ALLIANCE BENEFIT GROUP OF ILLINOIS
DEFINED CONTRIBUTION PROTOTYPE PLAN AND TRUST AGREEMENT
SPONSORED BY
ALLIANCE BENEFIT GROUP OF ILLINOIS
BASIC PLAN DOCUMENT #01
December, 2001
TABLE OF CONTENTS
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ARTICLE 1
PLAN ELIGIBILITY AND PARTICIPATION
This
Article contains the rules for determining when an Employee becomes eligible to
participate in the Plan. Part 1 and Part 2 of the Agreement contain specific
elections for applying these Plan eligibility and participation rules. Article
6 of this BPD and Part 7 of the Agreement contain special service crediting
elections to override the default provisions under this Article.
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1.1 |
Eligibility
for Plan Participation. An Employee who satisfies the Plan’s
minimum age and service conditions (as elected in Part 1, #5 of the
Agreement) is eligible to participate in the Plan beginning on the Entry Date
selected in Part 2 of the Agreement, unless he/she is specifically excluded
from participation under Part 1, #4 of the Agreement. An Employee who has
satisfied the Plan’s minimum age and service conditions and is employed on
his/her Entry Date is referred to as an Eligible Participant. (See Section
1.7 below for the rules regarding an Employee who terminates employment prior
to his/her Entry Date.) An Employee who is excluded from participation under
Part 1, #4 of the Agreement is referred to as an Excluded Employee. |
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1.2 |
Excluded
Employees. Unless specifically excluded under Part 1, #4 of the Agreement, all
Employees of the Employer are entitled to participate under the Plan upon
becoming an Eligible Participant. Any Employee who is excluded under Part 1,
#4 of the Agreement may not participate under the Plan, unless such Excluded
Employee subsequently becomes a member of an eligible class of Employees.
(See Section 1.8(b) of this Article for rules regarding an Excluded
Employee’s entry into the Plan if he/she subsequently becomes a member of an
eligible class of Employees.) |
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The Employer may elect
under Part 1, #4 of the 401(k) Agreement to exclude different groups of
Employees for Section 401(k) Deferrals, Employer Matching Contributions, and
Employer Nonelective Contributions. Unless provided otherwise under Part 1,
#4.f. of the Nonstandardized 401(k) Agreement, for purposes of determining
the Excluded Employees, any selection made with respect to Section 401(k)
Deferrals also will apply to any Employee After-Tax Contributions and any
Safe Harbor Contributions; any selections made with respect to Employer
Matching Contributions also will apply to any Qualified Matching
Contributions (QMACs); and any selections made with respect to Employer
Nonelective Contributions also will apply to any Qualified Nonelective
Contributions (QNECs). |
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(a) |
Independent
contractors. Any individual who is an independent contractor, or who performs
services with the Employer under an agreement that identifies the individual
as an independent contractor, is specifically excluded from the
Nonstandardized Plan. In the event the Internal Revenue Service (IRS)
retroactively reclassifies such an individual as an Employee, the
reclassified Employee will become an Eligible Participant on the date the IRS
issues a final determination regarding his/her employment status (or the
individual’s Entry Date, if later), unless the individual is otherwise
excluded from participation under Part 1, #4 of the Nonstandardized
Agreement. For periods prior to the date of such final determination, the
reclassified Employee will not have any rights to accrued benefits under the
Plan, except as agreed to by the Employer and the IRS, or as set forth in an
amendment adopted by the Employer. |
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(b) |
Leased
Employees. If an individual is a Leased Employee, such individual is treated as
an Employee of the Employer and may participate under the Plan upon satisfying
the Plan’s minimum age and service conditions, unless the Employer elects to
exclude Leased Employees from participation under Part 1, #4.d. of the
Nonstandardized Agreement. |
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(1) |
Definition
of Leased Employee.
Effective for Plan Years beginning after December 31, 1996, a Leased
Employee, as defined in Code §414(n), is an individual who performs services
for the Employer on a substantially full time basis for a period of at least
one year pursuant to an agreement between the Employer and a leasing organization,
provided such services are performed under the primary direction or control
of the recipient Employer. For Plan Years beginning before January 1, 1997,
the definition of Leased Employee is as defined under Code §414(n), as in
effect for such years. |
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(2) |
Credit for
benefits. If a
Leased Employee receives contributions or benefits under a plan maintained by
the leasing organization that are attributable to services performed for the
Employer, such contributions or benefits shall be treated as provided by the
Employer. |
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(3) |
Safe
harbor plan. A
Leased Employee will not be considered an Employee of the Employer if such
Leased Employee is covered by a money purchase plan of the leasing
organization which provides: (i) a nonintegrated employer contribution of at
least 10% of compensation, (ii) immediate participation, and (iii) full and
immediate vesting. For this paragraph to apply, Leased Employees must not
constitute more than 20% of the total Nonhighly Compensated Employees of the
Employer. |
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1.3
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Employees
of Related Employers. Employees of the Employer that executes the
Signature Page of the Agreement and Employees of any Related Employer that
executes a Co-Sponsor Adoption Page under the Agreement are eligible to
participate in this Plan.
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(a)
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Nonstandardized
Agreement. In a Nonstandardized Agreement, a Related Employer is not required to
execute a Co-Sponsor Adoption Page. However, Employees of a Related Employer
that does not execute a Co-Sponsor Adoption Page are not eligible to
participate in the Plan.
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(b)
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Standardized
Agreement. In a Standardized Agreement, Employees of all Related Employers are
eligible to participate under the Plan upon satisfying any required minimum
age and/or service conditions (unless otherwise excluded under Part 1, #4 of
the Agreement). All Related Employers (who have Employees who may be eligible
under the Plan) must execute a Co-Sponsor Adoption Page under the Agreement,
so the Employees of such Related Employers are eligible to become Participants
in the Plan. (See Article 21 for applicable rules if a Related Employer does
not sign the Co-Sponsor Adoption Page and the effect of an acquisition or
disposition transaction that is described in Code §410(b)(6)(C).)
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1.4
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Minimum
Age and Service Conditions. Part 1, #5 of the Agreement contains
specific elections as to the minimum age and service conditions which an
Employee must satisfy prior to becoming eligible to participate under the
Plan. An Employee may be required to attain a specific age or to complete a
certain amount of service with the Employer prior to commencing participation
under the Plan. If no minimum age or service conditions apply to a particular
contribution (i.e., the Employer elects “None” under Part 1, #5.a. of the Agreement),
an Employee is treated as satisfying the Plan’s eligibility requirements on
the individual’s Employment Commencement Date.
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Different age and service
conditions may be selected under Part 1, #5 of the 401(k) Agreement for
Section 401(k) Deferrals, Employer Matching Contributions, and Employer
Nonelective Contributions. For purposes of applying the eligibility
conditions under Part 1, #5, any selection made with respect to Section
401(k) Deferrals also will apply to any Employee After-Tax Contributions; any
selections made with respect to Employer Matching Contributions also will
apply to any Qualified Matching Contributions (QMACs); and any selections
made with respect to Employer Nonelective Contributions also will apply to
any Qualified Nonelective Contributions (QNECs), unless otherwise provided
under Part 1, #5.f. of the Nonstandardized 401(k) Agreement. In addition, any
eligibility conditions selected with respect to Section 401(k) Deferrals also
will apply to any Safe Harbor Contributions designated under Part 4E of the
401(k) Agreement, unless otherwise provided under Part 4E, #30.d. of the
401(k) Agreement. If different conditions apply for different contributions,
the rules in this Article for determining when an Employee is an Eligible Participant
are applied separately with respect to each set of eligibility conditions.
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(a) |
Maximum
permissible age and service conditions. Code §410(a) provides limits on the maximum
permissible age and service conditions that may be required prior to Plan
participation. The Employer may not require an Employee, as a condition of
Plan participation, to attain an age older than age 21. The Employer also may
not require an Employee to complete more than one Year of Service, unless the
Employer elects full and immediate vesting under Part 6 of the Agreement, in
which case the Employer may require an Employee to complete up to two Years
of Service. (The Employer may not require an Employee to complete more than
one Year of Service to be eligible to make Section 401(k) Deferrals under the
401(k) Agreement.) |
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(b) |
Year of
Service. Unless the Employer elects otherwise under Part 7, #23 of the
Agreement [Part 7, #41 of the 401(k) Agreement], an Employee will earn one
Year of Service for purposes of applying the eligibility rules under this
Article if the Employee completes at least 1,000 Hours of Service with the
Employer during an Eligibility Computation Period (as defined in subsection
(c) below). An Employee will receive credit for a Year of Service, as of the
end of the Eligibility Computation Period, if the Employee completes the
required Hours of Service during such period, even if the Employee is not
employed for the entire period. In calculating an Employee’s Hours of Service
for purposes of applying the eligibility rules under this Article, the
Employer will use the Actual Hours Crediting Method, unless elected otherwise
under Part 7 of the Agreement. (See Article 6 of this BPD for a description
of alternative service crediting methods.) |
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(c) |
Eligibility Computation Periods. For purposes of determining Years of
Service under this Article, an Employee’s initial Eligibility Computation
Period is the 12-month period beginning on the Employee’s Employment
Commencement Date. If one Year of Service is required for eligibility, and
the Employee is not credited with a Year of Service for the first Eligibility
Computation Period, subsequent Eligibility Computation Periods are calculated
under the Shift-to-Plan-Year Method, unless the Employer elects under Part 7,
#24.a. of the Agreement [Part 7, #42.a. of the 401(k) Agreement] to use the
Anniversary Year Method. If two Years of Service are required for
eligibility, subsequent Eligibility Computation Periods are measured on the
Anniversary Year Method, unless the Employer elects under Part 7, #24.b. of
the Agreement [Part 7, #42.b. of the 401(k) Agreement] to use the
Shift-to-Plan-Year Method. In the case of a 401(k) Agreement in which a two
Years of Service eligibility condition is used for either Employer Matching
Contributions or Employer Nonelective Contributions, the method used to
determine Eligibility Computation Periods for the two Years of Service
condition also will apply to any one Year of Service eligibility condition
used with respect to any other contributions under the Plan. |
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(1) |
Shift-to-Plan-Year
Method. Under the
Shift-to-Plan-Year Method, after the initial Eligibility Computation Period,
subsequent Eligibility Computation Periods are measured using the Plan Year.
In applying the Shift-to-Plan-Year Method, the first Eligibility Computation
Period following the shift to the Plan Year is the first Plan Year that
commences after the Employee’s Employment Commencement Date. See Section 11.7
for rules that apply if there is a short Plan Year. |
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(2) |
Anniversary
Year Method. Under
the Anniversary Year Method, after the initial Eligibility Computation
Period, each subsequent Eligibility Computation Period is the 12-month period
commencing with the anniversary of the Employee’s Employment Commencement
Date. |
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(d) |
Application
of eligibility rules. |
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(1) |
General
rule – Effective Date.
All Employees who have satisfied the conditions for being an Eligible
Participant (and have reached their Entry Date (as determined under Part 2 of
the Agreement)) as of the Effective Date of the Plan are eligible to
participate in the Plan as of the Effective Date (provided the Employee is
employed on such date and is not otherwise excluded from participation under
Part 1, #4 of the Agreement). If an Employee has satisfied all the conditions
for being an Eligible Participant as of the Effective Date of the Plan,
except the Employee has not yet reached his/her Entry Date, the Employee will
become an Eligible Participant on the appropriate Entry Date in accordance
with this Article. |
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(2) |
Dual
eligibility provision.
The Employer may modify the rule described in subsection (1) above by
electing under Part 1, #6.a. of the Nonstandardized Agreement [Part 1, #6 of
the Standardized Agreement] to treat all Employees employed on the Effective
Date of the Plan as Eligible Participants as of such date. Alternatively, the
Employer may elect under Part 1, #6.b. of the Nonstandardized Agreement to
apply the dual eligibility provision as of a specified date. Any Employee
employed as of a date designated under Part 1, #6 will be deemed to be an
Eligible Participant as of the later of such date or the Effective Date of
this Plan, whether or not the Employee has otherwise satisfied the
eligibility conditions designated under Part 1, #5 and whether or not the
Employee has otherwise reached his/her Entry Date (as designated under Part 2
of the Agreement). Thus, all eligible Employees employed on the date
designated under Part 1, #6 will commence participating under the Plan as of
the appropriate date. |
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(e) |
Amendment
of age and service requirements. If the Plan’s minimum age and service
conditions are amended, an Employee who is an Eligible Participant
immediately prior to the effective date of the amendment is deemed to satisfy
the amended requirements. This provision may be modified under the special
Effective Date provisions under Appendix A of the Agreement. |
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1.5 |
Entry
Dates. Part 2 of the Agreement contains specific elections regarding the
Entry Dates under the Plan. An
Employee’s Entry Date is the date as of which he/she is first
considered an Eligible Participant. Depending on the elections in Part 2 of
the Agreement, the Entry Date may be the exact date on which an Employee
completes the Plan’s age and service conditions, or it might be some date
that occurs before or after such conditions are satisfied. If an Employee is
excluded from participation under Part 1, #4 of the Agreement, see the rules
under Section 1.8 of this Article. |
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The Employer may elect
under Part 2 of the 401(k) Agreement to apply different Entry Dates for
Section 401(k) Deferrals, Employer Matching Contributions, and Employer
Nonelective Contributions. Unless provided otherwise in Part 2, #8.f. of the
Nonstandardized 401(k) Agreement, the Entry Date chosen for Section 401(k)
Deferrals also applies to any Employee After-Tax Contributions and to any
Safe Harbor Contributions designated under Part 4E of the Agreement; the
Entry Date chosen for Employer Matching Contributions also applies to any
Qualified Matching Contributions (QMACs); and the Entry Date chosen for
Employer Nonelective Contributions also applies to any Qualified Nonelective
Contributions (QNECs). |
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(a) |
Entry Date
requirements. Except as provided under Section 1.4(d)(2) above, an Employee (other
than an Excluded Employee) commences
participation under the Plan (i.e., becomes an Eligible Participant) as of
the Entry Date selected in Part 2 of the Agreement, provided the individual
is employed by the Employer on that Entry Date. (See Section 1.7 below for
the rules applicable to Employees who are not employed on the Entry Date.) In
no event may an Eligible Participant’s Entry Date be later than: (1) the
first day of the Plan Year beginning after the date on which the Eligible
Participant satisfies the maximum permissible minimum age and service
conditions described in Section 1.4, or (2) six months after the date the
Eligible Participant satisfies such age and service conditions. |
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(b) |
Single
annual Entry Date. If the Employer elects a single annual Entry Date under Part 2, #8 of
the Agreement, the maximum permissible age and service conditions described
in Section 1.4 above are reduced by one-half (1/2) year, unless: (1) the
Employer elects under Part 2, #7.c. of the Agreement to use the Entry |
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Date nearest the date the Employee satisfies
the Plan’s minimum age and service conditions and the Entry Date is the first day of the Plan Year or
(2) the Employer elects under Part 2, #7.d. of the Agreement to use the Entry
Date preceding the date the
Employee satisfies the Plan’s minimum age and service conditions. |
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1.6 |
Eligibility
Break in Service Rules. For purposes of eligibility to participate,
an Employee is credited with all Years of Service earned with the Employer,
except as provided under the following Break in Service rules. In applying
these Break in Service rules, Years of Service and Breaks in Service (as
defined in Section 22.26) are measured on the same Eligibility Computation
Period as defined in Section 1.4(c) above. |
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(a) |
Rule of
Parity Break in Service. This Break in Service rule applies only to
Participants who are totally nonvested (i.e., 0% vested) in their Employer
Contribution Account and Employer Matching Contribution Account, as
applicable. Under this Break in Service rule, if a nonvested Participant
incurs a period of consecutive one-year Breaks in Service which equals or
exceeds the greater of five (5) or the Participant’s aggregate number of
Years of Service with the Employer, all service earned prior to the
consecutive Break in Service period will be disregarded and the Participant
will be treated as a new Employee for purposes of determining eligibility
under the Plan. The Employer may elect under Part 7, #27 of the Agreement
[Part 7, #45 of the 401(k) Agreement] not to apply the Rule of Parity Break
in Service rule. |
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(1) |
Previous
application of the Rule of Parity Break in Service rule. In determining a Participant’s aggregate
Years of Service for purposes of applying the Rule of Parity Break in
Service, any Years of Service otherwise disregarded under a previous
application of this rule are disregarded. |
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(2) |
Application
to the 401(k) Agreement. The Rule of Parity Break in Service rule applies only to determine
the individual’s right to resume as an Eligible Participant with respect to
his/her Employer Contribution Account and/or Employer Matching Contribution
Account. In determining whether a Participant is totally nonvested for
purposes of applying the Rule of Parity Break in Service rule, the
Participant’s Section 401(k) Deferral Account, Employee After-Tax
Contribution Account, QMAC Account, QNEC Account, Safe Harbor Nonelective
Contribution Account, Safe Harbor Matching Contribution Account, and Rollover
Contribution Account are disregarded. |
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(b) |
One-year
Break in Service rule for Plans using a two Years of Service eligibility
condition. If the Employer elects to use the two Years of Service eligibility
condition under Part 1, #5.e. of the Agreement, any Employee who incurs a
one-year Break in Service before satisfying the two Years of Service
eligibility condition will not be credited with service earned before such
one-year Break in Service. |
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(c) |
One-year
holdout Break in Service rule. The one-year holdout Break in Service rule
will not apply unless the Employer specifically elects in Part 7, #27.b. of
the Nonstandardized Agreement [Part 7, #45.b. of the Nonstandardized 401(k)
Agreement] to have it apply. If the one-year holdout Break in Service rule is
elected, an Employee who has a one-year Break in Service will not be credited
for eligibility purposes with any Years of Service earned before such
one-year Break in Service until the Employee has completed a Year of Service
after the one-year Break in Service. (The one-year holdout Break in Service
rule does not apply under the Standardized Agreements.) |
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(1) |
Operating
rules. An Employee
who is precluded from receiving Employer Contributions (other than Section
401(k) Deferrals) as a result of the one-year holdout Break in Service rule,
and who completes a Year of Service following the Break in Service, is
reinstated as an Eligible Participant as of the first day of the 12-month
measuring period (determined under subsection (2) or (3) below) during which
the Employee completes the Year of Service. Unless otherwise selected under
Part 7, #45.b.(1)(b) of the Nonstandardized 401(k) Agreement, the one-year
holdout Break in Service rule does not apply to preclude an otherwise
Eligible Participant from making Section 401(k) Deferrals to the Plan. If the
Employer elects under Part 7, #45.b.(1)(b) of the Nonstandardized 401(k)
Agreement to have the one-year holdout Break in Service rule apply to Section
401(k) Deferrals, an Employee who is precluded from making Section 401(k)
Deferrals as a result of this Break in Service rule is re-eligible to make
Section 401(k) Deferrals immediately upon completing 1,000 Hours of Service
with the Employer during a subsequent measuring period (as determined under
subsection (2) or (3) below). No corrective action need be taken by the
Employer as a result of the failure to retroactively permit the Employee to
make Section 401(k) Deferrals. |
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(2) |
Plans
using the Shift-to-Plan-Year Method. If the Plan uses the Shift-to-Plan-Year Method (as defined in Section
1.4(c)(1)) for measuring Years of Service, the period for determining whether
an Employee completes a Year of Service following the one-year Break in
Service is the 12-month period commencing on the Employee’s Reemployment Commencement
Date and, if necessary, subsequent Plan Years beginning with the Plan Year
which includes the first anniversary of the Employee’s Reemployment
Commencement Date. |
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(3) |
Plans
using Anniversary Year Method. If the Plan uses the Anniversary Year Method (as defined in Section
1.4(c)(2)) for measuring Years of Service, the period for determining whether
an Employee completes a Year of Service following the one-year Break in
Service is the 12-month period which commences on the Employee’s Reemployment
Commencement Date and, if necessary, subsequent 12-month periods beginning on
anniversaries of the Employee’s Reemployment Commencement Date. |
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1.7 |
Eligibility
upon Reemployment. Subject to the Break in Service rules under Section 1.6, a former Employee
is reinstated as an Eligible Participant immediately upon rehire if the
Employee had satisfied the Plan’s minimum age and service conditions prior to
termination of employment, regardless of whether the Employee was actually
employed on his/her Entry Date, unless the Employee is an Excluded Employee
upon his/her return to employment. This requirement is deemed satisfied if a
rehired Employee is permitted to commence making Section 401(k) Deferrals as
of the beginning of the first payroll period commencing after the Employee’s
Reemployment Commencement Date. |
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If an Employee is
reemployed prior to his/her Entry Date, the Employee does not become an
Eligible Participant under the Plan until such Entry Date. A rehired Employee
who had not satisfied the Plan’s minimum age and service conditions prior to
termination of employment is eligible to participate in the Plan on the
appropriate Entry Date following satisfaction of the eligibility requirements
under this Article. |
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1.8 |
Operating
Rules for Employees Excluded by Class. |
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(a) |
Eligible
Participant becomes part of an excluded class of Employees. If an Eligible
Participant becomes part of an excluded class of Employees, his/her status as
an Eligible Participant ceases immediately. As provided in subsection (b)
below, such Employee’s status as an Eligible Participant will resume
immediately upon his/her returning to an eligible class of Employees,
regardless of whether such date is a normal Entry Date under the Plan,
subject to the application of any Break in Service rules under Section 1.6
and the special rule for Section 401(k) Deferrals under subsection (b) below.
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(b) |
Excluded
Employee becomes part of an eligible class of Employee. If an Excluded Employee
becomes part of an eligible class of Employees, the following rules apply. If
the Entry Date that otherwise would have applied to such Employee following
his/her completion of the Plan’s minimum age and service conditions has
already passed, then the Employee becomes an Eligible Participant on the date
he/she becomes part of the eligible class of Employees, regardless of whether
such date is a normal Entry Date under the Plan. This requirement is deemed
satisfied if the Employee is permitted to commence making Section 401(k)
Deferrals as of the beginning of the first payroll period commencing after
the Employee becomes part of an eligible class of Employees. If the Entry
Date that would have applied to such Employee has not passed, then the
Employee becomes an Eligible Participant on such Entry Date. If the Employee
has not satisfied the Plan’s minimum age and service conditions, the Employee
will become an Eligible Participant on the appropriate Entry Date following
satisfaction of the eligibility requirements under this Article. |
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1.9 |
Relationship
to Accrual of Benefits. An Eligible Participant is entitled to
accrue benefits in the Plan but will not necessarily do so in every Plan Year
that he/she is an Eligible Participant. Whether an Eligible Participant’s
Account receives an allocation of Employer Contributions depends on the
requirements set forth in Part 4 of the Agreement. If an Employee is an
Eligible Participant for purposes of making Section 401(k) Deferrals under
the 401(k) Agreement, such Employee is treated as an Eligible Participant
under the Plan regardless of whether he/she actually elects to make Section
401(k) Deferrals. |
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1.10 |
Waiver of
Participation. Unless the Employer elects otherwise under Part 13, #57 of the
Nonstandardized Agreement [Part 13, #75 of the Nonstandardized 401(k)
Agreement], an Eligible Participant may not waive participation under the
Plan. For this purpose, a failure to make Section 401(k) Deferrals or
Employee After-Tax Contributions under a 401(k) plan is not a waiver of
participation. The Employer may elect under Part 13, #57 of the
Nonstandardized Agreement [Part 13, #75 of the Nonstandardized 401(k)
Agreement] to permit Employees to make a one-time irrevocable election to not
participate under the Plan. Such election must be made upon inception of the
Plan or at any time prior to the time the Employee first becomes eligible to
participate under any plan maintained by the Employer. An Employee who makes
a one-time irrevocable election not to participate may not subsequently elect
to participate under the Plan. An Employee may not waive participation under
a Standardized Agreement. |
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An Employee who elects not
to participate under this Section 1.10 is treated as a nonbenefiting Employee
for purposes of the minimum coverage requirements under Code §410(b).
However, an Employee who makes a one-time irrevocable election not to
participate, as described in the preceding paragraph, is not an Eligible
Participant for purposes of applying the ADP Test or ACP Test under the
401(k) Agreement. See Section 17.7(e) and (f). A waiver of participation must
be filed in the manner, time and on the form required by the Plan
Administrator. |
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ARTICLE 2
EMPLOYER CONTRIBUTIONS AND ALLOCATIONS
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This Article describes how
Employer Contributions are made to and allocated under the Plan. The type of
Employer Contributions that may be made under the Plan and the method for
allocating such contributions will depend on the type of Plan involved.
Section 2.2 of this BPD provides specific rules regarding contributions and
allocations under a profit sharing plan; Section 2.3 provides the rules for a
401(k) plan; Section 2.4 provides the rules for a money purchase plan; and
Section 2.5 provides the rules for a target benefit plan. Part 4 of the
Agreement contains the elective provisions for the Employer to specify the
amount and type of Employer Contributions it will make under the Plan and to
designate any limits on the amount it will contribute to the Plan each year.
Employee After-Tax Contributions, Rollover Contributions and transfers to the
Plan are discussed in Article 3 and the allocation of forfeitures is
discussed in Article 5. Part 3 of the Agreement contains elective provisions
for determining an Employee’s Included Compensation for allocation purposes.
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2.1 |
Amount of Employer Contributions. The Employer shall make Employer
Contributions to the Trust as determined under the contribution formula
elected in Part 4 of the Agreement. If this Plan is a 401(k) plan, Employer
Contributions include Section 401(k) Deferrals, Employer Nonelective
Contributions, Employer Matching Contributions, QNECs, QMACs, and Safe Harbor
Contributions, to the extent such contributions are elected under the 401(k)
Agreement. The Employer has the responsibility for determining the amount and
timing of Employer Contributions under the terms of the Plan. |
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(a) |
Limitation
on Employer Contributions. Employer Contributions are subject to the
Annual Additions Limitation described in Article 7 of this BPD. If
allocations to a Participant exceed (or will exceed) such limitation, the
excess will be corrected in accordance with the rules under Article 7. In
addition, the Employer must comply with the special contribution and
allocation rules for Top-Heavy Plans under Article 16. |
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(b) |
Limitation on Included Compensation. For purposes of determining a Participant’s
allocation of Employer Contributions under this Article, the Included
Compensation taken into account for any Participant for a Plan Year may not
exceed the Compensation Dollar Limitation under Section 22.32. |
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(c) |
Contribution
of property. Subject to the consent of the Trustee, the Employer may make its
contribution to the Plan in the form of property, provided such contribution
does not constitute a prohibited transaction under the Code or ERISA. The
decision to make a contribution of property is subject to the general
fiduciary rules under ERISA. |
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(d) |
Frozen
Plan.
The Employer may designate under Part 4, #12 of the Agreement [#3 of the
401(k) Agreement] that the Plan is a frozen Plan. As a frozen Plan, the
Employer will not make any Employer Contributions with respect to Included
Compensation earned after the date identified in the Agreement, and if the
Plan is a 401(k) Plan, no Participant will be permitted to make Section 401(k)
Deferrals or Employee After-Tax Contributions to the Plan for any period
following the effective date identified in the Agreement. |
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2.2 |
Profit
Sharing Plan Contribution and Allocations. This Section 2.2 sets forth rules for
determining the amount of any Employer Contributions under the profit sharing
plan Agreement. This Section 2.2 also applies for purposes of determining any
Employer Nonelective Contributions under the 401(k) plan Agreement. In
applying this Section 2.2 to the 401(k) Agreement, the term Employer
Contribution refers solely to Employer Nonelective Contributions. Any
reference to the Agreement under this Section 2.2 is a reference to the
profit sharing plan Agreement or 401(k) plan Agreement (as applicable). |
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(a) |
Amount of
Employer Contribution. The Employer must designate under Part 4,
#12 of the profit sharing plan Agreement the amount it will contribute as an
Employer Contribution under the Plan. If the Employer adopts the 401(k) plan
Agreement and elects to make Employer Nonelective Contributions under Part 4C
of the Agreement, the Employer must complete Part 4C, #20 of the Agreement,
unless the only Employer Nonelective Contribution authorized under the Plan
is a QNEC under Part 4C, #22. An Employer Contribution authorized under this
Section may be totally within the Employer’s discretion or may be a fixed
amount determined as a uniform percentage of each Eligible Participant’s
Included Compensation or as a fixed dollar amount for each Eligible
Participant. An Employer Contribution under this Section will be allocated to
the Eligible Participants’ Employer Contribution Account in accordance with
the allocation formula selected under Part 4, #13 of the Agreement [Part 4C,
#21 of the 401(k) Agreement]. |
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(1) |
Xxxxx-Xxxxx
Contribution Formula.
The Employer may elect a Xxxxx-Xxxxx Contribution Formula under Part 4,
#12.d. of the Nonstandardized Agreement [Part 4C, #20.d. of the
Nonstandardized 401(k) Agreement]. Under the Xxxxx-Xxxxx Contribution
Formula, the Employer will provide an Employer Contribution for each Eligible
Participant who performs Xxxxx-Xxxxx Act Service. For this purpose,
Xxxxx-Xxxxx Act Service is any service performed by an Employee under a
public contract subject to the Xxxxx-Xxxxx Act or to any other federal, state
or municipal prevailing wage law. Each such Eligible Participant will receive
a contribution based on the hourly |
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contribution rate for the
Participant’s employment classification, as designated on Schedule A of the
Agreement. Schedule A is incorporated as part of the Agreement. |
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In applying the Xxxxx-Xxxxx
Contribution Formula under this subsection (1), the following default rules
will apply. The Employer may modify these default rules under Part 4,
#12.d.(2) of the Nonstandardized Agreement [Part 4C, #20.d.(2) of the
Nonstandardized 401(k) Agreement]. |
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(i) |
Eligible
Employees. Highly
Compensated Employees are Excluded Employees for purposes of receiving an
Employer Contribution under the Xxxxx-Xxxxx Contribution Formula. |
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(ii) |
Minimum
age and service conditions. No minimum age or service conditions will apply for purposes of
determining an Employee’s eligibility under the Xxxxx-Xxxxx Contribution
Formula. |
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(iii) |
Entry
Date. For purposes
of applying the Xxxxx-Xxxxx Contribution Formula, an Employee becomes an
Eligible Participant on his/her Employment Commencement Date. |
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(iv) |
Allocation
conditions. No
allocation conditions (as described in Section 2.6) will apply for purposes
of determining an Eligible Participant’s allocation under the Xxxxx-Xxxxx
Contribution Formula. |
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(v) |
Vesting. Employer Contributions made pursuant to the
Xxxxx-Xxxxx Contribution Formula are always 100% vested. |
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(vi) |
Offset of
other Employer Contributions. The contributions under the Xxxxx Bacon Contribution Formula will not
offset any other Employer Contributions under the Plan. However, the Employer
may elect under Part 4, #12.d.(1) of the Nonstandardized Agreement [Part 4C,
#20.d.(1) of the Nonstandardized 401(k) Agreement] to offset any other
Employer Contributions made under the Plan by the contributions a Participant
receives under the Xxxxx-Xxxxx Contribution Formula. Under the
Nonstandardized 401(k) plan Agreement, the Employer may elect under Part 4C,
#20.d.(1) to apply the offset under this subsection to Employer Nonelective
Contributions, Employer Matching Contributions, or both. |
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(2) |
Net
Profits. The
Employer may elect under Part 4, #12 of the Agreement [Part 4B, #16 and Part
4C, #20 of the 401(k) Agreement], to limit any Employer Contribution under
the Plan to Net Profits. Unless modified in the Agreement, Net Profits means
the Employer’s net income or profits determined in accordance with generally
accepted accounting principles, without any reduction for taxes based upon
income, or the contributions made by the Employer under this Plan or any
other qualified plan. Unless specifically elected otherwise under Part 4,
#12.e.(2) of the Nonstandardized Agreement [Part 4C, #20.e.(2) of the Nonstandardized
401(k) Agreement], this limit will not apply to any Employer Contributions
made under a Xxxxx-Xxxxx Contribution Formula. |
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(3) |
Multiple
formulas. If the
Employer elects more than one Employer Contribution formula, each formula is
applied separately. The Employer’s aggregate Employer Contribution for a Plan
Year will be the sum of the Employer Contributions under all such formulas. |
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(b) |
Allocation
formula for Employer Contributions. The Employer must elect a definite
allocation formula under Part 4, #13 of the profit sharing plan Agreement
that determines how much of the Employer Contribution is allocated to each
Eligible Participant. If the Employer adopts the 401(k) plan Agreement and
elects to make an Employer Nonelective Contribution (other than a QNEC) under
Part 4C, #20 of the Agreement, Part 4C, #21 also must be completed
designating the allocation formula under the Plan. An Eligible Participant is
only entitled to an allocation if such Participant satisfies the allocation conditions
described in Part 4, #15 of the Agreement [Part 4C, #24 of the 401(k)
Agreement]. See Section 2.6. |
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(1) |
Pro Rata
Allocation Method.
If the Employer elects the Pro Rata Allocation Method, a pro rata share of
the Employer Contribution is allocated to each Eligible Participant’s
Employer Contribution Account. A Participant’s pro rata share is determined
based on the ratio such Participant’s Included Compensation bears to the
total of all Eligible Participants’ Included Compensation. However, if the
Employer elects under Part 4, #12.c. of the Agreement [Part 4C, #20.c. of the
401(k) Agreement] to contribute a uniform dollar amount for each Eligible
Participant, the pro rata allocation method allocates that uniform dollar
amount to each Eligible Participant. If the Employer elects a Xxxxx-Xxxxx
Contribution Formula under Part 4, #12.d. of the Nonstandardized Agreement
[Part 4C, #20.d. of the Nonstandardized 401(k) Agreement], the Employer
Contributions made pursuant to such formula will be allocated to each
Eligible |
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Participant based on
his/her Xxxxx-Xxxxx Act Service in accordance with the employment
classifications identified under Schedule A of the Agreement. |
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(2) |
Permitted
Disparity Method. If
the Employer elects the Permitted Disparity Method, the Employer Contribution
is allocated to Eligible Participants under the Two-Step Formula or the
Four-Step Formula (as elected under the Agreement). The Permitted Disparity
Method only may apply if the Employer elects under the Agreement to make a
discretionary contribution. The Employer may not elect the Permitted
Disparity Method under the Plan if another qualified plan of the Employer,
which covers any of the same Employees, uses permitted disparity in
determining the allocation of contributions or the accrual of benefits under
the plan. |
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For purposes of applying
the Permitted Disparity Method, Excess Compensation is the portion of an
Eligible Participant’s Included Compensation that exceeds the Integration
Level. The Integration Level is the Taxable Wage Base, unless the Employer
designates a different amount under Part 4, #14.b.(2) of the Agreement [Part
4C, #23.b.(2) of the 401(k) Agreement]. |
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(i) |
Two-Step
Formula. If the
Employer elects the Two-Step Formula, the following allocation method
applies. However, the Employer may elect under Part 4, #14.b.(1) of the
Agreement [Part 4C, #23.b.(1) of the 401(k) Agreement] to have the Four-Step
Method, as described in subsection (ii) below, automatically apply for any
Plan Year in which the Plan is a Top-Heavy Plan. |
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(A) |
Step One. The Employer Contribution is allocated to
each Eligible Participant’s Account in the ratio that each Eligible
Participant’s Included Compensation plus Excess Compensation for the Plan
Year bears to the total Included Compensation plus Excess Compensation of all
Eligible Participants for the Plan Year. The allocation under this Step One,
as a percentage of each Eligible Participant’s Included Compensation plus
Excess Compensation, may not exceed the Applicable Percentage under the
following table: |
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Integration Level
(as a % of the Taxable Wage Base) |
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Applicable
Percentage |
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100% |
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5.7% |
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More
than 80% but less than 100% |
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5.4% |
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More
than 20% and not more than 80% |
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4.3% |
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20%
or less |
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5.7% |
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(B) |
Step Two. Any Employer Contribution remaining after
Step One will be allocated in the ratio that each Eligible Participant’s
Included Compensation for the Plan Year bears to the total Included
Compensation of all Eligible Participants for the Plan Year. |
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(ii) |
Four-Step
Formula. If the
Employer elects the Four-Step Formula, or if the Plan is a Top-Heavy Plan and
the Employer elects under the Agreement to have the Four-Step Formula apply
for any Plan Year that the Plan is a Top-Heavy Plan, the following allocation
method applies. The allocation under this Four-Step Formula may be modified
if the Employer maintains a Defined Benefit Plan and elects under Part 13,
#54.b. of the Agreement [Part 13, #72.b. of the 401(k) Agreement] to provide
a greater top-heavy minimum contribution. See Section 16.2(a)(5)(ii). |
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(A) |
Step One. The Employer Contribution is allocated to
each Eligible Participant’s Account in the ratio that each Eligible
Participant’s Total Compensation for the Plan Year bears to all Eligible
Participants’ Total Compensation for
the Plan Year, but not in excess of 3% of each Eligible Participant’s Total
Compensation. |
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For any Plan Year for which
the Plan is a Top-Heavy Plan, an allocation will be made under this
subsection (A) to any Non-Key Employee who is an Eligible Participant (and is
not an Excluded Employee) if such individual is employed as of the last day
of the Plan Year, even if such individual fails to satisfy any minimum Hours
of Service allocation condition under Part 4, #15 of the Agreement [Part 4C,
#24 of the 401(k) Agreement]. If the Plan is a Top-Heavy 401(k) Plan, an
allocation also will be made under this subsection (A) to any |
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Employee who is an Eligible
Participant for purposes of making Section 401(k) Deferrals under the Plan,
even if the individual has not satisfied the minimum age and service
conditions under Part 1, #5 of the Agreement applicable to any other contribution
types. |
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(B) |
Step Two. Any Employer Contribution remaining after
the allocation in Step One will be allocated to each Eligible Participant’s
Account in the ratio that each Eligible Participant’s Excess Compensation for
the Plan Year bears to the Excess Compensation of all Eligible Participants
for the Plan Year, but not in excess of 3% of each Eligible Participant’s
Included Compensation. |
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(C) |
Step
Three. Any Employer
Contribution remaining after the allocation in Step Two will be allocated to
each Eligible Participant’s Account in the ratio that the sum of each
Eligible Participant’s Included Compensation and Excess Compensation bears to
the sum of all Eligible Participants’ Included Compensation and Excess
Compensation. The allocation under this Step Three, as a percentage of each
Eligible Participant’s Included Compensation plus Excess Compensation, may
not exceed the Applicable Percentage under the following table: |
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Integration Level
(as a % of the Taxable Wage Base) |
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Applicable
Percentage |
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100% |
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2.7% |
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More
than 80% but less than 100% |
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2.4% |
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More
than 20% and not more than 80% |
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1.3% |
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20%
or less |
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2.7% |
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(D) |
Step Four. Any remaining Employer Contribution will be
allocated to each Eligible Participant’s Account in the ratio that each
Eligible Participant’s Included Compensation for the Plan Year bears to all
Eligible Participants’ Included Compensation for that Plan Year. |
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(3) |
Uniform
points allocation.
The Employer may elect under Part 4, #13.c. of the Nonstandardized Agreement
[Part 4C, #21.c. of the Nonstandardized 401(k) Agreement] to allocate the
Employer Contribution under a uniform points allocation formula. Under this
formula, the allocation for each Eligible Participant is determined based on
the Eligible Participant’s total points for the Plan Year, as determined
under the Nonstandardized Agreement. An Eligible Participant’s allocation of
the Employer Contribution is determined by multiplying the Employer
Contribution by a fraction, the numerator of which is the Eligible
Participant’s total points for the Plan Year and the denominator of which is
the sum of the points for all Eligible Participants for the Plan Year. |
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An Eligible Participant
will receive points for each year(s) of age and/or each Year(s) of Service
designated under Part 4, #13.c. of the Nonstandardized Agreement [Part 4C,
#21.c. of the Nonstandardized 401(k) Agreement]. In addition, an Eligible
Participant also may receive points based on his/her Included Compensation,
if the Employer so elects under the Nonstandardized Agreement. Each Eligible
Participant will receive the same number of points for each designated year
of age and/or service and the same number of points for each designated level
of Included Compensation. An Eligible Participant must receive points for
either age or service, or may receive points for both age and service. If the
Employer also provides points based on Included Compensation, an Eligible
Participant will receive points for each level of Included Compensation
designated under Part 4, #13.c.(3) of the Nonstandardized Agreement [Part 4C,
#21.c.(3) of the Nonstandardized 401(k) Agreement]. For this purpose, the
Employer may not designate a level of Included Compensation that exceeds
$200. |
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To satisfy the
nondiscrimination safe harbor under Treas. Reg. §1.401(a)(4)-2, the average
of the allocation rates for Highly Compensated Employees in the Plan must not
exceed the average of the allocation rates for the Nonhighly Compensated
Employees in the Plan. For this purpose, the average allocation rates are
determined in accordance with Treas. Reg. §1.401(a)(4)-2(b)(3)(B). |
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(c) |
Special
rules for determining Included Compensation. |
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(1) |
Applicable
period for determining Included Compensation. In determining an Eligible Participant’s
allocation under Part 4, #13 of the Agreement [Part 4C, #21 of the 401(k)
Agreement], the Participant’s Included Compensation is determined separately
for each period designated under Part 4, #14.a.(1) of the Agreement [Part 4C,
#23.a.(1) of the 401(k) Agreement]. If the Employer elects the Permitted
Disparity Method under Part 4, #13.b. of the Agreement [Part 4C, #21.b. of
the 401(k) Agreement], the period designated must be the Plan Year. If the
Employer elects the Pro Rata Allocation Method or the uniform points
allocation formula, and elects a period other than the Plan Year, a
Participant’s allocation of Employer Contributions will be determined
separately for each period based solely on Included Compensation for such
period. The Employer need not actually make the Employer Contribution during
the designated period, provided the total Employer Contribution for the Plan
Year is allocated based on the proper Included Compensation. |
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(2) |
Partial
period of participation. If an Employee is an Eligible Participant for only part of a Plan
Year, the Employer Contribution formula(s) will be applied based on such
Employee’s Included Compensation for the period he/she is an Eligible
Participant. However, the Employer may elect under Part 4, #14.a.(2) of the
Agreement [Part 4C, #23.a.(2) of the 401(k) Agreement] to base the Employer
Contribution formula(s) on the Employee’s Included Compensation for the
entire Plan Year, including the portion of the Plan Year during which the
Employee is not an Eligible Participant. In applying this subsection (2) to
the 401(k) Agreement, an Employee’s status as an Eligible Participant is
determined solely with respect to the Employer Nonelective Contribution under
Part 4C of the Agreement. |
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(3) |
Measurement
period. Except as
provided in subsection (2) above, for purposes of determining an Eligible
Participant’s allocation of Employer Contributions, Included Compensation is
measured on the Plan Year, unless the Employer elects under Part 4, #14.a.(3)
of the Nonstandardized Agreement [Part 3, #11.b. of the Nonstandardized
401(k) Agreement] to measure Included Compensation on the calendar year
ending in the Plan Year or on the basis of any other 12-month period ending
in the Plan Year. If the Employer elects to measure Included Compensation on
the calendar year or other 12-month period ending in the Plan Year, the
Included Compensation of any Employee whose Employment Commencement Date is
less than 12 months before the end of such period must be measured on the
Plan Year or such Employee’s period of participation, as determined under
subsection (2) above. If the Employer adopts the Nonstandardized 401(k)
Agreement, any election under Part 3, #11.b. of the Agreement applies for
purposes of all contributions permitted under the Agreement. |
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2.3 |
401(k)
Plan Contributions and Allocations. This Section 2.3 applies if the Employer
has adopted the 401(k) plan Agreement. The 401(k) Agreement is a profit
sharing plan with a 401(k) feature. Any reference to the Agreement under this
Section 2.3 is a reference to the 401(k) Agreement. The Employer must
designate under Part 4 of the Agreement the amount and type of Employer Contributions
it will make under the Plan. Employer Contributions under a 401(k) plan are
generally subject to special limits and nondiscrimination rules. (See Article
17 for a discussion of the special rules that apply to the Employer
Contributions under a 401(k) plan.) The Employer may make any (or all) of the
following contributions under the 401(k) Agreement. |
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(a) |
Section
401(k) Deferrals. If
so elected under Part 4A of the Agreement, an Eligible Participant may enter
into a Salary Reduction Agreement with the Employer authorizing the Employer
to withhold a specific dollar amount or a specific percentage from the
Participant’s Included Compensation and to deposit such amount into the
Participant’s Section 401(k) Deferral Account under the Plan. An Eligible
Participant may defer with respect to Included Compensation that exceeds the
Compensation Dollar Limitation, provided the deferrals otherwise satisfy the
limitations under Code §402(g) and any other limitations under the Plan. A
Salary Reduction Agreement may only relate to Included Compensation that is
not currently available at the time the Salary Reduction Agreement is
completed. An Employer may elect under Part 4A, #15 of the Agreement to
provide a special effective date solely for Section 401(k) Deferrals under
the Plan. |
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An Employee’s Section
401(k) Deferrals are treated as Employer Contributions for all purposes under
this Plan, except as otherwise provided under the Code or Treasury
regulations. If the Employer adopts the Nonstandardized 401(k) Agreement and
does not elect to allow Section 401(k) Deferrals under Part 4A of the
Agreement, the only contributions an Eligible Participant may make to the
Plan are Employee After-Tax Contributions as authorized under Article 3 of
this BPD and Part 4D of the Nonstandardized Agreement. In either case, an
Eligible Participant may also receive Employer Nonelective Contributions
and/or Employer Matching Contributions under the Plan, to the extent
authorized under the Agreement. (The Employee may not make Employee After-Tax
Contributions under the Standardized 401(k) Agreement.) |
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(1) |
Change in
deferral election.
At least once a year, an Eligible Participant may enter into a new Salary
Reduction Agreement, or may change his/her elections under an existing Salary
Reduction Agreement, at the time and in the manner prescribed by the Plan
Administrator on the Salary |
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Reduction Agreement form
(or other written procedures). The Salary Reduction Agreement may also
provide elections as to the investment funds into which the Section 401(k)
Deferrals will be contributed and the time and manner a Participant may
change such elections. |
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(2) |
Automatic
deferral election.
If elected under Part 4A, #14 of the Agreement, the Employer will
automatically withhold the amount designated under Part 4A, #14 from Eligible
Participants’ Included Compensation for payroll periods starting with such
Participants’ Entry Date, unless the Eligible Participant completes a Salary
Reduction Agreement electing a different deferral amount (including a zero
deferral amount). The Employer must designate in Part 4A, #14 of the
Agreement the date as of which an Employee’s deferral election will be taken
into account to override the automatic deferral election under this subparagraph
(2). This automatic deferral election does not apply to any Eligible
Participant who has elected to defer an amount equal to or greater than the
automatic deferral amount designated in Part 4A, #14 of the Agreement. The
Employer may elect under Part 4A, #14.b. of the Agreement to apply the
automatic deferral election only to Employees who become Eligible
Participants after a specified date. The Plan Administrator will deposit all
amounts withheld pursuant to this automatic deferral election into the appropriate
Participant’s Section 401(k) Deferral Account. |
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Prior to the time an
automatic deferral election first goes into effect, an Eligible Participant
must receive written notice concerning the effect of the automatic deferral
election and his/her right to elect a different level of deferral under the
Plan, including the right to elect not to defer. After receiving the notice,
an Eligible Participant must have a reasonable time to enter into a new
Salary Reduction Agreement before any automatic deferral election goes into
effect. |
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(b) |
Employer
Matching Contributions. If so elected under Part 4B of the
Agreement, the Employer will make an Employer Matching Contribution, in
accordance with the matching contribution formula(s) selected in Part 4B,
#16, to Eligible Participants who satisfy the allocation conditions under
Part 4B, #19 of the Agreement. See Section 2.6. Any Employer Matching
Contribution determined under Part 4B, #16 will be allocated to the Eligible
Participant’s Employer Matching Contribution Account. |
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(1) |
Applicable
contributions. The
Employer must elect under the Nonstandardized Agreement whether the matching
contribution formula(s) applies to Section 401(k) Deferrals, Employee
After-Tax Contributions, or both. Under the Standardized Agreement, Employer
Matching Contributions apply only to Section 401(k) Deferrals. The
contributions eligible for an Employer Matching Contribution are referred to
under this Section as “applicable contributions.” If a matching formula applies
to both Section 401(k) Deferrals and Employee After-Tax Contributions, such
contributions are aggregated to determine the Employer Matching Contribution
allocated under the formula. |
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(2) |
Multiple
formulas. If the
Employer elects more than one matching contribution formula under Part 4B,
#16 of the Agreement, each formula is applied separately. An Eligible
Participant’s aggregate Employer Matching Contributions for a Plan Year will
be the sum of the Employer Matching Contributions the Participant is entitled
to under all such formulas. |
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(3) |
Applicable
contributions taken into account under the matching contribution formula. The Employer must elect under Part 4B,
#17.a. of the Agreement the period for which the applicable contributions are
taken into account in applying the matching contribution formula(s) and in
applying any limits on the amount of such contributions that may be taken
into account under the formula(s). In applying the matching contribution
formula(s), applicable contributions (and Included Compensation) are
determined separately for each designated period and any limits on the amount
of applicable contributions taken into account under the matching
contribution formula(s) are applied separately for each designated period. |
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(4) |
Partial
period of participation. In applying the matching contribution formula(s) under the Plan to an
Employee who is an Eligible Participant for only part of the Plan Year, the
Employer may elect under Part 4B, #17.b. of the Agreement to take into
account Included Compensation for the entire Plan Year or only for the
portion of the Plan Year during which the Employee is an Eligible
Participant. Alternatively, the Employer may elect under Part 4B, #17.b.(3)
of the Agreement to take into account Included Compensation only for the
period that the Employee actually makes applicable contributions under the
Plan. In applying this subsection (4), an Employee’s status as an Eligible
Participant is determined solely with respect to the Employer Matching
Contribution under Part 4B of the Agreement. |
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(c) |
Qualified
Matching Contributions (QMACs). If so elected under Part 4B, #18 of the
Agreement, the Employer may treat all (or a portion) of its Employer Matching
Contributions as QMACs. If an Employer Matching Contribution is designated as
a QMAC, it must satisfy the requirements for a QMAC (as described in Section
17.7(g)) at the time the contribution is made to the Plan and must be
allocated to the Participant’s |
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QMAC Account. To the extent
an Employer Matching Contribution is treated as a QMAC under Part 4B, #18,
such contribution will be 100% vested, regardless of any inconsistent
elections under Part 6 of the Agreement relating to Employer Matching
Contributions. (See Sections 17.2(d)(2) and 17.3(d)(2) for the ability to
make QMACs to correct an ADP or ACP failure without regard to any election
under Part 4B, #18 of the Agreement.) |
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Under Part 4B, #18, the
Employer may designate all Employer Matching Contributions as QMACs or may
designate only those Employer Matching Contributions under specific matching
contribution formula(s) to be QMACs. Alternatively, the Employer may
authorize a discretionary QMAC, in addition to the Employer Matching
Contributions designated under Part 4B, #16, to be allocated uniformly as a
percentage of Section 401(k) Deferrals made during the Plan Year. The
Employer may elect under the Agreement to allocate the discretionary QMAC
only to Eligible Participants who are Nonhighly Compensated Employees or to
all Eligible Participants. If the Employer elects both a discretionary
Employer Matching Contribution formula and a discretionary QMAC formula, the
Employer must designate, in writing, the extent to which any matching
contribution is intended to be an Employer Matching Contribution or a QMAC. |
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(d) |
Employer
Nonelective Contributions. If so elected under Part 4C of the
Agreement, the Employer may make Employer Nonelective Contributions on behalf
of each Eligible Participant under the Plan who has satisfied the allocation
conditions described in Part 4C, #24 of the Agreement. See Section 2.6. The
Employer must designate under Part 4C, #20 of the Agreement the amount of any
Employer Nonelective Contributions it wishes to make under the Plan. The
amount of any Employer Nonelective Contributions authorized under the Plan
and the method of allocating such contributions is described in Section 2.2
of this Article. |
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(e) |
Qualified
Nonelective Contributions (QNECs). The Employer may elect under Part 4C, #22
of the Agreement to permit discretionary QNECs under the Plan. A QNEC must
satisfy the requirements for a QNEC (as described in Section 17.7(h)) at the
time the contribution is made to the Plan and must be allocated to the
Participant’s QNEC Account. If the Plan authorizes the Employer to make both
a discretionary Employer Nonelective Contribution and a discretionary QNEC,
the Employer must designate, in writing, the extent to which any contribution
is intended to be an Employer Nonelective Contribution or a QNEC. To the
extent an Employer Nonelective Contribution is treated as a QNEC under Part
4C, #22, such contribution will be 100% vested, regardless of any
inconsistent elections under Part 6 of the Agreement relating to Employer
Nonelective Contributions. (See Sections 17.2(d)(2) and 17.3(d)(2) for the
ability to make QNECs to correct an ADP or ACP failure without regard to any
election under Part 4C, #22 of the Agreement.) |
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If the Employer makes a
QNEC for the Plan Year, it will be allocated to Participants’ QNEC Account
based on the allocation method selected by the Employer under Part 4C, #22 of
the Agreement. An Eligible Participant will receive a QNEC allocation even if
he/she has not satisfied any allocation conditions designated under Part 4C,
#24 of the Agreement, unless the Employer elects otherwise under the Part 4C,
#22.c. of the Agreement. |
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(1) |
Pro Rata
Allocation Method.
If the Employer elects the Pro Rata Allocation Method under Part 4C, #22.a.
of the Agreement, any Employer Nonelective Contribution properly designated
as a QNEC will be allocated as a uniform percentage of Included Compensation
to all Eligible Participants who are Nonhighly Compensated Employees or to
all Eligible Participants, as specified under Part 4C, #22.a. |
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(2) |
Bottom-up
QNEC method. If the
Employer elects the Bottom-up QNEC method under Part 4C, #22.b. of the
Agreement, any Employer Nonelective Contribution properly designated as a
QNEC will be first allocated to the Eligible Participant with the lowest Included
Compensation for the Plan Year for which the QNEC is being allocated. To
receive an allocation of the QNEC under this subsection (2), the Eligible
Participant must be a Nonhighly Compensated Employee for the Plan Year for
which the QNEC is being allocated. |
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The QNEC will be allocated
to the Eligible Participant with the lowest Included Compensation until all
of the QNEC has been allocated or until the Eligible Participant has reached
his/her Annual Additions Limitation, as described in Article 7. For this
purpose, if two or more Eligible Participants have the same Included
Compensation, the QNEC will be allocated equally to each Eligible Participant
until all of the QNEC has been allocated, or until each Eligible Participant
has reached his/her Annual Additions Limitation. If any QNEC remains
unallocated, this process is repeated for the Eligible Participant(s) with
the next lowest level of Included Compensation in accordance with the
provisions under this subsection (2), until all of the QNEC is allocated. |
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(f) |
Safe
Harbor Contributions. If so elected under Part 4E of the 401(k)
Agreement, the Employer may elect to treat this Plan as a Safe Harbor 401(k)
Plan. To qualify as a Safe Harbor 401(k) Plan, the Employer must make a Safe
Harbor Nonelective Contribution or a Safe Harbor Matching Contribution under
the Plan. Such contributions are subject to special vesting and distribution
restrictions and must be allocated to the Eligible |
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Participants’ Safe Harbor
Nonelective Contribution Account or Safe Harbor Matching Contribution
Account, as applicable. Section 17.6 describes the requirements that must be
met to qualify as a Safe Harbor 401(k) Plan and the method for calculating
the amount of the Safe Harbor Contribution that must be made under the Plan. |
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(g) |
Prior
SIMPLE 401(k) plan. If this Agreement is being used to amend or restate a 401(k) plan
which complied with the SIMPLE 401(k) plan provisions under Code §401(k)(11),
any provision in this Agreement which is inconsistent with the SIMPLE 401(k)
plan provisions is not effective for any Plan Year during which the plan
complied with the SIMPLE 401(k) plan provisions. |
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2.4 |
Money
Purchase Plan Contribution and Allocations. This Section 2.4 applies if the Employer
has adopted the money purchase plan Agreement. Any reference to the Agreement
under this Section 2.4 is a reference to the money purchase plan Agreement. |
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(a) |
Employer
Contributions. The Employer must elect under Part 4 of the Nonstandardized Agreement
to make Employer Contributions under one or more of the following methods: |
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(1) |
as a uniform percentage of
each Eligible Participant’s Included Compensation; |
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(2) |
as a uniform dollar amount
for each Eligible Participant; |
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(3) |
under the Permitted Disparity
Method (using either the individual method or group method); |
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(4) |
under a formula based on
service with the Employer; or |
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(5) |
under a Xxxxx-Xxxxx
Contribution Formula. |
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Under the Standardized
Agreement, the Employer may only elect to make an Employer Contribution as a
uniform percentage of Included Compensation, a uniform dollar amount, or
under the Permitted Disparity Method. |
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An Eligible Participant is
only entitled to share in the Employer Contribution if such Participant
satisfies the allocation conditions described under Part 4, #15 of the
Agreement. See Section 2.6. |
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If the Employer elects more
than one Employer Contribution formula under Part 4, #12 of the Agreement,
each formula is applied separately. An Eligible Participant’s aggregate
Employer Contributions for a Plan Year will be the sum of the Employer
Contributions the Participant is entitled to under all such formulas. |
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(b) |
Uniform
percentage or uniform dollar amount. The contribution made by the Employer must
be allocated to Eligible Participants in a definitely determinable manner. If
the Employer elects to make an Employer Contribution as a uniform percentage
of Included Compensation under Part 4, #12.a. of the Agreement or as a
uniform dollar amount under Part 4, #12.b. of the Agreement, each Eligible
Participant’s allocation of the Employer Contribution will equal the amount
determined under the contribution formula elected under the Agreement. |
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(c) |
Permitted
Disparity Method. The Employer may elect under Part 4, #12.c. of the Agreement to use
the Permitted Disparity Method using either the individual method or the
group method. An Employer may not elect a Permitted Disparity Method under
the Plan if another qualified plan of the Employer, which covers any of the
same Employees, uses permitted disparity in determining the allocation of
contributions or accrual of benefits under the plan. |
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For purposes of applying
the Permitted Disparity Method, Excess Compensation is the portion of an
Eligible Participant’s Included Compensation that exceeds the Integration
Level. The Integration Level is the Taxable Wage Base, unless the Employer
designates a different amount under Part 4, #14.b. of the Agreement. |
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(1) |
Individual
method. If the
Employer elects the Permitted Disparity Method using the individual method,
each Eligible Participant will receive an allocation of the Employer
Contribution equal to the amount determined under the contribution formula
under Part 4, #12.c.(1) of the Agreement. Under the individual Permitted
Disparity Method, the Employer will contribute (i) a fixed percentage of each
Eligible Participant’s Included Compensation for the Plan Year plus (ii) a
fixed percentage of each Eligible Participant’s Excess Compensation. The
percentage of each Eligible Participant’s Excess Compensation under (ii) may
not exceed the lesser of the percentage of total Included Compensation
contributed under (i) or the Applicable Percentage under the following table:
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Integration Level
(As a percentage of the Taxable Wage Base) |
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Applicable
Percentage |
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100% |
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5.7% |
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More
than 80% but less than 100% |
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5.4% |
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More
than 20% and not more than 80% |
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4.3% |
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20%
or less |
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5.7% |
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(2) |
Group method. If the Employer elects the Permitted
Disparity Method using the group method under Part 4, #12.c.(2) of the
Agreement, the Employer will contribute a fixed percentage (as designated in
the Agreement) of the total Included Compensation for the Plan Year of all
Eligible Participants. The total Employer Contribution is then allocated
among the Eligible Participants under either the Two-Step Formula or the
Four-Step Formula described below. |
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(i) |
Two-Step
Formula. If the
Employer elects the Two-Step Formula, the Employer Contribution will be
allocated in the same manner as under Section 2.2(b)(2)(i) above. However,
the Employer may elect to have the Four-Step Formula automatically apply for
any Plan Year in which the Plan is a Top-Heavy Plan. |
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(ii) |
Four-Step
Formula. If the
Employer elects the Four-Step Formula or if the Plan is a Top-Heavy Plan and
the Employer elects to have the Four-Step Formula apply for Plan Years when
the Plan is a Top-Heavy Plan, the Employer Contribution will be allocated to
Eligible Participants in the same manner as under Section 2.2(b)(2)(ii)
above. |
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(d) |
Contribution
based on service. The Employer may elect under Part 4, #12.d. of the Nonstandardized
Agreement to provide an Employer Contribution for each Eligible Participant
based on the service performed by such Eligible Participant during the Plan
Year (or other period designated under Part 4, #13.a. of the Agreement). The
Employer may provide a fixed dollar amount of a fixed percentage of Included
Compensation for each Hour of Service, each week of employment or any other
measuring period selected under Part 4, #12.d. of the Nonstandardized
Agreement. If the Employer elects to make a contribution based on service,
each Eligible Participant will receive an allocation of the Employer
Contribution equal to the amount determined under the contribution formula
under Part 4, #12.d. of the Nonstandardized Agreement. |
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(e) |
Xxxxx-Xxxxx
Contribution Formula. The Employer may elect under Part 4, #12.e.
of the Nonstandardized Agreement to provide an Employer Contribution for each
Eligible Participant who performs Xxxxx-Xxxxx Act Service. For this purpose,
Xxxxx-Xxxxx Act Service is any service performed by an Employee under a
public contract subject to the Xxxxx-Xxxxx Act or to any other federal, state
or municipal prevailing wage law. Each such Eligible Participant will receive
a contribution based on the hourly contribution rate for the Participant’s
employment classification, as designated on Schedule A of the Agreement.
Schedule A is incorporated as part of the Xxxxxxxxx.Xx applying the
Xxxxx-Xxxxx Contribution Formula under this subsection (e), the following
default rules will apply. The Employer may modify these default rules under
Part 4, #12.e.(2) of the Nonstandardized Agreement |
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(1) |
Eligible
Employees. Highly
Compensated Employees are Excluded Employees for purposes of receiving an
Employer Contribution under the Xxxxx-Xxxxx Contribution Formula. |
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(2) |
Minimum
age and service conditions. No minimum age or service conditions will apply for purposes of
determining an Employee’s eligibility under the Xxxxx-Xxxxx Contribution
Formula. |
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(3) |
Entry
Date. For purposes
of applying the Xxxxx-Xxxxx Contribution Formula, an Employee becomes an Eligible
Participant on his/her Employment Commencement Date. |
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(4) |
Allocation
conditions. No
allocation conditions (as described in Section 2.6) will apply for purposes
of determining an Eligible Participant’s allocation under the Xxxxx-Xxxxx
Contribution Formula. |
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(5) |
Vesting. Employer Contributions made pursuant to the
Xxxxx-Xxxxx Contribution Formula are always 100% vested. |
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(6) |
Offset of
other Employer Contributions. The contributions under the Xxxxx Bacon Contribution Formula will not
offset any other Employer Contributions under the Plan. However, the Employer
may elect under Part 4, #12.e.(1) of the Nonstandardized Agreement to offset
any other Employer |
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Contributions made under
the Plan by the Employer Contributions a Participant receives under the
Xxxxx-Xxxxx Contribution Formula. |
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(f) |
Applicable
period for determining Included Compensation. In determining the amount of Employer
Contribution to be allocated to an Eligible Participant, Included
Compensation is determined separately for each period designated under Part
4, #13.a. of the Agreement. If the Employer elects the Permitted Disparity
Method under Part 4, #12.c. of the Agreement, the period designated under
Part 4, #13.a. must be the Plan Year. If the Employer elects an Employer
Contribution formula under Part 4, #12 of the Agreement other than the
Permitted Disparity Method, and elects a period under Part 4, #13.a. other
than the Plan Year, a Participant’s allocation of Employer Contributions will
be determined separately for each period based solely on Included
Compensation for such period. If the Employer elects the service formula
under Part 4, #12.d. of the Nonstandardized Agreement, the Employer
Contribution also will be determined separately for each period designated
under Part 4, #13.a. of the Agreement based on service performed during such
period. The Employer need not actually make the Employer Contribution during
the designated period, provided the total Employer Contribution for the Plan
Year is allocated based on the proper Included Compensation. |
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(g) |
Special
rules for determining Included Compensation. The same rules as discussed under Section
2.2(c)(2) apply to permit the Employer to elect under Part 4, #13.b. of the
Agreement to take into account an Employee’s Included Compensation for the
entire Plan Year, even if the Employee is an Eligible Participant for only
part of the Plan Year. If no election is made under Part 4, #13.b., only
Included Compensation for the portion of the Plan Year while an Employee is
an Eligible Participant will be taken into account in determining an
Employee’s Employer Contribution under the Plan. The Employer also may elect
under Part 4, #13.c. of the Agreement to take into account Included
Compensation for the calendar year ending in the Plan Year or other 12-month
period, as provided in Section 2.2(c)(3). |
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(h) |
Limit on
contribution where Employer maintains another plan in addition to a money
purchase plan. If the Employer adopts the money purchase plan Agreement and also
maintains another qualified retirement plan, the contribution to be made
under the money purchase plan Agreement (as designated in Part 4 of the
Agreement) will not exceed the maximum amount that is deductible under Code
§404(a)(7), taking into account all contributions that have been made to the
plans prior to the date a contribution is made under the money purchase plan
Agreement. |
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2.5 |
Target
Benefit Plan Contribution. This Section 2.5 applies if the Employer
has adopted the target benefit plan Agreement. Any reference to the Agreement
under this Section 2.5 is a reference to the target benefit plan Agreement. |
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(a) |
Stated
Benefit. A Participant’s Stated Benefit, as of any Plan Year, is the amount
determined in accordance with the benefit formula selected under Part 4 of
the Agreement, payable annually in the form of a Straight Life Annuity
commencing upon the Participant’s Normal Retirement Age (as defined in Part 5
of the Agreement) or current age (if later). In applying the benefit formula
under Part 4, all projected Years of Participation (as defined in subsection
(d)(10) below) are counted beginning with the first Plan Year and projecting
through the last day of the Plan Year in which the Participant attains Normal
Retirement Age (or the current Plan Year, if later), assuming all relevant
factors remain constant for future Plan Years. For this purpose, the first
Plan Year is the latest of: |
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(1) |
the first Plan Year in
which the Participant becomes an Eligible Participant; |
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(2) |
the first Plan Year
immediately following a Plan Year in which the Plan did not satisfy the
target benefit plan safe harbor under Treas. Reg. §1.401(a)(4)-8(b)(3); or |
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(3) |
the first Plan Year taken
into account under the Plan’s benefit formula, as designated in Part 4,
#13.c. of the Agreement. If Part 4, #13.c. is not completed, the first Plan
Year taken into account under this subsection (3) will be the original
Effective Date of this Plan, as designated under #59.a. or #59.b.(2) of the Agreement,
as applicable. |
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If this Plan is a “prior
safe harbor plan” then, solely for purposes of determining projected Years of
Participation, the Plan is deemed to satisfy the target benefit plan safe
harbor under Treas. Reg. §1.401(a)(4)-8(b)(3) and the Participant is treated
as an Eligible Participant under the Plan for any Plan Year beginning prior
to January 1, 1994. This Plan is a prior safe harbor plan if it was
originally in effect on September 19, 1991, and on that date the Plan
contained a stated benefit formula that took into account service prior to
that date, and the Plan satisfied the applicable nondiscrimination
requirements for target benefit plans for those prior years. For purposes of
determining whether a plan satisfies the applicable nondiscrimination
requirements for target benefit plans for Plan Years beginning before January
1, 1994, no amendments after September 19, 1991, other than amendments
necessary to satisfy §401(l) of the Code, will be taken into account. |
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(b) |
Employer Contribution. Each Plan Year, the Employer will contribute to the Plan on behalf of
each Eligible Participant who has satisfied the allocation conditions under
Part 4, #15 of the Agreement, an amount necessary to fund the Participant’s
Stated Benefit, determined in accordance with the benefit formula selected
under Part 4, #13 of the Agreement. The Employer’s required contribution may
be reduced by forfeitures in accordance with the provisions of Section
5.5(b). |
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(1) |
Participant
has not reached Normal Retirement Age. If a Participant has not reached Normal
Retirement Age by the last day of the Plan Year, the Employer Contribution
for such Plan Year with respect to that Participant is the excess, if any, of
the Present Value Stated Benefit (as defined in subsection (3) below) over
the Theoretical Reserve (as defined in subsection (4) below), multiplied by
the appropriate Amortization Factor from Table II under Exhibit A of the
Agreement. The factors under Table II are determined based on the applicable
interest rate assumptions selected under Part 4, #14.b.(1) of the Agreement. |
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(2) |
Participant
has reached Normal Retirement Age. If a Participant has reached Normal Retirement Age by the last day of
the Plan Year, the Employer Contribution for such Plan Year with respect to
that Participant is the excess, if any, of the Present Value Stated Benefit
(as defined in subsection (3) below) over the Theoretical Reserve (as defined
in subsection (4) below). |
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(3) |
Present
Value Stated Benefit.
