How Do Cash Balance Plans Work
In a typical cash balance plan, a participant’s account is credited each year with a “pay credit” and an “interest credit” . Increases and decreases in the value of the plan’s investments do not directly affect the benefit amounts promised to participants. Thus, the investment risks are borne solely by the employer.
When a participant becomes entitled to receive benefits under a cash balance plan, the benefits that are received are defined in terms of an account balance. For example, assume that a participant has an account balance of $100,000 when he or she reaches age 65. If the participant decides to retire at that time, he or she would have the right to an annuity based on that account balance. Such an annuity might be approximately $8500 per year for life. In many cash balance plans, however, the participant could instead choose to take a lump sum benefit equal to the $100,000 account balance.
If a participant receives a lump sum distribution, that distribution generally can be rolled over into an IRA or to another employer’s plan if that plan accepts rollovers.
The benefits in most cash balance plans, as in most traditional defined benefit plans, are protected, within certain limitations, by federal insurance provided through the Pension Benefit Guaranty Corporation.
What Happens To The Assets In A Plan When An Employer Converts Its Traditional Defined Benefit Plan Formula To A Cash Balance Plan Formula
When an employer amends its plan to convert the plan’s traditional defined benefit plan formula to a cash balance plan formula, the plan’s assets remain intact and continue to back all of the pension benefits under the plan. Employers cannot remove funds from the plan, unless the plan has been terminated and has assets remaining after payment of all of the benefits under the plan.
For Employees And Applicants
- Employee Assistance
- Employment Verification
Verification of employment is processed through uConfirm, an automated service that provides instant employment and income verification. You can access uConfirm online or 312-8266.
Call our Job Line at 297-9000 Monday through Friday, 7:00 am 5:00 pm for information about postings, your application status or our hiring process. Also visit Career Opportunities for more information.
If Im Retired And On A Los Rios Sponsored Retiree Plan At Age 65 Do I Have To Enroll In Medicare
If you do not enroll in Medicare, then you cannot enroll in a Medicare Supplement/Advantage Plan. This could have a significant impact on your insurance premiums. If you decide to enroll in Medicare at a later date, Medicare could be assessed penalties for late enrollment. The penalty is 10% for each 12 month period you were eligible for Part B but didnât enroll . This is a lifetime penalty.
Do I Need To Do Anything At Age 65 To Defer My Medicare Enrollment
If you are collecting Social Security Benefits, then Medicare will automatically enroll you at age 65. You will receive a Medicare Card in the mail with instructions to keep the card if you wish to be enrolled in Medicare. If you do not want Medicare, you must sign the document and return it to Social Security.
If you are not collecting Social Security Benefits, then you can contact Medicare and notify them of your decision to defer.
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What Information Is My Employer Required To Give Me To Explain The New Cash Balance Plan Formula And When Should I Receive This Information
Many employers voluntarily provide helpful information about these conversions in advance of the change becoming effective. Make sure you have all the information that the employer has provided. If you are still not sure if you have enough information to understand the plan change, you have a right to contact your plan administrator and ask for more information or help in understanding the change and any choices you have in conjunction with the change.
Plan administrators are generally required to give at least 45 days advance notice of plan amendments that significantly reduce the rate at which plan participants earn benefits in the future.
After the plan is amended, the plan administrator is required to provide all plan participants with a Summary of Material Modifications to the plan or a revised Summary Plan Description. This document will summarize the changes to your plan.
In addition, under the Age Discrimination in Employment Act , an employer requiring an employee to sign a waiver of rights and claims when choosing between plans is required to provide enough information to enable the employee to make a knowing and voluntary decision to waive ADEA rights. In most cases, an employee must be given at least 21 days to sign the waiver and at least 7 days to revoke the agreement.
How Am I Affected If I Leave My Job At A Company That Just Changed Its Pension Plan From A Traditional Defined Benefit Formula To A Cash Balance Plan Formula
If you have worked long enough to be vested under the plan, you should receive the sum of the accrued benefit under the formula in effect before the amendment, and the additional benefits you earned under the plan formula in effect after the amendment. However, you may have to wait until a retirement age under the plan to receive your benefit.
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What Is A Cash Balance Plan
There are two general types of pension plans defined benefit plans and defined contribution plans. In general, defined benefit plans provide a specific benefit at retirement for each eligible employee, while defined contribution plans specify the amount of contributions to be made by the employer toward an employee’s retirement account. In a defined contribution plan, the actual amount of retirement benefits provided to an employee depends on the amount of the contributions as well as the gains or losses of the account.
