Frequently Asked Questions

Your distribution will be processed as soon as administratively possible after we receive your completed paperwork and confirmation of your last payroll contribution. We require your final payroll information, as well as confirmation the deposit has been made at the bank before we will process any distributions. 

Note: Plan terminations take longer to process and may take up to 12-months if the plan is being submitted for approval by the IRS.

Are there penalties for taking a cash distribution?

The IRS requires a mandatory 20% federal withholding on all cash distributions. In addition, if you are under age 59 ½, you will incur a 10% early withdrawal penalty.

You may only take a distribution from your 401(k) account if you are no longer considered an employee. If you are temporarily laid off, and there is a reasonable expectation that you will be called back to work, then you would not qualify for a distribution. If your employment is considered terminated due to permanent lay off, then you would be eligible for a distribution of your funds.

• Roll over money into NEPPS IRA

• Roll over money into another qualified plan

• Leave money in the plan if your balance is over $5,000.00

• Take a cash distribution

• We offer the services of our Retirement Consultants to assist you with this process and to answer any questions you might have about your investment options.

The IRS mandates 20% withholding on all cash distributions towards any taxes that may be owed. Depending on your individual tax bracket, you may owe taxes in addition to the 20% withheld. The amount is determined when you file your taxes. In addition, if you are under age 59 ½ you will incur a 10% IRS early withdrawal penalty.

A hardship provision, if included in your plan, allows you to receive a distribution under certain qualifying reasons. All other options, including a 401(k) loan, must have been exhausted before a hardship distribution would be approved. In addition, the plan Trustee must give consent for the hardship. Qualifying reasons for a hardship distribution are:

• Medical Expenses – Yourself, Spouse or Dependents

• Educational Expenses – Room & Board, Tuition, & Fees (No Books)

• Purchase of a Principal Residence – Excluding Mortgage Payments

• To Prevent Eviction or Foreclosure on a Principal Residence

• Burial or Funeral Expenses – Spouse, Children, Parents or Dependents

• Damage of Principal Residence Due to Storm, Fire, or Similar Casualties

What amount is available for a hardship distribution?

Under IRS Safe Harbor Standards, you are only eligible to withdraw the amount that would satisfy your hardship. Typically, distributions are allowed from a deferral account; however, gains are not eligible. Those funds would remain in the plan until eligible for distribution.

What are the consequences of taking a hardship?

The distribution is taxable. If you are under age 59 ½, you may also incur a 10% penalty.

If your plan includes an in-service distribution, you may be eligible to take a withdrawal from your account without incurring a penalty. The 20% IRS mandatory withholding still applies.

When will I be able to withdraw my 401(k) contributions?

You will be able to withdraw your funds based on your individual balances, and the plan requirements, for the following reasons:

• NORMAL RETIREMENT 

• TERMINATION

• PERMANENT DISABILITY

• LOAN (if available)

• IN-SERVICE DISTRIBUTION (Age 59 ½ – if your plan allows)

• DEATH

Even though you are no longer working for the company, you are still participating in the company 401(k) plan. This is a Trustee directed plan and therefore, the Trustee must authorize any withdrawal of money.

1. Did you know money you borrow from 401(k) loses out on opportunities for compounded growth?

2. Did you know the interest you repay is not tax deductible?

3. Did you know if you leave your company, you have to repay your loan by the end of the quarter following your last payment.

4. Did you know your 401(k) should never be viewed as a savings account?

If your plan includes a loan provision, and you are still actively employed, then you may apply for a loan from your 401(k) account. The only portion of your balance that is eligible to borrow is your vested balance. In addition, the plan trustee must give their approval for the loan. Please see your plan’s Summary Plan Description to determine if your plan has a loan provision.

Loan payments, consisting of principal and interest, must be made through after-tax payroll deductions. The IRS states that a loan is not a deferrable benefit, so the payments do not fall under the 401(k) salary rules. Therefore, loan payments cannot be deducted before taxes.

• Please contact Client Services to obtain the correct payoff information

• Loan payoff checks must be in the form of a personal check/bank check

• Check must be made payable to the Trust Company

• Write “loan payoff” in memo line; include your name if not already on the check

• Mail check NEPPS, 790 North Main Street Providence, RI 02904

• Upon receipt, it takes 5 business days to process the payoff

Yes. In general, the minimum loan amount is $1,000.00. Therefore, you must have a vested balance of at least $2,000.00 in order to be approved for a loan.

