You ve helped others plan for their future now SourceAmerica can help you prepare for yours.

Transcription

1 SourceAmerica Retirement Plan You ve helped others plan for their future now SourceAmerica can help you prepare for yours. ENROLLMENT OVERVIEW PRODUCTS AND FINANCIAL SERVICES PROVIDED BY AMERICAN UNITED LIFE INSURANCE COMPANY, A ONEAMERICA COMPANY

2 Reaching your retirement goals can take a lot of preparation. Some investment professionals estimate that you ll need at least percent of your final working salary to maintain your lifestyle during retirement. The SourceAmerica Retirement Plan offer you tools, education and investment options to help you start preparing for your future. What do you see yourself doing when you retire? Maybe you re looking forward to spending more time with your family and friends. Or maybe you hope to be able to give back to the community or travel the world. No matter how big or small your retirement goals may be it takes preparation to achieve them. Fortunately, SourceAmerica offers a retirement program to help you reach your objectives and goals. 2

3 ENROLLMENT OVERVIEW Estimate your need With the average life expectancy increasing, uncertainty around Social Security and inflation continuing to erode the purchasing power of your money, participating in your retirement plan is more important now than ever. Use this worksheet to help you determine how much money you may need to reach your retirement goals. Retirement needs worksheet Note: Example assumes 25 years until retirement Example Your numbers 1 Annual income $40,000 2 Annual income needed in retirement in today s dollars $30,000 (Retirement professionals estimate that you will need 75 to 80 percent of your current annual income each year in retirement) 3 Approximate amount of Social Security expected annually $10,000 (Multiply Line 1 by.25 for a conservative estimate of your Social Security benefit. There is an annual cap on benefits. Visit for more information.) 4 Shortfall that will need to be made up from other sources of retirement income $20,000 (Subtract Line 3 from Line 2) 5 Adjust shortfall for inflation $32,800 (Multiply Line 4 by the appropriate inflation factor from the chart below. In the example, we assume 25 years remaining until retirement. Therefore, we multiplied $20,000 by 1.64.) 6 Investments already accumulated adjusted for future growth $325,800 (For this example, we assume $60,000 in already accumulated assets. Because we are still assuming 25 years until retirement, we multiply $60,000 by an investment factor of Check the table below for the appropriate investment factor for your situation.) 7 Amount needed at retirement to get the amount entered in Line 5 $410,000 (Multiply Line 5 by 12.5 a payout factor which assumes 2% inflation, 7% return and that 20 years of retirement income will be needed) 8 Determine how much needs to be allocated toward retirement income (Subtract Line 6 from Line 7) $84,200 9 Amount needed in contributions each year to achieve a goal of Line 8 (Divide Line 8 by the appropriate present value factor from the chart below. In the example, we did $84,200 divided by ) $1, Monthly contribution amount (Divide Line 9 by 12) 11 The percentage to be deducted monthly from paycheck (Line 10 divided by monthly income. In the example: $ divided by $3,333.) $ monthly investment 3.3% monthly investment Retirement needs factors Inflation Factor (2 percent inflation) Investment Factor (7 percent return) Present Value Factor (7 percent return) Note: 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. Balances shown are before reduction for taxes. 3

