My Employer’s retirement plan is administered through Chemical Bank. Where can I find information about participating in this plan?
Begin by contacting your Employer’s Human Resource/Personnel Department. They should be able to provide a Summary Plan Description (SPD) or refer you to a section in your Employee Handbook that explains the eligibility requirements for participation in the Plan. The Plan is likely to have two requirements: Service and Age. You must meet both requirements.
Are all Employees eligible to participate in the plan once they have met the eligibility requirements?
Generally, yes, all Employees who meet the eligibility requirements can participate in the Plan. However, your Employer may exclude certain groups of Employees from participating in their Plan. Such exclusion(s), if any, should be outlined in the Summary Plan Description and/or your Employee Handbook.
Once I have been found to be eligible and have entered the plan, what kind of contributions can I make?
If your Plan permits you to make contributions, these are known as Elective Deferrals. Elective Deferrals are contributions you elect to have made to the Plan on your behalf instead of being paid to you as salary or wages. You make this choice when you complete a salary deferral election form that withholds a portion of your salary to be contributed to the Plan on your behalf. The money contributed to the Plan and any earnings on that money is not taxable until it is actually distributed to you. However, you must still pay Social Security taxes on your contributions to this Plan.
Yes. As an eligible employee generally you may authorize your employer to withhold a portion of your salary up to the annual dollar limit established by the IRS. The annual dollar limit for 2012 was increased to $17,00 in most types of qualified Plans. The annual dollar limit will be adjusted annually for inflation in $500 increments in future years. In addition, eligible participants may make “catch-up” contributions to their Plan. For individuals who are at least age 50 before the end of the plan year, the current dollar limits on Elective Deferrals are increased in qualified Plans. The additional dollar amount is $5,500 for the 2012 calendar year. Annual “catch up” limits will likewise be adjusted for inflation in future years.
I have money that is currently in a prior Employer’s qualified retirement plan. Can that be added to the balance of my retirement plan at Chemical Bank?
Yes. A rollover contribution is a direct rollover of your retirement benefits from another qualified plan to this Plan, or a distribution from another qualified plan that was first transferred to an IRA and then from that IRA to your Chemical Bank retirement plan. The Plan Administrator at your prior employer’s plan will be able to provide the form(s) necessary to request a direct rollover to your current retirement plan or IRA administered at Chemical Bank.
That depends. Your employer has a variety of ways that contributions may be made to the plan. Offering to make a matching contribution is just one of the possibilities. Your employer will advise you of the percentage of the matching contribution and who is eligible for the match, should one be available.
Vesting relates to your account balance and what portion of it is yours to keep at any given point in time. The money you put into your account (that has been deducted from wages) is always 100% vested. This is called “immediate vesting”. But let’s say, for example, your Employer subjects the contributions they make to a vesting schedule. You earn or get to keep Employer Contributions with the passage of time as Years of Service. Once you have “vested” a portion of or the full amount of your account, that amount cannot be forfeited or taken away from you. The vesting schedule is intended to reward long-term service.
Obviously my account will grow larger or smaller based on investment performance. Beyond that, how can I lose any of the money in my account?
It is possible to lose all or a portion of your account for reasons other than investment performance. Here are a few:
- If applicable, you terminate your employment before you are 100% vested in the part of your account balance made up of employer contributions
- The plan requires that you pay your share of plan administrative expenses or other plan costs
- A portion of or all of your benefits are assigned (transferred) to an alternate payee under a “Qualified Domestic Relations Order”
- You cannot be located when a benefit becomes payable to you
A QDRO is a court order issued under state domestic relations law relating to divorce, legal separation, custody or support proceedings. The QDRO recognizes the right of someone other than you (the Alternate Payee) to receive all or a portion of your plan benefits. You will be notified if a QDRO relating to your plan benefits is received by the plan.
Employer provided plans that are participant-directed are valued on a daily basis. This means that with each payroll furnished by your employer, contributions received are invested for you according to the investment elections selected by you and on file with Chemical Bank. We make these purchases on a daily basis as each payroll is processed.
Participant statements are prepared on a quarterly basis and provided to you four times per year. Online account access is also available. Electronic access is password protected. For more information on electronic access to your account, contact your Plan Administrator or contact Employee Benefits directly at (989) 839-5365.
A great deal. First and foremost, “daily valuation” means you can access the current market value of your account value—daily. For security purposes what you see is not “live” but rather a snapshot of your account as of the previous day’s close. Next, you can change your investment elections, rebalance your portfolio or transfer funds between specific investments. If your plan allows, you can change your contribution or apply for a loan. You can also update personal information such as your address. Finally, you can access investment information about the funds in your plan and, in most cases, view your account’s rate of return.
I am a participant in the plan and have, on occasion, accessed my account on the web. Unfortunately, I have forgotten my User ID and/or Password. What do I do?
For your protection you will not be able to obtain your current User ID and Password over the phone. Rather, once you inform us of the problem, your User ID and Password will be returned to its initial default setting. You will then be able to access the site using the same steps that were initially used to access your account. Contact us during normal business hours at 989.839.5365 or 800.808.5404.
I have been contributing to the plan for a while. When may I begin receiving retirement benefits from the plan?
Generally, the full value of your account balance is payable at your Normal Retirement Date. The Normal Retirement Age will vary from plan to plan. Usually this is between age 60 and age 65. This is a plan-specific definition, so you will need to examine your particular plan to see what age applies.
