As filed with the Securities and Exchange Commission on December 8, 2004
Registration Statement No. 333-______
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
HOME FEDERAL BANCORP, INC.
(Exact name of registrant as specified in its charter)
Federal 20-0945587
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
500 12th Avenue South, Nampa Idaho 83651
(Address of principal executive offices) (Zip code)
HOME FEDERAL SAVINGS AND LOAN ASSOCIATION OF NAMPA
401(K) SAVINGS PLAN
(Full title of the plan)
Robert A. Schoelkoph John F. Breyer, Jr., Esquire
Chief Financial Officer Kristin M. Pechinsky, Esquire
Home Federal Bancorp, Inc. Breyer & Associates PC
500 12th Avenue South 8180 Greensboro Drive, Suite 785
Nampa, Idaho 83651 McLean, Virginia 22102
(208) 466-4634 (703) 883-1100
(Name, address and telephone number of agent for service)
CALCULATION OF REGISTRATION FEE
==============================================================================
Proposed Proposed
maximum maximum Amount of
Title of securities Amount to be offering price aggregate registration
to be registered registered per share offering price fee
------------------------------------------------------------------------------
Common stock,
$.01 par value
per share 152,000(1) $12.13(2) $1,843,760 $234
==============================================================================
(1) Estimated maximum aggregate number of shares of the registrant's common
stock purchasable with employee and employer contributions under the Home
Federal Savings and Loan Association of Nampa 401(k) Savings Plan during
the next 36 months. In addition, pursuant to Rule 416 under the
Securities Act of 1933, this Registration Statement also covers an
indeterminate amount of interests to be offered or sold pursuant to
the employee benefit plan described herein, as well as an indeterminate
number of additional shares which may be necessary to adjust the number
of shares reserved for issuance pursuant to the Home Federal Savings and
Loan Association of Nampa 401(k) Savings Plan as a result of a stock
split, stock dividend or similar adjustment of the outstanding common
stock of the registrant.
(2) Estimated in accordance with Rule 457(h), calculated on the basis of
$12.13 per share, the average of the high and low share prices of the
registrant's common stock on the Nasdaq National Market on December 7,
2004.
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The documents containing the information specified in Part I of Form S-8
will be sent or given to participants in the Home Federal Savings and Loan
Association of Nampa 401(k) Savings Plan as specified by Rule 428(b)(1)
promulgated by the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933.
Such documents are not being filed with the Commission, but constitute
(along with the documents incorporated by reference into this Registration
Statement pursuant to Item 3 of Part II hereof) a prospectus that meets the
requirements of Section 10(a) of the Securities Act of 1933.
I-1
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
------
The following documents previously filed by Home Federal Bancorp, Inc.
(the "Registrant") with the Commission are hereby incorporated by reference in
this Registration Statement:
(a) the Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 2004 filed pursuant to the Securities
Exchange Act of 1934;
(b) all other reports filed by the Registrant pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 since the end of the
fiscal quarter covered by the Quarterly Report on Form 10-Q referred
to in Item 3(a) above;
(c) the description of the Registrant's common stock, par value $.01 per
share, set forth in the Registrant's Registration Statement on Form
8-A, registering the Registrant's common stock, pursuant to Section
12(g) of the Securities Exchange Act of 1934, filed on August 11,
2004 and all amendments thereto or reports filed for the purpose of
updating such description; and
(d) the Registrant's Prospectus and Prospectus Supplement filed on
August 20, 2004, and the additional Prospectus Supplement filed on
November 4, 2004, all pursuant to Rule 424(b)(3) of the Securities
Act of 1933.
All documents subsequently filed by the Registrant and the Home Federal
Savings and Loan Association of Nampa 401(k) Savings Plan (the "Plan") with
the Commission pursuant to Sections 13(a), 13(c), 14, or 15(d) of the
Securities Exchange Act of 1934, prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold, shall be deemed
incorporated by reference into this Registration Statement to be a part hereof
from the date of the filing of such documents. Any statement contained in the
documents incorporated, or deemed to be incorporated, by reference herein
shall be deemed to be modified or superseded for purposes of this Registration
Statement to the extent that a statement contained herein or in any other
subsequently filed document which also is, or is deemed to be, incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Registration Statement.
All information appearing in this Registration Statement is qualified in
its entirety by the detailed information, including financial statements,
appearing in the documents incorporated herein by reference.
Item 4. Description of Securities
------
Not Applicable
Item 5. Interests of Named Experts and Counsel
------
Not Applicable
Item 6. Indemnification of Directors and Officers
------
Section 545.121 of Regulations of the Office of Thrift Supervision ("OTS
Regulations") (12 C.F.R. Section 545.121) sets forth the ability of a federal
savings and loan association to indemnify its officers and directors. This
section provides that a savings and loan association shall indemnify any
person against whom an action is brought or threatened because that person is
or was a director, officer or employee of the association for: (1) any amount
for which that person became liable under a judgment; and (2) reasonable costs
and expenses, including reasonable attorney's fees, paid or
II-1
incurred by that person in defending or settling such action, or in enforcing
his or her rights under such section if he or she attains a favorable judgment
in such enforcement action.
Indemnification shall be made to such individuals if (1) final judgments
on the merits is in the individual's favor or (2) in case of (i) settlement;
(ii) final judgment against the individual, or (iii) final judgment in the
individual's favor, other than on the merits, if a majority of the
disinterested directors determine that the individual was acting in good faith
within the scope of his or her employment or authority as he or she could have
reasonably perceived it under the circumstances and for a purpose he or she
could reasonably have believed under the circumstances was in the best
interests of the savings association of its members. The section also
provides that no indemnification may be made unless the association gives the
Office of Thrift Supervision 60 days notice of its intention to make such
indemnification.
In addition to providing indemnification, under OTS Regulations, a
savings association may obtain insurance to protect it and its officers,
directors and employees from potential losses arising from claims against any
of them for alleged wrongful acts, or wrongful acts, committed in their
capacity as directors, officers or employees. However, the savings
association may not obtain insurance which provides for payment of losses of
any person incurred as a consequence of his or her willful or criminal
misconduct.
Section 545.121 of the OTS Regulations is subject to and qualified by 12
U.S.C. Section 1821(k) which provides in general that a director or officer of
an insured depository institution may be held personally liable for monetary
damages by, on behalf of, or at the request or direction of the Federal
Deposit Insurance Corporation in certain circumstances.
Item 7. Exemption From Registration Claimed
------
Not Applicable
Item 8. Exhibits
------
The following exhibits are filed with or incorporated by reference into
this Registration Statement on Form S-8:
Exhibit
Number Description of Document
------- -----------------------------------------------------------
4.1 Articles of Incorporation of the Registrant(1)
4.2 Bylaws of the Registrant(1)
4.3 Form of Certificate of Common Stock of the Registrant(1)
5 Opinion of Breyer & Associates PC
23.1 Consent of Moss Adams, LLP
23.2 Consent of Breyer & Associates PC (contained in its opinion
filed as Exhibit 5)
24 Power of attorney (contained in the signature page of the
Registration Statement)
99 Home Federal Savings and Loan Association of Nampa 401(k)
Savings Plan
----------
(1) Filed as an exhibit to the Registrant's Registration Statement on Form
S-1 (File No. 333-113731), filed with the Commission on March 19, 2004,
and incorporated herein by reference.
Item 9. Undertakings
------
(a) The undersigned Registrant hereby undertakes:
II-2
1. To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement: (i) to
include any prospectus required by Section 10(a)(3) of the Securities Act of
1933; (ii) to reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the Registration Statement;
and (iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change in such information in the Registration Statement; provided,
however, that clauses (i) and (ii) do not apply if the information required to
be included in a post-effective amendment by those clauses is contained in
periodic reports filed by the Registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the Registration Statement.
2. That, for the purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed the initial
bona fide offering thereof.
3. To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for the purposes
of determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officer and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-3
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Nampa, State of Idaho, on December
8, 2004.
HOME FEDERAL BANCORP, INC.
By: /s/ Daniel L. Stevens
-----------------------------------------------
Daniel L. Stevens
Chairman, President and Chief Executive Officer
(Duly Authorized Representative)
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. Each person whose signature appears
below hereby makes, constitutes and appoints Daniel L. Stevens his true and
lawful attorney, with full power to sign for such person and in such person's
name and capacity indicated below, and with full power of substitution any and
all amendments to this Registration Statement, hereby ratifying and confirming
such person's signature as it may be signed by said attorney to any and all
amendments.
Signature Title Date
/s/ Daniel L. Stevens Chairman, President and December 8, 2004
--------------------------- Chief Executive Officer
Daniel L. Stevens (Principal Executive Officer)
/s/ Robert A. Schoelkoph Senior Vice President, December 8, 2004
--------------------------- Treasurer and
Robert A. Schoelkoph Chief Financial Officer
(Principal Financial and
Accounting Officer)
/s/ N. Charles Hedemark Director December 8, 2004
----------------------------
N. Charles Hedemark
/s/ Fred H. Helpenstell, M.D. Director December 8, 2004
----------------------------
Fred H. Helpenstell, M.D.
/s/ Thomas W. Malson Director December 8, 2004
----------------------------
Thomas W. Malson
/s/ Richard J. Schrandt Director December 8, 2004
----------------------------
Richard J. Schrandt
/s/ James R. Stamey Director December 8, 2004
----------------------------
James R. Stamey
/s/ Robert A. Tinstman Director December 8, 2004
----------------------------
Robert A. Tinstman
II-4
The Plan. Pursuant to the requirements of the Securities Act of 1933,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Nampa, State of Idaho,
on December 8, 2004.
HOME FEDERAL SAVINGS AND LOAN ASSOCIATION
OF NAMPA 401(K) SAVINGS PLAN
By: /s/ Daniel L. Stevens
---------------------------------------
Daniel L. Stevens
Administrator
II-5
HOME FEDERAL BANCORP, INC.
EXHIBIT INDEX
Exhibit
Number Description of Document
4.1 Articles of Incorporation of the Registrant(1)
4.2 Bylaws of the Registrant(1)
4.3 Form of Certificate of Common Stock of the Registrant(1)
5 Opinion of Breyer & Associates PC
23.1 Consent of Moss Adams, LLP
23.2 Consent of Breyer & Associates PC (contained in its opinion
filed as Exhibit 5)
24 Power of attorney (contained in the signature page of the
Registration Statement)
99 Home Federal Savings and Loan Association of Nampa 401(k)
Savings Plan
------------
(1) Filed as an exhibit to the Registrant's Registration Statement on Form
S-1 (File No. 333-113731), filed with the Commission on March 19, 2004,
and incorporated herein by reference.
Exhibit 5
Opinion of Breyer & Associates PC
[Letterhead of Breyer & Associates PC]
December 8, 2004
Board of Directors
Home Federal Bancorp, Inc.
500 12th Avenue South
Nampa, Idaho 83651
Ladies and Gentlemen:
We have acted as special counsel to Home Federal Bancorp, Inc., a federal
corporation (the "Company"), in connection with the preparation of the
Registration Statement on Form S-8 filed with the Securities and Exchange
Commission ("Registration Statement") under the Securities Act of 1933, as
amended, relating to shares of common stock, par value $.01 per share (the
"Common Stock") of the Company which may be issued pursuant to the terms of
the Home Federal Savings and Loan Association of Nampa 401(k) Savings Plan
(the "Plan"), all as more fully described in the Registration Statement. The
Registration Statement also registers an indeterminate number of additional
shares which may be necessary to adjust the number of shares registered
thereby for issuance as the result of a stock split, stock dividend or similar
adjustment of the number of issued and outstanding shares of Common Stock.
You have requested the opinion of this firm with respect to certain legal
aspects of the proposed offering.
We have reviewed the Registration Statement, the Charter and Bylaws of
the Company, the Plan, a specimen stock certificate evidencing the Common
Stock and such other documents and records as we have deemed necessary for
purposes of this opinion. We are relying upon the originals, or copies
certified or otherwise identified to our satisfaction, of the corporate
records of the Company and such other instruments, certificates and
representations of public officials, officers and representatives of the
Company as we have deemed applicable or relevant as a basis for the opinions
set forth below. In addition, we have assumed, without independent
verification, the genuineness of all signatures and the authenticity of all
documents furnished to us and the conformance in all respects of copies to
originals. Furthermore, we have made such factual inquiries and reviewed such
laws as we determined to be relevant for the purposes of this opinion.
For purposes of this opinion, we have also assumed that (i) the shares of
Common Stock issuable pursuant to contributions made under the Plan will
continue to be validly authorized on the dates the Common Stock is issued
pursuant to such contributions, (ii) no change occurs in applicable law or the
pertinent facts, (iii) the contributions are made in accordance with the terms
of the Plan and (iv) the provisions of "blue sky" and other securities laws as
may be applicable have been complied with to the extent required.
Based on the foregoing, and subject to the assumptions set forth herein,
we are of the opinion as of the date hereof that the shares of Common Stock to
be issued pursuant to the Plan, upon receipt by the Company of any
consideration required thereby, as applicable, will be legally issued, fully
paid and non-assessable shares of Common Stock.
Board of Directors
Home Federal Bancorp, Inc.
December 8, 2004
Page 2
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement on Form S-8.
Sincerely,
/s/ BREYER & ASSOCIATES PC
BREYER & ASSOCIATES PC
Exhibit 23.1
Consent of Moss Adams, LLP
Consent of Independent Accountants
The Board of Directors
Home Federal Bancorp, Inc.
Nampa, Idaho
We consent to incorporation by reference in the Registration Statement on Form
S-8 of Home Federal Bancorp, Inc., relating to the Home Federal Savings and
Loan Association of Nampa 401(k) Savings Plan, of our report dated January 30,
2004, relating to the consolidated statement of financial condition of Home
Federal Savings and Loan Association of Nampa and subsidiary as of September
30, 2003 and 2002, and the related consolidated statements of income, equity
and cash flows for each of the three years in the period ended September 30,
2003, which report appears in the Registration Statement on Form S-1 filed
March 19, 2004.
/s/ Moss Adams LLP
Spokane, Washington
December 8, 2004
Exhibit 99
Home Federal Savings and Loan Association of Nampa 401(k) Savings Plan
O'NEIL & ASSOCIATES, CHTD. DEFINED CONTRIBUTION PLAN SPONSORED BY O'NEIL
& ASSOCIATES, CHTD. BASIC PLAN DOCUMENT #01 January, 2002
TABLE OF CONTENTS
ARTICLE 1
PLAN ELIGIBILITY AND PARTICIPATION
1.1 Eligibility for Plan Participation 1
1.2 Excluded Employees 1
(a) Independent contractors 1
(b) Leased Employees 1
1.3 Employees of Related Employers 2
(a) Nonstandardized Agreement 2
(b) Standardized Agreement 2
1.4 Minimum Age and Service Conditions 2
(a) Maximum permissible age and service conditions 2
(b) Year of Service 2
(c) Eligibility Computation Periods 2
(d) Application of eligibility rules 3
(e) Amendment of age and service requirements 3
1.5 Entry Dates 3
(a) Entry Date requirements 3
(b) Single annual Entry Date 3
1.6 Eligibility Break in Service Rules 4
(a) Rule of Parity Break in Service 4
(b) One-year Break in Service rule for Plans using a two Years
of Service eligibility condition 4
(c) One-year holdout Break in Service rule 4
1.7 Eligibility upon Reemployment 5
1.8 Operating Rules for Employees Excluded by Class 5
(a) Eligible Participant becomes part of an excluded class
of Employees 5
(b) Excluded Employee becomes part of an eligible class of
Employee 5
1.9 Relationship to Accrual of Benefits 5
1.10 Waiver of Participation 5
ARTICLE 2
EMPLOYER CONTRIBUTIONS AND ALLOCATIONS
2.1 Amount of Employer Contributions 6
(a) Limitation on Employer Contributions 6
(b) Limitation on Included Compensation 6
(c) Contribution of property 6
(d) Frozen Plan 6
2.2 Profit Sharing Plan Contribution and Allocations 6
(a) Amount of Employer Contribution 6
(b) Allocation formula for Employer Contributions 7
(c) Special rules for determining Included Compensation 9
2.3 401(k) Plan Contributions and Allocations 10
(a) Section 401(k) Deferrals 10
(b) Employer Matching Contributions 11
(c) Qualified Matching Contributions (QMACs) 11
(d) Employer Nonelective Contributions 12
(e) Qualified Nonelective Contributions (QNECs) 12
(f) Safe Harbor Contributions 12
(g) Prior SIMPLE 401(k) plan 13
2.4 Money Purchase Plan Contribution and Allocations 13
(a) Employer Contributions 13
(b) Uniform percentage or uniform dollar amount 13
(c) Permitted Disparity Method 13
(d) Contribution based on service 14
(e) Davis-Bacon Contribution Formula 14
(f) Applicable period for determining Included Compensation 15
(g) Special rules for determining Included Compensation 15
(h) Limit on contribution where Employer maintains another
plan in addition to a money purchase plan 15
2.5 Target Benefit Plan Contribution 15
(a) Stated Benefit 15
(b) Employer Contribution 16
(c) Benefit formula 16
(d) Definitions 21
2.6 Allocation Conditions 23
(a) Safe harbor allocation condition 24
(b) Application of last day of employment rule for money
purchase and target benefit Plans in year of termination 24
(c) Elapsed Time Method 24
(d) Special allocation condition for Employer Matching
Contributions under Nonstandardized 401(k) Agreement 24
(e) Application to designated period 25
2.7 Fail-Safe Coverage Provision 26
(a) Top-Heavy Plans 27
(b) Category 1 Employees - Otherwise Eligible Participants
(who are Nonhighly Compensated Employees) who are still
employed by the Employer on the last day of the Plan Year
but who failed to satisfy the Plan's Hours of Service
condition 27
(c) Category 2 Employees - Otherwise Eligible Participants
(who are Nonhighly Compensated Employees) who terminated
employment during the Plan Year with more than 500 Hours
of Service 27
(d) Special Fail-Safe Coverage Provision 27
2.8 Deductible Employee Contributions 27
ARTICLE 3
EMPLOYEE AFTER-TAX CONTRIBUTIONS, ROLLOVER CONTRIBUTIONS AND TRANSFERS
3.1 Employee After-Tax Contributions 28
3.2 Rollover Contributions 28
3.3 Transfer of Assets 28
(a) Protection of Protected Benefits 29
(b) Transferee plan 29
(c) Transfers from a Defined Benefit Plan, money purchase
plan or 401(k) plan 29
(d) Qualified Transfer 29
(e) Trustee's right to refuse transfer 31
ARTICLE 4
PARTICIPANT VESTING
4.1 In General 32
(a) Attainment of Normal Retirement Age 32
(b) Vesting upon death, becoming Disabled, or attainment of
Early Retirement Age 32
(c) Addition of Employer Nonelective Contribution or Employer
Matching Contribution 32
(d) Vesting upon merger, consolidation or transfer 32
4.2 Vesting Schedules 32
(a) Full and immediate vesting schedule 32
(b) 7-year graded vesting schedule 33
(c) 6-year graded vesting schedule 33
(d) 5-year cliff vesting schedule 33
(e) 3-year cliff vesting schedule 33
(f) Modified vesting schedule 33
4.3 Shift to/from Top-Heavy Vesting Schedule 33
4.4 Vesting Computation Period 33
(a) Anniversary Years 33
(b) Measurement on same Vesting Computation Period 33
4.5 Crediting Years of Service for Vesting Purposes 33
(a) Calculating Hours of Service 33
(b) Excluded service 34
4.6 Vesting Break in Service Rules 34
(a) One-year holdout Break in Service 34
(b) Five-Year Forfeiture Break in Service 34
(c) Rule of Parity Break in Service 34
4.7 Amendment of Vesting Schedule 35
4.8 Special Vesting Rule - In-Service Distribution When Account
Balance Less than 100% Vested 35
ARTICLE 5
FORFEITURES
5.1 In General 36
5.2 Timing of forfeiture 36
(a) Cash-Out Distribution 36
(b) Five-Year Forfeiture Break in Service 36
(c) Lost Participant or Beneficiary 36
(d) Forfeiture of Employer Matching Contributions 36
5.3 Forfeiture Events 36
(a) Cash-Out Distribution 36
(b) Five-Year Forfeiture Break in Service 38
(c) Lost Participant or Beneficiary 39
(d) Forfeiture of Employer Matching Contributions 39
5.4 Timing of Forfeiture Allocation 39
5.5 Method of Allocating Forfeitures 39
(a) Reallocation of forfeitures 39
(b) Reduction of contributions 39
(c) Payment of Plan expenses 39
ARTICLE 6
SPECIAL SERVICE CREDITING PROVISIONS
6.1 Year of Service - Eligibility 40
(a) Selection of Hours of Service 40
(b) Use of Equivalency Method 40
(c) Use of Elapsed Time Method 40
6.2 Eligibility Computation Period 40
6.3 Year of Service - Vesting 40
(a) Selection of Hours of Service 40
(b) Equivalency Method 40
(c) Elapsed Time Method 41
6.4 Vesting Computation Period 41
6.5 Definitions 41
(a) Equivalency Method 41
(b) Elapsed Time Method 41
6.6 Switching Crediting Methods 41
(a) Shift from crediting Hours of Service to Elapsed
Time Method 41
(b) Shift from Elapsed Time Method to an Hours of Service
method 42
6.7 Service with Predecessor Employers 42
ARTICLE 7
LIMITATION ON PARTICIPANT ALLOCATIONS
7.1 Annual Additions Limitation - No Other Plan Participation 43
(a) Annual Additions Limitation 43
(b) Using estimated Total Compensation 43
(c) Disposition of Excess Amount 43
7.2 Annual Additions Limitation - Participation in Another Plan 44
(a) In general 44
(b) This Plan's Annual Addition Limitation 44
(c) Annual Additions reduction 44
(d) No Annual Additions permitted 44
(e) Using estimated Total Compensation 44
(f) Excess Amounts 45
(g) Disposition of Excess Amounts 45
7.3 Modification of Correction Procedures 45
7.4 Definitions Relating to the Annual Additions Limitation 45
(a) Annual Additions 45
(b) Defined Contribution Dollar Limitation 46
(c) Employer 46
(d) Excess Amount 46
(e) Limitation Year 46
(f) Maximum Permissible Amount 46
(g) Total Compensation 46
7.5 Participation in a Defined Benefit Plan 47
(a) Repeal of rule 47
(b) Special definitions relating to Section 7.5 47
ARTICLE 8
PLAN DISTRIBUTIONS
8.1 Distribution Options 49
8.2 Amount Eligible for Distribution 49
8.3 Distributions After Termination of Employment 49
(a) Account Balance exceeding $5,000 49
(b) Account Balance not exceeding $5,000 50
(c) Permissible distribution events under a 401(k) plan 50
(d) Disabled Participant 50
(e) Determining whether vested Account Balance exceeds $5,000 50
(f) Effective date of $5,000 vested Account Balance rule 51
8.4 Distribution upon the Death of the Participant 51
(a) Post-retirement death benefit 51
(b) Pre-retirement death benefit 51
(c) Determining a Participant's Beneficiary 52
8.5 Distributions Prior to Termination of Employment 53
(a) Employee After-Tax Contributions, Rollover Contributions,
and transfers 53
(b) Employer Contributions 53
(c) Section 401(k) Deferrals, Qualified Nonelective
Contributions, Qualified Matching Contributions, and
Safe Harbor Contributions 53
(d) Corrective distributions 54
8.6 Hardship Distribution 54
(a) Safe harbor Hardship distribution 54
(b) Non-safe harbor Hardship distribution 55
(c) Amount available for distribution 55
8.7 Participant Consent 55
(a) Participant notice 55
(b) Special rules 55
8.8 Direct Rollovers 56
(a) Eligible Rollover Distribution 56
(b) Eligible Retirement Plan 56
(c) Direct Rollover 56
(d) Direct Rollover notice 57
(e) Special rules for Hardship withdrawals of Section 401(k)
Deferrals 57
8.9 Sources of Distribution 57
(a) Exception for Hardship withdrawals 57
(b) In-kind distributions 57
ARTICLE 9
JOINT AND SURVIVOR ANNUITY REQUIREMENTS
9.1 Applicability 58
(a) Election to have requirements apply 58
(b) Election to have requirements not apply 58
(c) Accumulated deductible employee contributions 58
9.2 Qualified Joint and Survivor Annuity (QJSA) 58
9.3 Qualified Preretirement Survivor Annuity (QPSA) 58
9.4 Definitions 59
(a) Qualified Joint and Survivor Annuity (QJSA) 59
(b) Qualified Preretirement Survivor Annuity (QPSA) 59
(c) Distribution Commencement Date 59
(d) Qualified Election 59
(e) QPSA Election Period 59
(f) Pre-Age 35 Waiver 60
9.5 Notice Requirements 60
(a) QJSA 60
(b) QPSA 60
9.6 Exception to the Joint and Survivor Annuity Requirements 60
9.7 Transitional Rules 60
(a) Automatic joint and survivor annuity 61
(b) Election of early survivor annuity 61
(c) Qualified Early Retirement Age 61
ARTICLE 10
REQUIRED DISTRIBUTIONS
10.1 Required Distributions Before Death 62
(a) Deferred distributions 62
(b) Required minimum distributions 62
10.2 Required Distributions After Death 62
(a) Distribution beginning before death 62
(b) Distribution beginning after death 62
(c) Treatment of trust beneficiaries as Designated Beneficiaries 63
(d) Trust beneficiary qualifying for marital deduction 63
10.3 Definitions 64
(a) Required Beginning Date 64
(b) Five-Percent Owner 64
(c) Designated Beneficiary 64
(d) Applicable Life Expectancy 64
(e) Life Expectancy 65
(f) Distribution Calendar Year 65
(g) Participant's Benefit 65
10.4 GUST Elections 65
(a) Distributions under Old-Law Required Beginning Date rules 65
(b) Option to postpone distributions 65
(c) Election to stop minimum required distributions 66
10.5 Transitional Rule 67
ARTICLE 11
PLAN ADMINISTRATION AND SPECIAL OPERATING RULES
11.1 Plan Administrator 68
(a) Acceptance of responsibility by designated Plan
Administrator 68
(b) Resignation of designated Plan Administrator 68
(c) Named Fiduciary 68
11.2 Duties and Powers of the Plan Administrator 68
(a) Delegation of duties and powers 68
(b) Specific duties and powers 68
11.3 Employer Responsibilities 69
11.4 Plan Administration Expenses 69
11.5 Qualified Domestic Relations Orders (QDROs) 69
(a) In general 69
(b) Qualified Domestic Relations Order (QDRO) 69
(c) Recognition as a QDRO 69
(d) Contents of QDRO 70
(e) Impermissible QDRO provisions 70
(f) Immediate distribution to Alternate Payee 70
(g) No fee for QDRO determination 70
(h) Default QDRO procedure 70
11.6 Claims Procedure 71
(a) Filing a claim 71
(b) Notification of Plan Administrator's decision 72
(c) Review procedure 72
(d) Decision on review 72
(e) Default claims procedure 72
11.7 Operational Rules for Short Plan Years 72
11.8 Operational Rules for Related Employer Groups 73
ARTICLE 12
TRUST PROVISIONS
12.1 Creation of Trust 74
12.2 Trustee 74
(a) Discretionary Trustee 74
(b) Directed Trustee 74
12.3 Trustee's Responsibilities Regarding Administration of Trust 74
12.4 Trustee's Responsibility Regarding Investment of Plan Assets 75
12.5 More than One Person as Trustee 76
12.6 Annual Valuation 76
12.7 Reporting to Plan Administrator and Employer 76
12.8 Reasonable Compensation 76
12.9 Resignation and Removal of Trustee 77
12.10 Indemnification of Trustee 77
12.11 Appointment of Custodian 77
ARTICLE 13
PLAN ACCOUNTING AND INVESTMENTS
13.1 Participant Accounts 78
13.2 Value of Participant Accounts 78
(a) Periodic valuation 78
(b) Daily valuation 78
13.3 Adjustments to Participant Accounts 78
(a) Distributions and forfeitures from a Participant's Account 78
(b) Life insurance premiums and dividends 78
(c) Contributions and forfeitures allocated to a
Participant's Account 78
(d) Net income or loss 78
13.4 Procedures for Determining Net Income or Loss 78
(a) Net income or loss attributable to General Trust Account 78
(b) Net income or loss attributable to a Directed Account 79
(c) Share or unit accounting 79
(d) Suspense accounts 79
13.5 Investments under the Plan 80
(a) Investment options 80
(b) Limitations on the investment in Qualifying Employer
Securities and Qualifying Employer Real Property 80
(c) Participant direction of investments 81
ARTICLE 14
PARTICIPANT LOANS
14.1 Default Loan Policy 83
14.2 Administration of Loan Program 83
14.3 Availability of Participant Loans 83
14.4 Reasonable Interest Rate 83
14.5 Adequate Security 83
14.6 Periodic Repayment 84
(a) Unpaid leave of absence 84
(b) Military leave 84
14.7 Loan Limitations 84
14.8 Segregated Investment 85
14.9 Spousal Consent 85
14.10 Procedures for Loan Default 85
14.11 Termination of Employment 86
(a) Offset of outstanding loan 86
(b) Direct Rollover 86
(c) Modified loan policy 86
ARTICLE 15
INVESTMENT IN LIFE INSURANCE
15.1 Investment in Life Insurance 87
15.2 Incidental Life Insurance Rules 87
(a) Ordinary life insurance policies 87
(b) Life insurance policies other than ordinary life 87
(c) Combination of ordinary and other life insurance policies 87
(d) Exception for certain profit sharing and 401(k) plans 87
(e) Exception for Employee After-Tax Contributions and Rollover
Contributions 87
15.3 Ownership of Life Insurance Policies 87
15.4 Evidence of Insurability 87
15.5 Distribution of Insurance Policies 87
15.6 Discontinuance of Insurance Policies 88
15.7 Protection of Insurer 88
15.8 No Responsibility for Act of Insurer 88
ARTICLE 16
TOP-HEAVY PLAN REQUIREMENTS
16.1 In General 89
16.2 Top-Heavy Plan Consequences 89
(a) Minimum allocation for Non-Key Employees 89
(b) Special Top-Heavy Vesting Rules 91
16.3 Top-Heavy Definitions 91
(a) Determination Date 91
(b) Determination Period 91
(c) Key Employee 91
(d) Permissive Aggregation Group 91
(e) Present Value 91
(f) Required Aggregation Group 92
(g) Top-Heavy Plan 92
(h) Top-Heavy Ratio 92
(i) Total Compensation 93
(j) Valuation Date 93
ARTICLE 17
401(k) PLAN PROVISIONS
17.1 Limitation on the Amount of Section 401(k) Deferrals 94
(a) In general 94
(b) Maximum deferral limitation 94
(c) Correction of Code Section402(g) violation
94
17.2 Nondiscrimination Testing of Section 401(k) Deferrals - ADP Test 95
(a) ADP Test testing methods 95
(b) Special rule for first Plan Year 96
(c) Use of QMACs and QNECs under the ADP Test 96
(d) Correction of Excess Contributions 96
(e) Adjustment of deferral rate for Highly Compensated
Employees 98
17.3 Nondiscrimination Testing of Employer Matching Contributions
and Employee After-Tax Contributions - ACP Test 98
(a) ACP Test testing methods 98
(b) Special rule for first Plan Year 99
(c) Use of Section 401(k) Deferrals and QNECs under the
ACP Test 99
(d) Correction of Excess Aggregate Contributions 99
(e) Adjustment of contribution rate for Highly Compensated
Employees 101
17.4 Multiple Use Test 101
(a) Aggregate Limit 101
(b) Correction of the Multiple Use Test 101
17.5 Special Testing Rules 102
(a) Special rule for determining ADP and ACP of Highly
Compensated Employee Group 102
(b) Aggregation of plans 102
(c) Disaggregation of plans 102
(d) Special rules for the Prior Year Testing Method 103
17.6 Safe Harbor 401(k) Plan Provisions 103
(a) Safe harbor conditions 103
(b) Deemed compliance with ADP Test 107
(c) Deemed compliance with ACP Test 107
(d) Rules for applying the ACP Test 108
(e) Aggregated plans 108
(f) First year of plan 108
17.7 Definitions 108
(a) ACP - Average Contribution Percentage 108
(b) ADP - Average Deferral Percentage 108
(c) Excess Aggregate Contributions 108
(d) Excess Contributions 109
(e) Highly Compensated Employee Group 109
(f) Nonhighly Compensated Employee Group 109
(g) QMACs - Qualified Matching Contribution 109
(h) QNECs - Qualified Nonelective Contributions 109
(i) Testing Compensation 109
ARTICLE 18
PLAN AMENDMENTS AND TERMINATION
18.1 Plan Amendments 110
(a) Amendment by the Prototype Sponsor 110
(b) Amendment by the Employer 110
(c) Protected Benefits 111
18.2 Plan Termination 111
(a) Full and immediate vesting 111
(b) Distribution procedures 111
(c) Termination upon merger, liquidation or dissolution of the
Employer 112
18.3 Merger or Consolidation 112
ARTICLE 19
MISCELLANEOUS
19.1 Exclusive Benefit 113
19.2 Return of Employer Contributions 113
(a) Mistake of fact 113
(b) Disallowance of deduction 113
(c) Failure to initially qualify 113
19.3 Alienation or Assignment 113
19.4 Participants' Rights 113
19.5 Military Service 113
19.6 Paired Plans 113
19.7 Annuity Contract 114
19.8 Use of IRS compliance programs 114
19.9 Loss of Prototype Status 114
19.10 Governing Law 114
19.11 Waiver of Notice 114
19.12 Use of Electronic Media 114
19.13 Severability of Provisions 114
19.14 Binding Effect 114
ARTICLE 20
GUST ELECTIONS AND EFFECTIVE DATES
20.1 GUST Effective Dates 115
20.2 Highly Compensated Employee Definition 115
(a) Top-Paid Group Test 115
(b) Calendar Year Election 115
(c) Old-Law Calendar Year Election 115
20.3 Required Minimum Distributions 116
20.4 $5,000 Involuntary Distribution Threshold 116
20.5 Repeal of Family Aggregation for Allocation Purposes 116
20.6 ADP/ACP Testing Methods 116
20.7 Safe Harbor 401(k) Plan 116
ARTICLE 21
PARTICIPATION BY RELATED EMPLOYERS (CO-SPONSORS)
21.1 Co-Sponsor Adoption Page 117
21.2 Participation by Employees of Co-Sponsor 117
21.3 Allocation of Contributions and Forfeitures 117
21.4 Co-Sponsor No Longer a Related Employer 117
(a) Manner of discontinuing participation 117
(b) Multiple employer plan 117
21.5 Special Rules for Standardized Agreements 117
(a) New Related Employer 118
(b) Former Related Employer 118
ARTICLE 22
PLAN DEFINITIONS
22.1 Account 119
22.2 Account Balance 119
22.3 Accrued Benefit 119
22.4 ACP -- Average Contribution Percentage 119
22.5 ACP Test -- Actual Contribution Percentage Test 119
22.6 Actual Hours Crediting Method 119
22.7 Adoption Agreement 119
22.8 ADP -- Average Deferral Percentage 119
22.9 ADP Test -- Actual Deferral Percentage Test 119
22.10 Agreement 119
22.11 Aggregate Limit 119
22.12 Alternate Payee 119
22.13 Anniversary Year Method 119
22.14 Anniversary Years 119
22.15 Annual Additions 120
22.16 Annual Additions Limitation 120
22.17 Annuity Starting Date 120
22.18 Applicable Life Expectancy 120
22.19 Applicable Percentage 120
22.20 Average Compensation 120
22.21 Averaging Period 120
22.22 Balance Forward Method 120
22.23 Basic Plan Document 120
22.24 Beneficiary 120
22.25 BPD 120
22.26 Break-in-Service - Eligibility 120
22.27 Break-in-Service - Vesting 120
22.28 Calendar Year Election 120
22.29 Cash-Out Distribution 120
22.30 Code 120
22.31 Code Section415 Safe Harbor Compensation
121
22.32 Compensation Dollar Limitation 121
22.33 Co-Sponsor 121
22.34 Co-Sponsor Adoption Page 121
22.35 Covered Compensation 121
22.36 Cumulative Disparity Limit 121
22.37 Current Year Testing Method 121
22.38 Custodian 121
22.39 Davis-Bacon Act Service 121
22.40 Davis-Bacon Contribution Formula 121
22.4 Defined Benefit Plan 121
22.4 Defined Benefit Plan Fraction 122
22.4 Defined Contribution Plan 122
22.4 Defined Contribution Plan Dollar Limitation 122
22.4 Defined Contribution Plan Fraction 122
22.46 Designated Beneficiary 122
22.47 Determination Date 122
22.48 Determination Period 122
22.49 Determination Year 122
22.50 Directed Account 122
22.51 Directed Trustee 122
22.52 Direct Rollover 122
22.53 Disabled 122
22.54 Discretionary Trustee 122
22.55 Distribution Calendar Year 122
22.56 Distribution Commencement Date 122
22.57 Early Retirement Age 122
22.58 Earned Income 122
22.59 Effective Date 123
22.60 Elapsed Time Method 123
22.61 Elective Deferrals 123
22.62 Eligibility Computation Period 123
22.63 Eligible Participant 123
22.64 Eligible Rollover Distribution 123
22.65 Eligible Retirement Plan 123
22.66 Employee 123
22.67 Employee After-Tax Contribution Account 124
22.68 Employee After-Tax Contributions 124
22.69 Employer 124
22.70 Employer Contribution Account 124
22.71 Employer Contributions 124
22.72 Employer Matching Contribution Account 124
22.73 Employer Matching Contributions 124
22.74 Employer Nonelective Contributions 124
22.75 Employment Commencement Date 124
22.76 Employment Period 124
22.77 Entry Date 124
22.78 Equivalency Method 124
22.79 ERISA 124
22.80 Excess Aggregate Contributions 124
22.81 Excess Amount 124
22.82 Excess Compensation 124
22.83 Excess Contributions 125
22.84 Excess Deferrals 125
22.85 Excluded Employee 125
22.86 Fail-Safe Coverage Provision 125
22.87 Favorable IRS Letter 125
22.88 Five-Percent Owner 125
22.89 Five-Year Forfeiture Break in Service 125
22.90 Flat Benefit 125
22.91 Flat Excess Benefit 125
22.92 Flat Offset Benefit 125
22.93 Former Related Employer 125
22.94 Four-Step Formula 125
22.95 General Trust Account 125
22.96 GUST Legislation 125
22.97 Hardship 125
22.98 Highest Average Compensation 125
22.99 Highly Compensated Employee 125
(a) Definition 125
(b) Other Definitions 126
(c) Application of Highly Compensated Employee definition 126
22.100 Highly Compensated Employee Group 126
22.101 Hour of Service 126
(a) Performance of duties 126
(b) Nonperformance of duties 126
(c) Back pay award 127
(d) Related Employers/Leased Employees 127
(e) Maternity/paternity leave 127
22.102 Included Compensation 127
22.103 Insurer 128
22.104 Integrated Benefit Formula 128
22.105 Integration Level 128
22.106 Investment Manager 128
22.107 Key Employee 128
22.108 Leased Employee 128
22.109 Life Expectancy 128
22.110 Limitation Year 128
22.111 Lookback Year 128
22.112 Maximum Disparity Percentage 128
22.113 Maximum Offset Percentage 128
22.114 Maximum Permissible Amount 128
22.115 Measuring Period 128
22.116 Multiple Use Test 128
22.117 Named Fiduciary 128
22.118 Net Profits 128
22.119 New Related Employer 128
22.120 Nonhighly Compensated Employee 129
22.12 Nonhighly Compensated Employee Group 129
22.12 Nonintegrated Benefit Formula 129
22.12 Non-Key Employee 129
22.12 Nonresident Alien Employees 129
22.12 Nonstandardized Agreement 129
22.12 Normal Retirement Age 129
22.12 Offset Compensation 129
22.12 Offset Benefit Formula 129
22.12 Old-Law Calendar Year Election 129
22.130 Old-Law Required Beginning Date 129
22.13 Owner-Employee 129
22.13 Paired Plans 129
22.13 Participant 129
22.13 Period of Severance 129
22.13 Permissive Aggregation Group 129
22.13 Permitted Disparity Method 129
22.13 Plan 129
22.13 Plan Administrator 130
22.13 Plan Year 130
22.140 Pre-Age 35 Waiver 130
22.14 Predecessor Employer 130
22.14 Predecessor Plan 130
22.14 Present Value 130
22.14 Present Value Stated Benefit 130
22.14 Prior Year Testing Method 130
22.14 Pro Rata Allocation Method 130
22.14 Projected Annual Benefit 130
22.14 Protected Benefit 130
22.14 Prototype Plan 130
22.150 Prototype Sponsor 130
22.15 QDRO -- Qualified Domestic Relations Order 130
22.15 QJSA -- Qualified Joint and Survivor Annuity 130
22.15 QMAC Account 130
22.15 QMACs -- Qualified Matching Contributions 130
22.15 QNEC Account 131
22.15 QNECs -- Qualified Nonelective Contributions 131
22.15 QPSA -- Qualified Preretirement Survivor Annuity 131
22.15 QPSA Election Period 131
22.15 Qualified Election 131
22.160 Qualified Transfer 131
22.161 Qualifying Employer Real Property 131
22.162 Qualifying Employer Securities 131
22.163 Reemployment Commencement Date 131
22.164 Related Employer 131
22.165 Required Aggregation Group 131
22.166 Required Beginning Date 131
22.167 Reverse QNEC Method 131
22.168 Rollover Contribution Account 131
22.169 Rollover Contribution 131
22.170 Rule of Parity Break in Service 131
22.171 Safe Harbor 401(k) Plan 131
22.172 Safe Harbor Contribution 131
22.173 Safe Harbor Matching Contribution Account 131
22.174 Safe Harbor Matching Contributions 132
22.175 Safe Harbor Nonelective Contribution Account 132
22.176 Safe Harbor Nonelective Contributions 132
22.177 Salary Reduction Agreement 132
22.178 Section 401(k) Deferral Account 132
22.179 Section 401(k) Deferrals 132
22.180 Self-Employed Individual 132
22.181 Shareholder-Employee 132
22.182 Shift-to-Plan-Year Method 132
22.183 Short Plan Year 132
22.184 Social Security Retirement Age 132
22.185 Standardized Agreement 132
22.186 Stated Benefit 132
22.187 Straight Life Annuity 132
22.188 Successor Plan 133
22.189 Taxable Wage Base 133
22.190 Testing Compensation 133
22.191 Theoretical Reserve 133
22.192 Three Percent Method 133
22.193 Top-Paid Group 133
22.194 Top-Paid Group Test 133
22.195 Top-Heavy Plan 133
22.196 Top-Heavy Ratio 133
22.197 Total Compensation 133
(a) W-2 Wages 133
(b) Withholding Wages 133
(c) Code Section415 Safe Harbor Compensation
133
22.198 Transfer Account 134
22.199 Trust 134
22.200 Trustee 134
22.201 Two-Step Formula 134
22.202 Union Employee 134
22.203 Unit Benefit 134
22.204 Unit Excess Benefit 134
22.205 Unit Offset Benefit 134
22.206 Valuation Date 134
22.207 Vesting Computation Period 134
22.208 W-2 Wages 135
22.209 Withholding Wages 135
22.210 Year of Participation 135
22.211 Year of Service 135
ARTICLE 1 PLAN ELIGIBILITY AND PARTICIPATION
This Article contains the rules for determining when an Employee becomes
eligible to participate in the Plan. Part 1 and Part 2 of the Agreement
contain specific elections for applying these Plan eligibility and
participation rules. Article 6 of this BPD and Part 7 of the Agreement contain
special service crediting elections to override the default provisions under
this Article.
1.1 Eligibility for Plan Participation. An Employee who satisfies the Plan's
minimum age and service conditions (as elected in Part 1, #5 of the Agreement)
is eligible to participate in the Plan beginning on the Entry Date selected in
Part 2 of the Agreement, unless he/she is specifically excluded from
participation under Part 1, #4 of the Agreement. An Employee who has satisfied
the Plan's minimum age and service conditions and is employed on his/her Entry
Date is referred to as an Eligible Participant. (See Section 1.7 below for the
rules regarding an Employee who terminates employment prior to his/her Entry
Date.) An Employee who is excluded from participation under Part 1, #4 of the
Agreement is referred to as an Excluded Employee.
1.2 Excluded Employees. Unless specifically excluded under Part 1, #4 of the
Agreement, all Employees of the Employer are entitled to participate under the
Plan upon becoming an Eligible Participant. Any Employee who is excluded under
Part 1, #4 of the Agreement may not participate under the Plan, unless such
Excluded Employee subsequently becomes a member of an eligible class of
Employees. (See Section 1.8(b) of this Article for rules regarding an Excluded
Employee's entry into the Plan if he/she subsequently becomes a member of an
eligible class of Employees.)
The Employer may elect under Part 1, #4 of the 401(k) Agreement to exclude
different groups of Employees for Section 401(k) Deferrals, Employer Matching
Contributions, and Employer Nonelective Contributions. Unless provided
otherwise under Part 1, #4.f. of the Nonstandardized 401(k) Agreement, for
purposes of determining the Excluded Employees, any selection made with
respect to Section 401(k) Deferrals also will apply to any Employee After-Tax
Contributions and any Safe Harbor Contributions; any selections made with
respect to Employer Matching Contributions also will apply to any Qualified
Matching Contributions (QMACs); and any selections made with respect to
Employer Nonelective Contributions also will apply to any Qualified
Nonelective Contributions (QNECs).
(a) Independent contractors. Any individual who is an independent
contractor, or who performs services with the Employer under an agreement that
identifies the individual as an independent contractor, is specifically
excluded from the Nonstandardized Plan. In the event the Internal Revenue
Service (IRS) retroactively reclassifies such an individual as an Employee,
the reclassified Employee will become an Eligible Participant on the date the
IRS issues a final determination regarding his/her employment status (or the
individual's Entry Date, if later), unless the individual is otherwise
excluded from participation under Part 1, #4 of the Nonstandardized Agreement.
For periods prior to the date of such final determination, the reclassified
Employee will not have any rights to accrued benefits under the Plan, except
as agreed to by the Employer and the IRS, or as set forth in an amendment
adopted by the Employer.
(b) Leased Employees. If an individual is a Leased Employee, such
individual is treated as an Employee of the Employer and may participate under
the Plan upon satisfying the Plan's minimum age and service conditions, unless
the Employer elects to exclude Leased Employees from participation under Part
1, #4.d. of the Nonstandardized Agreement.
(1) Definition of Leased Employee. Effective for Plan Years
beginning after December 31, 1996, a Leased Employee, as defined in Code
Section414(n), is an individual who performs services for the Employer on a
substantially full time basis for a period of at least one year pursuant to an
agreement between the Employer and a leasing organization, provided such
services are performed under the primary direction or control of the recipient
Employer. For Plan Years beginning before January 1, 1997, the definition of
Leased Employee is as defined under Code Section414(n), as in effect for such
years.
(2) Credit for benefits. If a Leased Employee receives contributions
or benefits under a plan maintained by the leasing organization that are
attributable to services performed for the Employer, such contributions or
benefits shall be treated as provided by the Employer.
(3) Safe harbor plan. A Leased Employee will not be considered an
Employee of the Employer if such Leased Employee is covered by a money
purchase plan of the leasing organization which provides: (i) a nonintegrated
employer contribution of at least 10% of compensation, (ii) immediate
participation, and (iii) full and immediate vesting. For this paragraph to
apply, Leased Employees must not constitute more than 20% of the total
Nonhighly Compensated Employees of the Employer.
1.3 Employees of Related Employers. Employees of the Employer that executes
the Signature Page of the Agreement and Employees of any Related Employer that
executes a Co-Sponsor Adoption Page under the Agreement are eligible to
participate in this Plan.
(a) Nonstandardized Agreement. In a Nonstandardized Agreement, a Related
Employer is not required to execute a Co-Sponsor Adoption Page. However,
Employees of a Related Employer that does not execute a Co-Sponsor Adoption
Page are not eligible to participate in the Plan.
(b) Standardized Agreement. In a Standardized Agreement, Employees of all
Related Employers are eligible to participate under the Plan upon satisfying
any required minimum age and/or service conditions (unless otherwise excluded
under Part 1, #4 of the Agreement). All Related Employers (who have Employees
who may be eligible under the Plan) must execute a Co-Sponsor Adoption Page
under the Agreement, so the Employees of such Related Employers are eligible
to become Participants in the Plan. (See Article 21 for applicable rules if a
Related Employer does not sign the Co-Sponsor Adoption Page and the effect of
an acquisition or disposition transaction that is described in Code
Section410(b)(6)(C).)
1.4 Minimum Age and Service Conditions. Part 1, #5 of the Agreement contains
specific elections as to the minimum age and service conditions which an
Employee must satisfy prior to becoming eligible to participate under the
Plan. An Employee may be required to attain a specific age or to complete a
certain amount of service with the Employer prior to commencing participation
under the Plan. If no minimum age or service conditions apply to a particular
contribution (i.e., the Employer elects "None" under Part 1, #5.a. of the
Agreement), an Employee is treated as satisfying the Plan's eligibility
requirements on the individual's Employment Commencement Date.
Different age and service conditions may be selected under Part 1, #5 of the
401(k) Agreement for Section 401(k) Deferrals, Employer Matching
Contributions, and Employer Nonelective Contributions. For purposes of
applying the eligibility conditions under Part 1, #5, any selection made with
respect to Section 401(k) Deferrals also will apply to any Employee After-Tax
Contributions; any selections made with respect to Employer Matching
Contributions also will apply to any Qualified Matching Contributions (QMACs);
and any selections made with respect to Employer Nonelective Contributions
also will apply to any Qualified Nonelective Contributions (QNECs), unless
otherwise provided under Part 1, #5.f. of the Nonstandardized 401(k)
Agreement. In addition, any eligibility conditions selected with respect to
Section 401(k) Deferrals also will apply to any Safe Harbor Contributions
designated under Part 4E of the 401(k) Agreement, unless otherwise provided
under Part 4E, #30.d. of the 401(k) Agreement. If different conditions apply
for different contributions, the rules in this Article for determining when an
Employee is an Eligible Participant are applied separately with respect to
each set of eligibility conditions.
(a) Maximum permissible age and service conditions. Code Section410(a)
provides limits on the maximum permissible age and service conditions that may
be required prior to Plan participation. The Employer may not require an
Employee, as a condition of Plan participation, to attain an age older than
age 21. The Employer also may not require an Employee to complete more than
one Year of Service, unless the Employer elects full and immediate vesting
under Part 6 of the Agreement, in which case the Employer may require an
Employee to complete up to two Years of Service. (The Employer may not require
an Employee to complete more than one Year of Service to be eligible to make
Section 401(k) Deferrals under the 401(k) Agreement.)
(b) Year of Service. Unless the Employer elects otherwise under Part 7,
#23 of the Agreement [Part 7, #41 of the 401(k) Agreement], an Employee will
earn one Year of Service for purposes of applying the eligibility rules under
this Article if the Employee completes at least 1,000 Hours of Service with
the Employer during an Eligibility Computation Period (as defined in
subsection (c) below). An Employee will receive credit for a Year of Service,
as of the end of the Eligibility Computation Period, if the Employee completes
the required Hours of Service during such period, even if the Employee is not
employed for the entire period. In calculating an Employee's Hours of Service
for purposes of applying the eligibility rules
under this Article, the Employer will use the Actual Hours Crediting Method,
unless elected otherwise under Part 7 of the Agreement. (See Article 6 of
this BPD for a description of alternative service crediting methods.)
(c) Eligibility Computation Periods. For purposes of determining Years of
Service under this Article, an Employee's initial Eligibility Computation
Period is the 12-month period beginning on the Employee's Employment
Commencement Date. If one Year of Service is required for eligibility, and the
Employee is not credited with a Year of Service for the first Eligibility
Computation Period, subsequent Eligibility Computation Periods are calculated
under the Shift-to-Plan-Year Method, unless the Employer elects under Part 7,
#24.a. of the Agreement [Part 7, #42.a. of the 401(k) Agreement] to use the
Anniversary Year Method. If two Years of Service are required for eligibility,
subsequent Eligibility Computation Periods are measured on the Anniversary
Year Method, unless the Employer elects under Part 7, #24.b. of the Agreement
[Part 7, #42.b. of the 401(k) Agreement] to use the Shift-to-Plan-Year Method.
In the case of a 401(k) Agreement in which a two Years of Service eligibility
condition is used for either Employer Matching Contributions or Employer
Nonelective Contributions, the method used to determine Eligibility
Computation Periods for the two Years of Service condition also will apply to
any one Year of Service eligibility condition used with respect to any other
contributions under the Plan.
(1) Shift-to-Plan-Year Method. Under the Shift-to-Plan-Year Method,
after the initial Eligibility Computation Period, subsequent Eligibility
Computation Periods are measured using the Plan Year. In applying the
Shift-to-Plan-Year Method, the first Eligibility Computation Period following
the shift to the Plan Year is the first Plan Year that commences after the
Employee's Employment Commencement Date. See Section 11.7 for rules that
apply if there is a short Plan Year.
(2) Anniversary Year Method. Under the Anniversary Year Method,
after the initial Eligibility Computation Period, each subsequent Eligibility
Computation Period is the 12-month period commencing with the anniversary of
the Employee's Employment Commencement Date.
(d) Application of eligibility rules.
(1) General rule Effective Date. All Employees who have satisfied
the conditions for being an Eligible Participant (and have reached their Entry
Date (as determined under Part 2 of the Agreement)) as of the Effective Date
of the Plan are eligible to participate in the Plan as of the Effective Date
(provided the Employee is employed on such date and is not otherwise excluded
from participation under Part 1, #4 of the Agreement). If an Employee has
satisfied all the conditions for being an Eligible Participant as of the
Effective Date of the Plan, except the Employee has not yet reached his/her
Entry Date, the Employee will become an Eligible Participant on the
appropriate Entry Date in accordance with this Article.
(2) Dual eligibility provision. The Employer may modify the rule
described in subsection (1) above by electing under Part 1, #6.a. of the
Nonstandardized Agreement [Part 1, #6 of the Standardized Agreement] to treat
all Employees employed on the Effective Date of the Plan as Eligible
Participants as of such date. Alternatively, the Employer may elect under Part
1, #6.b. of the Nonstandardized Agreement to apply the dual eligibility
provision as of a specified date. Any Employee employed as of a date
designated under Part 1, #6 will be deemed to be an Eligible Participant as of
the later of such date or the Effective Date of this Plan, whether or not the
Employee has otherwise satisfied the eligibility conditions designated under
Part 1, #5 and whether or not the Employee has otherwise reached his/her Entry
Date (as designated under Part 2 of the Agreement). Thus, all eligible
Employees employed on the date designated under Part 1, #6 will commence
participating under the Plan as of the appropriate date.
(e) Amendment of age and service requirements. If the Plan's minimum age
and service conditions are amended, an Employee who is an Eligible Participant
immediately prior to the effective date of the amendment is deemed to satisfy
the amended requirements. This provision may be modified under the special
Effective Date provisions under Appendix A of the Agreement.
1.5 Entry Dates. Part 2 of the Agreement contains specific elections
regarding the Entry Dates under the Plan. An Employee's Entry Date is the date
as of which he/she is first considered an Eligible
Participant. Depending on the elections in Part 2 of the Agreement, the Entry
Date may be the exact date on which an Employee completes the Plan's age and
service conditions, or it might be some date that occurs before or after such
conditions are satisfied. If an Employee is excluded from participation under
Part 1, #4 of the Agreement, see the rules under Section 1.8 of this Article.
The Employer may elect under Part 2 of the 401(k) Agreement to apply different
Entry Dates for Section 401(k) Deferrals, Employer Matching Contributions, and
Employer Nonelective Contributions. Unless provided otherwise in Part 2, #8.f.
of the Nonstandardized 401(k) Agreement, the Entry Date chosen for Section
401(k) Deferrals also applies to any Employee After-Tax Contributions and to
any Safe Harbor Contributions designated under Part 4E of the Agreement; the
Entry Date chosen for Employer Matching Contributions also applies to any
Qualified Matching Contributions (QMACs); and the Entry Date chosen for
Employer Nonelective Contributions also applies to any Qualified Nonelective
Contributions (QNECs).
(a) Entry Date requirements. Except as provided under Section 1.4(d)(2)
above, an Employee (other than an Excluded Employee) commences participation
under the Plan (i.e., becomes an Eligible Participant) as of the Entry Date
selected in Part 2 of the Agreement, provided the individual is employed by
the Employer on that Entry Date. (See Section 1.7 below for the rules
applicable to Employees who are not employed on the Entry Date.) In no event
may an Eligible Participant's Entry Date be later than: (1) the first day of
the Plan Year beginning after the date on which the Eligible Participant
satisfies the maximum permissible minimum age and service conditions described
in Section 1.4, or (2) six months after the date the Eligible Participant
satisfies such age and service conditions.
(b) Single annual Entry Date. If the Employer elects a single annual
Entry Date under Part 2, #8 of the Agreement, the maximum permissible age and
service conditions described in Section 1.4 above are reduced by one-half
(1/2) year, unless: (1) the Employer elects under Part 2, #7.c. of the
Agreement to use the Entry Date nearest the date the Employee satisfies the
Plan's minimum age and service conditions and the Entry Date is the first day
of the Plan Year or (2) the Employer elects under Part 2, #7.d. of the
Agreement to use the Entry Date preceding the date the Employee satisfies the
Plan's minimum age and service conditions.
1.6 Eligibility Break in Service Rules. For purposes of eligibility to
participate, an Employee is credited with all Years of Service earned with the
Employer, except as provided under the following Break in Service rules. In
applying these Break in Service rules, Years of Service and Breaks in Service
(as defined in Section 22.26) are measured on the same Eligibility Computation
Period as defined in Section 1.4(c) above.
(a) Rule of Parity Break in Service. This Break in Service rule applies
only to Participants who are totally nonvested (i.e., 0% vested) in their
Employer Contribution Account and Employer Matching Contribution Account, as
applicable. Under this Break in Service rule, if a nonvested Participant
incurs a period of consecutive one-year Breaks in Service which equals or
exceeds the greater of five (5) or the Participant's aggregate number of Years
of Service with the Employer, all service earned prior to the consecutive
Break in Service period will be disregarded and the Participant will be
treated as a new Employee for purposes of determining eligibility under the
Plan. The Employer may elect under Part 7, #27 of the Agreement [Part 7, #45
of the 401(k) Agreement] not to apply the Rule of Parity Break in Service
rule.
(1) Previous application of the Rule of Parity Break in Service
rule. In determining a Participant's aggregate Years of Service for purposes
of applying the Rule of Parity Break in Service, any Years of Service
otherwise disregarded under a previous application of this rule are
disregarded.
(2) Application to the 401(k) Agreement. The Rule of Parity Break in
Service rule applies only to determine the individual's right to resume as an
Eligible Participant with respect to his/her Employer Contribution Account
and/or Employer Matching Contribution Account. In determining whether a
Participant is totally nonvested for purposes of applying the Rule of Parity
Break in Service rule, the Participant's Section 401(k) Deferral Account,
Employee After-Tax Contribution Account, QMAC Account, QNEC Account, Safe
Harbor Nonelective Contribution Account, Safe Harbor Matching Contribution
Account, and Rollover Contribution Account are disregarded.
(b) One-year Break in Service rule for Plans using a two Years of Service
eligibility condition. If the Employer elects to use the two Years of Service
eligibility condition under Part 1, #5.e. of
the Agreement, any Employee who incurs a one-year Break in Service before
satisfying the two Years of Service eligibility condition will not be credited
with service earned before such one-year Break in Service.
(c) One-year holdout Break in Service rule. The one-year holdout Break in
Service rule will not apply unless the Employer specifically elects in Part 7,
#27.b. of the Nonstandardized Agreement [Part 7, #45.b. of the Nonstandardized
401(k) Agreement] to have it apply. If the one-year holdout Break in Service
rule is elected, an Employee who has a one-year Break in Service will not be
credited for eligibility purposes with any Years of Service earned before such
one-year Break in Service until the Employee has completed a Year of Service
after the one-year Break in Service. (The one-year holdout Break in Service
rule does not apply under the Standardized Agreements.)
(1) Operating rules. An Employee who is precluded from receiving
Employer Contributions (other than Section 401(k) Deferrals) as a result of
the one-year holdout Break in Service rule, and who completes a Year of
Service following the Break in Service, is reinstated as an Eligible
Participant as of the first day of the 12-month measuring period (determined
under subsection (2) or (3) below) during which the Employee completes the
Year of Service. Unless otherwise selected under Part 7, #45.b.(1)(b) of the
Nonstandardized 401(k) Agreement, the one-year holdout Break in Service rule
does not apply to preclude an otherwise Eligible Participant from making
Section 401(k) Deferrals to the Plan. If the Employer elects under Part 7,
#45.b.(1)(b) of the Nonstandardized 401(k) Agreement to have the one-year
holdout Break in Service rule apply to Section 401(k) Deferrals, an Employee
who is precluded from making Section 401(k) Deferrals as a result of this
Break in Service rule is re-eligible to make Section 401(k) Deferrals
immediately upon completing 1,000 Hours of Service with the Employer during a
subsequent measuring period (as determined under subsection (2) or (3) below).
No corrective action need be taken by the Employer as a result of the failure
to retroactively permit the Employee to make Section 401(k) Deferrals.
(2) Plans using the Shift-to-Plan-Year Method. If the Plan uses the
Shift-to-Plan-Year Method (as defined in Section 1.4(c)(1)) for measuring
Years of Service, the period for determining whether an Employee completes a
Year of Service following the one-year Break in Service is the 12-month period
commencing on the Employee's Reemployment Commencement Date and, if necessary,
subsequent Plan Years beginning with the Plan Year which includes the first
anniversary of the Employee's Reemployment Commencement Date.
(3) Plans using Anniversary Year Method. If the Plan uses the
Anniversary Year Method (as defined in Section 1.4(c)(2)) for measuring Years
of Service, the period for determining whether an Employee completes a Year of
Service following the one-year Break in Service is the 12-month period which
commences on the Employee's Reemployment Commencement Date and, if necessary,
subsequent 12-month periods beginning on anniversaries of the Employee's
Reemployment Commencement Date.
1.7 Eligibility upon Reemployment. Subject to the Break in Service rules
under Section 1.6, a former Employee is reinstated as an Eligible Participant
immediately upon rehire if the Employee had satisfied the Plan's minimum age
and service conditions prior to termination of employment, regardless of
whether the Employee was actually employed on his/her Entry Date, unless the
Employee is an Excluded Employee upon his/her return to employment. This
requirement is deemed satisfied if a rehired Employee is permitted to commence
making Section 401(k) Deferrals as of the beginning of the first payroll
period commencing after the Employee's Reemployment Commencement Date.
If an Employee is reemployed prior to his/her Entry Date, the Employee does
not become an Eligible Participant under the Plan until such Entry Date. A
rehired Employee who had not satisfied the Plan's minimum age and service
conditions prior to termination of employment is eligible to participate in
the Plan on the appropriate Entry Date following satisfaction of the
eligibility requirements under this Article.
1.8 Operating Rules for Employees Excluded by Class.
(a) Eligible Participant becomes part of an excluded class of Employees.
If an Eligible Participant becomes part of an excluded class of Employees,
his/her status as an Eligible Participant ceases immediately. As provided in
subsection (b) below, such Employee's status as an Eligible Participant will
resume immediately upon his/her returning to an eligible class of Employees,
regardless of whether such date is a normal Entry Date under the Plan, subject
to the application of any Break in Service rules under
Section 1.6 and the special rule for Section 401(k) Deferrals under subsection
(b) below.
(b) Excluded Employee becomes part of an eligible class of Employee. If
an Excluded Employee becomes part of an eligible class of Employees, the
following rules apply. If the Entry Date that otherwise would have applied to
such Employee following his/her completion of the Plan's minimum age and
service conditions has already passed, then the Employee becomes an Eligible
Participant on the date he/she becomes part of the eligible class of
Employees, regardless of whether such date is a normal Entry Date under the
Plan. This requirement is deemed satisfied if the Employee is permitted to
commence making Section 401(k) Deferrals as of the beginning of the first
payroll period commencing after the Employee becomes part of an eligible class
of Employees. If the Entry Date that would have applied to such Employee has
not passed, then the Employee becomes an Eligible Participant on such Entry
Date. If the Employee has not satisfied the Plan's minimum age and service
conditions, the Employee will become an Eligible Participant on the
appropriate Entry Date following satisfaction of the eligibility requirements
under this Article.
1.9 Relationship to Accrual of Benefits. An Eligible Participant is entitled
to accrue benefits in the Plan but will not necessarily do so in every Plan
Year that he/she is an Eligible Participant. Whether an Eligible Participant's
Account receives an allocation of Employer Contributions depends on the
requirements set forth in Part 4 of the Agreement. If an Employee is an
Eligible Participant for purposes of making Section 401(k) Deferrals under the
401(k) Agreement, such Employee is treated as an Eligible Participant under
the Plan regardless of whether he/she actually elects to make Section 401(k)
Deferrals.
1.10 Waiver of Participation. Unless the Employer elects otherwise under
Part 13, #57 of the Nonstandardized Agreement [Part 13, #75 of the
Nonstandardized 401(k) Agreement], an Eligible Participant may not waive
participation under the Plan. For this purpose, a failure to make Section
401(k) Deferrals or Employee After-Tax Contributions under a 401(k) plan is
not a waiver of participation. The Employer may elect under Part 13, #57 of
the Nonstandardized Agreement [Part 13, #75 of the Nonstandardized 401(k)
Agreement] to permit Employees to make a one-time irrevocable election to not
participate under the Plan. Such election must be made upon inception of the
Plan or at any time prior to the time the Employee first becomes eligible to
participate under any plan maintained by the Employer. An Employee who makes a
one-time irrevocable election not to participate may not subsequently elect to
participate under the Plan. An Employee may not waive participation under a
Standardized Agreement.
An Employee who elects not to participate under this Section 1.10 is treated
as a nonbenefiting Employee for purposes of the minimum coverage requirements
under Code Section410(b). However, an Employee who makes a one-time
irrevocable election not to participate, as described in the preceding
paragraph, is not an Eligible Participant for purposes of applying the ADP
Test or ACP Test under the 401(k) Agreement. See Section 17.7(e) and (f). A
waiver of participation must be filed in the manner, time and on the form
required by the Plan Administrator.
ARTICLE 2 EMPLOYER CONTRIBUTIONS AND ALLOCATIONS
This Article describes how Employer Contributions are made to and
allocated under the Plan. The type of Employer Contributions that may be made
under the Plan and the method for allocating such contributions will depend on
the type of Plan involved. Section 2.2 of this BPD provides specific rules
regarding contributions and allocations under a profit sharing plan; Section
2.3 provides the rules for a 401(k) plan; Section 2.4 provides the rules for a
money purchase plan; and Section 2.5 provides the rules for a target benefit
plan. Part 4 of the Agreement contains the elective provisions for the
Employer to specify the amount and type of Employer Contributions it will make
under the Plan and to designate any limits on the amount it will contribute to
the Plan each year. Employee After-Tax Contributions, Rollover Contributions
and transfers to the Plan are discussed in Article 3 and the allocation of
forfeitures is discussed in Article 5. Part 3 of the Agreement contains
elective provisions for determining an Employee's Included Compensation for
allocation purposes.
2.1 Amount of Employer Contributions. The Employer shall make Employer
Contributions to the Trust as determined under the contribution formula
elected in Part 4 of the Agreement. If this Plan is a 401(k) plan, Employer
Contributions include Section 401(k) Deferrals, Employer Nonelective
contributions, Employer Matching Contributions, QNECs, QMACs, and Safe Harbor
Contributions, to the
extent such contributions are elected under the 401(k) Agreement. The Employer
has the responsibility for determining the amount and timing of Employer
Contributions under the terms of the Plan.
(a) Limitation on Employer Contributions. Employer Contributions are
subject to the Annual Additions Limitation described in Article 7 of this BPD.
If allocations to a Participant exceed (or will exceed) such limitation, the
excess will be corrected in accordance with the rules under Article 7. In
addition, the Employer must comply with the special contribution and
allocation rules for Top-Heavy Plans under Article 16.
(b) Limitation on Included Compensation. For purposes of determining a
Participant's allocation of Employer Contributions under this Article, the
Included Compensation taken into account for any Participant for a Plan Year
may not exceed the Compensation Dollar Limitation under Section 22.32.
(c) Contribution of property. Subject to the consent of the Trustee, the
Employer may make its contribution to the Plan in the form of property,
provided such contribution does not constitute a prohibited transaction under
the Code or ERISA. The decision to make a contribution of property is subject
to the general fiduciary rules under ERISA.
(d) Frozen Plan. The Employer may designate under Part 4, #12 of the
Agreement [#3 of the 401(k) Agreement] that the Plan is a frozen Plan. As a
frozen Plan, the Employer will not make any Employer Contributions with
respect to Included Compensation earned after the date identified in the
Agreement, and if the Plan is a 401(k) Plan, no Participant will be permitted
to make Section 401(k) Deferrals or Employee After-Tax Contributions to the
Plan for any period following the effective date identified in the Agreement.
2.2 Profit Sharing Plan Contribution and Allocations. This Section 2.2 sets
forth rules for determining the amount of any Employer Contributions under the
profit sharing plan Agreement. This Section 2.2 also applies for purposes of
determining any Employer Nonelective Contributions under the 401(k) plan
Agreement. In applying this Section 2.2 to the 401(k) Agreement, the term
Employer Contribution refers solely to Employer Nonelective Contributions. Any
reference to the Agreement under this Section 2.2 is a reference to the profit
sharing plan Agreement or 401(k) plan Agreement (as applicable).
(a) Amount of Employer Contribution. The Employer must designate under
Part 4, #12 of the profit sharing plan Agreement the amount it will contribute
as an Employer Contribution under the Plan. If the Employer adopts the 401(k)
plan Agreement and elects to make Employer Nonelective Contributions under
Part 4C of the Agreement, the Employer must complete Part 4C, #20 of the
Agreement, unless the only Employer Nonelective Contribution authorized under
the Plan is a QNEC under Part 4C, #22. An Employer Contribution authorized
under this Section may be totally within the Employer's discretion or may be a
fixed amount determined as a uniform percentage of each Eligible Participant's
Included Compensation or as a fixed dollar amount for each Eligible
Participant. An Employer Contribution under this Section will be allocated to
the Eligible Participants' Employer Contribution Account in accordance with
the allocation formula selected under Part 4, #13 of the Agreement [Part 4C,
#21 of the 401(k) Agreement].
(1) Davis-Bacon Contribution Formula. The Employer may elect a
Davis-Bacon Contribution Formula under Part 4, #12.d. of the Nonstandardized
Agreement [Part 4C, #20.d. of the Nonstandardized 401(k) Agreement]. Under the
Davis-Bacon Contribution Formula, the Employer will provide an Employer
Contribution for each Eligible Participant who performs Davis-Bacon Act
Service. For this purpose, Davis-Bacon Act Service is any service performed by
an Employee under a public contract subject to the Davis-Bacon Act or to any
other federal, state or municipal prevailing wage law. Each such Eligible
Participant will receive a contribution based on the hourly contribution rate
for the Participant's employment classification, as designated on Schedule A
of the Agreement. Schedule A is incorporated as part of the Agreement. In
applying the Davis-Bacon Contribution Formula under this subsection (1), the
following default rules will apply. The Employer may modify these default
rules under Part 4, #12.d.(2) of the Nonstandardized Agreement [Part 4C,
#20.d.(2) of the Nonstandardized 401(k) Agreement].
(i) Eligible Employees. Highly Compensated Employees are
Excluded Employees for purposes of receiving an Employer Contribution under
the Davis-Bacon Contribution
Formula.
