Plan Correction Administration Guides Now Available Online
The following administrative guides for 457 Plan correction processes have been updated and are now available online in a new section entitled Plan Corrections in the left-hand navigation of the Resource Center for Employers.
- Excess 457 Plan Deferrals and Mistake of Fact Corrections
- 457 Plan Automatic Enrollment Correction Process
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Payroll Authorization Form-Agency Transfer Updated and Renamed
The Payroll Authorization Form – Agency Transfer has been changed. The new form is now called the Payroll Authorization Form – Agency Transfer and Terminated Employee Return to Work. The form was revised to cover various situations when a participant may change agencies or have a break in service so their 457 Deferred Compensation plan contributions continue with their new agency or restart after returning from a break in service. The new Payroll Authorization Form – Agency Transfer and Terminated Employee Return to Work should be used if an employee:
(1) Moves between two agencies with no break in service,
(2) Terminates from agency A, has a break in service and returns to agency A, or
(3) Terminates from agency A, has a break in service and returns to agency B.
This new form is effective immediately and available in the Forms section of the Plan Web site. Participants cannot use this form to change their 457 Plan contribution amount; they must log in to their account to make a change online or call the Plan Information Line at 1-VRS-DC-PLAN1 (1-877-327-5261).
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How To Update a Beneficiary
Participants can change the beneficiary named for their Plan account(s) anytime. There are two ways to change your beneficiary:
Online. Go to www.varetire.org and select the appropriate Plan under the Defined Contribution Plans tab to log in to a Plan Account. Select Personal Information, then Beneficiary Information to update a beneficiary.
By form. Go to www.varetire.org and select the Plan under the Defined Contribution Plans tab. Select Forms from the top navigation bar, then Beneficiary Designation Form. Or, call the Plan Information Line at 1-VRS-DC-PLAN1 (1-877-327-5261) and request the Beneficiary Designation Form be sent. Participants with a 457 Plan and Cash Match Plan can use the same form to update their beneficiary information. Participants in the Optional Retirement Plan for Political Appointees or School Superintendents or the Supplemental Retirement Plan must complete a separate form for each Plan.
By phone. Call the Plan Information Line at 1-VRS-DC-PLAN1 (1-877-327-5261), option 1 to designate or change a beneficiary.
ING cannot accept other methods of changing beneficiaries, such as a letter or marked-up statement with changes to beneficiary information.
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Required Minimum Distributions:
What are they and what participants need to do?
Participants are required by law to begin withdrawing money from their retirement account(s) by April 1 of the year following the year in which they turn age 70½ or retire, whichever is later. This amount is called a required minimum distribution (RMD).
Example: John Smith is retired. He turned age 70 on November 1, 2010 and 70½ on May 1, 2011. He must take his first RMD no later than April 1, 2012.
The first year the participant is subject to the RMD is the only year he is allow to wait until April 1 of the following year to take the RMD. Thereafter, the RMD must be taken prior to the end of December each year. If the participant waits until April 1 to take his first RMD, he is required to take another RMD by the end of December that year.
The RMD for each year is generally determined by dividing the account balance at December 31 of the prior year by a distribution period based on uniform life expectancy tables.
Participants invested in the Virginia Retirement System Investment Portfolio (VRSIP) and/or the Self-Directed Brokerage Account (SDBA) are required to maintain a balance of $2,500 in the core investment options (non-VRSIP or SDBA investment options) at all times. Participants required to take an RMD in 2011 may need to plan ahead or take additional steps to ensure there is sufficient money in the core investments to cover their RMD amount, and maintain the Plan minimum balance of $2,500 in the core investments.
RMDs from the VRSIP
Participants must transfer the amount needed to satisfy their 2011 RMD from the VRSIP into one of the Plan’s core funds. Since the VRSIP allows outgoing transfers only on a quarterly basis, participants must transfer the amount no later than the quarter prior to the date the RMD will be paid. If required to cover the RMD due at the end of December, participants investing in the VRSIP must transfer money to the core investments by the last market day in September.
RMDs from the SDBA
Participants with an SDBA account must contact TD AMERITRADE to transfer funds from the SDBA account to core investments in order for ING, the Plan record keeper, to process the 2011 RMD. The amount transferred must be an amount large enough to leave at least $2,500 in the core investments after the RMD is paid out. Participants may want to consult their financial or tax advisor prior to making any investment decision.
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2011 Tax Cut May Help Boost Retirement Savings
Employees will have extra cash in every paycheck because of a Social Security tax break for 2011 only.
Beginning in January 2011, withholding taxes from wages were reduced by 2 percent. For example, employees earning income below $106,800 will pay 4.2 percent instead of the standard 6.2% into Social Security. Future Social Security benefits will not be affected.
This break offers people an opportunity to save extra money for retirement, while still saving on taxes since contributions are tax-deferred, which means the money is not subject to federal or state taxes until taken as a distribution from the Plan.
