Well Well
The Wise Choice for Educators The Combined 457(b) and 403(b) Plan Sponsored by Illinois Public Pension Fund Association (IPPFA)
Plan Well
Live Well The life you want in retirement begins right here, right now.
Welcome to The Wise Choice For Educators! As an association of public sector employees responsible for managing pension fund assets in excess of eighteen billion dollars, the Illinois Public Pension Fund Association (IPPFA) created THE WISE CHOICE FOR EDUCATORS to make sure that public sector employees had access to supplemental savings plans that were created in their best interests, not the interests of the sales person, broker or insurance company. IPPFA believes that no employee should have to pay higher fees or receive less service because he or she works for a small or medium size school district. Our plan offers the same pricing and plan design (including access to 457(b) and 403(b)) to all employees, regardless of the size of the district. This plan was built by pooling the buying power of hundreds of public sector employers. Through a competitive bidding process, IPPFA chose Transamerica Retirement Solutions (Transamerica) to be our provider. Transamerica is a firm dedicated exclusively to providing retirement savings plans. One of the reasons we chose Transamerica as our provider is that they focus all their resources on giving you the planning tools and guidance you need to achieve your retirement goals. From the day you're hired, THE WISE CHOICE FOR EDUCATORS will support you through each stage of the retirement planning process.THE WISE CHOICE FOR EDUCATORS program will be with you every step of the way. Please read through this booklet so you can better understand this valuable program. Be sure to enroll as soon as possible so you can begin maximizing this valuable benefit.
James M. McNamee, President Illinois Public Pension Fund Association
2
Maximize your Wise Choice for Educators Plan
Enroll today – Sign in online at my.trsretire.com or call 888‐676‐5512.
Catch up on your contributions (must be age 50 or older).
Designate your beneficiary. Complete the online Beneficiary Designation form.
Reduce your clutter. Sign up for e‐documents today.
Schedule automatic annual increases through our free auto‐increase service.
Rebalance your account automatically by using Auto‐Rebalance.
As an active participant, you can access your retirement account 24/7 by signing in to my.trsretire.com or calling us toll‐free at 800‐755‐5801. You may also speak with a customer service representative for enrollment assistance, investment guidance, and retirement planning support. First‐time online users my.trsretire.com
First‐time callers 888‐676‐5512
Questions? Visit my.trsretire.com 3
Plan Highlights Illinois Public Pension Fund Association Retirement Plan is a valuable employee benefit—and one of the most powerful ways to build your retirement savings. Take a few minutes now to read through these plan highlights and learn more about all the features and benefits your plan includes. You’ll find more about when you can join, how much you can contribute, when you can make changes, and how you can access your savings. Just keep in mind this is simply a quick overview of your benefits.
457(b) or 403(b) Which plan is right for me? Both 457(b) and 403(b) plans are payroll deduction savings plans aimed at helping you save additional money for retirement. These plans supplement your defined benefit plan. Both plans offer pre-tax contributions that provide tax deferred earnings with distributions taxable upon receipt or a Roth provision, where contributions are post-tax and earnings are tax free. The plans have the same contribution limits and the limits do not coordinate or integrate with each other; you can fully fund both plans. Most of our personal budgets do not permit us to fully fund both plans. Generally, the common practice is to fully fund one and only use the second plan when you wish to exceed the single plan contribution limit. That begs the question: “Which plan should I use if I defer less than $18,000 annually?” The primary differences in 457(b) and 403(b) is access to funds contributed pre-tax while still employed and taxation of those distributions prior to and after age 59 1/2.
Visit my.trsretire.com
4
Access to Funds while employed (in-service access)
Both plans allow you to access your funds while you are employed via loans or hardships. While the loan provisions are identical, there are differences in the hardship rules that specifically impact those who wish to use this provision for the purchase of a primary residence or for funding college education. In these two areas 403(b) is considered more flexible. However, most financial planners would advise that your 403(b) plan is not the appropriate place to access college funds once you take into consideration the 10% excise tax and the income taxes paid on the distribution. After attainment of age 59½, in-service distributions are permitted from the 403(b) plan without the excise tax and could change the analysis.
Taxation of Distributions at separation of service After separation of service, 457(b) pre-tax distributions are not subject to a 10% excise tax for severance or retirement distributions prior to age 59½. 403(b) distributions are subject to the excise tax under these circumstances. The excise tax is in addition to the regular income tax due. This is especially important for those that expect to: Retire before age 59 ½ Not spend your entire career in your current district While neither of the above may be planned, they may occur none the less. Which tax code section is best for you depends upon when you think you may need access to your funds.
Roth 457(b) and 403 (b) You may make all or a portion of your contribution into either the 457(b) or 403(b) Plan as an after-tax Roth contribution. The funds will grow tax free. Distributions are received tax free as long as the funds were in the plan for five years and the withdrawal is taken after age 59½. When considering using Roth provisions there are additional factors that must be considered. Please contact your Plan Representative for assistance in analyzing your options.
Which Plan is Right for Me? 457(b) or 403(b) – Which Plan is Right for Me? 457(b)
403(b)
$18,000
$18,000
Yes
Yes
$6,000
$6,000
Up to $18,000
N/A
Loans
Yes
Yes
Hardships
Yes
Yes
Automatic Hardships for Purchase of Primary Residence
No
Yes
Contribution Limits 2017
Roth Available Age 50 Catch-Up Rule Alternative Catch-Up
Visit my.trsretire.com
5
Automatic Hardships for children’s College Tuition
No
Yes
Start Distributions at any age with separation of service without 10% excise tax
Yes
No
Access Money without Separation of Service Hardship or loan only.
Yes, If you’re older than 59½ you have access to all contributions. Roth contributions need to be in the plan for at least 5 years before they can be distributed
On-Demand Representatives IPPFA Benefits is the exclusive marketer of the Wise Choice for Educators Plan. We have dedicated representatives who are available to meet with you on a one to one basis. To schedule an appointment or to just talk to us at any time, please call: IPPFA Benefits- 866-994-6312 Joel Babbitt Debby Karton Kevin O’Brien Brandon Blough
457(b) Eligibility
773-617-9690 (cell) 847-922-1191 (cell) 312-340-9778 (cell) 217-306-2041 (cell)
[email protected] [email protected] [email protected] [email protected]
457(b) Plan Specifics
You are immediately eligible to participate in the plan.
How Much Can I Contribute? You may choose to make contributions up to the maximum allowed by law. The annual IRS dollar limit of $18,000 applies for 2017. This limit is indexed annually by the IRS. If you are age 50 or older (or you reach age 50 during the current calendar year), you can make additional catch-up contributions up to $6,000 in 2017. In the three calendar years prior to the year of retirement with a pension that is not actuarially reduced, you may be eligible to use the “Alternative catch up rule.” You can defer the entire amount into both 457(b) and the 403(b). The two plans do not coordinate or integrate with each other for this purpose.
What Do I Do With Money in another 457(b) Plan If you have an existing retirement plan account with a prior employer, you may roll over that account into this plan at any time. Consolidating your retirement accounts makes it easier for you to make sure your investment strategy is on track for meeting your retirement goals. Please contact your IPPFA Benefits representative for more information
Visit my.trsretire.com
6
Vesting Vesting refers to your "ownership" of your account. You are always 100% vested in your contributions to this plan.
Access to Funds while employed There are two ways to access your funds while you are employed (in-service access): loans or hardships
Loans You may borrow from the plan, using your account as security (conditions and restrictions may apply). All loans with same employer plan are aggregated for these limits. You must count both your Wise Choice 403(b) and 457(b) together for this purpose. Minimum loan amount: $1,000 Maximum loan amount: 50% of your vested account balance, up to $50,000 General loan interest rate: Prime Maximum general loan term: 5 years. If for primary residence, then the loan may be amortized over 15 years. Loan Origination fee: A one-time set-up fee of $75 per loan deducted from your account. Maximum number of outstanding loans: 2
Withdrawals
Vested funds may be withdrawn from your plan account in these events:
Termination of employment or retirement (any age*) Unforeseeable emergency (as defined by IRS Regulations) Disability Death
Distributions must begin no later than the later of attainment of age 70½ or retirement. Please see your Plan Administrator for additional important information about your future distribution election. *There is NO excise tax on distributions made from pretax contributions after separation of service from 457(b) plans, regardless of age. If using Roth Provision, you must be age 59½ and the money must be on deposit for 5 years to withdrawal without penalty.
Roth 457 You may make all or a portion of your contribution as an after-tax Roth contribution. The funds will grow tax free. Distributions are received tax free as long as the funds were in the plan for five years and the withdrawal is taken after age 59 1/2.
