1
EXHIBIT (14)(b)
QUALIFIED RETIREMENT PLAN AND TRUST
DEFINED CONTRIBUTION
BASIC PLAN
DOCUMENT 03
(MONEY PURCHASE PENSION/PROFIT SHARING)
2
QUALIFIED RETIREMENT PLAN AND TRUST
DEFINED CONTRIBUTION BASIC PLAN DOCUMENT 03
SECTION ONE DEFINITIONS
The following words and phrases when used in the Plan with
initial capital letters shall, for the purpose of this Plan,
have the meanings set forth below unless the context
indicates that other meanings are intended:
1.01 ADOPTION AGREEMENT
Means the document executed by the Employer through which it
adopts the Plan and Trust and thereby agrees to be bound by
all terms and conditions of the Plan and Trust.
1.02 BASIC PLAN DOCUMENT
Means this prototype Plan and Trust document.
1.03 BREAK IN ELIGIBILITY SERVICE
Means a 12 consecutive month period which coincides with an
Eligibility Computation Period during which an Employee fails
to complete more than 500 Hours of Service (or such lesser
number of Hours of Service specified in the Adoption
Agreement for this purpose).
1.04 BREAK IN VESTING SERVICE
Means a Plan Year during which an Employee fails to complete
more than 500 Hours of Service (or such lesser number of
Hours of Set-vice specified in the Adoption Agreement for
this purpose).
1.05 CODE
Means the Internal Revenue Code of 1986 as amended from
time-to-time.
1.06 COMPENSATION
For Plan Years beginning on or after January 1, 1989, the
following definition of Compensation shall apply:
Compensation will mean Compensation as that term is defined
in Section 3.05(E)(2) of the Plan. For any Self-Employed
Individual covered under the Plan, Compensation will mean
Earned Income. Compensation shall include only that
Compensation which is actually paid to the Participant during
the applicable period. Except as provided elsewhere in this
Plan, the applicable period shall be the Plan Year unless the
Employer has selected another period in the Adoption
Agreement.
Unless otherwise indicated in the Adoption Agreement,
Compensation shall include any amount which is contributed by
the Employer pursuant to a salary reduction agreement and
which is not includible in the gross income of the Employee
under Sections 125, 402(a)(8), 402(h) or 403(b) of the Code.
For years beginning after December 31, 1988, the annual
Compensation of each Participant taken into account under the
Plan for any 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 Section 415(d) of the Code, except
that the dollar increase in effect on January I of any
calendar year is effective for years beginning in such
calendar year and the first adjustment to the $200,000
limitation is effected on January 1, 1990. If a Plan
determines Compensation on a period of time that contains
fewer than 12 calendar months, then the annual Compensation
limit is an amount equal to the annual Compensation limit for
the calendar year in which the compensation period begins
multiplied by the ratio obtained by dividing the number of
full months in the period by 12.
In determining the Compensation of a Participant for purposes
of this limitation, the rules of Section 414(q)(6) of the
Code shall apply, except in applying such rules, the term
"family" shall include only the spouse of the Participant and
any lineal descendants of the Participant who have not
attained age 19 before the close of the year.
If, as a result of the application of such rules the adjusted
$200,000 limitation is exceeded, then (except for purposes of
determining the portion of Compensation up to the integration
level if this Plan provides for permitted disparity), the
limitation shall be prorated among the affected individuals
in proportion to each such individual's Compensation as
determined under this Section prior to the application of
this limitation.
If Compensation for any prior Plan Year is taken into account
in determining an Employee's contributions or benefits for
the current year, the Compensation for such prior year is
subject to the applicable annual Compensation limit in effect
for that prior year. For this purpose for years beginning
before January 1, 1990, the applicable annual Compensation
limit is $200,000.
Unless otherwise indicated in the Adoption Agreement, where
an Employee enters the Plan (and thus becomes a Participant)
on an Entry Date other than the first Entry Date in a Plan
Year, his Compensation will include any such earnings paid to
him during the whole of such Plan Year.
Where this Plan is being adopted as an amendment and
restatement to bring a Prior Plan into compliance with the
Tax Reform Act of 1986, such Prior Plan's definition of
Compensation shall apply for Plan Years beginning before
January 1, 1989.
In addition to other applicable limitations set forth in the
Plan, and notwithstanding any other provision of the Plan to
the contrary, for Plan Years beginning on or after January 1,
1994, the annual Compensation of each Employee taken into
account under the Plan shall not exceed the OBRA '93 annual
Compensation limit. The OBRA '93 annual Compensation limit is
$150,000, as adjusted by the Commissioner for increases in
the cost of living in accordance with Section 401 (a)(17)(B)
of the Internal Revenue Code. The cost-of-living adjustment
in effect for a calendar year applies to any period, not
exceeding 12 months, over which Compensation is determined
(determination period) beginning in such calendar year. If a
determination period consists of fewer than 12 months, the
OBRA '93 annual Compensation limit will be multiplied by a
2
3
fraction, the numerator of which is the number of months in
the determination period, and the denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any
reference in this Plan to the limitation under Section
401(a)(17) of the Code shall mean the OBRA '93 annual
Compensation limit set forth in this provision.
If Compensation for any prior determination period is taken
into account in determining an Employee's benefits accruing
in the current Plan Year, the Compensation for that prior
determination period is subject to the OBRA '93 annual
Compensation limit in effect for that prior determination
period. For this purpose, for determination periods beginning
before the first day of the first Plan Year beginning on or
after January 1, 1994, the OBRA '93 annual Compensation limit
is $150,000.
1.07 CUSTODIAN
Means an entity specified in the Adoption Agreement as
Custodian or any duly appointed successor as provided in
Section 5.09.
1.08 DISABILITY
Means the inability to engage in any substantial, gainful
activity by reason of any medically determinable physical or
mental impairment that can be expected to result in death or
which has lasted or can be expected to last for a continuous
period of not less than 12 months. The permanence and degree
of such impairment shall be supported by medical evidence.
1.09 EARNED INCOME
Means the net earnings from self-employment in the trade or
business with respect to which the Plan is established, 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 Section 404 of the Code.
Net earnings shall be determined with regard to the deduction
allowed to the Employer by Section 164(f) of the Code for
taxable years beginning after December 31, 1989.
1.10 EFFECTIVE DATE
Means the date the Plan becomes effective as indicated in the
Adoption Agreement. However, where a separate date is stated
in the Plan as of which a particular Plan provision becomes
effective, such date will control with respect to that
provision.
1.11 ELIGIBILITY COMPUTATION PERIOD
An Employee's initial Eligibility Computation Period shall be
the 12 consecutive month period commencing with the date such
Employee first performs an Hour of Service (employment
commencement date). His subsequent Eligibility Computation
Periods shall be the 12 consecutive month periods commencing
on the anniversaries of his employment commencement date;
provided, however, if pursuant to the Adoption Agreement, an
Employee is required to complete one or less Years of
Eligibility Service to become a Participant, then his
subsequent Eligibility Computation Periods shall be the Plan
Years commencing with the Plan Year beginning during his
initial Eligibility Computation Period.
1.12 EMPLOYEE
Means any person employed by an Employer maintaining the Plan
or of any other employer required to be aggregated with such
Employer under Sections 414(b), (c), (m) or (o) or the Code.
The term Employee shall also include any Leased Employee
deemed to be an Employee of any Employer described in the
previous paragraph as provided in Section 414(n) or (o) of
the Code.
1.13 EMPLOYER
Means any corporation, partnership, sole-proprietorship or
other entity named in the Adoption Agreement and any
successor who by merger, consolidation, purchase or otherwise
assumes the obligations of the Plan. A partnership is
considered to be the Employer of each of the partners and a
sole-proprietorship is considered to be the Employer of a
sole proprietor.
1.14 EMPLOYER CONTRIBUTION
Means the amount contributed by the Employer each year as
determined under this Plan.
1.15 ENTRY DATES
Means the first day of the Plan Year and the first day of the
seventh month of the Plan Year, unless the Employer has
specified more frequent dates in the Adoption Agreement.
1.16 ERISA
Means the Employee Retirement Income Security Act of 1974 as
amended from time-to-time.
1.17 FORFEITURE
Means that portion of a Participant's Individual Account as
derived from Employer Contributions which he or she is not
entitled to receive (i.e., the nonvested portion).
1.18 FUND
Means the Plan assets held by the Trustee or Custodian for
the Participants' exclusive benefit.
1.19 HIGHLY COMPENSATED EMPLOYEE
The term Highly Compensated Employee includes highly
compensated active employees and highly compensated former
employees. A highly compensated active employee includes any
Employee who performs service for the Employer during the
determination year and who,
3
4
during the look-back year: (a) received Compensation from the
Employer in excess of $75,000 (as adjusted pursuant to
Section 415(d) of the Code); (b) received Compensation from
the Employer in excess of $50,000 (as adjusted pursuant to
Section 415(d) of the Code) and was a member of the top-paid
group for such year: or (c) was an officer of the Employer
and received Compensation during such year that is greater
than 50% of the dollar limitation in effect under Section
415(b)(1)(A) of the Code. The term Highly Compensated
Employee also includes: (a) Employees who are both described
in the preceding sentence if the term "determination year" is
substituted for the term "look-back year" and the Employee is
one of the 100 Employees who received the most Compensation
from the Employer during the determination year; and (b)
Employees who are 5% owners at any time during the look-back
year or determination year.
If no officer has satisfied the Compensation requirement of
(c) above during either a determination year or look-back
year, the highest paid officer for such year shall be treated
as a Highly Compensated Employee. For this purpose, the
determination year shall be the Plan Year. The look-back year
shall be the 12 month period immediately preceding the
determination year.
A highly compensated former employee includes any Employee
who separated from service (or was deemed to have separated)
prior to the determination year, performs no service for the
Employer during the determination year, and was a highly
compensated active employee for either the separation year or
any determination year ending on or after the Employee's 55th
birthday.
If an Employee is, during a determination year or look-back
year, a family member of either a 5% owner who is an active
or former Employee or a Highly Compensated Employee who is
one of the 10 most Highly Compensated Employees ranked on the
basis of Compensation paid by the Employer during such year,
then the family member and the 5% owner or top 10 Highly
Compensated Employee shall be aggregated. In such case, the
family member and 5% owner or top 10 Highly Compensated
Employee shall be treated as a single Employee receiving
Compensation and Plan contributions or benefits equal to the
sum of such Compensation and contributions or benefits of the
family member and 5% owner or top 10 Highly Compensated
Employee. For purposes of this Section, family member
includes the spouse, lineal ascendants and descendants of the
Employee or former Employee and the spouses of such lineal
ascendants and descendants.
The determination of who is a Highly Compensated Employee,
including the determinations of the number and identity of
Employees in the top-paid group, the top 100 Employees, the
number of Employees treated as officers and the Compensation
that is considered, will be made in accordance with Section
414(q) of the Code and the regulations thereunder.
1.20 HOURS OF SERVICE - Means
A. 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; and
B. Each hour for which an Employee is paid, or entitled to
payment, by the Employer on account of a period of time
during which no duties are performed (irrespective of
whether the employment relationship has terminated) due
to vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty or leave of
absence. No more than 501 Hours of Service 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 shall be
calculated and credited pursuant to Section 2530.200b-2
of the Department of Labor Regulations which is
incorporated herein by this reference; and
C. Each hour for which back pay, irrespective of mitigation
of damages, is either awarded or agreed to by the
Employer. The same Hours of Service will not be credited
both under paragraph (A) or paragraph (B), as the case
may be, and under this paragraph (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.
X. Xxxxxx for purposes of determining whether a Break in
Eligibility Service or a Break in Vesting Service has
occurred in a computation period (the computation period
for purposes of determining whether a Break in Vesting
Service has occurred is the Plan Year), an individual who
is absent from work for maternity or paternity reasons
shall receive credit for the Hours of Service which would
otherwise have been credited to such individual but for
such absence, or in any case in which such hours cannot
be determined, 8 Hours of Service per day of such
absence. For purposes of this paragraph, an absence from
work for maternity or paternity reasons means an absence
(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 shall be credited (1) in the Eligibility
Computation Period or Plan Year in which the absence
begins if the crediting is necessary to prevent a Break
in Eligibility Service or a Break in Vesting Service in
the applicable period, or (2) in all other cases, in the
following Eligibility Computation Period or Plan Year.
E. Hours of Service will be credited for employment with
other members of an affiliated service group (under
Section 414(m) of the Code), a controlled group of
corporations (under Section 414(b) of the Code), or a
group of trades or businesses under common control (under
Section 414(c) of the Code) of which the adopting
Employer is a member, and any other entity required to be
aggregated with the Employer pursuant to Section 414(o)
of the Code and the regulations thereunder.
Hours of Service will also be credited for any individual
considered an Employee for purposes of this Plan under
Code Sections 414(n) or 414(o) and the regulations
thereunder.
F. Where the Employer maintains the plan of a predecessor
employer, service for such predecessor employer shall be
treated as service for the Employer.
G. The above method for determining Hours of Service may be
altered as specified in the Adoption Agreement.
4
5
1.21 INDIVIDUAL ACCOUNT
Means the account established and maintained under this Plan
for each Participant in accordance with Section 4.0
1.22 INVESTMENT FUND
Means a subdivision of the Fund established pursuant to
Section 5.05.
1.23 KEY EMPLOYEE
Means any person who is determined to be a Key Employee under
Section 10.08.
1.24 LEASED EMPLOYEE
Means any person (other than an Employee of the recipient)
who pursuant to an agreement between the recipient and any
other person ("leasing organization") has performed services
for the recipient (or for the recipient and related persons
determined in accordance with Section 414(n)(6) of the Code)
on a substantially full time basis for a period of at least
one year, and such services are of a type historically
performed by Employees in the business field of the recipient
Employer. Contributions or benefits provided a Leased
Employee by the leasing organization which are attributable
to services performed for the recipient Employer shall be
treated as provided by the recipient Employer.
A Leased Employee shall not be considered an Employee of the
recipient if: (1) such employee is covered by a money
purchase pension plan providing: (a) a nonintegrated employer
contribution rate of at least 10% of compensation, as defined
in Section 415(c)(3) of the Code, but including amounts
contributed pursuant to a salary reduction agreement which
are excludable from the employee's gross income under Section
125, Section 402(a)(8), Section 402(h) or Section 403(b) of
the Code, (b) immediate participation, and (c) full and
immediate vesting; and (2) Leased Employees do not constitute
more than 20% of the recipient's nonhighly compensated work
force.
1.25 NORMAL RETIREMENT AGE
Means the age specified in the Adoption Agreement. However,
if the Employer enforces a mandatory retirement age which is
less than the Normal Retirement Age, such mandatory age is
deemed to be the Normal Retirement Age. If no age is
specified in the Adoption Agreement, the Normal Retirement
Age shall be age 59 1/2.
1.26 OWNER-EMPLOYEE
Means an individual who is a sole proprietor, or who is a
partner owning more than 10% of either the capital or profits
interest of the partnership.
1.27 PARTICIPANT
Means any Employee or former Employee of the Employer who has
met the Plan's eligibility requirements, has entered the Plan
and who is or may become eligible to receive a benefit of any
type from this Plan or whose Beneficiary may be eligible to
receive any such benefit.
1.28 PLAN
Means the prototype defined contribution plan adopted by the
Employer. The Plan consists of this Basic Plan Document plus
the corresponding Adoption Agreement as completed and signed
by the Employer.
1.29 PLAN ADMINISTRATOR
Means the person or persons determined to be the Plan
Administrator in accordance with Section 8.01.
1.30 PLAN YEAR
Means the 12 consecutive month period which coincides with
the Employer's tax year or such other 12 consecutive month
period as is designated in the Adoption Agreement.
1.31 PRIOR PLAN
Means a plan which was amended or replaced by adoption of
this Plan document as indicated in the Adoption Agreement.
1.32 PROTOTYPE SPONSOR
Means the entity specified in the Adoption Agreement. Such
entity must meet the definition of a sponsoring organization
set forth in Section 3.07 of Revenue Procedure 89-9.
1.33 SELF-EMPLOYED INDIVIDUAL
Means an individual who has Earned Income for the taxable
year from the trade or business for which the Plan is
established; also, an individual who would have had Earned
Income but for the fact that the trade or business had no net
profits for the taxable year.
1.34 SEPARATE FUND
Means a subdivision of the Fund held in the name of a
particular Participant representing certain assets held for
that Participant. The assets which comprise a Participant's
Separate Fund are those assets earmarked for him and those
assets subject to the Participant's individual direction
pursuant to Section 5.14.
1.35 TAXABLE WAGE BASE
Means, with respect to any taxable year, the maximum amount
of earnings which may be considered wages for such year under
Section 312(a)(1) of the Code.
1.36 TERMINATION OF EMPLOYMENT
A Termination of Employment of an Employee of an Employer
shall occur whenever his status as an Employee of such
Employer ceases for any reason other than his death. An
Employee who does not return to work for the Employer on or
before the expiration of an authorized leave of absence from
such Employer shall be deemed to have incurred a Termination
of Employment when such leave ends.
5
6
1.37 TOP-HEAVY PLAN
This Plan is a Top-Heavy Plan for any Plan Year if it is
determined to be such pursuant to Section 10.08.
1.38 TRUSTEE
Means an individual, individuals or corporation specified in
the Adoption Agreement as Trustee or any duly appointed
successor as provided in Section 5.09. Trustee shall mean
Custodian in the event the financial organization named as
Trustee does not have full trust powers.
1.39 VALUATION DATE
Means the last day of the Plan Year and each other date
designated by the Plan Administrator which is selected in a
uniform and nondiscriminatory manner when the assets of the
Fund are valued at their then fair market value.
1.40 VESTED
Means nonforfeitable, that is, a claim which is unconditional
and legally enforceable against the Plan obtained by a
Participant or his Beneficiary to that part of an immediate
or deferred benefit under the Plan which arises from a
Participant's Years of Vesting Service.
1.41 YEAR OF ELIGIBILITY SERVICE
Means a 12 consecutive month period which coincides with an
Eligibility Computation period during which an Employee
completes at least 1,000 Hours of Service (or such lesser
number of Hours of Service specified in the Adoption
Agreement for this purpose).
1.42 YEAR OF VESTING SERVICE
Means a Plan Year during which an Employee completes at least
1,000 Hours of Service (or such lesser number of Hours of
Service specified in the Adoption Agreement for this
purpose).
In the case of a Participant who has 5 or more consecutive
Breaks in Vesting Service, all Years of Vesting Service after
such Breaks in Vesting Service will be disregarded for the
purpose of determining the Vested portion of his Individual
Account derived from Employer Contributions that accrued
before such breaks. Such Participant's prebreak service will
count in vesting the postbreak Individual Account derived
from Employer Contributions only if either:
(A) such Participant had any Vested right to any portion of
his Individual Account derived from Employer
Contributions at the time of his Termination of
Employment; or
(B) upon returning to service, the number of consecutive
Breaks in Vesting Service is less than his number of
Years of Vesting Service before such breaks.
Separate subaccounts will be maintained for the Participant's
prebreak and postbreak portions of his Individual Account
derived from Employer Contributions. Both subaccounts will
share in the gains and losses of the Fund.
Years of Vesting Service shall not include any period of time
excluded from Years of Vesting Service in the Adoption
Agreement.
In the event the Plan Year is changed to a new 12-month
period, Employees shall receive credit for Years of Vesting
Service, in accordance with the preceding provisions of this
definition, for each of the Plan Years (the old and new Plan
Years) which overlap as a result of such change.
SECTION TWO ELIGIBILITY AND PARTICIPATION
2.01 ELIGIBILITY TO PARTICIPATE
Each Employee of the Employer, except those Employees who
belong to a class of Employees which is excluded from
participation as indicated in the Adoption Agreement, shall
be eligible to participate in this Plan upon the satisfaction
of the age and Years of Eligibility Service requirements
specified in the Adoption Agreement.
2.02 PLAN ENTRY
A. If this Plan is a replacement of a Prior Plan by
amendment or restatement, each Employee of the Employer
who was a Participant in said Prior Plan before the
Effective Date shall continue to be a Participant in this
Plan.
B. An Employee will become a Participant in the Plan as of
the Effective Date if he has met the eligibility
requirements of Section 2.01 as of such date. After the
Effective Date, each Employee shall become a Participant
on the first Entry Date following the date the Employee
satisfies the eligibility requirements of Section 2.01.
C. The Plan Administrator shall notify each Employee who
becomes eligible to be a Participant under this Plan and
shall furnish him with the application form, enrollment
forms or other documents which are required of
Participants. The eligible Employee shall execute such
forms or documents and make available such information as
may be required in the administration of the Plan.
2.03 TRANSFER TO OR FROM INELIGIBLE CLASS
If an Employee who had been a Participant becomes ineligible
to participate because he is no longer a member of an
eligible class of Employees, but has not incurred a Break in
Eligibility Service, such Employee shall participate
immediately upon his return to an eligible class of
Employees. If such Employee incurs a Break in Eligibility
Service, his eligibility to participate shall be determined
by Section 2.04.
6
7
An Employee who is not a member of the eligible class of
Employees will become a Participant immediately upon becoming
a member of the eligible class provided such Employee has
satisfied the age and Years of Eligibility Service
requirements. If such Employee has not satisfied the age and
Years of Eligibility Service requirements as of the date he
becomes a member of the eligible class, he shall become a
Participant on the first Entry Date following the date he
satisfies said requirements.
2.04 RETURN AS A PARTICIPANT AFTER BREAK IN ELIGIBILITY SERVICE
A. EMPLOYEE NOT PARTICIPANT BEFORE BREAK - If an Employee
incurs a Break in Eligibility Service before satisfying
the Plan's eligibility requirements, such Employee's
Years of Eligibility Service before such Break in
Eligibility Service will not be taken into account.
B. NONVESTED PARTICIPANTS - In the case of a Participant who
does not have a Vested interest in his Individual Account
derived from Employer Contributions, Years of Eligibility
Service before a period of consecutive Breaks in
Eligibility Service will not be taken into account for
eligibility purposes if the number of consecutive Breaks
in Eligibility Service in such period equals or exceeds
the greater of 5 or the aggregate number of Years of
Eligibility Service before such break. Such aggregate
number of Years of Eligibility Service will not include
any Years of Eligibility Service disregarded under the
preceding sentence by reason of prior breaks.
If a Participant's Years of Eligibility Service are
disregarded pursuant to the preceding paragraph, such
Participant will be treated as a new Employee for
eligibility purposes. If a Participant's Years of
Eligibility Service may not be disregarded pursuant to
the preceding paragraph, such Participant shall continue
to participate in the Plan, or, if terminated, shall
participate immediately upon reemployment.
C. VESTED PARTICIPANTS - A Participant who has sustained a
Break in Eligibility Service and who had a Vested
interest in all or a portion of his Individual Account
derived from Employer Contributions shall continue to
participate in the Plan, or, if terminated, shall
participate immediately upon reemployment.
2.05 DETERMINATIONS UNDER THIS SECTION
The Plan Administrator shall determine the eligibility of
each Employee to be a Participant. This determination shall
be conclusive and binding upon all persons except as
otherwise provided herein or by law.
2.06 TERMS OF EMPLOYMENT
Neither the fact of the establishment of the Plan nor the
fact that a common law Employee has become a Participant
shall give to that common law Employee any right to continued
employment; nor shall either fact limit the right of the
Employer to discharge or to deal otherwise with a common law
Employee without regard to the effect such treatment may have
upon the Employee's rights under the Plan.
SECTION THREE CONTRIBUTIONS
3.01 EMPLOYER CONTRIBUTIONS
A. OBLIGATION TO CONTRIBUTE - The Employer shall make
contributions to the Plan in accordance with the
contribution formula specified in the Adoption Agreement.
If this Plan is a profit sharing plan, the Employer
shall, in its sole discretion, make contributions without
regard to current or accumulated earnings or profits.
B. ALLOCATION FORMULA AND THE RIGHT TO SHARE IN THE EMPLOYER
PROFIT SHARING CONTRIBUTION -
1. General - The Employer Contribution for a Plan Year
will be allocated or contributed to the Individual
Accounts of qualifying Participants in accordance
with the allocation or contribution formula specified
in the Adoption Agreement. The Employer Contribution
for any Plan Year will be allocated to each
Participant's Individual Account as of the last day
of that Plan Year.
Any Employer Contribution for a Plan Year must
satisfy Section 401(a)(4) and the regulations
thereunder for such Plan Year.
2. Qualifying Participants - A Participant is a
qualifying Participant and is entitled to share in
the Employer Contribution for any Plan Year if (1) he
was a Participant on at least one day during the Plan
Year, (2) if this Plan is a nonstandardized plan, he
completes a Year of Vesting Service during the Plan
Year and (3) where the Employer has selected the
"last day requirement" in the Adoption Agreement, he
is an Employee of the Employer on the last day of
Plan Year (except that this last requirement (3)
shall not apply if the Participant has died during
the Plan Year or incurred a Termination of Employment
during the Plan Year after having reached his Normal
Retirement Age or having incurred a Disability).
Notwithstanding anything in this paragraph to the
contrary, a Participant will not be a qualifying
Participant for a Plan Year if he incurs a
Termination of Employment during such Plan Year with
not more than 500 Hours of Service if he is not an
Employee on the last day of the Plan Year. The
determination of whether a Participant is entitled to
share in the Employer Contribution shall be made as
of the last day of each Plan Year.
3. Special Rules for Integrated Plans - If the Employer
has selected the integrated contribution or
allocation formula in the Adoption Agreement, then
the maximum disparity rate shall be determined in
accordance with the following table.
7
8
MAXIMUM DISPARITY RATE
Top-Heavy Nontop-Heavy
Integration Level Money Purchase Profit Sharing Profit Sharing
----------------- -------------- -------------- --------------
Taxable Wage Base (TWB) 5.7% 2.7% 5.7%
More than $0 but not more than X* 5.7% 2.7% 5.7%
More than X* of TWB but not more 4.3% 1.3% 4.3%
than 80% of TWB
More than 80% of TWB but not more 5.4% 2.4% 5.4%
than TWB
*X means the greater of $10,000 or 20% of TWB.
C. ALLOCATION OF FORFEITURES - Forfeitures for a Plan
Year which arise as a result of the application of
Section 6.01(D) shall be allocated as follows:
1. Profit Sharing Plan - If this is a profit sharing
plan, Forfeitures shall be allocated in the manner
provided in Section 3.01(B) (for Employer
Contributions) to the Individual Accounts of
Participants who are entitled to share in the
Employer Contribution for such Plan Year.
2. Money Purchase Pension and Target Benefit Plan - If
this Plan is a money purchase plan or a target
benefit plan, forfeitures shall be applied towards
the reduction of Employer Contributions to the Plan.
However, if the Employer has indicated in the
Adoption Agreement that Forfeitures shall be
allocated to the Individual Accounts of Participants,
then Forfeitures shall be allocated in the manner
provided in Section 3.01(B) (for Employer
Contributions) to the Individual Accounts of
Participants who are entitled to share in the
Employer Contributions for such Plan Year.
X. XXXXXX OF EMPLOYER CONTRIBUTION - The Employer
Contribution for each Plan Year shall be delivered to the
Trustee (or Custodian, if applicable) not later than the
due date for filing the Employees income tax return for
its fiscal year in which the Plan Year ends, including
extensions thereof.
E. MINIMUM ALLOCATION FOR TOP-HEAVY PLANS - The contribution
and allocation provisions of this Section 3.01(E) shall
apply for any Plan Year with respect to which this Plan
is a Top-Heavy Plan.
1. Except as otherwise provided in (3) and (4) below,
the Employer Contributions and Forfeitures allocated
on behalf of any Participant who is not a Key
Employee shall not be less than the lesser of 3% of
such Participant's Compensation or (in the case where
the Employer has no defined benefit plan which
designates this Plan to satisfy Section 401 of the
Code) the largest percentage of Employer
Contributions and Forfeitures, as a percentage of the
first $200,000 (increased by any cost of living
adjustment made by the Secretary of Treasury or his
delegate) of the Key Employee's Compensation,
allocated on behalf of any Key Employee for that
year. The minimum allocation is determined without
regard to any Social Security contribution. This
minimum allocation shall be made even though under
other Plan provisions, the Participant would not
otherwise be entitled to receive an allocation, or
would have received a lesser allocation for the year
because of (a) the Participant's failure to complete
1,000 Hours of Service (or any equivalent provided in
the Plan), or (b) the Participant's failure to make
mandatory Employee Contributions to the Plan, or (c)
Compensation less than a stated amount.
2. For purposes of computing the minimum allocation,
Compensation shall mean Compensation as defined in
Section 1.06 of the Plan.
3. The provision in (1) above shall not apply to any
Participant who was not employed by the Employer on
the last day of the Plan Year.
4. The provision in (1) above shall not apply to any
Participant to the extent the Participant is covered
under any other plan or plans of the Employer and the
Employer has provided in the adoption agreement that
the minimum allocation or benefit requirement
applicable to Top-Heavy Plans will be met in the
other plan or plans.
5. The minimum allocation required under this Section
3.01(E) and Section 3.01(F)(1) (to the extent
required to be nonforfeitable under Code Section
416(b)) may not be forfeited under Code Section
411(a)(3)(B) or 411(a)(3)(D).
F. SPECIAL REQUIREMENTS FOR PAIRED PLANS - The Employer
maintains paired plans if the Employer has adopted both a
standardized profit sharing plan and a standardized money
purchase pension plan using this Basic Plan Document.
1. Minimum Allocation - The mandatory minimum allocation
provision of Section 3.01(E) shall not apply to any
Participant if the Employer maintains paired plans.
Rather, for each Plan Year, the Employer will provide
a minimum contribution equal to 3% of Compensation
for each non-Key Employee who is entitled to a
minimum contribution. Such minimum contribution will
only be made to one of the Plans. If an Employee is a
Participant in only one of the Plans, the minimum
contribution shall be made to that Plan. If the
Employee is a Participant in both Plans, the minimum
contribution shall be made to the money purchase
plan.
2. Only One Plan Can Be Integrated - If the Employer
maintains paired plans, only one of the Plans may
provide for the disparity in contributions which is
permitted under Section 401(l) of the Code. In the
event that both Adoption Agreements provide for such
integration, only the money purchase pension plan
shall be deemed to be integrated.
X. RETURN OF THE EMPLOYER CONTRIBUTION TO THE EMPLOYER UNDER
SPECIAL CIRCUMSTANCES - Any contribution made by the
Employer because of a mistake of fact must be returned to
the Employer within one year of the contribution.
8
9
In the event that the Commissioner of Internal Revenue
determines that the Plan is not initially qualified under
the Code, any contributions made incident to that initial
qualification by the Employer must be returned to the
Employer within one year after the date the initial
qualification is denied, but only if the application for
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.
In the event that a contribution made by the Employer
under this Plan is conditioned on deductibility and is
not deductible under Code Section 404, the contribution,
to the extent of the amount disallowed, must be returned
to the Employer within one year after the deduction is
disallowed.
X. OMISSION OF PARTICIPANT
1. If the Plan is a money purchase plan or a target
benefit plan and, if in any Plan Year, any Employee
who should be included as a Participant is
erroneously omitted and discovery of such omission is
not made until after a contribution by the Employer
for the year has been made and allocated, the
Employer shall make a subsequent contribution with
respect to the omitted Employee in the amount which
the Employer would have contributed with respect to
that Employee had he not been omitted.
2. If the Plan is a profit sharing plan, and if in any
Plan Year, any Employee who should be included as a
Participant is erroneously omitted and discovery of
such omission is not made until after the Employer
Contribution has been made and allocated, then the
Plan Administrator must re-do the allocation (if a
correction can be made) and inform the Employee.
Alternatively, the Employer may choose to contribute
for the omitted Employee the amount which the
Employer would have contributed for him.
3.02 EMPLOYEE CONTRIBUTIONS
This Plan will not accept nondeductible employee
contributions and matching contributions for Plan Years
beginning after the Plan Year in which this Plan is adopted
by the Employer. Employee contributions for Plan Years.
beginning after December 31, 1986. together with any matching
contributions as defined in Section 401(m) of the Code, will
be limited so as to meet the nondiscrimination test of
Section 401(m) of the Code.
A separate account will be maintained by the Plan
Administrator for the nondeductible employee contributions
of each Participant.
A Participant may, upon a written request submitted to the
Plan Administrator withdraw the lesser of the portion of his
Individual Account attributable to his nondeductible employee
contributions or the amount he contributed as nondeductible
employee contributions.
Employee contributions and earnings thereon will be
nonforfeitable at all times. No Forfeiture will occur solely
as a result of an Employee's withdrawal of employee
contributions.
The Plan Administrator will not accept deductible employee
contributions which are made for a taxable year beginning
after December 31, 1986. Contributions made prior to that
date will be maintained in a separate account which will be
nonforfeitable at all times. The account will share in the
gains and losses of the Fund in the same manner as described
in Section 4.03 of the Plan. No part of the deductible
employee contribution account will be used to purchase life
insurance. Subject to Section 6.05, joint and survivor
annuity requirements (if applicable), the Participant may
withdraw any part of the deductible employee contribution
account by making a written application to the Plan
Administrator.
3.03 ROLLOVER CONTRIBUTIONS
If the Plan Administrator so permits in a uniform and
nondiscriminatory manner, an Employee may contribute a
rollover contribution to the Plan; provided that such
Employee submits a written certification, satisfactory to the
Trustee (or Custodian), that the contribution qualifies as a
rollover contribution.
A separate account shall be maintained by the Plan
Administrator for each Employee's rollover contributions
which will be nonforfeitable at all times. Such account will
share in the income and gains and losses of the Fund in the
manner described in Section 4.03 and shall be subject to the
Plan's provisions governing distributions.
For purposes of this Section 3.03, "rollover contribution"
means a contribution described in Sections 402(a)(5),
403(a)(4) or 408(d)(3) of the Code or in any other provision
which may be added to the Code which may authorize rollovers
to the Plan.
3.04 TRANSFER CONTRIBUTIONS
If the Plan Administrator so permits in a uniform and
nondiscriminatory manner, the Trustee (or Custodian, if
applicable) may receive any amounts transferred to it from
the trustee or custodian of another plan qualified under Code
Section 401(a).
A separate account shall be maintained by the Plan
Administrator for each Employee's transfer contributions
which will be nonforfeitable at all times. Such account will
share in the income and gains and losses of the Fund in the
manner described in Section 4.03 and shall be subject to the
Plan's provisions governing distributions. Notwithstanding
any provision of this Plan to the contrary, to the extent
that any optional form of benefit under this Plan permits a
distribution prior to the Employee's retirement, death,
Disability, or severance from employment, and prior to Plan
termination, the optional form of benefit is not available
with respect to benefits attributable to assets (including
the post-transfer earnings thereon) and liabilities that are
transferred, within the meaning of Section 414(l) of the
Internal Revenue Code, to this Plan from a money purchase
pension plan qualified under Section 401(a) of the Internal
Revenue Code (other than any portion of those assets and
liabilities attributable to voluntary employee
contributions).
9
10
3.05 LIMITATION ON ALLOCATIONS
A. If the Participant does not participate in, and has never
participated in another qualified plan maintained by the
Employer or a welfare benefit fund, as defined in Section
419(e) of the Code maintained by the Employer, or an
individual medical account, as defined in Section
415(l)(2) of the Code, maintained by the Employer, which
provides an annual addition as defined in Section
3.05(E)(1), the following rules shall apply:
1. The amount of annual additions which may be credited
to the Participant's Individual Account for any
limitation year will not exceed the lesser of the
maximum permissible amount or any other limitation
contained in this Plan. If the Employer Contribution
that would otherwise be contributed or allocated to
the Participant's Individual Account would cause the
annual additions for the limitation year to exceed
the maximum permissible amount, the amount
contributed or allocated will be reduced so that the
annual additions for the limitation year will equal
the maximum permissible amount.
2. Prior to determining the Participant's actual
compensation for the limitation year, the Employer
may determine the maximum permissible amount for a
Participant on the basis of a reasonable estimation
of the Participant's Compensation for the limitation
year, uniformly determined for all participants
similarly situated.
3. As soon as is administratively feasible after the end
of the limitation year, the maximum permissible
amount for the limitation year will be determined on
the basis of the Participant's actual compensation
for the limitation year.
4. If pursuant to Section 3.05(A)(3) or as a result of
the allocation of Forfeitures there is an excess
amount, the excess will be disposed of as follows:
a. Any nondeductible voluntary employee
contributions, to the extent they would reduce
the excess amount. will be returned to the
Participant;
b. If after the application of paragraph (a) an
excess amount still exists, and the Participant
is covered by the Plan at the end of the
limitation year, the excess amount in the
Participant's Individual Account will be used to
reduce Employer Contributions (including any
allocation of Forfeitures) for such Participant
in the next limitation year, and each succeeding
limitation year if necessary.
c. If after the application of paragraph (a) an
excess amount still exists, and the Participant
is not covered by the Plan at the end of a
limitation year, the excess amount will be held
unallocated in a suspense account. The suspense
account will be applied to reduce future Employer
Contributions (including allocation of any
Forfeitures) for all remaining Participants in
the next limitation year, and each succeeding
limitation year if necessary;
d. If a suspense account is in existence at any time
during a limitation year pursuant to this
Section, it will not participate in the
allocation of the Fund's investment gains and
losses. If a suspense account is in existence at
any time during a particular limitation year, all
amounts in the suspense account must be allocated
and reallocated to Participants' Individual
Accounts before any Employer Contributions or any
Employee contributions may be made to the Plan
for that limitation year. Excess amounts may not
be distributed to Participants or former
Participants.
B. If, in addition to this Plan, the Participant is covered
under another qualified master or prototype defined
contribution plan maintained by the Employer, a welfare
benefit fund, as defined in Section 419(e) of the Code
maintained by the Employer, or an individual medical
account, as defined in Section 415(l)(2) of the Code,
maintained by the Employer, which provides an annual
addition as defined in Section 3.05(E)(1), during any
limitation year, the following rules apply:
1. The annual additions which may be credited to a
Participant's Individual Account under this Plan for
any such limitation year will not exceed the maximum
permissible amount reduced by the annual additions
credited to a Participant's Individual Account under
the other plans and welfare benefit funds for the
same limitation year. If the annual additions with
respect to the Participant under other defined
contribution plans and welfare benefit funds
maintained by the employer are less than the maximum
permissible amount and the Employer Contribution that
would otherwise be contributed or allocated to the
Participant's Individual Account under this Plan
would cause the annual additions for the limitation
year to exceed this limitation, the amount
contributed or allocated will be reduced so that the
annual additions under all such plans and funds for
the limitation year will equal the maximum
permissible amount. If the annual additions with
respect to the Participant under such other defined
contribution plans and welfare benefit funds in the
aggregate are equal to or greater than the maximum
permissible amount, no amount will be contributed or
allocated to the Participant's Individual Account
under this Plan for the limitation year.
2. Prior to determining the Participant's actual
compensation for the limitation year, the Employer
may determine the maximum permissible amount for a
Participant in the manner described in Section
3.05(A)(2).
3. As soon as is administratively feasible after the end
of the limitation year, the maximum permissible
amount for the limitation year will be determined on
the basis of the Participant's actual compensation
for the limitation year.
4. If, pursuant to Section 3.05(B)(3) or as a result of
the allocation of Forfeitures a Participant's annual
additions under this Plan and such other plans would
result in an excess amount for a limitation year, the
excess amount will be deemed to consist of the annual
additions last allocated, except that annual
additions attributable to a welfare benefit fund or
individual medical account will be deemed to have
been allocated first regardless of the actual
allocation date.
5. If an excess amount was allocated to a Participant on
an allocation date of this Plan which coincides with
an allocation date of another plan, the excess amount
attributed to this Plan will be the product of,
10
11
a. the total excess amount allocated as of such
date, times
b. the ratio of (i) the annual additions allocated
to the Participant for the limitation year as of
such date under this Plan to (ii) the total
annual additions allocated to the Participant for
the limitation year as of such date under this
and all the other qualified master or prototype
defined contribution plans.
6. Any excess amount attributed to this Plan will be
disposed in the manner described in Section
3.05(A)(4).
C. If the Participant is covered under another qualified
defined contribution plan maintained by the Employer
which is not a master or prototype plan, annual additions
which may be credited to the Participant's Individual
Account under this Plan for any limitation year will be
limited in accordance with Sections 3.05(B)(1) through
3.05(B)(6) as though the other plan were a master or
prototype plan unless the Employer provides other
limitations in the Section of the Adoption Agreement
titled "Limitation on Allocation - More Than One Plan."
D. If the Employer maintains, or at any time maintained, a
qualified defined benefit 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. The
annual additions which may be credited to the
Participant's Individual Account under this Plan for any
limitation year will be limited in accordance with the
Section of the Adoption Agreement titled "Limitation on
Allocation - More Than One Plan."
E. The following terms shall have the following meanings when
used in this Section 3.05:
1. Annual additions: The sum of the following amounts
credited to a Participant's Individual Account for
the limitation year:
a. Employer Contributions,
b. Employee contributions,
c. Forfeitures, and
d. amounts allocated, after March 31, 1984, to an
individual medical account, as defined in Section
415(l)(2) of the Code, which is part of a pension
or annuity plan maintained by the Employer are
treated as annual additions to a defined
contribution plan. Also amounts derived from
contributions paid or accrued after December 31,
1985, in taxable years ending after such date,
which are attributable to post-retirement medical
benefits, allocated to the separate account of a
key employee, as defined in Section 419A(d)(3) of
the Code. under a welfare benefit fund, as
defined in Section 419(e) of the Code, maintained
by the Employer are treated as annual additions
to a defined contribution plan.
For this purpose, any excess amount applied under
Section 3.05(A)(4) or 3.05(B)(6) in the limitation
year to reduce Employer Contributions will be
considered annual additions for such limitation year.
2. Compensation: As elected by the Employer in the Adoption
Agreement (and if no election is made, Section 3401(a)
wages will be deemed to have been selected), Compensation
shall mean all of a Participant's:
a. Section 3121 wages. Wages as defined in Section
3121(a) of the Code, for purposes of calculating
Social Security taxes, but determined without regard
to the wage base limitation in Section 3121(a)(1),
the special rules in Section 3121(v), any rules that
limit covered employment based on the type or
location of an Employee's Employer, and any rules
that limit the remuneration included in wages based
on familial relationship or based on the nature or
location of the employment or the services performed
(such as the exceptions to the definition of
employment in Section 312l(b)(1) through (20)).
b. Section 3401(a) wages. Wages as defined in Section
3401(a) of the Code, 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 (such as the
exception for agricultural labor in Section
3401(a)(2)).
c. 415 safe-harbor compensation. Wages, salaries, and
fees for professional services and other amounts
received (without regard to whether or not an amount
is paid in cash) for personal services actually
rendered in the course of employment with the
Employer maintaining the Plan to the extent that the
amounts are includible in gross income (including,
but not limited to, commissions paid salesmen,
compensation for services on the basis of a
percentage of profits, commissions on insurance
premiums, tips, bonuses, fringe benefits,
reimbursements, and expense allowances), and
excluding the following:
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
under a simplified employee pension plan to the
extent such contributions are deductible by the
Employee, or any distributions from a plan of
deferred compensation;
2. Amounts realized from the exercise of a
nonqualified 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;
3. Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified
stock option; and
4. Other amounts which received special tax
benefits, or contributions made by the Employer
(whether or not under a salary reduction
agreement) towards the purchase of an annuity
described in Section 403(b) of the Code (whether
or not the amounts are actually excludable from
the gross income of the Employee).
