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Exhibit 4.1
PENSION PROFESSIONALS, INC.
REGIONAL PROTOTYPE
DEFINED CONTRIBUTION PLAN AND TRUST
TABLE OF CONTENTS
ARTICLE I - DEFINITIONS
SECTION PAGE
1.01 Actuarial Equivalent 1
1.02 Adoption Agreement 1
1.03 Anniversary Date 1
1.04 Break in Service 1
1.05 Code 1
1.06 Compensation 1
1.07 Defined Benefit Plan 2
1.08 Defined Contribution Plan 2
1.09 Earned Income 2
1.10 Effective Date 3
1.11 Employee 3
1.12 Employer 3
1.13 Entry Date 3
1.14 Highly Compensated Employee 3
1.15 Hour of Service 4
1.16 Joint and Survivor Annuity 5
1.17 Key Employee 5
1.18 Limitation Year 5
1.19 Net Profits 5
1.20 Normal Retirement Age 5
1.21 Owner-Employee 6
1.22 Paired Plans 6
1.23 Participant 6
1.24 Plan 6
1.25 Plan Administrator 6
1.26 Plan Year 6
1.27 Self-Employed Individual 6
1.28 Service 6
1.29 Shareholder Employee 6
1.30 Super Top-Heavy Plan 6
1.31 Taxable Wage Base 6
1.32 Top-Heavy Plan 6
1.33 Trust Fund 7
1.34 Trustee 7
1.35 Valuation Date 7
1.36 Year of Service 7
(a) Eligibility and Break in Service
(b) Vesting
(c) Benefit Accrual
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ARTICLE II - ELIGIBILITY
2.01 Eligibility requirements 7
2.02 Immediate participation 8
2.03 Former Participants 8
2.04 Former Participants 8
2.05 Former Employees 8
2.06 Computation period 8
2.07 Break in Service 8
ARTICLE III - CONTRIBUTIONS
3.01 Employer intentions 9
3.02 Employer contributions 9
3.03 Administrative expenses 9
3.04 Contributions returned to Employer 9
3.05 Voluntary Employee contributions 10
3.06 Nondeductible Voluntary Contributions 10
3.07 Matching contributions 10
3.08 Separate account for deductible contributions 10
3.09 Rollover contributions 10
3.10 Forfeitures 11
3.11 Allocation date 11
3.12 Contributions for disabled Participants 11
3.13 Cash or Deferred Arrangement 11
ARTICLE IV - BENEFITS
4.01 Attainment of Normal Retirement Age 11
4.02 Late retirement 11
4.03 Disability retirement 12
4.04 Early Retirement 12
4.05 Normal Form of Benefit 12
4.06 Optional forms of benefit 12
4.07 Timing of distributions 12
4.08 Cash-out of benefits 13
4.09 Claims 14
4.10 Restrictions on immediate distributions 15
4.11 Hardship distributions 16
ARTICLE V - LIMITATIONS ON BENEFITS
5.01 Limitations if Participant only in this Plan 16
5.02 Estimating Compensation 17
5.03 Using actual Compensation 17
5.04 Disposal of excess amount 17
5.05 Limitations if Participant covered under another plan 17
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5.06 Estimating Compensation 18
5.07 Using actual Compensation 18
5.08 Excess amount deemed last allocated Annual Additions 18
5.09 Excess amount of Participant covered under two plans 18
5.10 Disposal of excess amount 18
5.11 Participant covered under another plan not a Prototype 18
5.12 Paired plans 19
5.13 Terms defined 19
Annual Additions
Compensation
Defined Benefit Fraction
Defined Contribution Dollar Limitation
Defined Contribution Fraction
Employer
Excess Amount
Highest Average Compensation
Limitation Year
Regional or prototype plan
Maximum Permissible Amount
Projected Annual Benefit
ARTICLE VI - DEATH BENEFITS
6.01 Pre-retirement death benefit 22
6.02 Benefits payable to non-spouse 23
6.03 Beneficiary designation 23
6.04 Death of beneficiary 23
6.05 Purchase of insurance contracts 23
ARTICLE VII - TERMINATION OF EMPLOYMENT
7.01 Normal Retirement Age 23
7.02 Distribution of benefit 23
7.03 Forfeiture 24
7.04 Former Participant returns to employment 24
7.05 Amendment of vesting schedule 24
7.06 Breaks in Service 24
ARTICLE VIII - ADMINISTRATION
8.01 Plan Administrator 25
8.02 Advice of counsel 25
8.03 Plan Administrator to establish rules 25
8.04 Written instructions to Trustee 25
8.05 Preparing and filing returns and reports 25
8.06 Denial of claims 25
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ARTICLE IX - TRUSTEES AND TRUST FUND
9.01 Trustee shall hold assets 26
9.02 Trustee shall maintain records 26
9.03 Investment of Trust Fund 26
9.04 Pooled assets 26
9.05 Legal counsel 26
9.06 Trustee's reliance upon other Trustees 26
9.07 Expenses of Trust 27
9.08 Powers, rights and duties of Trustee 27
9.09 Trustee protected 28
9.10 Replacement/resignation of Trustee 28
9.11 Valuation of Participants' accounts 28
9.12 Former Participant's account 29
9.13 Investment Manager 29
ARTICLE X - INSURANCE CONTRACTS
10.01 Plan can purchase insurance 30
10.02 Limit on death benefit 30
10.03 Participant not insurable 30
10.04 Trustee will own contracts and pay out proceeds 30
10.05 Conversion of contracts 30
10.06 Annuity contracts must comply with Plan provisions 30
ARTICLE XI - AMENDMENT AND TERMINATION
11.01 Sponsor's right to amend 30
11.02 Employer may amend optional provisions 30
11.03 Employer's right to terminate Plan 31
11.04 No amendment may decrease benefits 31
ARTICLE XII - JOINT AND SURVIVOR ANNUITY REQUIREMENTS
12.01 Automatic benefit form 31
12.02 Automatic benefit form 31
12.03 Terms defined 32
(a) Election Period
(b) Earliest Retirement Age
(c) Qualified Election
(d) Qualified Joint and Survivor Annuity
(e) Spouse
(f) Annuity Starting Date
(g) Vested Account Balance
12.04 Notice requirements 33
12.05 Safe harbor rules 34
12.06 Transitional rules 35
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ARTICLE XIII - TOP-HEAVY PROVISIONS
13.01 Definitions 37
(a) Compensation
(b) Determination Date
(c) Key Employee
(d) Permissive Aggregation Group
(e) Present Value
(f) Required Aggregation Group
(g) Top-Heavy Plan
(h) Top-Heavy Ratio
(i) Valuation Date
13.02 Top-Heavy vesting schedule 39
13.03 Minimum allocation 39
13.04 Minimum allocation 40
ARTICLE XIV - PAIRED PLAN PROVISIONS
14.01 When Plan is Top-Heavy 40
14.02 Integration 40
ARTICLE XV - MISCELLANEOUS
15.01 Assignment/alienation of benefits 40
15.02 Merger and consolidation 41
15.03 Plan not qualified 41
15.04 Diversion of Trust Corpus 41
15.05 Plan loans 41
15.06 Leased Employees 43
15.07 Owner-Employees 43
15.08 Plan not a contract of employment 44
15.09 Plan executed in parts 44
15.10 Fiduciaries must be responsible 44
15.11 Titles for information only 44
15.12 Contribution returned to Employer 44
15.13 If Plan fails to retain qualification 44
ARTICLE XVI - DISTRIBUTIONS
16.01 Limits on types of distributions 45
16.02 Determination of amount to be distributed (individual account) 45
16.03 Annuity purchased from insurance company 46
16.04 Death distribution provisions 46
16.05 Definitions 47
(a) Applicable Life Expectancy
(b) Designated Beneficiary
(c) Distribution Calendar Year
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(d) Life Expectancy
(e) Participant's Benefit
(f) Required Beginning Date
16.06 Transitional rule 48
16.07 Distribution upon death 49
16.08 Special distribution rule 49
16.09 Revocation of beneficiary designation 49
16.10 Entire interest must be distributed 50
16.11 In-service distributions 50
16.12 Withdrawal of nondeductible voluntary contributions 50
ARTICLE XVII - CASH OR DEFERRED ARRANGEMENT
17.01 Elective Deferrals 50
17.02 Excess Elective Deferrals 50
17.03 Actual Deferral Percentage (ADP) 52
17.04 Excess Contributions 54
17.05 Recharacterization of Excess Contributions 55
17.06 Matching Contributions 55
17.07 Vesting of Matching Contributions 55
17.08 Qualified Matching Contributions 55
17.09 Limitations on Employee Contributions and Matching Contributions 55
17.10 Distributions of Excess Aggregate Contributions 58
17.11 Qualified Non-elective Contributions 59
17.12 Nonforfeitability and vesting 59
17.13 Distribution requirements 59
17.14 Hardship distributions 60
17.15 Top-Heavy requirements 61
ARTICLE XVIII - ROLLOVER PROVISIONS
18.01 Applies to all distributions 61
18.02 Definitions 61
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PENSION PROFESSIONALS, INC.
REGIONAL PROTOTYPE
DEFINED CONTRIBUTION PLAN AND TRUST
The Sponsor hereby establishes the Prototype Defined Contribution Plan and Trust
for use by corporate and non-corporate employers who wish to provide retirement
and other related benefits for their employees and their beneficiaries subject
to the provisions and conditions set forth in this document.
ARTICLE I - DEFINITIONS
1.01 Actuarial Equivalent: A benefit having the same present value on the date
payment commences as another stated benefit. For purposes of establishing
actuarial equivalence, present value shall be determined by discounting all
future payments for interest and mortality on the basis specified in section
A-13.01 of the Adoption Agreement.
1.02 Adoption Agreement: The document attached hereto by which an Employer
elects to establish a qualified retirement plan and trust under the terms of
this Prototype Plan and Trust.
1.03 Anniversary Date: The first day of the Plan Year.
1.04 Break In Service: A 12-consecutive month period during which an Employee
fails to complete more than 500 Hours of Service.
1.05 Code: The Internal Revenue Code of 1986, including any amendments thereto.
1.06 Compensation: As elected by the Employer in the Adoption Agreement,
Compensation will mean all of each Participant's (a) W-2 earnings or (b)
Compensation [as that term is defined in Section 415 (c) (3) of the Code]. For
any Self-Employed Individual covered under the Plan, Compensation will mean
Earned Income. Compensation shall include only that Compensation which is
actually paid to the Participant during the applicable period. Except as
provided elsewhere in this Plan, the applicable period shall be the period
elected by the Employer in the Adoption Agreement. If the Employer makes no
election, the applicable period shall be the Plan Year.
Notwithstanding the above, if elected by the Employer in the Adoption Agreement,
Compensation shall include any amount which is contributed by the Employer
pursuant to a salary reduction agreement and which is not includable in the
gross income of the Employee under Sections 125, 402(a)(8), 402(h) or 403(b) of
the Code.
The annual Compensation of each Participant taken into account under the Plan
for any year shall not exceed $200,000, as adjusted by the Secretary at the same
time and in the same manner as under Section 415(d) of the Code. In determining
the Compensation of a Participant for purposes of this limitation, the rules of
Section 414(q) (6) of the Code shall apply, except in applying such rules, the
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term "family" shall include only the Spouse of the Participant and any lineal
descendants of the Participant who have not attained age 19 before the close of
the year. If, as a result of the application of such rules the adjusted $200,000
limitation is exceeded, then (except for purposes of determining the portion of
Compensation up to the integration level if this Plan provides for permitted
disparity), the limitation shall be prorated among the affected individuals in
proportion to each such individual's compensation as determined under this
section prior to the application of this limitation.
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for Plan Years
beginning on or after January 1, 1994, the annual Compensation of each Employee
taken into account under the Plan shall not exceed the OBRA '93 annual
Compensation limit. The OBRA '93 annual Compensation limit is $150,000, as
adjusted by the Commissioner for increases in the cost of living in accordance
with Section 401(a)(17)(B) of the Internal Revenue Code. The cost-of-living
adjustment in effect for a calendar year applies to any period, not exceeding 12
months, over which Compensation is determined (determination period) beginning
in such calendar year. If a determination period consists of fewer than 12
months, the OBRA '93 annual Compensation limit will be multiplied by a fraction,
the numerator of which is the number of months in the determination period, and
the denominator of which is 12.
For Plan years beginning on or after January 1, 1994, any reference in this Plan
to the limitation under Section 401(a)(17) of the Code shall mean the OBRA '93
annual Compensation limit set forth in this provision.
If Compensation for any prior determination period is taken into account in
determining an Employee's benefits accruing in the current Plan Year, the
Compensation for that prior determination period is subject to the OBRA '93
annual Compensation limit in effect for that prior determination period. For
this purpose, for determination periods beginning before the first day of the
first Plan Year beginning on or after January 1, 1994, the OBRA '93 annual
Compensation limit is $150,000.
1.07 Defined Benefit Plan: A Plan under which a Participant's benefit is
determined by a formula contained in the Plan under which no individual accounts
are maintained for Participants.
1.08 Defined Contribution Plan: A Plan under which individual accounts are
maintained for each Participant to which all contributions, forfeitures,
investment income and gains or losses, and expenses are credited or deducted. A
Participant's benefit under such Plan is based solely on the fair market value
of his or her account balance.
1.09 Earned Income: Net earnings from self-employment in the trade or business
with respect to which the Plan is established, determined without regard to
items not included in gross income and deductions allocable to such items,
provided that personal services of the individual are a material
income-producing factor. Net Earnings shall be reduced by contributions made by
an Employer to a qualified plan to the extent deductible under Section 404 of
the Code. Net earnings shall be determined with regard to the deduction allowed
to the Employer by Section
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164(f) of the Code for taxable years beginning after December 31, 1989.
1.10 Effective Date: The date on which the Employer's retirement plan becomes
effective, as indicated in section A-1.10 of the Adoption Agreement. The
Restatement Effective Date is the date on which any amendment becomes effective.
1.11 Employee: Any person employed by the Employer (including Self-Employed
Individuals and partners), all Employees of a member of an affiliated service
group [as defined in Section 414(m) of the Code], Employees of a controlled
group of corporations [as defined in Section 414(b) of the Code], all Employees
of any incorporated or unincorporated trade or business which is under common
control [as defined in Section 414(c) of the Code], leased Employees [as defined
in Section 414(n) of the Code] and Employees included under Section 414(o) of
the Code. All such Employees shall be treated as employed by a single Employer.
1.12 Employer: The Self-Employed Individual, partnership, corporation or other
organization which adopts this Plan including any firm who succeeds the Employer
and adopts this Plan. The Employer that adopts this Plan, and all members of a
controlled group of corporations [as defined in Section 414(b) of the Code as
modified by Section 415(h)], all commonly controlled trades or businesses [as
defined in Section 414(c) as modified by Section 415(h)] or affiliated service
groups [as defined Section 414(m)] of which the adopting Employer is a part.
1.13 Entry Date: The date on which an Employee commences participation in the
Plan as determined by the Employer in the Adoption Agreement.
1.14 Highly Compensated Employee: shall include highly compensated active
Employees and highly compensated former Employees.
A Highly Compensated active Employee includes any Employee who performs Service
for the Employer during the Determination Year and who, during the look-back
year: (a) received Compensation from the Employer in excess of $75,000 [as
adjusted pursuant to Section 415(d) of the Code]; (b) received Compensation from
the Employer in excess of $50,000 [as adjusted pursuant to Section 415(d) of the
Code] and was a member of the top-paid group for such year; or (c) was an
officer of the Employer and received Compensation during such year that is
greater than 50 percent of the dollar limitation in effect under Section
415(b)(1)(A) of the Code. The term Highly Compensated Employee also includes:
(d) Employees who are both described in the preceding sentence if the term
"determination year" is substituted for the term "look-back year" and the
Employee is one of the 100 Employees who received the most Compensation from the
Employer during the Determination Year; and (e) Employees who are 5 percent
owners at any time during the look-back year or Determination Year.
If no officer has satisfied the Compensation requirement of (c) above during
either a Determination Year or look-back year, the highest paid officer for such
year shall be treated as a Highly Compensated Employee.
For this purpose, the Determination Year shall be the Plan Year. The look-back
year shall be the twelve-month period immediately preceding the Determination
Year.
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A Highly Compensated former Employee includes any Employee who separated from
Service (or was deemed to have separated) prior to the Determination Year,
performs no Service for the Employer during the Determination Year, and was a
Highly Compensated active Employee for either the separation year or any
Determination Year ending on or after the Employee's 55th birthday.
If an Employee is, during a Determination Year or look-back year, a family
member of either a 5 percent owner who is an active or former Employee or a
Highly Compensated Employee who is one of the 10 most Highly Compensated
Employees ranked on the basis of Compensation paid by the Employer during such
year, then the family member and the 5 percent owner or top-ten Highly
Compensated Employee shall be aggregated. In such case, the family member and 5
percent owner or top-ten Highly Compensated Employee shall be treated as a
single Employee receiving Compensation and Plan contributions or benefits equal
to the sum of such Compensation and contributions or benefits of the family
member and 5 percent owner or top-ten Highly Compensated Employee. For purposes
of this section, family member includes the spouse, lineal ascendants and
descendants of the Employee or former Employee and the spouses of such lineal
ascendants and descendants.
The determination of who is a Highly Compensated Employee, including the
determinations of the number and identity of Employees in the top-paid group,
the top 100 Employees, the number of Employees treated as officers and the
Compensation that is considered, will be made in accordance with Section 414(q)
of the Code and the regulations thereunder.
1.15 Hour Of Service:
(a) Each hour for which an Employee is paid,or entitled to payment, for the
performance of duties for the Employer. These hours shall be credited to the
Employee for the computation period in which the duties are performed; and
(b) Each hour for which an Employee is paid, or entitled to payment, by the
Employer on account of a period of time during which no duties are performed
(irrespective of whether the employment relationship has terminated) due to
vacation, holiday, illness, incapacity (including disability), layoff, jury
duty, military duty or leave of absence. No more than 501 Hours of Service shall
be credited under this paragraph for any single continuous period (whether or
not such period occurs in a single computation period). Hours under this
paragraph shall be calculated and credited pursuant to Section 2530.200b-2 of
the Department of Labor Regulations which are incorporated herein by this
reference; and
(c) Each hour for which back pay, irrespective of mitigation of damages, is
either awarded or agreed to by the Employer. The same Hours of Service shall not
be credited both under paragraph (a) or paragraph (b), as the case may be, and
under this paragraph (c). These hours shall be credited to the Employee for the
computation period or periods to which the award or agreement pertains rather
than the computation period in which the award, agreement or payment is made.
(d) Hours of Service shall be credited for employment with the Employer and for
employment for any period of time with other members of an affiliated service
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group [as defined in Section 414(m) of the Code], a controlled group of
corporations [as defined in Section 414(b) of the Code], or a group of trades or
businesses under common control [as defined in Section 414(c) of the Code] of
which the adopting Employer is a member and any other entity required to be
aggregated with the Employer pursuant to Code Section 414(o) and the regulations
thereunder. Hours of Service shall also be credited for any individual
considered an Employee for purposes of this Plan under Section 414(n) or Code
Section 414(o) of the Code and the regulations thereunder.
(e) Solely for purposes of determining whether a Break in Service, as defined in
section 1.06, for participation and vesting purposes has occurred in a
computation period, an individual who is absent from work for maternity or
paternity reasons shall receive credit for the Hours of Service which would
otherwise have been credited to such individual but for such absence, or in any
case in which such hours cannot be determined, 8 Hours of Service per day of
such absence. For purposes of this paragraph, an absence from work for maternity
or paternity reasons means an absence by reason of the pregnancy of the
individual, by reason of a birth of a child of the individual, by reason of the
placement of a child with the individual in connection with the adoption of such
child by such individual, or for purposes of caring for such child for a period
beginning immediately following such birth or placement. The Hours of Service
credited under this paragraph shall be credited in the computation period in
which the absence begins if the crediting is necessary to prevent a Break in
Service in that period, or in all other cases, in the following computation
period.
