CITGO Benefits Connection


	Savings Overview

CITGO believes in helping their employees build their financial security. The CITGO Petroleum Corporation Employees’ Savings Plans is one piece of your retirement pie and offers you a great opportunity to save for the future. It's important to understand the resources that are available to you. We encourage you to take the time to educate yourself on how to maximize your savings and take full advantage of this Company provided benefit.

The following links provide valuable information and details regarding CITGO’s 401(k) Savings Plan.


	Fidelity Investments – Access Your 401k
	CITGO’s 401(k) Recordkeeper and Investment Manager. This website allows you to manage your savings retirement account online. It also has great tools available to assist you in preparing for Retirement. To view your 401k account click on this link www.401k.com then log into your 401(k) account through Fidelity’s Net Benefits.


	Your Savings Plan--Planning for Retirement
	How much money will you need for retirement? Start by building a budget. Learn to spend less than you earn. Utilize the tools available online through Fidelity Investment’s website, www.401k.com.

How Much Money Will You Need to Retire

If you want this amount of income each year of your retirement . . .	... to last 20 years	... to last 30 years	... to last 40 years
	Your retirement nest egg must be...*
$20,000	$233,800	$279,400	$304,400
$40,000	$467,600	$558,700	$608,800
$60,000	$701,400	$838,200	$913,200
$80,000	$935,200	$1,117,500	$1,217,700

*Figures reflect assumption that your nest egg earns 6% a year. After the number of years shown, your account balance is $0.

Think Retirement

The future will be here before you know it. It’s never too late to start planning and saving for your future. Set a goal. Start Now!

There’s no doubt about it: Saving for retirement is hard. There are so many other demands on your paycheck — mortgage payment, car payment, credit card bills, groceries — the list seems endless. It’s much easier to focus on your immediate needs and things you want right now rather than planning for your needs on down the road. We always think that we’ve got time to make it up, so we put off saving. If you start contributing a small amount to your 401(k) savings account today you will be surprised at what you have in even 5 years, then amazed in 10 years. History has proven over the years that investing your money is a smart decision that will pay-off in the future by providing you additional income for your retirement. Don’t shortchange one of the most important people in your life: You!

Here are a few tips on what you can do to get started Saving:

Build a Budget or Do You Need Help Managing Your Budget?
If you’re not currently saving or you feel that you should be saving more, then the first step to getting your savings on track is to know where your money is going. Fidelity has a great online tool called Budget & Debt Management Center. It allows you to build your budget to zero in on your spending. If you haven’t already, add "Savings Plan" to your list of budget items and write down the amount (or the additional amount) you want to invest each month. Putting the amount in writing can help you achieve two important results: First, you’ll start thinking of "saving for retirement" as an important financial obligation. Second, you’ll feel more committed to following through on your savings budget.
Spend Less Than You Earn
Its human nature — we like to spend what we earn. Whatever goes into the checking account is considered "fair game." If you have money leftover at the end of the month, it’s usually squandered away on impulse buys at the mall, the grocery store, eating out or on eBay. Sound familiar? If this happens to you, then increase your contribution percentage a percent. Your contributions will be taken out of your paycheck before you’re tempted to spend the money on items you really don’t need. If you’re worried about accessing your money when you’re in a pinch, consider investing some of your contributions on an after-tax basis. You can withdraw your after-tax contributions at any time. Also, learn to monitor and manage your credit card debt.
Change Your Mentality
If you’re like most people, saving for tomorrow means you have to give up something you want today — a new car, a new wardrobe, a new flat screen TV. Giving up the things you want is hard to do. It’s time to turn the tables on this way of thinking. The next time you find yourself admiring something you’ve "just gotta have," ask yourself "What am I giving up in my retirement savings if I buy this?" If you invest $100 a month in an account that earns an average annual return of 6%, you’ll have $16,470 after 10 years and $46,435 after 20 years.
Seek Help If You Need It
A financial planner or advisor can help you establish a clear retirement savings goal, help you decide how much to contribute to the Savings Plan and other investments (like an individual retirement account [IRA]), and help you choose an investment mix that’s right for your personal situation. If you are approaching retirement, a professional can also help you decide when and how to start taking distributions from the plan.

