Tuesday, July 9th, 2013

Co-op 401(k) Plan Enrollment for

Farmer’s Cooperative

Why participate?

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taxes on income earned today– Income not taxed until it is withdrawn

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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

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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

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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)

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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)

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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)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

later

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*Combined limit

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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

70½

Amount of time money must be in account

5 years No requirement

Can money be rolled over into a Roth IRA?*

Yes* No

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*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?

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• 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

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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 InvestingInvesting

Preference:

“I’ll do it myself”

Professionally Managed Accounts

Core FundsLEAST VOLATILE MOST VOLATILERISKOMETER

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InvestMap

Professional Management

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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,

CFA

Anthony R. Farella, CFP®,

AIF®

Patrick RoweCRPC

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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

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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

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InvestMap

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• 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

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Keeping track of your account• Three ways to access account

information and initiate transactions1 www.millimanbenefits.com

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Keeping track of your account• Three ways to access account

information and initiate transactions:

8887 0 8 6 9 8 8

2 Benefits Service Center

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Keeping track of your account• Three ways to access account

information and initiate transactions:

Mobile App for iPhone and AndroidView account asset allocation and deferral only

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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

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www.millimanbenefits.comPlanAhead for RetirementTM

Withdrawing money

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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

Thank you!