Carpenters of Western Washington Individual Account Pension Plan
Summary Plan Description
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Carpenters Individual Account Pension Plan
Retirement Payment Options
Under normal, early and disability retirement, your benefit amount is the vested combined balance of your five subaccounts on the later of your retirement effective date or on your distribution date(s). No benefit reduction is made for early retirement under this plan. Any non-periodic payment from this plan of less than ten years is subject to a 20 percent mandatory federal income tax withholding, unless it is rolled over to an Individual Retirement Account (IRA) or eligible retirement plan, including the pension enhancement option (please see below).
There are a variety of payment options available when you retire under this plan. Each of these payment options is described below. Your retirement benefits under this plan are taxable income.
Your payment from this plan is generally provided to you on the first business day of the month following timely receipt of your Explanation of Payment Options and Election of Retirement Benefits form.
- For additional information about the benefit amount available under normal and early retirement, please see Article 4.1.
Lump Sum Distribution
You receive a one-time, lump sum payment of your account balance. You may elect to rollover all or part of the lump sum. If your account balance is $5,000 or less, benefits will be paid in this form. This is the standard form of payment for a participant whose only contributions are for hours worked on or after January 1, 2014.
- For additional information about a lump sum distribution, please see Article 4.4.
Previous Policy
You can use all or a portion of your vested account balance in the Carpenters Individual Account Pension Plan to increase your monthly benefit in the Carpenters Retirement Plan of Western Washington. This plan feature is commonly referred to as a "cash fund annuity" with the Carpenters Retirement Plan as the annuity. The pension enhancement option provides you with several important financial advantages:
- The same actuarial assumptions (investment,
retirement and mortality) used to calculate
your monthly benefit under the Carpenters
Retirement Plan will be used to calculate the
pension enhancement from your Carpenters Individual Account Pension Plan. - Your pension enhancement provides you and your spouse or other designated beneficiary (if applicable) with a lifetime monthly benefit from the Carpenters Retirement Plan. The enhancement is added to the monthly benefit already earned under the Carpenters Retirement Plan. As with the monthly income provided by the Carpenters Retirement Plan, you cannot outlive the income provided from the enhancement. In addition, the enhancement does not experience fluctuations in investment earnings or losses as does the monthly income available from the Carpenters Individual Account Pension Plan.
- The amount used to generate the enhancement to your monthly benefit is guaranteed. If you die before the enhancement amount is distributed, any remaining balance is paid to your beneficiary.
- The enhancement provides you with a lifetime monthly benefit without the purchase and processing fees associated with the purchase of a commercial annuity or other investment incomes.
The examples below illustrate how the pension enhancement option works.
To elect the pension enhancement option, you must elect to retire from the Carpenters Retirement Plan at the same time.
- For additional information about the pension enhancement option, please see Article 10.6.
| You retire at age 62 with a single life benefit of $2,000.00 per month from the Carpenters Retirement Plan. You elect to use a portion of your Carpenters Individual Account Pension Plan to increase your $2,000.00 monthly benefit from the other plan. The following three examples illustrate how this can be done. The annuity conversion factors are listed in Table 3. |
Example 1 You use $20,000.00 to increase your $2,000.00 monthly benefit from the Carpenters Retirement Plan: $20,000.00 ÷ Annuity Conversion Factor = Pension Enhancement Amount In this example, $20,000.00 from the Carpenters Individual Account Pension Plan adds $158.12 to your $2,000.00 monthly benefit paid from the Carpenters Retirement Plan. Because you elected a single life benefit from the Carpenters Retirement Plan, the pension enhancement option will provide you an extra $158.12 per month for the rest of your life. The annuity conversion factor used to calculate the enhancement is age related so this portion of your monthly benefit is not subject to any early retirement reduction (if applicable). The enhancement amount is, however, subject to any joint and survivor reduction (also if applicable). |
Example 2 You use $80,000.00 to increase your $2,000.00 monthly benefit from the Carpenters Retirement Plan: $80,000.00 ÷ Annuity Conversion Factor = Pension Enhancement Amount In this example, $80,000.00 from the Carpenters Individual Account Pension Plan adds $632.48 to your $2,000.00 monthly benefit under the Carpenters Retirement Plan. Because you elected a single life benefit from the Carpenters Retirement Plan, the pension enhancement option will provide you an extra $632.48 per month for the rest of your life. This amount is subject to the joint and survivor reduction (if applicable). |
Example 3 You would like to increase your $2,000 monthly benefit under the Carpenters Retirement Plan by exactly $500.00: Pension Enhancement Amount x Annuity Conversion Factor = Required Enhancement Amount In this example, a $500.00 increase to your $2,000.00 Carpenters Retirement Plan monthly benefit requires $63,242.80 from your Carpenters Individual Account Pension Plan. This amount is subject to the joint and survivor reduction (if applicable). |
Partial Distribution
You receive a portion of your total vested account balance at retirement and defer receipt of the balance (including any investment gains or losses) to a later tax year. You may elect a different payment option for the balance of your account. Each partial distribution is subject to the application and election procedures. Until all of your funds are distributed to you, your account continues to experience investment gains and losses based on the investment performance of the entire plan. If you die before the second payment is made, your designated beneficiary receives the second payment.
