©2009 Lincoln National Corporation LCN Presenter Name (Edit on Slide Master) Title (Edit on Slide Master) Company (Edit on Slide Master) June 27, 2015 (Edit in View: Header and Footer) The Tax Increase Prevention and Reconciliation Act - TIPRA New Rules – New Opportunities for Retirement Planning

©2009 Lincoln National Corporation LCN Disclosure This presentation is for informational purposes only. It is intended to be accurate and authoritative in regard to the subject matter covered. It is presented with the understanding that I am not engaged in rendering legal or tax advice. Individuals should consult with their own legal or tax advisor concerning their own specific situation. Lincoln Financial Group provides the sales concepts discussed for information purposes only. IRS Circular 230 Disclosure Any discussion pertaining to taxes in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code. Individuals should seek advice based on their own particular circumstances from an independent tax advisor.

©2009 Lincoln National Corporation LCN Agenda Overview of TIPRA A Game-Changer for Retirement Planning Questions and Concerns 2009 Planning Strategies Summary

©2009 Lincoln National Corporation LCN Overview of New Roth Eligibility Through TIPRA Tax Increase Prevention and Reconciliation Act of $100,000 income limit on Roth IRA conversions eliminated in Special tax treatment available if conversion done in Direct rollovers from qualified plans allowed Income limits on contributions remain. TIPRA is the law and there is no current movement to repeal.

©2009 Lincoln National Corporation LCN Remember Roth? Benefits Tax-free distributions. No RMD for Roth IRA owner. Beneficiaries do not pay taxes on Roth distributions. Assets have the opportunity to grow income tax-free for decades. Recharacterization.

©2009 Lincoln National Corporation LCN Is TIPRA a Game-Changer? Introduction of the income tax – th Amendment Shift from defined benefit to defined contribution. Mutual funds, managed money. Cash management accounts. Access to information.

©2009 Lincoln National Corporation LCN A Game-Changer for Higher-Income Clients Requires different thinking. Diversify IRA account types. Reconsider tax-deferral. Taxes as a retirement expense. A bear-market advantage. Everyone gets a mulligan through recharacterization. The effect on asset allocation. Are taxes the greatest expense in retirement?

©2009 Lincoln National Corporation LCN A Different Level of Diversification Diversification is a cornerstone of asset allocation. (Diversification does not guarantee a gain or protect against a loss.) Stocks Bonds Cash 401(k) Traditional IRA Roth IRA Apply the same prudent thinking to retirement assets and account types. Mitigate the risk of a potentially hostile tax environment in retirement. Reducing uncertainty

©2009 Lincoln National Corporation LCN Top US Marginal Income Tax Rates S Source: The Atlantic

©2009 Lincoln National Corporation LCN Reconsider Tax-Deferral Tax-deferral a pillar of financial planning. Advisors, accountants, media. Few options for high-income taxpayers. Net Unrealized Appreciation. Tax-exempt bonds. Until now through TIPRA. Shifts the tax cost on new and on-going conversions. Save now pay later becomes pay now… save later

©2009 Lincoln National Corporation LCN Retirement Expenses Will taxes be lower in retirement? Tax rates increasing (Federal, state, local). Working longer will result in more taxable income. Accessing tax-deferred assets. Taxes as a retirement expense. Healthcare typically cited as the greatest expense. Taxes as a retirement expense will increase with higher rates. Compounded by required minimum distributions.

©2009 Lincoln National Corporation LCN A Bear-Market Advantage If you were allowed to convert in 2008 your tax liability would have been: IRA Balance (January 2008): $100,000 Tax Bracket: 35% Tax Liability: $35,000 As a result of this bear market your account balance and tax liability would be: IRA Balance (January 2010): $70,000 Tax Bracket: 35% Tax Liability: $24,500 Reduced account balances can result in a lower tax liability. Assets have the ability to recover tax-free.

