THE WINDERMERE REAL ESTATE 401(k) PLAN FOR EMPLOYEES DISTRIBUTION FORM

Transcription

1 THE WINDERMERE REAL ESTATE 401(k) PLAN FOR EMPLOYEES DISTRIBUTION FORM INSTRUCTIONS 1.) Please read the notice regarding the (a.) TIMING & COST OF DISTRIBUTION on this page, (b.) the DISTRIBUTION ACKNOWLEDGEMENTS on the signature page, and (c.) SPECIAL FEDERAL TAX NOTICE REGARDING PLAN PAYMENTS attached to the distribution form, to better understand the withdrawal process and tax consequences of cash distributions and rollovers. 2.) Complete all of the information requested under PARTICIPANT INFORMATION. Please print clearly. Make sure you tell us the name of the Windermere Office or company you work for, or if you left Windermere, for which you last worked. 3.) Tell us why you are requesting a distribution. Select one TYPE AND AMOUNT OF DISTRIBUTION on page 2. Also, if you have AN OUTSTANDING LOAN from the Plan, tell us how you want to deal with it on page 3. 4.) Tell us how you want the money distributed. Select one FORM OF DISTRIBUTION on page 3. 5.) Cash distributions and Roth IRA rollovers are taxable. If yours is, tell us how to handle your TAX WITHHOLDING OPTIONS on page 4. 6.) In the section titled DELIVERY INSTRUCTIONS on page 4, tell us where to send the distribution. 7.) If your account balance is $1,000 or more, AND you are married on the date you execute this form, you must get your spouse's consent AND have it notarized on page 5. If you are not married, ignore this section. 8.) On page 5, sign and date the form. Mail it to Windermere Insurance & Benefits (the address is on page 5 of this form). DO NOT SEND this form to the Trust's custodial bank in Phoenix, AZ, to Northwest Plan Services on California Avenue in Seattle, or to Windermere Services on Sand Point, as that will slow processing. If you have any questions regarding this form or the Plan, retirement@windermere.com or call or (outside of Puget Sound). NOTICE REGARDING THE TIMING AND COST OF DISTRIBUTIONS Retirement plans, by their nature, are long term investment programs, not a demand (checking) account. It takes several entities and several days to convert investment accounts into cash for withdrawal and/or rollover. Since the Trust is paid for by Plan Participants, there are several operational decisions that have been put in place to keep costs reasonable that also impact the speed of distributions. For instance, the Trust processes distributions only once a week, usually on Tuesdays. Distribution forms received in the trust office in good order on or before noon on processing day are processed at the market's close that night. It takes up to 3 business days to liquidate positions, obtain cash and issue a check. Participants usually receive checks in the mail on or about the 6th business day following processing. No stop pays and reissues will be performed until the 10th business day following processing. The trust does not have ACH (direct deposit) or overnight processing options. Rush requests cannot be accommodated. The Trust charges a processing fee for each distribution it processes. The fee covers data entry, converting your account to cash, printing check(s), federal withholding deposit and reporting, postage, and a 1099 form for your tax return. The fee is $55 for each Distribution. Prior to liquidating an account, it is important to see that you have been credited with all the money you are owed. Generally, those who have been gone from Windermere for some time have accounts that are current and their distributions can be completed within a couple of weeks. Those who have recently left Windermere may require more time to process, to make sure all employer match payments have been deposited. In order to reduce the cost of distribution fees charged to your account, it is better to process your account at one time rather than part now and the rest when your match comes in. Generally, the wait is no longer than a month from receipt of your form. If the Trust anticipates a longer wait, it will contact you regarding your options. Lastly, this form does not provide detailed information regarding all the installment payment options available since so few participants elect them. Installment options are rarely elected because each periodic withdrawals incur another distribution fee each time a payment is released. Most participants roll their accounts into IRAs or annuities that are set up to process periodic distributions at a more reasonable cost and have fewer withdrawal restrictions than do retirement plans. Please contact the Trust Office at the address or phone numbers indicated above if you wish to take your distribution in the form of installment payments. PARTICIPANT INFORMATION Participant's Name: Mailing Address: City, State, Zip: Windermere Office you last worked in: Social Security Number: Day Phone Number: Night Phone Number: Date of Birth: 401(k) Distribution xlsx Page 1 of 10 01/05/2011

