NRECA Employee Benefits Weekly

New Timeline for Requesting RS Plan Benefit Projections

Posted on Posted in Retirement Benefits

As 2015 comes to a close, many cooperative employees who are eligible for full or quasi-retirement will be requesting benefit projections from the Retirement Security (RS) Plan. While year-end always sees an increase in these types of requests, we expect higher-than-usual volume in anticipation of interest rate changes that affect lump sum calculations and distributions. We also need to factor in more time this year for projections affected by Internal Revenue Code (IRC) Section 415 because:

  • We expect more manual calculations to ensure compliance with benefit limitations required by IRC 415 because of historically low interest rates;
  • There will be a need for additional W-2 compensation information for some individuals affected by the IRC 415 limits.

Submit projection requests online by November 1
NRECA is committed to working with you to meet the needs of your employees. Benefits administrators can process projection requests directly on the NRECA Employee Benefits website.  To ensure the timely completion of any manual projections for those eligible to retire in 2015, benefits administrators should:

  • Reach out to employees now and encourage them to request benefit projections if they are considering retiring in 2015;
  • Perform projections on the Employee Benefits website before November 1, 2015;
  • Use the website’s pop-up form to request a manual calculation by November 1, 2015, if the online tool indicates that a manual calculation is necessary.

Running the online calculation before the November 1 deadline will enable the system to flag those participants whose projections need to be processed manually.  Generally, these manual requests will be fulfilled within four weeks of submission, subject to the following exceptions:

  • Participants affected by 415 limits or other special circumstances may experience a four-to-six-week turnaround time due to the need for manual calculations and, in some cases,  additional W-2 information;
  • Requests involving both 2015 and 2016 calculation dates (for participants needing to compare results at different retirement dates) will be fulfilled after mid-December when the 2016 lump sum interest rates are released; benefits administrators should revisit the Employee Benefits website at that time to run the most up-to-date 2016 projections.

Except for participants whose birthday occurs in January, manual calculation requests involving both 2015 and 2016 calculation dates will be limited to two calculations. (Participants with January birthdays may want two January calculations to best understand the impact on their benefits of their change in age).

Requests for manual calculations with 2015 retirement dates submitted after November 1, 2015 will be fulfilled as quickly as possible but not likely before January 1, 2016. These requests will be processed as quickly as possible in 2016 with earlier retirement dates taking precedence. Therefore it is important to submit projection requests online by November 1 to know if manual calculations are required.

Requests for manual calculations involving only 2016 retirement dates will be held until after those with 2015 calculation dates have been completed.

A note about quasi-retirements
Individuals seeking to quasi-retire must notify NRECA on or before the date they plan to quasi-retire; however, benefit distribution paperwork for quasi-retirement does not need to be completed and processed before the benefit determination date.

Participants affected by 415 limits
The IRC 415 benefit limit is determined partly based on the participant’s W-2 compensation history. Until 2015 W-2 data is collected in early 2016, NRECA will complete any requested calculation using W-2 compensation history through 2014. If that calculation indicates the participant is affected by the 415 limit, NRECA may ask for estimated 2015 W-2 compensation to produce a more accurate benefit projection. In situations in which the participant requests calculations with both a 2015 and 2016 termination date, NRECA may request estimated 2015 W-2 compensation two ways:

  • Assuming termination on or before December 31, 2015;
  • Assuming termination after December 31, 2015.

This allows us to analyze differences in the 415 limit driven by pay amounts attributed to unused paid time off or other amounts included in a final paycheck. Prior to benefit payments being made to a participant affected by the 415 limit, we may need to request final 2015 W-2 compensation information from the co-op.

Preparing your employees
In preparing for retirement, employees may approach their benefit administrators with questions about their RS Plan benefit distribution options. NRECA has developed Answers You Need: Weighing Your RS Plan Payment Options, a publication that can help participants evaluate their available options. Additionally, RS Plan participants have access to the Personal Investment & Retirement Consulting (PIRC) team. A PIRC team member can provide personalized guidance to co-op employees and can be reached via email at pirc@nreca.coop or by phone at 866.673.2299, option 5, then 2.

Questions
As always, we are here to help you. Please contact your field representative for specific questions or concerns. Representatives in NRECA’s Member Contact Center are available Monday through Friday, 7am – 7pm, Central time at 866.673.2299 or via email at contactcenter@nreca.coop.

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