Milwaukee Public Schools 403(b) Program

Transcription

1 403(b) Plan Milwaukee Public Schools 403(b) Program Voluntary 403(b) Plan with updates to products and services being offered October 2010 MPS Office of Human Resources Benefits and Insurance Services Division

2 Table of Contents MPS 403(b) Plan Question and Answer Sheet Traditional 403(b) and Roth 403(b) Comparison Chart MPS 403(b) Glossary MPS 403(b) Vendor Comparison of Plan Features Chart ING Summary MetLife Summary TIAA-CREF Summary WEA TSA Trust Summary Notes

3 Office of Human Resources 5225 W. Vliet St., P.O. Box 2181 Milwaukee, WI October, 2010 Dear Colleague: Milwaukee Public Schools is committed to providing you with a 403(b) Plan that allows you the flexibility necessary to meet your retirement needs. In 2009, we added new vendors and reduced administrative fees, providing you more investment choices and enhanced personal services at lower expense to you. In 2010, we eliminated vendors who no longer were allowed to accept contributions from MPS employees, thus providing a lineup of vendors ready to meet your needs. Now, as we approach 2011, we are introducing a new elective option called the Roth 403(b). The new Roth 403(b) option allows you to make after-tax contributions from your paycheck, while earnings accumulate tax-deferred and possibly tax free if certain conditions are met. Otherwise, you may continue to make tax-deferred contributions under the traditional 403(b) option as you do now, thus reducing your taxable income while deferring taxes until you take a distribution from your account at termination of service. Together these options provide you with a retirement planning opportunity in accordance with your personal preference for paying taxes in a retirement program. All of these improvements are the end result of a joint labor management collaboration that included participation by all MPS unions in identifying products and services to meet your retirement needs. What has Changed? Given these difficult economic times, making voluntary employee contributions to a retirement plan may be a challenge for many employees. That is one of the reasons why our program continues to be evaluated for enhancements to ensure that your hard-earned money is working as efficiently as possible. All four vendors (WEA Trust, ING, TIAA-CREF, and MetLife) have agreed to offer the new Roth 403(b) feature under the same fee structure as the traditional MPS 403(b). For your convenience, we have provided questions and answers as well as a comparison chart in this booklet. Why 403(b) Plans Make Sense Many experts tell us, and we see in the District, that people are living longer and thus will need supplemental income to add to their pension income from other sources like the City of Milwaukee and the Wisconsin Retirement System pension plans. Whether it s before-tax or after-tax, it s important to make voluntary contributions to a 403(b) plan as lifestyles are changing and Social Security benefits are under increasing stress. Not only is participation in the Milwaukee Public Schools 403(b) Plan a convenient way to set aside money for your future, it is an excellent way to defer your taxable income while you save for retirement. With the new Roth feature, you can save for retirement with current dollars (after-tax) while possibly minimizing your tax payment at the time of distributions. If you are not enrolled in the MPS 403(b) Plan, we highly encourage you take a look at what the Plan has to offer. If you are already enrolled, now is the time to consider any of the following options: Increase your 2010 contribution before the end of the year (2010 IRS limit is $16,500, plus an additional $5,500 if over age 50); Evaluate the Roth option to determine if you should stay in the tax-deferred plan or switch to the after-tax Roth; or Review your investment options to determine if they still make sense. Remember you should review your 403(b) portfolio at least once a year. An annual exam of your portfolio is important for the health of your investments! page 1

4 Stay Tuned For Upcoming Education Seminar On October 21, 2010 at Hamilton High School, we will give you opportunities to receive more information about the new Roth option as well as seek answers to any questions you may have during our 403(b) Education Seminar. The meeting will start at 4:00 p.m. and you will be able to obtain more information about the Roth 403(b), meet privately with vendor representatives to enroll or make changes to your investment amount, and/or attend any or all of the scheduled group education sessions conducted by plan representatives. In the meantime, we have included a comparison chart in this booklet that introduces you to the products and services of all four vendors, including how you can obtain more information. We have also included a question and answer chart highlighting questions that may help you select a vendor, and enroll once you ve made a selection. Additional information pertaining to the Education Seminar is enclosed. During the school year and beyond, we will provide education meetings, additional literature, and plenty of opportunities for you to find out more about ways to take advantage of this voluntary program. If you have any questions feel free to contact the vendor representatives listed in this booklet. We are excited about continuing to bring you new opportunities for you to provide a sound retirement plan for you and your family. We look forward to any feedback you may have. Sincerely, Chris Toth Chris Toth, Director Benefits and Insurance Services Division tothcm@milwaukee.k12.wi.us page 2