(f) Hours of Service shall be determined on the basis of the method selected in
the Adoption Agreement.
1.16 Joint And Survivor Annuity: Joint and Survivor Annuity means an annuity for
the life of the Participant with a survivor annuity for the life of the
Participant's spouse which is not less than one-half nor greater than the amount
of the annuity payable during the joint lives of the Participant and the
Participant's spouse. The Joint and Survivor Annuity will be the Actuarial
Equivalent of the Normal Retirement Benefit. The percentage of the survivor
annuity under the Plan shall be 50% (unless a different percentage is elected by
the Employer in the Adoption Agreement).
1.17 Key Employee: Certain highly compensated Employees who are officers, owners
or partners of the Employer as defined at section 13.01(c) hereof.
1.18 Limitation Year: The calendar year or such other 12- consecutive month
period designated by the Employer in the Adoption Agreement for purposes of
determining the maximum annual addition to a Participant's account.
1.19 Net Profits: shall mean the current and accumulated earnings of the
Employer before Federal and state taxes and contributions to this and any other
qualified plan.
1.20 Normal Retirement Age: The age set by the Employer in the Adoption
Agreement at which a Participant may retire and receive his or her benefits
under the Plan. For funding purposes, Normal Retirement Date shall be the first
day of the month coincident with or following the date on which a Participant
attains Normal
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Retirement Age. If the Employer enforces a mandatory retirement age, the Normal
Retirement Age is the lesser of that mandatory age or the age specified in the
Adoption Agreement.
1.21 Owner-Employee: A sole proprietor or partner owning more than 10% of either
the capital or profits interest of the partnership.
1.22 Paired Plans: Two or more Plans maintained by the Sponsor designed so that
a single or any combination of Plans adopted by an Employer will meet the
anti-discrimination rules, the contribution and benefit limitations, and the
Top-Heavy provisions of the Code.
1.23 Participant: Any Employee who has met the eligibility requirements and is
participating in the Plan.
1.24 Plan: The Employer's retirement plan as embodied herein and in the Adoption
Agreement.
1.25 Plan Administrator: The Employer.
1.26 Plan Year: The 12-consecutive month period designated by the Employer in
the Adoption Agreement.
1.27 Self-Employed Individual: An individual who has Earned Income for the
taxable year from the trade or business for which the Plan is established
including an individual who would have had Earned Income but for the fact that
the trade or business had no Net Profits for the taxable year.
1.28 Service: The period of current or prior employment with the Employer. If
the Employer maintains a plan of a predecessor employer, Service for such
predecessor shall be treated as Service for the Employer. All Years of Service
with other members of a controlled group of corporations [as defined in Code
Section 414(b)], trades or businesses under common control [as defined in Code
Section 414(c)], or members of an affiliated service group [as defined in Code
Section 414(m)] shall be credited for purposes of determining an Employee's
eligibility to participate in this Plan.
1.29 Shareholder Employee: An Employee or Officer who owns [or is considered as
owning within the meaning of Section 318(a)(i) of the Code], on any day during
the taxable year of an electing small business (Subchapter S) corporation, more
than 5% of such corporation's outstanding stock.
1.30 Super Top-Heavy Plan: A Plan described at section 13.01(g) hereof under
which the Top-Heavy Ratio [as defined at section 13.01(h)] exceeds 90%.
1.31 Taxable Wage Base: shall be the maximum amount of earnings which may be
considered wages for such Plan Year under Section 3121 (a)(1) of the Internal
Revenue Code.
1.32 Top-Heavy Plan: A Plan described at section 13.01(g) hereof under which the
Top-Heavy Ratio [as defined at section 13.01(h)] exceeds 60%.
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1.33 Trust Fund: Any and all assets held under the Plan by the Trustee.
1.34 Trustee: The bank, organization or individual(s) designated by the Employer
in the Adoption Agreement and any successor Trustee.
1.35 Valuation Date: The last day of the Plan Year and any other date on which
the fair market value of Participant accounts accrued from Employee
contributions and investment earnings and gains and losses are determined in
accordance with section 9.11 hereof.
1.36 Year Of Service: A 12-consecutive month period during which an Employee has
not less than 1,000 Hours of Service.
(a) For purposes of determining Years of Service and Breaks in Service for
purposes of eligibility, the initial eligibility computation period is the 12-
consecutive month period beginning on the date the Employee first performs an
Hour of Service for the Employer (employment commencement date). The succeeding
12-consecutive month periods commence with the first Plan Year which commences
prior to the first anniversary of the Employee's employment commencement date
regardless of whether the Employee is entitled to be credited with 1,000 Hours
of Service during the initial eligibility computation period. An Employee who is
credited with 1,000 Hours of Service in both the initial eligibility computation
period and the first Plan Year which commences prior to the anniversary of the
Employee's initial eligibility computation period will be credited with two
Years of Service for purposes of eligibility to participate.
(b) For purposes of vesting a Year of Service shall be any 12 consecutive month
period (which may include periods prior to the Effective Date) during which the
Employee has completed at least one thousand (1,000) Hours of Service, except
for Years of Service excluded in the Adoption Agreement and shall be computed
under one of the methods selected in the Adoption Agreement.
(c) For purposes of benefit accrual a Year of Service shall be computed under
one of the methods selected in Adoption Agreement. All Participants who complete
one thousand (1,000) Hours of Service, but terminate employment before the end
of the Year shall receive credit for a full benefit accrual Year of Service.
Years of Service and Breaks in Service will be measured on the same eligibility
computation period.
For purposes of computing an Employee's nonforfeitable right to the account
balance derived from Employer contributions, Years of Service and Breaks in
Service will be measured by the Plan Year.
ARTICLE II - ELIGIBILITY
2.01 An Employee who is employed on the Effective Date of this Plan shall become
a Participant on the Effective Date or on the Entry Date nearest the date on
which the Employee satisfies the eligibility requirements set forth in the
Adoption Agreement. An Employee who is employed after the Effective Date shall
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become a Participant on the Entry Date nearest or next following (as selected in
the Adoption Agreement) the date on which the Employee satisfies the eligibility
requirements set forth in the Adoption Agreement.
2.02 In the event an Employee who is not a member of an eligible class of
employees becomes a member of an eligible class, such Employee will participate
immediately upon satisfying the minimum age and service requirements and would
have otherwise previously become a Participant.
2.03 A former Participant will become a Participant immediately upon returning
to the employ of the Employer if such former Participant has a nonforfeitable
(vested) right to all or a portion of the Accrued Benefit derived from Employer
contributions at the time of termination from Service.
2.04 A former Participant who did not have a nonforfeitable (vested) right to
any portion of the Accrued Benefit derived from Employer contributions at the
time of termination from Service shall be considered a new Employee, for
eligibility purposes, if the number of consecutive one (1) year Breaks in
Service equal or exceed the greater of five (5) or the aggregate number of Years
of Service before such one (1) year Breaks in Service. Such aggregate number of
Years of Service will not include any Years of Service disregarded under the
preceding sentence by reason of prior Breaks in Service.
If a Participant's Years of Service are disregarded pursuant to the preceding
paragraph, such Participant will be treated as a new Employee for eligibility
purposes. If a Participant's Years of Service may not be disregarded pursuant to
the preceding paragraph, such Participant shall continue to participate in the
Plan, or, if terminated, shall participate immediately upon reemployment.
2.05 Any former Employee who has never been a Participant and is re-employed
shall be eligible to participate subject to the provisions of Section 2.02.
2.06 For purposes of determining Years of Service and Breaks in Service for
purposes of eligibility, the 12-consecutive month period shall commence on the
date on which an Employee first performs an Hour of Service with the Employer
(employment commencement date).
The succeeding 12-consecutive month periods commence with the first Plan Year
which commences prior to the first anniversary of the Employee's employment
commencement date regardless of whether the Employee is entitled to be credited
with 1,000 Hours of Service during the initial eligibility computation period.
An Employee who is credited with 1,000 Hours of Service in both the initial
eligibility computation period and the first Plan Year which commences prior to
the first anniversary of the Employee's initial eligibility computation period
will be credited with two Years of Service for purposes of eligibility to
participate.
2.07 In the case of any Employee who has a one (1) year Break in Service, years
of eligibility Service before such break will not be taken into account until
the Employee has completed a Year of Service after returning to employment.
Such Year of Service will be measured by the 12-consecutive month period
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beginning on an Employee's reemployment commencement date and, if necessary,
Plan Years beginning with the Plan Year which includes the first anniversary of
the reemployment commencement date. The reemployment commencement date is the
first day on which the Employee is credited with an Hour of Service for the
performance of duties after the first eligibility computation period in which
the Employee incurs a one (1) year Break in Service.
If a Participant completes a Year of Service in accordance with this provision,
his or her participation will be reinstated as of the reemployment commencement
date.
ARTICLE III - CONTRIBUTIONS
3.01 For each Plan Year, the Employer will contribute to the Trust Fund such
amount as is determined in accordance with the provisions selected by the
Employer in section A-3.01 of the Adoption Agreement. If this is a money
purchase plan or a target benefit plan the Employer will be required to make
such contribution as necessary to satisfy minimum funding standards.
At all times, Employer contributions will be a uniform percentage of
Compensation, excluding Compensation in excess of the limitation under Section
401(a)(17).
3.02 In order to insure a deduction for such Plan Year, the total amount of
required contributions shall be made no later than the time prescribed by law
for filing the Employer's United States Income Tax Return for the fiscal year
which ends with or within such Plan Year, including extensions thereof. All
contributions made by the Employer shall be conditional upon their deductibility
by the Employer for income tax purposes; provided, however, that no
contributions shall be returned to the Employer except as provided in section
3.04 below and section 15.03.
3.03 In addition, the Employer shall pay all the administrative expenses of the
Plan and Trust fund, except if otherwise elected in the Adoption Agreement, so
long as the Plan and Trust remains in effect except that any expenses directly
relating to the investments of the Trust fund such as taxes, brokerage
commissions, registration charges, etc., shall be paid from Trust assets. In
the event that the Employer should fail to pay all or a part of such expenses,
the Trustee shall pay these expenses and charge the payment thereof against the
Trust Fund.
3.04 Notwithstanding any other provision of the Plan, contributions made by the
Employer may be returned to the Employer if:
(a) the contribution was made by reason of a mistake of fact; or
(b) the contribution was conditioned upon its deductibility by the Employer and
the deduction was disallowed; and
(c) the return to the Employer of the amount involved occurs within one (1) year
16
of the mistaken payment of the contribution or the disallowance of the
deduction, as the case may be.
The amount which may be returned to the Employer is the excess of the amount
contributed over the amount that would have been contributed had there not
occurred the circumstances causing the excess. Earnings attributable to the
excess contributions may not be returned to the Employer, but losses thereto
shall reduce the amount to be so returned.
3.05 A separate account will be maintained by the Trustee for the nondeductible
Employee contributions of each Participant and shall be allocated a
proportionate share of the Trust Fund's income, losses, appreciation and
depreciation. A Participant shall always be 100% vested in his or her voluntary
non-deductible contributions. No suspension or forfeiture of any Employer
derived benefit under this Plan shall occur as a result of a Participant's
withdrawal of any Employee contributions.
3.06 If permitted by the Employer in the Adoption Agreement, a Participant may
make nondeductible voluntary contributions to the Plan provided that the total
of such voluntary contributions by a Participant to all plans maintained by the
Employer do not exceed the limits prescribed by Section 401(m) of the Code and
the regulations thereunder for the Plan Year.
The Plan may permit nondeductible voluntary contributions only if the sponsoring
organization (or regional prototype sponsor) (1) maintains records that enable
it to monitor adopting Employers' compliance with the requirements of Section
401(m) of the Code; (2) performs the Section 401(m) actual contribution
percentage (ACP) test for adopting Employers on an annual basis; and (3)
notifies adopting Employers if they are required to correct excess aggregate
contributions.
3.07 If the Plan permits nondeductible voluntary contributions to be made, the
Employer may make matching contributions, if so elected by the Employer in the
Adoption Agreement. Matching contributions may only be permitted if the
sponsoring organization (or regional prototype sponsor) (1) maintains records
that enable it to monitor adopting Employers' compliance with the requirements
of Section 401(m) of the Code; (2) performs the Section 401(m) actual
contribution percentage (ACP) test for adopting Employers on an annual basis;
and (3) notifies adopting Employers if they are required to correct excess
aggregate contributions.
3.08 The Plan Administrator will not accept deductible Employee contributions
which are made for a taxable year beginning after December 31, 1986.
Contributions made prior to that date will be maintained in a separate account
which will be nonforfeitable at all times. The account will share in the gains
and losses of the Trust fund in the same manner as described in section 9.03 of
the Plan. No part of the deductible voluntary contribution account will be used
to purchase life insurance. Subject to Article XII, Joint and Survivor Annuity
Requirements (if applicable), the participant may withdraw any part of the
deductible voluntary contribution account by making a written application to the
Plan Administrator.
3.09 If permitted by the Employer in the Adoption Agreement, a Participant may
17
make a "rollover" contribution to this Plan and Trust of an amount that was
distributed to (or will be distributed) such Participant from another qualified
pension or profit-sharing plan, provided that such amount does not include any
amounts contributed by the Participant to the other plan. Such amount must meet
the requirements of a "lump sum distribution" as defined in Code Section
402(e)(4)(A), or be on account of plan termination or the complete
discontinuance of contributions in the case of a profit-sharing plan.
In addition, the amount distributed from the other plan must be transferred to
this Plan no later than sixty days after distribution is made from the other
plan and the amount transferred must be made in kind. The Trustee shall
establish a separate account for such rollover or transferred amount in the name
of the respective participant(s). A proportionate share of the earnings of the
Trust Fund shall be allocated to each account.
3.10 Forfeitures arising hereunder will be used to reduce Employer contributions
for the next Plan Year or will be allocated to the Participant's accounts as
determined by the Employer in section A-3.10 of the Adoption Agreement. No
forfeitures will occur solely as a result of an Employee's withdrawal of
Employee contributions.
3.11 Contributions shall be allocated and credited to Participant's accounts on
the last day of each Plan Year (valuation date) or at more frequent intervals as
determined by the Plan Administrator.
3.12 If elected by the Employer in section A-3.01 of the Adoption Agreement,
nonforfeitable contributions will be made to the Plan on behalf of each disabled
Participant who is not a highly compensated Employee [within the meaning of
Section 414(q) of the Code].
3.13 Cash or Deferred Arrangement [CODA - 401(k)] - If the Plan is a profit
sharing plan with a Cash or Deferred Arrangement (CODA), Participants are
permitted to make Elective Deferrals under the Plan. In addition, if elected by
the Employer in the Adoption Agreement, Participants may be entitled to receive
a portion of Employer Matching and Employer discretionary contributions
(Qualified Non-Elective Contributions). Provisions for the CODA are found in
Article XVII of the Plan and at A-17.01 in the Adoption Agreement (#005).
ARTICLE IV - BENEFITS
4.01 Notwithstanding the vesting schedule elected by the Employer in section
A-7.01 of the Adoption Agreement, upon the attainment of Normal Retirement Age a
Participant shall be one hundred percent (100%) vested in his or her account
balance.
4.02 Upon mutual agreement between the Participant and the Employer, such
Participant may continue his or her employment and participation in the Plan
beyond Normal Retirement Age, in which case no distribution will be made until
the Participant's actual retirement. Upon actual retirement, the Participant
will be entitled to receive the entire value of his or her account balance.
18
4.03 In the event a Participant's employment is terminated because of total and
permanent disability, as defined below, such Participant shall be entitled to
receive a disability benefit as provided in the Adoption Agreement. Disability
means the inability to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment that can be expected to
result in death or which has lasted or can be expected to last for a continuous
period of not less than twelve (12) months. The permanence and degree of such
impairment shall be supported by medical evidence.
4.04 If permitted by the Employer in the Adoption Agreement, a Participant may
take Early Retirement upon satisfying the requirements set forth in the Adoption
Agreement. Such Participant shall be entitled to receive that benefit as
indicated by the Employer in the Adoption Agreement. If a Participant separates
from Service before satisfying the age requirement for early retirement, but has
satisfied the Service requirement, such Participant will be eligible to receive
an Early Retirement benefit upon the attainment of the age set forth in the
Adoption Agreement.
4.05 Unless either a Joint and Survivor Annuity or an optional form of benefit
payment is elected by the Participant, the Normal Retirement benefit (normal
form of benefit) under a profit sharing plan shall be a single sum distribution.
Under all other plans the normal form of benefit shall be that benefit selected
by the Employer in section A-4.05 of the Adoption Agreement.
4.06 In lieu of the normal form of benefit distribution of a Participant's
vested account balance shall be made to or for the benefit of a Participant by
either of the following methods:
(a) single sum payment;
(b) a series of substantially equal annual or more frequent installments, with
or without a period certain (of 10 or 20 years) over a period of:
(i) If the Participant had made an effective election under Section 242(b)(2) of
TEFRA which has not been revoked, any period allowed by the Internal Revenue
Code and Regulations as in effect prior to TEFRA, or if longer, any period
permitted in (ii) below;
(ii) Otherwise, over a period not to exceed the greater of: (A) the
Participant's life expectancy or (B) the joint and last survivor life expectancy
of the Participant and his or her designated beneficiary (if such beneficiary is
an individual).
This section shall apply only if the Participant has effectively waived the
requirements of Article XII under the rules set forth in the provisions of said
article. Any request for an optional form of benefit payment must be made in
writing to the Plan Administrator.
4.07 Unless otherwise elected in the Adoption Agreement, distribution of
benefits will begin no later than the 60th day after the latest of the close of
the Plan Year in which:
19
(a) the Participant attains age 65 (or Normal Retirement age, if earlier);
(b) occurs the 10th anniversary of the year in which the Participant commenced
Participation in the Plan; or,
(c) the Participant terminates service with the Employer.
Notwithstanding the foregoing, the failure of a Participant and spouse to
consent to a distribution while a benefit is immediately distributable, within
the meaning of section 4.10 of the Plan, shall be deemed to be an election to
defer commencement of payment of any benefit sufficient to satisfy this section.
4.08 If a Participant terminates Service, and the value of the Employee's vested
account balance derived from Employer and Employee contributions is not greater
than $3,500, the Employee will receive a distribution of the value of the entire
vested portion of such account balance and the nonvested portion will be treated
as a forfeiture. For purposes of this section, if the value of a Participant's
vested account balance is zero, the Participant shall be deemed to have received
a distribution of such vested account balance. A Participant's vested account
balance shall not include accumulated deductible Employee contributions within
the meaning of Section 72(o)(5)(B) of the Code for Plan Years beginning prior to
January 1, 1989.
If a Participant terminates Service, and elects, in accordance with the
requirements of section 4.10, to receive the value of the Participant's vested
account balance, the nonvested portion will be treated as a forfeiture. If the
Participant elects to have distributed less than the entire vested portion of
the account balance derived from Employer contributions, the part of the
nonvested portion that will be treated as a forfeiture is the total nonvested
portion multiplied by a fraction, the numerator of which is the amount of the
distribution attributable to Employer contributions and the denominator of which
is the total value of the vested Employer derived account balance.
