OHIO DEFERRED COMPENSATION

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1 OHIO DEFERRED COMPENSATION Ohio457.org Fourth Quarter 2017 SMarT Alternatives to Save for Retirement If you re planning for your retirement, you might be unsure about how much you ll really need to save. Ohio DC offers you options to help you take control of your retirement planning. Now might be a great time of year to make changes. Here are a couple of simple ways to give your savings a boost: 1. Annual savings increase The SMarT Plan Ohio DC allows automatic deferral increases every year by an amount that you specify. This can be adjusted at any time. Enroll in the SMarT Plan today! 2. Higher deferral limits If you are approaching retirement, you have higher limits for contributing to your account. Age 50+: This is a great opportunity if you are 50 or older. A maximum of $6,000 can be contributed to your account in addition to your annual $18,500 contribution limit.1 Traditional Catch-Up: If you are within three years of normal retirement age, and if you have not contributed the maximum amount every year in the past, you might be able to defer up to two times the normal contribution limit for a total of $37,000. Want to learn more about any of these options for giving your savings a boost in the new year? Visit our website at Ohio457.org 1 Call us at IRS.gov - IR , Oct. 19, 2017 Account Executives are Registered Representatives of Nationwide Investment Services Corporation, member FINRA. A publication of the Ohio Deferred Compensation Board

2 Message from the Executive Director... There were some less publicized changes to the Federal tax reform bill under consideration that would have negatively impacted participants in Ohio DC. Those provisions included, but were not limited to, reducing pretax contribution limits and reducing catch-up limits. Ohio DC was part of an Ohio-led coalition that worked with the National Association of Government Defined Contribution Administrators and other organizations to have all negative provisions eliminated before passage of the House and Senate bills. The final bill was approved on 12/20/2017 and signed by the President on 12/22/2017. Special thanks go to Ohio Senators Portman and Brown for their efforts to successfully eliminate these provisions and for their ongoing support of public and private sector retirement plans. Keith Overly Executive Director Roth 457 Option The Ohio legislature passed a law that became effective in 2017 to allow Ohio DC to offer a Roth 457 option. Once the legislation was passed, our Board of Trustees approved the implementation of a Roth 457 plan, which will allow our participants to contribute money on an after-tax basis. We are currently developing the proper processes and procedures to begin offering this option. The changes include accepting both pre-tax and post-tax contributions, working with over 1,800 employers to properly invoice and collect pre-tax and post-tax funds, and programming changes for both the record keeping system and website. In addition, we will educate participants and new hires about the difference between a traditional and Roth 457 plan. With all the extensive changes needed, we plan to offer a Roth 457 option in The Ohio Deferred Compensation Board of Trustees formally recognized the following employers' achievements in improved retirement education, enrollment, and savings among their employees. City of Lakewood City of North Ridgeville City of Reynoldsburg Miami County Paulding County Memorial Hospital Switzerland of Ohio Board of Education Warren County Wauseon Exempted Village Schools We appreciate everything these organizations do to make sure Ohio s public employees are ready for retirement. New Board Member Appointed by Ohio House The Ohio House of Representatives has appointed Richard D. Brown (D) of Ohio House District 20 to the Ohio Deferred Compensation Board of Trustees. Mr. Brown began serving on the Board on November 9,

