401 (K) NAF Benefit Enhancement Program
[Pages:28]401 (K) NAF Benefit Enhancement Program
SUMMARY PLAN DESCRIPTION JANUARY 2017
For Regular Status Marine Corps Nonappropriated Funds Employees
TABLE OF CONTENTS
INTRODUCTION ..........................................................................................................................................................1 FUTURE OF THE PLAN.................................................................................................................................................2 ENROLLMENT .............................................................................................................................................................2 ELECTING/CHANGING BENEFICIARY (IES)...................................................................................................................3 HOW MUCH CAN I SAVE? ...........................................................................................................................................4 EMPLOYER MATCH .....................................................................................................................................................5 VESTING ......................................................................................................................................................................5 CHANGING YOUR CONTRIBUTIONS............................................................................................................................5 REDEMPTION FEES .....................................................................................................................................................6 SUMMARY OF PLAN FEES ...........................................................................................................................................6 QUALIFIED DOMESTIC RELATIONS ORDERS (QDROS) ................................................................................................7 INVESTMENT OPTIONS ...............................................................................................................................................7 INVESTMENT PROFILES ..............................................................................................................................................9 DIVERSIFICATION ........................................................................................................................................................9 CHANGING YOUR INVESTMENT OPTIONS............................................................................................................... 11 FIDELITY E-LEARNING OPPORTUNITIES ................................................................................................................... 11 INDIVIDUAL ACCOUNT STATEMENTS ...................................................................................................................... 12 VOICE RESPONSE UNIT (VRU)/ ACCOUNT ACCESS .................................................................................................. 12 WITHDRAWALS WHILE EMPLOYED ......................................................................................................................... 13 LOANS ...................................................................................................................................................................... 15
I. ELIGIBILITY FOR A 401(K) LOAN ....................................................................................................................... 17 II. HOW A LOAN AFFECTS YOUR 401(K) ACCOUNT.............................................................................................. 17 III. RULES FOR BORROWING ................................................................................................................................ 18 IV. APPLYING FOR A LOAN .................................................................................................................................. 18 V. PAYING BACK A LOAN..................................................................................................................................... 19 VI. TAXABLE LOAN DISTRIBUTIONS ................................................................................................................... 21 DISTRIBUTION OF YOUR PLAN ACCOUNT ............................................................................................................... 22 ROLLOVERS .............................................................................................................................................................. 23 DEATH CLAIMS......................................................................................................................................................... 24 ADMINISTRATIVE FEES ............................................................................................................................................ 24 GLOSSARY OF TERMS .............................................................................................................................................. 24 BENEFIT PROVIDER CONTACT INFORMATION ........................................................................................................ 26
INTRODUCTION
The Marine Corps Nonappropriated Fund (MC NAF) 401(k) plan is offered to eligible Marine Corps NAF employees. This is a qualified defined contribution plan. Participation is voluntary.
The Plan was adopted by the Marine Corps effective 1 June 1993.
The Plan is known as a "cash or deferred arrangement or 401(k) plan," which refers to the applicable governing section of the U.S. Internal Revenue Tax Code. The Plan was established to help Employees save for retirement and other needs on a tax favored basis. The 401(k) Plan is separate and distinct from the Marine Corps retirement plan (defined benefit plan), and is designed to be part of a three-tiered retirement program, which also includes Social Security benefits.
Participants choose how their contributions are to be invested. Contributions to the Plan are held in trust in an account in the participant's name referred to as a Plan Account. The value of Plan Accounts will be available for retirement, or earlier separation from employment.
A formal Plan Document contains all of the terms and conditions of the Plan. This Summary Plan Description (SPD) summarizes the major provisions of the Plan. The SPD does not provide any benefits or rights that are not contained in the formal Plan document, which is the ultimate cognizant reference for administration of the Plan.
The Plan is one of the benefits MCCS provides to its employees. Neither the Plan nor this booklet gives rights to continued employment or otherwise affect employment status.
All regular employees are urged to plan for their future by joining the 401(k) Plan in addition to the group retirement plan as soon as they are eligible.
When investing in the MCCS 401(k) plan, pretax contributions are deducted from participant's paycheck before current income taxes are taken out. As a result, reported taxable income will be lower, reducing the amount of taxes withheld.
One great benefit of investing through the MCCS 401(k) Plan is tax deferral. You pay no federal income taxes on your pretax contributions, or on any investment earnings until you withdraw them (when they will be taxed at your applicable income tax rate).
