Catch-Up Contributions

Did you know that if you are 50 years or older in 2018, you can make additional contributions to the Dauphin County, PA Deferred Compensation Plan.  The normal contribution limit is $18,500 for 2018, but participants age 50 or older can make an additional contribution of $6,000, for a maximum annual contribution of $24,500.  Remember, the Employer contribution of $104 per year, is included in this $24,500; so the maximum employee contribution would be $24,396 (based upon 26 pays). 

If you plan to make catch-up contributions, you must contact HR so that they can raise your contribution limit from $18,500 to $24,500 in the payroll system. 

If you would like to discuss your contributions, don't hesitate to Contact Us.

Update to Loan Interest Rate

PLAN LOAN INTEREST RATE INCREASES FROM 5.25% TO 5.50%

The Dauphin County, PA Deferred Compensation Plan offers participants the opportunity to take loans against their account value.  So that you do not fall behind with your retirement income goals, you are required to pay interest on the loan.  The plan's loan interest rate is 1%+ the prime interest rate. The key point is that you are paying yourself the interest.  Essentially, you are acting as your own bank.  Below is more information on how the loan interest rate is calculated and the plan's loan provisions.

THE PRIME INTEREST RATE

You might have heard that the Federal Reserve Bank (Fed) raised its Federal Funds Target Rate (Target Rate) recently.  The Target Rate is the suggested range of interest which one bank may charge another for overnight lending. In December, the Fed set the range at 1.25% to 1.50%. This is an increase of 0.25% over the prior Target Rate.  The Fed does not set the prime interest rate. However, once the Fed establishes the Target Rate, then U.S. banks take action to set the rate for their best or "prime" customers. Generally, a bank's prime rate is linked to the Target Rate and moves in lockstep with it. Each U.S. bank can determine its own "prime" rate that it offers customers. However, there is no central authority which sets "prime."

The loan interest rate is based upon the prime interest rate.  The Wall Street Journal (WSJ) publishes the prime rate, which is determined by surveying the thirty largest banks in order to come up with a consensus amount.  The WSJ reports changes to the prime rate when the surveyed banks have adopted a new rate, which occurred when the Fed raised its Target Rate in December.

PLAN LOAN PROVISIONS

Any active employee may borrow money from his/her account for any reasonable purpose. Provisions of the loan program are as follows:

  • You may borrow up to half of your total vested account balance for any purpose, with a minimum loan of $1,000 and a maximum loan of $50,000.
  • The maximum number of loans a participant may leave outstanding at any time is two.
  • You may choose a repayment schedule of up to five years, except if the loan is used to acquire your principal residence (up to 15 years). All loans will be paid back through payroll deduction.
  • The interest rate charged on your loan will be 1% above the prime interest rate. All interest that you pay on your loan is credited to your account.
  • A one-time, non-refundable fee of $75 plus a $25 per year administrative fee will be deducted from your loan proceeds.
  • It may take three to four weeks to process your loan application, so plan accordingly.

If you have questions regarding the plan loan provisions, Contact Us.

 

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Payroll Deduction Limits Increase for 2018

In 2018, the maximum amount that you can contribute into the Dauphin County, PA Deferred Compensation Plan will increase from $18,000 to $18,500.  The catch-up contribution for those age 50 or older in 2018 is an additional $6,000 for a combined maximum contribution limit of $24,500.  Over 26 pays, the per pay limit would be:

$18,500 - $104 (employer contribution) = $18,396 / 26 = $707.53

$24,500 - $104 (employer contribution) = $24,396 / 26 = $938.30

If you would like to maximize your contributions for 2018, you can submit payroll deduction changes in December.  Payroll deduction changes can be made any time throughout the year and will take effect the first pay of the month after submitting the change request - submissions in December will take affect in January.

Payroll deduction changes can be made on the Alerus participant website or by contact HR.  If you have any questions, Contact Us.

