Q) When can I transfer from the Defined Benefit Plan (“DB Plan”) to the Defined Contribution Plan (“DC Plan”)?
A) P.L. 26-85 changed voluntary time frame to switch from the DB plan to DC plan and allows an "open enrollment" period where each year between March and May eligible employees can switch from the DB to the DC plans.
Q) If I do not transfer during the window and I terminate or separate from government service, will I be eligible for the Defined Contribution Plan if I am re-employed by the Government of Guam?
A) If you elect not to transfer within the window and you terminate or separate from employment, you will not be allowed to participate in the Defined Contribution Plan unless you have fully withdrawn your contributions from the Defined Benefit Plan (“DB Plan”).
Q) What are the basic differences between the Defined Benefit Plan and the Defined Contribution Plan?
Defined Benefit Plan (“DB Plan”)
- 9.5% Employee contribution
- After-tax dollars
- GovGuam Retirement Fund directs investments
- Benefits based on formula rather than return on investments
Defined Contribution Plan (“DC Plan”)
- 6.2% Employee/Employer contribution
- Before-tax dollars
- Participant directed investing
- Benefits based on the account balance and payout options chosen
Q) How do I choose my investment options when I do not know much about investing?
A) Although Empower Retirement and the Government of Guam Retirement Fund will not give advice on what investments to choose, we will be able to assist you in determining your investor profile that will assist you in choosing the right investments for you.
Q) If I terminate employment, do I have to withdraw my money from the Defined Contribution Plan?
A) No, you do not have to withdraw your money from the Defined Contribution Plan. However, you will not be allowed to make additional contributions to the account. You may defer withdrawal until the normal retirement age and receive full benefits if you are fully vested.
Q) Will I be able to increase my contributions to the Defined Contribution Plan?
A) At this point in time, any additional contributions will be made through the 457 Deferred Compensation Plan and is subject to the 457 contribution limits.
Q) If I elect to transfer to the Defined Contribution Plan from the Defined Benefit Plan, what will happen to my contributions made to the DB Plan?
A) The full amount of all contributions including interest earned while in the Defined Benefit Plan must be transferred to the Defined Contribution Plan. With the implementation of PL 25-19, a transfer incentive is provided and calculated based on 5% of the last 5 years annual base salary. The transfer incentive shall not be available after December 31, 1999.