5 Questions and Answers What is a 403(b) Plan? A 403(b) plan is a retirement plan known as a tax-sheltered annuity (TSA) available for employees of public schools and other tax exempt organizations. Similar to a 401(k) plan, a 403(b) plan allows you to make voluntary pre-tax contributions from your salary to a plan available under the MPS program. When you enroll, individual accounts are opened in a 403(b) plan in either of the following two types; (a) an annuity contract, which is provided through an insurance company under 403(b) or (b) custodial account which is invested in mutual funds under 403(b)(7). Vendors typically offer both arrangements as you may sometimes see the terms 403(b) and 403(b)(7) used together so remember that one uses individual annuity type contracts and the other uses custodial mutual funds type arrangements. You can select either or both arrangements for your individual account. Why should I participate in the MPS 403(b) Plan? There are several reasons why participating in a 403(b) plan makes sense, even given today s economy. These advantages include: 1. Significant tax deferred advantages exist for participants in a 403(b) plan. Contributions and earnings to a 403(b) plan are tax deferred, meaning that you are not taxed on your account until you terminate employment and take a distribution (note, there may be other tax implications, so please talk to your selected vendor or tax consultant prior to any distributions to obtain more details); (b) accounts are portable and can be carried with you upon termination of employment with MPS or at retirement; 3. Depending on your selected vendor, you may be able to take a loan against your contributions while working if you ever have a need to access those funds; 4. A 403(b) plan is a retirement savings and investment plan designed to allow MPS employees to supplement any existing retirement and pension benefits by saving pre-tax dollars through voluntary salary deferrals; 5. You have a choice to invest your voluntary contributions with one or more of the four (4) available vendors up to the IRS annual limit; 6. Your 403(b) plan can be a good tool to help make your future more secure. Who are the available vendors? In 2009, we enhanced the 403(b) program, and we have an excellent group of financial services firms ready to meet your savings needs. The vendor lineup is as follows: ING: MetLife; TIAA-CREF; and WEA TSA Trust. If I m already enrolled, do I need to do anything? In short, no you don t, unless you want to change vendors or your voluntary contribution amount. However, before you make any changes make sure you review the vendor comparison chart and the steps below for the enrollment process before you enroll or switch vendors. How much can I tax defer from my salary? The IRS has an allowable annual limit that each employee cannot exceed during the calendar year. For 2010, the limit is $16,500. In addition, there is a catch up provision for employees who have or will turn 50 during the year as they are allowed to contribute an additional $5,500. In addition, if you have 15 years or more of service page 3

6 Questions and Answers with MPS, you may be eligible for an additional catch-up provision to tax defer $3,000. Check with your plan representative first before you decide on the additional 15 year catch up provision. If the IRS limits change for 2011, we will communicate the new amounts in a future communication. How do I enroll and/or make changes? You can enroll anytime during the calendar year, and you can also make changes going forward to the amount you tax defer out of your salary at anytime. The first step is to select a vendor(s). If you are already making contributions to the MPS Plan, determine if you want to continue with your present vendor or select a new vendor from the list of MPS approved vendors. If you are currently enrolled in the Plan, you should be evaluating your contribution amount to determine if you want to make changes to your contribution level and consider increasing it as much as possible to help you build up your retirement nest egg. If you are currently enrolled, you should evaluate your investment options at this time and review your choices with the account representatives. Before you enroll or switch vendors, it is recommended you take the following steps: 1. You should have an initial meeting or discussion with one or more of the approved MPS vendor representatives of your choice. There is no cost to you as the employee for these meetings. 2. Review the vendor comparison chart included in this booklet to understand the differences between the products and services offered by each vendor. 3. Review the following as guidance on questions to ask vendor representatives. Your questions should focus on fees, services and expenses. Will I have a fee deducted from my account if I enroll with your organization? What are the ongoing annual expenses under various investment options? Should I make traditional(pre-tax) 403(b) or Roth(after-tax) contributions? Are there fees associated with loans, moving money around, or taking distributions? What is the current performance and long-term performance of investment options offered? How can I receive assistance in selecting investment options that suit me? Are there any incentives to invest with your organization? Do you offer loans and how do they work? What overall services are provided by your organization? Will I be able to make transactions online or through a toll free phone line? What happens to my account if I decide to discontinue contributions? Am I charged a fee if I decide to transfer money from your organization to another if I am unhappy? Where can I find information in writing to support your fees and investment performance? These are sample questions to use when talking to vendors and you should consider others as you meet with them. Once you have reviewed the vendor(s) and feel comfortable with a selection, you will need to (a) complete an enrollment form from that vendor and (b) complete the standard MPS Salary Reduction Agreement. Both forms must be completed and returned to the selected vendor(s) for processing. Please note that vendors may assist you through an exercise to determine your personal tolerance for risks. Will there be an opportunity to attend a meeting to gather more information? You will have an opportunity to receive additional information during our 403(b) Education Seminar on October 21, 2010 at Hamilton High School from 4:00 to 7:30. More information will be provided outlining the group education sessions that will be available. page 4

