“MOVING FORWARD FOR A BETTER FUTURE”

1. 2013 AIM-IRS AMBTS CONFERENCEAUGUST 6 – 9, 2013TUSCANY SUITES & CASINOLAS NEGAS, NVIRS RETIREMENT - JAMES E. HARDAWAYRETIREMENT PLAN – JAMES W. DANIELS, JR. “MOVING FORWARD FOR A BETTER FUTURE”

2. IRS Retirement IRS Retirement Systems • Civil Service Retirement System (CSRS) • Federal Employee Retirement System (FERS) • FERS • Basic Annuity • Thrift Savings Plan (TSP) • Social Security Benefits • Plan your IRS “Exit Strategy”

3. IRS RETIREMENT SYSTEMS • Civil Service Retirement System (CSRS)CSRS is a defined benefit retirement plan. If you were hired before January 1, 1984, you are under CSRS, unless you elected to transfer to FERS. Regular CSRS employees contribute 7.0% of basic pay to the Retirement Fund and law enforcement officers contribute 7.5%. All employees pay an additional 1.45% of basic pay towards the Medicare tax (Part A). The total retirement contribution for a CSRS employee is 8.45% of pay. If you have five years of creditable civilian service covered by CSRS deductions, AND have been subject to CSRS for one of the last two years before your retirement AND also meet the age requirements, you are eligible to retire under the provisions of CSRS. Following retirement, CSRS employees will receive a monthly retirement annuity check for life. • Short Cut Formula: Years of Service; Subtract 2 years; Multiply by 2 ; Plus: .25 = % used as % of Hi 3 average salary

4. IRS RETIREMENT SYSTEMS cont. • Federal Employees Retirement System (FERS)The FERS is a three-tiered plan made up of: a) Basic annuity b) Tax-deferred retirement savings and investment plan called Thrift Saving Plan (TSP) c) Social Security The Office of Personnel Management (OPM) administers the basic benefits portion of FERS. The Social Security Administration has responsibility for administering the Social Security benefits. And the Federal Thrift Investment Board administers the TSP. When eligible, FERS retirees will receive benefits from all three of these agencies. If you were first hired after December 31, 1983, on an appointment with retirement coverage, you are covered by FERS. You are also covered if you transferred to FERS during a FERS open season. To retire under the provisions of FERS, you must have at least five years of creditable civilian service and be covered by FERS on the date of separation. However, unlike CSRS, there is no one out of two year requirement. CSRS service is creditable under FERS if the service was covered by retirement deductions. FERS employees also contribute a total of 8.45% into the retirement fund. You contribute 7.65% Social Security tax, (including the Medicare Part A) and 0.8% of your basic pay into the FERS annuity fund.

5. FERS – Basic Annuity • Basic Annuity • For employees who retire under age 62, the formula is: • 1% x Hi-3 Avg. Pay x Yrs. and mos. of Service • For employees who are at least Age 62 at date of retirement, the formula is: • 1.1% x Hi-3 Avg. Pay x Yrs. and mos. of Service

6. Thrift Savings Plan - TSP • Thrift Savings Plan - a retirement savings plan similar to 401(k) plans offered to private sector employees. The purpose of the TSP is to give you the ability to participate in a long-term retirement savings and investment plan. Visit the TSP website for more detail information www.tsp.gov • Employee Contributions • Regular • Traditional (Pre-Tax) • Roth (After Tax) • Catch-up Contribution (50 & older) • Withdrawals • Partial Withdrawal • Full Withdrawal • Single Payment • Monthly Payments • Life Annuity • Mixed Withdrawal

7. Social Security Benefits • Your Social Security taxes pay for three kinds of benefits: retirement, disability and survivors. For those who qualify, the Social Security retirement benefit is a monthly annuity. However, Medicare (Part A, Hospital Insurance, which covers hospitalization, certain inpatient care, and home health services) is available to all employees whether or not they worked in a position covered by Social Security. This is the 1.45% Medicare deduction on your Statement of Earnings and Leave each pay period. To be covered by Part B, Medical Insurance, which covers doctors fees, most outpatient hospital services, and other related services, you must sign up for it through the Social Security Administration (SSA). • An employee can begin receiving Social Security retirement benefits as early as age 62 (age 60 if a widow or widower), but the benefits will be reduced. Full benefits are payable (and Medicare coverage is available) at age 65 to 67 based on your year of birth.Employees can apply for SSA retirement benefits three months before they are eligible. • Social Security Administration - www.ssa.gov

8. Plan your IRS “Exit Strategy” • Visualize when you want to exit the work force. • Do everything with in your power to stick to your plan. • Take FULL advantage of TSP or other forms of IRAs • Download Pre-Retirement Planning Participant Guide • Currently - This program is canceled until further notice • Document 9921 -http://core.publish.no.irs.gov/docs/pdf/23184b12.pdf • Retirement Checklist (Handout) • Six years before retirement • Five years before retirement • One year before retirement • Six months before retirement • Two months before retirement • Links to Resources (Handout)

