Introduction I'm here to talk about the deferred comp plan and hopefully convince you to sign up. My name is Austin Deeds with the Division of Treasury Bureau of Deferred Compensation set up in 1982 I am the new marketing and education coordinator for the deferred comp plan Matt McCaskil is in the back to help me in case I leave out any information Work for DFS our boss is Alex Sink I am a state employee Stop me at anytime if you have questions
What is deferred comp? This is available to all state employments. Deferred Comp is a way to save for retirement by putting your money aside, Pre-Tax, to help fund your retirement. set up under IRC 457 by the IRS to put money aside pre-tax. A way to invest your money to help supplement the benefits you will receive from the FRS Plan and Social Security
3 ways your retirement will be funded. The Pension, or more recently the Investment Plan. Social Security and the FRS will most likely not provide enough income to maintain your current standard of living. Supplemental Savings Deferred Comp that is where we come in. Deferred Comp is an employee funded retirement plan No one knows if Social Security will be around when we retire.
Explain the slide Pension plan is based on the number of years. The longer you work the more money you will get. The Pension plan will supply you with about half the income you were making while employed. You need to do something else to bridge the gap
No one know's how dependable social security will be in the future.
Deferred Comp helps make up the difference (bridge the cap) in what you were making while employed and what your pension pays Your Pension provides about half of what your making Social Security is not very dependable
It is harder to put money away after your paycheck has been received. Your money automatically deducted each pay period, so you don’t even think about putting the money aside The next slide is an example of Pre-tax investing
The first 5 IP’s are what we call traditional IP providers. The last one Symetra is an online brokerage Account. Symetra is for the people that want to do their own research, typically for people who follow the stock market on a regular basis. The first 4 IP’s you can meet with representative face to face. T. Rowe and Symetra are available on the phone or internet. Many of the IP’s websites and enrollment packets have short quizzes you can take to find out the type of investor you are and where to invest your money. The first five offer 12 mutual funds to choose from and some sort of Fixed Product. You can invest with more than one company Symetra is a catch-all Provider anything not offered in the other IP’s you can find with Symetra
Morningstar and Financial Engines are free research and advice firms. Morningstar rates funds on a scale from 1 to 5 stars. 5 being the best, 1 the worst. Financial Engines is available to give investment advice. ING, Nationwide & Symetra you can enroll online. AIG, Great-West and T. Rowe you need to contact their office by e-mail or phone to sign up. You can access your account to view the market closing from the previous day. You can view all your account balances thru our website. You can view your account balance as of the day before. Morningstar and Financial Engines are analytical tools that are available thru the individual providers websites
#1 question, How Do I Choose an Investment Provider. We encourage you to check the website for publications and other information. Please call us at anytime M-F 8-5pm. We are here as a resource for you. Our Info is on all three handouts you have in front of you. You can access your account on our website. You can invest with more than one company.
You can access your account thru our website and check yesterday’s stock market closing.
How much can you defer? In 2006 you can defer up to 15,000 and that will increase $500 over the coming years. The minimum amount is $20/month or $10/month. You can also defer a percentage of your paycheck. This forces you to invest more when your salary increases. flexibility You can stop and start your contribution at any time.
50+ catch-up, No enrollment, If you are 50 or over you can defer an extra 5,000. 3 years prior to retirement you can enter Standard Catch-Up. Either 27 years of services or 59 years old with 6 years vested you can invest 30,000 in 2006. You must apply for Standard Catch-up
How many people have an investment plan either one opened personal or while at another job? Deferred Comp does not affect other plans you could max out both plans if you would like.
Deferred Comp is great for today’s mobile work force. Many of you will not or have not been with the state your whole career. You can roll your account in or out of Deferred Comp. If you already have an IRA or another plan you can consolidate it into Deferred Comp. Upon retirement or separation from the state you can roll your plan into another investment plan. You can not keep contributing to Deferred Comp once you leave the state. Compared to most IRA’s you can begin receiving distributions from DC at anytime after separation you only pay taxes
Assuming 8.5 yield per year. Leaving your money until retirement at 62. The early you start investing and the longer you keep your money invested the larger your retirement fund will be .
Asset Allocations: Diversify your portfolio more aggressive when your young and more conservative the closer you get to retirement
Remember this is an Employee funded investment program.. Make sure this is discretionary income you can afford put aside. Ex. Look at it as a bill and pay it each month, budget it into your finances Dollar Cost Averaging. Investing a fixed amount on a regular basis. This allows you to buy the stock at the current price. If you buy a fund one month at $30 and next month it is $25 you are not all in at $30 your average would be 27.50 Dividends, your funds will automatically invest your dividends. You can not take your money out unless seperation or unforeseeable emergency You are able to diversify within each investment provider. Each provider offers 12 different funds that run the gamote from conservative to aggresive
Health Care cost are going up and the state does offer healthcare during retirement. Deferred Comp is a great way to help pay for healthcare cost. Deferred Comp will help you maintain your current standard of living.
Go over Performance Report. The 12 funds with each company are monitored by us in the bureau of deferred compensation. If you fund is doing bad it can be removed from the list. Compare these funds in the private sector and you will see our fees are lower.