For purposes of determining the Employer Contribution under the Plan, a
Participant’s Present Value Stated Benefit is the Participant’s Stated
Benefit multiplied by the appropriate present value factor under Table I or
Table IA, as appropriate (if the Participant has not attained Normal
Retirement Age) or Table IV (if the Participant has attained Normal
Retirement Age). The Present Value Stated Benefit must be further adjusted by
the factors under Table III if the Normal Retirement Age under the Plan is
other than age 65. (See Exhibit A under the Agreement for the applicable
factors. The applicable factors are determined based on the applicable
interest rate assumptions selected under Part 4, #14.b.(1) of the Agreement
and assuming a UP-1984 mortality table. If the Employer elects a different
applicable mortality table under Part 4, #14.b.(2), appropriate factors must
be attached to the Agreement.) |
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(4) |
Theoretical
Reserve. Except as
provided in the following paragraph, for the first Plan Year for which the
Stated Benefit is determined (see subsection (a) above), a Participant’s
Theoretical Reserve is zero. For each subsequent Plan Year, the Theoretical
Reserve is the sum of the Theoretical Reserve for the prior Plan Year plus
the Employer Contribution required for such prior Plan Year. The sum is then
adjusted for interest (using the Plan’s interest assumptions for the prior
Plan Year) through the last day of the current Plan Year. For any Plan Year
following the Plan Year in which the Participant attains Normal Retirement
Age, no interest adjustment is required. For purposes of determining a
Participant’s Theoretical Reserve, minimum contributions required solely to
comply with the Top-Heavy Plan rules under Article 16 are not included. |
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If this Plan was a prior
safe harbor plan (see the definition of prior safe harbor plan under
subsection (a) above), with a benefit formula that takes into account Plan
Years prior to the first Plan Year this Plan satisfies the target benefit
plan safe harbor under Treas. Reg. §1.401(a)(4)-8(b)(3)(c), the Theoretical
Reserve for the first Plan Year is determined by subtracting the result in
subsection (ii) from the result in subsection (i). |
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(i) |
Determine the present value
of the Stated Benefit as of the last day of the Plan Year immediately
preceding the first Plan Year this Plan satisfies the target benefit plan
safe harbor under Treas. Reg. §1.401(a)(4)-8(b)(3)(c), using the actuarial
assumptions, the provisions of the Plan, and the Participant’s compensation
as of such date. For a Participant who has attained Normal Retirement Age,
the Stated Benefit will be determined using the actuarial assumptions, the
provisions of the Plan, and the Participant’s compensation as of such date,
using a straight life annuity factor for a Participant whose attained age is
the Normal Retirement Age under the Plan. |
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(ii) |
Determine the present value
of future Employer Contributions (i.e., the Employer Contributions due each
Plan Year using the actuarial assumptions, the provisions of the Plan
(disregarding those provisions of the Plan providing for the limitations of
§415 of the Code or the minimum contributions under §416 of the Code)), and
the Participant’s compensation as of such date, beginning with the first Plan
Year through the end of the Plan Year in which the Participant attains Normal
Retirement Age. |
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(c) |
Benefit
formula. The Employer may elect under Part 4 of the Agreement to apply a
Nonintegrated Benefit Formula or an Integrated Benefit Formula. The benefit
formula selected under Part 4 of the Agreement must comply with the target
benefit plan safe harbor rules under Treas. Reg. §1.401(a)(4)-8(b)(3). |
16
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(1) |
Nonintegrated
Benefit Formula.
Under a Nonintegrated Benefit Formula, benefits provided under Social
Security are not taken into account when determining an Eligible
Participant’s Stated Benefit. A Nonintegrated Benefit Formula may provide for
a Flat Benefit or a Unit Benefit. |
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(i) |
Flat
Benefit. The
Employer may elect under Part 4, #13.a.(1) of the Agreement to apply a Flat
Benefit formula that provides a Stated Benefit equal to a specified
percentage of Average Compensation. A Participant’s Stated Benefit determined
under the Flat Benefit formula will be reduced pro rata if the Participant’s
projected Years of Participation are less than 25 Years of Participation. For
a Participant with less than 25 projected Years of Participation, the base
percentage and the excess percentage are reduced by multiplying such
percentages by a fraction, the numerator of which is the Participant’s
projected Years of Participation, and the denominator of which is 25. |
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(ii) |
Unit
Benefit. The
Employer may elect under Part 4, #13.a.(2) of the Agreement or under Part 4,
#13.a.(3) of the Nonstandardized Agreement to apply a Unit Benefit formula
that provides a Stated Benefit equal to a specified percentage of Average
Compensation multiplied by the Participant’s Years of Participation with the
Employer. The Employer may elect to limit the Years of Participation taken
into account under a Unit Benefit formula, however, the Plan must take into
account all Years of Participation up to at least 25 years. |
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If the Employer elects a
tiered formula under Part 4, #13.a.(3) of the Nonstandardized Agreement, the
highest benefit percentage for any Participant with less than 33 Years of
Participation cannot be more than one-third larger than the lowest benefit
percentage for any Participant with less than 33 Years of Participation. This
requirement is satisfied if the percentage under Part 4, #13.a.(3)(a) applies
to all Years of Participation up to at least 33. If the percentage under Part
4, #13.a.(3)(a) applies to Years of Participation less than 33, this
paragraph will be satisfied if the total Years of Participation taken into
account under Part 4, #13.a.(3)(b) and Part 4, #13.a.(3)(d) is not less than
33 and the percentage designated in Part 4, #13.a.(3)(c) is not less than
P1(25-Y)/(33-Y) and is not greater than P1(44-Y)/(33-Y), where P1 is the
percentage under Part 4, #13.a.(3)(a) and Y is the number of Years of
Participation to which the percentage under Part 4, #13.a.(3)(a) applies. If
the total Years of Participation taken into account under Part 4,
#13.a.(3)(b) and Part 4, #13.a.(3)(d) is less than 33, a similar calculation
applies to any percentage designated in Part 4, #13.a.(3)(e). |
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(2) |
Integrated
Benefit Formula. An
Integrated Benefit Formula is designed to provide a greater benefit to
certain Participants to make up for benefits not provided under Social
Security. An Integrated Benefit Formula may provide for a Flat Excess
Benefit, a Unit Excess Benefit, a Flat Offset Benefit, or a Unit Offset
Benefit. An Employer may not elect an Integrated Benefit Formula under the
Plan if another qualified plan of the Employer, which covers any of the same
Employees, uses permitted disparity (or imputes permitted disparity) in
determining the allocation of contributions or accrual of benefits under the
plan. |
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(i) |
Flat
Excess Benefit. The
Employer may elect under Part 4, #13.b.(1) of the Agreement to apply a Flat
Excess Benefit formula that provides a Stated Benefit equal to a specified
percentage of Average Compensation (“base percentage”) plus a specified
percentage of Excess Compensation (“excess percentage”). |
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(A) |
Maximum
permitted disparity.
In completing a Flat Excess Benefit formula under Part 4, #13.b.(1) of the
Agreement, the excess percentage under Part 4, #13.b.(1)(b) may not exceed
the Maximum Disparity Percentage identified under subsection (3)(i) below.
The excess percentage may be further reduced under the Cumulative Disparity
Limit under subsection (3)(iv) below. |
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(B) |
Limitation
on Years of Participation. The Participant’s base percentage and excess percentage under the
Flat Excess Benefit formula are reduced pro rata if the Participant’s
projected Years of Participation are less than 35 years. For a Participant
with less than 35 projected Years of Participation, the base percentage and
the excess percentage are reduced by multiplying such percentages by a
fraction, the numerator of which is the Participant’s projected Years of
Participation, and the denominator of which is 35. |
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(ii) |
Unit
Excess Benefit. The
Employer may elect under Part 4, #13.b.(2) of the Agreement or under Part 4,
#13.b.(3) of the Nonstandardized Agreement to apply a Unit Excess Benefit
formula which provides a Stated Benefit equal to a specified percentage of |
17
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Average Compensation (“base
percentage”) plus a specified percentage of Excess Compensation (“excess
percentage”) multiplied by the Participant’s Years of Participation with the
Employer. |
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(A) |
Maximum
permitted disparity.
In completing a Unit Excess Benefit formula under Part 4, #13.b. of the
Agreement, the excess percentage under the formula may not exceed the Maximum
Disparity Percentage identified under subsection (3)(i) below. In addition,
if the Employer elects a tiered formula under Part 4, #13.b.(3) of the
Nonstandardized Agreement, the percentage designated under Part 4,
#13.b.(3)(d) and/or Part 4, #13.b.(3)(f), as applicable, may not exceed the
sum of the base percentage under Part 4, #13.b.(3)(a) and the excess
percentage under Part 4, #13.b.(3)(b). |
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(B) |
Limitation
on Years of Participation. The Employer must identify under Part 4, #13.b. the Years of
Participation that will be taken into account under the Unit Excess Benefit
formula. If the Employer elects a uniform formula under Part 4, #13.b.(2) of
the Agreement, the Plan must take into account all Years of Participation up
to at least 25. In addition, a Participant may not be required to complete
more than 35 Years of Participation to earn his/her full Stated Benefit. (See
the Cumulative Disparity Limit under subsection (3)(iv) below for additional
restrictions that may limit a Participant’s Years of Participation that may
be taken into account under the Plan.)
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If the Employer elects a tiered
formula under Part 4, #13.b.(3) of the Nonstandardized Agreement and the
Years of Participation specified under Part 4, #13.b.(3)(c) is less than 35,
the percentage under Part 4, #13.b.(3)(d) must equal the sum of the base
percentage under Part 4, #13.b.(3)(a) and the excess percentage under Part 4,
#13.b.(3)(b) and any Years of Participation required under Part 4,
#13.b.(3)(e) may not be less than 35 minus the Years of Participation
designated under Part 4, #13.b.(3)(c). (See the Cumulative Disparity Limit
under subsection (3)(iv) below for additional restrictions that may limit a
Participant’s Years of Participation that may be taken into account under the
Plan.) If the number of Years of Participation specified under Part 4,
#13.b.(3)(c) is less than 35, and Part 4, #13.b.(3)(d) is not checked, the
percentage specified under Part 4, #13.b.(3)(f) must equal the sum of the
base percentage under Part 4, #13.b.(3)(a) and the excess percentage under
Part 4, #13.b.(3)(b). |
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(iii) |
Flat
Offset Benefit. The
Employer may elect under Part 4, #13.b.(4) of the Nonstandardized Agreement
or Part 4, #13.b.(3) of the Standardized Agreement to apply a Flat Offset
Benefit formula that provides a Stated Benefit equal to a specified
percentage of Average Compensation (“gross percentage”) offset by a specified
percentage of Offset Compensation (“offset percentage”). |
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(A) |
Maximum
permitted disparity.
In applying a Flat Offset Benefit formula, the offset percentage for any
Participant may not exceed the Maximum Offset Percentage identified under
subsection (3)(ii) below. The offset percentage may be further reduced under
the Cumulative Disparity Limit under subsection (3)(iv) below. |
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(B) |
Limitation
on Years of Participation. The Participant’s gross percentage and offset percentage under the
Flat Offset Benefit formula are reduced pro rata if the Participant’s
projected Years of Participation are less than 35 years. For a Participant
with less than 35 projected Years of Participation, the gross percentage and
the offset percentage are reduced by multiplying such percentages by a
fraction, the numerator of which is the Participant’s projected Years of
Participation, and the denominator of which is 35. |
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(iv) |
Unit
Offset Benefit. The
Employer may elect under Part 4, #13.b.(5) and Part 4, #13.b.(6) of the
Agreement or under Part 4, #13.b.(4) of the Standardized Agreement to apply a
Unit Offset Benefit formula which provides a Stated Benefit equal to a
specified percentage of Average Compensation (“gross percentage”) offset by a
specified percentage of Offset Compensation (“offset percentage”) multiplied
by the Participant’s Years of Participation with the Employer. |
18
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(A) |
Maximum
permitted offset. In
applying a Unit Offset Benefit formula, the offset percentage for any
Participant may not exceed the Maximum Offset Percentage identified under
subsection (3)(ii) below. In addition, if the Employer elects a tiered
formula under Part 4, #13.b.(6) of the Nonstandardized Agreement, the
percentage designated under Part 4, #13.b.(6)(d) and/or Part 4, #13.b.(6)(f),
as applicable, may not exceed the gross percentage under Part 4,
#13.b.(6)(a). |
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(B) |
Limitation
on Years of Participation. The Employer must identify under Part 4, #13.b. the Years of
Participation that will be taken into account under the Unit Offset Benefit
formula. If the Employer elects a uniform offset formula under Part 4,
#13.b.(5) of the Nonstandardized Agreement or Part 4, #13.b.(4) of the
Standardized Agreement, the Plan must take into account all Years of
Participation up to at least 25. In addition, a Participant may not be
required to complete more than 35 Years of Participation to earn his/her full
Stated Benefit. (See the Cumulative Disparity Limit under subsection (3)(iv)
below for additional restrictions that may limit a Participant’s Years of
Participation that may be taken into account under the Plan.) |
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If the Employer elects a
tiered offset formula under Part 4, #13.b.(6) of the Nonstandardized
Agreement and the Years of Participation specified under Part 4, #13.b.(6)(c)
is less than 35, any percentage under Part 4, #13.b.(6)(d) must equal the
gross percentage under Part 4, #13.d.(6)(a) and any Years of Participation
required under Part 4, #13.b.(6)(e) may not be less than 35 minus the Years
of Participation designated under Part 4, #13.b.(6)(c). (See the Cumulative
Disparity Limit under subsection (3)(iv) below for additional restrictions
that may limit a Participant’s Years of Participation that may be taken into
account under the Plan.) If the number of Years of Participation specified
under Part 4, #13.b.(6)(c) is less than 35, and Part 4, #13.b.(6)(d) is not
checked, the percentage specified under Part 4, #13.b.(6)(f) must equal the
gross percentage under Part 4, #13.b.(6)(a). |
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(3) |
Special
rules for applying Integrated Benefit Formulas under Part 4, #13.b. of the
Agreement. |
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(i) |
Maximum
Disparity Percentage.
In applying the Flat Excess Benefit formula described in subsection (2)(i)
above or the Unit Excess Benefit formula described in subsection (2)(ii)
above, the excess percentage under the formula may not exceed the Maximum
Disparity Percentage. Under a Flat Excess Benefit formula, the Maximum
Disparity Percentage is the lesser of the base percentage specified under the
Agreement or the appropriate factor described under the Simplified Table
below multiplied by 35. Under a Unit Excess Benefit formula, the Maximum
Disparity Percentage is the lesser of the base percentage specified under the
Agreement or the appropriate factor described under the Simplified Table
below. |
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In applying the Simplified
Table below, NRA is a Participant’s Normal Retirement Age under the Plan. If
a Participant’s Normal Retirement Age is prior to age 55, the applicable
factors under the Simplified Table must be further reduced to a factor that is
the Actuarial Equivalent of the factor at age 55. (See (iii) below for
possible adjustments to the Simplified Table if an Integration Level other
than Covered Compensation is selected under Part 4, #14.d.(1) of the
Agreement.) |
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Simplified Table |
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NRA |
|
Maximum
Disparity Percentage |
|
NRA |
|
Maximum
Disparity Percentage |
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70 |
|
0.838 |
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62 |
|
0.416 |
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69 |
|
0.760 |
|
61 |
|
0.382 |
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|
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68 |
|
0.690 |
|
60 |
|
0.346 |
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|
67 |
|
0.627 |
|
59 |
|
0.330 |
|
|
|
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66 |
|
0.571 |
|
58 |
|
0.312 |
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65 |
|
0.520 |
|
57 |
|
0.294 |
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|
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64 |
|
0.486 |
|
56 |
|
0.278 |
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63 |
|
0.450 |
|
55 |
|
0.260 |
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19
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(ii) |
Maximum
Offset Percentage.
In applying the Flat Offset Benefit formula described in subsection (2)(iii)
above or the Unit Offset Benefit formula described in subsection (2)(iv) above,
the offset percentage under the formula may not exceed the Maximum Offset
Percentage. Under a Flat Offset Benefit formula, the Maximum Offset
Percentage is the lesser of 50% of the gross percentage specified under the
Agreement or the appropriate factor described under the Simplified Table
above, multiplied by 35. Under a Unit Offset Benefit formula, the Maximum
Offset Percentage is the lesser of 50% of the gross percentage specified
under the Agreement or the appropriate factor described under the Simplified
Table above. |
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In applying the Simplified
Table above, NRA is a Participant’s Normal Retirement Age under the Plan. If
a Participant’s Normal Retirement Age is prior to age 55, the applicable
factors under the Simplified Table must be further reduced to a factor that
is the Actuarial Equivalent of the factor at age 55. (See (iii) below for
possible adjustments to the Simplified Table if an Integration Level other
than Covered Compensation is selected under Part 4, #14.d.(1) of the
Agreement.) |
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(iii) |
Adjustments
to the Maximum Disparity Percentage / Maximum Offset Percentage for
Integration Level other than Covered Compensation. The factors under the Simplified Table
under subsection (i) above are based on an Integration Level equal to Covered
Compensation. If the Employer elects under Part 4, #14.d.(1)(b) – (e) of the
Agreement to use an Integration Level other than Covered Compensation, the
factors under the Simplified Table may have to be modified. If the Employer
elects to modify the Integration Level under Part 4, #14.d.(1)(b) or Part 4,
#14.d.(1)(c) of the Agreement, no modification to the Simplified Table is
required. If the Employer elects to modify the Integration Level under Part
4, #14.d.(1)(d) or Part 4, #14.d.(1)(e), the factors under the Modified Table
below must be used instead of the factors under the Simplified Table. |
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Modified Table – Factors for Integration Level other than
Covered Compensation |
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|
NRA |
|
Maximum
Disparity Percentage |
|
NRA |
|
Maximum
Disparity Percentage |
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70 |
|
0.670 |
|
62 |
|
0.331 |
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69 |
|
0.608 |
|
61 |
|
0.305 |
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68 |
|
0.552 |
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60 |
|
0.277 |
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|
67 |
|
0.627 |
|
59 |
|
0.264 |
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|
|
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|
66 |
|
0.502 |
|
58 |
|
0.250 |
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|
|
65 |
|
0.416 |
|
57 |
|
0.234 |
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|
|
|
|
64 |
|
0.388 |
|
56 |
|
0.222 |
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|
63 |
|
0.360 |
|
55 |
|
0.208 |
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|
(iv) |
Cumulative
Disparity Limit. The
Cumulative Disparity Limit applies to further limit the permitted disparity
under the Plan. If the Cumulative Disparity Limit applies, the following
adjustment will be made to the Participant’s Stated Benefit, depending on the
type of formula selected under the Agreement. |
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|
(A) |
Flat
Excess Benefit. In
applying a Flat Excess Benefit formula, if a Participant’s cumulative
disparity years exceed 35, the excess percentage under the formula will be
reduced as provided below. For this purpose, a Participant’s cumulative
disparity years consist of: (I) the Participant’s projected Years of
Participation (up to 35); (II) any years the Participant benefited (or is
treated as having benefited) under this Plan prior to the Participant’s first
Year of Participation; and (III) any years credited to the Participant for
allocation or accrual purposes under one or more qualified plans or
simplified employee pension plans (whether or not terminated) ever maintained
by the Employer (other than years counted in (I) or (II) above). For purposes
of determining the Participant’s cumulative disparity years, all years ending
in the same calendar year are treated as the same year. |
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|
If the Cumulative Disparity
Limit applies, the excess percentage under the formula will be reduced by
multiplying the excess percentage (as adjusted under this subsection (3)) by
a fraction (not less than zero), the numerator of which is 35 minus the sum
of the years in (II) and (III) above, and the denominator of which is
35. |
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20
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(B) |
Unit
Excess Benefit. In
applying a Unit Excess Benefit formula, the projected Years of Participation
taken into account under the formula may not exceed the Participant’s
cumulative disparity years. For this purpose, the Participant’s cumulative
disparity years equal 35 minus: (I) the years the Participant benefited or is
treated as having benefited under this Plan prior to the Participant’s first
Year of Participation, and (II) the years credited to the Participant for
allocation or accrual purposes under one or more qualified plans or
simplified employee pension plans (whether or not terminated) ever maintained
by the Employer other than years counted in (I) above or counted toward a
Participant’s projected Years of Participation. For purposes of determining
the Participant’s cumulative disparity years, all years ending in the same
calendar year are treated as the same year. |
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|
(C) |
Flat
Offset Benefit. In
applying a Flat Offset Benefit formula, if a Participant’s cumulative
disparity years exceed 35, the gross percentage and offset percentage under
the formula will be reduced as provided below. For this purpose, a
Participant’s cumulative disparity years consist of: (I) the Participant’s
projected Years of Participation (up to 35); (II) any years the Participant
benefited (or is treated as having benefited) under this Plan prior to the
Participant’s first Year of Participation; and (III) any years credited to
the Participant for allocation or accrual purposes under one or more
qualified plans or simplified employee pension plans (whether or not
terminated) ever maintained by the Employer (other than years counted in (I)
or (II) above). For purposes of determining the Participant’s cumulative disparity
years, all years ending in the same calendar year are treated as the same
year. |
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|
|
If the Cumulative Disparity
Limit applies, the offset percentage will be reduced by multiplying such
percentage by a fraction (not less than 0), the numerator of which is 35
minus the sum of the years in (II) and (III) above, and the denominator of
which is 35. The gross benefit percentage will be reduced by the number of
percentage points by which the offset percentage is reduced. |
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|
|
(D) |
Unit
Offset Benefit. In
applying a Unit Offset Benefit formula, the Years of Participation taken into
account under the formula may not exceed the Participant’s cumulative
disparity years. For this purpose, the Participant’s cumulative disparity
years equal 35 minus: (I) the years the Participant benefited or is treated
as having benefited under this Plan prior to the Participant’s first Year of
Participation, and (II) the years credited to the Participant for allocation
or accrual purposes under one or more qualified plans or simplified employee
pension plans (whether or not terminated) ever maintained by the Employer
other than years counted in (I) above or counted toward a Participant’s
projected Years of Service. For purposes of determining the Participant’s
cumulative disparity years, all years ending in the same calendar year are
treated as the same year. |
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(d) |
Definitions. The following
definitions apply for purposes of applying the benefit formulas described
under this Section 2.5. |
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(1) |
Average
Compensation. The
average of a Participant’s annual Included Compensation during the Averaging
Period, as designated in Part 3, #11 of the Agreement. If no modifications
are made to the definition of Average Compensation under Part 3, #11, Average
Compensation is the average of the Participant’s annual Included Compensation
for the three (3) consecutive Plan Years during the Participant’s entire
employment history which produce the highest average. |
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(i) |
Averaging
Period. Unless the
Employer elects otherwise under Part 3, #11.a. of the Agreement, the
Averaging Period for determining a Participant’s Average Compensation is made
up of the three (3) consecutive Measuring Periods during the Participant’s
Employment Period which results in the highest Average Compensation. The
Employer may elect under Part 3, #11.a. to apply an alternative Averaging
Period which is greater than three (3) consecutive Measuring Periods, may
elect to take into account the highest Average Compensation over a period of
nonconsecutive Measuring Periods, or may elect to take into account all
Measuring Periods during the Participant’s Employment Period. |
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(ii) |
Measuring
Period. Unless the
Employer elects otherwise under Part 3, #11.b. of the Agreement, the
Measuring Period for determining Average Compensation is the Plan Year. (If
the Plan has a short Plan Year, Average Compensation is based on Included |
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Compensation earned during
the 12-month period ending on the last day of the short Plan Year.) The
Employer may elect under Part 3, #11.b. to apply an alternative Measuring
Period for determining Average Compensation based on the calendar year or any
other designated 12-month period. Alternatively, the Employer may elect to
use calendar months as the Measuring Periods. If monthly Measuring Periods
are selected under Part 3, #11.b., the Averaging Period designated under Part
3, #11.a. must be at least 36 months. |
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(iii) |
Employment
Period. Unless the
Employer elects otherwise under Part 3, #11.c. of the Agreement, the
Employment Period used to determine Average Compensation is the Participant’s
entire employment period with the Employer. Instead of measuring Average
Compensation over a Participant’s entire period of employment, the Employer
may elect under Part 3, #11.c. to use Averaging Periods only during the
period following the Participant’s original Entry Date (as determined under
Part 2 of the Agreement) or any other specified period. If the Employer
elects an alternative Employment Period under Part 3, #11.c., such Employment
Period must end in the current Plan Year and may not be shorter than the
Averaging Period selected in Part 3, #11.a. (or the Participant’s entire
period of employment, if shorter). |
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(iv) |
Drop-out
years. Unless
elected otherwise under Part 3, #11.d. of the Agreement, all Measuring
Periods within a Participant’s Employment Period are included for purposes of
determining Average Compensation. The Employer may elect under Part 3, #11.d.
to exclude the Measuring Period in which the Participant terminates
employment or any Measuring Period during which a Participant does not
complete a designated number of Hours of Service. If the Employer elects to
apply an Hour of Service requirement under Part 3, #11.d.(2), the designated
Hours of Service required for any particular Participant may not exceed 75%
of the Hours of Service that an Employee working full-time in the same job
category as the Participant would earn during the Measuring Period. |
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In determining whether the
Measuring Periods within an Averaging Period are consecutive (see subsection
(i) above), any Measuring Period excluded under this subsection (iv) will be
disregarded. |
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(2) |
Covered
Compensation. For
purposes of applying an Integrated Benefit Formula, a Participant’s Covered
Compensation for the Plan Year is the average of the Taxable Wage Bases in
effect for each calendar year during the 35-year period ending on the last
day of the calendar year in which the Participant attains (or will attain)
his/her Social Security Retirement Age. In determining a Participant’s
Covered Compensation, the Taxable Wage Base in effect as of the beginning of
the Plan Year is assumed to remain constant for all future years. If a
Participant is 35 or more years away from his/her Social Security Retirement
Age, the Participant’s Covered Compensation is the Taxable Wage Base in
effect as of the beginning of the Plan Year. A Participant’s Covered
Compensation remains constant for Plan Years beginning after the calendar
year in which the Participant attains Social Security Retirement Age. |
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Unless elected otherwise
under Part 4, #14.d.(2) of the Agreement, a Participant’s Covered
Compensation must be adjusted every Plan Year to reflect the Taxable Wage
Base in effect for such year. The Employer may designate under Part 4,
#14.d.(2)(a) to use Covered Compensation for a Plan Year earlier than the
current Plan Year. Such earlier Plan Year may not be more than 5 years before
the current Plan Year. For the sixth Plan Year following the Plan Year used
to calculate Covered Compensation (as determined under this sentence),
Covered Compensation will be adjusted using Covered Compensation for the
prior Plan Year. Covered Compensation will not be adjusted for Plan Years
prior to the sixth Plan Year following the Plan Year used to calculate
Covered Compensation. |
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In determining a
Participant’s Covered Compensation, the Employer may elect under Part 4,
#14.d.(2)(b) to apply the rounded Covered Compensation tables issued by the
IRS instead of using the applicable Taxable Wage Bases of the Participant. |
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(3) |
Excess
Compensation. Excess
Compensation is used for purposes of determining a Participant’s Normal
Retirement Benefit under an Excess Benefit Formula. A Participant’s Excess
Compensation is the excess (if any) of the Participant’s Average Compensation
over the Integration Level. |
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(4) |
Integration
Level. The
Integration Level under the Plan is used for determining the Excess
Compensation or Offset Compensation used to determine a Participant’s Stated
Benefit under the Plan. The Employer may elect under Part 4, #14.d.(1)(a) of
the Agreement to use a Participant’s Covered Compensation for the Plan Year
as the Integration Level. Alternatively, the Employer may |
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elect under Parts 4,
#14.d.(1)(b) – (e) to apply an alternative Integration Level under the Plan.
(See subsection (c)(3)(iii) above for special rules that apply if the
Employer elects an alternative Integration Level.) |
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(5) |
Offset
Compensation. A
Participant’s Offset Compensation is used to determine a Participant’s Stated
Benefit under an Offset Benefit formula. Unless modified under Part 3, #12 of
the Agreement, Offset Compensation is the average of a Participant’s annual
Included Compensation over the three (3) consecutive Plan Years ending with
the current Plan Year. A Participant’s Offset Compensation is taken into
account only to the extent it does not exceed the Integration Level under the
Plan. For purposes of determining a Participant’s Offset Compensation,
Included Compensation which exceeds the Taxable Wage Base in effect for the
beginning of a Measuring Period will not be taken into account. |
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(i) |
Measuring
Period. Unless
elected otherwise under Part 3, #12.a. of the Agreement, Offset Compensation
is determined based on Included Compensation earned during the Plan Year (or
the 12-month period ending on the last day of the Plan Year for a short Plan
Year). Instead of using Plan Years, the Employer may elect under Part 3,
#12.a. to determine Offset Compensation over the 3-year period ending with or
within the current Plan Year based on calendar years or any other designated
12-month period. |
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(ii) |
Drop-out
years. Unless
elected otherwise under Part 3, #12.b. of the Agreement, Offset Compensation
is determined based on the three consecutive Measuring Periods ending with or
within the current Plan Year. The Employer may elect under Part 3, #12.b. to
disregard the Measuring Period in which a Participant terminates employment
for purposes of determining Offset Compensation. |
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(6) |
Social
Security Retirement Age. An Employee’s retirement age as determined under Section 230 of the
Social Security Retirement Act. For a Participant who attains age 62 before
January 1, 2000 (i.e., born before January 1, 1938), the Participant’s Social
Security Retirement Age is 65. For a Participant who attains age 62 after
December 31, 1999, and before January 1, 2017 (i.e., born after December 31,
1937, but before January 1, 1955), the Participant’s Social Security
Retirement Age is 66. For a Participant attaining age 62 after December 31,
2016 (i.e., born after December 31, 1954), the Participant’s Social Security
Retirement Age is 67. |
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(7) |
Stated
Benefit. The amount
determined in accordance with the benefit formula selected in Part 4 of the
Agreement, payable annually as a Straight Life Annuity commencing at Normal
Retirement Age (or current age, if later). (See subsection (a) above.) |
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(8) |
Straight
Life Annuity. An
annuity payable in equal installments for the life of the Participant that
terminates upon the Participant’s death. |
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(9) |
Taxable
Wage Base. Taxable
Wage Base is the contribution and benefit base under Section 230 of the
Social Security Retirement Act at the beginning of the Plan Year. |
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(10) |
Year of
Participation. For
purposes of determining a Participant’s Stated Benefit under the Plan, a
Participant’s Years of Participation are defined under Part 4, #14.a. of the
Agreement. (See subsection (a) above for rules regarding the determination of
a Participant’s projected Years of Participation.) |
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The Employer may elect
under Part 4, #14.a.(1) to define an Employee’s Years of Participation as
each Plan Year during which the Employee satisfies the allocation conditions designated
under Part 4, #15 of the Agreement (see Section 2.6 below), including Plan
Years prior to the Employee’s becoming an Eligible Participant under the
Plan. Alternatively, the Employer may elect under Part 4, #14.a.(2) of the
Agreement to define an Employee’s Years of Participation as each Plan Year
during which the Employee satisfies the allocation conditions designated
under Part 4, #15 of the Agreement (see Section 2.6 below), taking into
account only Plan Years during which the Employee is an Eligible Participant.
The Employer may elect under Part 4, #14.a.(3) to disregard any Year of
Participation completed prior to a date designated under the Agreement. |
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2.6 |
Allocation
Conditions. In order to receive an allocation of Employer Contributions (other
than Section 401(k) Deferrals and Safe Harbor Contributions), an Eligible
Participant must satisfy any allocation conditions designated under Part 4,
#15 of the Agreement with respect to such contributions. (Similar allocation
conditions apply under Part 4B, #19 of the 401(k) Agreement for Employer
Matching Contributions and Part 4C, #24 of the 401(k) Agreement for Employer
Nonelective Contributions.) Under the Nonstandardized Agreements, the
imposition of an allocation condition may cause the Plan to fail the minimum
coverage requirements under Code §410(b), unless the only allocation
condition under the Plan is a safe harbor allocation condition. (Under the
Standardized Agreements, the only |
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allocation condition
permitted is a safe harbor allocation condition. But see (b) below for a
special rule upon plan termination.) |
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(a) |
Safe
harbor allocation condition. Under the safe harbor allocation condition
under Part 4, #15.b. of the Nonstandardized Agreement [Part 4B, #19.b. and
Part 4C, #24.b. of the Nonstandardized 401(k) Agreement], the Employer may
elect to require an Eligible Participant to be employed on the last day of
the Plan Year or to complete more than a specified number of Hours of Service
(not to exceed 500) during the Plan Year to receive an allocation of Employer
Contributions (other than Section 401(k) Deferrals or Safe Harbor
Contributions) under the Plan. Under this safe harbor allocation condition,
an Eligible Participant whose employment terminates before he/she completes the
designated Hours of Service is not entitled to an allocation of Employer
Contributions subject to such allocation condition. However, if an Eligible
Participant completes at least the designated Hours of Service during a Plan
Year, the Participant is eligible for an allocation of such Employer
Contributions, even if the Participant’s employment terminates during the
Plan Year. |
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The imposition of the safe
harbor allocation condition will not cause the Plan to fail the minimum
coverage requirements under Code §410(b) because Participants who are
excluded from participation solely as a result of the safe harbor allocation
condition are excluded from the coverage test. Except as provided under
subsection (b) below, the safe harbor allocation condition is the only
allocation condition that may be used under the Standardized Agreement. |
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(b) |
Application
of last day of employment rule for money purchase and target benefit Plans in
year of termination. The Employer may elect under Part 4, #15.c.
of the money purchase or target benefit plan Nonstandardized Agreement to
require an Eligible Participant to be employed on the last day of the Plan
Year to receive an Employer Contribution under the Plan. Regardless of
whether the Employer elects to apply a last day of employment condition under
the money purchase or target benefit plan Agreement, in any Plan Year during
which a money purchase or target benefit Plan is terminated, the last day of
employment condition applies. Any unallocated forfeitures under the Plan will
be allocated in accordance with the contribution formula designated under
Part 4 of the Agreement to each Eligible Participant who completes at least
one Hour of Service during the Plan Year. |
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(c) |
Elapsed
Time Method. The Employer may elect under Part 4, #15.e. of the Nonstandardized
Agreement [Part 4B, #19.e. and Part 4C, #24.e. of the Nonstandardized 401(k)
Agreement] to apply the allocation conditions using the Elapsed Time Method.
Under the Elapsed Time Method, instead of requiring the completion of a
specified number of Hours of Service, the Employer may require an Employee to
be employed with the Employer for a specified number of consecutive days. |
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(1) |
Safe
harbor allocation condition. The Employer may elect under Part 4, #15.e.(1) of the Agreement [Part
4B, #19.e.(1) and/or Part 4C, #24.e.(1) of the Nonstandardized 401(k)
Agreement] to apply the safe harbor allocation condition (as described in
subsection (a) above) using the Elapsed Time Method. Under the safe harbor
Elapsed Time Method, a Participant who terminates employment with less than a
specified number of consecutive days of employment (not more than 91 days)
during the Plan Year will not be entitled to an allocation of the designated
Employer Contributions. The use of the safe harbor allocation condition under
the Elapsed Time Method provides the same protection from coverage as
described in subsection (a) above. |
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(2) |
Service
condition.
Alternatively, the Employer may elect under Part 4, #15.e.(2) of the Nonstandardized
Agreement [Part 4B, #19.e.(2) and/or Part 4C, #24.e.(2) of the
Nonstandardized 401(k) Agreement] to require an Employee to complete a
specified number of consecutive days of employment (not exceeding 182) to
receive an allocation of the designated Employer Contributions. |
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(d) |
Special
allocation condition for Employer Matching Contributions under
Nonstandardized 401(k) Agreement. The Employer may elect under Part 4B,
#19.f. of the Nonstandardized 401(k) Agreement to require as a condition for receiving
an Employer Matching Contribution that a Participant not withdraw the
underlying applicable contributions being matched prior to the end of the
period for which the Employer Matching Contribution is being made. Thus, for
example, if the Employer elects under Part 4B, #17.a. of the Nonstandardized
401(k) Agreement to apply the matching contribution formula on the basis of
the Plan Year quarter, a Participant would not be entitled to an Employer
Matching Contribution with respect to any applicable contributions
contributed during a Plan Year quarter to the extent such applicable
contributions are withdrawn prior to the end of the Plan Year quarter during
which they are contributed. A Participant could take a distribution of
applicable contributions that were contributed for a prior period without
losing eligibility for a current Employer Matching Contribution. This
subsection (d) will not prevent a Participant from receiving an Employer
Matching Contribution merely because the Participant takes a loan (as
permitted under Article 14) from matched contributions. |
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(e) |
Application
to designated period. The Employer may elect under Part 4, #15.f.
of the Nonstandardized Agreement [Part 4B, #19.g. and Part 4C, #24.f. of the
Nonstandardized 401(k) Agreement] to apply any allocation condition(s)
selected under the Agreement on the basis of the period designated under Part
4, #14.a.(1) of the Nonstandardized Agreement [Part 4B, #17.a. or Part 4C,
#23.a.(1) of the Nonstandardized 401(k) Agreement]. If this subsection (e)
applies to any allocation condition(s) under the Plan, the following
procedural rules apply. (This subsection (e) does not apply to the target
benefit plan Agreement. See subsection (3) for rules applicable to the
Standardized Agreements.) |
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(1) |
Last day
of employment requirement. If the Employer elects under Part 4, #15.f. of the Nonstandardized
Agreement [Part 4B, #19.g. or Part 4C, #24.f. of the Nonstandardized 401(k)
Agreement] to apply the allocation conditions on the basis of designated
periods and the Employer elects to apply a last day of employment condition
under Part 4, #15.c. of the Nonstandardized Agreement [Part 4B, #19.c. or
Part 4C, #24.c. of the Nonstandardized 401(k) Agreement], an Eligible
Participant will be entitled to receive an allocation of Employer
Contributions for the period designated under Part 4, #14.a.(1) of the
Nonstandardized Agreement [Part 4B, #17.a. or Part 4C, #23.a.(1) of the
Nonstandardized 401(k) Agreement] only if the Eligible Participant is employed
with the Employer on the last day of such period. If an Eligible Participant
terminates employment prior to end of the designated period, no Employer
Contribution will be allocated to that Eligible Participant for such period.
Nothing in this subsection (1) will cause an Eligible Participant to lose
Employer Contributions that were allocated for a period prior to the period
in which the individual terminates employment. |
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(2) |
Hours of
Service condition.
If the Employer elects to apply the allocation conditions on the basis of
specified periods under Part 4, #15.f. of the Agreement [Part 4B, #19.g. or
Part 4C, #24.f. of the Nonstandardized 401(k) Agreement], and elects to apply
an Hours of Service condition under Part 4, #15.d. of the Nonstandardized
Agreement [Part 4B, #19.d. or Part 4C, #24.d. of the Nonstandardized 401(k)
Agreement], an Eligible Participant will be entitled to receive an allocation
of Employer Contributions for the period designated under Part 4, #14.a.(1)
of the Nonstandardized Agreement [Part 4B, #17.a. or Part 4C, #23.a.(1) of
the Nonstandardized 401(k) Agreement] only if the Eligible Participant
completes the required Hours of Service before the last day of such period.
In applying the fractional method under subsection (i) or the
period-by-period method under subsection (ii), an Eligible Participant who
completes a sufficient number of Hours of Service for the Plan Year to earn a
Year of Service under the Plan will be entitled to a full contribution for
the Plan Year, as if the Eligible Participant satisfied the Hours of Service
condition for each designated period. A catch-up contribution may be required
for such Participants. |
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(i) |
Fractional
method. The Employer
may elect under Part 4, #15.f.(1) of the Nonstandardized Agreement [Part 4B,
#19.g.(1) or Part 4C, #24.f.(1) of the Nonstandardized 401(k) Agreement] to
apply the Hours of Service condition on the basis of specified period using
the fractional method. Under the fractional method, the required Hours of
Service for any period are determined by multiplying the Hours of Service
required under Part 4, #15.d. of the Nonstandardized Agreement [Part 4B,
#19.d. or Part 4C, #24.d. of the Nonstandardized 401(k) Agreement] by a
fraction, the numerator of which is the total number of periods completed
during the Plan Year (including the current period) and the denominator of
which is the total number of periods during the Plan Year. Thus, for example,
if the Employer applies a 1,000 Hours of Service condition to receive an Employer
Matching Contribution and elects to apply such condition on the basis of Plan
Year quarters, an Eligible Participant would have to complete 250 Hours of
Service by the end of the first Plan Year quarter [1/4 x 1,000], 500 Hours of
Service by the end of the second Plan Year quarter [2/4 x 1,000], 750 Hours
of Service by the end of the third Plan Year quarter [3/4 x 1,000] and 1,000
Hours of Service by the end of the Plan Year [4/4 x 1,000] to receive an
allocation of the Employer Matching Contribution for such period. If an
Eligible Participant does not complete the required Hours of Service for any
period during the Plan Year, no Employer Contribution will be allocated to
that Eligible Participant for such period. However, if an Eligible
Participant completes the required Hours of Service under Part 4, #15.d. for
the Plan Year, such Participant will receive a full contribution for the Plan
Year as if the Participant satisfied the Hours of Service conditions for each
period during the year. Nothing in this subsection (i) will cause an Eligible
Participant to lose Employer Contributions that were allocated for a period
during which the Eligible Participant completed the required Hours of Service
for such period. |
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(ii) |
Period-by-period
method. The Employer
may elect under Part 4, #15.f.(2) of the Nonstandardized Agreement [Part 4B,
#19.g.(2) or Part 4C, #24.f.(2) of the Nonstandardized 401(k) Agreement] to
apply the Hours of Service condition on the basis of specified period using
the period-by-period method. Under the period-by-period |
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method, the required Hours
of Service for any period are determined separately for such period. The
Hours of Service required for any specific period are determined by
multiplying the Hours of Service required under Part 4, #15.d. of the
Nonstandardized Agreement [Part 4B, #19.d. or Part 4C, #24.d. of the
Nonstandardized 401(k) Agreement] by a fraction, the numerator of which is
one (1) and the denominator of which is the total number of periods during
the Plan Year. Thus, for example, if the Employer applies a 1,000 Hours of
Service condition to receive an Employer Matching Contribution and elects to
apply such condition on the basis of Plan Year quarters, an Eligible
Participant would have to complete 250 Hours of Service in each Plan Year
quarter [1/4 x 1,000] to receive an allocation of the Employer Matching
Contribution for such period. If an Eligible Participant does not complete
the required Hours of Service for any period during the Plan Year, no Employer
Contribution will be allocated to that Eligible Participant for such period.
However, if an Eligible Participant completes the required Hours of Service
under Part 4, #15.d. for the Plan Year, such Participant will receive a full
contribution for the Plan Year as if the Participant satisfied the Hours of
Service conditions for each period during the year. Nothing in this
subsection (ii) will cause an Eligible Participant to lose Employer
Contributions that were allocated for a period during which the Eligible
Participant completed the required Hours of Service for such period. |
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(3) |
Safe
harbor allocation condition. If the Employer elects to apply the allocation conditions on the
basis of specified periods under Part 4, #15.f. of the Nonstandardized
Agreement [Part 4B, #19.g. or Part 4C, #24.f. of the Nonstandardized 401(k)
Agreement] and elects to apply the safe harbor allocation condition under
Part 4, #15.b. of the Nonstandardized Agreement [Part 4B, #19.b. or Part 4C,
#24.b. of the Nonstandardized 401(k) Agreement], the rules under subsection
(1) above will apply, without regard to the rules under subsection (2) above.
Thus, an Eligible Employee who terminates during a period designated under
Part 4, #14.a.(1) of the Nonstandardized Agreement [Part 4B, #17.a. or Part
4C, #23.a.(1) of the Nonstandardized 401(k) Agreement] will not receive an
allocation of Employer Contributions for such period if the Eligible
Participant has not completed the Hours of Service designated under Part 4,
#15.b. of the Nonstandardized Agreement [Part 4B, #19.b. or Part 4C, #24.b.
of the Nonstandardized 401(k) Agreement]. Nothing in this subsection (3) will
cause an Eligible Participant to lose Employer Contributions that were
allocated for a period prior to the period in which the individual terminates
employment. (This subsection (3) also applies if the Employer elects to apply
the safe harbor allocation condition on the basis of specified periods under
Part 4, #15.c. of the Standardized Agreement [Part 4B, #19.c. or Part 4C,
#22.c. of the Standardized 401(k) Agreement].) |
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(4) |
Elapsed
Time Method. The
election to apply the allocation conditions on the basis of specified periods
does not apply to the extent the Elapsed Time Method applies under Part 4,
#15.e. of the Nonstandardized Agreement [Part 4B, #19.e. or Part 4C, #24.e.
of the Nonstandardized 401(k) Agreement]. If an Employer elects to apply the
allocation conditions on the basis of specified periods and elects to apply
the Elapsed Time Method, an Eligible Employee will be entitled to an
allocation of Employer Contributions if such Eligible Participant is employed
as of the last day of such period, without regard to the number of
consecutive days in such period. Thus, in effect, the Elapsed Time Method
will only apply to prevent an allocation of Employer Contributions for the
last designated period in the Plan Year, if the Eligible Participant has not
completed the consecutive days required under Part 4, #15.e. of the
Nonstandardized Agreement [Part 4B, #19.e. or Part 4C, #24.e. of the
Nonstandardized 401(k) Agreement] by the end of the Plan Year. The last day
of employment rules subsection (1) above still may apply (to the extent
applicable) for periods during which the Eligible Participant terminates
employment. |
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2.7 |
Fail-Safe
Coverage Provision. If the Employer has elected to apply a last day of the Plan Year
allocation condition and/or an Hours of Service allocation condition under a
Nonstandardized Agreement, the Employer may elect under Part 13, #56 of the
Nonstandardized Agreement [Part 13, #74 of the Nonstandardized 401(k)
Agreement] to apply the Fail-Safe Coverage Provision. Under the Fail-Safe
Coverage Provision, if the Plan fails to satisfy the ratio percentage
coverage requirements under Code §410(b) for a Plan Year due to the
application of a last day of the Plan Year allocation condition and/or an
Hours of Service allocation condition, such allocation condition(s) will be
automatically eliminated for the Plan Year for certain otherwise Eligible Participants,
under the process described in subsections (a) through (d) below, until
enough Eligible Participants are benefiting under the Plan so that the ratio
percentage test of Treasury Regulation §1.410(b)-2(b)(2) is satisfied. |
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If the Employer elects to
have the Fail-Safe Coverage Provision apply, such provision automatically
applies for any Plan Year for which the Plan does not satisfy the ratio
percentage coverage test under Code §410(b). (Except as provided in the
following paragraph, the Plan may not use the average benefits test to comply
with the minimum coverage requirements if the Fail-Safe Coverage Provision is
elected.) The Plan satisfies the ratio percentage test if the percentage of
the Nonhighly Compensated Employees under the Plan is at least 70% of the
percentage of the Highly |
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Compensated Employees who
benefit under the Plan. An Employee is benefiting for this purpose only if
he/she actually receives an allocation of Employer Contributions or
forfeitures or, if testing coverage of a 401(m) arrangement (i.e., a Plan
that provides for Employer Matching Contributions and/or Employee After-Tax
Contributions), the Employee would receive an allocation of Employer Matching
Contributions by making the necessary contributions or the Employee is
eligible to make Employee After-Tax Contributions. To determine the
percentage of Nonhighly Compensated Employees or Highly Compensated Employees
who are benefiting, the following Employees are excluded for purposes of
applying the ratio percentage test: (i) Employees who have not satisfied the
Plan’s minimum age and service conditions under Section 1.4; (ii) Nonresident
Alien Employees; (iii) Union Employees; and (iv) Employees who terminate
employment during the Plan Year with less than 501 Hours of Service and do
not benefit under the Plan. |
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Under the Fail-Safe
Coverage Provision, certain otherwise Eligible Participants who are not
benefiting for the Plan Year as a result of a last day of the Plan Year
allocation condition or an Hours of Service allocation condition will
participate under the Plan based on whether such Participants are Category 1
Employees or Category 2 Employees. Alternatively, the Employer may elect
under Part 13, #56.b.(2) of the Nonstandardized Agreement [Part 13, #74.b.(2)
of the Nonstandardized 401(k) Agreement] to apply the special Fail-Safe
Coverage Provision described in (d) below which eliminates the allocation
conditions for otherwise Eligible Participants with the lowest Included
Compensation. If after applying the Fail-Safe Coverage Provision, the Plan
does not satisfy the ratio percentage coverage test, the Fail-Safe Coverage
Provision does not apply, and the Plan may use any other available method
(including the average benefit test) to satisfy the minimum coverage
requirements under Code §410(b). |
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(a) |
Top-Heavy
Plans. Unless provided otherwise under Part 13, #56.b.(1) of the
Nonstandardized Agreement [Part 13, #74.b.(1) of the Nonstandardized 401(k)
Agreement], if the Plan is a Top-Heavy Plan, the Hours of Service allocation
condition will be eliminated for all Non-Key Employees who are Nonhighly
Compensated Employees, prior to applying the Fail-Safe Coverage Provisions
under subsections (b) and (c) or (d) below. |
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(b) |
Category 1
Employees - Otherwise Eligible Participants (who are
Nonhighly Compensated Employees) who are still employed by the Employer on
the last day of the Plan Year but who failed to satisfy the Plan’s Hours of
Service condition.
The Hours of Service allocation condition will be eliminated for Category 1
Employees (who did not receive an allocation under the Plan due to the Hours
of Service allocation condition) beginning with the Category 1 Employee(s)
credited with the most Hours of Service for the Plan Year and continuing with
the Category 1 Employee(s) with the next most Hours of Service until the
ratio percentage test is satisfied. If two or more Category 1 Employees have
the same number of Hours of Service, the allocation condition will be
eliminated for those Category 1 Employees starting with the Category 1
Employee(s) with the lowest Included Compensation. If the Plan still fails to
satisfy the ratio percentage test after all Category 1 Employees receive an
allocation, the Plan proceeds to Category 2 Employees. |
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(c) |
Category 2 Employees - Otherwise Eligible Participants (who are
Nonhighly Compensated Employees) who terminated employment during the Plan
Year with more than 500 Hours of Service. The last day of the Plan Year allocation
condition will then be eliminated for Category 2 Employees (who did not
receive an allocation under the Plan due to the last day of the Plan Year
allocation condition) beginning with the Category 2 Employee(s) who
terminated employment closest to the last day of the Plan Year and continuing
with the Category 2 Employee(s) with a termination of employment date that is
next closest to the last day of the Plan Year until the ratio percentage test
is satisfied. If two or more Category 2 Employees terminate employment on the
same day, the allocation condition will be eliminated for those Category 2
Employees starting with the Category 2 Employee(s) with the lowest Included
Compensation. |
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(d) |
Special
Fail-Safe Coverage Provision. Instead of applying the Fail-Safe Coverage
Provision based on Category 1 and Category 2 Employees, the Employer may
elect under Part 13, #56.b.(2) of the Nonstandardized Agreement [Part 13,
#74.b.(2) of the Nonstandardized 401(k) Agreement] to eliminate the
allocation conditions beginning with the otherwise Eligible Participant(s)
(who are Nonhighly Compensated Employees and who did not terminate employment
during the Plan Year with 500 Hours of Service or less) with the lowest
Included Compensation and continuing with such otherwise Eligible
Participants with the next lowest Included Compensation until the ratio
percentage test is satisfied. If two or more otherwise Eligible Participants
have the same Included Compensation, the allocation conditions will be
eliminated for all such individuals. |
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2.8 |
Deductible
Employee Contributions. The Plan Administrator will not accept
deductible employee contributions that 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 under the Plan in the same
manner as described in Section 13.4. No part of the deductible voluntary
contribution Account will be used to purchase life insurance. Subject to the
Joint and Survivor Annuity requirements under Article 9 (if applicable), the
Participant may withdraw any part of the deductible voluntary contribution
Account by making a written application to the Plan Administrator. |
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ARTICLE 3
EMPLOYEE AFTER-TAX CONTRIBUTIONS, ROLLOVER CONTRIBUTIONS AND
TRANSFERS
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This Article provides the
rules regarding Employee After-Tax Contributions, Rollover Contributions and
transfers that may be made under this Plan. The Trustee has the authority
under Article 12 to accept Rollover Contributions under this Plan and to
enter into transfer agreements concerning the transfer of assets from another
qualified retirement plan to this Plan, if so directed by the Plan
Administrator.
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3.1 |
Employee
After-Tax Contributions. The Employer may elect under Part 4D of the
Nonstandardized 401(k) Agreement to allow Eligible Participants to make
Employee After-Tax Contributions under the Plan. Employee After-Tax
Contributions may only be made under the Nonstandardized 401(k) Agreement.
Any Employee After-Tax Contributions made under this Plan are subject to the
ACP Test outlined in Section 17.3. (Nothing under this Section precludes the
holding of Employee After-Tax Contributions under a profit sharing plan or
money purchase plan that were made prior to the adoption of this Prototype
Plan.) |
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The Employer may elect
under Part 4D, #25 of the Nonstandardized 401(k) Agreement to impose a limit
on the maximum amount of Included Compensation an Eligible Participant may
contribute as an Employee After-Tax Contribution. The Employer may also elect
under Part 4D, #26 of the Nonstandardized 401(k) Agreement to impose a
minimum amount that an Eligible Participant may contribute to the Plan during
any payroll period. |
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Employee After-Tax
Contributions must be held in the Participant’s Employee After-Tax
Contribution Account, which is always 100% vested. A Participant may withdraw
amounts from his/her Employee After-Tax Contribution Account at any time, in
accordance with the distribution rules under Section 8.5(a), except as
prohibited under Part 10 of the Agreement. No forfeitures will occur solely
as a result of an Employee’s withdrawal of Employee After-Tax Contributions. |
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3.2 |
Rollover
Contributions. An Employee may make a Rollover Contribution to this Plan from
another “qualified retirement plan” or from a “conduit XXX,” if the
acceptance of rollovers is permitted under Part 12 of the Agreement or if the
Plan Administrator adopts administrative procedures regarding the acceptance
of Rollover Contributions. Any Rollover Contribution an Employee makes to
this Plan will be held in the Employee’s Rollover Contribution Account, which
is always 100% vested. A Participant may withdraw amounts from his/her
Rollover Contribution Account at any time, in accordance with the
distribution rules under Section 8.5(a), except as prohibited under Part 10
of the Agreement. |
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For purposes of this
Section 3.2, a “qualified retirement plan” is any tax qualified retirement
plan under Code §401(a) or any other plan from which distributions are
eligible to be rolled over into this Plan pursuant to the Code, regulations,
or other IRS guidance. A “conduit XXX” is an XXX that holds only assets that
have been properly rolled over to that XXX from a qualified retirement plan
under Code §401(a). To qualify as a Rollover Contribution under this Section,
the Rollover Contribution must be transferred directly from the qualified
retirement plan or conduit XXX in a Direct Rollover or must be transferred to
the Plan by the Employee within sixty (60) days following receipt of the
amounts from the qualified plan or conduit XXX. |
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If Rollover Contributions
are permitted, an Employee may make a Rollover Contribution to the Plan even
if the Employee is not an Eligible Participant with respect to any or all
other contributions under the Plan, unless otherwise prohibited under
separate administrative procedures adopted by the Plan Administrator. An
Employee who makes a Rollover Contribution to this Plan prior to becoming an
Eligible Participant shall be treated as a Participant only with respect to
such Rollover Contribution Account, but shall not be treated as an Eligible
Participant until he/she otherwise satisfies the eligibility conditions under
the Plan. |
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The Plan Administrator may
refuse to accept a Rollover Contribution if the Plan Administrator reasonably
believes the Rollover Contribution (a) is not being made from a proper plan
or conduit XXX; (b) is not being made within sixty (60) days from receipt of
the amounts from a qualified retirement plan or conduit XXX; (c) could
jeopardize the tax-exempt status of the Plan; or (d) could create adverse tax
consequences for the Plan or the Employer. Prior to accepting a Rollover
Contribution, the Plan Administrator may require the Employee to provide
satisfactory evidence establishing that the Rollover Contribution meets the
requirements of this Section. |
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The Plan Administrator may
apply different conditions for accepting Rollover Contributions from
qualified retirement plans and conduit IRAs. Any conditions on Rollover
Contributions must be applied uniformly to all Employees under the Plan. |
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3.3 |
Transfer
of Assets. The Plan Administrator may direct the Trustee to accept a transfer of
assets from another qualified retirement plan on behalf of any Employee, even
if such Employee is not eligible to receive other contributions under the
Plan. If a transfer of assets is made on behalf of an Employee prior to the
Employee’s becoming an Eligible Participant, the Employee shall be treated as
a Participant for all purposes with respect to such transferred amount. Any
assets transferred to this Plan from another plan must be accompanied by
written instructions designating the name of |
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each Employee for whose
benefit such amounts are being transferred, the current value of such assets,
and the sources from which such amounts are derived. The Plan Administrator
will deposit any transferred assets in the appropriate Participant’s Transfer
Account. The Transfer Account will contain any sub-Accounts necessary to
separately track the sources of the transferred assets. Each sub-Account will
be treated in the same manner as the corresponding Plan Account. |
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The Plan Administrator may
direct the Trustee to accept a transfer of assets from another qualified plan
of the Employer in order to comply with the qualified replacement plan
requirements under Code §4980(d) (relating to the excise tax on reversions
from a qualified plan) without affecting the status of this Plan as a
Prototype Plan. A transfer made pursuant to Code §4980(d) will be allocated
as Employer Contributions either in the Plan Year in which the transfer
occurs, or over a period of Plan Years (not exceeding the maximum period
permitted under Code §4980(d)), as provided in the applicable transfer
agreement. To the extent a transfer described in this paragraph is not
totally allocable in the Plan Year in which the transfer occurs, the portion
which is not allocable will be credited to a suspense account until allocated
in accordance with the transfer agreement. |
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The Plan Administrator may
refuse to accept a transfer of assets if the Plan Administrator reasonably
believes the transfer (a) is not being made from a proper qualified plan; (b)
could jeopardize the tax-exempt status of the Plan; or (c) could create
adverse tax consequences for the Plan or the Employer. Prior to accepting a
transfer of assets, the Plan Administrator may require evidence documenting
that the transfer of assets meets the requirements of this Section. The Trustee
will have no responsibility to determine whether the transfer of assets meets
the requirements of this Section; to verify the correctness of the amount and
type of assets being transferred to the Plan; or to perform any due diligence
review with respect to such transfer. |
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(a) |
Protection
of Protected Benefits. Except in the case of a Qualified Transfer
(as defined in subsection (d) below), a transfer of assets is initiated at
the Plan level and does not require Participant or spousal consent. If the Plan
Administrator directs the Trustee to accept a transfer of assets to this
Plan, the Participant on whose behalf the transfer is made retains all
Protected Benefits that applied to such transferred assets under the
transferor plan. |
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(b) |
Transferee plan.
Except in the case of a Qualified Transfer (as defined in subsection (d)), if
the Plan Administrator directs the Trustee to accept a transfer of assets
from another plan which is subject to the Joint and Survivor Annuity
requirements under Code §401(a)(11), the amounts so transferred continue to
be subject to such requirements, as provided in Article 9. If this Plan is
not otherwise subject to the Qualified Joint and Survivor Annuity
requirements (as determined under Part 11, #41.a. of the Agreement [Part 11,
#59.a. of the 401(k) Agreement]), the Qualified Joint and Survivor Annuity
requirements apply only to the amounts under the Transfer Account which are
attributable to the amounts which were subject to the Qualified Joint and
Survivor Annuity requirements under the transferor plan. The Employer may
override this default rule by checking Part 11, #41.b. of the Agreement [Part
11, #59.b. of the 401(k) Agreement] thereby subjecting the entire Plan to the
Qualified Joint and Survivor Annuity Requirements. |
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(c) |
Transfers
from a Defined Benefit Plan, money purchase plan or 401(k) plan. |
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(1) |
Defined
Benefit Plan. The
Plan Administrator will not direct the Trustee to accept a transfer of assets
from a Defined Benefit Plan unless such transfer qualifies as a Qualified
Transfer (as defined in subsection (d) below) or the assets transferred from
the Defined Benefit Plan are in the form of paid-up annuity contracts which
protect all the Participant’s Protected Benefits under the Defined Benefit Plan.
(However, see the special rule under the second paragraph of Section 3.3
above regarding transfers authorized under Code §4980(d).) |
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(2) |
Money
purchase plan. If
this Plan is a profit sharing plan or a 401(k) plan and the Plan
Administrator directs the Trustee to accept a transfer of assets from a money
purchase plan (other than as a Qualified Transfer as defined in subsection
(d) below), the amounts transferred (and any gains attributable to such
transferred amounts) continue to be subject to the distribution restrictions
applicable to money purchase plan assets under the transferor plan. Such
amounts may not be distributed for reasons other than death, disability,
attainment of Normal Retirement Age, or termination of employment, regardless
of any distribution provisions under this Plan that would otherwise permit a
distribution prior to such events. |
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(3) |
401(k)
plan. If the Plan
Administrator directs the Trustee to accept a transfer of Section 401(k)
Deferrals, QMACs, QNECs, or Safe Harbor Contributions from a 401(k) plan,
such amounts retain their character under this Plan and such amounts
(including any allocable gains or losses) remain subject to the distribution
restrictions applicable to such amounts under the Code. |
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(d) |
Qualified Transfer. The Plan may eliminate certain Protected Benefits (as provided under
subsection (3) below) related to plan assets that are received in a Qualified
Transfer from another plan. A Qualified Transfer |
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is a plan-to-plan transfer
of a Participant’s benefits that meets the requirements under subsection (1)
or (2) below. |
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(1) |
Elective
transfer. A
plan-to-plan transfer of a Participant’s benefits from another qualified
plans is a Qualified Transfer if such transfer satisfies the following requirements.
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(i) |
The Participant must have
the right to receive an immediate distribution of his/her benefits under the
transferor plan at the time of the Qualified Transfer. For transfers that
occur on or after January 1, 2002, the Participant must not be eligible at
the time of the Qualified Transfer to take an immediate distribution of
his/her entire benefit in a form that would be entirely eligible for a Direct
Rollover. |
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(ii) |
The Participant on whose
behalf benefits are being transferred must make a voluntary, fully informed
election to transfer his/her benefits to this Plan. |
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(iii) |
The Participant must be
provided an opportunity to retain the Protected Benefits under the transferor
plan. This requirement is satisfied if the Participant is given the option to
receive an annuity that protects all Protected Benefits under the transferor
plan or the option of leaving his/her benefits in the transferor plan. |
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(iv) |
The Participant’s spouse
must consent to the Qualified Transfer if the transferor plan is subject to
the Joint and Survivor Annuity requirements under Article 9. The spouse’s
consent must satisfy the requirements for a Qualified Election under Section
9.4(d). |
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(v) |
The amount transferred
(along with any contemporaneous Direct Rollover) must not be less than the
value of the Participant’s vested benefit under the transferor plan. |
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(vi) |
The Participant must be
fully vested in the transferred benefit. |
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(2) |
Transfer
upon specified events.
For transfers that occur on or after September 6, 2000, a plan-to-plan
transfer of a Participant’s entire benefit (other than amounts the Plan
accepts as a Direct Rollover) from another Defined Contribution Plan that is
made in connection with an asset or stock acquisition, merger, or other
similar transaction involving a change in the Employer or is made in
connection with a Participant’s change in employment status that causes the
Participant to become ineligible for additional allocations under the transferor
plan, is a Qualified Transfer if such transfer satisfies the following
requirements: |
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(i) |
The Participant need not be
eligible for an immediate distribution of his/her benefits under the
transferor plan. |
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(ii) |
The Participant on whose
behalf benefits are being transferred must make a voluntary, fully informed
election to transfer his/her benefits to this Plan. |
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(iii) |
The Participant must be
provided an opportunity to retain the Protected Benefits under the transferor
plan. This requirement is satisfied if the Participant is given the option to
receive an annuity that protects all Protected Benefits under the transferor
plan or the option of leaving his/her benefits in the transferor plan. |
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(iv) |
The benefits must be
transferred between plans of the same type. To satisfy this requirement, the
transfer must satisfy the following requirements. |
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(A) |
To accept a Qualified
Transfer under this subsection (2) from a money purchase plan, this Plan also
must be a money purchase plan. |
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(B) |
To accept a Qualified
Transfer under this subsection (2) from a 401(k) plan, this Plan also must be
a 401(k) plan. |
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(C) |
To accept a
Qualified Transfer under this subsection (2) from a profit sharing plan, this
Plan may be any type of Defined Contribution Plan. |
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(3) |
Treatment of Qualified Transfer. |
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(i) |
Rollover Contribution Account. If the Plan
Administrator directs the Trustee to accept on behalf of a Participant a
transfer of assets that qualifies as a Qualified Transfer, the Plan
Administrator will treat such amounts as a Rollover Contribution and will
deposit such amounts in the Participant’s Rollover Contribution Account. A
Qualified Transfer may include benefits derived from Employee After-Tax
Contributions. |
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(ii) |
Elimination of Protected Benefits. If the
Plan accepts a Qualified Transfer, the Plan does not have to protect any
Protected Benefits derived from the transferor plan. However, if the Plan
accepts a Qualified Transfer that meets the requirements for a transfer under
subsection (2) above, the Plan must continue to protect the QJSA benefit if
the transferor plan is subject to the QJSA requirements. |
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(e) |
Trustee’s right to refuse transfer. If the assets to be transferred to the Plan under this Section
3.3 are not susceptible to proper valuation and identification or are of such
a nature that their valuation is incompatible with other Plan assets, the
Trustee may refuse to accept the transfer of all or any specific asset, or
may condition acceptance of the assets on the sale or disposition of any
specific asset. |
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ARTICLE 4
PARTICIPANT VESTING
This Article contains the rules for determining the vested
(nonforfeitable) amount of a Participant’s Account Balance under the Plan. Part
6 of the Agreement contains specific elections for applying these vesting
rules. Part 7 of the Agreement contains special service crediting elections to
override the default provisions under this Article.
