Fidelity Investments
403(b) Program
Plan Administration Manual
(PAM Version 2014-01)
A Reference Guide to your Fidelity Investments 403(b)
Workplace Retirement Savings Program
© 2012-2014 FMR LLC
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Table of Contents
Important 403(b) Documents ........................................................................................... 1
Client Information (“Client”) .......................................................................................... 2
Plan Information (“Plan”) ............................................................................................... 2
Directing Parties Information .......................................................................................... 2
Approved Vendors ............................................................................................................ 3
Fidelity’s Contact Information ........................................................................................ 4
Account Creation .............................................................................................................. 5
Transmitting Contributions ............................................................................................. 6
Employer Contributions, Rollover Contributions, and Maintenance of Money
Sources ............................................................................................................................. 10
Investment Options ......................................................................................................... 12
Changes to Investments .................................................................................................. 13
Death Beneficiary Designations ..................................................................................... 13
Individuals’ Personal Data and Information ............................................................... 14
Vesting Status of Participant Accounts......................................................................... 15
Contract Exchanges and Rollovers ............................................................................... 15
Distributions .................................................................................................................... 16
Minimum Required Distributions ................................................................................. 17
Qualified Domestic Relations Orders (QDRO) ............................................................ 17
Distributions and Rollovers ........................................................................................... 27
Transfers from the Plan ................................................................................................. 28
Account Corrections ....................................................................................................... 29
Loans ................................................................................................................................ 30
Hardship Distributions ................................................................................................... 36
Forms of Distributions.................................................................................................... 36
Outstanding Check Service ............................................................................................ 40
Information Sharing ....................................................................................................... 43
Plan Accounting and Reporting .................................................................................... 44
Participant Reporting ..................................................................................................... 45
Plan Level Reporting ...................................................................................................... 46
Participant Communication and Education................................................................. 46
Implementation Services ................................................................................................ 47
Fees ................................................................................................................................... 47
Data Security ................................................................................................................... 48
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Important 403(b) Documents
The following documents contain important information about the recordkeeping services
and custodial accounts that Fidelity Investments provides for the Plan (collectively, the
“403(b) Documents”). These are legal documents and agreements, which may,
depending upon the terms of the Plan, be incorporated into the Plan and become a part of
the written Plan. Other documents, such as annuity contracts, may also be considered part
of the written Plan. Fidelity Investments is not a party to these other documents and is
not responsible for their content or promises contained therein. It is the Client’s
responsibility to ensure that the 403(b) Documents are consistent with the Plan. In the
event of any conflict between the 403(b) Documents and the Plan, Fidelity will be subject
to, and will follow, the terms of the 403(b) Documents, unless it agrees otherwise in
writing with the Client.
•
Fidelity Investments® Code Section 403(b)(7) Individual Custodial Account
Agreement (the “ICA”). This is an agreement between Fidelity Management
Trust Company and each participating employee, beneficiary and alternate payee
under the Plan, which is entered into when the individual’s 403(b) custodial
account application is completed or acknowledged by beneficiaries and alternate
payees who maintain an account balance. The ICA specifies Fidelity’s
responsibilities as custodian for money held in Code section 403(b) individual
custodial accounts, including offering certain Fidelity Investments mutual funds.
Copies are available at any time.
•
Recordkeeping Services Agreement (the “Recordkeeping Agreement” or
“RKA”). This is an agreement between the Client and Fidelity Employer
Services Company LLC, which reflects the recordkeeping services that the
Fidelity family of companies has agreed to provide to the Client as of the
Effective Date specified in the document. This document is effective upon
receipt by Fidelity of an unmodified, signed document from the Client, and
replaces the “Fidelity Service Agreement” or Recordkeeping Agreement that
specified the services that Fidelity Investments Institutional Operations Company,
Inc. would provide to the Client’s program and participating employees.
•
403(b) Plan Administration Manual (the “PAM”). This document is the
PAM. Fidelity reserves the right to make changes to any services that are
described in the PAM, in its sole discretion, and will update the PAM to reflect
the changes. Fidelity will promptly notify the Client of all changes through PSW,
in writing, or through other appropriate means.
•
403(b) Written Plan Document (the “Plan”). All 403(b) plans which are
subject to the Employee Retirement Income Security Act (ERISA) have always
been required, under ERISA, to be maintained in accordance with a written plan
document. As of January 1, 2009 (with some exceptions), all other 403(b) plans
are required by the Internal Revenue Service to be maintained in accordance with
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a written plan (which may consist of more than one document). The Client is
solely responsible for making sure that its Plan is compliant with Code Section
403(b), both in form and operation. The Plan may incorporate by reference the
ICA, the Recordkeeping Agreement and/or the PAM, as well as the annuity
contracts, custodial accounts, information sharing agreements, service
agreements, and other agreements that the Client or Plan participants have entered
into. Any inconsistencies between the terms of ICA, the RKA and the PAM, and
the Plan, must be identified by the Client. The Client is responsible for ensuring
that the inconsistencies are resolved to the mutual satisfaction of Fidelity and the
Client and documented in writing.
Client Information (“Client”)
Fidelity is required to collect and maintain contact information for the Client. The Client
is required to immediately inform Fidelity of any changes to its name, address, telephone
or fax number. The Client is also required to inform Fidelity of any changes that would
impact the recordkeeping services, such as reorganization, spin-off, or other event.
Plan Information (“Plan”)
The Client is responsible for all written Plan documentation and ensuring that the Plan
meets the requirements of Internal Revenue Code Section 403(b).
Fidelity has assigned a unique Plan number to each 403(b) Plan on its system. This
number is used to recordkeep information about the Plan and participants, and does not
change.
Title I of ERISA
Fidelity will rely on the Client’s representation about whether or not the Plan is subject to
Title I of ERISA, and shall not provide any advice on the Plan’s status. The Client must
immediately inform Fidelity of any changes to this status, or, if the Plan is not intended to
be subject to ERISA because the Client intends to meet the non-ERISA safe harbor
requirements of DOL Regulation Section 2510.3-2(f), any EBSA Field Assistance
Bulletins, any involuntary changes or pending DOL actions.
Directing Parties Information
The Client is responsible for designating the individuals who may provide directions on
behalf of the Client (or, if there is one, the Client’s Third Party Administrator) to Fidelity
in the Recordkeeping Agreement. Until Fidelity receives written notice, in good order, of
the termination of the authority of a designated individual, Fidelity shall be fully
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protected in relying on instructions from these individuals.
designation of an individual can be made through:
The termination and/or
1. Fidelity Plan Sponsor Webstation® (“Plan Sponsor Webstation” or “PSW”) (if
available to the Client), or
2. Sending Fidelity a letter of direction signed by an authorized plan
representative.
All changes to directing parties will be updated within 5 business days following the
receipt by Fidelity of the appropriate form which is in good order and acceptable to
Fidelity in its sole discretion.
Plan participants may want others to have the ability to access their accounts. These
persons or entities are called “authorized agents.” Fidelity’s security procedures require
that authorized agents either have the participant’s power of attorney, Limited Trading
Authority, or be acting as the participant’s advisor under the securities or banking laws.
With respect to Registered Investment Advisors and Bank Advisors (collectively,
“Advisors”), Fidelity will provide Account access to Advisors, permit Advisors to make
trades and exchanges within Participants’ Accounts, and/or pay Advisor’s fees directly
from Accounts, as appropriately authorized by each Participant through Fidelity’s
Registered Investment Advisor Authorization Form, unless the Client directs Fidelity in
writing with respect to restricting the access or rights of specific Advisors or permitting
the deduction of Advisor’s fees from the Participants’ Account.
The Client understands and agrees that Fidelity may disclose the contents of the
Recordkeeping Agreement, Schedule B-2. , Part 2. Registered Investment Advisors and
Bank Investment Advisors (collectively “Advisors”) with Advisors with respect to the
Plans for which Fidelity provides recordkeeping services, notwithstanding anything in
this agreement to the contrary, unless the Client directs Fidelity not to do so in writing.
Termination of an Advisor’s access and rights with respect to a Participant’s Account
will occur upon written notification from the Participant or the Client, or pursuant to the
terms of a separate agreement between Fidelity and the Advisor, or at Fidelity’s sole
discretion.
Approved Vendors
The Client is responsible for designating the Approved Vendors under the Plan. An
Approved Vendor may be eligible to receive contributions under the Plan, exchanges
from other Approved Vendors, or both contributions and exchanges. Fidelity will take
direction to exchange assets to the Approved Vendors only, through an “exchange” or a
“contract exchange” as described by the IRS. When accepting contract exchanges into
the Plan from other 403(b) vendors, Fidelity will not determine whether or not the
sending vendor is approved under the Plan, because Fidelity is reasonably assuming that
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the sending vendor has received the Client’s prior authorization to send the amount to
Fidelity (because Fidelity is an Approved Vendor under the Plan).
The Client is responsible for promptly notifying Fidelity of changes to the list of
Approved Vendors on a timely basis. Changes are updated within 5 business days. Any
contract exchange request in process during this 5 day window will be processed
according to the information on our systems at the time of processing. If a contract
exchange request is received after a change has been made to the list of Approved
Vendors, which change affects the contract exchange request, Fidelity will not process
the contract exchange request and will contact the participant. Client must correct any
exchanges that are made to “unapproved” vendors, if the Client fails to timely inform
Fidelity about a vendor’s change in status.
The addition or deletion of an Approved Vendor under the Plan can be made through:
1. Plan Sponsor Webstation (if available to the Client), or
2. A letter of direction from the Client naming those Vendors who are to be added or
deleted.
All changes to Approved Vendors will be updated within 5 business days following the
receipt by Fidelity of the appropriate form which is in good order and acceptable to
Fidelity in its sole discretion.
Fidelity’s Contact Information
To get in touch with Fidelity regarding services for the Plan, Clients and their
representatives may:
1. Call the Fidelity Service Team for the Plan at 1-800-868-1023 from 8 A.M. to 6
P.M. E.T., Monday through Friday (other than holidays)
2. Write to Fidelity Investments at P.O. Box 770002, Cincinnati, OH 45277-0089
3. If the Client has PSW access, use the service request functionality through
psw.fidelity.com.
It is not possible at this time to communicate with Fidelity through e-mails, text
messages, or in an on-line “chat room.”
Participants with questions about their Plan accounts may contact Fidelity as follows:
Toll-Free Phone Number:
Participants outside of the U. S. may call
toll-free
Participants needing TDD#:
800 Number for on-line services help:
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1-800-343-0860
Dial the AT&T Direct
country code followed by
877-343-0860
(800) 259-9743
(800) 581-5800
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The hours of operation for live telephone assistance are generally 8:00 A.M. to 12:00
A.M. (Midnight) Eastern Time. The telephone voice response system and Fidelity
NetBenefits® (“NetBenefits”) are available 24 hours per day, subject to periodic
maintenance requirements. These hours are subject to change without notice.
Terminated participants with a $0 balance will not have access to the voice response
system or NetBenefits.
Account Creation
Fidelity will establish and maintain Accounts under the Plan for Participants,
Beneficiaries, Alternate Payees and forfeitures, as necessary.
It is the Client’s
responsibility to ensure that all eligible employees are given a chance to participate in the
Plan in accordance with the Code section 403(b) universal availability rules and
applicable other nondiscrimination requirements. It is also the Client’s responsibility to
ensure that the participation of all individuals in the Plan is consistent with the terms of
the Plan.
