Feed Future your Enrollment Overview Jerry s Enterprises, Inc. Employees 401(k) Plan RETIREMENT PLAN ADMINISTRATIVE AND RECORDKEEPING SERVICES PROVIDED BY MCCREADY AND KEENE INC., A ONEAMERICA COMPANY
We ve all been to a grocery store we know the concept. We walk down the aisles, select items to add to our cart, check out and take those items home. Our meals for the week will be made using the items we bought at the store. Simple, right? But what about preparing for retirement? And investing? And creating an investment portfolio? Not as easy. And even a little bit intimidating. The good news? It doesn t need to be. This guide will walk you through the basics of planning and investing for retirement. Most importantly, it will put retirement planning in real-world terms so that you can feel confident in the steps you may take to feed your future. Let s go shopping! 2
ENROLLMENT OVERVIEW When should I begin preparing for retirement? Ever had company over for dinner and waited until the last minute to do your shopping? Long lines made you late, and rushing around made you forget an important ingredient. Or maybe what you needed was out of stock. The lesson is to begin preparing as early as possible. Reaching your retirement goals can take a lot of preparation. In addition, the sooner you start contributing, the more time your account may have to grow or to weather the ups and downs of the market. The Jerry s Enterprises, Inc. Employees 401(k) Plan provides tools, education and investment options that allow you to begin feeding your future today. While it is ideal to begin contributing early in your career, don t get discouraged if you are later in your career and just beginning. Take action today to put yourself in the best position possible. What will you need in retirement? Most people go to the grocery store with an idea of what they intend to buy. The same goes for retirement. You ll first need to figure out what you will need in retirement, so you can develop a plan to get there. Some investment professionals estimate that you ll need at least 75 80 percent of your final working salary to maintain your lifestyle during retirement. It is important that you start preparing to reach your retirement income goals early, because waiting even one year can make a big difference. David Age 25 $1,500 Annual contribution Assumptions: Earns $30,000/year Plans to retire at age 65 Contributions assume a constant rate of return of 6 percent Total at age 65 if contributions begin at: Age 25 $246,072 COST OF WAITING (ONE YEAR) = $0 Age 26 $230,643 = $15,429 Note: All individuals are fictitious and all numeric examples are hypothetical. These hypothetical investment returns are for educational purposes only and are not indicative of any particular investment or performance. Hypothetical returns assume reinvestment of earnings. Actual returns or principal value will vary. Balances shown are before reduction for taxes. 3
Choose your investments Because each investor has different goals and different circumstances, there is no set strategy that works for everyone, and each person s portfolio, or shopping cart of investments will look very different. If you re a single, 20-something man going grocery shopping, the items in your shopping cart most likely look nothing like the contents of your 70-year old grandmother s cart. As shoppers, our family situation, lifestyle, age and health dictate a lot about the items we buy. The same goes for investing. Things to consider Investment types There are different types of investments in which you may choose to invest your retirement plan contributions. Stocks, bonds, and cash equivalents are just a few examples. Each type of investment carries a unique level of risk and return. Risk tolerance Some people are comfortable taking on the risk of frequent ups and downs of the stock market in return for potentially greater long-term returns. Others prefer the possibility of a slow, steady return with lower risk investments. Understanding your personal attitude toward risk can help you find the right mix of investments for your portfolio. Time horizon The longer you have until retirement, the more risk you can potentially afford to take. Diversification A good mix of investments in your portfolio aims to balance risk and return by allocating assets according to your goals, risk tolerance and time horizon. Risk versus Return Money market Bonds Balanced Large-cap stock Mid-cap stock Small-cap stock International Fixed interest Specialty stock Note: Each group of investments carry their own unique risks. Before investing, please read each fund prospectus for a detailed explanation of the risks, fees and costs associated with each underlying investment option. Although you might reduce volatility and risk with diversification, you can t eliminate investment risk all together. Diversification does not ensure a profit or protect against loss. Lower risk: Lower potential return Less potential for loss Higher risk: Higher potential return Greater potential for loss Note: In the investment world, risk refers to the elements that determine whether an investment s value or return will be lower or higher than expected. Generally, the greater the risk, the greater the potential return. The risk/return meter above shows the relative risk and return characteristics of different investment types. 4
