How Are Contributions to a ▇▇▇▇ ▇▇▇ Reported for Federal Tax Purposes You must file Form 5329 with the IRS to report and remit any penalties or excise taxes. In addition, certain contribution and distribution information must be reported to the IRS on Form 8606 (as an attachment to your federal income tax return.)
How Are Distributions from a ▇▇▇▇ ▇▇▇ Taxed for Federal Income Tax Purposes Amounts distributed to you are generally excludable from your gross income if they (i) are paid after you attain age 59½, (ii) are made to your beneficiary after your death, (iii) are attributable to your becoming disabled, (iv) subject to various limits, the distribution is used to purchase a first home or, in limited cases, a second or subsequent home for you, your spouse, or you or your spouse’s grandchild or ancestor, or (v) are rolled over to another ▇▇▇▇ ▇▇▇. Regardless of the foregoing, if you or your beneficiary receives a distribution within the five-taxable-year period starting with the beginning of the year to which your initial contribution to your ▇▇▇▇ ▇▇▇ applies, the earnings on your account are includable in taxable income. In addition, if you roll over (convert) funds to your ▇▇▇▇ ▇▇▇ from another individual retirement plan (such as a Traditional IRA or another ▇▇▇▇ ▇▇▇ into which amounts were rolled from a Traditional IRA), the portion of a distribution attributable to rolled-over amounts which exceeds the amounts taxed in connection with the conversion to a ▇▇▇▇ ▇▇▇ is includable in income (and subject to penalty tax) if it is distributed prior to the end of the five-tax-year period beginning with the start of the tax year during which the rollover occurred. An amount taxed in connection with a rollover is subject to a 10% penalty tax if it is distributed before the end of the five-tax-year period. As noted above, the five-year holding period requirement is measured from the beginning of the five-taxable-year period beginning with the first taxable year for which you (or your spouse) made a contribution to a ▇▇▇▇ ▇▇▇ on your behalf. Previously, the law required that a separate five-year holding period apply to regular ▇▇▇▇ ▇▇▇ contributions and to amounts contributed to a ▇▇▇▇ ▇▇▇ as a result of the rollover or conversion of a Traditional IRA. Even though the holding period requirement has been simplified, it may still be advisable to keep regular ▇▇▇▇ ▇▇▇ contributions and rollover/ conversion ▇▇▇▇ ▇▇▇ contributions in separate accounts. This is because amounts withdrawn from a rollover/conversion ▇▇▇▇ ▇▇▇ within five years of the rollover/conversion may be subject to a 10% penalty tax. As noted above, a distribution from a ▇▇▇▇ ▇▇▇ that complies with all of the distribution and holding period requirements is excludable from your gross income. If you receive a distribution from a ▇▇▇▇ ▇▇▇ that does not comply with these rules, the part of the distribution that constitutes a return of your contributions will not be included in your taxable income, and the portion that represents earnings will be includable in your income. For this purpose, certain ordering rules apply. Amounts distributed to you are treated as coming first from your non-deductible contributions. The next portion of a distribution is treated as coming from amounts which have been rolled over (converted) from any non-▇▇▇▇ IRAs in the order such amounts were rolled over. Any remaining amounts (including all earnings) are distributed last. Any portion of your distribution which does not meet the criteria for exclusion from gross income may also be subject to a 10% penalty tax. Note that to the extent a distribution would be taxable to you, neither you nor anyone else can qualify for capital gains treatment for amounts distributed from your account. Similarly, you are not entitled to the special five- or ten- year averaging rule for lump-sum distributions that may be available to persons receiving distributions from certain other types of retirement plans. Rather, the taxable portion of any distribution is taxed to you as ordinary income. Your ▇▇▇▇ ▇▇▇ is not subject to taxes on excess distributions or on excess amounts remaining in your account as of your date of death. You must indicate on your distribution request whether federal income taxes should be withheld on a distribution from a ▇▇▇▇ ▇▇▇. If you do not make a withholding election, we will not withhold federal or state income tax. Note that, for federal tax purposes (for example, for purposes of applying the ordering rules described above), ▇▇▇▇ IRAs are considered separately from Traditional IRAs.
What Forms of Distribution Are Available from a ▇▇▇▇▇▇▇▇▇ Education Savings Account Distributions may be made as a lump sum of the entire account, or distributions of a portion of the account may be made as requested.
Application and Allocation of Payments (a) So long as no Event of Default has occurred and is continuing, (i) payments of regularly scheduled payments then due shall be applied to those scheduled payments, (ii) voluntary prepayments shall be applied in accordance with the provisions of Section 2.3(a), and (iii) mandatory prepayments shall be applied as set forth in Section 2.3(c). All payments and prepayments applied to a particular Loan shall be applied ratably to the portion thereof held by each Lender as determined by its Pro Rata Share. As to all payments made when an Event of Default has occurred and is continuing or following the Commitment Termination Date, each Borrower hereby irrevocably waives the right to direct the application of any and all payments received from or on behalf of such Borrower. All voluntary prepayments shall be applied as directed by Borrower Representative. In all circumstances after an Event of Default, subject to the ABL Intercreditor Agreement, all payments and proceeds of Collateral shall be applied to amounts then due and payable in the following order: (1) to Fees and Agent’s and Co-Collateral Agents’ expenses reimbursable hereunder and to all obligations owing to Agent, any Co-Collateral Agent, Swing Line Lender, any L/C Issuer or any other Lender by any Non-Funding Lender under the Loan Documents; (2) to interest on the Swing Line Loans; (3) to principal payments on the Swing Line Loans; (4) to interest on the other Loans, ratably in proportion to the interest accrued as to each Loan; (5) to principal payments on the other Loans (or cash collateral with respect to the Letter of Credit Obligations), ratably in proportion to the principal balance of such Loan and the Letter of Credit Obligations; (6) to the payment of the Bank Products Obligations then due and payable; and (7) to all other Obligations, including expenses of Lenders to the extent reimbursable under Section 12.3.
(b) Agent is authorized to, and at its sole election may, upon prior notice to Borrower Representative charge to the Revolving Loan balance on behalf of each U.S. Borrower or Canadian Borrower, as the case may be, and cause to be paid all Fees, expenses, costs (including, insurance premiums in accordance with Section 6.4(a)) and interest and principal, other than principal of the Revolving Loan, owing by such Borrowers under this Agreement or any of the other Loan Documents, if and to the extent such Borrowers fail to pay promptly any such amounts as and when due, even if the amount of such charges would exceed Availability at such time or would cause the balance of the Revolving Loan and the Swing Line Loan to exceed the Borrowing Base after giving effect to such charges (provided, any such Overadvance shall be subject to the cure period with respect to fees as set forth in Section 9.1(a)(ii)). At Agent’s option, and to the extent permitted by law, any charges so made shall constitute part of the Revolving Loan hereunder.
(c) This Section 2.9 is subject in its entirety to the provisions of Section 13.9 hereof.
Distributions Upon Income Inclusion Under Section 409A of the Code Upon the inclusion of any portion of the benefits payable pursuant to this Agreement into the Executive’s income as a result of the failure of this non-qualified deferred compensation plan to comply with the requirements of Section 409A of the Code, to the extent such tax liability can be covered by the Executive’s vested accrued liability, a distribution shall be made as soon as is administratively practicable following the discovery of the plan failure.