Fidelity has numerous Investor centers located throughout the U.S. with financial planners available to meet with you to answer any of your investment and financial planning questions along with assisting you to prepare for your retirement if you desire. The consultation is free and there is no obligation or sales pressure. Contact Fidelity today at 1-800-256-4015 or go online to locate a center near you. If a center is not located within your vicinity you may want to set up a telephone conference call with a financial planner to discuss your financial future.


	CITGO Petroleum Corporation Employees’ 401(k) Savings Plans
	Learn about: Company Contributions, Employee Pre-tax, After-tax and Catch-up contributions, Vesting Requirements, and Investment Funds.

It's important for you to know that...

New and rehired employees are automatically enrolled 45 days from their date of eligibility.
3% of your pay will automatically be deducted on a pre-tax basis unless you elect to not participate.
Refer to your plans Summary Plan Description (SPD) for additional information regarding auto-enrollment.

You can...

Begin your contributions sooner than the auto-enrollment date.
To begin contributing log into your account through Fidelity's Net Benefits at www.401k.com then click on New Registration or Call Fidelity toll free @ 1-800-256-401k to speak with a Fidelity Representative.
How much can you contribute?
- Hourly Thrift - Between 1% - 30% up to the IRS Annual Limits.
- Salaried RASP - Between 3% - 50% up to the IRS Annual Limits.
- CLICK HERE for more information regarding IRS Annual Limits
Increase your contribution percent.
Decline enrollment in the CITGO Savings Plan by logging into your 401(k) account on Fidelity’s website: www.401k.com or by calling Fidelity toll free at 1-800-256-4015 and electing 0% as your contribution percent.
The IRS limits the amount that can be contributed to any 401(k) savings plan.

You can save on a:

Tax-deferred basis (before taxes are withheld from your paycheck – also called Pre-tax) and
On an after-tax basis (after taxes are withheld from your paycheck)
If you are at least age 50 or will turn age 50 by the end of the current year, then you are also eligible for Tax-deferred Catch-up contributions.
Refer to your Plan’s Summary Plan Description for information regarding the minimum and maximum contribution percents.

Company Match Contribution

CITGO provides a generous $2 matching contribution for every $1 you contribute up to 3% of your eligible compensation, subject to legal limitations.
The CITGO match will begin after you have completed 12 months of service provided you are contributing to your 401k account. Remember, if you do not take full advantage of the Company Match that is available to you, you are essentially leaving “free” money on the table.
Refer to your Plan’s Summary Plan Description for additional information.

Company Basic Contribution

If you are a CITGO Salaried employee that has completed 12 months of service you are eligible to receive the Company Basic Contribution of 3% based on your eligible compensation whether you contribute to your 401k account or not.

Vesting

You are immediately 100% vested in your contributions. Company vesting requirements are as follows:

Hourly Thrift Plan – You must complete 3 years of service to be 100% vested. If you terminate employment prior to completing three years of service then you will be 0% vested in your Company contributions. Additionally, you will be considered 100% vested in your Company contributions provided you meet any of the following requirements:
- You reach age 65 while in employment.
- You retire direct from employment at age 55 or older.
- You are determined to be totally and permanently disabled by the Benefits Plan Committee.
- You are legally established to be mentally incompetent while in employment.
- You die while in employment.
Salaried Retirement and Savings Plan (RASP) – You are 100% vested upon completing one year of service.

Loans

Your Savings plan account is intended for your future retirement; however, you are eligible to borrow from your account for any reason. The plan allows for one outstanding loan at a time. The minimum loan amount is $1,000 and the maximum is up to 50% of your vested account balance not to exceed $50,000. Any outstanding loan balances over the previous 12 months may reduce the amount you have available to borrow. You may model and or initiate a loan online at www.401k.com or call Fidelity Investments at 1-800-256-401k. Refer to your Summary Plan Description for additional information.

Withdrawals

Withdrawals are generally permitted when you terminate your employment, retire, reach age 59 ½ while in active employment, become permanently disabled, or have severe financial hardship as defined by the Plan. Other types of withdrawals may be available with restrictions. To initiate a withdrawal you must contact Fidelity Investments at 1-800-256-401k. Refer to your Summary Plan Description (SPD) for additional information.

