Tuesday, July 9 th, 2013 Co-op 401(k) Plan Enrollment for Farmer’s Cooperative.

transcript

Tuesday, July 9th, 2013

Co-op 401(k) Plan Enrollment for

Farmer’s Cooperative

Why participate?

• Contributions are pre-tax– Amount deducted from paycheck has less

effect on take-home pay– Can reduce the overall amount you pay in

taxes on income earned today– Income not taxed until it is withdrawn

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

Why participate? • Investing pre-tax saves you money

401(k) Retirement Plan

(pretax)Regular Investment

(taxable)

Gross income $1.00 $1.00

Minus taxes -$0 -30%

Amount available to invest

$1.00 $0.70

Plus annual return +10% +10%

Balance after one year $1.10 $0.77

Are gains taxable? No Yes

Example taken from “The Power of Pretax Investing,” by David Bach.

Getting started

• Am I eligible? – Understand your company’s eligibility

requirements:• Age - (21 Years of Age)• Service - (1 year)• Entry date - (Monthly)

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)

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

Roth 401(k)

• The Roth 401(k) is a another

retirement savings/contribution

option

• Hybrid of the Roth IRA and a 401(k)

Roth 401(k)Roth 401(k)

Traditional 401(k)

Automatically deducted from paycheck

Yes Yes

When deducted? After-tax Pre-tax

Regular/catch-up contribution limits (2013)

$17,500/$5,500* $17,500/$5,500*

Can employers match?

Yes, treated as pre-tax money

and is taxed later

Yes, treated as pre-tax money and is taxed

*Combined limit

Roth 401(k)Roth 401(k)

Traditional 401(k)

Age at which distributions allowed without penalty

59½ 59½

Age at which you must begin distributions

After retirement or 70½

After retirement or

Amount of time money must be in account

5 years No requirement

Can money be rolled over into a Roth IRA?*

Yes* No

*Funds may not be able to be distributed until 5 years from date of rollover, unless transferred to pre-existing Roth IRA

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?

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?

Three Tiers of InvestingInvesting

Preference:

“I’ll do it myself”

Professionally Managed Accounts

Core FundsLEAST VOLATILE MOST VOLATILERISKOMETER

InvestMap

Professional Management

Professional ManagementAgri-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,

Anthony R. Farella, CFP®,

Patrick RoweCRPC

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.

Core Funds

Core FundsAsset 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

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.

Keeping track of your account

Keeping track of your account• Three ways to access account

information and initiate transactions1 www.millimanbenefits.com

information and initiate transactions:

8887 0 8 6 9 8 8

2 Benefits Service Center

information and initiate transactions:

Mobile App for iPhone and AndroidView 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

PlanAhead for Retirement

Tools to assist participants

www.millimanbenefits.comPlanAhead for RetirementTM

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

Withdrawing your money• Vesting

– Your contributions always fully vested

• Company Contribution– 6 year vesting on employer match– 6 year vesting on optional profit sharing

Thank you!

Tuesday, July 9 th, 2013 Co-op 401(k) Plan Enrollment for Farmer’s Cooperative.

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