1 / 32

Comparison between the 401(m) Plan and the OAS Retirement and Pension Plan (RPP)

This article compares the features and benefits of the 401(m) Plan and the OAS Retirement and Pension Plan (RPP), including definitions, funding and contributions, vesting, investment risk, taxation, retirement pensions, survivorship and disability benefits, and more.

deyo
Télécharger la présentation

Comparison between the 401(m) Plan and the OAS Retirement and Pension Plan (RPP)

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Comparison between the 401(m) Plan and the OAS Retirement and Pension Plan (RPP) OAS Staff Association and OAS Retirement and Pension Fund Daniel R. Vilariño Secretary-Treasurer OAS Retirement and Pension Fund December 6, 2011 OAS HQ, Washington, DC

  2. Topics: Definitions Funding and contributions Vesting and forfeitures Investment risk Taxation Retirement pensions Survivorship and disability benefits Investment management Fees Loan and pre-termination withdrawals Transfers from on plan to another Reinstatements 401(m) and Continuing Contracts Questions

  3. Definitions Pensionable Remuneration A kind of before-tax remuneration Pensionable Remuneration Basic Salary Post Adjustment > +

  4. Definitions (continued) Vesting Vested = Amount that I can withdraw when my employment ceases Unvested = Forfeitures, the amount (if any) that remains in the Fund when my employment ceases

  5. Definitions (continued) Institutional Contributions When we talk about the “institutional contributions” in the account, we refer not only to the contributions deposited by the employer there, but also the interest these contributions generated

  6. Definitions (continued) Personal Contributions When we talk about the “personal contributions” in the account, we refer not only to the contributions deposited by the participant there, but also the interest these contributions generated

  7. Sponsoring Institutions OAS Retirement and Pension Fund Sponsoring Institutions

  8. OAS Retirement and Pension Fund Sponsoring Institutions Participant Funding and Contributions OAS Retirement and Pension Plan 401(m) Plan = 14% of Pensionable Remuneration 7% of Pensionable Remuneration

  9. Vesting Personal Contributions For both the OAS Retirement and Pension Plan and the 401(m) Plan personal contributions are vested 100% since the beginning.

  10. Vesting (continued) Institutional Contributions The 401(m) Plan has full vesting since the beginning, the OAS Retirement and Pension Plan has a vesting schedule with changing rights from year 0 to year 7 when the participant becomes fully vested

  11. Vesting (continued) Vesting Schedule RPP Year 7 Institutional Contributions Year 6 100% Year 5 80% Year 4 Year 1 Year 2 Year 3 60% 40% 35% 35% 35% 35%

  12. Investment Risk OAS RPP 162 23% 156 57% 155 155 401(m) Plan 147 132 132 131 124 123 119 116 42% 111 111 110 110 104 28% 100 100 99 95 94 87 78 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 All dates are as of December 31 of the year. Assumes similar investment portfolios with a policy of around 60% in equity and 40% in fixed income. 401(m) returns are net of 1% annual fees. RPP are actual accreditations.

  13. Taxation I WANT YOU R MONEY!! If you are a US tax payer, no matter what Plan you select, you will have to pay taxes when you withdraw funds.

  14. Taxation (continued) TAXES TAXES TAXES TAXES TAXES TAXES TAXES Agreement between OAS and USA TAXES TAXES TAXES TAXES TAXES TAXES TAXES TAXES TAXES TAXES TAXES TAXES TAXES TAXES TAXES G-4 visa holders in OAS RPP

  15. Taxation (continued) The agreement does not apply Federal Income Tax: 30% of my gains i.e. If I had $200,000 in gains, the tax is $60,000 In the example, if the person was younger than 59 ½ he/she would end paying half his/her gains in taxes State Income Tax: Up to 11% in some jurisdictions i.e. If I had $200,000 in gains, and State Income tax is 10%, then the tax is $20,000 Penalty Tax, if younger than 59 ½: 10% of gains i.e. In the example the penalty tax would be $20,000 G-4 visa holders in 401(m) Plan

  16. PENSIONS Retirement Pensions Could be eligible for a PENSION for life In OAS RPP with COLAs problems with withdrawals In 401(m) Plan run out of funds Participant no optimal use of funds

