Frequently Asked Questions
What is the advantage of tax deferral?
In addition to increasing current disposable income, tax-deferred
savings accumulate more rapidly than after-tax savings.
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What are the contribution limits?
The maximum amount you may contribute annually is regulated by Federal Law and for the tax year 2006 is $15,000 for those under 50 years of age and $20,000 for those over 50 years of age. If you are covered by another plan, your maximum may be lower.
It may be possible, based on an individual's length of service, age and level of past contributions, to exceed the general limit outlined above. A calculation is required to determine your eligibility; please contact your Hamilton Cavanaugh & Associates, Inc. representative to request a calculation.
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Can I change my contribution amount?
Yes. You can increase or decrease your contribution amount within
the guidelines established by your employer. You may, of course,
discontinue or suspend contributions at any time. Please contact
Hamilton Cavanaugh & Associates, Inc. for more details.
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What are my investment options?
Retirement program participants may direct any portion of their
deposit to a wide variety of investment account options. Each account
offers varying approaches to investing with varying levels of risk
for stability of principal, income, or long-term growth.
Current program offers include:
- Guaranteed Fixed Interest Accounts
- Money Markets
- Bonds
- Large-Cap/Mid-Cap/Small-Cap Equity funds
- Diversified
- Balanced
- Managed
- Growth
- Capital Appreciation
- Value
- Global
- International
- Specialty Funds
Contact a Hamilton Cavanaugh & Associates, Inc. representative
to review your investment options and receive a current prospectus.
Please read carefully before investing. Some accounts may not be
available under your retirement program.
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How will I keep track of what has accumulated
in my account?
You will receive quarterly plan provider statements outlining
all activity which has taken place in your account. If you should
need updated account balances or any information regarding your account,
please contact any of our service representatives at: (800) 433-9832.
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Are loans available from my retirement
program?
Depending on your plan loans may be available. Please speak with
your account representative as your plan may have specific details
regarding loan availability. For the most part, once your account
balance reaches the required minimum, loans are available to you.
No taxes are paid on the amount borrowed. Loan repayments are made
on a quarterly basis over a five-year period or, if used to purchase
a principal residence, a ten-year period.
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Can I withdraw my money?
Under specific Internal Revenue Code regulations, voluntary contributions
deposited after January 1, 1989 and interest earned on those contributions
may only be withdrawn due to death, disability, attainment of age
59 1/2, separation of service after age 55, deductible medical expenses,
under a qualified domestic relations order, or election of a lifetime
annuity. Voluntary contributions may also be withdrawn because of
financial hardship or termination of service, but will be assessed
a 10% IRS early withdrawal penalty.
Your total TDA fund balance (contributions and earnings) as of December
31, 1988 may be withdrawn for any reason, but may be subject to the
10% IRS penalty as well.
*ALL withdrawals are subject to both Federal and State income tax.
Federal law requires a mandatory 20% withholding tax be applied
at the time of distribution. This mandatory withholding will not
apply to rollovers being made directly to another tax-qualified account,
payments made directly to participants for life expectancy distributions,
installments paid over a period of 10 years or more, or required
minimum distributions taken at age 70 1/2 or later.
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What does the IRS consider a financial hardship?
A financial hardship is considered an immediate and heavy financial
need that requires a participant to withdraw retirement account funds
to satisfy that need. A hardship is one of the following:
- To prevent eviction or foreclosure
- To purchase a principal residence
- To pay for the next 12 months' college tuition for oneself or
a family member
- To pay for funeral expenses of a family member
- To pay for deductible medical expenses for oneself or a family
member
Under the new tax code, if a participant takes a hardship withdrawal,
that participant is not allowed to make salary reduction contributions
for 6 months.
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What are my retirement income
options?
When you retire, you have the flexibility to choose the type
of payment plan that best suits your needs. The choices available
are:
- Lump Sum Distribution
- Periodic Partial Withdrawals
- Monthly Payments for your lifetime (Life Annuity)
- Monthly Payments for a specific period of time (Period Certain
Annuity)
- Monthly Payments for your lifetime, and upon your death, payments
will continue to your spouse for his/her lifetime (Joint & Survivor
Annuity)
- Interest Only
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What happens if I terminate employment?
If you terminate your employment, there are four options available
to you:
- You may leave the funds on deposit where they will continue to
earn interest on a tax-deferred basis. At age 70 1/2, you must
comply with minimum distribution requirements.
- You may close the account and withdraw your funds subject to
the provisions of the plan contract and IRS regulations.
- If you become employed by another organization that offers a
tax-deferred retirement program, you may transfer your account
to your new employer and continue your tax-deferred savings.
- You may roll over your account into an IRA. Care must be taken
in executing a rollover to avoid taxes and penalties. Contact your
Hamilton Cavanaugh & Associates, Inc. representative for assistance.
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What happens if I die?
Your beneficiary(ies) can choose to receive your funds as a lump
sum payment or your spouse may leave the funds on deposit by notifying
the program provider and re-titling the account to the surviving spouse.
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