SOLID HELPS YOU DISCOVER THE POSSIBILITIES Retirement Plan Rollover Guide
Rollover Guide Table of Contents Retirement Planning Checklist.... 1 Comparing Your Options.... 2 Distribution Details....3 5 Rollover IRA....6 7 Qualified Annuity... 8 10 Installment Payments......... 11 Lump-Sum Cash Payment... 12 Combination Distribution... 12
Let the Rollover Solution Center help you discover the possibilities. Need help today? Call the Rollover Solution Center today 800.453.4015 Making the right choices for your retirement savings is important not just for tax purposes but to help secure the financial future you want. We are here to help you make solid decisions. We are one of the region s oldest and largest trust and investment services providers. With more than a century of experience in investment management, we have earned a national reputation. Let us help you plan for a solid future. We re on the job full time an important consideration if you simply don t want to assume the responsibility for investing your assets at this stage in your life. We ll be glad to establish a rollover IRA for you, or assist you with other strategies for your retirement plan funds. If you have any questions or need more information, please contact one of our Retirement Services specialists at 800.453.4015 on any business day from 8:30 a.m. to 5:00 p.m. Eastern Time. We re ready to help. Retirement planning checklist Call the Rollover Solution Center at 800.453.4015. Read the special tax notice. Complete all pages of the distribution forms. Mail all pages of the distribution forms in the pre-addressed envelope or fax to 407.237.6750. If you ve misplaced the envelope, mail them to SunTrust Bank, Rollover Solution Center, 200 S. Orange Ave. Mail Code FL ORL-2072, Orlando, FL 32801. Need more planning tools? Visit suntrust.com/retirementsolutions. 1
Compare your options. Option Advantages Disadvantages Typical Client Roll your assets into a SunTrust IRA Rolling assets into an IRA typically provides different investment options than employers plans do Pay no income or penalty taxes. And your assets grow tax deferred (401(k) pre-tax to traditional IRA) or tax free (Roth 401(k) to Roth IRA rollover) You cannot take a loan from an IRA Taking on responsibilities formerly handled by your employer Does not need savings for current expenses Wants different investment options than offered in the plan Wants to consolidate retirement savings at a single company Transfer your assets to an annuity Steady source of retirement income Fees are higher for annuities than for IRAs Wants to avoid outliving retirement savings Pay no income or penalty taxes, and your assets grow tax deferred (401(k) pre-tax to traditional IRA rollover) or tax free (Roth 401(k) to Roth IRA rollover) Once annuitized, payments are subject to income tax and income may not keep pace with inflation Request installment payments Receive monthly, quarterly, semiannual, or annual payments over a period of years Your heirs will receive the balance of the plan if you die prematurely Can outlive the income your balance could provide Payments are subject to income tax withholding and must be included as income in the year they are received Wants immediate income Withdraw a lump sum cash payment Cash is available for current expenses Your retirement saving will no longer benefit from tax deferred growth or tax free (Roth) growth Your withdrawal may be subject to 20% withholding for federal income tax and possibly a 10% federal penalty tax Needs savings for immediate expenses, or can use forward averaging to spread tax liability over several years Leave your assets in former employer s plan You don t have to do anything Limited investment options Happy with former employer s plan provisions Roll to new employer s plan Consolidation of plan assets Limited to new employer s plan investment options and plan provisions Planning to stay at new job long term 2
You Worked Hard to Save for Retirement Need help today? Call the Rollover Solution Center today 800.453.4015 Your Next Step: Planning for Retirement Plan Rollovers and Distributions. Important Information Regarding Your Distribution Choices We make it easy to keep your money working for you. When you become eligible to take a distribution, you ll have some important decisions to make about the retirement assets you have accumulated in your employer-sponsored retirement plan. We can help you discover the possibilities. You can count on the Rollover Solution Center to help. When you call us at 800.453.4015, you will talk to a Retirement Specialist who can make these difficult decisions easier. Since SunTrust Employee Benefit Solutions handles your plan, we are familiar with the distribution options that are available to you. We will walk you through the pros and cons of each one, and help you understand your options. Making changes to your retirement plan can be stressful. With the Rollover Solution Center at your fingertips, it s easier to keep your retirement planning on course. When do you have to make a decision? You have at least 30 days from the date listed in the distribution package mailed to you to decide whether to take your money out of the retirement plan and, if so, what form of payment you want to receive. If you return your form earlier, then you may be waiving your right to wait 30 days if your plan allows that. If you wait more than 180 days to return your forms, you must request new paperwork since the original forms will be considered outdated. 3
