Department of State Employees Savings Trust Frequently Asked Questions

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1 Department of State Employees Savings Trust Frequently Asked Questions The Department of State Employees Savings Trust has many documents which control the plan, and are designed to meet the rules and regulations of the various laws which govern employer sponsored tax advantaged retirement plans. These documents may be found posted on the plan website. From time to time, as required by law or changes to the plan structure, these may be updated. If there is a conflict between the response to a question below, and a rule listed in these documents, the rules in the plan documents supercede any of the comments or responses to the questions in this FAQ summary. Eligibility and Enrollment When does the plan start? Deductions will begin as of pay period 7, Am I eligible? The plan is open to all Department of State PSC s on the first of the month after your date of hire. Non-PSC s are not eligible, along with other various categories noted in the Plan Highlights. Can I join at another time? Yes, you may join as of the first of the month in any pay period following this initial sign up period. Please note that deductions may not take place immediately due to processing delays, however, every effort is made to keep this process timely. Can I change the amount I contribute? Yes, by completing a new sf1199 form and submitting this to the payroll manager, you can adjust your contributions. How do I join? The easiest way to join the plan is to go the plan website There, you will find instructions regarding how to sign up, investment information, payroll deduction instructions and many other aspects of the plan. Additionally, there will be enrollment meetings held in Washington, D.C. during the March 2011 time frame. In these meetings, you can complete paperwork for submission to join the plan.

2 I can t sign into the website. What do I do? For assistance signing into the website, please call (ext 206). Tell them you are with the Department of State Employees Savings Trust and it is plan number They will ask you a few security questions and be able to provide further assistance with signing onto the site. Where do I send my paperwork? If you complete your enrollment into the plan via the website, there is no need to submit an enrollment or beneficiary form to anyone. You do need to complete the payroll deduction form, sf1190 and turn this in to your payroll manager for the deductions to commence. Here is a list of the contacts by bureau: Overseas Building Operations (OBO) Meana Ward Diplomatic Security (DS) Marlin Williams International Narcotics and Law Enforcement (INL) James Alderman If you complete paperwork by hand, you may send the enrollment and beneficiary forms to the local plan contact at Bowman Gaskins Financial Group. The forms may be ed to Dennis Donovan at ddonovan@bowmangaskins.com or faxed to Mr. Donovan at The payroll deduction form, sf1190, should still be turned in to your payroll manager as noted above. Odds and Ends What are the rules about completing the Beneficiary form? The Beneficiary Form must be completed in order to provide instructions to the Plan Trustee in the event of your death. By law, your beneficiary must be your spouse, unless they agree, in writing, to forego the money. Also, minor children should not be named beneficiary to your funds, as they are not permitted to receive the assets until reaching age 18. Trusts and Charities may also be named as beneficiary to plan assets. The beneficiary for your account may be changed at any time, and it is recommended that you review this periodically to ensure that it is correct. Please consult legal counsel if you have other questions. Can I access my funds while I am still a PSC? The plan does permit loans to plan participants. Please see the loan document for the regulations regarding this option.

3 Distributions are also permitted for Financial Hardships, which may be taxable, and subject to IRS penalties. Please see the rules and regulations regarding these types of withdrawals in the plan document. What happens if I leave my PSC position? In the event you leave your position as a PSC, you are allowed to transfer your funds to a personal Rollover IRA, another employer s plan, or in most instances, leave the account in the plan or receive a cash distribution. See the plan document for more details. Investing your money Is there a minimum amount I need to contribute? Yes, there is a $10 per pay period minimum contribution requirement. Is there a maximum amount I can contribute? The IRS sets and reviews plan contribution maximums annually. In 2011, the maximum amount you may contribute is $16,500. If you are over age 50 before the last day of the year, you may contribute an additional $5500, called a catch up contribution. Check on these amounts annually to take advantage of any changes. What are the options available in this plan? The Department of State Employees Savings Trust provides you the opportunity to invest in a Traditional or Roth 401(k) account. You can also do some of each; with the combined contribution total not exceeding the annual IRS maximum contribution limit. The Traditional account contributions are tax deductible now, and all funds coming out in the future will be subject to the prevailing income tax rates. The Roth account contributions are made with after tax money, but are not subject to tax when withdrawals occur, so long as the IRS minimum investment period is achieved. Please see a tax adviser for further information. Can I rollover money into this plan? Yes, this plan will accept rollover contributions. Please see the website for more details on how to complete this transfer. Can I write a check and send in additional contributions from my savings? No, this is not permitted. All contributions must come from a payroll deduction. However, you may adjust your contribution to include your full paycheck, as long as it does not exceed the IRS maximum. I have a pension coming in from another source. Can I still contribute?

4 Having a pension come in from another source does not preclude you from contributing to this plan. I have a Traditional IRA to which I contribute each year. Can I still deduct this contribution? The answer is, it depends. There is a level, depending on your tax filing status, under which you may still deduct contributions to a Traditional IRA. However, above these levels, no deductions are permitted for the Traditional IRA, because you are covered under an employer plan. It is recommended that you consult a tax adviser or the IRS website for further information. Search for the heading Table 1-2. Effect of Modified AGI 1 on Deduction if You Are Covered by a Retirement Plan at Work on the website The Plan Investments How are the plan investments chosen? The plan investments are screened for a number of criteria. Among these criteria, mutual funds are filtered for fund expense, manager tenure, fund performance within it s stated category, and availability through retirement plans. The goal is to offer a broad spectrum of investment options which permit participants to choose among funds which hold stocks or bonds, of domestic or international companies or governments. The investment options are periodically reviewed for continued performance; and if a fund fails to continue to meet these criteria, the fund will be replaced with a similar investment option. How many investment options can I choose? You are able to utilize as many or as few of the funds as you wish. There is a 1% of account value minimum, and no fractions of a percent are allowed as investment allocations. Can I move my funds within my account? Yes, funds may be moved within your account on a daily basis. However, since mutual funds are structured to be a long term investment vehicle, some funds may carry a short term redemption fee to discourage frequent trading, if the fund is only held for a short time (meaning up to 90 days). Please see the fund prospectus, available through the website, for more details. Am I charged a load or purchase fee for my investments? Under this plan, there are no up-front loads or charges to invest your money. The only fee you would potentially incur would be the short term

5 redemption fee in the event you were to sell the fund after holding it for a brief period. Do I need to meet the minimum investment amounts noted in the fund prospectuses of some funds? Any fund in this plan may be utilized without meeting any required investment minimums noted in a prospectus. Whatever the amount you invest in the fund, this money will be invested as soon as any other fund investment would be made. Is there any Guaranteed Investment Option? No, the plan investments do not offer any Guaranteed Investment Option. However, the plan does offer a wide variety of investment options, with very conservative opportunities in a Money Market style fund, also known as a Stable Value Fund. How can I speak with someone about where to invest my account funds? The plan offers the opportunity to speak with a local representative that is Series 7 Registered. The local representative may be reached at: Dennis Donovan C/o Bowman Gaskins Financial Group 75 West Lee Street Suite #102 Warrenton, VA ex115 (voice) fax ddonovan@bowmangaskins.com