Presentation Slide Show2010 Ec

Austin DeedsBureau of Deferred Compensation

State of FloridaDeferred Compensation Program

• Deferred Compensation is an employee funded supplemental retirement plan.

• The Deferred Compensation Plan allows you to “defer” or delay receiving a portion of your income.

• The income you receive at retirement will be in addition to your FRS and SSA benefits.

The Deferred Compensation Plan

1. Florida Retirement System(Pension or Investment Plan)

2. Social Security Benefits

3. Supplemental Savings (Deferred Comp, 401(k), 403(b), etc.)

3 Keys to Retirement

Source: Florida Retirement System (www.myfrs.com)

“Even Social Security and FRS benefits combined will provide you with only a portion of your pre-retirement pay. That’s why it’s important to have personal savings in your retirement nest egg.”

Florida Retirement System

$34,000 $34,000

$5,440 a year

($453 a month)

$16,320 a year

($1,360 a month)

Your FRS Benefits

Example 1 Example 2

10 Yrs 30 Yrs

x x

1.6% 1.6%

x x

Your years of service

Multiply by Benefit %

Multiply by average 5 best years salary to find your benefit

• In the 1950s, therewere 30 peopleworking for every one person receiving benefits.

• Today there are only 3 workers for every beneficiary.

Americans Age 65 and Older

0

20

40

60

80

100

120

1946 1999 2030 2060

in millions

Source: Social Security Website (www.ssa.gov)

Your FRS Benefits

Source: Social Security Website (www.socialsecurity.gov)

• Provide employees with one of the key retirement components.

• Help employees secure additional retirement income.

• Decrease employees’ current federal income taxes by delaying a portion of income until retirement.

Deferred Compensation Plan Goals

Over time, the account grows in value from interest earned and capital appreciation.

It puts your money to work for you through:

• Immediate Credit(your money is credited to your account each payday)

• Making Pre-Tax Investments (lowers your current tax bill)

How Deferred Compensation Works

Advantages of Pre-Tax Investing

Basic Savings Account Deferred Comp Account(Pre-tax)

Gross Income

Pre-tax Investment

Gross Taxable Income

W/H Tax

S.S. & Medicare

After-Tax

After-Tax Investment

Spendable Income

$2,800.00

$0.00

$2,800.00

($355.00)

($214.20)

$2,230.80

($200.00)

$2,030.80

$2,800.00

($200.00)

$2,600.00

($325.00)

($214.20)

$2,060.80

$0.00

$2,060.80

• Great West Retirement Services• T. Rowe Price• Nationwide Retirement Solutions• Valic • ING• Charles Schwab (An Online Brokerage

Account) Enrollment Available through Nationwide

Investment Providers

• Multi-Vendor Website

• Online Daily Account Access

• Online Enrollments

• Online Transactions

• Online Asset Allocation Changes

• Online Planning Tools Through Morningstar and Financial Engines

New Enhancements to theDeferred Compensation Program

Publications and other information are available by phone or the Internet.

www.MyFloridaDeferredComp.com

 (850) 413-3162

Toll-free 1-877-299-8002

How Do I Choose a Company?

www.MyFloridaDeferredComp.com

• The President recently signed a bill into law which states that participants who are 70 and a half are not required to minimum distribution for 2009.

• Higher annual contribution rates.

New for 2009

Annual deferral amounts:$16,500 in 2009

Minimum amount to contribute to Deferred Compensationremains $20/monthly or $10/biweekly pay

You can also defer a percentage of your paycheck

Deferral Limits

Participants cannot use both features during the same year.

Standard Catch-Up

3 years prior to retiring:• $33,000 Total in 2009• Must sign up for

Standard Catch-up

50+ Catch-Up• Participants age 50

and over may make an additional deferral on top of the new limits:

• $22,000 in 2009

Catch-Up Provisions

You can roll a full or partial amount

• You may roll any accrued leave payments into the Deferred Compensation Plan before you enter DROP

• After terminating DROP, you can roll your DROP Assets into the Deferred Compensation Plan

DROP & Accrued Leave

Eligible employees may participate in (and max out) other retirement plans:

• Other 457 deferred compensation plans

• 403(b) plans

• 401(k) plans

• Traditional IRA plans

Have Other Deferral Plans?NO PROBLEM!

• You may roll assets from traditional IRA’s, 403(b)’s, 401(k)’s, and other 457 plans into the State of Florida’s Deferred Compensation Plan

• Accounts rolled from a 457 plan into another plan may be subject to the IRS 10% penalty tax if you begin to receive distributions prior to age 59 ½.

Portability!

A difference of

$206,191

Stocks Bonds Cash

3-5 years fromretirement

(conservative)

20%

40%

40%

5-0 years fromretirement(moderate)

60%25%

15%

10 or more years from retirement

(aggressive)

95%

5%

Asset Allocation Models

1. Set realistic goals

2. Choose mutual funds that meet your risk tolerance

3. Invest a fixed amount on a regular basis (dollar cost average)

4. Focus on long-term results

5. Diversify (stocks, bonds, and cash)

Keys to Successful Investing

• It is never too early or too late to begin saving for your future!

• Do not count on Social Security and the Pension Plan to supply you with all of your retirement needs!

• Higher expenses for medical insurance and healthcare are likely!

Start Investing Today

Advantages to Deferred CompensationCompared to Other Retirement Plans

Flexibility:• Participants are able to change providers or deferral

amounts at any point throughout the year. • There are six providers to choose from, and participants

may have more than one provider. Value: • Deferred Compensation provides minimal fees for its’

participants, with no administrative fees.• Deferred Compensation employees are also State

Employees and make a salary, not a commission on your investment.

• Excise tax exemption for withdrawing funds before 59 and a half.

Questions?

Enjoy Retirement!