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Your 457 Plan Plan for your Future

Your 457 Plan Plan for your Future. Benchmarking & Understanding Your 457 Plan. Understanding Your Options & Investment Performance. Agenda. What is a 457 Plan? 2014 457 Contribution Limits & How does a 457 Plan work? 457 Plan Important Features / Wish List & Fiduciary Concerns

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Your 457 Plan Plan for your Future

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  1. Your457 PlanPlan for your Future • Benchmarking & Understanding Your 457 Plan. • Understanding Your Options & Investment Performance. Harbor Retirement Planning | Securities offered through LPL Financial. Member FINRA/SIPC

  2. Agenda • What is a 457 Plan? • 2014 457 Contribution Limits & How does a 457 Plan work? • 457 Plan Important Features / Wish List & Fiduciary Concerns • Why Benchmark Your Plan? Key Benchmarking Considerations • The Financial Markets & How to Understand Your Investments • The Power of Compounding! Make your Money Grow! Harbor Retirement Planning | Securities offered through LPL Financial. Member FINRA/SIPC

  3. What is a 457 Plan? • A Retirement Plan Sponsored by your employer • Designed for state and municipal workers and employees of some tax-exempt organizations • Often a supplement to your employer's pension or basic retirement plan. • Example - 401 Defined Contribution Plan / Pension Plan • Sometimes employers offer a match • Participant driven • Part of “3 Leg Stool” – (1) Pension, (2) Social Security, (3) 457 Plan Harbor Retirement Planning | Securities offered through LPL Financial. Member FINRA/SIPC

  4. 2014 457 Limits – Same as 2013 • $17,500 (in 2013 and 2014) - Deferral limits for 457 plans  • The limit on employee elective deferrals (for traditional and safe harbor plans). • $5,500 (in 2013 and 2014) - Catch-up contributions for those age 50 and over • If permitted by the 457 plan, participants who are age 50 or over at the end of the calendar year can also make catch-up contributions. • Source - http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/ Harbor Retirement Planning | Securities offered through LPL Financial. Member FINRA/SIPC

  5. How Does a 457 Plan Work? • You Decide: • To participate • How much to contribute • How to invest • Two Choices – (1) Pre-Tax or (2) After-Tax (ROTH) contributions into your account • Income taxes deferred on contributions (except ROTH) • Tax deferred or Tax free (ROTH) GROWTH on earnings • You can Start, Stop, Increase or Decrease contributions without penalty • Portable savings Harbor Retirement Planning | Securities offered through LPL Financial. Member FINRA/SIPC

  6. How Does a 457 Plan Work? Continued…. • Payroll deduction convenience • Employer-sponsored cost savings • Fiduciary Oversight • Many investment options • Access to Professional Investment Advice Harbor Retirement Planning | Securities offered through LPL Financial. Member FINRA/SIPC

  7. Pre-Tax v. ROTH • Do contributions reduce taxable income? • Do earnings accumulate tax-deferred? • Are contributions taxed upon withdrawal? • Are earnings taxed upon withdrawal? • Does a 10% early withdrawal penalty apply?* • Do IRS Required Minimum Distribution rules apply? • Are contribution limits the same? Pre-Tax ROTH Yes Yes Yes Yes No Yes Yes No Yes No No, if distribution is qualified No Yes Yes * 10% penalty tax never applies to withdrawals of original 457 plan contributions and associated earnings. But the penalty may apply to non-457 plan assets rolled into a 457 plan and subsequently withdrawn prior to age 59 ½ . Harbor Retirement Planning | Securities offered through LPL Financial. Member FINRA/SIPC

  8. Important Features and Improvements To 457 Plans • You WANT these things as part of your plan….. • Top Mutual Fund Managers – ask for Institutional Pricing • NO Proprietary Mutual Fund Requirements • ROTH option • Professionally Managed Accounts • Self Directed Brokerage Option • Retirement Calculators & Gap Analysis Tools • iPhone Apps – with processing capabilities • Education Plan - Focusing on needs of the plan, whether it’s to increase contributions, get people enrolled, talk about diversification etc. • Seminars & Workshops • Investment Policy Statement – How you monitor investment (the documented process) • Investment Plan Committee – With reps from different departments • Financial / Investment Advise – Someone available to meet with employees and help educate them Harbor Retirement Planning | Securities offered through LPL Financial. Member FINRA/SIPC

  9. Plan Sponsor’s Fiduciary Responsibility • Fiduciary Responsibility Regarding Offering Investment Options: • A 457 plan sponsor has fiduciary responsibility related to offering any investment option for plan participants. This responsibility and the associated risk is heightened if the plan is subject to ERISA. Due to the gathering storm, a plan sponsor should consider its fiduciary responsibility and take steps to lessen the risk related to the 457 plan. To reduce fiduciary liability risk, the plan sponsor should make documented efforts to: • Offer a reasonable choice and range of investment options for employees; and • Offer suitable investment options for the employees' needs • Monitor these investment options for the continued viability and integrity of these options Harbor Retirement Planning | Securities offered through LPL Financial. Member FINRA/SIPC

