EXHIBIT 10.12
PLAN DOCUMENT AND TRUST AGREEMENT
TABLE OF CONTENTS
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ARTICLE 1 - DEFINITIONS.......................................................1
1.1 Adoption Agreement...........................................1
1.2 Affiliated Company...........................................1
1.3 Annuity Starting Date........................................1
1.4 Basic Plan Document..........................................1
1.5 Beneficiary..................................................1
1.6 Break in Eligibility Service.................................1
1.7 Break in Vesting Service.....................................1
1.8 Code.........................................................1
1.9 Compensation.................................................1
1.10 Disability...................................................2
1.11 Earned Income................................................2
1.12 Effective Date...............................................3
1.13 Eligibility Testing Period...................................3
1.14 Employee.....................................................3
1.15 Employer.....................................................3
1.16 Employer Contribution........................................3
1.17 Entry Date...................................................3
1.18 ERISA........................................................3
1.19 Forfeiture...................................................3
1.20 Fund.........................................................3
1.21 Highly Compensated Employee..................................3
1.22 Hours of Service.............................................4
1.23 Immediately Distributable....................................5
1.24 Individual Account...........................................5
1.25 Investment Fund..............................................5
1.26 Key Employee.................................................5
1.27 Leased Employee..............................................5
1.28 Maternity or Paternity Absence...............................5
1.29 Normal Retirement Age........................................5
1.30 Owner-Employee...............................................5
1.31 Participant..................................................5
1.32 Plan.........................................................6
1.33 Plan Administrator...........................................6
1.34 Plan Year....................................................6
1.35 Prior Plan...................................................6
1.36 Prototype Sponsor............................................6
1.37 Self-Employed Individual.....................................6
1.38 Separate Fund................................................6
1.39 Taxable Wage Base............................................6
1.40 Termination of Employment....................................6
1.41 Top-Heavy Plan...............................................6
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1.42 Trust Agreement..............................................6
1.43 Trustee......................................................6
1.44 Valuation Date...............................................6
1.45 Vested.......................................................6
1.46 Years of Eligibility Service.................................7
1.47 Years of Vesting Service.....................................7
ARTICLE 2 - ELIGIBILITY AND PARTICIPATION.....................................7
2.1 Eligibility to Participate...................................7
2.2 Plan Entry...................................................8
2.3 Transfer To or From Ineligible Class.........................8
2.4 Returning After Break in Eligibility Service.................8
2.5 Waiver of Participation......................................9
ARTICLE 3 - CONTRIBUTIONS.....................................................9
3.1 Employer Contributions.......................................9
3.2 Employee Contributions......................................13
3.3 Rollover Contributions......................................13
3.4 Transfer Contributions......................................13
3.5 Limitation on Allocations...................................13
ARTICLE 4 - INDIVIDUAL ACCOUNTS AND VALUATION................................19
4.1 Individual Accounts.........................................19
4.2 Valuation of Fund...........................................19
4.3 Valuation of Individual Accounts............................19
4.4 Date for Determining Individual Account Balance.............19
4.5 Use of Separate Fund........................................20
4.6 Modification of Method for Valuing Individual Accounts......20
ARTICLE 5 - TRUST FUND.......................................................20
5.1 Creation of Fund............................................20
5.2 Investment Authority........................................20
5.3 Indemnification of Prototype Sponsor and Trustee............20
5.4 Life Insurance Purchases....................................20
5.5 Participants' Direction of Investments......................21
ARTICLE 6 - VESTING AND DISTRIBUTION.........................................21
6.1 Distribution to Participant.................................21
6.2 Form of Distribution to a Participant.......................25
6.3 Distribution Upon the Death of a Participant................28
6.4 Rules for Participant's Spouse..............................31
6.5 Unallocated Participant or Beneficiary......................31
6.6 Distribution Requirements...................................31
