GET Your Retirement Up and Running

Transcription

1 GET Your Retirement Up and Running

2 Your guide to the Houston Methodist Retirement Savings Plans Table of Contents Retirement Savings Plans 2 Frequently asked questions about your plans 3 Determine investments that are right for you 9 Investment Options 11 Level 1: Target Date Funds Level 2: Core Investment Options Level 3: Expanded Investment Options Level 4: Sector and Foreign Investment Options Performing transactions with Fidelity NetBenefits 13

3 Congratulations! Houston Methodist has made a generous contribution to your Defined Contribution Plan (DCP). Now it s your turn to make an investment election. Houston Methodist makes an annual contribution to your DCP each March, provided that you meet established criteria. The 2016 contribution was contributed to your account on March 16, Houston Methodist is committed to providing comprehensive and competitive benefits to Houston Methodist employees. Houston Methodist offers you two great ways to save and help you build a foundation for a solid retirement: the DCP and the 403(b) Tax-Sheltered Annuity Plan through Fidelity Investments. With these plans, you have access to a variety of investment choices and account management tools. Now more than ever, it s important to feel confident about your investment choices. When you re preoccupied with today s finances, it s sometimes hard to focus on your long term strategy. Your portfolio s asset mix the blend of stocks, bonds, and short-term investments can have a big impact on your long-term performance. For the information, tools, and support you need to create and manage your investment strategy, call or log in to Fidelity NetBenefits at netbenefits.com/methodist. This guide will help you learn more about the benefits offered through the Houston Methodist Plans, direct you to resources to help you understand the investment options available, instruct you on how to change your contribution percentage and designate beneficiaries, and provide you with simple instructions on how to review and manage your accounts. If you ve never accessed your account, or don t know how to choose investments, don t worry we can help. Easy, quick instructions follow. To learn more about what your plans offer, see the retirement plans summary on page 2 and Frequently asked questions about your plans beginning on page 3. Act Now: Visit netbenefits.com/methodist to create a password, choose your investments, and designate your beneficiaries. Questions? Contact us: Fidelity Representatives: Monday through Friday, 7:00 a.m. to 11:00 p.m. Central time Houston Methodist Representatives: Monday through Friday, 7:30 a.m. to 5:00 p.m. Central time or hrbenefits@houstonmethodist.org 1

4 Houston Methodist Retirement Savings Plans at a glance It is important to be confident about what your life will be like in retirement. That is why the Houston Methodist Retirement Savings Plans are designed to help you reach your retirement savings goals when you reach the end of your journey at Houston Methodist. To do that, Methodist provides two competitive retirement plans: 2 403(B) TAX-SHELTERED ANNUITY DEFINED CONTRIBUTION PLAN (DCP) Eligibility You are eligible to participate on your first day of employment. New employees are members on their first day of employment. Enrollment Participation is voluntary. You may enroll by contacting Fidelity Investments either by phone at or via the Web at netbenefits.com/methodist. Your enrollment is automatic on your first day of employment. Contributions Vesting Changes to Contributions Investment Options You may contribute 1% 60% of your allowed compensation, up to the IRS contribution limit of $18,000 for Flat dollar amounts are accepted, not to exceed 60% of your pay for that period. Allowed compensation includes base salary, overtime, shift differentials, and call pay. Your contribution will be matched at 50%, up to a maximum 2% match. For example: If you contribute The matching contribution will be 1.0% 0.5% 2.0% 1.0% 3.0% 1.5% 4.0% or more 2.0% If you will be age 50 or older by December 31, 2017, you may contribute an additional catch-up contribution up to the IRS catch-up contribution limit of $6,000 for 2017, but the contribution is not eligible for a match. If you average a 4% contribution over the entire year, a match true-up calculation will be completed subsequent to year-end to ensure that you received the full 50% match. Rollovers from other qualified plans are permitted. Employee contributions are 100% vested immediately. Employees hired prior to January 1, 2010, are 100% vested in the match. If you were hired on or after January 1, 2010, the employer match has a three-year cliff vesting schedule. Every calendar year you work 1,000 hours equals a year of vested service. After completing three years of working 1,000 hours per year, you will be 100% vested. You may increase, decrease, or stop your contributions at any time by contacting Fidelity Investments at or via the Web at netbenefits.com/methodist. A contribution is based on your base salary, and the eligible percentage is made to eligible employees annually. In order to receive the annual contribution, you must work 1,000 hours during the calendar year and be employed on the last day of the year. The contributions are calculated on years of service and base salary as follows: Years of Manage- Service Staff ment 0 9 3% 7% % 8% 20+ 5% 9% Rollovers from other qualified plans are permitted. The DCP plan has a three-year cliff vesting schedule. Every calendar year you work 1,000 hours equals a year of vested service. After completing three years of working 1,000 hours per year, you will be 100% vested. You are neither required nor allowed to make voluntary contributions to the plan. You may choose from a wide variety of funds available from Fidelity. You can select a mix of investment options that best suits your goals, time horizon, and risk tolerance. The investment options available include conservative, moderately conservative, and aggressive funds. For the most current details on the available investment options, visit netbenefits.com/methodist and click the Plans & Investments tab. IMPORTANT NOTE: If you don t make an investment election, your contribution will be directed to the plan default (one of the Vanguard Target Retirement Funds Institutional Shares), based on your date of birth and the assumption that you will retire at age 65.

