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Benefits of Consolidating Retirement Assets

Consider consolidating your retirement assets into your employer-sponsored retirement plan.

Certain employer-sponsored retirement plans (such as 401(k) and 403(b) plans) allow in-service withdrawals and loans from the plan. You should read the Summary Plan Description that was provided to you as a participant in your employer’s plan to learn whether your employer’s plan allows either withdrawals or loans (or both) and if there are any restrictions imposed by the plan or the IRS on either. If you have questions or are not sure about the features of your employer’s plan, please contact us.

As a reminder, your employer established a retirement savings plan to enable and encourage you to save for retirement. Although the plan may contain an in-service withdrawal or loan provision, Mutual of America does not encourage participants to take in-service withdrawals or loans, and your plan savings are not intended to be used for current expenses. When available, in-service withdrawals are generally taxed as ordinary income (and may be assessed a 10% tax penalty if taken before age 59½), and there are participant charges for loans and loan servicing. There may be significant adverse tax consequences to participants who do not repay loans on a timely basis. Failing to repay loans may have a negative impact on your ability to meet your retirement savings goals. We encourage you to evaluate these issues carefully before requesting a withdrawal or applying for a loan.

 

Withdrawals and Loans

 

If you need access to money before you retire, you should carefully consider and exhaust your other options before making a decision to take an in-service withdrawal or loan from your retirement savings.

With that, we have provided a general explanation of the difference between a withdrawal and a loan. The provisions of your employer’s plan may be different than the descriptions we provide here. Again, you should read the Summary Plan Description that was provided to you as a participant in your employer’s plan to learn about the withdrawal and loan provisions, if any, offered through that plan.

In-Service Withdrawals

An in-service withdrawal allows you to take money from your retirement savings, while you are still employed with the Plan Sponsor of your retirement plan, without having to pay money back. Unless the in-service withdrawal is on account of an immediate and heavy financial need (otherwise known as a “hardship distribution,” see below), your plan may not permit in-service distributions of elective deferrals (i.e., the money you have contributed to the plan from your paycheck), or certain other types of contributions, prior to age 59½. If your plan permits in-service withdrawals, you will be able to request a withdrawal of certain employer contributions, any funds you may have rolled over from another plan or IRA, and any designated Roth contributions. You will have to pay ordinary income taxes on a withdrawal amount (unless from your Roth account), and a 10% early withdrawal penalty if you take the withdrawal prior to age 59½, unless an exception applies.

Early Withdrawals

If you are younger than age 59½ and do not qualify for a hardship withdrawal, you will incur an additional 10% income tax penalty, unless an exception applies. See https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-tax-on-early-distributions for applicable exceptions.

Hardship Withdrawals

A hardship withdrawal is made because of an immediate and heavy financial need and is limited to the amount necessary to satisfy that financial need. You pay ordinary income tax on the amount withdrawn and do not have to pay the withdrawal back.

You are not automatically eligible for a hardship distribution. Your employer must first approve any hardship withdrawal and make sure your request meets the rules under the Internal Revenue Code and Internal Revenue Service regulations. Generally, an immediate and heavy financial need results from:

  • Medical care expenses for you, your spouse, dependents or beneficiary.
  • Tuition, related educational fees, and room and board expenses for the next 12 months of postsecondary education for you or your spouse, children, dependents or beneficiary.
  • Costs directly related to the purchase of your principal residence (excluding mortgage payments).
  • Payments necessary to prevent the eviction of you from your principal residence or foreclosure on the mortgage on that residence.
  • Certain expenses to repair damage to the employee’s principal residence.
  • Funeral expenses for you, your spouse, children, dependents or beneficiary.
  • Any other expense specified by the Internal Revenue Service.

Rollovers

Your employer's plan may accept rollovers from accounts you have with former employers or IRAs with different financial institutions.

You may be able to save time, money and effort by transferring your retirement savings from other retirement plans or IRAs into your Mutual of America retirement plan account. You will receive one convenient quarterly statement, and you can manage your account anytime.

Before making a rollover or transfer, you should review the accounts you have with other providers to determine the fees and expenses you currently pay and whether there are any surrender charges that may result and to ensure that it is in your best interest to transfer your other accounts to your current retirement plan account.

