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					                                                                 Termination Election of Membership Form
ALAMEDA COUNTY EMPLOYEES’ RETIREMENT ASSOCIATION
      th
475 14 Street, Suite 1000        VOICE (510) 628-3000
Oakland, CA 94612                  FAX (510) 268-9574

PART I – MEMBER INFORMATION Please print.
Name:                                                            Employee ID #:                      Social Security Number:               –          –

Address:                                                                      City:                                   State:                   Zip:
Birth Date:             /     /          Phone Number:                                 If Other Name Used, Please List Name:

Job Title:                                                 Department:                                           Dept. Phone Number:                      –

PART II, ELECTION OF MEMBERSHIP
 Upon separation of employment, one of the following options is available:
     A. You may elect to defer membership and leave your contributions on deposit. To defer your membership, complete Section
        A – Defer Membership, by checking the box
     B. You may defer membership and establish reciprocity if you are accepting employment with an employer covered by a
        reciprocal retirement system, provided membership in the agency begins within 6 months of your separation date. To elect
        reciprocity, complete Section B – Reciprocity Election by checking the box. Indicate the reciprocal agency and effective
        employment date. You will receive a letter with your reciprocal status upon our verification of eligibility.
     C. You may terminate your membership in ACERA and receive a refund of your contributions. To receive a refund of
        contributions, complete Section C – Withdraw (Refund) Contributions. If you are rolling over your funds, please review the
        attached IRS notice detailing your rollover rights. Upon verification of termination and receipt of final payroll/contribution
        information from your employer, if applicable, your refund will be processed with the next available check run. Please note
        that refunds cannot be processed until this information is received. Generally, this process takes 6 to 8 weeks from your
        separation date or ACERA’s receipt of your request, whichever is later.
 To be eligible to elect a refund, you must be permanently separating from all employment covered by ACERA. If you indicate
  that the refund is to be rolled over, the payee on the check will not be you, but will be the trustee (bank or brokerage firm) of the
  account. It is your responsibility to provide accurate information on the institution intended to receive a rollover distribution.
  ACERA will not check to see if this information is correct or verify that the account is open.
SECTION A – DEFER MEMBERSHIP
             DEFER MEMBERSHIP: I elect to defer membership and leave accumulated contributions on deposit. (Generally, members with less
              than 5 years of credited service will not be entitled to a retirement benefit other than a refund of contributions and interest, if applicable,
              of their account balance).

 Member Signature:                                                                                          Date:

SECTION B – RECIPROCITY ELECTION
             I am accepting employment with an employer covered by a reciprocal retirement system, which will begin within 6 months of my
              separation date. I want to establish reciprocity, and understand that I must leave my accumulated contributions and interest, if
              applicable, on deposit. Please provide information regarding the reciprocal retirement system below.
      Reciprocal Retirement System:                                                                          Date of Employment:

 Member Signature:                                                                                          Date:

SECTION C – WITHDRAW (REFUND) CONTRIBUTIONS
Please read the attached Withdrawal Information Sheet and 402(f) Special Tax Notice before submitting this form.
    By electing a refund, this refund will terminate your membership in ACERA and you will not be eligible for any future retirement benefits.

             I elect to terminate my membership in ACERA and receive a refund of my total accumulated contributions and interest, if applicable.
              When paying refunds, ACERA is required by law to withhold federal tax from taxable contributions and interest, if applicable. State law
              requires taxes to be withheld unless you elect taxes not be withheld. Federal tax withholding is 20% of taxable amount. State tax is
              10% of the federal tax withholding, i.e. 2% of total taxable distribution. If you do not want to have state taxes withheld from your refund,
              complete Section C on page 2 of this form.
             I elect to terminate my membership in ACERA and rollover* my eligible accumulated contributions and interest, if applicable, to the
              institution or plan designated below. (Any post-tax contribution paid into ACERA pre-1985 and post-tax lump sum purchases will be
              paid directly to you).
             I elect to terminate my membership in ACERA and receive a refund of $                                       and rollover* the balance of my
              eligible contributions to the institution or plan designated below.
      * IF YOU HAVE ELECTED A ROLLOVER OR PARTIAL ROLLOVER, YOU MUST COMPLETE THIS SECTION
             Name of Institution or Employer’s Qualified Plan:
             Address of Institution or Employer:
             IRA Number or Plan Number and Employer’s EIN Number:

        Both sides of this Termination Form must be completed if you have selected a refund of contributions.
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Page 2 of 2


SECTION C – WITHDRAW (REFUND) CONTRIBUTIONS (CONTINUED)
STATE & FEDERAL TAX NOTICE:
When paying refunds, ACERA is required by law to withhold federal tax from taxable contributions and interest, if applicable. Federal tax
withholding is 20% of taxable amount. State tax is 10% of the federal tax withholding, i.e. 2% of total taxable distribution. Federal tax withholding
is mandatory.

