OHIO DEFERRED COMPENSATION

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1 OHIO DEFERRED COMPENSATION Ohio457.org Fourth Quarter 2016 Here are three simple ways to give your savings a boost: 1. One-time savings increase A publication of the Ohio Deferred Compensation Board Ohio Deferred Compensation offers you smart alternatives when saving for retirement. If you re planning for your retirement, you might be unsure about how much you ll really need to save. As a current participant, Ohio DC offers you options to help you take control of your retirement planning. Now is a great time of the year to make changes. Ohio DC offers complete flexibility. You can make an increase in your deferral amount and can change this amount at any time. 2. Annual savings increase The SMarT Plan Ohio DC allows automatic deferral increases every year by an amount that you specify. This can also be adjusted at any time. 3. 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 $18,000 contribution limit. 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 $36,000. To learn more about any of these options for giving your savings a boost in the new year, you can visit Ohio457.org or call our Service Center to speak with an Account Executive at Account Executives are Registered Representatives of Nationwide Investment Services Corporation, member FINRA.

2 Message from the Executive Director... As we welcome in the new year, make a New Year s resolution to give yourself a gift a more secure retirement. More than 27,000 participants are enrolled in our SMarT automatic deferral increase plan. A small increase in your regular deferral to your account each year can make a huge difference in your retirement savings. You might not notice the difference in your paycheck, but, years later when you retire, you will appreciate the extra savings available to supplement the income from your pension. While your pension is a great foundation for your retirement, your Ohio Deferred Compensation savings can provide peace of mind and a more secure retirement, especially for unexpected expenses such as healthcare, home repairs, or car maintenance. You can find a SMarT enrollment form on our website or just call us and an Account Executive will be glad to sign you up. Keith Overly Executive Director Investing During Turbulent Times As people invest for retirement, there are bound to be ups and downs in the stock market. History has shown that short-term drops in the U.S. stock market in the aftermath of unexpected events have been followed by longer-term rallies. Some examples of such events include the 1987 Market Crash, the first Gulf War, the 1992 U.K. Currency Crisis, and the 1997 Asian Market Crisis. When confronted with these negative outcomes, many investors choose to get out of the market, effectively locking in their losses. If investors look at the history of market rebounds after these types of downturns, they will see that leaving their investments in the market long-term, rather than trying to time the market, will allow them to experience the eventual rebound that the market will experience. 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 Lima Clyde-Green Springs Village Schools Copley Township Erie County Hilliard City School District Metro Regional Transit Authority Muskingum County Western Reserve Transit Authority We appreciate everything these organizations do to make sure Ohio s public employees are ready for retirement. 2

3 Deferral Limits for 2017 The Internal Revenue Service recently announced that employee annual deferral limits for 2017 will remain the same as 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 $18,000 Age 50+ $24,000 Catch-up $36,000 Required Minimum Distribution If in 2017 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 2017 will be provided in the fourth quarter 2016 statements. 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, or update your beneficiaries or 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. You can deposit your PLOP into your Ohio DC account. Contact us for more information. Tax Time Saver's Tax Credit If you took a withdrawal or rollover from your Ohio DC account during 2016, you will receive a Form 1099-R from the Program. These forms are scheduled to be mailed the last week of January. Please call the Service Center at if you have not received your Form 1099-R by February 13. 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. 3

4 Retirement Savings and Finances for Women On average, women live 2.5 years longer than men and work 75% of the years men work, according to the study Income Insights: Gender Retirement Gap from TIAA. These two facts mean that women need to save a significantly higher percentage of their salaries to have the same retirement income that men do. There are a variety of tactics that women can use to make up for time they may be out of the workforce and to provide income for longer retirements than men. These include beginning to save earlier, making sure that they are actively involved in financial decisions, and safeguarding their own needs before helping family members in financial distress. Let Ohio DC help you prepare for retirement. Call or visit Ohio457.org. 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 Exchanges Holiday Date Closed Processed Martin Luther January 16 January 17 King, Jr., Day President's Day February 20 February 21 Good Friday April 14 April 17 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. 4 Ohio DC Board of Trustees Elected Charles Latsa, Vice Chair State College and University Employees Sean Loftus County Employees Christopher Mabe State Employees John W. Maurer Retired Group Cinthia Sledz Miscellaneous Employees Ken Thomas, Chair Municipal Employees Steve Toth Retired Group Statutory Robert Blair Director, Ohio Department of Administrative Services Kristin Boggs House of Representatives Jay Hottinger Senate Appointed Robert C. Smith Investment Expert James R. Tilling Investment Expert Vacant Investment Expert Keith Overly Executive Director Ohio Deferred Compensation Program is a supplemental retirement benefit plan regulated by Section 457 of the Internal Revenue Code. This newsletter is printed on recycled paper.

