Virginia Defined Contribution Plans

You are eligible to take a distribution when you retire or terminate employment with the employer that offers the Plan. Or, upon your death, the balance in your account is distributed to your beneficiaries.

Withdrawals from all Plans are subject to ordinary income tax. In the Cash Match Plan, a 10 percent penalty for withdrawals prior to age 59-1/2 may apply. You may avoid the penalty if you

begin distributions after age 59-1/2
leave employment after age 55
take distribution in essentially equal installments over your life expectancy.

You are required to take your first minimum distributions by April 1 of the calendar year following the later of:

the calendar year in which you reach 70-1/2 or
the calendar year in which you terminate employment from the employer sponsoring your Plan.

NOTE: For calendar year 2009 the minimum distribution requirement was suspended.

If you rolled funds from another retirement plan into your Cash Match Plan, you may withdraw funds from your rollover account while you are still employed. Withdrawals made prior to age 59-1/2 may be subject to a 10 percent penalty, plus state and federal income tax withholding.

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Will I be forced to take a distribution from the Plan when I leave employment with the employer that provides the Plan?

No. You may leave the money in the Plan and continue to manage your account. When you reach age 70-1/2, a certain minimum distribution will be required if you are not still working for an employer that provides the Plan.

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When will my benefit payments begin?

Generally, you determine when your benefits will begin and the method of payment. Your account is available to you when you retire or terminate employment with the employer that offers the Plan. You are required to begin taking required minimum distributions by April 1 of the calendar year following the later of:

the calendar year in which you reach 70-1/2 or
the calendar year in which you terminate employment.

NOTE: For calendar year 2009 the minimum distribution requirement was suspended.

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How do I request a distribution?
To request a distribution, complete the Cash Match Plan Distribution/Direct Rollover Request Form and send it to the Plan record keeper at the address on the form. Before the request can be processed you must have a break in service from the employer providing the Plan. A break in service is defined as a full calendar month during which you received no compensation or benefits from your employer. A break in service does not include summer breaks, periods of leave without pay, educational leave, sick leave and periods of time during which you would normally not be at work.

You should receive your distribution within two weeks after you have gone one full calendar month without receiving compensation or benefits from your employer.

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What happens to my Cash Match account if I am a salaried state employee who opts out of 457 Plan automatic enrollment?

If you opt out of the 457 Plan after being automatically enrolled and take a distribution of your 457 Plan contributions, you forfeit any contributions your employer made to the Cash Match Plan.

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What are my distribution options?

Your options are:

Keep your money in the ORPPA until a future date (subject to required minimum distribution rules).
Receive:
— A partial or full lump sum
— Periodic payments/installments
— Annuity payments
— A partial lump sum with remainder paid as a periodic payment or annuity.
Roll over the money into an eligible retirement plan such as a 401(a), 401(k), 403(b), governmental 457(b) or IRA that accepts such rollovers.

NOTE: Required minimum distributions may not be rolled over.

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Once I receive payments, can I change my distribution option?
Yes. Except for the purchase of an annuity, you may change your distribution option for the balance remaining in your Plan consistent with required minimum distribution rules. Call 1-VRS-DC-PLAN1 (1-877-327-5261) or go to www.varetire.org and select Commonwealth of Virginia Deferred Compensation Plan or Cash Match Plan 401(a) under the Defined Contribution Plans tab.

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When do I pay income taxes on the contributions my employer made to my Plan account?
Money withdrawn from the Cash Match Plan is taxable upon distribution. Each payment you receive from your account is subject to federal and state income tax as you receive it. All income tax withholding, whether state or federal, will be in compliance with IRS regulations. If you take a distribution from the Plan prior to age 59-1/2 you may be subject to early 10% withdrawal penalty on the amount withdrawn. VRS recommends you seek the advice of a tax or estate planning attorney for more information about taxes.

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What is the vesting schedule?
Account balances are 100 percent vested at all times. This means you are eligible to take a distribution of the total amount in your account when you leave employment with the employer that provides the Plan.

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Can I transfer or roll over my account if I leave employment with my employer?
If you leave employment with the employer that offers the Plan, you may roll over your account balance into an eligible retirement plan such as a 401(a), 401(k), 403(b), 457(b), IRA or Federal Employees Thrift Savings Plan. Withdrawals from these plans prior to age 59-1/2 may result in an IRS early withdrawal penalty.
Note: Check with the plan that you are rolling into to ensure the plan accepts the rolled over monies and to determine what fees may apply, if any.

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What happens to my Plan account when I die?
Your account balance will be payable to your named beneficiary according to Internal Revenue Code, Treasury regulations and Plan guidelines when he or she delivers a proper claim. You may designate both primary and contingent beneficiaries to receive your account balance at your death. You may change your beneficiary on-line or by completing a Cash Match Beneficiary Designation Form found on the Web at www.varetire.org under the Defined Contribution Plans Tab or by contacting ING.

If you do not designate a beneficiary, upon your death the account balance will be paid according to the following order of precedence: your surviving spouse, or if none, your children, and descendents of your deceased children per stirpes, or if none, your parents or if none the duly appointed executor or administrator of your estate, or if none, the next of kin entitled to inherit under the laws of your domicile.

Per stirpes is used in reference to a bequest made to a group of individuals. It means that, should one of the beneficiaries named in the group die before the maker of the will, then the deceased beneficiary's share shall go to that deceased beneficiary's lineal descendants.

You may view your current beneficiary designation by logging into your account from the VRS Web site at www.varetire.org. Select Account Log In from the Defined Contribution Plans menu and use your password to log into your account.

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