Expenses The Wise Choice for Educators Plan includes no annual account fee, no wrap fees and no contingent deferred sales charges. The participant will pay only the fee listed on the fund sheets. If the participant exercises Schwab Personal Choice Retirement Account® (PCRA), there is a $50 annual fee imposed by Charles Schwab.
Visit my.trsretire.com
7
Schwab Personal Choice Retirement Account® (PCRA) Schwab PCRA is a not a fund but rather a participant self-directed brokerage account maintained at Charles Schwab & Co., Inc. Participants must individually apply for PCRA and are solely responsible for their fund selections made under the PCRA. Commissions and transaction fees may apply to fund trades placed outside of the Schwab Mutual Fund OneSource® program or trades on other investment vehicles available through Schwab. An annual fee of $50 will be applied by Transamerica if you invest in the Schwab PCRA. Securities purchased through the PCRA are available through Charles Schwab & Co. Inc., (Member SIPC). Charles Schwab & Co., Inc. is not affiliated with Transamerica Retirement Solutions .
Investment Direction You decide how your account will be invested among the available investment options. You may change your investment allocation at any time. Transfers among investment options may be made at any time and may be subject to certain restrictions. The available investment options are presented as follows in groups to illustrate the applicable transfer restrictions. Investment Group A: TFLIC Fixed Fund Investment Group B: Schwab PCRA Investment Group C: All other funds Monies in a Group A investment option cannot be transferred to a Group B investment option. Monies transferred from a Group A investment option to a Group C investment option must remain in this investment option for at least 90 days before they may be transferred to a Group B investment option or back to a Group A investment option.
Beneficiary Designation It is necessary that you designate a beneficiary for The Wise Choice 457(b) Plan so that your assets can be distributed according to your wishes upon your death. Please complete the Beneficiary Designation which may be downloaded from my.trsretire.com and follow the instructions on the form for mailing.
403(b) Eligibility
403(b) Plan Specifics
You are immediately eligible to participate in the plan. However, if you are in one of the following group(s), you may not be eligible to participate in the plan
Employees who are students performing services described in Code Section 3121(b)(10) Employees who normally work less than 20 hours per week Some employers have implemented additional restrictions if you are working less than full time. Please check with your Human Resource Department for specifics.
How Much Can I Contribute? You may choose to make contributions up to the maximum allowed by law. You may increase, decrease or stop your contributions at any time. An annual IRS dollar limit of $18,000 applies for 2017. This limit is indexed annually by the IRS. If you are age 50 or older (or you reach age 50 during the current calendar year), you can make additional catch-up contributions up to $6,000 in 2017. You may designate your contributions as traditional pre-tax contributions, after-tax Roth contributions, or a combination of both. You may have the Roth contributions in both the 403(b) Plan and the 457(b) Plan.
Visit my.trsretire.com
8
You can defer the entire amount into both the 457(b) and the 403(b). The two plans do not coordinate or integrate with each other for this purpose.
What Do I Do with Money in another 403(b) Plan? If you have an existing retirement plan account with a prior employer, you may roll over that account into this plan at any time. Consolidating your retirement accounts makes it easier for you to make sure your investment strategy is on track for meeting your retirement goals. Please see “Consolidating your retirement and supplemental savings asset” section at the end of this section
Vesting Vesting refers to your "ownership" of your account. You are always 100% vested in your contributions to this plan.
Loans You may borrow from the plan, using your account as security (conditions and restrictions may apply). All loans with the same employer plan are aggregated for these limits. You must count both your Wise Choice 403(b) and 457(b) together for this purpose. Minimum loan amount: $1,000 Maximum loan amount: 50% of your vested account balance, up to $50,000 General loan interest rate: Prime Maximum general loan term: 5 years. If for primary residence, then the loan may be amortized over 15 years. Loan Origination fee: A one-time set-up fee of $75 per loan deducted from your account. Maximum number of outstanding loans: 2
Withdrawals You may withdraw funds from your plan account in these events (conditions and restrictions may apply as defined in the plan):
After age 59 1/2 Termination of employment (Subject to age 59½ rule on “penalty taxation” and Roth restrictions, if applicable) Financial hardship as defined in IRS regulations Disability Death
Roth 403(b) You may make all or a portion of your contribution as an after-tax Roth contribution. The funds will grow tax free. Distributions are received tax free as long as the funds were in the plan for five years and the withdrawal is taken after age 59 1/2.
Visit my.trsretire.com
9
Expenses
The Wise Choice for Educators Plan includes no annual account fee, no wrap fees and no contingent deferred sales charges. The participant will pay only the fee listed on the fund sheets. If the participant exercises Schwab Personal Choice Retirement Account® (PCRA), there is a $50 annual fee imposed by Charles Schwab. .
Investment Direction You decide how your account will be invested among the available investment options. You may change your investment allocation at any time. Transfers among investment options may be made at any time and maybe subject to certain restrictions. The available investment options are presented below in groups to illustrate the applicable transfer restrictions. Investment Group A: Fixed Fund Investment Group B: Schwab PCRA Investment Group C: All other funds Monies in a Group A investment option cannot be transferred to a Group B investment option. Monies transferred from a Group A investment option to a Group C investment option must remain in this investment option for at least 90 days before they may be transferred to a Group B investment option or back to a Group B investment option.
Beneficiary Designation It is necessary that you designate a beneficiary so that your assets can be distributed according to your wishes upon your death. Please complete the Beneficiary Designation which may be downloaded from my.trsretire.com and follow the instructions on the form for mailing.
Can I use these funds to buy “years” towards my pension? Yes, this is called a permissive service credit. You may use both 457(b) or 403(b) funds for this purpose. It is a direct transfer to your governmental pension. If you want to pursue this, call your pension plan service line to obtain a service purchase quote. Then call IPPFA Benefits at 866-994-6312 to initiate the transfer of funds in the required amount.
What should I do with my “other” Retirement and Supplemental Savings plan assets? There is no tax penalty to consolidate your prior retirement and supplemental savings assets into The Wise Choice for Educators Plan. There may be fees imposed by your current vendor. Please contact IPPFA Benefits at 866-994-6312 for personalized assistance on determining if consolidation of your current plans is in your best interest. If you have a 403(b) account with your current employer or a prior employer and you would like to consolidate into The Wise Choice Plan, please call IPPFA Benefits at 866-994-6312 and we will help you complete the appropriate paperwork. If you have a 457(b) account with your current employer or a prior employer and you would like to consolidate into The Wise Choice for Educators Plan, please call IPPFA Benefits at 866-994-6312 and we will help you complete the 457(b) Transfer paperwork. If you have a 401(k) or Pension account is with a prior employer and you would like to consolidate it into The Wise Choice Plan, please call IPPFA Benefits at 866-994-6312 and we will help you complete the necessary forms.
Visit my.trsretire.com
10
Important Disclosures:
Review the fees and expenses you pay, including any charges associated with transferring your account, to see if consolidating your accounts could help reduce your costs. Be sure to consider whether such a transfer changes any features or benefits that may be important to you. Descriptions of plan features and benefits are subject to the plan document. The plan document will govern in the event of any inconsistencies. For more information on any registered fund, please call Transamerica Retirement Solutions at 800755-5801 for a free summary prospectus (if available) and/or prospectus. Since the investment options available under a collective trust are exempt from SEC registration, a prospectus is not available with respect to such investment options. You should consider the objectives, risks, charges, and expenses of an investment carefully before investing. The summary prospectus and prospectus contain this and other information. Read them carefully before you invest.
Transamerica Investors Securities Corp. (TISC), 440 Mamaroneck Avenue, Harrison, NY, 10528, distributes securities products. Any mutual fund offered under the plan is distributed by that particular fund’s associated fund family and its affiliated broker-dealer or other broker-dealers with effective selling agreements such as TISC. Bank collective trusts funds are not insured by the FDIC, the Federal Reserve Bank or any other government agency and are not registered with the Securities and Exchange Commission. Group annuity contracts, if offered under the plan, are made available through the applicable insurance company. Any guarantee of principal and/or interest under a group annuity contract is subject to the claims-paying ability of the applicable insurer. Certain investment options made available under the plan may be offered through affiliates of Transamerica Retirement Solutions and TISC. These may include: (1) the Transamerica Funds (registered mutual funds distributed by Transamerica Capital, Inc. (TCI) and advised by Transamerica Asset Management, Inc. (TAM)); (2) the Diversified Investment Advisors Collective Trust, a collective trust fund of Massachusetts Fidelity Trust Company (MFTC) (includes the Stable Pooled Fund); (3) group annuity contracts issued by Transamerica Financial Life Insurance Company (TFLIC), 440 Mamaroneck Avenue, Harrison, NY 10528 (includes the Stable Fund, the Fixed Fund, the Guaranteed Pooled Fund, and SecurePath for Life); and (4) group annuity contracts issued by Transamerica Life Insurance Company (TLIC), 4333 Edgewood Road NE, Cedar Rapids, IA 52499 (includes SecurePath for Life). IPPFA has selected Transamerica Retirement Solutions as your retirement plan provider, but there are no other affiliations between IPPFA and Transamerica Retirement Solutions, TISC, TCI, TAM, MFTC, TFLIC, or TLIC.
