As a leading provider of retirement plan services, Legend can assist your organization
with the design, implementation and maintenance of a §401(a) Governmental plan.
Eligible Employers
Public educational institutions; state, county and municipal governmental agencies
Plan Design Strategies
The plan may be discriminatory, for example, unused sick/vacation pay
and retirement lump sums can be deposited as employer contributions
Employer contributions must be set up as non-elective,
i.e. the employee cannot have the option to receive the money in cash
A §401(a) plan cannot be used solely as a severance pay plan
Employee Contributions
The plan may require a mandatory deferral
Employer Contributions
Maximum contribution of 100% of participant’s salary with annual additions maximum
(employer and employee contributions combined) capped at $50,000 in 2012
Public schools have a &167;401(a) annual additions limit
that is separate from their &167;403(b) annual additions limit
Taxation
Distributions are taxed when they are paid out to the participant
Distributions
Eligible upon separation from service, death or disability
Loans1
Participants may take a loan of one half of their account value up to $50,000
Loans are an optional plan feature and must be qualified on an employer plan basis
Rollovers into Plan
Participants may rollover distributions from other
eligible retirement accounts into the employer’s §401(a) plan (optional plan feature)
Premature Penalty
A 10% penalty is applicable on distributions taken prior to age 59½ unless
the participant meets the age 55 exception (retires in the year age 55 is attained or later)
Required Minimum Distributions
A participant must begin taking distributions at the later of attainment of age 70½ or
retirement. The first minimum distribution must be taken by April 1st of the year following the year containing this triggering event.