11
12
For any Self-Employed Individual, Compensation
will mean Earned Income. For limitation years
beginning after December 31, 1991, for purposes
of applying the limitations of this Section 3.05,
compensation for a limitation year is the
compensation actually paid or includible in gross
income during such limitation year.
Notwithstanding the preceding sentence,
compensation for a Participant in a defined
contribution plan who is permanently and totally
disabled (as defined in Section 22(e)(3) of the
Code) is the compensation such Participant would
have received for the limitation year if the
Participant had been paid at the rate of
compensation paid immediately before becoming
permanently and totally disabled; such imputed
compensation for the disabled participant may be
taken into account only if the Participant is not
a Highly Compensated Employee (as defined in
Section 414(q) of the Code) and contributions
made on behalf of such Participant are
nonforfeitable when made.
3. Defined benefit fraction: A fraction, the numerator of
which is the sum of the Participant's projected annual
benefits under all the defined benefit plans (whether or
not terminated) maintained by the Employer, and the
denominator of which is the lesser of 125% of the dollar
limitation determined for the limitation year under
Section 415(b) and (d) of the Code or 140% of the highest
average compensation, including any adjustments under
Section 415(b) of the Code.
Notwithstanding the above, if the Participant was a
Participant as of the first day of the first limitation
year beginning after December 31, 1986, in one or more
defined benefit plans maintained by the employer which
were in existence on May 6, 1986, the denominator of this
fraction will not be less than 125% of the sum of the
annual benefits under such plans which the participant
had accrued as of the close of the last limitation year
beginning before January 1, 1987, disregarding any
changes in the terms and conditions of the plan after May
5, 1986. The preceding sentence applies only if the
defined benefit plans individually and in the aggregate
satisfied the requirements of Section 415 of the Code for
all limitation years beginning before January 1, 1987.
4. Defined contribution dollar limitation: $30,000 or if
greater, one-fourth of the defined benefit dollar
limitation set forth in Section 415(b)(1) of the Code as
in effect for the limitation year.
5. Defined contribution fraction: A fraction, the numerator
of which is the sum of the annual additions to the
Participant's account under all the defined contribution
plans (whether or not terminated) maintained by the
Employer for the current and all prior limitation years
(including the annual additions attributable to the
Participant's nondeductible employee contributions to all
defined benefit plans, whether or not terminated,
maintained by the Employer, and the annual additions
attributable to all welfare benefit funds, as defined in
Section 419(e) of the Code, and individual medical
accounts, as defined in Section 415(l)(2) of the Code,
maintained by the Employer), and the
denominator of which is the sum of the maximum aggregate
amounts for the current and all prior limitation years of
service with the Employer (regardless of whether a
defined contribution plan was maintained by the
Employer). The maximum aggregate amount in any limitation
year is the lesser of 125% of the dollar limitation
determined under Section 415(b) and (d) of the Code in
effect under Section 415(c)(1)(A) of the Code or 35% of
the Participant's compensation for such year.
If the Employee was a participant as of the end of the
first day of the first limitation year beginning after
December 31, 1986, in one or more defined contribution
plans maintained by the Employer which were in existence
on May 6, 1986, the numerator of this fraction will be
adjusted if the sum of this fraction and the defined
benefit fraction would otherwise exceed 1.0 under the
terms of this Plan. Under the adjustment, an amount equal
to the product of (1) the excess of the sum of the
fractions over 1.0 times (2) the denominator of this
fraction, will be permanently subtracted from the
numerator of this fraction. The adjustment is calculated
using the fractions as they would be computed as of the
end of the last limitation year beginning before January
1, 1987, and disregarding any changes in the terms and
conditions of the Plan made after May 5, 1986, but using
the Section 415 limitation applicable to the first
limitation year beginning on or after January 1, 1987.
The annual addition for any limitation year beginning
before January 1, 1987, shall not be recomputed to treat
all employee contributions as annual additions.
6. Employer: For purposes of this Section 3.05, Employer
shall mean the Employer that adopts this Plan, and all
members of a controlled group of corporations (as defined
in Section 414(b) of the Code as modified by Section
415(h)), all commonly controlled trades or businesses (as
defined in Section 414(c) as modified by Section 415(h))
or affiliated service groups (as defined in Section
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 Section 414(o) of the Code.
7. Excess amount: The excess of the Participant's annual
additions for the limitation year over the maximum
permissible amount.
8. Highest average compensation: The average compensation
for the three consecutive years of service with the
Employer that produces the highest average.
9. Limitation year: A calendar year, or the 12-consecutive
month period elected by the Employer in the Section of
the Adoption Agreement titled "Limitation on Allocation -
More Than One Plan." All qualified plans maintained by
the Employer must use the same limitation year. If the
limitation year is amended to a different 12-consecutive
month period, the new limitation year must begin on a
date within the limitation year in which the amendment is
made.
10. Master or prototype plan: A plan the form of which is the
subject of a favorable opinion letter from the Internal
Revenue Service.
11. Maximum permissible amount: The maximum annual addition
that may be contributed or allocated to a Participant's
Individual Account under the Plan for any limitation year
shall not exceed the lesser of:
12
13
a. the defined contribution dollar limitation, or
b. 25% of the Participant's compensation for the
limitation year.
The compensation limitation referred to in (b) shall not
apply to any contribution for medical benefits (within
the meaning of Section 401(h) or Section 419A(f)(2) of
the Code) which is otherwise treated as an annual
addition under Section 415(l)(1) or 419A(d)(2) of the
Code.
If a short limitation year is created because of an
amendment changing the limitation year to a different
12-consecutive month period, the maximum permissible
amount will not exceed the defined contribution dollar
limitation multiplied by the following fraction:
Number of months in the short limitation year
---------------------------------------------
12
12. 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:
a. the Participant will continue employment until normal
retirement age under the Plan (or current age, if
later), and
b. the Participant's 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.
SECTION FOUR INDIVIDUAL ACCOUNTS OF PARTICIPANTS AND VALUATION
4.01 INDIVIDUAL ACCOUNTS
A. The Plan Administrator shall establish and maintain an
Individual Account in the name of each Participant to
reflect the total value of his interest in the Fund. Each
Individual Account established hereunder shall consist of
such subaccounts as may be needed for each Participant
including:
1. a subaccount to reflect Employer Contributions and
Forfeitures allocated on behalf of a Participant;
2. a subaccount to reflect a Participant's rollover
contributions;
3. a subaccount to reflect a Participant's transfer
contributions;
4. a subaccount to reflect a Participant's nondeductible
employee contributions; and
5. a subaccount to reflect a Participant's deductible
employee contributions.
Such subaccounts are primarily for accounting purposes,
and do not necessarily require a segregation of the Fund.
B. The Plan Administrator may establish additional accounts
as it may deem necessary for the proper administration of
the Plan, including, but not limited to, a suspense
account for Forfeitures as required pursuant to Section
6.01(D).
4.02 VALUATION OF FUND
The Fund will be valued each Valuation Date at fair market
value.
4.03 VALUATION OF INDIVIDUAL ACCOUNTS
A. Where all or a portion of the assets of a Participant's
Individual Account are invested in a Separate Fund for
the Participant, then the value of that portion of such
Participant's Individual Account at any relevant time
equals the sum of the fair market values of the assets in
such Separate Fund, less any applicable charges or
penalties.
B. The fair market value of the remainder of each Individual
Account is determined in the following manner:
1. First, the portion of the Individual Account invested
in each Investment Fund as of the previous Valuation
Date is determined. Each such portion is reduced by
any withdrawal made from the applicable Investment
Fund to or for the benefit of a Participant or his
Beneficiary, further reduced by any amounts forfeited
by the Participant pursuant to Section 6.01(D) and
further reduced by any transfer to another Investment
Fund since the previous Valuation Date and is
increased by any amount transferred from another
Investment Fund since the previous Valuation Date.
The resulting amounts are the net Individual Account
portions invested in the Investment Funds.
2. Secondly, the net Individual Account portions
invested in each Investment Fund are adjusted upwards
or downwards, pro rata (i.e., ratio of each net
Individual Account portion to the sum of all net
Individual Account portions) so that the sum of all
the net Individual Account portions invested in an
Investment Fund will equal the then fair market value
of the Investment Fund. Notwithstanding the previous
sentence, for the first Plan Year only, the net
Individual Account portions shall be the sum of all
contributions made to each Participant's Individual
Account during the first Plan Year.
3. Thirdly, any contributions to the Plan and
Forfeitures are allocated in accordance with the
appropriate allocation provisions of Section 3. For
purposes of Section 4, contributions made by the
Employer for any Plan Year but after that Plan Year
will be considered to have been made on the last day
of that Plan Year regardless of when paid to the
Trustee (or Custodian, if applicable).
13
14
Amounts contributed between Valuation Dates will not
be credited with investment gains or losses until the
next following Valuation Date.
4. Finally, the portions of the Individual Account
invested in each Investment Fund (determined in
accordance with (1), (2) and (3) above) are added
together.
4.04 SEGREGATION OF ASSETS
If a Participant elects a mode of distribution other than a
lump sum, the Plan Administrator may place that Participants
account balance into a segregated Investment Fund for the
purpose of maintaining the necessary liquidity to provide
benefit installments on a periodic basis.
4.05 STATEMENT OF INDIVIDUAL ACCOUNTS
No later than 270 days after the close of each Plan Year, the
Plan Administrator shall furnish a statement to each
Participant indicating the Individual Account balances of
such Participant as of the last Valuation Date in such Plan
Year.
4.06 MODIFICATION OF METHOD FOR VALUING INDIVIDUAL ACCOUNTS
If necessary or appropriate, the Plan Administrator may
establish different or additional procedures (which shall be
uniform and nondiscriminatory) for determining the fair
market value of the Individual Accounts.
SECTION FIVE TRUSTEE OR CUSTODIAN
5.01 CREATION OF FUND
By adopting this Plan, the Employer establishes the Fund
which shall consist of the assets of the Plan held by the
Trustee (or Custodian, if applicable) pursuant to this
Section 5. Assets within the Fund may be pooled on behalf of
all Participants, earmarked on behalf of each Participant or
be a combination of pooled and earmarked. To the extent that
assets are earmarked for a particular Participant, they will
be held in a Separate Fund for that Participant.
No part of the corpus or income of the Fund may be used for,
or diverted to, purposes other than for the exclusive benefit
of Participants or their Beneficiaries.
5.02 INVESTMENT AUTHORITY
Except as provided in Section 5.14 (relating to individual
direction of investments by Participants), the Employer, not
the Trustee (or Custodian, if applicable), shall have
exclusive management and control over the investment of the
Fund into any permitted investment. Notwithstanding the
preceding sentence, a Trustee with full trust powers (under
applicable law) may make an agreement with the Employer
whereby the Trustee will manage the investment of all or a
portion of the Fund. Any such agreement shall be in writing
and set forth such matters, as the Trustee deems necessary or
desirable.
5.03 FINANCIAL ORGANIZATION CUSTODIAN OR TRUSTEE WITHOUT FULL
TRUST POWERS
This Section 5.03 applies where a financial organization has
indicated in the Adoption Agreement that it will serve, with
respect to this Plan, as Custodian or as Trustee without full
trust powers (under applicable law). Hereinafter, a financial
organization Trustee without full trust powers (under
applicable law) shall be referred to as a Custodian.
A. PERMISSIBLE INVESTMENTS - The assets of the Plan shall be
invested only in those investments which are available
through the Custodian in the ordinary course of business
which the Custodian may legally hold in a qualified plan
and which the Custodian chooses to make available to
Employers for qualified plan investments.
B. RESPONSIBILITIES OF THE CUSTODIAN - The responsibilities
of the Custodian shall be limited to the following:
1. To receive Plan contributions and to hold, invest and
reinvest the Fund without distinction between
principal and interest; provided, however, that
nothing in this Plan shall require the Custodian to
maintain physical custody of stock certificates (or
other indicia of ownership of any type of asset)
representing assets within the Fund;
2. To maintain accurate records of contributions,
earnings, withdrawals and other information the
Custodian deems relevant with respect to the Plan;
3. To make disbursements from the Fund to Participants
or Beneficiaries upon the proper authorization of
the Plan Administrator; and
4. To furnish to the Plan Administrator a statement
which reflects the value of the investments in the
hands of the Custodian as of the end of each Plan
Year.
X. XXXXXX OF THE CUSTODIAN - Except as otherwise provided in
this Plan, the Custodian shall have the power to take any
action with respect to the Fund which it deems necessary
or advisable to discharge its responsibilities under this
Plan including, but not limited to, the following powers:
1. To invest all or a portion of the Fund (including
idle cash balances) in time deposits, savings
accounts, money market accounts or similar
investments bearing a reasonable rate of interest in
the Custodian's own savings department or the savings
department of another financial organization;
2. To vote upon any stocks, bonds, or other securities;
to give general or special proxies or powers of
attorney with or without power of substitution; to
exercise any conversion privileges or subscription
rights and to make any payments incidental thereto;
to oppose, or to consent to, or otherwise participate
in, corporate reorganizations or other changes
affecting corporate securities, and to pay any
assessment or charges in connection therewith; and
generally to exercise any of the powers of an owner
with respect to stocks, bonds, securities or other
property;
14
15
3. To hold securities or other property of the Fund in
its own name, in the name of its nominee or in bearer
form; and
4. To make, execute, acknowledge, and deliver any and
all documents of transfer and conveyance and any and
all other instruments that may be necessary or
appropriate to carry out the powers herein granted.
5.04 FINANCIAL ORGANIZATION TRUSTEE WITH FULL TRUST POWERS AND
INDIVIDUAL TRUSTEE
This Section 5.04 applies where a financial organization has
indicated in the Adoption Agreement that it will serve as
Trustee with full trust powers. This Section also applies
where one or more individuals are named in the Adoption
Agreement to serve as Trustee(s).
A. PERMISSIBLE INVESTMENTS - The Trustee may invest the
assets of the Plan in property of any character, real or
personal, including, but not limited to the following:
stocks, including shares of open-end investment companies
(mutual funds); bonds; notes; debentures; options;
limited partnership interests; mortgages; real estate or
any interests therein; unit investment trusts; Treasury
Bills, and other U.S. Government obligations; common
trust funds, combined investment trusts, collective trust
funds or commingled funds maintained by a bank or similar
financial organization (whether or not the Trustee
hereunder); savings accounts, time deposits or money
market accounts of a bank or similar financial
organization (whether or not the Trustee hereunder);
annuity contracts; life insurance policies; or in such
other investments as is deemed proper without regard to
investments authorized by statute or rule of law
governing the investment of trust funds but with regard
to ERISA and this Plan.
Notwithstanding the preceding sentence, the Prototype
Sponsor may, as a condition of making the Plan available
to the Employer for adoption, limit the types of property
in which the Trustee (other than a financial organization
Trustee with full trust powers), is permitted to invest.
B. RESPONSIBILITIES OF THE TRUSTEE - The responsibilities of
the Trustee shall be limited to the following:
1. To receive Plan contributions and to hold, invest and
reinvest the Fund without distinction between
physical and interest; provided, however, that
nothing in this Plan shall require the Trustee to
maintain physical custody of stock certificates (or
other indicia of ownership) representing assets
within the Fund;
2. To maintain accurate records of contributions,
earnings, withdrawals and other information the
Trustee deems relevant with respect to the Plan;
3. To make disbursements from the Fund to Participants
or Beneficiaries upon the proper authorization of
the Plan Administrator; and
4. To furnish to the Plan Administrator a statement
which reflects the value of the investments in the
hands of the Trustee as of the end of each Plan Year.
X. XXXXXX OF THE TRUSTEE - Except as otherwise provided in
this Plan, the Trustee shall have the power to take any
action with respect to the Fund which it deems necessary
or advisable to discharge its responsibilities under this
Plan including, but not limited to, the following powers:
1. To hold any securities or other property of the Fund
in its own name, in the name of its nominee or in
bearer form;
2. To purchase or subscribe for securities issued, or
real property owned, by the Employer or any trade or
business under common control with the Employer but
only if the prudent investment and diversification
requirements of ERISA are satisfied;
3. To sell, exchange, convey, transfer or otherwise
dispose of any securities or other property held by
the Trustee. by private contract or at public
auction. No person dealing with the Trustee shall be
bound to see to the application of the purchase money
or to inquire into the validity, expediency, or
propriety of any such sale or other disposition, with
or without advertisement;
4. To vote upon any stocks, bonds, or other securities;
to give general or special proxies or powers of
attorney with or without power of substitution; to
exercise any conversion privileges or subscription
rights and to make any payments incidental thereto;
to oppose, or to consent to, or otherwise participate
in, corporate reorganizations or other changes
affecting corporate securities, and to delegate
discretionary powers, and to pay any assessments or
charges in connection therewith; and generally to
exercise any of the powers of an owner with respect
to stocks, bonds, securities or other property;
5. To invest any part or all of the Fund (including idle
cash balances) in certificates of deposit, demand or
time deposits, savings accounts, money market
accounts or similar investments of the Trustee (if
the Trustee is a bank or similar financial
organization), the Prototype Sponsor or any affiliate
of such Trustee or Prototype Sponsor, which bear a
reasonable rate of interest;
6. To provide sweep services without the receipt by the
Trustee of additional compensation or other
consideration (other than reimbursement of direct
expenses properly and actually incurred in the
performance of such services);
7. To hold in the form of cash for distribution or
investment such portion of the Fund as, at any time
and from time-to-time, the Trustee shall deem prudent
and deposit such cash in interest bearing or
noninterest bearing accounts;
15
16
8. To make, execute, acknowledge, and deliver any and
all documents of transfer and conveyance and any and
all other instruments that may be necessary or
appropriate to carry out the powers herein granted;
9. To settle, compromise, or submit to arbitration any
claims, debts, or damages due or owing to or from the
Plan, to commence or defend suits or legal or
administrative proceedings, and to represent the Plan
in all suits and legal and administrative
proceedings:
10. To employ suitable agents and counsel, to contract
with agents to perform administrative and
recordkeeping duties and to pay their reasonable
expenses, fees and compensation, and such agent or
counsel may or may not be agent or counsel for the
Employer;
11. To cause any part or all of the Fund, without
limitation as to amount, to be commingled with the
funds of other trusts (including trusts for qualified
employee benefit plans) by causing such money to be
invested as a part of any pooled, common, collective
or commingled trust fund heretofore or hereafter
created by any trustee (if the Trustee is a bank), by
the Prototype Sponsor, by any affiliate bank of such
a Trustee or the Prototype Sponsor, or by such a
Trustee, the Prototype Sponsor or such an affiliate
in participation with others; the instrument or
instruments establishing such trust fund or funds, as
amended, being made part of this Plan and trust so
long as any portion of the Fund shall be invested
through the medium thereof.
12. Generally to do all such acts, execute all such
instruments, initiate such proceedings, and exercise
all such rights and privileges with relation to
property constituting the Fund as if the Trustee were
the absolute owner thereof.
5.05 DIVISION OF FUND INTO INVESTMENT FUNDS
The Employer may direct the Trustee (or Custodian, if
applicable) from time-to-time to divide and redivide the Fund
into one or more Investment Funds. Such Investment Funds may
include, but not be limited to, Investment Funds representing
the assets under the control of an investment manager
pursuant to Section 5.12 and Investment Funds representing
investment options available for individual direction by
Participants pursuant to Section 5.14. Upon each division or
redivision, the Employer may specify the part of the Fund to
be allocated to each such Investment Fund and the terms and
conditions, if any, under which the assets in-such Investment
Fund shall be invested.
5.06 COMPENSATION AND EXPENSES
The Trustee (or Custodian, if applicable) shall receive such
reasonable compensation as may be agreed upon by the Trustee
(or Custodian) and the Employer. The Trustee (or Custodian)
shall be entitled to reimbursement by the Employer for all
proper expenses incurred in carrying out his duties under
this Plan, including reasonable legal, accounting and
actuarial expenses. If not paid by the Employer, such
compensation and expenses may be charged against the Fund.
All taxes of any kind that may be levied or assessed under
existing or future laws upon, or in respect of, the Fund or
the income thereof shall be paid from the Fund.
5.07 NOT OBLIGATED TO QUESTION DATA
The Employer shall furnish the Trustee (or Custodian, if
applicable) and Plan Administrator the information which each
party deems necessary for the administration of the Plan
including, but not limited to, changes in a Participant's
status, eligibility, mailing addresses and other such data as
may be required. The Trustee (or Custodian) and Plan
Administrator shall be entitled to act on such information as
is supplied them and shall have no duty or responsibility to
further verify or question such information.
5.08 LIABILITY FOR WITHHOLDING ON DISTRIBUTIONS
The Plan Administrator shall be responsible for withholding
federal income taxes from distributions from the Plan, unless
the Participant (or Beneficiary, where applicable) elects not
to have such taxes withheld. However, the Trustee (or
Custodian) shall act as agent for the Plan Administrator to
withhold such taxes and to make the appropriate distribution
reports, subject to the Plan Administrator's obligation to
furnish all the necessary information to so withhold to the
Trustee (or Custodian).
5.09 RESIGNATION OR REMOVAL OF TRUSTEE (OR CUSTODIAN)
The Trustee (or Custodian, if applicable) may resign at any
time by giving 30 days advance written notice to the
Employer. The resignation shall become effective 30 days
after receipt of such notice unless a shorter period is
agreed upon.
The Employer may remove any Trustee (or Custodian) at any
time by giving written notice to such Trustee (or Custodian)
and such removal shall be effective 30 days after receipt of
such notice unless a shorter period is agreed upon. The
Employer shall have the power to appoint a successor Trustee
(or Custodian).
Upon such resignation or removal, if the resigning or removed
Trustee (or Custodian) is the sole Trustee (or Custodian), he
shall transfer all of the assets of the Fund then held by him
as expeditiously as possible to the successor Trustee (or
Custodian) after paying or reserving such reasonable amount
as he shall deem necessary to provide for the expense in the
settlement of the accounts and the amount of any compensation
due him and any sums chargeable against the Fund for which he
may be liable. If the Funds as reserved are not sufficient
for such purpose, then he shall be entitled to reimbursement
from the successor Trustee (or Custodian) out of the assets
in the successor Trustee's (or Custodian's) hands under this
Plan. If the amount reserved shall be in excess of the amount
actually needed, the former Trustee (or Custodian) shall
return such excess to the successor Trustee (or Custodian).
Upon receipt of such assets, the successor Trustee (or
Custodian) shall thereupon succeed to all of the powers and
responsibilities given to the Trustee (or Custodian) by this
Plan.
16
17
The resigning or removed Trustee (or Custodian) shall render
an accounting to the Employer and unless objected to by the
Employer within 30 days of its receipt, the accounting shall
be deemed to have been approved and the resigning or removed
Trustee (or Custodian) shall be released and discharged as to
all matters set forth in the accounting. Where a financial
organization is serving as Trustee (or Custodian) and it is
merged with or bought by another organization (or comes under
the control of any federal or state agency), that
organization shall serve as the successor Trustee (or
Custodian) of this Plan, but only if it is the type of
organization that can so serve under applicable law.
Where the Trustee or Custodian is serving as a nonbank
trustee or custodian pursuant to Section 1.401-12(n) of the
Income Tax Regulations, the Employer will appoint a successor
Trustee (or Custodian) upon notification by the Commissioner
of Internal Revenue that such substitution is required
because the Trustee (or Custodian) has failed to comply with
the requirements of Section 1.401-12(n) or is not keeping
such records or making such returns or rendering such
statements as are required by form or regulations.
5.10 DEGREE OF CARE
Limitations of Liability - The Trustee (or Custodian) shall
not be liable for any losses incurred by the Fund by any
lawful direction to invest communicated by the Employer, Plan
Administrator or any Participant or Beneficiary. The Trustee
(or Custodian) shall be under no liability for distributions
made or other action taken or not taken at the written
direction of the Plan Administrator. It is specifically
understood that the Trustee (or Custodian) shall have no duty
or responsibility with respect to the determination of
matters pertaining to the eligibility of any Employee to
become a Participant or remain a Participant hereunder, the
amount of benefit to which a Participant or Beneficiary shall
be entitled to receive hereunder, whether a distribution to
Participant or Beneficiary is appropriate under the terms of
the Plan or the size and type of any policy to be purchased
from any insurer for any Participant hereunder or similar
matters; it being understood that all such responsibilities
under the Plan are vested in the Plan Administrator.
5.11 INDEMNIFICATION OF PROTOTYPE SPONSOR AND TRUSTEE (OR
CUSTODIAN)
Notwithstanding any other provision herein, and except as may
be otherwise provided by ERISA, the Employer shall indemnify
and hold harmless the Trustee (or Custodian, if applicable)
and the Prototype Sponsor, their officers, directors,
employees, agents, their heirs, executors, successors and
assigns, from and against any and all liabilities, damages,
judgments, settlements, losses, costs, charges, or expenses
(including legal expenses) at any time arising out of or
incurred in connection with any action taken by such parties
in the performance of their duties with respect to this Plan,
unless there has been a final adjudication of gross
negligence or willful misconduct in the performance of such
duties.
Further, except as may be otherwise provided by ERISA, the
Employer will indemnify the Trustee (or custodian) and
Prototype Sponsor from any liability, claim or expense
(including legal expense) which the Trustee (or Custodian)
and Prototype Sponsor shall incur by reason of or which
results, in whole or in part, from the Trustees (or
Custodian's) or Prototype Sponsor's reliance on the facts and
other directions and elections the Employer communicates or
fails to communicate.
5.12 INVESTMENT MANAGERS
A. DEFINITION OF INVESTMENT MANAGER - The Employer may
appoint one or more investment managers to make
investment decisions with respect to all or a portion of
the Fund. The investment manager shall be any firm or
individual registered as an investment adviser under the
Investment Advisers Act of 1940, a bank as defined in
said Act or an insurance company qualified under the laws
of more than one state to perform services consisting of
the management, acquisition or disposition of any assets
of the Plan.
B. INVESTMENT MANAGER'S AUTHORITY - A separate Investment
Fund shall be established representing the assets of the
Fund invested at the direction of the investment manager.
The investment manager so appointed shall direct the
Trustee (or Custodian, if applicable with respect to the
investment of such Investment Fund. The investments which
may be acquired at the direction of the investment
manager are those described in Section 5.03(A) (for
Custodians) or Section 5.04(A) (for Trustees).
C. WRITTEN AGREEMENT - The appointment of any investment
manager shall be by written agreement between the
Employer and the investment manager and a copy of such
agreement (and any modification or termination thereof)
must be given to the Trustee (or Custodian).
The agreement shall set forth, among other matters, the
effective date of the investment manager's appointment
and an acknowledgement by the investment manager that it
is a fiduciary of the Plan under XXXXX.
D. CONCERNING THE TRUSTEE (OR CUSTODIAN) - Written notice of
each appointment of an investment manager shall be given
to the Trustee (or Custodian) in advance of the effective
date of such appointment. Such notice shall specify which
portion of the Fund will constitute the Investment Fund
subject to the investment manager's direction. The
Trustee (or Custodian) shall comply with the investment
direction given to it by the investment manager and will
not be liable for any loss which may result by reason of
any action (or inaction) it takes at the direction of the
investment manager.
5.13 MATTERS RELATING TO INSURANCE
A. If a life insurance policy is to be purchased for a
Participant, the aggregate premium for certain life
insurance for each Participant must be less than a
certain percentage of the aggregate Employer
Contributions and Forfeitures allocated to a
Participant's Individual Account at any particular time
as follows:
1. Ordinary Life Insurance - For purposes of these
incidental insurance provisions, ordinary life
insurance contracts are contracts with both
nondecreasing death benefits and nonincreasing
premiums. If such contracts are purchased, less than
50% of the aggregate Employer Contributions and
Forfeitures allocated to any Participant's Individual
Account will be used to pay the premiums attributable
to them.
2. Term and Universal Life Insurance - No more than 25%
of the aggregate Employer Contributions and
Forfeitures allocated to any Participant's Individual
Account will be used to pay the premiums on term life
insurance contracts, universal life insurance
contracts, and all other life insurance contracts
which are not ordinary life.
17
18
3. Combination - The sum of 50% of the ordinary life
insurance premiums and all other life insurance
premiums will not exceed 25% of the aggregate
Employer Contributions and Forfeitures allocated to
any Participant's Individual Account.
B. Any dividends or credits earned on insurance contracts
for a Participant shall be allocated to such
Participant's Individual Account.
C. Subject to Section 6.05, the contracts on a Participant's
life will be converted to cash or an annuity or
distributed to the Participant upon commencement of
benefits.
D. The Trustee (or Custodian, if applicable) shall apply for
and will be the owner of any insurance contract(s)
purchased under the terms of this Plan. The insurance
contract(s) must provide that proceeds will be payable to
the Trustee (or Custodian), however, the Trustee (or
Custodian) shall be required to pay over all proceeds of
the contract(s) to the Participant's designated
Beneficiary in accordance with the distribution
provisions of this Plan. A Participant's spouse will be
the designated Beneficiary of the proceeds in all
circumstances unless a qualified election has been made
in accordance with Section 6.05, Joint and Survivor
Annuity Requirements, if applicable. Under no
circumstances shall the Fund retain any part of the
proceeds. In the event of any conflict between the terms
of this Plan and the terms of any insurance contract
purchased hereunder, the Plan provisions shall control.
E. The Employer may direct the Trustee (or Custodian) to
sell and distribute insurance or annuity contracts to a
Participant (or other party as may be permitted) in
accordance with applicable law or regulations.
5.14 DIRECTION OF INVESTMENTS BY PARTICIPANT
If so indicated in the Adoption Agreement, each Participant
may individually direct the Trustee (or Custodian, if
applicable) regarding the investment of part or all of his
Individual Account. To the extent so directed, the Employer,
Plan Administrator, Trustee (or Custodian) and all other
fiduciaries are relieved of their fiduciary responsibility
under Section 404 of ERISA.
The Plan Administrator shall direct that a Separate Fund be
established in the name of each Participant who directs the
investment of part or all of his Individual Account. Each
Separate Fund shall be charged or credited (as appropriate)
with the earnings, gains, losses or expenses attributable to
such Separate Fund. No fiduciary shall be liable for any loss
which results from a Participant's individual direction. The
assets subject to individual direction shall not be invested
in collectibles as that term is defined in Section 408(m) of
the Code.
The Plan Administrator shall establish such uniform and
nondiscriminatory rules relating to individual direction as
it deems necessary or advisable including, but not limited
to, rules describing (1) which portions of Participant's
Individual Account can be individually directed; (2) the
frequency of investment changes; (3) the forms and procedures
for making investment changes: and (4) the effect of a
Participant's failure to make a valid direction.
Subject to the approval of the Prototype Sponsor, the Plan
Administrator may, in a uniform and nondiscriminatory manner,
limit the available investments for Participants' individual
direction to certain specified investment options (including,
but not limited to, certain mutual funds, investment
contracts, deposit accounts and group trusts). The Plan
Administrator may permit, in a uniform and nondiscriminatory
manner, a Beneficiary of a deceased Participant to
individually direct in accordance with this Section.
SECTION-SIX VESTING AND DISTRIBUTION
6.01 DISTRIBUTION TO PARTICIPANT
A. WHEN DISTRIBUTABLE
1. Entitlement to Distribution - The Vested portion of a
Participant's Individual Account shall be
distributable to the Participant upon the occurrence
of any of the following events:
a. the Participant's Termination of Employment;
b. the Participant's attainment of Normal Retirement
Age;
c. the Participant's Disability; or
d. the termination of the Plan;
2. Written Request: When Distributed - A Participant
entitled to distribution who wishes to receive a
distribution must submit a written request to the
Plan Administrator. Such request shall be made upon a
form provided by the Plan Administrator. Upon a valid
request, the Plan Administrator shall direct the
Trustee (or Custodian, if applicable) to commence
distribution no later than 90 days following the
later of:
a. the close of the Plan Year within which the event
occurs which entitles the Participant to
distribution; or
b. the close of the Plan Year in which the request
is received.
3. Special Rules for Withdrawals During Service - If
this is a profit sharing plan and the Adoption
Agreement so provides, a Participant who is not
otherwise entitled to a distribution under Section
6.01(A)(1) may elect to receive a distribution of all
or part of the Vested portion of his Individual
Account, subject to the requirements of Section 6.05
and further subject to the following limits:
a. Participant for 5 or more years. An Employee who
has been a Participant in the Plan for 5 or more
years may withdraw up to his entire Vested
portion of his Individual Account.
18
19
b. Participant for less than 5 years. An Employee
who has been a Participant in the Plan for less
than 5 years may withdraw only the amount which
has been in his Vested Individual Account
attributable to Employer Contributions for at
least 2 full Plan Years.
However, if the distribution is on account of
hardship, the Participant may withdraw up to his
entire Vested portion of his Individual Account.
For purposes of the preceding sentence, hardship
is defined as an immediate and heavy financial
need of the Participant where such Participant
lacks other available resources. The following
are the only financial needs considered immediate
and heavy: expenses incurred or necessary for
medical care, described in Section 213(d) of the
Code, of the Employee, the Employee's spouse or
dependents; the purchase (excluding mortgage
payments) of a principal residence for the
Employee; payment of tuition and related
educational fees for the next 12 months of
post-secondary education for the Employee, the
Employee's spouse, children or dependents; or the
need to prevent the eviction of the Employee
from, or a foreclosure on the mortgage of, the
Employee's principal residence.
A distribution will be considered as necessary to
satisfy an immediate and heavy financial need of the
Employee only if:
1) The employee has obtained all distributions,
other than hardship distributions, and all
nontaxable loans under all plans maintained by
the Employer;
2) The distribution is not in excess of the amount
of an immediate and heavy financial need
(including amounts necessary to pay any federal,
state or local income taxes or penalties
reasonably anticipated to result from the
distribution)
4. Commencement of Benefits - Notwithstanding any other
provision, unless the Participant elects otherwise,
distribution of benefits will begin no later than the
60th day after the latest of the close of the Plan
Year in which:
a. the Participant attains Normal Retirement Age;
b. occurs the 10th anniversary of the year in which
the Participant commenced participation in the
Plan; or
c. the Participant incurs a Termination of
Employment.
Notwithstanding the foregoing, the failure of a
Participant and spouse to consent to a
distribution while a benefit is immediately
distributable, within the meaning of Section
6.02(B), shall be deemed to be an election to
defer commencement of payment of any benefit
sufficient to satisfy this Section 6.01(A)(4).
B. DETERMINING THE VESTED PORTION - In determining the
Vested portion of a Participant's Individual Account,
the following rules apply:
1. Employer Contributions and Forfeitures - The Vested
portion of a Participant's Individual Account derived
from Employer Contributions and Forfeitures is
determined by applying the vesting schedule selected
in the Adoption Agreement (or the vesting, schedule
described in Section 6.01(C) if the Plan is a
Top-Heavy Plan).
2. Rollover and Transfer Contributions - A Participant
is fully Vested in his rollover contributions and
transfer contributions.
3. Fully Vested Under Certain Circumstances - A
Participant is fully Vested in his Individual Account
if any of the following occurs:
a. the Participant reaches Normal Retirement Age;
b. the Participant incurs a Disability;
c. the Participant dies;
d. the Plan is terminated or partially terminated;
or
e. there exists a complete discontinuance of
contributions under the Plan (if this Plan is a
profit sharing plan).
4. Participants in a Prior Plan - If a Participant was a
participant in a Prior Plan on the Effective Date,
his Vested percentage shall not be less than it would
have been under such Prior Plan as computed on the
Effective Date.
C. MINIMUM VESTING SCHEDULE FOR TOP-HEAVY PLANS - The
following vesting provisions apply for any Plan Year in
which this Plan is a Top-Heavy Plan.
Notwithstanding the other provisions of this Section 6.01
or the vesting schedule selected in the Adoption
Agreement (unless those provisions or that schedule
provide for more rapid vesting), a Participant's Vested
portion of his Individual Account attributable to
Employer Contributions and Forfeitures shall be
determined in accordance with the following minimum
vesting schedule:
19
20
YEARS OF VESTING SERVICE VESTED PERCENTAGE
1 0
2 20
3 40
4 60
5 80
6 100
This minimum vesting schedule applies to all benefits
within the meaning of Section 411(a)(7) of the Code,
except those attributable to employee contributions
including benefits accrued before the effective date of
Section 416 of the Code and benefits accrued before the
Plan became a Top-Heavy Plan. Further, no decrease in a
Participant's Vested percentage may occur in the event
the Plan's status as a Top-Heavy Plan changes for any
Plan Year. However, this Section 6.01(C) does not apply
to the Individual Account of any Employee who does not
have an Hour of Service after the Plan has initially
become a Top-Heavy Plan and such Employee's Individual
Account attributable to Employer Contributions and
Forfeitures will be determined without regard to this
Section.
If this Plan ceases to be a Top-Heavy Plan, then in
accordance with the above restrictions, the vesting
schedule as selected in the Adoption Agreement will
govern. If the vesting schedule under the Plan shifts in
or out of top-heavy status, such shift is an amendment to
the vesting schedule and the election in Section 9.04
applies.
D. BREAK IN VESTING SERVICE AND FORFEITURES - If a
Participant incurs a Termination of Employment, any
portion of his Individual Account which is not Vested
shall be held in a suspense account. Such suspense
account shall share in any increase or decrease in the
fair market value of the assets of the Fund in accordance
with Section 4 of the Plan. The disposition of such
suspense account shall be as follows:
1. No Breaks in Vesting Service - If a Participant
neither receives nor is deemed to receive a
distribution pursuant to Section 6.01(D)(2) or (3)
and the Participant returns to the service of the
Employer before incurring 5 consecutive Breaks in
Vesting Service, there shall be no Forfeiture and the
amount in such suspense account shall be recredited
to such Participant's Individual Account.
2. Cash-out of Certain Participants - If the value of
the Vested portion of such Participant's Individual
Account derived from Employee and Employer
Contributions does not exceed $3,500, the Participant
shall receive a distribution of the entire Vested
portion of such Individual Account and the portion
which is not Vested shall be treated as a Forfeiture.
For purposes of this Section, if the value of the
Vested portion of a Participant's Individual Account
is zero, the Participant shall be deemed to have
received a distribution of such Vested Individual
Account. A Participant's Vested Individual Account
balance shall not include accumulated deductible
employee contributions within the meaning of Section
72(o)(5)(B) of the Code for Plan Years beginning
prior to January 1, 1989.
3. Participants Who Elect to Receive Distributions - If
such Participant elects to receive a distribution, in
accordance with Section 6.02(B), of the value of the
Vested portion of his Individual Account derived from
Employee and Employer Contributions, the portion
which is not Vested shall be treated as a Forfeiture.
4. Re-employed Participants - If a Participant receives
or is deemed to receive a distribution pursuant to
Section 6.01(D)(2) or (3) above and the Participant
resumes employment covered under this Plan, the
Participants Employer-derived Individual Account
balance will be restored to the amount on the date of
distribution if the Participant repays to the Plan
the full amount of the distribution attributable to
Employer Contributions before the earlier of 5 years
after the first date on which the Participant is
subsequently re-employed by the Employer, or the date
the Participant incurs 5 consecutive Breaks in
Vesting Service following the date of the
distribution.
Amounts forfeited under Section 6.01(D) shall be
allocated in accordance with Section 3.01(C) as of
the last day of the Plan Year during which the
Forfeiture arises. Any restoration of a Participant's
Individual Account pursuant to Section 6.01(D)(4)
shall be made from other Forfeitures, income or gain
to the Fund or contributions made by the Employer.
E. DISTRIBUTION PRIOR TO FULL VESTING - If a distribution is
made to a Participant who was not then fully Vested in
his Individual Account derived from Employer
Contributions and the Participant may increase his Vested
percentage in his Individual Account, then the following
rules shall apply:
1. a separate account will be established for the
Participant's interest in the Plan as of the time of
the distribution, and
2. at any relevant time the Participant's Vested portion
of the separate account will be equal to an amount
("X") determined by the formula: X=P (AB + (R x D)) -
(R x D) where "P" is the Vested percentage at the
relevant time, "AB" is the separate account balance
at the relevant time; "D" is the amount of the
distribution; and "R" is the ratio of the separate
account balance at the relevant time to the separate
account balance after distribution.
6.02 FORM OF DISTRIBUTION TO A PARTICIPANT
A. VALUE OF INDIVIDUAL ACCOUNT DOES NOT EXCEED $3,500 - If
the value of the Vested portion of a Participant's
Individual Account derived from Employee and Employer
Contributions does not exceed $3,500, distribution from
the Plan shall be made to the Participant in a single
lump sum in lieu of all other forms of distribution from
the Plan.
B. VALUE OF INDIVIDUAL ACCOUNT EXCEEDS $3,500
1. If the value of the Vested portion of a Participant's
Individual Account derived from Employee and Employer
Contributions exceeds (or at the time of any prior
distribution exceeded) $3,500, and the Individual
Account is immediately distributable, the Participant
and the Participant's spouse (or where either the
Participant or the spouse died, the survivor) must
consent to any distribution of such
20
21
Individual Account. The consent of the Participant
and the Participant's spouse shall be obtained in
writing within the 90-day period ending on the
annuity starting date. The annuity starting date is
the first day of the first period for which an amount
is paid as an annuity or any other form. The Plan
Administrator shall notify the Participant and the
Participant's spouse of the right to defer any
distribution until the Participant's Individual
Account is no longer immediately distributable. Such
notification shall include a general description of
the material features, and an explanation of the
relative values of, the optional forms of benefit
available under the Plan in a manner that would
satisfy the notice requirements of Section 417(a)(3)
of the Code, and shall be provided no less than 30
days and no more than 90 days prior to the annuity
starting date. If a distribution is one to which
Sections 401(a)(11) and 417 of the Internal Revenue
Code do not apply, such distribution may commence
less than 30 days after the notice required under
Section 1.411 (a)-11(c) of the Income Tax Regulations
is given, provided that:
a. the Plan Administrator clearly informs the
Participant that the Participant has a right to a
period of at least 30 days after receiving the
notice to consider the decision of whether or not
to elect a distribution (and, if applicable, a
particular distribution option), and
b. the Participant, after receiving the notice,
affirmatively elects a distribution.
Notwithstanding the foregoing, only the Participant
need consent to the commencement of a distribution in
the form of a qualified joint and survivor annuity
while the Individual Account is immediately
distributable. Neither the consent of the Participant
nor the Participant's spouse shall be required to the
extent that a distribution is required to satisfy
Section 401(a)(9) or Section 415 of the Code. In
addition, upon termination of this Plan if the Plan
does not offer an annuity option (purchased from a
commercial provider), the Participant's Individual
Account may, without the Participant's consent, be
distributed to the Participant or transferred to
another defined contribution plan (other than an
employee stock ownership plan as defined in Section
4975(e)(7) of the Code) within the same controlled
group.
