Small Business Retirement Plans at E*TRADE HELP AND GUIDANCE FOR EVERY SMALL BUSINESS OWNER

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1 Small Business Retirement Plans at E*TRADE HELP AND GUIDANCE FOR EVERY SMALL BUSINESS OWNER Small Business Plan recommendations Powerful online tools and resources Support from Small Business Retirement Plan Specialists

2 Running a business is hard enough work let E*TRADE handle your retirement plan for you If you are self-employed, or own a small business that employs others, you have many options when it comes to saving for your own retirement and helping your employees save for theirs. Small Business Plans Have a Variety of Benefits AN EASY WAY TO SAVE Your plan is easy to implement and not only helps secure your future, it may be the primary way your employees can secure theirs. A COMPETITIVE EDGE Offering a plan helps make your business competitive when attracting and retaining employees. TAX ADVANTAGES The potential tax benefits in offering a plan include tax deductible contributions as a business expense. Why Choose E*TRADE? A Wide Range of Account Types - Regardless of the business structure, we have a plan that can help you. Ongoing Support and Guidance - Find the right plan with help from our Small Business Retirement Specialists at Exceptional Value - We offer plans with no-annual-fees and no minimum deposits 1, supported by free online tools and research to help you find the right investments for your plan One-third of all private-sector employees work for a small business, and it is estimated up to 71% of these employees lack access to a retirement plan through their employer. 2 1

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4 Small business retirement plans to help you achieve your goals. At E*TRADE, we understand that running a small business is hard work. For self-employed individuals, or for those who own a small business with employees, there are many options when it comes to saving for retirement. E*TRADE offers small business plans which allow employers to save for their own retirement while helping their employees save for their retirement. Whether you want to contribute on behalf of your employees, you want your employees to be able to save for themselves, or you want both, we have a solution to meet your needs. Does your business have any employees other than your spouse or business partner? YES NO Would you like your employees to have the ability to make their own contributions to the retirement plan? Individual 401(k) and Roth Individual 401(k) (See page 4 for plan details) NO YES Do you want the plan to offer participant loans or a vesting schedule for employer contributions? NO YES SEP IRA (See page 5 for plan details) Profit Sharing Plan (See page 6 for plan details) SIMPLE IRA (See page 7 for plan details) For more help choosing a plan, call a Small Business Retirement Plan Specialist at

5 Individual & Roth Individual 401(k) Plans Individual and Roth Individual 401(k) plans offer the maximum retirement savings for self-employed individuals and spouses. The Individual 401(k) offers tax-deferred growth potential. The Roth Individual 401(k) account offers taxfree growth potential. Use either plan or both plans together to maximize your retirement savings. Advantages of the Individual and Roth Individual 401(k) plan Easy, cost effective plan for owner-only small businesses No minimum initial deposit No annual fees and no account minimums 1 Generous contribution limits for self-employed individuals, including catch up contributions for those over age 50 Individual 401(k) contributions are generally contributions that are deductible as a business expense Able to borrow against your retirement assets via a loan Able to roll over or transfer assets from SEP-IRAs, SIMPLE IRAs, Profit Sharing and Money Purchase plans into the pre-tax Individual 401(k) account Tax-free savings for those who may not be eligible to contribute to a Roth IRA because of income levels Who it is for? Self-employed individuals and their spouse When is the deadline to establish? December 31 st Who contributes? Employer/Employee When is the deadline to fund? Employer Contributions: Business tax filing deadline (plus extensions) How to get started: Download an application and plan documents at No minimum initial deposit or balance requirements to open an Individual 401(k) or Roth Individual 401(k). Once the account is opened, you will receive a welcome . You can log onto your new account and begin investing as soon as you receive it. 4

