1. 1 Castle Financial Advisors, LLC Like the Knights of Olde, Our Advisors Pledge to Help You Build & Fortify Your Financial Castle. Castle Financial Advisors, LLC Like the Knights of Olde, Our Advisors Pledge to Help You Build & Fortify Your Financial Castle. How Many Years to Retirement? Which Qualified Plan Is Right for You?

2. 2 Two Types of Qualified Plans Defined Contribution Defined Benefit Age is not the Only Factor  Traditional 401(k) Plans  Safe Harbor 401(k) Plans  Traditional Profit Sharing Plan  Age-Weighted PS Plan  New Comparability PS Plan  Traditional Defined Benefit Plans  Fully Insured 412i Defined Benefit Plans  Defined Benefit / Defined Contribution  Floor Offset Defined Benefit Plans  New Comparability Defined Benefit Plans

3. 3 What is Your Annual Plan Budget? Defined Contribution Plans Participant Receives Account Balance at Retirement Annual Contribution = Usually % of Current Salary Maximum Annual Contribution for each participant is the lesser of $41,000* or 100 % of salary for 2004 and thereafter May favor younger or older employees based upon plan design Define Benefit and 412(i) Fully Insured Plans Pension at Retirement = Set by Plan Formula Annual Contribution is Amount Needed Each Year to Provide Pension at Retirement No Dollar Limit on Annual Contribution Maximum Dollar Limit on Pension Benefit Lesser of 100% Salary* or $165,000* Typically favors older employees * Dollar Amount indexed and may increase each year.

4. 4 Safe Harbor 401(k)Plans What Are They?  Non Discrimination Tests Waived  No ADP/ACP Tests  Owner Can Defer Up to Maximum Limit Regardless of Amount of Employees’ Deferrals  Must Provide One of the following Safe Harbor Contributions  Either Non-elective Contribution 3% Compensation To All Eligible Employee  Matching Contribution 100% First 3% Compensation Deferred plus 50% Next 2% Compensation Deferred  No Minimum Top Heavy Contributions Required!

5. 5 Traditional Profit Sharing/401(k)Plans What Are They?  Traditional Profit Sharing Plan  Contribution of 0 to 25% Plan Payroll No Profits Necessary Can Change Contribution Each Year  Allocation – in Proportion to Salary No Age Weighting  401(k) Element  Elective Deferral - $13,000* in 2004  Catch-Up Contribution - $3,000* in 2004 Allowed for Those Age 50 & Older  Max. Allocation for Individual $44,000** in 2004 if Age 50 or Older $41,000** in 2004 if Under Age 50 *Scheduled increases through 2006 & indexed for inflation after 2006 **Indexed for inflation

6. 6 New Comparability Profit Sharing Plans What Are They?  Non Discrimination Test - Cross Testing Test Defined Contribution Plan as Defined Benefit Plan Project Contributions to Retirement Convert Accumulated Contributions to Monthly Benefit Designed to Provide older groups of Employees a Larger Benefit  Plan Contribution Levels May Be Customized  Preferred Employees may receive a Higher Contribution  Rank & File Employees may receive a Lower Contribution *  Each Year based upon Plan Budget & Census Information  401(k) Element may be added to Maximize Contributions  Allocation Levels Based on Job Classifications The Minimum employee contribution permitted is typically 5 percent

7. 7 New Comparability Profit Sharing Plans Customized Allocations New Comparability Profit Sharing Plans Customized Allocations Owner 60 205,000 41,000* 20% 41,000* 20% Owner 54 150,000 30,000 20% 41,000* 27% Mgr 50 80,000 16,000 20% 8,000 10% EE 1 35 35,000 7,000 20% 1,750 5% EE 2 34 30,000 6,000 20% 1,500 5% EE 3 24 25,000 5,000 20% 1,250 5% Totals $105,000 $94,500 Both Owners Get Same Contribution Manager Receives Higher Contribution Rate than Other Employees Manager Receives Higher Contribution Rate than Other Employees Traditional PSP New Comp PSP Traditional PSP New Comp PSP Age Salary Contribution Contribution Age Salary Contribution Contribution *2004 maximum allocation, indexed for inflation & may increase in future

8. 8 Defined Benefit Plans For Maximum Plan Contributions!  Client Profile  Ages 45-85  Relatively Stable Profits  Employees  Relatively Few Employees  Relatively Young Employees  Client Goals  Maximum Contributions/Deduction Benefits  Sustained Plan Contributions  Totally Flexible Contributions not Important

9. 9 412(i) Plans Advantages for Older Business Owners  Highest Possible  Contribution/Deduction  Benefits  Death Benefits  Highest Security  Benefits Guaranteed  Totally Recession Proof  No Investment Fund  Guaranteed Interest Rate  No Stock Market Investments

10. 10 Comparison of Qualified Plans First Year Contributions Comparison of Qualified Plans First Year Contributions 45/62 41,000 80,278 164,970 50/62 44,000 133,131 258,019 55/62 44,000 211,448 395,634 60/65 44,000 236,910 450,112 * Assumes maximum contributions & maximum life insurance for 2004. Traditional Defined Benefit uses Guardian Life PTWL100 Pref, 412(i) uses Guardian Life PTWL3 Pref. & PTAPRA-3F Att Age/ Ret Age Defined Defined Contribution* Benefit* 412i Plan*

11. 11 A Qualified Retirement Plan is Available for You! Defined Contribution Plans  401(k) Savings Plans Excellent Employee Contributory Plan  Traditional Profit Sharing Plans Ideal for One-Person Plans  Age-Based Profit Sharing Plans Each Age Has Separate Allocation Level  New Comparability Profit Sharing Plans Different Allocation Levels for Different Groups  Defined Benefit Plans  412(i) Plans Highest Possible Contributions  Traditional Defined Benefit Plans High Contributions with More Flexibility

12. 12 The information in this presentation is designed to be general in nature and for educational purposes only. Castle Financial Advisors, its agents and employees do not give tax or legal advice.