Lawhorn & Associates, P.L.L.C. Small Business Retirement Plans

Lawhorn & Associates, P.L.L.C. Agenda  Different Types of Plans  Summary

Lawhorn & Associates, P.L.L.C. Different Types of Plans  SIMPLE IRA  SEP-IRA  SOLO-401(k)  Safe-Harbor 401(k)

Lawhorn & Associates, P.L.L.C. SIMPLE-IRA  Savings Incentive Match PLan for Employees  Very little paperwork to start and very easy to administer  No annual filings with the IRS  Start-up and ongoing cost very low  Employees elect to defer part of their salary into an IRA account up to $10,000 ($12,500 if over 50)  Mandatory company match (generally 3%) every year  Overall limit between employee contributions and employer match of $20k ($25k if over 50)  Cannot have more than 100 employees  Employee is 100% vested immediately in his / her account  Must be the only retirement plan company has  Must set up plan by Oct 1 st.

Lawhorn & Associates, P.L.L.C. SEP-IRA  Simplified Employee Pension  Very little paperwork to start and very easy to administer  No annual filings with the IRS  Start-up and ongoing cost very low  Completely funded by the company via a uniform contribution rate – no employee salary deferrals  Can allow for a higher contribution than a SIMPLE in most instances  Maximum contribution (Lesser of 25% of salary or $44k) – No benefit for being over 50 with SEP  Employer can decide whether to make contributions year-to-year  No limit on number of employees  Employee is immediately 100% vested in his / her account  Can set up plan as late as tax return deadline (including extensions)

Lawhorn & Associates, P.L.L.C. SOLO-401(k)  More paperwork and administrative issues  Required annual filings with the IRS once assets hit $100k  Higher start-up and ongoing costs  Employees elect to defer part of their salary into an account up to $15,000 ($20,000 if over 50)  Discretionary company match up to 25% of eligible compensation  Overall limit between employee contributions and employer match of $44k ($49k if over 50)  Can allow for a higher contribution than a SIMPLE & SEP in most instances  Most plans allow loans – Cannot do with SIMPLE & SEP  Limit on number of employees – Only Husband & Wife  Employee is immediately 100% vested in his / her account  Must set-up by end of your tax year – generally Dec. 31st

Lawhorn & Associates, P.L.L.C. Safe Harbor 401(k)  More paperwork and administrative issues than SIMPLE & SEP, but not as bad as a regular 401(k)  Required annual filings with the IRS  Higher start-up and ongoing costs  Employees elect to defer part of their salary into an account up to $15,000 ($20,000 if over 50)  Mandatory company match (3%-4%)  Can allow for a higher contribution than a SIMPLE & SEP in most instances  Most plans allow loans – Cannot do with SIMPLE & SEP  No Limit on # of employees  Employee is immediately 100% vested in his / her account  Must set-up by end of your tax year – generally Dec. 31st

Lawhorn & Associates, P.L.L.C. Summary FeatureSIMPLESEPSolo-401(k) Safe Harbor 401(k) Cost to set-up & administer Very Low MediumMedium Annual filings with IRS NoneNone Yes, once assets > $100k Yes Employee Eligibility All employees earning $5k for any past 2 years and expected to do so in current year. No age restriction Age restriction cannot exceed 21; earned at least $450 in compensation in 3 of the past 5 years Age restriction cannot exceed 21; service requirements cannot exceed 1 year

Lawhorn & Associates, P.L.L.C. Summary FeatureSIMPLESEPSolo-401(k) Safe Harbor 401(k) Maximum Employee Deferral Lesser of: a)100% of Salary b)$10k None – Company funds account Lesser of: a)100% of Salary b)$15k b)$15k Over 50 Catch-Up? Yes - $2,500 None Yes - $5,000 Required Employer Contribution? YesNoNoYes

Lawhorn & Associates, P.L.L.C. Summary FeatureSIMPLESEPSolo-401(k) Safe Harbor 401(k) Maximum Employer Contribution Dollar for dollar match up to 3% of salary or 2% of compensation for all eligible employees Lesser of: a)25% of salary b)$44k 25% of salary Dollar for dollar match on first 3% of salary and 50% on next 2% or 3% of compensation for all eligible employees

Lawhorn & Associates, P.L.L.C. Summary FeatureSIMPLESEPSolo-401(k) Safe Harbor 401(k) Overall Limit per Employee $20,000 or $25,000 if over 50 Lesser of: a)25% of salary b)$44k Lesser of: a)100% of salary b)$44k ($49k if over 50) Lesser of: a)100% of salary b)$44k ($49k if over 50) Loans?NoNo Employer Option EmployeeVestingImmediateImmediateImmediateImmediate