Tom Gallagher
Chief Financial Officer
State of Florida
Matthew Pararo
Bureau of Deferred Compensation
• The Deferred Compensation Plan allows
you to “defer” or delay receiving a
portion of your income.
• Deferred Comp is an employee funded
retirement plan.
• The income will be in addition to your
FRS and SSA benefits.
1. Florida Retirement System
(Pension or Investment Plan)
2. Social Security Benefits
3. Supplemental Savings
(Deferred Comp, 401(k), 403(b), etc.
“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.”
Source: Florida Retirement System (www.myfrs.com)
• In the 1950s, there
were 30 people
working for every one
person receiving
benefits.
Americans Age 65 and Older
120
100
80
60
40
• Today there are only 3
workers for every
beneficiary.
20
0
1946
1999
2030
2060
in millions
Source: Social Security Website (www.ssa.gov)
• What three ways will your retirement
most likely be funded?
• FRS System, Social Security Benefits
and Supplemental Savings.
• Provide employees with one of the key
retirement components.
• Help employees secure additional
retirement income.
• Decrease employees’ federal income
taxes by delaying a portion of their
income until retirement.
It puts your money to work for you through:
• Making Pre-Tax Investments
(lowers your tax bill)
• Immediate Credit
(your money is credited to your account each payday)
Over time, the account grows in value from
interest earned and capital appreciation.
Basic Savings .
Account (After-Tax)
Gross Income
$2,000
Pre-Tax Investment
$0
Gross Taxable Income
$2,000
W/H Tax
($400)
S.S. & Medicare
($153)
Deferred Comp
Account (Pre-Tax)
$2,000
($200)
$1,800
($360)
($153)
After-Tax
After-Tax Investment
$1,447
($200)
$1,287
$0
Spendable Income
$1,247
$1,287
•
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AIG VALIC
Great West Retirement Services
ING
Nationwide Retirement Solutions (NRS)
T. Rowe Price
Symetra ShareBuilder (An Online
Brokerage Account)
• Multi-vendor Website
• Online Daily Account Access
• Online Enrollments
• Online Transactions
• Online Asset Allocation Changes
• Online Planning Tools Through
Morningstar and Financial Engines
Publications and other information are
available by phone or the Internet.
www.myfloridadeferredcomp.com
(850) 413-3162
SUNCOM 293-3162
Toll-free 1-877-299-8002
• How many investment providers
are in the Program?
• Six.
Annual deferral amounts increased to:
• $15,000 in 2006
• $500 increase for “cost of living”
increments in 2007 and beyond
Minimum amount to contribute to Deferred Compensation
remains $20/monthly or $10/biweekly pay.
You can also defer a percentage of your pay check.
50+ Catch-Up
Standard Catch-Up
Participants age 50 and over may
make an additional deferral
on top of the new limits:
• $20,000 Total in 2006
• Cost-of-living increases in
$500 increments thereafter
3 years prior to retiring:
• $30,000 Total in 2006
• Cost-of-living increases in
$1000 increments thereafter
Must sign up for Standard Catch-up
Participants cannot use both features during the same year.
• 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
You can roll a full or partial amount
• What is the Deferred
Compensation Website?
• www.myfloridadeferredcomp.com
Eligible employees may participate in (and max
out) other retirement plans:
• other 457 deferred compensation plans
• 403(b) plans
• 401(k) plans
• IRA plans (Roth or traditional)
• At retirement or separation, you may now
roll into/from IRAs, 403(b)s, 401(k)s and
other 457 plans
• 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 1/2
Some types of prior service may qualify
for FRS credits if you wish to buy them.
“…you can use your own money to buy this
time with FRS, increasing your total service
time under the FRS retirement plan.”
“If you have qualifying service for any
length of time in the past (including federal
government or military service)…”
• What is the deferral limit for 2006
if you are under 50?
• $15,000 in 2006, increases by
$500 in 2007 and beyond!
A difference of
$206,191
Stocks
3-5 Years from
Retirement
(conservative)
Bonds
Cash
5-10 Years from
Retirement
(moderate)
10 or More Years
from Retirement
(aggressive)
20%
20%
30%
40%
60%
40%
10%
80%
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. Reinvest dividends
5. Focus on long-term results
6. Diversify (stocks, bonds, and cash)
• It is never to early or to late to begin saving
for your future!
• Do not count on Social Security and the
Pension Plan to supply you with all your
retirement needs!
• Higher expenses for medical insurance and
healthcare are likely!