2 TYPE AND AMOUNT OF DISTRIBUTION (choose one) TERMINATION. I have terminated my relationship with Windermere effective as of the date listed below and am requesting a distribution of my entire account balance in the form selected below (see Form of Distribution later in this application). Date of Termination: IN-SERVICE WITHDRAWAL. I am still working at Windermere. I am requesting the following distribution from my account in the form selected below (see Form of Distribution later in this application). Amounts or percentages indicated on this page are BEFORE TAX WITHHOLDING, if applicable. When a distribution is subject to taxes (see Page 4), NET PROCEEDS will be reduced by the amount of tax withheld. For example, if you specify $10,000 on this page, a lump sum cash payment on page 3, and minimum 20% tax withholding on page 4, the gross distribution will be $10,000, the tax withholding will be $2,000 and the net proceeds paid to you will be $8,000. If you need net proceeds of $10,000, you would have to increase the specified amount to $12,500 so that after 20% wihholding of $2,500 you netted a $10,000 payment. AGE 65 or Over Withdrawal Option. I am 65 or older. I wish to withdraw the following amount: Entire account balance. Specified amount or percent: If Specified Amount is more than allowable amount, distribution amount will be reduced to the maximum available. AGE 59.5 to Age 65 Withdrawal Option. I am 59.5 years of age or older, but not yet 65. I understand that I am only entitled to withdraw the salary deferral portion of my account - what I contributed adjusted for earnings or loss. I am not entitled to withdraw the employer match portion of my account. I wish to withdraw the following amount: Entire available balance. Specified amount or percent: If Specified Amount is more than allowable amount, distribution amount will be reduced to the maximum available. Rollover Account: I previously rolled-over an account into the Plan. I am entitled to only one of these Distributions per plan/calendar year. I wish to withdraw the following amount: Entire Rollover account balance. Specified amount or percent: If Specified Amount is more than allowable amount, distribution amount will be reduced to the maximum available. Note Note Loan Option (Any Age): Loans are available to active employees. If you need a copy of the Loan Form, contact your Payroll Department. If you have general questions regarding loans, call or retirement@windermere.com. HARDSHIP Withdrawal Option (Any Age): This withdrawal type is only available to active employees and has its own distribution form. If you need a copy of the Hardship Withdrawal Form, call or retirement@windermere.com. RETIREMENT. I have retired from Windermere effective as of the date listed below. I am requesting the distribution of my entire account balance in the form selected below (see Form of Distribution later in this application). Date of Retirement: DISABILITY. I have become disabled effective as of the date listed below. I understand that to obtain a disability benefit, I must attach a copy of my disability award from the Social Security Administration. I am requesting the distribution of my entire account balance in the form selected below (see Form of Distribution later in this application). Effective Date of Award from Social Security: I have attached a copy of my Social Security Disability Award showing my effective date. DEATH BENEFIT. The participant named on page 1 is deceased. I have reason to believe that I am the participant's beneficiary. I am requesting the distribution of my share of the deceased participant's account balance in the form selected below (see Form of Distribution later in this application). I understand that to obtain a death benefit, I must attach a copy of the deceased participant's death certificate to this application. Further, I understand that a benefit is payable only if I am named as a beneficiary on the deceased participant's most current beneficiary designation form or, in absence of such form, there are no beneficiaries with superior rights to mine according to the terms of the plan. Date of Participant's Death I have attached a copy of the participant's death certificate. Beneficiary's Name: Beneficiary's Mailing Address: Beneficiary's Beneficiary's Social Security Number: Beneficiary's Business Hours Phone: Beneficiary's Date of Birth: Beneficiary's Evening Hours Phone: If needed, attach a separate sheet with this same information for additional beneficiaries. 401(k) Distribution xlsx Page 2 of 10 01/05/2011

3 DO YOU HAVE AN OUTSTANDING PLAN LOAN? Please select one: I do not have an outstanding loan from the 401(k) Plan. I will NOT be paying off my loan. I understand my outstanding loan balance will be considered a taxable distribution. Taxes withheld on my distribution will be based on my total Vested Balance which equals the market value of my invested funds on the date those funds are liquidated AND my outstanding loan balance. Taxes will only be withheld if part or all of my distribution is in the form of a Lump Sum Payment. I would like to PAY OFF my outstanding loan. Before processing your withdrawal request, the administrator will contact you with loan payoff information. Your funds will not be distributed until the loan payoff is complete. FORM OF DISTRIBUTION (choose one) Direct Rollover (Not available for non-spouse beneficiaries of death benefits). I elect to roll over 100% of my distribution directly to a Traditional IRA, Roth IRA or another Employer s Qualified Retirement Plan. I certify that I have set-up an IRA to receive this rollover or that I have confirmed that my new employer s plan will accept the rollover. I understand that tax withholding is not applicable to rollovers into a Traditional IRA or another Qualified Plan. I understand that rollovers into Roth IRAs may have taxes withheld. The rollover account is a: Traditional, SEP, or Rollover IRA (Tax withholding not applicable) Roth IRA (Tax withholding