Explanations, Important Notices, and Acknowledgments
for 401(k) Enrollment Form
401(k) Savings Section: important notices and employee acknowledgment - by signing the enrollment form, I acknowledge and agree to the following: I have received and agree to the terms in the summary plan description. I understand that I may elect to start, increase, or reduce my elections effective as of the first day of the plan year (January 1st) and the first day of the seventh month of the plan year (July 1st). However, I may revoke my election at any time by so advising the plan administrator (employer) and may start, increase, or reduce my election during the 30-day period following receipt of the notice and disclosures. If I revoke my election, I may resume contributions only as of the dates specified above. I understand that I must give the plan administrator (employer) sufficient time to process any change or revocation of an election. I understand that this 401(k) savings agreement will be processed in a timely manner, typically within a 15 day period. I understand that it is my responsibility to communicate any deferral changes to the payroll department. I understand that the election indicated on this agreement will continue into succeeding plan years unless I revoke or change the election in accordance with the rules listed above and in the summary plan description. I understand that this agreement supersedes and nullifies any prior 401(k) savings agreements under this plan. Should I contribute to a regular or a Roth 401(k)? In general, the longer you have until you retire and if you expect your tax rate in retirement to be higher than your current rate, the more likely you are to benefit from a Roth 401(k) account vs. A regular 401(k). If you think that your marginal tax rate will be lower when you retire than it is now, then a Roth 401(k) loses some of its appeal. On the other hand, if you think your marginal tax rate will be higher, the Roth 401(k) could be even more attractive. Keep in mind that your marginal tax rate is not just a function of your taxable income— it could change if you move to a different state after retirement. For example, the federal government might raise or lower the tax rate applied to you even if your income stays the same. It may be appropriate to contribute to both a regular and a Roth 401(k) if you can, giving you taxable and tax-free withdrawal options. Financial planners call this tax diversification, and it's generally a smart strategy. Contact your tax professional for the option that best fits your situation. Please note: the combined amount entered for regular 401(k) contributions and Roth contributions may not be more than 100% of your compensation. Please above for contribution and plan limits.
401(k) Beneficiary Designation Section: notice of surviving spouse's benefit - unless the surviving spouse's benefit is waived, an employee may not designate that any portion of his or her vested account balance is paid as a death benefit to a beneficiary or beneficiaries other than his or her surviving spouse. For example, if an employee designates his or her parents as beneficiaries and later marries but dies without having changed his or her beneficiary designation, the entire vested account balance will be paid to the surviving spouse rather than the deceased employee's parents. Similarly, if a married employee designates that his or her vested account balance be divided into equal shares among the surviving spouse and their three children but the surviving spouse's benefit is not waived, the surviving spouse must receive the entire vested account balance. The surviving spouse's benefit cannot be waived unless the spouse gives his or her written consent or the employee certifies that he or she does not know the whereabouts of the spouse. Designation of Beneficiary - as an employee in the above plan, I hereby revoke any prior beneficiary designation and direct that any benefits payable upon my death be paid to the beneficiary/beneficiaries listed above. The total share for the primary beneficiaries must equal 100% and the total share for the secondary beneficiaries, if any, must equal 100%.
401(k) Investment Election Section: options 1, 2, and 3 - explanation and acknowledgment – if option 1 is selected, I have reviewed my most recent account statement and elect not to make any changes to my current investment allocation. I understand that if I would like to change my investment allocation, i will need to complete a new 401(k) enrollment form, and mail it to the investment adviser at the address provided below. I understand that if my account is in a cash reserves fund, that investment management fees and plan administration fees continue to apply. If option 2 or 3 is selected, then the plan advisor will rebalance the entire portfolio one time according to the allocation herein. Otherwise, no holdings in the account are to be sold, with the exception of the cash reserves fund. No holdings will be purchased whose value is above the model target value. I further understand that the contributions may be invested for me as often as monthly, but not less than quarterly.
Important notices and employee acknowledgment - prospectuses can be viewed online at or at any other research site of your choice. If you are not able to locate the information you need, then please contact the plan’s adviser. Trades may be made in your account by calling the plan’s adviser. However, no trades will be accepted if left on voicemail, fax, or e-mail. Short-term trading fees, imposed by the fund company, may apply if you sell within 120 days of purchase. I understand that for future contributions under both investment elections, the available cash is used to purchase investments whose value is below the model target value in proportion to the difference between their current value and the value of the model target. I understand that the plan trustee is not responsible for any losses incurred in my account as a result of this election because of the provisions of IRC 404(c). (this code section and department of labor regulations set forth the conditions under which the trustees (whether one or more) are relieved of financial responsibility for employee's investment elections. It is the intent of this plan to follow these 404(c) conditions.) Moreover, in the event this is not my first opportunity to enroll in the plan and I in fact have existing money in the plan, but I have failed to elect an allocation, then I acknowledge that I have reviewed my last brokerage statement and choose not to amend my allocations at this time. However, in the event that this is my first opportunity to enroll in the plan, but I have failed to elect an allocation, then I acknowledge that all contributions will be invested in the cash reserves fund until I give further investment instructions in writing to the adviser. I further understand that it is in my best interest to maintain a well-balanced and diversified investment portfolio by spreading my retirement assets among different types of investments (although diversification is not a guarantee against loss, but just a strategy to help manage risk) and that I should take into account all of my assets (including any retirement assets outside of the account).
Additional important information - expense ratios and other fees. Fund companies generally charge fund shareholders management fees to cover the fund’s annual operating expenses. Total annual fund operating expenses are reflected in a fund’s prospectus as an expense ratio. An expense ratio of, for example, 0.5% means that the fund company charges an annual fee of 0.5% of average net assets. These fees are in addition to the fees paid by you to AFR. Performance figures quoted by mutual fund companies in various publications are after their fees have been deducted. Discount brokerages may charge a transaction fee for the purchase of some funds. Moreover, stocks and bonds may be purchased or sold through a brokerage account when appropriate. The brokerage firm charges a fee for stock and bond trades; however, AFR does not receive any compensation from fund companies or brokerage firms. Custodians may charge transaction fees on purchases or sales of certain mutual funds and exchange-traded funds. These transaction charges are usually small and incidental to the purchase or sale of a security for one-time purchases but can be significant for ongoing transactions. A fund's share class and transaction fee status, etc. Must be taken into account to determine the best avenue to select for investment. The loads for class A shares are waived by fidelity investments; however, each class a share has a 12b-1 fee (that fidelity keeps), which causes the expense ratio to be higher than another share class for the same fund. However, the same fund in a different share class may have a transaction fee associated with it (e.g., $20) for each purchase, but a lower expense ratio. For ongoing transactions, it may, under certain circumstances, be less expensive to purchase a class a share (waived load), and subsequently convert to a different share class with a lower expense ratio once a certain value in class A shares is reached. To that end, the purchase of mutual fund class shares with a higher expense ratio, like a class a share, may be utilized to avoid having the client incur a transaction fee in a lower expense share class. However, not converting class A shares into another share class that does not have 12b-1 fees once a certain value is reached, could result in higher overall and reoccurring expenses due to the higher expense ratio.).