Common Questions about Retirement Plans

Yes a participant can contribute to both their employer’s retirement plan and a personal IRA. However, depending on your income, all or a portion of your IRA contribution may still be taxable in that year.

Roth contributions are salary reduction contributions made to the plan that are made on an after tax basis (the income and gains that are earned on Roth contributions are not taxed).

Most plans will allow you to leave your vested balance in the plan if your vested account balance is greater than $5,000. Please check your Summary Plan Description for additional information.

To apply for a loan, a Participant must either submit a Loan Application and fax it to (925) 956-0506 or go online to www.pensiondynamics.com and request a loan electronically. Pending loans are pulled each morning by 7 am. Anything posted after 7 am will be processed the next business day.

Loans will normally be funded within 3-5 business days upon receipt by Pension Dynamics. Loans will not be approved unless the requested loan satisfies the requirements of the IRS and the Plan document.

The following fees will apply to all loans:

• Loan Origination Fee - $125.00
• Re-amortization Fee - $100.00 (only applies after return from LOA and re-amortization is requested instead of make-up payments are made)
• Quarterly Maintenance Fee - varies for each plan, check the Plan Administrative Policy Regarding Plan Expenses
• Overnight Next Day Delivery Fee - $25.00

Note: We recommend that you review the Plan Administrative Policy Regarding Plan Expenses for the applicable loan fees. Funds from “Paperless Loans” cannot be wired or electronically deposited to the Participant’s checking account. By cashing the check, you agree to the terms and conditions of the loan repayment guidelines.

Paperwork will be mailed to you from Retirement Clearinghouse giving you various options for cashing out, rolling the money over to an IRA, or moving the money into another company’s retirement plan. You will be given 30 days to make your distribution election. If Pension Dynamics doesn’t hear back from you within 30 days, your funds will be rolled over to an IRA at Retirement Clearinghouse.

As each plan can choose whether to charge maintenance fees, you should contact your previous employer’s Plan Representative or you can call Pension Dynamics to obtain that information.  Additionally, if you have a copy of the Summary Plan Description (SPD) and Administrative Policies from your previous plan, you can review it to find out if fees are paid by plan participants.

Your plan may have a vesting schedule for the employer contributions based on your years of service.  The “vested amount” is the value of your account that is available to you when you leave the company.  The Plan document determines the number of years it takes to be 100% vested.  This information can also be found in your Plan’s SPD.

IRA’s can be set up at almost any bank, or at most brokerage houses (e.g.: Schwab, Fidelity, Vanguard, E-Trade, UBS, etc.)

There will be a mandatory 20% Federal withholding on any cash distribution over $200.00. State withholding is optional. You may choose to have State withholding taken at the time of the distribution or you may choose to take care of State taxes at the end of the year when you file your tax return. You may also elect additional Federal withholding, if desired, at the time of distribution. In addition, if you are under the age of 59-1/2 you may be subject to a 10% federal penalty tax on the distribution amount and a possible state penalty tax based on your state residency. (i.e.; California may have an additional 2.5% penalty tax).

Unfortunately, in almost all cases, the answer is “No.”  However, if your plan account is held through a Self Directed Account platform, such as Charles Schwab, and you are rolling over your account to an IRA, – an in-kind distribution may be accomplished. You will need to contact your IRA custodian to see if they will accept an in-kind distribution.

A terminated employee/participant has until the end of the quarter following the due date of the last loan payment following their termination of employment to pay-off the full balance of the loan.  If you are unable to make this payment, the loan is “offset” and the outstanding balance becomes a taxable distribution.  You will be sent a 1099-R for the unpaid outstanding balance, and will be responsible for the taxes and penalties (if applicable) when you file your tax returns for that year.

You can call the Human Resources department of your previous employer and request a copy of the Summary Plan Description (SPD) and Administrative Policies for details.

Yes – taxes still apply when you choose to take cash distributions even if you are over the age of 59½. You will not be subject to the 10% federal early withdrawal penalty and 2.5% California state penalty tax that normally applies to cash distributions.

Yes.

You can access your account online here with the Login and Password to your previous employer’s plan and view your current balance and investment information. If you don’t remember your Login or Password, you can call Pension Dynamics at (888) 306-5465 for assistance.