Employees can establish an Account online by providing their personal information and
the plan’s five digit number at the following website: www.netbenefits.com/ready2enroll
.
Employees can also request an Enrollment Kit by calling our Retirement Services Center
at 800-343-0860, or at the payroll office. The kit includes information, charts and
worksheets that can help employees choose appropriate investments.
The Kit also includes an Account Application form and a copy of the current ICA.
Similar kits exist for the beneficiaries of deceased Participants and the alternate payees of
divorced Participants.
Accounts for Participants, Beneficiaries and Alternate Payees will be established upon
receipt of proper documentation.
The Client is responsible for collecting and maintaining a signed Salary Reduction
Agreement for each employee on whose behalf the Client collects and remits
contributions. The Salary Reduction Agreement is between the Client and the employee
and instructs the payroll department to deduct contributions from the employee’s pay.
Fidelity will provide a generic Salary Reduction Agreement to employees upon request,
but the Client may choose to require that employees use a different form or method to
enter into a salary reduction agreement. The generic Salary Reduction Agreement is also
available by calling Fidelity or logging on to www.fidelity.com/atwork.
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Forfeiture Accounts
Forfeiture money will be invested in the FMMT: Retirement Government Money Market
Portfolio, and the client will be solely responsible for ensuring that the use and
application of forfeiture money is consistent with the terms of the Plan.
Transmitting Contributions
Contributions on behalf of participating employees can be remitted to Fidelity by the
Client, its payroll remitter, or its TPA. Contribution and loan repayment (if loans apply)
data will be transmitted to Fidelity in accordance with the Client’s payroll schedule and
data transmission method. Loan repayments may be remitted directly to Fidelity by
participants in the manner communicated by Fidelity.
Using PSW or other Electronic Submission Methods
The data files must be received by Fidelity at least 2 days prior to the target contribution
update date in order to provide time to edit and resolve any errors with the Client or the
Client’s payroll vendor. The errors will be identified as (1) “critical” errors that would
prevent the files from updating (e.g., social security number on payroll file, with no
matching participant) or (2) “warnings” that would not prevent the files from updating
(e.g., sum of the year-to-date contributions plus the contribution on the current file will
exceed the 402(g) limit). Critical errors require immediate resolution by the Client or
their third party designee. Warnings may require further research prior to resolution or
further action being taken. Once corrections are made, the file will be re-edited by
Fidelity.
The correction process will continue until all totals agree. Edits are run at 4:00 A.M. E.T.,
10:00 A.M. E.T., 12:00 P.M. E.T., 2:00 P.M. E.T., 4:00 P.M. E.T. and 6:00 P.M. E.T. on
each business day.
After the Client has reconciled the files and the totals are verified, the Client is then
required to send the contribution funding amount (net of any forfeiture credit or
adjustments per specific client direction) to Fidelity through (1) a wire transfer, (2)
automatic debit service, or (3) check. The instructions for each contribution method are
set forth below. Failure to follow the instructions may result in delayed funding in
violation of ERISA, the Internal Revenue Code, or the terms of the Plan. Fidelity has no
responsibility prior to its actual receipt of properly identified contributions, and will not
anticipate when contributions should be made by the Client, monitor its receipt of
recurring contributions, contact the Client regarding the timing, method or amount of any
of contributions, or provide any similar services or undertake any similar responsibilities.
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Using Remittance Forms
Please note: Remittance Forms are being phased out and all contributions should be made
using PSW. Until Remittance Forms are completely phased out, Remittance Forms as
described below will continue to be accepted.
Remittance Forms are available to Clients with fewer than 50 participants, who elect not
to use PSW and which have 5 or fewer contribution sources, through the Fidelity Plan
Level Remittance System (PLRS). Remittance Forms can be obtained from the Service
Team.
Authorization of Remittance Form Directions: Client agrees that Fidelity shall not be
under a duty to inquire as to the authority or propriety of any directions given to Fidelity
by the Client, and Fidelity shall be entitled to act upon the direction of any person
authorized under the terms of this agreement. Fidelity shall not be liable for any loss,
cost, expense, or other liability that might arise out of any such direction.
The Client mails a completed Remittance Form and check for the total contribution
amount to Fidelity. The Remittance Form, or “invoice,” includes employees’ names,
contribution amounts for each contribution source, and may include the participants
social security numbers or other identification numbers. After successfully processing a
Remittance Form, Fidelity will send the Client (or third party designee) an updated
Remittance Form. The purpose of the updated Remittance Form is to confirm
contribution information; it is not a billing statement.
Employees must have a 403(b) account established at Fidelity, through the contributing
employer, before Fidelity can accept contributions on their behalf. The Client must
ensure that employees send Account Applications to Fidelity at least two weeks prior to
sending the employee’s first contribution, or confirm that the account is established using
PSW or by calling Fidelity at 800-868-1023.
Mailing address for Remittance Forms (if including a check):
Fidelity Investments
P.O. Box 770002
Cincinnati, OH 45277-0090
Fax number for Remittance Forms (if using a wire or ACH to transmit contributions):
877-236-4161
1. The Client
a) Mails the Remittance Form and check to Fidelity. Fidelity reviews the
Remittance Form for completeness and, if it is in good order, updates the
contribution data to PLRS. In order for the contributions to be invested on a
given business day, the Remittance Form and check must be received by Fidelity,
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in good order, prior to the close of the New York Stock Exchange, which is
normally 4:00 p.m., ET, (“Market Close”) OR
b) Faxes the Remittance Form to Fidelity. Remittance Forms must be faxed to
Fidelity prior to Market Close to be processed on the same business day.
Remittance Forms received after Market Close will be invested the following
business day or, if later, the date the funding is received by Fidelity prior to
Market Close. Fidelity reviews the Remittance Form for completeness and, if it
is in good order, updates the contribution data to PLRS.
c) If Form in (a) or (b) above is not in good order, Form will be returned to Client to
correct and start the process again unless Fidelity provides an alternative method.
2. Fidelity deposits the check or requests funding from the Client. When funding is
being transmitted via wire, in order for contributions to be invested on a given
business day, the wire must be credited to Fidelity’s bank account prior to Market
Close. If the wire is credited after Market Close, the contributions will be invested
the following business day. When the funding is transmitted via ACH transfer, the
contributions will be invested in accordance with the Automatic Debit section of the
Plan Administration Manual.
3. PLRS transmits the contribution amount to the recordkeeping system.
4. The recordkeeping system credits participants’ accounts daily.
5. The recordkeeping system also allows divisional reporting.
6. After the contribution is received, PLRS will mail a new Remittance Form to the
Client.
(a) The Remittance Form includes the name, SSN or other acceptable
identifier, past contribution amount, any changes from the last invoice, and all
active participants for the Plan.
Using a TPA
Fidelity may have established special processes to accept remittance data from a TPA.
Please contact your TPA or Fidelity for more information.
Instructions for Contribution Methods
1. Contribution Wire Instructions:
Contributions should not be wired until the contribution instructions have been
determined to be in good order by Fidelity. Once the contribution instructions have been
accepted, Fidelity will request the wire transfer from the Client. All wires should be
transmitted in accordance with the following instructions:
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Beneficiary Bank:
Bank Address:
Deutsche Bank
60 Wall Street
MS NYC06-0501
New York, NY 10005
Beneficiary Bank:
Bank Address:
Wells Fargo Bank
420 Montgomery Street
San Francisco, CA 94104
ABA#
Account Name:
Account Number:
021001033
FPRS Depository Account
00163002
ABA#
Account Name:
Account Number:
121000248
FPRS Depository Account
4375693322
* Beneficiary Reference:
PLAN12345 (please use your 5 digit plan number)
* Note: Beneficiary Reference applies to either bank.
Please note, both of the bank instructions referenced above are approved for use.
To ensure the timely updating of contribution, all of the information described above
must be included in the wire. Failure to provide the required information—including the
plan number—may result in delays in updating contributions. If a wire is received that
does not include the plan number in the Beneficiary Reference field, the wire will be
classified as “unidentified”. Fidelity will take reasonable steps to match unidentfied
wires to pending contribution batches as soon as possible. The contributions will be
posted to participant accounts on the business day that the wire is identified and matched
with the contribution file—prior to the close of the New York Stock Exchange, normally
4:00 p.m., ET, (“Market Close”). If the wire is not identified and matched prior to
Market Close, the file will be updated the next business day, at that day’s prices.
In order for a contribution file to be updated on a given business day, the wire must be
received by Fidelity’s bank prior to Market Close. If a wire is received after Market
Close, the file will be updated the following business day, at that day’s prices.
2. Automatic Debit Service Instructions (only available with PSW):
The Automatic Debit Service (“Auto Debit”) automates the contribution and loan
repayment funding process. When elected, Fidelity is authorized to debit the required
amounts from the client’s bank account, using the Automated Clearing House (“ACH”)
network. The client’s bank will reject Auto Debit transactions if there is a debit block on
either of Fidelity’s banks – Deutsche Bank or Wells Fargo. Therefore, it is important
that the client have any debit blocks removed from Deutsche Bank and Wells Fargo if
using this service.
Auto Debit is a two-day process. If a debit is initiated prior to 4:00 P.M. E.T. on a
business day, funds will typically be received by Fidelity the next business day. If
initiated after 4:00 P.M. E.T., funds will typically be received by Fidelity the second
business day. ACH transfers are generally credited to Fidelity’s bank account by 10:00,
a.m., ET. However, if, for any reason, funding initiated via ACH debit is not credited to
Fidelity’s bank account until after Market Close, the contribution file will be updated the
following business day.
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Auto Debit amounts are credited to Fidelity’s bank account on the next business day
without regard to whether the funds have actually been received from the Client’s bank.
If the funding is not received, the credit will be reversed. Should this occur, Fidelity will
reverse the transaction from the Plan account(s).
Fidelity will not be responsible for any fees, charges or expenses imposed on the Client
or the Client’s bank account related to Auto Debit. At the time the Auto Debit service is
established, Fidelity will send a “prenote” to the Client’s bank to validate the bank
information. The Auto Debit service cannot be used until the “prenote” process is
completed.
3. Check Instructions
The Client must enclose the employee contribution funding check with contribution
instructions. Please include your 5 digit plan number on the check and make checks made
payable to Fidelity Management Trust Company. Contributions received in good order
before Market Close on any business day will be processed the same business day.
Shares of Fidelity mutual funds will be credited to participants’ accounts at the fund’s
next available share price on the day the corresponding contribution check is deposited.
Mail checks to:
Fidelity Investments
P.O. Box 770002
Cincinnati, OH 45277-0090
Employer Contributions, Rollover Contributions, and
Maintenance of Money Sources
Payroll and Employer Contributions
Fidelity will post payroll contributions and employer contributions to the money source
directed by the Client for each Participant. The Client must ensure that the terms of the
Plan permit each type of contribution. The Client is responsible for ensuring that the
Internal Revenue Code’s limitations on contributions are observed.
The money sources maintained for the Client are identified in the Recordkeeping
Agreement, and may include one or more of the following sources:
•
Salary Reduction Contributions: These are voluntary pre-tax contributions made
by the employee as the result of a Salary Reduction Agreement between the
employee and the Client. These contributions are also frequently referred to as
Voluntary, SRA, TSA, or TDA contributions.
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•
•
•
•
Employee Non-Elective Contributions: These are pre-tax contributions made by
the employee as the result of a one-time irrevocable election to participate in a
403(b) program, or that are made as a condition of employment.
