Why Take Advantage of Your Company’s Retirement Plan Eric Harding Senior Vice President -...

Why Take Advantage of Your Company’s Retirement Plan

Eric Harding

Senior Vice President - Investments

[Date]

Seek the advice of tax and legal advisorsThis presentation is designed to provide accurate and authoritative information regarding the subject matter covered. You should understand that Wells Fargo Advisors is not engaged in rendering legal, accounting or tax-preparation services. If tax or legal advice is required, you should seek the services of an appropriate, competent professional.

Wells Fargo Advisors’ view is that investment decisions should be based on investment merit, not solely on tax considerations. However, the effects of taxes are a critical factor in achieving a desired after-tax return on your investment. The information provided is based on internal and external sources that are considered reliable; however, the accuracy of the information is not guaranteed. You should direct specific questions on taxes as they relate to your situation to your tax advisor.

Important information

Please note: No financial professional providing services with respect to the retirement plan mentioned in this seminar may provide “investment advice” or otherwise act as an ERISA fiduciary with respect to plan sponsors or plan participants. This includes advising any plan sponsor about appropriate investment products to be made available in the plan or advising plan participants about individual investments or asset allocation among the investments. They may provide approved general investment education materials and objective factual information, such as performance data, to help plan sponsors and participants make their own independent investment decisions. The services provided and any information provided by employees or representatives of Wells Fargo Advisors and its affiliates are intended to constitute investment education under U.S. Department of Labor guidance and do not constitute “investment advice” under the Employee Retirement Income Security Act of 1974 or regulations thereunder.

Retirement income sources

Earned income Social Security Personal investments Retirement plans

Retirement income sourcesPerc

enta

ge o

f all

work

ers

*Includes cash balance plans.

Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2009 Retirement Confidence Study.

40

1(k

) or

sim

ilar

pla

n

Soci

al

Secu

rity

Tra

dit

ional

pensi

on

pla

n*

Em

plo

ym

ent

Pers

onal

savin

gs

or

invest

ments

IR A

Expected major retirement income sources

Income source

Taking control of your future retirement needs

Customize according to personal needs

Use the sources available to control your destiny

– Personal investment savings

– Retirement plans

Retirement barometers Select your income need. Determine how close you are to meeting your retirement goals.

This chart reflects the approximate capital needed to support an income stream for 25 years, assuming withdrawals are made at the beginning of the year and a 3% increase per year for inflation. This example is for illustrative purposes only and does not reflect the return on any particular investment.

30,000

10,000

20,000

40,000

50,000

60,000

70,000

80,000

90,000

$2,231,723 $1,809,606 $1,499,625

2,008,550 1,628,645 1,349,663

1,785,378 1,447,685 1,199,700

1,562,206 1,266,724 1,049,738

1,339,034 1,085,764 899,775

1,115,861 904,803 749,813

892,689 723,842 599,850

669,517 542,882 449,888

446,345 361,921 299,925

223,172 180,961 149,963

6% 8%4%

Capital needed at retirement

Rate of return on investmentsInvestmentincome goal

$100,000

How $100 can shrink

Source: Consumer Price Index

$100Today

$85Five

yearsfromnow

$7310 years

fromnow $54

20 yearsfromnow

If prices rise 3% annually

How much should you save?

Your current age

25-35 35-47 47-65

35% to 75%

15% to 35%

35% to 75%

15% to 35%10% to 15%

401(k) plan

Offers a pretax opportunity to save for retirement Lets you determine how contributions are invested Provides an opportunity for savings to grow tax-deferred*

Wells Fargo Advisors is not a tax or legal advisor.*Withdrawals are subject to ordinary income tax and may be subject to a federal 10%

penalty if taken prior to age 59½.

Tax-advantaged saving

$ Taxable

investment

Tax-deferred

investment

Lower tax rates on capital gains and dividends may result in more favorable returns on taxable investments, thereby reducing the difference in performance between the accounts shown. You should consider your personal investment horizon and income tax brackets, both current and anticipated, when making an investment decision, as these may further affect the results of this comparison.

$727,430 after taxes with lump-sum withdrawal at 35% tax rate

Years

How does it work?

You decide how much to contribute. You choose how your contribution is invested. Your contributions are deducted from each paycheck.

Potential tax benefits

After-taxsaving

Before-tax saving

Annual income $40,000 $40,000

Investing 6% of pay before withholding 0 2,400

Taxable pay 40,000 37,600

Federal income taxes, single filer* 10,000 9,400

Investing 6% of pay after withholding 2,400 0

Take-home pay 27,600 28,200

* The result depends on your tax bracket and how much you save in the 401(k) plan. In this example, the federal income taxes shown reflect 25% for an investor making $40,000 in 2009. Exemptions, itemized deductions, Social Security, and state taxes are not reflected. Distributions are subject to income taxes and, if taken before age 59½, a 10% IRS early withdrawal penalty may apply.

