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This work was performed under the auspices of the U.S. Department of Energy by Lawrence Livermore National Laboratory under contract DE-AC52-07NA27344. Lawrence Livermore National Security, LLC

401(k) Plan Options Overview Presented to Employees

Financial Fitness Bootcamp

August 2017

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LLNS 401(k) Plans Overview

• Voluntary Contributions

• Change or cancel at anytime

• Fidelity Investments – Record Keeper

• Broad Investment Selection

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LLNS 401(k) Plans

• Employee voluntary contribution • Up to 75% of eligible compensation

• Pre-Tax Account

• Pretax contribution – tax deferred growth*

• After-Tax Account

• After tax contribution – tax deferred growth*

• Roth Account

• After tax contribution – tax free growth*

• Must remain on deposit for at least five years

*See Fidelity enrollment kit for more information

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LLNS 401(k) Plans

• Pre-Tax and Roth Plan Contribution Maximum • $18,000 (combined limit for pre-tax and Roth)

• Note: contributions automatically switch to after-tax once contributions reach the maximum limit

• $6,000 separate catch up contribution for those age 50 or older by December 31, 2017

• Plan Contribution Maximum • Up to $54,000 (including voluntary pre-tax, Roth, after-tax and

employer contributions)

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Auto Enrollment

• If you have not enrolled in the Plan within 30 days from your date of hire (or rehire), you will be automatically enrolled in the Plan at a contribution rate of 6% into the pretax account.

• Your contributions will be invested in a Target Retirement Fund.

• You may change your contribution rate at any time.

• If you do not wish to contribute to the Plan, you must change your contribution rate to 0% within the first 30 days of eligibility.

LLNS 401(k) Retirement Plan

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LLNS 401(k) Retirement Plan (TCP2)

Employer Contribution:

• Match: 100% up to the first 6% of employee contributions

• Non-elective (service based)

0 – 9 years 3.5%

10 – 19 years 4.5%

20 or more years 5.5%

• Credited per pay period

• Immediately vested in all employer contributions

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LLNS 401(k) Plan

• Loan Program

• No Income Tax / No Penalties

• Loan Limits:

• Minimum Account Balance $2,000:

• 50% or $50,000, whichever is less

• General Purpose < 5 yrs.

• Home Loan < 15 yrs.

• Paid by Payroll Deduction

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LLNS 401(k) Plan

Distributions and In-Service Withdrawals

— Distributions:

• Separation

• Age 59 ½

— In-Service Withdrawals:

• After-tax

• Hardship

• Penalties before age 59 ½*

• Federal 10% - State 2 1/2%

* See IRS Publication 575 and IRS Form 4972 for exceptions

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Options at Separation

• Leave Funds in LLNS Plan (>$1,000)

• Lump Sum Pay-Out

• Partial Payment

• Systematic Withdrawal

• Rollover to IRA or another Employer’s Plan

• Purchase Annuity

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Investment Choices

• You can select a mix of investment options that best suits

your goals, time horizon and risk tolerance.

• The investment options include conservative, moderately

conservative and aggressive funds.

• If you do not make an investment election your

contributions will be invested in the Target Retirement

Funds® based on your target retirement date.

• Self-directed brokerage option available.

• Description of investment options and performance

available online at Fidelity NetBenefits®.

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Investments

• Investments are broken into two general categories:

— Fixed Dollar Investments:

• Investment options that earn interest while preserving capital.

— Variable Investments:

• Investment options which aim for capital appreciation and may

fluctuate in market price.

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Fixed Dollar Investments

• T-Bills

• Savings Accounts

• Fixed Annuities

• CD’s

• Money Market Accounts

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Variable Investments

• Bonds

• Stocks

• Stock and Bond Mutual Funds

• Variable Annuities

• Real Estate

• Precious Metals

• Collectibles

• Commodities

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Investment Choices: Bonds

• No ownership characteristics

• Interest is paid periodically and principal occurs at

maturity

• Interest rate is dependent on issuer's credit rating.

• Market price of bond may fluctuate

–U.S. Gov’t U.S. Gov’t

–$1,000 $1,000

–5% 3%

–30 yrs. 15 yrs.

