Automated Retirement Plan Loan Insurance Program to Pay Off Loans Upon Employee’s Involuntary Separation of Service HR Specialty Products & Services Catalogue Executive Summary A No Frills Distillation of Vendor’s Marketing Collateral Thomas A Ference President & CEO Human Resources Mining & Distribution Co Locating, Validating and Accelerating HR  Innovation   Office: 219-662-0201 Cell: 630-240-2583 Fax: 219-661-0236 e-mail: tference@hrmdco.com Website: www.hrmdco.com

Automated Retirement Plan Loan Cancellation Insurance Program The majority of Defined Contribution plan sponsors want employees to achieve retirement goals and are increasingly seeking solutions to minimize qualified plan leakage and enhance the employee’s overall financial wellness. This group-style insurance program underwritten by an A+ rated carrier protects plan participants from loan defaults caused by death, disability or involuntary unemployment Here, the ERISA Plan Sponsor adopts the insurance program at the plan level for all participants Plan data is shared between the plan record-keeper and the Insurance Program Administrator (IPA) as to which participants have separated from service The IPA requests affidavits from both the employee and the employer to certify that a separation was involuntary

Automated Retirement Plan Loan Cancellation Insurance Program Upon validation, the insurer reimburses the plan so as to restore the unpaid loan balance in the participants account Insurance premiums = $2.47/$1,000 / month on borrowed amounts up to $10,000 and $4.25 /$1,000/ month thereafter Premiums can be paid either by the participant via payroll deduction (along with principal and interest) or by the qualified plan from a plan level account Helps Plan Sponsors comply with ERISA requirements to “help preserve plan assets in the event of a loan” Helps participants conserve retirement assets by paying off loans thereby minimizing the temptation to cash out remaining plan balance (in an estimated 50%+ of loan default cases)

Retirement Plan Leakage = $70 Billion Savings Plans Being Compromised by Leakage Retirement Plan Leakage = $70 Billion Leakage is identified as the top priority for the nation’s retirement savings* 40 cents of every dollar contributed by savers under age 55 eventually leaks from the system** *Leakage Is a Serious Problem for 401(k) Plans, DCIIA, February 08, 2016 **Retirement Plan Leakage—Cause For Concern And Action, AON presentation to ERIC 2013

Loan Problem Starts at Separation from Employment Plans require loans before hardships Hardship Job loss leads to loan defaults, taxes and penalties Loans Participants with loan defaults more likely to cash out Cash Outs Millions of workers die, become disabled or suffer involuntary job loss each year.* 86% of loans default upon job loss. $6 billion in loans default annually exclusive of cash outs – a major driver of plan leakage. *Sources: U.S. Census data analysis and “Borrowing From The Future: 401(k) Plan Loans and Loan Defaults, Wharton School, University of Pennsylvania, February 2014

Outsourced Insurance Program Administrator - IPA 1. Participant takes a loan Loan protected by insurance 2. Welcome kit How program works, summary of participation Insurance Program Administrator 6. Loan default & cash out prevented Account balance is restored 3. Protection in place Staying on track for retirement 5. Covered event occurs IPA communications 4. IPA call center Questions and decision support

Next Steps This product/service is contained in the HR Specialty Products & Services Catalogue™ Operational level details about this particular service provider can be obtained in conference with the vendor The HR Mining &Distribution Co. is an independent and contracted representative of the vendor Upon your request, we will arrange for an introduction that can range from a simple, quick conference call to a services overview / system demo Tom Ference 219-662-0201 (Chicagoland area) or tference@hrmdco.com Thank you for your potential interest in this fresh thinking