1/ A For broker/dealer use only. Not for use with the public. A Unique Retirement Plan for the Sole Proprietor Individual(k) No bank guarantee Not a deposit May lose value Not FDIC/NCUA insured Not insured by any federal government agency

Please Note For broker/dealer use only. Not for use with the public. This presentation provides general information about some sole proprietor or owner-only business retirement plans. Pacific Life, their affiliates, distributors, and respective representatives do not offer legal or tax advice. Clients should consult their attorneys and tax advisors as to the applicability of this information to their specific circumstances and for complete, up-to-date information concerning federal and state tax laws. Insurance products are issued by Pacific Life Insurance Company in all states except New York and in New York by Pacific Life & Annuity Company. Product availability and features may vary by state. Mutual funds are offered by Pacific Funds SM.

 Overview—market opportunity  Individual(k) plans defined – Eligibility – Contributions – Loans – Rollovers  Q & A  Getting started For broker/dealer use only. Not for use with the public. Agenda

Aging of society Longer life expectancy Working past normal retirement age Rising healthcare expenses For broker/dealer use only. Not for use with the public. Overview

Retirement Plans for the Self-Employed  Individual(k)  SIMPLE IRA  SEP-IRA  SIMPLE 401(k)  Safe Harbor 401(k)  Profit sharing  Defined benefit  Cash balance  Nonqualified deferred compensation For broker/dealer use only. Not for use with the public.

 401(k)-based plan  Designed exclusively for owner-only employers  Popular after tax-law changes effective since 2002 For broker/dealer use only. Not for use with the public. What Is an Individual(k)?

 Employee salary deferral limit is 100% of compensation up to $18,000  Catch-up contribution (age 50 and older) is $6,000  Profit-sharing deduction limit is 25%  Total contribution per employee is $53,000  Employee salary deferrals are not subject to the IRC 404 deduction limit For broker/dealer use only. Not for use with the public. Individual(k) These increases in contribution limits, including catch-up for employees age 50 and older, were enacted under the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). These increases became effective on 1/1/02 and were scheduled to sunset after 12/31/10. H.R.4, the Pension Protection Act of 2006 (PPA), repeals the sunset provisions of EGTRRA as they relate to pension and IRA provisions. Increases in the limits on contributions, including catch-up for employees age 50 and older, under 401(k) plans were made permanent.

Owner(s) and spouse(s) Owner(s) with excludable employees Corporations Partnerships Sole proprietorships Types of businesses Designed for owner-only businesses For broker/dealer use only. Not for use with the public. Who Can Establish an Individual(k)?

Employees younger than age 21 Employees with less than one year of service Employees who work fewer than 1,000 hours per year Certain union employees Certain nonresident alien employees For broker/dealer use only. Not for use with the public. Which Employees Are Excludable?

 Plan must be established by the last day of the business’s tax year  IRS-approved plan document – Investment provider – Third-party administrator For broker/dealer use only. Not for use with the public. How and When to Establish?

 Administration may be provided by financial institution or third party  Tracking deferrals  Loan administration  Distribution and 1099-R reporting  Annual IRS Form 5500EZ preparation – When plan assets are $250,000 or greater For broker/dealer use only. Not for use with the public. Plan Administration Pacific Life and its affiliates do not provide any employer-sponsored qualified plan administrative services or impartial investment advice and do not act in a fiduciary capacity for any plan.

 Employee salary deferral—any combination – After-tax Roth – Pretax contribution  Employer profit-sharing contribution – Cannot exceed 25% of compensation – Compensation more than $265,000 (2015) is disregarded – Can only be categorized as pretax contributions  Overall limit cannot exceed lesser of 100% of compensation or $53,000 (2015) For broker/dealer use only. Not for use with the public. Contribution Limits

 Elective salary deferral and catch-up contributions can be any combination of pretax contributions or after-tax Roth contributions For broker/dealer use only. Not for use with the public. Salary Deferral Limits $18,000 $6, Catch-Up Contribution for Ages 50+ Elective Deferral Taxable Year Actual limit may differ due to adjustment for inflation.

