Christian Brothers Services 2014 Fall Webinar Series

Transcription

1 Christian Brothers Services 2014 Fall Webinar Series 2014 Christian Brothers Services, Romeoville, IL. All Rights Reserved. No part of this presentation may be reproduced, stored in a retrieval system, or transmitted by any means without the written permission of Christian Brothers Services. Christian Brothers Retirement Planning Services Helping Employees Achieve Their Retirement Goals October 2, FALL WEBINAR SERIES Opening Prayer Creator God, through your world and people that surround us, we pray that we may grow more aware this day of your life giving presence. Open our minds and hearts to apply the knowledge from today s webinar for the good of all. We ask these things in Jesus Name. Amen 1

2 Helping Employees Achieve Their Retirement Goals David Gordon Pension Plan Consultant 2014 FALL WEBINAR SERIES Concept Retirement Planning Concepts E R P Employee Retirement Plan (defined benefit plan) Provides a retirement benefit payable in the form of a lifetime annuity. Funded entirely by the Employer 2

3 Eligibility Must work the minimum of hours per week set by the employer (from 20 to 30), or ½ a normal teaching load (as set by the employer), and A probationary period of 0 to 12 months (as set by the employer) ** All eligible employees must participate! (no opt-out) ** Vesting (defined benefit plan) Must complete 4 years and 9 months of continuous service to become vested. Service is counted from Date of Hire, not Date of Eligibility. Termination of employment prior to achieving vesting status results in no benefit. Benefit Formula Changes Effective July 1, levels replaced 3 levels previously in effect All employers basically given choice of keeping benefit level or keeping funding level Benefits earned 6/30 NOT AFFECTED! Employers can change level at the start of any fiscal year (but not more than once every three years) Benefit Formula still Career Average 3

4 Future Service Benefit Calculate your benefits Assume an average salary of $20,000 over 10 years of service up to 7/1/14 and $30,000 over 10 years after $20,000 x 10 x 2.64% $ 5,280 $30,000 x 10 x 2.04% 6, $11,400* 11,400 *Per year in retirement Normal Retirement Date First of month following age 65 if participation before 7/1/12 Corresponding to Social Security Normal Retirement Age if participation on or after 7/1/12 Must be vested at above dates (4 years, 9 months of service from Date of Hire). If not, then Normal Retirement Date is first of month following the date vesting is attained No longer an active participant Early Retirement Date Between first of month following age 55 and before Normal Retirement Date Must be vested No longer active Normal retirement benefit reduced to reflect longer payment period Reduction amount based on time before Normal Retirement Date (see chart) 4

5 Early Retirement Factors MONTHS PRIOR TO NRD REDUCTION FACTORS Factors are interpolated for time periods between the above monthly figures Payment Options Single-Life 50% Joint & Survivor 100% Joint & Survivor 10 Year Certain & Life Single-Life Always highest amount available Payable for your lifetime Ends upon your death 5

6 50% Joint & Survivor Choose one person as Joint Annuitant, can be anyone Single-life benefit reduced by factor based on age difference between you and Joint Annuitant (see chart) You receive reduced benefit for life Joint Annuitant receives 50% of your reduced benefit if he/she survives you Benefit ends on last death Cannot change Joint Annuitant 100% Joint & Survivor Choose one person as Joint Annuitant, if non-spouse cannot be more than 10 years younger Single-life benefit reduced by factor based on age difference between you and Joint Annuitant (see chart) You receive reduced benefit for life Joint Annuitant receives 100% of your reduced benefit if he/she survives you Benefit ends on last death Cannot change Joint Annuitant Joint & Survivor Factors Joint Annuitant s Age Relative to Employee s Age 50% 100% 5 or more years older Difference less than 5 years but less than 10 younger but less than but less than but less than but less than but less than or more younger