Your Money May Not Have to Leave When You Do If you like your plan s investment choices and don t need retirement income now, you may be able to leave your money right where it is. Retirement plan distributions can usually be postponed until you reach your plan s Normal Retirement Age or age 62 (whichever is later). Sometimes you can leave your money in the plan even longer. If you choose not to take your money out of the plan: You don t need to do anything. If you change your mind at a later date, simply contact a Retirement Specialist at 800.453.4015. But small account balances may have to be withdrawn. If your vested benefit is less than a certain amount (typically $5,001), your employer s plan may not allow you to leave your money in the plan. Instead, it may be sent to you in a single payment, either in cash or as a direct rollover to an individual retirement account (IRA) or other qualified plan. This payment, if required under your plan, may be made within 90 days of the date you receive your distribution package. Since the method of payment can have major tax implications (a lump sum is taxable, while a direct rollover is tax deferred), be sure to return the request form within 30 days of receiving this brochure to be sure your preference is honored. If your vested benefit includes amounts rolled over from another retirement plan, these rollover contributions may or may not be counted when determining if your plan sponsor decides to automatically distribute your account. To review your plan s rules on small account balances, please see your Summary Plan Description. Also, if you are notified that your employer is terminating your plan, leaving it in the plan will no longer be an option. 4
Larger account balances have more distribution options. If your vested benefit is larger than the specified minimum, your plan may offer you any or all of these distribution options: Direct rollover into an IRA or other qualified plan Installment payments A lump-sum cash payment Annuity A combination of the options above For more information, see pages 6-12. Moving to a new job? You may be able to roll over your plan distribution tax free into your new employer s qualified retirement plan. Call us for more information. Find out the facts. Before making a decision, be sure to review the Special Tax Notice Regarding Payments From Qualified Plans. This notice explains the tax consequences of different types of distributions. For example, you can defer paying tax on a plan distribution by rolling it over into an IRA or another eligible rollover plan. Although we are glad to discuss general differences with you, SunTrust is not a tax advisor. Therefore, we suggest consulting a tax professional while making your decision. If your situation is complex, you may also want to discuss your choices with a financial planner or other trusted advisor. Call the Rollover Solution Center at 800.453.4015 for help scheduling an appointment with a registered representative in your area. 5
Direct Rollover Into a Traditional IRA: Continued Tax Deferral, Plus Financial Freedom Rollover Solution Center 800.453.4015 One of your most flexible choices is to roll over your retirement assets into a traditional IRA. You will benefit in four ways: 1. You will have more control over how your money is invested and managed. You ll have almost unlimited investment choices with as much portfolio planning and help as you need. 2. You will continue to postpone income tax, and avoid a potential penalty tax on an early distribution. A direct rollover to a traditional IRA lets you avoid 20% mandatory tax withholding on your distribution (and, if you are younger than 59½, an additional 10% penalty tax). 3. Your money can potentially grow faster than in a similar, taxable investment, thanks to continued tax deferral and the benefits of compounding. 4. You can choose from a wide variety of flexible retirement income options. If you are over age 59½, you can begin withdrawals as needed. You can also delay withdrawals (and tax bills) until after age 70½. You can arrange regularly scheduled payments, or purchase an annuity to provide income for life. If you need or desire income prior to your normal retirement age (age 59½ for IRAs), ask us about the provisions of Internal Revenue Code section 72(t), which allows you to take regular income from your IRA before age 59½ without a penalty. Roth considerations Beginning in 2006, a 401(k) or 403(b) may permit Roth contributions. Unlike pretax contributions, Roth contributions are included in gross income initially but the taxable contributions and earnings are tax free later as long as the participant is making a qualified distribution. In 2008, participants are able to directly rollover from qualified plans (401(k), 403(b) and 457 plans) to Roth IRAs. If a participant decides to rollover pre-tax money into a Roth IRA directly from their employer plan, it s important to remember that this will be a taxable event and could impact their decision as to whether or not they can afford to roll to the Roth IRA. Certain income limitations pertain to ROTH conversions so it s important to seek professional tax advice before rushing into any decisions. Characteristics of both Traditional and Roth IRAs One of the few disadvantages of an IRA is that, unlike your balance in a retirement plan, you cannot take out a loan against your IRA. Also, when moving your plan assets to an IRA, you are assuming some of the responsibilities previously handled by your employer. Rollover IRAs are easy to set up and simple to maintain. The special advantages afforded by IRAs flexibility, simplicity, and a wide selection of investment options make this an attractive choice. Best of all, our Rollover Solution Center makes it easy. Regardless of whether you choose SunTrust or another provider for your rollover IRA, we will help you with all aspects of your retirement plan distribution. To choose this option, complete and return the distribution/direct rollover request form. If you need assistance or want specific information about your distribution, just call a Retirement Specialist at 800.453.4015. 6
