Docstoc

403_b_ Annuity

Document Sample
403_b_ Annuity Powered By Docstoc
					AMERICAN FIDELITY
ASSURANCE COMPANY’S


       403(b)
         Annuity




                           Live Your
                      Retirement Dreams
Live Your Dreams
More than ever before Americans are living longer, healthier lives. Many
of us look forward to when we will be able to retire and enjoy life to its
fullest.
The most important key to a comfortable retirement is planning. Planning
                                                                             f
for your financial future can help ensure that you will be able to meet all of
your retirement needs. A 403(b) tax-deferred annuity is one way to a well-
planned retirement.
Save Money Now
You save money each paycheck starting immediately by enrolling in your
District’s 403(b) Plan.
Get Paid Later
When you receive your money at retirement you may be in a lower tax
bracket, allowing you to pay less in taxes on your monthly distribution.
                                                                            cial
Your funds are distributed back to you as a supplemental income to your Social Security and State Retirement
                                                                             ent
Plan. A 403(b) plan does not affect your monthly benefits from other retirement plans or Social Security.
Control Your Future
With a 403(b), you have options! You may stop contributions or change the amount of your deferral as allowed by your employer.
Begin Your Plan Easily
When you enroll in a 403(b) your contributions will be deducted before taxes from your paycheck. A simple form is all you need to complete
in order to participate.

WHAT IS A 403(B) PLAN?                                                     IS THERE A LIMIT TO THE AMOUNT I CAN PAY TO
The Internal Revenue Code section 403(b) allows you to defer
a portion of your taxable income for retirement purposes. It is            MY 403(b)?
specifically for the faculty and employees of universities, colleges,      Tax laws limit the maximum payment which can be excluded from
public school systems, and certain non-profit organizations.               your taxable income to $16,500. This amount may be more or
                                                                           less, depending on your past years of service with your employer,
An American Fidelity annuity may be selected to fund your 403(b)           amounts previously contributed, and other employer contributions
Plan. An annuity offers you many options upon retirement such as a         to retirement plans. If you are age 50 or older, you may contribute
guaranteed lifetime income. This is a special advantage of an annuity      an additional $5,500. You may begin taking advantage of this
when compared to other methods of saving. The funds accumulated            increased limit in the tax year you attain age 50. Your American
in the Plan can be used at retirement to provide monthly annuity           Fidelity representative can assist you in calculating your maximum
payments, which you cannot outlive.                                        contribution amount.

WHAT IS THE TAX BENEFIT TO ME?                                             WHEN CAN THE MONEY BE WITHDRAWN?
Contributions to the Plan are deferred for federal and, in most            This money is intended to be used at retirement, however it may be
cases, state income tax purposes. As a member of the educational           withdrawn under the following conditions:
community, you have a great opportunity to save money with                    ■ Attainment of age 59½
before tax dollars since “after tax” plans do not offer the same tax
                                                                              ■ Your Death or Disability
advantage.
                                                                              ■ Separation from Service
HOW DOES THE TAX BENEFIT WORK?                                                ■ Severe Financial Hardship
Under a salary reduction agreement with your employer, your pay            Withdrawals due to hardship, if allowed under the Plan rules,
will be reduced by the amount you elect for your 403(b) account.           will be limited to your contributions only. Unpaid medical or
Your salary is reduced by the amount you volunteer to pay into the         education expenses, purchase of a home or amount needed to
program; you pay federal income tax only on the remaining portion!         prevent foreclosure or eviction of principle residence, death of an
                                                                           immediate family member, and qualified tax deductible repairs to
                                                                           the participant’s primary residence may qualify you for a hardship
                                                                           withdrawal. Because of the lost tax advantages and the penalty tax,
                                                                           you would want to avoid withdrawals if at all possible.
                                                                           If you do withdraw money before age 59½, a 10% tax penalty will
                                                                           be incurred in most situations.
CAN I BORROW ON MY ACCOUNT?                                                                      WHAT ARE MY OPTIONS AT RETIREMENT?
If the Plan allows for loans and depending on the 403(b) vehicle you                               ■ Option A – Lump Sum
choose, there may be a loan provision available. Many of American                                    Receive your money in a lump sum. You will probably realize
Fidelity’s annuity products do offer loan opportunities.                                             a greater tax advantage, though, if you elect a periodic payment
                                                                                                     option.
WHAT HAPPENS TO MY MONEY AFTER I ENROLL?                                                           ■ Option B – Life Only
Your money is contributed into an annuity that you choose. 403(b)                                    Receive monthly payments for life. You cannot outlive these
plans offer a variety of choices including fixed and variable                                        payments. They terminate only at your death no matter how long
annuities. You choose the annuity that’s best for you!                                               you live.
                                                                                                   ■ Option C – Life with 10 Years Certain
HOW DO I CHOOSE THE RIGHT OPTION FOR MY                                                              Receive a life annuity to you or your named beneficiary with
MONEY?                                                                                               120 months certain. This option provides you with monthly
                                                                                                     payments for as long as you live. If, at your death, payments
Your American Fidelity Representative can explain the options
                                                                                                     have been made for fewer than 120 months, you have the
available for you. Each person’s plan varies depending on his or her
                                                                                                     assurance that payments will be continued to your beneficiary
age, personal and family needs, and risk tolerance.
                                                                                                     for the remainder of the 120 months.
                                                                                                   ■ Option D – Period Certain
                                                                                                     Receive payments for a Period Certain (an agreed upon amount
                                                                                                     of time). Other options may be available. American Fidelity, for
                                                                                                     example, will work with you to set up the payment plan that best
                                                                                                     meets your retirement needs.


