Here’s a couple of fun facts: the name of the Money Purchase Plan and Trust will be changing to the I.B.E.W. Local 697 Defined Contribution Plan on September 1, 2023. Further, on that same date, the type of Defined Contribution Retirement Plan that the Plan was prior classified as will switch from a Money Purchase Plan and Trust to a Profit-Sharing Plan.
What do you have to do? Nothing. This improvement will occur automatically.
What do you have to know? Just four (4) things. Spoiler alert…..they are all good things.
What is not changing:
- The current investment options available to you will not be changing. Neither will your current investment selections. They remain the same. As will all the rules, provisions, and options as they relate to beneficiaries, disbursements, investments, loans, Required Minimum Disbursements, terminations, and voluntary contributions.
- Similar to when the Plan was classified as a Money Purchase Plan and Trust, under the Profit-Sharing Classification, the Plan will remain a multi-employer Defined Contribution Plan AND, pursuant to the law, the Collective Bargaining Agreement remains the governing document that obligates a signatory employer to contribute on an employee’s behalf. So, and again, no changes there.
What is improving?
- The name of the Plan is being amended to more accurately reflect the type of Retirement Plan that the Plan actually is. Secondly, and as previously communicated, reclassifying the Plan as a Profit-Sharing Plan aligns it with those types of Retirement Plans that during the Covid Crisis the federal government relaxed the tax rules surrounding disbursements. Should another national emergency occur, the Board wishes to be aligned with those types of Plans to which federal precedence has already been established.
- The Plan will have a 401(k) Roth feature which members can voluntarily contribute to. Why? Because tax-free earnings are always better than taxed earnings. It’s true. To put it another way - do you want to know why you have never met a retired individual who regretted their decision to make Roth contributions? Well, it is because they do not exist.