An Individual Account is immediately distributable if
any part of the Individual Account could be
distributed to the Participant (or surviving spouse)
before the Participant attains or would have attained
(if not deceased) the later of Normal Retirement Age
or age 62.
2. For purposes of determining the applicability of the
foregoing consent requirements to distributions made
before the first day of the first Plan year beginning
after December 31, 1988, the Vested portion of a
Participant's Individual Account shall not include
amounts attributable to accumulated deductible
employee contributions within the meaning of Section
72(o)(5)(B) of the Code.
C. OTHER FORMS OF DISTRIBUTION TO PARTICIPANT - If the value
of the Vested portion of a Participant's Individual
Account exceeds $3,500 and the Participant has properly
waived the joint and survivor annuity, as described in
Section 6.05, the Participant may request in writing that
the Vested portion of his Individual Account be paid to
him in one or more of the following forms of payment: (1)
in a lump sum; (2) in installment payments over a period
not to exceed the life expectancy of the Participant or
the joint and last survivor life expectancy of the
Participant and his designated Beneficiary; or (3)
applied to the purchase of an annuity contract.
Notwithstanding anything in this Section 6.02 to the
contrary, a Participant cannot elect payments in the form
of an annuity if the safe harbor rules of Section 6.05(F)
apply.
6.03 DISTRIBUTIONS UPON THE DEATH OF A PARTICIPANT
A. DESIGNATION OF BENEFICIARY - SPOUSAL CONSENT - Each
Participant may designate, upon a form provided by and
delivered to the Plan Administrator, one or more primary
and contingent Beneficiaries to receive all or a
specified portion of his Individual Account in the event
of his death. A Participant may change or revoke such
Beneficiary designation from time to time by completing
and delivering the proper form to the Plan Administrator.
In the event that a Participant wishes to designate a
primary Beneficiary who is not his spouse, his spouse
must consent in writing to such designation, and the
spouse's consent must acknowledge the effect of such
designation and be witnessed by a notary public.
Notwithstanding this consent requirement, if the
Participant establishes to the satisfaction of the Plan
Administrator that such written consent may not be
obtained because there is no spouse or the spouse cannot
be located, no consent shall be required. Any change of
Beneficiary will require a new spousal consent.
B. PAYMENT TO BENEFICIARY - If a Participant dies before his
entire Individual Account has been paid to him, such
deceased Participant's Individual Account shall be
payable to any surviving Beneficiary designated by the
Participant, or, if no Beneficiary survives the
Participant, to the Participant's estate.
C. WRITTEN REQUEST: WHEN DISTRIBUTED - A Beneficiary of a
deceased Participant entitled to a distribution who
wishes to receive a distribution must submit a written
request to the Plan Administrator. Such request shall be
made upon a form provided by the Plan Administrator. Upon
a valid request, the Plan Administrator shall direct the
Trustee (or Custodian) to commence distribution no later
than 90 days following the later of:
1. the close of the Plan Year within which the
Participant dies; or
2. the close of the Plan Year in which the request is
received.
D. LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN - In the
event that all, or any portion, of the distribution
payable to a Participant or his Beneficiary hereunder
shall, at the expiration of 5 years after it becomes
payable, remain unpaid solely by reason of the inability
of the Plan Administrator, after sending a registered
letter, return receipt requested, to the last known
address, and after further diligent effort, to ascertain
the whereabouts of such Participant or his Beneficiary,
the amount so distributable shall be forfeited and
allocated in accordance with the terms of the Plan.
In the event a Participant or Beneficiary is located
subsequent to his benefit being forfeited, such
benefit shall be restored; provided, however, if all
or a portion of such amount has been lost by reason
of escheat understate law, the Participant or
Beneficiary shall cease to be entitled to the portion
so lost.
21
22
6.04 FORM OF DISTRIBUTION TO BENEFICIARY
A. VALUE OF INDIVIDUAL ACCOUNT DOES NOT EXCEED $3,500 - If
the value of the Participant's Individual Account derived
from Employee and Employer Contributions does not exceed
$3,500, the Plan Administrator shall direct the Trustee
(or Custodian, if applicable) to make a distribution to
the Beneficiary in a single lump sum in lieu of all other
forms of distribution from the Plan.
B. VALUE OF INDIVIDUAL ACCOUNT EXCEEDS $3,500 - If the value
of a Participant's Individual Account derived from
Employee and Employer Contributions exceeds $3,500 the
preretirement survivor annuity requirements of Section
6.05 shall apply unless waived in accordance with that
Section or unless the safe harbor rules of Section
6.05(F) apply.
C. OTHER FORMS OF DISTRIBUTION TO BENEFICIARY - If the value
of a Participant's Individual Account exceeds $3,500 and
the Participant has properly waived the preretirement
survivor annuity, as described in Section 6.05 (if
applicable), the Beneficiary may, subject to the
requirements of Section 6.06, request in writing that the
Participant's Individual Account be paid to him as
follows: (1) in a lump sum; or (2) in installment
payments over a period not to exceed the life expectancy
of such Beneficiary.
6.05 JOINT AND SURVIVOR ANNUITY REQUIREMENTS
A. The provisions of this Section shall apply to any
Participant who is credited with at least one Hour of
Eligibility Service with the Employer on or after August
23, 1984, and such other participants as provided in
Section 6.05(G).
B. QUALIFIED JOINT AND SURVIVOR ANNUITY - Unless an optional
form of benefit is selected pursuant to a qualified
election within the 90-day period ending on the annuity
starting date, a married Participant's Vested account
balance will be paid in the form of a qualified joint and
survivor annuity and an unmarried Participant's Vested
account balance will be paid in the form of a life
annuity. The Participant may elect to have such annuity
distributed upon attainment of the earliest retirement
age under the Plan.
C. QUALIFIED PRERETIREMENT SURVIVOR ANNUITY - Unless an
optional form of benefit has been selected within the
election period pursuant to a qualified election, if a
Participant dies before the annuity starting date then
the Participant's Vested account balance shall be applied
toward the purchase of an annuity for the life of the
surviving spouse. The surviving spouse may elect to have
such annuity distributed within a reasonable period after
the Participant's death.
D. DEFINITIONS
1. Election Period - The period which begins on the
first day of the Plan Year in which the Participant
attains age 35 and ends on the date of the
Participant's death. If a Participant separates from
service prior to the first day of the Plan Year in
which age 35 is attained, with respect to the account
balance as of the date of separation, the election
period shall begin on the date of separation.
Pre-age 35 waiver - A Participant who will not yet
attain age 35 as of the end of any current Plan Year
may make special qualified election to waive the
qualified preretirement survivor annuity for the
period beginning on the date of such election and
ending on the first day of the Plan Year in which the
Participant will attain age 35. Such election shall
not be valid unless the Participant receives a
written explanation of the qualified preretirement
survivor annuity in such terms as are comparable to
the explanation required under Section 6.05(E)(1).
Qualified preretirement survivor annuity coverage
will be automatically reinstated as of the first day
of the Plan Year in which the Participant attains age
35. Any new waiver on or after such date shall be
subject to the full requirements of this Section
6.05.
2. Earliest Retirement Age - The earliest date on which,
under the Plan, the Participant could elect to
receive retirement benefits.
3. Qualified Election - A waiver of a qualified joint
and survivor annuity or a qualified preretirement
survivor annuity. Any waiver of a qualified joint and
survivor annuity or a qualified preretirement
survivor annuity shall not be effective unless: (a)
the Participant's spouse consents in writing to the
election, (b) the election designates a specific
Beneficiary, including any class of beneficiaries or
any contingent beneficiaries, which may not be
changed without spousal consent (or the spouse
expressly permits designations by the Participant
without any further spousal consent); (c) the
spouse's consent acknowledges the effect of the
election; and (d) the spouse's consent is witnessed
by a plan representative or notary public.
Additionally, a Participant's waiver of the qualified
joint and survivor annuity shall not be effective
unless the election designates a form of benefit
payment which may not be changed without spousal
consent (or the spouse expressly permits designations
by the Participant without any further spousal
consent). If it is established to the satisfaction of
a plan representative that there is no spouse or that
the spouse cannot be located, a waiver will be deemed
a qualified election.
Any consent by a spouse obtained under this provision
(or establishment that the consent of a spouse may
not be obtained) shall be effective only with respect
to such spouse. A consent that permits designations
by the Participant without any requirement of further
consent by such spouse must acknowledge that the
spouse has the right to limit consent to a specific
Beneficiary, and a specific form of benefit where
applicable, and that the spouse voluntarily elects to
relinquish either or both of such rights. A
revocation of a prior waiver may be made by a
Participant without the consent of the spouse at any
time before the commencement of benefits. The number
of revocations shall not be limited. No consent
obtained under this provision shall be valid unless
the Participant has received notice as provided in
Section 6.05(E) below.
4. Qualified Joint and Survivor Annuity - An immediate
annuity for the life of the Participant with a
survivor annuity for the life of the spouse which is
not less than 50% and not more than 100% of the
amount of the annuity which is payable during the
joint lives of the Participant and the spouse and
which is the amount of benefit which can be purchased
with the Participant's vested account balance. The
percentage of the survivor annuity under the Plan
shall be 50% (unless a different percentage is
elected by the Employer in the Adoption Agreement).
22
23
5. Spouse (surviving spouse) - The spouse or surviving
spouse of the Participant, provided that a former
spouse will be treated as the spouse or surviving
spouse and a current spouse will not be treated as
the spouse or surviving spouse to the extent provided
under a qualified domestic relations order as
described in Section 414(p) of the Code.
6. Annuity Starting Date - The first day of the first
period for which an amount is paid as an annuity or
any other form.
7. Vested Account Balance - The aggregate value of the
Participant's Vested account balances derived from
Employer and Employee contributions (including
rollovers), whether Vested before or upon death,
including the proceeds of insurance contracts, if
any, on the Participant's life. The provisions of
this Section 6.05 shall apply to a Participant who is
Vested in amounts attributable to Employer
Contributions, Employee contributions (or both) at
the time of death or distribution.
E. NOTICE REQUIREMENTS
1. In the case of a qualified joint and survivor
annuity, the Plan Administrator shall no less than 30
days and not more than 90 days prior to the annuity
starting date provide each Participant a written
explanation of: (a) the terms and conditions of a
qualified joint and survivor annuity; (b) the
Participant's right to make and the effect of an
election to waive the qualified joint and survivor
annuity form of benefit; (c) the rights of a
Participant's spouse; and (d) the right to make, and
the effect of, a revocation of a previous election to
waive the qualified joint and survivor annuity.
2. In the case of a qualified preretirement survivor
annuity as described in Section 6.05(C), the Plan
Administrator shall provide each Participant within
the applicable period for such Participant a written
explanation of the qualified preretirement survivor
annuity in such terms and in such manner as would be
comparable to the explanation provided for meeting
the requirements of Section 6.05(E)(1) applicable to
a qualified joint and survivor annuity.
The applicable period for a Participant is whichever
of the following periods ends last: (a) 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; (b) a
reasonable period ending after the individual becomes
a Participant; (c) a reasonable period ending after
Section 6.05(E)(3) ceases to apply to the
Participant; (d) a reasonable period ending after
this Section 6.05 first applies 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.
For purposes of applying the preceding paragraph, a
reasonable period ending after the enumerated events
described in (b), (c) and (d) 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.
3. Notwithstanding the other requirements of this
Section 6.05(E), the respective notices prescribed by
this Section 6.05(E), need not be given to a
Participant if (a) the Plan "fully subsidizes" the
costs of a qualified joint and survivor annuity or
qualified preretirement survivor annuity, and (b) the
Plan does not allow the Participant to waive the
qualified joint and survivor annuity or qualified
preretirement survivor annuity and does not allow a
married Participant to designate a nonspouse
beneficiary. For purposes of this Section 6.05(E)(3),
a plan fully subsidizes the costs of a benefit if no
increase in cost, or decrease in benefits to the
Participant may result from the Participant's failure
to elect another benefit.
F. SAFE HARBOR RULES
1. If the Employer so indicates in the Adoption
Agreement, this Section 6.05(F) shall apply to a
Participant in a profit sharing plan, and shall
always apply to any distribution, made on or after
the first day of the first Plan Year beginning after
December 31, 1988, from or under a separate account
attributable solely to accumulated deductible
employee contributions, as defined in Section
72(o)(5)(B) of the Code, and maintained on behalf of
a Participant in a money purchase pension plan,
(including a target benefit plan) if the following
conditions are satisfied:
a. the Participant does not or cannot elect payments
in the form of a life annuity; and
b. on the death of a participant, the Participant's
Vested account balance will be paid to the
Participants surviving spouse, but if there is no
surviving spouse, or if the surviving spouse has
consented in a manner conforming to a qualified
election, then to the Participant's designated
beneficiary. The surviving spouse may elect to
have distribution of the Vested account balance
commence within the 90-day period following the
date of the Participant's death. The account
balance shall be adjusted for gains or losses
occurring after the Participant's death in
accordance with the provisions of the Plan
governing the adjustment of account balances for
other types of distributions. This Section
6.05(F) shall not be operative with respect to a
Participant in a profit sharing plan if the plan
is a direct or indirect transferee of a defined
benefit plan, money purchase plan, a target
benefit plan,
stock bonus, or profit sharing plan which is
subject to the survivor annuity requirements of
Section 401(a)(11) and Section 417 of the code.
If this Section 6.05(F) is operative, then the
provisions of this Section 6.05 other than
Section 6.05(G) shall be inoperative.
23
24
2. The Participant may waive, the spousal death benefit
described in this Section 6.05(F) at any time
provided that no such waiver shall be effective
unless it satisfies the conditions of Section
6.05(D)(3) (other than the notification requirement
referred to therein) that would apply to the
Participant's waiver of the qualified preretirement
survivor annuity.
3. For purposes of this Section 6.05(F), Vested account
balance shall mean, in the case of a money purchase
pension plan or a target benefit plan, the
Participant's separate account balance attributable
solely to accumulated deductible employee
contributions within the meaning of Section
72(o)(5)(B) of the Code. In the case of a profit
sharing plan, Vested account balance shall have the
same meaning as provided in Section 6.05(D)(7).
G. TRANSITIONAL RULES
1. Any living Participant not receiving benefits on
August 23, 1984, who would otherwise not receive the
benefits prescribed by the previous subsections of
this Section 6.05 must be given the opportunity to
elect to have the prior subsections of this Section
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.
2. Any living Participant not receiving benefits on
August 23, 1984, who was credited with at least one
Hour of Service under this Plan or a predecessor plan
on or after September 2, 1974, and who is not
otherwise credited with any service in a Plan Year
beginning on or after January 1, 1976, must be given
the opportunity to have his or her benefits paid in
accordance with Section 6.05(G)(4).
3. The respective opportunities to elect (as described
in Section 6.05(G)(1) and (2) above) must be afforded
to the appropriate Participants during the period
commencing on August 23, 1984, and ending on the date
benefits would otherwise commence to said
Participants.
4. Any Participant who has elected pursuant to Section
6.05(G)(2) and any Participant who does not elect
under Section 6.05(G)(1) or who meets the
requirements of Section 6.05(G)(1) except that such
Participant does not have at least 10 Years of
Vesting Service when he or she separates from
service, shall have his or her benefits distributed
in accordance with all of the following requirements
if benefits would have been payable in the form of a
life annuity:
a. Automatic Joint and Survivor Annuity - If
benefits in the form of a life annuity become
payable to a married Participant who:
1. begins to receive payments under the Plan on
or after Normal Retirement Age; or
2. dies on or after Normal Retirement Age while
still working for the Employer; or
3. begins to receive payments on or after the
qualified early retirement age; or
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;
then such benefits will be received under this
Plan in the form of a qualified joint and
survivor annuity, unless the Participant has
elected otherwise during the election period. The
election period must begin at least 6 months
before the Participant attains qualified early
retirement age and ends 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.
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 which would have been made to the
spouse under the qualified joint and survivor
annuity if the Participant had retired on the day
before his or her death. Any election under this
provision will be in writing and may be changed
by the Participant at any time. The election
period begins on the later of (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.
c. For purposes of Section 6.05(G)(4):
1. Qualified early retirement age is the latest
of:
a. the earliest date, under the Plan, on
which the Participant may elect to
receive retirement benefits,
b. the first day of the 120th month
beginning before the Participant reaches
Normal Retirement Age, or
c. the date the Participant begins
participation.
2. Qualified joint and survivor annuity is an
annuity for the life of the Participant with
a survivor annuity for the life of the spouse
as described in Section 6.05(D)(4) of this
Plan.
24
25
6.06 DISTRIBUTION REQUIREMENTS
A. GENERAL RULES
1. Subject to Section 6.05 Joint and Survivor Annuity
Requirements, the requirements of this Section shall
apply to any distribution of a Participant's interest
and will take precedence over any inconsistent
provisions of this Plan. Unless otherwise specified,
the provisions of this Section 6.06 apply to calendar
years beginning after December 31, 1984.
2. All distributions required under this Section 6.06
shall be determined and made in accordance with the
Income Tax Regulations under Section 401(a)(9),
including the minimum distribution incidental benefit
requirement of Section 1.401(a)(9)-2 of the
regulations.
B. REQUIRED BEGINNING DATE - The entire interest of a
Participant must be distributed or begin to be
distributed no later than the Participant's required
beginning date.
C. LIMITS ON DISTRIBUTION PERIODS - As of the first
distribution calendar year, distributions, if not made in
a single sum, may only be made over one of the following
periods (or a combination thereof):
1. the life of the Participant,
2. the life of the Participant and a designated
Beneficiary,
3. a period certain not extending beyond the life
expectancy of the Participant, or
4. a period certain not extending beyond the joint and
last survivor expectancy of the Participant and a
designated Beneficiary.
D. DETERMINATION OF AMOUNT TO BE DISTRIBUTED EACH YEAR - If
the Participant's interest is to be distributed in other
than a single sum, the following minimum distribution
rules shall apply on or after the required beginning
date:
1. Individual Account
a. If a Participant's benefit is to be distributed
over (1) a period not extending beyond the life
expectancy of the Participant or the joint life
and last survivor expectancy of the Participant
and the Participant's designated Beneficiary or
(2) a period not extending beyond the life
expectancy of the designated Beneficiary, the
amount required to be distributed for each
calendar year, beginning with distributions for
the first distribution calendar year, must at
least equal the quotient obtained by dividing the
Participant's benefit by the applicable life
expectancy.
b. For calendar years beginning before January 1,
1989, if the Participant's spouse is not the
designated Beneficiary, the method of
distribution selected must assure that at least
50% of the present value of the amount available
for distribution is paid within the life
expectancy of the Participant.
c. For calendar years beginning after December 31,
1988, the amount to be distributed each year,
beginning with distributions for the first
distribution calendar year shall not be less than
the quotient obtained by dividing the
Participant's benefit by the lesser of (1) the
applicable life expectancy or (2) if the
Participant's spouse is not the designated
Beneficiary, the applicable divisor determined
from the table set forth in Q&A-4 of Section
1.401(a)(9)-2 of the Income Tax Regulations.
Distributions after the death of the Participant
shall be distributed using the applicable life
expectancy in Section 6.06(D)(1)(a) above as the
relevant divisor without regard to regulations
1.401(a)(9)-2.
d. The minimum distribution required for the
Participant's first distribution calendar year
must be made on or before the Participant's
required beginning date. The minimum distribution
for other calendar years, including the minimum
distribution for the distribution calendar year
in which the Employee's required beginning date
occurs, must be made on or before December 31 of
that distribution calendar year.
2. Other Forms - If the Participant's benefit is
distributed in the form of an annuity purchased from
an insurance company, distributions thereunder shall
be made in accordance with the requirements of
Section 401(a)(9) of the Code and the regulations
thereunder.
E. DEATH DISTRIBUTION PROVISIONS
1. Distribution Beginning Before Death - If the
Participant dies after distribution of his or her
interest has begun, the remaining portion of such
interest will continue to be distributed at least as
rapidly as under the method of distribution being
used prior to the Participant's death.
2. Distribution Beginning After Death - If the
Participant dies before distribution of his or her
interest begins, distribution of the Participant's
entire interest shall be completed by December 31 of
the calendar year containing the fifth anniversary of
the Participant's death except to the extent that an
election is made to receive distributions in
accordance with (a) or (b) below:
a. if any portion of the Participant's interest is
payable to a designated Beneficiary,
distributions may be made over the life or over a
period certain not greater than the life
expectancy of the designated Beneficiary
commencing on or before December 31 of the
calendar year immediately following the calendar
year in which the Participant died;
25
26
b. if the designated Beneficiary is the
Participant's surviving spouse, the date
distributions are required to begin in accordance
with (a) above shall not be earlier than the
later of (1) December 31 of the calendar year
immediately following the calendar year in which
the Participant dies or (2) December 31 of the
calendar year in which the Participant would have
attained age 70 1/2.
If the Participant has not made an election
pursuant to this Section 6.06(E)(2) by the time
of his or her death, the Participant's designated
Beneficiary must elect the method of distribution
no later than the earlier of (1) December 31 of
the calendar year in which distributions would be
required to begin under this Section 6.06(E)(2),
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.
3. For purposes of Section 6.06(E)(2) above, if the
surviving spouse dies after the Participant, but
before payments to such spouse begin, the provisions
of Section 6.06(E)(2), with the exception of
paragraph (b) therein, shall be applied as if the
surviving spouse were the Participant.
4. For purposes of this Section 6.06(E), any amount paid
to a child of the Participant will be treated as if
it had been paid to the surviving spouse if the
amount becomes payable to the surviving spouse when
the child reaches the age of majority.
5. For purposes of this Section 6.06(E), distribution of
a Participant's interest is considered to begin on
the Participant's required beginning date (or, if
Section 6.06(E)(3) above is applicable, the date
distribution is required to begin to the surviving
spouse pursuant to Section 6.06(E)(2) above). If
distribution in the form of an annuity irrevocably
commences to the Participant before the required
beginning date, the date distribution is considered
to begin is the date distribution actually commences.
F. DEFINITIONS
1. Applicable Life Expectancy - The life expectancy (or
joint and last survivor expectancy) calculated using
the attained age of the Participant (or designated
Beneficiary) as of the Participant's (or designated
Beneficiary's) birthday in the applicable calendar
year reduced by one for each calendar year which has
elapsed since the date life expectancy was first
calculated. If life expectancy is being recalculated,
the applicable life expectancy shall be the life
expectancy as so recalculated. The applicable
calendar year shall be the first distribution
calendar year, and if life expectancy is being
recalculated such succeeding calendar year.
2. Designated Beneficiary - The individual who is
designated as the Beneficiary under the Plan in
accordance with Section 401(a)(9) of the Code and the
regulations thereunder.
3. Distribution Calendar Year - A calendar year for
which a minimum distribution is required. For
distributions beginning before the Participant's
death, the first distribution calendar year is the
calendar year immediately preceding the calendar year
which contains the Participant's required beginning
date. For distributions beginning after the
Participant's death, the first distribution calendar
year is the calendar year in which distributions are
required to begin pursuant to Section 6.06(E) above.
4. Life Expectancy - Life expectancy and joint and last
survivor expectancy are computed by use of the
expected return multiples in Tables V and VI of
Section 1.72-9 of the Income Tax Regulations.
Unless otherwise elected by the Participant (or
spouse, in the case of distributions described in
Section 6.06(E)(2)(b) above) by the time
distributions are required to begin, life
expectancies shall be recalculated annually. Such
election shall be irrevocable as to the Participant
(or spouse) and shall apply to all subsequent years.
The life expectancy of a nonspouse Beneficiary may
not be recalculated.
5. Participant's Benefit
a. The account balance as of the last valuation date
in the valuation calendar year (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 valuation
calendar year after the valuation date and
decreased by distributions made in the valuation
calendar year after the valuation date.
b. Exception for second distribution calendar year.
For purposes of paragraph (a) above, if any
portion of the minimum distribution for the first
distribution calendar year is made in the second
distribution calendar year on or before the
required beginning date, the amount of the
minimum distribution made in the second
distribution calendar year shall be treated as if
it had been made in the immediately preceding
distribution calendar year.
6. Required Beginning Date
a. General Rule - The required beginning date of a
Participant is the first day of April of the
calendar year following the calendar year in
which the Participant attains age 70 1/2.
b. Transitional Rules - The required beginning date
of a Participant who attains age 70 1/2 before
January 1, 1988, shall be determined in
accordance with (1) or (2) below:
(1) Non 5% Owners - The required beginning date
of a Participant who is not a 5% owner is the
first day of April of the calendar year
following the calendar year in which the
later of retirement or attainment of age 70
1/2 occurs.
26
27
(2) 5% Owners - The required beginning date of a
Participant who is a 5% owner during any year
beginning after December 31, 1979, is the
first day of April following the later of:
(a) the calendar year in which the
Participant attains age 70 1/2, or
(b) the earlier of the calendar year with or
within which ends the Plan Year in which
the Participant becomes a 5% owner, or
the calendar year in which the
Participant retires.
The required beginning date of a
Participant who is not a 5% owner who
attains age 70 1/2 during 1988 and who
has not retired as of January 1, 1989, is
April 1, 1990.
(c) 5% Owner- A Participant is treated as a
5% owner for purposes of this Section
6.06(F)(6) if such Participant is a 5%
owner as defined in Section 416(i) of the
Code (determined in accordance with
Section 416 but without regard to whether
the Plan is top-heavy) at any time during
the Plan Year ending with or within the
calendar year in which such owner attains
age 66 1/2 or any subsequent Plan Year.
(d) Once distributions have begun to a 5%
owner under this Section 6.06(F)(6) they
must continue to be distributed, even if
the Participant ceases to be a 5% owner
in a subsequent year.
G. TRANSITIONAL RULE
1. Notwithstanding the other requirements of this
Section 6.06 and subject to the requirements of
Section 6.05, Joint and Survivor Annuity
Requirements, distribution on behalf of any Employee,
including a 5% owner, may be made in accordance with
all of the following requirements (regardless of when
such distribution commences):
a. The distribution by the Fund is one which would
not have disqualified such Fund under Section
401(a)(9) of the Code as in effect prior to
amendment by the Deficit Reduction Act of 1984.
b. The distribution is in accordance with a method
of distribution designated by the Employee whose
interest in the Fund is being distributed or, if
the Employee is deceased, by a Beneficiary of
such Employee.
c. Such designation was in writing, was signed by
the Employee or the Beneficiary, and was made
before January 1, 1984.
d. The Employee had accrued a benefit under the Plan
as of December 31, 1983.
e. The method of distribution designated by the
Employee or the Beneficiary specifies the time at
which distribution will commence, the period over
which distributions will be made, and in the case
of any distribution upon the Employee's death,
the Beneficiaries of the Employee listed in order
of priority.
2. A distribution upon death will not be covered by this
transitional rule unless the information in the
designation contains the required information
described above with respect to the distributions to
be made upon the death of the Employee.
3. For any distribution which commences before January
1, 1984, but continues after December 31, 1983, the
Employee, or the Beneficiary, to whom such
distribution is being made, will be presumed to have
designated the method of distribution under which the
distribution is being made if the method of
distribution was specified in writing and the
distribution satisfies the requirements in Sections
6.06(G)(1)(a) and (e).
4. If a designation is revoked, any subsequent
distribution must satisfy the requirements of Section
401(a)(9) of the Code and the 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
Section 401(a)(9) of the Code and the regulations
thereunder, but for the Section 242(b)(2) election.
For calendar years beginning after December 31, 1988,
such distributions must meet the minimum distribution
incidental benefit requirements in Section
1.401(a)(9)-2 of the Income Tax Regulations. Any
changes in the designation will be considered to be a
revocation of the designation. However, the mere
substitution or addition of another Beneficiary (one
not named in the designation) under the designation
will not be considered to be a revocation of the
designation, so long as such substitution or addition
does not alter the period over which distributions
are to be made under the designation, directly or
indirectly (for example, by altering the relevant
measuring life). In the case in which an amount is
transferred or rolled over from one plan to another
plan, the rules in Q&A J-2 and Q&A J-3 shall apply.
6.07 ANNUITY CONTRACTS
Any annuity contract distributed under the Plan (if permitted
or required by this Section 6) must be nontransferable. The
terms of any annuity contract purchased and distributed by
the Plan to a Participant or spouse shall comply with the
requirements of the Plan.
6.08 LOANS TO PARTICIPANTS
If the Adoption Agreement so indicates, a Participant may
receive a loan from the Fund, subject to the following rules:
A. Loans shall be made available to all Participants on a
reasonably equivalent basis.
B. Loans shall not be made available to Highly Compensated
Employees (as defined in Section 414(q) of the Code) in
an amount greater than the amount made available to other
Employees.
27
28
C. Loans must be adequately secured and bear a reasonable
interest rate.
D. No Participant loan shall exceed the present value of the
Vested portion of a Participant's Individual Account.
E. A Participant must obtain the consent of his or her
spouse, if any, to the use of the Individual Account as
security for the loan. Spousal consent shall be obtained
no earlier than the beginning of the 90 day period that
ends on the date on which the loan is to be so secured.
The consent must be in writing, must acknowledge the
effect of the loan, and must be witnessed by a plan
representative or notary public. Such consent shall
thereafter be binding with respect to the consenting
spouse or any subsequent spouse with respect to that
loan. A new consent shall be required if the account
balance is used for renegotiation, extension, renewal, or
other revision of the loan.
F. In the event of default, foreclosure on the note and
attachment of security will not occur until a
distributable event occurs in the Plan.
G. No loans will be made to any shareholder-employee or
Owner-Employee. For purposes of this requirement, a
shareholder-employee means an employee or officer of an
electing small business (Subchapter S) corporation who
owns (or is considered as owning within the meaning of
Section 318(a)(1) of the Code), on any day during the
taxable year of such corporation, more than 5% of the
outstanding, stock of the corporation.
If a valid spousal consent has been obtained in accordance
with 6.08(E), then, notwithstanding any other provisions of
this Plan, the portion of the Participant's Vested Individual
Account used as a security interest held by the Plan by
reason of a loan outstanding to the Participant shall be
taken into account for purposes of determining the amount of
the account balance payable at the time of death or
distribution, but only if the reduction is used as repayment
of the loan. If less than 100% of the Participant's Vested
Individual Account (determined without regard to the
preceding sentence) is payable to the surviving spouse, then
the account balance shall be adjusted by first reducing the
Vested Individual Account by the amount of the security used
as repayment of the loan, and then determining the benefit
payable to the surviving spouse.
No loan to any Participant can be made to the extent that
such loan when added to the outstanding balance of all other
loans to the Participant would exceed the lesser of (a)
$50,000 reduced by the excess (if any) of the highest
outstanding balance of loans during the one year period
ending on the day before the loan is made, over the
outstanding balance of loans from the Plan on the date the
loan is made, or (b) 50% of the present value of the
nonforfeitable Individual Account of the Participant or, if
greater, the total Individual Account up to $10,000. For the
purpose of the above limitation, all loans from all plans of
the Employer and other members of a group of employers
described in Sections 414(b), 414(c), and 414(m) of the Code
are aggregated. Furthermore, any loan shall by its terms
require that repayment (principal and interest) be amortized
in level payments, not less frequently than quarterly, over a
period not extending beyond 5 years from the date of the
loan, unless such loan is used to acquire a dwelling unit
which within a reasonable time (determined at the time the
loan is made) will be used as the principal residence of the
Participant. An assignment or pledge of any portion of the
Participant's interest in the Plan and a loan, pledge, or
assignment with respect to any insurance contract purchased
under the Plan, will be treated as a loan under this
paragraph.
The Plan Administrator shall administer the loan program in
accordance with a written document. Such written document
shall include, at a minimum, the following: (i) the identity
of the person or positions authorized to administer the
Participant loan program; (ii) the procedure for applying for
loans; (iii) the basis on which loans will be approved or
denied, (iv) limitations (if any) on the types and amounts of
loans offered; (v) the procedure under the program for
determining a reasonable rate of interest; (vi) the types of
collateral which may secure a Participant loan; and (vii) the
events constituting default and the steps that will be taken
to preserve Plan assets in the event of such default.
6.09 DISTRIBUTION IN KIND
The Plan Administrator may cause any distribution under this
Plan to be made either in a form actually held in the Fund,
or in cash by converting assets other than cash into cash, or
in any combination of the two foregoing ways.
6.10 DIRECT ROLLOVERS OF ELIGIBLE ROLLOVER DISTRIBUTIONS
A. DIRECT ROLLOVER OPTION - This Section applies to
distributions made on or after January 1, 1993.
Notwithstanding any provision of the Plan to the contrary
that would otherwise limit a distributee's election under
this Section, a distributee may elect, at the time and in
the manner prescribed by the Plan Administrator, to have
any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the
distributee in a direct rollover.
B. DEFINITIONS
1. Eligible rollover distribution - An eligible rollover
distribution is any distribution of all or any
portion of the balance to the credit of the
distributee, except that an eligible rollover
distribution does not include:
a. any distribution that is one of a series of
substantially equal periodic payments (not less
frequently than annually) made for the life (or
life expectancy) of the distributee or the joint
lives (or joint life expectancies) of the
distributee and the distributee's designated
beneficiary, or for a specified period of ten
years or more;
b. any distribution to the extent such distribution
is required under Section 401(a)(9) of the Code;
and
c. 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).
2. Eligible retirement plan - An eligible retirement
plan is an individual retirement account described in
Section 408(a) of the Code, an individual retirement
annuity described in Section 408(b) of the Code, an
annuity plan described in Section 403(a) of the Code,
or a qualified trust described in Section 401(a) of
the Code, that accepts the distributee's eligible
rollover distribution. However, in the case of an
eligible rollover distribution to the surviving
spouse, an eligible retirement plan is an individual
retirement account or individual retirement annuity.
28
29
3. Distributee - A distributee includes an Employee or
former Employee. In addition, the Employee's or
former Employee's surviving spouse and the Employee's
or former Employee's spouse or former spouse who is
the alternate payee under a qualified domestic
relations order, as defined in Section 414(p) of the
Code, are distributees with regard to the interest of
the spouse or former spouse.
4. Direct rollover - A direct rollover is a payment by
the Plan to the eligible retirement plan specified by
the distributee.
SECTION SEVEN CLAIMS PROCEDURE
7.01 FILING A CLAIM FOR PLAN DISTRIBUTIONS
A Participant or Beneficiary who desires to make a claim for
the Vested portion of the Participant's Individual Account
shall file a written request with the Plan Administrator on a
form to be furnished to him by the Plan Administrator for
such purpose. The request shall set forth the basis of the
claim. The Plan Administrator is authorized to conduct such
examinations as may be necessary to facilitate the payment of
any benefits to which the Participant or Beneficiary may be
entitled under the terms of the Plan.
7.02 DENIAL OF CLAIM
Whenever a claim for a Plan distribution by any Participant
or Beneficiary has been wholly or partially denied, the Plan
Administrator must furnish such Participant or Beneficiary
written notice of the denial within 60 days of the date the
original claim was filed. This notice shall set forth the
specific reasons for the denial, specific reference to
pertinent Plan provisions on which the denial is based, a
description of any additional information or material needed
to perfect the claim, an explanation of why such additional
information or material is necessary and an explanation of
the procedures for appeal.
7.03 REMEDIES AVAILABLE
The Participant or Beneficiary shall have 60 days from
receipt of the denial notice in which to make written
application for review by the Plan Administrator. The
Participant or Beneficiary may request that the review be in
the nature of a hearing. The Participant or Beneficiary shall
have the right to representation, to review pertinent
documents and to submit comments in writing. The Plan
Administrator shall issue a decision on such review within 60
days after receipt of an application for review as provided
for in Section 7.02. Upon a decision unfavorable to the
Participant or Beneficiary, such Participant or Beneficiary
shall be entitled to bring such actions in law or equity as
may be necessary or appropriate to protect or clarify his
right to benefits under this Plan.
SECTION EIGHT PLAN ADMINISTRATOR
8.01 EMPLOYER IS PLAN ADMINISTRATOR
A. The Employer shall be the Plan Administrator unless the
managing body of the Employer designates a person or
persons other than the Employer as the Plan Administrator
and so notifies the Prototype Sponsor and the Trustee (or
Custodian, if applicable). The Employer shall also be the
Plan Administrator if the person or persons so designated
cease to be the Plan Administrator.
B. If the managing body of the Employer designates a person
or persons other than the Employer as Plan Administrator,
such person or persons shall serve at the pleasure of the
Employer and shall serve pursuant to such procedures as
such managing body may provide. Each such person shall be
bonded as may be required by law.
8.02 POWERS AND DUTIES OF THE PLAN ADMINISTRATOR
A. The Plan Administrator may, by appointment, allocate the
duties of the Plan Administrator among several
individuals or entities. Such appointments shall not be
effective until the party designated accepts such
appointment in writing.
B. The Plan Administrator shall have the authority to
control and manage the operation and administration of
the Plan. The Plan Administrator shall administer the
Plan for the exclusive benefit of the Participants and
their Beneficiaries in accordance with the specific terms
of the Plan.
C. The Plan Administrator shall be charged with the duties
of the general administration of the Plan, including, but
not limited to, the following:
1. To determine all questions of interpretation or
policy in a manner consistent with the Plan's
documents and the Plan Administrator's construction
or determination in good faith shall be conclusive
and binding on all persons except as otherwise
provided herein or by law. Any interpretation or
construction shall be done in a nondiscriminatory
manner and shall be consistent with the intent that
the Plan shall continue to be deemed a qualified plan
under the terms of Section 401(a) of the Code, as
amended from time-to-time, and shall comply with the
terms of ERISA, as amended from time-to-time;
2. To determine all questions relating to the
eligibility of Employees to become or remain
Participants hereunder;
3. To compute the amounts necessary or desirable to be
contributed to the Plan;
4. To compute the amount and kind of benefits to which a
Participant or Beneficiary shall be entitled under
the Plan and to direct the Trustee (or Custodian, if
applicable) with respect to all disbursements under
the Plan, and, when requested by the Trustee (or
Custodian), to furnish the Trustee (or Custodian)
with instructions, in writing, on matters pertaining
to the Plan and the Trustee (or Custodian) may rely
and act thereon;
5. To maintain all records necessary for the
administration of the Plan;
6. To be responsible for preparing and filing such
disclosure and tax forms as may be required from
time-to-time by the Secretary of Labor or the
Secretary of the Treasury; and
29
30
7. To furnish each Employee, Participant or Beneficiary
such notices, information and reports under such
circumstances as may be required by law.
D. The Plan Administrator shall have all of the powers
necessary or appropriate to accomplish his duties under
the Plan, including, but not limited to, the following:
1. To appoint and retain such persons as may be
necessary to carry out the functions of the Plan
Administrator;
2. To appoint and retain counsel, specialists or other
persons as the Plan Administrator deems necessary or
advisable in the administration of the Plan;
3. To resolve all questions of administration of the
Plan;
4. To establish such uniform and nondiscriminatory rules
which it deems necessary to carry out the terms of
the Plan;
5. To make any adjustments in a uniform and
nondiscriminatory manner which it deems necessary to
correct any arithmetical or accounting errors which
may have been made for any Plan Year; and
6. To correct any defect, supply any omission or
reconcile any inconsistency in such manner and to
such extent as shall be deemed necessary or advisable
to carry out the purpose of the Plan.
8.03 EXPENSES AND COMPENSATION
All reasonable expenses of administration including, but not
limited to, those involved in retaining necessary
professional assistance maybe paid from the assets of the
Fund. Alternatively, the Employer may, in its discretion, pay
such expenses. The Employer shall furnish the Plan
Administrator with such clerical and other assistance as the
Plan Administrator may need in the performance of his duties.
8.04 INFORMATION FROM EMPLOYER
To enable the Plan Administrator to perform his duties, the
Employer shall supply full and timely information to the Plan
Administrator (or his designated agents) on all matters
relating to the Compensation of all Participants, their
regular employment, retirement, death, Disability or
Termination of Employment, and such other pertinent facts as
the Plan Administrator (or his agents) may require. The Plan
Administrator shall advise the Trustee (or Custodian, if
applicable) of such of the foregoing facts as may be
pertinent to the Trustee's (or Custodian's) duties under the
Plan. The Plan Administrator (or his agents) is entitled to
rely on such information as is supplied by the Employer and
shall have no duty or responsibility to verify such
information.
SECTION NINE AMENDMENT AND TERMINATION
9.01 RIGHT OF PROTOTYPE SPONSOR TO AMEND THE PLAN
A. The Employer, by adopting the Plan, expressly delegates
to the Prototype Sponsor the power, but not the duty, to
amend the Plan without any further action or consent of
the Employer as the Prototype Sponsor deems necessary for
the purpose of adjusting the Plan to comply with all laws
and regulations governing pension or profit sharing
plans. Specifically, it is understood that the amendments
may be made unilaterally by the Prototype Sponsor.
However, it shall be understood that the Prototype
Sponsor shall be under no obligation to amend the Plan
documents and the Employer expressly waives any rights or
claims against the Prototype Sponsor for not exercising
this power to amend. For purposes of Prototype Sponsor
amendments, the mass submitter shall be recognized as the
agent of the Prototype Sponsor. If the Prototype Sponsor
does not adopt the amendments made by the mass submitter,
it will no longer be identical to or a minor modifier of
the mass submitter plan.
B. An amendment by the Prototype Sponsor shall be
accomplished by giving written notice to the Employer of
the amendment to be made. The notice shall set forth the
text of such amendment and the date such amendment is to
be effective. Such amendment shall take effect unless
within the 30 day period after such notice is provided,
or within such shorter period as the notice may specify,
the Employer gives the Prototype Sponsor written notice
of refusal to consent to the amendment. Such written
notice of refusal shall have the effect of withdrawing
the Plan as a prototype plan and shall cause the Plan to
be considered an individually designed plan. The right of
the Prototype Sponsor to cause the Plan to be amended
shall terminate should the Plan cease to conform as a
prototype plan as provided in this or any other section.
9.02 RIGHT OF EMPLOYER TO AMEND THE PLAN
The Employer may (1) change the choice of options in the
Adoption Agreement, (2) add overriding language in the
Adoption Agreement when such language is necessary to satisfy
Section 415 or Section 416 of the Code because of the
required aggregation of multiple plans, and (3) add certain
model amendments published by the Internal Revenue Service
which specifically provide that their adoption will not cause
the Plan to be treated as individually designed. An Employer
that amends the Plan for any other reason, including a waiver
of the minimum funding requirement under Section 412(d) of
the Code, will no longer participate in this prototype plan
and will be considered to have an individually designed plan.
An Employer who wishes to amend the Plan to change the
options it has chosen in the Adoption Agreement must complete
and deliver a new Adoption Agreement to the Prototype Sponsor
and Trustee (or Custodian, if applicable). Such amendment
shall become effective upon execution by the Employer and
Trustee (or Custodian).
The Employer further reserves the right to replace the Plan
in its entirety by adopting another retirement plan which the
Employer designates as a replacement plan.