4 Contribute to your retirement plan For many people it is a good idea to participate in your retirement plan as soon as possible. If you start contributing right away, your account may have more time to grow or weather ups and downs in the stock market. Though starting early is important; there is assistance available through your plan if you are contributing later in life. Check with your plan administrator about catch up contributions. Your retirement plan contributions The money you contribute to your retirement account is automatically deducted from your paycheck before taxes are taken out. It goes directly into your retirement account, so your paycheck is actually less than it would have been before the deduction when taxes are taken out. This means you are paying less in current income taxes for the year. This can help reduce the impact of contributing to your retirement plan on your take-home pay. Put tax deferral to work for you Tax deferral simply means the contributions to your retirement plan are not currently taxed. You are putting off paying taxes on that money until you withdraw it from your retirement account. How can putting off paying taxes be a benefit? Not only are your contributions invested, but the deferred taxes allow your money to stay invested. The benefits of compounding Compounding occurs when your principal investment generates a gain that is reinvested and experiences an additional earning. When the new balance (the original investment plus the gain) generates further earnings, the initial gain increases the total return of your initial principal. When the following gains are reinvested, future positive earnings are further compounded. Compounding example Michael Age 25 $100 Monthly contribution over 40 years Total contribution $48k = $199,149 at retirement Note: This hypothetical investment return and fictitious name is designed to demonstrate the impact of compounding returns and is not indicative of any particular investment or performance. Hypothetical returns assume reinvestment of earnings and a 6 percent average return on investment. Actual returns or principal value will vary. Balance shown is before reduction of taxes. Any investment involves risk and there is no assurance that the investment objective of any investment option will be achieved. Before investing, understand that variable annuities are subject to market risk, including possible loss of principal. 4

5 ENROLLMENT OVERVIEW Plan highlights When you participate in the SourceAmerica Retirement 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 Upon the attainment of 21 years of age, new employees are eligible to contribute their own money to the Plan immediately upon hire. Any contribution deferrals go into effect the first day of the month coinciding with or next following completion of these eligibility provisions. In addition, after six months of employment, new employees who are at least 21 years of age are also eligible for the Employer matching contributions. These contributions go into effect the first day of the month coinciding with or next following completion of six months of service. Excluded employees The Plan does not allow for participation by employees who are: Employees as a result of a Code Section 410(b)(6)(C) transaction Independent contractors Plan entry dates Participants may participate in the Plan on the first day of the month coinciding with or next following completion of eligibility provisions. Employee contributions Generally you can contribute up to 100 percent of your wages, salary, earnings (and bonus, if applicable). Please visit for more information on the current year s contribution limits. You can designate your contribution as a pre-tax deferral, a Roth deferral or a combination of both. Roth deferrals are after-tax contributions, but earnings on these contributions accumulate tax-free in your account and withdrawals at retirement may be exempt from federal income tax. Auto enrollment new eligible employees New eligible employees who do not elect to begin contributing to their retirement account or opt out of participating within 60 days of becoming eligible, will automatically be enrolled in the Plan. Upon auto enrollment, your Employer will automatically withhold 2 percent of your compensation each payroll period and contribute that amount to the Plan as an elective deferral. You may enter a salary deferral election at any time to select an alternative deferral amount or to elect not to defer in to the Plan. In addition, the amount that is withheld from your paycheck will increase by 1 percent each year, up to 8 percent unless you elect otherwise. 5

6 Note: The auto enrollment feature described above is only effective for newly eligible employees who enter the Plan. Existing employees who are already contributing will not be subject to the automatic deferral schedule described in this section. Existing employees will maintain their current deferral contribution levels until they elect to make a change. The money that you contribute and the money it earns are always 100% vested. Employer matching contributions Your Plan provides for an employer matching contribution equal to 100 percent of your elective contribution up to 8 percent of your eligible compensation. Employer non elective contributions After six months of employment and the attainment of 21 years of age, your plan provides for an employer contribution of 3 percent of your eligble compensation each year. This money will be directed into the organization s money purchase Plan and is subject to the Employer vesting schedule described below, regardless of date of hire. Vesting Employee contributions You are always 100 percent vested in your deferral contributions to the Plan, plus any earnings they generate. Employer vesting schedule For those employees hired on or after 1/1/13, contributions made to the Plan on your behalf, plus any earnings they generate, are subject to the following vesting schedule. Vesting schedule for employer profit sharing contributions Years of service Vesting percentage 1 year of service or less 0% 2 years of service 20% 3 years of service 40% 4 years of service 60% 5 years of service 80% 6 years of service 100% Note: Employees hired on or before to 12/31/12 are not subject to the vesting schedule above. Any employer contributions made to the Plan on your behalf, plus any earnings they generate, are immediately vested. 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 percent vested in any rollovers or transfers to the Plan, plus any earnings they generate. 6