Potential benefits of participation

This example is for illustrative purposes only and does not represent the returns from a particular investment. It assumes a $50-per-week contribution and an 8% annual return, compounded weekly. Of course, your actual results may differ and regular investing does not ensure a profit or protect against a loss in a declining market. Distributions are subject to ordinary income taxes and, if taken before age 59½, a 10% IRS early-withdrawal penalty.

$

8% rate of return on a $50 weekly investment

This chart assumes a $2,100 annual employee contribution. Investments earn 8% per year. The rate shown is for illustrative purposes only and does not reflect the rate available on any particular investment. This illustration does not reflect taxes due on withdrawals.

$390,815

$165,804

Waiting 10 years to start investing

Investing every year

Years

$

The cost of waiting

Company contributions

[Description of company contributions]

While every effort has been made to ensure the above plan information is accurate, the information provided herein is subject to the official plan document, which controls in the event of any discrepancies. Of course, [Company Name] reserves the right to change any and all plan provisions.

Roth 401(k) feature

Contributions are deferred from salary

Similar to traditional 401(k), except:

– After-tax contributions

– Potentially tax-free withdrawals

Comparable to a Roth IRA, except:

– No income restrictions

– Higher contribution limits

– Mandatory distributions at age 70½

Three investment categories

Stocks

Bonds

Cash/cash equivalents

Investing your retirement assets

12

/ 86

09

/ 87

06

/ 88

03

/ 89

12

/ 90

09

/ 90

06

/ 91

03

/ 96

12

/ 96

09

/ 97

06

/ 98

03

/ 99

12

/ 99

09

/ 00

03

/ 01

03

/ 02

12

/ 02

09

/ 03

06

/ 04

03

/ 05

12

/ 05

09

/ 06

06

/ 07

03

/ 08

06

/ 08

$

Years invested

Stock A Stock B

Investm

en

t valu

e

The 1% difference

This chart assumes a 30-year-old investor makes a $2,100 contribution at the beginning of each year for 20 years, earning the various annual rates shown. The chart is for illustrative purposes only and does not reflect eventual taxation on withdrawals or the performance of any specific investment.

$

Investment choices

Past performance is no guarantee of future results. Assumes reinvestment of income and no transaction costs or taxes. Graph is not indicative of any investment. You cannot invest directly in an index. See next slide for additional important information.

Inflation (CPI)

Long-term government

bonds

Common stocks

Long-term corporate

bonds

Treasury bills

8

4

0

Average returns, 1926-2008

12%

Large company stocks: Represented by the Standard & Poor’s 500 Stock Composite Index (S&P 500), 1957-present, and the S&P 90, 1926-1956.

Long-term corporate bonds: Represented by the Citigroup long-term, high-grade corporate bond total return index.

Long-term government bonds: Measured using a one-bond portfolio with a maturity near 20 years.

U.S. treasury bills: Measured by rolling over each month a one-bill portfolio containing, at the beginning of each month, the bill having the shortest maturity not less than one month.

All rights reserved. Inflation is measured by the Consumer Price Index for all urban consumers, not seasonally adjusted. Stocks offer long-term growth potential but may fluctuate more and provide less current income than other investments. An investment in the stock market should be made with an understanding of the risks associated with common stocks, including market fluctuations.

While stocks generally have a greater potential return than government bonds and treasury bills, they involve a higher degree of risk. Government bonds and treasury bills, unlike stocks, are guaranteed as to payment of principal and interest by the U.S. government if held to maturity. There is no guarantee as to the market value of these securities if they are sold prior to maturity or redemption. Although treasuries are considered free from credit risk, they are subject to other types of risks. These risks include interest rate risk, which may cause the underlying value of the bond to fluctuate, and deflation risk, which may cause the principal to decline and the securities to underperform traditional treasury securities.

Investing in fixed-income securities involves certain risks, such as market risk, if sold prior to maturity and credit risk, especially if investing in high-yield bonds, which have lower ratings and are subject to greater volatility. All fixed-income investments may be worth less than their original cost upon redemption or maturity. Bond prices fluctuate inversely to changes in interest rates. Therefore, a general rise in interest rates can result in the decline of your investment’s value.

Chart is for illustrative purposes only.

Average returns, 1926-2008

Investment choices

Sound investing fundamentals

Determine your financial goals.

Consider investing regularly.

Diversify your investments among:

– Cash

– Bonds

– Stocks

Adjust your investments as your time horizon changes.

Asset allocation/diversification does not eliminate the risk of fluctuating prices and uncertain returns.

Please note

The hypothetical asset allocations that follow are shown for informational/educational purposes only and are not all encompassing. Since each investor’s situation is unique, you need to review your specific investment objectives, risk tolerance and liquidity needs with your financial professional before a suitable strategy can be selected. Also, since Wells Fargo Advisors does not provide tax or legal advice, investors need to consult with their own tax and legal advisors before taking any action that may have tax or legal consequences.

Early career — Longer time horizon

Asset allocation

*Investment grade

This is a hypothetical asset allocation example. Your specific allocation will vary based on your specific circumstances.

There are special risks associated with an investment in real estate, including credit risk, interest rate fluctuations and the impact of varied economic conditions.

