KPHA MEETING RETIREMENT PLANS 1/16/14 BRUCE A LAFFERRE

KPHA RETIREMENT PLANS COMPARISON 1/16/2014 BRUCE A LAFFERRE, CHFC, MSFS, MBA PHARMACISTS MUTUAL COMPANY

SIMPLE IRA SALARY DEFERRAL PLAN—OFFERS EMPLOYEES CHANCE TO CONTRIBUTE $12K (+$2500 > AGE 50) IN 2014 REQUIRES $ FOR $ MATCH BY KPHA UPTO 3% OF EMPLOYEE SALARY FOR 2014 REQUIRES NO SET UP FEE REQUIRES NO ANNUAL 5500 REPORT TO IRS KPHA CHOOSES A FIDUCIARY TO MANAGE THE CONTRIBUTIONS PARTICIPANTS MAYBE OFFERED A VARIETY OF INVESTMENT ALTERNATIVES

DOES NOT PROVIDE LOAN PROVISIONS TO PLAN PARTICIPANTS ALL CONTRIBUTIONS ARE IMMEDIATELY VESTED PARTICIPANTS MAY ACCESS ACCOUNT FUNDS UPON RETIREMENT, TERMINATION OF EMPLOYMENT, OR DEATH ADDITIONAL CONTRIBUTIONS BY KPHA ARE NOT ALLOWED ADDITIONAL CONTRIBUTIONS BY EMPLOYEES BEYOND TAX LIMITS ARE NOT ALLOWED

401K PLAN PLAN REQUIRES AN ADOPTION AGREEMENT FILED WITH IRS PLAN REQUIRES AN ANNUAL 5500 REPORT FILED WITH IRS BY AN ERISA ADMINISTRATOR PLAN OFFERS MORE FLEXIBILITY SALARY DEFERRAL PORTION THAT ALLOWS EMPLOYEES TO CONTRIBUTE UP TO $17500 AND ($5500 > AGE 50) IN 2014 MATCHING CONTRIBUTIONS BY KPHA ARE FLEXIBLE—SUCH AS $ FOR $ UP TO 3% OF SALARY AND $.50 FOR $ UP FROM 3% UP TO 5% OF SALARY

KPHA CAN ELECT TO MAKE ADDITIONAL CONTRIBUTIONS TO PLAN = TO LESSER OF EMPLOYEE SALARY OF $50K FOR 2014 VESTING SCHEDULE FOR KPHA CONTRIBUTIONS SET BY KPHA KPHA SELECTS A PLAN FIDUCIARY TO MANAGE THE PLAN ASSETS KPHA SELECTS THE INVESTMENT OPTIONS PLAN LOANS MAYBE AVAILABLE

DEVELOPMENTS TAX DEFERRED OPPORTUNITIES CREATED BY ERISA LEGISLATION SEVERAL DECADES AGO FOR ORGANIZATIONS TO CREATE RETIREMENT PLANS PROVIDE OPPORTUNITY TO OFFER TAX DEFERRAL OPPORTUNITY FOR EMPLOYEE TO SAVE FOR RETIREMENT PROVIDE IMPORTANT MATCHING INCENTIVES FOR EMPLOYEES TO CONSIDER MAJORITY OF WORKERS TODAY ARE NOT SAVING AND MAYNOT BE PARTICIPATING IN ANYTYPE OF RETIREMENT PROGRAM

DEFINED BENEFIT PENSION PLANS ARE BEING REPLACED BY SALARY DEFERRAL PLANS (401K AND SIMPLE IRA) PERFORMANCE RESPONSIBILITY IS BEING TRANSFERRED FROM EMPLOYER TO EMPLOYEE EMPLOYEE NOW DECIDES HOW MUCH AND WHEN TO INVEST IN THE PLAN MAY HAVE SOME CHOICES OF INVESTMENT OPTIONS PLAN ASSETS ARE PROTECTED UNDER FEDERAL LAWS

RETIREMENT FUNDS MAY NOT COME INTO CONSIDERATION FOR APPLICATION FOR EDUCATIONAL LOANS FOR CHILDREN PLAN ASSETS MAYBE AVAILABLE WHEN EMPLOYEE TERMINATES TO TRANSER TO ANOTHER PLAN PLAN EARNINGS AND CONTRIBUTIONS ARE TAX DEFERRED TREMENDOUS GROWTH OPPORTUNITIES OVER THE LONG TERM (TIME VALUE OF MONEY AND COMPOUNDING INTEREST) TAX DEDUCTIONS FOR EMPLOYERS FOR PAYMENTS

FEDERAL GUIDELINES ADOPT A WRITTEN PLAN AGREEMENT ARRANGE A TRUST FUND FOR PLAN ASSETS DEVELOP A RECORD KEEPING SYSTEM PROVIDE PLAN INFORMATION FOR EMPLOYEES CONDUCT PLAN ENROLLMENT MEETINGS MONITOR PLAN PERFORMANCE MONITOR PLAN SERVICE PROVIDER MAKE CONTRIBUTION DECISIONS FOR EMPLOYER ESTABLISH PROGRAM FOR PARTICIPANT COMPLAINTS

DEVELOP THE ANNUAL PLAN SUMMARY DESCRIPTION FOR EACH PARTICIPANT COMPLETE REQUIRED REPORTS AND PAY NECESSARY FEES PLAN ADMINISTRATOR SURETY BOND MAYBE REQUIRED ADJUST PLAN AS NECESSARY

KPHA CONSIDERATIONS PHMIC HAS BEEN IN EXISTANCE SINCE ONE OF 15 INSURANCE CARRIERS THAT HAVE MAINTAINED AN “A” RATING FROM AM BEST COMPANY FOR THE PAST 75 YEARS OFFER KPHA A VARIETY OF OPTIONS FOR PLAN FUND INVESTMENTS SPECIAL ARRANGEMENT WITH PMG ME