  10. Why Benchmark Your 457 Plan? • Simple Quick Answer - To Make More Money!! • IF you are a Plan Sponsor – As a plan sponsor you WANT and NEED to benchmark your 457 plan because you have an obligation to your employees and yourself. You want to be sure you have explored your options and understand your 457 plan and the cost associated with it. You want to be confident that you are offering your employees (and yourself) the BEST plan possible. ITS NOT YOUR MONEY! As a Plan Sponsor, you are controlling this money – where it is, costs, investments, features, etc. You need to do a good job for your employees. They are counting on you!! • IF you are a Plan Participant– You want to make sure that the money you are saving for retirement is being managed the BEST that it can be. You want the BEST investments available at a reasonable cost. You want HELP and access to education and tools that can help you achieve your financial retirement goals. Harbor Retirement Planning | Securities offered through LPL Financial. Member FINRA/SIPC

  11. Benchmark ALSO because - YOU Don’t Make The News…… Harbor Retirement Planning | Securities offered through LPL Financial. Member FINRA/SIPC

  12. What to look at when you Benchmark Your 457 Plan • Costs – What are your fees? Are the reasonable? • Features – What tools and features are you getting as part of your plan? • Investments – Are they performing? Costs? Proprietary funds? • Design – Do you have the best features? ROTH, SDBO, Managed Accounts, Target Date Funds? Group Annuity or Open Architecture? • Fiduciary Oversight & Protection – Are you protected? What is your process? • Participant Outcomes – On target to retirement goals? Deferral rates? Harbor Retirement Planning | Securities offered through LPL Financial. Member FINRA/SIPC

  13. Compare your 457 Plan to Others Harbor Retirement Planning | Securities offered through LPL Financial. Member FINRA/SIPC

  14. Independent - Monitoring of YOUR Investment Options & Costs Harbor Retirement Planning | Securities offered through LPL Financial. Member FINRA/SIPC

  15. Executive Summary – Document - Quick Look & Compare Harbor Retirement Planning | Securities offered through LPL Financial. Member FINRA/SIPC

  16. Understanding The Markets, Investments, Your Options • How the Major Markets Work – A little history • Asset Allocation & Why • Investments – Index verse Managed • Target Date Funds – Are they better? • Are YOU on Target? – How close are you to hitting your goals? • Increase your savings! – A little change goes a long way! Harbor Retirement Planning | Securities offered through LPL Financial. Member FINRA/SIPC

  17. 2013 – Market Statistics • S&P 500 – up 26% • Dow Jones Industrial Average – up 23% • NASDAQ – up 30% • Russell 2000 - up 30% • US Aggregate Bond Index – down (- 3.54%) • MSCI EAFE (International) – up 16% • 10 Year Treasury = 2.99% • PRIME Rate = 3.25% (Banks Lend to You) • Federal Discount Rate = 0.75% (Banks borrow from Fed) Harbor Retirement Planning | Securities offered through LPL Financial. Member FINRA/SIPC

  18. The BIG Picture – Understanding The Markets / Diversification Harbor Retirement Planning | Securities offered through LPL Financial. Member FINRA/SIPC

  19. Asset Allocation – Why? Harbor Retirement Planning | Securities offered through LPL Financial. Member FINRA/SIPC

  20. Plans Should have TOP Investment Managers… Some Examples Harbor Retirement Planning | Securities offered through LPL Financial. Member FINRA/SIPC

  21. Target Date Funds – Do You Have Them? Should You? Harbor Retirement Planning | Securities offered through LPL Financial. Member FINRA/SIPC

  22. Increase Your Savings! • Example 1: • Earn $40k per year • Saving 4% • 7.2% Average Rate of Return • 10 Years = $24k • 20 Years = $71k • 30 Years = $167k • INCREASE Saving to 6% • 7.2% Average Rate of Return • 10 Years = $35k (+ $11k) • 20 Years = $107k (+ $36k) • 30 Years = $251k (+ $84k) • *** Only $800 More Year / $33 Per Pay Period Harbor Retirement Planning | Securities offered through LPL Financial. Member FINRA/SIPC

  23. Increase Your Savings! • Example 2: • Earn $60k per year • Saving 4% • 6% Average Rate of Return • 10 Years = $33k • 20 Years = $93k • 20 Years = $201k • INCREASE Saving to 5% AND • 7% Average Rate of Return (+1%) • 10 Years = $44k (+ $11k) • 20 Years = $131k (+ $38k) • 20 Years = $303k (+ $102k) • *** Only $600 More Year / $25 Per Pay Period Harbor Retirement Planning | Securities offered through LPL Financial. Member FINRA/SIPC

  24. Quick Review • Plan Sponsors – Review & Benchmark Your 457 Plan! • Plan Participants – Ask Questions about YOUR Plan & Investments! • Understand The Markets – Stocks & Bonds • Diversity your Money– “Don’t put all your eggs in one basket” • Increase your savings! – A little Change goes a long way! • Ask for Help! – Need Financial Advice– Seek Professional Help Harbor Retirement Planning | Securities offered through LPL Financial. Member FINRA/SIPC

  25. QUESTIONS & Contact Information • Adam K Conway • Financial Advisor • http://www.HarborRetirement.com • Adam.Conway@HarborRetirement.com • 813-789-4846 – Direct Harbor Retirement Planning | Securities offered through LPL Financial. Member FINRA/SIPC

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