North Carolina Agents Checklist For Submitting Fixed Annuity New Business. General Information

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1 North Carolina Agents Checklist For Submitting Fixed Annuity New Business General Information... 1 Non-Qualified Single Premium Tax Deferred Annuity... 2 Traditional IRA (Qualified Annuity)... 3 Roth IRA (Qualified Annuity)... 4 SEPP Simplified Employee Pension Plan (Qualified Annuity)... 6 Simple IRA Savings Incentive Match Plan for Employees (Qualified Annuity)... 7 General Information Qualified or Non-Qualified? The flexible premium fixed annuity may be sold only as a Qualified annuity. If the annuity is being used to fund an IRS tax qualified plan, such as an IRA (Traditional or Roth), SEPP or SIMPLE IRA, it is considered to be a Qualified annuity. Generally, Roth IRA being the exception, the premiums are made with before tax or tax-deductible dollars. Additionally, when the annuity is being used to fund a qualified plan, the plan itself may have certain restrictions that may limit the amount of contributions to and withdrawals from the annuity or may require withdrawals at certain ages. If the annuity is not being used to fund an IRS tax qualified plan, it is considered to be a Non-Qualified annuity, and will be written as a Single Premium Deferred Annuity. Owner / Annuitant Joint Owners are allowed only in spousal situations and only on non-qualified annuities. The spouse that is not the annuitant should be the beneficiary. The only time that the owner can differ from the annuitant is in certain custodial, legal guardianship or trust situations. North Carolina Annuity Application Form ICC17-AF400-NC Please complete using black ink. Print clearly and complete every applicable section, following the instructions to the agent on the inside front cover. Form AF043-NC (Rev. 01/18) Page 1 of 8 FOR INTERNAL USE ONLY

2 Single Premium Non-Qualified Tax Deferred Annuity Forms & Requirements Non-Qualified Tax Deferred Annuity New Application Complete Form AF010-NQ-NC (Required Non- Qualified Annuity Disclosure and Agent Acknowledgement). The application must include the required documents including this completed acknowledgement. If any document is missing, the application will be considered incomplete and processing time will be Check, if applicable (Minimum $10,000) Section 1035 Exchange Transferring funds of a non-qualified annuity or life policy from another financial institution to a non-qualified annuity with Southern Farm Bureau Life is referred to as a 1035-tax free exchange (not a rollover). The policy must be structured the same (same owner and insured) as the policy being exchanged. A partial 1035 exchange of an annuity contract is allowed if the money is going into a new contract. Partial 1035 exchanges into existing annuity contracts are not allowed. Section 1035 Exchange Instructions (Non-Qualified Tax Deferred Annuity) Section 1035 Exchange into a NEW Application Complete Form AF010-NQ-NC (Required Non- Qualified Annuity Disclosure and Agent Acknowledgement). The application must include the required documents including this completed acknowledgement. If any document is missing, the application will be considered incomplete and processing time will be Complete the application as you normally would except that you indicate in the special request section of the application that I wish to do a 1035 exchange on policy #54321 with ABC Insurance Company into this contract. Form AF032 must be completed on every fixed annuity application, regardless of age. Complete the Replacement section of the application and check the Section 1035 Exchange box. Give the applicant Fixed Annuity Disclosure form AF040-NQ at time of application. Submit the application to the New Business department along with any replacement forms your state may require. When the application and forms are received, the Home Office will send to you an Absolute Assignment Form 1095 for the annuitant/owner s signature. Mail the completed Form 1095 and the annuitant/- owner s old contract to the Home Office. When the Form 1095 and the contract are received, the Home Office will initiate the exchange with the other financial institution. When the money is received from the other financial institution, the policy will be issued. Form AF043-NC (Rev. 01/18) Page 2 of 8 FOR INTERNAL USE ONLY

3 Traditional IRA (Qualified Annuity) Traditional IRA General Information A Traditional Individual Retirement Annuity (IRA) is a personal savings plan that offers certain tax benefits to encourage retirement savings. Contributions to traditional IRAs are either tax deductible (the money goes into the IRA pretax) or nondeductible (you pay income tax on the money that goes into the IRA). Regardless of whether contributions are tax deductible, amounts contributed to a traditional IRA grow tax deferred inside the IRA. Rollovers, Direct Rollovers and Direct Transfers to Traditional IRA Regular Rollover - The distributing company makes the check payable to the participant, after which, the participant has 60 days from the date the distribution is received to make a rollover deposit. Direct Rollover - This is used to transfer funds from an employer sponsored retirement plan, such as a TSA, 401(k) or pension plan, to an IRA. The funds are sent directly to the receiving company to avoid having the 20% withheld for federal income taxes. Direct Transfer - This is used to transfer funds between like plans such as an IRA to another IRA. The distributing company sends the funds directly to the receiving company. For direct rollovers or direct transfers, indicate in the special requests section of the application whether the app is a Direct Rollover or Direct Transfer and that money is to follow. Traditional IRA Forms & Requirements New Traditional IRA Application Check for initial premium (Minimum $2,500) Regular Rollover, Direct Rollover or Direct Transfer to a new Traditional IRA Application Check, if applicable (Minimum $2,500) NOTE: After Compliance completes its suitability review, if the proposed annuity appears suitable for the owner, New Business will send Form AF017 to the agent, which must be completed and signed by the owner before the new annuity can be issued. The owner or agent should forward the completed form to the other institution. Form AF043-NC (Rev. 01/18) Page 3 of 8 FOR INTERNAL USE ONLY

