Edited by LM 4/12/22 Not Apprvd
Supplemental Annuity Plan
Eligible employees can have a portion of their income matched by their employer before taxes for a future date.
Effective as of January 1,
The Alaska Supplemental Annuity Plan (SBS-AP) is a defined contribution plan governed by Section 401(a) of the Internal Revenue Code . The Alaska Statutes related to the SBS-AP plan are under AS 39.30, Article 4; AS 39.30.150 - 180 . Regulations are 02 AAC 37.125 - 190 . A portion of your wages and a matching employer contribution are made pre-tax to this Plan instead of contributions to Social Security. These contributions, plus any change in value (interest, gains and losses), are payable to you or your beneficiary at a future date.
Employees of the State of Alaska and 23 political subdivisions that have elected to be in the plan are eligible. If you work for an eligible employer, your employment status will determine whether you are required to contribute to this plan. Although the SBS-AP is a supplemental plan, all eligible employees are automatically enrolled in the SBS-AP plan on the date of their hiring.
KeyTalk Automated Functions
- Current account balance
- Current interest rates
- Current unit values or share prices
- Current account balance by fund
- Current fund allocation
- Recent transaction history
- Change investment fund allocation
- Transfer among investment funds
- Rebalance portfolio
- Change a PIN
- Order a copy of existing PIN
There are no front-end loads for investment. Expenses are charged to your account in order to cover the cost of administration of the Plan. There are two types of fees: a monthly fee, based on a 0.11% annual rate on assets (0.0011 / 12 x month-end asset balance), plus a fixed fee (charged annually) of $35 for actively contributing participants, or $25 for non-contributing members. The plan may also charge fees for using specific plan features.
In addition, the funds have annual investment expenses that vary depending on the funds you choose. The returns are net of these costs. For more detailed information, please read the corresponding Investment Option Detail Sheet available on the Empower Retirement Services website.
If you are an employee of the state or one of the 20 political subdivisions that have elected to be in the Plan, your employment status will determine whether you are required to contribute to this Plan. Your SBS-AP account is credited with a gross contribution that consists of a reduction to your wages of 6.13% and a matching employer contribution of 6.13%. The total contribution is 12.26% of your payroll up to the current Social Security maximum wage base. This wage base changes yearly. Your personnel department or Plan representative can tell you the current wage base in effect.
You’ll receive a comprehensive statement of your account each quarter. If you prefer to receive your statements electronically, you can sign up to use the Online File Cabinet® for your account at the Empower Retirement Services website.
The amount of taxes you pay, and when you pay them, is determined by whether you take payment directly or make a rollover to a traditional IRA or other qualified plan. Your payment will be taxed in the current year unless you roll it over. However, if you receive a lump-sum payment before age 59½, you also may have to pay an additional 10% tax penalty. Direct transfers to Roth IRAs are reported as taxable income but are not subject to the additional 10% tax penalty.
SBS-AP is a participant-directed Plan. This means that you choose from the investment options offered by the Plan. The providers of these investment options are selected by the Alaska Retirement Management Board. Investment options are described in detail in the Plan Information Booklet and in the individual Fund Overviews, which are available on the Empower Retirement Services website by selecting "Investment information" under the "Investing" menu.
Initially, your contributions made to the SBS-AP account are automatically invested in one of the Alaska Target Retirement Trust or Alaska Balanced Trust funds based on your year of birth. This is the default option. You can move all or a portion of your existing balances among existing fund options and allocation changes for future contributions once a day. This is the default option. You can move all or a portion of your existing balances among investment options and change how your contributions are invested. You may transfer among existing fund options and make changes to the allocation of your future contributions once a day. There is no extra charge for daily changes. Funds may impose redemption fees, and/or transfer restrictions, on certain transfers, redemptions or exchanges if assets are held for less than the period stated in the fund’s prospectus or other disclosure documents. For more information visit the Empower Retirement System website or call Empower's KeyTalk toll-free. Until you change how your future contributions are allocated, your money will continue to be invested the intial trust fund. Changes may be made through Empower's website, by telephone via KeyTalk, through a client service representative, or in writing.
Existing Investment Funds
The Plan provides for twenty-seven investment alternatives. Carefully consider the investment objectives, risks, fees and expenses before investing. Contact Empower Retirement for a prospectus, a summary prospectus and disclosure document, as available, containing this information. Read them carefully before investing.