Visit my.trsretire.com
11
12
How Much Do I need to save to accumulate $1,000,000 by age 65 Start Age 25 30 35 40 45 50 55 60
Total Contribution Monthly Per Pay Period* Contribution Contributions $143.23 $217.97 $335.49 $525.75 $848.87 $1,444.93 $2,733.05 $6,804.86
$286.45 $435.94 $670.98 $1,051.50 $1,697.73 $2,889.85 $5,466.09 $13,609.73
$137,496.11 $183,095.69 $241,552.47 $315,448.66 $407,456.17 $520,173.75 $655,931.13 $816,583.66
Value at Age 65** $1,000,000.00 $1,000,000.00 $1,000,000.00 $1,000,000.00 $1,000,000.00 $1,000,000.00 $1,000,000.00 $1,000,000.00
Years Until Age 65 40 35 30 25 20 15 10 5
Rate of Return 8%
* Assumes 24 Pay Periods ** Assumed rate of return 8%
How Much Do I need to save to accumulate $1,000,000 by age 60 Total Start Contribution Monthly Age Per Pay Period* Contribution Contributions 25 $217.97 $435.94 $183,095.69 30 $335.49 $670.98 $241,552.47 35 $525.75 $1,051.50 $315,448.66 40 $848.87 $1,697.73 $407,456.17 45 $1,444.93 $2,889.85 $520,173.75 50 $2,733.05 $5,466.09 $655,931.13
Value at Years Until Age 60** Age 60 $1,000,000.00 35 $1,000,000.00 30 $1,000,000.00 25 $1,000,000.00 20 $1,000,000.00 15 $1,000,000.00 10
* Assumes 24 Pay Periods ** Assumed rate of return 8%
How Much Do I need to save to accumulate $1,000,000 by age 55 Total Start Contribution Monthly Age Per Pay Period* Contribution Contributions 25 $335.49 $670.98 $241,552.47 30 $525.75 $1,051.50 $315,448.66 35 $848.87 $1,697.73 $407,456.17 40 $1,444.93 $2,889.85 $520,173.75 45 $2,733.05 $5,466.09 $655,931.13 50 $6,804.86 $13,609.73 $816,583.66
Value at Years Until Age 55** Age 55 30 $1,000,000.00 $1,000,000.00 25 20 $1,000,000.00 $1,000,000.00 15 10 $1,000,000.00 5 $1,000,000.00
* Assumes 24 Pay Periods ** Assumed rate of return 8% (1) Aon Consulting, 2008 Replacement Ratio Study
Questions? Visit my.trsretire.com
13
Investment Solutions Your Retirement Plan makes it easy to choose an investment strategy—and easy to maintain or adjust your strategy over time.
Choose a one‐step solution Make it automatic with PortfolioXpress® If your financial picture is relatively straightforward, consider PortfolioXpress. This service establishes an investment mix based on the retirement year and risk preference you select. Then it regularly rebalances your account to a more conservative mix over time. It's a solution for people who are saving for retirement and want automatic diversification. You can subscribe to PortfolioXpress at my.trsretire.com. PortfolioXpress® is a registered service mark of Transamerica Retirement Solutions Corporation (Transamerica). PortfolioXpress presents a series of asset allocation models up to and through a designated retirement year. You are solely responsible for choosing the retirement year and risk preference. By subscribing to the service, you agree to each of the asset allocation mixes and automated rebalancing transactions that will take place over time within your account as you approach the selected retirement year. If you sign up, you should carefully review the service agreement for additional information regarding fees and other terms and conditions that may apply to this service. Retirement date portfolios are subject to the same risks as the underlying asset classes in which they invest. The higher the portfolio's allocation is to stocks, the greater the risk. The principal value of the portfolio is not guaranteed at any time, including at and after the target date. Select one fund that maintains a diversified mix Asset allocation funds are diversified funds that offer a range of investment mixes depending on your comfort level with risk and how long you have until you retire. The funds range from short‐term, conservative options that invest more of their assets in bonds to long‐term, aggressive options that invest more of their assets in stocks. These funds do not change their asset allocation to become more conservative over time. You can select an asset allocation fund based on your desired risk level and/or years until retirement. Asset allocation funds are subject to the risks of the underlying funds in which they invest. To the extent the fund invests more of its assets in stock investments; it will be subject to greater risk than a fund investing more of its assets in bond funds.
Questions? Visit my.trsretire.com
14
Do it yourself Create your own investing strategy You can also create your own investment mix using the funds available in your plan. These funds offer flexibility for both new and experienced investors. With this approach, you can develop an investing strategy that is tailored just for you.
To supplement the investment funds offered under your plan, you may choose to open a Schwab Personal Choice Retirement Account® (PCRA). PCRA is a self‐directed investment option that allows you to direct purchases and sales within your account to investment options other than those offered under the plan. By establishing a PCRA, you assume responsibility for controlling your investments. For more information on establishing and maintaining a PCRA, please call us at 800‐755‐5801.
You must individually apply for PCRA and are solely responsible for your fund selections made under the PCRA. Commissions and transaction fees may apply to fund trades placed outside of the Schwab Mutual Fund OneSource® program or trades on other investment vehicles available through Schwab. An annual fee of $50 will be applied by Transamerica if you invest in the Schwab PCRA. Securities purchased through the PCRA are available through Charles Schwab & Co. Inc., (Member SIPC). Charles Schwab & Co., Inc. is not affiliated with Transamerica.
Questions? Visit my.trsretire.com
15
Brighten your outlook.
PortfolioXpress
®
“My financial picture is relatively straightforward, so an investment strategy based on when I plan to retire is probably a good starting point.” Does this statement sound like you? If so, consider PortfolioXpress, our free, automatic asset allocation and rebalancing service.
One‐step diversification PortfolioXpress uses the funds in your plan and the retirement year and risk preference you choose to present you with a diversified investment mix for today and a glide path of adjustments for tomorrow. Once you agree, the service automatically: Rebalances your account and contributions to reflect your mix. Rebalances your portfolio each quarter to maintain your mix as needed. Adjusts your mix to become more conservative over time. This way, you can focus on your savings goal, track your progress at my.trsretire.comand on your quarterly statements and get on with your life! Your circumstances may change over time, so review your investing strategy periodically to make sure it continues to reflect your current situation.
A glide path charts the course for your investment mix.
Retirement
Think ahead. Take action now. ✔ Go automatic! Sign up for PortfolioXpress at my.trsretire.com, or call 800‐755‐5801 for more information. Be sure to review the investment mixes and glide path before investing. PortfolioXpress® is a registered service mark of Transamerica Retirement Solutions Corporation (Transamerica). The illustration above is for education only and does not represent a specific asset allocation at any given time. PortfolioXpress presents a series of asset allocation models up to and through a designated retirement year. You are solely responsible for choosing the year. In implementing the service, you agree to each of the asset allocation mixes and automated rebalancing transactions that will take place over time within your account as you approach the selected retirement year. If you sign up, carefully review the service agreement for details on fees and other terms and conditions that may apply. Retirement date portfolios are subject to the same risks as the underlying assets in which they invest. The higher the allocation is to stocks, the greater the risk. The portfolio’s principal value is never guaranteed, including at and after the target date. Diversification does not guarantee against loss in a falling market. TD‐12084‐R (01/13) © 2013 Transamerica Retirement Solutions Corporation
16
PLAN COSTS CAN MAKE A DIFFERENCE! Astute investors consider total fees an important criterion in selecting investment providers. To adequately compare the fees on your Supplemental Savings options (403(b) & 457(b)), you may wish to do a total fee analysis by:
Finding out if the plans or investments under consideration have fees other than those calculated as part of the expense ratio on the investment(s) Add that number, if any, to the expense ratio on the investment(s) to determine Total Expenses Determine if there is a "fee differential" in your options and make a judgment if there is value received for that differential in performance, additional contract features or service.
Many Supplemental Savings do not build their plan operational costs into the expense ratios on the investments. They may have additional fees. These are generically referred to as "wrap fees" and they may include one or more of the following charges*:
Administrative Fee Variable Expense Charge Actuarial Risk Charge
• Mortality and Expense Charge • Mortality and Administration Charge
These charges are taken out daily in the calculation of unit values and cannot be seen on a statement. The disclosure may be in the master contract, prospectus or other disclosure material and can be hard to find.
HOW MUCH COULD A "FEE DIFFERENTIAL" AFFECT MY ACCOUNT BALANCE**?
