Profit Sharing 401(k) Enrollment Starts November 16th

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1 Profit Sharing 401(k) Enrollment Starts November 16th The W.W. Grainger, Inc. Employees Profit Sharing Plan is a hallmark of Grainger s performance culture and the Company s way of recognizing the valuable contribution that you make. Grainger takes great pride in getting it done for its customers and communities. That s why Grainger provides you the opportunity to be rewarded through the Profit Sharing Plan for contributing to the Company s success. Here s what profit sharing means for you: You will directly share in the earnings of the Company, and your share of the profits will be placed in an investment account. For many team members, the contribution that Grainger makes on your behalf becomes an important part of your financial future. The new 401(k) feature will allow you to make a personal contribution toward your long-term retirement goals.

2 Profit Sharing Plan Highlights Effective January 2016, Grainger will share profits in two ways: 1. Safe Harbor 401(k) Contribution: Eligible team members will receive 3% of their eligible compensation as an automatic contribution into their profit sharing account at Vanguard each pay period. The Company contribution will be fully vested immediately and does not require you to make elective pre-tax 401(k) contributions. You will begin to see this 3% contribution in your Profit Sharing plan account in early 2016! 2. The Annual Company Profit Sharing Contribution: Eligible team members must work 1,000 hours during the calendar year and be active on December 31 to receive this annual Company contribution. The service allocation will be eliminated for Company contributions made after 2017, which means all eligible participants will receive the same contribution percentage. Beginning with the annual Company profit sharing contribution for 2016 made in 2017, the vesting schedule will be 5 years. *Year(s) of Service Percent Vested 1 20% 2 40% 3 60% 4 80% 5 100% *Team Members must work more than 1,000 hours in a calendar year to qualify for a year of service. The 401(k) allows eligible team members the ability to contribute toward your financial future: You can elect to defer up to 75% of your eligible compensation up to the maximum of $18,000 for Team members age 50 and older can make an additional catch-up contribution of up to $6,000 for IRS 401(k) Contribution Limits for 2016 Contribution Limits 2016 Eligible Team Member Contribution $18,000 Catch-up Contributions (age 50 and older) $6,000 Company Contribution $53,000* Total aggregate contribution limits $53,000 Team Member + Company Contribution $59,000 including catch-up contribution *Or up to 75% of the Team Member s eligible compensation, whichever is less. 2

3 Enrollment starts November 16th You can select the percentage of your pay you want to contribute and how you want to invest among the fund choices available through the 401(k) feature starting November 16th. You will always have the opportunity to enroll in the plan and change or stop contributions. Contributing to a profit sharing plan may be a new idea for you, but think long term about how your savings and earnings have the potential to grow over time. Consider committing to making your own contributions today! Before you establish your 401(k) contribution: 1. Determine your 401(k) deferral percentages that will be deducted from your pay check each pay period. You can contribute from 1% to 75% of your pay on a pre-tax basis, up to the maximum contribution of $18,000 for 2016 and the additional catch-up contribution of $6,000 (age 50 and older). 2. Review and understand your investment fund options. Please refer to the Your Investment Fund Options at a Glance section of this newsletter. If you need help understanding the fund options or how to create the right investment mix, contact Vanguard at Review your beneficiary designation online according to the steps below. 4. You may roll over money from a former employer s 401(k) or other eligible plan into your W.W. Grainger, Inc. Employees Profit Sharing Plan. For more information, contact Vanguard at Review your beneficiary designation online: 1. Log on to your account at vanguard.com/retirementplans. 2. Click My Profile. 3. Click Beneficiaries. Note: If you have multiple accounts with Vanguard, you may need to select Employer plans before you click the My Profile tab. If you are married and want to elect a beneficiary other than your spouse, a beneficiary designation form must be signed by your spouse and notarized. If your spouse s notarized signature does not appear on the form, then the plan is required to ignore your designation and your spouse will be treated as your sole beneficiary. 3

4 It s easy to get started, here s how: Currently enrolled in the Profit Sharing Plan If you re already registered for secure online account access, follow these steps to start contributing to the plan: 1. Go to vanguard.com/retirementplans and log on to your account. 2. Click Manage my money. 3. Select Change my paycheck deduction to start contributing to your retirement plan. 4. Enter a new percentage amount under Employee Pre-Tax. 5. Click Continue and then review the election before clicking Submit. Note: If you make an election on or before December 29, 2015, your election will take effect with the first payroll of Not currently enrolled in the Profit Sharing Plan Eligible team members hired by Grainger in 2015, or eligible team members who did not work 1,000 hours prior to the 2015 calendar year or have not yet registered for secure online account access, can follow these steps to sign up: 1. Go to vanguard.com/retirementplans. 2. Click Register for account access. You will need your plan number: Once registered, go to the Overview page and click Begin enrollment. 4. Enter your deduction percentage then click Continue. 5. You will be prompted to select your investments under the Contribution allocations page. 6. Click Continue and then review the election before clicking Submit. Note: If you make an election on or before December 29, 2015, your election will take effect with the first payroll of You will be presented with the opportunity to establish your beneficiaries on the Enrollment Confirmation page once you submit your elections. 4