6.7 Payments in Kind............................................39
6.8 Annuity Contracts...........................................39
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6.9 Loans to Participants.......................................39
6.10 Direct Rollovers............................................40
6.11 Conversion of Money Purchase Plan to Profit Sharing Plan....41
ARTICLE 7 - CLAIMS PROCEDURE.................................................41
7.1 Claims Procedure............................................41
7.2 Initial Claim Determination.................................41
7.3 Initial Notification of Claim Denial........................42
7.4 Review Procedure............................................42
7.5 Decision on Review..........................................42
7.6 Notification of Decision on Review..........................42
7.7 Special Rules for Collectively Bargained Plans..............43
ARTICLE 8 - PLAN ADMINISTRATOR...............................................43
8.1 Employer is the Plan Administrator..........................43
8.2 Powers and Duties of the Plan Administrator.................43
8.3 Expenses and Compensation...................................44
8.4 Information from Employer...................................44
ARTICLE 9 - AMENDMENT AND TERMINATION........................................44
9.1 Right of Prototype Sponsor to Amend the Plan................44
9.2 Right of Employer to Amend the Plan.........................45
9.3 Limitation on Power to Amend................................45
9.4 Amendment of Vesting Schedule...............................46
9.5 Permanency..................................................46
9.6 Plan Termination Procedures.................................46
9.7 Plan Continued by Successor Employer........................46
9.8 Failure of Plan Qualification...............................46
ARTICLE 10 - MISCELLANEOUS...................................................47
10.1 State Community Property Laws...............................47
10.2 Headings....................................................47
10.3 Gender and Number...........................................47
10.4 Plan Merger or Consolidation................................47
10.5 Terms of Employment.........................................47
10.6 Agreement Binds Heirs, Etc..................................47
10.7 Determination of Top-Heavy Status...........................47
10.8 Inalienability of Benefits..................................49
10.9 No Duties or Responsibilities of Prototype Sponsor..........49
10.10 Governing Law...............................................50
10.11 Right of Veterans...........................................50
ARTICLE 11 - 401 (K) PROVISIONS..............................................50
11.1 Definitions.................................................50
11.2 Participation...............................................53
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11.3 Contributions..................................................54
11.4 Nondiscrimination Testing......................................55
11.5 Safe Harbor Rules..............................................58
11.6 Distribution and Withdrawal Provisions.........................63
11.7 Vesting........................................................67
11.8 Other Rules....................................................68
11.9 Effective Time of CODA.........................................68
ARTICLE 12 - PROVISIONS REFLECTING THE ECONOMIC GROWTH AND TAX
RELIEF RECONCILIATION ACT OF 2001....................................68
12.1 General........................................................68
12.2 Limits on Elective Deferrals...................................68
12.3 Catch-Up Contributions.........................................68
12.4 12.04 Vesting of Regular Matching Contributions................69
12.5 Hardship Withdrawals...........................................70
12.6 New Distributable Event........................................70
12.7 Multiple Use Test..............................................70
12.8 Compensation Limit.............................................70
12.9 Section 415 Limit..............................................70
12.10 Cash-Outs......................................................70
12.11 Direct Rollovers...............................................70
12.12 Rollover Contributions.........................................71
12.13 Top-Heavy Rules................................................71
12.14 Loans to Shareholder-Employees and Owner-Employees.............72
ARTICLE 13 - MINIMUM DISTRIBUTION REQUIREMENTS UNDER FINAL
REGULATIONS..........................................................72
13.1 General Rules..................................................72
13.2 Time and Manner of Distribution................................72
13.3 Required Minimum Distributions During Participant's Lifetime...73
13.4 Required Minimum Distributions After Participant's Death.......73
13.5 Definitions....................................................74
13.6 Elections......................................................75
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UBS PAINEWEBBER INC. QUALIFIED RETIREMENT PLAN DEFINED
CONTRIBUTION BASIC PLAN DOCUMENT 01
Article 1 - Definitions
Capitalized words and phrases in this Plan have the following meanings unless
the context clearly indicates otherwise:
1.1 Adoption Agreement
The document executed by the Employer by which it adopts this Plan and Trust and
agrees to be bound by their terms and conditions.
