Hardship Withdrawal Request Form

[Pages:8]The Early Learning Coalition 401(k) PSP

13501

HARDSHIP DISTRIBUTION REQUEST FORM

Table of Contents

Page

Employee & Employer Instructions ...................................................................................................... pg. 1

Section A-D: Employee Section ............................................................................................................ pg. 2-3

Section E: Employer Section ................................................................................................................. pg. 3

Special Tax Notice ................................................................................................................................. pg. 4-8

Employee Instructions Please complete Sections A-D of this form and know that by taking a hardship distribution you will receive a 1099R tax form. You may be required to pay state and federal taxes, along with early withdrawal penalties. Please consider speaking with a tax professional to discuss what to expect the next time you are required to file your income taxes.

One or more of the following reasons must be evident in order for you to qualify for this distribution. In addition, you must provide proof of the hardship to your Employer.

Expenses for (or necessary to obtain) personal medical care or care for a spouse, their children or other dependents.

Cost directly related to the purchase of a primary residence (excluding mortgage payments). Post-secondary education expenses for the next 12 months for tuition, educational fees and room

and board for themselves, a spouse, children or other dependents. Payments necessary to prevent eviction or foreclosure on the mortgage of a primary residence. Funeral and/or burial expenses for a deceased parent, a spouse, children or other dependents. Expenses for the repair to a primary residence that would qualify for a casualty deduction under

Code Section 165.

Important: Please provide accurate contact information, including email address in Section A so we can communicate the status of your distribution request. When you have completed your sections of this form, your Employer must sign and authorize this request.

Employer Instructions Please complete Section E of this form and have an Authorized Employer Representative sign the request for distribution. Then provide it to the Employee requesting this distribution so they can submit the form to us for processing.

As the Plan Sponsor, it's important that you know that according to IRS regulations: 1. If your plan allows loans, the Employee must first take advantage of the loan option. 2. The Employee must provide you with proof of a financial hardship (see list above). 3. You are required to suspend deferrals for 6 months and must reinstate the employee's contributions following the 6 month period according to the election on file. 4. You must maintain copies of the completed distribution form and proof of hardship.

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PAi (Plan Administrators, inc.) Hardship Distribution

13501

SECTION A-D: COMPLETED BY EMPLOYEE

Section A: Employee Information

Employee Name (First/Middle Initial/Last):

Social Security Number (SSN):

___________

Address: _________________________________________________________________________________________

(Distribution check and applicable IRS forms will be mailed to this address.)

City, State, Zip: Daytime Phone: ( ) __________________

____ Email Address: __________________________________

(We will communicate status of your distribution via email.)

Section B: Hardship Distribution Amount

I understand that a retirement account distribution will be considered due to financial hardship and only to the extent that the amount of the distribution is necessary to satisfy an immediate and heavy financial need. I represent that I have obtained all loans and distributions currently available to me under the Plan, as well as all other plans maintained by my Employer. I understand that this distribution may be taxable as ordinary income in the calendar year in which the check is issued. In addition, a 10% penalty tax may apply when my income taxes are filed, unless I am at least 59 ? years of age.

I hereby request a hardship distribution for the following amount. I have read the information regarding the tax implications of this distribution. Based on the rules set forth by the IRS, I understand that the only money available for a hardship distribution are my salary deferrals, excluding any earnings. If the amount requested exceeds the maximum amount available for a hardship distribution, PAi will process the hardship distribution using the maximum amount.

Distribution Amount $_____________________________

NOTE: IRS regulations require that your Employer suspend contributions to your retirement account for a period of 6 months. Your employer will resume withholding according to the election on file following the 6 month suspension period. If you no longer wish to contribute to your retirement account, you will need to complete a new election indicating 0%.

Section C: Mail Delivery*

Once the distribution has been processed, please select how you would like the checks delivered:

Send my distribution check(s) standard First Class Mail.

Send my distribution check(s) via Expedited Delivery (next business day election) and deduct $35.00 from my check(s). The fee for expedited delivery is a $35 charge and is per address.

*If no selection is made, the distribution check(s) will be mailed standard First Class Mail.

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PAi (Plan Administrators, inc.) Hardship Distribution

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Section D: Employee Authorization

I certify that the information given is accurate and complete. I understand this request is irrevocable and cannot be changed after distribution has been made. I understand any election made on this form shall expire after 180 days. I understand a hardship distribution will be withdrawn pro-rata from the funds in my Employee directed account. I understand that a processing fee for my distribution will be taken from my account and the check will be mailed to the address listed on this form.

Employee's Signature

Date

Print Name

SECTION E: COMPLETED BY EMPLOYER

Section E: Employer Authorization

It's your responsibility to review the information provided by the individual requesting this hardship distribution in its entirety, as you are authorizing this distribution by signing below.

Form Retention: The Plan Administrator (Employer) is responsible for maintaining a copy of the completed Hardship distribution form along with proof of hardship that meets the rules outlined by the IRS. As the Plan Administrator, you should request receipts (e.g. medical expenses, education expenses), invoices (e.g. tuition bills), contracts (e.g. purchase of a residence), or other relevent documentation (e.g. communication from a bank on a pending foreclosure) proving the need.

