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Choice Plan 401(k) Frequently Asked Questions
updated 01-07-2008 Accessing Your Account How do I look up my Account Balance?
Contributions What are my limits if I also contribute to a 457 or 403(b)? How can I find out the limits that apply to my circumstances? What should my employer do to track my limits?
Investments How do I transfer CURRENT funds between investment options? How do I change allocation of my FUTURE contributions? Is there a "safe" investment option? Is there a "guaranteed return" option? Why is PERSI fund the default investment option? How long does it take for my contributions to reach my account? What are no-load, front-end load, back-end load, and 12b-1 fees? What is the Choice Plan's Investment Policy?
Loans / Hardships Can I take a loan from my 401(k)? Is there a downside to taking a loan? How do I apply for a hardship withdrawal? Are there consequences for taking a hardship withdrawal?
Withdrawing Funds / Payments Can I withdraw my 401(k) money while working? How do I get a payment after I quit work or retire? Can I leave my money in the 401(k) after I quit or retire? Why did ACS send me a check I didn't request?
Buying Base Plan Service Can I use my 401(k) money to buy back Base Plan service while working? Can I use my 401(k) money to buy back Base Plan service after I quit? Can I use my 401(k) money to purchase Base Plan service? Can I use 457 or 403(b) money to buy back Base Plan service while working?
Rolling in Funds from Other Plans How do I roll funds from a previous 401(k) into the Choice Plan? Can I roll money from my current 457 or 403(b) into the 401(k)? Can I roll money from my 457 or 403(b) into the 401(k) after I quit or retire? Can I roll money from an IRA into the 401(k)? Can I defer ERIP money into the 401(k)? How do I benefit from rolling my other funds into the 401(k)? Can I put money in the 401(k) from my spouse's plan or IRA? Can I put money in the 401(k) as my spouse's beneficiary? Can I roll a death benefit from a non-spouse into the 401(k)? What is a Letter of Acceptance?
Loans — Repayments & Payoffs (Prepayments) Loans and Termination of Employment
Accessing Your Account What
is my PIN Number for the Choice Plan 401(k), and how do I get a reminder? You may request a reminder letter by calling 1-866-ID PERSI (866-437-3774). Enter your Social Security Number (SSN) and when prompted, hit the “*” key. Or, go to My Choice Plan Account. When it opens, enter your SSN and click “Click here to request PIN number reminder letter.” ACS will mail the PIN letter to your home address, which should arrive in about 10 days. PERSI does not have your PIN and, for your protection, cannot obtain it for you under any circumstances. If you have misplaced your PIN, you must follow the procedure above to receive a reminder from the Choice Plan Record Keeper, ACS HR Solutions. How
do I look up my Choice Plan 401(k) account balance? You may check your account balance at any time at My Choice Plan Account or via the toll free- number 1-866-ID PERSI (866-437-3774). You will need your PIN for access to either. You also will receive an annual statement mailed to your home address. Alternately, you may use the “single sign on” feature by signing in to your PERSI Base Plan and then accessing your Choice Plan without a separate sign on.
Contributions How
much can I contribute to the Choice Plan? In 2008, you may contribute $15,500 to the Choice Plan. It will be adjusted for inflation annually in $500 increments. If you are at least age 50 during 2008, you may also contribute an additional $5,000, as a “catch-up.” What
are my limits if I also contribute to a 457 or 403(b) plan? In 2008: · If you are contributing to both the 401(k) and a 457 plan, you may contribute $15,500 to each plan ($20,500 to each if at least age 50 during 2007). · If you are contributing to both the 401(k) plan and a 403(b) plan, you may only contribute a total of $15,500 ($20,500 if age 50) between both plans. · If you contribute to both a 457 plan and a 403(b) plan, you may contribute $15,500 to each plan ($20,500 to each if age 50). Please check out our online limits calculator.
How can I find out the limits that apply to my circumstances? First check with your employer. Besides you, only your employer knows where you have elected to make deferrals, and how much. PERSI does not have this information that is essential to limit testing. Limits questions can become complicated, particularly when a member contributes to multiple plans. PERSI encourages members and employers to consult qualified tax professionals to ensure all applicable limits are not exceeded. If you and your employer are unable to resolve questions, ask your employer to contact PERSI. Although PERSI can provide limited direction and assistance, you and your employer are ultimately responsible for assuring limits are not exceeded. Failure to comply with limits can result in penalties against both the member and the employer. Please check out our online limits calculator.
