457b Deferred Compensation Plans

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Johnson County Defined Contribution Program
An Effective Way to Build for Your Retirement
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Common Excuses for Not Saving for Retirement
!
Ages 21-30 Im just getting started in life!
Ages 30-45 Ive got a growing family on my
hands!
Ages 55-65 Things arent working out the way I
thought they would!
Ages 45-55 I have two children in college!
Ages 65-70 Its too late!
Dont wait for the perfect time take action
today!
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Major Considerations at Retirement

• When you retire, youll have many financial
  issues
• to consider, including
• Healthcare costs
• The possibility of significantly
• reduced income
• The potential effect of inflation
• on your purchasing power
• Expenses (e.g., housing, taxes, etc.)

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Income Reduction

• Almost 50 of retirees say they are less
  financially secure
• than anticipated.1

Will your retirement plan help replace this
income?
1 Source Managing Retirement and Financial
Status LIMRA International, Inc., 2003 2
Assumes 40 income reduction
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Effects of Inflation
How much will your current income be worth in 20
years?
Assumptions 30,000 annual salary and 3
inflation rate.
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Building for Your Retirement

• The Johnson County Defined Contribution Program
  is an effective way to address the potential
  income gap AND potentially build for your
  retirement

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What is the Johnson County Defined Contribution
Program?

• Two plans -- a voluntary plan under Code
  Section 457(b) and an employer-matching plan
  under 401(a)
• Allows you to defer a portion of your current
  compensation by payroll deduction to the 457(b)
  plan AND receive an employer matching
  contribution to the 401(a) plan

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What is the Johnson County Defined Contribution
Program?
Give yourself a raise!

• The County will make a matching contribution into
  a 401(a) plan equal to 100 of the 457
  contribution up to a maximum of 2.5 of
• base salary per pay period.
• (minimum 457(b) plan contribution 10.00, 401(a)
  subject to vesting)

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How will you replace your paycheck?
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Retirement income needs and sources.Its
estimated you will experience an income shortage
or gap during retirement.
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5 Good Reasons to Consider your Employer
Sponsored Retirement Program

• Automatic Payroll Deduction
• Pre-tax Contributions
• Tax-deferred Earnings
• Multi-Manager Investment Platform
• Flexible Payout Options

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What is the Johnson County Defined Contribution
Program?

• A voluntary plan permitted by Internal Revenue
  Code Section 457(b) and
  made available by the County
• Helps you solve for your retirement income gap
• Allows you to defer a portion of your current
  compensation by payroll deduction

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Benefits of Participating in the Countys 457(b)
plan.

• Employer match into a 401(a) plan
• Low fees
• Quality investment choices
• Fixed account with competitive credited rate
• Comprehensive local education services and
  support

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How a 457(b) Works

• The assumptions below will be used for the
  illustrations
• that follow
• Monthly Gross Income 3,000
• Monthly Contributions 300
• (Assumed 10 contribution rate)
• Federal tax rate 20
• State tax rate 5

These illustrations are for hypothetical purposes
only and are not guaranteed, nor do they
represent any specific product or investment.
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Compare the Difference
With Pre-tax 457(b)
To 457(b) Plan
Adjusted Gross
Disposable Income
Gross Income
Income Taxes
3,000 300 2,700 675
2,025
After-tax Savings Account
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The 457(b) Advantage (continued)

• In the next example, with a 457(b) you may
• Increase your monthly contribution to 400
  (originally 300), AND
• Maintain your disposable income level at 1,950

These assumptions apply to the following
illustration Monthly Gross Income 3,000 Fede
ral tax rate 20 State tax rate
5
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Compare the Difference in Increasing Your
Deferral.
With Pre-tax 457(b)
To 457(b) Plan
Adjusted Gross
Disposable Income
Gross Income
Income Taxes
3,000 400 2,600 650
1,950
After-tax Savings Account
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Account Accumulations (Pre-tax vs. After-tax)
After 20 years Pre-tax 457(b) balance
136,693 After-tax Savings balance 123,597
Pre-tax 457(b) 400 monthly contribution
income-tax deferred growth of investment.
182,258
After-tax Traditional Savings 300 monthly
contribution Investment income subject to annual
15 Capital gains tax yearly distribution of
dividends not reflected
123,597
Years
Total reflects 182,258 less 25 tax on
lump-sum distribution. Income tax is due upon
distribution from the tax-deferred plan. This is
only federal income tax impact, not necessarily
at the state level. This illustration is intended
to show the impact of pre-tax and after-tax
investing and illustrate investment growth
potential of each. Assumed hypothetical
investment growth of 6 per year shown for
illustrative purposes only and is not indicative
of any specific investment or investment vehicle.
Systematic investing does not assume a profit or
protect against loss. These figures do not
include fees or expenses that the product would
assess, including a mortality and expense risk
charge (ME) and an administrative fee. If
included, these fees would reduce the figures of
the tax-deferred product shown above. Refer to
the prospectus/prospectus summary for more
information about fees. Lower maximum tax rates
on capital gains and dividends would make the
investment return for the taxable investment more
favorable, thereby reducing the difference in the
performance between the accounts posted above.
Consider your personal investment horizon as well
as your current and anticipated income tax
bracket when making an investment decision, as
these may further impact the results of this
illustration. Bear in mind that changes in tax
rates and tax treatment of investment earnings
may impact the comparative results.
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Cost of Waiting
The potential cost of waiting A hypothetical
scenario
Monthly contributions needed to accumulate
250,000 by age 65
Start saving at
Assumes a 6 hypothetical rate of return
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Cost of Waiting
Time is money remember, the longer you wait, the
more difficult it may be to catch up!

