Ekon Benefits: Retirement Plan FAQ

General Information About Retirement Plans

What is a 401(k) Plan?

Contrary to popular belief, a 401(k) plan is not a plan at all, but rather it is a feature within a profit sharing plan that allows you to make contributions on a tax preferred basis, which also accumulate tax-deferred for your retirement. 401(k) plans get their name from the Internal Revenue Code Section 401(k), which allows for pretax voluntary savings. In addition to the pre-tax contributions, the investment earnings also accumulate tax deferred until paid out at retirement.

Why are 401(k) Plans so popular?

There are many reasons for the popularity of 401(k) plans, but the one reason which participants appreciate the most is their personal involvement. In older types of retirement plans the Plan Sponsors made all the decisions.

With a 401(k) Plan the participant can decide –

How much to contribute by electing to defer salary on a pre-tax basis.
How the account is invested by choosing investments, among those offered by the Plan, to tailor your 401(k) Plan to meet your personal objectives.

Also the tax advantages allow you to save more –

401(k) plans are named after the IRS Code Section 401(k), which allows for voluntary pre-tax savings. This means that you don’t pay federal and state tax on the money you contribute to the plan.
The investment earnings accumulate tax deferred, as with all other types of IRS qualified plans, until paid out at retirement.

Lastly, companies can, but are not obligated to make additional contributions on your behalf –

Some companies match the contributions of their employees. Usually this match is a portion of what the employee contributes up to a certain level.
Some companies also contribute additional amounts called profit sharing contributions. These contributions are made regardless of how much, if any, their employees contribute and are usually allocated based on salary.

401(k) plans are the plan of choice for both Plan Sponsors and their participants due to the tax advantages and personal involvement on which they are based.

What’s the difference between saving on my own and saving money in my company’s 401(k) Plan?

TAXES!

Both the federal and state governments will reduce your taxes if you save in the 401(k) plan. This initial tax savings allows you to save more because the government chips in by deferring your taxes. The investment earnings also grow tax-deferred unlike your personal savings.

Let’s look at an example. If you are paying 20% in federal and state taxes, the government chips in by reducing your taxes by 20¢ for each dollar you save.


Saving on your own	$1.00	20¢	80¢
Saving in 401(k) plan	$1.00	N/A	$1.00

The advantage is clear – by not paying taxes you have more money invested to earn more money for you.

Is my company’s profit sharing plan different than the 401(k) Plan?

A profit sharing plan allows a company to make additional contributions for their employees. These profit sharing contributions, sometimes called employer discretionary contributions, are usually distributed or allocated to the employees proportional to their salary.

A 401(k) is a feature under the umbrella of a profit sharing plan. Therefore, an IRS qualified profit sharing plan is required before you can have this 401(k) feature. However, the discretionary contributions are optional. This sometimes causes confusion. The 401(k) feature allows employees to voluntary contribute a percentage of their salary on a pre-tax basis. 401(k)’s also allow your employer to match a portion of the amount you contribute, but this is also optional.

What happens if my company is sold or goes out of business?

The Employee Retirement Income Security Act (ERISA) was established to protect the rights of employees in retirement plans. All of the funds that are invested for your benefit must be held in trust and are separate from your company’s assets. This means that all of the money in your account must be held in a separate Trust for your benefit. Because the money is held in trust, it is protected from the company’s creditors if it goes out of business.

If your company is sold, your new company could take over the responsibility under ERISA to protect your account. Alternatively, in some company sales situations, the 401(k) Plan can be terminated and the plan assets distributed. Also, if your company goes out of business, the Plan is usually terminated. If a 401(k) plan is terminated you are allowed to receive a distribution or directly roll over your account to your own Individual Retirement Account or your new company’s Plan.

Contributing to your 401(k) plan

When can I begin to participate?

Every plan has different eligibility requirements, which were selected by your employer when the Plan was established.

