PLAN HIGHLIGHTS. Guide to understanding your. Trinity Health. Retirement Program. For former Holy Cross 403(b) Plan participants

Transcription

1 PLAN HIGHLIGHTS Guide to understanding your Trinity Health Retirement Program For former Holy Cross 403(b) Plan participants HC

2 UNDERSTANDING THE TRINITY HEALTH RETIREMENT PROGRAM The Trinity Health Retirement Program was designed to provide benefits that meet the diverse needs of our workforce. It is a program that gives consideration to employees at all salary levels, supports Trinity Health s mission, values, and key cultural characteristics, and is easy for employees to understand. It is also a very important part of your benefits package. When combined with your personal savings, the Trinity Health Retirement Program provides the tools you need for a financially secure retirement. These tools include the Trinity Health Pension Plan, the Trinity Health Retirement Savings Plan, Employer 403(b) Matching Contributions, and Social Security. By taking advantage of all these tools, both you and Trinity Health work together to financially secure your future. CONSIDERING YOUR TOTAL RETIREMENT INCOME Retirement income is the amount of income you will need when you retire in order to maintain your current lifestyle. Retirement experts estimate this amount to be approximately 75 percent of your final salary. So, how do you ensure that you have an adequate retirement income when you retire? You start by taking advantage of all your income sources, including the Trinity Health Retirement Program, to create balanced income sources during retirement. Sources of Your Total Retirement Income Income sources provided by Trinity Health Pension Plan Pension Plan Match Employer 403(b) matching contributions and interest credits Social Security Funded by contributions from Trinity Health and you Income sources provided by You 403(b) Retirement Savings Plan Contributions After-tax Contributions Other Personal Savings (e.g., CDs, mutual funds, bank accounts, real estate, etc.) 1

3 WHAT YOU NEED TO KNOW ABOUT YOUR PENSION PLAN The Pension Plan is a component of the Retirement Program that rewards you financially at retirement for your hard work and long-term commitment to Trinity Health. Through the Pension Plan, you receive monthly retirement income based on your compensation and your years of service (your pension benefit). You become vested in your pension benefit after you earn five years of vesting service or reach age 65 while employed at Trinity Health. When you become vested, you may begin receiving your pension benefit at age 65, or you can elect to receive a reduced pension benefit as early as age 55 (early retirement). If you retire early, the benefit you receive will be reduced five percent for each year you receive your benefit before your normal retirement age (age 65). Trinity Health makes all the necessary contributions to the pension fund. Employees are not required or permitted to make any contributions to receive a pension benefit. This chart provides the Pension Plan highlights. For more information, you may: refer to the Retirement Program Summary Plan Description (SPD), log onto the Trinity Health Retirement Program website at or visit your local on-site Diversified Retirement Plan Specialist, or contact your local Human Resource representative. Trinity Advantage Pension Estimator (TAPE), is an interactive program that offers direct on-line access to estimates of your pension benefit. Projected monthly benefits are provided for ages assuming continued employment with Trinity Health until the age indicated. Access to TAPE is available through the Trinity Health website Eligibility Vesting Benefit Services Normal Retirement Age Early Retirement Benefit Participation is automatic beginning on your date of hire. Trinity Health pays for the entire cost of the Pension Plan. You are vested in the Pension Plan after five years of Trinity Health service or at age 65. (One year of vesting service is granted for 1,000 or more hours of service in each calendar year.) As a participant, you receive one year of Benefit Service for each year you have 1800 Hours of Service. Partial Benefit Service is granted for hours less than 1800 hours. Benefit Service is the multiplier used in calculating your pension. 65 As a participant in the Pension Plan, you are eligible to receive early retirement benefits if you are age 55 or older with five years of vesting service. Please note that a benefit reduction of five percent per year (for each year under age 65) will be made to your final benefit. 2