Employer Matching Contributions: These are employer contributions which are
made based on an employee’s salary reduction and/or after-tax contributions.
Employer Contributions: These are employer contributions that are not employer
matching contributions.
Designated Roth Contributions: These are salary reduction contributions that are
designated as after-tax contributions when made, and deposited into a special
Roth source under the Plan.
In addition, the Plan may permit certain employees to make one or both of the following
additional pre-tax salary reduction contributions (Fidelity will deposit these contributions
in the Salary Reduction Source):
•
403(b) Lifetime Catch-up, also known as the “15-Year Rule”: A participant who
has at least 15 years of service with a public school system, hospital, home health
service agency, health and welfare service agency, church, or convention or
association of churches (or associated organization) may make additional salary
reduction contributions. This amount is generally the least of (1) $3,000, (2)
$15,000, reduced by the sum of increases to the general limit the participant was
allowed in earlier years because of this rule plus the aggregate amount of
designated Roth contributions for prior tax years, or (3) $5,000 times the number
of years of service for the organization, minus the total elective deferrals made by
the employer on the participant’s behalf for earlier years.
•
Age 50+ Catch-up: A participant may make an additional contribution to the Plan
beginning in the year in which he or she reaches age 50, if he or she has already
made the maximum amount of elective deferrals for the plan year (including the
403(b) Lifetime Catch-up).
Rollover Contributions
Fidelity will deposit rollover contributions to the rollover money source, without
restrictions as to the source or type of money (except with respect to Roth rollovers).
Fidelity will rely on the distributing rollover Vendor for information about the rollover
money, including source (e.g., IRA, 401(k), 403(b), 457(b) plan) and type (pre-tax, aftertax or Roth). Rollover contributions of Roth money must be deposited to a Roth rollover
source if designated Roth contributions are available under the Plan, and will be rejected
if designated Roth contributions are not available under the Plan.
The Client must inform Fidelity in writing if any restrictions must be placed on rollover
contribution sources.
Participants can initiate a rollover into the Plan by using a Transfer/Exchange/Rollover
form (or similar form) and a distribution form from the distributing rollover Vendor.
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Employees who are not yet Plan participants must establish an account under the Plan as
a prerequisite to Fidelity’s acceptance of a rollover contribution.
USERRA/ Military Leave of Absence Contributions
The Uniformed Services Employment and Reemployment Rights Act of 1994
(“USERRA”) permits employees who perform military duty on a voluntary or
involuntary basis in a uniformed service to contribute “make-up contributions” to the
Plan. Employees who are eligible include those on active duty; active duty training,
inactive duty training, full time National Guard duty, or those who are absent from
employment for examination to determine fitness for such duty.
“Make-up
contributions” are contributions that are made currently, but are attributable to a prior
period of qualified military service.
The Client is solely responsible for calculating the amount of any matching or employer
contributions that must be made for any employee who may be eligible for such amounts.
The Client is also solely responsible for ensuring that the participant receives proper
service credit for vesting purposes.
Contract Exchanges into Fidelity Accounts
Fidelity will deposit amounts received in a contract exchange or transfer to the money
sources designated by the distributing vendor.
Investment Options
Available Investment Options
Assets in Accounts may be invested in Fidelity Investments Mutual Funds, including
only those share classes available to retail investors generally, and not any share classes
which are restricted to certain retirement Plans, closed to new investors, or otherwise not
generally available or appropriate for purchase under the Plan.
The list of Fidelity Investments Mutual Funds that are available for purchase under the
Plan is subject to change, and is available at any time by contacting Fidelity.
Prospectuses are also available for each Fidelity Investment Mutual Fund, in paper and
on-line at NetBenefits or Fidelity.com.
Investment Elections
Participants may make investment elections for their payroll reduction contributions,
rollovers, and exchanges, and other deposits of funds to their Account through
NetBenefits, Voice Response System (“VRS”) or a Retirement Service Specialist.
Default Investment Option
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In the event that a proper investment election is not received from a participant, all
contributions shall be invested in the Plan default fund as set forth for such purpose in the
ICA. Participants who are defaulted into the default fund described in the ICA will be
notified that proper investment directions have not been received by Fidelity and that
contributions are therefore being invested in the default investment option until proper
investment direction is received. A follow-up notification is sent to the participant 45
days subsequent to the initial defaulted contribution if proper investment direction still
has not been received by Fidelity.
Changes to Investments
Participants may access their account through NetBenefits, VRS, or a Fidelity Retirement
Service Specialist to initiate exchanges between mutual funds in their Accounts. Unless
otherwise noted in other sections of this document, transaction requests confirmed after
the close of the market on a business day, normally 4:00 P.M. E.T., or on weekends or
holidays, will receive the next business day’s closing prices Trading restrictions, fees
and penalties may apply, as described in the prospectus for each fund. Exchanges out of
a mutual fund may result in the assessment of redemption fees, which is a fee that is
charged when shares are sold. Not all funds charge redemption fees; see the fund’s
prospectus for more details.
Participants specify exchanges in the following units: percent, dollar, shares. If a
participant requests a dollar-specific exchange and the account value at time of
processing is not sufficient to cover the requested amount (e.g., due to market
fluctuations), Fidelity will process the maximum amount available.
Death Beneficiary Designations
Fidelity will accept beneficiary designation forms from the participant by mail. The form
will be reviewed to insure it is in good order. If in good order, the form will be imaged
and stored as part of the Fidelity recordkeeping system. If the form is not in good order,
it will be returned to the participant with specific instructions on how to complete and
return to Fidelity.
Upon the death of a participant, the beneficiary should call a Retirement Services
Specialist. The specialist will mail a Beneficiary Distribution Kit to the beneficiary. The
beneficiary should complete the forms with the required documentation and mail back to
Fidelity. If the forms or documentation are not in good order, it will be returned to the
participant with specific instructions on how to complete and return to Fidelity. Upon
receipt of all the required documentation, Fidelity will process a distribution to the
beneficiary per the imaged beneficiary form on file and instructions received from the
Beneficiary Distribution Kit.
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In the event that two or more parties claim to be the beneficiary of the deceased
participant's account value, the Client shall direct Fidelity as to the party that is the
correct beneficiary under the terms of the Plan.
Individuals’ Personal Data and Information
The Client may update the following information for each employee that has a Fidelity
account:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Employee ID
Employee First Name
Employee Last Name
Street Address, City, State, Zip
Payroll Date (Necessary only if retirement plan contributions are remitted with
census data)
Contribution Amounts by Source (Necessary only if retirement plan contributions
are remitted with census data)
Employee Date of Hire
Employment Status
A = Active
I = Inactive
R = Retired
S = Suspended
T = Terminated
M = Military
L = Leave
Q = QDRO
N = Non-Participant
B = Beneficiary
D = Death / Disability
K = Non-Contributory
o U = To be deleted
Employment Status Date
Employee Date of Birth
Gender ID
Phone/e-mail
HR Area/Location Code
HR Sub-Area
Vested date / Vesting status
Annual salary
Year-to-date compensation
Hours worked
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Vesting Status of Participant Accounts
Fidelity will not track a Participant’s vested interest in the Plan. Fidelity will require
Client direction regarding the vested amount (that is, the percentage) of any withdrawal
from an employer contribution source; unless such amounts are fully vested at the time of
contribution under the terms of the Plan and Fidelity is notified of that fact in writing.
Participants will be advised to check with their employer if they want to determine their
vested status in an employer contribution source. Fidelity will rely on the employer to
confirm vesting status prior to any distribution.
Contract Exchanges and Rollovers
Exchanges into Fidelity Investments
Participants who wish to consolidate their retirement assets in the Plan from other 403(b)
vendors in the plan can do so through a contract exchange. The Client and/or distributing
403(b) vendor is responsible for determining whether the receiving vendor is an
authorized vendor for the contract exchange.
Exchanges out of Fidelity Investments
If a participant wishes to exchange assets from Fidelity to another Approved Vendor
under the Plan the participant must contact the accepting vendor for the appropriate forms
to request the exchange. The accepting vendor will send the participant’s information as
well as a Letter of Acceptance of the assets to Fidelity for processing at the following
address:
Fidelity Investments
P.O. Box 770002
Cincinnati, OH 45277-0090
If the request for the exchange is in good order, Fidelity will process the requested
contract exchange and send a check directly to the new vendor for the benefit of the
Participant. Fidelity will also provide the requested information about the Participant’s
account and the nature of the exchanged assets (e.g., money source, pre-86
grandfathering status, etc.)
Fidelity will process transfers to and from the Plan, as permitted under Code Section
403(b), the 403(b) regulations and other IRS guidance. Client approval and direction
with respect to each transaction may be required.
Rollover into Fidelity Investments
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If the participant is eligible for a rollover distribution from another retirement plan or
from an IRA, the participant must request a rollover distribution from the other retirement
plan or IRA and the amount will be deposited into his or her rollover account under the
Plan (unless the Plan does not allow rollover contributions).
If a participant wishes to perform a contract exchange or rollover into Fidelity,
participant must contact Fidelity at 800-343-0860 or Fidelity.com/atwork to obtain
proper form. Checks for assets exchanged into Fidelity must be sent directly from
surrendering 403(b) vendor to Fidelity. A rollover may be sent directly form
surrendering plan or it may be sent through the participant.
the
the
the
the
Distributions
According to IRS guidelines and subject to the terms of the Plan, participants must meet
one of the following criteria to take a distribution from the Plan, as described in the ICA:
•
•
•
•
•
Attainment of age 59½
Separation from service
Disability
Financial hardship (from salary deferral and Roth 403(b) sources)
Death
Fidelity will generally require that the Client confirm that one of the foregoing events has
occurred and approve the distribution prior to processing. Different rules may be applied
by Fidelity with respect to certain “grandfathered” 403(b) accounts, or with respect to
individuals who separated from service prior to January 1, 2009.
The Client must approve each distribution, or provide Fidelity with sufficient information
so that it can reasonably approve the distribution without requiring any additional facts
(e.g., notifying Fidelity of an employee’s death).
The Client may review distribution requests, confirm that a distribution event has
occurred and provide approval:
•
•
Through PSW
By signing a participant’s distribution form
Fidelity will provide the IRS’s model “Special Tax Notice Regarding Plan Payments” to
participants at the time of a distribution. This Special Tax Notice is also called the
“402(f) notice.”
In the event of a Participant’s death, upon receipt of a death certificate or with Client
direction, Fidelity will freeze all activity and all third-party or limited trading
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authorizations will be terminated. Upon receipt of Fidelity forms in good order, Fidelity
will transfer securities from the decedent’s account and transfer them to the beneficiary’s
account.
Minimum Required Distributions
In general, and subject to the terms of the Plan, all employees must begin taking
minimum required distributions (“MRDs”) no later than April 1 of the calendar year
following the later of:
1.
2.
The calendar year in which the employee attains age 70½, or
The calendar year in which the employee retires.
Section 8 of the ICA provides more detailed rules regarding MRDs.
The Client is responsible for ensuring that participants receive MRDs under the Plan
from all of their accounts and in accordance with the terms of the Plan, the ICA, and
other annuities and/or custodial accounts under the Plan.
