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Frequently Asked Questions

General Questions

How does a 401(k) plan benefit me?
In addition to lowering your taxable income, 401 (k) plans offer convenience, flexibility, compounded savings, and the ability to self direct your investments.
How do I qualify to participate in a 401(k)?
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.
What is a vesting schedule?
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.
What is forfeiture?
Forfeiture is the non-vested balance that is lost when employment is terminated before a participant becomes 100% vested in their plan.
How often will I receive a statement on my 401(k) account balance?
Paper statements will be mailed to the participants’ home address approximately 15 business days after quarter end.
What deductions are exempt in a 401(k) plan?
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.
What is the maximum amount that I can contribute?
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.
What happens to my 401(k) account upon my death?
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.
What is a hardship distribution?
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
  • Purchase of a principal residence
  • To prevent eviction or foreclosure on a principal residence
  • Funeral Expenses
  • Tuition
Are there any loan fees?
Yes. Generally, there is a $50.00 fee to process a loan request. This fee is automatically deducted from the participant's account.
What is your email address?
Our email address is: service@newenglandpension.com
Why do you want my email address, what will you be sending me?
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.
What is the phone and fax number for NEPPS?
(phone) 866-WCP PLAN (fax) 401-274-1635
What is the address for NEPPS?
790 North Main Street
Providence, RI 02904
Who is my Plan Trustee?
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.
Who is my Plan Administrator/Sponsor?
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.
I missed meeting with the Retirement Consultant at the last open enrollment. What should I do?
The open enrollment is the only time you are able to make changes to your deferral percentage; however, you may change your allocations or transfer funds anytime using our web site or by calling our office.
Can I designate someone other than my spouse as my beneficiary on my 401(k) account?
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.
Why does my spouse have to waive their rights in order for me to list someone else as the beneficiary on my 401(k) account?
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.
Can I contribute to the 401(k) plan from my severance pay?
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)

Catch-Up Contributions

What is a catch-up contribution?
A catch-up contribution is any elective deferral made by an eligible participant that is in excess of the statutory limit ($16,500 in 2010), an employer-imposed plan limit, or any limit applied in order for the plan to satisfy the ADP nondiscrimination test for the year.
Who is eligible to make a catch-up contribution?
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.
How can I make sure I make a catch-up contribution?
Choose a deferral rate that is large enough to guarantee $20,500 in deferral throughout the year. Keep in mind, highly compensated employees might have a lower limit because of the testing requirement.
Does the catch-up contribution have to be made from payroll deductions?
Yes, contributions must be made by payroll deduction.

Web Questions

How do I access my account on the web?
  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
What do I do if I forgot my password?
Go to the login section on the home page and click Forgot Password. Your password will be emailed within a few minutes to the address used when your account was established.
How do I change my password?
Once you have logged into your account, click Password Change from the menu on the left. Follow the criteria and instructions noted, and then click Submit.
How should I exit my account?
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.
How can I obtain more information about a fund from your website?
Choose the Investment Profiles from the menu on the left side of your screen. 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.
How can I see my balance broken down by fund?
Click on the “Account Balance” option from the left menu. 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.
How do I change my investment elections?
To change your investment elections, click “Investment Election” from the left-hand menu. Investment 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 are electing 100% into a model portfolio. If you elect a model portfolio, your account will rebalance 100% into your new elections.
How do I initiate a fund transfer?
To transfer funds in your account, click "Transfer Funds" on the left-hand 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 changes you are making. If everything looks correct click "Continue" button. You will then receive your confirmation number.
What is Rebalance Portfolio?
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 Transactions
  2. Select Transfer Funds from the menu on the left
  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

401(k) Distribution Questions

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 (Usually age 65)
  • TERMINATION
  • PERMANENT DISABILITY
  • LOAN
  • IN-SERVICE DISTRIBUTION (Age 59 ½ - if your plan allows)
  • IN-SERVICE DISTRIBUTION (Age 70 ½ )
  • DEATH
How long does it take to process my distribution request?
Generally, we will complete the processing of your distribution request within 2 weeks after receiving 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. This process may take as long as 60 days to complete and is dependent on information from your employer. We also quote 1 week for mailing of the check.