ENROLLMENT OVERVIEW What type of investor are you? This questionnaire helps get to the heart of who you are as an investor, by asking you to answer some basic questions about your goals, time frame, and attitude toward risk. Your total score will help to determine your next steps. Answer as best and honestly as you can. After you answer the questions below: 1. Total your score in the bottom right hand box. 2. Review the corresponding managed portfolio on the next page to get a detailed description of the characteristics of your risk profile. TIME HORIZON Your current situation and future income needs. 5 points 4 points 3 points 2 points 1 point Score What is your current age? Less than 45 45 to 55 56 to 65 66 to 75 Older than 75 When do you expect to start drawing income? Not for at least 20 years In 10 to 20 years In 5 to 10 years Not now, but within 5 years Immediately GOALS/EXPECTATIONS Your views of how an investment should perform over the long term. 5 points 4 points 3 points 2 points 1 point Score What is your goal for this investment? Assuming normal market conditions, what would you expect from this investment over time? If stocks perform very poorly over the next decade, what would you expect from this investment? To grow aggressively To generally keep pace with the stock market To lose money To grow significantly To slightly trail the stock market & make good profits To make very little or nothing To grow moderately To trail the stock market, but make a moderate profit To make out a little gain To grow with caution To have some stability, but make modest profits To make a modest gain To avoid losing money To have a high degree of stability & make small profits To be affected little by the stock market SHORT-TERM RISK PROFILE Your attitude toward short-term volatility. 5 points 4 points 3 points 2 points 1 point Score Which of these statements describe your attitude about the next three years performance of this money? Which of these statements describe your attitude about the next few months performance of this money? I don t mind if I lose money Who cares, 3 months means nothing I can tolerate a loss I wouldn t worry about losses in that time frame I can tolerate a small loss A loss of more than 10% would concern me I d have a hard time dealing with a loss I can only tolerate shortterm losses I need to see at least a little return I d have a hard time stomaching any losses TOTAL 5
Your Do It For Me option Say you re the type of person who hates grocery shopping the crowds, the meal planning, the coupon cutting. An actively-managed FIT portfolio gives you the option to have a personal shopper. You tell your personal shopper the foods you like, your nutrition goals, and your budget, and voila your personal shopper does all the work for you. Selecting a managed portfolio to suit your style FIT Aggressive Portfolio Score 32 35 Best suited for investors who are seeking maximum appreciation, and willing to accept a higher level of volatility and risk to achieve that goal. FIT Growth Portfolio Is an actively-managed FIT portfolio right for me? Great question. If you select 1 of these 5 portfolios, you are selecting an actively-managed approach based on a combination of your age and tolerance for risk and market volatility. If choosing an activelymanaged FIT portfolio, use your score from the previous page to identify the FIT portfolio that might be suitable for your retirement investments. Note: These portfolios are based upon broad definitions used by Fiduciary Investment Trust and are not representative of an individual account objective. The median targets are considered as base guidelines, and as such, there is no guarantee of complete adherence to these levels. While diversification through an asset allocation strategy is a useful technique that can help to manage overall portfolio risk and volatility, there is no certainty or assurance that a diversified portfolio will enhance overall return or outperform one that is not diversified. Please note that the use of asset allocation or diversification does not assure a profit or guarantee against a loss. Fees are associated with managed portfolios. A written fee disclosure is available from your investment professional at Qualified Plan Advisors. The actively-managed FIT (Fiduciary Investment Trust) portfolios are collective investment trusts (CITs) sponsored by Comerica and managed by Prime Capital Investment Advisors and Qualified Plan Advisors. Score 25 31 Best suited for investors who are seeking portfolio appreciation, and willing to accept a higher level of volatility and risk to achieve that goal. FIT Balanced Portfolio Score 18 24 Best suited for investors who are seeking moderate growth while also looking for below market volatility. FIT Moderately Conservative Portfolio Score 11 17 Best suited for investors who are seeking below market volatility and are willing to accept lower returns. FIT Conservative Portfolio Score 7 10 Best suited for investors whose priority is preservation of capital, with the desire for a small portion of their portfolio in equities. 1. Percentages listed are median targets. 6
