Your retirement income. Managing your retirement plan assets

Transcription

1 Your retirement income Managing your retirement plan assets

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3 Taking control of your retirement assets If you are changing jobs, displaced, or retiring, you may find yourself facing one of the most important decisions in your life what to do with the money you ve accumulated in your retirement plan. How you manage these assets can have a significant effect on whether you live a comfortable retirement or struggle to make your savings last through 20 or 30 years of retirement. This brochure will clarify the options available for your retirement plan. Together with your Financial Advisor from Wells Fargo Advisors, you can design a strategy suited for your personal situation. All at once or a bit at a time What works best for you? As you approach actual retirement, you will need to consider how you will distribute or withdraw your assets. There are two basic types of distributions: periodic payments and lump-sum distributions. Periodic or partial payments are generally determined by your life expectancy and distributed as a pension from your employer. However, keep in mind that you may also be able to take partial distributions from your defined contribution plan such as a 401(k) or 403(b). A lump-sum distribution is a payout of the entire balance in your retirement plan. Most employees can receive a lump-sum distribution from an employer-sponsored retirement plan 401(k), 403(b), governmental 457 or profit sharing plan when they change jobs, are displaced, or retire. Your pension plan may also offer you a lump-sum distribution. We will discuss these terms and the various methods of distributing your retirement assets. We ll also take an in-depth look at the advantages, disadvantages, and tax consequences of these options so you can determine which may be best suited for you. Your defined contribution plan Defined contribution plans, such as 401(k)s or 403(b)s are employer-sponsored plans which allow you to contribute a set amount or percentage of your salary into the plan. Generally, within your employer-sponsored plan you are provided with a range of investment choices for your retirement savings. This allows you to choose investments based on your personal time horizon and risk tolerance. If you have a defined contribution plan and have been separated from service from your employer, you generally have four options for the assets in your former employer s plans: 1. Rolling assets into an Individual Retirement Account (IRA) 2. Leaving assets in your former employer s plan 3. Moving assets into a new employer s plan if allowed by the new plan 4. Cashing out Managing your retirement plan assets 1

4 Evaluate your choices Option 1: Roll assets into an IRA If you re changing jobs or retiring, you can potentially benefit from rolling assets from your previous employer s retirement plan into an IRA. A rollover to an IRA will let you retain the tax-advantaged growth potential and avoid paying taxes until you begin taking distributions. Advantages Rolling your assets into an IRA avoids current income taxes and early distribution penalties A direct rollover is simple and avoids the 20 percent withholding for the IRS Your assets retain their tax-advantaged growth potential An IRA offers a wide variety of investment choices with broader diversification options Penalty-free IRA distributions can be made in the following circumstances: A first-time home buyer Higher education expenses Death Disability Eligible medical expenses Stretch your assets over one, possibly two generations IRAs can conveniently be maintained with one custodian A Traditional IRA and an employer-sponsored plan can be converted to a Roth IRA for potentially greater tax benefits Your IRA includes professional guidance from a Financial Advisor at Wells Fargo Advisors Keep in mind Account fees may apply Distributions prior to the age of 59½ may be subject to a 10 percent IRS penalty Distributions from Traditional IRAs are taxed as ordinary income Annual required minimum distributions (RMDs) from Traditional IRAs begin April 1 following the year you reach age 70½ Unlike an employer-sponsored plan, IRAs do not provide creditor protection under the Employee Retirement Income Security Act (ERISA) 1 The advantages of a Wells Fargo Advisors IRA With a Wells Fargo Advisors IRA you ll get professional guidance from a Financial Advisor who can help you develop a personal retirement plan. Your Financial Advisor is available to help you navigate through your various financial needs including retirement portfolio management, income distribution, and legacy planning. To allow you to create a portfolio that suits your needs and allows for diversification, Wells Fargo Advisors offers a wide range of investments for your IRA including: Cash and cash alternatives Fixed-income investments Stocks and mutual funds Commission or fee-based accounts 2 Direct versus indirect rollover If you have decided to roll your assets into an IRA, you ll need to choose a direct or indirect rollover. For many investors, a direct rollover is the preferable choice, but please consider your own situation when making this decision. Direct IRA rollover Your easiest and simplest option, a direct rollover, occurs when your employer sends your retirement plan balances directly to your IRA custodian There are no taxes, penalties, or IRS withholdings with a direct rollover, making it a more efficient way to transfer balances You retain the tax-advantaged state of your retirement assets You may have the option to directly roll over only a portion of your retirement plan. The remaining assets could possibly be kept in your retirement plan or distributed directly to you. Keep in mind that for any portion distributed to you, taxes and penalties may apply. 1 Although not covered by ERISA, IRAs have bankruptcy protection and may be protected from creditors under your state laws. A tax professional or bankruptcy attorney can provide additional information. 2 Fee-based programs may not be appropriate for all investors. Asset allocation cannot eliminate the risk of fluctuating prices and uncertain returns. Diversification does not guarantee profit or protect against loss in declining markets. 2 Managing your retirement plan assets

