The Butterfield University Plan offers several ways to take cash distributions from your account. You can take a one-time cash distribution leaving the remaining balance in the plan. You can elect to receive systematic distributions from the plan (check or direct deposited to your bank account) or take a lump sum (single payment) distribution from the plan.
Consider the tax implications and applicable penalties that may apply. Distributions from your BURP plan prior to attaining age 59.5 will result in a 10% IRS penalty on the amount distributed from the plan in addition to regular income tax.
Important to note that you are under no requirement to remove your account balance from the BURP plan. You may
keep your balances within the plan and maintain the tax-deferred nature of the retirement account.
Here’s an example of the impact of fee’s and penalties on taking a cash distribution from your account prior to age 59.5:
|Account Value||Ordinary Income Taxes*||10% Penalty Tax||Total Income & Penalty Taxes||Remaining Distribution|
*Assumes a 28% tax rate. Your tax rate may be different