Comparison of Annual Contribution Limits For broker/dealer use only. Not for use with the public. CompensationMaximum Contribution Individual(k)SEP-IRASIMPLE IRA $10,000 $2,500$12,800 $50,000$30,500$12,500$14,000 $100,000$43,000$25,000$15,500 $150,000$53,000$37,500$17,000 $200,000$53,000$50,000$18,500 $300,000$53,000 $21,500 Chart assumes business owner is younger than age 50 and therefore cannot make “catch-up” contributions. The maximum contribution limit may be lower for individuals with self-employment income. Estimated 2015 Allowable Contributions

 May or may not be permitted by plan  If permitted, maximum outstanding loan amount is limited to the lesser of: – $50,000 or 50% of vested balance  Five-year (or shorter) amortization  Loan payments must be made at least quarterly  Interest rates selected by employer For broker/dealer use only. Not for use with the public. Loans

Distributions  Attainment of normal retirement age  Death  Disability  Hardship (salary deferral only)  Termination of plan  Separation from service For broker/dealer use only. Not for use with the public. Some events that “trigger” or permit distribution of retirement plan assets

 Distributions prior to age 59½ are subject to an additional 10% federal tax unless a qualifying exception occurs as defined by the IRS  Exceptions include: – Separation from service after age 55 – Series of substantially equal lifetime payments – Disability – Death For broker/dealer use only. Not for use with the public. Early Distribution Federal Tax This list is not inclusive of all exceptions. Please refer to for more information.

Individual(k)—Advantages  Contribution limits generally higher than SEP-IRA or SIMPLE IRA  Plan administration costs lower than traditional 401(k)  No discrimination or top-heavy testing  Roth 401(k) contribution  Availability of loans (funding product restrictions may apply)  Ability to consolidate other retirement assets For broker/dealer use only. Not for use with the public.

 Limited employer eligibility  Generally restricted to organizations without employees  Plan assets still may not be protected from creditors For broker/dealer use only. Not for use with the public. Individual(k)—Disadvantages

Individual(k) Rollover Sources  Qualified plans – 401(k) – Profit sharing – Money purchase – Defined benefit, etc.  403(b)/TSA  Governmental 457(b)  Traditional IRA and rollover IRA  SEP-IRA and SIMPLE IRA For broker/dealer use only. Not for use with the public. Note: A SIMPLE IRA participant can move his or her SIMPLE IRA to another qualified plan after the two-year requirement has been met.

Jack = $150,000Jill = $50,000 Jack is 52 and Jill is 48 Husband & wife, no employees Jack & Jill Corporation For broker/dealer use only. Not for use with the public. Case Study W-2 wages This hypothetical example is for illustrative purposes only.

Case Study For broker/dealer use only. Not for use with the public. Employee Deferral Age 50+ Catch-Up Employer Contribution Total Jack SIMPLE IRA$12,500$2,500 $4,500$19,500 SEP-IRA $0 $37,500 Individual(k)$18,000$6,000$35,000$59,000 Jill SIMPLE IRA$12,500 $0 $1,500$14,000 SEP-IRA $0 $12,500 Individual(k)$18,000 $0$12,500$30, Maximum Contribution Limits

 Increased overall contribution potential  Lower income-tax liability  Social Security benefits eligibility For broker/dealer use only. Not for use with the public. Question #1 What are the benefits of paying a spouse and including them in the individual(k) plan?

 SEP-IRA is limited to 25% of compensation  SEP-IRA does not allow salary deferral – No 50+ catch-up contribution  SEP-IRA does not allow loans  SEP-IRA may have to include part-time employees For broker/dealer use only. Not for use with the public. Question #2 Why might a 45-year-old sole proprietor with high income and no employees choose an individual(k) rather than a SEP-IRA? Hypothetical example. Product recommendations are to be made based on an individual's specific circumstances and financial goals.

 Determined by employer/trustee  Many options, including mutual funds and variable annuities For broker/dealer use only. Not for use with the public. Question #3 What funding vehicles are available for individual(k) plans?