4 Roth IRA (Qualified Annuity) General Roth IRA Information No tax deduction is allowed for contributions to a Roth IRA. All contributions are made with after-tax dollars. However, distributions will be tax free if the Roth IRA has been established for at least 5 years AND the distribution is attributable to one of the following reasons: 1. Age 59½ 2. Death 3. Disability 4. First home purchase Distributions from a Roth IRA are treated as principal (premium) coming out first. Unlike a traditional IRA, a Roth IRA is not subject to the required minimum distribution rules. A Roth IRA may be established for the previous calendar year if established by the tax-filing deadline of the individual, not including extensions. Roth Conversions You can do an external rollover conversion or an external direct conversion from an employer sponsored qualified plan or another traditional IRA to a Roth IRA. The conversion will be fully taxable in the year of the conversion. The conversion of a Traditional IRA or Qualified Plan is fully taxable in the year of the conversion with the exception of any non-deductible contributions made. For internal conversions, no surrender fee will be assessed to surrender the Traditional IRA policy; however, on any new issuance of a Roth policy, a new surrender charge period will begin. Roth IRA Forms & Requirements New Roth IRA Application Check for initial premium (Minimum $2,500) Regular Rollover or Direct Transfer to a new Roth IRA application Check if applicable (Minimum $2,500) NOTE: After Compliance completes its suitability review, if the proposed annuity appears suitable for the owner, New Business will send Form to the agent, which must be completed and signed by the owner before the new annuity can be issued. The owner or agent should forward the completed form to the other institution. Form AF043-NC (Rev. 01/18) Page 4 of 8 FOR INTERNAL USE ONLY

5 Roth IRA Forms & Requirements (Continued) External Direct Conversion or External Rollover Conversion of a Traditional IRA or Qualified Plan to a new Roth IRA Application Check, if applicable (minimum $2,500) NOTE: After Compliance completes its suitability review, if the proposed annuity appears suitable for the owner, New Business will send Form to the agent, which must be completed and signed by the owner before the new annuity can be issued. The owner or agent should forward the completed form to the other institution. Internal Conversion of a Traditional IRA to a new Roth IRA Application Cash Surrender Release Form 5535 IRS W4-P Form NOTE: After Compliance completes its suitability review, if the proposed annuity appears suitable for the owner, New Business will send Form to the agent, which must be completed and signed by the owner before the new annuity can be issued. The owner or agent should return the completed form to Southern Farm Bureau. Form AF043-NC (Rev. 01/18) Page 5 of 8 FOR INTERNAL USE ONLY

6 SEPP Simplified Employee Pension Plan (Qualified Annuity) General SEPP Information A SEPP (Simplified Employee Pension Plan) is an employer sponsored plan that can be established by sole proprietors, partnerships or corporations. Eligible employees are those that are age 21 and older that have performed services for the employer during any three of the previous five years and will earn at least $600 during the current year. Employees cannot elect not to participate. The employer must contribute the same percentage for every eligible employee that they contribute on their own behalf. A SEPP only allows for employer contributions; no employee contributions are permitted, except for traditional IRA contributions, if the employee is eligible for an IRA contribution. A SEPP may be established for the previous calendar year if established by the tax-filing deadline of the employer including extensions. Installation Guide Adopting a SEPP requires completion of IRS Form 5305-SEP, which is executed by an employer for installation of a SEPP for the employees of the business. An application for a SEPP IRA (ICC17-AF400-NC) is then submitted on each participating employee, accompanied by a copy of the 5305-SEP. A copy of the 5305-SEP should be given to each participating employee. The employer should retain the original 5305-SEP. SEPP Forms & Requirements New SEPP IRA Application Check for initial premium Initial Minimum for Employers and Agents - $1,000, subsequent scheduled premiums must be a minimum of $50 monthly, $300 semi-annually or $600 annually. The minimum unscheduled premium is $50. Initial Minimum for Employees - $50, subsequent scheduled premiums must be a minimum of $50 monthly, $300 semi-annually or $600 annually. The minimum unscheduled premium is $50. Regular Rollover, Direct Rollover or Direct Transfer to a new SEPP IRA Application Check, if applicable Initial Minimum for Employers and Agents - $1,000, subsequent scheduled premiums must be a minimum of $50 monthly, $300 semi-annually or $600 annually. The minimum unscheduled premium is $50. Initial Minimum for Employees - $50, subsequent scheduled premiums must be a minimum of $50 monthly, $300 semi-annually or $600 annually. The minimum unscheduled premium is $50. NOTE: After application and related documents are reviewed by the Home Office and deemed complete and acceptable, New Business will send Form AF017 to the agent, which must be completed and signed by the owner before the new annuity can be issued. The owner or agent should forward the completed form to the other institution. Form AF043-NC (Rev. 01/18) Page 6 of 8 FOR INTERNAL USE ONLY

