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Elevator Constructors Union Local No. 1 Annuity and 401 (k) Plan Retirement Seminar

Elevator Constructors Union Local No. 1 Annuity and 401 (k) Plan Retirement Seminar October 29, 2009. Elevator Constructors Union Local No. 1 Annuity and 401 (k) Plan Retirement Seminar. Presenters National Elevator Industry Pension Plan Rob Betts, Executive Director

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Elevator Constructors Union Local No. 1 Annuity and 401 (k) Plan Retirement Seminar

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  1. Elevator Constructors Union Local No. 1 Annuity and 401 (k) Plan Retirement Seminar October 29, 2009

  2. Elevator Constructors Union Local No. 1Annuity and 401 (k) Plan Retirement Seminar Presenters National Elevator Industry Pension Plan Rob Betts, Executive Director Jim Govannicci, Benefit Manager Pension Plan ECU Local No. 1 Annuity and 401(k) Plan Rita Wisniewski, Fund Manager Caroline Gordon, Assistant Administrator Lucille Hart, Administrator Vanguard (ECU Local No. 1 401(k) Plan) Colleen McGinley Maureen Rayburn

  3. WHEN CAN I RETIRE AND HOW MUCH MONEY DO I NEED? To answer this question, consider the following: • Age • Marital Status • Financial Obligations • Expected Retirement Income Can I afford toretire?

  4. AGE • What is your life expectancy? • Will you have enough money for all the years you are expected to live? • At what age can you get your pension? • Are there penalties for taking your pension early? Example of life expectancy: Male age 63 is expected to live to age 82 Female age 63 is expected to live 85½

  5. MARITAL STATUS • Are you married? • Do you want to provide a survivor benefit for your spouse? • Do you have children? • How old are they? • How will you provide for their future?

  6. FINANCIAL OBLIGATIONS • Mortgage • Tuition • Car Payments • Medical Expenses • Experts say you will need 80% of your pre-retirement income after retirement. • For example, if you earned $100,000 a year before retirement, you would need $80,000 a year after retirement to maintain your life style.

  7. EXPECTED RETIREMENT INCOME Retirement Bench Social Security Personal Savings Pension Plans Savings Accounts NEI Pension Plan Social Security Real Estate Investments Local 1 Annuity & 401(k) Plan Retirement Benefits IRA’s

  8. RETIREMENT INCOME FROM PERSONAL SAVINGS • Savings Accounts • CD’s • Investments • IRA’s • Equity in your Home

  9. RETIREMENT INCOME FROM SOCIAL SECURITY • Based on earnings throughout your working career • Average Social Security Monthly Benefit $945 • Age for full Social Security Benefits increases from 65 – 67 For example: If you were born 1937 or earlier Full Social Security at 65 1943 – 1954 Full Social Security at 66 1960 or later Full Social Security at 67

  10. RETIREMENT INCOME FROM PENSION PLANS National Elevator Industry Pension Plan ECU Local No. 1 Annuity Plan ECU Local No. 1 401(k) Plan

  11. PENSION PLANS • NEI Pension Plan – Defined Benefit Plan • Pension formula is stated in Plan rules • Participant must meet age and service requirements • Example formula: • Years of Service x $ Amount = Monthly Pension • 25 (years) x $ 98 = $ 2,450 • 30 (years) x $ 98 = $ 2,940

  12. PENSION PLANS ECU Local No. 1 Annuity Plan – Defined Contribution Plan Contribution is defined in collective bargaining agreement For example, current Annuity contribution rates for Journeypersons are: For construction work - $7.25 per hour For service work - $7.10 per hour Total of all Contributions - Loan Balance - Withdrawals +/- Investment Income - Operating Expenses-------------------------------------- = Annuity Account Balance

  13. PENSION PLANS • ECU Local No. 1 401(k) Plan – Defined Contribution Plan • Voluntary Plan • Pre-tax Employee Contribution • % of Wages or Flat Dollar Amount up to Annual Statutory Limit • 2009 Annual Limit $16,500 + $5,500 Catch-up • 2010 Annual Limit $16,500 + $5,500 Catch-up

  14. Annuity 401(k) Assets (as of 12/31/08) $376,009,118 $45,828,179 Administration Board of Trustees Board of Trustees Investments Trustee Directed Participant Directed Participation Automatic Voluntary Vesting Immediate 100% Immediate 100% Contributions Specified Amount per hour per CBA % of wages or flat $, up to annual limit Account Statements Quarterly and Annual Quarterly Loans Yes No Special Financial Needs Withdrawals Yes No Account Distribution Requirements are the same for both. Payment Methods Beneficiaries Same for both Tax Consequences Same for both LOCAL NO. 1 ANNUITY AND 401(k) PLAN Differ between Annuity and 401(k)

