RIC Participation and Enrollment

Transcription

1 Your Retirement Savings Benefit RIC Participation and Enrollment Get to know your retirement plan benefits Iowa Retirement Investors Club (RIC)

2 Iowa Retirement Investors Club (RIC) Your employer and supporting associations take your retirement readiness seriously. They have partnered with the Retirement Investors Club to provide a supplemental retirement savings plan that helps you now AND in the future!

3 Introduction Plan Basics Investments Enrollment

4 Introduction There is a large array of voluntary retirement savings plans available to investors today. As an education-related employee, you have the option to save through your employer s 403b plans.

5 Introduction The tax treatment of contributions, earnings, and distributions of all retirement savings plans are regulated by the IRS. Retirement Savings Plans Employer Sponsored Plans Funded with payroll deduction or employer contribution Individual Plans (IRAs) Funded through checking/savings 401k b (TSA) 401a Traditional Roth SEP Pretax &/or Post-tax Roth Pretax &/or Post-tax Roth Pretax &/or Post-tax Roth Pretax Post-tax Taxdeductible Taxdeductible

6 Introduction Certain plan provisions have been customized by your employer. This presentation will refer to both pretax & post-tax Roth benefits. For details specific to your plan, see the Employer Plan Details web page. Customizable Plan options Enrollment period Salary reduction frequency Loan provisions Hardship withdrawals Roth accounts Employer contributions Inactive provider exchanges Accept roll-ins from outside plans

7 Introduction RIC plan participants enjoy: Convenience of automatic savings through salary reduction Tax advantages Competitive low-cost investments and access to investment experts while you save and throughout retirement Income at retirement

8 Introduction Sources of income in retirement Social Security Full social security benefits may account for 40% of income replacement. Retirement Income Personal Savings Personal savings (RIC, IRAs, CDs, mutual funds, etc.) provides a safety net for income short-falls. IPERS Full IPERS benefits account for 60% of income replacement. No COLA!

9 Introduction Plan Basics Investments Enrollment

10 Plan basics As a RIC participant, you choose to have a portion of your wages automatically deducted from your paycheck to save for future income needs. Contributions are deposited into your selection of RIC investments.

11 Plan basics The RIC savings plans offer choice and flexibility. Choose/Change Amount Frequency/month Tax treatment Investment selection Roll-ins Distributions (distributable event) Plan Option IRS annual maximum limits Determined by employer Pretax or post-tax Roth (if allowed in your plan) Fixed rate accounts & 100+ & variable rate funds Non-taxable rollover into RIC Stay invested in RIC, take cash, or roll out

12 Plan basics (contribution limits) IRS 403b Annual Maximum Contribution Limits* Regular Age yr Special Catch-up Total EE 100% of compensation up to: The regular limit + $5,500 if age 50+ The total of all employee contributions made to the 403b account in a calendar year must not exceed the IRS annual maximum limits. If employed w/current employer 15+ yrs & meet eligibility rules If eligible for age 50+ & 15-yr catch-up limits $18,000 $24,000 $3,000 $27,000 *Limits shown are for 2015 & Current contribution limits available here.

13 Plan basics (contribution limits) 15-year special catch-up rules: You have 15+ years of employment with your current employer Must not exceed $15,000 May be utilized over a 5-year period ($3,000 x 5 years) IRS 403b Annual Maximum Contribution Limits* Regular Age yr Special Catch-up Total EE 100% of compensation up to: The regular limit + $5,500 if age 50+ If employed w/current employer 15+ yrs & meet eligibility rules If eligible for age 50+ & 15-yr catch-up limits $18,000 $24,000 $3,000 $27,000 *Limits shown are for 2015 & Current contribution limits available here.

14 Plan basics (tax benefits) Tax advantages differ depending on the taxation of deductions. Access your employer plan options to see if the Roth is available in your plan.

