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

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 1909.• 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