6 SEP-IRA A SEP-IRA, or Simplified Employee Pension IRA, is a retirement account for self-employed individuals or owners of small companies. This plan is suited for employers who are looking for a plan that is easy and inexpensive to administer, and allows for discretionary contributions to employee accounts. Advantages of a SEP-IRA: SEP-IRAs are easy to set up and operate There is no annual contribution required There is no annual nondiscrimination testing required Employees have immediate control over their accounts and may withdraw their balance at any time, subject to taxes and a 10% penalty if under age 59 1/2 SEP-IRAs offer immediate vesting of the full account balance Who it is for? Self-employed individuals or small businesses When is the deadline to establish? Business tax filing deadline (plus extensions) Who contributes? Employer only When is the deadline to fund? Employer Contributions: Business tax filing deadline (plus extensions) How to get started: Download a SEP-IRA application at No minimum initial deposit or balance requirements to open a SEP-IRA. Once the account is opened, you will receive a welcome . You can log onto your new account and begin investing as soon as you receive it. 5

7 Profit Sharing Plan A tax-deferred employer sponsored retirement plan that lets you contribute up to 25% of an employee s income, up to a specified dollar limit annually. This plan is ideally suited for employers who are looking for a plan that includes discretionary contributions, a vesting schedule, loan availability, and who don t mind mid-range administrative costs. Advantages of a Profit Sharing plan: A profit sharing plan may be established for any size employer A well-designed profit sharing plan can help attract and retain talented employees Contributions to a profit sharing plan are discretionary. The employer can choose when and how much to contribute each year This type of plan gives employers greater flexibility in design of key features, such as eligibility and vesting Plan may allow for loans and hardship withdrawals Who it is for? Any size employer When is the deadline to establish? December 31 st Who contributes? Employer only When is the deadline to fund? Employer Contributions: Business tax filing deadline (plus extensions) How to get started: Download a Profit Sharing application & plan documents at: No minimum initial deposit or balance requirements to open a Profit Sharing plan. Once the account is opened, you will receive a welcome . You can log onto your new account and begin investing as soon as you receive it. 6

8 SIMPLE IRA The SIMPLE IRA is like a simplified 401(k) for small businesses with fewer than 100 employees. Employees defer funds from their salary and receive a matching contribution from the employer. This plan is ideally suited for employers who are looking for a plan that is easy and inexpensive to administer, allows employees to share the cost of funding their accounts, and has a mandatory feature for employer contributions. Advantages of a SIMPLE IRA: SIMPLE IRAs are easy to set up and run Employees can contribute, on a tax-deferred basis, through payroll deductions The employer has two choices in determining their contributions to the SIMPLE IRA: A dollar-for-dollar match up to 3% of compensation, where only the participating employees will receive an employer contribution A 2% non-elective employer contribution, where employees eligible to participate receive an employer contribution regardless of whether they make their own contributions Each year, the plan sponsor can determine which method will be used for the next year The employer may be eligible for a tax credit of up to $600 per year for each of the first 3 years for the cost of starting a SIMPLE IRA Ongoing administrative costs are low The employer is not required to file annual IRS reports Who it is for? Businesses with less than 100 employees When is the deadline to establish? October 1 st Who contributes? Employer (mandatory)/employee When is the deadline to fund? Employer Contributions: Business tax filing deadline (plus extensions) How to get started: Download a SIMPLE IRA application at No minimum initial deposit or balance requirements to open a SIMPLE IRA. Accounts will be opened within two business days upon receipt of your completed SIMPLE IRA application and a copy of the 5304-SIMPLE employer form. (Form 5305-SIMPLE may also be accepted.) Once the account is opened, you will receive a welcome . You can log onto your new account and begin investing as soon as you receive it. 7

