NC 403(b) Program Participant FAQs The North Carolina Supplemental Retirement Board of Trustees (Board) has decided to discontinue the NC 403(b) Program, opting to focus on the larger and more popular NC 401(k) and NC 457 Plans. The Board voted unanimously December 2 at its regularly scheduled quarterly meeting to eliminate this option following an in-depth review of the Program. The NC 401(k) Plan, NC 457 Plan, and NC 403(b) Program are jointly administered by the Board and Department of State Treasurer. Click here to read the full press release. Participant Information Table NC 403(b) Participant Forms Why is the NC 403(b) Program being discontinued? The North Carolina Supplemental Retirement Board of Trustees (Board) decided to discontinue the NC 403(b) Program, opting to focus on the larger and more popular NC 401(k) and NC 457 Plans. The Board voted unanimously on December 2 at its regularly scheduled quarterly meeting to eliminate this option, following an in-depth review of the Program. While the Program offered competitive, low-cost investment options, enrollment in the Program lagged in the crowded 403(b) marketplace. What does it mean that the NC 403(b) Program is being discontinued? The NC 403(b) Program will cease to be an investment option in your 403(b) plan. Your account balance in the NC 403(b) Program will: be distributed to you or moved to another investment provider in your 403(b) plan or transferred or rolled over to another eligible retirement plan. Your options and the deadline for moving your account balance from the NC 403(b) Program will depend on several factors, including whether your employer continues or discontinues your 403(b) plan, the other investment options in your 403(b) plan (if any), and whether you have a distributable event. However, all assets should be removed from the NC 403(b) Program by September 30, 2022. When will the NC 403(b) Program be discontinued? How long is the discontinuation process? The process of discontinuing, or winding down, the NC 403(b) Program involves a series of actions that will take place throughout 2022. If you are an active employee contributing to the NC 403(b) Program, you will still be able to make contributions to your account through the pay period ending June 30, 2022. Your options and the deadline for moving your account balance from the NC 403(b) Program will depend on several factors, including your employment status, whether your employer continues or discontinues offering 403(b) options, the other investment options in your 403(b) plan (if any), and whether you have a distributable event. However, all assets should be removed from the NC 403(b) Program by September 30, 2022. The North Carolina Supplemental Retirement Plans, Empower and/or your employer will soon provide additional information on your options for consideration. There are several important dates to be aware of as a participant in the NC 403(b) Program: June 30, 2022: Employer and employee contributions may continue through the pay period ending June 30, 2022. The Program will stop accepting employee and employer contributions after this pay period. September 30, 2022: Account balance transfers, rollovers or distributions should be complete by September 30, 2022. December 31, 2022: The Program has a final discontinuation date of December 31, 2022. How much time do I have to decide my next steps? The process of discontinuing the NC 403(b) Program will take place throughout 2022. Take time to understand the benefits offered through your employer and the options that are available to you. There are several important items to keep in mind: If you are currently contributing to your NC 403(b) Program account, you may continue to do so through the pay period ending June 30, 2022. Alternatively, you may change your payroll deductions to a new retirement savings account now, such as the NC 401(k) Plan or the NC 457 Plan (if applicable), or another plan offered by your employer. Neither you nor your employer will be able to contribute to your NC 403(b) Program account after the pay period ending June 30, 2022. Account balance transfers, rollovers or distributions should be complete by September 30, 2022. The NC 403(b) Program will officially be discontinued as of December 31, 2022. Your options and the deadline for moving your account balance from the NC 403(b) Program will depend on several factors, including your employment status, whether your employer continues or discontinues your 403(b) plan, the other investment options in your 403(b) plan (if any), and whether you have a distributable event. Can I still make contributions to my NC 403(b) Program account? Yes, you can continue to contribute to your NC 403(b) Program account through the pay period ending on June 30, 2022. The Program will stop accepting employee and employer contributions after the pay period ending June 30, 2022. Can I stop making contributions to my NC 403(b) Program account and direct my money somewhere else? Yes, you can elect to stop your current contributions to the NC 403(b) Program account and start making contributions to another eligible retirement savings account through your employer (like the NC 401(k) Plan or the NC 457 Plan). You also may be eligible to contribute to an