Taking a loan from your 401(k) may have a negative impact on your account because your money is being taken out of the market. This may cause a loss of investment gains or dividends.

There is a $50.00 fee that is automatically deducted from the participant’s loan check.

If you terminate employment, an outstanding loan balance will be treated as a taxable distribution and will be deducted from your remaining 401(k) vested balance. You may avoid paying these taxes if you pay off your loan in full prior to your distribution being processed. You have to repay your loan by the end of the quarter following your last payment.

A 401(k) plan loan must bear a reasonable rate of interest similar to the prevailing rate of interest charged by a bank or other professional lenders making a loan in a similar circumstance. This rate varies, but it becomes fixed at the time your loan is processed, and remains fixed until it is paid off. Generally, the interest rate is the Wall Street Journal prime rate plus 1%. All of the interest is credited back into the participant’s account balance.

If your plan includes a loan provision, you may borrow up to 50%, or $50,000 of your vested account balance. The $50,000.00 IRS limit is reduced by the highest outstanding loan balance during the 12-month period ending on the day before the new loan is made.

Generally, five years. Please refer to your Summary Plan Description for your plan’s specific loan guidelines. The minimum term is one year.

If a transfer is requested prior to 4:00 p.m. Eastern Standard Time, it is initiated the same business day. If you wish to make changes to both your existing account balance(s), as well as any future contributions, you must request that both of these functions be initiated.

You may make changes to your selection of investment funds on a daily basis. You may elect to change which funds you contribute to, as well as what total percentage is allocated to each fund. You may elect to make changes for your existing account balances, your future contributions, or both.

Yes, contributions must be made by payroll deduction.

Choose a deferral rate that is large enough to guarantee the max limit in deferral throughout the year.

A catch-up contribution is any elective deferral made by an eligible participant that is in excess of the statutory limit (the catch up amount is adjusted for cost of living), or an employer-imposed plan limit.

Plan participants who are or will turn 50 years of age during the calendar year are eligible to make catch-up contributions. However, the participant’s regular plan contributions must reach at least one of the following limits before a contribution is considered “catch-up”: the annual deferral limit, the plan’s deferral limit, or the annual ADP limit for Highly Compensated Employees.

Our email address is: service@newenglandpension.com

790 North Main Street
Providence, RI 02904

800 Line:  866-WCP PLAN

Local Phone: 401-274-5000

Fax: 401-274-1635

From time to time we may send out an important update regarding the plan or your account, and we want to have your address for these purposes.

Deferrals cannot be withheld from compensation paid to employees after termination of employment unless the compensation is paid within 2 ½ months after the termination of employment and the compensation represents:

• Payments that the employee would have received if there had been no termination of employment (e.g., payment for hours actually worked prior to termination of employment or payment of commissions); OR
• Payment for accrued sick or vacation pay. (If the employee was entitled to take the leave if employment had continued)

If you are married, your spouse must be designated as the beneficiary on your account unless they sign a form waiving their rights as beneficiary.

You may change your elected deferral percentage based on a policy set by your plan. Please consult the Summary Plan Description. The Retirement Consultant assigned to your company or your HR will be able to assist you with this and answer any questions you may have.

As an employee, you are eligible to participate in your employer’s 401(k) plan once you have attained the minimum required years of age and have completed the required number of hours of service. These requirements are determined by your employer and may be found in your plan’s Summary Plan Description.

In addition to lowering your taxable income, 401 (k) plans offer convenience, flexibility, compounded savings, and the ability to self-direct your investments.

Paper statements will be mailed to the participant’s home address approximately 15 business days after the quarter’s end.

Federal and state income taxes are exempt in a 401(k) plan. City or local taxes may also be exempt. Check with your local tax authorities to verify this information.

If you were still employed at the time of death, your account generally becomes 100% vested and would be distributed according to your beneficiary elections. Please refer to your Summary Plan Description (SPD) for additional information.

A vesting schedule is used to determine what percentage of your employer-sponsored account you are eligible to keep when you separate from service. Your employer determines this schedule. A typical vesting schedule would be 1 year = 0%, 2 years = 20%, 3 years = 40%, 4 years = 60%, 5 years = 80%, and 6 years = 100%. You should refer to the Summary Plan Description for your plan’s specific vesting schedule.

Forfeiture is the non-vested balance that is lost when employment is terminated before a participant becomes 100% vested in their plan.

The IRS annually reviews and periodically adjusts, the maximum amount you can contribute each year to your 401(k) plan. If you are over age 50, you may be eligible to make a catch-up contribution.

