Brown & Brown, Inc. Conversion to Schwab FAQs

Transcription

1 Brown & Brown, Inc. Conversion to Schwab FAQs The Brown & Brown, Inc. Employee Savings Plan (the Plan ) was designed to provide employees an avenue to save for their retirement. We recognize that this is an important benefit for employees at all stages of their lives. Effective July 1, 2009, the Plan s administrative services are moving to Schwab. Please use this document to answer your frequently asked questions regarding the conversion process. Table of Contents Basic 401(k)..2 Conversion 3 Roth 401(k)...6 Schwab Personal Retirement Planning...7 Miscellaneous...9 Schwab Personal Choice Retirement Account PCRA 10

2 Basic 401(k) 1. What is a 401(k) retirement plan? A: A 401(k) retirement plan is a type of retirement plan that is named for a section of the tax law that allows employees to contribute a portion of their compensation, before income taxes, to a company sponsored retirement plan. The amount the company withholds from your paycheck is called a deferral. 2. What are the long-term benefits of pre-tax contributions? A: When you contribute to your retirement account, the money comes out of your paycheck before federal and most states income taxes are assessed. This means that you may pay lower income taxes than you would have paid if you had not contributed to the 401(k) retirement plan during the year. Your contributions are invested and start earning interest and capital gains on a tax-deferred basis. When you start withdrawing money from your account, usually at retirement when you may be in a lower tax bracket, you will pay regular income taxes on the contributions and earnings you withdraw. 3. Who is eligible to participate in the Plan? A: Employees are eligible to enroll in the Plan if they are at least 18 years of age and are expected to work at least 1,000 hours during the first year of employment. If the employee is enrolled, participation begins the first day of the payroll coinciding with or next following completion of one month of service. 4. How does the investment process work? A: After Brown & Brown, Inc. withholds your deferral, it is deposited into a Schwab trust account, and the deferral information is sent to Schwab Retirement Plan Services. Schwab then invests your deferral in the investments you have chosen, the fund company informs Schwab of the number of shares that your recent contribution purchased, and your account is updated. The number of units and unit prices are updated on a daily basis. 2

3 Conversion 1. Why is Brown & Brown, Inc. moving to Schwab at this time? A: Brown & Brown, Inc. completed an evaluation of the record keeper and trustee functions currently performed for the Brown & Brown, Inc. Employee Savings Plan. Recognizing the importance of providing leading services to participants while maximizing investment flexibility, a decision was made to evaluate service provider options for the Plan. The purpose of the evaluation was to identify potential new opportunities and improvements for the Plan. The evaluation included a market review of record keepers for similar tax-qualified retirement plans, including 401(k) plans. As a result of this evaluation process, Brown & Brown, Inc. has selected Schwab Retirement Plan Services, Inc. as the new record keeper and trustee for the Plan. 2. What is the timeframe for the Plan conversion to Schwab and what will happen to investments during the conversion? A: Participants will continue to manage their funds with the current record keeper (Diversified) up to Monday, June 22, This will begin a short period, known as the Blackout Period, during which participants will not be able to move money among investment option(s), take distributions or withdrawals, or apply for loans. All participants and employees received a notice at home containing the details of the Blackout Period and deadline dates to request or make changes. The transfer of assets from Diversified to Schwab will be initiated on a specific date that will minimize the time assets are unavailable for trading. Full access to funds will be restored as soon as participant records and assets are reconciled. We expect the period to be brief and complete access to accounts within the Plan is expected to be available to participants the second week of July, Investment options offered under the current record keeper (Diversified) will be liquidated on or about July 1, Proceeds will be wired from Diversified to Schwab and will either be mapped to funds with similar investment objectives, mapped to custom portfolios, or transferred in-kind on or about July 2, (Review the conversion calendar in the Schwab Newsletter that was mailed on May 22, 2009 for details). 3. What if participants want account information after the Blackout Period has started? A: They will need to contact their current record keeper (Diversified) for account information. After the Blackout Period begins, participants will have inquiry only access to their current account balances. Once the Plan is live at Schwab, participants will have complete account access by calling the Schwab Retirement Plan Hotline at or logging on to the Retirement Plan website at 4. How are the retirement funds protected? A: Federal regulations require that the assets of retirement plan accounts (whether at the current record keeper or once they are converted to Schwab) be held in a trust only for the benefit of plan participants and be protected from general creditors. Schwab is a stable financial institution with a strong balance sheet and credit ratings. If interested, participants can review Schwab s entire financial statement at 5. Will this change require participants to sell investments when the price is low? A: While we do not know how the market --- or any particular investment option --- will perform between now and then, keep in mind assets will be re-invested in similar funds as soon as possible and therefore under similar market conditions. Note, too, that because these transactions are occurring within the Plan s trust, there is no tax impact related to real gains or losses as long as they remain in the Plan. 3