What should my employer do to track my limits? Your employer should have acquired gain sharing amounts from PERSI for all 401(k) participants if any was paid, and for any 403(b) participants who have "elected" the "overall limit" (or "C" election). These amounts need to be included in annual additions limit testing for each plan, and if necessary, excess contributions should be refunded to the participant from the elective deferrals made to whichever plan(s) exceeded the annual additions limit due to gain sharing. These refunds will be considered taxable income for the year in which they are refunded and your employer (or plan) should issue a 1099-R related to those refunds. See What responsibilities do employers have for limits testing?
Investments How
do I transfer my CURRENT funds between investment options? You may transfer your currently invested funds by calling toll-free at 1-866-437-3774 or via My Choice Plan Account. You will need your Social Security Number and PIN for this transaction. Note: When you move money in your 401(k) account, changing current funds and future funds requires two separate actions. Transferring your current funds between investments is one transaction. Allocating where you want future contributions to go is another transaction. See detailed instructions for transferring your CURRENT funds.
How
do I change allocation of my FUTURE contributions? You may change the direction of your future allocations by calling toll-free 1-866-437-3774 or via My Choice Plan Account. You will need your Social Security Number and PIN for this transaction. Note: When you make fund allocations in your 401(k) account, changing current funds and future funds requires two separate actions. Transferring your current funds between investments is one transaction. Allocating where you want future contributions to go is another transaction. See instructions for redirecting your FUTURE allocations.
Does
the Choice Plan have "safe" investment options? PERSI does not offer financial advice, but you may want to read the Choice Plan Highlights, Choice Plan Guide, or review the investment fund options. You may also wish to contact a personal financial advisor. Does
the Choice Plan offer a "guaranteed return" option? No. PERSI
offers several conservative funds that have shown a
positive return over the last several years.
You may want to consult a financial advisor for further help in deciding
how to allocate your 401(k) funds.
Why is the PERSI Total Return Fund (TRF) the Default Fund? The TRF is the default fund because you pay no investment fees for this fund. The TRF (with billions in assets) is extremely well diversified among US and international stocks, large cap to small cap funds and more to ensure as little risk as possible. These reasons make it a good introductory investment option. See PERSI Total Return Fund. Other investment options are available, and you may transfer your money at any time. Call toll-free 1-866-437-3774 or see Choice Plan Investment Options.
How
long does it take for my contributions to reach my account? PERSI gives your employer five days from your pay date to send us a payroll report and your funds. If these reports contain errors they must be sent back to the employer. This process can take up to several days to complete. Our goal is to have your money deposited in your Choice Plan within three business days of receipt of a clean report and verifiable funds. We are working diligently to accomplish this goal and appreciate your patience.
What
are no-load, front-end load, back-end load, and 12b-1 fees? No-Load
- Front-End
Load - Back-End Load - You pay a sales commission when fund shares are redeemed. 12b-1- You pay a charge to cover marketing and distribution expenses. The PERSI Choice Plan does not charge any of these types of fees.
Loans / Hardships Can
I take a loan from the Choice Plan? Yes. You may borrow up to 50% of your account balance. The minimum loan amount is $1000, so you must have at least $2000 in available funds in your account for a loan. Available funds include your voluntary contributions, rollover amounts from previous eligible plans, earnings, and any employer contributions. Gain Sharing money is not eligible for loans. You may apply for a loan via My Choice Plan Account or by calling toll-free 1-866-437-3774. You repay your loan to your own account through payroll deductions. Your employer will set up the required payroll deductions. Can
I pay off my Choice Plan loan early? Yes. You may call ACS toll-free at 1-866-437-3774 or call the 401(k) Department at PERSI at 208-334-3365 or 1-800-451-8228 to get your payoff amount. Send a certified check or money order made payable to Mellon Bank, NA and mail it to ACS HR Solutions, PO Box 1014, Totowa, NJ 07511-1014. Include your name and SSN on the check and a note explaining it's a loan payoff. Please advise PERSI if you pay off a loan off early so that we may advise your payroll administrator to discontinue your loan payments.