Past performance of investment options is not indicative of future returns. It is recommended that Plan participants review investment options and prospectuses closely and determine their risk tolerance before making investment decisions. It is also recommended that Participants review investment elections periodically, but at least annually.
Account information can be obtained by accessing the Fidelity Retirement Services toll-free automated voice response unit 800-890-4015, or Fidelity's website at . This website has several interactive retirement planning tools for beginning to long-term investors. Each employee is encouraged to visit this site to learn important information about saving for retirement. Customer service representatives are available until 8:00 p.m. in all CONUS time zones. Participation in the 401(k) plan is not a guarantee of continued employment. In Japan contact Fidelity at 00-539-111-877-833-9900 Para solicitar esta informaci?n en Espa?ol, sirvase communicaci?n con Fidelity llamando 1-800-587-5282
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FUTURE OF THE PLAN
Headquarters, U.S. Marine Corps (MR) administers the Marine Corps NAF 401(k) plan and intends to continue this plan indefinitely, but retains the right to make plan changes and terminations. Participants will be notified of any changes in advance when practicable.
ENROLLMENT
Who can join the plan?
You can join the Plan if you are: A regular full-time or regular part-time NAF employee who is regularly scheduled for twenty (20) or more
hours per week: At least 18 years of age; A U.S. citizen or with other authorized non-citizen status Effective 7/21/2009, Non- U.S. citizen employees that meet the following criteria are also eligible to
participate in the plan regardless if they are in a CONUS or OCONUS location: o Employed on the U.S. Payroll, have a Social Security Number or Individual Tax Identification Number (TIN) and are subject to U.S. Income Tax; and o Not subject to a Status of Forces Agreement Provision that precludes eligibility
Those that have not made a portability election to remain in FERS or CSRS retirement programs and TSP
Who cannot join the plan?
You cannot join the Plan if you are: A flexible employee Under the age of 18 An employee that does not meet any of the above eligibility criteria Those that made a portability election to remain in APF retirement programs
When can I join?
You may join the Plan on date of hire provided you are eligible to participate in the plan, or during the bi-weekly pay period in which you meet the eligibility requirements. If you fail to join when you first become eligible, you may join during any future bi-weekly pay period, provided you still meet the eligibility requirements. Retroactive enrollments are prohibited.
Former participants in the Plan who are rehired may re-join the Plan on the date of rehire. Employees who are rehired but who did not meet the eligibility requirements may join the plan during any future bi-weekly pay period provided they meet the eligibility requirements.
Participants transferring from one MCCS location to another may enroll at the gaining MCCS location on the date of transfer provided they are still eligible. Employees transferring from another NAF Service component may begin participation on the date of hire, provided they are still eligible, and have not made a previous portability election.
If you convert from a flexible status position to a regular part time or regular full time position, you are eligible to participate in the plan on the effective date of your employment status change.
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How do I enroll?
Once you are hired (or have an employment category change) as a regular employee, and meet all the criteria to be enrolled in benefits, your information will be keyed into the personnel/payroll system. That information is sent electronically to Fidelity Retirement Services.
At that time, Fidelity will send you an enrollment kit providing you all the information you will need to enroll. You will contact Fidelity directly at their toll free number or via the Internet to enroll. (See information on pg. 1)
If you enroll online, Fidelity will send you a deferral confirmation email. If no email address has been provided, Fidelity will send you a notification in the mail outlining your deferral election. Please review this confirmation and save for future reference.
If you are a new employee to MCCS, and do not wish to wait for the enrollment kit to be mailed to you by Fidelity Investments, you can complete a "Quick Enrollment" form and beneficiary designation form at your local HR Office. You can only use a Quick Enrollment form within the same pay period of your hire date. Please see your local HR office to enroll. Your deferral election will become effective within 2 pay periods after your form is submitted.
- OR Once you become eligible, enrollment is easy by contacting Fidelity. You must indicate the percentage of earnings you wish to contribute and your choice of investment options. Failure to elect an investment option will result in all deferrals invested in the Fidelity Freedom Fund that corresponds with your "anticipated" date of retirement (based on your date of birth).
It is your responsibility to ensure deductions are being taken from your pay if you enroll in the 401(k) plan. Retro deductions are not allowed. Please contact your local HR office with any discrepancies.
