PRIME CAPITAL SERVICES ~ ASSET & FINANCIAL PLANNING LTD. RE: YEAR-END PROCESSING DEADLINES FOR PREMIERE SELECT RETIREMENT ACCOUNTS

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1 PRIME CAPITAL SERVICES ~ ASSET & FINANCIAL PLANNING LTD. IMPORTANT MEMO # RE: YEAR-END PROCESSING DEADLINES FOR PREMIERE SELECT RETIREMENT ACCOUNTS DATE: October 29, 2010 The end of the year is approaching, and National Financial Services LLC (NFS) would like to take this opportunity to alert you to a number of important processing deadlines for Premiere Select retirement accounts (includes Premiere Select Traditional, Roth, Rollover, SEP, SIMPLE IRAs, IRA Beneficiary Distribution Accounts, and Roth IRA Beneficiary Distribution Accounts; and Premiere Select Retirement Plan and Retirement Plan Beneficiary Distribution Accounts). The information contained herein is provided for informational purposes only and should not be construed as legal or tax advice. Customers should be encouraged to consult a tax advisor or an attorney for information related to their specific situation. Consistent with IRS requirements, distributions are tax reported by NFS for the year the distribution is processed. Distributions cannot be backdated to reflect a previous tax year for any reason. To help ensure timely processing of all distribution requests, representatives should familiarize their staff with all time frames detailed in this Memo. Please review this Memo for information on the following areas: Conversions to a Roth IRA Processed in 2010 Recharacterizations of Roth Conversions or IRA Contributions Year-End Distributions Periodic Distribution Plan Payments Executing Trades Needed to Satisfy a Distribution Processing Guidelines Contributions Received January 1 through April 15, 2011 Viewing Not In Good Order (NIGO) Items Key Dates to Remember Conversions to a Roth IRA Processed in 2010

2 Distributions from a Traditional IRA, Rollover IRA, SEP IRA, or SIMPLE IRA must be made on or before December 31, 2010, and converted to a Roth IRA within 60 days in order for the income to be included in gross income for Please note that SIMPLE IRA assets are not eligible for conversion until after the expiration of the two-year period, which begins on the date a participant first received contributions under the SIMPLE IRA plan maintained by his/her employer. To help ensure that NFS Retirement Distributions is able to process these conversions by December 31, 2010, it is strongly recommended that NFS Retirement Distributions receive the completed Premiere Select Roth IRA Conversion Form in good order on or before December 13, Conversion forms received in good order after December 13, 2010 will be processed on a best efforts basis up to and including December 31, Conversion forms should be separated from the Roth IRA account application and submitted to NFS Retirement Distributions for processing. Conversion forms submitted along with the application may not be received by NFS Retirement Distributions in time to process the conversion by December 31, Recharacterizations of Roth Conversions or IRA Contributions Customers who erroneously convert IRA assets to a Roth IRA, or otherwise wish to change the nature of an IRA contribution, may recharacterize such conversion and/or contribution prior to the due date (including extensions) for filing the customer s federal income tax return for the year the conversion/contribution was made to the IRA. Customers can, in the future, reconvert back to the Roth IRA. There are, however, limits on reconversions, including the following: A Roth IRA conversion contribution amount that has been recharacterized to another non-roth IRA can later be reconverted back to the Roth IRA. However, the IRS has imposed limits on the number of times an individual may reconvert previously converted and recharacterized assets. An IRA owner may not reconvert an amount previously converted and recharacterized before the later of: January 1 of the taxable year following the taxable year in which the conversion was made, or the end of the 30-day period beginning on the day the IRA owner completes a recharacterization back to the original IRA. (For example, if an individual converts a Traditional IRA to a Roth IRA on August 1, 2010, and then re-characterizes the amount back to a Traditional IRA on November 1, 2010, he/she cannot reconvert the amount until at least January 1, If an individual converts a Traditional IRA to a Roth IRA on August 1, 2010, and then recharacterizes the amount back to a Traditional IRA on December 26, 2010, he/she must wait until at least January 26, 2011 a 30-day period before he/she can reconvert.) Any reconversion(s) exceeding this limit will be deemed an excess reconversion and will require the customer to include the taxable portion of the

3 last valid conversion amount in income for the taxable year of the conversion. Note: SIMPLE IRA assets are not eligible for conversion until after the expiration of the two-year period for SIMPLE IRAs. For all reconversions beginning January 1, 2011, and thereafter, a reconversion of an amount that has been converted and recharacterized prior to January 1 of the taxable year, or, if later, the end of the 30-day period beginning on the day the recharacterization occurs is treated as a failed conversion. IRA owners may correct a failed conversion by recharacterizing such amount back to the IRA from which the IRA owner reconverted. If the IRA owner fails to recharacterize the reconverted amount, such amount will be treated as a regular Roth IRA contribution and thus may be subject to an excise tax to the extent that such amount exceeds the customer s annual IRA contribution limit for the tax year. Please note: it is strongly recommended that NFS Retirement Distributions receives the completed forms in good order by December 13, 2010, in order to help ensure that all recharacterization transactions are processed and completed by December 31, NFS will process all recharacterization requests received in good order after December 13, 2010, on a best efforts basis up to and including December 31, A recharacterization processed in 2010 will be reflected on the R and 5498 forms that will be mailed in January Year-End Distributions The last day to request a distribution for 2010 is December 31, 2010 (December 30, 2010 for distributions via EFT). NFS Retirement Distributions strongly recommends that these requests be submitted in good order by December 13, Submitting requests earlier allows your organization to address any that are Not In Good Order (NIGO) prior to December 31, 2010 Note: We will utilize the partial distribution process, which allows available funds to be paid if the funds available in the core account investment vehicle ( core account ) are insufficient to meet the requested distribution amount. The partial distribution process applies to both periodic and one-time distributions and will be in effect for December only. Partial Distribution Process: If funds in the core account are insufficient to meet the requested or scheduled distribution amount, the distribution will pend for the greater of 15 business days or until December 31, The full distribution amount will be paid if it becomes available at any time during the pending period. This allows us to: Minimize the creation of multiple, small-dollar checks.

