The Pentegra 3(16) Administrator Smart Path

1. The Pentegra 3(16) Administrator SMARTPATH TM The Path to Simpler, Safer, Easier Plan Management

3. THE PENTEGRA 3(16) ADMINISTRATOR SMARTPATH™ Good retirement plans can be complicated. But servicing them doesn’t have to be. The multitude of filings, administrative duties and attention required to manage a retirement plan can be overwhelming and make it a rough road for you and your clients. Pentegra’s 3(16) fiduciary outsourcing solution makes the path simple. Today, many providers say they provide 3(16) services. Some take responsibility for a handful of tasks. At Pentegra, we sign the plan document and 5500, not only performing these duties but accepting responsibility for them. Think of it as straightening out a curve filled, risky road.

4. Time is Money How much time in a given day are your clients taking to manage their retirement plans? And how much time are you spending resolving retirement plan administrative issues for your clients? Today, retirement plan administration has become increasingly complex and laden with compliance burdens. For many employers, the commitment of time and energy is overwhelming and too often distracts from the more critical responsibility of running a business. As an advisor, it’s a distraction from your business as well. And when it comes to the fiduciary oversight of a retirement plan, while most plan sponsors are the Named Fiduciary of their plan, the truth is that they aren’t aware of the myriad of responsibilities that come with that role, or that these responsibilities involve significant risk. Understanding and handling these responsibilities is time away from their business and yours. Time that could be better spent focusing on growth and profitability. For both you and your clients, time is money. There’s an easier way. Outsourcing. Fiduciary outsourcing involves the transfer of legal responsibility for a retirement plan from an employer to an institutional fiduciary. Pentegra’s 3(16) Fiduciary Administrator services shifts these burdens from your client’s organization to ours. Our 3(16) Fiduciary Administrator services allow you to reduce your administrative burdens by not only handing off these tasks to us, but also handing off the responsibility for ensuring that they are handled well. It’s the SmartPath™ to plan administration. 2 Pentegra

5. There’s an easier way. Outsourcing.

6. Which Business Model Is Right for Your Clients? Do your clients understand the difference between a third party administrator (TPA) and a ‘first’ party administrator? Many providers say they provide 3(16) services. Some take responsibility for a handful of tasks. At Pentegra, we, not only perform these tasks, but also accept responsibility for them. That’s the Pentegra difference. We are a ‘first’ party administrator—we provide TPA services and serve as a true 3(16) administrator. With a legacy built serving as an institutional fiduciary for more than 75 years for thousands of retirement plans nationwide, Pentegra offers a level of 3(16) service that is unmatched in the industry today. The TPA as 3(16) Fiduciary Administrator A “First” Party Administrator The TPA and/or recordkeeper—is appointed as the named fiduciary and/or 3(16) administrator. The key advantage of this approach is the ability to outsource these responsibilities because under a true 3(16) arrangement, the party doing the work is also the party accepting responsibility for doing it properly. An independent fiduciary is appointed as named fiduciary and/or 3(16) administrator as an added layer in the plan document and other governing documents and contracts. The fiduciary is not the TPA or recordkeeper, but becomes the party responsible for prudently selecting and monitoring the TPA and/or recordkeeper. TPA & Separate Fiduciary Under this approach, the TPA—the party doing the actual work—is still not a fiduciary. Non-Fiduciary TPA The non-fiduciary TPA offers supplemental services such as document mailings or hands-free distribution processing, but does so as a non-fiduciary or accepts very limited fiduciary responsibility for certain tasks only. While this is often a low cost approach, the employer retains the bulk of the legal responsibility and therefore much of the labor and all of the fiduciary responsibility. 4 Pentegra

7. An unmatched level of Oversight.

8. What makes an ERISA 3(16) fiduciary so important? Contrary to common belief, most plan mistakes that occur have little or nothing to do with the investments or the investment manager, but instead, involve plan administration issues. Some of the top mistakes that occur include: • Plan document not updated to reflect law changes • Failure to follow plan terms • Not using the plan’s definition of compensation for deferrals and allocations correctly • Employer matching contribution errors • Not satisfying non-discrimination tests (ADP & ACP) • Not notifying all eligible employees of their opportunity to defer • Not complying with IRC Section 402(g) • Not depositing employee elective deferrals in a timely fashion • Hardship distribution issues • Not making required minimum contributions for top-heavy plans • Not filing a Form 5500 series return and not distributing a Summary Annual Report to all participants. By hiring a competent ERISA 3(16) fiduciary, plan sponsors are insulating themselves against these errors to a greater level than a typical TPA arrangement provides. As a 3(16) Plan Administrator, Pentegra assumes full responsibility for managing the day-to-day operations of the plan, and shifts the legal and operational burdens of the Plan Administrator role from your organization to ours. 6 Pentegra

