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Since no income tax has been paid on the payments to your account, you would
need to report your withdrawals as income on your income tax return. Unless your
withdrawal is made after age 59½ , age 55 and separation from service, or on
account of your death, disability, or medical expenses meeting certain
conditions, a 10% penalty tax will also be due on the amount withdrawn.
For amounts accumulated after the end of the fund year beginning in 1988, the
Before Tax Annuities have withdrawal restrictions as required by current tax
law. All payments and any interest earned after this date are available for
withdrawal if you meet one of the following conditions:
- you attain age 59½
- your death or total disability
- separation from service
- severe financial hardship
Withdrawals due to hardship will be limited to your contributions only. Unpaid medical
or education expenses, purchase of a home or amount needed to prevent foreclosure or
eviction of principal residence, death of an immediate family member, and qualified tax
deductible repairs to the participant’s primary residence may qualify you for a hardship
withdrawal. Because of the lost tax advantages and the penalty tax, you would want to
avoid withdrawals if at all possible. Withdrawals from amounts transferred to the
Before Tax Annuity after December 31, 1988 is subject to the restricted amounts of the
previous contract.
All withdrawals are also subject to all applicable tax laws, restrictions and
penalties.
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E-SB-17 (R306)
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Last Updated: Wednesday March 22 2006
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