Fillable MA State Retirement Board Application to Withdraw Accumulated Pension Deductions

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MA State Retirement Board Application to Withdraw Accumulated Pension Deductions

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REFUND/ROLLOVER REQUEST FORM
THE COMMONWEALTH OF MASSACHUSETTS
State Retirement Board
ONE WINTER STREET, 8TH FLOOR, BOSTON, MA 02108
APPLICATION TO WITHDRAW ACCUMULATED PENSION DEDUCTIONS
(REFUND/ROLLOVER REQUEST FORM)
|
THIS SECTION BOARD USE ONLY
|
IMPORTANT:
A return of the member’s accumulated deductions terminates membership in the State Employees’ Retirement System
and the rights associated with membership. For more information call (617) 367-7770 or 1-800-392-6014 (within MA).
I HEREBY CERTIFY THAT: (please check every option)
I am not on a paid or unpaid leave of absence.
I am not presently receiving worker’s compensation benets under General Laws, c. 152 or injured on duty
payments c. 41, §111F.
I do not have a claim for worker’s compensation or an application for ordinary or accidental disability pending.
I am not currently appealing my termination or planning to appeal my termination.
I have not been charged with an oense or convicted of any crime relating to my position while in State Service.
I understand that by withdrawing my accumulated deductions, I lose all the rights associated with membership
in the State Employees’ Retirement System.
I understand that by withdrawing my accumulated deductions, if I have 10 years of creditable service I am waiving my
right to monthly pension benets upon reaching the age of 55 if I became a member before 4/2/2012, or age 60 if I
became a member on or after 4/2/2012.
I understand that if I have 20 or more years of creditable service and I became a member before 4/2/2012, I am eligible
for a monthly pension benet and by withdrawing my accumulated deductions I am waiving my right to monthly
pension benets.
I am not accepting a position which would make me eligible for membership in another General Laws, c. 32 Public
Retirement System, such as for a County, City, or Town, political subdivision or similar retirement system.
I do not have funds on account with any other General Laws, c. 32 Public Retirement System, such as for a County, City,
or Town, political subdivision or similar retirement system.
IF DIVORCED: Are you a party to a Domestic Relations order?
Yes No
(If YES, please include a copy of your Domestic Relations Order with this application.)
Print Member Name
Member’s Signature Date
2
SECTION A To be read and completed by Member:
I, the undersigned, having left the service of the Commonwealth of Massachusetts, request payment to me of the accumulated total deductions
now standing to my credit in the annuity savings fund of the State Employees’ Retirement System. In consideration of such payment, all other
rights and privileges to which I was entitled as a member of the Retirement System are surrendered and I understand that upon such payment,
my membership in the Retirement System will terminate. I understand that if I completed 20 or more years of creditable service and I became a
member before 4/2/2012, in lieu of receiving my lump sum refund I could elect to receive a retirement pension. I understand a member in service
subsequent to 1-01-78 and before 4/2/2012, who has completed 10 or more years of creditable service, who resigns or voluntary terminates
service and leaves accumulated total deductions in the annuity savings fund, shall have the right upon attaining age 55 to apply for a retirement
allowance. I further understand that if I return to active service, I do so with the status of a new employee subject to plan rules in eect at that
time and not entitled to credit for my previous service, unless, before the date any retirement allowance becomes eective for me, I pay into the
annuity savings fund deductions withdrawn by me, together with regular interest.
MEMBER INFORMATION:
Print Member Name: Social Security #:
Address:
City, State, Zip:
Telephone: Email:
SELECT ONE OF THE FOLLOWING:
REFUND REQUEST: Check will be mailed to the address above.
ROLLOVER REQUEST: Please complete Section B.
IMPORTANT: Participants who do not select the direct rollover option will be subject to a 20% Federal Withholding Tax on the taxable portion
of the distribution even if funds are deposited into an eligible plan within the 60-day grace period. Participants who choose the direct rollover
option to the Commonwealth’s Deferred Compensation SMART Plan must have an account open with the administrator of that Plan.