30
31
9.03 LIMITATION ON POWER TO AMEND
No amendment to the Plan shall be effective to the extent
that it has the effect of decreasing a Participant's accrued
benefit. Notwithstanding the preceding sentence, a
Participant's Individual Account may be reduced to the extent
permitted under Section 412(c)(8) of the Code. For purposes
of this paragraph, a plan amendment which has the effect of
decreasing a Participant's Individual Account or eliminating
an optional form of benefit with respect to benefits
attributable to service before the amendment shall be treated
as reducing an accrued benefit. Furthermore, if the vesting
schedule of a Plan is amended, in the case of an Employee who
is a Participant as of the later of the date such amendment
is adopted or the date it becomes effective, the Vested
percentage (determined as of such date) of such Employee's
Individual Account derived from Employer Contributions will
not be less than the percentage computed under the Plan
without regard to such amendment.
9.04 AMENDMENT OF VESTING SCHEDULE
If the Plan's vesting schedule is amended, or the Plan is
amended in any way that directly or indirectly affects the
computation of the Participant's Vested percentage, or if the
Plan is deemed amended by an automatic change to or from a
top-heavy vesting schedule, each Participant with at least 3
Years of Vesting Service with the Employer may elect, within
the time set forth below, to have the Vested percentage
computed under the Plan without regard to such amendment. For
Participants who do not have at least I Hour of Service in
any Plan Year beginning after December 31, 1988, the
preceding sentence shall be applied by substituting "5 Years
of Vesting Service" for "3 Years of Vesting Service" where
such language appears.
The Period during which the election may be made shall
commence with the date the amendment is adopted or deemed to
be made and shall end the later of:
A. 60 days after the amendment is adopted;
B. 60 days after the amendment becomes effective; or
C. 60 days after the Participant is issued written notice
of the amendment by the Employer or Plan Administrator.
9.05 PERMANENCY
The Employer expects to continue this Plan and make the
necessary contributions thereto indefinitely, but such
continuance and payment is not assumed as a contractual
obligation. Neither the Adoption Agreement nor the Plan nor
any amendment or modification thereof nor the making of
contributions hereunder shall be construed as giving any
Participant or any person whomsoever any legal or equitable
right against the Employer, the Trustee (or Custodian, if
applicable) the Plan Administrator or the Prototype Sponsor
except as specifically provided herein, or as provided by
law.
9.06 METHOD AND PROCEDURE FOR TERMINATION
The Plan may be terminated by the Employer at any time by
appropriate action of its managing body. Such termination
shall be effective on the date specified by the Employer. The
Plan shall terminate if the Employer shall be dissolved,
terminated, or declared bankrupt. Written notice of the
termination and effective date thereof shall be given to the
Trustee (or Custodian), Plan Administrator, Prototype
Sponsor, Participants and Beneficiaries of deceased
Participants, and the required filings (such as the Form 5500
series and others) must be made with the Internal Revenue
Service and any other regulatory body as required by current
laws and regulations. Until all of the assets have been
distributed from the Fund, the Employer must keep the Plan in
compliance with current laws and regulations by (a) making
appropriate amendments to the Plan and (b) taking such other
measures as may be required.
9.07 CONTINUANCE OF PLAN BY SUCCESSOR EMPLOYER
Notwithstanding the preceding Section 9.06, a successor of
the Employer may continue the Plan and be substituted in the
place of the present Employer. The successor and the present
Employer (or, if deceased, the executor of the estate of a
deceased Self-Employed Individual who was the Employer) must
execute a written instrument authorizing such substitution
and the successor must complete and sign a new Adoption
Agreement.
9.08 FAILURE OF PLAN QUALIFICATION
If the Plan fails to retain its qualified status, the Plan
will no longer be considered to be part of a prototype plan,
and such Employer can no longer participate under this
prototype. In such event, the Plan will be considered an
individually designed plan.
SECTION TEN MISCELLANEOUS
10.01 STATE COMMUNITY PROPERTY LAWS
The terms and conditions of this Plan shall be applicable
without regard to the community property laws of any state.
10.02 HEADINGS
The headings of the Plan have been inserted for convenience
of reference only and are to be ignored in any construction
of the provisions hereof.
10.03 GENDER AND NUMBER
Whenever any words are used herein in the masculine gender
they shall be construed as though they were also used in the
feminine gender in all cases where they would so apply, and
whenever any words are used herein in the singular form they
shall be construed as though they were also used in the
plural form in all cases where they would so apply.
10.04 PLAN MERGER OR CONSOLIDATION
In the case of any merger or consolidation of the Plan with,
or transfer of assets or liabilities of such Plan to, any
other plan, each Participant shall be entitled to receive
benefits immediately after the merger, consolidation, or
transfer (if the Plan had then terminated) which are equal to
or greater than the benefits he would have been entitled to
receive immediately before the merger, consolidation, or
transfer (if the Plan had then terminated). The Trustee (or
Custodian, if applicable) has the authority to enter into
merger agreements or agreements to directly transfer
31
32
the assets of this Plan but only if such agreements are made
with trustees or custodians of other retirement plans
described in Section 401(a) of the Code.
10.05 STANDARD OF FIDUCIARY CONDUCT
The Employer, Plan Administrator, Trustee and any other
fiduciary under this Plan shall discharge their duties with
respect to this Plan solely in the interests of Participants
and their Beneficiaries and with the care, skill, prudence
and diligence under the circumstances then prevailing that a
prudent man acting in like capacity and familiar with such
matters would use in the conduct of an enterprise of a like
character and with like aims. No fiduciary shall cause the
Plan to engage in any transaction known as a "prohibited
transaction" under ERISA.
10.06 GENERAL UNDERTAKING OF ALL PARTIES
All parties to this Plan and all persons claiming any
interest whatsoever hereunder agree to perform any and all
acts and execute any and all documents and papers which may
be necessary or desirable for the carrying out of this Plan
and any of its provisions.
10.07 AGREEMENT BINDS HEIRS, ETC.
This Plan shall be binding upon the heirs, executors,
administrators, successors and assigns, as those terms shall
apply to any and all parties hereto, present and future.
10.08 DETERMINATION OF TOP-HEAVY STATUS
A. For any Plan Year beginning after December 31, 1983, this
Plan is a Top-Heavy Plan if any of the following
conditions exist:
1. If the top-heavy ratio for this Plan exceeds 60% and
this Plan is not part of any required aggregation
group or permissive aggregation group of plans.
2. If this Plan is part of a required aggregation group
of plans but not part of a permissive and the
top-heavy ratio for the group of plans exceeds 60%.
3. If this Plan is a 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%.
For purposes of this Section 10.08, the following terms
shall have the meanings indicated below:
B. KEY EMPLOYEE - Any Employee or former Employee (and the
beneficiaries of such Employee) who at any time during
the determination period was an officer of the Employer
if such individual's annual compensation exceeds 50% of
the dollar limitation under Section 415(b)(1)(A) of the
Code, an owner (or considered an owner under Section 318
of the Code) of one of the 10 largest interests in the
Employer if such individual's compensation exceeds 100%
of the dollar limitation under Section 415(c)(1)(A) of
the Code, a 5% owner of the Employer, or a 1% owner of
the Employer who has an annual compensation of more than
$150,000. Annual compensation means compensation as
defined in Section 415(c)(3) of the Code, but including
amounts contributed by the Employer pursuant to a salary
reduction agreement which are excludible from the
Employee's gross income under Section 125, Section
402(a)(8), Section 402(h) or Section 403(b) of the Code.
The determination period is the Plan Year containing the
determination date and the 4 preceding Plan Years.
The determination of who is a Key Employee will be made
in accordance with Section 416(i)(1) of the Code and the
regulations thereunder.
C. TOP-HEAVY RATIO
1. If the Employer maintains one or more defined
contribution plans (including any simplified employee
pension plan) and the Employer has not maintained any
defined benefit plan which during the 5-year period
ending on the determination date(s) has or has had
accrued benefits, the top-heavy ratio for this Plan
alone or for the required or permissive aggregation
group as appropriate is a fraction, the numerator of
which is the sum of the account balances of all Key
Employees as of the determination date(s) (including
any part of any account balance distributed in the
5-year period ending on the determination date(s)),
and the denominator of which is the sum of all
account balances (including any part of any account
balance distributed in the 5-year period ending on
the determination date(s)), both computed in
accordance with Section 416 of the Code and the
regulations thereunder. Both the numerator and the
denominator of the top-heavy ratio are increased to
reflect any contribution not actually made as of the
determination date, but which is required to be taken
into account on that date under Section 416 of the
Code and the regulations thereunder.
2. If the Employer maintains one or more defined
contribution plans (including any simplified employee
pension plan) and the Employer maintains or has
maintained one or more defined benefit plans which
during the 5-year period ending on the determination
date(s) has or has had any accrued benefits, the
top-heavy ratio for any required or permissive
aggregation group as appropriate is a fraction, the
numerator of which is the sum of account balances
under the aggregated defined contribution plan or
plans for all Key Employees, determined in accordance
with (1) above, and the present value of accrued
benefits under the aggregated defined benefit plan or
plans 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 or plans for all Participants,
determined in accordance with (1) above, and the
present value of accrued benefits under the defined
benefit plan or plans for all Participants as of the
determination date(s), all determined in accordance
with Section 416 of the Code and the regulations
thereunder. The accrued benefits under a defined
benefit plan in both the numerator and denominator of
the top-heavy ratio are increased for any
distribution of an accrued benefit made in the 5-year
period ending on the determination date.
3. For purposes of (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 Section 416 of the Code and the
regulations thereunder for the first and second plan
years of a defined benefit plan. The account
32
33
balances and accrued benefits of a Participant (a)
who is not a Key Employee but who was a Key Employee
in a Prior Year, or (b) who has not been credited
with at least one Hour of Service with any employer
maintaining the plan at any time during the 5-year
period ending on the determination date will be
disregarded. The calculation of the top heavy ratio,
and the extent to which distributions, rollovers, and
transfers are taken into account will be made in
accordance with Section 416 of the Code and the
regulations thereunder. Deductible employee
contributions will not be taken into account for
purposes of computing the top-heavy ratio. When
aggregating plans the value of account balances and
accrued benefits will be calculated with reference to
the determination dates that fall within the same
calendar year.
The accrued benefit of a Participant other than a Key
Employee shall be determined under (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 Section 411(b)(1)(C) of the Code.
4. Permissive aggregation group: The required
aggregation group of plans plus any other plan or
plans of the Employer which, when considered as a
group with the required aggregation group, would
continue to satisfy the requirements of Sections
401(a)(4) and 410 of the Code.
5. Required aggregation group: (a) 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 (b) any other qualified plan of
the Employer which enables a plan described in (a) to
meet the requirements of Sections 401(a)(4) or 410 of
the Code.
6. Determination date: For any Plan Year subsequent to
the first Plan Year, the last day of the preceding
Plan Year. For the first Plan Year of the Plan, the
last day of that year.
7. Valuation date: For purposes of calculating the
top-heavy ratio, the valuation date shall be the last
day of each Plan Year.
8. Present value: For purposes of establishing the
"present value" of benefits under a defined benefit
plan to compute the top heavy ratio. any benefit
shall be discounted only for mortality and interest
based on the interest rate and mortality table
specified for this purpose in the defined benefit
plan.
10.09 SPECIAL LIMITATIONS FOR OWNER-EMPLOYEES
If this Plan provides contributions or benefits for one or
more Owner-Employees who control both the business for which
this Plan is established and one or more other trades or
businesses, this Plan and the plan established for other
trades or businesses must, when looked at as a single plan,
satisfy Sections 401(a) and (d) of the Code for the employees
of those trades or businesses.
If the Plan provides contributions or benefits for one or
more Owner-Employees who control one or more other trades or
businesses, the employees of the other trades or businesses
must be included in a plan which satisfies Sections 401(a)
and (d) of the Code and which provides contributions and
benefits not less favorable than provided for Owner-Employees
under this Plan.
If an individual is covered as an Owner-Employee under the
plans of two or more trades or businesses which are not
controlled and the individual controls a trade or business,
then the contributions or benefits of the employees under the
plan of the trade or business which is controlled must be as
favorable as those provided for him under the most favorable
plan of the trade or business which is not controlled.
For purposes of the preceding paragraphs, an Owner-Employee,
or two or more Owner-Employees, will be considered to control
a trade or business if the Owner-Employee, or two or more
Owner-Employees, together:
A. own the entire interest in a unincorporated trade or
business, or
B. in the case of a partnership, own more than 50% of either
the capital interest or the profit interest in the
partnership.
For purposes of the preceding sentence, an Owner-Employee, or
two or more Owner-Employees, shall be treated as owning any
interest in a partnership which is owned, directly or
indirectly, by a partnership which such Owner-Employee, or
such two or more Owner-Employees, are considered to control
within the meaning of the preceding sentence.
10.10 INALIENABILITY OF BENEFITS
No benefit or interest available hereunder will be subject to
assignment or alienation, either voluntarily or
involuntarily. The preceding sentence shall also apply to the
creation, assignment, or recognition of a right to any
benefit payable with respect to a Participant pursuant to a
domestic relations order, unless such order is determined to
be a qualified domestic relations order, as defined in
Section 414(p) of the Code.
Generally, a domestic relations order cannot be a qualified
domestic relations order until January 1, 1985. However, in
the case of a domestic relations order entered before such
date, the Plan Administrator:
(1) shall treat such order as a qualified domestic relations
order if such Plan Administrator is paying benefits
pursuant to such order on such date, and
(2) may treat any other such order entered before such date
as a qualified domestic relations order even if such
order does not meet the requirements of Section 414(p) of
the Code.
33
34
EXHIBIT 14(b)
QUALIFIED
RETIREMENT
PLAN
BASIC PLAN
DOCUMENT
35
TABLE OF CONTENTS
SECTION ONE DEFINITIONS
1.01 Adoption Agreement .............................................................................1
1.02 Basic Plan Document ............................................................................1
1.03 Beneficiary.....................................................................................1
1.04 Break In Eligibility Service....................................................................1
1.05 Break In Vesting Service........................................................................1
1.06 Code............................................................................................1
1.07 Compensation....................................................................................1
1.08 Custodian.......................................................................................3
1.09 Disability......................................................................................3
1.10 Early Retirement Age............................................................................3
1.11 Earned Income...................................................................................3
1.12 Effective Date..................................................................................3
1.13 Eligibility Computation Period..................................................................3
1.14 Employee........................................................................................3
1.15 Employer........................................................................................3
1.16 Employer Contribution...........................................................................3
1.17 Employment Commencement Date....................................................................4
1.18 Employer Profit Sharing Contribution............................................................4
1.19 Entry Dates.....................................................................................4
1.20 XXXXX...........................................................................................4
1.21 Forfeiture......................................................................................4
1.22 Fund............................................................................................4
1.23 Highly Compensated Employee.....................................................................4
1.24 Hours of Service - Means........................................................................4
1.25 Individual Account..............................................................................5
1.26 Investment Fund.................................................................................5
1.27 Key Employee....................................................................................5
1.28 Leased Employee.................................................................................5
1.29 Nondeductible Employee Contributions............................................................6
1.30 Normal Retirement Age...........................................................................6
1.31 Owner - Employee................................................................................6
1.32 Participant.....................................................................................6
1.33 Plan............................................................................................6
1.34 Plan Administrator..............................................................................6
1.35 Plan Year.......................................................................................6
1.36 Prior Plan......................................................................................6
1.37 Prototype Plan..................................................................................6
1.38 Qualifying Participant..........................................................................6
1.39 Related Employer................................................................................6
1.40 Related Employer Participation Agreement........................................................6
1.41 Self-Employed Individual........................................................................6
1.42 Separate Fund...................................................................................6
1.43 Taxable Wage Base...............................................................................6
1.44 Termination of Employment.......................................................................7
1.45 Top-Heavy Plan..................................................................................7
1.46 Trustee.........................................................................................7
1.47 Valuation Date..................................................................................7
1.48 Vested..........................................................................................7
1.49 Year Of Eligibility Service.....................................................................7
1.50 Year Of Vesting Service.........................................................................7
SECTION TWO ELIGIBILITY AND PARTICIPATION
2.01 Eligibility To Participate......................................................................7
2.02 Plan Entry......................................................................................8
36
2.03 Transfer To Or From Ineligible Class............................................................8
2.04 Return As A Participant After Break In Eligibility Service......................................8
2.05 Determinations Under This Section...............................................................8
2.06 Terms Of Employment.............................................................................8
2.07 Special Rules Where Elapsed Time Method Is Being Used...........................................8
2.08 Election Not To Participate.....................................................................9
SECTION THREE CONTRIBUTIONS
3.01 Employer Contributions..........................................................................9
3.02 Nondeductible Employee Contributions...........................................................12
3.03 Rollover Contributions.........................................................................12
3.04 Transfer Contributions.........................................................................12
3.05 Limitation On Allocations .....................................................................13
SECTION FOUR INDIVIDUAL ACCOUNTS OF PARTICIPANTS AND VALUATION
4.01 Individual Accounts ...........................................................................16
4.02 Valuation Of Fund..............................................................................17
4.03 Valuation Of Individual Accounts...............................................................17
4.04 Modification Of Method For Valuing Individual Accounts.........................................17
4.05 Segregation Of Assets..........................................................................17
4.06 Statement of Individual Accounts...............................................................17
SECTION FIVE TRUSTEE OR CUSTODIAN
5.01 Creation Of Fund...............................................................................18
5.02 Investment Authority...........................................................................18
5.03 Financial Organization Custodian Or Trustee
Without Full Trust Powers......................................................................18
5.04 Financial Organization Trustee With Full Trust Powers
And Individual Trustee.........................................................................19
5.05 Division Of Fund Into Investment Funds.........................................................20
5.06 Compensation And Expenses......................................................................20
5.07 Not Obligated To Question Data.................................................................20
5.08 Liability For Withholding On Distributions.....................................................21
5.09 Resignation Or Removal Of Trustee (Or Custodian)...............................................21
5.10 Degree Of Care - Limitations Of Liability......................................................21
5.11 Indemnification Of Prototype Sponsor And Trustee (Or Custodian)................................21
5.12 Investment Managers............................................................................22
5.13 Matters Relating To Insurance..................................................................22
5.14 Direction Of Investments By Participant........................................................23
SECTION SIX VESTING AND DISTRIBUTION
6.01 Distribution To Participant....................................................................23
6.02 Form Of Distribution To A Participant..........................................................26
6.03 Distributions Upon The Death Of A Participant..................................................27
6.04 Form Of Distribution To Beneficiary............................................................28
6.05 Joint And Survivor Annuity Requirements........................................................28
6.06 Distribution Requirements......................................................................32
6.07 Annuity Contracts..............................................................................35
6.08 Loans To Participants..........................................................................35
6.09 Distribution In Kind...........................................................................36
6.10 Direct Rollovers Of Eligible Rollover Distributions............................................37
6.11 Procedure For Missing Participants Or Beneficiaries............................................37
SECTION SEVEN CLAIMS PROCEDURE
7.01 Filing A Claim For Plan Distributions..........................................................37
7.02 Denial Of Claim................................................................................38
7.03 Remedies Available.............................................................................38
SECTION EIGHT PLAN ADMINISTRATOR
8.01 Employer Is Plan Administrator.................................................................38
37
8.02 Powers And Duties Of The Plan Administrator....................................................38
8.03 Expenses And Compensation......................................................................38
8.04 Information From Employer......................................................................38
SECTION NINE AMENDMENT AND TERMINATION
9.01 Right Of Prototype Sponsor To Amend The Plan...................................................39
9.02 Right of Employer To Amend The Plan............................................................39
9.03 Limitation On Power To Amend...................................................................40
9.04 Amendment Of Vesting Schedule..................................................................40
9.05 Permanency.....................................................................................40
9.06 Method And Procedure For Termination...........................................................40
9.07 Continuance Of Plan by Successor Employer......................................................40
9.08 Failure Of Plan Qualification..................................................................41
SECTION TEN MISCELLANEOUS
10.01 State Community Property Laws..................................................................41
10.02 Headings.......................................................................................41
10.03 Gender And Number..............................................................................41
10.04 Plan Merger Or Consolidation...................................................................41
10.05 Standard Of Fiduciary Conduct..................................................................41
10.06 General Undertaking Of All Parties.............................................................41
10.07 Agreement Binds Heirs, Etc.....................................................................41
10.08 Determination Of Top-Heavy Status..............................................................41
10.09 Special Limitations For Owner-Employees........................................................43
10.10 Inalienability Of Benefits.....................................................................43
10.11 Cannot Eliminate Protected Benefits............................................................43
SECTION ELEVEN 401(k) PROVISIONS
11.100 Definitions....................................................................................44
11.101 Actual Deferral Percentage (ADP)...............................................................44
11.102 Aggregate Limit................................................................................44
11.103 Average Contribution Percentage (ACP)..........................................................44
11.104 Contributing Participant.......................................................................44
11.105 Contribution Percentage........................................................................44
11.106 Contribution Percentage Amounts................................................................44
11.107 Elective Deferrals.............................................................................44
11.108 Eligible Participant...........................................................................45
11.109 Excess Aggregate Contributions.................................................................45
11.110 Excess Contributions...........................................................................45
11.111 Excess Elective Deferrals......................................................................45
11.112 Matching Contribution..........................................................................45
11.113 Qualified Nonelective Contributions............................................................45
11.114 Qualified Matching Contributions...............................................................46
11.115 Qualifying Contributing Participant............................................................46
11.200 Contributing Participant.......................................................................46
11.201 Requirements To Enroll As A Contributing Participant...........................................46
11.202 Changing Elective Deferral Amounts.............................................................46
11.203 Ceasing Elective Deferrals.....................................................................46
11.204 Return As A Contributing Participant After Ceasing Elective Deferrals..........................46
11.205 Certain One-Time Irrevocable Elections.........................................................46
11.300 Contributions..................................................................................46
11.301 Contributions By Employer......................................................................47
11.302 Matching Contributions.........................................................................47
11.303 Qualified Nonelective Contributions............................................................47
11.304 Qualified Matching Contributions...............................................................47
11.305 Nondeductible Employee Contributions...........................................................47
11.400 Nondiscrimination Testing......................................................................47
11.401 Actual Deferral Percentage Test (ADP)..........................................................47
11.402 Limits On Nondeductible Employee Contributions
And Matching Contributions.....................................................................48
38
11.500 Distribution Provisions........................................................................50
11.501 General Rule...................................................................................50
11.502 Distribution Requirements......................................................................50
11.503 Hardship Distribution..........................................................................50
11.504 Distribution Of Excess Elective Deferrals......................................................51
11.505 Distribution Of Excess Contributions...........................................................51
11.506 Distribution Of Excess Aggregate Contributions.................................................52
11.507 Recharacterization.............................................................................52
11.508 Distribution Of Elective Deferrals If Excess Annual Additions..................................52
11.600 Vesting........................................................................................52
11.601 100% Vesting On Certain Contributions..........................................................53
11.602 Forfeitures And Vesting Of Matching Contributions..............................................53
39
QUALIFIED RETIREMENT PLAN AND TRUST
Defined Contribution Basic Plan Document 04
SECTION ONE DEFINITIONS
The following words and phrases when used in the Plan with initial
capital letters shall, for the purpose of this Plan, have the meanings
set forth below unless the context indicates that other meanings are
intended:
1.01 ADOPTION AGREEMENT
Means the document executed by the Employer through which it adopts the
Plan and Trust and thereby agrees to be bound by all terms and
conditions of the Plan and Trust.
1.02 BASIC PLAN DOCUMENT
Means this prototype Plan and Trust document.
1.03 BENEFICIARY
Means the individual or individuals designated pursuant to Section
6.03(A) of the Plan.
1.04 BREAK IN ELIGIBILITY SERVICE
Means a 12 consecutive month period which coincides with an Eligibility
Computation Period during which an Employee fails to complete more than
500 Hours of Service (or such lesser number of Hours of Service
specified in the Adoption Agreement for this purpose).
1.05 BREAK IN VESTING SERVICE
Means a Plan Year (or other vesting computation period described in
Section 1.50) during which an Employee fails to complete more than 500
Hours of Service (or such lesser number of Hours of Service specified
in the Adoption Agreement for this purpose).
1.06 CODE
Means the Internal Revenue Code of 1986 as amended from time-to-time.
1.07 COMPENSATION
A. Basic Definition
For Plan Years beginning on or after January, 1, 1989, the
following definition of Compensation shall apply:
As elected by the Employer in the Adoption Agreement (and if
no election is made, W-2 -wages will be deemed to have been
selected), Compensation shall mean one of the following:
1. W-2 wages. Compensation is defined as information
required to be reported under Sections 6041 and 6051,
and 6052 of the Code (Wages, tips and other
compensation as reported on Form W-2). Compensation
is defined as wages within the meaning of Section
3401(a) of the Code 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 Sections 6041(d) and
6051(a)(3), and 6052 of the Code. Compensation must
be determined without regard to any rules under
Section 3401(a) that limit the remuneration included
in wages based on the nature or location of the
employment or the services performed (such as the
exception for agricultural labor in Section
3401(a)(2)).
2. Section 3401(a) wages. Compensation is defined as
wages within the meaning of Section 3401(a) of the
Code, 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 (such as the exception for
agricultural labor in Section WI(a)(2)).
3. 415 safe-harbor compensation. Compensation is defined
as wages, salaries, and fees for professional
services and other amounts received (without regard
to whether or not an amount is paid in cash) for
personal services actually rendered in the course of
employment with the Employer maintaining the Plan to
the extent that the amounts are includable in gross
income (including, but not Limited to, commissions
paid salesmen, compensation for services on the basis
of a percentage of profits, commissions on insurance
premiums, tips, bonuses, fringe benefits, and
reimbursements or other expense allowances under a
nonaccountable plan (as described in 1.62-2(c)), and
excluding the following:
a. Employer contributions to a plan of deferred
compensation which are not includable in the
Employee's gross income for the taxable year
in which contributed, or employer
contributions under a simplified employee
pension plan to the extent such
contributions are deductible by the
Employee, or any distributions from a plan
of deferred compensation;
40
2
b. Amounts realized from the exercise of a
nonqualified 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;
c. Amounts realized from the sale, exchange or
other disposition of stock acquired under a
qualified stock OPTIONS and
d. Other amounts which received special tax
benefits, or contributions made by the
Employer (whether or not under a salary
reduction agreement) towards the purchase of
an annuity contract described in Section
403(b) of the Code (whether or not the
contributions are actually excludable from
the gross income of the Employee).
For any Self-Employed Individual covered under the Plan,
Compensation will mean Earned Income.
B. Determination Period And Other Rules
Compensation shall include only that Compensation
which is actually paid to the Participant during the
determination period. Except as provided elsewhere in
this Plan, the determination period shall be the Plan
Year unless the Employer has selected another period
in the Adoption Agreement. If the Employer makes no
election, the determination period shall be the Plan
Year.
Unless otherwise indicated in the Adoption Agreement,
Compensation shall include any amount which is
contributed by the Employer pursuant to a salary
reduction agreement and which is not includable in
the gross income of the Employee under Sections 125,
402(e)(3), 402(h)(1)(13) or 403(b) of the Code.
Where this Plan is being adopted as an amendment and
restatement to bring a Prior Plan into compliance
with the Tax Reform Act of 1986 such Prior Plan's
definition of Compensation shall apply for Plan Years
beginning before January 1, 1989.
C. Limits On Compensation
For years beginning after December 31, 1988 and
before January 1, 1994, the annual Compensation of
each Participant taken into account for determining
all benefits provided under the Plan for any
determination period shall not exceed $200,000. This
limitation shall be adjusted by the Secretary at the
same time and in the same manner as under Section
415(d) of the Code, 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
For Plan Years beginning on or after January 1, 1994,
the annual Compensation of each Participant taken
into account for determining all benefits provided
under the Plan for any Plan Year shall not exceed
$150,000, as adjusted for increases in the
cost-of-living in accordance with Section
401(a)(17)(B) of the Internal Revenue Code. The
cost-of-living-adjustment in effect for a calendar
year applies to any determination period beginning in
such calendar year.
If the period for determining Compensation used in
calculating an Employee's allocation for a
determination period is a short Plan Year (i.e.,
shorter than 12 months), the annual Compensation
limit is an amount equal to the otherwise applicable
annual Compensation limit multiplied by a fraction,
the numerator of which is the number of months in the
short Plan Year, and the denominator of which is 12.
In determining the Compensation of a Participant for
purposes of this limitation, the rules of Section
414(q)(6) of the Code shall apply, except in applying
such rules, the term "family" shall include only the
spouse of the Participant and any lineal descendants
of the Participant who have not attained age 19
before the close of the year. If, as a result of the
application of such rules the adjusted $200,000
limitation is exceeded, then (except for purposes of
determining the portion of Compensation up to the
integration level, if this Plan provides for
permitted disparity), the limitation shall be
prorated among the affected individuals in proportion
to each such individual's Compensation as determined
under this Section prior to the application of this
limitation.
If Compensation for any prior determination period is
taken into account in determining an Employee's
allocations or benefits for the current determination
period, the Compensation for such prior determination
period is subject to the applicable annual
Compensation limit in effect for that prior period.
For this purpose, in determining allocations in Plan
Years beginning on or after January 1, 1989, the
annual Compensation limit 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, 19,94, the annual
Compensation limit in effect for determination
periods beginning before that date is $150,000
41
3
1.08 CUSTODIAN
Means an entity specified in the Adoption Agreement as Custodian or any
duly appointed successor as provided in Section 5.09.
1.09 DISABILITY
Unless the Employer has elected a different definition in the Adoption
Agreement, Disability means the inability to engage in any substantial,
gainful activity by reason of any medically determinable physical or
mental impairment that can be expected to result in death or which has
lasted or can be expected to last for a continuous period of not less
than 12 months. The permanence and degree of such impairment shall be
supported by medical evidence.
1.10 EARLY RETIREMENT AGE
Means the age specified in the Adoption Agreement. The Plan will not
have an Early Retirement Age if none is specified in the Adoption
Agreement.
1.11 EARNED INCOME
Means the net earnings from self-employment in the trade or business
with respect to which the Plan is established, 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 Section 404 of the Code.
Net earnings shall be determined with regard to the deduction allowed
to the Employer by Section 164(f) of the Code for taxable years
beginning after December 31, 1989.
1.12 EFFECTIVE DATE
Means the date the Plan becomes effective as indicated in the Adoption
Agreement. However, as indicated in the Adoption Agreement, certain
provisions may have specific effective dates. Further, where a separate
date is stated in the Plan as of which a particular Plan provision
becomes effective, such date will control with respect to that
provision.
1.13 ELIGIBILITY COMPUTATION PERIOD
An Employee's initial Eligibility Computation Period shall be the 12
consecutive month period commencing on the Employee's Employment
Commencement Date. The Employee's subsequent Eligibility Computation
Periods shall be the 12 consecutive month periods commencing on the
anniversaries of his or her Employment Commencement Date; provided,
however, if pursuant to the Adoption Agreement, an Employee is required
to complete one or less Years of Eligibility Service to become a
Participant, then his or her subsequent Eligibility Computation Periods
shall be the Plan Years commencing with the Plan Year beginning during
his or her initial Eligibility Computation Period. An Employee does not
complete a Year of Eligibility Service before the end of the 12
consecutive month period regardless of when during such period the
Employee completes the required number of Hours of Service.
1.14 EMPLOYEE
Means any person employed by an Employer maintaining the Plan or of any
other employer required to be aggregated with such Employer under
Sections 414(b), (c), (m) or (o) of the Code.
The term Employee shall also include any Leased Employee deemed to be
an Employee of any Employer described in the previous paragraph as
provided in Section 414(n) or (o) of the Code.
1.15 EMPLOYER
Means any corporation, partnership, sole-proprietorship or other entity
named in the Adoption Agreement and any successor who by merger,
consolidation, purchase or otherwise assumes the obligations of the
Plan. A partnership is considered to be the Employer of each of the
partners and a sole-proprietorship is considered to be the Employer of
a sole proprietor. Where this Plan is being maintained by a union or
other entity that represents its member Employees in the negotiation of
collective bargaining agreements, the term Employer shall mean such
union or other entity.
1.16 EMPLOYER CONTRIBUTION
Means the amount contributed by the Employer each year as determined
under this Plan.
1.17 EMPLOYMENT COMMENCEMENT DATE
An Employee's Employment Commencement date means the date the Employee
first performs an Hour of Service for the Employer.
1.18 EMPLOYER PROFIT SHARING CONTRIBUTION
Means an Employer Contribution made pursuant to the Section of the
Adoption Agreement titled "Employer Profit Sharing Contributions." The
Employer may make Employer Profit Sharing Contributions without regard
to current or accumulated earnings or profits.
1.19 ENTRY DATES
Means the first day of the Plan Year and the first day of the seventh
month of the Plan Year, unless the Employer has specified different
dates in the Adoption Agreement.
42
4
1.20 ERISA
Means the Employee Retirement Income Security Act of 1974 as amended
from time-to-time.
1.21 FORFEITURE
Means that portion of a Participant's Individual Account derived from
Employer Contributions which he or she is not entitled to receive
(i.e., the nonvested portion).
1.22 FUND
Means the Plan assets held by the Trustee for the Participants'
exclusive benefit.
1.23 HIGHLY COMPENSATED EMPLOYEE
The term Highly Compensated Employee includes highly compensated active
employees and highly compensated former employees.
A highly compensated active employee includes any Employee who performs
service for the Employer during the determination year and who, during
the look-back year. (a) received Compensation from the Employer in
excess of $75,000 (as adjusted pursuant to Section 415(d) of the Code);
(b) received Compensation from the Employer in excess of $50,000 (as
adjusted pursuant to Section 415(d) of the Code) and was a member of
the top-paid group for such year; or (c) was an officer of the Employer
and received Compensation during such year that is greater than 50% of
the dollar limitation in effect under Section 415(b)(1)(A) of the Code.
The term Highly Compensated Employee also includes: (a) Employees who
are both described in the preceding sentence if the term "determination
year" is substituted for the term "look-back year" and the Employee is
one of the 100 Employees who received the most Compensation from the
Employer during the determination year, and (b) Employees who are 5%
owners at any time during the look-back year or determination year.
If no officer has satisfied the Compensation requirement of (c) above
during either a determination year or look-back year, the highest paid
officer for such year shall be treated as a Highly Compensated
Employee.
For this purpose, the determination year shall be the Plan Year. The
look-back year shall be the 12 month period immediately preceding the
determination year.
A highly compensated former employee includes any Employee who
separated from service (or was deemed to have separated) prior to the
determination year, performs no service for the Employer during the
determination year, and was a highly compensated active employee for
either the separation year or an), determination year ending on or
after the Employee's 55th birthday,
If an Employee is, during a determination year or look-back year, a
family member of either a 5% owner who is an active or former Employee
or a Highly Compensated Employee who is one of the 10 most Highly
Compensated Employees ranked on the basis of Compensation paid by the
Employer during such year, then the fan-Lily member and the 5% owner or
top 10 Highly Compensated Employee shall be aggregated. In such case,
the family member and 5% owner or top 10 Highly Compensated Employee
shall be treated as a single Employee receiving Compensation and Plan
contributions or benefits equal to the sum of such Compensation and
contributions or benefits of the family member and 5% owner or top 10
Highly Compensated Employee. For purposes of this Section, family
member includes the spouse, lineal ascendants and descendants of the
Employee or former Employee and the spouses of such lineal ascendants
and descendants.
The determination of who is a Highly Compensated Employee, including
the determinations of the number and identity of Employees in the
top-paid group, the top 100 Employees, the number of Employees treated
as officers and the Compensation that is considered, will be made in
accordance with Section 414(q) of the Code and the regulations
thereunder.
1.24 HOURS OF SERVICE - MEANS
A. 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; and
B. Each hour for which an Employee is paid, or entitled to
payment, by the Employer on account of a period of time during
which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation,
holiday, illness, incapacity (including disability), layoff,
jury duty, military duty or leave of absence. No more than 501
Hours of Service 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 shall
be calculated and credited pursuant to Section 2530.200b-2 of
the Department of Labor Regulations which is incorporated
herein by this reference; and
C. Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer. The
same Hours of Service will not be credited both under
paragraph (A) or paragraph (B), as the case may be, and under
this paragraph (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.
43
5
D. Solely for purposes of determining whether a Break in
Eligibility Service or a Break in Vesting Service has occurred
in a computation period (the computation period for purposes
of determining whether a Break in Vesting Service has
occur-red is the Plan Year or other vesting computation period
described in Section 1.50), an individual who, is absent from
work for maternity or paternity reasons shall receive credit
for the Hours of Service which would otherwise have been
credited to such individual but for such absence, or in any
case in which such hours cannot be determined, 8 Hours of
Service per day of such absence. For purposes of this
paragraph, an absence from work for maternity or paternity
reasons means an absence (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
shall be credited (1) in the Eligibility Computation Period or
Plan Year or other 91 investing computation period described
in Section 1.50 in which the absence begins if the crediting
is necessary to prevent a Break in Eligibility Service or a
Break in Vesting Service in the applicable period, or (2) in
all other cases, in the following Eligibility Computation
Period or Plan Year or other -vesting computation period
described in Section 1.50.
E. Hours of Service will be credited for employment with other
members of an affiliated service group (under Section 414(m)
of the Code), a controlled group of corporations (under
Section 414(b) of the Code), or a group of trades or
businesses under common control (under Section 414(c) of the
Code) of which the adopting Employer is a member, and any
other entity required to be aggregated with the Employer
pursuant to Section 414(o) of the Code and the regulations t
hereunder.
Hours of Service will also be credited for any individual
considered an Employee for purposes of this Plan under Code
Sections 414(n) or 414(o) and the regulations thereunder.
F. Where the Employer maintains the plan of a predecessor
employer, service for such predecessor employer shall be
treated as service for the Employer.
G. The above method for determining Hours of Service may be
altered as specified in the Adoption Agreement.
1.25 INDIVIDUAL ACCOUNT
Means the account established and maintained under this Plan for each
Participant in accordance with Section 4.01.
1.26 INVESTMENT FUND
Means a subdivision of the Fund established pursuant to Section 5.05.
1.27 KEY EMPLOYEE
Means any person who is determined to be a Key Employee under Section
10.08.
1.28 LEASED EMPLOYEE
Means any person (other than an Employee of the recipient) who pursuant
to an agreement between the recipient and any other person ("leasing
organization") has performed services for the recipient (or for the
recipient and related persons determined in accordance with Section
414(n)(6) of the Code) on a substantially full time basis for a period
of at least one year, and such services are of a type historically
performed by Employees in the business field of the recipient Employer
Contributions or benefits provided a Leased Employee by the leasing
organization which are attributable to services performed for the
recipient Employer shall be treated as provided by the recipient
Employer. A Leased Employee shall not be considered an Employee of the
recipient if: (1) such employee is covered by a money purchase pension
plan providing: (a) a nonintegrated employer contribution rate of at
least 10% of compensation, as defined in Section 415(c)(3) of the Code,
but including amounts contributed pursuant to a salary reduction
agreement which are excludable from the employee's gross income under
Section 125, Section 402(e)(3), Section 402(h)(1)(B) or Section 403(b)
of the Code, (b) immediate participation, and (c) full and immediate
vesting; and (2) Leased Employees do not constitute more than 20% of
the recipient's nonhighly compensated work force.
1.29 NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS
Means any contribution made to the Plan by or on behalf of a
Participant that is included in the Participant's gross income in the
year in which made and that is maintained under a separate account to
which earnings and losses are allocated.
1.30 NORMAL RETIREMENT AGE
Means the age specified in the Adoption Agreement. However, if the
Employer enforces a mandatory retirement age which is less than the
Normal Retirement Age, such mandatory age is deemed to be the Normal
Retirement Age. If no age is specified in the Adoption Agreement, the
Normal Retirement Age shall be age 65.
1.31 OWNER - EMPLOYEE
Means an individual who is a sole proprietor, or who is a partner
owning more than 10% of either the capital or profits interest of the
partnership.
1.32 PARTICIPANT
Means any Employee or former Employee of the Employer who has met the
Plan's eligibility requirements, has entered the Plan and who is or may
become eligible to receive a benefit of any type from this Plan or
whose Beneficiary may be eligible to receive any such benefit.
44
6
1.33 PLAN
Means the prototype defined contribution plan adopted by the Employer.
The Plan consists of this Basic Plan Document plus the corresponding
Adoption Agreement as completed and signed by & Employer.
1.34 PLAN ADMINISTRATOR
Means the person or persons determined to be the Plan Administrator in
accordance with Section 8.01.
1.35 PLAN YEAR
Means the 12 consecutive month period which coincides with the
Employer's fiscal year or such other 12 consecutive month period as is
designated in the Adoption Agreement
1.36 PRIOR PLAN
Means a plan which was amended or replaced by adoption of this Plan
document as indicated in the Adoption Agreement.
1.37 PROTOTYPE SPONSOR
Means the entity specified in the Adoption Agreement that makes this
prototype plan available to employers for adoption.
1.38 QUALIFYING PARTICIPANT
Means a Participant who has satisfied the requirements described in
Section 3.01(B)(2) to be entitled to share in an%7 Employer
Contribution (and Forfeitures, if applicable) for a Plan Year.
1.39 RELATED EMPLOYER
Means an employer that may be required to be aggregated with the
Employer adopting this Plan for certain qualification requirements
under Sections' 414(b), (c), (in) or (o) of the Code (or any other
employer that has ownership in common with the Employer). A Related
Employer may participate in this Plan if so indicated in the Section of
the Adoption Agreement titled "Employer Information" or if such Related
Employer executes a Related Employer Participation Agreement.
1.40 RELATED EMPLOYER PARTICIPATION AGREEMENT
Means the agreement under this prototype Plan that a Related Employer
may execute to participate in this Plan.
1.41 SELF-EMPLOYED INDIVIDUAL
Means an individual who has Famed Income for the taxable year from the
trade or business for which the Plan is established; also, an
individual who would have had Earned Income but for the fact that the
trade or business had no net profits for the taxable year.
1.42 SEPARATE FUND
Means a subdivision of the Fund held in the name of a particular
Participant representing certain assets held for that Participant. The
assets which comprise a Participant's Separate Fund are those assets
earmarked for him or her and those assets subject to the Participant's
individual direction pursuant to Section 5.14.
1.43 TAXABLE WAGE BASE
Means, with respect to any taxable year, the contribution and benefit
base in effect under Section 230 of the Social Security Act at the
beginning of the Plan Year.
1.44 TERMINATION OF EMPLOYMENT
A Termination of Employment of an Employee of an Employer shall occur
whenever his or her status as an Employee of such Employer ceases for
any reason other than death. An Employee who does not return to work
for the Employer on or before the expiration of an authorized leave of
absence from such Employer shall be deemed to have incurred a
Termination of Employment when such leave ends.
1.45 TOP-HEAVY PLAN
This Plan is a Top-Heavy Plan for any Plan Year if it is determined to
be such pursuant to Section 10.08.
1.46 TRUSTEE
Means an individual, individuals or corporation specified in the
Adoption Agreement as Trustee or any duly appointed successor as
provided in Section 5.09. Trustee shall mean Custodian in the event the
financial organization named as Trustee does not have full trust
powers.