7 Questions and Answers What s new for 2011? Effective January 1, 2011, we will offer you a new after-tax option vehicle called the Roth 403(b). The current 403(b) plan allows you to make contributions from your pay check on a tax-deferred basis, with taxes on earnings and contributions not being made until distribution of the funds. Under the new Roth option, you make contributions from your paycheck with after-tax contributions and earnings accumulate tax-deferred and possibly tax free if certain requirements are met. The contribution limits for the Roth are exactly the same as the traditional 403(b), including all of the catch up provisions. So what s the difference between the Roth and the traditional 403(b)? Deciding whether to contribute under either method can be confusing. The decision comes down to whether you want to have a tax savings now through elective deferrals while reducing your taxable income, thus paying taxes on the entire accumulation when you take a distribution (contribution plus earnings) OR, having your current salary taxed now and have the potential for a tax free distribution of all contributions and earnings if certain conditions are met. Following are the conditions that must be met to receive a tax free withdrawal from a Roth 403(b): Distribution is made no earlier than five years after contributions were first made to Roth account; and The employee is age 59 ½ or greater; or The employee becomes disabled or dies. The IRS contribution limits apply on a combined basis for Roth 403(b) and traditional 403(b) contributions. It can be difficult to project your tax rate when you retire. However, one way to determine which option is best for you is to use this approach as guidance: If you think your marginal tax rate in retirement will be higher than your current tax rate, you may want to consider the Roth approach. Under this scenario, you can potentially receive your contributions with any earnings tax free when you are in a higher tax bracket. If you think your marginal tax rate in retirement will be lower than your current tax rate, you may want to consider the traditional approach. Under this scenario, you are paying no taxes now while your tax rate is higher and you are lowering your taxable income, then paying taxes on the distribution (contributions and earnings) when you will presumably be in a lower tax bracket. Please discuss your options with your tax advisor before making a decision. page 5

8 Traditional 403(b) and Roth 403(b) Comparison Chart Feature Traditional 403(b) Roth 403(b) Employee contribution limit $16,500 for 2010 $16,500 for (Applies to Roth and Traditional if both are selected) Age 50 Catch-Up Available for additional contributions up to $5,500 if age 50 or older 15 Year Rule Employees with 15 or more years may be able to contribute $3,000 more up to a lifetime maximum of $15,000 Employee Pre-Tax Contribution Available Does not apply Employee After-Tax Contributions Income limitations on Contributions Allowable but not preferred Does not apply Available for additional contributions up to $5,500 if age 50 or older Employees with 15 or more years may be able to contribute $3,000 more up to a lifetime maximum of $15,000 Available. Limit governed by annual contribution compliance amount Does not apply Vesting of Contributions Immediate Immediate Distribution Options Taxation of Distributions 10% Penalty on Early Distributions Minimum Distribution Requirements Annuities, cash, systematic withdrawals, etc. All pre-tax contribution amounts and any earnings are taxable when distributed Yes, unless age 59½ or older, disabled, or distribution used to pay medical expenses that exceed 7.5% of AGI Distribution required on certain income amount at age 70½ or retirement if later Annuities, cash, systematic withdrawals, etc. Earnings on contributions are tax free if the plan has been opened for at least five years and the participant has reached age 59½ or older, or becomes disabled, or dies. Original contributions are always tax free Yes, but only the portion of earnings that do not meet tax free distribution guidelines, unless age 59½ or older, disabled, or distribution used to pay medical expenses that exceed 7.5% of AGI Distribution required on certain income at age 70½ or retirement if later. However, Roth funds can be rolled to a Roth IRA prior to age 70½ as Roth IRAs are not subject to minimum distribution Loans Yes, if allowed by provider Yes, if allowed by provider Hardship withdrawals Yes, if allowed by provider Yes, if allowed by provider Please discuss with your tax advisor or a plan representative before you make any decisions. All vendors offer the new Roth 403(b) product effective January 1, page 6

