1. Planning for a Brighter Future
THE BENEFITS OF STARTING A RETIREMENT PROGRAM

2. Planning for a Brighter Future
Why Start a Retirement Program?
 Personal Retirement
 Individual and Business Tax Savings
 Proactively Prepare for the Future
 Attract and Retain Valued Employees
© 2011, Paychex, Inc. This information is provided with the understanding that
Paychex is not engaged in rendering legal, accounting, or other professional
services. If legal advice or other expert service is required, the service of a
competent professional should be sought.
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3. Planning for a Brighter Future
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4. Planning for a Brighter Future
Social Security is anything but secure.
– Replaces only about 27% of your income
– By 2015, will pay out more than it collects
– By 2037, will be unable to cover benefits
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5. Planning for a Brighter Future
Your Retirement Plan – The Pretax Advantage
Post-Tax* Pretax*
Investing $500/mo. $500/mo. Pretax*
Period Deposit into Conventional Contribution into Advantage
Savings Account Retirement Plan
10 Years $89,993 $103,276 + $13,283
20 Years $281,473 $382,848 + $101,375
30 Years $689,419 $1,139,663 + $405,244
*Assumes 25% tax rate, 10% rate of return, compounded monthly
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6. Planning for a Brighter Future
The Compounding Advantage
 Starting now pays off later
– The earlier you start investing, the more your contribution
can grow
 What is compounding interest?
– Reinvesting earned interest to earn additional interest
– The more frequent the compounding, the more you can earn
The Advantage of Compounding Interest
Assumes a $500 monthly pretax contribution
$1,236,816 $1,354,757
$518,801
$156,779
10 Years 20 Years 29 Years 30 Years
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7. Planning for a Brighter Future
Looking into the crystal ball at 40 years old
 $85,000 salary
 10% annually
 Retire at age 65
 8% return*
 $873,000
at retirement
*This illustration shows a hypothetical rate of return of 8%. Actual investments
may return more or less.
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8. Planning for a Brighter Future
Looking into the crystal ball at 35 years old
 $165,000 salary
 10% annually
 Retire at age 65
 8% return*
 $2,700,000
at retirement
*This illustration shows a hypothetical rate of return of 8%. Actual investments
may return more or less.
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9. Planning for a Brighter Future
Looking into the crystal ball at 25 years old
 $35,000 salary
 5% annually
 Retire at age 65
 7% return*
 $548,000
at retirement
*This illustration shows a hypothetical rate of return of 7%. Actual investments
may return more or less.
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10. A Benefit for Your Business
Attracting High-Quality Employees
Research shows that without benefits, a small-
business owner has trouble attracting the best
quality employees.
 75% of employees ranked “my ability to afford
retirement” as their top concern.*
 64% of employees said that a retirement
plan is critical or very important.**
 Yet, only 36% of employers said it was
critical or very important to their
recruitment and retention efforts.**
*2011 Top Five Total Rewards Priorities Survey, Deloitte Consulting LLP
**MetLife Ninth Annual Study of Employee Benefits Trends, 2011
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11. A Benefit for Your Business
Retaining Valued Employees
If you don’t offer a retirement plan,
don’t be surprised if you lose employees
to a competitor that does!
 40% of workers in small companies
say they would leave their job for
another that provided a 401(k) plan.*
*Survey by Harris Interactive, sponsored by ShareBuilder 401(k), a subsidiary of
ING Direct.
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12. 401(k) – A Flexible Retirement Program Option
Three Easy Ways to Fund Your 401(k)
1) Pretax Employee Salary Deferral
– Directly out of paycheck each pay period before taxes
2) Employer Match
– % match by employer into employee 401(k)
– Tax-deductible contribution for the employer
3) Employer Profit Sharing
– Annual tax-shelter opportunity
– Lump-sum contribution
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13. Maximize Your 401(k) Contributions
2011 401(k) Contribution Opportunities
 Pretax Employee Salary Deferral (1%-96%)
– Maximum contribution $16,500
 Employer Match – 0%-25% per pay period
 Employer Profit Sharing – 0%-25% year end
Note:
• The IRS caps any employee at an income level of $245,000.
