Are withdrawals from the State of Hawaii Island Savings Plan (the “Plan”) taxable?
A39: If, upon termination of employment, a participant in the Plan opts to withdraw any funds from the Plan without rolling the funds over to an eligible retirement plan within a specified time period, the withdrawn funds will be included in the participant’s gross income and subject to income tax in the year paid to the participant. A terminated employee may also opt to transfer balances in the Plan to another qualified plan or account (e.g., traditional IRAs, 403(b) annuities) to defer federal and Hawaii income taxes. The transfers may be accomplished by direct trustee-to-trustee transfers or rollovers. Refer to the Island Savings Plan website, available at http://islandsavings.ingplans.com, for further information.