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4.1 |
In General. A Participant’s
vested interest in his/her Employer Contribution Account and Employer
Matching Contribution Account is determined based on the vesting schedule
elected in Part 6 of the Agreement. A Participant is always fully vested in
his/her Section 401(k) Deferral Account, Employee After-Tax Contribution
Account, QNEC Account, QMAC Account, Safe Harbor Nonelective Contribution
Account, Safe Harbor Matching Contribution Account, and Rollover Contribution
Account. |
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(a) |
Attainment of Normal Retirement Age.
Regardless of the Plan’s vesting schedule, a Participant’s right to his/her
Account Balance is fully vested upon the date he/she attains Normal
Retirement Age, provided the Participant is an Employee on or after such
date. |
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(b) |
Vesting upon death, becoming Disabled, or attainment of Early
Retirement Age. If elected by the Employer in Part
6, #21 of the Agreement [Part 6, #39 of the 401(k) Agreement], a Participant
will become fully vested in his/her Account Balance if the Participant dies,
becomes Disabled, or attains Early Retirement Age while employed by the
Employer. |
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(c) |
Addition of Employer Nonelective Contribution or Employer Matching
Contribution. If the Plan is a Safe Harbor 401(k)
Plan as defined in Section 17.6, all amounts allocated to the Participant’s
Safe Harbor Nonelective Contribution Account and/or Safe Harbor Matching
Contribution Account are always 100% vested. If a Safe Harbor 401(k) Plan is
amended to add a regular Employer Nonelective Contribution or Employer
Matching Contribution, a Participant’s vested interest in such amounts is
determined in accordance with the vesting schedule selected under Part 6 of
the Agreement. The addition of a vesting schedule under Part 6 for such
contributions is not considered an amendment of the vesting schedule under
Section 4.7 below merely because the Participant was fully vested in his/her
Safe Harbor Nonelective Contribution Account or Safe Harbor Matching
Contribution Account. |
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(d) |
Vesting upon merger, consolidation or transfer.
No accelerated vesting will be required solely because a Defined Contribution
Plan is merged with another Defined Contribution Plan, or because assets are
transferred from a Defined Contribution Plan to another Defined Contribution
Plan. Thus, for example, Participants will not automatically become 100%
vested in their Employer Contribution Account(s) solely on account of a
merger of a money purchase plan with a profit sharing or 401(k) Plan or a
transfer of assets between such Plans. (See Section 18.3 for the benefits
that must be protected as a result of a merger, consolidation or transfer.) |
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4.2 |
Vesting Schedules. The
Plan’s vesting schedule will determine an Employee’s vested percentage in
his/her Employer Contribution Account and/or Employer Matching Contribution
Account. The vested portion of a Participant’s Employer Contribution Account
and/or Employer Matching Contribution Account is determined by multiplying
the Participant’s vesting percentage determined under the applicable vesting
schedule by the total amount under the applicable Account. |
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The Employer
must elect a normal vesting schedule and a Top-Heavy Plan vesting schedule
under Part 6 of the Agreement. The Top-Heavy Plan vesting schedule will apply
for any Plan Year in which the plan is a Top-Heavy Plan. If this Plan is a
401(k) plan, the Employer must elect a normal and Top-Heavy Plan vesting
schedule for both Employer Nonelective Contributions and Employer Matching
Contributions, but only to the extent such contributions are authorized under
Part 4B and/or Part 4C of the 401(k) Agreement. |
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The Employer
may choose any of the following vesting schedules as the normal vesting
schedule under Part 6 of the Agreement. For the Top-Heavy Plan vesting, the
Employer may only choose the full and immediate, 6-year graded, 3-year cliff,
or modified vesting schedule, as described below. |
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(a) |
Full and immediate vesting schedule. Under
the full and immediate vesting schedule, the Participant is always 100%
vested in his/her Account Balance. |
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(b) |
7-year graded vesting schedule. Under the
7-year graded vesting schedule, an Employee vests in his/her Employer
Contribution Account and/or Employer Matching Contribution Account in the
following manner: |
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After 3
Years of Service – 20% vesting
After 4 Years of Service – 40% vesting
After 5 Years of Service – 60% vesting
After 6 Years of Service – 80% vesting
After 7 Years of Service – 100% vesting |
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(c) |
6-year graded vesting schedule. Under the
6-year graded vesting schedule, an Employee vests in his/her Employer
Contribution Account and/or Employer Matching Contribution Account in the
following manner: |
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After 2
Years of Service – 20% vesting
After 3 Years of Service – 40% vesting
After 4 Years of Service – 60% vesting
After 5 Years of Service – 80% vesting
After 6 Years of Service – 100% vesting |
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(d) |
5-year cliff vesting schedule. Under the
5-year cliff vesting schedule, an Employee is 100% vested after 5 Years of
Service. Prior to the fifth Year of Service, the vesting percentage is zero. |
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(e) |
3-year cliff vesting schedule. Under the
3-year cliff vesting schedule, an Employee is 100% vested after 3 Years of
Service. Prior to the third Year of Service, the vesting percentage is zero. |
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(f) |
Modified vesting schedule. For the normal
vesting schedule, the Employer may elect a modified vesting schedule under
which the vesting percentage for each Year of Service is not less than the
percentage that would be required for each Year of Service under the 7-year
graded vesting schedule, unless 100% vesting occurs after no more than 5
Years of Service. For the Top-Heavy Plan vesting schedule, the Employer may
elect a modified vesting schedule under which the vesting percentage for each
Year of Service is not less than the percentage that would be required for
each Year of Service under the 6-year graded vesting schedule, unless 100%
vesting occurs after no more than 3 Years of Service. |
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4.3 |
Shift to/from Top-Heavy Vesting Schedule. For a Plan Year in which the Plan is a Top-Heavy Plan, the
Plan automatically shifts to the Top-Heavy Plan vesting schedule. Once a Plan
uses a Top-Heavy Plan vesting schedule, that schedule will continue to apply
for all subsequent Plan Years. The Employer may override this default
provision under Part 6, #22 of the Nonstandardized Agreement [Part 6, #40 of
the Nonstandardized 401(k) Agreement]. The rules under Section 4.7 will apply
when a Plan shifts to or from a Top-Heavy Plan vesting schedule. |
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4.4 |
Vesting Computation Period.
For purposes of computing a Participant’s vested interest in his/her Employer
Contribution Account and/or Employer Matching Contribution Account, an
Employee’s Vesting Computation Period is the 12-month period measured on a
Plan Year basis, unless the Employer elects under Part 7, #26 of the
Agreement [Part 7, #44 of the 401(k) Agreement] to measure Vesting
Computation Periods using Anniversary Years. The Employer may designate an
alternative 12-month period under Part 7, #26.b. of the Nonstandardized
Agreement [Part 7, #44.b. of the Nonstandardized 401(k) Agreement]. Any
Vesting Computation Period designated under Part 7, #26.b. or #44.b., as
applicable, must be a 12-consecutive month period and must apply uniformly to
all Participants. |
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(a) |
Anniversary Years. If the Employer elects to
measure Vesting Computation Periods using Anniversary Years, the Vesting
Computation Period is the 12-month period commencing on the Employee’s
Employment Commencement Date (or Reemployment Commencement Date) and each
subsequent 12-month period commencing on the anniversary of such date. |
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(b) |
Measurement on same Vesting Computation Period.
The Plan will measure Years of Service and Breaks in Service (if applicable)
for purposes of vesting on the same Vesting Computation Period. |
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4.5 |
Crediting Years of Service for Vesting Purposes. Unless the Employer elects otherwise under Part 7, #25 of the
Agreement [Part 7, #43 of the 401(k) Agreement], an Employee will earn one
Year of Service for purposes of applying the vesting rules if the Employee
completes 1,000 Hours of Service with the Employer during a Vesting
Computation Period. An Employee will receive credit for a Year of Service as
of the end of the Vesting Computation Period, if the Employee completes the
required Hours of Service during such period, even if the Employee is not
employed for the entire period. |
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(a) |
Calculating Hours of Service. In calculating
an Employee’s Hours of Service for purposes of applying the vesting rules
under this Article, the Employer will use the Actual Hours Crediting Method,
unless the Employer elects otherwise under Part 7, #25 of the Agreement [Part
7, #43 of the 401(k) Agreement]. (See Article 6 of this Plan for a
description of the alternative service crediting methods.) |
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(b) |
Excluded service. Unless the Employer elects
to exclude certain service with the Employer under Part 6, #20 of the
Agreement [Part 6, #38 of the 401(k) Agreement], all service with the
Employer is counted for vesting purposes. |
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(1) |
Service before the Effective Date of the Plan.
Under Part 6, #20.a. of the Agreement [Part 6, #38.a. of the 401(k)
Agreement], the Employer may elect to exclude service during any period for
which the Employer did not maintain the Plan or a Predecessor Plan. For this
purpose, a Predecessor Plan is a qualified plan maintained by the Employer
that is terminated within the 5-year period immediately preceding or
following the establishment of this Plan. A Participant’s service under a
Predecessor Plan must be counted for purposes of determining the
Participant’s vested percentage under this Plan. |
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(2) |
Service before a certain age. Under Part 6,
#20.b. of the Agreement [Part 6, #38.b.of the 401(k) Agreement], the Employer
may elect to exclude service before an Employee attains a certain age. For
this purpose, the Employer may not designate an age greater than 18. An
Employee will be credited with a Year of Service for the Vesting Computation
Period during which the Employee attains the requisite age, provided the
Employee satisfies all other conditions required for a Year of Service. |
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4.6 |
Vesting Break in Service Rules.
Except as provided under Section 4.5(b), in determining a Participant’s
vested percentage, a Participant is credited with all Years of Service earned
with the Employer, subject to the following Break in Service rules. In
applying these Break in Service rules, Years of Service and Breaks in Service
(as defined in Section 22.27) are measured on the same Vesting Computation
Period as defined in Section 4.4 above. |
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(a) |
One-year holdout Break in Service. The
one-year holdout Break in Service rule will not apply unless the Employer
specifically elects in Part 7, #27.b. of the Nonstandardized Agreement [Part
7, #45.b. of the Nonstandardized 401(k) Agreement] to have it apply. If the
one-year holdout Break in Service rule is elected, an Employee who has a
one-year Break in Service will not be credited for vesting purposes with any
Years of Service earned before such one-year Break in Service until the
Employee has completed a Year of Service after the one-year Break in Service.
The one-year holdout rule does not apply under the Standardized Agreement. |
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(b) |
Five-Year Forfeiture Break in Service. In
the case of a Participant who has five (5) consecutive one-year Breaks in
Service, all Years of Service after such Breaks in Service will be
disregarded for the purpose of vesting in the portion of the Participant’s
Employer Contribution Account and/or Employer Matching Contribution Account
that accrued before such Breaks in Service, but both pre-break and post-break
service will count for purposes of vesting in the portion of such Accounts
that accrues after such breaks. The Participant will forfeit the nonvested
portion of his/her Employer Contribution Account and/or Employer Matching
Contribution Account accrued prior to incurring five consecutive Breaks in
Service, in accordance with Section 5.3(b). |
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In the case
of a Participant who does not have five consecutive one-year Breaks in
Service, all Years of Service will count in vesting both the pre-break and
post-break Account Balance derived from Employer Contributions. |
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(c) |
Rule of Parity Break in Service. This Break
in Service rule applies only to Participants who are totally nonvested (i.e.,
0% vested) in their Employer Contribution Account and Employer Matching
Contribution Account. If an Employee is vested in any portion of his/her
Employer Contribution Account or Employer Matching Contribution Account, the
Rule of Parity does not apply. Under this Break in Service rule, if a
nonvested Participant incurs a period of consecutive one-year Breaks in
Service which equals or exceeds the greater of five (5) or the Participant’s
aggregate number of Years of Service with the Employer, all service earned
prior to the consecutive Break in Service period will be disregarded and the
Participant will be treated as a new Employee for purposes of determining
vesting under the Plan. The Employer may elect under Part 7, #27.a. of the
Agreement [Part 7, #45.a. of the 401(k) Agreement] not to apply the Rule of
Parity Break in Service rule. |
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(1) |
Previous application of the Rule of Parity Break in Service rule.
In determining a Participant’s aggregate Years of Service for purposes of
applying the Rule of Parity Break in Service rule, any Years of Service
otherwise disregarded under a previous application of this rule are not
counted. |
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(2) |
Application to the 401(k) Agreement. The
Rule of Parity Break in Service rule applies only to determine the
individual’s vesting rights with respect to his/her Employer Contribution
Account and Employer Matching Contribution Account. In determining whether a
Participant is totally nonvested for purposes of applying the Rule of Parity
Break in Service rule, the Participant’s Section 401(k) Deferral Account,
Employee After-Tax Contribution Account, QMAC Account, |
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QNEC
Account, Safe Harbor Nonelective Contribution Account, Safe Harbor Matching
Contribution Account, and Rollover Contribution Account are disregarded. |
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4.7 |
Amendment of Vesting Schedule.
If the Plan’s vesting schedule is amended (or is deemed amended by an
automatic change to or from a Top-Heavy Plan vesting schedule), each
Participant with at least three (3) Years of Service with the Employer, as of
the end of the election period described in the following paragraph, may
elect to have his/her vested interest computed under the Plan without regard
to such amendment or change. For this purpose, a Plan amendment, which in any
way directly or indirectly affects the computation of the Participant’s
vested interest, is considered an amendment to the vesting schedule. However,
the new vesting schedule will apply automatically to an Employee, and no
election will be provided, if the new vesting schedule is at least as
favorable to such Employee, in all circumstances, as the prior vesting schedule.
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The period
during which the election may be made shall commence with the date the
amendment is adopted or is deemed to be made and shall end on the latest of: |
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(a) |
60 days
after the amendment is adopted; |
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(b) |
60 days
after the amendment becomes effective; or |
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(c) |
60 days
after the Participant is issued written notice of the amendment by the
Employer or Plan Administrator. |
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Furthermore, if the vesting schedule of the
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 effective, the vested
percentage of such Employee’s Account Balance derived from Employer
Contributions (determined as of such date) will not be less than the
percentage computed under the Plan without regard to such amendment.
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4.8 |
Special Vesting Rule - In-Service Distribution When Account Balance
Less than 100% Vested. If amounts
are distributed from a Participant’s Employer Contribution Account or
Employer Matching Contribution Account at a time when the Participant’s
vested percentage in such amounts is less than 100% and the Participant may
increase the vested percentage in the Account Balance: |
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(a) |
A separate
Account will be established for the Participant’s interest in the Plan as of
the time of the distribution, and |
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(b) |
At any
relevant time the Participant’s vested portion of the separate Account will
be equal to an amount (“X”) determined by the formula: |
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X = P (AB +
D) - D |
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Where: |
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P is the
vested percentage at the relevant time; |
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AB is the
Account Balance at the relevant time; and |
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D is the
amount of the distribution. |
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35
ARTICLE 5
FORFEITURES
This Article contains the rules relating to the timing and disposition
of forfeitures of the nonvested portion of a Participant’s Account Balance.
Part 8 of the Agreement provides elections on the allocation of forfeitures.
The rules for determining the vested portion of a Participant’s Account Balance
are contained in Article 4 of this BPD.
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5.1 |
In General. The Plan
Administrator has the responsibility to determine the amount of a
Participant’s forfeiture based on the application of the vesting provisions
of Article 4. Until an amount is forfeited pursuant to this Article,
nonvested amounts will be held in the Account of the Participant and will
share in gains and losses of the Trust (as determined under Article 13). |
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5.2 |
Timing of forfeiture. The
forfeiture of all or a portion of a Participant’s nonvested Account Balance
occurs upon any of the events listed below: |
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(a) |
Cash-Out Distribution. The date the
Participant receives a total Cash-Out Distribution as defined in Section
5.3(a). |
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(b) |
Five-Year Forfeiture Break in Service. The
last day of the Vesting Computation Period in which the Participant incurs a
Five-Year Forfeiture Break in Service as defined in Section 5.3(b). |
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(c) |
Lost Participant or Beneficiary. The date
the Plan Administrator determines that a Participant or Beneficiary cannot be
located to receive a distribution from the Plan. See Section 5.3(c). |
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(d) |
Forfeiture of Employer Matching Contributions.
With respect to Employer Matching Contributions under a 401(k) plan, the date
a distribution is made as described in Section 5.3(d). |
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5.3 |
Forfeiture Events. |
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(a) |
Cash-Out Distribution. If a Participant
receives a total distribution upon termination of his/her participation in
the Plan (a “Cash-Out Distribution”), the nonvested portion (if any) of the
Participant’s Account Balance is forfeited in accordance with the provisions
of this Article. If a Participant has his/her nonvested Account Balance
forfeited as a result of a Cash-Out Distribution, such Participant must be
given the right to “buy-back” the forfeited benefit, as provided in
subsection (2) below. (See Article 8 for the rules regarding the availability
and timing of Plan distributions and the consent requirements applicable to
such distributions.) |
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(1) |
Amount of forfeiture. The Cash-Out
Distribution rules under this subsection (a) apply only if the Participant is
less than 100% vested in his/her Employer Contribution Account and/or
Employer Matching Contribution Account. If the Participant is 100% vested in
his/her entire Account Balance, no forfeiture of benefits will occur solely
as a result of the Cash-Out Distribution. |
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(i) |
Total Cash-Out Distribution. If a
Participant receives a Cash-Out Distribution of his/her entire vested Account
Balance, the Participant will immediately forfeit the entire nonvested
portion of his/her Account Balance, as of the date of the distribution (as
determined under subsection (A) or (B) below, whichever applies). The
forfeited amounts will be used in the manner designated under Part 8 of the
Agreement. |
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(A) |
No further allocations. If the terminated
Participant is not entitled to any further allocations under the Plan for the
Plan Year in which the Participant terminates employment, the Cash-Out
Distribution occurs on the day the Participant receives a distribution of
his/her entire vested Account Balance. The Participant’s nonvested benefit is
immediately forfeited on such date, in accordance with the provisions under
Section 5.5. |
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(B) |
Additional allocations. If the terminated
Participant is entitled to an additional allocation under the Plan for the
Plan Year in which the Participant terminates employment, a Cash-Out
Distribution is deemed to occur when the Participant receives a distribution
of his/her entire vested Account Balance, including any amounts that are
still to be allocated under the Plan. Thus, a Participant who is entitled to
an additional allocation under the Plan will not have a total Cash-Out
Distribution until such additional amounts are distributed, regardless of
whether the Participant takes a complete distribution of his/her vested
Account Balance before receiving the additional allocation. |
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(C) |
Modification of default cash-out rules. The
Employer may override the default cash-out rules under subsections (A) and
(B) above by electing under Part 8, #32 of the Agreement [Part 8, #50 of the
401(k) Agreement] to have the Cash-Out Distribution and related forfeiture
occur immediately upon a distribution of the terminated Participant’s entire
vested Account Balance, without regard to whether the Participant is entitled
to an additional allocation under the Plan. |
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(ii) |
Deemed Cash-Out Distribution. If a
Participant terminates employment with the Employer with a vested Account
Balance of zero in his/her Employer Contribution Account and/or Employer
Matching Contribution Account, the Participant is treated as receiving a
“deemed” Cash-Out Distribution from the Plan. Upon a deemed Cash-Out, the
nonvested portion of the Participant’s Account Balance will be forfeited in
accordance with subsection (A) or (B) below. |
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(A) |
No further allocations. If the Participant
is not entitled to any further allocations under the Plan for the Plan Year
in which the Participant terminates employment, the deemed Cash-Out
Distribution is deemed to occur on the day the employment terminates. The
Participant’s nonvested benefit is immediately forfeited on such date, in
accordance with the provisions under Section 5.5. |
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(B) |
Additional allocations. If the Participant
is entitled to an additional allocation under the Plan for the Plan Year in
which the Participant terminates employment, the deemed Cash-Out Distribution
is deemed to occur on the first day of the Plan Year following the Plan Year
in which the termination occurs. |
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(C) |
Modification of default cash-out rules. The
Employer may override the default cash-out rules under subsections (A) and
(B) above by electing under Part 8, #32 of the Agreement [Part 8, #50 of the
401(k) Agreement] to have the deemed Cash-Out Distribution and related
forfeiture occur immediately upon a distribution of the terminated
Participant’s entire vested Account Balance, without regard to whether the
Participant is entitled to an additional allocation under the Plan. |
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(iii) |
Other distributions. If the Participant receives
a distribution of less than the entire vested portion of his/her Employer
Contribution Account and Employer Matching Contribution Account (including
any additional amounts to be allocated under subsection (i)(B) above), the
total Cash-Out Distribution rule under subsection (i) above does not apply
until the Participant receives a distribution of the remainder of the vested
portion of his/her Account Balance. Until the Participant receives a
distribution of the remainder of the vested portion of his/her Account
Balance, the special vesting rule described in Section 4.8 applies to
determine the vested percentage of the Participant’s Employer Contribution
Account and Employer Matching Account (as applicable). The nonvested portion
of such Accounts will not be forfeited until the earlier of: (A) the
occurrence of a Five-Year Forfeiture Break in Service described in Section
5.3(b) or (B) the date the Participant receives a total Cash-Out Distribution
of the remaining vested portion of his/her Account Balance. |
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(2) |
Buy-back/restoration. If a Participant
receives (or is deemed to receive) a Cash-Out Distribution that results in a
forfeiture under subsection (1) above, and the Participant subsequently
resumes employment covered under this Plan, the Participant may “buy-back”
the forfeited portion of his/her Account(s) by repaying to the Plan the full
amount of the Cash-Out Distribution from such Account(s). |
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(i) |
Buy-back opportunity. A Participant may
buy-back the portion of his/her benefit that is forfeited as a result of a
Cash-Out Distribution (or a deemed Cash-Out Distribution) by repaying the
amount of such Cash-Out Distribution to the Plan before the earlier of: |
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(A) |
five (5)
years after the first date on which the Participant is subsequently
re-employed by the Employer, or |
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(B) |
the date a
Five-Year Forfeiture Break in Service occurs (as defined in Section 5.3(b)). |
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If a
Participant receives a deemed Cash-Out Distribution pursuant to subsection
(1)(ii) above, and the Participant resumes employment covered under this Plan
before the date |
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the
Participant incurs a Five-Year Forfeiture Break in Service, the Participant
is deemed to have repaid the Cash-Out Distribution immediately upon his/her
reemployment. |
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To receive a
restoration of the forfeited portion of his/her Employer Contribution Account
and/or Employer Matching Contribution Account, a Participant must repay the
entire Cash-Out Distribution that was made from the Participant’s Employer
Contribution Account and Employer Matching Contribution Account, unadjusted
for any interest that might have accrued on such amounts after the
distribution date. For this purpose, the Cash-Out Distribution is the total
value of the Participant’s vested Employer Contribution Account and Employer
Matching Contribution Account that is distributed at any time following the
Participant’s termination of employment. If a Participant also received a
distribution from other Accounts, the Participant need not repay such amounts
to have the forfeited portion of his/her Employer Contribution Account and/or
Employer Matching Contribution Account restored. |
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(ii) |
Restoration of forfeited benefit. Upon a
Participant’s proper repayment of a Cash-Out Distribution in accordance with
subsection (i) above, the forfeited portion of the Participant’s Employer
Contribution Account and Employer Matching Contribution Account (as
applicable) will be restored, unadjusted for any gains or losses on such
amount. For this purpose, a Participant who received a deemed Cash-Out
Distribution is automatically treated as having made a proper repayment and
his/her forfeited benefit will be restored in accordance with this subsection
(ii) if the Participant returns to employment with the Employer prior to
incurring a Five-Year Forfeiture Break in Service. A Participant is not
entitled to restoration under this subsection (ii) if the Participant returns
to employment after incurring a Five-Year Forfeiture Break in Service. |
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The
forfeited portion of the Participant’s Account(s) will be restored no later
than the end of the Plan Year following the Plan Year in which the
Participant repays the Cash-Out Distribution in accordance with subsection
(i) above. Although the Plan Administrator may permit a Participant to make a
partial repayment of a Cash-Out Distribution, no portion of the Participant’s
forfeited benefit will be restored until the Participant repays the entire
Cash-Out Distribution in accordance with subsection (i) above. If a
Participant received a deemed Cash-Out Distribution, the Participant’s
forfeited benefit will be restored no later than the end of the Plan Year
following the Plan Year in which the Participant returns to employment with
the Employer. |
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If a
Participant’s forfeited benefit is required to be restored under this
subsection (ii), the restoration of such benefit will occur from the
following sources. If the following sources are not sufficient to completely
restore the Participant’s benefit, the Employer must make an additional
contribution to the Plan. |
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(A) |
Any
forfeitures that have not been allocated to Participants’ Accounts for the
Plan Year in which the Employer is restoring the Participant’s benefit in
accordance with this subsection (ii). |
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(B) |
If
Participants are not permitted to self-direct investments under the Plan, any
Trust earnings which have not been allocated to Participants’ Accounts for
the Plan Year in which the Employer is restoring the Participant’s benefit in
accordance with this subsection (ii). |
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(C) |
If the
Employer makes a discretionary contribution to the Plan, it may designate all
or any part of such discretionary contribution as a restoration contribution
under this subsection (ii). |
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(b) |
Five-Year Forfeiture Break in Service. In
the case of a Participant who has five (5) consecutive one-year Breaks in
Service, the nonvested portion of the Participant’s Account Balance will be
forfeited as of the end of the Vesting Computation Period in which the
Participant incurs his/her fifth consecutive Break in Service. See Section
4.6(b) for more information on the Five-Year Forfeiture Break in Service. |
38
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(c) |
Lost Participant or Beneficiary. |
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(1) |
Inability to locate Participant or Beneficiary.
If the Plan Administrator, after a reasonable effort and time, is unable to
locate a Participant or a Beneficiary in order to make a distribution
otherwise required by the Plan, the distributable amount may be forfeited, as
permitted under applicable laws and regulations. In determining what is a
reasonable effort and time, the Plan Administrator may follow any applicable
guidance provided under statute, regulation, or other IRS or DOL guidance of
general applicability. |
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(2) |
Restoration of forfeited amounts. If, after
the distributable amount is forfeited, the Participant or Beneficiary is
located, the Plan will restore the forfeited amount (unadjusted for gains or
losses) to such Participant or Beneficiary within a reasonable time. The
method of restoring a forfeited benefit under subsection (a)(2)(ii) above
applies to any restoration required under this subsection (2). |
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(d) |
Forfeiture of Employer Matching Contributions.
This subsection (d) only applies if the Plan is a 401(k) Plan. |
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(1) |
Correction of ACP Test. If a Participant
receives a corrective distribution of Excess Aggregate Contributions to
correct the ACP Test, the portion of such corrective distribution which
relates to nonvested Employer Matching Contributions, including any allocable
income or loss, will be forfeited (as permitted under Section 17.3(d)(1)) in
the Plan Year in which the corrective distribution is made from the Plan. |
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(2) |
Excess Deferrals, Excess Contributions, and Excess Aggregate
Contributions. If a Participant receives a
distribution of Excess Deferrals, Excess Contributions, or Excess Aggregate
Contributions, the Employer will forfeit the portion of his/her Employer
Matching Contribution Account (whether vested or not) which is attributable
to such distributed amounts (except to the extent such amount has been
distributed as Excess Contributions or Excess Aggregate Contributions,
pursuant to Article 17). A forfeiture of Employer Matching Contributions
under this subsection (2) occurs in the Plan Year in which the Participant
receives the distribution of Excess Deferrals, Excess Contributions, and/or
Excess Aggregate Contributions. |
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5.4 |
Timing of Forfeiture Allocation. Pursuant to the elections under Part 8 of the Agreement,
forfeitures are allocated in either the same Plan Year in which the
forfeitures occur or in the Plan Year following the Plan Year in which the
forfeitures occur. |
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5.5 |
Method of Allocating Forfeitures. Forfeitures will be allocated in accordance with the method
chosen by the Employer under Part 8 of the Agreement. In no event, however,
will a Participant receive an allocation of forfeitures arising from his/her
own Account. If no method of allocation is selected under Part 8 of the
Agreement, any forfeitures will be used to reduce the Employer’s
contributions for the Plan Year following the Plan Year in which the
forfeiture occurs as described under (b) below. |
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(a) |
Reallocation of forfeitures. If the Employer
elects to reallocate forfeitures as additional contributions, the forfeitures
will be added to other contributions made by the Employer (as designated
under Part 8 of the Agreement) for the Plan Year designated under Part 8, #29
of the Agreement [Part 8, #47 of the 401(k) Agreement], and such amounts will
be allocated to Eligible Participants under the allocation method chosen
under Part 4 of the Agreement with respect to such contributions.
Reallocation of forfeitures is not available under the target benefit plan
Agreement. |
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(b) |
Reduction of contributions. If the Employer
elects under Part 8 of the Agreement to use forfeitures to reduce its
contributions under the Plan, the Employer may adjust its contribution
deposits in any manner, provided the total Employer Contributions made for
the Plan Year properly take into account the forfeitures that are to be used
to reduce such contributions for that Plan Year. If the contributions are
allocated over multiple allocation periods, the Employer may reduce its
contribution for any allocation periods within the Plan Year in which the
forfeitures are to be allocated so that the total amount allocated for the
Plan Year is proper. |
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(c) |
Payment of Plan expenses. If the Employer
elects under Part 8, #31 of the Agreement [Part 8, #49 of the 401(k)
Agreement], forfeitures will first be used to pay Plan expenses for the Plan
Year in which the forfeitures would otherwise be allocated. This subsection
(c) applies only if the Plan otherwise would pay such expenses as authorized
under Section 11.4. If any forfeitures remain after the payment of Plan
expenses under this subsection, the remaining forfeitures will be allocated
as selected under Part 8 of the Agreement. |
39
ARTICLE 6
SPECIAL SERVICE CREDITING PROVISIONS
This Article contains special service crediting rules that apply for
purposes of determining an Employee’s eligibility to participate and the vested
percentage in his/her Account Balance under the Plan. This Article 6 and Part 7
of the Agreement permit the Employer to override the general service crediting
rules under Articles 1 and 4 with respect to eligibility and vesting and to
apply special service crediting rules, such as the Equivalency Method and the
Elapsed Time Method for crediting service. Section 6.7 of this Article and Part
13, #53 of the Agreement [Part 13, #71 of the 401(k) Agreement] contain special
rules for crediting service with Predecessor Employers.
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6.1 |
Year of Service - Eligibility.
Section 1.4(b) defines a Year of Service for eligibility purposes. Generally,
an Employee earns a Year of Service for eligibility purposes upon the
completion of 1,000 Hours of Service during an Eligibility Computation
Period. For this purpose, Hours of Service are calculated using the Actual
Hours Crediting Method. Part 7, #23 of the Agreement [Part 7, #41 of the 401(k)
Agreement] permits the Employer to modify these default provisions for
determining a Year of Service for eligibility purposes. |
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(a) |
Selection of Hours of Service. The Employer
may elect to modify the requirement that an Employee complete 1,000 Hours of
Service during an Eligibility Computation Period to earn a Year of Service.
Under Part 7, #23.a. of the Agreement [Part 7, #41.a. of the 401(k)
Agreement], the Employer may designate a specific number of Hours of Service
(which cannot exceed 1,000) that an Employee must complete during the
Eligibility Computation Period to earn a Year of Service. Any Hours of
Service designated in accordance with this subsection (a) will be determined
using the Actual Hours Crediting Method, unless the Employer elects to use
the Equivalency Method under Part 7, #23.b. of the Agreement [Part 7, #41.b.
of the 401(k) Agreement]. |
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(b) |
Use of Equivalency Method. The Employer may
elect under Part 7, #23.b. of the Agreement [Part 7, #41.b. of the 401(k)
Agreement] to use the Equivalency Method (as defined in Section 6.5(a))
instead of the Actual Hours Crediting Method in determining whether an
Employee has completed the required Hours of Service to earn a Year of
Service. |
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(c) |
Use of Elapsed Time Method. The Employer may
elect under Part 7, #23.c. of the Agreement [Part 7, #41.c. of the 401(k)
Agreement] to use the Elapsed Time Method (as defined in Section 6.5(b))
instead of counting Hours of Service in applying the eligibility conditions
under Article 1. The Elapsed Time Method may not be selected if the Employer
elects to apply a designated Hours of Service requirement under Part 7,
#23.a. of the Agreement [Part 7, #41.a. of the 401(k) Agreement]. |
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6.2 |
Eligibility Computation Period.
Section 1.4(c) defines the Eligibility Computation Period used to determine
whether an Employee has earned a Year of Service for eligibility purposes.
Generally, if one Year of Service is required for eligibility, the
Eligibility Computation Period is determined using the Shift-to-Plan-Year
Method (as defined in Section 1.4(c)(1)). Part 7, #24 of the Agreement [Part
7, #42 of the 401(k) Agreement] permits the Employer to use the Anniversary
Year Method (as defined in Section 1.4(c)(2)) for determining Eligibility
Computation Periods under the Plan. If the Employer selects two Years of
Service eligibility condition (under Part 1, #5.e. of the Agreement), the
Anniversary Year Method applies, unless the Employer elects to use the
Shift-to-Plan-Year Method. In the case of a 401(k) plan in which a two Years
of Service eligibility condition is used for either Employer Matching
Contributions or Employer Nonelective Contributions, the method used to
determine Eligibility Computation Periods for the two Years of Service
condition also will apply to any one Year of Service eligibility condition
used with respect to any other contributions. |
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6.3 |
Year of Service - Vesting.
Section 4.5 defines a Year of Service for vesting purposes. Generally, an
Employee earns a Year of Service for vesting purposes upon the completion of
1,000 Hours of Service during a Vesting Computation Period. For this purpose,
Hours of Service are calculated using the Actual Hours Crediting Method. Part
7, #25 of the Agreement [Part 7, #43 of the 401(k) Agreement] permits the
Employer to modify these default provisions for determining a Year of Service
for vesting purposes. |
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(a) |
Selection of Hours of Service.
The Employer may elect to modify the requirement that an Employee complete
1,000 Hours of Service during a Vesting Computation Period to earn a Year of
Service. Under Part 7, #25.a. of the Agreement [Part 7, #43.a. of the 401(k)
Agreement], the Employer may designate a specific number of Hours of Service
(which cannot exceed 1,000) that an Employee must complete during the Vesting
Computation Period to earn a Year of Service. Any Hours of Service designated
in accordance with this subsection (a) will be determined using the Actual
Hours Crediting Method, unless the Employer elects to use the Equivalency
Method under Part 7, #25.b. of the Agreement [Part 7, #43.b. of the 401(k)
Agreement]. |
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(b) |
Equivalency Method. The
Employer may elect under Part 7, #25.b. of the Agreement [Part 7, #43.b. of
the 401(k) Agreement] to use the Equivalency Method (as defined in Section
6.5(a)) instead of the Actual Hours |
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Crediting
Method in determining whether an Employee has completed the required Hours of
Service to earn a Year of Service. |
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(c) |
Elapsed Time Method. The
Employer may elect under Part 7, #25.c. of the Agreement [Part 7, #43.c. of
the 401(k) Agreement] to use the Elapsed Time Method (as defined in Section
6.5(b)) instead of counting Hours of Service in applying the vesting
provisions under Article 4. The Elapsed Time Method may not be selected if
the Employer elects to apply a designated Hours of Service requirement under
Part 7, #25.a. of the Agreement [Part 7, #43.a. of the 401(k) Agreement]. |
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6.4 |
Vesting Computation Period.
Section 4.4 defines the Vesting Computation Period used to determine whether
an Employee has earned a Year of Service for vesting purposes. Generally, the
Vesting Computation Period is the Plan Year. Part 7, #26 of the Agreement
[Part 7, #44 of the 401(k) Agreement] permits the Employer to elect to use
Anniversary Years (see Section 4.4(a)) or, under the Nonstandardized
Agreement, any other 12-consecutive month period as the Vesting Computation
Period. |
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6.5 |
Definitions. |
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(a) |
Equivalency Method. Under
the Equivalency Method, an Employee is credited with 190 Hours of Service for
each calendar month during the Eligibility Computation Period or Vesting
Computation Period, as applicable, for which the Employee completes at least
one Hour of Service. Instead of applying the Equivalency Method on the basis
of months worked, the Employer may elect to apply different equivalencies
under Part 7, #28 of the Agreement [Part 7, #46 of the 401(k) Agreement]. The
Employer may credit Employees with 10 Hours of Service for each day worked,
45 Hours of Service for each week worked, or 95 Hours of Service for each
semi-monthly payroll period worked during the Eligibility Computation Period
or Vesting Computation Period, as applicable. For this purpose, an Employee
will receive credit for the appropriate Hours of Service if the Employer completes
at least one Hour of Service during the applicable period. |
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(b) |
Elapsed Time Method. Under
the Elapsed Time Method, an Employee receives credit for the aggregate of all
periods of service commencing with the Employee’s Employment Commencement Date
(or Reemployment Commencement Date) and ending on the date the Employee
begins a Period of Severance (as defined in subsection (2) below) which lasts
at least 12 consecutive months. In calculating an Employee’s aggregate period
of service, an Employee receives credit for any Period of Severance that
lasts less than 12 consecutive months. If an Employee’s aggregate period of
service includes fractional years, such fractional years are expressed as
days. |
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(1) |
Year of Service. For purposes of determining
whether an Employee has earned a Year of Service under the Elapsed Time
Method, an Employee is credited with a Year of Service for each 12-month
period of service the Employee completes under the above paragraph, whether
or not such period of service is consecutive. |
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(2) |
Period of Severance. For purposes of
applying the Elapsed Time Method, a Period of Severance is any continuous
period of time during which the Employee is not employed by the Employer. A
Period of Severance begins on the date the Employee retires, quits or is
discharged, or if earlier, the 12-month anniversary of the date on which the
Employee is first absent from service for a reason other than retirement,
quit or discharge. |
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In the case
of an Employee who is absent from work for maternity or paternity reasons,
the 12-consecutive month period beginning on the first anniversary of the
first date of such absence shall not constitute a Period of Severance. For
purposes of this paragraph, an absence from work for maternity or paternity
reasons means an absence (i) by reason of the pregnancy of the Employee, (ii)
by reason of the birth of a child of the Employee, (iii) by reason of the
placement of a child with the Employee in connection with the adoption of
such child by the Employee, or (iv) for purposes of caring for a child of the
Employee for a period beginning immediately following the birth or placement
of such child. |
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(3) |
Break in Service rules. The Break in Service
rules described in Sections 1.6 and 4.6 also apply under the Elapsed Time
Method. For purposes of applying the Break in Service rules under the Elapsed
Time Method, a Break in Service is any Period of Severance of at least 12
consecutive months. |
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6.6 |
Switching Crediting Methods.
The following rules apply if the service crediting method is changed in a
manner described below. |
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(a) |
Shift from crediting Hours of Service to Elapsed Time Method. If the service crediting method under the Plan is changed from
a method that uses Hours of Service to a method using Elapsed Time, each
Employee’s |
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period of
service under the Elapsed Time Method is the sum of the amounts under
subsections (1) and (2) below. |
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(1) |
The number
of Years of Service credited under the Hours of Service method for the period
ending immediately before the computation period during which the change to
the Elapsed Time Method occurs. |
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(2) |
For the
computation period in which the change occurs, the Plan Administrator will
determine the greater of: (i) the period of service that would be credited
under the Elapsed Time Method for the Employee’s service from the first day
of that computation period through the date of the change, or (ii) the
service that would be taken into account under the Hours of Service method for
that computation period through the date of the change. If (i) is greater,
then Years of Service are credited under the Elapsed Time Method beginning
with the first day of the computation period during which the change to the
Elapsed Time Method occurs. If (ii) is greater, then Years of Service are
credited under the Hours of Service method for the computation period during
which the change to the Elapsed Time Method occurs and under the Elapsed Time
Method beginning with the first day of the computation period that follows
the computation period in which the change occurs. If the change occurs as of
the first day of a computation period, treat subsection (1) as applicable for
purposes of applying the rule in this paragraph. |
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(b) |
Shift from Elapsed Time Method to an Hours of
Service method. If the service crediting method
changes from the Elapsed Time Method to an Hours of Service method, each
Employee’s Years of Service under the Hours of Service method is the sum of
the amounts under subsections (1) and (2) below. |
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(1) |
The number
of Years of Service credited under the Elapsed Time Method as of the date of
the change. |
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(2) |
For the
computation period in which the change to the Hours of Service method occurs,
the portion of that computation period in which the Elapsed Time Method was
in effect is converted into an equivalent number of Hours of Service, using
the Equivalency Method described in Section 6.5(a). For the remainder of the
computation period, actual Hours of Service are counted, unless the
Equivalency Method has been elected in Part 7 of the Agreement. The Hours of
Service deemed credited for the portion of the computation period in which
the Elapsed Time Method was in effect are added to the actual Hours of
Service credited for the remaining portion of the computation period to
determine if the Employee has a Year of Service for that computation period.
If the change to the Hours of Service method occurs as of the first day of a
computation period, then the determination as to whether an Employee has
completed a Year of Service for the first computation period that the change
is in effect is based solely on the Hours of Service method. |
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6.7 |
Service with Predecessor Employers. If the Employer maintains the plan of a Predecessor Employer,
any service with such Predecessor Employer is treated as service with the
Employer for purposes of applying the provisions of this Plan. If the
Employer maintains the Plan of a Predecessor Employer, the Employer may
complete Part 13, #53 of the Agreement [Part 13, #71 of the 401(k) Agreement]
to identify the Predecessor Employer and to specify that service with such
Predecessor Employer will be credited for all purposes under the Plan. The
failure to complete Part 13, #53 of the Agreement [Part 13, #71 of the 401(k)
Agreement] with respect to service of a Predecessor Employer where the
Employer is maintaining a Plan of such Predecessor Employer will not override
the requirement that such predecessor service be counted for all purposes
under the Plan. |
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If the
Employer does not maintain the plan of a Predecessor Employer, service with
such Predecessor Employer does not count under this Plan, unless the Employer
specifically designates under Part 13, #53 of the Agreement [Part 13, #71 of
the 401(k) Agreement] to include service with such Predecessor Employer. If
the Employer elects to credit service with a Predecessor Employer under this
paragraph, the Employer must designate the purpose for which it is crediting
Predecessor Employer service. If the Employer will treat service with
multiple Predecessor Employers differently, the Employer should complete an
additional election for each Predecessor Employer for which service is being
credited differently. If the Employer is not crediting service with any
Predecessor Employers, Part 13, #53 of the Agreement [Part 13, #71 of the
401(k) Agreement] need not be completed. |
42
ARTICLE 7
LIMITATION ON PARTICIPANT ALLOCATIONS
This Article provides limitations on the amount a Participant may
receive as an allocation under the Plan for a Limitation Year. The limitation
on allocations (referred to herein as the Annual Additions Limitation) applies
in the aggregate to all plans maintained by the Employer. Part 13, #54.c. of
the Agreement [Part 13, #72.c. of the 401(k) Agreement] permits the Employer to
specify how the Plan will comply with the Annual Additions Limitation where the
Employer maintains a plan (or plans) in addition to this Plan.
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7.1 |
Annual Additions Limitation - No Other Plan Participation. |
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(a) |
Annual Additions Limitation.
If the Participant does not participate in, and has never participated in
another qualified retirement plan, a welfare benefit fund (as defined under
Code §419(e)), an individual medical account (as defined under Code §415(l)(2)),
or a SEP (as defined under Code §408(k)) maintained by the Employer, then 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. |
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Generally,
if an Employer Contribution that would otherwise be contributed or allocated
to a Participant’s Account will cause that Participant’s Annual Additions for
the Limitation Year to exceed the Maximum Permissible Amount, the amount to
be contributed or allocated to such Participant will be reduced so that the
Annual Additions allocated to such Participant’s Account for the Limitation
Year will equal the Maximum Permissible Amount. However, if a contribution or
allocation to a Participant’s Account will exceed the Maximum Permissible
Amount due to a correctable event described in subsection (c) below, the
Excess Amount may be contributed or allocated to such Participant and
corrected in accordance with the correction procedures outlined in subsection
(c). |
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(b) |
Using estimated Total Compensation. Prior to determining the Participant’s actual Total
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 Total Compensation for the Limitation Year, uniformly
determined for all Participants similarly situated. |
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As soon as
administratively feasible after the end of the Limitation Year, the Employer
will determine the Maximum Permissible Amount for the Limitation Year on the
basis of the Participant’s actual Total Compensation for the Limitation Year. |
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(c) |
Disposition of Excess Amount.
If, as a result of the use of estimated Total Compensation, the allocation of
forfeitures, a reasonable error in determining the amount of Section 401(k)
Deferrals that may be made under this Article 7, or other reasonable error in
applying the Annual Additions Limitation, an Excess Amount arises, the excess
will be disposed of as follows: |
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(1) |
Any Employee
After-Tax Contributions (plus attributable earnings), to the extent such
contributions would reduce the Excess Amount, will be returned to the
Participant. The Employer may elect not to apply this subsection (1) if the
ACP Test (as defined in Section 17.3) has already been performed and the
distribution of Employee After-Tax Contributions to correct the Excess Amount
will cause the ACP Test to fail or will change the amount of corrective distributions
required under Section 17.3(d)(1) of this BPD. |
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If Employer
Matching Contributions were allocated with respect to Employee After-Tax
Contributions for the Limitation Year, the Employee After-Tax Contributions
and Employer Matching Contributions will be corrected together. Employee
After-Tax Contributions will be distributed under this subsection (1) only to
the extent the Employee After-Tax Contributions, plus the Employer Matching
Contributions allocated with respect to such Employee After-Tax
Contributions, reduce the Excess Amount. Thus, after correction under this
subsection (1), each Participant should have the same level of Employer
Matching Contribution with respect to the remaining Employee After-Tax
Contributions as provided under Part 4B of the Agreement. Any Employer
Matching Contributions identified under this subsection (1) will be treated
as an Excess Amount correctable under subsections (3) and (4) below. If
Employer Matching Contributions are allocated to both Employee After-Tax
Contributions and to Section 401(k) Deferrals, this subsection (1) is applied
by treating Employer Matching Contributions as allocated first to Section
401(k) Deferrals. |
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(2) |
If, after
the application of subsection (1), an Excess Amount still exists, any Section
401(k) Deferrals (plus attributable earnings), to the extent such deferrals
would reduce the Excess Amount, will be distributed to the Participant. The
Employer may elect not to apply this subsection (2) if the |
43
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ADP Test (as
defined in Section 17.2) has already been performed and the distribution of
Section 401(k) Deferrals to correct the Excess Amount will cause the ADP Test
to fail or will change the amount of corrective distributions required under
Section 17.2(d)(1) of this BPD. |
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If Employer
Matching Contributions were allocated with respect to Section 401(k)
Deferrals for the Limitation Year, the Section 401(k) Deferrals and Employer
Matching Contributions will be corrected together. Section 401(k) Deferrals
will be distributed under this subsection (2) only to the extent the Section
401(k) Deferrals, plus Employer Matching Contributions allocated with respect
to such Section 401(k) Deferrals, reduce the Excess Amount. Thus, after
correction under this subsection (2), each Participant should have the same
level of Employer Matching Contribution with respect to the remaining Section
401(k) Deferrals as provided under Part 4B of the Agreement. Any Employer
Matching Contributions identified under this subsection (2) will be treated
as an Excess Amount correctable under subsection (3) or (4) below. |
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(3) |
If, after
the application of subsection (2), an Excess Amount still exists, the Excess
Amount is allocated to a suspense account and is used in the next Limitation
Year (and succeeding Limitation Years, if necessary) to reduce Employer
Contributions for all Participants under the Plan. The Excess Amounts are
treated as Annual Additions for the Limitation Year in which such amounts are
allocated from the suspense account. |
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(4) |
If a
suspense account is in existence at any time during a Limitation Year
pursuant to this Article 7, such suspense account will not participate in the
allocation of investment gains and losses, unless otherwise provided in
uniform valuation procedures established by the Plan Administrator. If a
suspense account is in existence at any time during a particular Limitation
Year, all amounts in the suspense account must be allocated to Participants’
Accounts before the Employer makes any Employer Contributions, or any
Employee After-Tax Contributions are made, for that Limitation Year. |
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7.2 |
Annual Additions Limitation - Participation in Another Plan. |
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(a) |
In general. This Section
7.2 applies if, in addition to this Plan, the Participant receives an Annual
Addition during any Limitation Year from another Defined Contribution Plan, a
welfare benefit fund (as defined under Code §419(e)), an individual medical
account (as defined under Code §415(l)(2)), or a SEP (as defined under Code §408(k))
maintained by the Employer. If the Employer maintains, or at any time
maintained, a Defined Benefit Plan (other than a Paired Plan) covering any
Participant in this Plan, see Section 7.5. |
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(b) |
This Plan’s Annual Addition Limitation. The Annual Additions that may be credited to a Participant’s
Account under this Plan for any Limitation Year will not exceed the Maximum
Permissible Amount reduced by the Annual Additions credited to a
Participant’s Account under any other Defined Contribution Plan, welfare
benefit fund, individual medical account, or SEP maintained by the Employer
for the same Limitation Year. |
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(c) |
Annual Additions reduction.
If the Annual Additions with respect to the Participant under any other
Defined Contribution Plan, welfare benefit fund, individual medical account,
or SEP maintained by the Employer are less than the Maximum Permissible
Amount and the Annual Additions that would otherwise be contributed or
allocated to the Participant’s Account under this Plan would exceed the
Annual Additions Limitation for the Limitation Year, 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. However, if a contribution or allocation to a Participant’s Account
will exceed the Maximum Permissible Amount due to a correctable event
described in Section 7.1(c), the Excess Amount may be contributed or
allocated to such Participant and corrected in accordance with the correction
procedures outlined in Section 7.1(c). |
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(d) |
No Annual Additions permitted.
If the Annual Additions with respect to the Participant under such other
Defined Contribution Plan(s), welfare benefit fund(s), individual medical
account(s), or SEP(s) 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. However, if a
contribution or allocation to a Participant’s Account will exceed the Maximum
Permissible Amount due to a correctable event described in Section 7.1(c),
the Excess Amount may be contributed or allocated to such Participant and
corrected in accordance with the correction procedures outlined in Section 7.1(c).
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(e) |
Using estimated Total Compensation. Prior to determining the Participant’s actual Total
Compensation for the Limitation Year, the Employer may determine the Maximum
Permissible Amount for a Participant in the manner described in Section 7.1(b).
As soon as 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 Total Compensation for the Limitation
Year. |
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(f) |
Excess Amounts. If, as a
result of the use of estimated Total Compensation, an allocation of
forfeitures, a reasonable error in determining the amount of Section 401(k)
Deferrals that may be made under this Article 7, or other reasonable error in
applying the Annual Additions Limitation, a Participant’s Annual Additions
under this Plan and such other plans or funds 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 SEP will be deemed to have been allocated first, followed
by Annual Additions to a welfare benefit fund or individual medical account,
regardless of the actual allocation date. |
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(1) |
Same allocation date. If an Excess Amount is
allocated to a Participant on an allocation date of this Plan that coincides
with an allocation date of another plan, such Excess Amount will be
attributed to the following types of plan(s) in the order listed, until the
entire Excess Amount is allocated. |
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(i) |
First, to
any 401(k) plan(s) maintained by the Employer. |
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(ii) |
Then, to any
profit sharing plan(s) maintained by the Employer. |
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(iii) |
Then, to any
money purchase plan(s) maintained by the Employer. |
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(iv) |
Finally, to
any target benefit plan(s) maintained by the Employer. |
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If an amount
is allocated to the same type of Plan on the same allocation date, the Excess
Amount will be allocated to each plan in accordance with the pro rata
allocation method outlined in the following paragraph. |
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(2) |
Alternative methods. The Employer may elect
under Part 13, #54.c. of the Agreement [Part 13, #72.c. of the 401(k)
Agreement] to modify the default rules under this subsection (f). For
example, the Employer may elect to attribute any Excess Amount which is
allocated on the same date to this Plan and to another plan maintained by the
Employer by designating the specific plan to which the Excess Amount is
allocated or by using a pro rata allocation method. Under the pro rata
allocation method, the Excess Amount attributed to this Plan is the product
of: |
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(i) |
the total
Excess Amount allocated as of such date, times |
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(ii) |
the ratio of
(A) the Annual Additions allocated to the Participant for the Limitation Year
as of such date under this Plan to (B) the total Annual Additions allocated
to the Participant for the Limitation Year as of such date under this and all
other Defined Contribution Plans. |
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(g) |
Disposition of Excess Amounts.
Any Excess Amount attributed to this Plan will be disposed in the manner
described in Section 7.1(c). |
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7.3 |
Modification of Correction Procedures. The Employer may elect under Part 13, #51.c. of the Agreement
[Part 13, #69.c. of the 401(k) Agreement] to modify any of the corrective
provisions under Section 7.1 of this BPD. The provisions in Section 7.2 may
be modified under Part 13, #54.c. of the Agreement [Part 13, #72.c. of the
401(k) Agreement]. |
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7.4 |
Definitions Relating to the Annual Additions Limitation.
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(a) |
Annual Additions: The sum
of the following amounts credited to a Participant’s Account for the
Limitation Year: |
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(1) |
Employer
Contributions, including Section 401(k) Deferrals; |
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(2) |
Employee
After-Tax Contributions; |
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(3) |
forfeitures;
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(4) |
amounts
allocated to an individual medical account (as defined in Code §415(l)(2)),
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 Code §419A(d)(3)) under a welfare benefit fund (as
defined in Code §419(e)) maintained by the Employer are treated as Annual
Additions to a Defined Contribution Plan; and |
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(5) |
allocations
under a SEP (as defined in Code §408(k)). |
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For this
purpose, any Excess Amount applied under Sections 7.1(c) or 7.2(f) in the
Limitation Year to reduce Employer Contributions will be considered Annual
Additions for such Limitation Year. |
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An Annual
Addition is credited to a Participant’s Account for a particular Limitation
Year if such amount is allocated to the Participant’s Account as of any date
within that Limitation Year. An Annual Addition will not be deemed credited
to a Participant’s Account for a particular Limitation Year unless such
amount is actually contributed to the Plan no later than 30 days after the
time prescribed by law for filing the Employer’s income tax return (including
extensions) for the taxable year with or within which the Limitation Year
ends. In the case of Employee After-Tax Contributions, such amount shall not
be deemed credited to a Participant’s Account for a particular Limitation
Year unless the contributions are actually contributed to the Plan no later
than 30 days after the close of that Limitation Year. |
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(b) |
Defined Contribution Dollar Limitation:
$30,000, as adjusted under Code §415(d). |
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(c) |
Employer. For purposes of
this Article 7, Employer shall mean the Employer that adopts this Plan, and
all members of a controlled group of corporations (as defined in §414(b) of the
Code as modified by §415(h)), all commonly controlled trades or businesses
(as defined in §414(c) of the Code as modified by §415(h)) or affiliated
service groups (as defined in §414(m)) of which the adopting Employer is a
part, and any other entity required to be aggregated with the Employer
pursuant to regulations under §414(o) of the Code. |
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(d) |
Excess Amount: The excess
of the Participant’s Annual Additions for the Limitation Year over the
Maximum Permissible Amount. |
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(e) |
Limitation Year: The Plan
Year, unless the Employer elects another 12-consecutive month period under
Part 13, #51.a. of the Agreement [Part 13, #69.a. of the 401(k) Agreement].
All qualified retirement plans under Code §401(a) 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. If the Plan
has an initial Plan Year that is less than 12 months, the Limitation Year for
such first Plan Year is the 12-month period ending on the last day of that
Plan Year, unless otherwise specified in Part 13, #51.c. of the Agreement
[Part 13, #69.c. of the 401(k) Agreement]. |
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(f) |
Maximum Permissible Amount:
The maximum Annual Additions that may be contributed or allocated to a
Participant’s Account under the Plan for any Limitation Year shall not exceed
the lesser of: |
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(1) |
the Defined
Contribution Dollar Limitation, or |
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(2) |
25 percent of
the Participant’s Total Compensation for the Limitation Year. |
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The Total
Compensation limitation referred to in (2) shall not apply to any
contribution for medical benefits (within the meaning of Code §401(h) or
§419A(f)(2)) which is otherwise treated as an Annual Addition under Code
§415(l)(1) or §419A(d)(2). |
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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: |
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Number of months in the short Limitation Year |
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12 |
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If a short
Limitation Year is created because the Plan has an initial Plan Year that is less than 12 months, no
proration of the Defined Contribution Dollar Limitation is required, unless
provided otherwise under Part 13, #51.c. of the Agreement [Part 13, #69.c. of
the 401(k) Agreement]. (See subsection (e) above for the rule allowing the
use of a full 12-month Limitation Year for the first year of the Plan,
thereby avoiding the need to prorate the Defined Contribution Dollar
Limitation.) |
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(g) |
Total Compensation: The
amount of compensation as defined under Section 22.197, subject to the
Employer’s election under Part 3, #9 of the Agreement. |
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(1) |
Self-Employed Individuals. For a
Self-Employed Individual, Total Compensation is such individual’s Earned
Income. |
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(2) |
Total Compensation actually paid or made available.
For purposes of applying the limitations of this Article 7, Total
Compensation for a Limitation Year is the Total Compensation actually paid or |
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made
available to an Employee during such Limitation Year. However, the Employer
may include in Total Compensation for a Limitation Year amounts earned but
not paid in the Limitation Year because of the timing of pay periods and pay
days, but only if these amounts are paid during the first few weeks of the
next Limitation Year, such amounts are included on a uniform and consistent
basis with respect to all similarly-situated Employees, and no amounts are
included in Total Compensation in more than one Limitation Year. The Employer
need not make any formal election to include accrued Total Compensation
described in the preceding sentence. |
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(3) |
Disabled Participants. Total Compensation
does not include any imputed compensation for the period a Participant is
Disabled. However, the Employer may elect under Part 13, #51.b. of the
Agreement [Part 13, #69.b. of the 401(k) Agreement], to include under the
definition of Total Compensation, the amount a terminated Participant who is
permanently and totally Disabled (as defined in Section 22.53) would have
received for the Limitation Year if the Participant had been paid at the rate
of Total Compensation paid immediately before becoming permanently and
totally Disabled. If the Employer elects under Part 13, #51.b. of the
Agreement [Part 13, #69.b. of the 401(k) Agreement] to include imputed
compensation for a Disabled Participant, a Disabled Participant will receive
an allocation of any Employer Contribution the Employer makes to the Plan
based on the Employee’s imputed compensation for the Plan Year. Any Employer
Contributions made to a Disabled Participant under this subsection (3) are
fully vested when made. For Limitation Years beginning before January 1,
1997, imputed compensation for a Disabled Participant may be taken into
account only if the Participant is not a Highly Compensated Employee for such
Plan Year. |
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(4) |
Special rule for Limitation Years beginning before January 1, 1998.
For Limitation Years beginning before January 1, 1998, for purposes of
applying the limitations of this Article 7 and for determining the minimum
top-heavy contribution required under Section 16.2(a), Total Compensation
paid or made available during such Limitation Year shall not include any
Elective Deferrals, or any amount which is contributed or deferred by the
Employer at the election of the Employee and which is not includible in the
gross income of the Employee by reason of Code §125 or §457. |
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7.5 |
Participation in a Defined Benefit Plan. If the Employer maintains, or at any time maintained, a
Defined Benefit Plan (other than a Paired Plan) 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. If the sum of the Defined Benefit Plan Fraction and the Defined
Contribution Plan Fraction exceeds 1.0 in any Limitation Year, the Plan will
satisfy the 1.0 limitation by reducing a Participant’s Projected Annual
Benefit under the Defined Benefit Plan. |
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(a) |
Repeal of rule. The
limitations under this Section 7.5 do not apply for Limitation Years
beginning on or after January 1, 2000. However, the Employer may have
continued to apply rules consistent with this Section 7.5 for Plan Years
beginning after December 31, 1999 and before the Employer first adopted a
plan to comply with the GUST Legislation. If the Employer is adopting this
Plan as a restatement of a prior plan to comply with the GUST Legislation,
the provisions of the prior plan control for purposes of applying the
combined limitation rules under Code §415(e) for Limitation Years beginning
before the Effective Date of this Plan. For Limitation Years beginning on or
after the Effective Date of this Plan, the provisions of this Section 7.5
apply. If for any Limitation Year beginning prior to the date this Plan is
adopted as a GUST restatement, the Employer did not comply in operation with
the provisions under this Section 7.5 or the provisions of the prior plan, as
applicable, the Employer may document under Appendix B-4 of the Agreement how
the Plan was operated to comply with the combined limitation rules under Code
§415(e). |
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(b) |
Special definitions relating to Section 7.5. |
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(1) |
Defined Benefit Plan Fraction: A fraction,
the numerator of which is the sum of the Participant’s Projected Annual
Benefit 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 Code §§415(b)
and (d) or 140 percent of the Participant’s Highest Average Compensation,
including any adjustments under Code §415(b). |
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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 plans after May 5, 1986. The preceding sentence applies only if the
Defined Benefit Plans individually and in the aggregate satisfied the
requirements of Code §415 for all Limitation Years beginning before January
1, 1987. |
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If the Plan
is a Top-Heavy Plan for any Plan Year, 100% will be substituted for 125% in
the prior paragraph, unless in Part 13, #54.b. of the Agreement [Part 13,
#72.b. of the 401(k) Agreement], the Employer provides an extra minimum
top-heavy allocation or benefit in accordance with Code §416(h) and the
regulations thereunder. In any event, if the Top-Heavy Ratio exceeds 90%,
then 100% will always be substituted for 125% in the prior paragraph. |
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(2) |
Defined Contribution Plan 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
Employee After-Tax 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 under Code §419(e)), individual
medical accounts (as defined under Code §415(l)(2)), and SEPs (as defined
under Code §408(k)) maintained by the Employer, and the denominator of which
is the sum of the maximum aggregate amount for the current and all prior
Limitation Years during which the Participant performed service with the
Employer (regardless of whether a Defined Contribution Plan was maintained by
the Employer during such years). The maximum aggregate amount in any
Limitation Year is the lesser of: (i) 125 percent of the Defined Contribution
Dollar Limitation in effect under Code §415(c)(l)(A) (as determined under
Code §§415(b) and (d)) for such Limitation Year or (ii) 35 percent of the
Participant’s Total Compensation for such Limitation Year. |
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If the Plan
is a Top-Heavy Plan for any Plan Year, 100% will be substituted for 125%
unless in Part 13, #54.b. of the Agreement [Part 13, #72.b. of the 401(k)
Agreement], the Employer provides an extra minimum top-heavy allocation or
benefit in accordance with Code §416(h) and the regulations thereunder. In
any event, if the Top-Heavy Ratio exceeds 90%, then 100% will always be
substituted for 125%. |
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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 Plan Fraction would otherwise exceed 1.0
under the terms of this Plan. Under the adjustment, an amount equal to the
product of (i) the excess of the sum of the fractions over 1.0 times (ii) 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 Code §415
limitation applicable to the first Limitation Year beginning on or after
January 1, 1987. |
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The Annual
Additions for any Limitation Year beginning before January 1, 1987 shall not
be recomputed to treat all Employee After-Tax Contributions as Annual
Additions. |
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(3) |
Highest Average Compensation: The average
Total Compensation for the three consecutive years of service with the
Employer that produces the highest average. |
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(4) |
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: |
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(i) |
the
Participant will continue employment until Normal Retirement Age under the
Plan (or current age, if later), and |
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(ii) |
the
Participant’s Total Compensation for the current Limitation Year and all
other relevant factors used to determine benefits under the Plan will remain
constant for all future Limitation Years. |
48
ARTICLE 8
PLAN DISTRIBUTIONS
Except as provided under Article 9 (Joint and Survivor Annuity
Requirements), this Article 8 governs all distributions to Participants under
the Plan. Sections 8.1 and 8.2 set forth the available distribution options
under the Plan and the amount available for distribution. Section 8.3 sets
forth the Participants’ distribution options following termination of
employment, Section 8.4 discusses the distribution options upon a Participant’s
death, and Sections 8.5 and 8.6 set forth the in-service distribution options
under the Plan, including the conditions for receiving a Hardship distribution.
Parts 9 and 10 of the Agreement contain the elective provisions for the
Employer to identify the timing of distributions and the permitted distribution
events under the Plan.
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8.1 |
Distribution Options. A
Participant who terminates employment with the Employer may receive a
distribution of his/her vested Account Balance at the time and in the manner
designated under Part 9 of the Agreement. A Participant may receive an
in-service distribution prior to his/her termination of employment with the
Employer only to the extent permitted under Part 10 of the Agreement. |
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Distributions
from the Plan will be made in the form of a lump sum of the Participant’s
entire vested Account Balance, a single sum distribution of a portion of the
Participant’s vested Account Balance, installments, annuity payments, or
other form as selected under Part 11 of the Agreement. Unless provided
otherwise under Part 11 of the Agreement, a Participant may select any
combination of the available distribution forms. |
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If the Employer
elects to permit a single sum distribution of a portion of the Participant’s
vested Account Balance, the Employer may limit the availability or frequency
of subsequent withdrawals under Part 11, #40.f. of the Nonstandardized
Agreement [Part 11, #58.f. of the Nonstandardized 401(k) Agreement]. If the
Employer elects under Part 11 of the Agreement to permit installment payments
as an optional form of distribution, the Participant (and spouse, if
applicable) may elect to receive installments in monthly, quarterly,
semi-annual, or annual payments over a period not exceeding the Life
Expectancy of the Participant and his/her Designated Beneficiary. The
Participant may elect at any time to accelerate the payment of all, or any
portion, of an installment distribution. If the Employer elects under Part 11
of the Agreement to permit annuity payments, such annuity payments may not be
in a form that will provide for payments over a period extending beyond
either the life of the Participant (or the lives of the Participant and
his/her designated Beneficiary) or the life expectancy of the Participant (or
the life expectancy of the Participant and his/her designated Beneficiary).
The Employer may restrict the availability of installment payments or annuity
payments under Part 11, #40.f. of the Nonstandardized Agreement [Part 11,
#58.f. of the Nonstandardized 401(k) Agreement]. |
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If the Plan
is subject to the Joint and Survivor Annuity requirements under Article 9,
the Plan must make distribution in the form of a QJSA (as defined in Section
9.4(a)) unless the Participant (and spouse, if the Participant is married)
elects an alternative distribution form in accordance with Section 9.4(d).