ELECTING/CHANGING BENEFICIARY (IES)
When you have enrolled, you will also need to name a beneficiary (ies). The beneficiaries designated for your Pension Plan or Life Insurance plan do not apply to the 401(k) plan. Designations of Beneficiaries are done directly with Fidelity. Your HR office will submit your Beneficiary Designation form directly to Fidelity.
Please note, however, if you do not complete your beneficiary designation form when you complete a quick enrollment form, or if you enroll online, you must contact Fidelity Investments to designate your beneficiary. You can elect a Beneficiary online at .
If you do not have access to the Internet, please call the Fidelity Retirement Benefits Line at 1-800-890-4015 from the U.S., or 00-539-111-877-833-9900 from Japan to request a beneficiary form.
If you are married, you are required to name your spouse as your sole beneficiary. If you designate someone other than your spouse, written spousal consent must be obtained and notarized. This plan policy is in compliance with IRS regulations.
Important: Please note that if you do not elect a beneficiary, the beneficiary will default to your plan document guidelines & federal regulations, which state your account balance would go to your spouse, and if a spouse does not exist, then to your estate.
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HOW MUCH CAN I SAVE?
The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), made sweeping changes in all defined contribution plans. Effective 1 January 2008, you may contribute, on a pre-tax basis, between 1 and 100* percent of covered earnings into the Plan. For purposes of this Plan, covered earnings include all compensation except tips, and cost of living differentials and severance pay. All contributions are withheld from your salary by payroll deduction. If you elect to have 100% contributed towards 401(k), and are enrolled in other benefits, please ensure to calculate how much money you will need to pay the other benefits in which you are enrolled. You can use the 401(k) calculator at . It is the employee's responsibility to ensure that they will have enough earnings to cover the premiums for all benefits enrolled in, in addition to their contributions towards 401(k) without going into arrears. Your HR office will be notified if you have failed to consider your other payroll deductions when making your 401(k) deferral election.
Federal law limits the amount of contributions you make into a 401(k) Plan each year. You will be able to defer a maximum of $18,000 into your Plan for 2017. You may be prevented from deferring 100% due to other mandatory deductions. The Economic Growth and Tax Relief Reconciliation Act of 2001 provisions also allow for "age 50 catch up" contributions*, whereby employees aged 50 and up can defer an additional $6,000 into the Plan on a pre-tax basis (for 2017), provided they have already contributed the current year maximum deferral.
Deferral maximums may change annually as defined by the IRS. See your local Personnel Office for the most upto-date maximum deferral information. All employees that attain age 50 in the plan year will be eligible for the catch up contribution opportunity. If you attain age 50 in a calendar year, or if you are already at least age 50 you will be automatically placed into the payroll system that allows the additional catch up contribution. No paperwork is necessary. Lump sum catch up contributions cannot be sent to Fidelity. All contributions must be pre-tax by payroll deductions.
*Some states may not conform to the provisions of EGTRRA. To ensure that you are subject to state tax implications as a result of your state's non-conformance to EGTRRA, contact your tax advisor.
If your contributions reach the IRS annual maximum amount, deductions will automatically stop and start again at the beginning of the next year. The maximum amount permitted changes each year. It is imperative that you monitor your annual deferral to ensure you don't exceed the maximum allowable amount. If your deferral stops as a result of reaching the IRS maximum, you will also lose your future employer contribution match for the remainder of the year. NAF 401(k) plans are not currently required to perform discrimination testing due to classification as a governmental plan.
The IRS allowable maximum deferral considers the aggregate of all applicable tax plans you may be enrolled in, therefore, it is imperative that you monitor your annual deferral from all plans to avoid excess deferrals which could be considered taxable.
There are tools available on the MCCS webpage for you to use to determine how much you can defer per year that allows you to get close to the scheduled IRS maximum. Visit and use the "401(k) Deferral Calculator." There are two calculators available: one for employees age 50+, and one for employees age 18 to 49.
Fidelity Investments also has a "Deferral Calculator" online to assist you in calculating your annual contributions to the 401(k) plan. Please log on to .
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In compliance with IRS guidelines, additional money from payroll cannot be deducted at the end of the year in order for you to reach your maximum limit.
EMPLOYER MATCH
Your employer matches your contributions up to 4 percent of your covered gross earnings. The formula for employer match is shown below. In addition to the 4% employer match, your employer will contribute a one percent "incentive" contribution to your 401(k) account if you are actively participating in both the retirement (defined benefit) and 401(k) plans.
