presentation slide show2010 ec
TRANSCRIPT
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Austin DeedsBureau of Deferred Compensation
State of FloridaDeferred Compensation Program
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• Deferred Compensation is an employee funded supplemental retirement plan.
• The Deferred Compensation Plan allows you to “defer” or delay receiving a portion of your income.
• The income you receive at retirement will be in addition to your FRS and SSA benefits.
The Deferred Compensation Plan
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1. Florida Retirement System(Pension or Investment Plan)
2. Social Security Benefits
3. Supplemental Savings (Deferred Comp, 401(k), 403(b), etc.)
3 Keys to Retirement
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Source: Florida Retirement System (www.myfrs.com)
“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
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$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
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• In the 1950s, therewere 30 peopleworking for every one person receiving benefits.
• Today there are only 3 workers for every beneficiary.
Americans Age 65 and Older
0
20
40
60
80
100
120
1946 1999 2030 2060
in millions
Source: Social Security Website (www.ssa.gov)
Your FRS Benefits
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Source: Social Security Website (www.socialsecurity.gov)
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• Provide employees with one of the key retirement components.
• Help employees secure additional retirement income.
• Decrease employees’ current federal income taxes by delaying a portion of income until retirement.
Deferred Compensation Plan Goals
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Over time, the account grows in value from interest earned and capital appreciation.
It puts your money to work for you through:
• Immediate Credit(your money is credited to your account each payday)
• Making Pre-Tax Investments (lowers your current tax bill)
How Deferred Compensation Works
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Advantages of Pre-Tax Investing
Basic Savings Account Deferred Comp Account(Pre-tax)
Gross Income
Pre-tax Investment
Gross Taxable Income
W/H Tax
S.S. & Medicare
After-Tax
After-Tax Investment
Spendable Income
$2,800.00
$0.00
$2,800.00
($355.00)
($214.20)
$2,230.80
($200.00)
$2,030.80
$2,800.00
($200.00)
$2,600.00
($325.00)
($214.20)
$2,060.80
$0.00
$2,060.80
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• Great West Retirement Services• T. Rowe Price• Nationwide Retirement Solutions• Valic • ING• Charles Schwab (An Online Brokerage
Account) Enrollment Available through Nationwide
Investment Providers
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• Multi-Vendor Website
• Online Daily Account Access
• Online Enrollments
• Online Transactions
• Online Asset Allocation Changes
• Online Planning Tools Through Morningstar and Financial Engines
New Enhancements to theDeferred Compensation Program
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Publications and other information are available by phone or the Internet.
www.MyFloridaDeferredComp.com
(850) 413-3162
Toll-free 1-877-299-8002
How Do I Choose a Company?
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www.MyFloridaDeferredComp.com
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• 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.
• Higher annual contribution rates.
New for 2009
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Annual deferral amounts:$16,500 in 2009
Minimum amount to contribute to Deferred Compensationremains $20/monthly or $10/biweekly pay
You can also defer a percentage of your paycheck
Deferral Limits
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Participants cannot use both features during the same year.
Standard Catch-Up
3 years prior to retiring:• $33,000 Total in 2009• Must sign up for
Standard Catch-up
50+ Catch-Up• Participants age 50
and over may make an additional deferral on top of the new limits:
• $22,000 in 2009
Catch-Up Provisions
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You can roll a full or partial amount
• You may roll any accrued leave payments into the Deferred Compensation Plan before you enter DROP
• After terminating DROP, you can roll your DROP Assets into the Deferred Compensation Plan
DROP & Accrued Leave
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Eligible employees may participate in (and max out) other retirement plans:
• Other 457 deferred compensation plans
• 403(b) plans
• 401(k) plans
• Traditional IRA plans
Have Other Deferral Plans?NO PROBLEM!
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• 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
• 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.
Portability!
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A difference of
$206,191
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Stocks Bonds Cash
3-5 years fromretirement
(conservative)
20%
40%
40%
5-0 years fromretirement(moderate)
60%25%
15%
10 or more years from retirement
(aggressive)
95%
5%
Asset Allocation Models
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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
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• It is never too early or too late to begin saving for your future!
• Do not count on Social Security and the Pension Plan to supply you with all of your retirement needs!
• Higher expenses for medical insurance and healthcare are likely!
Start Investing Today
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Advantages to Deferred CompensationCompared to Other Retirement Plans
Flexibility:• Participants are able to change providers or deferral
amounts at any point throughout the year. • There are six providers to choose from, and participants
may have more than one provider. Value: • Deferred Compensation provides minimal fees for its’
participants, with no administrative fees.• Deferred Compensation employees are also State
Employees and make a salary, not a commission on your investment.
• Excise tax exemption for withdrawing funds before 59 and a half.
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Questions?
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Enjoy Retirement!