Census Workshop for the 2006 Plan Year January

Census Workshop for the 2006 Plan Year January 2007

AUL’s Retirement Services Awards & Recognition In the November 2005 issue of Plan. Sponsor magazine, AUL earned six “Best in Class” awards: v. Plan sponsor internet services v. Participant communication materials v. Participant call center v. Clarity of participant statements v. Loan/withdrawal turnaround v. Timelines of reporting As of January 2006: Based on a plan sponsor survey from 65 plans AUL rated in the top 10 for: v. Customer Service v. Education/communication v. Plan administration v. Recordkeeping

AUL’s Retirement Services Communication Awards & Recognition v. Best of Show (first place) v. Ranked AUL number Two in highest overall satisfaction among 30 retirement plan providers. The key drivers of the overall satisfaction were: üWholesaler market knowledge/expertise üWholesaler responding quickly to calls üWholesaler product knowledge/expertise üWholesaler accessibility and availability üCustom enrollment communications program in the Group Pensions Category v. Silver (second place) Top 100 Publicity Material for 2005 ü“Premier Proposal” packaging v. Honors ü“Welcome to Retirement Services” product overview brochure

Census Workshop Agenda • Overview • Highly Compensated and Key Employee Definitions • Compensation Discussion • Ex. ACCT Software Demonstration • Pension Protection Act of 2006 (PPA) Please complete the feedback survey and fax to the number on the survey!

Why Collect Census Data? • • • Forfeiture reallocation Profit sharing contribution calculation IRS compliance testing Annual report DOL/IRS Form 5500 Participant status and vesting updates

Compliance Testing

What Tests May Apply? Required Annual Test Mandated by • • • Coverage Testing IRC Section 410(b) Annual Additions Limit Test IRC Section 415 ADP Testing IRC Section 401(k) ACP Testing IRC Section 401(m) Top Heavy Testing IRC Section 416 Annual Deferral Limit IRC Section 402(g)

What Tests May Apply? Required Annual Test Mandated by Depending on Plan design, you may also need: • Benefits Right & Features IRC Section 401(a)(4) • General Test IRC Section 401(a)(4) • Average Benefits Test IRC Section 410(b) (Additional fees will apply) AUL Does Not Perform the Following: • Compensation Definition IRC Section 414(s)

Compliance Testing • Testing overview handout – See handout for brief description of tests – For more information: • Census Instructions on www. eretirement. aul. com

Timing of Tests • Tests performed after final contribution date stated on census • Prior to testing: – Profit Sharing contributions must be received – Matching amounts must be included in census, but do not need to be received – For multiple plans, all contributions (except match) and census must be received

Who’s a Highly Compensated Employee (HCE)? • A more than 5% owner in the current or prior plan year – Includes family members • Tip: Grandparent, spouse, child • Earned greater than $95, 000 in prior (2005) plan year – Compensation = total compensation – If elected in your Adoption Agreement or your plan document, the top paid group may apply. Note: If your plan has an anniversary date beginning other than January 1, and you have elected to use calendar year data to determine HCEs (see your Adoption Agreement or your plan document or plan document), then substitute $100, 000 for the $95, 000 amount shown above. See the “Census Instructions” on e. Sponsor at www. eretirement. aul. com

Summary of Family Attribution • Family Attribution as it applies to 5% ownership: – Spouse – Parent – Grandchild Between To Spouse Child Grandparent No attribution from grandparent to grandchild No attribution between siblings No attribution between in-laws Yes attribution between step-children and parents

Who’s a Key Employee? • Officer with compensation greater than $140, 000 • A more than 5% owner – Includes family members • A more than 1% owner with compensation greater than $150, 000 – Includes family members with compensation greater than $150, 000 Note: Not all Key Employees are Highly Compensated & vice versa. See Census instructions for more detail.

