Charting your course to retirement

Sample Company

Strategic PARTNERS

Your employer has chosen a team of strategic business partners that work together to provide the services your plan needs. This team approach gives you all the resources you need to meet your retirement goals.

RANDALL & HURLEY | TPA • Compliance testing • Annual reconciliation • Plan design & consulting • Provides reports & forms • Provides website access

SAMPLE | CUSTODIAN • Holds plan assets

SAMPLE CO | SPONSOR • Ultimate service provider & fund

selection • Transmits information

SAMPLE | INVESTMENT BROKER • Advises fund selection • Monitors fund and plan

performance

Planning Your route

Retirement Plans 46%

Social Security 36%

Savings & Investments

16%

Other 2%

Retirement Income sources

Your retirement plan is a vital source of retirement income and provides several advantages to traditional savings accounts, including: • Personal income tax savings • Choice and flexibility in planning for

your future • Convenience of automatic

reductions from pay • Potential for employer contributions

to further bolster your savings Source: Fast Facts and Figures About Social Security, 2009, Social Security Administration

Today’s retirees rely on several income sources. Your retirement plan is a critical component of your retirement income because you are able to control how much is available to you at retirement. By planning ahead, you can achieve your goals.

Retirement Planning

Start saving & Stay the course

Experts agree that the best way to save for retirement is to start saving now. Traditional deferrals are made on a pre-tax basis (but are taxed later) while Roth deferrals are made on an after-tax basis (but aren’t taxed later).

WHY SAVE?

Use the table to see how it works. You can choose to save taxes now or at retirement based on how

you choose to defer.

Pre-Tax Deferral

Equal Contribution Roth Deferral

Equal Pay Roth

Deferral Gross Annual Pay $30,000 $30,000 $30,000

401(k) Contribution ($200/mo.) 2,400 2,400 2,040

Taxable Income 27,600 30,000 30,000

Federal Income Taxes (15%) 4,140 4,500 4,500

FICA (7.65%) 2,295 2,295 2,295

Net Take-Home Pay $21,165 $20,805 $21,165

After one year of making retirement contributions, your total assets will likely grow due to investment returns and added tax savings.

ASSETS AFTER ONE YEAR

$28,964

Take Home Pay Taxes

+$26,650 -$5,850

Take Home Pay Taxes Tax Savings Retirement Interest Employer Contribs

+$23,985 -$5,265

+$585 +$3,250

+$169 $975

No plan Investment 10% invested in Plan

$26,650

The earlier you start saving, the easier it will be to meet your goals. Starting to save now—even if it’s just a little bit—can make a big difference at retirement.

HOW LONG WILL IT TAKE TO SAVE $100,000?

Number of

Years

Monthly Savings

Required

10 $578 20 $192 30 $82 40 $38

Starting to save now makes it easier to achieve your retirement goals. When you

start saving early, your required savings amount is much smaller.

Illustrations assumes a 7% annual return.

The earnings you accrue as your account grows makes a dramatic impact on your retirement savings. Many call this phenomenon the miracle of compound interest. No matter what you call it, it’s clear that the sooner you begin to save, the more you can rely on investment earnings—and not just contributions—to help you meet your retirement goals!

THE MIRACLE OF COMPOUND INTEREST

0

20

40

60

80

100

120

140

160

180

200

0 10 20 30 40

Tota

l Acc

ount

Val

ue ($

1,00

0)

Years

Contribs Earnings

Illustration assumes a 7% annual return.

Making small changes to your spending habits makes it easier than you might think to meet your retirement goals. A LITTLE GOES

A LONG WAY Average

Spent Tax

Savings Retirement

Savings 10 Years 20 Years 30 Years

Coffee Break $4/day $58 $2,010 $27,660 $82,071 $189,107

Use a loyalty card Save $146 $2,018 $5,987 $13,795

Limit to twice/week Save $1,040 $14,370 $42,637 $98,243

Eating Lunch Out $148/mo $68 $2,368 $24,538 $72,808 $167,762

Brown bag it 3 times/week Save $1,154 $15,945 $47,310 $109,012

Dining Out $58/wk $232 $8,043 $111,126 $329,727 $759,748

Skip one happy hour/month Save $696 $9,616 $28,533 $65,745

Entertainment $225/mo $78 $2,700 37,304 $110,688 $255,044

Watch movies at home Save $300 $4,145 $12,299 $28,338

Digital Downloads $10/mo $3 $120 $1,658 $4,919 $11,335

INVEST IT INSTEAD WATCH YOUR ACCOUNT GROW

Illustrations assume contributions are made on a pre-tax bi-weekly payroll schedule, the 25% income tax bracket, and interest of 7%, compounded annually. Data Source: www.bls.gov, accountingprincials.com

YOUR RETIREMENT NEEDS Experts recommend you will need 70% - 90% of your annual income to maintain the quality of life you enjoy now.

Annual Income at Retirement

Replacement Percent

Annual Retirement Need

No. of Years in Retirement

Total Retirement Savings Need

$50,000

80%

$40,000

20

$800,000

Allocate your investments across multiple asset classes to achieve the right balance of growth and security for your risk tolerance. The following tips will keep you on course:

SELECTING INVESTMENTS

Focus on THE long-term goal

UNDERSTAND risk & return

Diversify YOUR PORTFOLIO

FOCUS ON LONG TERM GOALS

How much time you have to save for retirement should impact how you investment your retirement plan account.

Years Until Retirement

<15 Long Term Investor You can afford to take some risks in hopes of a bigger payoff.

> 5 SHORT Term Investor Your goal is to preserve capital. Your portfolio should be more risk-averse.