5 Get there. Your way. Lifetime Retirement Planning with Wells Fargo Advisors. Indirect IRA rollover You receive the lump-sum distribution from your employer and are responsible for depositing it with your IRA custodian within 60 days Your employer is required to withhold 20 percent of the taxable amount to ensure payment of federal income taxes To roll over the total distribution amount (including withholding), you must personally deposit (out-of-pocket) the 20 percent tax withholding that was deducted from your distribution. Any portion not rolled over, including the 20 percent withholding, will be considered a taxable distribution and income tax will be due on the taxable portion, plus you may owe a 10 percent penalty, if you are under age 55 when you separate from service. funds from your IRA as you please. You will pay ordinary income tax on amounts distributed, but there are no IRS penalties. By April 1 of the year after you reach age 70½, you must begin taking annual RMDs Traditional versus Roth IRA Most employer-sponsored plans can be rolled into a Traditional IRA or Roth IRA. However, a Roth component of a Roth 401(k) or 403(b) can be rolled only into a Roth IRA. When considering an IRA for your retirement assets, evaluate the differences and consult with your Financial Advisor to determine which IRA Traditional or Roth is best suited for you. Traditional IRA A Traditional IRA offers the potential for tax-deferred growth so you don t pay taxes until the money is distributed from the IRA. Because your investment earnings are not taxed while in the IRA, they continue to work for you to help your account accumulate faster. Traditional IRA rules If you distribute funds from a Traditional IRA before reaching age 59½, you will usually have to pay regular income tax plus a 10 percent penalty on any taxable portion of the distribution. Exceptions to the 10 percent penalty may apply. Between the ages of 59½ and 70½, you may distribute Think about converting after-tax contributions to a Roth IRA If you have after-tax contributions in your former employer s plan, you can convert those amounts directly to a Roth IRA without paying any taxes. With a Roth IRA, your assets have the potential to grow tax free and you may have the advantage of tax-free income in retirement. 3 3 Qualified Roth IRA distributions are not subject to state and local taxation in most states. Qualified Roth IRA distributions are also federally tax-free provided a Roth account has been open for at least five years and the owner has reached age 59½ or meets other requirements. Managing your retirement plan assets 3

