Petco Barking About Benefits Magazine Q3 2012

Petco 401(k) Plan for Retirement Bliss One of the best paths to retirement bliss, according to many financial planning experts, is participation in a company-sponsored 401(k) Plan. With the Petco 401(k) Plan, the idea is to bury your bones now so you can enjoy them later. When you save for retirement with a 401(k) Plan, you brighten your future and at the same time benefit from tax savings and company matching contributions.

401(k) Plan Tail—Wagging Features • Saving is easy with automatic payroll deductions. • You decide how much to contribute to the plan, up to IRS limits. • Your savings are deducted from your pretax pay, which lowers your current taxable income. • Your account grows tax-free until you start taking withdrawals. • Matching contributions from Petco help your account grow faster. • You decide how your savings are invested. • You can stop or change your plan contribution at any time by contacting Fidelity. Who is Eligible? All associates age 21 or older are eligible to join the Petco 401(k) Plan after one year of service in which you work 1,000 or more hours. You can join the plan at any time after meeting the eligibility requirements. You can enroll online through Fidelity Investments. See page one of this magazine for enrollment quick steps.

Save with Pretax Contributions Through automatic payroll deduction, you may contribute between 1% and 60% of your eligible pay on a pretax basis, up to the annual IRS dollar limit. (For 2012, the dollar limit is $17,000.) Pretax means the money you save is deposited into your 401(k) account lowering your taxable income. Since there’s no tax bite, the cash you would typically pay toward taxes goes into your retirement savings account instead. How much should you save? As much as you can! The more you save, the faster your account balance will grow. And if you save at least 6% of your pay (3% for Directors and above), you will maximize Petco’s matching contributions added to your account. Also, if you make the maximum contribution to your plan account, and you’re 50 years of age or older during the calendar year, you can make an additional “catch- up” contribution of $5,500 in 2012. If you’re nearing retirement and can stretch your budget, the catch-up contribution is a wise investment for your future.

Pay Less Taxes with Pretax Savings Saving money with pretax dollars lowers the amount of tax you will pay. Here’s an example that shows the benefit of pretax saving. The example assumes an associate annual salary of $25,000, a 6% pretax contribution to the 401(k) Plan and a 25% tax rate.

6% Contribution

No Contribution

Annual Pay

$25,000

$25,000

401(k) Plan Pretax Contributions

$1,500

$0

Taxable Income

$23,500

$25,000

Taxes (assuming 25% tax bracket)

$5,875

$6,250

Saved for retirement

$1,500

$0

Tax Savings

$6,250 – $5,875 = $375

$0

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