Plan Your Rollover Strategy Understanding Your Distribution Options Louis Ventura, Insurance & Financial Services 6 Centerpointe Drive Suite 600, La Palma, CA Office(714) Fax (714) NYLIM-A MSWM32l-03/08 Click Mouse to Move Forward

Understanding Your Needs How long have you been contributing to your company plan? Are you changing jobs or looking for a new one? Are you retiring or considering early retirement? Do you have a need for current income? Do you know how much to expect from Social Security?

Social Security Statements Annual statement Mailed to all workers age 25 or older Includes an estimate of what you will get in return as monthly retirement benefits Statement mailed three months prior to your birthday What does it all mean?

Things to Consider The rollover distribution options available to you The advantages and disadvantages of each option The ability to access investments for income. Impact of current taxes and penalties Level of control you want over you investment options

Don’t dip into your retirement savings. You’ll lose principal and interest, and you may lose tax benefits. If you change jobs, roll over your savings directly into an IRA or your new employer’s retirement plan. –U.S. Department of Labor “Top 10 Ways To Prepare For Retirement”, March “ ”

Four Basic Rollover Distribution Strategies Rollover to Employer Plan Rollover To IRA Keep Current Plan Distribution In Cash Retirement Plan Assets

Strategy 1: Take the Distribution in Cash or Securities Advantages: Access to your money May be eligible for special tax treatment May be appropriate if distribution includes highly appreciated company stock Disadvantages: Current income taxes and 20% federal withholding apply 10% federal income tax penalty may apply if younger than age 59½* Lose continued tax- deferred compounding Spending retirement assets *Note: Exception applies when separation from service after attaining age 55.

Strategy 2: Keep Assets in Your Current Plan Advantages: Potentially more attractive investment options Avoids current income tax and penalties Continued tax-deferred compounding Disadvantages: Access to assets may be limited Your rights in the plan may change Investment options or performance may be unsatisfactory

Strategy 3: Rollover the Distribution Into an IRA Two methods: Indirect rollover to an IRA Direct rollover to an IRA

Strategy 3: Indirect Rollover to an IRA Advantages: Temporary access to 80% of proceeds May invest the money for 60 days Continued tax-deferred compounding Disadvantages: Amount not rolled over is taxed 20% will be withheld for federal income tax Client must replace the 20% being withheld 10% federal income tax penalty may apply Take the distribution in cash and then roll it over into an IRA.

Strategy 3: The Impact of Taxes on an Indirect Rollover You receive a $200,000 distribution $40,000 was withheld (20% of $200,000). You roll over $160,000 As a result, $40,000 is included in ordinary income and is subject to a 10% federal income tax penalty. To avoid tax and penalty, You need to replace the $40,000 that was withheld. For example, if you receive a distribution:

Strategy 3: Direct Rollover to an IRA Advantages: Continued tax-deferred compounding Broad range of investment options Avoid 20% withholding and current income taxes May be eligible to roll over into new employer’s retirement plan later Can receive substantially equal periodic payments without 10% federal income tax penalty Disadvantages: Cannot income average unless assets are later rolled back into employer plan Loans are not permitted Instruct employer to send assets directly to a new custodian.

Strategy 4: Direct Rollover to New Employer’s Plan Advantages: Continued tax-deferred compounding May offer attractive investment options Avoid current income tax implication Possible loan option Disadvantages: May have limited investment options Investment options or performance may be unsatisfactory Client’s rights in the plan may be different than your previous employer’s plan Client generally lose the ability to roll assets out prior to retirement

Reminder Distributions from a company plan that are not eligible to roll over into an IRA include: –Required minimum distributions –Periodic payments scheduled for 10 years or more –Periodic payments based on certain life expectancies –Certain other distributions

Plans Involving Company Stock Plan distributions of company stock Taxed differently than lump-sum distributions Use cost basis, not fair market value Apply lower capital gains rate

457(b) Plans If you are or were a government or state worker with a 457(b) governmental plan, you now have increased flexibility and expanded options 457(b) governmental plan assets can be rolled over into other defined contribution plans such as a 401(k), 403(b), and an IRA You will have the ability to consolidate retirement accounts and actively control your investments

Additional Factors to Consider Size of the distribution Retirement needs Time horizon Investment options Asset allocation

Internal Revenue Code Section 72(t): Substantially Equal Periodic Payments Allows for periodic payments without 10% federal income tax penalty Available through IRA or company plan Not appropriate for everyone

The Importance of Professional Guidance Retirement planning analysis Personalized asset allocation Sophisticated financial tools Monitor strategy The information contained herein is general in nature and is provided solely for educational and informational purposes. Financial professionals are not tax, accounting, or legal advisers. You should consult your own tax, accounting, or legal professional regarding your particular circumstances.

Thank You Presented by MainStay Investments, a division of New York Life Investment Management LLC. Securities distributed by NYLIFE Distributors LLC, 169 Lackawanna Avenue, Parsippany, NJ Louis Ventura, Insurance & Financial Services 6 Centerpointe Drive, Suite 600, La Palma, CA Office(714) Fax (714) For more information visit