Complete the following statement:
I ___________________________________ from my position as _________________________________________
(Resigned/Was Dismissed) (Position/Title)
in
(Name of Agency) (Signature - DO NOT PRINT YOUR NAME)
REFUND REQUEST FORM EMPLOYEE INSTRUCTIONS:
1. Please read Eligibility for a Refund on page 5 and the Special Tax Notice Regarding Lump Sum Distributions on pages 5-8 prior to
completing this form.
2. Complete page 1 and Section A of the Refund Request Form. Print all information, except your signature. IF REQUESTING A REFUND skip
Section B and go to Step 4.
3. If REQUESTING A ROLLOVER: Complete Section B. If your Plan Administrator has a preprinted form, please attach and check o the box
advising us that the form is attached. You do not need to complete Section B if a form/letter from your Plan Administrator is attached. You
must have an account open with a qualied plan in order for the rollover to be processed.
4. Send your Refund Request form to your Payroll/Personnel department where you were last employed to complete Section C. Your Payroll/
Personnel department will forward your Refund Request Form directly to the State Retirement Board.
Eective January 1, 1993 federal law requires the State Board of Retirement to implement a withholding provision on the taxable portion of a
member’s contributions and interest. The withholding rate is 20% of the taxable portion of the refund.
The withholding provisions can be avoided by “rolling over” these taxable funds to a qualied plan. The name of the institution where the
money will be transferred must be identied on the Withdrawal Notice. The Commonwealth of Massachusetts’ retirement system is “qualied”
under Sections 401 and 405 of the Internal Revenue Code. Withdrawals not rolled over may also be subject to a 10% penalty under certain
conditions. Please consult the IRS or a tax advisor for further information. Your check stub will show a breakdown of your refund/rollover. Next
year you will receive a 1099R Form from this oce.
3
REFUND/ROLLOVER REQUEST FORM
THE COMMONWEALTH OF MASSACHUSETTS
ONE WINTER STREET, 8TH FL., BOSTON, MA 02108
SECTION C To be completed by your Payroll/Personnel Department:
This is to notify you that:
PRINT Full Name
(maiden, if appl.)
:
Social Security Number: Employed by
(State Agency)
:
Employee:
Resigned
Was Dismissed Separation from Service was:
Voluntary
Involuntary
If Terminated, is employee appealing his/her termination?
Yes
No
Start Date: Membership Date:
Last Date on Payroll: Last Day Worked:
Has employee accepted any retirement or termination incentive payments as part of his/her separation from service?
Yes
No
If yes, please provide documentation.
Is Workman’s Compensation being paid/pending on this employee?
Yes
No
If yes, please give date of injury: _____________________ (Month/Day/Year)
Was there a Lump Sum settlement?
Yes
No
Has this employee been ocially investigated for or charged with misappropriation of funds or property from his employer or
convicted of any crime related to his/her oce or position?
Yes
No
Does the employee owe any money to the employer under an employee benet plan, including a cafeteria plan established pursuant
to 26 U.S.C. section 125?
Yes
No
IMPORTANT: If employee was less than full time, please attach list with dates and ratio(s).
IMPORTANT: Attach list with all dates of unpaid leaves of absences.
List below monthly retirement deductions for the last 2 (two) months on which employee appeared:
$
$
(Month/Year) (Amount) (Month/Year) (Amount)
Payroll/Personnel Administrator (Please Print) Telephone Number
(Authorized Signature) (Date)
SECTION B Please complete if requesting a rollover:
YOU MUST HAVE AN ACCOUNT OPEN WITH A QUALIFIED RETIREMENT PLAN IN ORDER FOR US TO PROCESS YOUR ROLLOVER REQUEST
Please complete all of the information below. If you do not have an account already open with a qualied plan, you must open one BEFORE
submitting this form to your payroll/personnel department. If your plan has its own standard form or letter containing the necessary
information needed to process your rollover, please attach your plan’s own original document to this form.
Check if company form attached.