4 Normal Retirement Benefit Formula Here is the formula that is used when determining a normal retirement benefit at age 65 payable monthly for your lifetime. 1.0% of final average compensation (up to one-half of the five-year average of the Social Security Wage Base or SSWB) multiplied by benefit service earned after December 31, 2001 PLUS 1.5% of final average compensation (over one-half of the five-year average of the Social Security Wage Base or SSWB) multiplied by benefit service (to an adjusted maximum of 35 years) earned after December 31, 2001 PLUS Your accrued pension benefit as of December 31, 2001, under the prior plan, multiplied by a pay adjustment factor Refer to the Summary Plan Description for an example using this formula. Final Average Compensation Compensation Average of the five highest calendar years of compensation during your entire Trinity Health career, divided by 12. All of your wages, including overtime pay, shift differentials, on-call, and variable compensation from a participating employer plus any amounts you elect to contribute to the 403(b)Retirement Savings Plan or which are excluded from income under a Code Section 125 (cafeteria) plan. Compensation is limited to $225,000 in 2007, and may be adjusted for inflation in future years. Compensation does not include such items as: severance pay, lump sum cashouts of accumulated vacation or paid time off (PTO) at termination, moving allowances, housing allowances, tuition reimbursement payments for outplacement services, and other specific types of compensation listed in the Summary Plan Description and Pension Plan document. For the pension benefit formula, the pay multiplier for Trinity Health will be 2,080 divided by actual hours of service (but not less than 1, or more than 10.40). Compensation will be annualized for all employees who earn less than 2,080 hours of service. For purposes of calculating deferrals and the employer matching contribution in the 403(b) Retirement Savings Plan, compensation will include lump sum cashouts of accumulated vacation or paid time off (PTO) paid at termination. Payment Options (Post-retirement) There are several payment options available when you retire from Trinity Health. Normal Forms of Monthly Payments: If you are single: Life Only Option 3

5 Payment Options (Post-retirement) (continued) If you are married: 50% Joint and Survivor Option with your spouse as the beneficiary Optional Forms of Monthly Payments: Life Only Option Ten Years Certain and Life Option 50% or 100% Joint and Survivor Option (spouse or non-spouse beneficiary) Grandfathered Five Years Certain and Life Option for former Holy Cross employees hired prior to January 1, 2002 Lump Sum Option: If you are vested and your pension lump sum value is less than $10,000, you may elect a single lump sum payment payable at termination of employment. If you are vested in your Pension Plan Match Account, it may be payable as a lump sum regardless of the amount at your termination of employment. In addition, if your pension lump sum value is $5,000 or less, only a lump sum payment will be made. Death Benefit (Pre-retirement) If you die before you retire from Trinity Health, your spouse or beneficiary is eligible to receive a death benefit as long as you earned five years of vesting service at the time of your death. If you were married at death, your spouse may elect an: immediate annuity, or lump sum (equivalent in value to 50% of the Joint and Survivor benefit payable at the participant s earliest retirement age). If you were single at death, your beneficiary (if any) would receive an: immediate lump sum (equivalent in value to 50% of the Joint and Survivor benefit, assuming your beneficiary is the same age and the benefit is payable at your earliest retirement age). Pre-retirement death benefits allow for lump sums even if the amount is greater than $10,000. Disability Benefit There is also a disability benefit in the Pension Plan if you become disabled while employed at Trinity Health. To receive a disability benefit, you must have attained five years of vesting service, be receiving a Social Security benefit and receive Benefits Committee approval. Phased Retirement (opportunity to work after retirement) Trinity Health allows you to work after your retirement benefits begin. Under age 65, you may work up to 1,300 hours in a calendar year after a bona fide termination of employment. (Bona fide termination equals at least 120 days off the Trinity Health payroll system.) If hours exceed 1,300, benefits are suspended and do not recommence until termination of all Trinity Health employment or age 65, if earlier. 4

