Frequently Asked Questions Delete What is the advantage of tax deferral? A retirement plan is your opportunity to save for retirement on a tax-deferred basis through pre-tax payroll deductions. Since your contributions are deducted from your salary before taxes, you pay less tax now. All money contributed, including earnings, accumulates tax-deferred until withdrawn. What are the contribution limits? The maximum amount you may contribute annually is regulated by Federal Law and for the tax year 2013 is $17,500 for those under 50 years of age and $23,000 for those 50 years of age or over. If you are covered by another plan, generally, your contributions must be coordinated. 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. What are my investment options? Retirement program participants may direct any portion of their deposit to a wide variety of investment options. Each fund offers varying approaches to investing with different levels of risk for stability of principal, income, or long-term growth. Generally, investment menus may include bond funds, stock funds, international funds and/or real estate funds. How will I keep track of what has accumulated in my account? You will receive quarterly statements outlining all activity which has taken place in your account. You can also access your account on-line at any time. Click on the My Retirement Account link under "Plan Participants" for on-line access to your account; then select your Provider. Have your log-in information readily available. Are loans available from my retirement program? Depending on your plan, loans may be available. Please speak with your Hamilton Cavanaugh account representative as your plan may have specific provisions regarding loan availability. Generally, once your account balance reaches the required minimum, loans are available to you. No taxes are paid on the amount borrowed if re-payments are paid according to the schedule. Can I withdraw my money? Under specific Internal Revenue Code regulations, contributions deposited and interest earned on those contributions may only be withdrawn due to death, disability, attainment of age 59 1/2, separation of service after age 55, under a qualified domestic relations order, or election of a lifetime annuity, where applicable. Certain contributions may also be withdrawn because of financial hardship or termination of service prior to age 55, but may be assessed a 10% IRS early withdrawal penalty. *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. 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 withdrawal may be requested based on one of the following: To prevent eviction or foreclosure of principal address 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 To pay for expenses to repair damage to a principal residence that would qualify under Code Section 165 If a participant takes a hardship withdrawal, that participant is not allowed to make salary reduction contributions for 6 months. 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 Interest Only Withdrawals Systematic Withdrawals (monthly, quarterly, or annually) Purchase an Annuity of lifetime payments (if applicable) Please call us at 1(800) 433-9832 should you need help with your decisions. What happens if I change jobs? If you terminate your employment, there are generally four options available to you: You may leave the funds on deposit where they will continue to be invested 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 roll-over your account to your new employer and continue your tax-deferred savings. You may roll-over your account to an IRA or a Roth IRA. Care must be taken in executing a roll-over to avoid taxes and penalties. Contact your Hamilton Cavanaugh & Associates, Inc. representative for assistance. What happens if I die? Your beneficiary(ies) can choose to leave the account balance on deposit. Alternatively, they may elect to receive the monies under a variety of options that may be available according to your Plan.