After you meet the eligibility requirements in your Plan, you are able to enter the Plan on the next entry date, again as selected by your employer. Entry dates are based on the plan year (i.e. 1/1 – 12/31 or 7/1 – 6/30). If your plan year is on a calendar year, entry dates could be 1/1 or 7/1 if dual entry, or 1/1, 4/1, 7/1 or 10/1 if quarterly entry. Some plans have monthly or even immediate entry. Please refer to the Plan Information option under the “Retirement Planning” tab after you login to your MyEkon account or contact your Plan Administrator for more information.

How do I contribute to the 401(k) Plan?

Once eligible, you can contribute to the 401(k) Plan through payroll deduction. These contributions are “pre-tax”. That is, they are deducted from your gross income before federal and state taxes are calculated. Generally, your gross earnings, including regular pay, overtime, bonus, etc. is considered when figuring the amount of your 401(k) contribution.

When computing your federal and state taxes, your 401(k) contributions are deducted from your gross earnings. Social Security taxes are paid on your gross salary (including 401(k) deferrals). Therefore, your Social Security taxes and benefits are not affected by your 401(k) participation. By contributing pre-tax, the government actually pays you to save by reducing the taxes you pay.

Your employer will have you complete an election form specifying the percentage of your gross salary you want to contribute to the 401(k) plan. Some Plan Sponsors allow on-line enrollment.

How much can I contribute to my 401(k)?

Some Plans specify certain percentage limits on what you can contribute. For example, some plans allow you to contribute between 1% and 15% of your gross salary, whereas other plans may allow you to contribute up to 100% of your salary. In addition to your Plan’s limits the IRS places a cap on the maximum dollar amount you can contribute in a calendar year. Beginning in 2002, an additional pre-tax catch-up contribution can be made if you are age 50 or older.

Please see the Contribution Limits under Industry News for the most current 401(k) and Catch-up dollar limits.

Does a 401(k) Plan have tax advantages?

Yes!

The federal and state governments provide tax incentives to encourage you to save for your retirement. That is:

You don’t pay federal and state tax on your contributions when they are made to the 401(k) Plan, and
You don’t pay federal and state tax on the investment earnings on your 401(k) savings as they accumulate for your retirement.

Because your contributions and the investment earnings are not currently taxed, you pay less federal and state taxes. In other words, the federal and state governments actually pay you to save. Because your account compounds tax deferred, you can build savings faster in the 401(k) Plan.

Look at the value of the tax deferred advantage:

Tax deferred savings grow geometrically. Geometric growth means that your funds grow at an ever-increasing rate. Albert Einstein called this compounding effect the eighth wonder of the world.

If I contribute, how much tax do I save?

The taxes you save by contributing to the 401(k) Plan depend on your income tax bracket. Your income tax bracket is the percentage of taxes you pay on your last dollar of income. That is, your 401(k) contributions are taken “off the top” of your salary which is the highest tax rate you pay – your income tax bracket.

Federal Tax Brackets For 2009
Tax Bracket	Single	Married
10%	Up to $8,350	Up to $16,700
15%	$8,350-$33,950	$16,700-$67,900
25%	$33,950-$82,250	$67,900-$137,050

In addition to federal tax you also save on your state tax. State taxes vary widely from state-to-state. For the following example we assume your state tax rate is 4%.

Let’s look at an example. Assume you are single, make $40,000/year and save 6% of your salary. Here’s what it looks like:

	No Contribution	6% Contribution
Your Annual Salary	$40,000	$40,000
401(k) Savings	----	2,400
Your Taxable Income	$ 40,000	$37,600

*Taxes You Pay*
*Federal Tax (10% on first $8,350, 15% on from $8,350 to $33,950 and 21% thereafter)	6,188	5,588
*State Tax (4%)	1,600	1,504
*Social Security Tax	3,060	3,060
Total Taxes You Pay	10,848	10,102

Net Income	29,152	27,498
401(K) Savings	----	2,400
Net Income (Including Savings)	$ 29,152	$ 29,898
Tax Savings		$ 746

Take advantage of the IRS’s tax rules and let the government pay you to save for retirement.