Investing in international securities or funds that invest in these securities takes on special risk. These risks include, but are not limited to, currency risk, political risk and risk associated with varying accounting standards. Investing in emerging markets normally accentuates these risks.

High-yield bonds, also known as junk bonks, are subject to greater risk of loss of principal and interest, including default risk, than higher-rated bonds.

Repositioning your retirement assets

As retirement approaches, you may want to reallocate your assets.

No current-year income tax implications.

Consider increasing fixed-income versus stock market investments.

Middle career — intermediate time horizon




Asset allocation

*Investment grade


Late career — short time horizonAsset allocation




*Investment grade


Three investment categories

Stocks

Bonds

Cash/cash equivalents

Your investment alternatives

[Investment alternative #1]





[Etc.]

Mutual funds and variable annuities are hold by prospectus. Please consider the investment objectives, risks, charges and expenses carefully before investing. The prospectus, which contains this and other information, can be obtained by calling your Financial Advisor. Read it carefully before you invest.Variable annuities are long-term investments suitable for retirement funding and are subject to market fluctuations and investment risk.

Please see the next slide for important disclosures.

Important disclosures

Fixed-income securities: Investing in fixed-income securities involves certain risks, such as market risk, if sold prior to maturity and credit risk — especially if investing in high-yield bonds, which have lower ratings and are subject to greater volatility. All fixed-income investments are subject to availability and changes in price and may be worth less than their original cost upon redemption or maturity.

International/emerging market securities or funds: Investing in international securities or funds that invest in these securities takes on special risk. These risks include, but are not limited to, currency risk, political risk and risk associated with varying accounting standards. Investing in emerging markets normally accentuates these risks.

Sector funds or portfolios: The investor should note that funds or portfolios that invest exclusively in one sector or industry carry additional risks. The lack of industry diversification subjects the investor to increased industry-specific risks.

Non-diversified funds or portfolios: Non-diversified funds or portfolios that invest more of their assets in a single issuer involve additional risks, including share price fluctuations, because of increased concentration of investments.

Small-cap securities or funds: Investing in small companies or mutual funds that invest in small companies involves additional risk. Smaller companies typically have a higher risk of failure and are not as well established as larger blue chip companies. Historically, smaller-company stocks have experienced a greater degree of price volatility than the overall market average.

Important disclosures (con’t)

Mid-cap securities or funds: Investing in companies with market capitalizations of $1 billion to $5 billion or funds that invest in these companies involves additional risk. The securities of these companies may be more volatile and less liquid than the securities of larger companies.

High-yield bonds or bond funds: Investing in lower-rated debt securities (commonly referred to as “junk bonds”) or funds that invest in such securities involves additional risk because of the lower credit quality of the security or fund portfolio. These securities or funds are subject to a higher level of volatility and increased risk of default or loss of principal.

Stocks or stock funds: Stocks offer long-term growth potential but may fluctuate more and provide less current income than other investments. An investment in the stock market/stock funds should be made with an understanding of the risks associated with common stocks, including market fluctuations.

Real estate investment trusts (REITs): Investing in REITs involves special risks, including the potential for illiquidity of REIT securities if they are not listed on an exchange. REITs have limited historical data, and their historical behavior has varied over time.

Summary

Potential benefits of your 401(k) plan

– Provides individual tax savings from pretax contributions

– Features the opportunity for tax-deferred growth*

– Offers investment choice and flexibility

– Helps you work toward your retirement

Next steps:

– Review fund information

– Ask questions

– Complete form

– Return to [Name] by [Date]

*Withdrawals are subject to ordinary income tax and may be subject to a federal 10%penalty if taken prior to age 59½.

Where to start?

Before you begin planning for your retirement needs, you need to: Know yourself

Understand your alternatives

Determine your financial objectives

Review your investments in light of your 401(k) plan

Our commitment to you

We will honor our relationship with you.

We will be fully invested in your success.

We will be with you every step of the way.

How can I help?

Seek the advice of tax and legal advisors

This presentation is designed to provide accurate and authoritative information regarding the subject matter covered. You should understand that Wells Fargo Advisors is not engaged in rendering legal, accounting or tax-preparation services. If tax or legal advice is required, you should seek the services of an appropriate, competent professional.

Wells Fargo Advisors’ view is that investment decisions should be based on investment merit, not solely on tax considerations. However, the effects of taxes are a critical factor in achieving a desired after-tax return on your investment. The information provided is based on internal and external sources that are considered reliable; however, the accuracy of the information is not guaranteed. You should direct specific questions on taxes as they relate to your situation to your tax advisor.

©2009 Wells Fargo Advisors, LLC. All rights reserved. 1209-0625A [27600-v8] 12/09

Investment and Insurance Products: NOT FDIC Insured NO Bank Guarantee MAY Lose Value

Wells Fargo Advisors, LLC, Member SIPC, is a registered broker-dealer and separate non-bank affiliate of Wells Fargo & Company.

Why Take Advantage of Your Company’s Retirement Plan Eric Harding Senior Vice President -...

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