New Employee contributing $2,000 per year over time period stated TOTAL FEE DIFFERENCE
AFTER 5 YEARS
AFTER 15 YEARS
AFTER 20 YEARS
AFTER 25 YEARS
AFTER 30 YEARS
.25% .50%
$77.53 $154.58
$1,167.21 $2,770.05
$2,732.87 $5,378.88
$5,664.87 $11,097.94
$10,890.18 $21,233.19
.75% 1.00%
$231.15 $307.24
$3,422.09 $4,510.97
$7,970.84 $10,421.47
$16,308.91 $21,307.08
$31,057.18 $40,388.83
1.25%
$382.86
$5,574.95
$12,823.42
$26,101.37
$49,253.46
1.50%
$458.01
$6,614.59
$15,149.24
$30,700.32
$57,675.09
Existing Employee: $35,000 balance -$4,000 per year contribution TOTAL FEE DIFFERENCE
AFTER 5 YEARS
AFTER 10 YEARS
AFTER 15 YEARS
AFTER 20 YEARS
AFTER 25 YEARS
.25%
$115.06
$795.14
$2,334.36
$5,465.58
$11,329.41
.50%
$309.15
$1,578.89
$4,615.27
$10,757.44
$22,195.22
.75% 1.00%
$469.29 $614.47
$2,351.41 $3,112.87
$6,843.97 $9,021.67
$15,881.20 $20,842.32
$32,616.84 $42,612.88
1.25%
$765.70
$3,863.42
$11,149.56
$25,646.08
$52,201.17
1.50%
$915.99
$4,603.21
$13,228.78
$30,297.58
$61,398.79
ASSUMPTION: Underlying annual fund yield is 8%** (net of fund management expenses) compounded over the periods shown. THERE ARE NO FEES IN THE IPPFA SUPPLEMENTAL SAVINGS PROGRAM OTHER THAN THE FUND EXPENSES SHOWN IN THIS BOOKLET! * Source: Aegis Advisors Market Overview Report to the IPPFA Board dated April 2000 (revised Feb, 2009) ** The costs and annual fund yield are hypothetical and illustrative only. They are not representative of any actual client or of a specific investment product or strategy.
17
INVESTMENTS BUILT FOR RETIREMENT AND SUPPLEMENTAL SAVINGS PLANS! Typical Annuity or Collective Trust Product INVESTMENT MANAGEMENT FEES
“WRAP” / ADMINISTRATIVE FEES
American Century American Funds Fidelity Janus Lord Abbot Putnam
• Mortality and Expense Fee • Mortality and Administration Fee • Administrative Fee $ per head % of account balance • Variable Expense Charge • Mutual Fund Access Charge
+
=
TOTAL FEES UP TO 3%
Insurance Company Separate Account Many Products contain more than one of these
Etc.
IPPFA Plan with Transamerica INVESTMENT MANAGEMENT FEES
16 Core - “Pension Style” Collective Trust Funds 5 Strategic Allocation Funds
Charles Schwab PCRA Account – Over 5,000 no load Funds and 150+ ETF’s
“Portfolio Express”
“WRAP” / ADMINISTRATIVE FEES
+
NONE
Charles Schwab PCRA Account ‐ $50 PER ANNUM
=
TOTAL FEES 0.00% TO 1.60%
(Customized Target Maturity)
18
Your Funds at a Glance Inception 403(b) 457(b) Date (403b Expense Expense listed first) Ratio Ratio Money Market Liquidity and as high a level of 1/4/1994 .80% .80% income as is consistent with the 11/30/1978 preservation of capital. High Quality Bond Provide a high risk‐adjusted 7/5/1994 1.00% 1.00% return while focusing on the 6/30/1990 preservation of capital. Core Bond Seeks to achieve maximum total 7/5/1994 .97% 1.00% return. 12/31/1977 Inflation‐Protected To seek maximum return 2/22/1996 1.00% 1.00% Securities consistent with the preservation 7/31/1990 of capital. High Yield Bond Seeks to provide a high level of 1/30/1996 1.10% 1.10% current income. 8/31/1995 Large Value Provide long‐term capital 7/5/1994 1.00% 1.00% appreciation through 12/31/1977 investment in a diversified portfolio of common stocks of large‐capitalization companies. Current income is a secondary goal. Large Core/Large Provide capital appreciation 7/5/1994 1.15% 1.15% Blend and current income. 12/31/1985 Stock Index To match the performance of 3/10/1999 .65% .65% the Standard & Poor’s 500® 4/1/1993 Index. Large Growth Provide a high level of capital 7/5/1994 1.24% 1.25% appreciation through 2/28/1993 investment in a diversified portfolio of common stocks with a potential for above‐average growth in earnings. Current income is a secondary goal. Mid Cap Value Provide a high total investment 8/15/2001 1.25% 1.25% return through investments 5/15/2001 primarily in a diversified portfolio of common stocks. Fund Name/Type
Investment Objective
19
Mid Cap Growth
Small Value
Small Cap Core
Small Cap Growth
Real Estate Fund (457b Only) International Equity/Foreign Large Growth Intermediate Horizon Asset Allocation Fund
Provide a high total investment return through investments primarily in a diversified portfolio of common stocks. Provide a high total investment return through investments primarily in a diversified portfolio of common stocks. Provide a high total investment return through investments primarily in a diversified portfolio of common stocks of small to medium size companies. Provide a high total investment return through investments primarily in a diversified portfolio of common stocks. Above average income and long‐ term capital growth. Provide a high level of long‐ term capital appreciation through investment in a diversified portfolio of securities of foreign issuers. Long‐term returns form a combination of investment income and capital appreciation with slightly less than average volatility as compared to other balanced funds. Target asset allocation is 50% Stocks and 50% Bonds.
9/6/2001 5/15/2001
1.35%
1.35%
7/10/2002 4/15/2002
1.57%
1.50%
7/5/1994 4/15/2002
1.53%
1.50%
8/9/2002 4/15/2002
1.55%
1.55%
8/29/2003
N/A
1.35%
1/19/1996 11/30/1992
1.40%
1.40%
6/13/1996 9/30/1992
1.23%
1.33%
20
Intermediate/Long Long‐term returns form a 6/13/1996 Horizon Asset combination of investment 9/30/1992 Allocation Fund income and capital appreciation with slightly less than average volatility as compared to other balanced funds. Target asset allocation is 70% Stocks and 30% Bonds.
1.29%
1.39%
Long Horizon Asset Long‐term returns from growth 5/5/1998 Allocation Fund of capital and growth of income. 4/30/1998 Target asset allocation is 90% Stocks and 10% Bonds. Short Horizon Asset High level of income and 6/13/1996 Allocation Fund preservation of capital. Target 9/30/1992 asset allocation is 10% Stocks and 90% Bonds. Short/Intermediate Reasonable returns with 5/5/1998 Horizon Asset considerably less than average 4/30/1998 Allocation Fund volatility as compared to other balanced funds. Target asset allocation is 30% Stocks and 70% Bonds.
1.34%
1.44%
1.12%
1.23%
1.17%
1.27%
403(b) Fixed Account – TFLIC Fixed The Wise Choice For Educators includes a Stable Value/Fixed Account. Please ask the representative what the current interest rate is. There is no expense associated with this account. 457(b) Fixed Account – TFLIC Stable Fund The Wise Choice For Educators includes a Stable Value/Fixed Account. Please ask the representative what the current interest rate is. There is no expense associated with this account.
21
22
23
24
25
26
27
28
29
30
31
32
The Transamerica Partners Funds are investment options under the Diversified Investment Advisors Collective Trust, 440 Mamaroneck Avenue, Harrison NY, 10528. The trustee of the Collective Trust is Massachusetts Fidelity Trust Company (MFTC), 440 Mamaroneck Avenue, Harrison NY, 10528. Stable Fund is offered under the plan by Transamerica Retirement Solutions, such option is made available under a group annuity contract issued by Transamerica Financial Life Insurance Company (TFLIC), 440 Mamaroneck Avenue, Harrison NY, 10528. TFLIC, MFTC, and Transamerica Retirement Solutions are affiliated companies. *Schwab Personal Choice Retirement Account® (PCRA) is not a fund but rather a participant selfdirected brokerage account maintained at Charles Schwab & Co., Inc. Participants must individually apply for PCRA and are solely responsible for their fund selections made under the PCRA. Commissions and transaction fees may apply to fund trades placed outside of the Schwab Mutual Fund OneSource® program or trades on other investment vehicles available through Schwab. An annual fee of $50 will be applied by Transamerica Retirement Solutions if you invest in the Schwab PCRA. Securities purchased through the PCRA are available through Charles Schwab & Co. Inc., (Member SIPC). Charles Schwab & Co., Inc. is not affiliated with Transamerica Retirement Solutions.
