Hewitt Financial Services Self-Directed Brokerage Account (SDBA)

Transcription

1 invest in you Enrollment Guide Brokerage Account (SDBA) Savings Plus offers a self-directed brokerage account option for investors who may want to direct investments to a wider variety of options other than those available in our core funds. Hewitt Financial Services (HFS) Self-Directed Brokerage Account (SDBA) provides greater flexibility with your Savings Plus investments by allowing the freedom to select and manage your portfolio from a much larger universe of mutual funds, individual stocks, bonds, and a variety of other investment choices. This booklet contains the following sections: SDBA overview SDBA self evaluation Questions to help you determine if an SDBA is the right choice for you How to enroll and manage an SDBA SDBA investment rules and restrictions SDBA investment transactions How to access your SDBA assets SDBA transfers Qualified Domestic Relations Orders How to close your SDBA Contact Information savingsplusnow.com (855) 616-4SPN (4776) Hewitt Financial Services representatives are available 6:00 a.m. to 7:00 p.m. PT, Monday through Friday by phone Lobby Hours are 8:00 a.m. to 5:00 p.m. PT, Monday through Friday

2 Brokerage Account (SDBA) page 2 SDBA overview About SDBA The HFS SDBA is the self-directed brokerage option offered by Hewitt Financial Services LLC (Member FINRA, SIPC). HFS is a broker/dealer that primarily provides services to retirement plans. It is a subsidiary of Hewitt Associates LLC (branded Aon Hewitt), a global human resources outsourcing and consulting firm, founded in 1940 and headquartered in Lincolnshire, IL. The SDBA is available through Aon Hewitt, the thirdparty administrator for Savings Plus. You can choose to invest in an SDBA in addition to the core funds in Savings Plus. The term core funds refers to the fund choices currently offered in Savings Plus. You must maintain a minimum balance in the core funds. Information about the core funds is available at savingsplusnow.com or by calling (855) 616 4SPN (4776). Enrollment requirements You may open an SDBA in your 401(k) account and/ or your 457 account with Savings Plus. You may not transfer money between your 401(k) SDBA and your 457 SDBA. You must retain $2,500 or 50% of your total account balance, whichever is less, in your Savings Plus core funds. Savings Plus may adjust this minimum account balance requirement in the future. Comparing SDBA with core funds With an SDBA, you manage your own investments. You have the freedom to plan the strategy, do the research, watch the performance, evaluate the progress, make adjustments, and initiate changes as needed. You re solely responsible for selecting and managing your SDBA investments. Tax-deferred investing Unlike a typical consumer brokerage account, you can invest tax-deferred income in an SDBA. Available investment options You can choose from more than 11,000 mutual funds in more than 350 fund families. Of those funds, more than 6,000 are available for purchase with no loads or waived loads and no transaction fees (NTF). 1 You ll also have access to most individual stocks listed on every major U.S. exchange (including over-the-counter stocks), exchange-traded funds (ETFs), certificates of deposit (CDs), bonds, and a variety of other investments. Refer to Available investments in SDBA investment rules and restrictions for a complete list of allowed investments. Additional transaction fees, commissions or sales charges may apply for trades placed in your SDBA. The full HFS Commission and Fee Schedule is available at savingsplusnow.com or by calling (855) 616-4SPN (4776) and choosing the Self-Directed Brokerage Account option. You ll also receive the commission and fee schedule from Hewitt Financial Services in your welcome material. SDBA information and resources One key to reaching your financial goals for retirement is making informed choices. Once you open an SDBA, HFS provides access to information and resources to help you make more informed investment decisions. For more information or for assistance with trades and brokerage questions, access your brokerage account at savingsplusnow.com, by logging into your SDBA directly at hewittfs.com or calling (855) 616 4SPN (4776). 1 Other fees and expenses regularly charged by the mutual funds will apply. NTF funds redeemed or exchanged within 90 days of the purchase date or deposit date will incur a transaction fee of $50. Investors should consider carefully information contained in the mutual fund prospectus, including investment objectives, risks, charges, fund minimums and expenses. You can request a mutual fund prospectus by accessing your SDBA from savingsplusnow.com. Hewitt Financial Services may receive servicing fees from money market funds and mutual fund companies in addition to the clearing and execution fees charged to you. Please refer to the Plan Participant Agreement for additional details.

