The Executive 457(b) Retirement Plan^SM

How it Works

The Executive 457(b) Retirement Plan is a nonqualified defined contribution deferred compensation plan codified under IRC Sec. 457(b) for tax-exempt organizations. The program allows selected executives the option of deferring up to $15,000 in 2006 into the plan in addition to 401(k) or 403(b) contributions.

Employee Advantages

Defer additional income in excess of the qualified plan limits on a pre-tax basis
Accumulate earnings tax-deferred*
No excise tax penalty for early distributions
Tailored investment strategy through self-directed investment accounts
Internet access to account information - valued daily
Catch-up provisions for employees within three years of retirement

* Contributions to the plan may not be tax deductible for state income tax purposes in some states.

Tax-exempt Organization Advantages

Provides a way for valuable key employees to defer income in excess of the qualified retirement plan on a pre-tax basis
Assets accumulated to finance the plan liability are held as corporate assets and should not affect the organization's financial statements
Can choose to make matching and/or incentive profit sharing contributions on a per-employee basis (subject to the $15,000 overall deferral limit)
Finances the plan with corporate-owned life insurance (COLI); the organization benefits from the life insurance death benefit
Internet access to account information - valued daily
Easy to administer, communicate and maintain

Employee Considerations

No loan provisions
The maximum combined contribution for 2006 is $15,000
No rollover provisions into an IRA (may be rolled into another 457(b) plan)
Contractual obligation versus fiduciary liability
Assets are owned by the organization and are subject to creditors
Nonqualified deferrals may reduce wages for qualified plan contributions
In the case of bankruptcy, amounts owed to participants in this plan are given the same status as other general creditors of the organization

Tax-exempt Organization Considerations

Potential charge to surplus on assets purchased to finance the plan
Plan level administrative service fees
Human resource time to communicate the plan benefits to eligible participants

The Services You Need to Succeed

The Principal Financial Group^® (The Principal^®) is a leading national provider of nonqualified executive benefit programs. We have worked with thousands of companies and their professional advisors to help design, finance, implement and provide ongoing support for nonqualified plans. Utilizing extensive financing and technical expertise and state-of-the-art technology, we provide turnkey services including plan documentation, tailored employee communications and enrollment materials, as well as Internet-based, plan-level administrative services.

Approval #566372007