Type of Plan: Traditional IRA Section 401(a) Section 403(a) Section 403(b) Section 457(b) governmental plan
Roth IRA
Company Name: Contact Person:
Mailing Address:
City, State, Zip: Telephone No.:
Account No. (if available):
Make Check Payable To:
4
REFUND/ROLLOVER REQUEST FORM
IMPORTANT NOTICE REGARDING ELIGIBILITY FOR WITHDRAWAL
OF ACCUMULATED TOTAL DEDUCTIONS (REFUND) TO MEMBERS
If you leave the service of the Commonwealth of Massachusetts and do not intend to take a position in the Commonwealth of
Massachusetts subject to the provisions of section I to 28 of Chapter 32 of the General Laws.
If your retirement allowance is less than $360.00 a year you must receive a refund instead of the allowance.
IF YOU ENTERED SERVICE AFTER JANUARY 1, 1984, YOU ARE ELIGIBLE FOR A REFUND OF THE INTEREST
CREDITED TO YOUR ACCOUNT ACCORDING TO THE FOLLOWING SCHEDULE:
1. If you have less than ten (10) years of creditable service and you VOLUNTARILY terminated service, you will be credited
with 3% interest on your total deductions.
2. If you have more than ten (10) years of creditable service or you INVOLUNTARILY withdraw from state service your total
deductions will be credited with regular interest. Also, if you have ten (10) or more years of creditable service, call the State
Retirement Board – you may be vested and eligible for retirement at age 55.
No interest will accrue to your account after two years from the date of your separation from employment.
TWO-YEAR RULE
If you are withdrawing your retirement deductions or rolling over your funds to another retirement plan, you may be required
to satisfy certain service requirements in the future if you return to employment with the Commonwealth and before you can
be eligible for particular retirement benets. Should you return to public service and if the above applies to you, you would
not be eligible to receive a retirement allowance until you have been in active membership service for at least two consecutive
years following the start of your new employment with the Commonwealth unless you meet one of the applicable exceptions.
We recommend you contact the Board to determine if this applies to you and to review the applicable exceptions.
FEDERAL REQUIREMENTS
Eective January 1, 1993, employers are required to oer plan participants trustee-to-trustee transfer. Participants
who DO NOT choose the direct transfer are subject to a 20 percent federal withholding on the taxable portion of the
distribution even if they deposit the rollover into another eligible plan within the existing 60 day grace period.
You may be entitled to income averaging. The State Retirement Board recommends you consult with a qualied tax preparer.
1
2
IMPORTANT NOTICE TO REFUND APPLICANTS WHO ENTERED SERVICE BEFORE APRIL 2, 2012
If you entered service prior to April 2, 2012 and you take a refund or a rollover of your contributions you are terminating your
membership. If you later return to state service, your membership date will be the date you reenter service, even if you buy
back any refunded contributions. You will also be subject to the retirement law changes which went into eect on April 2,
2012 (Chapter 176 of the Acts of 2011). These changes include, but are not limited to:
· New age factor table for your retirement benet calculation
· An increase in the salary average period used to calculate most benets from 3 years to 5 years
· An increase in the minimum retirement age
You have the option of leaving your funds in the system to retain your current level of benets. The State Retirement Board
recommends you consult with a Retirement Counselor prior to making your nal refund decision. You can reach a counselor
by calling 617-367-7770.
5
REFUND/ROLLOVER REQUEST FORM
This notice contains important information needed before you decide how to receive your lump sum distribution payment. In
accordance with the requirements of Internal Revenue Code Section 402 (f), this notice is being provided to you by the Retirement
System because you may be eligible to roll over all or part of the payment that you will soon receive from the Retirement System.
The Economic Growth and Tax Relief Reconciliation Act of 2001 (“EGTRRA”) has significantly changed the rules which apply to
your ability to roll over all or part of the payment that you will soon receive from the Retirement System. These changes include an
increase in the type of retirement plans to which you may roll over your lump sum distribution payment. This notice will explain the
operation of theses new rules and your options.
If you have additional questions after reading this notice, please contact the Retirement System.