State law requires taxes to be withheld unless you elect taxes not be withheld. If you do not want to have state taxes withheld from your refund,
please indicate by checking the box and signing below.
           DO NOT withhold state tax from my refund check.


    Member Signature:                                                                                       Date:

 WAIVER OF RIGHTS: I am aware of my service and disability retirement rights under ACERA. Despite my knowledge of these
  rights, I hereby WAIVE all rights to any future retirement benefits, in order to take this refund of contributions and interest, if
  applicable. I further understand that my tax-deferred contributions are subject to income tax withholding unless rolled over. I
  further understand that my request for a refund will be processed within 6 – 8 weeks from ACERA’s receipt of this completed
  form or my separation date, whichever is later.

 Member Signature:                                                                                          Date:


PART III – SPOUSAL RELEASE
 One of the following two sections must be completed if you have elected a withdrawal (refund) of contributions.

PART III SECTION A - SIGNATURE OF MEMBER SPOUSE

      I am the spouse of the member who is submitting this Termination Election of Membership Form. By signing below, I hereby acknowledge that
       I am informed about this form and its election.

Name of Spouse, please print:


Signature of Spouse:                                                                                          Date:

PART III SECTION B - DECLARATION OF REASON FOR ABSENCE OF SPOUSE’S SIGNATURE
      Pursuant to Government Code Section 31760.3 the member’s current spouse must be made aware of the selection of benefits or change in
       beneficiary made by the member. The spouse of an ACERA member must acknowledge the submission of a request for a refund of
       contributions; election of retirement optional settlement; and designation of beneficiary for pre-retirement death benefits. If a spouse’s
       signature does not appear, the following information must be completed by the member and submitted with the application or form.
            I declare under penalty of perjury under the laws of the State of California that: (Check one)
                  I am not married.
                  My current spouse has no identifiable community property interest in any ACERA benefits earned through my employment.
                  I do not know and have taken reasonable steps to determine the whereabouts of my current spouse.
                  My current spouse has been advised of my election and has refused to sign the written acknowledgement.
                  My current spouse is incapable of executing the written acknowledgement because of an incapacitating mental or physical
                  condition.
                  My current spouse and I have executed a marriage settlement agreement pursuant to California Family Code §§1500 – 1620 that
                  makes the community property law inapplicable to our marriage.
            I certify under penalty of perjury that the forgoing information is true and correct.


Member Signature:                                                                                             Date:


                                                                     For ACERA Use Only
                                                                                                                    DISTRIBUTION TO
                                                       PREVIOUSLY TAXED             ROLLOVER DISTRIBUTION               MEMBER        TOTAL DISTRIBUTION
                    CONTRIBUTIONS (515-00-001)
                           INTEREST (515-00-001)
                COL CONTRIBUTIONS (515-00-002)
                      COL INTEREST (515-00-002)