Authorized Employer Representative: An Authorized Employer Representative must sign and date this form. I direct PAi to act inaccordance with the instructions on this form. I certify that (1) the Special Tax Notice Regarding Payments from Qualified Plans has been provided to the Employee within the period required by law or regulation, (2) the distribution complies with applicable provisions of ERISA, other federal and state laws, and the terms of the plan, (3) the employee has provided me with proof of the hardship, (4) the information given above is accurate and complete.

Authorized Employer Representative's Signature

Date

Print Name

Send a copy of the completed form to PAi:

Regular Mail:

P.O. Box 60 De Pere, WI 54115-0060

Overnight Mail:

1300 Enterprise Dr De Pere, WI 54115

Fax:

(920) 337-9978 Attn: Plan Service

A distribution takes approximately 15 business days, plus mail delivery time.

Note: Every field is required and must be completed in order to process. Incorrect/Incomplete information could make a difference in the distribution amount and/or processing time.

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SPECIAL TAX NOTICE REGARDING PAYMENTS FROM QUALIFIED PLANS

YOUR ROLLOVER OPTIONS

You are receiving this notice because all or a portion of a payment you are receiving from the retirement plan (the "Plan") is eligible to be rolled over to an IRA, Roth IRA and/or another employer plan. This notice is intended to help you decide whether to do such a rollover. This notice describes the rollover rules that apply to payments from the Plan that are not from a designated Roth account ("Pre-tax"), payments from the Plan that are from a designated Roth account ( "Roth"), and also accounts holding after-tax money that did not result from Roth contributions to the plan ("After-tax") . Rules that apply to most payments from a plan are described in the "General Information About Rollovers" section. Special rules that only apply in certain circumstances are described in the "Special Rules and Options for Pre-tax Accounts" and "Special Rules and Options for Roth Accounts" sections of this notice.

GENERAL INFORMATION ABOUT ROLLOVERS

How much may I roll over? If you wish to do a rollover, you may roll over all or part of the amount eligible for rollover. Any payment from the Plan is eligible for rollover, except: Certain payments spread over a period of at least 10 years or

over your life or life expectancy (or the lives or joint life expectancy of you and your beneficiary) Required minimum distributions after age 70? (or after death) Hardship distributions ESOP dividends Corrective distributions of contributions that exceed tax law limitations Loans treated as deemed distributions (for example, loans in default due to missed payments before your employment ends) Cost of life insurance paid by the Plan Payments of certain automatic enrollment contributions requested to be withdrawn within 90 days of the first contribution Amounts treated as distributed because of a prohibited allocation of S corporation stock under an ESOP (also, there will generally be adverse tax consequences if you roll over a distribution of S corporation stock to an IRA). The Plan administrator or the payor can tell you what portion of a payment is eligible for rollover.

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If I don't do a rollover, will I have to pay the 10% additional income tax on early distributions?

If you are under age 59?, you will have to pay the 10% additional income tax on early distributions for any payment from the Plan (including amounts withheld for income tax) that you do not roll over, unless one of the exceptions listed below applies. This tax is in addition to the regular income tax on the payment not rolled over. With regard to payments from a designated Roth account, the additional tax would only apply to the earnings on distributions from the Roth that are not qualified if the exceptions below are not applicable.

The 10% additional income tax does not apply to the following payments from the Plan:

Payments made after you separate from service if you will be at least age 55 in the year of the separation

Payments that start after you separate from service if paid at least annually in equal or close to equal amounts over your life or life expectancy (or the lives or joint life expectancy of you and your beneficiary)

Payments made due to disability

Payments after your death

Payments of ESOP dividends

Corrective distributions of contributions that exceed tax law limitations

Cost of life insurance paid by the Plan

Payments made directly to the government to satisfy a federal tax levy

Payments made under a qualified domestic relations order (QDRO)

Payments up to the amount of your deductible medical expenses

Certain payments made while you are on active duty if you were a member of a reserve component called to duty after September 11, 2001 for more than 179 days

If I do a rollover to an IRA, will the 10% additional income tax apply to early distributions from the IRA?

If you receive a payment from an IRA (or Roth IRA) when you are under age 59?, you will have to pay the 10% additional income tax on early distributions from the IRA (or Roth IRA), unless an exception applies or the payment is a qualified Roth distribution. If the payment from a designated Roth account is not a qualified distribution, you will have to pay the 10% additional income tax on early distributions with respect to the earnings paid from the Roth IRA unless one of the exceptions below applies. In general, the exceptions to the 10% additional income tax for early distributions from an IRA (or Roth IRA) are the same as the exceptions listed above for early distributions from a plan. However, there are a few differences for payments from an IRA (or Roth IRA), including:

There is no exception for payments after separation from service that are made after age 55.

The exception for qualified domestic relations orders (QDROs) does not apply (although a special rule applies under which, as part of a divorce or separation agreement, a tax-free

Rev 11/2015

SPECIAL TAX NOTICE REGARDING PAYMENTS FROM QUALIFIED PLANS

transfer may be made directly to an IRA (or Roth IRA) of a spouse or former spouse).