SUMMARY
There are two ways you may be able to receive a lump sum distribution payment that is eligible for rollover:
1. Certain payments can be made directly to an ELIGIBLE RETIREMENT PLAN that will accept it (Direct Rollover), or
2. The payment can be Paid To You
The denition of an ELIGIBLE RETIREMENT PLAN, as used in this notice, depends on the payment date of the lump sum distribution
payment.
An ELIGIBLE RETIREMENT PLAN is:
► A traditional IRA. A traditional IRA does not include a Roth IRA, Simple IRA or education IRA
► Another qualied employer plan under Code Section 401 (a) or an annuity plan under Code Section 403 (a) that accepts
your rollover.
► An annuity contract described in Code Section 403 (b) that accepts your rollover.
► An eligible deferred compensation plan under Code Section 457 (b) that is maintained by a state, political subdivision
of a state, or any agency or instrumentality of a state or local governmental entity so long as it agrees to accept your
rollover, separately accounting for amounts transferred in such plan from the Retirement System’s plan.
SPECIAL TAX NOTICE REGARDING
LUMP SUM DISTRIBUTIONS For Distributions Made After January 1, 2002
For Distributions made prior to January 1, 2002, refer to earlier notice which can be obtained from the Retirement System
ADDITIONAL ROLLOVER INFORMATION
For State Retirement System Participants Requesting Return of Accumulated Pension Deductions
Option to roll over Accumulated Deductions into the Commonwealth’s Deferred Compensation SMART Plan
You have the option to roll over your accumulated pension deductions into your account with the Commonwealth’s
Deferred Compensation SMART Plan upon your separation from service. To qualify for this option, you must have
established an account with the Deferred Compensation SMART Plan prior to your separation from service.
It is a simple three-step process to roll your pension deductions into your Plan account:
1. First, complete Section A of this form, and have your Deferred Compensation representative ll out
Section B of the attached Refund Request Form. Your representative will assist in completing the form
and answer any questions you may have about making a rollover contribution into the Commonwealth’s
Deferred Compensation SMART Plan.
2. Second, forward this completed form to your payroll administrator for completion of Section C.
3. Third, your payroll/personnel department will return the form to the State Retirement Board for
processing.
QUALIFIED PUBLIC SAFETY EMPLOYEES
On and after August 18, 2006, if you are a “qualied public safety employee” who terminates employment in the calendar year
in which you are age 50 or older, and receive an eligible distribution, you will not have to pay the additional 10% tax on the
distribution PAID TO YOU. You are a “qualied public safety employee” if you are an employee of a State or political subdivision
of a State (such as a county or city) whose principal duties include services requiring specialized training in the area of police
protection, re ghting services, or emergency medical services for an area within the jurisdiction of the State or political
subdivision.
6
REFUND/ROLLOVER REQUEST FORM
If you choose a Direct Rollover:
► Your payment will not be taxed in the current year and no income tax will be withheld.
► Your payment will be made directly to an ELIGIBLE RETIREMENT PLAN.
► The taxable portion of your payment will be taxed later when you take it out of the ELIGIBLE RETIREMENT PLAN.
If you choose to have a lump sum distribution payment that is eligible for rollover Paid To You
► You will receive only 80% of the taxable portion of the distribution. The Retirement System is required to withhold
the remaining 20% of the taxable portion of the payment to send it to the IRS as income tax withholding which will be
credited against your taxes.
► Unless rolled over, the taxable portion of your payment will be taxed in the current year. Under limited circumstances,
you may be able to use special tax rules that could reduce your tax liability. However, if you receive the payment before
age 59-1/2, you may also have to pay an additional 10% tax penalty.
► You can roll over the payment by paying it to an ELIGIBLE RETIREMENT PLAN within 60 days after you receive the payment.
The amount rolled over will not be taxed until you take it out of the ELIGIBLE RETIREMENT PLAN.
If after you receive the lump sum distribution by check, you want to roll over 100% of the taxable portion of the distribution to an
ELIGIBLE RETIREMENT PLAN, you must add an amount equal to the 20% that was withheld. If you roll over only the 80% that you
received, you will be taxed on the remaining 20% that was withheld and that is not rolled over.