3 Important Items to Note Required Minimum Distribution If in 2018 you are no longer working and will turn 70½ or are already 70½, you will need to take a required minimum distribution (RMD) from your Ohio Deferred Compensation account. The RMD, mandated by the IRS, is determined at the beginning of the year and is required to be withdrawn by the end of the year. RMD information for 2018 is provided in the fourth quarter 2017 statements. Deferral Limits for 2018 The Internal Revenue Service recently announced an increase to the annual deferral limits for Each year, the IRS sets limits on the amount of wages that you can defer. These limits are tied to inflation statistics and are recalculated each fall for the following calendar year Deferral Limits Regular $18,500 Age 50+ $24,500 Catch-Up $37,000 Annual Statements Your Annual Statement, mailed at the beginning of February, gives you an update on your progress toward meeting your retirement income goal. Review your Annual Statement and take action. You might increase your deferrals, rebalance your investments, update your beneficiaries, or change your contact information. Partial Lump Sum Option Payment The Partial Lump Sum Option Payment or PLOP is an option that allows you to receive a lump-sum benefit payment, along with a reduced monthly retirement allowance from your public pension plan. It is usually taxable unless it is rolled over into a qualified plan or IRA. You can rollover a PLOP into your Ohio DC account. Contact us for more information. Saver's Tax Credit Tax Time Do you qualify for a Saver s Credit? You might be eligible for a federal tax credit just by deferring to your Ohio DC account. The Saver s Tax Credit rewards low- and moderate-income taxpayers saving for retirement who meet certain qualifications. Learn more about the Saver s Credit at Ohio457.org. If you took a withdrawal or rollover from your Ohio DC account during 2017, you will receive a Form 1099-R from Ohio DC. These forms are scheduled to be mailed the last week of January. Call the Service Center at if you have not received your Form 1099-R by February 13. 3

4 2018 Holiday Schedule Holiday Date Closed Exchanges Processed New Year's Day January 1 January 2 Martin Luther King, Jr., Day January 15 January 16 Presidents' Day February 19 February 20 Good Friday March 30 April 2 Memorial Day May 28 May 29 Day before July 3 July 5 Independence Day Close at 1 p.m. Received after 1 p.m. Independence Day July 4 July 5 Labor Day September 3 September 4 Thanksgiving November 22 November 23 Friday after Thanksgiving November 23 November 26 Close at 1 p.m. Received after 1 p.m. Christmas Eve December 24 December 26 Close at 1 p.m. Received after 1 p.m. Christmas Day December 25 December 26 The Service Center and exchange processing will be affected by the New York Stock Exchange holiday schedule. Exchanges received on holidays will be processed as of the market close of the next business day. How did you find out about Ohio DC? Many participants tell us their coworkers encouraged them to join. Encourage your coworkers to prepare for their financial future by enrolling in the Program. Pass this newsletter to them or have them visit Ohio457.org to learn more. Ohio Deferred Compensation Service Center 257 East Town Street, Suite 457 Columbus, Ohio Walk-in hours: 8 a.m. 4:30 p.m., Monday Friday Phone hours: 8 a.m. 5:30 p.m., Monday Friday Automated Telephone System: 24/ Ohio457@Nationwide.com Ohio457.org Ohio Deferred Compensation The Ohio Deferred Compensation Program is a supplemental retirement benefit plan regulated by Section 457 of the Internal Revenue Code. Elected Steve Toth, Chair Retired Group Sean Loftus, Vice Chair County Employees Randy V. Desposito Non-teaching College/ University Employees Christopher Mabe State Employees Cinthia Sledz Miscellaneous Employees Ken Thomas Municipal Employees Vacant Retired Group Keith Overly Executive Director Ohio DC Board of Trustees Statutory Robert Blair Director, Department of Administrative Services Richard D. Brown House of Representatives Jay Hottinger Senate Appointed Herman H. Mollmann, Jr. Investment Expert James R. Tilling Investment Expert Vacant Investment Expert This newsletter is printed on recycled paper. 4

