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Contributions
About My Plan
Statements You Receive
Distributions
Rollover to my 401(k)
Taxes
Vesting
Eligibility in My Plan
Loans

Contributions

How Much Can I Contribute To My 401(k) Plan Each Year?

These amount may be indexed each year for cost of living adjustments. Below are the Contribution Limits:

Item	2012	2011
401(k) and 403(b) Deferral Limit	$17,000	$16,500
401(k), 403(b), 457 Catch-up Contribution Limit	$5,500	$5,500
SIMPLE Deferral Limit	$11,500	$11,500
SIMPLE 401(k) and IRA Catch-up Contribution Limit	$2,500	$2,500
Annual Compensation Limit	$250,000	$245,000
Defined Benefit Plan 415 Limit	$200,000	$195,000
Defined Contribution 415 Limit	$50,000	$49,000
Dollar Limit for Highly Compensated Employee	$115,000	$110,000
Dollar Limit for Key Employee	$165,000	$160,000
Salary Limit for SEP Eligibility	$550	$500
457 Deferral Limit	$17,000	$16,500
Social Security Taxable Wage Base	$110,100	$106,800

How Often Can I Change My Deferral/Contribution Amount?

You can change your deferral/contribution amount as often as your plan will allow. Generally, a 401(k) Plan will allow you to change the amount you are contributing as often as the plan’s entry dates. This is outlined in your Summary Plan Description. Talk to your employer if you do not have a copy of the Summary Plan Description. You will also have to complete a new Election Form requesting your deferral/contribution amount change and hand it to your employer.

If I Am Currently Contributing To My 401(k) Plan And I Want To Stop, When Can I Do This?

You can elect out of the plan at any time. However, if you want to start contributing again after you elect to stop, you must wait until the next plan entry date to start-up again. Your Summary Plan Description will outline your plan’s entry dates.

Can I Make After Tax Contributions To My Plan?

This depends on whether or not your plan allows for this provision. Please read your Summary Plan Description to see if the plan allows for after-tax contributions.

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About My Plan

How Do I Learn How My Employer’s Retirement Plan Works?

Once you become eligible to participate in your employer’s retirement plan, you will be given a Summary Plan Description (SPD). The SPD outlines the “rules” or provisions of your employer’s plan. Every retirement plan has provisions on how the plan operates and dictates certain requirements for the following:

Eligibility Requirements
Vesting
When You Can Take Distributions
What Type of Distributions Are Allowed
If Loans Are Available
Retirement Age

And More … Please see your employer to request a Summary Plan Description.

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Statements You Receive

How Often Should I Receive A Statement Of My Account?

Most 401(k) Plans provide a statement of your account at least once a quarter. However, some 401(k) Plans and most Profit Sharing, Defined Benefit, and ESOP Plans provide a statement of your account only once a year.

What Does “RECEIVABLE” Mean on My Account Statement?

When you see an account listed on your statement that reads “RECEIVABLE”, this means that contributions were credited to your account for the period reported but have not been paid to the plan yet. When the “Receivable” amount has been paid to the plan you will see a transfer coming out of the “Receivable” account and into your investment elections.

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Distributions

If I Terminate My Employment When Can I Receive A Distribution From My Plan?

Generally, most 401(k) Plans will allow terminated participants to request a distribution of their vested account balance as of the date they terminate. However, some 401(k) Plans, and Profit Sharing, Defined Benefit, and ESOP plans have specific dates that a terminated employee may receive a distribution. Please read your Summary Plan Description to find out when your plan allows distributions when you terminate your employment. If you are eligible to receive a distribution from your plan, you will have to complete a Distribution Election Form and turn it in to your employer or MVP Plan Administrators, Inc.

Once I Have Completed A Distribution Election Form And Turned It In To My Employer Or MVP Plan Administrators, Inc. When Can I Expect Payment?

MVP Plan Administrators, Inc. does not hold the assets of your plan. Once we receive a completed Distribution Election Form and verify that you are eligible to receive a distribution, we request the investment custodian to make payment the same day. MVP Plan Administrators, Inc. can not dictate how long the investment custodian will take to make payment, but generally the entire process takes about two weeks.

What Happens To My Account Balance If I Die?

