Upon
Termination of Employment
If a member terminates employment
and withdraws all contributions from the basic retirement system,
the member must also withdraw all monies in the SACT Trust account
as a lump-sum settlement.
If a member has a SACT-TSA account,
it is eligible for tax-free rollover to an IRA.
The withdrawal value of the account
is determined as of the close of the month in which the employee
ceases to be a member of the basic retirement system. That
is, the month the member's withdrawal check from the basic system
is dated.
FILING A WITHDRAWAL APPLICATION
WITH THE BASIC RETIREMENT SYSTEM WILL NOT ALSO WITHDRAW A MEMBER'S
TRUST ACCOUNT. THERE IS A DIFFERENT AND SEPARATE FORM FOR THE
TRUST.
To withdraw from the Trust,
the member must file a "Application
for Withdrawal" with the Division of Pensions and
Benefits, SACT Section.
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Death
Benefits
The member should tell the designated
beneficiary or family to notify the Division of Pensions and Benefits,
SACT Section immediately upon 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.
NOTE: If a member has
completed a Designation of Beneficiary form for the "basic
retirement system " (PERS, TPAF, etc.), a form specific to
SACT must also be completed. If one is not completed for
an existing SACT account, recent changes in family status will
NOT be reflected in payment of SACT death benefits.
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's named beneficiary does
not apply for benefits within 90 days of notifying the Division
of Pensions and Benefits of the member's death, the account is
placed in suspense. For questions concerning an account in suspense,
call the SACT office at (609) 633-2031.
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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,
in writing of the intention to retire 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 important that the member
notify the Trust without delay because an 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 they retire.
Should the 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 (with no beneficiary). This is irrevocable under
Chapter 8 of the New Jersey Administrative Code.
Upon retirement, the Division of
Pensions and Benefits, SACT Section will provide the member with
a quotation of SACT account value detailing the distribution options.
FILING A RETIREMENT APPLICATION
WITH THE BASIC RETIREMENT SYSTEM IS NOT SUFFICIENT NOTIFICATION
OF RETIREMENT FROM THE TRUST. THERE IS A DIFFERENT AND SEPARATE
PROCESS 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 the member with a quotation of the value of the account.
The quotation will outline the distribution options. The options
are:
1. 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 Bureau
at the Division of Pensions and Benefits) selecting one of the
alternative methods of payment as listed below. There are no
provisions for a beneficiary under this option.
2. A LUMP-SUM SETTLEMENT OPTION
for the value of the account at the close of the month of the
member's retirement.
The SACT-TSA account is eligible
for tax-free rollover to an IRA.
If there is no rollover into a qualified IRA, the distribution
will be subject to federal tax and the Division of Pensions
and Benefits will withhold 20% as required by the IRS.
A SACT Distribution
Form is required in order to receive benefits under
this option only.
3. A 5-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 five years of retirement, the named beneficiary will be
paid the monthly annuity benefit until the end of the 5-year
period.
4. A 10-YEAR CERTAIN AND LIFE
THEREAFTER OPTION provides 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.
5. BENEFICIARY TO RECEIVE AN
EQUAL BENEFIT OPTION provides a lesser monthly annuity benefit
than Option 1. The annuity is paid for as long as the member
lives. However, upon death, the named beneficiary will receive
the same monthly annuity for his or her lifetime. Under this
option, the member may not change the named beneficiary after
retirement.
6. BENEFICIARY TO RECEIVE ONE-HALF
BENEFIT OPTION provides a lesser monthly annuity benefit
than Option 1. The annuity is paid for as long as the member
lives. However, upon death, the named beneficiary will receive
one-half of the member's monthly annuity for his or her lifetime.
Under this option, the member may not change the named beneficiary
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 value of the underlying securities in the plan
portfolio. This is the date that the account ceases to participate
in the earnings and/or losses of the plan.
A quotation letter will reflect the
estimated value of the member's account and the amounts that may
be received 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 member's SACT retirement
or withdrawal application, a copy of the retirement or withdrawal
application from the basic retirement system and all other required
information, a member's 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 loan balances against their regular pension accounts that
are 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 Division's calculation of month-end unit values.
Monthly annuity checks are mailed the first of the month following
final approval of the member's application.
Direct deposit of monthly annuity
checks can be arranged by filing the appropriate forms with the
Division.
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Income
Tax Information
A member's 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 or are receiving monthly
annuity checks.
Lump-sum distributions from a SACT-TSA
account 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.
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Early
Retirement
If a member files for Early Retirement
from the basic retirement system, he or she must also file for
early retirement from the Trust. If the member elects to receive
a lump-sum distribution from the Trust, it is subject to an IRS
penalty of 10 percent if the taxable amount is not "rolled
over" to a qualified IRA account.
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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-TSA.
Please refer to the Supplemental
Annuity Collective Trust (SACT) Member Handbook if you have additional questions about any aspect of the SACT program.