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A magazine from WEA Trust Member Benefits

™

WINTER

2011

Financial Education

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Online, So Fine your account

2011 guaranteed rate announced

your insurance

Underinsuring your home is risky business

your benefits

Are you leaving money on the table? weabenefits.com


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CONTENTS

WINTER 2010

3 YOUR ACCOUNT

- Do you qualify for the Saver’s Tax Credit?

- Contribution limits for 2011.

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- TRFs: Easy, but not without risk.

4 YOUR BENEFITS

- Don’t leave money on the table. Know your benefits.

6 YOUR STORY

- An online seminar helped the Greenwalds build confidence in their money management skills and positioned them for long-term planning. And it was so convenient.

4 8 YOUR INSURANCE - Find out how misconceptions can put your biggest investment at risk.

10 YOUR KIOSK - ’Tis tax season. Think IRA.

- What impacts your credit score? - Tips for safe wintery travels.

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president’s letter

8 © 2011 WEA Member Benefit Trust. All Rights Reserved.

Dave Kijek, President/CEO, WEA Trust Member Benefits

Sweet message—something to live by

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I keep a dish of chocolates in my office for visitors and to satisfy my occasional sweet tooth. These particular chocolates have inspirational messages on the inside of the wrapper. Today, the message was Never stop learning. If there is a theme in this issue of your$, that’s it. Because financial security for each member is our vision here at Member Benefits, we provide you with a variety of ways to learn with us. We’ve expanded our lineup of live

online financial seminars that you can participate in from the comfort of your own home—slippers are optional but recommended. And you can also attend financial seminars at a location near you, register for a personal phone consultation, or check out our financial planning services. Members Julie and Aaron Greenwald (story on pages 6–7) have taken advantage of many of these learning opportunities. (They love the online seminars by the way!) They’ve grown more and more confident about their financial future with each step. I encourage you to invest some time in 2011 for learning. A little education can

go a long way toward improving your personal finances—whether it’s learning money management techniques, understanding which benefits are available to you and how to access them, or finding out what you need to do now to secure your financial future. Member Benefits is here for you. May you and your family have a healthy, safe, and prosperous new year. Happy learning!

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{ your account IRA and 403(b) News Watch for your 1099R

If you took a reportable distribution from your WEA TSA Trust and/or WEAC IRA account(s) during 2010, we will send you a 1099R to the address on file on or before January 31, 2011.

Do you qualify for the Saver’s Tax Credit?

The Saver’s Tax Credit allows retirement plan participants with annual adjusted gross income of up to $28,250 (filing individually) or $56,500 (filing jointly) to save on their federal income tax. The maximum annual contribution eligible for the credit is $2,000 per person. The rate is based on your income in the taxable year for which you claim the credit.

2010 W EA C

WEAccess user ID and passwords

A PIN was assigned to you when you opened your TSA or IRA account. For a PIN reminder, call the Account Information Line at 1-800-279-2490 or go to weabenefits.com and click on Access Your Account.

Contribution limits unchanged for 2011

Contribution limits for 403(b) accounts will remain at $16,500 for 2011. Employees age 50 and older can contribute an additional $5,500 for a total of $22,000. If you have 15 years or more of service with your employer, you may have an additional “catch-up” opportunity. IRA contribution limits will remain at 5,000 for 2011. If you are age 50 or older, you may contribute an additional $1,000 to your IRA. To increase your 403(b) contribution, you must fill out a new Salary Reduction Agreement with your district business office.

Target Retirement Funds

One of the investments offered by Member Benefits is Target Retirement Funds (TRFs). TRFs are intended to provide investors with a one-fund solution that allocates money between stocks, bonds, and cash based on the number of years until the target retirement age is reached. However, when selecting a TRF, also consider factors such as when you intend to start withdrawals, what the allocation of the TRF is to and beyond its target, and your risk tolerance. Although TRFs are intended to simplify your investment decision, they still carry risk. The risk is not only before but also after the target date is reached. If you have questions, please call us at 1-800-279-4030, Ext. 8568. Before investing in any mutual fund, call WEA Trust Member Benefits at 1-800-279-4030 to request a prospectus. The prospectus contains information about the fund’s investment objectives, risks, fees, and other information about the investment company.

