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1. How can I enroll in the 401(k) Defined Contribution or 401(k)/457 deferred compensation plans?
Since April 1, 1997, all new employees of the State of Michigan are automatically enrolled in the 401(k) Defined Contribution Plan and the state begins to contribute 4% of your gross pay to the plan. You should then receive a packet in the mail from Voya Financial with information about the plan and your personal identification number (PIN). This PIN, along with your Social Security number, can be used to access and change your account information through the toll-free number 800-748-6128 or by accessing the Voya website.
You must contact Voya with the percent of your compensation you want to contribute. As soon as the State of Michigan starts deducting contributions from your pay, the State of Michigan will match those contributions up to 3%. Contributions are done on a pretax basis. Participants in the Defined Benefit Plan may also participate in the 401(k) or 457 plans by contacting Voya to begin deferrals.
2. How does a defined benefit plan differ from a defined contribution plan?
A defined benefit plan pays a benefit that is determined by a formula. The employer is responsible for paying into the retirement system enough money to fund those retirement benefits. At retirement, the amount of the benefit is fixed by the benefit formula. A defined contribution plan is one in which the employer and the employee contribute money to the employee's retirement account. The employee determines how the money will be invested which determines the amount of money in the account at retirement. At retirement, the employee determines how they want their account balance paid out.
3. What are the advantages of contributing to a deferred compensation plan?
In both the 401(k) and 457 plans, the contributions the employee puts in the plan are pretax contributions. This means that the employee will not pay taxes on this money during the current year and can defer taxation of the contributions and earnings until the money is paid out of the plan. In addition, the employee will be saving on a regular basis directly from their salary to help build a more comfortable retirement.
4. What do I do if I change my address?
If you are still an active employee of the State of Michigan, or are on leave of absence, contact your human resources office. If you are terminated or retired, contact Voya.
5. How do I designate or change my beneficiary?
You should complete a beneficiary designation form when you first enter the plan. Anytime you need to change your beneficiary, contact Voya to get a change of beneficiary form.