S All asset categories end 2003 with positive returns - American ...

FEBRUARY 2004
PlanBITS
1099Rs sent automatically
with distribution checks
Employees who take an in-service
withdrawal or distribution from their
401(k) account should note the 1099R
form is attached to their check. They
will need the 1099R when preparing
their tax returns for the year in
which they took the distribution.
Replacement 1099R forms are available
through the Charles Schwab Trust
Company for $5. Contact Customer
Service for more information.
Milliman USA welcomes
Justin Ingraham
Please join Milliman USA in welcoming
Justin Ingraham to the GeoVest
Plan service team. Justin joined
Milliman February 9 as a Customer
Service Representative.
Look for Milliman at AAPG
Annual Meeting
Milliman USA representatives will be
attending the AAPG Annual Meeting
in Dallas, Texas, on April 18-21,
2004. You are welcome to stop by the
booth to visit about the GeoVest Plan,
or attend the interactive presentation
and discussion regarding this valuable
AAPG member benefit.
Update
Employee Benefi t News for Members of AAPG
page 4
Interest on 401(k) loans not
tax-deductible
A
as employees prepare their
2003 tax returns, some may question
whether or not they can deduct
the interest they pay back to their
accounts on a 401(k) loan. Here’s
what you should tell them.
A loan taken from your 401(k) account is
not tax-deductible. This is the case even
if the purpose of the 401(k) loan is for
the purchase of a home. Interest paid on
a mortgage or home equity line of credit
may be tax-deductible because your
home is being used to secure the loan.
In the case of a 401(k) loan, your 401(k)
account is used to secure the loan. Remember,
you are already getting a tax
advantage when you put money into
your 401(k) plan, since these contributions
are taken out of your paycheck pretax
(i.e., before regular income taxes are
taken out).
When you are considering taking a loan
from your 401(k) plan versus ob tain ing a
loan from other sources, wheth er or not
the interest is tax-de duct ible is just one of
the factors that will affect your decision.
Also con sid er:
l Interest paid back on your 401(k)
loan is paid back to your own account
rath er than to a bank or other
in sti tu tion.
l However, unlike your 401(k) sala
ry de fer rals, you repay your loan
with after-tax dol lars. When you
with draw this mon ey at re tire ment,
it will be taxed again, and you will
es sen tial ly be pay ing tax es twice on
the same mon ey.
l The interest you pay back to your
ac count may be less than what you
could otherwise have earned through
your 401(k) investments. You also
lose out on the com pound ing earnings
you would oth er wise have received
on the money you borrowed.
l If you leave your employer, the entire
outstanding balance on the loan
is due within 60 days. If you don’t
pay it all back, you will have to pay
taxes on the balance plus a 10% penal
ty if you are not 55 at the time of
termination.
Answer to puzzle on page 6:
Good business leaders create a vision, articulate the
vision, passionately own the vision, and relentlessly
drive it to completion.