A cash balance plan is a defined benefit plan that defines the benefit in terms that are more characteristic of a defined contribution plan. In other words, a cash balance plan defines the promised benefit in terms of a stated account balance.
Sutter Health Sued Over Erisa Breaches In 403 Plan
Former employees of Sutter Health have sued the Sacramento, Calif.-based operator of hospitals and clinics, alleging ERISA violations in the management of the not-for-profit firm’s 403 plan.
Sutter’s fiduciaries “did not try to reduce the plan’s expenses or exercise appropriate judgment to scrutinize each investment option that was offered in the plan to ensure it was prudent,” said the complaint filed July 21 in a federal District Court in Sacramento.
The plaintiffs also said that plan executives kept certain investment options “despite the availability of identical or materially similar investment options with lower costs and/or better performance histories,” according to the complaint in the case of Sargony et al. vs. Sutter Health et al. The plaintiffs are seeking class-action status.
“Defendants knew or should have known of the existence of cheaper share classes and therefore also should have immediately identified the prudence of transferring the plan’s funds into these alternative investments,” the complaint said.
A Sutter representative didn’t respond to a request for comment. The Sutter Health 403 Savings Plan, which represents the mid-December 2018 consolidation of two 403 plans, had assets of $3.68 billion as of Dec. 31, 2018, according to the latest Form 5500 report.
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Will The Conversion Of My Pension Plan Formula Have An Effect On My Retiree Health Benefits
Often, pension plans and health plans are operated independently and are administered separately. However, sometimes eligibility for retiree health benefits depends upon eligibility for pension benefits. If you have questions about your health benefits you should contact your health plan administrator. Be aware that, like pension plans, health plans generally can be amended or terminated.
Vacation And Special Pay Plan
The following does not apply to LRCFT retirees.
Employees who retire may not:
- Use their vacation to extend out their retirement date
- Convert their accrued vacation leave to service credit
Vacation hours for retirees aged 55 and older are paid into the Special Pay Plan, which is a 403 retirement plan for special forms of compensation paid to employees in a tax-advantaged manner. Contributions to the Special Pay Plan permanently save payroll taxes, including 7.65% Social Security and Medicare taxes, on the money placed into the plan.
Envoy Plan Services and MidAmerica administer the Los Rios Special Pay Plan. MidAmerica will establish a 403 account on your behalf and will mail you a welcome packet with more details. You are 100% vested in the account balance at all times. Your account balance earns a guaranteed fixed interest rate of 1.75% and is reset each January. Assets can remain in the Special Pay Plan or you may withdraw the funds , take multiple distributions, or rollover funds to an IRA or other retirement plan.
Once your account is established â even before you receive the welcome packet â you can log in at www.mymidamerica.com and download forms. When you log in for the first time, you will need to use your social security number as the username and the last 4 digits of your SSN as the password.
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Retirement Benefits Are One Of The Unresolved Issues In Our Contract Negotiations With Kaiser Weve Prepared This Calculator To Help You Estimate The Difference Between Nuhws Proposal Vs Kaisers
In 2015, Kaiser unilaterally implemented a two-tiered system in which Southern California therapists & professionals and Northern California Optical staff hired after 2015 receive Kaisers cheaper 401 plan.
Meanwhile, those hired before 2015 get Kaisers defined-benefit pension plan.
Restoring Kaisers pension plan for all NUHW members is a top priority in our contract negotiations.
To help you gauge the impact of the two retirement proposals, NUHW created the following retirement calculator. It estimates the difference in retirement benefits you would earn under the two plans.
The calculator estimates your future benefits those you would earn from today going forward and doesnt calculate benefits youve already earned. These calculations are estimates and should not be taken as definitive.
Sutter Health Facing 403 Excessive Fee Suit
The allegations mirror those of other recently filed cases against both 401 and 403 plans.
A lawsuit has been filed against fiduciaries of the Sutter Health 403 Savings Plan for breaches of their fiduciary duties under the Employee Retirement Income Security Act .
The plaintiffs claim the defendants breached their fiduciary duties in multiple respects, including that:
- They did not make decisions regarding the plans investment lineup based solely on the merits of each investment and what was in the best interest of plan participants, but instead selected and retained investment options in the plan despite the high cost of the funds in relation to other comparable investments
- They failed to investigate the availability of lower-cost share classes of certain mutual funds in the plan and
- They failed to monitor or control the grossly excessive compensation paid for recordkeeping services.
