peraplus workshop: instructor guide · course overview this course is designed to teach members...

PERAPlusWorkshop:InstructorGuide

TableofContentsCourseOverview.......................................................................................................................................................3 

Introduction...........................................................................................................................................................4

DevelopingaSavingsPlan...............................................................................................................................7 

InvestmentOptionsandAssetAllocation.................................................................................................7 

EnrollinginPERAPlus…………………………………………………………………………………………………5

MaterialsandEquipment.................................................................Error!Bookmarknotdefined. 

IconGlossary..............................................................................................................................................................8 

Introduction................................................................................................................................................................9 

InstructionalGoal...........................................................................................................................................9 

Objectives..........................................................................................................................................................9 

Section1:DevelopingaSavingsPlan............................................................................................................13 

InstructionalGoal........................................................................................................................................13 

Objectives........................................................................................................................................................13 

LargeGroupCaseStudy‐Andrea..........................................................................................................15 

Section2:ChoosingyourInvestmentMix..................................................................................................26 

InstructionalGoal........................................................................................................................................26 

Objectives........................................................................................................................................................26 

Section3:EnrollinginPERAPlus....................................................................................................................40 

InstructionalGoal.........................................................................................................................................41 

Objectives.......................................................................................................................................................45 

Section3:EnrollinginPERAPlus‐401(k)Only........................................................................................47

Closing…………………………………………………………………………………………………………………………43

CourseOverviewThiscourseisdesignedtoteachmembersaboutseveralaspectsofthePERAPlusprogram.Ithasbeendividedintothreesections:DevelopingaSavingsPlan,InvestmentOptionsandAssetAllocation,andEnrollinginPERAPlus.Seethelistbelowforabriefdescriptionofeachsection.

Introduction

Lecture‐based Time:5‐7minutes Introducecurrentandfutureselfaswellascompounding

1:DevelopingaSavingsPlan

Discussion‐based Time:20‐30minutes Usescasestudiestoillustratehowtodevelopaplan

SelectingCaseStudiesforDevelopingaSavingsPlan

Youalsowillgettochoosethefollowing:

Thecasestudiestobeusedduringthesession Thecourseformat–whetherthecasestudieswillbediscussedinpairs,small

groups,orasalargegroup,witheachgroupreportingouttheirfindings

AudienceDiversity Thecasestudiesaredesignedtoexaminedifferentscenarioswithavarietyofagesandreasonstosaveaddressed.Chatwithmembersbeforethemeetingtogetasenseofwhattheirneedsare,andyoumaywanttoassigncasestudiesthataresimilartothemember’sneedsorconcerns.

ClassSize Makesuretodiscusswithemployerthenumberofattendeesasthiscanhaveanimpactontimeduetoincreaseinquestionsorproblemsolvinggettingparticipantsloggedon.Forverylargegroupsyoumayrunintotimeconstraintsbyusingasmallgroupapproach.It’sbesttolimitattendeestonomorethan20.

Employerrequests YourEmployercontactmaybeabletoprovideyouwiththebackgroundoftheorganization,soyoucandeterminetheagerangeofstaff.Thismayaidinthechoiceofthecasestudy.

TechnologyAvailability Checkwithemployerastowhattechnology/internetaccessisavailable.Someactivitiesmaybelimitedastohowmuchisavailable.

2:InvestmentOptionsandAssetAllocation

LectureandDiscussion‐based Time:20minutes Usescasestudiestoillustrateassetallocationstrategies

3:EnrollinginPERAPlus

Lecture‐based Time:10–15minutes

Whatisofferedbytheemployer(457/Roth)

Checkagencydirectoryforinformationonwhatisofferedattheemployerlocation.Youwillnothavetocover457informationifnotoffered.Thereisa401(k)onlypresentationyoucanuse.

Collecting401(k)enrollmentforms

Youwillbeguidingparticipantsthroughtheenrollmentprocessforeachplan.Sincethe401(k)requiresapaperform,youwillbeworkingwithsomeoneonsitetocollecttheseformssecurely.TheFieldEducationRepresentativewhoarrangedtheworkshopwillalsobemakingarrangementsforthoseformstobeturnedintoHumanResources,Payrollorotherstaffmemberattheemployersite.PleasechecktheM&Aforinstructions.

PriortoDeliveringCourseOnceyouhavescheduledthiscoursewithyouremployer,thepresenterwillneedtodothefollowing:

1. CreateappointmentinM&AandentermeetingtypeasPERAPlusWorkshop.2. CreateSign‐UpGeniusandemaillinktoemployercontact.3. OPTIONALifemployerwantsflyer:AccessthePERAPlusfolderlocatedatP:\Field

Education\InstructorFolder\PERAPlusa. Locatetheflyer.Editflyerwithdate,time,andmeetinglocationandinclude

howemployeescanregisterfortheevent.SaveflyerfortheeventasaPDFbeforeemailingtoyouremployercontact.

