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  • Other Questions

What is the minimum amount I may contribute?
What is the maximum amount I may contribute?
Does the state make any contributions?
How will my contributions impact my take home pay?
May I contribute part of my longevity check?
Do my contributions to this program qualify for the retirement savings tax credit?
How do I make transfers between products?
When do I receive a statement of my account?
Can I receive automated information about my account over the telephone?
How can I change my beneficiary?
Are loans available from either plan?
How are my contributions treated for federal income tax purposes?

How are my contributions treated for Social Security purposes?
Can funds ever be withdrawn during employment?
How is the program administered?
May an employee retired and receiving TCRS benefits who has returned to work under the 120 day rule defer income to the 401(k) or 457 Plans?
May a retired employee who has returned to work under the 120 day retiree rule receive the State Employer Matching Contribution in their 401(k) account?
Where can I get more information?


What is the minimum amount I may contribute?

The minimum deferral to either plan is $20 per month. If you are paid twice a month, the minimum deferral is $10 per paycheck.

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What is the maximum amount I may contribute?

401(k) Plan (Pre-tax and Post-tax)

The regular 401(k) deferral limit is $17,500 in 2014. If you will be age 50 or older during the year, your 401(k) contribution limit is $23,000 in 2014. Both the pre-tax and post-tax deferrals share these contribution limits.  The state's matching contributions do not count toward your dollar ceiling. This limit is per person.

457 Plan

The regular 457 deferral limit is $17,500 in 2014. If you will be age 50 or older during the year, your 457 contribution limit is $23,000 in 2014. The rule limiting 457 deferrals to a percentage of your state salary is no longer effective.

457 plan participants may apply for a special "catch-up" arrangement when they are within three calendar years of normal retirement age. (Normal retirement age may be any age between 60 and 70.) This allows participants the option of making up some or all of any 457 deferrals missed during previous years of eligibility Check Guidelines HERE. Years of eligibility include years of central state government employment since January 1, 1980, years of UT employment since January 1, 1985, or years of TBR employment since January 1, 1996. The additional deferrals must be made within the last three calendar years preceding the year of normal retirement age. While you are using the special catch-up provision, your total annual 457 deferral (regular & catch-up) may not exceed twice the regular contribution ceiling for that year. Contact Great-West for a Catch-Up Application at 1-800-922-7772 option 2.

If You Use Both Plans

If you use both the 401(k) and the 457 plan, you may defer the maximum to each plan. Your deferrals to the 457 plan do not reduce the amount you may defer to the 401(k) plan. For example, if you are under age 50 in 2014, you would be permitted to defer $17,500 to the 457 plan plus $17,500 to the 401(k) plan, for a total of $35,000.

Scheduling Maximum Deferrals

If you want to defer the maximum, you may prefer to spread that amount out evenly over the entire year so that you receive all available matching contributions.

Excess Deferrals

Be careful to plan your deferrals so that you do not exceed the legal maximum that applies to the plan(s) you have selected. The amount you defer to each plan is reported to the IRS on your W-2 form each year. If your contributions exceed your legal maximum for any calendar year, you will be subject to IRS tax penalties. If you have had multiple employers, during a single year, this could affect you.

Additional Limits for UT and TBR Employees

If you use a 403(b) plan plus a 401(k) plan, your total contributions to both plans may not exceed the 401(k) dollar ceiling for the year, even if you have more than one employer. In other words, if you use a 401(k) plan and a 403(b) plan in 2014, your total deferrals to both plans may not exceed $17,500 if you are under age 50, or $ 23,000 if you are age 50 or older. Deferrals to a 403(b) plan directly reduce the amount you may defer to a 401(k) plan and vice versa. If you use both the 401(k) plan and the Optional Retirement Program (ORP), total employee deferrals and employer contributions to the two plans for the year may not exceed $51,000 in 2014.

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Does the state make any contributions?

Effective July 2007, the state may match your contribution up to $50 per month in the 401(k) plan. Availability of the match is subject to funds being appropriated each year. In general, employees who are actively contributing to the 401(k) plan and who are eligible to participate in the Tennessee Consolidated Retirement System (TCRS) or the Optional Retirement Program (ORP) will be eligible to receive matching contributions if funds are allocated or appropriated on their behalf. Contact your personnel officer or your campus resource officer for current information on employer contributions. Updates on funding will be provided in the bulletin which accompanies your quarterly statement. State matching contributions are made to regular payroll deferrals.

Employer contributions are vested immediately, which means that they will be available for withdrawal when you leave state employment, no matter how long your employment lasts. When offered, employer contributions will be invested in the same option(s) you have chosen for your own deferrals.

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How will my contributions impact my take home pay?

Because your income taxes will be adjusted immediately, your take home pay will not be reduced by the full amount of your deferral. Use Great-West's Take Home Pay Calculator to estimate how your contributions will affect your take home pay.

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May I contribute part of my longevity check?

Click here for information.

If you make an Investment Option change for your longevity deferral, it will also affect any other contributions or loan repayments you are making to that plan. You may only have one investment election on file for any one pay date, but if you want to change your investment election for your longevity deferral and then change it back for the next pay date, you may do so.