Is
there a downside to taking a loan from the Choice Plan? There may be. Even though you are paying the principal and interest back to yourself, you are paying it with after-tax money. The money you use to repay the loan will be taxed again when you take a distribution from the plan. Also, you may miss out on potential earnings on the money while it is out on loan. How
do I apply for a hardship from the Choice Plan? If you are eligible for a loan, you must first apply for a regular loan to get money from the plan. If you already have an outstanding loan, or if you do not qualify one, you may then apply for a hardship withdrawal. To apply, call toll-free 1-866-437-3774 or go to My Choice Plan Account. You may request a hardship only from your voluntary pre-tax contributions. Earnings, rollover funds, gain sharing contributions, and employer contributions are not eligible for hardship distributions. A hardship is only available for the following reasons: · Payment of medical bills above and beyond what insurance covers. · College tuition and costs for you or your immediate family. · To prevent foreclosure or eviction from your primary residence. · Purchase of a new primary residence. Are
there any consequences to me if I take a hardship? You will not be allowed to participate in the 401(k) plan for six months following your hardship withdrawal. Your payroll clerk will be advised to stop your contributions. ACS HR Solutions will hold out 10% of the distribution for federal taxes unless you request a different amount on the application. You will receive a 1099-R form from ACS, and depending upon your tax bracket, you may owe more at the time you file your tax return. You may be responsible for a 10% penalty when you file your federal income taxes if you are under 59 ½ years of age.
Withdrawing Funds / Payments Can
I withdraw my 401(k) money while I'm working? You
may be eligible for an in-service withdrawal.
If you have rollover funds in your Choice Plan, you may request a
distribution from those funds at any time, regardless of your age.
If you have funds that were transferred from the Idaho Super Saver 401(k)
Plan, (called “prior” funds), you may request an in-service
withdrawal from those funds if you are at least age 59½.
Any other money contributed to the Choice Plan after October 1, 2001,
regardless of the source, is not eligible for an in-service distribution.
These distributions are subject to early withdrawal penalties; 20%
of the payment will be withheld for federal taxes, and a 10% penalty may
be applied when you file your federal income taxes if you are under age 59½.
Other distributions are available from the Choice Plan only upon termination, retirement, death or
disability. How
do I get a payment after I retire or quit work? You may request a distribution kit by calling toll-free 1-866-437-3774 or via My Choice Plan Account. You may also request a kit from PERSI 208-334-3365 or 1-800-451-8228. The kit is also available on the website. The distribution process generally takes 10 to 14 days. Can
I leave my money in the 401(k) after I quit or retire? Yes. If your account balance is over $200 at the time you quit work, you may leave the money in your account until a later date. When you turn age 70½, the IRS mandates that you begin receiving Required Minimum Distributions. Your account will be charged $2.50 per month for record keeping charges beginning the month following 90 days from the date of your termination. These fees are considered nominal and are much less than most IRAs charge.
Why did
ACS send me a check I didn't request? If you quit work or retired and your 401(k) account balance is less than $200, ACS will automatically send you the funds. To avoid any potential tax consequences, you may roll the check into an IRA or other eligible fund within 60 days from the date of the check.
Buying Base Plan Service Can
I use my 401(k) money to buy back Base Plan service while working? Yes. This is an excellent way to buy back your service using tax-deferred money. You may transfer money with no tax consequences from the Choice Plan to the Base Plan to buy back service, pay for a waiting period, or pay delinquent contributions. You will need to contact PERSI and request a Payment Agreement (Form 116) and accompanying paperwork. To process this type of transfer, you must complete the Payment Agreement, the PERSI Choice Plan Request for In-Service Transfer of Funds (Form V) and a PERSI In-Service Transfer Verification (Form IVb). If you have already started making payments through payroll deduction on a buyback, you are not eligible for this transfer.
Yes,
but only if the buyback is for a waiting period or to pay back delinquent
contributions. You would not be
able to pay back a separation benefit unless you had initiated that buyback
before you left employment and had made at least one payment.
