Principal Executive Bonus Plus SM Presented to: [ Name Of Company ] [ Title Of Employees ] Presented by: [ Name Of Agent(s) ] [ Title Of Agent(s) ] [ Name Of Company/Firm ]

The Principal The Principal Financial Group ® (The Principal ® ) has worked with thousands of employers to provide design, implementation, financing and Internet-based, plan-level administrative services and support for nonqualified executive benefit programs.

2014 and future limitations Qualified plan limitations The Challenge 401(k)/403(b) plan deferral/“Age 50” catch-up: 2014: $17,500/$5,500 Max. compensation: 2014: $260, : Indexed 401(k) plan average deferral limit 2% Max. defined benefit 2014: $210,000 at age : Indexed Max. contributions Lesser of 100% or $52,000 Deductible IRA (indexed) contributions Limited for higher adjusted gross income (AGI)

The retirement gap

How it works

Benefits for the plan participant Overcomes qualified plan limitations on the amount key employees can save for retirement. The employer establishes a specially designed benefit. The benefit may be funded with an insurance policy to provide tax-advantaged retirement and/or survivorship benefits for the key employee. The employer may make discretionary contributions with after-tax dollars. An additional bonus may be provided to cover taxes. Employees may contribute after-tax contributions to the plan as well.

Access to specialized policy designed and managed for retirement income. –Policy is owned by the key employee; it’s portable. –May provide a tax free death benefit. –In many states, will have Asset Protection benefits. –Employees have access to investments or can receive a fixed rate of return. No 10% IRS penalty for early distributions. No minimum withdrawal required at age 70 ½. Annual statements and account information online 24/7. Benefits for the plan participant

The bonuses made to the plan are taxable income. The bonuses made to the plan may be subject to a repayment schedule if the participant leaves the company. Insurance underwriting may be required for funding plan with life insurance. FOR THE PLAN PARTICIPANT Considerations:

Competitive benefit plan to help recruit, reward and retain key employees. Tax-deductible employer contributions. Company contributions are discretionary and can be customized for each employee. Agreements may be added to the bonus plan to tie the key employee to the company. Simple, flexible plan design that’s easy to communicate and maintain. FOR THE COMPANY Benefits:

The plan is exempt from annual reporting and ERISA requirements. No fees for administrative services costs. FOR THE COMPANY Benefits:

Policies are not owned by the corporation. Employer contributions and bonuses reduce company cash flow. FOR THE COMPANY Considerations:

Life insurance policy design PROS AND CONS Pros “Tax-deferred” earnings Tax-free distributions (subject to contract limitations/charges) Tax-free life insurance death proceeds Cons Mortality cost, policy fees and expenses Process of underwriting Surrender charges may apply

Employer and participant administrative services Dedicated staff A knowledgeable administrator will provide personalized service and support. Program-level reporting Consolidated reports list coverage amounts, policy values and premium information. List billing We send consolidated payment reminders for your convenience – annual, semiannual quarterly or monthly. Online access at principal.com View policy information online; policy owners may also make changes or initiate service requests. Ongoing support Help to add new policies, process policy adjustments, generate illustrations or quotes and research answers to any question you might have.

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Sample reports

Provides a competitive benefit plan to recruit, reward and retain valuable employees. Plan features and benefits can be customized by employee. Simple, yet effective plan designs are easy to administer and are not subject to ERISA requirements. Any employer contributions are currently deductible by the employer. No administrative service fees. Executive Bonus Plan summary

Disclaimers While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that none of the member companies of The Principal are rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements. Insurance issued and plan administrative services provided by Principal Life Insurance Company. Principal Funds, Inc. distributed by Principal Funds Distributor, Inc. Securities offered through Princor ® Financial Services Corporation, 800/ , member SIPC. Principal Life, Principal Funds Distributor, Inc. and Princor are members of The Principal Financial Group ®, Des Moines, IA No part of this presentation may be reproduced or used in any form or by any means, electronic or mechanical, including photocopying or recording, or by any information storage and retrieval system, without prior written permission from the Principal Financial Group ®. Copyright © 2014 Principal Financial Services, Inc. BB11399 | 09/2014 | t p

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