, visit the Forms section of our website (http://forms.rpgconsultants.com) to download a PDF copy of the appropriate distribution or withdrawal forms. PDF forms have a longer processing timeline and additional requirements such as an identity verification phone call, valid photo ID requirements, and supporting documentation for rollovers over $25,000. Please be sure to review the Special Tax Notice which details all tax implications for any withdrawal options.