Form 721 Application for Eligible Rollover Payment – Non-Spouse B

Application for Eligible Rollover Payment
– Non-Spouse Beneficiary
Pension Benefit Guaranty Corporation.
P.O. Box 151750 Alexandria Virginia 22315-1750
Plan Name: FX.PrismCase.CaseTitle.XF
Plan Number: FX.PrismCase.CaseIdNmbr.XF
Date Printed: 01/11/2021
Date of Plan Termination: FX.PrismCase.DOPT.XF

PBGC Form 721

For assistance, call 1-800-400-7242
Participant Name: FX.PrismCust.FullName.XF

INSTRUCTIONS: Use this form to request a lump-sum payment if you are the beneficiary of a participant who has
died and you are not the spouse. Please enclose a legible copy of the death certificate unless you have already
sent a copy to PBGC. Please print clearly with blue or black ink.

1. Information about you
Last Name

First Name

Middle Name

Your Relationship to Deceased Payee

Social Security Number

Date of Birth

-

/

-

/

Mailing Address

Apartment / Route Number

City

State

Daytime Phone

(

Extension

)

-

x

CONTINUE ON BACK

Zip Code

Evening Phone

(

)

-


Approved OMB 1212-0055
Expires __________ 10/31/21

Application for Eligible Rollover Payment – Non-Spouse Beneficiary
Plan Number: FX.PrismCase.CaseIdNmbr.XF

Form 721, page 2 of 3

Participant Name: FX.PrismCust.FullName.XF

2. Payment Option – Please read the enclosed Special Tax Notice Regarding Non-Periodic PBGC Payments.
Be sure you understand the tax implications of having PBGC send your lump-sum payment directly to you or to
an inherited individual retirement account (IRA).
Please elect only one option - A or B or C. If you do not elect an option or if you elect more than one
option, PBGC will pay you according to option B.

A. Rollover my payment into an Inherited IRA – Send my entire payment, plus
interest, directly to the inherited (IRA) I designate. I understand that PBGC will not
withhold federal income tax from the payment.



B. Pay me directly - Send the entire payment, plus interest, directly to me. I
understand that I cannot rollover this amount later to an inherited IRA, and that
PBGC will withhold 20% of the taxable amount of this payment for federal income
tax.



*Complete Section D if you want the payment to be sent directly to your bank
account.



C. Split my payment - Send some of the money directly to me, and send
some directly to an IRA as follows:
1. Send this much directly to me:

$

.

$

.

I understand that I cannot rollover this amount later to an inherited IRA
and that PBGC will withhold 20% of the taxable amount of this payment
for federal income tax.
*Complete Section D if you want the payment to be sent directly to your
bank account.
2. Send this much to an inherited IRA.
I understand that PBGC will not withhold taxes from this part of my
payment to the IRA I designate.
Note: the amount must be at least $500.00.

NO LESS THAN $500

*Note: PBGC does not transfer funds to financial institutions outside the United States and its territories. If you live outside
the United States or its territories and do not have a U.S bank account, PBGC will send your payment to your mailing
address.

If you elected option A or C, complete Section 3. PLEASE SIGN THE FORM ON PAGE 3.

CONTINUE



Application for Eligible Rollover Payment – Non-Spouse Beneficiary
Plan Number: FX.PrismCase.CaseIdNmbr.XF

Form 721, page 3 of 3

Participant Name: FX.PrismCust.FullName.XF

D. Direct Payment Information Only. Complete this section to send your payment directly to
your bank.
All fields required
Name(s) on the Account (Your name must be on the account)

Routing Number*

Account Number – Numbers only

Account Type
Checking
Savings





*This nine-digit number is on the lower left side of your check.

3. Information About Your Inherited Individual Retirement Account
Name of Receiving Account (example – Tom Smith as beneficiary of John Smith)

Account Number

Name of the Institution / Trustee

Daytime Phone

(

)

-

Mailing Address

City

State

Zip Code

-

4. Signature – Sign and date this application. Knowingly and willfully making false, fictitious or fraudulent
statements to the Pension Benefit Guaranty Corporation is a crime punishable under Title 18, Section 1001,
United States Code.)
I declare under penalty of perjury that all of the information I have provided on this form is true and
correct.

