Sample Mandatory Cash-out Distribution Notification to Participants with balances of $1,000 and under
[State, City, Zip]
Dear [Mr./Mrs.][Last Name]
As a former employee and current participant in our retirement plan, you are eligible to receive a full distribution of the vested account balance in your retirement savings account.
Please read the enclosed notice regarding distributions. This notice includes important information about income tax withholding and tax-free rollover rules. You will then need to complete the enclosed Distribution Form making your election regarding payment directions and tax withholding and return it to my attention, as soon as possible. A trustee signature is necessary to release your funds. We must receive your completed Distribution Form no later than 30-days from the date of this letter.
If we do not receive your completed distribution form within 30-days of the date of this letter, we will make a distribution of the value of your vested account balance payable directly to you. You will receive only 80% of the payment, as we are required to withhold 20% as income tax withholding for the IRS. In addition, your payment will be taxed in the current year unless you roll it over to an IRA or another qualified plan. You can expect to receive your distribution check five to ten business days after Transamerica Retirement Solutions obtains the notice from our office.
If you have any questions about distributions, please contact us at [phone number].