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ABC Company Deferred Compensa on Plan 2013 Plan Year Enrollment Kit

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Welcome to the ABC Company Deferred Compensa on Plan. The plan is designed to provide current tax planning opportuni es and supplemental funds for the re rement of select employees of ABC Company. It is intended that the plan will aid in retaining and a rac ng employees of excep onal ability by providing them with these benefits.


Contents Overview • • • • •

What is a Nonqualified Deferred Compensa on Plan? How Does 409A Compare to 401(k)? Baseline & Projected Higher Income Replacement Ra os Pre-Tax Growth vs. A er-Tax Growth Tax Preferences Savings Plans

Plan Highlights • • • • • • • •

Eligibility Contribu on Sources Par cipant Account Balances Ves ng Investment Credi ng Op ons Distribu on Dates: Specified Time Distribu on Dates: Separa on from Service Plan Distribu ons

Plan Advantages • •

More Investment Dollars Higher Return

Ques ons & Answers • • • • • • •

Plan Purpose & Eligibility Deferrals Benefit Payments Funding Status Investments Taxes Changes to the Plan

Enrollment Informa on •

Enrollment Informa on


Overview Introduc on Our most valued asset is our employees. Our goal is to recruit, reward and retain highly valued members of our team. As part of a select group, you are being presented with the opportunity to par cipate in the company’s nonqualified deferred compensa on plan. Nonqualified Deferred Compensa on plans (NQDC) are voluntary savings programs which give execu ves the ability to save addi onal pre-tax dollars above and beyond the current re rement plan limits. NQDC plans allow for enhanced re rement and savings opportuni es and provide par cipants a vehicle to manage current and future income taxes. Sec on 409A applies to compensa on that workers earn in one year, but that is paid in a future year. This is referred to as nonqualified deferred compensa on. This is different from deferred compensa on in the form of elec ve deferrals to qualified plans (such as a 401(k) plan) or to a 403(b) or 457(b) plan. Nonqualified deferred compensa on plans or 409A work in tandem with your personal savings, social security, and qualified re rement programs, yet allow eligible par cipants to: • Defer much more pre-tax compensa on than 401(k) plans • Significantly reduce current tax liablility • U lize tax-advantaged investment credi ng op ons • Plan for re rement and long-term savings goals in a tax-effec ve manner

Nonqualified Deferred Compensa on Plan

Social Security

Personal Savings

401(k)


Overview How Does 409A compare to 401K?

401(k)

409A

Type of Plan

Qualified Plan

Nonqualified Plan

Purpose

Accumula on of re rement funds on a tax deferred basis

Addi onal tax deferral savings opportunity for select employees

Contribu ons

Limited pre-tax contribu ons

Pre-tax contribu ons in excess of 401(k) limits

Catch-up Contribu ons

Available for par cipants over age fi y (50) subject to IRS limits

Not Available

Eligibility

No special criteria

By invita on only

Par cipa on

Voluntary

Voluntary

Investments

Directed by par cipant Earnings are tax-deferred

Can be directed by par cipant; however, subject to final approval of Company Earnings are tax-deferred

Loans

Available based on specific rules and requirements

Not Available

Upon separa on of service. Distribu ons prior to 591/2 may be subject to “early withdrawal� penalty Amounts may be rolled over into an IRA or other qualified plan

Subject to Plan but can include in-service distribu on, termina on, re rement or death, and hardship payment

Benefit Security

Secure in the event of change of control and insolvency

Subject to loss if Company becomes insolvent

Ownership of Plan Assets

Par cipant has direct ownership

Assets owned by Company

Distribu ons

Rollovers

No rollover op ons available


Overview The Power of Tax Deferral The power of tax deferral is an important benefit offered by many re rement savings programs such as §409A, §403(b), §401(k) and §457 plans, tradi onal IRAs, etc. When contribu ons are made on a pre-tax basis, your current taxable income is reduced by the amount you invest. Just as important, taxes on any earnings your tax-deferred investments generate are deferred as well, pu ng more of your money to work for you over me. Taxes are not due un l you begin to make withdrawals—usually at re rement—which may be years away. Plus, while distribu ons are taxed as ordinary income, the impact may be minimized as many investors find themselves in a lower tax bracket at re rement.

