Peach State Reserves news, Fall 2005

Fall 2005

Peach State Reserves News
VOLUME 1 , NUMBER 2

The Fixed Income Option

Quarterly Account Statement

The Fixed Income Option (FIO) is the most conservative investment option offered by PSR and is what is known as a "Stable Value" investment option. Its objective is to preserve the value of the money invested, while performing better than the average money market fund, and earning consistent, reliable returns.
In 2005, the administration of PSR was transferred to the Employees' Retirement System of Georgia (ERSGA). A thorough analysis determined that earnings could potentially be improved by making some fundamental changes to the underlying investments of the FIO, while at the same time reducing the overall risk of the portfolio. JPMorgan Asset Management (JPAM) was selected to manage the portfolio. To achieve the investment objectives, the FIO is invested in a conservative bond strategy, as well as a special kind of investment contract called a "benefit responsive wrap" issued by insurance companies and banks. The wrap helps stabilize the returns of the option, even when markets are volatile. The FIO has 3 wrap providers rated AA or AAA to further reduce risk.

Enclosed is your Quarterly Account Statement covering investment activity in Peach State Reserves The Georgia Retirement Investment Plan. This statement is for the period of July 1, 2005 through September 30, 2005. If you have any questions, contact GreatWest between 9:00 a.m. and 7:00 p.m., Monday through Friday, at 1-800-701-8255. Also enclosed is the Investment Options at a Glance, showing comparative performances of the investment options.
Year-End Small Account Payouts
For those participants with an account balance of $1,000 or less and for whom our records indicate that you have separated from service, PSR will liquidate those accounts on December 1, 2005. You should be receiving a distribution application soon, if you have not already. If you do not wish to have the account paid to you as taxable income, you must submit the distribution request no later than November 15 to roll the account over to another retirement plan such as an Individual Retirement Account. You can download an application from our website at ersga.org, or you can request the withdrawal on-line via your account access. If you do not know your Personal Identification Number (PIN) to access your account, please contact Great-West at 1-800-701-8255 to request a new one be issued to you.

The bond strategy consists of investment grade fixed income securities, primarily U.S. Treasury, Agency, corporate, mortgage-backed, asset-backed, commercial mortgage-backed securities, and privately placed mortgage debt. Had the FIO maintained its previous investment structure, the annualized return

The Fixed Income Option (cont)
to participants for this current quarter would have been reduced to 4% or possibly lower. By changing the investment structure and investing in a conservative fixed income bond strategy, JPAM is estimating the annualized return will range between 4.5% and 5% this quarter.

(cont. next column)

Year End Reminders

Retiring Soon?

The new plan contributions limits for 2006 will be as follows:
401(k) and 457 plan contribution maximums will increase to $15,000 for each plan. Therefore, those participating in both plans can contribute a maximum of $30,000. For those who are also eligible for a 403(b) plan, please be aware that the combined maximum for contributions to a 403(b) plan and a 401(k) plan is $15,000, but the combined maximum for contributions to a 403(b) plan and a 457 plan is $30,000.
For participants who will be age 50 or older anytime in 2006, the maximums for each plan are $20,000.

If you are retiring, please note that you are not required to make any decisions regarding the distribution of your account immediately at retirement. You are able to postpone withdrawals up until you reach age 70 , at which time you must begin taking your annual minimum required distributions. Access our website at ersga.org to learn more about your PSR withdrawal options. To attend a retirement seminar to learn more about all your state benefit options at retirement, as well as wills and estates and Social Security, visit the Seminars section of the website to obtain times and locations and download a Registration form.
Rollovers Into Peach State Reserves

For participants utilizing the Special 457 Catch-Up feature prior to retirement, the maximum contribution increases to $30,000 for the 457 plan.
To change your contribution amount, obtain a Participation Change Form from your personnel or payroll office for the appropriate plan and return the completed form to your personnel or payroll office. These changes are not effective until 2006, therefore any contribution changes to take advantage of the increased limits should be effective no earlier than the first pay period in January 2006.
Have you contributed to the 401(k) plan and a 403(b) plan in 2005? If so, you must ensure that your contributions to both plans combined do not exceed $14,000 in 2005.

Peach State Reserves has experienced a growing number of rollovers into the plan. To date, over 900 participants have transferred balances from other retirement accounts into their PSR account, totaling over $11,000,000. Participants are rolling into the plan because it offers a wide range of investment options with competitive fees. It's also easier to manage one account, rather than multiple accounts.
For help with transferring other retirement plans to PSR, including previous employer's 401(k) Plans and Individual Retirement Accounts (pre-tax assets only), contact a rollover specialist at 1-800331-7180, or, in Metro Atlanta, 404-651-6088. The application can be downloaded at ersga.org. Access "Rollovers Into PSR."

Peach State Reserves Two Northside 75
Atlanta, GA 30318-7778 www.ersga.org