is OPTIONAL) Qualified employer's retirement plan (Tax withholding not applicable) LUMP SUM CASH PAYMENT. I elect a lump sum cash payment of my distribution. I understand that my payment will be subject to mandatory 20% federal income tax withholding and may be subject to state income tax withholding (see the Tax Withholding section below). COMBINATION OF DIRECT ROLLOVER AND LUMP SUM CASH PAYMENT. I elect BOTH a cash lump sum payment and a rollover to a Traditional IRA, Roth IRA or Employer s Qualified Retirement Plan. With respect to the rollover portion of my distribution, I certify that I have set-up an IRA to receive this rollover or that I have confirmed that my new employer s plan will accept the rollover. I understand that tax withholding is not applicable to rollovers into a Traditional IRA or another Qualified Plan. I understand that rollovers into Roth IRAs are taxable and at my option may have taxes withheld. With respect to the lump sum cash portion of my distribution, I understand that my payment will be subject to mandatory 20% federal income tax withholding and may be subject to state income tax withholding (see the Tax Withholding section below). Send this amount to my Traditional IRA: Send this amount to my ROTH IRA: Send this amount to me as a lump sum cash payment: $ $ $ IMPORTANT NOTE ABOUT DIVIDING A DISTRIBUTION AMONG MULTIPLE DESTINATIONS: If you divide your distribution into more than one place, one of the "amounts" in the boxes to the left must be titled "REMAINDER." The other one or two amounts can be specific dollars but one account must get the "remainder." If no account is indicated as the remainder, or if your instructions are ambiguous, the remainder account will be presumed to be lump sum cash payment. If you don't want a portion of the distribution to go to one of the accounts to the left, be sure to put a zero or "N/A" in the box. INSTALLMENT PAYMENTS. I elect annual, quarterly or monthly distributions as indicated on the INSTALLMENT ELECTION SUPPLEMENT. I understand that if these payments are not rolled over into a Traditional IRA or other Qualified Plan these distributions are taxable. To obtain a copy of the INSTALMENT ELECTION SUPPLEMENT retirement@windermere.com or call (425) The installment program costs $4/month as of January This is in addition to the $55 distribution fee required to initiate a withdrawal. Fees may change without notice as vendor costs change. 401(k) Distribution xlsx Page 3 of 10 01/05/2011

4 TAX WITHHOLDING OPTIONS Federal withholding tax is mandatory on all lump sum distributions. Federal withholding tax is optional on Roth IRA rollovers. Federal withholding tax is not applicable to rollovers to other qualified plans or Traditional IRAs. State withholding is subject to the state you live in and may or may not be mandatory. See the Special Federal Tax Notice regarding Plan payments attached to this form. Distribution amounts and taxes are figured on a GROSS basis. Amounts that are not rolled over into another tax deferred account, like a Traditional IRA or another Qualified Plan, have taxes withheld and the amount distributed is NET of, or after taxes. For example, assuming you elect the minimum federal withholding of 20%, there will be a GROSS distribution of $10,000, $2,000 paid in withholding taxes, and a NET cash distribution of $8,000. Since Roth IRA Rollovers may or may not have tax withheld, the amount of the roll over may be either GROSS or NET depending on your election. Withhold the Minimum Taxes: As applicable to the Forms of Distribution elected above, 20% Federal Income Tax withholding on my cash payment; 0% on my Roth conversion (although my Roth conversion is taxable), and the minimum withholding applicable to my state. Withhold more than the recommended rate on federal and/or state taxable distributions as indicated below. With respect to federal withholding, include AN EXTRA: Specified amount IN ADDITION to 20% on my cash payments and 0% on my Roth: Specified percentage IN ADDITION to 20% on my cash payments and 0% on my Roth: With respect to state withholding, include AN EXTRA: $ % Specified amount IN ADDITION the state's minimum: $ Specified percentage IN ADDITION to the state's minimum % Tax rates change frequently. The tax rate for your jurisdiction may have changed since the Tax Notice following this application was printed. If your elections do not satisfy federal or your state's minimum withholding requirements in effect at the time of your withdrawal, the applicable minimum withholding will be used in place of your elections. DELIVERY INSTRUCTIONS (check as many as apply to your Form(s) of Distribution) NOTE: All distributions and rollovers are reported on an IRS Form 1099-R in January following the calendar year in which a distribution check is issued. The 1099-R will be sent to the same address as on Page 1. LUMP SUM CASH PAYMENT. Send to my home address shown at the beginning of this form. LUMP SUM CASH PAYMENT. Send to an alternate address. Care of: Mailing Address: City, State, Zip ROLLOVERS to IRA, Roth, SEP or Qualified Plan. Send directly to a financial institution or plan: Name of Trustee / Custodian: Financial Institution Mailing Address: City State & Zip: Plan Name (if applicable): Plan or Account Number for Deposit: Contact name & phone number: If needed, attach a separate sheet with this same information if you are distributing funds to more than one IRA, Roth or Qualified Plan. ROLLOVERS to IRA, Roth or Qualified Plan. Send to the address below and I will arrange to have it delivered to my new financial institution. Name of Trustee / Custodian: My Mailing Address: City State & Zip: Plan Name (if applicable): Plan or Account Number for Deposit: If needed, attach a separate sheet with this same information if you are distributing funds to more than one IRA, Roth or Qualified Plan. 401(k) Distribution xlsx Page 4 of 10 01/05/2011