(See Section 9.1 for the rules regarding the application of the Joint and Survivor
Annuity requirements.) |
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8.2 |
Amount Eligible for Distribution. For purposes of determining the amount a Participant may
receive as a distribution from the Plan, a Participant’s Account Balance is
determined as of the Valuation Date (as specified in Part 12 of the
Agreement) which immediately precedes the date the Participant receives
his/her distribution from the Plan. For this purpose, the Participant’s
Account Balance must be increased for any contributions allocated to the
Participant’s Account since the most recent Valuation Date and must be
reduced for any distributions the Participant received from the Plan since
the most recent Valuation Date. A Participant does not share in any
allocation of gains or losses attributable to the period between the
Valuation Date and the date of the distribution under the Plan, unless
provided otherwise under Part 12 of the Agreement or under uniform funding
and valuation procedures established by the Plan Administrator. In the case
of a Participant-directed Account, the determination of the value of the
Participant’s Account for distribution purposes is subject to the funding and
valuation procedures applicable to such directed Account. |
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8.3 |
Distributions After Termination of Employment. Subject to the required minimum distribution provisions under
Article 10, a Participant whose employment with the Employer is terminated
for any reason, other than death, is entitled to receive a distribution of
his/her vested Account Balance in accordance with this Section 8.3 as of the
date selected in Part 9 of the Agreement. If a Participant dies while
employed by the Employer, or dies before distribution of his/her vested
Account Balance is completed, distribution will be made in accordance with
Section 8.4. |
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(a) |
Account Balance exceeding $5,000.
If a Participant’s entire vested Account Balance exceeds $5,000 at the time
of distribution, the Participant may elect to receive a distribution of
his/her vested Account Balance in any form permitted under Part 11 of the
Agreement at the time indicated under Part 9, #33 of the Agreement [Part 9,
#51 of the 401(k) Agreement]. The Participant must receive proper notice and
must consent in writing, in accordance with Section 8.7, prior to receiving a
distribution from the Plan. If the Participant does not consent to a
distribution upon terminating employment with the Employer, distribution will
be made in accordance with Article 10. (Also see Section 8.8 for additional
notice requirements.) |
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(b) |
Account Balance not exceeding $5,000.
If a Participant’s entire vested Account Balance does not exceed $5,000 at
the time of distribution, the Plan Administrator will distribute the
Participant’s entire vested Account Balance in a single lump sum at the time
indicated under Part 9, #34 of the Agreement [Part 9, #52 of the 401(k)
Agreement]. Although the Participant need not consent to receive a
distribution under this subsection (b), the Participant must receive the
notice described in Section 8.8 (if applicable) prior to receiving the
distribution from the Plan. The Employer may modify the rule under this
subsection (b) by electing under Part 9, #37.a. of the Agreement [Part 9,
#55.a. of the 401(k) Agreement] to require Participant consent prior to a
distribution from the Plan, without regard to whether the Participant’s
vested Account Balance exceeds $5,000 at the time of distribution. |
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(c) |
Permissible distribution events under a 401(k) plan. A Participant may not receive a distribution of Section 401(k)
Deferrals, QNECs, QMACs and Safe Harbor Contributions under this Section 8.3
unless the Participant satisfies one of the following conditions: |
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(1) |
The
Participant has a “separation from service” with the Employer. For this
purpose, a separation from service occurs when an Employee terminates
employment with the Employer. If a Participant changes jobs as a result of
the Employer’s liquidation, merger, consolidation, or other similar
transaction, a distribution may be made to the Participant if the Plan
Administrator determines the Participant has incurred a separation from
service in accordance with rules promulgated under the Code or regulations,
or by reason of a ruling or other published guidance from the IRS. A
Participant may not receive a distribution by reason of separation from
service, or continue to receive an installment distribution based on
separation from service, if prior to the time the distribution is made from
the Plan, the Participant returns to employment with the Employer. |
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(2) |
The Employer
is a corporation and the Employer sells substantially all of the assets of a
trade or business (within the meaning of §409(d)(2) of the Code) to an
unrelated corporation, provided the purchaser does not continue to maintain
the Plan with respect to the Participant after the sale and the Participant
becomes employed by the unrelated corporation as a result of the sale and the
distribution is made by the end of the second calendar year after the year of
the sale. For this purpose, an Employer is deemed to have sold substantially
all of the assets of a trade or business if it sells 85% or more of the total
assets of such trade or business. |
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(3) |
The Employer
is a corporation and the Employer sells a subsidiary to an unrelated
corporation, provided the purchaser does not continue to maintain the Plan
with respect to the Participant after the sale and the Participant continues
to be employed by the unrelated corporation after the sale and the
distribution is made by the end of the second calendar year after the year of
the sale. |
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(d) |
Disabled Participant. A
terminated Employee who is Disabled at the time of termination, or who
becomes Disabled after terminating employment with the Employer, generally is
entitled to a distribution in the time and manner specified in Part 9 of the
Agreement. However, if so elected in Part 9, #35 of the Agreement [Part 9,
#53 of the 401(k) Agreement], a terminated Employee who is Disabled at the
time of termination, or who becomes Disabled after terminating employment
with the Employer, is entitled to a distribution in the time and manner
specified in Part 9, #35 of the Agreement [Part 9, #53 of the 401(k)
Agreement], to the extent such election will result in an earlier
distribution than would otherwise be available under Part 9 of the Agreement.
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(e) |
Determining whether vested Account Balance exceeds $5,000. For distributions made on or after October 17, 2000, the
determination of whether a Participant’s vested Account Balance exceeds
$5,000 is based on the value of the Participant’s Account as of the most
recent Valuation Date. In determining the value of a Participant’s Account
for distributions made before October 17, 2000, the “lookback rule” may
apply. If the lookback rule applies, the Participant’s vested Account Balance
is deemed to exceed $5,000 for purposes of applying the provisions under this
Article 8 and Article 9. |
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For
distribution made after March 21, 1999 and before October 17, 2000, the
“lookback rule” is applicable to a distribution to a Participant if the
Participant previously received a distribution when his/her vested Account
Balance exceeded $5,000, and either subsection (1) or (2) applies. |
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(1) |
The
distribution is subject to the Joint and Survivor Annuity requirements of
Article 9. |
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(2) |
The
distribution is not subject to the Joint and Survivor Annuity requirements of
Article 9, but a periodic distribution method (e.g., an installment
distribution) is currently in effect with respect to the Participant’s vested
Account Balance, at least one scheduled payment still remains, and when the
first periodic payment was made under such election, the vested Account
Balance exceeded $5,000. |
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For
distributions made before March 21, 1999, the lookback rule applies to all
distributions, without regard to subsections (1) and (2) above. However, the
Plan does not fail to satisfy the requirements of this subsection (e) if,
prior to the adoption of this Plan, the lookback rule was applied to all
distributions (without regard to the limitations described in subsections (1)
and (2) above), or if the limitations described in subsections (1) and (2)
above were applied to distributions made before March 22, 1999 but in a Plan
Year beginning after August 5, 1997. |
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(f) |
Effective date of $5,000 vested Account Balance
rule. The provisions under this Article 8 and
Article 9 which refer to a $5,000 vested Account Balance are effective for
Plan Years beginning after August 5, 1997, unless a later effective date is
specified in the GUST provisions under Appendix B-3.a. of the Agreement. For
plan years beginning prior to August 6, 1997 (or any later effective date
specified in Appendix B-3.a. of the Agreement) any reference under this
Article 8 or Article 9 to a $5,000 vested Account Balance should be applied
by replacing $5,000 with $3,500. |
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8.4 |
Distribution upon the Death of the Participant. The death benefit payable with respect to a deceased
Participant depends on whether the Participant dies after distribution of his
Account Balance has commenced (see subsection (a) below) or before
distribution commences (see subsection (b) below). |
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(a) |
Post-retirement death benefit.
If a Participant dies after commencing distribution of his/her benefit under
the Plan, the death benefit is the benefit payable under the form of payment
that has commenced. If a Participant commences distribution prior to death
only with respect to a portion of his/her Account Balance, then the rules in
subsection (b) apply to the rest of the Account Balance. |
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(b) |
Pre-retirement death benefit.
If a Participant dies before commencing distribution of his/her benefit under
the Plan, the death benefit that is payable depends on whether the value of
the death benefit exceeds $5,000 and whether the Joint and Survivor Annuity
requirements of Article 9 apply. If there is both a QPSA death benefit and a
non-QPSA death benefit, each death benefit is valued separately to determine
whether it exceeds $5,000. For death benefits distributed before the $5,000
rule described in Section 8.3(f) is effective, substitute $3,500 for $5,000. |
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(1) |
Death benefit not exceeding $5,000. If the
value of the pre-retirement death benefit does not exceed $5,000, it shall be
paid in a single sum as soon as administratively feasible after the Participant’s
death. |
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(2) |
Death benefit that exceeds $5,000. If the
value of the pre-retirement death benefit exceeds $5,000, the payment of the
death benefit will depend on whether the Joint and Survivor Annuity
requirements apply. |
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(i) |
If the Joint and Survivor Annuity requirements do not apply.
In this case, the entire death benefit is payable in the form and at the time
described below in subsection (ii)(B). |
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(ii) |
If the Joint and Survivor Annuity requirements apply.
In this case, the death benefit consists of a QPSA death benefit (see Section
9.3) and, if the QPSA is defined to be less than 100% of the Participant’s
vested Account Balance, a non-QPSA death benefit. The QPSA death benefit is
payable in accordance with subsection (A) below, unless the Participant has
waived such death benefit under the waiver procedures described in Section
9.4(d). In the event there is a proper waiver of the QPSA death benefit, then
such portion of the death benefit is payable in the same manner as the
non-QPSA death benefit. The non-QPSA death benefit is payable in the form and
at the time described below in subsection (B). |
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(A) |
QPSA death benefit. If the pre-retirement
death benefit is payable in the QPSA form, then it shall be paid in accordance
with Article 9. If the QPSA death benefit has not been waived, but the
surviving spouse elects a different form of payment, then distribution of the
QPSA death benefit is made in accordance with the form of payment elected by
the spouse, provided such form of payment is available under Section 8.1. The
surviving spouse may request the payment of the QPSA death benefit (in the
QPSA form or in the form elected by the surviving spouse) as soon as
administratively feasible after the death of the Participant. However,
payment of the death benefit will not commence without the consent of the
surviving spouse prior to the date the Participant would have reached Normal
Retirement Age (or age 62, if later). If the QPSA death benefit has been
waived, in accordance with the procedures in Article 9, then the portion of
the Participant’s vested Account Balance that would have been payable as a
QPSA death benefit in the absence of such a waiver is treated as a death
benefit payable under subsection (B). |
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(B) |
Non-QPSA death benefits. Any pre-retirement
death benefit not described in subsection (A) is payable under this
paragraph. Such death benefit is payable in lump sum as soon as
administratively feasible after the Participant’s death. However, the death benefit
may be payable in a different form if prescribed by the Participant’s
Beneficiary designation, or if the Beneficiary, before a lump sum payment of
the benefit is made, requests an election as to the form of payment. An
alternative form of payment must be one that is available under Section 8.1. |
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(3) |
Minimum distribution requirements. In no
event will any death benefit be paid in a manner that is inconsistent with
the minimum distribution requirements of Section 10.2. In addition, the Beneficiary
of any pre-retirement death benefit described above in subsection (2) may
postpone the commencement of the death benefit to a date that is not later
than the latest commencement date permitted under Section 10.2, unless such
election is prohibited in Part 9, #37.b. of the Agreement [Part 9, #55.b. of
the 401(k) Agreement]. |
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(c) |
Determining a Participant’s Beneficiary. A Participant may designate a Beneficiary to receive the death
benefits described in this Section 8.4. Any Beneficiary designation is
subject to the rules under subsections (1) - (4) below. A Participant may
change or revoke a Beneficiary designation at any time by filing a new
designation with the Plan Administrator. Any new Beneficiary designation is
subject to the spousal consent rules described below, unless the spouse
specifically waives such right under a general consent as authorized under
Section 9.4(d). Unless specified otherwise in the Participant’s designated
beneficiary election form, if a Beneficiary does not predecease the
Participant but dies before distribution of the death benefit is made to the
Beneficiary, the death benefit will be paid to the Beneficiary’s estate. |
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The Plan
Administrator may request proper proof of the Participant’s death and may
require the Beneficiary to provide evidence of his/her right to receive a
distribution from the Plan in any form or manner the Plan Administrator may
deem appropriate. The Plan Administrator’s determination of the Participant’s
death and of the right of a Beneficiary to receive payment under the Plan
shall be conclusive. If a distribution is to be made to a minor or
incompetent Beneficiary, payments may be made to the person’s legal guardian,
conservator, or custodian in accordance with the Uniform Gifts to Minors Act
or similar law as permitted under the laws of the state where the Beneficiary
resides. The Plan Administrator or Trustee will not be liable for any
payments made in accordance with this subsection (c) and are not required to
make any inquiries with respect to the competence of any person entitled to
benefits under the Plan. |
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If a
Participant designates his/her spouse as Beneficiary and subsequent to such
Beneficiary designation, the Participant and spouse are divorced or legally
separated, the designation of the spouse as Beneficiary under the Plan is
automatically rescinded unless specifically provided otherwise under a
divorce decree or QDRO, or unless the Participant enters into a new
Beneficiary designation naming the prior spouse as Beneficiary. |
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(1) |
Spousal consent to Beneficiary designation: post-retirement death
benefit. If a Participant is married at the time
distribution commences to the Participant, the Beneficiary of any
post-retirement death benefit is the Participant’s surviving spouse,
regardless of whether the Joint and Survivor Annuity requirements under
Article 9 apply, unless there is no surviving spouse or the spouse has
consented to the Beneficiary designation in a manner that is consistent with
the requirements for a Qualified Election under Section 9.4(d), or makes a
valid disclaimer of the benefit. If the Joint and Survivor Annuity
requirements apply, the spouse is determined as of the Distribution
Commencement Date for purposes of this spousal consent requirement. If the Joint
and Survivor Annuity requirements do not apply, the spouse is determined as
of the Participant’s date of death for purposes of this spousal consent
requirement. |
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(2) |
Spousal consent to Beneficiary designation: pre-retirement death
benefit. The rules for spousal consent depend on
whether the Joint and Survivor Annuity requirements in Article 9 apply. |
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(i) |
If the Joint and Survivor Annuity requirements apply.
In this case, the QPSA death benefit will be payable in accordance with
Section 9.3. The QPSA death benefit may be payable to a non-spouse
Beneficiary only if the spouse consents to the Beneficiary designation,
pursuant to the Qualified Election requirements under Section 9.4(d), or
makes a valid disclaimer. The non-QPSA death benefit, if any, is payable to
the person named in the Beneficiary designation, without regard to whether
spousal consent is obtained for such designation. If a spouse does not
properly consent to a Beneficiary designation, the QPSA waiver is invalid,
and the QPSA death benefit is still payable to the spouse, but the
Beneficiary designation remains valid with respect to any non-QPSA death
benefit. |
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(ii) |
If the Joint and Survivor Annuity requirements do not apply.
In this case, the surviving spouse (determined at the time of the
Participant’s death), if any, must be treated as the sole Beneficiary,
regardless of any contrary Beneficiary designation, unless there is no
surviving spouse, or the spouse has consented to the Beneficiary designation
in a manner that is consistent with the requirements for a Qualified Election
under Section 9.4(d) or makes a valid disclaimer. |
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(3) |
Default beneficiaries. To the extent a
Beneficiary has not been named by the Participant (subject to the spousal
consent rules discussed above) and is not designated under the terms of this
Plan to receive all or any portion of the deceased Participant’s death
benefit, such amount shall be distributed to the Participant’s surviving
spouse (if the Participant was married at the time of death). If the
Participant does not have a surviving spouse at the time of death,
distribution will be made to the Participant’s surviving children, in equal
shares. If the Participant has no surviving children, distribution will be
made to the Participant’s estate. The Employer may modify the default
beneficiary rules described in this subparagraph by addition attaching
appropriate language as an addendum to the Agreement. |
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(4) |
One-year marriage rule. The Employer may
elect under Part 11, #41.c. of the Agreement [Part 11, #59.c. of the 401(k)
Agreement], for purposes of applying the provisions of this Section 8.4, that
an individual will not be considered the surviving spouse of the Participant
if the Participant and the surviving spouse have not been married for the
entire one-year period ending on the date of the Participant’s death. |
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8.5 |
Distributions Prior to Termination of Employment. |
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(a) |
Employee After-Tax Contributions, Rollover Contributions, and
transfers. A Participant may withdraw
at any time, upon written request, all or any portion of his/her Account
Balance attributable to Employee After-Tax Contributions or Rollover
Contributions. Any amounts transferred to the Plan pursuant to a Qualified
Transfer (as defined in Section 3.3(d)) also may be withdrawn at any time
pursuant to a written request. No forfeiture will occur solely as a result of
an Employer’s withdrawal of Employee After-Tax Contributions. The Employer
may elect in Part 10, #39.d. of the Nonstandardized Agreement [Part 10,
#57.d. of the Nonstandardized 401(k) Agreement] to modify the availability of
in-service withdrawals of Employee After-Tax Contributions, Rollover
Contributions, or Qualified Transfers. |
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With respect
to transfers (other than Qualified Transfers) and subject to the restrictions
on distributions of transferred assets under Section 3.3, a Participant may
request a distribution of all or any portion of his/her Transfer Account only
as permitted under this Article with respect to contributions of the same
type as are being withdrawn. |
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(b) |
Employer Contributions.
Except as provided in Section 14.10 dealing with defaulted Participant loans,
a Participant may receive a distribution of all or any portion of his/her
vested Account Balance attributable to Employer Contributions prior to
termination of employment only as permitted under Part 10 of the Agreement.
If the Joint and Survivor Annuity requirements under Article 9 apply to the
Participant, the Participant’s spouse (if the Participant is married at the
time of distribution) must consent to a distribution in accordance with
Section 9.2. |
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The Employer
may elect under the profit sharing or 401(k) plan Agreement to permit
in-service distributions of Employer Contributions (other than Section 401(k)
Deferrals, QMACs, QNECs, and Safe Harbor Contributions) upon the occurrence
of a specified event or upon the completion of a certain number of years. In
no case, however, may a distribution that is made solely on account of the
completion of a designated number of years be made with respect to Employer
Contributions that have been accumulated in the Plan for less than 2 years.
This rule does not apply if the Participant has been an Eligible Participant
in the Plan for at least 5 years. An in-service distribution may be made on
account of a specified event (other than the completion of a designated
number of years) at any time, if authorized under Part 10 of the Agreement. |
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If a
Participant with a partially vested benefit receives an in-service
distribution under the Plan, the special vesting schedule under Section 4.8
must be applied to determine the Participant’s vested percentage in his/her
remaining Account Balance. This special vesting schedule will not apply if
the Employer limits the availability of in-service distributions under Part
10 of the Agreement to Participants who are 100% vested. |
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(c) |
Section 401(k) Deferrals, Qualified Nonelective Contributions,
Qualified Matching Contributions, and Safe Harbor Contributions. If the Employer has adopted the 401(k) Agreement, a
Participant may receive an in-service distribution of all or any portion of
his/her Section 401(k) Deferral Account, QMAC Account, QNEC Account, Safe
Harbor Matching Contribution Account and Safe Harbor Nonelective Contribution
Account only as permitted under Part 10 of the Agreement. No provision in
this Plan or in Part 10 of the |
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Agreement
may be interpreted to permit a Participant to receive a distribution of such
amounts prior to the occurrence of one of the following events: |
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(1) |
the
Participant becoming Disabled; |
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(2) |
the
Participant’s attainment of age 59½; |
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(3) |
the
Participant’s Hardship (as defined in Section 8.6). |
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(d) |
Corrective distributions.
Nothing in this Article 8 precludes the Plan Administrator from making a
distribution to a Participant, to the extent such distribution is made to
correct a qualification defect in accordance with the corrective procedures
under the IRS’ voluntary compliance programs. Thus, for example, nothing in
this Article 8 would preclude the Plan from making a corrective distribution
to an Employee who received contributions under the Plan prior to becoming an
Eligible Participant. Any such distribution must be made in accordance with
the correction procedures applicable under the IRS’ voluntary correction
programs. |
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8.6 |
Hardship Distribution. To
the extent permitted under Part 10 of the Agreement, a Participant may
receive an in-service distribution on account of a Hardship. The Employer may
elect under Part 10, #38.c. of the Agreement [Part 10, #56.c. of the 401(k)
Agreement] to permit a Hardship distribution only if the Participant
satisfies the safe harbor Hardship requirements under subsection (a) below.
Alternatively, the Employer may elect under Part 10, #38.d. of the Agreement
[Part 10, #56.d. of the 401(k) Agreement] to permit a Hardship distribution
of Employer Contributions (other than Section 401(k) Deferrals) in accordance
with the requirements of subsection (b) below. A Hardship distribution of
Section 401(k) Deferrals must meet the requirements of a safe harbor Hardship
as described under subsection (a) below. A Hardship distribution under this
Section 8.6 is not available for QNECs, QMACs or Safe Harbor Contributions. |
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(a) |
Safe harbor Hardship distribution. To qualify for a safe harbor Hardship, a Participant must
demonstrate an immediate and heavy financial need, as described in subsection
(1), and must satisfy the conditions described in subsection (2). |
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(1) |
Immediate and heavy financial need. To be
considered an immediate and heavy financial need, the Hardship distribution
must be made on account of one of the following events: |
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(i) |
the
incurrence of medical expenses (as described in §213(d) of the Code), of the
Participant, the Participant’s spouse or dependents; |
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(ii) |
the purchase
(excluding mortgage payments) of a principal residence for the Participant; |
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(iii) |
payment of
tuition and related educational fees (including room and board) for the next
12 months of post-secondary education for the Participant, the Participant’s
spouse, children or dependents; |
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(iv) |
to prevent
the eviction of the Participant from, or a foreclosure on the mortgage of,
the Participant’s principal residence; or |
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(v) |
any other
event that the IRS recognizes as a safe harbor Hardship distribution event
under ruling, notice or other guidance of general applicability. |
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A
Participant must provide the Plan Administrator with a written request for a
Hardship distribution. The Plan Administrator may require written
documentation, as it deems necessary, to sufficiently document the existence
of a proper Hardship event. |
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(2) |
Conditions for taking a safe harbor Hardship withdrawal.
A Participant may receive a safe harbor Hardship withdrawal only if all of
the following conditions are satisfied.
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(i) |
The
Participant has obtained all available distributions, other than Hardship
distributions, and all nontaxable loans under the Plan and all other
qualified plans maintained by the Employer. |
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(ii) |
The
Participant is suspended from making any Section 401(k) Deferrals (and any
Employee After-Tax Contributions) under the Plan or any other plans (other
than welfare benefit plans) maintained by the Employer for 12 months after
the receipt of the Hardship distribution. |
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(iii) |
The
distribution is not in excess of the amount of the 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). |
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(iv) |
The
limitation on Elective Deferrals under Code §402(g) for the Participant for
the taxable year immediately following the taxable year of the Hardship distribution
is reduced by the amount of any Elective Deferrals the Participant made
during the taxable year of the Hardship distribution. |
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(b) |
Non-safe harbor Hardship distribution. The Employer may elect under Part 10, #38.d. of the Agreement
[Part 10, #56.d. of the 401(k) Agreement] to permit a Hardship distribution
of Employer Contributions (other than Section 401(k) Deferrals) on account of
an immediate and heavy financial need (as described in subsection (a)(1)
above), but without regard to the requirements of subsection (a)(2) above.
Solely for the purpose of applying this subsection (b), a Hardship
distribution will be on account of an immediate and heavy financial need if
such Hardship distribution is made to pay for funeral expenses for a family
member of the Participant or upon the Participant’s Disability. The Employer
may add other permitted Hardship events under Part 10, #39.d. of the
Nonstandardized Agreement [Part 10, #57.d. of the Nonstandardized 401(k)
Agreement]. A non-safe harbor Hardship distribution is not available for
Section 401(k) Deferrals, QNECs, QMACs, or Safe Harbor Contributions. |
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(c) |
Amount available for distribution. A Participant may receive a Hardship distribution of any
portion of his/her vested Employer Contribution Account or Employer Matching
Contribution Account (including earnings thereon), as permitted under Part 10
of the Agreement. A Participant may receive a Hardship distribution of any
portion of his/her Section 401(k) Deferral Account, if permitted under Part
10 of the Agreement, provided such distribution, when added to other Hardship
distributions from Section 401(k) Deferrals, does not exceed the total
Section 401(k) Deferrals the Participant has made to the Plan (increased by
income allocable to such Section 401(k) Deferrals that was credited by the
later of December 31, 1988 or the end of the last Plan Year ending before
July 1, 1989). A Participant may not receive a Hardship distribution from
his/her QNEC Account, QMAC Account, Safe Harbor Nonelective Contribution
Account or Safe Harbor Matching Contribution Account. |
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8.7 |
Participant Consent. If the
value of a Participant’s entire vested Account Balance exceeds $5,000 (as
determined in accordance with Section 8.3(e)), the Participant must consent
to any distribution of such Account Balance prior to his/her Required
Beginning Date (as defined in Section 10.3(a)). The Employer may modify this
provision under Part 9, #37.b. of the Agreement [Part 9, #55.b. of the 401(k)
Agreement] to provide for automatic distribution to a terminated Participant
(or Beneficiary) as of the date the Participant attains (or would have
attained if not deceased) the later of Normal Retirement Age or age 62. A
Participant must consent in writing to a distribution under this Section 8.7
within the 90-day period ending on the Distribution Commencement Date (as
defined in Section 22.56). If the Participant is subject to the Joint and
Survivor Annuity requirements under Article 9 of this Plan, the Participant’s
spouse (if the Participant is married at the time of the distribution) also
must consent to the distribution in accordance with Section 9.2. If the
distribution is an Eligible Rollover Distribution, the Participant must also
direct the Plan Administrator as to whether he/she wants a Direct Rollover
and if so, the name of the Eligible Retirement Plan to which the distribution
will be made. (See Section 8.8 for more information regarding the Direct
Rollover rules.) |
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(a) |
Participant notice. Prior
to receiving a distribution from the Plan, the Participant must be notified
of his/her right to defer any distribution from the Plan in accordance with
the provisions under Article 10 of this BPD. The notification shall include a
general description of the material features and the relative values of the
optional forms of benefit available under the Plan (consistent with the
requirements under Code §417(a)(3)). The notice must be provided no less than
30 days and no more than 90 days prior to the Participant’s Distribution
Commencement Date. However, distribution may commence less than 30 days after
the notice is given, if the Participant is clearly informed of his/her right
to take 30 days after receiving the notice to decide whether or not to elect
a distribution (and, if applicable, a particular distribution option), and
the Participant, after receiving the notice, affirmatively elects to receive
the distribution prior to the expiration of the 30-day minimum period. (But
see Section 9.5(a) for the rules regarding the timing of distributions when
the Joint and Survivor Annuity requirements apply.) The notice requirements
described in this paragraph may be satisfied by providing a summary of the
required information, so long as the conditions described in applicable
regulations for the provision of such a summary are satisfied, and the full
notice is also provided (without regard to the 90-day period described in
this subsection). |
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(b) |
Special rules. The consent
rules under this Section 8.7 apply to distributions made after the Participant’s
termination of employment and to distributions made prior to the
Participant’s termination of employment. However, the consent of the
Participant (and the Participant’s spouse, if applicable) shall not be
required to the extent that a distribution is made: |
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(1) |
to satisfy
the required minimum distribution rules under Article 10; |
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(2) |
to satisfy
the requirements of Code §415, as described in Article 7; |
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(3) |
to correct
Excess Deferrals, Excess Contributions or Excess Aggregate Contributions, as
described in Article 17. |
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In addition,
if distributions are being made on account of the termination of the Plan,
and an annuity option is not available under the Plan, the Participant’s
Account Balance will, without the Participant’s consent, be distributed to
the Participant, without regard to the value of the Participant’s vested
Account Balance, unless the Employer (or any Related Employer) maintains
another Defined Contribution Plan (other than an employee stock ownership
plan as defined in Code §4975(e)(7)). If the Employer or any Related Employer
maintains another Defined Contribution Plan (other than an employee stock
ownership plan), then the Participant’s Account Balance will be transferred,
without the Participant’s consent, to the other plan, if the Participant does
not consent to an immediate distribution (to the extent consent to an
immediate distribution is otherwise required under this Section 8.7). |
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8.8 |
Direct Rollovers. This
Section 8.8 applies to distributions made on or after January 1, 1993.
Notwithstanding any provision in the Plan to the contrary, a Participant may
elect to have all or any portion of an Eligible Rollover Distribution paid
directly to an Eligible Retirement Plan in a Direct Rollover. If a
Participant elects a Direct Rollover of only a portion of an Eligible
Rollover Distribution, the Plan Administrator may require that the amount
being rolled over equals at least $500. |
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For purposes
of this Section 8.8, a Participant includes a Participant or former
Participant. In addition, this Section applies to any distribution from the
Plan made to a Participant’s surviving spouse or to a Participant’s spouse or
former spouse who is the Alternate Payee under a QDRO, as defined in Section
22.151. |
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If it is
reasonable to expect (at the time of the distribution) that the total amount
the Participant will receive as a distribution during the calendar year will
total less than $200, the Employer need not offer the Participant a Direct
Rollover option with respect to such distribution. |
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(a) |
Eligible Rollover Distribution.
An Eligible Rollover Distribution is any distribution of all or any portion
of a Participant’s Account Balance, except for the following distributions: |
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(1) |
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 Participant or the joint lives (or joint Life Expectancies) of the
Participant and the Participant’s Beneficiary, or for a specified period of
ten years or more; |
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(2) |
any
distribution to the extent such distribution is a required minimum
distribution under Article 10; |
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(3) |
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); |
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(4) |
an
in-service Hardship withdrawal of Section 401(k) Deferrals, as described in
subsection (e) below; and |
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(5) |
a distribution
made to satisfy the requirements of Code §415, as described in Article 7, or
a distribution to correct Excess Deferrals, Excess Contributions or Excess
Aggregate Contributions, as described in Article 17. |
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(b) |
Eligible Retirement Plan.
An Eligible Retirement Plan is: |
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(1) |
an
individual retirement account described in §408(a) of the Code; |
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(2) |
an
individual retirement annuity described in §408(b) of the Code; |
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(3) |
an annuity
plan described in §403(a) of the Code; or |
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(4) |
a qualified
plan described in §401(a) of the Code. |
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However, in
the case of an Eligible Rollover Distribution to a surviving spouse, an
Eligible Retirement Plan is only an individual retirement account or
individual retirement annuity. |
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(c) |
Direct Rollover. A Direct
Rollover is a payment made directly from the Plan to the Eligible Retirement
Plan specified by the Participant. The Plan Administrator may develop
reasonable procedures for accommodating Direct Rollover requests. |
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(d) |
Direct Rollover notice. A
Participant entitled to an Eligible Rollover Distribution must receive a
written explanation of his/her right to a Direct Rollover, the tax
consequences of not making a Direct Rollover, and, if applicable, any
available special income tax elections. The notice must be provided within
the same 30 – 90 day timeframe applicable to the Participant consent notice
under Section 8.7(a). The Direct Rollover notice must be provided to all
Participants, unless the total amount the Participant will receive as a
distribution during the calendar year is expected to be less than $200. |
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If a
Participant terminates employment with a total vested Account Balance of
$5,000 or less (as determined under Section 8.3(e)) and the Participant does
not respond to the Direct Rollover notice indicating whether a Direct
Rollover is desired and the name of the Eligible Retirement Plan to which the
Direct Rollover is to be made, the Plan Administrator will distribute the
Participant’s entire vested Account Balance (in accordance with Section
8.3(b)) no earlier than 30 days and no later than 90 days following the
provision of the notice under Section 8.7. The notice will describe the
procedures for making a default distribution under this paragraph, including
any rules for making a default Direct Rollover to an XXX. Any default
provisions described under the notice must be applied uniformly and in a
nondiscriminatory manner. If the notice provides for a default Direct
Rollover, the default distribution will be made as a Direct Rollover to the
XXX designated under the notice. The notice must contain pertinent
information regarding the Direct Rollover, including the name, address, and
telephone number of the XXX trustee and information regarding XXX maintenance
and withdrawal fees and how the XXX funds will be invested. The notice will
describe the timing of the Direct Rollover and the Participant’s ability to
affirmatively opt out of the Direct Rollover. The selection of an XXX
trustee, custodian or issuer and the selection of XXX investments for
purposes of a default Direct Rollover constitutes a fiduciary act subject to
the general fiduciary standards and prohibited transaction provisions of
ERISA. |
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(e) |
Special rules for Hardship withdrawals of Section 401(k) Deferrals. A Hardship withdrawal of
Section 401(k) Deferrals (as described in Code §401(k)(2)(B)(i)(IV)) is not
an Eligible Rollover Distribution to the extent such withdrawal is made after
December 31, 1998 or, if later, the first day (but not later than January 1,
2000) that the Plan Administrator begins to treat such Hardship withdrawals
as ineligible for rollover. Subject to any contrary pronouncement under
statute, regulation or IRS guidance, the Employer may treat a Hardship
withdrawal of Section 401(k) Deferrals as an Eligible Rollover Distribution
if the Participant otherwise satisfies a non-Hardship distribution event
described in Code §401(k)(2) or (10) at the time of the withdrawal,
regardless of whether the Plan’s procedures characterizes such distribution
as a Hardship withdrawal. |
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8.9 |
Sources of Distribution.
Unless provided otherwise in separate administrative provisions adopted by
the Plan Administrator, in applying the distribution provisions under this
Article 8, distributions will be made on a pro rata basis from all Accounts
from which a distribution is permitted under this Article. Alternatively, the
Plan Administrator may permit Participants to direct the Plan Administrator
as to which Account the distribution is to be made. Regardless of a
Participant’s direction as to the source of any distribution, the tax effect
of such a distribution will be governed by Code §72 and the regulations
thereunder. |
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(a) |
Exception for Hardship withdrawals. If the Plan permits a Hardship withdrawal from both Section
401(k) Deferrals and Employer Contributions, a Hardship distribution will
first be treated as having been made from a Participant’s Employer
Contribution Account and then from the Employer’s Matching Contribution
Account, to the extent such Hardship distribution is available with respect
to such Accounts. Only when all available amounts have been exhausted under
the Participant’s Employer Contribution Account and/or Employer Matching
Contribution Account will a Hardship distribution be made from a
Participant’s Section 401(k) Deferral Account. The Plan Administrator may
modify this provision in separate administrative procedures. |
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(b) |
In-kind distributions.
Nothing in this Article precludes the Plan Administrator from making a
distribution in the form of property, or other in-kind distribution |
57
ARTICLE 9
JOINT AND SURVIVOR ANNUITY REQUIREMENTS
This Article provides rules concerning the application of the Joint and
Survivor Annuity requirements under this Plan. If the Plan is a profit sharing
plan or a 401(k) plan, Part 11, #41.b. of the Agreement [Part 11, #59.b. of the
401(k) Agreement] permits the Employer to apply the Joint and Survivor Annuity
requirements to all Participants under the Plan. If the Employer does not elect
to apply the Joint and Survivor Annuity requirements to all Participants, the
Plan is only subject to the Joint and Survivor Annuity requirements to the
extent required under Section 9.1(b) of this Article.
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9.1 |
Applicability. Except as
provided in Section 9.6 below, this Article 9 applies to any distribution
received by a Participant under the money purchase plan Agreement or the
target benefit plan Agreement. For a profit sharing plan or 401(k) plan, the
following rules apply. |
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(a) |
Election to have requirements apply.
If this Plan is a profit sharing plan or a 401(k) plan, and the Employer
elects under Part 11, #41.b. of the profit sharing plan Agreement or Part 11,
#59.b. of the 401(k) Agreement to apply the Joint and Survivor Annuity
requirements, then this Article 9 applies in the same manner as it does to a
money purchase plan or a target benefit plan. |
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(b) |
Election to have requirements not apply. If this Plan is a profit sharing plan or a 401(k) plan, and
the Employer elects under Part 11, #41.a. of the profit sharing plan
Agreement or Part 11, #59.a. of the 401(k) Agreement not to apply the Joint
and Survivor Annuity requirements, this Article 9 generally will not apply to
distributions from the Plan. However, the rules of this Article 9 will apply
to a Participant under the following conditions: |
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(1) |
the
Participant elects to receive his/her benefit in the form of a life annuity
(if a life annuity is a permissible distribution option under Part 11 of the
Agreement); or |
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(2) |
the Participant
has received a direct or indirect transfer of benefits (other than a
Qualified Transfer as defined in Section 3.3(d)) from any plan which was
subject to the Joint and Survivor Annuity requirements at the time of the
transfer (but only to such transferred benefits); or |
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(3) |
the
Participant’s benefits under the Plan are used to offset the benefits under
another plan of the Employer that is subject to the Joint and Survivor
Annuity requirements. |
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Nothing in
this subsection (b) prohibits a Plan Administrator from developing
administrative procedures that apply the spousal consent requirements
outlined in this Article 9 to a Plan that is not otherwise subject to the
Joint and Survivor Annuity requirements. For example, the Plan Administrator
may require under separate administrative procedures to require spousal
consent to Participant distributions or may in a separate loan procedure
require spousal consent prior to granting a Participant loan, without
subjecting the Plan to the Joint and Survivor Annuity requirements. |
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(c) |
Accumulated deductible employee contributions. For purposes of applying the rules under this Section 9.1, any
distribution from a separate Account under a money purchase plan or a target
benefit plan which is attributable solely to accumulated deductible employee
contributions, as defined in Code §72(o)(5)(B), is treated as a distribution
from a profit sharing plan or 401(k) plan for which the rules under
subsection (b) above apply. |
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9.2 |
Qualified Joint and Survivor Annuity (QJSA).
If the Joint and Survivor Annuity requirements apply to a Participant, any
distribution from the Plan to that Participant must be in the form of a QJSA
(as defined in Section 9.4(a)), unless the Participant (and the Participant’s
spouse, if the Participant is married) elects to receive the distribution in
an alternative form, as authorized under Part 11 of the Agreement. Any
election of an alternative form of distribution must be pursuant to a
Qualified Election. Only the Participant needs consent (pursuant to Section
8.7) to the commencement of a distribution in the form of a QJSA. |
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9.3 |
Qualified Preretirement Survivor Annuity (QPSA). If the Joint and Survivor Annuity requirements apply to a
Participant who dies before the Distribution Commencement Date, the spouse of
that Participant is entitled to receive a QPSA (as defined in Section
9.4(b)), unless the Participant and spouse have waived the QPSA pursuant to a
Qualified Election. The Employer may elect under Part 11, #41.c. of the Agreement
[Part 11, #59.c. of the 401(k) Agreement] that a surviving spouse is not
entitled to a QPSA benefit if the Participant and surviving spouse were not
married throughout the one year period ending on the date of the
Participant’s death. Any portion of a Participant’s vested Account Balance
that is not payable to the surviving spouse as a QPSA (or other form elected
by the surviving spouse) constitutes a non-QPSA death benefit and is payable
under the rules described in Section 8.4. |
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9.4
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Definitions.
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(a)
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Qualified Joint and Survivor Annuity (QJSA). A QJSA is an immediate annuity payable over the life of the
Participant with a survivor annuity payable over the life of the spouse. If
the Participant is not married as of the Distribution Commencement Date, the
QJSA is an immediate annuity payable over the life of the Participant. The
survivor annuity must provide for payments to the surviving spouse equal to
50% of the payments that the Participant is entitled under the annuity during
the joint lives of the Participant and the spouse. The Employer may elect
under Part 11, #41.b. of the Agreement [Part 11, #59.b. of the 401(k)
Agreement] to make payments to the surviving spouse equal to 100%, 75% or
66-2/3% (instead of 50%) of the payments the Participant is entitled to under
the annuity.
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(b)
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Qualified Preretirement Survivor Annuity (QPSA). A QPSA is an annuity payable over the life of the surviving
spouse that is purchased using 50% of the Participant’s vested Account
Balance as of the date of death. The Employer may elect under Part 11, #41.b.
of the Agreement [Part 11, #59.b. of the 401(k) Agreement] to provide a QPSA
equal to 100% (instead of 50%) of the Participant’s vested Account Balance.
The remaining vested Account Balance will be distributed in accordance with
the death distribution provisions under Section 8.4. To the extent the
Participant’s vested Account Balance is derived from Employee After-Tax
Contributions, the QPSA will share in the Employee After-Tax Contributions in
the same proportion as the Employee After-Tax Contributions bear to the total
vested Account Balance of the Participant.
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The
surviving spouse may elect to have the QPSA distributed at any time following
the Participant’s death (subject to the required minimum distribution rules
under Article 10) and may elect to receive distribution in any form permitted
under Section 8.1 of the Plan. If the surviving spouse fails to elect
distribution upon the Participant’s death, the QPSA benefit will be
distributed in accordance with Section 8.4.
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(c) |
Distribution Commencement Date.
The Distribution Commencement Date is the date an Employee commences
distributions from the Plan. If a Participant commences distribution with
respect to a portion of his/her Account Balance, a separate Distribution
Commencement Date applies to any subsequent distribution. If distribution is
made in the form of an annuity, the Distribution Commencement Date is the
first day of the first period for which annuity payments are made. |
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(d) |
Qualified Election. A
Participant (and the Participant’s spouse) may waive the QJSA or QPSA
pursuant to a Qualified Election. If it is established to the satisfaction of
a plan representative that there is no spouse or that the spouse cannot be
located, any waiver signed by the Participant is deemed to be a Qualified
Election. For this purpose, a Participant will be deemed to not have a spouse
if the Participant is legally separated or has been abandoned and the
Participant has a court order to such effect. However, a former spouse of the
Participant will be treated as the spouse or surviving spouse and any current
spouse will not be treated as the spouse or surviving spouse to the extent
provided under a QDRO. |
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A Qualified
Election is a written election signed by both the Participant and the
Participant’s spouse (if applicable) that specifically acknowledges the
effect of the election. The spouse’s consent must be witnessed by a plan
representative or notary public. In the case of a waiver of the QJSA, the
election must designate an alternative form of benefit payment that may not
be changed without spousal consent (unless the spouse enters into a general
consent agreement expressly permitting the Participant to change the form of
payment without any further spousal consent). In the case of a waiver of the
QPSA, the election must be made within the QPSA Election Period and the
election must designate a specific alternate Beneficiary, including any class
of Beneficiaries or any contingent Beneficiaries, which may not be changed
without spousal consent (unless the spouse enters into a general consent
agreement expressly permitting the Participant to change the Beneficiary
designation without any further spousal consent). |
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Any consent
by a spouse under a Qualified Election (or a determination that the consent
of a spouse is not required) shall be effective only with respect to such
spouse. If the Qualified Election permits the Participant to change a payment
form or Beneficiary designation without any further consent by the spouse,
the Qualified Election must acknowledge that the spouse has the right to
limit consent to a specific form of benefit or a specific Beneficiary, as
applicable, and that the spouse voluntarily elects to relinquish either or
both of such rights. A Participant or spouse may revoke a prior waiver of the
QPSA benefit at any time before the commencement of benefits. Spousal consent
is not required for a Participant to revoke a prior QPSA waiver. No consent
obtained under this provision shall be valid unless the Participant has
received notice as provided in Section 9.5 below. |
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(e) |
QPSA Election Period. A
Participant (and the Participant’s spouse) may waive the QPSA at any time
during the QPSA Election Period. The QPSA Election Period is the period
beginning on the first day of the Plan Year in which the Participant attains
age 35 and ending 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 QPSA Election Period begins on the date of separation. |
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(f) |
Pre-Age 35 Waiver. A
Participant who has not yet attained age 35 as of the end of a Plan Year may
make a special Qualified Election to waive, with spousal consent, the QPSA
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 is not valid unless the Participant receives the proper notice
required under Section 9.5 below. QPSA coverage is 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 must satisfy all the requirements for a
Qualified Election. |
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9.5 |
Notice Requirements. |
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(a) |
QJSA. In the case of a
QJSA, the Plan Administrator shall provide each Participant with a written
explanation of: (1) the terms and conditions of the QJSA; (2) the
Participant’s right to make and the effect of an election to waive the QJSA
form of benefit; (3) the rights of the Participant’s spouse; and (4) the
right to make, and the effect of, a revocation of a previous election to
waive the QJSA. The notice must be provided to each Participant under the
Plan no less than 30 days and no more than 90 days prior to the Distribution
Commencement Date. |
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A
Participant may commence receiving a distribution in a form other than a QJSA
less than 30 days after receipt of the written explanation described in the
preceding paragraph provided: (1) the Participant has been provided with
information that clearly indicates that the Participant has at least 30 days
to consider whether to waive the QJSA and elect (with spousal consent) a form
of distribution other than a QJSA; (2) the Participant is permitted to revoke
any affirmative distribution election at least until the Distribution
Commencement Date or, if later, at any time prior to the expiration of the
7-day period that begins the day after the explanation of the QJSA is
provided to the Participant; and (3) the Distribution Commencement Date is
after the date the written explanation was provided to the Participant. For
distributions on or after December 31, 1996, the Distribution Commencement Date
may be a date prior to the date the written explanation is provided to the
Participant if the distribution does not commence until at least 30 days
after such written explanation is provided, subject to the waiver of the
30-day period. |
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(b) |
QPSA. In the case of a
QPSA, the Plan Administrator shall provide each Participant within the
applicable period for such Participant a written explanation of the QPSA in
such terms and in such manner as would be comparable to the explanation
provided for the QJSA in subsection (a) above. The applicable period for a
Participant is whichever of the following periods ends last: (1) 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 age 35; (2) a reasonable period ending
after the individual becomes a Participant; or (3) a reasonable period ending
after the joint and survivor annuity requirements first apply to the Participant.
Notwithstanding the foregoing, notice must be provided within a reasonable
period ending after separation from service in the case of a Participant who
separates from service before attaining age 35. |
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For purposes
of applying the preceding paragraph, a reasonable period ending after the
enumerated events described in (2) and (3) 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. |
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9.6 |
Exception to the Joint and Survivor Annuity Requirements. Except as provided in Section 9.7, this Article 9 does not
apply to any Participant who has not earned an Hour of Service with the
Employer on or after August 23, 1984. In addition, if, as of the Distribution
Commencement Date, the Participant’s vested Account Balance (for pre-death
distributions) or the value of the QPSA death benefit (for post-death distributions)
does not exceed $5,000, the Participant or surviving spouse, as applicable,
will receive a lump sum distribution pursuant to Section 8.4(b)(1), in lieu
of any QJSA or QPSA benefits. (See Section 8.3(e) for special rules for
calculating the value of a Participant’s vested Account Balance.) |
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9.7 |
Transitional Rules. Any
living Participant not receiving benefits on August 23, 1984, who would
otherwise not receive the benefits prescribed under this Article 9 must be
given the opportunity to elect to have the preceding provisions of this
Article 9 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. The Participant must be given
the opportunity to elect to have this Article 9 apply during the period
commencing on August 23, 1984, and ending on the date benefits would
otherwise commence to such Participant. A Participant described in this
paragraph who has not elected to have this Article 9 apply is subject to the
rules in this Section 9.7 instead. Also, a Participant who does not qualify
to elect to have this Article 9 apply because such Participant does not have
at least 10 Years of Service for vesting purposes is subject to the rules of
this Section 9.7. |
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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/her benefits paid in accordance with the following
paragraph. The Participant must be given the opportunity to elect to have
this Section 9.7 apply (other than the first paragraph of this Section)
during the period commencing on August 23, 1984, and ending on the date
benefits would otherwise commence to such Participant. |
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If, under
either of the preceding two paragraphs, a Participant is subject to this
Section 9.7, the following rules apply. |
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(a) |
Automatic joint and survivor annuity. If benefits in the form of a life annuity become payable to a
married Participant who: |
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(1) |
begins to
receive payments under the Plan on or after Normal Retirement Age; |
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(2) |
dies on or
after Normal Retirement Age while still working for the Employer; |
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(3) |
begins to
receive payments on or after the Qualified Early Retirement Age; or |
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(4) |
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 thereafter dies before beginning
to receive such benefits; |
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then such
benefits will be received under this plan in the form of a QJSA, unless the
Participant has elected otherwise during the election period. For this
purpose, 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. |
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(b) |
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 that
would have been made to the spouse under the QJSA 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. For
this purpose, the election period begins on the later of (1) the 90th day
before the Participant attains the Qualified Early Retirement Age, or (2) the
date on which participation begins, and ends on the date the Participant
terminates employment. |
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(c) |
Qualified Early Retirement Age.
The Qualified Early Retirement Age is the latest of: |
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(1) |
the earliest
date, under the plan, on which the Participant may elect to receive
retirement benefits, |
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(2) |
the first
day of the 120th month beginning before the Participant reaches Normal
Retirement Age, or |
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(3) |
the date the
Participant begins participation under the Plan. |
61
ARTICLE 10
REQUIRED DISTRIBUTIONS
This Article provides for the required commencement of distributions
upon certain events. In addition, this Article places limitations on the period
over which distributions may be made to a Participant or Beneficiary. To the
extent the distribution provisions of this Plan, particularly Articles 8 and 9,
are inconsistent with the provisions of this Article 10, the provisions of this
Article control. Part 13 of the Agreement contains specific elections for
applying the rules under this Article 10.
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10.1 |
Required Distributions Before Death. |
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(a) |
Deferred distributions. A
Participant must be permitted to receive a distribution from the Plan no
later than the 60th day after the latest of the close of the Plan Year in
which: |
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(1) |
the
Participant attains age 65 (or Normal Retirement Age, if earlier); |
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(2) |
occurs the
10th anniversary of the year in which the Participant commenced participation
in the Plan; or, |
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(3) |
the
Participant terminates service with the Employer. |
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(b) |
Required minimum distributions.
The entire interest of a Participant must be distributed or begin to be
distributed no later than the Participant’s Required Beginning Date (as
defined in Section 10.3(a)) over one of the following periods (or a
combination thereof): |
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(1) |
the life of
the Participant, |
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(2) |
the life of
the Participant and a Designated Beneficiary, |
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(3) |
a period
certain not extending beyond the Life Expectancy of the Participant, or |
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(4) |
a period
certain not extending beyond the joint and last survivor Life Expectancy of
the Participant and a Designated Beneficiary. |
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If the
Participant’s interest is to be distributed over a period designated under
subsection (3) or (4) above, the amount required to be distributed for each
calendar year must at least equal the quotient obtained by dividing the
Participant’s Benefit (as determined under Section 10.3(g)) by the lesser of
(i) the Applicable Life Expectancy or (ii) if the Participant’s Designated
Beneficiary is not his/her spouse, the minimum distribution incidental
benefit factor set forth in Q&A-4 of Prop. Treas. Reg. §401(a)(9)-2.
Distributions after the death of the Participant shall be determined using
the Applicable Life Expectancy as the relevant divisor regardless of the
Participant’s Designated Beneficiary. |
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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 Distribution Calendar Years, including the
minimum distribution for the Distribution Calendar Year in which the
Participant’s Required Beginning Date occurs, must be made on or before
December 31 of that Distribution Calendar Year. |
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If a
Participant receives a distribution in the form of an annuity purchased from
an insurance company, distributions thereunder shall be made in accordance
with the requirements of Code §401(a)(9) and the regulations thereunder. For
calendar years beginning before January 1, 1989, if the Participant’s spouse
is not the Designated Beneficiary, the method of distribution selected must
ensure that at least 50% of the Present Value of the amount available for
distribution is paid within the life expectancy of the Participant. |
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10.2 |
Required Distributions After Death. |
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(a) |
Distribution beginning before death. If the Participant dies after he/she has begun receiving
distributions under Section 10.1(b), the remaining portion of the
Participant’s vested Account Balance shall continue to be distributed at
least as rapidly as under the method of distribution being used prior to the
Participant’s death. |
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(b) |
Distribution beginning after death. Subject to the rules under Section 8.4(b), if the Participant
dies before receiving distributions under Section 10.1(b), distribution of
the Participant’s entire vested Account Balance shall be completed by
December 31 of the calendar year containing the fifth anniversary of the
Participant’s death, except to the extent an election is made to receive
distributions in accordance with subsection (1) or (2) below. |
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(1) |
To the
extent any portion of the Participant’s vested Account Balance is payable to
a Designated Beneficiary, distributions may be made over the life of the
Designated Beneficiary or over a period certain not greater than the Life
Expectancy of the Designated Beneficiary, provided such distributions begin
on or before December 31 of the calendar year immediately following the
calendar year in which the Participant died. |
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(2) |
If the
Designated Beneficiary is the Participant’s surviving spouse, he/she may
delay the distribution under subsection (1) until December 31 of the calendar
year in which the Participant would have attained age 70-1/2, if such date is
later than the date described in subsection (1). |
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If the
Participant has not made an election pursuant to this subsection (b) by the
time of his/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 subsection (b), 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. |
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For purposes
of this subsection (b), if the surviving spouse dies after the Participant,
but before payments to such spouse begin, the provisions of this subsection
(b), with the exception of subsection (2) above, shall be applied as if the
surviving spouse were the Participant. |
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(c) |
Treatment of trust beneficiaries as Designated Beneficiaries. If a trust is properly named as a Beneficiary under the Plan,
the beneficiaries of the trust will be treated as the Designated
Beneficiaries of the Participant solely for purposes of determining the
distribution period under this Article 10 with respect to the trust’s
interests in the Participant’s vested Account Balance. The beneficiaries of a
trust will be treated as Designated Beneficiaries for this purpose only if, as
of the later of the date the trust is named as a Beneficiary of the
Participant or the Participant’s Required Beginning Date (and as of all
subsequent periods during which the trust is named as a Beneficiary of the
Participant), the following requirements are met: |
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(1) |
the trust is
a valid trust under state law, or would be but for the fact there is no
corpus; |
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(2) |
the trust is
irrevocable or will, by its terms, become irrevocable upon the death of the
Participant; |
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(3) |
the beneficiaries
of the trust who are beneficiaries with respect to the trust’s interests in
the Participant’s vested Account Balance are identifiable from the trust
instrument; and |
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(4) |
the Plan
Administrator receives the documentation described in Question D-7 of
Proposed Treas. Reg. §1.401(a)(9)-1, as subsequently amended or finally
adopted. |
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If the
foregoing requirements are satisfied and the Plan Administrator receives such
additional information as it may request, the Plan Administrator may treat
such beneficiaries of the trust as Designated Beneficiaries. |
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(d) |
Trust beneficiary qualifying for marital deduction. If a Beneficiary is a trust (other than an estate marital
trust) that is intended to qualify for the federal estate tax marital deduction
under Code §2056 (“marital trust”), then: |
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(1) |
in no event
will the annual amount distributed from the Plan to the marital trust be less
than the greater of: |
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(i) |
all
fiduciary accounting income with respect to such Beneficiary’s interest in
the Plan, as determined by the trustee of the marital trust, or |
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(ii) |
the minimum
distribution required under this Article 10; |
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(2) |
the trustee
of the marital trust (or the trustee’s legal representative) shall be
responsible for calculating the amount to be distributed under subsection (1)
above and shall instruct the Plan Administrator in writing to distribute such
amount to the marital trust; |
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(3) |
the trustee
of the marital trust may from time to time notify the Plan Administrator in
writing to accelerate payment of all or any part of the portion of such
Beneficiary’s interest that remains to be distributed, and may also notify
the Plan Administrator to change the frequency of distributions (but not less
often than annually); and |
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(4) |
the trustee
of the marital trust shall be responsible for characterizing the amounts so
distributed form the Plan as income or principle under applicable state laws.
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63
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10.3
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Definitions.
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(a)
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Required Beginning Date. A
Participant’s Required Beginning Date is the date designated under subsection
(1)(i) or (ii) below, as applicable, unless the Employer elects under Part
13, #52 of the Agreement [Part 13, #70 of the 401(k) Agreement] to apply the
Old-Law Required Beginning Date, as described in subsection (2) below. If the
Employer does not select the Old-Law Required Beginning Date under Part 13,
#52 of the Agreement [Part 13, #70 of the 401(k) Agreement], the Required
Beginning Date rules under subsection (1) below apply. (But see Section 10.4
for special rules dealing with operational compliance with the GUST
Legislation.)
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(1)
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“New-law” Required Beginning Date. If the
Employer does not elect to apply the Old-Law Required Beginning Date under
Part 13, #52 of the Agreement [Part 13, #70 of the 401(k) Agreement], a
Participant’s Required Beginning Date under the Plan is:
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(i)
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For Five-Percent Owners. April 1 that
follows the end of the calendar year in which the Participant attains age
70-1/2.
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(ii)
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For Participants other than Five-Percent Owners.
April 1 that follows the end of the calendar year in which the later of the
following two events occurs:
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(A)
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the
Participant attains age 70-1/2 or
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(B) |
the
Participant retires. |
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If a
Participant is not a Five-Percent Owner for the Plan Year that ends with or
within the calendar year in which the Participant attains age 70-1/2, and the
Participant has not retired by the end of such calendar year, his/her
Required Beginning Date is April 1 that follows the end of the first
subsequent calendar year in which the Participant becomes a Five-Percent
Owner or retires. |
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A
Participant may begin in-service distributions prior to his/her Required
Beginning Date only to the extent authorized under Article 10 and Part 9 of
the Agreement. However, if this Plan were amended to add the Required
Beginning Date rules under this subsection (1), a Participant who attained
age 70-1/2 prior to January 1, 1999 (or, if later, January 1 following the
date the Plan is first amended to contain the Required Beginning Date rules
under this subsection (1)) may receive in-service minimum distributions in
accordance with the terms of the Plan in existence prior to such amendment. |
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(2) |
Old-Law Required Beginning Date. If the
Old-Law Required Beginning Date is elected under Part 13, #52 of the
Agreement [Part 13, #70 of the 401(k) Agreement], the Required Beginning Date
for all Participants will be determined under subsection (1)(i) above,
without regard to the rule in subsection (1)(ii). The Required Beginning Date
for all Participants under the Plan will be April 1 of the calendar year
following attainment of age 70-1/2. |
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(b) |
Five-Percent Owner. A
Participant is a Five-Percent Owner for purposes of this Section if such
Participant is a Five-Percent Owner (as defined in Section 22.88) at any time
during the Plan Year ending with or within the calendar year in which the
Participant attains age 70-1/2. Once distributions have begun to a Five-Percent
Owner under this Article, they must continue to be distributed, even if the
Participant ceases to be a Five-Percent Owner in a subsequent year. |
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(c) |
Designated Beneficiary. A
Beneficiary designated by the Participant (or the Plan), whose Life Expectancy
may be taken into account to calculate minimum distributions, pursuant to
Code §401(a)(9) and the regulations thereunder. |
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(d) |
Applicable Life Expectancy.
The determination of the Applicable Life Expectancy depends on whether the
term certain method or the recalculation method is being use to adjust the
Life Expectancy in each Distribution Calendar Year. The recalculation method
may only be used to determine the Life Expectancy of the Participant and/or
the Participant’s spouse. The recalculation method is not available with
respect to a nonspousal Designated Beneficiary. |
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If the
Designated Beneficiary is the Participant’s spouse, or if the Participant’s
(or surviving spouse’s) single life expectancy is the Applicable Life
Expectancy, the term certain method is used unless the recalculation method
is elected by the Participant (or by the surviving spouse). If the Designated
Beneficiary is not the Participant’s spouse, the term certain method is used
to determine the Life Expectancy of both the Participant and the Designated
Beneficiary, unless the recalculation method is elected by the Participant
with respect to his/her Life Expectancy. The term certain method will always
apply for purposes of determining the |
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Applicable
Life Expectancy of a nonspousal Designated Beneficiary. An election to
recalculate Life Expectancy (or the failure to elect recalculation) shall be
irrevocable as of the Participant’s Required Beginning Date as to the
Participant (or spouse) and shall apply to all subsequent years. |
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If the term
certain method is being used, the Life Expectancy determined for the first
Distribution Calendar Year is reduced by one for each subsequent Distribution
Year. If the recalculation method is used, the following rules apply: |
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(1) |
If the Life
Expectancy is the Participant’s (or surviving spouse’s) single Life
Expectancy, the Applicable Life Expectancy is redetermined for each
Distribution Year based on the Participant’s (or surviving spouse’s) age on
his/her birthday which falls in such year. |
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(2) |
If the Life
Expectancy is a joint and last survivor Life Expectancy based on the ages of
the Participant and the Participant’s spouse, and the recalculation method is
elected with respect to both the Participant and his/her spouse, the
Applicable Life Expectancy is redetermined for each Distribution Year based
on the ages of the individuals on their birthdays that fall in such year. |
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(3) |
If the Life
Expectancy is a joint and last survivor Life Expectancy based on the ages of
the Participant and the Participant’s spouse, and the recalculation method is
elected with respect to only one such individual, or if the Life Expectancy
is a joint and last survivor Life Expectancy based on the ages of the
Participant and a nonspousal Designated Beneficiary, and the recalculation
method is elected with respect to the Participant, the Applicable Life
Expectancy is determined in accordance with the procedures outlined in Prop.
Treas. Reg. §1.401(a)(9)-1, E-8(b), or other applicable guidance. |
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(e) |
Life Expectancy. For
purposes of determining a Participant’s required minimum distribution amount,
Life Expectancy and joint and last survivor Life Expectancy are computed
using the expected return multiples in Tables V and VI of §1.72-9 of the
Income Tax Regulations. |
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(f) |
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 that 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 10.2. |
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(g) |
Participant’s Benefit. For
purposes of determining a Participant’s required minimum distribution, the
Participant’s Benefit is determined based on his/her Account Balance as of
the last Valuation Date in the calendar year immediately preceding the
Distribution Calendar Year increased by the amount of any contributions or
forfeitures allocated to the Account Balance as of dates in the Distribution
Calendar Year after the Valuation Date and decreased by distributions made in
the Distribution Calendar Year after the Valuation Date. |
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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. |
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10.4 |
GUST Elections. If this
Plan is being restated to comply with the GUST Legislation (as defined in
Section 22.96), Appendix B-2 of the Agreement permits the Employer to
designate how it operated this Plan in compliance with the required minimum
distribution rules for years prior to the date the Plan is adopted. |
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(a) |
Distributions under Old-Law Required Beginning Date
rules. Unless the Employer specifically elects to
apply the Old-Law Required Beginning Date rule under Part 13, #52 of the
Agreement [Part 13, #70 of the 401(k) Agreement], the Required Beginning Date
rules (as described in Section 10.3(a)(1)) apply. However, if prior to the
adoption of this Prototype Plan, the terms of the Plan reflected the Old-Law
Required Beginning Date rules, minimum distributions for such years are
required to be calculated in accordance with that Old-Law Required Beginning
Date, except to the extent any operational elections described in subsection
(b) or (c) below applied. |
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(b) |
Option to postpone distributions. For calendar years beginning after December 31, 1996 and prior
to the restatement of this Plan to comply with the GUST changes, the Plan may
have permitted Participants (other than Five-Percent Owners) who would
otherwise have begun receiving minimum distributions under the terms of the
Plan in effect for such years to postpone receiving their minimum
distributions until the Required Beginning Date under Section 10.3(a)(1),
even though the terms of the Plan (prior to the restatement) did not permit
such an election. Appendix B-2.a. of the Agreement permits the Employer to
specify the years during which Participants were permitted to postpone
receiving minimum distributions under the Plan. Appendix B-2 need not be
completed if Participants were not provided the option to postpone |
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receiving
minimum distributions, either because the Plan used the “Old-Law” Required
Beginning Date rules or because the Plan made distributions under the
“New-Law” Required Beginning Date rules and contained other optional forms of
benefit under its general elective distribution provisions that preserved the
optional forms of benefit under the “Old Law Required Beginning Date” rules. |
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(c) |
Election to stop minimum required distributions. A Participant (other than a Five-Percent Owner) who began
receiving minimum distributions in accordance with the Old-Law Required
Beginning Date rules under the Plan prior to the date the Plan was amended to
comply with the GUST changes generally must continue to receive such minimum
distributions, even if the Participant is still employed with the Employer.
However, prior to the restatement of this Plan to comply with the GUST
changes, the Plan may have permitted Participants to stop minimum
distributions if they had not reached the Required Beginning Date described
in Section 10.3(a)(1), even though the terms of the Plan did not permit such
an election. Under Appendix B-2.b. of the Agreement, the Employer may
designate the year in which Participants were permitted to stop receiving
minimum distributions in accordance with this subsection (c). A Participant
must recommence minimum distributions as required under the Required
Beginning Date rules applicable under this restated Plan. |
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A
Participant’s election to stop and recommence distributions is subject to the
spousal consent requirements under Article 9 (if the Plan is otherwise
subject to the Joint and Survivor Annuity requirements) and is subject to the
terms of any applicable QDRO. The manner in which the Plan must comply with
the spousal consent requirements depends on whether or not the Employer
elects under Appendix B-2.c. of the Agreement to have the recommencement of
benefits constitute a new Distribution Commencement Date. If the Plan is not
otherwise subject to the Joint and Survivor Annuity requirements, Appendix
B-2.c. need not be completed. |
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(1) |
New Distribution Commencement Date. If the
Employer elects under Appendix B-2.c.(1) of the Agreement that recommencement
of benefits will create a new Distribution Commencement Date, no spousal
consent is required for a Participant to elect to stop distributions, except
where such distributions are being paid in the form of a QJSA. Where such
distributions are being paid in the form of a QJSA, in order to comply with
this subsection (1), the person who was the Participant’s spouse on the
original Distribution Commencement Date must consent to the election to stop
distributions and the spouse’s consent must acknowledge the effect of the
election. Because there is a new Distribution Commencement Date upon
recommencement of benefits, the Plan, in order to satisfy this subsection
(1), must comply with all of the requirements of Article 9 upon such
recommencement, including payment of a QPSA (as defined in Section 9.4(b)) if
the Participant dies before the new Distribution Commencement Date. |
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(2) |
No new Distribution Commencement Date. If
the Employer elects under Appendix B-2.c.(2) of the Agreement that
recommencement of benefits will not create a new Distribution Commencement
Date, no spousal consent is required for the Participant to elect to stop
required minimum distributions prior to retirement. In addition, no spousal
consent is required when payments recommence to the Participant if: |
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(i) |
payments
recommence to the Participant with the same Beneficiary and in a form of
benefit that is the same but for the cessation of distributions; |
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(ii) |
the
individual who was the Participant’s spouse on the Distribution Commencement
Date executed a general consent within the meaning of §1.401(a)-20, A-31 of
the regulations; or |
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(iii) |
the individual
who was the Participant’s spouse on the Distribution Commencement Date
executed a specific consent to waive a QJSA within the meaning of
§1.401(a)-20, A-31, and the Participant is not married to that individual
when benefits recommence. |
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To qualify
under this subsection (2), consent of the individual who was the
Participant’s spouse on the Distribution Commencement Date is required prior
to recommencement of distributions if the Participant chooses to recommence
benefits in a different form than the form in which benefits were being
distributed prior to the cessation of distributions or with a different
Beneficiary. Consent of the Participant’s spouse is also required if the
original form of distribution was a QJSA (as defined in Section 9.4(a)) or
the spouse originally executed a specific consent to waive the QJSA within
the meaning of §1.401(a)-20, A-31, of the regulations, and the Participant is
still married to that individual when benefits recommence. |
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10.5
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Transitional Rule. The minimum
distribution requirements in Section 10.2 do not apply if distribution of the
Participant’s Account Balance is subject to a TEFRA §242(b)(2) election. A
TEFRA §242(b) election overrides the required minimum distribution rules only
if the following requirements are satisfied.