Individual Retirement Account (IRA). When will my contributions stop going to my NC 403(b) Program account? The NC 403(b) Program will stop accepting employee and employer contributions after the pay period ending June 30, 2022. Can my employer still make employer contributions, if applicable, to my NC 403(b) Program account? Yes, your employer can still make contributions, if applicable, to your account through the pay period ending June 30, 2022. If I choose to start saving in a new plan offered by my employer, like the NC 401(k) Plan or the NC 457 Plan, will my employer make employer contributions, such as an employer match, to my new account? You will need to check with your employer about the benefits associated with your new account. What do I need to do before the NC 403(b) Program is discontinued? Take time to understand the benefits offered through your employer and the options that may be available to you. The options available to you are based on several factors including: Your age. Your employment status. Your employer’s decision to maintain or discontinue their 403(b) plan. The other investment options in your 403(b) plan (if any). Whether you have a distributable event. If your employer continues their 403(b) plan and you are NOT eligible for a distributable event, then: you will need to transfer your account balance to another investment provider offered through the 403(b) plan. If your employer elects to discontinue their 403(b) plan or you otherwise have a distributable event, you are eligible to take a lump sum distribution paid directly to you (taxes and penalties may apply) or roll over your account balance to an eligible retirement plan. Can I get assistance with what my options are? Yes. Empower’s Retirement Education Counselors (RECs) can meet with you to help you understand what options are available for you to move your money from the NC 403(b) Program. Click here to set up a meeting time with your REC. Customer Service Representatives are also available to discuss your options with you and answer any questions you may have. They can be contacted Monday through Friday, 8 a.m. to 9 p.m., Eastern Time at 1-866-NCPLANS. However, please keep in mind that neither the Department of State Treasurer nor Empower is in a position to provide financial or tax advice to participants, including advice on moving assets out of the NC 403(b) Program. Will I receive communications about this process and where will I find that information? Yes, the North Carolina Supplemental Retirement Plans and Empower will continue to inform employers and participants about the discontinuance of the NC 403(b) Program and actions that are required to move participants’ assets out of the Program’s investments. In addition to emails and communications, Empower will host a series of webinars beginning early 2022. This page will continue to be updated with new information as we move through 2022. There will also be opportunities for engagement with the Empower's Retirement Education Counselors (RECs). I am retired or no longer employed at the school district or community college that sponsored the 403(b) plan, but I have a NC 403(b) Program account. What are my next steps? As a retiree or former employee, you may qualify for a distribution or for a rollover to an eligible retirement plan, depending on the provisions of your former employer’s 403(b) plan. Taxes and penalties may apply. You can request a distribution or rollover from the NC 403(b) Program by going here online or calling Empower at 866-627-5267. I have an account in the NC 403(b) Program that I inherited as a beneficiary of a former participant. What are my next steps? Depending on the provisions of the 403(b) plan that participates in the NC 403(b) Program, you may qualify for a distribution or for a rollover to an eligible retirement plan. Taxes and penalties may apply. You can request a distribution or rollover from the NC 403(b) Program by going here online or calling Empower at 866-627-5267. I have an account in the NC 403(b) Program that I received from a former spouse in a domestic relations order. What are my next steps? Depending on the provisions of the 403(b) plan that participates in the NC 403(b) Program, you may qualify for a distribution or for a rollover to an eligible retirement plan. Taxes and penalties may apply to distributions. You can request a distribution or rollover from the NC 403(b) Program by going here online or calling Empower at 866-627-5267. Are there fees or penalties that will be assessed to my account with the discontinuation of the NC 403(b) Program? The NC 403(b) Program account fees will continue so long as there is an account balance. Taxes and possibly penalties may be assessed if you take a full or partial distribution that you do not roll over to an eligible retirement plan. For example, if you have not yet reached 59 ½ years of age, you may be subject to an early distribution penalty and taxes. My employer’s 403(b) plan has investment options other than those in the NC 403(b) Program, but they don’t fit my needs. What are my options? If your employer has other investment options in its 403(b) plan, you will be required to move your account balance to one of the other investment options unless you