Employees' guide to the State of Georgia Employees' Qualified Trust 401(k) Retirement Plan

Employees' Guide to the State of Georgia Employees'
Qualified Trust 401(k) Retirement Plan

EMPLOYEES' GUIDE TO THE STATE OF GEORGIA EMPLOYEES' QUALIFIED TRUST 401(K) RETIREMENT PLAN
T he State of Georgia Employees' Qualified Trust 401(k) Retirement Plan was implemented to provide basic and supplemental retirement benefits for employees of participating Community Service Boards (CSBs) and the Georgia Lottery Corporation (GLC) who are not eligible to participate in the retirement pension plan administered by the Employees' Retirement System.
The Board of Trustees of the Employees' Retirement System of Georgia has the responsibility, by law, for operation of the Plan. The Executive Director of the Employees' Retirement System, designated by the Board as Plan administrator, handles the ongoing administration of the Plan and arranges for recordkeeping and Plan accounting on a contractual basis.
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Plan Eligibility
As a CSB or GLC employee, you may qualify for membership in the 401(k) Retirement Plan. The Plan allows for employer contributions and optional payroll-deducted employee contributions for all GLC employees and for those CSB employees who are:
salaried, full-time employees, or
who work 1,000 hours or more in the initial 12-month period from date of hire and each calendar year thereafter.
Employees must be ineligible for coverage in any of the retirement plans sponsored by the Employees' Retirement System in order to be eligible for the 401(k) employer contribution.
Employees who transfer to a participating CSB from State mental health operations are, in most cases, not eligible for the 401(k) employer contribution, but instead maintain any existing retirement coverage through Employees' Retirement System.
Full-time employment for CSBs is defined as a minimum of 30 hours per week. However, full-time employees who are working in a time-limited job that requires less than nine months to complete a project are not eligible to participate in the 401(k) Plan.
Employer Contributions
When you first become eligible for the 401(k) Plan, you will be required to complete a Participation Agreement-Employer Contributions Form (Form PSR11-10E). The form allows you to designate the Plan Investment Option(s) in which your Employer Contributions will be invested.
As long as you remain 401(k)-eligible, your investment account(s) will be credited with an Employer Contribution of 7.5 percent of salary when submitted by your employer. Should you leave the CSB, GLC or State government, withdrawal of any portion of the Employer Contributions made on your behalf will be based on a process called vesting.
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Vesting is based on the length of employment service.

Vesting
Vesting is based on the length of employment service; you earn ownership of all or a portion of the Employer Contributions according to the time frames outlined in the table below. Access to the vested amount is not available until you separate from service (see pages 8 & 9).
Part-time and hourly CSB employees begin to accrue vesting at the start of the first 12-month period in which they became eligible for the 401(k) Retirement Plan.

Call 1-800-331-7180 or 404-651-6088 in the Metropolitan Atlanta area for questions about vesting, distributions, and rollovers.

WITH THIS MANY FULL YEARS OF PLAN VESTING
SERVICE...CONTRIBUTIONS
LESS THAN TWO (2) TWO (2) THREE (3) FOUR (4) FIVE (5) SIX (6) OR MORE

YOU OWN THIS PERCENTAGE OF
EMPLOYER VALUE...
0 PERCENT 20 PERCENT 40 PERCENT 60 PERCENT 80 PERCENT 100 PERCENT

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For employees who separated from service prior to January 1, 2002

WITH THIS MANY FULL YEARS OF PLAN VESTING
SERVICE...CONTRIBUTIONS
LESS THAN THREE (3) THREE (3) FOUR (4) FIVE (5) SIX (6) SEVEN (7) OR MORE