DayofCourse1. Printsign‐insheetfromSign‐UpGeniustouseforattendance.Makesuretobringit

backtotheofficeafteryourmeeting(donotdiscard).2. Takefeedbackformsforaudiencetofilloutaftermeeting.

NOTE:IfyoudidnotuseSign‐UpGeniusforregistration,makesuretobringalongthePERAPlusSignUpsheetforattendance.ThisislocatedatP:\FieldEducation\InstructorFolder\PERAPlus\PERAPlusSignUp

AfterDeliveringCourseAfterdeliveringthiscourse,youwillneedtodothefollowing:

1. Within24hoursofcompletingworkshop:CompareattendancesheetwithactualSign‐UpGeniusanddeletepeoplewhodidnotshowup.

2. GotoReportsinSign‐UpGenius,selectyourmeetingandexportdataasCSVfile.SavetoyourMdriveforyourrecords.

3. CopyandpasteemailaddressesfromCSVfiletoOutlookemail(makesuretoBCC).SettheTO:boxtoyourself.Dothisintwoseparateemails.

a. Ifyouusedyourownsign‐upsheetinsteadofSign‐UpGenius,simplyentertheemailaddressesmanuallyintheBCCofyouremails.

4. AccessthePERAPlusfolderlocatedatP:\FieldEducation\InstructorFolder\PERAPlus

5. LocateWordDocumenttitledPPSamedayParticipantFollowupEmail.Editinformationhighlightedinblueandemailtoeachworkshopparticipantthesameornextday.

6. LocateWordDocumenttitledPERAPlusParticipantFollowup.Editinformationhighlightedinblue,thenselecttheOPTIONStabinOutlookemailandsetupadelayeddeliveryfortwoweeksfromtheworkshop,thensendemailtoeachworkshopparticipant.

a. Alternatively,youcansetupacalendarinviteforyourselftoremindyoutosendtheemailtwoweeksfromthedateoftheworkshop.

MaterialsandEquipmentMaterialstoTake

toMeetingEquipmenttoTake

toMeetingEquipment

EmployerNeedstoProvide

EquipmentEmployeeNeedsto

bring Participant

Guides(1each)

InstructorManual

PowerPointPresentationloadedonLaptoporThumbDrive

ExtraPens 401(k)/457

enrollmentkits

FeedbackForms

AttendancesheetfromSign‐UpGenius

Projector Laptopor

ThumbDrive Mobile

HotspotifWifinotprovidedbyemployer

Screenorblankwall

Internetaccess

ComputerLab

Laptop,tablet,orhandhelddeviceifnotheldincomputerlab

InstructionNotes

IconGlossary

SPECIFIC SLIDE FOR USE DURING THE EXPLANATION

FLIPCHART USE

SUPPLEMENTAL INFORMATION TO HELP PERFORM A TASK MORE EASILY

GROUP EXERCISE

QUESTIONS FOR FACILITATOR TO ASK PARTICIPANTS

ONLINE WEB TOOL PRESENTATION

Introduction

InstructionalGoalParticipantswillbeabletoidentifythedifferencebetweencurrentandfutureself.

LearningObjectivesAttheendofthissection,participantswillbeableto:

1.Identifyiftheyarespendingnoworsavingforretirement.

2.Definecompounding.

3.Identifytheirtimehorizon.

ExpectedTime:5‐10minutes

KeyPoints Slide Welcometheparticipantsand

introduceyourself Explainhousekeepingitems,such

assilencingphone,restroomlocations,etc.

Explaintheworkbookandhowtheywilluseittocompleteexercisesandtakenotes.

Explainthatparticipantswillhaveanopportunitytoenrollorincreasecontributionsinthe401(k)or457neartheendofthispresentation.

Howdoyouenvisionyourretirementyears?Travelingtheworld,volunteeringforyourfavoritecharity,tryingexoticfoodsathigh‐endrestaurants,buyinganexpensivetoy,orpursuingyourfavoritehobbywithgusto?Tofulfillthoseretirementdreams,behavioraleconomistDanielGoldsteinsaysitrequiresapersontothinkofthemselvesastwopeople;thecurrentselfandthefutureself.Accordingtomultiplesurveys,onlyhalfofAmericanworkersareenrolledinaworkplace‐sponsoredretirementplan.Goldsteinattributesthistoworkershavingatoughtimeenvisioningtheirfutureselves.Thecurrentselfwantswhatitwantsnowwhilethefutureselfisforgotten.Forexample…Areyousomeonewhoalwayshasacarpaymentbecauseyouliketopurchaseanewcareveryfiveyears?Areyousomeonewhowouldrathertakeadreamvacationratherthansaveforretirement?Or,didyoujustmoveintoabiggerhouseandnowyouneedtobuyitemstofillthehome?Everydaywemakefinancialdecisionsthatwillimpacthowweliveinourretirementyears.TakingadvantageofsavinginPERA’s401(k)/457planscanprovideasourceofincometohelpyoupayforyourdesiredretirementlifestyle.