Presentation Slide Show2010 Ec
Austin Deeds Bureau of Deferred Compensation State of Florida Deferred Compensation Program
<ul><li>Deferred Compensation is an employee funded supplemental retirement plan. </li></ul><ul><li>The Deferred Compensation Plan allows you to “defer” or delay receiving a portion of your income. </li></ul><ul><li>The income you receive at retirement will be in addition to your FRS and SSA benefits. </li></ul>The Deferred Compensation Plan
<ul><ul><li>Florida Retirement System (Pension or Investment Plan) </li></ul></ul><ul><ul><li>Social Security Benefits </li></ul></ul><ul><ul><li>Supplemental Savings (Deferred Comp, 401(k), 403(b), etc.) </li></ul></ul>3 Keys to Retirement
<ul><li>Source: Florida Retirement System (www.myfrs.com) </li></ul>“ Even Social Security and FRS benefits combined will provide you with only a portion of your pre-retirement pay. That’s why it’s important to have personal savings in your retirement nest egg.” Florida Retirement System
$34,000 $34,000 $5,440 a year ($453 a month) $16,320 a year ($1,360 a month) Your FRS Benefits Example 1 Example 2 10 Yrs 30 Yrs x x 1.6% 1.6% x x Your years of service Multiply by Benefit % Multiply by average 5 best years salary to find your benefit
<ul><li>In the 1950s, there were 30 people working for every one person receiving benefits. </li></ul><ul><li>Today there are only 3 workers for every beneficiary. </li></ul>Americans Age 65 and Older Source: Social Security Website (www.ssa.gov) Your FRS Benefits
Source: Social Security Website (www.socialsecurity.gov)
<ul><li>Provide employees with one of the key retirement components. </li></ul><ul><li>Help employees secure additional retirement income. </li></ul><ul><li>Decrease employees’ current federal income taxes by delaying a portion of income until retirement. </li></ul>Deferred Compensation Plan Goals
Over time, the account grows in value from interest earned and capital appreciation. It puts your money to work for you through: <ul><li>Immediate Credit (your money is credited to your account each payday) </li></ul><ul><li>Making Pre-Tax Investments (lowers your current tax bill) </li></ul>How Deferred Compensation Works
<ul><li>The President recently signed a bill into law which states that participants who are 70 and a half are not required to minimum distribution for 2009. </li></ul><ul><li>Higher annual contribution rates. </li></ul>New for 2009
<ul><li>Annual deferral amounts: </li></ul><ul><ul><li>$16,500 in 2009 </li></ul></ul>Minimum amount to contribute to Deferred Compensation remains $20/monthly or $10/biweekly pay You can also defer a percentage of your paycheck Deferral Limits
<ul><li>50+ Catch-Up </li></ul><ul><li>Participants age 50 and over may make an additional deferral on top of the new limits: </li></ul><ul><li>$22,000 in 2009 </li></ul>Participants cannot use both features during the same year. <ul><li>Standard Catch-Up </li></ul><ul><li>3 years prior to retiring: </li></ul><ul><li>$33,000 Total in 2009 </li></ul><ul><li>Must sign up for Standard Catch-up </li></ul>Catch-Up Provisions
You can roll a full or partial amount <ul><li>You may roll any accrued leave payments into the Deferred Compensation Plan before you enter DROP </li></ul><ul><li>After terminating DROP, you can roll your DROP Assets into the Deferred Compensation Plan </li></ul>DROP & Accrued Leave
<ul><li>Eligible employees may participate in (and max out) other retirement plans: </li></ul><ul><li>Other 457 deferred compensation plans </li></ul><ul><li>403(b) plans </li></ul><ul><li>401(k) plans </li></ul><ul><li>Traditional IRA plans </li></ul>Have Other Deferral Plans? NO PROBLEM!
<ul><li>You may roll assets from traditional IRA’s, 403(b)’s, 401(k)’s, and other 457 plans into the State of Florida’s Deferred Compensation Plan </li></ul><ul><li>Accounts rolled from a 457 plan into another plan may be subject to the IRS 10% penalty tax if you begin to receive distributions prior to age 59 ½. </li></ul>Portability!
Stocks Bonds Cash Asset Allocation Models 3-5 years from retirement (conservative) 20% 40% 40% 5-0 years from retirement (moderate) 60% 25% 15% 10 or more years from retirement (aggressive) 95% 5%
1. Set realistic goals 2. Choose mutual funds that meet your risk tolerance 3. Invest a fixed amount on a regular basis (dollar cost average) 4. Focus on long-term results 5. Diversify (stocks, bonds, and cash) Keys to Successful Investing
<ul><li>It is never too early or too late to begin saving for your future! </li></ul><ul><li>Do not count on Social Security and the Pension Plan to supply you with all of your retirement needs! </li></ul><ul><li>Higher expenses for medical insurance and healthcare are likely! </li></ul>Start Investing Today
Advantages to Deferred Compensation Compared to Other Retirement Plans <ul><li>Flexibility : </li></ul><ul><li>Participants are able to change providers or deferral amounts at any point throughout the year. </li></ul><ul><li>There are six providers to choose from, and participants may have more than one provider. </li></ul><ul><li>Value : </li></ul><ul><li>Deferred Compensation provides minimal fees for its’ participants, with no administrative fees . </li></ul><ul><li>Deferred Compensation employees are also State Employees and make a salary, not a commission on your investment. </li></ul><ul><li>Excise tax exemption for withdrawing funds before 59 and a half. </li></ul>