- U.S. Real Estate Investment Trust Index Fund
- U.S. Small-Cap Trust Fund
- International Equity Fund
- World Equity Ex-US Index Fund
- Allianz/RCM Socially Responsible Investment Fund
- Russell 3000 Index Fund
- S&P 500® Index Fund
- Alaska Target Retirement 2065 Trust
- Alaska Target Retirement 2060 Trust
- Alaska Target Retirement 2055 Trust
- Alaska Target Retirement 2050 Trust
- Alaska Target Retirement 2045 Trust
- Alaska Target Retirement 2040 Trust
- Alaska Target Retirement 2035 Trust
- Alaska Target Retirement 2030 Trust
- Alaska Target Retirement 2025 Trust
- Alaska Target Retirement 2020 Trust
- Alaska Target Retirement 2015 Trust
- Alaska Target Retirement 2010 Trust
- Alaska Long-Term Balanced Trust
- Alaska Balanced Trust
- World Government Bond Ex-US Index Fund
- Long US Treasury Bond Index Fund
- Government/Credit Bond Index Fund
- US Treasury Inflation Protected Securities Index Fund
- Intermediate Bond Fund
- Interest Income Fund
- State Street Treasury Money Market Fund - Inst.
A layoff separation is considered a termination of employment by the Supplemental Annuity Plan (SBS-AP) and allows you to withdraw your accounts once you have been separated from employment for 60 days. You are not required to remove your funds simply because you have separated. You may leave your contributions in the plan and continue your retirement savings in order to meet your goals for the future. Experts say most people will live on retirement benefits longer than they worked to earn them.
If you are planning on reinvesting your money, please be sure to compare the fees for the services you will receive. The SBS-AP management and administrative fees are very low compared to the private sector.
If you must withdraw your SBS-AP funds, you will need to consider the following:
- You may elect to maintain your account, rollover all or a portion of your account to another qualified plan or elect one of the plan's payment options, which include full or partial lump sum withdrawl, periodic payments, and annuities.
- SBS-AP funds are taxable income as you receive them and the plan is required to withhold 20% for federal income tax. You may want to choose a method of payment that spreads your account balance across tax years. There is also a potential 10% tax penalty for early withdrawal prior to age 59 ½.
- You must wait 60 days from your separation date before you can access your funds. If you reemploy with an SBS-AP employer before the 60-day period is up you will not be able to access your funds.
Funds may be withdrawn at any age in the event of:
- Leaving State employment (including retirement)
- Death (after which your beneficiaries will take the withdrawal)
You are not eligible to receive payment from your account until 60 days after you have been terminated from employment. If you are re-hired before the 60-day period has passed, the withdrawal request will be canceled and a new 60-day period will begin at the next termination. Actual payment mailing occurs after you have been terminated 60 days and the Plan administrator approves your distribution. The only exception to payment eligibility earlier than 60 days after termination is for a qualified hardship. In the event of your death, funds will be available to your beneficiary. Your money remains invested until your account balance is zero.
Withdrawals are made directly to you or your beneficiary or to another qualified plan on your behalf at your direction. There are only three recognized exceptions that would allow your account to be paid directly to another person or agency other than yourself. They are:
- An IRS Lien for unpaid taxes
- A Qualified Domestic Relations Order (QDRO) issued by a court of law
- An Order to Withhold and Deliver Property issued by the Child Support Services Division (CSSD)
When you terminate employment and have an opportunity to withdraw your funds, please consider the following:
- SBS-AP funds are taxable income as you receive them. You may want to choose a method of payment that spreads your account balance across tax years.
- Consider your future needs before cashing out your SBS-AP nest egg, particularly your future retirement years. Experts say most people will live on retirement benefits longer than they worked to earn them. Using SBS-AP as part of your future retirement income will reduce your risk of outliving your money.
- Alaska Supplemental Annuity Plan and management fees are very low compared to the private sector. If you are planning on reinvesting your money, be sure to compare the fees for the services you will receive from a private provider versus the fees you pay for investment advice from the plan if you leave your money in the plan.
The actual dollar amount you will receive depends on such factors as the amount of your contributions, how your investments performed, the payment option you select and your life expectancy. When you terminate, your account value may be applied to the payment option(s) you choose. These options include:
A single payment of your account balance, or partial distribution of a portion of it.
Five-Year Period Certain Annuity
Equal monthly payments for five years (60 months). If you die before receiving all 60 payments, your beneficiary will receive the remaining benefit payments.
Ten-Year Period Certain Annuity
Similar to the five-year period certain but for ten years (120 months).
Fifteen-Year Period Certain Annuity
Similar to the five-year period certain but for fifteen years (180 months).
Single Life Annuity
Monthly payments for your lifetime. No payments are made to your beneficiary after your death.
Single Life Annuity with Ten-Year Period Certain
Monthly payments for the rest of your life. If you die before 120 payments have been made, your beneficiary will receive the remaining benefit payments.