I. PAYMENTS THAT CAN AND CANNOT BE ROLLED OVER
Payment from the Retirement System may be “eligible rollover distributions,” meaning that they can be rolled over to an ELIGIBLE
RETIREMENT PLAN. The Retirement System will be able to tell you what portion of your payment is an eligible rollover distribution.
The denition of an eligible rollover distribution has been changed by EGTRRA
The following types of payments cannot be rolled over
The non-taxable portion of a lump sum distribution payment which is paid on or after January 1, 2002 may be rolled over to (1) a
traditional IRA, or (2) a qualied dened contribution plan, if it is made by a Direct Rollover and if the dened contribution plan agrees
to separately account for amounts so transferred, including separately accounting for the non-taxable portion of the payment and the
taxable portion of the payment if the after-tax contributions are paid to you rst, you cannot roll them over later to a qualied dened
contribution plan. However, they could be indirectly rolled over to a traditional IRA (see Section III, “Payment Paid to You”).
Payments Spread over Long Periods You cannot roll over a payment if it is part of a series of equal (or almost equal) payments that
are made at least once a year and that will last for:
► your lifetime (or your life expectancy):
► your lifetime and your beneciary’s lifetime (or life expectancies): or
► a period of ten years or more
Required Minimum Payments Upon reaching age 70-1/2 or retirement, whichever is later, a certain portion of your payment cannot
be rolled over because it is a “required minimum payment” that must be paid to you.
II. DIRECT ROLLOVER
A Direct Rollover is a direct payment of the amount of your lump sum distribution payment to an ELIGIBLE RETIREMENT PLAN. You can choose
a Direct Rollover of all or any portion of your payment that is an eligible rollover distribution as described in Section I. You are not taxed on any
portion of your payment for which you choose a Direct Rollover until you later take it out of the ELIGIBLE RETIREMENT PLAN. In addition, no
income tax withholding is required for any portion of your lump sum distribution payment for which you choose a Direct Rollover.
Direct Rollover to a Traditional IRA You can open a traditional IRA to receive the direct rollover. If you choose to have your payment
made directly to a traditional IRA, contact an IRA sponsor (usually a nancial institution) to nd out how to have your payment made
in a direct rollover to a traditional IRA at the institution. If you are unsure of how to invest your money, you can temporarily establish a
traditional IRA at a later date, without penalties or other limitations. See IRS Publication 590, Individual Retirement Arrangements, for
more information on traditional IRAs (including limits on how often you can roll over between IRAs).
Direct Rollover to a Plan If you are employed by a new employer that has an ELIGIBLE RETIREMENT PLAN and you want a direct
rollover to that plan, ask the Plan Administrator of that plan whether it will accept your rollover. An ELIGIBLE RETIREMENT PLAN that is
not a traditional IRA is not legally required to accept a rollover and may choose to accept only certain types of funds as rollovers. If your
new employer’s plan does not accept a rollover, you can choose a Direct Rollover to a Traditional IRA. If the employer plan accepts
your rollover, the plan may restrict subsequent distributions of the rollover amount, or may require spousal consent to any subsequent
distribution. You should check with the Plan Administrator before making your decision.
7
REFUND/ROLLOVER REQUEST FORM
Example: The portion of your payment that can be rolled over under Section I is $10,000, and you choose to have it
paid to you. You will receive $8,000, and $2,000 will be sent to the IRS as income tax withholding. Within 60 days after
receiving the $8,000, you may roll over the entire $10,000 to an ELIGIBLE RETIREMENT PLAN. To do this, you roll over
the $8,000 you received from the Retirement System and you will have to nd $2,000 from other sources (your savings,
a loan, etc). In this case , the entire $10,000 is not taxed until you take it out of the ELIGIBLE RETIREMENT PLAN. If you
roll over the entire $10,000, when you le your income tax return you may get a refund of part or all of the $2,000
withheld.
If, on the other hand, you roll over only $8,000, the $2,000 you did not roll over is taxed in the year it was withheld.
When you le your income tax return you may get a refund of part of the $2,000 withheld.
(However, any refund is likely to be larger if you roll over the entire $10,000.)
