Comparing your retirement plan options

Transcription

1 Comparing your retirement plan options Putnam Retirement Services

2 Solutions for businesses of all sizes For over 40 years, Putnam Investments has been a leader in the business of retirement. We manage retirement assets for some of America s most successful companies, helping thousands of plan sponsors and financial advisors design plans that make saving as effortless as possible. We recognize that there is no one-size-fits-all retirement plan option. Putnam offers a comprehensive selection of plans and investment management options for businesses of all sizes. To determine which are best for your business, use the following questionnaire and plan comparison grid, and work with your plan s financial advisor. We look forward to helping you design a plan to meet your needs.

3 SEP IRA SIMPLE IRA Key benefit Easy to set up and maintain. Salary reduction contribution plan with little administrative paperwork. Eligibility Any employer. Any employer with 100 or fewer employees that does not currently maintain another retirement plan. Plan documents needed Set up plan using either IRS Form 5305-SEP or the Putnam prototype SEP agreement. Set up plan by completing IRS Form 5304-SIMPLE. Contributions to the plan Employer contributions only. Prior year contributions through tax filing deadline, plus extensions. Roth 401(k) after-tax contributions not available. Employee salary reduction and contributions and employer contributions. Roth 401(k) after-tax contributions not available. Maximum annual contribution 25% of compensation or a maximum of $51,000 (for 2013). Maximum compensation on which 2013 contribution can be based is $255,000. Self-employed individuals making employer contributions on their own behalf are generally limited to a deductible amount that is the lesser of 20% of net earnings after allowable deductions, or $51,000. Employee: $12,000 in Additional contributions can be made by participants age 50 and over ($2,500 in 2013). Employer: Employer must contribute matching contributions equal to 100% of first 3% of elective deferrals or nonelective contribution equal to 2% of compensation not in excess of $255,000 (for 2013). Contribution options Employer decides whether to make contributions for each year. Employee can elect how much to contribute from pay. Employer must make matching or nonelective contributions. Maximum employee coverage requirements Must be offered to all employees who meet minimum age, service, and pay requirements. More liberal standards may be adopted by the employer. Must be offered to all employees who meet minimum compensation requirements. More liberal standards may be adopted by the employer. Withdrawals, loans, and distributions Withdrawals permitted at any time subject to federal income taxes; early withdrawals subject to tax and potential penalty. No loans permitted. Withdrawals permitted at any time subject to federal income taxes; early withdrawals are subject to tax and potential penalty. No loans permitted. Vesting Contributions are immediately 100% vested. Employer and employee contributions are immediately 100% vested. Investments Full range of Putnam funds, including Asset Allocation funds, RetirementReady target-date funds, and Absolute Return funds. Full range of Putnam funds, including Asset Allocation funds, RetirementReady target-date funds, and Absolute Return funds.