Consider staying with SunTrust. We are one of the largest banks in the U.S., with more than 100 years of investment management experience. Because we already handle your company s retirement plan, the Rollover Solution Center is very familiar with the particular distribution options of your plan. If you decide to keep your money with us, our Retirement Specialists can help you understand the many IRA choices. First, we will assist you with the rollover process. We will help you decide which area of SunTrust can best serve your needs. For instance, SunTrust Bank may be involved if you are seeking FDIC insured bank IRAs. On the other hand, SunTrust Investment Services, Inc. will assist with your rollover if you are interested in stocks, bonds, or mutual finds in your IRA. A Wealth Strategist from our Private Wealth Team may be introduced to you if you have sophisticated estate planning** needs. The Rollover Solution Center can help arrange in person consultations with the appropriate areas or coordinate the account opening process by phone with other areas of SunTrust once we fully understand your objectives. Through SunTrust Investment Services, Inc., you can select from a wide array of products with help from investment experts. In addition to nationally recognized mutual funds*, SunTrust Investment Services offers many other investment choices including common or preferred stock, corporate bonds, U.S. government securities, and professionally managed portfolios. If you want to meet a full-service Investment Consultant, the Rollover Solution Center will coordinate this and introduce you to the appropriate person. These Investment Consultants or Private Financial Advisors will take the time to understand your investment objectives, your tolerance for investment risk, and the time frame you have available for your investments. They will develop an appropriate individual investment portfolio for you. At regular intervals, your portfolio will be reviewed and adapted accordingly in order to monitor progress towards your goals. You ll enjoy the confidence of knowing your retirement assets will continue to be handled by experienced SunTrust investment professionals regardless of the area or type of IRA you select. Once your IRA is funded, we provide periodic statements concerning the account and file any necessary regulatory reports. Of course, you can get information about your investment or any other aspect of your IRA at any time by calling your SunTrust advisor shown on your statement. If you prefer to manage your own account, the Rollover Solution Center will coordinate with the SunTrust Investment Services Retirement Solution Center and they will help you open your IRA by phone. If you like your plan s investment choices and don t need retirement income now, you may be able to leave your money right where it is. Call the Rollover Solution Center today at 800.453.4015 to speak to a Retirement Specialist for help sorting through your options. * Mutual fund investing involves risks, including fluctuating returns and potential loss of principal. ** SunTrust Bank and its affiliates and the directors, officers, employees and agents of SunTrust Bank and its affiliates (collectively, SunTrust ) cannot provide legal services or give legal advice. SunTrust s services or advice relating to estate planning are limited to (i) financial planning, multi-generational wealth planning, investment strategy, (ii) management of trust assets, investment management and trust administration, and (iii) working with the client s legal and tax advisors in the implementation of an estate plan. 7
Annuities: Monthly Payments for a Lifetime Rollover Solution Center 800.453.4015 If you re looking for a steady source of retirement income, consider taking your plan distributions in the form of an immediate annuity. If your plan offers annuities, your vested benefit can be used to purchase one. An immediate annuity is an insurance contract designed to provide payments at specified intervals, usually after retirement. Annuities purchased with your vested benefit are subject to income tax as you receive payments. There may be a tax penalty for payments before a certain specified age. Learn about the qualified annuity. Some plans provide that, unless you select a different form of payment, your vested benefit will automatically be paid in the form of a qualified annuity. This does not mean that a qualified annuity is the form of payment best suited to your circumstances. It does mean that if you select any payment option other than a qualified annuity, you must first obtain your spouse s consent (if you are married) and specify a different method of payment by completing and signing the enclosed distribution/ direct rollover request or another approved distribution form. If you are married on your distribution date, your qualified annuity will be what s known as a joint and survivor annuity. More specifically, this means that: You receive fixed monthly payments for life. If your spouse survives you, he or she will continue to receive a fixed monthly payment for life equal to a specific percentage (usually 50%) of the amount that was paid when you were both living. If you are unmarried on your distribution date, your qualified annuity will be a life annuity that provides fixed monthly payments during your lifetime (usually with no payments after your death). Variable annuities are suitable for long term investments, particularly retirement savings. There are fees and expenses associated with variable annuities. Variable annuities do not provide any additional tax-deferred treatment of earnings beyond the treatment provided by a retirement account. Withdrawals of earnings from the tax deferred account will be subject to ordinary income tax. 8
