EXHIBIT 10.3
REGIONAL PROTOTYPE DEFINED CONTRIBUTION
PLAN AND TRUST
Sponsored By
EPIC Advisors, Inc.
BASIC PLAN DOCUMENT #R1
THIS DOCUMENT IS COPYRIGHTED UNDER THE LAWS OF THE UNITED STATES.
UNAUTHORIZED USE, DUPLICATION OR REPRODUCTION, INCLUDING THE USE OF
ELECTRONIC MEANS, IS PROHIBITED BY LAW WITHOUT THE EXPRESS CONSENT OF
THE AUTHOR.
TABLE OF CONTENTS
PARAGRAPH PAGE
ARTICLE I
DEFINITIONS
1.1 Actual Deferral Percentage 1
1.2 Adoption Agreement 1
1.3 Aggregate Limit 1
1.4 Annual Additions 2
1.5 Annuity Starting Date 2
1.6 Applicable Calendar Year 2
1.7 Applicable Life Expectancy 2
1.8 Average Contribution Percentage (ACP) 2
1.9 Average Deferral Percentage (ADP) 2
1.10 Break In Service 3
1.11 Code 3
1.12 Compensation 3
1.13 Contribution Percentage 4
1.14 Defined Benefit Plan 5
1.15 Defined Benefit (Plan) Fraction 5
1.16 Defined Contribution Dollar Limitation 5
1.17 Defined Contribution Plan 5
1.18 Defined Contribution (Plan) Fraction 5
1.19 Designated Beneficiary 6
1.20 Disability 6
1.21 Distribution Calendar Year 6
1.22 Early Retirement Age 6
1.23 Earned Income 6
1.24 Effective Date 6
1.25 Election Period 6
1.26 Elective Deferral 6
1.27 Eligible Participant 7
1.28 Employee 7
1.29 Employer 7
1.30 Entry Date 7
1.31 Excess Aggregate Contributions 7
1.32 Excess Amount 7
1.33 Excess Contribution 8
1.34 Excess Elective Deferrals 8
1.35 Family Member 8
1.36 First Distribution Calendar Year 8
1.37 Fund 8
1.38 Hardship 8
1.39 Highest Average Compensation 8
1.40 Highly Compensated Employee 8
1.41 Hour Of Service 9
1.42 Key Employee 10
1.43 Leased Employee 10
1.44 Limitation Year 10
1.45 Master Or Prototype Plan 10
1.46 Matching Contribution 10
1.47 Maximum Permissible Amount 10
1.48 Net Profit 11
1.49 Normal Retirement Age 11
1.50 Owner-Employee 11
1.51 Paired Plans 11
1.52 Participant 11
1.53 Participant's Benefit 11
1.54 Permissive Aggregation Group 11
1.55 Plan 11
1.56 Plan Administrator 11
1.57 Plan Year 11
1.58 Present Value 11
1.59 Projected Annual Benefit 11
1.60 Qualified Deferred Compensation Plan 12
1.61 Qualified Domestic Relations Order 12
1.62 Qualified Early Retirement Age 12
1.63 Qualified Joint And Survivor Annuity 12
1.64 Qualified Matching Contribution 12
1.65 Qualified Non-Elective Contributions 12
1.66 Qualified Voluntary Contribution 12
1.67 Regional Prototype Plan 12
1.68 Required Aggregation Group 13
1.69 Required Beginning Date 13
1.70 Rollover Contribution 13
1.71 Salary Savings Agreement 13
1.72 Self-Employed Individual 13
1.73 Service 13
1.74 Shareholder Employee 13
1.75 Simplified Employee Pension Plan 13
1.76 Sponsor 13
1.77 Spouse (Surviving Spouse) 14
1.78 Super Top-Heavy Plan 14
1.79 Taxable Wage Base 14
1.80 Top-Heavy Determination Date 14
1.81 Top-Heavy Plan 14
1.82 Top-Heavy Ratio 14
1.83 Top-Paid Group 15
1.84 Transfer Contribution 16
1.85 Trustee 16
1.86 Valuation Date 16
1.87 Vested Account Balance 16
1.88 Voluntary Contribution 16
1.89 Welfare Benefit Fund 16
1.90 Year Of Service 17
ARTICLE II
ELIGIBILITY REQUIREMENTS
2.1 Participation 18
2.2 Change In Classification Of Employment 18
2.3 Computation Period 18
2.4 Employment Rights 18
2.5 Service With Controlled Groups 18
2.6 Owner-Employees 18
2.7 Leased Employees 19
2.8 Thrift Plans 19
ARTICLE III
EMPLOYER CONTRIBUTIONS
3.1 Amount 20
3.2 Expenses And Fees 20
3.3 Responsibility For Contributions 20
3.4 Return Of Contributions 20
ARTICLE IV
EMPLOYEE CONTRIBUTIONS
4.1 Voluntary Contributions 21
4.2 Qualified Voluntary Contributions 21
4.3 Rollover Contribution 21
4.4 Transfer Contribution 22
4.5 Employer Approval Of Transfer
Contributions 22
4.6 Elective Deferrals 22
4.7 Required Voluntary Contributions 23
4.8 Direct Rollover Of Benefits 23
ARTICLE V
PARTICIPANT ACCOUNTS
5.1 Separate Accounts 24
5.2 Adjustments To Participant Accounts 24
5.3 Allocating Employer Contributions 25
5.4 Allocating Investment Earnings
And Losses 25
5.5 Participant Statements 25
ARTICLE VI
RETIREMENT BENEFITS AND DISTRIBUTIONS
6.1 Normal Retirement Benefits 26
6.2 Early Retirement Benefits 26
6.3 Benefits On Termination Of Employment 26
6.4 Restrictions On Immediate Distributions 27
6.5 Normal Form Of Payment 28
6.6 Commencement Of Benefits 28
6.7 Claims Procedures 29
6.8 In-Service Withdrawals 29
6.9 Hardship Withdrawal 30
ARTICLE VII
DISTRIBUTION REQUIREMENTS
7.1 Joint And Survivor Annuity Requirements 32
7.2 Minimum Distribution Requirements 32
7.3 Limits On Distribution Periods 32
7.4 Required Distributions On Or After
The Required Beginning Date 32
7.5 Required Beginning Date 33
7.6 Transitional Rule 34
7.7 Designation Of Beneficiary For
Death Benefit 35
7.8 Nonexistence Of Beneficiary 35
7.9 Distribution Beginning Before Death 35
7.10 Distribution Beginning After Death 35
7.11 Distribution Of Excess Elective
Deferrals 36
7.12 Distributions Of Excess Contributions 37
7.13 Distribution Of Excess Aggregate
Contributions 37
ARTICLE VIII
JOINT AND SURVIVOR ANNUITY REQUIREMENTS
8.1 Applicability Of Provisions 39
8.2 Payment Of Qualified Joint
And Survivor Annuity 39
8.3 Payment of Qualified Pre-Retirement
Survivor Annuity 39
8.4 Qualified Election 39
8.5 Notice Requirements For Qualified Joint
And Survivor Annuity 40
8.6 Notice Requirements For Qualified
Pre-Retirement Survivor Annuity 40
8.7 Special Safe-Harbor Exception For
Certain Profit-Sharing Plans 40
8.8 Transitional Joint And Survivor
Annuity Rules 41
8.9 Automatic Joint And Survivor Annuity
And Early Survivor Annuity 41
8.10 Annuity Contracts 42
ARTICLE IX
VESTING
9.1 Employee Contributions 43
9.2 Employer Contributions 43
9.3 Computation Period 43
9.4 Re-qualification Prior To Five
Consecutive One-Year Breaks
In Service 43
9.5 Re-qualification After Five
Consecutive One-Year Breaks
In Service 43
9.6 Calculating Vested Interest 43
9.7 Forfeitures 44
9.8 Amendment Of Vesting Schedule 44
9.9 Service With Controlled Groups 44
9.10 Application Of Prior Vesting Rules 44
ARTICLE X
LIMITATIONS ON ALLOCATIONS AND
ANTIDISCRIMINATION TESTING
10.1 Participation In This Plan Only 45
10.2 Disposition Of Excess Annual Additions 45
10.3 Participation In This Plan And Another
Regional Prototype Defined 45
Contribution Plan, Welfare Benefit
Fund, Or Individual
Medical Account Maintained By
The Employer
10.4 Disposition Of Excess Annual Additions
Under Two Plans 46
10.5 Participation In This Plan And
Another Defined Contribution Plan
Plan Which Is Not A Regional
Prototype Plan 47
10.6 Participation In This Plan And A
Defined Benefit Plan 47
10.7 Limitations On Allocations 47
10.8 Average Deferral Percentage (ADP) Test 47
10.9 Special Rules Relating To Application
of ADP Test 48
10.10 Re-characterization 48
10.11 Average Contribution Percentage
(ACP) Test 49
10.12 Special Rules Relating To Application
Of ACP Test 49
ARTICLE XI
ADMINISTRATION
11.1 Plan Administrator 51
11.2 Trustee 51
11.3 Administrative Fees And Expenses 52
11.4 Division Of Duties And Indemnification 52
ARTICLE XII
TRUST FUND ACCOUNT
12.1 The Fund 54
12.2 Control Of Plan Assets 54
12.3 Exclusive Benefit Rules 54
12.4 Assignment And Alienation Of Benefits 54
12.5 Determination Of Qualified Domestic
Relations Order (QDRO) 54
ARTICLE XIII
INVESTMENTS
13.1 Fiduciary Standards 56
13.2 Trustee Appointment 56
13.3 Investment Alternatives Of The Trustee 56
13.4 Participant Loans 57
13.5 Insurance Policies 58
13.6 Employer Investment Direction 59
13.7 Employee Investment Direction 60
ARTICLE XIV
TOP-HEAVY PROVISIONS
14.1 Applicability Of Rules 61
14.2 Minimum Contribution 61
14.3 Minimum Vesting 61
ARTICLE XV
AMENDMENT AND TERMINATION
15.1 Amendment By Sponsor 62
15.2 Amendment By Employer 62
15.3 Termination 62
15.4 Qualification Of Employer's Plan 63
15.5 Mergers And Consolidations 63
15.6 Resignation And Removal 63
15.7 Qualification Of Prototype 63
ARTICLE XVI
GOVERNING LAW
Governing Law 64
REGIONAL PROTOTYPE DEFINED CONTRIBUTION
PLAN AND TRUST
Sponsored By
EPIC Advisors, Inc.
The Sponsor hereby establishes the following Regional Prototype
Defined Contribution Plan and Trust for use by those of its adopting
Employers who qualify and wish to provide a qualified retirement
program for its Employees. Any Plan and Trust Account established
hereunder shall be administered for the exclusive benefit of
Participants and their beneficiaries under the following terms and
conditions:
ARTICLE I
DEFINITIONS
1.1 ACTUAL DEFERRAL PERCENTAGE. The ratio (expressed as a
percentage and calculated separately for each Participant) of:
(a) the amount of Employer contributions [as defined at (c) and
(d)] actually paid over to the Fund on behalf of such
Participant for the Plan Year to
(b) the Participant's Compensation for such Plan Year.
Compensation will only include amounts for the period
during which the Employee was eligible to participate.
Employer contributions on behalf of any Participant shall include:
(c) any Elective Deferrals made pursuant to the Participant's
deferral election, including Excess Elective Deferrals, 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 these Elective
Deferrals) or are returned as excess Annual Additions; and
(d) at the election of the Employer, Qualified Non-Elective
Contributions and Qualified Matching Contributions.
For purposes of computing Actual Deferral Percentages, an Employee
who would be a Participant but for the failure to make Elective
Deferrals shall be treated as a Participant on whose behalf no
Elective Deferrals are made.
1.2 ADOPTION AGREEMENT. The document attached to this Plan by which
an Employer elects to establish a qualified retirement plan and
trust account under the terms of this Regional Prototype Defined
Contribution Plan and Trust.
1.3 AGGREGATE LIMIT. The sum of:
(a) 125 percent of the greater of the ADP of the non-Highly
Compensated Employees for the Plan Year or the ACP of
non-Highly Compensated Employees under the Plan subject
to Code Section 401(m) for the Plan Year beginning with or
within
the Plan Year of the cash or deferred arrangement as
described in Code Section 401(k) or Code Section
402(h)(1)(B) and
(b) the lesser of 200% or two plus the lesser of such ADP or
ACP.
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Alternatively, the Aggregate Limit may be expressed by substituting
the word "lesser" for the word "greater" where it appears in the
first line of sub-paragraph (a) and substituting the word "greater"
for the word "lesser" where it appears for the second time in the
first line of sub-paragraph (b).
1.4 ANNUAL ADDITIONS. The sum of the following amounts credited to
a Participant's account for the Limitation Year:
(a) Employer Contributions,
(b) Employee Contributions (under Article IV),
(c) forfeitures, and
(d) amounts allocated after March 31, 1984 to an individual
medical account, as defined in Code Section 415(l)(2),
which is part of a pension or annuity plan maintained by
the Employer (these amounts are treated as Annual Additions
to a Defined Contribution Plan though they arise under a
Defined Benefit Plan), and
(e) amounts derived from contributions paid or accrued after
1985, in taxable years ending after 1985, which are either
attributable to post-retirement medical benefits, allocated
to the account of a Key Employee, or a Welfare Benefit Fund
maintained by the Employer are also treated as Annual
Additions to a Defined Contribution Plan. For purposes of
this paragraph, an Employee is a Key Employee if he or she
meets the requirements of paragraph 1.42 at any time during
the Plan Year or any preceding Plan Year. Welfare Benefit
Fund is defined at paragraph 1.89.
Excess amounts applied in a Limitation Year to reduce Employer
contributions will be considered Annual Additions for such Limitation
Year, pursuant to the provisions of Article X.
1.5 ANNUITY STARTING DATE. The first day of the first period for
which an amount is paid as an annuity or in any other form.
1.6 APPLICABLE CALENDAR YEAR. The first Distribution Calendar Year,
and in the event of the recalculation of life expectancy, such
succeeding calendar year. If payments commence in accordance with
paragraph 7.4(e) before the Required Beginning Date, the Applicable
Calendar Year is the year such payments commence. If distribution is
in the form of an immediate annuity purchased after the Participant's
death with the Participant's remaining interest, the Applicable
Calendar Year is the year of purchase.
1.7 APPLICABLE LIFE EXPECTANCY. Used in determining the required
minimum distribution. The life expectancy (or joint and last
survivor expectancy) calculated using the attained age of the
Participant (or Designated Beneficiary) as of the Participant's (or
Designated Beneficiary's) birthday in the applicable calendar year
reduced by one for each calendar year which has elapsed since the
date life expectancy was first calculated. If life expectancy is
being recalculated, the Applicable Life Expectancy shall be the life
expectancy as so recalculated. The life expectancy of a non-Spouse
Beneficiary may not be recalculated.
1.8 AVERAGE CONTRIBUTION PERCENTAGE (ACP). The average of the
Actual Contribution Percentages for each Highly Compensated Employee
and for each non-Highly Compensated Employee.
1.9 AVERAGE DEFERRAL PERCENTAGE (ADP). The average of the
Percentages for each Highly Compensated Employee and for each
non-Highly Compensated Employee.
2
1.10 BREAK IN SERVICE. A 12-consecutive month period during which an
Employee fails to complete more than 500 Hours of Service.
1.11 CODE. The Internal Revenue Code of 1986, including any
amendments.
1.12 COMPENSATION. The Employer may select one of the following
three safe-harbor definitions of Compensation in the Adoption
Agreement. Compensation shall only include amounts earned while a
Participant if Plan Year is chosen as the applicable computation
period.
(a) Code Section 3401(a) Wages. Compensation is defined as
wages within the meaning of Code Section 3401(a) for the
purposes of Federal income tax withholding at the source
but determined without regard to any rules that limit the
remuneration included in wages based on the nature or
location of the employment or the services performed [such
as the exception for agricultural labor in Code Section
3401(a)(2)].
(b) Code Section 6041 and 6051 Wages. Compensation is defined
as wages as defined in Code Section 3401(a) and all other
payments of Compensation to an Employee by the Employer (in
the course of the Employer's trade or business) for which
the Employer is required to furnish the Employee a written
statement under Code Section 6041(d) and 6051(a)(3).
Compensation must be determined without regard to any rules
under Code Section 3401(a) that limit the remuneration
included in wages based on the nature or location of the
employment or the services performed [such as the exception
for agricultural labor in Code Section 3401(a)(2)].
(c) Code Section 415 Compensation. For purposes of applying
the limitations of Article X and Top-Heavy Minimums, the
definition of Compensation shall be Code Section 415
Compensation defined as follows: a Participant's Earned
Income, wages, salaries, and fees for professional services
and other amounts received (without regard to whether or
not an amount is paid in cash) for personal services
actually rendered in the course of employment with the
Employer maintaining the Plan to the extent that the
amounts are includable in gross income [including, but not
limited to, commissions paid salesmen, Compensation for
services on the basis of a percentage of profits,
commissions on insurance premiums, tips, bonuses, fringe
benefits and reimbursements or other expense allowances
under a non-accountable plan (as described in Regulation
1.62-2(c)], and excluding the following:
1. Employer contributions to a plan of deferred
compensation which are not includable in the
Employee's gross income for the taxable year in which
contributed, or Employer contributions under a
Simplified Employee Pension Plan or any distributions
from a plan of deferred compensation,
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; and
4. other amounts which received special tax benefits, or
contributions made by the Employer (whether or not
under a salary reduction agreement) towards the
purchase of an annuity contract described in Code
Section 403(b) (whether or not the contributions are
actually excludible from the gross income of the
Employee).
3
For purposes of applying the limitations of Article X and Top-Heavy
Minimums, the definition of Compensation shall be Code Section 415
Compensation described in this paragraph 1.12(c). Also, for purposes
of applying the limitations of Article X, Compensation for a
Limitation Year is the Compensation actually paid or made available
during such Limitation Year. Notwithstanding the preceding sentence,
Compensation for a Participant in a defined contribution plan who is
permanently and totally disabled [as defined in Code Section
22(e)(3)] is the Compensation such Participant would have received
for the Limitation Year if the Participant had been paid at the rate
of Compensation paid immediately before becoming permanently and
totally disabled. Such imputed Compensation for the disabled
Participant may be taken into account only if the Participant is not
a Highly Compensated Employee [as defined in Code Section 414(q)] and
contributions made on behalf of such Participant are nonforfeitable
when made.
If the Employer fails to pick the applicable period in the Adoption
Agreement, the Plan Year shall be used. Unless otherwise specified
by the Employer in the Adoption Agreement, Compensation shall be
determined as provided in Code Section 3401(a) [as defined in this
paragraph 1.12(a)]. In nonstandardized Adoption Agreements 004, 005
and 006, the Employer may choose to eliminate or exclude categories
of Compensation which do not violate the provisions of Code Sections
401(a)(4), 414(s) the regulations thereunder and Revenue Procedure
89-65.
Beginning with 1989 Plan Years, the annual Compensation of each
Participant which may be taken into account for determining all
benefits provided under the Plan (including benefits under Article
XIV) for any year shall not exceed $200,000, as adjusted under Code
Section 415(d). In determining the Compensation of a Participant for
purposes of this limitation, the rules of Code Section 414(q)(6)
shall apply, except in applying such rules, the term "family" shall
include only the Spouse of the Participant and any lineal descendants
of the Participant who have not attained age 19 before the end of the
Plan year. If, as a result of the application of such rules the
adjusted $200,000 limitation is exceeded, then (except for purposes
of determining the portion of Compensation up to the integration
level if this Plan provides for permitted disparity), the limitation
shall be prorated among the affected individuals in proportion to
each such individual's Compensation as determined under this section
prior to the application of this limitation.
If a Plan has a Plan Year that contains fewer than 12 calendar
months, then the annual Compensation limit for that period is an
amount equal to the $200,000 as adjusted for the calendar year in
which the Compensation period begins, multiplied by a fraction the
numerator of which is the number of full months in the Short Plan
Year and the denominator of which is 12. If Compensation for any
prior Plan Year is taken into account in determining an Employee's
contributions or benefits for the current year, the Compensation for
such prior year is subject to the applicable annual Compensation
limit in effect for that prior year. For this purpose, for years
beginning before January 1, 1990, the applicable annual Compensation
limit is $200,000.
Compensation shall not include deferred Compensation other than
contributions through a salary reduction agreement to a cash or
deferred plan under Code Section 401(k), a Simplified Employee
Pension Plan under Code Section 402(h)(1)(B), a cafeteria plan under
Code Section 125 or a tax-deferred annuity under Code Section 403(b).
Unless elected otherwise by the Employer in the Adoption Agreement,
these deferred amounts will be considered as Compensation for Plan
purposes. These deferred amounts are not counted as Compensation for
purposes of Articles X and XIV. When applicable to a Self-Employed
Individual, Compensation shall mean Earned Income.
1.13 Contribution Percentage. The ratio (expressed as a percentage
and calculated separately for each Participant) of:
(a) the Participant's Contribution Percentage Amounts [as
defined at (c)-(f)] for the Plan Year, to
(b) the Participant's Compensation for the Plan Year.
Compensation will only include amounts for the period
during which the Employee was eligible to participate.
4
Contribution Percentage Amounts on behalf of any Participant shall
include:
(c) the amount of Employee Voluntary Contributions, Matching
Contributions, and Qualified Matching Contributions (to the
extent not taken into account for purposes of the ADP test)
made under the Plan on behalf of the Participant for the
Plan Year,
(d) forfeitures of Excess Aggregate Contributions or Matching
Contributions allocated to the Participant's account which
shall be taken into account in the year in which such
forfeiture is allocated,
(e) at the election of the Employer, Qualified Non-Elective
Contributions, and
(f) the Employer also may elect to use Elective Deferrals in
the Contribution Percentage Amounts so long as the ADP test
is met before the Elective Deferrals are used in the ACP
test and continues to be met following the exclusion of
those Elective Deferrals that are used to meet the ACP
test.
Contribution Percentage Amounts shall not include Matching
Contributions, whether or not Qualified, that are forfeited either to
correct Excess Aggregate Contributions, or because the contributions
to which they relate are Excess Deferrals, Excess Contributions, or
Excess Aggregate Contributions.
1.14 DEFINED BENEFIT PLAN. A Plan under which a Participant's
benefit is determined by a formula contained in the Plan and no
individual accounts are maintained for Participants.
