MetLife Resource (MLR) Certification Training · Certification training is recommended before...

For use only by former MPCG Advisors who have transitioned to Mass Mutual 1

MetLife Resources Sales Support

888-377-8999 / [email protected]

Updated November 2019

MetLife Resource (MLR) Certification Training


MetLife Resources Overview

– Importance of MLR

Certification Training

– MLR Business Overview

403(b) Plans – Tax

Sheltered Annuities (TSAs)

– ERISA

– 403(b) Regulations

457(b) Plans

Table of Contents

401(a) and 401(k) Plans

403(a) Plans

State Specific Retirement Plans

Maximum Allowable

Contributions (MAC) Calculations

Thank You and Next Steps


MetLife Resources Overview

MetLife Resources (MLR) is a division of Metropolitan Life Insurance

Company (MetLife) that specializes in providing retirement plan products

and services to healthcare, educational, governmental and other

not-for-profit employers and their employees

• Optional Retirement Program (ORP)

• Public Employee Retirement

Association (PERA)

State-specific retirement plans

Each of these employer groups is

allowed to sponsor a retirement plan for

its employees’ participation under one or

more Internal Revenue Code sections

403(b), 457(b) ,401(a), and 403(a)


MetLife Resources Certification Training

• Exclusively available to former MPCG advisors who have transitioned

to MassMutual

• Provides the advisor with knowledge to market to new participants and

service existing participants in existing MLR groups (excluding ERISA and

their affiliated non-ERISA groups) in the not-for-profit marketplace. MLR

Certification training is recommended before marketing within an MLR group

• Provides the advisor with knowledge to understand how 403(b)Tax Sheltered

Annuities (TSAs) and Deferred Compensation Plans (DCP) operate and the

tax advantages of each

• Provides the advisor with knowledge to understand the retirement benefits by

learning the key provisions, and understand the tax code provisions that

regulate payroll contributions to qualified plans

Why is MLR Certification Training important?


MLR Business Overview

*Note that as of 4/10/2017, former MPCG advisors who have transitioned to MassMutual may no longer sell/service ERISA 403(b) groups and their affiliated non-ERISA groups.

(This change does NOT impact existing brokers from other broker dealers.)

MetLife and

Brighthouse

Products Sold

in Existing

MLR Plans

• Fixed Annuities

• Variable Annuities

• Mutual Fund

Platform with fixed

account options

Participants

• Teachers

• School Employees

• College Professors

• Doctors & Nurses

• Employees of

Not-For-Profit

Organizations

and churches

Plan Sponsors

• Education

• Healthcare

• Charitable

Organizations

• Government

• Other Not-For-

Profits

• Churches

Markets

• 403(b)

• 457(b)

• 401(a)

• 403(a)

Distribution

• Former MetLife

Premier Client

Group (MPCG)

Advisors who have

transitioned to

MassMutual*

• Selected Third

Party Brokers (on

a grandfathered,

exception basis

only)

MetLife Resources


MLR Knowledge Check – Question 1 of 1

Select all that apply.

Which of the following include MetLife Resources’

primary plan sponsors?

Healthcare

Sports Agencies

For-Profit Organizations

Education


MLR Knowledge Check – Answer

Select all that apply.

Which of the following include MetLife Resources’

primary plan sponsors?

Healthcare

Sports Agencies

For-Profit Organizations

Education


403(b) Plans – Tax Sheltered Annuities (TSAs)

*Subject to certain requirements as state tax treatment varies

• A tax-advantaged, defined contribution, retirement savings plan, sometimes

called a tax-sheltered annuity, available for public education organizations,

institutions of higher education, some not-for-profit employers (only 501(c)(3)

organizations), cooperative hospital service organizations and self-employed

ministers in the United States

• May be subject to ERISA. 403(b) plans are either considered ERISA

or non-ERISA

• Employee contributions, which are payroll deducted into a 403(b) plan, are

generally made on a pre-tax basis and are allowed to grow tax deferred;

Withdrawals from the plan are taxed as ordinary income

• 403(b) plans are funded with annuity contracts and/or a mutual fund platform

• Roth contributions may be allowed and are taxable subject to certain

requirements; Earnings on Roth contributions that meet certain requirements are

not subject to Federal income tax*

• Some plans provide for employer match and/or non-match contributions

on behalf of plan participants

• FICA taxes are currently withheld from salary reduction contributions to the 403(b)