EMPLOYEE DEFERRAL
EMPLOYER MATCH
If actively enrolled in 401(k) & Retirement Plans:
1% incentive employer contribution plus:
1 percent of gross pay
1 percent of gross pay
2 percent of gross pay
2 percent of gross pay
3 percent of gross pay
3 percent of gross pay
4 percent of gross pay
3.5 percent of gross pay
5+ percent of gross pay
4 percent of gross pay
The maximum possible employer contribution is 5 percent, if you are actively participating in both the 401(k) and retirement plans.
VESTING
You are 100 percent vested in the current value of your 401(k) contributions from the day you begin contributing to the Plan. This means that you always own these assets.
The one year vesting period for the employer match ceased effective 1 January 2015. Effective 1 Jan 15, the vesting period changed to a three- year cliff schedule for participants that join the plan on or after 1 Jan 15.
This means that you will own the employer match on your account after you have been actively enrolled in the Plan for three years.
If you terminate employment before your vesting period is satisfied, the employer match will remain with the Plan. If you are re-employed prior to five (5) one year breaks in service, your employer match may be reinstated to your account regardless of employment status (e.g., flexible or regular).
If you terminate employment and withdraw your funds from the plan and are subsequently re-hired, your vesting service from your prior participation will not be considered unless all of your non-taxed funds are rolled back into the plan from another qualified Plan. You will have one year from the date of re-hire to affect the roll over.
CHANGING YOUR CONTRIBUTIONS
You may change the amount you contribute to the plan anytime. To stop or change your contributions, contact Fidelity via the Internet, at or the automated Voice Response Unit (VRU) at 800-890-4015. From Japan call 00-539-111-877-833-9900. If you select to stop contributing, you may start contributions again at the start of any future pay period, provided you are still eligible. Your changes will be effective within the pay period that you have made your changes. Fidelity will send you a confirmation. Please keep for future reference.
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Para solicitar esta informaci?n en Espa?ol, sirvase communicaci?n con Fidelity llamando 1-800-587-5282.
Automatic Annual Increase Program:
You can elect to automatically increase your retirement savings plan contributions each year through the Annual Increase Program by contacting Fidelity directly. There is no fee involved to use this program and you can cancel at any time without penalties. You determine the date your deferral increase will go into effect.
REDEMPTION FEES
Short-Term Redemption Fee Guidelines
Certain Fidelity mutual funds may mpose a short-term redemption fee when shares of the fund are sold prior to the expiration of a specified holding period. This fee is paid to the fund and is calculated on a percentage basis based on the value of the shares being redeemed. The holding period and fee percentage differ depending on the fund. This information is outlined in the mutual fund's prospectus.
Mutual fund companies charge redemption fees on certain short-term transactions.
A "redemption fee" is a fee that is assessed to (subtracted from) the proceeds of a sale of shares of a fund, such as when you transfer money from one fund to another. It is generally applied as a percentage of the transaction (for example two percent) and is imposed if the shares of the fund have not been held for a minimum period of time, as defined by fund(s).
Fidelity Retirement Services administers redemption fees using the following method:
Redemption fees will apply to fund-to-fund transfers only. Fees will be applied to shares that are held less than the specified time period required by the fund
company. Fees will be calculated based on the market value at the time of sale using the "first-in, first-out" (FIFO)
method to age the shares transferred. In other words, the oldest shares acquired by a participant through a participant directed transfer into a fund would be the first ones sold in any participant directed transfer out of a fund. At this time, the majority of fund companies have indicated that holding periods will be counted in calendar days. Redemption Fee Processing. In order to process a short-term redemption fee, shares of mutual funds that carry such a fee must be tracked, or aged, beginning at the time of purchase. Then, at the time of sale, shares must be reviewed to determine if they are subject to a redemption fee.
You are encouraged to refer to individual plan prospectuses for the mutual funds in your plan's line up for fund specific information. Address questions pertaining to redemption fees to Customer Service at Fidelity.
SUMMARY OF PLAN FEES
There are fees associated with the administration of your 401(k) account.
The current fee schedule is:
$15 $35 $25
annual fee per loan acct ($3.75 per quarter = $15) loan processing fee Minimum Required Distribution (MRD) per withdrawal
$20
In-Service withdrawals
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