Other types of annuity payments Your plan may allow you to choose from several types of annuity payments. If this is the case, then your options could include the following: Single life annuity You receive payments for life, with no payments after your death. Joint and survivor annuity You receive payments for life, with a percentage (such as 50%, 66 2/3%, 75%, or 100%) of the amount payable during the lives of you and your designated beneficiary, payable to your beneficiary upon your death. Term-certain annuity You receive payments for a specified number of years, with a guarantee that the balance of those payments will continue for your beneficiaries when you die.* Other types of annuities Please refer to your Summary Plan Description to determine what types of annuity payments may be available to you. If you do choose an annuity, your vested benefit will be paid in the form of a qualified annuity unless you obtain your spouse s consent (if you are married) and specify a different method of payment by completing and signing the enclosed distribution/direct rollover request or another approved distribution form. *All guarantees based upon the claims-paying ability of the issuing company. How annuities work With any type of qualified annuity, your vested account balance is paid to an insurance company as chosen by your plan administrator. The insurance company will issue an annuity contract, showing your right to receive monthly payments. The actual amount of the monthly payment will depend on several factors, including the amount available to purchase the annuity, your age (and the age of your spouse, if you are married), and the annuity purchase rates used by the insurance company. Because the annuity is an insurance product, if you (and your spouse, if applicable) die prematurely, the insurance company may end up paying out less than your plan paid to purchase the annuity. On the other hand, if you (and/or your spouse) outlive your life expectancy, you may receive much more in monthly payments than the original cost of the annuity. 9
How much could you receive? For a rough idea of the amount of your monthly annuity payment, divide your vested account balance by the annuity factor in the table below that corresponds most closely to your age. Annuity factor table* Joint and Survivor Single Life Age of Married Age of Spouse Annuity Factor Age of Unmarried Annuity Factor Participant Participant 50 45 179.24 50 172.09 50 50 177.67 52 168.33 50 55 176.22 54 164.23 55 50 170.93 55 162.04 55 55 168.86 57 157.43 55 60 166.99 59 152.48 60 55 160.57 60 149.88 60 60 157.91 61 147.20 60 65 155.57 62 144.45 65 60 148.09 63 141.64 65 65 144.79 64 138.77 65 70 141.96 65 135.84 70 65 133.57 66 132.84 70 70 129.62 68 126.69 70 75 126.31 70 120.26 * These annuity factors are based upon the Society of Actuaries most recent mortality study, named the RP-2000 Mortality Table by the Society of Actuaries (assuming a female participant, and projecting life expectancies to 2015 as described in that table) and a 6% interest rate. This table is for illustrative purposes only; not indicative of the performance of any particular investment. Since females have a longer life expectancy, for purchased annuities the initial amount for a female participant is slightly lower than for a male participant. The joint annuity factors were calculated using a benefit that pays 100% during the lifetime of the female participant, but in the event of the participant s death, reduces to 50% payable for the remaining lifetime of the male spouse. Selecting higher benefit amounts for joint annuitants (66 2/3%, 75% or 100%) will result in lower initial annuity payments. The insurance company from which your annuity contract is purchased may use different factors, which would result in different monthly payment amounts. For example: If you are a female age 65, your spouse is a male age 60, and your vested account balance is $100,000, your monthly payment during your joint lives would be $675.26 ($100,000 148.09). The monthly payment to your surviving spouse (if applicable) would be $337.63 half the amount payable during your joint lives for the rest of his life. If you are female age 65 and unmarried with a vested account balance of $100,000, your monthly payment would be $736.16 ($100,000 135.84) for the rest of your life. To choose this option: To request that your vested benefit be paid in the form of an annuity [if offered by your plan], call us for the appropriate election form. If your plan doesn t offer annuities, you may still take a lump sum distribution electing to rollover to an annuity provider that you select. Call 800.453.4015 to be introduced to an insurance licensed representative from SunTrust Investment Services, Inc. 10
