Helping Build a More Secure Retirement Relaxing in retirement with the NC Supplemental Retirement...

Helping Build a More Secure RetirementRelaxing in retirement with the NC Supplemental Retirement Plans:

NC 401(k) Plan and NC Deferred Compensation Plan.INST-20090218-A029787

Retirement Considerations:

Not Saving for Retirement… Why?

• I already contribute to the NC Retirement System• I already contribute to Social Security• The financial markets are scary• I don’t have the extra money• I’m afraid of making a mistake, I don’t know how to

invest


Sources of Retirement Income

* Pension includes all defined benefit and defined contribution plans. Estimates are not guaranteed. 2008 Morningstar. All rights reserved 3/1/2008.


Saving for Retirement is a Long-Term Investment Strategy

Help make sure your portfolio can tame today’s challenging financial markets.

•Choose a variety of investments.

•Check your emotions at the door.

•GoalMaker can help.

•Don’t chase performance.

The bottom line – patience, long-term planning, and diversification are essential to successful retirement planning.


Understanding Your Retirement Needs

• How close am I to retirement?• How much money will I need?• What are my options?• Am I changing jobs?


Something to Think About

Can you afford to take a reduction in take-home pay in order to contribute to a retirement savings account?

* Assumes a 22% tax bracket. As a participant of the NC Supplemental Retirement Plans, you may qualify for a Saver’s Credit. If you meet certain federal eligibility requirements, this program allows you to receive a tax break for contributing to the NC 401(k) Plan.


Something to Think About

Your total tax advantage is $6,600 - $6,314 = $286

Reasons to Start Saving Today: The Earlier You Start Saving the Easier It Is To Reach Your Goals

Monthly savings needed to accumulate 1 million dollars by age 65 (assumes 7% interest)

This is for illustrative purposes only and not indicative of any investment. ©2008 Morningstar, Inc. All rights reserved. 3/1/2008

NC Supplemental Retirement Plans:

Plan Highlights

• Easy participation, enroll at anytime• You can pay yourself first • Easy savings through automatic payroll deductions• Tax credit (if you qualify)• No Cost Optional asset-allocation program - GoalMaker® • No annual account fees – more of your money works

for you• Access to variety of investment funds• Pre-tax savings and tax-deferred earnings

Note for 401(k) Plan Members: You will have to pay taxes when money is withdrawn, usually at retirement when you may be in a lower tax bracket. Amounts withdrawn before age 59½ may be subject to a 10 percent federal income tax penalty, applicable taxes, and plan restrictions. The penalty can be avoided if you retire or separate from service in the year you turn age 55 or older, or if you receive payments from the Plan in substantially equal payments over your life expectancy. Withdrawals are taxed at ordinary income tax rates. See plan information regarding limitations on withdrawals from your account.


Plan Highlights

• Available in the NC 401(k) Plan — Roth 401(k) feature to offer an after-tax source of retirement income

• Manage your account online• Choose a contribution amount that matches your wants

and needs• Change your contribution rate at anytime• Change your investment allocations at anytime• Choose from an array of distribution options upon

retirement• Regional Retirement Education Managers available for

assistance.

Note: You will have to pay taxes when money is withdrawn, usually at retirement when you may be in a lower tax bracket. Amounts withdrawn before age 59½ may be subject to a 10 percent federal income tax penalty, applicable taxes, and plan restrictions. Withdrawals are taxed at ordinary income tax rates. See plan information regarding limitations on withdrawals from your account.

• Available in the NC 401(k) Plan and designed to help you save more for retirement.

• Contributions to the NC 401(k) Plan are made with Roth, after-tax dollars.

• Contributions and earnings, typically grow tax free. There are no Federal or North Carolina State taxes upon taking a “qualified” distribution from Roth contributions in the Plan.

• A distribution is “qualified” if: your Roth contributions remain in the plan for at least 5 years; and you are over age 59 ½, disabled or deceased at the time of withdrawal.

NC 401(k) Plan Roth:

Roth Contributions

Distributions prior to age 59 ½ are not qualified therefore:

•Distributed earnings are taxable.

•10% tax penalty applies to the earnings unless the distribution is due to death or disability.


Roth Contributions

Roth contributions can be rolled into:

• Another qualified retirement plan that offers Roth contributions

• A Roth IRA (note that a Roth IRA cannot be rolled into a Roth 401(k)

Roth rollovers can offer an estate planning benefit.