4 6. How will participants be informed of the changes? A: All participants and current employees received a conversion newsletter outlining new investment options, whom to call with questions, and much more. We are excited about the selection of Schwab as the new Retirement Plan record keeper and will continue to keep participants informed of changes throughout this conversion. Up-to-date information will also be posted to a special conversion website details of which were included in the newsletter. This website includes copies of conversion communications, education meeting schedule and descriptions of the new and existing core funds offered in the Plan. 7. What are some of the new features of the Plan? A: An improved menu of well-known mutual funds managed by some of the most respected names in the industry including targeted retirement funds to make investing easier. The ability to make contributions to a Roth 401(k) contributions made on an after-tax basis; so both the contributions and earnings are tax-free upon distribution. The maximum that an employee can contribute to a Roth 401(k) and regular 401(k) is $16,500 in 2009, plus an additional $5,500 catch up contribution for employees 50 years or older. Specific, personalized recommendations for your retirement plan investments through Schwab Personal Retirement Planning, advice through GuidedChoice at no cost to participants. 8. What will happen to the current assets after the move to Schwab? A: The funds will be automatically mapped to the same or similar new investments with the conversion to Schwab. This is described in the conversion newsletter that was mailed in late May to participants home addresses and a copy is also available on the conversion website. This Plan conversion in itself does not allow participants to take a distribution or rollover to an IRA. However, if a participant is otherwise eligible to take a distribution, they may take the distribution from the current record keeper as long as the completed distribution or hardship withdrawal paperwork is returned to Diversified by Monday, June 22, 2009 at 4:00 PM ET. 9. When will participants be notified they have access to their accounts? A: Schwab will notify participants in writing of the date when the new Plan is live with all features available. Schwab s notification will include a personal identification number (PIN). Participants will need both their PIN and Social Security Number to access the Schwab Retirement Plan Hotline at and website at How often will participants receive statements? A: Participants will receive statements on a quarterly basis. The statements are mailed to participants home addresses, or they may choose to receive an e-statement that is ed to the address of their choice. After the conversion, participants can log on to and click on Manage Account, then click E-Services and Change Delivery Options for a full description. 11. What is the phone number for Schwab Retirement Plan Services? A: The Schwab Retirement Plan Hotline can be accessed by dialing Participants may contact Schwab prior to July, but please understand that the Plan assets from Diversified will not transfer to Schwab until the first week of July, and Schwab will need to reconcile the assets before the system is available. The Blackout Period starts June 22, 2009 and is estimated to end during the week of July 12, For general financial and investing information, visit Schwab s website anytime at 4

5 12. Do participants have the ability to rollover an account into an IRA? A: The Internal Revenue Service specifies when participants can get their money from a 401(k) plan. Specifically, they can get their money when they terminate employment, die, retire or become permanently disabled. Otherwise, the money must stay in the Plan as conversion is not a distributable event. While participants can take a loan or a hardship withdrawal, limitations apply to the amount they can take. Unless a participant meets one of the requirements listed above, taking a distribution would not be possible at this time. Keep in mind that these rules are placed on Plans in return for allowing the monies in the Plans to remain tax deferred until the monies come out of the Plans. Additionally, the Plan is designed to help employees save for a financially secure retirement. 13. How do newly hired employees enroll in the Brown & Brown, Inc. Employees Savings Plan during the Blackout Period? A. A paper enrollment form will be used for employees that become eligible during the conversion period to Schwab. The form is available through your Profit Center LD/Payroll Coordinator. This form needs to be completed and returned to your Profit Center LD/Payroll Coordinator so that all of the forms will be sent to Schwab to enter investment elections into the record keeping system. After the Plan goes live in mid-july 2009, all eligible employees may enroll via or by calling the Schwab Retirement Hotline at