ENROLLMENT OVERVIEW Allocation of assets Percentage 1 n Stock/Equity focus 8 95% n Bond/Cash focus 5 15% Allocation of assets Percentage 1 n Stock/Equity focus 70 85% n Bond/Cash focus 15 30% Allocation of assets Percentage 1 n Stock/Equity focus 45 65% n Bond/Cash focus 35 55% Allocation of assets Percentage 1 n Stock/Equity focus 30 45% n Bond/Cash focus 55 70% Allocation of assets Percentage 1 n Stock/Equity focus 20 30% n Bond/Cash focus 70 80% 7
Contributing to your retirement Put tax deferral to work for you Tax deferral simply means the contributions to your retirement plan are not currently taxed. You are putting off paying taxes on that money until you withdraw it from your retirement account. How can putting off paying taxes be a benefit? Not only are your contributions invested, but the deferred taxes allow your money to stay invested. You contribute to your physical nutrition and wellness by purchasing food at the grocery store. By contributing to your retirement account, you are improving your future financial wellness. There are also some major tax and compounding benefits that go along with contributing to your retirement account. Your retirement plan contributions Contributing to your retirement account actually lessens the amount you pay in income taxes today. Your retirement contribution comes out of your paycheck automatically and most importantly, before you have to pay taxes. That contribution goes directly to your retirement account. So while your take-home pay is less because you have contributed to your retirement, your total income the amount you must pay taxes on is also less. This tax break helps to offset the impact contributing can have on your take-home pay. Paycheck hypothetical example 2 With contribution Without contribution Taxable monthly income $2,500 $2,500 Monthly retirement plan contribution $150 $0 Net monthly taxable income $2,350 $2,500 Federal taxes $352.50 $375 Monthly take-home pay $1,997.50 $2,125 2. This example is based on a federal income tax bracket of 15 percent. Investment growth comparison 10 years 20 years 30 years $32,281 $34,539 $95,881 $111,233 Taxable investment (at 25% tax rate) Tax-deferred investment (25% tax applied at end of period) $221,183 $281,535 0 $100,000 $200,000 $300,000 Note: This example compares a monthly contribution of $250 into a qualified pre-tax retirement account that is earning an 8 percent annual rate of return to the same monthly contribution and earnings rate in an outside taxable investment, such as a savings account, with a 25 percent tax rate. All individuals are fictitious and all numeric examples are hypothetical. These hypothetical investment returns are for educational purposes only and are not indicative of any particular investment or performance. Hypothetical returns assume reinvestment of earnings. Actual returns or principal will vary. Balance shown is before reduction for taxes. 8
ENROLLMENT OVERVIEW Roth contributions Unlike traditional pre-tax contributions, Roth contributions are made with after-tax dollars. This means that initially, you pay taxes on your full income retirement contributions included. Your contribution is then deducted from your paycheck, and your contributions and earnings accumulate tax-free. When you reach retirement, you can withdraw your distributions and avoid taxes, because you paid these initially. The Roth option may make more sense for you if: You believe you will be in a higher tax bracket when you retire You prefer to reduce your future tax liability instead of your current tax liability You want tax-free growth However, Roth is not for everyone. Weigh your options carefully. The benefits of compounding Compounding is a great way to grow your money over time. Let s say you make an investment, and that investment does well and grows. Now you have your initial investment, as well as the growth from that investment. This new balance then grows even more, increasing the total return of your initial investment. The effect continues, and future positive earnings are further compounded. Compounding allows your money to work for you! When determining your needs in retirement, consider: Your specific situation How long you plan to be retired What you see yourself doing in retirement Compounding example Thanks in part to compounding, the difference between the contributions to Michael s account and his actual account balance at retirement is $151,149! Michael Age 25 $100 Monthly contribution over 40 years Total contribution $48k = $199,149 at retirement Note: This hypothetical investment return and fictitious name is designed to demonstrate the impact of compounding returns and is not indicative of any particular investment or performance. Hypothetical returns assume reinvestment of earnings and a 6 percent average return on investment. Actual returns or principal value will vary. Balance shown is before reduction of taxes. An investor should consider his or her current and anticipated investment horizon and income tax bracket when making an investment decision, as the example may not reflect these factors. Any investment involves risk and there is no assurance that the investment objective of any investment option will be achieved. Before investing, understand that mutual funds are subject to market risk, including possible loss of principal. 9