Can I use
401(k) money to do a Purchase of Service in
the Base Plan? Yes. You must complete Purchase of Service paperwork within 90 days prior to your retirement and then upon your retirement, complete a PERSI Choice Plan Request for Distribution/Rollover, choosing Option C. Contact your Retirement Specialist for information on how to use your Choice Plan to purchase service and to obtain the appropriate paperwork. Can
I use 457 or 403(b) money to buy back Base Plan service while working? Yes, you may use funds from those plans to buy back service while you are still working. You will need to contact your 457 or 403(b) plan administrator to determine what paperwork they require and then complete a PERSI In-Service Transfer Verification (Form IVb) and Payment Agreement (Form 116).
Rolling in Funds from Other Plans How
do I roll funds from a previous 401(k) plan into my Choice Plan? You may request
a PERSI Choice Plan Request for Rollover form from PERSI by calling
208-334-3365 or 1-800-451-8228. You
will need to complete Section One on the form and ask your previous plan
administrator to complete Section Two. The
rollover check should be made out to Mellon Bank, NA and sent to ACS HR
Solutions at the address included on the Rollover form.
It is very important that the Rollover form be sent to ACS along
with the check; otherwise, ACS cannot deposit the check. Can
I roll money from my current 457 or 403(b) into the 401(k)? If you are still working for the employer who offers the plan, you may not roll the money out of that plan. Upon a distributable event (termination or retirement), you may then roll the money into the Choice Plan if you have an open Choice Plan account. You may not roll money out of a 457 plan from a tax-exempt or non-profit organization. Only money from a governmental 457 plan may be rolled into the Choice Plan. Can
I roll money from my 457 or 403(b) into the 401(k) after I quit or retire?
Yes, the Choice Plan will accept rollovers even though you are no longer an active employee; however, you must have a Choice Plan account before your termination and maintain it (not close it out) after termination.. Can
I roll money from an IRA into the 401(k)? Yes, if the IRA is from pre-tax money. You will have to certify that the funds are pre-tax. The plan cannot accept after-tax dollars..
Can I defer ERIP money into the 401(k)? Some employers offer early retirement incentive plans (ERIPs) to their employees in the form of a cash bonus. You may defer this money to the Choice Plan if the following conditions are met: 1. The ERIP must be paid through your payroll while you are still actively working. The salary must also be reported to the IRS as W-2 wages. 2. You may not exceed your annual contribution limit. If you are contributing to a 403(b) plan as well as the Choice Plan 401(k), the total of the two plans may not exceed that allowable limit. To defer an ERIP, you must complete a Choice Plan Enrollment Form 801. On the form, indicate the percentage or dollar amount that will allow you to contribute as much as desired to the plan without exceeding the annual contribution limit. It should be noted that while the IRS considers the ERIP to be compensation, ERIP payments are not treated as salary for PERSI Base Plan purposes.
How
do I benefit
from rolling my other funds into the 401(k)? The PERSI Choice Plan funds are no-load funds and the management fees are considered nominal and are much less than those charged by most funds in traditional IRAs. In fact, you are not charged any management fees if you invest in the PERSI Total Return Fund because PERSI pays those fees for you. Many IRAs and other eligible plans not only charge higher management fees, but also include front-end load, back-end load, and 12b-1 fees, all of which will lower your potential earnings.
Can
I put money in the 401(k) from my spouse’s plan or
IRA? No. The IRS considers your account separate from your spouse. The money may not be mixed.
Can I
put money in the 401(k) as my spouse's beneficiary? Yes. If you are a spouse beneficiary, the IRS allows you to roll this money into the Choice Plan.
Can I roll a death benefit from
a non-spouse into the 401(k)? Yes. A non-spouse beneficiary can choose a direct rollover to an IRA established on behalf of the designated beneficiary that will be treated as an inherited IRA. The IRA must be established in a manner that identifies it as an IRA with respect to a deceased individual and also identifies the deceased individual and the beneficiary, for example, “Tom Smith as beneficiary of John Smith.” A direct rollover is not subject to tax withholding and the beneficiary is not taxed on the money until it is later withdrawn from the IRA. What
is a Letter of Acceptance? A Letter of
Acceptance is sometimes required by an annuity plan, such as a 403(b) plan or an
IRA. It ensures that our plan is
eligible to accept custody of the funds in the annuity plan. The letter states that PERSI agrees to accept as trustee a rollover contribution or the portion of a
distribution from an IRA or annuity described in
Section 408(a) or 408(b) of the IRS Code that it is eligible to be
rolled over and would otherwise be includible as gross income. Effect of Gain Sharing on Limit Tests - These questions were relevant in 2001 when PERSI offered Gain Sharing, and will be pertinent again if and when Gain Sharing occurs again, but otherwise may not be of interest to you.