Youcanspend$4,200annuallyincarpaymentsoverthenext5yearsorcontributethesameamounttothe401(k)or457andhaveabalanceof$87,816overthenext35years.(Assumesanannualreturnof4.5%.)

Compoundinginterestisoneofthemostpowerfulforcesofinvesting.Youearnreturnsontopofreturns.Theearlieryoustartsavingforretirement,thelessyou’llhavetosavewhenyou’reolder.Thinkingaboutherfutureself,Kaylabeginssaving$200amonthinher401(k)attheageof25.WhileinhistwentiesandthirtiesBenthinksabouthiscurrentselfanddoesn’tconsiderthinkingabouthisfutureselfuntilheis40.Hebeginssaving$500amonthat40.

SinceKaylastartedearlier,shedidn’tcontributeasmuchasBenandmade$3500moreinearnings.BencontributedmoreandstillmadelessthanKaylainearnings.Overtime,asteadyrateofcompoundinterestcanbuildintoasizeablenestegg.

Thiscourseisinthreesections:

1. DevelopingaSavingsPlan2. ChoosingYourInvestmentMix

3. EnrollinginPERAPlus

Section1:DevelopingaSavingsPlan_________________________________________________________________________________________________________

InstructionalGoalTheparticipantswillbeabletodevelopasavingsplan,afterlearningaboutvariousretirementtools,andidentifyreasonstosaveforretirement.

LearningObjectivesAttheendofthissection,participantswillbeableto:

1.Describetheirprimaryreasonforsaving,andidentifytheirbiggestobstacletosaving.

2.Determinetheamountoftimetheyhavetoananticipatedretirementdate.

3.Determinetheirbiggestobstacletosaving.

4.Usewebsitecalculatorstoplanfortheirfinancialfuture.

Theexpectationisthat100%oftheparticipantswillcompletetheworksheet.

ExpectedTime:20‐30minutes

DevelopingaSavingsPlan

PresentthefollowingslidesmakingsuretoaddresstheKeyPointsindicatedintheleftcolumn.

KeyPoints Slide Attheendofthissectionyou

willbeableto…o Describeyourprimary

reasonforsavingo Identifyyourbiggest

obstacletosavingo Determinetheamount

oftimeyouhavetoananticipatedretirementdate

o Usecalculatorstohelpyouplanyourfinancialfuture

Thereareanumberofdifferentreasonstobesaving.ForexampleIsavebecause….

Let’sbrainstormsomeotherreasonswhypeoplesave.Youcanuseyourparticipantguidetotakenotes,andIwillwriteouranswersontheboard.

Thefirststeptocreatingasavingsplanistohaveareasontosave,sopickoneortworeasonsthatresonatewithyou.ClickontheSection1Poll‐WhatisYourPrimaryReasonforSaving?

KeyPoints Slide

Thereareanumberofdifferentreasonstobesaving.ForexampleIsavebecause….

Let’sbrainstormsomeotherreasonswhypeoplesave.Youcanuseyourparticipantguidetotakenotes,andIwillwriteouranswersontheboard.

Thefirststeptocreatingasavingsplanistohaveareasontosave,sopickoneortworeasonsthatresonatewithyou.ClickontheSection1Poll‐WhatisYourPrimaryReasonforSaving?

LargeGroupCaseStudy

AndreaReasontoSave:ClosinganIncomeGap

KeyPoints Slide

Nowthatwearethinkingaboutreasonstosave,let’sexaminesomecasestudiestogethertogetsomepracticeusingsomecalculatortoolstohelpyoureachyoursavinggoals.(ClickonAndreacasestudy)

HavesomeonereadthedescriptionofAndreaintheparticipantguide

WalkthroughthekeyinformationregardingAndreaontheslideshow.

AsktheaudiencewhatistheprimaryreasonthatAndreaissaving?Tocloseanincomegap

KeyPoints Slide

ExplainhowtofindthePERACalculatorsoncopera.org

Wewillbespecificallylookingatthreecalculatorsinthissection

Enterconservativeexpectedratesofreturn

Themajorityofthesecalculatorsdonotapplytaxes,andnoneofthemprojectfluctuationsininvestmentearnings

Federaland/orstatelawsmayspecifylimitationsnotcontainedinthesecalculators

Andreaistryingto

determinehowmuchmoneyshemighthaveifshemaintainshercurrentcontributionstoher401k

Inordertodeterminethis,shecanusetheFutureValueofanInvestmentcalculator

HavetheaudiencefindthecalculatoronthePERAWebsite

Walkthroughthecalculator

o Entercurrentaccountbalance$50,000

o Entercurrentcontribution$100/month

o Enterherexpectedrateofreturn5%beforeretirement

o Enterlengthofinvestment20years

Asweusethiscalculatorwefindthatwithher

KeyPoints Slide

currentassumptions,Andreawillhave$173,245inheraccountforretirement

NowthatAndreahasanestimateonwhatheraccountbalancewillbe,sheneedstodetermineifthatisenoughtocoverherestimatedincomegapof$485.