(ii) Minimum age and service conditions. No minimum age or
service conditions will apply for purposes of determining an Employee's
eligibility under the Davis-Bacon Contribution Formula.
(iii) Entry Date. For purposes of applying the Davis-Bacon
Contribution Formula, an Employee becomes an Eligible Participant on his/her
Employment Commencement Date.
(iv) Allocation conditions. No allocation conditions (as
described in Section 2.6) will apply for purposes of determining an Eligible
Participant's allocation under the Davis-Bacon Contribution Formula.
(v) Vesting. Employer Contributions made pursuant to the
Davis-Bacon Contribution Formula are always 100% vested.
(vi) Offset of other Employer Contributions. The contributions
under the Davis Bacon Contribution Formula will not offset any other Employer
Contributions under the Plan. However, the Employer may elect under Part 4,
#12.d.(1) of the Nonstandardized Agreement [Part 4C, #20.d.(1) of the
Nonstandardized 401(k) Agreement] to offset any other Employer Contributions
made under the Plan by the contributions a Participant receives under the
Davis-Bacon Contribution Formula. Under the Nonstandardized 401(k) plan
Agreement, the Employer may elect under Part 4C, #20.d.(1) to apply the offset
under this subsection to Employer Nonelective Contributions, Employer Matching
Contributions, or both.
(2) Net Profits. The Employer may elect under Part 4, #12 of the
Agreement [Part 4B, #16 and Part 4C, #20 of the 401(k) Agreement], to limit
any Employer Contribution under the Plan to Net Profits. Unless modified in
the Agreement, Net Profits means the Employer's net income or profits
determined in accordance with generally accepted accounting principles,
without any reduction for taxes based upon income, or the contributions made
by the Employer under this Plan or any other qualified plan. Unless
specifically elected otherwise under Part 4, #12.e.(2) of the Nonstandardized
Agreement [Part 4C, #20.e.(2) of the Nonstandardized 401(k) Agreement], this
limit will not apply to any Employer Contributions made under a Davis-Bacon
Contribution Formula.
(3) Multiple formulas. If the Employer elects more than one Employer
Contribution formula, each formula is applied separately. The Employer's
aggregate Employer Contribution for a Plan Year will be the sum of the
Employer Contributions under all such formulas.
(b) Allocation formula for Employer Contributions. The Employer must
elect a definite allocation formula under Part 4, #13 of the profit sharing
plan Agreement that determines how much of the Employer Contribution is
allocated to each Eligible Participant. If the Employer adopts the 401(k) plan
Agreement and elects to make an Employer Nonelective Contribution (other than
a QNEC) under Part 4C, #20 of the Agreement, Part 4C, #21 also must be
completed designating the allocation formula under the Plan. An Eligible
Participant is only entitled to an allocation if such Participant satisfies
the allocation conditions described in Part 4, #15 of the Agreement [Part 4C,
#24 of the 401(k) Agreement]. See Section 2.6.
(1) Pro Rata Allocation Method. If the Employer elects the Pro Rata
Allocation Method, a pro rata share of the Employer Contribution is allocated
to each Eligible Participant's Employer Contribution Account. A Participant's
pro rata share is determined based on the ratio such Participant's Included
Compensation bears to the total of all Eligible Participants' Included
Compensation. However, if the Employer elects under Part 4, #12.c. of the
Agreement [Part 4C, #20.c. of the 401(k) Agreement] to contribute a uniform
dollar amount for each Eligible Participant, the pro rata allocation method
allocates that uniform dollar amount to each Eligible Participant. If the
Employer elects a Davis-Bacon Contribution Formula under Part 4, #12.d. of the
Nonstandardized Agreement [Part 4C, #20.d. of the Nonstandardized 401(k)
Agreement], the Employer Contributions made pursuant to such formula will be
allocated to each Eligible Participant based on his/her Davis-Bacon Act
Service in accordance with the employment
classifications identified under Schedule A of the Agreement.
(2) Permitted Disparity Method. If the Employer elects the Permitted
Disparity Method, the Employer Contribution is allocated to Eligible
Participants under the Two-Step Formula or the Four-Step Formula (as elected
under the Agreement). The Permitted Disparity Method only may apply if the
Employer elects under the Agreement to make a discretionary contribution. The
Employer may not elect the Permitted Disparity Method under the Plan if
another qualified plan of the Employer, which covers any of the same
Employees, uses permitted disparity in determining the allocation of
contributions or the accrual of benefits under the plan.
For purposes of applying the Permitted Disparity Method, Excess Compensation
is the portion of an Eligible Participant's Included Compensation that exceeds
the Integration Level. The Integration Level is the Taxable Wage Base, unless
the Employer designates a different amount under Part 4, #14.b.(2) of the
Agreement [Part 4C, #23.b.(2) of the 401(k) Agreement].
(i) Two-Step Formula. If the Employer elects the Two-Step
Formula, the following allocation method applies. However, the Employer may
elect under Part 4, #14.b.(1) of the Agreement [Part 4C, #23.b.(1) of the
401(k) Agreement] to have the Four-Step Method, as described in subsection
(ii) below, automatically apply for any Plan Year in which the Plan is a
Top-Heavy Plan.
(A) Step One. The Employer Contribution is allocated to
each Eligible Participant's Account in the ratio that each Eligible
Participant's Included Compensation plus Excess Compensation for the Plan Year
bears to the total Included Compensation plus Excess Compensation of all
Eligible Participants for the Plan Year. The allocation under this Step One,
as a percentage of each Eligible Participant's Included Compensation plus
Excess Compensation, may not exceed the Applicable Percentage under the
following table:
Integration Level Applicable (as a % of the Taxable Wage
Base)
Percentage
----------
100% 5.7%
More than 80% but less than 100% 5.4%
More than 20% and not more than 80% 4.3%
20% or less 5.7%
(B) Step Two. Any Employer Contribution remaining after
Step One will be allocated in the ratio that each Eligible Participant's
Included Compensation for the Plan Year bears to the total Included
Compensation of all Eligible Participants for the Plan Year.
(ii) Four-Step Formula. If the Employer elects the Four-Step
Formula, or if the Plan is a Top-Heavy Plan and the Employer elects under the
Agreement to have the Four-Step Formula apply for any Plan Year that the Plan
is a Top-Heavy Plan, the following allocation method applies. The allocation
under this Four-Step Formula may be modified if the Employer maintains a
Defined Benefit Plan and elects under Part 13, #54.b. of the Agreement [Part
13, #72.b. of the 401(k) Agreement] to provide a greater top-heavy minimum
contribution. See Section 16.2(a)(5)(ii).
(A) Step One. The Employer Contribution is allocated to
each Eligible Participant's Account in the ratio that each Eligible
Participant's Total Compensation for the Plan Year bears to all Eligible
Participants' Total Compensation for the Plan Year, but not in excess of 3% of
each Eligible Participant's Total Compensation.
For any Plan Year for which the Plan is a Top-Heavy Plan, an allocation will
be made under this subsection (A) to any Non-Key Employee who is an Eligible
Participant (and is not an Excluded Employee) if such individual is employed
as of the last day of the Plan Year, even if such individual fails to satisfy
any minimum Hours of Service allocation condition under Part 4, #15 of the
Agreement [Part 4C, #24 of the 401(k) Agreement]. If the Plan is a Top-Heavy
401(k) Plan, an allocation also will be made under this subsection (A) to any
Employee who is an Eligible Participant for purposes of making Section 401(k)
Deferrals under the Plan, even if the individual has not satisfied the minimum
age and service conditions under Part 1, #5 of the Agreement applicable to any
other contribution types.
(B) Step Two. Any Employer Contribution remaining after
the allocation in Step One will be allocated to each Eligible Participant's
Account in the ratio that each Eligible Participant's Excess Compensation for
the Plan Year bears to the Excess Compensation of all Eligible Participants
for the Plan Year, but not in excess of 3% of each Eligible Participant's
Included Compensation.
(C) Step Three. Any Employer Contribution remaining after
the allocation in Step Two will be allocated to each Eligible Participant's
Account in the ratio that the sum of each Eligible Participant's Included
Compensation and Excess Compensation bears to the sum of all Eligible
Participants' Included Compensation and Excess Compensation. The allocation
under this Step Three, as a percentage of each Eligible Participant's Included
Compensation plus Excess Compensation, may not exceed the Applicable
Percentage under the following table:
Integration Level Applicable
(as a % of the Taxable Wage Base) Percentage
--------------------------------------------
100% 2.7%
More than 80% but less than 100% 2.4%
More than 20% and not more than 80% 1.3%
20% or less 2.7%
(D) Step Four. Any remaining Employer Contribution will be
allocated to each Eligible Participant's Account in the ratio that each
Eligible Participant's Included Compensation for the Plan Year bears to all
Eligible Participants' Included Compensation for that Plan Year.
(3) Uniform points allocation. The Employer may elect under Part 4,
#13.c. of the Nonstandardized Agreement [Part 4C, #21.c. of the
Nonstandardized 401(k) Agreement] to allocate the Employer Contribution under
a uniform points allocation formula. Under this formula, the allocation for
each Eligible Participant is determined based on the Eligible Participant's
total points for the Plan Year, as determined under the Nonstandardized
Agreement. An Eligible Participant's allocation of the Employer Contribution
is determined by multiplying the Employer Contribution by a fraction, the
numerator of which is the Eligible Participant's total points for the Plan
Year and the denominator of which is the sum of the points for all Eligible
Participants for the Plan Year.
An Eligible Participant will receive points for each year(s) of age and/or
each Year(s) of Service designated under Part 4, #13.c. of the Nonstandardized
Agreement [Part 4C, #21.c. of the Nonstandardized 401(k) Agreement]. In
addition, an Eligible Participant also may receive points based on his/her
Included Compensation, if the Employer so elects under the Nonstandardized
Agreement. Each Eligible Participant will receive the same number of points
for each designated year of age and/or service and the same number of points
for each designated level of Included Compensation. An Eligible Participant
must receive points for either age or service, or may receive points for both
age and service. If the Employer also provides points based on Included
Compensation, an Eligible Participant will receive points for each level of
Included Compensation designated under Part 4, #13.c.(3) of the
Nonstandardized Agreement [Part 4C, #21.c.(3) of the Nonstandardized 401(k)
Agreement]. For this purpose, the Employer may not designate a level of
Included Compensation that exceeds $200.
To satisfy the nondiscrimination safe harbor under Treas. Reg.
Section1.401(a)(4)-2, the average of the allocation rates for Highly
Compensated Employees in the Plan must not exceed the average of the
allocation rates for the Nonhighly Compensated Employees in the Plan. For this
purpose, the average allocation rates are determined in accordance with Treas.
Reg. Section1.401(a)(4)-2(b)(3)(B).
(c) Special rules for determining Included Compensation.
(1) Applicable period for determining Included Compensation. In
determining an Eligible Participant's allocation under Part 4, #13 of the
Agreement [Part 4C, #21 of the 401(k) Agreement], the Participant's Included
Compensation is determined separately for each period designated
under Part 4, #14.a.(1) of the Agreement [Part 4C, #23.a.(1) of the 401(k)
Agreement]. If the Employer elects the Permitted Disparity Method under Part
4, #13.b. of the Agreement [Part 4C, #21.b. of the 401(k) Agreement], the
period designated must be the Plan Year. If the Employer elects the Pro Rata
Allocation Method or the uniform points allocation formula, and elects a
period other than the Plan Year, a Participant's allocation of Employer
Contributions will be determined separately for each period based solely on
Included Compensation for such period. The Employer need not actually make the
Employer Contribution during the designated period, provided the total
Employer Contribution for the Plan Year is allocated based on the proper
Included Compensation.
(2) Partial period of participation. If an Employee is an Eligible
Participant for only part of a Plan Year, the Employer Contribution formula(s)
will be applied based on such Employee's Included Compensation for the period
he/she is an Eligible Participant. However, the Employer may elect under Part
4, #14.a.(2) of the Agreement [Part 4C, #23.a.(2) of the 401(k) Agreement] to
base the Employer Contribution formula(s) on the Employee's Included
Compensation for the entire Plan Year, including the portion of the Plan Year
during which the Employee is not an Eligible Participant. In applying this
subsection (2) to the 401(k) Agreement, an Employee's status as an Eligible
Participant is determined solely with respect to the Employer Nonelective
Contribution under Part 4C of the Agreement.
(3) Measurement period. Except as provided in subsection (2) above,
for purposes of determining an Eligible Participant's allocation of Employer
Contributions, Included Compensation is measured on the Plan Year, unless the
Employer elects under Part 4, #14.a.(3) of the Nonstandardized Agreement [Part
3, #11.b. of the Nonstandardized 401(k) Agreement] to measure Included
Compensation on the calendar year ending in the Plan Year or on the basis of
any other 12-month period ending in the Plan Year. If the Employer elects to
measure Included Compensation on the calendar year or other 12-month period
ending in the Plan Year, the Included Compensation of any Employee whose
Employment Commencement Date is less than 12 months before the end of such
period must be measured on the Plan Year or such Employee's period of
participation, as determined under subsection (2) above. If the Employer
adopts the Nonstandardized 401(k) Agreement, any election under Part 3, #11.b.
of the Agreement applies for purposes of all contributions permitted under the
Agreement.
2.3 401(k) Plan Contributions and Allocations. This Section 2.3 applies if
the Employer has adopted the 401(k) plan Agreement. The 401(k) Agreement is a
profit sharing plan with a 401(k) feature. Any reference to the Agreement
under this Section 2.3 is a reference to the 401(k) Agreement. The Employer
must designate under Part 4 of the Agreement the amount and type of Employer
Contributions it will make under the Plan. Employer Contributions under a
401(k) plan are generally subject to special limits and nondiscrimination
rules. (See Article 17 for a discussion of the special rules that apply to
the Employer Contributions under a 401(k) plan.) The Employer may make any (or
all) of the following contributions under the 401(k) Agreement.
(a) Section 401(k) Deferrals. If so elected under Part 4A of
the Agreement, an Eligible Participant may enter into a Salary Reduction
Agreement with the Employer authorizing the Employer to withhold a specific
dollar amount or a specific percentage from the Participant's Included
Compensation and to deposit such amount into the Participant's Section 401(k)
Deferral Account under the Plan. An Eligible Participant may defer with
respect to Included Compensation that exceeds the Compensation Dollar
Limitation, provided the deferrals otherwise satisfy the limitations under
Code Section402(g) and any other limitations under the Plan. A Salary
Reduction Agreement may only relate to Included Compensation that is not
currently available at the time the Salary Reduction Agreement is completed.
An Employer may elect under Part 4A, #15 of the Agreement to provide a special
effective date solely for Section 401(k) Deferrals under the Plan.
An Employee's Section 401(k) Deferrals are treated as Employer Contributions
for all purposes under this Plan, except as otherwise provided under the Code
or Treasury regulations. If the Employer adopts the Nonstandardized 401(k)
Agreement and does not elect to allow Section 401(k) Deferrals under Part 4A
of the Agreement, the only contributions an Eligible Participant may make to
the Plan are Employee After-Tax Contributions as authorized under Article 3 of
this BPD and Part 4D of the Nonstandardized Agreement. In either case, an
Eligible Participant may also receive Employer Nonelective Contributions
and/or Employer Matching Contributions under the Plan, to the extent
authorized under the Agreement. (The Employee may not make Employee After-Tax
Contributions under the Standardized 401(k)
Agreement.)
(1) Change in deferral election. At least once a year, an Eligible
Participant may enter into a new Salary Reduction Agreement, or may change
his/her elections under an existing Salary Reduction Agreement, at the time
and in the manner prescribed by the Plan Administrator on the Salary Reduction
Agreement form (or other written procedures). The Salary Reduction Agreement
may also provide elections as to the investment funds into which the Section
401(k) Deferrals will be contributed and the time and manner a Participant may
change such elections.
(2) Automatic deferral election. If elected under Part 4A, #14 of
the Agreement, the Employer will automatically withhold the amount designated
under Part 4A, #14 from Eligible Participants' Included Compensation for
payroll periods starting with such Participants' Entry Date, unless the
Eligible Participant completes a Salary Reduction Agreement electing a
different deferral amount (including a zero deferral amount). The Employer
must designate in Part 4A, #14 of the Agreement the date as of which an
Employee's deferral election will be taken into account to override the
automatic deferral election under this subparagraph (2). This automatic
deferral election does not apply to any Eligible Participant who has elected
to defer an amount equal to or greater than the automatic deferral amount
designated in Part 4A, #14 of the Agreement. The Employer may elect under Part
4A, #14.b. of the Agreement to apply the automatic deferral election only to
Employees who become Eligible Participants after a specified date. The Plan
Administrator will deposit all amounts withheld pursuant to this automatic
deferral election into the appropriate Participant's Section 401(k) Deferral
Account.
Prior to the time an automatic deferral election first goes into effect, an
Eligible Participant must receive written notice concerning the effect of the
automatic deferral election and his/her right to elect a different level of
deferral under the Plan, including the right to elect not to defer. After
receiving the notice, an Eligible Participant must have a reasonable time to
enter into a new Salary Reduction Agreement before any automatic deferral
election goes into effect.
(b) Employer Matching Contributions. If so elected under Part 4B of the
Agreement, the Employer will make an Employer Matching Contribution, in
accordance with the matching contribution formula(s) selected in Part 4B, #16,
to Eligible Participants who satisfy the allocation conditions under Part 4B,
#19 of the Agreement. See Section 2.6. Any Employer Matching Contribution
determined under Part 4B, #16 will be allocated to the Eligible Participant's
Employer Matching Contribution Account.
(1) Applicable contributions. The Employer must elect under the
Nonstandardized Agreement whether the matching contribution formula(s) applies
to Section 401(k) Deferrals, Employee After-Tax Contributions, or both. Under
the Standardized Agreement, Employer Matching Contributions apply only to
Section 401(k) Deferrals. The contributions eligible for an Employer Matching
Contribution are referred to under this Section as "applicable contributions."
If a matching formula applies to both Section 401(k) Deferrals and Employee
After-Tax Contributions, such contributions are aggregated to determine the
Employer Matching Contribution allocated under the formula.
(2) Multiple formulas. If the Employer elects more than one matching
contribution formula under Part 4B, #16 of the Agreement, each formula is
applied separately. An Eligible Participant's aggregate Employer Matching
Contributions for a Plan Year will be the sum of the Employer Matching
Contributions the Participant is entitled to under all such formulas.
(3) Applicable contributions taken into account under the matching
contribution formula. The Employer must elect under Part 4B, #17.a. of the
Agreement the period for which the applicable contributions are taken into
account in applying the matching contribution formula(s) and in applying any
limits on the amount of such contributions that may be taken into account
under the formula(s). In applying the matching contribution formula(s),
applicable contributions (and Included Compensation) are determined separately
for each designated period and any limits on the amount of applicable
contributions taken into account under the matching contribution formula(s)
are applied separately for each designated period.
(4) Partial period of participation. In applying the matching
contribution formula(s) under the Plan to an Employee who is an Eligible
Participant for only part of the Plan Year, the Employer may elect under Part
4B, #17.b. of the Agreement to take into account Included Compensation for the
entire Plan Year or only for the portion of the Plan Year during which the
Employee is an Eligible
Participant. Alternatively, the Employer may elect under Part 4B, #17.b.(3)
of the Agreement to take into account Included Compensation only for the
period that the Employee actually makes applicable contributions under the
Plan. In applying this subsection (4), an Employee's status as an Eligible
Participant is determined solely with respect to the Employer Matching
Contribution under Part 4B of the Agreement.
(c) Qualified Matching Contributions (QMACs). If so elected under Part
4B, #18 of the Agreement, the Employer may treat all (or a portion) of its
Employer Matching Contributions as QMACs. If an Employer Matching Contribution
is designated as a QMAC, it must satisfy the requirements for a QMAC (as
described in Section 17.7(g)) at the time the contribution is made to the Plan
and must be allocated to the Participant's QMAC Account. To the extent an
Employer Matching Contribution is treated as a QMAC under Part 4B, #18, such
contribution will be 100% vested, regardless of any inconsistent elections
under Part 6 of the Agreement relating to Employer Matching Contributions.
(See Sections 17.2(d)(2) and 17.3(d)(2) for the ability to make QMACs to
correct an ADP or ACP failure without regard to any election under Part 4B,
#18 of the Agreement.)
Under Part 4B, #18, the Employer may designate all Employer Matching
Contributions as QMACs or may designate only those Employer Matching
Contributions under specific matching contribution formula(s) to be QMACs.
Alternatively, the Employer may authorize a discretionary QMAC, in addition to
the Employer Matching Contributions designated under Part 4B, #16, to be
allocated uniformly as a percentage of Section 401(k) Deferrals made during
the Plan Year. The Employer may elect under the Agreement to allocate the
discretionary QMAC only to Eligible Participants who are Nonhighly Compensated
Employees or to all Eligible Participants. If the Employer elects both a
discretionary Employer Matching Contribution formula and a discretionary QMAC
formula, the Employer must designate, in writing, the extent to which any
matching contribution is intended to be an Employer Matching Contribution or a
QMAC.
(d) Employer Nonelective Contributions. If so elected under Part 4C of
the Agreement, the Employer may make Employer Nonelective Contributions on
behalf of each Eligible Participant under the Plan who has satisfied the
allocation conditions described in Part 4C, #24 of the Agreement. See Section
2.6. The Employer must designate under Part 4C, #20 of the Agreement the
amount of any Employer Nonelective Contributions it wishes to make under the
Plan. The amount of any Employer Nonelective Contributions authorized under
the Plan and the method of allocating such contributions is described in
Section 2.2 of this Article.
(e) Qualified Nonelective Contributions (QNECs). The Employer may elect
under Part 4C, #22 of the Agreement to permit discretionary QNECs under the
Plan. A QNEC must satisfy the requirements for a QNEC (as described in Section
17.7(h)) at the time the contribution is made to the Plan and must be
allocated to the Participant's QNEC Account. If the Plan authorizes the
Employer to make both a discretionary Employer Nonelective Contribution and a
discretionary QNEC, the Employer must designate, in writing, the extent to
which any contribution is intended to be an Employer Nonelective Contribution
or a QNEC. To the extent an Employer Nonelective Contribution is treated as a
QNEC under Part 4C, #22, such contribution will be 100% vested, regardless of
any inconsistent elections under Part 6 of the Agreement relating to Employer
Nonelective Contributions. (See Sections 17.2(d)(2) and 17.3(d)(2) for the
ability to make QNECs to correct an ADP or ACP failure without regard to any
election under Part 4C, #22 of the Agreement.)
If the Employer makes a QNEC for the Plan Year, it will be allocated to
Participants' QNEC Account based on the allocation method selected by the
Employer under Part 4C, #22 of the Agreement. An Eligible Participant will
receive a QNEC allocation even if he/she has not satisfied any allocation
conditions designated under Part 4C, #24 of the Agreement, unless the Employer
elects otherwise under the Part 4C, #22.c. of the Agreement.
(1) Pro Rata Allocation Method. If the Employer elects the Pro Rata
Allocation Method under Part 4C, #22.a. of the Agreement, any Employer
Nonelective Contribution properly designated as a QNEC will be allocated as a
uniform percentage of Included Compensation to all Eligible Participants who
are Nonhighly Compensated Employees or to all Eligible Participants, as
specified under Part 4C, #22.a.
(2) Bottom-up QNEC method. If the Employer elects the Bottom-up QNEC
method under Part 4C, #22.b. of the Agreement, any Employer Nonelective
Contribution properly designated as a QNEC will be first allocated to the
Eligible Participant with the lowest Included Compensation for the Plan
Year for which the QNEC is being allocated. To receive an allocation of the
QNEC under this subsection (2), the Eligible Participant must be a Nonhighly
Compensated Employee for the Plan Year for which the QNEC is being allocated.
The QNEC will be allocated to the Eligible Participant with the lowest
Included Compensation until all of the QNEC has been allocated or until the
Eligible Participant has reached his/her Annual Additions Limitation, as
described in Article 7. For this purpose, if two or more Eligible Participants
have the same Included Compensation, the QNEC will be allocated equally to
each Eligible Participant until all of the QNEC has been allocated, or until
each Eligible Participant has reached his/her Annual Additions Limitation. If
any QNEC remains unallocated, this process is repeated for the Eligible
Participant(s) with the next lowest level of Included Compensation in
accordance with the provisions under this subsection (2), until all of the
QNEC is allocated.
(f) Safe Harbor Contributions. If so elected under Part 4E of the 401(k)
Agreement, the Employer may elect to treat this Plan as a Safe Harbor 401(k)
Plan. To qualify as a Safe Harbor 401(k) Plan, the Employer must make a Safe
Harbor Nonelective Contribution or a Safe Harbor Matching Contribution under
the Plan. Such contributions are subject to special vesting and distribution
restrictions and must be allocated to the Eligible Participants' Safe Harbor
Nonelective Contribution Account or Safe Harbor Matching Contribution Account,
as applicable. Section 17.6 describes the requirements that must be met to
qualify as a Safe Harbor 401(k) Plan and the method for calculating the amount
of the Safe Harbor Contribution that must be made under the Plan.
(g) Prior SIMPLE 401(k) plan. If this Agreement is being used to amend or
restate a 401(k) plan which complied with the SIMPLE 401(k) plan provisions
under Code Section401(k)(11), any provision in this Agreement which is
inconsistent with the SIMPLE 401(k) plan provisions is not effective for any
Plan Year during which the plan complied with the SIMPLE 401(k) plan
provisions.
2.4 Money Purchase Plan Contribution and Allocations. This Section 2.4
applies if the Employer has adopted the money purchase plan Agreement. Any
reference to the Agreement under this Section 2.4 is a reference to the money
purchase plan Agreement.
(a) Employer Contributions. The Employer must elect under Part 4 of the
Nonstandardized Agreement to make Employer Contributions under one or more of
the following methods:
(1) as a uniform percentage of each Eligible Participant's Included
Compensation;
(2) as a uniform dollar amount for each Eligible Participant;
(3) under the Permitted Disparity Method (using either the
individual method or group method);
(4) under a formula based on service with the Employer; or
(5) under a Davis-Bacon Contribution Formula.
Under the Standardized Agreement, the Employer may only elect to make an
Employer Contribution as a uniform percentage of Included Compensation, a
uniform dollar amount, or under the Permitted Disparity Method.
An Eligible Participant is only entitled to share in the Employer Contribution
if such Participant satisfies the allocation conditions described under Part
4, #15 of the Agreement. See Section 2.6.
If the Employer elects more than one Employer Contribution formula under Part
4, #12 of the Agreement, each formula is applied separately. An Eligible
Participant's aggregate Employer Contributions for a Plan Year will be the sum
of the Employer Contributions the Participant is entitled to under all such
formulas.
(b) Uniform percentage or uniform dollar amount. The contribution made by
the Employer must be allocated to Eligible Participants in a definitely
determinable manner. If the Employer elects to make an Employer Contribution
as a uniform percentage of Included Compensation under Part 4, #12.a. of the
Agreement or as a uniform dollar amount under Part 4, #12.b. of the Agreement,
each Eligible Participant's allocation of the Employer Contribution will equal
the amount determined under the
contribution formula elected under the Agreement.
(c) Permitted Disparity Method. The Employer may elect under Part 4,
#12.c. of the Agreement to use the Permitted Disparity Method using either the
individual method or the group method. An Employer may not elect a Permitted
Disparity Method under the Plan if another qualified plan of the Employer,
which covers any of the same Employees, uses permitted disparity in
determining the allocation of contributions or accrual of benefits under the
plan.
For purposes of applying the Permitted Disparity Method, Excess Compensation
is the portion of an Eligible Participant's Included Compensation that exceeds
the Integration Level. The Integration Level is the Taxable Wage Base, unless
the Employer designates a different amount under Part 4, #14.b. of the
Agreement.
(1) Individual method. If the Employer elects the Permitted
Disparity Method using the individual method, each Eligible Participant will
receive an allocation of the Employer Contribution equal to the amount
determined under the contribution formula under Part 4, #12.c.(1) of the
Agreement. Under the individual Permitted Disparity Method, the Employer will
contribute (i) a fixed percentage of each Eligible Participant's Included
Compensation for the Plan Year plus (ii) a fixed percentage of each Eligible
Participant's Excess Compensation. The percentage of each Eligible
Participant's Excess Compensation under (ii) may not exceed the lesser of the
percentage of total Included Compensation contributed under (i) or the
Applicable Percentage under the following table:
Integration Level Applicable
(As a percentage of the Taxable Wage Base)Percentage
----------------------------------------------------
100% 5.7%
More than 80% but less than 100% 5.4%
More than 20% and not more than 80% 4.3%
20% or less 5.7%
(2) Group method. If the Employer elects the Permitted Disparity
Method using the group method under Part 4, #12.c.(2) of the Agreement, the
Employer will contribute a fixed percentage (as designated in the Agreement)
of the total Included Compensation for the Plan Year of all Eligible
Participants. The total Employer Contribution is then allocated among the
Eligible Participants under either the Two-Step Formula or the Four-Step
Formula described below.
(i) Two-Step Formula. If the Employer elects the Two-Step
Formula, the Employer Contribution will be allocated in the same manner as
under Section 2.2(b)(2)(i) above. However, the Employer may elect to have the
Four-Step Formula automatically apply for any Plan Year in which the Plan is a
Top-Heavy Plan.
(ii) Four-Step Formula. If the Employer elects the Four-Step
Formula or if the Plan is a Top-Heavy Plan and the Employer elects to have the
Four-Step Formula apply for Plan Years when the Plan is a Top-Heavy Plan, the
Employer Contribution will be allocated to Eligible Participants in the same
manner as under Section 2.2(b)(2)(ii) above.
(d) Contribution based on service. The Employer may elect under Part 4,
#12.d. of the Nonstandardized Agreement to provide an Employer Contribution
for each Eligible Participant based on the service performed by such Eligible
Participant during the Plan Year (or other period designated under Part 4,
#13.a. of the Agreement). The Employer may provide a fixed dollar amount of a
fixed percentage of Included Compensation for each Hour of Service, each week
of employment or any other measuring period selected under Part 4, #12.d. of
the Nonstandardized Agreement. If the Employer elects to make a contribution
based on service, each Eligible Participant will receive an allocation of the
Employer Contribution equal to the amount determined under the contribution
formula under Part 4, #12.d. of the Nonstandardized Agreement.
(e) Davis-Bacon Contribution Formula. The Employer may elect under Part
4, #12.e. of the
Nonstandardized Agreement to provide an Employer Contribution for each
Eligible Participant who performs Davis-Bacon Act Service. For this purpose,
Davis-Bacon Act Service is any service performed by an Employee under a public
contract subject to the Davis-Bacon Act or to any other federal, state or
municipal prevailing wage law. Each such Eligible Participant will receive a
contribution based on the hourly contribution rate for the Participant's
employment classification, as designated on Schedule A of the Agreement.
Schedule A is incorporated as part of the Agreement.In applying the
Davis-Bacon Contribution Formula under this subsection (e), the following
default rules will apply. The Employer may modify these default rules under
Part 4, #12.e.(2) of the Nonstandardized Agreement
(1) Eligible Employees. Highly Compensated Employees are Excluded
Employees for purposes of receiving an Employer Contribution under the
Davis-Bacon Contribution Formula.
(2) Minimum age and service conditions. No minimum age or service
conditions will apply for purposes of determining an Employee's eligibility
under the Davis-Bacon Contribution Formula.
(3) Entry Date. For purposes of applying the Davis-Bacon
Contribution Formula, an Employee becomes an Eligible Participant on his/her
Employment Commencement Date.
(4) Allocation conditions. No allocation conditions (as described in
Section 2.6) will apply for purposes of determining an Eligible Participant's
allocation under the Davis-Bacon Contribution Formula.
(5) Vesting. Employer Contributions made pursuant to the Davis-Bacon
Contribution Formula are always 100% vested.
(6) Offset of other Employer Contributions. The contributions under
the Davis Bacon Contribution Formula will not offset any other Employer
Contributions under the Plan. However, the Employer may elect under Part 4,
#12.e.(1) of the Nonstandardized Agreement to offset any other Employer
Contributions made under the Plan by the Employer Contributions a Participant
receives under the Davis-Bacon Contribution Formula.
(f) Applicable period for determining Included Compensation. In
determining the amount of Employer Contribution to be allocated to an Eligible
Participant, Included Compensation is determined separately for each period
designated under Part 4, #13.a. of the Agreement. If the Employer elects the
Permitted Disparity Method under Part 4, #12.c. of the Agreement, the period
designated under Part 4, #13.a. must be the Plan Year. If the Employer elects
an Employer Contribution formula under Part 4, #12 of the Agreement other than
the Permitted Disparity Method, and elects a period under Part 4, #13.a. other
than the Plan Year, a Participant's allocation of Employer Contributions will
be determined separately for each period based solely on Included Compensation
for such period. If the Employer elects the service formula under Part 4,
#12.d. of the Nonstandardized Agreement, the Employer Contribution also will
be determined separately for each period designated under Part 4, #13.a. of
the Agreement based on service performed during such period. The Employer need
not actually make the Employer Contribution during the designated period,
provided the total Employer Contribution for the Plan Year is allocated based
on the proper Included Compensation.
(g) Special rules for determining Included Compensation. The same rules
as discussed under Section 2.2(c)(2) apply to permit the Employer to elect
under Part 4, #13.b. of the Agreement to take into account an Employee's
Included Compensation for the entire Plan Year, even if the Employee is an
Eligible Participant for only part of the Plan Year. If no election is made
under Part 4, #13.b., only Included Compensation for the portion of the Plan
Year while an Employee is an Eligible Participant will be taken into account
in determining an Employee's Employer Contribution under the Plan. The
Employer also may elect under Part 4, #13.c. of the Agreement to take into
account Included Compensation for the calendar year ending in the Plan Year or
other 12-month period, as provided in Section 2.2(c)(3).
(h) Limit on contribution where Employer maintains another plan in
addition to a money purchase plan.
If the Employer adopts the money purchase plan Agreement and also maintains
another qualified retirement plan, the contribution to be made under the money
purchase plan Agreement (as designated in Part 4 of the Agreement) will not
exceed the maximum amount that is deductible under Code Section404(a)(7),
taking into account all contributions that have been made to the plans prior
to the date a contribution is
made under the money purchase plan Agreement.
2.5 Target Benefit Plan Contribution. This Section 2.5 applies if the
Employer has adopted the target benefit plan Agreement. Any reference to the
Agreement under this Section 2.5 is a reference to the target benefit plan
Agreement.
(a) Stated Benefit. A Participant's Stated Benefit, as of any Plan Year,
is the amount determined in accordance with the benefit formula selected under
Part 4 of the Agreement, payable annually in the form of a Straight Life
Annuity commencing upon the Participant's Normal Retirement Age (as defined in
Part 5 of the Agreement) or current age (if later). In applying the benefit
formula under Part 4, all projected Years of Participation (as defined in
subsection (d)(10) below) are counted beginning with the first Plan Year and
projecting through the last day of the Plan Year in which the Participant
attains Normal Retirement Age (or the current Plan Year, if later), assuming
all relevant factors remain constant for future Plan Years. For this purpose,
the first Plan Year is the latest of:
(1) the first Plan Year in which the Participant becomes an Eligible
Participant;
(2) the first Plan Year immediately following a Plan Year in which
the Plan did not satisfy the target benefit plan safe harbor under Treas. Reg.
Section1.401(a)(4)-8(b)(3); or
(3) the first Plan Year taken into account under the Plan's benefit
formula, as designated in Part 4, #13.c. of the Agreement. If Part 4, #13.c.
is not completed, the first Plan Year taken into account under this subsection
(3) will be the original Effective Date of this Plan, as designated under
#59.a. or #59.b.(2) of the Agreement, as applicable.
If this Plan is a "prior safe harbor plan" then, solely for purposes of
determining projected Years of Participation, the Plan is deemed to satisfy
the target benefit plan safe harbor under Treas. Reg. Section1.401(a)(4)-
8(b)(3) and the Participant is treated as an Eligible Participant under the
Plan for any Plan Year beginning prior to January 1, 1994. This Plan is a
prior safe harbor plan if it was originally in effect on September 19, 1991,
and on that date the Plan contained a stated benefit formula that took into
account service prior to that date, and the Plan satisfied the applicable
nondiscrimination requirements for target benefit plans for those prior years.
For purposes of determining whether a plan satisfies the applicable
nondiscrimination requirements for target benefit plans for Plan Years
beginning before January 1, 1994, no amendments after September 19, 1991,
other than amendments necessary to satisfy Section401(l) of the Code, will be
taken into account.
(b) Employer Contribution. Each Plan Year, the Employer will contribute
to the Plan on behalf of each Eligible Participant who has satisfied the
allocation conditions under Part 4, #15 of the Agreement, an amount necessary
to fund the Participant's Stated Benefit, determined in accordance with the
benefit formula selected under Part 4, #13 of the Agreement. The Employer's
required contribution may be reduced by forfeitures in accordance with the
provisions of Section 5.5(b).
(1) Participant has not reached Normal Retirement Age. If a
Participant has not reached Normal Retirement Age by the last day of the Plan
Year, the Employer Contribution for such Plan Year with respect to that
Participant is the excess, if any, of the Present Value Stated Benefit (as
defined in subsection (3) below) over the Theoretical Reserve (as defined in
subsection (4) below), multiplied by the appropriate Amortization Factor from
Table II under Exhibit A of the Agreement. The factors under Table II are
determined based on the applicable interest rate assumptions selected under
Part 4, #14.b.(1) of the Agreement.
(2) Participant has reached Normal Retirement Age. If a Participant
has reached Normal Retirement Age by the last day of the Plan Year, the
Employer Contribution for such Plan Year with respect to that Participant is
the excess, if any, of the Present Value Stated Benefit (as defined in
subsection (3) below) over the Theoretical Reserve (as defined in subsection
(4) below).
(3) Present Value Stated Benefit. For purposes of determining the
Employer Contribution under the Plan, a Participant's Present Value Stated
Benefit is the Participant's Stated Benefit multiplied by the appropriate
present value factor under Table I or Table IA, as appropriate (if the
Participant has not attained Normal Retirement Age) or Table IV (if the
Participant has attained Normal Retirement Age). The Present Value Stated
Benefit must be further adjusted by the factors under Table III if the Normal
Retirement Age under the Plan is other than age 65. (See Exhibit A under the
Agreement for
the applicable factors. The applicable factors are determined based on the
applicable interest rate assumptions selected under Part 4, #14.b.(1) of the
Agreement and assuming a UP-1984 mortality table. If the Employer elects a
different applicable mortality table under Part 4, #14.b.(2), appropriate
factors must be attached to the Agreement.)
(4) Theoretical Reserve. Except as provided in the following
paragraph, for the first Plan Year for which the Stated Benefit is determined
(see subsection (a) above), a Participant's Theoretical Reserve is zero. For
each subsequent Plan Year, the Theoretical Reserve is the sum of the
Theoretical Reserve for the prior Plan Year plus the Employer Contribution
required for such prior Plan Year. The sum is then adjusted for interest
(using the Plan's interest assumptions for the prior Plan Year) through the
last day of the current Plan Year. For any Plan Year following the Plan Year
in which the Participant attains Normal Retirement Age, no interest adjustment
is required. For purposes of determining a Participant's Theoretical Reserve,
minimum contributions required solely to comply with the Top-Heavy Plan rules
under Article 16 are not included.
If this Plan was a prior safe harbor plan (see the definition of prior safe
harbor plan under subsection (a) above), with a benefit formula that takes
into account Plan Years prior to the first Plan Year this Plan satisfies the
target benefit plan safe harbor under Treas. Reg.
Section1.401(a)(4)-8(b)(3)(c), the Theoretical Reserve for the first Plan Year
is determined by subtracting the result in subsection (ii) from the result in
subsection (i).
(i) Determine the present value of the Stated Benefit as of the
last day of the Plan Year immediately preceding the first Plan Year this Plan
satisfies the target benefit plan safe harbor under Treas. Reg.
Section1.401(a)(4)-8(b)(3)(c), using the actuarial assumptions, the provisions
of the Plan, and the Participant's compensation as of such date. For a
Participant who has attained Normal Retirement Age, the Stated Benefit will be
determined using the actuarial assumptions, the provisions of the Plan, and
the Participant's compensation as of such date, using a straight life annuity
factor for a Participant whose attained age is the Normal Retirement Age under
the Plan.
(ii) Determine the present value of future Employer
Contributions (i.e., the Employer Contributions due each Plan Year using the
actuarial assumptions, the provisions of the Plan (disregarding those
provisions of the Plan providing for the limitations of Section415 of the Code
or the minimum contributions under Section416 of the Code)), and the
Participant's compensation as of such date, beginning with the first Plan Year
through the end of the Plan Year in which the Participant attains Normal
Retirement Age.
(c) Benefit formula. The Employer may elect under Part 4 of the Agreement
to apply a Nonintegrated Benefit Formula or an Integrated Benefit Formula. The
benefit formula selected under Part 4 of the Agreement must comply with the
target benefit plan safe harbor rules under Treas. Reg. Section1.401(a)(4)-
8(b)(3).
(1) Nonintegrated Benefit Formula. Under a Nonintegrated Benefit
Formula, benefits provided under Social Security are not taken into account
when determining an Eligible Participant's Stated Benefit. A Nonintegrated
Benefit Formula may provide for a Flat Benefit or a Unit Benefit.
(i) Flat Benefit. The Employer may elect under Part 4,
#13.a.(1) of the Agreement to apply a Flat Benefit formula that provides a
Stated Benefit equal to a specified percentage of Average Compensation. A
Participant's Stated Benefit determined under the Flat Benefit formula will be
reduced pro rata if the Participant's projected Years of Participation are
less than 25 Years of Participation. For a Participant with less than 25
projected Years of Participation, the base percentage and the excess
percentage are reduced by multiplying such percentages by a fraction, the
numerator of which is the Participant's projected Years of Participation, and
the denominator of which is 25.
(ii) Unit Benefit. The Employer may elect under Part 4,
#13.a.(2) of the Agreement or under Part 4, #13.a.(3) of the Nonstandardized
Agreement to apply a Unit Benefit formula that provides a Stated Benefit equal
to a specified percentage of Average Compensation multiplied by the
Participant's Years of Participation with the Employer. The Employer may elect
to limit the Years of Participation taken into account under a Unit Benefit
formula, however, the Plan must take into account all Years of Participation
up to at least 25 years.
If the Employer elects a tiered formula under Part 4, #13.a.(3) of the
Nonstandardized Agreement, the highest benefit percentage for any Participant
with less than 33 Years of Participation cannot be more than one-third larger
than the lowest benefit percentage for any Participant with less than 33 Years
of Participation. This requirement is satisfied if the percentage under Part
4, #13.a.(3)(a) applies to all Years of Participation up to at least
33. If the percentage under Part 4, #13.a.(3)(a) applies to Years of
Participation less than 33, this paragraph will be satisfied if the total
Years of Participation taken into account under Part 4, #13.a.(3)(b) and Part
4, #13.a.(3)(d) is not less than 33 and the percentage designated in Part 4,
#13.a.(3)(c) is not less than P1(25-Y)/(33-Y) and is not greater than
P1(44-Y)/(33-Y), where P1 is the percentage under Part 4, #13.a.(3)(a) and Y
is the number of Years of Participation to which the percentage under Part 4,
#13.a.(3)(a) applies. If the total Years of Participation taken into account
under Part 4, #13.a.(3)(b) and Part 4, #13.a.(3)(d) is less than 33, a similar
calculation applies to any percentage designated in Part 4, #13.a.(3)(e).
(2) Integrated Benefit Formula. An Integrated Benefit Formula is
designed to provide a greater benefit to certain Participants to make up for
benefits not provided under Social Security. An Integrated Benefit Formula may
provide for a Flat Excess Benefit, a Unit Excess Benefit, a Flat Offset
Benefit, or a Unit Offset Benefit. An Employer may not elect an Integrated
Benefit Formula under the Plan if another qualified plan of the Employer,
which covers any of the same Employees, uses permitted disparity (or imputes
permitted disparity) in determining the allocation of contributions or accrual
of benefits under the plan.
(i) Flat Excess Benefit. The Employer may elect under Part 4,
#13.b.(1) of the Agreement to apply a Flat Excess Benefit formula that
provides a Stated Benefit equal to a specified percentage of Average
Compensation ("base percentage") plus a specified percentage of Excess
Compensation ("excess percentage").
(A) Maximum permitted disparity. In completing a Flat
Excess Benefit formula under Part 4, #13.b.(1) of the Agreement, the excess
percentage under Part 4, #13.b.(1)(b) may not exceed the Maximum Disparity
Percentage identified under subsection (3)(i) below. The excess percentage may
be further reduced under the Cumulative Disparity Limit under subsection
(3)(iv) below.
(B) Limitation on Years of Participation. The
Participant's base percentage and excess percentage under the Flat Excess
Benefit formula are reduced pro rata if the Participant's projected Years of
Participation are less than 35 years. For a Participant with less than 35
projected Years of Participation, the base percentage and the excess
percentage are reduced by multiplying such percentages by a fraction, the
numerator of which is the Participant's projected Years of Participation, and
the denominator of which is 35.
(ii) Unit Excess Benefit. The Employer may elect under Part 4,
#13.b.(2) of the Agreement or under Part 4, #13.b.(3) of the Nonstandardized
Agreement to apply a Unit Excess Benefit formula which provides a Stated
Benefit equal to a specified percentage of Average Compensation ("base
percentage") plus a specified percentage of Excess Compensation ("excess
percentage") multiplied by the Participant's Years of Participation with the
Employer.
(A) Maximum permitted disparity. In completing a Unit
Excess Benefit formula under Part 4, #13.b. of the Agreement, the excess
percentage under the formula may not exceed the Maximum Disparity Percentage
identified under subsection (3)(i) below. In addition, if the Employer elects
a tiered formula under Part 4, #13.b.(3) of the Nonstandardized Agreement, the
percentage designated under Part 4, #13.b.(3)(d) and/or Part 4, #13.b.(3)(f),
as applicable, may not exceed the sum of the base percentage under Part 4,
#13.b.(3)(a) and the excess percentage under Part 4, #13.b.(3)(b).
(B) Limitation on Years of Participation. The Employer
must identify under Part 4, #13.b. the Years of Participation that will be
taken into account under the Unit Excess Benefit formula. If the Employer
elects a uniform formula under Part 4, #13.b.(2) of the Agreement, the Plan
must take into account all Years of Participation up to at least 25. In
addition, a Participant may not be required to complete more than 35 Years of
Participation to earn his/her full Stated Benefit. (See the Cumulative
Disparity Limit under subsection (3)(iv) below for additional restrictions
that may limit a
Participant's Years of Participation that may be taken into account under the
Plan.)
If the Employer elects a tiered formula under Part 4, #13.b.(3) of the
Nonstandardized Agreement and the Years of Participation specified under Part
4, #13.b.(3)(c) is less than 35, the percentage under Part 4, #13.b.(3)(d)
must equal the sum of the base percentage under Part 4, #13.b.(3)(a) and the
excess percentage under Part 4, #13.b.(3)(b) and any Years of Participation
required under Part 4, #13.b.(3)(e) may not be less than 35 minus the Years of
Participation designated under Part 4, #13.b.(3)(c). (See the Cumulative
Disparity Limit under subsection (3)(iv) below for additional restrictions
that may limit a Participant's Years of Participation that may be taken into
account under the Plan.) If the number of Years of Participation specified
under Part 4, #13.b.(3)(c) is less than 35, and Part 4, #13.b.(3)(d) is not
checked, the percentage specified under Part 4, #13.b.(3)(f) must equal the
sum of the base percentage under Part 4, #13.b.(3)(a) and the excess
percentage under Part 4, #13.b.(3)(b).
(iii) Flat Offset Benefit. The Employer may elect under Part 4,
#13.b.(4) of the Nonstandardized Agreement or Part 4, #13.b.(3) of the
Standardized Agreement to apply a Flat Offset Benefit formula that provides a
Stated Benefit equal to a specified percentage of Average Compensation ("gross
percentage") offset by a specified percentage of Offset Compensation ("offset
percentage").
(A) Maximum permitted disparity. In applying a Flat Offset
Benefit formula, the offset percentage for any Participant may not exceed the
Maximum Offset Percentage identified under subsection (3)(ii) below. The
offset percentage may be further reduced under the Cumulative Disparity Limit
under subsection (3)(iv) below.
(B) Limitation on Years of Participation. The
Participant's gross percentage and offset percentage under the Flat Offset
Benefit formula are reduced pro rata if the Participant's projected Years of
Participation are less than 35 years. For a Participant with less than 35
projected Years of Participation, the gross percentage and the offset
percentage are reduced by multiplying such percentages by a fraction, the
numerator of which is the Participant's projected Years of Participation, and
the denominator of which is 35.
(iv) Unit Offset Benefit. The Employer may elect under Part 4,
#13.b.(5) and Part 4, #13.b.(6) of the Agreement or under Part 4, #13.b.(4) of
the Standardized Agreement to apply a Unit Offset Benefit formula which
provides a Stated Benefit equal to a specified percentage of Average
Compensation ("gross percentage") offset by a specified percentage of Offset
Compensation ("offset percentage") multiplied by the Participant's Years of
Participation with the Employer.
(A) Maximum permitted offset. In applying a Unit Offset
Benefit formula, the offset percentage for any Participant may not exceed the
Maximum Offset Percentage identified under subsection (3)(ii) below. In
addition, if the Employer elects a tiered formula under Part 4, #13.b.(6) of
the Nonstandardized Agreement, the percentage designated under Part 4,
#13.b.(6)(d) and/or Part 4, #13.b.(6)(f), as applicable, may not exceed the
gross percentage under Part 4, #13.b.(6)(a).
(B) Limitation on Years of Participation. The Employer
must identify under Part 4, #13.b. the Years of Participation that will be
taken into account under the Unit Offset Benefit formula. If the Employer
elects a uniform offset formula under Part 4, #13.b.(5) of the Nonstandardized
Agreement or Part 4, #13.b.(4) of the Standardized Agreement, the Plan must
take into account all Years of Participation up to at least 25. In addition, a
Participant may not be required to complete more than 35 Years of
Participation to earn his/her full Stated Benefit. (See the Cumulative
Disparity Limit under subsection (3)(iv) below for additional restrictions
that may limit a Participant's Years of Participation that may be taken into
account under the Plan.)
If the Employer elects a tiered offset formula under Part 4, #13.b.(6) of the
Nonstandardized Agreement and the Years of Participation specified under Part
4, #13.b.(6)(c) is less than 35, any percentage under Part 4, #13.b.(6)(d)
must equal the gross percentage under Part 4, #13.d.(6)(a) and any Years of
Participation required under Part 4, #13.b.(6)(e) may not be less than 35
minus the Years of Participation designated under Part 4, #13.b.(6)(c). (See
the Cumulative Disparity Limit under subsection (3)(iv) below for additional
restrictions that may limit a Participant's Years of Participation that may be
taken into account
under the Plan.) If the number of Years of Participation specified under Part
4, #13.b.(6)(c) is less than 35, and Part 4, #13.b.(6)(d) is not checked, the
percentage specified under Part 4, #13.b.(6)(f) must equal the gross
percentage under Part 4, #13.b.(6)(a).
(3) Special rules for applying Integrated Benefit Formulas under
Part 4, #13.b. of the Agreement.
(i) Maximum Disparity Percentage. In applying the Flat Excess
Benefit formula described in subsection (2)(i) above or the Unit Excess
Benefit formula described in subsection (2)(ii) above, the excess percentage
under the formula may not exceed the Maximum Disparity Percentage. Under a
Flat Excess Benefit formula, the Maximum Disparity Percentage is the lesser of
the base percentage specified under the Agreement or the appropriate factor
described under the Simplified Table below multiplied by 35. Under a Unit
Excess Benefit formula, the Maximum Disparity Percentage is the lesser of the
base percentage specified under the Agreement or the appropriate factor
described under the Simplified Table below.
In applying the Simplified Table below, NRA is a Participant's Normal
Retirement Age under the Plan. If a Participant's Normal Retirement Age is
prior to age 55, the applicable factors under the Simplified Table must be
further reduced to a factor that is the Actuarial Equivalent of the factor at
age 55. (See (iii) below for possible adjustments to the Simplified Table if
an Integration Level other than Covered Compensation is selected under Part 4,
#14.d.(1) of the Agreement.)
Simplified Table
Maximum Disparity Maximum Disparity
NRA Percentage NRA Percentage
----- ----------------- ----- -----------------
70 0.838 62 0.416
69 0.760 61 0.382
68 0.690 60 0.346
67 0.627 59 0.330
66 0.571 58 0.312
65 0.520 57 0.294
64 0.486 56 0.278
63 0.450 55 0.260
(ii) Maximum Offset Percentage. In applying the Flat Offset
Benefit formula described in subsection (2)(iii) above or the Unit Offset
Benefit formula described in subsection (2)(iv) above, the offset percentage
under the formula may not exceed the Maximum Offset Percentage. Under a Flat
Offset Benefit formula, the Maximum Offset Percentage is the lesser of 50% of
the gross percentage specified under the Agreement or the appropriate factor
described under the Simplified Table above, multiplied by 35. Under a Unit
Offset Benefit formula, the Maximum Offset Percentage is the lesser of 50% of
the gross percentage specified under the Agreement or the appropriate factor
described under the Simplified Table above.
In applying the Simplified Table above, NRA is a Participant's Normal
Retirement Age under the Plan. If a Participant's Normal Retirement Age is
prior to age 55, the applicable factors under the Simplified Table must be
further reduced to a factor that is the Actuarial Equivalent of the factor at
age 55. (See (iii) below for possible adjustments to the Simplified Table if
an Integration Level other than Covered Compensation is selected under Part 4,
#14.d.(1) of the Agreement.)
(iii) Adjustments to the Maximum Disparity Percentage / Maximum
Offset Percentage for Integration Level other than Covered Compensation. The
factors under the Simplified Table under subsection (i) above are based on an
Integration Level equal to Covered Compensation. If the Employer elects under
Part 4, #14.d.(1)(b) - (e) of the Agreement to use an Integration Level other
than Covered Compensation, the factors under the Simplified Table may have to
be modified. If the Employer elects to modify the Integration Level under Part
4, #14.d.(1)(b) or Part 4,
#14.d.(1)(c) of the Agreement, no modification to the Simplified Table is
required. If the Employer elects to modify the Integration Level under Part 4,
#14.d.(1)(d) or Part 4, #14.d.(1)(e), the factors under the Modified Table
below must be used instead of the factors under the Simplified Table.
Modified Table - Factors for Integration Level other than Covered Compensation
Maximum Disparity Maximum Disparity
NRA Percentage NRA Percentage
----- ----------------- ----- -----------------
70 0.670 62 0.331
69 0.608 61 0.305
68 0.552 60 0.277
67 0.627 59 0.264
66 0.502 58 0.250
65 0.416 57 0.234
64 0.388 56 0.222
63 0.360 55 0.208
(iv) Cumulative Disparity Limit. The Cumulative Disparity Limit
applies to further limit the permitted disparity under the Plan. If the
Cumulative Disparity Limit applies, the following adjustment will be made to
the Participant's Stated Benefit, depending on the type of formula selected
under the Agreement.
(A) Flat Excess Benefit. In applying a Flat Excess
Benefit formula, if a Participant's cumulative disparity years exceed 35, the
excess percentage under the formula will be reduced as provided below. For
this purpose, a Participant's cumulative disparity years consist of: (I) the
Participant's projected Years of Participation (up to 35); (II) any years the
Participant benefited (or is treated as having benefited) under this Plan
prior to the Participant's first Year of Participation; and (III) any years
credited to the Participant for allocation or accrual purposes under one or
more qualified plans or simplified employee pension plans (whether or not
terminated) ever maintained by the Employer (other than years counted in (I)
or (II) above). For purposes of determining the Participant's cumulative
disparity years, all years ending in the same calendar year are treated as the
same year.
If the Cumulative Disparity Limit applies, the excess percentage under the
formula will be reduced by multiplying the excess percentage (as adjusted
under this subsection (3)) by a fraction (not less than zero), the numerator
of which is 35 minus the sum of the years in (II) and (III) above, and the
denominator of which is 35.
(B) Unit Excess Benefit. In applying a Unit Excess Benefit
formula, the projected Years of Participation taken into account under the
formula may not exceed the Participant's cumulative disparity years. For this
purpose, the Participant's cumulative disparity years equal 35 minus: (I) the
years the Participant benefited or is treated as having benefited under this
Plan prior to the Participant's first Year of Participation, and (II) the
years credited to the Participant for allocation or accrual purposes under one
or more qualified plans or simplified employee pension plans (whether or not
terminated) ever maintained by the Employer other than years counted in (I)
above or counted toward a Participant's projected Years of Participation. For
purposes of determining the Participant's cumulative disparity years, all
years ending in the same calendar year are treated as the same year.
(C) Flat Offset Benefit. In applying a Flat Offset Benefit
formula, if a Participant's cumulative disparity years exceed 35, the gross
percentage and offset percentage under the formula will be reduced as provided
below. For this purpose, a Participant's cumulative disparity years consist
of: (I) the Participant's projected Years of Participation (up to 35); (II)
any years the Participant
benefited (or is treated as having benefited) under this Plan prior to the
Participant's first Year of Participation; and (III) any years credited to the
Participant for allocation or accrual purposes under one or more qualified
plans or simplified employee pension plans (whether or not terminated) ever
maintained by the Employer (other than years counted in (I) or (II) above).
For purposes of determining the Participant's cumulative disparity years, all
years ending in the same calendar year are treated as the same year.
If the Cumulative Disparity Limit applies, the offset percentage will be
reduced by multiplying such percentage by a fraction (not less than 0), the
numerator of which is 35 minus the sum of the years in (II) and (III) above,
and the denominator of which is 35. The gross benefit percentage will be
reduced by the number of percentage points by which the offset percentage is
reduced.
(D) Unit Offset Benefit. In applying a Unit Offset Benefit
formula, the Years of Participation taken into account under the formula may
not exceed the Participant's cumulative disparity years. For this purpose, the
Participant's cumulative disparity years equal 35 minus: (I) the years the
Participant benefited or is treated as having benefited under this Plan prior
to the Participant's first Year of Participation, and (II) the years credited
to the Participant for allocation or accrual purposes under one or more
qualified plans or simplified employee pension plans (whether or not
terminated) ever maintained by the Employer other than years counted in (I)
above or counted toward a Participant's projected Years of Service. For
purposes of determining the Participant's cumulative disparity years, all
years ending in the same calendar year are treated as the same year.
(d) Definitions. The following definitions apply for purposes of applying
the benefit formulas described under this Section 2.5.
(1) Average Compensation. The average of a Participant's annual
Included Compensation during the Averaging Period, as designated in Part 3,
#11 of the Agreement. If no modifications are made to the definition of
Average Compensation under Part 3, #11, Average Compensation is the average of
the Participant's annual Included Compensation for the three (3) consecutive
Plan Years during the Participant's entire employment history which produce
the highest average.
(i) Averaging Period. Unless the Employer elects otherwise
under Part 3, #11.a. of the Agreement, the Averaging Period for determining a
Participant's Average Compensation is made up of the three (3) consecutive
Measuring Periods during the Participant's Employment Period which results in
the highest Average Compensation. The Employer may elect under Part 3, #11.a.
to apply an alternative Averaging Period which is greater than three (3)
consecutive Measuring Periods, may elect to take into account the highest
Average Compensation over a period of nonconsecutive Measuring Periods, or may
elect to take into account all Measuring Periods during the Participant's
Employment Period.
(ii) Measuring Period. Unless the Employer elects otherwise
under Part 3, #11.b. of the Agreement, the Measuring Period for determining
Average Compensation is the Plan Year. (If the Plan has a short Plan Year,
Average Compensation is based on Included Compensation earned during the
12-month period ending on the last day of the short Plan Year.) The Employer
may elect under Part 3, #11.b. to apply an alternative Measuring Period for
determining Average Compensation based on the calendar year or any other
designated 12-month period. Alternatively, the Employer may elect to use
calendar months as the Measuring Periods. If monthly Measuring Periods are
selected under Part 3, #11.b., the Averaging Period designated under Part 3,
#11.a. must be at least 36 months.
(iii) Employment Period. Unless the Employer elects otherwise
under Part 3, #11.c. of the Agreement, the Employment Period used to determine
Average Compensation is the Participant's entire employment period with the
Employer. Instead of measuring Average Compensation over a Participant's
entire period of employment, the Employer may elect under Part 3, #11.c. to
use Averaging Periods only during the period following the Participant's
original Entry Date (as determined under Part 2 of the Agreement) or any other
specified period. If the Employer elects an alternative Employment Period
under Part 3, #11.c., such Employment Period must end in the current Plan Year
and may not be shorter than the Averaging Period selected in Part 3, #11.a.
(or the Participant's entire period of employment, if shorter).
(iv) Drop-out years. Unless elected otherwise under Part 3,
#11.d. of the Agreement, all Measuring Periods within a Participant's
Employment Period are included for purposes of determining Average
Compensation. The Employer may elect under Part 3, #11.d. to exclude the
Measuring Period in which the Participant terminates employment or any
Measuring Period during which a Participant does not complete a designated
number of Hours of Service. If the Employer elects to apply an Hour of Service
requirement under Part 3, #11.d.(2), the designated Hours of Service required
for any particular Participant may not exceed 75% of the Hours of Service that
an Employee working full-time in the same job category as the Participant
would earn during the Measuring Period.
In determining whether the Measuring Periods within an Averaging Period are
consecutive (see subsection (i) above), any Measuring Period excluded under
this subsection (iv) will be disregarded.
(2) Covered Compensation. For purposes of applying an Integrated
Benefit Formula, a Participant's Covered Compensation for the Plan Year is the
average of the Taxable Wage Bases in effect for each calendar year during the
35-year period ending on the last day of the calendar year in which the
Participant attains (or will attain) his/her Social Security Retirement Age.
In determining a Participant's Covered Compensation, the Taxable Wage Base in
effect as of the beginning of the Plan Year is assumed to remain constant for
all future years. If a Participant is 35 or more years away from his/her
Social Security Retirement Age, the Participant's Covered Compensation is the
Taxable Wage Base in effect as of the beginning of the Plan Year. A
Participant's Covered Compensation remains constant for Plan Years beginning
after the calendar year in which the Participant attains Social Security
Retirement Age.
Unless elected otherwise under Part 4, #14.d.(2) of the Agreement, a
Participant's Covered Compensation must be adjusted every Plan Year to reflect
the Taxable Wage Base in effect for such year. The Employer may designate
under Part 4, #14.d.(2)(a) to use Covered Compensation for a Plan Year earlier
than the current Plan Year. Such earlier Plan Year may not be more than 5
years before the current Plan Year. For the sixth Plan Year following the Plan
Year used to calculate Covered Compensation (as determined under this
sentence), Covered Compensation will be adjusted using Covered Compensation
for the prior Plan Year. Covered Compensation will not be adjusted for Plan
Years prior to the sixth Plan Year following the Plan Year used to calculate
Covered Compensation.
In determining a Participant's Covered Compensation, the Employer may elect
under Part 4, #14.d.(2)(b) to apply the rounded Covered Compensation tables
issued by the IRS instead of using the applicable Taxable Wage Bases of the
Participant.
(3) Excess Compensation. Excess Compensation is used for purposes of
determining a Participant's Normal Retirement Benefit under an Excess Benefit
Formula. A Participant's Excess Compensation is the excess (if any) of the
Participant's Average Compensation over the Integration Level.
(4) Integration Level. The Integration Level under the Plan is used
for determining the Excess Compensation or Offset Compensation used to
determine a Participant's Stated Benefit under the Plan. The Employer may
elect under Part 4, #14.d.(1)(a) of the Agreement to use a Participant's
Covered Compensation for the Plan Year as the Integration Level.
Alternatively, the Employer may elect under Parts 4, #14.d.(1)(b) - (e) to
apply an alternative Integration Level under the Plan. (See subsection
(c)(3)(iii) above for special rules that apply if the Employer elects an
alternative Integration Level.)
(5) Offset Compensation. A Participant's Offset Compensation is used
to determine a Participant's Stated Benefit under an Offset Benefit formula.
Unless modified under Part 3, #12 of the Agreement, Offset Compensation is the
average of a Participant's annual Included Compensation over the three (3)
consecutive Plan Years ending with the current Plan Year. A Participant's
Offset Compensation is taken into account only to the extent it does not
exceed the Integration Level under the Plan. For purposes of determining a
Participant's Offset Compensation, Included Compensation which exceeds the
Taxable Wage Base in effect for the beginning of a Measuring Period will not
be taken into account.
(i) Measuring Period. Unless elected otherwise under Part 3,
#12.a. of the Agreement, Offset Compensation is determined based on Included
Compensation earned during the Plan Year (or the 12-month period ending on the
last day of the Plan Year for a short Plan Year). Instead of using Plan Years,
the Employer may elect under Part 3, #12.a. to determine Offset Compensation
over the 3-year period ending with or within the current Plan Year based on
calendar years or any other designated 12-month period.
(ii) Drop-out years. Unless elected otherwise under Part 3,
#12.b. of the Agreement, Offset Compensation is determined based on the three
consecutive Measuring Periods ending with or within the current Plan Year. The
Employer may elect under Part 3, #12.b. to disregard the Measuring Period in
which a Participant terminates employment for purposes of determining Offset
Compensation.
(6) Social Security Retirement Age. An Employee's retirement age as
determined under Section 230 of the Social Security Retirement Act. For a
Participant who attains age 62 before January 1, 2000 (i.e., born before
January 1, 1938), the Participant's Social Security Retirement Age is 65. For
a Participant who attains age 62 after December 31, 1999, and before January
1, 2017 (i.e., born after December 31, 1937, but before January 1, 1955), the
Participant's Social Security Retirement Age is 66. For a Participant
attaining age 62 after December 31, 2016 (i.e., born after December 31, 1954),
the Participant's Social Security Retirement Age is 67.
(7) Stated Benefit. The amount determined in accordance with the
benefit formula selected in Part 4 of the Agreement, payable annually as a
Straight Life Annuity commencing at Normal Retirement Age (or current age, if
later). (See subsection (a) above.)
(8) Straight Life Annuity. An annuity payable in equal installments
for the life of the Participant that terminates upon the Participant's death.
(9) Taxable Wage Base. Taxable Wage Base is the contribution and
benefit base under Section 230 of the Social Security Retirement Act at the
beginning of the Plan Year.
(10) Year of Participation. For purposes of determining a
Participant's Stated Benefit under the Plan, a Participant's Years of
Participation are defined under Part 4, #14.a. of the Agreement. (See
subsection (a) above for rules regarding the determination of a Participant's
projected Years of Participation.)
The Employer may elect under Part 4, #14.a.(1) to define an Employee's Years
of Participation as each Plan Year during which the Employee satisfies the
allocation conditions designated under Part 4, #15 of the Agreement (see
Section 2.6 below), including Plan Years prior to the Employee's becoming an
Eligible Participant under the Plan. Alternatively, the Employer may elect
under Part 4, #14.a.(2) of the Agreement to define an Employee's Years of
Participation as each Plan Year during which the Employee satisfies the
allocation conditions designated under Part 4, #15 of the Agreement (see
Section 2.6 below), taking into account only Plan Years during which the
Employee is an Eligible Participant. The Employer may elect under Part 4,
#14.a.(3) to disregard any Year of Participation completed prior to a date
designated under the Agreement.
2.6 Allocation Conditions. In order to receive an allocation of Employer
Contributions (other than Section 401(k) Deferrals and Safe Harbor
Contributions), an Eligible Participant must satisfy any allocation conditions
designated under Part 4, #15 of the Agreement with respect to such
contributions. (Similar allocation conditions apply under Part 4B, #19 of the
401(k) Agreement for Employer Matching Contributions and Part 4C, #24 of the
401(k) Agreement for Employer Nonelective Contributions.) Under the
Nonstandardized Agreements, the imposition of an allocation condition may
cause the Plan to fail the minimum coverage requirements under Code
Section410(b), unless the only allocation condition under the Plan is a safe
harbor allocation condition. (Under the Standardized Agreements, the only
allocation condition permitted is a safe harbor allocation condition. But see
(b) below for a special rule upon plan termination.)
(a) Safe harbor allocation condition. Under the safe harbor allocation
condition under Part 4, #15.b. of the Nonstandardized Agreement [Part 4B,
#19.b. and Part 4C, #24.b. of the Nonstandardized 401(k) Agreement], the
Employer may elect to require an Eligible Participant to be employed on the
last day of the Plan Year or to complete more than a specified number of Hours
of Service (not to exceed 500) during the Plan Year to receive an allocation
of Employer Contributions (other than Section 401(k) Deferrals or Safe Harbor
Contributions) under the Plan. Under this safe harbor allocation condition, an
Eligible Participant whose employment terminates before he/she completes the
designated Hours of Service is not entitled to an allocation of Employer
Contributions subject to such allocation condition. However, if an Eligible
Participant completes at least the designated Hours of Service during a Plan
Year, the Participant is eligible for an allocation of such Employer
Contributions, even if the Participant's employment terminates during the Plan
Year.
The imposition of the safe harbor allocation condition will not cause the Plan
to fail the minimum coverage requirements under Code Section410(b) because
Participants who are excluded from participation solely as a result of the
safe harbor allocation condition are excluded from the coverage test. Except
as provided under subsection (b) below, the safe harbor allocation condition
is the only allocation condition that may be used under the Standardized
Agreement.
(b) Application of last day of employment rule for money purchase and
target benefit Plans in year of termination. The Employer may elect under Part
4, #15.c. of the money purchase or target benefit plan Nonstandardized
Agreement to require an Eligible Participant to be employed on the last day of
the Plan Year to receive an Employer Contribution under the Plan. Regardless
of whether the Employer elects to apply a last day of employment condition
under the money purchase or target benefit plan Agreement, in any Plan Year
during which a money purchase or target benefit Plan is terminated, the last
day of employment condition applies. Any unallocated forfeitures under the
Plan will be allocated in accordance with the contribution formula designated
under Part 4 of the Agreement to each Eligible Participant who completes at
least one Hour of Service during the Plan Year.
(c) Elapsed Time Method. The Employer may elect under Part 4, #15.e. of
the Nonstandardized Agreement [Part 4B, #19.e. and Part 4C, #24.e. of the
Nonstandardized 401(k) Agreement] to apply the allocation conditions using the
Elapsed Time Method. Under the Elapsed Time Method, instead of requiring the
completion of a specified number of Hours of Service, the Employer may require
an Employee to be employed with the Employer for a specified number of
consecutive days.
(1) Safe harbor allocation condition. The Employer may elect under
Part 4, #15.e.(1) of the Agreement [Part 4B, #19.e.(1) and/or Part 4C,
#24.e.(1) of the Nonstandardized 401(k) Agreement] to apply the safe harbor
allocation condition (as described in subsection (a) above) using the Elapsed
Time Method. Under the safe harbor Elapsed Time Method, a Participant who
terminates employment with less than a specified number of consecutive days of
employment (not more than 91 days) during the Plan Year will not be entitled
to an allocation of the designated Employer Contributions. The use of the safe
harbor allocation condition under the Elapsed Time Method provides the same
protection from coverage as described in subsection (a) above.
(2) Service condition. Alternatively, the Employer may elect under
Part 4, #15.e.(2) of the Nonstandardized Agreement [Part 4B, #19.e.(2) and/or
Part 4C, #24.e.(2) of the Nonstandardized 401(k) Agreement] to require an
Employee to complete a specified number of consecutive days of employment (not
exceeding 182) to receive an allocation of the designated Employer
Contributions.