7 ENROLLMENT OVERVIEW Withdrawals/Distributions Generally, money may be withdrawn from your account for: Attainment of age 59½ 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. Roth after-tax contributions may not be withdrawn for a financial hardship In-service withdrawals of rollover contributions Loans Termination of employment Retirement at the plan s normal retirement age Section 404(c) Notice The plan is intended to be an ERISA Section 404(c) plan. This means that you exercise control over the investments in your plan account. You will choose which investments to put your money in now and you can choose different investment options as your needs change. This allows you to invest in the way that best meets your personal goals. Your investment elections remain in force until changed. Your employer and the fiduciaries of the plan may be relieved of liability for any losses that your account may experience as a result of investment choices made by you or your beneficiary. For rollovers and transfers, call , option 1, to discuss distribution options available to you and which option will suit your needs. If you do not make any investment option elections, your contributions will be credited to the default investment option identified in the contract. Once you provide investment option elections, new contributions will be allocated according to those elections. Monies defaulted to the default investment option will remain invested in that option until you transfer such amounts to another investment option. All or a part of your account value may be transferred between the available variable investment options at any time during the Accumulation Period, but no more frequently than once per day. However, AUL reserves the right to reject any transfer request which it reasonably determines to be made in connection with abusive trading practices, such as market timing or excessive trading by an investor or by accounts of investors under common control. Note: Fees, limits, terms, and requirements for loans vary from plan to plan. Plan participants should carefully consider the risks, tax implications, and retirement investing consequences before taking a loan from an employer-sponsored retirement plan. Contact the plan sponsor (employer) with any questions. 7

8 Choose your investments An important, and sometimes confusing, step in retirement preparation is choosing which options to invest in. Because each investor has different goals and different circumstances, there is no set strategy that works for everyone. The mix of investments that is appropriate for you depends on your retirement goals, your risk tolerance and how long you have until retirement. Asset classes There are different types of investments, known as asset classes, in which you may choose to invest your retirement plan contributions. The three main asset classes are: Stocks Stocks have historically had the greatest risk and highest returns among the three major asset categories. Bonds Bonds are generally less volatile than stocks but offer more modest returns. Cash equivalents Cash equivalents such as certificates of deposit, treasury bills and money market funds are generally the most conservative investments, but offer the lowest return of the three major asset categories. Another type of investment, called an Asset Allocation fund, provides investors with a portfolio of a fixed or variable mix of the three main asset classes. These funds are a good option for investors that would prefer not to worry about making adjustments to their portfolio as the market fluctuates. Note: Each group of investments carry their own unique risks. Before investing, please read each fund prospectus for a detailed explanation of the risks, fees, and costs associated with each underlying investment option. Although you might reduce volatility and risk with diversification, you can t eliminate investment risk all together. The use of asset allocation and diversification does not ensure a profit or protect against loss. Bond funds have the same interest rate, inflation and credit risks that are associated with the underlying bonds owned by the fund. Money Market funds are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other federal government agency. Although they seek to preserve the value of your investment at $1.00 per share, it s possible to lose money by investing in money market funds. Understanding risk and return 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. The amount of investment risk you are willing to take, also known as your risk tolerance, is a personal decision, which can be shaped by the amount of time you have until retirement, or your time horizon. Risk tolerance Some people are comfortable taking on the risk of frequent ups and downs of the market in return for potentially greater long-term returns. Others prefer the slow, steady return of lower risk investments. Understanding your personal attitude toward risk will help you find the right mix of investments for your portfolio. Time horizon The longer you have until retirement, the more risk you can potentially afford to take. Mixing it up with diversification Because different asset classes have varying levels of risk and return, it is important to make sure you have a good mix of investments in your portfolio. This strategy, called diversification, aims to balance risk and reward by allocating assets according to your goals, risk tolerance and investment horizon. 8