9 Glossary 401(k) 403(b) Plan 403(b)(7) Annuity Beneficiary Contract Exchange Defined Contribution Plan Loan Mutual Fund A type of qualified defined contribution plan established by an employer enabling participating employees to make pre-tax contributions by salary reduction agreements structured within the format of a cash or deferred plan under Internal Revenue Code Section 401(k). Traditionally available to only for profit organizations but recent laws have allowed certain tax-exempt organizations to implement these plans. The traditional 403(b) plan is a tax deferred retirement plan available for employees of public schools, colleges, research and other similar tax exempt organizations. It is defined under Internal Revenue Code (IRC) Section 403(b). Either or both employers and participants can make contributions to a 403(b) plan. Contributions can be made by participants on a tax-deferred basis under a traditional 403(b) plan, or with after-tax contributions under a 403(b) Roth plan (see Roth definition below). Prior to 1974, 403(b) participants could only invest in annuity products. Congress added paragraph 7 to the 403(b) in 1974 permitting the investment in mutual funds through a 403(b)(7) custodial account. Therefore, 403(b)(7) arrangements are investment options under 403(b) plans. Same investment options exist for both Roth 403(b) and traditional 403(b) contributions. A contract issued by an insurance company that provides income for a specified period of time, such as a number of years, or for the life or life expectancy of an individual. Same annuity options exist for both Roth 403(b) and traditional 403(b) contributions. Person or entity properly designated to receive benefits upon the death of a participant. Movement of accumulations in an individual s 403(b) account from one investment vehicle to another (i.e., from a stock investment to a bond investment) or movement of all or part of accumulations directly from one 403(b) retirement vendor to another 403(b) retirement vendor. Contract exchanges are only permitted within the employer s list of approved investment providers (vendors) for the 403(b) plan. Exchanges can only be made from a traditional 403(b) investment vehicle to another traditional or from a Roth 403(b) investment vehicle to another Roth 403(b). A retirement plan that specifies a rate of employer and/or employee contributions. How much income a participant receives in retirement will depend on several factors, including amount and duration of contributions, investment earnings, and age at retirement. Payment of funds as a credit against existing account balance based on collateral in existing account and rules of current vendor. Loans must be repaid based upon criteria of vendor. There is no tax consequence of securing a loan, as long as the loan is paid back based on selected payment schedule and amount of the loan. Loans are available under 403(b), 401(k) and similar plans, but not from IRA plans. Roth loans are only available from one of the MPS 403(b) vendors. A mutual fund is an investment that pools money from many participants and invests in stocks, bonds, short-term money-market instruments, or some combination of the three. The combined holdings of stocks, bonds, or other assets that the fund owns are known as its portfolio. Each investor in the fund owns shares, which represent a part of these holdings. There are two kinds of mutual funds: loaded mutual funds and no-load mutual funds. A load is a commission the investor must pay in order to purchase/sell that fund. All mutual funds have operating costs. Mutual funds are securities regulated by the SEC, but are not guaranteed or insured by the FDIC or any other government agency. Mutual funds may be used as funding vehicles in 403(b) (7) plans via custodial accounts. Mutual fund options are available under both the traditional 403(b) and the Roth 403(b). page 7

10 Glossary Rollover Roth 403(b) Salary Reduction Salary Reduction Agreement Tax Deferred Annuity (TDA) also Tax-Sheltered Annuity (TSA) Transfers Vesting Withdrawals Accumulations in a retirement account which are moved or rolled from one qualified plan to another qualified and eligible retirement vehicle and accounted for separately under the receiving vehicle. There are no tax consequences on the rollover accumulations as long as the receiving vehicle is a qualified retirement vehicle defined by the IRS. There must be a qualifying event such as termination of employment, disability, age 59 ½, or termination of the plan before a rollover can take place. The Milwaukee Public Schools 403(b) Plan permits rollovers to or from the following qualified plans: another 403(b) plan, 457 governmental plan, 401(a) or 401(k) plan or IRA. Rollovers are not permitted from or to Roth IRAs or 457 non profit plans. However, rollovers are permitted from a Roth 403(b) to a Roth 403(b) or to a Roth 401(k). Tax savings vehicle that combines features of 403(b) plans with tax-free growth advantage of Roth IRAs. Unlike Roth IRAs, the Roth 403(b) does not have an income level test to receive the tax benefit. Contributions are made with after-tax dollars up to the available IRS compliance limit each year. Accumulations may be tax-free if the following conditions are met: Distribution is made no earlier than five years after contributions were first made to Roth account; and The employee is age 59½ or greater; or The employee becomes disabled or dies. The IRS contribution limits apply to all participant contributions on a combined basis, whether traditional 403(b), Roth 403(b), or both. Retirement plan contributions withheld from an individual s salary by the employer under the terms of a salary reduction agreement. Salary reduction contributions are not subject to current federal (and usually sate and local) income taxes at the time of contribution. These contributions and earnings are taxable when withdrawn. This does not apply to Roth contributions. An agreement between an employer and an employee whereby the employee agrees to have a dollar amount or percentage of salary withheld from payment and the employer agrees to contribute such amount to a retirement plan on behalf of the employee. The Agreement is also used to select after-tax contributions to be made directly to a Roth 403(b) account. A 403(b) arrangement or plan pursuant to which an employee is permitted to make voluntary contributions on a pretax basis. Accumulations in an individual s 403(b) account that are transferred from one employer s 403(b) plan to another employer s 403(b) plan and both plans must permit such transfers. These are referred to as Plan to Plan Transfers. The Milwaukee Public Schools 403(b) Plan does not permit these types of transfers. The participant s nonforfeitable right to receive amounts allocable to contributions made to a retirement plan. It allows all monies and interest in the account to be owned by the participant. Distribution of funds from a retirement account at severance of employment or other qualifying event subject to applicable taxes at time of termination. Withdrawals can be in the form of a lump sum payment, an annuity, or periodic lump sum payment as permitted by the investment vehicle. Withdrawal options are the same for the Roth and Traditional 403(b). page 8

