Roth Contributions Date Presenter Name

2 Welcome [Prepared for: (enter client name here)]

3 Allow me to introduce myself  I’m _____________________________  I work for ________________________

4 T. Rowe Price  Over $738 billion under management worldwide as of 6/30/14  Approximately 2 million participants  Leading provider of retirement plan services 1937 T. Rowe Price is Established T. Rowe Price International th Anniversary Initial Public Offering

5 Different types of contributions Different tax advantages Before-tax Contributions Are made before taxes are taken out of your pay Can give you a tax break by helping you lower your current taxable income Allow more of your income to stay in your paycheck (compared to Roth contributions) Accumulate tax-deferred—once you begin making withdrawals, you will pay taxes on your contributions and any associated earnings Roth Contributions Are made after taxes are taken out of your pay Don’t give you a tax break today— contributions are made with money you’ve already paid taxes on Will cause you to see less take-home pay (compared to before-tax contributions) Accumulate tax-free—the balance of your contributions and any associated earnings are tax-free when you take a qualified distribution* * A qualified distribution is tax-free if taken at least 5 years after the year of your first Roth contribution AND you’ve reached age 59½, become totally disabled, or died. If your distribution is not qualified, any withdrawal from your account will be partially taxed. These rules apply to Roth distributions only from employer-sponsored retirement plans. Additional plan distribution rules apply.

6 Roth contributions Another way to contribute to your plan  Before-tax contributions – traditional way to contribute  Deducted from pay before taxes  Pay taxes when taking a distribution  Roth contributions – another way to contribute  Deducted from pay after taxes  You will not pay taxes with a qualified Roth distribution

7 Roth contributions Another way to contribute to your plan  Roth contribution advantages  Earnings from your Roth contributions can be tax-free forever  Potential of higher tax rates in retirement will not affect qualified distributions  Roth contributions disadvantages  No immediate tax break with less spendable income today as compared to before-tax contributions

8 So what is a qualified distribution? A qualified Roth distribution is tax-free if it is taken at least five years after the year of your first Roth contribution and you’ve reached age 59½, become disabled, or died. If your distribution is not qualified, any withdrawal from your Roth account will be partially taxable. Additional distribution rules may apply.

9 Roth contributions What does all this mean in terms of dollars and cents? Participant example:  Age 45  Earns $50,000 a year  Contributes $5,000 annually to the retirement plan  7% annual rate of return  25% tax rate before and during retirement  20 years until retirement

10

11

12 How using before-tax or Roth contributions could affect your annual pay and income in retirement These charts assume a participant is age 45, earns $50,000 a year, gets a 3% raise each year, contributes 10% of pay annually to his or her retirement plan, has an annual rate of return of 7% before retirement, has a 28.75% tax rate, retires at age 65, and withdraws 4% of the account balance in the first year of retirement. The annual income estimate is in today’s dollars and assumes a 3% rate of inflation. Chart and estimates only account for future contributions and not current balances in an effort to illustrate characteristics of each contribution type. Any current tax benefit from contributing to a before ‐ tax account is assumed to be spent and not factored into retirement income. The tax rate reflects estimated federal and state taxes. For illustrative purposes only. This is not meant to represent the performance of any investment options for your plan. Your results will vary.

13 Roth comparison tool Tax rate remains the same

14 Roth contributions The difference can be greater if you assume a higher tax rate during retirement Participant example:  Age 45  Earns $50,000 a year  Contributes $5,000 annually to the retirement plan  7% annual rate of return  25% tax rate before retirement and a 35% tax rate during retirement  20 years until retirement

15 Roth comparison tool Tax rate increases

16 Roth contributions To help you decide if Roth contributions are right for you, consider your answers to these questions: Are you willing to contribute the same amount to your retirement account without lowering your taxable income today? Yes No [Suitability Option - 1]

17 Roth contributions To help you decide if Roth contributions are right for you, consider your answers to these questions: Do you prefer potential tax-free earnings in the future to lower taxable income now? [Suitability Option - 1] No Yes

18 Roth contributions If you answered yes to both questions, you may want to consider Roth contributions – unless…  You are age 50 or older and  Believe your tax rate will decrease significantly in retirement Yes [Suitability Option - 1]

19 Roth contributions Your tax rate may decrease significantly in retirement if:  Your taxable income decreases significantly  You do not work part-time  You have a high number of exemptions [Suitability Option - 1]

