Marie Cox CRM The Roth 403(b) Your 403(b). Made Better Piedmont Healthcare www. ing.com
<ul><li>You should consider the investment objectives, risks, and charges and expenses of the variable product and its und...
The ING Difference… Fresh approach to life planning Straight talk about financial realities Personalized solutions that ta...
Your 403(b) continues to offer  a smart way to save. Automatic payroll deductions Investment flexibility Tax-deferred reti...
Your 403(b) continues to offer  a smart way to save. Automatic payroll deductions Investment flexibility Tax-deferred reti...
What’s the big deal?  A Roth 403(b) offers  you the potential for  tax-free   income when you retire.  Certain qualifying ...
Would you rather pay taxes later?  With the Traditional 403(b) Now: Pay no income taxes on contributions during your worki...
Or get them out of the way now?  With the Roth 403(b) Now: Pay income taxes on contributions as you make them. Withdraw sa...
Some things change. Some things stay the same. <ul><li>Simple payroll deductions. </li></ul><ul><li>Same high contribution...
Some things stay the same. The treatment of Traditional 403(b)  Roth 403(b) Money going in Pre-tax     After-tax 1 (contri...
The Roth 403(b). So, who might this be right for?
The Roth 403(b) might be right for you if... <ul><li>   Just starting career </li></ul><ul><li>   Relatively lower incom...
The Roth 403(b) might be right for you if... Traditional  Roth   Pre-tax 403(b)  After-tax 403(b) Comparing Linda’s option...
“ I’m more the traditional type.” <ul><li> Can’t really afford more taxes now </li></ul><ul><li>   Needs more tax deduct...
“ I’m more the traditional type.” Comparing Jeff’s options: Traditional  Roth   Pre-tax 403(b)  After-tax 403(b) Gross inc...
“ Both, please.”    Isn’t sure whether taxes will be higher or lower in retirement    Wants to diversify tax strategy  ...
“ Both, please.” Value at retirement: (assumes  10  years of contributions at 6%) $81,500 $61,100 Comparing Wanda’s option...
Is Roth right for you? Consider this … <ul><li>Are you looking for tax-free retirement income? </li></ul><ul><li>Do you ex...
Is Roth right for you? Consider this. If you answered “yes” to any of these,  a Roth may make sense for you. <ul><li>Are y...
What’s next? Use our online calculator. Time to take action. Consult a professional. Read on the topic.
Your 403(b). Made Better. Thanks for Participating in The Roth 403(b)
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Roth 403b Power Point

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  • Hello and welcome to today’s presentation—Your 403(b) made better. We’re here to talk about a new opportunity for saving in your 403(b).
  • Before we get started let me tell you a little about ING…We’re a different kind of financial services company…with a fresh approach to life planning. We don’t just focus on your finances, we start with your goals…what you want to get out of life. Then, we add a bit of reality and common sense to help you see what might be blocking your ability to reach your objectives. You can depend on us for straight talk about the realities of financial life…and information in terms you can understand. From there, we’ll help lay the groundwork for your retirement future…with the understanding that everyone’s unique…and other factors may need to be taken into account…so you can make decisions that fit with your overall picture. Before we get started, some introductions are in order. Let me tell you a bit about me. [PROVIDE YOUR BACKGROUND.]
  • Let’s start our conversation with a recap of your 403(b)’s overall benefits. Some experts will tell you that your 403(b) is the first and best place to save for retirement. How many of you are already investing in your company 403(b)? [ASK FOR SHOW OF HANDS.] Good for you. You’re doing a smart thing. If you’re not…Let’s see if I can convince you to start. The chief advantages of saving in a 403(b) are: A tax advantage. The government encourages you to take responsibility for funding your own retirement and gives you a tax break to do so. Automatic deductions. It’s simple to save in your 403(b) because your employer deducts your contributions right from your paycheck. Investment flexibility. Your 403(b) also gives you a way to invest your contributions wisely with competitive fixed account options or well-known variable investment options. Before we talk about a new opportunity for potentially tax-free retirement income, I’d like to take a moment to stress the importance of investing wisely.
