401k Distributions

IRC Section 402(f)

SPECIAL TAX NOTICE REGARDING PLAN PAYMENTS

This notice contains important information you will need before you decide how to receive your benefits from

Murphy & Associates 401K Plan U/A DTD 07/01/1985 Plan and Trust (the “Plan”).

SUMMARY

A payment from the Plan that is eligible for “rollover” can be taken in two ways. You can have all or any portion of

your payment wither (1) PAID IN A “DIRECT ROLLOVER” OR (2) PAID TO YOU. A rollover is a payment of

your Plan benefits to your individual retirement arrangement (IRA) or to another employer plan. This choice will

affect the tax you owe.

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 IRA or, if you choose, to another employer plan that accepts your

rollover.

• Your payment will be taxed later when you take it out of the IRA or employer plan.

If you choose to have your Plan benefits PAID TO YOU:

• You will receive only 80% of the payment, because the Plan administrator 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. 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 ½, you also may have to

pay an additional 10% tax.

• You can roll over the payment by paying it to your IRA or to another employer 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

IRA or employer plan.

• If you want to roll over 100% of the payment to an 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.

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