Plan Contribution Limits Increase for 2012

The Internal Revenue Service (IRS) increased the maximum amounts participants may contribute to their 457 Deferred Compensation Plan in 2012:

Age 50+ and Standard Catch-Up Provisions
Participants age 50 or older by December 31, 2012 may be eligible for the Age 50+ Catch-Up provision that allows them to contribute an additional $5,500 for a total annual contribution of $22,500.

Participants nearing retirement may be eligible to use the Standard Catch-Up provision and contribute up to twice the regular annual deferral limit ($34,000 for 2012) during the three consecutive years prior to reaching the normal retirement age they selected. Normal retirement age must be earlier than age 70 ½.

The earliest normal retirement age VRS Plan 1 members (hired before July 1, 2010) may select is the age at which they are eligible for an unreduced benefit from their primary retirement plan. For Optional Retirement Plan (ORP) 1 participants, normal retirement age can be no earlier than age 65.

For VRS and ORP Plan 2 members (hired on or after July 1, 2010) normal retirement age can be as early as the age at which they qualify for unreduced Social Security retirement with at least five years of service. Those covered by a VRS defined benefit plan also may select a normal retirement age as early as the age at which their age plus service equals 90.

Wage employees participating in the 457 Plan may use the Standard Catch–Up and select a normal retirement age as early as age 62, but not later than the year they reach age 70 ½.

Employees cannot use the 457 Age 50+ and Standard Catch-Up options in the same calendar year. Employer contributions to the Cash Match Plan do not count against the contribution limits that apply to the 457 Plan.

Saver’s Tax Credit
To encourage individuals with low and moderate incomes to save for retirement, the Saver’s Tax Credit offers a federal tax credit for contributions made to the 457 Deferred Compensation Plan.

Participants may be eligible for a federal tax credit equal to a percentage (up to 50%) of the first $2,000 invested in the 457 Plan. The amount of tax credit is based on Adjusted Gross Income (AGI) and filing status as outlined in the chart below:

Don’t let your eligible employees miss out on this great savings opportunity!

The new flyer, Saver’s Tax Credit, is available on the Employer Resources page on the Plan Web site at www.varetire.org and may be printed or linked from your agency’s Web site.

| top of page |

Making 457 Plan Contribution Changes and Catch-up Contributions

Most employers have their employees change their contribution amount online or by phone.

• Online: Go to www.varetire.org and select Account Log-In under the Defined Contribution Plans tab, under My Account select On-going Contributions.
• By phone: Call 1-VRS-DC-PLAN1 (1-877-327-5261) and follow the prompts to change contribution or investment elections.

To use the Standard Catch-Up provision, participants must complete the Normal Retirement Age Election form, the Standard Catch-Up Credit Worksheet and the Payroll Authorization Form-Standard Catch-Up. Forms are available online at www.varetire.org; select 457 Deferred Compensation Plan under the Defined Contribution Plans tab, then Forms. Employers implement the requested change when the employee gives them the completed forms. Forms are then sent to VRS to review. Unless there are question about the employee’s direction, employers should not wait for the VRS review to be complete before implementing the requested change.

| top of page |

Ordering Plan Publications Online

Now when you order publications online you will be brought to a new Web site, BMZ, a proprietary product of the Plans’ record keeper ING.

You can continue to access to the online ordering system through the Resource Center for VRS Employers or bookmark the site at www.benchmarketingzone.com. Previous usernames and passwords are no longer valid. Use the e-mail address and password below to login. Password is case sensitive.

E-mail address: virginia@us.ing.com
Password: virginia

| top of page |

Take Advantage of On-site Investment Education

VRS and ING provide a variety of educational resources to help alleviate the burden on employers to ensure employees are aware of their employer provided 457 tax-deferred savings plan and reinforce the importance of saving for retirement. These resources include four local registered representatives who can visit your location to:

• Help non-participating employees enroll in the Plans
• Review the investment options available
• Meet individually to review participant account information
• Conduct education meetings for employees

In 2012, the following seminars will be presented throughout the year and can be held at your location. Contact your registered representative today to schedule a seminar for your employees.

• First Steps to Financial Security. For employees getting started in their career, this seminar presents an overview of how to use the Plans to develop a long-term strategy to achieve financial security.
• Deferred Compensation and Cash Match Plans Overview. Provides employees an overview of the Plans and the investment options available.
• Managing Your Defined Contribution Plan Accounts. Employees will learn about various types of investment options and basic investment principles.
• Retirement Distribution Strategies. Retirees and participants nearing retirement can learn about the distribution options available to them.

VRS also holds Retirement Education Seminars (RES) that address a variety of financial planning and retirement readiness topics specific to VRS benefits and focused on the needs of individuals at various stages of their careers. Industry professionals deliver information, provide insight and answer questions on topics ranging from financial planning strategies to adjusting to retirement. For more information about the seminars offered, visit www.varetire.org and select Education and Counseling under the Member tab.

Now is a great time to take advantage of these resources and help your employees learn more about saving for retirement with the Defined Contribution Plans.

| top of page |

Appealing Emergency Withdrawal Denials

The Virginia 457 Deferred Compensation Plan allows withdrawals in the event of an unforeseeable emergency based on strict Internal Revenue Service (IRS) regulations as defined in Section 457 of the Internal Revenue Code (IRC).

Each request for an unforeseeable emergency distribution is initially approved or denied by ING based on documentation provided by the participant describing the nature of the unforeseeable emergency and providing proof there are no other resources available to cover the emergency. If ING denies a distribution request, the denial letter to the participant contains instructions on how to appeal. The appeal must be submitted to VRS within thirty days of receiving notification of the denial and include any additional documentation the participant can offer to show they are in a hardship situation.