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(a)
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The
distribution by the Plan is one that would not have disqualified the Plan
under §401(a)(9) of the Code as in effect prior to amendment by the Deficit
Reduction Act of 1984.
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(b) |
The
distribution is in accordance with a method of distribution designated by the
Participant whose interest in the Plan is being distributed or, if the
Participant is deceased, by a Beneficiary of such Participant. |
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(c) |
Such
designation was in writing, was signed by the Participant or the Beneficiary,
and was made before January 1, 1984. |
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(d) |
The
Participant had accrued a benefit under the Plan as of December 31, 1983. |
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(e) |
The method
of distribution designated by the Participant 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
Participant’s death, the Beneficiaries of the Participant listed in order of
priority. |
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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 Participant. |
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For any
distribution which commences before January 1, 1984, but continues after
December 31, 1983, the Participant, 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 subsections (a) and (e) above. |
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If a
designation is revoked any subsequent distribution must satisfy the
requirements of Code §401(a)(9) and the proposed regulations thereunder. If a
designation is revoked subsequent to the date distributions are required to
begin, the Plan 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 Code
§401(a)(9) and the proposed regulations thereunder, but for the TEFRA
§242(b)(2) election. For calendar years beginning after December 31, 1988,
such distributions must meet the minimum distribution incidental benefit
requirements in §1.401(a)(9)-2 of the proposed regulations (or other
applicable 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 Questions J-2 and J-3 of §1.401(a)(9)-1 of the proposed regulations
(or other applicable regulations) shall apply. |
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ARTICLE 11
PLAN ADMINISTRATION AND SPECIAL OPERATING RULES
This Article describes the duties and responsibilities of the Plan
Administrator. In addition, this Article sets forth default QDRO procedures and
benefit claims procedures, as well as special operating rules when an Employer
is a member of a Related Employer group and when there is a Short Plan Year.
Provisions related to Plan accounting and investments are contained in Article
13.
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11.1 |
Plan Administrator. The
Employer is the Plan Administrator, unless the Employer designates in writing
another person or persons as the Plan Administrator. The Employer may
designate the Plan Administrator by name, by reference to the person or group
of persons holding a certain position, by reference to a procedure under
which the Plan Administrator is designated, or by reference to a person or
group of persons charged with the specific responsibilities of Plan
Administrator. If any Related Employer has executed a Co-Sponsor Adoption
Page, the Employer referred to in this Section is the Employer that executes
the Signature Page of the Agreement. |
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(a) |
Acceptance of responsibility by designated Plan Administrator. If the Employer designates a Plan Administrator other than
itself, the designated Plan Administrator must accept its responsibilities in
writing. The designated Plan Administrator will serve in a manner and for the
time period as agreed upon with the Employer. If more than one person has the
responsibility of Plan Administrator, the group shall act by majority vote,
but may designate specific persons to act on the Plan Administrator’s behalf. |
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(b) |
Resignation of designated Plan Administrator. A designated Plan Administrator may resign by delivering a
written resignation to the Employer. The Employer may remove a designated
Plan Administrator by delivering a written notice of removal. If a designated
Plan Administrator resigns or is removed, and no new Plan Administrator is
designated, the Employer is the Plan Administrator. |
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(c) |
Named Fiduciary. The Plan
Administrator is the Plan’s Named Fiduciary, unless the Plan Administrator
specifically names another person as Named Fiduciary and the designated
person accepts its responsibilities as Named Fiduciary in writing. |
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11.2 |
Duties and Powers of the Plan Administrator. The Plan Administrator will administer the Plan for the
exclusive benefit of the Plan Participants and Beneficiaries, and in
accordance with the terms of the Plan. To the extent the terms of the Plan
are unclear, the Plan Administrator may interpret the Plan, provided such
interpretation is consistent with the rules of ERISA and Code §401 and is
performed in a uniform and nondiscriminatory manner. This right to interpret
the Plan is an express grant of discretionary authority to resolve
ambiguities in the Plan document and to make discretionary decisions
regarding the interpretation of the Plan’s terms, including who is eligible
to participate under the Plan, and the benefit rights of a Participant or
Beneficiary. The Plan Administrator will not be held liable for any
interpretation of the Plan terms or decision regarding the application of a
Plan provision provided such interpretation or decision is not arbitrary or
capricious. |
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(a) |
Delegation of duties and powers. To the extent provided for in an agreement with the Employer,
the Plan Administrator may delegate its duties and powers to one or more
persons. Such delegation must be in writing and accepted by the person or
persons receiving the delegation. |
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(b) |
Specific duties and powers.
The Plan Administrator has the general responsibility to control and manage
the operation of the Plan. This responsibility includes, but is not limited
to, the following: |
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(1) |
To construe
and enforce the terms of the Plan, including those related to Plan
eligibility, vesting and benefits; |
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(2) |
To develop
separate procedures, consistent with the terms of the Plan, to assist in the
administration of the Plan, including the adoption of separate or modified
loan policy procedures (see Article 14), procedures for direction of
investment by Participants (see Section 13.5(c)), procedures for determining
whether domestic relations orders are QDROs (see Section 11.5), and
procedures for the proper determination of investment earnings to be
allocated to Participants’ Accounts (see Section 13.4); |
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(3) |
To
communicate with the Trustee and other responsible persons with respect to
the crediting of Plan contributions, the disbursement of Plan distributions
and other relevant matters; |
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(4) |
To maintain
all necessary records which may be required for tax and other administration
purposes; |
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(5) |
To furnish
and to file all appropriate notices, reports and other information to
Participants, Beneficiaries, the Employer, the Trustee and government
agencies (as necessary); |
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(6) |
To answer
questions Participants and Beneficiaries may have relating to the Plan and
their benefits; |
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(7) |
To review
and decide on claims for benefits under the Plan; |
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(8) |
To retain
the services of other persons, including Investment Managers, attorneys,
consultants, advisers and others, to assist in the administration of the
plan; |
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(9) |
To correct
any defect or error in the administration of the Plan; |
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(10) |
To establish
a “funding policy and method” for the Plan for purposes of ensuring the Plan
is satisfying its financial objectives and is able to meet its liquidity
needs; and |
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(11) |
To suspend
contributions, including Section 401(k) Deferrals and/or Employee After-Tax
Contributions, on behalf of any or all Highly Compensated Employees, if the
Plan Administrator reasonably believes that such contributions will cause the
Plan to discriminate in favor of Highly Compensated Employees. See Sections
17.2(e) and 17.3(e). |
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11.3 |
Employer Responsibilities.
The Employer will provide in a timely manner all appropriate information
necessary for the Plan Administrator to perform its duties. This information includes,
but is not limited to, Participant compensation data, Employee employment,
service and termination information, and other information the Plan
Administrator may require. The Plan Administrator may rely on the accuracy of
any information and data provided by the Employer. |
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The Employer
will provide to the Trustee written notification of the appointment of any
person or persons as Plan Administrator, Investment Manager, or other Plan
fiduciary, and the names, titles and authorities of any individuals who are
authorized to act on behalf of such persons. The Trustee shall be entitled to
rely upon such information until it receives written notice of a change in
such appointments or authorizations. |
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11.4 |
Plan Administration Expenses.
All reasonable expenses related to plan administration will be paid from Plan
assets, except to the extent the expenses are paid (or reimbursed) by the
Employer. For this purpose, Plan expenses include all reasonable costs,
charges and expenses incurred by the Trustee in connection with the
administration of the Trust (including such reasonable compensation to the
Trustee as may be agreed upon from time to time between the Employer or Plan
Administrator and the Trustee and any fees for legal services rendered to the
Trustee). All reasonable additional administrative expenses incurred to
effect investment elections made by Participants and Beneficiaries under
Section 13.5(c) shall be paid from the Trust and, as elected by the Plan
Administrator, shall either be charged (in accordance with such reasonable
nondiscriminatory rules as the Plan Administrator deems appropriate under the
circumstances) to the Account of the individual making such election or
treated as a general expense of the Trust. All transaction-related expenses
incurred to effect a specific investment for an individually-directed Account
(such as brokerage commissions and other transfer expenses) shall, as elected
by the Plan Administrator, either be paid from or otherwise charged directly
to the Account of the individual providing such direction or treated as a
general Trust expense. In addition, unless specifically prohibited under
statute, regulation or other guidance of general applicability, the Plan
Administrator may charge to the Account of an individual Participant a
reasonable charge to offset the cost of making a distribution to the
Participant, Beneficiary, or Alternate Payee. If liquid assets of the Trust
are insufficient to cover the fees of the Trustee or the Plan Administrator,
then Trust assets shall be liquidated to the extent necessary for such fees.
In the event any part of the Trust becomes subject to tax, all taxes incurred
will be paid from the Trust. |
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11.5 |
Qualified Domestic Relations Orders (QDROs). |
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(a) |
In general. The Plan Administrator
must develop written procedures for determining whether a domestic relations
order is a QDRO and for administering distributions under a QDRO. For this
purpose, the Plan Administrator may use the default QDRO procedures set forth
in subsection (h) below or may develop separate QDRO procedures. |
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(b) |
Qualified Domestic Relations Order (QDRO). A QDRO is a domestic relations order that creates or
recognizes the existence of an Alternate Payee’s right to receive, or assigns
to an Alternate Payee the right to receive, all or a portion of the benefits
payable with respect to a Participant under the Plan. (See Code §414(p).) The
QDRO must contain certain information and meet other requirements described
in this Section 11.5. |
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(c) |
Recognition as a QDRO. To
be recognized as a QDRO, an order must be a “domestic relations order” that
relates to the provision of child support, alimony payments, or marital
property rights for the benefit of an Alternate Payee. The Plan Administrator
is not required to determine whether the court or agency issuing the domestic
relations order had jurisdiction to issue an order, whether state law is
correctly applied in the order, whether service was properly made on the
parties, or whether an individual identified in an order as an Alternate
Payee is a proper Alternate Payee under state law. |
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(1) |
Domestic relations order. A domestic
relations order is a judgment, decree, or order (including the approval of a
property settlement) that is made pursuant to state domestic relations law
(including community property law). |
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(2) |
Alternate Payee. An Alternate Payee must be
a spouse, former spouse, child, or other dependent of a Participant. |
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(d) |
Contents of QDRO. A QDRO
must contain the following information: |
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(1) |
the name and
last known mailing address of the Participant and each Alternate Payee; |
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(2) |
the name of
each plan to which the order applies; |
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(3) |
the dollar
amount or percentage (or the method of determining the amount or percentage)
of the benefit to be paid to the Alternate Payee; and |
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(4) |
the number
of payments or time period to which the order applies. |
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(e) |
Impermissible QDRO provisions. |
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(1) |
The order
must not require the Plan to provide an Alternate Payee or Participant with
any type or form of benefit, or any option, not otherwise provided under the
Plan; |
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(2) |
The order
must not require the Plan to provide for increased benefits (determined on
the basis of actuarial value); |
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(3) |
The order
must not require the Plan to pay benefits to an Alternate Payee that are
required to be paid to another Alternate Payee under another order previously
determined to be a QDRO; and |
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(4) |
The order
must not require the Plan to pay benefits to an Alternate Payee in the form
of a Qualified Joint and Survivor Annuity for the lives of the Alternate
Payee and his or her subsequent spouse. |
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(f) |
Immediate distribution to Alternate Payee. Even if a Participant is not eligible to receive an immediate
distribution from the Plan, an Alternate Payee may receive a QDRO benefit
immediately in a lump sum, provided such distribution is consistent with the
QDRO provisions. |
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(g) |
No fee for QDRO determination.
The Plan Administrator shall not condition the making of a QDRO determination
on the payment of a fee by a Participant or an Alternate Payee (either
directly or as a charge against the Participant’s Account). |
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(h) |
Default QDRO procedure. If
the Plan Administrator chooses this default QDRO procedure or if the Plan
Administrator does not establish a separate QDRO procedure, this Section
11.5(h) will apply as the procedure the Plan Administrator will use to
determine whether a domestic relations order is a QDRO. This default QDRO
procedure incorporates the requirements set forth under Sections 11.5(a)
through (g). |
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(1) |
Access to information. The Plan
Administrator will provide access to Plan and Participant benefit information
sufficient for a prospective Alternate Payee to prepare a QDRO. Such
information might include the summary plan description, other relevant plan
documents, and a statement of the Participant’s benefit entitlements. The
disclosure of this information is conditioned on the prospective Alternate
Payee providing to the Plan Administrator information sufficient to
reasonably establish that the disclosure request is being made in connection
with a domestic relations order. |
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(2) |
Notifications to Participant and Alternate Payee.
The Plan Administrator will promptly notify the affected Participant and each
Alternate Payee named in the domestic relations order of the receipt of the
order. The Plan Administrator will send the notification to the address
included in the domestic relations order. Along with the notification, the
Plan Administrator will provide a copy of the Plan’s procedures for
determining whether a domestic relations order is a QDRO. |
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(3) |
Alternate Payee representative. The
prospective Alternate Payee may designate a representative to receive copies
of notices and Plan information that are sent to the Alternate Payee with
respect to the domestic relations order. |
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(4) |
Evaluation of domestic relations order.
Within a reasonable period of time, the Plan Administrator will evaluate the
domestic relations order to determine whether it is a QDRO. A reasonable
period will depend on the specific circumstances. The domestic relations
order must |
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contain the
information described in Section 11.5(c). If the order is only deficient in a
minor respect, the Plan Administrator may supplement information in the order
from information within the Plan Administrator’s control or through
communication with the prospective Alternate Payee. |
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(i) |
Separate accounting. Upon receipt of a
domestic relations order, the Plan Administrator will separately account for
and preserve the amounts that would be payable to an Alternate Payee until a
determination is made with respect to the status of the order. During the
period in which the status of the order is being determined, the Plan
Administrator will take whatever steps are necessary to ensure that amounts
that would be payable to the Alternate Payee, if the order were a QDRO, are
not distributed to the Participant or any other person. The separate accounting
requirement may be satisfied, at the Plan Administrator’s discretion, by a
segregation of the assets that are subject to separate accounting. |
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(ii) |
Separate accounting until the end of “18 month period.”
The Plan Administrator will continue to separately account for amounts that
are payable under the QDRO until the end of an “18-month period.” The
“18-month period” will begin on the first date following the Plan’s receipt
of the order upon which a payment would be required to be made to an Alternate
Payee under the order.If,
within the “18-month period,” the Plan Administrator determines that the
order is a QDRO, the Plan Administrator must pay the Alternate Payee in
accordance with the terms of the QDRO. If, however, the Plan Administrator
determines within the “18-month period” that the order is not a QDRO, or if
the status of the order is not resolved by the end of the “18-month period,”
the Plan Administrator may pay out the amounts otherwise payable under the
order to the person or persons who would have been entitled to such amounts
if there had been no order. If the order is later determined to be a QDRO,
the order will apply only prospectively; that is, the Alternate Payee will be
entitled only to amounts payable under the order after the subsequent
determination. |
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(iii) |
Preliminary review. The Plan Administrator
will perform a preliminary review of the domestic relations order to
determine if it is a QDRO. If this preliminary review indicates the order is
deficient in some manner, the Plan Administrator will allow the parties to
attempt to correct any deficiency before issuing a final decision on the
domestic relations order. The ability to correct is limited to a reasonable
period of time. |
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(iv) |
Notification of determination. The Plan
Administrator will notify in writing the Participant and each Alternate Payee
of the Plan Administrator’s decision as to whether a domestic relations order
is a QDRO. In the case of a determination that an order is not a QDRO, the
written notice will contain the following information: |
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(A) |
references
to the Plan provisions on which the Plan Administrator based its decision; |
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(B) |
an
explanation of any time limits that apply to rights available to the parties
under the Plan (such as the duration of any protective actions the Plan
Administrator will take); and |
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(C) |
a
description of any additional material, information, or modifications
necessary for the order to be a QDRO and an explanation of why such material,
information, or modifications are necessary. |
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(v) |
Treatment of Alternate Payee. If an order is
accepted as a QDRO, the Plan Administrator will act in accordance with the
terms of the QDRO as if it were a part of the Plan. An Alternate Payee will be
considered a Beneficiary under the Plan and be afforded the same rights as a
Beneficiary. The Plan Administrator will provide any appropriate disclosure
information relating to the Plan to the Alternate Payee. |
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11.6 |
Claims Procedure. Unless
the Plan uses the default claims procedure under subsection (e) below, the
Plan Administrator shall establish a procedure for benefit claims consistent
with the requirements of ERISA Reg. §2560.503-1. The Plan Administrator is
authorized to conduct an examination of the relevant facts to determine the
merits of a Participant’s or Beneficiary’s claim for Plan benefits. The
claims procedure must incorporate the following guidelines: |
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(a) |
Filing a claim. The claims
procedure will set forth a reasonable means for a Participant or Beneficiary
to file a claim for benefits under the Plan. |
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(b) |
Notification of Plan Administrator’s decision. The Plan Administrator must provide a claimant with written
notification of the Plan Administrator’s decision relating to a claim within
a reasonable period of time (not more than 90 days unless special
circumstances require an extension to process the claim) after the claim was
filed. If the claim is denied, the notification must set forth the reasons
for the denial, specific reference to pertinent Plan provisions on which the
denial is based, a description of any additional information necessary for
the claimant to perfect the claim, and the steps the claimant must take to
submit the claim for review. |
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(c) |
Review procedure. The
claims procedure will provide a claimant a reasonable opportunity to have a
full and fair review of a denied claim. Such procedure shall allow a review
upon a written application, for the claimant to review pertinent documents,
and to allow the claimant to submit written comments to the Plan
Administrator. The procedure may establish a limited period (not less than 60
days after the claimant receives written notification of the denial of the
claim) for the claimant to request a review of the claim denial. |
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(d) |
Decision on review. If a
claimant requests a review, the Plan Administrator must respond promptly to
the request. Unless special circumstances exist (such as the need for a
hearing), the Plan Administrator must respond in writing within 60 days of
the date the claimant submitted the review application. The response must
explain the Plan Administrator’s decision on review. |
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(e) |
Default claims procedure.
If the Plan Administrator chooses this default claims procedure or if the
Plan Administrator does not establish a separate claims procedure, the
following will apply. |
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(1) |
A person may
submit to the Plan Administrator a written claim for benefits under the Plan.
The claim shall be submitted on a form provided by the Plan Administrator. |
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(2) |
The Plan
Administrator will evaluate the claim to determine if benefits are payable to
the Participant or Beneficiary under the terms of the Plan. The Plan
Administrator may solicit additional information from the claimant if
necessary to evaluate the claim. |
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(3) |
If the Plan
Administrator determines the claim is valid, the Participant or Beneficiary
will receive in writing from the Plan Administrator a statement describing
the amount of benefit, the method or methods of payment, the timing of
distributions and other information relevant to the payment of the benefit. |
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(4) |
If the Plan
Administrator denies all or any portion of the claim, the claimant will
receive, within 90 days after receipt of the claim form, a written explanation
setting forth the reasons for the denial, specific reference to pertinent
Plan provisions on which the denial is based, a description of any additional
information necessary for the claimant to perfect the claim, and the steps
the claimant must take to submit the claim for review. |
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(5) |
The claimant
has 60 days from the date the claimant received the denial of claim to appeal
the adverse decision of the Plan Administrator. The claimant may review
pertinent documents and submit written comments to the Plan Administrator.
The Plan Administrator will submit all relevant documentation to the
Employer. The Employer may hold a hearing or seek additional information from
the claimant and the Plan Administrator. |
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(6) |
Within 60
days (or such longer period due to the circumstances) of the request for
review, the Employer will render a written decision on the claimant’s appeal.
The Employer shall explain the decision, in terms that are understandable to
the claimant and by specific references to the Plan document provisions. |
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11.7 |
Operational Rules for Short Plan Years. The following operational rules apply if the Plan has a Short
Plan Year. A Short Plan Year is any Plan Year that is less than a 12-month
period, either because of the amendment of the Plan Year, or because the
Effective Date of a new Plan is less than 12 months prior to the end of the
first Plan Year. |
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(a) |
If the Plan
is amended to create a Short Plan Year, and an Eligibility Computation Period
or Vesting Computation Period is based on the Plan Year, the applicable
computation period begins on the first day of the Short Plan Year, but such
period ends on the day which is 12 months from the first day of such Short
Plan Year. Thus, the computation period that begins on the first day of the
Short Plan Year overlaps with the computation period that starts on the first
day of the next Plan Year. This rule applies only to an Employee who has at
least one Hour of Service during the Short Plan Year. |
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If a Plan
has an initial Short Plan Year, the rule in the above paragraph applies only
for purposes of determining an Employee’s Vesting Computation Period and only
if the Employer elects under Part 6, #20.a. of the Agreement [Part 6, #38.a.
of the 401(k) Agreement] to exclude service earned prior to the adoption of
the Plan. For eligibility and vesting (where service prior to the adoption of
the Plan is not ignored), if the Eligibility Computation Period or Vesting
Computation Period is based on the Plan Year, the applicable |
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computation
period will be determined on the basis of the Plan’s normal Plan Year,
without regard to the initial short Plan Year. |
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(b) |
If Employer
Contributions are allocated for a Short Plan Year, any allocation condition
under Part 4 of the Agreement that requires an Eligible Participant to
complete a specified number of Hours of Service to receive an allocation of
such Employer Contributions will not be prorated as a result of such Short
Plan Year unless otherwise specified in Part 4 of the Agreement. |
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(c) |
If the
Permitted Disparity Method is used to allocate any Employer Contributions
made for a Short Plan Year, the Integration Level will be prorated to reflect
the number of months (or partial months) included in the Short Plan Year. |
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(d) |
The
Compensation Dollar Limitation, as defined in Section 22.32, will be prorated
to reflect the number of months (or partial months) included in the Short
Plan Year unless the compensation used for such Short Plan Year is a period
of 12 months. |
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In all other
respects, the Plan shall be operated for the Short Plan Year in the same
manner as for a 12-month Plan Year, unless the context requires otherwise. If
the terms of the Plan are ambiguous with respect to the operation of the Plan
for a Short Plan Year, the Plan Administrator has the authority to make a
final determination on the proper interpretation of the Plan. |
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11.8 |
Operational Rules for Related Employer Groups. If an Employer has one or more Related Employers, the Employer
and such Related Employer(s) constitute a Related Employer group. In such
case, the following rules apply to the operation of the Plan. |
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(a) |
If the term
“Employer” is used in the context of administrative functions necessary to
the operation, establishment, maintenance, or termination of the Plan, only
the Employer executing the Signature Page of the Agreement, and any
Co-Sponsor of the Plan, is treated as the Employer. |
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(b) |
Hours of
Service are determined by treating all members of the Related Employer group
as the Employer. |
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(c) |
The term
Excluded Employee is determined by treating all members of the Related
Employer group as the Employer, except as specifically provided in the Plan. |
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(d) |
Compensation
is determined by treating all members of the Related Employer group as the
Employer, except as specifically provided in the Plan. |
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(e) |
An Employee
is not treated as separated from service or terminated from employment if the
Employee is employed by any member of the Related Employer group. |
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(f) |
The Annual
Additions Limitation described in Article 7 and the Top-Heavy Plan rules
described in Article 16 are applied by treating all members of the Related
Employer group as the Employer. |
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In all other
contexts, the term “Employer” generally means a reference to all members of
the Related Employer group, unless the context requires otherwise. If the
terms of the Plan are ambiguous with respect to the treatment of the Related
Employer group as the Employer, the Plan Administrator has the authority to
make a final determination on the proper interpretation of the Plan. |
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ARTICLE 12
TRUST PROVISIONS
This Article sets forth the creation of the Plan’s Trust (or, in the
case of an amendment of the Plan, the amended terms of the Trust) and the
duties and responsibilities of the Trustee under the Plan. By executing the
Trustee Declaration under the Agreement, the Trustee agrees to be bound by the
duties, responsibilities and liabilities imposed on the Trustee under the Plan
and to act in accordance with the terms of this Plan. The Employer may act as
Trustee under the Plan by executing the Trustee Declaration.
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12.1 |
Creation of Trust. By
adopting this Plan, the Employer creates a Trust to hold the assets of the
Plan (or, in the event that this Plan document represents an amendment of the
Plan, the Employer hereby amends the terms of the Trust maintained in
connection with the Plan). The Trustee is the owner of the Plan assets held
by the Trust. The Trustee is to hold the Plan assets for the exclusive
benefit of Plan Participants and Beneficiaries. Plan Participants and
Beneficiaries do not have ownership interests in the assets held by the
Trust. |
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12.2 |
Trustee. The Trustee
identified in the Trustee Declaration under the Agreement shall act either as
a Discretionary Trustee or as a Directed Trustee, as identified under the
Agreement. |
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(a) |
Discretionary Trustee. A
Trustee is a Discretionary Trustee to the extent the Trustee has exclusive
authority and discretion with respect to the investment, management or
control of Plan assets. Notwithstanding a Trustee’s designation as a
Discretionary Trustee, a Trustee’s discretion is limited, and the Trustee
shall be considered a Directed Trustee, to the extent the Trustee is subject
to the direction of the Plan Administrator, the Employer, a properly
appointed Investment Manager, or a Named Fiduciary under an agreement between
the Plan Administrator and the Trustee. A Trustee also is considered a
Directed Trustee to the extent the Trustee is subject to investment direction
of Plan Participants. (See Section 13.5(c) for a discussion of the Trustee’s
responsibilities with regard to Participant-directed investments.) |
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(b) |
Directed Trustee. A Trustee
is a Directed Trustee with respect to the investment of Plan assets to the
extent the Trustee is subject to the direction of the Plan Administrator, the
Employer, a properly appointed Investment Manager, a Named Fiduciary, or Plan
Participant. To the extent the Trustee is a Directed Trustee, the Trustee does
not have any discretionary authority with respect to the investment of Plan
assets. In addition, the Trustee is not responsible for the propriety of any
directed investment made pursuant to this Section and shall not be required
to consult or advise the Employer regarding the investment quality of any
directed investment held under the Plan. |
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The Trustee
shall be advised in writing regarding the retention of investment powers by
the Employer or the appointment of an Investment Manager or other Named
Fiduciary with power to direct the investment of Plan assets. Any such
delegation of investment powers will remain in force until such delegation is
revoked or amended in writing. The Employer is deemed to have retained
investment powers under this subsection to the extent the Employer directs
the investment of Participant Accounts for which affirmative investment
direction has not been received pursuant to Section 13.5(c). |
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The Employer
is a Named Fiduciary for investment purposes if the Employer directs
investments pursuant to this subsection. Any investment direction shall be
made in writing by the Employer, Investment Manager, or Named Fiduciary, as
applicable. A Directed Trustee must act solely in accordance with the
direction of the Plan Administrator, the Employer, any employees or agents of
the Employer, a properly appointed Investment Manager or other fiduciary of
the Plan, a Named Fiduciary, or Plan Participants. (See Section 13.5(c) for a
discussion of the Trustee’s responsibilities with regard to Participant
directed investments.) |
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The Employer
may direct the Trustee to invest in any media in which the Trustee may
invest, as described in Section 12.4. However, the Employer may not borrow
from the Trust or pledge any of the assets of the Trust as security for a
loan to itself; buy property or assets from or sell property or assets to the
Trust; charge any fee for services rendered to the Trust; or receive any
services from the Trust on a preferential basis. |
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12.3 |
Trustee’s Responsibilities Regarding Administration
of Trust. This Section outlines the Trustee’s
powers, rights and duties under the Plan with respect to the administration
of the investments held in the Plan. The Trustee’s administrative duties are
limited to those described in this Section 12.3; the Employer is responsible
for any other administrative duties required under the Plan or by applicable
law. |
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(a) |
The Trustee
will receive all contributions made under the terms of the Plan. The Trustee
is not obligated in any manner to ensure that such contributions are correct
in amount or that such contributions comply with the terms of the Plan, the
Code or ERISA. In addition, the Trustee is under no obligation to request
that the Employer make contributions to the Plan. The Trustee is not liable
for the manner in which such amounts are deposited or the allocation between
Participant’s Accounts, to the extent the Trustee follows the written
direction of the Plan Administrator or Employer. |
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(b) |
The Trustee
will make distributions from the Trust in accordance with the written
directions of the Plan Administrator or other authorized representative. To
the extent the Trustee follows such written direction, the Trustee is not
obligated in any manner to ensure a distribution complies with the terms of
the Plan, that a Participant or Beneficiary is entitled to such a
distribution, or that the amount distributed is proper under the terms of the
Plan. If there is a dispute as to a payment from the Trust, the Trustee may
decline to make payment of such amounts until the proper payment of such
amounts is determined by a court of competent jurisdiction, or the Trustee
has been indemnified to its satisfaction. |
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(c) |
The Trustee
may employ agents, attorneys, accountants and other third parties to provide
counsel on behalf of the Plan, where the Trustee deems advisable. The Trustee
may reimburse such persons from the Trust for reasonable expenses and
compensation incurred as a result of such employment. The Trustee shall not be
liable for the actions of such persons, provided the Trustee acted prudently
in the employment and retention of such persons. In addition, the Trustee
will not be liable for any actions taken as a result of good faith reliance
on the advice of such persons. |
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12.4 |
Trustee’s Responsibility Regarding Investment of Plan Assets. In addition to the powers, rights and duties enumerated under
this Section, the Trustee has whatever powers are necessary to carry out its
duties in a prudent manner. The Trustee’s powers, rights and duties may be
supplemented or limited by a separate trust agreement, investment policy,
funding agreement, or other binding document entered into between the Trustee
and the Plan Administrator which designates the Trustee’s responsibilities
with respect to the Plan. A separate trust agreement must be consistent with
the terms of this Plan and must comply with all qualification requirements
under the Code and regulations. To the extent the exercise of any power,
right or duty is subject to discretion, such exercise by a Directed Trustee
must be made at the direction of the Plan Administrator, the Employer, an
Investment Manager, a Named Fiduciary, or Plan Participant. |
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(a) |
The Trustee
shall be responsible for the safekeeping of the assets of the Trust in
accordance with the provisions of this Plan. |
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(b) |
The Trustee
may invest, manage and control the Plan assets in a manner that is consistent
with the Plan’s funding policy and investment objectives. The Trustee may
invest in any investment, as authorized under Section 13.5, which the Trustee
deems advisable and prudent, subject to the proper written direction of the
Plan Administrator, the Employer, a properly appointed Investment Manager, a
Named Fiduciary or a Plan Participant. The Trustee is not liable for the
investment of Plan assets to the extent the Trustee is following the proper
direction of the Plan Administrator, the Employer, a Participant, an
Investment Manager, or other person or persons duly appointed by the Employer
to provide investment direction. In addition, the Trustee does not guarantee
the Trust in any manner against investment loss or depreciation in asset
value, or guarantee the adequacy of the Trust to meet and discharge any or
all liabilities of the Plan. |
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(c) |
The Trustee
may retain such portion of the Plan assets in cash or cash balances as the
Trustee may, from time to time, deem to be in the best interests of the Plan,
without liability for interest thereon. |
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(d) |
The Trustee
may collect and receive any and all moneys and other property due the Plan
and to settle, compromise, or submit to arbitration any claims, debts, or
damages with respect to the Plan, and to commence or defend on behalf of the
Plan any lawsuit, or other legal or administrative proceedings. |
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(e) |
The Trustee
may hold any securities or other property in the name of the Trustee or in
the name of the Trustee’s nominee, and may hold any investments in bearer
form, provided the books and records of the Trustee at all times show such
investment to be part of the Trust. |
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(f) |
The Trustee
may exercise any of the powers of an individual owner with respect to stocks,
bonds, securities or other property, including the right to vote upon such
stocks, bonds or securities; to give general or special proxies or powers of
attorney; to exercise or sell any conversion privileges, subscription rights,
or other options; to participate in corporate reorganizations, mergers,
consolidations, or other changes affecting corporate securities (including
those in which it or its affiliates are interested as Trustee); and to make
any incidental payments in connection with such stocks, bonds, securities or
other property. Unless specifically agreed upon in writing between the
Trustee and the Employer, the Trustee shall not have the power or
responsibility to vote proxies with respect to any securities of the Employer
or a Related Employer or with respect to any Plan assets that are subject to
the investment direction of the Employer or for which the power to manage,
acquire, or dispose of such Plan assets has been delegated by the Employer to
one or more Investment Managers or Named Fiduciaries in accordance with ERISA
§403. With respect to the voting of Employer securities, or in the event of
any tender or other offer with respect to shares of Employer securities held
in the Trust, the Trustee will follow the direction of the Employer or other
responsible fiduciary or, to the extent voting and similar rights have been
passed through to Participants, of each Participant with respect to shares
allocated to his/her Account. |
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(g) |
The Trustee
may borrow or raise money on behalf of the Plan in such amount, and upon such
terms and conditions, as the Trustee deems advisable. The Trustee may issue a
promissory note as Trustee to secure the repayment of such amounts and may
pledge all, or any part, of the Trust as security. |
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(h) |
The Trustee,
upon the written direction of the Plan Administrator, is authorized to enter
into a transfer agreement with the Trustee of another qualified retirement
plan and to accept a transfer of assets from such retirement plan on behalf
of any Employee of the Employer. The Trustee is also authorized, upon the
written direction of the Plan Administrator, to transfer some or all of a
Participant’s vested Account Balance to another qualified retirement plan on
behalf of such Participant. A transfer agreement entered into by the Trustee
does not affect the Plan’s status as a Prototype Plan. |
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(i) |
The Trustee
is authorized to execute, acknowledge and deliver all documents of transfer
and conveyance, receipts, releases, and any other instruments that the
Trustee deems necessary or appropriate to carry out its powers, rights and
duties hereunder. |
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(j) |
If the
Employer maintains more than one Plan, the assets of such Plans may be
commingled for investment purposes. The Trustee must separately account for
the assets of each Plan. A commingling of assets, as described in this
paragraph, does not cause the Trusts maintained with respect to the
Employer’s Plans to be treated as a single Trust, except as provided in a
separate document authorized in the first paragraph of this Section 12.4. |
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(k) |
The Trustee
is authorized to invest Plan assets in a common/collective trust fund, or in
a group trust fund that satisfies the requirements of IRS Revenue Ruling
81-100. All of the terms and provisions of any such common/collective trust
fund or group trust into which Plan assets are invested are incorporated by
reference into the provisions of the Trust for this Plan. |
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(l) |
If the
Trustee is a bank or similar financial institution, the Trustee is authorized
to invest in any type of deposit of the Trustee (including its own money
market fund) at a reasonable rate of interest. |
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(m) |
The Trustee
must be bonded as required by applicable law. The bonding requirements shall
not apply to a bank, insurance company, or similar financial institution that
satisfies the requirements of §412(a)(2) of ERISA. |
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12.5 |
More than One Person as Trustee.
If the Plan has more than one person acting as Trustee, the Trustees may
allocate the Trustee responsibilities by mutual agreement and Trustee
decisions will be made by a majority vote (unless otherwise agreed to by the
Trustees) or as otherwise provided in a separate trust agreement or other
binding document. |
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12.6 |
Annual Valuation. The Plan
assets will be valued at least on an annual basis. The Employer may designate
more frequent valuation dates under Part 12, #45.b.(2) of the Agreement [Part
12, #63.b.(2) of the 401(k) Agreement]. Notwithstanding any election under
Part 12, #45.b.(2) of the Agreement [Part 12, #63.b.(2) of the 401(k)
Agreement], the Trustee and Plan Administrator may agree to value the Trust
on a more frequent basis, and/or to perform an interim valuation of the Trust
pursuant to Section 13.2(a). |
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12.7 |
Reporting to Plan Administrator and Employer. Within ninety (90) days following the end of each Plan Year,
and within ninety (90) days following its removal or resignation, the Trustee
will file with the Employer an accounting of its administration of the Trust
from the date of its last accounting. The accounting will include a statement
of cash receipts, disbursements and other transactions effected by the
Trustee since the date of its last accounting, and such further information
as the Trustee and/or Employer deems appropriate. Upon receipt of such
information, the Employer must promptly notify the Trustee of its approval or
disapproval of the information. If the Employer does not provide a written
disapproval within ninety (90) days following the receipt of the information,
including a written description of the items in question, the Trustee is
forever released and discharged from any liability with respect to all matters
reflected in such information. The Trustee shall have sixty (60) days
following its receipt of a written disapproval from the Employer to provide
the Employer with a written explanation of the terms in question. If the
Employer again disapproves of the accounting, the Trustee may file its
accounting with a court of competent jurisdiction for audit and adjudication.
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All assets
contained in the Trust accounting will be shown at their fair market value as
of the end of the Plan Year or as of the date of resignation or removal. The
value of marketable investments shall be determined using the most recent
price quoted on a national securities exchange or over-the-counter market.
The value of non-marketable securities shall, except as provided otherwise herein,
be determined in the sole judgment of the Trustee, which determination shall
be binding and conclusive. The value of investments in securities or
obligations of the Employer in which there is no market will be determined by
an independent appraiser at least once annually and the Trustee shall have no
responsibility with respect to the valuation of such assets. |
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12.8 |
Reasonable Compensation.
The Trustee shall be paid reasonable compensation in an amount agreed upon by
the Plan Administrator and Trustee. The Trustee also will be reimbursed for
any reasonable expenses or fees incurred in its |
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function as
Trustee. An individual Trustee who is already receiving full-time pay as an
Employee of the Employer may not receive any additional compensation for
services as Trustee. The Plan will pay the reasonable compensation and
expenses incurred by the Trustee, pursuant to Section 11.4, unless the
Employer pays such compensation and expenses. Any compensation or expense
paid directly by the Employer to the Trustee is not an Employer Contribution
to the Plan. |
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12.9 |
Resignation and Removal of Trustee. The Trustee may resign at any time by delivering to the
Employer a written notice of resignation at least thirty (30) days prior to
the effective date of such resignation, unless the Employer consents in
writing to a shorter notice period. The Employer may remove the Trustee at
any time, with or without cause, by delivering written notice to the Trustee
at least 30 days prior to the effective date of such removal. The Employer
may remove the Trustee upon a shorter written notice period if the Employer
reasonably determines such shorter period is necessary to protect Plan
assets. Upon the resignation, removal, death or incapacity of a Trustee, the
Employer may appoint a successor Trustee which, upon accepting such
appointment, will have all the powers, rights and duties conferred upon the
preceding Trustee. In the event there is a period of time following the
effective date of a Trustee’s removal or resignation before a successor
Trustee is appointed, the Employer is deemed to be the Trustee. During such
period, the Trust continues to be in existence and legally enforceable, and
the assets of the Plan shall continue to be protected by the provisions of
the Trust. |
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12.10 |
Indemnification of Trustee.
Except to the extent that it is judicially determined that the Trustee has
acted with gross negligence or willful misconduct, the Employer shall
indemnify the Trustee (whether or not the Trustee has resigned or been removed)
against any liabilities, losses, damages, and expenses, including attorney,
accountant, and other advisory fees, incurred as a result of: |
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(a) |
any action
of the Trustee taken in good faith in accordance with any information,
instruction, direction, or opinion given to the Trustee by the Employer, the
Plan Administrator, Investment Manager, Named Fiduciary or legal counsel of
the Employer, or any person or entity appointed by any of them and authorized
to give any information, instruction, direction, or opinion to the Trustee; |
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(b) |
the failure
of the Employer, the Plan Administrator, Investment Manager, Named Fiduciary
or any person or entity appointed by any of them to make timely disclosure to
the Trustee of information which any of them or any appointee knows or should
know if it acted in a reasonably prudent manner; or |
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(c) |
any breach
of fiduciary duty by the Employer, the Plan Administrator, Investment
Manager, Named Fiduciary or any person or entity appointed by any of them,
other than such a breach which is caused by any failure of the Trustee to
perform its duties under this Trust. |
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The duties
and obligations of the Trustee shall be limited to those expressly imposed
upon it by this instrument or subsequently agreed upon by the parties.
Responsibility for administrative duties required under the Plan or
applicable law not expressly imposed upon or agreed to by the Trustee shall
rest solely with the Employer. |
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The Employer
agrees that the Trustee shall have no liability with regard to the investment
or management of illiquid Plan assets transferred from a prior Trustee, and
shall have no responsibility for investments made before the transfer of Plan
assets to it, or for the viability or prudence of any investment made by a
prior Trustee, including those represented by assets now transferred to the
custody of the Trustee, or for any dealings whatsoever with respect to Plan
assets before the transfer of such assets to the Trustee. The Employer shall
indemnify and hold the Trustee harmless for any and all claims, actions or
causes of action for loss or damage, or any liability whatsoever relating to
the assets of the Plan transferred to the Trustee by any prior Trustee of the
Plan, including any liability arising out of or related to any act or event,
including prohibited transactions, occurring prior to the date the Trustee
accepts such assets, including all claims, actions, causes of action, loss,
damage, or any liability whatsoever arising out of or related to that act or
event, although that claim, action, cause of action, loss, damage, or
liability may not be asserted, may not have accrued, or may not have been
made known until after the date the Trustee accepts the Plan assets. Such
indemnification shall extend to all applicable periods, including periods for
which the Plan is retroactively restated to comply with any tax law or
regulation. |
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12.11 |
Appointment of Custodian.
The Plan Administrator may appoint a Custodian to hold all or any portion of
the Plan assets. A Custodian has the same powers, rights and duties as a
Directed Trustee. The Custodian will be protected from any liability with
respect to actions taken pursuant to the direction of the Trustee, Plan
Administrator, the Employer, an Investment Manager, a Named Fiduciary or
other third party with authority to provide direction to the Custodian. |
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ARTICLE 13
PLAN ACCOUNTING AND INVESTMENTS
This Article contains the procedures for valuing Participant Accounts
and allocating net income and loss to such Accounts. Part 12 of the Agreement
permits the Employer to document its administrative procedures with respect to
the valuation of Participant Accounts. Alternatively, the Plan Administrator
may adopt separate investment procedures regarding the valuation and investment
of Participant Accounts.
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13.1 |
Participant Accounts. The
Plan Administrator will establish and maintain a separate Account for each
Participant to reflect the Participant’s entire interest under the Plan. To
the extent applicable, the Plan Administrator may establish and maintain for
a Participant any (or all) of the following separate sub-Accounts: Employer
Contribution Account, Section 401(k) Deferral Account, Employer Matching
Contribution Account, QMAC Account, QNEC Account, Employee After-Tax
Contribution Account, Safe Harbor Matching Contribution Account, Safe Harbor
Nonelective Contribution Account, Rollover Contribution Account, and Transfer
Account. The Plan Administrator also may establish and maintain other
sub-Accounts as it deems appropriate. |
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13.2 |
Value of Participant Accounts.
The value of a Participant’s Account consists of the fair market value of the
Participant’s share of the Trust assets. A Participant’s share of the Trust
assets is determined as of each Valuation Date under the Plan. |
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(a) |
Periodic valuation. The
Trustee must value Plan assets at least annually. The Employer may elect
under Part 12, #45.b.(2) of the Agreement [Part 12, #63.b.(2) of the 401(k)
Agreement] or may elect operationally to value assets more frequently than
annually. The Plan Administrator may request the Trustee to perform interim
valuations, provided such valuations do not result in discrimination in favor
of Highly Compensated Employees. |
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(b) |
Daily valuation. If the
Employer elects daily valuation under Part 12, #44 of the Agreement [Part 12,
#62 of the 401(k) Agreement] or, if in operation, the Employer elects to have
the Plan daily valued, the Plan Administrator may adopt reasonable procedures
for performing such valuations. Unless otherwise set forth in the written
procedures, a daily valued Plan will have its assets valued at the end of
each business day during which the New York Stock Exchange is open. The Plan
Administrator has authority to interpret the provisions of this Plan in the
context of a daily valuation procedure. This includes, but is not limited to,
the determination of the value of the Participant’s Account for purposes of
Participant loans, distribution and consent rights, and corrective
distributions under Article 17. |
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13.3 |
Adjustments to Participant Accounts. As of each Valuation Date under the Plan, each Participant’s
Account is adjusted in the following manner. |
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(a) |
Distributions and forfeitures from a Participant’s Account. A Participant’s Account will be reduced by any distributions
and forfeitures from the Account since the previous Valuation Date. |
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(b) |
Life insurance premiums and dividends. A Participant’s Account will be reduced by the amount of any
life insurance premium payments made for the benefit of the Participant since
the previous Valuation Date. The Account will be credited with any dividends
or credits paid on any life insurance policy held by the Trust for the
benefit of the Participant. |
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(c) |
Contributions and forfeitures allocated to a
Participant’s Account. A Participant’s Account will
be credited with any contribution or forfeiture allocated to the Participant
since the previous Valuation Date. |
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(d) |
Net income or loss. A
Participant’s Account will be adjusted for any net income or loss in
accordance with the provisions under Section 13.4. |
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13.4 |
Procedures for Determining Net Income or Loss. The Plan Administrator may establish any reasonable procedures
for determining net income or loss under Section 13.3(d). Such procedures may
be reflected in a funding agreement governing the applicable investments
under the Plan. |
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(a) |
Net income or loss attributable to General Trust Account. To the extent a Participant’s Account is invested as part of a
General Trust Account, such Account is adjusted for its allocable share of
net income or loss experienced by the General Trust Account using the Balance
Forward Method. Under the Balance Forward Method, the net income or loss of
the General Trust Account is allocated to the Participant Accounts that are
invested in the General Trust Account, in the ratio that each Participant’s
Account bears to all Accounts, based on the value of each Participant’s
Account as of the prior Valuation Date, reduced for the adjustments described
in Section 13.3(a) and 13.3(b) above. |
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(1) |
Inclusion of certain contributions. In
applying the Balance Forward Method for allocating net income or loss, the
Employer may elect under Part 12, #45.b.(3) of the Agreement [Part 12,
#63.b.(3) of the 401(k) Agreement] or under separate administrative
procedures to adjust each Participant’s Account Balance (as of the prior
Valuation Date) for the following contributions made since the prior
Valuation Date (the “valuation period”) which were not reflected in the Participant’s
Account on such prior Valuation Date: (1) Section 401(k) Deferrals and
Employee After-Tax Contributions that are contributed during the valuation
period pursuant to the Participant’s contribution election, (2) Employer
Contributions (including Employer Matching Contributions) that are
contributed during the valuation period and allocated to a Participant’s
Account during the valuation period, and (3) Rollover Contributions. |
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(2) |
Methods of valuing contributions made during valuation period.
In determining Participants’ Account Balances as of the prior Valuation Date,
the Employer may elect to apply a weighted average method that credits each
Participant’s Account with a portion of the contributions based on the
portion of the valuation period for which such contributions were invested,
or an adjusted percentage method, that increases each Participant’s Account
by a specified percentage of such contributions. The Employer may designate
under Part 12, #45.b.(3)(c) of the Agreement [Part 12, #63.b.(3)(c) of the
401(k) Agreement] to apply the special allocation rules to only particular
types of contributions or may designate any other reasonable method for
allocating net income and loss under the Plan. |
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(i) |
Weighted average method. The Employer may
elect under Part 12, #45.b.(3)(a) of the Agreement [Part 12, #63.b.(3)(a) of
the 401(k) Agreement] or under separate administrative procedures to apply a
weighted average method in determining net income or loss. Under the weighted
average method, a Participant’s Account Balance as of the prior Valuation
Date is adjusted to take into account a portion of the contributions made
during the valuation period so that the Participant may receive an allocation
of net income or loss for the portion of the valuation period during which
such contributions were invested under the Plan. The amount of the adjustment
to a Participant’s Account Balance is determined by multiplying the
contributions made to the Participant’s Account during the valuation period
by a fraction, the numerator of which is the number of months during the
valuation period that such contributions were invested under the Plan and the
denominator is the total number of months in the valuation period. The Plan’s
investment procedures may designate the specific type(s) of contributions
eligible for a weighted allocation of net income or loss and may designate
alternative methods for determining the weighted allocation, including the
use of a uniform weighting period other than months. |
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(ii) |
Adjusted percentage method. The Employer may
elect under Part 12, #45.b.(3)(b) of the Agreement [Part 12, #63.b.(3)(b) of
the 401(k) Agreement] or under separate investment procedures to apply an
adjusted percentage method of allocating net income or loss. Under the
adjusted percentage method, a Participant’s Account Balance as of the prior
Valuation Date is increased by a percentage of the contributions made to the
Participant’s Account during the valuation period. The Plan’s investment
procedures may designate the specific type(s) of contributions eligible for
an adjusted percentage allocation and may designate alternative procedures
for determining the amount of the adjusted percentage allocation. |
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(b) |
Net income or loss attributable to a Directed
Account. If the Participant (or Beneficiary) is
entitled to direct the investment of all or part of his/her Account (see
Section 13.5(c)), the Account (or the portion of the Account which is subject
to such direction) will be maintained as a Directed Account, which reflects
the value of the directed investments as of any Valuation Date. The assets
held in a Directed Account may be (but are not required to be) segregated
from the other investments held in the Trust. Net income or loss attributable
to the investments made by a Directed Account is allocated to such Account in
a manner that reasonably reflects the investment experience of such Directed
Account. Where a Directed Account reflects segregated investments, the manner
of allocating net income or loss shall not result in a Participant (or
Beneficiary) being entitled to distribution from the Directed Account that
exceeds the value of such Account as of the date of distribution. |
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(c) |
Share or unit accounting.
The Plan’s investment procedures may provide for share or unit accounting to
reflect the value of Accounts, if such method is appropriate for the
investments allocable to such Accounts. |
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(d) |
Suspense accounts. The
Plan’s investment procedures also may provide for special valuation
procedures for suspense accounts that are properly established under the
Plan. |
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13.5
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Investments under the Plan.
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(a)
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Investment options. The
Trustee or other person(s) responsible for the investment of Plan assets is
authorized to invest Plan assets in any prudent investment consistent with
the funding policy of the Plan and the requirements of ERISA. Investment
options include, but are not limited to, the following: common and preferred
stock or other equity securities (including stock bought and sold on margin);
Qualifying Employer Securities and Qualifying Employer Real Property (to the
extent permitted under subsection (b) below), corporate bonds; open-end or
closed-end mutual funds (including funds for which the Prototype Sponsor, Trustee,
or their affiliates serve as investment advisor or in any other capacity);
money market accounts; certificates of deposit; debentures; commercial paper;
put and call options; limited partnerships; mortgages; U.S. Government
obligations, including U.S. Treasury notes and bonds; real and personal
property having a ready market; life insurance or annuity policies;
commodities; savings accounts; notes; and securities issued by the Trustee
and/or its affiliates, as permitted by law. Plan assets may also be invested
in a common/collective trust fund, or in a group trust fund that satisfies
the requirements of IRS Revenue Ruling 81-100. All of the terms and
provisions of any such common/collective trust fund or group trust into which
Plan assets are invested are incorporated by reference into the provisions of
the Trust for this Plan. No portion of any voluntary, tax deductible Employee
contributions being held under the Plan (or any earnings thereon) may be
invested in life insurance contracts or, as with any Participant-directed
investment, in tangible personal property characterized by the IRS as a
collectible.
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(b)
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Limitations on the investment in Qualifying Employer Securities and
Qualifying Employer Real Property.
The Trustee may invest in Qualifying Employer Securities and Qualifying
Employer Real Property up to certain limits. Any such investment shall only
be made upon written direction of the Employer who shall be solely
responsible for the propriety of such investment. Additional directives regarding
the purchase, sale, retention or valuing of such securities may be addressed
in a funding policy, statement of investment policy, or other separate
procedures or documents governing the investment of Plan assets. In any
conflicts between the Plan document and a separate investment trust
agreement, the Plan document shall prevail.
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(1)
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Money purchase plan. In the case of a money
purchase plan, no more than 10% of the fair market value of Plan assets may
be invested in Qualifying Employer Securities and Qualifying Employer Real
Property.
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(2)
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Profit sharing plan other than a 401(k) plan.
In the case of a profit sharing plan other than a 401(k) plan, no limit
applies to the percentage of Plan assets invested in Qualifying Employer
Securities and Qualifying Employer Real Property, except as provided in a
funding policy, statement of investment policy, or other separate procedures
or documents governing the investment of Plan assets.
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(3)
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401(k) plan. For Plan Years beginning after
December 31, 1998, with respect to the portion of the Plan consisting of
amounts attributable to Section 401(k) Deferrals, no more than 10% of the
fair market value of Plan assets attributable to Section 401(k) Deferrals may
be invested in Qualifying Employer Securities and Qualifying Employer Real
Property if the Employer, the Trustee, or a person other than the Participant
requires any portion of the Section 401(k) Deferrals and attributable
earnings to be invested in Qualifying Employer Securities or Qualifying
Employer Real Property.
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(i)
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Exceptions to Limitation. The limitation in
this subsection (3) shall not apply if any one of the conditions in
subsections (A), (B) or (C) applies.
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(A)
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Investment
of Section 401(k) Deferrals in Qualifying Employer Securities or Qualifying
Real Property is solely at the discretion of the Participant.
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(B) |
As of the
last day of the preceding Plan Year, the fair market value of assets of all
profit sharing plans and 401(k) plans of the Employer was not more than 10%
of the fair market value of all assets under plans maintained by the
Employer. |
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(C) |
The portion
of a Participant’s Section 401(k) Deferrals required to be invested in
Qualifying Employer Securities and Qualifying Employer Real Property for the
Plan Year does not exceed 1% of such Participant’s Included Compensation. |
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(ii) |
Plan Years Beginning Prior to January 1, 1999.
For Plan Years beginning before January 1, 1999, the limitations in this
subsection (3) do not apply and a 401(k) plan is treated like any other
profit sharing plan. |
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(iii) |
No application to other contributions. The
limitation in this subsection (3) has no application to Employer Matching
Contributions or Employer Nonelective Contributions. Instead, the rules under
subsection (2) above apply for such contributions. |
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(c) |
Participant direction of investments. If the Plan (by election in Part 12, #43 of the Agreement
[Part 12, #61 of the 401(k) Agreement] or by the Plan Administrator’s
administrative election) permits Participant direction of investments, the
Plan Administrator must adopt investment procedures for such direction. The
investment procedures should set forth the permissible investment options
available for Participant direction, the timing and frequency of investment
changes, and any other procedures or limitations applicable to Participant
direction of investment. In no case may Participants direct that investments
be made in collectibles, other than U.S. Government or State issued gold and
silver coins. The investment procedures adopted by the Plan Administrator are
incorporated by reference into the Plan. If Participant investment direction
is limited to specific investment options (such as designated mutual funds or
common or collective trust funds), it shall be the sole and exclusive
responsibility of the Employer or Plan Administrator to select the investment
options, and the Trustee shall not be responsible for selecting or monitoring
such investment options, unless the Trustee has otherwise agreed in writing. |
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The Employer
may elect under Part 12, #43.b.(1) of the Agreement [Part 12, #61.b.(1) of
the 401(k) Agreement] or under the separate investment procedures to limit
Participant direction of investment to specific types of contributions. The
investment procedures adopted by the Plan Administrator may (but need not)
allow Beneficiaries under the Plan to direct investments. (See Section
13.4(b) for rules regarding allocation of net income or loss to a Directed
Account.) |
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If
Participant direction of investments is permitted, the Employer will
designate how accounts will be invested in the absence of proper affirmative
direction from the Participant. Except as otherwise provided in this Plan,
neither the Trustee, the Employer, nor any other fiduciary of the Plan will
be liable to the Participant or Beneficiary for any loss resulting from
action taken at the direction of the Participant. |
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(1) |
Trustee to follow Participant direction. To
the extent the Plan allows Participant direction of investment, the Trustee
is authorized to follow the Participant’s written direction (or other form of
direction deemed acceptable by the Trustee). A Directed Account will be
established for the portion of the Participant’s Account that is subject to
Participant direction of investment. The Trustee may decline to follow a
Participant’s investment direction to the extent such direction would: (i)
result in a prohibited transaction; (ii) cause the assets of the Plan to be
maintained outside the jurisdiction of the U.S. courts; (iii) jeopardize the
Plan’s tax qualification; (iv) be contrary to the Plan’s governing documents;
(v) cause the assets to be invested in collectibles within the meaning of
Code §408(m); (vi) generate unrelated business taxable income; or (vii)
result (or could result) in a loss exceeding the value of the Participant’s
Account. The Trustee will not be responsible for any loss or expense
resulting from a failure to follow a Participant’s direction in accordance
with the requirements of this paragraph. |
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Participant
directions will be processed as soon as administratively practicable
following receipt of such directions by the Trustee. The Trustee, Plan
Administrator, or Employer will not be liable for a delay in the processing
of a Participant direction that is caused by a legitimate business reason
(including, but not limited to, a failure of computer systems or programs,
failure in the means of data transmission, the failure to timely receive
values or prices, or other unforeseen problems outside of the control of the
Trustee, Plan Administrator, or Employer). |
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(2) |
ERISA §404(c) protection. If the Plan (by
Employer election under Part 12, #43.b.(2) of the Agreement [Part 12,
#61.b.(2) of the 401(k ) Agreement] or pursuant to the Plan’s investment
procedures) is intended to comply with ERISA §404(c), the Participant
investment direction program adopted by the Plan Administrator should comply
with applicable Department of Labor regulations. Compliance with ERISA
§404(c) is not required for plan qualification purposes. The following
information is provided solely as guidance to assist the Plan Administrator
in meeting the requirements of ERISA §404(c). Failure to meet any of the
following safe harbor requirements does not impose any liability on the Plan
Administrator (or any other fiduciary under the Plan) for investment
decisions made by Participants, nor does it mean that the Plan does not
comply with ERISA §404(c). Nothing in this Plan shall impose any greater
duties upon the Trustee with respect to the implementation of ERISA §404(c)
than those duties expressly provided for in procedures adopted by the
Employer and agreed to by the Trustee. |
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(i) |
Disclosure requirements. The Plan
Administrator (or other Plan fiduciary who has agreed to perform this
activity) shall provide, or shall cause a person designated to act on his
behalf to provide, the following information to Participants: |
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(A) |
Mandatory disclosures. To satisfy the
requirements of ERISA §404(c), the Participants must receive certain
mandatory disclosures, including (I) an explanation that the Plan is intended
to be an ERISA §404(c) plan; (II) a description of the investment options
under the Plan; (III) the identity of any designated Investment Managers that
may be selected by the Participant; (IV) any restrictions on investment
selection or transfers among investment vehicles; (V) an explanation of the
fees and expenses that may be charged in connection with the investment
transactions; (VI) the materials relating to voting rights or other rights incidental
to the holding of an investment; (VII) the most recent prospectus for an
investment option which is subject to the Securities Act of 1933. |
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(B) |
Disclosures upon request. In addition, a
Participant must be able to receive upon request (I) the current value of the
Participant’s interest in an investment option; (II) the value and investment
performance of investment alternatives available under the Plan; (III) the
annual operating expenses of a designated investment alternative; and (IV) copies
of any prospectuses, or other material, relating to available investment
options. |
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(ii) |
Diversified investment options. The
investment procedure must provide at least three diversified investment
options that offer a broad range of investment opportunity. Each of the
investment opportunities must have materially different risk and return
characteristics. The procedure may allow investment under a segregated
brokerage account. |
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(iii) |
Frequency of investment instructions. The
investment procedure must provide the Participant with the opportunity to
give investment instructions as frequently as is appropriate to the
volatility of the investment. For each investment option, the frequency can
be no less than quarterly. |
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ARTICLE 14
PARTICIPANT LOANS
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This Article
contains rules for providing loans to Participants under the Plan. This
Article applies if: (1) the Employer elects under Part 12 of the Agreement to
provide loans to Participants or (2) if Part 12 does not specify whether Participant
loans are available, the Plan Administrator decides to implement a
Participant loan program. Any Participant loans will be made pursuant to the
default loan policy prescribed by this Article 14 unless the Plan
Administrator adopts a separate written loan policy or modifies the default
loan policy in this Article 14 by adopting modified loan provisions. If the
Employer adopts a separate written loan policy or written modifications to
the default loan program in this Article, the terms of such loan policy or
written modifications will control over the terms of this Plan with respect
to the administration of any Participant loans.
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14.1 |
Default Loan Policy. Loans
are available under this Article only if such loans: |
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(a) |
are
available to Participants on a reasonably equivalent basis (see Section
14.3); |
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(b) |
are not
available to Highly Compensated Employees in an amount greater than the
amount that is available to other Participants; |
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(c) |
bear a
reasonable rate of interest (as determined under Section 14.4) and are
adequately secured (as determined under Section 14.5); |
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(d) |
provide for
periodic repayment within a specified period of time (as determined under
Section 14.6); and |
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(e) |
do not
exceed, for any Participant, the amount designated under Section 14.7. |
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A separate
written loan policy may not modify the requirements under subsections (a)
through (e) above, except as permitted in the referenced Sections of this
Article. |
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14.2 |
Administration of Loan Program. A Participant loan is available under this Article only if the
Participant makes a request for such a loan in accordance with the provisions
of this Article or in accordance with a separate written loan policy. To
receive a Participant loan, a Participant must sign a promissory note along
with a pledge or assignment of the portion of the Account Balance used for
security on the loan. Except as provided in a separate loan policy or in a
written modification to the default loan policy in this Article, any reference
under this Article 14 to a Participant means a Participant or Beneficiary who
is a party in interest (as defined in ERISA §3(14)). |
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In the case
of a restated Plan, if any provision of this Article 14 is more restrictive
than the terms of the Plan (or a separate written loan policy) in effect
prior to the adoption of this Prototype Plan, such provision shall apply only
to loans finalized after the adoption of this Prototype Plan, even if the
restated Effective Date indicated in the Agreement predates the adoption of
the Plan. |
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14.3 |
Availability of Participant Loans. Participant loans must be made available to Participants in a
reasonably equivalent manner. The Plan Administrator may refuse to make a
loan to any Participant who is determined to be not creditworthy. For this
purpose, a Participant is not creditworthy if, based on the facts and
circumstances, it is reasonable to believe that the Participant will not
repay the loan. A Participant who has defaulted on a previous loan from the
Plan and has not repaid such loan (with accrued interest) at the time of any
subsequent loan will not be treated as creditworthy until such time as the
Participant repays the defaulted loan (with accrued interest). A separate
written loan policy or written modification to this loan policy may prescribe
different rules for determining creditworthiness and to what extent
creditworthiness must be determined. |
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No
Participant loan will be made to any Shareholder-Employee or Owner-Employee
unless a prohibited transaction exemption for such loan is obtained from the
Department of Labor or the prohibition against loans to such individuals is
formally withdrawn by statute or by action of the Treasury or the Department
of Labor. The prohibition against loans to Shareholder-Employees and
Owner-Employees outlined in this paragraph may not be modified by a separate
written loan policy. |
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14.4 |
Reasonable Interest Rate. A
Participant must be charged a reasonable rate of interest for any loan he/she
receives. For this purpose, the interest rate charged on a Participant loan
must be commensurate with the interest rates charged by persons in the
business of lending money for loans under similar circumstances. The Plan
Administrator will determine a reasonable rate of interest by reviewing the
interest rates charged by a sample of third party lenders in the same
geographical region as the Employer. The Plan Administrator must periodically
review its interest rate assumptions to ensure the interest rate charged on
Participant loans is reasonable. A separate written loan policy or written
modifications to this loan policy may prescribe an alternative means of
establishing a reasonable interest rate. |
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14.5 |
Adequate Security. All
Participant loans must be adequately secured. The Participant’s vested
Account Balance shall be used as security for a Participant loan provided the
outstanding balance of all Participant loans made to such |
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Participant
does not exceed 50% of the Participant’s vested Account Balance, determined
immediately after the origination of each loan, and if applicable, the
spousal consent requirements described in Section 14.9 have been satisfied.
