Transcript Exploring Investment Fundamentals

Understanding
Your Distribution
Options
with
Great-West Retirement Services®
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Business unit of Great-West Life & Annuity Insurance Company
Represents nearly 4.4 million participant accounts as of December 31,
2010
Provides administrative, education and communication services
Helps you understand and evaluate your financial situation
Provides information to help you make financial decisions
Representatives of GWFS Equities, Inc. are not registered investment advisers, and cannot offer financial, legal or tax
advice. Please consult with your financial planner, attorney and/or tax adviser as needed.
Objectives
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Determine your retirement needs.
Learn what options are available.
Determine tax consequences of
various options.
Explore techniques to turn your
investments into income.
Determine Your
Financial Needs
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Shift from primarily saving and investing to ensuring that your money
lasts.
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Many people live 18 years or more in retirement.1
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The number of people 65 and older will nearly double by 2034.1
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We’re leading more active lives than previous generations.
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Costs are rising.
1 Social Security Administration, May 2011.
Determine Expenses
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Mortgage or rent
Transportation
Food
Utilities
Taxes
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Income
 Property
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Insurance
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Health
Auto
Home
Life
Long-term care
Medical
 Travel/entertainment
Medical Expenses
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They can vary widely, depending on
health.
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Medicare generally starts at age 65.
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Medicare doesn’t currently cover all
prescription drug costs.
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Determine your employer’s retirement
health insurance benefits.
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Check out health insurance plans.
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Check out long-term care insurance.
Determine Income Sources
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You could need about 70% of your preretirement earnings to comfortably
maintain your pre-retirement standard of
living after you stop working full time.2
 SoonerSave
 Social Security benefits
 Pension plan (current and previous
employers’ plans)
 Other savings (bank account, CDs3,
mutual funds)
 IRA
 Spouse’s retirement account
2 Source: https://www.socialsecurity.gov/planners/morecalculators.htm.
3 Certificates of deposit are insured by the FDIC for up to $250,000 per depositor and offer a fixed rate of return, whereas both
the principal and yield of bonds and stocks will fluctuate with market conditions.
Social Security Benefits
Reduction in Benefits
If Retires at 62:
Birth Year
Full Benefit Retirement Age
Turns 62 in:
62:
1942
65 years, 10 months
2004
24.17%
1943-1954
66 years, 0 months
2005-2016
25.00%
1955
66 years, 2 months
2017
25.83%
1956
66 years, 4 months
2018
26.67%
1957
66 years, 6 months
2019
27.50%
1958
66 years, 8 months
2020
28.33%
1959
66 years, 10 months
2021
29.17%
1960 and Later
67 years, 0 months
2022 and Later
30.00%
Contact the Social Security Administration at (800) 772-1213 or www.socialsecurity.gov.
Source: Social Security Administration, Feb. 2011.
Pay Replaced by
Social Security Benefits
Average Annual Pay
Approximate Annual Percentage of Annual
Benefit
Pay Replaced by Social
Security
$20,000
$10,224
51%
$40,000
$15,360
38%
$60,000
$20,496
34%
$80,000
$23,724
30%
Source: Social Security Administration, June 2011
The numbers above are for a 55-year-old today planning to retire at full retirement age (66) and assume no future increases in
prices or earnings.
Closing the Gap
You can:
 Delay retirement.
 Put more into your
retirement account.
 Retire, but continue
working.
 Trade larger home
for smaller one.
 Refinance.
Age 50+ Catch-Up Contribution
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Already made maximum annual contribution
($16,500 for 2011)
Can contribute up to additional $5,500 in 2011 if
age 50 or older during calendar year
Standard Catch-Up Contribution
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Within three years of normal retirement age
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Didn’t contribute maximum amount in prior
years of eligibility
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Can contribute up to double the normal limit in
each of last three years before normal
retirement age, if eligible
Income from SoonerSave
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Leave your money in SoonerSave.
Take a distribution.4
Roll over or transfer into new employer’s plan
or to an IRA.
4 Withdrawals are subject to ordinary income tax. Amounts withdrawn prior to age 59½ may be subject to a 10%
penalty tax. The 10% early withdrawal penalty does not generally apply to 457 plan withdrawals.
Impact of Tax Deferral
Annual Growth: Potential Growth Rates
Compounded Annually
Age
5%
8%
55
$50,000
$50,000
65
$82,350
$110,982
70
$105,685
$165,346
FOR ILLUSTRATIVE PURPOSES ONLY. This illustration is hypothetical and does not represent the performance of any investment options. The
illustration does not reflect any charges, expenses or fees that may be associated with your Plan. The tax-deferred accumulation shown above would be
reduced if these fees had been deducted. Rates of return may vary. This hypothetical illustration is assuming a $50,000 starting balance and a 5% and
8% annual rate of return, respectively, compounded monthly, with no withdrawals.
Lump-Sum Distribution
Potential Impact of Taxes and Penalties
Account balance
Mandatory 20% federal income tax withholding
$50,000
-$10,000
Potential 5% additional tax owed
-$2,500
What's left?
