Account Access - PENCO
Summary Plan Description
FAQ's & Tips
Plan Investment Options
- 401(k) - Refers to the specific section of the
Internal Revenue Code that permits employees to contribute a portion of their
compensation to a qualified plan on a Pre-tax basis. These plans are also
called "cash or deferred arrangements". Amounts contributed to the
plan are not taxable to the participants until withdrawn. Amounts to be
deposited are determined by the employee. The employer permits formula
matching, discretionary matching, pure discretionary or profit sharing
contributions, and formula contributions. The Plan Document controls this. Fiduciary
responsibilities rest with the employee.
Compensation - A contractual commitment by an employer
to an employee to pay compensation in a future tax year.
Contribution - A plan that provides an individual
account for each participant and benefits based solely on (1) the amounts
contributed to the participant's account plus (2) any income, expense, gains
and losses, and reallocated forfeitures.
- Discretionary - The employer has the option of making contributions to the plan at
his choice regardless of the profit level of the corporation that year.
Contributions This type
of contribution is usually a deferral or percentage of a participants
salary. When an eligible employee
decides to contribute a percentage of their paycheck to the 401(k) plan they
are making an elective contribution.
Meeting - Group meetings with employees to explain
the employer's 401(k) plan and the investment accounts available.
- Extranet -
An extension of an
organization's intranet, especially over the World Wide Web, enabling
communication between the institution and people it deals with, often by
providing limited access to its intranet.
Withdrawals - A means by which a participant may
withdraw funds from his 401(k) account prior to age 59 1/2 or termination of employment. A
hardship withdrawal may be requested for:
- purchase of a principal residence
- tuition expenses for post-secondary education for the next year for
you, your spouse or dependents
- un-reimbursed medical expenses for you, your spouse or dependents
- payment of rent (to avoid eviction) or mortgage (to avoid
- An employee owning more
than five percent of the company or earning more than $80,000.
- Loans - Allows participants to access their plan
funds without extra tax costs or penalty. The plan must specifically permit loans before
participants may borrow. Check your
Contribution - An employer contribution to a plan that is allocated on the basis
of the employee's elective contribution. A matching contribution may be
either mandatory or discretionary.
Plan - A written plan that allows an employer to
discriminate in favor of highly compensated employees.
- Participants - Individuals who actually make deposits into their 401(k) plan. Not
all employees become participants or are eligible to participate.
Directed - The plan participants are provided the opportunity to direct their
own retirement assets/dollars by making investment choice in funds that more
closely meet their specific goals and objectives. Trustee Directed plans
do not permit the participants to invest their own assets, but rather, the
assets are invested in investments selected by the plan's Trustees.
Meetings - Scheduled meetings between Plan
Consultants and Participants to review and update individual retirement plan
goals and objectives.
Document The plan document is filed with
the Department of Labor and the IRS and governs the plan sponsor, the Trustees,
investment providers, plan administrators, and participants. This document is what provides your plan its tax qualified status. The
Summary Plan Description or SPD provides an overview of the plan document.
- Plan Sponsor - A Business or Employer Organization that
sponsors the qualified retirement plan and is ultimately responsible for its
- Pre-tax - Contributions are made to a retirement plan before taxes are
calculated. Your gross pay is reduced by the amount contributed to a
Sharing - A profit sharing contribution is a percentage of compensation paid
by the employer to all employees meeting eligibility requirements set by the
plan document. An employer is not
required to make a profit sharing contribution however, at the employers discretion,
may do so on an annual basis. While
the money is deposited to each eligible employee account and you may
generally invest it as your money, you must satisfy vesting requirements
before you fully control a profit sharing contribution.
Plan - A plan that meets Internal Revenue Code
and IRS regulatory requirements that entitles the employer to an immediate
tax deduction when benefits are funded.
Rebalancing - A process by which the system will
automatically create transfers between investment funds to achieve the
desired asset allocation. Rebalancing can be executed a single time, or
established so that transfers will automatically occur at certain dates.
- Summary Plan
Description The plans Summary plan Description
summarizes the Qualified Plan Document and is generally does not provide the
detail available in the Plan Document.
Also referred to as the SPD it is available to all persons eligible to
participate in the plan. If you do
not have your SPD you may request one form your plan sponsor.
- Tax-deferred - Federal income tax is not paid on contributions or earnings to a
retirement plan until the money is withdrawn.
- Top Heavy
Plan - A plan that provides more than 60 percent
of its aggregate accrued benefits or account balances to "key" or
"highly compensated" employees
Directed - The plan's Trustees have the fiduciary responsibility to select the
investment vehicles and invest the plan assets for all eligible plan
- Vesting - Refers to an employee's ownership of plan contributions. Employees
are always 100% vested in their own contributions. Employer contributions
become 100% vested after a predetermined stated period of time.