  • Here’s what’s different about your plan. Your employer offers a great additional feature to your 403(b) that gives you another way to contribute - and even more flexibility. So - on top of tax advantages, automatic payroll deductions, and investment flexibility - you now have a Roth 403(b) contribution option. The material I will cover today is not intended to be used to avoid tax penalties, and was prepared to introduce another way to contribute to your plan. You may wish to seek advice from an independent tax advisor to discuss if this is right for you.
  • What’s the big idea behind the Roth 403(b)? If you choose to put some or all of your retirement-plan contributions in the Roth 403(b) option, this money goes into your account after taxes, but comes out when you’re retired as tax-free income. Just like your Traditional 403(b), there are conditions that apply to receive tax-free income, which we’ll talk about in a minute.
  • For comparison purposes, think of your Traditional 403(b)—the one you’re hopefully saving in now. You make pre-tax contributions to your account. This means money comes out of your paycheck and is contributed to your retirement plan before income tax is taken. Saving in a Traditional 403(b) can help you reduce your current taxable income - saving you from paying more taxes now. The money grows tax-deferred in your account, and then when you withdraw savings, you pay taxes on each distribution. Money will be taxed as ordinary income in the year it is distributed and early withdrawals taken before age 59 ½ may be subject to an IRS 10% premature distribution penalty tax. Account values fluctuate with market conditions and when surrendered the principal may be worth more or less than the amount you originally invested. The Internal Revenue Code generally prohibits withdrawals of 403(b) salary reduction contributions and earnings on such contributions prior to death, disability, age 59 ½ , severance of employment, or financial hardship ( the amount available for hardship is limited to the lesser of the amount necessary to relieve the hardship, or the account value as of 12/31/1988 plus the amount of any salary reduction contributions made after 12/31/1988 (exclusive of any earnings)). Amounts held as of 12/31/1988 are “grandfathered” and are not subject to these withdrawal restrictions. Note, however, Employer Contributions made to an annuity contract issued after December 31, 2008 may not be paid or made available before a distributable event occurs. Such amounts may be distributed to a participant (or, if applicable, the beneficiary) upon the participant’s severance from employment, or upon the occurrence of an event, such as after a fixed number of years, the attainment of a stated age, or disability.
  • Now, here’s a visual of how Roth 403(b) works. It’s, in essence, the reverse of your Traditional 403(b). With a Traditional 403(b), income taxes are taken from your paycheck after your contribution is taken out. But, with a Roth 403(b), taxes are taken from your paycheck before your contribution. Now, here’s the good part. When you are retired and ready to draw income from your Roth 403(b), it comes to you tax free - provided you meet certain conditions. 1) First, you must have been saving in your Roth 403(b) account for at least 5 years. Keep in mind that the 5-year clock starts January 1st of the first calendar year that you make a Roth 403(b) contribution, and 2) Second, you have to wait until at least age 59 ½ to start taking income from your Roth 403(b). The exception to this rule is if you become disabled or die. Investment earnings withdrawn before meeting these conditions are taxable and may be subject to an IRS 10% premature distribution penalty tax if you are under age 59 ½ .