More Investment Dollars More money can be invested in a company-sponsored deferral plan than in an outside investment plan because your contribu ons are made from pre-tax income. Also, earnings on your account accumulate on a tax-deferred basis.

Higher Return Pre-tax investment, tax-deferred accumula on, and a pre-tax earnings rate for you with the ability to earn higher a er-tax returns compared to an outside investment.

Tax Preferences Savings Plans 401(k) Re rement Plans / 401(k) Roth Plans 2013 maximum contribu on: $17,500 Catch-up provision for employees age 50 or over: $5,500 Individual Re rement Accounts (IRA’s) / Roth IRA’s 2013 maximum contribu on: $5,500 Catch-up provision for individuals age 50 or over: $1,000 Plan contribu on deduc bility is phased out for Highly Compensated Employees (HCE) Social Security Wage base: $113,700 Maximum benefit: $30,396 Full re rement age: 65-67


Overview 401(k) Plans Limit Re rement Savings Opportuni es Maximum pre-tax deferral under IRS code sec on 402(g) ($17,500 in 2013 for those under 50) as a percentage of compensa on - this does not reflect addi onal limita ons that may further restrict amounts that may be deferred into a 401(k) plan.

Why is Nonqualified Deferred Compensa on Important? It is increasingly diďŹƒcult for highly compensated employees to meet re rement income needs with Social Security and 401(k) alone.

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Assump ons: Current Age 25, Re rement Age 65, Star ng Salary, $35,000, variable annual salary increases, Only ER contribu ons to 401(k) are counted, ER contribu on of 3% of annual salary, 6% annual investment return 15 years of annual payments.


Overview The Eect of Poten al Capital Gains Rate Increase If the capital gains rate were to change from 15% to 20% which means that the advantage of pre-tax deferral of income would increase further.

A er-Tax Advantage of Pre-Tax Deferrals (%)

Inves ng for Re rement - Types of Risk


Overview Stocks & Bonds: Risk vs. Return

Past performance is no guarantee of future results. Risk and return are measured by standard devia on and arithme c mean, respec vely. This is for illustra ve purposes only and not indica ve of any investment. An investment cannot be made directly in an index. Š 2011 Morningstar. All Rights Reserved. 3/1/2011

The Case for Diversifying: 2001-2010

Past performance is no guarantee of future results. Time period illustrated is from 2001–2010. This me period was chosen as a drama c illustra on of stock and bond return behavior and how their o en opposite movements reduced por olio vola lity. This is for illustra ve purposes only and not indica ve of any investment. An investment cannot be made directly in an index. Š 2011 Morningstar All Rights Reserved. 3/1/2011


Overview

The Importance of Staying Invested

Past performance is no guarantee of future results. This is for illustra ve purposes only and not indica ve of any investment. An investment cannot be made directly in an index. Š 2011 Morningstar. All Rights Reserved. 7/1/2011


Plan Highlights


Plan Highlights Descrip on Eligibility Management and highly compensated individuals who are either a member of the Senior Leadership Team or in a job graded at E1 or above.

Contribu on Sources • Par cipant Deferrals: Par cipants may defer up to 75% of salary, up to 100% of Short Term Incen ve Compensa on Payments (STI) and up to 100% of Long Term Incen ve Compensa on Payments (LTI). In order to par cipate, the individuals must elect to defer at least one percent of the elected deferral source for the Plan Year. Base salary elec ons are made on an annual basis in respect to the coming twelve (12) month Plan Year and will ordinarily occur during December of the prior calendar year. STI and LTI elec ons are made on an annual basis in respect to the coming twelve (12) month Plan Year and must be made prior to June 30 of the current Plan Year. Deferral elec ons are only in effect for the current Plan Year and are irrevocable.

Par cipant Account Balances For purposes of recording a Par cipant’s Account balances on the Employer’s records, each Par cipant’s Account balance shall include the amount of the Par cipant’s deferrals and the amount of any deemed earnings or losses based on the Par cipant’s direc ons as to deemed investments.

Ves ng • Par cipant deferrals will be 100% vested to par cipants at all mes.