1.47 VALUATION DATE
Means the date or dates as specified in the Adoption Agreement. If no
date is specified in the Adoption Agreement, the Valuation Date shall
be the last day of the Plan Year and each other date designated by the
Plan Administrator which is selected in a uniform and nondiscriminatory
manner when the assets of the Fund are valued at their then fair market
value.
1.48 VESTED
Means nonforfeitable, that is, a claim which is unconditional and
legally enforceable against the Plan obtained by a Participant or the
Participant's Beneficiary to that part of an immediate or deferred
benefit under the Plan which arises from a Participant's Years of
Vesting Service.
45
7
1.49 YEAR OF ELIGIBILITY SERVICE
Means a 12 consecutive month period which coincides with an Eligibility
Computation Period during which an Employee completes at least 1,000
Hours of Service (or such lesser number of Hours of Service specified
in the Adoption Agreement for this purpose). An Employee does not
complete a Year of Eligibility Service before the end of the 12
consecutive month period regardless of when during such period the
Employee completes the required number of Hours of Service.
1.50 YEAR OF VESTING SERVICE
Means a Plan Year during which an Employee completes at least 1,000
Hours of Service (or such lesser number of Hours of Service specified
in the Adoption Agreement for this purpose). Notwithstanding the
preceding sentence, where the Employer so indicates in the Adoption
Agreement, vesting shall be computed by reference to the 12 consecutive
month period beginning with the Employee's Employment Commencement Date
and each successive 12 month period commencing on the anniversaries
thereof.
In the case of a Participant who has 5 or more consecutive Breaks in
Vesting Service, all Years of Vesting Service after such Breaks in
Vesting Service will be disregarded for the purpose of determining the
Vested portion of his or her Individual Account derived from Employer
Contributions that accrued before such breaks. Such Participant's
prebreak service will count in vesting the postbreak Individual Account
derived from Employer Contributions only if either:
(A) such Participant had any Vested right to any portion of his or
her Individual Account derived from Employer Contributions at
the time of his or her Termination of Employment; or
(B) upon returning to service, the number of consecutive Breaks in
Vesting Service is less than his or her number of Years of
Vesting Service before such breaks.
Separate subaccounts will be maintained for the Participant's prebreak
and postbreak portions of his or her Individual Account derived from
Employer Contributions. Both subaccounts will share in the gains and
losses of the Fund.
Years of Vesting Service shall not include any period of time excluded
from Years of Vesting Service in the Adoption Agreement.
In the event the Plan Year is changed to a new 12-month period,
Employees shall receive credit for Years of Vesting Service, in
accordance with the preceding provisions of this definition, for each
of the Plan Years (the old and new Plan Years) which overlap as a
result of such change.
SECTION TWO ELIGIBILITY AND PARTICIPATION
2.01 ELIGIBILITY TO PARTICIPATE
Each Employee of the Employer, except those Employees who belong to a
class of Employees which is excluded from participation as indicated in
the Adoption Agreement, shall be eligible to participate in this Plan
upon the satisfaction of the age and Years of Eligibility Service
requirements specified in the Adoption Agreement.
2.02 PLAN ENTRY
A. If this Plan is a replacement of a Prior Plan by amendment or
restatement, each Employee of the Employer who was a
Participant in said Prior Plan before the Effective Date shall
continue to be a Participant in this Plan.
B. An Employee will become a Participant in the Plan as of the
Effective Date if the Employee has met the eligibility
requirements of Section 2.01 as of such date. After the
Effective Date, each Employee shall become a Participant on
the first Entry Date following the date the Employee satisfies
the eligibility requirements of Section 2.01 unless otherwise
indicated in the Adoption Agreement.
C. The Plan Administrator shall notify each Employee who becomes
eligible to be a Participant under this Plan and shall furnish
the Employee with the application form, enrollment forms or
other documents which are required of Participants. The
eligible Employee shall execute such forms or documents and
make available such information as may be required in the
administration of the Plan.
2.03 TRANSFER TO OR FROM INELIGIBLE CLASS
If an Employee who had been a Participant becomes ineligible to
participate because he or she is no longer a member of an eligible
class of Employees, but has not incurred a Break in Eligibility
Service, such Employee shall participate immediately upon his or her
return to an eligible class of Employees. If such Employee incurs a
Break in Eligibility Service, his or her eligibility to participate
shall be determined by Section 2.04.
An Employee who is not a member of the eligible class of Employees will
become a Participant immediately upon becoming a member of the eligible
class provided such Employee has satisfied the age and Years of
Eligibility Service requirements. If such Employee has not satisfied
the age and Years of Eligibility Service requirements as of the date he
or she becomes a member of the eligible class, such Employee shall
become a Participant on the first Entry Date following the date he or
she satisfies those requirements unless other-wise indicated in the
Adoption Agreement.
46
8
2.04 RETURN AS A PARTICIPANT AFTER BREAK IN ELIGIBILITY SERVICE
A. Employee Not Participant Before Break - If an Employee incurs
a Break in Eligibility Service before satisfying the Plan's
eligibility requirements, such Employee's Years of Eligibility
Service before such Break in Eligibility Service will not be
taken into account.
B. Nonvested Participants - In the case of a Participant who does
not have a Vested interest in his or her Individual Account
derived from Employer Contributions, Years of Eligibility
Service before a period of consecutive Breaks in Eligibility
Service will not be taken into account for eligibility
purposes if the number of consecutive Breaks in Eligibility
Service in such period equals or exceeds the greater of 5 or
the aggregate number of Years of Eligibility Service before
such break. Such aggregate number of Years of Eligibility
Service will not include any Years of Eligibility Service
disregarded under the preceding sentence by reason of prior
breaks.
If a Participant's Years of Eligibility Service are
disregarded pursuant to the preceding paragraph, such
Participant will be treated as a new Employee for eligibility
purposes- If a Participant's Years of Eligibility Service may
not be disregarded pursuant to the preceding paragraph, such
Participant shall continue to participate in the Plan, or, if
terminated, shall participate immediately upon reemployment.
C. Vested Participants - A Participant who has sustained a Break
in Eligibility Service and who had a Vested interest in all or
a portion of his or her Individual Account derived from
Employer Contributions shall continue to participate in the
Plan, or, if terminated, shall participate immediately upon
reemployment.
2.05 DETERMINATIONS UNDER THIS SECTION
The Plan Administrator shall determine the eligibility of each Employee
to be a Participant. This determination shall be conclusive and binding
upon all persons except as otherwise provided herein or by law.
2.06 TERMS OF EMPLOYMENT
Neither the fact of the establishment of the Plan nor the fact that a
common law Employee has become a Participant shall give to that common
law Employee any right to continued employment; nor shall either fact
limit the right of the Employer to discharge or to deal otherwise with
a common law Employee without regard to the effect such treatment may
have upon the Employee's rights under the Plan.
2.07 SPECIAL RULES WHERE ELAPSED TIME METHOD IS BEING USED
This Section 2.07 shall apply where the Employer has indicated in the
Adoption Agreement that the elapsed time method will be used. When this
Section applies, the definitions of year of service, break in service
and hour of service in this Section will replace the definitions of
Year of Eligibility Service,Year of Vesting Service, Break in
Eligibility Service, Break in Vesting Service and Hours of Service
found in the Definitions Section of the Plan (Section One).
For purposes of determining an Employee's initial or continued
eligibility to participate in the Plan or the Vested interest in the
Participant's Individual Account balance derived from Employer
Contributions, (except for periods of service which may be disregarded
on account of the "nile of parity" described in Sections 1.50 and 2.04)
an Employee will receive credit for the aggregate of all time period(s)
commencing with the Employee's first day of employment or reemployment
and ending on the date a break in service begins. The first day of
employment or reemployment is the first day the Employee performs an
hour of service. An Employee will also receive credit for any period of
severance of less than 12 consecutive months. Fractional periods of a
year will be expressed in terms of days. '
For purposes of this Section, hour of service will mean each hour for
which an Employee is paid or entitled to payment for the performance of
duties for the Employer. Break in service is a period of severance of
at least 12 consecutive months. Period of severance is a continuous
period of time during which the Employee is not employed by the
Employer, Such period 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 was otherwise first absent from service.
In the case of an individual 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, break in service. 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 the
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.
Each Employee will share in Employer Contributions for the period
beginning on the date the Employee commences participation under the
Plan and ending on the date on which such Employee xxxxxx employment
with the Employer or is no longer a member of an eligible class of
Employees.
If the Employer is a member of an affiliated service group (under
Section 414(m) of the Code), a controlled group of corporations under
Section 414(b) of the Code), a group of trades or businesses under
common control (under Section 414(c) of the Code), or any other entity
required to be aggregated with the Employer pursuant to Section 414(o)
of the Code, service will be credited for any employment for any period
of time for any other member of such group. Service will also be
credited for any individual required under Section 414(n) or Section
414(o) to be considered an Employee of any Employer aggregated under
Section 414(b), (c), or (m) of the Code.
47
9
2.08 ELECTION NOT TO PARTICIPATE
This Section 2.08 will apply if this Plan is a nonstandardized plan and
the Adoption Agreement so provides. If this Section applies, then an
Employee or a Participant may elect not to participate in the Plan for
one or more Plan Years. The Employer may not contribute for an Employee
or Participant for any Plan Year during which such Employee's or
Participant's election not to participate is in effect. Any election
not to participate must be in writing and filed with the Plan
Administrator.
The Plan Administrator shall establish such uniform and
nondiscriminatory rules as it deems necessary or advisable to carry out
the terms of this Section, including, but not limited to, rules
prescribing the timing of the filing of elections not to participate
and the procedures for electing to re-participate in the Plan.
An Employee or Participant continues to earn credit for vesting and
eligibility purposes for each Year of Vesting Service or Year of
Eligibility Service he or she completes and his or her Individual
Account (if any) will share in the gains or losses of the Fund during
the periods he or she elects not to participate.
SECTION THREE CONTRIBUTIONS
3.01 EMPLOYER CONTRIBUTIONS
A. Obligation to Contribute. The Employer shall make
contributions to the Plan in accordance with the contribution
formula specified in the Adoption Agreement. if this Plan is a
profit sharing plan, the Employer shall, in its sole
discretion, make contributions without regard to current or
accumulated earnings or profits.
B. Allocation Formula and the Right to Share in the Employer
Contribution
1. General - The Employer Contribution for any Plan Year
will be allocated or contributed to the Individual
Accounts of Qualifying Participants in accordance
with the allocation or contribution formula specified
in the Adoption Agreement. The Employer Contribution
for any Plan Year will be allocated to each
Participant's Individual Account as of the last day
of that Plan Year.
Any Employer Contribution for a Plan Year must
satisfy Section 401(a)(4) and the regulations
thereunder for such Plan Year.
2. Qualifying Participants - A Participant is a
Qualifying Participant and is entitled to share in
the Employer Contribution for any Plan Year if the
Participant was a Participant on at least one day
during the Plan Year and satisfies any additional
conditions specified in the Adoption Agreement. If
this Plan is a standardized plan, unless the Employer
specifies more favorable conditions in the Adoption
Agreement, a Participant will not be a qualifying
Participant for a Plan Year if he or she incurs a
Termination of Employment during such Plan Year with
not more than 500 Hours of Service if he or she is
not an Employee on the last day of the Plan Year. The
determination of whether a Participant is entitled to
share in the Employer Contribution shall be made as
of the last day of each Plan Year.
3. Special Rules for Integrated Plans - This Plan may
not allocate contributions based on an integrated
formula if the Employer maintains any other plan that
provides for allocation of contributions based on an
integrated formula that benefits any of the same'
Participants. If the Employer has selected the
integrated contribution or allocation formula in the
Adoption Agreement, then the maximum disparity rate
shall be determined in accordance with the following
table.
MAXIMUM DISPARITY RATE
Top-Heavy Nonstandardized and
Integration Level Money Purchase Profit Sharing Non-Top-Heavy Profit Sharing
Taxable Wage Base (TWB) 5.7% 2.7% 5.7%
More than $0 but not more
than 20% of TWB 5.7% 2.7% 5.7%
More than 20% of TWB but
not more than 80% of TWB 4.3% 1.3% 4.3%
More than 80% of TWB but
not more than TWB 5.4% 2.4% 5.4%
48
10
C. Allocation of Forfeitures - Forfeitures for a Plan Year which
arise as a result of the application of Section 6.01(D) shall
be allocated as follows:
1. Profit Sharing Plan - If thus is a profit sharing
plan, unless the Adoption Agreement indicates
otherwise, Forfeitures shall be allocated in the
manner provided in Section 3.01(B) (for Employer
Contributions) to the Individual Accounts of
Qualifying Participants who are entitled to share in
the Employer Contribution for such Plan Year.
Forfeitures shall be allocated as of the last day of
the Plan Year during which the Forfeiture arose (or
any subsequent Plan Year if indicated in the Adoption
Agreement).
2. Money Purchase Pension and Target Benefit Plan - If
this Plan is a money purchase plan or a target
benefit plan, unless the Adoption Agreement indicates
otherwise, Forfeitures shall be applied towards the
reduction of Employer Contributions to the Plan.
Forfeitures shall be allocated as of the last day of
the Plan Year during which the Forfeiture arose (or
any subsequent Plan Year if indicated in the Adoption
Agreement).
D. Timing of Employer Contribution - The Employer Contribution
for each Plan Year shall be delivered to the Trustee (or
Custodian, if applicable) not later than the due date for
filing the Employer's income tax return for its fiscal year in
which the Plan Year ends, including extensions thereof.
E. Minimum Allocation for Top-Heavy Plans - The contribution and
allocation provisions of this Section 3.010 shall apply for
any Plan Year with respect to which this Plan is a Top-Heavy
Plan.
1. Except as otherwise provided in (3) and (4) below,
the Employer Contributions and Forfeitures allocated
on behalf of any Participant who is not a Key
Employee shall not be less than the lesser of 3% of
such Participant's Compensation or (in the case where
the Employer has no defined benefit plan which
designates this Plan to satisfy Section 401 of the
Code) the largest percentage of Employer
Contributions and Forfeitures, as a percentage of the
first $200,000 ($150,000 for Plan Years beginning
after December 31, 1993), (increased by any cost of
living adjustment made by the Secretary of Treasury
or the Secretary's delegate) of the Key Employee's
Compensation, allocated on behalf of any Key Employee
for that year. The minimum allocation is determined
without regard to any Social Security contribution.
The Employer may, in the Adoption Agreement, limit
the Participants who are entitled to receive the
minimum allocation. This minimum allocation shall be
made even though under other Plan provisions, the
Participant would not otherwise be entitled to
receive an allocation, or would have received a
lesser allocation for the year because of (a) the
Participant's failure to complete 1,000 Hours of
Service (or any equivalent provided in the Plan), or
(b) the Participant's failure to make mandatory
Nondeductible Employee Contributions to the Plan, or
(c) Compensation less than a stated amount.
2. For purposes of computing the minimum allocation,
Compensation shall mean Compensation as defined in
Section 1.07 of the Plan and shall include any
amounts contributed by the Employer pursuant to a
salary reduction agreement and which is not
includible in the gross income of the Employee under
Sections 125, 402(e)(3), 402(h)(1)(B) or 403(b) of
the Code even if the Employer has elected to exclude
such contributions in the definition of Compensation
used for other purposes under the Plan.
3. The provision in (1) above shall not apply to any
Participant who was not employed by the Employer on
the last day of the Plan Year.
4. The provision in (1) above shall not apply to any
Participant to the extent the Participant is covered
under any other plan or plans of the Employer and the
Employer has provided in the adoption agreement that
the minimum allocation or benefit requirement
applicable to Top-Heavy Plans will be met in the
other plan or plans.
5. The minimum allocation required under this Section
3.01(E) and Section 3.01(F)(1) (to the extent
required to be nonforfeitable under Code Section
416(b)) may not be forfeited under Code Section
411(a)(3)(B) or 411(a)(3)(D).
F. Special Requirements for Paired Plans -The Employer maintains
paired plans if the Employer has adopted both a standardized
profit sharing plan and a standardized money purchase pension
plan using this Basic Plan Document.
1. Minimum Allocation -When the paired plans are
top-heavy, the top-heavy requirements set forth in
Section 3.01(E)(1) of the Plan shall apply.
a. Same eligibility requirements. In satisfying
the top-heavy minimum allocation
requirements set forth in Section 3.01(E) of
the Plan, if the Employees benefiting under
each of the paired plans are identical, the
top-heavy minimum allocation shall be made
to the money purchase pension plan.
b. Different eligibility requirements. In
satisfying the top-heavy minimum allocation
requirements set forth in Section 3.01(E) of
the Plan, if the Employees benefiting under
each of the paired plans are not identical,
the top-heavy minimum allocation will be
made to both of the paired plans.
49
11
A Participant is treated as benefiting under
the Plan for any Plan Year during which the
Participant received or is deemed to receive
an allocation in accordance with Section
1.410(b)-3(a)-
2. Only One Plan Can Be Integrated -If the Employer
maintains paired plans, only one of the Plans may
provide for the disparity in contributions which is
permitted under Section 4010) of the Code. In the
event that both Adoption Agreements provide for such
integration, only the money purchase pension plan
shall be deemed to be integrated.
G. Return of the Employer Contribution to the Employer Under
Special Circumstances. Any contribution made by the Employer
because of a mistake of fact must be returned to the Employer
within one year of the contribution.
In the event that the Commissioner of Internal Revenue
determines that the Plan is not initially qualified under the
Code, any contributions made incident to that initial
qualification by the Employer must be returned to the Employer
within one year after the date the initial qualification is
denied, but only if the application for 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.
In the event that a contribution made by the Employer under
this Plan is conditioned on deductibility and is not
deductible under Code Section 404, the contribution, to the
extent of the amount disallowed, must be returned to the
Employer within one year after the deduction is disallowed.
X. Xxxxxxxx of Participant
1. If the Plan is a money purchase plan or a
target benefit plan and, if in any Plan
Year, any Employee who should be included as
a Participant is erroneously omitted and
discovery of such omission is not made until
after a contribution by the Employer for the
year has been made and allocated, the
Employer shall make a subsequent
contribution to include earnings thereon,
with respect to the omitted Employee in the
amount which the Employer would have
contributed with respect to that Employee
had he or she not been omitted.
2. If the Plan is a profit sharing plan, and if
in any Plan Year, any Employee who should be
included as a Participant is erroneously
omitted and discovery of such omission is
not made until after the Employer
Contribution has been made and allocated,
then the Plan Administrator must re-do the
allocation (if a correction can be made) and
inform the Employee. Alternatively, the
Employer may choose to contribute for the
omitted Employee the amount to include
earnings thereon, which the Employer would
have contributed for the Employee.
3.02 NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS
This Plan will not accept Nondeductible Employee Contributions and
matching contributions for Plan Years beginning after the Plan Year in
which this Plan is adopted by Employer. Nondeductible Employee
Contributions for Plan Years beginning after December 31, 1986,
together with any matching contributions as defined in Section 401(m)
of the Code, will be limited so as to meet the nondiscrimination test
of Section 401(m) of the Code.
A separate account will be maintained by the Plan Administrator for the
Nondeductible Employee Contributions of each Participant.
A Participant may, upon a written request submitted to the Plan
Administrator withdraw the lesser of the portion of his or her
Individual Account attributable to his or her Nondeductible Employee
Contributions or the amount he or she contributed as Nondeductible
Employee Contributions.
Nondeductible Employee Contributions and earnings thereon will be
nonforfeitable at all times. No Forfeiture will occur solely as a
result of an Employee's withdrawal of Nondeductible Employee
Contributions
The Plan Administrator will not accept deductible employee
contributions which are made for a taxable year beginning after
December 31, 1986. Contributions made prior to that date will be
maintained in a separate account which will be nonforfeitable at all
times. The account will share in the gains and losses of the Fund in
the same mariner as described in Section 4.03 of the Plan. No part of
the deductible employee contribution account will be used to purchase
life insurance. Subject to Section 6.05, joint and survivor annuity
requirements (if applicable), the Participant may withdraw any part of
the deductible employee contribution account by making a written
application to the Plan Administrator.
3.03 ROLLOVER CONTRIBUTIONS
If so indicated in the Adoption Agreement, an Employee may contribute a
rollover contribution to the Plan. The Plan Administrator may require
the Employee to submit a written certification that the contribution
qualifies as a rollover contribution under the applicable provisions of
the Code. If it is later determined that all or part of a rollover
contribution was ineligible to be rolled into the Plan, the Plan
Administrator shall direct that any ineligible amounts, plus earnings
attributable thereto, be distributed from the Plan to the Employee as
soon as administratively feasible.
50
12
A separate account shall be maintained by the Plan Administrator for
each Employee's rollover contributions which will be nonforfeitable at
all times. Such account will share in the income and gains and losses
of the Fund in the manner described in Section 4.03 and shall be
subject to the Plan's provisions governing distributions.
The Employer may, in a uniform and nondiscriminatory manner, only allow
Employees who have become Participants in the Plan to make rollover
contributions.
3.04 TRANSFER CONTRIBUTIONS
If so indicated in the Adoption Agreement, the Trustee (or Custodian,
if applicable) may receive any amounts transferred to it from the
trustee or custodian of another plan qualified under Code Section
401(a). If it is later determined that all or part of a transfer
contribution was ineligible to be transferred into the Plan, the Plan
Administrator shall direct that any ineligible amounts, plus earnings
attributable thereto, be distributed from the Plan to the Employee as
soon as administratively feasible.
A separate account shall be maintained by the Plan Administrator for
each Employee's transfer contributions which will be nonforfeitable at
all times. Such account will share in the income and gains and losses
of the Fund in the manner described in Section 4.03 and shall be
subject to the Plan's provisions governing distributions.
The Employer may, in a uniform and nondiscriminatory manner, only allow
Employees who have become Participants in the Plan to make transfer
contributions.
3.05 LIMITATION ON ALLOCATIONS
A. If the Participant does not participate in, and has never
participated in another qualified plan maintained by the
Employer or a welfare benefit fund, as defined in Section
419(e) of the Code maintained by the Employer, or an
individual medical account, as defined in Section 4150)(2) of
the Code, or a simplified employee pension plan, as defined in
Section 408(k) of the Code, maintained by the Employer, which
provides an annual addition as defined in Section 3.08(E)(1),
the following rules shall apply.
1. The amount of annual additions which may be credited
to the Participant's Individual Account for any
limitation year will not exceed the lesser of the
maximum permissible amount or any other limitation
contained in this Plan. If the Employer Contribution
that would otherwise be contributed or allotted to
the Participant's Individual Account would cause the
annual additions for the limitation year to exceed
the maximum permissible amount, the amount
contributed or allocated will be reduced so that the
annual additions for the limitation year will equal
the maximum permissible amount.
2. Prior to determining the Participant's actual
Compensation for the limitation year, the Employer
may determine the maximum permissible amount for a
Participant on the basis of a reasonable estimation
of the Participant's Compensation for the limitation
year, uniformly determined for all Participants
similarly situated.
3. As soon as is administratively feasible after the end
of the limitation year, the maximum permissible
amount for the limitation year will be determined on
the basis of the Participant's actual Compensation
for the limitation year.
4. If pursuant to Section 3.05(A)(3) or as a result of
the allocation of Forfeitures there is an excess
amount, the excess will be disposed of as follows:
a. Any Nondeductible Employee Contributions, to
the extent they would reduce the excess
amount, will be returned to the Participant.
b. If after the application of paragraph (a) an
excess amount still exists, and the
Participant is covered by the Plan at the
end of the limitation year, the excess
amount in the Participant's Individual
Account will be used to reduce Employer
Contributions (including any allocation of
Forfeitures) for such Participant in the
next limitation year, and each succeeding
limitation year if necessary;
c. If after the application of paragraph (b) an
excess amount still exists, and the
Participant is not covered by the Plan at
the end of a limitation year, the excess
amount will be held unallocated in a
suspense account. The suspense account will
be applied to reduce future Employer
Contributions (including allocation of any
Forfeitures) for all remaining Participants
in the next limitation year, and each
succeeding limitation year if necessary;
d. If a suspense account is in existence at any
time during a limitation year pursuant to
this Section, it will not participate in the
allocation of the Fund's investment gains
and losses. If a suspense account is in
existence at any time during a particular
limitation year, all amounts in the suspense
account must be allocated and reallocated to
Participants' Individual Accounts before any
Employer Contributions or any Nondeductible
Employee Contributions may be made to the
Plan for that limitation year. Excess
amounts may not be distributed to
Participants or former Participants.
51
13
B. If, in addition to this Plan, the Participant is covered under
another qualified master or prototype defined contribution
plan maintained by the Employer, a welfare benefit fund
maintained by the Employer, an individual medical account
maintained by the Employer, or a simplified employee pension
maintained by the Employer that provides an annual addition as
defined in Section 3.05(E)(1), during any limitation year, the
following rules apply:
1. The annual additions which may be credited to a
Participant's individual Account under this Plan for
any such limitation year will not exceed the maximum
permissible amount reduced by the annual additions
credited to a Participant's Individual Account under
the other qualified master or prototype plans,
welfare benefit funds, individual medical accounts
and simplified employee pensions for the same
limitation year. If the annual additions with respect
to the Participant under other qualified master or
prototype defined contribution plans, welfare benefit
funds, individual medical accounts and simplified
employee pensions maintained by the Employer are less
than the maximum permissible amount and the Employer
contribution that would otherwise be contributed or
allocated to the Participant's Individual Account
under this Plan would cause the annual additions for
the limitation year to exceed this limitation, the
amount contributed or allocated will be reduced so
that the annual additions under all such plans and
funds for the limitation year will equal the maximum
permissible amount. If the annual additions with
respect to the Participant under such other qualified
master or prototype defined Contribution plans,
welfare benefit funds, individual medical accounts
and simplified employee pensions in the aggregate are
equal to or greater than the maximum permissible
amount, no amount will be contributed or allocated to
the Participant's Individual Account under this Plan
for the limitation year.
2. Prior to determining the Participant's actual
Compensation for the limitation year, the Employer
may determine the maximum permissible amount for a
Participant in the manner described in Section
3.05(A)(2).
3. As soon as is administratively feasible after the end
of the limitation year, the maximum permissible
amount for the limitation year will be determined on
the basis of the Participant's actual Compensation
for the limitation year.
4. If, pursuant to Section 3-05(B)(3) or as a result of
the allocation of Forfeitures a Participant's annual
additions under this Plan and such other plans would
result in an excess amount for a limitation year, the
excess amount will be deemed to consist of the annual
additions last allocated, except that annual
additions attributable to a simplified employee
pension 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.
5. If an excess amount was allocated to a Participant on
an allocation date of this Plan which coincides with
an allocation date of another plan, the excess amount
attributed to this Plan will be the product of,
a. the total excess amount allocated as of such
date, times
b. the ratio of W the annual additions
allocated to the Participant for the
limitation year as of such date under this
Plan to (h) the total annual additions
allocated to the Participant for the
limitation year as of such date under this
and all the other qualified prototype
defined contribution plans.
6. Any excess amount attributed to this Plan will be
disposed in the manner described in Section
3.05(A)(4).
C. If the Participant is covered under another qualified defined
contribution plan maintained by the Employer which is not a
master or prototype plan, annual additions which may be
credited to the Participant's Individual Account under this
Plan for any limitation year will be limited in accordance
with Sections 3.05(B)(1) through 3.05(B)(6) as though the
other plan were a master or prototype plan unless the Employer
provides other limitations in the Section of the Adoption
Agreement titled "Limitation on Allocation - More Than One
Plan."
D. If the Employer maintains, or at any time maintained, a
qualified defined benefit 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. The annual additions which
may be credited to the Participant's Individual Account under
this Plan for any limitation year %ill be limited in
accordance with the Section of the Adoption Agreement titled
"limitation on Allocation - More Than One Plan."
E. The following terms shall have the following meanings when
used in this Section 3.05:
1. Annual additions: The sum of the following amounts
credited to a Participant's Individual Account for
the limitation year:
a. Employer Contributions,
b. Nondeductible Employee Contributions,
52
14
c. Forfeitures,
d. amounts allocated, after March 31, 1984, to
an individual medical account, as defined in
Section 415(1)(2) of the Code, which is part
of a pension or annuity plan maintained by
the Employer are treated as annual additions
to a defined contribution plan. Also amounts
derived from contributions paid or accrued
after December 31, 1985, in taxable years
ending after such date, which are
attributable to post-retirement medical
benefits, allocated to the separate account
of a key employee, as defined in Section
419A(d)(3) of the Code, under a welfare
benefit fund, as defined in Section 419(e)
of the Code, maintained by the Employer are
treated as annual additions to a defined
contribution plan, and
e. allocations under a simplified employee
pension.
For this purpose, any excess amount applied under
Section 3.05(A)(4) or 3-05(B)(6) in the limitation
year to reduce Employer Contributions will be
considered annual additions for such limitation year.
2. Compensation: Means Compensation as defined in
Section 1.07 of the Plan except that Compensation for
purposes of this Section 3.03 shall not include any
amounts contributed by the Employer pursuant to a
salary reduction agreement and which is not
includible in the gross income of the Employee under
Sections 125, 402(e)(3), 402(h)(1)(B) or 403(b) of
the Code even if the Employer has elected to include
such contributions in the definition of Compensation
used for other purposes under the Plan. Further, any
other exclusion the Employer has elected (such as the
exclusion of certain types of pay or pay earned
before the Employee enters the Plan) will not apply
for purposes of thus Section.
Notwithstanding the preceding sentence, Compensation
for a Participant in a defined contribution plan who
is permanently and totally disabled (as defined in
Section 22(e)(3) of the Code) is the Compensation
such Participant would have received for the
limitation year if the Participant had been paid at
the rate of Compensation paid immediately before
becoming permanently and totally disabled; such
imputed Compensation for the disabled Participant may
be taken into account only if the Participant is not
a Highly Compensated Employee (as defined in Section
414(q) of the Code) and contributions made on behalf
of such Participant are nonforfeitable when made.
3. Defined benefit fraction: A fraction, the numerator
of which is the sum of the Participant's projected
annual benefits under all the defined benefit plans
(whether or not terminated) maintained by the
Employer, and the denominator of which is the lesser
of 125% of the dollar limitation determined for the
limitation year under Section 415(b) and (d) of the
Code or 140% of the highest average compensation,
including any adjustments under Section 415(b) of the
Code.
Notwithstanding the above, if the Participant was a
Participant as of the first day of the first
limitation year beginning after December 31, 1986, in
one or more defined benefit plans maintained by the
Employer which were in existence on May 6, 1986, the
denominator of this fraction will not be less than
125% of the sum of the annual benefits under such
plans which the Participant had accrued as of the
close of the last limitation year beginning before
January 1, 1987, disregarding any changes in the
terms and conditions of the plan after May 5, 1986.
The preceding sentence applies only if the defined
benefit plans individually and in the aggregate
satisfied the requirements of Section 415 of the Code
for all limitation years beginning before January 1,
1987.
4. Defined contribution dollar limitation: $30,000 or if
greater, one-fourth of the defined benefit dollar
limitation set forth in Section 415(b)(1) of the Code
as in effect for the limitation year.
5. Defined contribution fraction: A fraction, the
numerator of which is the sum of the annual additions
to the Participant's account under all the defined
contribution plans (whether or not terminated)
maintained by the Employer for the current and all
prior limitation years (including the annual
additions attributable to the Participant's
nondeductible employee contributions to all defined
benefit plans, whether or not terminated, maintained
by the Employer, and the annual additions
attributable to all welfare benefit funds, as defined
in Section 419(e) of the Code, individual medical
accounts, and simplified employee pensions,
maintained by the Employer), and the denominator of
which is the sum of the maximum aggregate amounts for
the current and all prior limitation years of service
With the Employer (regardless of whether a defined
contribution plan was maintained by the Employer).
The maximum aggregate amount in any limitation year
is the lesser of 125% of the dollar limitation
determined under Section 415(b) and (d) of the Code
in effect under Section 415(c)(1)(A) of the Code or
35% of the Participant's Compensation for such year.
If the Employee was a Participant as of the end of
the first day of the first limitation year beginning
after December 31, 1986, in one or more defined
contribution plans maintained by the Employer which
were in existence on May 6,1986, the numerator of
this fraction Will be adjusted if the sum of this
fraction and the defined benefit fraction would
otherwise exceed 1.0 under the terms of this Plan.
Under the adjustment, an amount equal to the product
of (1) the excess of the sum of the fractions over
1.0 times (2) the denominator of this fraction, will
be permanently subtracted from the numerator of this
fraction. The adjustment is calculated using the
fractions as they would be computed as of the end of
the last limitation year beginning before January 1,
1987, and disregarding any changes in the terms and
conditions of the Plan made after May 5, 1986, but
using the Section 415 limitation applicable to the
first limitation year beginning on or after January
1, 1987.
The annual addition for any limitation year beginning
before January 1, 1987, shall not be recomputed to
treat all Nondeductible Employee Contributions as
annual additions.
53
15
6. Employer. For purposes of this Section 3.05, Employer
shall mean the Employer that adopts this Plan, and
all members of a controlled group of corporations (as
defined in Section 414(b) of the Code as modified by
Section 415(h)), all commonly controlled trades or
businesses (as defined in Section 414(c) as modified
by Section 415(h)) or affiliated service groups (as
defined in Section 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 Section 414(o) of the Code.
7. Excess amount: The excess of the Participant's annual
additions for the limitation year over the maximum
permissible amount.
8. Highest average compensation: The average
compensation for the three consecutive years of
service with the Employer that produces the highest
average.
9. Limitation year: A calendar year, or the
12-consecutive month period elected by the Employer
in the Adoption Agreement All qualified plans
maintained by the Employer must use the same
limitation year. If the limitation year is amended to
a different 12-consecutive month period, the new
limitation year must begin on a date within the
limitation year in which the amendment is made.
10. Master or prototype plan: A plan the form of which is
the subject of a favorable opinion letter from the
Internal Revenue Service.
11. Maximum permissible amount: The maximum annual
addition that may be contributed or allocated to a
Participant's Individual Account under the Plan for
any limitation year shall not exceed the lesser of:
a. the defined contribution dollar limitation,
or
The compensation limitation referred to in
(b) shall not apply to any contribution for
medical benefits (within the meaning of
Section 401(h) or Section 419A(f)(2) of the
Code) which is otherwise treated as an
annual addition under Section 4150)(1) or
419A(d)(2) of the Code.
If a short limitation year is created
because of an amendment changing the
limitation year to a different
12-consecutive month period, the maximum
permissible amount will not exceed the
defined contribution dollar limitation
multiplied by the following fraction:
Number of months in the short
limitation year
-----------------------------
12
12. 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:
a. the Participant will continue
employment until Normal Retirement
Age under the Plan (or current age,
if later), and
b. the Participant's 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.
Straight life annuity means an
annuity payable in equal
installments for the life of the
Participant that terminates upon the
Participant's death.
SECTION FOUR INDIVIDUAL ACCOUNTS OF PARTICIPANTS AND VALUATION
4.01 INDIVIDUAL ACCOUNTS
A. The Plan Administrator shall establish and maintain an
Individual Account in the name of each Participant to reflect
the total value of his or her interest in the Fund. Each
Individual Account established hereunder shall consist of such
subaccounts as may be needed for each Participant including:
1. a subaccount to reflect Employer Contributions and
Forfeitures allocated on behalf of a Participant;
2. a subaccount to reflect a Participant's rollover
contributions;
3. a subaccount to reflect a Participant's transfer
contributions;
4. a subaccount to reflect a Participant's Nondeductible
Employee Contributions; and
5. a subaccount to reflect a Participant's deductible
employee contributions.
54
16
B. The Plan Administrator may establish additional accounts as it
may deem necessary for the proper administration of the Plan,
including, but not limited to, a suspense account for
Forfeitures as required pursuant to Section 6.01(D).
4.02 VALUATION OF FUND
The Fund will be valued each Valuation Date at fair market value.
4.03 VALUATION OF INDIVIDUAL ACCOUNTS
A. Where all or a portion of the assets of a Participant's
Individual Account are invested in a Separate Fund for the
Participant, then the value of that portion of such
Participant's Individual Account at any relevant time equals
the sum of the fair market values of the assets in such
Separate Fund, less any applicable charges or penalties.
B. The fair market value of the remainder of each Individual
Account is determined in the following manner:
1. First, the portion of the Individual Account invested
in each Investment Fund as of the previous Valuation
Date is determined. Each such portion is reduced by
any withdrawal made from the applicable Investment
Fund to or for the benefit of a Participant or the
Participant's Beneficiary, further reduced by any
amounts forfeited by the Participant pursuant to
Section 6.01 (D) and further reduced by any transfer
to another Investment Fund since the previous
Valuation Date and is increased by any amount
transferred from another Investment Fund since the
previous Valuation Date. The resulting amounts are
the net Individual Account portions invested in the
Investment Funds.
2. Secondly, the net Individual Account portions
invested in each Investment Fund are adjusted upwards
or downwards, pro rata (i.e., ratio of each net
Individual Account portion to the sum of all net
Individual Account portions) so that the sum of all
the net Individual Account portions invested in an
Investment Fund will equal the then fair market value
of the Investment Fund. Notwithstanding the previous
sentence, for the first Plan Year only, the net
Individual Account portions shall be the sum of all
contributions made to each Participant's Individual
Account during the first Plan Year.
3. Thirdly, any contributions to the Plan and
Forfeitures are allocated in accordance with the
appropriate allocation provisions of Section 3. For
purposes of Section 4, contributions made by the
Employer for any Plan Year but after that Plan Year
will be considered to have been made on the last day
of that Plan Year regardless of when paid to the
Trustee (or Custodian, if applicable).
Amounts contributed between Valuation Dates will not
be credited with investment gains or losses until the
next following Valuation Date.
4. Finally, the portions of the Individual Account
invested in each Investment Fund (determined in
accordance with (1), (2) and (3) above) are added
together.
4.0.4 MODIFICATION OF METHOD FOR VALUING INDIVIDUAL ACCOUNTS
If necessary or appropriate, the Plan Administrator may establish
different or additional procedures (which shall be uniform and
nondiscriminatory) for determining the fair market value of the
Individual Accounts.
4.05 SEGREGATION OF ASSETS
If a Participant elects a mode of distribution other than a lump sum,
the Plan Administrator may place that Participant's account balance
into a segregated Investment Fund for the purpose of maintaining the
necessary liquidity to provide benefit installments on a periodic
basis.
4.06 STATEMENT OF INDIVIDUAL ACCOUNTS
No later than 270 days after the close of each Plan Year, the Plan
Administrator shall furnish a statement to each Participant indicating
the Individual Account balances of such Participant as of the last
Valuation Date in such Plan Year.
SECTION FIVE TRUSTEE OR CUSTODIAN
5.01 CREATION OF FUND
By adopting this Plan, the Employer establishes the Fund which shall
consist of the assets of the Plan held by the Trustee (or Custodian, if
applicable) pursuant to this Section 5. Assets within the Fund may be
pooled on behalf of all Participants, earmarked on behalf of each
Participant or be a combination of pooled and earmarked. To the extent
that assets are earmarked for a particular Participant, they will be
held in a Separate Fund for that Participant.
55
17
No part of the corpus or income of the Fund may be used for, or
diverted to, purposes other than for the exclusive benefit of
Participants or their Beneficiaries.
5.02 INVESTMENT AUTHORITY
Except as provided in Section 5.14 (relating to individual direction of
investments by Participants), the Employer, not the Trustee (or
Custodian, if applicable), shall have exclusive management and control
over the investment of the Fund into any permitted investment.
Notwithstanding the preceding sentence, a Trustee may make an agreement
with the Employer whereby the Trustee will manage the investment of all
or a portion of the Fund. Any such agreement shall be in writing and
set forth such matters as the Trustee deems necessary or desirable.
5.03 FINANCIAL ORGANIZATION CUSTODIAN OR TRUSTEE WITHOUT FULL TRUST POWERS
This Section 5.03 applies where a financial organization has indicated
in the Adoption Agreement that it will serve, with respect to this
Plan, as Custodian or as Trustee without full trust powers (under
applicable law). Hereinafter, a financial organization Trustee without
full trust powers (under applicable law) shall be referred to as a
Custodian. The Custodian shall have no discretionary authority with
respect to the management of the Plan or the Fund but will act only as
directed by the entity who has such authority.
A. Permissible Investments - The assets of the Plan shall be
invested only in those investments which are available through
the Custodian in the ordinary course of business which the
Custodian may legally hold in a qualified plan and which the
Custodian chooses to make available to Employers for qualified
plan investments. Notwithstanding the preceding sentence, the
Prototype Sponsor may, as a condition of making the Plan
available to the Employer, limit the types of property in
which the assets of the Plan may be invested.
B. Responsibilities of the Custodian - The responsibilities of
the Custodian shall be limited to the following:
1. To receive Plan contributions and to hold, invest and
reinvest the Fund without distinction between
principal and interest; provided, however, that
nothing in this Plan shall require the Custodian to
maintain physical custody of stock certificates (or
other indicia of ownership of any type of asset)
representing assets within the Fund;
2. To maintain accurate records of contributions,
earnings, withdrawals and other information the
Custodian deems relevant with respect to the Plan;
3. To make disbursements from the Fund to Participants
or Beneficiaries upon the proper authorization of the
Plan Administrator; and
4. To furnish to the Plan Administrator a statement
which reflects the value of the investments in the
hands of the Custodian as of the end of each Plan
Year and as of an other times as the Custodian and
Plan Administrator may agree.
X. Xxxxxx of the Custodian - Except as otherwise provided in this
Plan, the Custodian shall have the power to take any action
with respect to the Fund which it deems necessary or advisable
to discharge its responsibilities under this Plan including,
but not limited to, the following powers:
1. To invest all or a portion of the Fund (including
idle cash balances) in time deposits, savings
accounts, money market accounts or similar
investments bearing a reasonable rate of interest in
the Custodian's own savings department or the savings
department of another financial organization;
2. To vote upon any stocks, bonds, or other securities;
to give general or special proxies or powers of
attorney with or without power of substitution; to
exercise any conversion privileges or subscription
rights and to make any payments incidental thereto;
to oppose, or to consent to, or other-wise
participate in, corporate reorganizations or other
changes affecting corporate securities, and to pay
any assessment or charges in connection therewith;
and generally to exercise any of the powers of an
owner with respect to stocks, bonds, securities or
other property;
3. To hold securities or other property of the Fund in
its own name, in the name of its nominee or in bearer
form; and
4. To make, execute, acknowledge, and deliver any and
all documents of transfer and conveyance and any and
all other instruments that may be necessary or
appropriate to carry out the powers herein granted.
5.04 FINANCIAL ORGANIZATION TRUSTEE WITH FULL TRUST POWERS AND INDIVIDUAL
TRUSTEE
This Section 5.04 applies where a financial organization has indicated
in the Adoption Agreement that it will serve as Trustee with
full trust powers. This Section also applies where one or more
individuals are named in the Adoption Agreement to serve as Trustee(s).
