403(b) and IRA Beneficiary Information

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The following information will help you understand some of the features and requirements of the retirement account that you have inherited. As beneficiary of this account, you have the option to keep the account with us (if the balance is over $5,000), roll it over to your own account, or liquidate the account. Please read this brochure to find out what each of these options means for you. If you have additional questions, call us at 1-800-279-4030. Please note that some rules differ among before-tax 403(b), after-tax (Roth) 403(b), Traditional IRA, or Roth IRA accounts for spousal or non-spousal beneficiaries.

Account options

What are my options?

There are four distinct options. The following questions and answers will help you understand each option.

Option 1: Keep beneficiary account with us.

What are the advantages to retaining the account as a beneficiary with WEA Member Benefits?

1. Penalty-free distributions. Beneficiary distributions are penalty-free, regardless of your age.
2. Successor beneficiaries. You will designate your own beneficiaries who may continue to stretch the tax-deferred, or tax-free if a Roth account, features of this account continue using your life expectancy.
3. Flexible distribution options. Monthly, quarterly, semiannual, or annual withdrawals.
4. Quarterly account statements. Available online within three weeks after the close of each quarter, enabling you to monitor performance.
5. Control the investments. We offer no-load mutual funds, life-cycle funds, model portfolios, and the Prudential Guaranteed Investment to help you build a suitable, diversified portfolio. You may move money between investments as long as it complies with our trade restriction policy.

Mutual fund redemption fees.

The mutual funds that are offered by WEA Member Benefits may charge a redemption fee. These fees are applied to shares that are acquired through purchases, including, but not limited to, contributions, trades, exchanges, transfers, and rollovers, and the subsequent sale occurring within the specified time frame. For more information about redemption fees, please refer to the mutual fund prospectus.

How can I access my account to make changes?

You may make changes to your account by calling a consultant at 1-800-279-4030 or access your account online at weabenefits.com/yourmoney.

Option 2:  Rollover to your own account.

Can I roll the account into another retirement plan?

Spousal beneficiaries may roll over all or part of the proceeds of a before-tax 403(b) or Traditional IRA account to a Traditional IRA, SEP IRA, or a governmental deferred compensation 457(b), 401(a), or 403(b) account.

If a spouse rolls the account to their own plan, they must wait until they reach the qualified age (59½ in most cases) to take penalty-free distributions. As the owner, spousal beneficiaries may postpone distributions until they reach age 70½. Since the life expectancy factor as the owner of an account may be higher, a rollover could maximize deferrals by not only delaying the distributions, but also by reducing the amount of distribution and related tax liability.

This may be a good option for you if you do not plan to take distributions until you reach the qualified age or if you intend to stretch the period of tax-deferred (tax-free) earnings beyond your lifetime for your beneficiaries.

Roth 403(b) accounts can only roll over to another Roth 403(b), Roth 401(k), or Roth IRA. When a Roth 403(b) account is rolled over to a new Roth IRA, the five-year requirement to qualify for tax-free distributions starts at the time of the rollover. Roth 403(b)s rolled into an existing Roth IRA take on the holding period of the existing account.

Nonspousal beneficiaries must begin to take required minimum distributions (RMDs) each year following the year of the original owner’s death and may only roll over their account to an Inherited IRA or possibly an Inherited Roth IRA.

Option 3:  Liquidate the account.

Can I liquidate the account?

Yes; however, you will be required to pay ordinary income taxes on the taxable portion of your distribution for the year in which you withdraw it. Withdrawals using this option may be subject to 20% federal income tax withholding.

Option 4:  Disclaim the account.

Can I disclaim my interest in this account?

Yes. You may choose to disclaim all or a portion of your inherited account to other beneficiaries named by the original owner. For example, if you are the only primary beneficiary and your spouse named your children as contingent beneficiaries, you have the right to disclaim all or a portion of your interest in the account, and it would pass to your children. The children would then be able to take distributions over their individual life expectancies. Likewise, if your spouse named you and a particular charity as beneficiaries and you chose to disclaim, the charity would receive your portion of the account.

Disclaiming is not for everyone, but it could be a valuable estate planning tool. You may want to consult your tax advisor or attorney.

When must I notify you of my intention to disclaim?

You must notify us in writing within nine months of the account owner’s death.

