Your Retirement Plan Distribution

How Your Decisions Today Affect Your Future

Who Is Stifel Nicolaus?

• National Headquarters - St. Louis, MO• Full-Service Brokerage/

Investment Banking Firm• Founded in 1890• 1,220 Financial Advisors, 193

branches, in 35 states*

• Member SIPC & NYSE * including our affiliates

Three Retirement PlanDistribution Questions

1) What are my distribution alternatives?

2) What are my tax and penalty consequences?

3) How should I invest my distribution?

Distribution Alternatives

Lump- Sum

Distribution

Roll Overto IRA

Leave $$ in the Plan

Ten-Year Averaging

Distribution Options:Leave $$ in Plan

• >$5,000 balance = Can’t be forced out

• Sever ties with former employer– Gain control– Greater flexibility

Total Distribution

• Withdraw entire balance

• Pay ordinary income tax

• 10% Penalty if less than 59½ years of age

• 20% Withholding when paid directly to you

Income Tax

• Withdrawal amount added to your other income

• Taxed at your current rate– current rate = 10% - 35%– state & local taxes

Premature Distribution Penalty

• 10% pre-59½

• Exceptions:– 55 years and separation from service– Death– Disability– Deductible medical expenses– QDRO

20% Tax Withholding

• Distributions made payable to participant’s name• Automatic withholding to IRS• Prepayment of potential taxes due• Roll over 80% of distribution or replace the 20%

with your own funds• If not replaced:

– 20% withheld amount is considered a distribution– taxable– 10% penalty if less than 59½

Distribution ExampleDistribution: $100,000Tax Withheld (20%): - 20,000Check Received: $80,000

Rollover: $80,000Subject to Tax: $20,000Tax (28% + 10% penalty): - 7,600Tax Refund: ($20,000 - $7,600) $12,400

Lump-Sum Distribution/Forward Tax Averaging

• Favorable method of calculating taxes due• Taxes due in year of distribution• Other ordinary income calculated separately• 10-Year averaging

– uses 1986 income tax rates• 20% capital gains treatment

– applies to pre-1974 balances

To Be Eligible for Tax Averaging

• Age 59½

• Plan participant for 5 years

• One-time election

• Distribute entire balance (Lump Sum)

and…

• For 10-year averaging: Born before January 1, 1936

Forward Averaging Example

Taxes due

Distribution Amount

Ordinary1

10-Year Averaging2

$200,000 $47,025 $36,922

1 Assumes joint return at 33% tax rate. 2 10-year averaging tax rate based on 1986 single filer

schedule. Total tax due paid in full in year of distribution.

Distribution OptionsRoll to IRA

Advantages:– Avoid current taxation– Avoid penalty– Tax-deferred compounding

Indirect Rollover

• Take possession of $$

• 20% Withholding– either repay this or consider it a distribution

• Deposit into an IRA– within 60 days of receipt

Direct Rollover is smarterDirect Rollover is smarter

Direct Rollover

• $$ sent directly to new IRA custodian

• Continue tax-deferred savings

• No current income tax

• No 10% penalty

• No 20% withholding

• Taxed only at time of distribution from IRA

How to Do a Direct Rollover

• Determine where you want to invest

• Before you receive your check– Open your IRA– Sign the current plan’s distribution

paperwork– Plan makes check payable to IRA

custodian

Portability

QP distributions may be rolled to:• IRA• another qualified plan which accepts rollovers• 403(b) plan• 457 plan for a state governmental entity

Tax Benefits of a Rollover$100,000 for 10 years with a 10% Return

0

50000

100000

150000

200000

250000

28% IncomeTax + 10%

Penalty

28% IncomeTax

10 YearAveraging

Direct Rollover

Distribution Reduced by Taxes

Annual Earnings Reduced by Taxes100 % of Distribution Invested

No Taxes on Annual Earnings

Note: Taxes will be due on the Direct Rollover upon withdrawal. The above is a hypothetical illustration only and is not intended to reflect actual investment performance.

IRA Distributions

• Ordinary income on distributions

• Penalty pre-59½ (exceptions)

• Mandatory distributions age 70½

Should I Convert IRA to Roth IRA?

• Eligibility = < $100k AGI

• Pay ordinary income tax now for entire amount

• Can do partial conversion

• Tax-free growth

• Tax-free distributions for life

Employer Stock

• Special taxation if distributed in-kind

• Do not roll to IRA

• 10% penalty does apply

Employer Stock

• Basis = taxed as ordinary income in year of distribution

• Net Unrealized Appreciation (NUA)

– taxed at 15% long-term capital gain rate

(5% if in 10% or 15% bracket)

– at time of sale of shares

– ordinary income if less than one year

Investing Your Distribution

Analyze Your Situation

See Your Tax

Advisor

What is a Stock?Bond?Mutual Fund?

InvestmentSelection &

AssetAllocation

What is a Stock?

• Ownership

• Appreciation

• Yield (dividends)

What is a Bond?

• Loan (Debt)

• Interest Rate

• Return of Principal

• Maturity Date

What is a Mutual Fund?

• Diversified portfolio

• Professionally managed

• Various Objectives

Investors should consider a fund’s investment objectives, risks, and charges and expenses carefully before investing. The prospectus, which contains this and other important information, can be obtained by contacting your Financial Advisor and should be read carefully before investing. The investment return and principal value of an investment will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than the original cost. Mutual funds are not FDIC insured and may lose value.