3 Brokerage Account (SDBA) page 3 SDBA trade options You may access your SDBA and place trades any time it s convenient for you: Log in at savingsplusnow.com and select your SDBA brokerage account, or Log in directly at hewittfs.com, or Call an HFS representative at (855) 616-4SPN (4776) and choose the Self-Directed Brokerage Account option, Monday through Friday from 6:00 a.m. to 7:00 p.m. PT. Trades placed by an HFS representative will incur an additional fee. Loans, withdrawals, and distributions All withdrawals are processed through your Savings Plus core funds. Your SDBA balance is included when determining your qualified amount for loans, emergency or hardship withdrawals, or distributions. However, you can t take a withdrawal directly from the SDBA. If the amount you want to withdraw includes money invested in your SDBA, you will need to sell some or all of your brokerage investments, wait for the trades to settle and the proceeds to sweep into the Hewitt Money Market Fund. 1 This process will take three to five business days to complete depending on the settlement period of the liquidated investments. Once the funds are in the Hewitt Money Market Fund, you may transfer the appropriate amount back to the core funds prior to requesting the withdrawal. If you fail to transfer the required amount to your core funds, your withdrawal will be rejected. SDBA self evaluation The following five questions are designed to help you evaluate if an SDBA may be an appropriate investment choice for you. 1. Are you looking for additional investment choices beyond the Savings Plus core funds for your retirement account? With an SDBA, you can choose from an expanded selection of mutual funds, individual stocks, bonds, and a variety of other investments to help you create a personalized portfolio. 2. Are you interested in researching, selecting, and maintaining your investments? Self-directing your own investments takes time: to research to choose from the broad array of investment choices available to monitor their performance to make the investment changes you choose HFS provides a variety of research tools to help you make informed investment decisions; however, you should have a sound familiarity with investments, a developed personal interest in keeping up with the market and its trends, and the ability to stay focused on your long-term goals. See How to access your SDBA assets for important guidelines on withdrawals. 1 An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Although money market funds seek 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.

4 Brokerage Account (SDBA) page 4 3. Are you comfortable with risk? All investments have some degree of investment risk. Your level of expertise and the amount of information available on an investment will help you develop and manage a high, moderate, or low risk strategy. An investment s past performance is no indication or guarantee of its future results. It s up to you to choose the investment vehicles that best meet your objectives and match your risk profile. Savings Plus is not responsible for monitoring or evaluating the investment choices available through an SDBA. Investments such as stocks, bonds, and mutual funds aren t insured by the Federal Deposit Insurance Corporation (FDIC). Securities (including mutual funds) sold by HFS aren t obligations of or insured by the FDIC or any other government agency. Investment balances may fluctuate. When securities are sold, they may be worth more or less than when they were purchased. No assurance can be given that the principal amount of SDBA investments will be preserved. Savings Plus is not liable for any loss that results from your investment choice(s) under the SDBA. 4. Are you willing to incur additional trading and maintenance costs for an expanded investment choice? With an SDBA, you need to manage your investment expenses just as carefully as your returns. HFS Commission and Fee Schedule, provided in the SDBA welcome material and online at savingsplusnow.com, lists the fees applicable to securities purchased or sold through an SDBA. Trades placed online are discounted over trades ordered through a HFS representative. 5. Can you stay invested for the long term? An SDBA, like any retirement plan investment, is a long-term commitment that seeks to build replacement income for the future. Making partial sales in the SDBA to cover regular distributions is not advisable. An SDBA may not be appropriate if you anticipate the need to access your money often, as frequent purchases and sales may result in excessive trading costs.

5 Brokerage Account (SDBA) page 5 How to enroll and manage an SDBA How to enroll 1. Enroll Online: Access your account at savingsplusnow.com Once you ve authenticated, select Change Investments under the Savings tab Select Tools and Information Select Open a New Account under Self-Directed Brokerage Accounts Select Enroll Online Confirm your personal information is correct on the SDBA Enrollment Form and answer a few questions Agree to the terms and conditions of the Memorandum of Understanding and Plan Participant Agreement and click Submit 2. Print and complete an enrollment form available from Open a New Account under Self-Directed Brokerage Accounts. Mail or fax the form to: Hewitt Financial Services PO Box Charlotte, NC Fax: (847) Call a HFS representative at (855) 616-4SPN (4776) and choose the Self-Directed Brokerage Account option. An SDBA will be established for you in one to two business days of receiving your enrollment form. Once your SDBA is set up, you ll receive a welcome from HFS with information about accessing your SDBA, an Access Guide, Commission and Fee Schedule, Plan Participant Agreement, Memorandum of Understanding, and Hewitt Money Market Fund Prospectus. How to fund your SDBA Before you can trade, you must transfer funds from your Savings Plus core funds to your SDBA: Access your Savings Plus account at savingsplusnow.com and decide which core funds you would like to transfer from Decide what dollar amount you would like to transfer Transfers into the SDBA requested by 1:00 p.m. PT on regular business days are processed same day and the funds are available for trading in the brokerage account the following business day. The SDBA will not accept direct contributions; however this capability may be an option in the future and you will be notified of any updates. You re required to retain $2,500 or 50% of your total account balance, whichever is less, in your Savings Plus core account. Savings Plus will notify you if this requirement changes. Remember, funds transferred to your SDBA are not automatically invested in any of the available SDBA options. Transferred funds will remain in your sweep account, the Hewitt Money Market Fund, until you purchase other securities by accessing your brokerage account at savingsplusnow.com, by logging into your SDBA directly at hewittfs.com or by calling (855) 616-4SPN (4776) and choosing the Self-Directed Brokerage Account option.