6 Is a Roth IRA for you? Roth IRA A Roth IRA may be one of the best ways for individuals to save for retirement for one simple reason: the earnings on your investments are free from federal income taxes as long as certain conditions are met. Roth IRA rules Distributions made after the Roth account has been funded for five years and you are age 59½ or older will be tax free and penalty free Assets that have been converted to a Roth IRA may be distributed penalty free after five years or attaining age 59½ (other exceptions apply). Each conversion has its own five-year holding period. Contributions may be distributed at any time, tax free and penalty free If you distribute earnings before reaching age 59½ you will usually have to pay a 10 percent penalty and income tax on the earnings You may continue to make contributions after age 70½, as long as you or your spouse have earned income Roth IRA owners have no required distributions during their lifetime Option 2: Leave assets in your former employer s plan In today s working world, you can expect to change jobs almost 11 times by the time you reach age With each job transition, you may choose to leave your retirement assets behind in your former employers plans, allowing your funds to stay invested tax deferred. However, you must work through your former employers plan administrators regarding questions and matters relevant to your plan. Even if you leave your employer on good terms, you may not want to maintain these relationships, possibly for decades, over a matter as important as your long-term retirement security. Advantages It requires no action on your part Assets retain their tax-advantaged growth potential Your assets are usually protected from creditors claims May avoid 10 percent premature distribution tax penalty if you separate from service in the year you are age 55 or older Beneficiaries for an estate planning strategy Your IRA assets can be used for legacy planning if you don t need the assets for your own retirement. By carefully selecting your IRA beneficiaries, you may be able to stretch out your retirement savings over one or possibly two generations. This stretch strategy generally only applies if you choose an individual rather than a trust or estate as your IRA beneficiary. 2 Talk to your Financial Advisor at Wells Fargo Advisors for more details. 1 U.S. Bureau of Labor Statistics, 6/08. 2 Please note that stretch IRA strategies are designed for investors who will not need the money in the account for their own retirement. There is no guarantee that there will be assets remaining in the account at the time of the IRA owner s death. 4 Managing your retirement plan assets

7 Get there. Your way. Lifetime Retirement Planning with Wells Fargo Advisors. Keep in mind If you change jobs several times, leaving assets behind each time can create complexities such as calculating RMDs from multiple accounts Your relationship with your former employer must be maintained, possibly for decades The plan may limit your investment alternatives and may not provide needed flexibility to execute an effective retirement savings strategy RMDs must begin at the age of 70½. Failure to take the required amount can result in substantial IRS penalties. Your former employer will control when and how you access your savings, which may mean that distributions become available at a predetermined age, or that the distributions may only be available through certain payout options You may have difficulty locating a former employer s plan administrator, or the plan administrator may encounter problems locating your beneficiaries Managing your retirement plan assets 5

8 Starting a new job? Option 3: Move assets into a new employer s plan If you are changing jobs, you may be able to roll your retirement plan savings from your former employer s plan into the new plan. This option provides many of the same features of leaving the money in your former employer s retirement plan. Advantages Assets retain their tax-advantaged growth potential Your assets are usually protected from creditors claims May avoid 10 percent premature distribution tax penalty if you separate from service at age 55 or older In the past, moving retirement plan assets to a new employer was not always easy because direct transfers were only permitted between like plans [e.g., 401(k) to 401(k)]. You may now move assets between different types of plans as long as the plan permits such a transfer. Keep in mind May have to wait before participating in your new employer s plan Limits your investment choices to those offered by the plan, which may not provide needed flexibility You can transfer or roll over only plan assets that your new employer permits Your employer will control when and how you access savings 6 Managing your retirement plan assets

9 Get there. Your way. Lifetime Retirement Planning with Wells Fargo Advisors. Option 4: Cash out While the prospect of taking a lump-sum distribution may sound attractive at first, you should carefully consider all of the financial consequences before you decide. Certainly, in extreme cases where there are no other resources, this option can offer a source of cash. However, there are good reasons to avoid cashing out of your retirement plan: Tax-advantage opportunities are lost 20 percent mandatory federal tax withholding is taken by your employer Taxes and perhaps penalties are due Retirement income typically comes from three sources: Social Security, employer-sponsored plans, and personal savings including IRAs. Tapping into any of these when you change jobs could eventually erode your retirement savings to the point where you may jeopardize your financial security in retirement. Advantages Immediate access to your retirement money Proceeds can be used however you wish, including re-investment Penalty-free distributions can be taken if you re: Age 55 or older when you separate from service from your employer. Although distributions from the plan are included in your taxable income, the 10 percent IRS penalty will not apply to any amounts you received if you separate from service at age 55 or older. An individual who is employed in a public safety capacity such as a police officer, firefighter, or emergency medical technician now has the option to distribute governmental defined benefit pension plan assets without IRS penalties, if age 50 or older when separating from service. Keep in mind Your financial security during retirement could be jeopardized Your funds lose their tax-advantaged growth potential Distribution is subject to federal, state, and local taxes The IRS may assess a 10 percent penalty if you re younger than age 55 when you receive distributions (see Advantages for exceptions) Your former employer is required to withhold 20 percent for the IRS Managing your retirement plan assets 7