Section 403(b)

• purchase an annuity contract and,

• subject to certain limitations, exclude the amount of the contributions from gross income for

income tax purposes or, otherwise, pay tax and allocate the amount to a Roth account

Section 403(b) of the tax code permits employees of public educational organizations and Section 501(c)(3) nonprofit organizations to:

• Employee authorizes the employer to reduce his/her salary by a specified amount to

contribute to a 403(b)

• Employer forwards this amount to an insurance company to fund a 403(b) on behalf

of the employee

A 403(b) annuity is normally funded by payroll deductions:

No federal income taxes are currently withheld on the portion of salary contributed to the 403(b)

and it is excluded from the employee’s gross income for federal and most state income tax purposes,

(except in the case of designated Roth contributions)

However, FICA taxes are currently withheld from the portion of salary contributed to the 403(b)


Section 403(b)

Some 403(b) plans have automatic enrollment features that automatically begin

salary reduction contributions when employees become eligible to participate, unless the

participant affirmatively opts out. These automatic enrollment plans are also

known as “negative election” plans.

The tax code limits the amount each employee can contribute to a 403(b) plan.

This amount depends on a number of factors and should be determined annually for

each employee using a formula that complies with applicable tax requirements.

• More details on this will be discussed later in the section on Maximum Allowable Contributions

Each employee who wishes to participate in a 403(b) generally must submit

a “salary reduction agreement (SRA)” (also referred to as an “amendment to

employment contract”) to the employer specifying the amount by which the

employee’s salary is to be reduced.


What is ERISA?

ERISA, (The Employee Retirement Income Security Act of 1974) is a federal law that

sets standards for pension plans in private industry. It is intended to protect the

retirement plan assets of participants by imposing certain requirements.

• Effective 4/10/2017, MetLife’s ERISA plans (and ERISA-affiliated plans) may not be serviced by former

MPCG advisors who have transitioned to MassMutual.

• A 403(b) plan may not be subject to ERISA requirements if it does not provide for any employer

contributions (e.g. matching contributions) and the employer has a very limited role administering the plan.

This determination is based on the particular facts and circumstances and should be made by the plan

sponsor (not MetLife) in consultation with their own counsel.

• ERISA does not require any employer to establish a benefit plan, however for those that do, they must meet

certain minimum standards as stated below:

– Requires plans to provide participants regularly and automatically with important plan information such as its

features and funding

– Sets minimum standards for participation, vesting, claims processing, benefit accrual and funding. The law defines

how long a person is required to work before becoming eligible to participate in a plan, accumulate benefits and

have a non-forfeitable right to those benefits. In addition, plan sponsors are required to provide adequate

funding for the plan

– Requires accountability of plan fiduciaries. ERISA defines a fiduciary as anyone exercising discretionary authority or

control over a plan’s management or assets, as well as anyone providing investment advice to the plan. Fiduciaries

may be liable for restoring any losses for which they are responsible

– Gives participants the right to sue for benefits and breaches of fiduciary duty

– Guarantees payment of certain pension plan benefits through a federally chartered corporation, known as Pension

Benefit Guaranty corporation, (PBGC). PBGC coverage generally does not apply to MLR customers’ plans.

• Government plans are never subject to ERISA


ERISA Considerations

• DOL Fee Disclosure Regulations

– Require plan service providers to disclose fees and revenue information to assist plan sponsors in

fulfilling obligations under ERISA rules (Plan-Level Fee Disclosures or "408(b)(2) regulations")

– Require plan sponsors to deliver disclosures and investment information to eligible employees,

participant and beneficiaries (Participant-Level Fee Disclosure Requirements)

• Substantial liability may result from failing to comply with ERISA when a 403(b) plan is

actually covered by ERISA

• Note that 403(b) plans not covered by ERISA may be subject to requirements similar to

ERISA by applicable state law

• Employers should consult with their own tax and legal advisers

• ERISA plans are subject to 5500 reporting and annual audits

Some of the challenges that exist for tax-exempt nongovernmental employers are covered by Department of Labor (DOL) FAB 2010-01 and other recent DOL guidance