Plan highlights Your plan has specific rules when it comes to: - Eligibility - Contributions - Vesting - Withdrawals/ Distributions The following information is a brief summary of your retirement plan s features. While this information outlines many of the provisions of the plan, it does not provide you with every plan detail. Additional planspecific provisions or limitations may apply. Plan documents govern this plan and contain a full set of rules for the plan. If there are discrepancies between this summary and the plan documents, the plan documents will govern. Please refer to your summary plan description (SPD), summary of material modifications (SMM), or contact your plan representative for more information. Eligibility When am I eligible to participate in the plan? You are eligible to participate in the plan if you are at least 18 years old, have completed at least 1 year and have completed 1,000 hours of employment. Note: Certain employees may be ineligible to participate in the plan. Please refer to your SPD or SMM for additional information. When am I eligible to enroll in the plan? When you have met the eligibility requirements, you may enroll at the beginning of the next quarter. Contributions How much can I contribute to the plan in pre-tax contributions? Through payroll deduction, you can contribute up to 100 percent of your wages, salary, earnings (and bonus, if applicable), up to IRS limits. Visit www.irs.gov for more information on the limits for the current year. Can I make Roth contributions to the plan? The plan allows you to make Roth after-tax contributions. The IRS dollar limit applies cumulatively to pre-tax and Roth after-tax contributions. Visit www.irs.gov for more information on the limits for the current year. Note: Additional plan-specific rules or limitations may apply. Can I make catch-up contributions to the plan? If you are age 50 or older (or will turn age 50 during the calendar year), you may be eligible to make catch-up contributions. Catch-up contributions allow those nearing retirement to catch up on contributions to their retirement accounts. Simply put, catch-up contributions allow people age 50 or older to defer more than those under age 50. Note: Before you can make catch-up contributions, you must first reach the elective deferral dollar limit (the Internal Revenue Code (Code) section 402(g) limit), the annual additions limit (the Code section 415 limit), the plan s deferral limit, or the Actual Deferral Percentage (ADP) limit. Visit www.irs.gov for contribution limits for the current year. 10
ENROLLMENT OVERVIEW When can I change or stop contributions to my plan? You can change your contributions or stop your contributions in accordance with plan provisions. Note: If you stop your contributions, you can only start contributing again in accordance with plan provisions. Vesting What is vesting? Vesting is the process of obtaining non-forfeitable ownership (or partial ownership) by an employee of the retirement account balances or benefits contributed to that employee s account. You are always 100 percent vested in your deferral contributions to the plan, any rollovers or transfers to the plan, plus any earnings they generate. Note: Additional plan-specific provisions or limitations may apply. Please refer to your SPD or SMM for more information. Withdrawals/Distributions Once invested, when can I withdraw money from my account? While your plan may provide for additional withdrawal options, in general withdrawals or distributions from your account can be made at death, in the event of a disability, or once you have attained age 59½. While the plan is intended to help set aside money for your retirement, the plan also includes a loan feature that may allow you to borrow money from your account. Other requirements, limitations, or fees may apply. The plan may also allow you to withdraw all or part of your vested account if you can prove financial hardship and are unable to meet your financial needs another way. The plan defines a hardship as an immediate and severe financial need and establishes the allowable reasons for which you may receive such a withdrawal. Other requirements, limitations or fees may apply. Note: Because withdrawals/distributions from your account may be taxable to you, and withdrawals prior to reaching age 59½ may be subject to an additional 10 percent penalty tax, you should talk with your tax advisor before withdrawing money from your account. You are always 100% vested in your contributions to the plan, plus any earnings they generate. 11