5 Ohio Deferred Compensation Investment Performance Report As of December 31, 2016 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. LifePath Portfolios Inception Date Ticker 4th Average Annual Returns Expense Symbol Quarter 1 Year 3 Year 5 Year 10 Year Ratio (1) LifePath Retirement (2) 8/26/2011 n/a (3) -0.83% 6.09% 3.39% 5.09% 4.65% 0.09% LifePath 2020 (2) 8/26/2011 n/a (3) -0.52% 6.63% 3.60% 6.36% 4.24% 0.09% LifePath 2025 (2) 8/26/2011 n/a (3) -0.15% 7.28% 3.79% 7.09% 4.28% 0.09% LifePath 2030 (2) 8/26/2011 n/a (3) 0.17% 7.87% 3.97% 7.76% 4.29% 0.09% LifePath 2035 (2) 8/26/2011 n/a (3) 0.49% 8.41% 4.11% 8.36% 4.29% 0.09% LifePath 2040 (2) 8/26/2011 n/a (3) 0.75% 8.86% 4.22% 8.85% 4.26% 0.09% LifePath 2045 (2) 8/26/2011 n/a (3) 0.89% 9.17% 4.30% 9.33% 4.22% 0.10% LifePath 2050 (2) 8/26/2011 n/a (3) 0.92% 9.24% 4.32% 9.73% 3.72% (4) 0.09% LifePath 2055 (2) 8/26/2011 n/a (3) 0.91% 9.21% 4.32% 10.07% 9.50% (4) 0.10% International Stock Funds Templeton Foreign TFFAX 2.97% 11.99% -2.31% 7.13% 2.50% 0.93% Vanguard International Growth VWILX -6.70% 1.85% -1.45% 7.21% 2.58% 0.34% Vanguard Total International Stock Index (5) VTPSX -1.91% 4.74% -1.29% 5.55% 0.88% 0.07% Small-Cap Stock Funds FPA Capital (6) FPPTX 9.42% 22.85% 0.14% 6.24% 5.42% 0.77% Hartford Small Company HIASX 0.56% 2.05% 0.09% 10.86% 5.83% 0.72% Vanguard Small-Cap Index (5) VSCPX 6.11% 18.34% 7.05% 14.87% 8.21% 0.05% Mid-Cap Stock Funds Vanguard Capital Opportunity VHCAX 3.37% 10.64% 10.55% 17.97% 9.14% 0.38% Large-Cap Stock Funds Dodge & Cox Stock DODGX 10.71% 21.28% 8.55% 17.01% 5.93% 0.52% Fidelity Contrafund CP (7) 1/17/2014 n/a (3) -0.33% 3.53% 6.43% (4) n/a n/a 0.43% Fidelity Growth Company CP (7) 12/13/2013 n/a (3) 2.14% 6.39% 9.60% 11.17% (4) n/a 0.43% Ohio DC Large-Cap Growth 8/1/2014 n/a (3) 1.81% 3.13% 8.04% (4) n/a n/a 0.37% Vanguard Institutional Index VIIIX 3.82% 11.94% 8.87% 14.65% 6.97% 0.02% Bond Funds Ohio DC Intermediate Bond 1/30/2015 n/a (3) -2.71% 2.55% 0.36% (4) n/a n/a 0.25% Vanguard Total Bond Market Index VBMPX -3.16% 2.62% 2.96% 2.17% 4.33% 0.04% Stable Value Ohio DC Stable Value Option n/a (3) 0.57% 2.25% 2.23% 2.34% 3.23% 0.29% (SVO Annualized Return) 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. (2) Returns shown are of the respective LifePath Index L series, net of historical Program administrative expenses. Returns for periods prior to the inception of the L series are those of the respective LifePath Index F series, net of historical Program administrative expenses. (3) These options are not publicly traded mutual funds and do not have a ticker symbol or prospectus. The value of the securities held by the SVO will fluctuate. The SVO focuses on principal preservation and a stable rate of return. (4) Average annual return since inception date. (5) 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. (6) Exchanges from this fund may be subject to a redemption fee. Please consult the Program website or fund prospectus for additional information. (7) The full fund names are Fidelity Contrafund Commingled Pool and Fidelity Growth Company Commingled Pool. 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 mutual fund 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. The LifePath Portfolios, Ohio DC Large-Cap Growth, Ohio DC Intermediate Bond, and Ohio DC Stable Value Option are not mutual funds or registered investment companies. 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 Many investment options have administrative fee reimbursements included in their expense ratios. Fee reimbursements received by Ohio DC will be rebated quarterly to the participant accounts invested in these options. 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. Fee Reimbursement Rates Investment Manager Annual Rebate Dodge & Cox 0.10% Fidelity 0.00% FPA 0.05% Hartford 0.05% Ohio DC 0.00% Templeton 0.15% Vanguard 0.00% NRM-3831OH.43 12/2016 6