  • Let’s look at what’s the same for both your Traditional and Roth 403(b). First, your employer makes participation simple by automatically taking contributions from your paycheck and placing them in your retirement account.Your total 403(b) contributions - whether Traditional, Roth, or both - can’t exceed $16,500 in 2009, or $22,000 if you are age 50 or older. This higher contribution limit may make your employer’s Roth more attractive than a Roth IRA, which has a much lower contribution limit. Plus, depending on your adjusted gross income, you may not be able to contribute to a Roth IRA at all. There are no income restrictions for contributing to a Roth 403(b). The same investment options are available to Traditional and Roth 403(b) contributions, and how you choose to invest them is still up to you. You also retain the same flexibility you’ve always had—for instance, to change your contribution amount or to change the funds in which you invest. Your plan’s required minimum distributions are the same, too, and must begin at age 70 ½ . However, Roth 403(b) assets may be rolled over to a Roth IRA, which has no minimum distribution requirements. Distributions are still permitted if you sever employment, become disabled or die. Also, if your plan allows, you can still withdraw money from either a Traditional or Roth 403(b) once you’ve reached age 59 ½ or in case of hardship.
  • Now, let’s look at what’s different between retirement-saving options. With a Traditional 403(b), you make pre-tax contributions to your account, meaning contributions are deferred before federal (and, where applicable, state and local) income taxes are withheld. However both FICA and FUTA payroll taxes apply to these deferrals. And, Traditional 403(b) distributions are subject to income taxes. With a Roth 403(b), contributions are made after tax, meaning they’re subject to income and payroll taxes before they’re contributed to the plan. However, Roth 403(b) assets can later be withdrawn tax-free, as long as they’ve been in the plan for the required five-year holding period and you are at least age 59 ½ , disabled, or deceased. Please remember, though, both Traditional and Roth investment earnings withdrawn before age 59 ½ may be subject to an IRS 10% premature distribution penalty tax. Not only is there a difference in how money is taxed going in and coming out, there is also a difference in how rollovers are treated. Money from a traditional 403(b) can be rolled over to another Traditional 403(b), 401(a) including 401(k), governmental 457, Traditional IRA or Roth IRA. It is important to note that traditional 403(b)money rolling into a Roth IRA may be subject to income restrictions. Money from a Roth 403(b) can only be directly rolled into a designated Roth 403(b) or 401(k) account or an individual Roth IRA (without any income restrictions).
  • All right. So, you have a pretty good idea of how the two plans work. But, you may be wondering how one or both could work for you. Let’s look at some examples of who the Roth 403(b) might be right for.
  • Say hello to Linda. She’s gung-ho for the Roth 403(b). Linda’s new to the working world, making $35,000 a year, so she’s in a relatively lower—25%— income-tax bracket. For right now, she isn’t worried so much about her tax deduction as she is about accumulating retirement savings. Her reasoning is that her salary will increase over time, and that her tax bracket will continue to go up. She believes that putting away as much as possible now will allow her to access tax-free money later in life, when she’s in a much higher tax bracket. Put another way, she is willing to pay taxes on her contributions now at a relatively lower tax rate, as opposed to possibly paying taxes at a higher rate in the future.
  • Let’s look at how making Roth 403(b) contributions affect Linda’s take-home pay today, and what her after-tax distributions may look like 40 years from now. No one really knows with certainty what taxes will be in retirement. Linda believes her taxes will be higher and has based her decision on that assumption.
  • Here’s another perspective. Jeff is Mr. Traditional. Jeff is in his peak earning years. He knows he won’t be making this money forever and wants to enjoy it while he can. Jeff has been contributing to the Traditional 403(b) for a while and has grown used to the current tax deduction it provides. He also reasons he will be in a lower tax bracket when he’s retired. Oh, yeah. Here’s the clincher. Jeff really doesn’t like change anyway.
  • Here’s how Jeff did the math to compare his saving options. Since Jeff believes he will be in a lower tax bracket in retirement, he projects that he will come out ahead by contributing to the Traditional pre-tax plan and has decided not to make Roth contributions.
  • Don’t forget, too, that you can choose both…contribute some to your Traditional 403(b) and some to your Roth 403(b). Like Wanda, you may find this combination option attractive if you are simply not sure where tax rates will be when you retire – in effect you are “hedging your bets”. Contributing to both also helps diversify your tax strategy, giving you more flexibility now as well as when you start withdrawing income. And of course, this options still allows you to reduce your current taxable income. To help with your decision, ING offers a great online calculator if you would like to do a little more modeling on your own. You can check it out at www.ingretirementplans.com You may also want to consult your personal tax advisor for assistance.
