WITHDRAWALS FROM THE THRIFT PLAN Initiating a Withdrawal You may request up to three withdrawals each year from the Thrift Plan. There are two types of withdrawals that you may request from your Thrift Plan: Non-hardship withdrawals; Hardship withdrawals to meet certain severe financial needs. Please be aware that because the Thrift Plan is intended for long-term savings retirement, withdrawals of contributions associated earnings may be restricted by the Code taxable amounts will be subject to taxation possibly a 10 percent penalty tax on early distributions (see Penalty for Early Withdrawal section below). If you wish to initiate a withdrawal, you may do so by accessing the Your Benefits Resources Web site or by calling the Federal Reserve Benefits Center at 1-877-FRS- CALL (1-877-377-2255). Non-Hardship Withdrawals The following amounts, to the extent vested, are available for a non-hardship withdrawal will be depleted in the following order: If you are an employee under age 59½, you may withdraw from: Pre-1987 Savings Account contributions; Post-1986 Savings Account contributions earnings (pro-rata); Pre-1987 Savings Account earnings; Rollover Pre-July 2007 Employer Contribution Account (For active employees with less than 60 months of participation, contributions made to the Pre-July 2007 Employer Contribution Account within the last 24 months are not eligible for withdrawal.) If you are an employee age 59½ or older, you may withdraw from: Non-Roth 401(k) Accounts (in the following order): 1. Pre-1987 Savings Account contributions; 2. Post-1986 Savings Account contributions earnings (prorata); 3. Pre-1987 Savings Account earnings; 4. Rollover 5. Pre-July 2007 6. Post-June 2007 7. Deferred Compensation 8. QNEC Accounts. If you separate from service, you may withdraw from: Non-Roth 401(k) Accounts (in the following order): 1. Pre-1987 Savings Account contributions; 2. Post-1986 Savings Account contributions earnings (prorata); 3. Pre-1987 Savings Account earnings; 4. Rollover 5. Pre-July 2007 6. Post-June 2007 7. Deferred Compensation 8. QNEC Accounts. Page 22 of 35
Roth 401(k) Account*; DEC/IRA Account* *Withdrawals from your Roth 401(k) Account DEC/IRA account must be made separately. Roth 401(k) Account*; DEC/IRA Account* *Withdrawals from your Roth 401(k) Account DEC/IRA account must be made separately. You may choose from two types of non-hardship withdrawals: Immediate Withdrawals are: Valued on the same business day if your request is received before 4 p.m. Eastern Time or when the NYSE closes, if earlier; Pro-rated across all investment funds (except the Interest Income Fund); Not allowed during the last three business days of the month if you have a month-end transaction pending. Immediate withdrawals are not permitted from the Interest Income Fund balance, the Roth 401(k) Account /or DEC/IRA Account. Month-end Withdrawals are: Pro-rated across all investment funds may include the Interest Income Fund; Valued on the last business day of the month if your request is received before 4 p.m. Eastern Time or when the NYSE closes, if earlier, at least three business days before the last business day of the month. A separate month - end withdrawal is needed to receive amounts from your Roth 401(k) Account balance your DEC/IRA Account balances. Keep in mind that investment earnings are tax-deferred will become taxable when withdrawn. For more information( see Tax Consequences of Withdrawing Taxable Monies later in this section.) You may request a non-hardship withdrawal by accessing the Your Benefits Resources Web site or by calling the Federal Reserve Benefits Center at 1-877-FRS-CALL (1-877-377-2255.) Tax Consequences of Withdrawing Taxable Monies Withdrawals of contributions from your Thrift Plan Accounts (with the exception of contributions made on an after-tax basis) investment earnings, in most cases, become taxable when you receive them. Earnings on your Roth 401(k) Contributions may be distributed tax-free if the withdrawal is a qualified distribution. A withdrawal is considered a qualified distribution if your first contribution to your Roth 401(k) Contribution Account was made at least five years prior to the withdrawal you are age 59½ or disabled. Page 23 of 35
You are encouraged to consult a professional financial or tax advisor for additional information on your own tax status before you request any withdrawal from the Thrift Plan. Penalty for Early Withdrawal Unless one of the exceptions listed below applies, you may be subject to an additional 10 percent federal income tax on the taxable portion of any Thrift Plan withdrawal or distribution you receive. This income tax is in addition to the regular income taxes you will be required to pay on the taxable portion of your withdrawal when you file your IRS Form 1040. This income tax applies to any taxable distribution, whether or not you terminate employment, will apply even if you received a hardship withdrawal. The 10 percent penalty does not apply if the withdrawal is paid: Because of your death or disability; After you separate from service in or after the year you reach age 55; After you reach age 59½ ; To cover tax-deductible medical expenses; or To an alternate payee as directed by a qualified domestic relations court order. 20 Percent Federal Tax Withholding on Withdrawals IRS regulations also require an automatic 20 percent federal tax withholding on most taxable withdrawals from eligible retirement plans. When you receive such a withdrawal, the Thrift Plan is required by the Code to withhold 20 percent. You can avoid the 20 percent withholding if you directly roll over the taxable amount into a traditional IRA or another employer s qualified plan by requesting that your withdrawal check be made payable to the trustee of the IRA or qualified plan. If you don t directly roll over the withdrawal have the check made payable to you, the 20 percent will be automatically withheld. Hardship Withdrawals Employees under age 59½ may withdraw money from their Deferred Compensation Accounts, Roth 401(k) Contribution Account Post-July 2007 Account by requesting a hardship withdrawal. Hardship withdrawals are only available for the following severe financial hardships: Purchasing your primary residence; Preventing foreclosure or eviction from your primary residence; Paying for major uninsured medical expenses for you or your eligible dependents (those for whom you take a federal income tax deduction); Page 24 of 35