qualify for a distributable event. If your employer discontinues its 403(b) plan or you otherwise qualify for a distributable event, you may take a distribution of your account balance or roll it over to an eligible retirement plan (including the NC 401(k) Plan or NC 457 Plan, if eligible). Taxes and penalties may apply to distributions. In addition, if you are an active employee, you can open an account in the NC 401(k) Plan or the NC 457 Plan (if offered by your employer) and start making your contributions to that savings account. What will happen to my NC 403(b) account? The options available to you are based on several factors, including: Your age. Your employment status. Your employer’s decision to maintain or discontinue their 403(b) plan. The other investment options in your 403(b) plan (if any). Whether you have a distributable event. If your employer maintains their 403(b) plan and you are NOT eligible for a distributable event, then you will need to transfer your account balance to another investment provider offered through your employer’s 403(b) plan. If your employer elects to discontinue their 403(b) plan or you otherwise qualify for a distributable event, you are eligible to take a distribution of your account balance or roll it over to an eligible retirement plan (including the NC 401(k) Plan or NC 457 Plan, if eligible). Taxes and penalties may apply to distributions. If my employer discontinues their 403(b) plan, when will I be eligible to take a distribution from or roll over my account in the NC 403(b) Program? On or after the discontinuation date of your employer’s 403(b) plan, you will be eligible to take a distribution from or roll over your account in the NC 403(b) Program to an eligible retirement plan (including the NC 401(k) Plan or NC 457 Plan, if eligible). If your employer uses the plan document provided by the NC 403(b) Program, the discontinuation date will be set by the North Carolina Supplemental Retirement Board of Trustees. Otherwise, the discontinuation date will be set by your employer. However, the deadline for account balance transfers, rollovers or distributions out of the NC 403(b) Program is September 30, 2022. What happens if I have an outstanding loan? If you are moving your NC 403(b) Program account balance to another investment provider in your 403(b) plan or another eligible retirement plan (other than an Individual Retirement Account [IRA]), you should find out if the new investment provider or plan will accept a transfer of the loan. If not, then you will receive a distribution of the outstanding loan balance when your money is moved out of the NC 403(b) Program; a distribution is subject to taxes and possibly penalties. If you take a distribution of your NC 403(b) Program account balance or roll it over to an IRA, you will receive a distribution of the outstanding loan balance when your money is moved out of the NC 403(b) Program; a distribution is subject to taxes and possibly penalties. If you roll over your NC 403(b) Program account to the NC 401(k) or NC 457 Plan, you also may roll over your outstanding loan in the NC 403(b) Program, provided you do not already have an outstanding loan in the Plan you are rolling into. One way to avoid a distribution of your outstanding loan balance is to pay off your loan in full, if possible, before your account balance moves out of the NC 403(b) Program. Prior to paying off your loan, please contact Empower at 1-866-NCPLANS for the payoff amount. What happens if I do not roll over or pay off my loan by the distribution date? If you do not roll over or pay off your loan by your distribution date, the outstanding balance of your loan will default and will be treated as a distribution, which is subject to normal income taxes and possibly a 10% early withdrawal tax penalty if you are younger than 59½.The amount of the distributed loan will be reported on Tax Form 1099-R, which will be issued to you in January 2023. However, participants in 403(b) plans have the opportunity to roll over their defaulted and distributed loan amounts to an IRA or eligible retirement plan if the default and distribution were due solely to the termination of their 403(b) plan. So even if your 403(b) loan is distributed, you may have the opportunity to roll over the amount of your distribution. What is a “distributable event” in a 403(b) plan? A distributable event is an event which allows you to take a distribution from your 403(b) plan, including rolling over money from your 403(b) plan to an eligible retirement plan. Subject to the provisions of your 403(b) plan, a distributable event is usually one of the following: retirement, separation from service (including retirement), attainment of age 59 ½, or discontinuation of the 403(b) plan. Will my NC 403(b) Program account be subject to taxes and penalties when my balance is moved out of the Program? Please consult a tax advisor or attorney. Here are some general guidelines to consider. A distribution from a pre-tax account is generally subject to federal income tax. If you take a distribution prior to the age of 59½, you may be subject to a 10% penalty unless an exemption applies. A rollover to an eligible retirement plan is generally not subject to tax or penalty. What is