Blue Line 457 Plan FAQ
General Info
- What is the Blue Line 457 Plan?
The Blue Line 457 Plan is a union-sponsored deferred compensation program provided exclusively to Fraternal Order of Police members. The FOP has chosen to partner with ICMA-RC to provide this program to members. Deferred compensation is a program that allows you to invest today for your retirement. Federal and (in most cases) state income taxes are deferred until your assets are withdrawn, usually during retirement when you may be in a lower tax bracket.
- What are the benefits of investing in the Blue Line 457 Plan?
Participating in the Blue Line 457 Plan offers many benefits including:
- You reduce your current income taxes while investing for retirement.
- Your earnings accumulate tax-deferred.
- You can dollar cost average through convenient payroll deductions.*
- You may be allowed to make additional “catch-up” contributions if you are 50 (or older) or within three years of your normal retirement age and already contributing the maximum to your plan,
- It’s portable. If you change jobs, you can consolidate your savings in another public sector employer’s 457 plan, a qualified 401 plan, a tax-sheltered 403(b) annuity plan, or a Traditional IRA.
- If you retire or leave service early, there is no penalty for withdrawals.
- Supplemental investments are helpful in states and communities where no contribution is made to Social Security.
*Dollar cost averaging does not assure profit or protect against loss in a declining market. Since dollar cost averaging involves continuous investing, regardless of fluctuating prices, investors must consider financial ability to continue to invest during low price levels.
- Who is eligible to participate in the Blue Line 457 Plan?
All active Fraternal Order of Police members currently employed by and providing service to state or local government entities are eligible to participate in the Blue Line 457 Plan if their Lodge and employer have agreed to offer the program. Unfortunately, FOP members providing service for the Federal Government are not eligible to participate.
- Does this program require mandatory participation?
No. Participation in the program is entirely voluntary.
- Do I only have one chance to sign up for the plan?
No. Once the plan has been implemented by your Lodge and established by your employer, you may enroll in the plan at any time.
- What services can I expect from ICMA-RC?
The Blue Line 457 Plan is an FOP-sponsored 457 plan designed specifically for public safety employees. Some of the additional advantages of participation are:
- Dedicated Web site at www.BlueLine457.org
- 24-hour access to account information via toll-free telephone and the Internet
- Ability to transfer assets and allocate future contributions over the phone and the internet
- Ability to receive statements and transaction confirmations over the Internet
- Competitive and fully disclosed fees*
- Free fund-to-fund transfers among investment options**
- Personalized service, including assistance in enrollment and retirement planning
- Quarterly combined account statements and performance summaries
- Quarterly newsletter
- Nationally recognized education materials including the Charting Your Course series, comprehensive retirement planning guides:
*Administrative management and fund expenses may apply. Consult the current prospectus and Making Sound Investment Decisions: A Retirement Investment Guide for complete details or call ICMA-RC at 1-866-747-NFOP (747-6367).
**Some funds impose redemption fees and transfer restrictions on frequent transfers. Consult the current prospectus and Making Sound Investment Decisions: A Retirement Investment Guide for complete details or call ICMA-RC at 1-866-747-NFOP (747-6367).
- Whom should I contact with questions regarding the Blue Line 457 Plan?
Please contact ICMA-RC at 1-866-747-NFOP (747-6367) for more information about the Blue Line 457 Plan.
Contributions
- How much may I contribute to the Blue Line 457?
You may defer each year a maximum of 100% of your "gross compensation"* or an annual dollar limit, whichever is less. The dollar limits are:
| Year | Contribution Limit |
|---|
| 2006 | $15,000 |
| 2007 | $15,500 |
*Your gross compensation must first be reduced by any mandatory pre-tax ("picked-up") employee 401 plan contributions.
- Can I make “Catch-Up” contributions?
Yes, the Blue Line 457 Plan offers two “Catch-Up” provisions allowing you to contribute greater that the normal annual maximum contribution amount.