Investment Options

The CITGO Savings Plan offers approximately 14 investment funds plus 11 Fidelity Freedom Funds and two different investment style approaches to help you reach your savings goals:

You may select your own investment options and manage your investment portfolio, or
You may select a Fidelity Freedom Fund. If you do not select any investment options your contributions will be automatically defaulted into the Fidelity Freedom Funds. These funds are designed to provide a diverse asset allocation which includes a broad spectrum of funds. The Freedom Funds are referred to as Life Cycle Funds which are based on your date of birth and a retirement date range. Included are a variety of asset allocation mutual funds. Your contributions are primarily invested in domestic equity funds, international equity funds, investment grade fixed income funds, high yield fixed income funds and in short-term mutual funds. The mix of underlying Fidelity mutual funds will gradually become more conservative over time as you draw closer to retirement age.
For additional fund information please visit Fidelity’s website at www.401k.com or refer to your plan’s Summary Plan Descriptions (SPD)


	IRS 401(k) Annual Benefit Limits
	2009 401(k) IRS plan limits. Information you need to know in order to maximize your contributions.


	Quarterly 401(K) Fund performance Report
	Allows you to review each funds performance for the last quarter.


	RASP Contribution Worksheet
	Salaried employees can utilize this worksheet to determine the maximum amount they can contribute on an after-tax basis in order to not exceed the annual limit for total contributions and prevent losing any Company contributions.


	Special Tax Notice Regarding Plan Payments
	This notice explains how you can continue to defer federal income tax on your retirement savings in the Plan and includes important information you will need before you decide how to receive your Plan benefits.

Special Tax Notice Regarding Plan Payments Printer Friendly Version

This notice is provided to you by your Plan Administrator because all or part of the payment that you will soon receive from the Plan may be eligible for rollover by you or your Plan Administrator to a traditional IRA or an eligible employer plan. A rollover is a payment by you or the Plan Administrator 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 over 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 are required to 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 wish 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 administrator of the plan that is to receive your rollover prior to making the rollover.

SUMMARY

There are two ways you may be able to receive a Plan payment that is eligible for rollover:

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 (“DIRECT ROLLOVER”)
The payment can be PAID TO YOU.

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:

You will receive only 80% of the taxable amount of the payment, because the Plan Administrator is required to withhold 20% of that amount and send it to the IRS as income tax withholding to be credited against your taxes.
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 59½, you may have to pay an additional 10% 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% of the payment to a traditional IRA or an eligible employer plan, you must find other money to replace the 20% of the taxable portion that was withheld. If you roll over only the 80% that you received, you will be taxed on the 20% 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 this notice. 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 the Plan Administrator.

MORE INFORMATION

PAYMENTS THAT CAN AND CANNOT BE ROLLED OVER

Payments from the Plan may be “eligible rollover distributions.” This means that they can be rolled over to a traditional IRA or to an eligible employer plan that accepts rollovers. Payments from a plan cannot be rolled over to a Roth IRA, a SIMPLE IRA, or a Coverdell Education Savings Account. Your Plan administrator should be able to tell you what portion of your payment is an eligible rollover distribution.

After-tax Contributions. If you made after-tax contributions to the Plan, 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:
1. Rollover into a Traditional IRA. You can roll over your after-tax contributions to a traditional IRA either directly or indirectly. Your plan administrator should be able to tell you how much of your payment is the taxable portion and how much is the after-tax portion.
  
  If you roll over after-tax contributions to a traditional IRA, it is your responsibility to keep track of, and report to the Service on the applicable forms, the amount of these after-tax contributions. This will enable the nontaxable amount of any future distributions from the traditional IRA to be determined.
  