The exception for payments made at least annually in equal or close to equal amounts over a specified period applies without regard to whether you have had a separation from service.

There are additional exceptions for (1) payments for qualified higher education expenses, (2) payments up to $10,000 used in a qualified first-time home purchase, and (3) payments for health insurance premiums after you have received unemployemtn compensation for 12 consecutive weeks (or would have been eligible to receive unemployment compensation but for self-employed status).

Will I owe State income taxes?

This notice does not describe any State or local income tax rules (including withholding rules).

SPECIAL RULES AND OPTIONS

If your payment includes after-tax contributions

After-tax contributions included in a payment are not taxed. If a payment is only part of your benefit, an allocable portion of your after-tax contributions is included in the payment, so you cannot take a payment of only after-tax contributions. However, if you have pre-1987 after-tax contributions maintained in a separate account, a special rule may apply to determine whether the aftertax contributions are included in a payment. In addition, special rules apply when you do a rollover, as described below.

You may roll over to an IRA a payment that includes after-tax contributions through either a direct rollover or a 60-day rollover. You must keep track of the aggregate amount of the after-tax contributions in all of your IRAs (in order to determine your taxable income for later payments from the IRAs). If you do a direct rollover of only a portion of the amount paid from the Plan and at the same time the rest is paid to you, the portion directly rolled over consists first of the amount that would be taxable if not rolled over. For example, assume you are receiving a distribution of $12,000, of which $2,000 is after-tax contributions. In this case, if you directly roll over $10,000 to an IRA that is not a Roth IRA, no amount is taxable because the $2,000 amount not directly rolled over is treated as being after-tax contributions. If you do a direct rollover of the entire amount paid from the Plan to two or more destinations at the same time, you can choose which destination receives the after-tax contributions.

If you do a 60-day rollover to an IRA of only a portion of a payment made to you, the after-tax contributions are treated as rolled over last. For example, assume you are receiving a distribution of $12,000, of which $2,000 is after-tax contributions, and no part of the distribution is directly rolled over. In this case, if you roll over $10,000 to an IRA that is not a Roth IRA in a 60-day rollover, no amount is taxable because the $2,000 amount not rolled over is treated as being after-tax contributions.

You may roll over to an employer plan all of a payment that includes after-tax contributions, but only through a direct rollover (and only if the receiving plan separately accounts for after-tax contributions and is not a governmental section 457(b) plan). You can do a 60-day rollover to an employer plan of part of a payment

that includes after-tax contributions, but only up to the amount of the payment that would be taxable if not rolled over.

If you miss the 60-day rollover deadline

Generally, the 60-day rollover deadline cannot be extended. However, the IRS has the limited authority to waive the deadline under certain extraordinary circumstances, such as when external events prevented you from completing the rollover by the 60-day rollover deadline. To apply for a waiver, you must file a private letter ruling request with the IRS. Private letter ruling requests require the payment of a nonrefundable user fee. For more information, see IRS Publication 590, Individual Retirement Arrangements (IRAs).

If you have an outstanding loan that is being offset

If you have an outstanding loan from the Plan, your Plan benefit may be offset by the amount of the loan, typically when your employment ends. The loan offset amount is treated as a distribution to you at the time of the offset and will be taxed (including the 10% additional income tax on early distributions, unless an exception applies) unless you do a 60-day rollover in the amount of the loan offset to an IRA or employer plan. To the extent a loan offset is attributable to your designated Roth account and the offset is not a qualified Roth distribution, the earnings on the loan offset will be taxed (including the 10% additional income tax on early distributions, unless an exception applies) unless you do a 60-day rollover in the amount of the earnings in the loan offset to a Roth IRA or designated Roth account in an employer plan.

If you were born on or before January 1, 1936

If you were born on or before January 1, 1936 and receive a lump sum distribution that you do not roll over, special rules for calculating the amount of the tax on the payment might apply to you. With regards to payments from a designated Roth account, special rules for calculating the tax on earnings from distributions that are not qualified Roth distributions. For more information, see IRS Publication 575, Pension and Annuity Income.

If you are a nonresident alien

If you are a nonresident alien and you do not do a direct rollover to a U.S. IRA or U.S. employer plan, instead of withholding 20%, the Plan is generally required to withhold 30% of the payment for federal income taxes. If the amount withheld exceeds the amount of tax you owe (as may happen if you do a 60-day rollover), you may request an income tax refund by filing Form 1040NR and attaching your Form 1042-S. See Form W-8BEN for claiming that you are entitled to a reduced rate of withholding under an income tax treaty. For more information, see also IRS Publication 519, U.S. Tax Guide for Aliens, and IRS Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities.

Other special rules

If a payment is one in a series of payments for less than 10 years, your choice whether to make a direct rollover will apply to all later payments in the series (unless you make a different choice for later payments).

If your payments for the year are less than $200, the Plan is not required to allow you to do a direct rollover and is not required to withhold for federal income taxes. However, you may do a 60-day rollover. In determining whether the payment is less than $200, the Pre-tax account and the designated Roth account will be treated as separate accounts. If either the payment from the Pre-

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