Although Fidelity has historically received from participants and recordkeeps date of
birth information, Fidelity does not review or audit date of birth information for
reasonableness or accuracy. Therefore, the Client must confirm that the date of birth on
Fidelity’s recordkeeping system for each Plan participant is accurate. In addition, the
Client must provide to Fidelity sufficient information about non-Fidelity accounts under
the Plan held by participants subject to the MRD rules, and all other information required
to determine the minimum distribution requirements of Code section 401(a)(9) with
respect to his or her Account hereunder, if requested and required by Fidelity to comply
with the MRD rules.
With respect to Plan participants for which Fidelity has date of birth information, Fidelity
will notify each such individual of the general Minimum Required Distribution
requirements in the calendar year that the individual attains age 70½. The client is
responsible for ensuring that the proper distributions are made. Fidelity will not monitor
minimum required distribution activity.
Qualified Domestic Relations Orders (QDRO)
The Internal Revenue Code provides procedures by which a right may be created for a
participant’s spouse, former spouse, child, or other dependent to all or a portion of the
participant’s defined benefit or defined contribution Plan benefits pursuant to a judgment,
decree, or court order, provided it satisfies certain requirements. These orders, judgments
or decrees must relate to the provision of alimony, child support, or marital property
rights.
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If assets are held by other 403(b) vendors under the Plan (such as TIAA-CREF), the
QDRO Guidelines and Procedures (“Guidelines”) will only apply to assets held at
Fidelity.
Unless the client has produced their own guidelines, the client must review the guidelines
below, ensure that they are consistent with the Plan, and direct Fidelity to use them.
Otherwise, the client must approve each Order pursuant to its separate procedures.
Fidelity will comply with the terms of an Order only if it meets the requirements of the
Guidelines and will treat the Guidelines as written directions from the client that are
consistent with the terms of the Plan. In the absence of affirmative direction to use the
Guidelines, the client must direct Fidelity to not follow the Guidelines and give Fidelity
direction for each Order.
QDRO GUIDELINES AND PROCEDURES
To be used with Fidelity Investments 403(b)(7) Individual Custodial Accounts.
A domestic relations order is an order signed by a Judge relating to the provision of child
support, alimony payments, or marital property rights made pursuant to a State domestic
relations law.
Employers or plan administrators generally review each domestic relations order
(“Order”) to determine if it is qualified and approved. Although not required by law, a
governmental entity or religious organization that has not elected to be subject to ERISA
may use these guidelines. As a service to certain clients, Fidelity has established the
following QDRO Guidelines and Procedures (“Guidelines”) which it will follow to
determine whether a domestic relations order (“Order”) relating to the Plan meets the
requirements of a qualified domestic relations order (“QDRO”). These Guidelines are
also used to administer benefit distributions to Alternate Payees as required by the
QDRO. In all cases, Fidelity will defer to the directions or approval given by the client,
if any, related to the Plan. Fidelity will deduct a one-time $200 administrative fee from a
Participant’s and/or Alternate Payee’s account, as specified in the Domestic Relations
Order, for the review of an order pursuant to these Guidelines.
Fidelity will comply with the terms of an Order only if it meets the requirements of these
Guidelines and will treat these guidelines as confirmation that they are consistent with the
terms of the Plan.
These Guidelines are divided into three sections, preceded by a Model Order:
Model Order: The Model Order may be used to assign benefits to an Alternate Payee. If
used, the Model Order must be executed and filed in a court of competent jurisdiction
before you submit it to Fidelity. Following the Model Order is the Information Sheet.
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Please complete the Information Sheet and return it with your court-executed Order to
expedite the review process.
The Model Order is provided as a courtesy only. Fidelity is not authorized to give
financial, tax or legal advice; and Fidelity makes no representation as to the Model
Order’s sufficiency under applicable Federal or State law, the Plan, or as to its legal
consequences. You should not use this Model Order without consulting your financial,
tax and/or legal advisors.
Section 1: Required Elements. Please refer to this section for information on
issues that must be addressed in a QDRO.
Section 2: Rules. Please refer to this section for information on Plan rules that
apply to the administration of the QDRO, and for rules that cannot be contradicted
by the terms of the QDRO.
Section 3: Procedural Information. Please refer to this section for information
concerning required documents, disbursement restrictions, post-qualification
disputes and mailing addresses.
Note: Individuals seeking QDROs may not rely on Fidelity, or any employees or agents
of Fidelity for advice on which type or form of QDRO is most appropriate under any
particular factual situation. The contents of these Guidelines are intended for
informational purposes only and should not be construed as legal advice or legal opinion.
Fidelity will provide factual information concerning the terms of the applicable Plan, and
these Guidelines that have been established for processing qualified domestic relations
orders. In all cases, the individuals should consult their legal advisor if they have
questions about their particular situation. These administrative Guidelines will be
reviewed periodically and may be changed at any time at Fidelity’s discretion. These
Guidelines are not a contract and do not modify the terms of the Plan.
GETTING STARTED
To get started, the parties (that is, the Participant and the Alternate Payee) should review
these QDRO Guidelines.
1. Determine the applicable Plan. These QDRO Guidelines apply only to 403(b)
Plan assets that are held by Fidelity in a Fidelity Investments 403(b)(7) Individual
Custodial Account under the Plan. Other guidelines will apply if the domestic
relations order is applicable to any other plan, such as a 401(k) plan, a defined
benefit plan, or a 457(b) plan. Please see the plan contact to obtain the guidelines
for other plan types or situations. Separate domestic relations orders may be
required for each plan.
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2. Verify that the Participant has sufficient assets in the applicable Plan held at
Fidelity.
3. Provide a copy of these Guidelines to the legal advisor.
4. Draft an order. You may use the Model Order provided below.
5. Submit the draft order to a court of competent jurisdiction
6. Once the draft order is executed (signed by the judge) and filed in the appropriate
state court, you must obtain a court-certified copy or a true copy of the executed
and filed order.
7. Submit the court-certified or true copy of the court-executed order to Fidelity at:
Fidelity Investments
QDRO Administration Group
P.O. Box 770002
Cincinnati, OH 45277-0090
(Model Order)
Court of______________________________ County of_________________________
State of_______________________________
Petitioner_____________________________)
)
and
)
)
Respondent___________________________)
CASE NO._____________
STIPULATED QUALIFIED DOMESTIC
RELATIONS ORDER
WHEREAS this Court has jurisdiction over Petitioner and Respondent and the subject
matter of this Order pursuant to (insert appropriate citation of State domestic relations
law and statute(s) relating to the provision of child support, alimony payments, or
marital property rights); and
WHEREAS Petitioner and Respondent have stipulated that the Court enter this Order.
NOW, THEREFORE, IT IS HEREBY ORDERED BY THE COURT as follows:
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As used in this Order, the following terms shall apply:
(a) Participant shall mean
_________________________________ (First / M.I. / Last)
Whose current address is ______________________________(Street Address/Apt #)
_________________________________________ (City, State, Zip Code)
Who was born on _____________________________________ (MM/DD/YYYY)
Whose Social Security Number is __________________________(XXX-XX-XXXX)
(b) Alternate Payee shall mean _______________________________(First / M.I. / Last)
Whose current address is ______________________________(Street Address/Apt #)
_________________________________________(City, State, Zip Code)
Who was born on _______________________________________(MM/DD/YYYY)
Whose Social Security Number is__________________________(XXX-XX-XXXX)
(c) Plan shall mean: ________________________________(Please insert Plan name
and Plan number)
2. The Alternate Payee is the (check one)
of the Participant.
Spouse
Former Spouse
Dependent
3. The Alternate Payee’s interest in the Plan shall be (check and complete one):
__________ (insert number) % of the Participant’s total vested account
balance in the Plan assets held by Fidelity as of the Date of Segregation.
“Date of Segregation” shall mean the date following acceptance of the Order
upon which a separate account is created for the Alternate Payee. This Order
is to be administered only as it relates to the Participant’s Fidelity Investments
403(b)(7) Individual Custodial Account.
The Alternate Payee’s interest in the Plan shall be $____________ (insert
dollar amount) of the Participant's Plan assets held by Fidelity as of the Date
of Segregation. “Date of Segregation” shall mean the date following
acceptance of the Order upon which a separate account is created for the
Alternate Payee. This Order is to be administered only as it relates to the
Participant’s Fidelity Investments 403(b)(7) Individual Custodial Account.
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4. The Alternate Payee’s interest in the Plan shall be payable to the Alternate Payee
in a lump sum as soon as administratively feasible following the date that the Order is
determined to be a QDRO.
5. The Parties shall cause an original court certified or true copy of this Order to be
served on the Plan custodian’s agent, Fidelity Employer Services Company LLC,
forthwith. This Order shall remain in effect until further order of this Court.
6. Nothing contained in the Order shall be construed to require the Plan or Fidelity:
to provide the Alternate Payee any type or form of benefit or option not otherwise
available to the Participant under the Plan to provide any benefits to the Alternate
Payee that are not the result of the segregation of the Participant's Account held by
Fidelity (that is, there is no requirement that any assets be transferred to the Alternate
Payee's account from another Plan or another vendor under the Plan); to provide the
Alternate Payee increased benefits (determined on the basis of actuarial value) not
available to the Participant; to pay any benefits to the Alternate Payee that are
required to be paid to another Alternate Payee under another QDRO.
7. Neither Party shall accept benefits from the Plan which are the property of the
other Party. If Fidelity inadvertently pays the Participant any benefits assigned to the
Alternate Payee, the Participant shall forthwith return such benefits to the Plan. If
Fidelity inadvertently pays the Alternate Payee benefits not assigned to the Alternate
Payee, the Alternate Payee shall forthwith return such benefits to the Plan.
Attorney for Petitioner:
Attorney for Respondent:
____________________________ (Name) ____________________________ (Name)
___________________________ (Address) __________________________ (Address)
___________________________
___________________________
________________________ (Telephone)
Dated: __________________
_______________________ (Telephone)
_____________________________________
Judge of the Court
SECTION 1: REQUIRED ELEMENTS
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THESE GUIDELINES PERTAIN ONLY TO THE ASSETS IN THE PLAN HELD
BY FIDELITY UNDER THE FIDELITY INVESTMENTS 403(b)(7) INDIVIDUAL
CUSTODIAL ACCOUNT
The Order must provide the following information:
A. Plan Name
The Order must clearly specify the Plan to which it applies. Please provide the Plan
name and the Fidelity plan number
B. Participant Information
1) Participants Name
2) Last known mailing address
C. Social Security Number*
D. Date of Birth
*NOTE: The social security number for the Participant is available on the Fidelity
Participant Recordkeeping System. Failure to include this information will not cause the
Order to be rejected.
E. Alternate Payee Information
a)
b)
c)
d)
e)
Alternate Payee’s name
Last known mailing address
Relationship to Participant*
Social Security Number*
Date of Birth*
*NOTE: The date of birth, social security number and the relationship to the Participant
will be requested from the Alternate Payee or his/her attorney if they are not included in
the Order. Failure to include this information will not cause the Order to be nonqualified; however, it will delay the processing of the distribution to the Alternate Payee.
F. The Alternate Payee’s Award
The “Date of Segregation” is defined as the date the Alternate Payee’s account is
established after qualification of an Order. This is also the Valuation Date of the award.
An Order must award the Alternate Payee either:
A percentage of the Participant’s total vested account balance (hereinafter referred to as
“account” or “account balance”) in the Plan assets held by Fidelity as of the Date of
Segregation; OR, a specific dollar amount of the Participant’s Plan assets held by Fidelity
as of the Date of Segregation.
