1. 1 Module 1.4 Leverage Resources for Retirement Core PFRP For Transition Module 1.4

2. 2 Module 1.4 Leverage Resources for Retirement Retirement Pensions Questions to ask a potential employer “When do company contributions start?” “When will my account be credited with 100% of company’s contributions as my own?” “Does your company do a graduated vesting?”

3. 3 Module 1.4 Leverage Resources for Retirement Retirement Pensions Defined-Benefit Plan Traditional company pension plan; ultimate retirement benefit is definite and determinable as a dollar amount Example is a military retirement pension ① Funded mostly by the employer ② Responsibility for payment of the benefit & risk on funds invested rests with the employer ③ Like separation pay & unemployment pay, it is considered a type of compensation ① Funded mostly by the employer ② Responsibility for payment of the benefit & risk on funds invested rests with the employer ③ Like separation pay & unemployment pay, it is considered a type of compensation

4. 4 Module 1.4 Leverage Resources for Retirement Retirement Pensions Defined-Contribution Plan A qualified retirement plan in which the contribution is defined yet the ultimate benefit to be paid is not ① Contributions are from the employee ② A portion may/may not be matched by employer ③ Each participant has an individual account ④ The benefit at retirement depends on amounts contributed + investment performance of account ⑤ Investment risk may rest solely with the employee due to opportunity to choose from a number of investment options ① Contributions are from the employee ② A portion may/may not be matched by employer ③ Each participant has an individual account ④ The benefit at retirement depends on amounts contributed + investment performance of account ⑤ Investment risk may rest solely with the employee due to opportunity to choose from a number of investment options Examples are 401(k) and 403(b) plans, Roth 401(k), Thrift Savings Plan (TSP), SIMPLE IRA, SEP, Employee Stock Ownership (ESOP), and profit sharing

5. 5 Module 1.4 Leverage Resources for Retirement Thrift Savings Plan (TSP) Options Leave funds in TSP account Roll your TSP into another eligible account i.e., IRA, annuity, civilian 401(k) Withdraw your TSP funds completely Some funds may include tax-exempt contributions! Contact ThriftLine (1-TSP-YOU-FRST) www.tsp.gov Contact ThriftLine (1-TSP-YOU-FRST) www.tsp.gov

6. 6 Module 1.4 Leverage Resources for Retirement Early TSP Withdrawal Example Member @ 42 withdrawals $10,000 balance from TSP A premature withdrawal penalty costs $1,000 Penalty Factor in a minimum 20% tax rate that will cost $2,000 Not waiting will cost a minimum of $3,000! Before 59 1/2 Taxes

7. 7 Module 1.4 Leverage Resources for Retirement New Tax Considerations No more automatic extension on the April 15 th tax filing deadline – Interest will be charged on unpaid amount You may have to start paying state taxes again if you weren’t (this includes spouses) No more tax exempt allowances No more exemptions from property taxes, sales taxes, etc…