Money Purchase Pension Plan Common Questions and Answers

Answers to common questions about the BART Money Purchase Pension Plan are provided below. The exact provisions of the Plan are set out in San Francisco Bay Area Rapid Transit District Money Purchase Pension Plan Document.

1. What is a money purchase pension plan?

Under a money purchase pension plan, the employer is required to make an annual contribution for each Participant based on the Participant’s annual compensation. BART’s Money Purchase Pension Plan is a “tax-qualified” retirement plan under Section 401(a) of the Internal Revenue Code.

2. What is the difference between a 457 and a 401(a) plans?

A 401(a) plan must meet many requirements under the Internal Revenue Code including requirements limiting contributions, governing coverage of participating employees, vesting, portability and the custody of investments. There are a number of different kinds of 401(a) plans, including defined benefit pension plans and defined contribution plans. The Money Purchase Pension Plan is a 401(a) defined contribution plan.

A 457 plan is established under Section 457 of the Internal Revenue Code. Similar to a 401(k) plan, a 457 plan permits the deferral of compensation by participants. A 457 plan may be maintained only by state or local governments or tax exempt employers. Like a 401(k) plan, there are limits on the annual amount that may be deferred. The compensation, which is deferred, may be paid only upon attainment of age 70½, separation from service, an unforeseeable financial hardship or death. Under current law, a distribution from a 457 plan cannot be rolled over to a qualified retirement plan or an Individual Retirement Account (IRA). BART’s Deferred Compensation Plan is a 457 plan.

3. How is this plan different from the PERS pension plan?

The PERS pension plan is a defined benefit plan. Participants in the PERS plan receive a benefit upon retirement which is defined by formula (see your PERS Summary Plan Description). The Employer’s contribution varies each year in order to ensure that the benefit is adequately funded.

This plan, the 401(a) Money Purchase Pension Plan, is a defined contribution plan. The amount of the Employer’s contribution is specifically defined and is the amount that you will receive in benefits from this plan adjusted for any earnings or losses attributable to the investment of such amounts.

4. What are the objectives of the BART Money Purchase Pension Plan?

The purpose of the Money Purchase Pension Plan is to provide BART Employees with a savings and investment program for retirement. Contributions to the Plan and earnings on those contributions are not subject to current income taxes, but are taxed only when you receive a distribution from the Plan.

The Plan will assist Employees in meeting individual objectives such as:

• accumulating tax-deferred retirement benefits
• accumulating tax-deferred earnings on those benefits
• supplementing retirement income
• enjoying the benefits of group investment power
• increasing financial independence
• self-directing retirement funds

5. Does the Money Purchase Pension Plan affect my PERS benefits?

Your PERS benefits generally are not affected by your participation in the Money Purchase Pension Plan.

6. How do I participate in the Plan?

BART Employees are eligible to participate in the Plan, as provided in their collective bargaining agreement or the non-represented Employees’ handbook.

When you start your participation, you will be asked to complete the Initial Participation Agreement to indicate how you would like the funds deposited in your Account invested and to designate who will be the Beneficiary of your Account in the event you die before receiving full distribution of your Account.

7. How much is contributed to my Account?

The amount of the Plan contribution made on your behalf will depend on the union, if any, to which you belong.