Saying that its assets qualified the 403 plan as a jumbo plan in the defined contribution plan marketplace, and among the largest plans in the United States, the complaint accuses the defendants of failing to leverage the size of the plan to negotiate for lower expense ratios for certain investment options and for a prudent payment arrangement for the plans recordkeeping and administrative fees.
Sutter Health has not yet responded to a call for comment.
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Is My Employer Required To Give Me A Choice Of Remaining Under The Old Formula Rather Than Automatically Switching Me To The New Cash Balance Plan Formula
Neither ERISA nor the IRC requires employers to give employees the choice of remaining in the old formula. Employers have several options, including:
The law permits employers to have such flexibility, but whatever option applies has to satisfy legal requirements.
Under each of these options, benefits already earned by the participants, as of the effective date of the amendment that converts the old formula to a cash balance formula, may not be reduced.
Distribution Of Retirement Savings Funds
Your money is always 100% yours and can be left where it is or rolled into an IRA or to your new retirement plan when you leave employment. If you withdraw your money, taxes will be due on the distribution. In most cases, withdrawal can be made without incurring an IRS penalty if you retire at 55 or if you become disabled. If you retire before age 55, you may be eligible to receive a series of periodic payments. There are several options:
- Transfer the money into your new employerâs retirement savings plan
- Roll it into an IRA
- Leave it where it is
- Take a lump sum payment
To withdraw funds, obtain the distribution form from your investment company, complete an Envoy Transaction Request Form, and fax both forms to Envoy. Envoy will sign the investment companyâs form on behalf of Los Rios, and will send it back to them to process the distribution. Just like life insurance, when you open your retirement savings plan, you designate a beneficiary. Be sure to keep your beneficiary up-to-date. Contact Envoy or the Employee Benefits Department if you have any questions or need additional details.
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If You Have A Change In Status
Your benefits elections will remain in effect throughout the plan year unless you experience a change in status that affects eligibility for benefits or another qualified status change event .
You must request an election change and submit associated forms to the Employee Benefits Department within 31 days. Examples of qualified status change events include a change in:
- Domestic partnership status, including establishment or termination of the partnership
- Number of your eligible children, including by birth, adoption, placement for adoption, or death
- Eligibility status of your children
What Benefits Does Sutter Health Provide
Asked to all employees at Sutter Health
Sutter PAMF has 1 1/2% 403B matching, if you put in at least 3%
They are good health care, eye care, dental, 401k and pension
Pension plus a 403b w/ 3% match. Full medical, dental, vision. Employee is free, dependents are a very reasonable price. Great medical coverage with a network larger than the Sutter system.
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Do I Need To Enroll In Medicare Part D
All Los Rios sponsored plans have prescription drug coverage. If you enroll in a separate drug plan, then you will jeopardize your Los Rios sponsored health plan. If you are being charged income-related monthly adjustment amount for Part B, then you will also have IRMAA for Part D that you must pay.
Very Importantthe Information On This Page Is For People Going Through A Divorce Or Attorneys Helping Their Clientsdo Not Call Qdrodesk For Retirement Account Information Unless It Is In Regards To A Divorce Qdrodesk Is A Private Company That Only Helps With The Divorce Process It Is Not Related Or Connected To The Retirement Account Listed On This Page This Page Is Provided For Informational Purposes Only
SUTTER HEALTH RETIREMENT PLAN
SUTTER HEALTH RETIREMENT PLAN is a Defined Benefit Plan providing retirees with a predetermined monthly retirement benefit upon reaching a specific age. The retirement benefit paid to a retiree is typically calculated using a formula which often employs years of credited service under the plan and salary information. The retirement benefit is typically payable to the employee upon attainment of their normal retirement age for the remainder of his/her lifetime. Benefits under this type of plan are often referred to as accrued benefits. This type of plan does not maintain individual accounts for employees.
It is important to remember that under this type of plan, the Alternate Payee is typically not awarded a lump sum cash payment from the Plan. It is usually a requirement of the Plan that the amount awarded to the Alternate Payee be expressed in terms of a monthly benefit payable for either the lifetime of the Participant or the Alternate Payee.
Plan & Company Information:SUTTER HEALTH SYSTEMS
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How Do Cash Balance Plans Differ From 401 Plans
Cash balance plans are defined benefit plans. In contrast, 401 plans are a type of defined contribution plan. There are four major differences between typical cash balance plans and 401 plans:
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