Understanding your PERSI Base Plan Decisions you make now, will impact your retirement later.

http://www.persi.Idaho.gov

Topics: New Employees: Understanding PERSI and Your Other Retirement Saving Options The Ins and Outs of PERSI Contributions for Retirement PERSI When You’re Winding Down: Planning for a Successful Retirement

Understanding PERSI and Other Retirement Options As a new employee with the school district, you need to be aware of your retirement plan and additional options for retirement saving. These options include: PERSI Base Plan (required contributions taken from paycheck) PERSI Choice 401(k) (elective contributions, tax-deferred) Other retirement account options (IRA, Roth IRA, etc.) Go over the difference between a “defined benefit” plan and a “defined contribution” plan. Explain how PERSI is kind of a mix of the two. Explain other qualified retirement savings vehicles along with contribution limits. Expand on the difference between Roth IRAs and traditional IRAs.

Understanding My PERSI Public Employee Retirement System of Idaho Qualifications for a PERSI Base Plan: Public Employee Work 20 hours or more per week

Contributions invested and grow over time Understanding My PERSI The PERSI Base Plan is a retirement plan acting like a pension for public employees once they retire. This is the state’s way of ensuring some retirement security for its employees. This is a defined benefit plan. Retirement payments for life Your Contributions Contributions invested and grow over time 65+ Employer Contributions

Understanding My PERSI As a public employee you contribute 6.79% of your annual income to your PERSI Basic Plan and your employer contributes 11.32% 6.79% 11.32% You won’t get to choose your investment options – this is not a 403(b) or IRA plan, although it is a tax-deferred, qualified account similar to a 403(b) or IRA Talk about how pension plans are managed, what kind of assets are invested in. Historical rates of return, and how managers ensure that future obligations can be met with current deposits + growth.

Understanding My PERSI Retirement Ages for Electing to Receive Your PERSI Benefit: You must be 65 years old Or, you meet the minimum age requirement (55 yrs. old) AND you have at least 60 months of credited service AND you meet the “Rule of 90” RULE OF 90: your age + years of service = 90 or more Talk about how pension plans are managed, what kind of assets are invested in. Historical rates of return, and how managers ensure that future obligations can be met with current deposits + growth.

Understanding My PERSI You make back every dollar you put into your PERSI Base Plan within approximately your first 3 ½ years of your retirement payments…and then you continue to receive payments for the remainder of your life. In addition you will receive “cost of living adjustments” as long as you live and take your monthly PERSI benefit. It would be extremely difficult to find another investment to provide a guaranteed, long-term source of retirement income. PERSI guaranteed by federal and state law. Not like Social Security, PERSI future benefits are funded through earnings now and is solvent. Not a pay as you go system. Managed by professionals to ensure you get the benefit you’re entitled to in retirement.

Calculating your benefits Average Monthly Salary x multiplier x Months of Credited Service $3000 x 2% x 360 months = $21,600 PERSI guaranteed by federal and state law. Not like Social Security, PERSI future benefits are funded through earnings now and is solvent. Not a pay as you go system. Managed by professionals to ensure you get the benefit you’re entitled to in retirement.

Contributions invested and grow over time Retirement payments for life Your Contributions Contributions invested and grow over time 65+ Employer Contributions Typically make back everything you contributed in first 3 ½ years 65….70....75....80....85....90....95....100

Retirement Distribution Options Regular Retirment - Full Payments based on your life alone. You’ll receive your pension benefits for your entire life. Option 1- You’ll receive a reduced benefit, your contingent annuitant will receive 100% of that same reduced benefit for the entirety of their life as well. Option 2 – You’ll receive a reduced benefit, your contingent annuitant will receive 50% of that same reduced benefit for the entirety of their life. Lump Sum – Take your contributions and earned interest PERSI guaranteed by federal and state law. Not like Social Security, PERSI future benefits are funded through earnings now and is solvent. Not a pay as you go system. Managed by professionals to ensure you get the benefit you’re entitled to in retirement.

Retirement Outside of Your Defined Benefit Plan As you can see, a large portion of a retiree’s income comes from Social Security. This forces a lot of people into working jobs they wouldn’t otherwise work. Talk about the importance of building up the other savings buckets which will provide income so that one isn’t solely dependent upon SS

Retirement Outside of Your Defined Benefit Plan As a rule of thumb, you shouldn’t rely solely on one source of income for retirement. While you also will be eligible for Social Security, it may be beneficial to contribute to other qualified plans, including: PERSI CHOICE 401(k) IRA (Roth or Traditional) 403(b) plan PERSI guaranteed by federal and state law. Not like Social Security, PERSI future benefits are funded through earnings now and is solvent. Not a pay as you go system. Managed by professionals to ensure you get the benefit you’re entitled to in retirement.

What You Should Know for Retirement PERSI Base Plan Choice 401(k) Social Security IRA / Roth IRA Talk about establishing different income streams in retirement, the importance of diversification. PERSI may allow someone to be a little more aggressive in their investment choices in their other retirement accounts, since their PERSI defined benefit plan is a guaranteed stream of income that will last their lifetime. My Retirement Income

Retirement Outside of Your Defined Benefit Plan General Rules of Retirement Accounts: The PERSI Choice 401(k) Plan is a defined contribution plan. This means you can contribute up to $18,500 annually ($24,500 if 50+ years old), and use the money after age 59 ½. A Traditional IRA (or just IRA), is a type of qualified plan that is funded with pre-tax money and grows tax-deferred ($5,500 maximum per year, or $6,500 if 50+ years old). Once 59 ½ or older, you can make withdrawals but are taxed on the withdrawals at ordinary income rates. PERSI guaranteed by federal and state law. Not like Social Security, PERSI future benefits are funded through earnings now and is solvent. Not a pay as you go system. Managed by professionals to ensure you get the benefit you’re entitled to in retirement.

Retirement Outside of Your Defined Benefit Plan Roth IRA Account Funded with your money that has already been taxed, but grows tax-deferred and is withdrawn tax-free once you are at least 59 ½. PERSI guaranteed by federal and state law. Not like Social Security, PERSI future benefits are funded through earnings now and is solvent. Not a pay as you go system. Managed by professionals to ensure you get the benefit you’re entitled to in retirement.

Regular Investment Account IRA Account Regular Investment Account $5,500 a year x 25 years Received 7% return each year After 25 years he has $347,870 $5,500 a year x 25 years Received 7% return each year After 25 years he has $271,730 The IRA account has $76,140 more than the taxable account. This is because a taxable return rate of 7% shrinks to 5.25% after taxes, based on a federal tax rate of 25%.

The Potential Benefits of Tax-Deferral Retirement Accounts: Show how tax deferral adds up over time. Although 401k choice plan contributions aren’t matched by your employer, the power of tax deferral and compounding still might make it worth your while to contribute to your 401k plan. This hypothetical illustration doesn't represent any particular investment nor does it account for inflation. There may be other material differences between investment products that must be considered prior to investing.

Thank you for listening! Ben Holzhauser and Jeremy Morris Investment Advisor Representatives Centaurus Financial Inc. Phone: (208)402-8552 Email: ben@fivepinewealth.com Website: www.fivepinewealth.com Securities and advisory services offered through Centaurus Financial Inc., member FINRA/SIPC, a registered investment advisor. Five Pine Wealth Management and Centaurus Financial Inc are not affiliated.