403 (b) Plans – Self-Study

Charges and Fees

Withdrawals

Hardships

Taxation of Withdrawals/Distributions

Loans

Click here to learn about

the following topics

related to 403(b) plans

https://metlifepro.metlife.com/content/dam/metlifeHoldings/advisors/PDFs/Annuity/403b_plans2018.pdf


403 (b) Retirement Benefits

• A 403(b) annuity contract may be annuitized at any time after becoming

eligible for distribution

• There are 2 periods to an annuity; pay in (accumulation) and payout (annuitization)

• Until a 403(b) account is annuitized, required minimum distribution rules generally

require taxable amounts begin to be distributed by April 1 of the year following the

year the employee turns age 70½, or retires, whichever is later (participant should

consult with tax and legal advisers)

– For example, when a participant turns age 70½ (or, if later, retires) in 2019, he or she must

withdraw a required minimum distribution amount for the year 2019. However, you have until April

1, 2020 to actually receive the 2019 distribution. He or she then must take the distribution for year

2019 by December 31, 2020. Subsequent distributions must be taken by December 31 each year.

Should a participant delay the first distribution until the year after turning 70 ½, he or she will be

taxed on two distributions in the same year.

• The annual required distribution amount is calculated based on life expectancy

tables provided by the IRS

• A federal tax penalty of 50% will apply to any required distribution amounts

that are not taken

• Distributions can be made in one lump sum or at periodic intervals, including as

annuity payments, depending on plan terms

• Income taxes are payable in the year a taxable distribution is received


403(b) – Payout Options Other Than Lump Sum

Provides income payments during lifetime of annuitant. Upon death of annuitant there are no

payments to beneficiary.

Life Income

Provides income payments for period certain elected (5, 10, 15 or 20 years) or lifetime of annuitant, whichever is

longer. If annuitant death occurs prior to end of elected period, beneficiary will receive payments for remainder of

period certain. Beneficiary may not take remaining monies in lump sum.

Life Income with Period Certain

Provides income payments for lifetime of two annuitants. Upon death of either annuitant, income continues to

survivor for his/her lifetime. Payments to survivor may continue at the same amount or can be a reduced amount

of two thirds or one half.

Joint and Survivor Annuity

Provides income payments for a selected period of time. Periods available are usually 3 to 30 years; This is a

popular option because it allows the annuitant to individually customize distributions in the time period suited for

his/her retirement needs.

Income for a Specified Period (AKA “Income for a Designated Period” or “Period Certain”


403(b) Knowledge Check – Question 1 of 5

Select the best answer.

Any of the following fees/charges may be assessed

against a Tax-Sheltered Annuity except:

Administrative fee

Separate account charge

Surrender charge

State sales charge


403(b) Knowledge Check – Answer


Any of the following fees/charges may be assessed

against a Tax-Sheltered Annuity except:

Administrative fee

Separate account charge

Surrender charge

State sales charge




How long does a participant have to pay back a loan

that was not used to acquire his principal residence:

2 years

Before retiring or severing employment

10 years

5 years




Generally, required minimum distributions for a

Tax-Sheltered Annuity must begin by April 1st

of what year?

The year following the year in which the employee

turns 70 ½

The year following the year in which the

employee retires or turns 55, whichever is later


turns 70 ½ or retires, whichever is later




Generally, required minimum distributions for a

Tax-Sheltered Annuity must begin by April 1st

of what year?


turns 70 ½

The year following the year in which the

employee retires or turns 55, whichever is later


turns 70 ½ or retires, whichever is later




After taking a hardship withdrawal from her TSA, for what

length of time will the client generally be prohibited from

making salary reduction contributions to her TSA?

1 year

6 months

2 years

She can make contributions immediately



True or False:

Exchanges can be made between 403(b)

and 401(a) plans.

True

False



True or False:

Exchanges can be made between 403(b)

and 401(a) plans.

True

False – Exchanges can NOT be made between

403(b) and 401(a) plans


403(b) Regulations – Effective as of January 1, 2009

Any employer that makes a 403(b) plan available to its employees must adhere

to certain requirements, including, in most cases, adopting and maintaining a

written plan. Subject to certain restrictions, the plan must have been adopted

by December 31, 2009.