6 Roth 401(k) 1. How are Roth 401(k) contributions different than regular 401(k) contributions? A: Regular 401(k) contributions give an immediate tax break; Roth 401(k) contributions give it to you down the road. Regular 401(k) contributions are made before taxes, reducing your current taxable income, and you don t pay any taxes until you withdraw money from your account. If you make a Roth 401(k) contribution, you pay taxes up front. Contributions are made on an after-tax basis; therefore, both the contributions and earnings are tax-free upon a qualified distribution. 2. Will Roth 401(k) contributions be matched? A: Yes, Roth 401(k) contributions are matched just like regular 401(k) contributions. 3. Can participants take loans and hardship withdrawals from the Roth 401(k) account? A: Yes, Roth 401(k) contributions are available to be withdrawn just like regular 401(k) contributions. Please note that if Roth 401(k) amounts are withdrawn for a hardship withdrawal, the portion attributable to investment earnings may be taxable. A participant under age 59 ½, may be subject to early distribution penalties. Participants should consult a tax advisor for specific implications. 4. How is the Roth 401(k) different than a Roth IRA? A: A Roth 401(k) and Roth IRA have the same basic underlying concept which allows you to put money away for retirement with no tax deduction for your contributions and when you retire you withdraw contributions and earnings tax-free. However, they do work differently. With a Roth 401(k), participant contributions count as taxable income, but investment gains accumulate tax deferred, and withdrawals of both participant contributions and investment gains can be tax-free in retirement. Only participant contributions are available for Roth treatment. Unlike Roth IRAs, which never require the account holder to take money out, Roth 401(k)s impose mandatory withdrawals after age 70 ½. Since there are no income limitations, Roth 401(k) contributions may be appealing to higher income earners who haven t been able to contribute to a Roth IRA. The maximum contribution to a regular 401(k) or Roth 401(k), or a combination of both is $16,500 in 2009, plus, an additional $5,500 "catch-up" contribution for participants 50 years or older, for a total of $22,000. By comparison, Roth IRAs are individual plans, not employer-sponsored, and contribution limits are lower. The maximum contribution for 2009 to a Roth IRA is $5,000, with an additional $1,000 "catch up," or $6,000 total for people 50 and older. 5. Should participants contribute to a Roth 401(k) account? A: If a participant is thinking about contributing, they need to remember that it depends on how long the money stays in their account, how much it may earn, what their tax rate may be when they put the money in and take it out, and what the tax laws may be at that time. Remember a regular 401(k) contribution gives an immediate tax break; a Roth 401(k) contribution gives it down the road. To calculate what option might work, participants can visit the Roth Calculator on As each individual s tax situation is different, they should take time to consider all the facts and consult a tax advisor. 6. When can participants contribute to the Roth 401(k)? A: Participants can begin contributing to the Roth 401(k) when the Plan goes live at Schwab. Once at Schwab, changes can be made at anytime. 6

