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In-Service Withdrawals

The plan's primary purpose is to provide benefits when you retire. However, under certain circumstances, you may be able to withdraw money from your account while you are still working.

When you take a withdrawal, you take money out of your account permanently. You may need to pay taxes on the amount you withdraw. You may also need to pay an additional 10% early withdrawal tax if the withdrawal is taken prior to age 59½.

If you choose to have your payment sent to you via check, a $2.00 fee is deducted from your account. There is no fee if you elect for your payment to be direct deposited.

You can request a withdrawal by logging into your account on the Savings Plus website or contact a Savings Plus Service Center representative.

Types of withdrawals:

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You may qualify for an in-service withdrawal from your 401(k) Plan account due to financial hardship for the following reasons:

  • Payment of tuition and related room and board expenses for postsecondary education for the following 12 months for you, your spouse, children, or a dependent;
  • Costs associated with the purchase of your principal residence (excluding mortgage payment);
  • Prevention of foreclosure on or eviction from your principal residence (you are limited to no more than two hardship withdrawals for evictions within a 12 month period);
  • Payment of expenses for medical or dental care described in Section 213(d) of the Internal Revenue Code incurred by you, your spouse, or a dependent;
  • Payment for burial or funeral expenses for your deceased parent, spouse, children, or a dependent; or
  • Expenses for the repair of damage to your principal residence that would qualify as a casualty deduction from your federal income taxes Section 165 of the Internal Revenue Code.

A hardship withdrawal from your 401(k) account will have income tax implications. You may wish to obtain the advice of a tax advisor before you request a hardship withdrawal.

To qualify for a 401(k) hardship withdrawal, you must first exhaust all other resources reasonably available.

The hardship withdrawal will be prorated among all of your accounts, including your Roth account if applicable. There are restrictions about early distribution of Roth assets, and they may be subject to an additional tax.

You are not eligible for a hardship withdrawal if your hardship can be completely or partially relieved through one of the following:

  1. Reimbursement or payment by insurance or other sources;
  2. The reasonable liquidation of assets, provided the liquidation would not itself cause an immediate heavy financial need;
  3. The suspension of elective deferrals under the 401(k) Plan and/or 457(b) Plan. Stopping your deferrals may help alleviate your financial need. If you would like to stop your deferrals, please call the Savings Plus Service Center; or
  4. Loans available from your Savings Plus account.

Complete the 401(k) Plan Hardship Withdrawal Form, attach the required documentation as outlined in the 401(k) Hardship Withdrawal Booklet, and mail to the address indicated at the end of the form. All documentation will be reviewed and does not guarantee approval of your request. In some cases, additional documentation may be requested.

If you have a Personal Choice Retirement Account (PCRA), it may be necessary to transfer your PCRA funds into your core funds to satisfy the amount of your hardship withdrawal request and maintain the required minimum in your core account.

If approved and you are currently contributing to the 401(k) or 457(b) Plan, you will not be able to contribute to your account for 6 months. Once the 6-month period has ended, you will need to restart your contributions. If you are currently contributing to any other plans maintained by the State, including 403(b), you are responsible for suspending those deferrals for 6 months.

Once you reach age 59½, you can take a withdrawal for any reason. No documentation is required.

Your contributions into the plan will not be suspended for this withdrawal.

If you have a self-directed brokerage account, the balance of your brokerage account is included in the total amount you may withdraw. However, you cannot take a withdrawal directly from a brokerage account. If the amount you want to withdraw includes money invested in your self-directed brokerage account, you will need to sell some or all of your brokerage investments and transfer the appropriate amount back to the core investment options in your Savings Plus account prior to requesting the withdrawal.

Once you reach age 59½ and the Roth contributions have been in the plan for at least five years, you can take a withdrawal for any reason. No documentation is required. Your contributions into the plan will not be suspended for this withdrawal.

If you have a self-directed brokerage account, the balance of your brokerage account is included in the total amount you may withdraw. However, you cannot take a withdrawal directly from a brokerage account. If the amount you want to withdraw includes money invested in your self-directed brokerage account, you will need to sell some or all of your brokerage investments and transfer the appropriate amount back to the core investment options in your Savings Plus account prior to requesting the withdrawal.

