How the Plan Works
You must enroll in the Plan in order to participate and to be eligible for MPTN’s employer matching contributions. You can enroll in the Plan any time after you complete 90 days of employment with MPTN.
Once you enroll, you will receive an account statement in the mail every quarter. The statement shows your account balance, as well as any contributions and earnings credited to your account during the reporting period. At Benefits OnLine, www.benefits.ml.com, you can view and print your statement or elect to receive your statements via e-mail by changing your delivery preferences.
Employee Contributions
Once you are eligible to participate in the Plan, you can authorize MPTN to deduct an amount between 1% and 50% of your covered earnings (in 1% increments) from your paycheck each pay period on a pre-tax and/or Roth after-tax basis, up to an annual limit which is periodically adjusted for inflation. (For more information, see “IRS Plan Limits” below.) Your contributions will begin with your next regular pay period.
If you are age 50 or older, or will turn age 50 during the current Plan year, there is an additional pre-tax and/or Roth after-tax elective contribution available — catch-up contributions. For detailed information, see “Catch-Up Contributions” below.
Employer Matching Contributions
MPTN will match the amount you contribute, dollar for dollar, up to the first 4% of your covered compensation through weekly employer-matching contributions, beginning with the first pay period for which you make contributions. All employer matching contributions are made on a pre-tax basis.
For example, if you earn $18,000 a year and you contribute 6% throughout the Plan year, you will have contributed $1,080 for the year. MPTN will have contributed $720 ($18,000 X 4%) for the year to your account as a matching contribution. In effect, you have added $1,800 for the year to your 401(k) account, at a cost to you of only $1,080.
IRS Plan Limits
Contributions — both yours and MPTN’s — are subject to certain limits under federal tax law, including an annual maximum limit on the amount you can contribute from your covered earnings on a pre-tax and Roth after-tax basis. Your combined pre-tax and Roth after-tax contributions cannot exceed this annual maximum limit. In addition, contributions by some team members may be limited by Section 415 of the Internal Revenue Code, which relates to limitations on contributions and benefits under tax-qualified plans. You will be notified if you are affected by any of these limits.
These IRS limits are periodically adjusted for inflation. Updates are posted annually on Benefits OnLine at www.benefits.ml.com or can be obtained by calling the Merrill Lynch Participant Service Center at 1-800-228-4015. These limits are also posted on MPTN’s intranet.
Pre-Tax and Roth After-Tax Contributions
With pre-tax contributions, money is deducted from your pay before federal and, in most cases, state and local income taxes are calculated. Also, earnings on your contributions accumulate on a tax-deferred basis. You pay income taxes on your pre-tax contributions and earnings at the time you withdraw them. Roth after-tax contributions are withheld on an after-tax basis from your pay. Current taxable income is not reduced. Any earnings are tax-free if you take a “qualified distribution,” which is described under the “When Benefits are Paid and Taxed” section of this document.
Catch-Up Contributions If You are Age 50 or Older
You may be eligible to make a catch-up contribution. To make such a contribution, contact the Merrill Lynch Participant Service Center at 1-800-228-4015 or access Benefits OnLine at www.benefits.ml.com. For more information, see “IRS Plan Limits”.
Catch-Up Contributions
Tax law changes allow individuals age 50 or older to make contributions to their 401(k) accounts that go beyond the regular maximum IRS contribution limits. These additional contributions are referred to as “catch-up” contributions because the intent is to provide additional savings opportunities to individuals who might not have had access to 401(k) plans throughout their careers.
You are considered age 50 for the Plan year if you celebrate your 50th birthday any time during the Plan year. For the MPT 401(k) Retirement Plan, the Plan year is the calendar year. So, if your 50th birthday is December 16, for example, you are considered age 50 for the entire Plan year.
If you are eligible and your regular contributions reach the current IRS maximum contribution limit or Plan limit, you can contribute more, up to a separate annual catch-up contribution maximum. These IRS maximums can be found on Benefits OnLine at www.benefits.ml.com, MPTN’s intranet, or by contacting the Merrill Lynch Participant Service Center at 1-800-228-4015.