5 MARITAL STATUS (check one) I AM NOT MARRIED. I AM MARRIED. SPOUSAL CONSENT: If my account balance is $1,000 or more, spousal consent is REQUIRED and spouse's signature MUST BE notarized. If account balance is under $1,000, spousal consent is not needed. I (PRINT NAME OF SPOUSE), the Participant's spouse, hereby consent to the foregoing election by my spouse for a withdrawal of all or a portion of his/her account balance. I understand that this withdrawal will reduce the amount of benefit to which my spouse and I will be entitled to at retirement. I understand that I do not have to consent to this waiver election. I understand that my consent is irrevocable unless my spouse revokes the foregoing election and that any change in the form of benefit election is subject to my consent. Spouse Signature Notary Public My license expires on <date> On the day of, 20 before me came to be known and known to me as the person described in and who executed the above statement and (s)he duly acknowledged to me that (s)he executed the same. { Seal } PARTICIPANT AUTHORIZATION & DISTRIBUTION ACKNOWLEDGEMENT I understand that a distribution fee of $55 will be deducted from my balance to process this request. I have read the accompanying "Special Federal Tax Notice Regarding Plan Payments." I understand that I should consult with my own tax advisor with respect to the proper method of reporting any distribution I receive from the Plan. I consent to an immediate distribution of the elected portion of my account. Furthermore, I elect to waive my 30-Day Election Period (no less than 7 days) during which I may consent to a distribution from the Plan. I certify that the information I have provided above is true and correct to the best of my knowledge. I understand that the trustee of "The Plan" will rely on this information in making the distribution that I have requested. I hereby consent to payment of my vested account balance as indicated on this form. I understand that "The Plan" reserves the right to directly, or through its Third Party Administrator, recover any payments made in excess of amounts to which I am entitled under the terms of the Plan, regardless of the method of payment. Signature of Participant Date SEND DISTRIBUTION FORM TO: Windermere 401(k) Plan c/o Windermere Insurance & Benefits PO Box 1060 Duvall, WA FOR ADVISORY COMMITTEE USE ONLY: APPLICATION APPROVED. APPLICATION DENIED. See attached letter dated: / / Signature of Plan Advisory Committee Member & Date THIS IS THE END OF THE DISTRIBUTION FORM. WHEN YOU RETURN THE FORM DO NOT SEND BACK THE TAX NOTICE ATTACHED. 401(k) Distribution xlsx Page 5 of 10 01/05/2011

6 TERMINATED PARTICIPANT DISTRIBUTION OPTIONS & SPECIAL FEDERAL TAX NOTICE REGARDING PLAN PAYMENTS NOTICE TO TERMINATED PARTICIPANT WITH PLAN BENEFIT You currently have a benefit in the Windermere Retirement Plan. Because you are no longer employed with Windermere, you are now eligible to receive your Plan benefit. However, you may also choose to leave your benefit in the Plan. If you choose to leave your benefit in the Plan, the tax deferred status of your account will continue, and the Trustee will continue to invest your account(s) in the Plan s investment options in accordance with your instructions. Should you elect to defer your distribution, you may request a distribution at any time unless your employment status under the Plan has changed. It will be your responsibility to notify us of any address change you may have. If you decide to take your benefit out of the Plan, you may elect to have it paid directly to you or rolled over to the custodian of an IRA or trustee of another eligible retirement plan. Please note that this means your account will no longer be invested in the investment options available under the Plan. In addition, be aware that some currently available investment options in the Plan may not be generally available on similar terms outside the Plan, and that fees and expenses (including administrative or investment related fees) outside the Plan may be different from fees and expenses in the Plan. If rolled over to another eligible retirement plan or IRA, the tax deferred status of your account will continue. The enclosed Special Tax Notice Regarding Plan Payments explains the federal income tax ramifications of distributions that are eligible for rollover and the types of retirement plans eligible to receive such distributions. Please note that when your benefit is paid directly to you, the taxable portion of the amount distributed will be included in your taxable income (unless you subsequently roll the distribution over). The enclosed Special Tax Notice Regarding Plan Payments explains the federal income tax ramifications of having your benefit paid directly to you. We have enclosed the following items with this notice to assist you in making your elections: Factors to Consider Distribution Election Form Special Federal Tax Notice Regarding Plan Payments Please consult with your tax advisor to determine the