Distribution Options

Single Life Expectancy

Age
Life
Expectancy
(years remaining)
Age
Life
Expectancy
(years remaining)
Age
Life
Expectancy
(years remaining)

21.................62.1
22.................61.1
23.................60.0
24.................59.1
25.................58.2
26.................57.2
27.................56.2
28.................55.3
29.................54.3
30.................53.3
31.................52.4
32.................51.4
33.................50.4
34.................49.4
35.................48.5
36.................47.5
37.................46.5
38.................45.6
39.................44.6
40.................43.6
41.................42.7
42.................41.7
43.................40.7
44.................39.8
45.................38.8
46.................37.9
47.................37.0

48.................36.0
49.................35.1
50.................34.2
51.................33.3
52.................32.3
53.................31.4
54.................30.5
55.................29.6
56.................28.7
57.................27.9
58.................27.0
59.................26.1
60.................25.2
61.................24.4
62.................23.5
63.................22.7
64.................21.8
65.................21.0
66.................20.2
67.................19.4
68.................18.6
69.................17.8
70.................17.0
71.................16.3
72.................15.5
73.................14.8
74.................14.1

75.................13.4
76.................12.7
77.................12.1
78.................11.4
79.................10.8
80.................10.2
81...................9.7
82...................9.1
83...................8.6
84...................8.1
85...................7.6
86...................7.1
87...................6.7
88...................6.3
89...................5.9
90...................5.5
91...................5.2
92...................4.9
93...................4.6
94...................4.3
95...................4.1
96...................3.8
97...................3.6
98...................3.4
99...................3.1
100.................2.9

When can I withdraw money from the beneficiary account?

As beneficiary of this account, you may begin making withdrawals at any time.

Are periodic distributions available?

Yes. You can choose from any of the following three automatic distribution options. Remember, yearly distributions must meet or exceed required minimum distributions. We withhold 20% for federal taxes.

Scheduled payments—Choose a fixed dollar amount to receive monthly, quarterly, semi-annually, or annually. Distributions must be a minimum of $100. Distributions are automatically sent the 10th of each month.

Declining balance—You can choose to have your account balance paid to you over a specific period of time.

Annually—Choose a fixed dollar amount to receive each year and indicate the month you would like to receive your distribution.

Why do I have to take required minimum distributions (RMDs)?

The IRS requires beneficiaries to take a minimum amount of money from their beneficiary retirement account each year. These are usually referred to as RMD. Generally, RMDs must begin in the year following the year of death; however, spousal beneficiaries may have the option to postpone their RMD until the year their spouse would have reached age 70½. If the deceased was older than age 70½ and receiving RMD, you must withdraw his or her RMD in the year of death, unless that distribution has already been made.

The RMD rules work to liquidate your beneficiary account through annual distributions, typically over your life expectancy (refer to Single Life Expectancy table above). While RMD requirements dictate the minimum amount that must be distributed, you are free to withdraw more than required under the RMD rules.

If you are a spouse and you choose to roll over the inherited account to your own account, you may be able to stretch the payments over a longer period of time.

How is an RMD determined?

The RMD is usually based on your life expectancy. The RMD is calculated by dividing your previous year-end account balance by the applicable life expectancy factor, which can be obtained from the Single Life Expectancy table. If you would like more information on this topic, you can call us or you can request Publication 571, Tax-Sheltered Annuity Plans (403(b) Plans), from the IRS Web site at irs.gov.

Taxation

Are distributions from my inherited retirement account taxable?

Distributions from your before-tax 403(b) are considered ordinary income and are subject to federal and state income tax. Qualified Roth 403(b) or Roth IRA (after-tax) distributions are tax-free. A Roth account must have been held for five years before distributions are qualified for tax-free treatment. Earnings on non-qualified Roth distributions are taxed.

Are withholding taxes deducted from my taxable distribution?

The IRS rules require withholding federal income tax at the rate of 10% on any taxable distribution that includes an RMD, unless you instruct us otherwise. All other distributions require withholding of 20% of the taxable amount.

May I have my distribution sent directly to my financial institution?

Yes. You may arrange to have the money deposited directly into an account at your financial institution.

If you would like to discuss any questions you have about this account, please call us at 1-800-279-4030.

TSA 3439-280-0417