Installment Payments: Regular Payments for a Specified Time Period Rollover Solution Center 800.453.4015 You may want to consider this option if you d like to receive regular income, but want your children or other heirs to receive the balance of your plan assets if you die prematurely. If your plan permits installment payments, you will receive monthly, quarterly, semiannual, or annual payments over a period of years. You can choose the actual frequency of payments and length of time from the options your plan provides. However, you may not specify a period of time longer than your estimated life expectancy, or the estimated joint life expectancy of you and a designated beneficiary. How it works Installments are paid out of your accumulated plan balance, which will continue to be subject to investment gains and losses until the entire account is distributed. These gains or losses may affect the number or amount of your installments. It s possible that you will outlive the income your account balance can provide. On the other hand, if you die before your entire account balance is distributed, your designated beneficiary will receive the remainder of your payments. Payments are subject to income tax withholding, and must be included as income in the year they are received. How much could you receive? You can estimate your installment payment amount by dividing your vested benefit by the number of payments you wish to receive. To choose this option: To request payment in regular installments, or obtain more specific information about what your approximate monthly installment payment would be, call us today. 11
Lump-Sum Cash Payment: Cash in Your Hand and Uncle Sam s. If you have bills to pay or an important purchase in mind, you may be thinking of withdrawing some or all of your vested balance as cash. Be sure to take into account the impact that taxes will have on the amount you actually receive: Your cash distribution will be subject to mandatory income tax withholding at a 20% rate. You may also have to pay a 10% early payment penalty tax if you re younger than 59½. (The 10% penalty does not apply to payments directly from an employer s plan if paid after you separate from service with your employer during or after the year you reach age 55.) You must report the entire distribution as taxable income in the year you receive it. Thus, after taxes you may end up with only 50% to 75% of your original assets, depending on your tax rate. Furthermore, cashing out will cost you the opportunity to earn compound interest on your funds in the future. At a hypothetical 6% annual rate of return, for example, $50,000 would grow to $66,912 in just five years. (The 6% rate of return is for illustrative purposes only, and is not indicative of the performance of any particular investment.) To choose this option: If your plan allows you to elect a lump sum cash payment, please complete the enclosed distribution/direct rollover request form. For assistance or more specific information, call us at 800.453.4015. Combination Distribution: Tailor an Income Plan to Meet Your Needs 12 Your plan may also allow you to receive your distribution in a combination of forms of payment. For example: Regular payments for a specified period, followed by a lump sum distribution of the remainder Partial rollover to a rollover IRA, with installment payments of the remaining account balance To choose this option: Please call us for specific information about combination options that are available with your plan. Your retirement plan is often one of your largest assets. You ve worked hard to plan for your future. We can help you stay on solid ground. Call our Retirement Specialists at 800.453.4015 and let us help you make well informed decisions. Our tailored solutions will help you discover the possibilities of retirement. Call us today.
suntrust.com/retirementsolutions 800.453.4015 Securities and Insurance Products and Services: Are Not Bank Guaranteed Are Not FDIC Or Any Other Government Agency Insured May Lose Value SunTrust Client Commitment: SunTrust will never send unsolicited emails asking clients to provide, update, or verify personal or account information, such as passwords, Social Security numbers, PINs, credit or Check Card numbers, or other confidential information. SunTrust Private Wealth Management is a marketing name used by SunTrust Banks, Inc., and the following affiliates: Banking and trust products and services are provided by SunTrust Bank. Securities, insurance (including annuities and certain life insurance products) and other investment products and services are offered by SunTrust Investment Services, Inc., a SEC registered investment adviser and broker/dealer and a member of the FINRA and SIPC. Other insurance products and services are offered by SunTrust Insurance Services, Inc., a licensed insurance agency. SunTrust Bank and its affiliates and the directors, officers, employees and agents of SunTrust Bank and its affiliates (collectively, SunTrust ) are not permitted to give legal or tax advice. While SunTrust can assist clients in the areas of estate and financial planning, only an attorney can draft legal documents, provide legal services and give legal advice. Clients of SunTrust should consult with their legal and tax advisors prior to entering into any financial transaction or estate plan. Because it cannot provide legal services or give legal advice, SunTrust s services or advice relating to estate planning are limited to (i) financial planning, multi-generational wealth planning, investment strategy, (ii) management of trust assets, investment management and trust administration, and (iii) working with the client s legal and tax advisors in the implementation of an estate plan. 2009 SunTrust Banks, Inc. SunTrust is a federally registered service mark of SunTrust Banks, Inc. Live solid. Bank solid. is a service mark of SunTrust Banks, Inc. mqc 106627 09 315966 08/09 14