6 Brokerage Account (SDBA) page 6 Moving funds out of your SDBA To move money back to your core funds you must first liquidate the necessary SDBA investments, wait for the trades to settle and the proceeds to sweep into the Hewitt Money Market Fund. This process takes three to five business days to complete, depending on the settlement period of the investments liquidated. Once the funds are in the Hewitt Money Market Fund, you can transfer funds back to the core funds by accessing your account at savingsplusnow.com, by logging into your SDBA directly at hewittfs.com or by calling (855) 616-4SPN (4776) and choosing the Self-Directed Brokerage Account option. Transfers out of the SDBA requested by 1:00 p.m. PT on regular business days are processed same day and the transfer of funds will be reflected in your core funds the following business day. SDBA investment rules and restrictions Available investments The following types of investments are available through an HFS SDBA: American depository receipts of foreign corporations* Bank deposit products Certificates of deposit (CDs) Collateralized mortgage obligations (CMOs) Commercial Paper Common and preferred stock* Convertible bonds* Convertible preferred stock* Corporate bonds Exchange Traded Funds (ETFs) Government bonds and other securities issued or guaranteed by the United States of America Listed options (limited to writing covered calls and buying puts against long positions) Mutual funds, including more than 6,000 funds available with no loads or waived loads and no transaction fees Open- and closed-end mutual funds Real Estate Investment Trusts (REITs)* Securities of any agency or instrumentality of the United States of America Unit investment trusts *Must be listed on an approved exchange or market, which includes the New York Stock Exchange, American Stock Exchange, National Market System sponsored by the National Association of Securities Dealers (NASD), National Association of Securities Dealers Automated Quotation System (NASDAQ), National Quotation Bureau n/k/a Pink Sheets LLC, and any other exchange registered as a National Securities Exchange under Section 6 of the Securities Exchange Act of 1934.

7 Brokerage Account (SDBA) page 7 Unavailable investments The following investments are not permitted within an SDBA: Investments not listed on approved exchanges or markets including common and preferred stocks, convertible bonds, convertible preferred stocks, foreign securities, and REITs and limited partnerships Collectibles (art, antiques, etc.) Commodities and commodity futures Direct participation plans Foreign currencies Insurance products (fixed and variable annuities, life insurance contracts) Limited Partnerships Municipal bonds Precious metals Real property Trust deeds Unlisted options, option purchases (exception: buying puts against long positions and writing covered calls), and writing uncovered call or put options Ask a HFS representative whether the type of investment you are considering is available for SDBA trading. SDBA Welcome Kit When you enroll, you ll receive an HFS SDBA Welcome Kit (after your account is opened) containing information about a variety of resources available to help you make investment decisions. For example, you ll find information about: Investments available in your SDBA Electronic and automated account access How to place trade orders at your convenience Tools to help you choose and monitor your investments SDBA investment transactions About trading within an SDBA You can place trades in any SDBA available investments at any time. SDBAs are considered cash on hand accounts. This means for buy orders you must have sufficient cash in your SDBA Hewitt Money Market Fund sweep account to complete the trade when you place the order. Margin trading is not allowed in retirement accounts. For sell orders, you must have the securities in your SDBA to complete the trade when you place the order. Proceeds from all sales are invested in the Hewitt Money Market Fund and remain there until you make other investment choices or transfer funds back to your core account. Notes: The securities held in an SDBA may be subject to initial and subsequent investment minimums. Many mutual fund companies require a minimum initial investment, usually $500. There may be other applicable fees depending on the investments you choose. Although HFS offers competitive commissions and fees, you can reduce those charges even further by trading online. For more information, refer to the HFS Commission and Fee Schedule and the mutual funds prospectus. Trade-away trades (trades that are placed by another broker and settle at HFS) are not allowed. Margin trading and short sales are not allowed in the SDBA. You must have sufficient funds in your sweep account to cover your trades.