7 Simple IRA Savings Incentive Match Plan for Employees (Qualified Annuity) General SIMPLE IRA Information A SIMPLE IRA is an employer sponsored plan that can be established by sole proprietors, partnerships or corporations. A SIMPLE is designed for employers with 100 or fewer employees. Employees can elect not to participate. A SIMPLE requires both employee and employer contributions unless the employer selects the 2% nonelective contribution. A SIMPLE IRA requires completion of IRS Form SIMPLE, which is executed by an employer for installation of a SIMPLE for the employees of the business. An application is then submitted on each employee that elects to participate. Employees that earned $5,000 or more in compensation during any two prior years and are reasonably expected to receive at least $5,000 in the current calendar year are eligible to participate. You can establish a SIMPLE between January 1 and October 1, but payroll deduction contributions can only be based on salaries earned after the agreement has been entered into. A SIMPLE may not be established for a previous tax year since the elective deferral contributions must be based on salaries earned after the salary reduction agreement has been entered into. The employer must choose one of the following formulas to contribute to the plan: 1. Match employee salary reduction dollar-fordollar up to 3% of the employee's compensation. 2. Elect to match a lower percentage (but not below 1%). This option is only allowed in two of any five years. 3. Make a 2% non-elective contribution on behalf of all eligible employees (even if they choose not to contribute). You cannot maintain any other employer sponsored qualified retirement plan if you adopt a SIMPLE. You can rollover money out of a SIMPLE into an IRA after two years of participation. After the SIMPLE has been established for two years you can roll money from other types of qualified plans into a SIMPLE. Any distributions from a SIMPLE in the first two years of participation are subject to an IRS penalty of 25% and are not eligible for rollover. SIMPLE IRA Installation Guide Since it is the sole responsibility of the employer to administer and service the SIMPLE-IRA, the employer should read and fully understand the 5304-SIMPLE document or seek legal and/or tax advice before establishing the plan. The employer will be required to complete and distribute a new 5304-SIMPLE to all of their employees every year 60 days prior to the beginning of the year. When the employer commits to the plan, he/she must complete pages 1, 2, and the top of page 3 of the SIMPLE document. The employer makes copies of the 5304-SIMPLE and distributes one to each employee. The employees have 60 days to decide whether or not they are going to participate; however, they do not have to wait the full 60 days. If the employee chooses to participate, the employee should complete the bottom half of page 3 of the 5304-SIMPLE document and return it to the employer. The employer needs to keep the original and give the employee a copy of the document. The minimum premium to submit with an application is: For Employers and Agents - $1,000, subsequent scheduled premium minimum is $50 monthly. For Employees - $50, subsequent scheduled premium minimum is $50 monthly. If the Employer wants to receive a list bill for subsequent payments they should arrange the salary reduction through their own payroll system as they receive the completed forms. Form AF043-NC (Rev. 01/18) Page 7 of 8 FOR INTERNAL USE ONLY

8 SIMPLE IRA Forms & Requirements New SIMPLE IRA Application Check for initial premium Initial Minimum for Employers and Agents - $1,000, subsequent scheduled premiums must be a minimum of $50 monthly. Initial Minimum for Employees - $50, subsequent scheduled premiums must be a minimum of $50 monthly. Regular Rollover or Direct Transfer of SIMPLE funds only to a new SIMPLE IRA Application Check, if applicable Initial Minimum for Employers and Agents - $1,000, subsequent scheduled premiums must be a minimum of $50 monthly. Initial Minimum for Employees - $50, subsequent scheduled premiums must be a minimum of $50 monthly. NOTE: After application and related documents are reviewed by the Home Office and deemed complete and acceptable, New Business will send Form AF017 to the agent, which must be completed and signed by the owner before the new annuity can be issued. The owner or agent should forward the completed form to the other institution. Form AF043-NC (Rev. 01/18) Page 8 of 8 FOR INTERNAL USE ONLY