ENROLLMENT OVERVIEW for the Caribou Coffee Retirement Savings Plan

Transcription

1 ENROLLMENT OVERVIEW for the Caribou Coffee Retirement Savings Plan

2 Whether your retirement is 40 years away or on the horizon, it is important to take stock of your situation and take charge. Industry professionals estimate that some Americans will spend nearly one third of their lives in retirement. Fortunately, the Caribou Coffee Retirement Savings Plan offers tools, education and investment options to help you prepare for retirement. 2

3 ENROLLMENT OVERVIEW LIVE FOR TODAY. PREPARE FOR TOMORROW. Reaching your retirement goals can take a lot of preparation. As a general rule, you ll need at least 75 to 80 percent of your final working salary to maintain your lifestyle during retirement. The Caribou Coffee Retirement Savings Plan is a way to start preparing for your retirement. Your plan offers you tools, education and investment options that can help prepare you for life s road trip to come. How much should I contribute towards retirement? What do you see yourself doing when you retire? Maybe you re looking forward to spending more time with your family and friends, and sharing your hobbies with others. Or maybe you hope to travel the world! No matter how big or small your retirement goals may be, it takes preparation to achieve them. For the vast majority of Americans, Social Security benefits will not provide enough income to cover expenses and make retirement comfortable. When you re deciding how much to contribute towards your retirement, a good place to start is deciding how you ll use your retirement account. Will your retirement account be your primary source of income or fun money to supplement your lifestyle? The answer will have an impact on how much you decide to contribute towards retirement. To find out more about your estimated future Social Security Benefits, visit the Social Security Administration website at or call Creating your investment strategy The amount of investment risk you are willing to take is a very important decision. Remember, all investments possess some element of risk, including possible loss of principal. Risk is the potential for an investment to lose value. Return is the change in value on an investment. Understanding the relationship between risk and return is very important as you develop your investment strategy: Increased risk offers the potential for a greater return over time, but there is also a greater potential for loss. Lower risk offers the potential for a lower return over time, but there is also less potential for loss. Risk versus Return Money market Fixed interest Bonds Balanced Lower risk: Lower potential return Less potential for loss Large-cap stock Mid-cap stock Small-cap stock Higher risk: Higher potential return Greater potential for loss International Specialty stock In the investment world, risk refers to the elements that determine whether an investment s value or return will be lower or higher than expected. Generally, the greater the risk, the greater the potential return. The risk/return meter above shows the relative risk and return characteristics of different investment types. 3

4 Diversification and asset allocation As an investor, it s important to find balance. You want stability, but you also want growth potential. You re willing to take on some investment risk, but only up to a certain point. Diversification is a technique that seeks to stabilize risk by allocating investments among various financial instruments, industries and other categories. Asset allocation is an investment technique that aims to balance risk and reward by allocating assets according to your goals, risk tolerance and the amount of time you have until retirement. There is no simple formula that can find the right asset allocation for you, as this will depend largely on your personal situation. The use of diversification and asset allocation as part of an overall investment strategy does not assure a profit or protect against loss in a declining market. Contribute now, pay taxes later The money you contribute to an employer-sponsored retirement plan is taken directly off the top of your paycheck before income tax and any other automatic weekly withdrawals. The portion deducted goes directly into your retirement account, which reduces your current taxable income and lessens your current income tax burden. As a result, you ll pay less in your current income taxes for the year because, in the eyes of the IRS, you ve been paid less money. Amounts withdrawn from qualified retirement accounts are taxable when distributed. Ideally, distributions will occur at retirement, when you could be in a lower income tax bracket. So, you are not paying taxes on the money you invest today and you could pay taxes at a lower rate when you finally do take home your money. Neither McCready and Keene nor its employees provide tax, legal or investment advice. For answers to specific questions and before making any decisions please consult a qualified attorney or tax advisor. Tax-deferred versus taxable With a qualified plan, you invest pre-tax dollars into a tax-deferred account. Money is deducted from your paycheck before taxes are imposed via withholding, so you pay no income tax on the initial investment. If your account experiences growth, that growth is also tax-deferred, so there is no tax on any gains in the account. Ultimately, when money is withdrawn, it is all taxed as ordinary income. With a taxable investment, you will pay normal income taxes on money you receive. When you invest money, any growth you have is taxed and you need to pay the tax in the same year as the gain, if it is realized. Unrealized gains are not taxed currently and are only taxed when a sale occurs. Dividends and capital gain are taxed at 15 percent or less, for some wage earners, but the tax will apply even if you opt to reinvest dividends and capital gains. The following example compares a monthly contribution of $250 into a tax-deferred retirement account that is earning an 8 percent annual percentage rate to the same monthly contribution and earnings rate in a taxable investment with a 25 percent tax rate. Contributing to a taxable investment, you would first have to pay taxes on the $250 contribution, netting only $ for contributions each month. In 10 years, the taxable investment would have grown to $32,281 while the tax-deferred retirement account would be at $34,539, net after taxes a difference of $2,258. Over a period of 30 years, the difference is even more dramatic. Here the taxable investment grows to just $221,183 while the tax-deferred investment grows to $281,535, net after taxes. The difference is $60,352! Note: Withdrawals prior to age 59 1/2 may be subject to a 10 percent IRS penalty. 4