4 Individual 401(k) 401(k) Permits high level of salary deferrals. Flexible design; high level of salary deferrals. Individual business owners and partners of partnerships plus spouses (if also working for the business). Any public or private company. IRS-approved prototype plan maintained by vendor (e.g., Putnam Individual 401(k) prototype available through ExpertPlan). IRS-approved prototype plan maintained by provider (e.g., Putnam Defined Contribution Plan) or custom-designed document. Employee salary deferral contributions and/or employer contributions. Roth 401(k) after-tax contributions available. Employee salary deferral contributions and/or employer contributions. Roth 401(k) after-tax contributions available. Employee salary deferral contributions: $17,500 in Additional contributions can be made by participants age 50 and over ($5,500 in 2013). Employer: Employer contributions for each employee cannot exceed 25% of compensation. Together with employee contributions, this amount cannot exceed the lesser of 100% of the employee s compensation, or $51,000 in 2013 (additional limits may apply). Self-employed individuals making employer contributions on their own behalf are generally limited to a deductible amount of 20% of net earnings after allowable deductions, or $51,000. Employee: $17,500 in 2013; additional contributions can be made by participants age 50 and over ($5,500 in 2013). Employer: Employer contributions for each employee, together with employee contributions, cannot exceed the lesser of 100% of the employee s compensation, or $51,000 in 2013 (additional limits may apply). Employee salary deferral contributions as desired up to limit. Employer contribution may also be made as set by plan terms. Employee can elect how much to contribute from pay. Employer contribution may also be made as set by plan terms. Plan is intended for self-employed business owners with spousal employees only. Coverage for additional employees is available through the Putnam Small Business 401(k). Plan sponsors can adopt eligibility requirements that are within the range allowed by law. Nondiscrimination and minimum coverage testing may apply. Withdrawals permitted after specified events occur (e.g., retirement, plan termination). Plan may permit loans and hardship withdrawals; early withdrawals subject to tax and potential penalty. Withdrawals permitted after specified events occur (e.g., retirement, plan termination). Plan may permit loans and hardship withdrawals; early withdrawals subject to tax and potential penalty. Employee salary deferrals are immediately 100% vested. Employer contributions may be 100% vested according to plan terms. Employee salary deferrals are immediately 100% vested. Employer contributions may vest over time according to plan terms, subject to applicable limits. Full range of Putnam funds, including Asset Allocation funds RetirementReady target-date funds, and Absolute Return funds; extensive non-putnam fund menu. Full range of Putnam funds, including a choice of prediversified options; extensive non-putnam fund menu available for Putnam Small Business 401(k), and complete open architecture available for Putnam full-service 401(k).

5 ÂÂ Assess your retirement plan needs Complete this questionnaire with your financial advisor to determine the plan that is best for your company. Company name Your current retirement plan (if applicable) Current retirement plan (if any) Are you self-employed or an employer-and-spouse business? Yes No If no, how many people does your company employ? Full time Part time How would you characterize your company s employee base? Highly compensated owner and partners/management What type of plan do you currently offer? Profit sharing SEP 401(k) Money purchase/keogh SAR-SEP Other What is the current asset level of your plan? What is your participation rate? Total number of employees Number of employees participating in plan Other salaried employees (e.g., group of doctors, attorneys, architects) Most employees have similar age, salary range, and years of experience Which best describes your company s income? Predictable and steady Business results are not known until the end of the calendar year What is your preference for contributions? I want employees to contribute to their own retirement accounts I want the company to contribute on behalf of the employees I would like both options (matching or other company contribution) Which of the following plan features would you require? Loans Multi-manager fund flexibility Matching contributions Vesting schedule After-tax option (Roth 401(k)) Other Total number of current accounts (including terminated employee accounts) Who is your plan provider? Why would you consider another plan provider? (check all that apply) Better service More investment choices Testing/5500 filing issues Better fee structure Better advisor support Other What investment options does your plan offer? What are your plan fees? Annual base fee Per participant fee Expense ratio (include wrap or other fee, if it is an insurance-based product group annuity) Other Total

6 For the 22nd consecutive year, Putnam is honored for service quality Again in 2011, Putnam Investments has been honored with a DALBAR award for providing outstanding service to shareholders of its mutual funds. This was the 22nd consecutive year that Putnam has been recognized by DALBAR for service quality. The awards are presented by DALBAR, Inc., a financial services market research and consulting firm that conducts rigorous, year-long testing of customer service based on industry benchmarks. Retirement solutions for every need Whether you are saving for your own retirement or responsible for the retirement plan of a large business, Putnam offers a complete range of options. Full-service 401(k) Total retirement outsourcing (TRO) Small Business 401(k) Individual 401(k) Traditional IRA Defined Contribution investment only Roth IRA Rollover IRA 403(b)(7) Custodial accounts SEP IRA SIMPLE IRA This material is for informational purposes only. It should not be considered tax advice. You should consult your financial advisor  to determine what may be best for your individual needs. Investors should carefully consider the investment objectives, risks, charges, and expenses of a fund before investing. For a prospectus, or a summary prospectus if available, containing this and other information for any Putnam fund or product, call your financial advisor or call Putnam at Please read the prospectus carefully before investing. Putnam Retirement Services One Post Office Square Boston, MA Putnam Retail Management IR / putnam.com