Notice to "Separated" Participant
FOR MEMBERS WHO HAVE RETIRED FROM THE NEW YORK CITY POLICE DEPARTMENT AND ARE ELIGIBLE TO TAKE DISTRIBUTIONS FROM THE SUPERIOR OFFICERS COUNCIL ANNUITY TRUST FUND
This notice explains how you can continue to defer federal income tax on your retirement savings in the Superior Officers Council Annuity Trust Plan (the “Plan”) and contains important information you will need before you decide how to receive your Plan benefits.
Our records reflect that you have retired/separated, or ceased employment, from the Police Department of the City of New York. As a result, you are entitled to receive a distribution of your account under the Superior Officers Council Annuity Trust Plan (the “Plan”). As of the date of your separation, the balance of your account in the Plan was $__________.
Since you have retired, or ceased employment, you may elect an immediate distribution. You may also delay your distribution until you attain age 72. Any amount you leave in the Plan will continue to be invested per your direction and any investment gains will not be subject to tax until you elect a distribution.
If you retired, or ceased employment, after attaining age 50 or on account of disability then you are not subject to the early distribution penalty tax of 10% (this is in addition to the regular tax you must pay). In most situations, if you retired, or ceased employment, prior to the calendar year in which you attain age 50 and you want to receive an immediate distribution, the only way to avoid the early distribution penalty tax is to elect to receive the distribution in installments over a period at least equal to your life expectancy. If you are interested, the SOC Fund Office will help you make a distribution election that will avoid the early distribution penalty tax. An installment distribution may also be the best way to take advantage of favorable state and local tax treatment.
If you retire after attaining age 50, by electing an installment distribution you can take maximum advantage of a new law that allows you to exclude from income up to $3,000 each year if you make an election to have a portion of your distribution applied to pay certain health premiums (see page 93 “Retired Public Safety Officer”).
The tax rules that apply to your distribution are complex. You are encouraged to read the Special Tax Notice Form and contact a tax advisor.