Who is Voya Financial®?_
Voya is a leading provider of deferred compensation education, administration and investment services to government plan sponsors and participants. We have serviced government retirement plans since 1972 and currently provide investment and/or administrative services to more than 4,300 cities, counties and municipalities.
What is a 457 deferred compensation plan? +
A 457 deferred compensation plan is a retirement plan that allows you to make contributions into an account established on your behalf. Your contributions are made on a pre-tax basis, Roth after-tax basis, or a combination of the two, and all earnings are tax-deferred. The amounts accumulated on your behalf are distributed at retirement, or due to another qualifying event, such as severance from employment, or death.
Unlike pre-tax elective deferral contributions, designated Roth contributions are currently includible in gross income. Designated Roth contributions are treated the same as pre-tax elective contributions for most purposes, including the annual contributions limits. In addition, a 457(b) plan that has a Roth account feature may permit a participant or spousal beneficiary who has a distributable event to directly roll over eligible amounts to the plan's Roth account. Earnings on designated Roth contributions are not subject to federal income tax If the Internal Revenue Service definition of a “qualified distribution” is met.
What is a 401(a) defined contribution plan?+
A type of retirement plan under which an employer typically contributes a percentage of salary and/or a flat dollar amount per year. The benefit available from the plan at retirement will be based on the total contributions and earnings on such contributions over the time the money is invested.
Under the Arlington County 401(a) Plan, two types of County contributions are made on behalf of Chapter 46 employees.
- For employees other than public safety employees, the employer contribution is 4.2% of your base pay. You will become vested in this contribution (i.e., earn a right to) at the rate of 20% for each year of service. After five (5) years of County service you will be 100% vested (pro-rated for part-time employees).
- A matching contribution based on the amount you contribute to the 457 deferred compensation plan. For most participants, the contribution will match the amount you contribute up to $20 per pay period to the 457 plan, whether or not you are a public safety employees. For Chapter 21 employees (hired before 2/8/81) who participate in the 457 deferred compensation plan will now have the $10 employer matching contribution directed to the 401(a) plan instead of the 457 plan
- You are immediately 100% vested in this contribution.
- Start up contributions for general employees based on years of service participating in Chapter 46.
- An employee can contribute to the 401(a) on an after-tax basis.
Who is eligible to participate in the Plan?+
For the 457 plan, any permanent employee who works for Arlington County is eligible to participate in the Plan. There are no age or service conditions. In order to participate, you will need to enroll and agree to defer a portion of your salary under the Plan.
For the 401(a) plan, all Chapter 46 employees hired on or after February 8, 1981, unless otherwise noted below, are automatically enrolled in the program. Temporary, part-time or seasonal employees are not eligible to participate in either the 457 or the 401(a) plan.
How do I enroll in the 457 Plan?+
There are two ways to enroll in the Plan:
- Participants hired after September 1, 2010, will be automatically enrolled at 2% base pay into Target Date Funds based on their date of birth.
- By enrolling via PRISM (See AC Commons for instructions).
How do I enroll in the 401 (a) Plan?+
If eligible, you are automatically enrolled in the 401(a) Plan.
What is the maximum amount I can contribute to the 457 Plan?+
Under the Plan, the maximum annual contribution amount is set by Internal Revenue Service (IRS) guidelines on a yearly basis. You may view the current limits here.
What is the NRA catch-up provision?+
The 457(b) Plan includes a NRA Catch-up provision, that enables eligible participants to increase their annual contributions by making up, or “catching up,” for prior years in which you may not have contributed the maximum amount permitted in accordance with Internal Revenue Code (IRC) limits to your employer’s deferred compensation plan. The catch-up limit is the lesser of:
- twice the annual contribution limit, as described above, or
- the normal limit for the year plus underutilized amounts from prior taxable years.
Note: Catch-up can only be elected during the three years (consecutive) prior to, but not including, the year the participant attains Normal Retirement Age. Please review the attached brochure for additional information.
Amount available under the NRA Catch-up is based on your prior contribution history. Contact your local Voya® representative for a calculation to determine how much you may contribute under the NRA Catch-up.
