Gretchen Thal
TVA Retirement System Board of Directors
|
|
|
|
Frequently Ask QuestionsThere are a number of questions surrounding 401K limits and the pros and cons of contributions. I hope the following will clarify 401K contributions.. You can contribute to your 401k on either/both a before-tax and/or an after-tax basis. I strongly encourage 401K contributions at the minimum amount necessary to get the employers maximum matching amount (for TVA employees that is 6%) (ex. salary $40,000 * 6% = $2,400) (for Highly Compensated Employees salary $80,000 * 6% = $4,800). Additionally, keep in mind that in the TVA Retirement System there can be contributions to all your sources ie. 401k before-tax and 401k after-tax and 401k matching and the TVA retirement system annuities (if applicable, fixed and variable) up to a total amount of 100% of gross earnings or $40,000 which ever is less. The current TVA Retirement System plan year runs from 10/1/2001 to 9/30/2002.
Important Closed Mutual Fund InformationQ. Is it true that (for example) the Magellan Fund is closed to new investors? I've heard that TVA employees that are members of the Retirement System that are not contributing to the Magellan Fund cannot start placing money in the Magellan Fund. A. All new and current TVA employees that want to invest in the Retirement System 401K funds as part of their retirement plan can select from any of the funds, including the Magellan Fund. However, it is true that the Magellan Fund is closed to new investors who want to purchase directly from Fidelity Investments.
Q. I have a question about the 1.3% multiplier in calculating our pension. Seems as though you have explained before, but there was an explanation as to why it could not be increased. I work with the Distributors and have not found a single one whose multiplier was this low. Another candidate has been talking about getting it changed and I fear he will be taking votes from you. Please send me some sort of answer so I can pass it on to those folks that I have told (when asked) to vote for you. I realize you are in the same situation as most of us, so if you could help get it changed you would! Thanks for all your hard work and we need you for another term. A. The short answer is YES, both my husband and myself would benefit greatly from an increased pension factor and I would really like to have the increased pension amount coming in on our paychecks. We are both above the age of 50, and therefore, any increase is of paramount benefit. Additionally, this is true for both of the other elected board members so you can be sure that we are all interested in getting as much as possible while still maintaining the health of the system, and staying within the legal boundaries. Concerning the distributors, every pension system I have checked, with a greater multiplier factor, has a mandatory employee contribution of at least 5% of the employees payroll into the pension system. All of ours/TVARS is paid for by the contributions and earnings provided to TVARS from TVA. Any contribution we make is in addition to our TVA provided benefit, and the sum of our pension + an annuity from a mandatory employee 5% contribution rate, has always calculated to a larger amount than the other pension systems. There are 2 other issues I would like to address. The first being the COLA (cost of living increases). COLA's have always been grated for TVARS members. This is important to me because I certainly cannot buy bread for the same money I bought it with 10, 15, 20 years ago, and I have to guess that I will need an additional increasing pension amount with a COLA to purchase my groceries 10, 15, 20 years AFTER my retirement. Almost 3 years ago, during my first few months on the TVA Retirement System board, I was studying chapters from an accounting textbook concerning pension systems. Without going into a great deal of technical terminology, I learned, to my surprise, that almost all of the time, the numbers and percentages presented when writing, discussing and presenting information concerning pension systems, pension liabilities, pension liability coverage, etc. (you get the idea) are using the assumptions for an ongoing system. That means there is a sponsor (TVA in our case) who is responsible for additional pension contributions if that need should ever become necessary. Obviously this can only happen if TVA continues to exist. Now let me make it perfectly clear that I do not foresee such a situation, but I am aware that unforeseen actions of Congress could change our directives. Because of the remote possibility of unexpected events, I began working on this, and for the time I have been on the retirement system board, I have had a personal financial goal for our system that would insure its ability to meet all the financial obligations to all our retirement system members, if for some reason, TVA were no longer our retirement sponsor. In simple terms that actuarial liability coverage has been approximately between 136% and 139% coverage during my term on the board. That is the level I would personally like to see us maintain. I feel this is just good business planning within the framework that exists today in a deregulated environment. DISCLAIMER: Once again, the views expressed here are my own and in no way reflect those of the Tennessee Valley Authority nor the Tennessee Valley Authority