  Once you roll over your after-tax contributions to a traditional IRA, those amounts CANNOT later be rolled over to an employer plan.
2. Rollover into an Employer Plan. You can roll over after-tax contributions from an employer plan that is qualified under Code section 401(a) or a section 403(a) annuity plan 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 can also roll over after-tax contributions from a section 403(b) tax-sheltered annuity to another section 403(b) tax-sheltered annuity using a direct rollover if the other tax-sheltered annuity provides separate accounting for amounts rolled over, including separate accounting for the after-tax employee contributions and earnings on those contributions. You CANNOT roll over after-tax contributions to a governmental 457 plan. If you want to roll over 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 the Plan Administrator of this Plan to make a direct rollover on your behalf. Also, you cannot first roll over after-tax contributions to a traditional IRA and then roll over that amount into an employer plan.
The following types of payments cannot be rolled over:
1. 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:
  - your lifetime (or a period measured by your life expectancy)
  - your lifetime and your beneficiary’s lifetime (or a period measured by your joint life expectancies)
  - a period of 10 years or more.
2. Required Minimum Payments.
  Beginning when you reach age 70½ 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. Special rules apply if you own 5% or more of your employer.
3. Hardship Distributions. A hardship distribution cannot be rolled over.
4. ESOP Dividends. Cash dividends paid to you on employer stock held in an employee stock ownership plan cannot be rolled over.
5. Corrective Distributions. A distribution that is made to correct a failed nondiscrimination test or because legal limits on certain contributions were exceeded cannot be rolled over.
6. Loans Treated as Distributions. The amount of a plan loan that becomes a taxable deemed distribution because of a default cannot be rolled over. However, the amount of a loan default is eligible for rollover if you roll over an amount equal to the amount of your loan default to another qualified employer plan or a traditional IRA within 60 days of the date of the default, as discussed in Part III below. Ask the Plan Administrator of this Plan if distribution of your loan qualifies for rollover treatment.
The Plan Administrator of this Plan should be able to tell you if your payment includes amounts which cannot be rolled over.
DIRECT ROLLOVER

A DIRECT ROLLOVER is a direct payment of the amount of your Plan benefits 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 Plan benefits for which you choose a DIRECT ROLLOVER. This Plan might not let you choose a DIRECT ROLLOVER if your distributions for the year are less than $200.
- 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 of that plan whether it 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 plan administrator of that plan before making your decision.
- DIRECT ROLLOVER of a Series of Payments. If you receive a payment that can be rolled over to a traditional IRA or an eligible employer plan that will accept it, and it is paid in a series of payments for less than 10 years, your choice to make or not make a DIRECT ROLLOVER for a payment will apply to all later payments in the series until you change your election. You are free to change your election for any later payment in the series.
- 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. 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% Tax if You Are under Age 59½” and “Special Tax Treatment if You Were Born before January 1, 1936.”
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% 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, the Plan is required by law to withhold 20% of the taxable amount. This amount is sent to the IRS as federal income tax withholding. For example, if you can 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% 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 over all or part of it to a traditional IRA or to an eligible employer plan that accepts rollovers. If you decide to roll over, 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 over up to 100% of your payment that can be rolled over under Part I above, including an amount equal to the 20% of the taxable portion that was withheld. If you choose to roll over 100%, 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% that was withheld. On the other hand, if you roll over only the 80% of the taxable portion that you received, you will be taxed on the 20% 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 over only $8,000, the $2,000 you did not roll over 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 over the entire $10,000.)
Additional 10% Tax If You Are under Age 59½. If you receive a payment before you reach age 59½ 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% of the taxable portion of the payment. The additional 10% 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) dividends paid with respect to stock by an employee stock ownership plan (ESOP) as described in Code section 404(k), (5) payments that are paid directly to the government to satisfy a federal tax levy, (6) payments that are paid to an alternate payee under a qualified domestic relations order, or (7) payments that do not exceed the amount of your deductible medical expenses. See
IRS Form 5329 for more information on the additional 10% tax.

The additional 10% tax will not apply to distributions from a governmental 457 plan, except to the extent the distribution is attributable to an amount you rolled over to that plan (adjusted for investment returns) from another type of eligible employer plan or IRA. Any amount rolled over from a governmental 457 plan to another type of eligible employer plan or to a traditional IRA will become subject to the additional 10% tax if it is distributed to you before you reach age 59½, unless one of the exceptions applies.

Default of Plan Loans. Plan loans are defaulted if you request a complete withdrawal after leaving employment or if a missed payment is not made up by the end of the quarter following the quarter in which the payment was missed. The amount of your loan default is treated as a distribution to you at the time of the default and will be taxed unless you roll over an amount equal to the amount of your loan default to another qualified employer plan or a traditional IRA within 60 days of the date of the default. If the amount of your loan default is the only amount you receive or are treated as having received, no amount will be withheld from it. If you receive other payments of cash or property from the Plan, the 20% withholding amount will be based on the entire amount paid to you, including the amount of the loan default. The amount withheld will be limited to the amount of other cash or property paid to you (other than any employer securities). The amount of a defaulted plan loan that is a taxable deemed distribution cannot be rolled over.

