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The time is now to start thinking about your future

ABC Company 401(k) Plan

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Introduction

First National BankYour Plan Trustee

BPAYour Plan Recordkeeper

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Transition details

• Blackout period starts• Transfer of existing assets (mapover

process)• Begin investing new contributions • Blackout period ends• PINs mailed to participants / blackout ends

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Agenda

1. Why join your plan?

2. How does the plan work?

3. How do I decide where to invest?

4. How do I sign up?

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Why Join Your Plan?

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Why join your plan

Will social security be enough?Ask the Social Security Administration…..

“Social Security was never meant to be the sole source of income in retirement….American workers should be saving for their retirement on a personal basis and through employer-sponsored or other retirement plans”

Source: FAQ, www.ssa.gov/ga.htm: July 2003

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Why join your plan

Your retirement income

PersonalSavings

SocialSecurity

Your Retirement

Plan

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Why join your plan

• It’s convenientYou elect to contribute a percentage of your pay to the plan each time you are paid. Sign up once and it all happens for you!

• Two tax advantagesTax Deferred SavingsTax Deferred Compounding

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Why join your plan

Savings are tax deferred

You do not pay current federal income tax on the contributions that you put in the plan – which means your paycheck is reduced by less than you think…..

Assumption: 28% federal tax rate on taxable income. Investors should consult their tax advisor or legal counsel for advice and information concerning their particular situation.

When you When you contributecontribute

It equals It equals this dollar this dollar

amountamount

Your net Your net pay is pay is

reduced byreduced by

1%1% $15$15 $11$11

2%2% $29$29 $22$22

5%5% $73$73 $55$55

8%8% $117$117 $88$88

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Why join your plan

You enjoy tax deferred compounding

Assumptions: $2,000 after-tax contributions at the beginning of each year, hypothetical 8% annual return, 28% federal tax rate on the taxable income. Earnings are taxed at 28% federal tax rate at time of withdrawal. Anticipated value of tax-deferred account, if balance is withdrawn as lump sum and taxes paid at 10 years: $28,130; 20 years: $82,369; 30 years: $192,978. Chart is for illustration purposes only and does not represent the performance of any investment security. Does not reflect any account fees. Dividends and interest reinvested each year until withdrawal. Investors should consult their tax advisor or legal counsel for advice and information concerning their particular situation.

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Traditional vs. Roth 401(k)

Traditional• Your traditional 401(k) contributions are tax-

deferred. This means that you do NOT pay federal taxes on your contribution when you deposit them into the plan. However, when you retire and withdraw your money from the 401(k) plan, you must pay taxes, unless you roll over your account into an IRA to maintain the tax-deferred status.

Roth 401(k)• Your Roth 401(k) contributions are INCLUDED INCLUDED in

your taxable income at the time they are deposited to the plan. However, they are tax-free at the time of withdrawal.

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Traditional vs. Roth 401(k)

Traditional• Contributions are made

through payroll deduction.

• Tax-deferred Contributions

• Tax-deferred Earnings

• Taxable Withdrawals

Roth• Contributions are made

through payroll deduction.

• After-Tax Contributions

• Tax-free Earnings *

• Tax-free Withdrawals

* Tax-free earnings if your first Roth 401(k) contribution was made at least 5 years before the withdrawal and you are past age 59 ½.

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Traditional vs. Roth 401(k)

Salary available to save 1,000 1,000 1,333Less taxes (25% tax bracket) - 250 - 0 - 333Plan contribution 750 1,000 1,000Investment return (10 yrs @ 7%) + 750 +1,000 +1,000Value at retirement 1,500 2,000 2,000 Less taxes - 0 - 500 - 0After-tax value 1,500 1,500 2,000

RothSalary

Available

the Same

Traditional Roth

Contribution

the Same

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Why join your plan

• Company matching contribution of 50% on the first 6% of pay that you save– Don’t leave money on the table!– You’ll get an immediate 50% return on your

investment!– Try to save at least 6% to take full advantage

of the company match.

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How does the plan work?

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How does the plan work?

How much should you save?

….generally, 10% for 30 years10% for 30 years

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Only put as much in as you want– $5.48/Day equals $2,000/Year– $16.43/Day equals $6,000/Year– $32.88/Day equals $12,000/Year

The Critical PointStart small if you need to, but just start!Increase contributions as your income rises.

How does the plan work?

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How does the plan work?

• Eligibility • Vesting• Participant directed investments• Daily access to your account• Reporting

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How do I decide where to invest?

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What is your plan?