1.15 DEFINED BENEFIT (PLAN) FRACTION. A fraction, the numerator of
which is the sum of the Participant's Projected Annual Benefits under
all the Defined Benefit Plans (whether or not terminated) maintained
by the Employer, and the denominator of which is the lesser of 125
percent of the dollar limitation determined for the Limitation Year
under Code Sections 415(b) and (d) or 140 percent of the Highest
Average Compensation, including any adjustments under Code Section
415(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
plan after May 5, 1986. The preceding sentence applies only if the
Defined Benefit Plans individually and in the aggregate satisfied the
requirements of Section 415 for all Limitation Years beginning before
January 1, 1987.
1.16 DEFINED CONTRIBUTION DOLLAR LIMITATION. Thirty thousand dollars
($30,000) or if greater, one-fourth of the defined benefit dollar
limitation set forth in Code Section 415(b)(1)(A) as in effect for
the Limitation Year.
1.17 DEFINED CONTRIBUTION PLAN. A Plan under which individual
accounts are maintained for each Participant to which all
contributions, forfeitures, investment income and gains or losses,
and expenses are credited or deducted. A Participant's benefit under
such Plan is based solely on the fair market value of his or her
account balance.
1.18 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 nondeductible Employee contributions to all Defined
Benefit Plans, whether or not terminated, maintained by the Employer,
and the Annual Additions attributable to all Welfare Benefit Funds,
as defined in paragraph 1.89 and individual medical accounts, as
defined in Code Section 415(1)(2), maintained by the Employer), and
the denominator of which is the sum of the maximum aggregate amounts
for the current and all
5
prior Limitation Years of service with the Employer (regardless of
whether a Defined Contribution Plan was maintained by the Employer).
The maximum aggregate amount in the Limitation Year is the lesser of
125 percent of the dollar limitation determined under Code Sections
415(b) and (d) in effect under Code Section 415(c)(1)(A) or 35
percent of the Participant's Compensation for such year.
If the Employee was a Participant as of the end of the first day of
the first Limitation Year beginning after December 31, 1986, in one
or more Defined Contribution Plans maintained by the Employer which
were in existence on May 6, 1986, the numerator of this fraction will
be adjusted if the sum of this fraction and the Defined Benefit
Fraction would otherwise exceed 1.0 under the terms of this Plan.
Under the adjustment, an amount equal to the product of (a) the
excess of the sum of the fractions over 1.0 times (b) 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 6, 1986, but using
the Section 415 limitation applicable to the first Limitation Year
beginning on or after January 1, 1987. The Annual Addition for any
Limitation Year beginning before January 1, 1987, shall not be
re-computed to treat all Employee Contributions as Annual Additions.
1.19 DESIGNATED BENEFICIARY. The individual who is designated as the
beneficiary under the Plan in accordance with Code Section 401(a)(9)
and the regulations thereunder.
1.20 DISABILITY. An illness or injury of a potentially permanent
nature, expected to last for a continuous period of not less than 12
months, certified by a physician selected by or satisfactory to the
Employer which prevents the Employee from engaging in any occupation
for wage or profit for which the Employee is reasonably fitted by
training, education or experience.
1.21 DISTRIBUTION CALENDAR YEAR. A calendar year for which a minimum
distribution is required.
1.22 EARLY RETIREMENT AGE. The age set by the Employer in the
Adoption Agreement (but not less than 55), which is the earliest age
at which a Participant may retire and receive his or her benefits
under the Plan.
1.23 EARNED INCOME. Net earnings from self-employment in the trade
or business with respect to which the Plan is established, determined
without regard to items not included in gross income and the
deductions allocable to such items, provided that personal services
of the individual are a material income-producing factor. Earned
income shall be reduced by contributions made by an Employer to a
qualified plan to the extent deductible under Code Section 404. For
tax years beginning after 1989, net earnings shall be determined
taking into account the deduction for one-half of self-employment
taxes allowed to the Employer under Code Section 164(f) to the extent
deductible.
1.24 EFFECTIVE DATE. The date on which the Employer's retirement
plan or amendment to such plan becomes effective. For amendments
reflecting statutory and regulatory changes post Tax Reform Act of
1986, the Effective Date will be the earlier of the date upon which
such amendment is first administratively applied or the first day of
the Plan Year following the date of adoption of such amendment.
1.25 ELECTION PERIOD. The period which begins on the first day of
the Plan Year in which the Participant attains age 35 and ends on the
date of the Participant's death. If a Participant separates from
Service prior to the first day of the Plan Year in which age 35 is
attained, the Election Period shall begin on the date of separation,
with respect to the account balance as of the date of separation.
1.26 ELECTIVE DEFERRAL. Employer contributions made to the Plan at
the election of the Participant, in lieu of cash Compensation.
Elective Deferrals shall also include contributions made pursuant to
a Salary Savings Agreement or other deferral mechanism, such as a
cash option contribution. With respect to any taxable year, a
Participant's Elective Deferral is the sum of all Employer
contributions made on behalf of such Participant pursuant to an
election to defer under any qualified cash or deferred arrangement as
described in Code Section 401(k), any simplified
6
employee pension cash or deferred arrangement as described in Code
Section 402(h)(1)(B), any eligible deferred compensation plan under
Code Section 457, any plan as described under Code Section
501(c)(18), and any Employer contributions made on the behalf of a
Participant for the purchase of an annuity contract under Code
Section 403(b) pursuant to a Salary Savings Agreement. Elective
Deferrals shall not include any deferrals properly distributed as
Excess Annual Additions.
1.27 ELIGIBLE PARTICIPANT. Any Employee who is eligible to make a
Voluntary Contribution, or an Elective Deferral (if the Employer
takes such contributions into account in the calculation of the
Contribution Percentage), or to receive a Matching Contribution
(including forfeitures) or a Qualified Matching Contribution. If a
Voluntary Contribution or Elective Deferral is required as a
condition of participation in the Plan, any Employee who would be a
Participant in the Plan if such Employee made such a contribution
shall be treated as an Eligible Participant even though no Voluntary
Contributions or Elective Deferrals are made.
1.28 EMPLOYEE. Any person employed by the Employer
(including Self-Employed Individuals and partners), all Employees
of a member of an
affiliated service group [as defined in Code Section 414(m)],
Employees of a controlled group of corporations [as defined in Code
Section 414(b)], all Employees of any incorporated or unincorporated
trade or business which is under common control [as defined in Code
Section 414(c)], Leased Employees [as defined in Code Section 414(n)]
and any Employee required to be aggregated by Code Section 414(o).
All such Employees shall be treated as employed by a single Employer.
1.29 EMPLOYER. The Self-Employed Individual, partnership,
corporation or other organization which adopts this Plan including
any firm that succeeds the Employer and adopting this Plan. For
purposes of Article X, Limitations shall mean the Employer that
adopts this Plan, and all members of a controlled group of
corporations [as defined in Code Section 414(b) as modified by Code
Section 415(h)], all commonly controlled trades or businesses [as
defined in Code Section 414(c) as modified by Code Section 415(h)] or
affiliated service groups [as defined in Code Section 414(m)] of
which the adopting Employer is a part, and other entities required to
be aggregated with the Employer pursuant to Regulations under Code
Section 414(o).
1.30 ENTRY DATE. The date on which an Employee commences
participation in the Plan as determined by the Employer in the
Adoption Agreement. Unless the Employer specifies otherwise in the
Adoption Agreement, Entry into the Plan shall be on the first day of
the Plan Year or the first day of the seventh month of the Plan Year
coinciding with or following the date on which an Employee meets the
eligibility requirements.
1.31 EXCESS AGGREGATE CONTRIBUTIONS. The excess, with respect to any
Plan Year, of:
(a) The aggregate Contribution Percentage Amounts taken into
account in computing the numerator of the Contribution
Percentage actually made on behalf of Highly Compensated
Employees for such Plan Year, over
(b) The maximum Contribution Percentage Amounts permitted by
the ACP test (determined by reducing contributions made on
behalf of Highly Compensated Employees in order of their
Contribution Percentages beginning with the highest of such
percentages).
Such determination shall be made after first determining Excess
Elective Deferrals pursuant to paragraph 1.34 and then determining
Excess Contributions pursuant to paragraph 1.33.
1.32 EXCESS AMOUNT. The excess of the Participant's Annual Additions
for the Limitation Year over the Maximum Permissible Amount.
1.33 EXCESS CONTRIBUTION. With respect to any Plan Year, the excess
of:
(a) The aggregate amount of Employer contributions actually
taken into account in computing
7
the ADP of Highly Compensated Employees for such Plan Year, over
(b) The maximum amount of such contributions permitted by the
ADP test (determined by reducing contributions made on
behalf of Highly Compensated Employees in order of the
ADPs, beginning with the highest of such percentages).
1.34 EXCESS ELECTIVE DEFERRALS. Those Elective Deferrals that are
includable in a Participant's gross income under Code Section 402(g)
to the extent such Participant's Elective Deferrals for a taxable
year exceed the dollar limitation under such Code Section. Excess
Elective Deferrals shall be treated as Annual Additions under the
Plan, unless such amounts are distributed no later than the first
April 15 following the close of the Participant's taxable year.
1.35 FAMILY MEMBER. The Employee's Spouse, any lineal descendants
and ascendants and the Spouse of such lineal descendants and
ascendants.
1.36 FIRST DISTRIBUTION CALENDAR YEAR. For distributions beginning
before the Participant's death, the First Distribution Calendar Year
is the calendar year immediately preceding the calendar year which
contains the Participant's Required Beginning Date. For
distributions beginning after the Participant's death, the First
Distribution Calendar Year is the calendar year in which
distributions are required to begin pursuant to paragraph 7.10.
1.37 FUND. All contributions received by the Trustee under this Plan
and Trust Account, investments thereof and earnings and appreciation
thereon.
1.38 HARDSHIP. An immediate and heavy financial need of the Employee
where such Employee lacks other available resources.
1.39 HIGHEST AVERAGE COMPENSATION. The average compensation for the
three consecutive Years of Service with the Employer that produces
the highest average. A Year of Service with the Employer is the 12-consecutive
month period defined in the Adoption Agreement.
1.40 HIGHLY COMPENSATED EMPLOYEE. Any Employee who performs service
for the Employer during the determination year and who, during the
immediate prior year:
(a) received Compensation from the Employer in excess of
$75,000 [as adjusted pursuant to Code Section 415(d)]; or
(b) received Compensation from the Employer in excess of
$50,000 [as adjusted pursuant to Code Section 415(d)] and
was a member of the Top-Paid Group for such year; or
(c) was an officer of the Employer and received Compensation
during such year that is greater than 50 percent of the
dollar limitation in effect under Code Section
415(b)(1)(A).
Notwithstanding (a), (b) and (c), an Employee who was not Highly
Compensated during the preceding Plan Year shall not be treated as a
Highly Compensated Employee with respect to the current Plan Year
unless such Employee is a member of the 100 Employees paid the
greatest Compensation during the year for which such determination is
being made.
(d) Employees who are five percent (5%) Owners at any time
during the immediate prior year or determination year.
Highly Compensated Employee includes Highly Compensated active
Employees and Highly Compensated former Employees.
8
For purposes of determining those employees that are to be treated as
Highly Compensated for a determination year, an Employer maintaining
a fiscal year Plan may elect to make the look-back year calculation
as defined in Paragraph 1.414(q)-1T, Q&A 14(b) of the Treasury Regulations
for a determination year on the basis of the calendar year ending with or
within the applicable determination year. For purposes of this
election, a determination year that is shorter than twelve (12)
months, the look-back year calculation may be made based upon the
calendar year ending with or within the twelve-month period ending
with the end of the applicable determination year. Where such
election is made, the employer shall make its determination year
calculation pursuant to the provisions of Treasury Regulation
Paragraph 1.414(q)-1T, Q&A 14(b).
1.41 HOUR OF SERVICE.
(a) Each hour for which an Employee is paid, or entitled to
payment, for the performance of duties for the Employer.
These hours shall be credited to the Employee for the
computation period in which the duties are performed; and
(b) Each hour for which an Employee is paid, or entitled to
payment, by the Employer on account of a period of time
during which no duties are performed (irrespective of
whether the employment relationship has terminated) due to
vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty or leave of
absence. No more than 501 Hours of Service shall be
credited under this paragraph for any single continuous
period (whether or not such period occurs in a single
computation period). Hours under this paragraph shall be
calculated and credited pursuant to Department of Labor
Regulations Section 2530.200b-2 which are incorporated
herein by this reference; and
(c) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer.
The same Hours of Service shall not be credited both under
paragraph (a) or paragraph (b), as the case may be, and
under this paragraph (c). These hours shall be credited to
the Employee for the computation period or periods to which
the award or agreement pertains rather than the computation
period in which the award, agreement or payment is made.
(d) Hours of Service shall be credited for employment with the
Employer and with other members of an affiliated service
group [as defined in Code Section 414(m)], a controlled
group of corporations [as defined in Code Section 414(b)],
or a group of trades or businesses under common control [as
defined in Code Section 414(c)] of which the adopting
Employer is a member, and any other entity required to be
aggregated with the Employer pursuant to Code Section
414(o) and the regulations thereunder. Hours of Service
shall also be credited for any individual considered an
Employee for purposes of this Plan under Code Section
414(n) or Code Section 414(o) and the regulations
thereunder.
(e) Solely for purposes of determining whether a Break in
Service, as defined in paragraph 1.10, for participation
and vesting purposes has occurred in a computation period,
an individual who is absent from work for maternity or
paternity reasons shall receive credit for the Hours of
Service which would otherwise have been credited to such
individual but for such absence, or in any case in which
such hours cannot be determined, 8 Hours of Service per day
of such absence. For purposes of this paragraph, an
absence from work for maternity or paternity reasons means
an absence by reason of the pregnancy of the individual, by
reason of a birth of a child of the individual, by reason
of the placement of a child with the individual in
connection with the adoption of such child by such
individual, or for purposes of caring for such child for a
period beginning immediately following such birth or
placement. The Hours of Service credited under this
paragraph shall be credited in the computation period in
which the absence begins if the crediting is necessary to
prevent
9
a Break in Service in that period, or in all other cases, in the
following computation period. No more than 501 hours will be credited
under this paragraph.
(f) Unless specified otherwise in the Adoption Agreement, Hours
of Service shall be determined on the basis of the actual
hours for which an Employee is paid or entitled to pay.
1.42 KEY EMPLOYEE. Any Employee or former Employee (and the
beneficiaries of such employee) who at any time during the
determination period was an officer of the Employer if such
individual's annual Compensation exceeds 50% of the dollar limitation
under Code Section 415(b)(1)(A) (the defined benefit maximum annual
benefit), an owner (or considered an owner under Code Section 318) of
one of the ten largest interests in the employer if such individual's
Compensation exceeds 100% of the dollar limitation under Code Section
415(c)(1)(A), a 5% owner of the Employer, or a 1% owner of the
Employer who has an annual Compensation of more than $150,000. For
purposes of determining who is a Key Employee, annual Compensation
shall mean Compensation as defined for Article X, but including
amounts deferred through a salary reduction agreement to a cash or
deferred plan under Code Section 401(k), a Simplified Employee
Pension Plan under Code Section 408(k), a cafeteria plan under Code
Section 125 or a tax-deferred annuity under Code Section 403(b). The
determination period is the Plan Year containing the Determination
Date and the four preceding Plan Years. The determination of who is
a Key Employee will be made in accordance with Code Section 416(i)(1)
and the regulations thereunder.
1.43 LEASED EMPLOYEE. Any person (other than an Employee of the
recipient) who, pursuant to an agreement between the recipient and
any other person ("leasing organization"), has performed services for
the recipient [or for the recipient and related persons determined in
accordance with Code Section 414(n)(6)] on a substantially full-time
basis for a period of at least one year, and such services are of a
type historically performed by Employees in the business field of the
recipient Employer.
1.44 LIMITATION YEAR. The calendar year or such other 12-consecutive
month period designated by the Employer in the Adoption Agreement for
purposes of determining the maximum Annual Addition to a
Participant's account. All qualified plans maintained by the
Employer must use the same Limitation Year. If the Limitation Year
is amended to a different 12-consecutive month period, the new
Limitation Year must begin on a date within the Limitation Year in
which the amendment is made.
1.45 MASTER OR PROTOTYPE PLAN. A plan, the form of which is the
subject of a favorable opinion letter from the Internal Revenue
Service.
1.46 MATCHING CONTRIBUTION. An Employer contribution made to this or
any other defined contribution plan on behalf of a Participant on
account of an Employee Voluntary Contribution made by such
Participant, or on account of a Participant's Elective Deferral,
under a Plan maintained by the Employer.
1.47 MAXIMUM PERMISSIBLE AMOUNT. The maximum Annual Addition that
may be contributed or allocated to a Participant's account under the
plan for any Limitation Year shall not exceed the lesser of:
(a) the Defined Contribution Dollar Limitation, or
(b) 25% of the Participant's Compensation for the Limitation
Year.
The Compensation limitation referred to in (b) shall not apply to any
contribution for medical benefits [within the meaning of Code Section
401(h) or Code Section 419A(f)(2)] which is otherwise treated as an
Annual Addition under Code Section 415(l)(1) or 419(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 number of months in the short
Limitation Year divided by 12.
10
1.48 NET PROFIT. The current and accumulated operating earnings of
the Employer before Federal and State income taxes, excluding
nonrecurring or unusual items of income, and before contributions to
this and any other qualified plan of the Employer. Alternatively,
the Employer may fix another definition in the Adoption Agreement.
1.49 NORMAL RETIREMENT AGE. The age, set by the Employer in the
Adoption Agreement, at which a Participant may retire and receive his
or her benefits under the Plan.
1.50 OWNER-EMPLOYEE. A sole proprietor, or a partner owning more
than 10% of either the capital or profits interest of the
partnership.
1.51 PAIRED PLANS. Two or more Plans maintained by the Sponsor
designed so that a single or any combination of Plans adopted by an
Employer will meet the antidiscrimination rules, the contribution and
benefit limitations, and the Top-Heavy provisions of the Code.
1.52 PARTICIPANT. Any Employee who has met the eligibility
requirements and is participating in the Plan.
1.53 PARTICIPANT'S BENEFIT. The account balance as of the last
Valuation Date in the calendar year immediately preceding the
Distribution Calendar Year (valuation calendar year) increased by the
amount of any contributions or forfeitures allocated to the account
balance as of the dates in the valuation calendar year after the
valuation date and decreased by distributions made in the valuation
calendar year after the Valuation Date. A special exception exists
for the second distribution Calendar Year. For purposes of this
paragraph, 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.
1.54 PERMISSIVE AGGREGATION GROUP. Used for Top-Heavy testing
purposes, it is 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 Sections 401(a)(4) and 410.
1.55 PLAN. The Employer's qualified retirement plan as embodied
herein and in the Adoption Agreement.
1.56 PLAN ADMINISTRATOR. The Employer.
1.57 PLAN YEAR. The 12-consecutive month period designated by the
Employer in the Adoption Agreement.
1.58 PRESENT VALUE. Used for Top-Heavy test and determination
purposes, when determining the Present Value of accrued benefits,
with respect to any Defined Benefit Plan maintained by the Employer,
interest and mortality rates shall be determined in accordance with
the provisions of the respective plan. If applicable, interest and
mortality assumptions will be specified in the section of the
Adoption Agreement entitled "Limitations on Allocations".
1.59 PROJECTED ANNUAL BENEFIT. Used to test the maximum benefit
which may be obtained from a combination of retirement plans, it is
the annual retirement benefit (adjusted to an actuarial 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 a
Defined Benefit Plan or plans, assuming:
(a) the Participant will continue employment until Normal
Retirement Age under the plan (or current age, if later),
and
(b) the Participant's Compensation for the current Limitation
Year and all other relevant factors used to determine
benefits under the plan will remain constant for all future
Limitation Years.
11
1.60 QUALIFIED DEFERRED COMPENSATION PLAN. Any
pension, profit-sharing, stock bonus, or other plan which meets
the requirements of
Code Section 401 and includes a trust exempt from tax under Code
Section 501(a) or any annuity plan described in Code Section 403(a).
An Eligible Retirement Plan is an individual retirement account (IRA)
as described in Code Section 408(a), an individual retirement annuity
(IRA) as described in Code Section 408(b), an annuity plan as
described in Code Section 403(a), or a qualified trust as described
in Code Section 401(a), which accepts Eligible Rollover
Distributions. However in the case of an Eligible Rollover
Distribution to a Surviving Spouse, an Eligible Retirement Plan is an
individual retirement account or individual retirement annuity.
1.61 QUALIFIED DOMESTIC RELATIONS ORDER. A QDRO is a signed Domestic
Relations Order issued by a State Court which creates, recognizes or
assigns to an alternate payee(s) the right to receive all or part of
a Participant's Plan benefit and which meets the requirements of Code
Section 414(p). An alternate payee is a Spouse, former Spouse,
child, or other dependent who is treated as a beneficiary under the
Plan as a result of the QDRO.
1.62 QUALIFIED EARLY RETIREMENT AGE. Qualified Early Retirement Age
is the latest of:
(a) the earliest date, under the Plan, on which the Participant
may elect to receive retirement benefits, or
(b) the first day of the 120th month beginning before the
Participant attains Normal Retirement Age, or
(c) the date the Participant begins participation.
1.63 QUALIFIED JOINT AND SURVIVOR ANNUITY. An immediate annuity for
the life of the Participant with a survivor annuity for the life of
the Participant's Spouse which is at least one-half of but not more
than the amount of the annuity payable during the joint lives of the
Participant and the Participant's Spouse. The exact amount of the
Survivor Annuity is to be specified by the Employer in the Adoption
Agreement. If not designated by the Employer, the Survivor Annuity
will be one-half of the amount paid to the Participant during his or
her lifetime. The Qualified Joint and Survivor Annuity will be the
amount of benefit which can be provided by the Participant's Vested
Account Balance.
1.64 QUALIFIED MATCHING CONTRIBUTION. Matching Contributions which
when made are subject to the distribution and nonforfeitability
requirements under Code Section 401(k).
1.65 QUALIFIED NON-ELECTIVE CONTRIBUTIONS. Contributions (other than
Matching Contributions or Qualified Matching Contributions) made by
the Employer and allocated to Participants' accounts that the
Participants may not elect to receive in cash until distributed from
the Plan; that are nonforfeitable when made; and that are
distributable only in accordance with the distribution provisions
that are applicable to Elective Deferrals and Qualified Matching
Contributions.
1.66 QUALIFIED VOLUNTARY CONTRIBUTION. A tax-deductible voluntary
Employee contribution. Qualified Voluntary Contributions are not
permitted in this Plan.
1.67 REGIONAL PROTOTYPE PLAN. A plan, the form of which is subject
to a favorable notification letter from the Internal Revenue Service.