(d) Special allocation condition for Employer Matching Contributions
under Nonstandardized 401(k) Agreement. The Employer may elect under Part 4B,
#19.f. of the Nonstandardized 401(k) Agreement to require as a condition for
receiving an Employer Matching Contribution that a Participant not withdraw
the underlying applicable contributions being matched prior to the end of the
period for which the Employer Matching Contribution is being made. Thus, for
example, if the Employer elects under Part 4B, #17.a. of the Nonstandardized
401(k) Agreement to apply the matching contribution formula on the basis of
the Plan Year quarter, a Participant would not be entitled to an Employer
Matching Contribution with respect to any applicable contributions contributed
during a Plan Year quarter to the extent such applicable contributions are
withdrawn prior to the end of the Plan Year quarter during which they are
contributed. A Participant could take a distribution of applicable
contributions that were contributed for a prior period without losing
eligibility for a current Employer Matching Contribution. This subsection (d)
will not prevent a Participant from receiving an Employer Matching
Contribution merely because the Participant takes a loan (as permitted under
Article 14) from matched contributions.
(e) Application to designated period. The Employer may elect under Part
4, #15.f. of the Nonstandardized Agreement [Part 4B, #19.g. and Part 4C,
#24.f. of the Nonstandardized 401(k) Agreement] to apply any allocation
condition(s) selected under the Agreement on the basis of the period
designated under Part 4, #14.a.(1) of the Nonstandardized Agreement [Part 4B,
#17.a. or Part 4C, #23.a.(1) of the Nonstandardized 401(k) Agreement]. If this
subsection (e) applies to any allocation condition(s) under the Plan, the
following procedural rules apply. (This subsection (e) does not apply to the
target benefit plan Agreement. See subsection (3) for rules applicable to the
Standardized Agreements.)
(1) Last day of employment requirement. If the Employer elects under
Part 4, #15.f. of the Nonstandardized Agreement [Part 4B, #19.g. or Part 4C,
#24.f. of the Nonstandardized 401(k) Agreement] to apply the allocation
conditions on the basis of designated periods and the Employer elects to apply
a last day of employment condition under Part 4, #15.c. of the Nonstandardized
Agreement [Part 4B, #19.c. or Part 4C, #24.c. of the Nonstandardized 401(k)
Agreement], an Eligible Participant will be entitled to receive an allocation
of Employer Contributions for the period designated under Part 4, #14.a.(1) of
the Nonstandardized Agreement [Part 4B, #17.a. or Part 4C, #23.a.(1) of the
Nonstandardized 401(k) Agreement] only if the Eligible Participant is employed
with the Employer on the last day of such period. If an Eligible Participant
terminates employment prior to end of the designated period, no Employer
Contribution will be allocated to that Eligible Participant for such period.
Nothing in this subsection (1) will cause an Eligible Participant to lose
Employer Contributions that were allocated for a period prior to the period in
which the individual terminates employment.
(2) Hours of Service condition. If the Employer elects to apply the
allocation conditions on the basis of specified periods under Part 4, #15.f.
of the Agreement [Part 4B, #19.g. or Part 4C, #24.f. of the Nonstandardized
401(k) Agreement], and elects to apply an Hours of Service condition under
Part 4, #15.d. of the Nonstandardized Agreement [Part 4B, #19.d. or Part 4C,
#24.d. of the Nonstandardized 401(k) Agreement], an Eligible Participant will
be entitled to receive an allocation of Employer Contributions for the period
designated under Part 4, #14.a.(1) of the Nonstandardized Agreement [Part 4B,
#17.a. or Part 4C, #23.a.(1) of the Nonstandardized 401(k) Agreement] only if
the Eligible Participant completes the required Hours of Service before the
last day of such period. In applying the fractional method under subsection
(i) or the period-by-period method under subsection (ii), an Eligible
Participant who completes a sufficient number of Hours of Service for the Plan
Year to earn a Year of Service under the Plan will be entitled to a full
contribution for the Plan Year, as if the Eligible Participant satisfied the
Hours of Service condition for each designated period. A catch-up contribution
may be required for such Participants.
(i) Fractional method. The Employer may elect under Part 4,
#15.f.(1) of the Nonstandardized Agreement [Part 4B, #19.g.(1) or Part 4C,
#24.f.(1) of the Nonstandardized 401(k) Agreement] to apply the Hours of
Service condition on the basis of specified period using the fractional
method. Under the fractional method, the required Hours of Service for any
period are determined by multiplying the Hours of Service required under Part
4, #15.d. of the Nonstandardized Agreement [Part 4B, #19.d. or Part 4C, #24.d.
of the Nonstandardized 401(k) Agreement] by a fraction, the numerator of which
is the total number of periods completed during the Plan Year (including the
current period) and the denominator of which is the total number of periods
during the Plan Year. Thus, for example, if the Employer applies a 1,000 Hours
of Service condition to receive an Employer Matching Contribution and elects
to apply such condition on the basis of Plan Year quarters, an Eligible
Participant would have to complete 250 Hours of Service by the end of the
first Plan Year quarter [1/4 x 1,000], 500 Hours of Service by the end of the
second Plan Year quarter [2/4 x 1,000], 750 Hours of Service by the end of the
third Plan Year quarter [3/4 x 1,000] and 1,000 Hours of Service by the end of
the Plan Year [4/4 x 1,000] to receive an allocation of the Employer Matching
Contribution for such period. If an Eligible Participant does not complete the
required Hours of Service for any period during the Plan Year, no Employer
Contribution will be allocated to that Eligible Participant for such period.
However, if an Eligible Participant completes the required Hours of Service
under Part 4, #15.d. for the Plan Year, such Participant will receive a full
contribution for the Plan Year as if the Participant satisfied the Hours of
Service conditions for each period during the year. Nothing in this subsection
(i) will cause an Eligible Participant to lose Employer Contributions that
were allocated for a period during which the Eligible Participant completed
the required Hours of Service for such period.
(ii) Period-by-period method. The Employer may elect under Part
4, #15.f.(2) of the Nonstandardized Agreement [Part 4B, #19.g.(2) or Part 4C,
#24.f.(2) of the Nonstandardized 401(k) Agreement] to apply the Hours of
Service condition on the basis of specified period using the period-by-period
method. Under the period-by-period method, the required Hours of Service for
any period are determined separately for such period. The Hours of Service
required for any specific period are determined by multiplying the Hours of
Service required under Part 4, #15.d. of the Nonstandardized Agreement [Part
4B, #19.d. or Part 4C, #24.d. of the Nonstandardized 401(k) Agreement] by a
fraction, the numerator of which is one (1) and the denominator of which is
the total number of periods during the Plan
Year. Thus, for example, if the Employer applies a 1,000 Hours of Service
condition to receive an Employer Matching Contribution and elects to apply
such condition on the basis of Plan Year quarters, an Eligible Participant
would have to complete 250 Hours of Service in each Plan Year quarter [1/4 x
1,000] to receive an allocation of the Employer Matching Contribution for such
period. If an Eligible Participant does not complete the required Hours of
Service for any period during the Plan Year, no Employer Contribution will be
allocated to that Eligible Participant for such period. However, if an
Eligible Participant completes the required Hours of Service under Part 4,
#15.d. for the Plan Year, such Participant will receive a full contribution
for the Plan Year as if the Participant satisfied the Hours of Service
conditions for each period during the year. Nothing in this subsection (ii)
will cause an Eligible Participant to lose Employer Contributions that were
allocated for a period during which the Eligible Participant completed the
required Hours of Service for such period.
(3) Safe harbor allocation condition. If the Employer elects to
apply the allocation conditions on the basis of specified periods under Part
4, #15.f. of the Nonstandardized Agreement [Part 4B, #19.g. or Part 4C, #24.f.
of the Nonstandardized 401(k) Agreement] and elects to apply the safe harbor
allocation condition under Part 4, #15.b. of the Nonstandardized Agreement
[Part 4B, #19.b. or Part 4C, #24.b. of the Nonstandardized 401(k) Agreement],
the rules under subsection (1) above will apply, without regard to the rules
under subsection (2) above. Thus, an Eligible Employee who terminates during a
period designated under Part 4, #14.a.(1) of the Nonstandardized Agreement
[Part 4B, #17.a. or Part 4C, #23.a.(1) of the Nonstandardized 401(k)
Agreement] will not receive an allocation of Employer Contributions for such
period if the Eligible Participant has not completed the Hours of Service
designated under Part 4, #15.b. of the Nonstandardized Agreement [Part 4B,
#19.b. or Part 4C, #24.b. of the Nonstandardized 401(k) Agreement]. Nothing in
this subsection (3) will cause an Eligible Participant to lose Employer
Contributions that were allocated for a period prior to the period in which
the individual terminates employment. (This subsection (3) also applies if the
Employer elects to apply the safe harbor allocation condition on the basis of
specified periods under Part 4, #15.c. of the Standardized Agreement [Part 4B,
#19.c. or Part 4C, #22.c. of the Standardized 401(k) Agreement].)
(4) Elapsed Time Method. The election to apply the allocation
conditions on the basis of specified periods does not apply to the extent the
Elapsed Time Method applies under Part 4, #15.e. of the Nonstandardized
Agreement [Part 4B, #19.e. or Part 4C, #24.e. of the Nonstandardized 401(k)
Agreement]. If an Employer elects to apply the allocation conditions on the
basis of specified periods and elects to apply the Elapsed Time Method, an
Eligible Employee will be entitled to an allocation of Employer Contributions
if such Eligible Participant is employed as of the last day of such period,
without regard to the number of consecutive days in such period. Thus, in
effect, the Elapsed Time Method will only apply to prevent an allocation of
Employer Contributions for the last designated period in the Plan Year, if the
Eligible Participant has not completed the consecutive days required under
Part 4, #15.e. of the Nonstandardized Agreement [Part 4B, #19.e. or Part 4C,
#24.e. of the Nonstandardized 401(k) Agreement] by the end of the Plan Year.
The last day of employment rules subsection (1) above still may apply (to the
extent applicable) for periods during which the Eligible Participant
terminates employment.
2.7 Fail-Safe Coverage Provision. If the Employer has elected to apply a
last day of the Plan Year allocation condition and/or an Hours of Service
allocation condition under a Nonstandardized Agreement, the Employer may elect
under Part 13, #56 of the Nonstandardized Agreement [Part 13, #74 of the
Nonstandardized 401(k) Agreement] to apply the Fail-Safe Coverage Provision.
Under the Fail-Safe Coverage Provision, if the Plan fails to satisfy the ratio
percentage coverage requirements under Code Section410(b) for a Plan Year due
to the application of a last day of the Plan Year allocation condition and/or
an Hours of Service allocation condition, such allocation condition(s) will be
automatically eliminated for the Plan Year for certain otherwise Eligible
Participants, under the process described in subsections (a) through (d)
below, until enough Eligible Participants are benefiting under the Plan so
that the ratio percentage test of Treasury Regulation Section1.410(b)-2(b)(2)
is satisfied.
If the Employer elects to have the Fail-Safe Coverage Provision apply, such
provision automatically applies for any Plan Year for which the Plan does not
satisfy the ratio percentage coverage test under Code Section410(b). (Except
as provided in the following paragraph, the Plan may not use the average
benefits test to comply with the minimum coverage requirements if the
Fail-Safe Coverage Provision is elected.) The Plan satisfies the ratio
percentage test if the percentage of the Nonhighly Compensated Employees under
the Plan is at least 70% of the percentage of the Highly
Compensated Employees who benefit under the Plan. An Employee is benefiting
for this purpose only if he/she actually receives an allocation of Employer
Contributions or forfeitures or, if testing coverage of a 401(m) arrangement
(i.e., a Plan that provides for Employer Matching Contributions and/or
Employee After-Tax Contributions), the Employee would receive an allocation of
Employer Matching Contributions by making the necessary contributions or the
Employee is eligible to make Employee After-Tax Contributions. To determine
the percentage of Nonhighly Compensated Employees or Highly Compensated
Employees who are benefiting, the following Employees are excluded for
purposes of applying the ratio percentage test: (i) Employees who have not
satisfied the Plan's minimum age and service conditions under Section 1.4;
(ii) Nonresident Alien Employees; (iii) Union Employees; and (iv) Employees
who terminate employment during the Plan Year with less than 501 Hours of
Service and do not benefit under the Plan.
Under the Fail-Safe Coverage Provision, certain otherwise Eligible
Participants who are not benefiting for the Plan Year as a result of a last
day of the Plan Year allocation condition or an Hours of Service allocation
condition will participate under the Plan based on whether such Participants
are Category 1 Employees or Category 2 Employees. Alternatively, the Employer
may elect under Part 13, #56.b.(2) of the Nonstandardized Agreement [Part 13,
#74.b.(2) of the Nonstandardized 401(k) Agreement] to apply the special
Fail-Safe Coverage Provision described in (d) below which eliminates the
allocation conditions for otherwise Eligible Participants with the lowest
Included Compensation. If after applying the Fail-Safe Coverage Provision, the
Plan does not satisfy the ratio percentage coverage test, the Fail-Safe
Coverage Provision does not apply, and the Plan may use any other available
method (including the average benefit test) to satisfy the minimum coverage
requirements under Code Section410(b).
(a) Top-Heavy Plans. Unless provided otherwise under Part 13, #56.b.(1)
of the Nonstandardized Agreement [Part 13, #74.b.(1) of the Nonstandardized
401(k) Agreement], if the Plan is a Top-Heavy Plan, the Hours of Service
allocation condition will be eliminated for all Non-Key Employees who are
Nonhighly Compensated Employees, prior to applying the Fail-Safe Coverage
Provisions under subsections (b) and (c) or (d) below.
(b) Category 1 Employees - Otherwise Eligible Participants (who are
Nonhighly Compensated Employees) who are still employed by the Employer on the
last day of the Plan Year but who failed to satisfy the Plan's Hours of
Service condition. The Hours of Service allocation condition will be
eliminated for Category 1 Employees (who did not receive an allocation under
the Plan due to the Hours of Service allocation condition) beginning with the
Category 1 Employee(s) credited with the most Hours of Service for the Plan
Year and continuing with the Category 1 Employee(s) with the next most Hours
of Service until the ratio percentage test is satisfied. If two or more
Category 1 Employees have the same number of Hours of Service, the allocation
condition will be eliminated for those Category 1 Employees starting with the
Category 1 Employee(s) with the lowest Included Compensation. If the Plan
still fails to satisfy the ratio percentage test after all Category 1
Employees receive an allocation, the Plan proceeds to Category 2 Employees.
(c) Category 2 Employees - Otherwise Eligible Participants (who are
Nonhighly Compensated Employees) who terminated employment during the Plan
Year with more than 500 Hours of Service. The last day of the Plan Year
allocation condition will then be eliminated for Category 2 Employees (who did
not receive an allocation under the Plan due to the last day of the Plan Year
allocation condition) beginning with the Category 2 Employee(s) who terminated
employment closest to the last day of the Plan Year and continuing with the
Category 2 Employee(s) with a termination of employment date that is next
closest to the last day of the Plan Year until the ratio percentage test is
satisfied. If two or more Category 2 Employees terminate employment on the
same day, the allocation condition will be eliminated for those Category 2
Employees starting with the Category 2 Employee(s) with the lowest Included
Compensation.
(d) Special Fail-Safe Coverage Provision. Instead of applying the
Fail-Safe Coverage Provision based on Category 1 and Category 2 Employees, the
Employer may elect under Part 13, #56.b.(2) of the Nonstandardized Agreement
[Part 13, #74.b.(2) of the Nonstandardized 401(k) Agreement] to eliminate the
allocation conditions beginning with the otherwise Eligible Participant(s)
(who are Nonhighly Compensated Employees and who did not terminate employment
during the Plan Year with 500 Hours of Service or less) with the lowest
Included Compensation and continuing with such otherwise Eligible
Participants with the next lowest Included Compensation until the ratio
percentage test is satisfied. If two or more otherwise Eligible Participants
have the same Included Compensation, the allocation conditions will be
eliminated for all such individuals.
2.8 Deductible Employee Contributions. The Plan Administrator will not
accept deductible employee contributions that are made for a taxable year
beginning after December 31, 1986. Contributions made prior to that date will
be maintained in a separate Account which will be nonforfeitable at all times.
The Account will share in the gains and losses under the Plan in the same
manner as described in Section 13.4. No part of the deductible voluntary
contribution Account will be used to purchase life insurance. Subject to the
Joint and Survivor Annuity requirements under Article 9 (if applicable), the
Participant may withdraw any part of the deductible voluntary contribution
Account by making a written application to the Plan Administrator.
ARTICLE 3 EMPLOYEE AFTER-TAX CONTRIBUTIONS, ROLLOVER CONTRIBUTIONS
AND TRANSFERS
This Article provides the rules regarding Employee After-Tax Contributions,
Rollover Contributions and transfers that may be made under this Plan. The
Trustee has the authority under Article 12 to accept Rollover Contributions
under this Plan and to enter into transfer agreements concerning the transfer
of assets from another qualified retirement plan to this Plan, if so directed
by the Plan Administrator.
3.1 Employee After-Tax Contributions. The Employer may elect under Part 4D
of the Nonstandardized 401(k) Agreement to allow Eligible Participants to make
Employee After-Tax Contributions under the Plan. Employee After-Tax
Contributions may only be made under the Nonstandardized 401(k) Agreement. Any
Employee After-Tax Contributions made under this Plan are subject to the ACP
Test outlined in Section 17.3. (Nothing under this Section precludes the
holding of Employee After-Tax Contributions under a profit sharing plan or
money purchase plan that were made prior to the adoption of this Prototype
Plan.)
The Employer may elect under Part 4D, #25 of the Nonstandardized 401(k)
Agreement to impose a limit on the maximum amount of Included Compensation an
Eligible Participant may contribute as an Employee After-Tax Contribution. The
Employer may also elect under Part 4D, #26 of the Nonstandardized 401(k)
Agreement to impose a minimum amount that an Eligible Participant may
contribute to the Plan during any payroll period.
Employee After-Tax Contributions must be held in the Participant's Employee
After-Tax Contribution Account, which is always 100% vested. A Participant may
withdraw amounts from his/her Employee After-Tax Contribution Account at any
time, in accordance with the distribution rules under Section 8.5(a), except
as prohibited under Part 10 of the Agreement. No forfeitures will occur solely
as a result of an Employee's withdrawal of Employee After-Tax Contributions.
3.2 Rollover Contributions. An Employee may make a Rollover Contribution to
this Plan from another "qualified retirement plan" or from a "conduit IRA," if
the acceptance of rollovers is permitted under Part 12 of the Agreement or if
the Plan Administrator adopts administrative procedures regarding the
acceptance of Rollover Contributions. Any Rollover Contribution an Employee
makes to this Plan will be held in the Employee's Rollover Contribution
Account, which is always 100% vested. A Participant may withdraw amounts from
his/her Rollover Contribution Account at any time, in accordance with the
distribution rules under Section 8.5(a), except as prohibited under Part 10 of
the Agreement.
For purposes of this Section 3.2, a "qualified retirement plan" is any tax
qualified retirement plan under Code Section401(a) or any other plan from
which distributions are eligible to be rolled over into this Plan pursuant to
the Code, regulations, or other IRS guidance. A "conduit IRA" is an IRA that
holds only assets that have been properly rolled over to that IRA from a
qualified retirement plan under Code Section401(a). To qualify as a Rollover
Contribution under this Section, the Rollover Contribution must be transferred
directly from the qualified retirement plan or conduit IRA in a Direct
Rollover or must be transferred to the Plan by the Employee within sixty (60)
days following receipt of the amounts from the qualified plan or conduit IRA.
If Rollover Contributions are permitted, an Employee may make a Rollover
Contribution to the Plan even if the Employee is not an Eligible Participant
with respect to any or all other contributions under the Plan,
unless otherwise prohibited under separate administrative procedures adopted
by the Plan Administrator. An Employee who makes a Rollover Contribution to
this Plan prior to becoming an Eligible Participant shall be treated as a
Participant only with respect to such Rollover Contribution Account, but shall
not be treated as an Eligible Participant until he/she otherwise satisfies the
eligibility conditions under the Plan.
The Plan Administrator may refuse to accept a Rollover Contribution if the
Plan Administrator reasonably believes the Rollover Contribution (a) is not
being made from a proper plan or conduit IRA; (b) is not being made within
sixty (60) days from receipt of the amounts from a qualified retirement plan
or conduit IRA; (c) could jeopardize the tax-exempt status of the Plan; or (d)
could create adverse tax consequences for the Plan or the Employer. Prior to
accepting a Rollover Contribution, the Plan Administrator may require the
Employee to provide satisfactory evidence establishing that the Rollover
Contribution meets the requirements of this Section.
The Plan Administrator may apply different conditions for accepting Rollover
Contributions from qualified retirement plans and conduit IRAs. Any conditions
on Rollover Contributions must be applied uniformly to all Employees under the
Plan.
3.3 Transfer of Assets. The Plan Administrator may direct the Trustee to
accept a transfer of assets from another qualified retirement plan on behalf
of any Employee, even if such Employee is not eligible to receive other
contributions under the Plan. If a transfer of assets is made on behalf of an
Employee prior to the Employee's becoming an Eligible Participant, the
Employee shall be treated as a Participant for all purposes with respect to
such transferred amount. Any assets transferred to this Plan from another plan
must be accompanied by written instructions designating the name of each
Employee for whose benefit such amounts are being transferred, the current
value of such assets, and the sources from which such amounts are derived.
The Plan Administrator will deposit any transferred assets in the appropriate
Participant's Transfer Account. The Transfer Account will contain any
sub-Accounts necessary to separately track the sources of the transferred
assets. Each sub-Account will be treated in the same manner as the
corresponding Plan Account.
The Plan Administrator may direct the Trustee to accept a transfer of assets
from another qualified plan of the Employer in order to comply with the
qualified replacement plan requirements under Code Section4980(d) (relating to
the excise tax on reversions from a qualified plan) without affecting the
status of this Plan as a Prototype Plan. A transfer made pursuant to Code
Section4980(d) will be allocated as Employer Contributions either in the Plan
Year in which the transfer occurs, or over a period of Plan Years (not
exceeding the maximum period permitted under Code Section4980(d)), as provided
in the applicable transfer agreement. To the extent a transfer described in
this paragraph is not totally allocable in the Plan Year in which the transfer
occurs, the portion which is not allocable will be credited to a suspense
account until allocated in accordance with the transfer agreement.
The Plan Administrator may refuse to accept a transfer of assets if the Plan
Administrator reasonably believes the transfer (a) is not being made from a
proper qualified plan; (b) could jeopardize the tax-exempt status of the Plan;
or (c) could create adverse tax consequences for the Plan or the Employer.
Prior to accepting a transfer of assets, the Plan Administrator may require
evidence documenting that the transfer of assets meets the requirements of
this Section. The Trustee will have no responsibility to determine whether the
transfer of assets meets the requirements of this Section; to verify the
correctness of the amount and type of assets being transferred to the Plan; or
to perform any due diligence review with respect to such transfer.
(a) Protection of Protected Benefits. Except in the case of a Qualified
Transfer (as defined in subsection (d) below), a transfer of assets is
initiated at the Plan level and does not require Participant or spousal
consent. If the Plan Administrator directs the Trustee to accept a transfer of
assets to this Plan, the Participant on whose behalf the transfer is made
retains all Protected Benefits that applied to such transferred assets under
the transferor plan.
(b) Transferee plan. Except in the case of a Qualified Transfer (as
defined in subsection (d)), if the Plan Administrator directs the Trustee to
accept a transfer of assets from another plan which is subject to the Joint
and Survivor Annuity requirements under Code Section401(a)(11), the amounts so
transferred continue to be subject to such requirements, as provided in
Article 9. If this Plan is not otherwise subject to the Qualified Joint and
Survivor Annuity requirements (as determined under Part 11, #41.a. of the
Agreement [Part 11, #59.a. of the 401(k) Agreement]), the Qualified Joint and
Survivor Annuity requirements apply only to the amounts under the Transfer
Account which are attributable to the amounts which were subject to the
Qualified Joint and Survivor Annuity requirements under the transferor plan.
The Employer may override this default rule by checking Part 11, #41.b. of the
Agreement [Part 11, #59.b. of the 401(k) Agreement] thereby subjecting the
entire Plan to the Qualified Joint and Survivor Annuity Requirements.
(c) Transfers from a Defined Benefit Plan, money purchase plan or 401(k)
plan.
(1) Defined Benefit Plan. The Plan Administrator will not direct the
Trustee to accept a transfer of assets from a Defined Benefit Plan unless such
transfer qualifies as a Qualified Transfer (as defined in subsection (d)
below) or the assets transferred from the Defined Benefit Plan are in the form
of paid-up annuity contracts which protect all the Participant's Protected
Benefits under the Defined Benefit Plan. (However, see the special rule under
the second paragraph of Section 3.3 above regarding transfers authorized under
Code Section4980(d).)
(2) Money purchase plan. If this Plan is a profit sharing plan or a
401(k) plan and the Plan Administrator directs the Trustee to accept a
transfer of assets from a money purchase plan (other than as a Qualified
Transfer as defined in subsection (d) below), the amounts transferred (and any
gains attributable to such transferred amounts) continue to be subject to the
distribution restrictions applicable to money purchase plan assets under the
transferor plan. Such amounts may not be distributed for reasons other than
death, disability, attainment of Normal Retirement Age, or termination of
employment, regardless of any distribution provisions under this Plan that
would otherwise permit a distribution prior to such events.
(3) 401(k) plan. If the Plan Administrator directs the Trustee to
accept a transfer of Section 401(k) Deferrals, QMACs, QNECs, or Safe Harbor
Contributions from a 401(k) plan, such amounts retain their character under
this Plan and such amounts (including any allocable gains or losses) remain
subject to the distribution restrictions applicable to such amounts under the
Code.
(d) Qualified Transfer. The Plan may eliminate certain Protected Benefits
(as provided under subsection (3) below) related to plan assets that are
received in a Qualified Transfer from another plan. A Qualified Transfer is a
plan-to-plan transfer of a Participant's benefits that meets the requirements
under subsection (1) or (2) below.
(1) Elective transfer. A plan-to-plan transfer of a Participant's
benefits from another qualified plans is a Qualified Transfer if such transfer
satisfies the following requirements.
(i) The Participant must have the right to receive an immediate
distribution of his/her benefits under the transferor plan at the time of the
Qualified Transfer. For transfers that occur on or after January 1, 2002, the
Participant must not be eligible at the time of the Qualified Transfer to take
an immediate distribution of his/her entire benefit in a form that would be
entirely eligible for a Direct Rollover.
(ii) The Participant on whose behalf benefits are being
transferred must make a voluntary, fully informed election to transfer his/her
benefits to this Plan.
(iii) The Participant must be provided an opportunity to retain
the Protected Benefits under the transferor plan. This requirement is
satisfied if the Participant is given the option to receive an annuity that
protects all Protected Benefits under the transferor plan or the option of
leaving his/her benefits in the transferor plan.
(iv) The Participant's spouse must consent to the Qualified
Transfer if the transferor plan is subject to the Joint and Survivor Annuity
requirements under Article 9. The spouse's consent must satisfy the
requirements for a Qualified Election under Section 9.4(d).
(v) The amount transferred (along with any contemporaneous
Direct Rollover) must not be less than the value of the Participant's vested
benefit under the transferor plan.
(vi) The Participant must be fully vested in the transferred
benefit.
(2) Transfer upon specified events. For transfers that occur on or
after September 6,
2000, a plan-to-plan transfer of a Participant's entire benefit (other than
amounts the Plan accepts as a Direct Rollover) from another Defined
Contribution Plan that is made in connection with an asset or stock
acquisition, merger, or other similar transaction involving a change in the
Employer or is made in connection with a Participant's change in employment
status that causes the Participant to become ineligible for additional
allocations under the transferor plan, is a Qualified Transfer if such
transfer satisfies the following requirements:
(i) The Participant need not be eligible for an immediate
distribution of his/her benefits under the transferor plan.
(ii) The Participant on whose behalf benefits are being
transferred must make a voluntary, fully informed election to transfer his/her
benefits to this Plan.
(iii) The Participant must be provided an opportunity to retain
the Protected Benefits under the transferor plan. This requirement is
satisfied if the Participant is given the option to receive an annuity that
protects all Protected Benefits under the transferor plan or the option of
leaving his/her benefits in the transferor plan.
(iv) The benefits must be transferred between plans of the same
type. To satisfy this requirement, the transfer must satisfy the following
requirements.
(A) To accept a Qualified Transfer under this subsection
(2) from a money purchase plan, this Plan also must be a money purchase plan.
(B) To accept a Qualified Transfer under this subsection
(2) from a 401(k) plan, this Plan also must be a 401(k) plan.
(C) To accept a Qualified Transfer under this subsection
(2) from a profit sharing plan, this Plan may be any type of Defined
Contribution Plan.
(3) Treatment of Qualified Transfer.
(i) Rollover Contribution Account. If the Plan Administrator
directs the Trustee to accept on behalf of a Participant a transfer of assets
that qualifies as a Qualified Transfer, the Plan Administrator will treat such
amounts as a Rollover Contribution and will deposit such amounts in the
Participant's Rollover Contribution Account. A Qualified Transfer may include
benefits derived from Employee After-Tax Contributions.
(ii) Elimination of Protected Benefits. If the Plan accepts a
Qualified Transfer, the Plan does not have to protect any Protected Benefits
derived from the transferor plan. However, if the Plan accepts a Qualified
Transfer that meets the requirements for a transfer under subsection (2)
above, the Plan must continue to protect the QJSA benefit if the transferor
plan is subject to the QJSA requirements.
(e) Trustee's right to refuse transfer. If the assets to be transferred
to the Plan under this Section 3.3 are not susceptible to proper valuation and
identification or are of such a nature that their valuation is incompatible
with other Plan assets, the Trustee may refuse to accept the transfer of all
or any specific asset, or may condition acceptance of the assets on the sale
or disposition of any specific asset.
ARTICLE 4 PARTICIPANT VESTING
This Article contains the rules for determining the vested (nonforfeitable)
amount of a Participant's Account Balance under the Plan. Part 6 of the
Agreement contains specific elections for applying these vesting rules. Part
7 of the Agreement contains special service crediting elections to override
the default provisions under this Article.
4.1 In General. A Participant's vested interest in his/her Employer
Contribution Account and Employer Matching Contribution Account is determined
based on the vesting schedule elected in Part 6 of the Agreement. A
Participant is always fully vested in his/her Section 401(k) Deferral Account,
Employee After-Tax Contribution Account, QNEC Account, QMAC Account, Safe
Harbor Nonelective Contribution Account, Safe Harbor Matching Contribution
Account, and Rollover Contribution Account.
(a) Attainment of Normal Retirement Age. Regardless of the Plan's vesting
schedule, a Participant's right to his/her Account Balance is fully vested
upon the date he/she attains Normal Retirement Age, provided the Participant
is an Employee on or after such date.
(b) Vesting upon death, becoming Disabled, or attainment of Early
Retirement Age. If elected by the Employer in Part 6, #21 of the Agreement
[Part 6, #39 of the 401(k) Agreement], a Participant will become fully vested
in his/her Account Balance if the Participant dies, becomes Disabled, or
attains Early Retirement Age while employed by the Employer.
(c) Addition of Employer Nonelective Contribution or Employer Matching
Contribution. If the Plan is a Safe Harbor 401(k) Plan as defined in Section
17.6, all amounts allocated to the Participant's Safe Harbor Nonelective
Contribution Account and/or Safe Harbor Matching Contribution Account are
always 100% vested. If a Safe Harbor 401(k) Plan is amended to add a regular
Employer Nonelective Contribution or Employer Matching Contribution, a
Participant's vested interest in such amounts is determined in accordance with
the vesting schedule selected under Part 6 of the Agreement. The addition of a
vesting schedule under Part 6 for such contributions is not considered an
amendment of the vesting schedule under Section 4.7 below merely because the
Participant was fully vested in his/her Safe Harbor Nonelective Contribution
Account or Safe Harbor Matching Contribution Account.
(d) Vesting upon merger, consolidation or transfer. No accelerated
vesting will be required solely because a Defined Contribution Plan is merged
with another Defined Contribution Plan, or because assets are transferred from
a Defined Contribution Plan to another Defined Contribution Plan. Thus, for
example, Participants will not automatically become 100% vested in their
Employer Contribution Account(s) solely on account of a merger of a money
purchase plan with a profit sharing or 401(k) Plan or a transfer of assets
between such Plans. (See Section 18.3 for the benefits that must be protected
as a result of a merger, consolidation or transfer.)
4.2 Vesting Schedules. The Plan's vesting schedule will determine an
Employee's vested percentage in his/her Employer Contribution Account and/or
Employer Matching Contribution Account. The vested portion of a Participant's
Employer Contribution Account and/or Employer Matching Contribution Account is
determined by multiplying the Participant's vesting percentage determined
under the applicable vesting schedule by the total amount under the applicable
Account.
The Employer must elect a normal vesting schedule and a Top-Heavy Plan vesting
schedule under Part 6 of the Agreement. The Top-Heavy Plan vesting schedule
will apply for any Plan Year in which the plan is a Top-Heavy Plan. If this
Plan is a 401(k) plan, the Employer must elect a normal and Top-Heavy Plan
vesting schedule for both Employer Nonelective Contributions and Employer
Matching Contributions, but only to the extent such contributions are
authorized under Part 4B and/or Part 4C of the 401(k) Agreement.
The Employer may choose any of the following vesting schedules as the normal
vesting schedule under Part 6 of the Agreement. For the Top-Heavy Plan
vesting, the Employer may only choose the full and immediate, 6-year graded,
3-year cliff, or modified vesting schedule, as described below.
(a) Full and immediate vesting schedule. Under the full and immediate
vesting schedule, the Participant is always 100% vested in his/her Account
Balance.
(b) 7-year graded vesting schedule. Under the 7-year graded vesting
schedule, an Employee vests in his/her Employer Contribution Account and/or
Employer Matching Contribution Account in the following manner:
After 3 Years of Service - 20% vesting
After 4 Years of Service - 40% vesting
After 5 Years of Service - 60% vesting
After 6 Years of Service - 80% vesting
After 7 Years of Service - 100% vesting
(c) 6-year graded vesting schedule. Under the 6-year graded vesting
schedule, an Employee vests in his/her Employer Contribution Account and/or
Employer Matching Contribution Account in the following manner:
After 2 Years of Service - 20% vesting
After 3 Years of Service - 40% vesting
After 4 Years of Service - 60% vesting
After 5 Years of Service - 80% vesting
After 6 Years of Service - 100% vesting
(d) 5-year cliff vesting schedule. Under the 5-year cliff vesting
schedule, an Employee is 100% vested after 5 Years of Service. Prior to the
fifth Year of Service, the vesting percentage is zero.
(e) 3-year cliff vesting schedule. Under the 3-year cliff vesting
schedule, an Employee is 100% vested after 3 Years of Service. Prior to the
third Year of Service, the vesting percentage is zero.
(f) Modified vesting schedule. For the normal vesting schedule, the
Employer may elect a modified vesting schedule under which the vesting
percentage for each Year of Service is not less than the percentage that would
be required for each Year of Service under the 7-year graded vesting schedule,
unless 100% vesting occurs after no more than 5 Years of Service. For the
Top-Heavy Plan vesting schedule, the Employer may elect a modified vesting
schedule under which the vesting percentage for each Year of Service is not
less than the percentage that would be required for each Year of Service under
the 6-year graded vesting schedule, unless 100% vesting occurs after no more
than 3 Years of Service.
4.3 Shift to/from Top-Heavy Vesting Schedule. For a Plan Year in which the
Plan is a Top-Heavy Plan, the Plan automatically shifts to the Top-Heavy Plan
vesting schedule. Once a Plan uses a Top-Heavy Plan vesting schedule, that
schedule will continue to apply for all subsequent Plan Years. The Employer
may override this default provision under Part 6, #22 of the Nonstandardized
Agreement [Part 6, #40 of the Nonstandardized 401(k) Agreement]. The rules
under Section 4.7 will apply when a Plan shifts to or from a Top-Heavy Plan
vesting schedule.
4.4 Vesting Computation Period. For purposes of computing a Participant's
vested interest in his/her Employer Contribution Account and/or Employer
Matching Contribution Account, an Employee's Vesting Computation Period is the
12-month period measured on a Plan Year basis, unless the Employer elects
under Part 7, #26 of the Agreement [Part 7, #44 of the 401(k) Agreement] to
measure Vesting Computation Periods using Anniversary Years. The Employer may
designate an alternative 12-month period under Part 7, #26.b. of the
Nonstandardized Agreement [Part 7, #44.b. of the Nonstandardized 401(k)
Agreement]. Any Vesting Computation Period designated under Part 7, #26.b. or
#44.b., as applicable, must be a 12-consecutive month period and must apply
uniformly to all Participants.
(a) Anniversary Years. If the Employer elects to measure Vesting
Computation Periods using Anniversary Years, the Vesting Computation Period is
the 12-month period commencing on the Employee's Employment Commencement Date
(or Reemployment Commencement Date) and each subsequent 12-month period
commencing on the anniversary of such date.
(b) Measurement on same Vesting Computation Period. The Plan will measure
Years of Service and Breaks in Service (if applicable) for purposes of vesting
on the same Vesting Computation Period.
4.5 Crediting Years of Service for Vesting Purposes. Unless the Employer
elects otherwise under Part 7, #25 of the Agreement [Part 7, #43 of the 401(k)
Agreement], an Employee will earn one Year of Service for purposes of applying
the vesting rules if the Employee completes 1,000 Hours of Service with the
Employer during a Vesting Computation Period. An Employee will receive credit
for a Year of Service as of the end of the Vesting Computation Period, if the
Employee completes the required Hours of Service during such period, even if
the Employee is not employed for the entire period.
(a) Calculating Hours of Service. In calculating an Employee's Hours of
Service for purposes of applying the vesting rules under this Article, the
Employer will use the Actual Hours Crediting Method, unless the Employer
elects otherwise under Part 7, #25 of the Agreement [Part 7, #43 of the 401(k)
Agreement]. (See Article 6 of this Plan for a description of the alternative
service crediting methods.)
(b) Excluded service. Unless the Employer elects to exclude certain
service with the Employer under Part 6, #20 of the Agreement [Part 6, #38 of
the 401(k) Agreement], all service with the Employer is counted for vesting
purposes.
(1) Service before the Effective Date of the Plan. Under Part 6,
#20.a. of the Agreement [Part 6, #38.a. of the 401(k) Agreement], the Employer
may elect to exclude service during any period for which the Employer did not
maintain the Plan or a Predecessor Plan. For this purpose, a Predecessor Plan
is a qualified plan maintained by the Employer that is terminated within the
5-year period immediately preceding or following the establishment of this
Plan. A Participant's service under a Predecessor Plan must be counted for
purposes of determining the Participant's vested percentage under this Plan.
(2) Service before a certain age. Under Part 6, #20.b. of the
Agreement [Part 6, #38.b.of the 401(k) Agreement], the Employer may elect to
exclude service before an Employee attains a certain age. For this purpose,
the Employer may not designate an age greater than 18. An Employee will be
credited with a Year of Service for the Vesting Computation Period during
which the Employee attains the requisite age, provided the Employee satisfies
all other conditions required for a Year of Service.
4.6 Vesting Break in Service Rules. Except as provided under Section 4.5(b),
in determining a Participant's vested percentage, a Participant is credited
with all Years of Service earned with the Employer, subject to the following
Break in Service rules. In applying these Break in Service rules, Years of
Service and Breaks in Service (as defined in Section 22.27) are measured on
the same Vesting Computation Period as defined in Section 4.4 above.
(a) One-year holdout Break in Service. The one-year holdout Break in
Service rule will not apply unless the Employer specifically elects in Part 7,
#27.b. of the Nonstandardized Agreement [Part 7, #45.b. of the Nonstandardized
401(k) Agreement] to have it apply. If the one-year holdout Break in Service
rule is elected, an Employee who has a one-year Break in Service will not be
credited for vesting purposes with any Years of Service earned before such
one-year Break in Service until the Employee has completed a Year of Service
after the one-year Break in Service. The one-year holdout rule does not apply
under the Standardized Agreement.
(b) Five-Year Forfeiture Break in Service. In the case of a Participant
who has five (5) consecutive one-year Breaks in Service, all Years of Service
after such Breaks in Service will be disregarded for the purpose of vesting in
the portion of the Participant's Employer Contribution Account and/or Employer
Matching Contribution Account that accrued before such Breaks in Service, but
both pre-break and post-break service will count for purposes of vesting in
the portion of such Accounts that accrues after such breaks. The Participant
will forfeit the nonvested portion of his/her Employer Contribution Account
and/or Employer Matching Contribution Account accrued prior to incurring five
consecutive Breaks in Service, in accordance with Section 5.3(b).
In the case of a Participant who does not have five consecutive one-year
Breaks in Service, all Years of Service will count in vesting both the
pre-break and post-break Account Balance derived from Employer Contributions.
(c) Rule of Parity Break in Service. This Break in Service rule applies
only to Participants who are totally nonvested (i.e., 0% vested) in their
Employer Contribution Account and Employer Matching Contribution Account. If
an Employee is vested in any portion of his/her Employer Contribution Account
or Employer Matching Contribution Account, the Rule of Parity does not apply.
Under this Break in Service rule, if a nonvested Participant incurs a period
of consecutive one-year Breaks in Service which equals or exceeds the greater
of five (5) or the Participant's aggregate number of Years of Service with the
Employer, all service earned prior to the consecutive Break in Service period
will be disregarded and the Participant will be treated as a new Employee for
purposes of determining vesting under the Plan. The Employer may elect under
Part 7, #27.a. of the Agreement [Part 7, #45.a. of the 401(k) Agreement] not
to apply the Rule of Parity Break in Service rule.
(1) Previous application of the Rule of Parity Break in Service
rule. In determining a Participant's aggregate Years of Service for purposes
of applying the Rule of Parity Break in Service rule, any Years of Service
otherwise disregarded under a previous application of this rule are not
counted.
(2) Application to the 401(k) Agreement. The Rule of Parity Break in
Service rule applies only to determine the individual's vesting rights with
respect to his/her Employer Contribution
Account and Employer Matching Contribution Account. In determining whether a
Participant is totally nonvested for purposes of applying the Rule of Parity
Break in Service rule, the Participant's Section 401(k) Deferral Account,
Employee After-Tax Contribution Account, QMAC Account, QNEC Account, Safe
Harbor Nonelective Contribution Account, Safe Harbor Matching Contribution
Account, and Rollover Contribution Account are disregarded.
4.7 Amendment of Vesting Schedule. If the Plan's vesting schedule is amended
(or is deemed amended by an automatic change to or from a Top-Heavy Plan
vesting schedule), each Participant with at least three (3) Years of Service
with the Employer, as of the end of the election period described in the
following paragraph, may elect to have his/her vested interest computed under
the Plan without regard to such amendment or change. For this purpose, a Plan
amendment, which in any way directly or indirectly affects the computation of
the Participant's vested interest, is considered an amendment to the vesting
schedule. However, the new vesting schedule will apply automatically to an
Employee, and no election will be provided, if the new vesting schedule is at
least as favorable to such Employee, in all circumstances, as the prior
vesting schedule.
The period during which the election may be made shall commence with the date
the amendment is adopted or is deemed to be made and shall end on the latest
of:
(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.
Furthermore, if the vesting schedule of the Plan is amended, in the case of an
Employee who is a Participant as of the later of the date such amendment is
adopted or effective, the vested percentage of such Employee's Account Balance
derived from Employer Contributions (determined as of such date) will not be
less than the percentage computed under the Plan without regard to such
amendment.
4.8 Special Vesting Rule - In-Service Distribution When Account Balance Less
than 100% Vested. If amounts are distributed from a Participant's Employer
Contribution Account or Employer Matching Contribution Account at a time when
the Participant's vested percentage in such amounts is less than 100% and the
Participant may increase the vested percentage in the Account Balance:
(a) A separate Account will be established for the Participant's interest
in the Plan as of the time of the distribution, and
(b) At any relevant time the Participant's vested portion of the separate
Account will be equal to an amount ("X") determined by the formula:
X = P (AB + D) - D
Where: P is the vested percentage at the relevant time;
AB is the Account Balance at the relevant time; and
D is the amount of the distribution.
ARTICLE 5 FORFEITURES
This Article contains the rules relating to the timing and disposition of
forfeitures of the nonvested portion of a Participant's Account Balance. Part
8 of the Agreement provides elections on the allocation of forfeitures. The
rules for determining the vested portion of a Participant's Account Balance
are contained in Article 4 of this BPD.
5.1 In General. The Plan Administrator has the responsibility to determine
the amount of a Participant's forfeiture based on the application of the
vesting provisions of Article 4. Until an amount is forfeited pursuant to this
Article, nonvested amounts will be held in the Account of the Participant and
will share in gains and losses of the Trust (as determined under Article 13).
5.2 Timing of forfeiture. The forfeiture of all or a portion of a
Participant's nonvested Account Balance occurs upon any of the events listed
below:
(a) Cash-Out Distribution. The date the Participant receives a total
Cash-Out Distribution as defined in Section 5.3(a).
(b) Five-Year Forfeiture Break in Service. The last day of the Vesting
Computation Period in which the Participant incurs a Five-Year Forfeiture
Break in Service as defined in Section 5.3(b).
(c) Lost Participant or Beneficiary. The date the Plan Administrator
determines that a Participant or Beneficiary cannot be located to receive a
distribution from the Plan. See Section 5.3(c).
(d) Forfeiture of Employer Matching Contributions. With respect to
Employer Matching Contributions under a 401(k) plan, the date a distribution
is made as described in Section 5.3(d).
5.3 Forfeiture Events.
(a) Cash-Out Distribution. If a Participant receives a total distribution
upon termination of his/her participation in the Plan (a "Cash-Out
Distribution"), the nonvested portion (if any) of the Participant's Account
Balance is forfeited in accordance with the provisions of this Article. If a
Participant has his/her nonvested Account Balance forfeited as a result of a
Cash-Out Distribution, such Participant must be given the right to "buy-back"
the forfeited benefit, as provided in subsection (2) below. (See Article 8 for
the rules regarding the availability and timing of Plan distributions and the
consent requirements applicable to such distributions.)
(1) Amount of forfeiture. The Cash-Out Distribution rules under this
subsection (a) apply only if the Participant is less than 100% vested in
his/her Employer Contribution Account and/or Employer Matching Contribution
Account. If the Participant is 100% vested in his/her entire Account Balance,
no forfeiture of benefits will occur solely as a result of the Cash-Out
Distribution.
(i) Total Cash-Out Distribution. If a Participant receives a
Cash-Out Distribution of his/her entire vested Account Balance, the
Participant will immediately forfeit the entire nonvested portion of his/her
Account Balance, as of the date of the distribution (as determined under
subsection (A) or (B) below, whichever applies). The forfeited amounts will be
used in the manner designated under Part 8 of the Agreement.
(A) No further allocations. If the terminated Participant
is not entitled to any further allocations under the Plan for the Plan Year in
which the Participant terminates employment, the Cash-Out Distribution occurs
on the day the Participant receives a distribution of his/her entire vested
Account Balance. The Participant's nonvested benefit is immediately forfeited
on such date, in accordance with the provisions under Section 5.5.
(B) Additional allocations. If the terminated Participant
is entitled to an additional allocation under the Plan for the Plan Year in
which the Participant terminates employment, a Cash-Out Distribution is deemed
to occur when the Participant receives a distribution of his/her entire vested
Account Balance, including any amounts that are still to be allocated under
the Plan. Thus, a Participant who is entitled to an additional allocation
under the Plan will not have a total Cash-Out Distribution until such
additional amounts are distributed, regardless of whether the Participant
takes a complete distribution of his/her vested Account Balance before
receiving the additional allocation.
(C) Modification of default cash-out rules. The Employer
may
override the default cash-out rules under subsections (A) and (B) above by
electing under Part 8, #32 of the Agreement [Part 8, #50 of the 401(k)
Agreement] to have the Cash-Out Distribution and related forfeiture occur
immediately upon a distribution of the terminated Participant's entire vested
Account Balance, without regard to whether the Participant is entitled to an
additional allocation under the Plan.
(ii) Deemed Cash-Out Distribution. If a Participant terminates
employment with the Employer with a vested Account Balance of zero in his/her
Employer Contribution Account and/or Employer Matching Contribution Account,
the Participant is treated as receiving a "deemed" Cash-Out Distribution from
the Plan. Upon a deemed Cash-Out, the nonvested portion of the Participant's
Account Balance will be forfeited in accordance with subsection (A) or (B)
below.
(A) No further allocations. If the Participant is not
entitled to any further allocations under the Plan for the Plan Year in which
the Participant terminates employment, the deemed Cash-Out Distribution is
deemed to occur on the day the employment terminates. The Participant's
nonvested benefit is immediately forfeited on such date, in accordance with
the provisions under Section 5.5.
(B) Additional allocations. If the Participant is entitled
to an additional allocation under the Plan for the Plan Year in which the
Participant terminates employment, the deemed Cash-Out Distribution is deemed
to occur on the first day of the Plan Year following the Plan Year in which
the termination occurs.
(C) Modification of default cash-out rules. The Employer
may override the default cash-out rules under subsections (A) and (B) above by
electing under Part 8, #32 of the Agreement [Part 8, #50 of the 401(k)
Agreement] to have the deemed Cash-Out Distribution and related forfeiture
occur immediately upon a distribution of the terminated Participant's entire
vested Account Balance, without regard to whether the Participant is entitled
to an additional allocation under the Plan.
(iii) Other distributions. If the Participant receives a
distribution of less than the entire vested portion of his/her Employer
Contribution Account and Employer Matching Contribution Account (including any
additional amounts to be allocated under subsection (i)(B) above), the total
Cash-Out Distribution rule under subsection (i) above does not apply until the
Participant receives a distribution of the remainder of the vested portion of
his/her Account Balance. Until the Participant receives a distribution of the
remainder of the vested portion of his/her Account Balance, the special
vesting rule described in Section 4.8 applies to determine the vested
percentage of the Participant's Employer Contribution Account and Employer
Matching Account (as applicable). The nonvested portion of such Accounts will
not be forfeited until the earlier of: (A) the occurrence of a Five-Year
Forfeiture Break in Service described in Section 5.3(b) or (B) the date the
Participant receives a total Cash-Out Distribution of the remaining vested
portion of his/her Account Balance.
(2) Buy-back/restoration. If a Participant receives (or is deemed to
receive) a Cash-Out Distribution that results in a forfeiture under subsection
(1) above, and the Participant subsequently resumes employment covered under
this Plan, the Participant may "buy-back" the forfeited portion of his/her
Account(s) by repaying to the Plan the full amount of the Cash-Out
Distribution from such Account(s).
(i) Buy-back opportunity. A Participant may buy-back the
portion of his/her benefit that is forfeited as a result of a Cash-Out
Distribution (or a deemed Cash-Out Distribution) by repaying the amount of
such Cash-Out Distribution to the Plan before the earlier of:
(A) five (5) years after the first date on which the
Participant is subsequently re-employed by the Employer, or
(B) the date a Five-Year Forfeiture Break in Service
occurs (as defined in Section 5.3(b)).
If a Participant receives a deemed Cash-Out Distribution pursuant to
subsection (1)(ii) above, and the Participant resumes employment covered under
this Plan before the date the Participant incurs a Five-Year Forfeiture Break
in Service, the Participant is deemed to have repaid the Cash-Out Distribution
immediately upon his/her reemployment.
To receive a restoration of the forfeited portion of his/her Employer
Contribution Account and/or Employer Matching Contribution Account, a
Participant must repay the entire Cash-Out Distribution that was made from the
Participant's Employer Contribution Account and Employer Matching Contribution
Account, unadjusted for any interest that might have accrued on such amounts
after the distribution date. For this purpose, the Cash-Out Distribution is
the total value of the Participant's vested Employer Contribution Account and
Employer Matching Contribution Account that is distributed at any time
following the Participant's termination of employment. If a Participant also
received a distribution from other Accounts, the Participant need not repay
such amounts to have the forfeited portion of his/her Employer Contribution
Account and/or Employer Matching Contribution Account restored.
(ii) Restoration of forfeited benefit. Upon a Participant's
proper repayment of a Cash-Out Distribution in accordance with subsection (i)
above, the forfeited portion of the Participant's Employer Contribution
Account and Employer Matching Contribution Account (as applicable) will be
restored, unadjusted for any gains or losses on such amount. For this purpose,
a Participant who received a deemed Cash-Out Distribution is automatically
treated as having made a proper repayment and his/her forfeited benefit will
be restored in accordance with this subsection (ii) if the Participant returns
to employment with the Employer prior to incurring a Five-Year Forfeiture
Break in Service. A Participant is not entitled to restoration under this
subsection (ii) if the Participant returns to employment after incurring a
Five-Year Forfeiture Break in Service.
The forfeited portion of the Participant's Account(s) will be restored no
later than the end of the Plan Year following the Plan Year in which the
Participant repays the Cash-Out Distribution in accordance with subsection (i)
above. Although the Plan Administrator may permit a Participant to make a
partial repayment of a Cash-Out Distribution, no portion of the Participant's
forfeited benefit will be restored until the Participant repays the entire
Cash-Out Distribution in accordance with subsection (i) above. If a
Participant received a deemed Cash-Out Distribution, the Participant's
forfeited benefit will be restored no later than the end of the Plan Year
following the Plan Year in which the Participant returns to employment with
the Employer.
If a Participant's forfeited benefit is required to be restored under this
subsection (ii), the restoration of such benefit will occur from the following
sources. If the following sources are not sufficient to completely restore the
Participant's benefit, the Employer must make an additional contribution to
the Plan.
(A) Any forfeitures that have not been allocated to
Participants' Accounts for the Plan Year in which the Employer is restoring
the Participant's benefit in accordance with this subsection (ii).
(B) If Participants are not permitted to self-direct
investments under the Plan, any Trust earnings which have not been allocated
to Participants' Accounts for the Plan Year in which the Employer is restoring
the Participant's benefit in accordance with this subsection (ii).
(C) If the Employer makes a discretionary contribution to
the Plan, it may designate all or any part of such discretionary contribution
as a restoration contribution under this subsection (ii).
(b) Five-Year Forfeiture Break in Service. In the case of a Participant
who has five (5) consecutive one-year Breaks in Service, the nonvested portion
of the Participant's Account Balance will be forfeited as of the end of the
Vesting Computation Period in which the Participant incurs his/her fifth
consecutive Break in Service. See Section 4.6(b) for more information on the
Five-Year Forfeiture Break in Service.
(c) Lost Participant or Beneficiary.
(1) Inability to locate Participant or Beneficiary. If the Plan
Administrator, after a reasonable effort and time, is unable to locate a
Participant or a Beneficiary in order to make a distribution otherwise
required by the Plan, the distributable amount may be forfeited, as permitted
under applicable laws and regulations. In determining what is a reasonable
effort and time, the Plan Administrator may follow any applicable guidance
provided under statute, regulation, or other IRS or DOL guidance of general
applicability.
(2) Restoration of forfeited amounts. If, after the distributable
amount is forfeited, the Participant or Beneficiary is located, the Plan will
restore the forfeited amount (unadjusted for gains or losses) to such
Participant or Beneficiary within a reasonable time. The method of restoring a
forfeited benefit under subsection (a)(2)(ii) above applies to any restoration
required under this subsection (2).
(d) Forfeiture of Employer Matching Contributions. This subsection (d)
only applies if the Plan is a 401(k) Plan.
(1) Correction of ACP Test. If a Participant receives a corrective
distribution of Excess Aggregate Contributions to correct the ACP Test, the
portion of such corrective distribution which relates to nonvested Employer
Matching Contributions, including any allocable income or loss, will be
forfeited (as permitted under Section 17.3(d)(1)) in the Plan Year in which
the corrective distribution is made from the Plan.
(2) Excess Deferrals, Excess Contributions, and Excess Aggregate
Contributions. If a Participant receives a distribution of Excess Deferrals,
Excess Contributions, or Excess Aggregate Contributions, the Employer will
forfeit the portion of his/her Employer Matching Contribution Account (whether
vested or not) which is attributable to such distributed amounts (except to
the extent such amount has been distributed as Excess Contributions or Excess
Aggregate Contributions, pursuant to Article 17). A forfeiture of Employer
Matching Contributions under this subsection (2) occurs in the Plan Year in
which the Participant receives the distribution of Excess Deferrals, Excess
Contributions, and/or Excess Aggregate Contributions.
5.4 Timing of Forfeiture Allocation. Pursuant to the elections under Part 8
of the Agreement, forfeitures are allocated in either the same Plan Year in
which the forfeitures occur or in the Plan Year following the Plan Year in
which the forfeitures occur.
5.5 Method of Allocating Forfeitures. Forfeitures will be allocated in
accordance with the method chosen by the Employer under Part 8 of the
Agreement. In no event, however, will a Participant receive an allocation of
forfeitures arising from his/her own Account. If no method of allocation is
selected under Part 8 of the Agreement, any forfeitures will be used to reduce
the Employer's contributions for the Plan Year following the Plan Year in
which the forfeiture occurs as described under (b) below.
(a) Reallocation of forfeitures. If the Employer elects to reallocate
forfeitures as additional contributions, the forfeitures will be added to
other contributions made by the Employer (as designated under Part 8 of the
Agreement) for the Plan Year designated under Part 8, #29 of the Agreement
[Part 8, #47 of the 401(k) Agreement], and such amounts will be allocated to
Eligible Participants under the allocation method chosen under Part 4 of the
Agreement with respect to such contributions. Reallocation of forfeitures is
not available under the target benefit plan Agreement.
(b) Reduction of contributions. If the Employer elects under Part 8 of
the Agreement to use forfeitures to reduce its contributions under the Plan,
the Employer may adjust its contribution deposits in any manner, provided the
total Employer Contributions made for the Plan Year properly take into account
the forfeitures that are to be used to reduce such contributions for that Plan
Year. If the contributions are allocated over multiple allocation periods, the
Employer may reduce its contribution for any allocation periods within the
Plan Year in which the forfeitures are to be allocated so that the total
amount allocated for the Plan Year is proper.
(c) Payment of Plan expenses. If the Employer elects under Part 8, #31
of the Agreement [Part 8, #49 of the 401(k) Agreement], forfeitures will first
be used to pay Plan expenses for the Plan Year in which the forfeitures would
otherwise be allocated. This subsection (c) applies only if the Plan otherwise
would pay such expenses as authorized under Section 11.4. If any forfeitures
remain after the payment of Plan expenses under this subsection, the remaining
forfeitures will be allocated as selected under Part 8 of the Agreement.
ARTICLE 6 SPECIAL SERVICE CREDITING PROVISIONS
This Article contains special service crediting rules that apply for purposes
of determining an Employee's eligibility to participate and the vested
percentage in his/her Account Balance under the Plan. This Article 6 and Part
7 of the Agreement permit the Employer to override the general service
crediting rules under Articles 1 and 4 with respect to eligibility and vesting
and to apply special service crediting rules, such as
the Equivalency Method and the Elapsed Time Method for crediting service.
Section 6.7 of this Article and Part 13, #53 of the Agreement [Part 13, #71 of
the 401(k) Agreement] contain special rules for crediting service with
Predecessor Employers.
6.1 Year of Service - Eligibility. Section 1.4(b) defines a Year of Service
for eligibility purposes. Generally, an Employee earns a Year of Service for
eligibility purposes upon the completion of 1,000 Hours of Service during an
Eligibility Computation Period. For this purpose, Hours of Service are
calculated using the Actual Hours Crediting Method. Part 7, #23 of the
Agreement [Part 7, #41 of the 401(k) Agreement] permits the Employer to modify
these default provisions for determining a Year of Service for eligibility
purposes.
(a) Selection of Hours of Service. The Employer may elect to modify the
requirement that an Employee complete 1,000 Hours of Service during an
Eligibility Computation Period to earn a Year of Service. Under Part 7, #23.a.
of the Agreement [Part 7, #41.a. of the 401(k) Agreement], the Employer may
designate a specific number of Hours of Service (which cannot exceed 1,000)
that an Employee must complete during the Eligibility Computation Period to
earn a Year of Service. Any Hours of Service designated in accordance with
this subsection (a) will be determined using the Actual Hours Crediting
Method, unless the Employer elects to use the Equivalency Method under Part 7,
#23.b. of the Agreement [Part 7, #41.b. of the 401(k) Agreement].
(b) Use of Equivalency Method. The Employer may elect under Part 7,
#23.b. of the Agreement [Part 7, #41.b. of the 401(k) Agreement] to use the
Equivalency Method (as defined in Section 6.5(a)) instead of the Actual Hours
Crediting Method in determining whether an Employee has completed the required
Hours of Service to earn a Year of Service.
(c) Use of Elapsed Time Method. The Employer may elect under Part 7,
#23.c. of the Agreement [Part 7, #41.c. of the 401(k) Agreement] to use the
Elapsed Time Method (as defined in Section 6.5(b)) instead of counting Hours
of Service in applying the eligibility conditions under Article 1. The Elapsed
Time Method may not be selected if the Employer elects to apply a designated
Hours of Service requirement under Part 7, #23.a. of the Agreement [Part 7,
#41.a. of the 401(k) Agreement].
6.2 Eligibility Computation Period. Section 1.4(c) defines the Eligibility
Computation Period used to determine whether an Employee has earned a Year of
Service for eligibility purposes. Generally, if one Year of Service is
required for eligibility, the Eligibility Computation Period is determined
using the Shift-to-Plan-Year Method (as defined in Section 1.4(c)(1)). Part 7,
#24 of the Agreement [Part 7, #42 of the 401(k) Agreement] permits the
Employer to use the Anniversary Year Method (as defined in Section 1.4(c)(2))
for determining Eligibility Computation Periods under the Plan. If the
Employer selects two Years of Service eligibility condition (under Part 1,
#5.e. of the Agreement), the Anniversary Year Method applies, unless the
Employer elects to use the Shift-to-Plan-Year Method. In the case of a 401(k)
plan in which a two Years of Service eligibility condition is used for either
Employer Matching Contributions or Employer Nonelective Contributions, the
method used to determine Eligibility Computation Periods for the two Years of
Service condition also will apply to any one Year of Service eligibility
condition used with respect to any other contributions.
6.3 Year of Service - Vesting. Section 4.5 defines a Year of Service for
vesting purposes. Generally, an Employee earns a Year of Service for vesting
purposes upon the completion of 1,000 Hours of Service during a Vesting
Computation Period. For this purpose, Hours of Service are calculated using
the Actual Hours Crediting Method. Part 7, #25 of the Agreement [Part 7, #43
of the 401(k) Agreement] permits the Employer to modify these default
provisions for determining a Year of Service for vesting purposes.
(a) Selection of Hours of Service. The Employer may elect to modify the
requirement that an Employee complete 1,000 Hours of Service during a Vesting
Computation Period to earn a Year of Service. Under Part 7, #25.a. of the
Agreement [Part 7, #43.a. of the 401(k) Agreement], the Employer may designate
a specific number of Hours of Service (which cannot exceed 1,000) that an
Employee must complete during the Vesting Computation Period to earn a Year of
Service. Any Hours of Service designated in accordance with this subsection
(a) will be determined using the Actual Hours Crediting Method, unless the
Employer elects to use the Equivalency Method under Part 7, #25.b. of the
Agreement [Part 7, #43.b. of the 401(k) Agreement].
(b) Equivalency Method. The Employer may elect under Part 7, #25.b. of
the Agreement [Part 7,
#43.b. of the 401(k) Agreement] to use the Equivalency Method (as defined in
Section 6.5(a)) instead of the Actual Hours Crediting Method in determining
whether an Employee has completed the required Hours of Service to earn a Year
of Service.
(c) Elapsed Time Method. The Employer may elect under Part 7, #25.c. of
the Agreement [Part 7, #43.c. of the 401(k) Agreement] to use the Elapsed Time
Method (as defined in Section 6.5(b)) instead of counting Hours of Service in
applying the vesting provisions under Article 4. The Elapsed Time Method may
not be selected if the Employer elects to apply a designated Hours of Service
requirement under Part 7, #25.a. of the Agreement [Part 7, #43.a. of the
401(k) Agreement].
6.4 Vesting Computation Period. Section 4.4 defines the Vesting Computation
Period used to determine whether an Employee has earned a Year of Service for
vesting purposes. Generally, the Vesting Computation Period is the Plan Year.
Part 7, #26 of the Agreement [Part 7, #44 of the 401(k) Agreement] permits the
Employer to elect to use Anniversary Years (see Section 4.4(a)) or, under the
Nonstandardized Agreement, any other 12-consecutive month period as the
Vesting Computation Period.
6.5 Definitions.
(a) Equivalency Method. Under the Equivalency Method, an Employee is
credited with 190 Hours of Service for each calendar month during the
Eligibility Computation Period or Vesting Computation Period, as applicable,
for which the Employee completes at least one Hour of Service. Instead of
applying the Equivalency Method on the basis of months worked, the Employer
may elect to apply different equivalencies under Part 7, #28 of the Agreement
[Part 7, #46 of the 401(k) Agreement]. The Employer may credit Employees with
10 Hours of Service for each day worked, 45 Hours of Service for each week
worked, or 95 Hours of Service for each semi-monthly payroll period worked
during the Eligibility Computation Period or Vesting Computation Period, as
applicable. For this purpose, an Employee will receive credit for the
appropriate Hours of Service if the Employer completes at least one Hour of
Service during the applicable period.
(b) Elapsed Time Method. Under the Elapsed Time Method, an Employee
receives credit for the aggregate of all periods of service commencing with
the Employee's Employment Commencement Date (or Reemployment Commencement
Date) and ending on the date the Employee begins a Period of Severance (as
defined in subsection (2) below) which lasts at least 12 consecutive months.
In calculating an Employee's aggregate period of service, an Employee receives
credit for any Period of Severance that lasts less than 12 consecutive months.
If an Employee's aggregate period of service includes fractional years, such
fractional years are expressed as days.
(1) Year of Service. For purposes of determining whether an Employee
has earned a Year of Service under the Elapsed Time Method, an Employee is
credited with a Year of Service for each 12-month period of service the
Employee completes under the above paragraph, whether or not such period of
service is consecutive.
(2) Period of Severance. For purposes of applying the Elapsed Time
Method, a Period of Severance is any continuous period of time during which
the Employee is not employed by the Employer. A Period of Severance begins on
the date the Employee retires, quits or is discharged, or if earlier, the
12-month anniversary of the date on which the Employee is first absent from
service for a reason other than retirement, quit or discharge.
In the case of an Employee who is absent from work for maternity or paternity
reasons, the 12-consecutive month period beginning on the first anniversary of
the first date of such absence shall not constitute a Period of Severance. For
purposes of this paragraph, an absence from work for maternity or paternity
reasons means an absence (i) by reason of the pregnancy of the Employee, (ii)
by reason of the birth of a child of the Employee, (iii) by reason of the
placement of a child with the Employee in connection with the adoption of such
child by the Employee, or (iv) for purposes of caring for a child of the
Employee for a period beginning immediately following the birth or placement
of such child.
(3) Break in Service rules. The Break in Service rules described in
Sections 1.6 and 4.6 also apply under the Elapsed Time Method. For purposes of
applying the Break in Service rules under the Elapsed Time Method, a Break in
Service is any Period of Severance of at least 12 consecutive months.
6.6 Switching Crediting Methods. The following rules apply if the service
crediting method is
changed in a manner described below.
(a) Shift from crediting Hours of Service to Elapsed Time Method. If the
service crediting method under the Plan is changed from a method that uses
Hours of Service to a method using Elapsed Time, each Employee's period of
service under the Elapsed Time Method is the sum of the amounts under
subsections (1) and (2) below.
(1) The number of Years of Service credited under the Hours of
Service method for the period ending immediately before the computation period
during which the change to the Elapsed Time Method occurs.
(2) For the computation period in which the change occurs, the Plan
Administrator will determine the greater of: (i) the period of service that
would be credited under the Elapsed Time Method for the Employee's service
from the first day of that computation period through the date of the change,
or (ii) the service that would be taken into account under the Hours of
Service method for that computation period through the date of the change. If
(i) is greater, then Years of Service are credited under the Elapsed Time
Method beginning with the first day of the computation period during which the
change to the Elapsed Time Method occurs. If (ii) is greater, then Years of
Service are credited under the Hours of Service method for the computation
period during which the change to the Elapsed Time Method occurs and under the
Elapsed Time Method beginning with the first day of the computation period
that follows the computation period in which the change occurs. If the change
occurs as of the first day of a computation period, treat subsection (1) as
applicable for purposes of applying the rule in this paragraph.
(b) Shift from Elapsed Time Method to an Hours of Service method. If the
service crediting method changes from the Elapsed Time Method to an Hours of
Service method, each Employee's Years of Service under the Hours of Service
method is the sum of the amounts under subsections (1) and (2) below.
(1) The number of Years of Service credited under the Elapsed Time
Method as of the date of the change.
(2) For the computation period in which the change to the Hours of
Service method occurs, the portion of that computation period in which the
Elapsed Time Method was in effect is converted into an equivalent number of
Hours of Service, using the Equivalency Method described in Section 6.5(a).
For the remainder of the computation period, actual Hours of Service are
counted, unless the Equivalency Method has been elected in Part 7 of the
Agreement. The Hours of Service deemed credited for the portion of the
computation period in which the Elapsed Time Method was in effect are added to
the actual Hours of Service credited for the remaining portion of the
computation period to determine if the Employee has a Year of Service for that
computation period. If the change to the Hours of Service method occurs as of
the first day of a computation period, then the determination as to whether an
Employee has completed a Year of Service for the first computation period that
the change is in effect is based solely on the Hours of Service method.
6.7 Service with Predecessor Employers. If the Employer maintains the plan
of a Predecessor Employer, any service with such Predecessor Employer is
treated as service with the Employer for purposes of applying the provisions
of this Plan. If the Employer maintains the Plan of a Predecessor Employer,
the Employer may complete Part 13, #53 of the Agreement [Part 13, #71 of the
401(k) Agreement] to identify the Predecessor Employer and to specify that
service with such Predecessor Employer will be credited for all purposes under
the Plan. The failure to complete Part 13, #53 of the Agreement [Part 13, #71
of the 401(k) Agreement] with respect to service of a Predecessor Employer
where the Employer is maintaining a Plan of such Predecessor Employer will not
override the requirement that such predecessor service be counted for all
purposes under the Plan.
If the Employer does not maintain the plan of a Predecessor Employer, service
with such Predecessor Employer does not count under this Plan, unless the
Employer specifically designates under Part 13, #53 of the Agreement [Part 13,
#71 of the 401(k) Agreement] to include service with such Predecessor
Employer. If the Employer elects to credit service with a Predecessor Employer
under this paragraph, the Employer must designate the purpose for which it is
crediting Predecessor Employer service. If the Employer will treat service
with multiple Predecessor Employers differently, the Employer should complete
an additional election for each Predecessor Employer for which service is
being credited differently. If the Employer is not crediting service with any
Predecessor Employers, Part 13, #53 of the Agreement [Part 13, #71 of the
401(k) Agreement] need not be completed.
ARTICLE 7 LIMITATION ON PARTICIPANT ALLOCATIONS
This Article provides limitations on the amount a Participant may receive as
an allocation under the Plan for a Limitation Year. The limitation on
allocations (referred to herein as the Annual Additions Limitation) applies in
the aggregate to all plans maintained by the Employer. Part 13, #54.c. of the
Agreement [Part 13, #72.c. of the 401(k) Agreement] permits the Employer to
specify how the Plan will comply with the Annual Additions Limitation where
the Employer maintains a plan (or plans) in addition to this Plan.
