Annuity Factor Method Sample Clauses

Annuity Factor Method. The annual payment is determined by dividing your account balance by an annuity factor. This factor is determined by use of a reasonable mortality table and a reasonable interest rate. The factor is the present value of an annuity of $1.00 for a stated period (yearly, semi-annually, monthly, etc.) beginning at the age you attain during the year you take the first distribution and continuing for your life. This annual amount will not change. SPECIAL WARNING-SUBSEQUENT CHANGE: A special penalty tax may apply if you set up a periodic payout schedule to avoid the 10% penalty tax, but then you subsequently modify the series of payments (e.g. you decide you need more cash, so you close the 403(b) or you decide to stop receiving the periodic payments.) If you modify the payment schedule before you reach 59 1/2, then you will be liable for this special penalty tax. If you have attained age 59 1/2 at the time of the modification, but the periodic payout schedule has not been in effect for five years (as determined from the date of the first payment), then you will also be subject to the special penalty tax on all taxable funds withdrawn before age 59 1/2 through such date of modification. This penalty tax shall be the amount, determined under regulations, equal to the 10% tax which otherwise would have been imposed plus the interest for the deferral period. That is, you owe the 10% tax that you otherwise would have owed but for this special exception and you must pay the interest which has accrued from the year you should have paid the 10% tax until such time of modification. The special penalty tax will not be imposed if the modification of the payout schedule is due to your death or disability. PARTICIPANT'S ACKNOWLEDGEMENT AND ELECTION I hereby instruct you that I have not attained age59 1/2 and that I wish to commence substantially equal periodic payments from my 403(b). I have read the above notice and understand that I will be subject to a special penalty tax if I subsequently modify this payout schedule as discussed above. I understand that I must take a distribution under this schedule at least annually and that the annual amount must be considered a substantially equal periodic payment as defined by the IRS and the Internal Revenue Code. I hereby request that my annual payment be determined under the following method (select one Method only and complete the following information): I elect to use a . single life; or . joint life factor and this factor will ...