The IRS is permitted to waive the 60-day requirement if the failure to do so would be against equity or good conscience. Examples of such
waivers may include cases of casualty, disaster, or other events beyond the reasonable control of the individual subject to such requirement
(examples include, but may not be limited to, death, disability, hospitalization, incarceration, restrictions imposed by a foreign country, or postal
error). You must apply to the IRS for this waiver.
Additional 10% Tax If You Are under Age 59-1/2 If you receive a payment before you reach age 59-1/2 and you do not roll it over, then, in
addition to the regular income tax, you may have to pay an extra tax equal to 10% of the taxable portion of the payment. The additional 10%
tax, generally does not apply to:
► Payments that are paid after you separate from service with your employer during or after the year you reach age 55.
► Payments that are paid because you retire due to disability.
► Payments that are paid as equal (or almost equal) payments over your life or life expectancy (or your and your
beneciary’s lives or life expectancies).
► Payments that are paid directly to the government to satisfy a federal tax levy.
► Payments that are paid to an alternate payee under a qualied domestic relations order, or
► Payments that do not exceed the amount of your deductible medical expenses.
See IRS Form 5329 for more information on the additional 10% tax penalty.
III. PAYMENT PAID TO YOU
If your payment can be rolled over under Section I and the payment is made directly to you by check it is subject to 20% federal income tax
withholding. The payment is taxed in the year you receive it unless, within 60 days, you roll it over to an ELIGIBLE RETIREMENT PLAN. If you do
not roll it over, special tax rules may apply. For lump sum distribution payments made ON or AFTER January 1, 2002 the IRS may waive the 60-day
requirement in certain circumstances, as explained below.
Income Tax Withholding
Mandatory Withholding If any portion of your payment can be rolled over under Section I and you do not elect to make a Direct
Rollover, the Retirement System is required by law to withhold 20% of that amount. The amount is sent to the IRS as income tax
withholding. For example, if you can roll over a payment of $10,000 only $8,000 will be paid to you because the Retirement System
must withhold $2,000 as income tax. However, when you prepare your income tax you must report the full $10,000 as a payment from
the Retirement System. You must report the $2,000 as tax withheld, and it will be credited against any income tax you owe for the year.
Voluntary Withholding If any portion of your payment is taxable but cannot be rolled over under Section I, the mandatory
withholding rules described above do not apply. In this case, you may elect not to have withholding apply to that portion. To elect out
of withholding, ask the Retirement System for the election form and related information.
Sixty-Day Rollover Option If you receive a payment that can be rolled over under Section I, you can still decide to roll over all or part
of it to an ELIGIBLE RETIREMENT PLAN. If you decide to roll over, you must contribute the amount of the payment you received to an
ELIGIBLE RETIREMENT PLAN within 60 day after you receive the payment. The portion of your payment that is rolled over will not be
taxed until you take it out of the ELIGIBLE RETIREMENT PLAN.
You can roll over up to 100% of your payment that can be rolled over under Section I , including an amount equal to the 20% that was withheld.
If you choose to roll over 100%, you must nd other money within the 60-day period to contribute to the ELIGIBLE RETIREMENT PLAN, to replace
the 20% that was withheld. On the other hand, if you roll over only 80% that you received, you will be taxed on the 20% that was withheld.
Refund/Rollover Request Form, 05/2019
THE COMMONWEALTH OF MASSACHUSETTS
State Retirement Board
Main Office: One Winter Street, 8th Floor, Boston, MA 02108 Phone: 617-367-7770 Fax: 617-723-1438 Toll Free (within MA): 1-800-392-6014
Regional Office: 436 Dwight Street, Room 109A, Springfield , MA 01103 Phone: 413-730-6135 Fax: 413-730-6139
mass.gov/retirement
Please notify the State Retirement Board of any change of address.
If you are a surviving spouse, an alternate payee, or another beneciary, you have the same choices as the employee described in
Parts II and III. Thus, you may choose to have an eligible rollover distribution, as described in Section I, paid in a Direct Rollover to an
ELIGIBLE RETIREMENT PLAN or paid to you. If you have the payment paid to you, you can keep it or roll it over yourself to an ELIGIBLE
RETIREMENT PLAN in the same manner as the employee. If you are an alternate payee, you continue to have the same choices as the
employee.