12
1.68 REQUIRED AGGREGATION GROUP. Used for Top-Heavy testing
purposes, it consists of:
(a) each qualified plan of the Employer in which at least one
Key Employee participates or participated at any time
during the determination period (regardless of whether the
plan has terminated), and
(b) any other qualified plan of the Employer which enables a
plan described in (a) to meet the requirements of Code
Sections 401(a)(4) or 410.
1.69 REQUIRED BEGINNING DATE. The date on which a Participant is
required to take his or her first minimum distribution under the
Plan. The rules are set forth at paragraph 7.5.
1.70 ROLLOVER CONTRIBUTION. A contribution made by a Participant of
an amount distributed to such Participant from another Qualified
Deferred Compensation Plan in accordance with Code Sections
402(a)(5), (6), and (7).
An Eligible Rollover Distribution is any distribution of all or any
portion of the balance to the credit of the Participant except that
an Eligible Rollover Distribution does not include:
(a) any distribution that is one of a series of substantially
equal periodic payments (not less frequently than annually)
made for the life (or life expectancy) of the Participant
or the joint lives (or joint life expectancies) of the
Participant and the Participant's Designated Beneficiary,
or for a specified period of ten years or more;
(b) any distribution to the extent such distribution is
required under Code Section 401(a)(9); and
(c) the portion of any distribution that is not includable in
gross income (determined without regard to the exclusion
for net unrealized appreciation with respect to Employer
securities).
A Direct Rollover is a payment by the plan to the Eligible Retirement
Plan specified by the Participant.
1.71 SALARY SAVINGS AGREEMENT. An agreement between the Employer and
a participating Employee where the Employee authorizes the Employer
to withhold a specified amount or percentage of his or her
Compensation for deposit to the Plan on behalf of such Employee.
1.72 SELF-EMPLOYED INDIVIDUAL. An individual who has Earned Income
for the taxable year from the trade or business for which the Plan is
established including an individual who would have had Earned Income
but for the fact that the trade or business had no Net Profit for the
taxable year.
1.73 SERVICE. The period of current or prior employment with the
Employer. If the Employer maintains a plan of a predecessor employer,
Service for such predecessor shall be treated as Service for the
Employer.
1.74 SHAREHOLDER EMPLOYEE. An Employee or Officer who owns [or is
considered as owning within the meaning of Code Section 318(a)(1)],
on any day during the taxable year of an electing small business
corporation (S Corporation), more than 5% of such corporation's
outstanding stock.
1.75 SIMPLIFIED EMPLOYEE PENSION PLAN. An individual retirement
account which meets the requirements of Code Section 408(k), and to
which the Employer makes contributions pursuant to a written formula.
These plans are considered for contribution limitation and Top-Heavy
testing purposes.
1.76 SPONSOR. EPIC Advisors, Inc., or any successor(s) or assign(s).
13
1.77 SPOUSE (SURVIVING SPOUSE). The Spouse or Surviving Spouse of
the Participant, provided that a former Spouse will be treated as the
Spouse or Surviving Spouse and a current Spouse will not be treated
as the Spouse or Surviving Spouse to the extent provided under a
Qualified Domestic Relations Order as described in Code Section
414(p).
1.78 SUPER TOP-HEAVY PLAN. A Plan under which the Top-Heavy Ratio
[as defined at paragraph 1.81] exceeds 90%.
1.79 TAXABLE WAGE BASE. For plans with an allocation formula which
takes into account the Employer's contribution under the Federal
Insurance Contributions Act (FICA), the maximum amount of earnings
which may be considered wages for such Plan Year under the Social
Security Act [Code Section 3121(a)(1)], or the amount selected by the
Employer in the sub-section of the Adoption Agreement entitled
"Taxable Wage Base".
1.80 TOP-HEAVY DETERMINATION DATE. For any Plan Year subsequent to
the first Plan Year, the last day of the preceding Plan Year. For
the first Plan Year of the Plan, the last day of that year.
1.81 TOP-HEAVY PLAN. For any Plan Year beginning after 1983, the
Employer's Plan is top-heavy if any of the following conditions
exist:
(a) If the Top-Heavy Ratio for the Employer's Plan exceeds 60%
and this Plan is not part of any Required Aggregation Group
or Permissive Aggregation Group of Plans.
(b) If the Employer's plan is a part of a Required Aggregation
Group of plans but not part of a Permissive Aggregation
Group and the Top-Heavy Ratio for the group of plans
exceeds 60%.
(c) If the Employer's plan is a part of a Required Aggregation
Group and part of a Permissive Aggregation Group of plans
and the Top-Heavy Ratio for the Permissive Aggregation
Group exceeds 60%.
1.82 TOP-HEAVY RATIO.
(a) If the Employer maintains one or more Defined Contribution
plans (including any Simplified Employee Pension Plan) and
the Employer has not maintained any Defined Benefit Plan
which during the 5-year period ending on the Determination
Date(s) has or has had accrued benefits, the Top-Heavy
Ratio for this Plan alone, or for the Required or
Permissive Aggregation Group as appropriate, is a fraction,
(1) the numerator of which is the sum of the account
balances of all Key Employees as of the Determination
Date(s) [including any part of any account balance
distributed in the 5-year period ending on the
Determination Date(s)], and
(2) the denominator of which is the sum of all account
balances [including any part of any account balance
distributed in the 5-year period ending on the
Determination Date(s)], both computed in accordance
with Code Section 416 and the regulations thereunder.
Both the numerator and denominator of the Top-Heavy Ratio
are increased to reflect any contribution not actually made
as of the Determination Date, but which is required to be
taken into account on that date under Code Section 416 and
the regulations thereunder.
14
(b) If the Employer maintains one or more Defined Contribution
Plans (including any Simplified Employee Pension Plan) and
the Employer maintains or has maintained one or more
Defined Benefit Plans which during the 5-year period ending
on the Determination Date(s) has or has had any accrued
benefits, the Top-Heavy Ratio for any Required or
Permissive Aggregation Group as appropriate is a fraction,
(1) the numerator of which is the sum of account balances
under the aggregated Defined Contribution Plan or
Plans for all Key Employees, determined in accordance
with (a) above, and the Present Value of accrued
benefits under the aggregated Defined Benefit Plan or
Plans for all Key Employees as of the Determination
Date(s), and
(2) the denominator of which is the sum of the account
balances under the aggregated Defined Contribution
Plan or Plans for all Participants, determined in
accordance with (a) above, and the Present Value of
accrued benefits under the Defined Benefit Plan or
Plans for all Participants as of the Determination
Date(s), all determined in accordance with Code
Section 416 and the regulations thereunder. The
accrued benefits under a Defined Benefit Plan in both
the numerator and denominator of the Top-Heavy Ratio
are increased for any distribution of an accrued
benefit made in the 5-year period ending on the
Determination Date.
(c) For purposes of (a) and (b) 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 Section 416
and the regulations thereunder for the first and second
plan years of a Defined Benefit Plan. The account balances
and accrued benefits of a participant (1) who is not a Key
Employee but who was a Key Employee in a prior year, or (2)
who has not been credited with at least one hour of service
with any Employer maintaining the Plan at any time during
the 5-year period ending on the Determination Date will be
disregarded. The calculation of the Top-Heavy Ratio, and
the extent to which distributions, rollovers, and transfers
are taken into account will be made in accordance with Code
Section 416 and the Regulations thereunder. Qualified
Voluntary Employee Contributions will not be taken into
account for purposes of computing the Top-Heavy Ratio.
When aggregating plans the value of account balances and
accrued benefits will be calculated with reference to the
Determination Dates that fall within the same calendar
year. The accrued benefit of a Participant other than a
Key Employee shall be determined under (1) the method, if
any, that uniformly applies for accrual purposes under all
Defined Benefit Plans maintained by the Employer, or (2) if
there is no such method, as if such benefit accrued not
more rapidly than the slowest accrual rate permitted under
the fractional rule of Code Section 411(b)(1)(C).
1.83 TOP-PAID GROUP. The group consisting of the top 20% of
Employees when ranked on the basis of Compensation paid during such
year. For purposes of determining the number of Employees in the
group (but not who is in it), the following Employees shall be
excluded:
(a) Employees who have not completed 6 months of Service.
(b) Employees who normally work less than 17 1/2 hours per week.
(c) Employees who normally do not work more than 6 months
during any year.
15
(d) Employees who have not attained age 21.
(e) Employees included in a collective bargaining unit, covered
by an agreement between employee representatives and the
Employer, where retirement benefits were the subject of
good faith bargaining and provided that 90% or more of the
Employer's Employees are covered by the agreement.
(f) Employees who are nonresident aliens and who receive no
earned income which constitutes income from sources within
the United States.
1.84 TRANSFER CONTRIBUTION. A non-taxable transfer of a
Participant's benefit directly from a Qualified Deferred Compensation
Plan to this Plan.
1.85 TRUSTEE. Shall be the individual, individuals or institution
appointed by the Employer to serve as Trustee of the Plan. In the
event the Employer does not name an individual, individuals or
institution to serve as Trustee of the Plan, the Employer will be
deemed to be the Trustee.
1.86 VALUATION DATE. The last day of the Plan Year or such other
date as agreed to by the Employer and the Trustee on which
Participant accounts are revalued in accordance with Article V
hereof. For Top-Heavy purposes, the date selected by the Employer as
of which the Top-Heavy Ratio is calculated.
1.87 VESTED ACCOUNT BALANCE. The aggregate value of the
Participant's vested account balances derived from Employer and
Employee contributions (including Rollovers), whether vested before
or upon death, including the proceeds of insurance contracts, if any,
on the Participant's life. The provisions of Article VIII shall
apply to a Participant who is vested in amounts attributable to
Employer contributions, Employee contributions (or both) at the time
of death or distribution.
For purposes of paragraph 8.7, Vested Account Balance shall mean, in
the case of a money purchase pension plan, the Participant's separate
account balance attributable solely to Qualified Voluntary
Contributions. For profit-sharing plans the above definition shall
apply.
1.88 VOLUNTARY CONTRIBUTION. An Employee contribution by or on
behalf of a Participant that is included in the Participant's gross
income in the year in which made and that is maintained under a
separate account to which earnings and losses are allocated. For
Plan Years beginning after the Plan Year in which this Plan is
adopted (or restated) by the Employer, Voluntary Contributions are
only permitted in Standardized Adoption Agreement 003 or
Nonstandardized Adoption Agreement 006 whether or not the Employer
utilizes the salary deferral provisions. Voluntary Contributions for
Plan Years beginning after 1986, together with any Matching
Contributions as defined in Code Section 401(m), will be limited so
as to meet the nondiscrimination test of Code Section 401(m).
1.89 WELFARE BENEFIT FUND. Any fund that is part of a plan of the
Employer, or has the effect of a plan, through which the Employer
provides welfare benefits to Employees or their beneficiaries. For
these purposes, Welfare Benefit means any benefit other than those
with respect to which Code Section 83(h) (relating to transfers of
property in connection with the performance of services), Code
Section 404 (relating to deductions for contributions to an
Employee's trust or annuity and Compensation under a deferred payment
plan), Code Section 404A (relating to certain foreign deferred
compensation plans) apply. A "Fund" is any social club, voluntary
employee benefit association, supplemental unemployment benefit trust
or qualified group legal service organization described in Code
Section 501(c)(7), (9), (17) or (20); any trust, corporation, or
other organization not exempt from income tax, or to the extent
provided in regulations, any account held for an Employer by any
person.
1.90 YEAR OF SERVICE. A 12-consecutive month period during which an
Employee is credited with not less than 1,000 (or such lesser number
as specified by the Employer in the Adoption Agreement) Hours of
Service.
16
ARTICLE II
ELIGIBILITY REQUIREMENTS
2.1 PARTICIPATION. Employees who meet the eligibility requirements
in the Adoption Agreement on the Effective Date of the Plan shall
become Participants as of the Effective Date of the Plan. If so
elected in the Adoption Agreement, all Employees employed on the
Effective Date of the Plan may participate, even if they have not
satisfied the Plan's specified eligibility requirements. Other
Employees shall become Participants on the Entry Date coinciding with
or immediately following the date on which they meet the eligibility
requirements. Depending on the Plan's eligibility requirements, the
entry date may actually be earlier than the date on which the
Employee satisfies the eligibility requirements. The Employee must
satisfy the eligibility requirements specified in the Adoption
Agreement and be employed on the Entry Date to become a Participant
in the Plan. In the event an Employee who is not a member of the
eligible class of Employees becomes a member of the eligible class,
such Employee shall participate immediately if such Employee has
satisfied the minimum age and service requirements and would have
previously become a Participant had he or she been in the eligible
class. Employees may waive participation in the Plan. However, this
is only permitted if the Employer's adoption is on Nonstandardized
Adoption Agreement 004, 005 or 006, and the Plan will meet the
minimum coverage requirements in Code Section 410(b) and the minimum
participation requirements of Code Section 401(a)(26). [To the
extent so provided by regulations, a partner (or other employee)
waiving participation in the Plan may cause Code Section 401(k) and
the regulations thereunder to apply.] A former Participant shall
again become a Participant upon returning to the employ of the
Employer at the next Entry Date or if earlier, the next Valuation
Date. For this purpose, Participant's Compensation and Service shall
be considered from date of rehire.
2.2 CHANGE IN CLASSIFICATION OF EMPLOYMENT. In the event a
Participant becomes ineligible to participate because he or she is no
longer a member of an eligible class of Employees, such Employee
shall participate upon his or her return to an eligible class of
Employees.
2.3 COMPUTATION PERIOD. To determine Years of Service and Breaks in
Service for purposes of eligibility, the 12-consecutive month period
shall commence on the date on which an Employee first performs an
Hour of Service for the Employer and each anniversary thereof, such
that the succeeding 12-consecutive month period commences with the
employee's first anniversary of employment and so on. If, however,
the period so specified is one year or less, the succeeding
12-consecutive month period shall commence on the first day of the
Plan Year prior to the anniversary of the date they first performed an
Hour of Service regardless of whether the Employee is entitled to be
credited with 1,000 (or such lesser number as specified by the
Employer in the Adoption Agreement) Hours of Service during their
first employment year.
2.4 EMPLOYMENT RIGHTS. Participation in the Plan shall not confer
upon a Participant any employment rights, nor shall it interfere with
the Employer's right to terminate the employment of any Employee at
any time.
2.5 SERVICE WITH CONTROLLED GROUPS. All Years of Service with other
members of a controlled group of corporations [as defined in Code
Section 414(b)], trades or businesses under common control [as
defined in Code Section 414(c)], or members of an affiliated service
group [as defined in Code Section 414(m)] shall be credited for
purposes of determining an Employee's eligibility to participate.
2.6 OWNER-EMPLOYEES. If this Plan provides contributions or
benefits for one or more Owner-Employees who control both the
business for which this Plan is established and one or more other
trades or businesses, this Plan and the Plan established for other
trades or businesses must, when looked at as a single Plan, satisfy
Code Sections 401(a) and (d) for the Employees of this and all other
trades or businesses.
If the Plan provides contributions or benefits for one or more
Owner-Employees who control one or more other trades or businesses,
the Employees of the other trades or businesses must be included in a
Plan which satisfies Code Sections 401(a) and (d) and which provides
contributions and benefits not less favorable than provided for
Owner-Employees under this Plan.
18
If an individual is covered as an Owner-Employee under the plans of
two or more trades or businesses which are not controlled, and the
individual controls a trade or business, then the contributions or
benefits of the Employees under the plan of the trades or businesses
which are controlled must be as favorable as those provided for him
or her under the most favorable plan of the trade or business which
is not controlled.
For purposes of the preceding sentences, an Owner-Employee, or two or
more Owner-Employees, will be considered to control a trade or
business if the Owner-Employee, or two or more Owner-Employees
together:
(a) own the entire interest in an unincorporated trade or
business, or
(b) in the case of a partnership, own more than 50% of either
the capital interest or the profits interest in the partnership.
For purposes of the preceding sentence, an Owner-Employee, or two or
more Owner-Employees shall be treated as owning any interest in a
partnership which is owned, directly or indirectly, by a partnership
which such Owner-Employee, or such two or more Owner-Employees, are
considered to control within the meaning of the preceding sentence.
2.7 LEASED EMPLOYEES. Any Leased Employee shall be treated as an
Employee of the recipient Employer; however, contributions or
benefits provided by the leasing organization which are attributable
to services performed for the recipient Employer shall be treated as
provided by the recipient Employer. A Leased Employee shall not be
considered an Employee of the recipient if such Employee is covered
by a money purchase pension plan providing:
(a) a non-integrated Employer contribution rate of at least 10%
of Compensation, [as defined in Code Section 415(c)(3) but
including amounts contributed by the Employer pursuant to a
salary reduction agreement, which are excludable from the
Employee's gross income under a cafeteria plan covered by
Code Section 125, a cash or deferred profit-sharing plan
under Code Section 401(k), a Simplified Employee Pension
Plan under Code Section 408(k) and a tax-sheltered annuity
under Code Section 403(b)],
(b) immediate participation, and
(c) full and immediate vesting.
This exclusion is only available if Leased Employees do not
constitute more than twenty percent (20%) of the recipient's
non-highly compensated work force.
2.8 THRIFT PLANS. If the Employer makes an election in Adoption
Agreements 003 or 006 to require Voluntary Contributions to
participate in this Plan, the Employer shall notify each eligible
Employee in writing of his or her eligibility for participation at
least 30 days prior to the appropriate Entry Date. The Employee
shall indicate his or her intention to join the Plan by authorizing
the Employer to withhold a percentage of his or her Compensation as
provided in the Plan. Such authorization shall be returned to the
Employer at least 10 days prior to the Employee's Entry Date. The
Employee may decline participation by so indicating on the enrollment
form or by failure to return the enrollment form to the Employer
prior to the Employee's Entry Date. If the Employee declines to
participate, such Employee shall be given the opportunity to join the
Plan on the next Entry Date. The taking of a Hardship Withdrawal
under the provisions of paragraph 6.9 will impact the Participant's
ability to make these contributions.
19
ARTICLE III
EMPLOYER CONTRIBUTIONS
3.1 AMOUNT. The Employer intends to make periodic contributions to
the Plan in accordance with the formula or formulas selected in the
Adoption Agreement. However, the Employer's contribution for any Plan
Year shall be subject to the limitations on allocations contained in
Article X. A Participant may elect to waive an Employer contribution
on his or her behalf for a given Plan Year. However, a Participant
may only make this election if the Employer's adoption is on
Nonstandardized Adoption Agreement 004, 005 or 006. [In the event a
partner in a partnership makes this election, in accordance with
Proposed Regulations Section 1.401(k)-1(a)(6), the Plan will be
deemed to constitute a cash or deferred arrangement with respect to
the partners. Thus, contributions made on behalf of any partners may
be limited to $7,000 indexed as set forth in Code Section 402(g)].
Any waiver made pursuant to this paragraph will be made prior to the
time such Participant accrues a benefit for that Plan Year.
3.2 EXPENSES AND FEES. The Employer shall also be authorized to
reimburse the Fund for all expenses and fees incurred in the
administration of the Plan or Trust Account and paid out of the
assets of the Fund. Such expenses shall include, but shall not be
limited to, fees for professional services, printing and postage.
Brokerage Commissions may not be reimbursed.
3.3 RESPONSIBILITY FOR CONTRIBUTIONS. Neither the Trustee nor the
Sponsor shall be required to determine if the Employer has made a
contribution or if the amount contributed is in accordance with the
Adoption Agreement or the Code. The Employer shall have sole
responsibility in this regard. The Trustee shall be accountable
solely for contributions actually received by it.
3.4 RETURN OF CONTRIBUTIONS. Contributions made to the Fund by the
Employer shall be irrevocable except as provided below:
(a) Any contribution forwarded to the Trustee because of a
mistake of fact, provided that the contribution is returned
to the Employer within one year of the contribution.
(b) In the event that the Commissioner of Internal Revenue
determines that the Plan is not initially qualified under
the Internal Revenue Code, any contribution made incident
to that initial qualification by the Employer must be
returned to the Employer within one 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.
(c) Contributions forwarded to the Trustee are presumed to be
deductible and are conditioned on their deductibility.
Contributions which are determined to not be deductible
will be returned to the Employer.
20
ARTICLE IV
EMPLOYEE CONTRIBUTIONS
4.1 VOLUNTARY CONTRIBUTIONS. An Employee may make Voluntary
Contributions to the Plan established hereunder if so authorized by
the Employer in a uniform and nondiscriminatory manner. Such
contributions are subject to the limitations on Annual Additions and
are subject to antidiscrimination testing. Voluntary Contributions
are permitted only in Adoption Agreements 003 and 006.
4.2 QUALIFIED VOLUNTARY CONTRIBUTIONS. A Participant may no longer
make Qualified Voluntary Contributions to the Plan. Such amounts
already contributed may remain in the Trust Fund Account until
distributed to the Participant.
4.3 ROLLOVER CONTRIBUTION. Unless provided otherwise in the
Adoption Agreement, a Participant may make a Rollover Contribution to
any Defined Contribution Plan established hereunder of all or any
part of an amount distributed or distributable to him or her from a
Qualified Deferred Compensation Plan provided:
(a) the amount distributed to the Participant is deposited to
the Plan no later than the sixtieth day after such
distribution was received by the Participant,
(b) the amount distributed is not one of a series of
substantially equal periodic payments 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 Designated Beneficiary, or for a specified
period of ten years or more;
(c) the amount distributed is not required under section
401(a)(9) of the Code;
(d) if the amount distributed included property such property
is rolled over, or if sold the proceeds of such property
may be rolled over,
(e) the amount distributed is not includable in gross income
(determined without regard to the exclusion for net
unrealized appreciation with respect to employer
securities).
In addition, if the Adoption Agreement allows Rollover Contributions,
the Plan will also accept any Eligible Rollover Distribution (as
defined at paragraph 1.70) directly to the Plan.
Rollover Contributions, which relate to distributions prior to
January 1, 1993, must be made in accordance with paragraphs (a)
through (e) and additionally meet the requirements of paragraph (f):
(f) The distribution from the Qualified Deferred Compensation
Plan constituted the Participant's entire interest in such
Plan and was distributed within one taxable year to the
Participant:
(1) on account of separation from Service, a Plan
termination, or in the case of a profit-sharing or
stock bonus plan, a complete discontinuance of
contributions under such plan within the meaning of
Section 402(a)(6)(A) of the Code, or
(2) in one or more distributions which constitute a
qualified lump sum distribution within the meaning of
Code Section 402(e)(4)(A), determined without
reference to subparagraphs (B) and (H).