                                          TOTAL

                           STATE TAX WITHHELD

                        FEDERAL TAX WITHHELD

                                      WARRANT      #                            #                             #




           Both sides of this Termination Form must be completed if you have selected a refund of contributions.
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                     WITHDRAWAL REQUEST INFORMATION SHEET
 IT IS STRONGLY ENCOURAGED THAT YOU SEEK THE PROFESSIONAL GUIDANCE OF YOUR TAX
  CONSULTANT.
A. MEMBERS WHO ELECT TO LEAVE CONTRIBUTIONS ON DEPOSIT VESTED VS. NON-VESTED
        VESTED MEMBERS (5 OR MORE YEARS OF SERVICE)
         You may elect to leave your retirement funds with ACERA and defer your retirement benefits. If you defer
         your retirement, you can apply for retirement benefits upon reaching age 50 and after 10 years in
         membership, or upon attaining age 70. If you are a safety member, you may apply for your benefit at the
         time when you would have earned 20 years of service or upon reaching age 50 and 10 years of
         membership in ACERA, whichever is sooner. Also, if you defer and subsequently return to covered
         employment, you will return at your original entry age and tier status. Members who elect to defer their
         retirement will continue to earn interest, if applicable, on their contributions and may subsequently withdraw
         their retirement contributions and interest, if applicable, by submitting this Termination Form. Service
         credit is not earned while in deferred membership status.
        NON-VESTED MEMBERS (LESS THAN 5 YEARS)
         If you have less than five years and elect to leave your contributions on deposit, generally, you will be only
         eligible to receive the balance of your contributions and interest, if applicable, at any time you choose to
         have your funds disbursed. Leaving your contributions on deposit will usually not result in attaining
         retirement benefit eligibility. There are certain circumstances, however, that could allow a non-vested
         member to become eligible for a retirement benefit such as; becoming age 70, re-entering membership
         and earning enough service to become vested, establishing reciprocity (see reciprocity section), or
         purchasing available service credit to become vested. Also, if you defer and subsequently return to
         covered employment, you will return at your original entry age and tier status. Members who elect to defer
         their retirement will continue to earn interest, if applicable, on their contributions and may subsequently
         withdraw their retirement contributions and interest, if applicable, by submitting this Termination Form.
         Service credit is not earned while in deferred membership status.
        MEMBERS WHO ELECT RECIPROCITY (TRANSFER TO A RECIPROCAL AGENCY)
         As a member of ACERA, accepting covered employment with one of the reciprocal retirement systems
         listed below, you will have certain rights if you enter that employment within 6 months after leaving your
         ACERA covered employment and leave your retirement funds with ACERA. These rights include
         continuation of basic death and disability benefits; service under all systems will be added together to
         determine eligibility for benefits; contribution rates in the reciprocal system may be based on your age
         when you first entered ACERA rather than your current age; and final compensation used to determine
         your retirement benefits from ACERA will be the highest income earned under either of the linked systems,
         provided that you retire from the systems at the same time. Contributions you have elected to leave on
         deposit with ACERA may not be withdrawn while you remain in employment covered by one of the
         reciprocal systems. Once reciprocity is established, it may not be broken without significant
         consequences. Please contact ACERA (510-628-3000) for further information regarding reciprocity.
         Reciprocal Systems
         Other 1937 Act County Systems and their affiliated Districts: Contra Costa; Fresno; Imperial; Kern; Los
         Angeles; Marin; Mendocino; Merced; Orange; Sacramento; San Bernardino; San Diego; San Joaquin; San
         Mateo; Santa Barbara; Sonoma; Stanislaus; Tulare; Ventura.
         PERS (Public Employees’ Retirement System), STRS (State Teachers’ Retirement System), JRS (Judges’
         Retirement System), City and County of San Francisco
         Any retirement system that has reciprocity with PERS, except UCRS (University of California Retirement
         System).
B. MEMBERS WHO ELECT TO WITHDRAW THEIR RETIREMENT
    Upon terminating your employment you can terminate your membership and withdraw your contributions and
    interest, if applicable, from ACERA. By requesting a withdrawal of your retirement contributions and
    terminating your membership in ACERA, you will be waiving and giving up any rights to retirement benefits
    which you might have been able to claim if you had remained a member. If you believe that you are disabled,
    either from your employment or you have a disability that is not job connected but still prevents you from
    working, by withdrawing your funds from ACERA you will be giving up the right to apply for disability retirement
    benefits. You must apply for disability benefits within four months of termination of your employment. ACERA
    staff is available at (510) 628-3000 to explain the nature and extent of retirement and disability benefits
    available to you, if you desire.
        LUMP SUM WITHDRAWALS
         This information is important in your decision of how to receive your retirement benefits from ACERA.

