Avon Independent Representative Retirement

Plan Highlights

For the first time in AVON's history, Independent Sales Representatives have the opportunity to participate in a retirement plan offered exclusively to AVON Independent Sales Representatives. In fact, this Plan is the first one of its kind in the direct sales industry market. The Plan is more formally known as the Avon Independent Representative Retirement Plan (hereafter referred to as the Plan). Participation in the Plan is available to U.S. Representatives who are in good standing with AVON and meet certain other criteria, as further described below. Your participation in the Plan is completely voluntary and prior to signing up for participation, we urge you to contact your personal financial and/or tax advisor to determine if this retirement vehicle is an appropriate investment for you. Neither AVON nor Burke Group provides you financial, tax or legal advice concerning your participation in the Plan.

AVON has entered into an arrangement with the Burke Group in order to make the Retirement Plan available to you. For complete information on the Burke Group, please visit us at www.BurkeGroup.com.

What is the Avon Independent Representative Retirement Plan?

The Plan is designed to provide certain qualifying Independent Sales Representatives of New Avon, LLC with a convenient method for saving for retirement by making contributions to the Plan. The Plan is intended to meet the Internal Revenue Code requirements as a tax-qualified profit-sharing plan within the meaning of Section 401(a) of the Internal Revenue Code.

What are the benefits of the Plan?

Saving under the Plan is convenient. Your contributions generally are made by including them with your payment to AVON for products. You will be billed for the contribution amount whether or not you order products for a particular campaign. Generally, your contribution amount will be included in the invoice sent to you and it will be based on the dollar amount you elect to contribute when you enroll. Additionally, you may elect to have a percentage of your Leadership Bonus checks contributed to the Plan.

Am I eligible for the Plan?

Generally, any U.S. Representative who has been with New Avon, LLC for 6 or more sales campaigns and who is considered an active Representative in good standing, as determined by AVON in accordance with the terms of the Plan, is eligible to participate in the Plan. In apition, in order to participate in the Plan, you must be the sole proprietor of your business or the sole employee of a corporation, 100% of the stock of which is owned by you. If you employ any individuals in connection with your AVON business, you are not eligible to participate in the Plan.

How Much Can I Save?

You can generally save $18,500 Pre-tax and/or Roth ($24,500 if age 50 or over) or After tax up to 25% of your net earnings from your AVON business, provided the grand total of your contributions is below $55,000 (the annual 415(c) limit). Other limits may apply. Be sure to read the Administration Agreement and the Plan Document and consult with your tax advisor to determine the type and maximum contribution you can make to the Plan.

Can I contribute when paying for my orders using a credit or debit card?

Currently, representatives paying invoices with credit or debit cards will not be eligible to defer into the Plan. If you elect to make a contribution to the plan and you pay your invoice using a credit or debit card, your contribution will not be deposited into the plan.

Burke Group has submitted a request for an Advisory Opinion to the U.S. Department of Labor (DOL) seeking approval to allow credit or debit card remittance to the Plan. We are waiting for formal approval from the DOL before we allow contributions by credit or debit card. In the meantime, you can contribute when paying by personal check or QuikPAY.

Risk and Reward?

The concept of risk and reward is as old as investing itself. Generally, the higher the potential return on an investment, the greater the level of risk associated with that investment. Anyone who has invested on even a small scale knows that there is no such thing as "risk free." Each type of investment vehicle carries a corresponding risk to its potential for reward. Risk can never be eliminated. In general, one tactic used to reduce risk is to create a well-diversified portfolio that includes investments of varying degrees of risk and reward. Most importantly, remember that your tolerance for and understanding of risk is a key factor in helping you decide on how to invest your money. You should consult your personal financial and/or tax advisors as to which type of asset allocation best meets your financial needs.

What are my rights to my benefits?

Because after-tax contributions are your monies, you have a fully vested right to these contributions and their earnings. However, your benefits may be subject to claims in the event of bankruptcy or divorce.

What are my Investment choices?

