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401(k) plan information: age 55 – 59 ½
[05.19.2008] -- From Peter Backus & Davin Kubo, Aloha Flight Attendant 401(k) and Pension Plan Advisors:
If a plan participant in a 401(k) is between 55 and 59 1/2 they should carefully consider whether they might want to take a distribution from their 401(k) before rolling over their balance to an IRA Rollover account. There is a 10% penalty imposed on early distributions from IRA's when the participant is less than 59 1/2. 401(k) participants who are 55 or older (during 2008) do not have this penalty imposed (all distributions are still taxable). Therefore it is quite important for 401(k) participants in this 'gap' group (55 - 59 1/2) to consider taking their distributions that they have planned for the next few years from their 401(k) plan before rolling it over. This important feature is often overlooked by many during the distribution period.
Here is the language from the IRS website with the specific definitions of these early distribution provisions:
Distributions made to you after you separated from service with your employer, if the separation occurred in or after the year you reached age 55 (After August 17, 2006, does not apply to distributions from qualified governmental plans if you were a public safety employee who separated from service after you reached age 50),
Also, please be aware that Peter and Davin have left Smith Barney and have been retained by Aloha in their new positions at Morgan Stanley to continue servicing the 401(k) participants. If participants have any questions they should feel free to contact Davin Kubo at 525-6905 or Peter Backus at 525-6064. Any participants who have already mailed in their rollover forms to Smith Barney should also contact Davin or Peter at their new phone #'s to process their rollovers.
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