Plan Information - Payment Methods
When you make the decision to retire, you will be asked to choose the way you want your pension to be paid. The forms of payment available to you are described in this section.
Small Benefit Cashout
If the actuarial present value of your monthly pension is $5,000 or less, the present value of your pension will be paid to you in a one-time lump sum. You do not have the ability to elect a separate payment form. This lump sum payment represents the full value of your pension benefit and no further benefits from the Plan are due to you or nay other party.
Guaranteed 36-Month Pension
If you are single, or if you are married and you and your spouse reject the spousal pension, you will receive monthly pension payments guaranteed for 36 months. Of course, benefits are paid to you for your lifetime, but if you die before 36 monthly pension benefits have been paid, monthly benefit payments will continue to any beneficiary you name for the remainder of the 36 months.
Rehabilitation Plan Provisions: If you retire under an Alternative Schedule, you are not entitled to the Guaranteed 36-Month Pension. If you retire under the Default Schedule, you are eligible for the Guaranteed 36-Month Pension only as to amounts accrued before January 1, 2011.
If you are married when you retire, you will automatically receive a spousal pension unless you elect to waive that form of payment and your spouse consents in writing to such waiver. The spousal pension may be waived any time during the 180-day period before your pension effective date and up to 180 days after you have been advised by the Trustees of the effects of this type of pension. This form of payment provides a fixed monthly payment for your lifetime, and, after your death, continues to provide a lifetime pension to your surviving spouse equal to 50%, 75% or 100% of the amount you were receiving, (depending on the type of spousal pension you choose). The amount you will receive is adjusted to take into account the type of spousal pension you choose and the expected lifespan of you and your spouse. Should your spouse die before you, monthly benefits to you will revert to the higher unadjusted amount, payable for your lifetime. Such higher amount will be subject to IRC Section 415 benefit limitations as described below. Rehabilitation Plan Provisions: If you retire under an Alternative Schedule, you are not entitled to the 100% Spousal Pension. If you retire under the Default Schedule, you are eligible for the 100% Spousal Pension only as to amounts accrued before January 1, 2011.
Some important facts concerning the spousal pension.
- The spousal pension will not be paid to the surviving spouse if the pensioner and spouse have not been married to each other for at least one year at the time of the pensioner’s death.
- The spousal pension, once payable, cannot be revoked or the pensioner’s benefits increased because of divorce, except as provided under a qualified domestic relations order.
- The right of a prior spouse to a share of a participant’s pension, as set forth under a qualified domestic relations order, shall take precedence over any claims of the participant’s souse at the time of retirement or death.
Optional Forms of Payment
Five or Ten-Year Guarantee Options
These options are similar to the 36-month pension, except that a lower amount is payable in exchange for the guarantee that if you die before 60 or 120 monthly payments have been made, as applicable, the balance of the payments will be made to your beneficiary.
These options are not available to a participant who will be receiving a spousal pension.
The Five-Year Guarantee Option is not available for benefits accrued on and after January 1, 1997.
Rehabilitation Plan Provisions: If you retire under an Alternative Schedule, you are not entitled to the Five or Ten-Year Guarantee Options. If you retire under the Default Schedule, you are eligible for the Ten-Year Guarantee Option only as to amounts accrued before January 1, 2011 and the Five-Year Guarantee Option only as to amounts accrued before January 1, 1997.
Income Tax Withholding
Federal and applicable State Income Taxes will be automatically withheld from any benefits paid by the Plan which exceed the limits established by law unless you elect not to have income taxes withheld. You will be given complete information and the opportunity to elect or reject withholding when you apply for benefits, and annually thereafter.
Federal law requires that if you or your spouse is receiving certain types of benefits from the Plan, 20% must be withheld for income tax purposes. These types of benefits are certain lump sum payments, installment payments over a period of less than 10 years, and certain death benefit payouts. However, these types of benefits are also eligible for a “rollover” into an IRA or other tax-exempt retirement plan. If you roll over your benefits, withholding is not mandatory. You will be given complete information when you apply for benefits and the opportunity to elect or reject rollover treatment if your benefit is subject to the 20% mandatory withholding.
Prior to making an election, you may wish to consult a professional tax adviser.