Co-op 401(k) Plan
Enrollment for
Farmer’s Cooperative
Tuesday, July 9th, 2013
Why participate?
Why participate?
• Contributions are pre-tax
– Amount deducted from paycheck has less effect on takehome pay
– Can reduce the overall amount you pay in taxes on income
earned today
– Income not taxed until it is withdrawn
3
Why participate?
• Payroll deductions are convenient
– Automatically deducted from paycheck
– Increase at any time via web or Benefit Service Center
– Set up automatic increases on MillimanBenefits.com
4
Why participate?
• Investing pre-tax saves you money
401(k) Retirement Plan
(pretax)
Gross income
Minus taxes
Amount available to invest
Plus annual return
Regular Investment
(taxable)
$1.00
-$0
$1.00
+10%
Balance after one year
$1.10
Are gains taxable?
No
Example taken from “The Power of Pretax Investing,” by David Bach.
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$1.00
-30%
$0.70
+10%
$0.77
Yes
Getting started
Getting started
• Am I eligible?
– Understand your company’s eligibility requirements:
• Age - (21 Years of Age)
• Service - (1 year)
• Entry date - (Monthly)
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Getting started
• Contribution limits
– No more than 50% of salary
– $17,500 (2013 IRS Limit)
– Additional $5,500 if 50 or older (2013 IRS Limit)
• Employer Contribution
– 50% of 4% match.
– Profit Sharing (1000hrs/last day requirement)(Optional)
8
Getting started
• Can roll over money from:
– Previous employer’s pension, profit sharing, or savings/thrift
plan
– Rollover IRA
– Even if you are not yet eligible to contribute to the Plan
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Roth 401(k)
Roth 401(k)
• The Roth 401(k) is a another retirement
savings/contribution option
• Hybrid of the Roth IRA and a 401(k)
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Roth 401(k)
Automatically deducted
from paycheck
When deducted?
Regular/catch-up
contribution limits (2013)
Can employers match?
Roth 401(k)
Traditional 401(k)
Yes
Yes
After-tax
Pre-tax
$17,500/$5,500*
$17,500/$5,500*
Yes, treated as pre-tax
money and is taxed
later
Yes, treated as pretax money and is
taxed later
*Combined limit
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Roth 401(k)
Roth 401(k)
Traditional
401(k)
59½
59½
Age at which you must
begin distributions
After retirement or
70½
After retirement
or 70½
Amount of time money
must be in account
5 years
No requirement
Can money be rolled
over into a Roth IRA?*
Yes*
No
Age at which
distributions allowed
without penalty
*Funds may not be able to be distributed until 5 years from
date of rollover, unless transferred to pre-existing Roth IRA
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Is the Roth 401(k) right for you?
• Do you believe you will be in a higher tax
bracket after you retire than you are now?
• Will you be close to the income limits
over which you are taxed for Social
Security?
• Can you afford it?
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Investing your money
Investing your money
• Your investor profile
– What is your risk tolerance?
– Where does your style fall in the range from
conservative to aggressive?
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Three Tiers of Investing
Investing
Preference:
“I’ll do it myself”
Core Funds
LEAST VOLATILE
RISKOMETER
MOST VOLATILE
InvestMap
Professionally Managed Accounts
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Professional
Management
Professional Management
Agri-Invest – A Division of Rockbridge Investment Management
– Professionally managed accounts
• Agri-Invest specializes in working with people in agriculture
• Accounts reviewed and adjusted periodically
• Asset allocation based on personal demographics
– Providing objective investment management:
• Since 1999
• With $25 million managed assets in program
• 1,000+ participants
Craig A.
Buckhout, CFA
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Anthony R. Farella,
CFP®, AIF®
Patrick Rowe
CRPC
Professional Management
• Objectives of the PMA
– As a Registered Investment Advisor, Agri-Invest is duty
bound to act in the best interest of each participant. The
two most important services include:
• Objective investment decisions based on the unique risk
tolerance and goals of the participant.
• Investment strategy with diversification at the lowest cost.
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Core Funds
Core Funds
Asset class
Fund
Ticker
Stable asset fund
Galliard Stable Asset
N/A
Bond
PIMCO Total Return Institutional
PTTRX
Inflation Protected Bond
Vanguard Inflation-Protected Securities Fund
VAIPX
Balanced
Vanguard Wellington Admiral
VWENX
Large-cap value
Vanguard Windsor II Admiral
VWNAX
Index stock
Vanguard Institutional Index
VINIX
Large-cap growth
MainStay Large Cap Growth I
MLAIX
Mid-cap value
JP Morgan Mid-Cap Value Select
JMVSX
Mid-cap growth
T. Rowe Price Mid-Cap Growth
RPMGX
Small-cap value
Allianz NFJ Small Cap Value Fund
PSVIX
Small-cap index
Vanguard Small-Cap Index Signal
VSISX
Small-cap growth
Vanguard Explorer Admiral
VEXRX
Intnat’l large-cap value
Dodge & Cox International Stock
DODFX
Intnat’l large-cap blend
Vanguard Internat’l Growth Admiral
VWILX
Intnat’l large-cap growth
Artisan International Fund
ARTIX
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InvestMap
InvestMap
• What is InvestMap?
– age-appropriate investment allocation approach
• Uses the Plan’s underlying funds
– Automatically becomes more conservative as you near
retirement age.
– Agri-Invest has constructed 5 different allocations to
allow personalization in retirement strategy.
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Keeping track of your account
Keeping track of your account
• Three ways to access account information
and initiate transactions
1
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www.millimanbenefits.com
Keeping track of your account
• Three ways to access account information
and initiate transactions:
2
Benefits Service Center
888
7 0 8
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6 9 8 8
Keeping track of your account
• Three ways to access account
information and initiate transactions:
3
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Mobile App for iPhone and Android
View account asset allocation and deferral only
Keeping track of your account
• Account statements
• For each investment fund:
–
–
–
–
–
–
Balance at beginning of quarter
Contributions
Investment earnings
Distributions
Balance at end of quarter
Percent of total account
balance
– Personal rate of return
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PlanAhead for Retirement
Tools to assist participants
www.millimanbenefits.com
PlanAhead for RetirementTM
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Withdrawing money
Withdrawing your money
• When you leave your company
– If more than $1,000, can leave it in the account until age
70½
– Lump sum distribution
– Roll money over into another retirement account
– Partial distribution
– Combination of distribution and rollover
– Recurring payments
– Taxes and penalties may apply
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Withdrawing your money
• Vesting
– Your contributions always fully vested
• Company Contribution
– 6 year vesting on employer match
– 6 year vesting on optional profit sharing
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Thank you!