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Withdrawal Information Sheet (page 2)

         A retirement refund from ACERA that is eligible for “rollover” can be withdrawn in three ways. You can
         have your payment (1) paid to you; or (2) paid in a “direct rollover”; or (3) combination of direct rollover and
         payment to you. A rollover is a payment of your ACERA retirement funds to your individual retirement
         account (IRA) or to another employer’s retirement plan or another eligible plan. The choice you make will
         affect the tax and/or penalties you will owe on your withdrawal. The term “IRA”, as used in this notice,
         includes individual retirement accounts and individual retirement annuities.
        IF YOU CHOOSE TO HAVE YOUR FUNDS PAID TO YOU
          Any previously taxed (post-tax) contributions will be refunded directly to you without any withholding.
          ACERA is required by law to withhold 20% of the taxable refund and send it to the IRS as income tax
           withholding to be credited against your income taxes.
          ACERA is required by law to withhold 10% of the federal tax withheld (i.e. 2% of the total taxable
           distribution) for state tax withholding unless you elect to not have state tax withheld.
          You can roll over the payment by paying to an IRA or another eligible plan that accepts rollovers,
              within 60 days of receiving the refund. The amount rolled over will not be taxed until you take it out of
              the IRA or employer plan.
        PAYMENTS THAT CAN AND CANNOT BE ROLLED OVER
         Payments from ACERA may qualify for “eligible rollover distribution”. This means that they can be rolled
         over to an IRA (Individual Retirement Account) or to another employer plan that accepts rollovers. ACERA
         staff can tell you what portion of your payment is an eligible rollover distribution. In general, only the
         “taxable portion” (contributions made on a pre-tax basis) of your retirement refund is an eligible rollover
         distribution. Employee contributions made on an “after-tax” (post-tax) basis are non-taxable when they are
         refunded to you, and therefore ineligible for roll over. Prior to January 1, 1985, employee contributions
         were made on an “after-tax” (post-tax) basis. Lump sum cash payments (excluding payments made by
         rollover) for redeposits, and purchases of service are also considered “after-tax” (post-tax) contributions.
        DIRECT ROLLOVER
         You can choose a direct rollover of all or any portion of your pre-tax contributions as an “eligible rollover
         distribution,” as described above. In a direct rollover, the eligible rollover distribution is paid directly from
         ACERA to an IRA or other employer plan that accepts rollovers.
        IF YOU CHOOSE A DIRECT ROLLOVER,
          Your payment will be made directly to your IRA, to another employer plan that accepts rollovers, or
           another eligible plan.
          Pre-tax contributions, which are “rolled over” into an eligible IRA or employer plan, are not taxable until
           you withdraw those funds out of the IRA or the employer plan.
          The amount of the rollover will only include contributions made on a pre-tax basis and exclude your
           post-tax contributions.     Your post-tax contributions will be refunded directly to you.




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                                                                                            4/5/07
                                                                                       Revised 6/11/07

                                               IRS 402(f) - Special Tax Notice

This notice explains how you can continue to defer federal income tax on certain benefits
provided by the Alameda County Employees’ Retirement System (ACERA). It contains
important information you will need before you decide how to receive your Plan benefits.

In all circumstances, you should obtain advice from your own professional tax advisor on
whether a payment can be rolled over. ACERA cannot give you tax advice and your taxes are
your own responsibility.

This notice is provided to you by ACERA because all or part of a payment from ACERA may be
eligible for rollover by you or ACERA to a traditional IRA or an eligible employer plan. A rollover
is a payment by you or ACERA of all or part of your benefit to another plan or IRA that allows
you to continue to postpone taxation of that benefit until it is paid to you. Your payment cannot
be rolled over to a Roth IRA, a SIMPLE IRA, or a Coverdell Education Savings Account
(formerly known as an education IRA). An "eligible employer plan" includes a plan qualified
under section 401(a) of the Internal Revenue Code, including a 401(k) plan, profit-sharing plan,
defined benefit plan, stock bonus plan, and money purchase plan; a section 403(a) annuity
plan; a section 403(b) tax-sheltered annuity; and an eligible section 457(b) plan maintained by a
governmental employer (governmental 457 plan).

An eligible employer plan is not legally required to accept a rollover. Before you decide to roll
your payment to another employer plan, you should find out whether the plan accepts rollovers
and, if so, the types of distributions it accepts as a rollover. You should also find out about any
documents that must be completed before the receiving plan will accept a rollover. Even if a
plan accepts rollovers, it might not accept rollovers of certain types of distributions, such as
after-tax amounts. If this is the case, and your distribution includes after-tax amounts, you may
decide instead to roll your distribution over to a traditional IRA or split your rollover amount
between the employer plan in which you will participate and a traditional IRA. If an employer
plan accepts your rollover, the plan may restrict subsequent distributions of the rollover amount
or may require your spouse's consent for any subsequent distribution. A subsequent
distribution from the plan that accepts your rollover may also be subject to different tax
treatment than distributions from this plan. Check with the plan administrator that is to receive
your rollover prior to making the rollover.

