Questions and Answers about Your Dreyfus 403(b)(7) Account
The following are answers to some frequently asked questions about your Dreyfus 403(b)(7) Account. If you need additional information, please refer to the Custodial Account Agreement, your employer or call a Dreyfus Retirement Specialist toll free at 1-800-358-0910.
How much can I contribute tax free?
Generally your maximum contribution for 2011 is limited to the lesser of $16,500 or 100% or your compensation. However, if you are age 50 or over before the end of the plan year, you may contribute an additional $5,500 (catch-up contribution) for a total contribution of $22,000. If you have been employed for 15 years or more with the same employer, you may be able to make a special election that will allow you to make an even higher contribution.
It's important to determine your maximum allowable contribution carefully because excess contributions may be subject to a tax penalty (with additional penalties if not removed from your account in a timely fashion). Contact your employer or tax advisor for assistance in determining your maximum contributions. If you wish to compute your own maximum, the IRS has published a helpful booklet with step-by-step instructions entitled, "Tax-Sheltered Annuity Programs for Employees of Public Schools and Certain Tax-Exempt Organizations." Ask for Internal Revenue Publication 571 at your local IRS office or by calling the IRS at 1-800-829-3676.
How much must I contribute to my Dreyfus 403(b)(7) Account and may I change the amount of my contributions?
There is no minimum contribution requirement, and you can change the amount of your contributions at any time. See your employer for any restrictions in changing your contribution amount. You may also stop contributing entirely at any time.
What happens to the money I deposit in my Dreyfus 403(b)(7) Account?
Your contributions will be placed in a special account maintained for you by BNY Mellon (Plan Custodian). Your money will be invested in the Dreyfus mutual fund(s) you specify on your Application. Dividends and/or capital gains declared by the fund(s) will automatically be reinvested in additional shares of the same fund(s) in your account.
Can I change my investment selection?
Yes. You have the flexibility to change the way future contributions are invested. You may exchange shares in an existing fund for shares in other Dreyfus funds.
- If you want to redirect the investment of your future contributions, just contact the Plan Custodian in writing. Your instructions will automatically apply to your subsequent contributions to the new fund(s) you have selected.
- If you want to exchange existing shares in one fund for shares of another, just call a Dreyfus retirement specialist or your advisor who will make sure that the exchange is affected.
Can I withdraw money at any time?
You are allowed to withdraw money from your account:
1. Upon attaining age 59½;
2. Upon severance of employment or retirement;
3. Upon your death or becoming disabled;
4. If your employer's plan allows, upon encountering financial hardship.
Any amount withdrawn from your account will be included in your current income. In addition, certain early withdrawals may be subject to a 10% penalty tax.
For further information on distributions or withdrawals available within your plan, please contact your employer or refer to the Dreyfus 403(b)(7) Custodial Account Agreement. You can also call a Dreyfus Retirement Specialist toll free.
What are my options for receiving payment when I am eligible to receive a distribution?
Your Dreyfus 403(b)(7) account may be distributed to you in one of several ways:
- A lump sum payment representing the entire value of your account.
- Payments in monthly, quarterly or annual installments for a period of time that does not exceed your life expectancy, or the joint life and survivor expectancy of you and your designated beneficiary.
- Payments from an annuity contract that provide payments over your life or over the lives of you and your beneficiary.
- A direct rollover to an eligible retirement plan or IRA.
Can I leave the assets in my 403(b)(7) plan for as long as I want?
You must begin making required withdrawals by the later of April 1st following the year in which you reach age 70½ or April 1st of the year following the calendar year in which you retire.
When do I pay taxes on my 403(b)(7) account?
You normally do not pay taxes on your investments until you actually withdraw your money. The money will then be taxed at your ordinary tax rate at that time. If you take payments in periodic installments, you pay taxes only on the amount you receive each year. On the other hand, if you elect to receive your entire account balance in one lump sum, you must declare the entire amount as ordinary income in the year it is received, unless you roll the money over to an IRA, a 403(b)(7) plan or another type of retirement plan within 60 days of receipt.
If I change jobs, can I continue deferring taxes on my 403(b)(7) account assets until I retire and want the money?
Yes, there are several ways in which you can continue to defer your taxes if you change jobs:
- You can leave the assets in your Dreyfus 403(b)(7) account and accumulate additional tax-deferred earnings. However, you are not permitted to make further contributions to the account, unless your new employer is an educational or nonprofit organization eligible to offer a 403(b)(7) plan and consents to your contributing to your Dreyfus 403(b)(7) Plan account.
- You can roll over your assets to an IRA or another eligible retirement plan and continue deferring taxes on the money.
What happens to my account in the event of my death?
The assets in your 403(b)(7) account will be distributed according to the beneficiary designation you filed with the Plan Custodian. You name the beneficiary or beneficiaries when you open your account and you can change your designation at any time by notifying the custodian in writing. In the event of your death, your beneficiary or a representative of your estate should contact the custodian to obtain the information necessary for distribution of the assets.
Call us at 1-800-358-0910 to speak with a Retirement Specialist.
Investors should consider the investment objectives, risks, charges, and expenses of a fund carefully before investing. Download a prospectus that contains this and other information about a fund, and read it carefully before investing.