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Do my contributions to this program qualify for the retirement savings tax credit?

Yes, your contributions to the state's 457 and 401(k) plans qualify for the tax credit if you meet other eligibility conditions. See IRS Form 8880 for more information.

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How do I make transfers between products?

If you want to move money from one fund to another, you may use the easy on-line Account Access feature or you may call the KeyTalk® at (1-800-922-7772). Requests called in by 3:00 p.m. Central Time will generally be processed that evening except on holidays. If you are eligible to use the self directed brokerage account SDBA option, you will complete additional legal forms prior to transfer.

You will receive written confirmation of all transfers. Transferring money already on deposit does not affect the investment of your future deferrals.

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When do I receive a statement of my account?

Once you begin participating in either plan, you will receive a quarterly statement from Great-West showing activity in your account during the quarter. The statement will include both a summary and a detailed listing of activity during the quarter. Statements are issued three weeks after the end of the quarter.

Along with each quarterly statement, you will receive a quarterly newsletter and an investment performance update. Monitor activity in your account. Contact Great West if you have not received a statement by the end of the month following each quarter end. Participants using the self directed brokerage account (SDBA) will receive a separate account statement from TD Ameritrade as well as the Great West Statement.

Sign up for paperless and secure statements online!  Log into your account at www.gwrs.com.  From the menu on the far left under Statements, choose What Is Online File Cabinet and follow the instructions.

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Can I receive automated information about my account over the telephone?

Great-West's KeyTalk® voice response system (1-800-922-7772) gives you immediate access to information about your account. This system allows you to request your current account balance, your most recent account activity, your current contribution amount and investment direction, interest rates on the program's fixed products, share values for the mutual funds, or personalized 401(k) loan information.

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How can I change my beneficiary?

Submit a Beneficiary Designation Form to Great-West's Nashville office for each plan (457 or 401 k) you use. You may name up to three primary beneficiaries and up to three contingent beneficiaries on that form. You may view your beneficiary designation on line after it has been recorded. Click here for the form to make changes to beneficiary.  You may also elect or change your beneficaries online by logging into your accout at www.gwrs.com.

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Are loans available from either plan?

Loans are not available from the 457 plan; however, the 401(k) plan permits active employees who have accumulated $4,000 or more in the plan to borrow a portion of their account balance. The minimum loan amount is $2,000. For your first loan, the maximum amount available is the lesser of 50 percent of your account balance or $50,000. For subsequent loans, additional limits apply. When you receive a loan, you sign loan documents which require you to repay the loan through payroll deductions, normally in five years or less. Both the principal and the interest you repay go back into your 401(k) account. Use the on-line Account Access feature or call KeyTalk® at (1-800-922-7772) for personalized information on your loan limitations and repayment examples based on the current interest rate. See Questions and Answers about 401(k) Loans for detailed information about the program's loan provisions.

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How are my contributions treated for federal income tax purposes?

Each year that you participate in this program, your W-2 statement will be adjusted because of your deferrals. The amount of salary you defer will be included in your salary only for the purpose of figuring your TCRS benefits and your Social Security (FICA) taxes and benefits. It will not be included in the salary reported to the IRS for income tax purposes.

The figure shown in box 1 (Wages, Tips, Other Compensation) of the W-2 form you receive from your employer is the salary you should report on your federal tax return. The amount of your deferral has already been subtracted. For example, if your gross salary was $20,000 and you deferred $2,000 during the calendar year, box 1 will show $18,000. Therefore, do not make any adjustments on your tax return for deferrals to this program.

Contributions you made to the 457 plan will be reported in box 12 labeled code G. Contributions you made to the 401(k) plan will be reported in box 12 labeled code D.

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How are my contributions treated for Social Security purposes?

Participation in the Deferred Compensation Program reduces salary for federal income tax purposes only. It has no effect on the salary reported to the Social Security Administration or to the Tennessee Consolidated Retirement System (TCRS).

Your total state salary (up to the Social Security Wage Base in effect) is used for computing Social Security taxes and benefits. If you are already receiving Social Security benefits, deferrals to this program do not reduce wages for Social Security earnings test purposes. On the other hand, withdrawals from the program are not subject to Social Security taxes nor earnings test limits at the time of distribution.

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Can funds ever be withdrawn during employment?

Federal law prohibits withdrawal of deferred funds prior to your separation from service except in four circumstances.

  1. Participants in the 401(k) plan who have reached age 59½ may withdraw employee funds from the 401(k) plan. At age 60 an employee may withdraw employee funds and employer matched funds.
  2. Participants in the 457 plan who have less than $5,000 in the plan and who have not made any contributions to the 457 plan in the past two years may withdraw their entire account from the 457 plan. A participant may only use this option one time.
  3. Participants in the 457 plan or the 401(k) plan who are eligible to purchase prior service in TCRS may pay for that service with a transfer from the 457 or 401(k) plan.
  4. Participants in either plan who meet the plan's definition of financial hardship may be eligible for a special hardship withdrawal.

