An Individual(k) plan can provide higher contribution limits, greater funding flexibility, and lower costs than other retirement plan options for self-employed individuals or small business owners. Key benefits include the ability to make discretionary employer contributions of up to 25% of compensation, employee contributions of up to $15,500 per year, and loans and distributions from the plan. Individual(k) plans also allow for consolidating other retirement accounts and designating some contributions as Roth 401(k) contributions, which provide tax-free future distributions. The plan may be a good fit for businesses with only owner-employees or those that can exclude common-law employees from participation.

1. [Greg Younger, CRPC 636.534.2092 If You Work for Yourself…an Individual(k) Plan Can Work for You

2. Individual(k) An introduction to Individual(k) plans Is an Individual(k) plan right for me? Establishing and maintaining an Individual(k) plan

3. An Introduction to an Individual(k) Plan

4. What is an Individual(k) plan? A 401(k)-based plan Designed exclusively for owner-only businesses Created by pension reform legislation that went into effect in 2002 Introduction

5. What makes Individual(k) plans so appealing? Greater funding opportunity Funding flexibility Access to loans Multiple distribution options Low cost/low maintenance Opportunity to designate some contributions as Roth 401(k) contributions Introduction

6. How do Individual(k) plans work? Two funding components: Discretionary employer contribution (from 0% up to 25% of eligible compensation 1 ) “ Salary deferral” contribution (from $0 up to $15,500 for 2008) Aggregate limit: 100% of compensation up to $46,000 for 2008 Additional “catch-up” contributions up to $5,000 for individuals age 50 or older Introduction 1 What is considered compensation varies for self-employed individuals, partnerships, and corporations. Consult your tax advisor.

7. Example Tom is a 45-year-old, incorporated small-business owner who anticipates paying himself $100,000 in wages during 2008 An Individual(k) plan would afford Tom the following funding flexibility Introduction This example is provided for illustrative purposes only. Minimum Maximum Salary deferral contribution $0 $15,500 Discretionary employer contribution $0 $25,000 Total contribution $0 $40,500

8. Comparison for unincorporated businesses Introduction This example is provided for illustrative purposes only. *Assumes employer matching contribution of 3% of eligible compensation. Business owner net profit (2008) SIMPLE IRA maximum* SIMPLE IRA w/ catch-up maximum* SEP, profit sharing or money purchase pension Individual(k) maximum Individual(k) w/ catch-up maximum $10,000 $9,235 $9,235 $1,859 $9,294 $9,294 $50,000 $11,885 $14,385 $9,294 $24,794 $29,794 $100,000 $13,271 $15,771 $18,587 $34,087 $39,087 $150,000 $14,656 $17,156 $28,333 $43,833 $48,833 $200,000 $16,041 $18,541 $38,200 $46,000 $51,000

9. Comparison for incorporated businesses Introduction This example is provided for illustrative purposes only. *Assumes employer matching contribution of 3% of eligible compensation. Business owner’s W-2 wages (2008) SIMPLE IRA maximum* SIMPLE IRA w/ catch-up maximum* SEP, profit sharing or money purchase maximum Individuall(k) maximum Individual(k) w/ catch-up maximum $10,000 $9,535 $9,535 $2,500 $10,000 $10,000 $50,000 $12,000 $14,500 $12,500 $28,000 $33,000 $100,000 $13,500 $16,000 $25,000 $40,500 $45,500 $150,000 $15,000 $17,500 $37,500 $46,000 $51,000 $200,000 $16,500 $19,000 $ 46,000 $46,000 $51,000

10. Roth 401(k) designated deferrals Designated Roth 401(k) deferrals are made with after-tax dollars (no tax deduction today) Future distributions of earnings are tax-free if: Distribution is made after age 59½ or due to death or disability, and Participant has held Roth 401(k) account for at least five years Introduction

11. Roth 401(k) designated deferrals requirements Plan must allow for designated Roth 401(k) deferrals Maximum deferral amount does not change All or some of the $15,500 (for 2008) maximum deferral may be designated as Roth 401(k) deferrals No income limits restrict the designation of contributions as Roth 401(k) deferrals Catch-up contributions are also eligible for Roth 401(k) deferrals Introduction

12. Is an Individual(k) plan right for me?

13. An Individual(k) is available for all types of businesses Sole proprietorships Partnerships Corporations Types of businesses Is an Individual(k) plan right for me?