When should I start to contribute?

As soon as possible!

The old saying, “Time is money” is right on target when applied to your retirement savings. Retirement funds grow geometrically on a tax-preferred basis. Geometric growth means that your account grows at an ever-increasing rate. Albert Einstein called this geometric compounding the eighth wonder of the world because the longer period of time your money is invested, the steeper the curve gets. The steeper the curve gets, the more money you make.

NOW is the time to begin contributing. The following example demonstrates both the geometric growth and the advantage of starting early.

Example

Both John and Bob are 25 years old

	John, at age 25, starts saving immediately $2,000 a year but stops after only 10 years, a total of $20,000 in contributions.
	Bob waits 10 years until he’s 35, but then he contributes $2,000 a year all the way to 65, making 30 years of contributions, a total of $60,000 in total contributions.


These charts illustrate the results for John and Bob assuming 8% investment earnings per year. Because John started earlier his earnings are much greater and Bob cannot catch up even though John has stopped contributing and Bob continues his contributions to age 65.

Don’t procrastinate! Pay yourself first and reap the rewards of beginning your retirement savings program as soon as possible.

Can I write a personal check to my 401(k) Plan?

No. The only contributions you can make must be by automatic payroll deduction before you are paid. This preserves the tax savings due to “pre-tax” treatment of your contributions. You cannot add money to the plan by writing a personal check.

If you want to increase your contributions, you must increase the percentage of salary you are having withheld through your payroll department or on-line if your company allows you to do so.

Can I move my retirement account from my old job into my new company’s 401(k) Plan?

First you have to check with your old employer to see if you are entitled to a distribution. If so, you must complete forms from your old employer to either receive a cash distribution or directly rollover your benefits to your new company’s plan. It is very important to directly rollover your benefit to avoid taxes and possible penalties.

Once the distribution forms from your old plan are completed, your old plan will directly transfer your benefits to your new company’s plan. Be sure to tell the new plan how you want your funds invested.

Some plans allow for rollovers regardless of whether or not you have met the initial eligibility requirements. Check with your benefits specialist.

Employer contributions to your account

Is my Employer required to contribute to my 401(k) Plan?

No. Employer contributions to a 401(k) plan are optional. Some employers “match” the contributions their employees make. The matching contributions are usually a portion of the employee’s 401(k) contributions subject to a cap. If made, these matching contributions are usually invested along with the 401(k) contributions.

Also, employers may make an additional profit sharing contribution. Profit sharing contributions, sometimes called employer discretionary contributions, are usually invested annually at the end of the plan year and are usually allocated based on your salary.

What is a matching contribution?

A matching contribution is an employer contribution that is based on the amount you contribute to the 401(k). Many employers commit to matching a fixed percentage of your 401(k) contributions up to a limit.

Sometimes the employer match is discretionary. That is, the company decides from year-to-year how much to match.

Examples of Popular Matches Based on $40,000 annual salary
		*Company Matching* Contribution**
Percent of Salary	401(k) Contribution	25¢/dollar up to 6%	50¢/dollar up to 4%
Percent of Salary	401(k) Contribution	25¢/dollar up to 6%	50¢/dollar up to 4%
2%	$800	$200	$400
4%	$1,600	$400	$800
6%	$2,400	$600	$800
8%	$3,200	$600	$800

If your employer matches your 401(k) contribution these are usually invested in your account along with your contribution. However, some employers only match at the end of each calendar quarter or even at the end of each year.

What is a profit sharing contribution?

A profit sharing contribution is an additional discretionary employer contribution. Discretionary means the company decides each year whether to make a contribution and if so, how much. Usually, companies who make this type of contribution review the company books at the end of the year to see if they make a profit. The company then decides on how much to contribute, if any. These contributions are usually made only once per year at the end of the plan year and are allocated to the eligible employees based on their salary.

Your employer may require you to work over a certain number of hours (e.g. 1,000) and be employed at the end of the plan year in order to share in a profit sharing contribution.

