August Maples

Is the Roth option suitable for your plan? In a traditional qualified plan, contributions are made with pre-tax dollars. Once the participant retires and begins taking distributions from the plan, contributions and earnings are taxed as ordinary income. With the Roth option, the participant pays taxes up front. Roth contributions are made with aftertax dollars, which means that first the participant is taxed on the full amount earned and then the contribution is deducted. Earnings accumulate tax-free, and in general, distributions (both principal and earnings) are tax-free when the participant retires. Roth contributions are deducted directly from the participant’s paycheck, and the participant s free to choose how their money is invested. If the participant takes a distribution prior to age 59½ and within five years of the first Roth contribution, taxes and penalties may apply. How are Roth contributions similar to pre-tax or traditional deferrals? • Roth contributions count towards the 402(g) maximum deferral limit ($18,500 for 2018). • Roth contributions count toward the 415 defined contribution limit ($55,000 for 2018). • Catch-up contributions include Roth and other deferrals. • Roth contributions are subject to annual deferral percentage (ADP) testing and minimum required distributions. • Roth contributions must be matched at the same level as pre-tax deferrals. How are Roth contributions different from pre-tax or traditional deferrals? • Roth contributions are made with after-tax dollars. • Roth contributions can only be rolled to another Roth account. • Roth contributions must be kept separate from other assets in a plan. • Roth contributions can be distributed after age 59½, if it has been at least five years since the first Roth contribution was made. Why consider the Roth option for your plan? • No income limit on Roth contribution eligibility. • Contribution limit is higher in comparison to a Roth IRA. • Roth contributions may be more advantageous than traditional deferrals for participants who believe they will be in a higher tax bracket at time of distribution. • Can be used as a recruitment and retention tool. Who should consider offering the Roth option? • Employers wanting to offer a retirement plan with additional features to attract and retain employees. • Employers who have the financial ability to give up a current tax deduction in favor of tax-free distributions at retirement age. • Employers with employees in a lower income tax bracket. • Employers with employees who have been excluded from participating in Roth IRAs because their income levels are too high. • Employers who want to provide plan participants with the financial freedom to decide when to pay taxes and what tax deductions to take. © 2018 OneAmerica Financial Partners, Inc. All rights reserved. PRODUCTS AND FINANCIAL SERVICES PROVIDED BY AMERICAN UNITED LIFE INSURANCE COMPANY®, A ONEAMERICA® COMPANY R-/28/18 1 of 2 How do I add the Roth option to my plan? • Amend your plan document by sending a written request to your day-to-day contact. • Update your payroll system to track pre-tax contributions and after-tax Roth contributions. Contributions must be tracked separately. Documentation of Roth contributions and earnings must be maintained until the entire account has been distributed. Note: Non-registered group annuity contracts are issued by American United Life Insurance Company® (AUL), One America Square, Indianapolis, IN 46282,-. Provided content is for overview and informational purposes only and is not intended and should not be relied upon as individualized tax, legal, fiduciary, or investment advice. For answers to specific questions, consult a qualified tax advisor, attorney or financial professional. These concepts were derived under current laws and regulations. Changes in the law or regulations may affect the information provided. Weigh your options carefully, Roth is not for everyone. Investing involves risk including potential loss of principal. © 2018 OneAmerica Financial Partners, Inc. All rights reserved. PRODUCTS AND FINANCIAL SERVICES PROVIDED BY AMERICAN UNITED LIFE INSURANCE COMPANY®, A ONEAMERICA® COMPANY R-/28/18 2 of 2