- What is the Premier Plan?
The Premier Plan is a retirement program chosen by your employer for all part-time, seasonal and temporary employees. Your employer established this Plan because they are not participating in the federally sponsored program (FICA). Under this plan, you will defer a set percentage of your salary into this Plan.
- What is a 3121 FICA Alternative plan?
A 457/3121 FICA Alternative Deferred Compensation Plan is a tax-favored retirement program only available to governmental employers. 457 is the Internal Revenue Code Section that explains the required operation of the program. This is offered to non-TRS eligible employees.
- Why do I have to participate in this plan if I didn't sign up for it?
This plan is mandatory (a condition of employment). Your employer has the option to have all its part-time, seasonal and temporary employees contribute to Social Security OR an alternative retirement plan.
- Is this plan legal?
Yes. Section 3121 of the Internal Revenue Code allows governmental entities the option to provide their employees with Social Security OR an alternative plan. Your employer has chosen to implement the Premier Plan. This Plan allows you to earn interest on your contributions, and take your money when you retire or one year after severance from service, unlike Social Security.
- How do I request a distribution from the plan?
You must have a "qualifying event". Examples of a qualifying event are: *Severance from employment, no contributions to the Plan for a period of at least 2 years (such as converting to full-time for 2 years) with the amount being under $5000.00, retirement, or reaching age 70 ½ years old. If you meet one of these conditions, you may request a Distribution Request Form from MidAmerica (800-430-7999 or www.midamerica.biz) to complete and return to MidAmerica for processing. The processing period normally takes 60-90 days. *If you have terminated employment, a waiting period of one year will apply before you're eligible to complete the paperwork. This waiting period is in place to ensure that we have posted all of the contributions to your account and ensure that you are not returning to work for the District.
- Why does the process take 60-90 days?
Your paperwork goes through different entities and a series of steps including allocation of interest, authorization from the employer and recordkeeping for tax purposes. We then issue checks once a month. Your check will have the Mid America check logo.
- Why does the district have to authorize my distribution?
To ensure that you are in fact eligible to take a distribution. There may be a portion of your account that you are not eligible to withdraw if you have only had a status change.
- Is this plan subject to the minimum distribution rules?
Yes, it is. Participants who are no longer employed at the School District must start receiving minimum distributions from the Plan by April 1 of the year following the year in which a participant turns age 70 ½. If a participant has returned to work at the same District, they will have the option of whether to take a minimum distribution.
- Will this plan accept rollover contributions?Yes, if the funds are from another 457 Plan.
- Why do I have to be terminated to withdraw these funds?This is a requirement by the Internal Revenue Code in order to receive favorable tax treatment in the program, for example, deferral of taxation on your contributions and earnings.
- Can I get my SSA plan money while I am still working?Only if your Employer is using a 457 Deferred Compensation Plan and you have not made a contribution for over 2 years.
- How does this plan affect my IRA?By participating in this plan, you are considered by the IRS to be an "active participant" in a retirement plan maintained by your Employer. Therefore, your contributions to an IRA will be limited. However, your spouse may still be able to contribute to an IRA. We recommend that you consult with your tax advisor to see if he/she may be able to make a contribution.
- Why can't this money be rolled into a Roth IRA?Once you have a qualified event, some, or all of your money may be able to be rolled into a ROTH IRA; however the amount may be subject to taxation. We recommend that you consult your tax advisor before choosing to roll your money into a ROTH IRA.
- How is the interest credited? Who determines the interest rate?Interest is credited daily by AUL and posted to your account on a monthly basis. The interest rate is determined by AUL and is based on current market conditions, the rate they can earn on fixed income investments, like bonds, as well as the rate that other fixed annuities are paying. Please remember there is a guaranteed rate of 3%.
- What information can you give me on the investment provider and the investment?The investment provider is AUL, a highly respected global organization rated AAA by A.M. Best.
- What if I withdraw my account balance prior to age 59 1/2 years old?Your plan is a 3121/457 Plan, there are no penalties for withdrawing prior to age 59 ½ years old.
- Am I required to take a distribution once I have terminated with the District? Is there a penalty if I decide to leave my funds in the account after I have terminated?No and Yes, there is a $.75 monthly fee on inactive accounts (those having no contributions for 1yr). The fee would begin to be assessed on the 13th month from your last contribution.
- I am already receiving Social Security Benefits, why do I have to contribute to this Plan?
Unfortunately, contributions to the plan are mandatory. However, unlike Social Security, you will receive your money back PLUS interest, when you take a distribution.
- Why do I have to pay 20% for taxes?The funds contributed to the Premier Plan are pre-tax dollars, and therefore taxable upon distribution. The Internal Revenue Service requires that we mandatorily withhold 20% for Federal Income Tax if you elect a lump sum distribution. If you choose to transfer your funds to another plan, we are not required to withhold taxes.
- What happens to my account if I die?In the event that you pass away, we would determine whether or not you have a beneficiary on file. If you do, the funds would be payable to that person. If you have no beneficiary on file, the funds are made payable to your estate.
- What if I am now a member of the Teacher Retirement System (TRS) - do I have to contribute to the Premier Plan if I do part-time work for the district?
If you are a retired member of TRS and receiving TRS benefits then you are not required to participate in the Premier Plan.
Frequently Asked Questions
How can we help you?
+ Expand