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Loans & Withdrawals

The Retirement Plan is designed for long-term savings for retirement. However, if you have a financial need that cannot be met through any other means, you may be eligible for a loan or partial withdrawal from your MMBB Retirement accounts. Withdrawals and loan defaults will reduce the financial resources you will have at retirement. Any loans or withdrawals should be considered after all other resources have been exhausted.

Loans Before Retirement

The minimum amount you can borrow from the Retirement Plan (RP) or Tax-Deferred Annuity (TDA) is $1,000, the maximum is 20% of your account value and the amount cannot exceed $50,000. The $50,000 maximum is reduced by the highest outstanding loan balance(s) from any of your MMBB retirement plan accounts during the past 12 months.

Loans taken from The Annuity Supplement (TAS) have a maximum threshold of 50%. All other provisions are the same.

You repay your loan, with interest, back to your account. The interest rate is set at 1% above the prime rate as quoted in The Wall Street Journal on the first business day of the month your loan is requested.

Withdrawals Before Retirement

Withdrawals from your RP and TDA accounts before retirement are permitted. The minimum amount of a partial distribution is $1,000, and the maximum is not more than 20% of your account. However, there is a $50,000 lifetime maximum on distributions prior to retirement. You also can make no more than two withdrawals in a 12-month period.

New members of RP and TDA after January 1, 2009 must complete 5 years of plan participation before being eligible to take a withdrawal.

Withdrawals from your TAS pre-tax account are limited to satisfying a financial hardship, unless you are age 59.5 or older. Eligible withdrawals from your RP and TDA accounts must be taken before you can access your TAS pre-tax account. Contact a senior benefits specialist to determine if you satisfy the financial hardship requirements of the IRS.

If you are 59.5 or older, or have a TAS after-tax or TAS rollover account with MMBB, the financial hardship requirements do not apply; however, other restrictions may.

Your withdrawal will be taxable as ordinary income in the year received and may be subject to an additional 10% tax penalty if you are under age 59.5 at the time you withdraw the funds.

How Benefits are Taxed

Funds not converted to your retirement annuity continue to enjoy tax-deferred status as long as the money remains in your account. Once you reach age 70.5 and are no longer employed by an eligible employer, the IRS requires you to take a Required Minimum Distribution (RMD) from your retirement account balances each year. The deadline for your first RMD is April 1 of the year after you reach 70.5.

Adding It All Up

Your Retirement Plan includes a variety of key advantages for you:

  • Your account grows through invested funds.
  • You may direct your account among the plan’s investment funds.
  • Your account principal and all earnings are tax-deferred.
  • Your variable annuity payments in retirement are designed to keep pace with inflation.
  • You are 100% vested in your Retirement Plan account from day one, which means you have a right to the value of your account according to the terms and conditions of the plan. This applies to most members but an employer can elect a vesting schedule.