Loans

A loan enables you to borrow money from your retirement savings and pay it back over time, with interest. Like most loans, you will have to pay interest until the loan is paid back in full; however, the payments and interest will go back into your retirement savings account. In most cases, such as with a 401(k) or 403(b) plan, loans must be paid back within a certain period (usually five years), and in some cases, may require consent from a spouse or partner, depending on your domestic status and plan type.

As mentioned previously, there may be significant adverse tax consequences to participants who do not repay loans on a timely basis. Failing to repay loans may have a negative impact on your ability to meet your retirement savings goals.

Start a Withdrawal or Rollover

Individual IRAs, FPAs and Certain Employer-Sponsored Retirement Plans

For withdrawals from Individual IRAs, FPAs and certain employer-sponsored retirement plans (e.g., any non-ERISA group plan or any group plan offering only mutual funds), please contact us at 800.468.3785 so we can provide you with the appropriate form. 

ERISA Group Annuity Retirement Plans

Before you initiate a withdrawal or rollover from an employer-sponsored retirement plan that is subject to ERISA and is funded by a group annuity contract, please complete the following steps:

  1. Review the Summary Plan Description that was provided to you as a participant in your employer’s plan to learn:

    • Whether your employer’s plan allows for withdrawals or rollovers;
    • If the plan does allow for withdrawals, the type of withdrawals it allows (e.g., in-service or only at termination of employment); and
    • Whether you are eligible for a withdrawal (i.e., you have money in your account that is available for a withdrawal).

  2. Download and read the following document:

    DOWNLOAD SPECIAL TAX NOTICE 7125 - Financial Information Concerning Qualified Joint & Survivor Annuities and Other Annuity Options

  3. Initiate a withdrawal or rollover from an ERISA group annuity retirement plan by downloading, completing and submitting the Withdrawal and Rollover Requests Form to us. You should read the form carefully before you complete it.

    DOWNLOAD WITHDRAWAL AND ROLLOVER REQUESTS FORM - ERISA 7126

    Reminder: This downloadable form is only for use with an employer-sponsored retirement plan that is subject to ERISA and is funded by a group annuity contract. Do not use this form to request a withdrawal or rollover from any other employer-sponsored retirement plan (e.g., any non-ERISA group plan or any group plan offering only mutual funds), Individual IRA, or FPA.

    Once you complete the form, you can either (1) mail the form and any additional documentation to the following address: Mutual of America Financial Group, Withdrawal Processing Center, 1150 Broken Sound Parkway NW, Boca Raton, FL 33487-9866, or (2) email the form and additional documentation as a PDF file to us at WPC@mutualofamerica.com from the email address we have on file for you. We will only be able to process emailed forms that are in PDF format. If you email the form to us using an email address other than the email address we have on file for you, we will reject your email. We do this to safeguard your account and to prevent fraudulent withdrawals from your account.

     

Start a Loan

Before you apply for a loan, you should review the Summary Plan Description that was provided to you as a participant in your employer’s plan to learn:

  • Whether your employer’s plan permits loans; and
  • Whether you are eligible for a loan.

If the plan allows for loans, we also provide some important information about loans in your My Account (under the Loans section). In your My Account, you can also model a loan and begin the application process.

You can also discuss your options with a Mutual of America loan specialist by calling 877.567.9662 and selecting option 3.

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Prospective Plan Sponsors

For employers looking to change or start a new retirement plan

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You should consider the investment objectives, risks, and charges and expenses of the investment funds and, if applicable, the variable annuity contract, carefully before investing. This and other information is contained in the funds' prospectuses and summary prospectuses and the contract prospectus or brochure, if applicable, which can be obtained by calling 800.468.3785 or visiting mutualofamerica.com. Read them carefully before investing.

 

Mutual of America's group and individual retirement products that are variable annuity contracts are suitable for long-term investing, particularly for retirement savings. The value of a variable annuity contract will fluctuate depending on the performance of the Separate Account investment options you choose. Upon redemption, you could receive more or less than the principal amount invested. A variable annuity contract provides no additional tax-deferred treatment of benefits beyond the treatment provided to any qualified retirement plan or IRA by applicable tax law. You should consider a variable annuity contract's other features before making a decision.