11 MPS 403(b) Vendor Comparison of Plan Features Chart Features ING 403(b)(1) Variable Annuity Product General Contact Information (general phone number and additional number to arrange personal meetings) Account Services (i.e., 1-on-1 service, internet access, etc) ING 2675 N. Mayfair Rd., Ste. 600 Milwaukee, WI To arrange a personal meeting: (414) Toll-free Milwaukee Office: 1-(800) Toll-free Account Access: 1-(800) Personalized face to face counseling and enrollment assistance from your local representative by calling (414) Distribution assistance for departing/retiring employees. No Fee Personal Account Reviews No Fee Retirement Planning com/custom/mps ING 403(b)(7) Mutual Fund Product ING 2675 N. Mayfair Rd., Ste. 600 Milwaukee, WI To arrange a personal meeting: (414) Toll-free Milwaukee Office: 1-(800) Toll-free Account Access: 1-(800) Personalized face to face counseling and enrollment assistance from your local representative by calling (414) Distribution assistance for departing/retiring employees. No Fee Personal Account Reviews No fee Retirement Planning com/custom/mps MetLife Expert Select (Mutual Funds) To arrange a personal meeting contact the Local MLR Office: (414) Account Information: (800) On Site Service 24 hour Internet Access 24 hour Voice Response System Call Center Hours: M-F 8am 6pm CST Personalized one-on-one meetings with a local representative MetLife Financial Freedom Select (Variable Annuity) To arrange a personal meeting contact the Local MLR Office: (414) Account Information: (866) On Site Service 24 hour Internet Access 24 hour Voice Response System Call Center Hours: M-F 7:30am 5:30pm CST Personalized one-on-one meetings with a local representative TIAA-CREF WEA TSA Trust National Contact Center Enrollment Hotline Online Enrollment a-cref.org/mps Meetings & One-on-One Counseling Retirement Planning, Wealth Management & Advice One-on-One Counseling Telephone Counseling Center Hours: M-F 7am 9pm (CT); Sat 8am -5pm (CT) 24 hour Internet Service -Online Enrollment -Secure Account Access 24 hour Automated Telephone Service (800) Use this number to obtain general information. (414) Use this number for onsite service or to set up a personal consultation with N Kenza Whitlow or Marty Richards. Madison Call Center Hours: M F 7:30 am 5:00 pm (Call center closes at 1:00pm on summer Fridays) 24 hour Online Account Access 24 hour Telephone Account Access Telephone consultations available by appointment Online enrollment Online Financial Calculators Loans (Yes or No) Yes Yes Yes Yes Yes No If loans are available, brief outline of features Residential and non-residential loans are available. No origination fee One loan is allowed every 12 months. Loans are not available from the Roth 403(b) account. Residential and non-residential loans are available. $100 origination fee Maximum of two loans allowed outstanding at any time. Loans are not available from the Roth 403(b) account. $1000 minimum loan amount $50 origination fee $50 annual maintenance fee General and residential loans available $1000 minimum loan amount $25 origination fee (waived for residents of WI) No annual maintenance fee General and residential loans available Minimum of $1,000 and maximum of $50,000 Variable rate of interest. Loans are issued by TIAA-CREF and are collateralized by up to 45% of account balances. (There must be 110% of the loan amt as collateral in the retirement loan certificate). Loan initiation fee is $75 for a standard loan (1-5 years) and $125 for a residential loan (6 to 10 years) Not applicable to traditional and Roth 403(b) Fixed Investment option (Yes or No) Yes Yes Yes Yes Yes Yes page 9