6 WHAT YOU NEED TO KNOW ABOUT YOUR PENSION PLAN MATCH Your 403(b) Retirement Savings Plan employer matching contributions are credited to the Pension Plan as a separate bookkeeping entry. Matching contributions are credited quarterly including interest credits. At Retirement, you can choose to receive your match as a lump sum payment or as a monthly benefit. You are vested in the employer matching contributions after you earn three years of vesting service or reach age 65 while employed by Trinity Health. WHAT YOU NEED TO KNOW ABOUT YOUR 403(b) RETIREMENT SAVINGS PLAN This component of the Retirement Program allows you to make voluntary pre-tax contributions to the 403(b) Retirement Savings Plan. When you make pre-tax contributions, Trinity Health will provide a 100 percent employer matching contribution on the first $500 contribution you make to the 403(b) Retirement Savings Plan. In addition, Trinity Health will make a 50 percent employer matching contribution on additional employee contributions up to a maximum annual percentage of compensation based on your location (or $500, whichever is greater). The maximum percentage includes the initial $500 employer matching contribution. Remember, you must be contributing to the 403(b) Retirement Savings Plan to receive the employer matching contributions. You can contact your Human Resources department or Diversified at to find out the match percentage you will receive from Trinity Health. When you participate in the 403(b) Retirement Savings Plan, your employer matching contributions are credited to the Pension Plan. The following chart provides the 403(b) Retirement Savings Plan highlights. For more information, you may: refer to the Retirement Program Summary Plan Description (SPD), log onto the Trinity Health Retirement Program website at visit your local on-site Diversified Retirement Plan Specialist, or call Diversified at , Monday through Friday, 8:00 a.m. to 9:00 p.m. ET, to speak with a Participant Advisory Services Counselor. 5

7 Eligibility How to Enroll Your Contributions to the Plan Participation is effective on your date of hire. You may enroll at any time by contacting the Diversified Investment Advisors toll-free number at , by logging onto the website at or by meeting with a Diversified Retirement Plan Specialist at your work location. Contact your Human Resources department regarding information on scheduling an appointment with a representative. You may choose to make salary reduction contributions from one to 75 percent of compensation. You may also designate a flat dollar amount (minimum $5 per pay period). An IRS dollar limit of $15,500 in 2007 (adjusted annually for inflation) also applies. (If you are age 50 or older, or have at least 15 years of service with Trinity Health, you may be eligible to make an additional catch-up contribution. Please refer to the Summary Plan Description for more information.) You also may choose to make after-tax contributions up to 25 percent of compensation subject to certain limitations. If you have an existing qualified retirement plan account with a prior employer, you may transfer or roll over that account into the 403(b) Retirement Savings Plan at any time. You may stop your contributions at any time. You may increase or decrease the amount of your contributions at any time. You decide how your contributions will be invested, choosing from investment options provided under the 403(b) Retirement Savings Plan. These options are described on the website at Employer Matching Contribution Trinity Health s matching contribution equals 100 percent on the first $500 of your contributions, plus a 50 percent match on any additional contributions you make over $500, up to a maximum match percentage of your annual covered compensation (or $500, whichever is greater). Note: The maximum Trinity Health matching contribution varies by location. Check with your Human Resources department regarding the maximum match at your location. Employer matching contributions are credited on a quarterly basis into the Trinity Health Pension Plan and earn a fixed rate of interest, which is established at the beginning of each year. Vesting Vesting refers to ownership of your account. You are always 100 percent vested in your salary reduction contributions (including any rollover/transfer contributions you have made to the 403(b) Retirement Savings Plan), plus any earnings generated on those contributions. Employer matching contributions, plus any earnings they generate, are vested as follows: Years of Service* Vesting Percentage Less than 3 0% 3 or more 100% 6