  15. LOCAL NO. 1 ANNUITY AND 401(k) PLAN Account Distribution - Requirements • Age 65 • Leave the Industry (no contributions for 6 months) • Retire from the NEI Pension Plan • Total and Permanent Disability (SSA Award) • Age 70½ Minimum Distributions

  16. LOCAL NO. 1 ANNUITY AND 401(k) PLANPayment Methods • Lump Sum Payment - Rollover over or direct payment to Participant – Available for both Annuity Account and 401(k) • 10 Annual Installments – methods are different under each plan • Qualified Joint and Survivor Annuity (monthly benefit to Participant with survivor benefit to spouse) – Available for Annuity Account only • Straight Life Annuity (monthly with no survivor benefit) – Annuity only • Investment Yield Only – Applies to Annuity Account only • Partial Lump Sum Payment with 10 annual installments

  17. LOCAL NO. 1 ANNUITY AND 401(k) PLAN • Who will get your Annuity and 401(k) Contributions if you die? • Before you Retire: • If married, Spouse, unless you designated another person and your spouse consents • If not married, you may name anyone as Beneficiary • Designated Beneficiary under NEI Pension Plan • Your estate • After You Retire: • Spouse, if you are receiving a QJSA • No one, if you received a Lump Sum or Straight Life Annuity • Designated Beneficiary for all other payment methods (If married, spouse must consent) Special Note: Qualified Domestic Relations Orders (QDRO’s)

  18. Distribution RulesAnnuity Account Only • Application postmarked or hand delivered to Fund Office by April 1 – Participant receives: • Account Balance as of 12/31 of prior year • Plus contributions between January 1 and distribution • Less Loan Balance ********************** • 100% of Account Balance if Prior Year’s Yield and Operating Expense has been calculated or • 80% Initial Payment & remaining 20% when Prior Year’s Yield and Operating Expense is determined (by end of March)

  19. Example #1 • Jim has Annuity Account of $200,000 as of 12/31/08 • Jim’s application is postmarked before April 1, 2009 • If the prior year’s Yield and Operating Expense have been calculated by the time Jim files his Application, Jim will receive one payment = 100% of his 12/31/08 plus/minus the 2008 Yield and Operating Expense. ******************************* • If the prior year’s Yield and Expense have not been calculated by the time Jim files his Application, Jim will receive two payments: • First Payment = 80% of his 12/31/08 Account Balance ($160,000) • Second Payment = 20% withheld from Account, plus/minus the Prior year’s Yield and Expense

  20. Distribution Rules Annuity Account Only • Application postmarked or hand delivered to Fund Office after April 1 – Participant receives: • Account Balance as of 12/31 of prior year • Plus contributions between January 1 and distribution date • Less Loan Balance • Plus/Minus Pro rata of current year’s Yield and Operating Expense (based on number of days full Account remained in Fund divided by 365) *************************** • Initial Payment = 80% of Account Balance as of 12/31 (paid in year distribution is requested) • Supplemental Payment = 20% withheld from Account, plus/minus pro rata share of current year Yield and Operating Expense (paid in following year)

  21. Example #2 • Sam has an Annuity Account of $400,000 as of May 1, 2009 • Sam’s application is received at the Fund Office on May 15, 2009 • Assume the Yield for 2009 is 5% and the Expense is $580 ******************** • Sam will receive his Annuity Account in two payments as follows: • Payment # 1 = 80% of Sam’s Account ($320,000) will be paid June 15, 2009 • Payment #2 = The remaining 20% ($80,000), plus a pro rata share of the Yield ($9,095.88), minus a pro rata share of the Operating Expense ($263.78) will be paid in March of 2010. The supplemental check would total $88,832.10

  22. LOCAL NO. 1 ANNUITY AND 401(k) PLAN • Tax Consequences • Federal, state and local taxes due when Pension is paid to you • Rollovers (to a traditional IRA or other qualified plan) – no taxes withheld or due in current year. You can roll over a Lump Sum or Partial Lump Sum • Payments eligible for Rollover that are paid directly to participant – Mandatory 20% withheld as federal income tax • Payments not eligible for Rollover (e.g., 10 annual installments, monthly annuity) – Mandatory 10% withheld unless you elect other amount

  23. LOCAL NO. 1 ANNUITY AND 401(k) PLAN • Tax Consequences (Continued) • 10% penalty for withdrawal prior to 59½ unless rolled over (exceptions include separation from service during or after age 55 and retirement due to disability) • Special tax treatment for individuals born before 1/1/36 (10 year average or capital gain – see accountant) • Spouse has same options as Employee.