If you have additional questions after reading this information, you can contact ACERA toll free
at 1-800-838-1932.

SUMMARY

There are two ways you may be able to receive a Plan payment that is eligible for rollover: (1)
certain payments can be made directly to a traditional IRA that you establish or to an eligible
employer plan that will accept it and hold it for your benefit. Payments made directly to a
traditional IRA or eligible employer plan are called "Direct Rollovers", or (2) the payment can be
made to you and you can pay it to a traditional IRA or an eligible employer plan.

If you choose a direct rollover:

Your payment will not be taxed in the current year and no income tax will be withheld. You
choose whether your payment will be made directly to your traditional IRA or to an eligible
employer plan that accepts your rollover. Your payment cannot be rolled over to a Roth IRA, a
SIMPLE IRA, or a Coverdell Education Savings Account because these are not traditional
IRAs.

The taxable portion of your payment will be taxed later when you take it out of the traditional
IRA or the eligible employer plan. Depending on the type of plan, the later distribution may be
subject to different tax treatment than it would be if you received a taxable distribution from this
Plan.

If you choose to have a Plan payment that is eligible for rollover paid to you:

ACERA, as required by the IRS, will withhold 20 percent of the taxable amount and send it to
the IRS as federal income tax withholding to be credited against your taxes.
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       402(f) Tax Notice page 2 of 6

The taxable amount of your payment will be taxed in the current year unless you roll it over.
Under limited circumstances, you may be able to use special tax rules that could reduce the tax
you owe. However, if you receive the payment before age 59 1/2, you may have to pay an
additional 10 percent tax.

You can roll over all or part of the payment by paying it to your traditional IRA or to an eligible
employer plan that accepts your rollover within 60 days after you receive the payment. The
amount rolled over will not be taxed until you take it out of the traditional IRA or the eligible
employer plan.

If you want to roll over 100 percent of the payment to a traditional IRA or an eligible employer
plan, you must find other money to replace the 20 percent of the taxable portion that was
withheld for federal taxes. If you roll over only the 80 percent that you received, you will be
taxed on the 20 percent that was withheld and that is not rolled over.

Your Right to Waive the 30-Day Notice Period. Generally, neither a direct rollover nor a
payment can be made from the plan until at least 30 days after your receipt of a notice from
ACERA. Thus, after receiving this notice, you have at least 30 days to consider whether or not
to have your withdrawal directly rolled over. If you do not wish to wait until this 30-day notice
period ends before your election is processed, you may waive the notice period by making an
affirmative election indicating whether or not you wish to make a direct rollover. Your withdrawal
will then be processed in accordance with your election as soon as practical after it is received
by ACERA.

MORE INFORMATION

I.         PAYMENTS THAT CAN AND CANNOT BE ROLLED OVER
II.        DIRECT ROLLOVER
III.       PAYMENT PAID TO YOU
IV.        SURVIVING SPOUSES, ALTERNATE PAYEES, AND OTHER BENEFICIARIES


I.         PAYMENTS THAT CAN AND CANNOT BE ROLLED OVER

A refund of your accumulated contributions and interest may be "eligible rollover distributions."
Also, the lump sum death benefit payable from ACERA may be an eligible rollover distribution.
If a distribution from ACERA is an eligible rollover distribution, then the funds can be rolled over
to a traditional IRA or to an eligible employer plan that accepts rollovers. The payment from
ACERA cannot be rolled over to a Roth IRA, a SIMPLE IRA, or a Coverdell Education Savings
Account. ACERA should be able to tell you what portion of your payment is an eligible rollover
distribution.

The discussion in this memorandum on rollovers applies only to distributions from ACERA that
are eligible rollover distributions, except as specifically stated below. However, in all
circumstances, you should obtain tax advice from your own professional tax advisor on whether
a payment can be rolled over. ACERA cannot give you tax advice and your taxes are your own
responsibility.

After-tax Contributions. If you made after-tax contributions to ACERA, the portion of the
payment representing these contributions may be rolled into either a traditional IRA or to certain
employer plans that accept rollovers of the after-tax contributions. The following rules apply:

     a)    Rollover into a Traditional IRA: You can roll over the portion of your payment
representing after-tax contributions to a traditional IRA either directly or indirectly. ACERA will
tell you how much of your payment is the taxable portion and how much is the after-tax portion.