9 Investment Only (Non-Custodial) Retirement Plan A flexible retirement plan arrangement designed for sponsors seeking to provide broader, more flexible investment choices in a retirement plan. Your plan s recordkeeping and tax reporting are handled by your third-party plan administrator, while E*TRADE provides an integrated online trading platform and a full range of low-cost investing solutions. Advantages of an Investment Only Retirement Plan: Easy, cost-effective trading platform for your retirement plan No account set-up or annual fees 1 Flexible account set up options: Open one pooled account where the plan administrator manages the investment activity for the entire plan, or Establish separate participant level accounts and authorize each plan participant or the plan administrator with management of the investment activity No withdrawal or rollover fees if an employee terminates Ability to make contributions online from outside accounts with Quick Transfer 2 Who it is for? Business owners with an established retirement plan When is the deadline to establish? An E*TRADE Investment Only (Non-Custodial) Retirement Plan account may be opened at any time. Who contributes? When is the deadline to fund? How to get started: Download an Investment Only (Non-Custodial) Retirement Plan application at Once the account is opened, you will receive a welcome . You can log onto your new account and begin investing as soon as you receive it. 8

10 Compare Small Business Plans from E*TRADE Securities Individual and Roth Individual 401(k) SEP-IRA Profit Sharing Plan Key Benefit(s) Has the highest contribution limits available to self-employed individuals who have no employees other than a spouse. The plans are easy to set up and maintain, and offer both pre- and post-tax contribution flexibility. Provides employers with a simplified method of making contributions toward their own and their employees retirement. Allows employers to give their employees a share in the profits of the company. Employees receive a percentage of profits based on the company s earnings. Eligibility Self-employed individuals and small businesses with no eligible employees other than the owner and spouse. Part-time employees can be excluded if they work less than 1,000 hours per year. Self-employed or small business owner Any employee 21 or older working for you at least three of the past five years, and earns at least $600. Must include employees over age 21 who have worked for you at least two years if vesting is 100% immediate (or one year if vesting is not 100% immediate). Deadline to Establish 12/31 Business tax filing deadline (plus extensions) 12/31 Employer Contribution Optional Optional Optional Employee Salary Deferrals Yes No No Employee Catch Up Contributions Up to $5,500 in 2014 if age 50 or over ($6,000 in 2015) No No Individual 401(k) contributions are generally contributions that are deductible as a business expense Tax-deductible contributions up to 25% of compensation, or $52,000 in 2014 ($53,000 in 2015), whichever is less. Tax-deductible contributions up to 25% of compensation, or $52,000 in 2014 ($53,000 in 2015), whichever is less. Contribution limits and tax deductions Up to $17,500 in 2014 ($18,000 in 2015) salary deferrals, plus up to $5,500 in 2014 ($6,000 in 2015) if age 50 or over. These salary deferrals can be split between the pre-tax Individual 401(k) account and the after-tax Roth Individual 401(k) account. Employer profit sharing contributions must be made to the pre-tax Individual 401(k) account. Total yearly contributions cannot exceed $52,000 in 2014 ($53,000 in 2015) or 100% of compensation. The yearly dollar limit increases by $5,500 in 2014 ($6,000 in 2015) if age 50 or over. Vesting of Contributions No No Yes Plan Administration Requirements Yes, if account balance is over $250,000 Minimal Yes Loans Yes No Yes NEED HELP? Call a Small Business Plan Specialist at

11 SIMPLE IRA Investment Only (Non-custodial account) Key Benefit(s) A flexible and affordable retirement plan for small businesses with 100 or fewer employees. A flexible retirement plan arrangement designed for sponsors seeking to provide broader, more flexible investment choices in a retirement plan. Flexible account set-up options: Open one pooled account where the plan administrator manages the investment activity for the entire plan, or Establish separate accounts and authorize each participant or the plan administrator with management of the investment activity Eligibility Businesses with 100 or fewer employees that do not maintain another qualified retirement plan. Must include employees who are expected to earn at least $5,000 this year, and who earned at least $5,000 in any preceding two years. This plan is for business owners with an established retirement plan with an individually designed or prototype plan document. Employee eligibility will be determined by the plan itself. Deadline to Establish 10/1 N/A Employer Contribution Required Employee Salary Deferrals Yes Employee Catch Up Contributions Up to $2,500 in 2014 ($3,000 in 2015) if age 50 or over Contribution Limits and Tax Deductions Employer contributions are tax deductible as a business expense. Employers must match 100% up to 3% of employee salary deferrals, or make non-elective contributions of 2% of compensation for all eligible employees. The maximum non-elective contribution is $5,200 in 2014 ($5,300 in 2015). Employee s salary deferrals up to $12,000 in 2014 ($12,500 in 2015), plus up to $2,500 in 2014 ($3,000 in 2015) if age 50 or over. Vesting of Contributions No Plan Administration Requirements Minimal Yes Loans No NEED HELP? Call a Small Business Plan Specialist at