What does vesting mean?

Vesting means that the money you have in the Plan belongs to you and cannot be taken away, or forfeited, if you leave your employer. Vesting protects your account if you quit, get laid off or fired.

Your personal 401(k) contributions and earnings are fully vested at all times – this is your money. The contributions your employer makes (either matching or profit sharing) may be subject to a “vesting schedule” established by the Plan.

The two options for the least rapid vesting schedules are:

Minimum Vesting Schedules

	Graded Vesting Schedule Alternative
Years of Service	Matching %	Profit Sharing %
less than 2	0%	0%
2	20%	20%
3	40%	40%
4	60%	60%
5	80%	80%
6	100%	100%
	Cliff Vesting Schedule Alternative
less than 3	0%	0%
3	100%	100%

Am I 100% vested if I die, retire or become disabled?

Although not legally required, most plans fully vest your entire account, regardless of your years of service, if you die, retire or become disabled while you are employed. Again this is not legally required, so review your particular plan’s provisions.

Are national statistics available on Retirement Plans?

Yes. The Profit Sharing/401(k) Council of America publishes statistics on profit sharing and 401(k) plans. You can access them through www.psca.org. Also, the Employee Benefit Research Institute compiles information about all employee benefit plans at www.ebri.org.

These web sites and many others can provide you with general information about retirement plans.

Investing your Account

Can I decide how to invest the money in my account?

It depends on the rules of your particular plan. In some plans, participants decide how their own contributions will be invested, but the company decides how to invest the employer contributions. In other plans, employer contributions are invested in the same proportions as the participant contributions. Further, there are plans where all matching contributions are made in the form of company stock.

You should check with your Plan Administrator regarding your specific Plan.

How should I invest my account?

Ultimately, this decision must be made by you. If your Plan allows for participant directed investments, your employer has selected investment options for the Plan and continues to make sure that these options are good, prudent investments. By shifting the responsibility for deciding how the money should be invested to you, the plan sponsors avoid the liability of being held responsible for individual investments. Plan sponsors don't want to give investment advice, because they could be held liable for the outcome of the investment allocations they have suggested.

There are many sources of information about the funds offered in your plan. You can request a prospectus either from your plan sponsor or directly from the company offering the fund. All publicly traded mutual funds must have a prospectus.

If your company uses Ekon Benefits for trading, you can login to My Ekon and click on the Retirement Planning Tab to obtain fund information. You can click on the Account Inquiring Tab to obtain fund performance and fund prices.

There are also some great mutual fund information resources on the Internet like Microsoft Investor, Individual Investor Online, Yahoo Finance, CBS Marketwatch and CNBC, just to name a few. You can also check your local public library's investment reference section. Financial magazines are another useful place to look for mutual fund information.

What kinds of investment options are usually offered in 401(k) plans and is there a minimum number of investment options a company is required to offer?

Most employers choose to comply with voluntary guidelines established by the Department of Labor that stipulate that plans must offer at least three distinct investment options with substantially different risk/return objectives.

The range of investment options commonly offered in 401(k) plans include a multitude of fund types which could include some of the following:

money market funds
government bond funds
income (bond) funds
growth and income funds
growth funds
aggressive growth funds
balanced funds
index funds
international funds
life cycle funds
company stock funds

Is my 401(k) account protected against investment loss?

No. The money in your 401(k) account is subject to investment risk (fluctuation in return). How much your 401(k) account is worth when you retire depends entirely on the amount of your contributions and the performance of your investments. It is possible to lose money if your investments do badly.

There are many types of risk in investing. Generally, when you hear someone talking about "investment risk" they're referring to market risk (or short-term risk), which is the fluctuation in an investment's value. Investments with wide swings in value (potential for very high gains but also for very high losses) are said to be high-risk, while those with more stable values are said to be low-risk.

