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Withdrawing money

Withdrawing money from your 401(k) account

Withdrawals/Rollovers That Are Permitted From 401(k) Accounts

You may be eligible to withdraw/rollover some or all of your 401(k) account balances if:

  • You reach age 59 ½ (Normal Retirement Age), or
  • You become permanently and totally disabled (as defined by the Plan), or
  • You suffer a “hardship”, as defined by the IRS and the Plan (hardship withdrawals are not eligible for rollovers), or
  • You qualify for a “Termination Withdrawal” because you don’t work for at least 12 consecutive months in “Covered Employment” (covered employment is any work under any collective bargaining agreement that permits salary deferrals, whether or not you elect to defer a portion of your salary to the Fund).

Requests for all of the above withdrawals must be filed at least 15 days prior to the proposed withdrawal date.

Why Are the Reasons For Withdrawals Limited?

401(K) accounts were created by law to assist workers in accumulating retirement savings, partly through favorable tax treatment. In return for their tax favored status, all 401(k) plans are required to place limitations on the ability to withdraw from these accounts, so that withdrawals are available only when one reaches retirement age, and in the event of a limited number of other hardships.    

Normal Retirement Age Withdrawals

Once you have attained age 59½, you may withdraw all or a portion of monies in your 401(k) accounts, even if you are still employed. To make such a withdrawal, you must file a written request at least 15 days before the proposed withdrawal date.

You may obtain a withdrawal form from the Fund Office. Such withdrawals are subject to income tax, but are not subject to the federal excise tax that applies to pre-retirement age withdrawals (with the exception to withdrawals by those who become disabled – please see “Disability Withdrawals” below).

To apply, please submit all of the following to the Fund Office:

  1. A completed Withdrawal Request form, and,
  2. One of the items on our Proof of Age/Identification list

Disability Withdrawals

If you terminate employment before at­taining age 59½ because you have become totally and perma­nently disabled (as defined by the Plan) you are entitled to withdraw all or a portion of your monies. You are considered totally and permanently disabled under the Plan if you have received an award from the Social Security Administration indicating that you are totally and permanently disabled. 

Disability withdrawals are subject to income tax, but are not subject to a federal excise tax on early distribution. Depending on the circumstances, disability withdrawals may have tax advantages over normal retirement age withdrawals, which our staff can explain to you once they understand the circumstance surrounding your withdrawal.

To apply, please submit all of the following to the Fund Office:

  1. A completed Disability Withdrawal Request form, and,
  2. One of the items on our Proof of Age/Identification list, and,
  3. An “award” letter from the Social Security Administration issued within the past 12 months.

Hardship Withdrawals

You can qualify for a Hardship Withdrawal, if you incur expenses in connection a “hardship” (as defined by the IRS and the Plan):

  • Medical Care for yourself, spouse, or dependent.
  • Purchase of Primary Residence excluding mortgage payments.
  • Tuition and Related Education Fees including room and board expenses, for the next 12 months for post-secondary education for yourself, spouse, or dependent.
  • Prevention of Eviction or Foreclosure on your primary residence.
  • Funerals of your parent, spouse, children or other dependents.
  • Repairing damage to your principal residence (e.g., hurricane or flood damage).

*IRS Regulations do not permit a Hardship Withdrawal to be taken in the event you qualify for another withdrawal type available under the Plan (i.e. Normal Retirement, Termination of Employment, etc.).

Important Limitations on Hardship Withdrawals

Your hardship withdrawals are limited to the balance in your Salary Deferral Account (contributions made by your employer are not available for this kind of withdrawal). For example, if you contributed $5,000.00 in elective salary deferrals, but you suffered a negative return of investments, and your account balance has been reduced to $4,000.00, then you are only eligible to withdraw $4,000.00. Also, if you make a hardship withdrawal, you will not be permitted to make contributions to your Salary Deferral Account (Deferral Contributions) for the 6 months following the hardship distribution.

To apply, please submit all of the following to the Fund Office:

  1. A completed Hardship Withdrawal Request form, and,
  2. One of the items on our Proof of Age/Identification list,
  3. The applicable Hardship Documentation, and,
  4. A statement that the amount requested is not greater than you immediate financial need. However, you may request an additional amount over the hardship to pay anticipated federal, state or local income taxes or excise taxes due to the distribution.

Important Note: If you make a hardship withdrawal you may be subject to an early withdrawal excise tax, and are subject to federal, state and local income tax on the withdrawal as well.

Termination of Employment Withdrawals

You are entitled to withdraw all or a portion of your 401(k) account balances if you have not engaged in covered employment for 12 or more consecutive months and are not engaged in covered employment at the time your ap­plication is received. Any period for which you are paid salary under a collective bargaining agreement (an agreement that permits you to defer salary to the Fund) is considered covered employment, whether or not you are performing services dur­ing that period and whether or not you choose to defer.

