How Taxes Affect Your Benefit

Tax on Distributions and Withdrawals

When you or your beneficiary receive a distribution from the Plan, you or your beneficiary are responsible for paying applicable federal, state and local income taxes.

Any taxable portion of your Plan Account that you receive as a lump sum payment (except a hardship withdrawal) will be subject to a mandatory 20% federal income tax withholding, unless you elect to roll over the payment to an IRA or Roth IRA for Roth balances. Your hardship withdrawal will be subject to a 10% federal income tax withholding, unless you elect no withholding. State and local income tax withholding may also apply.

In addition to ordinary income taxes, if you receive a payment before you reach age 59½, then you may have to pay an extra federal excise tax equal to 10% of the taxable portion of the payment. The additional 10% federal excise tax generally does not apply to (i) payments that are paid after you terminate employment with the Company if you terminate during or after the year you reach age 55, and (ii) payments that are paid because you terminate employment with the Company due to disability (as defined in the Internal Revenue Code).