Retirement System. Additionally, any increase in benefits must be approved by both the TVA and the TVARS boards. It must first pass sound financial actuarial tests, as well as legal tests. We were informed by legal during our work over the last couple of years, that a multiplier increase would not be likely to pass certain pension legal tests. That is not to say we have quit looking at this. What we have done over the last several years is to look at the problems that people are trying to address, and then work towards a way to resolve the problem, as often the solutions retirement members send, cannot be implemented due to any number of the above 3 factors (legal, actuarial, or the passing by the TVA & TVARS boards). I plan to continue posting questions and answers on my home website. If you need further information please feel free to email or call me. I will be glad to come and talk to any group of the retirement system members, whether retired or active employees. I always leave room for a good deal of questions and answers because I am very interested in addressing any issues on peoples minds that have to do with their retirement or related questions. Thanks soooo much for your support, your questions, your willingness to try to understand, and your work in attempting to bring understanding of the issues to others. Gretchen
Q. I heard that IBM paid all of their employees their cash balance amount from their retirement fund and the company kept the remainder of the money. I have been told that TVA could do the same to us. Is this true? A. No, it is not true. The TVA Retirement System belongs to all 35,000 system members (active, deferred and retired), and it does not belong to TVA. TVA is a separate entity from the Retirement System. If TVA were to cease existence or to sever its relationship with TVARS, then TVA would no longer be our sponsor. Any excess above liabilities would belong to the 35,000 members of our system. It would not belong to the active employees alone, nor to those already drawing a check. It would belong to all the members of the system. There are a number of options that could become available if that were to happen. A lottery or a scheme to distribute the funds among the active employees is not even a remote possibility. All increases/changes in liabilities ( i.e. paying out a greater amount of the funds to our members) must be approved by both the TVA and the TVARS boards. All changes must pass rigorous legal and actuarial requirements. The purpose of this is to safeguard your pension. This is called a fiduciary responsibility. I hardly think a Las Vegas type of mentality would meet this requirement.
Q. Can you increase 401K payroll allocations on the phone line? A. Yes, you can now change/ increase Annuity payroll deductions through the voice response system, (7575-K) or 5-632-7575, or 1-800-734-3275, using the contributions option for the annuity. You can now change/ increase 401K payroll deductions through the voice response system, 5-632-7575, or 1-800-734-3275, using the contributions option for the 401K. You can do this at any time as long as you know your Retirement System pin number.
Q. What If I do not know my Retirement System Pin Number? A. Be sure and call the retirement system at 5-632-2672 and let the staff know that you need to get a new pin number, that you have forgotten yours, and get this cleared up during normal business hours. Note 1: During normal business hours call the retirement system at 1-800-824-3870. After business hours, be sure to call our other numbers, 5-632-7575, or 1-800-734-3275, for voice response information and transactions. Note 2: If there is maintenance being performed on either of these lines, it normally does not last over 30 minutes, so just try calling back a bit later.
Q. Which is more valuable at retirement sick leave or annual leave (after you have 80 points and have accumulated excess sick leave)? A. There is more flexibility with annual leave. You can choose to take accumulated annual leave (that has not been forfeited) in cash at retirement.
Q. If an employee is sick and has the option between using sick leave or annual leave, which should they take? A. Sick. Again, annual leave is more flexible and you can take the money for all annual leave that is not forfeited at retirement.
Q. What is the amount I must contribute to my 401K to get the most possible matching contributions from TVA? A. You must contribute at least 6% of salary to get the maximum TVA matching contribution.
Q. How can I make a change to get at least 6% taken from my pay and put into my 401K? A. You can contact Retirement Services using the voice response system shown above. You can also process your changes using forms available in Microsoft Exchange. To obtain the on-line forms:
To begin or change Payroll deduction amounts for your 401K you will select form "Rs-1c.doc". When you double-click on the form it will open in Microsoft Word and you can:
The TVA RS mailing address is at the bottom of the form. If you are already a contributor to the 401K, you only need to fill out the first page to change (increase) your current payroll allocation. If you are a new 401K participant, then you also need to fill out the RS-2C form, which is a beneficiary designation form for the 401K plan. The above forms are also available from Retirement Services or your local human resource office.