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NOTE: Order provisions that attempt to assign assets held by another Vendor or under
another retirement plan are outside the scope of these guidelines. The Order will be sent
to the client for review and approval and direction to Fidelity.
SECTION 2: RULES
A. Benefit Form and Commencement of Alternate Payee
The Alternate Payee’s benefit under the Plan is payable as a lump sum distribution. The
Alternate Payee may initiate a distribution of his/her award as soon as administratively
feasible following the qualification of the Order and segregation of the Alternate Payee’s
award. This must be consistent with the Plan.
B. Taxation
An Alternate Payee who is a spouse or former spouse of the Participant is responsible for
any taxes incurred upon distribution of benefits. Payments to all other Alternate Payees
are taxable to the Participant. The Order will be rejected if it states otherwise.
C. Effective Date of Alternate Payee’s Award
The effective date of the Alternate Payee’s award is the date the Alternate Payee’s
account is established after qualification of an order (“Date of Segregation”). The amount
of the Alternate Payee’s award shall be determined as of the Date of Segregation. Orders
that provide otherwise will be rejected. If the Parties wish to determine the Alternate
Payee’s award using account information prior to the date of account segregation, they
must obtain Plan account information for the determination date desired and calculate the
specific dollar amount of the award adjusted for earnings for the applicable period prior
to the date of account segregation.
D. Transfer of the Award from Participant’s Plan Account
Pursuant to Section 72(m)(10) of the Internal Revenue Code, the Alternate Payee’s award
must be transferred proportionately from all investment options in the Participant's Plan
account(s) as of the Date of Segregation. Orders that provide otherwise will be rejected.
E. Establishment of Alternate Payee’s Account
As soon as administratively feasible following a determination that the Order is qualified,
an account will be established for the Alternate Payee under the Plan. The Alternate
Payee will receive a letter with instructions for contacting the Plan’s toll free telephone
line and/or NetBenefits, and will be required to complete and sign an account application
prior to account establishment. The distribution of the Alternate Payee’s account must be
initiated in accordance with the administrative procedures that have been established for
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the Plan. Any rollover instructions contained in the Order will be disregarded. The
Alternate Payee may separately elect a rollover distribution.
F. Death of Alternate Payee
Beneficiary designations cannot be accepted in the Order. Beneficiary designations or
provisions attempting to grant the Alternate Payee the right to designate a beneficiary
will be disregarded, but will not cause the Order to be rejected. The Alternate Payee may
separately designate his or her beneficiary.
G. Death of Participant
The Participant’s death after qualification of the Order will not affect the Alternate
Payee’s right to his/her award.
H. Fidelity Investments 403(b)(7) Individual Custodial Account Relationship
Fidelity will review an Order under these Guidelines only as it relates to assets held in the
Plan in a Fidelity Investments 403(b)(7) Individual Custodial Account. If a Vendor other
than Fidelity holds assets subject to assignment, these guidelines do not apply.
SECTION 3: PROCEDURAL INFORMATION
A. General Information
1) Domestic relations orders and other court orders relating to the Alternate Payee’s
interest in the Plan(s) will be reviewed.
2) An original or photocopy of a court certified or true copy of an executed (“file
stamped”) Order may be submitted for review and qualification.
3) A copy of the Plan’s Guidelines and the Sample Model Order will be provided to
the Parties, as requested.
4) Participant account information will be released to persons other than the
Participant, the client and the client’s agents only in response to written
authorization from the Participant or a properly served Subpoena.
5) Fidelity will advise the Parties, in writing, as to the Order’s qualification or nonqualification. Typically, the qualification or non-qualification of an Order
determined within 60 business days.
6) Fidelity will review an Order under these Guidelines only as it relates to assets
held in the Plan in a Fidelity Investments 403(b)(7) Individual Custodial Account.
B. Mailing Address
1) To submit a domestic relations order for review: Please submit the Original Court
Certified or True Copy of a Domestic Relations Order issued by a court of
competent jurisdiction to the following address:
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Fidelity Investments
QDRO Administration Group
P.O. Box 770002
Cincinnati, OH 45277-0090
2) If applicable: Subpoenas, Restraining Orders, Participant Information Release
Forms and other non-QDRO related correspondence should be sent to the
following address:
Fidelity Investments
Tax Exempt Market
P.O. Box 770002
Cincinnati, OH 45277-0090
C. Acknowledgment of Order and Disbursement Restrictions
1) Upon receipt of an executed Order, Fidelity will send written acknowledgment of
the Order to all Parties (provided that address information is available), and will
place a disbursement restriction on the Participant’s Plan account.
2) Fidelity will not place a disbursement restriction on the Participant’s Plan account
upon receipt of a draft Order. Draft Orders WILL NOT be reviewed.
3) If an executed Order is received and Fidelity is unclear as to which Plan the
document refers, a disbursement restriction will be placed on each Plan account in
which the Participant has a balance. An acknowledgment letter will be sent to the
Parties advising them of the specific Plan account(s) that have been restricted.
4) While the Participant’s Plan accounts are restricted, he/she may not initiate loans,
withdrawals or distributions. However, the Participant may continue to direct the
investment of future contributions and existing balances.
D. Removal of Disbursement Restrictions
A disbursement restriction will remain on a Participant’s Plan account(s) until one of
the following occurs:
1) The qualification and segregation of the award from the Participant’s Plan
account(s) to an account in the Alternate Payee’s name;
2) Receipt of a Court Order vacating a previously received Order (the receipt of
which caused the disbursement restriction to be originally placed on the
Participant’s Plan account(s));
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3) Receipt of a notarized document or a signature guaranteed document signed by
the Alternate Payee requesting the removal of the restriction from the
Participant’s Plan account(s); or
4) The expiration of the 45-day deadline to provide an amended Order as a result of
a dispute of a previously qualified Order.
E. Disputes
1) Upon receipt of a written Dispute following qualification of a QDRO, Fidelity
will place temporary disbursement restrictions on the Participant’s and the
Alternate Payee’s accounts for up to 45 days. The notification of Dispute must be
in writing.
2) If a new executed Order or court document demonstrating that the Parties are in
dispute and intend to seek an amended Order is not received within 45 days, the
disbursement restrictions on the Participant’s and the Alternate Payee’s accounts
will be removed and the terms of the original qualified Order will be honored.
3) If the Alternate Payee has taken a distribution and Fidelity has complied with the
Order and the Plan’s Guidelines, the Participant must seek relief outside the Plan.
4) If the Alternate Payee has taken a distribution and the dispute is to award the
Alternate Payee an additional amount of money in excess of what was awarded to
the Alternate Payee in the original qualified Order, the Parties must submit an
executed amended Order for the additional award amount.
Distributions and Rollovers
If eligible, a participant may rollover their 403(b) assets to an IRA, Roth IRA, or other
qualifying retirement program. The employee should contact a customer service
representative at 800-343-0860.
The participant should consider the following:
•
•
Federal income tax will be withheld at a rate of 20% for an eligible rollover
distribution, unless directly rolled into another employer’s retirement program
that accepts rollovers or into an individual retirement account. State income taxes
may also be withheld depending on the laws of the applicable state and client
direction.
If a participant is a non-resident alien, federal income tax withholding at a rate of
30% will apply. A lower rate may apply if a tax treaty exists between the United
States and the foreign country.
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•
•
•
•
Federal income tax will be withheld at a rate specified by the participant on their
distribution form for non-eligible rollover distributions. The default federal tax
withholding for non-eligible rollover distributions is 10%.
Distributions may also be subject to a 10% early withdrawal penalty if the
employee is under age 59 ½.
Distribution forms that are in good order and received and accepted by 4:00 P.M
ET will be processed the same business day we receive them. Shares of Fidelity
mutual funds will be processed directly from the participants’ accounts at the
fund’s next available share price.
Employer approval is not required to a participant who is age 59 ½ or older;
however, other types of distributions are subject to employer approval.
Transfers from the Plan
Transfer out of Fidelity Investments
If a participant wishes to exchange assets from Fidelity to another Approved Vendor
under the Plan the participant must contact the accepting vendor for the appropriate forms
to request the exchange. The accepting vendor will send the participant’s information as
well as a Letter of Acceptance of the assets to Fidelity for processing at the following
address:
Fidelity Investments
P.O. Box 770002
Cincinnati, OH 45277-0090
If the request for the exchange is in good order, Fidelity will process the requested
contract exchange and send a check directly to the new vendor for the benefit of the
Participant. Fidelity will also provide the requested information about the Participant’s
account and the nature of the exchanged assets (e.g., money source, pre-86
grandfathering status, etc.)
Fidelity will process transfers to and from the Plan, as permitted under Code Section
403(b), the 403(b) regulations and other IRS guidance. Client approval and direction
with respect to each transaction may be required.
Transfers to Purchase Permissive Service Credit. When the Client is a governmental
entity, the Participant’s Account may be transferred to a qualified defined benefit plan
that is a governmental plan (as defined in Code section 414(d)), provided that (1) the
transfer is for the purchase of permissive service credit (as defined in Code section
415(n)(3)(A)) under the receiving defined benefit plan, or (2) it is a repayment to which
Code section 415 does not apply by reason of Code section 415(k)(3).
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Account Corrections
The following tax rules and Fidelity guidelines will apply. Fidelity will not track deferral
contributions, determine whether excess deferrals, contributions, or aggregate
contributions have been made, or take any responsibility with respect to proactively
monitoring the Plan.
Excess Deferrals must be returned to participants by April 15 of the year following the
calendar year in which the excess deferral occurred. The Employer will submit the
Return of Excess Authorization at least 30 days prior to April 15 in order to insure that all
excess deferrals are processed in a timely manner. If an elective deferral that has been
matched is distributed as an excess deferral, the match attributable to the deferral must be
forfeited. Direction to forfeit any such “orphan matching contributions” will be noted on
the Return of Excess Authorization.
Excess Aggregate Contributions must be returned to participants by 2 ½ months (or six
months for safe harbor plans) following the close of the Plan year in which the excess
occurred or the Client will be subject a 10% excise tax on the amount of excess aggregate
contributions that were not returned within the 2 ½ month period. The Client must
submit the Return of Excess Authorization at least 30 days prior to the required
distribution date. If an after-tax contribution that has been matched is distributed as an
excess aggregate contribution, the match attributable to the after-tax contribution must be
forfeited. Direction to forfeit any such “orphan matching contributions” will be noted on
the Return of Excess Authorization.
Excess Annual Additions must be corrected (either distributed to the participant or
forfeited depending on the contribution source) by the end of the Plan year following the
Plan year in which the excess occurred. The Client will submit the Return of Excess
Authorization at least 30 days prior to the required correction date. If any elective
deferral or after-tax contribution that has been matched is distributed as an excess annual
addition, the match attributable to the deferral and/or contribution must be forfeited.
Direction to forfeit any such “orphan matching contributions” will be noted on the Return
of Excess Authorization.
Client Direction
All directions related to the processing of returns of excess deferrals, excess
contributions, excess aggregate contributions, and excess annual additions must be
submitted to Fidelity on the Return of Excess Authorization Form that will be provided to
the Client. The Form includes directions related to:
•
•
•
•
Investment fund(s) (standard is to prorate across all funds)
Prior Plan year earnings for newly converted Plans (by contribution source)
Tax withholding
Beginning and ending Plan year dates
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•
•
•
Direction for vesting of Employer Contributions
Mailing instructions
Signature of the Plan Administrator
Loans
Fidelity will provide loan services upon request when total 403(b) plan assets invested in
Accounts at Fidelity exceed $1 million. The Plan Sponsor and Fidelity must execute a
Loan Services Agreement as part of the RKA to direct Fidelity with respect to loans
offered to Plan participants. In such event, a loan may be made to the Participant as soon
as reasonably practicable following receipt of the Participant’s loan request In Good
Order, as documented in the RKA. Fidelity’s loan services are limited to Plans that
restrict the number of outstanding loans to one per participant. Certain restrictions may
apply to plans administered by a Third Party Administrator.
