Platinum Advisory Group, LLCMichael Foley, CLTC, LUTCFManaging Partner373 Collins Road NESuite #214Cedar Rapids, IA 52402Office: 319-832-2200Direct: 319-431-7520mdfoley@mdfoley.comwww.PlatinumAdvisoryGroupLLC.com

Retirement Plans for SmallBusinesses

Prepared for: Preferred Client Use for Business Owners,Key Employees and High Net Worth Individuals

January 13, 2016

If you're self-employed or own a small business andyou haven't established a retirement savings plan,what are you waiting for? A retirement plan can helpyou and your employees save for the future.

Tax advantagesA retirement plan can have significant taxadvantages:

• Your contributions are deductible when made• Your contributions aren't taxed to an employee

until distributed from the plan• Money in the retirement program grows tax

deferred (or, in the case of Roth accounts,potentially tax free)

Types of plansRetirement plans are usually either IRA-based (likeSEPs and SIMPLE IRAs) or "qualified" (like 401(k)s,profit-sharing plans, and defined benefit plans).Qualified plans are generally more complicated andexpensive to maintain than IRA-based plans becausethey have to comply with specific Internal RevenueCode and ERISA (the Employee Retirement IncomeSecurity Act of 1974) requirements in order to qualifyfor their tax benefits. Also, qualified plan assets mustbe held either in trust or by an insurance company.With IRA-based plans, your employees own (i.e.,"vest" in) your contributions immediately. Withqualified plans, you can generally require that youremployees work a certain numbers of years beforethey vest.

Which plan is right for you?With a dizzying array of retirement plans to choosefrom, each with unique advantages anddisadvantages, you'll need to clearly define your goalsbefore attempting to choose a plan. For example, doyou want:

• To maximize the amount you can save for yourown retirement?

• A plan funded by employer contributions? Byemployee contributions? Both?

• A plan that allows you and your employees tomake pretax and/or Roth contributions?

• The flexibility to skip employer contributions insome years?

• A plan with lowest costs? Easiest administration?

The answers to these questions can help guide youand your retirement professional to the plan (orcombination of plans) most appropriate for you.

SEPsA SEP allows you to set up an IRA (a "SEP-IRA") foryourself and each of your eligible employees. Youcontribute a uniform percentage of pay for eachemployee, although you don't have to makecontributions every year, offering you some flexibilitywhen business conditions vary. For 2016, yourcontributions for each employee are limited to thelesser of 25% of pay or $53,000. Most employers,including those who are self-employed, can establisha SEP.

SEPs have low start-up and operating costs and canbe established using an easy two-page form. Theplan must cover any employee aged 21 or older whohas worked for you for three of the last five years andwho earns $600 or more.

SIMPLE IRA planThe SIMPLE IRA plan is available if you have 100 orfewer employees. Employees can elect to makepretax contributions in 2016 of up to $12,500($15,500 if age 50 or older). You must either matchyour employees' contributions dollar for dollar--up to3% of each employee's compensation--or make afixed contribution of 2% of compensation for eacheligible employee. (The 3% match can be reduced to1% in any two of five years.) Each employee whoearned $5,000 or more in any two prior years, andwho is expected to earn at least $5,000 in the currentyear, must be allowed to participate in the plan.

In general, the amount ofemployee compensationthat can be taken intoaccount whendetermining employerand employeecontributions is limited to$265,000 in 2016.

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Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2016

ABOUT MIKE FOLEY

Mike specializes in Business Owner Benefits, Buy-Sell Agreement Funding, Business Continuation, Estate Planning, Key Person Benefits, Executive Benefits, andDeferred Compensation Plans for Business Owners, Key Employees and High Net Worth Individuals.

Mike is an Independent Insurance Broker with over 27 years of experience representing over 100+ top insurance and financial services companies in the industry.This allows him to provide you the best product solutions based on your individual needs and circumstances. References available upon request.