9 ENROLLMENT OVERVIEW What type of investor are you? For those who would like to take a more hands on approach For those that would like to select and actively manage their retirement plan assets, there is a fund line up available with individual investment options to choose from. For those who would like to take a more hands off approach Target date investment options are available to the plan through the TIAA- CREF Lifecycle Funds and may be appropriate for those who wish to take a more hands off approach to investing. The Lifecycle Funds consist of a series of target retirement date funds in five-year increments where you select the fund that most closely aligns with your retirement year. For example, a Lifecycle 2030 Fund may be appropriate for someone planning to retire in or around These investment options use a strategy that reallocates equity exposure to a higher percentage of fixed investments; the investment options will shift assets from equities to fixed income investments over time. As a result, the investment options become more conservative over time as you approach retirement. Target date investment options are available to the plan through the TIAA-CREF Lifecycle Funds and may be appropriate for those who wish to take a more hands off approach to investing. It s important to remember that no strategy can assure a profit or prevent a loss in a declining market. Target date investment options are designed to provide diversification and asset allocation across several types of investments and asset classes, primarily by investing in underlying funds. Therefore, in addition to the expenses of the target date investment options an investor is indirectly paying a proportionate share of the applicable fees and expenses of the underlying funds. The investment options are not guaranteed at any point and may lose value. For those who would like to take a middle of the road approach There is a tool available for those who would like some guidance with regards to investment strategy, but would still like the ability to make changes or manually select investment options if desired. The Strategy Builder tool from MasteryPOINT is designed to help you create a retirement action plan and provide recommendations that may move you closer to your retirement goals. When you use this tool, key information is pulled from your account and pre-populated for your convenience. You can further customize your strategy by answering some questions about your current financial situation, retirement income goal and comfort level with investing. You will then see a side-by-side view of your current strategy and the new suggested strategy as they relate to you being on track to meet your financial goals for retirement. The new proposed strategy can be implemented with the click of a button should you choose to accept the recommendations made. 9

10 Review your plan regularly Log in to your account at Retirement.org 24 hours/day, 7 days/week to: Access account balances View investment option performance Review or change investment options Update contact information Make deferral changes Designate and update beneficiaries The last step in investing in your retirement plan is to review your account regularly. Like other important things in life, your retirement account requires periodic monitoring and review. Be sure to carefully read your quarterly statements, call with any questions you may have and review all materials given to you from your employer about retirement preparation or the plan. As your life and priorities change, the amount you can contribute to your retirement account or your investment allocation strategy may also change. Any of these events might signal a need to re-evaluate your retirement plan choices. Marriage Birth or adoption of a child Change of employment for you or your spouse Divorce Financial emergency Death of a spouse Approaching retirement In addition to reviewing your account when major life events happen, it is also a good idea to do a review annually (perhaps with a financial professional) to determine whether or not you are still on track to reach your goals. This is a good habit because there will be tweaks you may want to make along the way such as rebalancing your investment mix or increasing your contribution level. For questions on how the plan works, asset allocation or investment strategy, please contact either: Michael Aylward, CRPS Vice President Financial Advisor, Consulting Group RBC Wealth Management michael.aylward@rbc.com Matthew G. Lanham, CFP First Vice President Financial Advisor, Consulting Group RBC Wealth Management matthew.lanham@rbc.com For specific questions as it relates to the pension plan, please contact: Matthew Szlapak Benefits Manager SourceAmerica mszlapak@sourceamerica.org 10

11 ENROLLMENT OVERVIEW Online tools In today s busy world, many investors enjoy learning about retirement related topics online. Through our Investment Education Toolbox and the My OneCheck Online tool from MasteryPOINT Financial Technologies, you can educate yourself and develop your retirement preparation strategy wherever (and whenever) it works best for you. Investment Education Toolbox By visiting you have access to retirement preparation resources such as: Our Asset Allocation Builder questionnaire to assist you with determining what type of investor you are Financial education resources from McGraw-Hill Financial Communications presented through articles, interactive charts and tutorials on a variety of topics Calculators and other tools to help you determine your retirement preparation strategy My OneCheck Online from MasteryPOINT If applicable for your plan, My OneCheck Online is available to you by logging in to your retirement account at and includes: Strategy Builder Designed to help you create a retirement action plan and provide recommendations from MasteryPOINT Retirement education Provides information on retirement preparation concepts and the advantages of your retirement plan Calculators Includes the College Planner, the Distribution Planner, the Paycheck Calculator and many more 11