Generally, if you die and if you are not already 100% vested in your plan, it will become 100% vested at the time of your death and will be paid to the beneficiary you designate. If you do not designate a beneficiary, the plan will pay your distribution to your spouse, children or estate. Please be certain that your employer has a recent beneficiary form for you in their records. If your marital status changes, please see your employer to update your beneficiary form.

What Do I Do If I Am The Beneficiary Of A Deceased Participant?

If you are the spouse of the deceased participant, you can either rollover the distribution into another qualified plan or IRA without tax consequence or you can elect to receive the distribution in cash. If you are not the spouse of the deceased participant, the distribution will be paid to you directly.

What Happens To My Account If I Become Disabled?

Generally, you will be eligible to take a distribution from your retirement plan. The plan has specific language as to who qualifies as “disabled” for plan purposes. If you meet the criteria then you may be eligible to receive a distribution of your vested account balance. Please read your Summary Plan Description or ask your employer if your situation meets your plan’s criteria.

What Happens To My Account If I Get Divorced?

In some divorce cases, the court will award a part or all of your vested account balance to your ex-spouse. If this happens, the court order must meet the conditions of a Qualified Domestic Relations Order (QDRO). A QDRO details the benefits the ex-spouse will receive from your retirement account. Any amounts your ex-spouse receives as a result of a QDRO is taxable to your ex-spouse, not you.

What Is a Hardship Withdrawal?

A hardship withdrawal is a distribution that can be given from a retirement plan if you have no other means to accommodate a financial hardship. In order to be eligible for a hardship withdrawal your plan must first allow for hardship withdrawals. See your Summary Plan Description to see if your plan allows for hardship withdrawals. Second, if your plan allows for loans in your retirement plan, you must take the loan first before you can qualify for a hardship withdrawal. Third, you must meet one of the following criteria to be considered for a hardship withdrawal:

To purchase your primary residence
To prevent eviction or foreclosure from your primary residence
To pay un-reimbursed medical expenses for you, your spouse, or children
To pay for tuition for the next 12 months of post-secondary education for you, your spouse, or children

Lastly, you have to complete a Hardship Withdrawal Application and be able to attach proof in the form of documentation to support your reason for a financial hardship.

Are Taxes Withheld From My Hardship Withdrawal?

It depends. Any amount distributed from employee monies is not eligible to be rolled over into an IRA or other qualified plan. However, any amount distributed from employer monies is eligible to be rolled over into an IRA or other qualified plan. Generally, the rule regarding withholding is that if a distribution from a retirement plan is NOT eligible for rollover, then taxes are not mandatory. Amounts taken from employee monies are not subject to tax, but amounts taken from employer monies are subject to tax withholding. However, the hardship distribution is taxable to you in the year it is taken.

May I Roll-Over A Hardship Withdrawal To An IRA?

Again, it depends. If amounts are distributed from employee monies they can not be rolled over into an IRA or other qualified plan. If monies are distributed from employer monies then they can be rolled over to an IRA or other qualified plan.

What Is An In-Service Withdrawal?

An in-service withdrawal is a distribution that can be taken from the plan while still employed by your employer if the plan allows. The in-service withdrawal option must be allowed in the plan document in order for a participant to receive a distribution. Generally, if the option for in-service withdrawal is available in your plan they have restrictions as to who would qualify. Typically, in-service withdrawals are allowed for participants who are at least age 59½ and worked for their employer for a specified number of years. Please read your Summary Plan Description to find out if in-service withdrawals are allowed in your plan and if you qualify.

How Do I Receive A Distribution At Retirement?

Each plan has a specific date and age specified for retirement. Some plans also have provisions for early retirement. Typically, normal retirement age is age 65. You will be eligible to receive a distribution from your retirement plan at normal retirement. You will also become fully-vested in your account, if you are not already. Most plans allow retired employees to take their distribution upon their retirement date. However, there are guidelines in every plan concerning when a distribution may be taken for retirement and early retirement. Please read your Summary Plan Description to find out more.

When Do I Have To Start Taking Distributions From My Retirement Plan?

Current legislation requires any employee who is age 70½ to start taking distributions from their retirement plan. However, if you are not a 5% owner of the employer and you continue to work for the employer, you may defer the required distribution until retirement. If you no longer work for the company or you own at least 5% of the employer, you must take a Required Minimum Distribution (RMD) each year by December 31st. MVP Plan Administrators, Inc. will notify any employee at least age 70½ each year regarding their options.