21
Such Rollover Contribution may also be made through an Individual
Retirement Account qualified under Code Section 408 where the IRA was
used as a conduit from the Qualified Deferred Compensation Plan, the
Rollover Contribution is made in accordance with the rules provided
under paragraphs (a) through (e) and the Rollover Contribution does
not include any regular IRA contributions, or earnings thereon, which
the Participant may have made to the IRA. Rollover Contributions,
which relate to distributions prior to January 1, 1993, may be made
through an IRA in accordance with paragraphs (a) through (f) and
additional requirements as provided in the previous sentence. The
Trustee shall not be held responsible for determining the tax-free
status of any Rollover Contribution made under this Plan.
4.4 TRANSFER CONTRIBUTION. Unless provided otherwise in the
Adoption Agreement a Participant may, subject to the provisions of
paragraph 4.5, also arrange for the direct transfer of his or her
benefit from a Qualified Deferred Compensation Plan to this Plan.
For accounting and record keeping purposes, Transfer Contributions
shall be treated in the same manner as Rollover Contributions.
In the event the Employer accepts a Transfer Contribution from a Plan
in which the Employee was directing the investments of his or her
account, the Employer may continue to permit the Employee to direct
his or her investments in accordance with paragraph 13.7 with respect
only to such Transfer Contribution. Notwithstanding the above, the
Employer may refuse to accept such Transfer Contributions.
4.5 EMPLOYER APPROVAL OF TRANSFER CONTRIBUTIONS. The Employer
maintaining a Safe-Harbor Profit-Sharing Plan in accordance with the
provisions of paragraph 8.7, acting in a nondiscriminatory manner,
may in its sole discretion refuse to allow Transfer Contributions to
its profit-sharing plan, if such contributions are directly or
indirectly being transferred from a defined benefit plan, a money
purchase pension plan (including a target benefit plan), a stock
bonus plan, or another profit-sharing plan which would otherwise
provide for a life annuity form of payment to the Participant.
4.6 ELECTIVE DEFERRALS. A Participant may enter into a Elective
Deferrals Agreement with the Employer authorizing the Employer to
withhold a portion of such Participant's Compensation not to exceed
$7,000 per calendar year as adjusted for inflation or, if lesser, the
percentage of Compensation specified in the Adoption Agreement and to
deposit such amount to the Plan. No Participant shall be permitted
to have Elective Deferrals made under this Plan or any other
qualified plan maintained by the Employer, during any taxable year,
in excess of the dollar limitation contained in Code Section 402(g)
in effect at the beginning of such taxable year. Thus, the $7,000
limit may be reduced if a Participant contributes pre-tax
contributions to qualified plans of this or other Employers. Any
such contribution shall be credited to the Employee's Elective
Deferrals Account. Unless otherwise specified in the Adoption
Agreement, a Participant may amend his or her Elective Deferrals
Agreement to increase, decrease or terminate the percentage upon 30
days written notice to the Employer. If a Participant terminates his
or her agreement, such Participant shall not be permitted to put a
new Elective Deferrals Agreement into effect until the first pay
period in the next Plan Year, unless otherwise stated in the Adoption
Agreement. The Employer may also amend or terminate said agreement
on written notice to the Participant. If a Participant has not
authorized the Employer to withhold at the maximum rate and desires
to increase the total withheld for a Plan Year, such Participant may
authorize the Employer upon 30 days notice to withhold a supplemental
amount up to 100% of his or her Compensation for one or more pay
periods. In no event may the sum of the amounts withheld under the
Elective Deferrals Agreement plus the supplemental withholding exceed
25% of a Participant's Compensation for a Plan Year. The Employer
may also re-characterize as after-tax Voluntary Contributions all or
any portion of amounts previously withheld under any Elective
Deferrals Agreement within the Plan Year as provided for at paragraph
10.10. This may be done to insure that the Plan will meet one of the
antidiscrimination tests under Code Section 401(k). Elective
Deferrals shall be deposited in the Trust within 30 days after being
withheld from the Participant's pay. Elective Deferrals are
permitted only in Standardized Adoption Agreement 003,
Nonstandardized Adoption Agreement 006, and Standardized Adoption
Agreement 009.
22
4.7 REQUIRED VOLUNTARY CONTRIBUTIONS. If the Employer makes a
thrift election in the Adoption Agreement, each eligible Participant
shall be required to make Voluntary Contributions to the Plan for
credit to his or her account as provided in the Adoption Agreement.
Such Voluntary Contributions shall be withheld from the Employee's
Compensation and shall be transmitted by the Employer to the Trustee
as agreed between the Employer and Trustee. A Participant may
discontinue participation or change his or her Voluntary Contribution
percentage by so advising the Employer at least 10 days prior to the
date on which such discontinuance or change is to be effective. If a
Participant discontinues his or her Voluntary Contributions, such
Participant may not again authorize Voluntary Contributions for a
period of one year from the date of discontinuance. A Participant
may voluntarily change his or her Voluntary Contribution percentage
once during any Plan Year and may also agree to have a reduction in
his or her contribution, if required to satisfy the requirements of
the ACP test. Voluntary Contributions are permitted only in
Standardized Adoption Agreement 003 and Nonstandardized Adoption
Agreement 006.
4.8 DIRECT ROLLOVER OF BENEFITS. Notwithstanding any provision of
the Plan to the contrary that would otherwise limit a Participant's
election under this paragraph, for distributions made on or after
January 1, 1993, a Participant may elect, at the time and in the
manner prescribed by the Plan Administrator, to have any portion of
an Eligible Rollover Distribution paid directly to an Eligible
Retirement Plan specified by the Participant in a Direct Rollover.
Any portion of a distribution which is not paid directly to an
Eligible Retirement Plan shall be distributed to the Participant.
For purposes of this paragraph, a Surviving Spouse or a Spouse or
former Spouse who is an alternate payee under a Qualified Domestic
Relations Order as defined in Code Section 414(p), will be permitted
to elect to have any Eligible Rollover Distribution paid directly to
an individual retirement account (IRA) or an individual retirement
annuity (IRA).
The Plan provisions otherwise applicable to distributions continue to
apply to Rollover and Transfer Contributions.
23
ARTICLE V
PARTICIPANT ACCOUNTS
5.1 SEPARATE ACCOUNTS. The Employer shall establish a separate
bookkeeping account for each Participant showing the total value of
his or her interest in the Fund. Each Participant's account shall be
separated for bookkeeping purposes into the following sub-accounts:
(a) Employer Contributions.
(1) Matching Contributions.
(2) Qualified Matching Contributions.
(3) Qualified Non-Elective Contributions.
(4) Discretionary Contributions.
(5) Elective Deferrals.
(b) Voluntary Contributions (and additional amounts including,
required contributions and if applicable, either repayments
of loans previously defaulted on and treated as "deemed
distributions" on which a tax report has been issued, and
amounts paid out upon a separation from service which have
been included in income and which are repaid after being
re-hired by the Employer).
(c) Qualified Voluntary Contributions (if the Plan previously
accepted these).
(d) Rollover Contributions.
(e) Transfer Contributions.
5.2 ADJUSTMENTS TO PARTICIPANT ACCOUNTS. As of each Valuation Date
of the Plan, the Employer shall add to each account:
(a) the Participant's share of the Employer's contribution and
forfeitures as determined in the Adoption Agreement,
(b) any Elective Deferrals, Voluntary, Rollover or Transfer
Contributions made by the Participant.
(c) any repayment of amounts previously paid out to a
Participant upon a separation from Service and repaid by
the Participant since the last Valuation Date, and
(d) the Participant's proportionate share of any investment
earnings and increase in the fair market value of the Fund
since the last Valuation Date, as determined at paragraph
5.4.
The Employer shall deduct from each account:
(e) any withdrawals or payments made from the Participant's
account since the last Valuation Date, and
(f) the Participant's proportionate share of any decrease in
the fair market value of the Fund since the last Valuation
Date, as determined at paragraph 5.4.
24
5.3 ALLOCATING EMPLOYER CONTRIBUTIONS. The Employer's contribution
shall be allocated to Participants in accordance with the allocation
formula selected by the Employer in the Adoption Agreement, and the
minimum contribution and allocation requirements for Top-Heavy Plans.
Beginning with the 1990 Plan Year and thereafter, for plans on
Standardized Adoption Agreements 001, 002, 003, 007, 008 and 009,
Participants who are credited with more than 500 Hours of Service or
are employed on the last day of the Plan Year must receive a full
allocation of Employer contributions. In Nonstandardized Adoption
Agreements 004, 005, and 006, Employer contributions shall be
allocated to the accounts of Participants employed by the Employer on
the last day of the Plan Year unless indicated otherwise in the
Adoption Agreement. In the case of a non-Top-Heavy, Nonstandardized
Plan, Participants must also have completed a Year of Service unless
otherwise specified in the Adoption Agreement. For Nonstandardized
Adoption Agreements 004, 005, and 006, the Employer may only apply
the last day of the Plan Year and Year of Service requirements, if
the Plan satisfies the requirements of Code Sections 401(a)(26) and
410(b) and the regulations thereunder including the exception for
401(k) plans. If, when applying the last day and Year of Service
requirements, the Plan fails to satisfy the aforementioned
requirements, additional Participants will be eligible to receive an
allocation of Employer Contributions until the requirements are
satisfied. Participants who are credited with a Year of Service, but
not employed at Plan Year end, are the first category of additional
Participants eligible to receive an allocation. If the requirements
are still not satisfied, Participants credited with more than 500
Hours of Service and employed at Plan Year end are the next category
of Participants eligible to receive an allocation. Finally, if
necessary to satisfy the said requirements, any Participant credited
with more than 500 Hours of Service will be eligible for an
allocation of Employer Contributions.
5.4 ALLOCATING INVESTMENT EARNINGS AND LOSSES. A Participant's
share of investment earnings and any increase or decrease in the fair
market value of the Fund shall be based on the proportionate value of
all active accounts (other than accounts with segregated investments)
as of the last Valuation Date less withdrawals since the last
Valuation Date. If Employer and/or Employee contributions are made
monthly, quarterly, or on some other systematic basis, the adjusted
value of such accounts for allocation of investment income and gains
or losses shall include one-half the Employer contributions for such
period. If Employer and/or Employee contributions are not made on a
systematic basis, it is assumed that they are made at the end of the
valuation period and therefore will not receive an allocation of
investment earnings and gains or losses for such period.
Alternatively, at the Plan Administrator's option, all Employer
contributions will be credited with an allocation of the actual
investment earnings and gains and losses from the actual date of
deposit of each such contribution until the end of the period.
Accounts with segregated investments shall receive only the income or
loss on such segregated investments. In no event shall the selection
of a method of allocating gains and losses be used to discriminate in
favor of the Highly Compensated Employees.
5.5 PARTICIPANT STATEMENTS. Upon completing the allocations
described above for the Valuation Date coinciding with the end of the
Plan Year, the Employer shall prepare a statement for each
Participant showing the additions to and subtractions from his or her
account since the last such statement and the fair market value of
his or her account as of the current Valuation Date. Employers so
choosing may prepare Participant statements for each Valuation Date.
25
ARTICLE VI
RETIREMENT BENEFITS AND DISTRIBUTIONS
6.1 NORMAL RETIREMENT BENEFITS. A Participant shall be entitled to
receive the balance held in his or her account from Employer
contributions upon attaining Normal Retirement Age or at such earlier
dates as the provisions of this Article VI may allow. If the
Participant elects to continue working past his or her Normal
Retirement Age, he or she will continue as an active Plan Participant
and no distribution shall be made to such Participant until his or
her actual retirement date unless the employer elects otherwise in
the Adoption Agreement, or a minimum distribution is required by law.
Settlement shall be made in the normal form, or if elected in one of
the optional forms of payment provided below.
6.2 EARLY RETIREMENT BENEFITS. If the Employer so provides in the
Adoption Agreement, an Early Retirement benefit will be available to
individuals who meet the age and Service requirements. An individual
who meets the Early Retirement Age requirements and separates from
Service, will become fully vested, regardless of any vesting schedule
which otherwise might apply. If a Participant separates from Service
before satisfying the age requirements, but after having satisfied
the Service requirement, the Participant will be entitled to elect an
Early Retirement benefit upon satisfaction of the age requirement.
6.3 BENEFITS ON TERMINATION OF EMPLOYMENT.
(a) If a Participant terminates employment prior to Normal
Retirement Age, such Participant shall be entitled to
receive the vested balance held in his or her account
payable at Normal Retirement Age in the normal form, or if
elected, in one of the optional forms of payment provided
hereunder. If applicable, the Early Retirement Benefit
provisions may be elected. Notwithstanding the preceding
sentence, a former Participant may, if allowed in the
Adoption Agreement, make application to the Employer
requesting early payment of any deferred vested and
nonforfeitable benefit due.
(b) If a Participant terminates employment, and the value of
that Participant's Vested Account Balance derived from
Employer and Employee contributions is not greater than
$3,500, the Participant may receive a lump sum distribution
of the value of the entire vested portion of such account
balance and the non-vested portion will be treated as a
forfeiture. The Employer shall continue to follow their
consistent policy, as may be established, regarding
immediate cash-outs of Vested Account Balances of $3,500 or
less. For purposes of this article, if the value of a
Participant's Vested Account Balance is zero, the
Participant shall be deemed to have received a
distribution of such Vested Account Balance immediately
following termination. Likewise, if the Participant is
reemployed prior to incurring 5 consecutive 1-year Breaks
in Service they will be deemed to have immediately repaid
such distribution. For Plan Years prior to 1989, a
Participant's Vested Account Balance shall not include
Qualified Voluntary Contributions. Notwithstanding the
above, if the Employer maintains or has maintained a policy
of not distributing any amounts until the Participant's
Normal Retirement Age, the Employer can continue to
uniformly apply such policy.
(c) If a Participant terminates Service with a Vested Account
Balance derived from Employer and Employee contributions in
excess of $3,500, and elects (with his or her Spouse's
consent) to receive 100% of the value of his or her Vested
Account Balance in a lump sum, the non-vested portion will
be treated as a forfeiture. Except as provided at
paragraph 6.4(c), the Participant (and his or her Spouse)
must consent to any distribution, when the Vested Account
Balance described above exceeds $3,500 or if at the time of
any prior distribution it exceeded $3,500. For purposes of
this paragraph, a Participant's Vested
26
Account Balance shall not include Qualified Voluntary Contributions,
for Plan Years beginning prior to 1989.
(d) Distribution of less than 100% of the Participant's Vested
Account Balance shall only be permitted if the Participant
is fully vested upon termination of employment.
(e) If a Participant who is not 100% vested receives or is
deemed to receive a distribution pursuant to this
paragraph, and such Participant's non-vested benefit is
forfeited hereunder, and if such Participant resumes
employment covered under this Plan, the Participant shall
have the right to repay to the Plan the full amount of the
distribution attributable to Employer contributions on or
before the earlier of the date that the Participant incurs
5 consecutive 1-year Breaks in Service following the date
of distribution or five years after the first date on which
the Participant is subsequently reemployed. In such event,
the Participant's forfeiture shall be restored to his or
her account as of the Valuation Date at the end of the Plan
Year following the date on which repayment of the
distribution is received. Restoration of the forfeiture
amount shall be accomplished in accordance with the
procedure selected by the Employer in the Adoption
Agreement.
(f) A Participant shall also have the option, to postpone
payment of his or her Plan benefits until the first day of
April following the calendar year in which he or she
attains age 70 1/2. Any balance of a Participant's account
resulting from his or her Employee contributions not
previously withdrawn, if any, may be withdrawn by the
Participant immediately following separation from Service.
(g) If a Participant ceases to be an active Employee as a
result of a Disability as defined at paragraph 1.20, such
Participant shall be able to make an application for a
disability retirement benefit payment. The Participant's
account balance will be deemed "immediately distributable"
as set forth in paragraph 6.4, and will be fully vested
pursuant to paragraph 9.2.
6.4 RESTRICTIONS ON IMMEDIATE DISTRIBUTIONS.
(a) An account balance is immediately distributable if any part
of the account balance could be distributed to the
Participant (or Surviving Spouse) before the Participant
attains (or would have attained whether or not deceased)
the later of the Normal Retirement Age or age 62.
(b) If the value of a Participant's Vested Account Balance
derived from Employer and Employee Contributions exceeds
(or at the time of any prior distribution exceeded) $3,500,
and the account balance is immediately distributable, the
Participant and his or her Spouse (or where either the
Participant or the Spouse has died, the survivor) must
consent to any distribution of such account balance. The
consent of the Participant and the Spouse shall be obtained
in writing within the 90-day period ending on the annuity
starting date, which is the first day of the first period
for which an amount is paid as an annuity or any other
form. The Plan Administrator shall notify the Participant
and the Participant's Spouse of the right to defer any
distribution until the Participant's account balance is no
longer immediately distributable. Such notification shall
include a general description of the material features, and
an explanation of the relative values of, the optional
forms of benefit available under the plan in a manner that
would satisfy the notice requirements of Code Section
417(a)(3), and shall be provided no less than 30 days and
no more than 90 days prior to the annuity starting date.
27
(c) Notwithstanding the foregoing, only the Participant need
consent to the commencement of a distribution in the form
of a qualified Joint and Survivor Annuity while the account
balance is immediately distributable. Furthermore, if
payment in the form of a Qualified Joint and Survivor
Annuity is not required with respect to the Participant
pursuant to paragraph 8.7 of the Plan, only the Participant
need consent to the distribution of an account balance that
is immediately distributable. Neither the consent of the
Participant nor the Participant's Spouse shall be required
to the extent that a distribution is required to satisfy
Code Section 401(a)(9) or Code Section 415. In addition,
upon termination of this Plan if the Plan does not offer an
annuity option (purchased from a commercial provider), the
Participant's account balance may, without the
Participant's consent, be distributed to the Participant or
transferred to another Defined Contribution Plan [other
than an employee stock ownership plan as defined in Code
Section 4975(e)(7)] within the same controlled group.
(d) For purposes of determining the applicability of the
foregoing consent requirements to distributions made before
the first day of the first Plan Year beginning after 1988,
the Participant's Vested Account Balance shall not include
amounts attributable to Qualified Voluntary Contributions.
6.5 NORMAL FORM OF PAYMENT. The normal form of payment for a
profit- sharing plan satisfying the requirements of paragraph 8.7
hereof shall be a lump sum with no option for annuity payments. For
all other plans, the normal form of payment hereunder shall be a
Qualified Joint and Survivor Annuity as provided under Article VIII.
A Participant whose Vested Account Balance derived from Employer and
Employee contributions exceeds $3,500, or if at the time of any prior
distribution it exceeds $3,500, shall (with the consent of his or her
Spouse) have the right to receive his or her benefit in a lump sum or
in monthly, quarterly, semi-annual or annual payments from the Fund
over any period not extending beyond the life expectancy of the
Participant and his or her Beneficiary. For purposes of this
paragraph, a Participant's Vested Account Balance shall not include
Qualified Voluntary Contributions, for Plan Years beginning prior to
1989. The normal form of payment shall be automatic, unless the
Participant files a written request with the Employer prior to the
date on which the benefit is automatically payable, electing a lump
sum or installment payment option. No amendment to the Plan may
eliminate one of the optional distribution forms listed above.
6.6 COMMENCEMENT OF BENEFITS.
(a) Unless the Participant elects otherwise, distribution of
benefits will begin no later than the 60th day after the
close of the Plan Year in which the latest of the following
events occurs:
(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) Notwithstanding the foregoing, the failure of a Participant
and Spouse (if necessary) to consent to a distribution
while a benefit is immediately distributable, within the
meaning of paragraph 6.4 hereof, shall be deemed an
election to defer commencement of payment of any benefit
sufficient to satisfy this paragraph.
(c) Unless the Employer provides otherwise in the Adoption
Agreement, distributions of benefits will be made within 60
days following the close of the Plan Year during which a
distribution is requested or otherwise becomes payable.
28
6.7 CLAIMS PROCEDURES. Upon retirement, death, or other severance
of employment, the Participant or his or her representative may make
application to the Employer requesting payment of benefits due and
the manner of payment. If no application for benefits is made, the
Employer shall automatically pay any vested benefit due hereunder in
the normal form at the time prescribed at paragraph 6.6. If an
application for benefits is made, the Employer shall accept, reject,
or modify such request and shall notify the Participant in writing
setting forth the response of the Employer and in the case of a
denial or modification the Employer shall:
(a) state the specific reason or reasons for the denial,
(b) provide specific reference to pertinent Plan provisions on
which the denial is based,
(c) provide a description of any additional material or
information necessary for the Participant or his
representative to perfect the claim and an explanation of
why such material or information is necessary, and
(d) explain the Plan's claim review procedure as contained in
this Plan.
In the event the request is rejected or modified, the Participant or
his representative may within 60 days following receipt by the
Participant or representative of such rejection or modification,
submit a written request for review by the Employer of its initial
decision. Within 60 days following such request for review, the
Employer shall render its final decision in writing to the
Participant or representative stating specific reasons for such
decision. If the Participant or representative is not satisfied with
the Employer's final decision, the Participant or representative can
institute an action in a federal court of competent jurisdiction; for
this purpose, process would be served on the Employer.
6.8 IN-SERVICE WITHDRAWALS. An Employee may withdraw all or any
part of the fair market value of his or her Mandatory Contributions,
Voluntary Contributions, Qualified Voluntary Contributions or
Rollover Contributions, upon written request to the Employer.
Transfer Contributions, which originate from a Plan meeting the
safe-harbor provisions of paragraph 8.7, may also be withdrawn by an
Employee upon written request to the Employer. Transfer Contributions
not meeting the safe-harbor provisions may only be withdrawn upon
retirement, death, Disability, termination or termination of the
Plan, and will be subject to Spousal consent requirements contained
in Code Sections 411(a)(11) and 417. No such withdrawals are
permitted from a money purchase plan until the Participant reaches
Normal Retirement Age. Such request shall include the Participant's
address, social security number, birth date, and amount of the
withdrawal. If at the time a distribution of Qualified Voluntary
Contributions is received the Participant has not attained age 59 1/2
and is not disabled, as defined at Code Section 22(e)(3), the
Participant will be subject to a federal income tax penalty, unless
the distribution is rolled over to a qualified plan or individual
retirement plan within 60 days of the date of distribution. A
Participant may withdraw all or any part of the fair market value of
his or her pre-1987 Voluntary Contributions with or without
withdrawing the earnings attributable thereto. Post-1986 Voluntary
Contributions may only be withdrawn along with a portion of the
earnings thereon. The amount of the earnings to be withdrawn is
determined by using the formula: DA[1-(V, V + E)], where DA is the
distribution amount, V is the amount of Voluntary Contributions and
V + E is the amount of Voluntary Contributions plus the earnings
attributable thereto. A Participant withdrawing his or her other
contributions prior to attaining age 59 1/2, will be subject to a
federal tax penalty to the extent that the withdrawn amounts are
includable in income. Unless the Employer provides otherwise in the
Adoption Agreement, any Participant in a profit-sharing plan who is
100% fully vested in his or her Employer contributions may withdraw
all or any part of the fair market value of any of such contributions
that have been in the account at least two years, plus the investment
earnings thereon, without separation from Service. Such
distributions shall not be eligible for redeposit to the Fund. A
withdrawal under this paragraph shall not prohibit such Participant
from sharing in any future Employer Contribution he or she would
otherwise be eligible to share in. A request to withdraw amounts
pursuant to this paragraph must if applicable, be consented to by the
Participant's Spouse. The consent shall comply with the requirements
of paragraph 6.4 relating to immediate distributions.