–Yields $50 per year Yields $30 per year

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Bond Ratings

highest

high

upper medium

medium

fair to good

fair

speculative

AAA

AA

A

BBB

BB

B

C

Aaa

Aa

A

Baa

Ba

B

C

Standard & Poor’s Moody’s

Interpretation Rating Services

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Investment Choices: Stocks

• Ownership shares in corporations

• Bought and sold on major exchanges

• Shareholders can profit: • Increase in share value

• Dividends

• Price will fluctuate due to various factors that

include • Company changes

• Industry changes

• Economic changes

• Investor perception

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Investment Choices: Mutual Funds

• Investment that pools $ of many people

with similar investment goals

• Professionally managed

• Broadly diversified portfolio

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Investment Choices: Mutual Funds

• Money Market Funds

• Income Funds

• Value

• Growth Funds

• Growth & Income Funds

• International Funds

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Investment Choices: • Usually greater the risk associated with an investment, the

greater the potential reward.

• Types of Risk:

• Market Risk

• Interest Rate Risk

• Credit Risk

• Inflation Risk

• Types of Funds Money Market / Income / Value / Growth & Income / Growth / International

• Lower Risk Higher Risk

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Achieve Your Investment Goals

3 Strategies to Achieve Your Goals — Start Early

— Maximize Investment Potential

— Manage Risk

• dollar cost averaging

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Start Early

$175,000

$160,000

$140,000

$120,000

$100,000

$80,000

$60,000

$40,000

$20,000

$0 You start saving at…

You stop saving at…

Age 25

Age 65

Age 35

Age 65

$175,000

$75,000

•This hypothetical example assumes a monthly contribution of $50 and an annual 8% rate of

return compounded monthly. Source – Bankrate.com

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Maximize Investment Potential Performance Can Make a Difference

$5,000 Annual Contribution

30 Years * The effect of only 2.0% increase in performance on $417 per month contribution. (Assumes 5%

monthly compound interest versus 7% monthly compound interest). Source – Bankrate.com

$515,000

$350,000

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Dollar Cost Averaging

• Investing equal sums at regular intervals

• Reduces the effect of market fluctuations

• Avoids guessing market direction

• Average cost per share over time is typically lower

than average price per share

Dollar cost averaging does not assure a profit or protect against loss in a declining market. For the strategy to be

effective, you must continue to purchase shares both in market ups and downs. You should consider your financial

ability to continue your purchases through periods of low price levels.

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Dollar Cost Averaging

Jan

Feb

Mar

April

May

June

July

August

Sept

Oct

$100

$100

$100

$100

$100

$100

$100

$100

$100

$100

$25

20

12.50

10

8

8

10

12.50

25

25

4

5

8

10

12.50

12.50

10

8

4

4

Average cost per share = $12.82

Average market price per share = $15.60

$1000 invested in January buys 40 shares

$1000 buys 64 shares at average market price

Period Amount Invested

Market Price Paid

Shares Purchased

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ENROLLMENT PROCESS

• Consult web-site: www.netbenefits.com

• To enroll or make changes:

— Enter Social Security Number

— Enter PIN

— Enroll in investment options

— Make salary deferral election

• Or call 1-800-835-5095 (between 5:00 AM and 9:00

PM PST)

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Legal Disclosures

• While this presentation and the oral statements of Plan

representatives are meant to be accurate, the actual Plan documents and relevant laws will govern at all times.

• In response to legal and contract requirements, market changes, etc., LLNS reserves the right to amend or terminate benefits at any time.

• Company policies on hiring, discharge, layoff, and discipline are in no way affected by the plans and programs described here. Therefore, nothing in this presentation is meant to be a guarantee of employment or continued employment.

• This material has been prepared for informational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, investment, or tax advice. Contact your accountant, attorney, and or financial advisor for such advice.

• Content of this presentation is valid as of date of presentation to expiration December 31, 2017.

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Additional Information

Fidelity Investments

1-800-835-5095

www.netbenefits.com

Or

LLNL BENEFITS OFFICE

x 2-9955

Building 543, Room 1220

http://www.benefits.llnl.gov

THANK YOU FOR ATTENDING

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