15 Plan basics (tax benefits) Tax treatment of deductions Tax benefit in year saved Tax treatment of earnings Consideration Pretax No withholding Immediate-lower taxable income Tax-deferred until withdrawn as cash Possibility of lower tax rate in retirement Post-tax Roth Regular income tax withholding None Tax-free for qualified distributions Possibility of higher tax rate in retirement

16 Plan basics (tax benefits) Which option is right for me? A number of factors may influence what is right for you: Age/years to retirement Current tax rate/need for tax relief Projected tax rate at retirement Possibility of fewer tax deductions in retirement Projected earnings Schedule a meeting with your financial advisor or tax professional if you have questions.

17 Plan basics (tax benefits) Savers Tax Credit You may be saying I can t afford to save! Consider the Savers Tax Credit designed to help lower income earners save for their own retirement. You may be qualified to receive credit against taxes owed, up to $1,000. Find out more on the RIC website under Program Basics, then Tax Benefits.

18 Plan basics (roll-ins) Roll-ins Outside pretax retirement assets (IRA, 401k, 403b, etc.) may be rolled into your RIC active provider account. Roth IRAs are not eligible for roll-in. Assets rolled into RIC may be rolled out without restrictions. Consider the RIC benefits of penalty-free competitive fixed rate accounts, no-load/low-cost mutual funds, expert advisors, etc.

19 Introduction Plan Basics Investments Enrollment

20 Investments Please Note: Providers and investments shown in this presentation represent Core* provider offerings for the contract period. Core provider investments must meet RIC investment policy standards and annual review requirements. Core provider representatives are your best source of information regarding the funds offered by their firm. RIC does not give investment advise. Investment models used in this presentation are for illustrative purposes only. *If Optional providers are allowed in your plan, please be aware that investment options are not monitored and fees are not negotiated by RIC.

21 Introduction + Core Providers = RIC Core investment providers give participants access to attractive investment options and services at low cost due to economies of scale. Your contributions to Core provider products are put to work in the investment mix you choose with no sales charges, hidden fees, or surrender penalties. 21

22 Investments RIC Core providers offer 2 basic types of investments. Fixed Rate Declared rate Guaranteed by provider Fixed period No market risk No restrictions/maturities No fees Variable Rate Mutual Funds No guarantees Always liquid Degrees of market risk No restrictions/maturities Fund management fees Total range of fees (2015) =.05% %. (2016) 04% %

23 Investments Funds are available in variety of investment categories. Principal Protection Fixed Rate Money Market Income (Bond) Core Bond Inflation Protection High Yield Foreign Bond Balanced (Stock/Bond) Traditional Balanced Target Date Growth (US Stock) Large Value Large Blend Large Cap Index Large Growth Mid Value Mid Cap Index Mid Growth Small Value Small Cap Index Small Growth International/Global Foreign Stock Emerging Mkts World Stock Alternative Real Estate Self-Directed Brokerage Account (SDBA-fees vary)

24 Investments Helping educators plan for retirement since 1961 Serving the Iowa RIC plans for 5 years Offering a full line of personal insurance and retirement planning products Financial Experts: Representatives, along with a dedicated team serve Iowa RIC participants across the state of Iowa Website: Retirement savings/planning calculators, personal finance calculators Asset allocation questionnaire Online account access

25 Investments Financial Education: Free financial workshops include valuable information on managing student loan debt/forgiveness, understanding your state retirement system, and more. Enrollment 1-on-1 assistance from a Horace Mann representative Self-enrollment - Fillable PDFs available online Online enrollment (coming soon) Extras Managed Account Option through ProNvest (available 1/1/2016) Self-Directed Brokerage through TD Ameritrade (available 1/1/2016) Donors choose

26 Investments Serving the Iowa RIC for over 14 years 2015 World s Most Ethical Company by the Ethisphere Institute Consistently ranking among the strongest companies in the nation (Ratings as of 08/27/15) A.M. Best Fitch Moody's Standard & Poor's A++ (Superior) AA+ (Very strong) Aa2 (Excellent) AA+ (Very Strong) Financial Experts: State-wide advisors are available to assist participants with enrollment and financial decisions to help them reach their retirement goals and retire on their own terms.