The decision to grant or deny an unforeseeable emergency withdrawal appeal must be based on sufficient evidence indicating the emergency is extraordinary and unforeseeable and that there are no other resources available to cover the emergency. Each appeal is reviewed to determine if anything was missed on the initial review and to see if VRS can allow the hardship based on any additional information provided by the participant.

| top of page |

Participant Focus Groups Provide Feedback

The Virginia Retirement System (VRS) is evaluating the DC Plans investment program with the objective of improving fund offerings and participant investment communications. To support this effort, VRS partnered with Virginia Commonwealth University’s (VCU) Performance Management Group to hold participant focus groups in Richmond, Roanoke, Fairfax and Norfolk during 2011. The groups were segmented by participants’ years of service as follows: 0-9 years of service; 10-19 years of service; and 20+ years of service including retirees. Participants were randomly invited to participate.

Below are summary highlights of the focus group discussions:

• A wide variation exists in how participants make investment decisions. Some are very unsure about their investment ability and are overwhelmed by the information and available options. These participants make their investment selections with great trepidation. Some participants make investment decisions based on various criteria they consider important and still others consult with external financial advisors or other people whose opinions they trust.
• Participants are generally satisfied with the investment options offered through the plans but some additional options were suggested for VRS to consider. Most of these options were focused on very specific investment strategies and are under consideration.
• The Web site is good but could be improved, particularly in the area of password resets. Participants expressed that the web site provided valuable information and provided convenient access to their account information.
• A wide range of opinions were expressed relative to communications. Some believe the information provided is too voluminous and complex and should be simplified, others think the information is adequate and still others want more detailed information. Participants suggested the use of graphs, pie charts and other visual representations of performance and asset allocations would be very useful. Participants were receptive to the use of video clips and interactive tools on the Web site as a means of communication.
• Participants suggested that VRS should proactively market the Deferred Compensation Plan. They see this program as a valuable benefit and every effort should be made to ensure employees are fully aware of the Plan.

If you or your employees have suggestions for improvements, please send an e-mail to Kelly Hiers, Plan Manager, at Kelly.Hiers@us.ing.com. VRS expects to make any necessary changes during the third quarter of 2012. Updates regarding this project will be provided in upcoming issues of The Employer View and posted on the Resource Center for VRS Employers.

| top of page |

Mobile Apps Coming Soon

In 2012, ING, the Plans’ record keeper, will be introducing a mobile account access “app” for participants. This app will make it more convenient for participants to manage their accounts and access educational material through their smartphones.

Also coming in 2012 — STRUCT, an online game that teaches the concepts of risk, diversification, goals and achievement. The skills required to succeed at this game are the same ones that are necessary to become a successful long-term saver.

Apps will be available for download for iPhone and Android smartphones. Stay tuned to Employer View for the debut of these new services.

| top of page |

457 Plan Automatic Enrollment Webinar Now Online

For employers at CIPPS and decentralized agencies that automatically enroll into the 457 Plan
If you missed the most recent webinar for employers, 457 Plan Automatic Enrollment Overview, you can access it now from the Resource Center for VRS Employers. The presentation provides an overview of automatic enrollment as well as:

• Employee eligibility requirements
• Enrollment process
• Employer responsibilities
• Plan error corrections
• Frequently asked questions

You can access previous webinars and register for upcoming webinars through the Resource Center for VRS Employers.

| top of page |

Money Matters for Virginians Courses Available

Money Matters for Virginians, a series of online courses covering financial basics, is now available at http://www.varetire.org/money-matters.asp. Courses are free and open to the public. No registration is necessary. Each course is 30 minutes and covers various financial topics from banking basics to more complicated subjects such as home finance. Help VRS get the word out about this important educational series by promoting it in your internal and external communications. The series includes:

• Banking
• Credit
• Taxes
• Investments
• Financial Planning
• Home Finance

| top of page |

If you would like to stop receiving these updates, select the “unsubscribe” link at the bottom of the e-mail.

Contact Us

Registered Representatives:
Contact your local registered representative to schedule an on-site employee meeting. Registered representatives are available by calling the local office toll-free at 1-VRS-DC-PLAN1 (1-877-327-5261), Monday – Friday, 8:30 a.m. to 5 p.m. or by email. Or, if you’re in the Richmond area, stop by the local office at 919 East Main Street, Suite 1604.

Participant Statements to Mail Quarterly account statements will be mailed with the most current Investment Option Performance Report, 2012 DC-REM Schedule and Focus participant newsletter the week of January 23.

Have a Question or Suggestion? You can contact your registered representative by phone or e-mail. We look forward to hearing from you!

Kelly Hiers, Plan Manager, Richmond/Central Virginia Representative
kelly.hiers@us.ing.com
1-877-327-5261, Option 2, Ext. 13

David Detamore, Central/Northern Virginia Representative
david.detamore@us.ing.com
1-877-327-5261, Option 2, Ext. 11

Mackenzie Moss, Tidewater Representative
mackenzie.moss@us.ing.com
1-877-327-5261, Option 2, Ext. 12

Janice Parker, Western Virginia Representative
janice.parker@us.ing.com
1-877-327-5261, Option 2, Ext. 14

VRS Customer Contact Center:
1-888-VARETIR (1-888-827-3847), weekdays 8:30 a.m. – 5:00 p.m.