• Participants who are not represented by any union:
  BART will contribute an amount equal to 6.65% of “Compensation” up to a maximum annual contribution of $1,868.65. “Compensation” means the amount of a Participant’s compensation paid by BART for the Plan Year excluding the following:
  1. All amounts in excess of $29,700;
  2. The first $133.33 of the Participant’s pay each month; and
  3. Any payment which would not be subject to FICA tax if the Participant were covered by the federal Social Security system.
  BART will also contribute an amount equal to 1.627% of non-represented Participants’ “Payroll,” up to $160,000 per year. This amount may be increased as a result of increases in the Consumer Price Index (CPI). The annual Payroll limit for Plan contributions for those hired prior to January 1, 1996 is $325,000 in 2006.
• Participants who are members of Amalgamated Transit Union (“ATU”) Local 1555, Service Employees International Union (“SEIU”) Local 790 and American Federation of State, County and Municipal Employees (“AFSCME”) Local 3993:
  These Participants receive the same 6.65% of Compensation contribution as non-represented Participants (see preceding paragraph), but receive no additional contribution with respect to Payroll. However, beginning July 1, 2011 for members of ATU and SEIU and beginning July 1, 2012 for members of AFSCME, these groups will receive, in addition to the 6.65% of Compensation, the same 1.627% of Payroll contribution as non-represented Participants.
• Participants who are members of the BART Police Officers Association and are not sworn police officers:
  These Participants receive the same 6.65% of Compensation contribution as non-represented Employees (see above), but receive no additional contribution with respect to Payroll. However, beginning July 1, 2012, they will receive, in addition to the 6.65% of Compensation contribution, the same 1.627% of Payroll contribution as non-represented Employees.
• BART Employees who are members of the BART Police Officers Association, the Chief of Police and are sworn police officers:
  These Employees did not participate in the Plan at all before July 1, 1994. Beginning July 1, 1994, they participate in the Plan and receive the same 6.65% of Compensation contribution as non-represented Employees (see above). They will not receive any additional contribution with respect to Payroll.
• Participants who are members of the BART Police Managers Association and are not sworn police officers:
  These Participants receive the same 6.65% of Compensation contribution as non-represented Employees (see above), but receive no additional contribution with respect to Payroll. However, beginning July 1, 2012, they will receive, in addition to the 6.65% of Compensation contribution, the same 1.627% of Payroll contribution as non-represented Employees.
• BART Employees who are members of the BART Police Managers Association and are sworn police officers:
  These Employees did not participate in the Plan at all before January 1, 1995. Beginning January 1, 1995, they participate in the plan and receive the same 6.65% of Compensation contribution as non-represented Employees (see above). They will not receive any additional contribution with respect to Payroll.

8. Can you provide an example of how the tax-deferred accumulation of contributions to the Money Purchase Pension Plan works?

The following illustration compares the benefits of saving $1,000 per year in the plan versus receiving $1,000 in salary and saving it in an after-tax savings account (such as an interest-bearing bank account). The comparison is based on the assumptions that you are in a 28% combined tax bracket and that your investment earnings would be 8% annually.

Saving after taxes		Saving through the Plan
$1,000	Annual Benefit	$1,000
- $280	Income Taxes	- $0
$720	Available for Investment	$1,000
+ $58	Investment Earnings	+ $80
-$16	Tax on Earnings	-$0
$762	Balance at end of 1st Year	$1,080
$61,084	Balance at end of 30th Year	122,345*

* This amount will be subject to State and Federal income taxes when distributed to you.

Please note that this is a general illustration. Please keep in mind that your specific situation will be different.

9. When will I pay income taxes?

Your income taxes will be payable in the year or years when your Account balance is distributed. In general, federal income taxes will be withheld from your distribution at the rate of 20% unless you direct that your distribution be transferred directly to another tax-qualified retirement plan or to an individual retirement account. For California income tax, you will be given an election whether or not to withhold from your distribution. Participants’ actual tax rates vary.

If you receive a distribution before you reach age 59½, you may also have to pay federal and state penalty taxes unless you transfer or roll over the distribution to another qualified retirement plan or individual retirement account or the distribution otherwise qualifies for one of the exceptions to the penalty tax including the following:

• The distribution is made to your Beneficiary (or to your estate) after your death;
• The distribution is made on account of your disability*;
• The distribution is part of a series of substantially equal periodic payments (not less frequently than annually) made for your life (or life expectancy) or the joint lives (or life expectancies) of yourself and your Beneficiary that began after you separated from service;
• The distribution is made to you after separation from service after attaining age 55;
• the distribution is to an Alternate Payee pursuant to a QDRO or Domestic Relations Order.

*Note: the disability requirement under IRS regulations is as follows: you cannot engage in any substantial gainful activity because of a physical or mental condition, and a physician determines that the condition has lasted or can be expected to last continuously for at least a year or can lead to death.

10. What happens to the contributions made on my behalf?

An Account is established on your behalf. Contributions and the earnings (or losses) on these contributions are credited (or debited) to this Account.

The Committee has selected investment options for the Money Purchase Pension Plan. You may direct the investment of your Account in one or more of the investment alternatives by completing the Employee Enrollment Form or Employee Change Form. You may change your election of investment alternatives at any time (see Question 22). If you do not make an investment selection, the monies deposited to your Account will be automatically invested in the Money Market Fund.

