Helping Idaho Public Employees Build A Secure Retirement

Choice 401(k) Plan Frequently Asked Questions (FAQs)

Accessing Your Account

Contributions

Investments

Loans / Hardships

Withdrawing Funds / Payments

Buying Base Plan Service

Rolling in Funds from Other Plans

Accessing Your Account

What is my PIN Number for the Choice 401(k) Plan, 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." Xerox 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, Xerox HR Solutions.

How do I look up my Choice 401(k) Plan 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.

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Contributions

How much can I contribute to the Choice Plan?

In 2013, you may contribute $17,500 to the Choice Plan. If you are at least age 50 during 2013, you may also contribute an additional $5,500, as a "catch-up."

What are my limits if I also contribute to a 457 or 403(b) plan?

    In 2013:
  • If you are contributing to both the 401(k) and a 457 plan, you may contribute $17,500 to each plan ($23,000 to each if at least age 50 during 2013).
  • If you are contributing to both the 401(k) plan and a 403(b) plan, you may only contribute a total of $17,500 ($23,000 if age at least age 50 during 2013) between both plans.
  • If you contribute to both a 457 plan and a 403(b) plan, you may contribute $17,500 to each plan ($23,000 to each if age at least age 50 during 2013). 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?

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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 - Funds that do not charge any front-end or back-end loads. Such funds eliminate sales commissions charged by load funds by selling their shares through direct distribution.
Front-End Load - You pay a sales commission up front when you purchase fund shares. If a front-end load is charged in a participant directed plan, you will see an immediate reduction in the amounts your deferrals.
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.

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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.

How do I pay back the loan?

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 pay it off early if you pay the entire balance in a lump sum. Partial loan payments cannot be accepted. To payoff your loan early, call Xerox toll-free at 1-866-437-3774 to get the loan payoff amount. Then send a certified check or money order in that amount. Send a certified check or money order made payable to PERSI Choice 401(k) Plan and mail it to PERSI Choice 401(k) Plan, Box 360512, Pittsburgh, PA 15251-6512. Please note this is a "banking lock box" and not a PO Box. Include your name and SSN on the check. Send the check with a note explaining it's a loan payoff and provide a telephone number where you can be reached if questions arise. To reach customer service at PERSI call 208-334-3365 or 1-800-451-8228.

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.
· Burial or Funeral Expenses: You may request a hardship withdrawal for expenses for deceased parent, spouse, children or dependents
· Expense for the repair of damage to principal residence: You may request a hardship withdrawal for expenses that would qualify for the casualty loss deduction under Internal Revenue Code Section 165, such as those resulting from a hurricane or flood damage.

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. Xerox 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 Xerox, 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 59½ years of age.

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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 contribution fund contributions 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. You may also qualify for a loan or hardship withdrawal.

How do I get a payment after I retire or quit work?

Online distributions are now available. Just log on to your My Choice Plan Account using your Social Security Number and the PIN assigned by Xerox HR Solutions (the record keeper) and go to the "Actions" tab and submit your request online. Requests are processed by Xerox within three business days, and the check is mailed to your home address of record.

Can I leave my money in the 401(k) after I quit or retire?

Yes. If your account balance is over $200, you may leave the money in your account until a later date. Your account will be charged $2.40 per month for record keeping charges beginning the month following 90 days following the date of your employment termination. These fees are considered nominal. If your account balance is below $200 after you terminate or retire, Xerox will process a final distribution. When your account balance goes to $0, it is closed. When you turn age 70-1/2, the IRS mandates that you begin receiving Required Minimum Distributions (RMD). President Bush signed legislation waiving the RMD requirement for 2009, but they will be required in 2010.

Why did Xerox send me a check I didn't request?

If you quit work or retired and your 401(k) account balance is less than $200, Xerox 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.

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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.

Can I use my 401(k) money or other funds to buy back service in the Base Plan after I quit?

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. To accomplish this transfer of funds after termination of employment, you would use rollover funds from an eligible plan. You will need to contact the plan administrator to initiate the rollover. If you use funds from the Choice Plan, you would need to complete the Payment Agreement (Form 116), PERSI Rollover Verification (Form IVa) and the Choice Plan Request for Distribution/Rollover (Form V).

Can I use 401(k) money to do a Purchase of Service in the Base Plan?

Yes. You must complete the Purchase of Service paperwork within 90 days prior to your retirement. Contact your PERSI Retirement Specialist for information on how to use your Choice Plan to purchase service and obtain the appropriate paperwork (See the Purchase of Service web page).

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).

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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 the 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: PERSI Choice 401(k) Plan, FBO (Participant Name and SSN) and sent to Xerox HR Solutions at the address included on the Rollover Form. It is very important that the Rollover Form be sent to Xerox along with the check; otherwise, Xerox cannot deposit the check. (See the Rollover Form)

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 generally may not roll the money out of that plan. Check with the plan's administrator to see if that is available. 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 balance. 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 (see the Rollover Form).

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 401(k) Plan, 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)?

No. 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. If a non-spouse beneficiary chooses a lump sum distribution, the distribution is subject to federal tax withholding at the rate of 10%; however, the beneficiary can choose to have no tax withheld by submitting Form W-4P to PERSI. Non-spouse beneficiaries may not leave funds in the Choice Plan. Pending changes in the plan will require funds to be paid out within 15 months after the member's death.

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.

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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.

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