7.1 Annual Additions Limitation - No Other Plan Participation.
(a) Annual Additions Limitation. If the Participant does not participate
in, and has never participated in another qualified retirement plan, a welfare
benefit fund (as defined under Code Section419(e)), an individual medical
account (as defined under Code Section415(l)(2)), or a SEP (as defined under
Code Section408(k)) maintained by the Employer, then the amount of Annual
Additions which may be credited to the Participant's Account for any
Limitation Year will not exceed the lesser of the Maximum Permissible Amount
or any other limitation contained in this Plan.
Generally, if an Employer Contribution that would otherwise be contributed or
allocated to a Participant's Account will cause that Participant's Annual
Additions for the Limitation Year to exceed the Maximum Permissible Amount,
the amount to be contributed or allocated to such Participant will be reduced
so that the Annual Additions allocated to such Participant's Account for the
Limitation Year will equal the Maximum Permissible Amount. However, if a
contribution or allocation to a Participant's Account will exceed the Maximum
Permissible Amount due to a correctable event described in subsection (c)
below, the Excess Amount may be contributed or allocated to such Participant
and corrected in accordance with the correction procedures outlined in
subsection (c).
(b) Using estimated Total Compensation. Prior to determining the
Participant's actual Total Compensation for the Limitation Year, the Employer
may determine the Maximum Permissible Amount for a Participant on the basis of
a reasonable estimation of the Participant's Total Compensation for the
Limitation Year, uniformly determined for all Participants similarly situated.
As soon as administratively feasible after the end of the Limitation Year, the
Employer will determine the Maximum Permissible Amount for the Limitation Year
on the basis of the Participant's actual Total Compensation for the Limitation
Year.
(c) Disposition of Excess Amount. If, as a result of the use of estimated
Total Compensation, the allocation of forfeitures, a reasonable error in
determining the amount of Section 401(k) Deferrals that may be made under this
Article 7, or other reasonable error in applying the Annual Additions
Limitation, an Excess Amount arises, the excess will be disposed of as
follows:
(1) Any Employee After-Tax Contributions (plus attributable
earnings), to the extent such contributions would reduce the Excess Amount,
will be returned to the Participant. The Employer may elect not to apply this
subsection (1) if the ACP Test (as defined in Section 17.3) has already been
performed and the distribution of Employee After-Tax Contributions to correct
the Excess Amount will cause the ACP Test to fail or will change the amount of
corrective distributions required under Section 17.3(d)(1) of this BPD. If
Employer Matching Contributions were allocated with respect to Employee
After-Tax Contributions for the Limitation Year, the Employee After-Tax
Contributions and Employer Matching Contributions will be corrected together.
Employee After-Tax Contributions will be distributed under this subsection (1)
only to the extent the Employee After-Tax Contributions, plus the Employer
Matching Contributions allocated with respect to such Employee After-Tax
Contributions, reduce the Excess Amount. Thus, after correction under this
subsection (1), each Participant should have the same level of Employer
Matching Contribution with respect to the remaining Employee After-Tax
Contributions as provided under Part 4B of the Agreement. Any Employer
Matching Contributions identified under this subsection (1) will be treated as
an Excess Amount correctable under subsections (3) and (4) below. If Employer
Matching Contributions are allocated to both Employee After-Tax Contributions
and to Section 401(k) Deferrals, this subsection (1) is applied by treating
Employer Matching Contributions as allocated first to Section 401(k)
Deferrals.
(2) If, after the application of subsection (1), an Excess Amount
still exists, any Section 401(k) Deferrals (plus attributable earnings), to
the extent such deferrals would reduce the Excess Amount, will be distributed
to the Participant. The Employer may elect not to apply this subsection (2) if
the ADP Test (as defined in Section 17.2) has already been performed and the
distribution of Section 401(k) Deferrals to correct the Excess Amount will
cause the ADP Test to fail or will change the amount of corrective
distributions required under Section 17.2(d)(1) of this BPD.
If Employer Matching Contributions were allocated with respect to Section
401(k) Deferrals for the Limitation Year, the Section 401(k) Deferrals and
Employer Matching Contributions will be corrected together. Section 401(k)
Deferrals will be distributed under this subsection (2) only to the extent the
Section 401(k) Deferrals, plus Employer Matching Contributions allocated with
respect to such Section 401(k) Deferrals, reduce the Excess Amount. Thus,
after correction under this subsection (2), each Participant should have the
same level of Employer Matching Contribution with respect to the remaining
Section 401(k) Deferrals as provided under Part 4B of the Agreement. Any
Employer Matching Contributions identified under this subsection (2) will be
treated as an Excess Amount correctable under subsection (3) or (4) below.
(3) If, after the application of subsection (2), an Excess Amount
still exists, the Excess Amount is allocated to a suspense account and is used
in the next Limitation Year (and succeeding Limitation Years, if necessary) to
reduce Employer Contributions for all Participants under the Plan. The Excess
Amounts are treated as Annual Additions for the Limitation Year in which such
amounts are allocated from the suspense account.
(4) If a suspense account is in existence at any time during a
Limitation Year pursuant to this Article 7, such suspense account will not
participate in the allocation of investment gains and losses, unless otherwise
provided in uniform valuation procedures established by the Plan
Administrator. If a suspense account is in existence at any time during a
particular Limitation Year, all amounts in the suspense account must be
allocated to Participants' Accounts before the Employer makes any Employer
Contributions, or any Employee After-Tax Contributions are made, for that
Limitation Year.
7.2 Annual Additions Limitation - Participation in Another Plan.
(a) In general. This Section 7.2 applies if, in addition to this Plan,
the Participant receives an Annual Addition during any Limitation Year from
another Defined Contribution Plan, a welfare benefit fund (as defined under
Code Section419(e)), an individual medical account (as defined under Code
Section415(l)(2)), or a SEP (as defined under Code Section408(k)) maintained
by the Employer. If the Employer maintains, or at any time maintained, a
Defined Benefit Plan (other than a Paired Plan) covering any Participant in
this Plan, see Section 7.5.
(b) This Plan's Annual Addition Limitation. The Annual Additions that may
be credited to a Participant's Account under this Plan for any Limitation Year
will not exceed the Maximum Permissible Amount reduced by the Annual Additions
credited to a Participant's Account under any other Defined Contribution Plan,
welfare benefit fund, individual medical account, or SEP maintained by the
Employer for the same Limitation Year.
(c) Annual Additions reduction. If the Annual Additions with respect to
the Participant under any other Defined Contribution Plan, welfare benefit
fund, individual medical account, or SEP maintained by the Employer are less
than the Maximum Permissible Amount and the Annual Additions that would
otherwise be contributed or allocated to the Participant's Account under this
Plan would exceed the Annual Additions Limitation for the Limitation Year, the
amount contributed or allocated will be reduced so that the Annual Additions
under all such Plans and funds for the Limitation Year will equal the Maximum
Permissible Amount. However, if a contribution or allocation to a
Participant's Account will exceed the Maximum Permissible Amount due to a
correctable event described in Section 7.1(c), the Excess Amount may be
contributed or allocated to such Participant and corrected in accordance with
the correction procedures outlined in Section 7.1(c).
(d) No Annual Additions permitted. If the Annual Additions with respect
to the Participant under such other Defined Contribution Plan(s), welfare
benefit fund(s), individual medical account(s), or SEP(s) in the aggregate are
equal to or greater than the Maximum Permissible Amount, no amount will be
contributed or allocated to the Participant's Account under this Plan for the
Limitation Year. However, if a
contribution or allocation to a Participant's Account will exceed the Maximum
Permissible Amount due to a correctable event described in Section 7.1(c), the
Excess Amount may be contributed or allocated to such Participant and
corrected in accordance with the correction procedures outlined in Section
7.1(c).
(e) Using estimated Total Compensation. Prior to determining the
Participant's actual Total Compensation for the Limitation Year, the Employer
may determine the Maximum Permissible Amount for a Participant in the manner
described in Section 7.1(b). As soon as administratively feasible after the
end of the Limitation Year, the Maximum Permissible Amount for the Limitation
Year will be determined on the basis of the Participant's actual Total
Compensation for the Limitation Year.
(f) Excess Amounts. If, as a result of the use of estimated Total
Compensation, an allocation of forfeitures, a reasonable error in determining
the amount of Section 401(k) Deferrals that may be made under this Article 7,
or other reasonable error in applying the Annual Additions Limitation, a
Participant's Annual Additions under this Plan and such other plans or funds
would result in an Excess Amount for a Limitation Year, the Excess Amount will
be deemed to consist of the Annual Additions last allocated, except that
Annual Additions attributable to a SEP will be deemed to have been allocated
first, followed by Annual Additions to a welfare benefit fund or individual
medical account, regardless of the actual allocation date.
(1) Same allocation date. If an Excess Amount is allocated to a
Participant on an allocation date of this Plan that coincides with an
allocation date of another plan, such Excess Amount will be attributed to the
following types of plan(s) in the order listed, until the entire Excess Amount
is allocated.
(i) First, to any 401(k) plan(s) maintained by the Employer.
(ii) Then, to any profit sharing plan(s) maintained by the
Employer.
(iii) Then, to any money purchase plan(s) maintained by the
Employer.
(iv) Finally, to any target benefit plan(s) maintained by the
Employer.
If an amount is allocated to the same type of Plan on the same allocation
date, the Excess Amount will be allocated to each plan in accordance with the
pro rata allocation method outlined in the following paragraph.
(2) Alternative methods. The Employer may elect under Part 13,
#54.c. of the Agreement [Part 13, #72.c. of the 401(k) Agreement] to modify
the default rules under this subsection (f). For example, the Employer may
elect to attribute any Excess Amount which is allocated on the same date to
this Plan and to another plan maintained by the Employer by designating the
specific plan to which the Excess Amount is allocated or by using a pro rata
allocation method. Under the pro rata allocation method, the Excess Amount
attributed to this Plan is the product of:
(i) the total Excess Amount allocated as of such date, times
(ii) the ratio of (A) the Annual Additions allocated to the
Participant for the Limitation Year as of such date under this Plan to (B) the
total Annual Additions allocated to the Participant for the Limitation Year as
of such date under this and all other Defined Contribution Plans.
(g) Disposition of Excess Amounts. Any Excess Amount attributed to this
Plan will be disposed in the manner described in Section 7.1(c).
7.3 Modification of Correction Procedures. The Employer may elect under Part
13, #51.c. of the Agreement [Part 13, #69.c. of the 401(k) Agreement] to
modify any of the corrective provisions under Section 7.1 of this BPD. The
provisions in Section 7.2 may be modified under Part 13, #54.c. of the
Agreement [Part 13, #72.c. of the 401(k) Agreement].
7.4 Definitions Relating to the Annual Additions Limitation.
(a) Annual Additions: The sum of the following amounts credited to a
Participant's Account for the Limitation Year:
(1) Employer Contributions, including Section 401(k)
Deferrals;
(2) Employee After-Tax Contributions;
(3) forfeitures;
(4) amounts allocated to an individual medical account (as defined
in Code Section415(l)(2)), which is part of a pension or annuity plan
maintained by the Employer, are treated as Annual Additions to a Defined
Contribution Plan. Also, amounts derived from contributions paid or accrued
after December 31, 1985, in taxable years ending after such date, which are
attributable to post-retirement medical benefits allocated to the separate
account of a key employee (as defined in Code Section419A(d)(3)) under a
welfare benefit fund (as defined in Code Section419(e)) maintained by the
Employer are treated as Annual Additions to a Defined Contribution Plan; and
(5) allocations under a SEP (as defined in Code Section408(k)).
For this purpose, any Excess Amount applied under Sections 7.1(c) or 7.2(f) in
the Limitation Year to reduce Employer Contributions will be considered Annual
Additions for such Limitation Year.
An Annual Addition is credited to a Participant's Account for a particular
Limitation Year if such amount is allocated to the Participant's Account as of
any date within that Limitation Year. An Annual Addition will not be deemed
credited to a Participant's Account for a particular Limitation Year unless
such amount is actually contributed to the Plan no later than 30 days after
the time prescribed by law for filing the Employer's income tax return
(including extensions) for the taxable year with or within which the
Limitation Year ends. In the case of Employee After-Tax Contributions, such
amount shall not be deemed credited to a Participant's Account for a
particular Limitation Year unless the contributions are actually contributed
to the Plan no later than 30 days after the close of that Limitation Year.
(b) Defined Contribution Dollar Limitation: $30,000, as adjusted under
Code Section415(d).
(c) Employer. For purposes of this Article 7, Employer shall mean the
Employer that adopts this Plan, and all members of a controlled group of
corporations (as defined in Section414(b) of the Code as modified by
Section415(h)), all commonly controlled trades or businesses (as defined in
Section414(c) of the Code as modified by Section415(h)) or affiliated service
groups (as defined in Section414(m)) of which the adopting Employer is a part,
and any other entity required to be aggregated with the Employer pursuant to
regulations under Section414(o) of the Code.
(d) Excess Amount: The excess of the Participant's Annual Additions for
the Limitation Year over the Maximum Permissible Amount.
(e) Limitation Year: The Plan Year, unless the Employer elects another
12-consecutive month period under Part 13, #51.a. of the Agreement [Part 13,
#69.a. of the 401(k) Agreement]. All qualified retirement plans under Code
Section401(a) maintained by the Employer must use the same Limitation Year. If
the Limitation Year is amended to a different 12-consecutive month period, the
new Limitation Year must begin on a date within the Limitation Year in which
the amendment is made. If the Plan has an initial Plan Year that is less than
12 months, the Limitation Year for such first Plan Year is the 12-month period
ending on the last day of that Plan Year, unless otherwise specified in Part
13, #51.c. of the Agreement [Part 13, #69.c. of the 401(k) Agreement].
(f) Maximum Permissible Amount: The maximum Annual Additions that may be
contributed or allocated to a Participant's Account under the Plan for any
Limitation Year shall not exceed the lesser of:
(1) the Defined Contribution Dollar Limitation, or
(2) 25 percent of the Participant's Total Compensation for the
Limitation Year.
The Total Compensation limitation referred to in (2) shall not apply to any
contribution for medical benefits (within the meaning of Code Section401(h) or
Section419A(f)(2)) which is otherwise treated as an Annual
Addition under Code Section415(l)(1) or Section419A(d)(2).
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
If a short Limitation Year is created because the Plan has an initial Plan
Year that is less than 12 months, no proration of the Defined Contribution
Dollar Limitation is required, unless provided otherwise under Part 13, #51.c.
of the Agreement [Part 13, #69.c. of the 401(k) Agreement]. (See subsection
(e) above for the rule allowing the use of a full 12-month Limitation Year for
the first year of the Plan, thereby avoiding the need to prorate the Defined
Contribution Dollar Limitation.)
(g) Total Compensation: The amount of compensation as defined under
Section 22.197, subject to the Employer's election under Part 3, #9 of the
Agreement.
(1) Self-Employed Individuals. For a Self-Employed Individual, Total
Compensation is such individual's Earned Income.
(2) Total Compensation actually paid or made available. For purposes
of applying the limitations of this Article 7, Total Compensation for a
Limitation Year is the Total Compensation actually paid or made available to
an Employee during such Limitation Year. However, the Employer may include in
Total Compensation for a Limitation Year amounts earned but not paid in the
Limitation Year because of the timing of pay periods and pay days, but only if
these amounts are paid during the first few weeks of the next Limitation Year,
such amounts are included on a uniform and consistent basis with respect to
all similarly-situated Employees, and no amounts are included in Total
Compensation in more than one Limitation Year. The Employer need not make any
formal election to include accrued Total Compensation described in the
preceding sentence.
(3) Disabled Participants. Total Compensation does not include any
imputed compensation for the period a Participant is Disabled. However, the
Employer may elect under Part 13, #51.b. of the Agreement [Part 13, #69.b. of
the 401(k) Agreement], to include under the definition of Total Compensation,
the amount a terminated Participant who is permanently and totally Disabled
(as defined in Section 22.53) would have received for the Limitation Year if
the Participant had been paid at the rate of Total Compensation paid
immediately before becoming permanently and totally Disabled. If the Employer
elects under Part 13, #51.b. of the Agreement [Part 13, #69.b. of the 401(k)
Agreement] to include imputed compensation for a Disabled Participant, a
Disabled Participant will receive an allocation of any Employer Contribution
the Employer makes to the Plan based on the Employee's imputed compensation
for the Plan Year. Any Employer Contributions made to a Disabled Participant
under this subsection (3) are fully vested when made. For Limitation Years
beginning before January 1, 1997, imputed compensation for a Disabled
Participant may be taken into account only if the Participant is not a Highly
Compensated Employee for such Plan Year.
(4) Special rule for Limitation Years beginning before January 1,
1998. For Limitation Years beginning before January 1, 1998, for purposes of
applying the limitations of this Article 7 and for determining the minimum
top-heavy contribution required under Section 16.2(a), Total Compensation paid
or made available during such Limitation Year shall not include any Elective
Deferrals, or any amount which is contributed or deferred by the Employer at
the election of the Employee and which is not includible in the gross income
of the Employee by reason of Code Section125 or Section457.
7.5 Participation in a Defined Benefit Plan. If the Employer maintains, or
at any time maintained, a Defined Benefit Plan (other than a Paired Plan)
covering any Participant in this Plan, the sum of the Participant's Defined
Benefit Plan Fraction and Defined Contribution Plan Fraction will not exceed
1.0 in any Limitation Year. If the sum of the Defined Benefit Plan Fraction
and the Defined Contribution Plan Fraction exceeds 1.0 in any Limitation Year,
the Plan will satisfy the 1.0 limitation by reducing a Participant's Projected
Annual Benefit under the Defined Benefit Plan.
(a) Repeal of rule. The limitations under this Section 7.5 do not apply
for Limitation Years beginning on or after January 1, 2000. However, the
Employer may have continued to apply rules
consistent with this Section 7.5 for Plan Years beginning after December 31,
1999 and before the Employer first adopted a plan to comply with the GUST
Legislation. If the Employer is adopting this Plan as a restatement of a prior
plan to comply with the GUST Legislation, the provisions of the prior plan
control for purposes of applying the combined limitation rules under Code
Section415(e) for Limitation Years beginning before the Effective Date of this
Plan. For Limitation Years beginning on or after the Effective Date of this
Plan, the provisions of this Section 7.5 apply. If for any Limitation Year
beginning prior to the date this Plan is adopted as a GUST restatement, the
Employer did not comply in operation with the provisions under this Section
7.5 or the provisions of the prior plan, as applicable, the Employer may
document under Appendix B-4 of the Agreement how the Plan was operated to
comply with the combined limitation rules under Code Section415(e).
(b) Special definitions relating to Section 7.5.
(1) Defined Benefit Plan Fraction: A fraction, the numerator of
which is the sum of the Participant's Projected Annual Benefit under all the
Defined Benefit Plans (whether or not terminated) maintained by the Employer,
and the denominator of which is the lesser of 125 percent of the dollar
limitation determined for the Limitation Year under Code SectionSection415(b)
and (d) or 140 percent of the Participant's Highest Average Compensation,
including any adjustments under Code Section415(b).
Notwithstanding the above, if the Participant was a Participant as of the
first day of the first Limitation Year beginning after December 31, 1986, in
one or more Defined Benefit Plans maintained by the Employer which were in
existence on May 6, 1986, the denominator of this fraction will not be less
than 125 percent of the sum of the annual benefits under such plans which the
Participant had accrued as of the close of the last Limitation Year beginning
before January 1, 1987, disregarding any changes in the terms and conditions
of the plans after May 5, 1986. The preceding sentence applies only if the
Defined Benefit Plans individually and in the aggregate satisfied the
requirements of Code Section415 for all Limitation Years beginning before
January 1, 1987.
If the Plan is a Top-Heavy Plan for any Plan Year, 100% will be substituted
for 125% in the prior paragraph, unless in Part 13, #54.b. of the Agreement
[Part 13, #72.b. of the 401(k) Agreement], the Employer provides an extra
minimum top-heavy allocation or benefit in accordance with Code Section416(h)
and the regulations thereunder. In any event, if the Top-Heavy Ratio exceeds
90%, then 100% will always be substituted for 125% in the prior paragraph.
(2) Defined Contribution Plan Fraction: A fraction, the numerator of
which is the sum of the Annual Additions to the Participant's Account under
all the Defined Contribution Plans (whether or not terminated) maintained by
the Employer for the current and all prior Limitation Years (including the
Annual Additions attributable to the Participant's Employee After-Tax
Contributions to all Defined Benefit Plans, whether or not terminated,
maintained by the Employer, and the Annual Additions attributable to all
welfare benefit funds (as defined under Code Section419(e)), individual
medical accounts (as defined under Code Section415(l)(2)), and SEPs (as
defined under Code Section408(k)) maintained by the Employer, and the
denominator of which is the sum of the maximum aggregate amount for the
current and all prior Limitation Years during which the Participant performed
service with the Employer (regardless of whether a Defined Contribution Plan
was maintained by the Employer during such years). The maximum aggregate
amount in any Limitation Year is the lesser of: (i) 125 percent of the Defined
Contribution Dollar Limitation in effect under Code Section415(c)(l)(A) (as
determined under Code SectionSection415(b) and (d)) for such Limitation Year
or (ii) 35 percent of the Participant's Total Compensation for such Limitation
Year.
If the Plan is a Top-Heavy Plan for any Plan Year, 100% will be substituted
for 125% unless in Part 13, #54.b. of the Agreement [Part 13, #72.b. of the
401(k) Agreement], the Employer provides an extra minimum top-heavy allocation
or benefit in accordance with Code Section416(h) and the regulations
thereunder. In any event, if the Top-Heavy Ratio exceeds 90%, then 100% will
always be substituted for 125%.
If the Employee was a Participant as of the end of the first day of the first
Limitation Year beginning after December 31, 1986, in one or more Defined
Contribution Plans maintained by the Employer which were in existence on May
6, 1986, the numerator of this fraction will be adjusted if the sum of this
fraction and the Defined Benefit Plan Fraction would otherwise exceed 1.0
under the terms of this Plan. Under the adjustment, an amount equal to the
product of (i) the excess of the sum of the fractions over 1.0 times (ii) the
denominator of this fraction, will be permanently subtracted from the
numerator of this fraction. The
adjustment is calculated using the fractions as they would be computed as of
the end of the last Limitation Year beginning before January 1, 1987, and
disregarding any changes in the terms and conditions of the Plan made after
May 5, 1986, but using the Code Section415 limitation applicable to the first
Limitation Year beginning on or after January 1, 1987.
The Annual Additions for any Limitation Year beginning before January 1, 1987
shall not be recomputed to treat all Employee After-Tax Contributions as
Annual Additions.
(3) Highest Average Compensation: The average Total Compensation for
the three consecutive years of service with the Employer that produces the
highest average.
(4) Projected Annual Benefit: The annual retirement benefit
(adjusted to an actuarially equivalent straight life annuity if such benefit
is expressed in a form other than a straight life annuity or Qualified Joint
and Survivor Annuity) to which the Participant would be entitled under the
terms of the Plan assuming:
(i) the Participant will continue employment until Normal
Retirement Age under the Plan (or current age, if later), and
(ii) the Participant's Total Compensation for the current
Limitation Year and all other relevant factors used to determine benefits
under the Plan will remain constant for all future Limitation Years.
ARTICLE 8 PLAN DISTRIBUTIONS
Except as provided under Article 9 (Joint and Survivor Annuity Requirements),
this Article 8 governs all distributions to Participants under the Plan.
Sections 8.1 and 8.2 set forth the available distribution options under the
Plan and the amount available for distribution. Section 8.3 sets forth the
Participants' distribution options following termination of employment,
Section 8.4 discusses the distribution options upon a Participant's death, and
Sections 8.5 and 8.6 set forth the in-service distribution options under the
Plan, including the conditions for receiving a Hardship distribution. Parts 9
and 10 of the Agreement contain the elective provisions for the Employer to
identify the timing of distributions and the permitted distribution events
under the Plan.
8.1 Distribution Options. A Participant who terminates employment with the
Employer may receive a distribution of his/her vested Account Balance at the
time and in the manner designated under Part 9 of the Agreement. A Participant
may receive an in-service distribution prior to his/her termination of
employment with the Employer only to the extent permitted under Part 10 of the
Agreement.
Distributions from the Plan will be made in the form of a lump sum of the
Participant's entire vested Account Balance, a single sum distribution of a
portion of the Participant's vested Account Balance, installments, annuity
payments, or other form as selected under Part 11 of the Agreement. Unless
provided otherwise under Part 11 of the Agreement, a Participant may select
any combination of the available distribution forms.
If the Employer elects to permit a single sum distribution of a portion of the
Participant's vested Account Balance, the Employer may limit the availability
or frequency of subsequent withdrawals under Part 11, #40.f. of the
Nonstandardized Agreement [Part 11, #58.f. of the Nonstandardized 401(k)
Agreement]. If the Employer elects under Part 11 of the Agreement to permit
installment payments as an optional form of distribution, the Participant (and
spouse, if applicable) may elect to receive installments in monthly,
quarterly, semi-annual, or annual payments over a period not exceeding the
Life Expectancy of the Participant and his/her Designated Beneficiary. The
Participant may elect at any time to accelerate the payment of all, or any
portion, of an installment distribution. If the Employer elects under Part 11
of the Agreement to permit annuity payments, such annuity payments may not be
in a form that will provide for payments over a period extending beyond either
the life of the Participant (or the lives of the Participant and his/her
designated Beneficiary) or the life expectancy of the Participant (or the life
expectancy of the Participant and his/her designated Beneficiary). The
Employer may restrict the availability of installment payments or annuity
payments under Part 11, #40.f. of the Nonstandardized Agreement [Part 11,
#58.f. of the Nonstandardized 401(k) Agreement].
If the Plan is subject to the Joint and Survivor Annuity requirements under
Article 9, the Plan must make
distribution in the form of a QJSA (as defined in Section 9.4(a)) unless the
Participant (and spouse, if the Participant is married) elects an alternative
distribution form in accordance with Section 9.4(d). (See Section 9.1 for the
rules regarding the application of the Joint and Survivor Annuity
requirements.)
8.2 Amount Eligible for Distribution. For purposes of determining the amount
a Participant may receive as a distribution from the Plan, a Participant's
Account Balance is determined as of the Valuation Date (as specified in Part
12 of the Agreement) which immediately precedes the date the Participant
receives his/her distribution from the Plan. For this purpose, the
Participant's Account Balance must be increased for any contributions
allocated to the Participant's Account since the most recent Valuation Date
and must be reduced for any distributions the Participant received from the
Plan since the most recent Valuation Date. A Participant does not share in any
allocation of gains or losses attributable to the period between the Valuation
Date and the date of the distribution under the Plan, unless provided
otherwise under Part 12 of the Agreement or under uniform funding and
valuation procedures established by the Plan Administrator. In the case of a
Participant-directed Account, the determination of the value of the
Participant's Account for distribution purposes is subject to the funding and
valuation procedures applicable to such directed Account.
8.3 Distributions After Termination of Employment. Subject to the required
minimum distribution provisions under Article 10, a Participant whose
employment with the Employer is terminated for any reason, other than death,
is entitled to receive a distribution of his/her vested Account Balance in
accordance with this Section 8.3 as of the date selected in Part 9 of the
Agreement. If a Participant dies while employed by the Employer, or dies
before distribution of his/her vested Account Balance is completed,
distribution will be made in accordance with Section 8.4.
(a) Account Balance exceeding $5,000. If a Participant's entire vested
Account Balance exceeds $5,000 at the time of distribution, the Participant
may elect to receive a distribution of his/her vested Account Balance in any
form permitted under Part 11 of the Agreement at the time indicated under Part
9, #33 of the Agreement [Part 9, #51 of the 401(k) Agreement]. The Participant
must receive proper notice and must consent in writing, in accordance with
Section 8.7, prior to receiving a distribution from the Plan. If the
Participant does not consent to a distribution upon terminating employment
with the Employer, distribution will be made in accordance with Article 10.
(Also see Section 8.8 for additional notice requirements.)
(b) Account Balance not exceeding $5,000. If a Participant's entire
vested Account Balance does not exceed $5,000 at the time of distribution, the
Plan Administrator will distribute the Participant's entire vested Account
Balance in a single lump sum at the time indicated under Part 9, #34 of the
Agreement [Part 9, #52 of the 401(k) Agreement]. Although the Participant need
not consent to receive a distribution under this subsection (b), the
Participant must receive the notice described in Section 8.8 (if applicable)
prior to receiving the distribution from the Plan. The Employer may modify the
rule under this subsection (b) by electing under Part 9, #37.a. of the
Agreement [Part 9, #55.a. of the 401(k) Agreement] to require Participant
consent prior to a distribution from the Plan, without regard to whether the
Participant's vested Account Balance exceeds $5,000 at the time of
distribution.
(c) Permissible distribution events under a 401(k) plan. A Participant
may not receive a distribution of Section 401(k) Deferrals, QNECs, QMACs and
Safe Harbor Contributions under this Section 8.3 unless the Participant
satisfies one of the following conditions:
(1) The Participant has a "separation from service" with the
Employer. For this purpose, a separation from service occurs when an Employee
terminates employment with the Employer. If a Participant changes jobs as a
result of the Employer's liquidation, merger, consolidation, or other similar
transaction, a distribution may be made to the Participant if the Plan
Administrator determines the Participant has incurred a separation from
service in accordance with rules promulgated under the Code or regulations, or
by reason of a ruling or other published guidance from the IRS. A Participant
may not receive a distribution by reason of separation from service, or
continue to receive an installment distribution based on separation from
service, if prior to the time the distribution is made from the Plan, the
Participant returns to employment with the Employer.
(2) The Employer is a corporation and the Employer sells
substantially all of the assets of a trade or business (within the meaning of
Section409(d)(2) of the Code) to an unrelated corporation, provided
the purchaser does not continue to maintain the Plan with respect to the
Participant after the sale and the Participant becomes employed by the
unrelated corporation as a result of the sale and the distribution is made by
the end of the second calendar year after the year of the sale. For this
purpose, an Employer is deemed to have sold substantially all of the assets of
a trade or business if it sells 85% or more of the total assets of such trade
or business.
(3) The Employer is a corporation and the Employer sells a
subsidiary to an unrelated corporation, provided the purchaser does not
continue to maintain the Plan with respect to the Participant after the sale
and the Participant continues to be employed by the unrelated corporation
after the sale and the distribution is made by the end of the second calendar
year after the year of the sale.
(d) Disabled Participant. A terminated Employee who is Disabled at the
time of termination, or who becomes Disabled after terminating employment with
the Employer, generally is entitled to a distribution in the time and manner
specified in Part 9 of the Agreement. However, if so elected in Part 9, #35 of
the Agreement [Part 9, #53 of the 401(k) Agreement], a terminated Employee who
is Disabled at the time of termination, or who becomes Disabled after
terminating employment with the Employer, is entitled to a distribution in the
time and manner specified in Part 9, #35 of the Agreement [Part 9, #53 of the
401(k) Agreement], to the extent such election will result in an earlier
distribution than would otherwise be available under Part 9 of the Agreement.
(e) Determining whether vested Account Balance exceeds $5,000. For
distributions made on or after October 17, 2000, the determination of whether
a Participant's vested Account Balance exceeds $5,000 is based on the value of
the Participant's Account as of the most recent Valuation Date. In determining
the value of a Participant's Account for distributions made before October 17,
2000, the "lookback rule" may apply. If the lookback rule applies, the
Participant's vested Account Balance is deemed to exceed $5,000 for purposes
of applying the provisions under this Article 8 and Article 9.
For distribution made after March 21, 1999 and before October 17, 2000, the
"lookback rule" is applicable to a distribution to a Participant if the
Participant previously received a distribution when his/her vested Account
Balance exceeded $5,000, and either subsection (1) or (2) applies.
(1) The distribution is subject to the Joint and Survivor Annuity
requirements of Article 9.
(2) The distribution is not subject to the Joint and Survivor
Annuity requirements of Article 9, but a periodic distribution method (e.g.,
an installment distribution) is currently in effect with respect to the
Participant's vested Account Balance, at least one scheduled payment still
remains, and when the first periodic payment was made under such election, the
vested Account Balance exceeded $5,000.
For distributions made before March 21, 1999, the lookback rule applies to all
distributions, without regard to subsections (1) and (2) above. However, the
Plan does not fail to satisfy the requirements of this subsection (e) if,
prior to the adoption of this Plan, the lookback rule was applied to all
distributions (without regard to the limitations described in subsections (1)
and (2) above), or if the limitations described in subsections (1) and (2)
above were applied to distributions made before March 22, 1999 but in a Plan
Year beginning after August 5, 1997.
(f) Effective date of $5,000 vested Account Balance rule. The provisions
under this Article 8 and Article 9 which refer to a $5,000 vested Account
Balance are effective for Plan Years beginning after August 5, 1997, unless a
later effective date is specified in the GUST provisions under Appendix B-3.a.
of the Agreement. For plan years beginning prior to August 6, 1997 (or any
later effective date specified in Appendix B-3.a. of the Agreement) any
reference under this Article 8 or Article 9 to a $5,000 vested Account Balance
should be applied by replacing $5,000 with $3,500.
8.4 Distribution upon the Death of the Participant. The death benefit
payable with respect to a deceased Participant depends on whether the
Participant dies after distribution of his Account Balance has commenced (see
subsection (a) below) or before distribution commences (see subsection (b)
below).
(a) Post-retirement death benefit. If a Participant dies after commencing
distribution of his/her benefit under the Plan, the death benefit is the
benefit payable under the form of payment that has commenced. If a Participant
commences distribution prior to death only with respect to a portion of
his/her Account Balance, then the rules in subsection (b) apply to the rest of
the Account Balance.
(b) Pre-retirement death benefit. If a Participant dies before commencing
distribution of his/her benefit under the Plan, the death benefit that is
payable depends on whether the value of the death benefit exceeds $5,000 and
whether the Joint and Survivor Annuity requirements of Article 9 apply. If
there is both a QPSA death benefit and a non-QPSA death benefit, each death
benefit is valued separately to determine whether it exceeds $5,000. For death
benefits distributed before the $5,000 rule described in Section 8.3(f) is
effective, substitute $3,500 for $5,000.
(1) Death benefit not exceeding $5,000. If the value of the
pre-retirement death benefit does not exceed $5,000, it shall be paid in a
single sum as soon as administratively feasible after the Participant's death.
(2) Death benefit that exceeds $5,000. If the value of the
pre-retirement death benefit exceeds $5,000, the payment of the death benefit
will depend on whether the Joint and Survivor Annuity requirements apply.
(i) If the Joint and Survivor Annuity requirements do not
apply. In this case, the entire death benefit is payable in the form and at
the time described below in subsection (ii)(B).
(ii) If the Joint and Survivor Annuity requirements apply. In
this case, the death benefit consists of a QPSA death benefit (see Section
9.3) and, if the QPSA is defined to be less than 100% of the Participant's
vested Account Balance, a non-QPSA death benefit. The QPSA death benefit is
payable in accordance with subsection (A) below, unless the Participant has
waived such death benefit under the waiver procedures described in Section
9.4(d). In the event there is a proper waiver of the QPSA death benefit, then
such portion of the death benefit is payable in the same manner as the
non-QPSA death benefit. The non-QPSA death benefit is payable in the form and
at the time described below in subsection (B).
(A) QPSA death benefit. If the pre-retirement death
benefit is payable in the QPSA form, then it shall be paid in accordance with
Article 9. If the QPSA death benefit has not been waived, but the surviving
spouse elects a different form of payment, then distribution of the QPSA death
benefit is made in accordance with the form of payment elected by the spouse,
provided such form of payment is available under Section 8.1. The surviving
spouse may request the payment of the QPSA death benefit (in the QPSA form or
in the form elected by the surviving spouse) as soon as administratively
feasible after the death of the Participant. However, payment of the death
benefit will not commence without the consent of the surviving spouse prior to
the date the Participant would have reached Normal Retirement Age (or age 62,
if later). If the QPSA death benefit has been waived, in accordance with the
procedures in Article 9, then the portion of the Participant's vested Account
Balance that would have been payable as a QPSA death benefit in the absence of
such a waiver is treated as a death benefit payable under subsection (B).
(B) Non-QPSA death benefits. Any pre-retirement death
benefit not described in subsection (A) is payable under this paragraph. Such
death benefit is payable in lump sum as soon as administratively feasible
after the Participant's death. However, the death benefit may be payable in a
different form if prescribed by the Participant's Beneficiary designation, or
if the Beneficiary, before a lump sum payment of the benefit is made, requests
an election as to the form of payment. An alternative form of payment must be
one that is available under Section 8.1.
(3) Minimum distribution requirements. In no event will any death
benefit be paid in a manner that is inconsistent with the minimum distribution
requirements of Section 10.2. In addition, the Beneficiary of any
pre-retirement death benefit described above in subsection (2) may postpone
the commencement of the death benefit to a date that is not later than the
latest commencement date permitted under Section 10.2, unless such election is
prohibited in Part 9, #37.b. of the Agreement [Part 9, #55.b. of the 401(k)
Agreement].
(c) Determining a Participant's Beneficiary. A Participant may designate
a Beneficiary to receive the death benefits described in this Section 8.4. Any
Beneficiary designation is subject to the rules under subsections (1) -(4)
below. A Participant may change or revoke a Beneficiary designation at any
time by filing a new designation with the Plan Administrator. Any new
Beneficiary designation is subject to the spousal consent
rules described below, unless the spouse specifically waives such right under
a general consent as authorized under Section 9.4(d). Unless specified
otherwise in the Participant's designated beneficiary election form, if a
Beneficiary does not predecease the Participant but dies before distribution
of the death benefit is made to the Beneficiary, the death benefit will be
paid to the Beneficiary's estate.
The Plan Administrator may request proper proof of the Participant's death and
may require the Beneficiary to provide evidence of his/her right to receive a
distribution from the Plan in any form or manner the Plan Administrator may
deem appropriate. The Plan Administrator's determination of the Participant's
death and of the right of a Beneficiary to receive payment under the Plan
shall be conclusive. If a distribution is to be made to a minor or incompetent
Beneficiary, payments may be made to the person's legal guardian, conservator,
or custodian in accordance with the Uniform Gifts to Minors Act or similar law
as permitted under the laws of the state where the Beneficiary resides. The
Plan Administrator or Trustee will not be liable for any payments made in
accordance with this subsection (c) and are not required to make any inquiries
with respect to the competence of any person entitled to benefits under the
Plan.
If a Participant designates his/her spouse as Beneficiary and subsequent to
such Beneficiary designation, the Participant and spouse are divorced or
legally separated, the designation of the spouse as Beneficiary under the Plan
is automatically rescinded unless specifically provided otherwise under a
divorce decree or QDRO, or unless the Participant enters into a new
Beneficiary designation naming the prior spouse as Beneficiary.
(1) Spousal consent to Beneficiary designation: post-retirement
death benefit. If a Participant is married at the time distribution commences
to the Participant, the Beneficiary of any post-retirement death benefit is
the Participant's surviving spouse, regardless of whether the Joint and
Survivor Annuity requirements under Article 9 apply, unless there is no
surviving spouse or the spouse has consented to the Beneficiary designation in
a manner that is consistent with the requirements for a Qualified Election
under Section 9.4(d), or makes a valid disclaimer of the benefit. If the Joint
and Survivor Annuity requirements apply, the spouse is determined as of the
Distribution Commencement Date for purposes of this spousal consent
requirement. If the Joint and Survivor Annuity requirements do not apply, the
spouse is determined as of the Participant's date of death for purposes of
this spousal consent requirement.
(2) Spousal consent to Beneficiary designation: pre-retirement death
benefit. The rules for spousal consent depend on whether the Joint and
Survivor Annuity requirements in Article 9 apply.
(i) If the Joint and Survivor Annuity requirements apply. In
this case, the QPSA death benefit will be payable in accordance with Section
9.3. The QPSA death benefit may be payable to a non-spouse Beneficiary only if
the spouse consents to the Beneficiary designation, pursuant to the Qualified
Election requirements under Section 9.4(d), or makes a valid disclaimer. The
non-QPSA death benefit, if any, is payable to the person named in the
Beneficiary designation, without regard to whether spousal consent is obtained
for such designation. If a spouse does not properly consent to a Beneficiary
designation, the QPSA waiver is invalid, and the QPSA death benefit is still
payable to the spouse, but the Beneficiary designation remains valid with
respect to any non-QPSA death benefit.
(ii) If the Joint and Survivor Annuity requirements do not
apply. In this case, the surviving spouse (determined at the time of the
Participant's death), if any, must be treated as the sole Beneficiary,
regardless of any contrary Beneficiary designation, unless there is no
surviving spouse, or the spouse has consented to the Beneficiary designation
in a manner that is consistent with the requirements for a Qualified Election
under Section 9.4(d) or makes a valid disclaimer.
(3) Default beneficiaries. To the extent a Beneficiary has not been
named by the Participant (subject to the spousal consent rules discussed
above) and is not designated under the terms of this Plan to receive all or
any portion of the deceased Participant's death benefit, such amount shall be
distributed to the Participant's surviving spouse (if the Participant was
married at the time of death). If the Participant does not have a surviving
spouse at the time of death, distribution will be made to the Participant's
surviving children, in equal shares. If the Participant has no surviving
children, distribution will be made to the Participant's estate. The Employer
may modify the default beneficiary rules described in this subparagraph by
addition attaching appropriate language as an addendum to the Agreement.
(4) One-year marriage rule. The Employer may elect under Part 11,
#41.c. of the
Agreement [Part 11, #59.c. of the 401(k) Agreement], for purposes of applying
the provisions of this Section 8.4, that an individual will not be considered
the surviving spouse of the Participant if the Participant and the surviving
spouse have not been married for the entire one-year period ending on the date
of the Participant's death.
8.5 Distributions Prior to Termination of Employment.
(a) Employee After-Tax Contributions, Rollover Contributions, and
transfers. A Participant may withdraw at any time, upon written request, all
or any portion of his/her Account Balance attributable to Employee After-Tax
Contributions or Rollover Contributions. Any amounts transferred to the Plan
pursuant to a Qualified Transfer (as defined in Section 3.3(d)) also may be
withdrawn at any time pursuant to a written request. No forfeiture will occur
solely as a result of an Employer's withdrawal of Employee After-Tax
Contributions. The Employer may elect in Part 10, #39.d. of the
Nonstandardized Agreement [Part 10, #57.d. of the Nonstandardized 401(k)
Agreement] to modify the availability of in-service withdrawals of Employee
After-Tax Contributions, Rollover Contributions, or Qualified Transfers.
With respect to transfers (other than Qualified Transfers) and subject to
the restrictions on distributions of transferred assets under Section 3.3, a
Participant may request a distribution of all or any portion of his/her
Transfer Account only as permitted under this Article with respect to
contributions of the same type as are being withdrawn.
(b) Employer Contributions. Except as provided in Section 14.10 dealing
with defaulted Participant loans, a Participant may receive a distribution of
all or any portion of his/her vested Account Balance attributable to Employer
Contributions prior to termination of employment only as permitted under Part
10 of the Agreement. If the Joint and Survivor Annuity requirements under
Article 9 apply to the Participant, the Participant's spouse (if the
Participant is married at the time of distribution) must consent to a
distribution in accordance with Section 9.2.
The Employer may elect under the profit sharing or 401(k) plan Agreement to
permit in-service distributions of Employer Contributions (other than Section
401(k) Deferrals, QMACs, QNECs, and Safe Harbor Contributions) upon the
occurrence of a specified event or upon the completion of a certain number of
years. In no case, however, may a distribution that is made solely on account
of the completion of a designated number of years be made with respect to
Employer Contributions that have been accumulated in the Plan for less than 2
years. This rule does not apply if the Participant has been an Eligible
Participant in the Plan for at least 5 years. An in-service distribution may
be made on account of a specified event (other than the completion of a
designated number of years) at any time, if authorized under Part 10 of the
Agreement.
If a Participant with a partially vested benefit receives an in-service
distribution under the Plan, the special vesting schedule under Section 4.8
must be applied to determine the Participant's vested percentage in his/her
remaining Account Balance. This special vesting schedule will not apply if the
Employer limits the availability of in-service distributions under Part 10 of
the Agreement to Participants who are 100% vested.
(c) Section 401(k) Deferrals, Qualified Nonelective Contributions,
Qualified Matching Contributions, and Safe Harbor Contributions. If the
Employer has adopted the 401(k) Agreement, a Participant may receive an
in-service distribution of all or any portion of his/her Section 401(k)
Deferral Account, QMAC Account, QNEC Account, Safe Harbor Matching
Contribution Account and Safe Harbor Nonelective Contribution Account only as
permitted under Part 10 of the Agreement. No provision in this Plan or in Part
10 of the Agreement may be interpreted to permit a Participant to receive a
distribution of such amounts prior to the occurrence of one of the following
events:
(1) the Participant becoming Disabled;
(2) the Participant's attainment of age 59.5;
(3) the Participant's Hardship (as defined in Section 8.6).
(d) Corrective distributions. Nothing in this Article 8 precludes the
Plan Administrator from making a distribution to a Participant, to the extent
such distribution is made to correct a qualification defect in accordance with
the corrective procedures under the IRS' voluntary compliance programs. Thus,
for example, nothing in this Article 8 would preclude the Plan from making a
corrective distribution to an
Employee who received contributions under the Plan prior to becoming an
Eligible Participant. Any such distribution must be made in accordance with
the correction procedures applicable under the IRS' voluntary correction
programs.
8.6 Hardship Distribution. To the extent permitted under Part 10 of the
Agreement, a Participant may receive an in-service distribution on account of
a Hardship. The Employer may elect under Part 10, #38.c. of the Agreement
[Part 10, #56.c. of the 401(k) Agreement] to permit a Hardship distribution
only if the Participant satisfies the safe harbor Hardship requirements under
subsection (a) below. Alternatively, the Employer may elect under Part 10,
#38.d. of the Agreement [Part 10, #56.d. of the 401(k) Agreement] to permit a
Hardship distribution of Employer Contributions (other than Section 401(k)
Deferrals) in accordance with the requirements of subsection (b) below. A
Hardship distribution of Section 401(k) Deferrals must meet the requirements
of a safe harbor Hardship as described under subsection (a) below. A Hardship
distribution under this Section 8.6 is not available for QNECs, QMACs or Safe
Harbor Contributions.
(a) Safe harbor Hardship distribution. To qualify for a safe harbor
Hardship, a Participant must demonstrate an immediate and heavy financial
need, as described in subsection (1), and must satisfy the conditions
described in subsection (2).
(1) Immediate and heavy financial need. To be considered an
immediate and heavy financial need, the Hardship distribution must be made on
account of one of the following events:
(i) the incurrence of medical expenses (as described in
Section213(d) of the Code), of the Participant, the Participant's spouse or
dependents;
(ii) the purchase (excluding mortgage payments) of a principal
residence for the Participant;
(iii) payment of tuition and related educational fees
(including room and board) for the next 12 months of post-secondary education
for the Participant, the Participant's spouse, children or dependents;
(iv) to prevent the eviction of the Participant from, or a
foreclosure on the mortgage of, the Participant's principal residence; or
(v) any other event that the IRS recognizes as a safe harbor
Hardship distribution event under ruling, notice or other guidance of general
applicability.
A Participant must provide the Plan Administrator with a written request for a
Hardship distribution. The Plan Administrator may require written
documentation, as it deems necessary, to sufficiently document the existence
of a proper Hardship event.
(2) Conditions for taking a safe harbor Hardship withdrawal. A
Participant may receive a safe harbor Hardship withdrawal only if all of the
following conditions are satisfied.
(i) The Participant has obtained all available distributions,
other than Hardship distributions, and all nontaxable loans under the Plan and
all other qualified plans maintained by the Employer.
(ii) The Participant is suspended from making any Section
401(k) Deferrals (and any Employee After-Tax Contributions) under the Plan or
any other plans (other than welfare benefit plans) maintained by the Employer
for 12 months after the receipt of the Hardship distribution.
(iii) The distribution is not in excess of the amount of the
immediate and heavy financial need (including amounts necessary to pay any
federal, state or local income taxes or penalties reasonably anticipated to
result from the distribution).
(iv) The limitation on Elective Deferrals under Code
Section402(g) for the Participant for the taxable year immediately following
the taxable year of the Hardship distribution is reduced by the amount of any
Elective Deferrals the Participant made during the taxable year of the
Hardship distribution.
(b) Non-safe harbor Hardship distribution. The Employer may elect under
Part 10, #38.d. of the Agreement [Part 10, #56.d. of the 401(k) Agreement] to
permit a Hardship distribution of Employer
Contributions (other than Section 401(k) Deferrals) on account of an immediate
and heavy financial need (as described in subsection (a)(1) above), but
without regard to the requirements of subsection (a)(2) above. Solely for the
purpose of applying this subsection (b), a Hardship distribution will be on
account of an immediate and heavy financial need if such Hardship distribution
is made to pay for funeral expenses for a family member of the Participant or
upon the Participant's Disability. The Employer may add other permitted
Hardship events under Part 10, #39.d. of the Nonstandardized Agreement [Part
10, #57.d. of the Nonstandardized 401(k) Agreement]. A non-safe harbor
Hardship distribution is not available for Section 401(k) Deferrals, QNECs,
QMACs, or Safe Harbor Contributions.
(c) Amount available for distribution. A Participant may receive a
Hardship distribution of any portion of his/her vested Employer Contribution
Account or Employer Matching Contribution Account (including earnings
thereon), as permitted under Part 10 of the Agreement. A Participant may
receive a Hardship distribution of any portion of his/her Section 401(k)
Deferral Account, if permitted under Part 10 of the Agreement, provided such
distribution, when added to other Hardship distributions from Section 401(k)
Deferrals, does not exceed the total Section 401(k) Deferrals the Participant
has made to the Plan (increased by income allocable to such Section 401(k)
Deferrals that was credited by the later of December 31, 1988 or the end of
the last Plan Year ending before July 1, 1989). A Participant may not receive
a Hardship distribution from his/her QNEC Account, QMAC Account, Safe Harbor
Nonelective Contribution Account or Safe Harbor Matching Contribution Account.
8.7 Participant Consent. If the value of a Participant's entire vested
Account Balance exceeds $5,000 (as determined in accordance with Section
8.3(e)), the Participant must consent to any distribution of such Account
Balance prior to his/her Required Beginning Date (as defined in Section
10.3(a)). The Employer may modify this provision under Part 9, #37.b. of the
Agreement [Part 9, #55.b. of the 401(k) Agreement] to provide for automatic
distribution to a terminated Participant (or Beneficiary) as of the date the
Participant attains (or would have attained if not deceased) the later of
Normal Retirement Age or age 62. A Participant must consent in writing to a
distribution under this Section 8.7 within the 90-day period ending on the
Distribution Commencement Date (as defined in Section 22.56). If the
Participant is subject to the Joint and Survivor Annuity requirements under
Article 9 of this Plan, the Participant's spouse (if the Participant is
married at the time of the distribution) also must consent to the distribution
in accordance with Section 9.2. If the distribution is an Eligible Rollover
Distribution, the Participant must also direct the Plan Administrator as to
whether he/she wants a Direct Rollover and if so, the name of the Eligible
Retirement Plan to which the distribution will be made. (See Section 8.8 for
more information regarding the Direct Rollover rules.)
(a) Participant notice. Prior to receiving a distribution from the Plan,
the Participant must be notified of his/her right to defer any distribution
from the Plan in accordance with the provisions under Article 10 of this BPD.
The notification shall include a general description of the material features
and the relative values of the optional forms of benefit available under the
Plan (consistent with the requirements under Code Section417(a)(3)). The
notice must be provided no less than 30 days and no more than 90 days prior to
the Participant's Distribution Commencement Date. However, distribution may
commence less than 30 days after the notice is given, if the Participant is
clearly informed of his/her right to take 30 days after receiving the notice
to decide whether or not to elect a distribution (and, if applicable, a
particular distribution option), and the Participant, after receiving the
notice, affirmatively elects to receive the distribution prior to the
expiration of the 30-day minimum period. (But see Section 9.5(a) for the rules
regarding the timing of distributions when the Joint and Survivor Annuity
requirements apply.) The notice requirements described in this paragraph may
be satisfied by providing a summary of the required information, so long as
the conditions described in applicable regulations for the provision of such a
summary are satisfied, and the full notice is also provided (without regard to
the 90-day period described in this subsection).
(b) Special rules. The consent rules under this Section 8.7 apply to
distributions made after the Participant's termination of employment and to
distributions made prior to the Participant's termination of employment.
However, the consent of the Participant (and the Participant's spouse, if
applicable) shall not be required to the extent that a distribution is made:
(1) to satisfy the required minimum distribution rules under Article
10;
(2) to satisfy the requirements of Code Section415, as described in
Article 7;
(3) to correct Excess Deferrals, Excess Contributions or Excess
Aggregate Contributions, as described in Article 17.
In addition, if distributions are being made on account of the termination of
the Plan, and an annuity option is not available under the Plan, the
Participant's Account Balance will, without the Participant's consent, be
distributed to the Participant, without regard to the value of the
Participant's vested Account Balance, unless the Employer (or any Related
Employer) maintains another Defined Contribution Plan (other than an employee
stock ownership plan as defined in Code Section4975(e)(7)). If the Employer or
any Related Employer maintains another Defined Contribution Plan (other than
an employee stock ownership plan), then the Participant's Account Balance will
be transferred, without the Participant's consent, to the other plan, if the
Participant does not consent to an immediate distribution (to the extent
consent to an immediate distribution is otherwise required under this Section
8.7).
8.8 Direct Rollovers. This Section 8.8 applies to distributions made on or
after January 1, 1993. Notwithstanding any provision in the Plan to the
contrary, a Participant may elect to have all or any portion of an Eligible
Rollover Distribution paid directly to an Eligible Retirement Plan in a Direct
Rollover. If a Participant elects a Direct Rollover of only a portion of an
Eligible Rollover Distribution, the Plan Administrator may require that the
amount being rolled over equals at least $500.
For purposes of this Section 8.8, a Participant includes a Participant or
former Participant. In addition, this Section applies to any distribution from
the Plan made to a Participant's surviving spouse or to a Participant's spouse
or former spouse who is the Alternate Payee under a QDRO, as defined in
Section 22.151.
If it is reasonable to expect (at the time of the distribution) that the total
amount the Participant will receive as a distribution during the calendar year
will total less than $200, the Employer need not offer the Participant a
Direct Rollover option with respect to such distribution.
(a) Eligible Rollover Distribution. An Eligible Rollover Distribution is
any distribution of all or any portion of a Participant's Account Balance,
except for the following distributions:
(1) any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the life (or
Life Expectancy) of the Participant or the joint lives (or joint Life
Expectancies) of the Participant and the Participant's Beneficiary, or for a
specified period of ten years or more;
(2) any distribution to the extent such distribution is a required
minimum distribution under Article 10;
(3) the portion of any distribution that is not includible in gross
income (determined without regard to the exclusion for net unrealized
appreciation with respect to Employer securities);
(4) an in-service Hardship withdrawal of Section 401(k) Deferrals,
as described in subsection (e) below; and
(5) a distribution made to satisfy the requirements of Code
Section415, as described in Article 7, or a distribution to correct Excess
Deferrals, Excess Contributions or Excess Aggregate Contributions, as
described in Article 17.
(b) Eligible Retirement Plan. An Eligible Retirement Plan is:
(1) an individual retirement account described in Section408(a) of
the Code;
(2) an individual retirement annuity described in Section408(b) of
the Code;
(3) an annuity plan described in Section403(a) of the Code; or
(4) a qualified plan described in Section401(a) of the Code.
However, in the case of an Eligible Rollover Distribution to a surviving
spouse, an Eligible Retirement Plan is only an individual retirement account
or individual retirement annuity.
(c) Direct Rollover. A Direct Rollover is a payment made directly from
the Plan to the Eligible Retirement Plan specified by the Participant. The
Plan Administrator may develop reasonable
procedures for accommodating Direct Rollover requests.
(d) Direct Rollover notice. A Participant entitled to an Eligible
Rollover Distribution must receive a written explanation of his/her right to a
Direct Rollover, the tax consequences of not making a Direct Rollover, and, if
applicable, any available special income tax elections. The notice must be
provided within the same 30 90 day timeframe applicable to the Participant
consent notice under Section 8.7(a). The Direct Rollover notice must be
provided to all Participants, unless the total amount the Participant will
receive as a distribution during the calendar year is expected to be less than
$200.
If a Participant terminates employment with a total vested Account Balance of
$5,000 or less (as determined under Section 8.3(e)) and the Participant does
not respond to the Direct Rollover notice indicating whether a Direct Rollover
is desired and the name of the Eligible Retirement Plan to which the Direct
Rollover is to be made, the Plan Administrator will distribute the
Participant's entire vested Account Balance (in accordance with Section
8.3(b)) no earlier than 30 days and no later than 90 days following the
provision of the notice under Section 8.7. The notice will describe the
procedures for making a default distribution under this paragraph, including
any rules for making a default Direct Rollover to an IRA. Any default
provisions described under the notice must be applied uniformly and in a
nondiscriminatory manner. If the notice provides for a default Direct
Rollover, the default distribution will be made as a Direct Rollover to the
IRA designated under the notice. The notice must contain pertinent information
regarding the Direct Rollover, including the name, address, and telephone
number of the IRA trustee and information regarding IRA maintenance and
withdrawal fees and how the IRA funds will be invested. The notice will
describe the timing of the Direct Rollover and the Participant's ability to
affirmatively opt out of the Direct Rollover. The selection of an IRA trustee,
custodian or issuer and the selection of IRA investments for purposes of a
default Direct Rollover constitutes a fiduciary act subject to the general
fiduciary standards and prohibited transaction provisions of ERISA.
(e) Special rules for Hardship withdrawals of Section 401(k) Deferrals. A
Hardship withdrawal of Section 401(k) Deferrals (as described in Code
Section401(k)(2)(B)(i)(IV)) is not an Eligible Rollover Distribution to the
extent such withdrawal is made after December 31, 1998 or, if later, the first
day (but not later than January 1, 2000) that the Plan Administrator begins to
treat such Hardship withdrawals as ineligible for rollover. Subject to any
contrary pronouncement under statute, regulation or IRS guidance, the Employer
may treat a Hardship withdrawal of Section 401(k) Deferrals as an Eligible
Rollover Distribution if the Participant otherwise satisfies a non-Hardship
distribution event described in Code Section401(k)(2) or (10) at the time of
the withdrawal, regardless of whether the Plan's procedures characterizes such
distribution as a Hardship withdrawal.
8.9 Sources of Distribution. Unless provided otherwise in separate
administrative provisions adopted by the Plan Administrator, in applying the
distribution provisions under this Article 8, distributions will be made on a
pro rata basis from all Accounts from which a distribution is permitted under
this Article. Alternatively, the Plan Administrator may permit Participants
to direct the Plan Administrator as to which Account the distribution is to be
made. Regardless of a Participant's direction as to the source of any
distribution, the tax effect of such a distribution will be governed by Code
Section72 and the regulations thereunder.
(a) Exception for Hardship withdrawals. If the Plan permits a Hardship
withdrawal from both Section 401(k) Deferrals and Employer Contributions, a
Hardship distribution will first be treated as having been made from a
Participant's Employer Contribution Account and then from the Employer's
Matching Contribution Account, to the extent such Hardship distribution is
available with respect to such Accounts. Only when all available amounts have
been exhausted under the Participant's Employer Contribution Account and/or
Employer Matching Contribution Account will a Hardship distribution be made
from a Participant's Section 401(k) Deferral Account. The Plan Administrator
may modify this provision in separate administrative procedures.
(b) In-kind distributions. Nothing in this Article precludes the Plan
Administrator from making a distribution in the form of property, or other
in-kind distribution
ARTICLE 9 JOINT AND SURVIVOR ANNUITY REQUIREMENTS
This Article provides rules concerning the application of the Joint and
Survivor Annuity requirements under this Plan. If the Plan is a profit sharing
plan or a 401(k) plan, Part 11, #41.b. of the Agreement [Part
11, #59.b. of the 401(k) Agreement] permits the Employer to apply the Joint
and Survivor Annuity requirements to all Participants under the Plan. If the
Employer does not elect to apply the Joint and Survivor Annuity requirements
to all Participants, the Plan is only subject to the Joint and Survivor
Annuity requirements to the extent required under Section 9.1(b) of this
Article.
9.1 Applicability. Except as provided in Section 9.6 below, this Article 9
applies to any distribution received by a Participant under the money purchase
plan Agreement or the target benefit plan Agreement. For a profit sharing plan
or 401(k) plan, the following rules apply.
(a) Election to have requirements apply. If this Plan is a profit sharing
plan or a 401(k) plan, and the Employer elects under Part 11, #41.b. of the
profit sharing plan Agreement or Part 11, #59.b. of the 401(k) Agreement to
apply the Joint and Survivor Annuity requirements, then this Article 9 applies
in the same manner as it does to a money purchase plan or a target benefit
plan.
(b) Election to have requirements not apply. If this Plan is a profit
sharing plan or a 401(k) plan, and the Employer elects under Part 11, #41.a.
of the profit sharing plan Agreement or Part 11, #59.a. of the 401(k)
Agreement not to apply the Joint and Survivor Annuity requirements, this
Article 9 generally will not apply to distributions from the Plan. However,
the rules of this Article 9 will apply to a Participant under the following
conditions:
(1) the Participant elects to receive his/her benefit in the form of
a life annuity (if a life annuity is a permissible distribution option under
Part 11 of the Agreement); or
(2) the Participant has received a direct or indirect transfer of
benefits (other than a Qualified Transfer as defined in Section 3.3(d)) from
any plan which was subject to the Joint and Survivor Annuity requirements at
the time of the transfer (but only to such transferred benefits); or
(3) the Participant's benefits under the Plan are used to offset the
benefits under another plan of the Employer that is subject to the Joint and
Survivor Annuity requirements.
Nothing in this subsection (b) prohibits a Plan Administrator from developing
administrative procedures that apply the spousal consent requirements outlined
in this Article 9 to a Plan that is not otherwise subject to the Joint and
Survivor Annuity requirements. For example, the Plan Administrator may require
under separate administrative procedures to require spousal consent to
Participant distributions or may in a separate loan procedure require spousal
consent prior to granting a Participant loan, without subjecting the Plan to
the Joint and Survivor Annuity requirements.
(c) Accumulated deductible employee contributions. For purposes of
applying the rules under this Section 9.1, any distribution from a separate
Account under a money purchase plan or a target benefit plan which is
attributable solely to accumulated deductible employee contributions, as
defined in Code Section72(o)(5)(B), is treated as a distribution from a profit
sharing plan or 401(k) plan for which the rules under subsection (b) above
apply.
9.2 Qualified Joint and Survivor Annuity (QJSA). If the Joint and Survivor
Annuity requirements apply to a Participant, any distribution from the Plan to
that Participant must be in the form of a QJSA (as defined in Section 9.4(a)),
unless the Participant (and the Participant's spouse, if the Participant is
married) elects to receive the distribution in an alternative form, as
authorized under Part 11 of the Agreement. Any election of an alternative form
of distribution must be pursuant to a Qualified Election. Only the Participant
needs consent (pursuant to Section 8.7) to the commencement of a distribution
in the form of a QJSA.
9.3 Qualified Preretirement Survivor Annuity (QPSA). If the Joint and
Survivor Annuity requirements apply to a Participant who dies before the
Distribution Commencement Date, the spouse of that Participant is entitled to
receive a QPSA (as defined in Section 9.4(b)), unless the Participant and
spouse have waived the QPSA pursuant to a Qualified Election. The Employer may
elect under Part 11, #41.c. of the Agreement [Part 11, #59.c. of the 401(k)
Agreement] that a surviving spouse is not entitled to a QPSA benefit if the
Participant and surviving spouse were not married throughout the one year
period ending on the date of the Participant's death. Any portion of a
Participant's vested Account Balance that is not payable to the surviving
spouse as a QPSA (or other form elected by the surviving spouse) constitutes a
non-QPSA death benefit and is payable under the rules described in Section
8.4.
9.4 Definitions.
(a) Qualified Joint and Survivor Annuity (QJSA). A QJSA is an immediate
annuity payable over the life of the Participant with a survivor annuity
payable over the life of the spouse. If the Participant is not married as of
the Distribution Commencement Date, the QJSA is an immediate annuity payable
over the life of the Participant. The survivor annuity must provide for
payments to the surviving spouse equal to 50% of the payments that the
Participant is entitled under the annuity during the joint lives of the
Participant and the spouse. The Employer may elect under Part 11, #41.b. of
the Agreement [Part 11, #59.b. of the 401(k) Agreement] to make payments to
the surviving spouse equal to 100%, 75% or 66-2/3% (instead of 50%) of the
payments the Participant is entitled to under the annuity.
(b) Qualified Preretirement Survivor Annuity (QPSA). A QPSA is an annuity
payable over the life of the surviving spouse that is purchased using 50% of
the Participant's vested Account Balance as of the date of death. The Employer
may elect under Part 11, #41.b. of the Agreement [Part 11, #59.b. of the
401(k) Agreement] to provide a QPSA equal to 100% (instead of 50%) of the
Participant's vested Account Balance. The remaining vested Account Balance
will be distributed in accordance with the death distribution provisions under
Section 8.4. To the extent the Participant's vested Account Balance is derived
from Employee After-Tax Contributions, the QPSA will share in the Employee
After-Tax Contributions in the same proportion as the Employee After-Tax
Contributions bear to the total vested Account Balance of the Participant.
The surviving spouse may elect to have the QPSA distributed at any time
following the Participant's death (subject to the required minimum
distribution rules under Article 10) and may elect to receive distribution in
any form permitted under Section 8.1 of the Plan. If the surviving spouse
fails to elect distribution upon the Participant's death, the QPSA benefit
will be distributed in accordance with Section 8.4.
(c) Distribution Commencement Date. The Distribution Commencement Date is
the date an Employee commences distributions from the Plan. If a Participant
commences distribution with respect to a portion of his/her Account Balance, a
separate Distribution Commencement Date applies to any subsequent
distribution. If distribution is made in the form of an annuity, the
Distribution Commencement Date is the first day of the first period for which
annuity payments are made.
(d) Qualified Election. A Participant (and the Participant's spouse) may
waive the QJSA or QPSA pursuant to a Qualified Election. If it is established
to the satisfaction of a plan representative that there is no spouse or that
the spouse cannot be located, any waiver signed by the Participant is deemed
to be a Qualified Election. For this purpose, a Participant will be deemed to
not have a spouse if the Participant is legally separated or has been
abandoned and the Participant has a court order to such effect. However, a
former spouse of the Participant will be treated as the spouse or surviving
spouse and any current spouse will not be treated as the spouse or surviving
spouse to the extent provided under a QDRO.
A Qualified Election is a written election signed by both the Participant and
the Participant's spouse (if applicable) that specifically acknowledges the
effect of the election. The spouse's consent must be witnessed by a plan
representative or notary public. In the case of a waiver of the QJSA, the
election must designate an alternative form of benefit payment that may not be
changed without spousal consent (unless the spouse enters into a general
consent agreement expressly permitting the Participant to change the form of
payment without any further spousal consent). In the case of a waiver of the
QPSA, the election must be made within the QPSA Election Period and the
election must designate a specific alternate Beneficiary, including any class
of Beneficiaries or any contingent Beneficiaries, which may not be changed
without spousal consent (unless the spouse enters into a general consent
agreement expressly permitting the Participant to change the Beneficiary
designation without any further spousal consent).
Any consent by a spouse under a Qualified Election (or a determination that
the consent of a spouse is not required) shall be effective only with respect
to such spouse. If the Qualified Election permits the Participant to change a
payment form or Beneficiary designation without any further consent by the
spouse, the Qualified Election must acknowledge that the spouse has the right
to limit consent to a specific form of benefit or a specific Beneficiary, as
applicable, and that the spouse voluntarily elects to relinquish either or
both of such rights. A Participant or spouse may revoke a prior waiver of the
QPSA benefit at any time before the commencement of benefits. Spousal consent
is not required for a Participant to revoke a prior QPSA waiver. No consent
obtained under this provision shall be valid unless the Participant has
received notice as provided in Section 9.5 below.
(e) QPSA Election Period. A Participant (and the Participant's spouse)
may waive the QPSA at any time during the QPSA Election Period. The QPSA
Election Period is the period beginning on the first day of the Plan Year in
which the Participant attains age 35 and ending on the date of the
Participant's death. If a Participant separates from service prior to the
first day of the Plan Year in which age 35 is attained, with respect to the
Account Balance as of the date of separation, the QPSA Election Period begins
on the date of separation.
(f) Pre-Age 35 Waiver. A Participant who has not yet attained age 35 as
of the end of a Plan Year may make a special Qualified Election to waive, with
spousal consent, the QPSA for the period beginning on the date of such
election and ending on the first day of the Plan Year in which the Participant
will attain age 35. Such election is not valid unless the Participant receives
the proper notice required under Section 9.5 below. QPSA coverage is
automatically reinstated as of the first day of the Plan Year in which the
Participant attains age 35. Any new waiver on or after such date must satisfy
all the requirements for a Qualified Election.
9.5 Notice Requirements.
(a) QJSA. In the case of a QJSA, the Plan Administrator shall provide
each Participant with a written explanation of: (1) the terms and conditions
of the QJSA; (2) the Participant's right to make and the effect of an election
to waive the QJSA form of benefit; (3) the rights of the Participant's spouse;
and (4) the right to make, and the effect of, a revocation of a previous
election to waive the QJSA. The notice must be provided to each Participant
under the Plan no less than 30 days and no more than 90 days prior to the
Distribution Commencement Date.
A Participant may commence receiving a distribution in a form other than
a QJSA less than 30 days after receipt of the written explanation described in
the preceding paragraph provided: (1) the Participant has been provided with
information that clearly indicates that the Participant has at least 30 days
to consider whether to waive the QJSA and elect (with spousal consent) a form
of distribution other than a QJSA; (2) the Participant is permitted to revoke
any affirmative distribution election at least until the Distribution
Commencement Date or, if later, at any time prior to the expiration of the
7-day period that begins the day after the explanation of the QJSA is provided
to the Participant; and (3) the Distribution Commencement Date is after the
date the written explanation was provided to the Participant. For
distributions on or after December 31, 1996, the Distribution Commencement
Date may be a date prior to the date the written explanation is provided to
the Participant if the distribution does not commence until at least 30 days
after such written explanation is provided, subject to the waiver of the
30-day period.
(b) QPSA. In the case of a QPSA, the Plan Administrator shall provide
each Participant within the applicable period for such Participant a written
explanation of the QPSA in such terms and in such manner as would be
comparable to the explanation provided for the QJSA in subsection (a) above.
The applicable period for a Participant is whichever of the following periods
ends last: (1) the period beginning with the first day of the Plan Year in
which the Participant attains age 32 and ending with the close of the Plan
Year preceding the Plan Year in which the Participant attains age 35; (2) a
reasonable period ending after the individual becomes a Participant; or (3) a
reasonable period ending after the joint and survivor annuity requirements
first apply to the Participant. Notwithstanding the foregoing, notice must be
provided within a reasonable period ending after separation from service in
the case of a Participant who separates from service before attaining age 35.
For purposes of applying the preceding paragraph, a reasonable period ending
after the enumerated events described in (2) and (3) is the end of the
two-year period beginning one year prior to the date the applicable event
occurs, and ending one year after that date. In the case of a Participant who
separates from service before the Plan Year in which age 35 is attained,
notice shall be provided within the two-year period beginning one year prior
to separation and ending one year after separation. If such a Participant
thereafter returns to employment with the employer, the applicable period for
such Participant shall be redetermined.
9.6 Exception to the Joint and Survivor Annuity Requirements. Except as
provided in Section 9.7, this Article 9 does not apply to any Participant who
has not earned an Hour of Service with the Employer on or after August 23,
1984. In addition, if, as of the Distribution Commencement Date, the
Participant's vested Account Balance (for pre-death distributions) or the
value of the QPSA death benefit (for post-death distributions) does not exceed
$5,000, the Participant or surviving spouse, as applicable, will receive a
lump sum distribution pursuant to Section 8.4(b)(1), in lieu of any QJSA or
QPSA benefits. (See Section 8.3(e) for special rules for calculating the
value of a Participant's vested Account Balance.)