If a Participant receives a distribution pursuant to this section and the
Participant resumes employment covered under this Plan, the Participant's
Employer-derived account balance will be restored to the amount on the date of
distribution if the Participant repays to the Plan the full amount attributable
to Employer contributions before the earlier of 5 years after the first date on
which the Participant is subsequently reemployed by the Employer, or the date
the Participant incurs 5 consecutive 1-year Breaks in Service following the date
of the distribution. If an Employee is deemed to receive a distribution pursuant
to this section, and the Employee resumes employment covered under this Plan
before the date the Participant incurs 5 consecutive 1-year Breaks in Service,
upon the reemployment of such Employee, the Employer-derived account balance of
the Employee will be restored to the amount on the date of such deemed
distribution.
Pursuant to a distribution made to a Participant under this section and the
subsequent repayment and restoration of such Participant's account balance,
permissible sources for such restoration of the account balance are: income or
gain to the Plan, forfeitures or Employer contributions. In order for the Plan
to remain qualified, the aggregate total of all account balances must correspond
to the assets in the Plan. Accordingly, there cannot be an unfunded account
balance.
20
However, an account balance will not be deemed to be unfunded in the case of a
restoration if assets for the restored benefit are provided by the end of the
Plan Year following the Plan Year in which the repayment occurs.
If a distribution is made at a time when a Participant has a nonforfeitable
right to less than 100 percent of the account balance derived from Employer
contributions and the Participant may increase the nonforfeitable percentage in
the account:
(a) A separate account will be established for the Participant's interest in the
Plan as of the time of the distribution, and
(b) At any relevant time the Participant's nonforfeitable portion of the
separate account will be equal to an amount ("X") determined by the formula:
X = P [AB + (RxD)] - (RxD)
For purposes of applying the formula: P is the nonforfeitable percentage at the
relevant time, AB is the account balance at the relevant time, D is the amount
of the distribution, and R is the ratio of the account balance at the relevant
time to the account balance after distribution.
4.09 Claims: The Plan Administrator shall make each claim determination in a
uniform and non-discriminatory manner. In no case shall the Insurer be liable
for any claim determination made by the Plan Administrator. Insurer shall mean
any legal reserve life insurance company licensed to do business in one or more
states of the United States.
Within 90 days after the receipt of the claim by the Plan Administrator, the
Plan Administrator shall either grant the claim, deny the claim, or notify the
Participant, former Participant, or beneficiary, (hereafter "Claimant") that
special circumstances have required an extension of time for the processing of
the claim; such extension not to exceed 180 days from the original notice.
Within 30 days after denial of any benefit under the Plan, the Plan
Administrator shall give to the Claimant written notice by certified mail,
directed to his or her last address of record with the Plan Administrator, of
the denial of claim for benefits. The notice shall set forth the specific reason
for such denial, shall make specific reference to Plan provisions upon which the
denial is based, shall describe any additional material or information necessary
for the Claimant to perfect his or her claim and why such material is necessary,
and shall advise the Claimant that he or she may file a written appeal of the
determination with the Plan Administrator within 60 days after receipt of such
notice. In connection with such appeal, the Claimant or his or her duly
authorized representative may review pertinent documents and submit issues and
comments in writing. Failure of the Claimant to file a written appeal with the
Plan Administrator within the allowable 60-day period shall constitute an
irrevocable consent by the Claimant to the Plan Administrator's decision denying
the benefit claimed, and the Plan Administrator's written notice shall so state.
Within 60 days after the filing of the appeal, the Plan Administrator shall
notify the Claimant either as to the decision on the appeal or that special
21
circumstances require an extension of time for processing; such extension not to
exceed 120 days from the date of the filing of the appeal. If neither the
decision nor a notice of extension is furnished within the 60-day period, the
claim shall be deemed to be denied on appeal.
All notices under this Article shall be written in a manner calculated to be
understood by Claimant.
4.10 Restrictions on Immediate Distributions
(a) If the value of a Participant's vested account balance derived from Employer
and Employee contributions exceeds (or at the time of any prior distribution
exceeded) $3,500, and the account balance is immediately distributable, the
Participant and the Participant's spouse (or where either the Participant or the
spouse has died, the survivor) must consent to any distribution of such account
balance. The consent of the Participant and the Participant's spouse shall be
obtained in writing within the 90-day period ending on the annuity starting
date. The annuity starting date is the first day of the first period for which
an amount is paid as an annuity or any other form. The Plan Administrator shall
notify the Participant and the Participant's spouse of the right to defer any
distribution until the Participant's account balance is no longer immediately
distributable. Such notification shall include a general description of the
material features, and an explanation of the relative values of, the optional
forms of benefit available under the Plan in a manner that would satisfy the
notice requirements of Section 417(a)(3), and shall be provided no less than 30
days and no more than 90 days prior to the annuity starting date.
Notwithstanding the foregoing, only the Participant need consent to the
commencement of a distribution in the form of a Qualified Joint and Survivor
Annuity while the account balance is immediately distributable. (Furthermore, if
payment in the form of a Qualified Joint and Survivor Annuity is not required
with respect to the Participant pursuant to Article XII of the Plan, only the
Participant need consent to the distribution of an account balance that is
immediately distributable.) Neither the consent of the Participant nor the
Participant's spouse shall be required to the extent that a distribution is
required to satisfy Section 401(a) (9) or Section 415 of the Code. In addition,
upon termination of this Plan if the Plan does not offer an annuity option
(purchased from a commercial provider), the Participant's account balance may,
without the Participant's consent, be distributed to the Participant or
transferred to another defined contribution plan (other than an employee stock
ownership plan as defined in Section 4975(e)(7) of the Code) within the same
controlled group.
An account balance is immediately distributable if any part of the account
balance could be distributed to the Participant (or surviving spouse) before the
Participant attains or would have attained if not deceased) the later of Normal
Retirement Age or age 62.
(b) For purposes of determining the applicability of the foregoing consent
requirements to distributions made before the first day of the first Plan Year
beginning after December 31, 1988, the Participant's vested account balance
shall not include amounts attributable to accumulated deductible Employee
contributions
22
within the meaning of Section 72(o)(5)(B) of the Code.
4.11 If permitted by the Employer in the Adoption Agreement, a Participant who
has a one hundred percent (100%) nonforfeitable interest in his or her account
balance derived from Employer contributions and who is not a 5-percent owner may
request a hardship distribution of all or a portion of such account balance
before the attainment of age 59 1/2. The provisions of this section (4.11) do
not pertain to amounts that are held under a CODA or 401(k) plan. For rules
governing these amounts refer to Article XVII or Adoption Agreement #005. The
following are the only financial needs considered immediate and heavy for which
a hardship distribution will be permitted:
(a) deductible medical expenses [within the meaning of Section 213(d) of the
Code] of the Participant, the Participant's spouse, children or dependents;
(b) the purchase (excluding mortgage payments) of a principal residence for the
Participant;
(c) payment of tuition for the next quarter or semester of post-secondary
education for the Participant, the Participant's spouse, children or dependents;
or
(d) the need to prevent the eviction of the Participant from, or a foreclosure
on the mortgage of, the Participant's principal residence.
A distribution will be considered as necessary to satisfy an immediate and heavy
financial need of the Participant only if:
(e) The Participant has obtained all distributions, other than hardship
distributions, and all nontaxable loans under all plans maintained by the
Employer; and
(f) The distribution is not in excess of the amount of an immediate and heavy
financial need.
Hardship distributions will only be made to a Participant in a profit sharing
plan and shall be made on a uniform and consistent basis by the Employer. A
request for a hardship distribution requires the written consent of the
Participant's spouse as prescribed in Code Sections 401(a) (11) and 417.
ARTICLE V - LIMITATION ON ALLOCATIONS
5.01 If the Participant does not participate in, and has never participated in
another qualified plan maintained by the Employer or a welfare benefit fund, as
defined in Section 419(e) of the Code maintained by the Employer, or an
individual medical account, as defined in Section 415(1)(2) of the Code,
maintained by the Employer, which provides an Annual Addition as defined in
section 5.13, the amount of Annual Additions which may be credited to the
Participant's account for any Limitation Year will not exceed the lesser of the
Maximum Permissible Amount, or any other limitation contained in this Plan. If
23
the Employer contribution that would otherwise be contributed or allocated to
the Participant's account would cause the Annual Additions for the Limitation
Year to exceed the Maximum Permissible Amount, the amount contributed or
allocated will be reduced so that the Annual Additions for the Limitation Year
will equal the Maximum Permissible Amount.
5.02 Prior to determining the Participant's actual Compensation for the
Limitation Year, the Employer may determine the Maximum Permissible Amount for a
Participant on the basis of a reasonable estimation of the Participant's
Compensation for the Limitation Year, uniformly determined for all Participants
similarly situated.
5.03 As soon as is administratively feasible after the end of the Limitation
Year, the Maximum Permissible Amount for the Limitation Year will be determined
on the basis of the Participant's actual Compensation for the Limitation Year.
5.04 If pursuant to section 5.03 or as a result of the allocation of
forfeitures, there is an excess amount, the excess will be disposed of as
follows:
(a) Any nondeductible voluntary Employee contributions, to the extent they would
reduce the excess amount, will be returned to the Participant;
(b) If after the application of paragraph (a) an excess amount still exists, and
the Participant is covered by the Plan at the end of a Limitation Year, the
excess amount in the Participant's account will be used to reduce Employer
contributions for such Participant in the next Limitation Year, and each
succeeding Limitation Year, if necessary.
(c) If after the application of paragraph (a) an excess amount still exists, and
the Participant is not covered by the Plan at the end of a Limitation Year, the
excess amount will be held unallocated in a suspense account. The suspense
account will be applied to reduce future Employer contributions (including
allocation of any forfeitures) for all remaining Participants in the next
Limitation Year, and each succeeding Limitation Year if necessary;
(d) If a suspense account is in existence at any time during a Limitation Year
pursuant to this section, it will not participate in the allocation of the
Trust's investment gains and losses. If a suspense account is in existence at
any time during a particular Limitation Year, all amounts in the suspense
account must be allocated and reallocated to Participants' accounts before any
Employer contributions or any Employee contributions may be made to the Plan for
that Limitation Year. Excess amounts may not be distributed to Participants or
former Participants.
5.05 This section applies if, in addition to this Plan, the Participant is
covered under another qualified regional prototype defined contribution plan
maintained by the Employer, a welfare benefit fund, as defined in Section 419(e)
of the Code maintained by the Employer, or an individual medical account, as
defined in Section 415(1)(2) of the code, maintained by the Employer, which
provides an Annual Addition as defined in section 5.13, during any Limitation
Year. The Annual Additions which may be credited to a Participant's account
under this Plan for any such Limitation Year will not exceed the Maximum
Permissible
24
Amount reduced by the Annual Additions credited to a Participant's account under
the other Plans and welfare benefit funds for the same Limitation Year. If the
Annual Additions with respect to the Participant under other defined
contribution plans and welfare benefit funds maintained by the Employer are less
than the Maximum Permissible Amount and the Employer contribution that would
otherwise be contributed or allocated to the Participant's account under this
Plan would cause the Annual Additions for the Limitation Year to exceed this
limitation, the amount contributed or allocated will be reduced so that the
Annual Additions under all such plans and funds for the Limitation Year will
equal the Maximum Permissible Amount. If the Annual Additions with respect to
the Participant under such other defined contribution plans and welfare benefit
funds in the aggregate are equal to or greater than the Maximum Permissible
Amount, no amount will be contributed or allocated to the Participant's account
under this Plan for the Limitation Year.
5.06 Prior to determining the Participant's actual Compensation for the
Limitation Year, the Employer may determine the Maximum Permissible Amount for a
Participant in the manner described in section 5.02.
5.07 As soon as is administratively feasible after the end of the Limitation
Year, the Maximum Permissible Amount for the Limitation Year will be determined
on the basis of the Participant's actual Compensation for the Limitation Year.
5.08 If, pursuant to section 5.07 or as a result of the allocation of
forfeitures, a Participant's Annual Additions under this Plan and such other
plans would result in an excess amount for a Limitation Year, the excess amount
will be deemed to consist of the Annual Additions last allocated, except that
Annual Additions attributable to a welfare benefit fund or individual medical
account will be deemed to have been allocated first regardless of the actual
allocation date.
5.09 If an excess amount was allocated to a Participant on a valuation date of
this Plan which coincides with an allocation date of another plan, the excess
amount attributed to this Plan will be the product of,
(a) the total excess amount allocated as of such date, times
(b) the ratio of (i) the Annual Additions allocated to the Participant for the
Limitation Year as of such date under this Plan to (ii) the total Annual
Additions allocated to the Participant for the Limitation Year as of such date
under this and all the other qualified Defined Contribution Plans.
5.10 Any excess amount attributed to this Plan will be disposed in the manner
described in section 5.04.
5.11 If the Participant is covered under another qualified Defined Contribution
Plan maintained by the Employer which is not a regional prototype plan, Annual
Additions which may be credited to the Participant's account under this Plan for
any Limitation Year will be limited in accordance with sections 5.05 through
5.10 as though the other plan were a regional prototype plan unless the Employer
provides other limitations in section A-5.01 of the Adoption Agreement.
25
5.12 If the Employer maintains, or at any time maintained, a qualified Defined
Benefit Plan (other than paired plan #02001, 02002, 02003, 02004 or 02009)
covering any Participant in this Plan, the sum of the Participant's Defined
Benefit Plan Fraction and Defined Contribution Plan Fraction will not exceed 1.0
in any Limitation Year. The Annual Additions which may be credited to the
Participant's account under this Plan for any Limitation Year will be limited in
accordance with section A-5.01 of the Adoption Agreement.
5.13 Definitions.
(a) Annual Additions: The sum of the following amounts credited to a
Participant's account for the Limitation Year:
(i) Employer contributions, (ii) Employee contributions, (iii) forfeitures,
and (iv) amounts allocated, after March 31, 1984, to an individual medical
account, as defined in Section 415(1)(2) of the Code, which is part of a pension
or annuity plan maintained by the Employer are treated as Annual Additions to a
Defined Contribution Plan. Also amounts derived from contributions paid or
accrued after December 31, 1985, in taxable years ending after such date, which
are attributable to post-retirement medical benefits, allocated to the separate
account of a Key Employee, as defined in Section 419A(d)(3) of the Code, under a
welfare benefit fund, as defined in Section 419(e) of the Code, maintained by
the Employer are treated as Annual Additions to a Defined Contribution Plan.
For this purpose, any excess amount applied under sections 5.04 or 5.10 in the
Limitation Year to reduce Employer contributions will be considered Annual
Additions for such Limitation Year.
(b) Compensation: A Participant's Earned Income, wages, salaries, and fees for
professional services and other amounts received for personal services actually
rendered in the course of employment with the Employer maintaining the Plan
(including, but not limited to, commissions paid salesmen, compensation for
services on the basis of a percentage of profits, commissions on insurance
premiums, tips and bonuses), and excluding the following:
(i) Employer contributions to a plan of deferred compensation which are not
includable in the Employee's gross income for the taxable year in which
contributed, or Employer contributions under a simplified employee pension plan
to the extent such contributions are deductible by the Employee, or any
distributions from a plan of deferred compensation;
(ii) Amounts realized from the exercise of a non- qualified stock option, or
when restricted stock (or property) held by the Employee either becomes freely
transferable or is no longer subject to a substantial risk of forfeiture;
(iii) Amounts realized from the sale, exchange or other disposition of stock
acquired under a qualified stock option; and
(iv) other amounts which received special tax benefits, or contributions made by
the Employer (whether or not under a salary reduction agreement) towards the
26
purchase of an annuity described in Section 403(b) of the Internal Revenue Code
(whether or not the amounts are actually excludable from the gross income of the
Employee).
For purposes of applying the limitations of this article, Compensation for a
Limitation Year is the Compensation actually paid or includable in gross income
during such Limitation Year.
Notwithstanding the preceding sentence, Compensation for a Participant in a
Defined Contribution Plan who is permanently and totally disabled [as defined in
Section 22(e)(3) of the Internal Revenue Code] is the Compensation such
Participant would have received for the Limitation Year if the Participant had
been paid at the rate of Compensation paid immediately before becoming
permanently and totally disabled; such imputed compensation for the disabled
Participant may be taken into account only if the Participant is not a highly
compensated Employee (as defined in Section 414(q) of the Code) and
contributions made on behalf of such Participant are nonforfeitable when made.
(c) Defined Benefit Fraction: A fraction, the numerator of which is the sum of
the Participant's projected annual benefits under all the Defined Benefit Plans
(whether or not terminated) maintained by the Employer, and the denominator of
which is the lesser of 125 percent of the dollar limitation determined for the
Limitation Year under Section 415(b) and (d) of the Code or 140 percent of the
Highest Average Compensation, including any adjustments under Section 415(b) of
the Code.
Notwithstanding the above, if the Participant was a Participant as of the first
day of the first Limitation Year beginning after December 31, 1986, in one or
more Defined Benefit Plans maintained by the Employer which were in existence on
May 6, 1986, the denominator of this fraction will not be less than 125 percent
of the sum of the annual benefits under such plans which the Participant had
accrued as of the close of the last Limitation Year beginning before January 1,
1987, disregarding any changes in the terms and conditions of the Plan after May
5, 1986. The preceding sentence applies only if the Defined Benefit Plans
individually and in the aggregate satisfied the requirements of Section 415 for
all Limitation Years beginning before January 1, 1987.
(d) Defined Contribution Dollar Limitation: $30,000 or if greater, one-fourth of
the defined benefit dollar limitation set forth in Section 415(b)(1) of the Code
as in effect for the Limitation Year.
(e) Defined Contribution Fraction: A fraction, the numerator of which is the sum
of the Annual Additions to the Participant's account under all the Defined
Contribution Plans (whether or not terminated) maintained by the Employer for
the current and all prior Limitation Years (including the Annual Additions
attributable to the Participant's nondeductible Employee contributions to all
Defined Benefit Plans, whether or not terminated, maintained by the Employer,
and the Annual Additions attributable to all welfare benefit funds, as defined
in Section 419(e) of the Code, and individual medical accounts, as defined in
Section 415(1)(2) of the Code, maintained by the Employer), and the denominator
of which is the sum of the maximum aggregate amounts for the current and all
prior Limitation Years of Service with the Employer (regardless of whether a
27
Defined Contribution Plan was maintained by the Employer). The maximum aggregate
amount in any Limitation Year is the lesser of 125 percent of the dollar
limitation determined under Sections 415(b) and (d) of the Code in effect under
Section 415(c)(1)(A) of the Code or 35 percent of the Participant's Compensation
for such year.
If the Employee was a Participant as of the end of the first day of the first
Limitation Year beginning after December 31, 1986, in one or more Defined
Contribution Plans maintained by the Employer which were in existence on May 6,
1986, the numerator of this fraction will be adjusted if the sum of this
fraction and the Defined Benefit Fraction would otherwise exceed 1.0 under the
terms of this Plan. Under the adjustment an amount equal to the product of (1)
the excess of the sum of the fractions over 1.0 times (2) the denominator of
this fraction, will be permanently subtracted from the numerator of this
fraction. The adjustment is calculated using the fractions as they would be
computed as of the end of the last Limitation Year beginning before January 1,
1987, and disregarding any changes in the terms and conditions of the Plan made
after May 5, 1986, but using the Section 415 limitation applicable to the first
Limitation Year beginning on or after January 1, 1987.
The Annual Addition for any Limitation Year beginning before January 1, 1987,
shall not be recomputed to treat all Employee contributions as Annual Additions.
(f) Employer: For purposes of this article, Employer shall mean the Employer
that adopts this Plan, and all members of a controlled group of corporations [as
defined in Section 414(b) of the Code as modified by Section 415(h)], all
commonly controlled trades or businesses [as defined in Section 414(c) as
modified by Section 415(h] or affiliated service groups [as defined in Section
415(m)] of which the adopting Employer is a part, and any other entity required
to be aggregated with the Employer pursuant to regulations under Section 414(o)
of the Code.