5 Frequently asked questions about your plans Below is a summary of questions frequently asked regarding the Houston Methodist Retirement Savings Plans. For any questions that are not addressed in this guide, please contact Houston Methodist Benefits at hrbenefits@houstonmethodist.org or at You may also contact your local HR Department. 1. What are retirement plans? Retirement plans are benefit programs that allow contributions for your retirement to be made on a tax-deferred basis. You may contribute money out of your own paycheck, and Houston Methodist may also provide contributions on your behalf. All contributions to the retirement plans are held in accounts at Fidelity Investments. Contributions are not taxed until distribution. 2. What are the types of retirement plans that Houston Methodist provides? Two plans are provided: Defined Contribution Plan (DCP): Contributions are provided by Houston Methodist to all employees who are actively employed on the last day of the year and have worked at least 1,000 hours during the year. Your DCP contributions become fully vested after three years of service in which you worked at least 1,000 hours per year. The contribution percentage is determined by rank and tenure, as shown below: Years of Service Staff Management 0 9 3% 7% % 8% 20+ 5% 9% 403(b) Tax-Sheltered Annuity: Houston Methodist contributions are based on individual participation in the plan. You may contribute either a flat dollar amount or percentage of your compensation (all functional pay base, shift, call, and overtime). If choosing a percentage, you may elect from 1% to 60% of your eligible pay. Flat dollar amounts are accepted up to 60% of your pay per period. If you are age 50 or older, you may contribute an additional $6,000. An employer match of 50% of your contributions up to 4% of your functional pay is provided. Catch up contributions are not eligible for a match. Employees hired prior to 2010 are 100% vested in the employer match at the time it is contributed. Employees hired after January 1, 2010, will have money vested based on a vesting schedule as outlined in Question What is meant by the term vesting? Why is it important to me? Vesting refers to your ownership of your retirement plan contributions. It is used by Fidelity to determine how your account balance will be paid when you leave Houston Methodist. DCP: You are 100% vested at three years, as outlined in the chart below. Vesting years include only calendar years when 1,000 hours are worked. Years of Service Vesting % 1 0% 2 0% 3 100% 403(b): Employee contributions are 100% vested immediately. Employer match contributions have a three-year cliff vesting schedule. For all employees hired on or after January 1, 2010, a vesting year is a year in which an employee works 1,000 hours. After completing three years of working 1,000 hours per year, you will be 100% vested. Years of Service Vesting % Less than 3 years 0% 3 years or more 100% 3