- For additional information about a partial distribution, please see Article 4.3(c).
Key Point
If you need greater payment flexibility than provided for by the distribution options available under this plan, you may wish to roll your account into an Individual Retirement Account (IRA) or eligible retirement plan that provides the needed flexibility.
Period Certain Payments
You receive benefits over a specified number of months. The amount is fixed, essentially equal guaranteed monthly payments (subject to adjustment for gains and losses in the plan). You elect the number of months over which the payments will be made, however, the payment period cannot exceed the joint life expectancy of you and your beneficiary. If you die before receiving all payments, payments will continue to your beneficiary. If you elect a payment period that is less than ten years, payments may be rolled over. You must designate your spouse as beneficiary, unless your spouse consents to your designation of another beneficiary.
- For additional information about period certain payments, please see Article 4.3(a).
Key Point
If you elect any of the periodic payment options (except one of the two annuity income options), you may elect, at any time, to cash out your remaining account balance. Please contact Retirement Service at Carpenters Trusts for the appropriate application. This process may take up to 60 days.
Minimum Annual Payout
You receive a specified dollar amount each month until you exhaust your account balance. You designate the monthly amount of the payout. The amount will be adjusted annually to account for investment gains or losses. If you die before receiving all payments, payments continue to your beneficiary. You must designate your spouse as beneficiary unless your spouse consents to your designation of another beneficiary.
You may also receive a specified monthly benefit based on your account balance divided by your life expectancy. The amount is adjusted annually to account for investment gains or losses. If you die before receiving all payments, payments continue to your beneficiary. You must designate your spouse as beneficiary unless your spouse consents to your designation of another beneficiary.
- For additional information about a minimum annual payout, please see Article 4.3(b).
Deferred Distribution
You may defer your distribution from this plan to a later date. On your future distribution date you may elect any one of the distribution options except the pension enhancement option. During the deferral period, your account balance continues to experience investment gains and losses based on the investment performance of the entire plan.
Key Point
Among the retirement payment options available to you are several which leave a portion of your account invested in this plan. Your account is not invested in a more conservative manner when you elect one of these payment options. The plan's investments consist of a mix of stocks, bonds and real estate designed to produce growth and income over a period of time. This mix involves some investment risk which means the value of your account (and therefore the size of your monthly benefit or other future distribution) may increase or decrease.
Lifetime Annuity Income
If contributions were made to the plan for work before January 1, 2014, you may elect to have the Board of Trustees purchase, on your behalf, a non-transferable annuity. You may elect to have your benefit paid to you as a lifetime monthly income. The amount of your monthly benefit is based on your vested account balance on your retirement effective date as well as other parameters (including your age and life expectancy and the interest rate) assumed by the insurance company providing the annuity. Annuities are not available to retirees whose first contributions to the plan are attributable to work beginning January 1, 2014 and later.
Two annuity options are available depending on your marital status when you retire:
Qualified Joint and Survivor Annuity: The standard form of payment for the married participant with contributions in the plan for work performed before January 1, 2014, is a joint and survivor annuity. This annuity provides a monthly benefit for your life and, if you die before your spouse, 50 percent of that amount for the remainder of your spouse's life. Your annuity income is based on your vested account balance on your retirement effective date.
- For additional information about a qualified joint and survivor annuity, please see Article 4.2(a).
Single Life Annuity: The standard form of payment for the single participant with contributions in the plan for work performed before January 1, 2014, is a single life annuity. This annuity provides a monthly income for your life. Your annuity income is based on your account balance on your retirement effective date.
- For additional information about a single life annuity, please see Article 4.2(b).
Please contact Retirement Services at the Trust Office for assistance with the two annuity income options.
Last Updated: 11/10/2020