If you roll over the after-tax contributions portion to a traditional IRA, it is your responsibility to
keep track of, and report to the IRS on the applicable forms, the amount of these after-tax
contributions. This will enable you to determine the nontaxable amount of any future
distributions from the traditional IRA.

Once you roll the portion of your payment representing your after-tax contributions to a
traditional IRA, those amounts cannot later be rolled over to an employer plan.
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   402(f) Tax Notice page 3 of 6

    b)    Rollover into an Employer Plan: As ACERA is a qualified plan under Code section
401(a), you can roll the portion of the payment representing your ACERA after-tax contributions
to another such plan using a direct rollover if the other plan provides separate accounting for
amounts rolled over, including separate accounting for the after-tax employee contributions and
earnings on those contributions.

You cannot roll after-tax contributions to a governmental 457 plan. If you want to roll your after-
tax contributions to an employer plan that accepts these rollovers, you cannot have the after-tax
contributions paid to you first. You must instruct ACERA to make a direct rollover on your
behalf. Also, you cannot first roll after-tax contributions to a traditional IRA and then roll that
amount into an employer plan.

Payments which Cannot be Rolled Over. Some payments or portions of payment by law are
not eligible rollover distributions. The following types of payments are among those which are
not eligible rollover distributions and cannot be rolled over:

       a) Payments Spread over Long Periods: You cannot roll over a payment if it is part of a
series of equal (or almost equal) payments that are made at least once a year and that will last
for:

           o Your lifetime (or a period measured by your life expectancy),
           o Your lifetime and your beneficiary's lifetime (or a period measured by your joint life
             expectancies), or
           o A period of 10 years or more.

       b) Required Minimum Payments. Beginning when you reach age 70-1/2 or retire,
whichever is later, a certain portion of your payment cannot be rolled over because it is a
"required minimum payment" that must be paid to you.

Annuity payments made for your lifetime or for the life time of you and your contingent annuitant
are not eligible to be rolled over. However, a refund distribution or a lump sum death benefit
payment may be eligible for rollover.

II.     DIRECT ROLLOVER
A direct rollover is a direct payment from ACERA to a traditional IRA or an eligible employer
plan that will accept it. You can choose a direct rollover of all or any portion of your payment
that is an eligible rollover distribution, as described in Part I above. You are not taxed on any
taxable portion of your payment for which you choose a direct rollover until you later take it out
of the traditional IRA or eligible employer plan. In addition, no income tax withholding is
required for any taxable portion of your payment for which you choose a direct rollover.

Direct Rollover to a Traditional IRA: You can open a traditional IRA to receive the direct
rollover. If you choose to have your payment made directly to a traditional IRA, contact an IRA
sponsor (usually a financial institution) to find out how to have your payment made in a. direct
rollover to a traditional IRA at that institution. If you are unsure of how to invest your money, you
can temporarily establish a traditional IRA to receive the payment. However, in choosing a
traditional IRA, you may wish to make sure that the traditional IRA you choose will allow you to
move all or a part of your payment to another traditional IRA at a later date, without penalties or
other limitations. See IRS Publication 590, Individual Retirement Arrangements, for more
information on traditional IRAs (including limits on how often you can roll over between IRAs).

Direct Rollover to a Plan: If you are employed by a new employer that has an eligible employer
plan, and you want a direct rollover to that plan, ask the plan administrator whether the plan will
accept your rollover. An eligible employer plan is not legally required to accept a rollover. Even
if your new employer's plan does not accept a rollover, you can choose a direct rollover to a
traditional IRA. If the employer plan accepts your rollover, the plan may provide restrictions on
the circumstances under which you may later receive a distribution of the rollover amount or
may require spousal consent to any subsequent distribution. Check with the administrator of
that plan before making your decision.

Change in Tax Treatment Resulting From a Direct Rollover: The tax treatment of any payment
from the eligible employer plan or traditional IRA receiving your direct rollover might be different
than if you received your benefit in a taxable distribution directly from the Plan.
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   402(f) Tax Notice page 4 of 6

For example, if you were born before January 1, 1936, you might be entitled to ten-year
averaging or capital gain treatment, as explained below. However, if you have your benefit
rolled over to a section 403(b) tax-sheltered annuity, a governmental 457 plan, or a traditional
IRA in a direct rollover, your benefit will no longer be eligible for that special treatment. See the
sections below entitled "Additional 10 Percent Tax if You are Under Age 59 1/2" and "Special
Tax Treatment if You were Born Before January 1, 1936."