6 4. How do I enroll in the 403(b) Plan? Can I enroll at any time? How do I change my contribution percentage in the 403(b)? You can enroll at any time. Enrollment must be made through Fidelity Investments and is very simple. Call Fidelity at to speak with a Fidelity Representative. In addition, you can enroll online at netbenefits.com/methodist. To change your contribution election, simply call Fidelity at or log in to netbenefits.com/methodist. If a new deduction percentage or flat dollar amount is made by 3:00 p.m. Central time on the last Thursday of a pay period, it will be reflected in the next week s payroll check. 5. If I contribute 4% to get the maximum employer match, how much is that? The following sample table illustrates the dollar amount of both your biweekly contribution and Methodist s match. Annual Salary Biweekly Salary 4% Biweekly Deferral* 2% Biweekly Match $20,000 $ $30.76 $15.38 $30,000 $1, $46.15 $23.08 $40,000 $1, $61.54 $30.77 $50,000 $1, $76.92 $38.46 $60,000 $2, $92.31 $46.16 $70,000 $2, $ $53.85 $80,000 $3, $ $61.54 * The 403(b) deduction is not subject to federal income tax at the time of contribution. 6. What is a catch-up contribution? Am I eligible to make a catch-up contribution? If you have reached the age of 50 or will be age 50 by the end of the year, and are making the maximum plan or IRS pretax contribution, you may make an additional catch-up contribution each pay period (all functional pay base, shift, call, and overtime) up to $6,000. Follow the enrollment instructions explained in Question 4 to participate in catch-up contributions. You should elect a catch-up contribution only if you are contributing or will be contributing the maximum plan or IRS contribution of $18,000. Catch-up elections can be made as a flat dollar amount only. 7. What are the contribution criteria for the retirement plans? DCP: Actively employed on the last day of the year having completed 1,000 hours in the plan year. Exceptions are provided for those who: 1. Leave at age Leave at age 55 with five years of vesting service 3. Leave by reason of involuntary termination with 1,000 hours worked in the year (as defined in the Houston Methodist Separation Plan) 4. Leave by reason of total and permanent disability or death 403(b): Eligible for an employer contribution with each employee contribution. Additionally, a true-up provision is allowed by the plan to ensure that, if you are an active employee at year-end, you receive the maximum match based on your contributions. 8. What is a true-up? How does it work? At the end of each year, your contributions are reviewed to ensure that your annual 403(b) deferrals received the maximum allowable match. If the match is not maximized, then additional funding is made to your account if you are employed on the last day of the year. The amount that is reported in your Summary of Retirement Plans reflects any true-up for What is the timing of employer funding for the plans? DCP: Funded in March following the plan year. For example, plan year 2016 is funded in March (b): Funded biweekly with payroll. Any true-up is made annually following the end of the plan year. 4

7 10. Once Houston Methodist directs these contributions to my retirement plans, can I change the funds in which they are invested? If so, how do I do that? You may choose from the Core funds, which are reviewed quarterly by Houston Methodist s investment consultants. The Core lineup consists of 12 fund choices that include Fidelity and non- Fidelity funds. In addition to core funds, there are a wide variety of additional Fidelity funds available. If no investment election is made, assets are defaulted into a Vanguard Target Retirement Fund Institutional Shares, based on your date of birth and the assumption that you will retire at age 65. Simply find your date of birth range in the chart on page 13 to determine the Vanguard Target Retirement Fund Institutional Shares where your contributions will be directed. If no date of birth or an invalid date of birth is on file, your contributions may be invested in the Vanguard Target Retirement Income Fund Institutional Shares. Changes to your fund elections can be made either by phone at or online at netbenefits.com/methodist. 11. What if I want to delegate the management of my account to professional investment managers? As important as saving for retirement is, many of us just don t have the time, let alone the experience, to actively manage our own workplace savings plans. Fidelity Portfolio Advisory Service at Work provides you with the opportunity to have investment professionals actively manage your portfolio. That means they monitor and rebalance your portfolio for you, as needed, and that can be reassuring. Here s how it works: We get to know you, then find the model portfolio that works for you based on your unique situation and goals. We then look for opportunities that offer a comfortable balance between risk and reward, because being too conservative can be just as harmful as being too aggressive. Because any big changes in the market or in your life may mean you need a change in your investment approach, we ll adjust your portfolio accordingly. A team of dedicated guidance professionals is just a phone call away. They are available to answer any questions you may have. Call to look further into having Fidelity manage your portfolio. Or visit fidelity.com/activelymanaged for detailed information. Fidelity Portfolio Advisory Service at Work is a service of Strategic Advisers, Inc., a registered investment adviser and a Fidelity Investments company. This service provides discretionary money management for a fee. 12. Is there a way to get help rebalancing my investment mix? Yes. Automatic Rebalance, available through your account online at netbenefits.com/methodist, is a service that annually rebalances your account to stay consistent with the investment strategy you ve chosen. You simply identify an initial investment combination, adjust your account to that mix, and let the service do the rest. In addition, you can sign up for Rebalance Notification and receive an alert by any time your account s investment mix strays from your original specification. You decide whether to rebalance, and you can take action immediately by clicking a link delivered with the message. For more information, log in to netbenefits.com/methodist. Click Change Investments, then select Exchange Multiple Investments. Fidelity also offers a wide variety of retirement planning tools conveniently available at your desk. Once logged in to NetBenefits, click Tools. 5

