IMPORTANT NOTICE
December 2005
- For automatic direct deposits, the payment of the monthly pension benefits is the 1st of each month. However, when the 1st falls on a weekend or holiday, expect the direct deposit to be in your account on the next business day. We recommend you annually review a calendar to determine when those particular ACH deposits will be in your account. In looking at the 2006 calendar, please note there are four (4) months in which the 1st of the month falls on a weekend or a holiday:
- January 2006 – ACH deposit Jan 3rd
- April 2006 – ACH deposit April 3rd
- July 2006 – ACH deposit Jul 3rd
- October 2006 – ACH deposit Oct 2nd
The Alaska Teamster-Employer Pension Trust began using State Street Bank to process the retiree checks effective September 1, 2005. After the change in September, the first of October fell on the weekend and it was at this point that some retirees inquired about what they perceived as a delay.
The prior claims payer, ASI, withdrew the $5 million the Trust pays out each month from the investment accounts 5 or 6 days before the end of the month and then directed the funds for deposit about 3 or 4 days before the end of the month. Therefore, retirees had gotten used to having the funds several days before they were actually due.
Since the funds are due on the first as they are an advance payment for the month (i.e., the retirement payment for the month of January is due January 1st) paying them early was creating two problems for the fund.
One, when someone died in the last few days of the month, with the funds already transferred and often cleared out of the account by the family members, we were spending money to recover funds that were often unrecoverable. And two, we were losing investment returns with prior third party administrator withdrawing funds from the investment account so early. With almost $5 million per month being paid out, the Trust can keep this money in the investment accounts for several days longer and use these investment returns to benefit the overall fund. Since State Street is both the fund’s custodian and the claims payer, the transfers are internal and can be timed very tightly.
While the funds which are direct deposited were in the “warehouse” of the receiving banks on Friday (we verified this), because the checks are marked for deposit on the first, some of the banks showed them in the account on Sunday. The smaller banks and credit unions tend not to have computer adjudication on the weekends. Also, some financial institutions may not have automatic computer adjudication when they are not open. Generally, if financial institutions do not post deposits during their non-business hours, they do not post debits.
- Tax time is just around the corner. You will be receiving multiple 1099R tax forms due to the change in third party administrators (TPA) during 2005.
- For benefit payments received for the period of January through August 2005, the 1099R tax for will be generated by the prior TPA - Administration Services, Inc. (ASI).
- For benefit payments received for the period of September through December 2005, the 1099R tax for will be generated by State Street – Retiree Services.
- Please note, due to changes in state income tax regulations, if you have moved and resided in different states between the period of September – December 2005, State Street is required to issue a 1099R tax for each state in which you have resided, regardless of whether or not you had state income tax withheld from your monthly benefit payment. Most states, but not all, require that you file a state income tax return. In cases such as this, those individuals who resided in multiple states during the tax year will receive more than one 1099R tax form from State Street – Retiree Services. NOTE: This will continue for subsequent tax years as well.
If you have any questions, please contact the Trust Customer Service Office at (907) 565-8300 or (800) 478-4450 (toll free).
Respectfully,
ALASKA TEAMSTER-EMPLOYER
PENSION TRUST
|
