1 elevator constructors union local no. 1 annuity and 401 (k) plan retirement seminar october 29,...
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Elevator Constructors Union Local No. 1 Elevator Constructors Union Local No. 1
Annuity and 401 (k) PlanAnnuity and 401 (k) Plan
Retirement SeminarRetirement Seminar
October 29, 2009October 29, 2009
Elevator Constructors Union Local No. 1 Elevator Constructors Union Local No. 1
Annuity and 401 (k) PlanAnnuity and 401 (k) Plan
Retirement SeminarRetirement Seminar
October 29, 2009October 29, 2009
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PresentersPresenters
National Elevator Industry Pension PlanNational Elevator Industry Pension Plan
Rob Betts, Executive DirectorJim Govannicci, Benefit Manager Pension Plan
ECU Local No. 1 Annuity and 401(k) PlanECU Local No. 1 Annuity and 401(k) Plan
Rita Wisniewski, Fund ManagerCaroline Gordon, Assistant Administrator
Lucille Hart, Administrator
Vanguard (ECU Local No. 1 401(k) Plan)Vanguard (ECU Local No. 1 401(k) Plan)
Colleen McGinleyMaureen Rayburn
Elevator Constructors Union Local No. 1Elevator Constructors Union Local No. 1Annuity and 401 (k) PlanAnnuity and 401 (k) Plan
Retirement Seminar Retirement Seminar
Elevator Constructors Union Local No. 1Elevator Constructors Union Local No. 1Annuity and 401 (k) PlanAnnuity and 401 (k) Plan
Retirement Seminar Retirement Seminar
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WHEN CAN I RETIREWHEN CAN I RETIRE AND HOW MUCH MONEY DO I NEED? AND HOW MUCH MONEY DO I NEED?
WHEN CAN I RETIREWHEN CAN I RETIRE AND HOW MUCH MONEY DO I NEED? AND HOW MUCH MONEY DO I NEED?
To answer this question, consider the following:
Age
Marital Status
Financial Obligations
Expected Retirement Income
Can I afford to retire?
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AGEAGEAGEAGE
What is your life expectancy?
Will you have enough money for all the years you are expected to live?
At what age can you get your pension?
Are there penalties for taking your pension early?
Example of life expectancy:
Male age 63 is expected to live to age 82
Female age 63 is expected to live 85½
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MARITAL STATUSMARITAL STATUSMARITAL STATUSMARITAL STATUS
Are you married?
Do you want to provide a survivor benefit for your spouse?
Do you have children?
How old are they?
How will you provide for their future?
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FINANCIAL OBLIGATIONSFINANCIAL OBLIGATIONS FINANCIAL OBLIGATIONSFINANCIAL OBLIGATIONS
Experts say you will need 80% of your pre-retirement income after retirement.
For example, if you earned $100,000 a year before retirement, you would need $80,000 a year after retirement to maintain your life style.
Mortgage
Tuition
Car Payments
Medical Expenses
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EXPECTED RETIREMENT INCOMEEXPECTED RETIREMENT INCOMEEXPECTED RETIREMENT INCOMEEXPECTED RETIREMENT INCOME
Personal SavingsPersonal SavingsPension PlansPension Plans
Social SecuritySocial Security
Retirement BenchRetirement Bench
Savings Accounts NEI Pension Plan Social SecurityReal Estate Investments Local 1 Annuity & 401(k) Plan Retirement Benefits
IRA’s
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RETIREMENT INCOME FROM PERSONAL SAVINGSRETIREMENT INCOME FROM PERSONAL SAVINGSRETIREMENT INCOME FROM PERSONAL SAVINGSRETIREMENT INCOME FROM PERSONAL SAVINGS
Savings Accounts
CD’s
Investments
IRA’s
Equity in your Home
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RETIREMENT INCOME FROM SOCIAL SECURITYRETIREMENT INCOME FROM SOCIAL SECURITYRETIREMENT INCOME FROM SOCIAL SECURITYRETIREMENT INCOME FROM SOCIAL SECURITY
Based on earnings throughout your working career
Average Social Security Monthly Benefit $945
Age for full Social Security Benefits increases from 65 – 67
For example:
If you were born 1937 or earlier Full Social Security at 65 1943 – 1954 Full Social Security at 66