Q What about the ATRS (Alabama Teachers Retirement System), why don’t we have a pension factor of 2.0 (like they do) instead of 1.3 that we now have? A. I will try to summarize. I have studied this situation thoroughly and the following is only my understanding after interviewing numerous people and reading a great deal of documentation on the subject.
 Note: I am not qualified to give tax advice. This is my current undrstanding. This is information I might need to kow undr a wide variety of circumstances.
Q. You make think this is silly, but I know that some vote against you because you won't take your husband's name. It gives the impression of an ego problem. Otherwise, you seem the most qualified. I also get aggravated with the types who run without any credentials, but still get votes. This is an embarrassment. A. Actually, for me, I think it's a type of perverse logic. I did change my name the first time I married. (Unfortunately, things do not always go as planned). Then I went to a professional computer conference and everyone knew where all the guys were from a few years back that had worked on our same project, but few were able to find the females because of name changes. When I married Dale we were both in the same field, but represented different customers. We were often in the same meetings and held differing opinions for our differing customers needs. Therefore, I continued using my maiden name professionally. Maybe I have been guilty of being over cautious (and for some, they may think that means an ego problem). Socially, I often am known as Mrs. Johnson or as Gretchen Thal-Johnson. I honestly don't care what name anyone calls me. I am proud to be Dale's Wife, and only use my maiden name professionally. It is too bad that would cost me votes. In today's world one never knows when it might be important for a business acquaintance to be able to locate me. At the time I married Dale, I was still raising 3 children and he was responsible for 2. Between the 2 of us that was 5 and neither one of us took the responsibilities lightly. Additionally, you might notice that I had no problems using OUR web site, with the email address of my husband, Dale Johnson. Well enough. I appreciate your email. Maybe you will have an opportunity to explain, or maybe reference this web site. I hope so. As far as qualifications go, I truly enjoy this avocation and continually read the literature related to the pension and investing fields as well as teaching, speaking, and attending classes, seminars etc. I take this responsibility seriously and it is a pleasure to hear when someone decides that I am the most qualified. Thanks again. I appreciate your comments and I hope I have your support. Gretchen Thal (alias Gretchen Thal-Johnson, Mrs. Dale Johnson)
Q. I am male assistant unit operator at Kingston steam plant, with 26+ years of service with TVA. I have 6 years of active duty in the military, 2 of which was spent in Vietnam pre TVA employment. I am also retired from the national guard. I chose to continue to serve this country by staying in the guard, and in doing so I used my weekends off, my annual leave, and leave without pay. Now this is being held against me by not allowing me to buy my active duty time to use toward my retirement. This is a slap in the face not just for me but also for other TVA Retirement members in the same position. I would like to know your position on this subject. A. I was in school and the mother of young sons during the Vietnam conflict. My brother was in the paratroopers and I saw the terrific toll that my parents and sister-in-law's concerns took on them. Our family was very fortunate. I saw others who were not as fortunate. I am for helping those that have served on foreign shores, in wars etc. because I can see some of the physical effects and can only imagine other effects of this service to our country. I used some of this exact same logic/argument, when we were working to increase the benefits package during 1998. I want you to know that the package that was approved has not been the last of the discussions that have occurred. We passed as much as we could get in 1998, and will continue to work to improve on those changes at every opportunity. Although it would be nice to get all of everything in effect immediately, that is not the way it works. Every change in liabilities takes a majority vote of both the TVA and the TVARS boards of directors. For your information, some of the arguments that are made against this type of benefit change is that you can not draw twice for the same service; however, this has never been an argument I made, let me make that very clear.
Q. When you ran for the Retirement Board the first time, I solicited your support in adding socially responsible funds to those available to TVA employees participating in the 401(k) program. Now that you are up for election for a third term, please apprise me of the status of your efforts to bring this option to TVA employees. A. Studies done initially (within my first year on the board), did not provide enough of a track record at that time to allow inclusion. For that reason and others of the categorization type, we opened the Brokerage window for any who would like additional options. Success on this one. We have chanded the 401k structure from 3 tiers to 4 tiers. today in the 3rd tier you can invest in socially responsible funds without having to use the Borkerage link. The book listed below mentions the Domini funds and they are part of my ongoing research. I am pleased the track records (history) are now in place. Thanks, for you past support and you comments and questions, Gretchen Thal
You can reach
me by
|
|
Copyright ©
2002 Gretchen Thal
|