SIGNATURE

DATE

Special Tax Notice Regarding Non-Periodic PBGC Payments

Page 1 of 5

YOUR ROLLOVER OPTIONS
You are receiving this notice because all or part of the payment you are due from the Pension Benefit Guaranty
Corporation (PBGC) is eligible to be rolled over to an individual retirement arrangement (IRA) or a qualified
employer plan. This notice is intended to help you decide whether to do such a rollover.
This notice describes the rollover rules that apply to non-periodic payments, such as a payment of your benefit in a
single sum or a withdrawal of employee contributions, from PBGC.
Payments from PBGC are from retirement plans that have terminated and are now administered by PBGC, a
federal government agency. The tax rules and rollover options that apply to payments from qualified retirement
plans generally apply to payments from PBGC. The rules that apply to most payments from PBGC are described
in the General Information About Rollovers section. Special rules that only apply in certain circumstances are
described in the Special Rules and Options section.
GENERAL INFORMATION ABOUT ROLLOVERS
How can a rollover affect my taxes?
You will be taxed on the taxable amount of the payment from PBGC if you do not roll it over into an IRA or another
qualified employer plan. If you are under age 591/2 and do not roll it over, you will also have to pay a 10%
additional income tax on early distributions (unless an exception applies). However, if you do a rollover, you will
not have to pay tax until you receive payments later (without rolling over that payment) and the 10% additional
income tax will not apply if those payments are made after you are age 591/2 (or if an exception applies). Note that
other rules apply to a rollover to a Roth IRA that are described later in this notice.
Where may I roll over the payment?
You may roll over the payment to either an IRA (an individual retirement account or individual retirement annuity,
including a Roth IRA) or an employer plan (a tax-qualified plan, section 403(b) plan, or governmental section
457(b) plan) that will accept the rollover. The rules of the IRA or employer plan that holds the rollover will
determine your investment options, fees, and rights to payment from the IRA or employer plan (for example, no
spousal consent rules apply to IRAs and IRAs may not provide loans). Further, the amount rolled over will become
subject to the tax rules that apply to the IRA or employer plan.
How can I do a rollover?
There are two ways to do a rollover. You can do either a direct rollover or a 60-day rollover.
Direct rollover option. You can chose to have all or part of an eligible rollover distribution paid directly to an IRA
or to an employer plan that accepts rollover payments. PBGC will not withhold tax from any part of your payment
that is directly paid to the trustee of the IRA or employer plan. If any part of the payment is paid directly to you,
PBGC will withhold 20% of it for income tax.
You should contact the IRA sponsor or the administrator of the employer plan for information on how to do a direct
rollover.
60-day rollover option. If you do not do a direct rollover, PBGC must withhold 20% of the taxable amount of the
payment for federal income tax. The full amount of the payment is treated as paid to you even though you actually
receive only 80% of the payment.

Special Tax Notice Regarding Non-Periodic PBGC Payments

Page 2 of 5

However, you may still do a rollover by making a deposit into an IRA or eligible employer plan that will accept it.
You will have 60 days after you receive the payment to make the deposit. In order to roll over the entire payment
in a 60-day rollover, you must use other funds to make up for the 20% that is withheld. If you do not roll over the
entire amount of the payment, the taxable portion not rolled over will be taxed and will be subject to the 10%
additional income tax on early distributions if you are under age 591/2 (unless an exception applies).
How much may I roll over?
You may roll over all or part of the amount eligible for rollover. However, PBGC will honor a rollover election only if
the total payment, including interest, will be rolled over or the part of a payment to be rolled over is $500 or more.
Payments from PBGC are eligible for rollover, except for:
•

Certain payments spread over a period of at least 10 years or over your life or life expectancy (or the lives
or joint life expectancy of you and your beneficiary).

•

Required minimum distributions after age 701/2 (or after death).

•

Loans treated as deemed distributions (for example, loans in default due to missed payments before your
employment ends).

All of the payment you are receiving from PBGC is eligible for rollover unless PBGC has otherwise told you that a
part of the payment is not eligible for rollover.
If I don’t do a rollover, will I have to pay the 10% additional income tax on early distributions?
If you are under age 591/2, you will have to pay the 10% additional income tax on early distributions for any
payment from PBGC (including amounts withheld for income tax) that you do not roll over, unless one of the
exceptions listed below applies. This tax is in addition to the regular income tax on the payment not rolled over.
However, PBGC does not withhold this additional tax. The 10% additional income tax does not apply to payments
from PBGC that are made:
•

as part of a series of substantially equal periodic payments (made at least annually) for your life (or life
expectancy) or the joint lives (or joint life expectancies) of you and your designated beneficiary (the
payment must begin after separation from service).

•

because you are totally and permanently disabled.
on or after the death of the plan participant.
after your separation from service if you will be at least 55 in the year of separation.
to an alternate payee under a qualified domestic relations order (‘QDRO’).
to the extent you have deductible medical expenses
directly to the government to satisfy a federal tax levy.
Certain payments made while you are on active duty if you were a member of a reserve component called
to duty after September 11, 2001 for more than 179 days.