III.    PAYMENT PAID TO YOU
If your payment can be rolled over (see Part I above) and the payment is made to you in cash,
it is subject to 20 percent federal income tax withholding on the taxable portion (state tax
withholding may also apply). The payment is taxed in the year you receive it unless, within 60
days, you roll it over to a traditional IRA or an eligible employer plan that accepts rollovers. If
you do not roll it over, special tax rules may apply.

Income Tax Withholding

Mandatory Withholding: If any portion of your payment can be rolled over under Part I (above)
and you do not elect to make a direct rollover, ACERA is required by law to withhold 20 percent
of the taxable amount. This amount is sent to the IRS as federal income tax withholding. For
example, if you roll over a taxable payment of $10,000, only $8,000 will be paid to you because
the Plan must withhold $2,000 as income tax. However, when you prepare your income tax
return for the year, unless you make a rollover within 60 days (see "Sixty-Day Rollover Option"
below), you must report the full $10,000 as a taxable payment from the Plan. You must report
the $2,000 as tax withheld, and it will be credited against any income tax you owe for the year.
There will be no income tax withholding if your payments for the year are less than $200.

Voluntary Withholding: If any portion of your payment is taxable but cannot be rolled over under
Part I above, the mandatory withholding rules described above do not apply. In this case, you
may elect not to have withholding apply to that portion. If you do nothing, 10 percent will be
taken out of this portion of your payment for federal income tax withholding. To elect out of
withholding, ask the Plan Administrator for the election form and related information.

Sixty-Day Rollover Option: If you receive a payment that can be rolled over under Part I above,
you can still decide to roll all or part of it to a traditional IRA or to an eligible employer plan that
accepts rollovers. If you choose a rollover, you must contribute the amount of the payment you
received to a traditional IRA or eligible employer plan within 60 days after you receive the
payment. The portion of your payment that is rolled over will not be taxed until you take it out of
the traditional IRA or the eligible employer plan. You can roll up to 100 percent of your payment
that can be rolled over under Part I above, including an amount equal to the 20 percent of the
taxable portion that was withheld. If you choose to roll 100 percent, you must find other money
within the 60-day period to contribute to the traditional IRA or the eligible employer plan, to
replace the 20 percent that was withheld. On the other hand, if you roll only the 80 percent of
the taxable portion that you received, you will be taxed on the 20 percent that was withheld.

Example: The taxable portion of your payment that can be rolled over under Part I above is
$10,000, and you choose to have it paid to you. You will receive $8,000, and $2,000 will be
sent to the IRS as income tax withholding. Within 60 days after receiving the $8,000, you may
roll over the entire $10,000 to a traditional IRA or an eligible employer plan. To do this, you roll
over the $8,000 you received from the Plan, and you will have to find $2,000 from other
sources (your savings, a loan, etc.). In this case, the entire $10,000 is not taxed until you take
it out of the traditional IRA or an eligible employer plan. If you roll over the entire $10,000, when
you file your income tax return you may get a refund of part or all of the $2,000 withheld.

If, on the other hand, you roll only $8,000, the $2,000 you did not roll is taxed in the year it was
withheld. When you file your income tax return, you may get a refund of part of the $2,000
withheld. (However, any refund is likely to be larger if you roll the entire $10,000.)

Remember that in all of the examples above that state income tax withholding must also be
factored in to determine the amount you would actually receive as a distribution or the amount
you would have to replace to have a complete rollover.



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Additional 10 Percent Tax if You are Under Age 59 1/2: If you receive a payment before you
reach age 59 1/2 and you do not roll it over, then, in addition to the regular income tax, you may
have to pay an extra tax equal to 10 percent of the taxable portion of the payment.
The additional 10 percent tax generally does not apply to (1) payments that are paid after you
separate from service with your employer during or after the year you reach age 55, (2)
payments that are paid because you retire due to disability, (3) payments that are paid as equal
(or almost equal) payments over your life or life expectancy (or your and your beneficiary's lives
or life expectancies), (4) payments that are paid directly to the government to satisfy a federal
tax levy, (5) payments that are paid to an alternate payee under a qualified domestic relations
order, or (6) payments that do not exceed the amount of your deductible medical expenses.
See IRS Form 5329 for more information on the additional 10 percent tax.