7 Schwab s Personal Retirement Planning - Advice through GuidedChoice 1. What is Schwab s advice solution provided through GuidedChoice? A: It is a personalized investment advice service to help you stay on track when it comes to planning for retirement. You will receive objective, personalized retirement planning answers that include: Savings recommendations How much you need to save today to reach your 401(k) savings goal. Fund-specific advice Recommendations to help you decide which funds to select and how much to invest in each of the funds. Annual rebalancing Automatic rebalancing of your portfolio each year so you can keep your recommended asset allocation. Ongoing support Ability to access advice solution services any time a life event occurs or when you feel a need to re-evaluate your financial situation. 2. Who is GuidedChoice? A: GuidedChoice is the third party administrator that delivers the objective advice. Their advice model was developed in collaboration with Nobel Laureate Dr. Harry Markowitz, founding father of Modern Portfolio Theory. Through a GuidedChoice analysis, you will complete a retirement assessment that includes a review of your goals, timeline to retirement, and current investments. Then, over 500 market scenarios are run to produce advice appropriate to your unique situation and goals. You will receive specific recommendations on how much to save, which funds to select from the Plan s core lineup, and how much to allocate to each fund. Participants will also receive an estimate of how much they could accumulate for retirement. 3. How will the advice solution services be delivered? A: Participants can access GuidedChoice online or schedule a phone appointment with a Schwab Advice Consultant. GuidedChoice provides a Guided Savings analysis and the personalized advice is then provided immediately online or delivered by a Schwab Advice Consultant. By phone: Call to set up your appointment with a Schwab Advice Consultant. You can even request to speak with the same consultant every time. Online: Log on to Sign in with the same Login ID and Password that you use to access your account information. Once you are on the homepage, click on the GuidedChoice link at the right to get started. If you have lost or forgotten your login information, call Schwab at to speak with a representative for assistance. 4. What are the hours to access the advice solution services provided by GuidedChoice? A: Advice Consultants will be available from 8:00 AM ET to 10:00 PM ET Monday through Friday and Saturday between 8:30 AM ET and 8:00 PM ET. Additionally, the Schwab Retirement Hotline call centers will support the Advice Consultants from 7:00 AM ET to 11:00 PM ET Monday through Friday, and will be able to set appointments. 5. Can participants talk to the same Advice Consultant every time they call? A: Yes. We believe a personal relationship is what many people want. The ability to call, ask questions along the way, and get overall assistance as well as assistance in obtaining specific GuidedChoice advice as delivered by a Schwab Advice Consultant will help participants be more willing to use advice solution services. Participants may need to set an appointment, but they can request to have the same Advice Consultant. 7

8 6. How frequently can a participant use the advice solution? Is there a distinction between inperson and online usage? A: A participant has the availability to use the online tool or speak with an Advice Consultant as often as they would like. Additionally, Schwab provides participants with key investment educational topics, such as investing for the long term, not timing the market, etc. These educational tools may help a participant determine if and when to seek out goal-specific advice from GuidedChoice. 7. Is there a fee to receive this service? A: No, Schwab has stated that they believe retirement plan advice is a necessity for plan participants, not an option. Schwab thinks it s the right thing to do to offer this at no cost to participants. 8. Will GuidedChoice advice cover all of a person s financial needs? A: Advice will be limited to core account investments offered within a defined contribution retirement plan. Outside assets will be considered when providing this advice. If a participant has financial needs outside of the retirement plan, the Advice Consultant can offer information on other Schwab resources. 9. Can Schwab Personal Retirement Planning through GuidedChoice recommend Roth 401(k)? What about a regular 401(k)? A: Yes to both questions. Based on a participant s specific situation, the analysis may recommend Roth 401(k) savings, regular 401(k), or a combination of both. 10. Why would the advice solution recommend both Roth 401(k) and regular 401(k) in the same account? Shouldn t one be better than the other? A: Because there s no way to know for sure what future tax environments will be like, the solution may recommend a combination of regular 401(k) and Roth 401(k) savings so that the participant is covered for a variety of scenarios. 11. What about company stock? A: Specific advice is offered only for account investment choices in the Plan. However, all assets and their respective allocations earmarked by the participant for retirement are factored into the analysis. Any recommendation to sell the investment will be made in compliance with the Plan rules. The participant has the option to disregard the sell recommendation. 8