12 Features ING 403(b)(1) Variable Annuity Product Current rate of fixed investment option during exact period of time. Investment options (number of options offered to MPS employees) Annual maintenance fee (Yes or No) Current interest rates as of 06/01/2009: ING Fixed Acct: 4.0% ING Fixed Plus Acct: 3.0% ING Guaranteed Accumulation Acct: Short Term: 4.0% Long Term: 4.0% Contractual Minimum Guaranteed Interest Rates: ING Fixed Acct: 4.0% ING Fixed Plus Acct: 3.0% ING Short Term: 4.0% ING Long Term GAA: 4.0% *Current interest rates are credited to participant accounts. No contract charges are deducted. Choose from over 100 variable investment options and three fixed interest options Including options from American Funds, Fidelity, and PIMCO. Daily Valuation ING 403(b)(7) Mutual Fund Product Current interest rates as of 06/01/2009: ING Fixed Plus III Account: 3.0% Contractual Minimum Guaranteed Interest Rate: ING Fixed Plus III Account: 3.0% *Current interest rates are credited to participant accounts. No contract charges are deducted. Choice of 34 mutual fund options and one fixed interest option Including options from American Funds, Fidelity, and PIMCO. Daily Valuation Self Directed Brokerage Account Available through TD Ameritrade Corporate ServicesTM MetLife Expert Select (Mutual Funds) MetLife Financial Freedom Select (Variable Annuity) 3.0% for August % for August 2010 Current rate is 2.75% for deposits made after 8/1/ investment options in 18 asset classes Selected and monitored by Morningstar, LLC Includes Target Date Funds, American Funds, Janus and PIMCO 57 Funding Options including: 8 Asset Allocation Portfolios 5 Index Portfolios 2 Exchange Traded Funds 1 Fund of Funds 1 Fixed Interest Account 4 Automated Investment Strategies TIAA-CREF WEA TSA Trust 29 investment options are available covering 5 distinct asset classes Including TIAA-CREF Lifecycle Funds and options from American Funds For a complete list of the fund options go to No No No No No No 5.0% for calendar year Fixed Investment 14 Mutual Funds for those who want to self direct 5 Target Retirement Funds for those who do not want to self direct Fund families include Fidelity, Vanguard, T.Rowe Price, PIMCO, & Parnassuss Funds pre-screened and monitored by Investment committee according to Investment Policy Statement All funds No-load Amount of annual maintenance fee if applicable Contract/ Account charges (i.e., annual administrative fee, annual service fee) Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable 1.25% Mortality and Expense Risk Charge assessed to variable investment options only. 0.35% annual asset based fee assessed to mutual fund options only. 2.5 basis points (0.025%) annual asset based fee assessed to mutual fund options only. Example: $100,000 x.0025 = $25 $ waived if account balance exceeds $25,000, or if contributions exceed $2,000 within last 12 months Mortality & Expense Fee (by class) B = 1.15%, L = 1.30%, C = 1.45%, Annual administrative fee of 28 basis points (.28%). 0.35% annual administrative fee with a maximum annual fee of $300 page 10

13 Features ING 403(b)(1) Variable Annuity Product Annuity contract features and charges. Charges for withdrawals at termination of employment Transfers allowed to other approved vendors (Yes or No) Fees or restrictions on transfers to approved vendors Range of total fees (includes mortality and expenses where total range is indicated) Guaranteed Death Benefit is included in all contracts at no additional charge. The death benefit is guaranteed to be the greater of (1) the current value of the account or (2) the total of net contribution(s) made to the individual account minus the total of any withdrawals, annuitizations, or loans. ING 403(b)(7) Mutual Fund Product MetLife Expert Select (Mutual Funds) MetLife Financial Freedom Select (Variable Annuity) Not applicable Not applicable Optional Annual Death Benefit Step Up: 0.10% Optional Guaranteed Minimum Income Benefit: 0.70% Optional Lifetime Withdrawal Guarantee: 0.95% None None None No withdrawal charges apply after five years from the issue date of the Contract upon retirement or severance of employment. TIAA-CREF WEA TSA Trust Not applicable Not applicable None None Yes Yes Yes Yes Yes Yes Withdrawal charges are benefit sensitive and waived upon separation from service and financial hardship. 7 year declining withdrawal charge schedule applies to in-service transfers to approved vendors. Withdrawals from ING Fixed Plus Account are subject to a spread payment over a 5 year period. Range of Fund Fees: 0.35%-1.52% Range of Total Fees: 1.60%-2.77% Fund fees depend on investment option(s) selected. All returns reported are net of investment fees and expenses. Website address com/custom/mps Available payout options at termination Lump Sum Withdrawal Partial Withdrawal Systematic Distribution Option(s) Variety of Annuity Payout Options including life income and/or distributions over a specified period. No restrictions or fees apply on transfers to approved vendors from the mutual fund investments. Transfers to an approved vendor from the ING Fixed Plus III Account are subject to an industry standard equity wash provision. Range of Fund Fees: 0.66% -1.30% Range of Total Fees: 1.01%-1.65% Fund fees depend on investment option(s) selected. All returns reported are net of investment fees and expenses. com/custom/mps Lump Sum Withdrawal Partial Withdrawal Systematic Distribution Option(s) Variety of Annuity Payout Options including life income and/or distributions over a specified period. Restrictions are on the Fixed Account only A 10% free withdrawal is available after the 1st contract year. 8-yr surrender schedule applies for transfers to another vendor from the fixed account option. No withdrawal charges apply on assets held within the mutual funds. Fund expense ratio range: 0.14% to 1.50% Range of total fees: 0.1% to 1.525% B Class: 12-yr surrender schedule L Class: 7-yr surrender schedule C Class: No withdrawal charges apply A 10% free withdrawal is available each year Variable funds operating expense range: 0.52% to 1.34% Fixed account operating expense: 0.0% Range of total fees: 0.0% to 2.95%, plus $30 None None Annual administrative fee of 28 basis points (.28%) Expense ratio range from.32 to 1.41% 0.35% annual administrative fee with a maximum annual fee of $300 Fund Expenses range from 0.05% % (returns published are net of fund costs) metlife.com/mps metlife.com/mps Lump Sum Periodic Payments Partial Distribution Lump Sum Lifetime Income Annuity Lifetime Income Annuity w/ Guarantee Period Systematic Withdrawals Partial Distribution Lump Sum Cash Systematic Withdrawals Lifetime Annuity Income Lump Sum Partial Monthly Quarterly Interest Period Certain Lifetime Income page 11