If you are on military leave for 180 days, you can take a withdrawal from your before-tax contribution account with no tax penalty. No documentation is required.

Once you take this early withdrawal, you are prohibited from contributing for six months to any 401(k) Plan or 457(b) Plan maintained by the State of California.

If you have a self-directed brokerage account, the balance of your brokerage account is included in the total amount you may withdraw. However, you cannot take a withdrawal directly from a brokerage account. If the amount you want to withdraw includes money invested in your self-directed brokerage account, you will need to sell some or all of your brokerage investments and transfer the appropriate amount back to the core investment options in your Savings Plus account prior to requesting the withdrawal.

If you are on military leave for 180 days, you can take a withdrawal from your account with no tax penalty. Once you reach age 59½ and the Roth contributions have been in the plan for at least five years, you can take a withdrawal for any reason. Please contact a Savings Plus Service Center representative to receive the necessary documents to request a withdrawal.

Once you take this early withdrawal, you are prohibited from contributing for six months to any 401(k) Plan or 457(b) Plan maintained by the State of California. This restriction does not apply to participants age 59½ or older.

If you have a self-directed brokerage account, the balance of your brokerage account is included in the total amount you may withdraw. However, you cannot take a withdrawal directly from a brokerage account. If the amount you want to withdraw includes money invested in your self-directed brokerage account, you will need to sell some or all of your brokerage investments and transfer the appropriate amount back to the core investment options in your Savings Plus account prior to requesting the withdrawal.

If you are on military leave for more than 30 days, you can take a withdrawal from your account. A 10% tax penalty will be applied.

Once you take this early withdrawal, you are prohibited from contributing for six months to any 401(k) Plan or 457(b) Plan maintained by the State of California.

If you have a self-directed brokerage account, the balance of your brokerage account is included in the total amount you may withdraw. However, you cannot take a withdrawal directly from a brokerage account. If the amount you want to withdraw includes money invested in your self-directed brokerage account, you will need to sell some or all of your brokerage investments and transfer the appropriate amount back to the core investment options in your Savings Plus account prior to requesting the withdrawal.

If you are on military leave for more than 30 days, you can take a withdrawal from your Roth contribution account. A 10% tax penalty may apply. Once you reach age 59½ and the Roth contributions have been in the plan for at least five years, you can take a withdrawal for any reason.

Once you take this early withdrawal, you are prohibited from contributing for six months to any 401(k) Plan or 457(b) Plan maintained by the State of California.

If you have a self-directed brokerage account, the balance of your brokerage account is included in the total amount you may withdraw. However, you cannot take a withdrawal directly from a brokerage account. If the amount you want to withdraw includes money invested in your self-directed brokerage account, you will need to sell some or all of your brokerage investments and transfer the appropriate amount back to the core investment options in your Savings Plus account prior to requesting the withdrawal.

If you have rolled money into the plan, you can take a withdrawal from your rollover contribution account. A 10% tax penalty may apply.  

Your contributions into the plan will not be suspended for this withdrawal.

If you have a self-directed brokerage account, the balance of your brokerage account is included in the total amount you may withdraw. However, you cannot take a withdrawal directly from a brokerage account. If the amount you want to withdraw includes money invested in your self-directed brokerage account, you will need to sell some or all of your brokerage investments and transfer the appropriate amount back to the core investment options in your Savings Plus account prior to requesting the withdrawal.

If you have rolled Roth money into the plan, you can take a withdrawal from your Roth rollover contribution account. No documentation is required. If you are age 59½ or older, and your Roth contributions are at least 5 years old, you can access your Roth contributions and earnings tax-free. If you are not 59½, a 10% tax penalty may apply.

Your contributions into the plan will not be suspended for this withdrawal.

If you have a self-directed brokerage account, the balance of your brokerage account is included in the total amount you may withdraw. However, you cannot take a withdrawal directly from a brokerage account. If the amount you want to withdraw includes money invested in your self-directed brokerage account, you will need to sell some or all of your brokerage investments and transfer the appropriate amount back to the core investment options in your Savings Plus account prior to requesting the withdrawal.

