Suffolk County Deferred Compensation Plan

SUFFOLK COUNTY DEFERRED COMPENSATION PARTICIPANT’S MEETINGS
MAY 31 & JUNE 1, 2006
QUESTIONS AND ANSWERS

	Distributions/Minimum Required Distributions
1	Q. My spouse is 75 years old and currently employed by the County. She has a very large 457 account balance and also has a $40,000 IRA. It is my understanding that the IRS now permits rollovers from the 457 Plan to an IRA and from an IRA to a 457. If she rolls her IRA to the 457 Plan and continues working, will the money rolled into the 457 Plan from the IRA be subject to minimum required distribution (MRD) rules?
	A The rollover institution will take the minimum required distribution before it is rolled into the 457 Plan. Once the money is in the 457, as long as she continues working for the county, she will not be required to take the minimum required distribution from our Plan.
2	Q Once you reach the minimum required distribution age, do you have to take your money regularly, such as monthly or quarterly?
	A There is a calculation that determines the minimum required distribution. You can take the distribution in a lump sum that year. There will be a new calculation each year. If you take periodic payments earlier in the year that exceed your required distribution, then your distribution obligation has been met for that year.
3	Q When you leave County service, do you have to pick a distribution date?
	A No. Rules have been changed since the beginning of 2002 by Federal Legislation (EGTRRA). There is much more flexibility-you no longer have to declare a future distribution date.
4	Q How soon can you start taking distribution? When do you have to start taking distributions?
	A You have access to your money 30 days after separation from service. You don’t have to take your money until you are subject to the minimum required distribution rules, which is April 1st in the year following the year you turn 70 ½.
5	Q If you are separated from County service and start taking distribution, can you stop taking distribution if you choose to and start again in the future?
	A Absolutely, you can stop it, change the amount and restart at a later date. Once you reach the age that is subject to minimum required distribution you can not withdraw any less than the required amount.
	ROLLOVERS
6	Q Is there an advantage to rolling your 457 into an IRA? Is there a penalty?
	A There are advantages and disadvantages. The Board would like to see you keep your money in our Plan as we believe we offer a great range of investments with low fees. Talk to VALIC or T Rowe Price regarding an IRA. It’s a good idea not to roll all your money out of the Plan because once you are out of the Plan you cannot come back; leave some money in the Plan.
7	Q If I rollover an IRA to the 457 will it be categorized as a rollover?
	A The records are kept separately by source of money. It will be stated that way on your statement. But once the money is in our Plan, it is not subject to minimum required distribution as long as you continue working.
	PLAN RULES
8	Q Are the rules covering the Plan expected to change in the future?
	A Change is always possible. The rules that are currently in effect will sunset December 31, 2010
9	Q When can I start contributing to the Deferred Compensation Plan?
	A Once you are an employee.
10	Q What is the minimum amount that I can contribute bi-weekly?
	A $10 a pay check.
11	Q What is the procedure to contribute to the Plan from a SCAT check?
	A Contact your union representative on the Board and they will forward you a form to complete, or call 3-5424. Your union rep will request a report for you with information regarding your past contributions.
	PLAN RULES (CONTINUED)
12	Q If you want to transfer to the other provider, who do you contact?
	A You contact the company where you want to move your money to. The transfer takes approximately 3 days. Please be aware that your money is out of the market for that time because this is not a wire transfer.
13	Q Is there any other protection of your money under the law?
	A All Plan assets are held in trust. T. Rowe Price’s money is held by the T. Rowe Price Trust Company and VALIC’s is held by the AIG Federal Savings Bank. The Board has a separate contract with each trustee.
14	Q How is the money distributed to a beneficiary, does it have to be a lump sum?
	A No, it does not have to be a lump sum. See chart outlining options in Distribution Options booklet at www.scdeferredcomp.org.
15	Q Are there any plans to raise the contribution level?
	A That is determined on the federal level. The 2007 Annual Deferral limits will be announced in the fall of 2006. The limit could possibly increase by $500.00.
16	Q Once you retire, do I have to notify the Provider?
	A No, the county sends a report to both providers on a monthly basis, notifying them of any participants who retired or were otherwise terminated during the prior month.
	RETIREES
17	Q As a retiree, can I still continue to contribute to the Plan?
	A No
18	Q When you retire, are there additional funds available to you as a retiree?
	A No, all the funds are available to everyone whether you’re a new employee or a retiree.
	FUNDS
19	Q Why hasn’t VALIC’s rate of 3.75% for the Fixed Income option increased?
	A Answer provided by AIG VALIC’S rep: Rate is based on the Portfolio composition and the duration of the specific securities that underlie that investment product. Different products are going to react differently in an interest rate environment. Their portfolio is a longer duration; they can’t get the returns that the current holdings are offering and they don’t have the justification to raise the interest rates.
20	Q How do I obtain a prospectus?
	A You can call the provider, go to the provider’s website or access the prospectus directly from the Fund’s website.
21	Q Are any of the funds for the environment?
	A VALIC has the Calvert Socially Responsible Fund-see fund offerings chart on www.scdeferredcomp.org.
22	Q How are the funds in the Plan chosen?
	A The Board determines the fund line-up. We provide at least one fund in every category. Also, we provide funds that have consistently done well over the 1, 3, 5 and 10 year periods.
23	Q What is a management fee and does it change when you retire?
	A The management fee is the amount of money charged by the fund itself to run the fund and all participants, whether active employees or retirees, pay the same basis points (bps) based on assets held.
24	Q We seem to have a lack of fund choices if we go into a Bear market. I would like the Board to introduce funds to protect us. Also the Plan doesn’t have enough Energy Funds.
	A At this time the Plan has over 80 fund choices. The Board’s goal is to cover the spectrum of funds that will represent the financial investment needs of as many people as possible
	LOANS
25	Q Can you take a loan from your Deferred Compensation account and what are the payment provisions?
	A Yes, you can take a loan. The rules are: 50% of your account up to $50,000 Loan can be 1 – 5 years Up to $50,000 for up to 15 years if it is for the purchase of a home If you retire before the loan is repaid and do not pay the loan back by the last day of the quarter following the quarter you ceased to make payment, the loan will be deemed a distribution. Retirees are not eligible for a loan, must be a payroll deduction If you are with both providers, you may only have a loan with one provider Interest that a participant pays goes back into participant’s account Rules are the same for both companies except for the application fee TRP a $50 one time initiation fee VALIC a $50 initiation fee and a $30 annual maintenance fee
26	Q If you take a loan, does it affect the balance of your account?
	A Yes. You are borrowing from your account.
	CATCH-UP
27	Q When can I use Catch-up?
	A In the three years prior to your normal retirement age, set by your tier. If you are eligible for catch-up based on under-utilization of the Plan in prior years, you are eligible to double your normal annual contribution amount in the three years prior to the year you are eligible to retire. Please contact your union representative for details.
28	Q If you want to contribute catch-up from your SCAT check, does the catch-up form have to be submitted before the retirement date? Note: The application form must be submitted to the Board before you retire or separate service. Additionally, you are not eligible to start catch-up unless you are at least age 40 or will turn 40 in the calendar year you are applying for catch-up.
	A It should be filed as soon as possible because you can only make a contribution to the Plan up to 75 days after your retirement date.
	ADVICE
29	Q What kind of charges is there for the financial advice?
	A Both have service charges by basis points-contact provider for specifics GPS (Guided Portfolio Services) offered through AIG VALIC Morningstar offered through T. Rowe Price