“The Fundamentals of Planning Your Retirement”...Pension Plan Comparisons Pension Investment Plan Design Defined Benefit Defined Contribution Vesting 6 Years (If after 2011 –8

“The Fundamentals of

Planning Your Retirement”

Duval County Public Schools

Presented By:

Robert Ard, CCO

TSA Consulting Group, Inc.

“The Fundamentals of

Planning Your Retirement”

What is retirement?

FRS Retirement Options

Employer Sponsored Voluntary Retirement Plans

Drop

Special Pay Plan

Money after Retirement

Successful Retirement

Freedom

Financial Freedom

Freedom of Time

Freedom of Choice

Travel

Health Care Covered

When to retire?

After 30 years of service

More years equals a higher factor

Is 62 years old enough?

Can you work longer?

What will your Social Security Benefit be?

Do you have enough saved?

Retirement

At a GlanceYOUR RETIREMENT OPTIONS

AS AN EMPLOYEE OF

DUVAL COUNTY PUBLIC SCHOOLS

Retirement Options

Florida Retirement System

All Full-time employees

Pension Plan

Investment Plan

Florida Retirement System

Pension

Defined Benefit Plan

Years of Service

Age

Average Final Compensation

Investment Plan

Defined Contribution

Contributions amount

Investment Results

FRS Pension

How much income can I expect?

AFC x YOS x Factor

Example: $50,000 x 30 x 1.6% = $24,000

What are my Benefit Payout Options

Life only

Life with 10 year certain

Joint with 100% to the Survivor

Joint with 2/3 to Survivor

FRS Investment Plan

Defined Contribution Plan

Benefits based on

Employer contributions

Investment Returns

Your investment skills

Portability

If you move from an FRS employer to a different

employer, this money moves with you.

FRS Pension & Investment

Plans Health Insurance Subsidy

Contribution made each month by

employer to provide a benefit for the

payment of health insurance premiums

during retirement

Benefit amount = $5.00 per month for each

year of creditable service

Example: 30 years x $5.00 = $150/mo.

FRS Pension & Investment

Plans Changing your mind

Pension to Investment

Actuarial Value of Account

Smaller in early years

Investment to Pension

Buy in at Actuarial Value

Investment results important

Pension Plan ComparisonsPension Investment

Plan Design Defined Benefit Defined Contribution

Vesting6 Years (If after 2011 – 8

years)1 Year

Transfer-abilityNo

Only FRS Employer

Yes

Any eligible plan

Retirement Age

62 or

30 Years of Service (Age 65 if employed after 7/1/11)

Governed by IRS Rules

Investment Management

FRS Self

DROP Eligibility Yes No

Considerations

Career Choices

The longer you stay in the system, the more the

FRS Pension looks good.

The more mobile you are, investment control

(Investment Plan) may be more important

If you are undecided, you have the choice of

changing later.

Problem with this is if market forces change, change may no longer be an option.

Retirement

Your Part!

Personal Savings Options

Non-Employer sponsored savings

Tax Deductible (if you qualify)

IRA

Mutual Funds

Annuities

Stocks, Bonds, etc.

Non-Tax Deductible

Stocks, Bonds

Real Estate

Annuities

Commodities

Etc.

Your Pre-Tax

Retirement Savings

Types of plans available through Duval County

Public Schools

403(b) Tax Sheltered Accounts

457(b) Deferred Compensation Program

401(a) Special Pay Plan

After tax vs. Before tax

Before tax savings (Pre-tax)

Immediate Savings

In a 25% Federal Income Tax bracket you

can increase your savings by 33%.

Pre-Tax savings lower your taxable income

each year

After Tax Savings

Pay taxes before savings. Contribute less withsame take home pay

Pay taxes at your higher tax bracket

24

68

1015

2025

30

$0.00

$20,000.00

$40,000.00

$60,000.00

$80,000.00

$100,000.00

$120,000.00

$140,000.00

Before Tax vs. After Tax Savings

After Tax

Savings

Before Tax

Savings

$100 per month @ 6% for 30 years = $76,223

(after tax)

OR

$133 per month @ 6% for 30 years = $134,268

(before tax)

403(b) Retirement Savings

Available to Education andQualified Non-Profit OrganizationEmployees

Pre-tax savings and accumulation

Savings made through salary reduction

Deposits made to the authorized vendor ofyour choice

Tax Deferral

Account grows without current taxation

457(b) Retirement Savings

Available to Governmental Employees

Governed by IRS and Plan Document

Pre-tax savings and accumulation

Savings made through salary reduction

Deposits made to the authorized vendor of your

choice

Tax Deferral

Account grows without current taxation

Rules for using accounts

Withdrawals

Governed by Internal Revenue Code

Only pay taxes when withdrawn

Loans

Loans up to ½ of account to $50,000

Retirement Income

Take income as you need it afterretirement (Subject to Internal Revenue

Guidelines).

