Supplemental Retirement Plan (SRP)

SRP2

What is the Supplemental Retirement Plan?  The plan permits you to voluntarily establish your own Individual Retirement Account (IRA: Traditional, Roth, and/or Non-Qualified Tax Deferred Annuity Account (interest accumulates on a tax-deferred basis).  Once received, your contributions are placed with the Lincoln National Life Insurance Company (Lincoln Life) at the prevailing rate.  As a participant, you will receive quarterly statements.

Why was Lincoln National Life Insurance Company selected?  Lincoln Life has a history of outstanding investment performance and is a leader in the industry with over 115 years of experience, assuring us of both expertise and unquestioned reliability.  Lincoln Life’s financial strength:  A+ by A.M. Best which ranked Lincoln Life “superior”, as second highest of sixteen.  (These ratings reflect claims paying ability, but are not a guarantee of future performance).

Who is Eligible?  All Federal employees, their respective spouses and the following family members:  grandparents, parents, children, and grandchildren over age 18, and their respective spouses are eligible to participate in this plan.

What is the minimum contribution and cost to participate in the SRP?  There is no mandatory minimum contribution amount and there are no administrative fees.

What is the return?  The second quarter interest rate is 2.00% on all contributions received by June 23, 2020.  All second quarter 2020 contributions will receive no less than 2.0% guaranteed through December 31, 2020.  For contributions credited during 2020, an interest rate will be declared each quarter and contributions received and credited during a particular quarter will receive that interest rate until December 31, 2020.  For 2021, a guaranteed rate will be declared each quarter on 2021 contributions, but can be no less than 1.50%.  You begin to earn interest upon receipt of your contributions by Lincoln LIfe, which will be forwarded to the custodian no later than 7 working days following deposit.

Withdrawals?  You may request withdrawal forms from the Plan Administrator (IPC).  Withdrawals are processed on the 15th and last calendar day of each month for forms received in good order 5 business days prior to the withdrawal date.

What are IRS penalties for premature distribution?  Generally, distributions received prior to age 59 1/2 that are not due to death, disability, transfer, or rollover are subject to a 10% Penalty Tax as follows:

  1. Traditional IRA – on the full amount withdrawn
  2. Non-Qualified Tax-Deferred Annuity – on interest earnings only
  3. Roth IRA – some withdrawals may be penalty-free and some may even be tax-free.  However, the combination of several factors, including your age and whether the account has been open at least 5 tax years, the purpose of the withdrawal and whether the Roth IRA was converted from a Traditional IRA affect the taxability.  Consult your tax advisor for more details.

What is the surrender charge?  Surrender charges are assessed as follows:

Participation YearsSurrender Charge
1-55%
64%
73%
82%
91%
10+0%

This charge will not be assessed if the Participant is (1) 59 1/2 and retired, or (2) disabled, or (3) deceased.  Principal is guaranteed by the funding carrier.  Guarantee is based on continued claims paying ability of the insurer or the ability of the company to meet is financial obligations.

Enhanced Plan Feature?  You may withdraw up to 50% of your accumulated interest earnings once per year without surrender charge.

Minimum CONTRACTUAL Guarantee for the SRP is 1.50%.  Stated interest rates are the effective annual rate.  Daily compounding rates are used to equal the rate.  Lincoln Life form number is 20880.

Individual Retirement Account (IRA)?  Participants may choose from a Traditional IRA or Roth IRA.  The maximum contribution amount is limited to 100% of earned income up to $12,000 for joint filers (up to $6,000 each), $6,000 for singles.  If you turn 50 or older in 2020 you may contribute up to $7,000.  This is a combined maximum for all Traditional and Roth IRA’s you hold.

Non-Qualified Tax-Deferred Annuity?  If you wish to make contributions larger than those permitted under IRA regulations or if you are not eligible to establish a deductible IRA, you may want to participate in the Non-Qualified Tax-Deferred Annuity portion of the SRP and have all of the advantages of this tax-deferred annuity plan for your retirement planning.

There are no limitations on contributions.  You may contribute as much as you wish at any time.  There is no maximum age limitations for contributions or withdrawal.

Contributions are not tax deductible, however, interest earnings will accumulate on a tax-deferred basis.  Taxes will not be assessed until earnings are withdrawn.  Withdrawals are processed from interest first (IRS Regulations).

IRS reporting requirements do not require you to indicate contributions to or current interest earning on a Non-Qualified Tax-Deferred Annuity on your Form 1040 (done at time of withdrawal).

Terms and Conditions:

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