Filing
For Distribution
Termination of Employment
If a member terminates employment
and withdraws all contributions from the basic retirement system,
withdrawal must also must be made from the Trust account as a
lump-sum settlement. Any investment gains on a SACT Regular
account are eligible for tax-free rollover to an IRA.
To withdraw from the Trust, the
member must file a Trust Application
for Withdrawal with the Division of Pensions and Benefits,
SACT Section.
The withdrawal value of any account
is determined as of the close of the month in which the employee
ceases to be a member of the basic retirement system; the month
a withdrawal check from the basic system is dated.
FILING A WITHDRAWAL APPLICATION
WITH THE BASIC RETIREMENT SYSTEM WILL NOT ALSO WITHDRAW A SACT
TRUST ACCOUNT. THERE IS A DIFFERENT AND SEPARATE FORM FOR SACT.
Death
Benefits
The member should always inform the
beneficiary or family to notify the Division of Pensions and Benefits,
SACT Section immediately in the event of their death.
Any time there is a change in family
status (marriage, divorce, death, birth, etc.) a member should
complete a new "Designation
of Beneficiary" form to reflect those changes for any
death benefits that may be payable. Once received at the
Division of Pensions and Benefits, properly completed beneficiary
designations supersede all prior designations in the member's
file.
If a member dies before retirement,
the named beneficiary(ies) will receive a lump-sum payment equal
to the value of the account at the time of death or, if the beneficiary
is a person (as opposed to an institution or charity), he or she
may elect to receive a variable annuity under one of the distribution
options of the plan.
If a member dies before retirement,
the named beneficiary(ies) will receive a lump-sum payment equal
to the value of the account at the time of death or, if the beneficiary
is a person (as opposed to an institution or charity), he or she
may elect to receive a variable annuity under one of the distribution
options of the plan.
If the named beneficiary does not
apply for benefits within 90 days of notifying the Division of
Pensions and Benefits of death, the account is placed in
suspense. For questions concerning an account in suspense, call
the SACT office at (609) 633-2031.
Retirement
Overview
A member must take distribution
of the SACT account at the time of his/her retirement from the basic
retirement system.
It is the member's responsibility to
notify the Division of Pensions and Benefits, SACT Section, of
his/her retirement at least 30 days in advance of the effective
date of retirement, by filing the Application for Settlement at Retirement form. Members choosing the Lump Sum Settlement option must also fill in and complete the SACT Distribution Form. (For an explanation of each of the available options at retirement, see Distribution Options below.)
It is very important that the member
notify the Trust without delay because the account ceases to participate
in the plan’s earnings and losses and does not earn interest
after the last day of the month in which the member retires.
Should a member fail to file the
appropriate distribution forms within the prescribed time, the
account will be processed for payment under a Monthly Variable
Life Annuity (no beneficiary). This payment option is irrevocable
under Chapter 8 of the New Jersey Administrative Code.
Upon retirement, the Division of
Pensions and Benefits, SACT Section will provide a quotation of
the Trust account value detailing all distribution options.
FILING A RETIREMENT APPLICATION
WITH THE BASIC RETIREMENT SYSTEM IS NOT SUFFICIENT NOTIFICATION
OF YOUR RETIREMENT FROM THE TRUST. THERE IS A DIFFERENT AND SEPARATE
FORM FOR THE TRUST.
LIKEWISE, THE RETIREMENT BENEFIT
A MEMBER RECEIVES FROM THE TRUST IS SEPARATE FROM THE RETIREMENT
ALLOWANCE RECEIVED FROM THE BASIC RETIREMENT SYSTEM.
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Distribution
Options
Upon retirement, the Division will provide
a quotation of the value of the member's account. This quotation
will also detail the distribution options. The options are:
- A MONTHLY VARIABLE ANNUITY
BENEFIT for the remainder of the member's life will be paid
unless, prior to retirement, the member filed a "Trust
Application for Settlement at Retirement" (available only
from the SACT Section at the Division) selecting one of the
alternative methods of payment as listed below. There are
no provisions for a beneficiary under this option.
- A LUMP-SUM SETTLEMENT OPTION
for the value of the account at the close of the month of retirement.
Any investment gains on the SACT Regular account are
eligible for tax-free rollover to an IRA.
