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SOCIAL SECURITY, MEDICARE, AND INCOME TAX

The pension benefit that you are eligible to receive from this Plan is paid to you in addition to any Social Security benefits you may also be entitled to receive.

SOCIAL SECURITY AND MEDICARE

Employees born in 1960 or later will be eligible for full Social Security benefits at 67 years of age or reduced benefits at 62 years of age. Those born before 1960 will be eligible to receive full Social Security Benefits somewhat earlier than age 67, depending on their year of birth. Regardless of the age you are eligible for full Social Security benefits, the earliest retirement age for reduced benefits will be 62. For more information, call your nearest Social Security Office and ask for a current booklet which explains the benefits. You will be eligible for Medicare at 65 years of age, regardless the age you become eligible for full Social Security benefits.

PENSION BENEFITS AS TAXABLE INCOME

Benefits from the NASI Pension Fund ARE taxable. You will receive from the Fund Office each year a 1099-R form showing the benefits paid to you.

If you are totally and permanently disabled, a portion of your Disability Pension from the Plan may be excluded from taxable income, but this exclusion is reduced if family taxable income exceeds a certain dollar amount per year. You should seek professional or IRS advice on taxes if this might apply to you.

Plan distributions which are not eligible rollover distributions (described below) are subject to elective Federal tax withholding. Recipients of periodic distributions (monthly pension) may elect to have their withholding according to the tax table for their stated dependent situation, to have their withholding according to the tax table for the "standard" dependent situation, to have a specified dollar amount withheld or to have no withholding. Recipients of non-periodic distributions (lump-sum payment) will have tax withheld at a flat 10% unless they elect to have a specified dollar amount greater than 10% withheld or to have no withholding.

DIRECT ROLLOVERS OF BENEFIT PAYMENTS AND TAX WITHHOLDING REQUIREMENTS

If you receive a form of lump sum distribution from this Plan on or after January 1, 1993, which is an "eligible rollover distribution" you must request a “direct rollover” of the money to an IRA or another plan that accepts rollover or this Plan is required to withhold 20% of your distribution. You will receive information concerning the rules for mandatory withholding and direct rollover at the time you are eligible for a distribution from the plan. The following is a summary of the tax rules:

    Eligible Rollover Distributions

    Generally, an "eligible rollover distribution" is any distribution of all or a portion of a lump sum distribution made to a Participant, a Participant's Surviving Spouse, or an Alternate Payee. The following distributions from the Plan are eligible rollover distributions:
    • Small pension cash-outs to Participants and Surviving Spouses. (Section 7.05(a))


    • Lump-sum portion under Partial Lump-Sum Payment Option. (Section 6.03)


    • Lump-sum death benefits to your surviving spouse or former spouse who is an alternate payee (Sections 3.15 and 3.16)
    Tax Withholding on Eligible Rollover Distributions

    You can have all or any portion of your benefit either paid as a direct rollover or paid to you. A "direct rollover" is a payment, in full or in part, of an eligible rollover distribution made by the Plan directly to an eligible retirement plan. Eligible retirement plans include other tax qualified Pension plans, tax qualified annuities, IRAs, and qualified state and local government plans which accept rollovers.

    If you choose a DIRECT ROLLOVER:
    • Your payment will not be taxed in the current year and no income tax will be withheld.


    • Your payment will be made directly to your traditional IRA or, if you choose, to another plan that will accept your rollover. Your payment cannot be rolled over to a Roth IRA, a SIMPLE IRA, or an education IRA because these are not traditional IRAs.


    • Your payment will be made payable to the trustee of the eligible retirement plan and must identify that it is for your benefit as the named recipient making the election for the direct rollover.


    • Your payment may be sent directly to the trustee of the IRA or other retirement plan that will accept your rollover or a check made payable to the trustee may be given to you for delivery to the trustee.


    • Your payment will be taxed later when you take it out of the IRA or the other plan.
    If you choose to have a Plan payment that is eligible for rollover PAID TO YOU:
    • You will receive only 80% of the payment, because this Plan is required to withhold 20% of the payment and send it to the IRS as income tax withholding to be credited against your taxes.


    • Your payment will be taxed in the current year unless you roll it over. Under limited circumstances, you may be able to use special tax rules that could reduce the tax you owe. However, if you receive the payment before age 59 ˝, you also may have to pay an additional 10% tax unless you received your payment as a retirement benefit after age 55 and after you have completely separated from service with employers that contribute to the Plan..


    • · You can roll over the payment by paying it to your traditional IRA or to another eligible retirement plan that accepts your rollover within 60 days of receiving the payment. The amount rolled over will not be taxed until you take it out of the traditional IRA or employer plan.


    • · If you want to rollover 100% of the payment to a traditional IRA or an employer plan, you must find other money to replace the 20% that was withheld. If you roll over only the 80% that you received, you will be taxed on the 20% that was withheld and that is not rolled over.


    Distributions Not Eligible for Rollover

    Generally, you cannot roll over any distribution made:

    • In a series of equal (or almost equal) periodic payments for


      • your lifetime (or your life expectancy)


      • your lifetime and your beneficiary's lifetime (or life expectancies); or


      • a period of ten years or more.


    • as a lump sum distribution to your Beneficiaries; or


    • as a "required minimum payment" beginning the first of the month after the month in which you reach age 70 ˝.


    The following Plan benefits and payments are NOT eligible rollover distributions:

    • Single Life Pension with 100-Payment Guarantee to Participants and spouses or Beneficiaries. (Section 6.02).


    • Split-Level or Social Security Option (Section 6.07).


    • 100% Joint Life and Survivorship Option to Participants and spouses or Beneficiaries. (Section 6.04).


    • 66 2/3% and 75% Joint Life and Survivorship Options to Participants and spouses Beneficiaries. (Sections 6.05 and 6.06).


    • 50% Husband and Wife Pension to Participants and Surviving Spouses (Section 5.02).


    • Monthly payment under Partial Lump-Sum Payment Option. (Section 6.03).


    • Preretirement Surviving Spouse Pension (Section 5.03).


    • Small pension cash-outs to non-spouse Beneficiaries. (Section 7.05(a))


    • Lump Sum Death Benefits to non-Spouse Beneficiaries. (Sections 3.15 and 3.16)