• The employer must establish and maintain the plan

– Adopt a written plan document

– Identify the approved providers that are available as part of the plan

– Determine employee eligibility and enforce universal availability requirements

– Determine if the plan will allow employees to effect exchanges and transfers

– Decide what type of contributions will be permitted, including Roth contributions

– Decide if the plan will allow employees to take a loan or hardship distribution

– Ensure contributions are remitted to approved providers in a timely manner

– For ERISA plans, comply with DOL Plan and Participant-Level Fee Disclosure Regulations

• If the employer doesn’t operate the plan in accordance with IRS and ERISA guidelines,

it can have a severe adverse impact on plan participants and the tax-deferred status

of the plan


403(b) Plans – Key Provision: Written Plan

Employers can either

develop a single written

plan document; or compile

a series of documents that

together constitute the

written plan

The IRS has released

model plan language

for public school 403(b)

plans. MetLife also offers

a specimen plan document

If required to maintain

a written plan, the written

plan must satisfy the

403(b) requirements in

form and operation

• Eligibility

• Applicable limitations

• Approved providers under the plan

Written plan must contain all material terms and conditions including:

Information sharing agreements are needed to maintain the 403(b) status of contracts

and accounts that receive exchanges after 9/24/07 if the contract or account is not

already part of the employer’s plan

• Time and form of distributions

• Assignment of compliance and administrative

responsibility (Third party administrator

(TPA), if applicable)


Regulatory Review

For Use With Plan Sponsor Only — Not For Distribution. For Informational Use Only.

“MetLife” as used throughout this presentation refers to Metropolitan Life Insurance Company (MLIC) and its affiliated companies.

“MetLife Resources” refers specifically to the business unit, which is a division of MLIC.

Any discussion of taxes is for general informational purposes only and does not purport to be complete or cover every situation. MetLife, its agents and representatives may not

give customers legal, tax or accounting advice and this document should not be construed as such. Customers should confer with their qualified legal, tax and accounting

advisors as appropriate.

IRS 403(b) Pre-Approved Plan Document Program

What is it?The IRS has established for the first time, a pre-approved 403(b) Plan Document Program (Program)

similar to the pre-approved plan document program available for 401(a) and 401(k) plans.

What purpose does it serve?The Program is designed to lower the cost and ease administration of 403(b) plans by providing an employer

with assurance its written plan document complies with applicable tax code requirements.

Are there additional benefits?

The IRS has provided remedial amendment relief. By adopting a pre-approved plan by March 31, 2020,

an employer with an existing written 403(b) plan document may be eligible to have reliance on the plan

document’s pre-approved status back to January 1, 2010 or, if later, the effective date of the employer’s plan.

What steps did MetLife take?MetLife submitted an application to the IRS for approval of its 403(b) plan and received IRS

approval in May 2017.

What will MetLife make

available to plan sponsors?

The MetLife pre-approved plan document is available to MLR 403(b) clients (subject to plan provisions)

regardless of whether they currently use the MetLife specimen 403(b) plan document.

What impact does this have

on MetLife’s existing 403(b)

specimen document?

Our expectation is that clients will use this opportunity to restate onto the pre-approved document to be able

to rely on the IRS opinion letter and to take advantage of the remedial amendment relief.


403(b) Plans – Key Provision: Universal Availability & Effective Opportunity Requirement

Note that ERISA provisions may contain more stringent rules

• Significant IRS audit focus

• “Everyone or no one” Rule – If the Plan is offered to one employee, it must be

offered to all employees

• 1,000 hour rule – Employees working less than 1000 hours in the prior year may

be excluded; Employer will need to keep records of actual hours

• Subject to certain transitional rules, collectively-bargained groups may no longer

be excluded from eligibility to participate

• Effective opportunity requirement:

– Employees must be notified at least once per year of the availability to make salary reduction

contributions; Plan must keep records of notifications for audit purposes

– Opportunity at least once per plan year to start or change deferrals

– Anti-conditioning requirement: A plan can’t make participation conditional on another benefit

or employer program


403(b) Regulations Knowledge Check –Question 1 of 2

True or False:

Regarding 403(b) plan regulations, an employer

may choose to allow employees to make non-deductible

Roth contributions

True

False


403(b) Regulations Knowledge Check –Answer

True or False:

Regarding 403(b) plan regulations, an employer

may choose to allow employees to make non-deductible

Roth contributions

True

False


403(b) Regulations Knowledge Check –Question 2 of 2


In addition to the required 403(b) plan document,

the employer has the option of including which of the

following provisions?