14. Types of businesses These plans may be right if you fit into one of the following categories: Category #1: Your business employs only business owners (including spouses) Category #2: Your business employs only common-law employees that can be excluded from plan participation under the federal laws governing plan coverage requirements Is an Individual(k) plan right for me?

15. Examples Family farmers & ranchers Board members Freelancers Consultants Independent contractors Store owners Sales representatives with 1099-MISC Doctors/attorneys Caterers Resort owners Home businesses Brokers Tax advisors/ financial planners Insurance agents Real estate agent Is an Individual(k) plan right for me?

16. Exclusions from plan coverage The following are some types of common-law employees that may generally be excluded from plan coverage: Employees under age 21 Those who work < 1000 hrs/yr Nonresident aliens Union employees covered under a collective bargaining agreement Is an Individual(k) plan right for me?

17. Example #1 Business type: Sole proprietorship, under age 50 2008 projected compensation: $80,000 Current arrangement: SEP-IRA This example is provided for illustrative purposes only. Is an Individual(k) plan right for me? Scenario 2008 maximum contribution Current arrangement $14,870 Adopt Individual(k) $30,370 Result 104% increase

18. Example # 2 Business type: Partnership, under age 50 Partner’s projected 2008 compensation: $100,000/partner Current arrangement: Profit sharing This example is provided for illustrative purposes only. Is an Individual(k) plan right for me? Scenario 2008 maximum contribution Current arrangement $18,587/partner Adopt Individual(k) $34,087/partner Result 83% increase

19. Example # 3 Business type: Sole proprietorship, over age 50 Projected 2008 compensation: $20,000 Current arrangement: None This example is provided for illustrative purposes only. Is an Individual(k) plan right for me? Scenario 2008 maximum contribution Adopt SEP-IRA $3,717 Adopt Profit Sharing $3,717 Adopt SIMPLE IRA $13,554 Adopt Individual(k) $18,587

20. What is asset consolidation? Consolidating some or all of your existing retirement savings under one umbrella, such as an Individual(k) plan Law changes have greatly enhanced the opportunities for asset consolidation Is an Individual(k) plan right for me?

21. Advantages of consolidation Reduce administrative fees Gain access to assets via Individual(k) plan loans Manage one unified retirement savings portfolio Eliminate statement clutter Is an Individual(k) plan right for me?

22. Types of retirement savings that can be consolidated… … under an Individual(k) plan: Profit sharing and money purchase Defined benefit 401(k) 403(b) (i.e., tax-sheltered account or annuity) Traditional IRA Rollover IRA SEP IRA SIMPLE IRA Is an Individual(k) plan right for me?

23. Three questions Would I like to have the option of contributing more than 25% of my compensation for a given year if circumstances permit? Is an Individual(k) plan right for me?

24. Three questions Would I like knowing that I could access my retirement savings – if circumstances required – in the form of a participant loan? Is an Individual(k) plan right for me?

25. Three questions Would I like to have the option of designating some or all of my deferral contributions as Roth 401(k) deferrals? Is an Individual(k) plan right for me?

26. Summary Higher funding limits – up to $46,000 (2008) Employer discretionary contribution of up to 25% of eligible compensation Plus up to $15,500 in employee contributions (2008) Funding flexibility Access to loans Multiple distribution options Cost-effective administration Asset consolidation opportunities Opportunity to make Roth 401(k) contributions Catch-up contributions Is an Individual(k) plan right for me?

27. Let’s Get Started. © 2006–2008 Ameriprise Financial, Inc. All rights reserved. Financial planning services and investments offered through Ameriprise Financial Services, Inc., Member FINRA and SIPC. Ameriprise financial advisors do not offer tax or legal advice. Always consult with your tax and legal advisors concerning your own situation.