8 Brokerage Account (SDBA) page 8 How to trade within an SDBA You can place a trade in your SDBA anytime: Online by accessing your brokerage account at savingsplusnow.com. Online by logging into your SDBA directly at hewittfs.com. Contact a HFS representative at (855) 616-4SPN (4776) and choose the Self-Directed Brokerage Account option, Monday through Friday from 6:00 a.m. to 7:00 p.m. PT. Trades placed by a HFS representative will incur an additional fee. More details about trading and investment choices within an SDBA are provided in the SDBA welcome material sent to you by HFS once your SDBA is established. Track your SDBA investment performance Here s how you ll be kept abreast of your SDBA account: Monthly brokerage statements detailing your SDBA activity and performance. If there is no brokerage activity you will receive statements quarterly. Trade confirmations. Online access to the last 24 months of activity in your SDBA by accessing your brokerage account at savingsplusnow.com, logging into your SDBA directly at hewittfs.com or by calling (855) 616-4SPN (4776). If HFS has a valid address on file for you, brokerage account trade confirmations, statements, and other communications will be delivered electronically. You can opt out of electronic delivery at any time by accessing your brokerage account. Aon Hewitt provides quarterly core fund statements in addition to SDBA statements, as well as written confirmation of transfers between your Savings Plus core funds and your SDBA. Quarterly Savings Plus participant statements reflect the total balance of your Savings Plus account, including the market value of your SDBA.

9 Brokerage Account (SDBA) page 9 How to access your SDBA assets There may be occasions when you need to obtain the money you ve saved for retirement. Here are a few factors you need to be aware of if you re contemplating a withdrawal: If you have an SDBA, the balance of your brokerage account is included in the total amount you may withdraw. However, you can t take a withdrawal directly from a brokerage account. If the amount you want to withdraw includes money invested in your SDBA, you will need to sell some or all of your brokerage investments and transfer the appropriate amount from the Hewitt Money Market Fund sweep account to the core funds in your Savings Plus account prior to requesting the withdrawal. (See SDBA Transfers ) You ll be notified by Savings Plus in the event that assets need to be transferred from the SDBA back to your core funds to meet this requirement. If you fail to transfer the required balance by the specified date, the request for a distribution will not be processed. Note: You must maintain $2,500 or 50% of your total account balance, whichever is less, in your Savings Plus core funds at all times. If you re over age 70½ and subject to the Required Minimum Distribution (RMD) rules and don t complete the required transfer to your core funds, Savings Plus will liquidate adequate funds to cover your RMD for the next 12 months. In the event of a liquidation the assets will be liquidated in the following order: 1. shares of Hewitt Money Market Fund; 2. shares of mutual funds for which no front-end sales charge or transaction fee was assessed at the time of purchase and no transaction fee is charged for liquidations (fund with the highest balance first); 3. shares of mutual funds for which no front-end sales charge or transaction fee was assessed at the time of purchase, but a transaction fee may be charged for liquidations (fund with the highest balance first); 4. shares of mutual funds which do charge a front-end sales charge or transaction fee for purchases and a transaction fee may be charged for liquidations (fund with the highest balance first); and 5. equities that charge a transaction fee at the time of purchase and may charge a transaction fee for liquidations (position with the highest balance first). If you have questions, call the Savings Plus Service Center at (855) 616-4SPN (4776). SDBA transfers If you don t have sufficient assets in your core funds to process a withdrawal or loan request, you ll need to transfer funds from your SDBA to your Savings Plus core funds. This transfer may require you to liquidate some investments in your SDBA. After you liquidate the necessary SDBA investments, wait for the trades to settle and the proceeds to sweep into the Hewitt Money Market Fund. This process will take three to five business days to complete depending on the settlement period of the type of liquidated investments. Once the funds are in the Hewitt Money Market Fund, you may transfer funds back to your core funds by accessing your account at savingsplusnow.com. How QDROs affect your SDBA A Qualified Domestic Relations Order (QDRO) is a court order that creates or recognizes the existence of an alternate payee s right to receive all or a portion Savings Plus account, including your SDBA. If the QDRO is approved by Savings Plus and you have an SDBA, assets ordered to be transferred to the alternate payee s account will be taken pro rata from your core funds. If the value of the assets in the core funds are less than the value ordered to be split, you will be notified to transfer money from your SDBA to your core funds. If you fail to transfer the necessary amount, Savings Plus will liquidate sufficient assets in the SDBA to process the QDRO. Fees and expenses associated with QDRO transactions are paid by the participant upon receipt of legal documents relating to the QDRO.