November Fund Changes and Model Updates

On November 15th, 2017, the Dauphin County, PA Deferred Compensation Plan will take the following actions:

  • Remove the Fidelity Inflation Protected Bond Fund (FINPX) from the Dauphin County, PA Deferred Compensation Plan’s investment line-up and models and replace it with the Eaton Vance Short Duration Real Return Fund I (EIRRX) in the plan investment line-up and modes.
  • Add the Third Avenue Real Estate Value Fund (TVRVX) as the global real estate investment option for inclusion in the Plan’s models and for participants to select as a component in their portfolios.
  • Rebalance the DC Conservative through DC Aggressive Growth Models to their new allocations that include the Third Avenue Real Estate Value Fund. The new model allocations are listed on page 2.

So that the fund changes may be made, there will be no trading in participant accounts on November 14th and 15th.  Trading will resume as normal, usually by mid-day, on November 16th, 2017.  If you would like to make changes to your account, please do so before November 14th. 

You can read the plan announcement that was distributed with your paychecks on October 13th using the link below:

Update to Loan Interest Rate

Plan Loan Interest Rate Increases from 5.00% to 5.25%

The Dauphin County, PA Deferred Compensation Plan offers participants the opportunity to take loans against their account value.  So that you do not fall behind with your retirement income goals, you are required to pay interest on the loan.  The plan's loan interest rate is 1%+ the prime interest rate. The key point is that you are paying yourself the interest.  Essentially, you are acting as your own bank.  Below is more information on how the loan interest rate is calculated and the plan's loan provisions.

The Prime Interest Rate

You might have heard that the Federal Reserve Bank (Fed) raised its Federal Funds Target Rate (Target Rate) recently.  The Target Rate is the suggested range of interest which one bank may charge another for overnight lending. Most recently, the Fed set the range at 1.00% to 1.25% on June 15. This is an increase of 0.25% over the prior Target Rate.  The Fed does not set the prime interest rate. However, once the Fed establishes the Target Rate, then U.S. banks take action to set the rate for their best or "prime" customers. Generally, a bank's prime rate is linked to the Target Rate and moves in lockstep with it. Each U.S. bank can determine its own "prime" rate that it offers customers. However, there is no central authority which sets "prime."

The loan interest rate is based upon the prime interest rate.  The Wall Street Journal (WSJ) publishes the prime rate, which is determined by surveying the thirty largest banks in order to come up with a consensus amount.  The WSJ reports changes to the prime rate when the surveyed banks have adopted a new rate, which occurred when the Fed raised its Target Rate in June.

Plan Loan Provisions

Any active employee may borrow money from his/her account for any reasonable purpose. Provisions of the loan program are as follows:

  • You may borrow up to half of your total vested account balance for any purpose, with a minimum loan of $1,000 and a maximum loan of $50,000.
  • The maximum number of loans a participant may leave outstanding at any time is two.
  • You may choose a repayment schedule of up to five years, except if the loan is used to acquire your principal residence (up to 15 years). All loans will be paid back through payroll deduction.
  • The interest rate charged on your loan will be 1% above the prime interest rate. All interest that you pay on your loan is credited to your account.
  • A one-time, non-refundable fee of $75 plus a $25 per year administrative fee will be deducted from your loan proceeds.
  • It may take three to four weeks to process your loan application, so plan accordingly.

If you have questions regarding the plan loan provisions, Contact Us.

2017 Q2 Tactical Model Report is Available

The quarterly report on the Tactical Models available in the Plan is available to download.  You can access it via the link below.  You can also sign up for the email list to have it delivered to your inbox.

The models will continue to have their maximum equity exposures, which are:

30% - Conservative Model High Risk Category Exposure

60% - Moderate Model High Risk Category Exposure

90% - Growth Model High Risk Category Exposure

There will be minor changes to the underlying funds for the quarter.  Fixed income (bonds) investments will remain the same.  High Risk Category investments (stocks) will have exposure to U.S. and International stocks and no exposure to material and real estate funds.

If you have any questions, regarding the models or your account, please contact us.

This site is intended for the employees of Dauphin County.  It contains information on the Dauphin County, PA Deferred Compensation Plan, educational material, and investment and financial planning resources provided by Retirement Collaborative LLC.  In order to access the website content, please log in.  If you would like to access the Plan's participant website, select Access Account.  On the Plan's Participant Website, you will be able to view and make changes to your account.  If you have questions, please contact Retirement Collaborative LLC at 717-545-1447.

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