an “eligible retirement plan” for the purpose of a rollover? An “eligible retirement plan” is a retirement plan at your current or former employer in which you have an account and to which you can roll over your NC 403(b) Program account without incurring taxes or penalties. Subject to applicable plan provisions and legal requirements, examples of eligible retirement plans generally include: North Carolina Supplemental Retirement Plans (NC 401(k) and NC 457 Plans) – Note: You must already have an account, or be an active employee eligible to open an account, in order to roll into the NC 401(k) Plan or NC 457 Plan. Traditional Individual Retirement Account (IRA) Roth IRA SEP-IRA SIMPLE IRA 401(k) plan Governmental 457 plan 403(b) plan Teachers’ and State Employees’ Retirement System (TSERS) Another governmental pension plan I’m getting ready to retire; what do I do? You will need to remove your money from the NC 403(b) Program no later than September 30, 2022. However, you may be eligible to roll over your account balance to the NC 401(k) Plan or NC 457 Plan if you already have an existing account in one of these plans. You also can roll over your account balance to an eligible retirement plan. Visit the Nearing Retirement page on the Supplemental Retirement Plans’ participant website for helpful information, including contact information for Empower's Retirement Education Counselors (RECs) and Retiree Advocates. However, please keep in mind that neither the Department of State Treasurer nor Empower is in a position to provide financial or tax advice to participants, including advice on moving assets out of the NC 403(b) Program. My 403(b) plan is being terminated. What happens if I do not select a distribution choice by September 26, 2022? If you do not select a distribution choice by September 26, 2022, your NC 403(B) Program account will be distributed as follows: If your account balance is $1,000 or less, then your account will be liquidated, and a check sent to you at the address on file with Empower. This distribution is subject normal income taxes and possibly a 10% early withdrawal tax penalty if you are younger than 59½. If your account balance is greater than $1,000, a Rollover IRA account will be set up on your behalf with Empower. The investment for the IRA will be in a government money market mutual fund with an annual net expense ratio of 0.63%2 of your account balance. You also will be charged an annual fee of $20 and a $25 fee for withdrawals. 2 You will receive more information from Empower about the Rollover IRA, including the IRA Custodial Agreement, when your account is opened.
NC 403(b) Program Participant FAQs The North Carolina Supplemental Retirement Board of Trustees (Board) has decided to discontinue the NC 403(b) Program, opting to focus on the larger and more popular NC 401(k) and NC 457 Plans. The Board voted unanimously December 2 at its regularly scheduled quarterly meeting to eliminate this option following an in-depth review of the Program. The NC 401(k) Plan, NC 457 Plan, and NC 403(b) Program are jointly administered by the Board and Department of State Treasurer. Click here to read the full press release. Participant Information Table NC 403(b) Participant Forms Why is the NC 403(b) Program being discontinued? The North Carolina Supplemental Retirement Board of Trustees (Board) decided to discontinue the NC 403(b) Program, opting to focus on the larger and more popular NC 401(k) and NC 457 Plans. The Board voted unanimously on December 2 at its regularly scheduled quarterly meeting to eliminate this option, following an in-depth review of the Program. While the Program offered competitive, low-cost investment options, enrollment in the Program lagged in the crowded 403(b) marketplace. What does it mean that the NC 403(b) Program is being discontinued? The NC 403(b) Program will cease to be an investment option in your 403(b) plan. Your account balance in the NC 403(b) Program will: be distributed to you or moved to another investment provider in your 403(b) plan or transferred or rolled over to another eligible retirement plan. Your options and the deadline for moving your account balance from the NC 403(b) Program will depend on several factors, including whether your employer continues or discontinues your 403(b) plan, the other investment options in your 403(b) plan (if any), and whether you have a distributable event. However, all assets should be removed from the NC 403(b) Program by September 30, 2022. When will the NC 403(b) Program be discontinued? How long is the discontinuation process? The process of discontinuing, or winding down, the NC 403(b) Program involves a series of actions that will take place throughout 2022. If you are an active employee contributing to the NC 403(b) Program, you will still be able to make contributions to your account through the pay period ending June 30, 2022. Your options and the deadline for moving your account balance from the NC 403(b) Program will depend on several factors, including your employment status, whether your employer continues or discontinues offering 403(b) options, the other investment options in your 403(b) plan (if any), and whether you have a distributable event. However, all assets should be