2011 Guaranteed Annual Rate of Return

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C o nve nt io n W

i n n e rs

2010

WEAC Convention The 2010 WEAC Convention was held on October 28–29 at the Alliant Energy Center in Madison. Member Benefits sponsored treats (pictured below) at Friday’s closing session and provided giveaways to five lucky WEAC members. Pictured above are the prize winners with Dave Kijek and WEAC leadership. From left to right: Mary Bell, WEAC President; Kevin Mikelbank, Monona Grove School District, winner of a Door County weekend getaway; Sarah Skosey, Student WEA-Carroll University, winner of an iPad; Ann Meyer, MequonThiensville School District, winner of a $100 VISA giftcard; Amy Johnson, Kimberly School District, winner of a flip camera; Geri Ann Strigel, Madison School District, winner of a $100 VISA giftcard; Dave Harswick, WEAC Secretary/Treasurer; and Dave Kijek, President/CEO of WEA Trust Member Benefits.

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*

WEA TSA & WEAC IRA Guaranteed Investment *Interest is compounded daily to produce a 4.25% annual yield prior to the deduction of administrative fees of the WEA TSA Trust and the WEAC IRA program. Principal and net credited interest are fully guaranteed by Prudential Retirement Insurance and Annuity Company (PRIAC). Such guarantees are based upon the financial strength and claims-paying ability of PRIAC. The Trustee for the WEAC IRA program is First Business Trust & Investments.

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{ your benefits

Financial Gaps? Benefits Could Be the Missing Piece Looking to improve your personal economy this year? You may have untapped benefits that can help you get the job done. Benefits—negotiated between your union and your employer— fill an important role in your short- and long-term financial well-being, and they can comprise upwards of 30% or more of an employee’s total compensation package. Obviously, not all districts offer the same benefit programs. The availability of flex spending accounts and sick leave credits, for example, vary by district. But have you fully reviewed the benefits listed in your professional agreement? And, more importantly, do you understand them? If not, you are likely leaving money on the table. Also, are you aware of benefit programs available to all Wisconsin public school employees that can enhance your financial well-being?

Here is just a sampling of benefits that may help you save money now, reduce your taxes, prepare for the future, and reduce your financial risks.

Reduce taxes with flex spending accounts

Flex spending accounts are one of the most under-utilized benefits offered through employers with only 14% participation among eligible employees. Flex spending accounts allow you to put away pre-tax dollars—thus lowering your taxable income—to pay for qualified outof-pocket medical and dependent care expenses. In addition to reducing taxable income, money set aside in a flex account avoids the 7.65% Social Security and Medicare tax. So if you’re in the 15% income tax bracket, contributing $5,000 to your flex plan (the maximum for many employers’ plans) would cut your federal income tax bill by $1,133 next year. Health care reform has made some key changes to flex spending accounts beginning in 2011, including how much you can contribute, how you can spend the money, and which of your family members can benefit. Check with your district’s human resources department for more information on these changes.

Save money with deals on group insurance coverage

You may be given the choice during open enrollment to buy extra disability insurance, life insurance, and long-term care insurance beyond any coverage already provided as part of your benefit package. You usually have to pay for this extra coverage, but you should get a better rate because of the group discount than you would find on your own. In some cases, coverage for family members is available. Short- and long-term disability insurance. Short-term and long-term disability insurance can help if you get sick or injured and are unable to work. Employers’ disability insurance policies generally cover a certain percentage of your salary. Find out how much your district’s disability insurance policy would pay if you became disabled. If there are major gaps between what your employer would cover and your expenses, consider buying extra coverage if available through your district. Life insurance. If someone will suffer financially when you die, chances are you need life insurance. The greater the financial needs of those left behind, the more coverage you need. Use the life insurance calculator at weabenefits.com/ calc to find out how much coverage you need for your situation. Then compare that to what you’re receiving as part of your contract. Long-term care insurance. Many people assume that their health insurance, or certainly Medicare, will fully pay for extended care needed in the event of a serious illness, stroke, or accident, but this is not the case. Neither were designed to pay for such care, and when policies do provide a benefit, it is usually limited to 30– 100 days. The costs associated with longterm care can be financially devastating— upwards of $70,000 annually for a private nursing facility in Wisconsin. But before you go out looking for individual long-term care insurance, check

If your district doesn’t offer a flex plan, consider claiming the child-care credit on your taxes. If you do participate in a flex plan, but have two or more children and child-care expenses exceed $5,000 per year, take advantage of both. Set aside up to $5,000 in your flex account, then claim the child-care credit for up to $1,000 in additional expenses.

