RS Plan: Quasi-retirement and Lump Sum Opt Out
For effective dates on or after January 1, 2019, cooperatives participating in NRECA’s Retirement Security (RS) Plan will be able to amend their plan to stop offering the quasi-retirement and/or the lump sum distribution option. If a co-op chooses to eliminate either (or both) of these options, benefits accrued by participants up to the effective date of the change will still be eligible for quasi-retirement and/or lump sum distribution.
Implementation
Co-ops deciding to opt out of one (or both) options should speak to their field representative, who will work with NRECA staff, as they do with other retirement plan changes. To be effective on the earliest available date (January 1, 2019), the adoption agreement must be completed in advance, along with participant notifications. For this reason, co-ops interested in a January 2019 effective date should contact their field representative as soon as possible.
An adoption agreement will be drafted by NRECA for review and signature by the co-op and its board. NRECA will provide template communications to assist your co-op with notifying affected plan participants.
Billing rate impact
There will be no billing rate impact for co-ops opting out of quasi-retirement. For lump sum opt out, co-ops that have participated in the prepayment program will see a reduction of up to 5% in their annual billing rate for RS Plan Trust contributions. For co-ops that did not participate, there will be a reduction of up to 3.75%. Rate adjustments will be reviewed periodically.
Reversing the opt-out decision
Co-ops may opt out of one or both of these options – they are separate options and can be opted into (or out of) individually. At a later time a co-ops may opt back into that option. However, once a co-op has opted out of the option, there is a five-year waiting period before a co-op can opt back in.
Next steps
If your co-op is considering amending its plan to stop offering one or both of these plan provisions, please contact your field representative. Field representatives can work with you to model costs for the lump sum opt out and answer additional questions.