8 Vesting (continued) *You must work at least 1,000 hours in a calendar year to accrue a year of vesting service. Note: Employees are fully vested at normal retirement age (age 65) if still an active participant. Employees hired on or before December 31, 2001, may be subject to a different vesting schedule. Please contact your Human Resources department for more information. Participant Loans You may borrow from the 403(b) Retirement Savings Plan using your account as security. You may borrow up to half of your employee deferral account including rollovers, not to exceed $50,000. Other restrictions may apply. The minimum loan amount is $500. Only one loan per plan may be outstanding at any time. The loan interest rate is the Prime Rate plus one percent. The term of the loan may be one to five years for a general purpose loan or up to 15 years for purchasing a principal residence. A one-time loan set-up fee of $75 will be deducted from your account. Loan repayments are payroll deducted while you remain an active employee. Transfers Plan Fees Transfers among investment options may be made at any time. Please call Diversified at or log onto the website at for more information. Prior to January 1, 2005, participants of the Plan were charged an annual fee of $12 to aid in offsetting plan services fees. Effective January 1, 2005, the $12 plan service fee was elimiated and is no longer deducted from participant accounts. In addition, the fund options have investment management fees. These fees vary by fund and are described in the fund s prospectus. Self-directed Account Diversified Investment Advisors has an alliance with Charles Schwab & Co. Inc. to provide a full range of self-directed investment options including access to over 2,000 mutual funds. The Personal Choice Retirement Account (PCRA) is designed for participants who: are experienced investors, want more control of their retirement investments, and want a wider choice of investment options. There is an annual fee of $50 for the PCRA, which will be withdrawn from your account each year in January. 7

9 Self-directed Account (continued) Employee deferral, after-tax and rollover account balances are permitted to be transferred from Diversified to the Schwab PCRA Account. Investments in the PCRA are restricted to mutual funds. If you are interested in establishing a PCRA, you may obtain additional information by calling Diversified at or by meeting with the Diversified Retirement Plan Specialist at your location. Access to Your Account Funds may be withdrawn from your 403(b) Retirement Savings Plan in these events: Death. Termination of employment. You may receive the market value of your account and the market value of your vested employer accounts upon termination. In-service withdrawals. In-service withdrawals of amounts attributable to your contributions are allowed under circumstances specified in the 403(b) Retirement Savings Plan. See Access to Your Account As an Active Employee below. Access to Your Account As an Active Employee (In-service withdrawals) Loans. You may borrow from the 401(k) Retirement Savings Plan, using your account as security. You may borrow up to half of your employee deferral account including rollovers, not to exceed $50,000. Hardship withdrawals. If you have an immediate financial need created by severe hardship and you lack other reasonably available resources to meet that need, you may be eligible to receive a hardship withdrawal. You may withdraw employee salary reduction contributions. You must take all eligible participant loans before you may apply for a hardship withdrawal. After-tax in-service withdrawals. In-service withdrawals of your after-tax Retirement Savings Plan Account are allowed up to 2 times each quarter. Age 59½ in-service withdrawals. After reaching age 59½, you may request an inservice withdrawal of your vested account balance in the 403(b) Retirement Savings Plan (not including the match). Other restrictions may apply. Please refer to your Summary Plan Description for more information. 8

10 WHAT YOU NEED TO KNOW ABOUT SOCIAL SECURITY You automatically contribute to Social Security when you work in the United States. The benefits you receive are based on your earnings and the contributions you made while you were working. Trinity Health also contributes on your behalf an amount equal to the amount you contribute to Social Security. WHAT YOU NEED TO DO NOW Once you have a good understanding of your retirement income sources, you can begin planning your financial future. To help you get started, see your on-site Diversified representative for assistance with determining what your 403(b) Retirement Savings Plan contribution should be in order to attain your retirement goal. For more in-depth analysis and customized retirement planning advice, you can access Retiretek SM, a retirement planning tool (once logged into your account, click on Retirement Planning) on the Trinity Health Retirement Program website. QUESTIONS For more information, please refer to your Trinity Health Retirement Program Summary Plan Description or visit the Trinity Health Retirement Program website at You also may contact your local on-site Diversified Retirement Plan Specialist or a Participant Advisory Services Counselor at , Monday through Friday, 8:00 a.m. to 9:00 p.m. ET. This information is designed only to highlight the Retirement Program. A Summary Plan Description containing more detailed information is available for the Retirement Program. Every effort has been made to provide an accurate summary of the program. If there is a conflict between this material and the applicable Plan documents, the Plan documents will govern. 9

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12 DIVERSIFIED INVESTMENT ADVISORS 8003-HC(b) (rev. 02/07) 4 Manhattanville Road, Purchase, New York