NC 401(k) Plan Roth Rollovers

• As a member of the NC 401(k) Plan, you can make both traditional and Roth contributions to your account.

Important!! - You can't reclassify or move contributions that have already been made between the two types of contributions.


Roth Contributions

NC Investments:

Risk/Reward of Investment Categories

This is a simplified illustration of the relationship between investment risk and potential rate of return.

Stability

Income

Growth

R E

T U

R N

R I S K

North Carolina Stable Value Fund

North Carolina Fixed Income Fund

North Carolina Small/Mid Cap Growth

North Carolina Small/Mid Cap IndexNorth Carolina Small/Mid Cap Value

North Carolina Large Cap Growth

North Carolina Large Cap IndexNorth Carolina Large Cap Value

North Carolina International Index

North Carolina International Fund

North Carolina Global Equity

Investors should carefully consider a fund’s investment objectives, risks, charges and expenses before investing.

For more complete information about the investment options available through your plan, please call 1-866-NCPlans (1-866-627-5267). To obtain fund fact sheets for the available investment options, visit www.ncplans.prudential.com. Please review the fund fact sheets carefully before investing.

NC Investments:

Fund Fact Sheets

Past performance is no guarantee of future results. Diversified portfolio: 35% stocks, 40% bonds, 25% Treasury bills. Hypothetical value of $1,000 invested at the beginning of January 1973 and July 2000, respectively. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. ©2008 Morningstar, Inc. All rights reserved. 3/1/2008

Diversified Portfolios and Bear Markets

Investments:

Market Risk

This example is for illustrative purposes only and is not intended to represent the performance of any specific investment. For information about the funds offered in your plan, please refer to the Fund Fact Sheets. Indexes are unmanaged–it is impossible to invest directly in an index.

INST-20090304-A029919

Asset Allocation & GoalMaker:

GoalMaker

• Asset allocation may explain up to 90% of a portfolio’s long-term investment performance*

• Asset allocation helps protect your portfolio from market risks.

• GoalMaker is an optional and easy-to-use asset allocation program that helps you choose a mix of investments.

• Optional age adjustment feature will adjust your allocations over time based on the number of years you have left until retirement

* Source: Determinants of Portfolio Performance Study, 1991 and 2000 by Brinson, Beebower and Singer; Ibbotson and Kaplan, respectively.


An Asset Allocation Choice for You

Your risk tolerance:

Conservative = C

Moderate = M

Aggressive = R

Determine your length of investment:

0-5 years = 01

6-10 years = 02

11-15 years = 03

16+ years = 04

These GoalMaker model portfolios are based on generally accepted financial theories that take into account the historic returns of different asset classes. Past performance of any investment product does not guarantee future results. In considering the appropriateness of any model portfolio to your individual situation, you should consider your other assets, income, and investments in addition to your account balance under your retirement plan. Investors should carefully consider a fund’s investment objectives, risks, charges and expenses before investing. For more complete information about the funds that comprise the GoalMaker model portfolios, please call 1-866-627-5267 for free fund fact sheets that contain this and other information about the funds. Read the materials carefully before investing. GoalMaker’s model allocations are based on generally accepted financial theories that take into account the historic returns of different asset classes. But, of course, past performance of any investment does not guarantee future results. Prudential Financial encourages participants to consider their other assets, income, and investments when enrolling in the GoalMaker program. We also recommend participants periodically reassess their GoalMaker investments to make sure their model portfolio continues to correspond to their changing attitudes and retirement time horizon. The funds are not part of Prudential Retirement’s Manager of Managers Program, Prudential Retirement does not assume any responsibility for the plan’s decision to invest in this fund, to monitor their performance or to provide information regarding this fund. Each of those is the sole responsibility of the plan. To the extent Prudential Retirement provides the fund performance, it makes no warranty as to the accuracy of this fund information and makes no undertaking to continue to provide such information unless Prudential Retirement agrees to continue to provide such information in writing. For more complete information about the investment options available through your plan, including charges and expenses, please call 1-866-NCPlans (1-866-627-5267).


GoalMaker Portfolios

• In 2009, members of a NC Supplemental Retirement Plan can contribute up to $16,500. And if the member is age 50 or older on or before December 31, 2009 – they are eligible to contribute an additional $5,500 to their plan.