Taxability of Loans. Loans from the Account to a Participant shall be treated as having
been received as a distribution in accordance with Code section 72(p)(1), except to the
extent that the loan satisfies Code section 72(p)(2) (relating to loans that do not exceed a
maximum amount and that are repayable in accordance with certain terms) and §1.72(p)1.
A plan loan offset shall be treated as a distribution hereunder. No loans shall be made that
would violate ERISA’s prohibited transaction rules.
Loan Repayments ACH
"ACH” refers to the Automated Clearing House, the nation's conduit for electronic funds
transfer. EFT can be thought of as an electronic check, and it is subject to the same
clearing times as physical checks. EFT should not be confused with Federal wires.
The ACH Loan Repayment service allows most inactive participants to process a onetime loan repayment (i.e., partial payment, full payoff, or payment of past due amounts)
or make recurring electronic loan payments. Active participants may also process onetime payments. Participants who initiate a new loan while a deemed default was
outstanding will not be able to repay on a recurring basis via the ACH service. This is in
accordance with IRS regulations which require such loans to be repaid by payroll
deduction only.
A “pre-note” will be sent from Fidelity to the participant’s bank via the NACHA
(National Automated Clearing House Association) network to establish the transaction
link.
The system will also create ACH debit transactions that will be sent to the NACHA
network via Deutsche Bank. The debit transactions will be applied against the
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participant's bank account and an automatic withdrawal for the specified loan repayment
amount will be completed.
If a participant’s bank rejects a debit request, the repayment will be reversed as soon as
administratively practicable and any loss resulting from the reversal will be realized by
the participant’s account.
Fidelity reserves the right to discontinue the service when a participant has two
consecutive debit requests rejected.
One time payments will be processed on the next business day after requested or on the
next business day following the end of the pre-note freeze.
Loan Write-off
Occasionally, small residual balances remain after payroll has sent the final payment.
This service allows the Employer to facilitate the ongoing administration of participant
accounts by eliminating “de minimis” residual loan balances. The write-off is
accomplished by recharacterizing interest payments as principal payments. The loan
write-off functionality is based on two different sets of criteria:
1. Plan Level Criteria
Loan is at least 30 days in arrears
Outstanding loan balance is less than the regular payment amount
Cumulative interest paid on the loan is equal to or greater than the residual balance
Outstanding loan balance is equal to or less than $25.00 unless otherwise directed.
2. Participant Level Criteria
Outstanding loan balance is less than the regular payment amount
Cumulative interest paid on the loan is equal to or greater than the residual balance
Outstanding loan balance is equal to or less than the participant level threshold
The threshold will default to a minimum of $5.00.
Loan Overpayments
Overpayments occur when too much money is sent to Fidelity on a final loan repayment
or an “extra payment” is received after the loan has been paid off. When this occurs,
Fidelity will process the overpayment as follows:
If the loan overpayment is greater than $25, a refund check will be sent to the participant.
If the loan overpayment is less than $25, it will be posted as an interest payment.
Fidelity Loan Default Service
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The Fidelity Loan Default Service identifies delinquent loans, provides participant
warning and default notification, and declares defaulted loans as income to participants,
all in accordance with IRS regulations and plan rules.
Key Aspects of the Fidelity Loan Default Service
Delinquency Determination
•
Elapsed Time – A loan will be considered delinquent if there are no repayments
made within the number of days specified by the Employer.
•
Outstanding Balance – A loan will be considered delinquent if there is a principal
balance outstanding at the term of the loan.
•
Out of Balance – A loan will be considered delinquent if either the amount paid is
less than the amount due or payments have been missed. The loan amortization
schedule will be used to determine if an out of balance condition exists.
Should a participant make any loan payments while on a Military Leave of Absence,
Fidelity will apply such payments at the lesser of the loan’s actual interest rate or 6%. If
a participant on Military Leave of Absence does not make any payments while on
MLOA, Fidelity will calculate interest owed at the lesser of the loan’s actual interest rate
or 6% and apply it upon the participant’s return.
Employers should also be aware that any request to have a loan re-amortized outside the
Automated Loan Default process need to be submitted to Fidelity via a Service Request
in PSW with an explanation of why the re-amortization needs to be performed (e.g.:
payroll stopped loan repayments in error).
Delinquency Exceptions
Non-Military Leave of Absence – Any period of time, up to 12 months, during which a
participant was on a non-military leave of absence may be disregarded when determining
loan delinquency.
Military Leave of Absence – Any period of time during which a participant was on a
military leave of absence may be disregarded when determining loan delinquency.
Note: A leave of absence is defined as an unpaid leave or a leave during which the
compensation received by a participant is not sufficient to make the required payments.
Upon return from non-military and military leaves of absence, regulations allow plans to
re-amortize outstanding loan balances. In some situations, the re-amortization may
extend the term of a loan beyond the original loan end date. In all cases, the new
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installment payment must be greater than or equal to the original payment amount and
will include interest accrued during the leave of absence.
Delay Periods
•
Delinquency Delay – 30 calendar days are allowed to elapse beyond the next
expected payment date before a loan is considered delinquent.
•
Warning Letter Delay – 15 calendar days are allowed to elapse between the date a
loan is found to be delinquent and the date a warning letter is sent to the impacted
participant.
•
Default Delay – The number of days between the date a warning letter is sent and
the date a loan is defaulted if the participant has not made the required payments.
For plans not using the Maximum Grace Period, the minimum default delay is 30
calendar days and the maximum default delay is 90 calendar days.
•
End of Term Delay – End of Term Delay is 30 days. A loan will be considered
delinquent if a balance, above the plan’s write-off threshold (if applicable),
remains after the last scheduled payment date. If a plan uses the End of Term
(EOT) Delay, past-term loans will not be considered delinquent until the term end
date + the EOT delay.
•
Maximum Grace Period – Under IRS regulations, a loan must be defaulted no
later than the last day of the calendar quarter following the calendar quarter in
which payments were discontinued.
•
New Loan Delay – The number of days between the date a loan is defaulted and
the date a new loan can be taken. The maximum delay is 9999 calendar days.
Default Processing
•
Amount of Loan Default – The outstanding principal balance plus interest accrued
through the date of default will be reported as a distribution.
•
Taxability of Loan Default – A plan’s normal return of cost basis rules (i.e., return
of employee after-tax contributions) will be applied in calculating the taxability of
all loan defaults.
•
Deemed Distributions – If a default results in a Deemed Distribution, the
defaulted loan will be reported as having been received as a distribution from the
plan and the principal loan balance will remain outstanding. Defaulted loans will
be treated as Deemed Distributions under one of the following conditions as
identified by the [Employer/Plan Sponsor]:
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o The participant is active, as indicated by their status code.
o The participant is not eligible for a withdrawal from the plan in the amount of
the defaulted loan (withdrawal eligibility will be determined at the source
level in accordance with the withdrawal rules established for the plan and
described in the Withdrawal Transaction Chart at the end of this document).
•
Actual Distributions – If a default results in an Actual Distribution, the loan will
be reported as having been received as a distribution and the participant’s account
balance will be offset by the amount of the defaulted loan (i.e., the outstanding
loan balance will be reduced to zero). Defaults will be treated as Actual
Distributions under one of the following conditions as identified by the
[Employer/Plan Sponsor]:
o The participant has terminated employment, as indicated by their status code.
o The participant is eligible for a withdrawal from the plan in the amount of the
defaulted loan (withdrawal eligibility will be determined at the source level in
accordance with the withdrawal rules established for the plan and described in
the Withdrawal Transaction Chart at the end of this document).
•
Pre-Default Interest Accrual – Interest will accrue from the date of the last
payment through the date of default without regard to whether defaults are actual
or deemed.
•
Interest Accrual upon Full Payout – If elected by the [Employer/Plan Sponsor],
for any outstanding loans that will be distributed as part of a full payout, interest
will accrue from the date of the last payment through the date of the full payout.
Post Default Processing
•
Reporting To Participants – A default notification letter will be sent for each
defaulted loan. The letter will indicate total amount of the loan default, the
taxable amount of the loan default, and if applicable, the portion of the loan
default that is eligible for rollover. An abbreviated 402(f) notice will be sent with
each default notification letter.
•
Tax Reporting – Loan defaults will be reported to the IRS on Form 1099-R.
Copies will be mailed to participants by January 31 of the year following the year
in which the default occurred.
•
Offsets to Deemed Distributed Loans – Previously defaulted loans will be offset
(i.e., the principal balance reduced to zero), either upon separation from service or
full payout, as elected by the Plan Sponsor.
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•
Repayments to Deemed Distributed Loans – Payments to previously defaulted
loans will decrease a loan’s outstanding principal balance and increase a
participant’s Post-86 tax cost basis.
•
Post Default Interest Accrual – If elected by the Employer, accrued interest will
be posted to previously defaulted loans on a monthly basis.
Fidelity’s Loan Default Service
Delinquency Delay – 30 calendar days are allowed to elapse beyond the next expected
payment date before a loan is considered delinquent.
Warning Letter Delay – 15 calendar days are allowed to elapse between the date a loan is
found to be delinquent and the date a warning letter is sent to the impacted participant.
During the warning letter delay, an opportunity exists for:
•
•
The participant to pay the past due amount or
For Fidelity to temporarily exclude any participants who appear on the Loan
Delinquency report in error.
Default Delay or “MGP” for Maximum Grace Period is 30 days. All delinquent loans
will be defaulted at the end of the calendar quarter following the calendar quarter in
which the repayments were discontinued.
End of Term Delay is 30 days. A loan will be considered delinquent if a balance, above
the write-off threshold (if applicable), remains after the last scheduled payment date.
Past-term loans will not be considered delinquent until the term end date + the EOT
delay.
New Loan Delay is 9999 days. No new loans will be allowed following a default prior to
the New Loan Delay period.
The Separation Default Delay is 10 days. This is the number of days allowed after
receipt of a separation status code before a loan may be defaulted.
Loans may be defaulted for the following status code: T
Payroll Ineligible. If a participant has a deemed distribution with an outstanding balance
and requests a subsequent loan, a loan will be considered delinquent if a customer
becomes payroll ineligible.
List payroll ineligible status codes: I, R, S, T
Non-military code used to identify participants who are on a non-military leave of
absence. Periods of time, up to 12 months, during which participants were on a non-
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military leave of absence will be disregarded in the delinquency determination process.
Status code: L
Military code used to identify participants who are on a military leave of absence. Period
of time which participants were on a military leave of absence will be disregarded in the
delinquency determination process. Status code: M
Actual vs. Deemed Determination –The criteria used in determining whether defaults
result in actual or deemed distributions is: Withdrawal Eligibility
Offset of Previously Deemed Distributions – Previously defaulted loans are to be offset,
at the time a full payout is processed
Hardship Distributions
Participants who would like to request a hardship withdrawal (if available) may call
Fidelity to begin the transaction. The Retirement Services Specialist will review the
Plan’s eligibility requirements for a hardship withdrawal with the participant, and if the
general criteria are met, Fidelity will mail the hardship withdrawal application and
procedures to the participant’s address of record. The completed hardship application
must be approved by the Client. The hardship distribution will be processed by Fidelity
after receiving the Client’s direction to do so.