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Rollover To My 401(k)

May I Rollover My Account Balance From My IRA Or My Prior Employer’s Retirement Plan To My Current Employer’s Retirement Plan?

Yes, if the plan allows. You will have to notify your prior employer or the custodian of your retirement account that you want to rollover your balance to your new employer’s plan. They will generally make you complete some forms to let them know how to make the check payable. Typically, the check is made payable to the investment custodian of your new employer’s plan and sent to MVP Plan Administrators, Inc. You will have to fill out an Election Form instructing MVP Plan Administrators, Inc. how to invest the money you are rolling over. You can obtain an Election Form from your employer, by downloading an Election Form from the “Forms” section of our website, or by contacting MVP Plan Administrators, Inc.

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Taxes

How Does Deferring To My Employer’s Retirement Plan Reduce The Taxes I Pay?

Any amount of money that you elect to defer to your employer’s retirement plan is not taxed when it is taken out of your paycheck. Here is how it works:

You put some of your pay into your employer’s retirement plan. The amount you elect to put into the plan is not taxable to you. That means tax withholding on your paycheck will be less - immediate tax savings! Example: An Employee is in the 28% tax bracket. Assume this Employee elects to save $100.00 per month.

	No 401(k) Program	With 401(k) Program
Current Salary 401(k) Deduction	$2,000 per month 0 per month	$2,000 per month $ 100 per month
Taxable Salary Taxes Withheld	$2,000 per month $ 560 per month	$1,900 per month $ 532 per month
Take Home Pay	$1,440 per month	$1,368 per month

$100.00 would go directly into the plan. $28.00 would be the immediate tax savings ($100.00 x 28%) = $72.00 is the out-of-pocket cost to the Employee to save $100.00.

It actually cost this employee $72.00 to save $100.00! Additionally, the $100 this employee put into the plan will begin to earn income immediately, which is also on a before-tax basis. Any interest, earnings, or appreciation in value of that money will not be taxed to her while she is in the plan. The money put into the plan and the earnings will only be taxed when she takes it out of the plan.

Do I Have To Report A Distribution That I’ve Taken From My Retirement Plan On My Tax Return?

If you receive a distribution from your retirement plan you must report it on your income tax return in the year it is taken. If you received the distribution in cash, you must pay income tax on the amount distributed. If you are under age 59½, the Internal Revenue Service will also assess a 10% early withdrawal penalty of the gross amount distributed. If you rolled-over your distribution to another qualified plan or IRA, the amount is not taxable.

How Is My Distribution Reported To Me?

If you receive a distribution from a retirement plan, you will receive an IRS Form 1099R that reports the distribution in the year it was received. The Form 1099R must be used to prepare your personal income tax return. You will receive this form no later than January 31st of the year following your distribution.

Why Is 20% Federal Income Tax Withheld From My Distribution?

If you do NOT rollover your distribution from your retirement plan or IRA to another qualified plan or IRA, the IRS requires that 20% of your distribution is withheld to pay federal income tax. In some cases, state income tax also must be withheld from your distribution. Before you take a distribution from a retirement plan you should read the “Special Tax Notice” that accompanies your Distribution Election Form to learn about how you are taxed.

What If I Elected To Take My Distribution In Cash And Then Changed My Mind?

If you received a distribution from a retirement plan and federal (and possibly) state income taxes were withheld. Then you change your mind and want to rollover all or part of your distribution, you generally have 60 days to do so. However, you must make up any amounts that were withheld from your distribution in taxes.

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Vesting

What Is A Vesting Schedule?

Most retirement plans have a vesting schedule that applies to the money your employer contributes to your account. You are always 100% vested in the money you put into the plan and any monies that you rollover to the plan from your prior employer’s plan or IRA. Each plan elects a vesting schedule that increases the amount of employer monies you are vested in based on your service with your employer. Here is an example:

The employer has a vesting schedule as follows:

One Year of Service:	0% vested
Two Years of Service:	20% vested
Three Years of Service:	40% vested
Four Years of Service:	60% vested
Five Years of Service:	80% vested
Six Years of Service:	100% vested

Generally, you receive credit for one year of service if you work at least 1,000 hours during a plan year. You start earning years of service for vesting credit from the date you are hired by your employer.