  • Let’s look at Wanda’s income and tax numbers to see how she arrived at her decision. Wanda likes the idea of tax-free retirement income, but also likes her current tax deduction. And, she doesn’t have a clue where taxes are headed in the future! She’s decided to “hedge her bets” and invest in a combination of both.
  • So, what about you? Is Roth 403(b) right for your situation? Here are some things to consider. [REVIEW POINTS] A “yes” answer to one or more of these questions may suggest you should consider directing at least a portion of your contributions to a Roth 403(b).
  • So, what about you? Is Roth 403(b) right for your situation? Here are some things to consider. [REVIEW POINTS] A “yes” answer to one or more of these questions may suggest you should consider directing at least a portion of your contributions to a Roth 403(b).
  • The decision for or against the Roth 403(b) option may not be one you’ll make by the close of today’s meeting. You’ll probably want to talk to your family, and even look at some numbers. Here are some suggested actions you can take to help your decision making: Read more on the topic. ING has informative materials to help you learn more, which I’ll hand out at the end of our session. Use ING’s online calculator to try different investing scenarios with a Traditional versus Roth 403(b). Go to www.ingretirementplans.com and click on the “Roth Comparison” link within the Tools and Calculators section. The address is also printed in ING’s Roth 403(b) participant brochure. The calculator will help you assess how Traditional 403(b) and Roth 403(b) contributions may affect your present income and taxes and your retirement account balances. You may wish to consult a tax and/or investment professional to help make a decision. You also may wish to talk to your human resources contact to ask more about your employer’s retirement plan before you make up your mind. I’ll take questions in a few moments and will stay after the meeting, as well.
  • Thanks for attending today’s meeting. I’d like to leave you with two important parting thoughts. First, your employer has given you another option in the form of the Roth 403(b). You now have more flexibility than ever to plan and save for your retirement. And second. Whether you choose the Traditional 403(b), the Roth 403(b), or both, ING and your employer strongly encourage you to save for your retirement and take advantage your 403(b) — an additional way to provide for your future.
  • Roth 403b Power Point

    1. 1. Marie Cox CRM The Roth 403(b) Your 403(b). Made Better Piedmont Healthcare www. ing.com
    2. 2. <ul><li>You should consider the investment objectives, risks, and charges and expenses of the variable product and its underlying fund options; or mutual funds offered through a retirement plan, carefully before investing. The prospectuses/prospectus summaries/information booklets contain this and other information, which can be obtained by contacting your local representative. Please read the information carefully before investing. </li></ul>Products and services are offered through the ING Family of Companies. Securities offered through ING Financial Advisers, LLC (member SIPC). The information is provided for your education only. Neither ING or its affiliated companies or representatives provide tax or legal advice. Please consult a tax adviser or attorney before a tax-related investment/insurance decision. C08-1114-018 (11/08) ELC.E.P.MS.462-1 (11/08)
    3. 3. The ING Difference… Fresh approach to life planning Straight talk about financial realities Personalized solutions that take the whole picture into account
    4. 4. Your 403(b) continues to offer a smart way to save. Automatic payroll deductions Investment flexibility Tax-deferred retirement contributions and earnings
    5. 5. Your 403(b) continues to offer a smart way to save. Automatic payroll deductions Investment flexibility Tax-deferred retirement contributions and earnings The Roth 403(b) option
    6. 6. What’s the big deal? A Roth 403(b) offers you the potential for tax-free income when you retire. Certain qualifying conditions apply.