(g) Excess Amount: The excess of the Participant's Annual Additions for the
Limitation Year over the Maximum Permissible Amount.
(h) Highest Average Compensation: The average Compensation for the three
consecutive Years of Service with the Employer that produces the highest
average. A Year of Service with the Employer is the 12-consecutive month period
defined in section A-1.36 of the Adoption Agreement.
(i) Limitation Year: A calendar year, or the 12-consecutive month period elected
by the Employer in section A-1.18 of the Adoption Agreement. All qualified plans
maintained by the Employer must use the same Limitation Year. If the Limitation
Year is amended to a different 12-consecutive month period, the new Limitation
Year must begin on a date within the Limitation Year in which the amendment is
made.
(j) Regional Prototype Plan: A plan the form of which is the subject of a
favorable notification letter from the Internal Revenue Service.
(k) Maximum Permissible Amount: The maximum Annual Addition that may be
contributed or allocated to a Participant's account under the Plan for any
28
Limitation Year shall not exceed the lesser of:
(i) the Defined Contribution Dollar Limitation, or
(ii) 25 percent of the Participant's Compensation for the Limitation Year.
The Compensation limitation referred to in (b) shall not apply to any
contribution for medical benefits [within the meaning of Section 401(h) or
Section 419A(f)(2) of the Code] which is otherwise treated as an Annual Addition
under Section 415(1)(l) or 419A(d)(2) of the Code.
If a short Limitation Year is created because of an amendment changing the
Limitation Year to a different 12-consecutive month period, the Maximum
Permissible Amount will not exceed the defined contribution dollar limitation
multiplied by the following fraction:
Number of months in the short Limitation Year
12
(l) Projected Annual Benefit: The annual retirement benefit (adjusted to an
actuarially equivalent straight life annuity if such benefit is expressed in a
form other than a straight life annuity or Qualified Joint and Survivor Annuity)
to which the Participant would be entitled under the terms of the Plan assuming:
(i) the Participant will continue employment until Normal Retirement Age under
the Plan (or current age, if later), and
(ii) the Participant's Compensation for the current Limitation Year and all
other relevant factors used to determine benefit under the Plan will remain
constant for all future Limitation Years.
ARTICLE VI - DEATH BENEFITS
The provisions of this Article are subject to the provisions of Article XII -
Joint and Survivor Annuity Requirements.
6.01 If permitted by the Employer in the Adoption Agreement, the Plan shall
provide a pre-retirement death benefit for a Participant who dies before
retirement or commencement of benefits under the Plan.
If the Plan provides for the purchase of life insurance contracts in the
Adoption Agreement, the preretirement death benefit that is payable to the
Participant's surviving spouse shall consist of the proceeds of any life
insurance contract in effect on the life of the Participant, plus one hundred
percent (100%) of the value of his or her account balance as indicated in the
Adoption Agreement, less the cash value, if any, of the life insurance contract.
If the Plan does not provide for the purchase of life insurance contracts, the
pre-retirement death benefit that is payable to the Participant's surviving
spouse shall consist of that portion of such Participant's account balance as
29
indicated in the Adoption Agreement.
6.02 In lieu of the death benefit being paid to a surviving spouse, a
Participant may elect to provide that the death benefit be payable to a
beneficiary other than the surviving spouse. If the Participant should die
without a surviving spouse then any death benefit shall be payable to a
contingent beneficiary.
6.03 A Participant has the right to designate a beneficiary to receive any death
benefit provided for under the Plan and to change that designation from time to
time. Furthermore, such beneficiary shall be able to elect to receive any death
benefits in any one or a combination of the optional payment forms provided.
Such designation must be made in writing to the Plan Administrator. If such
beneficiary is not the Participant's spouse, any change in the designation of a
beneficiary must be consented to, in writing, by the Participant's spouse.
6.04 If the beneficiary should die while in receipt of benefits hereunder, any
benefits payable shall be paid to the beneficiary's surviving children, if any,
or otherwise the estate of such deceased beneficiary.
6.05 The purchase of insurance contracts under the Plan shall be limited as
follows:
(a) Ordinary life - For purposes of these incidental insurance provisions,
ordinary life insurance contracts are contracts with both nondecreasing death
benefits and nonincreasing premiums. If such contracts are purchased, less than
one-half (1/2) of the aggregate Employer contributions allocated to any
Participant will be used to pay the premium attributable to them.
(b) Term and Universal Life - No more than one-quarter (1/4) of the aggregate
Employer contributions allocated to any Participant will be used to pay the
premiums on term life insurance contracts, universal life insurance contracts
and all other life insurance contracts which are not ordinary life.
(c) Combination - The sum of one-half (1/2) of the ordinary life insurance
premiums and all other life insurance premiums will not exceed one-quarter (1/4)
of the aggregate Employer contributions allocated to any Participant.
ARTICLE VII - TERMINATION OF EMPLOYMENT
7.01 Upon termination of employment for any reason other than disability, death
or retirement, a Participant shall be entitled to a nonforfeitable (vested)
interest in his or her account balance in accordance with the vesting schedule
selected in the Adoption Agreement. A Participant shall become 100 percent
vested in his or her account balance upon attaining Normal Retirement Age.
7.02 Upon termination of employment for any reason other than disability, death
or retirement, a Participant shall be entitled, subject to the provisions of
section 7.03 and Article IV, to a benefit in an amount equal to his or her
vested account balance plus the value of the Participant's voluntary
contributions, if any. Such benefit shall commence not later than 60 days after
the close of the
30
Plan Year in which the terminated Participant attains Normal Retirement Age. The
benefits will be paid out as provided in section 4.07 and shall be in the form
provided for in section 4.06.
7.03 That portion of a terminated Participant's account balance which is not
vested (upon distribution) shall be forfeitable and shall be used to reduce
Employer contributions or will be allocated to the remaining Participants as is
indicated by the Employer in section A-3.10 of the Adoption Agreement. If a
benefit is forfeited because the Participant or beneficiary cannot be found,
such benefit shall be reinstated if a claim is made by the Participant or
beneficiary.
7.04 In the event that a former Participant without a nonforfeitable right to
his or her account balance should become eligible to participate in the Plan
after having terminated employment and incurring a Break in Service, such
Participant shall be credited with all pre-break and post-break Service for
purposes of determining the Participant's nonforfeitable (vested) interest. No
Participant shall be entitled to receive a benefit by application of this
section which would exceed the benefit such Participant would have received had
employment been continuous.
In the case of a Participant who has incurred a one (1) year Break in Service,
Years of Service before such break will not be taken into account until the
Participant has completed a Year of Service after such Break in Service.
7.05 No amendment of the vesting schedule shall directly or indirectly deprive a
Participant of his or her nonforfeitable rights to benefits accrued to the date
of the amendment. Further, if the vesting schedule of the Plan is amended, or
the Plan is amended in any way that directly or indirectly affects the
computation of any Participant's nonforfeitable benefit, (including a change to
or from a Top-Heavy vesting schedule), each Participant with at least three
Years of Service with the Employer may elect, within a reasonable period after
the adoption of the amendment, to have his or her nonforfeitable benefit
computed under the Plan without regard to such amendment. For Participants who
do not have at least one(1) Hour of Service in any Plan Year beginning after
December 31, 1988, the preceding sentence shall be applied by substituting "five
(5) Years of Service" for "three (3) Years of Service" where such language
appears. The period during which the election may be made shall commence with
the date the amendment is adopted and shall end on the later of:
(a) 60 days after the amendment is adopted;
(b) 60 days after the amendment becomes effective; or
(c) 60 days after the Participant is issued written notice of the amendment by
the Employer or Trustee.
7.06 In the case of a Participant who has 5 or more consecutive 1-year Breaks in
Service all Service after such Breaks in Service will be disregarded for the
purpose of vesting the Employer-derived account balance that accrued before such
Breaks in Service. Such Participant's pre-break Service will count in vesting
the post-break Employer-derived account balance only if either:
31
(a) such Participant has any nonforfeitable interest in the account balance
attributable to Employer contributions at the time of separation from Service;
or
(b) upon returning to Service the number of consecutive 1-year Breaks in Service
is less than the number of Years of Service.
Separate accounts will be maintained for the Participant's pre-break and
post-break Employee-derived account balance. Both accounts will share in the
earnings and losses of the fund.
ARTICLE VIII - ADMINISTRATION
8.01 The Plan Administrator shall have such powers and duties as are necessary
for the proper administration of the Plan, including but not limited to the
power to make decisions with respect to the application and interpretation of
the Plan.
8.02 The Plan Administrator shall be entitled to rely on the advice or opinion
of any consultant, accountant or attorney and such persons may also act in their
respective professional capacities as advisors to the Employer.
8.03 Subject to the limitations contained in the Plan, the Plan Administrator
shall be empowered from time to time, at its discretion, to establish rules for
the transaction of its business and for the administration of the Plan.
8.04 The Plan Administrator shall provide written instructions to the Trustee
with respect to all payments which become due under the terms of the Plan and
shall direct the Trustee to make such payments from the Trust Fund. The Trustee
shall act and shall be fully protected in acting in accordance with such orders,
requests and instructions.
8.05 The Plan Administrator shall be responsible for filing any returns, reports
or documents with the various government agencies, such as the Internal Revenue
Service, as required by law or the regulations. In addition, the Plan
Administrator shall also be responsible for providing communication to Employees
and Participants, such as Summary Plan Descriptions and annual benefit
statements, as required by law or the regulations.
8.06 If, upon review of a request for benefits hereunder, the Plan Administrator
finds the Participant ineligible for such benefits, it shall inform the
Participant, in writing, of the reason or reasons for such denial. In the event
any Participant or beneficiary disagrees with the decision of the Plan
Administrator, the Plan Administrator must reconsider its decision based on the
facts and evidence presented by the Participant or beneficiary. Furthermore, the
Plan Administrator must provide, in writing, to any Participant or beneficiary
who disagrees with the amount of his or her benefit the method under which the
benefit computations were made.
32
ARTICLE IX - TRUSTEES AND TRUST FUND
9.01 The Trustee shall receive, hold, invest, administer and distribute the
assets of the Trust Fund in accordance with the provisions of the Plan.
9.02 The Trustee shall maintain accurate and detailed records and accounts of
all transactions of the Plan, which shall be available for inspection or audit
during regular business hours.
9.03 Except as otherwise provided in the Plan, the income and profits of the
Trust Fund shall be accumulated and added to the principal of the Trust Fund and
invested and reinvested therewith as a single fund. The Trustee is authorized to
invest the assets of the Trust Fund in such bonds, notes, debentures, mortgages,
certificates, preferred or common stock or such other property, real or
personal, within the United States permitted under the provisions of ERISA. If
the Employer elects under section A-9.03 of the Adoption Agreement to permit
Participants to direct the investment of their accounts, each Participant shall
have the right to direct the Trustee with respect to the investment of his
account. Investment directions shall not be effective unless made in such manner
as may be prescribed by the Trustee. A Participant who directs the investment of
his or her account shall not by reason thereof be deemed a fiduciary with
respect to the Plan and the Trustee, Plan Administrator and other fiduciaries
shall not be liable for any losses resulting from the purchase, sale or
retention of any assets which are purchased, sold or retained at the direction
of a Participant. Once a Participant assumes direction of the investment of his
or her account, the Trustee shall not thereafter be responsible for the
investment of his or her account until the Participant notifies the Trustee, in
writing, that the Trustee is to assume investment responsibility for his or her
account. Income, expenses, gains and losses, realized and unrealized,
attributable to a Participant's investment direction shall not be considered in
adjusting the accounts of other Participants, but shall for purposes of such
section be credited to such Participant's account. The Trustee in its discretion
may hold in cash such portion of the Trust Fund as shall be reasonable under the
prevailing circumstances, pending investment or payment of expenses or
distribution of benefits. Such investments must be sufficiently diversified or
insured or otherwise guaranteed to minimize the risk of large losses.
9.04 Notwithstanding any other provisions of this Plan, all or part of the
assets may be invested in a collective investment trust which provides for the
pooling of the assets of qualified plans [under Code Sections 401(a)] provided
that such collective trust is exempt from tax under the Code or regulations
issued by the Internal Revenue Service.
9.05 The Trustee may consult with legal counsel, who may be counsel for the
Employer, in respect to any of its rights, duties or obligations under the Plan
and Trust Fund.
9.06 Where more than one individual Trustee is appointed, the right to make any
decision or undertake any action shall be a joint responsibility of all Trustees
except that the Employer may designate any one of the Trustees to act on behalf
of all of the Trustees in the execution of any documents affecting the Trust. No
33
single Trustee shall be liable for any loss resulting from the acts or omissions
of another Trustee to whom specific responsibilities, obligations or duties have
been delegated by the Employer or by agreement among all of the Trustees, except
where a Trustee knowingly participates in or conceals a fiduciary breach of duty
of another Trustee or having knowledge of such breach, does not take reasonable
measures under the circumstances to remedy such breach, or enables another
Trustee to commit a breach by failure to carry out his or her own
responsibilities with the reasonable care, skill, prudence and diligence of
individuals familiar with such matters.
9.07 All reasonable costs, charges and expenses incurred by the Trustee in
connection with the administration of the Trust Fund and all reasonable costs,
charges and expenses incurred by the Plan Administrator in connection with the
administration of the Plan (including fees for legal services rendered to the
Trustee or Plan Administrator) shall be paid by the Employer, except if
otherwise elected in the Adoption Agreement. However, if such items are not paid
by the Employer then they shall be paid from the Trust Fund. The Trustee and
Plan Administrator may be paid such reasonable compensation as may be agreed
upon from time to time between the Employer, Trustee and Plan Administrator.
9.08 The Trustee shall have the following powers, rights and duties in addition
to those delegated to it elsewhere in the Plan or by law:
(a) To sell, convey, transfer, exchange, partition, mortgage, pledge or
otherwise deal with or dispose of any asset of the Trust Fund in such manner,
for such consideration and upon such terms and conditions as the Trustee, in its
discretion, shall determine;
(b) To retain, manage, invest, improve, operate and control any assets of the
Trust Fund;
(c) To employ such agents and counsel as may be reasonably necessary in
collecting, managing, administering, investing, distributing and protecting the
Trust Fund of the assets thereof and to pay them reasonable compensation;
(d) To settle, compromise or abandon all claims and demands in favor of or
against the Trust Fund;
(e) To organize and incorporate (or participate in the organization or
incorporation of) under the laws of any state, a corporation for the purpose of
acquiring and holding title to any property which the Trustee is authorized to
acquire for the Trust Fund and to exercise with respect thereto any of the
powers, rights and duties it has with respect to other assets of the Trust Fund;
(f) To cause title to the assets of the Trust Fund to be held in the name of the
Trustee, in bearer form so that title will pass by delivery or in any other
manner authorized by the laws of the State of Incorporation of the Trustee, if a
corporate trustee, or the state of residence, if an unincorporated trustee,
provided that the records of the Trustee shall indicate the true ownership of
such assets; and
(g) To exercise any of the powers and rights of an individual owner with respect
34
to any property of the Trust Fund and to do all other acts in its judgment
necessary or desirable for the proper administration of the Trust Fund.
9.09 The Trustee shall be protected in acting upon any notice, direction,
certificate or other paper or document believed by the Trustee to be genuine and
to have been executed by a Participant or by the Employer or a duly authorized
person or persons representing the Employer.
9.10 The Trustee may resign at any time upon sixty days' notice, in writing, to
the Employer. The Trustee may be removed by the Employer at any time upon sixty
days' notice, in writing, to the Trustee. Upon such resignation or removal the
Employer shall appoint a successor Trustee who shall have the same powers and
duties as those conferred upon the Trustee hereunder.
9.11 The Trustee will maintain a separate account for each Employee to which
will be credited the Employer contributions and earnings thereon. As of each
Valuation Date the Trustee shall value each Participant's account as follows:
(a) As of each Valuation Date, or more frequently, any increases or decreases in
the fair market value of the Trust Fund since the last adjustment and all income
of the Trust Fund for such period shall be credited to or deducted from the
account balances of all Participants and former Participants in the ratio that
such account balance bears to all account balances.
(b) As of each Valuation Date the account balances of all Participants shall be
adjusted to reflect the effects of income, realized and unrealized gains and
losses and expenses.
(c) In order to determine the increase or decrease in the fair market value of
the Trust Fund, the market value of the Trust assets there shall be subtracted
therefrom:
(i) the amount of any Employer contributions which have been made to the Trust
Fund for that Plan Year; and
(ii) the amount of any benefits which are due but not yet paid; and
(iii) the part of any account balance that has been forfeited by a Participant
since the last day of the preceding Plan Year.
(d) Any dividends or credits earned on insurance contracts will be allocated to
the Participant's account derived from Employer contributions for whose benefit
the contract is held.
(e) After each account balance has been increased or decreased as provided
above, the amounts that have been forfeited since the preceding Valuation Date
shall be allocated as provided in section A-3.10 of the Adoption Agreement.
(f) Notwithstanding the above, separate accounts shall be maintained for a
Participant's pre-Service Break and post-Service Break account balances as
provided in Article VII.
35
(g) Credits or deductions to a Participant's account balance shall be deemed to
have been made on the date to which they are related although actually
determined on some later date. Distributions to a Participant or beneficiary
shall be based on the Valuation Date coincident with or preceding the date of
payment.
9.12 Any portion of a former Participant's account which is retained in the
Trust Fund after his or her death or separation from Service may, upon
instructions from the Plan Administrator, be segregated in an interest-bearing
account and debited and credited only with income and charges attributable
directly to it.
9.13 The Employer may from time to time appoint one or more Investment Managers
to direct the investment and reinvestment of the Trust Fund. Such appointment
shall be in writing and shall be effective upon receipt by the Trustee of the
Investment Manager's written acceptance and acknowledgment that he or she is a
fiduciary with respect to the Plan and Trust. The Employer may revoke the
appointment of any Investment Manager by furnishing such Investment Manager and
the Trustee with written notice setting forth the effective date of such
revocation.
The Trustee shall comply with the directions of an Investment Manager regarding
the investment or reinvestment of the Trust Fund or such portion thereof as
shall be under management by the Investment Manager. Once an Investment Manager
has assumed direction of all or a portion of the Trust Fund, the Trustee shall
be under no duty to review any investment to be acquired, held or disposed of
pursuant to such directions, nor to make any recommendations with regard to the
acquisition, disposition or continued retention of any assets under management
by the Investment Manager. Until such time as the Trustee is notified, in
writing, by the Employer that the Trustee shall again assume exclusive authority
and discretion with regard to the portion of the Trust Fund previously under
management by the Investment Manager, the Trustee shall not have any
responsibility for investments which are managed by an Investment Manager and
shall not be liable for making or retaining any investments or for any failure
to invest in the absence of direction by an Investment Manager.
For purposes of this section, "investment manager" shall mean any fiduciary,
other than the Trustee or a named fiduciary [as defined in Section 402(a) (2) or
ERISA]:
(a) who is appointed by the Employer to manage, acquire, or dispose of all or
any portion of the Trust Fund;
(b) who is (i) registered as an investment advisor under the Investment Advisors
Act of 1940; (ii) is a bank, as defined in said Act; or (iii) is an insurance
company qualified to manage, acquire or dispose of all or any portion of the
Trust Fund under the laws of more than one State; and
(c) who has acknowledged, in writing, that he or she is a fiduciary with respect
to the Plan.
36
ARTICLE X - INSURANCE CONTRACTS
10.01 If permitted by the Employer in the Adoption Agreement and agreed to by
the Trustee, the Plan Administrator may direct the Trustee to purchase life
insurance policies for Participants.
10.02 The amount of Employer contributions used to purchase insurance contracts
shall be limited as provided in section 6.05.