A. Permissible Investments - The Trustee may invest the assets of
the Plan in property of any character, real or personal,
including, but not limited to the following: stocks, including
shares of open-end investment companies (mutual funds); bonds;
notes; debentures; options; limited partnership interests;
mortgages; real estate or any interests therein; unit
investment trusts; Treasury Bills, and other U.S. Government
obligations; common trust funds, combined investment trusts,
collective trust funds or commingled funds maintained by a
bank or similar financial organization (whether or not the
Trustee hereunder); savings accounts, time deposits or money
market accounts of a bank or similar financial organization
(whether or not the Trustee hereunder); annuity contracts;
life insurance policies; or in such other investments as is
deemed proper without regard to investments authorized by
statute or rule of law governing the investment of trust funds
but with regard to ERISA and this Plan.
56
18
Notwithstanding the preceding sentence, the Prototype Sponsor
may, as a condition of making the Plan available to the
Employer, limit the types of property in which the assets of
the Plan may be invested.
B. Responsibilities of the Trustee - The responsibilities of the
Trustee shall be limited to the following:
1. To receive Plan contributions and to hold, invest and
reinvest the Fund without distinction between
principal and interest; provided, however, that
nothing in this Plan shall require the Trustee to
maintain physical custody of stock certificates (or
other indicia of ownership) representing assets
within the Fund;
2. To maintain accurate records of contributions,
earnings, withdrawals and other information the
Trustee deems relevant with respect to the Plan;
3. To make disbursements from the Fund to Participants
or Beneficiaries upon the proper authorization of the
Plan Administrator; and
4. To furnish to the Plan Administrator a statement
which reflects the value of the investments in the
hands of the Trustee as of the end of each Plan Year
and as of any other times as the Trustee and Plan
Administrator may agree.
X. Xxxxxx of the Trustee - Except as otherwise provided in this
Plan, the Trustee shall have the power to take any action with
respect to the Fund which it deems necessary or advisable to
discharge its responsibilities under this Plan including-, but
not limited to, the following powers:
1. To hold any securities or other property of the Fund
in its own name, in the name of its nominee or in
bearer form;
2. To purchase or subscribe for securities issued, or
real property owned, by the Employer or any trade or
business under common control with the Employer but
only if the prudent investment and diversification
requirements of ERISA are satisfied;
3. To sell, exchange, convey, transfer or otherwise
dispose of any securities or other property held by
the Trustee, by private contract or at public
auction. No person dealing with the Trustee shall be
bound to see to the application of the purchase money
or to inquire into the validity, expediency, or
propriety of any such sale or other disposition, with
or without advertisement;
4. To vote upon any stocks, bonds, or other securities;
to give general or special proxies or powers of
attorney with or without power of substitution; to
exercise any conversion privileges or subscription
rights and to make any payments incidental thereto;
to oppose, or to consent to, or otherwise participate
in, corporate reorganizations or other changes
affecting corporate securities, and to delegate
discretionary powers, and to pay any assessments or
charges in connection therewith; and generally to
exercise any of the powers of an owner with respect
to stocks, bonds, securities or other property;
5. To invest any part or all of the Fund (including idle
cash balances) in certificates of deposit, demand or
time deposits, savings accounts, money market
accounts or similar investments of the Trustee (if
the Trustee is a bank or similar financial
organization), the Prototype Sponsor or any affiliate
of such Trustee or Prototype Sponsor, which bear a
reasonable rate of interest;
6. To provide sweep services without the receipt by the
Trustee of additional compensation or other
consideration (other than reimbursement of direct
expenses properly and actually incurred in the
performance of such services);
7. To hold in the form of cash for distribution or
investment such portion of the Fund as, at any time
and from time-to-time, the Trustee shall deem prudent
and deposit such cash in interest bearing or
noninterest bearing accounts;
8. To make, execute, acknowledge, and deliver any and
all documents of transfer and conveyance and any and
all other instruments that may be necessary or
appropriate to carry out the powers herein granted;
57
19
9. To settle, compromise, or submit to arbitration any
claims, debts, or damages due or owing to or from the
Plan, to commence or defend suits or legal or
administrative proceedings, and to represent the Plan
in all suits and legal and administrative
proceedings;
10. To employ suitable agents and counsel, to contract
with agents to perform administrative and
recordkeeping duties and to pay their reasonable
expenses, fees and compensation, and such agent or
counsel may or may not be agent or counsel for &
Employer;
11. To cause any part or all of the Fund, without
limitation as to amount, to be commingled with the
funds of other trusts (including trusts for qualified
employee benefit plans) by causing such money to be
invested as a part of any pooled, common, collective
or commingled trust fund (including any such fund
described in the Adoption Agreement) heretofore or
hereafter created by any Trustee (if the Trustee is a
bank), by the Prototype Sponsor, by any affiliate
bank of such a Trustee or by such a Trustee' or the
Prototype Sponsor, or by such an affiliate in
participation with others, the instrument or
instruments establishing such trust fund or funds, as
amended, being made part of this Plan and trust so
long as any portion of the Fund shall be invested
through the medium thereof; and
12. Generally to do all such acts, execute all such
instruments, initiate such proceedings, and exercise
all such rights and privileges with relation to
property constituting the Fund as if the Trustee were
the absolute owner thereof.
5.05 DIVISION OF FUND INTO INVESTMENT FUNDS
The Employer may direct the Trustee (or Custodian) from time-to-time to
divide and redivide the Fund into one or more Investment Funds-. Such
Investment Funds may include, but not be limited to, Investment Funds
representing the assets under the control of an investment manager
pursuant to Section 5.12 and Investment Funds representing investment
options available for individual direction by Participants pursuant to
Section 5.14. Upon each division or redivision, the Employer may
specify the part of the Fund to be allocated to each such Investment
Fund and the terms and conditions, if any, under which the assets in
such Investment Fund shall be invested.
5.06 COMPENSATION AND EXPENSES
The Trustee (or Custodian, if applicable) shall receive such reasonable
compensation as may be agreed upon by the Trustee (or Custodian) and
the Employer. The Trustee (or Custodian) shall be entitled to
reimbursement by the Employer for all proper expenses incurred in
carrying out his or her duties under this Plan, including reasonable
legal, accounting and actuarial expenses. If not paid by the Employer,
such compensation and expenses may be charged against the Fund.
All taxes of any kind that may be levied or assessed under existing or
future laws upon, or in respect of, the Fund or the income thereof
shall be paid from the Fund.
5.07 NOT OBLIGATED TO QUESTION DATA
The Employer shall furnish the Trustee (or Custodian, if applicable)
and Plan Administrator the information which each part~ deems necessary
for the administration of the Plan including, but not limited to,
changes in a Participant's status, eligibility, mailing addresses and
other such data as may be required. The Trustee (or Custodian) and Plan
Administrator shall be entitled to act on such information as is
supplied them and shall have no duty or responsibility to further
verify or question such information.
5.08 LIABILITY FOR WITHHOLDING ON DISTRIBUTIONS
The Plan Administrator shall be responsible for withholding federal
income taxes from distributions from the Plan, unless the Participant
(or Beneficiary, where applicable) elects not to have such taxes
withheld. The Trustee (or Custodian) or other pavor may act as agent
for the Plan Administrator to withhold such taxes and to make the
appropriate distribution reports, if the , Plan Administrator furnishes
all the information to the Trustee (or Custodian) or other payor it may
need to do withholding and reporting.
5.09 RESIGNATION OR REMOVAL OF TRUSTEE (OR CUSTODIAN)
The Trustee (or Custodian, if applicable) may resign at any time by
giving 30 days advance written not-ice to the Employer. The resignation
shall become effective 30 days after receipt of such notice unless a
shorter period is agreed upon.
The Employer may remove any Trustee (or Custodian) at any time by
giving written notice to such Trustee (or Custodian) and such removal
shall be effective 3,0 days after receipt of such notice unless a
shorter period is agreed upon. The Employer shall have the power to
appoint a successor Trustee (or Custodian).
Upon such resignation or removal, if the resigning or removed Trustee
(or Custodian) is the sole Trustee (or Custodian), he or she shall
transfer all of the assets of the Fund then held by such Trustee (or
Custodian) as expeditiously as possible to the successor Trustee (or
Custodian) after paying or reserving such reasonable amount as he or
she shall deem necessary to provide for the expense in the settlement
of the accounts and the amount of any compensation due him or her and
any sums chargeable against the Fund for which he or she may be liable.
If the Funds as reserved are not sufficient for such purpose, then he
or she shall be entitled to reimbursement from the successor Trustee
(or Custodian) out of the assets in the successor Trustee's (or
Xxxxxxxxx's) hands under this Plan. If the amount reserved shall be in
excess of the amount actually needed, the former Trustee (or Custodian)
shall return such excess to the successor Trustee (or Custodian).
58
20
Upon receipt of the transferred assets, the successor Trustee (or
Custodian) shall thereupon succeed to all of the powers and
responsibilities given to the Trustee (or Custodian) by this Plan.
The resigning or removed Trustee (or Custodian) shall render an
accounting to the Employer and unless objected to by the Employer
within 30 days of its receipt, the accounting shall be deemed to have
been approved and the resigning or removed Trustee (or Custodian) shall
be released and discharged as to all matters set forth in the
accounting. Where a financial organization is serving as Trustee (or
Custodian) and it is merged with or bought by another organization (or
comes under the control of any federal or state agency), that
organization shall serve as the successor Trustee (or Custodian) of
this Plan, but only if it is the type of organization that can so serve
under applicable law.
Where the Trustee or Custodian is serving as a nonbank trustee or
custodian pursuant to Section 1.401-12(n) of the Income Tax
Regulations, the Employer will appoint a successor Trustee (or
Custodian) upon notification by the Commissioner of Internal Revenue
that such substitution is required because the Trustee (or Custodian)
has failed to comply with the requirements of Section 1.401-12(n) or
is not keeping such records or making such returns or rendering such
statements as are required by forms or regulations.
5.10 DEGREE OF CARE - LIMITATIONS OF LIABILITY
The Trustee (or Custodian) shall not be liable for any losses incurred
by the Fund by any direction to invest communicated by the Employer,
Plan Administrator, investment manager appointed pursuant to Section 12
or any Participant or Beneficiary. The Trustee (or Custodian) shall be
under no liability for distributions made or other action taken or not
taken at the written direction of the Plan Administrator. It is
specifically understood that the Trustee (or Custodian) shall have no
duty or responsibility with respect to the determination of matters
pertaining to the eligibility of any Employee to become a Participant
or remain a Participant hereunder, the amount of benefit to which a
Participant or Beneficiary shall be entitled to receive hereunder,
whether a distribution to Participant or Beneficiary is appropriate
under the terms of the Plan or the size and type of any policy to be
purchased from any insurer for any Participant hereunder or similar
matters; it being understood that all such responsibilities under the
Plan are vested in the Plan Administrator.
5.11 INDEMNIFICATION OF PROTOTYPE SPONSOR AND TRUSTEE (OR CUSTODIAN)
Notwithstanding any other provision herein, and except as may be
otherwise provided by ERISA, the Employer shall indemnify and hold
harmless the Trustee (or Custodian, if applicable) and the Prototype
Sponsor, their officers, directors, employees, agents, their heirs,
executors, successors and assigns, from and against any and all
liabilities, damages, judgments, settlements, losses, costs, charges,
or expenses (including legal expenses) at anytime arising out of or
incurred in connection with any action taken by such parties in the
performance of their duties with respect to this Plan, unless there has
been a final adjudication of gross negligence or willful misconduct in
the performance of such duties.
Further, except as may be otherwise provided by ERISA, the Employer
will indemnify the Trustee (or Custodian) and Prototype Sponsor from
any liability, claim or expense (including legal expense) which the
Trustee (or Custodian) and Prototype Sponsor shall incur by reason of
or which results, in whole or in part, from the Trustee's (or
Custodian's) or Prototype Sponsor's reliance on the facts and other
directions and elections the Employer communicates or fails to
communicate.
5.12 INVESTMENT MANAGERS
A. Definition of Investment Manager - The Employer may appoint
one or more investment managers to make investment decisions
with respect to all or a portion of the Fund. The investment
manager shall be any firm or individual registered as an
investment adviser under the Investment Advisers Act of 1940,
a bank as defined in said Act or an insurance company
qualified under the laws of more than one state to perform
services consisting of the management, acquisition or
disposition of any assets of the Plan.
B. Investment Manager's Authority - A separate Investment Fund
shall be established representing the assets of the Fund
invested at the direction of the investment manager. The
investment manager so appointed shall direct the Trustee (or
Custodian, if applicable) with respect to the investment of
such Investment Fund. The investments which may be acquired at
the direction of the investment manager are those described in
Section 3.03(A) (for Custodians) or Section 5.04(A) (for
Trustees).
C. Written Agreement - The appointment of any investment manager
shall be by written agreement between the Employer and the
investment manager and a copy of such agreement (and any
modification or termination thereof) must be given to the
Trustee (or Custodian).
The agreement shall set forth, among other matters, the
effective date of the investment manager's appointment and an
acknowledgement by the investment manager that it is a
fiduciary of the Plan under XXXXX.
D. Concerning the Trustee (or Custodian) - Written notice of each
appointment of an investment manager shall be given to the
Trustee (or Custodian) in advance of the effective date of
such appointment. Such notice shall specify which portion of
the Fund will constitute the Investment Fund subject to the
investment manager's direction. The Trustee (or Custodian)
shall comply, with the investment direction given to it by the
investment manager and will not be liable for any loss which
may result by reason of any action (or inaction) it takes at
the direction of the investment manager.
59
21
5.13 MATTERS RELATING TO INSURANCE
A. If a life insurance policy is to be purchased for a
Participant, the aggregate premium for certain life insurance
for each Participant must be less than a certain Percentage of
the aggregate Employer Contributions and Forfeitures allocated
to a Participant's Individual Account at any particular time
as follows:
1. Ordinary Life Insurance - For purposes of these
incidental insurance provisions, ordinary life
insurance contracts are contracts with both
nondecreasing death benefits and nonincreasing
premiums. If such contracts are purchased, less than
50% of the aggregate Employer Contributions and
Forfeitures allocated to any Participant's Individual
Account will be used to pay the premiums attributable
to them.
2. Term and Universal Life Insurance - No more than 25%
of the aggregate Employer Contributions and
Forfeitures allocated to any Participant's Individual
Account will be used to pay the premiums on term life
insurance contracts, universal life insurance
contracts, and all other life insurance contracts
which are not ordinary life.
3. Combination - The sum of 30% of the ordinary life
insurance premiums and all other life insurance
premiums will not exceed 25% of the aggregate
Employer Contributions and Forfeitures allocated to
any Participant's Individual Account.
If this Plan is a profit sharing plan, the above
incidental benefits limits do not apply to life
insurance contracts purchased with Employer
Contributions and Forfeitures that have been in the
Participant's Individual Account for at least 2 full
Plan Years, measured from the date such contributions
were allocated.
B. Any dividends or credits earned on insurance contracts for a
Participant shall be allocated to such Participant's
Individual Account.
C. Subject to Section 6.05, the contracts on a Participant's life
will be converted to cash or an annuity or distributed to the
Participant upon commencement of benefits.
D. The Trustee (or Custodian, if applicable) shall apply for and
will be the owner of any insurance contract(s) purchased under
the terms of this Plan. The insurance contract(s) must provide
that proceeds will be payable to the Trustee (or Custodian),
however, the Trustee (or Custodian) shall be required to pay
over all proceeds of the contract(s) to the Participant's
designated Beneficiary in accordance with the distribution
provisions of this Plan. A Participant's spouse will be the
designated Beneficiary of the proceeds in all circumstances
unless a qualified election has been made in accordance with
Section 6.05. Under no circumstances shall the Fund retain any
part of the proceeds- In the event of any conflict between the
terms of this Plan and the terms of any insurance contract
purchased hereunder, the Plan provisions shall control.
E. The Plan Administrator may direct the Trustee (or Custodian)
to sell and distribute insurance or annuity contracts to a
Participant (or other party as may be permitted) in accordance
with applicable law or regulations.
5.14 DIRECTION OF INVESTMENTS BY PARTICIPANT
If so indicated in the Adoption Agreement, each Participant may
individually direct the Trustee (or Custodian, if applicable) regarding
the investment of part or all of his or her Individual Account. To the
extent so directed, the Employer, Plan Administrator, Trustee (or
Custodian) and all other fiduciaries are relieved of their fiduciary
responsibility under Section 404 of ERISA.
The Plan Administrator shall direct that a Separate Fund be established
in the name of each Participant who directs the investment of part or
all of his or her Individual Account- Each Separate Fund shall be
charged or credited (as appropriate) with the earnings, gains, losses
or expenses attributable to such Separate Fund. No fiduciary shall be
liable for any loss which results from a Participant's individual
direction. The assets subject to individual direction shall not be
invested in collectibles as that term is defined in Section 408(m) of
the Code.
The Plan Administrator shall establish such uniform and
nondiscriminaton, rules relating to individual direction as it deems
necessary or advisable including, but not limited to, rules describing
(1) which portions of Participant's Individual Account can be
individually directed; (2) the frequency of investment changes; (3) the
forms and procedures for making investment changes; and (4) the effect
of a Participant's failure to make a valid direction.
The Plan Administrator may, in a uniform and nondiscriminatory manner,
limit the available investments for Participants' individual direction
to certain specified investment options (including, but not limited to,
certain mutual funds, investment contracts, deposit accounts and group
trusts). The Plan Administrator may permit, in a uniform and
nondiscriminatory manner, a Beneficiary of a deceased Participant or
the alternate payee under a qualified domestic relations order (as
defined in Section 414(p) of the Code) to individually direct in
accordance with this Section.
SECTION SIX VESTING AND DISTRIBUTION
6.01 DISTRIBUTION TO PARTICIPANT
A. Distributable Events
60
22
1. Entitlement to Distribution - The Vested portion of a
Participant's Individual Account shall be
distributable to the Participant upon (1) the
occurrence of any of the distributable events
specified in the Adoption Agreement; (2) the
Participant's Termination of Employment after
attaining Normal Retirement Age; (3) the termination
of the Plan; and (4) the Participant's Termination of
Employment after satisfying any Early Retirement Age
conditions.
If a Participant separates from service before
satisfying the Early Retirement Age requirement, but
has satisfied the service requirement, the
Participant will be entitled to elect an early
retirement benefit upon satisfaction of such age
requirement.
2. Written Request: When Distributed - A Participant
entitled to distribution who wishes to receive a
distribution, must submit a written request to the
Plan Administrator. Such request shall be made upon a
form provided by the Plan Administrator. Upon a valid
request, the Plan Administrator shall direct the
Trustee (or Custodian, if applicable) to commence
distribution no later than the time specified in the
Adoption Agreement for this purpose and, if not
specified
a. the close of the Plan Year within which the
event occurs which entitles the Participant
to distribution; or
b. the close of the Plan Year in which the
request is received.
3. Special Rules for Withdrawals During Service - If
this is a profit sharing plan and the Adoption
Agreement so provides, a Participant may elect to
receive a distribution of ali or part of the Vested
portion of his or her Individual Account, subject to
the requirements of Section 6.05 and further subject
to the following limits:
a. Participant for 5 or more years. An Employee
who has been a Participant in the Plan for 5
or more years may withdraw up to the entire
Vested portion of his or her Individual
Account.
b. Participant for less than 5 years. An
Employee who has been a Participant in the
Plan for less than 5 years may withdraw only
the amount which has been in his or her
Individual Account attributable to Employer
Contributions for at least 2 full Plan
Years, measured from the date such
contributions were allocated. However, if
the distribution is on account of hardship,
the Participant may withdraw up to his or
her entire Vested portion of the
Participant's Individual Account. For this
purpose, hardship shall have the meaning set
forth in Section 6.01(A)(4) of the Code.
4. Special Rules for Hardship Withdrawals -If this is a
profit sharing plan and the Adoption Agreement so
provides, a Participant may elect to receive a
hardship distribution of all or part of the Vested
portion of his or her Individual Account, subject to
the requirements of Section 6.05 and further subject
to the following limits:
a. Participant for 5 or more years. An Employee
who has been a Participant in the Plan for 5
or more years may withdraw up to the entire
Vested portion of his or her Individual
Account.
b. Participant for less than 5 years. An
Employee who has been a Participant in the
Plan for less than 5 years may withdraw only
the amount which has been in his or her
Individual Account attributable to Employer
Contributions for at least 2 full Plan
Years, measured from the date such
contributions were allocated.
For purposes of this Section 6.01(A)(4) and
Section 6.01(A)(3) hardship is defined as an
immediate and heavy financial need of the
Participant where such Participant lacks
other available resources. The following are
the only financial needs considered
immediate and heavy: expenses incurred or
necessary for medical care, described in
Section 213(d) of the Code, of the Employee,
the Employee's spouse or dependents; the
purchase (excluding mortgage payments) of a
principal residence for the Employee;
payment of tuition and related educational
fees for the next 12 months of
post-secondary education for the Employee,
the Employee's spouse, children or
dependents; or the need to prevent the
eviction of the Employee from, or a
foreclosure on the mortgage of, the
Employee's principal residence.
A distribution will be considered as
necessary to satisfy an immediate and heavy
financial need of the Employee only if:
1) The employee has obtained all
distributions, other than hardship
distributions, and all nontaxable
loans under all plans maintained by
the Employer;
2) The distribution is not in excess of
the amount of an immediate and heavy
financial need (including amounts
necessary to pay any federal, state
or local income taxes or penalties
reasonably anticipated to result
from the distribution).
61
23
5. One-Time In-Service Withdrawal Option - If this is a
profit sharing plan and the Employer has elected the
one-time in-service withdrawal option in the Adoption
Agreement, then Participants will be permitted only
one in-service withdrawal during the course of such
Participants employment with the Employer. The amount
which the Participant can withdraw will be limited to
the lesser of the amount determined under the limits
set forth in Section 6.01(A)(3) or the percentage of
the Participant's Individual Account specified by the
Employer in the Adoption Agreement. Distributions
under this Section will be subject to the
requirements of Section 6.05.
6. Commencement of Benefits - Notwithstanding any other
provision, unless the Participant elects otherwise,
distribution of benefits will begin no later than the
60th day after the latest of the close of the Plan
Year in which:
a. the Participant attains Normal Retirement
Age;
b. occurs the 10th anniversary of the year in
which the Participant commenced
participation in the Plan, or
c. the Participant incurs a Termination of
Employment.
Notwithstanding the foregoing, the failure
of a Participant and spouse to consent to a
distribution while a benefit is immediately
distributable, within the meaning of Section
6.02(B) of the Plan, shall be deemed to be
an election to defer commencement of payment
of any benefit sufficient to satisfy this
Section.
B. Determining the Vested Portion - In determining the
Vested portion of a Participant's Individual Account,
the following rules apply:
1. Employer Contributions and Forfeitures - The
Vested portion of a Participant's Individual
Account derived from Employer Contributions
and Forfeitures is determined by applying
the vesting schedule selected in the
Adoption Agreement (or the vesting schedule
described in Section 6.01(b if the Plan is a
Top-Heavy Plan).
2. Rollover and Transfer Contributions - A
Participant is fully Vested in his or her
rollover contributions and transfer
contributions.
3. Fully Vested Under Certain Circumstances - A
Participant is fully Vested in his or her
Individual Account if any of the following
occurs:
a. the Participant reaches Normal
Retirement Age;
b. the Plan is terminated or partially
terminated; or
c. there exists a complete
discontinuance of contributions
under the Plan.
Further, unless otherwise indicated in the Adoption
Agreement, a Participant is fully Vested if the
Participant dies, incurs a Disability, or satisfies
the conditions for Early Retirement Age (if
applicable).
4. Participants in a Prior Plan - If a Participant was a
participant in a Prior Plan on the Effective Date,
his or her Vested percentage shall not be less than
it would have been under such Prior Plan as computed
on the Effective Date.
C. Minimum Vesting Schedule for Top-Heavy Plans - The following
vesting provisions apply for any Plan Year in which this Plan
is a Top-Heavy Plan.
Notwithstanding the other provisions of this Section 6.01 or
the vesting schedule selected in the Adoption Agreement
(unless those provisions or that schedule provide for more
rapid vesting), a Participant's Vested portion of his or her
Individual Account attributable to Employer Contributions and
Forfeitures shall be deter-mined in accordance with the
vesting schedule elected by the Employer in the Adoption
Agreement (and if no election is made the 6 year graded
schedule will be deemed to have been elected) as described
below:
6 YEAR GRADED 3 YEAR CLIFF
Years of Vesting Service Vested Percentage Years of Vesting Service Vested Percentage
1 0 1 0
2 20 2 0
3 40 3 100
4 60
5 80
6 100
62
24
This minimum vesting schedule applies to all benefits within
the meaning of Section 411(a)(7) of the Code, except those
attributable to Nondeductible Employee Contributions including
benefits accrued before the effective date of Section 416 of
the Code and benefits accrued before the Plan became a
Top-Heavy Plan. Further, no decrease in a Participant's Vested
percentage may occur in the event the Plan's status as a
Top-Heavy Plan changes for any Plan Year. However, this
Section 6.01(C) does not apply to the Individual Account of
any Employee who does not have an Hour of Service after the
Plan has initially become a Top-Heavy Plan and such Employee's
Individual Account attributable to Employer Contributions and
Forfeitures will be determined without regard to this Section.
If this Plan ceases to be a Top-Heavy Plan, then in accordance
with the above restrictions, the vesting schedule as selected
in the Adoption Agreement will govern. If the vesting schedule
under the Plan shifts in or out of top-heavy status, such
shift is an amendment to the vesting schedule and the election
in Section 9.04 applies.
D. Break in Vesting Service and Forfeitures - If a Participant
incurs a Termination of Employment, any portion of his or her
Individual Account which is not Vested shall be held in a
suspense account. Such suspense account shall share in any
increase or decrease in the fair market value of the assets of
the Fund in accordance with Section 4 of the Plan. The
disposition of such suspense account shall be as follows:
1. Breaks in Vesting Service - If a Participant neither
receives nor is deemed to receive a distribution
pursuant to Section 6.01(D)(3) or (4) and the
Participant returns to the service of the Employer
before incurring 5 consecutive Breaks in Vesting
Service, there shall be no Forfeiture and the amount
in such suspense account shall be recredited to such
Participant's Individual Account.
2. Five Consecutive Breaks in Vesting Service - If a
Participant neither receives nor is deemed to receive
a distribution pursuant to Section 6.01(D)(3) or (4)
and the Participant does not return to the service of
the Employer before incurring 5 consecutive Breaks in
Vesting Service, the portion of the Participant's
Individual Account which i~ not Vested shall be
treated as a Forfeiture and allocated in accordance
with Section 3.01(C).
3. Cash-out of Certain Participants - If the value of
the Vested portion of such Participant's Individual
Account derived from Nondeductible Employee
Contributions and Employer Contributions does not
exceed $3,500, the Participant shall receive a
distribution of the entire Vested portion of such
Individual Account and the portion which is not
Vested shall be treated as a Forfeiture and allocated
in accordance with Section 3.01(C). For purposes of
this Section, if the value of the Vested portion of a
Participant's Individual Account is zero, the
Participant shall be deemed to have received a
distribution of such Vested Individual Account. A
Participant's Vested Individual Account balance shall
not include accumulated deductible employee
contributions within the meaning of Section
72(o)(5)(B) of the Code for Plan Years beginning
prior to January 1, 1989.
4. Participants Who Elect to Receive Distributions - If
such Participant elects to receive a distribution, in
accordance with Section 6.02(B), of the value of the
Vested portion of his or her Individual Account
derived from Nondeductible Employee Contributions and
Employer Contributions, the portion which is not
Vested shall be treated as a Forfeiture and allocated
in accordance with Section 3.01(C).
5. Re-employed Participants - If a Participant receives
or is deemed to receive a distribution pursuant to
Section 6.01(D)(3) or (4) above and the Participant
resumes employment covered under this Plan, the
Participant's Employer-derived Individual Account
balance will be restored to the amount on the date of
distribution if the Participant's repays to the Plan
the full amount of the distribution attributable to
Employer Contributions before the earlier of 5 years
after the first date on which the Participant is
subsequently re-employed b~ the Employer, or the date
the Participant incurs; 5 consecutive Breaks in
Vesting Service following the date of the
distribution.
Any restoration of a Participant's Individual Account
pursuant to Section 6.010)(5) shall be made from
other Forfeitures, income or gain to the Fund or
contributions made by the Employer.
E. Distribution Prior to Full Vesting - If a distribution is made
to a Participant who was not then fully Vested in his or her
Individual Account derived from Employer Contributions and the
Participant may increase his or her Vested percentage in his
or her Individual Account, then the following rules shall
apply:
1. a separate account will be established for the
Participant's interest in the Plan as of the time of
the distribution, and
2. at any relevant time the Participant's Vested portion
of the separate account will be equal to an amount
("X") determined by the formula: X=P (AB + (R x N) -
(R x D) where "P" is the Vested percentage at the
relevant time, "AB" is the separate account balance
at the relevant time; "D" is the amount of the
distribution; and "R" is the ratio of the separate
account balance at the relevant time to the separate
account balance after distribution.
63
25
6.02 FORM OF DISTRIBUTION TO A PARTICIPANT
A. Value of Individual Account Does Not Exceed $3,500 - If the
value of the Vested portion of a Participant's Individual
Account derived from Nondeductible Employee Contributions and
Employer Contributions does not exceed $3,500, distribution
from the Plan shall be made to the Participant in a single
lump sum in lieu of all other forms of distribution from the
Plan as soon as administratively feasible.
B. Value of Individual Account Exceeds $3,500
1. If the value of the Vested portion of a Participant's
Individual Account derived from Nondeductible
Employee Contributions and Employer Contributions
exceeds (or at the time of any prior distribution
exceeded) $3,500, and the Individual Account is
immediately distributable, the Participant and the
Participant's spouse (or where either the Participant
or the spouse died, the survivor) must consent to any
distribution of such Individual Account. The consent
of the Participant and the Participant's spouse shall
be obtained in writing within the 90-day period
ending on the annuity starting date. The annuity
starting date is the first day of the first period
for which an amount is paid as an annuity, or any
other form. The Plan Administrator shall notify the
Participant and the Participant's spouse of the right
to defer any distribution until the Participant's
Individual Account is no longer immediately
distributable. Such notification shall include a
general description of the material features, and an
explanation of the relative values of, the optional
forms of benefit available under the Plan in a manner
that would satisfy the notice requirements of Section
417(a)(3) of the Code, and shall be provided no less
than 30 days and no more than 90 days prior to the
annuity starting date.
If a distribution is one to which Sections 401(a)(11)
and 417 of the Internal Revenue Code do not apply,
such distribution may commence less than 30 days
after the notice required under Section
1.411(a)-11(c) of the Income Tax Regulations is
given, provided that:
a. the Plan Administrator clearly informs the
Participant that the Participant has a right
to a period of at least 30 days after
receiving the notice to consider the
decision of whether or not to elect a
distribution (and, if applicable, a
particular distribution option), and
b. the Participant, after receiving the notice,
affirmatively elects a distribution.
Notwithstanding the foregoing, only the
Participant need consent to the commencement
of a distribution in the form of a qualified
joint and survivor annuity while the
Individual Account is immediately
distributable. Neither the consent of the
Participant nor the Participant's spouse
shall be required to the extent that a
distribution is required to satisfy Section
401(a)(9) or Section 415 of the Code. In
addition, upon termination of this Plan if
the Plan does not offer an annuity option
(purchased from a commercial provider), the
Participant's Individual Account may,
without the Participant's consent, be
distributed to the Participant or
transferred to another defined contribution
plan (other than an employee stock ownership
plan as defined in Section 4975(e)(7) of the
Code) within the same controlled group.
An Individual Account is immediately
distributable if an), part of the Individual
Account could be distributed to the
Participant (or surviving spouse) before the
Participant attains or would have attained
(if not deceased) the later of Normal
Retirement Age or age 62.
2. For purposes of determining the
applicability of the foregoing consent
requirements to distributions made before
the first day of the first Plan Year
beginning after December 31, 1988, the
Vested portion of a Participant's Individual
Account shall not include amounts
attributable to accumulated deductible
employee contributions within the meaning of
Section 72(o)(5)(B) of the Code.
C. Other Forms of Distribution to Participant - If the value of
the Vested portion of a Participant's Individual Account
exceeds $3,500 and the Participant has properly waived the
joint and survivor annuity, as described in Section 6.05, the
Participant may request in writing that the Vested portion of
his or her Individual Account be paid to him or her in one or
more of the following forms of payment: (1) in a lump sum; (2)
in installment payments over a period not to exceed the life
expectancy of the Participant or the joint and last survivor
life expectancy of the Participant and his or her designated
Beneficiary; or (3) applied to the purchase of an annuity
contract.
Notwithstanding anything in this Section 6.02 to the contrary,
a Participant cannot elect payments in the form of an annuity
if the Retirement Equity Act safe harbor rules of Section
6.05(F) apply.
6.03 DISTRIBUTIONS UPON THE DEATH OF A PARTICIPANT
A. Designation of Beneficiary - Spousal Consent - Each
Participant may designate, upon a form provided by and
delivered to the Plan Administrator, one or more primary and
contingent Beneficiaries to receive all or a specified portion
of the Participant's Individual Account in the event of his or
her death. A Participant may change or revoke such Beneficiary
designation from time to time by completing and delivering the
proper form to the Plan Administrator.
64
26
In the event that a Participant wishes to designate a primary
Beneficiary who is not his or her spouse, his or her spouse
must consent in writing to such designation, and the spouse's
consent must acknowledge the effect of such designation and be
witnessed by a notary public or plan representative.
Notwithstanding this consent requirement, if the Participant
establishes to the satisfaction of the Plan Administrator that
such written consent may not be obtained because there is no
spouse or the spouse cannot be located, no consent shall be
required. Any change of Beneficiary will require a new spousal
consent.
B. Payment to Beneficiary - If a Participant dies before the
Participant's entire Individual Account has been paid to him
or her, such deceased Participant's Individual Account shall
be payable to any surviving Beneficiary designated by the
Participant, or, if no Beneficiary survives the Participant,
to the Participant's estate.
C. Written Request: When Distributed - A Beneficiary of a
deceased Participant entitled to a distribution who wishes to
receive a distribution must submit a written request to the
Plan Administrator. Such request shall be made upon a form
provided by the Plan Administrator. Upon a valid request, the
Plan Administrator shall direct the Trustee (or Custodian) to
commence distribution no later than the time specified in the
Adoption Agreement for this purpose and if not specified in
the Adoption Agreement, then no later than 90 days following
the later of:
1. the close of the Plan Year within which the
Participant dies; or
2. the close of the Plan Year in which the request is
received.
6.04 FORM OF DISTRIBUTION TO BENEFICIARY
A. Value of Individual Account Does Not Exceed $3,500 - If the
value of the Participant's Individual Account derived from
Nondeductible Employee Contributions and Employer
Contributions does not exceed $3,500, the Plan Administrator
shall direct the Trustee (or Custodian, if applicable) to make
a distribution to the Beneficiary in a single lump sum in lieu
of all other forms of distribution from the Plan.
B. Value of Individual Account Exceeds $3,500 - If the value of a
Participant's Individual Account derived from Nondeductible
Employee Contributions and Employer Contributions exceeds
$3,500 the preretirement survivor annuity requirements of
Section 6.05 shall apply unless waived in accordance with that
Section or unless the Retirement Equity Act safe harbor rules
of Section 6.05(F) apply. However, a surviving spouse
Beneficiary may elect any form of payment allowable under the
Plan in lieu of the preretirement survivor annuity Any such
payment to the surviving spouse must meet the requirements of
Section 6.06.
C. Other Forms of Distribution to Beneficiary - If the value of a
Participant's Individual Account exceeds $3,500 and the
Participant has properly waived the preretirement survivor
annuity, as described in Section 6.05 (if applicable) or if
the Beneficiary is the Participant's surviving spouse, the
Beneficiary may, subject to the requirements of Section 6.06,
request in writing that the Participant's Individual Account
be paid as follows: (1) in a lump sum; or (2) in installment
payments over a period not to exceed the life expectancy of
such Beneficiary.
6.05 JOINT AND SURVIVOR ANNUITY REQUIREMENTS
A. The provisions of this Section shall apply to any Participant
who is credited with at least one Hour of Eligibility Service
with the Employer on or after August 23, 1984, and such other
Participants as provided in Section 6.05(G).
B. Qualified Joint and Survivor Annuity - Unless an optional form
of benefit is selected pursuant to a qualified election within
the 90-day period ending on the annuity starting date, a
married Participant's Vested account balance will be paid in
the form of a qualified joint and survivor annuity and an
unmarried Participant's Vested account balance will be paid in
the form of a life annuity. The Participant may elect to have
such annuity distributed upon attainment of the earliest
retirement age under the Plan.
C. Qualified Preretirement Survivor Annuity - Unless an optional
form of benefit has been selected within the election period
pursuant to a qualified election, if a Participant dies before
the annuity starting date then the Participant's Vested
account balance shall be applied toward the purchase of an
annuity for the life of the surviving spouse. The surviving
spouse may elect to have such annuity distributed within a
reasonable period after the Participant's death.
D. Definitions
1. Election Period - The period which begins on the
first day of the Plan Year in which the Participant
attains age 35 and ends on the date of the
Participant's death. If a Participant separates from
service prior to the first day of the Plan Year in
which age 35 is attained, with respect to the account
balance as of the date of separation, the election
period shall begin on the date of separation.
Pre-age 35 waiver - A Participant who will not yet
attain age 35 as of the end of any cur-rent Plan Year
may make special qualified election to waive the
qualified preretirement survivor annuity for the
period beginning on the date of such election and
ending on the first day of the Plan Year in which the
Participant will attain age 35. Such election shall
not be valid unless the Participant receives a
written explanation of the qualified preretirement
survivor annuity in such terms as are comparable to
the explanation required under Section 6.05(E)(1).
Qualified preretirement survivor annuity coverage
will be automatically reinstated as of the first day
of the Plan Year in which the Participant attains age
35. Any new waiver on or after such date shall be
subject to the full requirements of this Section
6.05.
65
27
2. Earliest Retirement Age - The earliest date on which,
under the Plan, the Participant could elect to
receive retirement benefits.
3. Qualified Election - A waiver of a qualified joint
and survivor annuity or a qualified preretirement
survivor annuity. Any waiver of a qualified joint and
survivor annuity or a qualified preretirement
survivor annuity shall not be effective unless: (a)
the Participant's spouse consents in writing to the
election, (b) the election designates a specific
Beneficiary, including any class of beneficiaries or
any contingent beneficiaries, which may not be
changed without spousal consent (or the spouse
expressly permits designations by the Participant
without any further spousal consent); (c) the
spouse's consent acknowledges the effect of the
election; and (d) the spouse's consent is witnessed
by a plan representative or notary public.
Additionally, a Participant's waiver of the qualified
joint and survivor annuity shall not be effective
unless the election designates a form of benefit
payment which may not be changed without spousal
consent (or the spouse expressly permits designations
by the Participant without any further spousal
consent). If it is established to the satisfaction of
a plan representative that there is no spouse or that
the spouse cannot be located, a waiver will be deemed
a qualified election.
Any consent by a spouse obtained under this provision
(or establishment that the consent of a spouse may
not be obtained) shall be effective only with respect
to such spouse. A consent that permits designations
by the Participant without any requirement of further
consent by such spouse must acknowledge that the
spouse has the right to limit consent to a specific
Beneficiary, and a specific form of benefit where
applicable, and that the spouse voluntarily elects to
relinquish either or both of such rights. A
revocation of a prior waiver may be made by a
Participant without the consent of the spouse at any
time before the commencement of benefits. The number
of revocations shall not be limited. No consent
obtained under this provision shall be valid unless
the Participant has received notice as provided in
Section 6.05(E) below.
4. Qualified Joint and Survivor Annuity - An immediate
annuity for the life of the Participant with a
Survivor annuity for the life of the spouse which is
not less than 50% and not more than 100 %, of the
amount of the annuity which is payable during the
joint lives of the Participant and the spouse and
which is the amount of benefit which can be purchased
with the Participant's vested account balance. The
percentage of the survivor annuity under the Plan
shall be 50% (unless a different percentage is
elected by the Employer in the Adoption Agreement).
5. Spouse (surviving spouse) - The spouse or surviving
spouse of the Participant, provided that a former
spouse will be treated as the spouse or surviving
spouse and a current spouse will not be treated as
the spouse or surviving spouse to the extent provided
under a qualified domestic relations order as
described in Section 414(p) of the Code.
6. Annuity Starting Date - The first day of the first
period for which an amount is paid as an annuity or
any other form.
7. Vested Account Balance - The aggregate value of the
Participant's Vested account balances derived from
Employer and Nondeductible Employee Contributions
(including rollovers), whether Vested before or upon
death, including the proceeds of insurance contracts,
if any, on the Participant's life. The provisions of
this Section 6.05 shall apply to a Participant who is
Vested in amounts attributable to Employer
Contributions, Nondeductible Employee Contributions
(or both) at the time of death or distribution.
E. Notice Requirements
1. In the case of a qualified joint and survivor
annuity, the Plan Administrator shall no less than 30
days and not more than 90 days prior to the annuity
starting date provide each Participant a written
explanation of: (a)the terms and conditions of a
qualified joint and survivor annuity; (b) the
Participant's right to make and the effect of an
election to waive the qualified joint and survivor
annuity form of benefit, (c) the rights of a
Participant's spouse, and (d) the right to make, and
the effect of, a revocation of a previous election to
waive the qualified joint and survivor annuity.
2. In the case of a qualified preretirement annuity as
described in Section 6.05(C), the Plan Administrator
shall provide each Participant within the applicable
period for such Participant a written explanation of
the qualified preretirement survivor annuity in such
terms and in such manner as would be comparable to
the explanation provided for meeting the requirements
of Section 6.05(E)(1) applicable to a qualified joint
and survivor annuity.
The applicable period for a Participant is whichever
of the following periods ends last: (a) 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
66
28
Year preceding the Plan Year in which the Participant
attains age 35; (b) a reasonable period ending after
the individual becomes a Participant; (c) a
reasonable period ending after Section 6 05(E)(3)
ceases to apply to the Participant; and (d) a
reasonable period ending after this Section 6.05
first applies 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.
For purposes of applying the preceding paragraph, a
reasonable period ending after the enumerated events
described in (b), (c) and (d) is the end of the
two-year period beginning one year prior to the date
the applicable event occurs, a nd 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.
3. Notwithstanding the other requirements of this
Section 6.05(E), the respective notices prescribed by
this Section 6.05(E), need not be given to a
Participant if (a) the Plan "fully subsidizes" the
costs of a qualified joint and survivor annuity or
qualified preretirement survivor annuity, and (b) the
Plan does not allow the Participant to waive the
qualified joint and survivor annuity or qualified
preretirement survivor annuity and does not allow a
married Participant to designate a nonspouse
beneficiary. For purposes of this Section 6.05(E)(
3), a plan fully subsidizes the costs of a benefit if
no increase in cost, or decrease in benefits to the
Participant may result from the Participant's failure
to elect another benefit.