    7. 7. Would you rather pay taxes later? With the Traditional 403(b) Now: Pay no income taxes on contributions during your working years. Pay taxes when you withdraw during retirement. Later: The Internal Revenue Code generally prohibits withdrawals of 403(b) salary reduction contributions and earnings on such contributions prior to death, disability, age 59 1/2, severance of employment, or financial hardship (The amount available for hardship is limited to the lesser of the amount necessary to relieve the hardship, or the account value as of 12/31/1988 plus the amount of any salary reduction contributions made after 12/31/1988 (exclusive of any earnings)). Amounts held as of 12/31/1988 are &quot;grandfathered&quot; and are not subject to these withdrawal restrictions. Note, however, Employer Contributions made to an annuity contract issued after December 31, 2008 may not be paid or made available before a distributable event occurs. Such amounts may be distributed to a participant (or, if applicable, the beneficiary) upon the participant’s severance from employment, or upon the occurrence of an event, such as after a fixed number of years, the attainment of a stated age, or disability. Note that distributions from the Roth 403(b) are subject to taxation on the portion attributable to earnings if made before Qualified Distribution provisions are satisfied.
    8. 8. Or get them out of the way now? With the Roth 403(b) Now: Pay income taxes on contributions as you make them. Withdraw savings tax-free during retirement, once qualifying conditions are met. Later:
    9. 9. Some things change. Some things stay the same. <ul><li>Simple payroll deductions. </li></ul><ul><li>Same high contribution limits* as for a traditional 403(b). </li></ul><ul><li>Access to the same investment options. </li></ul><ul><li>Same flexibility to make investment changes. </li></ul><ul><li>Same required minimum distributions. </li></ul>*When contributing to both, traditional and Roth, contribution limits apply to the combined balance.
    10. 10. Some things stay the same. The treatment of Traditional 403(b) Roth 403(b) Money going in Pre-tax After-tax 1 (contributions) Money Taxable when Tax-free if five-year holding period is coming out withdrawn satisfied and age 59 1 / 2 or older, (distributions) disabled, or deceased Some things change. Direct Rollovers allowed to Traditional 403(b), governmental 457, 401(a) including 401(k), Traditional IRA or Roth IRA Direct Rollovers allowed o another Designated Roth 401(k) or 403(b) Account or Roth IRA 2 Money moving on (rollovers) 1 Roth deferrals are subject to federal (and, where applicable, state and local) income tax withholding, while Traditional deferrals are not. However, payroll taxes (FICA and FUTA) apply to both Roth and Traditional deferrals. 2 Rollovers to a Roth IRA from a Roth 403(b) are not subject to the income restrictions that apply to Roth IRA contributions
    11. 11. The Roth 403(b). So, who might this be right for?
    12. 12. The Roth 403(b) might be right for you if... <ul><li> Just starting career </li></ul><ul><li> Relatively lower income tax bracket </li></ul><ul><li>Believes income (and taxes) will increase in the future </li></ul><ul><li> Isn’t worried about current tax deduction </li></ul>
    13. 13. The Roth 403(b) might be right for you if... Traditional Roth Pre-tax 403(b) After-tax 403(b) Comparing Linda’s options: After-tax value: $318,700 $358,700 Gross income: $35,000 $ 35,000 Less taxes at 33%* -$159,500 -$0 Annual salary available to save: $3,000 $ 3,000 Less taxes at 25%* -$0 -$750 Net yearly contribution: $3,000 $2,250 (totals over 40 years: $120,000 $90,000) Value at retirement: (assumes 40 years of contributions at 6%) $478,200 $358,700 *Assumed rate represents federal and state taxes. This is a hypothetical example for illustrative purposes only and is not intended to reflect the performance of any specific product, nor does it reflect sales charges or other expenses that may be required for some investments. Neither ING nor its agents and representatives can provide tax, legal, or accounting advice. You should consult your own attorney or tax advisor about your specific circumstances.