If there is no rollover into
a qualified IRA, the taxable portion of the distribution will
be subject to federal tax and the Division of Pensions and
Benefits will withhold 20% as required by the IRS.
- A 5-YEAR ANNUITY CERTAIN AND
LIFE THEREAFTER OPTION provides the member with a lesser
monthly annuity benefit than Option 1. The annuity is paid for
as long as the member lives. However, if the member dies
within the first five years of retirement, the named beneficiary
will be paid the monthly annuity benefit until the end of the
5-year period.
- A 10-YEAR CERTAIN AND LIFE
THEREAFTER OPTION provides the member with a lesser monthly
annuity benefit than Option 1. The annuity is paid for as long
as the member lives. However, if the member dies within the
first 10 years of retirement, the named beneficiary will be
paid the monthly annuity benefit until the end of the 10-year
period.
- BENEFICIARY TO RECEIVE AN EQUAL
BENEFIT OPTION provides the member with a lesser monthly
annuity benefit than Option 1. The annuity is paid for as long
as the member lives. However, upon the member's death, the named
beneficiary will receive the same monthly annuity for his or
her lifetime. Under this option, the named beneficiary may not
changed after retirement.
- BENEFICIARY TO RECEIVE ONE-HALF
BENEFIT OPTION provides the member with a lesser monthly
annuity benefit than Option 1. The annuity is paid for as long
as the member lives. However, upon the member's death, the named
beneficiary will receive one-half of the member's monthly annuity
for his or her lifetime. Under this option, the named beneficiary
may not be changed after retirement.
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Account
Valuations
The Trust is a variable annuity plan
that is comprised of common stocks, cash management units and
equity investments. The value of a Trust account will vary according
to market value, the income and mortality experience of the plan.
A quotation of retirement benefits will be calculated based on
the latest unit values of the underlying securities in the plan
portfolio. This is the date that an account ceases to participate
in the earnings and/or losses of the plan.
A quotation letter will reflect the
estimated value of an account and the amounts a member may receive
as a monthly life annuity under the available options.
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Distribution
Date
When the Division
of Pensions and Benefits, SACT Section has received a Trust retirement
or withdrawal application, a copy of the retirement or withdrawal
application from the basic retirement system, and all other required
information, the account will be processed for payment.
Chapter 42,
PL 1993 allows retiring members of PERS and the TPAF to use their
SACT accumulations to offset any outstanding loans against their
regular pension accounts that may be outstanding prior to retirement.
To do so, a member must file an application with the SACT council
within a 60-day period ending 30 days prior to retirement. Providing
final approval has been given, lump-sum settlements are usually
mailed within 30 days of the calculation of month-end unit values. Monthly
annuity checks are mailed the first of the month following final
approval of a member's retirement application.
Direct deposit
of monthly annuity checks can be arranged by filing the appropriate
forms with the Division.
Income
Tax Information
All settlement check stubs detail
information necessary for filing income tax returns. In addition,
at the end of the year in which a member receives distribution,
the Division of Pensions and Benefits will issue Form 1099R to
those who received lump-sum distributions and W2-Ps to those who
selected and are receiving monthly annuity checks.
Earnings from lump-sum distributions
are eligible for rollover to an Individual Retirement Account
(IRA). Eligible rollovers must be completed within 60 days of
the date on the distribution check.
Early
Retirement
If a member files for Early Retirement
from the basic retirement system, an application must also be
filed for early retirement from the Trust. If the member elects
to receive a lump-sum distribution from the Trust, it may be subject
to an IRS penalty of 10 percent if the qualified amount is not
"rolled over" to a qualified IRA account.
Deferred Retirement
If a member files for Deferred Retirement
under the basic retirement system, the Trust account must be deferred
as well. During the period that an account is deferred, it will
continue to participate in the earnings and/or losses of the underlying
investment portfolio. The account valuation date will be the end
of the month in which the member's deferred retirement from the
basic retirement system becomes effective.
Once the member has terminated employment
in anticipation of a deferred retirement, no further contributions
are permitted to SACT-SA.
Please refer to the Supplemental
Annuity Collective Trust (SACT) Member Handbook if you have additional questions about any aspect of the SACT program.