1960 or later Full Social Security at 67
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RETIREMENT INCOME FROM PENSION PLANSRETIREMENT INCOME FROM PENSION PLANSRETIREMENT INCOME FROM PENSION PLANSRETIREMENT INCOME FROM PENSION PLANS
National Elevator Industry Pension PlanNational Elevator Industry Pension Plan
ECU Local No. 1 Annuity PlanECU Local No. 1 Annuity Plan
ECU Local No. 1 401(k) PlanECU Local No. 1 401(k) Plan
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PENSION PLANSPENSION PLANSPENSION PLANSPENSION PLANS
NEI Pension Plan – Defined Benefit Plan
Pension formula is stated in Plan rules
Participant must meet age and service requirements
Example formula:
Years of Service x $ Amount = Monthly Pension
25 (years) x $ 98 = $ 2,450
30 (years) x $ 98 = $ 2,940
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PENSION PLANSPENSION PLANSPENSION PLANSPENSION PLANS
ECU Local No. 1 Annuity Plan – Defined Contribution Plan
Contribution is defined in collective bargaining agreement
For example, current Annuity contribution rates for Journeypersons are:
For construction work - $7.25 per hourFor service work - $7.10 per hour
Total of all Contributions - Loan Balance- Withdrawals
+/- Investment Income- Operating Expenses
--------------------------------------= Annuity Account Balance
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PENSION PLANSPENSION PLANSPENSION PLANSPENSION PLANS
ECU Local No. 1 401(k) Plan – Defined Contribution Plan
Voluntary PlanPre-tax Employee Contribution
% of Wages or Flat Dollar Amount up to Annual Statutory Limit
2009 Annual Limit $16,500 + $5,500 Catch-up2010 Annual Limit $16,500 + $5,500 Catch-up
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LOCAL NO. 1 ANNUITY AND 401(k) PLANLOCAL NO. 1 ANNUITY AND 401(k) PLANLOCAL NO. 1 ANNUITY AND 401(k) PLANLOCAL NO. 1 ANNUITY AND 401(k) PLAN
Annuity 401(k)
Assets (as of 12/31/08) $376,009,118 $45,828,179
Administration Board of Trustees Board of Trustees
Investments Trustee Directed Participant Directed
Participation Automatic Voluntary
Vesting Immediate 100% Immediate 100%
Contributions Specified Amount per hour per CBA % of wages or flat $, up to annual limit
Account Statements Quarterly and Annual Quarterly
Loans Yes No
Special Financial Needs Withdrawals Yes No
Account Distribution Requirements are the same for both.
Payment Methods
Beneficiaries Same for both
Tax Consequences Same for both
Differ between Annuity and 401(k)
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LOCAL NO. 1 ANNUITY AND 401(k) PLANLOCAL NO. 1 ANNUITY AND 401(k) PLANLOCAL NO. 1 ANNUITY AND 401(k) PLANLOCAL NO. 1 ANNUITY AND 401(k) PLAN
Account Distribution - RequirementsAccount Distribution - Requirements
Age 65
Leave the Industry (no contributions for 6 months)
Retire from the NEI Pension Plan
Total and Permanent Disability (SSA Award)
Age 70½ Minimum Distributions
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LOCAL NO. 1 ANNUITY AND 401(k) PLANLOCAL NO. 1 ANNUITY AND 401(k) PLAN
Payment MethodsPayment Methods
LOCAL NO. 1 ANNUITY AND 401(k) PLANLOCAL NO. 1 ANNUITY AND 401(k) PLAN
Payment MethodsPayment Methods
1. Lump Sum Payment - Rollover over or direct payment to Participant – Available for both Annuity Account and 401(k)
2. 10 Annual Installments – methods are different under each plan
3. Qualified Joint and Survivor Annuity (monthly benefit to Participant with survivor benefit to spouse) – Available for Annuity Account only
4. Straight Life Annuity (monthly with no survivor benefit) – Annuity only
4. Investment Yield Only – Applies to Annuity Account only
5. Partial Lump Sum Payment with 10 annual installments
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LOCAL NO. 1 ANNUITY AND 401(k) PLANLOCAL NO. 1 ANNUITY AND 401(k) PLANLOCAL NO. 1 ANNUITY AND 401(k) PLANLOCAL NO. 1 ANNUITY AND 401(k) PLAN
Who will get your Annuity and 401(k) Contributions if you die?Who will get your Annuity and 401(k) Contributions if you die?
