Welcome to 401(k) #101
The ABC’s of CSG’s 401(k) Plan
What Is a 401(k) Plan?
Savings and investment plan
Pre-tax income is deposited
into the plan
Tax-deferred earnings that
are invested
Designed primarilyas a retirement plan
What Are theAdvantages Of a 401(k)?
Tax-deferred earnings
Reduction in current gross income
Automatic payroll deductions
Portability
No minimum investment required
CSG matches employee contributions (CSGwill match 100% on the first 3% of employee contributions, and 50% on thenext 2% of employee contributions. Employee contributions over 5% will notbe matched.)
Who Is Eligible to Participate?
All Employees of CSG
Must be over age 21
Employee Deferrals
Must complete 6 months of
of service and 500 hours
Match
Must complete 1 Year of Service
(a year of service begins with the date of
hire and is a 12 month period in which an
employee works 1,000 hours)
Plan Management &Common Terms
In July 1979 CSG established atax-deferred retirement plan.This plan did not requireemployees to contribute, CSGcontributed 3% of eachemployee’s earnings.
Starting in 2007 an employeehas the ability to direct theirown investments through theavailable funds in the plan.
Commonly Used Terms
Elective Deferrals – Fundscontributed by the employees
Eligibility – who mayparticipate in the plan
Employer Matching – Fundscontributed by the employer
Plan Administrator – theperson our employer identifiesto manage the plan
Common Terms
Plan Year – Follows CSG’s Fiscal Year
Roll Over Contributions – Direct transfer of your retirement benefits from aprior employer’s qualified plan
Safe Harbor Plan – a plan that promises to make a contribution to eligibleparticipants in a designated percentage, or dollar amount; CSG’s plan is aSafe Harbor Plan
Tax Deferred Earnings – Earnings on your retirement plan which are notsubject to income tax until withdrawn
Trustee – an outside financial organization that oversees the 401(k) plan
How Much Can You Save?
Maximum contributions
Vesting rules
Annual dollar limit is set
by law
Annual limit is
adjusted yearly
($15,500 for 2008)
When Should You StartSaving in a 401(k) Plan?
AS SOON ASPOSSIBLE!
What is Vesting?
It means you have earned the right to all or part
of the employer portion of your account.
Once you are fully (100%) vested, that amount
cannot be forfeited, or taken away from you.
The vesting schedule is based on years of
service.
All contributions you make, plus any investment
earnings on those contributions are
always 100% vested.
Safe Harbor Match is 100% Vested Immediately
What amounts will be contributedto my account?
Your salary deferrals (what you contribute out of your ownpaycheck)
Your safe harbor matching contributions
Investment earnings/increases
in the value of investments
CSG’s contribution to your
participant account based
on the match formula
What will be subtracted frommy Participant Account
Any withdrawals ordistributions youreceive
Investment losses
Administrative fees
What Are the AdvantagesOf a 401(k) Versus an IRA?
Maximum contribution
Automatic Deposits
Matching contributions
Timing of tax savings
Tax treatment at distribution
How much of my salary should Iinvest?
Research suggests that you should save at least10% of your salary each year towards retirement.
You can consider the employer’s contributiontowards that goal. For example, if you save 6%,the company will match you 4% which brings youto a 10% contribution.
You should meet periodically with a financialplanner to be sure you are on target to achieveyour goals. Beverly Herr (717) 672-2001
What If You Leave the CompanyBefore Retirement Age?
If you terminate employment, the portion of
your account that is not 100% vested is forfeited.
After termination, you may request to
receive a distribution of the vested
portion of your account
What if you die before retirementage?
If you die, the full value of your account is payable toyour Beneficiary in a lump sum
It is important to designate a Beneficiary for youraccount.
If you are married, your spouse must be listed as yourPrimary Beneficiary, unless he or she agrees that youshould name someone else. In which case, yourspouse’s consent is required on the form and theirsignature must be notarized.
Can You BorrowFrom CSG’s 401(k) Plan?
Borrowing from our 401(k) account is notpermitted in this plan
Hardship withdrawals are permitted
Application for a Hardship Withdrawal isaccessible through our plan administrator
–Allowable hardships: to purchase a principal home, toprevent eviction from your home, to pay college tuitionfor employee or their dependents, for medical expensesnot covered by their insurance or funeral expenses
When Are FundsNormally Distributed?
At Normal Retirement Age of 65
After Age 59 ½
If the Employee becomes totally andpermanently disabled
If the Employee dies
If the Plan is terminated
If the Employee leaves the company
Are There Any DisadvantagesTo a 401(k) Plan?
Funds aren’t insured
Benefits are based only on the vested value of theaccount
Company can amend, merge, or discontinue theplan at any time
People tend to spend their 401(k) money whenthey change jobs
What Else Should EmployeesKnow About the 401(k) Plan?
Maximum allowable annual contribution
Percentage matched by the company
Vesting rules-for old Profit Sharing portion
Rules for transfer of funds
Encourage employees to read the SummaryPlan Description.
What Else Should CSG Employees Know About the 401(k) Plan?
Earnings are credited to accounts on a daily basis.
Statements are provided to each employeequarterly.
Employees can access their accounts via theinternet or telephone systems.
Distribution rules
Ask & Answer
How does the 401(k) plan work?
What are the eligibility requirements?
What is the difference between traditional savings plans andinvestment savings plans, like the 401(k) plan?
What is CSG’s matching contribution program?
What are the rules for distribution? What about earlywithdrawal?
Employees should realize that they are responsible for thegrowth of their 401(k) account.
FAQs
Can I say no if I don’t want to participate?
Is there a way to “catch-up” for employee’s over50?
Will there be tax penalty upon withdrawal of the401(k)?
How do I know I won’t lose money in this401(k) thing?