Census Data Collection

Reporting Employees and Hours • Reporting all employees is necessary for: – Testing services – Annual reports – 5500 reporting

Reporting Employees and Hours • Hours are required for: – Testing services – Vesting calculations – Participant eligibility • To receive forfeiture reallocations and/or employer contributions – Employees working greater than 1, 000 hours report 1, 000

Status Codes • • Employment Status Plan Status Testing Status Review “Census Instructions” for details on e. Sponsor at www. e. Retirement. aul. com

Plan and 415 Compensation • There may be multiple definitions of compensation for different tests • Refer to the Compensation Guide in the handouts • If Plan and 415 Compensation are the same, provide the data in both places on your census Note: For 2005, the compensation limit is $210, 000. For 2006, the limit is $220, 000

Partial Year Compensation • Partial year compensation (comp. ): – Applies to employees who are eligible after the first day of the plan year – Eligible does not mean actively contributing or receiving contributions • Partial year comp. “A”: – Earned from entry date to end of the plan year • Partial year comp. “B”: – Earned from entry date to end of plan year for match and/or employer if requirement different than deferral requirement

Partial Year Compensation Example • Joe Employee – Hired 1/1 – Eligible for deferrals 4/1 – Eligible for match 7/1 • 415 Compensation: – 1/1 to 12/31 • Plan compensation full year: – 1/1 to 12/31 – Your Adoption Agreement or your plan document defines this period • Partial year compensation “A”: – 4/1 to 12/31 • Partial year compensation “B”: – 7/1 to 12/31

Catch-Up Contributions • Must be 50 by the end of the calendar year and exceed one of the following: – 402(g) deferral limit ($15, 000 in 2006) – 415 annual additions limit ($44, 000 in 2006 or 100% of pay) – Plan deferral limit (see Adoption Agreement or your plan document) – ADP limit (not known until ADP testing) • Employees can defer additional money: – $5, 000 in 2006 – $5, 000 in 2007

Catch-Up Contributions • Contributions will automatically be reclassified as catch-up if failure of: – ADP Test – 402(g) Limit – 415 Test – If catch-up limit not met • Dedicated field to report catch-up contributions – Do not include in deferral amount

Catch-Up Contributions • Example: – Joe is age 50, earns $50, 000, defers 30% • Joe intends to defer the maximum amount, $15, 000 – Effective July 1 Joe’s salary was increased by 5% • Joe does not reduce his deferral percentage • $1, 250 additional salary through end of year X 30% deferral rate increases deferral by $375 – $375 is re-characterized as catch-up contribution – Many payroll systems support separate calculation of employee deferrals – Another example is bonuses – are they subject to deferral calculation?

Roth 401(k)/403(b) • Roth Deferrals – Roth monies must be separately accounted for – Separate accounting must continue until Roth completely distributed – No forfeitures should be allocated to Roth – Roth deferral election is required – Roth catch-up allowed but subject to limit

Roth 401(k)/403(b) • Deferrals – cont’d – Part of ADP test – Subject to 402(g) limit – Part of top-heavy calculation – Subject to 415 limit – Corrective distributions are NOT qualified distributions

For Help Determining What Data to Report … Please refer to Census Instructions • Instructions located at: – One. America website: • www. eretirement. aul. com – Call your Plan Services Consultant

For Help With Hardware or Software Questions … Please refer to the Ex. ACCT User Guide • Most recent guide located on One. America website: – www. eretirement. aul. com • Plan Services Consultant • Data Transmission Unit • (800) 261 -9618 ext 7472

Dates to Remember • January, 2007 (See handout) – Deadline to send in your census and final contributions – This will guarantee testing completion by March 15, 2007 – E-Mail sent December, 2006 • March 15, 2007 – First IRS test refund deadline if your plan fails – Refunds processed by this date will not incur 10% corporate excise tax

Dates to Remember • April 2, 2007 – Second deadline for your census if you missed the January deadline – AUL will begin processing other year-end services (annual report, 5500, etc. ) – Late census will incur re-work fee of $300 per item if already complete

Next Up … Ex. ACCT Software Presentation Time for a 15 minute break

ONEAMERICA® companies: AMERICAN UNITED LIFE INSURANCE COMPANY® ONEAMERICA SECURITIES, INC. PIONEER MUTUAL LIFE INSURANCE COMPANY A stock subsidiary of American United Mutual Insurance Holding Company R. E. MOULTON, INC. THE STATE LIFE INSURANCE COMPANY