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Sample XYZ Company Employee 401(k) Retirement Plan

Sample XYZ Company Employee 401(k) Retirement Plan. Transamerica Insurance & Investments. Your Social Security Benefit.

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Sample XYZ Company Employee 401(k) Retirement Plan

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  1. Sample XYZ CompanyEmployee 401(k) Retirement Plan Transamerica Insurance & Investments

  2. Your Social Security Benefit The Social Security Administration will give you a benefit estimate at your request. Call (800) 772-1213 and ask for a “Request for Earnings & Benefit Estimate Statement”. Fill out the form and mail it back. The Social Security Administration will send you a report (in three to four weeks) that shows your employment history and an estimate of your benefits.

  3. WHAT IS IT? • IRS regulations allowing for employee income deferral before taxes. • An employee benefit. • A vehicle available to employees which provides for long-term growth of retirement income.

  4. WHAT DOES ITMEAN TO ME? • Accumulative savings for retirement. • Current year income tax reduction. • No tax on earnings as they grow. • Future tax advantages when you receive your income. • Competitive investment yields with Transamerica.

  5. HOW DOES IT WORK? • You elect a deferral of your income in the form of a percentage of pay (1%-15%). • Your company may match a percentage of the salary you defer on a discretionary basis. • Your annual taxable income reported to the IRS is reduced by your elected deferral. • Your deferred income is owned by you and will accrue at a competitive current rate of interest, tax-deferred, with Transamerica.

  6. Sample XYZ Company 401(k) Plan Highlights 1) Plan Effective Date: April 1, 1997 2) Maximum Deferral: 15% of Salary 3) Company Contribution: Discretionary 4) Eligibility Requirements: Age 21 and 12 Months of Service 5) Monthly Entry Dates: January 1st, & July 1st 6) Change in Investment Mix: Daily 7) Normal Retirement Date: Age 65 8) Early Retirement Date: Age 55 and 10 Years of Service 9) Vesting of -Elective Contributions: 100% Immediate -Employer Contributions: Begins from Date of Hire Years of Service Vested Percentage Less than 3 0% 3 but less than 4 20% 4 but less than 5 40% 5 but less than 6 60% 6 but less than 7 80% 7 or more 100% 10) Death/Total Disability: 100% Vesting 11) Hardship Withdrawals: of Your Elective Deferrals Permitted 12) Loans: Permitted with a Minimum of $1,000 13) 24-Hour Fund Performance Hotline-- Call (800) 382-8661 14) Transamerica’s Website Address: www.ta-retirement.com

  7. Does 401(k) Cut my Pay? Assuming you are saving now on an after tax basis; your net take home pay will actually increase. Here’s how: Assumes a $20,000 Annual Salary Without 401(k) With 401(k) Current Pay $20,000 $20,000 401(k) Deferral (6%) ______ 1,200 Taxable Income $20,000 $18,800 Tax (20%) 4,000 3,760 Net Pay $16,000 $15,040 Personal Savings 960 _______ Net Take Home Pay $15,040 $15,040 Tax Savings $ -0- $ 240 Plus your 401(k) Savings -0- 1,200 Plus Employer Match -0- 0 TOTAL SAVINGS $ 960 $ 1,440

  8. The Benefit of Investing Early Annual # of years Total Accumulative Age Contribution in plan Contribution value @ 65 Participant A 20 $2,000 9 $18,000 $465,168 Participant B 30 $2,000 36 $72,000 $404,141 Assumes an 8% Annual Rate of Return

  9. How Should I Invest My Plan Contributions? Good question. Especially when you consider the difference just a few percentage points of additional investment return can make on your accumulated balance, as this chart shows: Investment of $100 per Month Assumed Investment Return Years 6% 8% 10% 12% 10 $16,470 18,417 20,655 23,234 20 46,435 59,295 76,570 99,915 30 100,954 150,030 227,933 352,991 40 200,145 351,428 637,428 1,188,242 The right answer for you depends on a number of factors in your own personal situation. These include: How many years until you need to liquidate your account? What other investments do you have? What is your investment goal? What level of risk are you willing to take? Before you try to analyze your answers to these questions, remember a basic theory of investing: over time, you should be rewarded for taking greater risk. For example, despite its ups and downs, over any ten year period in the last 70 years- the stock market has outperformed any other investment category. This is not to say that everyone should invest in the stock market. Every individual is different and has different risk tolerance levels. One way to lower your risk but still participate in the market is to diversify your investments... the old “don’t put your eggs in one basket” theory. With this strategy, even if one type of investment does poorly, the other types are likely to do better.

  10. Asset Classifications • CASH Investing money in very short term securities such as T-Bills • BONDS Lending Money to Governments or Corporations • STOCKSOwning a piece of a company

  11. Types of Risk • Market Risk -Short Term -Risk of losing money due to market fluctuations • Inflation Risk -Long Term -Risk that your investments won’t earn enough to maintain purchasing power

  12. Risk Classifications Examples of Three Investment Strategies Conservative 5% Cash 55% Bonds 40% Stocks Moderate 5% Cash 30% Bonds 65% Stocks Aggressive 15% Bonds 85% Stocks Whatever strategy is right for you, remember, you have the flexibility to change it if your situation or goals change. The keys to successful investing are knowing your risk tolerance, planning a long-term strategy and diversification. Where Do You Fit In?

  13. Your Investment Options A broad range of investment funds!

  14. Your Investment Options Sample XYZ Company Selected Funds TA PBHG Emerging Growth TA Janus Worldwide Fund Transamerica Equity Fund TA Brandywine Transamerica Equity Index TA Fidelity Equity Income II TA Putnam Asset Allocation: Growth TA Putnam Asset Allocation: Balanced Transamerica Bond Transamerica Cash Management Examples of Three Investment Strategies Conservative 5% Cash 55% Bonds 40% Stocks Moderate 5% Cash 30% Bonds 65% Stocks Aggressive 15% Bonds 85% Stocks Whatever strategy is right for you, remember, you have the flexibility to change it if your situation or goals change. The keys to successful investing are knowing your risk tolerance, planning a long-term strategy and diversification. • Aggressive • Moderate • Conservative

  15. Assess Your Financial Picture • How Much Have I Saved? • How Much Money Will I Need? • Risk Tolerance Market & Inflation Risk • Time Horizon How many years until I retire?

  16. Your Game Plan • Assess your Financial Picture • Save Early on a Pre-tax Basis • Save Regularly - Dollar Cost Averaging • Understand Basic Investment Concepts • Expect Years With Losses! • Develop a Long Term Game Plan • Review that Plan Periodically

  17. Questions? Service Contact @ Penco: Customer Service 800-999-9999 cust.svc@penco401k.com Sample XYZ Company Contact: Employer Contact Sample XYZ Company Transamerica Contact: Mark L. Shaffer, Pension Specialist Executive Benefit Plans, Inc. 1-800-622-2411 mshaffer@benefitplans.com www.benefitplans.com/client

  18. www.benefitplans.com/client

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