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In This Issue The Benefits of Lower PERAPlus Plan Fees Reminder About Plan Contribution Deferral Elections F I R S T Q UA RT E R 2014 PERA Investor Save More for Your Retirement as Early as You Can The Benefits of Lower PERAPlus Plan Fees Lower fees help keep more of your retirement savings in your PERAPlus 401(k) and 457 Plan accounts. If you appreciate low expenses and the easy-to-understand PERA is a large institutional investor, providing you with from an IRA into your PERAPlus 401(k) or 457 Plan account, as access to custom, diversified investments that are not long as the entire balance is made up of pre-tax contributions normally available to independent investors. and earnings. Investing in the PERAdvantage funds gives you the benefit To move retirement assets into your PERAPlus 401(k) or of economies of scale that reduce the trading costs per dollar 457 Plan account: of investment. PERAdvantage investment options, consider consolidating your other retirement assets in one place. You can transfer or roll over money from a former employer’s retirement plan or • request a direct rollover. The following fees for PERAPlus Plan administration and investments are lower than many other plans. • • Contact your previous employer or IRA institution to • Depending on where you want the money to go, the rollover A flat monthly fee of $1.00 for each Plan in which check must be made out to Colorado PERAPlus 401(k) Plan or you participate. Colorado PERAPlus 457 Plan for the benefit of (your name). An asset-based administrative fee of 0.14 percent built • Complete a Colorado PERA 401(k) Rollover Form or Colorado PERA into each PERAdvantage fund’s total expense, which is 457 Plan Rollover Form. Forms can be downloaded from the Plan deducted from the fund’s rate of return. websites accessible through www.copera.org or by calling 1-800-759-7372 and selecting the PERAPlus/DC option. • No deferred sales charges or transaction fees for any of the PERAdvantage investment options. • Send the form with the rollover check to the address on the form. A complete fee schedule is available on the Plan websites. Retirees and inactive PERA members who were not previously enrolled in the PERAPlus 401(k) Plan have the option to roll money from a former employer’s 401(k) retirement plan or from Reminder About Plan Contribution Deferral Elections an IRA into the PERAPlus 401(k) Plan, as long as the entire balance is made up of pre-tax contributions and earnings. Contributions to the PERA DC Plan cannot be rolled into the PERAPlus 401(k) Plan. Fund fact sheets are available on the Plan websites accessible Changes to the contribution deferral election through www.copera.org or by calling 1-800-759-7372 and in the PERAPlus 457 Plan must be received by selecting the PERAPlus/DC option. You should review all fund 2:00 p.m. (Mountain time) on the 25th of the information, including investment objectives, risks, and fees, month (or the first business day after) to be before making investing decisions. effective for the following month or following payroll period, whichever is later. If the 25th of the month is a stock market holiday, the next stock market operating date will be the cutoff. Plan Information Line: 1-800-759-7372 Plan Website: www.copera.org Save More for Your Retirement as Early as You Can Perhaps one of the best and simplest ways to save for your retirement is to take full advantage of the PERAPlus 401(k) and 457 Plans. Contributing steadily to your PERAPlus Plan accounts puts the power of compounding on your side. Compounding occurs when interest is added to the principal amount of a contribution. Each year’s gains may build on those of the past, potentially increasing the value of an investment over time. The process of compounding is often compared to the way a snowball grows as it rolls downhill. The longer the hill, the larger the snowball becomes. And thanks to the potential role of compounding, increasing your contributions by even a small amount each year could provide significant long-term benefits. By contributing more as soon as you can to your PERAPlus 401(k) Plan and/or 457 Plan account, your money has more time to grow. If you contribute only a minimal amount or delay increasing your contribution level, you lose out on the maximum benefit of compounding. In fact, waiting 10 or 20 years could force you to contribute much larger amounts to your PERAPlus Plan accounts later on to try to reach your retirement income goal. Of course, systematic investing does not ensure profit or guarantee against loss in declining markets, and investments in the markets fluctuate over time, which can result in gains as well as losses. You should always consider your ability to consistently invest in up and down markets. Be sure to review your contribution level regularly to check your progress toward saving enough for retirement. To change your PERAPlus 401(k) Plan contribution amount, contact your personnel office. You can change your PERAPlus 457 Plan contribution amount by logging into your account online through www.copera.org or by calling 1-800-759-7372 and selecting the PERAPlus/DC option. A 25-year-old who immediately begins saving and investing in a PERAPlus Plan accumulates $7,212 more in account value than someone who waits until age 26 to begin. Delaying contributions by 10 or 20 years means giving up thousands of dollars for retirement. The Cost of Waiting $120,000 Whatever your age, it’s never too soon to contribute as much as you can afford. The PERAPlus 401(k) and 457 Plans have separate contribution limits, so you can contribute up to the IRS maximum limit of $17,500 to each Plan in 2014, for a total of $35,000. If you will be age 50 or older this year, you can take advantage of catch-up contributions that allow you to save even more for retirement. $115,018 Starting at age 25 Starting at age 26 Starting at age 35 Starting at age 45 This hypothetical example assumes $60 contributions $107,806 made at the beginning of each month, a 6 percent $100,000 $87,679 effective annual interest rate compounded monthly, no withdrawals, and retirement at age 65. For illustrative $80,000 purposes only to show how the number of years invested in a PERAPlus Plan could affect participant account $58,755 $60,000 values. Not intended as a guarantee of past or future $56,262 performance of any security. Actual rate of return may $40,000 be more or less than shown and will depend on a $27,339 number of different factors, including a participant’s $20,000 $7,212 choice of investment options. Any fees, expenses, or charges that may be associated with a PERAPlus Plan $0 Account Value at Age 65 www.copera.org • Cost of Waiting One Year Cost of Waiting 10 Years Cost of Waiting 20 Years 1-800-759-7372 Participant Services Representatives: Available Monday–Friday, 6 a.m.–6 p.m. (Mountain time) except on New York Stock Exchange holidays. Information from registered Plan Service Representatives is for educational purposes only and is not legal, tax or investment advice. Local Plan Service Representatives are registered representatives of ING Investment Advisors, LLC (member SIPC). The Colorado PERA Investor is meant only as background information for your consideration and is not intended as investment advice. PERA recommends that you consult a CPA, attorney, or other professional adviser for investment advice. Your rights, benefits, and obligations as a PERA member are governed by Title 24, Article 51 of the Colorado Revised Statutes, and the Rules of the Colorado Public Employees’ Retirement Association, the PERA 401(k) and Defined Contribution Plan and Trust Document, and The Deferred Compensation Plan document, which take precedence over any interpretations in this newsletter. * are not considered in this illustration. These charges would reflect lower net returns. Quarterly Calendar Transactions made on these dates when the New York Stock Exchange (NYSE) is closed will be processed the following business day that the NYSE is open. • Friday, April 18, 2014 • Monday, May 26, 2014 • Friday, July 4, 2014 SKU#CO1Q14