The Client (or their designee) is responsible for ensuring that the participant meets the
Plan’s requirements for a hardship distribution, including, if applicable, taking all
available loans. The Client is also responsible for ensuring that the minimum 6-month
suspension of employee pre-tax, Roth, and post-tax contributions is imposed following a
hardship withdrawal, if applicable.
Forms of Distributions
Fidelity will process a distribution for a Participant, Beneficiary or Alternate Payee after
the Client confirms that the individual is eligible for the distribution under the terms of
the Plan and that all necessary spousal consents have been obtained. Client direction
may be provided through PSW or a form.
If the Plan is subject to the joint and survivor annuity rules under Sections 401(a)(11) and
417 of the Internal Revenue Code, the following rules will apply. Although the Plan
allows participants to elect optional forms of benefit, such as a lump sum distribution, a
married participant must have the written consent of their spouse for any distribution
other than the joint and survivor annuity. The spouse’s consent must acknowledge the
effect of the election to receive an optional form of distribution and must be witnessed by
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either an authorized Plan representative or a notary public. It is the client’s responsibility
to ensure that the Plan will provide each participant with a written explanation of the
Forms of Distribution (please contact your Fidelity Service Team at 800-868-1023 if you
have questions regarding this responsibility).
Full Payout Distributions
Full payout distributions are made through a check (cash) or an electronic funds transfer.
Rollover Distributions
If a participant’s distribution qualifies as an “eligible rollover distribution,” Fidelity will
process a rollover at the Participant’s request as follows:
To a Fidelity IRA: Participants may obtain the Fidelity Rollover IRA kit by calling
Fidelity or via NetBenefits. Participants will complete the application and the
distribution form and return them to Fidelity. The IRA account will be established, the
distribution will be processed and the distribution proceeds will be transferred to the
Fidelity IRA account.
To a non-Fidelity IRA or other retirement Plan: The Participant must establish the IRA
with the chosen provider, or be eligible to participate in the retirement Plan. Participants
must call Fidelity and specify that the distributions are to be directly rolled over and
provide the Participant Service Representatives with instructions for payment to the new
custodian or trustee. All direct rollovers to Non-Fidelity IRAs or retirement Plans will be
paid through a check. Checks will be made payable to the new custodian or trustee and
will be mailed to the Participant for transmittal to the recipient Plan.
Periodic Installment Distributions
Participants who request periodic installment distributions must obtain employer
approval of the distribution form and submit it to Fidelity. The pre-defined default
withdrawal method is pro-rata across money sources and mutual funds. The participant
may choose a specific fund from which distributions will be made. However, payments
will cease if that mutual fund becomes depleted.
With the Systematic Withdrawal Plan (“SWP”), participants may elect to receive their
retirement Plan money in installment (systematic) payments based on a predetermined
schedule set by the participant (monthly, quarterly or annually). Sometimes referred to as
recurring payments, these payments may be made over the life of a participant or for a
specified period of time.
There are two types of systematic withdrawal installment payments:
•
Decrementing Counter: Participant specifies the total number of payments to be
received and the payment frequency. The system calculates the percentage of the
participant's account balance to be withdrawn and reduces the account pro-rata
across funds and money sources. For example, if there are ten total payments, the
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•
first payment amount would be 1/10 of the participant's account balance, the
second payment 1/9 of the account balance, and so forth.
Payment Specific: Participant specifies the dollar amount, fund, money source
and payment frequency. The requested amount will be sent to the participant
according to the schedule specified.
Payments may be made to the participant either through check or EFT.
Partial Distributions
If allowed by the Plan, partial distributions are made as indicated on the distribution form
and approved by the employer. Partial distributions are paid by check.
If a participant elects to receive his/her benefit in the form of an annuity, Fidelity will
process a full pay-out from the participant’s account and make the check payable to the
insurance carrier. The participant will be responsible for submitting the check, together
with the annuity application and any other required documentation, to the insurance
company.
Fidelity Income Lifetime Solutions - Fidelity Income Lifetime Solutions (“FILS”) is
designed to provide clients with an annuity education and purchase program that can be
made available to terminated or retired Plan participants who seek to create an additional
stream of income in retirement. Employees who purchase an income annuity can turn a
portion of their retirement assets into a monthly payment creating a pension-like stream
of income.
Electronic Funds Transfer - Fidelity’s Electronic Funds Transfer (“EFT”) service enables
participants to receive most Plan distributions electronically. Payments sent via EFT
generally enable participants to receive money more quickly than a paper check, and may
also eliminate delays due to mail delivery and lost checks.
EFT disbursements will be processed through the Automated Clearing House (ACH)
Network. The ACH Network is an electronic payment network used by individuals,
corporations, businesses, financial institutions and government entities. The National
Automated Clearing House Association (NACHA) governs the ACH Network.
EFT Eligibility and Requirements
The Plan must use Fidelity’s check and tax services.
For Client and payroll provided participant bank information, participant EFT data must
have successfully gone through the pre-note process or been used without rejection for a
direct deposit on the participant’s behalf. (For an explanation of the pre-note process,
please refer to the “EFT Processing” section.)
EFT Initiation and Setup - Participant Provided
Participants must contact a Service Representative at 800-343-0860 to initiate EFT setup.
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To set up the service, participants must provide the following information:
•
•
•
•
Account type (i.e. checking or savings)
Name on bank account
Account number
ABA Number
Fidelity will accept participants’ EFT information with the expectation that it has been
successfully validated through the pre-note process or used for direct deposit within the
previous 3 months.
Subsequent to initial setup, participants may perform EFT transactions via Retirement
Service Specialist, NetBenefits and the Voice Response System.
EFT Processing
Upon receipt of EFT set-up provided by a participant, Fidelity will forward a written
confirmation to the participant and initiate the pre-note (participants providing EFT
information via NetBenefits may elect to receive an on-line or standard mail
confirmation). The pre-note is a non-monetary transaction sent through the ACH
network to verify the participant’s bank information. Participant EFT information
provided by the Client or from a payroll provider will not be validated through the prenote process and will not trigger a participant confirmation statement.
Assuming the pre-note is not rejected, participants may elect to have funds distributed
via EFT in accordance with the Plan’s EFT service procedures. The pre-note process
requires NACHA member financial institutions to notify Fidelity, through its
correspondent bank, within 6 banking days if the participant provided EFT information is
not accurate and/or cannot be utilized for EFT distributions.
EFT information must be set up and validated via the pre-note process prior to
participants initiating pre-approved loan or withdrawal transactions via EFT.
In the event that a monetary transaction rejects (e.g., incorrect name on account or
account on file closed), Fidelity will send a confirmation to the participant describing the
reason for the rejection and instructions for correction. If an EFT distribution is rejected
Fidelity will send the funds by check to the participant’s address of record with Fidelity.
Fidelity will prevent the participant from initiating distributions by EFT until the cause
for the rejection is fixed or a different account is provided and is validated by the pre-note
process.
If a participant's bank or financial institution is not part of the NACHA network, the
participant will not be able to utilize the EFT service.
Fidelity is not responsible for any fees or other expenses the participant may incur as a
result of the receipt of EFT distributions.
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EFT Payment Changes/Discontinuation of Service
Participants may change or delete their bank account information via a Retirement
Service Specialist at any time.
•
•
•
•
Participants who delete their EFT information will have all future recurring
eligible distributions (automatically generated MRDs, SWPs) sent to their address
of record via check.
Participants who change their EFT information will have all their future recurring
eligible distributions that they have elected to receive via EFT to be sent to the
new bank account (provided it has been successfully pre-noted).
Participants who delete their EFT information will not be able to use that account
for distribution via EFT for any future distributions unless they provide the EFT
information to Fidelity again and it is validated through the pre-note process.
If a participant makes a change or adds EFT information for the first time, any
distributions processed during a 6-business day pre note period will be sent via
check to their address of record.
The EFT service can be terminated by the Participant at any time. If terminated, all EFT
transactions will automatically be converted to paper checks.
Outstanding Check Service
Outstanding Check Service provides plan sponsors with an automated approach to
managing outstanding checks, including returned checks, related to distributions and
withdrawals from Participant accounts, issued by Fidelity as the paying agent.
Aged Outstanding Checks:
Fidelity shall send a proactive email notification to Participants with valid email
addresses found in NetBenefits if any checks issued to the participant remain outstanding
more than 90 days after issuance.
Fidelity shall send another email notification to impacted Participants for any checks that
remain outstanding for 180 days or more after issuance.
Note: As a contingency, email notifications that are returned from the participant’s
primary email account will result in a follow-up email notification to the participant’s
alternate email account (if on record at Fidelity). This applies to both the 90-day and
180-day process.
A written notification shall also be mailed via U.S Mail to the Participant’s address of
record found on Fidelity’s recordkeeping system for any checks that remain outstanding
for 180 days or more after issuance unless:
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•
•
•
•
•
The participant does not have a valid address of record on Fidelity’s
recordkeeping system
The check is not associated with a participant account on Fidelity’s recordkeeping
system
The amount of the outstanding check is less than $25
The amount attributed to the outstanding check can be redeposited into the
Participant’s account
Fidelity has received notification from its third party search vendor that the
participant has died
Participants will have 45 days from the date of the 180 day notice to contact Fidelity
before action is taken with respect to the check.
Checks Returned to Fidelity as Undeliverable:
For checks returned to Fidelity due to a bad address, participants will have 15 days from
the date the check is returned to direct Fidelity to stop and re-issue the check. If
participant direction is not received within 15 days, action will be taken in accordance
with plan settings.
Escheatment:
If there is no response from the Participant, Fidelity shall escheat certain checks, based on
applicable state law, to the appropriate state entity.
Checks subject to escheatment include:
•
•
•
Checks issued from non-ERISA plans
Checks issued from terminated ERISA plans (the plan fiduciary will be
responsible for searching for missing or unresponsive participants prior to
escheatment)
Checks that do not represent plan assets (e.g. loan overpayments, participant
reimbursement checks)
For checks that are not subject to escheatment, Fidelity shall manage them as follows:
Participant account
Checks issued from a participant account, or from a terminated participant
account for which there is a balance greater than $0, shall be stopped. Fidelity will
redeposit the net check amount (excluding any tax withholding, if applicable)
proportionally to the sources from which monies were originally withdrawn and
re-invest amounts according to the investment mix default funds for each source.
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If the default fund is an age based/lifecycle based fund, the Plan Level Default
fund, which is associated with the lowest date range by date-of-birth as
configured by the plan, shall be used.
•
The following types of checks cannot be re-deposited into a participant
account, regardless of the account balance:
• minimum required distributions
• return of excess distributions
• checks issued to correct plan operational failures
• unwind withdrawals
•
If the Plan provides for loans and maintains any limitations on the number
of outstanding loans for Participants and/or the application process for
new loans, such limitations shall not be affected by the subsequent
redeposit of amounts attributed to an outstanding check for a loan. All
other aspects of the Plan’s loan procedures shall continue including the
Participant’s responsibility for loan repayments and the loan default
policies.
If a full payout check is re-deposited to the participant’s account, the
maintenance fee will be reversed.
If a Participant contacts Fidelity regarding a check that has been redeposited to his/her account, the check can be re-issued.