8 13. Can I take a withdrawal from the plans while still employed by Houston Methodist? While actively employed, you may take an inservice distribution from the 403(b) Plan if you are at least age 59½. You may take an in-service distribution from the DCP if you are at least age 59½ and have completed 60 months of employment. Keep in mind that withdrawals are subject to income taxes. 14. Can I take a hardship distribution? If you are experiencing financial difficulty, we encourage you to contact the Employee Assistance Program (EAP) at to seek financial counseling. If, after talking with an EAP counselor, you want to proceed with a financial hardship distribution, you must have a loan on your retirement account. It is not in your best interest to take a hardship distribution from your retirement plan due to the tax implications. Hardships are only available from your contributions to the 403(b) Tax-Sheltered Annuity Plan. Your contributions will be stopped for a six-month period, so you will not be eligible for the match, which decreases the amount in your retirement account. If you meet the IRS-specific criteria for taking a hardship distribution, you are eligible to receive the amount that you prove qualifies for the distribution. You must claim the distribution amount as income and pay taxes on it, subject to a 10% penalty tax according to IRS regulations if you are under age 59½. 15. How do the plans affect my taxes? 403(b): Your deferral (contribution) reduces your annual federal taxable income by the amount of your deferral. The 403(b) match and investment earnings are tax deferred along with your contribution until distribution. DCP: The DCP contributions and any investment earnings are both tax deferred until distribution. 16. What happens to my retirement plans when I leave or retire from Houston Methodist? a. Maintaining accounts at Fidelity If your vested (owned) account balance in either plan is greater than $1,000, you are allowed to leave the balance in the plan. If your vested account balance is less than $1,000, you will be required to roll it over or take a distribution within 12 months of leaving. You will be notified by Fidelity when an automated distribution on your account will occur. b. Rollover You may also elect to roll over your account to another employer s plan, if allowed, or to an IRA. Contact Fidelity directly at to initiate a rollover. c. Distribution Your accounts are not taxed until distributions are taken, but please be aware that if you are younger than age 59½ at the time of distribution, you may be subject to an additional 10% penalty tax. 17. What happens to my nonvested money when I leave or retire from Houston Methodist? Nonvested money will be forfeited upon a full distribution being made from your account. If you return to Houston Methodist, the forfeited money will be reinstated to your account only if you pay back the money that was distributed. If 100% of your money is forfeited, it will be reinstated when you are rehired. If you have a partial amount forfeited, you will need to pay back any distributed amount for the forfeiture to be reinstated. 18. What if I want more information on my retirement options? In March and April, Houston Methodist Benefits will host a fair at the main hospital locations. A schedule of the dates and times can be found on your DCP statement that accompanies this guide. 6

