Withdrawal Terms

Question 1

10% Early Withdrawal Penalty

Answer 1

A distribution penalty for customers, typically under age 59 ½, that withdraw pre-tax dollars from a retirement account. An amount that is due and payable to the IRS, based on the amount of the taxable distribution.

Question 2

1099-R

Answer 2

IRS Form 1099-R reports distributions from pensions, annuities, retirement or profit sharing plans, IRAs, insurance contracts, and other types of distributions. Customers may to opt to receive their tax forms using eDelivery through NetBenefits instead of receiving a paper form each year through the mail.

Question 3

401(k)

Answer 3

This is an employer-sponsored retirement plan type that allows employees to defer a portion of their salary for retirement savings. The employer can contribute to employee accounts as well.

Question 4

402(f)

Answer 4

The Special Tax Notice regarding plan payments discusses the tax implications of taking a distribution that is eligible for rollover.

Question 5

411(a)(11)

Answer 5

An IRS-required notification to customers that describes the primary and optional forms of payment available under the plan rules (for example, lump sum, SWPs, annuity, and so on).The notice is unique for each plan based the plan’s specific distribution requirements and features.

Question 6

60-day rollover rule

Answer 6

If customers take cash distributions from their retirement plan, they have the option of rolling over to an IRA or to another qualified retirement plan within 60 days of receipt of the check.

Question 7

After-tax

Answer 7

Contributions deducted directly from customer paychecks after all taxes are paid. At withdrawal, these contributions are nontaxable; however, any earnings are taxable.

Question 8

Auto-age payout

Answer 8

The plan pays out the account when customers reach a plan-specified age. Customers receive a check for the balance of the account, minus taxes.

Question 9

Cost basis

Answer 9

The price paid to purchase shares of a mutual fund or other security. Cost basis determines whether the customer has a capital gain or capital loss when selling the security.

Question 10

De Minimis payout

Answer 10

A lump sum, involuntary, payout from separated or terminated customer accounts where the vested balance does not exceed the required balance limit defined by plan rules.

Question 11

Default

Answer 11

In accordance with IRS loan provisions, failure to make a required loan payment will result in default. Safe Harbor provisions allow plan sponsors to give customers an opportunity, known as a cure period, to make up missed payments to avoid default. A loan default has an X on the 1099R tax form.

Question 12

e-Certified hardship

Answer 12

Fidelity uses a straight-through-processing (STP) transaction that allows customers to request a hardship and receive a check, in one transaction. It allows electronic submission of documentation.

Question 13

Electronic Funds Transfer (EFT)

Answer 13

The transfer of money to customers via an electronic banking system called the Automated Clearing House.

Question 14

Facts and circumstances

Answer 14

A set of guidelines established by a plan that defines the reasons why customers might be eligible for a hardship withdrawal.

Question 15

Fidelity approved

Answer 15

A Fidelity approved loan or withdrawal requires paperwork from the customer before the funds are distributed. Fidelity approves the paperwork.

Question 16

Full withdrawal (payout)

Answer 16

Removal of all money accumulated in the retirement account, including contributions and earnings.

Question 17

Gross up

Answer 17

A Workplace Investing plan provision that enables customers to request funds in excess of the financial obligations specified in the hardship documentation submitted. Gross-up provisions are plan specific and typically set to allow customers to offset tax liabilities and early withdrawal penalties.

Question 18

Hardship withdrawal

Answer 18

A hardship withdrawal is a type of in-service withdrawal. The IRS generally defines a hardship as an immediate and heavy need with no other financial resources available. Customers must meet the specific “hardship” provisions of the plan.

Question 19

In Good Order (IGO)

Answer 19

A work order request deemed complete because it contains all required information and documentation.

Question 20

In-service withdrawal

Answer 20

Distributions that take place while a customer is actively employed with the company, usually after attaining age 59 1/2 or if before age 59 1/2, taken for specific reasons or due to financial hardship.

Question 21

Individual Retirement Account (IRA)

Answer 21

This is a tax-deferred retirement plan that contains annual investor contributions. Personal Investing associates service Fidelity’s IRAs.

Question 22

Minimum Required Distribution (MRD)

Answer 22

The minimum amount customers must withdraw annually when they reach the Required Beginning Date. Customers must take MRDs from all qualified plans.

Question 23

Net Unrealized Appreciation (NUA)

Answer 23

NUA is the difference between the market value of employer securities and the cost of the securities at the time of the distribution.

Question 24

Not In Good Order (NIGO)

Answer 24

A work order deemed incomplete because it lacks the required documentation or information for processing.

Question 25

Preapproved

Answer 25

A loan or withdrawal that requires no paperwork and that processes, on the day of the request, if before market close or the next business day if requested after market close. Customers receive the closing prices of the day the transaction processes.

Question 26

Pretax

Answer 26

Contributions deducted from customer paychecks before Fidelity withholds state and federal income taxes. At withdrawal, customers pay taxes on the contribution amount and any earnings.

Question 27

Required beginning date (RBD)

Answer 27

The date when customers must begin taking their MRD, based on pension simplification and plan rules.

Question 28

Rollover

Answer 28

This is the transfer of eligible money from one qualified plan to another qualified plan or to an IRA. Customers continue to defer taxes on the rollover amount plus any subsequent earnings.

Question 29

Rollover withdrawal

Answer 29

Fidelity keeps money rolled into the 401(k) from an eligible retirement account in a separate source. From this source, customers can take cash distributions or rollover into other eligible employer plans or IRAs.

Question 30

Roth

Answer 30

These are elective deferrals made on an after-tax basis. Distributions are entirely tax free if customers meet certain requirements.

Question 31

Safe Harbor

Answer 31

A set of guidelines established by the IRS that defines the reasons why customers might process a hardship withdrawal.

Question 32

Special Tax and Distribution Notice

Answer 32

The notice combines the 402(f) and the 411(a)11 forms for plans that require both forms.

Question 33

Sponsor approved

Answer 33

A loan or withdrawal that requires paperwork from the customer before Fidelity disburses funds. The plan sponsor must approve the paperwork.

Question 34

Sponsor directed

Answer 34

A Fidelity approved loan or withdrawal that requires paperwork from the customer before the funds are distributed. Fidelity approves the paperwork.

Question 35

Stock in-kind

Answer 35

A distribution made in the form of stock rather than cash.

Question 36

Stock treatment

Answer 36

Customers can typically choose to keep stock in-kind or liquidate shares during a withdrawal.

Question 37

SWP

Answer 37

Distribution of a certain amount money that occurs over time on a systematic basis (for example, annually, semi-annually, quarterly, or monthly) as determined by the customer, and allowed by the plan.

Question 38

W-8BEN

Answer 38

A form for international customers who wish to take withdrawals, because Fidelity withholds 30% of the taxable amount withdrawn to pay any federal tax liability.