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% withholding on all cash distributions. In addition, if you are under age 59 ½, you will incur a 10% early withdrawal penalty.
What is a hardship distribution?
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. In addition, you will not be allowed to contribute to the 401(k) plan for six months.
What is an in-service distribution?
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.
What are my options if I terminate employment?
  • Roll over money into NEPPS IRA
  • Roll over money into another qualified plan
  • Leave money in the plan if your balance is over $1,000.00
  • 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.
What are the consequences of taking a cash distribution?
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.
How much time do I have to make my decision?
If your balance is under $1000.00, you need to respond within 30 days of receiving your distribution package. If we haven't received any direction from you at that time, we may automatically process your distribution. However, if your balance is over $1,000.00 you may leave your money in the plan indefinitely.

PLEASE NOTE: It is critical that you continue to provide us with any changes to your home address and phone number.
If I am laid off, can I take a distribution from my 401(k) account?
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.
Why does the trustee of the plan have to sign off for me to get my money once I no longer work for the company?
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.

401(k) Transfer Questions

How long does it take to process a transfer?
If a transfer is requested prior to 3:00 p.m. Eastern Standard Time, it is initiated the same business day. Generally, it takes 2 business days to complete the trades and confirm the transaction on our system. 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.
How do I change my elected deferral percentage?
You may change your elected deferral percentage only during your plan's open enrollment period. The Retirement Consultant assigned to your company will be able to assist you with this and answer any questions you may have.
How often can I change my choice of investment funds?
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.

401(k) Loan Questions

Can I borrow money from my 401(k) 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.
What are the disadvantages of borrowing from a 401(k)?
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.

Are you sure about taking that 401(k) loan?

1. Did you know you pay taxes on the interest twice?
The interest payments that you make are made with after-tax dollars and you will pay taxes again when you withdraw the money for retirement.
So, let's say your monthly interest payment is $300 and you're in the 28% tax bracket. You'll have to make $416 in gross earnings to make the $300 payment. Then, when you retire and take withdrawals, you pay taxes again.
2. Did you know money you borrow from 401(k) loses out on opportunities for compounded growth?
No one can predict that history will repeat itself, but if you miss a few good years in the market, the difference could be difficult to make up. The interest rate on your loan is fixed; the return on your 401(k) investment options could be much higher.
The money you take out of your account misses out on any potential market gains. Although you are paying interest to off set this, the money comes out of your own pocket.
3. Did you know the interest you repay is not tax deductible?
Unlike a home equity loan, the interest you pay on your 401(k) loan is not tax deductible.
4. Did you know if you leave your company, you have to repay your loan in full within 90 days?
If it is not repaid you must pay income taxes and penalties on the outstanding amount of your loan. This can be very difficult if you lose your job, considering this is usually when you need money the most.
5. Did you know your 401(k) should never be viewed as a savings account?
Remember this money is for retirement! Take a loan only as a last resort and be sure you have exhausted all possibilities first.
If you have no other choice and have to tap into your 401(k), borrow as little as possible and repay the loan as quickly as you can.
What is the maximum amount I can borrow?
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.
Is there a minimum amount I must borrow?
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.
What is the maximum loan term? The minimum?
Generally, five years. Please refer to your Summary Plan Description for your plan's specific loan guidelines. The minimum term is one year.
What is the interest rate on a 401(k) loan?
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.
What are the loan fees?
There is a $50.00 fee that is automatically deducted from the participant's loan check.
How do I make loan payments?
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.
How do I pay off my loan?
  • Please contact Client Services to obtain the correct payoff information
  • Loan payoff checks must be in the form of a personal check
  • Check must be made payable to the complete name of the plan
  • 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
What happens to my loan if I terminate employment?
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. This must be done within 30 days of your termination date. A loan will be considered in default after 90 days with no payments being applied.

NEPPS IRA

How do I change my beneficiary?
By completing a change of beneficiary form and returning to NEPPS via fax or US mail. If electing a trust as beneficiary, you must include the front page of your trust document stating how the trust is titled.
Can I take a loan from my IRA?
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.
Can I take a distribution from my NEPPS IRA or managed account?
Yes. The minimum distribution is $250.
Are there fees associated with my distribution?
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 which you will provide to your accountant. The fee is waived for systematic distributions.
How often can I take a distribution?
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.
Where do I send my IRA Distribution Form?
You can fax (401-274-5000) or mail the form to NEPPS:
New England Pension Plan Systems, LLC.
790 North Main Street
Providence, RI 02904