9 19. How do I designate a beneficiary for my retirement accounts? If you have not already selected your beneficiary, or if you have experienced a life-changing event, such as marriage, divorce, the birth of a child, or a death in the family, it s time to consider your beneficiary designations. Fidelity s Online Beneficiaries Service, available through Fidelity NetBenefits, offers a straightforward, convenient process that takes just minutes to complete. Simply log in to netbenefits.com/methodist and click Profile in the navigation bar at the top of your NetBenefits page and click the Summary tab and then Beneficiaries. If you do not have access to the Internet or prefer to complete your beneficiary information by paper form, please contact Fidelity at Keep in mind that, if you are married, your spouse must be your primary beneficiary (100%) unless your spouse signs off in the presence of a notary public or plan administrator. Additionally, it s important to list contingent beneficiaries should you and your spouse die at the same time. 20. What can I access online with Fidelity at netbenefits.com/methodist? Besides reviewing your account balance and investment elections, you can change your 403(b) deduction and contribution elections. You can also request fund exchanges on existing account balances and obtain a complete history of fund performance. In addition, you can designate your beneficiary online, and transfer/rollover forms can be printed directly from the Web site. You can access and manage your workplace savings account from virtually anywhere, any time, via your wireless device. You can also read articles on the markets, get insight on an array of personal finance topics, and discover new investing strategies via Facebook and Twitter. Like or Follow Fidelity Investments at Facebook.com/fidelityinvestments and Twitter.com/fidelity. 21. Can I roll over my balance in my previous employer s plan to the Houston Methodist plans? You may roll over your vested account balance from your previous employer s retirement plan, provided that the plan is a qualified plan. To obtain a transfer/rollover form, you can either contact Fidelity Investments at or print one directly by logging in to your account and selecting the Rollovers link in the drop-down menu next to the Plan name. This completed form, plus documentation supporting the qualified status of the previous plan and the pretax status of the monies to be rolled over, must be returned to Fidelity for processing. Once the balance has been rolled over into the plan, it cannot be withdrawn while you are employed; however, loans are allowed. 7

10 23. Does Houston Methodist provide a retirement bonus and reception for retiring employees? What are the criteria for eligibility? Retiring employees are eligible for a bonus and luncheon/reception if they are at least age 55, have 10 years of vesting service (1,000 hours worked per year), and intend to retire from active work. The retirement bonus allows an employee to receive a minimum of $250, with an additional $25 for each year of service over 10 years. The maximum retirement bonus is $1,000, which is equal to 40 years of service. An employee meeting the requirements listed above is also eligible for a luncheon/reception held at Houston Methodist facilities. Expense allowances for retirement receptions and luncheons must be approved by the appropriate executive. Food and beverage expenses must not exceed $8 per person or a total of $1,000, whichever is less. Also, visual communications cannot exceed $100 and incidental expenses cannot exceed $50. For more information regarding the retirement bonus and reception policy, please view Policy HR85, located on the Houston Methodist intranet under Policy Tech. 24. Can I talk to someone in a Fidelity Investor Center in Houston about my retirement accounts? Fidelity Investor Centers are retail services outlets, providing Houston Methodist employees with convenient local access to Fidelity Representatives during normal business hours. While we encourage you to take advantage of their services, please remember that the Investor Centers focus on providing services beyond your retirement plan, rather than the servicing of your Houston Methodist retirement plan accounts. Representatives are available to help provide financial insight and personal attention. After working with you to complete a retirement review, they can help you meet your goals and assist with the following: Analyzing your options. Get help to make sure you re taking full advantage of your workplace savings plan. Then, look at other opportunities that may also be worth considering. Creating a plan that meets your needs that factors in all your retirement resources and your broader financial priorities. Inspiring confidence in meeting your financial goals. Get the proactive guidance you need to stay on track, including access to specialists in estate planning and charitable giving. In-depth portfolio reviews Developing investment strategies for a variety of financial goals Complimentary investment seminars and workshops College savings programs In-depth portfolio reviews are provided by Fidelity Representatives through the use of Fidelity s suite of guidance tools. Although consultations are one on one, guidance provided by Fidelity is educational in nature, is not individualized, and is not intended to serve as the primary or sole basis for your investment or taxplanning decisions. Assistance with your Houston Methodist retirement plans is available from Fidelity at Monday through Friday, 7:00 a.m. to 11:00 p.m. Central time. You can also access your accounts online, virtually 24 hours a day, 7 days a week, by visiting netbenefits.com/methodist. This summary does not replace the official plan documents. In the event that the information in this summary differs from the information in the plan documents, the information in the plan documents will prevail. 8