• Members eligible to participate in both NC Supplemental Retirement Plans, can contribute up to $33,000 in 2009.

• Additionally – those who are age 50 or older on or before December 31, 2009 –are eligible to contribute an additional $11,000 (maximum combined limit is $44,000 in 2009).

* Note that NC Deferred Compensation Plan (457) Members are eligible for an additional catch-up contribution.


Contribution Limits

• Keep your assets in the Plan

• Systematic Payments (Direct Deposits available)

• Direct Rollover to an IRA

• Rollover to your new Employer’s Program

• Purchase Annuity

• Lump-Sum Payout or Partial Payout


Your Distribution Options

• Age 55 Distribution Option*

• All pre-tax contributions and earnings, including any employer contributions, are subject to ordinary income taxes at withdrawal at the tax rate that is in effect at the time of withdrawal

• Members may elect to have taxes withheld at the time of distribution

• NC Deferred Compensation Plan withdrawals are not subject to any early withdrawal penalties, regardless of age at time of withdrawal

• NC 401(k) Plan withdrawals may be subject to an additional 10% early withdrawal penalty. The penalty can be avoided if you retire or separate from service in the year you turn age 55 or older, or if you receive payments from the Plan in substantially equal payments over your life expectancy.

*In the NC 401(k) Plan only - A 10% federal income tax penalty may apply for any withdrawals made before age 59 12/ (unless you separate from service with your employer during or after the year you reach age 55, then take a withdrawal.)


Tax Considerations

Disadvantages of Loans

Loans can negatively impact your financial future.

• Interest Paid vs. Growth of your account

• Interest is not Tax Deductible

• What if you terminate employment or retire?

• Risk of accumulating more debt

• Taxes are paid twice on the after tax interest repaid to your account.

The Potential Impact of Taking a Loan

The Impact of Taking a Loan The Impact of Taking a Loan Total Saved After 30 Years Total Saved After 30 Years Percentage of Retirement Percentage of Retirement Savings Lost Savings Lost

Participant A: Takes a loan; Participant A: Takes a loan; stops contributing to Plan stops contributing to Plan

$127,890 $127,890 30% 30%

Participant B: Takes a loan; Participant B: Takes a loan; continues contributing to the continues contributing to the

PlanPlan

$176,403 $176,403 3.3% 3.3%

Participant C: Doesn’t take a Participant C: Doesn’t take a loan; continues contributing loan; continues contributing

to the Planto the Plan

$182,359 $182,359 0% 0%

Loans are not subject to federal taxes or penalties unless IRS rules are violated or the loan is in default. This information has been provided for your benefit and is not intended or designed to be tax advice. This example does not include any company matching contributions. The assumed rate of return is 7% . The compounding concept is hypothetical and for illustrative purposes only and is not intended to represent performance of any specific investment, which may fluctuate. No taxes are considered in the calculations; generally withdrawals are taxable at ordinary rates. It is possible to lose money by investing in securities.

Account Tools:

www.NCPlans.Prudential.com

Account Tools:

Enroll Today

Enroll in the Plan

• Complete the form.

• Visit www.NCPlans.Prudential.com.

•Call the Interactive Voice Response System (IVR) at 1-866-NCPlans, or speak with a Participant Service representative.

Choose your investment options.

Seek guidance as needed.

Monitor your plan carefully, but revise it only as required.

• View your account online.

Keep in mind that application of asset allocation and diversification concepts does not ensure safety of principal and interest.It is possible to lose money by investing in securities.Investing in securities involves risk, including the possible loss of principal. Unforeseen market conditions have the potential to maximize losses. Investors are urged to carefully consider their personal risk tolerance, retirement time horizon, and willingness to weather severe market downturns before making investment decisions.The investment options in your plan are insurance separate accounts and are issued under group annuity contracts by Prudential Retirement Insurance and Annuity Company (PRIAC), Hartford, CT, a Prudential Financial company.Prudential Retirement is a registered service mark of The Prudential Insurance Company of America, Newark, NJ and its affiliates. Prudential Retirement is a Prudential Financial business. Securities products and services are offered by Prudential Investment Management Services LLC (PIMS), Three Gateway Center, 14th Floor, Newark, NJ 07102-4077. PIMS is a Prudential Financial company. Regional Retirement Education Managers are registered representatives of PIMS.

Helping Build a More Secure Retirement Relaxing in retirement with the NC Supplemental Retirement...

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