33
34
TA069292 00001 PT-3447 (06/15)
35
Plan Well
Live Well The life you want in retirement begins right here, right now.
Welcome to The Wise Choice For Educators! As an association of public sector employees responsible for managing pension fund assets in excess of eighteen billion dollars, the Illinois Public Pension Fund Association (IPPFA) created THE WISE CHOICE FOR EDUCATORS to make sure that public sector employees had access to supplemental savings plans that were created in their best interests, not the interests of the sales person, broker or insurance company. IPPFA believes that no employee should have to pay higher fees or receive less service because he or she works for a small or medium size school district. Our plan offers the same pricing and plan design (including access to 457(b) and 403(b)) to all employees, regardless of the size of the district. This plan was built by pooling the buying power of hundreds of public sector employers. Through a competitive bidding process, IPPFA chose Transamerica Retirement Solutions (Transamerica) to be our provider. Transamerica is a firm dedicated exclusively to providing retirement savings plans. One of the reasons we chose Transamerica as our provider is that they focus all their resources on giving you the planning tools and guidance you need to achieve your retirement goals. From the day you're hired, THE WISE CHOICE FOR EDUCATORS will support you through each stage of the retirement planning process.THE WISE CHOICE FOR EDUCATORS program will be with you every step of the way. Please read through this booklet so you can better understand this valuable program. Be sure to enroll as soon as possible so you can begin maximizing this valuable benefit.
James M. McNamee, President Illinois Public Pension Fund Association
2
Maximize your Wise Choice for Educators Plan
Enroll today – Sign in online at my.trsretire.com or call 888‐676‐5512.
Catch up on your contributions (must be age 50 or older).
Designate your beneficiary. Complete the online Beneficiary Designation form.
Reduce your clutter. Sign up for e‐documents today.
Schedule automatic annual increases through our free auto‐increase service.
Rebalance your account automatically by using Auto‐Rebalance.
As an active participant, you can access your retirement account 24/7 by signing in to my.trsretire.com or calling us toll‐free at 800‐755‐5801. You may also speak with a customer service representative for enrollment assistance, investment guidance, and retirement planning support. First‐time online users my.trsretire.com
First‐time callers 888‐676‐5512
Questions? Visit my.trsretire.com 3
Plan Highlights Illinois Public Pension Fund Association Retirement Plan is a valuable employee benefit—and one of the most powerful ways to build your retirement savings. Take a few minutes now to read through these plan highlights and learn more about all the features and benefits your plan includes. You’ll find more about when you can join, how much you can contribute, when you can make changes, and how you can access your savings. Just keep in mind this is simply a quick overview of your benefits.
457(b) or 403(b) Which plan is right for me? Both 457(b) and 403(b) plans are payroll deduction savings plans aimed at helping you save additional money for retirement. These plans supplement your defined benefit plan. Both plans offer pre-tax contributions that provide tax deferred earnings with distributions taxable upon receipt or a Roth provision, where contributions are post-tax and earnings are tax free. The plans have the same contribution limits and the limits do not coordinate or integrate with each other; you can fully fund both plans. Most of our personal budgets do not permit us to fully fund both plans. Generally, the common practice is to fully fund one and only use the second plan when you wish to exceed the single plan contribution limit. That begs the question: “Which plan should I use if I defer less than $18,000 annually?” The primary differences in 457(b) and 403(b) is access to funds contributed pre-tax while still employed and taxation of those distributions prior to and after age 59 1/2.
Visit my.trsretire.com
4
Access to Funds while employed (in-service access)
Both plans allow you to access your funds while you are employed via loans or hardships. While the loan provisions are identical, there are differences in the hardship rules that specifically impact those who wish to use this provision for the purchase of a primary residence or for funding college education. In these two areas 403(b) is considered more flexible. However, most financial planners would advise that your 403(b) plan is not the appropriate place to access college funds once you take into consideration the 10% excise tax and the income taxes paid on the distribution. After attainment of age 59½, in-service distributions are permitted from the 403(b) plan without the excise tax and could change the analysis.
Taxation of Distributions at separation of service After separation of service, 457(b) pre-tax distributions are not subject to a 10% excise tax for severance or retirement distributions prior to age 59½. 403(b) distributions are subject to the excise tax under these circumstances. The excise tax is in addition to the regular income tax due. This is especially important for those that expect to: Retire before age 59 ½ Not spend your entire career in your current district While neither of the above may be planned, they may occur none the less. Which tax code section is best for you depends upon when you think you may need access to your funds.
Roth 457(b) and 403 (b) You may make all or a portion of your contribution into either the 457(b) or 403(b) Plan as an after-tax Roth contribution. The funds will grow tax free. Distributions are received tax free as long as the funds were in the plan for five years and the withdrawal is taken after age 59½. When considering using Roth provisions there are additional factors that must be considered. Please contact your Plan Representative for assistance in analyzing your options.
Which Plan is Right for Me? 457(b) or 403(b) – Which Plan is Right for Me? 457(b)
403(b)
$18,000
$18,000
Yes
Yes
$6,000
$6,000
Up to $18,000
N/A
Loans
Yes
Yes
Hardships
Yes
Yes
Automatic Hardships for Purchase of Primary Residence
No
Yes
Contribution Limits 2017
Roth Available Age 50 Catch-Up Rule Alternative Catch-Up
Visit my.trsretire.com
5
Automatic Hardships for children’s College Tuition
No
Yes
Start Distributions at any age with separation of service without 10% excise tax
Yes
No
Access Money without Separation of Service Hardship or loan only.
Yes, If you’re older than 59½ you have access to all contributions. Roth contributions need to be in the plan for at least 5 years before they can be distributed
On-Demand Representatives IPPFA Benefits is the exclusive marketer of the Wise Choice for Educators Plan. We have dedicated representatives who are available to meet with you on a one to one basis. To schedule an appointment or to just talk to us at any time, please call: IPPFA Benefits- 866-994-6312 Joel Babbitt Debby Karton Kevin O’Brien Brandon Blough
457(b) Eligibility
773-617-9690 (cell) 847-922-1191 (cell) 312-340-9778 (cell) 217-306-2041 (cell)
[email protected] [email protected] [email protected] [email protected]
457(b) Plan Specifics
You are immediately eligible to participate in the plan.
How Much Can I Contribute? You may choose to make contributions up to the maximum allowed by law. The annual IRS dollar limit of $18,000 applies for 2017. This limit is indexed annually by the IRS. If you are age 50 or older (or you reach age 50 during the current calendar year), you can make additional catch-up contributions up to $6,000 in 2017. In the three calendar years prior to the year of retirement with a pension that is not actuarially reduced, you may be eligible to use the “Alternative catch up rule.” You can defer the entire amount into both 457(b) and the 403(b). The two plans do not coordinate or integrate with each other for this purpose.
What Do I Do With Money in another 457(b) Plan If you have an existing retirement plan account with a prior employer, you may roll over that account into this plan at any time. Consolidating your retirement accounts makes it easier for you to make sure your investment strategy is on track for meeting your retirement goals. Please contact your IPPFA Benefits representative for more information
Visit my.trsretire.com
6
Vesting Vesting refers to your "ownership" of your account. You are always 100% vested in your contributions to this plan.
Access to Funds while employed There are two ways to access your funds while you are employed (in-service access): loans or hardships
Loans You may borrow from the plan, using your account as security (conditions and restrictions may apply). All loans with same employer plan are aggregated for these limits. You must count both your Wise Choice 403(b) and 457(b) together for this purpose. Minimum loan amount: $1,000 Maximum loan amount: 50% of your vested account balance, up to $50,000 General loan interest rate: Prime Maximum general loan term: 5 years. If for primary residence, then the loan may be amortized over 15 years. Loan Origination fee: A one-time set-up fee of $75 per loan deducted from your account. Maximum number of outstanding loans: 2
Withdrawals
Vested funds may be withdrawn from your plan account in these events:
Termination of employment or retirement (any age*) Unforeseeable emergency (as defined by IRS Regulations) Disability Death
Distributions must begin no later than the later of attainment of age 70½ or retirement. Please see your Plan Administrator for additional important information about your future distribution election. *There is NO excise tax on distributions made from pretax contributions after separation of service from 457(b) plans, regardless of age. If using Roth Provision, you must be age 59½ and the money must be on deposit for 5 years to withdrawal without penalty.
Roth 457 You may make all or a portion of your contribution as an after-tax Roth contribution. The funds will grow tax free. Distributions are received tax free as long as the funds were in the plan for five years and the withdrawal is taken after age 59 1/2.
Expenses The Wise Choice for Educators Plan includes no annual account fee, no wrap fees and no contingent deferred sales charges. The participant will pay only the fee listed on the fund sheets. If the participant exercises Schwab Personal Choice Retirement Account® (PCRA), there is a $50 annual fee imposed by Charles Schwab.
