All benefits under a SEP and a SIMPLE plan must be fully vested at all times.

Payment Of Benefits

This section outlines your rights to payment of your benefits. The following questions are addressed:

• When will your benefits be paid?
• In what form will your benefits be paid?

As described in the previous section, ERISA sets rules protecting your eligibility to participate, your accrual of benefits, and your becoming vested under your retirement plan. ERISA also provides a variety of rules concerning when, as a plan participant, you may or must be permitted to receive your benefits. This section describes the payment of your benefits.

When can you expect payment of your benefits?

ERISA provides specific rules governing when you may, or must, begin receiving your retirement benefits. First, ERISA sets the latest date by which the plan must permit you to begin receiving your benefit. Under this rule, payment must begin by the 60th day after the end of the plan year in which the latest of the following events occur:

• you reach age 65 or, if earlier, the normal retirement age specified by your plan;
• the end of the 10th year after you began participation in the plan ends; or
• you terminate your service with the employer.

Thus, for example, your plan must provide at a minimum that you will be entitled to begin to receive your benefit 60 days after the end of the year in which you reach age 65, if you began participation in the plan at least 10 years before that year.

Your plan may allow you to receive payment of your benefit earlier than required by the above rule (and many plans do, subject to rules described below). However, as long as the present value of your vested accrued benefit is greater than $5,000, the plan cannot force you to begin receiving your benefit before you reach the age that is generally considered normal retirement age (or age 62 if later).

If the present value of your vested accrued benefit under the plan is $5,000 or less, the plan may require you to receive your benefit when it first becomes distributable, such as when you terminate employment. In determining whether your vested accrued benefit is $5,000 or less, the portion of your benefit that comes from amounts rolled over from another plan is not counted.