Investment Credi ng Op ons • Par cipants can choose to have asset alloca ons made in whole percentages among a variety of investment op ons that may be offered by the Employer. • Alloca on changes can be requested on a daily basis and are effec ve as soon as is administra vely prac cable within the opera onal constraints of the plan. Important Note: The Employer is not required to fund plan benefits in accordance with Par cipants’ direc ons regarding investment op ons.

Those eligible to par cipate in the Plan are a select group of management or highly-compensated employees as designated by the Employer.


Plan Highlights Distribu on Dates: Specified Time • Any year’s deferrals, contribu ons, and investment returns may be deferred un l any future year prior to the par cipant’s separa on of service with the Employer provided that the distribu on date is at least two years from the first day of the plan year for which the deferral will apply. The Par cipant may elect his or her distribu on dates and elec on during annual enrollment each year they are eligible to par cipate. The elec on of a distribu on date may not be revoked or modified

Distribu on Dates: Separa on from Service • Par cipants termina ng employment will receive a lump sum or commence payments of his or her vested account balances no later than 60 days.

Financial Hardship Distribu on • Hardship distribu ons shall be available to par cipants in the event of an unforeseeable hardship. A financial hardship is defined as a severe financial hardship to the Par cipant resul ng from a sudden and unexpected illness, accident, loss of Par cipant’s property due to casualty, or other unforeseen circumstances to the Par cipant or dependent of the Par cipant, each as determined by the Employer. • In no event shall the aggregate amount of the distribu on exceed either the full value of the Par cipant’s Account or the amount determined by the Employer to be necessary to alleviate the Par cipant’s hardship.

Survivor Benefits • Pre-Re rement: All vested account balances will be distributed to the par cipant’s beneficiary in the manner elected by the Par cipant. Provided, however, that a par cipant who elects to receive three or five annual installments shall receive payments in a lump sum. • Post-Re rement: Benefits will con nue to be paid to the par cipant’s beneficiary at the same rate and frequency as was being paid to the par cipant.

Disability Benefits • In the event of a Disability experienced by the Par cipant before termina ng his or her employment, the Par cipant shall be en tled to receive the en re balance of his or her Account in the manner elected on his or her Elec on Form(s).

Plan Benefits Unfunded • The Plan is a nonqualified, unfunded deferred compensa on plan. Any trust or funding vehicle established by the Employer for the purpose of paying Plan benefits shall at all mes be subject to the claims of the Employer’s creditors in the event of the Employer’s insolvency or bankruptcy. Par cipants have no right to any deemed investments under the Plan or any funds the Employer may set aside for Plan benefits.

Important: This summary plan descrip on is subject in its en rety to the Plan Document, which contains more detailed informa on regarding the Plan. The Plan Document’s terms govern any interpreta on of the Plan, including without limita on, any discrepancy between anything contained in this memorandum and any provision of the Plan.


PlanHighlights Highlights Plan Investment Op ons • This sec on is intended to assist with selec ng the investments that fit your overall asset alloca on and risk tolerance. • Please note that transac ons involving stock may be delayed due to the se lement mes involved with the transac on • The investment op ons available to you are:

Category

Fund Ticker

Mutual Fund Name

Money Market

FDRXX

Fidelity Cash Reserves

Intermediate Bond

FBIDX

Sparatan US Bond Index

Inflation Protection Bond

DIPSX

DFA Inflation Protected Securities

Core Bond

JCBRX

J.P. Morgan Core Bond

High Yield

IVHIX

Ivy High Income

International Bond

RCWFX

American Funds Capital World Bond

Large Value

OIERX

J.P. Morgan Equity Income

Large Core Index

VIFSX

Vanguard 500 Index

Large Growth

DEUIX

Delaware US Growth

Medium Core Index

VEMSX

Vanguard Extended Market Index

Small Value

FCPVX

Fidelity Small Cap Value

Small Growth

HSRSX

Eagle Small Cap Growth

International Developed

RERFX

EuroPacifc

Real Estate

RRREX

DWS RREEF Real Estate

Precious Metals

OGMYX

Oppenheimer Equity Precious Metals

Category

Stock Symbol

Stock Name

Company Stock

TAP

Molson Coors Brewing Company

Company Stock

SAB:LN

SABMiller PLC


Plan Advantages


Plan Advantages

Plan for Your Re rement Most execu ves will need 70% to 80% of their final income to maintain their pre-re rement standard of living. Benefits from 401(k) plans, other qualified plans and Social Security will not provide this level of income for most execu ves. To fill the income gap, these execu ves need a flexible savings program with a rac ve investment returns. A nonqualified deferred compensa on plan can be the right solu on. The Miller Coors Deferred Compensa on Plan allows you to maximize your personal savings for re rement, on a pre-tax basis, while earning tax-deferred returns. The graph below illustrates the poten al gap between your post-re rement income needs and the benefits provided by qualified plans and social security.