14 Features ING 403(b)(1) Variable Annuity Product Independent advice offered (Yes or No) ING 403(b)(7) Mutual Fund Product MetLife Expert Select (Mutual Funds) MetLife Financial Freedom Select (Variable Annuity) TIAA-CREF WEA TSA Trust Yes Yes Yes Yes Yes Yes If offering independent advice, summarize high level features No additional charges apply to services and education provided by ING local representatives to participants including: Retirement Income Analysis. Analysis takes into consideration the Wisconsin Retirement System, Social Security, and personal retirement savings. Face to Face Meetings Asset Allocation Assistance One on one enrollment assistance Distribution and retirement planning assistance for retirees. No additional charges apply to services and education provided by ING local representatives to participants including: Retirement Income Analysis. Analysis takes into consideration the Wisconsin Retirement System, Social Security, and personal retirement savings. Face to Face Meetings Asset Allocation Assistance One on one enrollment assistance. Distribution and retirement planning assistance for retirees. All MetLife representatives are Investment Advisor Representatives One-on-one consultations with employees Asset allocation assistance Custom analysis: Paycheck analysis, contribution limit monitoring Distribution planning for retirees. All MetLife representatives are Investment Advisor Representatives One-on-one consultations with employees Asset allocation assistance Custom analysis: Paycheck analysis, contribution limit monitoring Distribution planning for retirees. Personalized Retirement Planning Unbiased Investment Advice No Additional Charge Retirement Income Analysis, which is a for-fee, highly focused retirement plan that takes into consideration the Wisconsin Retirement System, Social Security, and personal retirement savings. The final plan culminates with a cash flow analysis that will predict if you have sufficient recourses to successfully retire. Retirement Income Projection is a for-fee projection of retirement expenses and income, including a Wisconsin Retirement System pension benefit estimate and a Social Security benefit estimate. Portfolio Analysis is a for-fee evaluation of a member s current portfolio that includes recommended adjustments to meet financial goals, risk tolerance, and investment objectives. Free Consultation is a one-hour service to assist members in understanding and determining appropriate asset allocation, evaluating retirement savings options, and calculating savings goals. All investment advisory services are offered through WEA Financial Advisors, Inc. Roth 403(b) Available Yes Yes Yes Yes Yes Yes Hardship Withdrawals Yes Yes Yes Yes Yes Yes Special Incentive Feature B & L Class: 3% bonus for rollovers or exchanges in the first two years. Optional Annual Death Benefit Step Up Optional Guaranteed Minimum Income Benefit Optional Lifetime Withdrawal Guarantee page 12

