ITEMS 1 and 2: Name
and Address
The member must complete the
name and address fields so the Division can forward any
withdrawal benefits correctly; sometimes members who withdraw
their contributions have changed their names (marriage,
divorce, etc.) and may have moved to a new home. The
Division will mail all correspondence, including withdrawal
checks, to the address listed on the application, regardless
of the address that may be on file.
Withdrawal checks must be mailed.
They cannot be picked up at the Division of Pensions and
Benefits. If the member moves between the time the
application is filed and the check is mailed, he/she may
change his/her address by contacting the Division's Office
of Client Services at (609) 292-7524 and following up that
telephone call with written confirmation of the new address.
ITEM 3: Phone Number
Providing a daytime phone number
enables the Division to quickly contact the member if additional
information is required.
ITEM 4: Date of Birth
Members must provide their
date of birth in order for the Division to process the Application
for Withdrawal.
ITEM 5: Retirement
System
The member must indicate the
retirement system from which membership is being withdrawn.
If the member is not sure, the employer can provide this
information.
PERS: Public Employees'
Retirement System
TPAF: Teachers' Pension
and Annuity Fund
PFRS: Police and Firemen's
Retirement System
SPRS:
State Police Retirement System
ITEMS 6-8: Member
Number, Social Security Number, and Employer
Member should indicate membership
number for Item 6. The member's personnel, payroll office,
or annual Personal Benefits Statement can provide this information.
Item 7 is the member's Social Security number, and for Item
8 the member should indicate his/her former employer. These
items ensure accuracy in processing the claim for withdrawal.
ITEM 9: Reason for
Termination
The date and reason for termination
of employment must be indicated here. If the member was
dismissed and is in the process of appealing the decision,
the withdrawal cannot be processed until a decision has
been made or the appeal terminated.
ITEM 10: Workers' Compensation
If a member is receiving Workers’
Compensation benefits, the Division is required to send
the member an additional retirement benefit waiver form,
which the member must complete and return before the Division
can process the member's withdrawal.
ITEM 11: Waiver of Retirement
Benefits
If the member has established
at least 10 years of creditable service and has not attained
normal retirement age, the member can apply for a Deferred
Retirement. For more information about Deferred Retirement,
see the Retirement
section of this manual.
Normal retirement age for the
Public Employees' Retirement System (PERS) and the Teachers'
Pension and Annuity Fund (TPAF) is 60.
Normal retirement age for the
Police and Firemen's Retirement System (PFRS) or the State
Police Retirement System (SPRS) is 55.
Members are not eligible for
Deferred Retirement if they withdraw their contributions.
If the member chooses to withdraw
even when eligible for a retirement allowance, the waiver
must be completed on the Application
for Withdrawal. If the waiver is not completed
and the member is eligible for retirement, then a separate
waiver form will be sent to the member. The claim
for withdrawal will not be paid until a signed waiver is
obtained by the Division.
Member Signature
The member's signature indicates
he/she waives the retirement benefit for which he/she is
eligible.
ITEM 12: Taxation of Withdrawn
Contributions
The member should read the
instructions on the application and the information in Questions
#9 , #10, and #11 of the "Withdrawal Provisions"
carefully before completing this portion of the application. The
decision made in item #11 of the application, concerning
the withholding of taxes, is irrevocable once the application
has been processed.
The essential elements of
the tax consequences of withdrawal are reproduced here.
A withdrawal distribution is
most likely fully taxable since regular pension contributions
have been tax-deferred since January 1, 1987. However, if
a member purchased any service credit, a portion of the
withdrawal distribution would be nontaxable. This is because
contributions made toward the purchase of optional service
credit are not tax-deferred.
In accordance with federal
law, if the taxable portion of your withdrawal is $200 or
more, income tax must be withheld from your payment. This
does not apply, however, if the taxable amount of the payment
is rolled over into an individual retirement account (IRA)
or a qualified retirement plan offered by another employer.
The term IRA refers to traditional
individual retirement accounts and individual retirement
annuities; it does not include a Roth IRA, simple IRA, or
education IRA: payments cannot be rolled over to these types
of IRAs.
Since the taxable portion of
a withdrawal is eligible for rollover, it can be taken in
two ways. A member may have all or any part of the taxable
distribution either (1) paid in a direct rollover ($500
minimum) or (2) paid to the member. A rollover is a distribution
of the taxable benefits to an individual retirement
arrangement (IRA) or to another eligible employer plan.
