AUTOMATIC CONTRIBUTION ARRANGEMENT - MassMutual
SAMPLE SAFE HARBOR ELIGIBLE AUTOMATIC CONTRIBUTION ARRANGEMENT (SHEACA)
NOTICE FOR PLAN YEAR BEGINNING
To: Plan Participants
From: Plan Administrator, Plan (“Plan”)
Plan Sponsor: (“Employer”)
Re: Notice of Rights under Safe Harbor Eligible Automatic Contribution Arrangement
Automatic contributions (deferrals). This notice advises you of certain rights and obligations you have under the Plan. The Plan includes a traditional safe harbor feature with an eligible automatic contribution arrangement. Under this arrangement for the Plan for the [2009] plan year, the Employer automatically will withhold from your compensation per pay period the percentage described in the following table, which bases your automatic deferral percentage on your plan year of participation, and will transmit the withheld amount to the Plan as your elective deferrals.
[Automatic deferral percentage
[3%]
If you wish to defer the automatic deferral percentage, you do not need to make a deferral election. If you do not wish to defer any of your compensation, or you wish to defer a percentage of your compensation different from (either more or less than) the automatic deferral percentage, you may elect to defer a different percentage (“contrary election”) of your compensation (including zero). Your contrary election will be effective as soon as the Plan Administrator reasonably can implement your election after receipt. Your election will remain in effect unless and until you change it. The percentage of pay for your deferral contribution is based on the amount reported in [Define Compensation Definition].
If you want to contribute more to your account than would be provided automatically, there are limits on the maximum amount. For 2009, the IRS 401(k) deferral limit is $16,500 and for catch-up eligible participants, an additional $5,500 401(k) deferral may be made.
Please refer to your Summary Plan Description for more information about how to change your deferral election. IF YOU PREVIOUSLY ELECTED TO DEFER A DIFFERENT PERCENTAGE OF YOUR COMPENSATION (INCLUDING ZERO), YOU NEED NOT TAKE ANY FURTHER ACTION.
Use this paragraph if Company makes safe harbor matching contributions:
For the [2009] plan year, the Company will match ___[e.g 100%] of the first _[e.g.3%] of your deferrals and __[e.g. 50%] of any deferral contributions between _[e.g. 4%] and _[e.g. 5%] of pay. Your deferrals and safe harbor contributions are immediately 100% vested.
Both your deferrals and safe harbor contribution may not be withdrawn while employed prior to age 59½. [Your deferrals cannot be withdrawn for hardship] [can be withdrawn for financial hardship]. For further information on these contributions to your Plan as well as receive a copy of the SPD, please contact [name], the Plan Administrator, at [address, telephone number and e-mail address].
Use this paragraph if Company makes annual profit sharing contributions: In addition, the Company may make an annual profit-sharing contribution at its discretion. [The profit-sharing contribution may be not be withdrawn for financial hardship and may not be withdrawn prior to age 59½. All eligible employees share in this contribution except those employees who have not worked 1,000 hours in the plan year. This contribution will be 100% vested after your completion of 5 years of service. ]
Use this paragraph if Company makes safe harbor non-elective contributions (can also be used for the “wait and see” safe harbor supplemental notice):
For the [2009] plan year, the Company will make a Safe Harbor Non-Elective Contribution of [at least 3%] of your pay to the Plan. Your deferrals and safe harbor contributions are immediately 100% vested.
Both your deferrals and safe harbor contribution may not be withdrawn while employed prior to age 59½. Your deferrals cannot be withdrawn for hardship can be withdrawn for financial hardship. For further information on these contributions to your Plan as well as receive a copy of the SPD, please contact [name], the Plan Administrator, at [address, telephone number and e-mail address].
Use this paragraph if Company makes safe harbor non-elective contributions (“Wait and See Approach”):
The Company may also make a Safe Harbor Non-Elective Contribution of [at least 3%] for the coming [2009] plan year. You will be notified at least 30 days before the end of the [2009] plan year as to whether or not this contribution will be made. Your deferrals and safe harbor contributions are immediately 100% vested.
Both your deferrals and safe harbor contribution may not be withdrawn while employed prior to age 59½. [Your deferrals cannot be withdrawn for hardship] [can be withdrawn for financial hardship]. For further information on these contributions to your Plan as well as receive a copy of the SPD, please contact [name], the Plan Administrator, at [address, telephone number and e-mail address].
[IMPORTANT: In addition to the above paragraphs, the notice needs to include all vesting and withdrawal restrictions on all contributions including conditions under which such contributions are made, not just safe harbor contributions. If the plan has additional contributions, please ensure that such information is included in this notice.]
