“Let everyone ascertain his special business and calling, and then stick to it if he wants to be successful.”
Leaving Latham
Whether you seek career success at Latham or elsewhere, when you leave Latham, it is important you know the rules about receiving your 401(k) account.
What You Need to Know
You are eligible to receive your account balance in the 401(k) Plan when you leave employment at Latham.
There are several ways to receive your distribution, depending on your account balance and employment status. You can leave your account with Latham until you want to take a distribution. However, if you are a summer associate, Latham will leave your account open until you return to work at Latham or for two years.
Here are some details:
If your account balance is $1,000 or less, your account will be paid to you in a lump sum.
If your account balance is more than $1,000 but less than $5,000 and you elect to take a distribution, your account will be distributed in a lump sum payment. If you do not make an election to receive or roll over your account, it will be rolled over into an IRA with Schwab. You may incur fees for any expenses.
If your account balance is $5,000 or less, your account will be distributed as soon as administratively possible after employment ends.
If your account balance is more than $5,000, your account will not be distributed until you request a distribution or you reach age 72 or your employment with Latham ends — whichever is later.
You may elect to receive your account distribution as follows:
- Lump sum
- Rollover to another employer-sponsored plan or IRA
- Partial withdrawal
- Installment payments
For more details regarding each of the options, consult the Latham & Watkins 401(k) Savings and Profit Sharing Plan SPD.
Retirement
Guidelines and tax treatment are different depending on your contributions.
Pre-Tax 401(k)
You may withdraw any amount to take installment payments from your partnership contributions (and related earnings) once you have reached age 55½, but you will incur a 10% penalty. You are eligible to take installment payments starting at age 59½ with no penalties. You will pay taxes on the amount you withdraw, which includes your contributions, any partnership contributions and investment growth. At age 72, you are required to take a minimum distribution (RMD), unless you’re still working at Latham.
Roth After-Tax 401(k)
Contributions and earnings will not be taxed, provided you are taking a qualified distribution. That means the withdrawal is occurring at least five years following the year you make your first Roth 401(k) contribution and you are at least age 59½ or have become disabled. At age 72, you are required to take a minimum distribution (RMD), unless you are still working at Latham.
Disability Retirement
If you become permanently disabled and can no longer work at Latham, you can take a lump sum distribution or receive installment payments from your 401(k) account balance.
Withdrawal Upon Death
If you die, your account balance will be paid to your designated beneficiaries at their request. Check that you have completed the online beneficiary designation information and review it regularly to be sure all information is up-to-date. Depending on the type of distribution your beneficiary chooses, the funds maybe subject to federal and/or state income tax as well as any applicable estate tax.
The same guidelines apply to both pre-tax 401(k) and Roth after-tax 401(k) accounts.
Your beneficiaries will not be subject to any early withdrawal IRS penalty.
