Plan Sponsor FAQs

It is an investment fiduciary on a retirement plan as defined by the Employee Retirement and Income Security Act of 1974 (“ERISA”) section 3(38).  A 3(38) Investment Manager is responsible for exercising complete discretion in selecting, managing, monitoring, and benchmarking the investment offerings of a retirement plan. SCM is basically required by law to act in our customers’ best interest, not our own.

We have assembled a great group of partners that share the same exceptional customer service-centric principles that we have at Shelton Capital Management. We are all here to make your life easier.

Plan Participant FAQs

Please call us directly at (800) 225-8778. You can also email anytime to ask a real person questions (info@sheltoncap.com).

Hours of Operation: (Monday-Thursday 8am-5pm MST, Friday 8am-4pm MST).

If you are a new Plan Participant, we recommend that you take time to review the SmartPlan videos. These videos are short, simple, and give you guidance in thinking about your retirement savings goals and personal investment risk tolerance. Your responses can help you choose the model portfolio or the funds that are right for you from your employer’s investment selections. After that, you simply click on Investment Elections to select your funds.  Your contributions are then removed pre-tax from your paycheck. You may change your Investment Elections at any time and changes occur the next business day.

The Internal Revenue Service (IRS) sets annual contribution limits. For 2024, this limit is $23,000, subject to the cost of living adjustments. There is also a catch-up contribution limit for Plan Participants that are 50 years old or older, and this limit is $7,500 for total of $30,500. Employer match or profit sharing contributions aren’t included in these limits.

First, you need to make sure that your current employer’s plan accepts direct rollovers. If it does, then your current and former employer each have the needed instructions to guide you through this process. There are forms on our Third-Party Administrator partner site to aid you as well. You do not incur penalties when you transfer from one plan to another. The timeline for this process varies from employer to employer.

There are purposefully restrictions on 401(k) loans as this money is supposed to be used for retirement.  If you do take out a loan here are some rules.

  1. There is a $50,000 limit or half of your balance, whichever is less.  You must start repaying into your account in your very next paycheck through automatic deduction.
  2. You must repay the loan within 5 years from the date you take out the loan. (Certain exceptions apply such as first-time house purchase). Remember you are using after-tax money to repay the loan.
  3. You must pay interest on the loan.
  4. If you leave your employer, you will be required to pay the loan in full within 60 days.  If you do not, you can face taxation and penalties.

You are responsible for your 401(k) Account once you leave a job.  It will stay with your old employer until you act.  You have up to 4 choices for your next steps: 

  1. Roll over your money to an Individual Retirement Account (IRA).  We can help you!
  2. Leave your money with your old employer if allowable.  If you choose to do this, make sure you periodically review the performance.
  3. You can transfer your account to a new employer plan depending on how the investment choices compare from your old employer plan.
  4. Take a lump sum in cash (our least favorite option, but hey, it is your money). You will typically be taxed at ordinary income tax rate levels and possibly pay a 10% IRS early distribution penalty depending on your age.

They are made available in fund prospectuses for transparency to investors. The good news is that the industry trend is your friend – generally going lower.

There are three (3) major categories of fees in 401(k) plans. 

  1. Investment Fees – these fees cover the management of the investments within your plan and are often a % of assets.
  2. Plan Administration Fees such as recordkeeping, accounting and legal fees.
  3. Individual Service Fees – these depend on the features or plan options. One example is a fee for taking a loan out.

Other fees to look for include:

  1. Sales loads for the buying and selling of a fund.
  2. 12b-1 fees (named after relevant section of the Investment Company Act of 1940) are marketing or distribution fees on a mutual fund.
  3. Investment advisory fees for managing the assets of the investments.

Your accumulated funds stay in place until you act. There are no penalties for withdrawals beginning at age 59.5 and you will be taxed at ordinary income tax rate levels. The IRS imposes a 10% penalty if you are younger than 59.5, unless you are taking a hardship withdrawal. The IRS also mandates that you began withdrawals no later than April 1 in the year after you turn 72 years old, or you can face penalties.