Selecting Investments

• Balance risk and rate of return– Be realistic in return assumptions

• Every person has different risk concerns and income needs

• Stifel Nicolaus has numerous options available to meet your needs.

Risk and Reward

• The more risk taken, the greater the potential reward or loss.

• Risk and reward are directly related.

RISK REWARD

more

less

less

more

Risk Categories

• Conservative

• Moderate

• Aggressive

91.5% of Portfolio Varianceis Determined by Asset Allocation

Strategic Asset Allocation 91.5%

Security Selection 4.6%

Other Factors 2.1%

Market Timing 1.8%

Source: Brinson, Singer, and Beebower, “Determinants of Portfolio Performance II”: An Update, “Financial Analysts Journal”, May-June 1991.

Stocks, Bonds and Inflation$15,091.10$15,091.10

$3,246.39$3,246.39

$78.78$78.78

$20.19$20.19$11.72$11.72

$0.10

$1.00

$10.00

$100.00

$1,000.00

$10,000.00

1925 1935 1945 1955 1965 1975 1985 1995 2000 2002 2007

Large Company Stocks

Small Company Stocks

Long-Term Government Bonds

Treasury Bills

Inflation

1925 - 2007

Source: Stocks, Bonds, Bills and Inflation 2008 Yearbook, ™ Ibbotson Associates, Chicago. Large Company Stocks represented by S&P 500 (a registered trademark of Standard & Poor’s Corporation). Small Company Stocks are from an index of the 9th & 10th (lowest) capitalization stocks of the NYSE. Long-term U.S. government bonds represented by the Salomon Brothers Long-Term Government Bond Index, cash as measured by 30-day Treasury bills and inflation measured by the Consumer Price Index for all urban consumers (CPI-U). Dividends are reinvested. Past performance is no guarantee of future results. Indices are unmanaged and are not available for direct investment.

Short-Term Performance is Hard to Predict . . .

-30

-20

-10

0

10

20

30

40

19971998199920002001200220032004200520062007

Source: Stocks, Bonds, Bills, and Inflation 2008 Yearbook, ™ Ibbotson Associates, Chicago. Bonds as represented by the Salomon Brothers Long-Term Government Bond Index, Stocks are measured by the S&P 500® (a registered trademark of Standard & Poor’s Corporation) and Cash as measured by 30-day Treasury bills. The indices are unmanaged and are not available for direct investment. The S&P 500 includes dividend reinvestment. Past performance is no guarantee of future results.

Stocks CashBonds

. . . But Over Time, Stocks Tend to Out Perform Other Investments

Stocks Bonds Cash

Historical Average Annual Returns

1926 - 2007 10.36% 5.47% 3.73%

Best 20 Year Average Annual

Return

17.87% (Period ended

1999)

12.09% (Period ended

2001)

7.72% (Period ended

1991) Worst 20 Year

Average Annual Return

3.11% (Period ended

1948)

.69% (Period ended

1969)

.42% (Period ended

1950)

Source: Stocks, Bonds, Bills and Inflation 2008 Yearbook, Ibbotson Associates, Chicago, IL. Long-term U.S. Government bonds represented by the Salomon Brothers Long-Term Government Bond Index, common stocks are measured by the S&P 500® (a registered trademark of Standard & Poor’s Corporation) and Cash as measured by 30-day Treasury bills. The indices are unmanaged and are not available for direct investment. The S&P 500 includes dividend reinvestment. Past performance is no guarantee of future results.

Benefit of Time in the Stock Market

Frequency of Positive Returns 1926-2007

78 Five-Year Periods13%

87%

63 Twenty-Year Periods

100%

73 Ten-Year Periods

97%

3%

82 One-Year Periods28%

72%

Source: Stocks, Bonds, Bills and Inflation 2008 Yearbook, ™ Ibbotson Associates, Chicago. Common stocks are measured by the S&P 500® (a registered trademark of Standard & Poor’s Corporation). The indices are unmanaged and are not available for direct investment. The S&P 500 includes dividend reinvestment. Past performance is no guarantee of future results

Stock Prices Increased Stock Prices Decreased

Aggressive

5%

35%

10%

25%

25%

Conservative

65%

10%

25%

Moderate

2.5%

7.5%

30%

45%5%

10%

The above Asset Allocation Models are intended to provide a guide in the allocation of your total financial assets. The actual allocation of all or any portion of your financial assets may not correlate to the percentages shown for the applicable Model. Stifel does not predict nor guarantee actual results of an asset allocation or investments made in connection with a suggested allocation. Any changes in your financial situation should be reviewed with your Stifel Financial Advisory for a determination of whether changes in your portfolio allocation are necessary. Stifel also encourages you to periodically review your allocation with your Stifel Financial Advisor. Small company stocks may be riskier and more volatile than larger, more established company stocks. International investing is subject to the risk of currency fluctuations and political and economic events.

Sample Asset Allocation ModelsCash

Fixed Income

Large Cap Stocks

Mid Cap Stocks

Small Cap Stocks

International

Stifel Nicolaus Can Help You Assess Your Situation

The Asset Allocation

Analysis Report

Take the Next Steps

• Plan early• Consult with your tax

advisor• Free consultation &

analysis• Determine which tax

strategy is best for YOU

Member SIPC and NYSE

Questions?This presentation is for educational purposes only.

It is recommended that you seek the aid of a competent tax advisor or tax attorney to assist you with tax advice and guidance.