You must decide how comfortable you are with the possibility that your investment value will fluctuate. This is called risk tolerance and knowing how much risk you can stand is a crucial first step in developing an asset allocation. Developing an asset allocation is choosing the right mixture of different asset types (stocks, bonds, and cash investments) to meet your financial goal.

Generally, the two biggest factors affecting a person's risk tolerance are personal temperament and your investment time horizon. Therefore, you must invest in a variety of asset classes, security types and industries in order to reduce risk exposure while striving for substantial rewards. This procedure is called diversification. Diversification does more than just reduce risk, an intelligently diversified portfolio will nearly always outperform a single investment.

Can I change my investments?

Yes. How often you can change your investments depends on how frequently the plans' recordkeeper values the account (reconciles the various investment gains and losses). Valuations can be performed annually, semi-annually, quarterly, monthly, or even daily. You can only change investments when the account is valued.

If your Plan uses Ekon Benefits for trading, you can access your account on the Internet by logging onto www.myekon.com or call toll free 1-866-721-401k.

Loans

Can I borrow from my 401(k) account?

You will need to check with your plan representative. Not all plans allow loans to participants.

If your Plan allows for loans, it has a specific loan policy which explains how loans in your Plan operate. In addition to your Plan’s requirements, there are many legal restrictions on loans. Your Plan may allow you to borrow for any reason or may only allow loans if you have a financial hardship as defined by the IRS:

Unreimbursed medical expenses
Purchase or rehabilitation of your primary residence
College tuition/room and board
Amounts necessary to prevent eviction
Payment of burial or funeral expenses
Expenses for repair of damage to principal residence

Loans are non-taxable distributions, which must be repaid. Generally, loans have to be repaid within five years by payroll deductions. Most loan policies require full repayment when you leave employment. You should understand your Plan’s loan policy before you borrow from the Plan.

What are the basic legal requirements of a participant loan?

The law dictates that participant loans meet many requirements. The law mandates that loans must –

be made equally available to all participants on a reasonable basis,
not be more than the legal maximum,
be secured by the participant’s vested interest in the plan,
charge a reasonable rate of interest,
be repaid in level installments, and
be repaid over five years or less, unless made for principal residence.

As you can see there are numerous requirements loans must satisfy. Therefore, you should review your Plan’s loan policy closely before you borrow.

If I have a financial hardship

Keeping your money tax-deferred should be your most important objective.

A hardship withdrawal is subject to regular income tax and is also subject to a 10% penalty for early distribution (if you’re less than age 59½). If you were to take a $30,000 hardship withdrawal and paid 30% federal and state tax ($9,000) and a 10% penalty ($3,000), you would only net $18,000. It would be much better to borrow $18,000 from your account and repay it to yourself.

By repaying the loan, you climb back-up on the retirement savings curve which keeps and restores your savings and allows you to have more for your retirement.

What are the pros and cons of taking a loan?

It seems so simple to take out a loan from the plan. But, you should review the following pros and cons before taking a loan -

Pros

No bankers – no credit checks – no personal collateral needed.
Competitive interest rate (e.g. prime + 1%).
The interest you pay is paid back to your own account.
Repayments are automatically deducted from your paycheck.

Cons

Loan initiation or maintenance fees may apply.
You’re really not borrowing anything. You’re using your own money.
By reducing your account, the borrowed monies are not invested, and are not working for you.
The interest you pay is not tax-deductible.
If you quit or are fired, you must repay the loan immediately.
If you don’t repay the loan, it is considered a taxable distribution and subject to penalty taxes if you are less than 59 ½.
It is too easy to get in the habit of borrowing small amounts.

Protect your retirement savings and don’t get into the borrowing habit. Keep your 401(k) Plan loan free to build up more money for your retirement.

How much can I borrow?

If your plan allows for loans, it also can establish the loan limits but most plans use the rules dictated by the government to calculate the maximum loan amount.

Legally, you can borrow up to one-half of your vested account balance. However, there is also a dollar maximum which limits any loan to $50,000 less the largest loan balance you’ve carried in the last 12 months.