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17 Metropolitan Life Insurance Company (MetLife) is the largest life insurance company in the United States and a leading provider of financial services to millions of individuals and institutional clients, including 88 of the top 100 FORTUNE 500 companies. MetLife is widely recognized as a leader in our industry for providing financial products and services to our clients for over 140 years. Financial rating agencies continue to re-affirm our financial strength and ability to meet our financial obligation. MetLife has served the employees of Milwaukee Public Schools (MPS) for over 25 years and we welcome the opportunity to continue providing our quality products and services, as well as introduce some enhancements to our products. Local On-Site Service MetLife Resources is a division of MetLife that specializes in providing retirement plans and other employee benefit programs to the nonprofit sector. Our approach is to provide competitive financial products delivered to you through multiple channels, including experienced and dedicated onsite reps. While automated account management tools are available to all participants, our experience has shown us that face-to-face education is one of the best ways to plan for retirement. To make onsite education convenient and accessible for all employees, we have assigned eight full-time representatives to provide onsite education and communication support to MPS employees. Our service representatives will: Review all the plan options Help you complete enrollment and salary reduction forms Schedule one-on-one consultations to answer your questions about the plan Analyze your financial needs Offer education to help you achieve your financial goals and objectives MetLife provides personalized support by utilizing a local office (located in West Allis) with local service representatives who will provide service for every MPS site. As an MPS employee, MetLife offers you the choice of a mutual fund product or a variable annuity product. However you picture your future, the right retirement savings vehicle can help you get started. You can elect the option that best meets your financial goals and dreams. ExpertSelect Mutual Funds Under this program, MetLife offers mutual funds including 12 target date funds coupled with a fixed account. Program highlights include: Mutual fund line up selection, monitoring, automatic replacement and fund mapping by Morningstar Associates, LLC Broadly diversified fund lineup across 18 asset classes Priced at Net Asset Value No front-end sales charge Free and unlimited transfers between the fixed annuity account and the mutual funds Mutual funds are sold by prospectus, which are available from a registered representative. Investment objectives, risks, charges, and expenses should be carefully considered before investing. For this and other information about any mutual fund investment please obtain a prospectus and read it carefully before investing. Investment return and principal value will fluctuate with changes in market conditions such that shares may be worth more or less than original cost when redeemed. Diversification cannot eliminate the risk of investment losses. MetLife Financial Freedom Select The MetLife Financial Freedom Select (MFFS) variable annuity can help you accumulate assets during your working years and provide you with a stream of income throughout your retirement. A variable annuity is a retirement savings vehicle specifically designed to help you save for retirement, providing you with a steady retirement income that you cannot outlive. MFFS allows participants to choose from three share classes and two optional benefit provisions the Lifetime Withdrawal Guarantee and the Predictor SM Guaranteed Minimum Income Benefit. Product highlights include: 57 funding options, asset allocation portfolios, and automated investment strategies. The B and L Classes offer a possible 3% bonus on eligible transfers made in the first two Contract years. Periodic payments- Payments continue for the rest of your life (or the life of your spouse or any other person you designate). This feature offers protection against the possibility that, after you retire, you will outlive your assets. Death benefit- If you die before the periodic payments to you have begun, your beneficiary is guaranteed to receive a specified amount. Your beneficiary will benefit from this feature if, at the time of your death, your account value is less than the guaranteed amount. MetLife Financial Freedom Select Variable Annuity is offered by prospectus only, which is available from your registered representative. You should carefully consider the product s features, risks, charges and expenses, and the investment objectives, risks and policies of the underlying portfolios, as well other information about the underlying funding choices. This and other information is available in the prospectus, which you should read carefully before investing. The amounts allocated to the variable investment options of your account balance are subject to market fluctuations so that, when withdrawn or annuitized it may be worth more or less than its original value. Product availability and features may vary by state. All product guarantees are based on the financial strength and claims-paying ability of Metropolitan Life Insurance Company. page 15

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24 MPS 403(b) Vendor Contact Information ING Financial Advisers 2675 North Mayfair Road, Suite 600 Milwaukee, WI (414) MetLife Resources West National Avenue, Suite 300 Milwaukee, WI (414) TIAA-CREF National Contact Center Enrollment Hotline: WEA TSA Trust NONDISCRIMINATION NOTICE It is the policy of Milwaukee Public Schools that, as required by section , Wisconsin Statutes, no person will be denied admission to any public school or be denied the benefits of, or be discriminated against in any curricular, extracurricular, pupil services, recreational or other program or activity because of the person s sex, race, religion, national origin, ancestry, creed, pregnancy, marital or parental status, sexual orientation or physical, mental, emotional or learning disability. This policy also prohibits discrimination under related federal statutes, including Title VI of the Civil Rights Act of 1964 (race, color, and national origin), Title IX of the Education Amendments of 1972 (sex), and Section 504 of the Rehabilitation Act of 1973 (disability), and the Americans with Disabilities Act of 1990 (disability). THIS ENTIRE BOOKLET DESCRIBES THE MILWAUKEE PUBLIC SCHOOLS 403(B) PLAN IN GENERAL TERMS ONLY AS OF THE DATE OF THIS PRINTING. IT IS NOT INTENDED TO BE A COMPLETE DESCRIPTION OF PLAN PROVISIONS. STATEMENTS IN THIS BOOKLET ARE SUBJECT TO THE TERMS AND CONDITIONS OF THE MILWAUKEE PUBLIC SCHOOLS 403(B) PLAN DOCUMENT MPS Office of Human Resources, Benefits and Insurance Services Division