2007 investment education expo simple. smart. for you. for life kentucky’s new deemed iras...

2007 Investment Education Expo

Simple. Smart. For you. For Life

Kentucky’s New Deemed IRAs

NRM-4680KY



1)Options to Help Prepare for Retirement

2)Deemed IRA Basics

3)Opportunities for KY Employees

Preparing for Retirement

Individual Retirement AccountsTaxable Investments

Supplemental Retirement

Plans

KERS & KTRS / Social Security



401k Plan

DeemedIRA

DeemedRothIRA

Roth401k

457 Plan

KYEmployees



Supplemental Retirement

PlansDeemed IRAs

Eligible for Payroll Deduction

Employees of the Commonwealth, public schools and universities / other public employers

Eligible & active employees

Eligible to Roll-in other Retirement Accounts

Employees of the Commonwealth, public schools and universities / other public employers

Eligible & active employees plus those separated from

service with a minimum Plan account balance of $5,000



• Regular IRA– Available through

banks, credit unions, brokerage firms, mutual funds, and others

– Traditional and Roth versions

• Deemed IRA– Available as a

component of a retirement plan

– Traditional and Roth versions



Deemed IRA

Basics



Deemed IRA Basics

Easy & Flexible Contributions

1)Payroll deduction – just like your other benefits

– OR – 2) Direct Contribution

Personal check Certified check Money orders

All contributions are subject to IRA annual limits

Deemed IRA Basics

• Contributions– Deemed IRA contributions are not

counted toward the annual contribution limits associated with your 457 and 401(k) Supplemental Retirement Plans

• 457 plan: $15,500• 401k plan (including Roth): $15,500• Deemed IRA: $4,000


Deemed IRA Basics

• Effective Tax-Year

– Payroll Deduction: year that contributions are made

– Direct Contribution: able to apply to either prior or current year until April 15


Deemed IRA Basics

Deemed Roth IRA

Deemed IRA

Maximum contribution

$4,000 in 2007

$5,000 in 2008

$4,000 in 2007

$5,000 in 2008

Who can contribute

For Full Contribution

Single filer: <$95,000

Joint filer: <$150,000

Any wage earner under age 70½

Catch-up contributions

Age 50+

$1,000

Age 50+

$1,000

Contributions after age 70½ Yes No

Are rollovers permitted

Yes, between Roth IRAs

Yes, between Traditional IRAs & from other qualified

employer-sponsored plans


Deemed IRA Basics

Deemed Roth IRA

Deemed IRA

Tax Benefits Tax-free growth potential

Contributions may be tax deductible

Tax-deferred earnings growth Yes Yes

Earnings Taxed on withdrawals

No federal taxes as long as rules are met

Earnings are subject to federal income tax

Penalty-free withdrawals After age 59 ½ After age 59 ½

Required Minimum Distributions

No Yes, after age 70½



Opportunities for

Kentucky Employees


Opportunities for You

457

401k /

Roth 401k

Deemed

IRA

Annual Contribution $15,500

$15,500

(Combined)

$4,000

(Combined)

Age 50 Catch-up $5,000 $5,000 $1,000

3-year “special” 457 Catch-up $15,500 N/A N/A

Total Potential Contribution

$20,500 OR

$31,000 $20,500 $5,000



I’m contributing what I can through payroll deductions, but maybe I’ll have some extra at the end of the

year.

What can I do?



I’ve been contributing on a pre-tax basis and I like how that works, but tax-free withdrawals sound great!

What can I do?



Keep things simple.

One statement.

One website.

One phone number.



Keep things simple.

Consistent Investment OptionsConsistent Education

Plan Service Representatives are registered representatives of Nationwide Investment Services Corporation, member FINRA



I’m contributing to my KY 401k, and I have two IRAs that I’ve opened over

the years. I have a hard time keeping track of everything.

What are some options for me?


How KY Employees Benefit

Simplification

Multiple statements One quarterly statementMultiple websites www.kentuckydcp.comMultiple phone numbers 1-800-542-2667Different investment lineups Same as current PlanInconsistent resources Plan Services Reps

Qualified retirement plans, deferred compensation plans and individual retirement accounts are all different, including fees and when you can access funds. Assets rolled over from your account(s) may be subject to surrender charges, other fees and/or a 10% tax penalty if withdrawn before age 59 ½. Neither Nationwide nor any of its representatives give legal or tax advice. Please contact your legal or tax advisor for such advice.


http://www.kentuckydcp.com/


Headline Benefits

• Flexible payout options– Based on your income needs

• Beneficiary designation– You decide



Headline Benefits

• Asset fees– Breakpoints based on all the assets in

your accounts

• Investment options fees– Lower, institutional pricing



Variety

Simplicity

Consistency


2007 investment education expo simple. smart. for you. for life kentucky’s new deemed iras...

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