Limited right to withdraw automatic deferrals. Within the time period described in this paragraph, you may elect to have the Plan distribute to you all of your prior automatic deferrals and allocable earnings on the deferrals. You may make this election on the contrary deferral election form the Plan Administrator will provide to you upon request. You must make this election no later than 90 days after the first automatic deferral is taken from your compensation. If you elect to withdraw all of your prior automatic deferrals, you will pay income tax on the distributed amount, but you will not be subject to the 10% premature distribution penalty tax, even if you receive the distribution prior to age 59½.
If you have made an investment election with respect to your own account, the following information may not apply to you.
Right to direct investment. This notice advises you that as a Participant (including a Beneficiary of a deceased Participant) in the Plan, you have the right to direct the investment of some or all of your Plan account assets. Specifically, under the Plan, you may direct the investment of:
[ ] All of your Plan accounts
[ ] Your elective deferral contributions account
[ ] Your matching contributions account
[ ] Your nonelective (profit sharing) contributions account
Default investment. You may invest your account(s) specified above (your “directed account(s)”) in any of the investment choices offered in the Plan. If you do not make an election as to how the Plan should invest any of your future directed account(s) (e.g. rollover contribution, employee or employer contribution) by returning the election form to the Plan Administrator, the Plan Trustee will invest your future directed account(s) in the “default” investment that the Plan officials have selected. The default investment is [insert name of default investment option]
To be Used for Target Date Investment Options:
[Retirement Income
Retirement 2010
Retirement 2020
Retirement 2030
Retirement 2040]
[Describe the default investment option. For example - The Select Destination Retirement Series investment options are model portfolios designed to provide varying degrees of long-term appreciation and capital preservation through a mix of equity and fixed income exposures based on a participant’s age and target retirement date. These portfolios change their asset allocations and associated risk levels over time with the objective of becoming more conservative (i.e., decreasing risk of losses) with increasing age. These portfolios assume a retirement age of 65. Your default investment option will be invested according to a predetermined asset allocation strategy based on your age and anticipated retirement date]
To be Used With Balanced Investment Option:
[________ Balanced Investment Option]
[Describe the default investment option. For example The _____ Balanced Investment Option or model portfolio that applies generally accepted investment theories, is diversified so as to minimize the risk of large losses, and is designed to provide long-term appreciation and capital preservation through a mix of equity and fixed income exposures consistent with a target level of risk appropriate for participants of the plan as a whole.]
To be Used With Managed Accounts
[ _____________ Managed Account]
[Describe the default investment option. For example The ______ Managed Account service with respect to which a fiduciary, applying generally accepted investment theories, allocates the assets of a participant’s individual account to achieve varying degrees of long-term appreciation and capital preservation through a mix of equity and fixed income exposures, offered through investment alternatives available under the plan, based on the participant’s age, target retirement date (such as normal retirement age under the Plan) or life expectancy. Such portfolios are diversified so as to minimize the risk of large losses and change their asset allocations and associated risk levels for an individual account over time with the objective of becoming more conservative (i.e. decreasing risk of losses) with increasing age.]
To be Used With Non-QDIA Default Investment Options
[ _____________ Stable Value]
[Describe the default investment option. For example The _______ Stable Value investment option is an option that is designed to preserve principal and provide a rate of return consistent with intermediate investment grade bonds, while providing liquidity for participant initiated withdrawals and transfers.
To be Used With Plans that Grandfather Stable Value QDIA
Your directed account(s), prior to __________, (“prior directed account(s)”) may have been previously invested in a default investment option: Such prior directed account(s) may continue to be invested in such default investment option If you did not make an election as to how the Plan would invest any of your prior directed account(s) (e.g. rollover contribution, employee or employer contribution) by returning the election form to the Plan Administrator, the Plan Trustee invested your prior directed account(s) in the “default” investment that the Plan officials had previously selected. Such default investment is [insert name of default investment option]
[Describe the default investment option. For example The _______ Stable Value investment option is an option that is designed to preserve principal and provide a rate of return consistent with intermediate investment grade bonds, while providing liquidity for participant initiated withdrawals and transfers.
Description of default investment. The description of the default investment option[s] including investment strategy, risk and return characteristics, and fees and expenses are shown on the attached Investment Profile[s]
Right to alternative investment. Even if the Plan Trustee invests some or all of your directed account(s) in the default investment, you have the continuing right to direct the investment of your directed account(s) in one or more of the other investment choices available to you under the Plan. You may change your investments [at least once within any three month period]. You are entitled to invest in any of the alternative investment choices without incurring a financial penalty.
Where to go for further investment information. You can obtain further information about the Plan and its investment alternatives other than the default investment by contacting the Plan Administrator at:
.
Copyright © 2008 Massachusetts Mutual Life Insurance Company, Springfield, MA 01111. All rights reserved.
MassMutual Financial Group is a marketing name for Massachusetts Mutual Life Insurance Company (MassMutual) and its affiliated companies and sales representatives.
This sample notice is for informational purposes only and should not be considered legal advice. Clients should seek legal counsel as to its application to the Plan.
RS 12948-04
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