9.7 Transitional Rules. Any living Participant not receiving benefits on
August 23, 1984, who would otherwise not receive the benefits prescribed under
this Article 9 must be given the opportunity to elect to have the preceding
provisions of this Article 9 apply if such Participant is credited with at
least one Hour of Service under this Plan or a predecessor plan in a Plan Year
beginning on or after January 1, 1976, and such Participant had at least 10
years of vesting service when he or she separated from service. The
Participant must be given the opportunity to elect to have this Article 9
apply during the period commencing on August 23, 1984, and ending on the date
benefits would otherwise commence to such Participant. A Participant described
in this paragraph who has not elected to have this Article 9 apply is subject
to the rules in this Section 9.7 instead. Also, a Participant who does not
qualify to elect to have this Article 9 apply because such Participant does
not have at least 10 Years of Service for vesting purposes is subject to the
rules of this Section 9.7. Any living Participant not receiving benefits on
August 23, 1984, who was credited with at least one Hour of Service under this
Plan or a predecessor plan on or after September 2, 1974, and who is not
otherwise credited with any service in a Plan Year beginning on or after
January 1, 1976, must be given the opportunity to have his/her benefits paid
in accordance with the following paragraph. The Participant must be given the
opportunity to elect to have this Section 9.7 apply (other than the first
paragraph of this Section) during the period commencing on August 23, 1984,
and ending on the date benefits would otherwise commence to such Participant.
If, under either of the preceding two paragraphs, a Participant is subject to
this Section 9.7, the following rules apply.
(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;
(2) dies on or after Normal Retirement Age while still working for
the Employer;
(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 QJSA, unless the Participant
has elected otherwise during the election period. For this purpose, the
election period must begin at least 6 months before the participant attains
Qualified Early Retirement Age and end not more than 90 days before the
commencement of benefits. Any election hereunder will be in writing and may be
changed by the Participant at any time.
(b) Election of early survivor annuity. A Participant who is employed
after attaining the Qualified Early Retirement Age will be given the
opportunity to elect, during the election period, to have a survivor annuity
payable on death. If the Participant elects the survivor annuity, payments
under such annuity must not be less than the payments that would have been
made to the spouse under the QJSA if the Participant had retired on the day
before his or her death. Any election under this provision will be in writing
and may be changed by the Participant at any time. For this purpose, the
election period begins on the later of (1) the 90th day before the Participant
attains the Qualified Early Retirement Age, or (2) the date on which
participation begins, and ends on the date the Participant terminates
employment.
(c) Qualified Early Retirement Age. The Qualified Early Retirement Age is
the latest of:
(1) the earliest date, under the plan, on which the Participant may
elect to receive retirement benefits,
(2) the first day of the 120th month beginning before the
Participant reaches Normal Retirement Age, or
(3) the date the Participant begins participation under the Plan.
ARTICLE 10 REQUIRED DISTRIBUTIONS
This Article provides for the required commencement of distributions upon
certain events. In addition, this
Article places limitations on the period over which distributions may be made
to a Participant or Beneficiary. To the extent the distribution provisions of
this Plan, particularly Articles 8 and 9, are inconsistent with the provisions
of this Article 10, the provisions of this Article control. Part 13 of the
Agreement contains specific elections for applying the rules under this
Article 10.
10.1 Required Distributions Before Death.
(a) Deferred distributions. A Participant must be permitted to receive a
distribution from the Plan no later than the 60th day after the latest of the
close of the Plan Year in which:
(1) the Participant attains age 65 (or Normal Retirement Age, if
earlier);
(2) occurs the 10th anniversary of the year in which the Participant
commenced participation in the Plan; or,
(3) the Participant terminates service with the Employer.
(b) Required minimum distributions. The entire interest of a Participant
must be distributed or begin to be distributed no later than the Participant's
Required Beginning Date (as defined in Section 10.3(a)) over one of the
following periods (or a combination thereof):
(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 Life Expectancy of the Participant and a Designated Beneficiary.
If the Participant's interest is to be distributed over a period designated
under subsection (3) or (4) above, the amount required to be distributed for
each calendar year must at least equal the quotient obtained by dividing the
Participant's Benefit (as determined under Section 10.3(g)) by the lesser of
(i) the Applicable Life Expectancy or (ii) if the Participant's Designated
Beneficiary is not his/her spouse, the minimum distribution incidental benefit
factor set forth in Q&A-4 of Prop. Treas. Reg. Section401(a)(9)-2.
Distributions after the death of the Participant shall be determined using the
Applicable Life Expectancy as the relevant divisor regardless of the
Participant's Designated Beneficiary.
The minimum distribution required for the Participant's first Distribution
Calendar Year must be made on or before the Participant's Required Beginning
Date. The minimum distribution for other Distribution Calendar Years,
including the minimum distribution for the Distribution Calendar Year in which
the Participant's Required Beginning Date occurs, must be made on or before
December 31 of that Distribution Calendar Year.
If a Participant receives a distribution in the form of an annuity purchased
from an insurance company, distributions thereunder shall be made in
accordance with the requirements of Code Section401(a)(9) and the regulations
thereunder. For calendar years beginning before January 1, 1989, if the
Participant's spouse is not the Designated Beneficiary, the method of
distribution selected must ensure that at least 50% of the Present Value of
the amount available for distribution is paid within the life expectancy of
the Participant.
10.2 Required Distributions After Death.
(a) Distribution beginning before death. If the Participant dies after
he/she has begun receiving distributions under Section 10.1(b), the remaining
portion of the Participant's vested Account Balance shall continue to be
distributed at least as rapidly as under the method of distribution being used
prior to the Participant's death.
(b) Distribution beginning after death. Subject to the rules under
Section 8.4(b), if the Participant dies before receiving distributions under
Section 10.1(b), distribution of the Participant's entire vested Account
Balance shall be completed by December 31 of the calendar year containing the
fifth anniversary of the Participant's death, except to the extent an election
is made to receive distributions in accordance with subsection (1) or (2)
below.
(1) To the extent any portion of the Participant's vested Account
Balance is payable to a
Designated Beneficiary, distributions may be made over the life of the
Designated Beneficiary or over a period certain not greater than the Life
Expectancy of the Designated Beneficiary, provided such distributions begin on
or before December 31 of the calendar year immediately following the calendar
year in which the Participant died.
(2) If the Designated Beneficiary is the Participant's surviving
spouse, he/she may delay the distribution under subsection (1) until December
31 of the calendar year in which the Participant would have attained age
70-1/2, if such date is later than the date described in subsection (1).
If the Participant has not made an election pursuant to this subsection (b) by
the time of his/her death, the Participant's Designated Beneficiary must elect
the method of distribution no later than the earlier of (1) December 31 of the
calendar year in which distributions would be required to begin under this
subsection (b), or (2) December 31 of the calendar year which contains the
fifth anniversary of the date of death of the Participant. If the Participant
has no Designated Beneficiary, or if the Designated Beneficiary does not elect
a method of distribution, distribution of the Participant's entire interest
must be completed by December 31 of the calendar year containing the fifth
anniversary of the Participant's death.
For purposes of this subsection (b), if the surviving spouse dies after the
Participant, but before payments to such spouse begin, the provisions of this
subsection (b), with the exception of subsection (2) above, shall be applied
as if the surviving spouse were the Participant.
(c) Treatment of trust beneficiaries as Designated Beneficiaries. If a
trust is properly named as a Beneficiary under the Plan, the beneficiaries of
the trust will be treated as the Designated Beneficiaries of the Participant
solely for purposes of determining the distribution period under this Article
10 with respect to the trust's interests in the Participant's vested Account
Balance. The beneficiaries of a trust will be treated as Designated
Beneficiaries for this purpose only if, as of the later of the date the trust
is named as a Beneficiary of the Participant or the Participant's Required
Beginning Date (and as of all subsequent periods during which the trust is
named as a Beneficiary of the Participant), the following requirements are
met:
(1) the trust is a valid trust under state law, or would be but for
the fact there is no corpus;
(2) the trust is irrevocable or will, by its terms, become
irrevocable upon the death of the Participant;
(3) the beneficiaries of the trust who are beneficiaries with
respect to the trust's interests in the Participant's vested Account Balance
are identifiable from the trust instrument; and
(4) the Plan Administrator receives the documentation described in
Question D-7 of Proposed Treas. Reg. Section1.401(a)(9)-1, as subsequently
amended or finally adopted.
If the foregoing requirements are satisfied and the Plan Administrator
receives such additional information as it may request, the Plan Administrator
may treat such beneficiaries of the trust as Designated Beneficiaries.
(d) Trust beneficiary qualifying for marital deduction. If a Beneficiary
is a trust (other than an estate marital trust) that is intended to qualify
for the federal estate tax marital deduction under Code Section2056 ("marital
trust"), then:
(1) in no event will the annual amount distributed from the Plan to
the marital trust be less than the greater of:
(i) all fiduciary accounting income with respect to such
Beneficiary's interest in the Plan, as determined by the trustee of the
marital trust, or
(ii) the minimum distribution required under this Article 10;
(2) the trustee of the marital trust (or the trustee's legal
representative) shall be responsible for calculating the amount to be
distributed under subsection (1) above and shall instruct the Plan
Administrator in writing to distribute such amount to the marital trust;
(3) the trustee of the marital trust may from time to time notify
the Plan Administrator in writing to accelerate payment of all or any part of
the portion of such Beneficiary's interest that remains to be distributed, and
may also notify the Plan Administrator to change the frequency of
distributions (but not less often than annually); and
(4) the trustee of the marital trust shall be responsible for
characterizing the amounts so distributed form the Plan as income or principle
under applicable state laws.
10.3 Definitions.
(a) Required Beginning Date. A Participant's Required Beginning Date is
the date designated under subsection (1)(i) or (ii) below, as applicable,
unless the Employer elects under Part 13, #52 of the Agreement [Part 13, #70
of the 401(k) Agreement] to apply the Old-Law Required Beginning Date, as
described in subsection (2) below. If the Employer does not select the Old-Law
Required Beginning Date under Part 13, #52 of the Agreement [Part 13, #70 of
the 401(k) Agreement], the Required Beginning Date rules under subsection (1)
below apply. (But see Section 10.4 for special rules dealing with operational
compliance with the GUST Legislation.)
(1) "New-law" Required Beginning Date. If the Employer does not
elect to apply the Old-Law Required Beginning Date under Part 13, #52 of the
Agreement [Part 13, #70 of the 401(k) Agreement], a Participant's Required
Beginning Date under the Plan is:
(i) For Five-Percent Owners. April 1 that follows the end of
the calendar year in which the Participant attains age 70-1/2.
(ii) For Participants other than Five-Percent Owners. April 1
that follows the end of the calendar year in which the later of the following
two events occurs:
(A) the Participant attains age 70-1/2 or
(B) the Participant retires.
If a Participant is not a Five-Percent Owner for the Plan Year that ends with
or within the calendar year in which the Participant attains age 70-1/2, and
the Participant has not retired by the end of such calendar year, his/her
Required Beginning Date is April 1 that follows the end of the first
subsequent calendar year in which the Participant becomes a Five-Percent Owner
or retires.
A Participant may begin in-service distributions prior to his/her Required
Beginning Date only to the extent authorized under Article 10 and Part 9 of
the Agreement. However, if this Plan were amended to add the Required
Beginning Date rules under this subsection (1), a Participant who attained age
70-1/2 prior to January 1, 1999 (or, if later, January 1 following the date
the Plan is first amended to contain the Required Beginning Date rules under
this subsection (1)) may receive in-service minimum distributions in
accordance with the terms of the Plan in existence prior to such amendment.
(2) Old-Law Required Beginning Date. If the Old-Law Required
Beginning Date is elected under Part 13, #52 of the Agreement [Part 13, #70 of
the 401(k) Agreement], the Required Beginning Date for all Participants will
be determined under subsection (1)(i) above, without regard to the rule in
subsection (1)(ii). The Required Beginning Date for all Participants under the
Plan will be April 1 of the calendar year following attainment of age 70-1/2.
(b) Five-Percent Owner. A Participant is a Five-Percent Owner for
purposes of this Section if such Participant is a Five-Percent Owner (as
defined in Section 22.88) at any time during the Plan Year ending with or
within the calendar year in which the Participant attains age 70-1/2. Once
distributions have begun to a Five-Percent Owner under this Article, they must
continue to be distributed, even if the Participant ceases to be a
Five-Percent Owner in a subsequent year.
(c) Designated Beneficiary. A Beneficiary designated by the Participant
(or the Plan), whose Life Expectancy may be taken into account to calculate
minimum distributions, pursuant to Code Section401(a)(9) and the regulations
thereunder.
(d) Applicable Life Expectancy. The determination of the Applicable Life
Expectancy depends on
whether the term certain method or the recalculation method is being use to
adjust the Life Expectancy in each Distribution Calendar Year. The
recalculation method may only be used to determine the Life Expectancy of the
Participant and/or the Participant's spouse. The recalculation method is not
available with respect to a nonspousal Designated Beneficiary.
If the Designated Beneficiary is the Participant's spouse, or if the
Participant's (or surviving spouse's) single life expectancy is the Applicable
Life Expectancy, the term certain method is used unless the recalculation
method is elected by the Participant (or by the surviving spouse). If the
Designated Beneficiary is not the Participant's spouse, the term certain
method is used to determine the Life Expectancy of both the Participant and
the Designated Beneficiary, unless the recalculation method is elected by the
Participant with respect to his/her Life Expectancy. The term certain method
will always apply for purposes of determining the
Applicable Life Expectancy of a nonspousal Designated Beneficiary. An election
to recalculate Life Expectancy (or the failure to elect recalculation) shall
be irrevocable as of the Participant's Required Beginning Date as to the
Participant (or spouse) and shall apply to all subsequent years.
If the term certain method is being used, the Life Expectancy determined for
the first Distribution Calendar Year is reduced by one for each subsequent
Distribution Year. If the recalculation method is used, the following rules
apply:
(1) If the Life Expectancy is the Participant's (or surviving
spouse's) single Life Expectancy, the Applicable Life Expectancy is
redetermined for each Distribution Year based on the Participant's (or
surviving spouse's) age on his/her birthday which falls in such year.
(2) If the Life Expectancy is a joint and last survivor Life
Expectancy based on the ages of the Participant and the Participant's spouse,
and the recalculation method is elected with respect to both the Participant
and his/her spouse, the Applicable Life Expectancy is redetermined for each
Distribution Year based on the ages of the individuals on their birthdays that
fall in such year.
(3) If the Life Expectancy is a joint and last survivor Life
Expectancy based on the ages of the Participant and the Participant's spouse,
and the recalculation method is elected with respect to only one such
individual, or if the Life Expectancy is a joint and last survivor Life
Expectancy based on the ages of the Participant and a nonspousal Designated
Beneficiary, and the recalculation method is elected with respect to the
Participant, the Applicable Life Expectancy is determined in accordance with
the procedures outlined in Prop. Treas. Reg. Section1.401(a)(9)-1, E-8(b), or
other applicable guidance.
(e) Life Expectancy. For purposes of determining a Participant's required
minimum distribution amount, Life Expectancy and joint and last survivor Life
Expectancy are computed using the expected return multiples in Tables V and VI
of Section1.72-9 of the Income Tax Regulations.
(f) Distribution Calendar Year. A calendar year for which a minimum
distribution is required. For distributions beginning before the Participant's
death, the first Distribution Calendar Year is the calendar year immediately
preceding the calendar year that contains the Participant's Required Beginning
Date. For distributions beginning after the Participant's death, the first
Distribution Calendar Year is the calendar year in which distributions are
required to begin pursuant to Section 10.2.
(g) Participant's Benefit. For purposes of determining a Participant's
required minimum distribution, the Participant's Benefit is determined based
on his/her Account Balance as of the last Valuation Date in the calendar year
immediately preceding the Distribution Calendar Year increased by the amount
of any contributions or forfeitures allocated to the Account Balance as of
dates in the Distribution Calendar Year after the Valuation Date and decreased
by distributions made in the Distribution Calendar Year after the Valuation
Date.
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.
10.4 GUST Elections. If this Plan is being restated to comply with the GUST
Legislation (as defined in Section 22.96), Appendix B-2 of the Agreement
permits the Employer to designate how it operated this
Plan in compliance with the required minimum distribution rules for years
prior to the date the Plan is adopted.
(a) Distributions under Old-Law Required Beginning Date rules. Unless the
Employer specifically elects to apply the Old-Law Required Beginning Date rule
under Part 13, #52 of the Agreement [Part 13, #70 of the 401(k) Agreement],
the Required Beginning Date rules (as described in Section 10.3(a)(1)) apply.
However, if prior to the adoption of this Prototype Plan, the terms of the
Plan reflected the Old-Law Required Beginning Date rules, minimum
distributions for such years are required to be calculated in accordance with
that Old-Law Required Beginning Date, except to the extent any operational
elections described in subsection (b) or (c) below applied.
(b) Option to postpone distributions. For calendar years beginning after
December 31, 1996 and prior to the restatement of this Plan to comply with the
GUST changes, the Plan may have permitted Participants (other than
Five-Percent Owners) who would otherwise have begun receiving minimum
distributions under the terms of the Plan in effect for such years to postpone
receiving their minimum distributions until the Required Beginning Date under
Section 10.3(a)(1), even though the terms of the Plan (prior to the
restatement) did not permit such an election. Appendix B-2.a. of the Agreement
permits the Employer to specify the years during which Participants were
permitted to postpone receiving minimum distributions under the Plan. Appendix
B-2 need not be completed if Participants were not provided the option to
postpone receiving minimum distributions, either because the Plan used the
"Old-Law" Required Beginning Date rules or because the Plan made distributions
under the "New-Law" Required Beginning Date rules and contained other optional
forms of benefit under its general elective distribution provisions that
preserved the optional forms of benefit under the "Old Law Required Beginning
Date" rules.
(c) Election to stop minimum required distributions. A Participant (other
than a Five-Percent Owner) who began receiving minimum distributions in
accordance with the Old-Law Required Beginning Date rules under the Plan prior
to the date the Plan was amended to comply with the GUST changes generally
must continue to receive such minimum distributions, even if the Participant
is still employed with the Employer. However, prior to the restatement of
this Plan to comply with the GUST changes, the Plan may have permitted
Participants to stop minimum distributions if they had not reached the
Required Beginning Date described in Section 10.3(a)(1), even though the terms
of the Plan did not permit such an election. Under Appendix B-2.b. of the
Agreement, the Employer may designate the year in which Participants were
permitted to stop receiving minimum distributions in accordance with this
subsection (c). A Participant must recommence minimum distributions as
required under the Required Beginning Date rules applicable under this
restated Plan.
A Participant's election to stop and recommence distributions is subject to
the spousal consent requirements under Article 9 (if the Plan is otherwise
subject to the Joint and Survivor Annuity requirements) and is subject to the
terms of any applicable QDRO. The manner in which the Plan must comply with
the spousal consent requirements depends on whether or not the Employer elects
under Appendix B-2.c. of the Agreement to have the recommencement of benefits
constitute a new Distribution Commencement Date. If the Plan is not otherwise
subject to the Joint and Survivor Annuity requirements, Appendix B-2.c. need
not be completed.
(1) New Distribution Commencement Date. If the Employer elects under
Appendix B-2.c.(1) of the Agreement that recommencement of benefits will
create a new Distribution Commencement Date, no spousal consent is required
for a Participant to elect to stop distributions, except where such
distributions are being paid in the form of a QJSA. Where such distributions
are being paid in the form of a QJSA, in order to comply with this subsection
(1), the person who was the Participant's spouse on the original Distribution
Commencement Date must consent to the election to stop distributions and the
spouse's consent must acknowledge the effect of the election. Because there is
a new Distribution Commencement Date upon recommencement of benefits, the
Plan, in order to satisfy this subsection (1), must comply with all of the
requirements of Article 9 upon such recommencement, including payment of a
QPSA (as defined in Section 9.4(b)) if the Participant dies before the new
Distribution Commencement Date.
(2) No new Distribution Commencement Date. If the Employer elects
under Appendix B-2.c.(2) of the Agreement that recommencement of benefits will
not create a new Distribution Commencement Date, no spousal consent is
required for the Participant to elect to stop required minimum
distributions prior to retirement. In addition, no spousal consent is required
when payments recommence to the Participant if:
(i) payments recommence to the Participant with the same
Beneficiary and in a form of benefit that is the same but for the cessation of
distributions;
(ii) the individual who was the Participant's spouse on the
Distribution Commencement Date executed a general consent within the meaning
of Section1.401(a)-20, A-31 of the regulations; or
(iii) the individual who was the Participant's spouse on the
Distribution Commencement Date executed a specific consent to waive a QJSA
within the meaning of Section1.401(a)-20, A-31, and the Participant is not
married to that individual when benefits recommence.
To qualify under this subsection (2), consent of the individual who was the
Participant's spouse on the Distribution Commencement Date is required prior
to recommencement of distributions if the Participant chooses to recommence
benefits in a different form than the form in which benefits were being
distributed prior to the cessation of distributions or with a different
Beneficiary. Consent of the Participant's spouse is also required if the
original form of distribution was a QJSA (as defined in Section 9.4(a)) or the
spouse originally executed a specific consent to waive the QJSA within the
meaning of Section1.401(a)-20, A-31, of the regulations, and the Participant
is still married to that individual when benefits recommence.
10.5 Transitional Rule. The minimum distribution requirements in Section
10.2 do not apply if distribution of the Participant's Account Balance is
subject to a TEFRA Section242(b)(2) election. A TEFRA Section242(b) election
overrides the required minimum distribution rules only if the following
requirements are satisfied.
(a) The distribution by the Plan is one that would not have disqualified
the Plan under Section401(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 Participant whose interest in the Plan is being distributed
or, if the Participant is deceased, by a Beneficiary of such Participant.
(c) Such designation was in writing, was signed by the Participant or the
Beneficiary, and was made before January 1, 1984.
(d) The Participant had accrued a benefit under the Plan as of December
31, 1983.
(e) The method of distribution designated by the Participant or the
Beneficiary specifies the time at which distribution will commence, the period
over which distributions will be made, and in the case of any distribution
upon the Participant's death, the Beneficiaries of the Participant listed in
order of priority.
A distribution upon death will not be covered by this transitional rule unless
the information in the designation contains the required information described
above with respect to the distributions to be made upon the death of the
Participant.
For any distribution which commences before January 1, 1984, but continues
after December 31, 1983, the Participant, or the Beneficiary, to whom such
distribution is being made, will be presumed to have designated the method of
distribution under which the distribution is being made if the method of
distribution was specified in writing and the distribution satisfies the
requirements in subsections (a) and (e) above.
If a designation is revoked any subsequent distribution must satisfy the
requirements of Code Section401(a)(9) and the proposed regulations thereunder.
If a designation is revoked subsequent to the date distributions are required
to begin, the Plan must distribute by the end of the calendar year following
the calendar year in which the revocation occurs the total amount not yet
distributed which would have been required to have been distributed to satisfy
Code Section401(a)(9) and the proposed regulations thereunder, but for the
TEFRA Section242(b)(2) election. For calendar years beginning after December
31, 1988, such distributions must meet the minimum distribution incidental
benefit requirements in Section1.401(a)(9)-2 of the proposed regulations (or
other applicable regulations). Any changes in the designation will be
considered to be a revocation of the designation. However, the mere
substitution or addition of another Beneficiary (one not named in the
designation) under the designation will not be considered to be a revocation
of the designation, so long as such substitution or addition does not alter
the period over which distributions are to be made under the designation,
directly or indirectly (for example, by altering the relevant measuring life).
In the case in which an amount is transferred or rolled over from one plan to
another plan, the rules in Questions J-2 and J-3 of Section1.401(a)(9)-1 of
the proposed regulations (or other applicable regulations) shall apply.
ARTICLE 11 PLAN ADMINISTRATION AND SPECIAL OPERATING RULES
This Article describes the duties and responsibilities of the Plan
Administrator. In addition, this Article sets forth default QDRO procedures
and benefit claims procedures, as well as special operating rules when an
Employer is a member of a Related Employer group and when there is a Short
Plan Year. Provisions related to Plan accounting and investments are contained
in Article 13.
11.1 Plan Administrator. The Employer is the Plan Administrator, unless the
Employer designates in writing another person or persons as the Plan
Administrator. The Employer may designate the Plan Administrator by name, by
reference to the person or group of persons holding a certain position, by
reference to a procedure under which the Plan Administrator is designated, or
by reference to a person or group of persons charged with the specific
responsibilities of Plan Administrator. If any Related Employer has executed a
Co-Sponsor Adoption Page, the Employer referred to in this Section is the
Employer that executes the Signature Page of the Agreement.
(a) Acceptance of responsibility by designated Plan Administrator. If the
Employer designates a Plan Administrator other than itself, the designated
Plan Administrator must accept its responsibilities in writing. The designated
Plan Administrator will serve in a manner and for the time period as agreed
upon with the Employer. If more than one person has the responsibility of Plan
Administrator, the group shall act by majority vote, but may designate
specific persons to act on the Plan Administrator's behalf.
(b) Resignation of designated Plan Administrator. A designated Plan
Administrator may resign by delivering a written resignation to the Employer.
The Employer may remove a designated Plan Administrator by delivering a
written notice of removal. If a designated Plan Administrator resigns or is
removed, and no new Plan Administrator is designated, the Employer is the Plan
Administrator.
(c) Named Fiduciary. The Plan Administrator is the Plan's Named
Fiduciary, unless the Plan Administrator specifically names another person as
Named Fiduciary and the designated person accepts its responsibilities as
Named Fiduciary in writing.
11.2 Duties and Powers of the Plan Administrator. The Plan Administrator
will administer the Plan for the exclusive benefit of the Plan Participants
and Beneficiaries, and in accordance with the terms of the Plan. To the extent
the terms of the Plan are unclear, the Plan Administrator may interpret the
Plan, provided such interpretation is consistent with the rules of ERISA and
Code Section401 and is performed in a uniform and nondiscriminatory manner.
This right to interpret the Plan is an express grant of discretionary
authority to resolve ambiguities in the Plan document and to make
discretionary decisions regarding the interpretation of the Plan's terms,
including who is eligible to participate under the Plan, and the benefit
rights of a Participant or Beneficiary. The Plan Administrator will not be
held liable for any interpretation of the Plan terms or decision regarding the
application of a Plan provision provided such interpretation or decision is
not arbitrary or capricious.
(a) Delegation of duties and powers. To the extent provided for in an
agreement with the Employer, the Plan Administrator may delegate its duties
and powers to one or more persons. Such delegation must be in writing and
accepted by the person or persons receiving the delegation.
(b) Specific duties and powers. The Plan Administrator has the general
responsibility to control and manage the operation of the Plan. This
responsibility includes, but is not limited to, the following:
(1) To construe and enforce the terms of the Plan, including those
related to Plan eligibility, vesting and benefits;
(2) To develop separate procedures, consistent with the terms of the
Plan, to assist in the administration of the Plan, including the adoption of
separate or modified loan policy procedures (see
Article 14), procedures for direction of investment by Participants (see
Section 13.5(c)), procedures for determining whether domestic relations orders
are QDROs (see Section 11.5), and procedures for the proper determination of
investment earnings to be allocated to Participants' Accounts (see Section
13.4);
(3) To communicate with the Trustee and other responsible persons
with respect to the crediting of Plan contributions, the disbursement of Plan
distributions and other relevant matters;
(4) To maintain all necessary records which may be required for tax
and other administration purposes;
(5) To furnish and to file all appropriate notices, reports and
other information to Participants, Beneficiaries, the Employer, the Trustee
and government agencies (as necessary);
(6) To answer questions Participants and Beneficiaries may have
relating to the Plan and their benefits;
(7) To review and decide on claims for benefits under the Plan;
(8) To retain the services of other persons, including Investment
Managers, attorneys, consultants, advisers and others, to assist in the
administration of the plan;
(9) To correct any defect or error in the administration of the
Plan;
(10) To establish a "funding policy and method" for the Plan for
purposes of ensuring the Plan is satisfying its financial objectives and is
able to meet its liquidity needs; and
(11) To suspend contributions, including Section 401(k) Deferrals
and/or Employee After-Tax Contributions, on behalf of any or all Highly
Compensated Employees, if the Plan Administrator reasonably believes that such
contributions will cause the Plan to discriminate in favor of Highly
Compensated Employees. See Sections 17.2(e) and 17.3(e).
11.3 Employer Responsibilities. The Employer will provide in a timely manner
all appropriate information necessary for the Plan Administrator to perform
its duties. This information includes, but is not limited to, Participant
compensation data, Employee employment, service and termination information,
and other information the Plan Administrator may require. The Plan
Administrator may rely on the accuracy of any information and data provided by
the Employer.
The Employer will provide to the Trustee written notification of the
appointment of any person or persons as Plan Administrator, Investment
Manager, or other Plan fiduciary, and the names, titles and authorities of any
individuals who are authorized to act on behalf of such persons. The Trustee
shall be entitled to rely upon such information until it receives written
notice of a change in such appointments or authorizations.
11.4 Plan Administration Expenses. All reasonable expenses related to plan
administration will be paid from Plan assets, except to the extent the
expenses are paid (or reimbursed) by the Employer. For this purpose, Plan
expenses include all reasonable costs, charges and expenses incurred by the
Trustee in connection with the administration of the Trust (including such
reasonable compensation to the Trustee as may be agreed upon from time to time
between the Employer or Plan Administrator and the Trustee and any fees for
legal services rendered to the Trustee). All reasonable additional
administrative expenses incurred to effect investment elections made by
Participants and Beneficiaries under Section 13.5(c) shall be paid from the
Trust and, as elected by the Plan Administrator, shall either be charged (in
accordance with such reasonable nondiscriminatory rules as the Plan
Administrator deems appropriate under the circumstances) to the Account of the
individual making such election or treated as a general expense of the Trust.
All transaction-related expenses incurred to effect a specific investment for
an individually-directed Account (such as brokerage commissions and other
transfer expenses) shall, as elected by the Plan Administrator, either be paid
from or otherwise charged directly to the Account of the individual providing
such direction or treated as a general Trust expense. In addition, unless
specifically prohibited under statute, regulation or other guidance of general
applicability, the Plan Administrator may charge to the Account of an
individual Participant a reasonable charge to offset the cost of making a
distribution to the Participant, Beneficiary, or Alternate Payee. If liquid
assets of the Trust are insufficient to cover the fees of the Trustee or the
Plan Administrator, then Trust assets shall be liquidated to the extent
necessary for such fees. In the event any part of the Trust becomes subject to
tax, all taxes incurred will be paid from the Trust.
11.5 Qualified Domestic Relations Orders (QDROs).
(a) In general. The Plan Administrator must develop written procedures
for determining whether a domestic relations order is a QDRO and for
administering distributions under a QDRO. For this purpose, the Plan
Administrator may use the default QDRO procedures set forth in subsection (h)
below or may develop separate QDRO procedures.
(b) Qualified Domestic Relations Order (QDRO). A QDRO is a domestic
relations order that creates or recognizes the existence of an Alternate
Payee's right to receive, or assigns to an Alternate Payee the right to
receive, all or a portion of the benefits payable with respect to a
Participant under the Plan. (See Code Section414(p).) The QDRO must contain
certain information and meet other requirements described in this Section
11.5.
(c) Recognition as a QDRO. To be recognized as a QDRO, an order must be a
"domestic relations order" that relates to the provision of child support,
alimony payments, or marital property rights for the benefit of an Alternate
Payee. The Plan Administrator is not required to determine whether the court
or agency issuing the domestic relations order had jurisdiction to issue an
order, whether state law is correctly applied in the order, whether service
was properly made on the parties, or whether an individual identified in an
order as an Alternate Payee is a proper Alternate Payee under state law.
(1) Domestic relations order. A domestic relations order is a
judgment, decree, or order (including the approval of a property settlement)
that is made pursuant to state domestic relations law (including community
property law).
(2) Alternate Payee. An Alternate Payee must be a spouse, former
spouse, child, or other dependent of a Participant.
(d) Contents of QDRO. A QDRO must contain the following information:
(1) the name and last known mailing address of the Participant and
each Alternate Payee;
(2) the name of each plan to which the order applies;
(3) the dollar amount or percentage (or the method of determining
the amount or percentage) of the benefit to be paid to the Alternate Payee;
and
(4) the number of payments or time period to which the order
applies.
(e) Impermissible QDRO provisions.
(1) The order must not require the Plan to provide an Alternate
Payee or Participant with any type or form of benefit, or any option, not
otherwise provided under the Plan;
(2) The order must not require the Plan to provide for increased
benefits (determined on the basis of actuarial value);
(3) The order must not require the Plan to pay benefits to an
Alternate Payee that are required to be paid to another Alternate Payee under
another order previously determined to be a QDRO; and
(4) The order must not require the Plan to pay benefits to an
Alternate Payee in the form of a Qualified Joint and Survivor Annuity for the
lives of the Alternate Payee and his or her subsequent spouse.
(f) Immediate distribution to Alternate Payee. Even if a Participant is
not eligible to receive an immediate distribution from the Plan, an Alternate
Payee may receive a QDRO benefit immediately in a lump sum, provided such
distribution is consistent with the QDRO provisions.
(g) No fee for QDRO determination. The Plan Administrator shall not
condition the making of a QDRO determination on the payment of a fee by a
Participant or an Alternate Payee (either directly or as a charge against the
Participant's Account).
(h) Default QDRO procedure. If the Plan Administrator chooses this
default QDRO procedure or
if the Plan Administrator does not establish a separate QDRO procedure, this
Section 11.5(h) will apply as the procedure the Plan Administrator will use to
determine whether a domestic relations order is a QDRO. This default QDRO
procedure incorporates the requirements set forth under Sections 11.5(a)
through (g).
(1) Access to information. The Plan Administrator will provide
access to Plan and Participant benefit information sufficient for a
prospective Alternate Payee to prepare a QDRO. Such information might include
the summary plan description, other relevant plan documents, and a statement
of the Participant's benefit entitlements. The disclosure of this information
is conditioned on the prospective Alternate Payee providing to the Plan
Administrator information sufficient to reasonably establish that the
disclosure request is being made in connection with a domestic relations
order.
(2) Notifications to Participant and Alternate Payee. The Plan
Administrator will promptly notify the affected Participant and each Alternate
Payee named in the domestic relations order of the receipt of the order. The
Plan Administrator will send the notification to the address included in the
domestic relations order. Along with the notification, the Plan Administrator
will provide a copy of the Plan's procedures for determining whether a
domestic relations order is a QDRO.
(3) Alternate Payee representative. The prospective Alternate Payee
may designate a representative to receive copies of notices and Plan
information that are sent to the Alternate Payee with respect to the domestic
relations order.
(4) Evaluation of domestic relations order. Within a reasonable
period of time, the Plan Administrator will evaluate the domestic relations
order to determine whether it is a QDRO. A reasonable period will depend on
the specific circumstances. The domestic relations order must contain the
information described in Section 11.5(c). If the order is only deficient in a
minor respect, the Plan Administrator may supplement information in the order
from information within the Plan Administrator's control or through
communication with the prospective Alternate Payee.
(i) Separate accounting. Upon receipt of a domestic relations
order, the Plan Administrator will separately account for and preserve the
amounts that would be payable to an Alternate Payee until a determination is
made with respect to the status of the order. During the period in which the
status of the order is being determined, the Plan Administrator will take
whatever steps are necessary to ensure that amounts that would be payable to
the Alternate Payee, if the order were a QDRO, are not distributed to the
Participant or any other person. The separate accounting requirement may be
satisfied, at the Plan Administrator's discretion, by a segregation of the
assets that are subject to separate accounting.
(ii) Separate accounting until the end of "18 month period."
The Plan Administrator will continue to separately account for amounts that
are payable under the QDRO until the end of an "18-month period." The
"18-month period" will begin on the first date following the Plan's receipt of
the order upon which a payment would be required to be made to an Alternate
Payee under the order. If, within the "18-month period," the Plan
Administrator determines that the order is a QDRO, the Plan Administrator must
pay the Alternate Payee in accordance with the terms of the QDRO. If, however,
the Plan Administrator determines within the "18-month period" that the order
is not a QDRO, or if the status of the order is not resolved by the end of the
"18-month period," the Plan Administrator may pay out the amounts otherwise
payable under the order to the person or persons who would have been entitled
to such amounts if there had been no order. If the order is later determined
to be a QDRO, the order will apply only prospectively; that is, the Alternate
Payee will be entitled only to amounts payable under the order after the
subsequent determination.
(iii) Preliminary review. The Plan Administrator will perform a
preliminary review of the domestic relations order to determine if it is a
QDRO. If this preliminary review indicates the order is deficient in some
manner, the Plan Administrator will allow the parties to attempt to correct
any deficiency before issuing a final decision on the domestic relations
order. The ability to correct is limited to a reasonable period of time.
(iv) Notification of determination. The Plan Administrator will
notify in writing the Participant and each Alternate Payee of the Plan
Administrator's decision as to whether a domestic relations order is a QDRO.
In the case of a determination that an order is not a QDRO, the written notice
will contain the following information:
(A) references to the Plan provisions on which the Plan
Administrator based its decision;
(B) an explanation of any time limits that apply to rights
available to the parties under the Plan (such as the duration of any
protective actions the Plan Administrator will take); and
(C) a description of any additional material, information,
or modifications necessary for the order to be a QDRO and an explanation of
why such material, information, or modifications are necessary.
(v) Treatment of Alternate Payee. If an order is accepted as a
QDRO, the Plan Administrator will act in accordance with the terms of the QDRO
as if it were a part of the Plan. An Alternate Payee will be considered a
Beneficiary under the Plan and be afforded the same rights as a Beneficiary.
The Plan Administrator will provide any appropriate disclosure information
relating to the Plan to the Alternate Payee.
11.6 Claims Procedure. Unless the Plan uses the default claims procedure
under subsection (e) below, the Plan Administrator shall establish a procedure
for benefit claims consistent with the requirements of ERISA Reg.
Section2560.503-1. The Plan Administrator is authorized to conduct an
examination of the relevant facts to determine the merits of a Participant's
or Beneficiary's claim for Plan benefits. The claims procedure must
incorporate the following guidelines:
(a) Filing a claim. The claims procedure will set forth a reasonable
means for a Participant or Beneficiary to file a claim for benefits under the
Plan.
(b) Notification of Plan Administrator's decision. The Plan Administrator
must provide a claimant with written notification of the Plan Administrator's
decision relating to a claim within a reasonable period of time (not more than
90 days unless special circumstances require an extension to process the
claim) after the claim was filed. If the claim is denied, the notification
must set forth the reasons for the denial, specific reference to pertinent
Plan provisions on which the denial is based, a description of any additional
information necessary for the claimant to perfect the claim, and the steps the
claimant must take to submit the claim for review.
(c) Review procedure. The claims procedure will provide a claimant a
reasonable opportunity to have a full and fair review of a denied claim. Such
procedure shall allow a review upon a written application, for the claimant to
review pertinent documents, and to allow the claimant to submit written
comments to the Plan Administrator. The procedure may establish a limited
period (not less than 60 days after the claimant receives written notification
of the denial of the claim) for the claimant to request a review of the claim
denial.
(d) Decision on review. If a claimant requests a review, the Plan
Administrator must respond promptly to the request. Unless special
circumstances exist (such as the need for a hearing), the Plan Administrator
must respond in writing within 60 days of the date the claimant submitted the
review application. The response must explain the Plan Administrator's
decision on review.
(e) Default claims procedure. If the Plan Administrator chooses this
default claims procedure or if the Plan Administrator does not establish a
separate claims procedure, the following will apply.
(1) A person may submit to the Plan Administrator a written claim
for benefits under the Plan. The claim shall be submitted on a form provided
by the Plan Administrator.
(2) The Plan Administrator will evaluate the claim to determine if
benefits are payable to the Participant or Beneficiary under the terms of the
Plan. The Plan Administrator may solicit additional information from the
claimant if necessary to evaluate the claim.
(3) If the Plan Administrator determines the claim is valid, the
Participant or Beneficiary will receive in writing from the Plan Administrator
a statement describing the amount of benefit, the method or methods of
payment, the timing of distributions and other information relevant to the
payment of the benefit.
(4) If the Plan Administrator denies all or any portion of the
claim, the claimant will
receive, within 90 days after receipt of the claim form, a written explanation
setting forth the reasons for the denial, specific reference to pertinent Plan
provisions on which the denial is based, a description of any additional
information necessary for the claimant to perfect the claim, and the steps the
claimant must take to submit the claim for review.
(5) The claimant has 60 days from the date the claimant received the
denial of claim to appeal the adverse decision of the Plan Administrator. The
claimant may review pertinent documents and submit written comments to the
Plan Administrator. The Plan Administrator will submit all relevant
documentation to the Employer. The Employer may hold a hearing or seek
additional information from the claimant and the Plan Administrator.
(6) Within 60 days (or such longer period due to the circumstances)
of the request for review, the Employer will render a written decision on the
claimant's appeal. The Employer shall explain the decision, in terms that are
understandable to the claimant and by specific references to the Plan document
provisions.
11.7 Operational Rules for Short Plan Years. The following operational rules
apply if the Plan has a Short Plan Year. A Short Plan Year is any Plan Year
that is less than a 12-month period, either because of the amendment of the
Plan Year, or because the Effective Date of a new Plan is less than 12 months
prior to the end of the first Plan Year.
(a) If the Plan is amended to create a Short Plan Year, and an
Eligibility Computation Period or Vesting Computation Period is based on the
Plan Year, the applicable computation period begins on the first day of the
Short Plan Year, but such period ends on the day which is 12 months from the
first day of such Short Plan Year. Thus, the computation period that begins on
the first day of the Short Plan Year overlaps with the computation period that
starts on the first day of the next Plan Year. This rule applies only to an
Employee who has at least one Hour of Service during the Short Plan Year.
If a Plan has an initial Short Plan Year, the rule in the above paragraph
applies only for purposes of determining an Employee's Vesting Computation
Period and only if the Employer elects under Part 6, #20.a. of the Agreement
[Part 6, #38.a. of the 401(k) Agreement] to exclude service earned prior to
the adoption of the Plan. For eligibility and vesting (where service prior to
the adoption of the Plan is not ignored), if the Eligibility Computation
Period or Vesting Computation Period is based on the Plan Year, the applicable
computation period will be determined on the basis of the Plan's normal Plan
Year, without regard to the initial short Plan Year.
(b) If Employer Contributions are allocated for a Short Plan Year, any
allocation condition under Part 4 of the Agreement that requires an Eligible
Participant to complete a specified number of Hours of Service to receive an
allocation of such Employer Contributions will not be prorated as a result of
such Short Plan Year unless otherwise specified in Part 4 of the Agreement.
(c) If the Permitted Disparity Method is used to allocate any Employer
Contributions made for a Short Plan Year, the Integration Level will be
prorated to reflect the number of months (or partial months) included in the
Short Plan Year.
(d) The Compensation Dollar Limitation, as defined in Section 22.32, will
be prorated to reflect the number of months (or partial months) included in
the Short Plan Year unless the compensation used for such Short Plan Year is a
period of 12 months.
In all other respects, the Plan shall be operated for the Short Plan Year in
the same manner as for a 12-month Plan Year, unless the context requires
otherwise. If the terms of the Plan are ambiguous with respect to the
operation of the Plan for a Short Plan Year, the Plan Administrator has the
authority to make a final determination on the proper interpretation of the
Plan.
11.8 Operational Rules for Related Employer Groups. If an Employer has one
or more Related Employers, the Employer and such Related Employer(s)
constitute a Related Employer group. In such case, the following rules apply
to the operation of the Plan.
(a) If the term "Employer" is used in the context of administrative
functions necessary to the operation, establishment, maintenance, or
termination of the Plan, only the Employer executing the Signature Page of the
Agreement, and any Co-Sponsor of the Plan, is treated as the Employer.
(b) Hours of Service are determined by treating all members of the
Related Employer group as the Employer.
(c) The term Excluded Employee is determined by treating all members of
the Related Employer group as the Employer, except as specifically provided in
the Plan.
(d) Compensation is determined by treating all members of the Related
Employer group as the Employer, except as specifically provided in the Plan.
(e) An Employee is not treated as separated from service or terminated
from employment if the Employee is employed by any member of the Related
Employer group.
(f) The Annual Additions Limitation described in Article 7 and the
Top-Heavy Plan rules described in Article 16 are applied by treating all
members of the Related Employer group as the Employer.
In all other contexts, the term "Employer" generally means a reference to all
members of the Related Employer group, unless the context requires otherwise.
If the terms of the Plan are ambiguous with respect to the treatment of the
Related Employer group as the Employer, the Plan Administrator has the
authority to make a final determination on the proper interpretation of the
Plan.
ARTICLE 12 TRUST PROVISIONS
This Article sets forth the creation of the Plan's Trust (or, in the case of
an amendment of the Plan, the amended terms of the Trust) and the duties and
responsibilities of the Trustee under the Plan. By executing the Trustee
Declaration under the Agreement, the Trustee agrees to be bound by the duties,
responsibilities and liabilities imposed on the Trustee under the Plan and to
act in accordance with the terms of this Plan. The Employer may act as Trustee
under the Plan by executing the Trustee Declaration.
12.1 Creation of Trust. By adopting this Plan, the Employer creates a Trust
to hold the assets of the Plan (or, in the event that this Plan document
represents an amendment of the Plan, the Employer hereby amends the terms of
the Trust maintained in connection with the Plan). The Trustee is the owner of
the Plan assets held by the Trust. The Trustee is to hold the Plan assets for
the exclusive benefit of Plan Participants and Beneficiaries. Plan
Participants and Beneficiaries do not have ownership interests in the assets
held by the Trust.
12.2 Trustee. The Trustee identified in the Trustee Declaration under the
Agreement shall act either as a Discretionary Trustee or as a Directed
Trustee, as identified under the Agreement.
(a) Discretionary Trustee. A Trustee is a Discretionary Trustee to the
extent the Trustee has exclusive authority and discretion with respect to the
investment, management or control of Plan assets. Notwithstanding a Trustee's
designation as a Discretionary Trustee, a Trustee's discretion is limited, and
the Trustee shall be considered a Directed Trustee, to the extent the Trustee
is subject to the direction of the Plan Administrator, the Employer, a
properly appointed Investment Manager, or a Named Fiduciary under an agreement
between the Plan Administrator and the Trustee. A Trustee also is considered a
Directed Trustee to the extent the Trustee is subject to investment direction
of Plan Participants. (See Section 13.5(c) for a discussion of the Trustee's
responsibilities with regard to Participant-directed investments.)
(b) Directed Trustee. A Trustee is a Directed Trustee with respect to the
investment of Plan assets to the extent the Trustee is subject to the
direction of the Plan Administrator, the Employer, a properly appointed
Investment Manager, a Named Fiduciary, or Plan Participant. To the extent the
Trustee is a Directed Trustee, the Trustee does not have any discretionary
authority with respect to the investment of Plan assets. In addition, the
Trustee is not responsible for the propriety of any directed investment made
pursuant to this Section and shall not be required to consult or advise the
Employer regarding the investment quality of any directed investment held
under the Plan.
The Trustee shall be advised in writing regarding the retention of investment
powers by the Employer or the appointment of an Investment Manager or other
Named Fiduciary with power to direct the investment of Plan assets. Any such
delegation of investment powers will remain in force until such delegation is
revoked or amended in writing. The Employer is deemed to have retained
investment powers under this subsection to the extent the Employer directs the
investment of Participant Accounts for which affirmative investment direction
has not been received pursuant to Section 13.5(c).
The Employer is a Named Fiduciary for investment purposes if the Employer
directs investments pursuant to this subsection. Any investment direction
shall be made in writing by the Employer, Investment Manager, or Named
Fiduciary, as applicable. A Directed Trustee must act solely in accordance
with the direction of the Plan Administrator, the Employer, any employees or
agents of the Employer, a properly appointed Investment Manager or other
fiduciary of the Plan, a Named Fiduciary, or Plan Participants. (See Section
13.5(c) for a discussion of the Trustee's responsibilities with regard to
Participant directed investments.)
The Employer may direct the Trustee to invest in any media in which the
Trustee may invest, as described in Section 12.4. However, the Employer may
not borrow from the Trust or pledge any of the assets of the Trust as security
for a loan to itself; buy property or assets from or sell property or assets
to the Trust; charge any fee for services rendered to the Trust; or receive
any services from the Trust on a preferential basis.
12.3 Trustee's Responsibilities Regarding Administration of Trust. This
Section outlines the Trustee's powers, rights and duties under the Plan with
respect to the administration of the investments held in the Plan. The
Trustee's administrative duties are limited to those described in this Section
12.3; the Employer is responsible for any other administrative duties required
under the Plan or by applicable law.
(a) The Trustee will receive all contributions made under the terms of
the Plan. The Trustee is not obligated in any manner to ensure that such
contributions are correct in amount or that such contributions comply with the
terms of the Plan, the Code or ERISA. In addition, the Trustee is under no
obligation to request that the Employer make contributions to the Plan. The
Trustee is not liable for the manner in which such amounts are deposited or
the allocation between Participant's Accounts, to the extent the Trustee
follows the written direction of the Plan Administrator or Employer.
(b) The Trustee will make distributions from the Trust in accordance with
the written directions of the Plan Administrator or other authorized
representative. To the extent the Trustee follows such written direction, the
Trustee is not obligated in any manner to ensure a distribution complies with
the terms of the Plan, that a Participant or Beneficiary is entitled to such a
distribution, or that the amount distributed is proper under the terms of the
Plan. If there is a dispute as to a payment from the Trust, the Trustee may
decline to make payment of such amounts until the proper payment of such
amounts is determined by a court of competent jurisdiction, or the Trustee has
been indemnified to its satisfaction.
(c) The Trustee may employ agents, attorneys, accountants and other third
parties to provide counsel on behalf of the Plan, where the Trustee deems
advisable. The Trustee may reimburse such persons from the Trust for
reasonable expenses and compensation incurred as a result of such employment.
The Trustee shall not be liable for the actions of such persons, provided the
Trustee acted prudently in the employment and retention of such persons. In
addition, the Trustee will not be liable for any actions taken as a result of
good faith reliance on the advice of such persons.
12.4 Trustee's Responsibility Regarding Investment of Plan Assets. In
addition to the powers, rights and duties enumerated under this Section, the
Trustee has whatever powers are necessary to carry out its duties in a prudent
manner. The Trustee's powers, rights and duties may be supplemented or limited
by a separate trust agreement, investment policy, funding agreement, or other
binding document entered into between the Trustee and the Plan Administrator
which designates the Trustee's responsibilities with respect to the Plan. A
separate trust agreement must be consistent with the terms of this Plan and
must comply with all qualification requirements under the Code and
regulations. To the extent the exercise of any power, right or duty is subject
to discretion, such exercise by a Directed Trustee must be made at the
direction of the Plan Administrator, the Employer, an Investment Manager, a
Named Fiduciary, or Plan Participant.
(a) The Trustee shall be responsible for the safekeeping of the assets of
the Trust in accordance with the provisions of this Plan.
(b) The Trustee may invest, manage and control the Plan assets in a
manner that is consistent with the Plan's funding policy and investment
objectives. The Trustee may invest in any investment, as authorized under
Section 13.5, which the Trustee deems advisable and prudent, subject to the
proper written direction of the Plan Administrator, the Employer, a properly
appointed Investment Manager, a Named Fiduciary or a Plan Participant. The
Trustee is not liable for the investment of Plan assets to the extent the
Trustee is following the proper direction of the Plan Administrator, the
Employer, a Participant,
an Investment Manager, or other person or persons duly appointed by the
Employer to provide investment direction. In addition, the Trustee does not
guarantee the Trust in any manner against investment loss or depreciation in
asset value, or guarantee the adequacy of the Trust to meet and discharge any
or all liabilities of the Plan.
(c) The Trustee may retain such portion of the Plan assets in cash or
cash balances as the Trustee may, from time to time, deem to be in the best
interests of the Plan, without liability for interest thereon.
(d) The Trustee may collect and receive any and all moneys and other
property due the Plan and to settle, compromise, or submit to arbitration any
claims, debts, or damages with respect to the Plan, and to commence or defend
on behalf of the Plan any lawsuit, or other legal or administrative
proceedings.
(e) The Trustee may hold any securities or other property in the name of
the Trustee or in the name of the Trustee's nominee, and may hold any
investments in bearer form, provided the books and records of the Trustee at
all times show such investment to be part of the Trust.
(f) The Trustee may exercise any of the powers of an individual owner
with respect to stocks, bonds, securities or other property, including the
right to vote upon such stocks, bonds or securities; to give general or
special proxies or powers of attorney; to exercise or sell any conversion
privileges, subscription rights, or other options; to participate in corporate
reorganizations, mergers, consolidations, or other changes affecting corporate
securities (including those in which it or its affiliates are interested as
Trustee); and to make any incidental payments in connection with such stocks,
bonds, securities or other property. Unless specifically agreed upon in
writing between the Trustee and the Employer, the Trustee shall not have the
power or responsibility to vote proxies with respect to any securities of the
Employer or a Related Employer or with respect to any Plan assets that are
subject to the investment direction of the Employer or for which the power to
manage, acquire, or dispose of such Plan assets has been delegated by the
Employer to one or more Investment Managers or Named Fiduciaries in accordance
with ERISA Section403. With respect to the voting of Employer securities, or
in the event of any tender or other offer with respect to shares of Employer
securities held in the Trust, the Trustee will follow the direction of the
Employer or other responsible fiduciary or, to the extent voting and similar
rights have been passed through to Participants, of each Participant with
respect to shares allocated to his/her Account.
(g) The Trustee may borrow or raise money on behalf of the Plan in such
amount, and upon such terms and conditions, as the Trustee deems advisable.
The Trustee may issue a promissory note as Trustee to secure the repayment of
such amounts and may pledge all, or any part, of the Trust as security.
(h) The Trustee, upon the written direction of the Plan Administrator, is
authorized to enter into a transfer agreement with the Trustee of another
qualified retirement plan and to accept a transfer of assets from such
retirement plan on behalf of any Employee of the Employer. The Trustee is also
authorized, upon the written direction of the Plan Administrator, to transfer
some or all of a Participant's vested Account Balance to another qualified
retirement plan on behalf of such Participant. A transfer agreement entered
into by the Trustee does not affect the Plan's status as a Prototype Plan.
(i) The Trustee is authorized to execute, acknowledge and deliver all
documents of transfer and conveyance, receipts, releases, and any other
instruments that the Trustee deems necessary or appropriate to carry out its
powers, rights and duties hereunder.
(j) If the Employer maintains more than one Plan, the assets of such
Plans may be commingled for investment purposes. The Trustee must separately
account for the assets of each Plan. A commingling of assets, as described in
this paragraph, does not cause the Trusts maintained with respect to the
Employer's Plans to be treated as a single Trust, except as provided in a
separate document authorized in the first paragraph of this Section 12.4.
(k) The Trustee is authorized to invest Plan assets in a
common/collective trust fund, or in a group trust fund that satisfies the
requirements of IRS Revenue Ruling 81-100. All of the terms and provisions of
any such common/collective trust fund or group trust into which Plan assets
are invested are incorporated by reference into the provisions of the Trust
for this Plan.
(l) If the Trustee is a bank or similar financial institution, the
Trustee is authorized to invest in any type of deposit of the Trustee
(including its own money market fund) at a reasonable rate of interest.
(m) The Trustee must be bonded as required by applicable law. The bonding
requirements shall not apply to a bank, insurance company, or similar
financial institution that satisfies the requirements of Section412(a)(2) of
ERISA.
12.5 More than One Person as Trustee. If the Plan has more than one person
acting as Trustee, the Trustees may allocate the Trustee responsibilities by
mutual agreement and Trustee decisions will be made by a majority vote (unless
otherwise agreed to by the Trustees) or as otherwise provided in a separate
trust agreement or other binding document.
12.6 Annual Valuation. The Plan assets will be valued at least on an annual
basis. The Employer may designate more frequent valuation dates under Part 12,
#45.b.(2) of the Agreement [Part 12, #63.b.(2) of the 401(k) Agreement].
Notwithstanding any election under Part 12, #45.b.(2) of the Agreement [Part
12, #63.b.(2) of the 401(k) Agreement], the Trustee and Plan Administrator may
agree to value the Trust on a more frequent basis, and/or to perform an
interim valuation of the Trust pursuant to Section 13.2(a).
12.7 Reporting to Plan Administrator and Employer. Within ninety (90) days
following the end of each Plan Year, and within ninety (90) days following its
removal or resignation, the Trustee will file with the Employer an accounting
of its administration of the Trust from the date of its last accounting. The
accounting will include a statement of cash receipts, disbursements and other
transactions effected by the Trustee since the date of its last accounting,
and such further information as the Trustee and/or Employer deems appropriate.
Upon receipt of such information, the Employer must promptly notify the
Trustee of its approval or disapproval of the information. If the Employer
does not provide a written disapproval within ninety (90) days following the
receipt of the information, including a written description of the items in
question, the Trustee is forever released and discharged from any liability
with respect to all matters reflected in such information. The Trustee shall
have sixty (60) days following its receipt of a written disapproval from the
Employer to provide the Employer with a written explanation of the terms in
question. If the Employer again disapproves of the accounting, the Trustee may
file its accounting with a court of competent jurisdiction for audit and
adjudication.
All assets contained in the Trust accounting will be shown at their fair
market value as of the end of the Plan Year or as of the date of resignation
or removal. The value of marketable investments shall be determined using the
most recent price quoted on a national securities exchange or over-the-counter
market. The value of non-marketable securities shall, except as provided
otherwise herein, be determined in the sole judgment of the Trustee, which
determination shall be binding and conclusive. The value of investments in
securities or obligations of the Employer in which there is no market will be
determined by an independent appraiser at least once annually and the Trustee
shall have no responsibility with respect to the valuation of such assets.
12.8 Reasonable Compensation. The Trustee shall be paid reasonable
compensation in an amount agreed upon by the Plan Administrator and Trustee.
The Trustee also will be reimbursed for any reasonable expenses or fees
incurred in its function as Trustee. An individual Trustee who is already
receiving full-time pay as an Employee of the Employer may not receive any
additional compensation for services as Trustee. The Plan will pay the
reasonable compensation and expenses incurred by the Trustee, pursuant to
Section 11.4, unless the Employer pays such compensation and expenses. Any
compensation or expense paid directly by the Employer to the Trustee is not an
Employer Contribution to the Plan.
12.9 Resignation and Removal of Trustee. The Trustee may resign at any time
by delivering to the Employer a written notice of resignation at least thirty
(30) days prior to the effective date of such resignation, unless the Employer
consents in writing to a shorter notice period. The Employer may remove the
Trustee at any time, with or without cause, by delivering written notice to
the Trustee at least 30 days prior to the effective date of such removal. The
Employer may remove the Trustee upon a shorter written notice period if the
Employer reasonably determines such shorter period is necessary to protect
Plan assets. Upon the resignation, removal, death or incapacity of a Trustee,
the Employer may appoint a successor Trustee which, upon accepting such
appointment, will have all the powers, rights and duties conferred upon the
preceding Trustee. In the event there is a period of time following the
effective date of a Trustee's removal or resignation before a successor
Trustee is appointed, the Employer is deemed to be the Trustee. During such
period, the Trust continues to be in existence and legally enforceable, and
the assets of the Plan shall continue to be protected by the provisions of the
Trust.
12.10 Indemnification of Trustee. Except to the extent that it is judicially
determined that the Trustee has acted with gross negligence or willful
misconduct, the Employer shall indemnify the Trustee (whether or not the
Trustee has resigned or been removed) against any liabilities, losses,
damages, and expenses, including attorney, accountant, and other advisory
fees, incurred as a result of:
(a) any action of the Trustee taken in good faith in accordance with any
information, instruction, direction, or opinion given to the Trustee by the
Employer, the Plan Administrator, Investment Manager, Named Fiduciary or legal
counsel of the Employer, or any person or entity appointed by any of them and
authorized to give any information, instruction, direction, or opinion to the
Trustee;
(b) the failure of the Employer, the Plan Administrator, Investment
Manager, Named Fiduciary or any person or entity appointed by any of them to
make timely disclosure to the Trustee of information which any of them or any
appointee knows or should know if it acted in a reasonably prudent manner; or
(c) any breach of fiduciary duty by the Employer, the Plan Administrator,
Investment Manager, Named Fiduciary or any person or entity appointed by any
of them, other than such a breach which is caused by any failure of the
Trustee to perform its duties under this Trust.
The duties and obligations of the Trustee shall be limited to those expressly
imposed upon it by this instrument or subsequently agreed upon by the parties.
Responsibility for administrative duties required under the Plan or applicable
law not expressly imposed upon or agreed to by the Trustee shall rest solely
with the Employer.
The Employer agrees that the Trustee shall have no liability with regard to
the investment or management of illiquid Plan assets transferred from a prior
Trustee, and shall have no responsibility for investments made before the
transfer of Plan assets to it, or for the viability or prudence of any
investment made by a prior Trustee, including those represented by assets now
transferred to the custody of the Trustee, or for any dealings whatsoever with
respect to Plan assets before the transfer of such assets to the Trustee. The
Employer shall indemnify and hold the Trustee harmless for any and all claims,
actions or causes of action for loss or damage, or any liability whatsoever
relating to the assets of the Plan transferred to the Trustee by any prior
Trustee of the Plan, including any liability arising out of or related to any
act or event, including prohibited transactions, occurring prior to the date
the Trustee accepts such assets, including all claims, actions, causes of
action, loss, damage, or any liability whatsoever arising out of or related to
that act or event, although that claim, action, cause of action, loss, damage,
or liability may not be asserted, may not have accrued, or may not have been
made known until after the date the Trustee accepts the Plan assets. Such
indemnification shall extend to all applicable periods, including periods for
which the Plan is retroactively restated to comply with any tax law or
regulation.
12.11 Appointment of Custodian. The Plan Administrator may appoint a
Custodian to hold all or any portion of the Plan assets. A Custodian has the
same powers, rights and duties as a Directed Trustee. The Custodian will be
protected from any liability with respect to actions taken pursuant to the
direction of the Trustee, Plan Administrator, the Employer, an Investment
Manager, a Named Fiduciary or other third party with authority to provide
direction to the Custodian.
ARTICLE 13 PLAN ACCOUNTING AND INVESTMENTS
This Article contains the procedures for valuing Participant Accounts and
allocating net income and loss to such Accounts. Part 12 of the Agreement
permits the Employer to document its administrative procedures with respect to
the valuation of Participant Accounts. Alternatively, the Plan Administrator
may adopt separate investment procedures regarding the valuation and
investment of Participant Accounts.
13.1 Participant Accounts. The Plan Administrator will establish and
maintain a separate Account for each Participant to reflect the Participant's
entire interest under the Plan. To the extent applicable, the Plan
Administrator may establish and maintain for a Participant any (or all) of the
following separate sub-Accounts: Employer Contribution Account, Section 401(k)
Deferral Account, Employer Matching Contribution Account, QMAC Account, QNEC
Account, Employee After-Tax Contribution Account, Safe Harbor Matching
Contribution Account, Safe Harbor Nonelective Contribution Account, Rollover
Contribution Account, and Transfer Account. The Plan Administrator also may
establish and maintain other sub-Accounts as it deems appropriate.
13.2 Value of Participant Accounts. The value of a Participant's Account
consists of the fair market
value of the Participant's share of the Trust assets. A Participant's share of
the Trust assets is determined as of each Valuation Date under the Plan.
(a) Periodic valuation. The Trustee must value Plan assets at least
annually. The Employer may elect under Part 12, #45.b.(2) of the Agreement
[Part 12, #63.b.(2) of the 401(k) Agreement] or may elect operationally to
value assets more frequently than annually. The Plan Administrator may request
the Trustee to perform interim valuations, provided such valuations do not
result in discrimination in favor of Highly Compensated Employees.
(b) Daily valuation. If the Employer elects daily valuation under Part
12, #44 of the Agreement [Part 12, #62 of the 401(k) Agreement] or, if in
operation, the Employer elects to have the Plan daily valued, the Plan
Administrator may adopt reasonable procedures for performing such valuations.
Unless otherwise set forth in the written procedures, a daily valued Plan will
have its assets valued at the end of each business day during which the New
York Stock Exchange is open. The Plan Administrator has authority to interpret
the provisions of this Plan in the context of a daily valuation procedure.
This includes, but is not limited to, the determination of the value of the
Participant's Account for purposes of Participant loans, distribution and
consent rights, and corrective distributions under Article 17.
13.3 Adjustments to Participant Accounts. As of each Valuation Date under
the Plan, each Participant's Account is adjusted in the following manner.
(a) Distributions and forfeitures from a Participant's Account. A
Participant's Account will be reduced by any distributions and forfeitures
from the Account since the previous Valuation Date.
(b) Life insurance premiums and dividends. A Participant's Account will
be reduced by the amount of any life insurance premium payments made for the
benefit of the Participant since the previous Valuation Date. The Account will
be credited with any dividends or credits paid on any life insurance policy
held by the Trust for the benefit of the Participant.
(c) Contributions and forfeitures allocated to a Participant's Account. A
Participant's Account will be credited with any contribution or forfeiture
allocated to the Participant since the previous Valuation Date.
(d) Net income or loss. A Participant's Account will be adjusted for any
net income or loss in accordance with the provisions under Section 13.4.
13.4 Procedures for Determining Net Income or Loss. The Plan Administrator
may establish any reasonable procedures for determining net income or loss
under Section 13.3(d). Such procedures may be reflected in a funding agreement
governing the applicable investments under the Plan.
(a) Net income or loss attributable to General Trust Account. To the
extent a Participant's Account is invested as part of a General Trust Account,
such Account is adjusted for its allocable share of net income or loss
experienced by the General Trust Account using the Balance Forward Method.
Under the Balance Forward Method, the net income or loss of the General Trust
Account is allocated to the Participant Accounts that are invested in the
General Trust Account, in the ratio that each Participant's Account bears to
all Accounts, based on the value of each Participant's Account as of the prior
Valuation Date, reduced for the adjustments described in Section 13.3(a) and
13.3(b) above.
(1) Inclusion of certain contributions. In applying the Balance
Forward Method for allocating net income or loss, the Employer may elect under
Part 12, #45.b.(3) of the Agreement [Part 12, #63.b.(3) of the 401(k)
Agreement] or under separate administrative procedures to adjust each
Participant's Account Balance (as of the prior Valuation Date) for the
following contributions made since the prior Valuation Date (the "valuation
period") which were not reflected in the Participant's Account on such prior
Valuation Date: (1) Section 401(k) Deferrals and Employee After-Tax
Contributions that are contributed during the valuation period pursuant to the
Participant's contribution election, (2) Employer Contributions (including
Employer Matching Contributions) that are contributed during the valuation
period and allocated to a Participant's Account during the valuation period,
and (3) Rollover Contributions.
(2) Methods of valuing contributions made during valuation period.
In determining Participants' Account Balances as of the prior Valuation Date,
the Employer may elect to apply a weighted average method that credits each
Participant's Account with a portion of the contributions based on the
portion of the valuation period for which such contributions were invested, or
an adjusted percentage method, that increases each Participant's Account by a
specified percentage of such contributions. The Employer may designate under
Part 12, #45.b.(3)(c) of the Agreement [Part 12, #63.b.(3)(c) of the 401(k)
Agreement] to apply the special allocation rules to only particular types of
contributions or may designate any other reasonable method for allocating net
income and loss under the Plan.
(i) Weighted average method. The Employer may elect under Part
12, #45.b.(3)(a) of the Agreement [Part 12, #63.b.(3)(a) of the 401(k)
Agreement] or under separate administrative procedures to apply a weighted
average method in determining net income or loss. Under the weighted average
method, a Participant's Account Balance as of the prior Valuation Date is
adjusted to take into account a portion of the contributions made during the
valuation period so that the Participant may receive an allocation of net
income or loss for the portion of the valuation period during which such
contributions were invested under the Plan. The amount of the adjustment to a
Participant's Account Balance is determined by multiplying the contributions
made to the Participant's Account during the valuation period by a fraction,
the numerator of which is the number of months during the valuation period
that such contributions were invested under the Plan and the denominator is
the total number of months in the valuation period. The Plan's investment
procedures may designate the specific type(s) of contributions eligible for a
weighted allocation of net income or loss and may designate alternative
methods for determining the weighted allocation, including the use of a
uniform weighting period other than months.
(ii) Adjusted percentage method. The Employer may elect under
Part 12, #45.b.(3)(b) of the Agreement [Part 12, #63.b.(3)(b) of the 401(k)
Agreement] or under separate investment procedures to apply an adjusted
percentage method of allocating net income or loss. Under the adjusted
percentage method, a Participant's Account Balance as of the prior Valuation
Date is increased by a percentage of the contributions made to the
Participant's Account during the valuation period. The Plan's investment
procedures may designate the specific type(s) of contributions eligible for an
adjusted percentage allocation and may designate alternative procedures for
determining the amount of the adjusted percentage allocation.
(b) Net income or loss attributable to a Directed Account. If the
Participant (or Beneficiary) is entitled to direct the investment of all or
part of his/her Account (see Section 13.5(c)), the Account (or the portion of
the Account which is subject to such direction) will be maintained as a
Directed Account, which reflects the value of the directed investments as of
any Valuation Date. The assets held in a Directed Account may be (but are not
required to be) segregated from the other investments held in the Trust. Net
income or loss attributable to the investments made by a Directed Account is
allocated to such Account in a manner that reasonably reflects the investment
experience of such Directed Account. Where a Directed Account reflects
segregated investments, the manner of allocating net income or loss shall not
result in a Participant (or Beneficiary) being entitled to distribution from
the Directed Account that exceeds the value of such Account as of the date of
distribution.
(c) Share or unit accounting. The Plan's investment procedures may
provide for share or unit accounting to reflect the value of Accounts, if such
method is appropriate for the investments allocable to such Accounts.
(d) Suspense accounts. The Plan's investment procedures also may provide
for special valuation procedures for suspense accounts that are properly
established under the Plan.
13.5 Investments under the Plan.
(a) Investment options. The Trustee or other person(s) responsible for
the investment of Plan assets is authorized to invest Plan assets in any
prudent investment consistent with the funding policy of the Plan and the
requirements of ERISA. Investment options include, but are not limited to, the
following: common and preferred stock or other equity securities (including
stock bought and sold on margin); Qualifying Employer Securities and
Qualifying Employer Real Property (to the extent permitted under subsection
(b) below), corporate bonds; open-end or closed-end mutual funds (including
funds for which the Prototype Sponsor, Trustee, or their affiliates serve as
investment advisor or in any other capacity); money market accounts;
certificates of deposit; debentures; commercial paper; put and call options;
limited partnerships; mortgages;
U.S. Government obligations, including U.S. Treasury notes and bonds; real and
personal property having a
ready market; life insurance or annuity policies; commodities; savings
accounts; notes; and securities issued by the Trustee and/or its affiliates,
as permitted by law. Plan assets may also be invested in a common/collective
trust fund, or in a group trust fund that satisfies the requirements of IRS
Revenue Ruling 81-100. All of the terms and provisions of any such
common/collective trust fund or group trust into which Plan assets are
invested are incorporated by reference into the provisions of the Trust for
this Plan. No portion of any voluntary, tax deductible Employee contributions
being held under the Plan (or any earnings thereon) may be invested in life
insurance contracts or, as with any Participant-directed investment, in
tangible personal property characterized by the IRS as a collectible.
