Understanding Retirement Plan Alternatives for Small Businesses Presented by: Mark M. Gutrich President & CEO ePlan Services, Inc.

What Are The Basic Options? Simplified Employee Pensions (SEP) – Any small business with/without employees Savings Incentive Match Plan (SIMPLE) – Any employer with less than 100 employees Profit Sharing/401(k) Plan – Any size company, including sole proprietors Safe Harbor 401(k) Plan – Any size company, typically less than 100 employees - 1 -

What is a SEP? B ASICS IRS Form 5305-SEP Minimum Eligibility (Fixed) : – 21 Years of Age – Earned $450 in current year – Employed 3 of 5 Years Maximum Contribution: – 25% of Compensation – Up to $46,000/year – No employee deferrals P ROS & C ONS PROS: Easy to Set-Up & Maintain No Mandatory Contributions No Discrimination Testing No Annual Tax Filings CONS: Must Include ALL Employees Same Contributions for ALL 100% Employer Funded 100% Employee Owned - 2 -

What is SIMPLE? B ASICS IRS Form 5305-SIMPLE Minimum Eligibility (Fixed) : – Earned $5,000 in any 2 past yrs – Likely to Earn $5,000 current yr Mandatory Contributions: – 2% of Annual Compensation -OR – -3% Match on Deferrals Elective Deferrals: – 100% of Compensation – Up to $10,500/year P ROS & C ONS PROS: Easy to Set-Up & Maintain No Discrimination Testing No Annual Tax Filings CONS: Must Include ALL Employees Low Elective Deferral Rates Mandatory ER Contributions Cannot Make Addtn’l Contrib 100% Immediately Vested - 3 -

What is a Profit Sharing/401k? B ASICS Plan Adoption Agreement Flexible Eligibility: – 18 to 21 Years of Age – Worked 1,000 hours/year Optional Contributions: – Deferral Matching – Profit Sharing Elective Deferrals: – 100% of Compensation – Up to $15,500/year P ROS & C ONS PROS: Easy to Set-Up & Administer No Mandatory Contributions Permitted Disparity Designs Optional Vesting Schedules Optional ROTH Contributions Optional Loan Feature CONS: Annual Tax Filings Annual Administration Fees Annual Discrimination Tests - 4 -

What is a Safe Harbor 401k? B ASICS Plan Adoption Agreement Flexible Eligibility: – 18 to 21 Years of Age – Worked 1,000 hours/year Mandatory Contributions: – 3% of Annual Compensation - OR – – 3.5% to 4% Match on Deferrals Elective Deferrals: – 100% of Compensation – Up to $15,500/year P ROS & C ONS PROS: Easy to Set-Up & Administer No Discrimination Testing Optional Profit Sharing Optional Vesting Schedules* Optional ROTH Contributions Optional Loan Feature CONS: Annual Tax Filings Annual Administration Fees Mandatory ER Contributions - 5 -

How Do They Compare? 2009 Maximum Deductible Contributions for Incorporated Businesses W-2 Income$25,000$50,000$100,000$150,000 SEP-IRA$6,250$12,500$25,000$37,500 SIMPLE – IRA/401k* Normal w/ Catch-Up (Age 50+) $12,000 $14,500 $12,500 $15,000 $13,500 $16,000 $14,500 $17,000 Profit Sharing/401k Normal w/ Catch-Up (Age 50+) $16,500 $22,000 $29,000 $34,500 $41,500 $47,000 $49,000 $54,500 Safe Harbor 401k* Normal w/ Catch-Up (Age 50+) $17,250 $22,750 $30,500 $36,000 $44,500 $50,000 $49,000 $54,500 *Includes Non-Elective Employer Contribution Amounts - 6 -

How Do They Differ? SEP-IRASIMPLESH 401kPS 401k $1,500 Tax Credit Easy to Set-Up & Maintain Integrated with SurePayroll  Exclude Part-Time Employees  Optional Employer Contributions  Vesting of Employer Contributions  Optional ROTH Contributions  Optional Loan Feature  No Discrimination Testing  No Annual Administration Fees  No Annual Tax Filing  - 7 -

SEP v. PS/401(k) SEP No Administrative Fees No Annual Tax Filings No Discrimination Testing Max Contrib = Lesser of: – 25% Compensation – Up to $46,000 Must Include ALL Employees – Including Part-Timers No ROTH Contributions No Pre-Retirement Access S OLO ( K ) Low Administrative Fees No Annual Tax Filings No Discrimination Testing Max Contrib = Lesser of: – 100% Compensation – Up to $46,000 May Exclude Employees – Vesting Schedules Available Optional ROTH Contributions Optional Loan Feature - 8 -

SIMPLE v. SH401k SIMPLE No Administrative Fees No Annual Tax Filings No Discrimination Testing Must Include ALL Employees Max Personal Deferral: – 100% Compensation – Up to $10,500 Mandatory Contributions: – 2% of Annual Compensation - OR – – 3% Match on Deferrals 100% Immediately Vested S AFE H ARBOR 401( K ) Low Administrative Fees Easy Annual Tax Filings No Discrimination Testing May Exclude Employees Max Personal Deferral: – 100% Compensation – Up to $15,500 Mandatory Contributions: – 3% of Annual Compensation - OR - – 3.5% to 5% Match on Deferrals Up to 2 yr Vesting Schedule* - 9 -

How Do I Choose? SEP Willing to fund entire plan, without employee help SIMPLE Willing to unconditionally give employees money/yr Traditional 401k Not sure if you can afford to make contributions/yr Safe Harbor 401(k) Willing to conditionally offer employees money/yr

Questions & Answers