F. Retirement Equity Act Safe Harbor Rules
1. If the Employer so indicates in the Adoption
Agreement, this Section 6.05(F) shall apply to a
Participant in a profit sharing plan, and shall
always apply to any distribution, made on or after
the first day of the first Plan Year beginning after
December 31, 1988, from or under a separate account
attributable solely to accumulated deductible
employee contributions, as defined in Section
72(o)(5)(B) of the Code, and maintained on behalf of
a Participant in a money purchase pension plan,
(including a target benefit plan) if the following
conditions are satisfied:
a. the Participant does not or cannot elect
payments in the form of a life annuity; and
b. on the death of a Participant, the
Participant's Vested account balance will be
paid to the Participant's surviving spouse,
but if there is no surviving spouse, or if
the surviving spouse has consented in a
manner conforming to a qualified election,
then to the Participant's designated
Beneficiary. The surviving spouse may elect
to have distribution of the Vested account
balance commence within the 90-day period
following the date of the Participant's
death. The account balance shall be adjusted
for gains or losses occurring after the
Participant's death in accordance with the
provisions of the Plan governing the
adjustment of account balances for other
types of distributions. This Section 6.05(F)
shall not be operative with respect to a
Participant in a profit sharing plan if the
plan is a direct or indirect transferee of a
defined benefit plan, money purchase plan, a
target benefit plan, stock bonus, or profit
sharing plan which is subject to the
survivor annuity requirements of Section 401
(a)(11) and Section 417 of the code. If this
Section 6.05(F) is operative, then the
provisions of this Section 6.05 other than
Section 6.05(G) shall be inoperative.
2. The Participant may waive the spousal death benefit
described in this Section 6.05(F) at any time
provided that no such waiver shall be effective
unless it satisfies the conditions of Section
6-05(D)(3) (other than the notification requirement
referred to therein) that would apply to the
Participant's waiver of the qualified preretirement
survivor annuity.
3. For purposes of this Section 6.05(F), Vested account
balance shall mean, in the case of a money purchase
pension plan or a target benefit plan, the
Participant's separate account balance attributable
solely to accumulated deductible employee
contributions within the meaning of Section
72(o)(5)(B) of the Code. In the case of a profit
sharing plan, Vested account balance shall hove the
same meaning as provided in Section 6.05(D)(7).
G. TRANSITIONAL RULES
1. Any living Participant not receiving benefits on
August 23, 1984, who would otherwise not receive the
benefits prescribed by the previous subsections of
this Section 6.05 must be given the opportunity to
elect to have the prior subsections of this Section
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.
2. Any living Participant not receiving benefits on
August 23, 1984, who was credited with at least one
Hour of Service under this Plan or a predecessor plan
on or after September 2, 1974, and who is not
otherwise credited with any service in a Plan Year
beginning on or after January 1, 1976, must be given
the opportunity to have his or her benefits paid in
accordance with Section 6.05(G)(4).
67
29
3. The respective opportunities to elect (as described
in Section 6.05(G)(1) and (2) above) must be afforded
to the appropriate Participant, during the period
commencing on August 23, 1984, and ending on the date
benefits would otherwise commence to said
Participants.
4. Any Participant who has elected pursuant to Section
6.05(G)(2) and any Participant who does not elect
under Section 6.05(G)(1) or who meets the
requirements of Section 6.05(G)(1) except that such
Participant does not have at least 10 Years of
Vesting Service when he or she separates from
service, shall have his or her benefits
distributed in accordance with all of the following
requirements if benefits would have been payable in
the form of a life annuity:
a. Automatic Joint and Survivor Annuity - If
benefits in the form of a life annuity
become payable to a married Participant who:
(1) begins to receive payments under
the Plan on or after Normal
Retirement Age; or
(2) dies on or after Normal Retirement
Age while still working for the
Employer; or
(3) begins to receive payments on or
after the qualified early
retirement age; or
(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.
then such benefits will be received
under this Plan in the form of a
qualified joint and survivor
annuity, unless the Participant has
elected otherwise during the
election period. The election period
must begin at least 6 months before
the Participant attains qualified
early retirement age and ends 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.
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
which would have been made to the spouse
under the qualified joint and survivor
annuity if the Participant had retired on
the day before his or her death. Any
election under this provision will be in
writing and may be changed by the
Participant at any time. The election period
begins on the later of (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.
c. For purposes of Section 6.05(G)(4):
1. Qualified early retirement age is
the latest of:
a. the earliest date, under
the Plan, on which the
Participant may elect to
receive retirement
benefits,
b. the first day of the 120th
month beginning before the
Participant reaches Normal
Retirement Age, or
c. the date the Participant
begins participation.
2. Qualified joint and survivor annuity
is an annuity for the life of the
Participant with a survivor annuity
for the life of the spouse as
described in Section 6.05(D)(4) of
this Plan.
6.06 DISTRIBUTION REQUIREMENTS
A. General Rules
1. Subject to Section 6.05 joint and Survivor Annuity
Requirements, the requirements of this Section shall
apply to any distribution of a Participant's interest
and will take precedence over any inconsistent
provisions of this Plan. Unless otherwise specified,
the provisions of this Section 6.06 apply to calendar
years beginning after December 31, 1994.
2. All distributions required under this Section 6.06
shall be determined and made in accordance with the
Income Tax Regulations under Section 401(a)(9),
including the minimum distribution incidental benefit
requirement of Section 1.401(a)(9)-2 of the proposed
regulations.
68
30
B. Required Beginning Date - The entire interest of a Participant
must be distributed or begin to be distributed no later than
the Participant's required beginning date.
C. Limits on Distribution Periods - As of the first distribution
calendar year, distributions, if not made in a single sum, may
only be made over one of the following periods (or a
combination thereof):
1. the life of the Participant,
2. the life of the Participant and a designated
Beneficiary,
3. a period certain not extending beyond the life
expectancy of the Participant, or
4. a period certain not extending beyond the joint and
last survivor expectancy of the Participant and a
designated Beneficiary
D. Determination of Amount to be Distributed Each Year - If the
Participant's interest is to be distributed in other than a
single sum, the following minimum distribution rules shall
apply on or after the required beginning date:
1. Individual Account
a. If a Participant's benefit is to be
distributed over (1) a period not extending
beyond the life expectancy of the
Participant or the joint life and last
survivor expectancy of the Participant and
the Participant's designated Beneficiary or
(2) a period not extending beyond the life
expectancy of the designated Beneficiary,
the amount required to be distributed for
each calendar year, beginning with
distributions for the first distribution
calendar year, must at least equal the
quotient obtained by dividing the
Participant's benefit by the applicable life
expectancy.
b. For calendar years beginning before January
1, 1989, if the Participant's spouse is not
the designated Beneficiary, the method of
distribution selected must assure that at
least 50% of the present value of the amount
available for distribution is paid within
the life expectancy of the Participant.
c. For calendar years beginning after December
31, 1988, the amount to be distributed each
year, beginning with distributions for the
first distribution calendar year shall not
be less than the quotient obtained by
dividing the Participant's benefit by the
lesser of (1) the applicable life expectancy
or (2) if the Participant's spouse is not
the designated Beneficiary, the applicable
divisor determined from the table set forth
in Q&A-4 of Section 1.401(a)(9)-2 of the
Proposed Income Tax Regulations.
Distributions after the death of the
Participant shall be distributed using the
applicable life expectancy in Section
6.05(D)(1)(a) above as the relevant divisor
without regard to proposed regulations
1.401(a)(9)-2.
d. The minimum distribution required for the
Participant's first distribution calendar
year must be made on or before the
Participant's required beginning date. The
minimum distribution for other calendar
years, including the minimum distribution
for the distribution calendar year in which
the Employee's required beginning date
occurs, must be made on or before December
31 of that distribution calendar year.
2. Other Forms -If the Participant's benefit is
distributed in the form of an annuity Purchased from
an insurance company, distributions thereunder shall
be made in accordance with the requirements of
Section 401(a)(9) of the Code and the regulations
thereunder.
E. DEATH DISTRIBUTION PROVISIONS
1. Distribution Beginning Before Death - If the
Participant dies after distribution of his or her
interest has begun, the remaining portion of such
interest will continue to be distributed at least as
rapidly as under the method of distribution being
used prior to the Participant's death.
2. Distribution Beginning After Death - If the
Participant dies before distribution of his or her
interest begins, distribution of the Participant's
entire interest shall be completed by, December 31 of
the calendar year containing the fifth anniversary of
the Participant's death except to the extent that an
election is made to receive distributions in
accordance with (a) or (b) below:
a. if any portion of the Participant's interest
is payable to a designated Beneficiary,
distributions may be made over the life or
over a period certain not greater than the
life expectancy of the designated
Beneficiary commencing on or before December
31 of the calendar year immediately
following the calendar year in which the
Participant died;
69
31
b. if the designated Beneficiary is the
Participant's surviving spouse, the date
distributions are required to begin in
accordance with (a) above shall not be
earlier than the later of (1) December 31 of
the calendar year immediately following the
calendar year in which the Participant dies
or (2) December 31 of the calendar year in
which the Participant would have attained
age 70 1/2.
If the Participant has not made an election
pursuant to this Section 6.05(E)(2) by the
time of his or her death, the Participant's
designated Beneficiary must elect the method
of distribution no later than the earlier of
(1) December 31 of the calendar year in
which distributions would be required to
begin under this Section 6.05(E)(2), 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.
3. For purposes of Section 6.06(E)(2) above, if the
surviving spouse dies after the Participant, but
before payments to such spouse begin, the provisions
of Section 6.06(E)(2), with the exception of
paragraph (b) therein, shall be applied as if the
surviving spouse were the Participant.
4. For purposes of this Section 6.06(E), any amount paid
to a child of the Participant will be treated as if
it had been paid to the surviving spouse if the
amount becomes payable to the surviving spouse when
the child reaches the age of majority.
5. For purposes of this Section 6.06(E), distribution of
a Participant's interest is considered to begin on
the Participant's required beginning date (or, if
Section 6.06(E)(3) above is applicable, the date
distribution is required to begin to the surviving
spouse pursuant to Section 6-06(E)(2) above). If
distribution in the form of an annuity irrevocably
commences to the Participant before the required
beginning date, the date distribution is considered
to begin is the date distribution actually commences.
E. DEFINITIONS
1. Applicable Life Expectancy - The life expectancy (or
joint and last survivor expectancy) calculated using
the attained age of the Participant (or designated
Beneficiary') as of the Participant's (or designated
Beneficiary's) birthday in the applicable calendar
year reduced by one for each calendar year which has
elapsed since the date life expectancy was first
calculated. If life expectancy, is being
recalculated, the applicable life expectancy shall be
the life expectancy as so recalculated. The
applicable calendar year shall be the first
distribution calendar year, and if life expectancy is
being recalculated such succeeding calendar year.
2. Designated Beneficiary, - The individual who is
designated as the Beneficiary under the Plan in
accordance with Section 401(a)(9) of the Code and the
regulations thereunder.
3. Distribution Calendar Year - A calendar year for
which a minimum distribution is required. For
distributions beginning before the Participant's
death, the first distribution calendar year is the
calendar year immediately preceding the calendar year
which contains the Participant's required beginning
date. For distributions beginning after the
Participant's death, the first distribution calendar
year is the calendar year in which distributions are
required to begin Pursuant to Section 6.03(E) above.
4. Life Expectancy - Life expectancy and joint and last
survivor expectancy are computed by use of the
expected return multiples in Tables V and VI of
Section 1.72-9 of the Income Tax Regulations.
Unless otherwise elected by the Participant (or
spouse, in the case of distributions described in
Section 6.05(E)(2)(b) above) by the time
distributions are required to begin, life
expectancies shall be recalculated annuity. Such
election shall be irrevocable as to the Participant
(or spouse) and shall apply to all subsequent years.
The life expectancy of a nonspouse Beneficiary may
not be recalculated.
5. Participant's Benefit
a. The account balance as of the last valuation
date in the valuation calendar year (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 valuation calendar year after the
valuation date and decreased by
distributions made in the valuation calendar
year after the valuation date.
b. Exception for second distribution calendar
year. For purposes of paragraph (a) above,
if any portion of the minimum distribution
for the first distribution calendar year is
made in the second distribution calendar
year on or before the required beginning
date, the amount of the minimum distribution
made in the second distribution calendar
year shall be treated as if it had been made
in the immediately preceding distribution
calendar year.
70
32
6. Required Beginning Date
a. General Rule - The required beginning, date
of a Participant is the first day of April
of the calendar year following the calendar
year in which the Participant attains age 70
1/2.
b. Transitional Rules - The required beginning
date of a Participant who attains age 70
1/2 before January 1, 1988, shall be
determined in accordance with (1) or (2)
below:
(1) Non 5% Owners - The required
beginning date of a Participant who
is not a 5% owner is the first day
of April of the calendar year
following the calendar year in which
the later of retirement or
attainment of age 70 1/2 occurs.
(2) 5% Owners - The required beginning
date of a Participant who is a 5%
owner during any year beginning
after December 31, 1979, is the
first day of April following the
later of:
(a) the calendar year in which
the Participant attains
age 70 1/2, or
(b) the earlier of the calendar
year with or within which
ends the Plan Year in which
the Participant becomes a
5% owner, or the calendar
year in which the
Participant retires.
The required beginning date
of a Participant who is not
a 5% owner who attains age
70 1/12 during 1988 and who
has not retired as of
January 1, 1989, is April
1, 1990.
c. Owner - A Participant is treated as
a 5% owner for purposes of this
Section 6-06(F)(6) if such
Participant is a 5% owner as defined
in Section 4160) of the Code
(determined in accordance with
Section 416 but without regard to
whether the Plan is top-heavy) at
any time during the Plan Year ending
with or within the calendar year in
which such owner attains age 66 1/2
or any subsequent Plan Year.
d. Once distributions have begun to a
5% owner under this Section
6.06(F)(6) they must continue to be
distributed, even if the Participant
ceases to be a 5% owner in a
subsequent year.
G. TRANSITIONAL RULE
1. Notwithstanding the other requirements of this
Section 6.06 and subject to the requirements of
Section 6.05, Joint and Survivor Annuity
Requirements, distribution on behalf of any Employee,
including a 5% owner, may be made in accordance with
all of the following requirements (regardless of when
such distribution commences):
a. The distribution by the Fund is one which
would not have qualified such Fund under
Section 401(a)(9) of the Code as in effect
prior to amendment by the Deficit Reduction
Act of 1984.
b. The distribution is in accordance with a
method of distribution designated by the
Employee whose interest in the Fund is being
distributed or, if the Employee is deceased,
by a Beneficiary of such Employee.
c. Such designation was in writing, was signed
by the Employee or the Beneficiary, and was
made before January 1, 1984.
d. The Employee had accrued a benefit under the
Plan as of December 31, 1983.
e. The method of distribution designated by the
Employee or the Beneficiary specifies the
time at which distribution will commence,
the period over which distributions will be
made, and in the case of any distribution
upon the Employee's death, the Beneficiaries
of the Employee listed in order of priority.
2. A distribution upon death will not be covered by this
transitional rule unless the information in the
designation contains the required information
described above with respect to the distributions to
be made upon the death of the Employee.
71
33
3. For any distribution which commences before January
1, 198-4, but continues after December 31, 1983, the
Employee, or the Beneficiary to whom such
distribution is being made, will be presumed to have
designated the method of distribution under which the
distribution is being made if the method of
distribution was specified in writing and the
distribution satisfies the requirements in Sections
6.06(G)(1)(a) and (e).
4. If a designation is revoked, any subsequent
distribution must satisfy the requirements of Section
401(a)(9) of the Code and the 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
Section 401(a)(9) of the Code and the regulations
thereunder, but for the Section 242(b)(2) election.
For calendar years beginning after December 31, 1988,
such distributions must meet the minimum distribution
incidental benefit requirements in Section
1.401(a)(9)-2 of the Proposed Income Tax Regulations.
Any changes in the designation will be considered to
be a revocation of the designation. However, the mere
substitution or addition of another Beneficiary (one
not named in the designation) under the designation
will not be considered to be a revocation of the
designation, so long as such substitution or addition
does not alter the period over which distributions
are to be made under the designation, directly or
indirectly (for example, by altering the relevant
measuring life). In the case in which an amount is
transferred or rolled over from one plan to another
plan, the rules in Q&A J-2 and Q&A J-3 shall apply.
6.07 ANNUITY CONTRACTS
Any annuity contract distributed under the Plan (if permitted or
required by this Section 6) must be nontransferable. The terms of any
annuity contract purchased and distributed by the Plan to a Participant
or spouse shall comply with the requirements of the Plan.
6.08 LOANS TO PARTICIPANTS
If the Adoption Agreement so indicates, a Participant may receive a
loan from the Fund, subject to the following rules:
A. Loans shall be made available to all Participants on a
reasonably equivalent basis.
B. Loans shall not be made available to Highly Compensated
Employees, (as defined in Section 414(q) of the Code) in an
amount greater than the amount made available to other
Employee's.
C. Loans must be adequately secured and bear a reasonable
interest rate.
D. No Participant loan shall exceed the present value of the
Vested portion of a Participant's Individual Account.
E. A Participant must obtain the consent of his or her spouse, if
any, to the use of the Individual Account as security for the
loan. Spousal consent shall be obtained no earlier toil~an the
beginning of the 90 day period that ends on the date on which
the loan is to be so secured. The consent must be in writing,
must acknowledge the effect of the loan, and must be witnessed
by a plan representative or notary public. Such consent shall
thereafter be binding with respect to the consenting spouse or
any subsequent spouse with respect to that loan. A new consent
shall be required if the account balance is used for
renegotiation, extension, renewal, or other revision of the
loan. Notwithstanding the foregoing, no spousal consent is
necessary if, at the time the loan is secured, no consent
would be required for a distribution under Section
417(a)(2)(B). In addition ' spousal consent is not required if
the Plan or the Participant is not subject to Section
401(a)(11) at the time the Individual Account is used as
security, or if the total Individual Account subject to the
security is less than or equal to $3,500.
F. In the event of default, foreclosure on the note and
attachment of security will not occur until a distributable
event occurs in the Plan. Notwithstanding the preceding
sentence, a Participant's default on a loan will be treated as
a distributable event and as soon as administratively feasible
after the default, the Participant's Vested Individual Account
will be reduced by the lesser of the amount in default (plus
accrued interest) or the amount secured. If this Plan is a
401(k) plan, then to the extent the loan is attributable to a
Participant's Elective Deferrals, Qualified Nonelective
Contributions or Qualified Matching Contributions, the
Participant's Individual Account will not be reduced unless
the Participant has attained age 59 1/2 or has another
distributable event- A Participant will be deemed to have
consented to the provision at the time the loan is made to the
Participant.
G. No loans will be made to any shareholder-employee or
Owner-Employee. For purposes of this requirement, a
shareholder-employee means an employee or officer of an
electing small business (Subchapter S) corporation who owns
(or is considered as owning within the meaning of Section
318(a)(1) of the Code), on any day during the taxable year of
such corporation, more than 5% of the outstanding stock of the
corporation.
If a valid spousal consent has been obtained in accordance
with 6.08(E), then, notwithstanding any other provisions of
this Plan, the portion of the Participant's Vested Individual
Account used as a security interest held by the Plan by reason
of a loan outstanding to the Participant shall be taken into
account for purposes of determining the amount of the account
balance payable at the time of death or distribution, but only
if the reduction is used as repayment of the loan. If less
than 100% of the Participant's Vested Individual Account
(determined without regard to the preceding sentence) is
payable to the surviving spouse, then the account balance
shall be adjusted by first reducing the Vested Individual
Account by the amount of the security used as repayment of the
loan, and then determining the benefit payable to the
surviving spouse.
72
34
To avoid taxation to the Participant, no loan to any
Participant can be made to the extent that such loan when
added to the outstanding balance of all other loans to the
Participant would exceed the lesser of (a) $50,000 reduced by
the excess (if any) of the highest outstanding balance of loan
during the one year period ending on the day before the loan
is made, over the outstanding balance of loans from the Plan
on the date the loan is made, or (b) 50% of the present value
of the nonforfeitable Individual Account of the Participant
or, if greater, the total Individual Account up to $10,000.
For the purpose of the above limitation, all loans from all
plans of the Employer and other members of a group of
employers described in Sections 414(b), 414(c), and 414(m) of
the Code are aggregated. Furthermore, any loan shall by its
terms require that repayment (principal and interest) be
amortized in level payments, not less frequently than
quarterly, over a period not extending beyond 5 years from the
date of the loan, unless such loan is used to acquire a
dwelling unit which within a reasonable time (determined at
the time the loan is made) will be used as the principal
residence of the Participant. An assignment or pledge of any
portion of the Participant's interest in the Plan and a loan,
pledge, or assignment with respect to any insurance contract
purchased under the Plan, will be treated as a loan under this
paragraph.
The Plan Administrator shall administer the loan program in
accordance with a written document. Such written document
shall include, at a minimum, the following: 6) the identity of
the person or positions authorized to administer the
Participant loan program; (ii) the procedure for applying for
loans; (iii) the basis on which loans will be approved or
denied; (iv) limitations (if any) on the types and amounts of
loan offered, (v) the procedure under the program for
determining a reasonable rate of interest; (vi) the types of
collateral which may secure a Participant loan; and (vii) the
events constituting default and the steps that will be taken
to preserve Plan assets in the event of such default.
6.09 DISTRIBUTION IN KIND
The Plan Administrator may cause any distribution under this Plan to be
made either in a form actually held in the Fund, or in cash by
converting assets other than cash into cash, or in any combination of
the two foregoing ways.
6.10 DIRECT ROLLOVERS OF ELIGIBLE ROLLOVER DISTRIBUTIONS
A. Direct Rollover Option
This Section applies to distributions made on or after January
1, 1993. Notwithstanding any provision of the Plan to the
contrary that would otherwise limit a distributee's election
under this Section, a distributee may elect, at the time and
in the manner prescribed by the Plan Administrator, to have
any portion of an eligible rollover distribution that is equal
to at least $500 paid directly to an eligible retirement plan
specified by the distributee in a direct rollover.
B. DEFINITIONS
1. Eligible rollover distribution - An eligible rollover
distribution is any distribution of all or any
portion of the balance to the credit of the
distributee, except that an eligible rollover
distribution does not include:
a. any distribution that is one of a series of
substantially equal periodic payments (not
less frequently than annually) made for the
life (or life expectancy) of the distributee
or the joint lives (or joint life
expectancies) of the distributee and the
distributee's designated Beneficiary, or for
a specified period of ten years or more;
b. any distribution to the extent such
distribution is required under Section
401(a)(9) of the Code;
c. the portion of any other distribution that
is not includible in gross income
(determined without regard to the exclusion
for net unrealized appreciation with respect
to employer securities); and
d. any other distribution(s) that is reasonably
expected to total less than $200 during a
year.
2. Eligible retirement plan -An eligible retirement plan
is an individual retirement account described in
Section 408(a) of the Code, an individual retirement
annuity described in Section 408(b) of the Code, an
annuity plan described in Section 403(a) of the Code,
or a qualified trust described in Section 401(a) of
the Code, that accepts the distributee's eligible
rollover distribution. However, in the case of an
eligible rollover distribution to the surviving
spouse, an eligible retirement plan is an individual
retirement account or individual retirement annuity.
3. Distributee - A distributee includes an Employee or
former Employee. In addition, the Employee's or
former Employee's surviving spouse and the Employee's
or former Employee's spouse or former spouse who is
the alternate payee under a qualified domestic
relations order, as defined in Section 414(p) of the
Code, are distributees with regard to the interest of
the spouse or former spouse.
4. Direct rollover - A direct rollover is a payment by
the Plan to the eligible retirement plan specified by
the distributee.
73
35
6.11 PROCEDURE FOR MISSING PARTICIPANTS OR BENEFICIARIES
The Plan Administrator must use all reasonable measures to locate
Participants or Beneficiaries who are entitled to distributions from
the Plan. In the event that the Plan Administrator cannot locate a
Participant or Beneficiary who is entitled to a distribution from the
Plan after using all reasonable measures to locate him or her, the Plan
Administrator may, consistent with applicable laws, regulations and
other pronouncements under ERISA, use any reasonable procedure to
dispose of distributable plan assets, including any of the following:
(1) establish a bank account for and in the name of the Participant or
Beneficiary and transfer the assets to such bank account, (2) purchase
an annuity contract with the assets in the name of the Participant or
Beneficiary, or (3) after the expiration of 5 years after the benefit
becomes payable, treat the amount distributable as a Forfeiture and
allocate it in accordance with the terms of the Plan and if the
Participant or Beneficiary is later located, restore such benefit to
the Plan.
SECTION SEVEN CLAIMS PROCEDURE
7.01 FILING A CLAIM FOR PLAN DISTRIBUTIONS
A Participant or Beneficiary who desires to make a claim for the Vested
portion of the Participant's Individual Account shall file a written
request with the Plan Administrator on a form to be furnished to him or
her by the Plan Administrator for such purpose. The request shall set
forth the basis of the claim. The Plan Administrator is authorized to
conduct such examinations as may be necessary to facilitate the payment
of any benefits to which the Participant or Beneficiary may be entitled
under the terms of the Plan.
7.02 DENIAL OF CLAIM
Whenever a claim for a Plan distribution by any Participant or
Beneficiary has been wholly or partially denied, the Plan Administrator
must furnish such Participant or Beneficiary written notice of the
denial within 60 days of the date the original claim was filed. This
notice shall set forth the specific reasons for the denial, specific
reference to pertinent Plan provisions on which the denial is based, a
description of any additional information or material needed to perfect
the claim, an explanation of why such additional information or
material is necessary and an explanation of the procedures for appeal.
7.03 REMEDIES AVAILABLE
The Participant or Beneficiary shall have 60 days from receipt of the
denial notice in which to make written application for review by the
Plan Administrator. The Participant or Beneficiary may request that the
review be in the nature of a hearing. The Participant or Beneficiary,
shall have the right to representation, to review pertinent documents
and to submit comments in writing. The Plan Administrator shall issue a
decision on such review within 60 days after receipt of an application
for review as provided for in Section 7.02. Upon a decision unfavorable
to the Participant or Beneficiary, such Participant or Beneficiary
shall be entitled to bring such actions in law or equity as may be
necessary or appropriate to protect or clarify his or her right to
benefits under this Plan.
SECTION EIGHT PLAN ADMINISTRATOR
8.01 EMPLOYER IS PLAN ADMINISTRATOR
A. The Employer shall be the Plan Administrator unless the
managing body of the Employer designates a person or persons
other than the Employer as the Plan Administrator and so
notifies the Trustee (or Custodian, if applicable). The
Employer shall also be the Plan Administrator if the person or
persons so designated cease to be the Plan Administrator. The
Employer may establish an administrative committee that will
carry out the Plan Administrator's duties. Members of the
administrative committee may allocate the Plan Administrator's
duties among themselves.
B. If the managing body of the Employer designates a person or
persons other than the Employer as Plan Administrator, such
person or persons shall serve at the pleasure of the Employer
and shall serve pursuant to such procedures as such managing
body may provide. Each such person shall be bonded as may be
required by law.
8.02 POWERS AND DUTIES OF THE PLAN ADMINISTRATOR
A. The Plan Administrator may, by appointment, allocate the
duties of the Plan Administrator among several individuals or
entities. Such appointments shall not be effective until the
party designated accepts such appointment in writing.
B. The Plan Administrator shall have the authority to control and
manage the operation and administration of the Plan. The
Plan Administrator shall administer the Plan for the exclusive
benefit of the Participants and their Beneficiaries in
accordance with the specific terms of the Plan.
C. The Plan Administrator shall be charged with the duties of the
general administration of the Plan, including, but not limited
to the following:
1. To determine all questions of interpretation or
policy in a manner consistent with the Plan's
documents and the Plan Administrator's construction
or determination in good faith shall be conclusive
and binding on all persons except as otherwise
provided herein or by law. Any interpretation or
construction shall be done in a nondiscriminatory
manner and shall he consistent with the intent that
the Plan shall continue to be deemed a qualified plan
under the terms of Section 401(a) of the Code, as
amended from time-to-time, and shall comply with the
terms of ERISA, as amended from time-to-time.
2. To determine all questions relating to the
eligibility of Employees to become or remain
Participants hereunder;
74
36
3. To compute the amounts necessary or desirable to be
contributed to the Plan;
4. To compute the amount and kind of benefits to which a
Participant or Beneficiary, shall be entitled under
the Plan and to direct the Trustee (or Custodian, if
applicable) with respect to all disbursements under
the Plan, and, when requested by the Trustee (or
Custodian), to furnish the Trustee (or Custodian)
with instructions, in writing, on matters pertaining
to the Plan and the Trustee (or Custodian) may rely
and act thereon;
5. To maintain all records necessary for the
administration of the Plan;
6. To be responsible for preparing and filing such
disclosure and tax forms as may be required from
time-to-time by the Secretary of Labor or the
Secretary of the Treasury; and
7. To furnish each Employee, Participant or Beneficiary
such notices, information and reports under such
circumstances as may be required by law.
D. The Plan Administrator shall have all of the powers necessary
or appropriate to accomplish his or her duties under the Plan,
including, but not limited to, the following:
1. To appoint and retain such persons as may be
necessary to carry out the functions of the Plan
Administrator,
2. To appoint and retain counsel, specialists or other
persons as the Plan Administrator deems necessary or
advisable in the administration of the Plan;
3. To resolve all questions of administration of the
Plan;
4. To establish such uniform and nondiscriminatory rules
which it deems necessary to cam, out the terms of the
Plan;
5. To make any adjustments in a uniform and
nondiscriminatory manner which it deems necessary to
correct any arithmetical or accounting errors which
may have been made for any Plan Year; and
6. To correct any defect, supply any omission or
reconcile any inconsistency in such manner and to
such extent as shall be deemed necessary or advisable
to carry out the purpose of the Plan.
8.03 EXPENSES AND COMPENSATION
All reasonable expenses of administration including, but not limited
to, those involved in retaining necessary professional assistance may
be paid from the assets of the Fund. Alternatively, the Employer may,
in its discretion, pay any or all such expenses. Pursuant to uniform
and nondiscriminatory rules that the Plan Administrator may establish
from time to time, administrative expenses and expenses unique to a
particular Participant may be charged to a Participant's Individual
Account or the Plan Administrator may allow Participants to pay such
fees outside of the Plan. The Employer shall furnish the Plan
Administrator with such clerical and other assistance as the Plan
Administrator may need in the performance of his or her duties.
8.04 INFORMATION FROM EMPLOYER
To enable the Plan Administrator to perform his or her duties, the
Employer shall supply full and timely information to the Plan
Administrator (or his or her designated agents) on all matters relating
to the Compensation of all Participants, their regular employment,
retirement, death, Disability or Termination of Employment, and such
other pertinent facts as the Plan Administrator (or his or her agents)
may require. The Plan Administrator shall advise the Trustee (or
Custodian, if applicable) of such of the foregoing facts as may be
pertinent to the Trustee's (or Custodian's) duties under the Plan. The
Plan Administrator (or his or her agents) is entitled to rely on such
information as is supplied by the Employer and shall have no duty or
responsibility to verify such information.
SECTION NINE AMENDMENT AND TERMINATION
9.01 RIGHT OF PROTOTYPE SPONSOR TO AMEND THE PLAN
A. The Employer, by adopting the Plan, expressly delegates to the
Prototype Sponsor the power, but not the duty, to amend the
Plan without any further action or consent of the Employer as
the Prototype Sponsor deems necessary for the purpose of
adjusting the Plan to comply with all laws and regulations
governing pension or profit sharing plans. Specifically, it is
understood that the amendments may be made unilaterally by the
Prototype Sponsor. However, it shall be understood that the
Prototype Sponsor shall be under no obligation to amend the
Plan documents and the Employer expressly waives any rights or
claims against the Prototype Sponsor for not exercising this
power to amend. For purposes of Prototype Sponsor amendments,
the mass submitter shall be recognized as the agent of the
Prototype Sponsor. If the Prototype Sponsor does not adopt the
amendments made by the mass submitter, it will no longer be
identical to or a minor modifier of the mass submitter plan.
B. An amendment by the Prototype Sponsor shall be accomplished by
giving written notice to the Employer of the amendment to be
made. The notice shall set forth the text of such amendment
and the date such amendment is to be effective. Such amendment
shall take effect unless within the 30 day period after such
notice is provided, or within such shorter period as the
notice may specify, the Employer gives the Prototype Sponsor
written notice of refusal to consent to the amendment. Such
written notice of refusal shall have the effect of withdrawing
the Plan as a prototype plan and shall cause the Plan to be
considered an individually designed plan. The right of the
Prototype Sponsor to cause the Plan to be amended shall
terminate should the Plan cease to conform as a prototype plan
as provided in this or any other section.
75
37
9.02 RIGHT OF EMPLOYER TO AMEND THE PLAN
The Employer may (1) change the choice of options in the Adoption
Agreement; (2) add overriding language in the Adoption Agreement when
such language is necessary to satisfy Section 415 or Section 416 of the
Code because of the required aggregation of multiple plans; and (3) add
certain model amendments published by the Internal Revenue Service
which specifically provide that their adoption will not cause the Plan
to be treated as individually designed. An Employer that amends the
Plan for any other reason, including a waiver of the minimum funding
requirement under Section 412(d) of the Code, will no longer
participate in this prototype plan and will be considered to have an
individually designed plan.
An Employer who wishes to amend the Plan to change the options it has
chosen in the Adoption Agreement must complete and deliver a new
Adoption Agreement to the Prototype Sponsor and Trustee (or Custodian,
if applicable). Such amendment shall become effective upon execution by
the Employer and Trustee (or Custodian).
The Employer further reserves the right to replace the Plan in its
entirety by adopting another retirement plan which the Employer
designates as a replacement plan.
9.03 LIMITATION ON POWER TO AMEND
No amendment to the Plan shall be effective to the extent that it has
the effect of decreasing a Participant's accrued benefit.
Notwithstanding the preceding sentence, a Participant's Individual
Account may be reduced to the extent permitted under Section 412(c)(8)
of the Code. For purposes of this paragraph, a plan amendment which has
the effect of decreasing a Participant's Individual Account or
eliminating an optional form of benefit with respect to benefits
attributable to service before the amendment shall be treated as
reducing an accrued benefit. Furthermore, if the vesting schedule of a
Plan is amended, in the case of an Employee who is a Participant as of
the later of the date such amendment is adopted or the date it becomes
effective, the Vested percentage (determined as of such date) of such
Employee's Individual Account derived from Employer Contributions will
not be less than the percentage computed under the Plan without regard
to such amendment.
9.04 AMENDMENT OF VESTING SCHEDULE
If the Plan's vesting schedule is amended, or the Plan is amended in
any way that directly or indirectly affects the computation of the
Participant's Vested percentage, or if the Plan is deemed amended by an
automatic change to or from a top-heavy vesting schedule, each
Participant with at least 3 Years of Vesting Service with the Employer
may elect, within the time set forth below, to have the Vested
percentage computed under the Plan without regard to such amendment.
For Participants who do not have at least I Hour of Service in any Plan
Year beginning after December 31, 1988, the preceding sentence shall be
applied by substituting "5 Years of Vesting Service" for "3 Years of
Vesting Service" where such language appears.
The Period during which the election may be made shall commence with
the date the amendment is adopted or deemed to be made and shall end
the later of:
A. 60 days after the amendment is adopted;
B. 60 days after the amendment becomes effective; or
C. 60 days after the Participant is issued written notice of the
amendment by the Employer or Plan Administrator.
9.05 PERMANENCY
The Employer expects to continue this Plan and make the necessary
contributions thereto indefinitely, but such continuance and payment is
not assumed as a contractual obligation. Neither the Adoption Agreement
nor the Plan nor any amendment or modification thereof nor the making
of contributions hereunder shall be construed as giving any Participant
or any person whomsoever any legal or equitable right against the
Employer, the Trustee (or Custodian, if applicable) the Plan
Administrator or the Prototype Sponsor except as specifically provided
herein, or as provided by law.
9.06 METHOD AND PROCEDURE FOR TERMINATION
The Plan may be terminated by the Employer at any time by appropriate
action of its managing body. Such termination shall be effective on the
date specified by the Employer. The Plan shall terminate if the
Employer shall be dissolved, terminated, or declared bankrupt. Written
notice of the termination and effective date thereof shall be given to
the Trustee (or Custodian), Plan Administrator, Prototype Sponsor,
Participants and Beneficiaries of deceased Participants, and the
required filings (such as the Form 5500 series and others) must be made
with the Internal Revenue Service and any other regulatory body as
required by current laws and regulations. Until all of the assets have
been distributed from the Fund, the Employer must keep the Plan in
compliance with current laws and regulations by (a) making appropriate
amendments to the Plan and (b) taking such other measures as may be
required.
9.07 CONTINUANCE OF PLAN BY SUCCESSOR EMPLOYER
Notwithstanding the preceding Section 9.06, a successor of the Employer
may continue the Plan and be substituted in the place of the present
Employer. The successor and the present Employer (or, if deceased, the
executor of the estate of a deceased Self-Employed Individual who was
the Employer) must execute a written instrument authorizing such
substitution and the successor must complete and sign a new plan
document.
76
38
9.08 FAILURE OF PLAN QUALIFICATION
If the Plan fails to retain its qualified status, the Plan will no
longer be considered to be part of a prototype plan, and such Employer
can no longer participate under this prototype. In such event, the Plan
will be considered an individually designed plan.
SECTION TEN MISCELLANEOUS
10.01 STATE COMMUNITY PROPERTY LAWS
The terms and conditions of this Plan shall be applicable without
regard to the community property laws of any state.
10.02 HEADINGS
The headings of the Plan have been inserted for convenience of
reference only and are to be ignored in any construction of the
provisions hereof.
10.03 GENDER AND NUMBER
Whenever any words are used herein in the masculine gender they shall
be construed as though they were also used in the feminine gender in
all cases where they would so apply, and whenever any words are used
herein in the singular form they shall be construed as though they were
also used in the plural form in all cases where they would so apply.
10.04 PLAN MERGER OR CONSOLIDATION
In the case of any merger or consolidation of the Plan with, or
transfer of assets or liabilities of such Plan to, any other plan, each
Participant shall be entitled to receive benefits immediately after the
merger, consolidation, or transfer (if the Plan had then terminated)
which are equal to or greater than the benefit he or she would have
been entitled to receive immediately before the merger, consolidation,
or transfer (if the Plan had then terminated). The Trustee (or
Custodian) has the authority to enter into merger agreements or
agreements to directly transfer the assets of this Plan but only if
such agreements are made with trustees or custodians of other
retirement plans described in Section 401(a) of the Code.
10.05 STANDARD OF FIDUCIARY CONDUCT
The Employer, Plan Administrator, Trustee and any other fiduciary under
this Plan shall discharge their duties with respect to this Plan solely
in the interests of Participants and their Beneficiaries and with the
care, skill, prudence and diligence under the circumstances then
prevailing that a prudent man acting in like capacity and familiar with
such matters would use in the conduct of an enterprise of a like
character and with like aims. No fiduciary shall cause the Plan to
engage in any transaction known as a "prohibited transaction" under
ERISA.
10.06 GENERAL UNDERTAKING OF ALL PARTIES
All parties to this Plan and all persons claiming any interest
whatsoever hereunder agree to perform any and all acts and execute any
and all documents and papers which may be necessary or desirable for
the carrying out of this Plan and any of its provisions.
10.07 AGREEMENT BINDS HEIRS, ETC.
This Plan shall be binding upon the heirs, executors, administrators,
successors and assigns, as those terms shall apply to any and all
parties hereto, present and future.
10.08 DETERMINATION OF TOP-HEAVY STATUS
A. For any Plan Year beginning after December 31, 1983, this Plan
is a Top-Heavy Plan if any of the following conditions exist:
1. If the top-heavy ratio for this Plan exceeds 60% and
this Plan is not part of any required aggregation
group or permissive aggregation group of plans.
2. If this 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 group of plans
exceeds 60%.
3. If this Plan is a 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%.
For purposes of this Section 10.08, the following
terms shall have the meanings indicated below:
B. KEY EMPLOYEE - Any Employee or former Employee (and the
Beneficiaries of such Employee) who at any time during the
determination period was an officer of the Employer if such
individual's annual compensation exceeds 50% of the dollar
limitation under Section 415(b)(1)(A) of the Code, an owner
(or considered an owner under Section 318 of the Code) of one
of the 10 largest interests in the Employer if such
individual's compensation exceeds 100% of the dollar
limitation under Section 415(c)(1)(A) of the Code, a 5% owner
of the Employer, or a 11/o owner of the Employer who has an
annual compensation of more than $150,000. Annual compensation
means compensation as defined in Section 415(c)(3) of the
Code, but including amounts contributed by the Employer
pursuant to a salary reduction agreement which are excludable
from the Employee's gross income under Section 125, Section
402(e)(3), Section 402(h)(1)(B) or Section 403(b) of the Code.
The determination period is the Plan Year containing the
determination date and the 4 preceding Plan Years.
77
39
The determination of who is a Key Employee will be made in
accordance with Section 416(i)(1) of the Code and the
regulations thereunder.
C. Top-heavy ratio
1. If the Employer maintains one or more defined
contribution plans (including any simplified employee
pension plan) and the Employer has not maintained any
defined benefit plan which during the 5-year period
ending on the determination date(s) has or has had
accrued benefits, the top-heavy ratio for this Plan
alone or for the required or permissive aggregation
group as appropriate is a fraction, the numerator of
which is the sum of the account balances of all Key
Employees as of the determination date(s) (including
any part of any account balance distributed in the
5-year period ending on the determination date(s)),
and the denominator of which is the sum of all
account balances (including any part of any account
balance distributed in the 5-year period ending on
the determination date(s)), both computed in
accordance with Section 416 of the Code and the
regulations thereunder. Both the numerator and the
denominator of the top-heavy ratio are increased to
reflect any contribution not actually made as of the
determination date, but which is required to be taken
into account on that date under Section 416 of the
Code and the regulations thereunder.
2. If the Employer maintains one or more defined
contribution plans (including any simplified employee
pension plan) and the Employer maintains or has
maintained one or more defined benefit plan's which
during the 5-year period ending on the determination
date(s) has or has had any accrued benefits, the
top-heavy ratio for any required or permissive
aggregation group as appropriate is a fraction, the
numerator of which is the sum of account balances
under the aggregated defined contribution plan or
plans for all Key Employees, determined in accordance
with (1) above, and the present value of accrued
benefits under the aggregated defined benefit plan or
plans 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 or plans for all Participants,
determined in accordance with (1) above, and the
present value of accrued benefits under the defined
benefit plan or plans for all Participants as of the
determination date(s), all determined in accordance
with Section 416 of the Code and the regulations
thereunder. The accrued benefits under a defined
benefit plan in both the numerator and denominator of
the top-heavy ratio are increased for any
distribution of an accrued benefit made in the 5-year
period ending on the determination date.
3. For purposes of (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 Section 416 of the Code and the
regulations thereunder for the first and second plan
years of a defined benefit plan. The account balances
and accrued benefits of a Participant (a) who is not
a Key Employee but who was a Key Employee in a Prior
Year, or (b) who has not been credited with at least
one Hour of Service with any employer maintaining the
plan at any time during the 5-year period ending on
the determination date will be disregarded. The
calculation of the top-heavy ratio, and the extent~to
which distributions, rollovers, and transfers are
taken into account will be made in accordance with
Section 416 of the Code and the regulations
thereunder. Deductible employee contributions will
not be taken into account for purposes of computing
the top-heavy ratio. When aggregating plans the value
of account balances and accrued benefits will be
calculated with reference to the determination dates
that fall within the same calendar year.