For example, if your account looked like the following:

Source of Money	Account Balance	Vested %	Vested Balance
401(k) Employer Match	$10,000 2,500 $12,500	100% 40%	$10,000 1,000 $11,000

The maximum you could borrow is $5,500 (i.e. ½ x $11,000).

If your highest loan balance during the last 12 months was $10,000 and your account balance looked like the following:

Source of Money	Account Balance	Vested %	Vested Balance
401(k) Employer Match	$100,000 25,000 $125,000	100% 100%	$100,000 25,000 $125,000

The maximum you could borrow is $40,000, the smaller of (a) or (b):

(a) $50,000 – highest loan =$50,000 - $10,000 = $40,000

(b) ½ x $125,000 = $62,500

Remember your loan policy may provide additional restrictions besides these legal limits, such as, not allowing loans from company stock accounts.

How does taking a loan affect my account?

Borrowing from your 401(k) Plan is literally borrowing your own money. If you borrow part of your account, your 401(k) investments are sold to get the necessary amount you’ve requested. Therefore, because you have less money invested in the Plan, your earnings will be less. On the other hand, because the loan must be repaid, you pay yourself back - both principal and interest on the loan through payroll deduction. The interest you pay is not tax deductible.

Withdrawals

Can I receive benefits from the plan after I leave employment?

Most plans allow for distributions as soon as possible following your separation from service. However, if your vested account balance is greater than $5,000, you are not required to take a distribution. A plan can delay distribution until your normal retirement date. When you are entitled to payment, you receive all of your contributions and earnings plus the vested portion of the company's contribution. Generally the full value of your account, including your contributions, plus any company contributions and all investment earnings, will be paid to you if:

You retire according to the provisions of the Plan,
You become disabled while in service, or
You die while in service. In this case, your beneficiary will receive the full balance of your account.

Do I have to take a withdrawal if I leave employment?

If you leave employment and have not reached the age of 70 ½ you have the option of leaving your account with your former employer's Plan, providing there is an account value of $5,000 or more. There is no requirement for you to close the account as long as your former employer continues to sponsor the Plan.

If for some reason your former employer were to stop sponsoring the Plan, you could either take a lump sum distribution or roll the account over into your current employer's Plan or an IRA. If you take a lump sum distribution you would have to pay tax on the entire amount. If you rolled the money over to your current employer's Plan or to an IRA, you would not have to pay taxes until you ultimately withdraw the money from that Plan or IRA.

It would be a good idea to contact appropriate tax/estate planning and investment professionals for advice in this situation.

Do I have to receive withdrawals during retirement?

Yes, the Internal Revenue Code provides for "required minimum distribution" (RMD). The Internal Revenue Code established these minimums to ensure that you actually use your Employer Sponsored Retirement Plan account balance for retirement (and not, for instance, to pass it onto your heirs). Unless an earlier date is specified by your Plan, you must take your first withdrawal (RMD) from your account by April 1 of the year following the calendar year in which you reach 70 ½, or April 1 of the year following the calendar year in which you retire, whichever is later. However, if you are a five percent owner of your employer, you must begin taking distributions by April 1 following the year you reach age 70 ½ even though you are still employed.

In each subsequent year, the minimum required distribution must be made on or before December 31. If you do not take an RMD from your retirement account each year, the Internal Revenue Code imposes a 50 percent penalty tax on the amount that should have been withdrawn. This tax is in addition to regular income taxes.

Can I withdraw money from my 401(k) account due to financial hardship?

Like loans, hardship withdrawals are allowed by law, but your employer is not required to provide for them in your Plan. If your Plan allows for hardship withdrawals, you can qualify only if you need the money for one of the following reasons:

Payment of medical expenses incurred by the participant, his spouse or dependents or costs involved in obtaining medical care for such persons;

Purchase of a principal residence of the participant;

Payment of tuition, related educational fees and/or room and board expenses for the next twelve months of post secondary education for the participant, his spouse, children or dependents;

Payment of amounts necessary to prevent the participant's eviction from his principal residence or foreclosure on the mortgage of such residence.