If you are eligible for both the NRA Catch-up and the Age 50+ Catch-up, IRS rules say you cannot use both in the same year, but you are allowed to use the option that lets you defer the greater amount. For additional information on the 457 catch-up provisions or the annual contribution limits, please view a brochure on 457 contribution limitations.
What is the Age 50+ Catch-up Provision?+
If you are at least age 50 you’re eligible to contribute an additional amount over the regular limit. However, you cannot use both the NRA Catch-up and the Age 50+ Catch-up during the same year. IRS rules say you cannot use both in the same year, but you are allowed to use the option that lets you defer the greater amount. For additional information on the 457 catch-up provisions or the annual contribution limits, please view a brochure on 457 contribution limitations.
Am I eligible to take advantage of the NRA or the Age 50+ Catch-up Provision?+
You are eligible if you meet the following conditions:
For NRA catch-up:
- Your catch-up contributions must be made in the three years prior to the year that you elect your “normal retirement age” (as defined by the 457 Plan); and
- During the years that you were eligible to participate in the 457 Plan , your contributions to the 457 Plan were less than the amount permitted under the IRS limits in those prior years.
Contact your local Voya® representative for a calculation to determine how much you may contribute under the NRA Catch-up.
For the Age 50+ Catch-up:
- You will be at least age 50 by the end of the year, and
- You contribute the maximum amount to the 457 Plan under the IRS annual regular limit for that year.
If you are eligible for both the NRA Catch-up and the Age 50+ Catch-up, IRS rules say you cannot use both in the same year, but you are allowed to use the option that lets you defer the greater amount.
Additional information on catch-ups is available by calling your local representative, our call center representatives at (800) 584-6001, or by reviewing our 457(b) – How Much Can I Contribute Brochure.
What is normal retirement age?+
The 457 Plan defines “normal retirement age” for purposes of electing the NRA catch-up as any age which is
- not earlier than the earliest age you can retire with unreduced retirement benefits in your employer’s basic pension plan; and
- not later than age 70 ½.
What is the maximum amount that can be contributed to the 401(a) Plan?+
The IRS limits the total of your employee and employer contributions to the 401(a) Plan to 100% of compensation up to an annual dollar amount (determined by the IRS based on annual cost of living adjustments). For 2015,the total contributions that can be made to the 401(a) Plan (and any other 401(a) defined contribution plans sponsored by the County) are 100% of compensation up to $53,000.
How do I increase, decrease or stop my contribution to the 457 Plan?+
You may increase or decrease your contribution amount at any time. Your change will be effective beginning in the month following the month your request to change your contribution amount is received by the County.
Contributions changes can made via AC commons through the following link.
When can I receive a distribution of my benefits under the Plan?+
For the 457 Plan, distributions are allowed only upon your retirement or severance from employment, death, which are considered to be triggering events. In addition, the Plan allows participant to take a withdrawal while still employed with the County upon reaching age 70½, meeting the IRS requirements for a small amount cash outs of up to $5,000, or incurring an unforeseeable emergency. For the 401(a) Plan, distributions are allowed upon your separation from service, retirement, disability or death. You are not able to take a distribution of your 401(a) benefits while you are still working. If you are eligible to take a distribution under a Plan, you may:
- postpone any decision on the payment of your benefits to a future date (no later than the April 1st following the calendar year in which you attain age 70½ or retire, if later);
- receive your benefits immediately, under one of the distribution options available under the applicable Plan; or
- Roll over eligible benefits into another employer-sponsored 401 qualified plan, 403(b) tax deferred annuity plan, or another governmental 457 deferred compensation plan, or to a traditional or Roth IRA.
Can I take a loan from either Plan?+
Loans are not permitted under the 457(b) Plan.
Loans are permitted under the 401(a) Plan. The following information is intended as an outline of the loan provisions governing loans issued from the Arlington County 401(a) Defined Contribution Plan. To request a loan, call Voya at (800) 584-6001. Bear in mind that loans may impact your withdrawal value and limit participation in future growth potential.
1. Maximum Amount of the Loan
The Plan generally limits the total outstanding amount which you can borrow to the lesser of the following:
- 50% of your vested account balance; or
- $50,000 reduced by the highest outstanding loan balance within the last year.
2. Type of Loan and Repayment Requirements
- General Purpose Loans (non-residential) must be repaid by level biweekly payments over no more than five (5) years (60 months).