11. May I contribute my own funds to the Plan?

No, the Plan does not allow you to contribute your own funds. Subject to the approval of the Committee, you may rollover monies distributed to you from another qualified plan or “conduit” individual retirement account into the Plan, provided certain conditions are met.

12. What credits and charges will be made to my Account?

Your Account will be credited and debited with its share of earnings and losses experienced by your investment selection. Your Account will share in the costs of administering the Plan, such as record keeping, legal and accounting expenses.

13. What is vesting and how do I become vested?

A vested benefit is that percentage of your Account balance which belongs to you unconditionally. It can never be taken away from you, even if you quit or are fired. You are 100% vested in your Plan Account at all times.

14. May I obtain a loan?

No. Loans are not allowed under this Plan.

15. When will I be eligible for benefits?

You become eligible to receive benefits upon the earlier of attainment of age 59½ or your termination of employment for any reason.

After you become eligible to receive a distribution, you may select the time such distribution will begin, and the Committee will direct the Plan Record Keeper to begin distribution of your Account to you at that time. However, you may not defer the commencement of your distribution past April 1 of the calendar year following the later of the calendar year in which (1) you attain age 70½ or (2) you retire. If you make no election as to when distribution of your benefits will commence, then the distribution of your benefits will commence on the later of the date you stop working for BART or your 70th birthday.

Also, becoming totally disabled does not automatically entitle a Participant to payment. Generally, a Participant must also terminate employment with BART.

Please note: The distribution provisions in BART’s Deferred Compensation Plan and BART’s Money Purchase Pension Plan are different.

16. How will my benefits be paid to me?

If the value of your individual Account is equal to or less than $1,000, distribution will be made in a lump sum. If the value of your Account is greater than $1,000, you may elect to have your benefit distributed in a lump sum, a series of substantially equal installments, a straight life Annuity contract or an Annuity contract for your life with a survivor Annuity on the life of your spouse. If you choose a series of payments, you may additionally elect to have the installment distribution automatically adjusted annually for a cost-of-living increase. You may make an election as to the form of your distribution at any time prior to the date distribution begins. Once a selection is made and distribution has commenced, the method selected may not be changed.

The Plan must make minimum required distributions to you in accordance with the requirements of the Internal Revenue Code, the main provisions of which are summarized below:

1. Your account will be either distributed in full or begin to be distributed by April 1 of the calendar year following the later of (a) the year in which you attain age 70½, or (b) the year in which you retire.
2. If you die before distribution begins,
   • If your spouse is your beneficiary, the distribution must begin by December 31 of the calendar year immediately following the year of your death or the year in which you would have attained age 70½, if later.
   • If your spouse is not your beneficiary, the distribution will begin by December 31 of the calendar year immediately following the year of your death or be paid in full by December 31 of the calendar year containing the 5th anniversary of your death.
3. The required minimum distributions during your lifetime will be determined annually by dividing the value of your account by the appropriate factors under IRS regulations.
4. If you die after distributions have begun, the required minimum distribution will be determined annually by dividing the remaining account by the longer of your remaining life expectancy or the life expectancy of your beneficiary using the tables in the IRS regulations.
5. If you die before distribution begins, the required minimum distribution will be determined annually by dividing the value of your account by the beneficiary’s life expectancy using the tables in the IRS regulations.

17. What happens to my Account if my spouse receives an interest in my benefits in a domestic relations case?

If a state court awards your spouse (or former spouse) an interest in your benefits through a Qualified Domestic Relations Order, a separate Account will be established for your spouse (or former spouse) for the amount so awarded. He or she can make investment decisions with respect to that Account (Questions 12 and 23), and distributions can be made from the account at any time permitted by the order, but in no event later than the time distribution must be made under the Plan.

18. How will benefits be paid to Alternate Payees and beneficiaries and may I change my beneficiary designation?

Within the rules specified for their participation, Alternate Payees and Beneficiaries have the right to direct the investment of the funds held under their social security number. Alternate Payees and Beneficiaries cannot contribute additional funds to this Account.

Alternate payees and beneficiaries must comply with certain rules with regard to beginning withdrawals and when those withdrawals are complete (see question 18, paragraph 3). Alternate payees and beneficiaries should refer to the documentation sent by the Plan Record Keeper when they were notified that they became an Alternate Payee or were the Beneficiary of funds.