  17. Participant Spouse Child Child Less than 5 years in the OAS RPP, spouse and/or children Other Social Security Benefits Survivorship Benefits Spouse and/or children receive 100% of personal plus institutional contributions In OAS RPP

  18. Participant Spouse Child Child More than 5 years in the OAS RPP, spouse and/or children Other Social Security Benefits (continued) Survivorship Benefits Spouse and/or minor children receive survivorship pensions In OAS RPP

  19. Participant Designated Beneficiary Designated Beneficiary Any length participation in OAS RPP, no spouse and no children Other Social Security Benefits (continued) Survivorship Benefits Designated beneficiaries receive only personal contributions in account In OAS RPP

  20. Participant Designated Beneficiary Designated Beneficiary Any length participation in 401(m) Plan Other Social Security Benefits (continued) Survivorship Benefits Designated beneficiaries receive personal and institutional contributions in account, designated beneficiaries may not be spouse or children In 401(m) Plan

  21. OAS RPP PARTICIPANT Other Social Security Benefits (continued) Disability Benefits Less than 5 years in OAS RPP Receives 100% personal and institutional contributions in his/her account More than 5 years in OAS RPP Receives disability pension

  22. 401(m) Plan PARTICIPANT Disability Benefits Other Social Security Benefits (continued) Disability Benefits In 401(m) Plan

  23. OAS Retirement and Pension Fund Sponsoring Institutions Investment Management In the OAS RPP: In the 401(m) Plan: Each individual on his/her own Contributions pooled together in a professionally managed and well monitored Fund For some this might be an opportunity For others it might be a burden

  24. Fees In the OAS RPP: In the 401(m) Plan: Fees paid out of the Fund’s Operational Reserve Fees paid out of the Participant’s account The Fund’s takes advantage of economies of scale to lower fees Some mutual funds will charge up to 1.36% of asset value in fees Average management fees for pool of resources as low as 0.15% Participant also pays custodian and record-keeper fees

  25. Loans & pre-termination withdrawals In the OAS RPP: In the 401(m) Plan: Loans with the OAS Staff Credit Union with guaranty of the participant’s RPP account Loans with the OAS Staff Credit Union with guaranty of the participant’s 401(m) Plan account Preferential Rates!!! Pre-termination withdrawals Pre-termination withdrawals allowed, however, have to pay taxes and possibly penalties

  26. Transfers from one plan to another OAS Retirement and Pension Plan 401(m) Plan Unless you separate from the sponsoring institution and are then rehired I can leave the 401(m) and begin participation in the OAS RPP at any moment I can transfer funds only after 5 years of participation in the OAS RPP I can transfer up to 5 years of previous 401(m) participation, with 2 years I can accelerate the vesting from 60% to 100%

  27. Reinstatements In the OAS RPP If a participant in the OAS RPP is separated from service, upon being re-hired by any sponsoring institution, he/she has the right to be enrolled in the OAS RPP without having to participate in the Provident Fund He/she also has the right to reinstate previous participation in the OAS RPP, restoring the moneys withdrawn when the separation occurred plus any interest due to accreditations given during the period of no participation If the reinstatement is done, participation time and vesting rights will count as continuing from the moment of the previous participation/s. Any forfeitures left when the separation will be reinstated in the account.

  28. 401(m) Plan and Continuing Contracts If you join the 401(m) Plan You may be required, at any time, by decision of the Secretary General, to join the Retirement and Pension Plan. If you apply for and are selected for a Continuing Contract, you will be required to participate in the OAS Retirement and Pension Plan If you are required to join the Retirement and Pension Plan, you may keep your 401(m) account. However, no more contributions will be done to that account

  29. 401(m) Plan and Continuing Contracts OAS Retirement and Pension Plan Participation 401(m) Plan Participation Continuing Contract

  30. Questions and Comments?

  31. Contact Information • Daniel R. Vilarino (Secretary-Treasurer) • Organization of American States • Office of the Retirement and Pension Fund • 1889 F. Street, N.W. Office TL-50 • Washington, D.C., 20006 • Tel. (202)458-3844 • Fax. (202)458-6125 • dvilarino@oas.org • http://www.oas.org/retirementfund

More Related