THE GOVERNMENT PLAN IRA 401k Lets Take A

THE GOVERNMENT PLAN IRA 401(k)

Let’s Take A Hypothetical Look… I have a business proposal for you ü You front all the money. ü You take all the risk. ü You manage the business on a day to day basis. ü 30 years from now I’ll tell you how much I Doown. you want to go into business with me?

THE GOVERNMENT PLAN 25 -35% Ordinary Taxable Income 10% Early Withdrawal Penalty 35 -45% TOTAL TAXABLE Age 19 -1/2 • 40 Years • 10% Penalty Age • 11 Years 59 -1/2 • 100% • 30 Years Age 70 -1/2 • 50% Penalty 80 to 85% of the time THE OWNER IS IN THE PENALTY PHASE What value does money have if you can’t use it? IS THIS DESIGNED FOR YOU, YOUR FAMILY, OR UNCLE SAM?

Putting Dollars in Perspective One Million Seconds………… 11. 5 days One Billion Seconds…………. 31. 6 years One Trillion Seconds……. 31, 688 years

Future Tax Rates What do you think? % Lower Higher Stay the Same

Four Phases of Retirement Planning If we think taxes are going to be Higher…. Is postponing taxes really a good idea? When should we start doing tax planning? YFB 11/22/2020 6

Getting a Plan in Place Design Accumulation Distribution YFB 11/22/2020 7

Four Phases of Retirement Planning YFB Contribution Tax Favored Accumulation Tax Favored Withdraw Taxed Transfer Taxed 11/22/2020 8

Annual IRA or 401 k Contributions $6, 000 for 40 Years = $240, 000 Tax Bracket 20% Annual Taxes Deferred = $1, 200 40 year savings = $48, 000 YFB 11/22/2020 9

Annual IRA or 401 k Contributions $6, 000 @ 7% for 40 years = $1, 281, 657 Withdrawal Annually = $175, 000 28. 00% Federal Tax Bracket -$36, 247* Net Income = $138, 743 YFB *2014 Tax Table: ($175, 000 x 28%)-$12, 753 = $36, 247 Married filing jointly 11/22/2020 10

Annual IRA or 401 k Contributions During the retirement years (ages 65 -87) $834, 302 in taxes are paid Vs. $48, 000 taxes saved during the contribution years YFB 11/22/2020 11

Annual IRA or 401 k Contributions In the first 1. 5 years of retirement, every dollar of taxes saved is paid back. A person living a normal life expectancy drawing income from a qualified retirement plan can pay more than 17. 5 times the taxes saved during the contribution years. YFB 11/22/2020 12

What About Contributing to an 401(k)? • You Contribute $6, 000 a year for 40 years at a 7% rate of return with no match. • Your account would be worth $1, 281, 657! YFB 11/22/2020 13

You get to defer the TAX!!! • You get to defer $1, 200 a year for 40 years in a 20% tax bracket. • $48, 000 Deferral YFB 11/22/2020 14

The Withdraw Period • You withdraw $175, 000 a year at age 65 with a 4% rate of return. • You run out of Money at age 73! YFB 11/22/2020 15

The TAX BILL!!! • You withdraw $175, 000 a year for 9. 45 years. If this were your only income, you would be in a 28. 00% tax bracket. • That’s $36, 247 a year for taxes. • Total taxes for 9. 45 years: $342, 534. • Deferral: $48, 000 for 40 years. YFB 11/22/2020 16

The you… IRS loves 714% RETURN ON YOUR DEFERAL!!! YFB 11/22/2020 17

What About the Match? ? ? • You make $100, 000 a year and want to contribute 6% to your 401(k) to max out the match. • Your Company matches 50% of your contributions for the first 6% of salary that you contribute. • So the company will contribute $3, 000 to your 401(k). YFB 11/22/2020 18

What About the Match? ? ? YFB • You Contribute $6, 000 a year for 40 years at a 7% rate of return. • Your Company matches 50% of your contribution up to 6% of your salary • Total $9, 000 each year. • Your Account would be worth $1, 922, 486! 11/22/2020 19

You get to defer the TAX!!! • You still get to defer $1, 200 a year for 40 years in a 20% tax bracket. • $48, 000 Deferral YFB 11/22/2020 20

The Withdraw Period • You withdraw $175, 000 a year at age 65 with a 4% rate of return. • Then you run out of MONEY at age 79! YFB 11/22/2020 21

The TAX BILL!!! • You withdraw $175, 000 a year for 14. 10 years. If this were your only income, you would be in a 28. 00% tax bracket. • That’s $36, 247 a year for taxes. • Total taxes for 14. 10 years: $507, 598. YFB 11/22/2020 22