Before you Retire:
If married, Spouse, unless you designated another person and your spouse consents
If not married, you may name anyone as Beneficiary Designated Beneficiary under NEI Pension Plan Your estate
After You Retire:
Spouse, if you are receiving a QJSA No one, if you received a Lump Sum or Straight Life Annuity Designated Beneficiary for all other payment methods (If married, spouse must consent)
Special Note: Qualified Domestic Relations Orders (QDRO’s)
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Distribution RulesDistribution RulesAnnuity Account OnlyAnnuity Account Only
• Application postmarked or hand delivered to Fund Office by April 1 – Participant receives:– Account Balance as of 12/31 of prior year– Plus contributions between January 1 and distribution– Less Loan Balance
**********************– 100% of Account Balance if Prior Year’s Yield and Operating
Expense has been calculated or– 80% Initial Payment & remaining 20% when Prior Year’s Yield and
Operating Expense is determined (by end of March)
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Example #1Example #1
• Jim has Annuity Account of $200,000 as of 12/31/08• Jim’s application is postmarked before April 1, 2009
• If the prior year’s Yield and Operating Expense have been calculated by the time Jim files his Application, Jim will receive one payment = 100% of his 12/31/08 plus/minus the 2008 Yield and Operating Expense.
*******************************• If the prior year’s Yield and Expense have not been calculated by the time Jim files
his Application, Jim will receive two payments:• First Payment = 80% of his 12/31/08 Account Balance ($160,000)• Second Payment = 20% withheld from Account, plus/minus the Prior year’s Yield
and Expense
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Distribution RulesDistribution Rules Annuity Account Only Annuity Account Only
• Application postmarked or hand delivered to Fund Office after April 1 – Participant receives:– Account Balance as of 12/31 of prior year– Plus contributions between January 1 and distribution date– Less Loan Balance– Plus/Minus Pro rata of current year’s Yield and Operating Expense (based
on number of days full Account remained in Fund divided by 365)***************************
– Initial Payment = 80% of Account Balance as of 12/31 (paid in year distribution is requested)
– Supplemental Payment = 20% withheld from Account, plus/minus pro rata share of current year Yield and Operating Expense (paid in following year)
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Example #2Example #2
• Sam has an Annuity Account of $400,000 as of May 1, 2009• Sam’s application is received at the Fund Office on May 15, 2009• Assume the Yield for 2009 is 5% and the Expense is $580
********************• Sam will receive his Annuity Account in two payments as follows:
– Payment # 1 = 80% of Sam’s Account ($320,000) will be paid June 15, 2009
– Payment #2 = The remaining 20% ($80,000), plus a pro rata share of the Yield ($9,095.88), minus a pro rata share of the Operating Expense ($263.78) will be paid in March of 2010. The supplemental check would total $88,832.10
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LOCAL NO. 1 ANNUITY AND 401(k) PLANLOCAL NO. 1 ANNUITY AND 401(k) PLANLOCAL NO. 1 ANNUITY AND 401(k) PLANLOCAL NO. 1 ANNUITY AND 401(k) PLAN
Tax ConsequencesTax Consequences
Federal, state and local taxes due when Pension is paid to you
Rollovers (to a traditional IRA or other qualified plan) – no taxes withheld or due in current year. You can roll over a Lump Sum or Partial Lump Sum
Payments eligible for Rollover that are paid directly to participant – Mandatory 20% withheld as federal income tax
Payments not eligible for Rollover (e.g., 10 annual installments, monthly annuity) – Mandatory 10% withheld unless you elect other amount
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LOCAL NO. 1 ANNUITY AND 401(k) PLANLOCAL NO. 1 ANNUITY AND 401(k) PLANLOCAL NO. 1 ANNUITY AND 401(k) PLANLOCAL NO. 1 ANNUITY AND 401(k) PLAN
Tax Consequences (Continued)Tax Consequences (Continued)
10% penalty for withdrawal prior to 59½ unless rolled over (exceptions include separation from service during or after age 55 and retirement due to disability)
Special tax treatment for individuals born before 1/1/36 (10 year average or capital gain – see accountant)
Spouse has same options as Employee.