Inordertodeterminethis,wecanuseadifferentcalculator;theHowLongCanIWithdrawFromMyAccount.Haveaudiencefindthecalculatoronthewebsite.

Walkthroughthecalculator

o Enteraccountbalancedeterminedinpreviouscalculator$173,245

o EnterwithdrawalamountfromAndrea’skeyinformation$485

o Enterwithdrawalfrequencymonthly

o Enterassumedrateofreturnafterretirement3%

UsingthiscalculatorwedeterminethatAndreacanwithdrawthisamountfromheraccountbalanceforapproximately865monthsorjustover72years.ItappearsthatAndreawillbeabletofillhergapthroughherretirement,butitisimportanttonotethatAndreahasnotaccountedforinflationorthelossofpurchasingpower

KeyPoints Slide

NowthatwehavedeterminedthatAndreashouldbeabletofillherincomegap,weneedtoestimatehowmuchshecanwithdrawfromheraccount.

HavetheaudiencefindthecalculatoronthePERAWebsite

Walkthroughthecalculator

o EntertheaccountbalancefromtheFutureValueCalculator$173,245

o Enterwithdrawalfrequencymonthly

o Enterthenumberofyearsofwithdrawalsassumingshelivesuntil9525years

o Enterassumedrateofreturnafterretirement3%

Asweusethecalculator,wedeterminethatAndreamightbeabletowithdrawapproximately$818permonthforthenext25years

KeyPoints Slide

ToreviewAndrea,itappearsthatsheisontrackforherretirementgoals,howevershehasnotaccountedforinflationorfluctuationsinherassumptions.ThesethingsmaycauseAndreatoneedtoadjustherplansifexpectationsarenotmet.

PERAhasothercalculatorsotherthantheoneswehaveusedsofar

o HAScalculatorcanhelpyouestimateyourPERAHAS

o MonthlyBenefitCalculatorcanhelpyouestimateyourPERADefinedBenefitamount

o PurchasingServiceCreditcalculatorscanhelpyoudeterminewhetheryouwanttoPurchaseService

o PERACarepremiuminquirycanhelpyoudeterminethecostofyourPERACarecost

o TheRetirement

KeyPoints Slide

Plannercanlookattheaggregateimpactofallretirementincomes

o BenefitTaxestimatecanestimateyourDefinedBenefittaxamount

Clickonthe“CaseStudy”linktoreturntothelistofcasestudies.(Donotclickuntilyourarrowturnsintoapointinghandorthehyperlinkwillnotwork).

NowthatwehavewalkedthroughacasestudyIwantyoutogetsomepracticeusingthethreecalculatorsonyourown.

Iamgoingtoassigngroupstodifferentcasestudies,andyouwilluseyourparticipantguidetolearnmoreaboutyourcasestudy,andanswerthequestionsassociatedwithyourassignedcase

Assigngroupsandassigneachgrouptoadifferentcasestudy

Asgroupsareworkingontheircasestudy,walkaroundtheroomandhelpthegroupsusethecalculatorsandanswertheirquestions

CaseStudy

Daleisagoodcasestudyforsomeonesavingforhealthreasons,orforsomeonestartingtosavemuchlaterinlife.

Tedisagoodcasestudyforsomeonethathasbeensaving,buthasn’tincreasedtheirsavings,orforsomeonethatisjustgettingstartedwithsaving.

CeciliaisagoodcasestudyforsomeoneinterestedinRothsavings,orsomeoneconcernedwiththetaximplicationsofsaving.

VeronicaisagoodcasestudyforsomeoneinterestedinPurchasingServiceCredit.

Kaylaisagoodcasestudyforsomeonethatisyoungandjuststartingtheircareer,orhasalongtimehorizon.

Benisagoodcasestudyforsomeonethatisalittlemoreadvancedintheirplanningability,orsomeonethatismid‐career.

KeyPoints Slide

Onceallgroupshavefinishedtheirtasks,haveeachgroupreportoutontheirfindings.Aseachgroupgivessomebackgroundontheircase,pullupthe“KeyInformation”forthecasestudybeingdiscussed.

Asthegroupreportsoutontheanswerstotheirquestions,pullupthe“Analysis”forthecasestudy,andreviewtomakesurethecorrectanswersweredetermined.

Clickonthe“CaseStudy”linkatthebottomofthe“Analysis”slidetoreturntotheothercasestudies,andfollowthesameprocessforallassignedcases.

Onceyouhavewalkedthroughtheanalysisforallstudies,clickonthe“QuestionMark”linktotakeyoutothesectionquiz.(Donotclickuntilyourarrowturnsintoapointinghandorthehyperlinkwillnotwork).Thegrayquestionmarkisifyouaredoinga401(k)/457presentation

KeyPoints Slide

andthebluequestionmarkisifyouaredoingthe401(k)onlypresentation.