The you… IRS loves 1065% RETURN ON YOUR DEFERAL!!! YFB 11/22/2020 23

Let’s Compare At Age 65… No Match • • YFB Rate of Return 7%/year Account Value $1, 281, 657 Annual Withdraw $175, 000 Tax Bracket 28. 00% $36, 257 Net Distribution $138, 743 Total Distribution to 73 (Net) $1, 248, 687 Total Taxes Paid $342, 534 50% match • • Rate of Return 7%/year Account Value $1, 922, 486 Annual Withdraw $175, 000 Tax Bracket 28. 00% $36, 257 Net Distribution $138, 743 Total Distribution to 79 (Net) $1, 942, 404 Total Taxes Paid $507, 598 11/22/2020 24

Let’s Compare the YFB 401(k) Alternative with 401(k) Contributions Let’s keep everything the same, the only variable will be the investment. YFB 11/22/2020 25

Let’s Compare Your 401(k) with the Maximum Match to the YFB 401(k) Alternative!!! YFB 401(k) Alternative ($6, 000 per 3% Match ($9, 000 per year) Rate of Return Account Value at 65 Annual Withdraw 7%/year $1, 922, 486 $175, 000 Tax Bracket 28. 00% $36, 257 Net Distribution $138, 743 Total Distribution to 79 (net) Total Taxes Paid YFB $1, 942, 402 $507, 598 year) Rate of Return 7%/year -$541, 083 Account Value at 65 $1, 381, 403 Annual Withdraw $138, 743 Tax Bracket Tax Free Net Distribution $138, 743 Total Distribution to 87 $3, 052, 346 Total Taxes Paid $0 +$1, 109, 944 Plus +$507, 598 11/22/2020 26

So What’s the Big Deal with the Match? ? We have a Better Plan! Conversion Alternative Rate of Return 7%/year Account Value at 65 $1, 381, 403 Annual Withdraw Tax Bracket Tax Free Net Distribution $138, 743 Total Distribution to 87 $3, 052, 346 Total Taxes Paid YFB $138, 743 Cost not to do the plan… • Addition Income: • Tax Savings: • Total: $1, 109, 944 $507, 598 $ 1, 617, 542 $0 11/22/2020 27

Let’s Compare Your IRA/401 k With and Without Market Risk • What if we could show you how the Conversion Alternative performs 200%+ better than an IRA, and without market risk. • Assumptions: With S&P Market Risk 25% Income Tax Rate S&P Interest Credit is 100% Not including brokerage fees or fund expenses YFB 11/22/2020 28

IRA vs. Conversion Alternative Returns With and Without S&P Market Risk YEAR START S&P Gain/Loss Ending Value P +I 2000 1. 00 -0. 054 0. 95 2001 0. 95 -0. 149 0. 81 2002 0. 81 -0. 224 0. 62 2003 0. 62 1. 231 0. 77 2004 0. 77 1. 104 0. 85 2005 0. 85 1. 056 0. 90 2006 0. 90 1. 121 1. 01 2007 1. 01 1. 024 1. 03 2008 1. 03 -0. 393 0. 62 2009 0. 62 1. 238 0. 77 2010 0. 77 1. 134 0. 88 2011 0. 88 -0. 022 0. 86 2012 0. 86 1. 188 1. 02 2013 1. 02 1. 254 1. 28 2014 1. 28 1. 139 1. 46 2015 1. 46 -0. 001 1. 46 What is the return of $1. 00 after 16 years With Market RISK and Tax? • Assumptions: With S&P Market Risk. 25% income Tax Rate. S&P Interest Credit is 100% No Brokerage Fees or Mutual Fund Expenses.

IRA With S&P Market Risk YEAR START S&P Gain/Loss Ending Value P +I 2000 1. 00 -0. 054 0. 95 2001 0. 95 -0. 149 0. 81 2002 0. 81 -0. 224 0. 62 2003 0. 62 1. 231 0. 77 2004 0. 77 1. 104 0. 85 2005 0. 85 1. 056 0. 90 2006 0. 90 1. 121 1. 01 2007 1. 01 1. 024 1. 03 2008 1. 03 -0. 393 0. 62 2009 0. 62 1. 238 0. 77 2010 0. 77 1. 134 0. 88 2011 0. 88 -0. 022 0. 86 2012 0. 86 1. 188 1. 02 2013 1. 02 1. 254 1. 28 2014 1. 28 1. 139 1. 46 2015 1. 46 -0. 001 1. 46 What is the return of $1. 00 after 16 years With Market RISK and Tax? Start with $1. 00 and End with $1. 46=$. 46 Gain, or 46%. $46%-25% tax = 35% return over 16 years after tax. 35%/16 years = 2. 19 % average return per year. 35% with Market Risk, Tax and New Tax(s) Risk