financial impact of each distribution option before you making your elections. Options Advantages Considerations Leave your money in your former employer s plan Easy Continued tax deferral Access to same investment choices After age 55, penalty free withdrawals may be possible Breadth of investment options within a plan Flexibility of distribution options Options for beneficiaries Possible restrictions and fees Move it to a rollover IRA Easy to establish Continued tax deferral Wide array of investment choices Allows for consolidation of multiple accounts Flexibility of distribution options Flexibility for beneficiaries Loss of plan-specific options Possible fees Move it to your employer-sponsored plan Continued tax deferral Allows for consolidation of multiple retirement accounts Breadth of investment options Subject to all provisions of the new plan Ability to withdraw savings and tax treatment varies Direct cash payment(s) Immediate access to your savings Ends tax deferral status on payments made Usually required 20% withholding and potential 10% early withdrawal penalty Liquidating your account leaves you with less money for retirement Distribution Tax Notice r.doc 1 of 5

7 TERMINATED PARTICIPANT DISTRIBUTION OPTIONS & SPECIAL FEDERAL TAX NOTICE REGARDING PLAN PAYMENTS This Special Tax Notice Applies to Distributions from The Windermere Retirement Plans. These plans contain pre-tax monies only. They do not contain after-tax money. YOUR ROLLOVER OPTIONS You are receiving this notice because all or a portion of a payment you are receiving from the Windermere Retirement Plan (the Plan ) is eligible to be rolled over to an IRA or an employer plan. This notice is intended to help you decide whether to do such a rollover. This notice describes the rollover rules that apply to payments from the Plan that are not from a designated Roth account (a type of account with special tax rules in some employer plans). If you also receive a payment from a designated Roth account in the Plan, you will be provided a different notice for that payment, and the Plan administrator or the payor will tell you the amount that is being paid from each account. Rules that apply to most payments from a plan are described in the General Information About Rollovers section. Special rules that only apply in certain circumstances are described in the Special Rules and Options section. GENERAL INFORMATION ABOUT ROLLOVERS How can a rollover affect my taxes? You will be taxed on a payment from the Plan if you do not roll it over. If you are under age 59! and do not do a rollover, you will also have to pay a 10% additional income tax on early distributions (unless an exception applies). However, if you do a rollover, you will not have to pay tax until you receive payments later and the 10% additional income tax will not apply if those payments are made after you are age 59! (or if an exception applies). Where may I roll over the payment? You may roll over the payment to either an IRA (an individual retirement account or individual retirement annuity) or an employer plan (a taxqualified plan, section 403(b) plan, or governmental section 457(b) plan) that will accept the rollover. The rules of the IRA or employer plan that holds the rollover will determine your investment options, fees, and rights to payment from the IRA or employer plan (for example, no spousal consent rules apply to IRAs and IRAs may not provide loans). Further, the amount rolled over will become subject to the tax rules that apply to the IRA or employer plan. How do I do a rollover? There are two ways to do a rollover. You can do either a direct rollover or a 60-day Rollover. If you do a direct rollover, the Plan will make the payment directly to your IRA or an employer plan. You should contact the IRA sponsor or the administrator of the employer plan for information on how to do a direct rollover. If you do not do a direct rollover, you may still do a rollover by making a deposit into an IRA or eligible employer plan that will accept it. You will have 60 days after you receive the payment to make the deposit. If you do not do a direct rollover, the Plan is required to withhold 20% of the payment for federal income taxes (up to the amount of cash and property received other than employer stock). This means that, in order to roll over the entire payment in a 60-day rollover, you must use other funds to make up for the 20% withheld. If you do not roll over the entire amount of the payment, the portion not rolled over will be taxed and will be subject to the 10% additional income tax on early distributions if you are under age 59! (unless an exception applies). How much may I roll over? If you wish to do a rollover, you may roll over all or part of the amount eligible for rollover. Any payment from the Plan is eligible for rollover, except: Certain payments spread over a period of at least 10 years or over your life or life expectancy (or the lives or joint life expectancy of you and your beneficiary) Required minimum distributions after age 70! (or after death) Hardship distributions ESOP dividends Corrective distributions of contributions that exceed tax law limitations Loans treated as deemed distributions (for example, loans in default due to missed payments before your employment ends) Cost of life insurance paid by the Plan Contributions made under special automatic enrollment rules that are withdrawn pursuant to your request within 90 days of enrollment Amounts treated as distributed because of a prohibited allocation of S corporation stock under an ESOP (also, there will generally be adverse tax consequences if you roll over a distribution of S corporation stock to an IRA). The Plan administrator or the payor can tell you what portion of a payment is eligible for rollover. If I don t do a rollover, will I have to pay the 10% additional income tax on early distributions? If you are under age 59!, you will have to pay the 10% additional income tax on early distributions for any payment from the Plan (including amounts withheld for income tax) that you do not roll over, unless one of the exceptions listed below applies. This tax is in addition to the regular income tax on the payment not rolled over. Distribution Tax Notice r.doc 2 of 5