• An employee over 50 can defer an additional $5,500 per year.
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14. How to Start Your 401(k)
Three Simple Decisions
1) Determine Eligibility Requirements
2) Select Your Fund Options
3) Determine Matching/Vesting Options
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15. How to Start Your 401(k)
Employer 401(k) Matching/Vesting Options
Matching Employer Not to Employer’s Years of
Options Matching Exceed Maximum Vesting
Contribution This Matching from Date Vesting Percentage
Percentage Percentage of Hire
of Salary
Option 1 Option 2 Option 3
100% of first 3%
1 5% 4%
50% of next 2%
1 100% 0% 0%
2 0% 0% 0% 2 100% 0% 20%
3 25% 4% 1% 3 100% 100% 40%
4 50% 4% 2% 4 100% 100% 60%
5 50% 6% 3% 5 100% 100% 80%
6 100% 3% 3% 6 100% 100% 100%
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16. Typical Non-Paychex 401(k) Model
You Manage Many Relationships
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17. The Paychex 401(k) Advantage
Paychex Manages Those Relationships for You
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18. What Paychex Does for You
 Required legal documents
 Adoption agreement
 Plan document
 Summary plan description
 Payroll integration of employee and employer
contributions and census data
 Enrollment meeting and enrollment kits
 Automatic enrollment option
 Roth contribution option
 Account access via participant Web site
or automated phone system
 Toll-free phone support
 Daily valuation of account balances
 Deferral calculations for pretax and Roth contributions
 Electronic recordkeeping and fund transfer each pay period
 Quarterly IRS nondiscrimination testing
 Quarterly management reports
 Quarterly participant statements
 Loan modeling and administration
 Discretionary profit-sharing plan
 Preparation of Form 5500
 Preparation of Forms 1099-R and 945
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19. Investment Plan
Paychex Fixed Fund Select
 Several preselected menus from a variety
of multiple-fund families
 Option to move from one fixed-fund menu
 Move to Guided Fund Select or Open Fund Select
without penalty*
*Fund fees may apply. Refer to each fund prospectus for details on fees.
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20. Investment Plan
Paychex Guided Fund Select
 Fund fiduciary service through our partner GuidedChoice®
 Provides the quarterly review and benchmarking
 Provides an investment policy statement
 Acts like an investment policy committee
 Offers several preselected, dynamic menus using a variety of
fund families
 Advisory services provided by GuidedChoice Asset
Management, Inc.
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21. Investment Plan
Paychex Open Fund Select
 Flexibility, choices, and control
 Create a specific menu tailored to your needs
 Up to 4,500 fund choices from hundreds of fund families
 Add and delete funds at the plan sponsor’s discretion
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22. Flexible Spending Accounts
ANOTHER PRETAX BENEFIT

23. What Is a Flexible Spending Account (FSA)?
 Section 125 of the IRS tax code
 Allows employees to pay for out-of-pocket expenses on a
pretax basis:
– Medical
– Dental
– Vision
– Certain over-the-counter items
– Note: Over-the-counter medications or drugs must
have a doctor’s prescription
– Dependent Care
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24. The Benefits of an FSA
Savings!
 Employee:
– Federal income tax savings
– Tax savings on FICA
– State tax savings
APPROX. 25%–45% SAVINGS ON EXPECTED GOODS AND SERVICES
 Employer:
– Savings on FICA tax
– Savings on unemployment tax
APPROX. 8%-10% SAVINGS ON PAYROLL TAXES
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25. Flexible Saving for Flexible Spending
Allows for Saving in Three Different Spending Buckets
Insurance Dependent Care Out-of-Pocket
Premiums Expenses Medical, Dental,
and Vision Expenses
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26. What Paychex Does for You
We Help Manage the Details
 Preparation of required legal documents
 Enrollment meeting and materials
 Payroll integration (for Paychex payroll clients)
 FSA debit card
 Weekly claim processing within two business days
 Direct deposit of reimbursements
 Participant Web site and toll-free support
 Employer and employee status reports
 Discretionary employer contributions allowable through
employer-funded FSA
 Regular nondiscrimination testing
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