4 Extend the pending period for distributions originally set to pay early in December until December 31. Pend distributions set to pay later in December the full 15 business days extending into January Generate a partial payment of funds available on December 31, 2010, for all pending distributions. The partial distribution process works as follows: NFS will pay the available amount on December 31, 2010, if the amount available is $50 or more. If the pending period extends to January 2011, NFS will pay the full amount remaining if it becomes available during the pending period or any partial amount $50 or greater available both on December 31 and at the end of the pending period. The unpaid portion of the distribution will be deleted upon expiration of the pending period if sufficient funds have not become available to meet the requested amount. Important Note: Do not submit distribution requests for 2011 reporting until after December 31, 2010, to ensure proper handling.

5 Partial Distribution Examples If funds in the core account are insufficient to pay the scheduled distribution: Requested Amount & Payment Date: $75.00 on 12/3/2010 $75.00 on 12/3/2010 Pending Expires: Funds available on Then on : $60.00 $60.00 will be sent on Remaining $15.00 expires $25.00 No payment will be sent Full request expires $ on 12/15/2010 Checks/Wires:1/4/2011 Money Line/Directed Payee ACH: 1/3/2011 $55.00 $55.00 will be sent on Remaining $45.00 expires if funding not available by 1/4/2011 for Checks/Wires or 1/3/2011 for Money Line/Directed Payee ACH If remainder is paid in 2011, it applies to tax year 2011 $30.00 on 12/3/2010 $5.00 $5.00 will be sent on Remaining $25.00 expires $45.00 on 12/15/2010 Checks/Wires:1/4/2010 Moneyline/Directed Payee ACH: 1/3/2010 $25.00 $25.00 will be sent on Remaining $20.00 expires if funding not available by 1/4/2011 for Checks/Wires or 1/3/2011 for Money Line/Directed Payee ACH If remainder is paid in 2011 it applies to tax year 2011

6 Periodic Distribution Plan Payments December periodic distribution plan payments from a customer s core account which are scheduled to occur between December 3, 2010 and December 31, 2010 will be pulled forward and processed in the December 3, 2010 nightly cycle. For Example: A customer has a periodic distribution plan which is scheduled to distribute $ from his or her core account on December 22, This payment will be pulled forward and will feed into the nightly cycle on December 3, 2010 with a processing date of December 6, Mutual fund liquidating trades for this distribution will be placed at market close on December 3, Additionally, all periodic distribution plan payments scheduled to occur between December 21, 2010 and December 31, 2010 which were not processed in the December 3, 2010 pull forward described above, will be processed in the December 17, 2010 nightly cycle. This will help ensure that all 2010 retirement distributions are processed in the 2010 tax year. Systems Deadline for New 2010 Periodic Distribution Plans: December 27, 2010 is the last day to establish a new periodic distribution plan to pay in Beginning December 28, 2010, NFS Retirement Distributions will establish periodic distribution plans for 2011 only. For customers who request a 2010 payment, we will process a onetime retirement distribution (OTR) in addition to the periodic distribution plan set up to meet the request. Executing Trades Needed to Satisfy a Distribution All trades must settle by December 31, 2010 to be available for distributions on December 31, 2010 (the last business day of the year 2010). Therefore, equity trades must be executed no later than December 28, Please take the different settlement periods for different securities into consideration when placing trades. Failure to allow sufficient time for trade settlement may cause distributions to occur in Contributions Received January 1 through April 15, 2011 All IRA contribution checks mailed to NFS must have the intended year of contribution designated in the check s memo field. If an IRA contribution check is received by NFS without a contribution year indicated, it will automatically be coded as a current year contribution. An IRA contribution made after January 1, 2011, using electronic funds transfer (EFT) (e.g., periodic investment plan) will be coded as a current year contribution. If the

7 contribution made between January 1 and April 15 is intended to be a prior-year contribution, NFS Distributions will be contacted.. Key Dates to Remember All retirement periodic distribution plan payments scheduled to be made between December 3, 2010, and December 31, 2010, will be processed in the December 3, 2010 nightly cycle. Additionally, all periodic distribution plan payments scheduled to occur between December 21, 2010 and December 31, 2010 which were not processed on December 3, 2010 will be pulled forward and processed in the December 17, 2010 nightly cycle. The last day to request 2010 Required Minimum Distributions (RMDs) is December 31, 2010; however, the NFS Retirement Distributions group strongly recommends that these requests be submitted in good order by December 13, NFS will process all RMDs received in good order after December 13, 2010, on a best efforts basis up to and including December 31, Distributions of residuals will be reported in the year that the residual distributions are processed. One-time distributions via EFT must be processed by December 30, 2010, in order to post by December 31, The last day to establish a new periodic distribution plan for a distribution for the 2010 tax year is December 27, It is recommended that all distribution forms to establish periodic plans be received by NFS Retirement Distributions by December 13, If you have any questions, please contact our Relationship Management Team at (845) , Option 2.