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Home > 401(k)/457 Plans > Plan Information > Payment Options

Payment Options

All payments are subject to federal and state income taxes.

You have the same payment options (described below) whether you're enrolled in a 401(k) Plan or 457 Plan. The only difference relates to age: if you take payments from your 401(k) Plan before age 59½, you may be subject to an additional 10 percent federal tax and, if you're a California resident, 2.5 percent state tax. However, these additional taxes generally don't apply if you:

  • separate or retire in or after the year you reach age 55;
  • retire due to disability; or
  • require the payment for medical expenses.
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There are no minimum age requirements to receive payments from your 457 Plan without penalty. However, you must be separated from employment or age 70½ or older.

All payments are subject to federal and state income taxes. See Taxes for more information.

If you have a SDBA, you need to be aware of certain requirements.

You can model payments to see examples of what your payments would be using the fixed period or fixed amount payment options described below.

Partial/Total Distribution

This option allows you to specify, a dollar amount or percentage of your funds that you want to withdraw. The payment is made directly to you and is reported as ordinary income. A 1099-R form will be mailed to you by January 31 of the year following your payment. See Taxes for more information.

Installment Payments

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This option allows you to choose one of the following types of payment from your Savings Plus account(s): fixed period, fixed amount, or required minimum distributions, described below. You may stop installment payments at any time if you’re younger than age 70½, or select a different payment method (fixed period, fixed amount, annual, or monthly) by contacting a Savings Plus Service Center representative; changes take effect immediately.

All payments are deposited directly into a financial institution of your choice via ACH. If the banking information is not complete or accurate, we’ll send you a hard copy check. We deduct a $2.50 fee from each installment payment issued by check. There’s no fee if you receive periodic payments by direct deposit.

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  • Fixed Period

    You may choose to receive monthly or annual payments over a fixed period of time. We calculate your payments by dividing your account balance by the number of payments you want to receive. Your payments are recalculated each month (if you choose a monthly payout) or each year (if you choose an annual payout) so that your account balance is exhausted at the end of your payment schedule. Your payments may increase when you reach age 70½ if they're less than the required minimum distribution amount.

  • Fixed Amount

    This option allows you to designate a specific dollar amount to receive monthly or annually. The minimum payment period is one year. Your payments may increase when you reach age 70½ if the payment amount is less than the minimum distribution amount required by the IRS.

  • Lifetime Payment

    You may request to have your monthly or annual payment amount calculated by dividing your account balance by your life expectancy. Savings Plus will recalculate your payment amount annually. This payment allows you to avoid the 10% early withdrawal penalty on 401(k) plan distributions. A payment must be made at least once each year without a change five years after the first payment or the date on which you reach age 59½, whichever is later. Lifetime payments also meet RMD requirements.

  • Required Minimum Disribution

    You may select this annual payment option in the year you reach age 70½ or the year you retire, whichever is later. We'll send you a letter of notification if you're not receiving these payments. You can delay your first required minimum distribution until April 1 of the year following the year you reach age 70½. However, as you're required to receive two payments the following year -- one in March and another in November delaying your payment could result in a higher tax liability for that year.

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Your minimum payment amount is calculated as follows: the balance of your 401(k) and/or 457 accounts on the preceding December 31 divided by your life expectancy, which is based on one of the following two standards:

Uniform Lifetime Table: We use this standard if you don't designate a beneficiary, if your spouse is your beneficiary and is less than 10 years younger than you, or if your sole beneficiary is not your spouse.

Joint Life and Last Survivor Expectancy Table: We use this standard if your spouse is your sole beneficiary and is more than 10 years younger than you. You must provide proof of your spouse's date of birth.

You can get these tables from IRS Publication 590 (revised January 2005), available on the IRS website. (Different rules apply after your death.)

We mail a 1099-R form to you by January 31 of the year following your payment. For more information, see Taxes.

If you don't take a required minimum distribution in the year it's due, you may be subject to additional taxation and/or penalty. For more information, please consult IRS Publication 575, Pension and Annuity Income; and IRS Form 5329, Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts.

Supplemental Payments

This option allows you to withdraw additional funds any time you're receiving installment payments. The supplemental payment will be processed in the same manner and by the same method as your installment payment.

However, a supplemental payment will reduce the amount of your future fixed-period payments or the number of remaining fixed-amount payments.

Required Minimum Distribution (RMD)

IRS regulations generally require you receive a required minimum distribution (RMD) in the year you reach age 70½ or the year you retire, whichever is later. We'll notify you if you're required to receive an RMD. You have the option to delay your first RMD until April 1 of the following year. If you delay, you may be required to receive two payments in the same year — one in March and another in November. Since RMDs are taxed as income, receiving two payments in the same year could result in a higher tax liability.

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We calculate your RMD payment as follows: the balance of your plan account on the preceding December 31 divided by your life expectancy. Life expectancy is based on one of the following:

Uniform Lifetime Table: We use this when you don't have a beneficiary on file, your spouse is your beneficiary and is less than 10 years younger than you, or your sole beneficiary is not your spouse.

Joint Life and Last Survivor Expectancy Table: We use this table when your spouse is your sole beneficiary and is more than 10 years younger than you. You must provide proof of your spouse's date of birth.

Go to the IRS website to get these tables (Publication 590). We send a 1099-R to you by January 31 of the year following your payment. For more information, see Taxes.

If you don't take an RMD when required, you may be subject to additional taxation and/or penalty. For more information, consult IRS Publication 575, Pension and Annuity Income and IRS Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, both available on the IRS website.