(b) Limitations on the investment in Qualifying Employer Securities and
Qualifying Employer Real Property. The Trustee may invest in Qualifying
Employer Securities and Qualifying Employer Real Property up to certain
limits. Any such investment shall only be made upon written direction of the
Employer who shall be solely responsible for the propriety of such investment.
Additional directives regarding the purchase, sale, retention or valuing of
such securities may be addressed in a funding policy, statement of investment
policy, or other separate procedures or documents governing the investment of
Plan assets. In any conflicts between the Plan document and a separate
investment trust agreement, the Plan document shall prevail.
(1) Money purchase plan. In the case of a money purchase plan, no
more than 10% of the fair market value of Plan assets may be invested in
Qualifying Employer Securities and Qualifying Employer Real Property.
(2) Profit sharing plan other than a 401(k) plan. In the case of a
profit sharing plan other than a 401(k) plan, no limit applies to the
percentage of Plan assets invested in Qualifying Employer Securities and
Qualifying Employer Real Property, except as provided in a funding policy,
statement of investment policy, or other separate procedures or documents
governing the investment of Plan assets.
(3) 401(k) plan. For Plan Years beginning after December 31, 1998,
with respect to the portion of the Plan consisting of amounts attributable to
Section 401(k) Deferrals, no more than 10% of the fair market value of Plan
assets attributable to Section 401(k) Deferrals may be invested in Qualifying
Employer Securities and Qualifying Employer Real Property if the Employer, the
Trustee, or a person other than the Participant requires any portion of the
Section 401(k) Deferrals and attributable earnings to be invested in
Qualifying Employer Securities or Qualifying Employer Real Property.
(i) Exceptions to Limitation. The limitation in this subsection
(3) shall not apply if any one of the conditions in subsections (A), (B) or
(C) applies.
(A) Investment of Section 401(k) Deferrals in Qualifying
Employer Securities or Qualifying Real Property is solely at the discretion of
the Participant.
(B) As of the last day of the preceding Plan Year, the
fair market value of assets of all profit sharing plans and 401(k) plans of
the Employer was not more than 10% of the fair market value of all assets
under plans maintained by the Employer.
(C) The portion of a Participant's Section 401(k)
Deferrals required to be invested in Qualifying Employer Securities and
Qualifying Employer Real Property for the Plan Year does not exceed 1% of such
Participant's Included Compensation.
(ii) Plan Years Beginning Prior to January 1, 1999. For Plan
Years beginning before January 1, 1999, the limitations in this subsection (3)
do not apply and a 401(k) plan is treated like any other profit sharing plan.
(iii) No application to other contributions. The limitation in
this subsection (3) has no application to Employer Matching Contributions or
Employer Nonelective Contributions. Instead, the rules under subsection (2)
above apply for such contributions.
(c) Participant direction of investments. If the Plan (by election in
Part 12, #43 of the Agreement [Part 12, #61 of the 401(k) Agreement] or by the
Plan Administrator's administrative election) permits Participant direction of
investments, the Plan Administrator must adopt investment procedures for such
direction. The investment procedures should set forth the permissible
investment options available for Participant direction, the timing and
frequency of investment changes, and any other procedures or
limitations applicable to Participant direction of investment. In no case may
Participants direct that investments be made in collectibles, other than U.S.
Government or State issued gold and silver coins. The investment procedures
adopted by the Plan Administrator are incorporated by reference into the Plan.
If Participant investment direction is limited to specific investment options
(such as designated mutual funds or common or collective trust funds), it
shall be the sole and exclusive responsibility of the Employer or Plan
Administrator to select the investment options, and the Trustee shall not be
responsible for selecting or monitoring such investment options, unless the
Trustee has otherwise agreed in writing.
The Employer may elect under Part 12, #43.b.(1) of the Agreement [Part 12,
#61.b.(1) of the 401(k) Agreement] or under the separate investment procedures
to limit Participant direction of investment to specific types of
contributions. The investment procedures adopted by the Plan Administrator may
(but need not) allow Beneficiaries under the Plan to direct investments. (See
Section 13.4(b) for rules regarding allocation of net income or loss to a
Directed Account.)
If Participant direction of investments is permitted, the Employer will
designate how accounts will be invested in the absence of proper affirmative
direction from the Participant. Except as otherwise provided in this Plan,
neither the Trustee, the Employer, nor any other fiduciary of the Plan will be
liable to the Participant or Beneficiary for any loss resulting from action
taken at the direction of the Participant.
(1) Trustee to follow Participant direction. To the extent the Plan
allows Participant direction of investment, the Trustee is authorized to
follow the Participant's written direction (or other form of direction deemed
acceptable by the Trustee). A Directed Account will be established for the
portion of the Participant's Account that is subject to Participant direction
of investment. The Trustee may decline to follow a Participant's investment
direction to the extent such direction would: (i) result in a prohibited
transaction; (ii) cause the assets of the Plan to be maintained outside the
jurisdiction of the U.S. courts; (iii) jeopardize the Plan's tax
qualification; (iv) be contrary to the Plan's governing documents; (v) cause
the assets to be invested in collectibles within the meaning of Code
Section408(m); (vi) generate unrelated business taxable income; or (vii)
result (or could result) in a loss exceeding the value of the Participant's
Account. The Trustee will not be responsible for any loss or expense resulting
from a failure to follow a Participant's direction in accordance with the
requirements of this paragraph.
Participant directions will be processed as soon as administratively
practicable following receipt of such directions by the Trustee. The Trustee,
Plan Administrator, or Employer will not be liable for a delay in the
processing of a Participant direction that is caused by a legitimate business
reason (including, but not limited to, a failure of computer systems or
programs, failure in the means of data transmission, the failure to timely
receive values or prices, or other unforeseen problems outside of the control
of the Trustee, Plan Administrator, or Employer).
(2) ERISA Section404(c) protection. If the Plan (by Employer
election under Part 12, #43.b.(2) of the Agreement [Part 12, #61.b.(2) of the
401(k ) Agreement] or pursuant to the Plan's investment procedures) is
intended to comply with ERISA Section404(c), the Participant investment
direction program adopted by the Plan Administrator should comply with
applicable Department of Labor regulations. Compliance with ERISA
Section404(c) is not required for plan qualification purposes. The following
information is provided solely as guidance to assist the Plan Administrator in
meeting the requirements of ERISA Section404(c). Failure to meet any of the
following safe harbor requirements does not impose any liability on the Plan
Administrator (or any other fiduciary under the Plan) for investment decisions
made by Participants, nor does it mean that the Plan does not comply with
ERISA Section404(c). Nothing in this Plan shall impose any greater duties upon
the Trustee with respect to the implementation of ERISA Section404(c) than
those duties expressly provided for in procedures adopted by the Employer and
agreed to by the Trustee.
(i) Disclosure requirements. The Plan Administrator (or other
Plan fiduciary who has agreed to perform this activity) shall provide, or
shall cause a person designated to act on his behalf to provide, the following
information to Participants:
(A) Mandatory disclosures. To satisfy the requirements of
ERISA Section404(c), the Participants must receive certain mandatory
disclosures, including (I) an explanation that the Plan is intended to be an
ERISA Section404(c) plan; (II) a description of the investment options under
the Plan; (III) the identity of any designated Investment Managers that may be
selected by the Participant; (IV) any restrictions on investment selection or
transfers among investment vehicles; (V) an explanation of the fees
and expenses that may be charged in connection with the investment
transactions; (VI) the materials relating to voting rights or other rights
incidental to the holding of an investment; (VII) the most recent prospectus
for an investment option which is subject to the Securities Act of 1933.
(B) Disclosures upon request. In addition, a Participant
must be able to receive upon request (I) the current value of the
Participant's interest in an investment option; (II) the value and investment
performance of investment alternatives available under the Plan; (III) the
annual operating expenses of a designated investment alternative; and (IV)
copies of any prospectuses, or other material, relating to available
investment options.
(ii) Diversified investment options. The investment procedure
must provide at least three diversified investment options that offer a broad
range of investment opportunity. Each of the investment opportunities must
have materially different risk and return characteristics. The procedure may
allow investment under a segregated brokerage account.
(iii) Frequency of investment instructions. The investment
procedure must provide the Participant with the opportunity to give investment
instructions as frequently as is appropriate to the volatility of the
investment. For each investment option, the frequency can be no less than
quarterly.
ARTICLE 14 PARTICIPANT LOANS
This Article contains rules for providing loans to Participants under the
Plan. This Article applies if: (1) the Employer elects under Part 12 of the
Agreement to provide loans to Participants or (2) if Part 12 does not specify
whether Participant loans are available, the Plan Administrator decides to
implement a Participant loan program. Any Participant loans will be made
pursuant to the default loan policy prescribed by this Article 14 unless the
Plan Administrator adopts a separate written loan policy or modifies the
default loan policy in this Article 14 by adopting modified loan provisions.
If the Employer adopts a separate written loan policy or written modifications
to the default loan program in this Article, the terms of such loan policy or
written modifications will control over the terms of this Plan with respect to
the administration of any Participant loans.
14.1 Default Loan Policy. Loans are available under this Article only if
such loans:
(a) are available to Participants on a reasonably equivalent basis (see
Section 14.3);
(b) are not available to Highly Compensated Employees in an amount
greater than the amount that is available to other Participants;
(c) bear a reasonable rate of interest (as determined under Section 14.4)
and are adequately secured (as determined under Section 14.5);
(d) provide for periodic repayment within a specified period of time (as
determined under Section 14.6); and
(e) do not exceed, for any Participant, the amount designated under
Section 14.7.
A separate written loan policy may not modify the requirements under
subsections (a) through (e) above, except as permitted in the referenced
Sections of this Article.
14.2 Administration of Loan Program. A Participant loan is available under
this Article only if the Participant makes a request for such a loan in
accordance with the provisions of this Article or in accordance with a
separate written loan policy. To receive a Participant loan, a Participant
must sign a promissory note along with a pledge or assignment of the portion
of the Account Balance used for security on the loan. Except as provided in a
separate loan policy or in a written modification to the default loan policy
in this Article, any reference under this Article 14 to a Participant means a
Participant or Beneficiary who is a party in interest (as defined in ERISA
Section3(14)).
In the case of a restated Plan, if any provision of this Article 14 is more
restrictive than the terms of the Plan (or a separate written loan policy) in
effect prior to the adoption of this Prototype Plan, such provision shall
apply only to loans finalized after the adoption of this Prototype Plan, even
if the restated Effective Date indicated in the Agreement predates the
adoption of the Plan.
14.3 Availability of Participant Loans. Participant loans must be made
available to Participants in a reasonably equivalent manner. The Plan
Administrator may refuse to make a loan to any Participant who is determined
to be not creditworthy. For this purpose, a Participant is not creditworthy
if, based on the facts and circumstances, it is reasonable to believe that the
Participant will not repay the loan. A Participant who has defaulted on a
previous loan from the Plan and has not repaid such loan (with accrued
interest) at the time of any subsequent loan will not be treated as
creditworthy until such time as the Participant repays the defaulted loan
(with accrued interest). A separate written loan policy or written
modification to this loan policy may prescribe different rules for determining
creditworthiness and to what extent creditworthiness must be determined.
No Participant loan will be made to any Shareholder-Employee or Owner-Employee
unless a prohibited transaction exemption for such loan is obtained from the
Department of Labor or the prohibition against loans to such individuals is
formally withdrawn by statute or by action of the Treasury or the Department
of Labor. The prohibition against loans to Shareholder-Employees and
Owner-Employees outlined in this paragraph may not be modified by a separate
written loan policy.
14.4 Reasonable Interest Rate. A Participant must be charged a reasonable
rate of interest for any loan he/she receives. For this purpose, the interest
rate charged on a Participant loan must be commensurate with the interest
rates charged by persons in the business of lending money for loans under
similar circumstances. The Plan Administrator will determine a reasonable rate
of interest by reviewing the interest rates charged by a sample of third party
lenders in the same geographical region as the Employer. The Plan
Administrator must periodically review its interest rate assumptions to ensure
the interest rate charged on Participant loans is reasonable. A separate
written loan policy or written modifications to this loan policy may prescribe
an alternative means of establishing a reasonable interest rate.
14.5 Adequate Security. All Participant loans must be adequately secured.
The Participant's vested Account Balance shall be used as security for a
Participant loan provided the outstanding balance of all Participant loans
made to such Participant does not exceed 50% of the Participant's vested
Account Balance, determined immediately after the origination of each loan,
and if applicable, the spousal consent requirements described in Section 14.9
have been satisfied. The Plan Administrator (with the consent of the Trustee)
may require a Participant to provide additional collateral to receive a
Participant loan if the Plan Administrator determines such additional
collateral is required to protect the interests of Plan Participants. A
separate loan policy or written modifications to this loan policy may
prescribe alternative rules for obtaining adequate security. However, the 50%
rule in this paragraph may not be replaced with a greater percentage.
14.6 Periodic Repayment. A Participant loan must provide for level
amortization with payments to be made not less frequently than quarterly. A
Participant loan must be payable within a period not exceeding five (5) years
from the date the Participant receives the loan from the Plan, unless the loan
is for the purchase of the Participant's principal residence, in which case
the loan must be payable within a reasonable time commensurate with the
repayment period permitted by commercial lenders for similar loans. Loan
repayments must be made through payroll withholding, except to the extent the
Plan Administrator determines payroll withholding is not practical given the
level of a Participant's wages, the frequency with which the Participant is
paid, or other circumstances.
(a) Unpaid leave of absence. A Participant with an outstanding
Participant loan may suspend loan payments to the Plan for up to 12 months for
any period during which the Participant is on an unpaid leave of absence. Upon
the Participant's return to employment (or after the end of the 12-month
period, if earlier), the Participant's outstanding loan will be reamortized
over the remaining period of such loan to make up for the missed payments. The
reamortized loan may extend beyond the original loan term so long as the loan
is paid in full by whichever of the following dates comes first: (1) the date
which is five (5) years from the original date of the loan (or the end of the
suspension, if sooner), or (2) the original loan repayment deadline (or the
end of the suspension period, if later) plus the length of the suspension
period.
(b) Military leave. A Participant with an outstanding Participant loan
also may suspend loan payments for any period such Participant is on military
leave, in accordance with Code Section414(u)(4). Upon the Participant's return
from military leave (or the expiration of five years from the date the
Participant began his/her military leave, if earlier), loan payments will
recommence under the amortization schedule in effect prior to the
Participant's military leave, without regard to the five-year maximum loan
repayment
period. Alternatively, the loan may be reamortized to require a different
level of loan payment, as long as the amount and frequency of such payments
are not less than the amount and frequency under the amortization schedule in
effect prior to the Participant's military leave.
A separate loan policy or written modification to this loan policy may (1)
modify the time period for repaying Participant loans, provided Participant
loans are required to be repaid over a period that is not longer than the
periods described in this Section; (2) specify the frequency of Participant
loan repayments, provided the payments are required at least quarterly; (3)
modify the requirement that loans be repaid through payroll withholding; or
(4) modify or eliminate the leave of absence and/or military leave rules under
this Section.
14.7 Loan Limitations. A Participant loan may not be made to the extent such
loan (when added to the outstanding balance of all other loans made to the
Participant) exceeds the lesser of:
(a) $50,000 (reduced by the excess, if any, of the Participant's highest
outstanding balance of loans from the Plan during the one-year period ending
on the day before the date on which such loan is made, over the Participant's
outstanding balance of loans from the Plan as of the date such loan is made)
or
(b) one-half (.5) of the Participant's vested Account Balance, determined
as of the Valuation Date coinciding with or immediately preceding such loan,
adjusted for any contributions or distributions made since such Valuation
Date.
A Participant may not receive a Participant loan of less than $1,000 nor
may a Participant have more than one Participant loan outstanding at any time.
A Participant may renegotiate a loan without violating the one outstanding
loan requirement to the extent such renegotiated loan is a new loan (i.e., the
renegotiated loan separately satisfies the reasonable interest rate
requirement under Section 14.4, the adequate security requirement under
Section 14.5, and the periodic repayment requirement under Section 14.6). and
the renegotiated loan does not exceed the limitations under (a) or (b) above,
treating both the replaced loan and the renegotiated loan as outstanding at
the same time. However, if the term of the renegotiated loan does not end
later than the original term of the replaced loan, the replaced loan may be
ignored in applying the limitations under (a) and (b) above.
In applying the limitations under this Section, all plans maintained by the
Employer are aggregated and treated as a single plan. In addition, any
assignment or pledge of any portion of the Participant's interest in the Plan
and any loan, pledge, or assignment with respect to any insurance contract
purchased under the Plan will be treated as loan under this Section.
A separate written loan policy or written modifications to this loan policy
may (1) modify the limitations on the amount of a Participant loan; (2) modify
or eliminate the minimum loan amount requirement; (3) permit a Participant to
have more than one loan outstanding at a time; (4) prescribe limitations on
the purposes for which loans may be required; or (5) prescribe rules for
reamortization, consolidation, renegotiation, or refinancing of loans.
14.8 Segregated Investment. A Participant loan is treated as a segregated
investment on behalf of the individual Participant for whom the loan is made.
The Plan Administrator may adopt separate administrative procedures for
determining which type or types of contributions (and the amount of each type
of contribution) may be used to provide the Participant loan. If the Plan
Administrator does not adopt procedures designating the type of contributions
from which the Participant loan will be made, such loan is deemed to be made
on a proportionate basis from each type of contribution.
Unless requested otherwise on the Participant's loan application, a
Participant loan will be made equally from all investment funds in which the
applicable contributions are held. A Participant or Beneficiary may direct the
Trustee, on his/her loan application, to withdraw the Participant loan amounts
from a specific investment fund or funds. A Participant loan will not violate
the requirements of this default loan policy merely because the Plan
Administrator does not permit the Participant to designate the contributions
or funds from which the Participant loan will be made. Each payment of
principal and interest paid by a Participant on his/her Participant loan shall
be credited proportionately to such Participant's Account(s) and to the
investment funds within such Account(s).
A separate loan policy or written modifications to this loan policy may modify
the rules of this Section without limitation, including prescribing different
rules for determining the source of a loan with respect to
contribution types and investment funds.
14.9 Spousal Consent. If this Plan is subject to the Joint and Survivor
Annuity requirements under Article 9, a Participant may not use his/her
Account Balance as security for a Participant loan unless the Participant's
spouse, if any, consents to the use of such Account Balance as security for
the loan. The spousal consent must be made within the 90-day period ending on
the date the Participant's Account Balance is to be used as security for the
loan. Spousal consent is not required, however, if the value of the
Participant's total vested Account Balance (as determined under Section
8.3(e)) does not exceed $5,000 ($3,500 for loans made before the time the
$5,000 rules becomes effective under Section 8.3). If the Plan is not subject
to the Joint and Survivor Annuity requirements under Article 9, a spouse's
consent is not required to use a Participant's Account Balance as security for
a Participant loan, regardless of the value of the Participant's Account
Balance.
Any spousal consent required under this Section must be in writing, must
acknowledge the effect of the loan, and must be witnessed by a plan
representative or notary public. Any such consent to use the Participant's
Account Balance as security for a Participant loan is binding with respect to
the consenting spouse and with respect to any subsequent spouse as it applies
to such loan. A new spousal consent will be required if the Account Balance is
subsequently used as security for a renegotiation, extension, renewal, or
other revision of the loan. A new spousal consent also will be required only
if any portion of the Participant's Account Balance will be used as security
for a subsequent Participant loan.
A separate loan policy or written modifications to this loan policy may not
eliminate the spousal consent requirement where it would be required under
this Section, but may impose spousal consent requirements that are not
prescribed by this Section.
14.10 Procedures for Loan Default. A Participant will be considered to be in
default with respect to a loan if any scheduled repayment with respect to such
loan is not made by the end of the calendar quarter following the calendar
quarter in which the missed payment was due.
If a Participant defaults on a Participant loan, the Plan may not offset the
Participant's Account Balance until the Participant is otherwise entitled to
an immediate distribution of the portion of the Account Balance which will be
offset and such amount being offset is available as security on the loan,
pursuant to Section 14.5. For this purpose, a loan default is treated as an
immediate distribution event to the extent the law does not prohibit an actual
distribution of the type of contributions which would be offset as a result of
the loan default (determined without regard to the consent requirements under
Articles 8 and 9, so long as spousal consent was properly obtained at the time
of the loan, if required under Section 14.9). The Participant may repay the
outstanding balance of a defaulted loan (including accrued interest through
the date of repayment) at any time.
Pending the offset of a Participant's Account Balance following a defaulted
loan, the following rules apply to the amount in default.
(a) Interest continues to accrue on the amount in default until the time
of the loan offset or, if earlier, the date the loan repayments are made
current or the amount is satisfied with other collateral.
(b) A subsequent offset of the amount in default is not reported as a
taxable distribution, except to the extent the taxable portion of the default
amount was not previously reported by the Plan as a taxable distribution.
(c) The post-default accrued interest included in the loan offset is not
reported as a taxable distribution at the time of the offset.
A separate loan policy or written modifications to this loan policy may modify
the procedures for determining a loan default.
14.11 Termination of Employment.
(a) Offset of outstanding loan. A Participant loan becomes due and
payable in full immediately upon the Participant's termination of employment.
Upon a Participant's termination, the Participant may repay the entire
outstanding balance of the loan (including any accrued interest) within a
reasonable period following termination of employment. If the Participant does
not repay the entire outstanding loan balance, the Participant's vested
Account Balance will be reduced by the remaining outstanding balance of the
loan
(without regard to the consent requirements under Articles 8 and 9, so long as
spousal consent was properly obtained at the time of the loan, if required
under Section 14.9), to the extent such Account Balance is available as
security on the loan, pursuant to Section 14.5, and the remaining vested
Account Balance will be distributed in accordance with the distribution
provisions under Article 8. If the outstanding loan balance of a deceased
Participant is not repaid, the outstanding loan balance shall be treated as a
distribution to the Participant and shall reduce the death benefit amount
payable to the Beneficiary under Section 8.4.
(b) Direct Rollover. Upon termination of employment, a Participant may
request a Direct Rollover of the loan note (provided the distribution is an
Eligible Rollover Distribution as defined in Section 8.8(a)) to another
qualified plan which agrees to accept a Direct Rollover of the loan note. A
Participant may not engage in a Direct Rollover of a loan to the extent the
Participant has already received a deemed distribution with respect to such
loan. (See the rules regarding deemed distributions upon a loan default under
Section 14.10.)
(c) Modified loan policy. A separate loan policy or written modifications
to this loan policy may modify this Section 14.11, including, but not limited
to: (1) a provision to permit loan repayments to continue beyond termination
of employment; (2) to prohibit the Direct Rollover of a loan note; and (3) to
provide for other events that may accelerate the Participant's repayment
obligation under the loan.
ARTICLE 15 INVESTMENT IN LIFE INSURANCE
This Article provides special rules for Plans that permit investment in life
insurance on the life of the Participant, the Participant's spouse, or other
family members. The Employer may elect in Part 12 of the Agreement to permit
life insurance investments in the Plan, or life insurance investments may be
permitted, prohibited, or restricted under the Plan through separate
investment procedures or a separate funding policy. If the Plan prohibits
investments in life insurance, this Article does not apply.
15.1 Investment in Life Insurance. A group or individual life insurance
policy purchased by the Plan may be issued on the life of a Participant, a
Participant's spouse, a Participant's child or children, a family member of
the Participant, or any other individual with an insurable interest. If this
Plan is a money purchase plan, a life insurance policy may only be issued on
the life of the Participant. A life insurance policy includes any type of
policy, including a second-to-die policy, provided that the holding of a
particular type of policy is not prohibited under rules applicable to
qualified plans.
Any premiums on life insurance held for the benefit of a Participant will be
charged against such Participant's vested Account Balance. Unless directed
otherwise, the Plan Administrator will reduce each of the Participant's
Accounts under the Plan equally to pay premiums on life insurance held for
such Participant's benefit. Any premiums paid for life insurance policies must
satisfy the incidental life insurance rules under Section 15.2.
15.2 Incidental Life Insurance Rules. Any life insurance purchased under the
Plan must meet the following requirements:
(a) Ordinary life insurance policies. The aggregate premiums paid for
ordinary life insurance policies (i.e., policies with both nondecreasing death
benefits and nonincreasing premiums) for the benefit of a Participant shall
not at any time exceed 49% of the aggregate amount of Employer Contributions
(including Section 401(k) Deferrals) and forfeitures that have been allocated
to the Account of such Participant.
(b) Life insurance policies other than ordinary life. The aggregate
premiums paid for term, universal or other life insurance policies (other than
ordinary life insurance policies) for the benefit of a Participant shall not
at any time exceed 25% of the aggregate amount of Employer Contributions
(including Section 401(k) Deferrals) and forfeitures that have been allocated
to the Account of such Participant.
(c) Combination of ordinary and other life insurance policies. The sum of
one-half (1/2) of the aggregate premiums paid for ordinary life insurance
policies plus all the aggregate premiums paid for any other life insurance
policies for the benefit of a Participant shall not at any time exceed 25% of
the aggregate amount of Employer Contributions (including Section 401(k)
Deferrals) and forfeitures which have been allocated to the Account of such
Participant.
(d) Exception for certain profit sharing and 401(k) plans. If the Plan is
a profit sharing plan or a
401(k) plan, the limitations in this Section do not apply to the extent life
insurance premiums are paid only with Employer Contributions and forfeitures
that have been accumulated in the Participant's Account for at least two years
or are paid with respect to a Participant who has been an Eligible Participant
for at least five years. For purposes of applying this special limitation,
Employer Contributions do not include any Section 401(k) Deferrals, QMACs,
QNECs or Safe-Harbor Contributions under a 401(k) plan.
(e) Exception for Employee After-Tax Contributions and Rollover
Contributions. The Plan Administrator also may invest, with the Participant's
consent, any portion of the Participant's Employee After-Tax Contribution
Account or Rollover Contribution Account in a group or individual life
insurance policy for the benefit of such Participant, without regard to the
incidental life insurance rules under this Section.
15.3 Ownership of Life Insurance Policies. The Trustee is the owner of any
life insurance policies purchased under the Plan in accordance with the
provisions of this Article 15. Any life insurance policy purchased under the
Plan must designate the Trustee as owner and beneficiary under the policy. The
Trustee will pay all proceeds of any life insurance policies to the
Beneficiary of the Participant for whom such policy is held in accordance with
the distribution provisions under Article 8 and the Joint and Survivor Annuity
requirements under Article 9. In no event shall the Trustee retain any part of
the proceeds from any life insurance policies for the benefit of the Plan.
15.4 Evidence of Insurability. Prior to purchasing a life insurance policy,
the Plan Administrator may require the individual whose life is being insured
to provide evidence of insurability, such as a physical examination, as may be
required by the Insurer.
15.5 Distribution of Insurance Policies. Life insurance policies under the
Plan, which are held on behalf of a Participant, must be distributed to the
Participant or converted to cash upon the later of the Participant's
Distribution Commencement Date (as defined in Section 22.56) or termination of
employment. Any life insurance policies that are held on behalf of a
terminated Participant must continue to satisfy the incidental life insurance
rules under Section 15.2.
If a life insurance policy is purchased on behalf of an individual other than
the Participant, and such individual dies, the Participant may withdraw any or
all life insurance proceeds from the Plan, to the extent such proceeds exceed
the cash value of the life insurance policy determined immediately before the
death of the insured individual.
15.6 Discontinuance of Insurance Policies. Investments in life insurance may
be discontinued at any time, either at the direction of the Trustee or other
fiduciary responsible for making investment decisions. If the Plan provides
for Participant direction of investments, life insurance as an investment
option may be eliminated at any time by the Plan Administrator. Where life
insurance investment options are being discontinued, the Plan Administrator,
in its sole discretion, may offer the sale of the insurance policies to the
Participant, or to another person, provided that the prohibited transaction
exemption requirements prescribed by the Department of Labor are satisfied.
15.7 Protection of Insurer. An Insurer that issues a life insurance policy
under the terms of this Article, shall not be responsible for the validity of
this Plan and shall be protected and held harmless for any actions taken or
not taken by the Trustee or any actions taken in accordance with written
directions from the Trustee or the Employer (or any duly authorized
representatives of the Trustee or Employer). An Insurer shall have no
obligation to determine the propriety of any premium payments or to guarantee
the proper application of any payments made by the insurance company to the
Trustee.
The Insurer is not and shall not be considered a party to this Agreement and
is not a fiduciary with respect to the Plan solely as a result of the issuance
of life insurance policies under this Article 15.
15.8 No Responsibility for Act of Insurer. Neither the Employer, the Plan
Administrator nor the Trustee shall be responsible for the validity of the
provisions under a life insurance policy issued under this Article 15 or for
the failure or refusal by the Insurer to provide benefits under such policy.
The Employer, the Plan Administrator and the Trustee are also not responsible
for any action or failure to act by the Insurer or any other person which
results in the delay of a payment under the life insurance policy or which
renders the policy invalid or unenforceable in whole or in part.
ARTICLE 16 TOP-HEAVY PLAN REQUIREMENTS
This Article contains the rules for determining whether the Plan is a
Top-Heavy Plan and the consequences of having a Top-Heavy Plan. Part 6 of the
Agreement provides for elections relating to the vesting schedule for a
Top-Heavy Plan. Part 13 of the Agreement allows the Employer to elect to
satisfy the Top-Heavy Plan allocation requirements under another plan.
16.1 In General. If the Plan is or becomes a Top-Heavy Plan in any Plan
Year, the provisions of this Article 16 will supersede any conflicting
provisions in the Plan or Agreement. However, this Article 16 will no longer
apply if Code Section416 is repealed.
16.2 Top-Heavy Plan Consequences.
(a) Minimum allocation for Non-Key Employees. If the Plan is a Top-Heavy
Plan for any Plan Year, except as otherwise provided in subsections (4) and
(5) below, the Employer Contributions and forfeitures allocated for the Plan
Year on behalf of any Eligible Participant who is a Non-Key Employee must not
be less than a minimum percentage of the Participant's Total Compensation (as
defined in Section 16.3(i)). If any Non-Key Employee who is entitled to
receive a top-heavy minimum contribution pursuant to this Section 16.2(a)
fails to receive an appropriate allocation, the Employer will make an
additional contribution on behalf of such Non-Key Employee to satisfy the
requirements of this Section. The Employer may elect under Part 4 of the
Agreement [Part 4C of the 401(k) Agreement] to make the top-heavy contribution
to all Eligible Participants. If the Employer elects under the Agreement to
provide the top-heavy minimum contribution to all Eligible Participants, the
Employer also will make an additional contribution on behalf of any Key
Employee who is an Eligible Participant and who did not receive an allocation
equal to the top-heavy minimum contribution.
(1) Determining the minimum percentage. The minimum percentage that
must be allocated under subsection (a) above is the lesser of: (i) three (3)
percent of Total Compensation for the Plan Year or (ii) the highest
contribution rate for any Key Employee for the Plan Year. The highest
contribution rate for a Key Employee is determined by taking into account the
total Employer Contributions and forfeitures allocated to each Key Employee
for the Plan Year, as a percentage of the Key Employee's Total Compensation. A
Key Employee's contribution rate includes Section 401(k) Deferrals made by the
Key Employee for the Plan Year (except as provided by regulation or statute).
If this Plan is aggregated with a Defined Benefit Plan to satisfy the
requirements of Code Section401(a)(4) or Code Section410(b), the minimum
percentage is three (3) percent, without regard to the highest Key Employee
contribution rate. See subsection (5) below if the Employer maintains more
than one plan.
(2) Determining whether the Non-Key Employee's allocation satisfies
the minimum percentage.
To determine if a Non-Key Employee's allocation of Employer Contributions and
forfeitures is at least equal to the minimum percentage, the Employee's
Section 401(k) Deferrals for the Plan Year are disregarded. In addition,
Matching Contributions allocated to the Employee's Account for the Plan Year
are disregarded, unless: (i) the Plan Administrator elects to take all or a
portion of the Matching Contributions into account, or (ii) Matching
Contributions are taken into account by statute or regulation. The rule in (i)
does not apply unless the Matching Contributions so taken into account could
satisfy the nondiscrimination testing requirements under Code Section401(a)(4)
if tested separately. Any Employer Matching Contributions used to satisfy the
Top-Heavy Plan minimum allocation may not be used in the ACP Test (as defined
in Section 17.3), except to the extent permitted under statute, regulation or
other guidance of general applicability.
(3) Certain allocation conditions inapplicable. The Top-Heavy Plan
minimum allocation shall be made even though, under other Plan provisions, the
Non-Key Employee would not otherwise be entitled to receive an allocation, or
would have received a lesser allocation for the Plan Year because of:
(i) the Participant's failure to complete 1,000 Hours of
Service (or any equivalent provided in the Plan),
(ii) the Participant's failure to make Employee After-Tax
Contributions to the Plan, or
(iii) Total Compensation is less than a stated amount.
The minimum allocation also is determined without regard to any Social
Security contribution or whether an Eligible Participant fails to make Section
401(k) Deferrals for a Plan Year in which the Plan includes a 401(k) feature.
(4) Participants not employed on the last day of the Plan Year. The
minimum allocation requirement described in this subsection (a) does not apply
to an Eligible Participant who was not employed by the Employer on the last
day of the applicable Plan Year.
(5) Participation in more than one Top-heavy Plan. The minimum
allocation requirement described in this subsection (a) does not apply to an
Eligible Participant who is covered under another plan maintained by the
Employer if, pursuant to Part 13, #54 of the Agreement [Part 13, #72 of the
401(k) Agreement], the other Plan will satisfy the minimum allocation
requirement.
(i) More than one Defined Contribution Plans. If the Employer
maintains more than one top-heavy Defined Contribution Plan (including Paired
Plans), the Employer may designate in Part 13, #54.a. of the Agreement [Part
13, #72.a. of the 401(k) Agreement] which plan will provide the top-heavy
minimum contribution to Non-Key Employees. Alternatively, under Part 13,
#54.a.(3) of the Agreement [Part 13, #72.a.(3) of the 401(k) Agreement], the
Employer may designate another means of complying with the top-heavy
requirements. If Part 13, #54 of the Agreement [Part 13, #72 of the 401(k)
Agreement] is not completed and the Employer maintains more than one Defined
Contribution Plan, the Employer will be deemed to have selected this Plan
under Part 13, #54.a. of the Agreement [Part 13, #72.a. of the 401(k)
Agreement] as the Plan under which the top-heavy minimum contribution will be
provided.
If an Employee is entitled to a top-heavy minimum contribution but has not
satisfied the minimum age and/or service requirements under the Plan
designated to provide the top-heavy minimum contribution, the Employee may
receive a top-heavy minimum contribution under the designated Plan. Thus, for
example, if the Employer maintains both a 401(k) plan and a non-401(k) plan, a
Non-Key Employee who has not satisfied the minimum age and service conditions
under Part 1, #5 of the non-401(k) plan Agreement is eligible for a top-heavy
minimum allocation under the non-401(k) plan (if so provided under Part 13,
#54.a. of the Agreement [Part 13, #72.a. of the 401(k) Agreement]) if such
Employee has satisfied the eligibility conditions for making Section 401(k)
Deferrals under the 401(k) plan. The provision of a top-heavy minimum
contribution under this paragraph will not cause the Plan to fail the minimum
coverage or nondiscrimination rules. The Employer may designate an alternative
method of providing the top-heavy minimum contribution to such Employees under
Part 13, #54.a.(3) of the Agreement [Part 13, #72.a.(3) of the 401(k)
Agreement].
(ii) Defined Contribution Plan and a Defined Benefit Plan. If
the Employer maintains both a top-heavy Defined Contribution Plan (under this
BPD) and a top-heavy Defined Benefit Plan, the Employer must designate the
manner in which the plans will comply with the Top-Heavy Plan requirements.
Under Part 13, #54.b. of the Agreement [Part 13, #72.b. of the 401(k)
Agreement], the Employer may elect to provide the top-heavy minimum benefit to
Non-Key Employees who participate in both Plans (A) in the Defined Benefit
Plan; (B) in the Defined Contribution Plan (but increasing the minimum
allocation from 3% to 5%); or (C) under any other acceptable method of
compliance. If a Non-Key Employee participates only under the Defined Benefit
Plan, the top-heavy minimum benefit will be provided under the Defined Benefit
Plan. If a Non-Key Employee participates only under the Defined Contribution
Plan, the top-heavy minimum benefit will be provided under the Defined
Contribution Plan (without regard to this subsection (ii)). If Part 13, #54.b.
of the Agreement [Part 13, #72.b. of the 401(k) Agreement] is not completed
and the Employer maintains a Defined Benefit Plan, the Employer will be deemed
to have selected this Plan under Part 13, #54.b.(1) of the Agreement [Part 13,
#72.b.(1) of the 401(k) Agreement] as the plan under which the top-heavy
minimum contribution will be provided.
If the Employer maintains more than one Defined Contribution Plan in addition
to a Defined Benefit Plan, the Employer may use Part 13, #54.b.(3) of the
Agreement [Part 13, #72.b.(3) of the 401(k) Agreement] to designate which
Defined Contribution Plan will provide the top-heavy minimum contribution.
If the Employer is using the Four-Step Permitted Disparity Method (as
described in Section 2.2(b)(ii)) and elects under Part 13, #54.b.(1) of the
Agreement [Part 13, #72.b.(1) of the 401(k) Agreement] to provide a 5%
top-heavy minimum contribution, the 3% minimum allocation under Step One is
increased to 5%. The
3% allocation under Step Two will also be increased to the lesser of (A) 5% or
(B) the amount determined under Step Three (increased by 3 percentage points).
If an additional allocation is to be made under Step Three, the Applicable
Percentage under Section 2.2(b)(ii)(C) must be reduced by 2 percentage points
(but not below zero).
(6) No forfeiture for certain events. The minimum top-heavy
allocation (to the extent required to be nonforfeitable under Code
Section416(b)) may not be forfeited under the suspension of benefit rules of
Code Section411(a)(3)(B) or the withdrawal of mandatory contribution rules of
Code Section411(a)(3)(D).
(b) Special Top-Heavy Vesting Rules.
(1) Minimum vesting schedules. For any Plan Year in which this Plan
is a Top-Heavy Plan, the Top-Heavy Plan vesting schedule elected in Part 6,
#19 of the Agreement [Part 6, #37 of the 401(k) Agreement] will automatically
apply to the Plan. The Top-Heavy Plan vesting schedule will apply to all
benefits within the meaning of Code Section411(a)(7) except those attributable
to Employee After-Tax Contributions, including benefits accrued before the
effective date of Code Section416 and benefits accrued before the Plan became
a Top-Heavy Plan. No decrease in a Participant's nonforfeitable percentage may
occur in the event the Plan's status as a Top-Heavy Plan changes for any Plan
Year. However, this subsection does not apply to the Account Balance of any
Employee who does not have an Hour of Service after a Top-Heavy Plan vesting
schedule becomes effective.
(2) Shifting Top-Heavy Plan status. If the vesting schedule under
the Plan shifts in or out of the Top-Heavy Plan vesting schedule for any Plan
Year because of a change in Top-Heavy Plan status, such shift is an amendment
to the vesting schedule and the election in Section 4.7 of the Plan applies.
16.3 Top-Heavy Definitions.
(a) Determination Date: For any Plan Year subsequent to the first Plan
Year, the Determination Date is the last day of the preceding Plan Year. For
the first Plan Year of the Plan, the Determination Date is the last day of
that first Plan Year.
(b) Determination Period: The Plan Year containing the Determination Date
and the four (4) preceding Plan Years.
(c) Key Employee: Any Employee or former Employee (and the Beneficiaries
of such Employee) is a Key Employee for a Plan Year if, at any time during the
Determination Period, the individual was:
(1) an officer of the Employer with annual Total Compensation in
excess of 50 percent of the dollar limitation under Code Section415(b)(1)(A),
(2) an owner (or considered an owner under Code Section318) of one
of the ten largest interests in the Employer with annual Total Compensation in
excess of 100 percent of the dollar limitation under Code Section415(c)(1)(A);
(3) a Five-Percent Owner (as defined in Section 22.88),
(4) a more than 1-percent owner of the Employer with an annual Total
Compensation of more than $150,000.
The Key Employee determination will be made in accordance with Code
Section416(i)(1) and the regulations thereunder.
(d) Permissive Aggregation Group: The Required Aggregation Group of plans
plus any other plan or plans of the Employer which, when considered as a group
with the Required Aggregation Group, would continue to satisfy the
requirements of Code SectionSection401(a)(4) and 410.
(e) Present Value: The present value based on the interest and mortality
rates specified in the relevant Defined Benefit Plan. In the event that more
than one Defined Benefit Plan is included in a Required Aggregation Group or
Permissive Aggregation Group, a uniform set of actuarial assumptions must be
applied to determine present value. The Employer may specify in Part 13,
#54.b.(3) of the Agreement [Part 13, #72.b.(3) of the 401(k) Agreement] the
actuarial assumptions that will apply if the Defined Benefit Plans do not
specify a uniform set of actuarial assumptions to be used to determine if the
plans are Top-Heavy.
(f) Required Aggregation Group:
(1) Each qualified plan of the Employer in which at least one Key
Employee participates or participated at any time during the Determination
Period (regardless of whether the plan has terminated), and
(2) any other qualified plan of the Employer that enables a plan
described in (l) to meet the coverage or nondiscrimination requirements of
Code SectionSection410(b) or 401(a)(4).
(g) Top-Heavy Plan: For any Plan Year, this Plan is a Top-Heavy Plan if
any of the following conditions exist:
(1) The Plan is not part of any Required Aggregation Group or
Permissive Aggregation Group of plans, and the Top-Heavy Ratio for the Plan
exceeds 60 percent.
(2) The Plan is part of a Required Aggregation Group of plans, but
not part of a Permissive Aggregation Group, and the Top-Heavy Ratio for the
Required Aggregation Group of plans exceeds 60 percent.
(3) The Plan is part of a Required Aggregation Group and part of a
Permissive Aggregation Group of plans, and the Top-Heavy Ratio for the
Permissive Aggregation Group exceeds 60 percent.
(h) Top-Heavy Ratio:
(1) Defined Contribution Plans only. This paragraph applies if the
Employer maintains one or more Defined Contribution Plans (including any SEP
described under Code Section408(k)) and the Employer has not maintained any
Defined Benefit Plan that during the Determination Period has or has had
Accrued Benefits. The Top-Heavy Ratio for this Plan alone, or for the
Required Aggregation Group or Permissive Aggregation Group, as appropriate, is
a fraction, the numerator of which is the sum of the Account Balances of all
Key Employees as of the Determination Date(s) and the denominator of which is
the sum of all Account Balances, both computed in accordance with Code
Section416 and the regulations thereunder.
(2) Defined Contribution Plan and Defined Benefit Plan. This
paragraph applies if the Employer maintains one or more Defined Contribution
Plans (including a SEP described under Code Section408(k)) and the Employer
maintains or has maintained one or more Defined Benefit Plans which during the
Determination Period has or has had any Accrued Benefits. The Top-Heavy Ratio
for any Required Aggregation Group or Permissive Aggregation Group, as
appropriate, is a fraction, the numerator of which is the sum of Account
Balances under the aggregated Defined Contribution Plan(s) for all Key
Employees, and the Present Value of Accrued Benefits under the aggregated
Defined Benefit Plan(s) for all Key Employees as of the Determination Date(s),
and the denominator of which is the sum of the Account Balances under the
aggregated Defined Contribution Plan(s) for all Participants and the Present
Value of Accrued Benefits under the Defined Benefit Plan(s) for all
Participants as of the Determination Date(s), all determined in accordance
with Code Section416 and the regulations thereunder. The accrued benefits
under a Defined Benefit Plan in both the numerator and denominator of the
Top-Heavy Ratio are increased for any distributions of an accrued benefit made
in the five-year period ending on the Determination Date.
(3) Applicable Valuation Dates. For purposes of subsections (1) and
(2) above, the value of Account Balances and the Present Value of Accrued
Benefits will be determined as of the most recent Valuation Date that falls
within or ends with the 12-month period ending on the Determination Date,
except as provided in Code Section416 and the regulations thereunder for the
first and second Plan Years of a Defined Benefit Plan. When aggregating plans,
the value of Account Balances and Accrued Benefits will be calculated with
reference to the Determination Dates that fall within the same calendar year.
(4) Valuation of benefits. Determining a Participant's Account
Balance or Accrued Benefit. The calculation of the Top-Heavy Ratio, and the
extent to which distributions, rollovers, and transfers are taken into account
will be made in accordance with Code Section416 and the regulations
thereunder. For purposes of subsections (1) and (2) above, the Account
Balance and/or Accrued Benefit of each Participant is adjusted as provided
under subsections (i) and (ii) below.
(i) Increase for prior distributions. In applying the Top-Heavy
Ratio, a Participant's Account Balance and/or Accrued Benefit is increased for
any distributions made from the Plan during the Determination Period.
(ii) Increase for future contributions. Both the numerator and
denominator of the Top-Heavy Ratio are increased to reflect any contribution
to a Defined Contribution Plan not actually made as of the Determination Date,
but which is required to be taken into account on that date under Code
Section416 and the regulations thereunder.
(iii) Exclusion of certain benefits. The Account Balance and/or
Accrued Benefit of a Participant (and any distribution during the
Determination Period with respect to such Participant's Account Balance or
Accrued Benefit) is disregarded from the Top-Heavy Ratio if: (A) the
Participant is a Non-Key Employee who was a Key Employee in a prior year, or
(B) the Participant has not been credited with at least one Hour of Service
during the Determination Period. The calculation of the Top-Heavy Ratio, and
the extent to which distributions, rollovers, and transfers are taken into
account will be made in accordance with Code Section416 and the regulations
thereunder.
(iv) Calculation of Accrued Benefit. The Accrued Benefit of a
Participant other than a Key Employee shall be determined under: (A) the
method, if any, that uniformly applies for accrual purposes under all Defined
Benefit Plans maintained by the Employer; or (B) if there is no such method,
as if such benefit accrued not more rapidly than the slowest accrual rate
permitted under the fractional rule of Code Section411(b)(1)(C).
(i) Total Compensation. For purposes of determining the minimum top-heavy
contribution under 16.2(a), Total Compensation is determined using the
definition under Section 7.4(f), including the special rule under Section
7.4(f)(4) for years beginning before January 1, 1998. For this purpose, Total
Compensation is subject to the Compensation Dollar Limitation as defined in
Section 22.32.
(j) Valuation Date: The date as of which Account Balances are valued for
purposes of calculating the Top-Heavy Ratio.
ARTICLE 17 401(k) PLAN PROVISIONS
This Article sets forth the special testing rules applicable to Section 401(k)
Deferrals, Employer Matching Contributions, and Employee After-Tax
Contributions that may be made under the 401(k) Agreement and the requirements
to qualify as a Safe Harbor 401(k) Plan. Section 17.1 provides limits on the
amount of Elective Deferrals an Employee may defer into the Plan during a
calendar year. Sections 17.2 and 17.3 set forth the rules for running the ADP
Test and ACP Test with respect to contributions under the 401(k) plan and
Section 17.4 discusses the requirements for applying the Multiple Use Test.
Section 17.5 prescribes special testing rules for performing the ADP Test and
the ACP Test. Section 17.6 sets forth the requirements that must be met to
qualify as a Safe Harbor 401(k) Plan. Unless otherwise stated, any reference
to the Agreement under this Article 17 is a reference to the 401(k) Agreement.
17.1 Limitation on the Amount of Section 401(k) Deferrals.
(a) In general. An Eligible Participant's total Section 401(k) Deferrals
under this Plan, or any other qualified plan of the Employer, for any calendar
year may not exceed the lesser of:
(1) the percentage of Included Compensation designated under Part
4A, #12 of the Agreement;
(2) the dollar limitation under Code Section402(g); or
(3) the amount permitted under the Annual Additions Limitation
described in Article 7.
(b) Maximum deferral limitation. If the Employer elects to impose a
maximum deferral limitation under Part 4A, #12 of the Agreement, it must
designate under Part 4A, #12.a. the period for which such limitation applies.
Regardless of any limitation designated under Part 4A, #12 of the Agreement,
the Employer may provide for alternative limitations in the Salary Reduction
Agreement with respect to designated types of Included Compensation, such as
bonus payments. If no maximum percentage is designated under Part 4A, #12 of
the Agreement, the only limit on a Participant's Section 401(k) Deferrals
under this Plan is the dollar limitation under Code Section402(g) and the
Annual Additions Limitation.
(c) Correction of Code Section402(g) violation. A Participant may not
make Section 401(k) Deferrals that exceed the dollar limitation under Code
Section402(g). The dollar limitation under Code Section402(g) applicable to a
Participant's Section 401(k) Deferrals under this Plan is reduced by any
Elective Deferrals the Participant makes under any other plan maintained by
the Employer. If a Participant makes Section 401(k) Deferrals that exceed the
Code Section402(g) limit, the Employer may correct the Code Section402(g)
violation in the following manner.
(1) Suspension of Section 401(k) Deferrals. The Employer may suspend
a Participant's Section 401(k) Deferrals under the Plan for the remainder of
the calendar year when the Participant's Section 401(k) Deferrals under this
Plan, in combination with any Elective Deferrals the Participant makes during
the calendar year under any other plan maintained by the Employer, equal or
exceed the dollar limitation under Code Section402(g).
(2) Distribution of Excess Deferrals. If a Participant makes Section
401(k) Deferrals under this Plan during a calendar year which exceed the
dollar limitation under Code Section402(g), the Participant will receive a
corrective distribution from the Plan of the Excess Deferrals (plus allocable
income) no later than April 15 of the following calendar year. The amount
which must be distributed as a correction of Excess Deferrals for a calendar
year equals the amount of Elective Deferrals the Participant contributes in
excess of the dollar limitation under Code Section402(g) during the calendar
year to this Plan, and any other plan maintained by the Employer, reduced by
any corrective distribution of Excess Deferrals the Participant receives
during the calendar year from this Plan or other plan(s) maintained by the
Employer. Excess Deferrals that are distributed after April 15 are includible
in the Participant's gross income in both the taxable year in which deferred
and the taxable year in which distributed.
(i) Allocable gain or loss. A corrective distribution of Excess
Deferrals must include any allocable gain or loss for the calendar year in
which the Excess Deferrals are made. For this purpose, allocable gain or loss
on Excess Deferrals may be determined in any reasonable manner, provided the
manner used to determine allocable gain or loss is applied uniformly and in a
manner that is reasonably reflective of the method used by the Plan for
allocating income to Participants' Accounts.
(ii) Coordination with other provisions. A corrective
distribution of Excess Deferrals made by April 15 of the following calendar
year may be made without consent of the Participant or the Participant's
spouse, and without regard to any distribution restrictions applicable under
Article 8 or Article 9. A corrective distribution of Excess Deferrals made by
the appropriate April 15 also is not treated as a distribution for purposes of
applying the required minimum distribution rules under Article 10.
(iii) Coordination with corrective distribution of Excess
Contributions. If a Participant for whom a corrective distribution of Excess
Deferrals is being made received a previous corrective distribution of Excess
Contributions to correct the ADP Test for the Plan Year beginning with or
within the calendar year for which the Participant made the Excess Deferrals,
the previous corrective distribution of Excess Contributions is treated first
as a corrective distribution of Excess Deferrals to the extent necessary to
eliminate the Excess Deferral violation. The amount of the corrective
distribution of Excess Contributions which is required to correct the ADP Test
failure is reduced by the amount treated as a corrective distribution of
Excess Deferrals.
(3) Correction of Excess Deferrals under plans not maintained by the
Employer. The correction provisions under subsections (1) and (2) above apply
only if a Participant makes Excess Deferrals under plans maintained by the
Employer. However, if a Participant has Excess Deferrals because the total
Elective Deferrals for a calendar year under all plans in which he/she
participates, including plans that are not maintained by the Employer, exceed
the dollar limitation under Code Section402(g), the Participant may assign to
this Plan any portion of the Excess Deferrals made during the calendar year.
The Participant must notify the Plan Administrator in writing on or before
March 1 of the following calendar year of the amount of the Excess Deferrals
to be assigned to this Plan. Upon receipt of a timely notification, the Excess
Deferrals assigned to this Plan will be distributed (along with any allocable
income or loss) to the Participant in accordance with the corrective
distribution provisions under subsection (2) above. A Participant is deemed to
notify the Plan Administrator of Excess Deferrals to the extent such Excess
Deferrals arise only under this Plan and any other plan maintained by the
Employer.
17.2 Nondiscrimination Testing of Section 401(k) Deferrals ADP Test.
Except as provided under Section 17.6 for Safe Harbor 401(k) Plans, the
Section 401(k) Deferrals made by Highly Compensated Employees must satisfy the
Actual Deferral Percentage Test ("ADP Test") for each Plan Year. The Plan
Administrator shall maintain records sufficient to demonstrate satisfaction of
the ADP Test, including the amount of any QNECs or QMACs included in such
test, pursuant to subsection (c) below. If the Plan fails the ADP Test for any
Plan Year, the corrective provisions under subsection (d) below will apply.
(a) ADP Test testing methods. For Plan Years beginning on or after
January 1, 1997, the ADP Test will be performed using the Prior Year Testing
Method or Current Year Testing Method, as selected under Part 4F, #31 of the
Agreement. If the Employer does not select a testing method under Part 4F, #31
of the Agreement, the Plan will use the Current Year Testing Method. Unless
specifically precluded under statute, regulations or other IRS guidance, the
Employer may amend the testing method designated under Part 4F for a
particular Plan Year (subject to the requirements under subsection (2) below)
at any time through the end of the 12-month period following the Plan Year for
which the amendment is effective. (For Plan Years beginning before January 1,
1997, the Current Year Testing Method is deemed to have been in effect.)
(1) Prior Year Testing Method. Under the Prior Year Testing Method,
the Average Deferral Percentage ("ADP") of the Highly Compensated Employee
Group (as defined in Section 17.7(e)) for the current Plan Year is compared
with the ADP of the Nonhighly Compensated Employee Group (as defined in
Section 17.7(f)) for the prior Plan Year. If the Employer elects to use the
Prior Year Testing Method under Part 4F of the Agreement, the Plan must
satisfy one of the following tests for each Plan Year:
(i) The ADP of the Highly Compensated Employee Group for the
current Plan Year shall not exceed 1.25 times the ADP of the Nonhighly
Compensated Employee Group for the prior Plan Year.
(ii) The ADP of the Highly Compensated Employee Group for the
current Plan Year shall not exceed the percentage (whichever is less)
determined by (A) adding 2 percentage points to the ADP of the Nonhighly
Compensated Employee Group for the prior Plan Year or (B) multiplying the ADP
of the Nonhighly Compensated Employee Group for the prior Plan Year by 2.
(2) Current Year Testing Method. Under the Current Year Testing
Method, the ADP of the Highly Compensated Employee Group for the current Plan
Year is compared to the ADP of the Nonhighly Compensated Employee Group for
the current Plan Year. If the Employer elects to use the Current Year Testing
Method under Part 4F of the Agreement, the Plan must satisfy the ADP Test, as
described in subsection (1) above, for each Plan Year, but using the ADP of
the Nonhighly Compensated Employee Group for the current Plan Year instead of
for the prior Plan Year. If the Employer elects to use the Current Year
Testing Method, it may switch to the Prior Year Testing Method only if the
Plan satisfies the requirements for changing to the Prior Year Testing Method
as set forth in IRS Notice 98-1 (or superseding guidance).
(b) Special rule for first Plan Year. For the first Plan Year that the
Plan permits Section 401(k) Deferrals, the Employer may elect under Part 4F,
#32.a. of the Agreement to apply the ADP Test using the Prior Year Testing
Method, by assuming the ADP for the Nonhighly Compensated Employee Group is
3%. Alternatively, the Employer may elect in Part 4F, #32.b. of the Agreement
to use the Current Year Testing Method using the actual data for the Nonhighly
Compensated Employee Group in the first Plan Year. This first Plan Year rule
does not apply if this Plan is a successor to a plan (as described in IRS
Notice 98-1 or subsequent guidance) that included a 401(k) arrangement or the
Plan is aggregated for purposes of applying the ADP Test with another plan
that included a 401(k) arrangement in the prior Plan Year. For subsequent Plan
Years, the testing method selected under Part 4F, #31 will apply.
(c) Use of QMACs and QNECs under the ADP Test. The Plan Administrator may
take into account all or any portion of QMACs and QNECs (see Sections 17.7(g)
and (h)) for purposes of applying the ADP Test. QMACs and QNECs may not be
included in the ADP Test to the extent such amounts are included in the ACP
Test for such Plan Year. QMACs and QNECs made to another qualified plan
maintained by the Employer may also be taken into account, so long as the
other plan has the same Plan Year as this Plan. To include QNECs under the ADP
Test, all Employer Nonelective Contributions,
including the QNECs, must satisfy Code Section401(a)(4). In addition, the
Employer Nonelective Contributions, excluding any QNECs used in the ADP Test
or ACP Test, must also satisfy Code Section401(a)(4).
(1) Timing of contributions. In order to be used in the ADP Test for
a given Plan Year, QNECs and QMACs must be made before the end of the 12-month
period immediately following the Plan Year for which they are allocated. If
the Employer is using the Prior Year Testing Method (as described in
subsection (a)(1) above), QMACs and QNECs taken into account for the Nonhighly
Compensated Employee Group must be allocated for the prior Plan Year, and must
be made no later than the end of the 12-month period immediately following the
end of such prior Plan Year. (See Section 7.4(a) for rules regarding the
appropriate Limitation Year for which such contributions will be applied for
purposes of the Annual Additions Limitation under Code Section415.)
(2) Double-counting limits. This paragraph applies if, in any Plan
Year beginning after December 31, 1998, the Prior Year Testing Method is used
to run the ADP Test and, in the prior Plan Year, the Current Year Testing
Method was used to run the ADP Test. If this paragraph applies, the following
contributions are disregarded in calculating the ADP of the Nonhighly
Compensated Employee Group for the prior Plan Year:
(i) All QNECs that were included in either the ADP Test or ACP
Test for the prior Plan Year.
(ii) All QMACs, regardless of how used for testing purposes in
the prior Plan Year.
(iii) Any Section 401(k) Deferrals that were included in the
ACP Test for the prior Plan Year.
For purposes of applying the double-counting limits, if actual data of the
Nonhighly Compensated Employee Group is used for a first Plan Year described
in subsection (b) above, the Plan is still considered to be using the Prior
Year Testing Method for that first Plan Year. Thus, the double-counting limits
do not apply if the Prior Year Testing Method is used for the next Plan Year.
(3) Testing flexibility. The Plan Administrator is expressly granted
the full flexibility permitted by applicable Treasury regulations to determine
the amount of QMACs and QNECs used in the ADP Test. QMACs and QNECs taken into
account under the ADP Test do not have to be uniformly determined for each
Eligible Participant, and may represent all or any portion of the QMACs and
QNECs allocated to each Eligible Participant, provided the conditions
described above are satisfied.
(d) Correction of Excess Contributions. If the Plan fails the ADP Test
for a Plan Year, the Plan Administrator may use any combination of the
correction methods under this Section to correct the Excess Contributions
under the Plan. (See Section 17.7(d) for the definition of Excess
Contributions.)
(1) Corrective distribution of Excess Contributions. If the Plan
fails the ADP Test for a Plan Year, the Plan Administrator may, in its
discretion, distribute Excess Contributions (including any allocable income or
loss) no later than the last day of the following Plan Year to correct the ADP
Test violation. If the Excess Contributions are distributed more than 2.5
months after the last day of the Plan Year in which such excess amounts arose,
a 10-percent excise tax will be imposed on the Employer with respect to such
amounts.
(i) Amount to be distributed. In determining the amount of
Excess Contributions to be distributed to a Highly Compensated Employee under
this Section, Excess Contributions are first allocated equally to the Highly
Compensated Employee(s) with the largest dollar amount of contributions taken
into account under the ADP Test for the Plan Year in which the excess occurs.
The Excess Contributions allocated to such Highly Compensated Employee(s)
reduce the dollar amount of the contributions taken into account under the ADP
Test for such Highly Compensated Employee(s) until all of the Excess
Contributions are allocated or until the dollar amount of such contributions
for the Highly Compensated Employee(s) is reduced to the next highest dollar
amount of such contributions for any other Highly Compensated Employee(s). If
there are Excess Contributions remaining, the Excess Contributions continue to
be allocated in this manner until all of the Excess Contributions are
allocated.
(ii) Allocable gain or loss. A corrective distribution of
Excess
Contributions must include any allocable gain or loss for the Plan Year in
which the excess occurs. For this purpose, allocable gain or loss on Excess
Contributions may be determined in any reasonable manner, provided the manner
used is applied uniformly and in a manner that is reasonably reflective of the
method used by the Plan for allocating income to Participants' Accounts.
(iii) Coordination with other provisions. A corrective
distribution of Excess Contributions made by the end of the Plan Year
following the Plan Year in which the excess occurs may be made without consent
of the Participant or the Participant's spouse, and without regard to any
distribution restrictions applicable under Article 8 or Article 9. Excess
Contributions are treated as Annual Additions for purposes of Code Section415
even if distributed from the Plan. A corrective distribution of Excess
Contributions is not treated as a distribution for purposes of applying the
required minimum distribution rules under Article 10.
If a Participant has Excess Deferrals for the calendar year ending with or
within the Plan Year for which the Participant receives a corrective
distribution of Excess Contributions, the corrective distribution of Excess
Contributions is treated first as a corrective distribution of Excess
Deferrals. The amount of the corrective distribution of Excess Contributions
that must be distributed to correct an ADP Test failure for a Plan Year is
reduced by any amount distributed as a corrective distribution of Excess
Deferrals for the calendar year ending with or within such Plan Year.
(iv) Accounting for Excess Contributions. Excess Contributions
are distributed from the following sources and in the following priority:
(A) Section 401(k) Deferrals that are not matched;
(B) proportionately from Section 401(k) Deferrals not
distributed under (A) and related QMACs that are included in the ADP Test;
(C) QMACs included in the ADP Test that are not
distributed under (B); and
(D) QNECs included in the ADP Test.
(2) Making QMACs or QNECs. Regardless of any elections under Part
4B, #18 or Part 4C, #22 of the Agreement, the Employer may make additional
QMACs or QNECs to the Plan on behalf of the Nonhighly Compensated Employees in
order to correct an ADP Test violation. QMACs or QNECs may only be used to
correct an ADP Test violation if the Current Year Testing Method is selected
under Part 4F, #31.b. of the 401(k) Agreement. Any QMACs contributed under
this subsection (2) which are not specifically authorized under Part 4B, #18
of the Agreement will be allocated to all Eligible Participants who are
Nonhighly Compensated Employees as a uniform percentage of Section 401(k)
Deferrals made during the Plan Year. Any QNECs contributed under this
subsection (2) which are not specifically authorized under Part 4C, #22 of the
Agreement will be allocated to all Eligible Participants who are Nonhighly
Compensated Employees as a uniform percentage of Included Compensation. See
Sections 2.3(c) and (e), as applicable.
(3) Recharacterization. If Employee After-Tax Contributions are
permitted under Part 4D of the Agreement, the Plan Administrator, in its sole
discretion, may permit a Participant to treat any Excess Contributions that
are allocated to that Participant as if he/she received the Excess
Contributions as a distribution from the Plan and then contributed such
amounts to the Plan as Employee After-Tax Contributions. Any amounts
recharacterized under this subsection (3) will be 100% vested at all times.
Amounts may not be recharacterized by a Highly Compensated Employee to the
extent that such amount in combination with other Employee After-Tax
Contributions made by that Participant would exceed any limit on Employee
After-Tax Contributions under Part 4D of the Agreement.
Recharacterization must occur no later than 2.5 months after the last day of
the Plan Year in which such Excess Contributions arise and is deemed to occur
no earlier than the date the last Highly Compensated Employee is informed in
writing of the amount recharacterized and the consequences thereof.
Recharacterized amounts will be taxable to the Participant for the
Participant's taxable year in which the Participant would have received such
amounts in cash had he/she not deferred such amounts into the Plan.
(e) Adjustment of deferral rate for Highly Compensated Employees. The
Employer may suspend (or automatically reduce the rate of) Section 401(k)
Deferrals for the Highly Compensated Employee Group, to the extent necessary
to satisfy the ADP Test or to reduce the margin of failure. A suspension or
reduction shall not affect Section 401(k) Deferrals already contributed by the
Highly Compensated Employees for the Plan Year. As of the first day of the
subsequent Plan Year, Section 401(k) Deferrals shall resume at the levels
stated in the Salary Reduction Agreements of the Highly Compensated Employees.
17.3 Nondiscrimination Testing of Employer Matching Contributions and
Employee After-Tax Contributions ACP Test. Except as provided under Section
17.6 for Safe Harbor 401(k) Plans, if the Employer elects to provide Employer
Matching Contributions under Part 4B of the Agreement or to permit Employee
After-Tax Contributions under Part 4D of the Agreement, the Employer Matching
Contributions (including QMACs that are not included in the ADP Test) and/or
Employee After-Tax Contributions made for Highly Compensated Employees must
satisfy the Actual Contribution Percentage Test ("ACP Test") for each Plan
Year. The Plan Administrator shall maintain records sufficient to demonstrate
satisfaction of the ACP Test, including the amount of any Section 401(k)
Deferrals or QNECs included in such test, pursuant to subsection (c) below. If
the Plan fails the ACP Test for any Plan Year, the correction provisions under
subsection (d) below will apply.
(a) ACP Test testing methods. For Plan Years beginning on or after
January 1, 1997, the ACP Test will be performed using the Prior Year Testing
Method or the Current Year Testing Method, as selected under Part 4F, #31 of
the Agreement. If the Employer does not select a testing method under Part 4F,
#31 of the Agreement, the Plan will be deemed to use the Current Year Testing
Method. For Plan Years beginning before January 1, 1997, the Current Year
Testing Method is deemed to have been in effect. If the Plan is a Safe Harbor
401(k) Plan, as designated under Part 4E of the Agreement, the Current Year
Testing Method must be selected.
(1) Prior Year Testing Method. Under the Prior Year Testing Method,
the Average Contribution Percentage ("ACP") of the Highly Compensated Employee
Group (as defined in Section 17.7(e)) for the current Plan Year is compared
with the ACP of the Nonhighly Compensated Employee Group (as defined in
Section 17.7(f)) for the prior Plan Year. If the Employer elects to use the
Prior Year Testing Method under Part 4F of the Agreement, the Plan must
satisfy one of the following tests for each Plan Year:
(i) The ACP of the Highly Compensated Employee Group for the
current Plan Year shall not exceed 1.25 times the ACP of the Nonhighly
Compensated Employee Group for the prior Plan Year.
(ii) The ACP of the Highly Compensated Employee Group for the
current Plan Year shall not exceed the percentage (whichever is less)
determined by (A) adding 2 percentage points to the ACP of the Nonhighly
Compensated Employee Group for the prior Plan Year or (B) multiplying the ACP
of the Nonhighly Compensated Employee Group for the prior Plan Year by 2.
(2) Current Year Testing Method. Under the Current Year Testing
Method, the ACP of the Highly Compensated Employee Group for the current Plan
Year is compared to the ACP of the Nonhighly Compensated Employee Group for
the current Plan Year. If the Employer elects to use the Current Year Testing
Method under Part 4F of the Agreement, the Plan must satisfy the ACP Test, as
described in subsection (1) above, for each Plan Year, but using the ACP of
the Nonhighly Compensated Employee Group for the current Plan Year instead of
for the prior Plan Year. If the Employer elects to use the Current Year
Testing Method, it may switch to the Prior Year Testing Method only if the
Plan satisfies the requirements for changing to the Prior Year Testing Method
as set forth in IRS Notice 98-1 (or superseding guidance).
(b) Special rule for first Plan Year. For the first Plan Year that the
Plan includes either an Employer Matching Contribution formula or permits
Employee After-Tax Contributions, the Employer may elect under Part 4F, #33.a.
of the Agreement to apply the ACP Test using the Prior Year Testing Method, by
assuming the ACP for the Nonhighly Compensated Employee Group is 3%.
Alternatively, the Employer may elect in Part 4F, #33.b. of the Agreement to
use the Current Year Testing Method using the actual data for the Nonhighly
Compensated Employee Group in the first Plan Year. This first Plan Year
rule does not apply if this Plan is a successor to a plan that was subject to
the ACP Test or if the Plan is aggregated for purposes of applying the ACP
Test with another plan that was subject to the ACP test in the prior Plan
Year. For subsequent Plan Years, the testing method selected under Part 4F,
#31 will apply.
(c) Use of Section 401(k) Deferrals and QNECs under the ACP Test. The
Plan Administrator may take into account all or any portion of Section 401(k)
Deferrals and QNECs (see Section 17.7(h)) made to this Plan, or to another
qualified plan maintained by the Employer, for purposes of applying the ACP
Test. QNECs may not be included in the ACP Test to the extent such amounts are
included in the ADP Test for such Plan Year. Section 401(k) Deferrals and
QNECs made to another qualified plan maintained by the Employer may also be
taken into account, so long as the other plan has the same Plan Year as this
Plan. To include Section 401(k) Deferrals under the ACP Test, the Plan must
satisfy the ADP Test taking into account all Section 401(k) Deferrals,
including those used under the ACP Test, and taking into account only those
Section 401(k) Deferrals not included in the ACP Test. To include QNECs under
the ACP Test, all Employer Nonelective Contributions, including the QNECs,
must satisfy Code Section401(a)(4). In addition, the Employer Nonelective
Contributions, excluding any QNECs used in the ADP Test or ACP Test, must also
satisfy Code Section401(a)(4). QNECs may only be used to correct an ACP Test
violation if the Current Year Testing Method is selected under Part 4F, #31.b.
of the 401(k) Agreement.
(1) Timing of contributions. In order to be used in the ACP Test for
a given Plan Year, QNECs must be made before the end of the 12-month period
immediately following the Plan Year for which they are allocated. If the
Employer is using the Prior Year Testing Method (as described in subsection
(a)(1) above), QNECs taken into account for the Nonhighly Compensated Employee
Group must be allocated for the prior Plan Year, and must be made no later
than the end of the 12-month period immediately following such Plan Year. (See
Section 7.4(a) for rules regarding the appropriate Limitation Year for which
such contributions will be applied for purposes of the Annual Additions
Limitation under Code Section415.)
(2) Double-counting limits. This paragraph applies if, in any Plan
Year beginning after December 31, 1998, the Prior Year Testing Method is used
to run the ACP Test and, in the prior Plan Year, the Current Year Testing
Method was used to run the ACP Test. If this paragraph applies, the following
contributions are disregarded in calculating the ACP of the Nonhighly
Compensated Employee Group for the prior Plan Year:
(i) All QNECs that were included in either the ADP Test or ACP
Test for the prior Plan Year.
(ii) All Section 401(k) Deferrals, regardless of how used for
testing purposes in the prior Plan Year.
(iii) Any QMACs that were included in the ADP Test for the
prior Plan Year. For purposes of applying the double-counting limits, if
actual data of the Nonhighly Compensated Employee Group is used for a first
Plan Year described in subsection (b) above, the Plan is still considered to
be using the Prior Year Testing Method for that first Plan Year. Thus, the
double-counting limits do not apply if the Prior Year Testing Method is used
for the next Plan Year.
(3) Testing flexibility. The Plan Administrator is expressly granted
the full flexibility permitted by applicable Treasury regulations to determine
the amount of Section 401(k) Deferrals and QNECs used in the ACP Test. Section
401(k) Deferrals and QNECs taken into account under the ACP Test do not have
to be uniformly determined for each Eligible Participant, and may represent
all or any portion of the Section 401(k) Deferrals and QNECs allocated to each
Eligible Participant, provided the conditions described above are satisfied.
For Plan Years beginning after the first Plan Year.
