Understanding 403(b)(7) Plans

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[Name of Financial Professional, Company Name][Name of Pacific Life Wholesaler, Pacific Life]

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Insurance products are issued by Pacific Life Insurance Company in all states except New York and in New York by Pacific Life & Annuity Company. Product availability and features may vary by state.

Please note that this presentation has been designed to provide general information. Neither Pacific Life nor its representatives offer legal or tax advice. Clients should consult their attorneys and tax advisers as to the applicability of this information to their specific circumstances and for complete up-to-date information concerning federal and state tax law.

[Name of Financial Professional] and [Company] are not affiliated with Pacific Life or its affiliated companies.

Why save for retirement 403(b)(7) basics

– Eligibility– Contributions– Distributions and Loans– Rollovers and Transfers

Investment choices– Portfolio Optimization Funds– Fixed-Income Funds

Agenda

People are living longer and healthier lives You could spend 15, 20, 25 years, or more in

retirement Many experts suggest you will need 70% – 90% of

your working income You may want the choice to continue working

Saving for Retirement

Sources of Retirement Income1

1Source: Social Security, Fast Facts and Figures About Social Security, 2014.

3% Other Sources

35% Social Security

34% Earnings

17% Pensions

11% Income from Assets

The Effects of Inflation

Postage Stamp: Historian, United States Postal Service, February 2014.Home: U.S. Census Bureau, Median and Average Sales Process of New Homes Sold in United States, April 2014.

Cost TodayProjected

Cost in 20 YearsPostage Stamp $.49 $.78

New Home $274,500 $407,893

Enjoy Your Retirement

The most important reason to save? You want a great retirement! Your financial independence is a necessity

Employees of public schools, colleges, and universities Employees of 501(c)(3) nonprofit organizations:

– Private schools, colleges, and universities– Religious organizations– Charities– Hospitals– Museums

Who is Eligible?

Maximum annual contribution– Employee salary deferral only▪ $18,000, plus an additional $6,000 if age 50 or older▪ 15 years of service may increase deferral amount by $3,000 per year▪ Public schools generally do not provide employer or matching

contributions– Employer and employee ▪ Some plans may be designed to include employer contributions

(e.g., matching contributions) ▪ 100% of pay, up to $53,000 (or $59,000 if age 50 or older)▪ Public schools generally do not provide employer or matching

contributions

How Much Can I Contribute?

An employee may begin taking distributions at age 59½ If younger than age 59½, employees must meet one of

the IRC exceptions to take out money that has been contributed through salary reduction, such as: Separation from service Hardship Disability Death

Can I Access The Funds?

Distributions taken prior to age 59½ may be subject to an additional 10% federal tax unless the employee meets a qualifying exception:

Separation from service after age 55 Series of substantially equal lifetime payments Disability Death

Early Distribution Federal Tax Penalty

May be permitted by plan Maximum amount is limited to the lesser of:

– $50,000 or 50% of accrued balance Loan payments must be made at least quarterly Repayment of the loan generally must occur within

five years (or up to 30 years if for primary residence)

Loans

Required minimum distributions must begin by April 1 of the year following the year you turn age 70½, or the calendar year in which you retire, whichever is later.

50% excise tax is assessed on required amounts not taken

Possible exception: Contributions prior to 12/31/86 may continue to defer until the calendar year in which employee turns 75

When Must I Begin Distributions?

Contract Exchange – Exchange of assets within the current employer’s plan from one approved investment option to another approved investment option

Plan-to-Plan Transfer – Move assets from an account with the prior employer 403(b)(7) to a new account with current employer 403(b)(7)

Rollovers – Between a 403(b)(7) contract and different types of retirement plans (e.g., 401(k) or IRA)

Consolidating Retirement Assets

Save for retirement with pretax dollars Offers tax deferral on contributions and earnings Reduces current taxable income Can be rolled over to other eligible retirement plans

Why 403(b)(7) Plans?