In certain situations, you can take an unforeseeable emergency withdrawal from your account. An unforeseeable emergency is defined as 1) a severe financial hardship to the participant resulting from a sudden and unexpected illness or accident of the participant or a dependent; 2) a loss of the Participant's property because of a casualty; or 3) other similar extraordinary and unforeseen circumstances arising as a result of events beyond your control.

An unforeseeable emergency is defined as a severe financial hardship to you resulting from:

  • Payments necessary to prevent foreclosure or eviction from your primary residence;
  • Payment of expenses for medical care described in Section 213(d) of the Internal Revenue Code incurred by you, your spouse, or your dependents;
  • Payment for burial or funeral expenses for your deceased parent, spouse, or dependents as defined in Section 152 of the Internal Revenue Code;
  • Expenses for the repair of unforeseen damage to your principal residence that would qualify as a casualty deduction from your federal income taxes under Section 165 of the Internal Revenue Code;
  • Involuntary loss of your or your spouse's income;

Complete the 457(b) Plan Unforeseeable Emergency Withdrawal Booklet, attach the required documentation, and submit as outlined. Approval for an unforeseeable emergency withdrawal is not automatic. You must provide supporting documentation to Savings Plus. If approved, you can receive up to the full amount of your 457(b) account balance.

There is no tax penalty for this early withdrawal unless your 457(b) account contains amounts received by a rollover deferral from a source other than another 457(b) plan. The amount that you receive as an early withdrawal that is attributable to such a rollover deferral could be subject to early withdrawal penalties. The entire withdrawal would then be taxed as ordinary income.

Once you make an unforeseeable emergency withdrawal, you are prohibited from contributing for six months to any 401(k), 457(b), or 403(b) plan maintained by the State of California.

If you are a current State of California employee, you may withdraw funds from your 457(b) account if your total balance does not exceed $5,000 and you meet all of the following requirements:

  • You have not contributed to your 457(b) account in the previous 24 months;
  • You have not received a prior distribution from your 457(b) account under this provision;
  • You do not have a freeze or hold on your account.
  • You do not have an active loan on your account.

If you have a self-directed brokerage account, the balance of your brokerage account is included in the total amount you may withdraw. However, you cannot take a withdrawal directly from a brokerage account. If the amount you want to withdraw includes money invested in your self-directed brokerage account, you will need to sell your brokerage investments and transfer the amount back to the core investment options in your Savings Plus account prior to requesting the withdrawal.

If you are on military leave for more than 30 days, you can take a withdrawal. No documentation is required. Your withdrawal will deplete funds equally from your pre-tax contribution account and rollover contribution account.

Once you take this early withdrawal, you are prohibited from contributing for six months to any 401(k) Plan or 457(b) Plan maintained by the State of California.

If you have a self-directed brokerage account, the balance of your brokerage account is included in the total amount you may withdraw. However, you cannot take a withdrawal directly from a brokerage account. If the amount you want to withdraw includes money invested in your self-directed brokerage account, you will need to sell some or all of your brokerage investments and transfer the appropriate amount back to the core investment options in your Savings Plus account prior to requesting the withdrawal.

If you are on military leave for more than 30 days, you can take a withdrawal. Once you reach age 59½ and the Roth contributions have been in the plan for at least five years, you can take a tax-free withdrawal for any reason. No documentation is required. This withdrawal will deplete funds equally from your Roth contribution account and Roth rollover contribution account.

Once you take this early withdrawal, you are prohibited from contributing for six months to any 401(k) Plan or 457(b) Plan maintained by the State of California.

If you have a self-directed brokerage account, the balance of your brokerage account is included in the total amount you may withdraw. However, you cannot take a withdrawal directly from a brokerage account. If the amount you want to withdraw includes money invested in your self-directed brokerage account, you will need to sell some or all of your brokerage investments and transfer the appropriate amount back to the core investment options in your Savings Plus account prior to requesting the withdrawal.

Neither Savings Plus nor its representatives offer tax or legal advice. For such questions, consult a tax or legal advisor.

NRW-4438CA-CA.2
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