(d) Correction of Excess Aggregate Contributions. If the Plan fails the
ACP Test for a Plan Year, the Plan Administrator may use any combination of
the correction methods under this Section to correct the Excess Aggregate
Contributions under the Plan. (See Section 17.7(c) for the definition of
Excess Aggregate Contributions.)
(1) Corrective distribution of Excess Aggregate Contributions. If
the Plan fails the ACP Test for a Plan Year, the Plan Administrator may, in
its discretion, distribute Excess Aggregate
Contributions (including any allocable income or loss) no later than the last
day of the following Plan Year to correct the ACP Test violation. Excess
Aggregate Contributions will be distributed only to the extent they are vested
under Article 4, determined as of the last day of the Plan Year for which the
contributions are made to the Plan. To the extent Excess Aggregate
Contributions are not vested, the Excess Aggregate Contributions, plus any
income and minus any loss allocable thereto, shall be forfeited in accordance
with Section 5.3(d)(1). If the Excess Aggregate Contributions are distributed
more than 2.5 months after the last day of the Plan Year in which such excess
amounts arose, a 10-percent excise tax will be imposed on the Employer with
respect to such amounts.
(i) Amount to be distributed. In determining the amount of
Excess Aggregate Contributions to be distributed to a Highly Compensated
Employee under this Section, Excess Aggregate Contributions are first
allocated equally to the Highly Compensated Employee(s) with the largest
dollar amount of contributions taken into account under the ACP Test for the
Plan Year in which the excess occurs. The Excess Aggregate Contributions
allocated to such Highly Compensated Employee(s) reduce the dollar amount of
the contributions taken into account under the ACP Test for such Highly
Compensated Employee(s) until all of the Excess Aggregate Contributions are
allocated or until the dollar amount of such contributions for the Highly
Compensated Employee(s) is reduced to the next highest dollar amount of such
contributions for any other Highly Compensated Employee(s). If there are
Excess Aggregate Contributions remaining, the Excess Aggregate Contributions
continue to be allocated in this manner until all of the Excess Aggregate
Contributions are allocated.
(ii) Allocable gain or loss. A corrective distribution of
Excess Aggregate Contributions must include any allocable gain or loss for the
Plan Year in which the excess occurs. For this purpose, allocable gain or loss
on Excess Aggregate Contributions may be determined in any reasonable manner,
provided the manner used is applied uniformly and in a manner that is
reasonably reflective of the method used by the Plan for allocating income to
Participants' Accounts.
(iii) Coordination with other provisions. A corrective
distribution of Excess Aggregate Contributions made by the end of the Plan
Year following the Plan Year in which the excess occurs may be made without
consent of the Participant or the Participant's spouse, and without regard to
any distribution restrictions applicable under Article 8 or Article 9. Excess
Aggregate Contributions are treated as Annual Additions for purposes of Code
Section415 even if distributed from the Plan. A corrective distribution of
Excess Aggregate Contributions is not treated as a distribution for purposes
of applying the required minimum distribution rules under Article 10.
(iv) Accounting for Excess Aggregate Contributions. Excess
Aggregate Contributions are distributed from the following sources and in the
following priority:
(A) Employee After-Tax Contributions that are not matched;
(B) proportionately from Employee After-Tax Contributions
not distributed under (A) and related Employer Matching Contributions that are
included in the ACP Test;
(C) Employer Matching Contributions included in the ACP
Test that are not distributed under (B);
(D) Section 401(k) Deferrals included in the ACP Test that
are not matched;
(E) proportionately from Section 401(k) Deferrals included
in the ACP Test that are not distributed under (D) and related Employer
Matching Contributions that are included in the ACP Test and not distributed
under (B) or (C); and
(F) QNECs included in the ACP Test.
(2) Making QMACs or QNECs. Regardless of any elections under Part
4B, #18 or Part 4C, #22 of the Agreement, the Employer may make additional
QMACs and/or QNECs to the Plan on behalf of the Nonhighly Compensated
Employees in order to correct an ACP Test violation to the extent such amounts
are not used in the ADP Test. Any QMACs contributed under this subsection (2)
which are not specifically authorized under Part 4B, #18 of the Agreement will
be allocated to all Eligible Participants who are Nonhighly Compensated
Employees as a uniform percentage of Section 401(k) Deferrals made
during the Plan Year. Any QNECs contributed under this subsection (2) which
are not specifically authorized under Part 4C, #22 of the Agreement will be
allocated to all Eligible Participants who are Nonhighly Compensated Employees
as a uniform percentage of Included Compensation. See Sections 2.3(c) and (e),
as applicable.
(e) Adjustment of contribution rate for Highly Compensated Employees. The
Employer may suspend (or automatically reduce the rate of) Employee After-Tax
Contributions for the Highly Compensated Employee Group, to the extent
necessary to satisfy the ACP Test or to reduce the margin of failure. A
suspension or reduction shall not affect Employee After-Tax Contributions
already contributed by the Highly Compensated Employees for the Plan Year. As
of the first day of the subsequent Plan Year, Employee After-Tax Contributions
shall resume at the levels elected by the Highly Compensated Employees.
17.4 Multiple Use Test. If both an ADP Test and an ACP Test are run for the
Plan Year, and the Plan does not pass the 1.25 test under either the ADP Test
or the ACP Test, the Plan must satisfy a special Multiple Use Test, unless
such Multiple Use Test is repealed or modified by statute, or other IRS
guidance.
(a) Aggregate Limit. Under the Multiple Use Test, the sum of the ADP and
the ACP for the Highly Compensated Employee Group may not exceed the Plan's
Aggregate Limit. For this purpose, the ADP and ACP of the Highly Compensated
Employees are determined after any corrections required to meet the ADP and
ACP tests and are deemed to be the maximum permitted under such tests for the
Plan Year. In applying the Multiple Use Test, the Plan's Aggregate Limit is
the sum of (1) and (2):
(1) 1.25 times the greater of: (i) the ADP of the Nonhighly
Compensated Employee Group or (ii) the ACP of the Nonhighly Compensated
Employee Group; and
(2) the lesser of 2 times or 2 plus the lesser of: (i) the ADP of
the Nonhighly Compensated Employee Group or (ii) the ACP of the Nonhighly
Compensated Employee Group.
Alternatively, if it results in a larger amount, the Aggregate Limit is the
sum of (3) and (4): (3) 1.25 times the lesser of: (i) the ADP of the Nonhighly
Compensated Employee Group or (ii) the ACP of the Nonhighly Compensated
Employee Group; and (4) the lesser of 2 times or 2 plus the greater of: (i)
the ADP of the Nonhighly Compensated Employee Group or (ii) the ACP of the
Nonhighly Compensated Employee Group.
The Aggregate Limit is calculated using the ADP and ACP of the Nonhighly
Compensated Employee Group that is used in performing the ADP Test and ACP
Test for the Plan Year. Thus, if the Prior Year Testing Method is being used,
the Aggregate Limit is calculated by using the applicable percentage of the
Nonhighly Compensated Employee Group for the prior Plan Year. If the Current
Year Testing Method is being used, the Aggregate Limit is calculated by using
the applicable percentage of the Nonhighly Compensated Employee Group for the
current Plan Year.
(b) Correction of the Multiple Use Test. If the Multiple Use Test is not
passed, the following corrective action will be taken.
(1) Corrective distributions. The Plan will make corrective
distributions (or additional corrective distributions, if corrective
distributions are already being made to correct a violation of the ADP Test or
ACP Test), to the extent other corrective action is not taken or such other
action is not sufficient to completely eliminate the Multiple Use Test
violation. Such corrective distributions may be determined as if they were
being made to correct a violation of the ADP Test or a violation of the ACP
Test, or a combination of both, as determined by the Plan Administrator. Any
corrective distribution that is treated as if it were correcting a violation
of the ADP Test will be determined under the rules described in Section
17.2(d). Any corrective distribution that is treated as if it were correcting
a violation of the ACP Test will be determined under the rules described in
Section 17.3(d).
(2) Making QMACs or QNECs. Regardless of any elections under Part
4B, #18 or Part 4C, #22 of the Agreement, the Employer may make additional
QMACs or QNECs, so that the resulting ADP and/or ACP of the Nonhighly
Compensated Employee Group is increased to the extent necessary to satisfy the
Multiple Use Test. Any QMACs contributed under this subsection (2) which are
not specifically authorized under Part 4B, #18 of the Agreement will be
allocated to all Eligible Participants who are
Nonhighly Compensated Employees as a uniform percentage of Section 401(k)
Deferrals made during the Plan Year. Any QNECs contributed under this
subsection (2) which are not specifically authorized under Part 4C, #22 of the
Agreement will be allocated to all Eligible Participants who are Nonhighly
Compensated Employees as a uniform percentage of Included Compensation. See
Sections 2.3(c) and (e), as applicable.
17.5 Special Testing Rules. This Section describes special testing rules
that apply to the ADP Test or the ACP Test. In some cases, the special testing
rule is optional, in which case, the election to use such rule is solely
within the discretion of the Plan Administrator.
(a) Special rule for determining ADP and ACP of Highly Compensated
Employee Group. When calculating the ADP or ACP of the Highly Compensated
Employee Group for any Plan Year, a Highly Compensated Employee's Section
401(k) Deferrals, Employee After-Tax Contributions, and Employer Matching
Contributions under all qualified plans maintained by the Employer are taken
into account as if such contributions were made to a single plan. If the plans
have different Plan Years, the contributions made in all Plan Years that end
in the same calendar year are aggregated under this paragraph. This
aggregation rule does not apply to plans that are required to be disaggregated
under Code Section410(b).
(b) Aggregation of plans. When calculating the ADP Test and the ACP Test,
plans that are permissively aggregated for coverage and nondiscrimination
testing purposes are treated as a single plan. This aggregation rule applies
to determine the ADP or ACP of both the Highly Compensated Employee Group and
the Nonhighly Compensated Employee Group. Any adjustments to the ADP of the
Nonhighly Compensated Employee Group for the prior year will be made in
accordance with Notice 98-1 and any superseding guidance, unless the Employer
has elected in Part 4F, #31.b. of the 401(k) Agreement to use the Current Year
Testing Method. Aggregation described in this paragraph is not permitted
unless all plans being aggregated have the same Plan Year and use the same
testing method for the applicable test.
(c) Disaggregation of plans.
(1) Plans covering Union Employees and non-Union Employees. If the
Plan covers Union Employees and non-Union Employees, the Plan is mandatorily
disaggregated for purposes of applying the ADP Test and the ACP Test into two
separate plans, one covering the Union Employees and one covering the non-
Union Employees. A separate ADP Test must be applied for each disaggregated
portion of the Plan in accordance with applicable Treasury regulations. A
separate ACP Test must be applied to the disaggregated portion of the Plan
that covers the non-Union Employees. The disaggregated portion of the Plan
that includes the Union Employees is deemed to pass the ACP Test.
(2) Otherwise excludable Employees. If the minimum coverage test
under Code Section410(b) is performed by disaggregating "otherwise excludable
Employees" (i.e., Employees who have not satisfied the maximum age 21 and one
Year of Service eligibility conditions permitted under Code Section410(a)),
then the Plan is treated as two separate plans, one benefiting the otherwise
excludable Employees and the other benefiting Employees who have satisfied the
maximum age and service eligibility conditions. If such disaggregation
applies, the following operating rules apply to the ADP Test and the ACP Test.
(i) For Plan Years beginning before January 1, 1999, the ADP
Test and the ACP Test are applied separately for each disaggregated plan. If
there are no Highly Compensated Employees benefiting under a disaggregated
plan, then no ADP Test or ACP Test is required for such plan.
(ii) For Plan Years beginning after December 31, 1998, instead
of the rule under subsection (i), only the disaggregated plan that benefits
the Employees who have satisfied the maximum age and service eligibility
conditions permitted under Code Section410(a) is subject to the ADP Test and
the ACP Test. However, any Highly Compensated Employee who is benefiting under
the disaggregated plan that includes the otherwise excludable Employees is
taken into account in such tests. The Employer may elect to apply the rule in
subsection (i) instead.
(3) Corrective action for disaggregated plans. Any corrective action
authorized by this Article may be determined separately with respect to each
disaggregated portion of the Plan. A corrective action taken with respect to a
disaggregated portion of the Plan need not be consistent with the method of
correction (if any) used for another disaggregated portion of the Plan. In the
case of a Nonstandardized
Agreement, to the extent the Agreement authorizes the Employer to make
discretionary QNECs or discretionary QMACs, the Employer is expressly
permitted to designate such QNECs or QMACs as allocable only to Eligible
Participants in a particular disaggregated portion of the Plan.
(d) Special rules for the Prior Year Testing Method. If the Plan uses the
Prior Year Testing Method, and an election made under subsection (b) or (c)
above is inconsistent with the election made in the prior Plan Year, the plan
coverage change rules described in IRS Notice 98-1 (or other successor
guidance) will apply in determining the ADP and ACP for the Nonhighly
Compensated Employee Group.
17.6 Safe Harbor 401(k) Plan Provisions. For Plan Years beginning after
December 31, 1998, the ADP Test described in Section 17.2 is deemed to be
satisfied for any Plan Year in which the Plan qualifies as a Safe Harbor
401(k) Plan. In addition, if Employer Matching Contributions are made for such
Plan Year, the ACP Test is deemed satisfied with respect to such contributions
if the conditions of subsection (c) below are satisfied. To qualify as a Safe
Harbor 401(k) Plan, the requirements under this Section 17.6 must be satisfied
for the entire Plan Year. This Section contains the rules that must be met for
the Plan to qualify as a Safe Harbor 401(k) Plan.
Part 4E of the Agreement allows the Employer to designate the manner in which
it will comply with the safe harbor requirements. If the Employer wishes to
designate the Plan as a Safe Harbor 401(k) Plan, it should complete Part 4E of
the Agreement. The safe harbor provisions described in this Section are not
applicable unless the Plan is identified as a Safe Harbor 401(k) Plan under
Part 4E. The election under Part 4E to be a Safe Harbor 401(k) Plan is
effective for all Plan Years beginning with the Effective Date of the Plan (or
January 1, 1999, if later) unless the Employer elects otherwise under Appendix
B-5.b. of the Agreement. In addition, to qualify as a Safe Harbor 401(k) Plan,
the Current Year Testing Method (as described in Section 17.3(a)(2)) must be
elected under Part 4F, #31 of the Agreement. (See Section 20.7 for rules
regarding the application of the Safe Harbor 401(k) Plan provisions for Plan
Years beginning before the date this Plan is adopted.)
(a) Safe harbor conditions. To qualify as a Safe Harbor 401(k) Plan, the
Plan must satisfy the requirements under subsections (1), (2), (3) and (4)
below.
(1) Safe Harbor Contribution. The Employer must provide a Safe
Harbor Matching Contribution or a Safe Harbor Nonelective Contribution under
the Plan. The Employer must designate the type and amount of the Safe Harbor
Contribution under Part 4E of the Agreement. The Safe Harbor Contribution must
be made to the Plan no later than 12 months following the close of the Plan
Year for which it is being used to qualify the Plan as a Safe Harbor 401(k)
Plan.
The Employer may elect under Part 4E, #30 of the Agreement to provide the Safe
Harbor Contribution to all Eligible Participants or only to Eligible
Participants who are Nonhighly Compensated Employees. Alternatively, the
Employer may elect under Part 4E, #30.c. to provide the Safe Harbor
Contribution to all Nonhighly Compensated Employees who are Eligible
Participants and all Highly Compensated Employees who are Eligible
Participants but who are not Key Employees. This permits a Plan providing the
Safe Harbor Nonelective Contribution to use such amounts to satisfy the
top-heavy minimum contribution requirements under Article 16.
In determining who is an Eligible Participant for purposes of the Safe Harbor
Contribution, the eligibility conditions applicable to Section 401(k)
Deferrals under Part 1, #5 of the Agreement apply. However, the Employer may
elect under Part 4E, #30.d. to apply a one Year of Service (as defined in
Section 1.4(b)) and an age 21 eligibility condition for the Safe Harbor
Contribution, regardless of the eligibility conditions selected for Section
401(k) Deferrals under Part 1, #5 of the Agreement. Unless elected otherwise
under Part 2, #8.f., column (1) of the Nonstandardized Agreement, the special
eligibility rule under Part 4E, #30.d. will be applied as if the Employer
elected under Part 2, #7.a., column (1) and Part 2, #8.a., column (1) of the
Agreement to use semi-annual Entry Dates following completion of the minimum
age and service conditions. If different eligibility conditions are selected
for the Safe Harbor Contribution, additional testing requirements may apply in
accordance with IRS Notice 2000-3.
(i) Safe Harbor Matching Contribution. The Employer may elect
under Part 4E, #27 of the Agreement to make the Safe Harbor Matching
Contribution with respect to each Eligible Participant's applicable
contributions. For this purpose, an Eligible Participant's applicable
contributions are the total Section 401(k) Deferrals and Employee After-Tax
Contributions the Eligible Participant makes
under the Plan. However, the Employer may elect under Part 4E, #27.d. to
exclude Employee After-Tax Contributions from the definition of applicable
contributions for purposes of applying the Safe Harbor Matching Contribution
formula.
The Safe Harbor Matching Contribution may be made under a basic formula or an
enhanced formula. The basic formula under Part 4E, #27.a. provides an Employer
Matching Contribution that equals:
(A) 100% of the amount of a Participant's applicable
contributions that do not exceed 3% of the Participant's Included
Compensation, plus
(B) 50% of the amount of a Participant's applicable
contributions that exceed 3%, but do not exceed 5%, of the Participant's
Included Compensation.
The enhanced formula under Part 4E, #27.b. provides an Employer Matching
Contribution that is not less, at each level of applicable contributions, than
the amount required under the basic formula. Under the enhanced formula, the
rate of Employer Matching Contributions may not increase as an Employee's rate
of applicable contributions increase.
The Plan will not fail to be a Safe Harbor 401(k) Plan merely because Highly
Compensated Employees also receive a contribution under the Plan. However, an
Employer Matching Contribution will not satisfy this Section if any Highly
Compensated Employee is eligible for a higher rate of Employer Matching
Contribution than is provided for any Nonhighly Compensated Employee who has
the same rate of applicable contributions.
In applying the Safe Harbor Matching Contribution formula under Part 4E, #27
of the Agreement, the Employer may elect under Part 4E, #27.c.(1) to determine
the Safe Harbor Matching Contribution on the basis of all applicable
contributions a Participant makes during the Plan Year. Alternatively, the
Employer may elect under Part 4E, #27.c.(2) - (4) to determine the Safe Harbor
Matching Contribution on a payroll, monthly, or quarterly basis. If the
Employer elects to use a period other than the Plan Year, the Safe Harbor
Matching Contribution with respect to a payroll period must be deposited into
the Plan by the last day of the Plan Year quarter following the Plan Year
quarter for which the applicable contributions are made.
In addition to the Safe Harbor Matching Contribution, an Employer may elect
under Part 4B of the Agreement to make Employer Matching Contributions that
are subject to the normal vesting schedule and distribution rules applicable
to Employer Matching Contributions. See subsection (c) below for a discussion
of the effect of such additional Employer Matching Contributions on the ACP
Test.
The Employer may amend the Plan during the Plan Year to reduce or eliminate
the Safe Harbor Matching Contribution elected under Part 4E, #27 of the
Agreement, provided a supplemental notice is given to all Eligible
Participants explaining the consequences and effective date of the amendment,
and that such Eligible Participants have a reasonable opportunity (including a
reasonable period) to change their Section 401(k) Deferral and/or Employee
After-Tax Contribution elections, as applicable. The amendment reducing or
eliminating the Safe Harbor Matching Contribution must be effective no earlier
than the later of: (A) 30 days after Eligible Participants are given the
supplemental notice or (B) the date the amendment is adopted. Eligible
Participants must be given a reasonable opportunity (and reasonable period)
prior to the reduction or elimination of the Safe Harbor Matching Contribution
to change their Section 401(k) Deferral or Employee After-Tax Contribution
elections, as applicable. If the Employer amends the Plan to reduce or
eliminate the Safe Harbor Matching Contribution, the Plan is subject to the
ADP Test and ACP Test for the entire Plan Year.
(ii) Safe Harbor Nonelective Contribution. The Employer may
elect under Part 4E, #28 of the Agreement to make a Safe Harbor Nonelective
Contribution of at least 3% of Included Compensation. The Employer may elect
under Part 4E, #28.b. to retain discretion to increase the amount of the Safe
Harbor Nonelective Contribution in excess of the percentage designated under
Part 4E, #28. In addition, the Employer may provide for additional
discretionary Employer Nonelective Contributions under Part 4C of the
Agreement (in addition to the Safe Harbor Contribution under this Section)
which are subject to the normal vesting schedule and distribution rules
applicable to Employer Nonelective Contributions.
(A) Supplemental notice. The Employer may elect under Part
4E, #28.a. of the Agreement to provide the Safe Harbor Nonelective
Contribution authorized under Part 4E, #28 only if the Employer provides a
supplemental notice to Participants indicating its intention to provide
such Safe Harbor Nonelective Contribution. If Part 4E, #28.a. is selected, to
qualify as a Safe Harbor 401(k) Plan under Part 4E, the Employer must notify
its Eligible Employees in the annual notice described in subsection (4) below
that the Employer may provide the Safe Harbor Nonelective Contribution
authorized under Part 4E, #28 of the Agreement and that a supplemental notice
will be provided at least 30 days prior to the last day of the Plan Year if
the Employer decides to make the Safe Harbor Nonelective Contribution. The
supplemental notice indicating the Employer's intention to make the Safe
Harbor Nonelective Contribution must be provided no later than 30 days prior
to the last day of the Plan Year for the Plan to qualify as a Safe Harbor
401(k) Plan. If the Employer selects Part 4E, #28.a. of the Agreement but
does not provide the supplemental notice in accordance with this paragraph,
the Employer is not obligated to make such contribution and the Plan does not
qualify as a Safe Harbor 401(k) Plan. The Plan will qualify as a Safe Harbor
401(k) Plan for subsequent Plan Years if the appropriate notices are provided
for such years.
(B) Separate Plan. The Employer may elect under Part 4E,
#28.c. of the Agreement to provide the Employer Nonelective Contribution under
another Defined Contribution Plan maintained by the Employer. The Employer
Nonelective Contribution under such other plan must satisfy the conditions
under this Section 17.6 for this Plan to qualify as a Safe Harbor 401(k) Plan.
Under the Standardized Agreement, the other plan designated under Part 4E,
#28.c. must be a Paired Plan as defined in Section 22.132.
(I) Profit sharing plan Agreement. If the Plan
designated under Part 4E, #28.c. is a profit sharing plan Agreement under this
Prototype Plan, the Employer must select Part 4, #12.f. under the profit
sharing plan Nonstandardized Agreement or Part 4, #12.e. under the profit
sharing plan Standardized Agreement, as applicable. The Employer may elect to
provide other Employer Contributions under Part 4, #12 of the profit sharing
plan Agreement, however, the first amounts allocated under the profit sharing
plan Agreement will be the Safe Harbor Nonelective Contribution required under
the 401(k) plan Agreement. Any Employer Contributions designated under Part 4,
#12 of the profit sharing plan Agreement are in addition to the Safe Harbor
Contribution required under the 401(k) plan Agreement. (If the only Employer
Contribution to be made under the profit sharing plan Agreement is the Safe
Harbor Nonelective Contribution, no other selection need be completed under
Part 4 of the profit sharing plan Agreement (other than Part 4, #12.f. of the
Nonstandardized Agreement or Part 4, #12.e. of the Standardized Agreement, as
applicable).)
If the Employer elects to provide the Safe Harbor Nonelective Contribution
under the profit sharing plan Agreement, the Employer must select either the
Pro Rata Allocation Method under Part 4, #13.a. or the Permitted Disparity
Method under Part 4, #13.b. of the profit sharing plan Agreement. If the
Employer elects the Pro Rata Allocation Method, the first amounts allocated
under the Pro Rata Allocation Method will be deemed to be the Safe Harbor
Nonelective Contribution as required under the 401(k) plan Agreement. To the
extent required under the 401(k) plan Agreement, such amounts are subject to
the conditions for Safe Harbor Nonelective Contributions described in
subsections (2) - (4) below, without regard to any contrary elections under
the Agreement.
If the Employer elects the Permitted Disparity Method, the Safe Harbor
Nonelective Contribution required under the 401(k) plan Agreement will be
allocated before applying the Permitted Disparity Method of allocation. To the
extent required under the 401(k) plan Agreement, such amounts are subject to
the conditions for Safe Harbor Nonelective Contributions described in
subsections (2) - (4) below without regard to any contrary elections under the
Agreement. If additional amounts are contributed under the profit sharing plan
Agreement, such amounts will be allocated under the Permitted Disparity
Method. The Safe Harbor Nonelective Contribution may not be taken into account
in applying the Permitted Disparity Method of allocation.
(II) Money purchase plan Agreement. If the Plan
designated under Part 4E, #28.c. is a money purchase plan Agreement under this
Prototype Plan, the Employer must select Part 4, #12.f. under the money
purchase plan Nonstandardized Agreement or Part 4, #12.d. under the money
purchase plan Standardized Agreement, as applicable. The Employer may elect to
provide other Employer Contributions under Part 4, #12 of the money purchase
plan Agreement, however, the first amounts allocated under the money purchase
plan Agreement will be the Safe Harbor Nonelective Contribution required under
the 401(k) plan Agreement. Any Employer Contributions designated under
Part 4, #12 of the money purchase plan Agreement are in addition to the Safe
Harbor Contribution. (If the only Employer Contribution to be made under the
money purchase plan Agreement is the Safe Harbor Nonelective Contribution, no
other need be completed under Part 4 of the money purchase plan Agreement
(other than Part 4, #12.f. of the Nonstandardized Agreement or Part 4, #12.d.
of the Standardized Agreement, as applicable).)
If the Employer elects to make a Safe Harbor Contribution under the money
purchase plan Agreement, the first amounts allocated under the Plan will be
deemed to be the Safe Harbor Nonelective Contribution as required under the
401(k) plan Agreement. Such amounts will be allocated equally to all Eligible
Participants as defined under the 401(k) plan Agreement. To the extent
required under the 401(k) plan Agreement, such amounts are subject to the
conditions for Safe Harbor Nonelective Contributions described in subsections
(2) - (4) below, without regard to any contrary elections under the Agreement.
If the Employer elects the Permitted Disparity Method of contribution, the
Safe Harbor Nonelective Contribution required under the 401(k) plan Agreement
will be allocated before applying the Permitted Disparity Method. The Safe
Harbor Nonelective Contribution may not be taken into account in applying the
Permitted Disparity Method of contribution.
(C) Elimination of Safe Harbor Nonelective Contribution.
The Employer may amend the Plan during the Plan Year to reduce or eliminate
the Safe Harbor Nonelective Contribution elected under Part 4E of the
Agreement. The Employer must notify all Eligible Participants of the amendment
and must provide each Eligible Participants with a reasonable opportunity
(including a reasonable period) to change their Section 401(k) Deferral and/or
Employee After-Tax Contribution elections, as applicable. The amendment
reducing or eliminating the Safe Harbor Nonelective Contribution must be
effective no earlier than the later of: (A) 30 days after Eligible
Participants are notified of the amendment or (B) the date the amendment is
adopted. If the Employer reduces or eliminates the Safe Harbor Nonelective
Contribution during the Plan Year, the Plan is subject to the ADP Test (and
ACP Test, if applicable) for the entire Plan Year.
(2) Full and immediate vesting. The Safe Harbor
Contribution under subsection (1) above must be 100% vested, regardless of the
Employee's length of service, at the time the contribution is made to the
Plan. Any additional amounts contributed under the Plan may be subject to a
vesting schedule.
(3) Distribution restrictions. Distributions of the Safe
Harbor Contribution under subsection (1) must be restricted in the same manner
as Section 401(k) Deferrals under Article 8, except that such contributions
may not be distributed upon Hardship. See Section 8.6(c).
(4) Annual notice. Each Eligible Participant under the
Plan must receive a written notice describing the Participant's rights and
obligations under the Plan, including a description of: (i) the Safe Harbor
Contribution formula being used under the Plan; (ii) any other contributions
under the Plan; (iii) the plan to which the Safe Harbor Contributions will be
made (if different from this Plan); (iv) the type and amount of Included
Compensation that may be deferred under the Plan; (v) the administrative
requirements for making and changing Section 401(k) Deferral elections; and
(vi) the withdrawal and vesting provisions under the Plan. For any Plan Year
that began in 1999, the notice requirements described in this paragraph are
deemed satisfied if the notice provided satisfied a reasonable, good faith
interpretation of the notice requirements under Code Section401(k)(12). (See
subsection (1)(ii) above for a special supplemental notice that may need to be
provided to qualify as a Safe Harbor 401(k) Plan.)
Each Eligible Participant must receive the annual notice within a reasonable
period before the beginning of the Plan Year (or within a reasonable period
before an Employee becomes an Eligible Participant, if later). For this
purpose, an Employee will be deemed to have received the notice in a timely
manner if the Employee receives such notice at least 30 days and no more than
90 days before the beginning of the Plan Year. For an Employee who becomes an
Eligible Participant during a Plan Year, the notice will be deemed timely if
it is provided no more than 90 days prior to the date the Employee becomes an
Eligible Participant. For Plan Years that began on or before April 1, 1999,
the notice requirement under this subsection will be satisfied if the notice
was provided by March 1, 1999. If an Employer first designates the Plan as a
Safe Harbor 401(k) Plan for a Plan Year that begins on or after January 1,
2000 and on or before June 1, 2000, the notice requirement under this
subsection will be satisfied if the notice was provided by May 1, 2000.
(b) Deemed compliance with ADP Test. If the Plan satisfies all the
conditions under subsection (a) above to qualify as a Safe Harbor 401(k) Plan,
the Plan is deemed to satisfy the ADP Test for the Plan Year. This Plan will
not be deemed to satisfy the ADP Test for a Plan Year if an Eligible
Participant is covered under another Safe Harbor 401(k) Plan maintained by the
Employer which uses the provisions under this Section to comply with the ADP
Test.
(c) Deemed compliance with ACP Test. If the Plan satisfies all the
conditions under subsection (a) above to qualify as a Safe Harbor 401(k) Plan,
the Plan is deemed to satisfy the ACP Test for the Plan Year with respect to
Employer Matching Contributions (including Employer Matching Contributions
that are not used to qualify as a Safe Harbor 401(k) Plan), provided the
following conditions are satisfied. If the Plan does not satisfy the
requirements under this subsection (c) for a Plan Year, the Plan must satisfy
the ACP Test for such Plan Year in accordance with subsection (d) below.
(1) Only Employer Matching Contributions are Safe Harbor Matching
Contributions under basic formula. If the only Employer Matching Contribution
formula provided under the Plan is a basic safe harbor formula under Part 4E,
#27.a. of the Agreement, the Plan is deemed to satisfy the ACP Test, without
regard to the conditions under subsections (2) - (5) below.
(2) Limit on contributions eligible for Employer Matching
Contributions. If Employer Matching Contributions are provided (other than
just Employer Matching Contributions under a basic safe harbor formula) the
total Employer Matching Contributions provided under the Plan (whether or not
such Employer Matching Contributions are provided under a Safe Harbor Matching
Contribution formula) must not apply to any Section 401(k) Deferrals or
Employee After-Tax Contributions that exceed 6% of Included Compensation. If
an Employer Matching Contribution formula applies to both Section 401(k)
Deferrals and Employee After-Tax Contributions, then the sum of such
contributions that exceed 6% of Included Compensation must be disregarded
under the formula.
(3) Limit on discretionary Employer Matching Contributions. For Plan
Years beginning after December 31, 1999, the Plan will not satisfy the ACP
Safe Harbor if the Employer elects to provide discretionary Employer Matching
Contributions in addition to the Safe Harbor Matching Contribution, unless the
Employer limits the aggregate amount of such discretionary Employer Matching
Contributions under Part 4B, #16.b. to no more than 4 percent of the
Employee's Included Compensation.
(4) Rate of Employer Matching Contribution may not increase. The
Employer Matching Contribution formula may not provide a higher rate of match
at higher levels of Section 401(k) Deferrals or Employee After-Tax
Contributions.
(5) Limit on Employer Matching Contributions for Highly Compensated
Employees. The Employer Matching Contributions made for any Highly Compensated
Employee at any rate of Section 401(k) Deferrals and/or Employee After-Tax
Contributions cannot be greater than the Employer Matching Contributions
provided for any Nonhighly Compensated Employee at the same rate of Section
401(k) Deferrals and/or Employee After-Tax Contributions.
(6) Employee After-Tax Contributions. If the Plan permits Employee
After-Tax Contributions, such contributions must satisfy the ACP Test,
regardless of whether the Employer Matching Contributions under Plan are
deemed to satisfy the ACP Test under this subsection (c). The ACP Test must be
performed in accordance with subsection (d) below.
(d) Rules for applying the ACP Test. If the ACP Test must be performed
under a Safe Harbor 401(k) Plan, either because there are Employee After-Tax
Contributions, or because the Employer Matching Contributions do not satisfy
the conditions described in subsection (c) above, the Current Year Testing
Method must be used to perform such test, even if the Agreement specifies that
the Prior Year Testing Method applies. In addition, the testing rules provided
in IRS Notice 98-52 (or any successor guidance) are applicable in applying the
ACP Test.
(e) Aggregated plans. If the Plan is aggregated with another plan under
Section 17.5(a) or (b), then the Plan is not a Safe Harbor 401(k) Plan unless
the conditions of this Section are satisfied on an aggregated basis.
(f) First year of plan. To qualify as a Safe Harbor 401(k) Plan, the Plan
Year must be a 12-month period, except for the first year of the Plan, in
which case the Plan may have a short Plan Year. In no
case may the Plan have a short Plan Year of less than 3 months.
If the Plan has an initial Plan Year that is less than 12 months, for purposes
of applying the Annual Additions Limitation under Article 7, the Limitation
Year will be the 12-month period ending on the last day of the short Plan
Year. Thus, no proration of the Defined Contribution Dollar Limitation will be
required. (See Section 7.4(e).) In addition, the Employer's Included
Compensation will be determined for the 12-month period ending on the last day
of the short Plan Year.
17.7 Definitions. The following definitions apply for purposes of applying
the provisions of this Article 17.
(a) ACP - Average Contribution Percentage. The ACP for a group is the
average of the contribution percentages calculated separately for each
Eligible Participant in the group. An Eligible Participant's contribution
percentage is the ratio of the contributions made on behalf of the Participant
that are included under the ACP Test, expressed as a percentage of the
Participant's Testing Compensation for the Plan Year. For this purpose, the
contributions included under the ACP Test are the sum of the Employee
After-Tax Contributions, Employer Matching Contributions, and QMACs (to the
extent not taken into account for purposes of the ADP test) made under the
Plan on behalf of the Participant for the Plan Year. The ACP may also include
other contributions as provided in Section 17.3(c), if applicable.
(b) ADP - Average Deferral Percentage. The ADP for a group is the average
of the deferral percentages calculated separately for each Eligible
Participant in the group. A Participant's deferral percentage is the ratio of
the Participant's deferral contributions expressed as a percentage of the
Participant's Testing Compensation for the Plan Year. For this purpose, a
Participant's deferral contributions include any Section 401(k) Deferrals made
pursuant to the Participant's deferral election, including Excess Deferrals of
Highly Compensated Employees (but excluding Excess Deferrals of Nonhighly
Compensated Employees). The ADP may also include other contributions as
provided in Section 17.2(c), if applicable.
In determining a Participant's deferral percentage for the Plan Year, a
deferral contribution may be taken into account only if such contribution is
allocated to the Participant's Account as of a date within the Plan Year. For
this purpose, a deferral contribution may only be allocated to a Participant's
Account within a particular Plan Year if the deferral contribution is actually
paid to the Trust no later than the end of the 12-month period immediately
following that Plan Year and the deferral contribution relates to Included
Compensation that (1) would otherwise have been received by the Participant in
that Plan Year or (2) is attributable to services performed in that Plan Year
and would otherwise have been received by the Participant within 2.5 months
after the close of that Plan Year. No formal election need be made by the
Employer to use the 2.5-month rule described in the preceding sentence.
However, deferral contributions may only be taken into account for a single
Plan Year.
(c) Excess Aggregate Contributions. Excess Aggregate Contributions for a
Plan Year are the amounts contributed on behalf of the Highly Compensated
Employees that exceed the maximum amount permitted under the ACP Test for such
Plan Year. The total dollar amount of Excess Aggregate Contributions for a
Plan Year is determined by calculating the amount that would have to be
distributed to the Highly Compensated Employees if the distributions were made
first to the Highly Compensated Employee(s) with the highest contribution
percentage until either:
(1) the adjusted ACP for the Highly Compensated Employee Group would
reach a percentage that satisfies the ACP Test, or
(2) the contribution percentage of the Highly Compensated
Employee(s) with the next highest contribution percentage would be reached.
This process is repeated until the adjusted ACP for the Highly Compensated
Employee Group would satisfy the ACP Test. The total dollar amount so
determined is then divided among the Highly Compensated Employee Group in the
manner described in Section 17.3(d)(1) to determine the actual corrective
distributions to be made.
(d) Excess Contributions. Excess Contributions for a Plan Year are the
amounts taken into account in computing the ADP of the Highly Compensated
Employees that exceed the maximum amount permitted under the ADP Test for such
Plan Year. The total dollar amount of Excess Contributions for a Plan Year is
determined by calculating the amount that would have to be distributed to the
Highly Compensated Employees if the distributions were made first to the
Highly Compensated Employee(s) with the highest deferral percentage until
either:
(1) the adjusted ADP for the Highly Compensated Employee Group would
reach a percentage that satisfies the ADP Test, or
(2) the deferral percentage of the Highly Compensated Employee(s)
with the next highest deferral percentage would be reached.
This process is repeated until the adjusted ADP for the Highly Compensated
Employee Group would satisfy the ADP test. The total dollar amount so
determined is then divided among the Highly Compensated Employee Group in the
manner described in Section 17.2(d)(1) to determine the actual corrective
distributions to be made.
(e) Highly Compensated Employee Group. The Highly Compensated Employee
Group is the group of Eligible Participants who are Highly Compensated
Employees for the current Plan Year. An Employee who makes a one-time
irrevocable election not to participate in accordance with Section 1.10 (if
authorized under Part 13, #75 of the Nonstandardized Agreement) will not be
treated as an Eligible Participant.
(f) Nonhighly Compensated Employee Group. The Nonhighly Compensated
Employee Group is the group of Eligible Participants who are Nonhighly
Compensated Employees for the applicable Plan Year. If the Prior Year Testing
Method is selected under Part 4F of the Agreement, the Nonhighly Compensated
Employee Group is the group of Eligible Participants in the prior Plan Year
who were Nonhighly Compensated Employees for that year. If the Current Year
Testing Method is selected under Part 4F of the Agreement, the Nonhighly
Compensated Employee Group is the group of Eligible Participants who are
Nonhighly Compensated Employees for the current Plan Year. An Employee who
makes a one-time irrevocable election not to participate in accordance with
Section 1.10 (if authorized under Part 13, #75 of the Nonstandardized
Agreement) will not be treated as an Eligible Participant.
(g) QMACs - Qualified Matching Contribution. To the extent authorized
under Part 4B, #18 of the Agreement, QMACs are Employer Matching Contributions
which are 100% vested when contributed to the Plan and are subject to the
distribution restrictions applicable to Section 401(k) Deferrals under Article
8, except that no portion of a Participant's QMAC Account may be distributed
from the Plan on account of Hardship. See Section 8.6(c).
(h) QNECs - Qualified Nonelective Contributions. To the extent authorized
under Part 4C, #22 of the Agreement, QNECs are Employer Nonelective
Contributions which are 100% vested when contributed to the Plan and are
subject to the distribution restrictions applicable to Section 401(k)
Deferrals under Article 8, except that no portion of a Participant's QNEC
Account may be distributed from the Plan on account of Hardship. See Section
8.6(c).
(i) Testing Compensation. In determining the Testing Compensation used
for purposes of applying the ADP Test, the ACP Test, and the Multiple Use
Test, the Plan Administrator is not bound by any elections made under Part 3
of the Agreement with respect to Total Compensation or Included Compensation
under the Plan. The Plan Administrator may determine on an annual basis (and
within its discretion) the components of Testing Compensation for purposes of
applying the ADP Test, the ACP Test and the Multiple Use Test. Testing
Compensation must qualify as a nondiscriminatory definition of compensation
under Code Section414(s) and the regulations thereunder and must be applied
consistently to all Participants. Testing Compensation may be determined over
the Plan Year for which the applicable test is being performed or the calendar
year ending within such Plan Year. In determining Testing Compensation, the
Plan Administrator may take into consideration only the compensation received
while the Employee is an Eligible Participant under the component of the Plan
being tested. In no event may Testing Compensation for any Participant exceed
the Compensation Dollar Limitation defined in Section 22.32. In determining
Testing Compensation, the Plan Administrator may exclude amounts paid to an
individual as severance pay to the extent such amounts are paid after the
common-law employment relationship between the individual and the Employer has
terminated, provided such amounts also are excluded in determining Total
Compensation under 22.197.
ARTICLE 18 PLAN AMENDMENTS AND TERMINATION
This Article contains the rules regarding the ability of the Prototype Sponsor
or Employer to make Plan amendments and the effect of such amendments on the
Plan. This Article also contains the rules for administering the Plan upon
termination and the effect of Plan termination on Participants' benefits and
distribution rights.
18.1 Plan Amendments.
(a) Amendment by the Prototype Sponsor. The Prototype Sponsor may amend
the Prototype Plan on behalf of each adopting Employer who is maintaining the
Plan at the time of the amendment. An amendment by the Prototype Sponsor to
the Basic Plan Document does not require consent of the adopting Employers,
nor does an adopting Employer have to reexecute its Agreement with respect to
such an amendment. The Prototype Sponsor will provide each adopting Employer a
copy of the amended Basic Plan Document (either by providing substitute or
additional pages, or by providing a restated Basic Plan Document). An
amendment by the Prototype Sponsor to any Agreement offered under the
Prototype Plan is not effective with respect to an Employer's Plan unless the
Employer reexecutes the amended Agreement.
If the Prototype Plan is amended by the mass submitter, the mass submitter is
treated as the agent of the Prototype Sponsor. If the Prototype Sponsor does
not adopt any amendments made by the mass submitter, the Prototype Plan will
no longer be identical to or a minor modifier of the mass submitter Prototype
Plan.
(b) Amendment by the Employer. The Employer shall have the right at any
time to amend the Agreement in the following manner without affecting the
Plan's status as a Prototype Plan. (The ability to amend the Plan as
authorized under this Section applies only to the Employer that executes the
Signature Page of the Agreement. Any amendment to the Plan by the Employer
under this Section also applies to any Related Employer that participates
under the Plan as a Co-Sponsor.)
(1) The Employer may change any optional selections under the
Agreement.
(2) The Employer may add additional language where authorized under
the Agreement, including language necessary to satisfy Code Section415 or Code
Section416 due to the aggregation of multiple plans.
(3) The Employer may change the administrative selections under Part
12 of the Agreement by replacing the appropriate page(s) within the Agreement.
Such amendment does not require reexecution of the Signature Page of the
Agreement.
(4) The Employer may add any model amendments published by the IRS
which specifically provide that their adoption will not cause the Plan to be
treated as an individually designed plan.
(5) The Employer may adopt any amendments that it deems necessary to
satisfy the requirements for resolving qualification failures under the IRS'
compliance resolution programs.
(6) The Employer may adopt an amendment to cure a coverage or
nondiscrimination testing failure, as permitted under applicable Treasury
regulations.
The Employer may amend the Plan at any time for any other reason, including a
waiver of the minimum funding requirement under Code Section412(d). However,
such an amendment will cause the Plan to lose its status as a Prototype Plan
and become an individually designed plan.
The Employer's amendment of the Plan from one type of Defined Contribution
Plan (e.g., a money purchase plan) into another type of Defined Contribution
Plan (e.g., a profit sharing plan) will not result in a partial termination or
any other event that would require full vesting of some or all Plan
Participants.
Any amendment that affects the rights, duties or responsibilities of the
Trustee or Plan Administrator may only be made with the Trustee's or Plan
Administrator's written consent. Any amendment to the Plan must be in writing
and a copy of the resolution (or similar instrument) setting forth such
amendment (with the applicable effective date of such amendment) must be
delivered to the Trustee.
No amendment may authorize or permit any portion of the assets held under the
Plan to be used for or diverted to a purpose other than the exclusive benefit
of Participants or their Beneficiaries, except to the extent such assets are
used to pay taxes or administrative expenses of the Plan. An amendment also
may not
cause or permit any portion of the assets held under the Plan to revert to or
become property of the Employer.
(c) Protected Benefits. Except as permitted under statute (such as Code
Section412(c)(8)), regulations (such as Treas. Reg. Section1.411(d)-4), or
other IRS guidance of general applicability, no Plan amendment (or other
transaction having the effect of a Plan amendment, such as a merger,
acquisition, plan transfer, or similar transaction) may reduce a Participant's
Account Balance or eliminate or reduce a Protected Benefit to the extent such
Protected Benefit relates to amounts accrued prior to the adoption date (or
effective date, if later) of the Plan amendment. For this purpose, Protected
Benefits include any early retirement benefits, retirement-type subsidies, and
optional forms of benefit (as defined under the regulations). If the adoption
of this Plan will result in the elimination of a Protected Benefit, the
Employer may preserve such Protected Benefit by identifying the Protected
Benefit in accordance with Part 13, #58 of the Agreement [Part 13, #76 of the
401(k) Agreement]. Failure to identify Protected Benefits under the Agreement
will not override the requirement that such Protected Benefits be preserved
under this Plan. The availability of each optional form of benefit under the
Plan must not be subject to Employer discretion.
Effective for amendments adopted and effective on or after September 6, 2000,
if the Plan is a profit sharing plan or a 401(k) plan, the Employer may
eliminate all annuity and installment forms of distribution (including the
QJSA form of benefit to the extent the Plan is not required to offer such form
of benefit under Article 9), provided the Plan offers a single-sum
distribution option that is available at the same time as the annuity or
installment options that are being eliminated. If the Plan is a money purchase
plan or a target benefit plan, the Employer may not eliminate the QJSA form of
benefit. However, the Employer may eliminate all other annuity and installment
forms of distribution, provided the Plan offers a single-sum distribution
option that is available at the same time as the annuity or installment
options that are being eliminated. Any amendment eliminating an annuity or
installment form of distribution may not be effective until the earlier of:
(1) the date which is the 90th day following the date a summary of the
amendment is furnished to the Participant which satisfies the requirements
under DOL Reg. Section2520.104b-3 or (2) the first day of the second Plan Year
following the Plan Year in which the amendment is adopted.
18.2 Plan Termination. The Employer may terminate this Plan at any time by
delivering to the Trustee and Plan Administrator written notice of such
termination.
(a) Full and immediate vesting. Upon a full or partial termination of the
Plan (or in the case of a profit sharing plan, the complete discontinuance of
contributions), all amounts credited to an affected Participant's Account
become 100% vested, regardless of the Participant's vested percentage
determined under Article 4. The Plan Administrator has discretion to determine
whether a partial termination has occurred.
(b) Distribution procedures. Upon the termination of the Plan, the Plan
Administrator shall direct the distribution of Plan assets to Participants in
accordance with the provisions under Article 8. For this purpose, distribution
shall be made to Participants with vested Account Balances of $5,000 or less
in lump sum as soon as administratively feasible following the Plan
termination, regardless of any contrary election under Part 9, #34 of the
Agreement [Part 9, #52 of the 401(k) Agreement]. For Participants with vested
Account Balances in excess of $5,000, distribution will be made through the
purchase of deferred annuity contracts which protect all Protected Benefits
under the Plan, unless a Participant elects to receive an immediate
distribution in any form of payment permitted under the Plan. If an immediate
distribution is elected in a form other than a lump sum, the distribution will
be satisfied through the purchase of an immediate annuity contract.
Distributions will be made as soon as administratively feasible following the
Plan termination, regardless of any contrary election under Part 9, #33 of the
Agreement [Part 9, #51 of the 401(k) Agreement]. The references in this
paragraph to $5,000 shall be deemed to mean $3,500, prior to the time the
$5,000 threshold becomes effective under the Plan (as determined in Section
8.3(f)).
For purposes of applying the provisions of this subsection (b), distribution
may be delayed until the Employer receives a favorable determination letter
from the IRS as to the qualified status of the Plan upon termination, provided
the determination letter request is made within a reasonable period following
the termination of the Plan.
(1) Special rule for certain profit sharing plans. If this Plan is a
profit sharing plan, distribution will be made to all Participants, without
consent, as soon as administratively feasible following
the termination of the Plan, without regard to the value of the Participants'
vested Account Balance. This special rule applies only if the Plan does not
provide for an annuity option under Part 11 of the Agreement and the Employer
does not maintain any other Defined Contribution Plan (other than an ESOP) at
any time between the termination of the Plan and the distribution.
(2) Special rule for 401(k) plans. Section 401(k) Deferrals, QMACs,
QNECs, Safe Harbor Matching Contributions and Safe Harbor Nonelective
Contributions under a 401(k) plan (as well as transferred assets (see Section
3.3(c)(3)) which are subject to the distribution restrictions applicable to
Section 401(k) Deferrals) may be distributed in a lump sum upon Plan
termination only if the Employer does not maintain a Successor Plan at any
time during the period beginning on the date of termination and ending 12
months after the final distribution of all Plan assets. For this purpose, a
Successor Plan is any Defined Contribution Plan, other than an ESOP (as
defined in Code Section4975(e)(7)), a SEP (as defined in Code Section408(k)),
or a SIMPLE IRA (as defined in Code Section408(p)). A plan will not be
considered a Successor Plan, if at all times during the 24-month period
beginning 12 months before the Plan termination, fewer than 2% of the Eligible
Participants under the 401(k) plan are eligible under such plan. A
distribution of these contributions may be made to the extent another
distribution event permits distribution of such amounts.
(3) Plan termination not distribution event if assets are
transferred to another Plan. If, pursuant to the termination of the Plan, the
Employer enters into a transfer agreement to transfer the assets of the
terminated Plan to another plan maintained by the Employer (or by a successor
employer in a transaction involving the acquisition of the Employer's stock or
assets, or other similar transaction), the termination of the Plan is not a
distribution event and the distribution procedures above do not apply. Prior
to the transfer of the assets, distribution of a Participant's Account Balance
may be made from the terminated Plan only to a Participant (or Beneficiary, if
applicable) who is otherwise eligible for distribution without regard to the
Plan's termination. Otherwise, benefits will be distributed from the
transferee plan in accordance with the terms of that plan (subject to the
protection of any Protected Benefits that must be continued with respect to
the transferred assets).
(c) Termination upon merger, liquidation or dissolution of the Employer.
The Plan shall terminate upon the liquidation or dissolution of the Employer
or the death of the Employer (if the Employer is a sole proprietor) provided
however, that in any such event, arrangements may be made for the Plan to be
continued by any successor to the Employer.
18.3 Merger or Consolidation. In the event the Plan is merged or
consolidated with another plan, each Participant must be entitled to a benefit
immediately after such merger or consolidation that is at least equal to the
benefit the Participant would have been entitled to had the Plan terminated
immediately before such merger or consolidation. (See Section 4.1(d) for rules
regarding vesting following a merger or consolidation.) The Employer may
authorize the Trustee to enter into a merger agreement with the Trustee of
another plan to effect such merger or consolidation. A merger agreement
entered into by the Trustee is not part of this Plan and does not affect the
Plan's status as a Prototype Plan. (See Section 3.3 for the applicable rules
where amounts are transferred to this Plan from another plan.)
ARTICLE 19 MISCELLANEOUS
This Article contains miscellaneous provisions concerning the Employer's and
Participants' rights and responsibilities under the Plan.
19.1 Exclusive Benefit. Except as provided under Section 19.2, no part of
the Plan assets (including any corpus or income of the Trust) may revert to
the Employer prior to the satisfaction of all liabilities under the Plan nor
will such Plan assets be used for, or diverted to, a purpose other than the
exclusive benefit of Participants or their Beneficiaries.
19.2 Return of Employer Contributions. Upon written request by the Employer,
the Trustee must return any Employer Contributions provided that the
circumstances and the time frames described below are satisfied. The Trustee
may request the Employer to provide additional information to ensure the
amounts may be properly returned. Any amounts returned shall not include
earnings, but must be reduced by any losses.
(a) Mistake of fact. Any Employer Contributions made because of a mistake
of fact must be
returned to the Employer within one year of the contribution.
(b) Disallowance of deduction. Employer Contributions to the Trust are
made with the understanding that they are deductible. In the event the
deduction of an Employer Contribution is disallowed by the IRS, such
contribution (to the extent disallowed) must be returned to the Employer
within one year of the disallowance of the deduction.
(c) Failure to initially qualify. Employer Contributions to the Plan are
made with the understanding, in the case of a new Plan, that the Plan
satisfies the qualification requirements of Code Section401(a) as of the
Plan's Effective Date. In the event that the Internal Revenue Service
determines that the Plan is not initially qualified under the Code, any
Employer Contributions (and allocable earnings) made incident to that initial
qualification must be returned to the Employer within one year after the date
the initial qualification is denied, but only if the application for the
qualification is made by the time prescribed by law for filing the employer's
return for the taxable year in which the plan is adopted, or such later date
as the Secretary of the Treasury may prescribe.
19.3 Alienation or Assignment. Except as permitted under applicable statute
or regulation, a Participant or Beneficiary may not assign, alienate, transfer
or sell any right or claim to a benefit or distribution from the Plan, and any
attempt to assign, alienate, transfer or sell such a right or claim shall be
void, except as permitted by statute or regulation. Any such right or claim
under the Plan shall not be subject to attachment, execution, garnishment,
sequestration, or other legal or equitable process. This prohibition against
alienation or assignment also applies to the creation, assignment, or
recognition of a right to a benefit payable with respect to a Participant
pursuant to a domestic relations order, unless such order is determined to be
a QDRO pursuant to Section 11.5, or any domestic relations order entered
before January 1, 1985.
19.4 Participants' Rights. The adoption of this Plan by the Employer does
not give any Participant, Beneficiary, or Employee a right to continued
employment with the Employer and does not affect the Employer's right to
discharge an Employee or Participant at any time. This Plan also does not
create any legal or equitable rights in favor of any Participant, Beneficiary,
or Employee against the Employer, Plan Administrator or Trustee. Unless the
context indicates otherwise, any amendment to this Plan is not applicable to
determine the benefits accrued (and the extent to which such benefits are
vested) by a Participant or former Employee whose employment terminated before
the effective date of such amendment, except where application of such
amendment to the terminated Participant or former Employee is required by
statute, regulation or other guidance of general applicability. Where the
provisions of the Plan are ambiguous as to the application of an amendment to
a terminated Participant or former Employee, the Plan Administrator has the
authority to make a final determination on the proper interpretation of the
Plan.
19.5 Military Service. To the extent required under Code Section414(u), an
Employee who returns to employment with the Employer following a period of
qualified military service will receive any contributions, benefits and
service credit required under Code Section414(u), provided the Employee
satisfies all applicable requirements under the Code and regulations.
19.6 Paired Plans. If the Employer adopts more than one Standardized
Agreement, each of the Standardized Agreements are considered to be Paired
Plans, provided the Employer completes Part 13, #54 of the Agreement [Part 13,
#72 of the 401(k) Agreement] in a manner which ensures the plans together
comply with the Annual Additions Limitation, as described in Article 7, and
the Top-Heavy Plan rules, as described in Article 16. If the Employer adopts
Paired Plans, each Plan must have the same Plan Year.
19.7 Annuity Contract. Any annuity contract distributed under the Plan must
be nontransferable. In addition, the terms of any annuity contract purchased
and distributed to a Participant or to a Participant's spouse must comply with
all requirements under this Plan.
19.8 Use of IRS compliance programs. Nothing in this Plan document should be
construed to limit the availability of the IRS' voluntary compliance programs,
including the IRS Administrative Policy Regarding Self-Correction (APRSC)
program. An Employer may take whatever corrective actions are permitted under
the IRS voluntary compliance programs, as is deemed appropriate by the Plan
Administrator or Employer.
19.9 Loss of Prototype Status. If the Plan as adopted by the Employer fails
to attain or retain
qualification, such Plan will no longer qualify as a Prototype Plan and will
be considered an individually-designed plan.
19.10 Governing Law. The provisions of this Plan shall be construed,
administered, and enforced in accordance with the provisions of applicable
Federal Law and, to the extent applicable, the laws of the state in which the
Trustee has its principal place of business. The foregoing provisions of this
Section shall not preclude the Employer and the Trustee from agreeing to a
different state law with respect to the construction, administration and
enforcement of the Plan.
19.11 Waiver of Notice. Any person entitled to a notice under the Plan may
waive the right to receive such notice, to the extent such a waiver is not
prohibited by law, regulation or other pronouncement.
19.12 Use of Electronic Media. The Plan Administrator may use telephonic or
electronic media to satisfy any notice requirements required by this Plan, to
the extent permissible under regulations (or other generally applicable
guidance). In addition, a Participant's consent to immediate distribution, as
required by Article 8, may be provided through telephonic or electronic means,
to the extent permissible under regulations (or other generally applicable
guidance). The Plan Administrator also may use telephonic or electronic media
to conduct plan transactions such as enrolling participants, making (and
changing) salary reduction elections, electing (and changing) investment
allocations, applying for Plan loans, and other transactions, to the extent
permissible under regulations (or other generally applicable guidance).
19.13 Severability of Provisions. In the event that any provision of this
Plan shall be held to be illegal, invalid or unenforceable for any reason, the
remaining provisions under the Plan shall be construed as if the illegal,
invalid or unenforceable provisions had never been included in the Plan.
19.14 Binding Effect. The Plan, and all actions and decisions made
thereunder, shall be binding upon all applicable parties, and their heirs,
executors, administrators, successors and assigns.
ARTICLE 20 GUST ELECTIONS AND EFFECTIVE DATES
The provisions of this Plan are generally effective as of the Effective Date
designated on the Signature Page of the Agreement. Appendix A of the Agreement
also allows for special effective dates for specified provisions of the Plan,
which override the general Effective Date under the Agreement. Section 22.96
refers to a series of laws that have been enacted since 1994 as the GUST
Legislation, for which extended time (known as the remedial amendment period)
was provided to Employers to conform their plan documents to such laws. This
Article prescribes special effective date rules for conforming plans to the
GUST Legislation.
20.1 GUST Effective Dates. If the Agreement is adopted within the remedial
amendment period for the GUST Legislation, and the Plan has not previously
been restated to comply with the GUST Legislation, then special effective
dates apply to certain provisions. These special effective dates apply to the
appropriate provisions of the Plan, even if such special effective dates are
earlier than the Effective Date identified on the Signature Page of the
Agreement. The Employer may specify in elections provided in Appendix B of the
Agreement, how the Plan was operated to comply with the GUST Legislation.
Appendix B need only be completed if the Employer operated this Plan in a
manner that is different from the default provisions contained in this Plan or
the elective choices made under the Agreement. If the Employer did not operate
the Plan in a manner that is different from the default provisions or elective
provisions of the Plan or, if the Plan is not being restated for the first
time to comply with the GUST Legislation, and prior amendments or restatements
of the Plan satisfied the requirement to amend timely to comply with the GUST
Legislation, Appendix B need not be completed and may be removed from the
Agreement.
If one or more qualified retirement plans have been merged into this Plan, the
provisions of the merging plan(s) will remain in full force and effect until
the Effective Date of the plan merger(s), unless provided otherwise under
Appendix A-12 of the Agreement [Appendix A-16 of the 401(k) Agreement]. If the
merging plan(s) have not been amended to comply with the changes required
under the GUST Legislation, the merging plan(s) will be deemed amended
retroactively for such required changes by operation of this Agreement. The
provisions required by the GUST Legislation (as provided under this BPD and
related Agreements) will be effective for purposes of the merging plan(s) as
of the same effective date that is specified for that GUST provision in this
BPD and Appendix B of the Agreement (even if that date precedes the general
Effective Date specified in the Agreement).
20.2 Highly Compensated Employee Definition. The definition of Highly
Compensated Employee under Section 22.99 is modified effective for Plan Years
beginning after December 31, 1996. Under the current definition of Highly
Compensated Employee, the Employer must designate under the Plan whether it is
using the Top-Paid Group Test and whether it is using the Calendar Year
Election or, for the 1997 Plan Year, whether it used the Old-Law Calendar Year
Election.
(a) Top-Paid Group Test. In determining whether an Employee is a Highly
Compensated Employee, the Top-Paid Group Test under Section 22.99(b)(4) does
not apply unless the Employer specifically elects under Part 13, #50.a. of the
Agreement [Part 13, #68.a. of the 401(k) Agreement] to have the Top-Paid Group
Test apply. The Employer's election to use or not use the Top-Paid Group Test
generally applies for all years beginning with the Effective Date of the Plan
(or the first Plan Year beginning after December 31, 1996, if later). However,
because the Employer may not have operated the Plan consistent with this Top-
Paid Group Test election for all years prior to the date this Plan restatement
is adopted, Appendix B-1.a. of the Agreement also permits the Employer to
override the Top-Paid Group Test election under this Plan for specified Plan
Years beginning after December 31, 1996, and before the date this Plan
restatement is adopted.
(b) Calendar Year Election. In determining whether an Employee is a
Highly Compensated Employee, the Calendar Year Election under Section
22.99(b)(5) does not apply unless the Employer specifically elects under Part
13, #50.b. of the Agreement [Part 13, #68.b. of the 401(k) Agreement] to have
the Calendar Year Election apply. The Employer's election to use or not use
the Calendar Year Election is generally effective for all years beginning with
the Effective Date of this Plan (or the first Plan Year beginning after
December 31, 1996, if later). However, because the Employer may not have
operated the Plan consistent with this Calendar Year Election for all years
prior to the date this Plan restatement is adopted, Appendix B-1.b. of the
Agreement permits the Employer to override the Calendar Year Election under
this Plan for specified Plan Years beginning after December 31, 1996, and
before the date this Plan restatement is adopted.
(c) Old-Law Calendar Year Election. In determining whether an Employee
was a Highly Compensated Employee for the Plan Year beginning in 1997, a
special Old-Law Calendar Year Election was available. (See Section 22.99(b)(6)
for the definition of the Old-Law Calendar Year Election.) Appendix B-1.c. of
the Agreement permits the Employer to designate whether it used the Old-Law
Calendar Year Election for the 1997 Plan Year. If the Employer did not use the
Old-Law Calendar Year Election, the election in Appendix B-1.c. need not be
completed.
20.3 Required Minimum Distributions. Appendix B-2 of the Agreement permits
the Employer to designate how it complied with the GUST Legislation changes to
the required minimum distribution rules. Section 10.4 describes the
application of the GUST Legislation changes to the required minimum
distribution rules.
20.4 $5,000 Involuntary Distribution Threshold. For Plan Years beginning on
or after August 5, 1997, a Participant (and spouse, if the Joint and Survivor
Annuity rules apply under Article 9) must consent to a distribution from the
Plan if the Participant's vested Account Balance exceeds $5,000. (See Section
8.3(e) for the applicable rules for determining the value of a Participant's
vested Account Balance.) For Plan Years beginning before August 5, 1997, the
consent threshold was $3,500 instead of $5,000.
The increase in the consent threshold to $5,000 is generally effective for
Plan Years beginning on or after August 5, 1997. However, because the Employer
may not have operated the Plan consistent with the $5,000 threshold for all
years prior to the date this Plan restatement was adopted, Appendix B-3.a. of
the Agreement permits the Employer to designate the Plan Year during which it
began applying the higher $5,000 consent threshold. If the Employer began
applying the $5,000 consent threshold for Plan Years beginning on or after
August 5, 1997, Appendix B-3.a. need not be completed. If the Employer did not
begin using the $5,000 consent threshold until some later date, the Employer
must designate the appropriate date in Appendix B-3.a.
20.5 Repeal of Family Aggregation for Allocation Purposes. For Plan Years
beginning on or after January 1, 1997, the family aggregation rules were
repealed. For Plan Years beginning before January 1, 1997, the family
aggregation rules required that family members of a Five-Percent Owner or one
of the 10 Employees with the highest ownership interest in the Employer were
aggregated as a single Highly
Compensated Employee for purposes of determining such individuals' share of
any contributions under the Plan. In determining the allocation for such
aggregated individuals, the Compensation Dollar Limitation (as defined in
Section 22.32) was applied on an aggregated basis with respect to the
Five-Percent Owner or top-10 owner, his/her spouse, and his/her minor children
(under the age of 19).
The family aggregation rules were repealed effective for Plan Years beginning
on or after January 1, 1997. However, because the Employer may not have
operated the Plan consistent with the repeal of family aggregation for all
years prior to the date this Plan restatement is adopted, Appendix B-3.b. of
the Agreement permits the Employer to designate the Plan Year during which it
repealed family aggregation for allocation purposes. If the Employer
implemented the repeal of family aggregation for Plan Years beginning on or
after January 1, 1997, Appendix B-3.b. need not be completed. If the Employer
did not implement the repeal of family aggregation until some later date, the
Employer must designate the appropriate date in Appendix B-3.b.
20.6 ADP/ACP Testing Methods. The GUST Legislation modified the
nondiscrimination testing rules for Section 401(k) Deferrals, Employer
Matching Contributions, and Employee After-Tax Contributions, effective for
Plan Years beginning after December 31, 1996. For purposes of applying the ADP
Test and ACP Test under the 401(k) Agreement, the Employer must designate the
testing methodology used for each Plan Year. (See Article 17 for the
definition of the ADP Test and the ACP Test and the applicable testing
methodology.)
Part 4F of the 401(k) Agreement contains elective provisions for the Employer
to designate the testing methodology it will use in performing the ADP Test
and the ACP Test. Appendix B-5.a. of the 401(k) Agreement contains elective
provisions for the Employer to designate the testing methodology it used for
Plan Years that began before the adoption of the Agreement.
20.7 Safe Harbor 401(k) Plan. Effective for Plan Years beginning after
December 31, 1998, the Employer may elect under Part 4E of the 401(k)
Agreement to apply the Safe Harbor 401(k) Plan provisions. To qualify as a
Safe Harbor 401(k) Plan for a Plan Year, the Plan must be identified as a Safe
Harbor 401(k) Plan for such year.
If the Employer elects under Part 4E to apply the Safe Harbor 401(k) Plan
provisions, the Plan generally will be considered a Safe Harbor Plan for all
Plan Years beginning with the Effective Date of the Plan (or January 1, 1999,
if later). Likewise, if the Employer does not elect to apply the Safe Harbor
401(k) provisions, the Plan generally will not be considered a Safe Harbor
Plan for such year. However, because the Employer may have operated the Plan
as a Safe Harbor 401(k) Plan for Plan Years prior to the Effective Date of
this Plan or may not have operated the Plan consistent with its election under
Part 4E to apply (or to not apply) the Safe Harbor 401(k) Plan provisions for
all years prior to the date this Plan restatement is adopted, Appendix B-5.b.
of the 401(k) Agreement permits the Employer to designate any Plan Year in
which the Plan was (or was not) a Safe Harbor 401(k) Plan. Appendix B-5.b.
should only be completed if the Employer operated this Plan prior to date it
was actually adopted in a manner that is inconsistent with the election made
under Part 4E of the Agreement.
If the Employer elects under Appendix B-5.b. of the Agreement to apply the
Safe Harbor 401(k) Plan provisions for any Plan Year beginning prior to the
date this Plan is adopted, the Plan must have complied with the requirements
under Section 17.6 for such year. The type and amount of the Safe Harbor
Contribution for such Plan Year(s) is the type and amount of contribution
described in the Participant notice issued pursuant to Section 17.6(a)(4) for
such Plan Year.
ARTICLE 21 PARTICIPATION BY RELATED EMPLOYERS (CO-SPONSORS)
21.1 Co-Sponsor Adoption Page. A Related Employer may elect to participate
under this Plan by executing a Co-Sponsor Adoption Page under the Agreement.
By executing a Co-Sponsor Adoption Page, the Co-Sponsor adopts all the
provisions of the Plan, including the elective choices made by the Employer
under the Agreement. The Co-Sponsor is also bound by any amendments made to
the Plan in accordance with Article 18. The Co-Sponsor agrees to use the same
Trustee as is designated on the Trustee Declaration under the Agreement,
except as provided in a separate trust agreement authorized under Article 12.
21.2 Participation by Employees of Co-Sponsor. A Related Employer may not
contribute to this Plan unless it executes the Co-Sponsor Adoption Page. (See
Section 1.3 for a discussion of the eligibility rules
as they apply to Employees of Related Employers who do not execute a
Co-Sponsor Adoption Page.) However, in applying the provisions of this Plan,
Total Compensation (as defined in Section 22.197) includes amounts earned with
a Related Employer, regardless of whether such Related Employer executes a
Co-Sponsor Adoption Page. The Employer may elect under Part 3, #10.b.(7) of
the Nonstandardized Agreement [Part 3, #10.i. of the Nonstandardized 401(k)
Agreement] to exclude amounts earned with a Related Employer that does not
execute a Co-Sponsor Page for purposes of determining an Employee's Included
Compensation under the Plan.
21.3 Allocation of Contributions and Forfeitures. Unless selected otherwise
under the Co-Sponsor Adoption Page, any contributions made by a Co-Sponsor
(and any forfeitures relating to such contributions) will be allocated to all
Eligible Participants employed by the Employer and Co-Sponsors in accordance
with the provisions under this Plan. Under a Nonstandardized Agreement, a
Co-Sponsor may elect under the Co-Sponsor Page to allocate its contributions
(and forfeitures relating to such contributions) only to the Eligible
Participants employed by the Co-Sponsor making such contributions. If so
elected, Employees of the Co-Sponsor will not share in an allocation of
contributions (or forfeitures relating to such contributions) made by any
other Related Employer (except in such individual's capacity as an Employee of
that other Related Employer). Where contributions are allocated only to the
Employees of a contributing Co-Sponsor, the Plan Administrator will maintain a
separate accounting of an Employee's Account Balance attributable to the
contributions of a particular Co-Sponsor. This separate accounting is
necessary only for contributions that are not 100% vested, so that the
allocation of forfeitures attributable to such contributions can be allocated
for the benefit of the appropriate Employees. An election to allocate
contributions and forfeitures only to the Eligible Participants employed by
the Co-Sponsor making such contributions will preclude the Plan from
satisfying the nondiscrimination safe harbor rules under Treas. Reg.
Section1.401(a)(4)-2 and may require additional nondiscrimination testing.
21.4 Co-Sponsor No Longer a Related Employer. If a Co-Sponsor becomes a
Former Related Employer because of an acquisition or disposition of stock or
assets, a merger, or similar transaction, the Co-Sponsor will cease to
participate in the Plan as soon as administratively feasible. If the
transition rule under Code Section410(b)(6)(C) applies, the Co-Sponsor will
cease to participate in the Plan as soon as administratively feasible after
the end of the transition period described in Code Section410(b)(6)(C). If a
Co-Sponsor ceases to be a Related Employer under this Section 21.4, the
following procedures may be followed to discontinue the Co-Sponsor's
participation in the Plan.
(a) Manner of discontinuing participation. To document the cessation of
participation by a Former Related Employer, the Former Related Employer may
discontinue its participation as follows: (1) the Former Related Employer
adopts a resolution that formally terminates active participation in the Plan
as of a specified date, (2) the Employer that has executed the Signature Page
of the Agreement reexecutes such page, indicating an amendment by page
substitution through the deletion of the Co-Sponsor Adoption Page executed by
the Former Related Employer, and (3) the Former Related Employer provides any
notices to its Employees that are required by law. Discontinuance of
participation means that no further benefits accrue after the effective date
of such discontinuance with respect to employment with the Former Related
Employer. The portion of the Plan attributable to the Former Related Employer
may continue as a separate plan, under which benefits may continue to accrue,
through the adoption by the Former Related Employer of a successor plan (which
may be created through the execution of a separate Agreement by the Former
Related Employer) or by spin-off of that portion of the Plan followed by a
merger or transfer into another existing plan, as specified in a merger or
transfer agreement.