Start participating in your plan Paper enrollment Your plan offers enrollment with paper enrollment forms. Simply fill out the forms and return them following the instructions given by your plan representative. Your dedicated team For enrollment questions and general account information, please contact: Qualified Plan Advisors support@qualifiedplanadvisors.com 1-855-401-5378 toll free Register for online account access 1. Go to www.jerrys401k.com 2. Select the Register for your account button if you are a first time user, and the Log in to your account button if you are a returning user 3. If you are a first time user, read the enrollment checklist and click on Go to create your account. From there, you will be prompted to enter your Social Security Number (SSN) as your User ID, and enter the password provided to you via postal mail 4. Enter or confirm your personal information by clicking My Information 5. Choose your investment options by clicking My Investments 6. Review your entries and click Enroll Me Consolidating retirement accounts You are able to roll over or transfer an existing qualified retirement plan account from a prior employer immediately upon meeting plan eligibility requirements. Benefits of account consolidation include: One point of contact for your retirement questions Reporting of your retirement assets on a single account statement One account for allocation and diversification of your retirement portfolio Note: Provided content is for overview and informational purposes only and is not intended and should not be relied upon as individualized tax, legal, fiduciary or investment advice. Changes in the tax law may affect the information provided. Investors should consult with their legal or tax advisors for personalized assistance, including any specific state law requirements. Investing always involves risk, including the potential loss of principal. Participants should carefully consider their risk tolerance, investing time horizon, needs, and objectives as well as the specific risks and limitations associated with each of the investment options before investing. It is important to note that there are typically costs associated with investment options, such as expense fees. 12
ENROLLMENT OVERVIEW Fund fact sheets and performance information are available for most investment options, but not all options. McCready and Keene provides administrative and recordkeeping services and is not a broker/dealer or an investment advisor. Mutual Funds are sold by prospectus. To obtain a copy of the prospectus, the participant should contact the plan s investment advisor or the mutual fund company directly. Before investing, carefully consider the fund s investment objectives, risks, charges, and expenses. The underlying fund prospectuses contain this and other important information. Read the prospectuses carefully before investing. Bond funds have the same interest rate, inflation and credit risks that are associated with the underlying bonds owned by the fund. Money Market funds are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other federal government agency. Although they seek to preserve the value of your investment at $1.00 per share, it s possible to lose money by investing in money market funds. Questions? Visit us online at www.jerrys401k.com or call your dedicated team at Qualifed Plan Advisors. Funds investing in stocks of small, mid-sized, and emerging companies may have less liquidity than those investing in larger, established companies and may be subject to greater price volatility and risk than the overall stock market. Investing in international markets involves risks not associated with investing solely in the U.S., such as currency fluctuation, potential political and diplomatic instability, liquidity risks, and differences in accounting, taxes, and regulations. Qualified Plan Advisors (QPA)/Prime Capital Investment Advisors is not an affiliate of McCready and Keene, Inc. and is not a OneAmerica company. 13
14
ENROLLMENT OVERVIEW Feed Future your 15
About OneAmerica A national leader in the insurance and financial services marketplace for more than 140 years, the companies of OneAmerica help customers build and protect their financial futures. OneAmerica offers a variety of products and services to serve the financial needs of their policyholders and customers. These products include retirement plan products and recordkeeping services, individual life insurance, annuities, asset-based long-term care solutions and employee benefit plan products. Products are issued and underwritten by the companies of OneAmerica and distributed through a nationwide network of employees, agents, brokers and other sources that are committed to providing value to our customers. To learn ore about our products, services and the companies of OneAmerica, visit OneAmerica.com/companies. McCready and Keene Inc. a OneAmerica company P.O. Box 50460 Indianapolis, IN 46250-0460 1-800-442-4015 www.mcak.com 2018 OneAmerica Financial Partners, Inc. All rights reserved. OneAmerica and the OneAmerica banner are all registered trademarks of OneAmerica Financial Partners, Inc. R-26256 04/26/18