Frequently Asked Questions about Defined Contribution
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What is a 401(a) plan?
A 401(a) is a retirement plan governed by Section 401(a) of the United States Internal Revenue Code.
What happens to the money?
When you become a participant, you have a choice of many professionally managed investment options, including several mutual funds. More complete information can be found in the investment options guide, which is included with this Information Kit. You should carefully read any prospectus and other relevant investment information before you select your Plan investment options.
What happens if my employer discontinues contributions?
Your Plan Account will continue to enjoy tax-deferred earnings.
May I split contributions among the different investment options?
Yes. You may allocate contributions in whole percentages among the various Plan investment options.
Once I am enrolled in the Plan, how may I transfer or reallocate amounts from one investment option to another?
A transfer or allocation change can be requested through VoiceCONNECT, the automated Voice Response System, or by speaking to a HELPLINE Counselor. You may also use the Plan’s website to transfer account balances among the fund options or reallocate contributions.
What if I take a job with another employer?
If you take a job with another employer that maintains a Section 401(a) plan, you may elect to have all or a portion of your eligible rollover distribution paid directly to that employer’s plan, as long as the other plan will accept the rollover. In the case of such a rollover, the amount rolled over will not be treated as currently taxable income by the IRS.
When do I receive my Plan money?
Because your Plan is designed to provide retirement income, you can’t withdraw from your Plan until after you permanently terminate your employment (including death or termination due to total and permanent disability).
What is separation from service?
Separation from service occurs due to your voluntary termination, involuntary termination, or death. A leave of absence or suspension from employment is not a separation from service. However, if you are on unpaid leave for six consecutive months, you will be considered separated from service.
Is there a time when I must receive payments from the Plan?
Yes, just like IRAs or other retirement plans, you must begin receiving payments starting with the year after you reach age 70 ½. But if you’re still working when you reach 70 ½, you won’t have to begin receiving payments until the year after you actually leave work. These payments must satisfy certain minimums based on your life expectancy.
How am I taxed on my Plan money?
Each Plan payment is taxed as ordinary income when you receive it. A distribution prior to age 59 ½ may result in a 10% federal tax penalty.
What are my benefit payment options?
You may elect to have your benefits paid in a:
· lump sum, or
· monthly, quarterly, or annual basis in substantially equal installments over a number of years that does not exceed your life expectancy, or
· partial lump sum followed by periodic payments
Can I toll over my Plan Account value into an IRA?
Yes. If you receive an eligible rollover distribution, you may make a rollover into an IRA.
Am I still eligible for an IRA deduction?
If you’re “covered” under this plan or any qualified retirement plan, you’ll be eligible for a full IRA deduction only if your modified adjusted gross income (before the IRA deduction) is no more than $32,000 [2001] if you’re single or $52,000 [2001] if you’re married filing a joint return.
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