29
Elective Deferrals, Qualified Non-elective Contributions, and
Qualified Matching Contributions, and income allocable to each are
not distributable to a Participant or his or her Beneficiary or
Beneficiaries, in accordance with such Participant's or Beneficiary's
or Beneficiaries' election, earlier than upon separation from
Service, death, or Disability. Such amounts may also be distributed
upon:
(a) Termination of the Plan without the establishment of
another Defined Contribution Plan.
(b) The disposition by a corporation to an unrelated
corporation of substantially all of the assets [within the
meaning of Code Section 409(d)(2)] used in a trade or
business of such corporation if such corporation continues
to maintain this Plan after the disposition, but only with
respect to Employees who continue employment with the
corporation acquiring such assets.
(c) The disposition by a corporation to an unrelated entity of
such corporation's interest in a subsidiary [within the
meaning of Code Section 409(d)(3)] if such corporation
continues to maintain this plan, but only with respect to
Employees who continue employment with such subsidiary.
(d) The attainment of age 59 1/2.
(e) The Hardship of the Participant as described in paragraph
6.9.
All distributions that may be made pursuant to one or more of the
foregoing distributable events are subject to the Spousal and
Participant consent requirements, if applicable, contained in Code
Sections 401(a)(11) and 417.
6.9 HARDSHIP WITHDRAWAL. If permitted by the Employer in the
Adoption Agreement, a Participant in a profit-sharing plan may
request a hardship withdrawal prior to attaining age 59 1/2. If the
Participant has not attained age 59 1/2, the Participant may be
subject to a federal income tax penalty. Such request shall be in
writing to the Employer who shall have sole authority to authorize a
hardship withdrawal, pursuant to the rules below. Hardship
withdrawals may include Elective Deferrals and any earnings accrued
and credited thereon as of the last day of the Plan Year ending
before July 1, 1989 and Employer related contributions, including but
not limited to Employer Matching Contributions, plus the investment
earnings thereon to the extent vested. Qualified Matching
Contributions, Qualified Non-Elective Contributions and Elective
Deferrals reclassified as Voluntary Contributions, plus the
investment earnings thereon are only available for a Hardship
Withdrawal prior to age 59 1/2 to the extent that they were credited
to the Participant's Account as of the last day of the Plan Year
ending prior to July 1, 1989. The Plan Administrator may limit
withdrawals to Elective Deferrals and the earnings thereon as
stipulated above. Hardship withdrawals are subject to the Spousal
consent requirements contained in Code Sections 401(a)(11) and 417.
Only the following reasons are valid to obtain hardship withdrawal:
(a) medical expenses [within the meaning of Code Section
213(d)] of the Participant, his or her Spouse, children and
other dependents,
(b) the purchase (excluding mortgage payments) of the principal
residence for the Participant,
(c) payment of tuition and related educational expenses for the
next twelve (12) months of post-secondary education for the
Participant, his or her Spouse, children or other
dependents, or
(d) the need to prevent eviction of the Employee from or a
foreclosure on the mortgage of, the Employee's principal
residence.
Furthermore, for Plans on Adoption Agreements 003 and 006, the
following conditions must be met in order for a withdrawal to be
authorized:
30
(e) the Participant has obtained all distributions, other than
hardship distributions, and all nontaxable loans under all
plans maintained by the Employer,
(f) all plans maintained by the Employer provide that the
Employee's Elective Deferrals and Voluntary Contributions
will be suspended for twelve months after the receipt of
the Hardship distribution,
(g) the distribution is not in excess of the amount of the
immediate and heavy financial need [(a) through (d)] above,
and
(h) all plans maintained by the Employer provide that an
Employee may only make Elective Deferrals for the
Employee's taxable year immediately following the taxable
year of the hardship distribution of the applicable limit
under Code Section 402(g) for such taxable year, less the
amount of such Employee's pre-tax contributions for the
taxable year of the hardship distribution.
If a distribution is made from any Plan at a time when a
Participant has a nonforfeitable right to less than 100% of the
account balance derived from Employer contributions and the
Participant may increase the nonforfeitable percentage in the
account:
(a) A separate account will be established for the
Participant's interest in the Plan as of the time of the
distribution, and
(b) At any relevant time the Participant's nonforfeitable
portion of the separate account will be equal to an amount
("X") determined by the formula:
X = P [AB + (R X D)] - (R X D)
For purposes of applying the formula: "P" is the nonforfeitable
percentage at the relevant time, "AB" is the account balance at the
relevant time, "D" is the amount of the distribution and "R" is the
ratio of the account balance at the relevant time to the account
balance after distribution.
31
ARTICLE VII
DISTRIBUTION REQUIREMENTS
7.1 JOINT AND SURVIVOR ANNUITY REQUIREMENTS. All distributions made
under the terms of this Plan must comply with the provisions of
Article VIII including, if applicable, the safe harbor provisions
thereunder.
7.2 MINIMUM DISTRIBUTION REQUIREMENTS. All distributions required
under this Article shall be determined and made in accordance with
the minimum distribution requirements of Code Section 401(a)(9) and
the regulations thereunder, including the minimum distribution
incidental benefit rules found at Regulations Section 1.401(a)(9)-2.
The entire interest of a Participant must be distributed or begin to
be distributed no later than the Participant's Required Beginning
Date. Life expectancy and joint and last survivor life expectancy
are computed by using the expected return multiples found in Tables V
and VI of Regulations Section 1.72-9.
7.3 LIMITS ON DISTRIBUTION PERIODS. As of the First Distribution
Calendar Year, distributions if not made in a single-sum, may only be
made over one of the following periods (or a combination thereof):
(a) the life of the Participant,
(b) the life of the Participant and a Designated Beneficiary,
(c) a period certain not extending beyond the life expectancy
of the participant, or
(d) a period certain not extending beyond the joint and last
survivor expectancy of the Participant and a Designated
Beneficiary.
7.4 REQUIRED DISTRIBUTIONS ON OR AFTER THE REQUIRED BEGINNING DATE.
(a) If a participant's benefit is to be distributed over (1) a
period not extending beyond the life expectancy of the
Participant or the joint life and last survivor expectancy
of the Participant and the Participant's Designated
Beneficiary or (2) a period not extending beyond the life
expectancy of the Designated Beneficiary, the amount
required to be distributed for each calendar year,
beginning with distributions for the First Distribution
Calendar Year, must at least equal the quotient obtained by
dividing the Participant's benefit by the Applicable Life
Expectancy.
(b) For calendar years beginning before 1989, if the
Participant's Spouse is not the Designated Beneficiary, the
method of distribution selected must have assured that at
least 50% of the Present Value of the amount available for
distribution was to be paid within the life expectancy of
the Participant.
(c) For calendar years beginning after 1988, the amount to be
distributed each year, beginning with distributions for the
First Distribution Calendar Year shall not be less than the
quotient obtained by dividing the Participant's benefit by
the lesser of (1) the Applicable Life Expectancy or (2) if
the Participant's Spouse is not the Designated Beneficiary,
the applicable divisor determined from the table set forth
in Q&A-4 of Regulations Section 1.401(a)(9)-2.
Distributions after the death of the Participant shall be
distributed using the Applicable Life Expectancy as the
relevant divisor without regard to Regulations Section
1.401(a)(9)-2.
32
(d) The minimum distribution required for the Participant's
First Distribution Calendar Year must be made on or before
the Participant's Required Beginning Date. The minimum
distribution for other calendar years, including the
minimum distribution for the Distribution Calendar Year in
which the Participant's Required Beginning Date occurs,
must be made on or before December 31 of that Distribution
Calendar Year.
(e) If the Participant's benefit is distributed in the form of
an annuity purchased from an insurance company,
distributions thereunder shall be made in accordance with
the requirements of Code Section 401(a)(9) and the
regulations thereunder.
(f) For purposes of determining the amount of the required
distribution for each Distribution Calendar Year, the
account balance to be used is the account balance
determined as of the last valuation preceding the
Distribution Calendar Year. This balance will be increased
by the amount of any contributions or forfeitures allocated
to the account balance after the valuation date in such
preceding calendar year. Such balance will also be
decreased by distributions made after the Valuation Date in
such preceding Calendar Year.
(g) For purposes of subparagraph 7.4(f), 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.
7.5 REQUIRED BEGINNING DATE.
(a) General Rule. The Required Beginning Date of a Participant
is the first day of April of the calendar year following
the calendar year in which the Participant attains age 70
1/2.
(b) Transitional Rules. The Required Beginning Date of a
Participant who attained age 70 1/2 before 1988, shall be
determined in accordance with (1) or (2) below:
(1) Non-5-percent owners. The Required Beginning Date of
a Participant who is not a 5-percent owner is the
first day of April of the calendar year following the
calendar year in which the later of retirement or
attainment of age 70 1/2 occurs. The Required
Beginning Date of a Participant who is not a 5-percent
owner, who attains age 70 1/2 during 1988 and who has
not retired as of 1989, is April 1, 1990.
(2) 5-percent owners. The Required Beginning Date of a
Participant who is a 5-percent owner during any year
beginning after 1979, is the first day of April
following the later of:
(i) the calendar year in which the Participant
attains age 70 1/2, or
(ii) the earlier of the calendar year with or within
which ends the plan year in which the Participant
becomes a 5-percent owner, or the calendar year
in which the Participant retires.
(c) A Participant is treated as a 5-percent owner for purposes
of this Paragraph if such Participant is a 5-percent owner
as defined in Code Section 416(i) (determined in accordance
with Code Section 416 but without regard to whether the
Plan is Top-Heavy) at
33
any time during the Plan Year ending with or within the calendar year
in which such Owner attains age 66 1/2 or any subsequent Plan Year.
(d) Once distributions have begun to a 5-percent owner under
this paragraph, they must continue to be distributed, even
if the Participant ceases to be a 5-percent owner in a
subsequent year.
7.6 TRANSITIONAL RULE.
(a) Notwithstanding the other requirements of this article and
subject to the requirements of Article VIII, Joint and
Survivor Annuity Requirements, distribution on behalf of
any Employee, including a 5-percent owner, may be made in
accordance with all of the following requirements
(regardless of when such distribution commences):
(i) The distribution by the trust is one which
would not have disqualified such trust under
Code Section 401(a)(9) as in effect prior to
amendment by the Deficit Reduction Act of 1984.
(ii) The distribution is in accordance with a method
of distribution designated by the employee
whose interest in the trust is being
distributed or, if the employee is deceased, by
a beneficiary of such employee.
(iii) Such designation was in writing, was signed by
the employee or the beneficiary, and was made
before January 1, 1984.
(iv) The Employee has accrued a benefit under the
Plan as of December 31, 1983.
(v) The method of distribution designated by the
Employee or the beneficiary specifies the time
at which distribution will commence, the period
over which distributions will be made, and in
the case of any distribution upon the
Employee's death, the beneficiaries of the
Employee listed in order of priority.
(b) A distribution upon death will not be covered by this
transitional rule unless the information in the designation
contains the required information described above with
respect to the distributions to be made upon the death of
the Employee.
(c) For any distribution which commences before January 1,
1984, but continues after December 31, 1983, the Employee,
or the beneficiary, to whom such distribution is being
made, will be presumed to have designated the method of
distribution under which the distribution is being made if
the method of distribution was specified in writing and the
distribution satisfies the requirements in sub-paragraphs
(a)(i) and (a)(v) above.
(d) If a designation is revoked, any subsequent distribution
must satisfy the requirements of Code Section 401(a)(9) and
the Regulations thereunder. If a designation is revoked
subsequent to the date distributions are required to begin,
the Plan must distribute by the
34
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 Section 401(a)(9) and the
Regulations thereunder, but for the Tax Equity and Fiscal
Responsibility Act Section 242(b)(2) election. For
calendar years beginning after December 31, 1988, such
distributions must meet the minimum distribution incidental
benefit requirements in Regulations Section 1.401(a)(9)-2.
Any changes in the designation will be considered to be a
revocation of the designation. However, the mere
substitution or addition of another beneficiary (one not
named in the designation) under the designation will not be
considered to be a revocation of the designation, so long
as such substitution or addition does not alter the period
over which distributions are to be made under the
designation, directly or indirectly (for example, by
altering the relevant measuring life). In the case in
which an amount is transferred or rolled over from one plan
to another plan, the rules in Q&A J-2 and Q&A J-3 of
Regulations Section 1.401(a)(9)-2 shall apply.
7.7 DESIGNATION OF BENEFICIARY FOR DEATH BENEFIT. Each Participant
shall file a written designation of beneficiary with the Employer
upon qualifying for participation in this Plan. Such designation
shall remain in force until revoked by the Participant by filing a
new beneficiary form with the Employer. The Participant may elect to
have a portion of his or her account balance invested in an insurance
contract. If an insurance contract is purchased under the Plan, the
Trustee must be named as Beneficiary under the terms of the contract.
However, the Participant shall designate a Beneficiary to receive the
proceeds of the contract after settlement is received by the Trustee.
Under a profit-sharing plan satisfying the requirements of paragraph
8.7 hereof, the Designated Beneficiary shall be the Participant's
Surviving Spouse, if any, unless such Spouse properly consents
otherwise.
7.8 NONEXISTENCE OF BENEFICIARY. Any portion of the amount payable
hereunder which is not disposed of because of the Participant's or
former Participant's failure to designate a beneficiary, or because
all of the Designated Beneficiaries are deceased, shall be paid to
his or her Spouse. If the Participant had no Spouse at the time of
death, payment shall be made to the personal representative of his or
her estate in a lump sum.
7.9 DISTRIBUTION BEGINNING BEFORE DEATH. If the Participant dies
after distribution of his or her interest has begun, the remaining
portion of such interest will continue to be distributed at least as
rapidly as under the method of distribution being used prior to the
Participant's death.
7.10 DISTRIBUTION BEGINNING AFTER DEATH. If the Participant dies
before distribution of his or her interest begins, distribution of
the Participant's entire interest shall be completed by December 31
of the calendar year containing the fifth anniversary of the
Participant's death except to the extent that an election is made to
receive distributions in accordance with (a) or (b) below:
(a) If any portion of the Participant's interest is payable to
a Designated Beneficiary, distributions may be made over
the life or over a period certain not greater than the life
expectancy of the Designated Beneficiary commencing on or
before December 31 of the calendar year immediately
following the calendar year in which the Participant died;
(b) If the Designated Beneficiary is the Participant's
Surviving Spouse, the date distributions are required to
begin in accordance with (a) above shall not be earlier
than the later of (1) December 31 of the calendar year
immediately following the calendar year in which the
participant died, or (2) December 31 of the calendar year
in which the Participant would have attained age 70 1/2.
If the Participant has not made an election pursuant to this
paragraph by the time of his or her death, the Participant's
Designated Beneficiary must elect the method of distribution no later
than the earlier of (1) December 31 of the calendar year in which
distributions would be required to begin under this section, or (2)
December 31 of the calendar year which contains the fifth anniversary
of the date of death of the participant. If the Participant has
35
no Designated Beneficiary, or if the Designated Beneficiary does not
elect a method of distribution, then 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 paragraph if the Surviving Spouse dies after the
Participant, but before payments to such Spouse begin, the provisions
of this paragraph with the exception of paragraph (b) therein, shall
be applied as if the Surviving Spouse were the Participant. For the
purposes of this paragraph and paragraph 7.9, distribution of a
Participant's interest is considered to begin on the Participant's
Required Beginning Date (or, if the preceding sentence is applicable,
the date distribution is required to begin to the Surviving Spouse).
If distribution in the form of an annuity described in paragraph
7.4(e) irrevocably commences to the Participant before the Required
Beginning Date, the date distribution is considered to begin is the
date distribution actually commences.
For purposes of paragraph 7.9 and this paragraph, if an amount is
payable to either a minor or an individual who has been declared
incompetent, the benefits shall be paid to the legally appointed
guardian for the benefit of said minor or incompetent individual,
unless the court which appointed the guardian has ordered otherwise.
7.11 DISTRIBUTION OF EXCESS ELECTIVE DEFERRALS.
(a) Notwithstanding any other provision of the Plan, Excess
Elective Deferrals plus any income and minus any loss
allocable thereto, shall be distributed no later than
April 15, 1988, and each April 15 thereafter, to
Participants to whose accounts Excess Elective Deferrals
were allocated for the preceding taxable year, and who
claim Excess Elective Deferrals for such taxable year.
Excess Elective Deferrals shall be treated as Annual
Additions under the Plan, unless such amounts are
distributed no later than the first April 15th following
the close of the Participant's taxable year. A Participant
is deemed to notify the Plan Administrator of any Excess
Elective Deferrals that arise by taking into account only
those Elective Deferrals made to this Plan and any other
plans of this Employer. Furthermore, a Participant who
participates in another plan allowing Elective Deferrals
may assign to this Plan any Excess Elective Deferrals made
during a taxable year of the Participant, by notifying the
Plan Administrator of the amount of the Excess Elective
Deferrals to be assigned.
(b) The Participant's claim shall be in writing; shall be
submitted to the Plan Administrator not later than March 1
of each year; shall specify the amount of the Participant's
Excess Elective Deferrals for the preceding taxable year;
and shall be accompanied by the Participant's written
statement that if such amounts are not distributed, such
Excess Elective Deferrals, when added to amounts deferred
under other plans or arrangements described in Code
Sections 401(k), 408(k) [Simplified Employee Pensions], or
403(b) [annuity programs for public schools and charitable
organizations] will exceed the $7,000 limit as adjusted
under Code Section 415(d) imposed on the Participant by
Code Section 402(g) for the year in which the deferral
occurred.
(c) Excess Elective Deferrals shall be adjusted for any income
or loss up to the end of the taxable year, during which
such excess was deferred. Income or loss will be
calculated under the method used to calculate investment
earnings and losses elsewhere in the Plan.
(d) If the Participant receives a return of his or her Elective
Deferrals, the amount of such contributions which are
returned must be brought into the Employee's taxable
income.
36
7.12 DISTRIBUTIONS OF EXCESS CONTRIBUTIONS.
(a) Notwithstanding any other provision of this Plan, Excess
Contributions, plus any income and minus any loss allocable
thereto, shall be distributed no later than the last day of
each Plan Year to Participants to whose accounts such
Excess Contributions were allocated for the preceding Plan
Year. If such excess amounts are distributed more than 2
1/2 months after the last day of the Plan Year in which
such excess amounts arose, a ten (10) percent excise tax
will be imposed on the Employer maintaining the Plan with
respect to such amounts. Such distributions shall be made
to Highly Compensated Employees on the basis of the
respective portions of the Excess Contributions
attributable to each of such Employees. Excess
Contributions shall be allocated to Participants who are
subject to the Family Member aggregation rules of Code
Section 414(q)(6) in the manner prescribed by the
regulations thereunder.
(b) Excess Contributions (including the amounts re-characterized)
shall be treated as Annual Additions under
the Plan.
(c) Excess Contributions shall be adjusted for any income or
loss up to the end of the Plan Year. Income or loss will
be calculated under the method used to calculate investment
earnings and losses elsewhere in the Plan.
(d) Excess Contributions shall be distributed from the
Participant's Contribution account and Qualified Matching
Contribution account (if applicable) in proportion to the
Participant's Elective Deferrals and Qualified Matching
Contributions (to the extent used in the ADP test) for the
Plan Year. Excess Contributions shall be distributed from
the Participant's Qualified Non-Elective Contribution
account only to the extent that such Excess Contributions
exceed the balance in the Participant's Elective Deferral
account and Qualified Matching Contribution account.
7.13 DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS.
(a) Notwithstanding any other provision of this Plan, Excess
Aggregate Contributions, plus any income and minus any loss
allocable thereto, shall be forfeited, if forfeitable, or
if not forfeitable, distributed no later than the last day
of each Plan Year to Participants to whose accounts such
Excess Aggregate Contributions were allocated for the
preceding Plan Year. Excess Aggregate Contributions shall
be allocated to Participants who are subject to the Family
Member aggregation rules of Code Section 414(q)(6) in the
manner prescribed by the regulations. If such Excess
Aggregate Contributions are distributed more than 2 1/2
months after the last day of the Plan Year in which such
excess amounts arose, a ten (10) percent excise tax will be
imposed on the Employer maintaining the Plan with respect
to those amounts. Excess Aggregate Contributions shall be
treated as Annual Additions under the plan.
(b) Excess Aggregate Contributions shall be adjusted for any
income or loss up to the end of the Plan Year. The income
or loss allocable to Excess Aggregate Contributions is the
sum of income or loss for the Plan Year allocable to the
Participant's Voluntary Contribution account, Matching
Contribution account, (if any, and if all amounts therein
are not used in the ADP test) and, if applicable, Qualified
Non-Elective Contribution account and Elective Deferral
account. Income or loss will be calculated under the
method used to calculate investment earnings and losses
elsewhere in the Plan.
37
(c) Forfeitures of Excess Aggregate Contributions may either be
reallocated to the accounts of non-Highly Compensated
Employees or applied to reduce Employer contributions, as
elected by the employer in the Adoption Agreement.
(d) Excess Aggregate Contributions shall be forfeited if such
amount is not vested. If vested, such excess shall be
distributed on a pro-rata basis from the Participant's
Voluntary Contribution account (and, if applicable, the
Participant's Qualified Non-Elective Contribution account
or Elective Deferral account, or both).
38
ARTICLE VIII
JOINT AND SURVIVOR ANNUITY REQUIREMENTS
8.1 APPLICABILITY OF PROVISIONS. The provisions of this Article
shall apply to any Participant who is credited with at least one Hour
of Service with the Employer on or after August 23, 1984 and such
other Participants as provided in paragraph 8.8.
8.2 PAYMENT OF QUALIFIED JOINT AND SURVIVOR ANNUITY. Unless an
optional form of benefit is selected pursuant to a Qualified Election
within the 90-day period ending on the Annuity Starting Date, a
married Participant's Vested Account Balance will be paid in the form
of a Qualified Joint and Survivor Annuity and an unmarried
Participant's Vested Account Balance will be paid in the form of a
life annuity. The Participant may elect to have such annuity
distributed upon attaining Early Retirement Age under the Plan.