Visit my.trsretire.com
7
Schwab Personal Choice Retirement Account® (PCRA) Schwab PCRA is a not a fund but rather a participant self-directed brokerage account maintained at Charles Schwab & Co., Inc. Participants must individually apply for PCRA and are solely responsible for their fund selections made under the PCRA. Commissions and transaction fees may apply to fund trades placed outside of the Schwab Mutual Fund OneSource® program or trades on other investment vehicles available through Schwab. An annual fee of $50 will be applied by Transamerica if you invest in the Schwab PCRA. Securities purchased through the PCRA are available through Charles Schwab & Co. Inc., (Member SIPC). Charles Schwab & Co., Inc. is not affiliated with Transamerica Retirement Solutions .
Investment Direction You decide how your account will be invested among the available investment options. You may change your investment allocation at any time. Transfers among investment options may be made at any time and may be subject to certain restrictions. The available investment options are presented as follows in groups to illustrate the applicable transfer restrictions. Investment Group A: TFLIC Fixed Fund Investment Group B: Schwab PCRA Investment Group C: All other funds Monies in a Group A investment option cannot be transferred to a Group B investment option. Monies transferred from a Group A investment option to a Group C investment option must remain in this investment option for at least 90 days before they may be transferred to a Group B investment option or back to a Group A investment option.
Beneficiary Designation It is necessary that you designate a beneficiary for The Wise Choice 457(b) Plan so that your assets can be distributed according to your wishes upon your death. Please complete the Beneficiary Designation which may be downloaded from my.trsretire.com and follow the instructions on the form for mailing.
403(b) Eligibility
403(b) Plan Specifics
You are immediately eligible to participate in the plan. However, if you are in one of the following group(s), you may not be eligible to participate in the plan
Employees who are students performing services described in Code Section 3121(b)(10) Employees who normally work less than 20 hours per week Some employers have implemented additional restrictions if you are working less than full time. Please check with your Human Resource Department for specifics.
How Much Can I Contribute? You may choose to make contributions up to the maximum allowed by law. You may increase, decrease or stop your contributions at any time. An annual IRS dollar limit of $18,000 applies for 2017. This limit is indexed annually by the IRS. If you are age 50 or older (or you reach age 50 during the current calendar year), you can make additional catch-up contributions up to $6,000 in 2017. You may designate your contributions as traditional pre-tax contributions, after-tax Roth contributions, or a combination of both. You may have the Roth contributions in both the 403(b) Plan and the 457(b) Plan.
Visit my.trsretire.com
8
You can defer the entire amount into both the 457(b) and the 403(b). The two plans do not coordinate or integrate with each other for this purpose.
What Do I Do with Money in another 403(b) Plan? If you have an existing retirement plan account with a prior employer, you may roll over that account into this plan at any time. Consolidating your retirement accounts makes it easier for you to make sure your investment strategy is on track for meeting your retirement goals. Please see “Consolidating your retirement and supplemental savings asset” section at the end of this section
Vesting Vesting refers to your "ownership" of your account. You are always 100% vested in your contributions to this plan.
Loans You may borrow from the plan, using your account as security (conditions and restrictions may apply). All loans with the same employer plan are aggregated for these limits. You must count both your Wise Choice 403(b) and 457(b) together for this purpose. Minimum loan amount: $1,000 Maximum loan amount: 50% of your vested account balance, up to $50,000 General loan interest rate: Prime Maximum general loan term: 5 years. If for primary residence, then the loan may be amortized over 15 years. Loan Origination fee: A one-time set-up fee of $75 per loan deducted from your account. Maximum number of outstanding loans: 2
Withdrawals You may withdraw funds from your plan account in these events (conditions and restrictions may apply as defined in the plan):
After age 59 1/2 Termination of employment (Subject to age 59½ rule on “penalty taxation” and Roth restrictions, if applicable) Financial hardship as defined in IRS regulations Disability Death
Roth 403(b) You may make all or a portion of your contribution as an after-tax Roth contribution. The funds will grow tax free. Distributions are received tax free as long as the funds were in the plan for five years and the withdrawal is taken after age 59 1/2.
Visit my.trsretire.com
9
Expenses
The Wise Choice for Educators Plan includes no annual account fee, no wrap fees and no contingent deferred sales charges. The participant will pay only the fee listed on the fund sheets. If the participant exercises Schwab Personal Choice Retirement Account® (PCRA), there is a $50 annual fee imposed by Charles Schwab. .
Investment Direction You decide how your account will be invested among the available investment options. You may change your investment allocation at any time. Transfers among investment options may be made at any time and maybe subject to certain restrictions. The available investment options are presented below in groups to illustrate the applicable transfer restrictions. Investment Group A: Fixed Fund Investment Group B: Schwab PCRA Investment Group C: All other funds Monies in a Group A investment option cannot be transferred to a Group B investment option. Monies transferred from a Group A investment option to a Group C investment option must remain in this investment option for at least 90 days before they may be transferred to a Group B investment option or back to a Group B investment option.
Beneficiary Designation It is necessary that you designate a beneficiary so that your assets can be distributed according to your wishes upon your death. Please complete the Beneficiary Designation which may be downloaded from my.trsretire.com and follow the instructions on the form for mailing.
Can I use these funds to buy “years” towards my pension? Yes, this is called a permissive service credit. You may use both 457(b) or 403(b) funds for this purpose. It is a direct transfer to your governmental pension. If you want to pursue this, call your pension plan service line to obtain a service purchase quote. Then call IPPFA Benefits at 866-994-6312 to initiate the transfer of funds in the required amount.
What should I do with my “other” Retirement and Supplemental Savings plan assets? There is no tax penalty to consolidate your prior retirement and supplemental savings assets into The Wise Choice for Educators Plan. There may be fees imposed by your current vendor. Please contact IPPFA Benefits at 866-994-6312 for personalized assistance on determining if consolidation of your current plans is in your best interest. If you have a 403(b) account with your current employer or a prior employer and you would like to consolidate into The Wise Choice Plan, please call IPPFA Benefits at 866-994-6312 and we will help you complete the appropriate paperwork. If you have a 457(b) account with your current employer or a prior employer and you would like to consolidate into The Wise Choice for Educators Plan, please call IPPFA Benefits at 866-994-6312 and we will help you complete the 457(b) Transfer paperwork. If you have a 401(k) or Pension account is with a prior employer and you would like to consolidate it into The Wise Choice Plan, please call IPPFA Benefits at 866-994-6312 and we will help you complete the necessary forms.
Visit my.trsretire.com
10
Important Disclosures:
Review the fees and expenses you pay, including any charges associated with transferring your account, to see if consolidating your accounts could help reduce your costs. Be sure to consider whether such a transfer changes any features or benefits that may be important to you. Descriptions of plan features and benefits are subject to the plan document. The plan document will govern in the event of any inconsistencies. For more information on any registered fund, please call Transamerica Retirement Solutions at 800755-5801 for a free summary prospectus (if available) and/or prospectus. Since the investment options available under a collective trust are exempt from SEC registration, a prospectus is not available with respect to such investment options. You should consider the objectives, risks, charges, and expenses of an investment carefully before investing. The summary prospectus and prospectus contain this and other information. Read them carefully before you invest.
Transamerica Investors Securities Corp. (TISC), 440 Mamaroneck Avenue, Harrison, NY, 10528, distributes securities products. Any mutual fund offered under the plan is distributed by that particular fund’s associated fund family and its affiliated broker-dealer or other broker-dealers with effective selling agreements such as TISC. Bank collective trusts funds are not insured by the FDIC, the Federal Reserve Bank or any other government agency and are not registered with the Securities and Exchange Commission. Group annuity contracts, if offered under the plan, are made available through the applicable insurance company. Any guarantee of principal and/or interest under a group annuity contract is subject to the claims-paying ability of the applicable insurer. Certain investment options made available under the plan may be offered through affiliates of Transamerica Retirement Solutions and TISC. These may include: (1) the Transamerica Funds (registered mutual funds distributed by Transamerica Capital, Inc. (TCI) and advised by Transamerica Asset Management, Inc. (TAM)); (2) the Diversified Investment Advisors Collective Trust, a collective trust fund of Massachusetts Fidelity Trust Company (MFTC) (includes the Stable Pooled Fund); (3) group annuity contracts issued by Transamerica Financial Life Insurance Company (TFLIC), 440 Mamaroneck Avenue, Harrison, NY 10528 (includes the Stable Fund, the Fixed Fund, the Guaranteed Pooled Fund, and SecurePath for Life); and (4) group annuity contracts issued by Transamerica Life Insurance Company (TLIC), 4333 Edgewood Road NE, Cedar Rapids, IA 52499 (includes SecurePath for Life). IPPFA has selected Transamerica Retirement Solutions as your retirement plan provider, but there are no other affiliations between IPPFA and Transamerica Retirement Solutions, TISC, TCI, TAM, MFTC, TFLIC, or TLIC.
