What are my Annuity Savings Account payment options?
Your options for receiving your Annuity Savings Account (ASA) depend on whether you are eligible to retire or are withdrawing your ASA after leaving covered employment before retirement.
Withdrawing your ASA after leaving employment OR at retirement from the PERF Hybrid plan:
The total amount in your ASA (less the mandatory withholding for federal income tax) will be paid directly to you.
If you elect this payment option, PERF is required to withhold 20 percent of the taxable portion. The taxable portion of the ASA consists of:
- all 3 percent contributions paid by the employer; and
- all earnings
You will have to pay state and federal income tax on this taxable portion. You may still rollover the taxable portion into a Qualified Retirement Plan or IRA. You can initiate a request for a distribution by logging in to your PERF Online account. You may also call (888) 526-1687 to initiate a distribution request by phone with a customer service representative.The taxable portion of your ASA will be paid in the form of a Direct Rollover to an eligible 401(a), 403(b) or governmental 457(b) plan, or eligible IRA, which has provisions allowing it to accept the rollover on your behalf.
Except in the case of a Roth IRA, this option defers any taxes you owe on your ASA balance.
If you choose to rollover only part of the taxable amount, the portion not rolled over is paid directly to you (less the mandatory 20 percent withholding for federal income tax).
Part of the taxable portion of your ASA will be paid in the form of a Direct Rollover to an eligible 401(a), 403(b) or governmental 457(b) plan, or eligible IRA, which has provisions allowing it to accept the rollover on your behalf.
The part of the taxable portion of the distribution which is not directly rolled over (less the mandatory withholding for federal income tax) will be paid directly to you, and the non-taxable portion will be paid directly to you.
If you elect this payment option, the taxable portion of the ASA consists of:
- all 3 percent contributions paid by the employer; and
- all earnings.
For any part of the eligible rollover distribution that is not directly rolled over, PERF is required by law to withhold 20 percent for federal income taxes. You will have to pay federal and state income taxes on this taxable portion. You will not be taxed in the current year and no income tax will be withheld on the Direct Rollover amount. You will be taxed on that amount when you receive a distribution from the IRA or Qualified Retirement Plan.
Choosing your ASA payment when retiring from the PERF Hybrid plan:
The total amount of your ASA will be paid out as a lifetime monthly benefit.
If you elect this payment option, any non-taxable basis you have will be recovered on a pro-rata basis over a predetermined number of payments based on your age at the time benefits start. The balance of each benefit payment will be fully taxable. Unless you elect otherwise on your federal tax withholding form, PERF is required to withhold in accordance with IRS guidelines.
Withdraw 1986 Tax Basis portion of ASA and combine it with the pension benefit.
If you make this choice for your ASA, you will withdraw the non-taxable (1986 Tax Basis) portion of your ASA in the form of a direct rollover, a complete distribution, or a partial rollover to a qualified plan, and then receive the balance of the account as a part of your monthly payment.
If you elect this payment option, the income tax consequences will be determined as follows:
- In accordance with a letter ruling received from the IRS, the “basis,” that existed on Dec. 31, 1986, will be recovered tax-free.
- Any “basis” after Dec. 31, 1986, will be recovered on a pro-rata basis over a pre-determined number of payments based on your age at the time benefits start.
- The remainder of your ASA and your pension benefits will be fully taxable in the year received.