    14. 14. “ I’m more the traditional type.” <ul><li> Can’t really afford more taxes now </li></ul><ul><li> Needs more tax deductions </li></ul><ul><li>Doesn’t expect to be in a higher tax bracket when he retires </li></ul>
    15. 15. “ I’m more the traditional type.” Comparing Jeff’s options: Traditional Roth Pre-tax 403(b) After-tax 403(b) Gross income: $75,000 $75,000 Less taxes at 15%* -$56,800 -$0 Annual salary available to save: $10,000 $10,000 Less taxes at 25%* -$0 -$2,500 Net yearly contribution: $10,000 $7,500 (totals over 20 years $200,000 $150,000) Value at retirement: (assumes 20 years of contributions at 6%) $378,900 $284,200 After-tax value: $322,100 $284,200 *Assumed rate represents federal and state taxes. This is a hypothetical example for illustrative purposes only and is not intended to reflect the performance of any specific product, nor does it reflect sales charges or other expenses that may be required for some investments. Neither ING nor its agents and representatives can provide tax, legal, or accounting advice. You should consult your own attorney or tax advisor about your specific circumstances.
    16. 16. “ Both, please.”  Isn’t sure whether taxes will be higher or lower in retirement  Wants to diversify tax strategy  Still wants a current income tax deduction
    17. 17. “ Both, please.” Value at retirement: (assumes 10 years of contributions at 6%) $81,500 $61,100 Comparing Wanda’s options: Traditional Roth Pre-tax 403(b) After-tax 403(b) Less taxes at 25%* -$20,400 -$0 Less taxes at 25%* -$0 -$1,500 Net yearly contribution: $6,000 $4,500 (totals over 10 years $60,000 $45,000) Gross income: $60,000 $60,000 After-tax value: $61,100 $61,100 Annual salary available to save: $6,000 $6,000 *Assumed rate represents federal and state taxes. This is a hypothetical example for illustrative purposes only and is not intended to reflect the performance of any specific product, nor does it reflect sales charges or other expenses that may be required for some investments. Neither ING nor its agents and representatives can provide tax, legal, or accounting advice. You should consult your own attorney or tax advisor about your specific circumstances.
    18. 18. Is Roth right for you? Consider this … <ul><li>Are you looking for tax-free retirement income? </li></ul><ul><li>Do you expect your taxes to be higher when you retire? </li></ul><ul><li>Are you currently in a lower income tax bracket? </li></ul><ul><li>Do you like the idea of diversifying your tax strategy like you diversify your investment strategy? </li></ul><ul><li>Are you looking to minimize taxes on your Social Security benefits? </li></ul><ul><ul><li>Roth distributions do not affect taxation of Social Security benefits; whereas traditional distributions might </li></ul></ul>There’s more … These materials are not intended to be used to avoid tax penalties, and were prepared to support the promotion or marketing of the matter addressed in this document. The taxpayer should seek advice from an independent tax advisor.
    19. 19. Is Roth right for you? Consider this. If you answered “yes” to any of these, a Roth may make sense for you. <ul><li>Are you already maxing out your Traditional 403(b) contributions? </li></ul><ul><li>Can you afford a reduction in take-home pay to contribute the same amount to your Roth 403(b)? </li></ul><ul><ul><li>For those already contributing to a Traditional 403(b) and wishing to switch to a Roth 403(b) </li></ul></ul><ul><li>Are you looking to leave tax-free assets to your heirs? </li></ul><ul><ul><li>A Roth 403(b) may be rolled over to Roth IRA: age 70 ½ required distributions do not apply to a Roth IRA </li></ul></ul><ul><ul><li>A traditional 403(b) may be rolled over to a Roth IRA which may be advantageous as set forth above. In order to complete the rollover to the Roth IRA, taxes will need to be paid on the traditional 403(b) </li></ul></ul>
    20. 20. What’s next? Use our online calculator. Time to take action. Consult a professional. Read on the topic.
    21. 21. Your 403(b). Made Better. Thanks for Participating in The Roth 403(b)
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