AssessmentQuestions

Instructions

AskAudiencetothinkaboutwhatisonethingtheycandothisweektoovercometheirbiggestobstacletosaving.

Thereisspacetowriteananswertothisintheparticipantguide.

Instructions

InsideyourparticipantguideisaSavingsPlanworksheettotakehomeandstartdevelopingyourownsavingsplan.

Arethereanyquestionsbeforewemoveontothenextsection?

Section2:ChoosingyourInvestmentMix

InstructionalGoalParticipantswillbeabletochooseaninvestmenttooltohelpthemcreatetheirownassetallocationplan.

Objectives

Attheendofthissection,participantswillbeableto:

1. Selectanappropriateinvestmenttoolbasedonacasestudycharacter’spreference.2. Selectanappropriateinvestmenttoolbasedonadescription.3. Definetheterms:assetclass,diversification,stocks,bonds,andcash.4. Identifytherelationshipbetweenriskandreturnofeachassetclass.5. Identifytheaffectcostscanhaveoninvestmentreturns.

ExpectedTime:20minutes

ChoosingYourInvestmentMixPresentthefollowingslidesmakingsuretoaddresstheKeyPointsindicatedintheleftcolumn.

KeyPoints Slide

Introduction:Manyindividualsareintimidatedbyinvestingandmanagingassets.

Inthissection,wewilldiscusswhatmakesagoodportfolioandsomethingstoconsiderwheninvesting.

PERAdoesoffersomehelp.Therearetoolsandresourcesthatwillhelpyouwithinvestingdependingonhowcomfortableyouarewithmanagingyourowninvestments.

Oneofthemostimportant

thingstoconsiderwithinvestingisdiversification.

You’veallheardtheterm,“Don’tputallofyoureggsinonebasket”.

Thesameistruewithinvesting:Tohaveagoodretirementportfolioyoudon’twanttoputallofyourhopeinoneinvestmentoption.

Thecasefordiversificationisthatdifferentkindsofinvestmentswill,onaverage,yieldhigherreturnsandposelowerriskthatanindividualinvestment.

Asktheaudience:Whataresomedifferentinvestmentoptions?

Toproperlydiversify,youwanttospreadyourassetsacrossavarietyofinvestmentsandassetclasses.

Let’stalkaboutthedifferentassetclasses.

The three main asset classes are 

cash, bonds, and stocks.   

You want to spread your assets 

across these different types.   

Cash:  Cash could mean cash in 

your wallet, checking account, or 

savings account.  The benefit of 

cash is that it is very liquid 

meaning you have easy access to 

it to buy things.  You are not 

paying high costs or transactions 

to use the money.  The down side 

you have to cash is that there is 

not much risk involved and it 

doesn’t offer the returns that may 

help you save for retirement and 

keep up with inflation. Cash is the 

most susceptible to inflation risk.  

Bonds:  Bonds are essentially a 

loan you are giving to a business 

or government.  It is the opposite 

of a loan you may take for 

student loans or a mortgage in 

that you are paying the loan 

company interest. With a bond, 

the company is paying you 

interest for the loan.  This offers a 

better return than cash and is 

usually in a bond for a timeframe 

like 5 or 10 years.  Thus, the 

money is not as accessible as cash 

but does offer a higher return 

than cash.   

Stocks:  With stocks you are 

taking ownership in a company.  

You are essentially part owner of 

that company and receive returns 

based on how well the company 

does.  Because of this, you have 

more risk but it essentially can 

offer higher returns.   

Because each of these has pros 

and cons, to build a solid 

portfolio, you want to have 

money in each of these classes.   

Ask:  Has anyone seen the Callan Periodic Table before? 

Callan Periodic Table is the case for asset allocation.   

This table show different indexes and how they performed each year. 

An index is a group of investments of a specific type.  

This shows that there is no way to predict what the market may do from year to year.  You wouldn’t be able to use this chart to predict where you should put all of your assets.   

Show example:  One may think that the emerging markets would be a good place to put all of their assets since that index was on top for 5 years from 2003‐2007.  However, where were the emerging markets the next year?  At the bottom.  This shows that you can never predict how an investment will perform; therefore, putting your assets across many investments will ensure a solid portfolio.

There is a correlation between risk and return.  The less risk you take in an investment, the less return you will have (such as with cash).  The more risk you take, the higher the opportunity for return.     

This slide shows PERA investment funds. 

Show investments in 401(k) or 457 enrollment guide.   

You are choosing what percentage goes into which funds. 

Spread money across all asset classes. 

In general, the younger a person is, the more aggressive you can go with more risk, and the closer a person is to retirement, the more conservative they need to be.  

Costs can have an impact on your portfolio. 

Just like any other cost (checking account, credit card, etc.) costs mean less in your pocket.   

PERA plans are cost efficient.   

Show costs in booklet.   

Visit copera.org for a list of current costs. 

Ask:  What has the highest cost?   

Ask:  What has the lowest cost?

You do not have to manage your 

investments all on your own. 

PERA offers some help with your investments. 