removed from the NC 403(b) Program by September 30, 2022. The North Carolina Supplemental Retirement Plans, Empower and/or your employer will soon provide additional information on your options for consideration. There are several important dates to be aware of as a participant in the NC 403(b) Program: June 30, 2022: Employer and employee contributions may continue through the pay period ending June 30, 2022. The Program will stop accepting employee and employer contributions after this pay period. September 30, 2022: Account balance transfers, rollovers or distributions should be complete by September 30, 2022. December 31, 2022: The Program has a final discontinuation date of December 31, 2022. How much time do I have to decide my next steps? The process of discontinuing the NC 403(b) Program will take place throughout 2022. Take time to understand the benefits offered through your employer and the options that are available to you. There are several important items to keep in mind: If you are currently contributing to your NC 403(b) Program account, you may continue to do so through the pay period ending June 30, 2022. Alternatively, you may change your payroll deductions to a new retirement savings account now, such as the NC 401(k) Plan or the NC 457 Plan (if applicable), or another plan offered by your employer. Neither you nor your employer will be able to contribute to your NC 403(b) Program account after the pay period ending June 30, 2022. Account balance transfers, rollovers or distributions should be complete by September 30, 2022. The NC 403(b) Program will officially be discontinued as of December 31, 2022. Your options and the deadline for moving your account balance from the NC 403(b) Program will depend on several factors, including your employment status, whether your employer continues or discontinues your 403(b) plan, the other investment options in your 403(b) plan (if any), and whether you have a distributable event. Can I still make contributions to my NC 403(b) Program account? Yes, you can continue to contribute to your NC 403(b) Program account through the pay period ending on June 30, 2022. The Program will stop accepting employee and employer contributions after the pay period ending June 30, 2022. Can I stop making contributions to my NC 403(b) Program account and direct my money somewhere else? Yes, you can elect to stop your current contributions to the NC 403(b) Program account and start making contributions to another eligible retirement savings account through your employer (like the NC 401(k) Plan or the NC 457 Plan). You also may be eligible to contribute to an Individual Retirement Account (IRA). When will my contributions stop going to my NC 403(b) Program account? The NC 403(b) Program will stop accepting employee and employer contributions after the pay period ending June 30, 2022. Can my employer still make employer contributions, if applicable, to my NC 403(b) Program account? Yes, your employer can still make contributions, if applicable, to your account through the pay period ending June 30, 2022. If I choose to start saving in a new plan offered by my employer, like the NC 401(k) Plan or the NC 457 Plan, will my employer make employer contributions, such as an employer match, to my new account? You will need to check with your employer about the benefits associated with your new account. What do I need to do before the NC 403(b) Program is discontinued? Take time to understand the benefits offered through your employer and the options that may be available to you. The options available to you are based on several factors including: Your age. Your employment status. Your employer’s decision to maintain or discontinue their 403(b) plan. The other investment options in your 403(b) plan (if any). Whether you have a distributable event. If your employer continues their 403(b) plan and you are NOT eligible for a distributable event, then: you will need to transfer your account balance to another investment provider offered through the 403(b) plan. If your employer elects to discontinue their 403(b) plan or you otherwise have a distributable event, you are eligible to take a lump sum distribution paid directly to you (taxes and penalties may apply) or roll over your account balance to an eligible retirement plan. Can I get assistance with what my options are? Yes. Empower’s Retirement Education Counselors (RECs) can meet with you to help you understand what options are available for you to move your money from the NC 403(b) Program. Click here to set up a meeting time with your REC. Customer Service Representatives are also available to discuss your options with you and answer any questions you may have. They can be contacted Monday through Friday, 8 a.m. to 9 p.m., Eastern Time at 1-866-NCPLANS. However, please keep in mind that neither the Department of State Treasurer nor Empower is in a position to provide financial or tax advice to participants, including advice on moving assets out of the NC 403(b) Program. Will I receive communications about this process and where will I find that information? Yes, the North Carolina Supplemental Retirement Plans and Empower will continue to inform employers and participants about the discontinuance of the NC 