Outline of todays discussion

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Outline of todays discussion

• Who is Peachtree?
• What is LBP?
• Case Studies
• Action Steps

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Who is Peachtree?

• Peachtree LBP
• Administrator for LBP Program
• Finance company providing premium loan
  origination and loan servicing
• Independent SSO

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Who is Peachtree?

• The Peachtree Family of Companies
• Established in 1996
• 350 Employees
• Over 4 Billion in Committed Financing
• Administer Over 2 Billion in Originated Assets
• IPO March 2006 - LSE PSF
• Private November 2006 DLJ/Credit Suisse

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What is LBP?

• Leveraged Bonus Program
• Individually Owned Retirement Plan
• 3 Key Ingredients
• After-Tax Dollars from EE
• Tax Replacement Loan
• Interest Paid by ER
• Emulation of Retirement Arrangements
• Focus on 401(k) Plans

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Why a 401(k) Plan?

• Large, Untapped Market
• 90 of Companies Have a 401(k)
• 401(k) Challenges
• 70 Have Testing Issues
• Top-Heavy Compliance (HCEs)
• Limited Solutions for Employers

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Traditional Options

• Remain Top-Heavy
• Continuous Testing Concerns
• Refund Contributions to HCEs
• Spend in other ways for HCEs
• Create a Safe Harbor Plan
• Permanently Ends Testing Concerns
• Non-elective contribution (3)

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Traditional Options

• Is there a better choice?

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9000 6000 (IRS)
6000 LBP
9000
ANY AGE Tax-Free (if done properly)

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Permanently Eliminate 401(k) Top Heavy Testing
Issues
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Payroll 5.0M
10 HCEs
3 Non-elective
60,000
150K
144K
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LBP 401(k) PlusSM

• For the Company
• Existing 401(k) Plan stays in place
• Selective Participation
• Permits maximum contributions for key executives
• Deductible
• Permanently eliminates testing issues at a
  fraction of the cost

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LBP 401(k) PlusSM

• For the Participant
• Unlimited contributions
• Tax deferred growth for retirement
• Tax-favored income at retirement
• Pre- and post-retirement death benefits

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Case Studies
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Case Study LBP vs. Safe Harbor

• Business received 2006 Testing from the TPA

• Plan failed HCE/NHCE Testing
• 5.4 Million Payroll
• 17 HCEs
• Company had used Safe Harbor to resolve testing
  issues (3 non-elective match)

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Case Study LBP vs. Safe Harbor
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Case Study LBP vs. Safe Harbor

• Current Safe Harbor Plan
• 164,490 (3 non-elective)
• Instead utilize LBP 401(k) PlusSM
• 24,475 (year one)

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LBP 401(k) PlusSM vs. Safe Harbor
Hurdle Rate This figure is a corporations
incremental cost of capital or required rate of
return. LBP Indirect Savings This reflects the
incremental earnings for the particular year on
the cumulative LBP Direct Savings (including
prior incremental earnings), based on the
companys Hurdle Rate. LBP 401(k) Plus Cost
Bonus to executives for annual loan interest. In
years 1and 6, this figure also includes the bonus
to cover the LBP loan commitment fee. Loan
interest rate 12 Month LIBOR plus a fixed 1.95.
LBP Loan Commitment Fee 2 charged in year 1
and 6 of the total loan amount expected over 5
years.
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LBP 401(k) PlusSM vs. Safe Harbor
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Case Study 401(k) Enhancement

• Peachtree LBPSM was approached by a company with
  a voluntary 401(k) plan.
• Payroll of 62,000,000
• 120 Employees not able to participate at the
  maximum deferral amounts
• Deferrals have been refunded the last 3 years
  because the plan failed the ADP test
• Safe Harbor was not an option because of cost

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Case Study 401(k) Enhancement

• Original recommendation
• create a safe harbor plan
• minimum cost 1,860,000 (3 of payroll) per year
• Instead provide LBP
• Cost 212,640 year one

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LBP 401(k) PlusSM vs. Safe Harbor
Hurdle Rate This figure is a corporations
incremental cost of capital or required rate of
return. LBP Indirect Savings This reflects the
incremental earnings for the particular year on
the cumulative LBP Direct Savings (including
prior incremental earnings), based on the
companys Hurdle Rate. LBP 401(k) Plus Cost
Bonus to executives for annual loan interest. In
years 1and 6, this figure also includes the bonus
to cover the LBP loan commitment fee. Loan
interest rate 12 Month LIBOR plus a fixed 1.95.
LBP Loan Commitment Fee 2 charged in year 1
and 6 of the total loan amount expected over 5
years.
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LBP 401(k) PlusSM vs. Safe Harbor
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The LBPSM 30-Day Plan

• Day 1 Introduction to LBP
• Day 15 LBP Mechanics
• Sales Process
• Enrollment Implementation
• Administration
• Day 30 Onsite Meetings
• Client Presentations
• Enrollment

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Day 15 LBP Mechanics
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Day 15 LBP Mechanics

• Sales Process
• Prospecting with LBP
• Company Decision Cycle

• Company Cost Analysis
• Presumptive Closing Steps

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Day 15 LBP Mechanics
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Day 15 LBP Mechanics

• Sales Process
• Prospecting with LBP
• Company Decision Cycle

• Company Cost Analysis
• Presumptive Closing Steps
• Enrollment Implementation
• Steps in Process
• Timeline
• Peachtrees Roll

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Day 15 LBP Mechanics

• Sales Process
• Prospecting with LBP
• Company Decision Cycle

• Company Cost Analysis
• Presumptive Closing Steps
• Enrollment Implementation
• Steps in Process
• Timeline
• Peachtrees Roll

• Administration
• Technical Structure of LBP
• How to work with Peachtree

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Action Steps

• Identify 5 prospective businesses
• Company has a 401k plan
• Utilize Prospecting Call Script
• Have you had Top-Heavy issues in the past or
  currently?
• Have you refunded 401k contributions back to
  HCEs?
• Utilizing or considering a safe harbor plan
• Would you be interested in permanently
  eliminating Top-Heavy testing issues?
• Utilize Napkin Pitch and Script
• Call LBP for Support

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