Welcome to 401(k) #101 The ABC’s of CSG’s 401(k) Plan

What Is a 401(k) Plan? Savings and investment plan Pre-tax income is deposited into the plan Tax-deferred earnings that are invested Designed primarily as a retirement plan

What Are the Advantages Of a 401(k)? Tax-deferred earnings Reduction in current gross income Automatic payroll deductions Portability No minimum investment required CSG matches employee contributions (CSG will match 100% on the first 3% of employee contributions, and 50% on the next 2% of employee contributions. Employee contributions over 5% will not be matched.)

Who Is Eligible to Participate? All Employees of CSG Must be over age 21 Employee Deferrals Must complete 6 months of of service and 500 hours Match Must complete 1 Year of Service (a year of service begins with the date of hire and is a 12 month period in which an employee works 1,000 hours)

Plan Management & Common Terms In July 1979 CSG established a tax-deferred retirement plan. This plan did not require employees to contribute, CSG contributed 3% of each employee’s earnings. Starting in 2007 an employee has the ability to direct their own investments through the available funds in the plan. Commonly Used Terms Elective Deferrals – Funds contributed by the employees Eligibility – who may participate in the plan Employer Matching – Funds contributed by the employer Plan Administrator – the person our employer identifies to manage the plan

Common Terms Plan Year – Follows CSG’s Fiscal Year Roll Over Contributions – Direct transfer of your retirement benefits from a prior employer’s qualified plan Safe Harbor Plan – a plan that promises to make a contribution to eligible participants in a designated percentage, or dollar amount; CSG’s plan is a Safe Harbor Plan Tax Deferred Earnings – Earnings on your retirement plan which are not subject to income tax until withdrawn Trustee – an outside financial organization that oversees the 401(k) plan

How Much Can You Save? Maximum contributions Vesting rules Annual dollar limit is set by law Annual limit is adjusted yearly ($15,500 for 2008)

When Should You Start Saving in a 401(k) Plan? AS SOON AS POSSIBLE!

What is Vesting? It means you have earned the right to all or part of the employer portion of your account. Once you are fully (100%) vested, that amount cannot be forfeited, or taken away from you. The vesting schedule is based on years of service. All contributions you make, plus any investment earnings on those contributions are always 100% vested. Safe Harbor Match is 100% Vested Immediately

What amounts will be contributed to my account? Your salary deferrals (what you contribute out of your own paycheck) Your safe harbor matching contributions Investment earnings/increases in the value of investments CSG’s contribution to your participant account based on the match formula

What will be subtracted from my Participant Account Any withdrawals or distributions you receive Investment losses Administrative fees

What Are the Advantages Of a 401(k) Versus an IRA? Maximum contribution Automatic Deposits Matching contributions Timing of tax savings Tax treatment at distribution

How much of my salary should I invest? Research suggests that you should save at least 10% of your salary each year towards retirement. You can consider the employer’s contribution towards that goal. For example, if you save 6%, the company will match you 4% which brings you to a 10% contribution. You should meet periodically with a financial planner to be sure you are on target to achieve your goals. Beverly Herr (717)

What If You Leave the Company Before Retirement Age? If you terminate employment, the portion of your account that is not 100% vested is forfeited. After termination, you may request to receive a distribution of the vested portion of your account

What if you die before retirement age? If you die, the full value of your account is payable to your Beneficiary in a lump sum It is important to designate a Beneficiary for your account. If you are married, your spouse must be listed as your Primary Beneficiary, unless he or she agrees that you should name someone else. In which case, your spouse’s consent is required on the form and their signature must be notarized.

Can You Borrow From CSG’s 401(k) Plan? Borrowing from our 401(k) account is not permitted in this plan Hardship withdrawals are permitted Application for a Hardship Withdrawal is accessible through our plan administrator – Allowable hardships: to purchase a principal home, to prevent eviction from your home, to pay college tuition for employee or their dependents, for medical expenses not covered by their insurance or funeral expenses

When Are Funds Normally Distributed? At Normal Retirement Age of 65 After Age 59 ½ If the Employee becomes totally and permanently disabled If the Employee dies If the Plan is terminated If the Employee leaves the company

Are There Any Disadvantages To a 401(k) Plan? Funds aren’t insured Benefits are based only on the vested value of the account Company can amend, merge, or discontinue the plan at any time People tend to spend their 401(k) money when they change jobs

What Else Should Employees Know About the 401(k) Plan? Maximum allowable annual contribution Percentage matched by the company Vesting rules-for old Profit Sharing portion Rules for transfer of funds Encourage employees to read the Summary Plan Description.

What Else Should CSG Employees Know About the 401(k) Plan? Earnings are credited to accounts on a daily basis. Statements are provided to each employee quarterly. Employees can access their accounts via the internet or telephone systems. Distribution rules

Ask & Answer How does the 401(k) plan work? What are the eligibility requirements? What is the difference between traditional savings plans and investment savings plans, like the 401(k) plan? What is CSG’s matching contribution program? What are the rules for distribution? What about early withdrawal? Employees should realize that they are responsible for the growth of their 401(k) account.

FAQs Can I say no if I don’t want to participate? Is there a way to “catch-up” for employee’s over 50? Will there be tax penalty upon withdrawal of the 401(k)? How do I know I won’t lose money in this 401(k) thing?