8 TERMINATED PARTICIPANT DISTRIBUTION OPTIONS & SPECIAL FEDERAL TAX NOTICE REGARDING PLAN PAYMENTS The 10% additional income tax does not apply to the following payments from the Plan: Payments made after you separate from service if you will be at least age 55 in the year of the separation Payments that start after you separate from service if paid at least annually in equal or close to equal amounts over your life or life expectancy (or the lives or joint life expectancy of you and your beneficiary) Payments from a governmental defined benefit pension plan made after you separate from service if you are a public safety employee and you are at least age 50 in the year of the separation Payments made due to disability Payments after your death Payments of ESOP dividends Corrective distributions of contributions that exceed tax law limitations Cost of life insurance paid by the Plan Contributions made under special automatic enrollment rules that are withdrawn pursuant to your request within 90 days of enrollment Payments made directly to the government to satisfy a federal tax levy Payments made under a qualified domestic relations order (QDRO) Payments up to the amount of your deductible medical expenses Certain payments made while you are on active duty if you were a member of a reserve component called to duty after September 11, 2001 for more than 179 days Payments of certain automatic enrollment contributions requested to be withdrawn within 90 days of the first contribution. If I do a rollover to an IRA, will the 10% additional income tax apply to early distributions from the IRA? If you receive a payment from an IRA when you are under age 59!, you will have to pay the 10% additional income tax on early distributions from the IRA, unless an exception applies. In general, the exceptions to the 10% additional income tax for early distributions from an IRA are the same as the exceptions listed above for early distributions from a plan. However, there are a few differences for payments from an IRA, including: There is no exception for payments after separation from service that are made after age 55. The exception for qualified domestic relations orders (QDROs) does not apply (although a special rule applies under which, as part of a divorce or separation agreement, a tax-free transfer may be made directly to an IRA of a spouse or former spouse). The exception for payments made at least annually in equal or close to equal amounts over a specified period applies without regard to whether you have had a separation from service. There are additional exceptions for (1) payments for qualified higher education expenses, (2) payments up to $10,000 used in a qualified first-time home purchase, and (3) payments after you have received unemployment compensation for 12 consecutive weeks (or would have been eligible to receive unemployment compensation but for self-employed status). Will I owe State income taxes? This notice does not describe any State or local income tax rules (including withholding rules). SPECIAL RULES AND OPTIONS If your payment includes after-tax contributions After-tax contributions included in a payment are not taxed. If a payment is only part of your benefit, an allocable portion of your after-tax contributions is generally included in the payment. If you have pre-1987 after-tax contributions maintained in a separate account, a special rule may apply to determine whether the after-tax contributions are included in a payment. You may roll over to an IRA a payment that includes after-tax contributions through either a direct rollover or a 60-day rollover. You must keep track of the aggregate amount of the after-tax contributions in all of your IRAs (in order to determine your taxable income for later payments from the IRAs). If you do a direct rollover of only a portion of the amount paid from the Plan and a portion is paid to you, each of the payments will include an allocable portion of the after-tax contributions. If you do a 60- day rollover to an IRA of only a portion of the payment made to you, the after-tax contributions are treated as rolled over last. For example, assume you are receiving a complete distribution of your benefit which totals $12,000, of which $2,000 is after-tax contributions. In this case, if you roll over $10,000 to an IRA in a 60-day rollover, no amount is taxable because the $2,000 amount not rolled over is treated as being aftertax contributions. You may roll over to an employer plan all of a payment that includes after-tax contributions, but only through a direct rollover (and only if the receiving plan separately accounts for after-tax contributions and is not a governmental section 457(b) plan). You can do a 60-day rollover to an employer plan of part of a payment that includes after-tax contributions, but only up to the amount of the payment that would be taxable if not rolled over. Distribution Tax Notice r.doc 3 of 5

