When are benefits payable?
Benefits are payable at:
- Retirement (restrictions/penalties apply based on age, see page 80 of benefits book)
- Upon your death
- If you become disabled, (must cease employment to receive this benefit)
- Upon separation from employment (see page 80 “Notice to Separated Participant” summarizing your distribution options)
Distribution Guidelines
When you are eligible to receive a distribution, you may elect one of the following:
- Lump Sum
- Substantially equal installments
- Direct Rollover
How Distributions Affect Your Account
Your account shall be valued for distribution purposes as soon as administratively possible following the date your Distribution Election Form is approved by the SOC Fund Office.
Most withdrawals/distributions are subject to taxation and required withholding. Generally, distributions paid from the Plan to a participant are exempt from New York City and New York
State income taxes (Federal income taxes apply). By “rolling-over” your account to another qualified plan, you may lose this tax-favored status in whole or in part.
The Principal is required by the IRS to withhold 20% of any distribution eligible for rollover if it is not directly rolled over to another eligible retirement plan, including an IRA, or is paid in installments over a minimum period of the lesser of 10 years or the participant’s life expectancy. Any withholding will offset a portion of federal income taxes you owe on the distribution.
Pension Protection Act
A special rule allows you to make an election to exclude up to $3,000 a year from income taxes if such amount is applied by the Plan to pay for qualified health insurance premiums for the retiree, the retiree’s spouse or dependents for that year. The amount to be used to pay for qualified health insurance premiums will need to be elected annually, by completing a Special Election Form for Public Safety Officers Electing Distributions. For more detailed information on the “Pension Protection Act” see page 87.
Note: You should consult your financial/tax advisor on the applicable tax rules and how best to receive your distribution.