New Tools and Resources Available for Employers
The Commonwealth of Virginia Defined Contribution Plans transitioned recordkeeping responsibilities to ING Institutional Plan Services in January 2009. A number of new tools and resources are now available to employers.
Resource Center for VRS Employers
Designed to be a primary resource for information and updates on the DC Plans, this Web site includes:
• Contact with your Registered Representatives
• Schedule for Defined Contribution Plans Regional Education Meetings
• Employer Publications and Guides
• Order Publications Online
• Investment Option Information
• Frequently Asked Questions
• Employer Webinar Registration and Archives
Ordering Publications Online
Ordering publications online has been popular with VRS employers. Use the log-in instructions provided to to order and ship Plan publications to you.
Employer Webinars Provide Answers
Throughout the year, VRS, ING and other business partners hold series of employer webinars focusing on various aspects of the Plans. Go to the Resource Center for Employers to register for upcoming webinars, view past webinars and read questions and answers from those sessions.
Plan Education Meetings Available Onsite
The following Defined Contribution Plan Education Meetings, which are offered regionally, can be conducted at your site:
Deferred Compensation and Cash Match Plans Overview: Provides a basic overview of the Plans and the investment options available. Appropriate for those employees who are eligible for Deferred Compensation and Cash Match Plans.
Guide to Defined Contribution Plans Web site: Provides a tour of the Web site and reviews online capabilities and tools. Appropriate for all employees.
Managing Your Defined Contribution Plan Accounts: Provides an overview of the Plans’ investment options and reviews basic investment principals. Appropriate for all employees.
Retirement Distribution Strategies: Reviews the Plans’ distribution options and provides information on potential taxes and penalties. Appropriate for participants nearing retirement or retirees.
Contact your Registered Representative to schedule a meeting.
Assist Employees to Maximize Their Plan Benefits
Participant Web Site
Participants in the Commonwealth’s Defined Contribution Plans have a custom Web site.
The site provides detailed information on each of the five plans and investments available. There is also a short-cut to the Account Log-in page. You may use the Web site tour to assist your employees in accessing their Plan account(s).
Most Distributions Require Break In Service
Generally, participants can take money out of the Plans only after terminating employment with the employer that offers the Plan and satisfying a break-in-service requirement.
A break in service is at least one full calendar month during which the employee receives no reportable creditable compensation or active member benefits. A break in service does not include summer breaks, periods of leave without pay, educational leave, sick leave and periods of time during which the employee would not normally be at work.
For example, an employee leaves employment in June. July serves as the calendar month required for a break in service. In August, VRS receives the employer report showing the employee is no longer on the payroll. VRS approves the distribution request once it is determined the participant is no longer employed. ING issues the payment a few days later.
Another example is a teacher who has a contract other than 12 months and receives service credit through the end of June. She/he is eligible for a first distribution in October since September is the first month normally worked after summer break.
After retirement, employees may return to work as wage employees with the former employer or an employer that offers a VRS defined contribution plan. Employees who wish to take money out of the Plan(s) must submit a distribution request during the break in service; it must be processed prior to the participant’s return to work.
Under the 457 Plan, a few types of distributions do not require a break in service:
- Withdrawal of balances of $5,000 or less, if the employee has not made contributions to the Plan for the last 24 months.
- Withdrawals from the 457 Plan to pay for approved VRS service credit.
- Withdrawals for unforeseeable hardships, when the employee meets IRS requirements.
- Withdrawal of automatic contributions by an employee who opts out of automatic enrollment in the 457 Plan, provided the employee opts out and requests a distribution within 90 days of the first contribution.
457 Plan and Cash Match Plan Rules Related to Layoffs
Employees who have been laid off should be aware of the 457 Deferred Compensation Plan and Cash Match Plan rules that apply to their situation.
State employees who are laid off typically receive Work-Force Transition Act (WTA) Severance benefits. WTA-Severance is a package of benefits that includes monthly payments and certain health and life insurance coverage. The severance payments are not considered to be compensation and, therefore, may not be contributed to the 457 Plan.
Severance benefits are provided to individuals who are no longer employed by the State. These employees are considered to have terminated employment and are eligible to request a distribution from their 457 and Cash Match Plans, unless they have moved to employment with another employer that offers the plans. The normal timing of distributions applies. The participant must have had one full calendar month during which he received no reportable creditable compensation before processing of the distribution begin.
NOTE: These Plan rules are different from those that apply to your VRS Member Contribution Account (MCA). If you take a distribution of your MCA your Severance benefits will cease. Go to www.varetire.org and select the “Member” tab for more information on WTA
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