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Members with group LTC insurance through WEA Trust may not realize that after premiums have been paid for 30 years and the member has reached age 65, the policy is “paid up.” If you retire before your policy is paid up, employees (and their spouse if they have been added to the policy) can maintain the coverage paying the same group premium rate, currently around $75 per month. This is true as long as your employer maintains the group coverage. If group coverage is dropped, you can make a lump sum payment to keep the coverage. An option you should strongly consider. if your district offers a group plan. Even if you are required to pay part or all of the premium, the group pricing will be hard to beat in the marketplace. If group LTC insurance isn’t available, Member Benefits sponsors an individual program for Wisconsin public school employees and their families*. For more information, visit weabenefits.com/ltc or call 1-888-247-5905.

Bank sick leave for the future

Some districts allow you to bank unused sick leave until you retire. Compensation for the unused time could take the form of a cash payment, contribution to your 403(b), or payments toward health insurance coverage in retirement. This benefit can have a significant impact on your financial situation at retirement and may affect when you can retire, since health insurance costs are a major issue for those retiring before they are eligible for Medicare. Find out how your district handles unused sick leave. It’s like money in the bank.

Roth savings can reduce future taxes

Let’s talk retirement savings. The Wisconsin Retirement System (WRS)— the state pension plan—is funded by your employer while you are working and will be a major source of retirement income for most Wisconsin public school employees. WRS may provide for as much as 40%–50% of your retirement income if you have 25–30 years in the system. It’s a wonderful benefit, but where will the other 50%–60% come from? Social Security may cover 14%–28%, leaving 22%–46% to come from your personal savings. Your benefit solution: 403(b) retirement savings account. In 2011, you can contribute up to $16,500 ($22,000 if you’re age 50 or older), and the 403(b) is a tax-advantaged savings account. weabenefits.com

Contributions may be made before taxes are taken out, reducing your taxable income now, or after-tax (Roth) which gives you tax-free growth. The Roth can be a good option for most participants because it will help diversify their tax liability in retirement since most other sources of income will be taxed as regular income. Unfortunately, school districts are not required to offer the Roth option. Find out if your district is one of the 250 plus districts offering the Roth option. If not, encourage them to add this no-cost benefit.

Payroll deduction saves time and aids in planning

If you are currently contributing to a 403(b), you know how easy it is to save with payroll deduction. It’s convenient and provides built in budgeting. Did you know that over 160 districts offer payroll deduction for auto and home insurance premiums and IRA contributions for employees participating in WEA Trust Member Benefits? This automatic option spreads payments out for as long as 26 installments which eliminates the need to come up with large payments, no more missed payments, no more checks, stamps, or hassle.

Free financial education a benefit to all

Anyone desiring to improve their financial situation can do so by investing a small amount of time increasing their knowledge. Free financial education geared toward all public school employees is offered on an ongoing basis from WEA Trust Member Benefits— frequently in collaboration with your UniServ or district. Learn more at weabenefits.com/calendar.

*Underwriting applies. Long-term care insurance products are underwritten by multiple LTC insurers. TSA program securities offered through WEA Investment Services, Inc., member FINRA.

Finding Information on Your Benefits • Get to know your contract. • Contact your UniServ or education association. They are there to answer your questions and provide assistance. • Contact your district’s business office or HR department. • Ask a colleague. • Watch your mail box for benefit updates and opportunities to learn more. • Check the Web sites of your district, UniServ and education association, as well as weac.org and weabenefits.com. • Attend free financial seminars offered by WEA Trust Member Benefits and WEAC. • Contact Member Benefits for information about benefit programs created exclusively for Wisconsin public school employees.

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{ your story FINANCIAL EDUCATION

Online, So Fine

Julie and Aaron Greenwald teach third and fourth grades respectively in the Hamilton School District. They were drawn to education by the rewards that come from everyday classroom experiences. “Being there when a child learns something new, when it clicks. We love being part of that.”

Aaron and Julie Greenwald have discovered the key to money management: It’s as simple as careful planning, good communication, and the continuous pursuit of financial education.