8.3 PAYMENT OF QUALIFIED PRE-RETIREMENT SURVIVOR ANNUITY. Unless an
optional form of benefit has been selected within the Election Period
pursuant to a Qualified Election, if a Participant dies before
benefits have commenced then one-half of the Participant's Vested
Account Balance shall be paid to the Surviving Spouse in the form of
a life annuity. The Surviving Spouse may elect to have such annuity
distributed within a reasonable period after the Participant's death.
A Participant who does not meet the age 35 requirement set forth in
the Election Period as of the end of any current Plan Year may make a
special qualified election to waive the qualified Pre-retirement
Survivor Annuity for the period beginning on the date of such
election and ending on the first day of the Plan Year in which the
Participant will attain age 35. Such election shall not be valid
unless the Participant receives a written explanation of the
Qualified Pre-retirement Survivor Annuity in such terms as are
comparable to the explanation required under paragraph 8.5.
Qualified Pre-retirement Survivor Annuity coverage will be
automatically reinstated as of the first day of the Plan Year in
which the Participant attains age 35. Any new waiver on or after
such date shall be subject to the full requirements of this Article.
8.4 QUALIFIED ELECTION. A waiver of a Qualified Joint and Survivor
Annuity or a qualified pre-retirement survivor annuity. Any waiver
of a Qualified Joint and Survivor Annuity or a qualified pre-retirement
survivor annuity shall not be effective unless:
(a) the Participant's Spouse consents in writing to the
election;
(b) the election designates a specific beneficiary, including
any class of beneficiaries or any contingent beneficiaries,
which may not be changed without spousal consent (or the
Spouse expressly permits designations by the Participant
without any further spousal consent);
(c) the Spouse's consent acknowledges the effect of the
election; and
(d) the Spouse's consent is witnessed by a Plan representative
or notary public.
Additionally, a Participant's waiver of the Qualified Joint and
Survivor Annuity shall not be effective unless the election
designates a form of benefit payment which may not be changed without
spousal consent (or the Spouse expressly permits designations by the
Participant without any further spousal consent). If it is
established to the satisfaction of the Plan Administrator that there
is no Spouse or that the Spouse cannot be located, a waiver will be
deemed a Qualified Election. Any consent by a Spouse obtained under
this provision (or establishment that the consent of a Spouse may not
be obtained) shall be effective only with respect to such Spouse. A
consent that permits designations by the Participant without any
requirement of further consent by such Spouse must acknowledge that
the Spouse has the right to limit consent to a specific beneficiary,
and a specific form of benefit where applicable, and that the Spouse
voluntarily elects to relinquish either or both of such rights. A
revocation of a prior waiver may be made by a Participant without the
consent of the Spouse at any time before the commencement of
benefits. The number of revocations shall not be limited. No
consent obtained under this provision shall be valid unless the
Participant has received notice as provided in paragraphs 8.5 and 8.6
below.
39
8.5 NOTICE REQUIREMENTS FOR QUALIFIED JOINT AND SURVIVOR ANNUITY.
In the case of a Qualified Joint and Survivor Annuity, the Plan
Administrator shall, no less than 30 days and no more than 90 days
prior to the Annuity Starting date, provide each Participant a
written explanation of:
(a) the terms and conditions of a Qualified Joint and Survivor
Annuity;
(b) the Participant's right to make and the effect of an
election to waive the qualified Joint and Survivor Annuity
form of benefit;
(c) the rights of a Participant's Spouse; and
(d) the right to make, and the effect of, a revocation of a
previous election to waive the Qualified Joint and Survivor
Annuity.
8.6 NOTICE REQUIREMENTS FOR QUALIFIED PRE-RETIREMENT SURVIVOR
ANNUITY. In the case of a qualified pre-retirement survivor annuity
as described in paragraph 8.3, the Plan Administrator shall provide
each Participant within the applicable period for such Participant a
written explanation of the qualified pre-retirement survivor annuity
in such terms and in such manner as would be comparable to the
explanation provided for meeting the requirements of paragraph 8.5
applicable to a Qualified Joint and Survivor Annuity. The applicable
period for a Participant is whichever of the following periods ends
last:
(a) the period beginning with the first day of the Plan Year in
which the Participant attains age 32 and ending with the
close of the Plan Year preceding the Plan Year in which the
Participant attains age 35;
(b) a reasonable period ending after the individual becomes a
Participant;
(c) a reasonable period ending after this Article first applies
to the Participant. Notwithstanding the foregoing, notice
must be provided within a reasonable period ending after
separation from Service in the case of a Participant who
separates from Service before attaining age 35.
For purposes of applying the preceding paragraph, a reasonable
period ending after the events described in (b) and (c) 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 subsequently returns to
employment with the Employer, the applicable period for such
Participant shall be re-determined.
8.7 SPECIAL SAFE-HARBOR EXCEPTION FOR CERTAIN PROFIT-SHARING PLANS.
(a) To the extent that the following conditions are met, the
Qualified Joint and Survivor Annuity requirements of this
Article VIII shall be inapplicable to a Participant in a
profit-sharing plan, and to any distribution, made on or
after the first day of the first plan year beginning after
1988, from or under a separate account attributable solely
to Qualified Voluntary contributions, as maintained on
behalf of a Participant in a money purchase pension plan,
(including a target benefit plan) if the following
conditions are satisfied:
(1) the Participant does not or cannot elect payments in
the form of a life annuity; and
40
(2) on the death of a Participant, the Participant's
Vested Account Balance will be paid to the
Participant's Surviving Spouse, but if there is no
Surviving Spouse, or if the Surviving Spouse has
consented in a manner conforming to a Qualified
Election, then to the Participant's Designated
Beneficiary.
The Surviving Spouse may elect to have distribution of the
Vested Account Balance commence within the 90-day period
following the date of the Participant's death. The account
balance shall be adjusted for gains or losses occurring after
the Participant's death in accordance with the provisions of the
Plan governing the adjustment of account balances for other
types of distributions. These safe-harbor rules shall not be
operative with respect to a Participant in a profit-sharing plan
if that Plan is a direct or indirect transferee of a Defined
Benefit Plan, money purchase plan, a target benefit plan, stock
bonus plan, or profit-sharing plan which is subject to the
survivor annuity requirements of Code Section 401(a)(11) and
Code Section 417, and would therefore have a Qualified Joint and
Survivor Annuity as its normal form of benefit.
(b) The Participant may waive the spousal death benefit
described in this paragraph at any time provided that no
such waiver shall be effective unless it satisfies the
conditions (described in paragraph 8.4) that would apply to
the Participant's waiver of the Qualified Pre-Retirement
Survivor Annuity.
(c) If this paragraph 8.7 is operative, then all other
provisions of this Article other than paragraph 8.8 are
inoperative.
8.8 TRANSITIONAL JOINT AND SURVIVOR ANNUITY RULES. Special
transition rules apply to Participants who were not receiving
benefits on August 23, 1984.
(a) Any living Participant not receiving benefits on August 23,
1984, who would otherwise not receive the benefits
prescribed by the previous paragraphs of this Article, must
be given the opportunity to elect to have the prior
paragraphs of this Article apply if such Participant is
credited with at least one Hour of Service under this Plan
or a predecessor Plan in a Plan Year beginning on or after
January 1, 1976 and such Participant had at least 10 Years
of Service for vesting purposes when he or she separated
from Service.
(b) Any living Participant not receiving benefits on August 23,
1984, who was credited with at least one Hour of Service
under this Plan or a predecessor Plan on or after
September 2, 1974, and who is not otherwise credited with
any Service in a Plan Year beginning on or after January 1,
1976, must be given the opportunity to have his or her
benefits paid in accordance with paragraph 8.9.
(c) The respective opportunities to elect [as described in (a)
and (b) above] must be afforded to the appropriate
Participants during the period commencing on August 23,
1984 and ending on the date benefits would otherwise
commence to said Participants.
8.9 AUTOMATIC JOINT AND SURVIVOR ANNUITY AND EARLY SURVIVOR ANNUITY.
Any Participant who has elected pursuant to paragraph 8.8(b) and any
Participant who does not elect under paragraph 8.8(a) or who meets
the requirements of paragraph 8.8(a), except that such Participant
does not have at least 10 years of vesting Service when he or she
separates from Service, shall have his or her benefits distributed in
accordance with all of the following requirements if benefits would
have been payable in the form of a life annuity.
(a) Automatic Joint and Survivor Annuity. If benefits in the
form of a life annuity become payable to a married
Participant who:
(1) begins to receive payments under the Plan on or after
Normal Retirement Age, or
41
(2) dies on or after Normal Retirement Age while still
working for the Employer, or
(3) begins to receive payments on or after the Qualified
Early Retirement Age, or
(4) separates from Service on or after attaining Normal
Retirement (or the Qualified Early Retirement Age) and
after satisfying the eligibility requirements for the
payment of benefits under the Plan and thereafter dies
before beginning to receive such benefits, then such
benefits will be received under this Plan in the form
of a Qualified Joint and Survivor Annuity, unless the
Participant has elected otherwise during the Election
Period. The Election Period must begin at least 6
months before the Participant attains Qualified Early
Retirement Age and 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 which would
have been made to the Spouse under the Qualified Joint and
Survivor Annuity if the Participant had retired on the day
before his or her death. Any election under this provision
will be in writing and may be changed by the Participant at
any time. The Election Period begins on the later of:
(1) the 90th day before the Participant attains the
Qualified Early Retirement Age, or
(2) the date on which participation begins, and ends on
the date the Participant terminates employment.
8.10 ANNUITY CONTRACTS. Any annuity contract distributed under this
Plan must be nontransferable. The terms of any annuity contract
purchased and distributed by the Plan to a Participant or Spouse
shall comply with the requirements of this Plan.
42
ARTICLE IX
VESTING
9.1 EMPLOYEE CONTRIBUTIONS. A Participant shall always have a 100%
vested and nonforfeitable interest in his or her Elective Deferrals,
Voluntary Contributions, Qualified Voluntary Contributions, Rollover
Contributions, and Transfer Contributions plus the earnings thereon.
No forfeiture of Employer related contributions (including any
minimum contributions made under paragraph 14.2 hereof) will occur
solely as a result of an Employee's withdrawal of any Employee
contributions.
9.2 EMPLOYER CONTRIBUTIONS. A Participant shall acquire a vested
and nonforfeitable interest in his or her account attributable to
Employer contributions in accordance with the table selected in the
Adoption Agreement, provided that if a Participant is not already
fully vested, he or she shall become so upon attaining Normal
Retirement Age, Early Retirement Age, on death prior to normal
retirement, on retirement due to Disability, or on termination of the
Plan.
9.3 COMPUTATION PERIOD. The computation period for purposes of
determining Years of Service and Breaks in Service for purposes of
computing a Participant's nonforfeitable right to his or her account
balance derived from Employer contributions shall be determined by
the Employer in the Adoption Agreement. If the Employer provides for
other than full and immediate vesting and does not designate
otherwise, the computation period will be the Plan Year. In the
event a former Participant with no vested interest in his or her
Employer contribution account requalifies for participation in the
Plan after incurring a Break in Service, such Participant shall be
credited for vesting with all pre-break and post-break Service.
9.4 RE-QUALIFICATION PRIOR TO FIVE CONSECUTIVE ONE-YEAR BREAKS IN
SERVICE. The account balance of such Participant shall consist of
any undistributed amount in his or her account as of the date of
re-employment plus any future contributions added to such account plus
the investment earnings on the account. The Vested Account Balance
of such Participant shall be determined by multiplying the
Participant's account balance (adjusted to include any distribution
or redeposit made under paragraph 6.3) by such Participant's vested
percentage. All Service of the Participant, both prior to and
following the break, shall be counted when computing the
Participant's vested percentage.
9.5 RE-QUALIFICATION AFTER FIVE CONSECUTIVE ONE-YEAR BREAKS IN
SERVICE. If such Participant is not fully vested upon re-employment,
a new account shall be established for such Participant to separate
his or her deferred vested and nonforfeitable account, if any, from
the account to which new allocations will be made. The Participant's
deferred account to the extent remaining shall be fully vested and
shall continue to share in earnings and losses of the Fund. When
computing the Participant's vested portion of the new account, all
pre-break and post-break Service shall be counted. However,
notwithstanding this provision, no such former Participant who has
had five consecutive one-year Breaks in Service shall acquire a
larger vested and nonforfeitable interest in his or her prior account
balance as a result of re-qualification hereunder.
9.6 CALCULATING VESTED INTEREST. A Participant's vested and
nonforfeitable interest shall be calculated by multiplying the fair
market value of his or her account attributable to Employer
contributions on the Valuation Date preceding distribution by the
decimal equivalent of the vested percentage as of his or her
termination date. The amount attributable to Employer contributions
for purposes of the calculation includes amounts previously paid out
pursuant to paragraph 6.3 and not repaid. The Participant's vested
and nonforfeitable interest, once calculated above, shall be reduced
to reflect those amounts previously paid out to the Participant and
not repaid by the Participant. The Participant's vested and
nonforfeitable interest so determined shall continue to share in the
investment earnings and any increase or decrease in the fair market
value of the Fund up to the Valuation Date preceding or coinciding
with payment.
43
9.7 FORFEITURES. Any balance in the account of a Participant who
has separated from Service to which he or she is not entitled under
the foregoing provisions, shall be forfeited and applied as provided
in the Adoption Agreement. If not specified otherwise in the Adoption
Agreement, forfeitures will be allocated to Participants in the same
manner as the Employer's contribution. A forfeiture may only occur
if the Participant has received a distribution from the Plan or if
the Participant has incurred five consecutive 1-year Breaks in
Service. Forfeitures shall inure only to the accounts of
Participants of the adopting Employer's plan. If not specified
otherwise in the Adoption Agreement, forfeitures shall be allocated
at the end of the Plan Year during which the former Participant
incurs five consecutive one-year Breaks in Service. Furthermore, a
Highly Compensated Employee's Matching Contributions may be
forfeited, even if vested, if the contributions to which they relate
are Excess Deferrals, Excess Contributions or Excess Aggregate
Contributions.
9.8 AMENDMENT OF VESTING SCHEDULE. No amendment to the Plan shall
have the effect of decreasing a Participant's vested interest
determined without regard to such amendment as of the later of the
date such amendment is adopted or the date it becomes effective.
Further, if the vesting schedule of the Plan is amended, or the Plan
is amended in any way that directly or indirectly affects the
computation of any Participant's nonforfeitable percentage, or if the
Plan is deemed amended by an automatic change to or from a Top-Heavy
vesting schedule, each Participant with at least three Years of
Service with the Employer may elect, within a reasonable period after
the adoption of the amendment or change, to have his or her
nonforfeitable percentage computed under the Plan without regard to
such amendment or change. For Participants who do not have at least
one Hour of Service in any Plan Year beginning after 1988, the
preceding sentence shall be applied by substituting "Five Years of
Service" for "Three Years of Service" where such language appears.
The period during which the election may be made shall commence with
the date the amendment is adopted or deemed to be made and shall end
on the later of:
(a) 60 days after the amendment is adopted;
(b) 60 days after the amendment becomes effective; or
(c) 60 days after the Participant is issued written notice of
the amendment by the Employer or the Trustee. If the
Trustee is asked to so notify, the Fund will be charged for
the costs thereof unless the Employer pays the charges as
permitted in paragraph 11.3.
No amendment to the Plan shall be effective to the extent that it has
the effect of decreasing a Participant's accrued benefit.
Notwithstanding the preceding sentence, a Participant's account
balance may be reduced to the extent permitted under section
412(c)(8) of the Code (relating to financial hardships). For
purposes of this paragraph, a Plan amendment which has the effect of
decreasing a Participant's account balance or eliminating an optional
form of benefit, with respect to benefits attributable to service
before the amendment shall be treated as reducing an accrued benefit.
9.9 SERVICE WITH CONTROLLED GROUPS. All Years of Service with other
members of a controlled group of corporations [as defined in Code
Section 414(b)], trades or businesses under common control [as
defined in Code Section 414(c)], or members of an affiliated service
group [as defined in Code Section 414(m)] shall be considered for
purposes of determining a Participant's nonforfeitable percentage.
9.10 APPLICATION OF PRIOR VESTING RULES. This Article reflects the
vesting rules in effect after amendment for the Tax Reform Act of
1986. Any Participant who separated from Service prior to rendering
an Hour of Service in the 1989 Plan Year, will continue to have his
or her vesting governed by the Plan's prior vesting rules, including,
if applicable, the "rules of parity" which would allow for certain
Years of Service to be disregarded.
44
ARTICLE X
LIMITATIONS ON ALLOCATIONS
AND ANTIDISCRIMINATION TESTING
10.1 PARTICIPATION IN THIS PLAN ONLY. If the Participant does not
participate in and has never participated in another qualified plan,
a Welfare Benefit Fund (as defined in paragraph 1.89) or an
individual medical account, as defined in Code Section 415(l)(2),
maintained by the adopting Employer, which provides an Annual
Addition as defined in paragraph 1.4, the amount of Annual Additions
which may be credited to the Participant's account for any Limitation
Year will not exceed the lesser of the Maximum Permissible Amount or
any other limitation contained in this Plan. If the Employer
contribution that would otherwise be contributed or allocated to the
Participant's account would cause the Annual Additions for the
Limitation Year to exceed the Maximum Permissible Amount, the amount
contributed or allocated will be reduced so that the Annual Additions
for the Limitation Year will equal the Maximum Permissible Amount.
Prior to determining the Participant's actual Compensation for the
Limitation Year, the Employer may determine the Maximum Permissible
Amount for a Participant on the basis of a reasonable estimate of the
Participant's Compensation for the Limitation Year, uniformly
determined for all Participants similarly situated. As soon as is
administratively feasible after the end of the Limitation Year, the
Maximum Permissible Amount for the Limitation Year will be determined
on the basis of the Participant's actual Compensation for the
Limitation Year.
10.2 DISPOSITION OF EXCESS ANNUAL ADDITIONS. If pursuant to
paragraph 10.1 or as a result of the allocation of forfeitures, there
is an Excess Amount, the excess will be disposed of under one of the
following methods as determined in the Adoption Agreement. If no
election is made in the Adoption Agreement then method "(a)" below
shall apply.
(a) Suspense Account Method
(1) Any nondeductible Employee Voluntary, Required
Voluntary Contributions and unmatched Elective
Deferrals to the extent they would reduce the Excess
Amount will be returned to the Participant. To the
extent necessary to reduce the Excess Amount, non-Highly
Compensated Employees will have all Elective
Deferrals returned whether or not there was a
corresponding match.
(2) If after the application of paragraph (1) an Excess
Amount still exists, and the Participant is covered by
the Plan at the end of the Limitation Year, the Excess
Amount in the Participant's account will be used to
reduce Employer contributions (including any
allocation of forfeitures) for such Participant in the
next Limitation Year, and each succeeding Limitation
Year if necessary;
(3) If after the application of paragraph (1) an Excess
Amount still exists, and the Participant is not
covered by the Plan at the end of the Limitation Year,
the Excess Amount will be held unallocated in a
suspense account. The suspense account will be
applied to reduce future Employer contributions
(including allocation of any forfeitures) for all
remaining Participants in the next Limitation Year,
and each succeeding Limitation Year if necessary;
(4) If a suspense account is in existence at any time
during the Limitation Year pursuant to this paragraph,
it will not participate in the allocation of
investment gains and losses. If a suspense account is
in existence at
45
any time during a particular Limitation Year, all
amounts in the suspense account must be allocated and
reallocated to Participants' accounts before any
Employer contributions or any Employee or Voluntary
Contributions may be made to the Plan for that
Limitation Year. Excess amounts may not be
distributed to Participants or former Participants.
(b) Spillover Method
(1) Any nondeductible Employee Voluntary, Required
Voluntary Contributions and unmatched Elective
Deferrals to the extent they would reduce the Excess
Amount will be returned to the Participant. To the
extent necessary to reduce the Excess Amount, non-Highly
Compensated Employees will have all Elective
Deferrals returned whether or not there was a
corresponding match.
(2) Any Excess Amount which would be allocated to the
account of an individual Participant under the Plan's
allocation formula will be reallocated to other
Participants in the same manner as other Employer
contributions. No such reallocation shall be made to
the extent that it will result in an Excess Amount
being created in such Participant's own account.
(3) To the extent that amounts cannot be reallocated under
(1) above, the suspense account provisions of (a)
above will apply.
10.3 PARTICIPATION IN THIS PLAN AND ANOTHER REGIONAL PROTOTYPE
DEFINED CONTRIBUTION PLAN, WELFARE BENEFIT FUND, OR INDIVIDUAL
MEDICAL ACCOUNT MAINTAINED BY THE EMPLOYER. The Annual Additions
which 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 the other Regional Prototype Defined Contribution plans and
Welfare Benefit Funds and individual medical accounts as defined in
Code Section 415(l)(2), maintained by the Employer, which provide an
Annual Addition as defined in paragraph 1.4, for the same Limitation
Year. If the Annual Additions, with respect to the Participant under
other Defined Contribution Plans and Welfare Benefit Funds maintained
by the Employer, are less than the Maximum Permissible Amount and the
Employer contribution that would otherwise be contributed or
allocated to the Participant's account under this Plan would cause
the Annual Additions for the Limitation Year to exceed this
limitation, the amount contributed or allocated will be reduced so
that the Annual Additions under all such plans and funds for the
Limitation Year will equal the Maximum Permissible Amount. If the
Annual Additions with respect to the Participant under such other
Defined Contribution Plans and Welfare Benefit Funds in the aggregate
are equal to or greater than the Maximum Permissible Amount, no
amount will be contributed or allocated to the Participant's account
under this Plan for the Limitation Year. Prior to determining the
Participant's actual Compensation for the Limitation Year, the
Employer may determine the Maximum Permissible Amount for a
Participant in the manner described in paragraph 10.1. 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 Compensation for the
Limitation Year.
10.4 DISPOSITION OF EXCESS ANNUAL ADDITIONS UNDER TWO PLANS. If,
pursuant to paragraph 10.3 or as a result of forfeitures, a
Participant's Annual Additions under this Plan and such other plans
would result in an Excess Amount for a Limitation Year, the Excess
Amount will be deemed to consist of the Annual Additions last
allocated except that Annual Additions attributable to a Welfare
Benefit Fund or an individual medical account as defined in Code
Section 415(l)(2) will be deemed to have been allocated first
regardless of the actual allocation date. If an Excess Amount was
allocated to a Participant on an allocation date of this Plan which
coincides with an allocation date of another plan, the Excess Amount
attributed to this Plan will be the product of:
46
(a) the total Excess Amount allocated as of such date, times
(b) the ratio of:
(1) the Annual Additions allocated to the Participant for
the Limitation Year as of such date under the Plan, to
(2) the total Annual Additions allocated to the
Participant for the Limitation Year as of such date
under this and all the other qualified Master or
Prototype Defined Contribution Plans.