  24. SAMPLE BENEFIT CALCULATION #1 Lump Sum Payment – Rollover or direct payment • Entire account is paid in a lump sum • Can be rolled over to another qualified plan or IRA • Not taxed when rolled over • Taxed as ordinary income as you take money out of the roll over • If not rolled over, mandatory 20% tax withholding Example of Benefit Calculation Lump Sum Member Works 25 years Annuity Account Balance $235,000 Member Age: 63 Spouse Age: 51 • Lump Sum – Participant receives entire account balance $235,000 Earnings % Annual Earnings Monthly Earnings $235,000 @ 4% = $ 9,400 $ 783.33 $235,000 @ 6% = $ 14,100 $ 1,175 $235,000 @ 8% = $ 18,800 $ 1,567 $235,000 @ 10% = $ 23,500 $ 1,958 Lump Sum (earning 6%) $ 1,175 + NEI Pension Benefit (with 50% J&S) $ 2,075 + Social Security $ 1,000 $ 4,250 taxable monthly retirement income + Local No. 1 401(k) Plan + Personal Savings

  25. SAMPLE BENEFIT CALCULATION #2 Qualified Joint and Survivor Annuity (monthly with survivor benefit) • Account balance used to purchase monthly annuity from an insurance company • 50% J&S • Reduced monthly payment to pensioner with 50% continuing to spouse • If spouse dies, pensioner continues to get reduced monthly amount • Cannot be rolled over • Taxed as ordinary income as you receive the benefit • Automatic for married participant • Participant can elect another payment method, with written spousal consent Example of Benefit Calculation Qualified Joint and Survivor Annuity Member Works 25 years Annuity Account Balance $235,000 Member Age: 63 Spouse Age: 51 QJSA (50% J&S) $ 1,230 per month* + NEI Pension Benefit (with 50% J&S) $ 2,075 + Social Security (reduced @ age 63) $ 1,000 $ 4,305 taxable monthly retirement income + Local No. 1 401(k) Plan + Personal Savings * If pensioner dies before spouse, spouse receives $615 per month for life.

  26. SAMPLE BENEFIT CALCULATION #3 Ten Annual Installments • Annual payments = 1/10th of original account balance = +/- investment income and expenses • Two payments each year: 1/10th in January and net investment income in April • Taxed as ordinary income as you receive the benefit • Cannot be rolled over Example of Benefit Calculation Ten Annual Installments Member Works 25 years Annuity Account Balance $235,000 Member Age: 63 Spouse Age: 51 • Ten Annual Installments First Year $ 23,500 ($1,958 per month) Second Year $ 23,500 +/- Earnings and Expenses Third Year $ 23,500 +/- Earnings and Expenses Etc. • Ten Annual Installments (Approx.) $ 1,958 Per Month (ends in 10 years) + NEI Pension Benefit (with 50% J&S) $ 2,075 + Social Security $ 1,000 $ 5,033 Taxable monthly retirement income 1st 10 years) $ 3,075 Monthly after 10 years + Local No. 1 401(k) Plan + Personal Savings

  27. Highlights of Recent Plan Changes • 401(k) Investment Manager changed to Vanguard – July 1, 2008 • Participants no longer have to take Annuity and 401(k) accounts at the same time • Participants can make direct rollovers of Annuity and 401(k) accounts to Roth IRA’s • Non-spouse beneficiaries can make direct rollovers to IRA’s • Annuity, J&S and Investment Yield Only eliminated as payment methods under the 401(k) plan • 75% J&S added as payment method for Annuity accounts • Investment Consultant changed to The Dobbs Group at Graystone Consulting • Our webpage is getting a facelift

  28. LOCAL NO. 1 ANNUITY AND 401(k) PLAN Write or Call the Fund Office at ECU LOCAL NO. 1 ANNUITY AND 401(k) PLAN 2185 Lemoine Avenue, Fort Lee, NJ 07024 (201) 592-6800 (212) 564-4800 or Visit our Web Site at: www.benserconj.com and click on the Local 1 logo • If you have questions • To change your address or marital status • To request a Beneficiary Designation form • To apply for your Annuity and 401(k) withdrawals

  29. ELEVATOR CONSTRUCTORS UNION LOCAL No. 1 ANNUITY AND 401(k) PLAN 2185 LEMOINE AVENUE, FORT LEE, NJ 07024 (201) 592-6800 (212) 564-4800 Union TrusteesEmployer Trustees Leonard Legotte E. James Walker, Jr. (Emany) Michael Riegger Michael Shields (Schindler) Robert Stork Vincent Schiavone (Kone)

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