We have 3 different paths that you can choose from depending on your comfort level of investing.

Key Points  Slide

The three paths are: 

Help me invest – You feel somewhat comfortable investing. 

Invest for me – You do not feel comfortable investing. 

Let me invest – You feel very 

comfortable with investing. 

Help me invest:  If you like to manage your account but need help picking funds 

Personal online advice  Explain how to use 

Key Points  Slide

Invest for me:  You want the account managed for you. 

Target retirement date funds 

Default 

Set it and forget it 

Open enrollment guide and explain a  TRD 

Has one of the lowest costs 

Investments become more 

conservative over time 

Another Invest for me: Professional Account Manager 

costs apply 

Ongoing management 

Not commission based  One‐on‐one support 

Key Points  Slide

Twooptions:ChoosemyownorSelf‐directedbrokerage

Choosemyown:PickfromPERAadvantagefundswithorwithouttool

Self‐DirectedBrokerage:ChooseinvestmentsfromTDAmeritrade,extracostsapply 

LargeGroupExerciseToreviewtheinvestmenttools,youwillworkthroughfourcasestudiesasagroup.

Step Instructions

1.

Present the slide with the initial details of the character’s situation.

2.

Direct the participants to the case study details in the Participant Guide.

3.

Read each question associated with the case study (or ask a participant to read it) and facilitate a group discussion to answer the question.

InstructorNote:

Thisisyourperformanceassessmentforyourparticipants.

Makesurethattheparticipantsareabletoidentifytheinvestmentpathappropriateforthatcasestudy.(LO1‐2):

AssessmentQuestions

Step Instructions

1.

Presenttheslidesorhaveparticipantsusethevotingapptoanswerthefollowingquestions.

1. Whichassetclassismostsusceptibletoinflationrisk?a. Stocksb. Bondsc. Cash

2. Whichassetclassallowsyoutohaveownershipinacompany?A. StocksB. BondsC. Cash

3. Investinginwhichassetclassislikeloaningmoneytoacompanyoragovernment?

a. Stocksb. Bondsc. Cash

4. Theproperwaytodiversifyisto…..a. Investonlyinbondsb. Keepyourinvestmentsatmanydifferentbanksand

investmentfirmsc. Spreadyourinvestmentsacrossdifferentassetclasses

5. Investmentfundcostscan:A. Increaseyourinvestmentearnings.B. Decreaseyourinvestmentearnings

6. Thisinvestmentpathallowsyoutochooseyourowninvestments

outsideofthePERAdvantageinvestments?a.OnlineAdviceb.Self‐DirectedBrokerageAccountc.TargetRetirementDateFundd.ProfessionalManagement

7. Whichinvestmentpathautomaticallychangestheassetallocation

Step Instructions

foryouovertime?a.OnlineAdviceb.Self‐DirectedBrokerageAccountc.TargetRetirementDateFundd.ProfessionalManagement

8. Whichinvestmentpathhiressomeonetomanageyouraccountforyou?A.OnlineAdviceb.Self‐DirectedBrokerageAccountc.TargetRetirementDateFundd.ProfessionalManagement

PollQuestion:

9. Whatinvestmenttoolareyoumostlikelytouse?a. OnlineAdviceb. Self‐DirectedBrokerageAccountc. TargetRetirementDateFundd. ProfessionalManagemente. Choosemyownallocationf. Notsure

Section3:EnrollinginPERAPlus

InstructionalGoalParticipantswillbeabletoidentifysavingvehiclesofferedatPERAandbeabletoenrollinaplan.

Objectives

Attheendofthissection,participantswillbeableto:

1. Identifythedifferencesbetweena401(k)and457plan.2. Identifythedifferencesbetweenatraditional401(k)/457andaRothaccount.3. Identifytheenrollmentmethodforthe401(k)and457plan.

ExpectedTime:7‐10minutes

EnrollinginPERAPlusPresentthefollowingslidesmakingsuretoaddresstheKeyPointsindicatedintheleftcolumn.

KeyPoints Slide

Therearesomekeydifferencesbetweenthetwoplansavailabletoyouandwewillbediscussingtheseinthefollowingslides.

YoumayalsobewonderingwhatitmeanstocontributetoaRothplan,sowewillcoverthebasicsofthatinthissectionaswell.

Finally,wewilldiscussthedifferentenrollmentmethodsforthe401kandthe457sothatyoucanparticipate!

Justtoreview–wehavebeentalkingaboutthesetwoplans,whicharetax‐advantagedplansthatallowyou,theemployee,tosetasideextramoneyforyourretirement.

Bothoftheseplansareavailabletoyouandthereisnoopenenrollmentfortheseplans–whichmeansyoucansignupanytimeyouwouldlike!

Firstlet’slookatwhatthese

planshaveincommon. Theybothhavethesame

KeyPoints Slide

contributionlimits–in2018theamountyoumaysaveonanannualbasisisupto$19,000

Ifyouare50+,themaximumlimitisincreasedby$6,000foratotalof$25,000ineachplan.