10 Assess your plan payment options Your defined benefit plan managing your pension plan Defined benefit plans, such as pensions, are employersponsored plans managed by your employer. The benefits to you, the employee, are determined by a formula using factors such as salary history and length of employment. Defined benefit plans have a number of distribution options but generally pay through monthly payments. A monthly pension benefit is generally calculated based on life expectancy. Typically, you may choose to receive your payments over your own single life expectancy, the joint life expectancy of you and your spouse, or a certain number of years (period certain). Generally, these types of distributions are not eligible to roll over. However, if available, you may take a lump-sum distribution and possibly be able to directly or indirectly roll over the assets to an IRA. The next few pages provide an overview of these options. Talk to a representative from your employee benefit plan to see what options are available to you. Hypothetical plan payment options Option Life Monthly Payment Single life $2,000 $0 100% joint and survivor life 75% joint and survivor life 50% joint and survivor life $1,400 $1,400 $1,600 $1,200 $1,800 $900 Surviving Spouse Monthly Payment Single life payments Choosing the single life option results in the largest monthly pension payment. That s because your payments are spread over only one person s life expectancy yours. However, the trade-off for this bigger monthly check is that payments typically cease after your death. In other words, if your spouse survives you, he or she will no longer have your pension as an income source. Period certain payments Some retirement plans offer a period certain option in which, in exchange for a slightly lower monthly check, a steady stream of pension payments is guaranteed for a specified number of years, and if you die during that period, your beneficiaries will receive the remaining payments. The best reason for choosing a period certain option is to support your beneficiary, such as a child, who is likely to survive you and is in need of the financial support. Joint and survivor payments Your pension distribution can be based on the joint life expectancy of you and your spouse. Although this will result in a lower monthly payment than if the payments were based on your single life expectancy, with the joint life option, your spouse will continue to receive a monthly pension check after your death. The amount of the continued payments may remain the same, or it may be reduced to a specified percentage of the original payment, typically 50 percent or 75 percent. The higher your payments are during your life, the lower the percentage your surviving spouse will receive after your death and vice versa. The example to the left illustrates the payment amounts generated with the single life versus joint and survivor life options for one hypothetical plan. Your actual payments will depend on your age and how much you ve accumulated in your retirement plan. 8 Managing your retirement plan assets

11 Get there. Your way. Lifetime Retirement Planning with Wells Fargo Advisors. Lump-sum distribution consider the tax impact Your pension plan may give you the option of taking a lump-sum distribution. Just as taking a lump-sum distribution from your 401(k), the prospect may sound attractive at first, but you should carefully consider all of the financial consequences before you decide on this choice. This option provides immediate cash to spend, save, or invest. However, without restrictions you may find that you deplete your pension quicker than if you had received monthly payments putting your retirement security in jeopardy. Keep in mind that you will typically owe taxes on your entire lump sum. Consider how that will impact your financial situation including an increased tax rate and impact of any benefits such as Social Security. Roll your pension into an IRA When evaluating your pension distribution options, if your plan allows a lump-sum distribution, consider rolling the assets directly into an IRA. Rolling your retirement assets into a tax-advantaged IRA allows your money to potentially grow faster. Also, when you roll your lump-sum payout to an IRA, you will not pay taxes or penalties. 1 An IRA allows you to choose from a variety of investment choices for your assets providing you with the flexibility to develop a retirement portfolio that suits your personal goals and risk tolerance. Your Financial Advisor from Wells Fargo Advisors can help you evaluate whether an IRA is a suitable option for your lump-sum payout. Your payout choices Single life Single life with period certain Period certain Joint and survivor payments Joint and survivor payments with period certain Lump sum IRA Details of this payout option You ll receive monthly payments for your life Monthly payments will be paid for your life expectancy or for a set number of years whichever is longer Your monthly payment will be set for a specific number of years Your payments are based on the joint life expectancy of you and your spouse and the payments will continue as long as either of you is living Your pension payments are based on the joint life expectancy of you and your spouse or for a set number of years whichever is longer Your pension amount is provided in one single lump-sum distribution. You may also have the option of a partial lump sum combined with a reduced annuity option With an IRA, you may take partial or lump-sum distributions (taxes and penalties may apply) 1 Traditional IRA distributions are taxed as ordinary income. Qualified Roth IRA distributions are not subject to state and local taxation in most states. Qualified Roth IRA distributions are also federally tax-free provided a Roth account has been open for at least five years and the owner has reached age 59½ or meets other requirements. Both may be subject to a 10% federal tax penalty if distributions are taken prior to age 59½. Managing your retirement plan assets 9

