First American Title Holding Company

1. First American Title Holding Company Our 401(k) Opportunity Phase I

2. The Need to Prepare • Experts say that individuals need between 70% and 80% of the income they earned in their working years for each year of retirement. • Inflation must be considered in retirement planning. • The time to start preparing is NOW!

3. Investment Vehicles • Individual Retirement Account (IRA)- a tax deferred investment account that can be contributed to yearly. Earnings are tax deferred until withdrawal begins. • Brokerage Account – an account with an individual or firm (Merrill Lynch, Edward Jones, A.G. Edwards, etc.) that brings buyers and sellers together, usually charging a commission. Almost all financial products are offered by these firms.

4. Investment Vehicles 401 (k) - a retirement savings plan that is contributed to through payroll deductions. These deductions are pretax, which reduces taxable income. Taxes are deferred, or postponed, until withdrawal.

5. Why a Company 401(k) Plan? • To provide employees with an opportunity to be actively preparing for retirement • The impact of consistent investment is dramatic over time • Tax free contributions allow employees to contribute more than they would be able to otherwise • You still have to eat when you are retired!

6. The Tax Effect • The fact that 401(k) contributions are pre-tax is a big deal • In this example, a contribution of $115.38 actually costs only $89.09 • This saves $683.66 in taxes over the year Out of pocket contribution will vary based on number of dependants and marital status

7. Personal Responsibility • Employees are given the opportunity to choose how they invest their money within First American’s chosen fund group. • Employees have all of the tools they need to make informed decisions and feel in control of their money.

8. Vocabulary • Mutual Fund – a group of assets (stocks, bonds, etc.) managed by an investment company. Shares are bought and sold by investors. • Bond(fixed income)– generally, a bond is an investment where the issuer promises to repay the principal along with interest on a specified date. • Stock - An instrument that represents an ownership in a corporation, and represents a claim on its proportional share in the corporation's assets and profits.

9. Vocabulary • Standard & Poor’s (S&P 500) – a stock index that includes 500 widely held stocks. The performance of the index is thought to represent the performance of the stock market as a whole. • Dow Jones Industrial Average - The most widely used indicator of the overall condition of the stock market, a price-weighted average of 30 actively traded stocks. The 30 stocks are chosen by the editors of the Wall Street Journal.

10. Vocabulary • NASDAQ – a computerized system established to facilitate trading between buyers and sellers • Morningstar – an organization that has developed a rating system for mutual funds. Five is the best and one is the worst. • Dividends – payments given to a company’s shareholders, often a certain amount per share. They are usually paid quarterly.

11. Vocabulary • Capital PreservationFund – a fund whose goal is to avoid risk, not necessarily make a large return • Growth Fund – a mutual fund whose goal is to invest in stocks that are appreciating (the stock price is going up), not necessarily paying out dividends • Income Fund – a mutual fund that focuses on income through dividends rather than the growth of stocks

12. Eligibility In order to contribute employees must: • Be at least 21 years of age • Have been employed by First American for 6 months Employees can begin contributing to the plan on January 1st or July 1st, whichever comes first after meeting the above requirements.

13. Contributions • Employees can contribute up to 15% of their gross salary • Contribution percentages can be changed on the first payroll of each month

14. Rollovers • Rollover: a movement of funds from one investment to another • New employees can rollover their 401(k) balances from a previous employer before they are eligible to contribute to First American’s plan

15. Borrowing • Employees can borrow up to half of their balance at 7.75% up to $50,000 • A maximum of two loans can be issued at once • A $125 loan fee is charged

16. Company Contribution • In the past, First American has chosen to contribute to the employees’ 401(k) plan – as a percentage of individual contributions • The Board of Directors decides if the company can contribute and how much will be contributed • Company contributions are applied to employee accounts by March 15th

17. Vesting of Employer Contributions Vesting is a guideline stating that employees must be entitled to their benefits (the money that the company has contributed) after a certain period of time. Time starts at the first day of employment.

18. The Time to Start is NOW! Assuming an 8% return

19. Getting Help • Sandra Dalton, Merrill Lynch Investment Advisor for First American • 208-338-3143 • 800-964-4048 • Sandra_dalton@ml.com

20. PlanServices.com • https://www.planservices.com/ml • After registering as a new user, employees can access their account information • A social security number and a birth date are required to register

21. Contribution Information To find out what the exact out of pocket expense will be to increase a contribution, email payroll@firstam.com There is also a 401(k) calculator on the Ipay website where check stubs can be viewed: ipay.adp.com

22. Summary: Why Contribute? • Tax benefits • Personal responsibility for retirement • Company contributions • Automatic withdrawal from employee paychecks – no self discipline required! • Potential for large growth through the compounding power of interest