Special Tax Treatment if You Were Born Before January 1, 1936: If you receive a payment
from ACERA that can be rolled over under Part I and you do not roll it over to a traditional IRA
or an eligible employer plan, the payment will be taxed in the year you receive it. However, a
lump sum distribution may be eligible for special tax treatment. A lump sum distribution is a
payment, within one taxable year, of your entire balance from ACERA because you have
reached age 59 1/2 or have separated from service. For a payment to be treated as a lump
sum distribution, you must have been a participant in ACERA for at least five years before the
year in which you received the distribution. The special tax treatment for lump sum distributions
that may be available to you is described below.

Ten-Year Averaging: If you receive a lump sum distribution and you were born before January
1, 1936, you can make a one-time election to figure the tax on the payment by using "10-year
averaging" (using 1986 tax rates). This often reduces the tax you owe.

Capital Gain Treatment: If you receive a lump sum distribution and you were born before
January 1, 1936, you may elect to have the part of your payment that is attributable to your pre-
1974 participation in the Plan taxed as long-term capital gain at a rate of 20 percent.

There are other limits on the special tax treatment for lump sum distributions. For example, you
can generally elect this special tax treatment only once in your lifetime, and the election applies
to all lump sum distributions that you receive in that same year. You may not elect this special
tax treatment if you rolled amounts into this Plan from a 403(b) tax-sheltered annuity contract or
from an IRA not originally attributable to a qualified employer plan. If you have previously rolled
over a distribution from ACERA, you cannot use this special averaging treatment for later
payments from ACERA. If you roll your payment to a traditional IRA, governmental 457 plan, or
403(b) tax-sheltered annuity, you will not be able to use special tax treatment for later payments
from that IRA, plan, or annuity. Also, if you roll only a portion of your payment to a traditional
IRA, governmental 457 plan, or 403(b) tax-sheltered annuity, this special tax treatment is not
available for the rest of the payment. See IRS Form 4972 for additional information on lump
sum distributions and how you elect the special tax treatment.

IV.       SURVIVING SPOUSES, ALTERNATE PAYEES AND OTHER BENEFICIARIES

In general, the rules summarized above that apply to payments to employees also apply to
payments to surviving spouses of employees and to spouses or former spouses who are
"alternate payees." You are an alternate payee if your interest in the Plan results from a
"domestic relations order," which is an order issued by a court, usually in connection with a
divorce or legal separation.

If you are a surviving spouse or an alternate payee, you may choose to have a payment that
can be rolled over, as described in Part I above, paid in a direct rollover to a traditional IRA or to
an eligible employer plan or paid to you. If you have the payment paid to you, you can keep it
or roll it over yourself to a traditional IRA or to an eligible employer plan. Thus, you have the
same choices as the employee.

If you are a beneficiary other than a surviving spouse or an alternate payee, you cannot choose
a direct rollover, and you cannot roll over the payment yourself.

If you are a surviving spouse, an alternate payee, or another beneficiary, your payment is
generally not subject to the additional 10 percent tax described in Part III above, even if you are
younger than age 59 1/2.
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If you are a surviving spouse, an alternate payee, or another beneficiary, you may be able to
use the special tax treatment for lump sum distributions, as described in Part III above.
If you receive a payment because of the employee's death, you may be able to treat the
payment as a lump sum distribution if the employee met the appropriate age requirements,
whether or not the employee had 5 years of participation in the Plan.

HOW TO OBTAIN ADDITIONAL INFORMATION

This notice summarizes only the federal (not state or local) tax rules that might apply to your
payment. The rules described above are complex and contain many conditions and exceptions
that are not included in this notice. Therefore, you may want to consult with a professional tax
advisor before you take a payment of your benefits from your Plan. Also, you can find more
specific information on the tax treatment of payments from qualified employer plans in IRS
Publication 575, Pension and Annuity Income, and IRS Publication 590, Individual Retirement
Arrangements. These publications are available from your local IRS office, on the IRS's Internet
Web Site at www.irs.gov, or by calling 1-800-TAX-FORMS.




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