Thereisnominimumcontributiontoeitherplan.

Thecostfortheplansarealsoidentical.

Eachplanhasaflatadministrationcostof$1/month(perplan).Soifyouenrolledinjustthe401(k),yourtotaladministrationcostwouldbe$12peryear.Ifyouenrollinboththe401(k)and457,thatwouldbe$24peryear.

Therearealsocostscalled“asset‐based”costs.Thesewillvarydependingonwhatyoudeterminetoinvestin.Theflatcostperinvestmentis.03%whichisaddedtotheindividualfundcosts.

ShowexampleofthecostsinthebookletandexplainhowtheyworkusingtheTRDaccount(orifyoualreadywentthroughthisinanearliersection,justaquickreview).

Therearenohiddencostssuchascommissions,loads,withdrawals,orpayoutcosts.Ifyouarecomparingdifferentretirementsavingsoptions,thisisanimportantthingtobeonthelookoutfor.  

KeyPoints Slide

Althoughtheseplansareverysimilar,therearesomekeydifferencesthatyoushouldbeawareof.Thesedifferencesmighthelpyoudecidewhichplanisrightforyou.

Ifyouleaveyourjob,whetherthroughretirementorquittingorotherwise,thereisnopenaltywiththe457plan–allyouwillincuristhemandatory20%taxwithholding.However,ifyouleaveemploymentbeforeage59½(mention55rule)thenyoumaynottakeyour401(k)asacashdistributionwithoutanadditional10%taxpenalty.

Ontheotherhand,ifyoudonotleaveemployment,youmaybegintakingwithdrawalsonyour401(k)atage59½withoutataxpenalty.Ifyouareinthe457andstillworking,youmustwaituntilage70½totakewithdrawals(orwheneveryouterminateemploymentpriorto70½).

SomeemployersofferaRothoptionforthePERAPlusaccounts–thisoptionisavailableonboththe401(k)andthe457.

Simplyput,RothmeansthatyouaremakingcontributionsonaPOST‐TAXbasis.Inotherwords,youwillpre‐paythetaxesonyourcontributionsandthenyourearningswillgrowtax‐free.

Whenit’stimetobegintakingdistributionsonyourRothaccount,theywillalsobetax‐free.Thissimplymeansthatyouwillnotpaytaxesonthesedistributionsbecausetheyhavealreadybeenpaidwhenyoumadethecontribution.

IfyouremployerdoesNOToffertheRothoption,youcanstillconvertyourcontributionstoRoth.Todothis,youwouldpaythetaxesonthemattheyearoftheconversionandthentheywouldgrowtax‐freefromthenonout.

TherearesomeRothspecific

KeyPoints Slide

rulesthatmustbefollowed,soformoreinformationonthoserules,pleaserefertotheAppendixinyourParticipantGuide.  

Enrollingissimple,butit’sanotherwaytheplansdiffer.

Ifyouwouldliketoenrollinthe401(k),thereisanenrollmentforminthebackoftheblue401(k)booklet.SimplyfillthisoutandsubmitittoyourHRorPayrolldepartment(Showformtoparticipants).

Ifyouwouldliketoenrollinthe457,pleaselogintoyourPERAaccount(orcreateoneifyouhaven’talready)andclickonthe“EnrollinthePERAPlus457Plan”linkintheupperright‐handcornerofyouraccountdashboard.

Remember–thereisnoopenenrollmentfortheseplans,soyoucanenrollanytimeitisconvenientforyou!Justkeepinmindthatyourparticipationmaybedelayedbyapay‐perioddependingonyourtimingofgettingtheenrollmentformsubmitted.

AssessmentQuestions

Step Instructions

Presenttheslidesorhaveparticipantsusethevotingapptoanswerthefollowingquestions.

1. Whatisthemaximumcontributionthatcanbemadetoeachplanforsomeoneunder50yearsold?

A. $20,000B. $36,000C. $18,500

2. Whatisthecatch‐upcontributionamountforsomeone50orolder?A. $6,000B. $12,000C. $10,000

3. Whichplanisnotsubjecttoa10percentpenaltyifyouwithdrawyourmoneyafteryouhaveterminatedemployment?

A. 401(k)planB. 457Plan

4. Whichplanallowsyoutotakedistributionifyouareworkingbeyondtheageof59½?

A. 401(k)PlanB. 457Plan

5. TheRothoptionallowsyoutocontributemoney:A. BeforetaxesB. Aftertaxes

6. Whichplanhasonlineenrollment?A. 401(k)PlanB. 457Plan

KeyPoints Slide

Thankparticipantsforcomingandshowthemwheretheycangetmoreinformation.

Askparticipantstotakesurveybeforetheyleave.

Collect401(k)enrollmentforms.

Section3:EnrollinginPERAPlus‐401(k)Only

InstructionalGoalParticipantswillbeabletoidentifysavingvehicleofferedatPERAandbeabletoenrollinplan.