11 Determine investments that are right for you What kind of investor are you? The answer to this question will determine which plan investments may be right for you. The Houston Methodist Retirement Savings Plans offer a range of investments, so you can build your portfolio your way. Just follow the simple process described here. Finding the right mix How four hypothetical target asset mixes align with different approaches to investing Aggressive Growth Growth Balanced Conservative 25% 15% 60% 5% 25% 21% 49% 40% 10% 35% 15% 50% 14% 6% 30% May be appropriate for investors: May be appropriate for investors: May be appropriate for investors: May be appropriate for investors: Comfortable with wide fluctuation Comfortable with significant fluctuation Comfortable with moderate fluctuation Looking to minimize fluctuation >10 years until retirement goal >5 years until retirement goal <5 years until retirement goal <5 years until retirement goal Domestic Stock Foreign Stock Short-term Investments Bond The purpose of the hypothetical target asset mixes is to show how target asset mixes may be created with different risk and return characteristics to help meet a participant s goals. You should choose your own investments based on your particular objectives and situation. Remember, you may change how your account is invested. Be sure to review your decisions periodically to make sure they are still consistent with your goals. You should also consider any investments you may have outside the plan when making your investment choices. These target asset mixes were developed by Strategic Advisers, Inc., a registered investment adviser and a Fidelity Investments company, based on the needs of a typical retirement plan participant. 9

12 First, start by finding your approach. Are you a conservative investor? An aggressive investor? Somewhere in between? The answer is a function of three things. The first is the length of time you have to invest in this case, the number of years until you expect to retire. The second is your comfort with risk. The third is your financial situation. If your time horizon is long, your risk tolerance is high, and your financial situation stable, you may be an aggressive investor. On the other hand, if you ll need your money soon, are uncomfortable with risk, and your financial situation is somewhat uncertain, you may need a more conservative approach. Many investors may be somewhere in between, taking a growth or balanced approach. To help determine your possible investment approach, consider these factors: The age at which you plan to retire Your comfort level with the stock market s ups and downs Whether you prefer stability or the potential for bigger returns, which entails greater risk Your short- and long-term financial needs Next, learn about the different kinds of investments. There are three basic investment types shortterm investments, bonds, and stocks. And they, like investors, fall along a range from conservative to aggressive. Short-term investments are the most conservative. Also known as cash investments, this investment type involves the least amount of risk, but also provides the lowest potential returns. Bonds are in the middle. Generally less risky than stocks, this investment type typically offers moderate returns and risk compared with stocks. Stocks are the most aggressive. Although past investment results do not guarantee future results, this investment type has historically provided the highest long-term returns and the greatest risk. Stock investments include large (large cap), medium-sized (mid-cap), and small (small cap) U.S. companies, as well as foreign companies. However, each of these types of stock investments has its own level of risk for example, small cap tends to be more risky than large cap. Then, select the right mix of investment types for your situation. Once you know how conservative or aggressive your approach is as an investor, and you understand the difference between investment types, you can figure out the mix of investment types that matches your approach. Finally, pick your investment options. The Houston Methodist Retirement Savings Plans offer a range of investment options across the three investment types. For descriptions, turn to the Investment Options section of this guide. Log in to NetBenefits at netbenefits.com/methodist to get up-todate performance information, other investment specifics, and educational material. Hands-on or hands-off? Do you want to make your own investment decisions? Are you comfortable building your own portfolio? 10 Do you have the time to actively manage your investments?

13 HANDS-OFF HANDS-ON Managed account Investment decisions and management of your portfolio are made by professionals on your behalf to help pursue your goals. Target date funds* These funds provide an automatic investment mix that becomes continually more conservative as time goes on. Just pick the fund with the year that s closest to the year you plan to retire. Let us guide you Visit our Planning & Guidance Center to identify a target investment mix, receive a model portfolio suggestion, and easily implement your strategy. Do-it-yourself Access Fidelity s research resources, and utilize our fund selection tools to build your own portfolio. What are my investment options? To help you meet your investment goals, Houston Methodist offers you a range of options. You can select a mix of investment options that best suits your goals, time horizon, and risk tolerance. The investment options available include conservative, moderately conservative, and aggressive funds. A complete description of the investment options and their performance, as well as planning tools to help you choose an appropriate mix, is available online at Fidelity NetBenefits. Four investment levels are available. Level 1: Target Date Funds If you understand the importance of having a mix of investments but feel more comfortable having a professional portfolio manager manage it for you, you might consider selecting one of the Vanguard Target Retirement Fund Institutional Shares offered in this level. These funds are designed for investors who want a simple approach to investing. Each fund s portfolio includes a target retirement date based mix of Vanguard funds to achieve a diversified allocation of stock, bond, and short-term investments. Consider choosing the fund that most closely matches your expected retirement date. Level 2: Core The Core lineup was developed to provide plan participants with access to what Houston Methodist and its consultants determine to be appropriate based on each fund s investment strategy, objectives, and overall diversity of the fund lineup. With this approach, you determine and manage the mix of investments in your plan account by choosing from a limited menu of choices. This level includes Fidelity and non-fidelity mutual funds, plus the VOYA STABILIZER. These options represent primary asset classes (stocks, bonds, and stable value). You may want to consider these options if you are comfortable creating your own mix of investments. * Target date funds are designed for investors expecting to retire around the year indicated in each fund s name. The investment risk of each target date fund changes over time as the fund s asset allocation changes. Target date funds are subject to the volatility of the financial markets, including that of equity and fixed income investments in the U.S. and abroad, and may be subject to risks associated with investing in high-yield, small-cap, and foreign securities. Principal invested is not guaranteed at any time, including at or after the funds target dates. Guidance provided by Fidelity through the Planning and Guidance tools is educational in nature, is not individualized, and is not intended to serve as the primary basis for your investment or tax-planning decisions. Neither diversification nor asset allocation ensures a profit or guarantees against loss. 11