10.03 If a Participant is not insurable as a standard risk but may nevertheless
be eligible for insurance coverage at an extra rating the Plan Administrator, in
its discretion, may agree to pay the sub-standard rate required to obtain the
full amount of death benefit. The Plan Administrator shall treat all such
Participants in a similar situation on a uniform basis.
10.04 The Trustee shall apply for and will be the owner of any insurance
contract purchased under the terms of this Plan. The insurance contract(s) must
provide that proceeds will be payable to the Trustee, however the Trustee shall
be required to pay over all proceeds of the contract(s) to the Participant's
designated beneficiary in accordance with the distribution provisions of this
Plan. A Participant's spouse will be the designated beneficiary of the proceeds
in all circumstances unless a qualified election has been made in accordance
with Article XII, Joint and Survivor Annuity Requirements, if applicable. Under
no circumstances shall the Trust retain any part of the proceeds. In the event
of any conflict between the terms of this Plan and the terms of any insurance
contract purchased hereunder, the Plan provisions shall control.
10.05 Subject to Article XII, Joint and Survivor Annuity Requirements, the
contracts on a Participant's life will be converted to cash or an annuity or
distributed to the Participant upon commencement of benefits.
10.06 The terms of any annuity contract purchased and distributed by the Plan to
a Participant or spouse shall comply with the requirements of this Plan. Any
annuity contract distributed herefrom must be nontransferable.
ARTICLE XI - AMENDMENT AND TERMINATION
11.01 The regional prototype sponsor may amend any part of the Plan. For
purposes of sponsoring organization amendments, the mass submitter shall be
recognized as the agent of the sponsoring organization. If the sponsoring
organization does not adopt the amendments made by the mass submitter, it will
no longer be identical to or a minor modifier of the mass submitter plan.
11.02 The Employer may (a) change the choice of options in the Adoption
Agreement, (b) add overriding language in the Adoption Agreement when such
language is necessary to satisfy Section 415 or Section 416 of the Code because
of the required aggregation of multiple plans, and (c) add certain model
amendments published by the Internal Revenue Service which specifically provide
that their adoption will not cause the Plan to be treated as individually
37
designed. An Employer that amends the Plan for any other reason, including a
waiver of the minimum funding requirement under Section 412(d) of the Code, will
no longer participate in this Master or Prototype plan and will be considered to
have an individually designed plan.
11.03 While it is the intention of the Employer adopting this Plan that it
should be permanent and continue to operate, the Employer reserves the right to
terminate the Plan and Trust, at any time, and at its discretion. In the event
of the termination or partial termination of the Plan the account balance of
each affected Participant will be nonforfeitable. In the case of a profit
sharing plan, in the event of a complete discontinuance of contributions under
the Plan, the account balance of each affected Participant will be
nonforfeitable.
11.04 No amendment to the Plan shall be effective to the extent that it has the
effect of decreasing a Participant's accrued benefit. Notwithstanding the
preceding sentence, a Participant's account balance may be reduced to the extent
permitted under Section 412(c)(8) of the Code. For purposes of this paragraph, a
plan amendment which has the effect of decreasing a Participant's account
balance or eliminating an optional form of benefit, with respect to benefits
attributable to Service before the amendment shall be treated as reducing an
accrued benefit. Furthermore, if the vesting schedule of a plan is amended, in
the case of an Employee who is a Participant as of the later of the date such
amendment is adopted or the date it becomes effective, the nonforfeitable
percentage (determined as of such date) of such Employee's Employer-derived
accrued benefit will not be less than the percentage computed under the Plan
without regard to such amendment.
ARTICLE XII - JOINT AND SURVIVOR ANNUITY REQUIREMENTS
The provisions of this Article shall apply to any Participant who is credited
with at least one (1) Hour of Service with the Employer on or after August 23,
1984, and such other Participants as provided in Section 12.06.
12.01 Qualified Joint and Survivor Annuity.
(a) Unless an optional form of benefit is selected pursuant to a Qualified
Election within the 90-day period ending on the Annuity Starting Date, a married
Participant's Vested Account Balance will be paid in the form of a Qualified
Joint and Survivor Annuity and an unmarried Participant's vested account balance
will be paid in the form of a life annuity. The Participant may elect to have
such annuity distributed upon attainment of the earliest retirement age under
the Plan.
12.02 Qualified Preretirement Survivor Annuity.
(a) Unless an optional form of benefit has been selected within the Election
Period pursuant to a Qualified Election, if a Participant dies before the
Annuity Starting Date then the Participant's Vested Account Balance shall be
applied toward the purchase of an annuity for the life of the surviving Spouse.
The surviving Spouse may elect to have such annuity distributed within a
reasonable
38
period after the Participant's death.
12.03 Definitions.
(a) Election Period: The period which begins on the first day of the Plan Year
in which the Participant attains age 35 and ends on the date of the
Participant's death. If a Participant separates from Service prior to the first
day of the Plan Year in which age 35 is attained, with respect to the account
balance as of the date of separation, the Election Period shall begin on the
date of separation.
Pre-age 35 waiver: A Participant who will not yet attain age 35 as of the end of
any current Plan Year may make a special Qualified Election to waive the
Qualified Preretirement Survivor Annuity for the period beginning on the date of
such election and ending on the first day of the Plan Year in which the
Participant will attain age 35. Such election shall not be valid unless the
Participant receives a written explanation of the Qualified Preretirement
Survivor Annuity in such terms as are comparable to the explanation required
under section 12.04(a). Qualified Preretirement Survivor Annuity coverage will
be automatically reinstated as of the first day of the Plan Year in which the
Participant attains age 35. Any new waiver on or after such date shall be
subject to the full requirements of this article.
(b) Earliest Retirement Age: The earliest date on which, under the Plan, the
Participant could elect to receive retirement benefits.
(c) Qualified Election: A waiver of a Qualified Joint and Survivor Annuity or a
Qualified Preretirement Survivor Annuity. Any waiver of a Qualified Joint and
Survivor Annuity or a Qualified Preretirement Survivor Annuity shall not be
effective unless:
(i) the Participant's Spouse consents in writing to the election;
(ii) the election designates a specific beneficiary, including any class of
beneficiaries or any contingent beneficiaries, which may not be changed without
spousal consent (or the Spouse expressly permits designations by the Participant
without any further spousal consent);
(iii) the Spouse's consent acknowledges the effect of the election; and
(iv) the Spouse's consent is witnessed by a Plan representative or notary
public.
Additionally, a Participant's waiver of the Qualified Joint and Survivor Annuity
shall not be effective unless the election designates a form of benefit payment
which may not be changed without spousal consent (or the Spouse expressly
permits designations by the Participant without any further spousal consent). If
it is established to the satisfaction of a Plan representative that there is no
spouse or that the spouse cannot be located, a waiver will be deemed a Qualified
Election.
Any consent by a Spouse obtained under this provision (or establishment that the
consent of a Spouse may not be obtained) shall be effective only with respect to
such Spouse. A consent that permits designations by the Participant without any
39
requirement of further consent by such Spouse must acknowledge that the Spouse
has the right to limit consent to a specific beneficiary, and a specific form of
benefit where applicable, and that the Spouse voluntarily elects to relinquish
either or both of such rights. A revocation of a prior waiver may be made by a
Participant without the consent of the Spouse at any time before the
commencement of benefits. The number of revocations shall not be limited. No
consent obtained under this provision shall be valid unless the Participant has
received notice as provided in section 12.04 below.
(d) Qualified Joint And Survivor Annuity: An immediate annuity for the life of
the Participant with a survivor annuity for the life of the Spouse which is not
less than 50 percent and not more than 100 percent of the amount of the annuity
which is payable during the joint lives of the Participant and the Spouse and
which is the amount of benefit which can be purchased with the Participant's
Vested Account Balance. The percentage of the survivor annuity under the Plan
shall be 50% (unless a different percentage is elected by the Employer in the
Adoption Agreement.)
(e) Spouse (Surviving Spouse): The Spouse or surviving Spouse of the
Participant, provided that a former spouse will be treated as the Spouse or
surviving spouse and a current spouse will not be treated as the Spouse or
surviving spouse to the extent provided under a qualified domestic relations
order as described in Section 414(p) of the Code.
(f) Annuity Starting Date: The first day of the first period for which an amount
is paid as an annuity or any other form.
(g) Vested Account Balance: The aggregate value of the Participant's Vested
Account Balances derived from Employer and Employee contributions (including
roll-overs), whether vested before or upon death, including the proceeds of
insurance contracts, if any, on the Participant's life.
The provisions of this article shall apply to a Participant who is vested in
amounts attributable to Employer contributions, employee contributions (or both)
at the time of death or distribution.
12.04 Notice Requirements.
(a) In the case of a Qualified Joint and Survivor Annuity, the Plan
Administrator shall no less than 30 days and no more than 90 days prior to the
Annuity Starting Date provide each Participant a written explanation of: (i) the
terms and conditions of a Qualified Joint and Survivor Annuity; (ii) the right's
of a Participant's Spouse; (iii) the Participant's right to make and the effect
of an election to waive the Qualified Joint and Survivor Annuity form of
benefit; and (iv) the right to make, and the effect of, a revocation of a
previous election to waive the Qualified Joint and Survivor Annuity. If a
distribution is one to which Sections 401(a)(17) and 417 of the Code do not
apply, such distribution may commence less than 30 days after the notice
required under Section 1.411(a)-11(c) of the Income Tax Regulations is given,
provided that:
(i) the Plan Administrator clearly informs the Participant that the Participant
has a right to a period of at least 30 days after receiving the notice to
40
consider the decision of whether or not to elect a distribution (and, if
applicable, a particular option), and
(ii) the Participant after receiving the notice, affirmatively elects a
distribution.
(b) In the case of a Qualified Preretirement Survivor Annuity as described in
Section 12.02 of this article, the Plan Administrator shall provide each
Participant within the applicable period for such Participant a written
explanation of the Qualified Preretirement Survivor Annuity in such terms and in
such manner as would be comparable to the explanation provided for meeting the
requirements of section 12.04(a) applicable to a Qualified Joint and Survivor
Annuity.
The applicable period for a Participant is whichever of the following periods
ends last: (i) the period beginning with the first day of the Plan Year in which
the Participant attains age 32 and ending with the close of the Plan year
preceding the Plan Year in which the Participant attains 35; (ii) a reasonable
period ending after the individual becomes a Participant; (iii) a reasonable
period ending after this article first applies to the Participant; and (IV) a
reasonable period ending after section 12.04(c) ceases to apply to the
Participant. Notwithstanding the foregoing, notice must be provided within a
reasonable period ending after separation from Service in case of a Participant
who separates from Service before attaining age 35.
For purposes of applying the preceding paragraph, a reasonable period ending
after the enumerated events described in (ii), (iii) and (iv) is the end of the
two year period beginning one year prior to the date the applicable event occurs
and ending one year after that date. In the case of a Participant who separates
from Service before the Plan Year in which age 35 is attained, notice shall be
provided within the two year period beginning one year prior to separation and
ending one year after separation. If such a Participant thereafter returns to
employment with the Employer, the applicable period for such Participant shall
be redetermined.
(c) Notwithstanding the other requirements of this section, the respective
notices prescribed by this section need not be given to a Participant if (1) the
Plan "fully subsidizes" the costs of a Qualified Joint and Survivor Annuity or
Qualified Preretirement Survivor Annuity, and (2) the Plan does not allow the
Participant to waive the Qualified Joint and Survivor Annuity or Qualified
Preretirement Survivor Annuity and does not allow a married Participant to
designate a nonspouse beneficiary. For purposes of this section, a Plan fully
subsidizes the costs of a benefit if no increase in cost or decrease in benefits
to the Participant may result from the Participant's failure to elect another
benefit.
12.05 Safe Harbor Rules.
(a) This section shall apply to a Participant in a profit-sharing plan and to
any distribution, made on or after the first day of the first Plan Year
beginning after December 31, 1988, from or under a separate account attributable
solely to accumulated deductible Employee Contributions, as defined in Section
72(o)(5)(B)
41
of the Code, and maintained on behalf of a Participant in a money purchase
pension plan, (including a target benefit plan) if the following conditions are
satisfied: (i) the Participant does not or cannot elect payments in the form of
a life annuity; and (ii) on the death of a Participant, the Participant's Vested
Account Balance will be paid to the Participant's surviving Spouse, but if there
is no surviving Spouse, or if the surviving Spouse has consented in a manner
conforming to a Qualified Election, then to the Participant's designated
beneficiary. The surviving Spouse may elect to have distribution of the Vested
Account Balance commence within the 90-day period following the date of the
Participant's death. The account balance shall be adjusted for gains or losses
occurring after the Participant's death in accordance with the provisions of the
Plan governing the adjustment of account balances for other types of
distributions. This section shall not be operative with respect to a Participant
in a profit-sharing plan if the Plan is a direct or indirect transferee of a
defined benefit plan, money purchase plan, a target benefit plan, stock bonus,
or profit-sharing plan which is subject to the survivor annuity requirements of
Section 401(a)(11) and Section 417 of the Code. If this section is operative,
then the provisions of this article, other than section 12.06, shall be
inoperative.
(b) The Participant may waive the spousal death benefit described in this
section at any time provided that no such waiver shall be effective unless it
satisfies the conditions of Section 12.03(c) (other than the notification
requirement referred to therein) that would apply to the Participant's waiver of
the Qualified Preretirement Survivor Annuity.
(c) For purposes of this section, Vested Account Balance shall mean, in the case
of a money purchase pension plan or a target benefit plan, the Participant's
separate account balance attributable solely to accumulated deductible Employee
contributions within the meaning of Section 72(o)(5)(B) of the Code. In the case
of a profit-sharing plan, Vested Account Balance shall have the same meaning as
provided in section 12.03(g).
12.06 Transitional Rules.
(a) Any living Participant not receiving benefits on August 23, 1984, who would
otherwise not receive the benefits prescribed by the previous sections of this
article must be given the opportunity to elect to have the prior sections of
this article apply if such Participant is credited with at least one Hour of
Service under this Plan or a predecessor plan in a Plan Year beginning on or
after January 1, 1976, and such Participant had at least 10 years of vesting
service when he or she separated from Service.
(b) Any living Participant not receiving benefits on August 23, 1984, who was
credited with at least one Hour of Service under this Plan or a predecessor plan
on or after September 2, 1974, and who is not otherwise credited with any
Service in a Plan Year beginning on or after January 1, 1976, must be given the
opportunity to have his or her benefits paid in accordance with section 12.06(d)
of this article.
(c) The respective opportunities to elect [as described in section 12.06(a) and
(b) above] must be afforded to the appropriate Participants during the period
42
commencing on August 23, 1984, and ending on the date benefits would otherwise
commence to said Participants.
(d) Any Participant who has elected pursuant to section 12.06(b) of this article
and any Participant who does not elect under section 12.06(a) or who meets the
requirements of section 12.06(a) except that such Participant does not have at
least 10 years of vesting service when he or she separates from Service, shall
have his or her benefits distributed in accordance with all of the following
requirements if benefits would have been payable in the form of a life annuity:
(i) Automatic Joint and Survivor Annuity. If benefits in the form of a life
annuity become payable to a married Participant who:
(A) begins to receive payments under the Plan on or after Normal Retirement Age;
or
(B) dies on or after Normal Retirement Age while still working for the Employer;
or
(C) begins to receive payments on or after the Qualified Early Retirement Age;
or
(D) separates from Service on or after attaining Normal Retirement Age (or the
Qualified Early Retirement Age) and after satisfying the eligibility
requirements for the payment of benefits under the Plan and therefore dies
before beginning to receive such benefits;
then such benefits will be received under this Plan in the form of a Qualified
Joint and Survivor Annuity, unless the Participant has elected otherwise during
the Election Period. The Election Period must begin at least 6 months before the
Participant attains Qualified Early Retirement Age and end not more than 90 days
before the commencement of benefits.
Any election hereunder will be in writing and may be changed by the Participant
at any time.
(ii) Election of early survivor annuity. A Participant who is employed after
attaining the Qualified Early Retirement Age will be given the opportunity to
elect, during the Election Period, to have a survivor annuity payable on death.
If the Participant elects the survivor annuity, payments under such annuity
must not be less than the payments which would have been made to the Spouse
under the Qualified Joint and Survivor Annuity if the Participant had retired on
the day before his or her death. Any election under this provision will be in
writing and may be changed by the Participant at any time. The election period
begins on the later of (A) the 90th day before the Participant attains the
qualified Early Retirement Age, or (B) the date on which participation begins,
and ends on the date the Participant terminates employment.
(iii) For purposes of this section:
(A) Qualified Early Retirement Age is the latest of:
(1) the earliest date, under the Plan, on which the Participant may elect to
43
receive retirement benefits,
(2) the first day of the 120th month beginning before the Participant reaches
Normal Retirement Age, or
(3) the date the Participant begins participation.
(B) Qualified Joint and Survivor Annuity is an annuity for the life of the
Participant with a survivor annuity for the life of the Spouse as described in
section 12.03 (d) of this article.
ARTICLE XIII - TOP-HEAVY PROVISIONS
If the Plan is or becomes Top-Heavy in any Plan Year beginning after December
31, 1983, the provisions of this Article will supercede any conflicting
provisions in the Plan or Adoption Agreement.
13.01 Definitions. For purposes of the Top-Heavy provisions:
(a) Compensation: An Employee's total Compensation as defined in section 1.06
hereof up to a maximum of $200,000 [or such higher amount as determined under
Section 416(d) of the Code].
(b) Determination Date: For any Plan Year subsequent to the first Plan Year, the
last day of the preceding Plan Year. For the first Plan Year of the Plan, the
last day of that year.
(c) Key Employee: Any Employee or former Employee (and the beneficiaries of such
Employee) who at any time during the determination period was an officer of the
Employer if such individual's annual Compensation exceeds 50% of the dollar
limitation under Section 415(b)(1)(A) of the Code, an owner (or considered an
owner under Section 318 of the Code) of one of the ten largest interests in the
Employer if such individual's Compensation exceeds 100% of the dollar limitation
under Section 415(c)(1)(A) of the Code, a 5% owner of the Employer, or a 1%
owner of the Employer who has an annual Compensation of more than $150,000.
Annual Compensation means Compensation as defined in Section 415(c)(3) of the
Code, but including amounts contributed by the Employer pursuant to a salary
reduction agreement which are excludable from the Employee's gross income under
Section 125, Section 402(a)(8), Section 402(h) or Section 403(b) of the Code.The
determination period is the Plan Year containing the Determination Date and the
four preceding Plan Years. The determination of who is a Key Employee will be
made in accordance with Section 416(i)(1) of the Code and the regulations
thereunder.
(d) Permissive Aggregation Group: The Required Aggregation Group of plans plus
any other plan or plans of the Employer which, when considered as a group with
the Required Aggregation Group, would continue to satisfy the requirements of
Sections 401(a)(4) and 410 of the Code.
(e) Present Value: When determining the Present Value of accrued benefits for
44
purposes of the Top-Heavy Ratio, interest and mortality rates shall be
determined by the interest and mortality rates specified in section A-13.01 of
the Adoption Agreement.
(f) Required Aggregation Group: Each qualified plan of the Employer in which at
least one Key Employee participates or participated at any time during the
determination period (regardless of whether the Plan terminated), and any other
qualified plan of the Employer which enables a plan covering a Key Employee to
meet the requirements of Sections 401(a)(4) and 410 of the Code.
(g) Top-Heavy Plan: For any Plan Year beginning after December 31, 1983, the
Employer's Plan will be Top-Heavy if any of the following conditions exists:
(i) If the Top-Heavy Ratio for the employer's Plan exceeds 60% and the Plan is
not part of any Required Aggregation Group or Permissive Aggregation Group of
plans;
(ii) If the Employer's Plan is a part of a Required Aggregation Group of plans
(but which is not part of a Permissive Aggregation Group) and the Top-Heavy
Ratio for the group of plans exceeds 60%; or
(iii) If the Employer's Plan is a part of a Required Aggregation Group of plans
and part of a Permissive Aggregation Group and the Top-Heavy Ratio for the
Permissive Aggregation Group exceeds 60%.
