401(a) Defined Contribution Plan Overview
Arlington County’s Defined Contribution Plan is established under Internal Revenue Service (IRS) Section 401(a). It is available for all permanent employees of Arlington County. Leased, seasonal, and temporary employees are not eligible to participate in the Plan.
Eligible individual means any permanent Employee of the County who was hired on or after February 8, 1981. This does not include lease, seasonal, and temporary employees. Any eligible individual is automatically enrolled in the Plan. To find out more information or to schedule an appointment, please contact your local Voya representatives at (703) 228-4783.
The Employer shall make the following contributions to the Plan on behalf of Participants:
- Employer Nonelective Contribution - The Employer shall contribute an amount equal to 4.2% of a participant’s base compensation for all general employees. Special contribution rates apply to uniformed County employees and to County employees who are members of both Arlington County Employees’ Retirement System and the Virginia Retirement System.
- Matching Contributions - A matching contribution based on the amount you contribute to the 457 plan. The contribution will match the amount you contribute up to $20 per pay period to the 457 plan which is pro-rated for part-time employees.
- Investment Allocation - The default investment option for contributions to the 401(a) Plan are Target Date Funds and are based on your date of birth . The allocation of contributions to this default fund will remain in effect until you initiate an investment allocation change through the Internet, automated Voice Response System, or by talking with the Retirement Readiness Service Center (call center).
Arlington County 401(a) Defined Contribution Plan Loan Policy
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.
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 can I receive a distribution under the Plan?
Distributions are allowed only upon:
- separation from service;
- disability; or
The Plan does not permit any distributions while you remain employed.
What are the options for payment of my benefits under the Plan?
The County’s Plan provides you with a wide variety of payout options. They include:
- 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.
- Systematic withdrawal of your account over a specified period or of a specified amount.
- Lump sum, or partial lump sum distribution in combination with other options.
- Deferral of all or a portion of your benefits to a later date, subject to IRS minimum required distribution rules.
Distributions of eligible amounts from the 401(a) Plan can be rolled into other employer sponsored 401, 403(b), and governmental 457(b) plans and to traditional and Roth IRAs.
How will my benefits be taxed?
Benefits are taxable when distributed from the plan. Voya Retirement Insurance and Annuity Company (VRIAC) will report the distribution to you on Form 1099-R, and will withhold the appropriate income taxes. Benefits are subject to the IRS 10% premature distribution penalty tax when distributed before age 59½ unless an exception applies. IRS exceptions include:
- payment on account of death;
- payment on account of separation from service in or after the year in which you attain age 50 (applicable to public safety workers only);
- payment on account of separation from service in- or after the year in which you attain age 55 (all other employees);
- periodic payments made at least annually over your life/life expectancy, or (as applicable) joint lives of the participant and the designated beneficiary;
- payment on account of becoming disabled;
- payment on account of qualified medical expenses greater than 10% of adjusted gross income (7.5% for individuals age 65 or older until 2017);
- payment on account of a federal tax levy;
- payment made under a qualified domestic relations order (“QDRO”); or
- a payment that meets the requirements of a “Qualified Reservist Distribution.”
What happens if I elect to postpone the receipt of my payments to a later date?
If you elect to defer the payment of your benefits to a later date, you may subsequently elect to change to an earlier date or a later date (not later than the time frame specified above and in accordance with IRS minimum required distribution rules). You are required to choose the manner in which your deferred benefits will be paid no later than 30 days prior to the deferral date elected.
Anyone who wishes to obtain a current copy of the Information Booklet and fund prospectuses may contact his/her Voya representative or call (800) 584-6001. Securities are offered through Voya Financial Partners, LLC (Member SIPC), and any other authorized broker/dealers that have selling agreement with Voya.
Voya does not offer tax or legal advice. You should consult with a tax advisor and /or tax attorney concerning your personal situation before making a financial / investment decision.
You should consider the investment objectives, risks, and charges and expenses of the variable investment options offered through a retirement plan, carefully before investing. The fund prospectuses and information booklet containing this and other information can be obtained by contacting your local representative. Please read the information carefully before investing.
Group annuities and mutual funds offered through a retirement plan are intended as long-term investments designed for retirement purposes. Money taken from the annuity will be taxed as ordinary income in the year the money is distributed. Account values fluctuate with market conditions, and when surrendered the principal may be worth more or less than its original amount invested. An annuity does not provide any additional tax deferral benefit, as tax deferral is provided by the plan. Annuities may be subject to additional fees and expenses to which other tax-qualified funding vehicles may not be subject. However, an annuity does provide other features and benefits, such as lifetime income payments and death benefits, which may be valuable to you.
Voya StabilizerSM is offered under a group annuity contract. An annuity does not provide any additional tax deferral benefit, as tax deferral is provided by the plan. Annuities may be subject to additional fees and expenses to which other tax-qualified funding vehicles may not be subject.
Insurance products issued by Voya Retirement Insurance and Annuity Company, One Orange Way, Windsor, CT 06095-4774. Securities are distributed by Voya Financial Partners, LLC (member SIPC). Custodial account agreements or trust agreements are provided by Voya Institutional Trust Company. Insurance obligations are the responsibility of each individual company. All companies are members of the Voya family of companies. Securities may also be through other broker-dealers with which Voya has selling agreements. Product and services may not be available in all states.