The Plan Administrator/Sponsor is the same person as the plan Trustee; you can find this information in the Summary Plan Description (SPD) you received when you became eligible for the 401(k) plan.

Generally, the Plan Trustee is the owner or a key employee within the company. Refer to your Human Resources department or the Summary Plan Description (SPD) you received when you became eligible for the 401(k) plan.

Because 401(k) accounts are considered a marital asset, your spouse is automatically the beneficiary. If you wish to designate a beneficiary other than your spouse, your spouse must waive their right to the benefit.

Yes, there is a $50 processing fee. You will have to pay taxes and possibly a penalty if you are under age 59 ½ (for IRA accounts). You will receive a 1099 for your distribution at the end of the year or with your check, which you will provide to your accountant. The fee is waived for systematic distributions.

Yes. 

No. The IRA only allows you to take distributions. There is a 60-day provision which allows you to pay back the distribution without paying taxes or penalties. However, this is only allowed one time in a 12-month period.

By completing a change of beneficiary form and returning to NEPPS via fax or US mail or email to service@newengladnpension.com.  If electing a trust as beneficiary, you must include the front page of your trust document stating how the trust is titled

You can take distributions monthly, (in the form of automatic bank draft) quarterly, semi-annually, annually, or unscheduled by completing a IRA Distribution Form. If you choose monthly, you must attach a deposit slip with your account number to your IRA Distribution Form. Contact Client Services to request an IRA Distribution Form.

You can email to: service@newenglandpension.com

Fax (401-274-1635

Mail the form to NEPPS:
New England Pension Plan Systems, LLC.
790 North Main Street
Providence, RI 02904

Choose from the top menu Performance> Investment Information. You will be able to view a list of the funds we offer including the ticker symbol and current price. All of the fund names, with the exception of the Stable Value Funds, are a link to the Morningstar.com listing for that fund. You may also view the Funds Profile and Performance Chart.

On your dashboard under “My Portfolio” you will be able to view your account balance broken down by fund and by money type. If you are in a model, click on the name of the model to view the breakdown by fund.

1. Go to newenglandpension.com
2. Enter your User ID and Password. If you have never logged on before, use your SSN as the User ID and the last four digits of you SSN as your password.
3. Click “Participant” if you are a participant

To change your investment elections, click Manage>Manage Investments from the top menu. Changing Elections determine the way all future dollars are invested. When changing elections, the “New percentage column” must total 100%; therefore, you must carry over any percentages that are not changing. Once you have completed your changes click “Submit.” You will see a review screen that allows you to view the changes you are making. If everything looks correct, click “Continue.” You will then receive your confirmation number. NOTE: Investment Elections only affect future contributions. Any dollars already posted to an account will remain where it is invested unless you manage your current balance.

Once you have logged into your account, click Password Change from the settings menu. Follow the criteria and instructions noted, and then click Submit.

To transfer funds to your account, click “Move Money” or “Rebalance” under Manage>Manage Investments side of the screen. In the “From” column enter the percentage you would like to transfer out of funds. In the “To” column enter the percentage of where you would like those dollars to be transferred into. Once you have completed entering the percentage click “Submit” at the bottom of the screen. You will see a review screen that allows you to view the changes you are making. If everything looks correct click the “Continue” button. You will then receive your confirmation number.

You should always exit your account using the Log Out option located in the upper right-hand side of the screen. If you fail to do so, it will leave your account open until it times out. This could allow others access to your personal information.

Go to the login section on the home page and click Forgot Password.

When you request a rebalance of your portfolio, we realign the money currently invested in your account with your investment elections. Example: You have elected to have 25% of your deferral invested into Funds A, B, C, and D. Due to market fluctuations, the actual percentages in each fund are: 30% in Fund A, 20% in Fund B, 15% in Fund C and 35% in Fund D. Initiating a rebalance of your portfolio would sell some of the shares in Funds A and D and buy some shares of Funds B and C. Once the rebalance was complete all four funds would again hold 25% of your total investment.

The Rebalance Portfolio may also be used in conjunction with an Investment Election change. This will align your current invested money with your new investment portfolio.

How do I Rebalance my Portfolio?

Log into your account and follow these steps:

1. Click on Manage 

2. Select Rebalance

3. Transfer Type: Click on the drop down menu and select “Rebalance investments based on current allocation percentages.” Note: the screen will automatically refresh once you have selected this option

4. Click Submit