EFTA Document EFTA01454209

3. It's not dependent on an individual's health or death. The fees associated with a PPVA don't depend on the health of the individuaL There's no mortality component of a PPVA. There are no medical exams required and no underwriting. PPVA Limitations As discussed more fully below, while a client may allo- cate to any of the IDFs offered on the company's PPVA investment account platform, the client can't control the selection of securities within the IDFs. If distributions are taken from the PPVA investment account before age .59%, there's a 10 percent penalty in addition to income tax on the gain element of the distribution. All gains accrued within the PPVA investment account are ultimately subject to the potentially higher ordinary income tax rates (unless distrib- uted to charity). And, any balance remaining in the PPVA investment account owned on the client's date of death is subject to both income and estate tax (unless left to charity). So, when could it make sense to consider using PPVA? Enhance Tax Efficiency Clients with exposure to traditionally tax- inefficient asset classes (for example, hedge funds, high-yield bonds and growth-orient- ed equities) could benefit from using PPVA. It's important, however, not to let the tax "tail" wag the investment "dog." Typically, only if a top performing manager is available on the PPVA investment account platform could this make sense. More broadly, though, clients with a typi- cal multi-asset class portfolio in a higher income tax regime could also benefit from a PPVA. A PPVA works in either case for the same reasons that retail investors have for years benefitted from investing in their individual retirement accounts Income tax deferral almost always makes sense. "After-Tax Advantage," this page, illustrates the ben- efit of owning a higher income tax portfolio in a PPVA investment account. After about five years, the PPVA account outperforms the taxable account. Practice lip: While the client owns the PPVA investment account and can choose to allocate to any of the IDFs offered by the insurance company on its PPVA investment account platform, the IDFs are deemed to be owned by the insurance company's sepa- rate account. Therefore, investors in vehicles like hedge funds would like the fact that the K-Is are delivered to the insurance company, not to the PPVA investment account owner. Charitable Legacy P anning Extremely wealthy individuals who plan on making a substantial gift to charity at death have also awakened After-Tax Advantage here are the differences in value between a PPVA account and a taxable account over a 30-year period, assuming ur different growth rates 45; 5X.!?.? 515‘818". 11:4:15 sion 51.35.5K, (S ti.1538 cf.,6O$ VM.9,14 P.2*rr 5k 12?3,3;(; 52.Knei 1,4174,j*3 5U53.523 (N SS4,21., %OM S.4311 It.351.etE 1165*: 1R593.02 10 I5 x Tent( 0SrS Returns se net Sanowned 1 5 peort et tont moverrent lees cc a SS ration inenstment n a Belieawn' and a private pkxemert elate mite account 75 melt et tealeed gains' taxed at Any kerne rates; end no withdrawals o mark belto age S97:. Wino ill(Ofie far tale assumed to te 4)1 pentni in Veci I al 492 penent thereafter. Capital gent tax Weis 20.7 percent in Year land 291 waft Moans Assumes thi the itresbned unagement fees ant tax eedinnble in the taxable investment atom! tie b tel 2 went of aged gots in me litesh% let itertiaKi (Walk' en — SAL( Fund Services 22 TRUSTS S ESTATES / wealthmanagement.com CONFIDENTIAL — PURSUANT TO FED. R. CRIM. P. 6(e) CONFIDENTIAL DECEMBER 2012 DB-SDNY-0112190 SDNY_GM_00258374 EFTA01454209