Paying tuition, room board, related educational expenses for the next 12 months for you or an eligible dependent to attend a post-secondary school, such as college; Funeral/Burial expenses for your parents, spouse, children or dependents (as defined in Code Section 152); Repair of unexpected damage to your principal residence not compensated for by insurance that would qualify for the casualty deduction under Code Section 165. Withdrawals for financial hardships are only allowed if funds from other sources are not reasonably available, including loans from your Thrift Plan. Your hardship withdrawal request can include an amount to cover the taxes which result from the withdrawal. Amounts You May Withdraw for Financial Hardships If you have an approved hardship, your hardship withdrawal will be paid from your Thrift Plan Accounts in the following order: 1. Pre-1987 Savings Account contributions; 2. Post-1986 Savings Account contributions earnings (pro-rata); 3. Pre-1987 Savings Account earnings; 4. Rollover 5. Pre-July 2007 Account*; 6. Post-June 2007 7. Roth 401(k) Contribution Account**; 8. Deferred Compensation Account ***. *For active employees with less than 60 months of participation, contributions made to the Pre-July 2007 Account within the last 24 months are not eligible for withdrawal. **You will receive a payment from your Roth 401(k) Contribution Account separately. *** Contributions made to your Deferred Compensation Account after Dec. 31, 1988 will be paid last. Requesting a Hardship Withdrawal To request a hardship withdrawal, you must access the Your Benefits Resources Web site or call the Federal Reserve Benefits Center at 1-877-FRS-CALL (1-877-377-2255) to request a hardship withdrawal form. You will be required to provide specific documentation for your withdrawal, as shown in the following chart: For: You Will Need: Timeframe: a primary home a purchase contract or an within 30 days Page 25 of 35
purchase non-reimbursed medical expenses tuition, room board preventing an eviction or foreclosure agreement with a contractor (if building a home) an Explanation of Benefits (EOB) statement a summary of tuition-related expenses statement provided by the school a statement indicating that you are past due on mortgage or rent payments a letter from your financial institution or llord that mentions eviction or foreclosure within two years within four months of the beginning of the quarter or semester within the last 30 days Funeral/burial expenses for: Your parent, Your spouse, Your children, Your dependents (as defined in Code Section 152) Funeral burial billing statement Must reflect name of deceased, Must reflect date of services provided within the past 90 days, Must reflect your name as individual billed, Must include itemized funeral/burial expenses Repair of unforeseen damage to your principal residence not compensated for by insurance that would qualify for the casualty deduction under Code Section 165 Insurance Report, or letter from you stating that your principal residence was not covered by insurance for the damage incurred, Estimate or bill of itemized repairs (for insured portion), Document that gives damage explanation (e.g., insurance report, if insured), police/fire report, newspaper article, etc), or Letter from you stating the cause of damage if official or third party documentation is not available, Real estate property tax bill, or Mortgage Statement or Property Deed, or Insurance Report: Must reflect the address of Must reflect date of damage within the past 90 days, Must reflect the amount paid (or to be paid) by the insurance company, Must reflect the amount owed by the insured Letter (if uninsured): Must reflect the address of Must include the cause of damage, Must reflect date of damage within the past 90 days, Must include a statement from you that the property Page 26 of 35
Lease Agreement (if leasing). is not insured Estimate or bill: Must reflect your name, Must reflect the address of Must be dated after the damage event Property Tax Bill, Mortgage Statement, Property Deed, or Lease Agreement: Must reflect the address of Must reflect you as the owner (or lessee) of property, If a lessee, must reflect you as contractually liable to the owner for damages. Tax Treatment of Hardship Withdrawals The taxable portion of a hardship withdrawal is subject to taxation as ordinary income in the year in which it is received is generally subject to the 10 percent early withdrawal penalty. Monies received in a hardship withdrawal are not subject to the 20 percent automatic federal income tax withholding are not eligible for rollover. For more information, see the Tax Consequences of Withdrawing Taxable Money earlier in this section. Contribution Suspension After A Hardship Withdrawal If you take a hardship withdrawal that includes any amounts taken from your Deferred Compensation Account or your Roth 401(k) Account, your ability to make employee contributions to the Thrift Plan will be suspended for a period of six months following the receipt of the hardship withdrawal, as a result, you will not receive any Employer Matching contributions during this period. Members will, however, continue to receive the 1 percent Employer Non-Elective Contribution during the six month suspension period. After the suspension period has ended, your employee contributions will resume automatically. Page 27 of 35