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Castle Financial Advisors, LLC

Like the Knights of Olde, Our Advisors Pledge to Like the Knights of Olde, Our Advisors Pledge to Help You Build & Fortify Your Financial Castle.Help You Build & Fortify Your Financial Castle.

Castle Financial Advisors, LLC

Like the Knights of Olde, Our Advisors Pledge to Like the Knights of Olde, Our Advisors Pledge to Help You Build & Fortify Your Financial Castle.Help You Build & Fortify Your Financial Castle.

How Many Years to Retirement? How Many Years to Retirement? Which Qualified Plan Is Right for You?Which Qualified Plan Is Right for You?

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Two Types of Qualified PlansTwo Types of Qualified PlansTwo Types of Qualified PlansTwo Types of Qualified Plans

Defined ContributionDefined ContributionDefined ContributionDefined Contribution Defined BenefitDefined Benefit

Age is not the Only FactorAge is not the Only Factor

Traditional 401(k) Plans

Safe Harbor 401(k) Plans

Traditional Profit Sharing Plan

Age-Weighted PS Plan

New Comparability PS Plan

Traditional Defined Benefit Plans

Fully Insured 412i Defined Benefit Plans

Defined Benefit / Defined Contribution

Floor Offset Defined Benefit Plans

New Comparability Defined Benefit Plans

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What is Your Annual Plan Budget?What is Your Annual Plan Budget?

Defined Contribution Plans• Participant Receives Account Balance at Retirement Annual

• Contribution = Usually % of Current Salary

• Maximum Annual Contribution for each participant is the lesser of $41,000* or 100 % of salary for 2004 and thereafter

• May favor younger or older employees based upon plan design

Define Benefit and 412(i) Fully Insured Plans• Pension at Retirement = Set by Plan Formula

• Annual Contribution is Amount Needed Each Year to Provide Pension at Retirement

• No Dollar Limit on Annual Contribution

• Maximum Dollar Limit on Pension Benefit Lesser of 100% Salary* or $165,000*

• Typically favors older employees

*Dollar Amount indexed and may increase each year.

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Safe Harbor 401(k)PlansSafe Harbor 401(k)PlansWhat Are They?What Are They?

Non Discrimination Tests Waived No ADP/ACP Tests Owner Can Defer Up to Maximum Limit

Regardless of Amount of Employees’ Deferrals

Must Provide One of the following Safe Harbor Contributions Either Non-elective Contribution

3% Compensation To All Eligible Employee Matching Contribution

100% First 3% Compensation Deferred plus50% Next 2% Compensation Deferred

No Minimum Top Heavy Contributions Required!

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Traditional Profit Sharing/401(k)PlansTraditional Profit Sharing/401(k)PlansWhat Are They?What Are They?

Traditional Profit Sharing Plan Contribution of 0 to 25% Plan Payroll

No Profits NecessaryCan Change Contribution Each Year

Allocation – in Proportion to SalaryNo Age Weighting

401(k) Element Elective Deferral - $13,000* in 2004 Catch-Up Contribution - $3,000* in 2004

Allowed for Those Age 50 & Older Max. Allocation for Individual

$44,000** in 2004 if Age 50 or Older$41,000** in 2004 if Under Age 50

*Scheduled increases through 2006 & indexed for inflation after 2006

**Indexed for inflation

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New Comparability Profit Sharing PlansNew Comparability Profit Sharing PlansWhat Are They?What Are They?

Non Discrimination Test - Cross Testing• Test Defined Contribution Plan as Defined Benefit Plan• Project Contributions to Retirement • Convert Accumulated Contributions to Monthly Benefit• Designed to Provide older groups of Employees a Larger Benefit

Plan Contribution Levels May Be Customized Preferred Employees may receive a Higher Contribution Rank & File Employees may receive a Lower Contribution * Each Year based upon Plan Budget & Census Information 401(k) Element may be added to Maximize Contributions Allocation Levels Based on Job Classifications

The Minimum employee contribution permitted is typically 5 percent

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New Comparability Profit Sharing Plans New Comparability Profit Sharing Plans Customized AllocationsCustomized Allocations

New Comparability Profit Sharing Plans New Comparability Profit Sharing Plans Customized AllocationsCustomized Allocations

Owner 60 205,000 41,000* 20% 41,000* 20%Owner 54 150,000 30,000 20% 41,000* 27%Mgr 50 80,000 16,000 20% 8,000 10%EE 1 35 35,000 7,000 20% 1,750 5%EE 2 34 30,000 6,000 20% 1,500 5%EE 3 24 25,000 5,000 20% 1,250 5%Totals $105,000 $94,500

Both Owners Get Same ContributionBoth Owners Get Same Contribution

Manager Receives Higher Contribution Rate than Other EmployeesManager Receives Higher Contribution Rate than Other Employees

Traditional PSP New CompTraditional PSP New Comp PSPPSP AgeAge SalarySalary ContributionContribution ContributionContribution

*2004 maximum allocation, indexed for inflation & may increase in future

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Defined Benefit PlansDefined Benefit Plans For Maximum Plan Contributions!For Maximum Plan Contributions!

Client Profile Ages 45-85 Relatively Stable Profits

Employees Relatively Few Employees Relatively Young Employees

Client Goals Maximum

Contributions/DeductionBenefits

Sustained Plan Contributions Totally Flexible Contributions not Important

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412(i) Plans412(i) Plans Advantages for Older Business OwnersAdvantages for Older Business Owners

Highest Possible Contribution/Deduction Benefits Death Benefits

Highest Security Benefits Guaranteed Totally Recession Proof

No Investment Fund Guaranteed Interest Rate No Stock Market Investments

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Comparison of Qualified PlansComparison of Qualified PlansFirst Year ContributionsFirst Year Contributions

Comparison of Qualified PlansComparison of Qualified PlansFirst Year ContributionsFirst Year Contributions

45/62 41,000 80,278 164,97045/62 41,000 80,278 164,970

50/6250/62 44,000 133,131 258,019 44,000 133,131 258,019

55/62 55/62 44,000 211,448 395,634 44,000 211,448 395,634

60/6560/65 44,000 236,910 450,112 44,000 236,910 450,112

*Assumes maximum contributions & maximum life insurance for 2004. Traditional Defined Benefit uses Guardian Life PTWL100 Pref, 412(i) uses Guardian Life PTWL3 Pref. & PTAPRA-3F

Att Age/Ret Age

Defined Defined Contribution* Benefit*

412i Plan*

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A Qualified Retirement Plan A Qualified Retirement Plan is Available for You!is Available for You!

Defined Contribution Plans 401(k) Savings Plans

Excellent Employee Contributory Plan Traditional Profit Sharing Plans

Ideal for One-Person Plans Age-Based Profit Sharing Plans

Each Age Has Separate Allocation Level New Comparability Profit Sharing Plans

Different Allocation Levels for Different Groups

Defined Benefit Plans 412(i) Plans

Highest Possible Contributions Traditional Defined Benefit Plans

High Contributions with More Flexibility

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The information in this presentation is The information in this presentation is designed to be general in naturedesigned to be general in nature and for and for

educational purposes onlyeducational purposes only. . Castle Financial Castle Financial AdvisorsAdvisors, its agents and employees do not , its agents and employees do not

give tax or legal advicegive tax or legal advice..