If you were hired on February 2, 1998 and you worked at least 1,000 hours every year you were hired and it is now December 31, 2003, then your vesting service would be 6 years and you would be 100% vested in all the money your employer contributed.

Please read your Summary Plan Description to find out what your vesting schedule is in your retirement plan.

What Happens To My Account If I Terminate Employment Before I Am 100% Vested?

If you terminated employment before becoming 100% vested in your employer’s retirement plan, you will receive only a distribution based upon the vesting schedule for any employer monies. You are always 100% vested in the monies that you put into the plan. Any amounts that you are not vested in will be forfeited.

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Eligibility In My Plan

What Is Meant by “Eligibility Requirements”?

Most retirement plans have provisions that dictate when you will become eligible to participate in the retirement plan. Generally, your employer’s plan will have a required period of time you must be employed by them and a minimum age requirement to become eligible. Once you have met these requirements, you will be eligible to participate in the plan on certain dates that your employer elects. Here is an example:

Your employer’s plan has a one (1) year service requirement and a minimum age requirement of 21. One year of service may also mean that you must work at least 1,000 hours during your first year of employment.

Your employer’s plan also has plan entry dates specified as January 1st, April 1st, July 1st and October 1st. This means that after you have met the eligibility requirements you will become eligible to participate on one of these dates following the date you met the requirements.

Let’s say you were hired on February 2, 2007 and you are over age 21. Your year of service is measured from your date of hire (2/2/07) to one year later (2/2/08). If you worked over 1,000 hours during this year you will be eligible to participate in the plan on April 1, 2008.

Please read your Summary Plan Description for details on eligibility requirements.

What Happens If I Was Eligible To Participate In My Employer’s Plan And I Terminate My Employment And Then I Am Rehired?

Every retirement plan has provisions for employees who were eligible to participate in their employer’s plan, then left employment, and then were rehired. Typically, if you left your employer for less than one year and then are rehired, you can start participating again on the next entry date in the plan. Please see your employer or call MVP Plan Administrators, Inc. to determine your eligibility date.

What Do I Need To Do To Start Contributing To The Plan Once I Become Eligible?

Once you become eligible to participate in the plan you will have to complete an Election Form and a Beneficiary Form. The Election Form allows you the opportunity to contribute a portion of your pay to the retirement plan. The Beneficiary Form must be completed in order to pay any monies you may be owed from the plan to your beneficiary in the event of your death. You may download these forms from our website or see your employer.

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Loans

May I Take A Loan From My 401(k) Plan?

Only if the plan allows loans. Please read your Summary Plan Description to see if your plan allows loans.

Under What Circumstances May I Take Out A Loan?

If your plan allows loans, then the plan will also have provisions for taking a loan. Typically, you will be eligible to borrow up to 50% of your vested account balance up to $50,000. The plan loan provisions may also have a minimum required amount that may be taken as a loan. Generally, plans that allow loans have a minimum loan requirement of $1,000 This means that you must have a minimum vested balance of $2,000. See your employer for questions regarding loans in your plan.

Do I pay Interest On My Loan?

Yes, you will pay interest on your loan, but the interest and principal you pay is paid back to your account. Therefore, you pay yourself the interest.

How Is The Rate Of Interest Determined?

The interest rate you pay on any loan amount from your retirement is outlined in the plan provisions. It’s common to see provisions that state either the same rate for a secured personal loan or prime plus 1%.

How Do I Make Payments On My Loan?

Typically, loan payments will be deducted through your paycheck and submitted to the plan by your employer. Loan payments are deducted from your paycheck on an after-tax basis.

May I Pay My Loan Off Early? If So, Is There A Penalty?

Yes, you may pay your loan off early at anytime without penalty.

What Is The Maximum Time Period I Have To Pay Back The Loan?

You must pay the loan back within 5 years unless the loan is being used to purchase your primary residence. If the loan is being used to purchase your primary residence the plan may allow a longer time to repay the loan.

What Happens If I Terminate Employment Before I Repay My Outstanding Loan Balance?

Generally, you will be able to pay off the loan within 90 days from the date of your termination. If you choose not to pay the loan back after terminating employment, the remaining balance is deemed a distribution and the loan is considered to be defaulted. The outstanding loan balance will be taxable to you in the year it was deemed a distribution.