12 Make an informed decision Evaluating your choices Pension payments versus lump-sum distribution If you have a choice between receiving your retirement distribution through a monthly pension or in a lump sum, which should you choose? Of course, the answer depends on your situation. When evaluating this question, consider factors such as life expectancy, inflation, and taxes. Life expectancy Because of advancements in healthcare and a focus on nutrition and exercise, many Americans are living longer and may easily spend 30 years or more in retirement. With this in mind, you don t want to outlive your retirement assets by depleting them too quickly. By choosing a monthly pension option based on your life expectancy, you are assured that you will not outlive your assets. You will receive a monthly pension check for the rest of your life. On the other hand, in exchange for this dependable income, you give up control of your principal. Opting to receive a lumpsum distribution or rolling your assets into an IRA gives you the opportunity to invest your savings according to your own investment criteria, generating income, growth, or a combination of both, as you require. With an IRA, you also have the advantage of not losing any of your assets to taxes or penalties when you roll your retirement plan meaning that all of your assets have the potential to grow in the tax-advantaged IRA. 1 Inflation The erosive effect of inflation can also have an impact on your income. Even with a low inflation rate, you can t assume today s income will be enough to cover your expenses 10 or 15 years from now. Remember, you may encounter extra expenses in your later retirement years, including long-term care and increased medical bills. If you opt to receive a monthly pension benefit, you lock yourself into a specific dollar amount paid out over your retirement years. Your pension payout method is permanent so make sure you thoroughly evaluate your options. Talk to your tax and financial advisors about the impact of your various options. Generally, pension plans do not increase these payments to compensate for inflation (although adjustments may be offered at the discretion of the employer). As inflation rises, the buying power of your pension benefit decreases. 1 Traditional IRA distributions are taxed as ordinary income. Qualified Roth IRA distributions are not subject to state and local taxation in most states. Qualified Roth IRA distributions are also federally tax-free provided a Roth account has been open for at least five years and the owner has reached age 59½ or meets other requirements. Both may be subject to a 10% federal tax penalty if distributions are taken prior to age 59½. 10 Managing your retirement plan assets