•
•
•
•
•
•

Special Tax Notice Regarding Non-Periodic PBGC Payments

Page 3 of 5

If I do a rollover to an IRA, will the 10% additional income tax apply to early distributions from the IRA?
If you receive a payment from an IRA when you are under age 591/2, you will have to pay the 10% additional
income tax on early distributions from the IRA, unless an exception applies. In general, the exceptions to the 10%
additional income tax for early distributions from an IRA are the same as the exceptions listed above for early
distributions from a plan. However, there are a few differences for payments from an IRA, including:
•

There is no exception for payments after separation from service that are made after age 55.

•

The exception for QDROs does not apply (although a special rule applies under which, as part of a divorce
or separation agreement, a tax-free transfer may be made directly to an IRA of a spouse or former
spouse).

•

The exception for payments made at least annually in equal or close to equal amounts over a specified
period applies without regard to whether you have had a separation from service.

There are additional exceptions for (1) payments for qualified higher education expenses, (2) payments up to
$10,000 used in a qualified first-time home purchase, and (3) payments after you have received unemployment
compensation for 12 consecutive weeks (or would have been eligible to receive unemployment compensation but
for self-employed status).
Will I owe State income taxes?
This notice does not describe any State or local income tax rules (including withholding rules).
SPECIAL RULES AND OPTIONS
If your payment includes after-tax contributions
After-tax contributions included in a payment are not taxed. If a payment is only part of your benefit, an allocable
portion of your after-tax contributions is generally included in the payment, so you cannot take a payment of only
after-tax contributions. However, if you have pre-1987 after-tax contributions maintained in a separate account, a
special rule may apply to determine whether the after-tax contributions are included in a payment. In addition,
special rules apply when you do a rollover, as described below.
You may roll over to an IRA a payment that includes after-tax contributions through either a direct rollover or a 60day rollover. You must keep track of the aggregate amount of the after-tax contributions in all of your IRAs (in
order to determine your taxable income for later payments from the IRAs). If you do a direct rollover of only a
portion of the amount paid by PBGC and at the same time the rest is paid to you, the portion directly rolled over
consists first of the amount that would be taxable if not rolled over. If you do a direct rollover of the entire amount
paid from PBGC to two or more destinations at the same time, you can choose which destination receives the
after tax contributions.
If you do a 60-day rollover to an IRA of only a part of the payment made to you, the after-tax contributions are
treated as rolled over last. For example, assume you are receiving a complete distribution of your benefit which
totals $12,000, of which $2,000 is after-tax contributions, and no part of the distributions is directly rolled over. In
this case, if you roll over $10,000 to an IRA that is not a Roth IRA in a 60-day rollover; no amount is taxable
because the $2,000 amount not rolled over is treated as being after-tax contributions.
You may roll over to an employer plan all of a payment that includes after-tax contributions, but only through a
direct rollover (and only if the receiving plan separately accounts for after-tax contributions and is not a
governmental section 457(b) plan). You can do a 60-day rollover to an employer plan of part of a payment that
includes after-tax contributions, but only up to the amount of the payment that would be taxable if not rolled over.

Special Tax Notice Regarding Non-Periodic PBGC Payments

Page 4 of 5

If you miss the 60-day rollover deadline
Generally, the 60-day rollover deadline cannot be extended. However, the IRS has the limited authority to waive
the deadline under certain extraordinary circumstances, such as when external events prevented you from
completing the rollover by the 60-day rollover deadline. To apply for a waiver, you must file a private letter ruling
request with the IRS. Private letter ruling requests require the payment of a nonrefundable user fee. For more
information, see IRS Publication 590-A, Individual Retirement Arrangements (IRAs).
If you have an outstanding loan that is being offset
If you have an outstanding loan from the Plan, your Plan benefit may be offset by the amount of the loan, typically
when your employment ends. The loan offset amount is treated as a distribution to you at the time of the offset and
will be taxed (including the 10% additional income tax on early distributions, unless an exception applies) unless
you do a 60-day rollover in the amount of the loan offset to an IRA or employer plan.
If you were born on or before January 1, 1936
If you were born on or before January 1, 1936 and receive a lump sum distribution that you do not roll over,
special rules for calculating the amount of the tax on the payment might apply to you. For more information, see
IRS Publication 575, Pension and Annuity Income.
If you roll over your payment to a Roth IRA
If you roll over the payment to a Roth IRA, a special rule applies under which the amount of the payment rolled
over (reduced by any after-tax amounts) will be taxed. However, the 10% additional income tax on early
distributions will not apply (unless you take the amount rolled over out of the Roth IRA within 5 years, counting
from January 1 of the year of the rollover).
If you roll over the payment to a Roth IRA, later payments from the Roth IRA that are qualified distributions will not
be taxed (including earnings after the rollover). A qualified distribution from a Roth IRA is a payment made after
you are age 591/2 (or after your death or disability, or as a qualified first-time homebuyer distribution of up to
$10,000) and after you have had a Roth IRA for at least 5 years. In applying this 5-year rule, you count from
January 1 of the year for which your first contribution was made to a Roth IRA. Payments from the Roth IRA that
are not qualified distributions will be taxed to the extent of earnings after the rollover, including the 10% additional
income tax on early distributions (unless an exception applies). You do not have to take required minimum
distributions from a Roth IRA during your lifetime. For more information, see IRS Publication 590-A, Individual
Retirement Arrangements (IRAs) and IRS Publication 590-B, Distributions from Individual Retirement
Arrangements (IRAs).
You cannot roll over a payment from PBGC to a designated Roth account in an employer plan.
If you are not a plan participant
Payments after death of the participant. If you receive a distribution after the participant’s death that you do not roll
over, the distribution will generally be taxed in the same manner described elsewhere in this notice. However, the
10% additional income tax on early distributions does not apply, and the special rule described under the section
“If you were born on or before January 1, 1936” applies only if the participant was born on or before January 1,
1936.
•