The accrued benefit of a Participant other than a Key
Employee shall be determined under (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 Section 411(b)(1)(C) of the Code.
4. Permissive aggregation group: The required
aggregation group of plans plus any other plan or
plans of the Employer which, when considered as a
group with the required aggregation group, would
continue to satisfy the requirements of Sections
401(a)(4) and 410 of the Code.
5. Required aggregation group: (a) 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 (b) any other qualified plan of
the Employer which enables a plan described in (a) to
meet the requirements of Sections 401(a)(4) or 410 of
the Code.
6. Determination date: For any Plan Year subsequent to
the first Plan Year, the last day of the preceding
Plan Year. For the first Plan Year of the Plan, the
last day of that year.
78
40
7. Valuation date: For purposes of calculating the
top-heavy ratio, the valuation date shall be the last
day of each Plan Year.
8. Present value: For purposes of establishing the
"present value" of benefits under a defined benefit
plan to compute the top-heavy ratio, any benefit
shall be discounted only for mortality and interest
based on the interest rate and mortality table
specified for this purpose in the defined benefit
plan, unless otherwise indicated in the Adoption
Agreement.
10.09 SPECIAL LIMITATIONS FOR OWNER-EMPLOYEES
If this Plan provides contributions or benefits for one or more
Owner-Employees who control both the business for which this Plan is
established and one or more other trades or businesses, this Plan and
the plan established for other trades or businesses must, when looked
at as a single plan, satisfy Sections 401(a) and (d) of the Code for
the employees of those trades or businesses.
If the Plan provides contributions or benefits for one or more
Owner-Employees who control one or more other trades or businesses, the
employees of the other trades or businesses must be included in a plan
which satisfies Sections 401(a) and (d) of the Code and which provides
contributions and benefits not less favorable than provided for
Owner-Employees under this Plan.
If an individual is covered as an Owner-Employee under the plans of two
or more trades or businesses which are not controlled and the
individual controls a trade or business, then the contributions or
benefits of the employees under the plan of the trade or business which
is controlled must be as favorable as those provided for him or her
under the most favorable plan of the trade or business which is not
controlled.
For purposes of the preceding paragraphs, an Owner-Employee, or two or
more Owner-Employees, will be considered to control a trade or business
if the Owner-Employee, or two or more Owner-Employees, together:
A. own the entire interest in a unincorporated trade or business,
or
B. in the case of a partnership, own more than 50% of either the
capital interest or the profit interest in the partnership.
For purposes of the preceding sentence, an Owner-Employee, or two or
more Owner-Employees, shall be treated as owning any interest in a
partnership which is owned, directly or indirectly, by a partnership
which such Owner-Employee, or such two or more Owner-Employees, are
considered to control within the meaning of the preceding sentence.
10.10 INALIENABILITY OF BENEFITS
No benefit or interest available hereunder will be subject to
assignment or alienation, either voluntarily or involuntarily. The
preceding sentence shall also apply to the creation, assignment, or
recognition of a right to any benefit payable with respect to a
Participant pursuant to a domes~c relations order, unless such order is
determined to be a qualified domestic relations order, as defined in
Section 414(p) of the Code.
Generally, a domestic relations order cannot be a qualified domestic
relations order until January 1, 1985. However, in the case of a
domestic relations order entered before such date, the Plan
Administrator:
(1) shall treat such order as a qualified domestic relations order
if such Plan Administrator is paying benefits pursuant to such
order on such date, and
(2) may treat any other such order entered before such date as a
qualified domestic relations order even if such order does not
meet the requirements of Section 414(p) of the Code.
Notwithstanding any provision of the Plan to the contrary, a
distribution to an alternate payee under a qualified domestic relations
order shall be permitted even if the Participant affected by Such Order
is not otherwise entitled to a distribution and even if such
Participant has not attained earliest retirement age as defined in
Section 414(p) of the Code.
10.11 CANNOT ELIMINATE PROTECTED BENEFITS
Pursuant to Section 411(d)(6) of the Code, and the regulations
thereunder, the Employer cannot reduce, eliminate or make subject to
Employer discretion any Section 411 (d)(6) protected benefit. Where
this Plan document is being adopted to amend another plan thai contains
a protected benefit not provided for in this document, the Employer may
attach a supplement to the Adoption Agreement that describes such
protected benefit which shall become part of the Plan.
SECTION ELEVEN 401(K) PROVISIONS
In addition to Sections I through 10, the provisions of this Section 11
shall apply if the Employer has established a 401(k) cash or deferred
arrangement (CODA) by completing and signing the appropriate, Adoption
Agreement.
11.100 DEFINITIONS
The following words and phrases when used in the Plan with initial
capital letters shall, for the purposes of this Plan, have the meanings
set forth below unless the context indicates that other meanings are
intended.
79
41
11.101 ACTUAL DEFERRAL PERCENTAGE (ADP)
Means, for a specified group of Participants for a Plan Year, the
average of the ratios (calculated separately for each Participant in
such group) of (1) the amount of Employer Contributions actually paid
over to the Fund on behalf of such Participant f~r the Plan Year to (2)
the Participant's Compensation for such Plan Year (taking into account
only that Compensation paid to the Employee during the portion of the
Plan Year he or she was an eligible Participant, unless otherwise
indicated in the Adoption Agreement). For purposes of calculating the
ADF, Employer Contributions on behalf of any Participant shall include:
(1) any Elective Deferrals made pursuant to the Participant's deferral
election, (including Excess Elective Deferrals of Highly Compensated
Employees), but excluding (a) Excess Elective Deferrals of Non-Highly
Compensated Employees that arise solely from Elective Deferrals made
under the Plan or plans of this Employer and (b) Elective Deferrals
that are taken into account in the Contribution Percentage test
(provided the ADP test is satisfied both with and without exclusion of
these Elective Deferrals); and (2) at the election of the Employer,
Qualified Nonelective Contributions and Qualified Matching
Contributions For purposes of computing Actual Deferral Percentages, an
Employee who would be a Participant but for the failure to make
Elective Deferrals shall be treated as a Participant on whose behalf no
Elective Deferrals are made.
11.102 AGGREGATE LIMIT
Means the sum of (1) 125% of the greater of the ADP of the Participants
who are not Highly Compensated Employees for the Plan Year or the ACP
of the Participants who are not Highly Compensated Employees under the
Plan subject to Code Section 401(m) for the Plan Year beginning with or
within the Plan Year of the CODA; and (2) the lesser of 200% or two
plus the lesser of such ADP or ACP. "Lesser" is substituted for
"greater" in "W" above, and "greater" is substituted for "lesser" after
"two plus the" in "(2)" if it would result in a larger Aggregate Limit.
11.103 AVERAGE CONTRIBUTION PERCENTAGE (ACP)
Means the average of the Contribution Percentages of the Eligible
Participants in a group.
11.104 CONTRIBUTING PARTICIPANT
Means a Participant who has enrolled as a Contributing Participant
pursuant to Section 11.201 and on whose behalf the Employer is
contributing Elective Deferrals to the Plan (or is making Nondeductible
Employee Contributions).
11.105 CONTRIBUTION PERCENTAGE
Means the ratio (expressed as a percentage) of the Participant's
Contribution Percentage Amounts to the Participant's Compensation for
the Plan Year (taking into account only the Compensation paid to the
Employee during the portion of the Plan Year he or she was an eligible
Participant, unless otherwise indicated in the Adoption Agreement).
11.106 CONTRIBUTION PERCENTAGE AMOUNTS
Means the sum of the Nondeductible Employee Contributions, Matching
Contributions, and Qualified Matching Contributions made under the Plan
on behalf of the Participant for the Plan Year. Such Contribution
Percentage Amounts shall not include Matching Contributions that are
forfeited either to correct Excess Aggregate Contributions or because
the contributions to which they relate are Excess Deferrals, Excess
Contributions, Excess Aggregate Contributions or excess annual
additions which are distributed pursuant to Section 11.508. If so
elected in the Adoption Agreement, the Employer may include Qualified
Nonelective Contributions in the Contribution Percentage Amount. The
Employer also may elect to use Elective Deferrals in the Contribution
Percentage Amounts so long as the ADP test is met before the Elective
referrals are used in the ACP test and continues to be met following
the exclusion of those Elective Deferrals that are used to meet the ACP
test.
11.107 ELECTIVE DEFERRALS
Means any Employer Contributions made to the Plan at the election of
the Participant, in lieu of cash compensation, and shall include
contributions made pursuant to a salary reduction agreement or other
deferral mechanism. With respect to any taxable year, a Participant's
Elective Deferral is the sum of all Employer contributories made on
behalf of such Participant pursuant to an election to defer under any
qualified CODA as described in Section 401(k) of the Code, any
simplified employee pension cash or deferred arrangement as described
in Section 402(h)(1)(B), any eligible deferred compensation plan under
Section 457, any plan as described under Section 501(c)(18), and any
Employer contributions made on the behalf of a Participant for the
purchase of an annuity contract under Section 403(b) pursuant to a
salary reduction agreement. Elective Deferrals shall not include any
deferrals properly distributed as excess annual additions.
No Participant shall be permitted to have Elective Deferrals made under
this Plan, or any other qualified plan maintained by the Employer,
during any taxable year, in excess of the dollar limitation contained
in Section 402(g) of the Code in effect at the beginning of such
taxable year.
Elective Deferrals may not be taken into account for purposes of
satisfying the minimum allocation requirement applicable to Top-Heavy
Plans described in Section 3.01(E).
11.108 ELIGIBLE PARTICIPANT
Means any Employee who is eligible to make a Nondeductible Employee
Contribution or an Elective Deferral (if the Employer takes such
contributions into account in the calculation of the Contribution
Percentage), Or to receive a Matching Contribution (including
Forfeitures thereof) or a Qualified Matching Contribution.
If a Nondeductible Employee Contribution is required as a condition of
participation in the Plan, any Employee who would be a Participant in
the Plan if such Employee made such a contribution shall be treated as
an Eligible Participant on behalf of whom no Nondeductible Employee
Contributions are made.
80
42
11.109 EXCESS AGGREGATE CONTRIBUTIONS
Means, with respect to any Plan Year, the excess of:
A. The aggregate Contribution Percentage Amounts taken into
account in computing the numerator of the Contribution
Percentage actually made on behalf of Highly Compensated
Employees for such Plan Year, over
B. The maximum Contribution Percentage Amounts permitted by the
ACP test (determined by reducing contributions made on behalf
of Highly Compensated Employees in order of their Contribution
Percentages beginning with the highest of such 91
percentages).
Such determination shall be made after first determining
Excess Elective Deferrals pursuant to Section 11.112 and then
determining Excess Contributions pursuant to Section 11.111.
11-110 EXCESS CONTRIBUTIONS
Means, with respect to any Plan Year, the excess of:
A. The aggregate amount of Employer Contributions actually taken
into account in computing the ADP of Highly Compensated
Employees for such Plan Year, over
B. The maximum amount of such contributions permitted by the ADP
test (determined by reducing contributions made on behalf of
Highly Compensated Employees in order of the ADP, beginning
with the highest of such percentages).
11.111 EXCESS ELECTIVE DEFERRALS
Means those Elective Deferrals that are includible in a Participant's
gross income under Section 402(g) of the Code to the extent such
Participant's Elective Deferrals for a taxable year exceed the dollar
limitation under such Code section. Excess Elective Deferrals shall be
treated as annual additions under the Plan, unless such amounts are
distributed no later than the first April 15 following, the close of
the Participant's taxable year.
11.112 MATCHING CONTRIBUTION
Means an Employer Contribution made to this or any other defined
contribution plan on behalf of a Participant on account of an Elective
Deferral or a Nondeductible Employee Contribution made by such
Participant under a plan maintained by the Employer.
Matching Contributions may not be taken into account for purposes of
satisfying the minimum allocation requirement applicable to Top-Heavy
Plans described in Section 3.01(E).
11.113 QUALIFIED NONELECTIVE CONTRIBUTIONS
Means contributions (other than Matching Contributions or Qualified
Matching Contributions) made by the Employer and allocated to
Participants' Individual Accounts that the Participants may not elect
to receive in cash until distributed from the Plan, that are
nonforfeitable when made; and that are distributable only in accordance
with the distribution provisions that art applicable to Elective
Deferrals and Qualified Matching Contributions.
Qualified Nonelective Contribution may be taken into account for
purpose, of satisfying the minimum allocation requirement applicable to
Top-Heavy Plans described in Section 3.01(E).
11.114 QUALIFIED MATCHING CONTRIBUTIONS
Means Matching Contributions which are subject to the distribution and
nonforfeitability requirements under Section 401(k) of the Code when
made.
11.115 QUALIFYING CONTRIBUTING PARTICIPANT
Means a Contributing Participant who satisfies the requirements
described in Section 11.302 to be entitled to receive a Matching
Contribution (and Forfeitures, if applicable) for a Plan Year.
11.200 CONTRIBUTING PARTICIPANT
11.201 REQUIREMENTS TO ENROLL AS A CONTRIBUTING PARTICIPANT
A. Each Employee who satisfies the eligibility requirements
specified in the Adoption Agreement may enroll as a
Contributing Participant as of any subsequent Entry Date (or
earlier if required by Section 2.03) specified in the Adoption
Agreement for this purpose. A Participant who wishes to enroll
as a Contributing Participant must complete, sign and file a
salary reduction agreement (or agreement to make Nondeductible
Employee Contributions) with the Plan Administrator.
B. Notwithstanding the times set forth in Section 11.201(A) as of
which a Participant may enroll as a Contributing Participant,
the Plan Administrator shall have the authority to designate,
in a nondiscriminatory manner, additional enrollment times
during the 12 month period beginning on the Effective Date (or
the date that Elective Deferrals may commence, if later) in
order that an orderly first enrollment might be completed. In
addition, if the Employer has indicated in the Adoption
Agreement that Elective Deferrals may he based on bonuses,
then Participants shall be afforded a reasonable period of
time prior to the issuance of such bonuses to elect to defer
them into the Plan.
81
43
11.202 CHANGING ELECTIVE DEFERRAL AMOUNTS
A Contributing Participant may modify his or her salary reduction
agreement (or agreement to make Nondeductible Employee Contributions)
to increase or decrease (within the limits placed on Elective Deferrals
(or Nondeductible Employee Contributions) in the Adoption Agreement)
the amount of his or her Compensation deferred into the Plan. Such
modification may only be made as of the dates specified in the Adoption
Agreement for this purpose, or as of any other more frequent date(s) if
the Plan Administrator permits in a uniform and nondiscriminatory
manner. A Contributing Participant who desires to make such a
modification shall complete, sign and file a new salary reduction
agreement (or agreement to make Nondeductible Employee Contribution)
with the Plan Administrator. The Plan Administrator may prescribe such
uniform and nondiscriminatory rules it deems appropriate to can-y out
the terms of this Section.
11.203 CEASING ELECTIVE DEFERRALS
A Participant may cease Elective Deferrals (or Nondeductible Employee
Contributions) and thus withdraw as a Contributing Participant as of
the dates specified in the Adoption Agreement for this purpose (or as
of any other date if the Plan Administrator so permits in a uniform
and nondiscriminatory manner) by revoking the authorization to the
Employer to make Elective Deferrals (or Nondeductible Employee
Contributions) on his or her behalf. A Participant who desires to
withdraw as a Contributing Participant shall give written notice of
withdrawal to the Plan Administrator at least thirty days (or such
lesser period of days as the Plan Administrator shall permit in a
uniform and nondiscriminatory manner) before the effective date of
withdrawal. A Participant shall cease to be a Contributing
Participant upon his or her Termination of Employment, or an account
of termination of the Plan.
11.204 RETURN AS A CONTRIBUTING PARTICIPANT AFTER CEASING ELECTIVE DEFERRALS
A Participant who has withdrawn as a Contributing Participant under
Section 11.203 (or because the Participant has taken a hardship
withdrawal pursuant to Section 11.503) may not again become a
Contributing Participant until the dates set forth in the Adoption
Agreement for this purpose, unless the~Plan Administrator, in a uniform
and nondiscriminatory manner, permits withdrawing Participants to
resume their status as Contributing Participants sooner.
11.205 CERTAIN ONE-TIME IRREVOCABLE ELECTIONS
This Section 11.205 applies where the Employer has indicated in the
Adoption Agreement that an Employee may make a onetime irrevocable
election to have the Employer make contributions to the Plan on such
Employee's behalf. In such event, an Employee may elect, upon the
Employee's first becoming eligible to participate in the Plan, to have
contributions equal to a specified amount or percentage of
the~Employee's Compensation (including no amount of Compensation) made
by the Employer on the Employee's behalf to the Plan (and to any other
plan of the Employer) for the duration of the Employee's employment
with the Employer. Any contributions made pursuant to a one-time
irrevocable election described in this Section are not treated as made
pursuant to a' cash or deferred election, are not Elective Deferrals
and are not includible in an Employee's gross income.
The Plan Administrator shall establish such uniform and
nondiscriminatory procedures as it deems necessary or advisable to
administer this provision.
11.300 CONTRIBUTIONS
11.301 CONTRIBUTIONS BY EMPLOYER
The Employer shall make contributions to the Plan in accordance with
the contribution formulas specified in the Adoption Agreement.
11.302 MATCHING CONTRIBUTIONS
The Employer may elect to make Matching Contributions under the Plan on
behalf of Qualifying Contributing Participants as provided in the
Adoption Agreement. To be a Qualifying Contributing Participant for a
Plan Year, the Participant must make Elective Deferrals (or
Nondeductible Employee Contributions, if the Employer has agreed to
match such contributions) for the Plan Year satisfy any age and Years
of Eligibility Service requirements that are specified for Matching
Contributions in the Adoption Agreement and also satisfy any additional
conditions set forth in the Adoption Agreement for this purpose. In a
uniform and nondiscriminatory, manner, the Employer may make Matching
Contributions at the same time as it contributes Elective Deferrals or
at any other time as permitted by laws and regulations.
11.303 QUALIFIED NONELECTIVE CONTRIBUTIONS
The Employer may elect to make Qualified Nonelective Contributions
under the Plan on behalf of Participants as provided in the Adoption
Agreement.
In addition, in lieu of distributing Excess Contributions as provided
in Section 11.50-5 of the Plan, or Excess Aggregate Contributions as
provided in Section 11.506 of the Plan, and to the extent elected by
the Employer in the Adoption Agreement, the Employer may make Qualified
Nonelective Contributions on behalf of Participants who are not Highly
Compensated Employees that are sufficient to satisfy either the Actual
Deferral Percentage test or the Average Contribution Percentage test,
or both, pursuant to regulations under the Code.
82
44
11.304 QUALIFIED MATCHING CONTRIBUTIONS
The Employer may elect to make Qualified Matching Contributions under
the Plan on behalf of Participants as provided in the Adoption
Agreement.
11.305 NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS
Notwithstanding Section 3.02, if the Employer so allows in the Adoption
Agreement, a Participant may contribute Nondeductible Employee
Contributions to the Plan.
If the Employer has indicated in the Adoption Agreement that
Nondeductible Employee Contributions will be mandatory, then the
Employer shall establish uniform and nondiscriminatory rules and
procedures for Nondeductible Employee Contributions as it deems
necessary and advisable including, but not limited to, rules describing
in amounts or percentages of Compensation Participants may or must
contribute to the Plan.
A separate account will be maintained by the Plan Administrator for the
Nondeductible Employee Contributions for each Participant.
A Participant may, upon a written request submitted to the Plan
Administrator, withdraw the lesser of the portion of his or her
Individual Account attributable to his or her Nondeductible Employee
Contributions or the amount he or she contributed as Nondeductible
Employee Contributions.
Nondeductible Employee Contributions and earnings thereon will be
nonforfeitable at all times. No Forfeiture will occur solely as a
result of an Employee's withdrawal of Nondeductible Employee
Contributions.
11.400 NONDISCRIMINATION TESTING
11.401 ACTUAL DEFERRAL PERCENTAGE TEST (ADP)
A. Limits on Highly Compensated Employees - The Actual Deferral
Percentage (hereinafter "AD') for Participants who are Highly
Compensated Employees for each Plan Year and the ADP for
Participants who are not Highly Compensated Employees for the
same Plan Year must satisfy one of the following tests:
1. The ADP for Participants who are Highly Compensated
Employees for the Plan Year shall not exceed the AD
for Participants who are not Highly Compensated
Employees for the same Plan Year multiplied by 1.25;
or
2. The ADP for Participants who are Highly Compensated
Employees for the Plan Year shall not exceed the ADP
for Participants who are not Highly Compensated
Employees for the same Plan Year multiplied by 2.0
provided that the ADP for Participants who are Highly
Compensated Employees does not exceed the ADP for
Participants who are not Highly Compensated Employees
by more than 2 percentage points.
B. Special Rules
1. The ADP for any Participant who is a Highly
Compensated Employee for the Plan Year and who is
eligible to have Elective Deferrals (and Qualified
Nonelective Contributions or Qualified Matching
Contributions, or both, if treated as Elective
Deferrals for purposes of the ADP test) allocated to
his or her Individual Accounts under two or more
arrangements described in Section 401(k) of the Code,
that are maintained by the Employer, shall be
determined as if such Elective Deferrals (and, if
applicable, such Qualified Nonelective Contributions
or Qualified Matching Contributions, or both) were
made under a single arrangement. If a Highly
Compensated Employee participates in two or more cash
or deferred arrangements that have different Plan
Years, all cash or deferred arrangements ending with
or within the same calendar year shall be treated as
a single arrangement. Notwithstanding the foregoing,
certain plans shall be treated as separate if
mandatorily desegregated under regulations under
Section 401(k) of the Code.
2. In the event that this Plan satisfies the
requirements of Sections 401(k), 401(a)(4), or 410(b)
of the Code only if aggregated with one or more other
plans, or if one or more other plans satisfy the
requirements of such sections of the Code only if
aggregated with this Plan, then this Section 11-401
shall be applied by determining the ADP of Employees
as if all such plans were a single plan. For Plan
Years beginning after December 31, 1989, plans may be
aggregated in order to satisfy Section 401(k) of the
Code only if they have the same Plan Year.
3. For purposes of determining the ADP of a Participant
who is a 5% owner or one of the 10 most highly paid
Highly Compensated Employees, the Elective Deferrals
(and Qualified Nonelective Contributions or Qualified
Matching Contributions, or both if treated as
Elective Deferrals for purposes of the ADP test) and
Compensation of such Participant shall include the
Elective Deferrals (and, if applicable, Qualified
Nonelective Contributions and Qualified ,Matching
Contributions, or both) and Compensation for the Plan
Year of family members (as defined in Section
Compensated Employees, shall be disregarded as
414(q)(6) of the Code). Family members, with respect
to such Highly separate Employees, in determining the
ADP both for Participants who are not Highly
Compensated Employees and for Participants who are
Highly Compensated Employees.
83
45
4. For purposes of determining the ADP test, Elective
Deferrals, Qualified Nonelective Contributions and
Qualified Matching Contributions must be made before
the last day of the 12 month period immediately
following the Plan Year to which contributions
relate.
5. The Employer shall maintain records sufficient to
demonstrate satisfaction of the ADP test and the
amount of Qualified Nonelective Contributions Or
Qualified Matching Contributions, or both, used in
such test.
6. The determination and treatment of the ADP amounts of
any Participant shall satisfy such other requirements
as may be prescribed by the Secretary of the
Treasury.
7. If the Employer elects to take Qualified Matching
Contributions into account as Elective Deferrals for
purposes of the ADP test, then (subject to such other
requirements as may be prescribed by the Secretary of
the Treasury) unless otherwise indicated in the
Adoption Agreement, only the amount of such Qualified
Matching Contributions that are needed to meet the
ADP test shall be taken into account.
8. In the event that the Plan Administrator determines
that it is not likely that the ADP test will be
satisfied for a particular Plan Year unless certain
steps are taken prior to the end of such Plan Year,
the Plan Administrator may require Contributing
Participants who are Highly Compensated Employees to
reduce their Elective Deferrals for such Plan Year in
order to satisfy that requirement. Said reduction
shall also be required by the Plan Administrator in
the event that the Plan Administrator anticipates
that the Employer will not be able to deduct all
Employer Contributions from its income for Federal
income tax purposes.
11.402 LIMITS ON NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS AND MATCHING CONTRIBUTIONS
A. LIMITS ON HIGHLY COMPENSATED EMPLOYEES - The Average
Contribution Percentage (hereinafter "ACP") for Participants
who are Highly Compensated Employees for each Plan Year and
the ACP for Participants who are not Highly Compensated
Employees for the same Plan Year must satisfy one of the
following tests:
1. The ACP for Participants who are Highly Compensated
Employees for the Plan Year shall not exceed the ACP
for Participants who are not Highly Compensated
Employees for & same Plan Year multiplied by 1.25; or
2. The ACP for Participants who are Highly Compensated
Employees for the Plan Year shall not exceed the ACP
for Participants who are not Highly Compensated
Employees for the same Plan Year multiplied by 2,
provided that the ACP for the Participants who are
Highly Compensated Employees does not exceed the ACP
for Participants who are not Highly Compensated
Employees by more than 2 percentage points.
B. SPECIAL RULES
1. Multiple Use - If one or more Highly Compensated
Employees participate in both a CODA and a plan
subject to the ACP test maintained by the Employer
and the sum of the ADP and ACP of those Highly
Compensated Employees subject to either or both tests
exceeds the Aggregate Limit, then, as elected in the
Adoption Agreement, the ACP or the ADP of those
Highly Compensated Employees who also participate in
a CODA will be reduced (beginning with such Highly
Compensated Employee whose ACP (or ADP, if elected)
is the highest) so that the limit is not exceeded.
The amount by which each Highly Compensated
Employee's Contribution Percentage Amounts (or ADP,
if elected) is reduced shall be treated as an Excess
Aggregate Contribution (or Excess Contribution, if
elected). The ADP and ACP of the Highly Compensated
Employees are determined after any corrections
required to meet the ADP and ACP tests. Multiple use
does not occur if the ADP and ACP of the Highly
Compensated Employees does not exceed 1.25 multiplied
by the ADP and ACP of the Participants who are not
Highly Compensated Employees.
2. For purposes of this Section 11.402, the Contribution
Percentage for any Participant who is a Highly
Compensated Employee and who is eligible to have
Contribution Percentage Amounts allocated to his or
her Individual Account under two or more plans
described in Section 401(a) of the Code, or
arrangements described in Section 401(k) of the Code
that are maintained by the Employer, shall be
determined as if the total of such Contribution
Percentage Amounts was made under each plan If a
Highly Compensated Employee participates in two or
more cash or deferred arrangements that have
different plan years, all cash or deferred
arrangements ending with or within the same calendar
year shall be treated as a single arrangement.
Notwithstanding the foregoing, certain plans shall be
treated as separate If mandatorily desegregated under
regulations under Section 401(m) of the Code.
3. In the event that this Plan satisfies the
requirements of Sections 401(m), 401(a)(4) or 410(b)
of the Code only if aggregated with one or more other
plans, or if one or more other plans satisfy the
requirements of such Sections of the Code only if
aggregated with this Plan, then this Section shall be
applied by determining the Contribution Percentage of
Employees as if all such plans were a single plan.
For Plan Years beginning after December 31,1989,
plans may be aggregated in order to satisfy Section
401(m) of the Code only if they have the same Plan
Year.
84
46
4. For purposes of determining the Contribution
Percentage of a Participant who is a 5% owner or one
of the 10 most highly paid Highly Compensated
Employees, the Contribution Percentage Amounts and
Compensation of such Participant shall include the
Contribution Percentage Amounts and Compensation for
the Plan Year of family members, (as defined in
Section 414(q)(6) of the Code). Family members, with
respect to Highly Compensated Employees, shall be
disregarded as separate Employees in determining the
Contribution Percentage both for Participants who are
not Highly Compensated Employees and for Participants
who are Highly Compensated Employees.
5. For purposes of determining the Contribution
Percentage test, Nondeductible Employee Contributions
are considered to have been made in the Plan Year in
which contributed to the Fund. Matching Contributions
and Qualified Nonelective Contributions will be
considered made for a Plan Year if made no later than
the end of the 12 month period beginning on the day
after the close of the Plan Year.
6. The Employer shall maintain records sufficient to
demonstrate satisfaction of the ACP test and the
amount of Qualified Nonelective Contributions or
Qualified Matching Contributions, or both, used in
such test.
7. The determination and treatment of the Contribution
Percentage of any Participant shall satisfy such
other requirements as may be prescribed by the
Secretary of the Treasury.
8. If the Employer elects to take Qualified Nonelective
Contributions into account as Contribution Percentage
Amounts for purposes of the ACP test, then (subject
to such other requirements as may be prescribed by
the Secretary of the Treasury) unless otherwise
indicated in the Adoption Agreement, only the amount
of such Qualified Nonelective Contributions that are
needed to meet the ACP test shall be taken into
account.
9. If the Employer elects to take Elective Deferrals
into account as Contribution Percentage Amounts for
purposes of the ACP test, then (subject to such other
requirements as ma~ be prescribed by the Secretary of
the Treasury) unless otherwise indicated in the
Adoption Agreement, only the amount of such Elective
Deferrals that are needed to meet the ACP test, shall
be taken into account.
11.500 DISTRIBUTION PROVISIONS
11.501 GENERAL RULE
Distributions from the Plan are subject to the provisions of Section 6
and the provisions of this Section 11. In the event of a conflict
between the provisions of Section 6 and Section 11, the provisions of
Section 11 shall control.
11.502 DISTRIBUTION REQUIREMENTS
Elective Deferrals, Qualified Nonelective Contributions, and Qualified
Matching Contributions, and income allocable to each are not
distributable to a Participant or his or her Beneficiary or
Beneficiaries, in accordance with such Participant's or Beneficiary or
Beneficiaries' election, earlier than upon separation from service,
death or disability,,.
Such amounts may also be distributed upon:
A. Termination of the Plan without the establishment of another
defined contribution plan, other than an employee stock
ownership plan (as defined in Section 4975(e) or Section 409
of the Code) or a simplified employee pension plan as defined
in Section 408(k).
B. The disposition by a corporation to an unrelated corporation
of substantially all of the assets (within the meaning of
Section 409(d)(2) of the C~de used in a trade or business of
such corporation if such corporation continues to maintain
this Plan after the disposition, but only with respect to
Employees who continue employment with the corporation
acquiring such assets.
C. The disposition by a corporation to an unrelated entity of
such corporation's interest in a subsidiary (within the
meaning of Section 409(d)(3) of the Code) if such corporation
continues to maintain this Plan, but only with respect to
Employees who continue employment with such subsidiary.
D. The attainment of age 59 1/2 in the case of a profit sharing
plan.
E. If the Employer has so elected in the Adoption Agreement, the
hardship of the Participant as described in Section 11.503.
All distributions that may be made pursuant to one or more of
the foregoing distributable events are subject to the spousal
and Participant consent requirements (if applicable) contained
in Section 401(a)(11) and 417 of the Code. In addition,
distributions after March 31, 1988, that are triggered by any
of the first three events enumerated above must be made in a
lump sum.
85
47
11.503 HARDSHIP DISTRIBUTION
A. GENERAL - If the Employer has so elected in the Adoption
Agreement, distribution of Elective Deferrals (and any
earnings credited to a Participant's account as of the end of
the last Plan Year, ending before July 1, 1989) may be made to
a Participant in the event of hardship. For the purposes of
this Section, hardship is defined as an immediate and heavy
financial need of the Employee where such Employee lacks other
available resources. Hardship distributions are subject to the
spousal consent requirements contained in Sections 401(a)(11)
and 417 of the Code.
B. SPECIAL RULES
1. The following are the only financial needs considered
immediate and heavy: expenses incurred or necessary
for medical care, described in Section 213(d) of the
Code, of the Employee, the Employee's spouse or
dependents; the purchase (excluding mortgage
payments) of a principal residence for the Employee;
payment of tuition and related educational fees for
the next 12 months of post-secondary education for
the Employee, the Employee's spouse, children or
dependents; or the need to prevent the eviction of
the~Employee from, or a foreclosure on the mortgage
of, the Employee's principal residence.
2. A distribution will be considered as necessary to
satisfy an immediate and heavy financial need of the
Employee only if:
a. The Employee has obtained all distributions,
other than hardship distributions, and all
nontaxable loans under all plans maintained
by the Employer;
b. All plans maintained by the Employer provide
that the Employee's Elective Deferrals (and
Nondeductible Employee Contributions) will
be suspended for 12 months after the receipt
of the hardship distribution,
c. The distribution is not in excess of the
amount of an immediate and heavy financial
need (including amounts necessary to pay any
Federal, state or local income taxes or
penalties reasonably anticipated to result
from the distribution); and
d. All plans maintained by the Employer provide
that the Employee may not make Elective
Deferrals for the Employee's taxable year
immediately following the taxable year of
the hardship distribution in excess of the
applicable limit under Section 402(g) of the
Code for such taxable year less the amount
of such Employee's Elective Deferrals for
the taxable year of the hardship
distribution.
11.504 DISTRIBUTION OF EXCESS ELECTIVE DEFERRALS
A. GENERAL RULE - A Participant may assign to this Plan any
Excess Elective Deferrals made during a taxable year of the
Participant by notifying the Plan Administrator on or b~fore
the date specified in the Adoption Agreement' of the amount of
the Excess Elective deferrals to be assigned to the Plan. A
Participant is deemed to notify the Plan Administrator of any
Excess Elective Deferrals that arise by taking into account
only those Elective Deferrals made to this Plan and any other
plans of the Employer.
Notwithstanding any other provision of the Plan, Excess
Elective Deferrals, plus any income and minus any loss
allocable thereto, shall be distributed no later than April 15
to any Participant to whose Individual Account Excess Elective
Deferrals were assigned for the preceding year and who claims
Excess Elective Deferrals for such taxable year.
B. DETERMINATION OF INCOME OR LOSS - Excess Elective Deferrals
shall be adjusted for any income or loss up to the date of
distribution. The income of loss allocable to Excess Elective
Deferrals is the sum of : (1) income or loss allocable to the
Participant's Elective Deferral account for the taxable year
multiplied by a fraction, the numerator of which is such
Participant's Elective Deferrals for the year and the
denominator is the participant's Individual Account balance
attributable to Elective Deferrals without regard to any
income or loss occurring during such taxable year; and (2) 10%
of the amount determined under (1) multiplied by the number of
whole calendar months between the end of the Participant's
taxable year and the date of distribution, counting the month
of distribution if distribution occurs after the 15th of such
month. Notwithstanding the preceding sentence, the Plan
Administrator may compute the income or loss allocable to
Excess Elective Deferrals in the manner described in Section 4
(i.e., the usual manner used by the Plan for allocating income
or loss to Participants' Individual Accounts), provided such
method is used consistently for all Participants and for all
corrective distributions under the Plan for the Plan Year.
11.505 DISTRIBUTION OF EXCESS CONTRIBUTIONS
A. GENERAL RULE - Notwithstanding any other provision of this
Plan, Excess Contributions, plus any income and minus any loss
allocable thereto, shall be distributed no later than the last
day of each Plan Year to Participants to whose Individual
Accounts such Excess Contributions were allocated for the
preceding Plan Year. If such excess amounts are distributed
more than 2 1/2 months after the last day of the Plan Year in
which such excess amounts arose, a 10% excise tax will be
imposed on the Employer maintaining the Plan with respect to
such amounts. Such distributions shall be made to Highly
Compensated Employees on the basis of the respective portions
of the Excess Contributions attributable to each of such
Employees. Excess Contributions of Participants who are
subject to the family member aggregation rules shall be
allocated among the family members in proportion to the
Elective Deferrals (and amounts treated as Elective Deferrals)
of each family member that is combined to determine the
combined ADP.
Excess Contributions (including the amounts recharacterized)
shall be treated as annual additions under the Plan.
86
48
B. DETERMINATION OF INCOME OR LOSS - Excess Contributions shall
be adjusted for any income or loss up to the date of
distribution. The income or loss allocable to Excess
Contributions is the sum of: (1) income or loss allocable to
Participant' Elective Deferral account (and, if applicable,
the Qualified Nonelective Contribution account or the
Qualified Matching Contributions account or both) for the Plan
Year multiplied by a fraction, the numerator of which is such
Participant's Excess Contributions for the year and the
denominator is the Participant's Individual Account balance
attributable to Elective Deferrals (and Qualified Nonelective
Contributions or Qualified Matching Contributions, or both, if
any of such contributions are included in the ADP test)
without regard to any income or loss occurring during such
Plan Year; and (2) 10% of the amount determined under (1)
multiplied by the number of whole calendar months between the
end of the Plan Year and the date of distribution, counting
the month of distribution if distribution occurs after the
15th of such month. Notwithstanding the preceding sentence,
the Plan Administrator may compute the income or loss
allocable to Excess Contributions in the manner described in
Section 4 (i.e., the usual manner used by the Plan for
allocating income or loss to Participants' Individual
Accounts), provided such method is used consistently for all
Participants and for all corrective distributions under the
Plan for the Plan Year.
C. ACCOUNTING FOR EXCESS CONTRIBUTIONS - Excess Contributions
shall be distributed from the Participant's Elective Deferral
account and Qualified Matching Contribution account (if
applicable) in proportion to the Participant's Elective
Deferrals and Qualified Matching Contributions (to the extent
used in the ADP test) for the Plan Year. Excess Contributions
shall be distributed from the Participants Qualified
Nonelective Contribution account only to the extent that such
Excess Contributions exceed the balance in the Participant's
Elective Deferral account and Qualified Matching Contribution
account.
11.506 DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS
A. GENERAL RULE - Notwithstanding any other provision of this
Plan, Excess Aggregate Contributions, plus any income and
minus any loss allocable thereto, shall be forfeited, if
forfeitable, or if not forfeitable, distributed no later th~n
the last day c each Plan Year to Participants to whose
accounts such Excess Aggregate Contributions were allocated
for the preceding Plan Year. Excess Aggregate Contributions of
Participants who are subject to the family member aggregation
rules shall b( allocated among the family members in
proportion to the Employee and Matching Contributions (or
amounts treated as Matching Contributions) of each family
member that is combined to determine the combined ACP. If such
Excess Aggregate Contributions are distributed more than 2 1/2
months after the last day of the Plan Year in which such
excess amounts arose, a 10% excise tax will be imposed on the
Employer maintaining the Plan with respect to those amounts.
Excess Aggregate Contributions shall be treated as annual
additions under the Plan.
B. DETERMINATION OF INCOME OR LOSS - Excess Aggregate
Contributions shall be adjusted for any income or loss up to
the date of distribution. The income or loss allocable to
Excess Aggregate Contributions is the sum of: (1) income or
loss allocable to the Participant's Nondeductible Employee
Contribution account, Matching Contribution account (if any,
and if all amounts therein are not used in the ADP ~est) and,
if applicable, Qualified Nonelective Contribution account and
Elective Deferral account for the Plan Year multiplied by a
fraction, the numerator of which is such Participant's Excess
Aggregate Contributions for the year and the denominator is
the Participant's Individual Account balance(s) attributable
to Contribution Percentage Amounts without regard to any
income or loss occurring during such Plan Year; and (2) 10% of
the amount determined under (1) multiplied by the number of
whole calendar months between the end of the Plan Year and the
date of distribution, counting the month of distribution if
distribution occurs after the 15th of such month
Notwithstanding the preceding sentence, the Plan Administrator
may compute the income or loss allocable to Excess Ag
Aggregate Contributions in the manner described in Section 4
(i.e., the usual manner used by the Plan for allocating income
or loss to Participants' Individual Accounts), provided such
method is used consistently for all Participants and for all
corrective distributions under the Plan for the Plan Year.
C. FORFEITURES OF EXCESS AGGREGATE CONTRIBUTIONS - Forfeitures of
Excess Aggregate Contributions may either be reallocated to
the accounts of Contributing Participants who are not Highly
Compensated Employees or applied to reduce Employer
contributions, as elected by the Employer in the Adoption
Agreement.
D. ACCOUNTING FOR EXCESS AGGREGATE CONTRIBUTIONS - Excess
Aggregate Contributions shall be forfeited, if forfeitable or
distributed on a pro rata basis from the Participant's
Nondeductible Employee Contribution account, Matching
Contribution account, and Qualified Matching Contribution
account (and, if applicable, the Participant's Qualified
Nonelective Contribution account or Elective Deferral account,
or both).
87
49
11.507 RECHARACTERIZATION
A Participant may treat his or her Excess Contributions as an amount
distributed to the Participant and then contributed by t! Participant
to the Plan. Recharacterized amounts will remain nonforfeitable and
subject to the same distribution requirement as Elective Deferrals.
Amounts may not be recharacterized by a Highly Compensated Employee to
the extent that such amount in combination with other Nondeductible
Employee Contributions made by that Employee would exceed any stated
limit under the Plan on Nondeductible Employee Contributions.
Recharacterization must occur no later than two and one-half months
after the last day of the Plan Year in which such Excess Contributions
arose and is deemed to occur no earlier than the date the last Highly
Compensated Employee is informed in writing of the amount
recharacterized and the consequences thereof. Recharacterized amounts
will be taxable to the Participant for the Participant's tax year in
which the Participant would have received them in cash.
11.508 DISTRIBUTION OF ELECTIVE DEFERRALS IF EXCESS ANNUAL ADDITIONS
Notwithstanding any other provision of the Plan, a Participant's
Elective Deferrals shall be distributed to him or her to the extent
that the distribution will reduce an excess annual addition (as that
term is described in Section 3.05 of the Plan).
11.600 VESTING
11.601 100% VESTING ON CERTAIN CONTRIBUTIONS
The Participant's accrued benefit derived from Elective Deferrals,
Qualified Nonelective Contributions, Nondeductible Employee
Contributions, and Qualified Matching Contributions is nonforfeitable.
Separate accounts for Elective Deferrals, Qualified Nonelective
Contributions, Nondeductible Employee Contributions, Matching
Contributions, and Qualified Matching Contributions be maintained for
each Participant. Each account will be credited with the applicable
contributions and earnings thereon.
11.602 FORFEITURES AND VESTING OF MATCHING CONTRIBUTIONS
Matching Contributions shall be Vested in accordance with the vesting
schedule for Matching Contributions in the Adoption Agreement. In any
event, Matching Contributions shall be fully Vested at Normal
Retirement Age, upon the complete or partial termination of the profit
sharing plan, or upon the complete discontinuance of Employer
Contributions. Notwithstanding any other provisions of the Plan,
Matching Contributions or Qualified Matching Contributions must be
forfeited if the contributions to which they relate are Excess Elective
Deferrals, Excess Contributions, Excess Aggregate Contributions or
excess annual additions which are distributed pursuant to Section
11-508. Such Forfeitures shall be allocated in accordance with Section
3.01 (C).
When a Participant incurs a Termination of Employment, whether a
Forfeiture arises with respect to Matching Contributions shall be
determined in accordance with Section 6.01(D).