Special Tax Treatment If You Were Born before January 1, 1936. If you receive a payment from a plan qualified under section 401(a) or a section 403(a) annuity plan 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, if the payment qualifies as a “lump sum distribution,” it may be eligible for special tax treatment. (See also “Employer Stock or Securities”, below.) A lump sum distribution is a payment, within one year, of your entire balance under the Plan (and certain other similar plans of the employer) that is payable to you after you have reached age 59½ or because you have separated from service with your employer (or, in the case of a self-employed individual, after you have reached age 59½ or have become disabled). For a payment to be treated as a lump sum distribution, you must have been a participant in the plan 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.
1. 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). Ten-year averaging often reduces the tax you owe.
2. Capital Gain Treatment. If you receive a lump sum distribution and you were born before January 1, 1936, and you were a participant in the Plan before 1974, 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%.
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 this Plan (or certain other similar plans of the employer), you cannot use this special averaging treatment for later payments from the Plan. If you roll over 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 over 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.

Employer Stock or Securities. There is a special rule for a payment from the Plan that includes employer stock (or other employer securities). To use this special rule, 1) the payment must qualify as a lump sum distribution, as described above, except that you do not need five years of plan participation, or 2) the employer stock included in the payment must be attributable to “after-tax” employee contributions, if any. Under this special rule, you may have the option of not paying tax on the “net unrealized appreciation” of the stock until you sell the stock. Net unrealized appreciation generally is the increase in the value of the employer stock while it was held by the Plan. For example, if employer stock was contributed to your Plan account when the stock was worth $1,000 but the stock was worth $1,200 when you received it, you would not have to pay tax on the $200 increase in value until you later sold the stock.

You may instead elect not to have the special rule apply to the net unrealized appreciation. In this case, your net unrealized appreciation will be taxed in the year you receive the stock, unless you roll over the stock. The stock can be rolled over to a traditional IRA or another eligible employer plan, either in a direct rollover or a rollover that you make yourself. Generally, you will no longer be able to use the special rule for net unrealized appreciation if you roll the stock over to a traditional IRA or another eligible employer plan.

If you receive only employer stock in a payment that can be rolled over, no amount will be withheld from the payment. If you receive cash or property other than employer stock, as well as employer stock, in a payment that can be rolled over, the 20% withholding amount will be based on the entire taxable amount paid to you (including the value of the employer stock determined by excluding the net unrealized appreciation). However, the amount withheld will be limited to the cash or property (excluding employer stock) paid to you.

If you receive employer stock in a payment that qualifies as a lump sum distribution, the special tax treatment for lump sum distributions described above (such as 10-year averaging) also may apply. See IRS Form 4972 for additional information on these rules.
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 “qualified 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 designated beneficiary (other than a surviving spouse or alternate payee) of a deceased employee, you may be able to roll over tax free all or a portion of a distribution you receive from an eligible retirement plan of the employee. The distribution must be a direct trustee-to-trustee transfer to your IRA that was set up to receive the distribution. The transfer will be treated as an eligible rollover distribution and the receiving plan will be treated as an Inherited IRA. For information on inherited IRAs, see Publication 590.

If you are a surviving spouse, an alternate payee, or another beneficiary, your payment is generally not subject to the additional 10% tax described in Part III above, even if you are younger than age 59½.

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 and the special rule for payments that include employer stock, 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 the Plan Administrator or 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.

You should keep this notice and all paperwork concerning the distribution to use in the preparation of your income tax return and any declaration of estimated tax.

The laws and rules governing your distribution are very complex and they change from time to time. You are strongly urged to promptly seek the advice of a competent professional tax advisor to determine the tax impact applicable to your distribution.


	401(K) Beneficiary Designation
	Remember to review and update your beneficiary information as needed. If a designated beneficiary moves, has a name change or dies then you need to update your information by completing and returning a new beneficiary designation form. Return all forms to: CITGO Petroleum Corporation Attn: Corporate Office - Benefits P.O. Box 4689 Houston, TX 77210-4689.


	Summary Plan Descriptions
	Describes the benefits available under the Plans, as well as the Plan’s limitations and exclusions. As a participant of the Plan, you may be asked to comply with certain provisions of the Plan, which could affect the benefits you receive. We recommend you review your plan’s SPD in order to make informed decisions about your savings account.