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he Greenwalds have always been good at managing their money. Their careful planning allowed them to get their Masters without taking out loans, and two years ago they bought their dream home. Because they’ve known each other since first grade, they communicate well which helps keep them on the same financial page. “I can’t say that we’ve always been masters of our finances. We haven’t always known exactly what to do every step of the way. But we’ve always been able to prioritize what’s important to us right now, for the short term,” says Aaron. Last year, Julie and Aaron Greenwald decided to invest some time increasing their financial knowledge. “Those who work in education naturally give a lot. It’s sometimes hard to give back to yourself. Even if it’s just taking the time to learn about your finances,” says Julie.

The Greenwalds were at a place in their lives when they felt they needed to think further out. They had a lot of questions about what they were doing now and what they needed to do to plan for retirement.

Free online education? We’re there.

While attending a financial seminar offered a few years ago by Bob Moeller (WEAC), they learned about opportunities to further their financial education with WEA Trust Member Benefits. On the seminar schedule at weabenefits.com, they discovered a new online seminar presentation called Finances 101: Seven Mistakes New Members Make with Their Money. “I thought, ‘It’s online? We don’t have to go anywhere! This is great. We can put on our slippers. Eat dinner.’ ” They weren’t

sure what to expect. “I thought it was going to be more of a video presentation, but I was happily surprised when the seminar was interactive,” says Aaron. “It felt very conversational. Ana Bonjour, the presenter, did a really nice job.” Ana Bonjour is a Retirement Savings Consultant with WEA Trust Member Benefits. “Throughout the presentation members use the chat, Q & A, and ‘raise your hand’ features to communicate with me. I’m able to provide instant feedback to all,” says Ana, who shares stories and examples from her personal and work experiences. “The online forum makes it a safe place to ask questions without worrying about what others might think,” she adds.

Drink it all in

“We absorbed a lot,” says Aaron. They took notes, asked questions, and utilized weabenefits.com


a list of Web resources sent to them before the seminar started. “We had a very productive and positive conversation after the seminar. Ana left us with a lot of goals, but also a lot of reassurances that we were doing some things right,” he says. That’s been key for the Greenwalds, learning that they’re on the right track. They have confidence moving forward with long-term plans that their approach is sound.

Guilt-free spending? Oh yeah!

Aaron and Julie are planners, and they’ve been good about prioritizing their wants and needs. “We have an Excel spreadsheet that we live by,” says Julie. By planning their purchases and sticking to their budget, they essentially give themselves permission to spend—guilt free. “If we have it in the budget, we get to do it,” says Aaron. There’s no buyer’s remorse. They include things like clothes shopping, yoga, and massages in their monthly budget. “That was my ‘aha’ moment. If we stick to this budget, we’ll be able to furnish our home how we’d like, we’ll have this amount for the emergency fund, and long-term we’ll be able to decide when we retire.” The downside, they acknowledge, is that you can’t have everything at once, “but in the grand scheme of things, it’s better to be able to sleep at night.”

Slow and steady wins the race

Aaron and Julie admit that it’s not the most glamorous thing to sit down on the weekend with the spreadsheet, but they agree that it’s well worth it. “It’s not like you get to the finish line and you see what place you’re in,” says Julie. “You can actually win the race if you plan.” The hardest part was taking the initial look at their finances and figuring out where they were spending their money and setting priorities and goals. “But after that, it’s just maintenance,” says Aaron.

“I thought, ‘It’s online? We don’t have to go anywhere! This is great.’ ” - Aaron Greenwald

The follow up

After the online presentation, they followed up with a phone consultation with Ana “to take a more specific look at our allocations in our IRA accounts,” says Aaron. “It’s our plan to touch base with somebody once a year.” This year they’re going to take advantage of one of the new fee-based financial planning services offered by Member Benefits. “We’ve had

good experiences. And we like that there are no commissions for the products they’re selling,” adds Julie.

Reaping the benefits

Other plans for 2011? They’re interested in learning more about the Wisconsin Retirement System and saving for retirement by participating in other Member Benefits seminars, preferably online. “We don’t want to wait to see if we can retire, we’d rather know ahead of time what we need to do to retire when we are ready.” They also plan to pay off their car, then reallocate the money to their IRAs. “We also want to add to our emergency fund. And then we want to relax,” says Julie, “and enjoy the benefits of our hard work.” They say they’re more confident because of the steps they’ve taken. And they’re appreciating the journey. “It’s not just where we are, but how did we get here?” says Aaron. “And it ends up being fun. It’s like a board game because there’s positive progress and we have wins along the way,” says Julie. The Trustee for the WEAC IRA program is First Business Trust & Investments.

Online seminars. Slippers optional.