Loans and hardships

Exchanges and rollovers

Automatic enrollment

All of these


403(b) Regulations Knowledge Check –Answer


In addition to the required 403(b) plan document,

the employer has the option of including which of the

following provisions?

Loans and hardships

Exchanges and rollovers

Automatic enrollment

All of these


457(b) Plans

A 457(b) Plan is an eligible non-qualified, tax deferred compensation

plan under section 457(b) of the Internal Revenue Code and a retirement

savings plan available to state and local government employers and certain

tax exempt non-government 501(c) employers that are not churches

Contributions are

pre-tax with no

Federal income tax

paid until distribution,

however state income

tax may apply.

Earnings grow tax

deferred until

distribution

Not generally

subject to ERISA

(non-government

457(b) plans are

subject to certain

parts of ERISA)

Although 457(b)

plans may allow

Roth Contributions,

MetLife and

Brighthouse Financial

do not provide this

feature for certain

products


457(b) – Plan Ownership

The trustee or custodian

holds a governmental plan’s

annuity contract, or custodial

accounts for the exclusive

benefit of plan participants and

their beneficiaries.

Assets maintained by a

non-governmental tax exempt

employer remain the property of

the employer. Non-governmental

plans may have a rabbi trust but

are not required to.


• Withdrawals from the plan are generally limited to a triggering event

such as attaining age 70½, separation from service or for

unforeseeable hardship withdrawals

• Emergency withdrawals are subject to more stringent

requirements than hardship distributions from 403(b) or 401(k) plans;

Unlike 403(b) or 401(k) plans, emergency withdrawals from a

457(b) plan do not allow for the purchase of principal residence

or college tuition expenses

• Taxable distributions are subject to ordinary income taxation,

although there is no 10% penalty for withdrawals before age 59½*

457(b) – Withdrawals/Distributions

*Unless attributable to rollovers from a plan subject to the 10% tax penalty.

Before taking withdrawals/distributions, participant should

consult with tax and legal advisers


• Governmental employers must allow eligible rollover distributions to

IRAs, 401(a), 403(a), 403(b), and other governmental 457(b) plans

• If a plan accepts rollovers/transfers from a non 457(b) plan, it must

provide for separate accounting since distribution before the participant

reaches the age of 59½ may be subject to a 10% distribution penalty

• A governmental 457(b) plan may make direct transfers into a defined

benefit governmental plan to allow for the purchase of permissive service

credit, subject to certain restrictions

• An “eligible retired public safety officer”, subject to certain restrictions,

may exclude up to $3,000 per year from taxable gross income for amounts

that are transferred directly from a governmental 457(b) plan to the

provider of accident, health or long term care insurance for the payment

of premiums that provide coverage for the retiree, spouse and dependents

457(b) – Rollover or Direct Transfers


457(b) Plans – Governmental Catch-up Deferrals

• A governmental 457(b) plan may allow age 50 catch-ups of an additional

$6,500 in 2020

• The plan may allow a special “last 3-year catch-up,” which allows you to

defer in the three years before you reach the plan’s normal retirement

age:

- twice the annual 457(b) limit (in 2020, $19,500 x 2 = $39,000), or

- the annual 457(b) limit, plus amounts allowed in prior years that

you didn’t contribute.

If a governmental 457(b) allows both the age 50 catch-up & the 3-year

catch-up, you can use the one that allows a larger deferral, not both.