Tax reporting for checks issued in good order that are re-deposited will
remain in-tact.
•
•
•
Plan forfeiture account
• The following types of checks, regardless of the account balance, shall be
deposited into the forfeiture account:
o minimum required distributions
o return of excess distributions
o checks issued to correct plan operational failures
o unwind withdrawals
• Other checks issued from a terminated participant account, for which there
is a $0 balance, shall be stopped and deposited into the plan’s forfeiture
account.
• The amounts deposited into the forfeiture account shall be invested in the
Plan’s default fund and plan forfeiture mapping will be applied where
available. When forfeiture mapping is unavailable, other employer
sources will be used.
• If a Participant contacts Fidelity regarding a check that has been deposited
into the Plan forfeiture account, the check will be re-issued to the
Participant from the forfeiture account from the source and funds into
which it was deposited. If the balance in the forfeiture account is
insufficient to cover the liability associated with the checks to be reissued, the Plan Sponsor must fund the forfeiture account before the
checks can be re-issued.
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•
Tax reporting for checks issued in good order that are deposited will
remain in-tact.
Amounts attributed to outstanding checks which are not subject to escheatment or cannot
be managed under the Fidelity Outstanding Check Service, as described above, shall
remain in Fidelity’s omnibus accounts at unaffiliated banks.
Distribution and withdrawal checks which were outstanding prior to the effective date of
the Fidelity Outstanding Check Service will be processed according to the terms of the
service, as soon as administratively feasible.
In the event of a plan deconversion, all outstanding checks will be stopped and wired to
the successor recordkeeper.
Reporting
Fidelity will provide reports to the plan sponsor via PSW to allow the plan sponsor to
monitor outstanding check volumes, notifications, and forfeiture account activity due to
outstanding checks. These include the Outstanding Check Handling Report, Outstanding
Check Participant Notifications Report, and the Outstanding Checks Forfeiture Posting
Summary Report.
Information Sharing
Fidelity will share the following information with the Client and their approved designees
through PSW. Fidelity will not create special data feeds to “push” this information to the
client or other third parties, at this time.
1. Basic Account Data
• Vendor Source Name
• Vendor Plan ID
• Employee Account #
• Employee SSN
• Employee First Name
• Employee Last Name
• Date of Birth
• Employer Cash Value
• EE Deferral Cash Value
• Rollover EE Pre-Tax Cash Value
• Rollover EE Post-Tax Cash Value
• EE Post-Tax Cash Value
• Roth 403b Cash Value
• Rollover Roth Cash Value
• Date of First Roth Contribution
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•
•
•
Cash Value Date
Type of Account
403(b)(7) Cash Value
2. Required Minimum Distribution Data
• 12/31/86 Cash Value – EE
• 12/31/86 Cash Value – ER
3. Hardship Withdrawal Data
• Total Hardship Amount Available
• Latest Hardship Distribution Date
• Or provide each of the following data points:
• 12/31/88 Cash Value – EE
• 12/31/88 Cash Value – ER
• Post 12/31/88 Contributions – EE
• Post 12/31/88 Withdrawals – ER
• Hardship Distribution Date
4. Deferral Limit Monitoring
• Year-to-Date EE Contributions
5. Loans (for each loan request and with respect to the 403(b) plan only)
• Maximum Loan Amount Available
• Number Of Loans Outstanding
• Vendor Loan Number
• Loan Initiation Date
• Loan Status (Active, Paid Or Deemed Distributed)
• Loan Type (General Or Residential)
• Original Loan Amount
• Remaining Loan Balance
• Remaining Balance Date
• Highest Outstanding Loan Balance Over The Past 12-Month Period
Plan Accounting and Reporting
Through PSW, Fidelity provides access to standard and customized plan reporting.
Several types of standard reports are available immediately, such as loan delinquency
reports, participant indicative data, balance information, and history to assist the plan
sponsor’s need for current, pertinent data. The following is a sample list of reports plan
sponsors can access through PSW:
•
Trial Balance Report – Gives an overview of each month’s activity, broken down
by money class, fund, and transaction type
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•
•
•
•
•
•
•
Participant Balance Report – Shows the current market value for all or selected
participants for a specific date chosen.
Distribution Report – Lists the distributions for all or selected participants,
including dollar amounts and dates withdrawn.
Loan Withdrawal Report – Lists the date, source, and dollar amount by participant
of loans withdrawn from the plan.
Loan Delinquency Report – Lists the participants with delinquent loan payments,
and indicates what amounts are 30, 60, or 90 days overdue.
Participant Report – Provides the plan sponsor with all or selected participants’
dates of hire, participation dates, vesting dates, dates of birth, and dates of
termination, if applicable.
Transaction Report – Allows plan sponsors to view specific transactions for all or
selected participants, dollar amount of transaction, and the dates on which they
occurred.
Fund Mix Report – Allows plan sponsors to view all or selected participants’ fund
mixes by sources and percentages.
Participant Reporting
Statements will automatically be created for each participant with an account balance
during the reporting period. No statements will be created for participants with zero
balance accounts, or who do not have any money invested in the Plan and recordkept by
Fidelity. The statement shows the individual’s financial activity during the reporting
period.
Participant statements will be delivered as follows:
•
•
•
•
Participants will default to receive paper statements mailed quarterly to the
address on file.
Upon initial NetBenefits login, participants will be given the opportunity to
convert to online default and access statements through NetBenefits
Using on demand statement creation, participants can generate a statement for any
time period, and print directly from NetBenefits.
Participants have the option to revert back to paper statements at any time by
making an election on NetBenefits.
Each quarter, a “reminder e-mail” is sent to those participants who have elected online
default, reminding them that their statements are ready.
The Custodian shall file tax reports with the Internal Revenue Service as required with
respect to the Account, including IRS Form 1099-R.
Minister’s Housing Allowance Withholding and Reporting
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Fidelity will not withhold federal and state taxes on that portion of a disbursement made
to a Participant who is a minister and which is entitled to an exclusion from taxable
income in accordance with Internal Revenue Code section 107 and applicable law.
Fidelity will rely on the Client’s confirmation of a Participant’s self-certification
regarding minister status. Any distributions processed without withholding will be
marked “taxable amount unknown” on Form 1099-R.
Plan Level Reporting
Plan level reporting is available to the Client through Plan Sponsor Webstation. All
reports automatically default to social security number order. Reports can also be sorted
alphabetically, by division, region, status code or employee number. Participant-level
reporting is available to each participant through NetBenefits.
Participant Communication and Education
General Education Materials
Every participant will receive Fidelity’s quarterly newsletter, Connect®. The newsletter
is written explicitly for employees in the 403(b) marketplace and clearly defines the
concept of retirement readiness by putting it into simple messages for participants.
On-demand Tools and Resources
Fidelity offers a variety of tools and resources that allow participants to decide how and
when they interact with Fidelity. They can use the tools and services to create personal
plans to achieve retirement readiness, monitor their progress, and adjust the plan as their
life circumstances change.
Fidelity NetBenefits®.
Your employees will have 24-hour access to their account information through Fidelity
NetBenefits®. Through this site, participants can obtain account, plan, and investment
data, and initiate transactions. They will also have access to a variety of financial
planning resources including:
•
•
•
Online Tutorials – Self-paced modules that employees can access any time and
progress at their own speed. They are available virtually 24 hours a day, 7 days a
week, so participants do not have to wait to get help with their planning needs.
Fidelity Portfolio Review – An easy-to-use guidance tool that can help
participants make better informed investment decisions. The Portfolio Review
tool streamlines the process of choosing an investment strategy that is targeted to
match a participant’s needs and goals.
Full View® – Fidelity’s online account aggregation services that further enhances
participants’ planning experience. Full View® enables participants to see a
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complete and consolidated view of all their finances at a single glance, including
both Fidelity and non-Fidelity accounts.
Implementation Services
Fidelity will provide the following Implementation Services:
1.
2.
3.
4.
Establish Plan profile on Fidelity’s recordkeeping system
Establish Participant Accounts.
Activate Plan Sponsor Webstation.
Accept Plan assets from other/prior Plan vendors or recordkeepers, and deposit
into Plan and Participant Accounts in accordance with Client Directions.
5. Client shall be responsible for providing all notices and other disclosures to
employees and Participants.
Fees
Recordkeeping fees
The recordkeeping fee is deducted from participant accounts unless alternate
arrangements are made to bill the employer.
Redemption and exchange fees
Many mutual funds carry short-term redemption fees to lessen the adverse impact caused
by short-term trading. For funds that impose a short-term redemption fee, the fee will be
assessed on any sale of shares that were held less than the holding period specified in the
fund’s prospectus. The fees are typically calculated as a percentage of the transaction
amount and will be net from the redemption proceeds.
Fees that are to be deducted from participant accounts will be deducted in the following
order: Fund Hierarchy Order – beginning with the fund with the lowest fund number
Loan fees
Loan origination and maintenance fees will be deducted from the Participant’s account.
The amounts of such fees are set forth in the Agreement, and may be changed from time
to time.
QDRO fees
Fidelity will deduct a one-time $200 administrative fee from a Participant’s and/or
Alternate Payee’s account, as specified in the Domestic Relations Order, for the review
of an order pursuant to the QDRO guidelines covered in this PAM.
Withdrawal and distribution processing fees
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Any fees related to withdrawals or distributions which are described in the Agreement
will be deducted from the Participant’s account, unless previously paid by the Client.
The amounts of such fees are set forth in the Agreement, and may be changed from time
to time.
Other fees
Participants may choose to pay an additional fee for expedited delivery of a distribution
check. The amount of the fee will be disclosed to the participant at the time of the
transaction, and, if the expedited delivery is requested by the participant, the fee will be
deducted from their account.
Data Security
Fidelity currently employs the following authentication measures. These processes are
subject to change at any time without notice.
PIN Creation
Participants may establish Personal Identification Numbers (PINs) during their first call
to our Voice Response System (VRS), or when first accessing their account on line via
Fidelity NetBenefits®. Both access channels require a Social Security number or
Alternate Customer ID (ACI) as an identifier, and authentication information that
includes, but is not limited to, date of birth and ZIP code. Once this information is
entered, participants are instructed to set up a PIN between six and twelve digits in
length.
Participants can choose whatever PIN they like, including any previously used PINs, as
long as it meets Fidelity’s PIN security requirements. The PIN cannot be the participant’s
Social Security number, date of birth, repeating number (e.g., 777777777) or numbers in
ascending or descending order (e.g., 1234567, 7654321). This mitigates the risk that the
PIN could be easily guessed by an unauthorized user. Users have the ability to change
their PIN at any time and Fidelity encourages them to do so periodically.
The PIN is known only to the authorized user. When a user creates his or her PIN, it is
stored and encrypted using a one-way algorithm so that even Fidelity has no knowledge
of what the PIN is. Fidelity encourages users not to share their PIN with anyone.
PIN Procedures
A participant’s PIN must be validated on the VRS or on NetBenefits before a Customer
Service Associate can provide service or before a participant can access their Plan
information via the Web. If a participant fails to enter the correct PIN three times, they
are locked out of the system and automatically asked to reset their PIN. This prevents
unauthorized users from trying to guess an authorized user's PIN.
Fidelity generates and mails confirmation statements when a participant establishes a new
PIN. In addition, any changes to a user’s PIN also results in a confirmation statement
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being mailed to the user's address of record so that a user is aware of all PIN-related
transactions.
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