Any Excess Amount attributed to this Plan will be disposed of in the
manner described in paragraph 10.2.
10.5 PARTICIPATION IN THIS PLAN AND ANOTHER DEFINED CONTRIBUTION
PLAN WHICH IS NOT A REGIONAL PROTOTYPE PLAN. If the Participant is
covered under another qualified Defined Contribution Plan maintained
by the Employer which is not a Regional Prototype Plan, Annual
Additions which may be credited to the Participant's account under
this Plan for any Limitation Year will be limited in accordance with
paragraphs 10.3 and 10.4 as though the other plan were a Master or
Prototype Plan, unless the Employer provides other limitations in the
Adoption Agreement.
10.6 PARTICIPATION IN THIS PLAN AND A DEFINED BENEFIT PLAN. If the
Employer maintains, or at any time maintained, a qualified Defined
Benefit Plan covering any Participant in this Plan, the sum of the
Participant's Defined Benefit Plan Fraction and Defined Contribution
Plan Fraction will not exceed 1.0 in any Limitation Year. For any
Plan Year during which the Plan is Top-Heavy, the Defined Benefit and
Defined Contribution Plan Fractions shall be calculated in accordance
with Code Section 416(h). The Annual Additions which may be credited
to the Participant's account under this Plan for any Limitation Year
will be limited in accordance with the provisions set forth in the
Adoption Agreement.
10.7 LIMITATIONS ON ALLOCATIONS. In any Plan Year in which the
Top-Heavy Ratio exceeds 90% (i.e., the Plan becomes Super Top-Heavy),
the denominators of the Defined Benefit Fraction (as defined in paragraph
1.15) and Defined Contribution Fraction (as defined in paragraph
1.18) shall be computed using 100% of the dollar limitation instead
of 125%.
10.8 AVERAGE DEFERRAL PERCENTAGE (ADP) TEST. With respect to any
Plan Year, the Average Deferral Percentage for Participants who are
Highly Compensated Employees and the Average Deferral Percentage for
Participants who are non-Highly Compensated Employees must satisfy
one of the following tests:
(a) Basic Test. - The Average Deferral Percentage for
Participants who are Highly Compensated Employees for the
Plan Year is not more than 1.25 times the Average Deferral
Percentage for Participants who are non-Highly Compensated
Employees for the same Plan Year, or
(b) Alternative Test. - The Average Deferral Percentage for
Participants who are Highly Compensated Employees for the
Plan Year does not exceed the Average Deferral Percentage
for Participants who are non-Highly Compensated Employees
for the same Plan Year by more than 2 percentage points
provided that the Average Deferral Percentage for
Participants who are Highly Compensated Employees is not
more than 2.0 times the Average Deferral Percentage for
Participants who are non-Highly Compensated Employees.
47
10.9 SPECIAL RULES RELATING TO APPLICATION OF ADP TEST.
(a) The Actual Deferral Percentage for any Participant who is a
Highly Compensated Employee for the Plan Year and who is
eligible to have Elective Deferrals (and Qualified Non-Elective
Contributions or Qualified Matching Contributions,
or both, if treated as Elective Deferrals for purposes of
the ADP test) allocated to his or her accounts under two or
more arrangements described in Code Section 401(k), that
are maintained by the Employer, shall be determined as if
such Elective Deferrals (and, if applicable, such Qualified
Non-Elective Contributions or Qualified Matching
Contributions, or both) were made under a single
arrangement. If a Highly Compensated Employee participates
in two or more cash or deferred arrangements that have
different Plan Years, all cash or deferred arrangements
ending with or within the same calendar year shall be
treated as a single arrangement.
(b) In the event that this Plan satisfies the requirements of
Code Sections 401(k), 401(a)(4), or 410(b), only if
aggregated with one or more other plans, or if one or more
other plans satisfy the requirements of such Code Sections
only if aggregated with this Plan, then this Section shall
be applied by determining the Actual Deferral Percentage of
Employees as if all such plans were a single plan. For
Plan Years beginning after 1989, plans may be aggregated in
order to satisfy Code Section 401(k) only if they have the
same Plan Year.
(c) For purposes of determining the Actual Deferral Percentage
of a Participant who is a 5-percent owner or one of the ten
most highest-paid Highly Compensated Employees, the
Elective Deferrals (and Qualified Non-Elective
Contributions or Qualified Matching Contributions, or both,
if treated as Elective Deferrals for purposes of the ADP
test) and Compensation of such Participant shall include
the Elective Deferrals (and, if applicable, Qualified Non-Elective
Contributions and Qualified Matching
Contributions, or both) for the Plan Year of Family Members
as defined in paragraph 1.35 of this Plan. Family Members,
with respect to such Highly Compensated Employees, shall be
disregarded as separate Employees in determining the ADP
both for Participants who are non-Highly Compensated
Employees and for Participants who are Highly Compensated
Employees. In the event of repeal of the family
aggregation rules under Code Section 414(q)(6), all
applications of such rules under this Plan will cease as of
the effective date of such repeal.
(d) For purposes of determining the ADP test, Elective
Deferrals, Qualified Non-Elective Contributions and
Qualified Matching Contributions must be made before the
last day of the twelve-month period immediately following
the Plan Year to which contributions relate.
(e) The Employer shall maintain records sufficient to
demonstrate satisfaction of the ADP test and the amount of
Qualified Non-Elective Contributions or Qualified Matching
Contributions, or both, used in such test.
(f) 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.
48
10.10 RE-CHARACTERIZATION. If the Employer allows for Voluntary
Contributions in the Adoption Agreement, a Participant may treat his
or her Excess Contributions as an amount distributed to the
Participant and then contributed by the Participant to the Plan.
Re-characterized amounts will remain nonforfeitable and subject to the
same distribution requirements as Elective Deferrals. Amounts may
not be re-characterized by a Highly Compensated Employee to the
extent that such amount in combination with other Employee
Contributions made by that Employee would exceed any stated limit
under the Plan on Voluntary Contributions. Re-characterization must
occur no later than two and one-half months after the last day of the
Plan Year in which such Excess Contributions arose and is deemed to
occur no earlier than the date the last Highly Compensated Employee
is informed in writing of the amount re-characterized and the
consequences thereof. Re-characterized amounts will be taxable to
the Participant for the Participant's tax year in which the
Participant would have received them in cash.
10.11 AVERAGE CONTRIBUTION PERCENTAGE (ACP) TEST. If the Employer
makes Matching Contributions or if the Plan allows Employees to make
Voluntary Contributions the Plan must meet additional
nondiscrimination requirements provided under Code Section 401(m).
If Employee Contributions (including any Elective Deferrals
re-characterized as Voluntary Contributions) are made pursuant to this
Plan, then in addition to the ADP test referenced in paragraph 10.8,
the Average Contribution Percentage test is also applicable. The
Average Contribution Percentage for Participants who are Highly
Compensated Employees for each Plan Year and the Average Contribution
Percentage for Participants who are Non-Highly Compensated Employees
for the same Plan Year must satisfy one of the following tests:
(a) The Average Contribution Percentage for Participants who
are Highly Compensated Employees for the Plan Year shall
not exceed the Average Contribution Percentage for
Participants who are non-Highly Compensated Employees for
the same Plan Year multiplied by 1.25; or
(b) The ACP for Participants who are Highly Compensated
Employees for the Plan Year shall not exceed the Average
Contribution Percentage for Participants who are non-Highly
Compensated Employees for the same Plan Year multiplied by
two (2), provided that the Average Contribution Percentage
for Participants who are Highly Compensated Employees does
not exceed the Average Contribution Percentage for
Participants who are non-Highly Compensated Employees by
more than two (2) percentage points.
10.12 SPECIAL RULES RELATING TO APPLICATION OF ACP TEST.
(a) If one or more Highly Compensated Employees participate in
both a cash or deferred arrangement and a plan subject to
the ACP test maintained by the Employer and the sum of the
ADP and ACP of those Highly Compensated Employees subject
to either or both tests exceeds the Aggregate Limit, then
the ADP or ACP of those Highly Compensated Employees who
also participate in a cash or deferred arrangement will be
reduced (beginning with such Highly Compensated Employee
whose ACP is the highest) as set forth in the Adoption
Agreement so that the limit is not exceeded. The amount by
which each Highly Compensated Employee's Contribution
Percentage Amounts is reduced shall be treated as an Excess
Aggregate Contribution. The ADP and ACP of the Highly
Compensated Employees are determined after any corrections
required to meet the ADP and ACP tests. Multiple use does
not occur if both the ADP and ACP of the Highly Compensated
Employees does not exceed 1.25 multiplied by the ADP and
ACP of the non-Highly Compensated Employees.
(b) For purposes of this Article, the Contribution Percentage
for any Participant who is a Highly Compensated Employee
and who is eligible to have Contribution Percentage Amounts
allocated to his or her account under two or more plans
described in Code Section 401(a), or arrangements described
in Code Section 401(k) that are maintained by
49
the Employer, shall be determined as if the total of such
Contribution Percentage Amounts was made under each Plan.
If a Highly Compensated Employee participates in two or
more cash or deferred arrangements that have different plan
years, all cash or deferred arrangements ending with or
within the same calendar year shall be treated as a single
arrangement.
(c) In the event that this Plan satisfies the requirements of
Code Sections 401(a)(4), 401(m), or 410(b) only if
aggregated with one or more other plans, or if one or more
other plans satisfy the requirements of such Code Sections
only if aggregated with this Plan, then this Section shall
be applied by determining the Contribution Percentage of
Employees as if all such plans were a single plan. For
Plan Years beginning after 1989, plans may be aggregated in
order to satisfy Code Section 401(m) only if the aggregated
plans have the same Plan Year.
(d) For purposes of determining the Contribution percentage of
a Participant who is a five-percent owner or one of the ten
most highest-paid, Highly Compensated Employees, the
Contribution Percentage Amounts and Compensation of such
Participant shall include the Contribution Percentage
Amounts and Compensation for the Plan Year of Family
Members as defined in paragraph 1.35 of this Plan. Family
Members, with respect to Highly Compensated Employees,
shall be disregarded as separate Employees in determining
the Contribution Percentage both for Participants who are
non-Highly Compensated Employees and for Participants who
are Highly Compensated Employees. In the event of repeal of
the family aggregation rules under Code Section 414(q)(6),
all applications of such rules under this Plan will cease
as of the effective date of such repeal.
(e) For purposes of determining the Contribution Percentage
test, Employee Contributions are considered to have been
made in the Plan Year in which contributed to the trust.
Matching Contributions and Qualified Non-Elective
Contributions will be considered made for a Plan Year if
made no later than the end of the twelve-month period
beginning on the day after the close of the Plan Year.
(f) The Employer shall maintain records sufficient to
demonstrate satisfaction of the ACP test and the amount of
Qualified Non-Elective Contributions or Qualified Matching
Contributions, or both, used in such test.
(g) The determination and treatment of the Contribution
Percentage of any Participant shall satisfy such other
requirements as may be prescribed by the Secretary of the
Treasury.
(h) Qualified Matching Contributions and Qualified Non-Elective
Contributions used to satisfy the ADP test may not
be used to satisfy the ACP test.
50
ARTICLE XI
ADMINISTRATION
11.1 PLAN ADMINISTRATOR. The Employer shall be the named fiduciary
and Plan Administrator. These duties shall include:
(a) appointing the Plan's attorney, accountant, actuary,
custodian or any other party needed to administer the Plan
or the Fund,
(b) directing the Trustee or custodian with respect to payments
from the Fund,
(c) communicating with Employees regarding their participation
and benefits under the Plan, including the administration
of all claims procedures,
(d) filing any returns and reports with the Internal Revenue
Service, Department of Labor, or any other governmental
agency,
(e) reviewing and approving any financial reports, investment
reviews, or other reports prepared by any party appointed
by the Employer under paragraph (a),
(f) establishing a funding policy and investment objectives
consistent with the purposes of the Plan and the Employee
Retirement Income Security Act of 1974, and
(g) construing and resolving any question of Plan
interpretation. The Plan Administrator's interpretation of
Plan provisions including eligibility and benefits under
the Plan is final, and unless it can be shown to be
arbitrary and capricious will not be subject to "de novo"
review.
11.2 TRUSTEE. The Trustee shall be responsible for the
administration of investments held in the Fund. These duties shall
include:
(a) receiving contributions under the terms of the Plan,
(b) making distributions from the Fund in accordance with
written instructions received from an authorized
representative of the Employer,
(c) keeping accurate records reflecting its administration of
the Fund and making such records available to the Employer
for review and audit. Within 90 days after each Plan Year,
and within 90 days after its removal or resignation, the
Trustee shall file with the Employer an accounting of its
administration of the Fund during such year or from the end
of the preceding Plan Year to the date of removal or
resignation. Such accounting shall include a statement of
cash receipts and disbursements since the date of its last
accounting and shall contain an asset list showing the fair
market value of investments held in the Fund as of the end
of the Plan Year. 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 investments shall be determined
in the sole judgement 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 shall be determined in the sole judgement of
the Employer and the Trustee shall have no responsibility
with respect to the valuation of such assets. The Employer
shall review the Trustee's accounting
51
and notify the Trustee in the event of its disapproval of the report
within 90 days, providing the Trustee with a written description of
the items in question. The Trustee shall have 60 days to provide the
Employer with a written explanation of the items in question. If the
Employer again disapproves, the Trustee shall file its accounting in
a court of competent jurisdiction for audit and adjudication, and
(d) employing such agents, attorneys or other professionals as
the Trustee may deem necessary or advisable in the
performance of its duties.
The Trustee's duties shall be limited to those described above. The
Employer shall be responsible for any other administrative duties
required under the Plan or by applicable law.
11.3 ADMINISTRATIVE FEES AND EXPENSES. All reasonable costs,
charges and expenses incurred by the Trustee in connection with the
administration of the Fund and all reasonable costs, charges and
expenses incurred by the Plan Administrator in connection with the
administration of the Plan (including fees for legal services
rendered to the Trustee or Plan Administrator) may be paid by the
Employer, but if not paid by the Employer when due, shall be paid
from the Fund. Such reasonable compensation to an institutional
Trustee as may be agreed upon from time to time between the Employer
and the Trustee and such reasonable compensation to the Plan
Administrator as may be agreed upon from time to time between the
Employer and Plan Administrator may be paid by the Employer, but if
not paid by the Employer when due shall be paid by the Fund. The
Trustee shall have the right to liquidate trust assets to cover its
fees. Notwithstanding the foregoing, no compensation other than
reimbursement for expenses shall be paid to a Trustee or Plan
Administrator who is the Employer or a full-time Employee of the
Employer. In the event any part of the Trust Account becomes subject
to tax, all taxes incurred will be paid from the Fund unless the Plan
Administrator advises the Trustee not to pay such tax.
11.4 DIVISION OF DUTIES AND INDEMNIFICATION.
(a) The Trustee shall have the authority and discretion to
manage and govern the Fund to the extent provided in this
instrument, but does not guarantee the Fund in any manner
against investment loss or depreciation in asset value, or
guarantee the adequacy of the Fund to meet and discharge
all or any liabilities of the Plan.
(b) The Trustee shall not be liable for the making, retention
or sale of any investment or reinvestment made by it, as
herein provided, or for any loss to, or diminution of the
Fund, or for any other loss or damage which may result from
the discharge of its duties hereunder except to the extent
it is judicially determined that the Trustee has failed to
exercise the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent person acting
in a like capacity and familiar with such matters would use
in the conduct of an enterprise of a like character with
like aims.
(c) The Employer warrants that all directions issued to the
Trustee by it or the Plan Administrator will be in
accordance with the terms of the Plan and not contrary to
the provisions of the Employee Retirement Income Security
Act of 1974 and Regulations issued thereunder.
(d) The Trustee shall not be answerable for any action taken
pursuant to any direction, consent, certificate, or other
paper or document on the belief that the same is genuine
and signed by the proper person. All directions by the
Employer or the Plan Administrator shall be in writing.
The Employer shall deliver to the Trustee certificates
evidencing the individual or individuals authorized to act
as set forth in the Adoption Agreement or as the Employer
may subsequently inform the Trustee in writing and shall
deliver to the Trustee specimens of their signatures.
52
(e) 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.
(f) The Trustee shall be indemnified and saved harmless by the
Employer from and against any and all liability to which
the Trustee may be subjected, including all expenses
reasonably incurred in its defense, for any action or
failure to act resulting from compliance with the
instructions of the Employer, the employees or agents of
the Employer, the Plan Administrator, or any other
fiduciary to the Plan, and for any liability arising from
the actions or nonactions of any predecessor trustee,
custodian or other fiduciaries of the Plan.
(g) The Trustee shall not be responsible in any way for the
application of any payments it is directed to make or for
the adequacy of the Fund to meet and discharge any and all
liabilities under the Plan.
53
ARTICLE XII
TRUST FUND ACCOUNT
12.1 THE FUND. The Fund shall consist of all contributions made
under Article III and Article IV of the Plan and the investment
thereof and earnings thereon. All contributions and the earnings
thereon less payments made under the terms of the Plan, shall
constitute the Fund. The Fund shall be administered as provided in
this document.
12.2 CONTROL OF PLAN ASSETS. The assets of the Fund or evidence of
ownership shall be held by the Trustee under the terms of the Plan
and Trust Account. If the assets represent amounts transferred from
another trustee or custodian under a former plan, the Trustee named
hereunder shall not be responsible for the propriety of any
investment under the former plan.
12.3 EXCLUSIVE BENEFIT RULES. No part of the Fund shall be used
for, or diverted to, purposes other than for the exclusive benefit of
Participants, former Participants with a vested interest, and the
beneficiary or beneficiaries of a deceased Participant having a
vested interest in the Fund at the death of the Participant.
12.4 ASSIGNMENT AND ALIENATION OF BENEFITS. No right or claim to,
or interest in, any part of the Fund, or any payment from the Fund,
shall be assignable, transferable, or subject to sale, mortgage,
pledge, hypothecation, commutation, anticipation, garnishment,
attachment, execution, or levy of any kind. The Trustee shall not
recognize any attempt to assign, transfer, sell, mortgage, pledge,
hypothecate, commute, or anticipate the same, except to the extent
required by law. The preceding sentences shall also apply to the
creation, assignment, or recognition of a right to any benefit
payable with respect to a Participant pursuant to a domestic
relations order, unless such order is determined to be a Qualified
Domestic Relations Order, as defined in Code Section 414(p), or any
domestic relations order entered before January 1, 1985 which the
Plan attorney and Plan Administrator deem to be qualified.
12.5 DETERMINATION OF QUALIFIED DOMESTIC RELATIONS ORDER (QDRO). A
domestic relations order shall specifically state all of the
following in order to be deemed a Qualified Domestic Relations Order
("QDRO"):
(a) The name and last known mailing address (if any) of the
Participant and of each alternate payee covered by the
domestic relations order. However, if the domestic
relations order does not specify the current mailing
address of the alternate payee, but the Plan Administrator
has independent knowledge of that address, the domestic
relations order may still be a valid QDROs.
(b) The dollar amount or percentage of the Participant's
benefit to be paid by the Plan to each alternate payee, or
the manner in which the amount or percentage will be
determined.
(c) The number of payments or period for which the domestic
relations order applies.
(d) The specific plan (by name) to which the domestic relations
order applies.
A domestic relations order shall not be deemed a QDRO if it requires
the Plan to provide:
(e) any type or form of benefit, or any option not already
provided for in the Plan;
(f) increased benefits, or benefits in excess of the
Participant's vested rights;
(g) payment of a benefit earlier than allowed by the Plan's
earliest retirement provisions or in the case of a profit-sharing
b plan, prior to the allowability of in-service
withdrawals, or
54
(h) payment of benefits to an alternate payee which are
required to be paid to another alternate payee under
another QDRO.
Promptly, upon receipt of a domestic relations order ("Order") which
may or may not be "Qualified", the Plan Administrator shall notify
the Participant and any alternate payee(s) named in the Order of such
receipt, and include a copy of this paragraph 12.5. The Plan
Administrator shall then forward the Order to the Plan's legal
counsel for an opinion as to whether or not the Order is in fact
"Qualified" as defined in Code Section 414(p). Within a reasonable
time after receipt of the Order, not to exceed 60 days, the Plan's
legal counsel shall make a determination as to its "Qualified" status
and the Participant and any alternate payee(s) shall be promptly
notified in writing of the determination.
If the "Qualified" status of the Order is in question, there will be
a delay in any payout to any payee including the Participant, until
the status is resolved. In such event, the Plan Administrator shall
segregate the amount that would have been payable to the alternate
payee(s) if the Order had been deemed a QDRO. If the Order is not
Qualified, or the status is not resolved (for example, it has been
sent back to the Court for clarification or modification) within 18
months beginning with the date the first payment would have to be
made under the Order, the Plan Administrator shall pay the segregated
amounts plus interest to the person(s) who would have been entitled
to the benefits had there been no Order. If a determination as to
the Qualified status of the Order is made after the 18-month period
described above, then the Order shall only be applied on a
prospective basis. If the Order is determined to be a QDRO, the
Participant and alternate payee(s) shall again be notified promptly
after such determination. Once an Order is deemed a QDRO, the Plan
Administrator shall pay to the alternate payee(s) all the amounts due
under the QDRO, including segregated amounts plus interest which may
have accrued during a dispute as to the Order's qualification.
Unless specified otherwise in the Adoption Agreement, the earliest
retirement age with regard to the Participant against whom the order
is entered shall be the date the order is determined to be qualified.
This will only allow payouts to alternate payee(s) and not the
Participant.
55
ARTICLE XIII
INVESTMENTS
13.1 FIDUCIARY STANDARDS. The Trustee shall invest and reinvest
principal and income in the same Fund in accordance with the
investment objectives established by the Employer, provided that:
(a) such investments are prudent under the Employee Retirement
Income Security Act of 1974 and the regulations promulgated
thereunder,
(b) such investments are sufficiently diversified or otherwise
insured or guaranteed to minimize the risk of large losses,
and
(c) such investments are similar to those which would be
purchased by another professional money manager for a like
plan with similar investment objectives.
13.2 TRUSTEE APPOINTMENT. Xxxxx be appointed by the Employer in
accordance with paragraph 1.85.