12 Why E*TRADE for Your Small Business Plan? Great Tools, Great Guidance For over 25 years, we ve been helping investors get the most from their important retirement assets. When you open a small business retirement account with E*TRADE, you ll benefit from: Professional Guidance to Help You Reach Your Goals One-on-one assistance from our Financial Consultants by phone or in person4 Small Business Plan Specialists to help you choose which small business retirement plan is right for you A Full Range of Accounts & Investments Small business retirement account types including: Individual and Roth Individual 401(k), SEP-IRA, SIMPLE IRA, Profit Sharing, Money Purchase, and Investment Only Non-Custodial plans Choose from stock, bonds, ETFs, and nearly 8,000 mutual funds Value Beyond Price No-annual fees so you keep more of your money 1,300 no load, no-fee Mutual Funds to choose from5 Over 80 commission-free ETFs from leading providers6 Easy-to-Use Tools to Plan & Stay on Track Small Business Selector Tool available at etrade.com/gethelpchoosing Retirement Planning Calculator that tells you how much you need to save to reach your retirement goals Online Portfolio Advisor to help diversify your investments7 Ready to Get Started? Talk to a Financial Consultant in your branch, call a Small Business Retirement Plan Specialist at or visit etrade.com/smallbusiness PLEASE READ THE IMPORTANT DISCLOSURES BELOW. 1. Other service and account fees, fund expenses and brokerage commissions may apply. 2. Challenges and Prospects for Employees of Small Businesses, GAO.gov, July For details and important information about Quick Transfer, please visit etrade.com for a listing of the limitations, restrictions and time deadlines associated with this service. 4. Financial Consultants are dually registered with E*TRADE Securities, a registered broker-dealer, and E*TRADE Capital Management, LLC, a registered investment adviser, and may offer either one-time commission based investment recommendations or ongoing fee-based portfolio management services. To help determine which guidance option may be right for you, please visit etrade.com/guidance for additional information. 5. To discourage short-term trading, E*TRADE Securities will charge an Early Redemption Fee of $49.99 on redemptions or exchanges of no-load, no-transaction-fee funds that are held less than 90 days. Direxon, ProFunds, and Rydex mutual funds will not be subject to the Early Redemption Fee. All fees and expenses as described in the fund s prospectus still apply. Please read the fund s prospectus carefully before investing. 6. You can buy and sell the exchange-traded funds (ETFs) available through the E*TRADE Securities commission-free ETF program without paying brokerage commissions. To discourage short-term trading, E*TRADE Securities may charge a short-term trading fee on sales of participating ETFs held less than 30 days. 7. The Online Portfolio Adviser tool offers investment solutions that include pre-designed portfolios from E*TRADE Securities that are not monitored, rebalanced or otherwise managed by E*TRADE Securities or its affiliates and professionally managed portfolios from E*TRADE Capital Management. E*TRADE Securities or its affiliates do not provide tax advice, and you always should consult your own tax adviser regarding your personal circumstances before taking any action that may have tax consequences.the E*TRADE Financial family of companies provides financial services including trading, investing and related banking products and services to retail investors. Securities products and services offered by E*TRADE Securities LLC, Member FINRA/SIPC. E*TRADE Securities and E*TRADE Capital Management are separate but affiliated companies. Investment advisory solutions are offered through E*TRADE Capital Management, LLC. System response and account access times may vary due to a variety of factors, including trading volumes, market conditions, system performance, and other factors E*TRADE Financial Corporation. All rights reserved SMBSRB2-P62372