A Tax-Advantaged Strategy—Hypothetical Example

Assumes a 28% federal tax rate, assessed yearly on the taxable investment and at period-end on the tax-deferred example. Assumes the tax-deferred investment is made with pretax funds and not a Roth 403(b)(7) contribution. This hypothetical illustration does not include charges and fees. Had these charges and fees been included, the investment returns would have been reduced. If the full amount of the tax-deferred investment was withdrawn at the end of the 30 years, assuming a 28% tax rate, the value after paying taxes would be $349,363. Actual tax rates may vary for different taxpayers and assets from that illustrated (for example, capital gains and qualified dividend income). Actual performance of your investment also will vary. Lower tax rates on capital gains and dividends would make the investment return for the taxable investment more favorable, thereby reducing the difference in performance among the examples shown. Consider your personal investment horizon and income tax brackets, both current and anticipated, when making an investment decision. Hypothetical returns and tax rates are not guaranteed and do not represent performance of any particular investment.

Tax-Deferred Investments vs. Taxable Investment5 Years 10 Years 20 Years 30 Years

$500,000

$400,000

$300,000

$200,000

$100,000

0

$34,

610

$36,

568

$71,

193

$78,

812 $1

72,2

32

$210

,999

$326

,461

$447

,726

Taxable Income Tax-Deferred Investment

A Tax-Advantaged Strategy—Hypothetical Example

End balances after 35 years. Assumes $30,000 annual wage, 10% contributions for 25 years, 4% average annual wage inflation, 8% average annual return, and Barry starts 10 years after Julia. Deposits to the plan at the end of each month.

Julia

$800K

$600K

$400K

$200K

0

Don’t Delay, Start Today!

Barry

$124,938 $184,938

$576,800

$296,201

$701,738

$481,139

After 35 Years

Earnings

Contributions

Investment Choices

What is a mutual fund?Pools the money of investorsManaged by a professional fund managerInvests in stocks, bonds, and other securities

to meet fund’s objective

Investment Choices

Managing risk through diversification Diversification is the process of spreading

investments among different types of companies, industries, or asset classes to reduce risk

Mutual funds generally provide automatic diversification

Asset Allocation Funds

• Pacific FundsSM Portfolio Optimization Funds (five funds ranging in investment style from conservative to aggressive-growth)

Fixed-Income Funds

• Pacific FundsSM

Short Duration Income• Pacific FundsSM

Core Income• Pacific FundsSM

Strategic Income• Pacific FundsSM Floating

Rate Income• Pacific FundsSM

Limited Duration High Income

• Pacific FundsSM

High Income

Retirement Plan Service Provider

• Aspire provides recordkeeping services

Pacific Life 403(b)(7) Investment Options

Asset allocation, although intended to provide diversification, does not guarantee future results, ensure a profit, or protect against loss.Better returns could be achieved by investing in an individual fund or funds representing a single asset class rather than using asset allocation.

Specialty Fund

• Pacific FundsSM Diversified Alternatives

Portfolio Optimization Funds

Pacific Funds offers five Portfolio Optimization Funds, allowing you to match the appropriate fund to your financial objectives, risk tolerance, and time horizon. Each fund is structured as a fund-of-funds (a mutual fund that invests in other mutual funds) that has been diversified to achieve a specific target-risk level using a strategic mix of multiple asset classes.

Asset Allocation Funds

One-Step DiversificationEach Portfolio Optimization Fund is diversified among multiple asset classes, providing you with a core asset allocation solution to help meet your financial goals.

A Dedicated Team that Manages Multi-Asset Class SolutionsPacific Life Fund Advisors’ investment approach uses three fundamental disciplines: Asset allocation Manager research Investment risk management

Target-Risk Funds to Fit Your NeedsPortfolio Optimization Funds range in investment style from conservative to aggressive-growth to help match your risk tolerance and investment goals.