Our live online seminars use Cisco’s Webex technology to offer members an interactive learning experience that is the ultimate convenience. Online seminars allow members to participate from the comfort of their own homes or anywhere there is Internet access, like the library or a favorite cozy coffee shop with free wi-fi.

Members love it

“Very clear, organized presentation.”-R. S. “I loved that I could participate from home. It was so convenient.” -Melissa H. “It was good and informative without boring me to death.” -Jennifer B. “I learned what I was doing right and ways to solidify my financial security.” -Melanie N.

Upcoming online seminars

Register at weabenefits.com/calendar.

weabenefits.com

4 semin now onl ars ine!

Seminar

Dates

Finances 101

Jan. 19, Feb. 9, Mar. 9

Preparing for Retirement

Jan. 20, Mar. 17

Investing 101

Jan. 26, Feb. 16, Mar. 23

Wisconsin Retirement System Feb. 2

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{ your insurance

Risky Business

Fifty percent of American homeowners do not have a clear understanding of their homeowners insurance coverage. Two thirds are underinsured. Coincidence? Not in my case. Our coverage was a house of cards.

Our home was underinsured for the first 14 years we owned it. My lack of knowledge put the largest investment of my life at risk—a fact that still gives me chills. - Sonja Penner

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t’s funny that no one wants to be a statistic, yet when you find yourself represented in a study, you start to feel like part of something. Even when the stats are not flattering, like those I found myself associating with recently, on some level it’s comforting to know you’re not alone. What caught my attention was a statistic from the 2010 J.D. Power and Associates customer satisfaction survey results for homeowners insurance. The study found that 50% of American homeowners do not have a clear understanding of their homeowners insurance coverage. Another study by Marshall & Swift/Boeckh— recognized consultants to the insurance industry—reports that two-thirds of Americans underinsure their homes. Coincidence? Not in my case. These stats reminded me of a meeting I had six years ago with Skip Miller, Member Benefits underwriter. I was

taking advantage of the opportunity as a new employee to have a personal insurance consultation. I was looking to save money on my insurance, but instead got a shock to my personal sense of security as well as my self-created image as a savvy consumer. Not only did I learn that my home was grossly underinsured, but it also became clear that I really didn’t know anything about my homeowners policy. My lack of knowledge was directly related to the fact that for more years than I care to count, I did not have enough insurance to protect the biggest investment of my life. All of the misconceptions I had about homeowners insurance were drawn out in the J.D. Power survey. Furthermore, anecdotal evidence from our Personal Insurance Consultants supports the findings. Here are the top four reasons that people like me find themselves underinsured.

Shopping solely based on price Price has always been a sticking point with insurance. Insurance is one of those gotta-have intangibles that unless you’ve been in a situation where you’ve needed it, the value isn’t always obvious. When my husband and I purchased our home in 1991, I was in charge of getting insurance. I’m quite certain I bragged about getting the lowest price available. And my husband probably gave me a high five (or the 1980s equivalent) for my success. Unfortunately, I missed the whole point of insurance and increased our financial risk for the sake of a few bucks. If we had lost our home due to fire, for instance, we would not have had enough coverage for a comparable rebuild. Our choices would’ve been to cover the added cost ourselves weabenefits.com


or settle for a lesser home. Fortunately, I home prices reflect the cost to rebuild. didn’t learn my lesson the hard way. It seems reasonable, but not true. ReDave Gardner, Personal Insurance building a home is almost always more Consultant in our Green Bay office, expensive than building a comparable tells of a recent insurance review he had new one: Demolition and removal of a with a member. “The house was insured destroyed home must occur before reat $169,000, and our replacement cost building even begins, local ordinances calculation came back at $221,000. often place regulations on demolition That’s a $52,000 difference. That’s a lot if that can increase expenses, builders can’t you’re in a situation where you need to rebuild your home.” According to Gardner, in this situation the premium difference - Dave Gardner, WEA Trust Member Benefits was only about $50 per year. “It does not make financial buy materials at volume discounts when sense to underinsure a home by $50,000– working on a single home, and it generally $60,000 to save $50 per year.” takes longer due to the complexities of A better, safer way to save money on rebuilding. homeowners insurance premiums is Failing to have to increase your deductible. Choosing a higher deductible may reduce your insurance reviewed or premium by 15%–30%. adjusted