13 Get there. Your way. Lifetime Retirement Planning with Wells Fargo Advisors. Special considerations Tax considerations Generally, the amounts distributed from retirement plans are taxable income. The only exception is any part of the distribution from after-tax contributions. Taxable components of distributions include: Employer contributions Your pre-tax contributions, such as contributions to 401(k) plans Earnings accumulated on all contributions in the plan excluding earnings from a qualified Roth 401(k) and a qualified Roth 403(b) Pro-Rata Rule It is important to understand that once you roll over after-tax money to a Traditional IRA, you cannot simply distribute only the after-tax money from your Traditional IRA in a guaranteed tax-free lump sum. Once your assets are in a Traditional IRA, distributions are treated under the Pro-Rata Rule. The Pro-Rata Rule states that all pre-tax and post-tax (basis) funds in any Traditional, SEP, and/or SIMPLE IRAs are considered blended. Every distribution will contain some percentage of the two types of money. In other words, all Traditional, SEP, or SIMPLE IRA distributions will represent a proportionate share of both basis and taxable money. You will need to keep track of these funds on IRS form This accounting must be done so that you can keep track of any after-tax amounts in your Traditional, SEP, or SIMPLE IRAs. IRS Code 72(t) In today s economy, many workers are facing early retirement decisions. What if you need income from your IRA? Generally, IRA distributions taken prior to age 59½ are subject to the 10 percent premature distribution penalty. For employer-sponsored plans, such as your 401(k), if you leave the company in the year you turn age 55 or older, you may take IRS penalty-free distributions. Individuals experiencing cash flow problems or taking unexpected early retirement may want to consider taking early distributions from their IRA by using the Substantially Equal Periodic Payment (SEPP) exception under IRS Code 72(t). This option avoids the 10 percent early distribution penalty, however, please note that payment of ordinary income tax still applies. Under IRS Code 72(t), the following conditions must be met: The distributions taken must be substantially equal and periodic These payments must be based on the life expectancy of the IRA owner or on the joint life expectancy of the IRA owner and his or her beneficiaries Investors may choose one of three life expectancy tables published by the Internal Revenue Service to determine the Required Minimum Distribution (RMD) the Uniform Table, the Single Life Table, or the Joint and Last Survivor Table. Once a table is chosen, that same table must be used for all subsequent years. Once begun, the substantially equal periodic payments must continue for five years or until age 59½, whichever is longer. If there is any modification to the 72(t) payment schedule prior to the completion of the time frame, a 10% penalty will be applied to all distributions, retroactively and with interest. Managing your retirement plan assets 11

14 Retirement plan investments If using the annuitization or amortization method, the interest rate that may be used must be one that is not more than 120% of the applicable federal mid-term rate (AFR) published by the Internal Revenue Service in revenue rulings for either of the two months immediately preceding the month in which the distribution begins. Although 72(t) distributions can begin at any age, individuals younger than age 50 must make longer time commitments. This often increases the risk that an individual would need to alter their series of payments before age 59½ due to changing income needs, which could result in retroactive penalties and interest charges. Market and investment risk should be taken into consideration. Most employer retirement plans and IRAs alike carry market risk. If considering an IRA rollover with 72(t) payments as an alternative to receiving a pension, be aware that principal protection of the IRA rollover investment cannot be guaranteed. The overall return on the investments will be reduced by various fees and expenses associated with the investments, investment program, or account. Individuals should also review the withdrawal rate necessary to meet their income need. Many experts recommend withdrawal rates of 3% to 5% per year. Withdrawal rates that exceed investment rate of return may jeopardize the ability to sustain withdrawals through retirement. IRA accounts are subject to market risk and may lose value. Accounts can lose value as a result of a decline in the market. Before thinking about the IRS 72(t) option, you should consider tapping taxable assets first to bridge any income gap until the IRA is no longer subject to the 10 percent penalty at age 59½. Your Financial Advisor at Wells Fargo Advisors, along with your accountant, can help you determine if a SEPP distribution is suitable for your personal situation. 1 1 Wells Fargo Advisors does not provide tax or legal advice. Be sure to consult with your own tax and legal advisors before taking any action that may have tax or legal consequences. 12 Managing your retirement plan assets