9 Miscellaneous 1. Is it possible to move funds from my previous employer s retirement plan to the Brown & Brown, Inc. Employee Savings Plan? A: Yes, as long as the money comes from a qualified retirement plan, a traditional individual retirement account (IRA), a 403(b) plan, a 457 government plan, or a 401(a) plan. By doing so, you can avoid current income tax liability on the amount distributed and your money can continue to accumulate tax-deferred. To request a Direct Rollover Transfer Form, please contact the Schwab Retirement Plan Hotline at What is a qualified plan? A: A qualified plan is a plan that qualifies for special tax consideration under section 401(a) of the Internal Revenue Code. Your funds must come from this type of plan if you wish to roll them into the Brown & Brown, Inc. Employee Savings Plan. 3. What is the procedure for rolling funds from my previous employer s retirement plan into the Brown & Brown, Inc. Employee Savings Plan? A: After you receive the Direct Rollover Transfer Form from Schwab, forward it to your previous employer s retirement administrator. Your previous employer sends you the rollover form with the check made payable to the Brown & Brown, Inc. Employee Saving Plan. You then fill out the back portion of the form and send it to Schwab with the check from your previous plan. 4. Can terminated employees with a loan in the Plan continue their loan repayments? A: Yes, but there is a new procedure for loan repayment effective June 22, If a terminated participant wishes to continue to make repayments on their existing plan loan: Payments should be made to Charles Schwab Trust Company, Trustee Brown & Brown, Inc. Employee Savings Plan Payments must be in exact multiples of loan payment (i.e. for a $25.00 repayment, amounts of $25, $50, $75, etc. would be accepted). Indicate reason for funds being sent (i.e. repayment loan #001, loan payoff, etc.) Send a certified check or money order to the address below. Please note: personal checks will not be accepted. Mail payments to: Schwab Retirement Plan Services, Inc. Attn: RPS Operations/CPU 4150 Kinross Lakes Parkway P.O. Box 5050 Richfield, OH

10 Schwab Personal Choice Retirement Account (PCRA) 1. What is PCRA? A: Schwab Personal Choice Retirement Account (PCRA) is a self-directed brokerage account that allows participants to invest in select investments as chosen by the Retirement Plan Committee that are outside the Plan s core fund lineup. PCRA is offered through Charles Schwab & Co., Inc. (Member SIPC), a registered broker/dealer which also provides other brokerage and custody services to its customers. 2. What are some reasons for opening a PCRA? A: If participants are looking for investment choices beyond the core fund lineup they may want to consider opening a PCRA. If they want more investment options, are interested in researching, selecting and monitoring their own investments, or have a significant account balance that they would like professionally managed for an additional fee, they may wish to open a PCRA. 3. What investments will be available in a PCRA? A: Mutual Funds the opportunity to choose from a wider range of mutual fund investments, including: No load, no transaction-fee mutual funds from hundreds of leading fund companies Money market funds Taxable mutual funds Tax-Exempt mutual funds Closed end mutual funds Exchange-traded funds (ETFs) Certificates of Deposit (CDs) Bonds Stocks Equities Publicly Traded Limited Partnerships Taxable Fixed Income Tax-Exempt Fixed Income Foreign Securities Investors should carefully consider information contained in the prospectus, including investment objectives, risks, trading policies, charges and expenses. A prospectus can be obtained by calling the Schwab Retirement Plan Hotline at You may also request a prospectus at Please read the prospectus carefully before investing. Investment return and principal value of an investment will fluctuate so that an investor s shares, when redeemed, may be worth more or less than their original cost. 4. What is not available in a PCRA? A: Option trading is not permitted. 5. What transaction fees apply to a PCRA? A: Schwab will charge its standard brokerage commission on any trade within your PCRA. Current brokerage commission rates are available by calling Schwab at These rates are subject to change. 10