How will gain sharing affect my 401(k) plan? Gain sharing may affect your 401(k) plan. Your 401(k) plan is subject to two separate limits – one limiting elective deferrals (elective deferral limit) and one limiting total contributions, including both elective deferrals and employer contributions (annual additions limit). Gain sharing will not affect the elective deferral limit but it is included in determining whether you have exceeded your annual additions limit. Whether gain sharing will affect your annual additions limit will depend on the level of your compensation, the amount of elective deferrals and employer contributions to your 401(k) account, and the level of gain sharing each year.
How will gain sharing affect my 457 plan? It won’t. Employer contributions to a qualified defined contribution account are not considered when applying 457 limits. Gain sharing is a contribution to a qualified defined contribution account and is considered an employer contribution for purposes of limits testing. However, keep in mind that elective deferrals into either a 401(k) or 403(b) account will affect your 457 plan.
How will gain sharing affect my 403(b) plan? It depends on what elections you have made, if any. 403(b) plans are generally subject to the lesser of three different limits – an elective deferral limit, an annual additions limit, and a maximum exclusion allowance (MEA). However, if you are employed by certain qualified employers (such as school districts, hospitals, etc.) you may irrevocably elect one of three alternative limits provided by section 415(c)(4)(A), (B) and (C) of the Internal Revenue Code. One of those alternatives, commonly known as the "C" election (corresponding to subsection (C) of section 415(c)(4)) or the "overall limit", permits the 403(b) participant to disregard the MEA. However, in exchange for disregarding the MEA, the participant must include all employer contributions to all qualified plans together with all 403(b) contributions when applying the annual additions test. This means that gain sharing will be included in the 403(b) annual additions test only when a "C" election is effective.
Loans — Repayments & Payoffs (Prepayments) Loan repayments will begin approximately 60 days following the processing of a new loan. The only way to repay a loan is through automatic payroll deductions, unless you want to payoff your loan early (see the “Prepayment” section). Loan repayments are made with after-tax money. Your loan repayments are invested on the basis of your investment election for current contribution deductions.
If you want to repay your loan early, you can pay off (“prepay”) the full amount of your outstanding loan balance at any time. To process a loan pay off, please contact the plan’s record keeper, ACS HR Solutions, at 1-866-437-3774 for the exact amount and procedure to pay off the loan. Partial payments are not permitted.
Obtain a bank check or certified check for the exact amount of the outstanding loan balance, made payable to: PERSI Choice Plan 401(k) Mail the check along with a note instructing the record keeper (ACS HR Solutions) that the check is for a loan pay off as noted below. Include your name, Social Security Number, and a phone number where they can reach you if they have questions. PERSI Choice Plan 401(k)
Note: This is NOT a PO Box. It is a “lock box” used for banking purposes. *FBO means “For Benefit Of”
Loans and Termination of Employment If you are no longer employed by a PERSI employer and have an outstanding loan balance, you may repay the remaining balance at that time through the plan’s loan prepayment (“payoff”) procedures. If you do not payoff the loan, you will be deemed to be in default if you fail to make payment by the last day of the calendar quarter following the calendar quarter in which the payment is due.
If you are on an unpaid Military leave, please let PERSI know as federal regulations may affect the loan. If you are on an unpaid leave and it is not an approved Military Leave, your loan repayments will end as soon as you stop receiving pay from your employer. You can arrange to repay the loan by paying off the entire balance (see the “Prepayment” section). Otherwise, the loan may go into default status if you are on unpaid leave for more than 60 days. If the loan goes into default, it is considered a plan distribution, subject to both income taxes and potential penalties.
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