Asset Allocation Funds

Portfolio Optimization Funds offer:

Select The Portfolio Optimization Fund That’s Right For You

Domestic Equity

Fixed Income

Source: Ibbotson Associates®

Pote

ntial

Ret

urn

Conservative

Moderate-Conservative

Moderate

Growth

Aggressive-Growth

Risk Tolerance HighLow

Broad Asset Class Allocations as of 12/31/14

International EquityLow

High

One-Step Diversification

Pacific FundsSM Portfolio Optimization Moderate

19 Money

Managers

21Underlying

Funds

17Asset

Class Styles

1Portfolio

Optimization Fund

+ + =

As of 12/31/14.

Example:

Designed for IncomeCover a broad spectrum of income opportunities

Based on ExperienceA portfolio management team that specializes in institutional fixed-income asset management.

Fixed-Income Funds

There’s no guarantee that the funds’ investment strategies will achieve the funds’ investment goal under all market conditions.

Fixed-Income Funds

This chart is for illustrative purposes only and is not intended to represent all available investments. A fund may not be invested in all the types of investments at any one time and may invest in other types of investments not reflected in the chart.

Pacific Funds High Income

Pacific Funds Limited Duration High Income

Pacific Funds Floating Rate Income

Pacific Funds Strategic Income

Pacific Funds Core Income

Pacific Funds Short Duration IncomeLo

wer

High

erPo

tenti

al In

com

e

Lower HigherVolatility (Risk)

High-Yield BondsFloating-Rate LoansInvestment-Grade Corporate BondsCash and Other

Asset class mix as of 12/31/14

The fund offers: A Simplified Approach to Alternatives Investing: Pacific Funds Diversified

Alternatives provides exposure to multiple alternative asset classes in one fund-of-funds.

Professional Management and Oversight: An experienced portfolio management team uses a disciplined approach to oversee investment manager selection, asset allocation, and investment risk management.

Portfolio Diversification: The addition of alternative asset classes to a portfolio can help improve diversification and may smooth out the overall risk.

Pacific Funds Diversified Alternatives

Broad Asset Class Allocations as of 12/31/14

Fixed IncomeDomestic Equity International Equity

Today we’ve reviewed: Why save for retirement 403(b)(7) basics Pacific Funds offered within the Pacific Life

403(b)(7) Program

Get Started Today!

For more information: Contact your financial professional Determine which investment choices in your

Pacific Life 403(b)(7) Program are best for you

Get Started Today!

Pacific Life, its distributors and their respective representatives do not provide tax, accounting or legal advice. Any taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor or attorney.You should carefully consider an investment’s goals, risks, charges, strategies and expenses. This and other information about Pacific Funds are in the prospectus available from your financial advisor or by calling (800) 722-2333, option 2. Read the prospectus carefully before investing.

Pacific Life Fund Advisors LLC (PLFA), a wholly owned subsidiary of Pacific Life Insurance Company, is the investment advisor to Pacific Funds and is responsible for determining the asset allocation mix for each fund. PLFA also does business under the name Pacific Asset Management and manages certain funds under that name.

Pacific Life offers the 403(b)(7) Program. Aspire provides recordkeeping services and is not a broker/dealer or an investment advisor. Pacific Life and its affiliates are not affiliated with Aspire, do not provide any employer-sponsored qualified plan administrative services or impartial investment advice, and do not act in a fiduciary capacity for any plan.

Effective December 31, 2014, Pacific Life Funds and its family of mutual funds changed its name to Pacific Funds. In addition, individual funds were also renamed. For more information, please visit www.PacificFunds.com.

Please contact your plan administrator for any questions relating to your plan. For information regarding administrative and recordkeeping services for the Pacific Life 403(b)(7) Program, call Aspire at (866) 634-5873.

Mutual funds are offered by Pacific Funds. Pacific Funds are distributed by Pacific Select Distributors, LLC (member FINRA & SIPC), a subsidiary of Pacific Life Insurance Company (Newport Beach, CA), and are available through licensed third-party broker/dealers.