If you are a surviving spouse, an alternate payee, or another beneciary, your payment is generally not subject to the additional 10%
tax penalty described in Section III, even if you are younger than age 59-1/2.
If you are a surviving spouse, an alternate payee, or another beneciary, you may be able to use the special tax treatment for lump
sum distributions, as described in Section III. If you receive a payment because of the employee’s death, you may be able to treat the
payment as a lump sum distribution if the employee met the appropriate age requirements, whether or not the employee had 5 years
of participation in the Retirement System.
HOW TO OBTAIN ADDITIONAL INFORMATION
This notice summarizes only the federal (not state or local) tax rules that might apply to your payment. The rules described above are complex
and contain many conditions and exceptions that are not included in this notice. Therefore, you may want to consult with a professional
tax advisor before you take a payment of your benets from the Retirement System. Also, you can nd more specic information on the tax
treatment of payments from qualied retirement plans in IRS Publication 575, Pension and Annuity Income, and IRS Publication 590, Individual
Retirement Arrangements. These publications are available from your local IRS oce, on the IRS’s Internet Web Site at www.irs.gov or by calling
1-800-TAX-FORMS.
Special Tax Treatment If You Were Born Before January 1, 1936 If you receive a payment that can be rolled over under Section I and is
not rolled over to an ELIGIBLE RETIREMENT PLAN, the payment will be taxed in the year you receive it. Special tax treatment for lump sum,
distributions that may be available to you is described below.
Ten-Year Averaging. If you receive a lump sum distribution and you were born before January 1, 1936, you can make a one-time
election to gure the tax on the payment by using “10-year averaging” (using 1986 tax rates). Ten-year averaging often reduces
the tax you owe.
Capital Gain Treatment. If you receive a lump sum distribution and you were born before January 1, 1936 and if you were a
participant in the Retirement System before 1974, you may elect to have the part of your payment that is attributable to your
pre-1974, participation in the Retirement System taxed as long-term capital gain at a rate of 20%.
There are other limits on the special tax treatment for lump sum distributions. For example, you can generally elect this special
tax treatment only once in your lifetime, and the election applies to all lump sum distributions that you receive in that same year.
If you have previously rolled over a distribution from the Retirement System (or certain other similar plans of the employer), you
cannot use the special averaging treatment for later payments from the Retirement System. If you roll over your payment to a
traditional IRA, you will not be able to use special tax treatment for later payments from the traditional IRA. Also, if you roll over
only a portion of your payment to a traditional IRA, this special tax treatment is not available for the rest of the payment, See IRS
Form 4972 for additional information on lump sum distributions and how to elect the special tax treatment.
Important notice for distributions ON or AFTER January 1, 2002. As explained in this notice, EGTRRA creates new rollover options. However,
a distribution from a qualied plan, like your lump sum distribution payment, is not eligible for capital gains or averaging treatment if there was
a rollover to the plan that would not have been permitted under the law in eect before January 1, 2002. Thus, in order to preserve capital gains
and averaging treatment (if available) for a lump sum distribution payment that is rolled over, the rollover would have to be made to a “conduit
IRA” (i.e. a traditional IRA which only includes the lump sum distribution payment), and then rolled back into a qualied plan.
IV. SURVIVING SPOUSES, ALTERNATE PAYEES, AND OTHER BENEFICIARIES
In general, the rules summarized above that apply to payments to employees also apply to payments to surviving spouses of employees and
to spouses or former spouses who are “alternate payees.” You are an alternate payee if your interest in the Retirement System results from
a domestic relations order, which is an order issued by a court, usually in connection with a divorce or legal separation. Some of the rules
summarized above also apply to a deceased employee’s beneciary who is not a spouse. However, there are some exceptions for payments to
surviving spouses, alternate payees, and other beneciaries that should be mentioned:
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MA State Retirement Board Application to Withdraw Accumulated Pension Deductions

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Completed 8 May 2020

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