Visit my.trsretire.com
11
12
How Much Do I need to save to accumulate $1,000,000 by age 65 Start Age 25 30 35 40 45 50 55 60
Total Contribution Monthly Per Pay Period* Contribution Contributions $143.23 $217.97 $335.49 $525.75 $848.87 $1,444.93 $2,733.05 $6,804.86
$286.45 $435.94 $670.98 $1,051.50 $1,697.73 $2,889.85 $5,466.09 $13,609.73
$137,496.11 $183,095.69 $241,552.47 $315,448.66 $407,456.17 $520,173.75 $655,931.13 $816,583.66
Value at Age 65** $1,000,000.00 $1,000,000.00 $1,000,000.00 $1,000,000.00 $1,000,000.00 $1,000,000.00 $1,000,000.00 $1,000,000.00
Years Until Age 65 40 35 30 25 20 15 10 5
Rate of Return 8%
* Assumes 24 Pay Periods ** Assumed rate of return 8%
How Much Do I need to save to accumulate $1,000,000 by age 60 Total Start Contribution Monthly Age Per Pay Period* Contribution Contributions 25 $217.97 $435.94 $183,095.69 30 $335.49 $670.98 $241,552.47 35 $525.75 $1,051.50 $315,448.66 40 $848.87 $1,697.73 $407,456.17 45 $1,444.93 $2,889.85 $520,173.75 50 $2,733.05 $5,466.09 $655,931.13
Value at Years Until Age 60** Age 60 $1,000,000.00 35 $1,000,000.00 30 $1,000,000.00 25 $1,000,000.00 20 $1,000,000.00 15 $1,000,000.00 10
* Assumes 24 Pay Periods ** Assumed rate of return 8%
How Much Do I need to save to accumulate $1,000,000 by age 55 Total Start Contribution Monthly Age Per Pay Period* Contribution Contributions 25 $335.49 $670.98 $241,552.47 30 $525.75 $1,051.50 $315,448.66 35 $848.87 $1,697.73 $407,456.17 40 $1,444.93 $2,889.85 $520,173.75 45 $2,733.05 $5,466.09 $655,931.13 50 $6,804.86 $13,609.73 $816,583.66
Value at Years Until Age 55** Age 55 30 $1,000,000.00 $1,000,000.00 25 20 $1,000,000.00 $1,000,000.00 15 10 $1,000,000.00 5 $1,000,000.00
* Assumes 24 Pay Periods ** Assumed rate of return 8% (1) Aon Consulting, 2008 Replacement Ratio Study
Questions? Visit my.trsretire.com
13
Investment Solutions Your Retirement Plan makes it easy to choose an investment strategy—and easy to maintain or adjust your strategy over time.
Choose a one‐step solution Make it automatic with PortfolioXpress® If your financial picture is relatively straightforward, consider PortfolioXpress. This service establishes an investment mix based on the retirement year and risk preference you select. Then it regularly rebalances your account to a more conservative mix over time. It's a solution for people who are saving for retirement and want automatic diversification. You can subscribe to PortfolioXpress at my.trsretire.com. PortfolioXpress® is a registered service mark of Transamerica Retirement Solutions Corporation (Transamerica). PortfolioXpress presents a series of asset allocation models up to and through a designated retirement year. You are solely responsible for choosing the retirement year and risk preference. By subscribing to the service, you agree to each of the asset allocation mixes and automated rebalancing transactions that will take place over time within your account as you approach the selected retirement year. If you sign up, you should carefully review the service agreement for additional information regarding fees and other terms and conditions that may apply to this service. Retirement date portfolios are subject to the same risks as the underlying asset classes in which they invest. The higher the portfolio's allocation is to stocks, the greater the risk. The principal value of the portfolio is not guaranteed at any time, including at and after the target date. Select one fund that maintains a diversified mix Asset allocation funds are diversified funds that offer a range of investment mixes depending on your comfort level with risk and how long you have until you retire. The funds range from short‐term, conservative options that invest more of their assets in bonds to long‐term, aggressive options that invest more of their assets in stocks. These funds do not change their asset allocation to become more conservative over time. You can select an asset allocation fund based on your desired risk level and/or years until retirement. Asset allocation funds are subject to the risks of the underlying funds in which they invest. To the extent the fund invests more of its assets in stock investments; it will be subject to greater risk than a fund investing more of its assets in bond funds.
Questions? Visit my.trsretire.com
14
Do it yourself Create your own investing strategy You can also create your own investment mix using the funds available in your plan. These funds offer flexibility for both new and experienced investors. With this approach, you can develop an investing strategy that is tailored just for you.
To supplement the investment funds offered under your plan, you may choose to open a Schwab Personal Choice Retirement Account® (PCRA). PCRA is a self‐directed investment option that allows you to direct purchases and sales within your account to investment options other than those offered under the plan. By establishing a PCRA, you assume responsibility for controlling your investments. For more information on establishing and maintaining a PCRA, please call us at 800‐755‐5801.
You must individually apply for PCRA and are solely responsible for your fund selections made under the PCRA. Commissions and transaction fees may apply to fund trades placed outside of the Schwab Mutual Fund OneSource® program or trades on other investment vehicles available through Schwab. An annual fee of $50 will be applied by Transamerica if you invest in the Schwab PCRA. Securities purchased through the PCRA are available through Charles Schwab & Co. Inc., (Member SIPC). Charles Schwab & Co., Inc. is not affiliated with Transamerica.
Questions? Visit my.trsretire.com
15
Brighten your outlook.
PortfolioXpress
®
“My financial picture is relatively straightforward, so an investment strategy based on when I plan to retire is probably a good starting point.” Does this statement sound like you? If so, consider PortfolioXpress, our free, automatic asset allocation and rebalancing service.
One‐step diversification PortfolioXpress uses the funds in your plan and the retirement year and risk preference you choose to present you with a diversified investment mix for today and a glide path of adjustments for tomorrow. Once you agree, the service automatically: Rebalances your account and contributions to reflect your mix. Rebalances your portfolio each quarter to maintain your mix as needed. Adjusts your mix to become more conservative over time. This way, you can focus on your savings goal, track your progress at my.trsretire.comand on your quarterly statements and get on with your life! Your circumstances may change over time, so review your investing strategy periodically to make sure it continues to reflect your current situation.
A glide path charts the course for your investment mix.
Retirement
Think ahead. Take action now. ✔ Go automatic! Sign up for PortfolioXpress at my.trsretire.com, or call 800‐755‐5801 for more information. Be sure to review the investment mixes and glide path before investing. PortfolioXpress® is a registered service mark of Transamerica Retirement Solutions Corporation (Transamerica). The illustration above is for education only and does not represent a specific asset allocation at any given time. PortfolioXpress presents a series of asset allocation models up to and through a designated retirement year. You are solely responsible for choosing the year. In implementing the service, you agree to each of the asset allocation mixes and automated rebalancing transactions that will take place over time within your account as you approach the selected retirement year. If you sign up, carefully review the service agreement for details on fees and other terms and conditions that may apply. Retirement date portfolios are subject to the same risks as the underlying assets in which they invest. The higher the allocation is to stocks, the greater the risk. The portfolio’s principal value is never guaranteed, including at and after the target date. Diversification does not guarantee against loss in a falling market. TD‐12084‐R (01/13) © 2013 Transamerica Retirement Solutions Corporation
16
PLAN COSTS CAN MAKE A DIFFERENCE! Astute investors consider total fees an important criterion in selecting investment providers. To adequately compare the fees on your Supplemental Savings options (403(b) & 457(b)), you may wish to do a total fee analysis by:
Finding out if the plans or investments under consideration have fees other than those calculated as part of the expense ratio on the investment(s) Add that number, if any, to the expense ratio on the investment(s) to determine Total Expenses Determine if there is a "fee differential" in your options and make a judgment if there is value received for that differential in performance, additional contract features or service.
Many Supplemental Savings do not build their plan operational costs into the expense ratios on the investments. They may have additional fees. These are generically referred to as "wrap fees" and they may include one or more of the following charges*:
Administrative Fee Variable Expense Charge Actuarial Risk Charge
• Mortality and Expense Charge • Mortality and Administration Charge
These charges are taken out daily in the calculation of unit values and cannot be seen on a statement. The disclosure may be in the master contract, prospectus or other disclosure material and can be hard to find.
HOW MUCH COULD A "FEE DIFFERENTIAL" AFFECT MY ACCOUNT BALANCE**?