14 Level 3: Expanded Investment Options This extensive list of mutual funds is for more experienced investors who have the ability to create and manage a portfolio through a substantially larger selection of investments. This option is for employees who know how to research, evaluate, and monitor a wide variety of funds with different risk and return characteristics. Level 4: Sector and Foreign Investment Options This list of sector and foreign funds is designed for more experienced investors comfortable creating and managing their own investments, and who may take a more active role in monitoring political, regulatory, market, or economic developments. Stock markets, especially foreign markets, are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments. Participants choosing to invest in this level of funds tend to be more comfortable with this type of market volatility and additional risk. Because of their narrow concentration in a specific industry, sector funds may be more volatile than funds that diversify across many sectors. Foreign securities are subject to interest-rate, currency-exchange-rate, economic, and political risks, all of which are magnified in emerging markets. These risks are particularly significant for funds that focus on a single country or region. Sector and foreign funds are less diversified and you may want to consider investing in these funds only to complement your core investment holdings. Where can I find information about exchanges and other plan features? You can learn about exchanges, withdrawals, and more, online through Fidelity NetBenefits at netbenefits.com/methodist. In particular, you can access a withdrawal modeling tool, which shows the amount of federal income taxes and early withdrawal penalties you might pay, along with the amount of earnings you could potentially lose by taking a withdrawal. You can obtain additional information about exchanges, withdrawals, and other plan features by calling Fidelity Investments at to speak with a representative, Monday through Friday from 7 a.m. to 11 p.m. Central time, or to use the automated voice response system, virtually 24 hours a day, 7 days a week. How do I obtain additional investment options and account information? Houston Methodist has appointed Fidelity to provide additional information on the investment options available through the plans. Also, a statement of your account may be requested by phone at or reviewed online through Fidelity NetBenefits at netbenefits.com/methodist. Statements are mailed quarterly, unless you have requested to receive them electronically. For up-to-date performance information and other fund specifics, log in to NetBenefits at netbenefits.com/methodist. Would you prefer to have investment professionals actively manage your account? 12 Fidelity Portfolio Advisory Service at Work is available in your 403(b) Plans and gives you the opportunity to have investment professionals actively manage your portfolio. That means they monitor and rebalance your portfolio for you, as needed. Call to look further into having Fidelity manage your portfolio. Or visit fidelity.com/activelymanaged for detailed information. Fidelity Portfolio Advisory Service at Work is a service of Strategic Advisers, Inc., a registered investment adviser and a Fidelity Investments company. This service provides discretionary money management for a fee.

15 Performing transactions with Fidelity NetBenefits Choose your investments today! The quickest way to set up your investment mix is to visit your account online. Step-by-step instructions are included here. Or call and have a Fidelity Representative assist you. In addition, planning materials and a dedicated voice response system (VRS) in Spanish are available. The VRS provides account balances, password authentication, mutual fund quotes, and some transactions in Spanish. When participants request to speak with a Fidelity Representative from the Spanish VRS, they will automatically be transferred to a Spanish-speaking representative with whom they can request printed materials and discuss their retirement account. Step 1: Go to netbenefits.com/methodist and click Register. (If you have already registered, enter your username and password to log in and skip to step 3.) Step 2: Set up a password for security purposes. Follow the directions provided to register and log in. 13

