Although taking all of your money in one chunk might look attractive, the tax bite will greatly reduce your savings. NADART must withhold 20% of the taxable portion of your account to pay current federal income tax. If you are in a higher tax bracket than 20%, you will have to pay the remaining federal income tax when you file your tax return. You might also owe state and local taxes. If you are under age 59 ½, you may owe Uncle Sam a 10% early withdrawal penalty.

Consider your future financial security. You have designated this money for your retirement. If your retirement account balance becomes cash-in-hand, it may be difficult to resist the temptation to spend it on your current financial needs.

If you are a married participant whose vested account balance exceeds $5000, you must receive plan benefits in the form of a Qualified Joint and Survivor Annuity unless your spouse signs a waiver of his/her right to this form of payment. A Qualified Joint and Survivor Annuity provides both a guaranteed payment amount distributed at regular intervals (monthly, quarterly, etc.) throughout your life and a similar benefit continuing for the life of your spouse. If you select another form of benefit, your spouse must sign the waiver section of the NADART Benefit Request Form (N-10).

Special Tax Treatment

If you were born before January 1, 1936 and your payment qualifies as a true “lump sum distribution,” it may be eligible for special tax treatment. Technically defined, a lump sum distribution is a payment, within one year, of your entire balance under the Plan (and certain other similar plans of the employer) that is payable to you after you have reached age 59 ½ or because you have separated from service with your employer (or, in the case of a self-employed individual, after you have reached age 59 ½ or have become disabled). For a payment to be treated as a lump sum distribution, you must have been a participant in the plan for at least five years before the year in which you received the distribution. Consult your tax advisor to see if you are eligible for special tax treatment.