Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,#,Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,Agenda,Review Exams,Talk about Applied Knowledge and Goal moving forward,Overall Goal of a 401(k)Plan,Company Responsibility,HR Responsibility,Individual Responsiblity,Exercise,AgendaReview Exams,401(K)Basics,What you should and need to know!,401(K)BasicsWhat you should,What is a 401(k)Plan,Enron crash and people running around saying 401(k)was a bad idea,What is a 401(k)PlanEnron cr,Retirement,Defined Benefit PlanFor example State Retirement System based on last 3 years salary average*the number of years of service as a percentage,Defined Contribution Plan401k,Typical match is 50 cents on the dollar up to 3%,RetirementDefined Benefit Plan,Defined Plan,Very expensive,Retirement of the past,State System,Defined PlanVery expensive,Defined Contribution,Employee stock ownershipcompany allocates number of shares to employee,Deferred profit sharingcompany contributes an amount of profits each year,Defined ContributionEmployee s,Company Makes Decision,Decides to Offer,Decides on Matching Contribution,Decides on Safe Harbor v.Regular,Create a 401(k)Committee,Picks Provider,Very important to document provider choice,Company Makes DecisionDecides,Chief Duties of Retirement Plan Committees,ADMINISTRATION,Design plan.,Choose and monitor third-party record keepers,other service providers.,Ensure government compliance.,Amend plan document as needed.,Handle employee communications.,Decide benefits claims and appeals.,Provide for financial education.,INVESTMENT MANAGEMENT,Write and ensure adherence to investment policy statement.,Choose specific investments or recommend them to full committee.,Hire and monitor investment managers,other service providers.,Review investment performance and make changes as needed.,Chief Duties of Retirement Pla,404C Compliance,Very Critical to HR Field,Erisa Section 404(C)provides limited fiduciary relief to plan sponsors,assuming participants can exercise control over their accounts.,EMPLOYERS MUST EDUCATE BUT CAN NOT GIVE INVESTMENT GUIDANCE AND/OR ADVICE,404C ComplianceVery Critical t,Investment Policy,State what the overall goal of the company is in offering the 401(k)and how it will be administered,Should have an investment committee,Investment PolicyState what th,See sample Fiduciary Service Timeline,See sample Fiduciary Service T,Good Advice from HR Magazine about Committee Responsibility,These nuts and bolts of setting up and running a committee may not be glamorous,but the devil is in the details.Following the three Psprudence,process and procedure can result in a well-functioning committee that provides the best retirement plan for participants while insulating top executives from legal liability.,Good Advice from HR Magazine a,Welcome,What well cover today,Info,Why save and the benefits of your plan,Process,How to make the plan work for you,Your role,What you need to do,Introducing,Today,Process,Your Role,Info,WelcomeWhat well cover todayI,Social Insecurity?,Info,Welcome,Benefits,Why Save,Process,Your Role,Source:Social Security Administration,2006 OASDI Trustee Report,2005,3.3 workers per SocialSecurity Recipient,2030,2.2,workers per SocialSecurity Recipient,1940,16.5 workers per Social Security Recipient,Social Insecurity?InfoWelcomeB,Social Insecurity?,People are living longer,Most likely,you will enjoy 20-30 years of retirement,Did you know?,i,Benefits,Process,Your Role,Welcome,Info,Why Save,According to the U.S.Census Bureau,in 2005 there were over 70,000 Americans age 100 and older.,This is expected to increase to 1.1 million by 2050.,Social Insecurity?People are l,Your company match,i,The company makes a$1.00 contributionto your account,For every dollar you contribute up to 6%of pay,Your company matchiThe company,Vesting schedule,Your entitlement to the employers contribution portion of your account,You are immediately Vested 100%,Vesting scheduleYour entitleme,Now add the match 100%,30years,10years,20years,$31,824,$102,590,$259,947,Assumes a$20 weekly contribution,100%match,and an 8%annual return compounded monthly,This is for illustrative purposes only and not meant to represent the return of any of your plans investment options.Your situation will vary.,Now add the match 100%30yea,Lower current taxable income,annual base wage,pretax contributions,pay subject to income tax,tax*,Social Security,regular savings,spendable income,Eds 6%RegularSavings*,$25,000,0,25,000,-3,750,-1,913,-1,500,$,17,837,Janes 6%PlanSavings,$25,000,-1,500,23,500,-3,525,-1,913,0,$,18,062,Janes taxable income is lower,resulting in$225 morein spendable income than Ed,*An investment in a savings account at a bank may be FDIC insured;an investment through the pl