9. Shift legal and operational burdens.

10. The Pentegra 3(16) SmartPath™ Advantage A Solution that Takes These 50 Responsibilities Off Your and Your Client’s Plates 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. Segregation of assets by source Coverage testing and corrections Involuntary distributions Episodic notices Distributions Hardship withdrawals Qualified Domestic Relations Orders (QDRO) Lost/missing participants and unclaimed benefits Grandfathered plan provisions Plan termination and partial termination Spousal consents Survivor benefits, (QJSA and QPSA) Summary Plan Descriptions and Summaries of Material Modifications (SPD and SMM) Timely remission of deferrals and loan repayments Timeliness of other required contributions Diversification requirements for plans with employer securities Blackout procedures Defined benefit plan duties Participant fee disclosure (404a-5) Fiduciary fee disclosure (408b-2) Records retention under ERISA Sections 107 and 209 Responding to participant inquiries Top-heavy minimum benefit Overpayments Personal liability under ERISA 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. Overall operational compliance Document compliance, mandatory interim amendments, restatements Form 5500 Annual plan audit, if applicable New hire processing ERISA bond ACA (automatic enrollment) administration ACI (automatic contribution increases) administration Default investment administration Determination of vesting and amount of distribution ERISA section 105 employee benefit statements Reasonableness of fees Prudent selection and monitoring of service providers Benefit determinations and disputes Administration of beneficiary rules Worker classification Nondiscrimination testing Summary Annual Report (SAR) Definition of compensation Allocation of unallocated monies by plan year- end IRC section 72(p) loan administration Contribution calculations and limitations Protected benefits Acceptance or rejection of rollovers or transfers Annual notices 8 Pentegra

11. Simpler, safer, easier plan management.

12. Pentegra’s 3(16)(A) Fiduciary Administration Services Plan Operational Oversight and Compliance Plan Document Administration New Hire and Termination Processing • Accept responsibility under ERISA 404(a)(1)(D) for ensuring that the plan is operated in accordance with the terms of the plan document subject to the fulfillment of any responsibilities retained by the employer • This is an extremely broad responsibility: “operational compliance” is a catch-all term covering nearly everything that can go wrong in a retirement plan • Includes the many requirements that must be met for a plan to be “qualified” for tax purposes • Ensure proper documentation and ERISA 107/209 records retention • Prepare plan document and ensure compliance with applicable laws • Prepare plan adoption and trust agreements • Prepare plan qualification package • Ensure plan document is amended as required by new laws, regulations, and mandatory restatements • Obtain favorable letters of determination • Maintain records of historical plan documents • Identify eligibles based on plan provisions and employer-provided data and automatically mail packet to address of record • Administer auto-enroll provisions • Complete, up-to-date enrollment materials • Online enrollment process with live telephone backup Participant Fee Disclosure Hardship Distributions Loans and Loan Repayments • Compliance with DOL Reg. Sec. 2550.404a-5 • Gather fee information from third parties and collate the data to create the plan’s disclosure documents • Ensure timely delivery of disclosures annually and to newly eligible employees in accordance with the DOL’s rules on document delivery • Cross-reference plan document rules since each plan may be different • Test for both existence and amount of need • Take only from allowable sources and only after exhausting loans and in-service distributions • Suspend deferrals for six months and reinstate promptly when applicable • Keep careful documentation of every distribution for the ERISA 107 period • Establish written loan policy as supplement to plan document • Review and approve loans; remove employer from loop except for payroll deductions • Ensure amortization periods match actual payroll implementation • Ensure each loan agreement is executed and documented • Enforce quarterly deadlines and deemed distribution requirements Distributions and QDROs Forfeitures and Suspense Accounts Corrections and E&O • Review and ensure the qualified status of domestic relations orders (DROs) • Ensure that alternate payees are given their ERISA participant rights • Review and approve distributions, including determinations of disability, death, retirement, or other distributable events • Ensure that the appropriate notices are delivered and that the tax withholding rules are properly applied • Ensure that all unallocated monies are used to offset employer contributions, pay plan expenses, or are allocated to participants by plan year end • Includes revenue sharing held within the plan, monies returned to the plan such as expense reimbursements, forfeitures, demutualization proceeds, legal settlements, etc. • SCP , VCP , Audit CAP , DFVCP , and VFCP calculations, preparation of government submission, follow-up, and implementation of corrections • Maintain an E&O account for trusteed plans to ensure an audit trail for corrections • Maintain insurance and reserves at appropriate levels at or in excess of regulatory requirements 10 Pentegra