11 6. How does a participant set up a PCRA? A: To open a PCRA for the first time, participants will need to complete the online enrollment application and choose PCRA as one of your investment election choices. Participants need to make sure their investment election choices total 100 percent. From click the link to open a PCRA and complete the online PCRA Application. Funding your PCRA 7. How do participants contribute to their PCRA? A: To contribute to a PCRA, participants direct money from their Retirement Plan into the PCRA. Contributions are initially deposited into a Money Market Fund. When they contribute to their PCRA, they should keep in mind that they will need to have sufficient cash in their account before placing any trades. Their account can be funded in one of two ways: Automatic payroll deductions A participant may choose to contribute money to their PCRA every pay period, by electing the PCRA option when they complete their investment elections online at Transfers from funds existing account balances A participant may transfer some or all of their savings from their current Plan core account investments to the PCRA. A request to transfer from a core investment to a PCRA can be done via the Schwab Retirement Plan Hotline or website at The money will be available to invest in their PCRA two business days later. 8. How do participants change their investment election? A: Once participants direct contributions toward their PCRA, they can increase/decrease those contributions or transfer core funds to their PCRA either by calling the Schwab Retirement Plan Hotline at or by accessing On the Retirement Plan website, they can click the Plan Services tab. From this tab, click on either Investments (to move existing money) or Contributions (to change future contributions). Note: Participants may not click the Rebalance Portfolio selection to move funds into their PCRA. Transfers requested by 4:00 PM ET of any business day will be available the next business day. Guidelines to Investing 9. How do participants trade? A: All transfers to PCRA go into a Money Market Fund that is used to handle flows of cash into, out of and within PCRA. Cash in their PCRA will remain invested in the Schwab Money Market Fund unless the participant uses an automatic investment plan. PCRA is designed to offer participants investment flexibility and choice. PCRA participants may place trade orders whenever it is convenient for them, day or night, using the following resources: TeleBroker touch tone service, Schwab by Phone voice recognition service or Schwab s dedicated PCRA Call Center at Participants can activate an Automatic Investment Plan (AIP) to place Mutual Fund OneSource service trade orders automatically. Participants can utilize an Investment Advisor for PCRA assets. An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although money market funds seek 11

12 to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in a money market fund. 10. Is there any way participants can automatically invest their PCRA? A: By activating Schwab s Automatic Investment Plan (AIP), participants can arrange to have regular, automatic investments (subject to investment restrictions). With AIP, they can choose the dollar amount to invest, the frequency, and the fund to invest in. Learn more about the Automatic Investment Plan on or call Schwab s dedicated PCRA Call Center at for help activating AIP. Access to PCRA 11. How can participants keep track of their PCRA investments? A: To help keep track of PCRA investments, Schwab will provide participants with easy-tounderstand information on a regular basis: Brokerage statements Each month participants will receive, via mail or (notification to access their secure statement), a Schwab PCRA statement that details all of their PCRA activity, including trades, payroll contributions and transfers. Benefit statements The total dollar value of their PCRA, along with their core investments, will be reflected on the quarterly retirement plan benefit statement, provided by Schwab Retirement Plan Services. Trade confirmations Participants will receive a written confirmation from Schwab for each trade made and they will be mailed out on the trade date. Participants can also elect to receive econfirms via What is Schwab Complete Account Access? A: With a single login, participants can receive a comprehensive view of multiple Schwab investing accounts. With a Schwab brokerage account and login ID, participants can get complete access starting immediately. 13. What other PCRA related services are available? A: Schwab can provide participants with information and resources to assist in making informed investment decisions to help meet their financial goals for retirement.* Some examples of these educational resources include the following: Access to powerful research tools on and third-party research from leading providers such as Argus Research, Standard & Poor s, and Morningstar. Access to mutual fund screener tools to help participants choose their investments based on their criteria. In-person and online seminars covering current investing topics. Schwab Alerts These alerts are designed to help you stay informed about your account activity, news and market news. Market Insight Review commentaries from Schwab market analysts on top stories of today, investing strategies and retirement strategies at located under Research & Strategies on the home page. 12