• Non-governmental 457(b) plans must be “top hat” plans

maintained primarily for a group of management or highly

compensated employees

• MetLife generally places the burden on employers

to determine if a plan qualifies as a “top hat” plan, as there

is no authority that establishes when a plan is too large to be

deemed a “top hat” plan

• To establish itself as a “top hat” plan, an employer must file

a one-time statement with the U.S. Department of Labor within

120 days of establishment

457(b) – Non-Governmental Plan Participation


457(b) – Non-Governmental Plan Funding

• Plan assets are not held in trust for employers, but remain the

property of the employer

• Assets cannot be set aside for the exclusive benefits of participants

A non-governmental 457(b) plan must be unfunded in order to avoid taxation of amounts credited under the plan

• A rabbi trust creates security for employees because the assets

within the trust are typically outside the control of the employers

and are irrevocable

• The trust is funded, but the trust assets remain available to creditors

Employee deferrals in non-governmental plans are frequently placed in “rabbi trusts”


457(b) – Loans

Loans in 457(b) plans

of non-governmental

tax exempt employers

are not permitted

Although 457(b)

governmental plans allow

for loans, MetLife does

not provide administrative

services for this feature


Differences between 457(b) plans of Governmental and Non-Governmental Employers

Governmental EmployerNon-Governmental Employer /

Tax-Exempt Employer

Funding Status of Plan Assets must be held in a 457(g) trust custodial account

or annuity contract for exclusive benefit of participant

and beneficiaries

Plan must be unfunded. All amounts must remain the

property of the employer until made available to

participants or beneficiaries. Rabbi trust may be used to

protect from employers refusal to pay deferred

compensation obligation

ERISA Title 1 Reporting and

Disclosure Requirements

N/A N/A if one time statement filed with DOL within 120 days

of plan establishment

Participant Eligibility Determined by employer. May be discriminatory Determined by employer; must be limited to select group

of management or highly compensated employees

Participant Investment Direction Yes, plan permitting Yes, plan permitting investment instruction

by participants

Catch-up Contributions for

Participants 50 and older

Permitted after contribution limit is exceeded; not permitted

in three years prior to reaching normal retirement age if

catch-up provision is used

Not permitted

Incoming rollovers and transfers Plan may agree to accept pre-tax rollovers from other

qualified plans such as 401(a), 403(b),

IRAs if separate accounting is provided

Plan may agree to accept from other non-governmental

plans, subject to IRS 457(b) regulations

Benefits Protected from Employer

Bankruptcy

Yes No

Benefits Protected from Participant

Bankruptcy (IRS claims excluded)

Maybe under state spendthrift trust laws or applicable

state statutes

Maybe, through state law exemption


Differences between 457(b) plans of Governmental and Non-Governmental Employers

Governmental EmployerNon-Governmental Employer /

Tax-Exempt Employer

Loans May be permitted (MetLife does not provide) Not permitted

Federal Income Tax withholding

and reporting of distributions

10% of taxable amount withheld not eligible for rollover to a

qualified plan unless participant opts out of withholding or

increases withholding percentage

20% of eligible rollover distributions not rolled over to

another qualified plan

Tax Reporting done on IRS Form 1099

Distributions considered wages under 3401(a) subject to

income tax withholding. Tax reporting on IRS Form W-2.

10% of taxable amount of distribution withheld to

beneficiaries unless non-annuitized distribution, otherwise

wage withholding rates apply, unless beneficiary opts out

of withholding or increases withholding percentage.

Tax Reporting on IRS Form 1099

State Income Tax Withholding and

Reporting of Distributions

If Federal income tax withheld, some states

require withholding

Distributions to participants withheld using published

state supplemental wage withholding or graduated wage

withholding tables

If Federal income tax withheld, some states require

withholding

Outgoing rollovers and Transfers May be permitted to governmental Defined Benefit plans to

purchase service credit. Plan must permit eligible rollover

distributions to IRAs or other retirement plans.

May be permitted to other 457(b) plans, subject to IRS

457(b) requirements

IRS Premature Distribution Penalty

prior to Age 59½

N/A to distributions to regular 457(b) contributions.

May apply to taxable portion of distributions rolled into plan

from other qualified plans such as 401(a), 403(b), IRAs

N/A

Designated Roth Accounts Yes (MetLife does not provide) No




Generally, in a governmental 457(b) plan, distributions

are allowed for all the following reasons except:

Severance of employment

Unforeseeable emergency as defined by the IRS

Retirement

Age 59 ½




What are distributions from 457(b) plans taxed as?