Thinking $100,000 liability coverage is more than enough

Accidents happen. Your dog bites your neighbor’s young child in the face and they need stitches and possibly reconstructive surgery. Your teenager beans someone with a baseball while at the park causing eye damage. Your runaway grocery cart causes someone to fall and break a hip. Accidents yes, but the reality is that you could be held financially responsible in any one of these situations, and each could easily exceed $100,000. Thank goodness I never needed my liability coverage, because I’m sure I was at risk for coming up short here as well. Most experts recommend at least $300,000 worth of home liability coverage. Others, like Member Benefits, recommend even more. “Our homeowners policy includes $500,000 of liability coverage. We don’t even offer anything lower,” says Gardner. “Again, the additional coverage is a relatively inexpensive way for members to protect their assets.” It offers protection for you and all family members who live with you, including kids away at college, and it typically covers incidents on or away from your property.

“The premium difference was only about $50 annually for the additional $52,000 in coverage. It doesn’t make financial sense to underinsure.”

Confusing market or assessed value with the cost to rebuild

The J.D. Power survey suggests that most consumers believe their policy limits are based on the real estate value of their home, rather than the replacement cost of the physical structure. One-third of those surveyed had contacted their insurer upset with one simple issue: since the value of their home had plummeted, why did they need so much insurance? Shouldn’t they be able to reduce their coverage and thus their premiums? “The assumption that these two numbers are tied together causes people to think they are paying for coverage they don’t need,” says Gardner. He explains that market values are based on factors such as location, condition of neighboring properties, prevailing interest rates, local market conditions, and even property taxes. None of these influence what your insurance really covers: your home’s replacement cost. This is the cost to rebuild your home exactly as it is now, in its current location, and using the same materials and workmanship. Despite a severe economic downturn, the cost of building has shown no signs of decline. A related misconception is that new weabenefits.com

Some people buy their policy and never look at it again. Guilty. For the first 14 years we owned our home, we never reviewed our policy or talked with our insurance agent after the sale, despite the fact that we made major improvements to our home. “It’s recommended that you review your insurance coverages at least every other year, but it’s especially important to adjust your policy when you make improvements like adding a deck, a bathroom, or updating your kitchen,” says Gardner. Some companies offer inflation guard protection that automatically adjusts your coverage limits by a certain percentage each year to help keep up with increases in material and personal property costs. However, members shouldn’t rely solely on this to keep their coverage current. Member Benefits offers a Midterm Policy Exam to help you keep your policy up to date. “We provide an evaluation of how well your policies manage your risks, verify that your policy information is up-to-date, and that you are receiving all available discounts,” says Gardner. As an added convenience, you can complete the Midterm Policy Exam online at weabenefits.com if you like.

My new bottom line

I now understand that the value of my insurance is not as much about the price as it is about protecting my assets. I’ve worked hard for what I have, and protecting my family’s financial security is just the other half of the equation. I’m still a statistic, but now I’m part of the other half. Are you with me?

{ FEEDBACK

Do you have a story to tell? Do you want to tell us what you think about the magazine or suggest an article idea? Send an e-mail to

memberbenefits@weatrust.com.

Please type “your$” in the subject line.

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{ your kiosk

’Tis Tax Season. Think IRA. Contributing to an IRA gives you an opportunity to save for retirement while taking advantage of tax benefits. There are two IRA account types available— Traditional and Roth.

What’s the difference between a Roth and a Traditional IRA?

Contributions to a Roth IRA are taxed now, but all qualified withdrawals, including earnings, are tax free. Contributions to a Traditional IRA account may provide a tax deduction now, but all withdrawals, including earnings, will be taxed as regular income. Consider a Roth if… • You have a long time until retirement. • You want to reduce tax liability in retirement. • You want greater flexibility in estate planning. • You believe your tax rate is lower now than it will be when you withdraw the money.

When and how to contribute?

Contribute throughout the year or all at once with a lump sum. Setting up automatic payments through your credit union or bank or payroll deduction through your district makes it easy to budget your contributions. Contributions for a specific tax year can be made until your tax return deadline for that year. For example, you may apply IRA contributions made by April 15, 2011 to the 2010 tax year. Be aware you cannot apply automatic contributions to a prior tax year. You will need to write a check for any contributions made in 2011 that you wish to apply to 2010.

What’s the limit?