Generally, hardship withdrawals are permitted only if an event has occurred that creates a severe financial emergency for the participant which cannot be met by the cancellation of deferrals or by the liquidation of other assets. Distributions for this reason may never exceed the amount needed to cover the emergency. Many of the tax advantages of this program are sacrificed if you make a hardship withdrawal.

A participant filing a financial hardship application is required to furnish complete financial data as well as documentation of the expense. Once a completed application is received, it will be reviewed by a state appointed committee before a determination of eligibility is made. Normally, deferrals will be canceled upon receipt of a hardship application.

457 Plan Hardship Definition

The 457 plan allows hardship withdrawals only if a participant experiences a severe financial hardship resulting from (1) sudden and unexpected illness or accident of the participant or a dependent, (2) loss of the participant's property due to uninsured casualty, or (3) other similar or extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the participant. Examples of circumstances which do not qualify for 457 plan hardship withdrawal include purchase of a home or a car, educational expenses, payment of child support or alimony, bankruptcy or wage garnishment, past due credit card bills, or payment of taxes or tax penalties.

401(k) Plan Hardship Definition

The 401(k) plan allows hardship withdrawals only if a participant experiences an immediate and heavy financial need caused by one or more of the following circumstances: (1) un-reimbursed medical expenses incurred by the participant or a dependent of the participant, (2) purchase of the participant's primary residence, (3) payment of college tuition for the next year for the participant or a dependent of the participant, (4) funeral expenses for an immediate family member of the participant which exceed life insurance coverage, or (5) official notification of implementation of eviction or foreclosure proceedings regarding the participant's primary residence.  (6) Damage repair for principal residence due to casualty.

401(k) hardship withdrawals may not include employer contributions or earnings accrued on your account after December 31, 1988. If you apply for a financial hardship distribution from the 401(k) plan, federal regulations require that all deferrals be canceled for six months thereafter. If you qualify for a loan in the 401(k) plan, you will normally be required to apply for a loan before applying for a hardship withdrawal from the 401(k) plan.

In addition to being subject to regular income tax, hardship distributions from the 401(k) plan may be subject to the 10% early distribution tax penalty. Distributions made due to hardship are not eligible for forward income averaging tax treatment or rollover.

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How is the program administered?

Great-West serves as record keeper and provider of communication services for the program under the oversight of the state of Tennessee Treasury Department. Great-West does not hold or invest your deferrals. Your deferrals are wired immediately to the companies you have selected from those that the state has authorized to provide investment products for the program.

The administrative costs for the program are paid by participants. For most 401(k) participants, the cost of administration is currently the equivalent of .25% of assets (25 basis points) annually or $3 per quarter, whichever is greater. For 457 participants and participants who made their first contribution to the 401(k) plan prior to July 1995, the cost of administration is currently the equivalent of .25% of assets annually. Several of the program's investment providers offer assistance with the basis point fee to participants who use their investments as detailed in your Quarterly Bulletin. Administrative costs for the program are subject to change in the future. Quarterly Investment performance reports are included in the mailed account statements. For your convenience, fees for investment products are provided on the Investment at a Glance report. For the most current investment information refer to the prospectus.

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May an employee retired and receiving TCRS benefits who has returned to work under the 120 day rule defer income to the 401(k) or 457 Plans?

Yes a retiree returning to work for 120 days or less may elect to defer a portion of his/her salary. The participant should complete a new deferral agreement form. A retired employee who is receiving retirement benefits from TCRS is not eligible to participate in TCRS as an active employee. Therefore the employee is not entitled to the State match. The employee is permitted to defer their earnings if desired with no State match if working under the 120 day retiree provision.

An employee is not eligible to have employer contributions to TCRS and draw benefits at the same time. A TCRS member may be an active, inactive employee or a retired member exclusively.

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May a retired employee who has returned to work under the 120 day retiree rule receive the State Employer Matching Contribution in their 401(k) account?

No, a retired employee may not receive the Employer matching contribution. A retired employee who is receiving retirement benefits from TCRS is not eligible to participate in TCRS as an active employee. Therefore they are not entitled to the State match. A retired employee should not receive the State match if working as a 120 day retiree. An employee is not eligible to have employer contributions to TCRS and draw benefits at the same time. A TCRS member may be an active, inactive employee or a retired member exclusively.

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Where can I get more information?

For Great West Retirement Services contact information, click here.

KeyTalk® is available 7 days a week, 24 hours a day, except Sunday between 2 a.m. and 2 p.m. Eastern Time for routine maintenance. Transfer requests received prior to 4 p.m. Eastern Time on business days will be initiated at the close of that business day. The actual effective date of your transaction may vary depending on the investment option selected. Access to KeyTalk® and the Web site may be limited or unavailable during periods of peak demand, market volatility, systems upgrades/maintenance, or other reasons.

For more information about available investment options, including fees and expenses, you may obtain applicable prospectuses and/or disclosure documents from your registered representative. Read them carefully before investing.

This discussion is intended to provide general information only and does not supersede nor restrict procedures or authority established pursuant to state or federal statute. If there are any differences between this discussion and the law, the law will prevail. Any eligible state employee who believes he or she has been discriminated against may find contact information here.

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