27 Investments Website: 24/7 online account access and support Suite of educational tools and calculators Enrollment 1-on-1 assistance from a local representative Self-enrollment - Fillable PDFs available online Extras Managed account option through Morningstar Guidance Self Directed Brokerage Account through Charles Schwab

28 Investments Leading provider of retirement plans for K-12, higher education, healthcare, government and other notfor-profit institutions with more than 60 years experience. Serving Iowa RIC for 15 years Strong financial ratings A.M. Best A Standard & Poor's A+ Moody's A2 Fitch A+ Financial Experts: They ask and listen to your financial situation, values and objectives to have a clear set of priorities and goals. Use of sophisticated software helps develop a personal plan to help you achieve your goals. Periodic reviews with advisors keeps your plan on track.

29 Investments Website: Retirement planning tools, calculators, videos, webcasts Financial 360 o - Financial aggregator 24/7 account access Enrollment Online enrollment 1-on-1 assistance from a local representative Self-enrollment - Fillable PDFs available online Extras Self Directed Brokerage Account Free VALIC Mobile App

30 Investments America s Retirement Company Serving the Iowa RIC for 14+ years 2015 World s Most Ethical Company by the Ethisphere Institute Strong financial ratings A.M. Best Fitch Moody's Standard & Poor's A A A2 A Financial Experts: Advisors throughout Iowa provide one-on-one (or group) education on the benefits of participating, dollar cost averaging, catch-up provisions, diversification, etc. Ongoing services include annual reviews and retiree counseling on withdrawal options and tax implications.

31 Investments America s Retirement Company Website: Access from RIC website 24/7 account access plus retirement planning tools, calculators, videos Financial Education: Educate participants on the participant website, including the MyOrangeMoney tool and provide financial, investment, and retirement planning seminars and webinars Enrollment 1-on-1 assistance from Voya representative Self-enrollment Request enrollment kit by mail Extras MyOrangeMoney and Financial Dashboard (financial aggregator) Free mobile app - Access your account information anywhere Self Directed Brokerage Account

32 Investments (investor styles) Providers can help you establish your investment style.

33 Investments (online resources) The RIC At-A-Glance, provider websites, individual fund performance/fees, advisor listings, fixed rates, etc., are easily accessed from the RIC website.

34 Introduction Plan Basics Investments Enrollment

35 Enrollment Enrollment is year-round. But waiting even 1 year to save can hurt you. Starting age Savings amount Results at age $1,000 per year $122, $1,000 per year $112,283 Cost of waiting 1 year = $10,073 Saving early is saving smarter! Assumes average 8% earnings rate

36 Enrollment STEP 1 - Choose a provider

37 Enrollment STEP 1 - Choose a provider Keep in mind RIC Core providers meet bid standards and annual investment review requirements. Each offers: Guaranteed rate accounts (no fees or maturities) Low cost mutual funds including, target date funds, index funds, SDBA accounts Investment planning tools Investment advisors (some local options) Online access to accounts and educational information

38 Enrollment STEP 1 - Choose a provider To help you choose, you may: Talk to participating co-workers. Call the provider or review their website to get a feel for their services. Utilize the Investment Provider Interview to ask a provider questions.

39 Enrollment STEP 1 - STEP 2 - Choose a provider Complete provider forms & RIC Salary Reduction Form and process as instructed Meet with an advisor* (no cost) Use the Pre-enroll Now! option Access forms online (if available) Request a kit by mail *Many independent advisors can represent at least one RIC provider.

40 Establish your new RIC accounts as soon as possible to begin taking advantage of the many great benefits. Providers are available to answer questions and set appointments to help you get your RIC accounts open

41 Resources Call your provider if you have questions about your statements or the investments in your account Access your account online (your provider welcome letter includes your PIN- save it for your records!) Visit the RIC website at John Williams RIC 403b plan coordinator