The “Age 50 Catch-Up Provision” allows you to contribute an additional annual amount when you reach age 50 or older. This additional contribution is not dependent on your prior year’s deferrals to any 457 deferred compensation account with your existing employer. The “Age 50 Catch-Up” limits are
| Year | Additional Age 50 Contributions |
|---|
| 2006 | $5,000 |
| 2007 | $5,000 |
The “Normal Catch-Up Provision” allows you to make up for eligible contributions not deferred to an existing 457 plan with your current employer in prior years, permitting up to double the normal maximum annual contribution in effect for that year.
- Can I contribute accumulated vacation and sick leave?
The Blue Line 457 Plan allows for the deferral of accumulated vacation pay, sick pay, and back pay (“accumulated pay”), if these deferrals are made with 2½ months of your separation from service. Any accumulated pay deferred to the plan is counted towards the contribution maximum in effect for that year.
- Can I stop or change my contribution amount?
The Blue Line 457 Plan allows members to increase, decrease, stop and restart contributions as often as they wish, without fees or penalties, subject to employer approval.
- Can members transfer an existing 457 Plan Account with their employer to the Blue Line 457 Plan?
Yes. To transfer an existing 457 plan account to the Blue Line 457 Plan, please complete the Blue Line 457 Plan Request For Account Transfer Form. This form is available as part of the Member Enrollment Kit, or can be obtained by calling ICMA-RC at 1-866-747-NFOP (747-6367).
Investments
- How are plan contributions invested?
Through the Blue Line 457 Plan, you are able to invest in a full range of investment options including actively managed funds, index funds, target-date funds and risk-based funds. You may specify your investment allocation at the time of enrollment. If no allocation information is provided on the enrollment form, contributions will be invested in the VantageTrust PLUS Fund. The VantageTrust PLUS Fund (the “PLUS Fund”) is a stable value fund that invests in investment contracts issued by financial institutions.
You may change your investment allocation or transfer your existing Blue Line 457 Plan assets between available investment options at any time by accessing your account online at www.Blueline457.org or by calling ICMA-RC at 1-866-747-NFOP (747-6367).
- What are the fees, minimum investments, and/or restrictions?
ICMA-RC prides itself on its competitive fee structure and publishes all fees in the Vantagepoint Funds prospectus and Making Sound Investment Decisions: A Retirement Investment Guide. All funds offered through ICMA-RC are no-load** and have no minimum investment required.
You may generally transfer your assets between funds without restriction. However, some funds may limit your ability to conduct frequent transfers to protect the interest of long-term investors.
**Other fees may apply, please consult Making Sound Investment Decisions: A Retirement Investment Guide and the current prospectus.
Withdrawals
- When can I withdraw funds from the Blue Line 457 Plan?
You are eligible to withdraw funds from the Blue Line 457 Plan under the following circumstances:
- Following separation from service with your employer
- For the purchase of prior service credits from a defined benefit plan
- After you reach the age of 70 ½
- In-service withdrawals of rollover assets (funds transferred into the Blue Line 457 Plan from a previous employer’s retirement plan or Traditional IRA)
- Unforeseeable emergency circumstances
- Small Balance Withdrawals - available if the balance of the account is under $5,000 and no contributions have been made to the account for two years
- May I withdraw money in case of an unforeseeable emergency?
The Blue Line 457 Plan is intended to help you put aside money for retirement. However, emergencies do occur. If you experience an immediate financial need created by an unforeseeable emergency and you lack other reasonably available resources to meet that need, you may be eligible to receive an emergency withdrawal from your account. For an emergency withdrawal to comply with the Internal Revenue Code, it must satisfy all of the following:
- Financial hardship must be severe and beyond your control.
- Funds in your Blue Line 457 plan account must represent a last resort.
- Emergency circumstances must be sudden and unexpected.
- In the event of sudden illness, financial hardship must result from events affecting you or a dependent that can be claimed on your tax return.
- What is the tax treatment of withdrawals from my Blue Line 457 account?
Blue Line 457 Plan assets that remain in the plan until paid are never subject to an early withdrawal penalty tax. The assets will be taxable as income in the year in which they are withdrawn, and withholding may be applied. Please review the Special Tax Notice Regarding Plan Payments for additional tax information pertaining to distributions.