(h) Top-Heavy Ratio:
(i) If the Employer maintains one or more defined contribution plans (including
any Simplified Employee Pension Plan) and the Employer has not maintained any
defined benefit plan which during the 5-year period ending on the Determination
Date(s) has or has had Accrued Benefits, the Top-Heavy Ratio for this Plan alone
or for the Required or Permissive Aggregation Group as appropriate is a
fraction, the numerator of which is the sum of the account balances of all Key
Employees as of the Determination Date(s), (including any part of any account
balance distributed in the 5-year period ending on the Determination Date(s))
and the denominator of which is the sum of all account balances (including any
part of any account balance distributed in the 5-year period ending on the
Determination Date(s), both computed in accordance with Section 416 of the Code
and the regulations thereunder. Both the numerator and denominator of the
Top-Heavy Ratio are increased to reflect any contribution not actually made as
of the Determination Date, but which is required to be taken into account on
that date under Section 416 of the Code and the regulations thereunder.
(ii) If the Employer maintains one or more defined contribution plans (including
any Simplified Employee Pension Plan) and the Employer maintains or has
maintained one or more defined benefit plans which during the 5-year period
ending on the Determination Date(s) has or has had any Accrued Benefits, the
Top-Heavy Ratio for any Required or Permissive Aggregation Group as appropriate
is a fraction, the numerator of which is the sum of account balances under the
aggregated defined contribution plan or plans for all Key Employees, determined
in accordance with (i) above, and the present value of Accrued Benefits under
the aggregated defined benefit plan or plans for all Key Employees as of the
45
Determination Date(s) and the denominator of which is the sum of the account
balances under the aggregated defined contribution plan or plans for all
Participants, determined in accordance with (i) above, and the Present Value of
Accrued Benefits under the defined benefit plan or plans for all Participants as
of the Determination Date(s), all determined in accordance with Section 416 of
the Code and the regulations thereunder. The Accrued Benefits under a defined
benefit plan in both the numerator and denominator of the Top-Heavy Ratio are
increased for any distribution of an Accrued Benefit made in the five-year
period ending on the Determination Date.
(iii) For purposes of (i) and (ii) above the value of account balances and the
Present Value of Accrued Benefits will be determined as of the most recent
Valuation Date that falls within or ends with the 12-month period ending on the
Determination Date, except as provided in Section 416 of the Code and the
regulations thereunder for the first and second Plan Years of a defined benefit
plan. The account balances and Accrued Benefits of a Participant (A) who is not
a Key Employee but who was a Key Employee in a prior year, or (B) who has not
been credited with at least one Hour of Service with any employer maintaining
the plan at any time during the 5-year period ending on the Determination Date
will be disregarded. The calculation of the Top- Heavy Ratio, and the extent to
which distributions, rollovers, and transfers are taken into account will be
made in accordance with Section 416 of the Code and the regulations thereunder.
Deductible Employee contributions will not be taken into account for purposes of
computing the Top-Heavy Ratio. When aggregating plans the value of account
balances and Accrued Benefits will be calculated with reference to the
Determination Dates that fall within the same calendar year. The Accrued Benefit
of a Participant other than a Key Employee shall be determined under (1) the
method, if any, that uniformly applies for accrual purposes under all defined
benefit plans maintained by the Employer, or (2) if there is no such method, as
if such benefit accrued not more rapidly than the slowest accrual rate permitted
under the fractional rule of Section 411(b)(1)(C) of the Code.
(i) Valuation Date: The day elected by the Employer in section A-13.01 of the
Adoption Agreement as of which account balances or Accrued Benefits are valued
for purposes of calculating the Top-Heavy Ratio.
13.02 For any Plan Year in which this Plan is Top-Heavy, the minimum vesting
schedule elected by, or deemed elected by, the Employer in the Adoption
Agreement will automatically apply to the Plan. The minimum vesting schedule
applies to all benefits within the meaning of Section 411(a)(7) of the Code
except those attributable to Employee contributions, including benefits accrued
before the effective date of Section 416 of the Code and benefits accrued before
the Plan became Top-Heavy. Further, no decrease in a Participant's
nonforfeitable percentage may occur in the event the Plan's status as Top-Heavy
changes for any Plan Year. However, this section does not apply to the account
balances of any Employee who does not have an Hour of Service after the Plan
initially becomes Top-Heavy and such Employee's account balance attributable to
Employer Contributions and forfeitures will be determined without regard to this
section.
13.03 Minimum Allocation
(a) Except as otherwise provided in (c) and (d) below, the Employer
contributions
46
and forfeitures allocated on behalf of any Participant who is not a Key Employee
shall not be less than the lesser of three percent of such Participant's
Compensation or in the case where the Employer has no defined benefit plan which
designates this Plan to satisfy Section 401 of the Code, the largest percentage
of Employer contribution and forfeitures, as a percentage of the first $200,000
of the Key Employee's Compensation, allocated on behalf of any Key Employee for
that year. The minimum allocation is determined without regard to any Social
Security contribution. This minimum allocation shall be made even though, under
other Plan provisions, the Participant would not otherwise be entitled to
receive an allocation, or would have received a lesser allocation for the year
because of (i) the Participant's failure to complete 1,000 Hours of Service (or
any equivalent provided in the Plan), or (ii) the Participant's failure to make
mandatory Employee contributions to the Plan, or (iii) Compensation less than a
stated amount.
(b) For purposes of computing the minimum allocation, compensation shall mean
Compensation as defined in Section 1.06 of the Plan.
(c) The provision in (a) above shall not apply to any Participant who was not
employed by the Employer on the last day of the Plan Year.
(d) The provision in (a) above shall not apply to any Participant to the extent
the Participant is covered under any other plan or plans of the Employer and
Employer has provided in section A-5.01 of the Adoption Agreement that the
minimum allocation or benefit requirement applicable to Top-Heavy plans will be
met in the other plan or plans.
13.04 The minimum allocation required [to the extent required to be
nonforfeitable under Section 416(b)] may not be forfeited under Section
411(a)(3)(B) or 411(a)(3)(D).
ARTICLE XIV - PAIRED PLAN PROVISIONS
The provisions of this article shall apply if the Employer adopts a set of the
Sponsor's paired plans.
14.01 For each Plan Year in which the paired plans are Top- Heavy, the Employer
will provide a minimum contribution equal to 3% of Compensation for each non-Key
Employee who is entitled to a minimum contribution under both paired defined
contribution plan #01001 and paired defined contribution plan #01002.
14.02 Only one of the paired plans may allow for permitted disparity.
ARTICLE XV - MISCELLANEOUS
15.01 No benefit or interest available hereunder will be subject to assignment
or alienation, either voluntarily or involuntarily. The preceding sentence shall
also apply to the creation, assignment, or recognition of a right to any benefit
47
payable with respect to a Participant pursuant to a domestic relations order,
unless such order is determined to be a qualified domestic relations order, as
defined in Code Section 414(p), or any domestic relations order entered before
January 1, 1985.
15.02 In the event of a merger or consolidation with or a transfer of assets or
liabilities to any other plan each Participant will receive a benefit
immediately after such merger or consolidation or transfer (if the Plan then
terminated) which is at least equal to the benefit the Participant was entitled
to immediately before such merger or consolidation or transfer (if the Plan had
terminated).
15.03 In the event that the Commissioner of Internal Revenue determines that the
Plan is not initially qualified under the Internal Revenue Code, any
contribution made incident to that initial qualification by the Employer must be
returned to the Employer within one (1) year after the date the initial
qualification is denied, but only if the application for the qualification is
made by the time prescribed by law for filing the Employer's return for the
taxable year in which the Plan is adopted, or such later date as the Secretary
of the Treasury may prescribe.
15.04 The corpus or income of the Trust Fund may not be diverted to, or used
for, other than the exclusive benefit of the Participants or their
beneficiaries.
15.05 If permitted by the Employer in the Adoption Agreement, the Plan
Administrator, in its discretion, may authorize and direct the Trustee to grant
loans to Participants, secured by the interest of the Participant in his or her
Accrued Benefit under the Plan. Such loan shall be evidenced by a promissory
note and shall bear a reasonable rate of interest, which shall not be more than
that charged by commercial lenders in the area of the Employer's place of
business. Such loans shall be subject to the following:
(a) Loans shall be made available to all Participants and beneficiaries on a
reasonably equivalent basis.
(b) Loans shall not be made available to highly compensated Employees [as
defined in Section 414(q) of the Code] in an amount greater than the amount made
available to other Employees.
(c) Loans must be adequately secured and bear a reasonable interest rate.
(d) No Participant loan shall exceed the present value of the Participant's
vested Accrued Benefit.
(e) A Participant must obtain the consent of his or her spouse, if any, to the
use of the account balance as security for the loan. Spousal consent shall be
obtained no earlier than the beginning of the 90-day period that ends on the
date on which the loan is to be so secured. The consent must be in writing, must
acknowledge the effect of the loan, and must be witnessed by a Plan
representative or notary public. Such consent shall thereafter be binding with
respect to the consenting spouse or any subsequent spouse with respect to the
loan. A new consent shall be required if the account balance is used for
00
xxxxxxxxxxxxx, xxxxxxxxx, xxxxxxx, or other revision of the loan.
(f) In event of default, foreclosure on the note and attachment of security will
not occur until a distributable event occurs in the Plan.
(g) No loans will be made to any Shareholder-Employee or Owner-Employee. For
purposes of this requirement, a Shareholder-Employee means an Employee or
officer of an electing small business (subchapter S) corporation who owns [or is
considered as owning within the meaning of Section 318(a)(1) of the Code], on
any day during the taxable year of such corporation, more than 5% of the
outstanding stock.
(h) If a valid spousal consent has been obtained in accordance with (e), then,
notwithstanding any other provision of this Plan, the portion of the
Participant's vested account balance used as a security interest held by the
Plan by reason of loan outstanding to the Participant shall be taken into
account for purposes of determining the amount of the account balance payable at
the time of death or distribution, but only if the reduction is used as
repayment of the loan. If less than 100% of the Participant's vested account
balance (determined without regard to the preceding sentence) is payable to the
surviving spouse, then the account balance shall be adjusted by first reducing
the vested account balance by the amount of the security used as repayment of
the loan, and then determining the benefit payable to the surviving spouse.
(i) No loan to any Participant or beneficiary can be made to the extent that
such loan when added to the outstanding balance of all other loans to the
Participant or beneficiary would exceed the lesser of (i) $50,000 reduced by the
excess (if any) of the highest outstanding balance of loans during the one year
period ending on the day before the loan is made, over the outstanding balance
of loans from the Plan on the date the loan is made, or (ii) one- half the
present value of the nonforfeitable account balance of the Participant or, if
greater, the total account balance up to $10,000. For the purpose of the above
limitation, all loans from all plans of the Employer and other members of a
group of employers described in Sections 414(b), 414(c), and 414(m) and (o) of
the Code are aggregated. Furthermore, any loan shall by its terms require that
repayment (principal and interest) be amortized in level payments, not less
frequently than quarterly, over a period not extending beyond five years from
the date of the loan, unless such loan is used to acquire a dwelling unit which
within a reasonable time (determined at the time the loan is made) will be used
as the principal residence of the Participant. An assignment or pledge of any
portion of the Participant's interest in the Plan and a loan, pledge, or
assignment with respect to any insurance contract purchased under the Plan, will
be treated as a loan under this section.
(j) For purposes of this section, "reasonably equivalent basis" shall mean that
loans will be available to all Plan Participants and beneficiaries without
regard to any individual's race, color, religion, sex, age or national origin.
And in making loans, consideration will be given only to those factors which
would be considered in a normal commercial setting by an entity in the business
of making similar types of loans. Such factors will include the Participant's
creditworthiness and financial need.
49
The Trustee will provide loan application forms to Participants who wish to
apply for loans from the Plan.
(k) A loan will be considered as being in default based on the same facts and
circumstances used by an entity in the business of making similar types of
loans.
In the event of default, the Participant's account balance shall be used to
satisfy the outstanding amount of the loan.
15.06 Any leased employee shall be treated as an employee of the recipient
employer; however, contributions or benefits provided by the leasing
organization which are attributable to the services performed for the recipient
employer shall be treated as provided by the recipient.
For purposes of this section, the term "leased employee" means any person (other
than an employee of the recipient) who, pursuant to an agreement between the
recipient and any other person ("leasing organization") has performed services
for the recipient or for the recipient and related persons [determined in
accordance with Section 414(n)(6) of the Code] on a substantially full-time
basis for a period of at least one (1) year and such services are of a type
historically performed by employees in the business field of the recipient
Employer. Contributions or benefits provided a leased employee by the leasing
organization which are attributable to services performed for the recipient
employer shall be treated as provided by the recipient employer.
A leased employee shall not be considered an Employee of the recipient if: (i)
such employee is covered by a money purchase pension plan providing: (1) a
nonintegrated employer contribution rate of at least 10 percent of Compensation,
as defined in Section 415(c)(3) of the Code, but including amounts contributed
pursuant to a salary reduction agreement which are from the Employee's gross
income under Section 125, Section 402(a)(8), Section 402(h) or Section 403(b) of
the Code, (2) immediate participation, and (3) full and immediate vesting; and
(ii) leased employees do not constitute more than 20 percent of the recipient's
non-highly compensated workforce.
15.07 If this Plan provides contributions or benefits for one or more
Owner-Employees who control both the business for which this Plan is established
and one or more other trades or businesses, this Plan and the plan established
for the other trades or businesses must, when looked at as a single Plan,
satisfy Sections 401(a) and (d) of the Code for the Employees of this and all
other trades or businesses. If the Plan provides contributions or benefits for
one or more Owner-Employees who control one or more other trades or businesses,
the employees of the other trades or businesses must be included in a Plan which
satisfies Sections 401(a) and (d) of the Code and which provides contributions
and benefits not less favorable than provided for Owner-Employees under this
Plan. If an individual is covered as an Owner-Employee under the plans of two or
more trades or businesses which are not controlled and the individual controls a
trade or business, then contributions or benefits of the employees under the
plan of the trades or businesses which are controlled must be as favorable as
those provided for him under the most favorable plan of the trade or business
which is not controlled. For purposes of the preceding sentences, an
Owner-Employee, or two or more Owner-Employees, will be considered to control a
trade or business if
50
the Owner-Employee, or two or more Owner-Employees together:
(a) own the entire interest in an unincorporated trade or business, or
(b) in the case of a partnership, own more than 50% of either the capital
interest or the profits interest in the partnership.
An Owner-Employee, or two or more Owner-Employees shall be treated as owning any
interest in a partnership which is owned, directly or indirectly, by a
partnership which such Owner-Employee, or such two or more Owner-Employees, are
considered to control within the meaning of the preceding sentence.
15.08 The Plan is not a contract of employment and participation in the Plan
will not give any Participant the right to be retained in the Employer's employ,
nor any right or claim to any benefit under the Plan, unless the right or claim
has specifically occurred under the Plan.
15.09 The Plan and Trust may be executed in two or more counterparts, any one of
which will be an original without reference to the others.
15.10 The Plan Administrator, Trustee and all other fiduciaries of the Plan
shall discharge their duties solely in the interest of Participants and their
beneficiaries and shall act with the care, skill, prudence and diligence under
the circumstances then prevailing that a prudent man acting in a like capacity
and familiar with such matters would use in the conduct of an enterprise of a
like character and with like aims.
15.11 The titles of articles, sections, subsections or Adoption Agreement items
are for general information only and neither this Plan nor the Adoption
Agreement shall be construed by reference thereto.
15.12 Any contribution made by the Employer because of a mistake of fact must be
returned to the Employer within one year of the contribution.
15.13 If the Employer's Plan fails to attain or retain qualification, such plan
will no longer participate in this regional prototype plan and will be
considered an individually designed plan.
ARTICLE XVI - DISTRIBUTIONS
Subject to Article XII - Joint and Survivor Annuity Requirements, the
requirements of this article shall apply to any distribution of a Participant's
interest and will take precedence over any inconsistent provisions of this Plan.
Unless otherwise specified, the provisions of this article apply to calendar
years beginning after December 31, 1984.
All distributions required under this article shall be determined and made in
accordance with the proposed regulations under Section 401(a)(9) of the Code,
including the minimum distribution incidental benefit requirement of Section
1.401(a)(9)-2 of the proposed regulations.
51
16.01 As of the first distribution calendar year, distributions, if not made in
a single-sum, may only be made over one of the following periods (or a
combination thereof):
(a) the life of the Participant;
(b) the life of the Participant and designated beneficiary;
(c) a period certain not extending beyond the life expectancy of the
Participant; or
(d) a period certain not extending beyond the joint and last survivor expectancy
of the Participant and a designated beneficiary.
16.02 Determination of amount to be distributed each year. If the Participant's
interest is to be distributed in other than a single sum, the following minimum
distribution rules shall apply on or after the Required Beginning Date:
Individual Account.
(a) If a Participant's benefit is to be distributed over
(i) a period not extending beyond the life expectancy of the Participant or the
joint life and last survivor expectancy of the Participant and the Participant's
designated beneficiary or
(ii) a period not extending beyond the life expectancy of the designated
beneficiary, the amount required to be distributed for each calendar year,
beginning with distributions for the first distribution calendar year, must at
least equal the quotient obtained by dividing the Participant's benefit by the
applicable life expectancy.
(b) For calendar years beginning before January 1, 1989, if the Participant's
spouse is not the designated beneficiary, the method of distribution selected
must assure that at least 50% of the present value of the amount available for
distribution is paid within the life expectancy of the Participant.
(c) For the calendar years beginning after December 31, 1988, the amount to be
distributed each year, beginning with distributions for the first distribution
calendar year shall not be less than the quotient obtained by dividing the
Participant's benefit by the lesser of (i) the applicable life expectancy or
(ii) if the Participant's spouse is not the designated beneficiary, the
applicable divisor determined from the table set forth in Q&A-4 of Section
1.401(a)(9)-2 of the proposed regulations. Distributions after the death of the
Participant shall be distributed using the applicable life expectancy in section
16.05(a) below as the relevant divisor without regard to proposed regulations
Section 1.401(a)(9)-2.
(d) The minimum distribution required for the Participant's first distribution
calendar year must be made on or before the Participant's Required Beginning
Date. The minimum distribution for other calendar years, including the minimum
distribution for the distribution calendar year in which the Employee's Required
52
Beginning Date occurs, must be made on or before December 31 of that
distribution calendar year.
16.03 If the Participant's benefit is distributed in the form of an annuity
purchased from an insurance company, distributions thereunder shall be made in
accordance with the requirements of Section 401(a)(9) of the Code and the
proposed regulations thereunder.
16.04 Death Distribution Provisions.
(a) Distribution beginning before death. If the Participant dies after
distribution of his or her interest has begun, the remaining portion of such
interest will continue to be distributed at least as rapidly as under the method
of distribution being used prior to the Participant's death.
(b) Distribution beginning after death. If the Participant dies before
distribution of his or her interest begins, distribution of the Participant's
entire interest shall be completed by December 31 of the calendar year
containing the fifth anniversary of the Participant's death except to the extent
that an election is made to receive distributions in accordance with (i) or (ii)
below:
(i) if any portion of the Participant's interest is payable to a designated
beneficiary, distributions may be made over the life or over a period certain
not greater than the life expectancy of the designated beneficiary commencing on
or before December 31 of the calendar year immediately following the calendar
year in which the Participant died;
(ii) if the designated beneficiary is the Participant's surviving spouse, the
date distributions are required to begin in accordance with (i) above shall not
be earlier than the later of (A) December 31 of the calendar year immediately
following the calendar year in which the Participant died and (B) December 31 of
the calendar year in which the Participant would have attained age 70 1/2.