Payment of burial or funeral expenses for a parent, spouse, child or dependent.

Payment of expenses for repair of damage to principal residence.

The test to determine necessity requires that:

The withdrawal must not exceed the amount necessary to satisfy the financial need;

All withdrawals and nontaxable loans from all plans of the employer must have been made;

All plans of the employer must provide that the maximum elective deferrals that a participant can make in the following taxable year is reduced by the amount of elective deferrals in the taxable year of the hardship distribution;

All plans of the employer must provide that a participant is prohibited from making elective deferrals for at least six months after receipt of hardship distribution.

Hardship distributions are subject to income taxes plus the 10% early withdrawal penalty tax.

Plan Loans vs Hardship Withdrawals

Keeping your money tax-deferred should be your most important objective. Hardship withdrawals are not treated as an eligible rollover distribution, therefore when you take a hardship distribution there is no way to recapture the tax-deferred status. Loans taken from the plan, on the other hand, are required to be repaid to the plan, therefore maintaining the tax-deferred status of these monies.

To be eligible for a hardship withdrawal, most plans require that you first make application for all other withdrawals or loans from all plans of the employer. If your plan provides for loans, there are two issues to consider. First, the regulations provide that any available loan not serve to merely increase the extent of the hardship and secondly, the loan may be denied based on the credit worthiness of the participant. If repayment appears to be unlikely, the loan can be denied which would open the door for a hardship distribution.

Are hardship withdrawals subject to income tax?

Yes, any money withdrawn from your Plan under the hardship withdrawal provisions are subject to ordinary income taxes as well as the 10% early withdrawal penalty, unless an exception applies.

Can I receive an in-service withdrawal that is not due to a hardship?

Although most plans do not allow for in-service withdrawals, some do, so please check with your Plan Administrator for specific plan provisions. Note that in-service distributions are subject to ordinary income taxes and a 10% penalty tax, if you are less than age 59 ½.

How would a withdrawal affect my taxes?

Generally all distributions from qualified plans are included in your gross income when received. If property is distributed (company stock, plan assets etc.,) the amount included in your gross income is the fair market value on the date of distribution. You may postpone the taxation of certain distributions by rolling over or directly transferring an Individual Retirement Account (IRA) or to another qualified plan.

Retirement plans are designed to help you save for retirement. If a distribution is taken prior to age 59 ½, there is an additional early withdrawal penalty tax of 10%. There are several exceptions to this penalty tax. Before taking a distribution you should seek professional tax advice.

Some plans allow for after-tax contributions. After-tax contributions are monies you contribute to the plan after paying ordinary income taxes. Since you have already paid taxes when you contributed these monies you do not pay taxes a second time when withdrawn, although the earnings are taxable.

Accessing Your Account

If your Plan uses Ekon Benefits for trading, you can access your account with a computer via the Internet or by touch-tone phone. You can obtain information including your vesting percentage, your balance by source and fund, and the general provisions of your plan. In order to access your account you will need your Social Security Number and your PIN (personal identification number) which you can obtain from your Plan Administrator or by requesting a PIN from the site.

On the Web – www.MyEkon.com

After you are logged into MyEkon you have access to:

Account Inquiry-to review your investments, current prices, or recent transactions
Account Management - to transfer existing savings, change direction of future savings, or change your PIN
Retirement Planning-to review Plan information, use financial planning calculators, or contact us

Call toll free – 1-866-721-401k and press:

for Account Balance-to hear your vesting percentage and your account balance in each fund or in each fund by source
for Investment Direction-to review and/or change direction of future savings
for Fund Reallocation-to transfer current balances among available funds
for Change PIN-to change your Personal Identification Number

Any transactions that you place through the web or by phone will be executed at the end of that day if received before 3:00 P.M. Central Standard Time and will be confirmed in writing within 5 business days. If you do not receive an accurate confirmation, please contact your Plan Administrator.

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