403(b) Program and actions that are required to move participants’ assets out of the Program’s investments. In addition to emails and communications, Empower will host a series of webinars beginning early 2022. This page will continue to be updated with new information as we move through 2022. There will also be opportunities for engagement with the Empower's Retirement Education Counselors (RECs). I am retired or no longer employed at the school district or community college that sponsored the 403(b) plan, but I have a NC 403(b) Program account. What are my next steps? As a retiree or former employee, you may qualify for a distribution or for a rollover to an eligible retirement plan, depending on the provisions of your former employer’s 403(b) plan. Taxes and penalties may apply. You can request a distribution or rollover from the NC 403(b) Program by going here online or calling Empower at 866-627-5267. I have an account in the NC 403(b) Program that I inherited as a beneficiary of a former participant. What are my next steps? Depending on the provisions of the 403(b) plan that participates in the NC 403(b) Program, you may qualify for a distribution or for a rollover to an eligible retirement plan. Taxes and penalties may apply. You can request a distribution or rollover from the NC 403(b) Program by going here online or calling Empower at 866-627-5267. I have an account in the NC 403(b) Program that I received from a former spouse in a domestic relations order. What are my next steps? Depending on the provisions of the 403(b) plan that participates in the NC 403(b) Program, you may qualify for a distribution or for a rollover to an eligible retirement plan. Taxes and penalties may apply to distributions. You can request a distribution or rollover from the NC 403(b) Program by going here online or calling Empower at 866-627-5267. Are there fees or penalties that will be assessed to my account with the discontinuation of the NC 403(b) Program? The NC 403(b) Program account fees will continue so long as there is an account balance. Taxes and possibly penalties may be assessed if you take a full or partial distribution that you do not roll over to an eligible retirement plan. For example, if you have not yet reached 59 ½ years of age, you may be subject to an early distribution penalty and taxes. My employer’s 403(b) plan has investment options other than those in the NC 403(b) Program, but they don’t fit my needs. What are my options? If your employer has other investment options in its 403(b) plan, you will be required to move your account balance to one of the other investment options unless you qualify for a distributable event. If your employer discontinues its 403(b) plan or you otherwise qualify for a distributable event, you may take a distribution of your account balance or roll it over to an eligible retirement plan (including the NC 401(k) Plan or NC 457 Plan, if eligible). Taxes and penalties may apply to distributions. In addition, if you are an active employee, you can open an account in the NC 401(k) Plan or the NC 457 Plan (if offered by your employer) and start making your contributions to that savings account. What will happen to my NC 403(b) account? The options available to you are based on several factors, including: Your age. Your employment status. Your employer’s decision to maintain or discontinue their 403(b) plan. The other investment options in your 403(b) plan (if any). Whether you have a distributable event. If your employer maintains their 403(b) plan and you are NOT eligible for a distributable event, then you will need to transfer your account balance to another investment provider offered through your employer’s 403(b) plan. If your employer elects to discontinue their 403(b) plan or you otherwise qualify for a distributable event, you are eligible to take a distribution of your account balance or roll it over to an eligible retirement plan (including the NC 401(k) Plan or NC 457 Plan, if eligible). Taxes and penalties may apply to distributions. If my employer discontinues their 403(b) plan, when will I be eligible to take a distribution from or roll over my account in the NC 403(b) Program? On or after the discontinuation date of your employer’s 403(b) plan, you will be eligible to take a distribution from or roll over your account in the NC 403(b) Program to an eligible retirement plan (including the NC 401(k) Plan or NC 457 Plan, if eligible). If your employer uses the plan document provided by the NC 403(b) Program, the discontinuation date will be set by the North Carolina Supplemental Retirement Board of Trustees. Otherwise, the discontinuation date will be set by your employer. However, the deadline for account balance transfers, rollovers or distributions out of the NC 403(b) Program is September 30, 2022. What happens if I have an outstanding loan? If you are moving your NC 403(b) Program account balance to another investment provider in your 403(b) plan or another eligible retirement plan (other than an Individual Retirement Account [IRA]), you should find out if the new investment provider or plan will accept a transfer of the loan. If not, then you will receive a distribution of the outstanding loan balance when your money is moved out of the