Receiving Your Benefits

Paying Taxes

The taxable portion of your CRP benefit is subject to federal income taxation when you receive it. This section describes some of the rules that affect the taxation of your benefits.

Lump Sum Distributions

The taxable portion of your lump sum distribution is subject to a mandatory federal income tax withholding rate of 20% to the extent you do not elect a direct rollover to another tax-deferred retirement vehicle such as an IRA or eligible employer plan. If you timely roll over all or a part of your lump sum distribution, that portion will not be subject to federal income tax in the year of distribution and will continue to be tax-deferred. Portions you do not roll over are treated as taxable income in the year of distribution and you may be required to pay income taxes in addition to the 20% withheld when you file your tax return for that year. You also may be required to pay an additional 10% tax penalty if your distribution is an early withdrawal (see below).

Annuity Payments

The taxable portion of your annuity payments is not subject to mandatory federal income tax withholding. You may elect that withholding not apply to your annuity payments, but if you do nothing, a federal income tax withholding rate of 10% will apply. You cannot roll over annuity payments to another tax-deferred retirement vehicle such as an IRA or eligible employer plan. The election to waive withholding is included with the benefit application that must be completed when you elect your annuity option.

Periodic Payments

The taxable portion of your periodic payments may or may not be subject to mandatory federal income tax withholding. If your periodic payments are scheduled to last for a period of less than 10 years, they are subject to tax as described under “Lump Sum Distributions” above. If your periodic payments are scheduled to last for a period of 10 years or more, they are subject to tax as described under “Annuity Payments” above.

While this Summary Plan Description summarizes the major provisions of this plan, it does not provide you with every plan detail. The plan documents, which govern this plan, provide full details. If there are any discrepancies between this Summary Plan Description and the legal plan documents, the legal plan documents control.