9. SPENDING TOO MUCH MONEY ON CLOTHING, ENTERTAINMENT, & OTHER NON-APPRECIATING ITEMS“CONSPICUOUS CONSUMPTION” • “CONSPICUOUS CONSUMPTION” IS AN OLD TERM THAT HAS BEEN COINED AS OF RECENT TO DESCRIBE THE TREND OF BLACKS PURCHASING MORE UNNECESSARY AND OVER-PRICED HIGH-END PRODUCTS WITH THEIR DISPOSABLE INCOME THAN OTHER RACIAL GROUPS. • TWO ANALYTICAL REPORTS DONE ON CONSPICUOUS CONSUMPTION IN 2007: ONE BY THE UNIVERSITY OF PENNSYLVANIA AND TWO BY UNIVERSITY OF CHICAGO PROFESSORS. • FINDING: BASICALLY, THEY FOUND THAT THIS TREND IS INDEED FACTUAL AND, GET THIS, THAT IT IS ALL ABOUT BLACKS SUBCONSCIOUSLY TRYING TO SEND VISIBLE SIGNS OR “SIGNALS” OF WEALTH AND PROSPERITY TO ONE ANOTHER. • ANOTHER PHRASE: “VISIBLE CONSUMPTION” • IN OTHER WORDS, BLACKS DO WASTE MUCH MORE OF THEIR DISPOSABLE INCOME THAN WHITES OF COMPARABLE MEANS.

10. CON’T – “SPENDING TOO MUCH MONEY ON CLOTHING, ENTERTAINMENT, & OTHER NON-APPRECIATING ITEMS”SOLUTIONS • LET’S START TO LIVE BY MANTRA “MAN/WOMAN MAKES THE MONEY; MONEY DOESN’T MAKE THE MAN/WOMAN.” • LET’S GET INTO THE HABIT OF INVESTING IN OURSELVES AND NOT IN OUR THINGS BECAUSE OUR THINGS DON’T DEFINE WHO WE ARE. • LET’S INVEST IN OUR FUTURE GENERATIONS, OUR CHILDREN. • LET’S SEEK OUT A PROFESSIONAL FINANCIAL ADVISOR WHO IS CERTIFIED IN VARIOUS BUDGETING TECHNIQUES. THIS APPROACH IS EXTREMELY IMPORTANT BECAUSE HONEST CONSTRUCTION FEEDBACK HAS TO BE TAILORED TO THAT SPECIFIC INDIVIDUAL. • LET’S GET SERIOUS ABOUT THE FUTURE BECAUSE WITHOUT A RETIREMENT PLAN IN THE PRESENT YOU WILL NEVER, NEVER “MOVE FORWARD FOR A BETTER FUTURE.”

11. CONCLUSION – “SPENDING TOO MUCH MONEY ON CLOTHING, ENTERTAINMENT, & OTHER NON-APPRECIATING ITEMS” • “FOOD FOR THOUGHT” • EXPERTS RECOMMEND YOU SOCK AWAY AT LEAST 10% OF YOUR GROSS INCOME EACH YEAR FOR RETIREMENT; • RETIREES GENERALLY NEED AT LEAST 75% OF THEIR PREVIOUS INCOME TO CONTINUE THEIR STANDARD OF LIVING (MORE IF THEY WANT TO TRAVEL OR INDULGE IN EXPENSIVE HOBBIES; • IT IS SCARY TO THINK THAT ABOUT 60% OF RETIREES 65 AND OLDER GET THE BULK OF THEIR RETIREMENT INCOME FROM SOCIAL SECURITY, AND THE AVERAGE PAYMENT IS ABOUT $1,150 A MONTH; AND, • REALITY “CHECK”: DO YOU WANT TO SURVIVE ON $14,000 A YEAR?

12. 10 STEPS TO GET YOU READY FOR RETIREMENT • STEP 1: DEFINE YOUR RETIREMENT • STEP 2: TAKE STOCK OF YOUR “ASSETS” • STEP 3: EVALUATE YOUR HEALTH – NOW • STEP 4: DETERMINE WHEN TO COLLECT SOCIAL SECURITY • STEP 5: NETWORK THROUGH SOCIAL MEDIA AND OTHER METHODS • STEP 6: DECIDE HOW MUCH YOU WANT (OR NEED) TO WORK • STEP 7: CREATE A RETIREMENT BUDGET • STEP8: FIND NEW WAYS TO CUT YOUR EXPENSES (START SAVING MORE) • STEP 9: PREPARE FOR THE UNEXPECTED • STEP 10: STICK TO YOUR PLAN (WE HUMANS ARE CREATURES OF HABIT AND IT’S COMMON TO REVERT TO OLD HABITS AFTER TRYING A NEW COURSE.) JOIN A COMMUNITY/GROUP OF POSITIVE INDIVIDUALS