Ordinary Income

Capital gains if participant was in the plan

for over a year

Contributions are tax-free, but earnings are

taxable as ordinary income

Tax-free if used for retirement



True or False:

Loans can be taken against both 457(b) Governmental

and 457(b) Non-Governmental plans

True

False


401(a) Money Purchase and 401(k) Plans

• Retirement plan savings account primarily used by

government employers, that enables an employer to offer

employees an additional incentive program

• For a 401(a) plan, the sponsoring employer determines

contribution amounts, whether dollar-based or percentage-

based, eligibility and vesting schedules; Contributions are

allowed by the employee, employer or both

• Funds are withdrawn from a 401(a) plan through lump-sum

payment, rollovers to another qualified plan, or through

an annuity

• 401(k) plans offered by a non-governmental employer

may permit participant elective contributions on a Roth,

pre-tax or post-tax basis


401(a) Knowledge Check – Question 1 of 1


Who determines the amount of money that may be

contributed, vesting schedules and eligibility

requirements for a 401(a) plan?

Both employer and employee

Employer

Employee


401(a) Knowledge Check – Answer


Who determines the amount of money that may be

contributed, vesting schedules and eligibility

requirements for a 401(a) plan?

Both employer and employee

Employer

Employee


403(a) Plans

A 403(a) is a retirement annuity plan; It is a deferred compensation

plan that is established by an employer (commonly government

organizations) to provide benefits to participating employees

• Plan generally works in a similar manner to a non-governmental qualified

retirement plan except that the 403(a) plan does not have a trust or trustee.

Rather, plan assets are held under annuity contracts.

• Qualified plan funding only through annuities

• Funded solely by employer contributions

• Recommend that employer have independent investment advice

• May be eligible for a rollover if employee leaves the firm, depending on how the

403(a) annuity was created; Most individual retirement annuities and profit-sharing

plans may be rolled into a self-directed IRA post-employment (Employees should

consult with annuity administrator regarding pension plan qualifications for rolling

these type of annuity funds after employment has ended)


403(a) Knowledge Check – Question 1 of 1

Mutual Funds

Annuities

Through a trust

Mutual Funds and Annuities


How is a 403(a) funded?


403(a) Knowledge Check – Answer


How is a 403(a) funded?

Mutual Funds

Annuities

Through a trust

Mutual Funds and Annuities


State Specific Retirement Plans – ORP & PERA

• Another form of a defined contribution retirement plan which may be offered by a state to

public employees of colleges, universities, K-12 schools, and local government agencies

and public entities

• Generally offered as an alternative to participation in the traditional defined benefit plan

Not offered in all states. States that currently offer ORPs include Florida, Massachusetts, New Jersey,

New York, South Carolina, Texas

Optional Retirement Program (ORP)

• A form of defined benefit pension plan which may be offered by a state to public employees of

colleges, universities, K-12 schools, and local government agencies and public entities

• Generally offered as an alternative to participation in Social Security

Not offered in all states. States that currently offer PERAs include Colorado, Minnesota, New Mexico.

Public Employees Retirement Association (PERA) Defined Benefit Plan


Maximum Allowable Contributions (MAC) Calculation

• 401(k) and 403(b) plans defer taxes on income by allowing elective

before-tax contributions

• Roth after-tax elective contributions are also permitted and when

eventually distributed with earnings will be distributed tax-free subject

to certain restrictions

• Before-tax and Roth elective contributions are aggregated for

MAC purposes

• Two separate Internal Revenue Codes apply to contribution limits

for the individual employee:

– Limit I. Section 415(c) General Limit: applies to both employer and

employee contributions

– Limit II. Section 402(g) Elective Deferral Limit: applies to only the employee’s

voluntary salary reduction contributions (elective deferrals)

• A special increased elective deferral cap for certain employees is also

permitted, and contains specific rules regarding aggregating 403(b)

contributions and accrued benefits with those of other plans


Maximum Allowable Contributions (MAC) – Limits

*Refer to www.IRS.gov for more details on current limits

• Annual additions to a defined contribution plan on behalf of a participant (employer and employee

contributions) cannot exceed the lesser of 100% of the participant’s compensation or $57,000

(for 2020)

Limit I. Section 415 (c) General Limit

• Limit applies equally to all salary reduction contributions (elective deferrals) whether made by an

individual to a 403(b), 401(k), SEP or SIMPLE IRA

• All elective deferrals made by employee to other plans must be aggregated with the 403(b) contribution

to determine if limit has been exceeded. (Contributions to 457(b) plans are not aggregated into the

402(g) limit for the above plans).