If the Participant has not made an election pursuant to this section by the time
of his or her death, the Participant's designated beneficiary must elect the
method of distribution no later than the earlier of (1) December 31 of the
calendar year in which distributions would be required to begin under this
section, or (2) December 31 of the calendar year which contains the fifth
anniversary of the date of death of the Participant. If the Participant has no
designated beneficiary, or if the designated beneficiary does not elect a method
of distribution, distribution of the Participant's entire interest must be
completed by December 31 of the calendar year containing the fifth anniversary
of the Participant's death.
(c) For purposes of section 16.04(b) above, if the surviving spouse dies after
the Participant, but before payments to such spouse begin, the provisions of
section 16.04(b), with the exception of paragraph (ii) therein, shall be applied
as if the surviving spouse were the Participant.
(d) For purposes of this section 16.04, any amount paid to a child of the
Participant will be treated as if it had been paid to the surviving spouse if
the amount becomes payable to the surviving spouse when the child reaches the
age of majority.
53
(e) For purposes of this section, distribution of a Participant's interest is
considered to begin on the Participant's required beginning date [or, if section
16.04(c) above is applicable, the date distribution is required to begin to the
surviving spouse pursuant to section 16.04(b) above]. If distribution in the
form of an annuity irrevocably commences to the Participant before the required
beginning date, the date distribution is considered to begin is the date
distribution actually commences.
16.05 Definitions
(a) Applicable Life Expectancy. The life expectancy (or joint and last survivor
expectancy) calculated using the attained age of the Participant (or designated
beneficiary) as of the Participant's (or designated beneficiary's) birthday in
the applicable calendar year reduced by one for each calendar year which has
elapsed since the date life expectancy was first calculated. If life expectancy
is being recalculated, the applicable life expectancy shall be the life
expectancy as so recalculated. The applicable calendar year shall be the first
distribution calendar year, and if life expectancy is being recalculated such
succeeding calendar year.
(b) Designated Beneficiary. The individual who is designated as the beneficiary
under the Plan in accordance with section 401(a)(9) of the Code and the
regulations thereunder.
(c) Distribution Calendar Year. A calendar year for which a minimum distribution
is required. For distributions beginning before the Participant's death, the
first distribution calendar year is the calendar year immediately preceding the
calendar year which contains the Participant's required beginning date. For
distributions beginning after the Participant's death, the first distribution
calendar year is the calendar year in which distributions are required to begin
pursuant to section 16.04 above.
(d) Life Expectancy. Life expectancy and joint and last survivor expectancy are
computed by use of the expected return multiples in Tables V and VI of Section
1.72-9 of the Income Tax Regulations.
Unless otherwise elected by the Participant (or spouse, in the case of
distributions described in section 16.04(b)(ii) above) by the time distributions
are required to begin, life expectancies shall be recalculated annually. Such
election shall be irrevocable as to the Participant (or spouse) and shall apply
to all subsequent years. The life expectancy of a nonspouse beneficiary may not
be recalculated.
(e) Participant's Benefit.
(i) The account balance as of the last Valuation Date in the calendar year
immediately preceding the distribution calendar year (valuation calendar year)
increased by the amount of any contributions or forfeitures allocated to the
account balance as of dates in the valuation calendar year after the valuation
date and decreased by distributions made in the valuation calendar year after
the Valuation Date.
54
(ii) Exception for second distribution calendar year. For purposes of paragraph
(i) above, if any portion of the minimum distribution for the first distribution
calendar year is made in the second distribution calendar year on or before the
Required Beginning Date, the amount of the minimum distribution made in the
second distribution calendar year shall be treated as if it had been made in the
immediately preceding distribution calendar year.
(f) Required Beginning Date.
(i) General rule. The required beginning date of a Participant is the first day
of April of the calendar year following the calendar year in which the
Participant attains age 70 1/2.
(ii) Transitional rule. The required beginning date of a Participant who attains
age 70 1/2 before January 1, 1988, shall be determined in accordance with (A) or
(B) below:
(A) Non-5-percent owners. The required beginning date of a Participant who is
not a "5-percent owner" [as defined in (iii) below] is the first day of April of
the calendar year following the calendar year in which the later of retirement
or attainment of age 70 1/2 occurs.
(B) 5-percent owners. The required beginning date of a Participant who is a
5-percent owner during any year beginning after December 31, 1979, is the first
day of April following the later of:
(1) the calendar year in which the Participant attains age 70 1/2, or
(2) the earlier of the calendar year with or within which ends the Plan Year in
which the Participant becomes a 5-percent owner, or the calendar year in which
the Participant retires.
The required beginning date of a Participant who is not a 5-percent owner who
attains age 70 1/2 during 1988 and who has not retired as of January 1, 1989, is
April 1, 1990.
(iii) 5-percent owner. A Participant is treated as a 5-percent owner for
purposes of this section if such Participant is a 5-percent owner as defined in
Section 416(i) of the Code (determined in accordance with Section 416 but
without regard to whether the Plan is Top-Heavy) at any time during the Plan
Year ending with or within the calendar year in which such owner attains age 66
1/2 or any subsequent Plan Year.
(iv) Once distributions have begun to a 5-percent owner under this section, they
must continue to be distributed, even if the Participant ceases to be a
5-percent owner in a subsequent year.
Transitional Rule
16.06 Notwithstanding the other requirements of this article and subject to the
provisions of Article XII - Joint and Survivor Annuity Requirements,
distribution on behalf of any Employee, including a 5-percent owner, may be made
in accordance
55
with all of the following requirements (regardless of when such distribution
commences):
(a) The distribution by the Trust Fund is one which would not have disqualified
such trust under Section 401(a)(9) of the Internal Revenue Code as in effect
prior to amendment by the Deficit Reduction Act of 1984.
(b) The distribution is in accordance with a method of distribution designated
by the Employee whose interest in the Trust Fund is being distributed or, if the
Employee is deceased, by a beneficiary of such Employee.
(c) Such designation was in writing, was signed by the Employee or beneficiary,
and was made before January 1, 1984.
(d) The Employee had accrued a benefit under the Plan as of December 31, 1983.
(e) The method of distribution designated by the Employee or the beneficiary
specifies the time at which distribution will commence, the period over which
distributions will be made, and in the case of any distribution upon the
Employee's death, the beneficiaries of the Employee listed in order of priority.
16.07 A distribution upon death will not be covered by this transitional rule
unless the information in the designation contains the required information
described above with respect to the distributions to be made upon the death of
the employee.
16.08 For any distribution which commences before January 1, 1984, but continues
after December 31, 1983, the Employee, or the beneficiary, to whom such
distribution is being made, will be presumed to have designated the method of
distribution under which the distribution is being made if the method of
distribution was specified in writing and the distribution satisfies the
requirements in sections 16.06(a) and (e) above.
16.09 If a designation is revoked, any subsequent distribution must satisfy the
requirements of Section 401(a)(9) of the Code and the proposed regulations
thereunder. If a designation is revoked subsequent to the date distributions are
required to begin, the Trust Fund must distribute by the end of the calendar
year following the calendar year in which the revocation occurs the total amount
not yet distributed which would have been required to have been distributed to
satisfy Section 401(a)(9) of the Code and the proposed regulations thereunder,
but for the Section 242(b)(2) election. For calendar years beginning after
December 31, 1988, such distributions must meet the minimum distribution
incidental benefit requirements in Section 1.401(a)(9)-2 of the proposed
regulations. Any changes in the designation will be considered to be a
revocation of the designation. However, the mere substitution or addition of
another beneficiary (one not named in the designation) under the designation
will not be considered to be a revocation of the designation, so long as such
substitution or addition does not alter the period over which distributions are
to be made under the designation, directly or indirectly (for example, by
altering the relevant measuring life). In the case in which an amount is
transferred or rolled over from one plan to another plan, the rules in Q and A
J-2 and Q and A J-3 of Section 1.401(a)(9)-1 of the proposed regulations shall
apply.
56
16.10 The entire interest of a Participant must be distributed or begin to be
distributed no later than the Participant's required beginning date.
16.11 If this is a profit sharing plan, a Participant with a minimum of five (5)
years of participation in this Plan and who has a 100% non-forfeitable interest
in his/her Employer contributions account balance, may request a one-time
distribution of his/her entire vested interest in the Plan upon the attainment
of age 59 1/2. Such distribution will be made as soon as administratively
possible and shall reflect the value of such Participant's account balance as of
the last Valuation Date. Such "in service" distribution shall require the
written consent of the Participant's spouse (if applicable).
16.12 A Participant may withdraw all or any part of the value of his/her
nondeductible voluntary contributions upon written request to the Plan
Administrator. A Participant who elects an in service withdrawal of his/her
nondeductible voluntary contributions shall not be permitted to make further
nondeductible voluntary contributions for a period of one year from the date of
the withdrawal. A request to withdraw such contributions must be consented to by
the Participant's spouse. The consent shall comply with the requirements of
section 11.04(c), but shall be deemed to meet any requirements contained in such
section relating to the consent of any subsequent spouse.
ARTICLE XVII - CASH OR DEFERRED ARRANGEMENT
If the Employer has elected, in the Adoption Agreement, to include a Cash or
Deferred Arrangement (CODA) as part of this Plan, then the following provisions
shall apply. Only a profit-sharing plan can include a CODA.
17.01 An Employee who is eligible to participate in the Cash or Deferred
Arrangement (CODA) may elect to have the Employer make payments either:
(a) as contributions to the Trust Fund under the Plan in accordance with a
salary reduction agreement, or some other deferral mechanism (as selected in the
Adoption Agreement); or
(b) to the Participant directly in cash.
Each Participant will have the opportunity to elect to defer a portion of his or
her Compensation as often as provided for in the Adoption Agreement. Such
election may not be made retroactively. A Participant's election to commence
Elective Deferrals shall remain in effect until modified or terminated.
No Participant shall be permitted to have Elective Deferrals made under this
Plan, or any other qualified plan maintained by the Employer, during any taxable
year, in excess of the dollar limitation contained in Section 402(g) of the Code
in effect at the beginning of such taxable year.
17.02 A Participant may assign to this Plan any Excess Elective Deferrals made
during a taxable year of the Participant by notifying the Plan Administrator on
or before the date specified in the Adoption Agreement of the amount of the
57
Excess Elective Deferrals to be assigned to the Plan. A Participant is deemed to
notify the Plan Administrator of any Excess Elective Deferrals that arise by
taking into account only those Elective Deferrals made to this Plan and any
other plans of this Employer.
Notwithstanding any other provision of the Plan, Excess Elective Deferrals, plus
any income and minus any loss allocable thereto, shall be distributed no later
than April 15 to any Participant to whose account Excess Elective Deferrals were
assigned for the preceding year and who claims Excess Elective Deferrals for
such taxable year.
Definitions:
(a) "Elective Deferrals" shall mean any Employer contributions made to the Plan
at the election of the Participant, in lieu of cash Compensation, and shall
include contributions made pursuant to a salary reduction agreement or other
deferral mechanism. With respect to any taxable year, a Participant's Elective
Deferral is the sum of all Employer contributions made on behalf of such
Participant pursuant to an election to defer under any qualified CODA as
described in Section 401(k) of the Code, any simplified employee pension cash or
deferred arrangement as described in Section 402(h)(1)(B), any eligible deferred
compensation plan under Section 457, any plan as described under Section
501(c)(18), and any Employer contributions made on the behalf of a Participant
for the purchase of an annuity contract under Section 403(b) pursuant to a
salary reduction agreement. Elective Deferrals shall not include any deferrals
properly distributed as excess Annual Additions.
(b) "Excess Elective Deferrals" shall mean those Elective Deferrals that are
includable in a Participant's gross income under Section 402(g) of the code to
the extent such Participant's Elective Deferrals for a taxable year exceed the
dollar limitation under such Code section. Excess Elective Deferrals shall be
treated as Annual Additions under the Plan, unless such amounts are distributed
no later than the first April 15th following the close of the Participant's
taxable year.
Determination of income or loss: Excess Elective Deferrals shall be adjusted for
any income or loss up to the date of distribution. The income or loss allocable
to Excess Elective Deferrals is the sum of: (i) income or loss allocable to the
Participant's Elective Deferral account for the taxable year multiplied by a
fraction, the numerator of which is such Participant's Excess Elective Deferrals
for the year and the denominator is the Participant's account balance
attributable to Elective Deferrals without regard to any income or loss
occurring during such taxable year; and (ii) ten percent of the amount
determined under (i) multiplied by the number of whole calendar months between
the end of the Participant's taxable year and the date of distribution, counting
the month of distribution if distribution occurs after the 15th of such month.
Determination of income (simplified method): The income allocable to (i) excess
contributions; (ii) excess aggregate contributions; or (iii) excess deferrals is
equal to the sum of the allocable gain or loss for the Plan Year [(i) and (ii)]
or taxable year of the individual (iii) and the allocable gain or loss for the
period between the end of the Plan Year [(i) or (ii)] or taxable year (iii) and
58
the date of distribution (the "gap period").
Such income is allocated to (i) excess contributions; (ii) excess aggregate
contributions; or (iii) excess deferrals by multiplying the income allocable to
(i) Employer contributions; (ii) Employee Contibutions, Matching Contributions;
or amounts treated as Matching Contributions; or (iii) Elective Deferrals by a
fraction. The numerator of which is the (i) Excess Contributions; (ii) Excess
Aggregate Contributions for the Plan Year; or (iii) Excess Deferrals for the
Employee's taxable year. The denominator of the fraction is equal to the sum
of:
(A) The total account balance of the Employee attributable to (i) Employer
Contributions; (ii) Employee Contributions, Matching Contributions or amounts
treated as Matching Contributions; or (iii) Elective Deferrals as of the
beginning of the Plan Year [(i) and (ii)] or Employee's taxable year (iii), plus
(B) The Employee's (i) Employer Contributions or (ii) Employee Contributions,
Matching Contributions or amounts treated as Matching Contributions for the Plan
Year or (iii) Elective Deferrals for the Employee's taxable year and the gap
period.
Safe harbor method of allocating gap period income: The income on (i) Excess
Contributions; (ii) Excess Aggregate Contributions; or (iii) Excess Deferrals
for the gap period is equal to 10 percent of the income allocable to (i) Excess
Contributions or (ii) Excess Aggregate Contributions for the Plan Year or (iii)
Excess Deferrals for the Employee's taxable year, as determined above,
multiplied by the number of calendar months that have elapsed since the end of
the Plan Year [(i) and (ii)] or taxable year (iii). For purposes of calculating
the number of calendar months that have elapsed under this method, a corrective
distribution that is made on or before the fifteenth day of the month is treated
as made on the last day of the preceding month. A distribution make after the
fifteenth day of the month is treated as made on the first day of the next
month.
17.03 The Actual Deferral Percentage (hereinafter "ADP") for Participants who
are Highly Compensated Employees for each Plan Year and the ADP for Participants
who are Non-highly Compensated Employees for the same Plan Year must satisfy one
of the following tests:
(a) The ADP for Participants who are Highly Compensated Employees for the Plan
Year shall not exceed the ADP for Participants who are Non-highly Compensated
Employees for the same Plan Year multiplied by 1.25; or
(b) The ADP for Participants who are Highly Compensated Employees for the Plan
Year shall not exceed the ADP for Participants who are Non-highly Compensated
Employees for the same Plan Year multiplied by 2.0, provided that the ADP for
Participants who are Highly Compensated Employees does not exceed the ADP for
Participants who are Non-highly Compensated Employees by more than two (2)
percentage points.
Special Rules:
(c) The ADP for any Participant who is a Highly Compensated Employee for the
Plan Year and who is eligible to have Elective Deferrals (and Qualified
Non-elective
59
Contributions or Qualified Matching Contributions, or both, if treated as
Elective Deferrals for purposes of the ADP test) allocated to his or her
accounts under two or more arrangements described in Section 401(k) of the Code,
that are maintained by the Employer, shall be determined as if such Elective
Deferrals (and, if applicable, such Qualified Non-elective Contributions or
Qualified Matching Contributions, or both) were made under a single arrangement.
If a Highly Compensated Employee participates in two or more cash or deferred
arrangements that have different Plan Years, all cash or deferred arrangements
ending with or within the same calendar year shall be treated as a single
arrangement.
(d) In the event that this Plan satisfies the requirements of Sections 401(k),
401(a)(4), or 410(b) of the Code only if aggregated with one or more other
plans, or if one or more other plans satisfy the requirements of such sections
of the Code only if aggregated with this Plan, then this section shall be
applied by determining the ADP of Employees as if all such plans were a single
plan. For Plan Years beginning after December 31, 1989, plans may be aggregated
in order to satisfy Section 401(k) of the Code only if they have the same Plan
Year.
(e) For purposes of determining the ADP of a Participant who is a 5-percent
owner or one of the ten most highly-paid Highly Compensated Employees, the
Elective Deferrals (and Qualified Non-elective Contributions or Qualified
Matching Contributions, or both, if treated as Elective Deferrals for purposes
of the ADP test) and Compensation of such Participant shall include the Elective
Deferrals (and, if applicable, Qualified Non-elective Contributions and
Qualified Matching Contributions, or both) and Compensation for the Plan Year of
Family Members (as defined in Section 414(q)(6) of the Code). Family Members,
with respect to such Highly Compensated Employees, shall be disregarded as
separate Employees in determining the ADP both for Participants who are
non-highly Compensated Employees and for Participants who are Highly Compensated
Employees.
(f) For purposes of determining the ADP test, Elective Deferrals, Qualified
Non-elective Contributions and Qualified Matching Contributions must be made
before the last day of the twelve-month period immediately following the Plan
Year to which contributions relate.
(g) The Employer shall maintain records sufficient to demonstrate satisfaction
of the ADP test and the amount of Qualified Non-elective Contributions or
Qualified Matching Contributions, or both, used in such test.
(h) The determination and treatment of the ADP amounts of any Participant shall
satisfy such other requirements as may be prescribed by the secretary of the
Treasury.
Definitions:
(i) "Actual Deferral Percentage" shall mean, for a specified group of
Participants for a Plan Year, the average of the ratios (calculated separately
for each Participant in such group) of (A) the amount of Employer contributions
actually paid over to the Trust on behalf of such Participant for the Plan Year
to (B) the Participant's Compensation for such Plan Year. Employer contributions
on behalf of any Participant shall include: (C) any Elective Deferrals made
60
pursuant to the Participant's deferral election, (including Excess Elective
Deferrals of Highly Compensated Employees), but excluding (D) Excess Elective
Deferrals of NonHighly Compensated Employees that arise solely from Elective
Deferrals made under the Plan or plans of this Employer and (E) including
Elective Deferrals that are taken into account in the Contribution Percentage
test (provided the ADP test is satisfied both with and without exclusion of
these Elective Deferrals); and (F) at the election of the Employer, Qualified
Non-elective Contributions and Qualified Matching Contributions. For purposes of
computing Actual Deferral Percentages, an Employee who would be a Participant
but for the failure to make Elective Deferrals shall be treated as a Participant
on whose behalf no Elective Deferrals are made.
17.04 Notwithstanding any other provision of this Plan, Excess Contributions,
plus any income and minus any loss allocable thereto, shall be distributed no
later than the last day of each Plan Year to Participants to whose accounts such
Excess Contributions were allocated for the preceding Plan Year. If such excess
amounts are distributed more than 2 1/2 months after the last day of the Plan
Year in which such excess amounts arose, a ten (10) percent excise tax will be
imposed on the Employer maintaining the Plan with respect to such amounts. Such
distributions shall be made to Highly Compensated Employees on the basis of the
respective portions of the Excess Contributions attributable to each of such
Employees. Excess Contributions of Participants who are subject to the family
member aggregation rules shall be allocated among the family members in
proportion to the Elective Deferrals (and amounts treated as Elective Deferrals)
of each family member that is combined to determine the combined ADP.