5 - 15 MID Term Investor You have enough time to take on some risk in search of higher-than-average returns.

Less Risk More Risk 5 10 15 20 25

AVERAGE RATE OF Return INVESTOR PROFILE

Conservative Moderate Balanced Growth Aggressive

UNDERSTAND RISK & RETURN

How much time you have to save for retirement should impact how you investment your retirement plan account.

RISK/RETURN RELATIONSHIP Risk/RETURN BY ASSET CLASS

Risk

Retu

rn

Short Term Investments

Bonds

Large Cap

Mid Cap

Int’l.

Small Cap

3.58%

Annual Range of Return (%)

Average Return 6.04% 7.90% 8.81% 9.42% 9.85%

-0.04

15.20 11.13

0.06 -17.67

31.06 17.24

-0.37

-40.64

76.57

23.14

-6.18

-52.92

109.55

27.27

-10.43

-60.78

136.07

31.91

-13.78

-67.56

162.89

36.12

-17.36

5%

25%

49%

21%

Data Source: Ibbotson Associates, 2011 (1926-2011). Past performance is no guarantee of future results. Returns include the reinvestment of dividends and other earnings. This chart is for illustrative purposes only and does not represent actual or implied performance of any investment option.

RISK & RETURN BY PORTFOLIO

This chart illustrates how asset allocation can be created with different risk and return characteristics to meet your goals. You should choose your investments based on your particular objectives and situation.

Int’l. Stocks

Bonds Short-Term/Cash

Domestic Stocks

15%

60%

25%

70%

30%

10%

40% 35%

15% 30%

50%

14%

6%

Short-Term Conservative Balanced Growth Aggressive

Growth Most

Aggressive

DIVERSIFY YOUR PORTFOLIO

By allocating your account across multiple asset classes, you balance your risk for a variety of market conditions.

Diversification does not ensure a profit or protect against a loss in a declining market.

ASSET CLASS DIVERSIFICATION

Certain asset classes do better in different market conditions. For example, stocks tend to rise when bond rates fall.

Past performance is no guarantee of future results.

SAMPLE ASSET ALLOCATIONS

The diagram below illustrates how asset allocations change based on your risk tolerance and time horizon.

10%

40% 50%

20%

40%

40% 30%

40%

30%

20%

50%

30% 40%

40%

20%

50% 40%

10%

70%

20%

10%

80%

20%

90%

10%

Long Term Investor 15+ Years

Short Term Investor 0 - 15 Years

Mid Term Investor 5 – 15 Years

Conservative Moderate Aggressive

Stocks Bonds Short-Term/Cash

o Contact Information Is your street address and email current?

o Contribution Level Can you save a little more?

o Beneficiary Designations Marriage, divorce and children may necessitate a change.

o Investment Elections Is your current investment strategy a good fit for your long-term goals?

o Rebalance Options Should you rebalance your account to align with your investment strategy?

PERIODIC REVIEW At least once each year, you should complete a plan review to verify:

ANYTIME ACCOUNT ACCESS

1-888-454-0334

VRU System (888) 454-0334

Basic Account Inquiry

Online & Mobile Website www.randall-hurley.com

Comprehensive Account Management

YOUR PLAN HIGHLIGHTS

YOUR PLAN HIGHLIGHTS

General Plan Information

Plan Type: 401(k) Plan

Trustees: John Smith

Effective Date: January 1, 2012 (for employer contributions)

Normal Retirement Age: Age 62 (with 5 years of participation)

Vesting Percent:

• Account balance from elective deferrals is 100% vested; • Account balance from employer 3% Safe Harbor Nonelective

contributions is 100% vested; • Account balance from Employer Profit Sharing and Matching

contributions is subject to a 6 year graded vesting schedule (0-1 years = 0%, 2 years = 20%, 3 years = 40%, 4 years = 60%, 5 years = 80%, 6+ years = 100%). Years of service start effective 1/1/2012.

Investments: Plan assets will be invested in accounts held at Thrivent. Participants will be able to direct 100% of their account balance and will have access to their account through Thrivent’s website.

Timing of Statements: Thrivent will issue monthly/quarterly participant statements. Plan assets are daily valued.

YOUR PLAN HIGHLIGHTS

Plan Eligibility & Entry

Eligibility Requirements: Attainment of age 21 and one year of service (working over 1000 hours).

Entry Date: January 1 or July 1 following completion of eligibility requirements.

Contribution Types

Employee Pre-Tax or Roth Salary Deferrals:

Participants are allowed to elect pre-tax or Roth salary deferral contributions up to 100% of compensation not to exceed $17,000 (2012). Participants who are age 50 by December 31 may contribute an additional $5,500 “catch-up” contribution. These limits are adjusted each plan year.

Employer 3% Safe Harbor Nonelective Contribution:

The employer will make a Safe Harbor contribution to each eligible participant’s account equal to 3% of compensation.

Employer Discretionary Profit Sharing Contribution:

The employer may make a discretionary profit sharing contribution that will be a designated percentage of each participant’s compensation.

Employer Discretionary Matching Contribution: The employer may make a discretionary matching contribution.

YOUR PLAN HIGHLIGHTS

Distributions from the Plan

In-Service Withdrawals: None permitted.

Distributions: Processed as soon as administratively feasible following termination of employment.

Forms of Payment: One-time Lump-sum of account balance that can be received as taxable income or rolled over (to an IRA or another qualified plan).

CUSTOMER SERVICE

Monday – Friday 8 am – 5 pm PST

(888) 682-4406

info@randall-hurley.com Messages will be routed

Monday – Friday, 8 am – 5 pm PST

www.randall-hurley.com For general questions, from the home page, click For Individuals/Resources.