Elevator Constructors Union Local No. 1 Annuity and 401 (k) Plan Retirement Seminar

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1 Elevator Constructors Union Local No. 1 Elevator Constructors Union Local No. 1 Annuity and 401 (k) Plan Annuity and 401 (k) Plan Retirement Seminar Retirement Seminar October 29, 2009 October 29, 2009

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Elevator Constructors Union Local No. 1 Annuity and 401 (k) Plan Retirement Seminar October 29, 2009. Elevator Constructors Union Local No. 1 Annuity and 401 (k) Plan Retirement Seminar. Presenters National Elevator Industry Pension Plan Rob Betts, Executive Director - PowerPoint PPT Presentation

Transcript of Elevator Constructors Union Local No. 1 Annuity and 401 (k) Plan Retirement Seminar

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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)