Contribution Guidelines for

403(b) and 457(b)

Basic Limit

$18,000 in 2017

Aged Based Addition

$6,000 additional contribution if you areover 50 years old

Service Based Catch-up

Up to $3,000 additional contributions -403(b) only

Subject to Years of Service and PriorContribution Restrictions

What is DROP?

FRS Pension benefit that was designed

to allow an employee to work past

normal retirement age and increase

their personal wealth through

accumulations in their DROP account.

DROP

Only available to FRS Pension PlanParticipants

After Reaching Qualified Retirement

Employee retires from Pension Plan

Payments made to a trust earning 1.3%

Money available at full retirement

Portability

You may take distribution in cash, utilize arollover, or combination of two.

DROP

When can you DROP?

30 years of Service or Age 62 and

vested

Age 57 if later

Over age 57 if instructional

What happens if I don’t DROP?

Normal Pension

Lose DROP options after one year if you

have reached age limit

DROP

How long can I DROP?

Up to 5 years

What if I want to keep working after

five years

Must come back as a new employee

after being retired for at least one year

What happens at DROP

termination?

DROP Accumulations for most

participants $100,000 to $200,000

DROP Options Take Cash – Pay taxes

Rollover – Defer taxes

Combination Cash & Rollover

Your Bencor

Special Pay Plan

Contributions Made to the

Bencor Special Pay Plan

Accumulated Sick

Leave

Accumulated Annual

Leave

Why do you have the

Bencor Special Pay Plan?

Taxes

Taxes

Taxes

Tax Savings & Deferrals

FICA – SS and MediCare

Taxes

Federal Income Taxes

FICA & Medicare taxes

Without the BENCOR Plan you pay

up to 7.65% in Social Security and

Medicare payroll taxes

With the BENCOR Plan

Avoid all Payroll Taxes

Example: $20,000 x 7.65% = $1,530

savings

Federal Income Taxes

Without the Bencor Plan you

could pay 25%, 31%, 36% or

higher in income taxes

With the Bencor Plan – Defer

all Income Taxes

Control Payment of Income

Taxes

Special Pay Comparison

Without Bencor Plan

$ 10,000.00

2,500.00 Fed Tax

620.00 FICA

145.00 Medicare

6,735.00 Net Pay

With Bencor Plan

$ 10,000.00

$ 0 Fed Tax Deferred

$ 0 FICA Saved

$ 0 Medicare Saved

$ 10,000.00 Deposited

Contribution Limits

Annual Maximum Limits

100% of Salary up to $54,000

Multiple Contributions

Made over Drop Years, or

Final years prior to retirement (subject to employer’s Board Policy)

Contributions during DROPMultiple Annual Contributions

Increasing percentage of Sick and Bank Point leave at end of each year of DROP.

5 Year example: Year 1 20%

Year 2 25%

Year 3 33.3%

Year 4 50%

Year 5 100%

Other Features

Liquidity & Flexibility

Safety

Tax-Deferred Earnings

Optional Investment Accounts

Loans

Employee Instructions

Complete Enrollment

Forms

Address

Beneficiary

Investment Direction

Employee Account

Information

BENCOR Administrative

Services Administers accounts for BENCOR

Offices in Westchester, OH

Employee Account

Information

Using your account (Subject to IRS

Guidelines)

Withdrawals at employment separation

Use as income or take as you need

Loans

½ of account balance up to $50,000 (one time $100 fee)

Change Investments

Over the phone, online

Rollovers – In & Out

Your Money

After Retirement

DROP or Special Pay

Rollover

DROP

Accumulation

IRA

403(b) & 457(b)

401(a)

DROP or Special Pay

Rollover

DROP

Accumulation

IRAExisting IRA

Rollover IRA

59 ½ Minimum Age

Subjects $ to IRA

restrictions

Fees and Charges

DROP or Special Pay

Rollover

DROP

Accumulation 403(b) & 457(b)Existing account

only

Evaluate any fees &

surrender charges

DROP Rollover

DROP

Accumulation 401(a)Existing Account

No surrender

charges

Make final decisions

at later date

Questions & Answers