To apply, please submit all of the following to the Fund Office:

  1. A completed Termination of Employment Withdrawal form, and,
  2. One of the items on our Proof of Age/Identification

Important Note: Termination of employment withdrawals may be subject to an early withdrawal excise tax, and are subject to federal, state and local income tax on the withdrawal as well.

Taking your pension before age 70 ½

Even if you are no longer working, you have the option of leaving some or all funds in your 401(k) account until the required distribution age of 70½. The value of your account will, of course, fluctuate with changes in the market value of your investments.

Learning more about payment options

If you are eligible to withdraw funds in one of the situations described on this page, learn more how you may receive your withdrawal at our Forms of benefit payment page.

Forms of benefit payment

Everyone has different retirement income needs, so the Equity-League Benefit Funds  401(k) Plan offers several forms of benefit payment, as summarized on this page. Possible payment options include a lump sum benefit, a rollover, installments, an annuity, or a survivor benefit to your beneficiary. The options available to you are determined by your age and other factors.

To learn more about the tax implications of taking your 401(k) benefit, visit our Withdrawing money from your 401(k) account page. For complete information, please refer to the Equity-League Benefit Funds Pension Plan and 401(k) Summary Plan Description.

Taking your 401(k) benefit as a lump sum

You may choose to receive your Equity-League Benefit Funds 401(k) account balance in a lump-sum payment or payments. The benefit payment may be taken in cash, or, in some cases, through a rollover distribution to another eligible retirement plan.

Rolling over 401(k) funds into another retirement account

You may choose to have all or part of a distribution from your 401(k) account rolled over into another eligible retirement account. Direct rollovers are not subject to income tax withholding. Additionally, you have up to 60 days after you receive a 401(k) distribution to roll it over to another account.

Taking your benefit in installments

Several installment options are also available to you after you reach age 59½, or if you become disabled1.

  • Fixed amount installments – You or your beneficiary receive payments of an amount chosen by you (or your beneficiary) every month, calendar quarter, semi-annually, or annually. Fixed amount payments will be issued until the account balance is exhausted.
  • Fixed period installments – You or your beneficiary receive payments every month, calendar quarter, semiannually, or annually, for a period of time defined by you (or your beneficiary). The amount of each payment will be the account balance divided by the number of remaining payments for the chosen period until the account balance is exhausted.
  • Lifetime installments – You or your beneficiary receive payments every month, calendar quarter, semiannually, or annually, for a period of time estimated to be your life expectancy2.

Taking your benefit as an annuity

Another option for receiving your 401(k) benefit through periodic payments is by purchasing an annuity. Under an annuity, payments are guaranteed. However, you lose the ability to take your benefit as a lump sum balance.

You may use your account balance to purchase an annuity from John Hancock or from another insurer. Your annuity benefit will typically be equal or greater than the amount guaranteed by the insurer from which you purchased your annuity.

If you purchase your annuity from John Hancock, the following annuity options are available to you after you reach age 59 ½ or if you become disabled3.

  • Single Life Annuity with a Five-Year Guarantee This annuity is payable over your lifetime, with a guaranteed minimum of 60 monthly payments. If you die before receiving at least 60 payments, your beneficiary will receive monthly payments until a total of 60 payments have been made. The Single Life Annuity with a Five Year Guarantee provides the highest monthly payments during your lifetime. It is available to you if you are single, or if you are married and your spouse provides written consent.
  • 50% Joint and Survivor Annuity – This annuity is payable over your lifetime. If your surviving spouse or other designated beneficiary survives you, he or she will receive a monthly benefit equal to half the amount you received before your death.
  • 75% Joint and Survivor Annuity – This annuity is payable over your lifetime. If your surviving spouse or other designated beneficiary survives you, he or she will receive a monthly benefit equal to 75% the amount you received before your death.
  • 100% Joint and Survivor Annuity – This annuity is payable over your lifetime. If your surviving spouse or other designated beneficiary survives you, he or she will receive a monthly benefit equal to the amount you received before your death.

Taking a survivor benefit as a beneficiary

To learn more about how your spouse or other named beneficiary may receive your 401(k) benefit, visit our 401(k) survivor benefits page.

 

1  You must be permanently and totally disabled as defined by the Equity-League Benefit Funds Pension Plan and 401(k) Plan Summary Plan Descriptions.

2  Your life expectancy (or your beneficiary’s) is determined by your Single Life Expectancy factor under the IRS Life Expectancy Table. For additional information, visit www.irs.gov.

3  You must be permanently and totally disabled as defined by the Equity-League Benefit Funds Pension Plan and 401(k) Plan Summary Plan Descriptions.

Questions?

For complete details about Equity-League Benefit Funds 401(k) benefits, refer to the Equity-League Benefit Funds Pension Plan and 401(k) Summary Plan Description. If you have additional questions or need assistance, contact the Equity-League Benefit Funds Retirement Services Department at (212) 869-9380 or outside the NY Metro area, at 1-800-344-5220 from 9:30 am to 5:30 pm ET