YOU OWN THIS PERCENTAGE OF
EMPLOYER VALUE...
0 PERCENT 20 PERCENT 40 PERCENT 60 PERCENT 80 PERCENT 100 PERCENT

Employee Elective Contributions
Eligible employees may contribute to the Plan by deferring amounts from each paycheck on a pre-tax basis (Federal and State of Georgia income tax). These contributions must be made on a per pay period basis, must be designated as a whole- or half-dollar amount, and must be at least $30.00 per month ($15 per pay period for those paid semi-monthly).
Once you become eligible and enroll for employee contributions, you are always eligible to make such contributions during your continued employment with the CSB or GLC, regardless of loss of eligibility for Employer Contributions due to not meeting the 1,000 hour work requirement (CSBs only) for part-time and temporary employees.
Employee contributions in a Calendar Year are subject to IRS limitations. Please go to www.ersga.org or check with your personnel or payroll office to determine the most current contribution limits.
An eligible employee may enroll for contributions at any time during the year and may change the per pay period contribution amount at any time during the year.
For New Enrollments, you must complete a New Enrollment Participation Agreement-Employee Salary Deferrals form (PSR11-10K). For changes in contribution amounts, you must complete the Participation Change Agreement (PSR11-13K).
New Enrollments or contribution amount changes must be requested by you and approved by your employer no later than the month PRIOR to the month in which your salary would otherwise be paid (e.g., the Form PSR11-10K must be approved by the employer on or before the end of February in order for the requested contribution to be deducted from your paycheck for any pay period ending during March). The employer may establish earlier submission cutoff dates or deadlines as may be necessary for proper administrative processing of contribution requests.
You may stop contributions at any time by submitting a properly completed Change form (PSR11-13K). If you discontinue making contributions, the amounts already contributed will continue to reflect the performance of the underlying investment option(s) until distributed in accordance with Plan Regulations.
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Withdrawals While Still Employed Withdrawals from the 401(k) Plan while still employed by the CSB, GLC, or other state agency are very limited. Upon attainment of age 59 you may withdraw any portion of employee elective deferral contributions and any associated earnings. Withdrawals of Employer Contributions and associated earnings are not allowed regardless of vesting service completed or age until separation for a minimum of 30 consecutive days from a CSB, GLC and any other state employment. Distribution will not be made if an employee has returned to state employment.
Withdrawals due to Financial Hardship are very limited and must meet the approval of the Deferred Compensation Hardship Review Committee. The financial hardship application must be completed and accompanied by supporting documentation, such as copies of paycheck stubs, lease/rental agreements, account statements, billings, loan agreements, invoices and any other documentation appropriate to substantiate the claim of financial hardship. Employer contributions are not eligible for financial hardship withdrawal, regardless of the vesting service completed.
Withdrawals cannot be made for the purchase of a home, educational expenses or other discretionary items or services except where the financial situation is such that incurral of the expense would or has created a financial hardship which cannot be relieved from any other means such as insurance reimbursement, grants, application of reasonably liquid assets, or application of loans currently available from commercial sources. In addition, the only assets available for financial hardship withdrawal are those elective deferrals made by the participant, excluding any earnings associated with those deferrals. If you are approved for a financial hardship withdrawal, employee contributions are prohibited for the 12-month period following the withdrawal. After the 12-month period, the 401(k) contribution limit for that year will be reduced by the amount of employee contributions made in the prior plan year.

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Rollover Contributions
As a tax-qualified retirement plan under Section 401 of the Internal Revenue Code, the state's 401(k) Plan will accept rollover contributions of pre-tax accumulations from other qualified plans. Other qualified plans can include 401(k), 401(a) and 403(b) plans, as well as Individual Retirement Accounts (IRAs). Contact Great-West Retirement Services at 1-800-701-8255 for appropriate forms and instructions.

While many private sector 401(k) Plans offer loans, through which participants may access funds to make a downpayment on a house, or to supplement educational expenses, the State of Georgia 401(k) Plan does not have loan provisions.
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ns are not able through 401(k) Plan.

Investments
Under the 401(k) Plan, you are required to direct the investment of all contributions to your Plan account. Initial investment elections are made via the New Enrollment Participation Agreement forms (PSR11-10K and PSR11-10E). Subsequent changes to investments must be made by contacting Great-West at 1-800-701-8255 or by accessing your account at www.ersga.org.
Note: Both employee and employer contributions must be allocated to the same investment options on an ongoing basis. If you enroll for employee deferrals at the same time as you complete the paperwork for the employer contribution, you must select identical investment options and percentages on both enrollment forms. If you enroll for employee deferrals subsequent to your enrollment for employer contributions, whatever investment option(s) you elect on the employee deferral New Enrollment form will also become the option(s) into which future employer contributions will be invested. You may select different investment options for Rollover contributions than those selected for the Employee and Employer contributions. Once selected, your contributions will be invested as directed until you modify your selection.
Account Access and Information
After you have enrolled and received your Personal Identifcation Number (PIN) in the mail from Great-West - the Plan's Third Party Administrator, you may change your investment selection for future contributions at any time by calling 1-800-701-8255, or accessing your account at www.ersga.org. In addition to redirecting investments for future Plan contributions, you may also transfer some or all of the balances of past-accumulated contributions into the other investment options offered by the Plan. You will receive a statement each quarter from Great-West mailed to your home or you can choose to receive it electronically. The statement will reflect all investment activity and balances for the preceding quarter.
Call 1-800-701-8255 for questions about investments and account balances.
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Beneficiary and Account Maintenance
You must complete a Beneficiary Election form (PSR11-11K) upon enrollment in the Plan. Please note that if you are married and electing anything other than 100 percent Spousal beneficiary, your spouse must complete the Spousal Waiver form (PSR11-11W) agreeing to the beneficiary designation. The Spousal Waiver form must also be notarized. Beneficiaries may be changed by completing a new beneficiary form and submitting it to the Peach State Reserves office at the address on the inside back cover of this brochure. Address changes may be reported by completing the Participation Change Agreement (PSR11-13K) and submitting it to the Peach State Reserves office. You are responsible for keeping the Plan informed of any changes that may affect administration of the Plan, such as change of address or a new beneficiary.
Employment Termination
At the time you terminate employment with any CSB, the GLC or other State Government employer, you will be entitled to be paid the then-current value of your credited Employer Contributions TIMES your then-applicable earned Vesting Percentage. For example, if you were to resign after one and a half years of eligible service, you would receive none of the credited Employer Contributions (Employer Contributions value times zero percent), but if you left after five and a half service years, you would be entitled to 80 percent of accumulated Employer Contributions.
Any portion of the Employer Contributions value not vested when you permanently separate service is forfeited back to the Plan for offsetting against administrative expenses.
Note: Please note that this retirement plan only provides the assets accumulated by you there is no provision for continuation of other benefits such as health or dental insurance. You should contact the providers of those options to determine what continuation privileges may be available to you if any.
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Employment Transfer
Should you transfer your current employment from a CSB or the GLC to full-time employment with a Georgia state agency or a non-participating CSB (excluding local school systems), you will:

become eligible to participate in the Employees' Retirement System, the Teachers Retirement System, or another retirement plan

become ineligible for further Employer Contributions to the 40l(k) Plan (although elective employee contributions would still be available to you).

Employer Contributions made by your employer would not be forfeited nor would you at that time become eligible for payment of any then-vested portion of such Contributions.

Service years with respect to vesting of 401(k) Plan Employer Contributions continue to accrue as long as you remained in continuous active service with any State agency. A transfer is defined as a break in service of 31 days or less.

Distributions
Upon separation from employment from a CSB, GLC or any other state employment for a minimum of 31 consecutive days, you are eligible to receive a distribution from the Plan of both the elective deferrals account balance as well as the vested portion of the Employer contribution (as long as you have not been rehired by a CSB, the GLC or another state agency prior to the date of distribution). If your total vested account balance (employee deferrals and employer contributions) is $1,000 or less, you must receive a distribution or roll the assets over to another qualified plan or Individual Retirement Account no later than December of the year following the year of termination of employment. If your balance is greater than $1,000, you may elect to maintain the assets in the Plan until such time as a withdrawal is desired (distributions are required to begin at age 70 if no longer working for the CSB, GLC or a state agency). If you choose to leave your assets in the Plan, you will continue to have full control over your investments among the options offered by the Plan.

Rollover Distributions

In order to delay payment of taxes, you can choose a direct rollover of all

(or of any lesser fraction) of your vested account balance (employee

deferrals and employer contributions). In a direct rollover, the distribution

is paid directly from the Plan to an Individual Retirement Account (IRA)

or to another employer-sponsored qualified retirement plan that accepts

rollover contributions. If you choose a direct rollover, you are not taxed on

the payment (and no income tax withholding is deducted) until you take it

out of the IRA or other employer retirement plan.

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Taxes and Penalties
The Internal Revenue Service (IRS) designed the Section 401(k) Plan as a tax-sheltered retirement savings plan. In accordance with that, the Internal Revenue Code imposes a 10 percent early withdrawal penalty tax on most distributions made to participants prior to age 59 . This penalty is in addition to the income tax owed for the distribution made, and must be paid by you at the time you file your taxes it will not be deducted from your distribution. The Plan Administrator is required to withhold 20 percent of the payment and send it to the IRS as income tax withholding to be credited against your taxes for the calendar year in which the payment is made; therefore you will receive only 80 percent of the total payment amount. The distribution to you constitutes taxable income to you. Depending upon your tax bracket and other income received during the year, you may owe taxes in addition to the 20 percent withheld by the administrator and sent to the IRS.
Administrative Cost and Recordkeeping
To cover Plan administrative costs, a recordkeeping fee of $3.00 per calendar quarter is deducted from the value of your Plan account. The Employees' Retirement System reserves the right to increase the level of fees if the total fees collected do not cover the administrative costs.
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The State of Georgia Employees' Qualified Trust 401(k) Retirement Plan
For additional information, contact your payroll/ benefits or personnel office. You may also contact Great-West regarding your account balance and investments at 1-800-701-8255. Personal representatives are available Monday through Friday from 10:00 a.m. to 7:00 p.m. Benefit representatives in the Employees' Retirement System Peach State Reserves Office are also available for questions regarding vesting, distributions, and rollovers at 1-800-331-7180 or 404-651-6088 in the metropolitan Atlanta area.
Visit our website at: www.ersga.org Employees Retirement System Peach State Reserves Two Northside 75, Suite 300 Atlanta, Georgia 30318
Michael J. Nehf, Executive Director
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