©2009 Lincoln National Corporation LCN Everyone Gets a Mulligan Recharacterization – the ability to undo the conversion decision. Recharacterization mitigates the market risk of conversion and removes the tax liability. Receive a tax refund on any income tax paid on the conversion. The liability is removed if the tax has not yet been paid. Time to evaluate the conversion. Can be done up to the due date of the return plus extensions. Convert any time in 2010 and recharacterize by October 15, Compelling questions around asset allocation. Recharacterized funds can not be reconverted in the same tax year.

©2009 Lincoln National Corporation LCN Answering the Asset Allocation Question Investing in a tax-free account for the first time. Taxes paid up-front No required minimum distributions. Growth, income, guarantees? Municipal bond surrogate through taxable bond funds? Replicate a defined benefit plan with an annuity. Investing “unconverted” assets. - Tax-deferral through annuities. Withdrawals of taxable amounts are taxable as ordinary income and, if taken prior to age 59½, may be subject to a 10% federal tax penalty. Withdrawals will reduce the death benefit and cash surrender value.

©2009 Lincoln National Corporation LCN Questions and Concerns It may be difficult to pay the tax. Do a partial conversion relative to budget. Taxes can be deferred until tax filing years 2011 and 2012 for conversions done in My IRA has lost value. Reduced balances = lower tax liability. Reposition assets to recover tax-free. What if the market keeps going down? Recharacterization. My accountant has always told me to defer taxes as long as possible. This is first time Roth is available to high-income taxpayers.

©2009 Lincoln National Corporation LCN Questions and Concerns Congress will change the rules. Participants typically grandfathered. My income and taxes will be lower in retirement. Today’s tax rates are historically low. The need to work longer may result in more taxable income than expected. Won’t a conversion trigger AMT? Maybe… that’s why the tax professional needs to involved.

©2009 Lincoln National Corporation LCN Questions and Concerns My accountant said it’s not a good idea. Roth conversion is a new retirement strategy for high income tax payers that requires a reassessment of traditional planning (including tax-deferral). I’m too old to benefit. Could be… it depends on the objective (income, legacy etc). I use municipal bonds for tax-exempt income. Roth assets can serve as a surrogate or complement to tax- exempt bond strategies.

©2009 Lincoln National Corporation LCN Strategies Understand the new regulations. Make an informed decision regardless of outcome. Collaborate with your financial advisor and tax professional. Consider other family members who might benefit from conversion. Earmark funds for the tax liability. Consider the effect on asset allocation.

©2009 Lincoln National Corporation LCN Summary TIPRA is law and there is no talk of repeal. 1 New thinking is required for high income tax-payers. Recharacterization mitigates conversion risk. It’s not a matter of converting; it’s a matter of making a well-informed decision. The conversion decision isn’t complete without a well thought-out asset allocation strategy. 1 Future changes in tax laws may reduce or eliminate the benefits of applying the strategies offered in this presentation.

©2009 Lincoln National Corporation LCN Important information Important disclosures. Please read. Investment company products are sold by prospectus. Investors should consider the investment objectives, risks, and charges, and expenses of the investment carefully before investing. A prospectus contains this and other important information about the investment. To request a prospectus call or obtain one from your investment representative. Investors should read it carefully before they invest or send money. This material was prepared to support the promotion and marketing of insurance and investment company products. Lincoln Financial Group ® affiliates, their distributors, and their respective employees, representatives, and/or insurance agents do not provide tax, accounting, or legal advice. Any tax statements contained herein were not intended or written to be used, and cannot be used for the purpose of avoiding U.S. federal, state, or local tax penalties. Please consult your own independent advisor as to any tax, accounting, or legal statements made herein. Securities and investment advisory services are distributed by Lincoln Financial Distributors, Inc., a broker/dealer and registered investment advisor. Principal office is located at 130 N. Radnor-Chester Rd., Radnor, PA Insurance products are offered through Lincoln affiliate. ©2009 Lincoln National Corporation Lincoln Financial Distributors, Inc., a broker/dealer, is the wholesale distribution organization of Lincoln Financial Group. Lincoln Financial Group is the marketing name for Lincoln National Corporation and its affiliates. Affiliates are separately responsible for their own financial and contractual obligations.

©2009 Lincoln National Corporation LCN Thank you Thank you.