9 TERMINATED PARTICIPANT DISTRIBUTION OPTIONS & SPECIAL FEDERAL TAX NOTICE REGARDING PLAN PAYMENTS If you miss the 60-day rollover deadline Generally, the 60-day rollover deadline cannot be extended. However, the IRS has the limited authority to waive the deadline under certain extraordinary circumstances, such as when external events prevented you from completing the rollover by the 60-day rollover deadline. To apply for a waiver, you must file a private letter ruling request with the IRS. Private letter ruling requests require the payment of a nonrefundable user fee. For more information, see IRS Publication 590, Individual Retirement Arrangements (IRAs). If your payment includes employer stock that you do not roll over If you do not do a rollover, you can apply a special rule to payments of employer stock (or other employer securities) that are either attributable to after-tax contributions or paid in a lump sum after separation from service (or after age 59!, disability, or the participant s death). Under the special rule, the net unrealized appreciation on the stock will not be taxed when distributed from the Plan and will be taxed at capital gain rates when you sell the stock. Net unrealized appreciation is generally the increase in the value of employer stock after it was acquired by the Plan. If you do a rollover for a payment that includes employer stock (for example, by selling the stock and rolling over the proceeds within 60 days of the payment), the special rule relating to the distributed employer stock will not apply to any subsequent payments from the IRA or employer plan. The Plan administrator can tell you the amount of any net unrealized appreciation. If you have an outstanding loan that is being offset If you have an outstanding loan from the Plan, your Plan benefit may be offset by the amount of the loan, typically when your employment ends. The loan offset amount is treated as a distribution to you at the time of the offset and will be taxed (including the 10% additional income tax on early distributions, unless an exception applies) unless you do a 60-day rollover in the amount of the loan offset to an IRA or employer plan. If you were born on or before January 1, 1936 If you were born on or before January 1, 1936 and receive a lump sum distribution that you do not roll over, special rules for calculating the amount of the tax on the payment might aply to you. For more information, see IRS Publication 575, Pension and Annuity Income If the Plan is a governmental section 457(b) plan, the same rules described elsewhere in this notice generally apply, allowing you to roll over the payment to an IRA or an employer plan that accepts rollovers. One difference is that, if you do not do a rollover, you will not have to pay the 10% additional income tax on early distributions from the Plan even if you are under age 59! (unless the payment is from a separate account holding rollover contributions that were made to the Plan from a tax-qualified plan, a section 403(b) plan, or an IRA). However, if you do a rollover to an IRA or to an employer plan that is not a governmental section 457(b) plan, a later distribution made before age 59! will be subject to the 10% additional income tax on early distributions (unless an exception applies). Other differences are that you cannot do a rollover if the payment is due to an unforeseeable emergency and the special rules under If your payment includes employer stock that you do not roll over and If you were born on or before January 1, 1936 do not apply. If you are an eligible retired public safety officer and your pension payment is used to pay for health coverage or qualified long-term care insurance If the Plan is a governmental plan, you retired as a public safety officer, and your retirement was by reason of disability or was after normal retirement age, you can exclude from your taxable income plan payments paid directly as premiums to an accident or health plan (or a qualified long-term care insurance contract) that your employer maintains for you, your spouse, or your dependents, up to a maximum of $3,000 annually. For this purpose, a public safety officer is a law enforcement officer, firefighter, chaplain, or member of a rescue squad or ambulance crew. If you roll over your payment to a Roth IRA You can roll over a payment from the Plan made before January 1, 2010 to a Roth IRA only if your modified adjusted gross income is not more than $100,000 for the year the payment is made to you and, if married, you file a joint return. These limitations do not apply to payments made to you from the Plan after If you wish to roll over the payment to a Roth IRA, but you are not eligible to do a rollover to a Roth IRA until after 2009, you can do a rollover to a traditional IRA and then, after 2009, elect to convert the traditional IRA into a Roth IRA. If you roll over the payment to a Roth IRA, a special rule applies under which the amount of the payment rolled over (reduced by any after-tax amounts) will be taxed. However, the 10% additional income tax on early distributions will not apply (unless you take the amount rolled over out of the Roth IRA within 5 years, counting from