opportunities in the tax-exempt marketplace for financial professional use only. not for public...

Opportunities in the Tax-Exempt Marketplace

For Financial Professional Use Only. Not For Public Distribution

Disclosures

• Tax qualified retirement plans from American United Life Insurance Company ® (AUL) are funded by an AUL group annuity contract. While a participant in an annuity contract may benefit from additional investment and annuity related benefits under the annuity contract, any tax deferral is provided by the plan and not the annuity contract.

• Group variable annuity contracts are issued by AUL and registered group variable annuity contracts are distributed by OneAmerica Securities, Inc., Member FINRA, SIPC, a Registered Investment Advisor, 433 N. Capitol Ave., Indianapolis, IN 46204, 1-877-285-3863, which is a wholly owned subsidiary of AUL.

• Variable products are sold by prospectus. Both the product prospectus and underlying fund prospectuses can be obtained from your investment professional or by writing to 433 N. Capitol Ave., Indianapolis, IN 46204, 1-877-285-3863. Before investing, carefully consider the fund's investment objectives, risks, charges and expenses. The product prospectus and underlying fund prospectus contain this and other important information. Read the prospectuses carefully before investing.

• Any investment involves risk and there is no assurance that the investment objective of any investment option will be achieved. Before investing, understand that variable annuities are subject to market risk, including possible loss of principal.

2For Use With Financial Professionals Only. Not For Public Distribution.

Experience You can Trust

• 45+ yrs experience servicing the tax-exempt retirement market

• ERISA & Non-ERISA Plans

• 5,300 plans for tax exempt organizations

• 99% retention rate for tax-exempt clients (as of December 31, 2011)


403(b) 2nd Largest Provider457 1st Largest Provider401(k) 9th Largest Provider

Industry Leadership

For Use With Financial Professionals Only. Not For Public Distribution. 4

Plan Types for Tax Exempt Organizations

Categories 403(b) 457 401(k)

Employee salary reduction

Yes-up to $17,000 (2012) Yes-up to $17,000 (2012) Yes-up to $17,000 (2012)

Employer contributions

Optional-matching and/or supplemental Optional, but rare Optional-matching and/or supplemental

Age 50 catch-up Yes Yes Yes

15-year catch-up Yes No No

5500s Yes No 5500 Yes

Nondiscrimination testing

No ADP testing for employee deferrals ACP for employer matching and after tax employee contributions

No ADP/ACP testing ADP and ACP testing

Plan document Document required Document required Document required

Plan termination-employer control

Yes Yes Yes

Distributions Required minimum distributions, Pre-59 ½ -10% penalty may apply

Required minimum distributions, No penalty for Pre-59 ½

Required minimum distributions, Pre-59 ½ -10% penalty may apply

Most for-profit and 501 ( c ) organizations

Yes

Plan Sponsor entities

State & local government entities, agencies. Tax-exempt entities under IRC section 501(c) (top hat only)

ERISA No

Public and private schoolsTax-exempt entities under IRC section501(c)(3)-such as Healthcare, Foundations, Churchesschools

Exemption for government employers, churchesExemption for programs with no employer contribution or employer involvement

Old Paradigm

• Viewed as employee’s money• Relationship between employee and

product provider• Employer responsible for salary reductions

and remitting to product provider• Most plans had multiple vendors• Participants were sold, not educated


Current Paradigm

• Must be a written plan document

• Employer is responsible for making sure the plan operates in compliance with the plan document and regulations

• Employer is responsible for compliance with loan program, hardship withdrawals and distributions

• Relationship is between employer and product provider

• Single, or limited number of providers


Basic fiduciary duties

• Acting solely in the interests of the participants and their beneficiaries

• Being prudent • Paying only reasonable and necessary

expenses of the plan • Following the terms of the plan


The Value of Benchmarking

• Legislation

• Litigation

• Regulation


Benchmarking the Right Way

• Unbiased Methodology

• Reputable Data

• Analyze the Output


Most Common Errors Found by the IRS

• Excess contributions• Failure to follow the plan document• Loan administration• Universal availability procedures• Administration of hardships


Plan Sponsors Need Your Help

• Plan design issues• Fiduciary management• Provider selection and monitoring• Development and implementation of a

communication strategy


The Opportunity

• Plan sponsors are being encouraged to leverage plan assets and require that providers offer a retirement plan at competitive expense ratios and without proprietary or core fund requirements

• The current fee structure is a legacy of the expenses associated with a very inefficient system of gathering assets and distributing benefits on the basis of individual participants

• The current system is based on a retail model, not a wholesale one that could efficiently provide a true group benefit


And Also – “a Win-Win” Solution

• For participants

- Employee education

- Investment guidance

- Higher account balances

• Plan Sponsors- Comply with legislation/regulation- Assist with fiduciary liability


Where are the opportunities?

• Healthcare Organizations• Community Agencies• Governmental Entities • Educational Institutions• Religious Organizations


Prospecting ERISA plans

• 5500 services e.g. Judy Diamond, FreeErisa, DOL website

• Referrals: CPA’s, Attorney’s, Bankers, Board Members

• Review existing client list and offer a plan review


Prospecting – Who to Talk to?

• Executive Director• Finance Chair – board member• President of the Board• HR Director• Employee Benefits Specialist


How You Can Help

• Review current capabilities to track and report information required on Form 5500

• If required, engage an auditor experienced in employee benefit plans and the nuances of Tax Exempt plans

• If a multi-vendor plan, consider consolidation or a single-provider

• Budget for audit expense


Thank you for attending!


LIFE INSURANCE | RETIREMENT | EMPLOYEE BENEFITS

ONEAMERICA® companies:

AMERICAN UNITED LIFE INSURANCE COMPANY®

AUL REINSURANCE MANAGEMENT SERVICES, LLC

McCready and Keene, Inc.

ONEAMERICA SECURITIES, INC.

PIONEER MUTUAL LIFE INSURANCE COMPANY

A stock subsidiary of American United Mutual Insurance Holding Company

THE STATE LIFE INSURANCE COMPANY


opportunities in the tax-exempt marketplace for financial professional use only. not for public...

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aul group annuity contract

investment professional

additional investment

investment option

public school

taxexempt employer