16 Step 3: Click either the HM 403(b) Plan or the HM DCP link. Please note: The steps to follow are the same for reviewing and managing the 403(b) Plan and the DCP Plan. From Quick Links, select the Change Investments link. Step 4: Changing Investments You will have a choice to change your future contributions or exchange an existing balance. If you want to change or view how your future contributions are invested, click Change Investment Elections. If you want to make an exchange to your existing balance, select the Exchange ONE Investment or Exchange MULTIPLE Investments link. Please note: Before investing, you ll want to view a mutual fund prospectus online or request a hard copy for each mutual fund in which you want to invest through your plan. Step 5: Request an exchange If you wish to modify how the annual DCP contribution is invested, or make an exchange for your 403(b) Plan investments, you will first need to choose the investment you wish to sell, and then one to buy. 14

17 Step 6: Choose your funds for the exchange To exchange out of an investment option, you will need to choose the investments to sell. For your convenience, you can view performance information or a prospectus online. Once you have selected the investments to sell, you will need to select the investments you want to buy (or exchange into). Step 7: Confirming your exchange You will then be able to preview your selections on the pre-confirm screen. To confirm, click the Process this Exchange button. You will receive a confirmation number for the exchange. 15

18 For 403(b) Plan only Step 8: Choose Contribution Amount or Learn More on the welcome page If you click Contribution Amount, you will be able to determine how much you would like to contribute to the 403(b) plan. If you click Manage your Contribution Amount, then Learn, you ll be able to access more detailed information about retirement savings plans, contribution limits, and tax advantages. Step 9: Review and submit information Once complete, you ll receive an immediate online confirmation. It s that easy. Be sure to check out the Planning and Library tabs. Within the Planning tab, you can plan for multiple goals while taking advantage of Fidelity s calculators and tools. These help you take the guesswork out of saving for retirement and assist you in building an income strategy to meet your needs. 16 Within the Library, Fidelity s checklists, tools, and videos can help you make smarter choices about your benefits and your money. Learn the basics. Hone your skills. Above all, get the most out of everything we have to offer.

19 Step 10: Change your future investment elections In order to also have next year s DCP contribution invested in funds of your choosing, repeat this process. At Step 4, click Investment Elections instead of Exchanges and follow the prompts to update how your future contributions are invested. Step 11: Designate or update your beneficiaries Go to Profile in the navigation bar at the top of your NetBenefits page and click the Summary tab and then Beneficiaries. Step 12: Name your beneficiaries Be sure to have information about each of your beneficiaries and follow the steps. When complete, you will receive an instant online confirmation. The plans are intended to be participant-directed plans as described in Section 404(c) of ERISA, which means that fiduciaries of the plans are ordinarily relieved of liability for any losses that are the direct and necessary result of investment instructions given by a participant or beneficiary. Third-party trademarks and service marks appearing herein are the property of their respective owners. All other trademarks and service marks are the property of FMR LLC. An annuity is a contract issued by an insurance company and purchased by a consumer for long-term investing. An annuity is not a mutual fund. There are various fees and expenses associated with annuities and, in certain situations, withdrawal penalties may be applicable. This document provides only a summary of the main features of the Houston Methodist Retirement Savings Plans and the Plan Document will govern in the event of discrepancies. Investor Center products and services are offered beyond your employer-sponsored retirement plan FMR LLC. All rights reserved. 17

20 Houston Methodist 6565 Fannin, GB 163 Houston, TX More Information This guide highlights our retirement benefits program but is not intended to be a complete description. More complete details, including limitations and exclusions, are available in each plan s summary plan description (located on myhr.houstonmethodist.org) or plan document (available from your HR Department or HR Benefits). Houston Methodist retains the right to add, delete, or modify any of the benefit provisions at any time. Houston Methodist also retains the right to final interpretations of plan provisions. Online Benefits Resource: myhr.houstonmethodist.org Houston Methodist HR Benefits at: Monday through Friday, 7:30 a.m. to 5:00 p.m. hrbenefits@houstonmethodist.org Fidelity Investments at: Monday through Friday, 7:00 a.m. to 11:00 p.m. netbenefits.com/methodist Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI FMR LLC. All rights reserved