Accessing Benefits Before Retirement

Withdrawing Benefits Before Retirement

The MPT 401(k) Retirement Plan is primarily a retirement plan. However, if you need money before that time — for an emergency or a large expense — you may be able to take a loan or make a withdrawal.

Loans

You may borrow from your vested Plan account balance without incurring tax liability subject to the following conditions:

* Monies from the pre-tax and match (vested) sources are taken simultaneously in proportion to the percent of each in the Plan at the investment level. Once all available (vested) monies have been taken from these sources, the Roth after-tax monies are used if necessary. 

** You need to provide to Human Resources a copy of the signed buyer’s/seller’s agreement proving that you are purchasing a primary residence.

Applying for a Loan

You can initiate a general purpose loan through Merrill Lynch’s website at www.benefits.ml.com or by speaking to a Participant Service Representative at 1-800-228-4015. Residential loans, however, can only be initiated through a Representative and will require documentation that it is for the purchase of your “primary” residence.

Loan requests are processed on the day you initiate the loan if it is confirmed by 4 p.m. Eastern Time on a business day on which the New York Stock Exchange is open. Loan requests made after 4 p.m. (or on holidays or weekends) will be processed on the next business day.

A nonrefundable $40 per loan initiation fee will be withdrawn from your account. The fee is considered an application fee and not part of the loan balance.

Repaying a Loan

You choose the repayment period for your loan — up to five years. If your loan is for the purchase of your primary residence, you can choose a longer repayment period — up to 15 years.

You repay the loan through regular weekly payroll deductions. Your repayment, including interest, goes back into your Plan account, and is reinvested according to your investment choices at the time you repay the loan. In effect, you are paying yourself interest. However, federal tax law does not permit a deduction on your personal income tax for the interest you pay to your Plan account.

You can pay off a loan — in full — at any time with no penalty as follows:

• By contacting Merrill Lynch at 1-800-228-4015 and requesting a Loan Payoff/Repayment form, or
• By accessing Benefits OnLine at www.benefits.ml.com and using the Direct Debit Service by selecting the “Loan Payoff” option. (Currently, this option is not available to participants that are no longer employed by MPTN.)

Loan payoffs must be in the form of a certified bank check or money order. Personal checks are not accepted.

You can check the status of your loan payoff by calling Merrill Lynch at 1-800-228-4015 or accessing Merrill Lynch’s website at www.benefits.ml.com.

Defaulting on a Loan

Because loans from your Plan account are not taxable events, there are tax penalties should you default on your loan. A default is defined as a failure to correct a missed scheduled loan payment before the end of the calendar quarter following the calendar quarter in which the payment was due or not paying off your loan within the 5-year maximum time frame allowed for general purpose loans. If your loan defaults, your loan will be treated as a taxable distribution to you. As a result, the unpaid portion of your loan amount plus accrued interest from the last payment date through date of default will be subject to Federal and State taxes and may be subject to an early withdrawal penalty. In addition, upon distribution of your account balance, your Plan account will be reduced by the unpaid loan amount.

Termination of Employment, Death or Qualified Leave of Absence

If you terminate employment with an outstanding loan balance, you have the option to repay the loan in full or continue to make weekly repayments through Merrill Lynch’s Direct Debit Service by accessing the 401(k) website at www.benefits.ml.com to have your loan repayments deducted from your checking or savings account. If you do not repay the outstanding loan balance, it will be considered a withdrawal from the Plan and taxed accordingly.

If you die before paying off your loan typically the outstanding balance is treated as a distribution from the Plan taxable to your estate. No early withdrawal penalty applies.

In cases involving a qualified leave of absence, a grace period of up to one year may be granted. After this period has elapsed, loan repayments must begin over the original loan term or the loan will be considered a taxable distribution to you. If you are planning an approved unpaid leave of absence and currently have an outstanding loan amount, please contact Human Resources at 1-888-287-4369.

Loan Repayments During Military Leave

The Plan will suspend loan repayments during the period of your qualified military leave under USERRA. Upon return to employment, you must resume loan repayments with the payment frequency and amount being at least equal to the payment schedule in effect prior to your qualified military leave and you will be required to repay the remainder of the loan by the end of the period equal to the original term of the loan plus the period of such military service.  The loan may be re-amortized in order to repay the loan in full (including interest accrued during the qualified military leave) by the end of the period equal to the original term of the loan plus the period of such military service.

