Common use of Limitation on Deferral Percentage for Highly Compensated Employees Clause in Contracts

Limitation on Deferral Percentage for Highly Compensated Employees. Notwithstanding any provision herein to the contrary, the actual deferral percentage for all Highly Compensated Employees for each Plan Year must not exceed the actual deferral percentage for all other Employees eligible to participate by more than the greater of: (a) the actual deferral percentage of such other Employees multiplied by 1.25; or (b) the actual deferral percentage of such other Employees multiplied by 2.0, but in no event more than two (2) percentage points greater than the actual deferral percentage of such other Employees. For purposes hereof, the actual deferral percentages for a Plan Year for all Highly Compensated Employees and for all other Employees respectively are the averages of the ratios, calculated separately for each Employee in the respective group, of the amount of Elective Contributions and Qualified Non-Elective Contributions paid under the Plan on behalf of each such Employee for such Plan Year including Excess Elective Deferrals to the Employee's Compensation for such Plan Year (whether or not the Employee was a Participant for the entire Plan Year) but excluding Elective Deferrals that are taken into account in the Contribution Percentage test (provided the ADP test is satisfied both with and without exclusion of those Elective Deferrals). An Employee who would be a Participant but for the failure to have Elective Contributions made on his behalf shall be treated as a Participant on whose behalf no Elective Contributions are made. For purposes of calculating the actual deferral percentages of Highly Compensated Employees who are 5 percent owners or among the ten most highly paid Employees, Elective Contributions and Qualified Non-Elective Contributions on behalf of a member of the Family of such Highly Compensated Employees shall be taken into account and Compensation of such Employees shall include the Elective Deferrals and Qualified Non-Elective Contributions and Compensation for the Plan Year of members of his Family (as determined in Section 414(q)(6) of the Code). A member of the Family of such Highly Compensated Employees shall be disregarded as a separate Employee in determining the actual deferral percentage both for Participants who are Highly Compensated Employees and for all other Employees. For purposes of determining the actual deferral percentage test, Elective Contributions and Qualified Non-Elective Contributions must be made before the last day of the twelve month period immediately following the Plan Year to which the contributions relate. The Employer shall maintain records sufficient to demonstrate satisfaction of the actual deferral percentage test and the amount of Qualified Non-Elective Contributions used in such test. The determination and treatment of the actual deferral percentage amounts of any Participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury.

Limitation on Deferral Percentage for Highly Compensated Employees. Notwithstanding any provision herein to the contrary, the actual deferral percentage Actual Deferral Percentage for all Highly Compensated Employees for each the current Plan Year must not exceed the actual deferral percentage Actual Deferral Percentage, for the preceding Plan Year, for all other Non-highly Compensated Employees eligible to participate by more than the greater of: (a) the actual deferral percentage Actual Deferral Percentage of such other Non-highly Compensated Employees multiplied by 1.25; or (b) the actual deferral percentage Actual Deferral Percentage of such other Non-highly Compensated Employees multiplied by 2.0, but in no event more than two (2) percentage points greater than the actual deferral percentage Actual Deferral Percentage of such other Non-highly Compensated Employees; (c) the Employer may elect in the Adoption Agreement to use the Actual Deferral Percentage for Participants who are Non-highly Compensated Employees for the current Plan Year rather than the preceding Plan Year. If such election is made, it may not be changed except as provided by Notice 98-1 (or superseding guidance). The testing method selected must be used for both the Actual Deferral Percentage Test and the Actual Contribution Percentage Test; (d) in the case of the first Plan Year the Plan permits any Participant to make Elective Deferrals and this is not a successor plan, the amount taken into account as the Actual Deferral Percentage of Nonhighly Compensated Employees for the preceding Plan Year shall be 3 percent or, at the Employer's election, the Actual Deferral Percentage for the first Plan Year; (e) A Participant is a Highly Compensated Employee for a particular Plan Year if he or she meets the definition of a Highly Compensated Employee in effect for that Plan Year. Similarly, a Participant is a Non-highly Compensated Employee for a particular Plan Year if he or she does not meet the definition of a Highly Compensated Employee in effect for that Plan Year. For purposes hereof, the actual deferral percentages Actual Deferral Percentages for a Plan Year for all Highly Compensated Employees and for all other Non-highly Compensated Employees respectively are the averages of the ratios, calculated separately for each Employee in the respective group, of the amount of Elective Contributions and Contributions, Qualified Non-Elective Contributions and those applicable Qualified Matching Contributions paid under the Plan on behalf of each such Employee for such Plan Year including Excess Elective Deferrals Deferrals, to the Employee's Compensation compensation for such Plan Year (whether or not the Employee was a Participant for the entire Plan Year) Year but excluding Elective Deferrals that are taken into account in the Actual Contribution Percentage test (provided the ADP test is satisfied both with and without exclusion of those Elective Deferrals). The Actual Deferral Percentages shall be rounded to the nearest hundredth of a percentage point. An Employee who would be a Participant but for the failure to have Elective Contributions made on his behalf shall be treated as a Participant on whose behalf no Elective Contributions are made. For purposes of calculating determining the actual deferral percentages of Highly Compensated Employees who are 5 percent owners or among the ten most highly paid EmployeesActual Deferral Percentage test, Elective Contributions and Qualified Non-Elective Contributions on behalf of a member of the Family of such Highly Compensated Employees shall be taken into account and Compensation of such Employees shall include the Elective Deferrals and Contributions, Qualified Non-Elective Contributions and Compensation for the Plan Year of members of his Family (as determined in Section 414(q)(6) of the Code). A member of the Family of such Highly Compensated Employees shall be disregarded as a separate Employee in determining the actual deferral percentage both for Participants who are Highly Compensated Employees and for all other Employees. For purposes of determining the actual deferral percentage test, Elective Contributions and Qualified Non-Elective Matching Contributions must be made before the last day of the twelve month period immediately following the Plan Year to which the contributions relate. In order to be taken into account in the calculation of the Actual Deferral Percentage for a year under prior year testing, a Qualified Non-Elective Contribution or Qualified Matching Contribution must be allocated as of a date within the year using current data and must actually be paid to the Trust no later than the end of the 12-month period following the end of the year to which the contribution relates. Pursuant to section 410(b)(4)(B) of the Code the Employer may elect to treat that portion of the Plan that benefits only Employees who satisfy age and service conditions under the Plan that are lower than the greatest minimum age and service conditions permitted under section 410(a) of the Code ("Otherwise Excludable Employees") and that portion of the Plan that benefits Employees that meet the greatest minimum age and service conditions permitted under section 410(a) of the Code ("Not Otherwise Excludable Employees") as two separate plans for purposes of section 401(k) of the Code, and the ADP test safe harbor need not be satisfied with respect to both plans in order for one of the plans to take advantage of the ADP test safe harbor. The Employer shall maintain records sufficient to demonstrate satisfaction of the actual deferral percentage Actual Deferral Percentage test and the amount of Qualified Matching Contributions and Qualified Non-Elective Contributions used in such test. The determination and treatment of the actual deferral percentage Actual Deferral Percentage amounts of any Participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury.