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Your Plan Highlights – Plan Overview

The Plan is established under Internal Revenue Code Section 457. Under the Plan, you postpone receiving (defer) a portion of your salary. It works like this:

You decide, within certain legal limits, how much of your income you want to defer.

The State (your employer) reduces your paycheck before income tax by that amount and forwards it to ING on a regular basis.

Contributions are invested in the investment options you have selected.

The contributions and any earnings that accumulate are not taxed until they are distributed to you. This is usually at retirement when you may be in a lower tax bracket.

Eligibility

The Plan is a voluntary plan available to all employees of the State, including individuals performing services by appointment or election for which compensation is paid. It is also available to employees of cities, counties, towns and other municipalities that have adopted the State Plan.

There are no age or length of service requirements.

Contributions

Contributions under the Plan are made by participants through a reduction in salary. To participate, you are required to contribute a minimum of $11.54 per pay period.

Under the Plan, the maximum annual contribution amount is identified below (or 100% of includible compensation, if less):

Year

Annual Maximum

2008 $15,500

2009 $16,500

You may be eligible for increased contributions:

During the three consecutive years prior to attaining Normal Retirement Age under a special catch-up provision.

On and after you attain age 50 under an age 50+ catch-up provision.

(For additional information on the 457 catch-up provision or the increased contribution limits for participants age 50 and older, please refer to the brochure “457(b)-How Much Can I Contribute?” located in the library section of this web site.)

Timing of Distributions

Distributions are allowed only upon severance from employment, attainment of age 70½, death, or the occurrence of an unforeseeable emergency, which are considered to be triggering events. The Plan also includes a provision allowing the in-service distribution of accounts that do not exceed $5,000 if:

1) You have not made any contributions to the Plan during the prior two years; and 2) You have not received this type of in-service distribution in the past.

The IRS requires that distributions under a 457 plan begin no later than the April 1st of the calendar year following the calendar year in which you attain age 70½ or separate from service, whichever occurs later. If you fail to receive the minimum required distribution for any tax year, a 50% excise tax is imposed on the required amount that was not timely distributed. These rules are referred to as IRS minimum required distribution requirements (MRD).

Payout Options

When you are entitled to a distribution of benefits under the Plan, you have the choice from a variety of payment options. These options are described in the section “Payout Options” on this web site.

Death Benefits

Upon your death, benefits would be payable to the beneficiary(ies) that you designated under the Plan. If you have not designated a beneficiary, payment of death benefits will be made to your estate.

Your beneficiary will be entitled to select from a variety of payment options, which are generally the same options that would have been available to you (and are described in the “Payment Options” section of this web site). Your beneficiary must notify ING of your death and make a payment election in accordance with the Plan.

Taxation

All of the payments you receive from the Plan are subject to federal and state income taxes.

Federal income tax withholding will apply to your payments, as described below, based on whether you were eligible to rollover the distribution.

If you receive a distribution that was eligible to be rolled over, a mandatory 20% will be withheld for federal tax and 5% for Kansas tax purposes at the time of payment.

If you receive a distribution that was not eligible to be rolled over, 10% federal tax and 5% Kansas tax will be withheld at the time of payment. However, you may elect to have no withholding withheld.

Amounts distributed from a 457 plan are not subject to the IRS 10% penalty tax if distributed prior to attaining age 59½. However, if you have previously rolled over amounts from a plan other than a governmental 457 plan, such rollover amounts will be subject to this 10% penalty tax if distributed prior to attaining age 59½, unless an IRS exception applies. IRS exceptions include payments made:

To your beneficiary as a result of your death;

Upon your severance from employment/retirement on or after you attain age 55;

In substantially equal amounts over your life/life expectancy; or

As a result of your total and permanent disability.

Unforeseeable Emergency Withdrawals

IRS guidelines and the Plan document provide that an unforeseeable emergency means a severe financial hardship to the Participant resulting from:

An illness or accident involving you or one of your dependents (as defined by the IRS);

The loss of your property due to casualty; or

Other similar extraordinary and unforeseeable circumstances arising as a result of events beyond your control.

The purchase of a home, an auto or the need to pay a child’s college expenses, are not considered unforeseeable emergencies. In addition, withdrawals are permitted only to the extent the hardship cannot be relieved:

(1) Through reimbursement or compensation by insurance or otherwise

(2) By liquidating your assets (to the extent this would not itself cause severe financial hardship)

(3) By borrowing from commercial sources to the extent that this borrowing would not itself cause severe financial hardship

(4) By stopping deferrals under the Plan.

Only the amount necessary to meet the emergency need is available for withdrawal.

Insurance products issued by ING Life Insurance and Annuity Company. Financial planning and securities offered through ING Financial Advisers, LLC (member SIPC), One Orange Way, Windsor, CT 06095-4774, or other broker/dealers with which it has a selling agreement.