General Rules for Age 59-1/2  and Hardship Withdrawals

The amount available as a withdrawal is reduced by the aggregate amount of any loan you have outstanding at the time your withdrawal request is made. Withdrawals cannot be repaid to the Plan.

Age 59-1/2 Withdrawals

In general, if you are age 59-1/2 or older, you have unlimited access to your entire vested Plan account balance, which includes the following sources:

• Your pre-tax contributions and earnings (including catch-ups)
• Your pre-tax rollover contributions and earnings
• MPTN’s matching (vested) contributions and earnings
• Your Roth after-tax contributions and earnings (including catch-ups)
• Your Roth after-tax rollover contributions and earnings

The monies for an age 59-1/2 withdrawal will be liquidated on a prorata basis from these sources using all pre-tax sources first and then Roth after-tax sources as needed.

The Plan is required to automatically withhold 20% of the taxable portion of your withdrawal for federal income taxes, unless you directly roll it over into an IRA or another qualified plan that accepts rollovers. (For information on the tax treatment of Roth after-tax distributions see the section on “When Benefits are Paid and Taxed.”)

Hardship Withdrawals

In certain circumstances, you may qualify for a hardship withdrawal from your Plan account because of immediate and heavy financial need. Hardship withdrawals are limited to one withdrawal in any 12-month period. According to IRS guidelines, there are seven specific events that qualify as immediate and heavy financial need for hardship withdrawals. They are as follows:

• Unreimbursed medical and/or dental expenses that qualify for a federal income tax deduction and are incurred by you, your spouse, or your dependents,
• The purchase of your primary residence (excluding mortgage payments),
• To prevent eviction from or foreclosure on your primary residence,
• Unreimbursed tuition payments (including room and board and related educational expenses) for the next 12 months of postsecondary education for you, your spouse, or your dependents,
• Payment for burial or funeral expenses for your deceased parent, spouse, children, or dependents, and
• Payment for repairs to your primary residence resulting from damage that would qualify for a tax deduction for casualty losses.
• Expenses or losses (including loss of income) incurred by you on account of a disaster declared by the Federal Emergency Management Agency (FEMA) under the Robert T. Stafford Disaster Relief and Emergency Act; provided, however, that your principal residence or principal place of employment at the time of the disaster is located in an area designated by FEMA for individual assistance with respect to the disaster.

As a Reminder …
Since the tax laws are complicated and are subject to change, it is recommended that you consult a tax advisor before receiving distributions.

If You Need a Hardship Withdrawal

To request a hardship withdrawal, you will need to complete an application with appropriate attachments supporting your financial need. The application can be accessed at Merrill Lynch’s website at www.benefits.ml.com or you can call Merrill Lynch at 1-800-228-4015 to have an application mailed to your home. You can also obtain an application from Human Resources by calling 1-888-287-4369. Requests for hardships are subject to review and approval.

Only your pre-tax and Roth after-tax salary contributions are available for withdrawal. The monies for a hardship withdrawal will be liquidated on a prorata basis from these sources using your pre-tax source first and then the Roth after-tax source as needed.

The amount of your withdrawal cannot exceed the amount necessary to satisfy your financial need, including any amounts necessary to pay any taxes or penalties resulting from the hardship withdrawal.

The following restrictions apply to hardship withdrawals:

• You must have obtained all other available withdrawals and nontaxable loans available under the Plan, and
• You are limited to one hardship withdrawal in any 12-month period.

Taxes on Hardship Withdrawals

The taxable portion of your hardship withdrawal is subject to federal income tax withholding unless you elect not to have withholding apply. If you do not make an election by the date your distribution is scheduled to occur, federal income tax will be withheld at a rate of 10%. If you elect not to have withholding apply, or if you do not have enough federal income tax withheld from your withdrawal, you may be responsible for paying estimated taxes. You may be subject to tax penalties if your payments of estimated taxes and withholding are not adequate. Further, in addition to income taxes, your withdrawal may be subject to a 10% penalty tax for distributions prior to age 59-1/2. (For information on the tax treatment of Roth after-tax distributions see the section on “When Benefits are Paid and Taxed.”)