Upcoming Deadlines for the RS Plan’s Voluntary Contribution Acceleration Program

Cooperatives interested in participating in the Retirement Security (RS) Plan’s Voluntary Contribution Acceleration Program (VCAP) in 2020 should notify their field representatives of their interest before the beginning of December. All new VCAP agreements must be signed by co-op representatives no later than December 2, 2019 to become effective on January 1, 2020.

The RS Plan’s VCAP provides co-ops with the flexibility to make additional contributions to the plan in exchange for a proportional discount applied to the trust portion of their billing rate for a specific period of time.

To set up a VCAP, the co-op will need to decide on two of the following three variables. The variable that is not used will be determined based on the values provided for the two that are chosen:

• The amount of the VCAP contribution;
• The period of time over which a VCAP contribution can be applied to reduce the billing rate (called the “discount period,” which may last up to 10 years);
• The amount of proportional discount desired for the trust contribution.

Once a VCAP agreement is signed by an authorized member of the co-op and the contribution is made, NRECA will establish a VCAP account to track the balance of the contribution for the associated plan. The VCAP contribution must be paid in full prior to January 1, 2020, for the discount in the billing rate to apply for 2020. Each participating co-op receives an annual statement in September detailing the projected end of the discount period as well as the monthly deductions for the reduction in the RS Plan Trust contribution and the increases for the RS Plan’s monthly market rate of return.

The same December 2, 2019, deadline applies to co-ops that are already participating in the VCAP and wish to make an additional contribution to their VCAP account. Adding a contribution will either extend the discount period, increase the scheduled reduction of their billing rate, or both. A co-op cannot modify the discount period or the discount level without making additional contributions to their VCAP account balance. For more information about the VCAP or to model specific scenarios for your co-op’s plans, we encourage you to contact your field representative.