15 Get there. Your way. Lifetime Retirement Planning with Wells Fargo Advisors. Employer stock in your plan Net Unrealized Appreciation Rolling over your retirement plan assets to an IRA is often a suitable choice because this option allows your assets to remain in a tax-advantaged account. However, if you hold highly appreciated employer securities such as stocks, bonds, or debentures in your retirement plan, you should consider the potential tax advantages of Net Unrealized Appreciation (NUA). The NUA value of the securities is the difference between the current market value of the securities and the cost basis. When the securities are sold, they are taxed at the long-term capital gain tax gain rate instead of your ordinary income tax rate. However, if these securities are rolled directly into an IRA and eventually distributed (or liquidated in your plan and the proceeds rolled over), they will be taxed as ordinary income, generally a higher rate than when the assets are treated as NUA. Tell us what you need Wells Fargo Advisors welcomes the opportunity to help you create a comfortable retirement future and provide financial resources for your family. Your Financial Advisor at Wells Fargo Advisors can offer a variety of services including IRA beneficiary planning strategies, RMD calculations, and periodic financial checkups. If you have any retirement planning questions, please contact your Financial Advisor at Wells Fargo Advisors and, together, we can help design a strategy to help support every aspect of your retirement goals. Considerations As you move forward with your retirement planning, please remember: Don t be tempted to spend your retirement savings If you are considering rolling over your retirement assets, think about contacting your Financial Advisor to open an IRA and then request a direct rollover Consider participating in your employer s retirement plan as soon as you are eligible Think about supplementing your retirement savings by funding your IRA each year and maximizing your annual contributions. If you are 50 or older, consider making catch-up contributions to your employersponsored plan and IRAs. Consider using asset allocation strategies to help diversify your retirement savings and coordinating those investments with your personal savings 1 1 Asset allocation cannot eliminate the risk of fluctuating prices and uncertain returns. Diversification does not guarantee profit or protect against loss in declining markets. Managing your retirement plan assets 13

16 Together we ll plan your retirement Our commitment to you We will honor our relationship with you. When you work with a Financial Advisor from Wells Fargo Advisors, you have someone who takes the time to listen and understand your needs, helps you clarify your goals, and takes seriously the safety and security of your money and investments. We will be fully invested in your success. Your Financial Advisor will help you stay on track to meet your goals through intelligent financial solutions, in-depth analysis of your investments, and regular feedback on your progress. We will be with you every step of the way. Your needs and goals will change over time. That s why your Financial Advisor will be there to provide ongoing advice along with the exceptional service you deserve through the ups and downs of markets and economic cycles. 14 Managing your retirement plan assets

17 A heritage of client service Wells Fargo Advisors is one of the nation s premier financial services firms. Headquartered in St. Louis and represented by more than 15,000 Financial Advisors, it was born out of Wells Fargo s 2009 acquisition of Wachovia Securities. Wachovia Securities, which traces its roots to 1879, grew over the years by combining with some of the industry s most respected regional and national firms, including the 2007 acquisition of A.G. Edwards. Throughout their histories, Wells Fargo Advisors predecessors were known for exceptional service based on trust and knowledge and for corporate cultures that put client needs above all else. Wells Fargo Advisors is a subsidiary of Wells Fargo & Company, one of the nation s largest and strongest financial institutions. In business since 1852 and named on Fortune magazine s 2009 list of the World s Most Admired Companies, Wells Fargo is known and respected for its responsible stewardship of its clients assets.

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20 INVESTMENT AND INSURANCE PRODUCTS: NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE This brochure was created for informational purposes only and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. The topics discussed may not be suitable for all investors. Investors must make their own decisions based on their specific investment objectives, financial circumstances, and tolerance for risk. Past performance is not a guarantee of future results. Asset allocation cannot eliminate the risk of fluctuating prices and uncertain returns. This brochure is intended to provide a general overview of the topics covered. The accuracy and completeness of this information is not guaranteed and is subject to change. It is based on current tax information and legislation as of December It is not intended to provide tax, accounting or legal advice of any type since Wells Fargo Advisors is not engaged in rendering tax, accounting, or legal advice. Investors need to consult with their own tax and legal advisors before taking any action that may have tax or legal consequences. Wells Fargo Advisors is not a legal or tax advisor. However, its Financial Advisors will be glad to work with you, your accountant, tax advisor, and/or lawyer to help you meet your financial goals. Wells Fargo Advisors is the trade name used by two separate registered broker-dealers: Wells Fargo Advisors, LLC and Wells Fargo Advisors Financial Network, LLC, Members SIPC, non-bank affiliates of Wells Fargo & Company Wells Fargo Advisors. All rights reserved A ECG Printed on 10% Post-Consumer Recycled Paper