NEENAH JOINT SCHOOL DISTRICT 403(B) RETIREMENT PLAN

Transcription

1 NEENAH JOINT SCHOOL DISTRICT 403(B) RETIREMENT PLAN PHILIP GATIEN SEPTEMBER 2016

2 HOW THE 403B PLAN WORKS Eligibility You can defer into your account with the first full payroll period after you are hired Contribution Percentage and Dollar Limits Up to 100% of compensation The maximum dollar limit is $18,000 in 2015 Catch Up Contributions - 50 years of age or older Up to $6,000 in 2015

3 403B BASIC PLAN PROVISIONS Contribution Types: From you -Pre-Tax Deferral (you choose the amount) -Roth Deferral (you choose the amount) -Rollovers from other retirement plans From the District - District Contribution after 5 years of service (Discretionary)

4 HOW THE 457B PLAN WORKS Eligibility You can defer into your account with the first full payroll period after you are hired Contribution Percentage and Dollar Limits Up to 100% of compensation The maximum dollar limit is $18,000 in 2016 Catch Up Contributions - 50 years of age or older Up to $6,000 in 2016 Technically, the 457(b) doubles your deferral limit

5 457B BASIC PLAN PROVISIONS Contribution Types: From you -Pre-Tax Deferral (you choose the amount) -Roth Deferral is not allowed

6 ROTH VS. PRE-TAX DEFERRAL FEATURE Roth - You choose to pay the tax now Do not pay tax on withdrawals in retirement Pre-Tax - You choose to defer the tax Pay tax on withdrawals in retirement

7 PRE-TAX VS. ROTH The entire $135,940 is taxable upon withdrawal at retirement $36,000 was taxed on your paycheck, and therefore the entire $135,940 is tax-free upon withdrawal at retirement!

8 THE BOTTOM LINE: If you would like a tax-free bucket of money to dip into to pay for large-ticket items that could bump you into a higher tax bracket or cause your Social Security to become taxed: Medical Expenses New Car Vacation Home Other Large Expenses Roth 401(k) = Tax Free!

9 WHAT IS THE MARKET DOING? An easy way for you to check: Follow the S&P 500 I like Yahoo Finance or Google Finance for an easy check

10 WHERE HAS THE MARKET BEEN? August 12, 1982; S&P at March 24, 2000; S&P at October 10, 2002; S&P at What about October 2007?

11 OCT 11, 2007; S&P AT 1,576.09

12 MARCH 9, 2009; S&P AT

13 INVESTMENT RISK The #1 Risk for most people: Market or Volatility Risk: Stock and bond market prices may be affected by many issues - world events, tax laws, interest rate changes, or just the "mood" of investors. Although volatility is a formidable short-term risk, it becomes less significant over time.

14 S&P YEAR

15 S&P YEAR

16 S&P YEAR

17 WHAT IS THE S&P NOW? About 2, points higher than 2007 records 1,464 points higher than 2009 low Remember, this changes continuously every day throughout the trading day

18 A WORD ABOUT MARKET TIMING

19 LOOKING ON YOUR STATEMENT Compare Share Price Dollar Cost Averaging at work

20 STOCKS WHAT IS A STOCK You have ownership in the company Growth stock is a stock that generates positive cash flow and whose revenues and earnings are expected to increase at a faster rate than the average company within the same industry. Value stock is a stock that may have fallen out of favor in the market and are considered bargain priced compared with their competitors. Investors buy these stocks in the hope that they will increase in value.

21 WHAT IS A BOND An entity is borrowing cash and promising to pay it back at a set interest rate in a set period of time Essentially a long-term loan Bonds are sold by: Treasury Department (Treasury) State/local governments (municipal) Businesses (corporate) Junk Bonds Trading bonds in a secondary market INDIVIDUAL BONDS Par value is usually $1,000 Interest rate is called the coupon rate, typically paid semi-annually When bond matures, you get your principal back

22 BONDS AND INTEREST RATES This is an inverse relationship meaning when one goes up, the other goes down

23 Stocks and Bonds: Risk Versus Return Past performance is no guarantee of future results. Risk and return are measured by standard deviation and arithmetic mean, respectively. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index Morningstar. All Rights Reserved.

24 ACCOUNT ACCESS Online Access: Access instructions and randomly assigned personal identification number will be mailed directly to you once deferrals start First time user ID is your SS# with the dashes

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28 QUESTIONS? Associated Retirement Help Line OR Mary Hale, Associated Trust Dept Philip Gatien, Associated Trust Dept.