This choice will affect the federal income tax that will
be owed on the withdrawal distribution.
To ascertain the taxable amount
of a member's account, please call the Automated Information
System (using a touch-tone telephone) at (609) 777-1777.
Additional information is available from a professional
tax advisor and IRS Publication 575, Pension and
Annuity Income, and IRS Publication 590, Individual
Retirement Arrangements. These publications are
available from your local IRS office or by calling 1-800-TAX-FORMS.
If the member chooses to
receive the taxable portion of the distribution directly:
There is a mandatory withholding
of 20% on the taxable portion of the distribution made directly
to a member. The money withheld will be forwarded
to the IRS as income tax withholding and is credited toward
the member's annual federal tax liability.
If the member chooses to
rollover the taxable amount to an IRA or qualified employer
plan:
In this case, the taxable
distribution will not be taxed in the current year and no
income tax will be withheld. The taxable distribution
will be made payable directly to the IRA or employer plan
and mailed directly to the member. If the member chooses
to have payment made directly to an IRA, the IRA sponsor
(usually a financial institution) should be contacted immediately
to find out how payment should be made in a direct rollover
at that institution.
If an individual is unsure
how to invest the withdrawal money, an IRA can be temporarily
established to receive payment. In choosing an IRA, the
member may wish to consider whether the IRA chosen will
allow movement of all or a part of the payment to another
IRA at a later date without penalties or limitation. See
IRS Publication 590, Individual Retirement Arrangements
for more information.
The taxable distribution will
be taxed when it is taken out of the IRA or employer plan.
If the member has an outstanding
loan balance at the time of withdrawal:
Any outstanding loan is part
of a member's pension distribution and may be part of the
eligible rollover amount. As such, 20 percent withholding
will be deducted from the loan portion of the eligible amount
if the member chooses a direct payment. If, rather, the
member chooses to do a direct rollover, there is the option
of paying off the loan prior to the settlement of the account.
If the member does not pay off the loan, the Division will
process a partial transfer with available funds in the account
after 20 percent withholding has been applied to the outstanding
loan. The member will then be taxed on the eligible amount
not directly transferred unless the balance is rolled over
to a traditional IRA or new employer plan within 60 days
of the distribution by the Division of Pensions and Benefits.
Member Signature
The application must be signed
by the member. Unsigned applications will not be processed.
The Division cannot accept photocopies or facsimiles of
completed applications.
The application must be signed
only after the member has terminated employment.
Pre-signed or postdated applications will be rejected and
the member will have to complete a new withdrawal application.
Part 2: Employer Certification
Part Two of this application
is to be filled out by the former employer after
the member has terminated employment. Forms completed
in advance of termination of employment will not be accepted.
Part Two must be completed in its entirety or the claim
cannot be processed.
If the employee is a participant
in Supplemental Annuity Collective Trust (SACT) or New Jersey
State Employees Deferred Compensation Plan (Deferred Comp),
and is choosing to withdraw all accumulated salary deductions
in the retirement system, a separate application to withdraw
from these funds must also be filed with the Division of
Pensions and Benefits.
Member Information
The employer first completes
the basic member information requested: name, membership
number, Social Security number.
Cause and Date of Termination
The
certification begins with a statement of the cause (resignation,
dismissal with no appeal, dismissal with appeal), date of
termination and date of last deduction. Even if the
employee terminated employment years ago, these items still
must be completed for the withdrawal application to be processed.
Workers' Compensation Claim
The question concerning periodic
benefits under a claim filed for Workers' Compensation must
be answered because it may have pension consequences that
affect withdrawal. Lump sum awards under Workers'
Compensation need not be listed because they have no effect
on an Application for Withdrawal.
The Certification of Salary
Deductions
This section need only be completed
if there are recent salary deductions that have not been
posted to the member's account. State biweekly employing
agencies who use Centralized Payroll need to attach a screen
print from Centralized Payroll History or complete a Supplemental
Biweekly Certification of Employing Agency.
Generally, it takes approximately
45 days from the end of a calendar quarter for all member
contributions to be posted to their pension accounts. Therefore,
if you are completing a certification for a withdrawal application
on behalf of a member who has been off payroll sufficiently
long for all deductions to be posted on account, this section
need not be completed.
Signature
by Certifying Officer
The Certifying Officer must
sign and date the certification, listing the name and phone
number of the employing agency.
Please be certain to submit
this form as quickly as possible. Any delay in submitting
this form will prevent the Division from paying the member's
claim for withdrawal in a timely manner.
