Volunteer Ambulance Personnel
The Defined Contribution Plan (DCP) administered by PERA is a tax-deferred retirement savings program for public ambulance service personnel. (Participation is also available to public physicians and elected public officials.) Participants determine how employee and employer contributions are to be invested through the purchase of shares in accounts of the Minnesota Supplemental Investment Fund. Total contributions plus investment performance determine the ultimate benefit, which is paid as a lump sum upon withdrawal.
Any public ambulance service or private ambulance service that receives an operating subsidy from a governmental agency in Minnesota may elect to participate in the plan. Once an ambulance service chooses to join the program, individual participation in the plan is completely voluntary and there is no minimum salary requirement. A person’s decision to participate must be made within 30 days of the service’s joining the program, or 30 days from the date the individual became employed or began providing service to the agency, whichever is later.
Once an ambulance service chooses to join the program, individual participation in the plan is completely voluntary and there is no minimum salary requirement.
How it Works
Ambulance services fund the benefits of individuals who elect to participate in the plan and determine the contributions that will be made on behalf of participating personnel. The ambulance service must establish a fixed percentage of compensation to contribute on behalf of personnel who are paid wages or a salary. Paid personnel may in turn choose to make member contributions up to the amount the ambulance service makes on their behalf. Ambulance services making contributions for volunteer or largely uncompensated personnel may assign a unit value for each call or each period of alert duty for the purpose of calculating ambulance service contributions.
Individual participants designate a percentage of total contributions to be placed in one or more of seven accounts of the Minnesota Supplemental Investment Fund. This investment fund is administered by the Minnesota State Board of Investment and includes actively and passively managed stock, bond and balanced accounts, a money market fund and a fixed interest plan. The investment goals of these accounts and the returns the accounts have actually achieved are described in the Minnesota Supplemental Investment Fund annual prospectus published by the Minnesota State Board of Investment.
Contributions made by the ambulance service and any made by the participant (minus administrative charges) are combined and used to purchase shares in accounts selected by the participant. Shares belong entirely to the individual participant. Except for the Money Market and Fixed Interest accounts, whose shares are always one dollar each, shares are purchased at market prices.
Interest paid by the money market and fixed interest accounts is reinvested, increasing each share’s value of the respective accounts. Interest and dividends earned by the stocks and bonds held in the other five accounts are used to purchase additional shares in those accounts. These purchases and the gains and losses in market value of the stocks and bonds held in the accounts are reflected in the value of the accounts’ shares, in much the same way as with mutual funds.
DCP Participants may change their investment selections any time and may also transfer all or portions of previously purchased shares from one account to another. Some special restrictions may apply, however, to transferring funds to other accounts from the Fixed Interest Account. Contact the PERA office for complete details about these transfer restrictions.
PERA provides a statement of account to DCP participants twice a year. Among other things, the semi-annual statement reports the contributions deposited into the participant’s account in the six-month reporting period and the total value of the shares the participant owns at the end of the reporting period.
The Defined Contribution Plan and Taxes
Participants do not pay taxes on contributions to the DCP withheld from earnings and those made on behalf of the participant by the employing ambulance service. However, because the DCP is a qualified tax-deferred program, these contributions are taxable upon withdrawal, unless rolled over into another tax-qualified plan. If taken out before age 59½, withdrawals are, with a few exceptions, subject to an additional ten percent tax surcharge, unless rolled over.
Because the DCP is tax-qualified, enrollment in the plan may, depending on an individual’s income level, reduce or eliminate the tax deductibility of contributions to an individual retirement account (IRA).
Two percent of the employer contributions to the DCP (2 cents for each $1.00 contributed by your employer) is used by PERA for administrative costs of the plan. In addition, 0.25 percent (one quarter of one percent) of the value of your shares is also retained by PERA each year to help defray the costs of administering the plan. This asset-based charge amounts to $2.50 for each $1,000 in your account.