The investment choices offered under the Plan currently consist of 18 mutual funds, including Target Date funds. Prospectuses for these mutual funds are available to you on the Plan's website (through an easy link at www.YourAvon.com). Please note that you cannot enroll in the Plan until you acknowledge that you have received copies of these prospectuses. This is not a solicitation, offer or recommendation of any particular securities. Neither New Avon, LLC, nor Burke Group make any representations regarding the merits of any investment, provide investment advice or endorse specific securities under the Plan. New Avon, LLC is not a broker-dealer registered with the Securities and Exchange Commission. Investments in mutual funds involve risks, including the possible loss of principal amount invested. Mutual funds are sold by prospectuses, which contain more information including risks, charges and expenses. We strongly recommend that you share these prospectuses with your personal financial and/or tax advisor before selecting any of the mutual funds. Please read these carefully before investing or sending money. Securities offered by: Fidelity Institutional Investment Brokerage Group.

Read more about your Plan Investments.

What are my privacy rights?

Your decision to adopt the Plan and make contributions is your choice. You can rest assured that the service providers for your Plan have adopted policies that protect your privacy and personal information. Read our Privacy Policy, or call 877-535-4419.

Additional Commonly Asked Questions

How does a Representative enroll in the plan?

Enrollment can be handled by linking to the special website from yourAVON.com, by visiting www.AvonSaving.com directly. You'll be asked to provide your AVON Account Number and Social Security Number.

What is the minimum investment?

Your investment can be as little as $10 per campaign. Most qualified retirement plans would require a larger dollar amount. In apition, you may change the contribution amount from campaign to campaign. If you are past due for payment of New AVON, LLC products, the amount you elected to contribute may be reduced by amounts you owe to AVON subject to rules and procedures established by AVON.

How often will I receive statements and how can I access my information?

The default delivery method for the plan is electronic statements. If your e-mail address on file is accurate, you will receive notification when your quarterly statements are available online. You will not be sent a statement by postal mail unless you specifically request to have one sent. However, you can review your account and historical account statements online at any time at www.newportgroup.com/login and also through a toll free number, 877-535-4419 or through a link at yourAVON.com.

How risky are the investment choices that are available to me?

The investment choices will range from conservative to high risk. The choice will always be at your election. Prior to investing it is strongly recommended that you consult with your financial advisor and always read the prospectuses thoroughly.

Read more about your Plan Investments.

Are there any costs?

The Plan is being offered to you at a nominal $100 annual service fee for Recordkeeping and Administration ($70) and Trustee Service ($30). These fees, as well as Legal, Accounting, Compliance, and Investment Management fees, will be deducted from your account quarterly. The mutual funds also have management and other fees and expenses, which are described in the mutual fund prospectuses. The fee is $60 if you take a complete distribution or withdrawal of your Plan Account balance.

What if I am no longer an AVON Representative?

If your association with AVON is temporarily suspended and you are reinstated to status as a qualifying Independent Sales Representative within 13 campaigns, you can make contributions to the Plan again. If your association with AVON is suspended for more than 26 campaigns, your account may be distributed, as described below. Thereafter, you can make apitional contributions to the Plan only after you once again have met the Plan's eligibility requirements.

When will my Plan account be distributed?

If you voluntarily terminate your participation in the Plan or are no longer a qualifying Independent Sales Representative, as determined solely by AVON, you may choose to keep your account in the Plan until the earlier of the date you elect to receive a distribution or age 62, so long as the value of your account balance exceeds $5,000. Otherwise, you may elect to receive a lump sum distribution. If your account balance is less than or equal to $5,000, your account will be distributed to you in a lump sum as soon as you submit a completed form. Upon termination of your participation in the Plan and distribution of your account balance, you will be charged a $60 fee. Payment of your account will be made in a lump sum. Beginning in 2002, the rollover rules are liberalized and will permit direct rollovers of after-tax contributions, not just the earnings portion, to an IRA or another employer's qualified retirement plan.

How will my distributions be taxed for Federal income tax purposes?