Encourage your employees to invest some or all of the additional money into their 457 Deferred Compensation Plan account. There are two ways to increase contributions*:
Online. Go to www.varetire.org and select Commonwealth of Virginia 457 Plan under the Defined Contribution Plans tab. Once logged in, select Change Contributions under My Account.
By phone. Call the Plan Information Line at 1-VRS-DC-PLAN1 (1-877-327-5261) and press 1 to speak with a Customer Service Representative
* UVA, UVA Medical, GMU, and VCU participants cannot change their contribution online or by phone; they must submit a Payroll Authorization Form—For State Agencies Without Online Functionality directly to their employer.
For some employers, the Payroll Authorization Form-Political Subdivisions and School Divisions is available for deferral changes.
Have non-participating employees? Now is a perfect time to join the 457 Plan. Eligible employees can receive a cash match and save even more for retirement. Employees can download enrollment and beneficiary forms from the Plan Web site at www.varetire.org or call the Plan Information Line at 1-VRS-DC-PLAN1 (1-877-327-5261).
Coming soon! "Short Takes" Presentation Series
Help your employees with time management. Employees unable to attend an enrollment meeting or DC-REM can soon access a series of short, online presentations (5 to 10 minutes long) to help them save and plan for retirement with the Defined Contribution Plans. Check the Plan Web site at www.varetire.org in the coming weeks. |
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In case you missed it...
457 Plan Uniformed Services Leave Make-Up Webinar Available
Do you or your employees have questions on how employees qualify to make-up missed contributions to their 457 Plan and what they need to do when they return to employment from military leave? Check out the webinar for employers: 457 Plan Uniformed Services Leave Make-Up available on the home page of the Resource Center for VRS Employers.
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DC-REM Scheduled Through October 2011
Deferred Compensation Regional Education Meetings (DC-REMs) are held throughout the Commonwealth from March through October. Access an up-to-date DC-REM schedule for meetings scheduled through October. Want to schedule one or all of these sessions at your location? Contact the ING registered representative serving your area of the state.
Following is a brief description of the DC-REMs offered in 2011:
- First Steps to Financial Security gives a basic overview of financial tools such as budgeting and debt management, with an emphasis on long-term planning. Appropriate for employees just getting started in their career and those not currently contributing to the 457 Deferred Compensation Plan. — (60 minutes)
- Deferred Compensation and Cash Match Plans Overview provides an overview of Plan provisions, features and benefits. Appropriate for employees eligible for the Deferred Compensation and Cash Match Plans. This presentation can be a refresher for those already in the Plan. — (45 minutes)
- Understanding Your Plan Investments provides an overview of the options available within the Plans, and an explanation of investment performance and account statements. Appropriate for all employees. — (75 minutes)
- Retirement Distribution Strategies reviews distribution options. Appropriate for retirees and participants nearing retirement those developing their own individualized retirement plan. — (75 minutes)
Web-based versions (webinars) of DC-REM sessions also are available. Webinars allow employees to attend a presentation at their desk or at home. Employees can register for a webinar online at www.varetire.org. Choose the appropriate Plan under the Defined Contribution Plans tab, then Participant Education to view and register for upcoming webinars.
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Register for an Employer Webinar
VRS and ING, the Plan record keeper, offer a series of webinars for employers to help you learn more about the Plans. Go online to the Resource Center for Employers to register for an upcoming session.
As always, you can access any of the presentations from previous webinars online at the Resource Center for Employers.
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 Defined Contribution Plans Web Site Tips
The Defined Contribution Plans Web site at www.varetire.org offers participants a
convenient way to access information and manage their account. Here are some tips to
share with your employees to help them master the basics and avoid delays.
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Entering data in required fields
In cases where participants are asked to enter their Social Security Number—usually at login—type in the SSN without hyphens or dashes. Use a forward slash (/) for date of birth.
About security questions
Five security questions are used to establish future password reset capabilities in case a participant forgets his or her password or wants to change their online password. Answers are case sensitive, so uppercase and lowercase letters must be entered precisely.
Logging on to an account from a new computer
If a participant attempts to log in to their account from a computer that is not recognized with the account or registered, they will be prompted to answer three of the five security questions. Once they are successfully logged in, they can register their computer, which alleviates them from answering security questions at future logins. Multiple computers can be registered at one time. |
Getting locked out
It may take a few minutes to complete some tasks, such as creating a new password, and logging on and off multiple times in a short period of time could result in being locked out of an account. If this happens, participants should wait an hour and log back in with a username and password, and the account will unlock.
A participant also may get locked out of their account if they fail to answer three security questions correctly. To unlock the account, they must call a Customer Service Associate at 1-877-327-5261.
What to do when a new password is in the mail
Once a participant requests a new password be issued, he/she should not attempt to log into their account online or by phone, otherwise the account will become locked. If they have any questions about the Plan or their account, they should contact a Customer Service Associate at 1-877-327-5261. Transaction such as changing the contribution amount or restarting contributions can be accomplished online without a password. The Customer Service Associate will ask questions to authenticate the participant. |
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