Monday, June 2, 2008
Good Information - Ask Fidelity
I can't figure out the employee's age, so I don't know whether or not this applies or not. However, if you are over 55 years of age and since you have separated from LLNL (either from UC if TCP2 or LLNS for TCP1), you can take any of the money from the 403b or DCP accounts without having to roll it over and wait until 59.5 and start up the SEPP, etc. The actual retirement is another thing, but the retirement savings is yours to take. Of course, you have to figure out tax implications, because any money you take and don't roll over will count as income in the year you receive it.
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7 comments:
What if someone was 54 when they went TCP-2 and started drawing their UCRP and then went to work for LLNS, but sometime later gets laid off by LLNS at or around age 57-58; does this rule still apply or does this person have no choice but to participate in an SEPP in order to have access to their deferred savings?
You have to retire from the UC in the year you are turning 55 to avoid 401k withdrawal penalty. Otherwise, you cannot draw from savings until age 59.5
6:05 - You need to roll over you 403b money NOW, including UCRP CAP Accounts to LLNS 401k WHILE YOU ARE STILL WIH LLNS and then when/if you separate from service in the year you turn 55, or later, you will avoid early withdrawal penalties. See it listed as first item on the third list down at:
http://www.irs.gov/taxtopics/tc558.html
A good place to read about this is:
http://atyourservice.ucop.edu/forms_pubs/misc/
special_tax_notice.pdf
And, FITSCO will be glad to help you if you call and ask them about accessing your retirement savings accounts.
In this case, I'm not sure. I'm assuming that we're talking about 403b and DCP money left with UC. It might be that a 10% penalty would apply without a SEPP, since you need to be 55 or older when you separated from UC employment in order to qualify for the exception.
from 6:55pm
7:29pm is correct - I was assuming you already rolled over your accounts. Call Fidelity fast!!
Found this on the web. Might be of help to this line of questions:
1. When can I take my money out of my 403(b) account? What are the penalties for early withdrawal?
You should check your custodial account agreement or annuity contract for the rules specific to your plan. Below is general information about some situations in which distributions are permitted, and the related tax implications and penalties for each.
Once you reach age 59½, you can generally begin to withdraw money from your 403(b) with no penalty. Federal, state and local income taxes are due on the amount you withdraw.
Distributions before age 59½ may be allowed under the following circumstances:
* If you die.
* If you are totally disabled.
* If you qualify for a "financial hardship" distribution. You may qualify for a financial hardship withdrawal if you need the money: (A) to pay college tuition and related educational expenses for yourself or a dependent, provided they're due within the next 12 months; (B) to make a down payment on a primary residence; (C) to pay medical expenses for you or your dependents; or, (D) to prevent foreclosure or eviction from your home.
While distributions are generally allowed for these reasons, you could still be liable for a 10 percent penalty from the IRS for early withdrawal. Depending on the hardship rules in your plan, you could have to prove that you have exhausted all other financial resources. All applicable federal, state and local income taxes are also due on the amount you withdraw.
You will not have to pay the 10 percent early withdrawal penalty if the distribution occurs for one of the following reasons:
* Your death.
* Your disability.
* Unreimbursed medical expenses exceeding 7.5 percent of your adjusted gross income.
* If you are required by court order (called a qualified domestic relations order) to give the money to your divorced spouse, a child or dependent.
* If you are separated from service (through permanent layoff, termination, quitting or taking early retirement) and you're at least 55 years old when you terminate.
* If you are separated from service and you have set up a payment schedule to withdraw money in substantially equal amounts over the course of your life expectancy. (Once you begin taking this kind of distribution, you are required to continue the payments for five years or until you reach age 59½, whichever is longer.)
Any money withdrawn for the above reasons would still be subject to applicable federal, state and local income taxes.
June 5th 1:36pm
You do not have be 55, you just need to retire within the year you turn 55 to avoid IRS penalties. I got this straight from IRS.
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