NC 403(b) Program; a distribution is subject to taxes and possibly penalties. If you take a distribution of your NC 403(b) Program account balance or roll it over to an IRA, you will receive a distribution of the outstanding loan balance when your money is moved out of the NC 403(b) Program; a distribution is subject to taxes and possibly penalties. If you roll over your NC 403(b) Program account to the NC 401(k) or NC 457 Plan, you also may roll over your outstanding loan in the NC 403(b) Program, provided you do not already have an outstanding loan in the Plan you are rolling into. One way to avoid a distribution of your outstanding loan balance is to pay off your loan in full, if possible, before your account balance moves out of the NC 403(b) Program. Prior to paying off your loan, please contact Empower at 1-866-NCPLANS for the payoff amount. What happens if I do not roll over or pay off my loan by the distribution date? If you do not roll over or pay off your loan by your distribution date, the outstanding balance of your loan will default and will be treated as a distribution, which is subject to normal income taxes and possibly a 10% early withdrawal tax penalty if you are younger than 59½.The amount of the distributed loan will be reported on Tax Form 1099-R, which will be issued to you in January 2023. However, participants in 403(b) plans have the opportunity to roll over their defaulted and distributed loan amounts to an IRA or eligible retirement plan if the default and distribution were due solely to the termination of their 403(b) plan. So even if your 403(b) loan is distributed, you may have the opportunity to roll over the amount of your distribution. What is a “distributable event” in a 403(b) plan? A distributable event is an event which allows you to take a distribution from your 403(b) plan, including rolling over money from your 403(b) plan to an eligible retirement plan. Subject to the provisions of your 403(b) plan, a distributable event is usually one of the following: retirement, separation from service (including retirement), attainment of age 59 ½, or discontinuation of the 403(b) plan. Will my NC 403(b) Program account be subject to taxes and penalties when my balance is moved out of the Program? Please consult a tax advisor or attorney. Here are some general guidelines to consider. A distribution from a pre-tax account is generally subject to federal income tax. If you take a distribution prior to the age of 59½, you may be subject to a 10% penalty unless an exemption applies. A rollover to an eligible retirement plan is generally not subject to tax or penalty. What is an “eligible retirement plan” for the purpose of a rollover? An “eligible retirement plan” is a retirement plan at your current or former employer in which you have an account and to which you can roll over your NC 403(b) Program account without incurring taxes or penalties. Subject to applicable plan provisions and legal requirements, examples of eligible retirement plans generally include: North Carolina Supplemental Retirement Plans (NC 401(k) and NC 457 Plans) – Note: You must already have an account, or be an active employee eligible to open an account, in order to roll into the NC 401(k) Plan or NC 457 Plan. Traditional Individual Retirement Account (IRA) Roth IRA SEP-IRA SIMPLE IRA 401(k) plan Governmental 457 plan 403(b) plan Teachers’ and State Employees’ Retirement System (TSERS) Another governmental pension plan I’m getting ready to retire; what do I do? You will need to remove your money from the NC 403(b) Program no later than September 30, 2022. However, you may be eligible to roll over your account balance to the NC 401(k) Plan or NC 457 Plan if you already have an existing account in one of these plans. You also can roll over your account balance to an eligible retirement plan. Visit the Nearing Retirement page on the Supplemental Retirement Plans’ participant website for helpful information, including contact information for Empower's Retirement Education Counselors (RECs) and Retiree Advocates. However, please keep in mind that neither the Department of State Treasurer nor Empower is in a position to provide financial or tax advice to participants, including advice on moving assets out of the NC 403(b) Program. My 403(b) plan is being terminated. What happens if I do not select a distribution choice by September 26, 2022? If you do not select a distribution choice by September 26, 2022, your NC 403(B) Program account will be distributed as follows: If your account balance is $1,000 or less, then your account will be liquidated, and a check sent to you at the address on file with Empower. This distribution is subject normal income taxes and possibly a 10% early withdrawal tax penalty if you are younger than 59½. If your account balance is greater than $1,000, a Rollover IRA account will be set up on your behalf with Empower. The investment for the IRA will be in a government money market mutual fund with an annual net expense ratio of 0.63%2 of your account balance. You also will be charged an annual fee of $20 and a $25 fee for withdrawals. 2 You will receive more information from Empower about the Rollover IRA, including the IRA Custodial Agreement, when your account is opened.