• Lost accumulations
• Forgone Federal State income tax savings
• Lost interest/earnings potential
• You may be able to consolidate assets from other
  eligible retirement Plans into the Countys Plan.

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457(b) Contributions

• For 2007, 457(b) contributions are limited to
• The lesser of 100 of includible compensation OR
  15,500
• If you are age 50, and participate in a
  governmental 457(b) plan, you are eligible to
  defer an additional 5000
• Utilize the special 3 year catch-up provision if
  you have underutilized contributions and are
  within 3 years of your earliest normal retirement
  age for full benefits from KPERS.
• twice the general deferral limit. In 2007, it is
  31,000 (15,500 x 2)

Note The special 3 year catch-up (twice the
applicable limit) and the age 50 catch-up
provisions may not be utilized in the same year.
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How Should I Invest?

• Based on
• Financial goals
• Investment objectives
• Time horizon (when you expect to begin receiving
  your benefits)
• Risk tolerance/preference

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Why Do You Need Effective Asset Allocation

• Helps shift selection focus from fund name to its
  asset class and investment style
• Helps construct portfolio that seeks to reduce
  risk while increasing investment return potential
• Helps lessen impact of poor performance in any
  one asset class
• Helps discourage chasing the hot fund
• Helps eliminate need to be in the right place
  at the right time

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Why Do You Need Effective Asset Allocation?
Portfolio Performance is Determined by

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Asset Class Spectrum
A range of asset classes are available across the
potential risk/reward spectrum
Global/International
HIGHER
Small/Mid/Specialty
Large Cap Growth
Large Cap Value
REWARD
Balanced
Bonds
Stability of Principal
HIGHER
LOWER
RISK
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Why Do You Need Effective Asset Allocation?
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Tailor Your Investment Strategy
Moderately Aggressive
Aggressive
Moderate
5
60
20
60
40
95
80
80
95
40
Moderately Conservative
Conservative
20
20
40
40
60
80
80
60
Equities Income/Guaranteed
Examples are illustrative only and are not
intended to be specific recommendations. You have
to decide whats best for you.
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Access to Your Benefits

• IRS and the Countys Plan permit distributions
  upon
• Severance from employment
• Retirement
• Death

Participants are required to take a mandatory
minimum distribution by April 1st of the calendar
year following the year in which they turn age
70½ or retire, whichever is later. Distributions
thereafter are required annually by December
31st. Distributions not taken by the required
date are subject to a 50 excise tax on the
required amount not distributed.
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Access to Your Benefits (continued)

• Under the Countys Plan, you have access to your
  account balance under certain conditions while
  still employed
• Unforeseeable Emergency Withdrawal (457(b) only)
• 5,000 in-service (under certain conditions)
• If account balance is under 5,000, participant
  hasnt contributed in two years or
• more and if this option has
  not been previously elected.

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Flexible Distribution Options

• You can choose from options including
• Leave account balance to access at anytime. (Must
  start required minimum distributions by age 70
  ½.)
• Lump Sum Payments (amount of your choice, subject
  to 20 Federal income tax and 5 State income tax
  withholding.)
• May be rolled over to other eligible defined
  contribution plans or traditional IRA (subject
  to plan and IRS guidelines)
• Systematic Withdrawals (Monthly, Quarterly,
  Semi-Annual or Annually)
• Life Expectancy Option (LEO) (satisfies required
  minimum distribution at 70 ½)

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Take Advantage of INGs Service and Support
Overland Park Service Center 10740 Nall
Ave. Overland Park, Ks 66211 913.661.3797
Local 800.814.1643 Outside KC Area
For Account balance information or to make
transfers among available fund options call
1.800.584.6001 or visit us online at
www.INGretirementplans.com/custom/joco
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Your Next Steps Enrolling is Easy

• You will need to complete
• Participation Agreement to specify deferral
  (dollar amount or percentage of pay, minimum is
  10.00 per pay period)
• ING Enrollment Form
• Please contact the ING Overland Park Service
  Center for more information or to schedule a time
  to visit with a Plan Representative.
• 913.661.3797

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Nows the time to actThe Johnson County
Defined Contribution Program can help you design
the retirement income thats right for YOU!
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