Taking Withdrawals in Retirement

As retirement approaches, it's important to understand the options for receiving your money before you leave employment. Fortunately, several options are available so you can select the option that's best for you.

Staying put

One option is to delay taking distributions until you need to access your money. If you’re in a good financial position and can let your money stay invested and possibly grow, you can stay put! Better yet, you may be able to roll over money from other retirement accounts. Your money can potentially continue to grow until you're required to take minimum distributions at age 70½.

Of course, investing involves market risk, including possible loss of the money invested. One of our Account Executives will help you understand how to deal with and adjust for market risk through retirement.

Withdrawal Options

• Systematic withdrawal – With a systematic withdrawal, your account value is paid to you on a regular basis until the balance runs out or until the account owner passes away. This option is most similar to you receiving a paycheck from an employer – your withdrawals are taxed as ordinary income. The Plan will also calculate and send your Required Minimum Distribution after you turn age 70½, if your systematic withdrawals are less than required.

  You can continue to manage and change your investment options while receiving systematic withdrawals. Since market risk is involved, you may not be paid as much or as long as you originally expected, depending on the performance of your investments.

• Lump Sum – With a lump sum withdrawal you receive the entire balance of your account, and your account is closed. Unless the money is rolled over into another qualifying plan within 60 days of receipt, it will be taxed based on your tax bracket. Keep in mind that receiving a lump sum may push you into a higher tax bracket. Qualifying Roth 457 withdrawals may be taken tax-free.
• Partial Lump Sum – With a partial lump sum withdrawal, you can take part of your account balance as a lump sum, and leave the remainder in your account.

Tax-free benefit for New York State residents

You won’t pay federal or New York state income tax on your Plan assets until you receive the money from your account (usually during your retirement years, when you may be in a lower tax bracket). New York State residents who are at least 59½ are entitled to a state income tax deduction of up to $20,000 on periodic payments received over two or more consecutive years from the Plan and other retirement plans. This deduction is separate from the exemption of pensions for New York State public employees.

If you live in another state, there could be different tax implications for money you withdraw. Please review the taxability table under the “Tax Info” tab on the Retired Public Employees Association's website.

Small inactive account withdrawal

You may take advantage of a one-time provision to withdraw up to $5,000 from your account balance if the following requirements are met:

• You are still working for your employer
• You have an account balance of less than or equal to $5,000 excluding any assets you may have in a rollover account, and
• You have not contributed at any time in the last two years, and
• You have not used this provision before

Unless you elect a direct rollover of the funds, mandatory federal income tax withholding will apply.

Get the help you need

You can log into your account to request an online distribution or you can call one of our Account Executives or HELPLINE Representatives to discuss which withdrawal option(s) work(s) best for you. Because plan withdrawals involve tax issues, you should consult your own counsel before making decisions. Keep in mind that the Plan is flexible, so you can change your choice at anytime if your circumstances change.