Beneficiary Information
- Whom can I name as beneficiary to my account?
You may designate one or more primary beneficiaries, with any proceeds divided among those named. Beneficiaries may be individuals, institutions, trusts or estates (if a trust is named, it must be an irrevocable trust in order to be valid). You may also name contingent beneficiaries, who would receive the proceeds of the account in the event that you are not survived by any of the named primary beneficiaries.
- What happens in the event of my death?
In the event of your death, your beneficiary can take withdrawals under any schedule, as long as the time period is no longer than his/her life expectancy. Your beneficiary may choose a shorter time frame. In most cases, these payments must begin by December 31 of the year following the year of your death. If your beneficiary is your spouse, he or she may be able to postpone the beginning date, and may be able to roll the money into another retirement plan or Traditional IRA, including an ICMA-RC Vantagepoint IRA.
Lodges
- How does the Lodge establish a Blue Line 457 Plan for members?
ICMA-RC will provide you with a Lodge Implementation Package containing the information you will need in order to implement the Blue Line 457 Plan for your members.
After reviewing the Lodge Implementation Package and completing the Lodge Implementation Data Form, you should work with ICMA-RC to identify employers of your members who are interested in adopting the plan. Once an eligible employer has been identified, ICMA-RC will send you an Administrative Services Agreement (ASA) for the employer that you will need to sign and return to ICMA-RC. The signed ASA will then be included in an Employer Implementation Package sent to the employer.
As soon as the employer has returned all of the necessary implementation documents, your Blue Line 457 Plan will be created. At that point, your members who are employed by the employer who adopted the plan will be eligible to enroll and begin participation in the plan.
If you would like to obtain a Lodge Implementation Package, or if you have any questions regarding the adoption process, please call ICMA-RC at 1-866-747-NFOP (747-6367).
- Who performs contribution processing for the Blue Line 457 Plan?
Your members’ employer(s) will perform contribution processing for the Plan through EZLink, a fully automated Internet-based administration system.
Employers
- What is the Employer's role in the Blue Line 457 Plan?
The Internal Revenue Service ("IRS") issued guidance in 2004 permitting unions to offer 457 plans to their members who are employed by state and local governmental entities. That guidance, Revenue Ruling 2004-57, held that a union-created deferred compensation plan does not fail to be an eligible governmental plan under Section 457(b) of the Code merely because the plan is offered and administered by a union.
The Blue Line 457 Plan is a union-sponsored deferred compensation program provided exclusively to Fraternal Order of Police members employed by state and local governmental entities.
Under the Blue Line 457 Plan:
- Employers must formally adopt the plan;
- Non-FOP member employees may not participate in the plan;
- With the exception of employee enrollment and approval of emergencey withdrawals and Quaified Domestic Relations Order requests, which will be done by ICMA-RC, employers are respsonsible for the adminsitration of the plan but ICMA-RC provides the employer with full support;
- Employers are required to submit contribution detail information through EZLink, a fully automated Internet-based adminsitration sytem that requires only a few easy steps to provide the required data;
- Contributions must be aggregated and treated as made under a single plan for purposes of the Code section 457 maximum contribution limits along with contributions an emplyee makes to any other 457(b) plan sponsored by the employer;
- The normal retirement age for purposes of the “last-three years” catch-up contribution must be the same under both the Blue Line Plan and any other 457(b) plans offered by the same employer.
- How are contributions processed?
Employers perform contribution processing for the Plan through EZLink, a fully automated Internet-based administration system. The Blue Line 457 EZLink Access Form that employer’s need to complete to establish the contribution processing for the plan is contained within the Employer Implementation Package (provided to employers by ICMA-RC after a local FOP Lodge adopts the plan).
- Are assets in the Blue Line 457 Plan subject to creditors?
No. Blue Line 457 Plan assets are held in trust for the exclusive benefit of plan participants or their beneficaries.
National Fraternal Order of Police
General Info