5 Ohio Deferred Compensation Investment Performance Report As of December 31, 2017 The results shown represent past performance and should not be considered a representation of future performance or experience. Past performance cannot guarantee future results. Current investment results may be lower or higher than quoted in this report. The principal value and investment return of an investment will fluctuate so that an investor's units/shares, when redeemed, may be worth more or less than their original cost. Performance data current to the most recent month-end may be obtained by visiting Ohio457.org. Although data is gathered from investment providers, the Program cannot guarantee completeness and accuracy. Please see other important disclosures at the end of this report. Consider the investment objectives, risks, charges, and expenses carefully before investing by consulting your prospectuses, which contain this and other information. Prospectuses are available by calling or visiting Ohio457.org. Read the prospectus carefully before investing. Inception 4th Average Annual Returns Expense Fund Name (Manager or Ticker Symbol) Date Quarter 1 Year 3 Year 5 Year 10 Year Ratio (1) Ohio DC LifePath Portfolios (BlackRock) (2) LifePath Retirement (3) 8/26/ % 10.17% 4.94% 5.36% 5.00% 0.09% LifePath 2020 (3) 8/26/ % 11.77% 5.57% 6.50% 4.78% 0.09% LifePath 2025 (3) 8/26/ % 13.90% 6.39% 7.43% 5.03% 0.09% LifePath 2030 (3) 8/26/ % 15.82% 7.12% 8.24% 5.24% 0.09% LifePath 2035 (3) 8/26/ % 17.69% 7.80% 9.01% 5.42% 0.09% LifePath 2040 (3) 8/26/ % 19.37% 8.39% 9.66% 5.55% 0.09% LifePath 2045 (3) 8/26/ % 20.45% 8.76% 10.19% 5.62% 0.09% LifePath 2050 (3) 8/26/ % 20.83% 8.88% 10.53% 5.76% 0.09% LifePath 2055 (3) 8/26/ % 20.81% 8.87% 10.73% 10.94% (4) 0.09% International Stock Funds Templeton Foreign (FTFGX) (5) (6) 5/1/ % 17.83% 7.22% 7.10% 2.74% 0.72% Vanguard International Growth (VWILX) (5) 8/31/ % 43.18% 13.19% 11.03% 4.74% 0.33% Vanguard Total International Stock Index (VTPSX) (5) (6) 11/30/ % 27.56% 8.56% 7.16% 1.87% 0.07% Small-Cap Stock Funds Ohio DC Small-Cap Growth (Westfield, Fiera) (2) 6/2/ % 11.12% (4) n/a n/a n/a 0.73% Ohio DC Small-Cap Value (Westwood) (2) 6/2/ % 9.34% (4) n/a n/a n/a 0.59% Vanguard Small-Cap Index (VSCPX) (5) (6) 12/17/ % 16.26% 9.86% 14.47% 9.71% 0.04% Mid-Cap Stock Funds Vanguard Capital Opportunity (VHCAX) (5) 11/12/ % 29.20% 13.64% 20.05% 10.85% 0.38% Large-Cap Stock Funds Dodge & Cox Stock (DODGX) (5) 1/4/ % 18.34% 11.09% 16.30% 7.71% 0.52% Fidelity Contrafund Commingled Pool (2) 1/17/ % 32.98% 13.55% 12.64% (4) n/a 0.38% Fidelity Growth Company Commingled Pool (2) 12/13/ % 37.91% 16.72% 17.30% (4) n/a 0.38% Ohio DC Large-Cap Growth (T. Rowe Price) (2) 8/1/ % 37.58% 15.96% 15.97% (4) n/a 0.36% Vanguard Institutional Index (VIIIX) (5) 7/7/ % 21.81% 11.40% 15.78% 8.52% 0.02% Bond Funds Ohio DC Intermediate Bond (TCW) (2) 1/30/ % 3.48% 1.42% (4) n/a n/a 0.25% Vanguard Total Bond Market Index (VBMPX) (5)(6) 2/5/ % 3.58% 2.19% 2.05% 3.97% 0.03% Stable Value Ohio DC Stable Value Option (Multiple Managers) (2) 1/1/ % 2.13% 2.21% 2.23% 2.94% 0.29% Annualized Crediting Rates: 4 th Quarter % 1 st Quarter % (1) Investment performance has been reduced for expense ratios. These expense ratios may vary from period to period. Expense ratios do not include administrative fees or rebates of fee reimbursements. See "Administrative Fees and Rebates" for more information. (2) These options are not publicly traded mutual funds and do not have a ticker symbol or prospectus. Additional information regarding the manager(s) and investment strategy can be found in the fund profile at Ohio457.org. The value of the securities held by the SVO will fluctuate. The SVO focuses on principal preservation and a stable rate of return. (3) Returns shown are of the respective LifePath Index L series. Returns for periods prior to the inception of the L series are those of the respective LifePath Index F series. (4) Average annual return since inception date. (5) These options are publicly traded mutual funds, and they have a ticker symbol and prospectus. (6) Returns include performance of a different share class achieved prior to the inception of the current share classes. Returns were not recalculated to reflect the fees of the prior share class. Account Executives are registered representatives of Nationwide Investment Services Corporation, member FINRA. 5