$37,500
FOR ILLUSTRATIVE PURPOSES ONLY.
Assumes $50,000 account balance, age below 59½ and a 25% federal income tax bracket.
Tax Deferred vs.
Currently Taxable
Potential Impact of Taxes and Penalties
Starting amount
Tax-deferred vehicle
$50,000
$110,982
Lump-sum distribution
$37,500
Currently taxable vehicle
$68,596
FOR ILLUSTRATIVE PURPOSES ONLY.
This hypothetical illustration does not represent the performance of any investment options. It assumes an 8% annual rate of return, a 25% combined
federal and state income tax bracket, and reinvestment of earnings, with no withdrawals. Rates of return may vary. Assumes that the taxable account
does not hold any investment for more than 12 months. Taxable investments held longer than 12 months may qualify for lower capital gains and/or
qualified dividend tax rates, which may make the return on the taxable investments more favorable, thereby reducing the difference in performance
between the accounts shown. The illustration does not reflect any charges, expenses or fees that may be associated with your Plan. The tax-deferred
accumulation shown above would be reduced if these fees had been deducted.
Lump-Sum Distribution
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Mandatory 20% deducted for federal income tax
May owe more, depending on tax bracket
Potential 401(a) 10% early withdrawal penalty
Investments and any earnings are no longer tax-deferred
Money is available (less taxes and any applicable penalties)
Other Options
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Partial lump-sum distribution
Periodic payments
Combination
Partial Lump-Sum Distribution
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Take portion of balance as distribution
Single check
Fully taxable that year
Periodic Payments
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Equal amounts
 Select dollar amount
 Select how often
 Payments continue until money
is gone
 Number of payments varies
Specified period
 Select how often
 Payment amount varies
(depending upon length of time,
periodic basis and rate of return)
Taxable payments
Periodic Payments
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Regular “retirement paycheck”
Any earnings continue to be tax-deferred
Continue to transfer money among options
Retain access to services provided by
Great-West Retirement Services5
May change election
5 Representatives of GWFS Equities, Inc. are not registered investment advisers and cannot offer financial,
legal or tax advice. Please consult your financial planner, attorney and/or tax adviser as needed.
Roll Over or Transfer
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To new employer’s eligible plan (if allowed)
To IRA
Direct Rollover
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Check made out to institution or company, not you
If check made out to you, mandatory 20% federal
income tax withholding applies
Potential 401(a) 10% early withdrawal penalty
Evaluate investment choices and fees
Contact me
Direct Rollover
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Money continues to be tax-deferred
Avoid mandatory 20% federal income tax withholding and
potential 10% penalty for early withdrawal
May incur higher fees and/or have limited investment selection
Leave Money in Plan
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Can leave it until age 70½ or retirement, whichever comes later
Wide array of investment options
Transfer among options
Website, education
Same payout options
Establish withdrawal strategy and adjust it to your needs
Investing During Retirement6
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Some suggestions
 Think conservatively, but still consider
investing in stocks.
 Search for investments that provide
income and keep ahead of inflation.
 Maintain sufficient cash equivalents to
support two to three years of living
expenses.
 Begin with annual withdrawals of 3% to
4%.
 Tap into taxable accounts first to let taxdeferred accounts keep growing.
6 This is not intended as financial advice. Representatives of GWFS Equities, Inc. are not registered investment advisers and
cannot offer financial, legal or tax advice. Please consult with your financial planner, attorney and/or tax adviser as needed.
Required Minimum Distribution
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Must be taken by April 1 of the year after
the year you turn 70½
After that, at least once a year—on or
before December 31
Excise tax—50% of difference between
what was taken and what should have
been taken
We can calculate for you and send your
payment
Decision Timeline
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Start at least three months before
retirement to:
 Get necessary forms.
 Explore options.
 Complete and return forms.
We cannot release funds until your
employer confirms severance.
Tools You Can Use
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Plan website7
 www.soonersave.com
KeyTalk®7
 (877) 538-3457
7 Access to KeyTalk and the website site may be limited or unavailable during periods of peak demand, market
volatility, systems upgrades/maintenance or other reasons.
Distribution Forms
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For distribution forms, please contact the Oklahoma Public
Employees Retirement System (OPERS) at:
 (405) 858-6737, or
 (800) 733-9008
Questions?
Thank You!
Core securities when offered, are offered through GWFS Equities, Inc., a wholly owned subsidiary of
Great-West Life & Annuity Insurance Company.
Representatives of GWFS Equities, Inc. are not registered investment advisers, and cannot offer financial, legal
or tax advice. Please consult with your financial planner, attorney and/or tax adviser as needed.
Great-West Retirement Services® refers to products and services provided by Great-West Life & Annuity
Insurance Company and its subsidiaries and affiliates. Great-West Retirement Services® and KeyTalk® are
registered trademarks of Great-West Life & Annuity Insurance Company. ©2011 Great-West Life & Annuity
Insurance Company. All rights reserved. Not intended for Plans whose situs is in New York.
Form# CB1000_DOP PT129998 (07/2011)