If you are a surviving spouse. If you receive a payment from the Plan as the surviving spouse of a
deceased participant, you have the same rollover options that the participant would have had, as described
elsewhere in this notice. In addition, if you choose to do a rollover to an IRA, you may treat the IRA as your
own or as an inherited IRA.

Special Tax Notice Regarding Non-Periodic PBGC Payments

Page 5 of 5

An IRA you treat as your own is treated like any other IRA of yours, so that payments made to you before
you are age 591/2 will be subject to the 10% additional income tax on early distributions (unless an
exception applies) and required minimum distributions from your IRA do not have to start until after you are
age 701/2.
If you treat the IRA as an inherited IRA, payments from the IRA will not be subject to the 10% additional
income tax on early distributions. However, if the participant had started taking required minimum
distributions, you will have to receive required minimum distributions from the inherited IRA. If the
participant had not started taking required minimum distributions from the Plan, you will not have to start
receiving required minimum distributions from the inherited IRA until the year the participant would have
been age 701/2.
•

If you are a surviving beneficiary other than a spouse. If you receive a payment from the Plan because
of the participant’s death and you are a designated beneficiary other than a surviving spouse, the only
rollover option you have is to do a direct rollover to an inherited IRA. Payments from the inherited IRA will
not be subject to the 10% additional income tax on early distributions. You will have to receive required
minimum distributions from the inherited IRA.

Payments under a qualified domestic relations order. If you are the spouse or former spouse of the participant
who receives a payment from PBGC under a qualified domestic relations order (QDRO), you generally have the
same options the participant would have (for example, you may roll over the payment to your own IRA or an
eligible employer plan that will accept it). Payments under the QDRO will not be subject to the 10% additional
income tax on early distributions.
If you are a nonresident alien. If you are a nonresident alien and you do not do a direct rollover to a U.S. IRA or
U.S. employer plan, instead of withholding 20%, PBGC is generally required to withhold 30% of the payment for
federal income taxes. If the amount withheld exceeds the amount of tax you owe (as may happen if you do a 60day rollover), you may request an income tax refund by filing Form 1040NR and attaching your Form 1042-S. See
Form W-8BEN for claiming that you are entitled to a reduced rate of withholding under an income tax treaty. For
more information, see also IRS Publication 519, U.S. Tax Guide for Aliens, and IRS Publication 515, Withholding
of Tax on Nonresident Aliens and Foreign Entities.
Other special rules
Series of payments for less than 10 years. If a payment is one in a series of payments for less than 10 years,
your choice whether to make a direct rollover will apply to all later payments in the series (unless you make a
different choice for later payments).
Recent service in the U.S. Armed Forces. You may have special rollover rights if you recently served in the US
Armed Forces. For more information, see IRS Publication 3, Armed Forces’ Tax Guide.
FOR MORE INFORMATION
You may wish to consult a professional tax advisor. Also, you can find more detailed information on the federal tax
treatment of payments from employer plans in: IRS Publication 575, Pension and Annuity Income; IRS Publication
590-A, Individual Retirement Arrangements (IRAs); IRS Publication 590-B, Distributions from Individual Retirement
Arrangements (IRAs); and IRS Publication 571, Tax-Sheltered Annuity Plans (403(b) Plans). These publications
are available from a local IRS office, on the web at www.irs.gov, or by calling 1-800-TAX-FORM.