6 Investment Performance Report Notes LifePath Portfolios Each LifePath Portfolio is based on a target year (when you expect to begin using your money). Portfolios are designed to provide diversification and asset allocation across several types of investments and asset classes, primarily by investing in underlying funds. LifePath Portfolios are designed for people who plan to begin withdrawing funds during or near a specific year. Like other funds, LifePath Portfolios are subject to market risk and loss. Loss of principal can occur at any time, including before, at, or after the target year. There is no guarantee that LifePath Portfolios will provide enough income for retirement. International Stock Funds International funds involve risks not associated with investing solely in the United States, such as currency fluctuation, differences in accounting standards, and the limited availability of information. Over the long term, an investor should be willing to accept a high level of risk resulting from potentially higher market volatility. Small-Cap Stock Funds Small-cap funds contain stocks from companies with less than $2 billion in capitalization, including many start-up companies. Small companies can grow much faster than big companies, but small company stocks tend to be more volatile than the stocks of larger companies. Over the long term, an investor should be willing to accept a high level of risk resulting from potentially higher market volatility. Mid-Cap Stock Funds Mid-cap funds contain stocks from companies with market values between $2 billion and $10 billion, and often include companies that are well established and growing. Over the long term, an investor should be willing to accept a moderate to high level of risk resulting from potentially higher market volatility. Large-Cap Stock Funds Large-cap funds contain stocks from companies with market values of more than $10 billion, and they include blue-chip and Fortune 500 companies. They are typically more mature, diversified companies with many products and services. Over the long term, an investor should be willing to accept a moderate to high level of risk resulting from potentially higher market volatility. Bond Funds Bonds are loans or debt instruments issued by governments or corporations that need to raise money. Bond funds have the same interest rate, inflation, and credit risks associated with the underlying bonds owned by the fund. Bonds are generally a more conservative form of investment than stocks, and usually provide a more steady flow of income. Typically, bonds have a lower long-term total return than stocks. Stable Value These options own short to intermediate term, high-quality securities. Investors who seek safety of principal as well as a competitive rate of return compared to money market funds may invest in these options. The Ohio DC Stable Value Option returns are shown net of fees for investment management, custody, and principal protection. A fund profile can be obtained for the Ohio DC Stable Value Option by calling or at Ohio457.org. Investment Performance All reported returns assume reinvestment of capital gains and dividends and reflect the fund's expense ratio, but not the deduction of the administrative fee or reinvestment of rebates. Administrative Fees and Rebates Administrative Fees An annual administrative fee of or 0.14% is charged to each participant. Administrative fees will be charged each quarter and are based on the total of a participant s account balance(s). Administrative fees will be waived if the total of a participant s account balance(s) is below $5,000. Administrative fees will be capped at $55 per quarter, per participant. Rebates of Fee Reimbursements The Dodge & Cox Stock fund has an annual administrative fee reimbursement of 0.10% included in its expense ratio. Ohio DC will rebate the fee reimbursement quarterly to the participant accounts invested in this option. Investment decisions should not be made based on fee reimbursements. Before investing in a fund, carefully consider its objectives, risks, and charges and expenses. This information and other important facts can be found in the prospectus or fund profile at Ohio457.org. Read them carefully before investing. NRM-3831OH.47 12/2017 6