13 *Please be aware that brokerage products and services provided by Charles Schwab & Co., Inc. (member SIPC) through Schwab Investor Centers are separate and distinct from the services offered through your retirement plan serviced by Schwab Retirement Plan Services, Inc. Any fees incurred for products or services provided by the Schwab Investor Centers will be incurred by the individual investor and not be paid by your retirement plan or Plan Sponsor. Schwab Retirement Plan Services, Inc. and Charles Schwab & Co., Inc. are separate but affiliated companies and subsidiaries of The Charles Schwab Corporation. Retirement plan investment advice is formulated and provided by GuidedChoice Asset Management, Inc. (GuidedChoice) which is not affiliated with or an agent of Charles Schwab & Co., Inc. (CS&Co.) or any of its affiliates (collectively Schwab). The GuidedChoice service is available to participants enrolled in plans that use the recordkeeping and related services of SRPS. Schwab does not supervise, make recommendations with respect to, or take responsibility for monitoring the advice provided to participants by GuidedChoice. Schwab s Advice Consultants are employees of CS&Co. and not of GuidedChoice. There is no additional cost for the GuidedChoice service outside of the standard fees paid to SRPS and Schwab for recordkeeping and related services, including fees paid to Charles Schwab Trust Company, a division of Charles Schwab Bank. Accounts will be rebalanced annually unless you opt out of this service. 59½ is the federally mandated age you may take in-service withdrawals from a 401(k) plan without a 10% penalty. Schwab does not provide tax or legal advice. Access to electronic services and your account may be limited or unavailable during periods of peak demand, market volatility, system upgrades or for other reasons. Exchange Traded Funds are subject to risks similar to those of stocks. Investment returns will fluctuate and are subject to market volatility, so that an investor s shares, when redeemed or sold, may be worth more or less than their original cost. Investments in foreign investments may incur greater risks than domestic investments. A redemption fee is a fee that some funds charge their shareholders when they redeem their shares within a specified period of time. The fee is meant to discourage short term trading. A redemption fee is typically used to defray fund cost associated with a shareholder s redemption and is paid directly to the fund - not to the broker. Periodic investment plans, dollar-cost-averaging, dividend reinvestment or Schwab s Automatic Investment Plan ( AIP ) do not assure a profit and do not protect against loss in declining markets. Network member advisors are independent and are not employees or agents of Charles Schwab & Co., Inc. ( Schwab ). Schwab prescreens advisors and checks their experience and credentials against criteria Schwab sets, such as years of experience managing investments, amount of assets managed, professional education, regulatory licensing, and business relationship as a client of Schwab. Advisors pay fees to Schwab in connection with referrals. Schwab does not supervise advisors and does not prepare, verify or endorse information distributed by advisors. Investors must decide whether to hire an advisor and what authority to give him or her. Investors, not Schwab, are responsible for monitoring and evaluating an advisor s service, performance and account transactions. Services may vary depending on which advisor an investor chooses. For participants who utilize the Personal Choice Retirement Account (PCRA), the following fees and conditions may apply: Schwab s short-term redemption fee of $49.95 will be charged on redemption of funds purchased through Schwab s Mutual Fund OneSource service (and certain other funds with no transaction fee) and held for 90 days or less. Schwab reserves the right to exempt certain funds from this fee, including Schwab Funds, which may charge a separate redemption fee, and funds that accommodate short-term trading. Trades in no-load mutual funds available through Mutual Funds OneSource service (including Schwab Funds) as well as certain other funds, are available without transaction fees when placed through schwab.com or our automated phone channels. Schwab reserves the right to change the funds we make available without transaction fees and to reinstate fees on any funds. Funds are also subject to management fees and expenses. Charles Schwab & Co., Inc., member SIPC, receives remuneration from fund companies for record keeping, shareholder services and other administrative services for shares purchased through its Mutual Fund OneSource service. Schwab also may receive remuneration from transaction fee fund companies for certain administrative services. Schwab Personal Choice Retirement Account (PCRA) is offered through Charles Schwab & Co., Inc. (Member SIPC), the registered broker/dealer, which also provides other brokerage and custody services to its customers. Schwab Equity Ratings and the general buy/hold/sell guidance are not personal recommendations for any particular investor or client and do not take into account the financial, investment or other objectives or needs of, and may not be suitable for, any particular investor or client. Investors and clients should consider Schwab Equity Ratings as only a single factor in making their investment decision while taking into account the current market environment. The Charles Schwab Corporation (Charles Schwab) provides services to retirement and other benefit plans and participants as well as equity compensation plan services and other financial and retirement services to corporations and executives through its separate but affiliated companies and subsidiaries: Schwab Retirement Plan Services, Inc.; Schwab Retirement Plan Services Company; Charles Schwab Trust Company, a division of the Charles Schwab Bank; and Charles Schwab & Co., Inc. Brokerage products and services are offered by Charles Schwab & Co., Inc. (Member SIPC) Schwab Retirement Plan Services, Inc. All rights reserved. ( ) MKT43002BRB-00 (06/09) 13