New Employee contributing $2,000 per year over time period stated TOTAL FEE DIFFERENCE
AFTER 5 YEARS
AFTER 15 YEARS
AFTER 20 YEARS
AFTER 25 YEARS
AFTER 30 YEARS
.25% .50%
$77.53 $154.58
$1,167.21 $2,770.05
$2,732.87 $5,378.88
$5,664.87 $11,097.94
$10,890.18 $21,233.19
.75% 1.00%
$231.15 $307.24
$3,422.09 $4,510.97
$7,970.84 $10,421.47
$16,308.91 $21,307.08
$31,057.18 $40,388.83
1.25%
$382.86
$5,574.95
$12,823.42
$26,101.37
$49,253.46
1.50%
$458.01
$6,614.59
$15,149.24
$30,700.32
$57,675.09
Existing Employee: $35,000 balance -$4,000 per year contribution TOTAL FEE DIFFERENCE
AFTER 5 YEARS
AFTER 10 YEARS
AFTER 15 YEARS
AFTER 20 YEARS
AFTER 25 YEARS
.25%
$115.06
$795.14
$2,334.36
$5,465.58
$11,329.41
.50%
$309.15
$1,578.89
$4,615.27
$10,757.44
$22,195.22
.75% 1.00%
$469.29 $614.47
$2,351.41 $3,112.87
$6,843.97 $9,021.67
$15,881.20 $20,842.32
$32,616.84 $42,612.88
1.25%
$765.70
$3,863.42
$11,149.56
$25,646.08
$52,201.17
1.50%
$915.99
$4,603.21
$13,228.78
$30,297.58
$61,398.79
ASSUMPTION: Underlying annual fund yield is 8%** (net of fund management expenses) compounded over the periods shown. THERE ARE NO FEES IN THE IPPFA SUPPLEMENTAL SAVINGS PROGRAM OTHER THAN THE FUND EXPENSES SHOWN IN THIS BOOKLET! * Source: Aegis Advisors Market Overview Report to the IPPFA Board dated April 2000 (revised Feb, 2009) ** The costs and annual fund yield are hypothetical and illustrative only. They are not representative of any actual client or of a specific investment product or strategy.
17
INVESTMENTS BUILT FOR RETIREMENT AND SUPPLEMENTAL SAVINGS PLANS! Typical Annuity or Collective Trust Product INVESTMENT MANAGEMENT FEES
“WRAP” / ADMINISTRATIVE FEES
American Century American Funds Fidelity Janus Lord Abbot Putnam
• Mortality and Expense Fee • Mortality and Administration Fee • Administrative Fee $ per head % of account balance • Variable Expense Charge • Mutual Fund Access Charge
+
=
TOTAL FEES UP TO 3%
Insurance Company Separate Account Many Products contain more than one of these
Etc.
IPPFA Plan with Transamerica INVESTMENT MANAGEMENT FEES
16 Core - “Pension Style” Collective Trust Funds 5 Strategic Allocation Funds
Charles Schwab PCRA Account – Over 5,000 no load Funds and 150+ ETF’s
“Portfolio Express”
“WRAP” / ADMINISTRATIVE FEES
+
NONE
Charles Schwab PCRA Account ‐ $50 PER ANNUM
=
TOTAL FEES 0.00% TO 1.60%
(Customized Target Maturity)
18
Your Funds at a Glance Inception 403(b) 457(b) Date (403b Expense Expense listed first) Ratio Ratio Money Market Liquidity and as high a level of 1/4/1994 .80% .80% income as is consistent with the 11/30/1978 preservation of capital. High Quality Bond Provide a high risk‐adjusted 7/5/1994 1.00% 1.00% return while focusing on the 6/30/1990 preservation of capital. Core Bond Seeks to achieve maximum total 7/5/1994 .97% 1.00% return. 12/31/1977 Inflation‐Protected To seek maximum return 2/22/1996 1.00% 1.00% Securities consistent with the preservation 7/31/1990 of capital. High Yield Bond Seeks to provide a high level of 1/30/1996 1.10% 1.10% current income. 8/31/1995 Large Value Provide long‐term capital 7/5/1994 1.00% 1.00% appreciation through 12/31/1977 investment in a diversified portfolio of common stocks of large‐capitalization companies. Current income is a secondary goal. Large Core/Large Provide capital appreciation 7/5/1994 1.15% 1.15% Blend and current income. 12/31/1985 Stock Index To match the performance of 3/10/1999 .65% .65% the Standard & Poor’s 500® 4/1/1993 Index. Large Growth Provide a high level of capital 7/5/1994 1.24% 1.25% appreciation through 2/28/1993 investment in a diversified portfolio of common stocks with a potential for above‐average growth in earnings. Current income is a secondary goal. Mid Cap Value Provide a high total investment 8/15/2001 1.25% 1.25% return through investments 5/15/2001 primarily in a diversified portfolio of common stocks. Fund Name/Type
Investment Objective
19
Mid Cap Growth
Small Value
Small Cap Core
Small Cap Growth
Real Estate Fund (457b Only) International Equity/Foreign Large Growth Intermediate Horizon Asset Allocation Fund
Provide a high total investment return through investments primarily in a diversified portfolio of common stocks. Provide a high total investment return through investments primarily in a diversified portfolio of common stocks. Provide a high total investment return through investments primarily in a diversified portfolio of common stocks of small to medium size companies. Provide a high total investment return through investments primarily in a diversified portfolio of common stocks. Above average income and long‐ term capital growth. Provide a high level of long‐ term capital appreciation through investment in a diversified portfolio of securities of foreign issuers. Long‐term returns form a combination of investment income and capital appreciation with slightly less than average volatility as compared to other balanced funds. Target asset allocation is 50% Stocks and 50% Bonds.
9/6/2001 5/15/2001
1.35%
1.35%
7/10/2002 4/15/2002
1.57%
1.50%
7/5/1994 4/15/2002
1.53%
1.50%
8/9/2002 4/15/2002
1.55%
1.55%
8/29/2003
N/A
1.35%
1/19/1996 11/30/1992
1.40%
1.40%
6/13/1996 9/30/1992
1.23%
1.33%
20
Intermediate/Long Long‐term returns form a 6/13/1996 Horizon Asset combination of investment 9/30/1992 Allocation Fund income and capital appreciation with slightly less than average volatility as compared to other balanced funds. Target asset allocation is 70% Stocks and 30% Bonds.
1.29%
1.39%
Long Horizon Asset Long‐term returns from growth 5/5/1998 Allocation Fund of capital and growth of income. 4/30/1998 Target asset allocation is 90% Stocks and 10% Bonds. Short Horizon Asset High level of income and 6/13/1996 Allocation Fund preservation of capital. Target 9/30/1992 asset allocation is 10% Stocks and 90% Bonds. Short/Intermediate Reasonable returns with 5/5/1998 Horizon Asset considerably less than average 4/30/1998 Allocation Fund volatility as compared to other balanced funds. Target asset allocation is 30% Stocks and 70% Bonds.
1.34%
1.44%
1.12%
1.23%
1.17%
1.27%
403(b) Fixed Account – TFLIC Fixed The Wise Choice For Educators includes a Stable Value/Fixed Account. Please ask the representative what the current interest rate is. There is no expense associated with this account. 457(b) Fixed Account – TFLIC Stable Fund The Wise Choice For Educators includes a Stable Value/Fixed Account. Please ask the representative what the current interest rate is. There is no expense associated with this account.
21
22
23
24
25
26
27
28
29
30
31
32
The Transamerica Partners Funds are investment options under the Diversified Investment Advisors Collective Trust, 440 Mamaroneck Avenue, Harrison NY, 10528. The trustee of the Collective Trust is Massachusetts Fidelity Trust Company (MFTC), 440 Mamaroneck Avenue, Harrison NY, 10528. Stable Fund is offered under the plan by Transamerica Retirement Solutions, such option is made available under a group annuity contract issued by Transamerica Financial Life Insurance Company (TFLIC), 440 Mamaroneck Avenue, Harrison NY, 10528. TFLIC, MFTC, and Transamerica Retirement Solutions are affiliated companies. *Schwab Personal Choice Retirement Account® (PCRA) is not a fund but rather a participant selfdirected brokerage account maintained at Charles Schwab & Co., Inc. Participants must individually apply for PCRA and are solely responsible for their fund selections made under the PCRA. Commissions and transaction fees may apply to fund trades placed outside of the Schwab Mutual Fund OneSource® program or trades on other investment vehicles available through Schwab. An annual fee of $50 will be applied by Transamerica Retirement Solutions if you invest in the Schwab PCRA. Securities purchased through the PCRA are available through Charles Schwab & Co. Inc., (Member SIPC). Charles Schwab & Co., Inc. is not affiliated with Transamerica Retirement Solutions.
33
34
TA069292 00001 PT-3447 (06/15)
35