As long as there is no QDRO or other Domestic Relations Order mandating the payment of benefits from your Account, you may change the Beneficiary of your Account by requesting and submitting an Employee Change Form or a Designation of Beneficiary Form. See the answer to Question 33 for a list of forms and where they may be obtained.

19. What will happen to my Account if I die before I receive my benefits?

The balance of your Account will be paid to your designated Beneficiary. If you have not designated a Beneficiary on either an Employee Enrollment Form, an Employee Change Form or a Designation of Beneficiary Form, or if your designated Beneficiary dies before you do, payments will be made to your estate or to persons who are generally entitled to your other property upon your death. You may change your designated Beneficiary at any time. To be effective, your signed Beneficiary designation must be received by the Committee or the Plan Record Keeper prior to your death. Be sure to keep your Beneficiary designation up-to-date.

Subject to the limitations discussed in the following paragraphs, you may select the time and manner of distribution of your benefit to your Beneficiary. If you have made no election, your Beneficiary may, within a reasonable period following your death, choose the time and manner of distribution. If neither you nor your Beneficiary has made an election, benefits will be paid to your Beneficiary in the form of a lump sum.

If you had already begun to receive distribution of your benefits prior to your death, your Beneficiary must receive the balance of your Account at least as rapidly as under the method of payment in effect at the time of your death.

If you had not begun to receive your benefits, your Beneficiary generally must receive your entire benefit no later than December 31 of the calendar year, which contains the fifth anniversary of your death. There are two exceptions to this rule. First, if your spouse is your Beneficiary, commencement of benefits may be deferred until the later of the end of the year following the year of your death or the end of the year in which you would have attained age 70½. Second, payments may be spread out over your Beneficiary’s life expectancy, even if someone other than your spouse is the Beneficiary but, the payment must begin by the December 31st of the year following death.

20. What is the Plan Year?

The Plan Year is the calendar year (January 1 through December 31).

21. How often will I receive a statement of my Account?

A quarterly statement will be provided to you reflecting the activity in your Account.

22. What do I need to do with my Account statements?

You will receive regular statements regarding your Account from the Plan Record Keeper. You must read and review your statement and report any items which you believe may be in error to the Plan Record Keeper within 120 days from the date that you receive the statement.

23. How can I change my investment choices?

There are two types of changes you can make to the investment of your Account:

• changes to the investment of your current Account balance
• changes to the investment of your future contributions.

Changes to the Investment of Your Current Account Balance
You may transfer your Account balance among the various investment funds at any time. To do so, you may either complete an Employee Change Form, request a transfer by touch-tone telephone on the Plan Record Keeper's voice response telephone system, or make a change through the Internet. Upon becoming a Participant in the Plan, you will receive instructions on how to use these systems. In each case, transfers are processed by the Plan Record Keeper based on the market value for the succeeding day.

Changes to the Investment of Your Future Contributions
You may change the investment direction of your future contributions at any time. To do so, you may either complete an Employee Change Form, request a transfer by touch-tone telephone on the Plan Record Keeper’s voice response telephone system, or make a change through the Internet. Upon becoming a Participant in the Plan, you will receive instructions on how to use these systems. In each case, transfers are processed by the Plan Record Keeper based on the market value for the succeeding day.

See the “Contacts” section at the end of this Summary Plan Description for the Plan Record Keeper’s telephone number and other contact information.

24. How do I request payment of my benefits?

Upon your attainment of age 60 or termination of employment, in order to begin receiving your benefits you must file a Withdrawal Form with the Plan Record Keeper. The Investment Plans Committee must approve all requests before the distribution of benefits can commence.

24. Can I use my account to purchase Additional Retirement Service Credit fromCalPERS?

Yes, any part of your account may be used to purchase Additional Retirement Service Credit from CalPERS if permitted by it. Such a purchase shall be made by a trustee-to-trustee transfer, without the assets of the Plan being made available to you. To direct such a purchase you must complete a Trustee-To-Trustee Transfer to Purchase Prior Service Credit Form available at the BART Benefits Office.