The Plan Administrator (with the consent of the Trustee) may require a
Participant to provide additional collateral to receive a Participant loan if
the Plan Administrator determines such additional collateral is required to
protect the interests of Plan Participants. A separate loan policy or written
modifications to this loan policy may prescribe alternative rules for obtaining
adequate security. However, the 50% rule in this paragraph may not be
replaced with a greater percentage. |
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14.6 |
Periodic Repayment. A
Participant loan must provide for level amortization with payments to be made
not less frequently than quarterly. A Participant loan must be payable within
a period not exceeding five (5) years from the date the Participant receives
the loan from the Plan, unless the loan is for the purchase of the
Participant’s principal residence, in which case the loan must be payable
within a reasonable time commensurate with the repayment period permitted by
commercial lenders for similar loans. Loan repayments must be made through
payroll withholding, except to the extent the Plan Administrator determines
payroll withholding is not practical given the level of a Participant’s
wages, the frequency with which the Participant is paid, or other
circumstances. |
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(a) |
Unpaid leave of absence. A
Participant with an outstanding Participant loan may suspend loan payments to
the Plan for up to 12 months for any period during which the Participant is
on an unpaid leave of absence. Upon the Participant’s return to employment
(or after the end of the 12-month period, if earlier), the Participant’s
outstanding loan will be reamortized over the remaining period of such loan
to make up for the missed payments. The reamortized loan may extend beyond
the original loan term so long as the loan is paid in full by whichever of
the following dates comes first: (1) the date which is five (5) years from
the original date of the loan (or the end of the suspension, if sooner), or
(2) the original loan repayment deadline (or the end of the suspension
period, if later) plus the length of the suspension period. |
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(b) |
Military leave. A
Participant with an outstanding Participant loan also may suspend loan
payments for any period such Participant is on military leave, in accordance
with Code §414(u)(4). Upon the Participant’s return from military leave (or
the expiration of five years from the date the Participant began his/her
military leave, if earlier), loan payments will recommence under the
amortization schedule in effect prior to the Participant’s military leave,
without regard to the five-year maximum loan repayment period. Alternatively,
the loan may be reamortized to require a different level of loan payment, as
long as the amount and frequency of such payments are not less than the
amount and frequency under the amortization schedule in effect prior to the
Participant’s military leave. |
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A separate
loan policy or written modification to this loan policy may (1) modify the
time period for repaying Participant loans, provided Participant loans are
required to be repaid over a period that is not longer than the periods
described in this Section; (2) specify the frequency of Participant loan
repayments, provided the payments are required at least quarterly; (3) modify
the requirement that loans be repaid through payroll withholding; or (4)
modify or eliminate the leave of absence and/or military leave rules under
this Section. |
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14.7 |
Loan Limitations. A
Participant loan may not be made to the extent such loan (when added to the
outstanding balance of all other loans made to the Participant) exceeds the
lesser of: |
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(a) |
$50,000
(reduced by the excess, if any, of the Participant’s highest outstanding
balance of loans from the Plan during the one-year period ending on the day
before the date on which such loan is made, over the Participant’s
outstanding balance of loans from the Plan as of the date such loan is made)
or |
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(b) |
one-half (½)
of the Participant’s vested Account Balance, determined as of the Valuation
Date coinciding with or immediately preceding such loan, adjusted for any
contributions or distributions made since such Valuation Date. |
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A
Participant may not receive a Participant loan of less than $1,000 nor may a
Participant have more than one Participant loan outstanding at any time. A
Participant may renegotiate a loan without violating the one outstanding loan
requirement to the extent such renegotiated loan is a new loan (i.e., the
renegotiated loan separately satisfies the reasonable interest rate
requirement under Section 14.4, the adequate security requirement under
Section 14.5, and the periodic repayment requirement under Section 14.6). and
the renegotiated loan does not exceed the limitations under (a) or (b) above,
treating both the replaced loan and the renegotiated loan as outstanding at
the same time. However, if the term of the renegotiated loan does not end
later than the original term of the replaced loan, the replaced loan may be
ignored in applying the limitations under (a) and (b) above. |
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In applying
the limitations under this Section, all plans maintained by the Employer are
aggregated and treated as a single plan. In addition, any assignment or
pledge of any portion of the Participant’s interest in the Plan and any loan,
pledge, or assignment with respect to any insurance contract purchased under
the Plan will be treated as loan under this Section. |
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A separate
written loan policy or written modifications to this loan policy may (1)
modify the limitations on the amount of a Participant loan; (2) modify or
eliminate the minimum loan amount requirement; (3) permit a Participant to
have more than one loan outstanding at a time; (4) prescribe limitations on
the purposes for which loans may be required; or (5) prescribe rules for
reamortization, consolidation, renegotiation, or refinancing of loans. |
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14.8 |
Segregated Investment. A
Participant loan is treated as a segregated investment on behalf of the
individual Participant for whom the loan is made. The Plan Administrator may
adopt separate administrative procedures for determining which type or types
of contributions (and the amount of each type of contribution) may be used to
provide the Participant loan. If the Plan Administrator does not adopt
procedures designating the type of contributions from which the Participant
loan will be made, such loan is deemed to be made on a proportionate basis
from each type of contribution. |
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Unless
requested otherwise on the Participant’s loan application, a Participant loan
will be made equally from all investment funds in which the applicable
contributions are held. A Participant or Beneficiary may direct the Trustee,
on his/her loan application, to withdraw the Participant loan amounts from a
specific investment fund or funds. A Participant loan will not violate the
requirements of this default loan policy merely because the Plan
Administrator does not permit the Participant to designate the contributions
or funds from which the Participant loan will be made. Each payment of
principal and interest paid by a Participant on his/her Participant loan
shall be credited proportionately to such Participant’s Account(s) and to the
investment funds within such Account(s). |
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A separate
loan policy or written modifications to this loan policy may modify the rules
of this Section without limitation, including prescribing different rules for
determining the source of a loan with respect to contribution types and
investment funds. |
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14.9 |
Spousal Consent. If this
Plan is subject to the Joint and Survivor Annuity requirements under Article
9, a Participant may not use his/her Account Balance as security for a
Participant loan unless the Participant’s spouse, if any, consents to the use
of such Account Balance as security for the loan. The spousal consent must be
made within the 90-day period ending on the date the Participant’s Account
Balance is to be used as security for the loan. Spousal consent is not
required, however, if the value of the Participant’s total vested Account
Balance (as determined under Section 8.3(e)) does not exceed $5,000 ($3,500
for loans made before the time the $5,000 rules becomes effective under
Section 8.3). If the Plan is not subject to the Joint and Survivor Annuity
requirements under Article 9, a spouse’s consent is not required to use a
Participant’s Account Balance as security for a Participant loan, regardless
of the value of the Participant’s Account Balance. |
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Any spousal
consent required under this Section must be in writing, must acknowledge the
effect of the loan, and must be witnessed by a plan representative or notary
public. Any such consent to use the Participant’s Account Balance as security
for a Participant loan is binding with respect to the consenting spouse and
with respect to any subsequent spouse as it applies to such loan. A new
spousal consent will be required if the Account Balance is subsequently used
as security for a renegotiation, extension, renewal, or other revision of the
loan. A new spousal consent also will be required only if any portion of the
Participant’s Account Balance will be used as security for a subsequent
Participant loan. |
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A separate
loan policy or written modifications to this loan policy may not eliminate
the spousal consent requirement where it would be required under this
Section, but may impose spousal consent requirements that are not prescribed
by this Section. |
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14.10 |
Procedures for Loan Default. A
Participant will be considered to be in default with respect to a loan if any
scheduled repayment with respect to such loan is not made by the end of the
calendar quarter following the calendar quarter in which the missed payment
was due. |
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If a
Participant defaults on a Participant loan, the Plan may not offset the
Participant’s Account Balance until the Participant is otherwise entitled to
an immediate distribution of the portion of the Account Balance which will be
offset and such amount being offset is available as security on the loan,
pursuant to Section 14.5. For this purpose, a loan default is treated as an
immediate distribution event to the extent the law does not prohibit an
actual distribution of the type of contributions which would be offset as a
result of the loan default (determined without regard to the consent
requirements under Articles 8 and 9, so long as spousal consent was properly
obtained at the time of the loan, if required under Section 14.9). The
Participant may repay the outstanding balance of a defaulted loan (including
accrued interest through the date of repayment) at any time. |
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Pending the
offset of a Participant’s Account Balance following a defaulted loan, the
following rules apply to the amount in default. |
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(a) |
Interest
continues to accrue on the amount in default until the time of the loan
offset or, if earlier, the date the loan repayments are made current or the
amount is satisfied with other collateral. |
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(b) |
A subsequent
offset of the amount in default is not reported as a taxable distribution,
except to the extent the taxable portion of the default amount was not
previously reported by the Plan as a taxable distribution. |
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(c) |
The
post-default accrued interest included in the loan offset is not reported as
a taxable distribution at the time of the offset. |
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A separate
loan policy or written modifications to this loan policy may modify the
procedures for determining a loan default. |
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14.11 |
Termination of Employment. |
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(a) |
Offset of outstanding loan. A
Participant loan becomes due and payable in full immediately upon the
Participant’s termination of employment. Upon a Participant’s termination,
the Participant may repay the entire outstanding balance of the loan
(including any accrued interest) within a reasonable period following
termination of employment. If the Participant does not repay the entire
outstanding loan balance, the Participant’s vested Account Balance will be
reduced by the remaining outstanding balance of the loan (without regard to
the consent requirements under Articles 8 and 9, so long as spousal consent
was properly obtained at the time of the loan, if required under Section
14.9), to the extent such Account Balance is available as security on the
loan, pursuant to Section 14.5, and the remaining vested Account Balance will
be distributed in accordance with the distribution provisions under Article
8. If the outstanding loan balance of a deceased Participant is not repaid,
the outstanding loan balance shall be treated as a distribution to the
Participant and shall reduce the death benefit amount payable to the
Beneficiary under Section 8.4. |
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(b) |
Direct Rollover. Upon
termination of employment, a Participant may request a Direct Rollover of the
loan note (provided the distribution is an Eligible Rollover Distribution as
defined in Section 8.8(a)) to another qualified plan which agrees to accept a
Direct Rollover of the loan note. A Participant may not engage in a Direct
Rollover of a loan to the extent the Participant has already received a
deemed distribution with respect to such loan. (See the rules regarding
deemed distributions upon a loan default under Section 14.10.) |
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(c) |
Modified loan policy. A
separate loan policy or written modifications to this loan policy may modify
this Section 14.11, including, but not limited to: (1) a provision to permit
loan repayments to continue beyond termination of employment; (2) to prohibit
the Direct Rollover of a loan note; and (3) to provide for other events that
may accelerate the Participant’s repayment obligation under the loan. |
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ARTICLE 15
INVESTMENT IN LIFE INSURANCE
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This Article
provides special rules for Plans that permit investment in life insurance on
the life of the Participant, the Participant’s spouse, or other family
members. The Employer may elect in Part 12 of the Agreement to permit life
insurance investments in the Plan, or life insurance investments may be
permitted, prohibited, or restricted under the Plan through separate
investment procedures or a separate funding policy. If the Plan prohibits
investments in life insurance, this Article does not apply.
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15.1 |
Investment in Life Insurance. A
group or individual life insurance policy purchased by the Plan may be issued
on the life of a Participant, a Participant’s spouse, a Participant’s child
or children, a family member of the Participant, or any other individual with
an insurable interest. If this Plan is a money purchase plan, a life
insurance policy may only be issued on the life of the Participant. A life insurance
policy includes any type of policy, including a second-to-die policy,
provided that the holding of a particular type of policy is not prohibited
under rules applicable to qualified plans. |
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Any premiums
on life insurance held for the benefit of a Participant will be charged
against such Participant’s vested Account Balance. Unless directed otherwise,
the Plan Administrator will reduce each of the Participant’s Accounts under
the Plan equally to pay premiums on life insurance held for such Participant’s
benefit. Any premiums paid for life insurance policies must satisfy the
incidental life insurance rules under Section 15.2. |
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15.2 |
Incidental Life Insurance Rules. Any life insurance purchased under the Plan must meet the
following requirements: |
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(a) |
Ordinary life insurance policies. The aggregate premiums paid for ordinary life insurance
policies (i.e., policies with both nondecreasing death benefits and
nonincreasing premiums) for the benefit of a Participant shall not at any
time exceed 49% of the aggregate amount of Employer Contributions (including
Section 401(k) Deferrals) and forfeitures that have been allocated to the
Account of such Participant. |
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(b) |
Life insurance policies other than ordinary life. The aggregate premiums paid for term, universal or other life
insurance policies (other than ordinary life insurance policies) for the
benefit of a Participant shall not at any time exceed 25% of the aggregate
amount of Employer Contributions (including Section 401(k) Deferrals) and forfeitures
that have been allocated to the Account of such Participant. |
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(c) |
Combination of ordinary and other life insurance policies. The sum of one-half (1/2) of the aggregate premiums paid for
ordinary life insurance policies plus all the aggregate premiums paid for any
other life insurance policies for the benefit of a Participant shall not at
any time exceed 25% of the aggregate amount of Employer Contributions
(including Section 401(k) Deferrals) and forfeitures which have been
allocated to the Account of such Participant. |
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(d) |
Exception for certain profit sharing and 401(k) plans. If the Plan is a profit sharing plan or a 401(k) plan, the
limitations in this Section do not apply to the extent life insurance
premiums are paid only with Employer Contributions and forfeitures that have
been accumulated in the Participant’s Account for at least two years or are
paid with respect to a Participant who has been an Eligible Participant for
at least five years. For purposes of applying this special limitation,
Employer Contributions do not include any Section 401(k) Deferrals, QMACs,
QNECs or Safe-Harbor Contributions under a 401(k) plan. |
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(e) |
Exception for Employee After-Tax Contributions and Rollover
Contributions. The Plan
Administrator also may invest, with the Participant’s consent, any portion of
the Participant’s Employee After-Tax Contribution Account or Rollover
Contribution Account in a group or individual life insurance policy for the
benefit of such Participant, without regard to the incidental life insurance
rules under this Section. |
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15.3 |
Ownership of Life Insurance Policies. The Trustee is the owner of any life insurance policies
purchased under the Plan in accordance with the provisions of this Article
15. Any life insurance policy purchased under the Plan must designate the
Trustee as owner and beneficiary under the policy. The Trustee will pay all
proceeds of any life insurance policies to the Beneficiary of the Participant
for whom such policy is held in accordance with the distribution provisions
under Article 8 and the Joint and Survivor Annuity requirements under Article
9. In no event shall the Trustee retain any part of the proceeds from any
life insurance policies for the benefit of the Plan. |
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15.4 |
Evidence of Insurability. Prior
to purchasing a life insurance policy, the Plan Administrator may require the
individual whose life is being insured to provide evidence of insurability,
such as a physical examination, as may be required by the Insurer. |
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15.5 |
Distribution of Insurance Policies. Life
insurance policies under the Plan, which are held on behalf of a Participant,
must be distributed to the Participant or converted to cash upon the later of
the Participant’s Distribution Commencement Date (as defined in Section 22.56)
or termination of employment. Any life insurance policies that are held on
behalf of a terminated Participant must continue to satisfy the incidental
life insurance rules under Section 15.2. |
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If a life
insurance policy is purchased on behalf of an individual other than the
Participant, and such individual dies, the Participant may withdraw any or
all life insurance proceeds from the Plan, to the extent such proceeds exceed
the cash value of the life insurance policy determined immediately before the
death of the insured individual. |
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15.6 |
Discontinuance of Insurance Policies. Investments in life insurance may be discontinued at any time,
either at the direction of the Trustee or other fiduciary responsible for
making investment decisions. If the Plan provides for Participant direction
of investments, life insurance as an investment option may be eliminated at
any time by the Plan Administrator. Where life insurance investment options
are being discontinued, the Plan Administrator, in its sole discretion, may
offer the sale of the insurance policies to the Participant, or to another
person, provided that the prohibited transaction exemption requirements
prescribed by the Department of Labor are satisfied. |
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15.7 |
Protection of Insurer. An
Insurer that issues a life insurance policy under the terms of this Article,
shall not be responsible for the validity of this Plan and shall be protected
and held harmless for any actions taken or not taken by the Trustee or any
actions taken in accordance with written directions from the Trustee or the
Employer (or any duly authorized representatives of the Trustee or Employer).
An Insurer shall have no obligation to determine the propriety of any premium
payments or to guarantee the proper application of any payments made by the
insurance company to the Trustee. |
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The Insurer
is not and shall not be considered a party to this Agreement and is not a
fiduciary with respect to the Plan solely as a result of the issuance of life
insurance policies under this Article 15. |
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15.8 |
No Responsibility for Act of Insurer. Neither the Employer, the Plan Administrator nor the Trustee
shall be responsible for the validity of the provisions under a life
insurance policy issued under this Article 15 or for the failure or refusal
by the Insurer to provide benefits under such policy. The Employer, the Plan
Administrator and the Trustee are also not responsible for any action or
failure to act by the Insurer or any other person which results in the delay
of a payment under the life insurance policy or which renders the policy
invalid or unenforceable in whole or in part. |
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ARTICLE 16
TOP-HEAVY PLAN REQUIREMENTS
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This Article
contains the rules for determining whether the Plan is a Top-Heavy Plan and
the consequences of having a Top-Heavy Plan. Part 6 of the Agreement provides
for elections relating to the vesting schedule for a Top-Heavy Plan. Part 13
of the Agreement allows the Employer to elect to satisfy the Top-Heavy Plan
allocation requirements under another plan.
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16.1 |
In General. If the Plan is
or becomes a Top-Heavy Plan in any Plan Year, the provisions of this Article
16 will supersede any conflicting provisions in the Plan or Agreement.
However, this Article 16 will no longer apply if Code §416 is repealed. |
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16.2 |
Top-Heavy Plan Consequences. |
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(a) |
Minimum allocation for Non-Key Employees. If
the Plan is a Top-Heavy Plan for any Plan Year, except as otherwise provided
in subsections (4) and (5) below, the Employer Contributions and forfeitures
allocated for the Plan Year on behalf of any Eligible Participant who is a
Non-Key Employee must not be less than a minimum percentage of the
Participant’s Total Compensation (as defined in Section 16.3(i)). If any
Non-Key Employee who is entitled to receive a top-heavy minimum contribution
pursuant to this Section 16.2(a) fails to receive an appropriate allocation,
the Employer will make an additional contribution on behalf of such Non-Key
Employee to satisfy the requirements of this Section. The Employer may elect
under Part 4 of the Agreement [Part 4C of the 401(k) Agreement] to make the
top-heavy contribution to all Eligible Participants. If the Employer elects
under the Agreement to provide the top-heavy minimum contribution to all
Eligible Participants, the Employer also will make an additional contribution
on behalf of any Key Employee who is an Eligible Participant and who did not
receive an allocation equal to the top-heavy minimum contribution. |
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(1) |
Determining the minimum percentage. The
minimum percentage that must be allocated under subsection (a) above is the
lesser of: (i) three (3) percent of Total Compensation for the Plan Year or
(ii) the highest contribution rate for any Key Employee for the Plan Year.
The highest contribution rate for a Key Employee is determined by taking into
account the total Employer Contributions and forfeitures allocated to each
Key Employee for the Plan Year, as a percentage of the Key Employee’s Total
Compensation. A Key Employee’s contribution rate includes Section 401(k) Deferrals
made by the Key Employee for the Plan Year (except as provided by regulation
or statute). If this Plan is aggregated with a Defined Benefit Plan to
satisfy the requirements of Code §401(a)(4) or Code §410(b), the minimum
percentage is three (3) percent, without regard to the highest Key Employee
contribution rate. See subsection (5) below if the Employer maintains more
than one plan. |
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(2) |
Determining whether the Non-Key Employee’s allocation satisfies the
minimum percentage. To determine if a Non-Key
Employee’s allocation of Employer Contributions and forfeitures is at least
equal to the minimum percentage, the Employee’s Section 401(k) Deferrals for
the Plan Year are disregarded. In addition, Matching Contributions allocated
to the Employee’s Account for the Plan Year are disregarded, unless: (i) the
Plan Administrator elects to take all or a portion of the Matching
Contributions into account, or (ii) Matching Contributions are taken into
account by statute or regulation. The rule in (i) does not apply unless the
Matching Contributions so taken into account could satisfy the
nondiscrimination testing requirements under Code §401(a)(4) if tested
separately. Any Employer Matching Contributions used to satisfy the Top-Heavy
Plan minimum allocation may not be used in the ACP Test (as defined in
Section 17.3), except to the extent permitted under statute, regulation or
other guidance of general applicability. |
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(3) |
Certain allocation conditions inapplicable.
The Top-Heavy Plan minimum allocation shall be made even though, under other
Plan provisions, the Non-Key Employee would not otherwise be entitled to
receive an allocation, or would have received a lesser allocation for the
Plan Year because of: |
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(i) |
the
Participant’s failure to complete 1,000 Hours of Service (or any equivalent
provided in the Plan), |
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(ii) |
the
Participant’s failure to make Employee After-Tax Contributions to the Plan,
or |
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(iii) |
Total
Compensation is less than a stated amount. |
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The minimum
allocation also is determined without regard to any Social Security
contribution or whether an Eligible Participant fails to make Section 401(k)
Deferrals for a Plan Year in which the Plan includes a 401(k) feature. |
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(4) |
Participants not employed on the last day of the Plan Year.
The minimum allocation requirement described in this subsection (a) does not
apply to an Eligible Participant who was not employed by the Employer on the
last day of the applicable Plan Year. |
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(5) |
Participation in more than one Top-heavy Plan. The
minimum allocation requirement described in this subsection (a) does not
apply to an Eligible Participant who is covered under another plan maintained
by the Employer if, pursuant to Part 13, #54 of the Agreement [Part 13, #72 of
the 401(k) Agreement], the other Plan will satisfy the minimum allocation
requirement. |
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(i) |
More than one Defined Contribution Plans. If
the Employer maintains more than one top-heavy Defined Contribution Plan
(including Paired Plans), the Employer may designate in Part 13, #54.a. of
the Agreement [Part 13, #72.a. of the 401(k) Agreement] which plan will
provide the top-heavy minimum contribution to Non-Key Employees.
Alternatively, under Part 13, #54.a.(3) of the Agreement [Part 13, #72.a.(3) of
the 401(k) Agreement], the Employer may designate another means of complying
with the top-heavy requirements. If Part 13, #54 of the Agreement [Part 13,
#72 of the 401(k) Agreement] is not completed and the Employer maintains more
than one Defined Contribution Plan, the Employer will be deemed to have
selected this Plan under Part 13, #54.a. of the Agreement [Part 13, #72.a. of
the 401(k) Agreement] as the Plan under which the top-heavy minimum
contribution will be provided. |
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If an
Employee is entitled to a top-heavy minimum contribution but has not
satisfied the minimum age and/or service requirements under the Plan
designated to provide the top-heavy minimum contribution, the Employee may
receive a top-heavy minimum contribution under the designated Plan. Thus, for
example, if the Employer maintains both a 401(k) plan and a non-401(k) plan,
a Non-Key Employee who has not satisfied the minimum age and service
conditions under Part 1, #5 of the non-401(k) plan Agreement is eligible for
a top-heavy minimum allocation under the non-401(k) plan (if so provided
under Part 13, #54.a. of the Agreement [Part 13, #72.a. of the 401(k)
Agreement]) if such Employee has satisfied the eligibility conditions for
making Section 401(k) Deferrals under the 401(k) plan. The provision of a
top-heavy minimum contribution under this paragraph will not cause the Plan
to fail the minimum coverage or nondiscrimination rules. The Employer may
designate an alternative method of providing the top-heavy minimum
contribution to such Employees under Part 13, #54.a.(3) of the Agreement
[Part 13, #72.a.(3) of the 401(k) Agreement]. |
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(ii) |
Defined Contribution Plan and a Defined Benefit Plan. If
the Employer maintains both a top-heavy Defined Contribution Plan (under this
BPD) and a top-heavy Defined Benefit Plan, the Employer must designate the
manner in which the plans will comply with the Top-Heavy Plan requirements.
Under Part 13, #54.b. of the Agreement [Part 13, #72.b. of the 401(k)
Agreement], the Employer may elect to provide the top-heavy minimum benefit
to Non-Key Employees who participate in both Plans (A) in the Defined Benefit
Plan; (B) in the Defined Contribution Plan (but increasing the minimum
allocation from 3% to 5%); or (C) under any other acceptable method of
compliance. If a Non-Key Employee participates only under the Defined Benefit
Plan, the top-heavy minimum benefit will be provided under the Defined
Benefit Plan. If a Non-Key Employee participates only under the Defined
Contribution Plan, the top-heavy minimum benefit will be provided under the
Defined Contribution Plan (without regard to this subsection (ii)). If Part
13, #54.b. of the Agreement [Part 13, #72.b. of the 401(k) Agreement] is not
completed and the Employer maintains a Defined Benefit Plan, the Employer
will be deemed to have selected this Plan under Part 13, #54.b.(1) of the
Agreement [Part 13, #72.b.(1) of the 401(k) Agreement] as the plan under
which the top-heavy minimum contribution will be provided. |
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If the
Employer maintains more than one Defined Contribution Plan in addition to a
Defined Benefit Plan, the Employer may use Part 13, #54.b.(3) of the
Agreement [Part 13, #72.b.(3) of the 401(k) Agreement] to designate which
Defined Contribution Plan will provide the top-heavy minimum contribution. |
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If the
Employer is using the Four-Step Permitted Disparity Method (as described in
Section 2.2(b)(ii)) and elects under Part 13, #54.b.(1) of the Agreement
[Part 13, #72.b.(1) of the 401(k) Agreement] to provide a 5% top-heavy
minimum contribution, the 3% minimum allocation under Step One is increased
to 5%. The 3% allocation under Step Two will also be increased to the lesser
of (A) 5% or (B) the amount determined under Step Three (increased by 3
percentage points). If an additional allocation is to be |
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made under
Step Three, the Applicable Percentage under Section 2.2(b)(ii)(C) must be
reduced by 2 percentage points (but not below zero). |
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(6) |
No forfeiture for certain events. The
minimum top-heavy allocation (to the extent required to be nonforfeitable
under Code §416(b)) may not be forfeited under the suspension of benefit
rules of Code §411(a)(3)(B) or the withdrawal of mandatory contribution rules
of Code §411(a)(3)(D). |
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(b) |
Special Top-Heavy Vesting Rules. |
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(1) |
Minimum vesting schedules. For any Plan Year
in which this Plan is a Top-Heavy Plan, the Top-Heavy Plan vesting schedule
elected in Part 6, #19 of the Agreement [Part 6, #37 of the 401(k) Agreement]
will automatically apply to the Plan. The Top-Heavy Plan vesting schedule
will apply to all benefits within the meaning of Code §411(a)(7) except those
attributable to Employee After-Tax Contributions, including benefits accrued
before the effective date of Code §416 and benefits accrued before the Plan
became a Top-Heavy Plan. No decrease in a Participant’s nonforfeitable
percentage may occur in the event the Plan’s status as a Top-Heavy Plan
changes for any Plan Year. However, this subsection does not apply to the
Account Balance of any Employee who does not have an Hour of Service after a
Top-Heavy Plan vesting schedule becomes effective. |
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(2) |
Shifting Top-Heavy Plan status. If the
vesting schedule under the Plan shifts in or out of the Top-Heavy Plan
vesting schedule for any Plan Year because of a change in Top-Heavy Plan
status, such shift is an amendment to the vesting schedule and the election
in Section 4.7 of the Plan applies. |
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16.3 |
Top-Heavy Definitions. |
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(a) |
Determination Date: For any
Plan Year subsequent to the first Plan Year, the Determination Date is the
last day of the preceding Plan Year. For the first Plan Year of the Plan, the
Determination Date is the last day of that first Plan Year. |
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(b) |
Determination Period: The
Plan Year containing the Determination Date and the four (4) preceding Plan
Years. |
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(c) |
Key Employee: Any Employee
or former Employee (and the Beneficiaries of such Employee) is a Key Employee
for a Plan Year if, at any time during the Determination Period, the
individual was: |
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(1) |
an officer
of the Employer with annual Total Compensation in excess of 50 percent of the
dollar limitation under Code §415(b)(1)(A), |
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(2) |
an owner (or
considered an owner under Code §318) of one of the ten largest interests in
the Employer with annual Total Compensation in excess of 100 percent of the
dollar limitation under Code §415(c)(1)(A); |
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(3) |
a
Five-Percent Owner (as defined in Section 22.88), |
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(4) |
a more than
1-percent owner of the Employer with an annual Total Compensation of more
than $150,000. |
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The Key
Employee determination will be made in accordance with Code §416(i)(1) and
the regulations thereunder. |
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(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 Code §§401(a)(4) and
410. |
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(e) |
Present Value: The present
value based on the interest and mortality rates specified in the relevant
Defined Benefit Plan. In the event that more than one Defined Benefit Plan is
included in a Required Aggregation Group or Permissive Aggregation Group, a
uniform set of actuarial assumptions must be applied to determine present
value. The Employer may specify in Part 13, #54.b.(3) of the Agreement [Part
13, #72.b.(3) of the 401(k) Agreement] the actuarial assumptions that will
apply if the Defined Benefit Plans do not specify a uniform set of actuarial
assumptions to be used to determine if the plans are Top-Heavy. |
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(f) |
Required Aggregation Group: |
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(1) |
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 has terminated), and |
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(2) |
any other
qualified plan of the Employer that enables a plan described in (l) to meet
the coverage or nondiscrimination requirements of Code §§410(b) or 401(a)(4). |
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(g) |
Top-Heavy Plan: For any
Plan Year, this Plan is a Top-Heavy Plan if any of the following conditions
exist: |
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(1) |
The Plan is
not part of any Required Aggregation Group or Permissive Aggregation Group of
plans, and the Top-Heavy Ratio for the Plan exceeds 60 percent. |
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(2) |
The Plan is
part of a Required Aggregation Group of plans, but not part of a Permissive
Aggregation Group, and the Top-Heavy Ratio for the Required Aggregation Group
of plans exceeds 60 percent. |
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(3) |
The Plan is
part of a Required Aggregation Group and part of a Permissive Aggregation
Group of plans, and the Top-Heavy Ratio for the Permissive Aggregation Group
exceeds 60 percent. |
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(h) |
Top-Heavy Ratio: |
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(1) |
Defined Contribution Plans only. This
paragraph applies if the Employer maintains one or more Defined Contribution
Plans (including any SEP described under Code §408(k)) and the Employer has
not maintained any Defined Benefit Plan that during the Determination Period
has or has had Accrued Benefits. The Top-Heavy Ratio for this Plan alone, or
for the Required Aggregation Group 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) and the
denominator of which is the sum of all Account Balances, both computed in
accordance with Code §416 and the regulations thereunder. |
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(2) |
Defined Contribution Plan and Defined Benefit Plan.
This paragraph applies if the Employer maintains one or more Defined
Contribution Plans (including a SEP described under Code §408(k)) and the
Employer maintains or has maintained one or more Defined Benefit Plans which
during the Determination Period has or has had any Accrued Benefits. The
Top-Heavy Ratio for any Required Aggregation Group 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(s) for all
Key Employees, and the Present Value of Accrued Benefits under the aggregated
Defined Benefit Plan(s) for all Key Employees as of the Determination
Date(s), and the denominator of which is the sum of the Account Balances
under the aggregated Defined Contribution Plan(s) for all Participants and
the Present Value of Accrued Benefits under the Defined Benefit Plan(s) for
all Participants as of the Determination Date(s), all determined in
accordance with Code §416 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 distributions of an accrued
benefit made in the five-year period ending on the Determination Date. |
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(3) |
Applicable Valuation Dates. For purposes of
subsections (1) and (2) 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 Code §416 and the regulations
thereunder for the first and second Plan Years of a Defined Benefit Plan.
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. |
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(4) |
Valuation of benefits. Determining a Participant’s Account Balance or
Accrued Benefit. 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 Code §416 and the
regulations thereunder. For purposes of subsections (1) and (2) above, the
Account Balance and/or Accrued Benefit of each Participant is adjusted as
provided under subsections (i) and (ii) below. |
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(i) |
Increase for prior distributions. In
applying the Top-Heavy Ratio, a Participant’s Account Balance and/or Accrued
Benefit is increased for any distributions made from the Plan during the
Determination Period. |
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(ii) |
Increase for future contributions. Both the
numerator and denominator of the Top-Heavy Ratio are increased to reflect any
contribution to a Defined Contribution Plan not actually made as of the
Determination Date, but which is required to be taken into account on that
date under Code §416 and the regulations thereunder. |
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(iii) |
Exclusion of certain benefits. The Account
Balance and/or Accrued Benefit of a Participant (and any distribution during
the Determination Period with respect to such Participant’s Account Balance
or Accrued Benefit) is disregarded from the Top-Heavy Ratio if: (A) the
Participant is a Non-Key Employee who was a Key Employee in a prior year, or
(B) the Participant has not been credited with at least one Hour of Service
during the Determination Period. 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 Code §416 and the regulations
thereunder. |
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(iv) |
Calculation of Accrued Benefit. The Accrued
Benefit of a Participant other than a Key Employee shall be determined under:
(A) the method, if any, that uniformly applies for accrual purposes under all
Defined Benefit Plans maintained by the Employer; or (B) 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 Code §411(b)(1)(C). |
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(i) |
Total Compensation. For
purposes of determining the minimum top-heavy contribution under 16.2(a),
Total Compensation is determined using the definition under Section 7.4(f),
including the special rule under Section 7.4(f)(4) for years beginning before
January 1, 1998. For this purpose, Total Compensation is subject to the
Compensation Dollar Limitation as defined in Section 22.32. |
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(j) |
Valuation Date: The date as
of which Account Balances are valued for purposes of calculating the
Top-Heavy Ratio. |
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ARTICLE 17
401(k) PLAN PROVISIONS
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This Article
sets forth the special testing rules applicable to Section 401(k) Deferrals,
Employer Matching Contributions, and Employee After-Tax Contributions that
may be made under the 401(k) Agreement and the requirements to qualify as a
Safe Harbor 401(k) Plan. Section 17.1 provides limits on the amount of
Elective Deferrals an Employee may defer into the Plan during a calendar
year. Sections 17.2 and 17.3 set forth the rules for running the ADP Test and
ACP Test with respect to contributions under the 401(k) plan and Section 17.4
discusses the requirements for applying the Multiple Use Test. Section 17.5
prescribes special testing rules for performing the ADP Test and the ACP
Test. Section 17.6 sets forth the requirements that must be met to qualify as
a Safe Harbor 401(k) Plan. Unless otherwise stated, any reference to the
Agreement under this Article 17 is a reference to the 401(k) Agreement.
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17.1 |
Limitation on the Amount of Section 401(k)
Deferrals. |
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(a) |
In general. An Eligible
Participant’s total Section 401(k) Deferrals under this Plan, or any other
qualified plan of the Employer, for any calendar year may not exceed the
lesser of: |
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(1) |
the percentage
of Included Compensation designated under Part 4A, #12 of the Agreement; |
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(2) |
the dollar
limitation under Code §402(g); or |
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(3) |
the amount
permitted under the Annual Additions Limitation described in Article 7. |
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(b) |
Maximum deferral limitation. If
the Employer elects to impose a maximum deferral limitation under Part 4A,
#12 of the Agreement, it must designate under Part 4A, #12.a. the period for
which such limitation applies. Regardless of any limitation designated under
Part 4A, #12 of the Agreement, the Employer may provide for alternative
limitations in the Salary Reduction Agreement with respect to designated
types of Included Compensation, such as bonus payments. If no maximum
percentage is designated under Part 4A, #12 of the Agreement, the only limit
on a Participant’s Section 401(k) Deferrals under this Plan is the dollar
limitation under Code §402(g) and the Annual Additions Limitation. |
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(c) |
Correction of Code §402(g) violation. A Participant may not make Section 401(k) Deferrals that
exceed the dollar limitation under Code §402(g). The dollar limitation under
Code §402(g) applicable to a Participant’s Section 401(k) Deferrals under
this Plan is reduced by any Elective Deferrals the Participant makes under
any other plan maintained by the Employer. If a Participant makes Section
401(k) Deferrals that exceed the Code §402(g) limit, the Employer may correct
the Code §402(g) violation in the following manner. |
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(1) |
Suspension of Section 401(k) Deferrals. The
Employer may suspend a Participant’s Section 401(k) Deferrals under the Plan
for the remainder of the calendar year when the Participant’s Section 401(k)
Deferrals under this Plan, in combination with any Elective Deferrals the
Participant makes during the calendar year under any other plan maintained by
the Employer, equal or exceed the dollar limitation under Code §402(g). |
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(2) |
Distribution of Excess Deferrals. If a
Participant makes Section 401(k) Deferrals under this Plan during a calendar
year which exceed the dollar limitation under Code §402(g), the Participant
will receive a corrective distribution from the Plan of the Excess Deferrals
(plus allocable income) no later than April 15 of the following calendar
year. The amount which must be distributed as a correction of Excess
Deferrals for a calendar year equals the amount of Elective Deferrals the
Participant contributes in excess of the dollar limitation under Code §402(g)
during the calendar year to this Plan, and any other plan maintained by the
Employer, reduced by any corrective distribution of Excess Deferrals the
Participant receives during the calendar year from this Plan or other plan(s)
maintained by the Employer. Excess Deferrals that are distributed after April
15 are includible in the Participant’s gross income in both the taxable year
in which deferred and the taxable year in which distributed. |
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(i) |
Allocable gain or loss. A corrective
distribution of Excess Deferrals must include any allocable gain or loss for
the calendar year in which the Excess Deferrals are made. For this purpose,
allocable gain or loss on Excess Deferrals may be determined in any
reasonable manner, provided the manner used to determine allocable gain or
loss is applied uniformly and in a manner that is reasonably reflective of
the method used by the Plan for allocating income to Participants’ Accounts. |
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(ii) |
Coordination with other provisions. A
corrective distribution of Excess Deferrals made by April 15 of the following
calendar year may be made without consent of the Participant or the
Participant’s spouse, and without regard to any distribution
restrictions |
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applicable
under Article 8 or Article 9. A corrective distribution of Excess Deferrals
made by the appropriate April 15 also is not treated as a distribution for
purposes of applying the required minimum distribution rules under Article
10. |
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(iii) |
Coordination with corrective distribution of Excess Contributions. If
a Participant for whom a corrective distribution of Excess Deferrals is being
made received a previous corrective distribution of Excess Contributions to
correct the ADP Test for the Plan Year beginning with or within the calendar
year for which the Participant made the Excess Deferrals, the previous
corrective distribution of Excess Contributions is treated first as a
corrective distribution of Excess Deferrals to the extent necessary to
eliminate the Excess Deferral violation. The amount of the corrective
distribution of Excess Contributions which is required to correct the ADP
Test failure is reduced by the amount treated as a corrective distribution of
Excess Deferrals. |
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(3) |
Correction of Excess Deferrals under plans not maintained by the
Employer. The correction provisions under
subsections (1) and (2) above apply only if a Participant makes Excess
Deferrals under plans maintained by the Employer. However, if a Participant
has Excess Deferrals because the total Elective Deferrals for a calendar year
under all plans in which he/she participates, including plans that are not
maintained by the Employer, exceed the dollar limitation under Code §402(g),
the Participant may assign to this Plan any portion of the Excess Deferrals
made during the calendar year. The Participant must notify the Plan
Administrator in writing on or before March 1 of the following calendar year
of the amount of the Excess Deferrals to be assigned to this Plan. Upon
receipt of a timely notification, the Excess Deferrals assigned to this Plan
will be distributed (along with any allocable income or loss) to the
Participant in accordance with the corrective distribution provisions under
subsection (2) above. A Participant is deemed to notify the Plan
Administrator of Excess Deferrals to the extent such Excess Deferrals arise
only under this Plan and any other plan maintained by the Employer. |
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17.2 |
Nondiscrimination Testing of Section 401(k) Deferrals – ADP Test. Except as provided under Section 17.6 for Safe Harbor 401(k)
Plans, the Section 401(k) Deferrals made by Highly Compensated Employees must
satisfy the Actual Deferral Percentage Test (“ADP Test”) for each Plan Year.
The Plan Administrator shall maintain records sufficient to demonstrate
satisfaction of the ADP Test, including the amount of any QNECs or QMACs
included in such test, pursuant to subsection (c) below. If the Plan fails
the ADP Test for any Plan Year, the corrective provisions under subsection
(d) below will apply. |
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(a) |
ADP Test testing methods. For
Plan Years beginning on or after January 1, 1997, the ADP Test will be
performed using the Prior Year Testing Method or Current Year Testing Method,
as selected under Part 4F, #31 of the Agreement. If the Employer does not
select a testing method under Part 4F, #31 of the Agreement, the Plan will
use the Current Year Testing Method. Unless specifically precluded under
statute, regulations or other IRS guidance, the Employer may amend the
testing method designated under Part 4F for a particular Plan Year (subject
to the requirements under subsection (2) below) at any time through the end
of the 12-month period following the Plan Year for which the amendment is
effective. (For Plan Years beginning before January 1, 1997, the Current Year
Testing Method is deemed to have been in effect.) |
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(1) |
Prior Year Testing Method. Under the Prior
Year Testing Method, the Average Deferral Percentage (“ADP”) of the Highly
Compensated Employee Group (as defined in Section 17.7(e)) for the current
Plan Year is compared with the ADP of the Nonhighly Compensated Employee
Group (as defined in Section 17.7(f)) for the prior Plan Year. If the
Employer elects to use the Prior Year Testing Method under Part 4F of the
Agreement, the Plan must satisfy one of the following tests for each Plan
Year: |
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(i) |
The ADP of
the Highly Compensated Employee Group for the current Plan Year shall not
exceed 1.25 times the ADP of the Nonhighly Compensated Employee Group for the
prior Plan Year. |
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(ii) |
The ADP of
the Highly Compensated Employee Group for the current Plan Year shall not
exceed the percentage (whichever is less) determined by (A) adding 2
percentage points to the ADP of the Nonhighly Compensated Employee Group for
the prior Plan Year or (B) multiplying the ADP of the Nonhighly Compensated
Employee Group for the prior Plan Year by 2. |
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(2) |
Current Year Testing Method. Under the
Current Year Testing Method, the ADP of the Highly Compensated Employee Group
for the current Plan Year is compared to the ADP of the Nonhighly Compensated
Employee Group for the current Plan Year. If the Employer elects to use the
Current Year Testing Method under Part 4F of the Agreement, the Plan must
satisfy the ADP Test, as described in subsection (1) above, for each Plan
Year, but using the ADP of the Nonhighly |
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Compensated
Employee Group for the current Plan Year instead of for the prior Plan Year.
If the Employer elects to use the Current Year Testing Method, it may switch
to the Prior Year Testing Method only if the Plan satisfies the requirements
for changing to the Prior Year Testing Method as set forth in IRS Notice 98-1
(or superseding guidance). |
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(b) |
Special rule for first Plan Year. For the first Plan Year that the Plan permits Section 401(k)
Deferrals, the Employer may elect under Part 4F, #32.a. of the Agreement to
apply the ADP Test using the Prior Year Testing Method, by assuming the ADP
for the Nonhighly Compensated Employee Group is 3%. Alternatively, the
Employer may elect in Part 4F, #32.b. of the Agreement to use the Current
Year Testing Method using the actual data for the Nonhighly Compensated
Employee Group in the first Plan Year. This first Plan Year rule does not
apply if this Plan is a successor to a plan (as described in IRS Notice 98-1
or subsequent guidance) that included a 401(k) arrangement or the Plan is aggregated
for purposes of applying the ADP Test with another plan that included a
401(k) arrangement in the prior Plan Year. For subsequent Plan Years, the
testing method selected under Part 4F, #31 will apply. |
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(c) |
Use of QMACs and QNECs under the ADP Test. The
Plan Administrator may take into account all or any portion of QMACs and
QNECs (see Sections 17.7(g) and (h)) for purposes of applying the ADP Test.
QMACs and QNECs may not be included in the ADP Test to the extent such
amounts are included in the ACP Test for such Plan Year. QMACs and QNECs made
to another qualified plan maintained by the Employer may also be taken into
account, so long as the other plan has the same Plan Year as this Plan. To
include QNECs under the ADP Test, all Employer Nonelective Contributions,
including the QNECs, must satisfy Code §401(a)(4). In addition, the Employer
Nonelective Contributions, excluding any QNECs used in the ADP Test or ACP
Test, must also satisfy Code §401(a)(4). |
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(1) |
Timing of contributions. In order to be used
in the ADP Test for a given Plan Year, QNECs and QMACs must be made before
the end of the 12-month period immediately following the Plan Year for which
they are allocated. If the Employer is using the Prior Year Testing Method
(as described in subsection (a)(1) above), QMACs and QNECs taken into account
for the Nonhighly Compensated Employee Group must be allocated for the prior
Plan Year, and must be made no later than the end of the 12-month period
immediately following the end of such prior Plan Year. (See Section 7.4(a)
for rules regarding the appropriate Limitation Year for which such
contributions will be applied for purposes of the Annual Additions Limitation
under Code §415.) |
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(2) |
Double-counting limits. This paragraph
applies if, in any Plan Year beginning after December 31, 1998, the Prior
Year Testing Method is used to run the ADP Test and, in the prior Plan Year,
the Current Year Testing Method was used to run the ADP Test. If this
paragraph applies, the following contributions are disregarded in calculating
the ADP of the Nonhighly Compensated Employee Group for the prior Plan Year: |
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(i) |
All QNECs
that were included in either the ADP Test or ACP Test for the prior Plan
Year. |
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(ii) |
All QMACs,
regardless of how used for testing purposes in the prior Plan Year. |
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(iii) |
Any Section
401(k) Deferrals that were included in the ACP Test for the prior Plan Year. |
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For purposes
of applying the double-counting limits, if actual data of the Nonhighly Compensated
Employee Group is used for a first Plan Year described in subsection (b)
above, the Plan is still considered to be using the Prior Year Testing Method
for that first Plan Year. Thus, the double-counting limits do not apply if
the Prior Year Testing Method is used for the next Plan Year. |
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(3) |
Testing flexibility. The Plan Administrator
is expressly granted the full flexibility permitted by applicable Treasury
regulations to determine the amount of QMACs and QNECs used in the ADP Test.
QMACs and QNECs taken into account under the ADP Test do not have to be
uniformly determined for each Eligible Participant, and may represent all or
any portion of the QMACs and QNECs allocated to each Eligible Participant,
provided the conditions described above are satisfied. |
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(d) |
Correction of Excess Contributions. If the Plan fails the ADP Test for a Plan Year, the Plan
Administrator may use any combination of the correction methods under this
Section to correct the Excess Contributions under the Plan. (See Section
17.7(d) for the definition of Excess Contributions.) |
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(1) |
Corrective distribution of Excess Contributions. If
the Plan fails the ADP Test for a Plan Year, the Plan Administrator may, in
its discretion, distribute Excess Contributions (including any allocable
income or loss) no later than the last day of the following Plan Year to
correct the ADP |
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Test
violation. If the Excess Contributions are distributed more than 2½ 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 with respect to such
amounts. |
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(i) |
Amount to be distributed. In determining the
amount of Excess Contributions to be distributed to a Highly Compensated
Employee under this Section, Excess Contributions are first allocated equally
to the Highly Compensated Employee(s) with the largest dollar amount of
contributions taken into account under the ADP Test for the Plan Year in
which the excess occurs. The Excess Contributions allocated to such Highly
Compensated Employee(s) reduce the dollar amount of the contributions taken
into account under the ADP Test for such Highly Compensated Employee(s) until
all of the Excess Contributions are allocated or until the dollar amount of
such contributions for the Highly Compensated Employee(s) is reduced to the
next highest dollar amount of such contributions for any other Highly
Compensated Employee(s). If there are Excess Contributions remaining, the
Excess Contributions continue to be allocated in this manner until all of the
Excess Contributions are allocated. |
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(ii) |
Allocable gain or loss. A corrective
distribution of Excess Contributions must include any allocable gain or loss
for the Plan Year in which the excess occurs. For this purpose, allocable
gain or loss on Excess Contributions may be determined in any reasonable
manner, provided the manner used is applied uniformly and in a manner that is
reasonably reflective of the method used by the Plan for allocating income to
Participants’ Accounts. |
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(iii) |
Coordination with other provisions. A
corrective distribution of Excess Contributions made by the end of the Plan
Year following the Plan Year in which the excess occurs may be made without
consent of the Participant or the Participant’s spouse, and without regard to
any distribution restrictions applicable under Article 8 or Article 9. Excess
Contributions are treated as Annual Additions for purposes of Code §415 even
if distributed from the Plan. A corrective distribution of Excess
Contributions is not treated as a distribution for purposes of applying the
required minimum distribution rules under Article 10. |
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If a
Participant has Excess Deferrals for the calendar year ending with or within
the Plan Year for which the Participant receives a corrective distribution of
Excess Contributions, the corrective distribution of Excess Contributions is
treated first as a corrective distribution of Excess Deferrals. The amount of
the corrective distribution of Excess Contributions that must be distributed
to correct an ADP Test failure for a Plan Year is reduced by any amount
distributed as a corrective distribution of Excess Deferrals for the calendar
year ending with or within such Plan Year. |
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(iv) |
Accounting for Excess Contributions. Excess
Contributions are distributed from the following sources and in the following
priority: |
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(A) |
Section
401(k) Deferrals that are not matched; |
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(B) |
proportionately
from Section 401(k) Deferrals not distributed under (A) and related QMACs
that are included in the ADP Test; |
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(C) |
QMACs
included in the ADP Test that are not distributed under (B); and |
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(D) |
QNECs
included in the ADP Test. |
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(2) |
Making QMACs or QNECs. Regardless of any elections
under Part 4B, #18 or Part 4C, #22 of
the Agreement, the Employer may make additional QMACs or QNECs to the Plan on
behalf of the Nonhighly Compensated Employees in order to correct an ADP Test
violation. QMACs or QNECs may only be used to correct an ADP Test violation
if the Current Year Testing Method is selected under Part 4F, #31.b. of the
401(k) Agreement. Any QMACs contributed under this subsection (2) which are
not specifically authorized under Part 4B, #18 of the Agreement will be
allocated to all Eligible Participants who are Nonhighly Compensated
Employees as a uniform percentage of Section 401(k) Deferrals made during the
Plan Year. Any QNECs contributed under this subsection (2) which are not
specifically authorized under Part 4C, #22 of the Agreement will be allocated
to all Eligible Participants who are Nonhighly Compensated Employees as a
uniform percentage of Included Compensation. See Sections 2.3(c) and (e), as
applicable. |
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(3) |
Recharacterization. If Employee After-Tax
Contributions are permitted under Part 4D of the Agreement, the Plan
Administrator, in its sole discretion, may permit a Participant to treat any
Excess Contributions that are allocated to that Participant as if he/she
received the Excess Contributions as a distribution from the Plan and then
contributed such amounts to the Plan as Employee After-Tax Contributions. Any
amounts recharacterized under this subsection (3) will be 100% vested at all
times. Amounts may not be recharacterized by a Highly Compensated Employee to
the extent that such amount in combination with other Employee After-Tax
Contributions made by that Participant would exceed any limit on Employee
After-Tax Contributions under Part 4D of the Agreement. |
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Recharacterization
must occur no later than 2½ months after the last day of the Plan Year in
which such Excess Contributions arise 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 taxable year in
which the Participant would have received such amounts in cash had he/she not
deferred such amounts into the Plan. |
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(e) |
Adjustment of deferral rate for Highly Compensated
Employees. The Employer may suspend (or
automatically reduce the rate of) Section 401(k) Deferrals for the Highly
Compensated Employee Group, to the extent necessary to satisfy the ADP Test
or to reduce the margin of failure. A suspension or reduction shall not
affect Section 401(k) Deferrals already contributed by the Highly Compensated
Employees for the Plan Year. As of the first day of the subsequent Plan Year,
Section 401(k) Deferrals shall resume at the levels stated in the Salary
Reduction Agreements of the Highly Compensated Employees. |
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17.3 |
Nondiscrimination Testing of Employer Matching Contributions and
Employee After-Tax Contributions – ACP Test. Except as provided under Section 17.6 for Safe Harbor 401(k)
Plans, if the Employer elects to provide Employer Matching Contributions
under Part 4B of the Agreement or to permit Employee After-Tax Contributions
under Part 4D of the Agreement, the Employer Matching Contributions
(including QMACs that are not included in the ADP Test) and/or Employee
After-Tax Contributions made for Highly Compensated Employees must satisfy
the Actual Contribution Percentage Test (“ACP Test”) for each Plan Year. The
Plan Administrator shall maintain records sufficient to demonstrate
satisfaction of the ACP Test, including the amount of any Section 401(k)
Deferrals or QNECs included in such test, pursuant to subsection (c) below.
If the Plan fails the ACP Test for any Plan Year, the correction provisions
under subsection (d) below will apply. |
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(a) |
ACP Test testing methods. For
Plan Years beginning on or after January 1, 1997, the ACP Test will be
performed using the Prior Year Testing Method or the Current Year Testing
Method, as selected under Part 4F, #31 of the Agreement. If the Employer does
not select a testing method under Part 4F, #31 of the Agreement, the Plan
will be deemed to use the Current Year Testing Method. For Plan Years
beginning before January 1, 1997, the Current Year Testing Method is deemed
to have been in effect. If the Plan is a Safe Harbor 401(k) Plan, as
designated under Part 4E of the Agreement, the Current Year Testing Method
must be selected. |
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(1) |
Prior Year Testing Method. Under the Prior
Year Testing Method, the Average Contribution Percentage (“ACP”) of the Highly
Compensated Employee Group (as defined in Section 17.7(e)) for the current
Plan Year is compared with the ACP of the Nonhighly Compensated Employee
Group (as defined in Section 17.7(f)) for the prior Plan Year. If the
Employer elects to use the Prior Year Testing Method under Part 4F of the
Agreement, the Plan must satisfy one of the following tests for each Plan
Year: |
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(i) |
The ACP of
the Highly Compensated Employee Group for the current Plan Year shall not
exceed 1.25 times the ACP of the Nonhighly Compensated Employee Group for the
prior Plan Year. |
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(ii) |
The ACP of
the Highly Compensated Employee Group for the current Plan Year shall not
exceed the percentage (whichever is less) determined by (A) adding 2
percentage points to the ACP of the Nonhighly Compensated Employee Group for
the prior Plan Year or (B) multiplying the ACP of the Nonhighly Compensated
Employee Group for the prior Plan Year by 2. |
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(2) |
Current Year Testing Method. Under the
Current Year Testing Method, the ACP of the Highly Compensated Employee Group
for the current Plan Year is compared to the ACP of the Nonhighly Compensated
Employee Group for the current Plan Year. If the Employer elects to use the
Current Year Testing Method under Part 4F of the Agreement, the Plan must
satisfy the ACP Test, as described in subsection (1) above, for each Plan
Year, but using the ACP of the Nonhighly Compensated Employee Group for the
current Plan Year instead of for the prior Plan Year. If the Employer elects
to use the Current Year Testing Method, it may switch to the Prior Year
Testing |
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Method only
if the Plan satisfies the requirements for changing to the Prior Year Testing
Method as set forth in IRS Notice 98-1 (or superseding guidance). |
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(b) |
Special rule for first Plan Year. For
the first Plan Year that the Plan includes either an Employer Matching
Contribution formula or permits Employee After-Tax Contributions, the
Employer may elect under Part 4F, #33.a. of the Agreement to apply the ACP
Test using the Prior Year Testing Method, by assuming the ACP for the
Nonhighly Compensated Employee Group is 3%. Alternatively, the Employer may
elect in Part 4F, #33.b. of the Agreement to use the Current Year Testing
Method using the actual data for the Nonhighly Compensated Employee Group in
the first Plan Year. This first Plan Year rule does not apply if this Plan is
a successor to a plan that was subject to the ACP Test or if the Plan is
aggregated for purposes of applying the ACP Test with another plan that was subject
to the ACP test in the prior Plan Year. For subsequent Plan Years, the
testing method selected under Part 4F, #31 will apply. |
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(c) |
Use of Section 401(k) Deferrals and QNECs under the ACP Test. The Plan Administrator may take into account all or any portion
of Section 401(k) Deferrals and QNECs (see Section 17.7(h)) made to this
Plan, or to another qualified plan maintained by the Employer, for purposes
of applying the ACP Test. QNECs may not be included in the ACP Test to the
extent such amounts are included in the ADP Test for such Plan Year. Section
401(k) Deferrals and QNECs made to another qualified plan maintained by the
Employer may also be taken into account, so long as the other plan has the
same Plan Year as this Plan. To include Section 401(k) Deferrals under the
ACP Test, the Plan must satisfy the ADP Test taking into account all Section
401(k) Deferrals, including those used under the ACP Test, and taking into
account only those Section 401(k) Deferrals not included in the ACP Test. To include
QNECs under the ACP Test, all Employer Nonelective Contributions, including
the QNECs, must satisfy Code §401(a)(4). In addition, the Employer
Nonelective Contributions, excluding any QNECs used in the ADP Test or ACP
Test, must also satisfy Code §401(a)(4). QNECs may only be used to correct an
ACP Test violation if the Current Year Testing Method is selected under Part
4F, #31.b. of the 401(k) Agreement. |
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(1) |
Timing of contributions. In order to be used
in the ACP Test for a given Plan Year, QNECs must be made before the end of
the 12-month period immediately following the Plan Year for which they are
allocated. If the Employer is using the Prior Year Testing Method (as
described in subsection (a)(1) above), QNECs taken into account for the Nonhighly
Compensated Employee Group must be allocated for the prior Plan Year, and
must be made no later than the end of the 12-month period immediately
following such Plan Year. (See Section 7.4(a) for rules regarding the
appropriate Limitation Year for which such contributions will be applied for
purposes of the Annual Additions Limitation under Code §415.) |
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(2) |
Double-counting limits. This paragraph
applies if, in any Plan Year beginning after December 31, 1998, the Prior
Year Testing Method is used to run the ACP Test and, in the prior Plan Year,
the Current Year Testing Method was used to run the ACP Test. If this
paragraph applies, the following contributions are disregarded in calculating
the ACP of the Nonhighly Compensated Employee Group for the prior Plan Year: |
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(i) |
All QNECs
that were included in either the ADP Test or ACP Test for the prior Plan
Year. |
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(ii) |
All Section
401(k) Deferrals, regardless of how used for testing purposes in the prior
Plan Year. |
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(iii) |
Any QMACs
that were included in the ADP Test for the prior Plan Year. |
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For purposes
of applying the double-counting limits, if actual data of the Nonhighly
Compensated Employee Group is used for a first Plan Year described in
subsection (b) above, the Plan is still considered to be using the Prior Year
Testing Method for that first Plan Year. Thus, the double-counting limits do
not apply if the Prior Year Testing Method is used for the next Plan Year. |
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(3) |
Testing flexibility. The Plan Administrator
is expressly granted the full flexibility permitted by applicable Treasury
regulations to determine the amount of Section 401(k) Deferrals and QNECs
used in the ACP Test. Section 401(k) Deferrals and QNECs taken into account
under the ACP Test do not have to be uniformly determined for each Eligible
Participant, and may represent all or any portion of the Section 401(k)
Deferrals and QNECs allocated to each Eligible Participant, provided the
conditions described above are satisfied. For Plan Years beginning after the
first Plan Year. |
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(d) |
Correction of Excess Aggregate Contributions. If the Plan fails the ACP Test for a Plan Year, the Plan
Administrator may use any combination of the correction methods under this
Section to correct the Excess |
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Aggregate
Contributions under the Plan. (See Section 17.7(c) for the definition of
Excess Aggregate Contributions.) |
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(1) |
Corrective distribution of Excess Aggregate Contributions. If
the Plan fails the ACP Test for a Plan Year, the Plan Administrator may, in
its discretion, distribute Excess Aggregate Contributions (including any
allocable income or loss) no later than the last day of the following Plan
Year to correct the ACP Test violation. Excess Aggregate Contributions will
be distributed only to the extent they are vested under Article 4, determined
as of the last day of the Plan Year for which the contributions are made to
the Plan. To the extent Excess Aggregate Contributions are not vested, the
Excess Aggregate Contributions, plus any income and minus any loss allocable
thereto, shall be forfeited in accordance with Section 5.3(d)(1). If the
Excess Aggregate Contributions are distributed more than 2½ 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 with respect to such amounts. |
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(i) |
Amount to be distributed. In determining the
amount of Excess Aggregate Contributions to be distributed to a Highly
Compensated Employee under this Section, Excess Aggregate Contributions are
first allocated equally to the Highly Compensated Employee(s) with the
largest dollar amount of contributions taken into account under the ACP Test
for the Plan Year in which the excess occurs. The Excess Aggregate
Contributions allocated to such Highly Compensated Employee(s) reduce the
dollar amount of the contributions taken into account under the ACP Test for
such Highly Compensated Employee(s) until all of the Excess Aggregate
Contributions are allocated or until the dollar amount of such contributions
for the Highly Compensated Employee(s) is reduced to the next highest dollar
amount of such contributions for any other Highly Compensated Employee(s). If
there are Excess Aggregate Contributions remaining, the Excess Aggregate
Contributions continue to be allocated in this manner until all of the Excess
Aggregate Contributions are allocated. |
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(ii) |
Allocable gain or loss. A corrective
distribution of Excess Aggregate Contributions must include any allocable
gain or loss for the Plan Year in which the excess occurs. For this purpose,
allocable gain or loss on Excess Aggregate Contributions may be determined in
any reasonable manner, provided the manner used is applied uniformly and in a
manner that is reasonably reflective of the method used by the Plan for
allocating income to Participants’ Accounts. |
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(iii) |
Coordination with other provisions. A
corrective distribution of Excess Aggregate Contributions made by the end of
the Plan Year following the Plan Year in which the excess occurs may be made
without consent of the Participant or the Participant’s spouse, and without
regard to any distribution restrictions applicable under Article 8 or Article
9. Excess Aggregate Contributions are treated as Annual Additions for purposes
of Code §415 even if distributed from the Plan. A corrective distribution of
Excess Aggregate Contributions is not treated as a distribution for purposes
of applying the required minimum distribution rules under Article 10. |
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(iv) |
Accounting for Excess Aggregate Contributions. Excess
Aggregate Contributions are distributed from the following sources and in the
following priority: |
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(A) |
Employee
After-Tax Contributions that are not matched; |
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(B) |
proportionately
from Employee After-Tax Contributions not distributed under (A) and related
Employer Matching Contributions that are included in the ACP Test; |
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(C) |
Employer
Matching Contributions included in the ACP Test that are not distributed
under (B); |
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(D) |
Section
401(k) Deferrals included in the ACP Test that are not matched; |
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(E) |
proportionately
from Section 401(k) Deferrals included in the ACP Test that are not
distributed under (D) and related Employer Matching Contributions that are
included in the ACP Test and not distributed under (B) or (C); and |
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(F) |
QNECs
included in the ACP Test. |
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(2) |
Making QMACs or QNECs. Regardless of any
elections under Part 4B, #18 or Part 4C, #22 of the Agreement, the Employer
may make additional QMACs and/or QNECs to the Plan on behalf of |
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the
Nonhighly Compensated Employees in order to correct an ACP Test violation to
the extent such amounts are not used in the ADP Test. Any QMACs contributed
under this subsection (2) which are not specifically authorized under Part
4B, #18 of the Agreement will be allocated to all Eligible Participants who
are Nonhighly Compensated Employees as a uniform percentage of Section 401(k)
Deferrals made during the Plan Year. Any QNECs contributed under this subsection
(2) which are not specifically authorized under Part 4C, #22 of the Agreement
will be allocated to all Eligible Participants who are Nonhighly Compensated
Employees as a uniform percentage of Included Compensation. See Sections
2.3(c) and (e), as applicable. |
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(e) |
Adjustment of contribution rate for Highly Compensated Employees. The Employer may suspend (or automatically reduce the rate of)
Employee After-Tax Contributions for the Highly Compensated Employee Group,
to the extent necessary to satisfy the ACP Test or to reduce the margin of
failure. A suspension or reduction shall not affect Employee After-Tax
Contributions already contributed by the Highly Compensated Employees for the
Plan Year. As of the first day of the subsequent Plan Year, Employee
After-Tax Contributions shall resume at the levels elected by the Highly
Compensated Employees. |
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17.4 |
Multiple Use Test. If both
an ADP Test and an ACP Test are run for the Plan Year, and the Plan does not
pass the 1.25 test under either the ADP Test or the ACP Test, the Plan must
satisfy a special Multiple Use Test, unless such Multiple Use Test is
repealed or modified by statute, or other IRS guidance. |
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(a) |
Aggregate Limit. Under the
Multiple Use Test, the sum of the ADP and the ACP for the Highly Compensated
Employee Group may not exceed the Plan’s Aggregate Limit. For this purpose,
the ADP and ACP of the Highly Compensated Employees are determined after any
corrections required to meet the ADP and ACP tests and are deemed to be the
maximum permitted under such tests for the Plan Year. In applying the
Multiple Use Test, the Plan’s Aggregate Limit is the sum of (1) and (2): |
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(1) |
1.25 times
the greater of: (i) the ADP of the Nonhighly Compensated Employee Group or
(ii) the ACP of the Nonhighly Compensated Employee Group; and |
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(2) |
the lesser
of 2 times or 2 plus the lesser of: (i) the ADP of the Nonhighly Compensated
Employee Group or (ii) the ACP of the Nonhighly Compensated Employee Group. |
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Alternatively,
if it results in a larger amount, the Aggregate Limit is the sum of (3) and
(4): |
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(3) |
1.25 times
the lesser of: (i) the ADP of the Nonhighly Compensated Employee Group or
(ii) the ACP of the Nonhighly Compensated Employee Group; and |
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(4) |
the lesser
of 2 times or 2 plus the greater of: (i) the ADP of the Nonhighly Compensated
Employee Group or (ii) the ACP of the Nonhighly Compensated Employee Group. |
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The
Aggregate Limit is calculated using the ADP and ACP of the Nonhighly
Compensated Employee Group that is used in performing the ADP Test and ACP
Test for the Plan Year. Thus, if the Prior Year Testing Method is being used,
the Aggregate Limit is calculated by using the applicable percentage of the
Nonhighly Compensated Employee Group for the prior Plan Year. If the Current
Year Testing Method is being used, the Aggregate Limit is calculated by using
the applicable percentage of the Nonhighly Compensated Employee Group for the
current Plan Year. |
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(b) |
Correction of the Multiple Use Test. If the Multiple Use Test is not passed, the following
corrective action will be taken. |
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(1) |
Corrective distributions. The Plan will make
corrective distributions (or additional corrective distributions, if
corrective distributions are already being made to correct a violation of the
ADP Test or ACP Test), to the extent other corrective action is not taken or
such other action is not sufficient to completely eliminate the Multiple Use
Test violation. Such corrective distributions may be determined as if they
were being made to correct a violation of the ADP Test or a violation of the
ACP Test, or a combination of both, as determined by the Plan Administrator.
Any corrective distribution that is treated as if it were correcting a
violation of the ADP Test will be determined under the rules described in
Section 17.2(d). Any corrective distribution that is treated as if it were
correcting a violation of the ACP Test will be determined under the rules
described in Section 17.3(d). |
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(2) |
Making QMACs or QNECs. Regardless of any
elections under Part 4B, #18 or Part 4C, #22 of the Agreement, the Employer
may make additional QMACs or QNECs, so that the resulting ADP and/or ACP of
the Nonhighly Compensated Employee Group is increased to the extent necessary
to satisfy the Multiple Use Test. Any QMACs contributed under this subsection
(2) which are not specifically authorized under Part 4B, #18 of the Agreement
will be allocated to all Eligible |
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Participants
who are Nonhighly Compensated Employees as a uniform percentage of Section
401(k) Deferrals made during the Plan Year. Any QNECs contributed under this
subsection (2) which are not specifically authorized under Part 4C, #22 of
the Agreement will be allocated to all Eligible Participants who are
Nonhighly Compensated Employees as a uniform percentage of Included
Compensation. See Sections 2.3(c) and (e), as applicable. |
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17.5 |
Special Testing Rules. This
Section describes special testing rules that apply to the ADP Test or the ACP
Test. In some cases, the special testing rule is optional, in which case, the
election to use such rule is solely within the discretion of the Plan
Administrator. |
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(a) |
Special rule for determining ADP and ACP of Highly Compensated
Employee Group. When calculating
the ADP or ACP of the Highly Compensated Employee Group for any Plan Year, a
Highly Compensated Employee’s Section 401(k) Deferrals, Employee After-Tax
Contributions, and Employer Matching Contributions under all qualified plans
maintained by the Employer are taken into account as if such contributions
were made to a single plan. If the plans have different Plan Years, the
contributions made in all Plan Years that end in the same calendar year are
aggregated under this paragraph. This aggregation rule does not apply to
plans that are required to be disaggregated under Code §410(b). |
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(b) |
Aggregation of plans. When
calculating the ADP Test and the ACP Test, plans that are permissively
aggregated for coverage and nondiscrimination testing purposes are treated as
a single plan. This aggregation rule applies to determine the ADP or ACP of
both the Highly Compensated Employee Group and the Nonhighly Compensated
Employee Group. Any adjustments to the ADP of the Nonhighly Compensated
Employee Group for the prior year will be made in accordance with Notice 98-1
and any superseding guidance, unless the Employer has elected in Part 4F,
#31.b. of the 401(k) Agreement to use the Current Year Testing Method.