(b) Multiple employer plan. If, after a Co-Sponsor becomes a Former
Related Employer, its Employees continue to accrue benefits under this Plan,
the Plan will be treated as a multiple employer plan to the extent required by
law. So long as the discontinuance procedures of this Section are satisfied,
such treatment as a multiple employer plan will not affect reliance on the
favorable IRS letter issued to the Prototype Sponsor or any determination
letter issued on the Plan.
21.5 Special Rules for Standardized Agreements. As stated in Section 1.3(b)
of this BPD, under a Standardized Agreement each Related Employer (who has
Employees who may be eligible to participate in the Plan) is required to
execute a Co-Sponsor Adoption Page. If a Related Employer fails to execute a
Co-Sponsor Adoption Page, the Plan will be treated as an individually-designed
plan, except as provided in subsections (a) and (b) below. Nothing in this
Plan shall be construed to treat a Related Employer as
participating in the Plan in the absence of a Co-Sponsor Adoption Page
executed by that Related Employer.
(a) New Related Employer. If an organization becomes a New Related
Employer after the Effective Date of the Agreement by reason of an acquisition
or disposition of stock or assets, a merger, or similar transaction, the New
Related Employer must execute a Co-Sponsor Page no later than the end of the
transition period described in Code Section410(b)(6)(C). Participation of the
New Related Employer must be effective no later than the first day of the Plan
Year that begins after such transition period ends. If the transition period
in Code Section410(b)(6)(C) is not applicable, the effective date of the New
Related Employer's participation in the Plan must be no later than the date it
became a Related Employer.
(b) Former Related Employer. If an organization ceases to be a Related
Employer (Former Related Employer), the provisions of Section 21.4, relating
to discontinuance of participation, apply.
Under the Standardized Agreement, if the rules of subsections (a) or (b) are
followed, the Employer may continue to rely on the favorable IRS letter issued
to the Prototype Sponsor during any period in which a New Related Employer is
not participating in the Plan or a Former Related Employer continues to
participate in the Plan. If the rules of subsections (a) or (b) are not
followed, the Plan is treated as an individually-designed plan for any period
of such noncompliance.
ARTICLE 22 PLAN DEFINITIONS
This Article contains definitions for common terms that are used throughout
the Plan. All capitalized terms under the Plan are defined in this Article.
Where applicable, this Article will refer to other Sections of the Plan where
the term is defined.
22.1 Account. The separate Account maintained for each Participant under the
Plan. To the extent applicable, a Participant may have any (or all) of the
following separate sub-Accounts within his/her Account: Employer Contribution
Account, Section 401(k) Deferral Account, Employer Matching Contribution
Account, QMAC Account, QNEC Account, Employee After-Tax Contribution Account,
Safe Harbor Matching Contribution Account, Safe Harbor Nonelective
Contribution Account, Rollover Contribution Account, and Transfer Account. The
Transfer Account also may have any (or all) of the sub-Accounts listed above.
The Plan Administrator may maintain other sub-Accounts, if necessary, for
proper administration of the Plan.
22.2 Account Balance. A Participant's Account Balance is the total value of
all Accounts (whether vested or not) maintained for the Participant. A
Participant's vested Account Balance includes only those amounts for which the
Participant has a vested interest in accordance with the provisions under
Article 4 and Part 6 of the Agreement. A Participant's Section 401(k) Deferral
Account, QMAC Account, QNEC Account, Employee After-Tax Contribution Account,
Safe Harbor Matching Contribution Account, Safe Harbor Nonelective
Contribution Account, and Rollover Contribution Account are always 100%
vested.
22.3 Accrued Benefit. If referred to in the context of a Defined
Contribution Plan, the Accrued Benefit is the Account Balance. If referred to
in the context of a Defined Benefit Plan, the Accrued Benefit is the benefit
accrued under the benefit formula prescribed by the Defined Benefit Plan.
22.4 ACP -- Average Contribution Percentage. The average of the contribution
percentages for the Highly Compensated Employee Group and the Nonhighly
Compensated Employee Group, which are tested for nondiscrimination under the
ACP Test. See Section 17.7(a).
22.5 ACP Test -- Actual Contribution Percentage Test. The special
nondiscrimination test that applies to Employer Matching Contributions and/or
Employee After-Tax Contributions under the 401(k) Agreement. See Section 17.3.
22.6 Actual Hours Crediting Method. The Actual Hours Crediting Method is a
method for counting service for purposes of Plan eligibility and vesting.
Under the Actual Hours Crediting Method, an Employee is credited with the
actual Hours of Service the Employee completes with the Employer or the number
of Hours of Service for which the Employee is paid (or entitled to payment).
22.7 Adoption Agreement. See the definition for Agreement.
22.8 ADP -- Average Deferral Percentage. The average of the deferral
percentages for the Highly Compensated Employee Group and the Nonhighly
Compensated Employee Group, which are tested for
nondiscrimination under the ADP Test. See Section 17.7(b).
22.9 ADP Test -- Actual Deferral Percentage Test. The special
nondiscrimination test that applies to Section 401(k) Deferrals under the
401(k) Agreement. See Section 17.2.
22.10 Agreement. The Agreement (sometimes referred to as the "Adoption
Agreement") contains the elective provisions under the Plan that an Employer
completes to supplement or modify the provisions under the BPD. Each Employer
that adopts this Plan must complete and execute the appropriate Agreement. An
Employer may adopt more than one Agreement under this Prototype Plan. Each
executed Agreement is treated as a separate Plan and Trust. For example, if an
Employer executes a profit sharing plan Agreement and a money purchase plan
Agreement, the Employer is treated as maintaining two separate Plans under
this Prototype Plan document. An Agreement is treated as a single Plan, even
if there is one or more executed Co-Sponsor Adoption Pages associated with the
Agreement.
22.11 Aggregate Limit. The limit imposed under the Multiple Use Test on
amounts subject to both the ADP Test and the ACP Test. See Section 17.4(a).
22.12 Alternate Payee. A person designated to receive all or a portion of
the Participant's benefit pursuant to a QDRO. See Section 11.5.
22.13 Anniversary Year Method. A method for determining Eligibility
Computation Periods after an Employee's initial Eligibility Computation
Period. See Section 1.4(c)(2) for more detailed discussion of the Anniversary
Year Method.
22.14 Anniversary Years. An alternative period for measuring Vesting
Computation Periods. See Section 4.4.
22.15 Annual Additions. The amounts taken into account under a Defined
Contribution Plan for purposes of applying the limitation on allocations under
Code Section415. See Section 7.4(a) for the definition of Annual Additions.
22.16 Annual Additions Limitation. The limit on the amount of Annual
Additions a Participant may receive under the Plan during a Limitation Year.
See Article 7.
22.17 Annuity Starting Date. This Plan does not use the term Annuity
Starting Date. To determine whether the notice and consent requirements in
Articles 8 and 9 are satisfied, the Distribution Commencement Date (see
Section 22.56) is used, even for a distribution that is made in the form of an
annuity. However, the payment made on the Distribution Commencement Date under
an annuity form of payment may reflect annuity payments that are calculated
with reference to an "annuity starting date" that occurs prior to the
Distribution Commencement Date (e.g., the first day of the month in which the
Distribution Commencement Date falls).
22.18 Applicable Life Expectancy. The Life Expectancy used to determine a
Participant's required minimum distribution under Article 10. See Section
10.3(d).
22.19 Applicable Percentage. The maximum percentage of Excess Compensation
that may be allocated to Eligible Participants under the Permitted Disparity
Method. See Article 2.
22.20 Average Compensation. The average of a Participant's annual Included
Compensation during the Averaging Period designated under Part 3, #11 of the
target benefit plan Agreement. See Section 2.5(d)(1) for a complete definition
of Average Compensation.
22.21 Averaging Period. The period used for determining an Employee's
Average Compensation. Unless modified under Part 3, #11.a. of the target
benefit plan Agreement, the Averaging Period is the three (3) consecutive
Measuring Periods during the Participant's Employment Period which produces
the highest Average Compensation.
22.22 Balance Forward Method. A method for allocating net income or loss to
Participants' Accounts based on the Account Balance as of the most recent
Valuation Date under the Plan. See Section 13.4(a).
22.23 Basic Plan Document. See the definition for BPD.
22.24 Beneficiary. A person designated by the Participant (or by the terms
of the Plan) to receive a benefit under the Plan upon the death of the
Participant. See Section 8.4(c) for the applicable rules for
determining a Participant's Beneficiaries under the Plan.
22.25 BPD. The BPD (sometimes referred to as the "Basic Plan Document") is
the portion of the Plan that contains the non-elective provisions. The
provisions under the BPD may be supplemented or modified by elections the
Employer makes under the Agreement or by separate governing documents that are
expressly authorized by the BPD.
22.26 Break-in-Service -Eligibility. Generally, an Employee incurs a
Break-in-Service for eligibility purposes for each Eligibility Computation
Period during which the Employee does not complete more than 500 Hours of
Service with the Employer. However, if the Employer elects under Part 7 of the
Agreement to require less than 1,000 Hours of Service to earn a Year of
Service for eligibility purposes, a Break in Service will occur for any
Eligibility Computation Period during which the Employee does not complete
more than one-half (1/2) of the Hours of Service required to earn a Year of
Service. (See Section 1.6 for a discussion of the eligibility Break-in-Service
rules. Also see Section 6.5(b) for rules applicable to the determination of a
Break in Service when the Elapsed Time Method is used.)
22.27 Break-in-Service - Vesting. Generally, an Employee incurs a
Break-in-Service for vesting purposes for each Vesting Computation Period
during which the Employee does not complete more than 500 Hours of Service
with the Employer. However, if the Employer elects under Part 7 of the
Agreement to require less than 1,000 Hours of Service to earn a Year of
Service for vesting purposes, a Break in Service will occur for any Vesting
Computation Period during which the Employee does not complete more than
one-half (1/2) of the Hours of Service required to earn a Year of Service.
(See Section 4.6 for a discussion of the vesting Break-in-Service rules. Also
see Section 6.5(b) for rules applicable to the determination of a Break in
Service when the Elapsed Time Method is used.)
22.28 Calendar Year Election. A special election used for determining the
Lookback Year in applying the Highly Compensated Employee test under Section
22.99.
22.29 Cash-Out Distribution. A total distribution made to a partially vested
Participant upon termination of participation under the Plan. See Section
5.3(a) for the rules regarding the forfeiture of nonvested benefits upon a
Cash-Out Distribution from the Plan.
22.30 Code. The Internal Revenue Code of 1986, as amended.
22.31 Code Section415 Safe Harbor Compensation. An optional definition of
compensation used to determine Total Compensation. This definition may be
selected under Part 3, #9.c. of the Agreement. See Section 22.197(c) for the
definition of Code Section415 Safe Harbor Compensation.
22.32 Compensation Dollar Limitation. The maximum amount of compensation
that can be taken into account for any Plan Year for purposes of determining a
Participant's Included Compensation (see Section 22.102) or Testing
Compensation (see Section 22.190). For Plan Years beginning on or after
January 1, 1994, the Compensation Dollar Limitation is $150,000, as adjusted
for increases in the cost-of-living in accordance with Code
Section401(a)(17)(B).
In determining the Compensation Dollar Limitation for any applicable period
for which Included Compensation or Testing Compensation is being determined
(the "determination period"), the cost-of-living adjustment in effect for a
calendar year applies to any determination period beginning with or within
such calendar year. If a determination period consists of fewer than 12
months, the Compensation Dollar Limitation for such period is an amount equal
to the otherwise applicable Compensation Dollar Limitation multiplied by a
fraction, the numerator of which is the number of months in the short
determination period, and the denominator of which is 12. A determination
period will not be considered to be less than 12 months merely because
compensation is taken into account only for the period the Employee is an
Eligible Participant. If Section 401(k) Deferrals, Employer Matching
Contributions, or Employee After-Tax Contributions are separately determined
for each pay period, no proration of the Compensation Dollar Limitation is
required with respect to such pay periods.
For Plan Years beginning on or after January 1, 1989, and before January 1,
1994, the Compensation Dollar Limitation taken into account for determining
all benefits provided under the Plan for any Plan Year shall not exceed
$200,000. This limitation shall be adjusted by the Secretary at the same time
and in the same manner as under Code Section415(d), except that the dollar
increase in effect on January 1 of any calendar year is effective for Plan
Years beginning in such calendar year and the first adjustment to the $200,000
limitation
is effective on January 1, 1990.
If compensation for any prior determination period is taken into account in
determining a Participant's allocations for the current Plan Year, the
compensation for such prior determination period is subject to the applicable
Compensation Dollar Limitation in effect for that prior period. For this
purpose, in determining allocations in Plan Years beginning on or after
January 1, 1989, the Compensation Dollar Limitation in effect for
determination periods beginning before that date is $200,000. In addition, in
determining allocations in Plan Years beginning on or after January 1, 1994,
the Compensation Dollar Limitation in effect for determination periods
beginning before that date is $150,000.
22.33 Co-Sponsor. A Related Employer that adopts this Plan by executing the
Co-Sponsor Adoption Page under the Agreement. See Article 21 for the rules
applicable to contributions and deductions for contributions made by a
Co-Sponsor.
22.34 Co-Sponsor Adoption Page. The execution page under the Agreement that
permits a Related Employer to adopt this Plan as a Co-Sponsor. See Article 21.
22.35 Covered Compensation. The average (without indexing) of the Taxable
Wage Bases in effect for each calendar year during the 35-year period ending
with the last day of the calendar year in which the Participant attains (or
will attain) Social Security Retirement Age. See Section 2.5(d)(2).
22.36 Cumulative Disparity Limit. A limit on the amount of permitted
disparity that may be provided under the target benefit plan Agreement. See
Section 2.5(c)(3)(iv).
22.37 Current Year Testing Method. A method for applying the ADP Test and/or
the ACP Test. See Section 17.2(a)(2) for a discussion of the Current Year
Testing Method under the ADP Test and 17.3(a)(2) for a discussion of the
Current Year Testing Method under the ACP Test.
22.38 Custodian. An organization that has custody of all or any portion of
the Plan assets. See Section 12.11.
22.39 Davis-Bacon Act Service. A Participant's service used to apply the
Davis-Bacon Contribution Formula under Part 4 of the Nonstandardized Agreement
[Part 4C of the Nonstandardized 401(k) Agreement]. For this purpose,
Davis-Bacon Act Service is any service performed by an Employee under a public
contract subject to the Davis-Bacon Act or to any other federal, state or
municipal prevailing wage law. See Section 2.2(a)(1).
22.40 Davis-Bacon Contribution Formula. The Employer may elect under Part 4
of the Nonstandardized Agreement [Part 4C of the Nonstandardized 401(k)
Agreement] to provide an Employer Contribution for each Eligible Participant
who performs Davis-Bacon Act Service. (See Section 2.2(a)(1) (profit sharing
plan and 401(k) plan) and Section 2.4(e) (money purchase plan) for special
rules regarding the application of the Davis-Bacon Contribution Formula.)
22.41 Defined Benefit Plan. A plan under which a Participant's benefit is
based solely on the Plan's benefit formula without the establishment of
separate Accounts for Participants.
22.42 Defined Benefit Plan Fraction. A component of the combined limitation
test under Code Section415(e) for Employers that maintain or ever maintained
both a Defined Contribution and a Defined Benefit Plan. See Section 7.5
(b)(1).
22.43 Defined Contribution Plan. A plan that provides for individual
Accounts for each Participant to which all contributions, forfeitures, income,
expenses, gains and losses under the Plan are credited or deducted. A
Participant's benefit under a Defined Contribution Plan is based solely on the
fair market value of his/her vested Account Balance.
22.44 Defined Contribution Plan Dollar Limitation. The maximum dollar amount
of Annual Additions an Employee may receive under the Plan. See Section
7.4(b).
22.45 Defined Contribution Plan Fraction. A component of the combined
limitation test under Code Section415(e) for Employers that maintain or ever
maintained both a Defined Contribution and a Defined Benefit Plan. See Section
7.5(b)(2).
22.46 Designated Beneficiary. A Beneficiary who is designated by the
Participant (or by the terms of the
Plan) and whose Life Expectancy is taken into account in determining minimum
distributions under Code Section401(a)(9). See Article 10.
22.47 Determination Date. The date as of which the Plan is tested to
determine whether it is a Top-Heavy Plan. See Section 16.3(a).
22.48 Determination Period. The period during which contributions to the
Plan are tested to determine if the Plan is a Top-Heavy Plan. See Section
16.3(b).
22.49 Determination Year. The Plan Year for which an Employee's status as a
Highly Compensated Employee is being determined. See Section 22.99(b)(1).
22.50 Directed Account. The Plan assets under a Trust which are held for the
benefit of a specific Participant. See Section 13.4(b).
22.51 Directed Trustee. A Trustee is a Directed Trustee to the extent that
the Trustee's investment powers are subject to the direction of another
person. See Section 12.2(b).
22.52 Direct Rollover. A rollover, at the Participant's direction, of all or
a portion of the Participant's vested Account Balance directly to an Eligible
Retirement Plan. See Section 8.8.
22.53 Disabled. Except as modified under Part 13, #55 of the Agreement [Part
13, #73 of the 401(k) Agreement], an individual is considered Disabled for
purposes of applying the provisions of this Plan if the individual is unable
to engage in any substantial gainful activity by reason of a medically
determinable physical or mental impairment that can be expected to result in
death or which has lasted or can be expected to last for a continuous period
of not less than 12 months. The permanence and degree of such impairment shall
be supported by medical evidence.
22.54 Discretionary Trustee. A Trustee is a Discretionary Trustee to the
extent the Trustee has exclusive authority and discretion to invest, manage or
control the Plan assets without direction from any other person. See Section
12.2(a).
22.55 Distribution Calendar Year. A calendar year for which a minimum
distribution is required. See Section 10.3(f).
22.56 Distribution Commencement Date. The date an Employee commences
distribution from the Plan. If a Participant commences distribution with
respect to a portion of his/her Account Balance, a separate Distribution
Commencement Date applies to any subsequent distribution. If distribution is
made in the form of an annuity, the Distribution Commencement Date may be
treated as the first day of the first period for which annuity payments are
made.
22.57 Early Retirement Age. The age and/or Years of Service requirement
prescribed by Part 5, #17 of the Agreement [Part 5, #35 of the 401(k)
Agreement]. Early Retirement Age may be used to determine distribution rights
and/or vesting rights. The Plan is not required to have an Early Retirement
Age.
22.58 Earned Income. Earned Income is the net earnings from self-employment
in the trade or business with respect to which the Plan is established, and
for which personal services of the individual are a material income-producing
factor. Net earnings will be determined without regard to items not included
in gross income and the deductions allocable to such items. Net earnings are
reduced by contributions by the Employer to a qualified plan to the extent
deductible under Code Section404. Net earnings shall be determined after the
deduction allowed to the taxpayer by Code Section164(f). If Included
Compensation is defined to exclude any items of Compensation (other than
Elective Deferrals), then for purposes of determining the Included
Compensation of a Self-Employed Individual, Earned Income shall be adjusted by
multiplying Earned Income by the percentage of Total Compensation that is
included for the Eligible Participants who are Nonhighly Compensated
Employees. The percentage is determined by calculating the percentage of each
Nonhighly Compensated Eligible Participant's Total Compensation that is
included in the definition of Included Compensation and averaging those
percentages.
22.59 Effective Date. The date this Plan, including any restatement or
amendment of this Plan, is effective. Where the Plan is restated or amended,
a reference to Effective Date is the effective date of the restatement or
amendment, except where the context indicates a reference to an earlier
Effective Date. If this Plan is retroactively effective, the provisions of
this Plan generally control. However, if the provisions
of this Plan are different from the provisions of the Employer's prior plan
and, after the retroactive Effective Date of this Plan, the Employer operated
in compliance with the provisions of the prior plan, the provisions of such
prior plan are incorporated into this Plan for purposes of determining whether
the Employer operated the Plan in compliance with its terms, provided
operation in compliance with the terms of the prior plan do not violate any
qualification requirements under the Code, regulations, or other IRS guidance.
The Employer may designate special effective dates for individual provisions
under the Plan where provided in the Agreement or under Appendix A of the
Agreement. If one or more qualified retirement plans have been merged into
this Plan, the provisions of the merging plan(s) will remain in full force and
effect until the Effective Date of the plan merger(s), unless provided
otherwise under Appendix A-12 of the Agreement [Appendix A-16 of the 401(k)
Agreement]. See Section 20.1 for special effective date provisions relating to
the changes required under the GUST Legislation.
22.60 Elapsed Time Method. The Elapsed Time Method is a special method for
crediting service for eligibility, vesting or for applying the allocation
conditions under Part 4 of the Agreement. To apply the Elapsed Time Method for
eligibility or vesting, the Employer must elect the Elapsed Time Method under
Part 7 of the Agreement. To apply the Elapsed Time Method to determine an
Employee's eligibility for an allocation under the Plan, the Employer must
elect the Elapsed Time Method under Part 4, #15.e. of the Nonstandardized
Agreement [Part 4B, #19.e. and/or Part 4C, #24.e. of the Nonstandardized
401(k) Agreement]. (See Section 6.5(b) for more information on the Elapsed
Time Method of crediting service for eligibility and vesting and Section
2.6(c) for information on the Elapsed Time Method for allocation conditions.)
22.61 Elective Deferrals. Section 401(k) Deferrals, salary reduction
contributions to a SEP described in Code SectionSection408(k)(6) and
402(h)(1)(B) (sometimes referred to as a SARSEP), contributions made pursuant
to a Salary Reduction Agreement to a contract, custodial account or other
arrangement described in Code Section403(b), and elective contributions made
to a SIMPLE-IRA plan, as described in Code Section408(p). Elective Deferrals
shall not include any amounts properly distributed as an Excess Amount under
Section415 of the Code.
22.62 Eligibility Computation Period. The 12-consecutive month period used
for measuring whether an Employee completes a Year of Service for eligibility
purposes. An Employee's initial Eligibility Computation Period always begins
on the Employee's Employment Commencement Date. Subsequent Eligibility
Computation Periods are measured under the Shift-to-Plan-Year Method or the
Anniversary Year Method. See Section 1.4(c).
22.63 Eligible Participant. Except as provided under Part 1, #6 of the
Agreement, an Employee (other than an Excluded Employee) becomes an Eligible
Participant on the appropriate Entry Date (as selected under Part 2 of the
Agreement) following satisfaction of the Plan's minimum age and service
conditions (as designated in Part 1 of the Agreement). See Article 1 for the
rules regarding participation under the Plan.
For purposes of the 401(k) Agreement, an Eligible Participant is any Employee
(other than an Excluded Employee) who has satisfied the Plan's minimum age and
service conditions designated in Part 1 of the Agreement with respect to a
particular contribution. With respect to Section 401(k) Deferrals or Employee
After-Tax Contributions, an Employee who has satisfied the eligibility
conditions under Part 1 of the Agreement for making Section 401(k) Deferrals
or Employee After-Tax Contribution is an Eligible Participant with respect to
such contributions, even if the Employee chooses not to actually make any such
contributions. With respect to Employer Matching Contributions, an Employee
who has satisfied the eligibility conditions under Part 1 of the Agreement for
receiving such contributions is an Eligible Participant with respect to such
contributions, even if the Employee does not receive an Employer Matching
Contribution (including forfeitures) because of the Employee's failure to make
Section 401(k) Deferrals or Employee After-Tax Contributions, as applicable.
22.64 Eligible Rollover Distribution. An amount distributed from the Plan
that is eligible for rollover to an Eligible Retirement Plan. See Section
8.8(a).
22.65 Eligible Retirement Plan. A qualified retirement plan or IRA that may
receive a rollover contribution. See Section 8.8(b).
22.66 Employee. An Employee is any individual employed by the Employer
(including any Related
Employers). An independent contractor is not an Employee. An Employee is not
eligible to participate under the Plan if the individual is an Excluded
Employee under Section 1.2. (See Section 1.3 for rules regarding coverage of
Employees of Related Employers.) For purposes of applying the provisions under
this Plan, a Self-Employed Individual (including a partner in a partnership)
is treated as an Employee. A Leased Employee is also treated as an Employee of
the recipient organization, as provided in Section 1.2(b).
22.67 Employee After-Tax Contribution Account. The portion of the
Participant's Account attributable to Employee After-Tax Contributions.
22.68 Employee After-Tax Contributions. Employee After-Tax Contributions are
contributions made to the Plan by or on behalf of a Participant that is
included in the Participant's gross income in the year in which made and that
is maintained under a separate Employee After-Tax Contribution Account to
which earnings and losses are allocated. Employee After-Tax Contributions may
only be made under the Nonstandardized 401(k) Agreement. See Section 3.1.
22.69 Employer. Except as otherwise provided, Employer means the Employer
(including a Co-Sponsor) that adopts this Plan and any Related Employer. (See
Section 1.3 for rules regarding coverage of Employees of Related Employers.
Also see Section 11.8 for operating rules when the Employer is a member of a
Related Employer group, and Article 21 for rules that apply to Related
Employers that execute a Co-Sponsor Adoption Page under the Agreement.)
22.70 Employer Contribution Account. If this Plan is a profit sharing plan
(other than a 401(k) plan), a money purchase plan, or a target benefit plan,
the Employer Contribution Account is the portion of the Participant's Account
attributable to contributions made by the Employer. If this is a 401(k) plan,
the Employer Contribution Account is the portion of the Participant's Account
attributable to Employer Nonelective Contributions, other than QNECs or Safe
Harbor Nonelective Contributions.
22.71 Employer Contributions. If this Plan is a profit sharing plan (other
than a 401(k) plan), a money purchase plan, or a target benefit plan, Employer
Contributions are any contributions the Employer makes pursuant to Part 4 of
to the Agreement. If this Plan is a 401(k) plan, Employer Contributions
include Employer Nonelective Contributions and Employer Matching
Contributions, including QNECs, QMACs and Safe Harbor Contributions that the
Employer makes under the Plan. Employer Contributions also include any Section
401(k) Deferrals an Employee makes under the Plan, unless the Plan expressly
provides for different treatment of Section 401(k) Deferrals.
22.72 Employer Matching Contribution Account. The portion of the
Participant's Account attributable to Employer Matching Contributions, other
than QMACs or Safe Harbor Matching Contributions.
22.73 Employer Matching Contributions. Employer Matching Contributions are
contributions made by the Employer on behalf of a Participant on account of
Section 401(k) Deferrals or Employee After-Tax Contributions made by such
Participant, as designated under Parts 4B(b) of the 401(k) Agreement. Employer
Matching Contributions may only be made under the 401(k) Agreement. Employer
Matching Contributions also include any QMACs the Employer makes pursuant to
Part 4B, #18 of the 401(k) Agreement and any Safe Harbor Matching
Contributions the Employer makes pursuant to Part 4E of the 401(k) Agreement.
See Section 2.3(b).
22.74 Employer Nonelective Contributions. Employer Nonelective Contributions
are contributions made by the Employer on behalf of Eligible Participants
under the 401(k) Plan, as designated under Part 4C of the 401(k) Agreement.
Employer Nonelective Contributions also include any QNECs the Employer makes
pursuant to Part 4C, #22 of the 401(k) Agreement and any Safe Harbor
Nonelective Contributions the Employer makes pursuant to Part 4E of the 401(k)
Agreement. See Section 2.3(d).
22.75 Employment Commencement Date. The date the Employee first performs an
Hour of Service for the Employer. For purposes of applying the Elapsed Time
rules under Section 6.5(b), an Hour of Service is limited to an Hour of
Service as described in Section 22.101(a).
22.76 Employment Period. The period as defined in Part 3, #11.c. of the
target benefit plan Agreement used to determine an Employee's Average
Compensation. See Section 2.5(d)(1)(iii).
22.77 Entry Date. The date on which an Employee becomes an Eligible
Participant upon satisfying the
Plan's minimum age and service conditions. See Section 1.5.
22.78 Equivalency Method. An alternative method for crediting Hours of
Service for purposes of eligibility and vesting. To apply, the Employer must
elect the Equivalency Method under Part 7 of the Agreement. See Section 6.5(a)
for a more detailed discussion of the Equivalency Method.
22.79 ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
22.80 Excess Aggregate Contributions. Amounts which are distributed to
correct the ACP Test. See Section 17.7(c).
22.81 Excess Amount. Amounts which exceed the Annual Additions Limitation.
See Section 7.4(c).
22.82 Excess Compensation. The amount of Included Compensation which exceeds
the Integration Level. Excess Compensation is used for purposes of applying
the Permitted Disparity allocation formula under the profit sharing or 401(k)
plan Agreement (see Section 2.2(b)(2)) or under the money purchase plan
Agreement (see Section 2.4(c)) or for applying the Integration Formulas under
the target benefit plan Agreement (see Section 2.5(d)(3)).
22.83 Excess Contributions. Amounts which are distributed to correct the ADP
Test. See Section 17.7(d).
22.84 Excess Deferrals. Elective Deferrals that are includible in a
Participant's gross income because they exceed the dollar limitation under
Code Section402(g). Excess Deferrals made to this Plan shall be treated as
Annual Additions under the Plan, unless such amounts are distributed no later
than the first April 15 following the close of the Participant's taxable year
for which the Excess Deferrals are made. See Section 17.1.
22.85 Excluded Employee. An Employee who is excluded under Part 1, #4 of the
Agreement. See Section 1.2.
22.86 Fail-Safe Coverage Provision. A correction provision that permits the
Plan to automatically correct a coverage violation resulting from the
application of a last day of employment or Hours of Service allocation
condition. See Section 2.7.
22.87 Favorable IRS Letter. A notification letter or opinion letter issued
by the IRS to a Prototype Sponsor as to the qualified status of a Prototype
Plan. A separate Favorable IRS Letter is issued with respect to each Agreement
offered under the Prototype Plan. If the term is used to refer to a letter
issued to an Employer with respect to its adoption of this Prototype Plan,
such letter is a determination letter issued by the IRS.
22.88 Five-Percent Owner. An individual who owns (or is considered as owning
within the meaning of Code Section318) more than 5 percent of the outstanding
stock of the Employer or stock possessing more than 5 percent of the total
combined voting power of all stock of the Employer. If the Employer is not a
corporation, a Five-Percent Owner is an individual who owns more than 5
percent of the capital or profits interest of the Employer.
22.89 Five-Year Forfeiture Break in Service. A Break in Service rule under
which a Participant's nonvested benefit may be forfeited. See Section 4.6(b).
22.90 Flat Benefit. A Nonintegrated Benefit Formula under Part 4 of the
target benefit plan Agreement that provides for a Stated Benefit equal to a
specified percentage of Average Compensation. See Section 2.5(c)(1)(i).
22.91 Flat Excess Benefit. An Integrated Benefit Formula under Part 4 of the
target benefit plan Agreement that provides for a Stated Benefit equal to a
specified percentage of Average Compensation plus a specified percentage of
Excess Compensation. See Section 2.5(c)(2)(i).
22.92 Flat Offset Benefit. An Integrated Benefit Formula under Part 4 of the
target benefit plan Agreement that provides for a Stated Benefit equal to a
specified percentage of Average Compensation which is offset by a specified
percentage of Offset Compensation. See Section 2.5(c)(2)(iii).
22.93 Former Related Employer. A Related Employer (as defined in Section
22.164) that ceases to be a Related Employer because of an acquisition or
disposition of stock or assets, a merger, or similar
transaction. See Section 21.4 for the effect when a Co-Sponsor becomes a
Former Related Employer.
22.94 Four-Step Formula. A method for allocating certain Employer
Contributions under the Permitted Disparity Method. See Section 2.2(b)(2)(ii).
22.95 General Trust Account. The Plan assets under a Trust which are held
for the benefit of all Plan Participants as a pooled investment. See Section
13.4(a).
22.96 GUST Legislation. GUST Legislation refers to the Uruguay Round
Agreements Act (GATT), the Uniformed Services Employment and Reemployment
Rights Act of 1994 (USERRA) the Small Business Job Protection Act of 1996
(SBJPA), the Taxpayer Relief Act of 1997 (TRA '97), and the Internal Revenue
Service Restructuring and Reform Act of 1998. See Article 20 for special rules
for demonstrating compliance with the qualification changes under the GUST
Legislation.
22.97 Hardship. A heavy and immediate financial need which meets the
requirements of Section 8.6.
22.98 Highest Average Compensation. A term used to apply the combined plan
limit under Code Section415(e). See Section 7.5(b)(3).
22.99 Highly Compensated Employee. The definition of Highly Compensated
Employee under this Section is effective for Plan Years beginning after
December 31, 1996. For Plan Years beginning before January 1, 1997, Highly
Compensated Employees are determined under Code Section414(q) as in effect at
that time.
(a) Definition. An Employee is a Highly Compensated Employee for a Plan
Year if he/she:
(1) is a Five-Percent Owner (as defined in Section 22.88) at any
time during the Determination Year or the Lookback Year; or
(2) has Total Compensation from the Employer for the Lookback Year
in excess of $80,000 (as adjusted) and, if elected under Part 13, #50.a. of
the Agreement [Part 13, #68.a. of the 401(k) Agreement], is in the Top-Paid
Group for the Lookback Year. If the Employer does not specifically elect to
apply the Top-Paid Group Test, the Highly Compensated Employee definition will
be applied without regard to whether an Employee is in the Top-Paid Group. The
$80,000 amount is adjusted at the same time and in the same manner as under
Code Section415(d), except that the base period is the calendar quarter ending
September 30, 1996.
(b) Other Definitions. The following definitions apply for purposes of
determining Highly Compensated Employee status under this Section 22.99.
(1) Determination Year. The Determination Year is the Plan Year for
which the Highly Compensated Employee determination is being made.
(2) Lookback Year. Unless the Calendar Year Election (or Old-Law
Calendar Year Election) applies, the Lookback Year is the 12-month period
immediately preceding the Determination Year.
(3) Total Compensation. Total Compensation as defined under Section
22.197.
(4) Top-Paid Group. An Employee is in the Top-Paid Group for
purposes of applying the Top-Paid Group Test if the Employee is one of the top
20% of Employees ranked by Total Compensation. In determining the Top-Paid
Group, any reasonable method of rounding or tie-breaking is permitted. For
purposes of determining the number of Employees in the Top-Paid Group for any
year, Employees described in Code Section414(q)(5) or applicable regulations
may be excluded.
(5) Calendar Year Election. If the Plan Year elected under the
Agreement is not the calendar year, for purposes of applying the Highly
Compensated Employee test under subsection (a)(2) above, the Employer may
elect under Part 13, #50.b. of the Agreement [Part 13, #68.b. of the 401(k)
Agreement] to substitute for the Lookback Year the calendar year that begins
in the Lookback Year. The Calendar Year Election does not apply for purposes
of applying the Five-Percent Owner test under subsection (a)(1) above. If the
Employer does not specifically elect to apply the Calendar Year Election, the
Calendar Year Election does not apply. The Calendar Year Election should not
be selected if the Plan is
using a calendar Plan Year.
(6) Old-Law Calendar Year Election. A special election available
under section 1.414(q)-1T of the temporary Income Tax Regulations and provided
for in Notice 97-45 for the Plan Year beginning in 1997 which permitted the
Employer to substitute the calendar year beginning with or within the Plan
Year for the Lookback Year in applying subsections (a)(1) and (a)(2) above. If
the 1997 Plan Year was a calendar year, the effect of the Old-Law Calendar
Year Election was to treat the Determination Year and the Lookback Year as the
same 12-month period. The Employer may elect to apply the Old-Law Calendar
Year Election under Appendix B-1.c. of the Agreement. See Section 20.2(c).
(c) Application of Highly Compensated Employee definition. In determining
whether an Employee is a Highly Compensated Employee for years beginning in
1997, the amendments to Code Section414(q) as described above are treated as
having been in effect for years beginning in 1996. In determining an
Employee's status as a highly compensated former employee, the rules for the
applicable Determination Year apply in accordance with section 1.414(q)-1T,
A-4 of the temporary Income Tax Regulations and Notice 97-45.
22.100 Highly Compensated Employee Group. The group of Highly Compensated
Employees who are included in the ADP Test and/or the ACP Test. See Section
17.7(e).
22.101 Hour of Service. Each Employee will receive credit for each Hour of
Service as defined in this Section 22.101. An Employee will not receive credit
for the same Hour of Service under more than one category listed below.
(a) Performance of duties. Hours of Service include each hour for which
an Employee is paid, or entitled to payment, for the performance of duties for
the Employer. These hours will be credited to the Employee for the computation
period in which the duties are performed.
(b) Nonperformance of duties. Hours of Service include each hour for
which an Employee is paid, or entitled to payment, by the Employer on account
of a period of time during which no duties are performed (irrespective of
whether the employment relationship has terminated) due to vacation, holiday,
illness, incapacity (including disability), layoff, jury duty, military duty
or leave of absence. No more than 501 hours of service will be credited under
this paragraph for any single continuous period (whether or not such period
occurs in a single computation period). Hours under this paragraph will be
calculated and credited pursuant to Section2530.200b-2 of the Department of
Labor Regulations which is incorporated herein by this reference.
(c) Back pay award. Hours of Service include each hour for which back
pay, irrespective of mitigation of damages, is either awarded or agreed to by
the Employer. The same Hours of Service will not be credited both under
subsection (a) or subsection (b), as the case may be, and under this
subsection (c). These hours will be credited to the Employee for the
computation period or periods to which the award or agreement pertains rather
than the computation period in which the award, agreement or payment is made.
(d) Related Employers/Leased Employees. For purposes of crediting Hours
of Service, all Related Employers are treated as a single Employer. Hours of
Service will be credited for employment with any Related Employer. Hours of
Service also include hours credited as a Leased Employee for a recipient
organization.
(e) Maternity/paternity leave. Solely for purposes of determining whether
a Break in Service has occurred in a computation period, an individual who is
absent from work for maternity or paternity reasons will receive credit for
the Hours of Service which would otherwise have been credited to such
individual but for such absence, or in any case in which such hours cannot be
determined, 8 Hours of Service per day of such absence. For purposes of this
paragraph, an absence from work for maternity or paternity reasons means an
absence (1) by reason of the pregnancy of the individual, (2) by reason of a
birth of a child of the individual, (3) by reason of the placement of a child
with the individual in connection with the adoption of such child by such
individual, or (4) for purposes of caring for such child for a period
beginning immediately following such birth or placement. The Hours of Service
credited under this paragraph will be credited (1) in the computation period
in which the absence begins if the crediting is necessary to prevent a Break
in Service in that period, or (2) in all other cases, in the following
computation period.
22.102 Included Compensation. Included Compensation is Total Compensation,
as modified under Part 3, #10 of the Agreement, used to determine allocations
of contributions and forfeitures. Under the Nonstandardized Agreement,
Included Compensation generally includes amounts an Employee earns with a
Related Employer that has not executed a Co-Sponsor Adoption Page under the
Agreement. However, the Employer may elect under Part 3, #10.b.(7) of the
Nonstandardized Agreement [Part 3, #10.i. of the Nonstandardized 401(k)
Agreement] to exclude all amounts earned with a Related Employer that has not
executed a Co-Sponsor Adoption Page. Under the Standardized Agreement,
Included Compensation always includes all compensation earned with all Related
Employers, without regard to whether the Related Employer executes the
Co-Sponsor Adoption Page. (See Section 21.5.) In no case may Included
Compensation for any Participant exceed the Compensation Dollar Limitation as
defined in Section 22.32. Included Compensation does not include any amounts
earned while an individual is an Excluded Employee (as defined in Section 1.2
of this BPD).
The Employer may select under Part 3, #10 of the 401(k) Agreement to provide a
different definition of Included Compensation for determining Section 401(k)
Deferrals, Employer Matching Contributions, and Employer Nonelective
Contributions. Unless otherwise provided in Part 3, #10.j. of the
Nonstandardized 401(k) Agreement, the definition of Included Compensation
chosen for Section 401(k) Deferrals also applies to any Employee After-Tax
Contributions and to any Safe Harbor Contributions designated under Part 4E of
the Agreement; the definition of Included Compensation chosen for Employer
Matching Contributions also applies to any QMACs; and the definition of
Included Compensation chosen for Employer Nonelective Contributions also
applies to any QNECs.
The Employer may elect to exclude from the definition of Included Compensation
any of the amounts permitted under Part 3, #10 of the Agreement. However, to
use the same definition of compensation for purposes of nondiscrimination
testing, the definition of Included Compensation must satisfy the
nondiscrimination requirements of Code Section414(s). The definition of
Included Compensation will be deemed to be nondiscriminatory under Code
Section414(s) if the only amounts excluded are amounts under Part 3, #10.b.(1)
- (3) of the Nonstandardized Agreement [Part 3, #10.c. - e. of the
Nonstandardized 401(k) Agreement]. Any other exclusions could cause the
definition of Included Compensation to fail to satisfy the nondiscrimination
requirements of Code Section414(s). If the definition of Included Compensation
fails to satisfy the nondiscrimination requirements of Code Section414(s),
additional nondiscrimination testing may have to be performed to demonstrate
compliance with the nondiscrimination requirements. The definition of Included
Compensation under the Standardized Agreements must satisfy the
nondiscrimination requirements under Code Section414(s).
If the Plan uses a Permitted Disparity Method under Part 4 of the Agreement or
if the Plan is a Safe Harbor 401(k) Plan, the definition of Included
Compensation must satisfy the nondiscrimination requirements under Code
Section414(s). Therefore, any exclusions from Included Compensation under Part
3, #10.b.(4) - (8) of the Nonstandardized Agreement [Part 3, #10.f. - j. of
the Nonstandardized 401(k) Agreement] will apply only to Highly Compensated
Employees, unless specifically provided otherwise under Part 3, #10.b.(8). of
the Nonstandardized Agreement [Part 3, #10.j. of the Nonstandardized 401(k)
Agreement].
The Employer may elect under Part 3, #10.b.(1) of the Agreement [Part 3,
#10.c. of the 401(k) Agreement] to exclude Elective Deferrals, pre-tax
contributions to a cafeteria plan or a Code Section457 plan, and qualified
transportation fringes under CodeSection132(f)(4). Generally, the exclusion of
qualified transportation fringes is effective for Plan Years beginning on or
after January 1, 2001. However, the Employer may elect an earlier effective
date under Appendix B-3.c. of the Agreement.
22.103 Insurer. An insurance company that issues a life insurance policy on
behalf of a Participant under the Plan in accordance with the requirements
under Article 15.
22.104 Integrated Benefit Formula. A benefit formula under Part 4 of the
target benefit plan Agreement that takes into account an Employee's Social
Security benefits. See Section 2.5(c)(2).
22.105 Integration Level. The amount used for purposes of applying the
Permitted Disparity Method allocation formula (or the Integrated Benefit
Formulas under the target benefit plan Agreement). The Integration Level is
the Taxable Wage Base, unless the Employer designates a different amount under
Part 4 of the Agreement.
22.106 Investment Manager. A person (other than the Trustee) who (a) has the
power to manage, acquire,
or dispose of Plan assets (b) is an investment adviser, a bank, or an
insurance company as described in Section3(38)(B) of ERISA, and (c)
acknowledges fiduciary responsibility to the Plan in writing.
22.107 Key Employee. Employees who are taken into account for purposes of
determining whether the Plan is a Top-Heavy Plan. See Section 16.3(c).
22.108 Leased Employee. An individual who performs services for the Employer
pursuant to an agreement between the Employer and a leasing organization, and
who satisfies the definition of a Leased Employee under Code Section414(n).
See Section 1.2(b) for rules regarding the treatment of a Leased Employee as
an Employee of the Employer.
22.109 Life Expectancy. A Participant's and/or Designated Beneficiary's life
expectancy used for purposes of determining required minimum distributions
under the Plan. See Section 10.3(e).
22.110 Limitation Year. The measuring period for determining whether the
Plan satisfies the Annual Additions Limitation under Section 7.4(d).
22.111 Lookback Year. The 12-month period immediately preceding the current
Plan Year during which an Employee's status as Highly Compensated Employee is
determined. See Section 22.99(b)(2).
22.112 Maximum Disparity Percentage. The maximum amount by which the
designated percentage of Excess Compensation under an Excess Benefit formula
under Part 4 of the target benefit plan Agreement may exceed the designated
percentage of Average Compensation. See Section 2.5(c)(3)(i).
22.113 Maximum Offset Percentage. The maximum amount that may be designated
as the offset percentage under an Offset Benefit formula under Part 4 of the
target benefit plan Agreement. See Section 2.5(c)(3)(ii).
22.114 Maximum Permissible Amount. The maximum amount that may be allocated
to a Participant's Account within the Annual Additions Limitation. See Section
7.4(e).
22.115 Measuring Period. The period for which Average Compensation or Offset
Compensation is measured under the target benefit plan Agreement. Unless
elected otherwise under Part 3, #11.b. or Part 3, #12.a. of the target benefit
plan Agreement, as applicable, the Measuring Period is the Plan Year (or the
12-month period ending on the last day of the Plan Year for a short Plan
Year). See Sections 2.5(d)(1)(ii) and 2.5(d)(5)(i).
22.116 Multiple Use Test. A special nondiscrimination test that applies when
the Plan must perform both the ADP Test and the ACP Test in the same Plan
Year. See Section 17.4.
22.117 Named Fiduciary. The Plan Administrator or other fiduciary named by
the Plan Administrator to control and manage the operation and administration
of the Plan. To the extent authorized by the Plan Administrator, a Named
Fiduciary may delegate its responsibilities to a third party or parties. The
Employer shall also be a Named Fiduciary.
22.118 Net Profits. The Employer's net income or profits that may be used to
limit the amount of Employer Contributions made under the Plan. See Section
2.2(a)(2).
22.119 New Related Employer. An organization that becomes a Related Employer
(as defined in Section 22.164) with the Employer by reason of an acquisition
or disposition of stock or assets, a merger, or similar transaction. See
Section 21.5 for special procedures under a Standardized Agreement when there
is a New Related Employer.
22.120 Nonhighly Compensated Employee. Any Employee who is not a Highly
Compensated Employee. See Section 22.99 for the definition of Highly
Compensated Employee.
22.121 Nonhighly Compensated Employee Group. The group of Nonhighly
Compensated Employees included in the ADP Test and/or the ACP Test. See
Section 17.7(f).
22.122 Nonintegrated Benefit Formula. A benefit formula under Part 4 of the
target benefit plan Agreement that does not take into account an Employee's
Social Security benefits. See Section 2.5(c)(1).
22.123 Non-Key Employee. Any Employee who is not a Key Employee. (See
Section 16.3(c).)
22.124 Nonresident Alien Employees. An Employee who is neither a citizen of
the United States nor a resident of the United States for U.S. tax purposes
(as defined in Code Section7701(b)), and who does not have any earned income
(as defined in Code Section911) for the Employer that constitutes U.S. source
income (within the meaning of Code Section861). If a Nonresident Alien
Employee has U.S. source income, he/she is treated as satisfying this
definition if all of his/her U.S. source income from the Employer is exempt
from U.S. income tax under an applicable income tax treaty.
22.125 Nonstandardized Agreement. An Agreement under this Prototype Plan
under which an adopting Employer may not rely on a Favorable IRS Letter issued
to the Prototype Sponsor. In order to have reliance from the IRS that the form
of the Plan as adopted by the Employer is qualified, the Employer must request
a determination letter on the Plan.
22.126 Normal Retirement Age. The age selected under Part 5 of the
Agreement. If a Participant's Normal Retirement Age is determined wholly or
partly with reference to an anniversary of the date the Participant commenced
participation in the Plan and/or the Participant's Years of Service, Normal
Retirement Age is the Participant's age when such requirements are satisfied.
If the Employer enforces a mandatory retirement age, the Normal Retirement Age
is the lesser of that mandatory age or the age specified in the Agreement.
22.127 Offset Compensation. The average of a Participant's annual Included
Compensation during the three (3) consecutive Measuring Periods designated
under Part 3, #12 of the target benefit plan Agreement. See Section 2.5(d)(5)
for a complete definition of Offset Compensation.
22.128 Offset Benefit Formula. A Flat Offset Benefit formula or a Unit
Offset Benefit formula under Part 4 of the target benefit plan Agreement that
provides for a Stated Benefit based on a percentage of Average Compensation
offset by a percentage of Offset Compensation. See Section 2.5(c)(2)(iii) and
(iv).
22.129 Old-Law Calendar Year Election. A special election for determining
the Lookback Year under the Highly Compensated Employee test that was
available only for the 1997 Plan Year. See Section 22.99(b)(6).
22.130 Old-Law Required Beginning Date. If so elected under Part 13, #52 of
the Agreement [Part 13, #70 of the 401(k) Agreement], the date by which
minimum distributions must commence under the Plan, as determined under
Section 10.3(a)(2).
22.131 Owner-Employee. A Self-Employed Individual (as defined in Section
22.180) who is a sole proprietor, or who is a partner owning more than 10
percent of either the capital or profits interest of the partnership.
22.132 Paired Plans. Two or more Standardized Agreements that are designated
as Paired Plans. See Section 19.6.
22.133 Participant. A Participant is an Employee or former Employee who has
satisfied the conditions for participating under the Plan. A Participant also
includes any Employee or former Employee who has an Account Balance under the
Plan, including an Account Balance derived from a rollover or transfer from
another qualified plan or IRA. A Participant is entitled to share in an
allocation of contributions or forfeitures under the Plan for a given year
only if the Participant is an Eligible Participant as defined in Section 1.1,
and satisfies the allocation conditions set forth in Section 2.6 and Part 4 of
the Agreement.
22.134 Period of Severance. A continuous period of time during which the
Employee is not employed by the Employer and which is used to determine an
Employee's Participation under the Elapsed Time Method. See Section 6.5(b)(2).
22.135 Permissive Aggregation Group. Plans that are not required to be
aggregated to determine whether the Plan is a Top-Heavy Plan. See Section
16.3(d).
22.136 Permitted Disparity Method. A method for allocating certain Employer
Contributions to Eligible Participants as designated under Part 4 of the
Agreement. See Article 2.
22.137 Plan. The Plan is the retirement plan established or continued by the
Employer for the benefit of its Employees under this Prototype Plan document.
The Plan consists of the BPD and the elections made under the Agreement. If
the Employer adopts more than one Agreement offered under this Prototype Plan,
then each executed Agreement represents a separate Plan, unless the Agreement
restates a previously
executed Agreement.
22.138 Plan Administrator. The Plan Administrator is the person designated
to be responsible for the administration and operation of the Plan. Unless
otherwise designated by the Employer, the Plan Administrator is the Employer.
If any Related Employer has executed a Co-Sponsor Adoption Page, the Employer
referred to in this Section is the Employer that executes the Signature Page
of the Agreement.
22.139 Plan Year. The 12-consecutive month period for administering the
Plan, on which the records of the Plan are maintained. The Employer must
designate the Plan Year applicable to the Plan under the Agreement. If the
Plan Year is amended, a Plan Year of less than 12 months may be created. If
this is a new Plan, the first Plan Year begins on the Effective Date of the
Plan. If the amendment of the Plan Year or the Effective Date of a new Plan
creates a Plan Year that is less than 12 months long, there is a Short Plan
Year. The existence of a Short Plan Year may be documented under the Plan Year
definition on page 1 of the Agreement. See Section 11.7 for operating rules
that apply to Short Plan Years.
22.140 Pre-Age 35 Waiver. A waiver of the QPSA before a Participant reaches
age 35. See Section 9.4(f).
22.141 Predecessor Employer. An employer that previously employed the
Employees of the Employer. See Section 6.7 for the rules regarding the
crediting of service with a Predecessor Employer.
22.142 Predecessor Plan. A Predecessor Plan is a qualified plan maintained
by the Employer that is terminated within the 5-year period immediately
preceding or following the establishment of this Plan. A Participant's service
under a Predecessor Plan must be counted for purposes of determining the
Participant's vested percentage under the Plan. See Section 4.5(b)(1).
22.143 Present Value. The current single-sum value of an Accrued Benefit
under a Defined Benefit Plan.
22.144 Present Value Stated Benefit. An amount used to determine the
Employer Contribution under the target benefit plan Agreement. See Section
2.5(b)(3).
22.145 Prior Year Testing Method. A method for applying the ADP Test and/or
the ACP Test. See Section 17.2(a)(1) for a discussion of the Prior Year
Testing Method under the ADP Test and Section 17.3(a)(1) for a discussion of
the Prior Year Testing Method under the ACP Test.
22.146 Pro Rata Allocation Method. A method for allocating certain Employer
Contributions to Eligible Participants under the Plan. See Article 2.
22.147 Projected Annual Benefit. An amount used in the numerator of the
Defined Benefit Plan Fraction. See Section 7.5(b)(4).
22.148 Protected Benefit. A Participant's benefits which may not be
eliminated by Plan amendment. Protected Benefits include early retirement
benefits, retirement-type subsidies, and optional forms of benefit (as defined
under the regulations). See Section 18.1(c).
22.149 Prototype Plan. A plan sponsored by a Prototype Sponsor the form of
which is the subject of a Favorable IRS Letter from the Internal Revenue
Service which is made up of a Basic Plan Document and an Adoption Agreement.
An Employer may establish or continue a plan by executing an Adoption
Agreement under this Prototype Plan.
22.150 Prototype Sponsor. The Prototype Sponsor is the entity that maintains
the Prototype Plan for adoption by Employers. See Section 18.1(a) for the
ability of the Prototype Sponsor to amend this Plan.
22.151 QDRO -- Qualified Domestic Relations Order. A domestic relations
order that provides for the payment of all or a portion of the Participant's
benefits to an Alternate Payee and satisfies the requirements under Code
Section414(p). See Section 11.5.
22.152 QJSA -- Qualified Joint and Survivor Annuity. A QJSA is an immediate
annuity payable over the life of the Participant with a survivor annuity
payable over the life of the spouse. If the Participant is not married as of
the Distribution Commencement Date, the QJSA is an immediate annuity payable
over the life of the Participant. See Section 9.2.
22.153 QMAC Account. The portion of a Participant's Account attributable to
QMACs.
22.154 QMACs -- Qualified Matching Contributions. An Employer Matching
Contribution made by the
Employer that satisfies the requirements under Section 17.7(g).
22.155 QNEC Account. The portion of a Participant's Account attributable to
QNECs.
22.156 QNECs -- Qualified Nonelective Contributions. An Employer Nonelective
Contribution made by the Employer that satisfies the requirements under
Section 17.7(h).
22.157 QPSA -- Qualified Preretirement Survivor Annuity. A QPSA is an
annuity payable over the life of the surviving spouse that is purchased using
50% of the Participant's vested Account Balance as of the date of death. The
Employer may modify the 50% QPSA level under Part 11, #41.b. of the Agreement
[Part 11, #59.b. of the 401(k) Agreement]. See Section 9.3.
22.158 QPSA Election Period. The period during which a Participant (and the
Participant's spouse) may waive the QPSA under the Plan. See Section 9.4(e).
22.159 Qualified Election. An election to waive the QJSA or QPSA under the
Plan. See Section 9.4(d).
22.160 Qualified Transfer. A plan-to-plan transfer which meets the
requirements under Section 3.3(d).
22.161 Qualifying Employer Real Property. Real property of the Employer
which meets the requirements under ERISA Section407(d)(4). See Section 13.5(b)
for limitations on the ability of the Plan to invest in Qualifying Employer
Real Property.
22.162 Qualifying Employer Securities. An Employer security which is stock,
a marketable obligation, or interest in a publicly traded partnership as
described in ERISA Section407(d)(5). See Section 13.5(b) for limitations on
the ability of the Plan to invest in Qualifying Employer Securities.
22.163 Reemployment Commencement Date. The first date upon which an Employee
is credited with an Hour of Service following a Break in Service (or Period of
Severance, if the Plan is using the Elapsed Time Method of crediting service).
For purposes of applying the Elapsed Time rules under Section 6.5(b), an Hour
of Service is limited to an Hour of Service as described in Section 22.101(a).
22.164 Related Employer. A Related Employer includes all members of a
controlled group of corporations (as defined in Code Section414(b)), all
commonly controlled trades or businesses (as defined in Code Section414(c)) or
affiliated service groups (as defined in Code Section414(m)) of which the
adopting Employer is a part, and any other entity required to be aggregated
with the Employer pursuant to regulations under Code Section414(o). For
purposes of applying the provisions under this Plan, the Employer and any
Related Employers are treated as a single Employer, unless specifically stated
otherwise. See Section 11.8 for operating rules that apply when the Employer
is a member of a Related Employer group.
22.165 Required Aggregation Group. Plans which must be aggregated for
purposes of determining whether the Plan is a Top-Heavy Plan. See Section
16.3(f).
22.166 Required Beginning Date. The date by which minimum distributions must
commence under the Plan. See Section 10.3(a).
22.167 Reverse QNEC Method. A method for allocating QNECs under the Plan.
See Section 2.3(e)(2).
22.168 Rollover Contribution Account. The portion of the Participant's
Account attributable to a Rollover Contribution from another qualified plan or
IRA.
22.169 Rollover Contribution. A contribution made by an Employee to the Plan
attributable to an Eligible Rollover Distribution from another qualified plan
or IRA. See Section 8.8(a) for the definition of an Eligible Rollover
Distribution.
22.170 Rule of Parity Break in Service. A Break in Service rule used to
determine an Employee's Participation under the Plan. See Section 1.6(a) for
the effect of the Rule of Parity Break in Service on eligibility to
participate under the Plan and see Section 4.6(c) for the application for the
effect of the Rule of Parity Break in Service Rule on vesting.
22.171 Safe Harbor 401(k) Plan. A 401(k) plan that satisfies the conditions
under Section 17.6.
22.172 Safe Harbor Contribution. A contribution authorized under Part 4E of
the 401(k) Agreement that allows the Plan to qualify as a Safe Harbor 401(k)
Plan. A Safe Harbor Contribution may be a Safe Harbor
Matching Contribution or a Safe Harbor Nonelective Contribution.
22.173 Safe Harbor Matching Contribution Account. The portion of a
Participant's Account attributable to Safe Harbor Matching Contributions.
22.174 Safe Harbor Matching Contributions. An Employer Matching Contribution
that satisfies the requirements under Section 17.6(a)(1)(i).
22.175 Safe Harbor Nonelective Contribution Account. The portion of a
Participant's Account attributable to Safe Harbor Nonelective Contributions.
22.176 Safe Harbor Nonelective Contributions. An Employer Nonelective
Contribution that satisfies the requirements under Section 17.6(a)(1)(ii).
22.177 Salary Reduction Agreement. A Salary Reduction Agreement is a written
agreement between an Eligible Participant and the Employer, whereby the
Eligible Participant elects to reduce his/her Included Compensation by a
specific dollar amount or percentage and the Employer agrees to contribute
such amount into the 401(k) Plan. A Salary Reduction Agreement may require
that an election be stated in specific percentage increments (not greater than
1% increments) or in specific dollar amount increments (not greater than
dollar increments that could exceed 1% of Included Compensation).
A Salary Reduction Agreement may not be effective prior to the later of: (a)
the date the Employee becomes an Eligible Participant; (b) the date the
Eligible Participant executes the Salary Reduction Agreement; or (c) the date
the 401(k) plan is adopted or effective. A Salary Reduction Agreement is valid
even though it is executed by an Employee before he/she actually has qualified
as an Eligible Participant, so long as the Salary Reduction Agreement is not
effective before the date the Employee is an Eligible Participant. A Salary
Reduction Agreement may only apply to Included Compensation that becomes
currently available to the Employee after the effective date of the Salary
Reduction Agreement.
A Salary Reduction Agreement (or other written procedures) must designate a
uniform period during which an Employee may change or terminate his/her
deferral election under the Salary Reduction Agreement. An Eligible
Participant's right to change or terminate a Salary Reduction Agreement may
not be available on a less frequent basis than once per Plan Year.
22.178 Section 401(k) Deferral Account. The portion of a Participant's
Account attributable to Section 401(k) Deferrals.
22.179 Section 401(k) Deferrals. Amounts contributed to the 401(k) Plan at
the election of the Participant, in lieu of cash compensation, which are made
pursuant to a Salary Reduction Agreement or other deferral mechanism, and
which are not includible in the gross income of the Employee pursuant to Code
Section402(e)(3). Section 401(k) Deferrals do not include any deferrals
properly distributed as excess Annual Additions pursuant to Section 7.1(c)(2).
22.180 Self-Employed Individual. An individual who has Earned Income (as
defined in Section 22.58) for the taxable year from the trade or business for
which the Plan is established, or an individual who would have had Earned
Income but for the fact that the trade or business had no Net Profits for the
taxable year.
22.181 Shareholder-Employee. A Shareholder-Employee means an Employee or
officer of a subchapter S corporation who owns (or is considered as owning
within the meaning of Code Section318(a)(1)), on any day during the taxable
year of such corporation, more than 5% of the outstanding stock of the
corporation.
22.182 Shift-to-Plan-Year Method. The Shift-to-Plan-Year Method is a method
for determining Eligibility Computation Periods, after an Employee's initial
computation period. See Section 1.4(c)(1).
22.183 Short Plan Year. Any Plan Year that is less than 12 months long,
either because of the amendment of the Plan Year, or because the Effective
Date of a new Plan is less than 12 months prior to the end of the first Plan
Year. See Section 11.7 for the operational rules that apply if the Plan has a
Short Plan Year.
22.184 Social Security Retirement Age. An Employee's retirement age as
determined under Section 230 of the Social Security Retirement Act. See
Section 2.5(d)(6).
22.185 Standardized Agreement. An Agreement under this Prototype Plan that
permits the adopting Employer to rely under certain circumstances on the
Favorable IRS Letter issued to the Prototype Sponsor
without the need for the Employer to obtain a determination letter.
22.186 Stated Benefit. The amount determined in accordance with the benefit
formula selected in Part 4 of the target benefit plan Agreement, payable
annually as a Straight Life Annuity commencing at Normal Retirement Age (or
current age, if later). See Section 2.5(a).
22.187 Straight Life Annuity. An annuity payable in equal installments for
the life of the Participant that terminates upon the Participant's death.
22.188 Successor Plan. A Successor Plan is any Defined Contribution Plan,
other than an ESOP, SEP, or SIMPLE-IRA plan, maintained by the Employer which
prevents the Employer from making a distribution to Participants upon the
termination of a 401(k) plan. See Section 18.2(b)(2).
22.189 Taxable Wage Base. The maximum amount of wages that are considered
for Social Security purposes. The Taxable Wage Base is used to determine the
Integration Level for purposes of applying the Permitted Disparity Method
allocation formula under the profit sharing or 401(k) plan Agreement (see
Section 2.2(b)(2)) or under the money purchase plan Agreement (see Section
2.4(c)) or for applying the Integrated Benefit Formulas under the target
benefit plan Agreement (see Section 2.5(d)(9)).
22.190 Testing Compensation. The compensation used for purposes of the ADP
Test, the ACP Test, and the Multiple Use Test. See Section 17.7(i).
22.191 Theoretical Reserve. An amount used to determine the Employer
Contribution under the target benefit plan Agreement. See Section 2.5(b)(4).
22.192 Three Percent Method. A method for applying the ADP Test or the ACP
Test for a new 401(k) Plan. See Section 17.2(b) for a discussion of the ADP
Test for new plans and Section 17.3(b) for a discussion of the ACP Test for
new plans.
22.193 Top-Paid Group. The top 20% of Employees ranked by Total Compensation
for purposes of applying the Top-Paid Group Test. See Section 22.99(b)(4).
22.194 Top-Paid Group Test. An optional test the Employer may apply when
determining its Highly Compensated Employees. See Section 22.99(a)(2).
22.195 Top-Heavy Plan. A Plan that satisfies the conditions under Section
16.3(g). A Top-Heavy Plan must provide special accelerated vesting and minimum
benefits to Non-Key Employees. See Section 16.2.
22.196 Top-Heavy Ratio. The ratio used to determine whether the Plan is a
Top-Heavy Plan. See Section 16.3(h).
22.197 Total Compensation. Total Compensation is used to apply the Annual
Additions Limitation under Section 7.1 and to determine the top-heavy minimum
contribution under Section 16.2 (a). Total Compensation is either W-2 Wages,
Withholding Wages, or Code Section415 Safe Harbor Compensation, as designated
under Part 3 of the Agreement. For a Self-Employed Individual, each definition
of Total Compensation means Earned Income. Except as otherwise provided under
Sections 7.4(g)(4) and 16.3(i), each definition of Total Compensation
(including Earned Income for Self-Employed Individuals) is increased to
include Elective Deferrals (as defined in Section 22.61) and elective
contributions to a cafeteria plan under Code Section125 or to an eligible
deferred compensation plan under Code Section457. For years beginning on or
after January 1, 2001, each definition of Total Compensation also is increased
to include elective contributions that are not includible in an Employee's
gross income as a qualified transportation fringe under Code Section132(f)(4).
The Employer may elect an earlier effective date under Appendix B-3.c. of the
Agreement.
Unless modified under the Agreement, Total Compensation does not include
amounts paid to an individual as severance pay to the extent such amounts are
paid after the common-law employment relationship between the individual and
the Employer has terminated. The Employer may modify the definition of Total
Compensation under Part 13, #51.b. or c. of the Agreement [Part 13, #69.b. or
c. of the 401(k) Agreement]. The Employer may elect under #51.b. or #69.b.,
as applicable, to modify the definition of Total Compensation to include
imputed compensation of Disabled Employees as permitted under Section
7.4(g)(3) of this BPD. Additional modifications may be made under #51.c. or
#69.c., as applicable. Any modification to the definition of Total
Compensation must be consistent with the definition of
compensation under Treas. Reg. Section1.415-2(d).
(a) W-2 Wages. Wages within the meaning of Code Section3401(a) and all
other payments of compensation to an Employee by the Employer (in the course
of the Employer's trade or business) for which the Employer is required to
furnish the Employee a written statement under Code Section6041(d),
6051(a)(3), and 6052, determined without regard to any rules under Code
Section3401(a) that limit the remuneration included in wages based on the
nature or location of the employment or the services performed.
(b) Withholding Wages. Wages within the meaning of Code Section3401(a)
for the purposes of income tax withholding at the source but determined
without regard to any rules that limit the remuneration included in wages
based on the nature or location of the employment or the services performed.
(c) Code Section 415 Safe Harbor Compensation. A Participant's wages,
salaries, fees for professional services and other amounts received for
personal services actually rendered in the course of employment with the
Employer (without regard to whether or not such amounts are paid in cash) to
the extent that the amounts are includible in gross income. Such amounts
include, but are not limited to, commissions, compensation for services on the
basis of a percentage of profits, tips, bonuses, fringe benefits, and
reimbursements or other expense allowances under a nonaccountable plan (as
described in Treas. Reg. Section 1.62-2(c)), 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 (other than Elective Deferrals)
under a SEP (as described in Code Section 408(k)), or any distributions from a
plan of deferred compensation. For this purpose, Employer contributions to a
plan of deferred compensation do not include Elective Deferrals (as defined in
Section 22.61), elective contributions to a cafeteria plan under Code Section
125 or a deferred compensation plan under Code Section 457 and, for years
beginning on or after January 1, 2001, qualified transportation fringes under
Code Section 132(f)(4). The Employer may elect an earlier effective date for
qualified transportation fringes under Appendix B-3.c. of the Agreement.
(2) Amounts realized from the exercise of a non-qualified stock
option, or when restricted stock (or property) held by the Employee either
becomes freely transferable or is no longer subject to a substantial risk of
forfeiture.
(3) Amounts realized from the sale, exchange or other disposition of
stock acquired under a qualified stock option.
(4) Other amounts which received special tax benefits, or
contributions made by the Employer (other than Elective Deferrals) towards the
purchase of an annuity contract described in Code Section 403(b) (whether or
not the contributions are actually excludable from the gross income of the
Employee).
22.198 Transfer Account. The portion of a Participant's Account attributable
to a direct transfer of assets or liabilities from another qualified
retirement plan. See Section 3.3 for the rules regarding the acceptance of a
transfer of assets under this Plan.
22.199 Trust. The Trust is the separate funding vehicle under the Plan.
22.200 Trustee. The Trustee is the person or persons (or any successor to
such person or persons) named in the Trustee Declaration under the Agreement.
The Trustee may be a Discretionary Trustee or a Directed Trustee. See Article
12 for the rights and duties of a Trustee under this Plan.
22.201 Two-Step Formula. A method of allocating certain Employer
Contributions under the Permitted Disparity Method. See Section 2.2(b)(2)(i).
22.202 Union Employee. An Employee who is included in a unit of Employees
covered by a collective bargaining agreement between the Employer and Employee
representatives and whose retirement benefits are subject to good faith
bargaining. For this purpose, an Employee will not be considered a Union
Employee for a Plan Year if more than two percent of the Employees who are
covered pursuant to the collective bargaining agreement are professionals as
defined in Section 1.410(b)-9 of the regulations. For this purpose, the term
"Employee representatives" does not include any organization more than half of
whose members are Employees who are owners, officers, or executives of the
Employer.
22.203 Unit Benefit. A Nonintegrated Benefit Formula under Part 4 of the
target benefit plan Agreement that provides for a Stated Benefit equal to a
specified percentage of Average Compensation multiplied by the Participant's
projected Years of Participation with the Employer. See Section
2.5(c)(1)(ii).
22.204 Unit Excess Benefit. An Integrated Benefit Formula under Part 4 of
the target benefit plan Agreement that provides for a Stated Benefit equal to
a specified percentage of Average Compensation plus a specified percentage of
Excess Compensation multiplied by the Participant's projected Years of
Participation. See Section 2.5(c)(2)(ii).
22.205 Unit Offset Benefit. An Integrated Benefit Formula under Part 4 of
the target benefit plan Agreement that provides for a Stated Benefit equal to
a specified percentage of Average Compensation offset by a specified
percentage of Offset Compensation multiplied by the Participant's projected
Years of Participation. See Section 2.5(c)(2)(iv).
22.206 Valuation Date. The date or dates selected under Part 12 of the
Agreement upon which Plan assets are valued. If the Employer does not select a
Valuation Date under Part 12, Plan assets will be valued as of the last day of
each Plan Year. Notwithstanding any election under Part 12 of the Agreement,
the Trustee and Plan Administrator may agree to value the Trust on a more
frequent basis, and/or to perform an interim valuation of the Trust. See
Section s 12.6 and 13.2.
22.207 Vesting Computation Period. The 12-consecutive month period used for
measuring whether an Employee completes a Year of Service for vesting
purposes. See Section 4.4.
22.208 W-2 Wages. An optional definition of Total Compensation which the
Employer may select under Part 3, #9.a. of the Agreement. See Section
22.197(a) for the definition of W-2 Wages.
22.209 Withholding Wages. An optional definition of Total Compensation which
the Employer may select under Part 3, #9.b. of the Agreement. See Section
22.197(b) for the definition of Withholding Wages.
22.210 Year of Participation. Years of Participation are used to determine a
Participant's Stated Benefit under the target benefit plan Agreement. See
Section 2.5(d)(10).
22.211 Year of Service. An Employee's Years of Service are used to apply the
eligibility and vesting rules under the Plan. Unless elected otherwise under
Part 7 of the Agreement, an Employee will earn a Year of Service for purposes
of applying the eligibility rules if the Employee completes 1,000 Hours of
Service with the Employer during an Eligibility Computation Period. (See
Section 1.4(b).) Unless elected otherwise under Part 7 of the Agreement, an
Employee will earn a Year of Service for purposes of applying the vesting
rules if the Employee completes 1,000 Hours of Service with the Employer
during a Vesting Computation Period. (See Section 4.5.)