What are the tax consequences associated with the distribution of my benefits?
Depending on the form of distribution chosen and the age of the participant, there are different tax scenarios that may apply. Should a participant elect to receive a direct payment, mandatory IRS withholding of 20% will apply. In addition, if the participant has not attained age 591/2 an IRS penalty of 10% will apply. Regardless of the amounts withheld at the time of a distribution, the full tax consequence will ultimately be decided upon the completion of the participant’s personal tax return. Should a participant elect to receive a rollover to either and IRA or another qualified retirement plan, there are no penalties and no IRS withholding applicable.