The distribution of any after-tax contributions will not be subject to Federal income tax on distribution. Because the earnings on your contributions are not subject to Federal income tax while in the Plan, these earnings generally will be subject to tax when distributed to you. A distribution of taxable earnings made to you also may be subject to an apitional 10% tax if they are distributed to you before you attain age 59-1/2 or certain other specified circumstances. You can avoid current taxation and the 10% apitional tax by rolling over the taxable portion of your distribution to a traditional IRA or another qualified retirement plan. When you elect to receive a distribution from the Plan, you will receive a tax notice that more fully explains the tax rules and the alternatives available to you. In any event, you also should consult your personal tax advisor regarding Plan distributions. Please note that if you make a withdrawal of less than the full amount of your Plan account, your withdrawal will include after-tax and taxable amounts in proportion to the amounts contained in your Plan account. If you take a complete distribution, all earnings will be fully taxable. Federal tax law currently does not allow you to choose only to withdraw your after-tax amounts from the Plan.

Who will receive my Plan account in the event of my death?

You may designate a beneficiary to receive your Plan account in the event of your death. If you are married, your beneficiary will automatically be your spouse unless your spouse consents to a different beneficiary designation in writing. You may designate your beneficiary(ies) as part of the enrollment process, and thereafter, you may change your beneficiary(ies) by submitting a new designation to the Plan's recordkeeper.

How do these costs compare to other plans I can participate in on my own?

In general, these costs are reduced due to the fact that you are participating in a group plan, which was designed specifically for AVON's Independent Sales Representatives and through that, the cost to administer the Plan has been reduced. Although the cost to administer the Plan is reduced, you need to compare this with similar programs with similar investments and services. It is important that you review each fund's prospectus before investing.

Must I contribute every campaign?

Remember, part of your success in achieving your financial goals is consistent with investing over time. However, you may change or stop your contributions at any campaign.

Who is available to help me?

For your convenience you have access to information through our Customer Service Center’s toll free number at 877-535-4419 or by using the link from www.yourAVON.com.

How can AVON offer such plan with such a low annual fee?

AVON is not offering the plan. Burke Group is the sponsor of the Plan. AVON merely acts on behalf of the Representative to collect and transfer the funds so you can benefit from "automatic" savings.

Why is AVON giving Representatives this opportunity and how will AVON benefit?

AVON has always been committed to empowering women by providing an opportunity to establish their financial independence. The Avon Independent Representative Retirement Plan is the next logical step in helping women earn and save all the money they can. There is no direct financial benefit to AVON. However, AVON does expect to benefit from the positive impact this Plan will have on its recruiting and retention efforts.

Choosing the Right Contribution

Eligible participants may choose between Roth 401(k), Pre-tax or After-tax contributions. Each of the options feature tax deferred investment earnings. Of course, all contributions are limited to your net earnings in your Avon business.

This information has been provided to assist you in evaluating the contribution types that are permissible under the terms of the plan. This does not constitute tax advice or a recommendation to contribute a specific way.

You have three choices when it comes to funding your 401k plan (only one choice is allowed at a time):

  1. Roth 401(k) Contributions

    Roth 401(k) contributions are contributed on an after-tax basis. However, if you hold the account for at least five years, and you're age 59 1/2, then the entire withdrawal is tax free (contributions and earnings).

    Contributions are aggregated with pre-tax contributions and both are subject to the annual 402(g) limit (currently $18,500) across all qualified plans that you contribute to. You are responsible for monitoring this. If you are over age 50, you may contribute an additional $6,000 in catch-up contributions under 414(v).

  2. Pre-Tax 401(k) Contributions

    Pre-tax contributions provide the benefit of reducing your taxable income in the year of the contribution. However, at the time of withdrawal, both your earnings and your contributions will be subject to income taxes.

    Self employed individuals completing Schedule C may reduce their taxable profit from business by reporting Pre-tax contributions to a qualified plan are reported on Line 28 of Form 1040.

    Contributions are aggregated with Roth 401(k) contributions and both are subject to the annual 402(g) limit (currently $18,500) across all qualified plans that you contribute to. You are responsible for monitoring this. If you are over age 50, you may contribute an additional $6,000 in catch-up contributions under 414(v).

  3. After-Tax Contributions

    After-tax contributions to the plan do not reduce your taxable income in the year of your contribution. Earnings are taxable upon withdrawal, but the portion of your investments that are contributions are returned tax free.

    Contributions are subject to the 415(c) Annual Additions Limit (currently $55,000). You are responsible for monitoring this. This higher contribution limit may be useful for Participants that have maxed out on the Roth and Pre-tax limits.