7 10 YEAR CERTAIN & LIFE Guarantees payment to someone or some entity (Church, charity, etc.) for 10 years Single-life benefit reduced by 4% Payable for your lifetime If you live over 10 years, ends at your death If you die before 10 years, payments continue to beneficiary(s) for balance of 10 year period Multiple beneficiaries allowed Can change beneficiary(s) at any time Disability Supplement An employee who becomes totally disabled and qualifies for social security disability, will continue to accrue a benefit until the earlier of age 65 or the date they no longer qualify for disability. 7

8 Pre-Retirement Death Benefit Death Benefits For Active Employees: If a married and vested active employee dies before retirement, the surviving spouse will receive a 50% pension for life starting immediately (minimum age 40). If a single and vested active employee dies before retirement, the designated beneficiary will receive a lump sum payment of up to $10,000. Golden Rule of 90 Add your age + the number of years worked When it totals 90 you can retire with full unreduced benefits (after age 55)! Started participation before 7/1/12 to be eligible Golden Rule of 90 Age + Years Worked = 90 8

9 403(b) Retirement Savings Plan Helping You Plan For Your Retirement Eligibility Must work the minimum of hours per week set by the employer (from 20 to 30), or ½ a normal teaching load (as set by the er), and A probationary period of 0 to 12 months (as set by the er) ** Participation is voluntary ** 9

10 Employee Saves You can save from 1% to 100% of salary Maximum 2014 employee contribution: $17,500 Catch up for those over age 50: $5,500 10

11 403(b) Vesting Vested Immediately! Investments PATH ONE Target Retirement Funds based on anticipated retirement date Investments Path Two: Choose Your Own Allocation Prime Money Market Total Bond Market Index Vanguard Wellington Vanguard 500 Stock Index Vanguard Total Stock Market Windsor II U.S. Growth Fidelity Blue Chip Growth FTSE Social Index Aquinas Value Extended Market International Growth Short-Term Inflation- Protected Securities Index Total International Bond Index 11

12 The Power of Compounding JILL JACK Years 1-10: $1,000/yr. -0- Years 11-25: -0- $1,000/yr. Total Contribution: $10,000 $15,000 Value after 25 years: $99,911 $73,108 Distributions An employee may withdraw money from their salary deferral savings account for the following events: Normal Retirement Age 65 Early Retirement Age ½ Death Disability Termination of Employment Financial Hardship Financial Hardship Hardship is defined as an Immediate and Severe Financial Need and may only be applied to the following circumstances: College Education (taxable and subject to 10% excise tax) Purchase of Primary Residence (taxable and subject to 10% excise tax) Prevention of Eviction from Primary Residence (taxable and subject to 10% excise tax) Deductible Medical Expense (taxable and subject to 10% excise tax unless medical expenses exceed 7 ½% of adjusted gross income). Pay Funeral Expenses for Dependent (taxable and subject to 10% excise tax) Repair Damage to Primary Residence (insurable loss not covered) (taxable and subject to 10% excise tax) 12

13 Financial Hardship A Participant may withdraw all or part of your salary deferral savings contributions (not earnings or employer contributions) if the Participant can prove financial hardship to the Plan Administrator. If a Hardship distribution is made, the Participant is precluded from saving in the Plan for 6 months. Can t Afford To Save? Eat at Wendy s Value Meal $5.00 Cost: $50/bi-weekly Bring Your Lunch Saves extra $40/bi-weekly in 403(b) Secure Retirement PRICELESS! 13

14 Christian Brothers Retirement Services We appreciate the opportunity to serve the participating employers of the CBS retirement programs For Questions Regarding Retirement Planning Contact: David Gordon at x

15 For the link to the handouts from today s webinar cbs.webinars@cbservices.org To sign up for any of our fall webinars: cbservices.org/educationalresources.php 2014 Christian Brothers Services, Romeoville, IL. All Rights Reserved. No part of this presentation may be reproduced, stored in a retrieval system, or transmitted by any means without the written permission of Christian Brothers Services. 15