Single Life Annuity with Fifteen-Year Period Certain
Monthly payments for the rest of your life. If you die before 180 payments have been made, your beneficiary will receive the remaining benefit payments.
50% Joint and Survivor Annuity
Monthly payments for your lifetime. After your death, your survivor will receive one-half of the monthly amount you were receiving for his/her lifetime. Your survivor does not have to be your spouse.
100% Joint and Survivor Annuity
Similar to the 50% Joint and Survivor but, after your death, your survivor would receive the same benefit amount you were receiving for his/her lifetime. Your survivor does not have to be your spouse.
A payout method that allows you to be paid by either selecting a specific dollar amount or the number of years over which your account will be paid to you, or by selecting IRC Minimum Distribution payments (you may choose the frequency of your payments as (monthly, quarterly, semiannually or annually). You can make changes to the payment frequency or amount, or stop it.
How to Elect a Form of Payment
Payments are authorized 60 days after termination of employment (for any reason). You should allow for a minimum of five business days after payment is authorized before you will receive your distribution.
To begin receiving payment you must meet the requirements stated above. Next, you must submit the Distribution/Direct Rollover Request form to Empower Retirement for payment. You should complete all sections of the form that apply to you. Each section serves a specific purpose and helps to determine if all requirements for payment have been met. Payments will not be issued without receipt of the required payment form.
The date of payment depends on when the Distribution/Direct Rollover Request form is received, and your termination date. Assuming the 60 day waiting period has been met, payment can be made within five business days of receipt of the completed form by Empower Retirement.
If you have been involved in a divorce, dissolution, or legal separation, you must submit proof of these circumstances before you can receive payment of your account. You must provide a court-certified copy of the appropriate divorce, dissolution, or QDRO. Because of the very detailed and specialized nature of this type of situation, you should contact the Division of Retirement and Benefits at the earliest possible time so that you know what specific information we need.
You should be aware that making any false or fraudulent statement for the purpose of obtaining benefits or to avoid making payments due to others is a criminal offense punishable by law. Depending on the payout option you select, you may be required to provide proof of birth date for yourself as well as your designated survivor. A birth certificate or a driver’s license is considered acceptable forms of proof of birth date.
If you are terminated from employment and not subject to the IRS Required Minimum Distribution rule and do not desire to be paid currently, you do not need to submit a Distribution/Direct Rollover Request form until the time you wish to be paid or reach the required distribution age.
There are strict provisions for hardship withdrawals. Only the following reasons are valid to obtain an early eligibility for payment of an account (you MUST be terminated in any case):
- medical care described in Code §213(d) incurred by the Participant, by the Participant’s spouse, or by any of the Participant’s dependents, or necessary to obtain such medical care;
- the purchase (excluding mortgage payments) of a principal residence for the Participant;
- the payment of post-secondary education tuition and related educational fees, for the next 12-month period, for the Participant, for the Participant’s spouse, or for any of the Participant’s dependents (as defined in Code §152);
- to prevent the eviction of the Participant from their principal residence or the foreclosure on the mortgage
- payments for burial or funeral expenses for the Participant’s deceased parent, spouse, children, or dependents (as defined in Code §152)
- any need prescribed by the Internal Revenue Service in a revenue ruling, notice or other document of general applicability which satisfies the safe harbor definition of hardship.
The Participant shall remain responsible for repayment to the plan of any excess amounts received pursuant to an early eligibility distribution should it be determined that such Participant is not entitled to the entire amount he or she was actually paid.
Your SBS-AP offers access to three different levels of investment advisory tools and services called Reality Investing® Advisory Services . You can have Advised Assets Group, LLC (AAG), a wholly owned subsidiary of Empower Retirement and a federally registered investment adviser, manage your retirement account for you. Or if you prefer to manage your retirement account on your own, you can use online investment guidance and advice tools. These services provide a retirement strategy based on your investment goals, time horizon and tolerance for risk. There is no guarantee that participation in Reality Investing Advisory Services will result in a profit or that your account will outperform a self-managed portfolio.
The following transactions must be conducted through Empower Retirement Services:
- Inactive and Retired Employees: Changing your address or your name. (Active employees: Contact your employer to change your address or name.)
- Account Withdrawals: Empower Retirement Services processes all Plan payments. Empower Retirement Services should be contacted for information on how to complete disbursement forms and for the status of pending payments.
- Hardship withdrawals
The Division of Retirement and Benefits is responsible for the overall administration of this plan. To contact the Juneau Division of Retirement and Benefits office, call (800) 821-2251, or (907) 465-4460 from Juneau.