• The 2020 annual limit is the lesser of 100% of compensation or $19,500

– Employees over age 50 are eligible to use a catch-up contribution of $6,500 (Govt. plans only –

Not available for 457(b) tax-exempt)

– Eligible employees can contribute $19,500 and a catch-up of $6,500 to both a 403(b) and a 457(b)

Limit II. Section 402(g) Elective Deferral Limit

http://www.irs.gov/


Alternative to 402(g) Limit

Catch-Up Contributions

Salary Reduction Agreements

Final Pay Plan

Excess Deferrals and Contributions

Contributions to 457(b) Plans

Special Catch-Up Contributions

to 457(b) Plans

Click here to learn

about the following

topics related to MAC

Calculations:

Maximum Allowable Contributions (MAC) – Self-Study

https://metlifepro.metlife.com/content/dam/metlifeHoldings/advisors/PDFs/Annuity/MAC_Calculations2018.pdf


MAC Knowledge Check – Question 1 of 2


In a 403(b) plan, what is the maximum additional annual

deferral amount an individual can contribute if she has

15 years of service with her employer?

$1,000

$3,000

$6,500

$5,000


MAC Knowledge Check – Answer


In a 403(b) plan, what is the maximum additional annual

deferral amount an individual can contribute if she has

15 years of service with her employer?

$1,000

$3,000

$6,500

$5,000


MAC Knowledge Check – Question 2 of 2


Which of the following employer groups is not eligible to

provide the special increase in deferral limits for employees

with 15 or more years of service?

Churches

Hospitals

Educational Institutions

Charitable Organizations


MAC Knowledge Check – Answer


Which of the following employer groups is not eligible to

provide the special increase in deferral limits for employees

with 15 or more years of service?

Churches

Hospitals

Educational Institutions

Charitable Organizations


Thank You & Next Steps

Thank you for completing the

MetLife Resources Certification Training!

• You must receive approval from your Manager and acknowledgement from the MetLife

Resources Workplace Sales Director (WSD) to market to and/or service participants in an

MLR employer group. Contact your Manager or MLR Sales Support for next steps

• Contact MLR Sales Support for help with your questions about the not-for-profit marketplace

– 888-377-8999 or [email protected]

• Please note, if you have not already completed the MetLife/Brighthouse Annuity product-specific

training, visit https://naic.pinpointglobal.com/BrighthouseFinancial/apps/default.aspx

Please email a print screen shot of this page to MLR Sales Support

at [email protected] and cc your Manager

so that completion of this training can be tracked.

mailto:[email protected]

https://naic.pinpointglobal.com/BrighthouseFinancial/apps/default.aspx

mailto:[email protected]


Disclosure

Any discussion of taxes is for general informational purposes only, does not purport to be complete or cover every

situation, and should not be construed as legal, tax or accounting advice. Clients should confer with their qualified legal,

tax and accounting advisors as appropriate.

MetLife Resources is a division of Metropolitan Life Insurance Company (MLIC), New York, NY 10166. Annuities are

issued by Brighthouse Life Insurance Company, Charlotte, NC 28277 and in New York only by Brighthouse Life Insurance

Company of NY, New York, NY 10017. Variable annuity products are distributed through Brighthouse Securities, LLC

(member FINRA). Product guarantees are solely the responsibility of Brighthouse Life Insurance Company or in New York

only Brighthouse Life Insurance Company and not MetLife. MetLife, a registered service mark of Metropolitan Life

Insurance Company, is used under license to Brighthouse Services, LLC and its affiliates. Brighthouse Financial is a

service mark of Brighthouse Financial, Inc. or its affiliates. Securities, including Metropolitan Life Insurance Company

variable products, are distributed by MetLife Investors Distribution Company (MLIDC)(member FINRA).

L0819517725[exp0820][All States][DC]

MetLife Resource (MLR) Certification Training · Certification training is recommended before...

Documents

Transcript of MetLife Resource (MLR) Certification Training · Certification training is recommended before...