5 ENROLLMENT OVERVIEW Investment growth comparison 10 years 20 years 30 years $32,281 $34,539 $95,881 $111,233 Taxable investment (at 25% tax rate) Tax-deferred investment (25% tax applied at end of period) $221,183 $281,535 0 $100,000 $200,000 $300,000 All numeric examples are hypothetical. These hypothetical investment returns are for educational purposes only and are not indicative of any particular investment or performance. Hypothetical returns assume reinvestment of earnings. Actual returns or principal value will vary. An investor should consider his or her current and anticipated investment horizon and income tax bracket when making an investment decision, as the example may not reflect those factors. Investing involves risk, including the potential loss of principal. Your actual results may vary. Tax laws are complex and subject to change. Neither McCready and Keene, nor its subsidiaries, nor agents provide tax or legal advice. Plan highlights When you participate in the Caribou Coffee Retirement Savings Plan, you are one step closer to having the income you will need to enjoy your retirement. Here are a few of the features and benefits available to you as a plan participant: Eligibility Requirements Employee and Employer Contributions Participation in the plan is open to employees who meet the following requirement: Age 21 and completion of 3 months of service Plan Entry Dates - Contributions Participants may participate in the plan effective on the first day of the month following completion of the plan eligibility requirements. Employee Contributions Generally you can contribute up to 100% of your wages, salary, earnings (and bonus, if applicable), up to the IRS allowable limits. Visit for information on the IRS limits for the current calendar year. You may change your contributions at any time. Employer Matching Contributions Your plan provides for a discretionary matching contribution paid per payroll in an amount to be determined by your employer on an annual basis. Vesting Employee Contributions You are always 100% vested in your deferral contributions to the plan, plus any earnings they generate. Employer Matching Contributions Contributions made to the plan on your behalf, plus any earnings they generate, are subject to the following vesting schedule: Vesting Schedule Years of or more Service Vesting % 25% 50% 75% 100% Rollovers and Transfers Your plan allows for the rollover or transfer of an existing qualified retirement plan account from a prior employer. You are always 100% vested in any rollovers or transfers to the plan, plus any earnings they generate. Withdrawals/Distributions Generally, money may be withdrawn from your account for: Attainment of age 59 1/2, prior to separation from service Death Disability Financial hardship. In this case, any distribution would be further limited to the total amount contributed and contributions must be suspended for six months after receipt of a distribution of hardship Loans Termination of employment 5

6 Getting started Whether you prefer the internet or telephone, there s an easy-to-use enrollment tool available to you 24 hours a day, seven days a week. Enrollment 1. Click on Enroll or View Account 2. Enter login information First time users will enter their full Social Security Number (SSN) as their user name and the last four digits of their SSN as their PIN The user name and PIN can be changed under the Plan Services tab once enrollment is complete 3. Check the box if you have other retirement accounts you would like to roll over (if applicable) 4. Enter your personal information 5. Decide how much you want to contribute 6. Choose your investment options 7. Add Beneficiary(ies) information 8. Review your entries and click Enroll Me Note: Mutual Funds are sold by prospectus. The prospectus contains important information about the fund. Before investing any money, plan participants should read the prospectus and carefully consider the fund s investment objectives, risks, charges and expenses. Investing involves risk, including the potential loss of principal. To obtain a copy of the prospectus, the participant should contact the plan s investment advisor or the mutual fund company directly or visit TD Ameritrade Trust Company is a non-depository trust company, acts as a custodian and/or directed trustee and is not a member of FINRA, SIPC or NFA. TD Ameritrade Trust Company is a subsidiary of TD Ameritrade Holding Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank TD Ameritrade IP Company, Inc. All rights reserved. Used with permission. What should I have ready when I visit the website? Social Security Number Contribution deferral amount Desired investment allocation Beneficiary(ies) information including beneficiary Social Security Number To learn more visit or call

7 You can adjust your asset allocation or change your investment choices at any time by logging into your account at

8 About McCready and Keene McCready and Keene, Inc., a OneAmerica company, is an actuarial and retirement benefits consulting firm that focuses on designing, installing, and administering customized retirement plans. Based in Indianapolis, Ind., McCready and Keene provides actuarial services to defined benefit plans and provides record keeping services to employee stock ownership plans and other defined contribution plans, including a trust program that uses an open architecture investment platform available to 401(k), 403(b), 457, money purchase pension, and profit sharing plans. About OneAmerica OneAmerica Financial Partners, Inc., headquartered in Indianapolis, Ind., has companies that can trace their solid foundations back more than 135 years in the financial services marketplace. OneAmerica s nationwide network of companies offers a variety of products to serve the financial needs of their policyholders and other customers. These products include retirement plan products and services; individual life insurance, annuities, long-term care solutions and employee benefit plan products. The goal of OneAmerica is to blend the strengths of each company to achieve greater collective results. The products of the OneAmerica companies are distributed through a nationwide network of employees, agents, brokers and other distribution sources that are committed to increasing value to policyholders by helping them prepare to meet their financial goals. McCready and Keene, Inc. a OneAmerica company 7941 Castleway Drive Indianapolis, IN OneAmerica Financial Partners, Inc. All rights reserved. OneAmerica and the OneAmerica banner are all registered trademarks of OneAmerica Financial Partners, Inc. R /27/14