5 Retirement Toolbox and Resources: You may want to visit vanguard.com/retirementtoolbox for a wealth of information and useful tools, including the Payroll Deductions Calculator. This tool can help you determine the effect on your take-home pay when changing your payroll deductions. Need Help Selecting Your Investments? This is a perfect time to take a look at your retirement portfolio. For your long-term retirement security, you should carefully consider the importance of a well-balanced and diversified investment portfolio, taking into account all your assets, income, and investments. Keep in mind that diversification does not ensure a profit or protect against a loss. To find an asset mix that s right for you, log on to your account at vanguard.com /retirementplans for easy-to-use financial planning tools including the Investor Questionnaire and personalized financial education to help you create your investment mix. You can access the questionnaire at vanguard.com/investor. If you would prefer to speak with a Vanguard Participant Services associate, call Associates can answer your questions about creating an investment mix and help you with the Investor Questionnaire. Remember to visit for more information about the current investment options in your plan. Note: The Grainger Stock Fund is not available for elective contributions to the 401(k). 5

6 Your Investment Options at a Glance: The investment options are listed by overall risk level (from most conservative to most aggressive), which takes into account the different types of risk applicable to each option s asset class and investment style. Investment Option Short-Term Income Fund Objective/Strategy Target Asset Allocation Risk Level Expense Ratio* Seeks to provide income greater than that offered by money market funds. The fund invests in a diversified portfolio of short-term fixed income and money market securities. The fund maintains a portfolio allocation of 50% shortterm fixed income securities and 50% money market securities. 50% Vanguard Short-Term Bond Index Fund Institutional Plus Shares 50% Vanguard Prime Money Market Fund Conservative 0.11% Balanced Fund Seeks to provide a high level of total return consistent with reasonable risk. The fund invests in a diversified portfolio of domestic and international stocks and fixed income securities. The fund maintains a portfolio allocation of 30% domestic stocks, 30% international stocks, and 40% fixed income securities. 30% Vanguard Total Stock Market Index Fund Institutional Plus Shares 30% Vanguard Total International Stock Index Fund 40% Vanguard Total Bond Market Index Fund Institutional Plus Shares Moderate 0.09% Common Stock Fund Seeks to provide long-term capital appreciation. The fund invests in a diversified portfolio of domestic and international stocks. The fund maintains a portfolio allocation of 50% domestic stocks and 50% international stocks. 50% Vanguard Total Stock Market Index Fund Institutional Plus Shares 50% Vanguard Total International Stock Index Fund Moderate to aggressive 0.12% Grainger Stock Fund Seeks to provide long-term growth of capital. The fund invests in Grainger common stock to provide investors the possibility of long-term growth through increases in the value of the stock and the reinvestment of its dividends. A small portion of the fund will also be invested in cash investments such as money market instruments to help accommodate daily transactions. 99% Grainger common stock 1% Vanguard Prime Money Market Fund Aggressive 0.05% *The annual cost of running the fund, expressed as a percentage of the fund s assets, as of the most recent fund prospectus. A Note About Risk All investing is subject to risk, including possible loss of principal. Bond funds are subject to the risk that an issuer will fail to make payments on time, and that bond prices will decline because of rising interest rates or negative perceptions of an issuer s ability to make payments. Investments in stocks or bonds issued by non-u.s. companies are subject to risks including country/regional risk and currency risk. Because it concentrates on a single stock, the Grainger Stock Fund is considered riskier than a stock mutual fund, which is diversified. Diversification does not ensure a profit or protect against a loss. 6

7 Connect with Vanguard Online. Log on to your account at vanguard.com/retirementplans. Not yet registered for immediate, secure online account access? Click Register for account access on the logon page to sign up. You will need your plan number, On your mobile device. Go to vanguard.com/bemobile to download the Vanguard app so you can access your account on the go. By phone. Call to reach Vanguard s 24-hour interactive VOICE Network. You ll need your Social Security number and a personal identification number (PIN) to use VOICE. To create a PIN, follow the prompts when you call. Or you can speak with a Vanguard Participant Services associate Monday through Friday from 7:30 a.m. to 8 p.m., Central time. Join the Vanguard community on social media channels. You ll have access to Vanguard experts and be able to get up-to-the-minute news and views, attend live web events, participate in live chats, and interact with other Vanguard investors. Questions? If you have any questions about your account or the information in this newsletter, you can reach a Vanguard Participant Services associate at Monday through Friday from 7:30 a.m. to 8 p.m., Central time. 7

8 Connect with Vanguard vanguard.com/retirementplans > For more information about any fund, including investment objectives, risks, charges, and expenses, call Vanguard at to obtain a prospectus. The prospectus contains this and other important information about the fund. Read and consider the prospectus information carefully before you invest. You can also download Vanguard fund prospectuses at vanguard.com. An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although a money market fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in such a fund. *Tax implications: When taking withdrawals from a tax-deferred plan before age 59½, you will have to pay ordinary income tax plus a 10% federal penalty tax. Vanguard, Connect with Vanguard, vanguard.com and VOICE are trademarks of The Vanguard Group, Inc. Participant Education P.O. Box 2900 Valley Forge, PA The Vanguard Group, Inc. All rights reserved. Vanguard Marketing Corporation, Distributor of the Vanguard Funds. BBBBKGVV