10 Brokerage Account (SDBA) page 10 How to close your SDBA Account When you re ready to close your SDBA, you must first liquidate all your SDBA investments either by accessing your SDBA at savingsplusnow.com, logging into your SDBA directly at hewittfs.com or by calling a HFS representative at (855) 616-4SPN (4776) Monday through Friday from 6:00 a.m. to 7:00 p.m. PT. Once the trades settle and the proceeds have swept into the Hewitt Money Market Fund (this process will take three to five business days to complete depending on the settlement period of the investments liquidated) you can request a close out transfer event. After the initial close out transfer event there will be two additional automatic transfers that will move any residual money (dividends, interest) back your Savings Plus core funds. These automatic transfers take place on the 3rd and 6th business day following the initial close out transfer event. Once your SDBA has a zero balance you can contact HFS to close your SBDA. Take the next step If you believe an SDBA is right for you, the next step is easy. Simply agree to the terms and conditions of the Plan Participant Agreement and Memorandum of Understanding and complete and submit the required enrollment form. Your beneficiary(ies) for the SDBA are the same as you designated for your Savings Plus account. If you have further questions about the SDBA or the types of services and resources available through HFS, please contact an HFS representative by calling (855) 616-4SPN (4776) Monday through Friday from 6:00 a.m. to 7:00 p.m. PT. Glossary of Terms The following are common definitions for technical terms used by Savings Plus. These definitions do not represent legal or formal definitions. Assets The holdings of your Savings Plus core funds and your Hewitt Financial Services (HFS) Self-Directed Brokerage Account (SDBA) investments. Assets are represented as a dollar value on your statements. Broker/Dealer An organization licensed to buy and sell investment products on behalf of investors. Hewitt Financial Services LLC (member FINRA, SIPC) is the broker/dealer for the Savings Plus SDBA. Business Day Any day that the New York Stock Exchange (NYSE) is open. Core Funds Refers to the portion of a participant s account that is invested in the investment options offered by Savings Plus, excluding the Self-Directed Brokerage Account (SDBA). Distribution An amount paid (to you) out of your plan accounts. Also called a payout, withdrawal, or payment. Federal Deposit Insurance Corporation (FDIC) Insured A U.S. government agency that insures cash deposits, including certificates of deposit, that have been placed in member institutions. The basic insured amount for each depositor is capped at $250,000 per Financial Institution. The FDIC s mission is to maintain the stability of and public confidence in the U.S. banking system. Fiduciary An individual or organization responsible for making sure a benefit plan is administered in the best interest of plan participants and beneficiaries. Load Commissions or sales charges paid to a broker/ dealer on the sale or purchase of mutual funds.

11 Brokerage Account (SDBA) page 11 Liquidation The sale of investment products for cash. As the sales settle, the funds are transferred from the investment to the cash account, or money market sweep. The sweep account for the SDBA is the Hewitt Money Market Fund. Each financial product type has its own regulated settlement timeframe. Mutual Fund An investment with a company that pools money from shareholders and invests in a variety of securities, including stocks, bonds, and money market instruments. A mutual fund stands ready to buy back (redeem) its shares at their current net asset value, which depends on the total market value of the fund s investment portfolio at the time of redemption. As open-end investments, most mutual funds continuously offer new shares to investors. Prospectus A legal document offering securities or mutual fund shares for sale. Federal and state securities regulators require that the prospectus include the fund s investment objectives, policies and restrictions, fees and expenses, and the process for buying and selling shares. It s important to read each fund s prospectus carefully before investing. Settlement The period of time it takes for a trade to settle, usually 1 3 days. During this time, your funds will be unavailable for other investments. Sweep Account A money market fund (in the case of SDBA, the Hewitt Money Market Fund) that is the cash position of the brokerage account. The sweep account accepts and holds money transferred from Savings Plus core funds to the SDBA until the money is used to purchase investments in the SDBA. It is also used for a settlement account when a participant sells an SDBA investment(s) and wants the proceeds transferred back to the core account. Trade The purchase or sale of investment products (mutual funds, stocks, bonds, etc.), subject to trading fees. Trustee A person(s) legally appointed to act on behalf of a beneficiary or a trust. Qualified Domestic Relations Order (QDRO) A court order that creates or recognizes the existence of an alternate payee s right to receive all or a portion of the benefits payable to a participant under a retirement or savings plan. The Self-Directed Brokerage Account, SDBA, is provided by Hewitt Financial Services LLC (Member FINRA, SIPC). All information contained in this booklet was current as of the post date. The Plan reserves the right to amend any of the procedures or plan provisions outlined in this booklet or in the Plan Document. Such changes may be enacted without prior announcement or the express consent or agreement of plan participants. The Plan Document will govern if any contradiction arises between the terms of the Plan Document and this booklet. SOC