401(k) Loan Recipients: Don’t Forget Florida Stamp Tax
Employees living in Florida who request a loan from their 401(k) account should note that there’s an additional cost to borrowing: They will owe stamp tax on the promissory note.
The Florida stamp tax is a marginal tax levied on certain types of documents that are executed, delivered or recorded in Florida. Starting December 10, updated versions of the NRECA-sponsored 401(k) Pension Plan’s loan promissory note will carry a notice about this tax, which will not be withheld and paid by NRECA but will be the responsibility of loan applicants. The tax rate for loan documents is 35 cents per $100 of consideration.
Updated 401(k) withdrawal forms
401(k) Plan participants who request certain types of in-service withdrawals will also receive forms that have been updated. The updated forms capture the same information the previous versions do, but they have been revised to help reduce confusion for applicants.
Updated forms will be provided for:
- Scheduled intermittent withdrawals
- Unscheduled intermittent and partial annuity withdrawals
- Hardship withdrawals
An important change: For intermittent withdrawals, participants will no longer request Roth versus pre-tax contribution dollars on two separate forms. The forms have been combined, so there is now one scheduled withdrawal form and one unscheduled withdrawal/partial annuity form. Each allows participants to indicate which type of dollars they wish to withdraw.
If you or your participants have questions about the updated forms, please contact the Retirement Plan Distribution team at 866.673.2299 (choose option 5, then 4). For questions about the Florida stamp tax, please refer to the Florida Department of Revenue website or talk with your tax advisor.