Aggregation described in this paragraph is not permitted unless all plans
being aggregated have the same Plan Year and use the same testing method for
the applicable test. |
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(c) |
Disaggregation of plans. |
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(1) |
Plans covering Union Employees and non-Union Employees. If
the Plan covers Union Employees and non-Union Employees, the Plan is
mandatorily disaggregated for purposes of applying the ADP Test and the ACP
Test into two separate plans, one covering the Union Employees and one
covering the non-Union Employees. A separate ADP Test must be applied for
each disaggregated portion of the Plan in accordance with applicable Treasury
regulations. A separate ACP Test must be applied to the disaggregated portion
of the Plan that covers the non-Union Employees. The disaggregated portion of
the Plan that includes the Union Employees is deemed to pass the ACP Test. |
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(2) |
Otherwise excludable Employees. If the
minimum coverage test under Code §410(b) is performed by disaggregating
“otherwise excludable Employees” (i.e., Employees who have not satisfied the
maximum age 21 and one Year of Service eligibility conditions permitted under
Code §410(a)), then the Plan is treated as two separate plans, one benefiting
the otherwise excludable Employees and the other benefiting Employees who
have satisfied the maximum age and service eligibility conditions. If such
disaggregation applies, the following operating rules apply to the ADP Test
and the ACP Test. |
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(i) |
For Plan
Years beginning before January 1, 1999, the ADP Test and the ACP Test are
applied separately for each disaggregated plan. If there are no Highly
Compensated Employees benefiting under a disaggregated plan, then no ADP Test
or ACP Test is required for such plan. |
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(ii) |
For Plan
Years beginning after December 31, 1998, instead of the rule under subsection
(i), only the disaggregated plan that benefits the Employees who have
satisfied the maximum age and service eligibility conditions permitted under
Code §410(a) is subject to the ADP Test and the ACP Test. However, any Highly
Compensated Employee who is benefiting under the disaggregated plan that
includes the otherwise excludable Employees is taken into account in such
tests. The Employer may elect to apply the rule in subsection (i) instead. |
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(3) |
Corrective action for disaggregated plans. Any
corrective action authorized by this Article may be determined separately
with respect to each disaggregated portion of the Plan. A corrective action
taken with respect to a disaggregated portion of the Plan need not be
consistent with the method of correction (if any) used for another
disaggregated portion of the Plan. In the case of a Nonstandardized
Agreement, to the extent the Agreement authorizes the Employer to make
discretionary QNECs or discretionary QMACs, the Employer is expressly
permitted to designate |
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such QNECs
or QMACs as allocable only to Eligible Participants in a particular
disaggregated portion of the Plan. |
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(d) |
Special rules for the Prior Year Testing Method. If the Plan uses the Prior Year Testing Method, and an election
made under subsection (b) or (c) above is inconsistent with the election made
in the prior Plan Year, the plan coverage change rules described in IRS
Notice 98-1 (or other successor guidance) will apply in determining the ADP
and ACP for the Nonhighly Compensated Employee Group. |
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17.6 |
Safe Harbor 401(k) Plan Provisions. For Plan Years beginning after December 31, 1998, the ADP Test
described in Section 17.2 is deemed to be satisfied for any Plan Year in
which the Plan qualifies as a Safe Harbor 401(k) Plan. In addition, if
Employer Matching Contributions are made for such Plan Year, the ACP Test is
deemed satisfied with respect to such contributions if the conditions of
subsection (c) below are satisfied. To qualify as a Safe Harbor 401(k) Plan,
the requirements under this Section 17.6 must be satisfied for the entire
Plan Year. This Section contains the rules that must be met for the Plan to
qualify as a Safe Harbor 401(k) Plan. |
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Part 4E of
the Agreement allows the Employer to designate the manner in which it will comply
with the safe harbor requirements. If the Employer wishes to designate the
Plan as a Safe Harbor 401(k) Plan, it should complete Part 4E of the
Agreement. The safe harbor provisions described in this Section are not
applicable unless the Plan is identified as a Safe Harbor 401(k) Plan under
Part 4E. The election under Part 4E to be a Safe Harbor 401(k) Plan is
effective for all Plan Years beginning with the Effective Date of the Plan
(or January 1, 1999, if later) unless the Employer elects otherwise under
Appendix B-5.b. of the Agreement. In addition, to qualify as a Safe Harbor
401(k) Plan, the Current Year Testing Method (as described in Section
17.3(a)(2)) must be elected under Part 4F, #31 of the Agreement. (See Section
20.7 for rules regarding the application of the Safe Harbor 401(k) Plan
provisions for Plan Years beginning before the date this Plan is adopted.) |
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(a) |
Safe harbor conditions. To
qualify as a Safe Harbor 401(k) Plan, the Plan must satisfy the requirements
under subsections (1), (2), (3) and (4) below. |
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(1) |
Safe Harbor Contribution. The Employer must
provide a Safe Harbor Matching Contribution or a Safe Harbor Nonelective
Contribution under the Plan. The Employer must designate the type and amount
of the Safe Harbor Contribution under Part 4E of the Agreement. The Safe
Harbor Contribution must be made to the Plan no later than 12 months
following the close of the Plan Year for which it is being used to qualify
the Plan as a Safe Harbor 401(k) Plan. |
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The Employer
may elect under Part 4E, #30 of the Agreement to provide the Safe Harbor
Contribution to all Eligible Participants or only to Eligible Participants
who are Nonhighly Compensated Employees. Alternatively, the Employer may
elect under Part 4E, #30.c. to provide the Safe Harbor Contribution to all
Nonhighly Compensated Employees who are Eligible Participants and all Highly
Compensated Employees who are Eligible Participants but who are not Key
Employees. This permits a Plan providing the Safe Harbor Nonelective
Contribution to use such amounts to satisfy the top-heavy minimum
contribution requirements under Article 16. |
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In
determining who is an Eligible Participant for purposes of the Safe Harbor
Contribution, the eligibility conditions applicable to Section 401(k)
Deferrals under Part 1, #5 of the Agreement
apply. However, the Employer may elect under Part 4E, #30.d. to apply
a one Year of Service (as defined in Section 1.4(b)) and an age 21
eligibility condition for the Safe Harbor Contribution, regardless of the
eligibility conditions selected for Section 401(k) Deferrals under Part 1, #5
of the Agreement. Unless elected otherwise under Part 2, #8.f., column (1) of
the Nonstandardized Agreement, the special eligibility rule under Part 4E,
#30.d. will be applied as if the Employer elected under Part 2, #7.a., column
(1) and Part 2, #8.a., column (1) of the Agreement to use semi-annual Entry
Dates following completion of the minimum age and service conditions. If
different eligibility conditions are selected for the Safe Harbor
Contribution, additional testing requirements may apply in accordance with
IRS Notice 2000-3. |
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(i) |
Safe Harbor Matching Contribution. The
Employer may elect under Part 4E, #27 of the Agreement to make the Safe
Harbor Matching Contribution with respect to each Eligible Participant’s
applicable contributions. For this purpose, an Eligible Participant’s
applicable contributions are the total Section 401(k) Deferrals and Employee
After-Tax Contributions the Eligible Participant makes under the Plan.
However, the Employer may elect under Part 4E, #27.d. to exclude Employee
After-Tax Contributions from the definition of applicable contributions for
purposes of applying the Safe Harbor Matching Contribution formula. |
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The Safe
Harbor Matching Contribution may be made under a basic formula or an enhanced
formula. The basic formula under Part 4E, #27.a. provides an Employer
Matching Contribution that equals: |
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(A) |
100% of the
amount of a Participant’s applicable contributions that do not exceed 3% of
the Participant’s Included Compensation, plus |
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(B) |
50% of the
amount of a Participant’s applicable contributions that exceed 3%, but do not
exceed 5%, of the Participant’s Included Compensation. |
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The enhanced
formula under Part 4E, #27.b. provides an Employer Matching Contribution that
is not less, at each level of applicable contributions, than the amount
required under the basic formula. Under the enhanced formula, the rate of
Employer Matching Contributions may not increase as an Employee’s rate of
applicable contributions increase. |
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The Plan
will not fail to be a Safe Harbor 401(k) Plan merely because Highly
Compensated Employees also receive a contribution under the Plan. However, an
Employer Matching Contribution will not satisfy this Section if any Highly
Compensated Employee is eligible for a higher rate of Employer Matching
Contribution than is provided for any Nonhighly Compensated Employee who has
the same rate of applicable contributions. |
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In applying
the Safe Harbor Matching Contribution formula under Part 4E, #27 of the
Agreement, the Employer may elect under Part 4E, #27.c.(1) to determine the
Safe Harbor Matching Contribution on the basis of all applicable
contributions a Participant makes during the Plan Year. Alternatively, the
Employer may elect under Part 4E, #27.c.(2) – (4) to determine the Safe
Harbor Matching Contribution on a payroll, monthly, or quarterly basis. If
the Employer elects to use a period other than the Plan Year, the Safe Harbor
Matching Contribution with respect to a payroll period must be deposited into
the Plan by the last day of the Plan Year quarter following the Plan Year
quarter for which the applicable contributions are made. |
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In addition
to the Safe Harbor Matching Contribution, an Employer may elect under Part 4B
of the Agreement to make Employer Matching Contributions that are subject to
the normal vesting schedule and distribution rules applicable to Employer
Matching Contributions. See subsection (c) below for a discussion of the
effect of such additional Employer Matching Contributions on the ACP Test. |
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The Employer
may amend the Plan during the Plan Year to reduce or eliminate the Safe
Harbor Matching Contribution elected under Part 4E, #27 of the Agreement,
provided a supplemental notice is given to all Eligible Participants
explaining the consequences and effective date of the amendment, and that
such Eligible Participants have a reasonable opportunity (including a reasonable
period) to change their Section 401(k) Deferral and/or Employee After-Tax
Contribution elections, as applicable. The amendment reducing or eliminating
the Safe Harbor Matching Contribution must be effective no earlier than the
later of: (A) 30 days after Eligible Participants are given the supplemental
notice or (B) the date the amendment is adopted. Eligible Participants must
be given a reasonable opportunity (and reasonable period) prior to the
reduction or elimination of the Safe Harbor Matching Contribution to change
their Section 401(k) Deferral or Employee After-Tax Contribution elections,
as applicable. If the Employer amends the Plan to reduce or eliminate the
Safe Harbor Matching Contribution, the Plan is subject to the ADP Test and
ACP Test for the entire Plan Year. |
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(ii) |
Safe Harbor Nonelective Contribution. The
Employer may elect under Part 4E, #28 of the Agreement to make a Safe Harbor
Nonelective Contribution of at least 3% of Included Compensation. The
Employer may elect under Part 4E, #28.b. to retain discretion to increase the
amount of the Safe Harbor Nonelective Contribution in excess of the
percentage designated under Part 4E, #28. In addition, the Employer may
provide for additional discretionary Employer Nonelective Contributions under
Part 4C of the Agreement (in addition to the Safe Harbor Contribution under
this Section) which are subject to the normal vesting schedule and
distribution rules applicable to Employer Nonelective Contributions. |
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(A) |
Supplemental notice. The Employer may elect
under Part 4E, #28.a. of the Agreement to provide the Safe Harbor Nonelective
Contribution authorized under Part 4E, #28 only if the Employer provides a
supplemental notice to Participants indicating its intention to provide such
Safe Harbor Nonelective Contribution. If Part 4E, #28.a. is selected, to
qualify as a Safe Harbor 401(k) |
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Plan under
Part 4E, the Employer must notify its Eligible Employees in the annual notice
described in subsection (4) below that the Employer may provide the Safe Harbor Nonelective
Contribution authorized under Part 4E, #28 of the Agreement and that a
supplemental notice will be provided at least 30 days prior to the last day
of the Plan Year if the Employer decides to make the Safe Harbor Nonelective
Contribution. The supplemental notice indicating the Employer’s intention to
make the Safe Harbor Nonelective Contribution must be provided no later than
30 days prior to the last day of the Plan Year for the Plan to qualify as a
Safe Harbor 401(k) Plan. If the Employer selects Part 4E, #28.a. of the
Agreement but does not provide the supplemental notice in accordance with
this paragraph, the Employer is not obligated to make such contribution and
the Plan does not qualify as a Safe Harbor 401(k) Plan. The Plan will qualify
as a Safe Harbor 401(k) Plan for subsequent Plan Years if the appropriate
notices are provided for such years. |
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(B) |
Separate Plan. The Employer may elect under
Part 4E, #28.c. of the Agreement to provide the Employer Nonelective
Contribution under another Defined Contribution Plan maintained by the
Employer. The Employer Nonelective Contribution under such other plan must
satisfy the conditions under this Section 17.6 for this Plan to qualify as a
Safe Harbor 401(k) Plan. Under the Standardized Agreement, the other plan
designated under Part 4E, #28.c. must be a Paired Plan as defined in Section
22.132. |
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(I) |
Profit sharing plan Agreement. If the Plan
designated under Part 4E, #28.c. is a profit sharing plan Agreement under
this Prototype Plan, the Employer must select Part 4, #12.f. under the profit
sharing plan Nonstandardized Agreement or Part 4, #12.e. under the profit
sharing plan Standardized Agreement, as applicable. The Employer may elect to
provide other Employer Contributions under Part 4, #12 of the profit sharing
plan Agreement, however, the first amounts allocated under the profit sharing
plan Agreement will be the Safe Harbor Nonelective Contribution required
under the 401(k) plan Agreement. Any Employer Contributions designated under
Part 4, #12 of the profit sharing plan Agreement are in addition to the Safe
Harbor Contribution required under the 401(k) plan Agreement. (If the only
Employer Contribution to be made under the profit sharing plan Agreement is
the Safe Harbor Nonelective Contribution, no other selection need be
completed under Part 4 of the profit sharing plan Agreement (other than Part
4, #12.f. of the Nonstandardized Agreement or Part 4, #12.e. of the
Standardized Agreement, as applicable).) |
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If the
Employer elects to provide the Safe Harbor Nonelective Contribution under the
profit sharing plan Agreement, the Employer must select either the Pro Rata
Allocation Method under Part 4, #13.a. or the Permitted Disparity Method
under Part 4, #13.b. of the profit sharing plan Agreement. If the Employer
elects the Pro Rata Allocation Method, the first amounts allocated under the
Pro Rata Allocation Method will be deemed to be the Safe Harbor Nonelective
Contribution as required under the 401(k) plan Agreement. To the extent
required under the 401(k) plan Agreement, such amounts are subject to the
conditions for Safe Harbor Nonelective Contributions described in subsections
(2) – (4) below, without regard to any contrary elections under the
Agreement. |
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If the
Employer elects the Permitted Disparity Method, the Safe Harbor Nonelective
Contribution required under the 401(k) plan Agreement will be allocated
before applying the Permitted Disparity Method of allocation. To the extent
required under the 401(k) plan Agreement, such amounts are subject to the
conditions for Safe Harbor Nonelective Contributions described in subsections
(2) – (4) below without regard to any contrary elections under the Agreement.
If additional amounts are contributed under the profit sharing plan
Agreement, such amounts will be allocated under the Permitted Disparity
Method. The Safe Harbor Nonelective Contribution may |
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not be taken
into account in applying the Permitted Disparity Method of allocation. |
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(II) |
Money purchase plan Agreement. If the Plan
designated under Part 4E, #28.c. is a money purchase plan Agreement under
this Prototype Plan, the Employer must select Part 4, #12.f. under the money
purchase plan Nonstandardized Agreement or Part 4, #12.d. under the money
purchase plan Standardized Agreement, as applicable. The Employer may elect
to provide other Employer Contributions under Part 4, #12 of the money
purchase plan Agreement, however, the first amounts allocated under the money
purchase plan Agreement will be the Safe Harbor Nonelective Contribution
required under the 401(k) plan Agreement. Any Employer Contributions
designated under Part 4, #12 of the money purchase plan Agreement are in
addition to the Safe Harbor Contribution. (If the only Employer Contribution
to be made under the money purchase plan Agreement is the Safe Harbor
Nonelective Contribution, no other need be completed under Part 4 of the
money purchase plan Agreement (other than Part 4, #12.f. of the
Nonstandardized Agreement or Part 4, #12.d. of the Standardized Agreement, as
applicable).) |
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If the
Employer elects to make a Safe Harbor Contribution under the money purchase
plan Agreement, the first amounts allocated under the Plan will be deemed to
be the Safe Harbor Nonelective Contribution as required under the 401(k) plan
Agreement. Such amounts will be allocated equally to all Eligible
Participants as defined under the 401(k) plan Agreement. To the extent
required under the 401(k) plan Agreement, such amounts are subject to the
conditions for Safe Harbor Nonelective Contributions described in subsections
(2) – (4) below, without regard to any contrary elections under the
Agreement. If the Employer elects the Permitted Disparity Method of
contribution, the Safe Harbor Nonelective Contribution required under the
401(k) plan Agreement will be allocated before applying the Permitted
Disparity Method. The Safe Harbor Nonelective Contribution may not be taken
into account in applying the Permitted Disparity Method of contribution. |
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(C) |
Elimination of Safe Harbor Nonelective Contribution. The
Employer may amend the Plan during the Plan Year to reduce or eliminate the
Safe Harbor Nonelective Contribution elected under Part 4E of the Agreement.
The Employer must notify all Eligible Participants of the amendment and must
provide each Eligible Participants with a reasonable opportunity (including a
reasonable period) to change their Section 401(k) Deferral and/or Employee
After-Tax Contribution elections, as applicable. The amendment reducing or
eliminating the Safe Harbor Nonelective Contribution must be effective no
earlier than the later of: (A) 30 days after Eligible Participants are
notified of the amendment or (B) the date the amendment is adopted. If the
Employer reduces or eliminates the Safe Harbor Nonelective Contribution
during the Plan Year, the Plan is subject to the ADP Test (and ACP Test, if
applicable) for the entire Plan Year. |
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(2) |
Full and immediate vesting. The Safe Harbor
Contribution under subsection (1) above must be 100% vested, regardless of
the Employee’s length of service, at the time the contribution is made to the
Plan. Any additional amounts contributed under the Plan may be subject to a
vesting schedule. |
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(3) |
Distribution restrictions. Distributions of
the Safe Harbor Contribution under subsection (1) must be restricted in the
same manner as Section 401(k) Deferrals under Article 8, except that such
contributions may not be distributed upon Hardship. See Section 8.6(c). |
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(4) |
Annual notice. Each Eligible Participant
under the Plan must receive a written notice describing the Participant’s
rights and obligations under the Plan, including a description of: (i) the
Safe Harbor Contribution formula being used under the Plan; (ii) any other
contributions under the Plan; (iii) the plan to which the Safe Harbor
Contributions will be made (if different from this Plan); (iv) the type and
amount of Included Compensation that may be deferred under the Plan; (v) the
administrative requirements for making and changing Section 401(k) Deferral
elections; and (vi) the withdrawal and vesting provisions under the Plan. For
any Plan Year that began in 1999, the |
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notice requirements described in this
paragraph are deemed satisfied if the notice provided satisfied a reasonable,
good faith interpretation of the notice requirements under Code §401(k)(12).
(See subsection (1)(ii) above for a special supplemental notice that may need
to be provided to qualify as a Safe Harbor 401(k) Plan.) |
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Each
Eligible Participant must receive the annual notice within a reasonable
period before the beginning of the Plan Year (or within a reasonable period
before an Employee becomes an Eligible Participant, if later). For this
purpose, an Employee will be deemed to have received the notice in a timely
manner if the Employee receives such notice at least 30 days and no more than
90 days before the beginning of the Plan Year. For an Employee who becomes an
Eligible Participant during a Plan Year, the notice will be deemed timely if
it is provided no more than 90 days prior to the date the Employee becomes an
Eligible Participant. For Plan Years that began on or before April 1, 1999,
the notice requirement under this subsection will be satisfied if the notice
was provided by March 1, 1999. If an Employer first designates the Plan as a
Safe Harbor 401(k) Plan for a Plan Year that begins on or after January 1,
2000 and on or before June 1, 2000, the notice requirement under this
subsection will be satisfied if the notice was provided by May 1, 2000. |
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(b) |
Deemed compliance with ADP Test. If the Plan satisfies all the conditions under subsection (a)
above to qualify as a Safe Harbor 401(k) Plan, the Plan is deemed to satisfy
the ADP Test for the Plan Year. This Plan will not be deemed to satisfy the
ADP Test for a Plan Year if an Eligible Participant is covered under another
Safe Harbor 401(k) Plan maintained by the Employer which uses the provisions
under this Section to comply with the ADP Test. |
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(c) |
Deemed compliance with ACP Test. If the Plan satisfies all the conditions under subsection (a)
above to qualify as a Safe Harbor 401(k) Plan, the Plan is deemed to satisfy
the ACP Test for the Plan Year with respect to Employer Matching
Contributions (including Employer Matching Contributions that are not used to
qualify as a Safe Harbor 401(k) Plan), provided the following conditions are
satisfied. If the Plan does not satisfy the requirements under this subsection
(c) for a Plan Year, the Plan must satisfy the ACP Test for such Plan Year in
accordance with subsection (d) below. |
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(1) |
Only Employer Matching Contributions are Safe Harbor Matching
Contributions under basic formula. If the only
Employer Matching Contribution formula provided under the Plan is a basic
safe harbor formula under Part 4E, #27.a. of the Agreement, the Plan is
deemed to satisfy the ACP Test, without regard to the conditions under
subsections (2) – (5) below. |
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(2) |
Limit on contributions eligible for Employer Matching Contributions.
If Employer Matching Contributions are provided (other than just Employer
Matching Contributions under a basic safe harbor formula) the total Employer
Matching Contributions provided under the Plan (whether or not such Employer
Matching Contributions are provided under a Safe Harbor Matching Contribution
formula) must not apply to any Section 401(k) Deferrals or Employee After-Tax
Contributions that exceed 6% of Included Compensation. If an Employer
Matching Contribution formula applies to both Section 401(k) Deferrals and
Employee After-Tax Contributions, then the sum of such contributions that
exceed 6% of Included Compensation must be disregarded under the formula. |
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(3) |
Limit on discretionary Employer Matching Contributions.
For Plan Years beginning after December 31, 1999, the Plan will not satisfy
the ACP Safe Harbor if the Employer elects to provide discretionary Employer
Matching Contributions in addition to the Safe Harbor Matching Contribution,
unless the Employer limits the aggregate amount of such discretionary
Employer Matching Contributions under Part 4B, #16.b. to no more than 4
percent of the Employee’s Included Compensation. |
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(4) |
Rate of Employer Matching Contribution may not increase. The
Employer Matching Contribution formula may not provide a higher rate of match
at higher levels of Section 401(k) Deferrals or Employee After-Tax
Contributions. |
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(5) |
Limit on Employer Matching Contributions for Highly Compensated
Employees. The Employer Matching Contributions made
for any Highly Compensated Employee at any rate of Section 401(k) Deferrals
and/or Employee After-Tax Contributions cannot be greater than the Employer
Matching Contributions provided for any Nonhighly Compensated Employee at the
same rate of Section 401(k) Deferrals and/or Employee After-Tax
Contributions. |
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(6) |
Employee After-Tax Contributions. If the
Plan permits Employee After-Tax Contributions, such contributions must
satisfy the ACP Test, regardless of whether the Employer Matching
Contributions under Plan are deemed to satisfy the ACP Test under this
subsection (c). The ACP Test must be performed in accordance with subsection
(d) below. |
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(d) |
Rules for applying the ACP Test. If the ACP Test must be performed under a Safe Harbor 401(k)
Plan, either because there are Employee After-Tax Contributions, or because
the Employer Matching Contributions do not satisfy the conditions described
in subsection (c) above, the Current Year Testing Method must be used to
perform such test, even if the Agreement specifies that the Prior Year
Testing Method applies. In addition, the testing rules provided in IRS Notice
98-52 (or any successor guidance) are applicable in applying the ACP Test. |
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(e) |
Aggregated plans. If the
Plan is aggregated with another plan under Section 17.5(a) or (b), then the
Plan is not a Safe Harbor 401(k) Plan unless the conditions of this Section
are satisfied on an aggregated basis. |
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(f) |
First year of plan. To
qualify as a Safe Harbor 401(k) Plan, the Plan Year must be a 12-month
period, except for the first year of the Plan, in which case the Plan may
have a short Plan Year. In no case may the Plan have a short Plan Year of
less than 3 months. |
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If the Plan
has an initial Plan Year that is less than 12 months, for purposes of
applying the Annual Additions Limitation under Article 7, the Limitation Year
will be the 12-month period ending on the last day of the short Plan Year.
Thus, no proration of the Defined Contribution Dollar Limitation will be
required. (See Section 7.4(e).) In addition, the Employer’s Included
Compensation will be determined for the 12-month period ending on the last
day of the short Plan Year. |
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17.7 |
Definitions. The following
definitions apply for purposes of applying the provisions of this Article 17. |
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(a) |
ACP - Average Contribution Percentage. The ACP for a group is the average of the contribution
percentages calculated separately for each Eligible Participant in the group.
An Eligible Participant’s contribution percentage is the ratio of the
contributions made on behalf of the Participant that are included under the
ACP Test, expressed as a percentage of the Participant’s Testing Compensation
for the Plan Year. For this purpose, the contributions included under the ACP
Test are the sum of the Employee After-Tax Contributions, Employer Matching
Contributions, and QMACs (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. The ACP may also include other contributions as provided in
Section 17.3(c), if applicable. |
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(b) |
ADP - Average Deferral Percentage. The ADP for a group is the average of the deferral percentages
calculated separately for each Eligible Participant in the group. A
Participant’s deferral percentage is the ratio of the Participant’s deferral
contributions expressed as a percentage of the Participant’s Testing
Compensation for the Plan Year. For this purpose, a Participant’s deferral
contributions include any Section 401(k) Deferrals made pursuant to the
Participant’s deferral election, including Excess Deferrals of Highly
Compensated Employees (but excluding Excess Deferrals of Nonhighly
Compensated Employees). The ADP may also include other contributions as
provided in Section 17.2(c), if applicable. |
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In
determining a Participant’s deferral percentage for the Plan Year, a deferral
contribution may be taken into account only if such contribution is allocated
to the Participant’s Account as of a date within the Plan Year. For this
purpose, a deferral contribution may only be allocated to a Participant’s
Account within a particular Plan Year if the deferral contribution is
actually paid to the Trust no later than the end of the 12-month period
immediately following that Plan Year and the deferral contribution relates to
Included Compensation that (1) would otherwise have been received by the
Participant in that Plan Year or (2) is attributable to services performed in
that Plan Year and would otherwise have been received by the Participant
within 2½ months after the close of that Plan Year. No formal election need
be made by the Employer to use the 2½-month rule described in the preceding
sentence. However, deferral contributions may only be taken into account for
a single Plan Year. |
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(c) |
Excess Aggregate Contributions. Excess Aggregate Contributions for a Plan Year are the amounts
contributed on behalf of the Highly Compensated Employees that exceed the
maximum amount permitted under the ACP Test for such Plan Year. The total
dollar amount of Excess Aggregate Contributions for a Plan Year is determined
by calculating the amount that would have to be distributed to the Highly
Compensated Employees if the distributions were made first to the Highly
Compensated Employee(s) with the highest contribution percentage until
either: |
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(1) |
the adjusted
ACP for the Highly Compensated Employee Group would reach a percentage that
satisfies the ACP Test, or |
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(2) |
the
contribution percentage of the Highly Compensated Employee(s) with the next
highest contribution percentage would be reached. |
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This process
is repeated until the adjusted ACP for the Highly Compensated Employee Group
would satisfy the ACP Test. The total dollar amount so determined is then
divided among the Highly Compensated |
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Employee
Group in the manner described in Section 17.3(d)(1) to determine the actual
corrective distributions to be made. |
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(d) |
Excess Contributions. Excess
Contributions for a Plan Year are the amounts taken into account in computing
the ADP of the Highly Compensated Employees that exceed the maximum amount
permitted under the ADP Test for such Plan Year. The total dollar amount of
Excess Contributions for a Plan Year is determined by calculating the amount
that would have to be distributed to the Highly Compensated Employees if the
distributions were made first to the Highly Compensated Employee(s) with the
highest deferral percentage until either:
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(1) |
the adjusted
ADP for the Highly Compensated Employee Group would reach a percentage that
satisfies the ADP Test, or |
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(2) |
the deferral
percentage of the Highly Compensated Employee(s) with the next highest
deferral percentage would be reached. |
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This process
is repeated until the adjusted ADP for the Highly Compensated Employee Group
would satisfy the ADP test. The total dollar amount so determined is then
divided among the Highly Compensated Employee Group in the manner described
in Section 17.2(d)(1) to determine the actual corrective distributions to be
made. |
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(e) |
Highly Compensated Employee Group. The Highly Compensated Employee Group is the group of Eligible
Participants who are Highly Compensated Employees for the current Plan Year.
An Employee who makes a one-time irrevocable election not to participate in
accordance with Section 1.10 (if authorized under Part 13, #75 of the
Nonstandardized Agreement) will not be treated as an Eligible Participant. |
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(f) |
Nonhighly Compensated Employee Group. The Nonhighly Compensated Employee Group is the group of
Eligible Participants who are Nonhighly Compensated Employees for the
applicable Plan Year. If the Prior Year Testing Method is selected under Part
4F of the Agreement, the Nonhighly Compensated Employee Group is the group of
Eligible Participants in the prior Plan Year who were Nonhighly Compensated
Employees for that year. If the Current Year Testing Method is selected under
Part 4F of the Agreement, the Nonhighly Compensated Employee Group is the
group of Eligible Participants who are Nonhighly Compensated Employees for
the current Plan Year. An Employee who makes a one-time irrevocable election
not to participate in accordance with Section 1.10 (if authorized under Part
13, #75 of the Nonstandardized Agreement) will not be treated as an Eligible
Participant. |
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(g) |
QMACs – Qualified Matching Contribution. To the extent authorized under Part 4B, #18 of the Agreement,
QMACs are Employer Matching Contributions which are 100% vested when
contributed to the Plan and are subject to the distribution restrictions
applicable to Section 401(k) Deferrals under Article 8, except that no
portion of a Participant’s QMAC Account may be distributed from the Plan on
account of Hardship. See Section 8.6(c). |
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(h) |
QNECs – Qualified Nonelective Contributions. To
the extent authorized under Part 4C, #22 of the Agreement, QNECs are Employer
Nonelective Contributions which are 100% vested when contributed to the Plan
and are subject to the distribution restrictions applicable to Section 401(k)
Deferrals under Article 8, except that no portion of a Participant’s QNEC
Account may be distributed from the Plan on account of Hardship. See Section
8.6(c). |
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(i) |
Testing Compensation. In
determining the Testing Compensation used for purposes of applying the ADP
Test, the ACP Test, and the Multiple Use Test, the Plan Administrator is not
bound by any elections made under Part 3 of the Agreement with respect to
Total Compensation or Included Compensation under the Plan. The Plan Administrator
may determine on an annual basis (and within its discretion) the components
of Testing Compensation for purposes of applying the ADP Test, the ACP Test
and the Multiple Use Test. Testing Compensation must qualify as a
nondiscriminatory definition of compensation under Code §414(s) and the
regulations thereunder and must be applied consistently to all Participants.
Testing Compensation may be determined over the Plan Year for which the
applicable test is being performed or the calendar year ending within such
Plan Year. In determining Testing Compensation, the Plan Administrator may
take into consideration only the compensation received while the Employee is
an Eligible Participant under the component of the Plan being tested. In no
event may Testing Compensation for any Participant exceed the Compensation
Dollar Limitation defined in Section 22.32. In determining Testing
Compensation, the Plan Administrator may exclude amounts paid to an
individual as severance pay to the extent such amounts are paid after the
common-law employment relationship between the individual and the Employer
has terminated, provided such amounts also are excluded in determining Total
Compensation under 22.197. |
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ARTICLE 18
PLAN AMENDMENTS AND TERMINATION
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This Article
contains the rules regarding the ability of the Prototype Sponsor or Employer
to make Plan amendments and the effect of such amendments on the Plan. This
Article also contains the rules for administering the Plan upon termination
and the effect of Plan termination on Participants’ benefits and distribution
rights.
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18.1 |
Plan Amendments. |
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(a) |
Amendment by the Prototype Sponsor. The Prototype Sponsor may amend the Prototype Plan on behalf of
each adopting Employer who is maintaining the Plan at the time of the
amendment. An amendment by the Prototype Sponsor to the Basic Plan Document
does not require consent of the adopting Employers, nor does an adopting
Employer have to reexecute its Agreement with respect to such an amendment.
The Prototype Sponsor will provide each adopting Employer a copy of the
amended Basic Plan Document (either by providing substitute or additional
pages, or by providing a restated Basic Plan Document). An amendment by the
Prototype Sponsor to any Agreement offered under the Prototype Plan is not
effective with respect to an Employer’s Plan unless the Employer reexecutes
the amended Agreement. |
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If the
Prototype Plan is amended by the mass submitter, the mass submitter is
treated as the agent of the Prototype Sponsor. If the Prototype Sponsor does
not adopt any amendments made by the mass submitter, the Prototype Plan will
no longer be identical to or a minor modifier of the mass submitter Prototype
Plan. |
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(b) |
Amendment by the Employer. The
Employer shall have the right at any time to amend the Agreement in the
following manner without affecting the Plan’s status as a Prototype Plan.
(The ability to amend the Plan as authorized under this Section applies only
to the Employer that executes the Signature Page of the Agreement. Any
amendment to the Plan by the Employer under this Section also applies to any
Related Employer that participates under the Plan as a Co-Sponsor.) |
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(1) |
The Employer
may change any optional selections under the Agreement. |
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(2) |
The Employer
may add additional language where authorized under the Agreement, including
language necessary to satisfy Code §415 or Code §416 due to the aggregation
of multiple plans. |
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(3) |
The Employer
may change the administrative selections under Part 12 of the Agreement by
replacing the appropriate page(s) within the Agreement. Such amendment does
not require reexecution of the Signature Page of the Agreement. |
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(4) |
The Employer
may add any model amendments published by the IRS which specifically provide
that their adoption will not cause the Plan to be treated as an individually
designed plan. |
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(5) |
The Employer
may adopt any amendments that it deems necessary to satisfy the requirements
for resolving qualification failures under the IRS’ compliance resolution
programs. |
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(6) |
The Employer
may adopt an amendment to cure a coverage or nondiscrimination testing
failure, as permitted under applicable Treasury regulations. |
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The Employer
may amend the Plan at any time for any other reason, including a waiver of
the minimum funding requirement under Code §412(d). However, such an
amendment will cause the Plan to lose its status as a Prototype Plan and
become an individually designed plan. |
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The
Employer’s amendment of the Plan from one type of Defined Contribution Plan
(e.g., a money purchase plan) into another type of Defined Contribution Plan
(e.g., a profit sharing plan) will not result in a partial termination or any
other event that would require full vesting of some or all Plan Participants. |
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Any
amendment that affects the rights, duties or responsibilities of the Trustee
or Plan Administrator may only be made with the Trustee’s or Plan
Administrator’s written consent. Any amendment to the Plan must be in writing
and a copy of the resolution (or similar instrument) setting forth such
amendment (with the applicable effective date of such amendment) must be
delivered to the Trustee. |
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No amendment
may authorize or permit any portion of the assets held under the Plan to be
used for or diverted to a purpose other than the exclusive benefit of
Participants or their Beneficiaries, except to the extent such assets are
used to pay taxes or administrative expenses of the Plan. An amendment also
may not cause or permit any portion of the assets held under the Plan to
revert to or become property of the Employer. |
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(c) |
Protected Benefits. Except
as permitted under statute (such as Code §412(c)(8)), regulations (such as
Treas. Reg. §1.411(d)-4), or other IRS guidance of general applicability, no
Plan amendment (or other transaction having the effect of a Plan amendment,
such as a merger, acquisition, plan transfer, or similar transaction) may
reduce a Participant’s Account Balance or eliminate or reduce a Protected
Benefit to the extent such Protected Benefit relates to amounts accrued prior
to the adoption date (or effective date, if later) of the Plan amendment. For
this purpose, Protected Benefits include any early retirement benefits,
retirement-type subsidies, and optional forms of benefit (as defined under
the regulations). If the adoption of this Plan will result in the elimination
of a Protected Benefit, the Employer may preserve such Protected Benefit by
identifying the Protected Benefit in accordance with Part 13, #58 of the Agreement
[Part 13, #76 of the 401(k) Agreement]. Failure to identify Protected
Benefits under the Agreement will not override the requirement that such
Protected Benefits be preserved under this Plan. The availability of each
optional form of benefit under the Plan must not be subject to Employer
discretion. |
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Effective
for amendments adopted and effective on or after September 6, 2000, if the
Plan is a profit sharing plan or a 401(k) plan, the Employer may eliminate
all annuity and installment forms of distribution (including the QJSA form of
benefit to the extent the Plan is not required to offer such form of benefit
under Article 9), provided the Plan offers a single-sum distribution option
that is available at the same time as the annuity or installment options that
are being eliminated. If the Plan is a money purchase plan or a target
benefit plan, the Employer may not eliminate the QJSA form of benefit.
However, the Employer may eliminate all other annuity and installment forms
of distribution, provided the Plan offers a single-sum distribution option
that is available at the same time as the annuity or installment options that
are being eliminated. Any amendment eliminating an annuity or installment
form of distribution may not be effective until the earlier of: (1) the date
which is the 90th day following the date a summary of the
amendment is furnished to the Participant which satisfies the requirements
under DOL Reg. §2520.104b-3 or (2) the first day of the second Plan Year
following the Plan Year in which the amendment is adopted. |
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18.2 |
Plan Termination. The
Employer may terminate this Plan at any time by delivering to the Trustee and
Plan Administrator written notice of such termination. |
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(a) |
Full and immediate vesting. Upon
a full or partial termination of the Plan (or in the case of a profit sharing
plan, the complete discontinuance of contributions), all amounts credited to
an affected Participant’s Account become 100% vested, regardless of the
Participant’s vested percentage determined under Article 4. The Plan
Administrator has discretion to determine whether a partial termination has
occurred. |
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(b) |
Distribution procedures. Upon
the termination of the Plan, the Plan Administrator shall direct the
distribution of Plan assets to Participants in accordance with the provisions
under Article 8. For this purpose, distribution shall be made to Participants
with vested Account Balances of $5,000 or less in lump sum as soon as
administratively feasible following the Plan termination, regardless of any
contrary election under Part 9, #34 of the Agreement [Part 9, #52 of the
401(k) Agreement]. For Participants with vested Account Balances in excess of
$5,000, distribution will be made through the purchase of deferred annuity
contracts which protect all Protected Benefits under the Plan, unless a
Participant elects to receive an immediate distribution in any form of
payment permitted under the Plan. If an immediate distribution is elected in
a form other than a lump sum, the distribution will be satisfied through the
purchase of an immediate annuity contract. Distributions will be made as soon
as administratively feasible following the Plan termination, regardless of
any contrary election under Part 9, #33 of the Agreement [Part 9, #51 of the
401(k) Agreement]. The references in this paragraph to $5,000 shall be deemed
to mean $3,500, prior to the time the $5,000 threshold becomes effective
under the Plan (as determined in Section 8.3(f)). |
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For purposes
of applying the provisions of this subsection (b), distribution may be
delayed until the Employer receives a favorable determination letter from the
IRS as to the qualified status of the Plan upon termination, provided the
determination letter request is made within a reasonable period following the
termination of the Plan. |
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(1) |
Special rule for certain profit sharing plans. If
this Plan is a profit sharing plan, distribution will be made to all
Participants, without consent, as soon as administratively feasible following
the termination of the Plan, without regard to the value of the Participants’
vested Account Balance. This special rule applies only if the Plan does not
provide for an annuity option under Part 11 of the Agreement and the Employer
does not maintain any other Defined Contribution Plan (other than an ESOP) at
any time between the termination of the Plan and the distribution. |
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(2) |
Special rule for 401(k) plans. Section
401(k) Deferrals, QMACs, QNECs, Safe Harbor Matching Contributions and Safe
Harbor Nonelective Contributions under a 401(k) plan (as well as transferred
assets (see Section 3.3(c)(3)) which are subject to the distribution
restrictions applicable to Section 401(k) Deferrals) may be distributed in a
lump sum upon Plan termination only if the Employer does not maintain a
Successor Plan at any time during the period beginning on the date of
termination and ending 12 months after the final distribution of all Plan
assets. For this purpose, |
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a Successor
Plan is any Defined Contribution Plan, other than an ESOP (as defined in Code
§4975(e)(7)), a SEP (as defined in Code §408(k)), or a SIMPLE XXX (as defined
in Code §408(p)). A plan will not be considered a Successor Plan, if at all
times during the 24-month period beginning 12 months before the Plan termination,
fewer than 2% of the Eligible Participants under the 401(k) plan are eligible
under such plan. A distribution of these contributions may be made to the
extent another distribution event permits distribution of such amounts. |
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(3) |
Plan termination not distribution event if assets are transferred to
another Plan. If, pursuant to the termination of the
Plan, the Employer enters into a transfer agreement to transfer the assets of
the terminated Plan to another plan maintained by the Employer (or by a
successor employer in a transaction involving the acquisition of the
Employer’s stock or assets, or other similar transaction), the termination of
the Plan is not a distribution event and the distribution procedures above do
not apply. Prior to the transfer of the assets, distribution of a
Participant’s Account Balance may be made from the terminated Plan only to a
Participant (or Beneficiary, if applicable) who is otherwise eligible for
distribution without regard to the Plan’s termination. Otherwise, benefits
will be distributed from the transferee plan in accordance with the terms of
that plan (subject to the protection of any Protected Benefits that must be
continued with respect to the transferred assets). |
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(c) |
Termination upon merger, liquidation or dissolution
of the Employer. The Plan shall terminate upon the
liquidation or dissolution of the Employer or the death of the Employer (if
the Employer is a sole proprietor) provided however, that in any such event,
arrangements may be made for the Plan to be continued by any successor to the
Employer. |
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18.3 |
Merger or Consolidation. In
the event the Plan is merged or consolidated with another plan, each
Participant must be entitled to a benefit immediately after such merger or
consolidation that is at least equal to the benefit the Participant would
have been entitled to had the Plan terminated immediately before such merger
or consolidation. (See Section 4.1(d) for rules regarding vesting following a
merger or consolidation.) The Employer may authorize the Trustee to enter
into a merger agreement with the Trustee of another plan to effect such
merger or consolidation. A merger agreement entered into by the Trustee is
not part of this Plan and does not affect the Plan’s status as a Prototype Plan.
(See Section 3.3 for the applicable rules where amounts are transferred to
this Plan from another plan.) |
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ARTICLE 19
MISCELLANEOUS
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This Article
contains miscellaneous provisions concerning the Employer’s and Participants’
rights and responsibilities under the Plan.
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19.1 |
Exclusive Benefit. Except
as provided under Section 19.2, no part of the Plan assets (including any
corpus or income of the Trust) may revert to the Employer prior to the
satisfaction of all liabilities under the Plan nor will such Plan assets be
used for, or diverted to, a purpose other than the exclusive benefit of
Participants or their Beneficiaries. |
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19.2 |
Return of Employer Contributions. Upon written request by the Employer, the Trustee must return
any Employer Contributions provided that the circumstances and the time
frames described below are satisfied. The Trustee may request the Employer to
provide additional information to ensure the amounts may be properly
returned. Any amounts returned shall not include earnings, but must be
reduced by any losses. |
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(a) |
Mistake of fact. Any
Employer Contributions made because of a mistake of fact must be returned to
the Employer within one year of the contribution. |
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(b) |
Disallowance of deduction.
Employer Contributions to the Trust are made with the understanding that they
are deductible. In the event the deduction of an Employer Contribution is
disallowed by the IRS, such contribution (to the extent disallowed) must be
returned to the Employer within one year of the disallowance of the
deduction. |
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(c) |
Failure to initially qualify.
Employer Contributions to the Plan are made with the understanding, in the
case of a new Plan, that the Plan satisfies the qualification requirements of
Code §401(a) as of the Plan’s Effective Date. In the event that the Internal
Revenue Service determines that the Plan is not initially qualified under the
Code, any Employer Contributions (and allocable earnings) made incident to
that initial qualification must be returned to the Employer within one 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. |
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19.3 |
Alienation or Assignment. Except
as permitted under applicable statute or regulation, a Participant or
Beneficiary may not assign, alienate, transfer or sell any right or claim to
a benefit or distribution from the Plan, and any attempt to assign, alienate,
transfer or sell such a right or claim shall be void, except as permitted by
statute or regulation. Any such right or claim under the Plan shall not be
subject to attachment, execution, garnishment, sequestration, or other legal
or equitable process. This prohibition against alienation or assignment also
applies to the creation, assignment, or recognition of a right to a benefit
payable with respect to a Participant pursuant to a domestic relations order,
unless such order is determined to be a QDRO pursuant to Section 11.5, or any
domestic relations order entered before January 1, 1985. |
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19.4 |
Participants’ Rights. The
adoption of this Plan by the Employer does not give any Participant,
Beneficiary, or Employee a right to continued employment with the Employer
and does not affect the Employer’s right to discharge an Employee or
Participant at any time. This Plan also does not create any legal or
equitable rights in favor of any Participant, Beneficiary, or Employee
against the Employer, Plan Administrator or Trustee. Unless the context
indicates otherwise, any amendment to this Plan is not applicable to
determine the benefits accrued (and the extent to which such benefits are
vested) by a Participant or former Employee whose employment terminated
before the effective date of such amendment, except where application of such
amendment to the terminated Participant or former Employee is required by
statute, regulation or other guidance of general applicability. Where the
provisions of the Plan are ambiguous as to the application of an amendment to
a terminated Participant or former Employee, the Plan Administrator has the
authority to make a final determination on the proper interpretation of the
Plan. |
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19.5 |
Military Service. To the
extent required under Code §414(u), an Employee who returns to employment
with the Employer following a period of qualified military service will
receive any contributions, benefits and service credit required under Code §414(u),
provided the Employee satisfies all applicable requirements under the Code
and regulations. |
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19.6 |
Paired Plans. If the
Employer adopts more than one Standardized Agreement, each of the
Standardized Agreements are considered to be Paired Plans, provided the
Employer completes Part 13, #54 of the Agreement [Part 13, #72 of the 401(k)
Agreement] in a manner which ensures the plans together comply with the
Annual Additions Limitation, as described in Article 7, and the Top-Heavy
Plan rules, as described in Article 16. If the Employer adopts Paired Plans,
each Plan must have the same Plan Year. |
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19.7
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Annuity Contract. Any
annuity contract distributed under the Plan must be nontransferable. In
addition, the terms of any annuity contract purchased and distributed to a
Participant or to a Participant’s spouse must comply with all requirements
under this Plan.
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19.8
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Use of IRS compliance programs. Nothing in this Plan document should be construed to limit the
availability of the IRS’ voluntary compliance programs, including the IRS
Administrative Policy Regarding Self-Correction (APRSC) program. An Employer
may take whatever corrective actions are permitted under the IRS voluntary
compliance programs, as is deemed appropriate by the Plan Administrator or
Employer.
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19.9
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Loss of Prototype Status. If
the Plan as adopted by the Employer fails to attain or retain qualification,
such Plan will no longer qualify as a Prototype Plan and will be considered
an individually-designed plan.
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19.10
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Governing Law. The
provisions of this Plan shall be construed, administered, and enforced in
accordance with the provisions of applicable Federal Law and, to the extent
applicable, the laws of the state in which the Trustee has its principal
place of business. The foregoing provisions of this Section shall not
preclude the Employer and the Trustee from agreeing to a different state law
with respect to the construction, administration and enforcement of the Plan.
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19.11
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Waiver of Notice. Any
person entitled to a notice under the Plan may waive the right to receive
such notice, to the extent such a waiver is not prohibited by law, regulation
or other pronouncement.
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19.12
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Use of Electronic Media.
The Plan Administrator may use telephonic or electronic media to satisfy any
notice requirements required by this Plan, to the extent permissible under
regulations (or other generally applicable guidance). In addition, a
Participant’s consent to immediate distribution, as required by Article 8,
may be provided through telephonic or electronic means, to the extent
permissible under regulations (or other generally applicable guidance). The
Plan Administrator also may use telephonic or electronic media to conduct
plan transactions such as enrolling participants, making (and changing)
salary reduction elections, electing (and changing) investment allocations,
applying for Plan loans, and other transactions, to the extent permissible
under regulations (or other generally applicable guidance).
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19.13
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Severability of Provisions. In
the event that any provision of this Plan shall be held to be illegal,
invalid or unenforceable for any reason, the remaining provisions under the
Plan shall be construed as if the illegal, invalid or unenforceable
provisions had never been included in the Plan.
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19.14
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Binding Effect. The Plan,
and all actions and decisions made thereunder, shall be binding upon all
applicable parties, and their heirs, executors, administrators, successors
and assigns.
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114
ARTICLE 20
GUST ELECTIONS AND EFFECTIVE DATES
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The
provisions of this Plan are generally effective as of the Effective Date
designated on the Signature Page of the Agreement. Appendix A of the
Agreement also allows for special effective dates for specified provisions of
the Plan, which override the general Effective Date under the Agreement.
Section 22.96 refers to a series of laws that have been enacted since 1994 as
the GUST Legislation, for which extended time (known as the remedial
amendment period) was provided to Employers to conform their plan documents
to such laws. This Article prescribes special effective date rules for
conforming plans to the GUST Legislation.
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20.1 |
GUST Effective Dates. If
the Agreement is adopted within the remedial amendment period for the GUST
Legislation, and the Plan has not previously been restated to comply with the
GUST Legislation, then special effective dates apply to certain provisions.
These special effective dates apply to the appropriate provisions of the
Plan, even if such special effective dates are earlier than the Effective
Date identified on the Signature Page of the Agreement. The Employer may
specify in elections provided in Appendix B of the Agreement, how the Plan
was operated to comply with the GUST Legislation. Appendix B need only be
completed if the Employer operated this Plan in a manner that is different
from the default provisions contained in this Plan or the elective choices
made under the Agreement. If the Employer did not operate the Plan in a
manner that is different from the default provisions or elective provisions
of the Plan or, if the Plan is not being restated for the first time to
comply with the GUST Legislation, and prior amendments or restatements of the
Plan satisfied the requirement to amend timely to comply with the GUST Legislation,
Appendix B need not be completed and may be removed from the Agreement. |
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If one or
more qualified retirement plans have been merged into this Plan, the
provisions of the merging plan(s) will remain in full force and effect until
the Effective Date of the plan merger(s), unless provided otherwise under
Appendix A-12 of the Agreement [Appendix A-16 of the 401(k) Agreement]. If
the merging plan(s) have not been amended to comply with the changes required
under the GUST Legislation, the merging plan(s) will be deemed amended
retroactively for such required changes by operation of this Agreement. The
provisions required by the GUST Legislation (as provided under this BPD and
related Agreements) will be effective for purposes of the merging plan(s) as
of the same effective date that is specified for that GUST provision in this
BPD and Appendix B of the Agreement (even if that date precedes the general
Effective Date specified in the Agreement). |
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20.2 |
Highly Compensated Employee Definition. The definition of Highly Compensated Employee under Section
22.99 is modified effective for Plan Years beginning after December 31, 1996.
Under the current definition of Highly Compensated Employee, the Employer
must designate under the Plan whether it is using the Top-Paid Group Test and
whether it is using the Calendar Year Election or, for the 1997 Plan Year,
whether it used the Old-Law Calendar Year Election. |
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(a) |
Top-Paid Group Test. In
determining whether an Employee is a Highly Compensated Employee, the
Top-Paid Group Test under Section 22.99(b)(4) does not apply unless the
Employer specifically elects under Part 13, #50.a. of the Agreement [Part 13,
#68.a. of the 401(k) Agreement] to have the Top-Paid Group Test apply. The
Employer’s election to use or not use the Top-Paid Group Test generally
applies for all years beginning with the Effective Date of the Plan (or the
first Plan Year beginning after December 31, 1996, if later). However,
because the Employer may not have operated the Plan consistent with this
Top-Paid Group Test election for all years prior to the date this Plan
restatement is adopted, Appendix B-1.a. of the Agreement also permits the
Employer to override the Top-Paid Group Test election under this Plan for
specified Plan Years beginning after December 31, 1996, and before the date
this Plan restatement is adopted. |
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(b) |
Calendar Year Election. In
determining whether an Employee is a Highly Compensated Employee, the
Calendar Year Election under Section 22.99(b)(5) does not apply unless the
Employer specifically elects under Part 13, #50.b. of the Agreement [Part 13,
#68.b. of the 401(k) Agreement] to have the Calendar Year Election apply. The
Employer’s election to use or not use the Calendar Year Election is generally
effective for all years beginning with the Effective Date of this Plan (or
the first Plan Year beginning after December 31, 1996, if later). However,
because the Employer may not have operated the Plan consistent with this
Calendar Year Election for all years prior to the date this Plan restatement
is adopted, Appendix B-1.b. of the Agreement permits the Employer to override
the Calendar Year Election under this Plan for specified Plan Years beginning
after December 31, 1996, and before the date this Plan restatement is adopted. |
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(c) |
Old-Law Calendar Year Election. In determining whether an Employee was a Highly Compensated
Employee for the Plan Year beginning in 1997, a special Old-Law Calendar Year
Election was available. (See Section 22.99(b)(6) for the definition of the
Old-Law Calendar Year Election.) Appendix B-1.c. of the Agreement permits the
Employer to designate whether it used the Old-Law Calendar Year Election for
the 1997 Plan Year. If the Employer did not use the Old-Law Calendar Year
Election, the election in Appendix B-1.c. need not be completed. |
115
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20.3
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Required Minimum Distributions. Appendix B-2 of the Agreement permits the Employer to designate
how it complied with the GUST Legislation changes to the required minimum
distribution rules. Section 10.4 describes the application of the GUST
Legislation changes to the required minimum distribution rules.
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20.4
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$5,000 Involuntary Distribution Threshold. For Plan Years beginning on or after August 5, 1997, a
Participant (and spouse, if the Joint and Survivor Annuity rules apply under
Article 9) must consent to a distribution from the Plan if the Participant’s
vested Account Balance exceeds $5,000. (See Section 8.3(e) for the applicable
rules for determining the value of a Participant’s vested Account Balance.)
For Plan Years beginning before August 5, 1997, the consent threshold was
$3,500 instead of $5,000.
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The increase
in the consent threshold to $5,000 is generally effective for Plan Years
beginning on or after August 5, 1997. However, because the Employer may not
have operated the Plan consistent with the $5,000 threshold for all years
prior to the date this Plan restatement was adopted, Appendix B-3.a. of the
Agreement permits the Employer to designate the Plan Year during which it
began applying the higher $5,000 consent threshold. If the Employer began
applying the $5,000 consent threshold for Plan Years beginning on or after
August 5, 1997, Appendix B-3.a. need not be completed. If the Employer did
not begin using the $5,000 consent threshold until some later date, the
Employer must designate the appropriate date in Appendix B-3.a.
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20.5 |
Repeal of Family Aggregation for Allocation Purposes. For Plan Years beginning on or after January 1, 1997, the
family aggregation rules were repealed. For Plan Years beginning before
January 1, 1997, the family aggregation rules required that family members of
a Five-Percent Owner or one of the 10 Employees with the highest ownership
interest in the Employer were aggregated as a single Highly Compensated Employee
for purposes of determining such individuals’ share of any contributions
under the Plan. In determining the allocation for such aggregated
individuals, the Compensation Dollar Limitation (as defined in Section 22.32)
was applied on an aggregated basis with respect to the Five-Percent Owner or
top-10 owner, his/her spouse, and his/her minor children (under the age of
19). |
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The family
aggregation rules were repealed effective for Plan Years beginning on or
after January 1, 1997. However, because the Employer may not have operated
the Plan consistent with the repeal of family aggregation for all years prior
to the date this Plan restatement is adopted, Appendix B-3.b. of the
Agreement permits the Employer to designate the Plan Year during which it repealed
family aggregation for allocation purposes. If the Employer implemented the
repeal of family aggregation for Plan Years beginning on or after January 1,
1997, Appendix B-3.b. need not be completed. If the Employer did not
implement the repeal of family aggregation until some later date, the
Employer must designate the appropriate date in Appendix B-3.b. |
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20.6 |
ADP/ACP Testing Methods. The
GUST Legislation modified the nondiscrimination testing rules for Section
401(k) Deferrals, Employer Matching Contributions, and Employee After-Tax
Contributions, effective for Plan Years beginning after December 31, 1996.
For purposes of applying the ADP Test and ACP Test under the 401(k)
Agreement, the Employer must designate the testing methodology used for each
Plan Year. (See Article 17 for the definition of the ADP Test and the ACP
Test and the applicable testing methodology.) |
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Part 4F of
the 401(k) Agreement contains elective provisions for the Employer to
designate the testing methodology it will use in performing the ADP Test and
the ACP Test. Appendix B-5.a. of the 401(k) Agreement contains elective
provisions for the Employer to designate the testing methodology it used for
Plan Years that began before the adoption of the Agreement. |
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20.7 |
Safe Harbor 401(k) Plan. Effective
for Plan Years beginning after December 31, 1998, the Employer may elect
under Part 4E of the 401(k) Agreement to apply the Safe Harbor 401(k) Plan
provisions. To qualify as a Safe Harbor 401(k) Plan for a Plan Year, the Plan
must be identified as a Safe Harbor 401(k) Plan for such year. |
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If the
Employer elects under Part 4E to apply the Safe Harbor 401(k) Plan
provisions, the Plan generally will be considered a Safe Harbor Plan for all
Plan Years beginning with the Effective Date of the Plan (or January 1, 1999,
if later). Likewise, if the Employer does not elect to apply the Safe Harbor
401(k) provisions, the Plan generally will not be considered a Safe Harbor
Plan for such year. However, because the Employer may have operated the Plan
as a Safe Harbor 401(k) Plan for Plan Years prior to the Effective Date of
this Plan or may not have operated the Plan consistent with its election
under Part 4E to apply (or to not apply) the Safe Harbor 401(k) Plan
provisions for all years prior to the date this Plan restatement is adopted,
Appendix B-5.b. of the 401(k) Agreement permits the Employer to designate any
Plan Year in which the Plan was (or was not) a Safe Harbor 401(k) Plan.
Appendix B-5.b. should only be completed if the Employer operated this Plan
prior to date it was actually adopted in a manner that is inconsistent with
the election made under Part 4E of the Agreement. |
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If the
Employer elects under Appendix B-5.b. of the Agreement to apply the Safe
Harbor 401(k) Plan provisions for any Plan Year beginning prior to the date
this Plan is adopted, the Plan must have complied with the requirements under
Section 17.6 for such year. The type and amount of the Safe Harbor
Contribution for such Plan Year(s) is the type and amount of contribution
described in the Participant notice issued pursuant to Section 17.6(a)(4) for
such Plan Year. |
116
ARTICLE 21
PARTICIPATION BY RELATED EMPLOYERS (CO-SPONSORS)
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21.1
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Co-Sponsor Adoption Page. A
Related Employer may elect to participate under this Plan by executing a
Co-Sponsor Adoption Page under the Agreement. By executing a Co-Sponsor
Adoption Page, the Co-Sponsor adopts all the provisions of the Plan,
including the elective choices made by the Employer under the Agreement. The
Co-Sponsor is also bound by any amendments made to the Plan in accordance
with Article 18. The Co-Sponsor agrees to use the same Trustee as is
designated on the Trustee Declaration under the Agreement, except as provided
in a separate trust agreement authorized under Article 12.
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21.2
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Participation by Employees of Co-Sponsor. A Related Employer may not contribute to this Plan unless it
executes the Co-Sponsor Adoption Page. (See Section 1.3 for a discussion of
the eligibility rules as they apply to Employees of Related Employers who do
not execute a Co-Sponsor Adoption Page.) However, in applying the provisions
of this Plan, Total Compensation (as defined in Section 22.197) includes
amounts earned with a Related Employer, regardless of whether such Related
Employer executes a Co-Sponsor Adoption Page. The Employer may elect under
Part 3, #10.b.(7) of the Nonstandardized Agreement [Part 3, #10.i. of the
Nonstandardized 401(k) Agreement] to exclude amounts earned with a Related
Employer that does not execute a Co-Sponsor Page for purposes of determining
an Employee’s Included Compensation under the Plan.
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21.3
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Allocation of Contributions and Forfeitures. Unless selected otherwise under the Co-Sponsor Adoption Page,
any contributions made by a Co-Sponsor (and any forfeitures relating to such
contributions) will be allocated to all Eligible Participants employed by the
Employer and Co-Sponsors in accordance with the provisions under this Plan.
Under a Nonstandardized Agreement, a Co-Sponsor may elect under the
Co-Sponsor Page to allocate its contributions (and forfeitures relating to
such contributions) only to the Eligible Participants employed by the
Co-Sponsor making such contributions. If so elected, Employees of the
Co-Sponsor will not share in an allocation of contributions (or forfeitures
relating to such contributions) made by any other Related Employer (except in
such individual’s capacity as an Employee of that other Related Employer).
Where contributions are allocated only to the Employees of a contributing
Co-Sponsor, the Plan Administrator will maintain a separate accounting of an
Employee’s Account Balance attributable to the contributions of a particular
Co-Sponsor. This separate accounting is necessary only for contributions that
are not 100% vested, so that the allocation of forfeitures attributable to
such contributions can be allocated for the benefit of the appropriate
Employees. An election to allocate contributions and forfeitures only to the
Eligible Participants employed by the Co-Sponsor making such contributions
will preclude the Plan from satisfying the nondiscrimination safe harbor
rules under Treas. Reg. §1.401(a)(4)-2 and may require additional
nondiscrimination testing.
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21.4
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Co-Sponsor No Longer a Related Employer. If a Co-Sponsor becomes a Former Related Employer because of
an acquisition or disposition of stock or assets, a merger, or similar
transaction, the Co-Sponsor will cease to participate in the Plan as soon as
administratively feasible. If the transition rule under Code §410(b)(6)(C) applies,
the Co-Sponsor will cease to participate in the Plan as soon as
administratively feasible after the end of the transition period described in
Code §410(b)(6)(C). If a Co-Sponsor ceases to be a Related Employer under
this Section 21.4, the following procedures may be followed to discontinue
the Co-Sponsor’s participation in the Plan.
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(a)
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Manner of discontinuing participation. To document the cessation of participation by a Former Related
Employer, the Former Related Employer may discontinue its participation as
follows: (1) the Former Related Employer adopts a resolution that formally
terminates active participation in the Plan as of a specified date, (2) the
Employer that has executed the Signature Page of the Agreement reexecutes
such page, indicating an amendment by page substitution through the deletion
of the Co-Sponsor Adoption Page executed by the Former Related Employer, and
(3) the Former Related Employer provides any notices to its Employees that
are required by law. Discontinuance of participation means that no further
benefits accrue after the effective date of such discontinuance with respect
to employment with the Former Related Employer. The portion of the Plan
attributable to the Former Related Employer may continue as a separate plan,
under which benefits may continue to accrue, through the adoption by the
Former Related Employer of a successor plan (which may be created through the
execution of a separate Agreement by the Former Related Employer) or by
spin-off of that portion of the Plan followed by a merger or transfer into
another existing plan, as specified in a merger or transfer agreement.
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(b)
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Multiple employer plan. If,
after a Co-Sponsor becomes a Former Related Employer, its Employees continue
to accrue benefits under this Plan, the Plan will be treated as a multiple
employer plan to the extent required by law. So long as the discontinuance
procedures of this Section are satisfied, such treatment as a multiple
employer plan will not affect reliance on the favorable IRS letter issued to
the Prototype Sponsor or any determination letter issued on the Plan.
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21.5
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Special Rules for Standardized Agreements. As stated in Section 1.3(b) of this BPD, under a Standardized
Agreement each Related Employer (who has Employees who may be eligible to
participate in the Plan) is required to execute a Co-Sponsor Adoption Page.
If a Related Employer fails to execute a Co-Sponsor Adoption Page, the Plan
will be treated as an individually-designed plan, except as provided in
subsections (a) and (b) below. Nothing in this
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Plan shall
be construed to treat a Related Employer as participating in the Plan in the
absence of a Co-Sponsor Adoption Page executed by that Related Employer. |
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(a) |
New Related Employer. If an
organization becomes a New Related Employer after the Effective Date of the
Agreement by reason of an acquisition or disposition of stock or assets, a
merger, or similar transaction, the New Related Employer must execute a
Co-Sponsor Page no later than the end of the transition period described in
Code §410(b)(6)(C). Participation of the New Related Employer must be
effective no later than the first day of the Plan Year that begins after such
transition period ends. If the transition period in Code §410(b)(6)(C) is not
applicable, the effective date of the New Related Employer’s participation in
the Plan must be no later than the date it became a Related Employer. |
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(b) |
Former Related Employer. If
an organization ceases to be a Related Employer (Former Related Employer),
the provisions of Section 21.4, relating to discontinuance of participation,
apply. |
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Under the
Standardized Agreement, if the rules of subsections (a) or (b) are followed,
the Employer may continue to rely on the favorable IRS letter issued to the
Prototype Sponsor during any period in which a New Related Employer is not
participating in the Plan or a Former Related Employer continues to
participate in the Plan. If the rules of subsections (a) or (b) are not
followed, the Plan is treated as an individually-designed plan for any period
of such noncompliance. |
118
ARTICLE 22
PLAN DEFINITIONS
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This Article
contains definitions for common terms that are used throughout the Plan. All
capitalized terms under the Plan are defined in this Article. Where applicable,
this Article will refer to other Sections of the Plan where the term is
defined.
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22.1 |
Account. The separate
Account maintained for each Participant under the Plan. To the extent
applicable, a Participant may have any (or all) of the following separate
sub-Accounts within his/her Account: Employer Contribution Account, Section
401(k) Deferral Account, Employer Matching Contribution Account, QMAC
Account, QNEC Account, Employee After-Tax Contribution Account, Safe Harbor
Matching Contribution Account, Safe Harbor Nonelective Contribution Account,
Rollover Contribution Account, and Transfer Account. The Transfer Account
also may have any (or all) of the sub-Accounts listed above. The Plan
Administrator may maintain other sub-Accounts, if necessary, for proper
administration of the Plan. |
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22.2 |
Account Balance. A
Participant’s Account Balance is the total value of all Accounts (whether
vested or not) maintained for the Participant. A Participant’s vested Account
Balance includes only those amounts for which the Participant has a vested
interest in accordance with the provisions under Article 4 and Part 6 of the
Agreement. A Participant’s Section 401(k) Deferral Account, QMAC Account,
QNEC Account, Employee After-Tax Contribution Account, Safe Harbor Matching
Contribution Account, Safe Harbor Nonelective Contribution Account, and
Rollover Contribution Account are always 100% vested. |
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22.3 |
Accrued Benefit. If
referred to in the context of a Defined Contribution Plan, the Accrued
Benefit is the Account Balance. If referred to in the context of a Defined
Benefit Plan, the Accrued Benefit is the benefit accrued under the benefit
formula prescribed by the Defined Benefit Plan. |
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22.4 |
ACP -- Average Contribution Percentage. The average of the contribution percentages for the Highly
Compensated Employee Group and the Nonhighly Compensated Employee Group,
which are tested for nondiscrimination under the ACP Test. See Section
17.7(a). |
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22.5 |
ACP Test -- Actual Contribution Percentage Test. The special nondiscrimination test that applies to Employer
Matching Contributions and/or Employee After-Tax Contributions under the
401(k) Agreement. See Section 17.3. |
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22.6 |
Actual Hours Crediting Method. The
Actual Hours Crediting Method is a method for counting service for purposes
of Plan eligibility and vesting. Under the Actual Hours Crediting Method, an
Employee is credited with the actual Hours of Service the Employee completes
with the Employer or the number of Hours of Service for which the Employee is
paid (or entitled to payment). |
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22.7 |
Adoption Agreement. See the
definition for Agreement. |
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22.8 |
ADP -- Average Deferral Percentage. The average of the deferral percentages for the Highly
Compensated Employee Group and the Nonhighly Compensated Employee Group,
which are tested for nondiscrimination under the ADP Test. See Section
17.7(b). |
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22.9 |
ADP Test -- Actual Deferral Percentage Test. The special nondiscrimination test that applies to Section
401(k) Deferrals under the 401(k) Agreement. See Section 17.2. |
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22.10 |
Agreement. The Agreement
(sometimes referred to as the “Adoption Agreement”) contains the elective
provisions under the Plan that an Employer completes to supplement or modify
the provisions under the BPD. Each Employer that adopts this Plan must
complete and execute the appropriate Agreement. An Employer may adopt more
than one Agreement under this Prototype Plan. Each executed Agreement is
treated as a separate Plan and Trust. For example, if an Employer executes a
profit sharing plan Agreement and a money purchase plan Agreement, the
Employer is treated as maintaining two separate Plans under this Prototype
Plan document. An Agreement is treated as a single Plan, even if there is one
or more executed Co-Sponsor Adoption Pages associated with the Agreement. |
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22.11 |
Aggregate Limit. The limit
imposed under the Multiple Use Test on amounts subject to both the ADP Test
and the ACP Test. See Section 17.4(a). |
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22.12 |
Alternate Payee. A person
designated to receive all or a portion of the Participant’s benefit pursuant
to a QDRO. See Section 11.5. |
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22.13 |
Anniversary Year Method. A
method for determining Eligibility Computation Periods after an Employee’s
initial Eligibility Computation Period. See Section 1.4(c)(2) for more
detailed discussion of the Anniversary Year Method. |
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22.14 |
Anniversary Years. An
alternative period for measuring Vesting Computation Periods. See Section
4.4. |
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22.15
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Annual Additions. The
amounts taken into account under a Defined Contribution Plan for purposes of
applying the limitation on allocations under Code §415. See Section 7.4(a)
for the definition of Annual Additions.