The maximum combined amount you may contribute to all of your Traditional and Roth IRAs (2010 and 2011) is $5,000 if you are under age 50 and $6,000 if you are age 50 or older. However, contributions may also never exceed your earned compensation for the year (if your earned compensation is less than the applicable

Compare Before You Renew

Get a Quote

with our new online quote request form. 10 weabenefits.com/getaquote

limit, you may only contribute up to the amount of your compensation). You may also contribute on behalf of a spouse who doesn’t have earned income.

Who can contribute?

If you have earned income, you can contribute to a Roth IRA unless your income exceeds $120,000 (single) or $177,000 (married, filing jointly) in 2010 or $122,000 (single) or $179,000 (married, filing jointly) in 2011. However, once you hit $105,000 (single) or $167,000 (married filing jointly) your Roth IRA contribution limit is reduced or “phased out” as your income rises— until you exceed $120,000 and $177,000 respectively.

Where to open an IRA?

Wisconsin public school employees, their children, parents, and parents-inlaw may participate in the IRA program offered by WEA Trust Member Benefits. We accept rollovers from a variety of retirement plans. We also offer Simplified Employee Pension (SEP) IRAs. Members who have spouses—or other eligible family members—who are self-employed are eligible to participate in our SEP program. Wisconsin residency required. Our WEAC IRA program is a great option because we do not charge commissions, and our low annual administrative fee is lower than the fees charged by many other providers. Enrolling is easy with our step-by-step online application at weabenefits.com or call us at 1-800-279-4030. This article is for

informational purposes only and not intended to be legal or tax advice. Consult your tax advisor or attorney before taking any action. The Trustee for the WEAC IRA program is First Business Trust & Investments.

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When you apply for credit—whether for a credit card, an auto loan, or a mortgage—lenders want to know what risk they will be taking by loaning money to you. Three credit bureaus keep information on file relating to your credit history, which affects both how much and what loan terms lenders will offer you at any given time. It pays to know your score and how to improve it. Can you pass our credit score quiz?

What is more likely to have an effect on your credit score? A. Having overdue library books B. Getting married The correct answer is… A. Having overdue library books. There is no such thing as a joint credit report or score, so just getting married won’t lower your score. Your credit score will only change if you’re added as an authorized user on your spouse’s credit card, for example. If a library fine goes to collection, however, that can significantly reduce your credit score.

To improve your credit score, which of the following will help the MOST? A. Keeping your accounts open for a long time. B. Keeping the balance on your cards below 25% of your available credit. C. Paying your bills on time. The correct answer is… C. While all three answers will help your credit score, paying your bills on time helps the most. About 35% of your score is based on your payment history (the later you are, the lower your score). About 30% of your score is based on the percentage of your credit limit that you’ve actually used weabenefits.com

(how much you owe). Even though it’s better to pay off your balances in full each month, if you are holding a balance, try to keep it below 25% of your available credit. (Source: myfico.com)

How long can a negative item on your credit history impact your score? A. 3 years. B. 5 years. C. 7 years. D. 9 years. The correct answer is… C. Although negative items usually affect a credit score for up to seven years, the impact of each item lessens as time goes on. If you pay your bills on time, keep your account balances low, and don’t open a lot of new accounts, it is likely your score will rebound fairly quickly. Tuning in to your credit report and score is the first step to good credit. Learning the basics about FICO credit bureaus and credit scores is the next step to understanding your score and what you can do to improve it. Visit myfico.com for more information, check up on your reports with annualcreditreport.com (NOT freecreditreport.com or any other sites), and put together a plan to improve your score.

Be Careful Out There From slippery roads to reduced visibility, driving in wintery weather is full of dangerous challenges and plenty of inconveniences. Being prepared and following these winter driving tips, however, will help keep your travels safe in snowy, slushy, and icy conditions: • Clear snow and ice from all windows and lights—even the hood and roof—before driving. A snow covered car becomes camouflaged and makes it difficult for other drivers to see you. • SLOW DOWN. Posted speed limits are for ideal travel conditions on dry roads. Reduce your driving speed in winter weather. • Be alert. Do not use cruise control. Winter driving requires you to be in full control at all times. • Increase the following distance between you and the vehicle ahead of you. Stopping distance on an icy road is double that of stopping on a dry one. • Watch for bridges. Bridges are likely to be icy because bridge decks ice up sooner than pavement. • If you start to skid, don’t hit the brakes. Take your foot off the accelerator and steer in the direction you want the front of the car to go.

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Your$ Magazine -- January 2011