Re rement Income Shor all

Social Security

401(k) Plan

Shor all

Assumes a 45-year-old (i) receives salary increases of 5% annually for 20 years; (ii) contributes the lesser of 15% of salary or the maximum amount allowed under IRC Sec on 402(g) to the company’s 401(k) plan; (iii) receives a dollar-for-dollar employer match on the first 3% of compensa on contributed to the 401(k) plan (up to the maximum IRC Sec on 401(a)(17) and 415(c) limits); (iv) earns 8% annually on the 401(k) balance; (v) re res at age 65; (vi) has a 401(k) balance equal to 1/2 of current salary at the beginning of age 45; and (vii) takes annual withdrawals from the 401(k) plan that increase at a rate of 3% per year un l age 85 when the 401(k) balance is exhausted.

Social Security Administra on es mates in future dollars. Assumes benefits are obtained at age 65, 2 years prior to full/normal re rement age of 67. Full benefits have been reduced by 5/9 of 1% per month of early re rement as per the Social Security Administra on’s guidelines on early re rement benefits.

The investment returns assumed in this example are illustra ve only and are not guaranteed. These returns do not reflect any investment management fees or charges that might apply. Such fees or charges, if included, would reduce performance.


Plan Advantages Plan Advantages

Enhance Your Investment Returns If you par cipate in the plan, you will delay federal income taxa on on the compensa on that you defer. As a result, 100% of every dollar of compensa on you defer will be invested within the plan – your full deferral will be working for you to generate earnings. Like your deferrals, earnings will not be taxed un l they are paid to you. The impact of this pre-tax compounding of deferrals is significant. To obtain the same effec ve investment return outside the plan, your a er-tax compensa on would have to be invested more aggressively and produce consistently higher returns than your pre-tax contribu ons to the plan. The graph below illustrates the comparison of the a er-tax lump sum payment from a deferred compensaon plan versus personal inves ng.

A par cipant who defers $20,000 per year into the deferred compensa on plan (“DCP”) for 15 years, and earns 8% per year, compounded annually, based on the par cipant’s hypothe cal investment choices, would accumulate $586,486, pre-tax. Assuming a 40% tax rate, the par cipant would receive an a er-tax, lump sum payment of $351,891.

In contrast, this same par cipant would only have $12,000 a er-tax to invest in a taxable investment outside the DCP. Pre-tax earnings of 8%, per year, compounded annually, in a taxable investment yield an a er-tax return of 4.8%. A par cipant who invests $12,000 per year in a taxable investment for 15 years, and earns 4.8% per year, would accumulate $267,315.

The investment returns assumed in this example are illustra ve only and are not guaranteed. These returns do not reflect any investment management fees or charges that might apply. Such fees or charges, if included, would reduce performance.


Ques ons & Answers


Ques ons & Answers

Funding Status ARE MY BENEFITS UNDER THE PLAN PROTECTED? No. The Plan is legally required to be an unfunded plan. Any trust or funding vehicle established by ABC Company for the purpose of paying Plan benefits shall at all mes be subject to the claims of ABC Company creditors in the event of ABC Company insolvency or bankruptcy. Par cipants have no right to any deemed investments under the Plan or any funds ABC Company may set aside for Plan benefits.

Investments WILL I HAVE THE ABILITY TO CHOOSE FROM A MENU OF INVESTMENT OPTIONS? Yes. You will be given a variety of pre-selected investment alterna ves. HOW OFTEN CAN I CHANGE MY SELECTION OF INVESTMENTS? You may change your investment elec on daily. HOW DO I CHANGE MY INVESTMENT ELECTION? You can change your deemed investment elec on via the Pen-Cal internet and telephone systems. Your deemed investment elec on change will become eec ve as soon as administra vely prac cable a er receipt and processing of your request.

