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