20 I prefer potential tax-free earnings in the future to lower taxable income now. Are you willing to contribute the same amount to your retirement account without lowering your taxable income today? NOYES Before-tax Contributions Roth Contributions If you answered YES to both, then you may want to consider Roth contributions – unless…  You are 50 years of age or older AND  You believe your tax rate will decrease significantly in retirement If you answered YES to both, then you may want to consider Roth contributions – unless…  You are 50 years of age or older AND  You believe your tax rate will decrease significantly in retirement [Suitability Option - 2]

21  Your taxable income decreases significantly  You do not work part-time  You have a high number of exemptions Your tax rate may decrease if… [Suitability Option - 2]

22 Roth contributions Additional plan details (presenter, check for plan specifics)  Your Roth contributions are eligible for matching contributions  You can contribute from 1% to ___% of your pay as before-tax and/or Roth contributions up to $18,000 for 2015  If you will be 50 or over by the end of the year and contribute the maximum amount permitted by the plan, you can contribute up to an additional $6,000 into the plan with before-tax and/or Roth contributions for 2015  Roth contributions are not an eligible loan source

IRS limits If you contribute before-tax, Roth, or a combination of the two You can contribute up to the catch-up limit if you will be age 50 or older by the end of the year and contribute the maximum amount allowed by your plan. You may never contribute more than the plan allows. $18,000 Age 49 or younger Participant salary deferral contributions += $6,000 Age 50 or older catch-up$24,000 Annual Totals

24 Roth plan contributions and Roth IRA details *You may never contribute more than the plan allows. Roth Plan ContributionsRoth IRAs 2015 maximum contribution amount*$18,000$5, age 50 and older catch-up contributions $6,000$1,000 Take note… ! You may be eligible to make a 401(k) Roth contribution AND a Roth IRA contribution in the same year.

25 Roth contributions Common questions: Will I have to open a separate account in my plan if I elect to make Roth contributions to my plan?  No, Roth contributions are a separate source of money that are contributed to the same plan and will be included on your current statement. Will I still be eligible for the company contributions if I make Roth contributions? (presenter, remove if they don’t get a match)  Yes, making Roth contributions will not affect any eligible company contributions. [Common Questions Option - 1]

26 Common questions Will I still be eligible for the company contributions if I make Roth contributions? Can I convert my current before ‐ tax balance to Roth? Can I still contribute to a Roth IRA if I choose Roth contributions? Will I have to open a separate account in my plan if I elect to make Roth contributions to my plan? YESNO [Presenter – check plan specifics to confirm matching contributions] [Common Questions Option - 2]

27 Retirement plan account – one account, multiple buckets *A qualified Roth distribution is tax-free if it is taken at least five years after the year of your first Roth contribution AND you’ve reached age 59½, become totally disabled, or died. Will money be withheld from your pay (to pay taxes) as you contribute to the account? Will you owe tax on the original contribution at withdrawal? Yes No Yes No Yes Will you owe tax on any earnings/growth at withdrawal? Yes No Yes * Before-tax Contributions Roth Contributions Employer Contributions

28 Retirement plan account – one account, multiple buckets *A qualified Roth distribution is tax-free if it is taken at least five years after the year of your first Roth contribution AND you’ve reached age 59½, become totally disabled, or died. Will money be withheld from your pay (to pay taxes) as you contribute to the account? Will you owe tax on the original contribution at withdrawal? Yes No Yes No Will you owe tax on any earnings/growth at withdrawal? Yes No Yes No Yes Before-tax Contributions Roth Contributions After-Tax Contributions Employer Contributions *

29 What do I do now? If you want more information or you are ready to begin Roth contributions rps.troweprice.com Take note… !

30 Take Action Today. Invest wisely and get ready for a great future

31 Online  Account access  Interactive tools By Phone  Phone representative  Voice response Paper or Paperless  Statements  Educational materials

32 Individual retirement accounts For example: IRA  Step 1: Open a type of IRA  Traditional  Roth  Step 2: Make contributions  Step 3: Contributions are invested [Optional Slide]

33 Employer retirement plans For example: 401(k)  Step 1: Enroll in retirement plan  Step 2: Make contributions  Pretax  Roth  Step 3: Contributions are invested [Optional Slide]

34 Remember! For employer retirement plans, Roth is a type of contribution For IRAs, Roth is a type of account [Optional Slide]