13.3 INVESTMENT ALTERNATIVES OF THE TRUSTEE. The Trustee shall
implement an investment program based on the Employer's investment
objectives and the Employee Retirement Income Security Act of 1974.
In addition to powers given by law, the Trustee may:
(a) invest the Fund in any form of property, including common
and preferred stocks, exchange traded put and call options,
bonds, money market instruments, mutual funds (including
funds for which the Trustee or its affiliates serve as
investment advisor), savings accounts, certificates of
deposit, Treasury bills, insurance policies and contracts,
or in any other property, real or personal, having a ready
market. The Trustee may invest in time deposits
(including, if applicable, its own or those of affiliates)
which bear a reasonable interest rate. No portion of any
Qualified Voluntary Contribution, or the 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, other
than U.S. Government or State issued gold and silver coins,
(b) transfer any assets of the Fund to a group or collective
trust established to permit the pooling of funds of
separate pension and profit-sharing trusts, provided the
Internal Revenue Service has ruled such group or collective
trust to be qualified under Code Section 401(a) and exempt
under Code Section 501(a) or to any other common,
collective, or commingled trust fund. Such commingling of
assets of the Fund with assets of other qualified trusts is
specifically authorized, and to the extent of the
investment of the Fund in such a group or collective trust,
the terms of the instrument establishing the group or
collective trust shall be a part hereof as though set forth
herein,
(c) invest up to 100% of the Fund in the common stock, debt
obligations, or any other security issued by the Employer
or by an affiliate of the Employer within the limitations
provided under Sections 406, 407, and 408 of the Employee
Retirement Income Security Act of 1974 and further provided
that such investment does not constitute a prohibited
transaction under Code Section 4975. Any such investment
in Employer securities shall only be made upon written
direction of the Employer who shall be solely responsible
for propriety of such investment,
(d) hold cash uninvested and deposit same with any banking or
savings institution,
(e) join in or oppose the reorganization, recapitalization,
consolidation, sale or merger of corporations or
properties, including those in which it is interested as
Trustee, upon such terms as it deems wise,
56
(f) hold investments in nominee or bearer form,
(g) vote proxies and, if appropriate, pass them on to any
investment manager which may have directed the investment
in the equity giving rise to the proxy,
(h) exercise all ownership rights with respect to assets held
in the Fund.
13.4 PARTICIPANT LOANS. If permitted by the Employer in the
Adoption Agreement, a Plan Participant may make application to the
Employer requesting a loan from the Fund. The Employer shall have
the sole right to approve or disapprove a Participant's application
provided that loans shall be made available to all Participants on a
reasonably equivalent basis. Loans shall not be made available to
Highly Compensated Employees [as defined in Code Section 414(q)] in
an amount greater than the amount made available to other Employees.
Any loan granted under the Plan shall be made subject to the
following rules:
(a) No loan, when aggregated with any outstanding Participant
loan(s), shall exceed the lesser of (i) $50,000 reduced by
the excess, if any, of the highest outstanding balance of
loans during the one year period ending on the day before
the loan is made, over the outstanding balance of loans
from the Plan on the date the loan is made or (ii) one-half
of the fair market value of a Participant's Vested Account
Balance built up from Employer Contributions, Voluntary
Contributions, and Rollover Contributions. If the
Participant's Vested Account Balance is $20,000 or less,
the maximum loan shall not exceed the lesser of $10,000 or
100% of the Participant's Vested Account Balance. For the
purpose of the above limitation, all loans from all plans
of the Employer and other members of a group of employers
described in Code Sections 414(b), 414(c), and 414(m) are
aggregated. An assignment or pledge of any portion of the
Participant's interest in the Plan and a loan, pledge, or
assignment with respect to any insurance contract purchased
under the Plan, will be treated as a loan under this
paragraph.
(b) All applications must be made on forms provided by the
Employer and must be signed by the Participant.
(c) Any loan shall bear interest at a rate reasonable at the
time of application, considering the purpose of the loan
and the rate being charged by representative commercial
banks in the local area for a similar loan unless the
Employer sets forth a different method for determining loan
interest rates in its loan procedures. The loan agreement
shall also provide that the payment of principal and
interest be amortized in level payments not less frequently
than quarterly.
(d) The term of such loan shall not exceed five years except in
the case of a loan for the purpose of acquiring any house,
apartment, condominium, or mobile home (not used on a
transient basis) which is used or is to be used within a
reasonable time as the principal residence of the
Participant. The term of such loan shall be determined by
the Employer considering the maturity dates quoted by
representative commercial banks in the local area for a
similar loan.
(e) The principal and interest paid by a Participant on his or
her loan shall be credited to the Fund in the same manner
as for any other Plan investment. If elected in the
Adoption Agreement, loans may be treated as segregated
investments of the individual Participants. This provision
is not available if its election will result in
discrimination in operation of the Plan.
(f) If a Participant's loan application is approved by the
Employer, such Participant shall be required to sign a
note, loan agreement, and assignment of one-half of his or
her interest in the Fund as collateral for the loan. The
Participant, except in the case of a profit-sharing plan
57
satisfying the requirements of paragraph 8.7 must obtain
the consent of his or her Spouse, if any, within the 90 day
period before the time his or her account balance is used
as security for the loan. A new consent is required if the
account balance is used for any renegotiation, extension,
renewal or other revision of the loan, including an
increase in the amount thereof. The consent must be
written, must acknowledge the effect of the loan, and must
be witnessed by a plan representative or notary public.
Such consent shall subsequently be binding with respect to
the consenting Spouse or any subsequent Spouse.
(g) If a valid Spousal consent has been obtained, then,
notwithstanding any other provision of this Plan, the
portion of the Participant's Vested Account Balance used as
a security interest held by the Plan by reason of a loan
outstanding to the Participant shall be taken into account
for purposes of determining the amount of the account
balance payable at the time of death or distribution, but
only if the reduction is used as repayment of the loan. If
less than 100% of the Participant's vested account balance
(determined without regard to the preceding sentence) is
payable to the Surviving Spouse, then the account balance
shall be adjusted by first reducing the Vested Account
Balance by the amount of the security used as repayment of
the loan, and then determining the benefit payable to the
Surviving Spouse.
(h) The Employer may also require additional collateral in
order to adequately secure the loan.
(i) A Participant's loan shall immediately become due and
payable if such Participant terminates employment for any
reason or fails to make a principal and/or interest payment
as provided in the loan agreement. If such Participant
terminates employment, the Employer shall immediately
request payment of principal and interest on the loan. If
the Participant refuses payment following termination, the
Employer shall reduce the Participant's Vested Account
Balance by the remaining principal and interest on his or
her loan. If the Participant's Vested Account Balance is
less than the amount due, the Employer shall take whatever
steps are necessary to collect the balance due directly
from the Participant. However, no foreclosure on the
Participant's note or attachment of the Participant's
account balance will occur until a distributable event
occurs in the Plan.
13.5 INSURANCE POLICIES. If permitted by the Employer in the
Adoption Agreement, Employees may elect the purchase of life
insurance policies under the Plan. If elected, the maximum annual
premium for a whole life policy shall not exceed 50% of the aggregate
Employer contributions allocated to the account of a Participant.
For profit-sharing plans the 50% test need only be applied against
Employer contributions allocated in the last two years. Whole life
policies are policies with both nondecreasing death benefits and
nonincreasing premiums. The maximum annual premium for term
contracts or universal life policies and all other policies which are
not whole life shall not exceed 25% of aggregate Employer
contributions allocated to the account of a Participant. The two
year rule for profit-sharing plans again applies. The maximum annual
premiums for a Participant with both a whole life and a term contract
or universal life policies shall be limited to one-half of the whole
life premium, plus the term premium, but shall not exceed 25% of the
aggregate Employer contributions allocated to the account of a
Participant, subject to the two year rule for profit-sharing plans.
Any policies purchased under this Plan shall be held subject to the
following rules:
(a) The Trustee shall be applicant and owner of any policies
issued.
(b) All policies or contracts purchased, shall be endorsed as
nontransferable, and must provide that proceeds will be
payable to the Trustee; however, the Trustee shall be
required to pay over all proceeds of the contracts to the
Participant's Designated Beneficiary in accordance with the
distribution provisions of this Plan. Under no
circumstances shall the Trust retain any part of the
proceeds.
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(c) Each Participant shall be entitled to designate a
beneficiary under the terms of any contract issued;
however, such designation will be given to the Trustee
which must be the named beneficiary on any policy. Such
designation shall remain in force, until revoked by the
Participant, by filing a new beneficiary designation form
with the Trustee. A Participant's Spouse will be the
Designated Beneficiary of the proceeds in all circumstances
unless a Qualified Election has been made in accordance
with paragraph 8.4. The beneficiary of a deceased
Participant shall receive in addition to the proceeds of
the Participant's policy or policies, the amount credited
to such Participant's investment account.
(d) A Participant who is uninsurable or insurable at
substandard rates, may elect to receive a reduced amount of
insurance, if available, or may waive the purchase of any
insurance.
(e) All dividends or other returns received on any policy
purchased, shall be applied to reduce the next premium due
on such policy, or if no further premium is due, such
amount shall be credited to the Fund as part of the account
of the Participant for whom the policy is held.
(f) If Employer contributions are inadequate to pay all
premiums on all insurance policies, the Trustee may, at the
option of the Employer, utilize other amounts remaining in
each Participant's account to pay the premiums on his or
her respective policy or policies, allow the policies to
lapse, reduce the policies to a level at which they may be
maintained, or borrow against the policies on a prorated
basis, provided that the borrowing does not discriminate in
favor of the policies on the lives of officers,
shareholders, and Highly Compensated Employees.
(g) On retirement or termination of employment of a
Participant, the Employer shall direct the Trustee to cash
surrender the Participant's policy and credit the proceeds
to his or her account for distribution under the terms of
the Plan. However, before so doing, the Trustee shall
first offer to transfer ownership of the policy to the
Participant in exchange for payment by the Participant of
the cash value of the policy at the time of transfer. Such
payment shall be credited to the Participant's account for
distribution under the terms of the Plan. All
distributions resulting from the application of this
paragraph shall be subject to the Joint and Survivor
Annuity Rules of Article VIII, if applicable.
(h) The Employer shall be solely responsible to see that these
insurance provisions are administered properly and that if
there is any conflict between the provisions of this Plan
and any insurance contracts issued that the terms of this
Plan will control.
13.6 EMPLOYER INVESTMENT DIRECTION. If approved by the Employer in
the Adoption Agreement, the Employer shall have the right to direct
the Trustee with respect to investments of the Fund, may appoint an
investment manager (registered as an investment advisor under the
Investment Advisors Act of 1940) to direct investments, or may give
the Trustee sole investment management responsibility. The Employer
may purchase and sell interests in a registered investment company
(i.e., mutual funds) for which the Sponsor, its parent, affiliates,
or successors, may serve as investment advisor and receive
compensation from the registered investment company for its services
as investment advisor. The Employer shall advise the Trustee in
writing regarding the retention of investment powers, the appointment
of an investment manager, or the delegation of investment powers to
the Trustee. Any investment directive shall be made in writing by
the Employer or investment manager, as the case may be. In the
absence of such written directive, the Trustee shall automatically
invest the available cash in its discretion in an appropriate interim
investment until specific investment directions are received. Such
instructions regarding the delegation of investment responsibility
shall remain in force until revoked or amended in writing. The
Trustee shall not be responsible for the propriety of any directed
investment made and shall not be required to consult with or advise
the Employer regarding the investment quality of any directed
investment held hereunder. If the Employer fails to designate an
investment manager, the Trustee shall have full investment authority.
If the Employer does not issue investment directions, the Trustee
shall have authority to invest the Fund in its sole discretion.
While the Employer may direct the Trustee with respect to Plan
investments, the Employer may not:
59
(a) borrow from the Fund or pledge any of the assets of the
Fund as security for a loan,
(b) buy property or assets from or sell property or assets to
the Fund,
(c) charge any fee for services rendered to the Fund, or
(d) receive any services from the Fund on a preferential basis.
13.7 EMPLOYEE INVESTMENT DIRECTION. If approved by the Employer in
the Adoption Agreement, Participants shall be given the option to
direct the investment of their personal contributions and their share
of the Employer's contribution among alternative investment funds
established as part of the overall Fund, unless otherwise specified
by the Employer in the Adoption Agreement. Such investment funds
shall be under the full control of the Trustee. If investments
outside the Trustee's control are allowed, Participants may not
direct that investments be made in collectibles, other than U.S.
Government or State issued gold and silver coins. In this
connection, a Participant's right to direct the investment of any
contribution shall apply only to selection of the desired fund. The
following rules shall apply to the administration of such funds.
(a) At the time an Employee becomes eligible for the Plan, he
or she shall complete an investment designation form
stating the percentage of his or her contributions to be
invested in the available funds.
(b) A Participant may change his or her election with respect
to future contributions by filing a new investment
designation form with the Employer in accordance with the
procedures established by the Plan Administrator.
(c) A Participant may elect to transfer all or part of his or
her balance from one investment fund to another by filing
an investment designation form with the Employer in
accordance with the procedures established by the Plan
Administrator.
(d) The Employer shall be responsible when transmitting
Employee and Employer contributions to show the dollar
amount to be credited to each investment fund for each
Employee.
(e) Except as otherwise provided in the Plan, neither the
Trustee, nor the Employer, nor any fiduciary of the Plan
shall be liable to the Participant or any of his or her
beneficiaries for any loss resulting from action taken at
the direction of the Participant.
60
ARTICLE XIV
TOP-HEAVY PROVISIONS
14.1 APPLICABILITY OF RULES. If the Plan is or becomes Top-Heavy in
any Plan Year beginning after December 31, 1983, the provisions of
this Article will supersede any conflicting provisions in the Plan or
Adoption Agreement.
14.2 MINIMUM CONTRIBUTION. Notwithstanding any other provision in
the Employer's Plan, for any Plan Year in which the Plan is Top-Heavy
or Super Top-Heavy, the aggregate Employer contributions and
forfeitures allocated on behalf of any Participant (without regard to
any Social Security contribution) under this Plan and any other
Defined Contribution Plan of the Employer shall be the lesser of 3%
of such Participant's Compensation or the largest percentage of
Employer contributions and forfeitures, as a percentage of the first
$200,000, as adjusted under Code Section 415(d), of the Key
Employee's Compensation, allocated on behalf of any Key Employee for
that year.
Each Participant who is employed by the Employer on the last day of
the Plan Year shall be entitled to receive an allocation of the
Employer's minimum contribution for such Plan Year. The minimum
allocation applies even though under other Plan provisions the
Participant would not otherwise be entitled to receive an allocation,
or would have received a lesser allocation for the year because the
Participant fails to make Voluntary Contributions to the Plan, the
Participant's Compensation is less than a stated amount, or the
Participant fails to complete 1,000 Hours of Service (or such lesser
number designated by the Employer in the Adoption Agreement) during
the Plan Year. A Paired profit-sharing plan designated to provide
the minimum Top-Heavy contribution must do so regardless of profits.
An Employer may make the minimum Top-Heavy contribution available to
all Participants or just non-Key Employees. Unless the Employer
specifies otherwise in the Adoption Agreement, the minimum Top-Heavy
contribution will be allocated to the accounts of all eligible
Participants even if they are Key Employees.
For purposes of computing the minimum allocation, Compensation shall
mean Compensation as defined in paragraph 1.12(c) of the Plan.
The Top-Heavy minimum contribution does not apply to any Participant
to the extent the Participant is covered under any other plan(s) of
the Employer and the Employer has provided in the Adoption Agreement
that the minimum allocation or benefit requirements applicable to
Top-Heavy Plans will be met in the other plan(s).
If a Key Employee makes an Elective Deferral or has an allocation of
Matching contributions made to his or her account, a Top-Heavy
minimum will be required for all non-Key Employees who are
Participants. However, neither Elective Deferrals by nor Matching
Contributions to non-Key Employees may be taken into account for
purposes of satisfying the Top-Heavy minimum contribution
requirement.
14.3 MINIMUM VESTING. For any Plan Year in which this Plan is
Top-Heavy, the minimum vesting schedule elected by, or deemed elected
by, the Employer in the Adoption Agreement will automatically apply to
the Plan. If the vesting schedule selected by the Employer in the
Adoption Agreement is less liberal than the allowable schedule, the
schedule will be automatically modified. If the vesting schedule
under the Plan shifts in or out of the Top-Heavy schedule for any
Plan Year, such shift is an amendment to the vesting schedule and the
election in paragraph 9.8 of the Plan applies. The minimum vesting
schedule applies to all accrued benefits within the meaning of Code
Section 411(a)(7) except those attributable to Employee
contributions, including benefits accrued before the effective date
of Code Section 416 and benefits accrued before the Plan became
Top-Heavy. Further, no reduction in vested benefits may occur in the
event the Plan's status as Top-Heavy changes for any Plan Year.
However, this paragraph does not apply to the account balances of any
Employee who does not have an Hour of Service after the Plan
initially becomes Top-Heavy and such Employee's account balance
attributable to Employer contributions and forfeitures will be
determined without regard to this paragraph.
61
ARTICLE XV
AMENDMENT AND TERMINATION
15.1 AMENDMENT BY SPONSOR. The Sponsor of this Regional Prototype
may amend any or all provisions of this Plan and Trust Account at any
time without obtaining the approval or consent of any Employer which
has adopted this Plan and Trust Account provided that no amendment
shall authorize or permit any part of the corpus or income of the
Fund to be used for or diverted to purposes other than for the
exclusive benefit of Participants and their beneficiaries, or
eliminate an optional form of distribution. In the case of a mass-submitted
plan, the mass-submitter shall amend the Plan on behalf of
the Sponsor.
15.2 AMENDMENT BY EMPLOYER. The Employer may amend any option in the
Adoption Agreement, and may include language as permitted in the
Adoption Agreement,
(a) to satisfy Code Section 415,
(b) to avoid duplication of minimums under Code Section 416
because of the required aggregation of multiple plans,
The Employer may add certain model amendments published by the
Internal Revenue Service which specifically provide that their
adoption will not cause the Plan to be treated as individually
designed.
An Employer that has adopted a Standardized Regional Prototype Plan
(Adoption Agreements 001, 002, 003, 007, or 008) may amend the trust
document provided such amendment merely involves the specifications
of the names of the Plan, Employer, Trustee, Plan Administrator and
other fiduciaries, the Trust year or the name of any pooled Trust in
which the Plan's Trust will participate.
An Employer that has adopted a Nonstandardized Regional Prototype
Plan (Adoption Agreement 004, 005 or 006) will not be considered to
have an individually designed plan merely because the Employer amends
administrative provisions of the Trust document (such as provisions
relating to investments and duties of Trustees) so long as the
amended provisions are not in conflict with any other provision of
the Plan and do not cause the plan to fail to qualify under Code
Section 401(a).
If the Employer amends the Plan and Trust Account other than as
provided above, the Employer's Plan shall no longer participate in
this Prototype Plan and will be considered an individually designed
plan for which the Employer must obtain a separate determination
letter.
15.3 TERMINATION. Employers shall have the right to terminate their
Plans upon 60 days notice in writing to the Trustee. If the Plan is
terminated, partially terminated, or if there is a complete
discontinuance of contributions under a profit-sharing plan
maintained by the Employer, all amounts credited to the accounts of
Participants shall vest and become nonforfeitable. In the event of
termination, the Employer shall direct the Trustee with respect to
the distribution of accounts to or for the exclusive benefit of
Participants or their beneficiaries. In the event of a partial
termination, only those who are affected by such partial termination
shall be fully vested. In the event of termination, the Trustee
shall dispose of the Fund in accordance with the written directions
of the Plan Administrator, provided that no liquidation of assets and
payment of benefits, (or provision therefore), shall actually be made
by the Trustee until after it is established by the Employer in a
manner satisfactory to the Trustee, that the applicable requirements,
if any, of the Employee Retirement Income Security Act of 1974 and
the Internal Revenue Code governing the termination of employee
benefit plans, have been or are being, complied with, or that
appropriate authorizations, waivers, exemptions, or variances have
been, or are being obtained.
62
15.4 QUALIFICATION OF EMPLOYER'S PLAN. If the adopting Employer
fails to attain or retain Internal Revenue Service qualification,
such Employer's Plan shall no longer participate in this Regional
Prototype Plan and will be considered an individually designed plan.
15.5 Mergers And Consolidations.
(a) In the case of any merger or consolidation of the
Employer's Plan with, or transfer of assets or liabilities
of the Employer's Plan to, any other plan, Participants in
the Employer's Plan shall be entitled to receive benefits
immediately after the merger, consolidation, or transfer
which are equal to or greater than the benefits they would
have been entitled to receive immediately before the
merger, consolidation, or transfer if the Plan had then
terminated.
(b) In the event that the Trustee is an institution, that
corporation into which the Trustee or any successor trustee
may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to
which the Trustee or any successor trustee may be a party,
or any corporation to which all or substantially all the
trust business of the Trustee or any successor trustee may
be transferred, shall be the successor of such Trustee
without the filing of any instrument or performance of any
further act, before any court.
15.6 RESIGNATION AND REMOVAL. The Trustee may resign by written
notice to the Employer or may be removed by written notice from the
Employer. Either such notification shall be effective 60 days after
delivery. The Employer may discontinue its participation in this
Prototype Plan and Trust Account effective upon 60 days written
notice to the Sponsor. In such event the Employer shall, prior to
the effective date thereof, amend the Plan to eliminate any
reference to this Prototype Plan and Trust Account and appoint a
successor trustee or arrange for another funding agent. The Trustee
shall deliver the Fund to its successor on the effective date of the
resignation or removal, or as soon thereafter as practicable,
provided that this shall not waive any lien the Trustee, if an
institution, may have upon the Fund for its compensation or expenses.
If the Employer fails to appoint a successor trustee with the said 60
days, or such longer period as the Trustee may specify in writing,
the Employer shall be deemed the successor trustee. The Employer
must then obtain its own determination letter.
15.7 QUALIFICATION OF PROTOTYPE. The Sponsor intends that this
Regional Prototype Plan will meet the requirements of the Code as a
qualified Prototype Retirement Plan and Trust Account. Should the
Commissioner of Internal Revenue or any delegate of the Commissioner
at any time determine that the Plan and Trust Account fails to meet
the requirements of the Code, the Sponsor will amend the Plan and
Trust Account to maintain its qualified status.
63
ARTICLE XVI
GOVERNING LAW
Construction, validity and administration of the Regional Prototype
Retirement Plan and Trust, and any Employer Plan and Trust as
embodied in the Regional Prototype document and accompanying Adoption
Agreement, shall be governed by Federal law to the extent applicable
and to the extent not applicable by the laws of the
State/Commonwealth in which the principal office of the Employer is
located.
