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What are the advantages to participating in a 401(k) plan?

"When people talk about 401(k) plans, you often hear about advantages like:

  • Free money from your employer
  • Lower taxable income
  • Savings and earnings that accumulate without you having to remember to make deposits
  • The opportunity to retire and not have to worry about money anymore

Does this sound too good to be true? It isn't. It's what you can gain from investing in your company's 401(k) plan. The 401(k) is one of the most popular retirement plans around."

How do I make contributions?

You contribute through payroll deduction by completing an enrollment form and sending it to the administration office.

How much can I contribute?

You can contribute up to 100% of your wages, in whole percentages, up to a maximum of $18,000 per year in 2015 and $17,500 per year in 2014. This dollar amount is adjusted periodically for cost-of-living increases. Call us for the most recent rate.

Can I lose my contribution?

No. Your contribution is 100% vested and nonforfeitable at all times. However, depending upon the investment fund or funds you choose, the value of your account may, at any time, be more or less than the amount of your contributions. Also, your account is subject to administration expense charges which may reduce your account balance.

Can I revoke my election?

Yes, at any time.  Contact Coast Benefits to stop contributions.  A revocation will be effective as soon as it can be processed by your employer's payroll office. You cannot withdraw any funds at that time unless you also satisfy one of the distribution eligibility rules.

When can I receive funds from my account?

Distributions from your deferred account are not permitted before age 59 and 1/2, except in the event of the Participant's:

  • Death
  • Disability
  • Termination of employment
  • Retirement at age 55 or older

Your contributions and investment earnings are available for distribution following termination of employment and filing an application. If you are younger than 59 and 1/2 years at the time of distribution, a 10% excise tax penalty may apply depending on the form in which your account balance is paid to you.

What are "catch up" contributions?

Participants age 50 and over will be allowed to make annual "catch up" contributions of $6,000 a year for 2015 and $5,500 a year for 2014.  If you intend to take advantage of this "catch up" provision, contact the administrator to coordinate the contribution through your employer's payroll office.

May I borrow money from my account?

Yes, with the exception of participants of the IBEW Local 40 NECA Plan. in addition to distributions, there is a loan option available under the Plan. Loans can be taken from the plan for any reason. The minimum amount is $1,000.00, and the maximum amount is the lesser of half the balance of your account or $50,000.00 at an interest rate of prime plus 1%.

How and where are my funds invested?

You will have the opportunity to direct your funds to be invested in one or more different investment funds offered by the Trustees.
See a list of investment funds on your Plan's page.

How often can I switch my investment selection?

Under the San Diego Electric Annuity Plan, you may switch your investment selection up to four times a year, once each calendar quarter.  Changes may be made by contacting Coast Benefits, and normally will be effective as of the end of the month following the receipt of the request.  If the changes is made via telephone or email, you will receive a written confirmation of the change.

Transfers of existing account funds will be weighted based on the date received.  Transfers received within the first six weeks of a quarter are back dated to the beginning of the quarter, and those received within the last six weeks of a quarter will forward to the end of the quarter.  There will be no charge for up to four annual switches.  You will receive a statement of your account four times a year, based on the figures at the end of each quarter.

Under the IBEW Local 40 NECA Plan, you may switch your investment selection as often as you like.  Changes may be made through Putnam Investments.  However, to protect your interests, Putnam and its administrative partner, Mercer HR Services, adhere to the following policies designed to curb different types of short-term trading.
Download the Short Term Trading Notice.

Will I be charged any fees for participating in this plan?

Yes, your account will be charged a pro-rata share of the expenses of operating the Plan which include administration fees, audit costs, legal and investment manager fees.  These amounts will reduce the investment return you receive.  The expenses of operating the Plan are not expected to exceed 1.85% of total Plan assets annually.  Investment management expenses are charged by each fund are pre-gain/loss.  Your employer does not pay any of these costs.

How will the plan be administered?

The plan will be administered by a board of trustees with the assistance of a third-party administrator.

How do I know my account balance?

Statements are mailed out quarterly, generally 30 days after the end of the quarter (March 31, June 30, September 30, and December 31).  At any time between quarters you may call the adminstrator to check your account balance.