Taxes DO I PAY FEDERAL AND STATE INCOME TAXES ON THE MONEY THAT IS DEFERRED DURING THE PLAN YEAR? The compensa on you defer is exempt from federal and state taxes at the me of deferral. The amounts deferred and any addi onal benefits are subject to FICA and Medicare taxes at the me of deferral, and are subject to income taxes in the year in which you or your beneficiary receives them.

DO I PAY TAXES ON ANY INVESTMENT GAINS IN MY ACCOUNT? Federal and State income taxes will be due at me of distribu on. All funds grow tax deferred.


Ques ons & Answers

Changes to the Plan COULD THIS PLAN BE CHANGED OR TERMINATED? ABC Company reserves the right to amend, abridge, or terminate the program should they deem it necessary.

Personal Advisors MAY I REVIEW THIS PROGRAM WITH MY PERSONAL ADVISORS? Please review this program with any trusted advisor at your discre on.

Important: This ques ons and answers memorandum is subject in its en rety to the Plan Document, which contains more detailed informa on regarding the Plan. The Plan Document’s terms govern any interpreta on of the Plan, including without limita on, any discrepancy between anything contained in this memorandum and any provision of the Plan.


Enrollment Informa on


Ques ons & Answers

Plan Purpose & Eligibility WHY HAS THE ABC COMPANY DEFERRED COMPENSATION PLAN BEEN INTRODUCED? The ABC Company Nonqualified Deferred Compensa on Plan (the “Plan”) was designed to provide re rement benefits to a select group of key execu ves or highly compensated employees in order to provide postemployment payments and related benefits.

WHO IS ELIGIBLE TO PARTICIPATE IN THE PLAN? Select members of management or highly compensated employees who are either a member of the Senior Leadership Team or are in a job graded at E1 or above shall be eligible to par cipate in the Plan.

Deferrals HOW IS THE INCOME DEFERRAL HANDLED? Before the beginning of each plan year, you will be given the opportunity to defer a por on of your income received from ABC Company. You will have no current federal and state income tax liability on the amount of your deferral. The liability for the taxes deferred occurs when you or your beneficiary actually receives the money in the future.

WHEN DO I NEED TO DECIDE ON THE AMOUNT DEFERRED? Under U.S. tax laws, you need to decide to defer compensa on before it is earned. An agreement received a er that date cannot be processed and made effec ve.

Benefit Payments HOW DO I SELECT OR CHANGE MY BENEFICIARY? You select your beneficiary by comple ng the beneficiary designa on sec on of enrollment. You may change your beneficiary designa on at any me by comple ng a Beneficiary Designa on Form and submi ng it to ABC Company. WHO HAS THE OBLIGATION TO PAY MY PLAN BENEFITS? ABC Company shall have the responsibility of paying your Plan benefit as stated in the Plan Document. Your benefits are subject to the claims of the company’s creditors, and may be forfeited in the event of the ABC Company insolvency or bankruptcy.


Enrollment Informa on Enrollment Informa on (Online) Enrollment into the ABC Company Deferred Compensa on Plan is accomplished online. You will soon receive a le er containing your web login informa on and detailed instruc ons regarding the enrollment process. The le er will instruct you to login at www.pencal.com and enter your username and password. A er logging in you will click the enrollment link on the le -hand side of your browser and complete the steps to select your: • • • •

Deferral Elec on Payment Elec on Investment Elec on Beneficiary Designa on

Your employer will inform you of how long you have to complete the enrollment. In the future, you will be able to manage your account using the web login informa on contained in the enrollment le er. Your employer will inform you when your account becomes accessible.

Step 1: www.pencal.com

Step 2: Enter username and password. No company name necessary. Step 2: Click the enrollment link on the le -hand side of your browser and complete selec ons.

le p m

Sa

A er you enroll, you will receive an e-mail confirma on.


Pen-Cal Administrators 6210 Stoneridge Mall Rd., Suite 300 Pleasanton, CA 94588 www.pencal.com Š2013 Pen-Cal Administrators


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