12 My OneCheck Online from MasteryPOINT disclosure MasteryPOINT Retirement Income Strategy (RIS) is a sophisticated retirement planning tool designed to provide you with valuable help in reaching your retirement goals. However, RIS forecasts and projections are derived from mathematical modeling techniques of the economic and financial markets that may or may not reflect actual conditions and events. IMPORTANT: The projections or other information generated by this RIS tool regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investments results and are not guaranteed. RIS does not evaluate every possible investment or retirement strategy you could use, particularly when considering investments outside of your employer-sponsored pension plan. As a result, the recommendations of RIS may not have considered investments or strategies that would produce similar or superior results. Additionally, the results provided by RIS may vary with each use and over time depending on the assumptions you enter. The asset projections and suggestions of asset allocation strategies furnished through the RIS tool are based on information and assumptions you provide about your current financial, personal, family status, and expected returns as well the historical performance of various asset categories available within your plan. While RIS can provide you with insights on which investment asset categories offered by your Plan appear to best fit your retirement needs, you are solely responsible for using your own best judgment to choose the investments that are most suitable for you. Methodology RIS generates retirement wealth and retirement income projections based on current account balances, current salary, retirement age, life expectancy, current savings rates and rate of return assumptions entered by the participant. The risk questionnaire provides a series of questions that are used to determine the user s tolerance for risk. Base on his/ her answers to the questions, the tool assigns each user a conservative, moderate or aggressive risk profile. The tool then displays a suggested mix of assets that may be appropriate for the user s time horizon to retirement and risk profile. 12

13 ENROLLMENT OVERVIEW Limitations and key assumptions There can be no assurance that any of the suggestions for modification of participant savings level, participant retirement age, participant retirement goal or participant risk level will generate any specific level of retirement date wealth or income in retirement. These illustrations are hypothetical and are based on the information and variables you provide. Investing involves risk including the potential for loss of principal. Past performance is not a guarantee of future results. Your actual investment experience will vary. Any investment involves risk and there is no assurance that the investment objective of any investment option will be achieved. Before investing, understand that your investments are subject to market risk, including possible loss of principal. 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. Monthly 401(k) retirement plan contributions are made at the end of each month prior to retirement at the specified rate you selected. Your 401(k) retirement plan assets grow at the pre- and post-retirement rates of return you select. Your salary growth before retirement is calculated at an annual rate of 3%. Contributions into the Plan before retirement will also grow at the same rate. Income growth after retirement is set to the inflation rate. After retirement, your growth-adjusted salary is withdrawn from your 401(k) retirement plan balance each month. This amount is indicated as withdrawn before investment growth is applied for the month. Monthly compounding is applied to rates of return and inflation. These values are applied at the rate you select, divided by 12 for growth of 401(k) retirement plan balances. Social Security is calculated based on your current salary. An earnings base for up to 35 working years prior to retirement date is calculated. Your current Social Security benefits are calculated from your assumed earnings base and that of your spouse (whether non-working spouse or working spouse if his/her age and salary are specified). A 2.5% annual growth factor is applied to your Social Security benefits after retirement. The calculated benefit is added to your 401(k) retirement plan balance at the end of each month during retirement. Benefits are reduced for early retirement and increased for late retirement according to current Social Security regulations. If you are married and do not explicitly exclude the spouse Social Security benefit, a spousal benefit equal to one half of your benefit will be computed and added to your balance. If you retire before your normal retirement age (65, 66, or 67 depending on your age), your Social Security benefit will be reduced by the standard reduction formula. If you retire before age 62, your benefit may be reduced even further. The program does not consider your salary and Social Security contribution history. As a result, your computed benefit when you retire early may be less than your actual benefit. Contact the Social Security Administration for a more accurate benefit estimate. Your federal tax rate is calculated based upon your current salary (including spouse salary, if entered) and assumes only the standard deduction. State taxes are not considered in the analysis. Other risks and limitations MasteryPOINT RIS cannot independently monitor, review or update the recommendations or projections you receive from it, nor does it have the capability to monitor or review the investment decisions you make based on its recommendations or projections. Because MasteryPOINT RIS utility depends on the completeness, accuracy and timeliness of the information you provide, you are solely responsible for reviewing and updating information within MasteryPOINT RIS. You understand that you must provide complete and accurate information when requested by MasteryPOINT RIS in order to get meaningful results from it. Consult with your financial professional to discuss how other investment options can be combined with your MasteryPOINT RIS asset level suggestions to best meet your overall retirement or other financial goals. 13