Conversion Alternative Returns Without S&P Market Risk YEAR START S&P Gain/Loss Ending Value P +I 2000 0. 75 0% 0. 75 2001 0. 75 0% 0. 75 2002 0. 75 0% 0. 75 2003 0. 75 1. 13 2004 0. 85 1. 104 0. 94 2005 0. 94 1. 056 0. 99 2006 0. 99 1. 121 1. 11 2007 1. 11 1. 024 1. 13 2008 1. 13 0% 1. 13 2009 1. 13 Cap 1. 28 2010 1. 28 1. 13 Cap 1. 45 2011 1. 45 0% 2012 1. 45 1. 13 Cap 1. 64 2013 1. 64 1. 13 Cap 1. 85 2014 1. 85 1. 13 Cap 2. 09 2015 2. 09 0% Cap 0. 85 1. 45 2. 09 Start with $0. 75 Deposit after 25% Tax • Assumptions: No S&P Market Risk. No Tax Rate. S&P Interest Credit is 100%. Cost of insurance contract is not included.

Conversion Alternative Returns Without S&P Market Risk YEAR START S&P Gain/Loss Ending Value P +I 2000 0. 75 0% 0. 75 2001 0. 75 0% 0. 75 2002 0. 75 0% 0. 75 2003 0. 75 1. 13 2004 0. 85 1. 104 0. 94 2005 0. 94 1. 056 0. 99 2006 0. 99 1. 121 1. 11 2007 1. 11 1. 024 1. 13 2008 1. 13 0% 1. 13 2009 1. 13 Cap 1. 28 2010 1. 28 1. 13 Cap 1. 45 2011 1. 45 0% 2012 1. 45 1. 13 Cap 1. 64 2013 1. 64 1. 13 Cap 1. 85 2014 1. 85 1. 13 Cap 2. 09 2015 2. 09 0% Cap 0. 85 1. 45 2. 09 Start with $0. 75 Deposit after 25% Tax Start with $0. 75 and End with $2. 09 = $1. 34 Gain, or 179%/16 years = 11. 2% average return per year. 179% with No Market Risk, Tax and New Tax(s) Risk

Conversion Alternative Returns Without S&P Market Risk What is the return of $1. 00 after 16 years With Market RISK and Tax? Start with $0. 75 Deposit after 25% Tax Start with $1. 00 and End with $1. 46=$. 46 Gain, or 46%. $46%-25% tax = 35% return over 16 years after tax. 35%/16 years = 2. 19 % average return per year. Start with $0. 75 and End with $2. 09 = $1. 34 Gain, or 179%. 35% with Market Risk, Tax and New Tax(s) Risk 179% with No Market Risk, Tax and New Tax(s) Risk 179%/16 years = 11. 2 % average return per year.

What about a Roth? Tax-Free Accumulation Tax-Deferred Growth Tax-Free Withdrawals

What about a Roth? YEAR START S&P Gain/Loss Ending Value P +I 2000 0. 75 -0. 54 0. 71 2001 0. 71 -0. 149 0. 60 2002 0. 60 -0. 224 0. 49 2003 0. 49 1. 231 0. 60 2004 0. 60 1. 104 0. 66 2005 0. 66 1. 056 0. 70 2006 0. 70 1. 121 0. 79 2007 0. 79 1. 024 0. 81 2008 0. 81 -0. 393 0. 49 2009 0. 49 1. 238 0. 61 2010 0. 61 1. 134 0. 69 2011 0. 69 -0. 022 0. 68 2012 0. 68 1. 188 0. 81 2013 0. 81 1. 254 1. 02 2014 1. 02 1. 139 1. 16 2015 1. 16 0% 1. 16 Start with $0. 75 Deposit after 25% Tax Start with $0. 75 and End with $1. 16 = $0. 41 Gain, or 55%/16 years = 3. 44 % average return per year.

Roth IRA Retirement Savings We started with $. 75 and end with $1. 16 That is gain of $0. 41 or 55% return. 55%/16 years equals 3. 44% average return per year. 55% with Market Risk Conversion Alternative 178% with NO Market Risk, NO Tax and NO New Tax(s) YFB 11/22/2020 36 Risk!

IRA 401 K Your Family Bank Gr ow th Withdrawals Risks? Guarantee’s? 100% Penalty + Penalties? Tax = 40% ? Tax Free Liquid? (10% + 30%) Including Protected/Creditors? Cost Basis Leverage? Tax Deductible Tax Deferred? After Tax Or (Not ded. ) Tax Free? Tax Deferred? Collateral? Disability? Contributions The “Perfect” Investment