Implement

Develop A Plan

DetermineInvestor Profile

ReviewInvestments Assess

Your Needs

Review

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Three types of investors

Don’t have the timeor interest to

learn about investing

Don’t trust themselves to make sound

investment decisions

Not interested in monitoring

Want someone to takeover

Interested in learninggeneral investing

principles

Will take the time to read about available

investments

Will monitor portfolio

Would like a few generalsuggestions

Understand the available options, asset allocation and how to manage risk

Typically have other accounts

that theyare monitoring

Just need some information to help

make decisions

Motivated Willing Reluctant

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Three types of investors

If you are Motivated or Willing, Consider the Do-It-Yourself Approach• Enrollment kits• Fund fact sheets, prospectuses• Participant website• Sample Portfolios• Target Retirement Funds• Lifestyle Funds• Investment Programs

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Three types of investors

If you are Reluctant, then delegate!• Investment Programs

– Provide an “Autopilot” approach– Targeted maturity or lifecycle funds– Automatically rebalanced to maintain stated

risk/return profile over time– As you approach retirement, you can transfer

funds to a more conservative model

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Three types of investors

If you are Reluctant then delegate!• Lifestyle Funds

– Provide an “Autopilot” approach– An Investment Professional makes investment

decisions for you– Automatically rebalanced to maintain stated

risk/return profile– As you approach retirement you can transfer

funds to a more conservative “model”

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Three types of investors

If you are Reluctant then delegate!• Target Retirement Funds

– Provide an “Autopilot” approach– An Investment Professional makes investment

decisions for you– Automatically rebalanced to maintain stated

risk/return profile– As you approach retirement you can transfer

funds to a more conservative “model”

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Target Retirement Funds

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Investment basics

• What are the different types of investments?

EquitiesFixed IncomeStable Value/Money Market

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Investment basics

Stable Value/Money Market investments are designed to seek safety of principal with little or no fluctuation in investment value.

Ex. Certificates of deposit (cds)Treasury bills (t-bills)Money market mutual fundsStable value funds

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Investment basics

Fixed Income investments are also called bonds. Bonds are issued by a borrower, such as a public entity or corporation that seeks to raise funds.

Ex. U.S. Government bondsMunicipal bondsCorporate bondsBond mutual funds

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Investment basics

Equities, or stock investments, represent individual shares of ownership in a company.

Ex. Large capitalization International stocksSpecialty -- Healthcare

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Investment basics

Stable Value/Money Market - inflation risk?

Fixed Income - interest rate risk?- credit risk?

Equities - market risk?

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LargeValue

LargeFlex

LargeGrowth

MedValue

MedFlex

MedGrowth

SmallValue

SmallFlex

SmallGrowth

ValueValue - The fund manager believes the stocks are undervalued and will

eventually be recognized

GrowthGrowth - The fund manager believes

the stocks have the potential to grow

faster than the rest of the market

FlexFlex - The investment philosophy incorporates both

Value and Growth oriented companies

LargeLarge - Above $10 billion

MediumMedium - Between $1 - $10 billion

SmallSmall - Below $1 billion

Equity Style Box

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Investment basics

Annual Average Total ReturnDecember 31, 1920 - December 31, 2007

Stocks (S&P 500 Index) 10.3%10.3%Long Term US Gov’t Bonds 5.7%5.7%US Treasury Bills 3.8%3.8%

Past performance does not guarantee future results. Current and future results may be lower or higher than those shown..

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Investment basics

What can a higher return do for you?Assuming you save $2,000 per year:

RATE OF RETURN 10 YEARS 20 YEARS 30 YEARS

10.3%10.3% $36,000 $36,000 $131,000 $131,000 $384,000 $384,000

5.7%5.7% $27,000 $27,000 $75,000 $75,000 $158,000 $158,000

3.8%3.8% $25,000 $25,000 $61,000 $61,000 $113,000 $113,000

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Stable Value/Stable Value/MoneyMktMoneyMkt

Small CapSmall CapEquitiesEquities

FixedFixedIncomeIncome

Mid CapMid CapEquitiesEquities

Potential Risk

Pote

ntia

l Rew

ard

Large CapLarge CapEquitiesEquities

Risk versus reward

Investment basics

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Investment basics

How do you minimize your risk?

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Investment basics

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How important isasset allocation to your investment success?

More than 90%90% of

Overall Portfolio performance is Influenced by asset allocation

Source: Brinson Hood Beebower Study. Based on 10 years of quarterly data 1977-1987.

ORE THAN 90% OF OVERALL PORTFOLIO PERFORMANCE IS INFLUENCED BY ASSET

ALLOCATION

Asset allocation 91.5%

Market timing 1.8%

Security selection 6.7%

ORE THAN 90% OF OVERALL PORTFOLIO PERFORMANCE IS INFLUENCED BY ASSET

ALLOCATION

Asset allocation 91.5%

Market timing 1.8%

Security selection 6.7%

Asset allocation 91.5%

Market timing 1.8%

Security selection 6.7%

Asset Allocation

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Investment basics

• Your enrollment guide includes an individual investor profile.

• Your time horizon. • Your risk tolerance.• Select an investment strategy.

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Moderate Investment Strategy

Sample Allocation

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Fund line up

EquitiesEnter the names of the fundsEnter the names of the fundsEnter the names of the fundsEnter the names of the fundsEnter the names of the fundsEnter the names of the fundsEnter the names of the fundsEnter the names of the fundsEnter the names of the fundsEnter the names of the funds

Fixed IncomeEnter the names of the fundsStable Value/Money MarketEnter the names of the funds

A copy of the prospectus for any fund may be obtained from the Plan Administrator.

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Access your account

• 24 hours / 7 days a week

• 800 or website

• No cost trading

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How do I sign up?

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Sign up

1. Decide how much to save

2. Decide which investments

3. Complete Enrollment Forms

4. Review, rebalance & increase!

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Visit www.bpas.com

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• Thank you for your time today.• We hope you take this opportunity to make

the most out of your retirement journey.• We will be available to help you with any

questions you may have.