14 Get started! Enroll today at Retirement.org or by calling eenrollment 1. Go to 2. Click on Register Now. 3. Complete the step-by-step registration process, which includes: Creation of User ID and Password Creation of password recovery information Enrollment 1. Enter your User ID and Password created during Registration. Click Login. 2. Complete the step-by-step enrollment process, which includes: Entry of deferral information Investment selection Information regarding account consolidation (if any) Note: eenrollment is available for most, but not all plans. Enroll over the phone via OneAmerica TeleServe Call Register by entering some information: Enter your Social Security Number (SSN) Then re-enter the last four digits of your SSN Enter the numeric portion of your Plan Number Enter your birth date (mm/dd/yyyy) 3. Choose and enter a password. 4. Answer the questions about whether you want to make a deferral contribution and what percentage you want to defer. 5. Enter your investment option elections. 6. Indicate whether you have other retirement accounts that you wish to roll over to your AUL retirement plan. Paper enrollment form If your plan offers enrollment with a paper enrollment form, simply fill out the form and return it following the instructions given by your plan administrator. 14

15 ENROLLMENT OVERVIEW Note: Group annuity contracts are issued by American United Life Insurance Company (AUL) and registered variable annuity products are distributed by OneAmerica Securities, Inc., Member FINRA, SIPC, a Registered Investment Advisor, 433 N. Capitol Ave., Indianapolis, IN 46204, Neither AUL nor their representatives provide tax, legal, fiduciary or investment advice. Retirement plans from American United Life Insurance Company (AUL) are funded by an AUL group annuity contract. While a participant in an annuity contract may benefit from additional investment and annuity related benefits under the annuity contract, any tax deferral is provided by the plan and not the annuity contract. The information is provided for educational purposes only and is not intended as financial or legal advice. Investing involves risk which includes potential loss of principal. Variable products are sold by prospectus. Both the product prospectus and underlying fund prospectuses can be obtained from your investment professional or by writing to 433 N. Capitol Ave., Indianapolis, IN 46204, Before investing, carefully consider the fund s investment objectives, risks, charges and expenses. The product prospectus and underlying fund prospectus contain this and other important information. Read the prospectuses carefully before investing. TIAA-CREF, RBC Wealth Management, Mastery POINT Financial Technologies and McGraw Hill Financial Communications are not affiliates of American United Life Insurance Company (AUL) and are not OneAmerica companies. 15

16 About OneAmerica A national leader in the insurance and financial services marketplace for 140 years, the companies of OneAmerica help customers build and protect their financial futures. OneAmerica offers a variety of products and services to serve the financial needs of their policyholders and customers. These products include retirement plan products and recordkeeping services, individual life insurance, annuities, asset-based long-term care solutions and employee benefit plan products. Products are issued and underwritten by the companies of OneAmerica and distributed through a nationwide network of employees, agents, brokers and other sources who are committed to providing value to our customers. To learn more about our products, services and the companies of OneAmerica, visit OneAmerica.com/companies. American United Life Insurance Company a OneAmerica company One American Square, P.O. Box 368 Indianapolis, IN OneAmerica Financial Partners, Inc. All rights reserved. OneAmerica and the OneAmerica banner are all registered trademarks of OneAmerica Financial Partners, Inc. R /24/17