January 1 of the year of the rollover). For payments from the Plan during 2010 that are rolled over to a Roth IRA, the taxable amount can be spread over a 2-year period starting in If you roll over the payment to a Roth IRA, later payments from the Roth IRA that are qualified distributions will not be taxed (including earnings after the rollover). A qualified distribution from a Roth IRA is a payment made after you are age 59! (or after your death or disability, or as a qualified first-time homebuyer distribution of up to $10,000) and after you have had a Roth IRA for at least 5 years. In applying this 5-year rule, you count from January 1 of the year for which your first contribution was made to a Roth IRA. Payments from the Roth IRA that are not qualified distributions will be taxed to the extent of earnings after the rollover, including the 10% additional income tax on early distributions (unless an exception applies). You do not have to take required minimum distributions from a Roth IRA during your lifetime. For more information, see IRS Publication 590, Individual Retirement Arrangements (IRAs). You cannot roll over a payment from the Plan to a designated Roth account in an employer plan Distribution Tax Notice r.doc 4 of 5

10 TERMINATED PARTICIPANT DISTRIBUTION OPTIONS & SPECIAL FEDERAL TAX NOTICE REGARDING PLAN PAYMENTS 1. State or Local Income Tax STATE TAX WITHOLDING ISSUES Please note that state or local income tax is withheld only for those states where such withholding is mandatory. If you reside in a state that has a state income tax, and the state does not have a mandatory withholding rule, you will be responsible for any state income taxes due on the taxable portion of your distribution. You should also be aware that some states have not yet changed their laws to take into account the expanded rollover rules that became effective January 1, In certain cases, a rollover now permitted under federal law may be subject to taxation under state law. However, once the rollover is taxed under state law, the state would not tax this amount again when later you receive it as a distribution. 2. How to Obtain Additional Information The rules described above are complex and contain many conditions and exceptions that are not included in this notice. Therefore, you may want to consult with the Plan Administrator or a professional tax advisor before you take a payment of your benefits from your Plan. Also, you can find more specific information on the tax treatment of payments from qualified employer plans in IRS Publication 575, Pension and Annuity Income, and IRS Publication 590, Individual Retirement Arrangements. These publications are available from your local IRS office, on the IRS's Internet Web Site at or by calling TAX-FORMS. State income tax withholding falls into one of the three following categories: 1. Mandatory State Withholding: Some states require qualified retirement plans to withhold state income taxes from distributions to individuals who legally reside in that state if federal taxes are withheld from those payments. However, several of these states let individuals elect out of state withholding in certain situations. In these cases the individual receiving the payment must provide a written request to have no state taxes withheld. 2. Voluntary State Withholding: Voluntary withholding states are states that let individuals determine whether they want state taxes withheld from their payments, regardless of whether federal taxes are withheld. Individuals who legally reside in these states must determine the amount they want to have withheld. If no written election is made, there will be no state withholding. 3. States with No Withholding: Some states have no income tax on distributions from qualified plans. Therefore, no state withholding is required from these payments The table below shows basic state income tax withholding information by state. For more information about withholding rates and rules, obtain information from your state. Mandatory State Withholding - No Exceptions AR 5% of eligible rollover dist.; 3% non-elig.* DE 5% of taxable portion of distribution.* KS 5% of taxable portion of distribution.* MD 7.75% of taxable portion of distribution. ME 5% of taxable portion of distribution.* NC 4% of taxable portion of distribution.* NE 5% of taxable portion of distribution. OK 5% of taxable portion of distribution.* VT 5.4% of taxable portion of distribution*. *Payee may elect out for periodic payments. Mandatory State Withholding Mandatory State Withholding - Unless Participant Provides Rate from the Applicable State Form IA 5% of taxable portion.* MA 5.3% of taxable portion of distribution.* VA 4% of taxable portion of distribution.* You must forward the applicable signed State form along with your Distribution Election Form to change your withholding rate. *Payee may elect out for periodic payments. Mandatory State Withholding - Unless Participant Elects Out CA 10% of amount of Federal taxes withheld or 6% of taxable amount. GA variable rates, for Periodic Payments only. OR 8% of taxable portion of distribution. Voluntary State Withholding Voluntary State Withholding - Participant Elects Amount Withheld (No Election, No Withholding) AL, AZ, CO, CT, DC, GA, ID, IL, IN, KY, LA, MI, MN, MO, MS, MT, NJ, NM, NY, ND, OH, PA, RI, SC, UT, WI, WV No State Withholding AK, FL, HI, NH, NV, SD, TN, TX, WA, WY States With No Withholding Distribution Tax Notice r.doc 5 of 5