- Residential Loans (used to purchase your principal residence) must be repaid by level biweekly payment over no more than 30 years (360 months).
3. Loan Interest Rate
The loan will bear interest at a rate which is determined by the Plan Administrator and which will be a rate which a commercial lender would use in the making of a loan under similar circumstances. The County has determined this to be the prime rate as in effect the first business day of each calendar quarter at one of the County’s financial institutions, such as, First Union.
As collateral for a loan, you grant a security interest in fifty percent (50%) of your vested interest in the Plan, as of the time the loan is made. If you default on the loan, the then outstanding principal and all unpaid interest on the loan will be recharacterized as an in-service withdrawal (a “Withdrawal”) by you from the Plan. Such a Withdrawal will discharge the Arlington County 401(a) Defined Contribution Plan from any further liability with respect to amounts treated as distributed to you pursuant to such loan. Such a Withdrawal may have adverse tax consequences to you under the provisions of the Internal Revenue Code (IRC).
5. Investment Option Information
Amounts used to satisfy a loan request will be withdrawn proportionately from the investment options in your Plan account. Amounts withdrawn do not share in the investment experience of the options from which they are withdrawn. Loan repayments will be reinvested in the same way the current contributions to your Plan account are invested.
6. Loan Repayment
The loan must be repaid by payroll deduction while you are employed with the County. When Voya receives a payment in excess of the amount due, the excess will be applied to the principal portion of the outstanding loan. For participants who leave County employment with an outstanding loan balance, the Plan will treat the outstanding loan balance as a taxable withdrawal from the Plan.
7. Prepayment of the Entire Loan Balance
You have the right to prepay the entire unpaid principal amount of your loan at any time. If you prepay all or a portion of this loan, you will not have to pay a penalty and you will not be entitled to any refund of finance charges already paid.
In applying loan repayments received, Voya will apply all amounts received to interest and the principal balance on a level amortization schedule on the date of crediting the payment.
9. Loan Default
If you default on the loan repayment, the entire remaining balance of the loan and any unpaid interest will become due and payable. For these purposes, the following events will be considered a default:
- Your retirement, death, disability, or other termination of employment.
- Termination of the Plan.
- Any scheduled payment remains unpaid more than ninety (90) days.
- Your failure to repay the loan by the scheduled maturity date.
- The occurrence of an event identified in the Promissory Note and Security Agreement as event of default.
10. Promissory Note and Security Agreement
You will be required to sign a Promissory Note and Security Agreement giving the Trustee a security interest in your account balance under the Plan.
11. Tax Results
Neither the Trustee, the Plan Administrator nor any other Plan representative may make any representations as to any tax consequences that may result from your loan from the Plan or as a result of the enforcement of the Promissory Note and Security Agreement. Any borrowed principal and unpaid interest that is not repaid as promised may be treated as a distribution from the Plan to you for which taxes are owed. You will be solely liable for payment of the resulting taxes and understand that the Plan will not withhold any taxes on any such deemed distribution other that an offset loan repayment as directed by applicable federal or state requirements.
12. Choice of Law
If approved, the loan will be governed by the laws of Virginia.
When am I required to begin receiving distributions?+
Yes. At retirement or severance from employment, you are permitted to rollover your benefits to another employer-sponsored eligible retirement plan or traditional IRA.
The IRS requires that distributions under a 457 Plan or a 401(a) Plan begin no later than the April 1st of the calendar year following the calendar year in which you attain age 70½ or retire, whichever occurs later. If you fail to take the minimum required distribution timely for any tax year, an IRS 50% excise tax is imposed on the required amount that was not timely distributed. These rules are referred to as IRS minimum required distribution requirements (MRD).
What are my payment options under the 457 Plan or 401(a) Plan? +
When you are entitled to a distribution of benefits, the County’s plan provides a variety of payout options from which to choose. These include:
- Systematic withdrawal of your account over a specified period, or of a specified amount.
- Distribution over your lifetime.
- Distribution over your lifetime and the lifetime of your designated beneficiary.
- Distribution over a set period, not extending beyond your life expectancy.
- Distribution over a set period of time, not extending beyond the joint and last survivor life expectancy of both you and your designated beneficiary.