Cost of Waiting
Consider the cost of waiting to activate your savings plan. This illustration describes just how much it can cost you. In scenario one, you              4



invest $2,000 at the beginning of each year for twelve (12) years. In scenario two, the same investment program is started twelve years later,
but continues for 31 years.
Note the difference in the total value of the investment at age 65. In scenario one, the investment is $38,000 less than the investment in
scenario two. Yet, the total value of the investment is $3,091 more than the value in scenario two.


                                                                                    THE BENEFIT OF
                                                                                     SAVING EARLY
                                            Contribute
                                             12 Years
                            Star
                                ting
                                     at   Age
                                              22                                 VALUE
                                                                                $151,688

                                                                  Contribute
                                                                   31 Years
                                                                                 VALUE
                                                   Sta
                                                      rtin
                                                          g at
                                                                                $148,597
                                                                 Age
                                                                     34                                                          Age 65

                                                                                                Age 65

              AGE 22                                                                  AGE 34
                  ■   $2,000 per year for 12 years to age 34                              ■   $2,000 per year for 31 years to age 65
                  ■   $24,000 total invested                                              ■   $62,000 total invested
                  ■   5% assumed annual rate of return                                    ■   5% assumed annual rate of return
                  ■   At age 65, investment grows to $151,688                             ■   At age 65, investment grows to $148,597
                      or wait and start at age 34...
     4
         This is a hypothetical example that does not represent the performance of any investment product. The rates of return will vary depending on the investment options selected.
         Growth, if any, is tax-deferred until withdrawn.
                      The Company Behind Your Plan
                American Fidelity Assurance Company is a third-generation, family-owned organization providing
                insurance products and financial services to education employees, trade association members and
                companies throughout the United States and across the globe.
                Since 1982, American Fidelity has been rated “A+” (Superior)1 by A.M. Best Company. Considered
                one of the nation’s leading insurance company rating services, A.M. Best bases its ratings on an
                analysis of the financial condition and operating performance of insurance companies in such vital
                areas as: Competency of Underwriting, Control of Expenses, Adequacy of Reserves, Soundness of
                Investments and Capital Sufficiency.
                Because of American Fidelity’s fiscal strength and financial security, the company has been rated
                “A” (Excellent)2 with TheStreet.com, Inc (formerly Weiss Ratings, Inc.). This places American
                Fidelity on the list of TheStreet.com’s Recommended Companies, an elite group of life, health and
                annuity companies. American Fidelity’s rating represents the top 2.8 percent of insurance companies.
                The 2008 Standard and Poor’s Insurance Rating Report has given American Fidelity an “Api”3
                rating. The qualified solvency ratings assigned by S&P are based on the analysis of quantitative data
                such as Capital Strength, Quality of Assets, Profitability and Liquidity.
                American Fidelity Assurance Company is proud to count itself among Fortune4 magazine’s “100
                Best Companies to Work For” in America for the sixth straight year. We know that satisfied
                employees result in satisfied customers, which is an important foundation of American Fidelity’s
                approach to business.
                American Fidelity is founded on and driven by the principle of serving our customers. We continue
                to grow steadily through calculated growth and conservative investment practices.
                  1
                       www.ambest.com, February 21, 2008 (A+ is the 2nd out of 16 with 1 being the highest.)
                  2
                      TheStreet.com Ratings’ Guide to Life, Health and Annuity Insurers, Winter 2008 - 09 (A is the 2nd out of 16 with 1 being
                      the highest.)
                  3
                      www.standardandpoors.com February, 2009 (Api is 9th out of 24 with 1 being the highest.)
                  4
                      Fortune Magazine, February 2, 2009 Issue




                                                                 2000 N. Classen Blvd,
                                                            Oklahoma City, Oklahoma 73106
                                                                    (800)662-1106
                                                                                                                               Visit us online at:



SB-13065-0809                                                                                                                                        FPDA Series

				
DOCUMENT INFO