Objectives

Attheendofthissection,participantswillbeableto:

1. Definea401(k)plan.2. Identifythedifferencesbetweenatraditional401(k)andaRothaccount.3. Enrollin401(k).

ExpectedTime:7‐10minutes

KeyPoints Slide

Wearegoingtocoversomekeyfeaturesandrulesofthe401(k)plan.

YoumayalsobewonderingwhatitmeanstocontributetoaRothplan,sowewillcoverthebasicsofthatinthissectionaswell.

Finally,wewilldiscussthehowtoenrollinthe401(k)sothatyoucanparticipateintheplan.

A401(k)isatax‐advantagedplanthatallowsyou,theemployee,tosetasidepartofyoursalaryforyourretirement.

SomeemployersofferaRoth

optionforthePERAPlusaccounts.

[Ask:hasanybodyheardofaRothOption?]Simplyput,RothmeansthatyouaremakingcontributionsonaPOST‐TAXbasis.Inotherwords,youwillpre‐paythetaxesonyour

KeyPoints Slide

contributionsandthenyourearningswillgrowtax‐free.

Whenit’stimetobegintakingdistributionsonyourRothaccount,theywillalsobetax‐free.Thissimplymeansthatyouwillnotpaytaxesonthesedistributionsbecausetheyhavealreadybeenpaidwhenyoumadethecontribution.

IfyouremployerdoesNOToffertheRothoption,youcanstillconvertyourcontributionstoRoth.Todothis,youwouldpaythetaxesonthemattheyearoftheconversionandthentheywouldgrowtax‐freefromthenonout.

TherearesomeRothspecificrulesthatmustbefollowed,soformoreinformationonthoserules,pleaserefertotheAppendixinyourParticipantGuide.   

Thereisnominimumcontributiontoparticipateinthe401(k)plan.

The2018maximumlimit,assetbytheIRC,is$19,000

Ifyouare50+,youcancontributeanadditional$6,000annuallyforatotalof$25,000peryear.

KeyPoints Slide

 The401(k)hasaflatcostof$1permonth,or$12peryear.

Thereisalsoaplanadministrationassetbasedcostthatvariesbetweenthedifferentinvestmentsoptionsavailabletoyou(pointoutcostsandwhattheylooklikeinthe401(k)booklet).

Therearenocommissions,loadcosts,withdrawal,orpayoutcostsassociatedwiththePERAPlus401(k)plan.

Enrollingissimple! Ifyouwouldliketoenrollinthe

401(k),thereisanenrollmentforminthebackoftheblue401(k)booklet.SimplyfillthisoutandsubmitittoyourHRorPayrolldepartment(Showformtoparticipants).

Remember–thereisnoopenenrollmentforthisplan,soyoucanenrollanytimeitisconvenientforyou!Justkeepinmindthatyourparticipationmaybedelayedbyapay‐perioddependingonyourtimingofgettingtheenrollmentformsubmitted.

KeyPoints Slide

Thereareafewdifferentscenarioswhereyoumayneedtotakewithdrawalsfromyour401(k).

401(k)shaveaHardshipWithdrawalprovisionthatallowsyoutomakeawithdrawalforcertainsituations,specificallymedicalexpenses,purchaseofaprimaryresidence,foreclosureoreviction,tuition,funeralexpenses,anddamagestoprimaryresidence.Thesetypeofhardshipwithdrawalsaretaxed.

Ontheotherhand,ifyouarereadytoretire,therearesomeotherrulesfortakingdistributionstobeawareof.

Ifyouleaveyourjobbeforeage59½andwanttostarttakingdistributions,thereisanautomatic20%taxwithholdinganda10%taxpenalty.Theexceptiontothisisifyouleaveemploymenttheyearyouturn55(orolder).

Youcanalsobegintakingdistributionsonyour401(k)whileyouarestillemployedaslongasyouare59½orolder.Thiswillnotincura10%taxpenaltybutwillstillbetaxedatthestandardIRSrateof20%ontraditional401(k)s.

AssessmentQuestions

Step Instructions

Presenttheslidesorhaveparticipantsusethevotingapptoanswerthefollowingquestions.

1. Whatisthemaximumcontributionthatcanbemadetothe401(k)planforsomeoneunder50yearsold?

A.$20,000B.$36,000C.$18,500

2. Whatisthecatch‐upcontributionamountforsomeone50orolder?A.$6,000B.$12,000C.$10,000

3. Atwhichofthefollowingageswouldyoubesubjecttoa10%penaltyifyouwithdrawyourmoneywhenyouterminateemployment?

A.55B.59½C.53D.65

4. Ifyouarestillworking,atwhatagecanyoubegintakingwithdrawalsfromyour401(k)Plan?

A. 50B. 55C. 59½D. Notalloweduntilyouretire

KeyPoints Slide

Thankparticipantsforcomingandshowthemwheretheycangetmoreinformation.

Askparticipantstotakesurveybeforetheyleave.

Collect401(k)enrollmentforms.