IMPORTANT DISCLOSURES

Michael D. Foley, Platinum Advisory Group, LLC and Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. Theinformation presented here is not specific to any individual's personal circumstances.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoidingpenalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—wecannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

SIMPLE IRA plans are easy to set up. You fill out ashort form to establish a plan and ensure thatSIMPLE IRAs are set up for each employee. Afinancial institution can do much of the paperwork.Additionally, administrative costs are low.

Profit-sharing planTypically, only you, not your employees, contribute toa qualified profit-sharing plan. Your contributions arediscretionary--there's usually no set amount you needto contribute each year, and you have the flexibility tocontribute nothing at all in a given year if you sochoose (although your contributions must benondiscriminatory, and "substantial and recurring," foryour plan to remain qualified). The plan must containa formula for determining how your contributions areallocated among plan participants. A separateaccount is established for each participant that holdsyour contributions and any investment gains orlosses. Generally, each employee with a year ofservice is eligible to participate (although you canrequire two years of service if your contributions areimmediately vested). Contributions for any employeein 2016 can't exceed the lesser of $53,000 or 100% ofthe employee's compensation.

401(k) planThe 401(k) plan (technically, a qualified profit-sharingplan with a cash or deferred feature) has become ahugely popular retirement savings vehicle for smallbusinesses. According to the Investment CompanyInstitute, 401(k) plans held $4.3 trillion of assets as ofMarch 2014, and covered 52 million activeparticipants. (Source: www.ici.org/401k, accessedNovember 6, 2015.) With a 401(k) plan, employeescan make pretax and/or Roth contributions in 2016 ofup to $18,000 of pay ($24,000 if age 50 or older).These deferrals go into a separate account for eachemployee and aren't taxed until distributed. Generally,each employee with a year of service must beallowed to contribute to the plan.

You can also make employer contributions to your401(k) plan--either matching contributions ordiscretionary profit-sharing contributions. Combinedemployer and employee contributions for anyemployee in 2016 can't exceed the lesser of $53,000(plus catch-up contributions of up to $6,000 if youremployee is age 50 or older) or 100% of theemployee's compensation. In general, each employeewith a year of service is eligible to receive employercontributions, but you can require two years of service

if your contributions are immediately vested.

401(k) plans are required to perform somewhatcomplicated testing each year to make sure benefitsaren't disproportionately weighted toward higher paidemployees. However, you don't have to performdiscrimination testing if you adopt a "safe harbor"401(k) plan. With a safe harbor 401(k) plan, yougenerally have to either match your employees'contributions (100% of employee deferrals up to 3%of compensation, and 50% of deferrals between 3and 5% of compensation), or make a fixedcontribution of 3% of compensation for all eligibleemployees, regardless of whether they contribute tothe plan. Your contributions must be fully vested.

Another way to avoid discrimination testing is byadopting a SIMPLE 401(k) plan. These plans aresimilar to SIMPLE IRAs, but can also allow loans andRoth contributions. Because they're still qualifiedplans (and therefore more complicated than SIMPLEIRAs), and allow less deferrals than traditional401(k)s, SIMPLE 401(k)s haven't become popular.

Defined benefit planA defined benefit plan is a qualified retirement planthat guarantees your employees a specified level ofbenefits at retirement (for example, an annual benefitequal to 30% of final average pay). As the namesuggests, it's the retirement benefit that's defined, notthe level of contributions to the plan. In 2016, adefined benefit plan can provide an annual benefit ofup to $210,000 (or 100% of pay if less). The servicesof an actuary are generally needed to determine theannual contributions that you must make to the planto fund the promised benefit. Your contributions mayvary from year to year, depending on the performanceof plan investments and other factors.

In general, defined benefit plans are too costly andtoo complex for most small businesses. However,because they can provide the largest benefit of anyretirement plan, and therefore allow the largestdeductible employer contribution, defined benefitplans can be attractive to businesses that have asmall group of highly compensated owners who areseeking to contribute as much money as possible ona tax-deferred basis.

As an employer, you have an important role to play inhelping America's workers save. Now is the time tolook into retirement plan programs for you and youremployees.

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