Deferred Deferred Compensation Compensation

ProgramProgram

Austin DeedsAustin Deeds

State of FloridaState of FloridaDeferred Compensation Deferred Compensation

ProgramProgram

Alex SinkAlex SinkChief Financial OfficerChief Financial Officer

State of FloridaState of Florida

3 Keys To Prepare 3 Keys To Prepare For RetirementFor Retirement

FloridaFlorida Retirement SystemRetirement System(pension or Investment Plan)(pension or Investment Plan)

Supplemental SavingsSupplemental Savings(Deferred Compensation., Individual (Deferred Compensation., Individual

Retirement Accounts, etc.)Retirement Accounts, etc.)

Social Security BenefitsSocial Security Benefits

Your FRS BenefitsYour FRS BenefitsExample 1 Example 2

Your years of service

10 years 30 years

Multiply by X X

X X

1.6% 1.6%Benefit %

Multiply by

Average salary Of 5 best years

To find yourFRS benefit

$34,000 $34,000

$5,400 a year $453 a month

$16,320 a year $1360 a month

Deferred CompensationDeferred CompensationPlan Goals:Plan Goals:

Provide employees with one of the key retirement Provide employees with one of the key retirement components.components.

Help employees secure additional retirement Help employees secure additional retirement income. income.

Decrease employees’ federal income taxes by Decrease employees’ federal income taxes by delaying a portion of your income until retirement.delaying a portion of your income until retirement.

Making Pre-tax InvestmentMaking Pre-tax Investment(lowers your tax bill)(lowers your tax bill)

Immediate CreditImmediate Credit(your money is credited to your (your money is credited to your

account each payday)account each payday)

Over time, the account grows in value Over time, the account grows in value from interest earned and capital from interest earned and capital appreciation.appreciation.

How Deferred Compensation Works:How Deferred Compensation Works:

It puts your money to work for you through:It puts your money to work for you through:

Advantages of Pre-Tax Advantages of Pre-Tax InvestingInvesting

Basic Savings Deferred Comp. Account (After -Tax) Account (Pre -Tax)

Gross Income $2,800 $2,800 Pre -Tax Investment $0 ($200)

Gross Taxable Income $2,800

$2,600

W/H Tax

($355)

($325)

S.S. & Medicare

($214.20)

($214.20)

After -Tax

$2,230.80

After -Tax Investment

($200)

$0

Spendable Income

$2,030.80

$2,060.80

$2,060.80

Investment ProvidersInvestment Providers

AIG Retirement SolutionsAIG Retirement Solutions Great West Retirement ServicesGreat West Retirement Services INGING Nationwide Retirement Solutions (NRS)Nationwide Retirement Solutions (NRS) T. Rowe PriceT. Rowe Price Charles Schwab (An Online Brokerage Charles Schwab (An Online Brokerage

Account)Account)

How Do I Choose A Company?How Do I Choose A Company?

Publications and other information is Publications and other information is available by phone or the Internet.available by phone or the Internet.

www.myfloridadeferredcomp.com 

(850) 413-3162

Toll-free 1-877-299-8002

www.myfloridadeferredcomp.comwww.myfloridadeferredcomp.com

Deferral LimitsDeferral Limits

Annual deferral amounts:Annual deferral amounts:

• $15,500 in 2008 $15,500 in 2008

Minimum amount to contribute to Deferred Minimum amount to contribute to Deferred Compensation remains $20/monthly or $10/biweeklyCompensation remains $20/monthly or $10/biweekly pay.pay.

You can also defer a percentage of your pay. This is You can also defer a percentage of your pay. This is a good way to increase your deferrals when you get a good way to increase your deferrals when you get a pay increase.a pay increase.

The Magic of CompoundingThe Magic of Compounding

A difference ofA difference of

$206,191$206,191!!

$126,228

$332,479

John Linda

Linda John

Same

$200

8.5%

35

Same

$200

8.5%

45

Age

Invest

Yield

Began atage

$0

$50

$100

$150

$200

$250

$300

$325

$350

Keys to Successful Keys to Successful InvestingInvesting

1.1. Set realistic goalsSet realistic goals

2.2. Choose mutual funds that meet Choose mutual funds that meet your risk toleranceyour risk tolerance

3.3. Invest a fixed amount on a regular Invest a fixed amount on a regular basis (dollar cost average)basis (dollar cost average)

4.4. Reinvest dividendsReinvest dividends

5.5. Focus on long-term resultsFocus on long-term results

6.6. Diversify (stocks, bonds and cash)Diversify (stocks, bonds and cash)

Advantages to Deferred CompensationAdvantages to Deferred CompensationCompared to Other Retirement PlansCompared to Other Retirement Plans

FlexibilityFlexibility:: Participants are able to change providers or deferral Participants are able to change providers or deferral

amounts at any point throughout the year. amounts at any point throughout the year. There are six providers to choose from, and participants There are six providers to choose from, and participants

may have more than one provider. may have more than one provider. ValueValue:: Deferred Compensation provides minimal fees for its’ Deferred Compensation provides minimal fees for its’

participants, with participants, with no administrativeno administrative fees fees.. Deferred Compensation employees are also State Deferred Compensation employees are also State

Employees and make a salary, not a Employees and make a salary, not a commissioncommission on on your investment.your investment.

Excise tax exemption for withdrawing funds before 59 Excise tax exemption for withdrawing funds before 59 and a half. and a half.

Questions?Questions?