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22.16
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Annual Additions Limitation. The
limit on the amount of Annual Additions a Participant may receive under the
Plan during a Limitation Year. See Article 7.
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22.17
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Annuity Starting Date. This
Plan does not use the term Annuity Starting Date. To determine whether the
notice and consent requirements in Articles 8 and 9 are satisfied, the
Distribution Commencement Date (see Section 22.56) is used, even for a
distribution that is made in the form of an annuity. However, the payment
made on the Distribution Commencement Date under an annuity form of payment
may reflect annuity payments that are calculated with reference to an
“annuity starting date” that occurs prior to the Distribution Commencement
Date (e.g., the first day of the month in which the Distribution Commencement
Date falls).
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22.18
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Applicable Life Expectancy. The
Life Expectancy used to determine a Participant’s required minimum
distribution under Article 10. See Section 10.3(d).
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22.19
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Applicable Percentage. The
maximum percentage of Excess Compensation that may be allocated to Eligible
Participants under the Permitted Disparity Method. See Article 2.
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22.20
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Average Compensation. The
average of a Participant’s annual Included Compensation during the Averaging
Period designated under Part 3, #11 of the target benefit plan Agreement. See
Section 2.5(d)(1) for a complete definition of Average Compensation.
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22.21
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Averaging Period. The
period used for determining an Employee’s Average Compensation. Unless
modified under Part 3, #11.a. of the target benefit plan Agreement, the
Averaging Period is the three (3) consecutive Measuring Periods during the
Participant’s Employment Period which produces the highest Average
Compensation.
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22.22
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Balance Forward Method. A
method for allocating net income or loss to Participants’ Accounts based on
the Account Balance as of the most recent Valuation Date under the Plan. See
Section 13.4(a).
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22.23
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Basic Plan Document. See
the definition for BPD.
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22.24
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Beneficiary. A person
designated by the Participant (or by the terms of the Plan) to receive a
benefit under the Plan upon the death of the Participant. See Section 8.4(c)
for the applicable rules for determining a Participant’s Beneficiaries under
the Plan.
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22.25
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BPD. The BPD (sometimes
referred to as the “Basic Plan Document”) is the portion of the Plan that
contains the non-elective provisions. The provisions under the BPD may be
supplemented or modified by elections the Employer makes under the Agreement
or by separate governing documents that are expressly authorized by the BPD.
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22.26
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Break-in-Service - Eligibility.
Generally, an Employee incurs a Break-in-Service for eligibility purposes for
each Eligibility Computation Period during which the Employee does not
complete more than 500 Hours of Service with the Employer. However, if the
Employer elects under Part 7 of the Agreement to require less than 1,000
Hours of Service to earn a Year of Service for eligibility purposes, a Break
in Service will occur for any Eligibility Computation Period during which the
Employee does not complete more than one-half (1/2) of the Hours of Service
required to earn a Year of Service. (See Section 1.6 for a discussion of the
eligibility Break-in-Service rules. Also see Section 6.5(b) for rules
applicable to the determination of a Break in Service when the Elapsed Time
Method is used.)
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22.27
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Break-in-Service - Vesting.
Generally, an Employee incurs a Break-in-Service for vesting purposes for
each Vesting Computation Period during which the Employee does not complete
more than 500 Hours of Service with the Employer. However, if the Employer
elects under Part 7 of the Agreement to require less than 1,000 Hours of
Service to earn a Year of Service for vesting purposes, a Break in Service
will occur for any Vesting Computation Period during which the Employee does
not complete more than one-half (1/2) of the Hours of Service required to
earn a Year of Service. (See Section 4.6 for a discussion of the vesting
Break-in-Service rules. Also see Section 6.5(b) for rules applicable to the
determination of a Break in Service when the Elapsed Time Method is used.)
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22.28
|
Calendar Year Election. A
special election used for determining the Lookback Year in applying the
Highly Compensated Employee test under Section 22.99.
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22.29
|
Cash-Out Distribution. A
total distribution made to a partially vested Participant upon termination of
participation under the Plan. See Section 5.3(a) for the rules regarding the
forfeiture of nonvested benefits upon a Cash-Out Distribution from the Plan.
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22.30
|
Code. The Internal Revenue
Code of 1986, as amended.
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120
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22.31
|
Code §415 Safe Harbor Compensation. An optional definition of compensation used to determine Total
Compensation. This definition may be selected under Part 3, #9.c. of the
Agreement. See Section 22.197(c) for the definition of Code §415 Safe Harbor
Compensation.
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22.32
|
Compensation Dollar Limitation. The
maximum amount of compensation that can be taken into account for any Plan
Year for purposes of determining a Participant’s Included Compensation (see
Section 22.102) or Testing Compensation (see Section 22.190). For Plan Years
beginning on or after January 1, 1994, the Compensation Dollar Limitation is
$150,000, as adjusted for increases in the cost-of-living in accordance with
Code §401(a)(17)(B).
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In
determining the Compensation Dollar Limitation for any applicable period for
which Included Compensation or Testing Compensation is being determined (the
“determination period”), the cost-of-living adjustment in effect for a
calendar year applies to any determination period beginning with or within
such calendar year. If a determination period consists of fewer than 12
months, the Compensation Dollar Limitation for such period is an amount equal
to the otherwise applicable Compensation Dollar Limitation multiplied by a
fraction, the numerator of which is the number of months in the short determination
period, and the denominator of which is 12. A determination period will not
be considered to be less than 12 months merely because compensation is taken
into account only for the period the Employee is an Eligible Participant. If
Section 401(k) Deferrals, Employer Matching Contributions, or Employee
After-Tax Contributions are separately determined for each pay period, no
proration of the Compensation Dollar Limitation is required with respect to
such pay periods.
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For Plan
Years beginning on or after January 1, 1989, and before January 1, 1994, the
Compensation Dollar Limitation taken into account for determining all
benefits provided under the Plan for any Plan Year shall not exceed $200,000.
This limitation shall be adjusted by the Secretary at the same time and in
the same manner as under Code §415(d), except that the dollar increase in
effect on January 1 of any calendar year is effective for Plan Years
beginning in such calendar year and the first adjustment to the $200,000
limitation is effective on January 1, 1990. |
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If
compensation for any prior determination period is taken into account in
determining a Participant’s allocations for the current Plan Year, the
compensation for such prior determination period is subject to the applicable
Compensation Dollar Limitation in effect for that prior period. For this
purpose, in determining allocations in Plan Years beginning on or after
January 1, 1989, the Compensation Dollar Limitation in effect for
determination periods beginning before that date is $200,000. In addition, in
determining allocations in Plan Years beginning on or after January 1, 1994,
the Compensation Dollar Limitation in effect for determination periods
beginning before that date is $150,000. |
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22.33 |
Co-Sponsor. A Related
Employer that adopts this Plan by executing the Co-Sponsor Adoption Page
under the Agreement. See Article 21 for the rules applicable to contributions
and deductions for contributions made by a Co-Sponsor. |
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22.34 |
Co-Sponsor Adoption Page. The
execution page under the Agreement that permits a Related Employer to adopt
this Plan as a Co-Sponsor. See Article 21. |
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22.35 |
Covered Compensation. The
average (without indexing) of the Taxable Wage Bases in effect for each
calendar year during the 35-year period ending with the last day of the
calendar year in which the Participant attains (or will attain) Social
Security Retirement Age. See Section 2.5(d)(2). |
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22.36 |
Cumulative Disparity Limit.
A limit on the amount of permitted disparity that may be provided under the
target benefit plan Agreement. See Section 2.5(c)(3)(iv). |
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22.37 |
Current Year Testing Method. A
method for applying the ADP Test and/or the ACP Test. See Section 17.2(a)(2)
for a discussion of the Current Year Testing Method under the ADP Test and
17.3(a)(2) for a discussion of the Current Year Testing Method under the ACP
Test. |
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22.38 |
Custodian. An organization
that has custody of all or any portion of the Plan assets. See Section 12.11. |
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22.39 |
Xxxxx-Xxxxx Act Service. A
Participant’s service used to apply the Xxxxx-Xxxxx Contribution Formula
under Part 4 of the Nonstandardized Agreement [Part 4C of the Nonstandardized
401(k) Agreement]. For this purpose, Xxxxx-Xxxxx Act Service is any service
performed by an Employee under a public contract subject to the Xxxxx-Xxxxx
Act or to any other federal, state or municipal prevailing wage law. See
Section 2.2(a)(1). |
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22.40 |
Xxxxx-Xxxxx Contribution Formula. The Employer may elect under Part 4 of the Nonstandardized
Agreement [Part 4C of the Nonstandardized 401(k) Agreement] to provide an
Employer Contribution for each Eligible Participant who performs Xxxxx-Xxxxx
Act Service. (See Section 2.2(a)(1) (profit sharing plan and 401(k) plan) and
Section 2.4(e) (money purchase plan) for special rules regarding the
application of the Xxxxx-Xxxxx Contribution Formula.) |
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22.41 |
Defined Benefit Plan. A
plan under which a Participant’s benefit is based solely on the Plan’s
benefit formula without the establishment of separate Accounts for
Participants. |
121
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22.42
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Defined Benefit Plan Fraction. A
component of the combined limitation test under Code §415(e) for Employers
that maintain or ever maintained both a Defined Contribution and a Defined
Benefit Plan. See Section 7.5 (b)(1).
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22.43
|
Defined Contribution Plan. A
plan that provides for individual Accounts for each Participant to which all
contributions, forfeitures, income, expenses, gains and losses under the Plan
are credited or deducted. A Participant’s benefit under a Defined
Contribution Plan is based solely on the fair market value of his/her vested
Account Balance.
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22.44
|
Defined Contribution Plan Dollar Limitation. The maximum dollar amount of Annual Additions an Employee may
receive under the Plan. See Section 7.4(b).
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22.45
|
Defined Contribution Plan Fraction. A
component of the combined limitation test under Code §415(e) for Employers
that maintain or ever maintained both a Defined Contribution and a Defined
Benefit Plan. See Section 7.5(b)(2).
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22.46
|
Designated Beneficiary. A
Beneficiary who is designated by the Participant (or by the terms of the
Plan) and whose Life Expectancy is taken into account in determining minimum
distributions under Code §401(a)(9). See Article 10.
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22.47
|
Determination Date. The
date as of which the Plan is tested to determine whether it is a Top-Heavy
Plan. See Section 16.3(a).
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22.48
|
Determination Period. The
period during which contributions to the Plan are tested to determine if the
Plan is a Top-Heavy Plan. See Section 16.3(b).
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22.49
|
Determination Year. The
Plan Year for which an Employee’s status as a Highly Compensated Employee is
being determined. See Section 22.99(b)(1).
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22.50
|
Directed Account. The Plan
assets under a Trust which are held for the benefit of a specific
Participant. See Section 13.4(b).
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22.51
|
Directed Trustee. A Trustee
is a Directed Trustee to the extent that the Trustee’s investment powers are
subject to the direction of another person. See Section 12.2(b).
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22.52
|
Direct Rollover. A
rollover, at the Participant’s direction, of all or a portion of the
Participant’s vested Account Balance directly to an Eligible Retirement Plan.
See Section 8.8.
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22.53
|
Disabled. Except as
modified under Part 13, #55 of the Agreement [Part 13, #73 of the 401(k)
Agreement], an individual is considered Disabled for purposes of applying the
provisions of this Plan if the individual is unable to engage in any
substantial gainful activity by reason of a 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 12
months. The permanence and degree of such impairment shall be supported by
medical evidence.
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22.54
|
Discretionary Trustee. A
Trustee is a Discretionary Trustee to the extent the Trustee has exclusive
authority and discretion to invest, manage or control the Plan assets without
direction from any other person. See Section 12.2(a).
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22.55
|
Distribution Calendar Year. A
calendar year for which a minimum distribution is required. See Section
10.3(f).
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22.56
|
Distribution Commencement Date. The date an Employee commences distribution from the Plan. If a
Participant commences distribution with respect to a portion of his/her
Account Balance, a separate Distribution Commencement Date applies to any
subsequent distribution. If distribution is made in the form of an annuity,
the Distribution Commencement Date may be treated as the first day of the
first period for which annuity payments are made.
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22.57
|
Early Retirement Age. The
age and/or Years of Service requirement prescribed by Part 5, #17 of the
Agreement [Part 5, #35 of the 401(k) Agreement]. Early Retirement Age may be
used to determine distribution rights and/or vesting rights. The Plan is not
required to have an Early Retirement Age.
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22.58
|
Earned Income. Earned
Income is the net earnings from self-employment in the trade or business with
respect to which the Plan is established, and for which personal services of
the individual are a material income-producing factor. Net earnings will be
determined without regard to items not included in gross income and the
deductions allocable to such items. Net earnings are reduced by contributions
by the Employer to a qualified plan to the extent deductible under Code §404.
Net earnings shall be determined after the deduction allowed to the taxpayer
by Code §164(f). If Included Compensation is defined to exclude any items of
Compensation (other than Elective Deferrals), then for purposes of
determining the Included Compensation of a Self-Employed Individual, Earned
Income shall be adjusted by multiplying Earned Income by the percentage of
Total Compensation that is included for the Eligible Participants who are
Nonhighly Compensated Employees. The percentage is determined by calculating
the percentage of each Nonhighly Compensated Eligible Participant’s Total
Compensation that is included in the definition of Included Compensation and
averaging those percentages.
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122
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22.59
|
Effective Date. The date
this Plan, including any restatement or amendment of this Plan, is effective.
Where the Plan is restated or amended, a reference to Effective Date is the
effective date of the restatement or amendment, except where the context
indicates a reference to an earlier Effective Date. If this Plan is
retroactively effective, the provisions of this Plan generally control.
However, if the provisions of this Plan are different from the provisions of
the Employer’s prior plan and, after the retroactive Effective Date of this
Plan, the Employer operated in compliance with the provisions of the prior
plan, the provisions of such prior plan are incorporated into this Plan for
purposes of determining whether the Employer operated the Plan in compliance
with its terms, provided operation in compliance with the terms of the prior
plan do not violate any qualification requirements under the Code,
regulations, or other IRS guidance.
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|
|
The Employer
may designate special effective dates for individual provisions under the
Plan where provided in the Agreement or under Appendix A of the Agreement. If
one or more qualified retirement plans have been merged into this Plan, the
provisions of the merging plan(s) will remain in full force and effect until
the Effective Date of the plan merger(s), unless provided otherwise under
Appendix A-12 of the Agreement [Appendix A-16 of the 401(k) Agreement]. See
Section 20.1 for special effective date provisions relating to the changes
required under the GUST Legislation.
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|
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22.60 |
Elapsed Time Method. The
Elapsed Time Method is a special method for crediting service for
eligibility, vesting or for applying the allocation conditions under Part 4
of the Agreement. To apply the Elapsed Time Method for eligibility or
vesting, the Employer must elect the Elapsed Time Method under Part 7 of the
Agreement. To apply the Elapsed Time Method to determine an Employee’s
eligibility for an allocation under the Plan, the Employer must elect the
Elapsed Time Method under Part 4, #15.e. of the Nonstandardized Agreement
[Part 0X, #00.x. xxx/xx Xxxx 0X, #00.x. of the Nonstandardized 401(k)
Agreement]. (See Section 6.5(b) for more information on the Elapsed Time
Method of crediting service for eligibility and vesting and Section 2.6(c)
for information on the Elapsed Time Method for allocation conditions.) |
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22.61 |
Elective Deferrals. Section
401(k) Deferrals, salary reduction contributions to a SEP described in Code
§§408(k)(6) and 402(h)(1)(B) (sometimes referred to as a SARSEP),
contributions made pursuant to a Salary Reduction Agreement to a contract,
custodial account or other arrangement described in Code §403(b), and
elective contributions made to a SIMPLE-XXX plan, as described in Code
§408(p). Elective Deferrals shall not include any amounts properly
distributed as an Excess Amount under §415 of the Code. |
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|
22.62 |
Eligibility Computation Period. The 12-consecutive month period used for measuring whether an
Employee completes a Year of Service for eligibility purposes. An Employee’s
initial Eligibility Computation Period always begins on the Employee’s
Employment Commencement Date. Subsequent Eligibility Computation Periods are
measured under the Shift-to-Plan-Year Method or the Anniversary Year Method.
See Section 1.4(c). |
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22.63 |
Eligible Participant. Except
as provided under Part 1, #6 of the Agreement, an Employee (other than an
Excluded Employee) becomes an Eligible Participant on the appropriate Entry
Date (as selected under Part 2 of the Agreement) following satisfaction of
the Plan’s minimum age and service conditions (as designated in Part 1 of the
Agreement). See Article 1 for the rules regarding participation under the
Plan. |
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|
|
For purposes
of the 401(k) Agreement, an Eligible Participant is any Employee (other than
an Excluded Employee) who has satisfied the Plan’s minimum age and service
conditions designated in Part 1 of the Agreement with respect to a particular
contribution. With respect to Section 401(k) Deferrals or Employee After-Tax
Contributions, an Employee who has satisfied the eligibility conditions under
Part 1 of the Agreement for making Section 401(k) Deferrals or Employee
After-Tax Contribution is an Eligible Participant with respect to such
contributions, even if the Employee chooses not to actually make any such
contributions. With respect to Employer Matching Contributions, an Employee
who has satisfied the eligibility conditions under Part 1 of the Agreement
for receiving such contributions is an Eligible Participant with respect to
such contributions, even if the Employee does not receive an Employer
Matching Contribution (including forfeitures) because of the Employee’s
failure to make Section 401(k) Deferrals or Employee After-Tax Contributions,
as applicable. |
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22.64 |
Eligible Rollover Distribution.
An amount distributed from the Plan that is eligible for rollover to an
Eligible Retirement Plan. See Section 8.8(a). |
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22.65 |
Eligible Retirement Plan. A
qualified retirement plan or XXX that may receive a rollover contribution.
See Section 8.8(b). |
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22.66 |
Employee. An Employee is
any individual employed by the Employer (including any Related Employers). An
independent contractor is not an Employee. An Employee is not eligible to
participate under the Plan if the individual is an Excluded Employee under
Section 1.2. (See Section 1.3 for rules regarding coverage of Employees of
Related Employers.) For purposes of applying the provisions under this Plan,
a Self-Employed Individual (including a partner in a partnership) is treated
as an Employee. A Leased Employee is also treated as an Employee of the
recipient organization, as provided in Section 1.2(b). |
123
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22.67
|
Employee After-Tax Contribution Account. The portion of the Participant’s Account attributable to
Employee After-Tax Contributions.
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22.68
|
Employee After-Tax Contributions. Employee After-Tax Contributions are contributions 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 Employee After-Tax Contribution Account to which earnings and losses
are allocated. Employee After-Tax Contributions may only be made under the
Nonstandardized 401(k) Agreement. See Section 3.1.
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22.69
|
Employer. Except as
otherwise provided, Employer means the Employer (including a Co-Sponsor) that
adopts this Plan and any Related Employer. (See Section 1.3 for rules
regarding coverage of Employees of Related Employers. Also see Section 11.8
for operating rules when the Employer is a member of a Related Employer
group, and Article 21 for rules that apply to Related Employers that execute
a Co-Sponsor Adoption Page under the Agreement.)
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22.70
|
Employer Contribution Account. If
this Plan is a profit sharing plan (other than a 401(k) plan), a money
purchase plan, or a target benefit plan, the Employer Contribution Account is
the portion of the Participant’s Account attributable to contributions made
by the Employer. If this is a 401(k) plan, the Employer Contribution Account
is the portion of the Participant’s Account attributable to Employer Nonelective
Contributions, other than QNECs or Safe Harbor Nonelective Contributions.
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22.71
|
Employer Contributions. If
this Plan is a profit sharing plan (other than a 401(k) plan), a money
purchase plan, or a target benefit plan, Employer Contributions are any
contributions the Employer makes pursuant to Part 4 of to the Agreement. If
this Plan is a 401(k) plan, Employer Contributions include Employer
Nonelective Contributions and Employer Matching Contributions, including
QNECs, QMACs and Safe Harbor Contributions that the Employer makes under the
Plan. Employer Contributions also include any Section 401(k) Deferrals an
Employee makes under the Plan, unless the Plan expressly provides for
different treatment of Section 401(k) Deferrals.
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22.72
|
Employer Matching Contribution Account. The
portion of the Participant’s Account attributable to Employer Matching
Contributions, other than QMACs or Safe Harbor Matching Contributions.
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|
|
22.73
|
Employer Matching Contributions. Employer Matching Contributions are contributions made by the
Employer on behalf of a Participant on account of Section 401(k) Deferrals or
Employee After-Tax Contributions made by such Participant, as designated
under Parts 4B(b) of the 401(k) Agreement. Employer Matching Contributions
may only be made under the 401(k) Agreement. Employer Matching Contributions
also include any QMACs the Employer makes pursuant to Part 4B, #18 of the
401(k) Agreement and any Safe Harbor Matching Contributions the Employer
makes pursuant to Part 4E of the 401(k) Agreement. See Section 2.3(b).
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|
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22.74
|
Employer Nonelective Contributions. Employer Nonelective Contributions are contributions made by
the Employer on behalf of Eligible Participants under the 401(k) Plan, as
designated under Part 4C of the 401(k) Agreement. Employer Nonelective
Contributions also include any QNECs the Employer makes pursuant to Part 4C,
#22 of the 401(k) Agreement and any Safe Harbor Nonelective Contributions the
Employer makes pursuant to Part 4E of the 401(k) Agreement. See Section 2.3(d).
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22.75
|
Employment Commencement Date.
The date the Employee first performs an Hour of Service for the Employer. For
purposes of applying the Elapsed Time rules under Section 6.5(b), an Hour of
Service is limited to an Hour of Service as described in Section 22.101(a).
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22.76
|
Employment Period. The
period as defined in Part 3, #11.c. of the target benefit plan Agreement used
to determine an Employee’s Average Compensation. See Section 2.5(d)(1)(iii).
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|
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22.77
|
Entry Date. The date on
which an Employee becomes an Eligible Participant upon satisfying the Plan’s
minimum age and service conditions. See Section 1.5.
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|
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22.78
|
Equivalency Method. An
alternative method for crediting Hours of Service for purposes of eligibility
and vesting. To apply, the Employer must elect the Equivalency Method under
Part 7 of the Agreement. See Section 6.5(a) for a more detailed discussion of
the Equivalency Method.
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|
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22.79
|
ERISA. The Employee
Retirement Income Security Act of 1974, as amended.
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|
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22.80
|
Excess Aggregate Contributions. Amounts
which are distributed to correct the ACP Test. See Section 17.7(c).
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|
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22.81
|
Excess Amount. Amounts
which exceed the Annual Additions Limitation. See Section 7.4(c).
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|
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22.82
|
Excess Compensation. The
amount of Included Compensation which exceeds the Integration Level. Excess
Compensation is used for purposes of applying the Permitted Disparity
allocation formula under the profit sharing or 401(k) plan Agreement (see
Section 2.2(b)(2)) or under the money purchase plan Agreement (see Section
2.4(c)) or for applying the Integration Formulas under the target benefit
plan Agreement (see Section 2.5(d)(3)).
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124
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22.83
|
Excess Contributions. Amounts
which are distributed to correct the ADP Test. See Section 17.7(d).
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|
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22.84
|
Excess Deferrals. Elective
Deferrals that are includible in a Participant’s gross income because they
exceed the dollar limitation under Code §402(g). Excess Deferrals made to
this Plan shall be treated as Annual Additions under the Plan, unless such
amounts are distributed no later than the first April 15 following the close
of the Participant’s taxable year for which the Excess Deferrals are made.
See Section 17.1.
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22.85
|
Excluded Employee. An
Employee who is excluded under Part 1, #4 of the Agreement. See Section 1.2.
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22.86
|
Fail-Safe Coverage Provision. A
correction provision that permits the Plan to automatically correct a
coverage violation resulting from the application of a last day of employment
or Hours of Service allocation condition. See Section 2.7.
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|
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22.87
|
Favorable IRS Letter. A
notification letter or opinion letter issued by the IRS to a Prototype
Sponsor as to the qualified status of a Prototype Plan. A separate Favorable
IRS Letter is issued with respect to each Agreement offered under the Prototype
Plan. If the term is used to refer to a letter issued to an Employer with
respect to its adoption of this Prototype Plan, such letter is a
determination letter issued by the IRS.
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|
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22.88
|
Five-Percent Owner. An
individual who owns (or is considered as owning within the meaning of Code
§318) more than 5 percent of the outstanding stock of the Employer or stock
possessing more than 5 percent of the total combined voting power of all
stock of the Employer. If the Employer is not a corporation, a Five-Percent
Owner is an individual who owns more than 5 percent of the capital or profits
interest of the Employer.
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22.89
|
Five-Year Forfeiture Break in Service. A Break in Service rule under which a Participant’s nonvested
benefit may be forfeited. See Section 4.6(b).
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|
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22.90
|
Flat Benefit. A
Nonintegrated Benefit Formula under Part 4 of the target benefit plan
Agreement that provides for a Stated Benefit equal to a specified percentage
of Average Compensation. See Section 2.5(c)(1)(i).
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22.91
|
Flat Excess Benefit. An
Integrated Benefit Formula under Part 4 of the target benefit plan Agreement
that provides for a Stated Benefit equal to a specified percentage of Average
Compensation plus a specified percentage of Excess Compensation. See Section
2.5(c)(2)(i).
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22.92
|
Flat Offset Benefit. An
Integrated Benefit Formula under Part 4 of the target benefit plan Agreement
that provides for a Stated Benefit equal to a specified percentage of Average
Compensation which is offset by a specified percentage of Offset
Compensation. See Section 2.5(c)(2)(iii).
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22.93
|
Former Related Employer. A
Related Employer (as defined in Section 22.164) that ceases to be a Related
Employer because of an acquisition or disposition of stock or assets, a
merger, or similar transaction. See Section 21.4 for the effect when a
Co-Sponsor becomes a Former Related Employer.
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22.94
|
Four-Step Formula. A method for allocating
certain Employer Contributions under the Permitted Disparity Method. See
Section 2.2(b)(2)(ii).
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|
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22.95
|
General Trust Account. The
Plan assets under a Trust which are held for the benefit of all Plan
Participants as a pooled investment. See Section 13.4(a).
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|
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22.96
|
GUST Legislation. GUST
Legislation refers to the Uruguay Round Agreements Act (GATT), the Uniformed Services
Employment and Reemployment Rights Act of 1994 (USERRA) the Small Business
Job Protection Act of 1996 (SBJPA), the Taxpayer Relief Act of 1997 (TRA
‘97), and the Internal Revenue Service Restructuring and Reform Act of 1998.
See Article 20 for special rules for demonstrating compliance with the
qualification changes under the GUST Legislation.
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22.97
|
Hardship. A heavy and
immediate financial need which meets the requirements of Section 8.6.
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22.98
|
Highest Average Compensation. A
term used to apply the combined plan limit under Code §415(e). See Section
7.5(b)(3).
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22.99
|
Highly Compensated Employee.
The definition of Highly Compensated Employee under this Section is effective
for Plan Years beginning after December 31, 1996. For Plan Years beginning
before January 1, 1997, Highly Compensated Employees are determined under
Code §414(q) as in effect at that time.
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(a)
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Definition. An Employee is
a Highly Compensated Employee for a Plan Year if he/she:
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(1) |
is a
Five-Percent Owner (as defined in Section 22.88) at any time during the
Determination Year or the Lookback Year; or |
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(2) |
has Total
Compensation from the Employer for the Lookback Year in excess of $80,000 (as
adjusted) and, if elected under Part 13, #50.a. of the Agreement [Part 13,
#68.a. of the 401(k) Agreement], is in the Top-Paid Group for the Lookback
Year. If the Employer does not specifically elect to apply the Top-Paid Group
Test, the Highly Compensated Employee definition will be applied without
regard to whether an Employee is in the Top-Paid Group. The $80,000 amount is
adjusted at the same time and in the same manner as under Code §415(d),
except that the base period is the calendar quarter ending September 30,
1996. |
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(b) |
Other Definitions. The
following definitions apply for purposes of determining Highly Compensated
Employee status under this Section 22.99. |
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(1) |
Determination Year. The Determination Year
is the Plan Year for which the Highly Compensated Employee determination is
being made. |
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(2) |
Lookback Year. Unless the Calendar Year
Election (or Old-Law Calendar Year Election) applies, the Lookback Year is
the 12-month period immediately preceding the Determination Year. |
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(3) |
Total Compensation. Total Compensation as
defined under Section 22.197. |
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(4) |
Top-Paid Group. An Employee is in the
Top-Paid Group for purposes of applying the Top-Paid Group Test if the
Employee is one of the top 20% of Employees ranked by Total Compensation. In
determining the Top-Paid Group, any reasonable method of rounding or
tie-breaking is permitted. For purposes of determining the number of
Employees in the Top-Paid Group for any year, Employees described in Code
§414(q)(5) or applicable regulations may be excluded. |
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(5) |
Calendar Year Election. If the Plan Year
elected under the Agreement is not the calendar year, for purposes of
applying the Highly Compensated Employee test under subsection (a)(2) above,
the Employer may elect under Part 13, #50.b. of the Agreement [Part 13,
#68.b. of the 401(k) Agreement] to substitute for the Lookback Year the
calendar year that begins in the Lookback Year. The Calendar Year Election
does not apply for purposes of applying the Five-Percent Owner test under
subsection (a)(1) above. If the Employer does not specifically elect to apply
the Calendar Year Election, the Calendar Year Election does not apply. The
Calendar Year Election should not be selected if the Plan is using a calendar
Plan Year. |
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(6) |
Old-Law Calendar Year Election. A special
election available under section 1.414(q)-1T of the temporary Income Tax
Regulations and provided for in Notice 97-45 for the Plan Year beginning in
1997 which permitted the Employer to substitute the calendar year beginning
with or within the Plan Year for the Lookback Year in applying subsections
(a)(1) and (a)(2) above. If the 1997 Plan Year was a calendar year, the
effect of the Old-Law Calendar Year Election was to treat the Determination
Year and the Lookback Year as the same 12-month period. The Employer may elect
to apply the Old-Law Calendar Year Election under Appendix B-1.c. of the
Agreement. See Section 20.2(c). |
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(c) |
Application of Highly Compensated Employee definition. In determining whether an Employee is a Highly Compensated
Employee for years beginning in 1997, the amendments to Code §414(q) as
described above are treated as having been in effect for years beginning in
1996. In determining an Employee’s status as a highly compensated former
employee, the rules for the applicable Determination Year apply in accordance
with section 1.414(q)-1T, A-4 of the temporary Income Tax Regulations and
Notice 97-45. |
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22.100 |
Highly Compensated Employee Group. The group of Highly Compensated Employees who are included in
the ADP Test and/or the ACP Test. See Section 17.7(e). |
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22.101 |
Hour of Service. Each
Employee will receive credit for each Hour of Service as defined in this
Section 22.101. An Employee will not receive credit for the same Hour of
Service under more than one category listed below. |
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(a) |
Performance of duties. Hours
of Service include each hour for which an Employee is paid, or entitled to
payment, for the performance of duties for the Employer. These hours will be
credited to the Employee for the computation period in which the duties are
performed. |
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(b) |
Nonperformance of duties. Hours
of Service include 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 |
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will 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 will be calculated and
credited pursuant to §2530.200b-2 of the Department of Labor Regulations
which is incorporated herein by this reference. |
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(c) |
Back pay award. Hours of
Service include 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 will not be credited both under subsection (a) or subsection (b), as
the case may be, and under this subsection (c). These hours will 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. |
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(d) |
Related Employers/Leased Employees. For purposes of crediting Hours of Service, all Related
Employers are treated as a single Employer. Hours of Service will be credited
for employment with any Related Employer. Hours of Service also include hours
credited as a Leased Employee for a recipient organization. |
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(e) |
Maternity/paternity leave. Solely
for purposes of determining whether a Break in Service has occurred in a
computation period, an individual who is absent from work for maternity or
paternity reasons will 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 (1) by reason of the
pregnancy of the individual, (2) by reason of a birth of a child of the
individual, (3) by reason of the placement of a child with the individual in
connection with the adoption of such child by such individual, or (4) 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 will be credited (1) in the computation period in which the absence
begins if the crediting is necessary to prevent a Break in Service in that
period, or (2) in all other cases, in the following computation period. |
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22.102 |
Included Compensation. Included
Compensation is Total Compensation, as modified under Part 3, #10 of the
Agreement, used to determine allocations of contributions and forfeitures.
Under the Nonstandardized Agreement, Included Compensation generally includes
amounts an Employee earns with a Related Employer that has not executed a
Co-Sponsor Adoption Page under the Agreement. However, the Employer may elect
under Part 3, #10.b.(7) of the Nonstandardized Agreement [Part 3, #10.i. of
the Nonstandardized 401(k) Agreement] to exclude all amounts earned with a
Related Employer that has not executed a Co-Sponsor Adoption Page. Under the
Standardized Agreement, Included Compensation always includes all
compensation earned with all Related Employers, without regard to whether the
Related Employer executes the Co-Sponsor Adoption Page. (See Section 21.5.)
In no case may Included Compensation for any Participant exceed the
Compensation Dollar Limitation as defined in Section 22.32. Included
Compensation does not include any amounts earned while an individual is an
Excluded Employee (as defined in Section 1.2 of this BPD). |
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The Employer
may select under Part 3, #10 of the 401(k) Agreement to provide a different
definition of Included Compensation for determining Section 401(k) Deferrals,
Employer Matching Contributions, and Employer Nonelective Contributions.
Unless otherwise provided in Part 3, #10.j. of the Nonstandardized 401(k)
Agreement, the definition of Included Compensation chosen for Section 401(k)
Deferrals also applies to any Employee After-Tax Contributions and to any
Safe Harbor Contributions designated under Part 4E of the Agreement; the
definition of Included Compensation chosen for Employer Matching
Contributions also applies to any QMACs; and the definition of Included
Compensation chosen for Employer Nonelective Contributions also applies to
any QNECs. |
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The Employer
may elect to exclude from the definition of Included Compensation any of the
amounts permitted under Part 3, #10 of the Agreement. However, to use the
same definition of compensation for purposes of nondiscrimination testing,
the definition of Included Compensation must satisfy the nondiscrimination
requirements of Code §414(s). The definition of Included Compensation will be
deemed to be nondiscriminatory under Code §414(s) if the only amounts
excluded are amounts under Part 3, #10.b.(1) – (3) of the Nonstandardized
Agreement [Part 3, #10.c. – e. of the Nonstandardized 401(k) Agreement]. Any
other exclusions could cause the definition of Included Compensation to fail
to satisfy the nondiscrimination requirements of Code §414(s). If the
definition of Included Compensation fails to satisfy the nondiscrimination
requirements of Code §414(s), additional nondiscrimination testing may have
to be performed to demonstrate compliance with the nondiscrimination
requirements. The definition of Included Compensation under the Standardized
Agreements must satisfy the nondiscrimination requirements under Code
§414(s). |
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If the Plan
uses a Permitted Disparity Method under Part 4 of the Agreement or if the
Plan is a Safe Harbor 401(k) Plan, the definition of Included Compensation
must satisfy the nondiscrimination requirements under Code §414(s).
Therefore, any exclusions from Included Compensation under Part 3, #10.b.(4)
– (8) of the Nonstandardized Agreement [Part 3, #10.f. – j. of the
Nonstandardized 401(k) Agreement] will apply only to Highly Compensated
Employees, unless specifically provided otherwise under Part 3, #10.b.(8). of
the Nonstandardized Agreement [Part 3, #10.j. of the Nonstandardized 401(k)
Agreement]. |
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The Employer
may elect under Part 3, #10.b.(1) of the Agreement [Part 3, #10.c. of the
401(k) Agreement] to exclude Elective Deferrals, pre-tax contributions to a
cafeteria plan or a Code §457 plan, and qualified transportation fringes
under Code§132(f)(4). Generally, the exclusion of qualified transportation
fringes is effective for Plan Years beginning on or after January 1, 2001.
However, the Employer may elect an earlier effective date under Appendix
B-3.c. of the Agreement. |
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22.103 |
Insurer. An insurance
company that issues a life insurance policy on behalf of a Participant under
the Plan in accordance with the requirements under Article 15. |
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22.104 |
Integrated Benefit Formula.
A benefit formula under Part 4 of the target benefit plan Agreement that
takes into account an Employee’s Social Security benefits. See Section
2.5(c)(2). |
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22.105 |
Integration Level. The
amount used for purposes of applying the Permitted Disparity Method
allocation formula (or the Integrated Benefit Formulas under the target
benefit plan Agreement). The Integration Level is the Taxable Wage Base,
unless the Employer designates a different amount under Part 4 of the
Agreement. |
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22.106 |
Investment Manager. A
person (other than the Trustee) who (a) has the power to manage, acquire, or
dispose of Plan assets (b) is an investment adviser, a bank, or an insurance
company as described in §3(38)(B) of ERISA, and (c) acknowledges fiduciary
responsibility to the Plan in writing. |
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22.107 |
Key Employee. Employees who
are taken into account for purposes of determining whether the Plan is a
Top-Heavy Plan. See Section 16.3(c). |
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22.108 |
Leased Employee. An
individual who performs services for the Employer pursuant to an agreement
between the Employer and a leasing organization, and who satisfies the
definition of a Leased Employee under Code §414(n). See Section 1.2(b) for
rules regarding the treatment of a Leased Employee as an Employee of the
Employer. |
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22.109 |
Life Expectancy. A
Participant’s and/or Designated Beneficiary’s life expectancy used for
purposes of determining required minimum distributions under the Plan. See
Section 10.3(e). |
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22.110 |
Limitation Year. The
measuring period for determining whether the Plan satisfies the Annual
Additions Limitation under Section 7.4(d). |
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22.111 |
Lookback Year. The 12-month
period immediately preceding the current Plan Year during which an Employee’s
status as Highly Compensated Employee is determined. See Section 22.99(b)(2). |
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22.112 |
Maximum Disparity Percentage.
The maximum amount by which the designated percentage of Excess Compensation
under an Excess Benefit formula under Part 4 of the target benefit plan
Agreement may exceed the designated percentage of Average Compensation. See
Section 2.5(c)(3)(i). |
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22.113 |
Maximum Offset Percentage.
The maximum amount that may be designated as the offset percentage under an
Offset Benefit formula under Part 4 of the target benefit plan Agreement. See
Section 2.5(c)(3)(ii). |
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22.114 |
Maximum Permissible Amount. The
maximum amount that may be allocated to a Participant’s Account within the
Annual Additions Limitation. See Section 7.4(e). |
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22.115 |
Measuring Period. The
period for which Average Compensation or Offset Compensation is measured
under the target benefit plan Agreement. Unless elected otherwise under Part
3, #11.b. or Part 3, #12.a. of the target benefit plan Agreement, as
applicable, the Measuring Period is the Plan Year (or the 12-month period
ending on the last day of the Plan Year for a short Plan Year). See Sections
2.5(d)(1)(ii) and 2.5(d)(5)(i). |
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22.116 |
Multiple Use Test. A
special nondiscrimination test that applies when the Plan must perform both
the ADP Test and the ACP Test in the same Plan Year. See Section 17.4. |
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22.117 |
Named Fiduciary. The Plan
Administrator or other fiduciary named by the Plan Administrator to control
and manage the operation and administration of the Plan. To the extent
authorized by the Plan Administrator, a Named Fiduciary may delegate its
responsibilities to a third party or parties. The Employer shall also be a
Named Fiduciary. |
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22.118 |
Net Profits. The Employer’s
net income or profits that may be used to limit the amount of Employer
Contributions made under the Plan. See Section 2.2(a)(2). |
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22.119 |
New Related Employer. An
organization that becomes a Related Employer (as defined in Section 22.164)
with the Employer by reason of an acquisition or disposition of stock or
assets, a merger, or similar transaction. See Section 21.5 for special
procedures under a Standardized Agreement when there is a New Related
Employer. |
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22.120
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Nonhighly Compensated Employee. Any Employee who is not a Highly Compensated Employee. See
Section 22.99 for the definition of Highly Compensated Employee.
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22.121
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Nonhighly Compensated Employee Group. The
group of Nonhighly Compensated Employees included in the ADP Test and/or the
ACP Test. See Section 17.7(f).
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22.122
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Nonintegrated Benefit Formula.
A benefit formula under Part 4 of the target benefit plan Agreement that does
not take into account an Employee’s Social Security benefits. See Section
2.5(c)(1).
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22.123
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Non-Key Employee. Any
Employee who is not a Key Employee. (See Section 16.3(c).)
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22.124
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Nonresident Alien Employees. An
Employee who is neither a citizen of the United States nor a resident of the
United States for U.S. tax purposes (as defined in Code §7701(b)), and who
does not have any earned income (as defined in Code §911) for the Employer
that constitutes U.S. source income (within the meaning of Code §861). If a
Nonresident Alien Employee has U.S. source income, he/she is treated as
satisfying this definition if all of his/her U.S. source income from the
Employer is exempt from U.S. income tax under an applicable income tax
treaty.
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22.125
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Nonstandardized Agreement. An
Agreement under this Prototype Plan under which an adopting Employer may not
rely on a Favorable IRS Letter issued to the Prototype Sponsor. In order to
have reliance from the IRS that the form of the Plan as adopted by the
Employer is qualified, the Employer must request a determination letter on
the Plan.
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22.126
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Normal Retirement Age. The
age selected under Part 5 of the Agreement. If a Participant’s Normal
Retirement Age is determined wholly or partly with reference to an anniversary
of the date the Participant commenced participation in the Plan and/or the
Participant’s Years of Service, Normal Retirement Age is the Participant’s
age when such requirements are satisfied. 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 Agreement.
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22.127
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Offset Compensation. The
average of a Participant’s annual Included Compensation during the three (3)
consecutive Measuring Periods designated under Part 3, #12 of the target
benefit plan Agreement. See Section 2.5(d)(5) for a complete definition of
Offset Compensation.
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22.128
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Offset Benefit Formula. A
Flat Offset Benefit formula or a Unit Offset Benefit formula under Part 4 of
the target benefit plan Agreement that provides for a Stated Benefit based on
a percentage of Average Compensation offset by a percentage of Offset
Compensation. See Section 2.5(c)(2)(iii) and (iv).
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22.129
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Old-Law Calendar Year Election. A special election for determining the Lookback Year under the
Highly Compensated Employee test that was available only for the 1997 Plan
Year. See Section 22.99(b)(6).
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22.130
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Old-Law Required Beginning Date. If so elected under Part 13, #52 of the Agreement [Part 13, #70
of the 401(k) Agreement], the date by which minimum distributions must
commence under the Plan, as determined under Section 10.3(a)(2).
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22.131
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Owner-Employee. A
Self-Employed Individual (as defined in Section 22.180) who is a sole
proprietor, or who is a partner owning more than 10 percent of either the
capital or profits interest of the partnership.
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22.132
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Paired Plans. Two or more
Standardized Agreements that are designated as Paired Plans. See Section
19.6.
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22.133
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Participant. A Participant
is an Employee or former Employee who has satisfied the conditions for
participating under the Plan. A Participant also includes any Employee or
former Employee who has an Account Balance under the Plan, including an
Account Balance derived from a rollover or transfer from another qualified
plan or XXX. A Participant is entitled to share in an allocation of
contributions or forfeitures under the Plan for a given year only if the
Participant is an Eligible Participant as defined in Section 1.1, and
satisfies the allocation conditions set forth in Section 2.6 and Part 4 of
the Agreement.
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22.134
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Period of Severance. A
continuous period of time during which the Employee is not employed by the
Employer and which is used to determine an Employee’s Participation under the
Elapsed Time Method. See Section 6.5(b)(2).
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22.135
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Permissive Aggregation Group. Plans
that are not required to be aggregated to determine whether the Plan is a
Top-Heavy Plan. See Section 16.3(d).
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22.136
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Permitted Disparity Method. A
method for allocating certain Employer Contributions to Eligible Participants
as designated under Part 4 of the Agreement. See Article 2.
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22.137
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Plan. The Plan is the
retirement plan established or continued by the Employer for the benefit of
its Employees under this Prototype Plan document. The Plan consists of the
BPD and the elections made under the Agreement. If the
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Employer
adopts more than one Agreement offered under this Prototype Plan, then each
executed Agreement represents a separate Plan, unless the Agreement restates
a previously executed Agreement. |
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22.138 |
Plan Administrator. The
Plan Administrator is the person designated to be responsible for the
administration and operation of the Plan. Unless otherwise designated by the
Employer, the Plan Administrator is the Employer. If any Related Employer has
executed a Co-Sponsor Adoption Page, the Employer referred to in this Section
is the Employer that executes the Signature Page of the Agreement. |
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22.139 |
Plan Year. The
12-consecutive month period for administering the Plan, on which the records
of the Plan are maintained. The Employer must designate the Plan Year
applicable to the Plan under the Agreement. If the Plan Year is amended, a
Plan Year of less than 12 months may be created. If this is a new Plan, the
first Plan Year begins on the Effective Date of the Plan. If the amendment of
the Plan Year or the Effective Date of a new Plan creates a Plan Year that is
less than 12 months long, there is a Short Plan Year. The existence of a
Short Plan Year may be documented under the Plan Year definition on page 1 of
the Agreement. See Section 11.7 for operating rules that apply to Short Plan
Years. |
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22.140 |
Pre-Age 35 Waiver. A waiver
of the QPSA before a Participant reaches age 35. See Section 9.4(f). |
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22.141 |
Predecessor Employer. An
employer that previously employed the Employees of the Employer.See Section 6.7 for the rules regarding
the crediting of service with a Predecessor Employer. |
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22.142 |
Predecessor Plan. A
Predecessor Plan is a qualified plan maintained by the Employer that is
terminated within the 5-year period immediately preceding or following the
establishment of this Plan. A Participant’s service under a Predecessor Plan
must be counted for purposes of determining the Participant’s vested
percentage under the Plan. See Section 4.5(b)(1). |
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22.143 |
Present Value. The current
single-sum value of an Accrued Benefit under a Defined Benefit Plan. |
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22.144 |
Present Value Stated Benefit. An
amount used to determine the Employer Contribution under the target benefit
plan Agreement. See Section 2.5(b)(3). |
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22.145 |
Prior Year Testing Method. A
method for applying the ADP Test and/or the ACP Test. See Section 17.2(a)(1)
for a discussion of the Prior Year Testing Method under the ADP Test and
Section 17.3(a)(1) for a discussion of the Prior Year Testing Method under
the ACP Test. |
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22.146 |
Pro Rata Allocation Method. A
method for allocating certain Employer Contributions to Eligible Participants
under the Plan. See Article 2. |
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22.147 |
Projected Annual Benefit. An
amount used in the numerator of the Defined Benefit Plan Fraction. See
Section 7.5(b)(4). |
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22.148 |
Protected Benefit. A
Participant’s benefits which may not be eliminated by Plan amendment.
Protected Benefits include early retirement benefits, retirement-type
subsidies, and optional forms of benefit (as defined under the regulations).See Section 18.1(c). |
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22.149 |
Prototype Plan. A plan
sponsored by a Prototype Sponsor the form of which is the subject of a
Favorable IRS Letter from the Internal Revenue Service which is made up of a
Basic Plan Document and an Adoption Agreement. An Employer may establish or
continue a plan by executing an Adoption Agreement under this Prototype Plan. |
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22.150 |
Prototype Sponsor. The
Prototype Sponsor is the entity that maintains the Prototype Plan for
adoption by Employers.See
Section 18.1(a) for the ability of the Prototype Sponsor to amend this Plan. |
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22.151 |
QDRO -- Qualified Domestic Relations Order. A domestic relations order that provides for the payment of all
or a portion of the Participant’s benefits to an Alternate Payee and
satisfies the requirements under Code §414(p).See Section 11.5. |
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22.152 |
QJSA -- Qualified Joint and Survivor Annuity. A QJSA is an immediate annuity payable over the life of the
Participant with a survivor annuity payable over the life of the spouse. If
the Participant is not married as of the Distribution Commencement Date, the
QJSA is an immediate annuity payable over the life of the Participant. See
Section 9.2. |
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22.153 |
QMAC Account. The portion
of a Participant’s Account attributable to QMACs. |
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22.154 |
QMACs -- Qualified Matching Contributions. An Employer Matching Contribution made by the Employer that
satisfies the requirements under Section 17.7(g). |
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22.155
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QNEC Account. The portion
of a Participant’s Account attributable to QNECs.
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22.156
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QNECs -- Qualified Nonelective Contributions. An Employer Nonelective Contribution made by the Employer that
satisfies the requirements under Section 17.7(h).
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22.157
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QPSA -- Qualified Preretirement Survivor Annuity. A QPSA is an annuity payable over the life of the surviving
spouse that is purchased using 50% of the Participant’s vested Account
Balance as of the date of death.The
Employer may modify the 50% QPSA level under Part 11, #41.b. of the Agreement
[Part 11, #59.b. of the 401(k) Agreement]. See Section 9.3.
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22.158
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QPSA Election Period. The
period during which a Participant (and the Participant’s spouse) may waive
the QPSA under the Plan.See Section
9.4(e).
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22.159
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Qualified Election. An
election to waive the QJSA or QPSA under the Plan. See Section 9.4(d).
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22.160
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Qualified Transfer. A
plan-to-plan transfer which meets the requirements under Section 3.3(d).
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22.161
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Qualifying Employer Real Property. Real
property of the Employer which meets the requirements under ERISA §407(d)(4).
See Section 13.5(b) for limitations on the ability of the Plan to invest in
Qualifying Employer Real Property.
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22.162
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Qualifying Employer Securities.
An Employer security which is stock, a marketable obligation, or interest in
a publicly traded partnership as described in ERISA §407(d)(5). See Section
13.5(b) for limitations on the ability of the Plan to invest in Qualifying
Employer Securities.
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22.163
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Reemployment Commencement Date. The first date upon which an Employee is credited with an Hour
of Service following a Break in Service (or Period of Severance, if the Plan
is using the Elapsed Time Method of crediting service). For purposes of
applying the Elapsed Time rules under Section 6.5(b), an Hour of Service is
limited to an Hour of Service as described in Section 22.101(a).
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22.164
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Related Employer. A Related
Employer includes all members of a controlled group of corporations (as
defined in Code §414(b)), all commonly controlled trades or businesses (as
defined in Code §414(c)) or affiliated service groups (as defined in Code
§414(m)) of which the adopting Employer is a part, and any other entity
required to be aggregated with the Employer pursuant to regulations under
Code §414(o). For purposes of applying the provisions under this Plan, the
Employer and any Related Employers are treated as a single Employer, unless
specifically stated otherwise. See Section 11.8 for operating rules that
apply when the Employer is a member of a Related Employer group.
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22.165
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Required Aggregation Group. Plans
which must be aggregated for purposes of determining whether the Plan is a
Top-Heavy Plan. See Section 16.3(f).
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22.166
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Required Beginning Date. The
date by which minimum distributions must commence under the Plan. See Section
10.3(a).
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22.167
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Reverse QNEC Method. A
method for allocating QNECs under the Plan. See Section 2.3(e)(2).
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22.168
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Rollover Contribution Account. The
portion of the Participant’s Account attributable to a Rollover Contribution
from another qualified plan or XXX.
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22.169
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Rollover Contribution. A
contribution made by an Employee to the Plan attributable to an Eligible
Rollover Distribution from another qualified plan or XXX.See Section 8.8(a) for the definition of
an Eligible Rollover Distribution.
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22.170
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Rule of Parity Break in Service. A Break in Service rule used to determine an Employee’s
Participation under the Plan. See Section 1.6(a) for the effect of the Rule
of Parity Break in Service on eligibility to participate under the Plan and
see Section 4.6(c) for the application for the effect of the Rule of Parity
Break in Service Rule on vesting.
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22.171
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Safe Harbor 401(k) Plan. A
401(k) plan that satisfies the conditions under Section 17.6.
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22.172
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Safe Harbor Contribution. A
contribution authorized under Part 4E of the 401(k) Agreement that allows the
Plan to qualify as a Safe Harbor 401(k) Plan. A Safe Harbor Contribution may
be a Safe Harbor Matching Contribution or a Safe Harbor Nonelective
Contribution.
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22.173
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Safe Harbor Matching Contribution Account. The portion of a Participant’s Account attributable to Safe
Harbor Matching Contributions.
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22.174
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Safe Harbor Matching Contributions. An Employer Matching Contribution that satisfies the
requirements under Section 17.6(a)(1)(i).
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22.175
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Safe Harbor Nonelective Contribution Account. The portion of a Participant’s Account attributable to Safe
Harbor Nonelective Contributions.
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22.176
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Safe Harbor Nonelective Contributions. An
Employer Nonelective Contribution that satisfies the requirements under
Section 17.6(a)(1)(ii).
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22.177
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Salary Reduction Agreement. A
Salary Reduction Agreement is a written agreement between an Eligible
Participant and the Employer, whereby the Eligible Participant elects to
reduce his/her Included Compensation by a specific dollar amount or
percentage and the Employer agrees to contribute such amount into the 401(k)
Plan. A Salary Reduction Agreement may require that an election be stated in
specific percentage increments (not greater than 1% increments) or in
specific dollar amount increments (not greater than dollar increments that
could exceed 1% of Included Compensation).
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A Salary
Reduction Agreement may not be effective prior to the later of: (a) the date
the Employee becomes an Eligible Participant; (b) the date the Eligible
Participant executes the Salary Reduction Agreement; or (c) the date the
401(k) plan is adopted or effective. A Salary Reduction Agreement is valid
even though it is executed by an Employee before he/she actually has
qualified as an Eligible Participant, so long as the Salary Reduction
Agreement is not effective before the date the Employee is an Eligible
Participant. A Salary Reduction Agreement may only apply to Included
Compensation that becomes currently available to the Employee after the
effective date of the Salary Reduction Agreement.
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A Salary
Reduction Agreement (or other written procedures) must designate a uniform
period during which an Employee may change or terminate his/her deferral
election under the Salary Reduction Agreement. An Eligible Participant’s
right to change or terminate a Salary Reduction Agreement may not be
available on a less frequent basis than once per Plan Year. |
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22.178 |
Section 401(k) Deferral Account. The portion of a Participant’s Account attributable to Section
401(k) Deferrals. |
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22.179 |
Section 401(k) Deferrals. Amounts
contributed to the 401(k) Plan at the election of the Participant, in lieu of
cash compensation, which are made pursuant to a Salary Reduction Agreement or
other deferral mechanism, and which are not includible in the gross income of
the Employee pursuant to Code §402(e)(3). Section 401(k) Deferrals do not
include any deferrals properly distributed as excess Annual Additions
pursuant to Section 7.1(c)(2). |
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22.180 |
Self-Employed Individual.
An individual who has Earned Income (as defined in Section 22.58) for the
taxable year from the trade or business for which the Plan is established, or
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. |
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22.181 |
Shareholder-Employee. A
Shareholder-Employee means an Employee or officer of a subchapter S
corporation who owns (or is considered as owning within the meaning of Code
§318(a)(1)), on any day during the taxable year of such corporation, more
than 5% of the outstanding stock of the corporation. |
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22.182 |
Shift-to-Plan-Year Method. The
Shift-to-Plan-Year Method is a method for determining Eligibility Computation
Periods, after an Employee’s initial computation period. See Section
1.4(c)(1). |
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22.183 |
Short Plan Year. Any Plan
Year that is less than 12 months long, either because of the amendment of the
Plan Year, or because the Effective Date of a new Plan is less than 12 months
prior to the end of the first Plan Year. See Section 11.7 for the operational
rules that apply if the Plan has a Short Plan Year. |
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22.184 |
Social Security Retirement Age.
An Employee’s retirement age as determined under Section 230 of the Social
Security Retirement Act. See Section 2.5(d)(6). |
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22.185 |
Standardized Agreement. An
Agreement under this Prototype Plan that permits the adopting Employer to
rely under certain circumstances on the Favorable IRS Letter issued to the
Prototype Sponsor without the need for the Employer to obtain a determination
letter. |
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22.186 |
Stated Benefit. The amount
determined in accordance with the benefit formula selected in Part 4 of the
target benefit plan Agreement, payable annually as a Straight Life Annuity
commencing at Normal Retirement Age (or current age, if later). See Section
2.5(a). |
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22.187 |
Straight Life Annuity. An
annuity payable in equal installments for the life of the Participant that
terminates upon the Participant’s death. |
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22.188
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Successor Plan. A Successor
Plan is any Defined Contribution Plan, other than an ESOP, SEP, or SIMPLE-XXX
plan, maintained by the Employer which prevents the Employer from making a
distribution to Participants upon the termination of a 401(k) plan. See
Section 18.2(b)(2).
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22.189
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Taxable Wage Base. The
maximum amount of wages that are considered for Social Security purposes. The
Taxable Wage Base is used to determine the Integration Level for purposes of
applying the Permitted Disparity Method allocation formula under the profit
sharing or 401(k) plan Agreement (see Section 2.2(b)(2)) or under the money
purchase plan Agreement (see Section 2.4(c)) or for applying the Integrated
Benefit Formulas under the target benefit plan Agreement (see Section
2.5(d)(9)).
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22.190
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Testing Compensation. The
compensation used for purposes of the ADP Test, the ACP Test, and the
Multiple Use Test. See Section 17.7(i).
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22.191
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Theoretical Reserve. An
amount used to determine the Employer Contribution under the target benefit
plan Agreement. See Section 2.5(b)(4).
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22.192
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Three Percent Method. A
method for applying the ADP Test or the ACP Test for a new 401(k) Plan. See
Section 17.2(b) for a discussion of the ADP Test for new plans and Section
17.3(b) for a discussion of the ACP Test for new plans.
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22.193
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Top-Paid Group. The top 20%
of Employees ranked by Total Compensation for purposes of applying the
Top-Paid Group Test. See Section 22.99(b)(4).
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22.194
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Top-Paid Group Test. An
optional test the Employer may apply when determining its Highly Compensated
Employees. See Section 22.99(a)(2).
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22.195
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Top-Heavy Plan. A Plan that
satisfies the conditions under Section 16.3(g). A Top-Heavy Plan must provide
special accelerated vesting and minimum benefits to Non-Key Employees. See
Section 16.2.
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22.196
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Top-Heavy Ratio. The ratio
used to determine whether the Plan is a Top-Heavy Plan. See Section 16.3(h).
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22.197
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Total Compensation. Total
Compensation is used to apply the Annual Additions Limitation under Section
7.1 and to determine the top-heavy minimum contribution under Section 16.2
(a). Total Compensation is either W-2 Wages, Withholding Wages, or Code §415
Safe Harbor Compensation, as designated under Part 3 of the Agreement. For a
Self-Employed Individual, each definition of Total Compensation means Earned
Income. Except as otherwise provided under Sections 7.4(g)(4) and 16.3(i),
each definition of Total Compensation (including Earned Income for Self-Employed
Individuals) is increased to include Elective Deferrals (as defined in
Section 22.61) and elective contributions to a cafeteria plan under Code §125
or to an eligible deferred compensation plan under Code §457. For years
beginning on or after January 1, 2001, each definition of Total Compensation
also is increased to include elective contributions that are not includible
in an Employee’s gross income as a qualified transportation fringe under Code
§132(f)(4). The Employer may elect an earlier effective date under Appendix
B-3.c. of the Agreement.
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Unless
modified under the Agreement, Total Compensation does not include amounts
paid to an individual as severance pay to the extent such amounts are paid
after the common-law employment relationship between the individual and the
Employer has terminated. The Employer may modify the definition of Total
Compensation under Part 13, #51.b. or c. of the Agreement [Part 13, #69.b. or
c. of the 401(k) Agreement]. The Employer may elect under #51.b. or #69.b.,
as applicable, to modify the definition of Total Compensation to include
imputed compensation of Disabled Employees as permitted under Section
7.4(g)(3) of this BPD. Additional modifications may be made under #51.c. or
#69.c., as applicable. Any modification to the definition of Total
Compensation must be consistent with the definition of compensation under
Treas. Reg. §1.415-2(d).
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(a) |
W-2 Wages. Wages within the
meaning of Code §3401(a) and all other payments of compensation to an
Employee by the Employer (in the course of the Employer’s trade or business)
for which the Employer is required to furnish the Employee a written
statement under Code §6041(d), 6051(a)(3), and 6052, determined without
regard to any rules under Code §3401(a) that limit the remuneration included
in wages based on the nature or location of the employment or the services
performed. |
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(b) |
Withholding Wages. Wages
within the meaning of Code §3401(a) for the purposes of income tax
withholding at the source but determined without regard to any rules that
limit the remuneration included in wages based on the nature or location of
the employment or the services performed. |
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(c) |
Code §415 Safe Harbor Compensation. A Participant’s wages, salaries, fees for professional
services and other amounts received for personal services actually rendered
in the course of employment with the Employer (without regard to whether or
not such amounts are paid in cash) to the extent that the amounts are
includible in gross income. Such amounts include, but are not limited to,
commissions, compensation for services on the basis of a percentage of
profits, tips, bonuses, fringe benefits, and reimbursements or other |
133
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expense
allowances under a nonaccountable plan (as described in Treas. Reg. §1.62-2(c)),
and excluding the following: |
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(1) |
Employer
contributions to a plan of deferred compensation which are not includible in
the Employee’s gross income for the taxable year in which contributed, or
Employer contributions (other than Elective Deferrals) under a SEP (as
described in Code §408(k)), or any distributions from a plan of deferred
compensation. For this purpose, Employer contributions to a plan of deferred
compensation do not include Elective Deferrals (as defined in Section 22.61),
elective contributions to a cafeteria plan under Code §125 or a deferred
compensation plan under Code §457 and, for years beginning on or after
January 1, 2001, qualified transportation fringes under Code §132(f)(4). The
Employer may elect an earlier effective date for qualified transportation
fringes under Appendix B-3.c. of the Agreement. |
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(2) |
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. |
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(3) |
Amounts
realized from the sale, exchange or other disposition of stock acquired under
a qualified stock option. |
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(4) |
Other
amounts which received special tax benefits, or contributions made by the
Employer (other than Elective Deferrals) towards the purchase of an annuity
contract described in Code §403(b) (whether or not the contributions are
actually excludable from the gross income of the Employee). |
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22.198 |
Transfer Account. The
portion of a Participant’s Account attributable to a direct transfer of
assets or liabilities from another qualified retirement plan. See Section 3.3
for the rules regarding the acceptance of a transfer of assets under this
Plan. |
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22.199 |
Trust. The Trust is the
separate funding vehicle under the Plan. |
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22.200 |
Trustee. The Trustee is the
person or persons (or any successor to such person or persons) named in the
Trustee Declaration under the Agreement. The Trustee may be a Discretionary
Trustee or a Directed Trustee. See Article 12 for the rights and duties of a
Trustee under this Plan. |
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22.201 |
Two-Step Formula. A method
of allocating certain Employer Contributions under the Permitted Disparity
Method. See Section 2.2(b)(2)(i). |
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22.202 |
Union Employee. An Employee
who is included in a unit of Employees covered by a collective bargaining
agreement between the Employer and Employee representatives and whose
retirement benefits are subject to good faith bargaining. For this purpose,
an Employee will not be considered a Union Employee for a Plan Year if more
than two percent of the Employees who are covered pursuant to the collective
bargaining agreement are professionals as defined in section 1.410(b)-9 of
the regulations. For this purpose, the term “Employee representatives” does
not include any organization more than half of whose members are Employees
who are owners, officers, or executives of the Employer. |
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22.203 |
Unit Benefit. A
Nonintegrated Benefit Formula under Part 4 of the target benefit plan
Agreement that provides for a Stated Benefit equal to a specified percentage
of Average Compensation multiplied by the Participant’s projected Years of
Participation with the Employer. See Section 2.5(c)(1)(ii). |
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22.204 |
Unit Excess Benefit. An
Integrated Benefit Formula under Part 4 of the target benefit plan Agreement
that provides for a Stated Benefit equal to a specified percentage of Average
Compensation plus a specified percentage of Excess Compensation multiplied by
the Participant’s projected Years of Participation. See Section
2.5(c)(2)(ii). |
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22.205 |
Unit Offset Benefit. An
Integrated Benefit Formula under Part 4 of the target benefit plan Agreement
that provides for a Stated Benefit equal to a specified percentage of Average
Compensation offset by a specified percentage of Offset Compensation
multiplied by the Participant’s projected Years of Participation. See Section
2.5(c)(2)(iv). |
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22.206 |
Valuation Date. The date or
dates selected under Part 12of
the Agreement upon which Plan assets are valued. If the Employer does not
select a Valuation Date under Part 12, Plan assets will be valued as of the
last day of each Plan Year. Notwithstanding any election under Part 12 of the
Agreement, the Trustee and Plan Administrator may agree to value the Trust on
a more frequent basis, and/or to perform an interim valuation of the Trust.
See Sections 12.6 and 13.2. |
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22.207 |
Vesting Computation Period. The
12-consecutive month period used for measuring whether an Employee completes
a Year of Service for vesting purposes. See Section 4.4. |
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22.208
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W-2 Wages. An optional
definition of Total Compensation which the Employer may select under Part 3,
#9.a. of the Agreement. See Section 22.197(a) for the definition of W-2
Wages.
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22.209
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Withholding Wages. An
optional definition of Total Compensation which the Employer may select under
Part 3, #9.b. of the Agreement. See Section 22.197(b) for the definition of
Withholding Wages.
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22.210
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Year of Participation.
Years of Participation are used to determine a Participant’s Stated Benefit
under the target benefit plan Agreement. See Section 2.5(d)(10).
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22.211
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Year of Service. An
Employee’s Years of Service are used to apply the eligibility and vesting
rules under the Plan. Unless elected otherwise under Part 7 of the Agreement,
an Employee will earn a Year of Service for purposes of applying the
eligibility rules if the Employee completes 1,000 Hours of Service with the
Employer during an Eligibility Computation Period. (See Section 1.4(b).) Unless
elected otherwise under Part 7 of the Agreement, an Employee will earn a Year
of Service for purposes of applying the vesting rules if the Employee
completes 1,000 Hours of Service with the Employer during a Vesting
Computation Period. (See Section 4.5.)
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135