26. Who is responsible for the administration of the Plan?

The Plan is administered by the Investment Plans Committee, which includes a representative from each of four Employee organizations and one representative from BART management. The Committee interprets and applies the terms and provisions of the Plan, receives claims for benefits, determines the eligibility of claimants for receipt of benefits and the amount of those benefits, authorizes benefit payments, and determines investment and administration policy. The actions taken by the Committee are final and binding on all Participants, beneficiaries, and their successors in interest.

The Committee has contracted with the Plan Record Keeper to provide record keeping and other administrative services for the plan.

27. What are the fees for administering the Plan Participants’ Accounts?

As a Participant in the Plan, certain fees connected with plan administration are allocated to your Account. These include fees for record keeping, consulting, trustee and legal services, and the Plan audit. All fees are allocated to your account on a “pro rata” basis meaning that fees are allocated among participants’ accounts in proportion to the asset value of the account.

28. Who is the Trustee?

A trustee has been selected to receive, hold and distribute the assets of the trust fund in accordance with the Plan and upon instructions from the Investment Plans Committee. The Trustee for the Plan is listed in the Plan contact page.

29. What happens if the Plan terminates?

The Plan has no specific expiration date and is intended to be permanent, but BART has reserved the right to amend or terminate the Plan subject to any collective bargaining requirements. Any such action would not affect your interest in your Account.

30. May my benefits be assigned or alienated?

Generally no, however, the Plan’s provisions regarding assignment should be read to see how a Domestic Relations Order may be an exception to this general rule.

31. What are the Plan’s governing documents?

The Plan is established pursuant to a formal plan document and a Trust Agreement with the Trustee. In the event of any inconsistency between those documents and this description, the Plan document and Trust Agreement will govern. You may examine these documents by contacting the Committee. See the Contacts section for address information.

32. What is Asset Allocation?

The allocation of investment dollars to different categories of assets. For example, an individual may want to put some of his or her funds into bonds and some into equities.

The Committee recommends that you carefully consider your investment goals and your risk tolerance as you decide how you wish to allocate your investment dollars to the various funds available through the Plans.

33. Who should I ask if I have questions?

Any questions can be addressed to the staff to the Committee at (510) 464-6238 or addressed to the Committee directly in the public meeting either in person or in writing. For complete information, see the contact information page.

34. Where can I obtain Plan Forms for the BART Money Purchase Pension Plan?

The majority of forms are available at the BART Benefits Office.

The following forms are available at various work locations:

• Change Form—to change your address, Beneficiary designation, investment allocation or amount of Compensation deferred into the Plan.

The following forms are available through the BART Benefits Office:

• Employee Enrollment Form—to enroll in the plan, select investment options and name your Beneficiary.
• Withdrawal Form—to apply for benefits after termination of employment.
• Designation of Beneficiary Form—to name or modify your Beneficiary designation.
• Request for a Direct Rollover—to request a transfer of assets from an eligible account into your Plan Account.
• Direct Deposit Authorization Form—to have periodic distribution checks paid by direct deposit to your bank account (submit a direct deposit form with the Withdrawal Form).
• Request for Benefit Illustrations—to ask the Plan Record Keeper to provide you with examples of the different methods of receiving your benefits.
• Beneficiary Withdrawal Form—for your Beneficiary to apply for a withdrawal of assets after your death.

35. Are there meetings at which issues relating to the Plan are discussed?

The Investment Plans Committee meets once a month to discuss investments, policy and ongoing administrative issues relating to the Plans. The meetings are open to the public and Participants are encouraged to attend.

In addition to its monthly meetings, the Investment Plan Committee sponsors an annual meeting for the purpose of informing the Plans’ Participants of any notable events or changes to the Plans and responding to Participants’ questions and concerns regarding the Plans. The meetings are generally held in the second or third month of the year.

Can rollovers be made to and from the Plan?

Yes, you can elect to have any portion of an eligible rollover distribution from the Plan otherwise payable to you be paid directly to another eligible retirement plan. Likewise you may elect to have an eligible rollover distribution from another eligible retirement plan rolled over directly to this plan.

What if I am reemployed by BART under the Uniformed Services Employment and Reemployment Rights Act (USERRA)?

If you are reemployed by BART under USERRA, your military service will be deemed to constitute service with BART. Within 60 days after you are reemployed by BART, BART will contribute to your account the amount that would have been contributed for you had you been employed by BART during your term of military service.