Meet with employer to determine goals Identify owner-only businesses (partnerships and sole proprietorships) Review book of business For broker/dealer use only. Not for use with the public. Getting Started

Potential individual(k) candidates include: Who Are Prime Prospects?  Doctors  Attorneys  Family farmers  Tax advisors  Entrepreneurs  Independent insurance agents  Brokers  Real estate agents  Consultants  Moonlighters  Accountants  Home-business owners For broker/dealer use only. Not for use with the public.

Higher contribution limits Access to loans Cost-effective administration Funding flexibility Flexible distribution options After-tax Roth contributions For broker/dealer use only. Not for use with the public. Highlights of the Individual(k)

How Can I Help My Clients? For broker/dealer use only. Not for use with the public. Contact The Advanced Marketing Group (800) , ext The Retirement Strategies Group Additional tools and resources are also available on our website at PacificLife.com.

This material is not intended to be used, nor can it be used by any taxpayer, for the purpose of avoiding U.S. federal, state, or local tax penalties. This material is written to support the promotion or marketing of the transaction(s) or matter(s) addressed by this material. Pacific Life, Pacific Funds, their distributors, and respective representatives do not provide tax, accounting, or legal advice. Any taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor or attorney. For broker/dealer use only. Not for use with the public.

Investors should carefully consider an investment’s risks, charges, limitations, and expenses. This and other information about Pacific Life variable annuities and Pacific Funds are provided in the applicable product and underlying fund prospectuses. These prospectuses should be read carefully before investing. For broker/dealer use only. Not for use with the public.

Annuity withdrawals and other distributions of taxable amounts, including death benefit payouts, will be subject to ordinary income tax. For nonqualified contracts, an additional 3.8% federal tax may apply on net investment income. If withdrawals and other distributions are taken prior to age 59½, an additional 10% federal tax may apply. A withdrawal charge also may apply. Withdrawals will reduce the contract value and the value of the death benefits, and also may reduce the value of any optional benefits. Variable annuities are long-term investments designed for retirement. The value of the variable investment options will fluctuate and, when redeemed, may be worth more or less than the original cost. IRAs and qualified plans—such as 401(k)s and 403(b)s—are already tax-deferred. Therefore, an annuity should be used only to fund an IRA or qualified plan to benefit from the annuity’s features other than tax deferral. These include lifetime income, death benefit options, and the ability to transfer among investment options without sales or withdrawal charges. Effective December 31, 2014, Pacific Life Funds and its family of mutual funds changed its name to Pacific Funds. In addition, individual funds were also renamed. For more information, please visit For broker/dealer use only. Not for use with the public.

Pacific Life refers to Pacific Life Insurance Company and its affiliates, including Pacific Life & Annuity Company. Insurance products are issued by Pacific Life Insurance Company in all states except New York and in New York by Pacific Life & Annuity Company. Product availability and features may vary by state. Each insurance company is solely responsible for the financial obligations accruing under the products it issues. Insurance product and rider guarantees, including optional benefits and any fixed subaccount crediting rates or annuity payout rates, are backed by the financial strength and claims-paying ability of the issuing insurance company and do not protect the value of the variable investment options. They are not backed by the broker/dealer from which this annuity is purchased, by the insurance agency from which this annuity is purchased, or any affiliates of those entities, and none makes any representations or guarantees regarding the claims-paying ability of the issuing insurance company. Mutual funds are offered by Pacific Funds. Variable insurance products and mutual funds are distributed by Pacific Select Distributors, Inc. (member FINRA & SIPC), a subsidiary of Pacific Life Insurance Company and an affiliate of Pacific Life & Annuity Company (Newport Beach, CA), and are available through licensed third-party broker/dealers. Pacific Life Insurance Company P.O. Box 2378 Omaha, NE (800) In New York, Pacific Life & Annuity Company P.O. Box 2829 Omaha, NE (800) Pacific Funds P.O. Box 9768 Providence, RI (800) , Option 2