Excess Contributions (including the amounts recharacterized) shall be treated as
annual additions under the Plan.
Determination of Income or Loss: Excess Contributions shall be adjusted for any
income or loss up to the date of distribution. The income or loss allocable to
Excess Contributions is the sum of: (a) income or loss allocable to the
Participant's Elective Deferral account (and, if applicable, the Qualified
Non-elective Contribution account or the Qualified Matching Contributions
account or both) for the Plan Year multiplied by a fraction, the numerator of
which is such Participant's Excess Contributions for the year and the
denominator is the Participant's account balance attributable to Elective
Deferrals (and Qualified Non-Elective Contributions or Qualified Matching
Contributions, or both, if any of such contributions are included in the ADP
test) without regard to any income or loss occurring during such Plan Year; and
(b) ten percent of the amount determined under (a) multiplied by the number of
whole calendar months between the end of the Plan Year and the date of
distribution, counting the month of distribution if distribution occurs after
the 15th of such month.
Accounting for Excess Contributions: Excess Contributions shall be distributed
from the Participant's Elective Deferral account and Qualified Matching
Contribution account (if applicable) in proportion to the Participant's Elective
Deferrals and Qualified Matching Contributions (to the extent used in the ADP
test) for the Plan Year. Excess Contributions shall be distributed from the
Participant's Qualified Non-elective Contribution account only to the extent
that such Excess Contributions exceed the balance in the Participant's Elective
Deferral account and Qualified Matching Contributions account.
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Definition:
(c) "Excess Contributions" shall mean, with respect to any Plan Year, the excess
of:
(i) The aggregate amount of Employer contributions actually taken into account
in computing the ADP of Highly Compensated Employees for such Plan Year, over
(ii) The maximum amount of such contributions permitted by the ADP test
(determined by reducing contributions made on behalf of Highly Compensated
Employees in order of the ADP's beginning with the highest of such percentages).
17.05 A Participant may treat his or her Excess Contributions as an amount
distributed to the Participant and then contributed by the Participant to the
Plan. Recharacterized amounts will remain nonforfeitable and subject to the same
distribution requirements as Elective Deferrals. Amounts may not be
recharacterized by a Highly Compensated Employee to the extent that such amount
in combination with other Employee Contributions made by that Employee would
exceed any stated limit under the Plan on Employee Contributions.
Recharacterization must occur no later than two and one-half months after the
last day of the Plan Year in which such Excess Contributions arose and is deemed
to occur no earlier than the date the last Highly Compensated Employee is
informed in writing of the amount recharacterized and the consequences thereof.
Recharacterized amounts will be taxable to the Participant for the Participant's
tax year in which the Participant would have received them in cash.
17.06 If elected by the Employer in the Adoption Agreement, the Employer will
make Matching Contributions to the Plan.
17.07 Matching Contributions shall be vested in accordance with section A-17.07
of the Adoption Agreement. In any event, Matching Contributions shall be fully
vested at Normal Retirement Age, upon the complete or partial termination of the
Profit Sharing Plan or upon the complete discontinuance of Employer
contributions.
Forfeitures of Matching Contributions, other than Excess Aggregate
Contributions, shall be made in accordance with section 7.03.
17.08 If elected by the Employer in the Adoption Agreement, the Employer will
make Qualified Matching Contributions to the Plan Qualified Matching
Contributions shall mean Matching Contributions which are subject to the
distribution and nonforfeitability requirements under Section 401(k) of the Code
when made.
17.09 The ACP for Participants who are Highly Compensated Employees for each
Plan Year and the ACP for Participants who are Non-highly Compensated Employees
for the same Plan Year must satisfy one of the following tests:
(a) The ACP for Participants who are Highly Compensated Employees for the Plan
Year shall not exceed the ACP for Participants who are Non-highly Compensated
Employees for the same Plan Year multiplied by 1.25; or
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(b) The ACP for Participants who are Highly Compensated Employees for the Plan
Year shall not exceed the ACP for Participants who are Non-highly Compensated
Employees for the same Plan Year multiplied by two (2), provided that the ACP
for Participants who are Highly Compensated Employees does not exceed the ACP
for Participants who are Non-highly Compensated Employees by more than two (2)
percentage points.
Special Rules:
(c) Multiple Use: If one or more Highly Compensated Employees participate in
both a CODA and a Plan subject to the ACP test maintained by the Employer and
the sum of the ADP and ACP of those Highly Compensated Employees subject to
either or both tests exceeds the Aggregate Limit, then the ACP of those Highly
Compensated Employees who also participate in a CODA will be reduced (beginning
with such Highly Compensated Employee whose ACP is the Highest) so that the
limit is not exceeded. The amount by which each Highly Compensated Employee's
Contribution Percentage Amounts is reduced shall be treated as an Excess
Aggregate Contribution. The ADP and ACP of the Highly Compensated Employees are
determined after any corrections required to meet the ADP and ACP tests.
Multiple use does not occur if both the ADP and ACP of the Highly Compensated
Employees does not exceed 1.25 multiplied by the ADP and ACP of the Nonhighly
Compensated Employees.
(d) For purposes of this section, the Contribution Percentage for any
Participant who is a Highly Compensated Employee and who is eligible to have
Contribution Percentage Amounts allocated to his or her account under two or
more plans described in Section 401(a) of the Code, or arrangements described in
Section 401(k) of the Code that are maintained by the Employer, shall be
determined as if the total of such Contribution Percentage Amounts was made
under each plan. If a Highly Compensated Employee participates in two or more
cash or deferred arrangements ending with or within the same calendar year shall
be treated as a single arrangement. Notwithstanding the foregoing, certain plans
shall be treated as separate if mandatorily disaggregated under regulations
under Section 401(m) of the Code.
(e) In the event that this Plan satisfies the requirements of Sections 401(m),
401(a)(4) or 410(b) of the Code only if aggregated with one or more other plans,
or if one or more other plans satisfy the requirements of such sections of the
Code only if aggregated with this Plan, then this section shall be applied by
determining the Contribution Percentage of Employees as if all such plans were a
single plan. For Plan Years beginning after December 31, 1989, plans may be
aggregated in order to satisfy Section 401(m) of the Code only if they have the
same Plan Year.
(f) For purposes of determining the Contribution percentage of a Participant who
is a five-percent owner of one of the ten most highly-paid Highly Compensated
Employees, the Contribution Percentage Amounts and Compensation of such
Participant shall include the Contribution Percentage Amounts and Compensation
for the Plan Year of Family Members [as defined in Section 414(q)(6) of the
Code]. Family Members, with respect to Highly Compensated Employees, shall be
disregarded as separate Employees in determining the Contribution Percentage
both for Participants who are Non-highly Compensated Employees and for
Participants who are Highly Compensated Employees.
63
(g) For purposes of determining the Contribution Percentage test, Employee
Contributions are considered to have been made in the Plan Year in which
contributed to the trust. Matching Contributions and Qualified Non-elective
Contributions will be considered made for a Plan Year if made no later than the
end of the twelve-month period beginning on the day after the close of the Plan
Year.
(h) The Employer shall maintain records sufficient to demonstrate satisfaction
of the ACP test and the amount of Qualified Non-elective Contributions or
Qualified Matching Contributions, or both, used in such test.
(i) The determination and treatment of the Contribution Percentage of any
Participant shall satisfy such other requirements as may be prescribed by the
Secretary of the Treasury.
Definitions:
(j) "Aggregate Limit" shall mean the sum of (i) 125 percent of the greater of
the ADP of the Non-highly Compensated Employees for the Plan Year or the ACP of
Non-highly Compensated Employees under the plan subject to Code Section 401(m)
for the Plan Year beginning with or within the Plan Year of the CODA and (ii)
the lesser of 200% or two plus the lesser of such ADP or ACP.
(k) "Average Contribution Percentage" shall mean the average of the Contribution
Percentages of the Eligible Participants in a group.
(l) "Contribution Percentage" shall mean the ratio (expressed as a percentage)
of the Participant's Contribution Percentage Amounts to the Participant's
Compensation for the Plan Year (whether or not the Employee was a Participant
for the entire Plan Year).
(m) "Contribution Percentage Amounts" shall mean the sum of the Employee
Contributions, Matching Contributions, and Qualified Matching Contributions (to
the extent not taken into account for purposes of the ADP test) made under the
Plan on behalf of the Participant for the Plan Year. Such Contribution
Percentage Amounts shall not include Matching Contributions that are forfeited
either to correct Excess Aggregate Contributions or because the contributions to
which they relate are Excess Deferrals, Excess Contributions or Excess Aggregate
Contributions. If so elected in the Adoption Agreement the Employer may include
Qualified Non-elective Contributions in the Contribution Percentage Amounts.
The Employer also may elect to use Elective Deferrals in the Contribution
Percentage Amounts so long as the ADP test is met before the Elective Deferrals
are used in the ACP test and continues to be met following the exclusion of
those Elective Deferrals that are used to meet the ACP test.
(n) "Eligible Participant" shall mean any Employee who is eligible to make an
Employee Contribution, or an Elective Deferral (if the Employer takes such
contributions into account in the calculation of the Contribution Percentage),
or to receive a Matching Contribution (including forfeitures) or a Qualified
Matching Contribution. If an Employee Contribution is required as a condition of
participation in the Plan, any Employee who would be a Participant in the Plan
if
64
such Employee made such a contribution shall be treated as an eligible
Participant on behalf of whom no Employee Contributions are made.
(o) "Employee Contribution" shall mean any contribution made to the Plan by or
on behalf of a Participant that is included in the Participant's gross income in
the year in which made and that is maintained under a separate account to which
earnings and losses are allocated.
(p) "Matching Contribution" shall mean an Employer contribution made to this or
any other Defined Contribution Plan on behalf of a Participant on account of a
Participant's Elective Deferral, under a plan maintained by the Employer.
17.10 Notwithstanding any other provision of this Plan, Excess Aggregate
Contributions, plus any income and minus any loss allocable thereto, shall be
forfeited, if forfeitable, or if not forfeitable, distributed no later than the
last day of each Plan Year to Participants to whose accounts such Excess
Aggregate Contributions were allocated for the preceding Plan Year. Excess
Aggregate Contributions of Participants who are subject to the family member
aggregation rules shall be allocated among the family members in proportion to
the Employee and Matching Contributions (or amounts treated as Matching
Contributions) of each family member that is combined to determine the combined
ACP. If such Excess Aggregate Contributions are distributed more than 2 1/2
months after the last day of the Plan Year in which such excess amounts arose, a
(10) percent excise tax will be imposed on the Employer maintaining the Plan
with respect to those amounts. Excess Aggregate Contributions shall be treated
as annual additions under the Plan.
Determination of Income or Loss: Excess Aggregate Contributions shall be
adjusted for any income or loss up to the date of distribution. The income or
loss allocable to Excess Aggregate Contributions is the sum of: (a) income or
loss allocable to the Participant's Employee Contribution account, Matching
Contribution account (if any, and if all amounts therein are not used in the ADP
test) and, if applicable, Qualified Non-elective Contribution account and
Elective Deferral account for the Plan Year multiplied by a fraction, the
numerator of which is such Participant's Excess Aggregate Contributions for the
year and the denominator is the Participant's account balance(s) attributable to
Contribution Percentage Amounts without regard to any income or loss occurring
during the Plan Year; and (b) ten percent of the amount determined under (a)
multiplied by the number of whole calendar months between the end of the Plan
Year and the date of distribution, counting the month of distribution if
distribution occurs after the 15th of such month.
Forfeitures of Excess Aggregate Contributions: Forfeitures of Excess Aggregate
Contributions may either by reallocated to the accounts of Non-highly
Compensated Employees or applied to reduce Employer contributions, as elected by
the Employer in section A- 3.10 of the Adoption Agreement.
Accounting for Excess Aggregate Contributions: Excess Aggregate Contributions
shall be forfeited, if forfeitable or distributed on a pro-rata basis from the
Participant's Employee Contribution account, Matching Contribution account, and
Qualified Matching Contribution account (and, if applicable, the Participant's
Qualified Non-elective Contribution account or Elective Deferral account, or
both).
65
Definitions:
(c) "Excess Aggregate Contributions" shall mean, with respect to any Plan Year,
the excess of:
(i) The aggregate Contribution Percentage Amounts taken into account in
computing the numerator of the Contribution Percentage actually made on behalf
of Highly Compensated Employees for such Plan Year, over
(ii) the maximum Contribution Percentage Amounts permitted by the ACP test
(determined by reducing contributions made on behalf of Highly Compensated
Employees in order of their Contribution Percentages beginning with the highest
of such percentages).
Such determination shall be made after first determining Excess Elective
Deferrals pursuant to section 17.02 and then determining Excess Contributions
pursuant to section 17.04.
17.11 (a) The Employer may elect to make Qualified Non-elective Contributions
under the Plan on behalf of Employees as provided in the adoption agreement.
(b) In addition, in lieu of distributing Excess Contributions as provided in
section 17.04 of the Plan, or Excess Aggregate Contributions as provided in
section 17.10 of the Plan, and to the extent elected by the Employer in the
Adoption Agreement, the Employer may make Qualified Non-elective Contributions
on behalf of Non-highly Compensated Employees that are sufficient to satisfy
either the Actual Deferral Percentage test or the Average Contribution
Percentage test, or both, pursuant to regulations under the Code.
Definition:
(c) "Qualified Non-elective Contributions" shall mean contributions (other than
Matching Contributions or Qualified Matching Contributions) made by the Employer
and allocated to Participants' accounts that the Participants may not elect to
receive in cash until distributed from the Plan; that are nonforfeitable when
made; and that are distributable only in accordance with the distribution
provisions that are applicable to Elective Deferrals and Qualified Matching
Contributions.
17.12 The Participant's accrued benefit derived from Elective Deferrals,
Qualified Non-elective Contributions, Employee Contributions, and Qualified
Matching Contributions is nonforfeitable. Separate accounts for Elective
Deferrals, Qualified Non-elective Contributions, Employee Contributions,
Matching Contributions, and Qualified Matching Contributions will be maintained
for each Participant. Each account will be credited with the applicable
contributions and earnings thereon.
17.13 Elective Deferrals, Qualified Non-elective Contributions, and Qualified
Matching Contributions, and income allocable to each are not distributable to a
Participant or his or her beneficiary or beneficiaries, in accordance with such
Participant's or beneficiary or beneficiaries election, earlier than upon
separation from service, death, or disability.
66
Such amounts may also be distributed upon:
(a) Termination of the Plan without the establishment of another Defined
Contribution Plan, other than an employee stock ownership plan (as defined in
Section 4975 (e) or Section 409 of the Code) or a simplified employee pension
plan as defined in Section 408(k).
(b) The disposition by a corporation to an unrelated corporation of
substantially all of the assets (within the meaning of Section 409(d)(2) of the
Code) used in a trade or business of such corporation if such corporation
continues to maintain this Plan after the disposition, but only with respect to
Employees who continue employment with the corporation acquiring such assets.
(c) The disposition by a corporation to an unrelated entity of such
corporation's interest in a subsidiary (within the meaning of Section 409(d)(3)
of the Code) if such corporation continues to maintain this Plan, but only with
respect to Employees who continue employment with such subsidiary.
(d) The attainment of age 59 1/2 in the case of a profit-sharing plan.
(e) The hardship of the Participant as described in section 17.14.
All distributions that may be made pursuant to one or more of the forgoing
distributable events are subject to the spousal and Participant consent
requirements (if applicable) contained in Sections 401(a)(11) and 417 of the
Code. In addition, distributions after March 31, 1988, that are triggered by any
of the first three events enumerated above must be made in a lump sum.
17.14 Distribution of Elective Deferrals (and any earnings credited to a
Participant's account as of the end of the last Plan Year ending before July 1,
1989) may be made to a Participant in the event of hardship. For the purpose of
this section, hardship is defined as an immediate and heavy financial need of
the Employee where such employee lacks other available resources. Hardship
distributions are subject to the spousal consent requirements contained in
Sections 401(a)(911) and 417 of the Code.
Special rules:
(a) The following are the only financial needs considered immediate and heavy:
deductible medical expenses [within the meaning of Section 213(d) of the Code]
of the Employee, the Employee's spouse, children, or dependents; the purchase
(excluding mortgage payments) of a principal residence for the Employee; payment
of tuition and related educational fees for the next 12 months of post-secondary
education for the Employee, the Employee's spouse, children or dependents; or
the need to prevent the eviction of the Employee from, or a foreclosure on the
mortgage of, the Employee's principal residence.
(b) A distribution will be considered as necessary to satisfy an immediate and
heavy financial need of the Employee only if:
(i) The Employee has obtained all distributions, other than hardship
distributions, and all non taxable loans under all plans maintained by the
Employer;
67
(ii) All plans maintained by the Employer provide that the Employee's Elective
Deferrals (and Employee Contributions) will be suspended for twelve months after
the receipt of the hardship distributions;
(iii) The distribution is not in excess of the amount of an immediate and heavy
financial need (including amounts necessary to pay any federal, state or local
income taxes or penalties reasonably anticipated to result from the
distribution); and all plans maintained by the Employer provide that the
Employee may not make Elective Deferrals for the Employee's taxable year
immediately following the taxable year of the hardship distribution in excess of
the applicable limit under Section 402(g) of the Code for such taxable year less
the amount of such Employee's Elective Deferrals for the taxable year of the
hardship distribution.
17.15 Neither Elective Deferrals nor Matching Contributions may be taken into
account for the purpose of satisfying the minimum top-heavy contribution
requirement.
ARTICLE XVIII - ROLLOVER PROVISIONS
18.01 This Article applies to distributions made on or after January 1, 1993.
Notwithstanding any provision of the Plan to the contrary that would otherwise
limit a Distributee's election under this Article a Distributee may elect, at
the time and in the manner prescribed by the Plan Administrator, to have any
portion of an eligible rollover distribution paid directly to an eligible
retirement plan specified by the Distributee in a Direct Rollover.
18.02 Definitions
(a) Eligible Rollover distribution: An eligible rollover distribution is any
distribution of all or any portion of the balance to the credit of the
Distributee, except that an Eligible Rollover Distribution does not include: any
distribution that is one of a series of substantially equal periodic payments
(not less frequently than annually) made for the life (or life expectancy) of
the Distributee or the joint lives (or joint life expectancies) of the
Distributee and the Distributee's designated Beneficiary, or for a specified
period of ten years or more; any distribution to the extent such distribution is
required under Section 401(a)(9) of the Code; and the portion of any
distribution that is not includible in gross income (determined without regard
to the exclusion for net unrealized appreciation with respect to Employer
securities).
(b) Eligible Retirement Plan: An Eligible Retirement Plan is an individual
retirement account described in Section 408 (a) of the Code, an individual
retirement annuity described in Section 408(b) of the Code, and annuity plan
described in Section 403 (a) of the Code, or a qualified trust described in
Section 401(a) of the Code, that accepts the Distributee's Eligible Rollover
Distribution. However, in the case of an Eligible Rollover Distribution to the
surviving spouse, an Eligible Retirement Plan is an individual retirement
account or individual retirement annuity.
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(c) Distributee: A Distributee includes an Employee or former Employee. In
addition, the Employee's or former Employee's surviving spouse and the
Employee's or former Employee's spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as defined in Section 414(p)
of the Code, are distributees with regard to the interest of the spouse or
former spouse.
(d) Direct rollover: A Direct Rollover is a payment by the plan to the eligible
retirement plan specified by the Distributee.