Some plans have an “in-service withdrawal” feature that permits employees who have attained age 59½ and who are still working, to withdraw all or part of their vested account balance.
There are other so-called “distributable events” that would trigger the possible payment of benefits: Termination of Service (Separation of Employment), Disability, Death and/or Plan Termination. If any of these events occur, you or your personal representative begins a dialogue with the plan administrator to assess the appropriate course of action.
Are there any other options available for removing money? For example, what about a "hardship" withdrawal or a participant "loan"?
A hardship withdrawal is a distribution taken to satisfy an immediate and heavy financial need that cannot be satisfied from other financial resources. Examples include un-reimbursed medical expenses for you or a dependent, prevention of foreclosure on or eviction from your principal residence, funeral expenses for a parent, spouse, child or dependent. A participant loan is a distribution taken from one’s vested account balance with a written agreement to pay it back (with interest) over a specific time period.
If offered, an employer must approve hardship and/or loan applications in a nondiscriminatory manner. There are potentially significant income tax ramifications with hardship withdrawals and defaulted participant loans. Be sure you have investigated and clearly understand these ramifications before proceeding.
Each of these options has plan-specific features. What that means is that a plan might offer hardship withdrawals or it might not; it might offer participant loans or it might not. It depends on which features management wants to offer and which ones they don’t. Employers are primarily focused on creating a meaningful retirement benefit. Any features added to a plan that provide access to account balances before “normal retirement” compromises the original intent of the plan.
Generally, if you work beyond your normal retirement age and have not terminated employment, you may request a benefit payment. Whether or not you work past normal retirement age, you will continue to fully participate in the plan.
You may choose the person or persons (the beneficiary or beneficiaries) who will receive benefits under the plan if you die. You must name your beneficiary (or beneficiaries) on a form provided by the plan administrator and return the form to Human Resources. You may change your Beneficiary at any time though you may be subject to certain written consent requirements if you are married.
If you are married, your spouse is your beneficiary automatically. If you wish to name someone else, you must complete a beneficiary designation form and get your spouse’s written consent. Your spouse’s signature must be witnessed by a notary public or by the plan administrator. IRA's provide greater flexibility with naming beneficiaries than 401K plans.
In a participant-directed plan, the employer has consented to allow each employee to pick and choose from a menu of pre-determined investment alternatives. Usually this includes a series of mutual funds, each with a specific fund objective. You will be permitted to pick one or a number of funds that comprise your personal investment portfolio. Chemical Bank furnishes at enrollment an ‘Investment Strategy Worksheet’ that will help you determine what type of investment portfolio that may be best suited for you.
If your distribution is an “eligible rollover distribution,” you may either have them paid directly to you or you may have them directly rolled over to another qualified plan or your IRA. With a directed rollover you incur no tax penalties and the assets remain invested tax-deferred. You can consolidate multiple retirement accounts into a single Rollover IRA to simplify your retirement savings and make it easier to allocate and monitor assets.
Chemical Bank has a variety of IRA products from which to choose. A key decision you must make is to decide how much involvement you want in the investment decision making process. To review the specific options available to you ask to speak with or meet a member of the Chemical Bank Employee Benefit team.
Yes, there are. Chemical Bank offers individual retirement accounts (IRAs) in one of two legal forms: Custodial and Trusteed. With a custodial IRA, Chemical Bank serves as custodian of the IRA assets. Upon the IRA owner's death, the beneficiary gains complete control of the account. With a trusteed IRA, Chemical Bank serves as the Trustee of the IRA assets. The IRA owner can specify what rights the beneficiary will have after the owner's death.
Chemical Bank's Retirement Trust is a trusteed IRA that offers certain benefits that a typical IRA does not. For example, upon the death of the IRA owner, it limits the amount a beneficiary can withdraw each year; it provides for continuation of the IRA upon the death of the initial IRA beneficiary whereby assets can pass to remainder individuals named by the IRA owner; it avoids complications of the minimum distribution rules. In the right circumstances, Chemical Bank's Retirement Trust can be the solution to a whole host of estate planning needs.
As an Employer why would I choose a Corporate Trustee rather than acting as Trustee for my company’s retirement plan?
The Trustee is responsible for the administration of investments held in the plan trust fund. These duties include:
- Receipt of contributions under the terms of the plan
- Investment of plan assets, unless investment responsibility is delegated to another party
- Custodian of plan assets, unless custody responsibility is delegated to another party
- Distribution of monies from the fund in accordance with written instructions received from the plan administrator
- Maintenance of accounts and records of the financial transactions of the plan trust fund
- Preparation of an annual report of the plan trust fund that shows the financial transactions for the plan year
Since the employer’s duties as “plan administrator” are significant in their own right, many employers are pleased to have the alternative of turning “trustee” duties over to a corporate trustee like Chemical Bank.
Chemical Bank offers two distinct solutions for our clients ranging from complete turn-key services to our partnership program each utilizing a unique professional team customized to manage your plan. The benefits of both include access to advanced daily recordkeeping technology, internet access, professional compliance, and a wide selection of top brand name mutual funds.
Dave Farkas, the New Business Development Officer, is focused on the establishment of new retirement plan clients through the state of Michigan and Northern Indiana. Dave can be reached at 269.983.3792 or Dave.Farkas@ChemicalBankMI.com.