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SAMPLE BENEFIT CALCULATION #1SAMPLE BENEFIT CALCULATION #1SAMPLE BENEFIT CALCULATION #1SAMPLE BENEFIT CALCULATION #1Lump Sum Payment – Rollover or direct payment Entire account is paid in a lump sum Can be rolled over to another qualified plan or IRA Not taxed when rolled over Taxed as ordinary income as you take money out of the roll over If not rolled over, mandatory 20% tax withholding
Example of Benefit CalculationLump Sum
Member Works 25 yearsAnnuity Account Balance $235,000Member Age: 63Spouse Age: 51
Lump Sum – Participant receives entire account balance $235,000
Earnings % Annual Earnings Monthly Earnings
$235,000 @ 4% = $ 9,400 $ 783.33$235,000 @ 6% = $ 14,100 $ 1,175$235,000 @ 8% = $ 18,800 $ 1,567
$235,000 @ 10% = $ 23,500 $ 1,958
Lump Sum (earning 6%) $ 1,175+ NEI Pension Benefit (with 50% J&S) $ 2,075+ Social Security $ 1,000
$ 4,250 taxable monthly retirement income+ Local No. 1 401(k) Plan+ Personal Savings
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SAMPLE BENEFIT CALCULATION #2SAMPLE BENEFIT CALCULATION #2SAMPLE BENEFIT CALCULATION #2SAMPLE BENEFIT CALCULATION #2Qualified Joint and Survivor Annuity (monthly with survivor benefit)
Account balance used to purchase monthly annuity from an insurance company 50% J&S Reduced monthly payment to pensioner with 50% continuing to spouse If spouse dies, pensioner continues to get reduced monthly amount Cannot be rolled over Taxed as ordinary income as you receive the benefit Automatic for married participant Participant can elect another payment method, with written spousal consent
Example of Benefit CalculationQualified Joint and Survivor Annuity
Member Works 25 yearsAnnuity Account Balance $235,000Member Age: 63Spouse Age: 51
QJSA (50% J&S) $ 1,230 per month*+ NEI Pension Benefit (with 50% J&S) $ 2,075+ Social Security (reduced @ age 63) $ 1,000
$ 4,305 taxable monthly retirement income+ Local No. 1 401(k) Plan+ Personal Savings
* If pensioner dies before spouse, spouse receives $615 per month for life.
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SAMPLE BENEFIT CALCULATION #3SAMPLE BENEFIT CALCULATION #3SAMPLE BENEFIT CALCULATION #3SAMPLE BENEFIT CALCULATION #3Ten Annual Installments Annual payments = 1/10th of original account balance = +/- investment income and expenses Two payments each year: 1/10th in January and net investment income in April Taxed as ordinary income as you receive the benefit Cannot be rolled over
Example of Benefit CalculationTen Annual Installments
Member Works 25 yearsAnnuity Account Balance $235,000Member Age: 63Spouse Age: 51
Ten Annual InstallmentsFirst Year $ 23,500 ($1,958 per month)Second Year $ 23,500 +/- Earnings and ExpensesThird Year $ 23,500 +/- Earnings and ExpensesEtc.
Ten Annual Installments (Approx.)$ 1,958 Per Month (ends in 10 years) + NEI Pension Benefit (with 50% J&S) $ 2,075
+ Social Security $ 1,000$ 5,033 Taxable monthly retirement income 1st 10 years)
$ 3,075 Monthly after 10 years+ Local No. 1 401(k) Plan+ Personal Savings
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Highlights of Recent Plan ChangesHighlights of Recent Plan Changes
• 401(k) Investment Manager changed to Vanguard – July 1, 2008• Participants no longer have to take Annuity and 401(k) accounts at the
same time• Participants can make direct rollovers of Annuity and 401(k) accounts to
Roth IRA’s• Non-spouse beneficiaries can make direct rollovers to IRA’s• Annuity, J&S and Investment Yield Only eliminated as payment
methods under the 401(k) plan• 75% J&S added as payment method for Annuity accounts• Investment Consultant changed to The Dobbs Group at Graystone
Consulting• Our webpage is getting a facelift
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LOCAL NO. 1 ANNUITY AND 401(k) PLANLOCAL NO. 1 ANNUITY AND 401(k) PLAN
Write or Call the Fund Office atWrite or Call the Fund Office at
ECU LOCAL NO. 1 ANNUITY AND 401(k) PLANECU LOCAL NO. 1 ANNUITY AND 401(k) PLAN 2185 Lemoine Avenue, Fort Lee, NJ 070242185 Lemoine Avenue, Fort Lee, NJ 07024
(201) 592-6800 (212) 564-4800(201) 592-6800 (212) 564-4800oror
Visit our Web Site at: Visit our Web Site at: www.benserconj.comand click on the Local 1 logoand click on the Local 1 logo
If you have questionsIf you have questions
To change your address or marital statusTo change your address or marital status
To request a Beneficiary Designation formTo request a Beneficiary Designation form
To apply for your Annuity and 401(k) withdrawalsTo apply for your Annuity and 401(k) withdrawals
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ELEVATOR CONSTRUCTORS UNION LOCAL No. 1ELEVATOR CONSTRUCTORS UNION LOCAL No. 1ANNUITY AND 401(k) PLANANNUITY AND 401(k) PLAN
2185 LEMOINE AVENUE, FORT LEE, NJ 070242185 LEMOINE AVENUE, FORT LEE, NJ 07024(201) 592-6800 (212) 564-4800(201) 592-6800 (212) 564-4800
Union TrusteesUnion Trustees Employer TrusteesEmployer TrusteesLeonard Legotte E. James Walker, Jr. (Emany)Michael Riegger Michael Shields (Schindler)Robert Stork Vincent Schiavone (Kone)
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