13. Service Provider Selection and Oversight Participant Notices, Statements and Disclosures Plan Audit • Select and monitor plan auditor in accordance with joint DOL/AICPA guidelines • Negotiate volume discounts • Serve as primary liaison with auditor; remove employer from loop to the maximum extent possible • Prepare plan financial statements to meet the letter of AICPA independence guidelines • Obtain and make available SOC I and II audits on internal controls to allow for a limited scope audit • Prudent hiring of service providers not appointed directly by employer such as auditor and custodian • Review vendor fee disclosures and ensure reasonableness of fees • Regular monitoring of Pentegra- appointed service providers to ensure they remain prudent and fees remain reasonable • Preparation of notices and disclosures such as SPD, SMM, SAR, 404(c), QDIA, ACA, Safe Harbor, and 402(f); contrast with how a non-fiduciary TPA provides a boilerplate document the employer is supposed to review and approve • Ensure document delivery compliant with DOL rules on electronic disclosure • Includes beneficiaries, alternate payees, and other “interested parties” Contributions Government Filings Compliance Testing • Establish and enforce ERISA 402 funding policy for timing of remittances • Maintain proper source accounts and tax basis • Ensure proper investment of contributions of “defaulted” participants • Ensure rollovers into the plan are from qualified sources • Prepare and submit filings such as Form 5500 Annual Report with applicable Schedules, Form 5558 extensions, Form 5330 prohibited transaction tax reports, PBGC premium filings, and more • Tax reporting, state and federal, including 1099-R, 1096, 945, and 1099-MISC • Determine plans to include for compliance testing • 401(a)(4) Nondiscriminatory Allocations • 401(a)(9) RMD • 401(a)(26) Minimum Participation testing • 402(g) Excess Deferrals • 404 Maximum Deductible Contributions • 410(b) Minimum Coverage testing • 414(s) testing for non-safe harbor compensation • ADP/ACP testing • 415 Annual Addition testing • 416 Top Heavy testing • Nondiscriminatory Benefits/Rights/ Features • Determine Highly Compensated Employees and key employees • Prepare comprehensive compliance reporting package • Provide detailed analysis of testing results • Develop corrective scenarios in the event of test failures Claims and Benefit Determinations Annual Plan Review Process • Establish and administer ERISA- compliant claims process • Verify identity of beneficiaries • Make benefit determinations in accordance with the plan document and ERISA • Ensure QJSA/QPSA rules are met and proper waivers obtained, including spousal consent on all loans and distributions with respect to protected sources • Establish plan governance process and checklist • Provide completed checklist and annual review report annually • Review service provider performance and fees

14. Make Our Expertise Your Expertise and Deliver Added Value for Your Clients With Pentegra’s 3(16) administrator services, you can partner with a professional fiduciary to relieve plan sponsors of real work, time and liability. • Partner with one of the most experienced 3(16) Administrators in the nation • Deliver comprehensive retirement plan administrative support • Outsource ERISA 3(16) fiduciary administrator services to help both you and your clients comply with retirement plan fiduciary obligations • Benefit from the services of an experienced team and the deep bench strength of an institutional fiduciary • Spend more of your time on participant retirement readiness • Integrate across many platforms to bring recordkeeping flexibility to every opportunity • Share a new solution that is different than the usual talk about funds and fees 12 Pentegra

15. Make the path simple for your clients.

16. Partner with Pentegra to make the path simple. Our team brings experience, expertise and above all, collaboration to every opportunity to deliver retirement plan and fiduciary outsourcing solutions that genuinely add value for you and your clients. 14 Pentegra

18. Let us help you achieve your goals. Contact the Pentegra Solutions Center at solutions@pentegra.com or 855.549.6689 or visit us at www.pentegra.com

20. 2 Enterprise Drive, Suite 408, Shelton, CT 06484-4694 800•872•3473 tel 203•925•0674 fax www.pentegra.com © 2018 Pentegra All Rights Reserved