Here are some other things to keep in mind about catch-up contributions:
- Like your regular contributions, your catch-up contributions must be made through payroll deductions.
- You can authorize an amount from 1% to 99% of your covered earnings, in 1% increments.
- You can make your catch-up contributions over a few pay periods or throughout the year, as long as you keep within the contribution limit.
- You do not need to make the full catch-up contribution. You can elect to make a lower catch-up contribution.
- There is no MPTN match on catch-up contributions.
To elect this catch-up option, contact Merrill Lynch at 1-800-228-4015 or access Benefits OnLine at www.benefits.ml.com.
Updates to Limits and Changing Your Contributions
IRS limits on contributions are updated annually on Benefits OnLine and MPTN’s intranet. You can increase, decrease, stop, or resume your contributions at any time by contacting Merrill Lynch at 1-800-228-4015 or accessing Benefits OnLine at www.benefits.ml.com. Any change you make will be effective with your next regular pay period.
Planning Your Rate of Salary Deferral
Essentially, you have two approaches to consider when planning your salary contributions to the MPT 401(k) Retirement Plan. These approaches are generally suitable for individuals with higher incomes.
- Spread your contributions across 52 weeks of the calendar year. This approach provides a consistent stream of new contributions to your 401(k) account (your salary deferral amount, plus MPTN’s weekly match). To calculate your optimum deferral rate, use the following formula:
- Regular Maximum Annual Salary Deferral Limit ÷ your annual earnings = percentage to contribute each pay period.
- “Front-load” your contributions early in the year. The potential advantage of this approach is that it enables you to reach your regular maximum annual salary deferral limit earlier in the year than the approach discussed above. However, remember that the Plan matches on a weekly basis. Once you have reached your regular maximum annual salary deferral limit, no further deductions will be made from your paycheck, and no weekly match can be made.
To make sure that you receive the maximum match from MPTN, even if your contributions end early in the year, the Plan uses what is known as a “true-up” calculation at the end of the calendar year. This “true-up” calculation is designed to make up the difference between the maximum employee match (based on your own deferrals) and the amount of MPTN’s match that has already been contributed into your 401(k) account.
Using this approach, you will ultimately receive the same amount of employer match as you would by spreading your deferral throughout the year, but a portion of your match will not be placed in your account until after December 31. In order to receive any employer match from this “true-up” process, the Plan requires that you be employed with MPTN as of the last day of the calendar year.
Team members who retire, become totally and permanently disabled, or die during the Plan year will be eligible for the “true-up” adjustment as well. (Please note that normal retirement age is defined as age 65 or the fifth anniversary after which the team member began employment with MPTN, if later.)
For More Information …
Contact Merrill Lynch at 1-800-228-4015 for more information on making rollover contributions. You should also consult your tax advisor.
Rollover Contributions
You can also make rollover contributions from another employer’s tax-qualified plan or a taxable individual retirement account (IRA), such as the following:
- 401(k) plan,
- 403(b) plan,
- 457(b) plan,
- Simple Employee Plan (SEP),
- Rollover (conduit) Individual Retirement Account (IRA), or
- Contributory (traditional) IRA.
If you are considering making a rollover contribution, be sure that you understand how the MPT 401(k) Retirement Plan works. For example, you should know how the Plan’s withdrawal features may differ from those of your previous employer. You can make a rollover contribution even if you have not yet met the eligibility requirements for your participation.
When Contributions Stop
Contributions to your Plan account stop in the following cases:
- When your employment ends,
- While on an approved leave of absence and no longer receiving a paycheck,
- While you are receiving disability benefits from MPTN’s Short or Long-Term Disability Plan.
Also, if you take a military leave of absence, your contributions to the Plan are suspended during your leave. When you return from a military leave, you are eligible to make up contributions to the Plan as if you had actually received your regular covered earnings from MPTN during your leave. Your make-up contributions are eligible for MPTN matching contributions up to applicable limits. The make-up payment period begins upon your return and cannot exceed the lesser of three times the period of military service or five years.