1.2 Affiliated Company
An entity which is treated as a single employer with the Employer under Section
414(b), (c), (m) or (o) of the Code and the Treasury Regulations thereunder.
1.3 Annuity Starting Date
The first day of the first period for which an amount is payable from the Plan
as an annuity or in any other form.
1.4 Basic Plan Document
This document, together with the Trust Agreement.
1.5 Beneficiary
The person or entity designated by the Participant to receive any death benefit
payable under the Plan on account of the death of the Participant. If no
designation is in effect on the date of the Participant's death or if no
designated Beneficiary is alive on that date, the following shall apply. If the
Participant is married on the date of his or her death, the Participant's spouse
will be the Beneficiary. Otherwise, the Participant's estate will be the
Beneficiary.
1.6 Break in Eligibility Service
If the Employer elects in the Adoption Agreement to determine Years of
Eligibility Service on the basis of an Employee's number of Hours of Service, an
Eligibility Testing Period in which an Employee does not complete at least 501
Hours of Service.
If the Employer elects in the Adoption Agreement to determine Years of
Eligibility Service on the basis of elapsed time, a 12-consecutive month period
during which the Employee does not complete at least one Hour of Service, and
which begins (a) on the earlier of (1) the day on which the Employee retires,
quits or is discharged, or (2) the first anniversary of the day on which the
Employee was otherwise first absent from employment, or (b) on any anniversary
of such earlier day in clause (a). However, if the Employee has taken a
Maternity or Paternity Absence, clause (a)(2) of the preceding sentence shall be
applied by substituting the "second anniversary" for the "first anniversary"
therein.
If selected in the Adoption Agreement, no Breaks in Eligibility Service will be
considered under the Plan.
1.7 Break in Vesting Service
If the Employer elects in the Adoption Agreement to determine Years of Vesting
Service on the basis of an Employee's number of Hours of Service, a Plan Year
during which an Employee does not complete at least 501 Hours of Service.
If the Employer elects in the Adoption Agreement to determine Years of Vesting
Service on the basis of elapsed time, a 12-consecutive month period during which
the Employee does not complete at least one Hour of Service, and which begins
(a) on the earlier of (1) the day on which the Employee retires, quits or is
discharged, or (2) the first anniversary of the day on which the Employee was
otherwise first absent from employment, or (b) on any anniversary of such
earlier day in clause (a). However, if the Employee has taken a Maternity or
Paternity Absence, clause (a)(2) of the preceding sentence shall be applied by
substituting the "second anniversary" for the "first anniversary" therein.
If selected in the Adoption Agreement, no Breaks in Vesting Service will be
considered under the Plan.
1.8 Code
The Internal Revenue Code of 1986, including amendments.
1.9 Compensation
Restated Plans - Plan Years beginning before January 1, 1997:
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If this Plan is adopted as an amendment and restatement to bring a Prior Plan
into compliance with the Small Business Job Protection Act of 1996, that Prior
Plan's definition of Compensation continues to apply for Plan Years beginning
before January 1, 1997.
Plan Years beginning on or after January 1, 1997:
Unless another definition of Compensation is selected in the Adoption Agreement,
Compensation means a Participant's W-2 earnings from his or her Employer.
Alternative definitions of Compensation selected in the Adoption Agreement may
include "section 3401(a) wages" and "415 Compensation." "Section 3401(a) wages"
means wages within the meaning of Section 3401(a) of the Code for the purposes
of income tax withholding at the source but determined without regard to any
rules that limit the remuneration included in wages based on the nature or
location of the employment or the services performed. "415 Compensation" is
defined under Section 3.05(E)(7) of the Plan.
For any Self-Employed Individual, Compensation will mean Earned Income.
Unless otherwise selected in the Adoption Agreement, Compensation also includes
any amount which is (1) contributed by the Employer under a salary reduction
agreement and which is not includable in the Employee's gross income under
Section 125, 132(f)(4), 402(e)(3), 402(h)(1)(B) or 403(b) of the Code, (2)
compensation deferred under a plan described in Section 457(b) of the Code, or
(3) treated as an employer contribution under Section 414(h)(2) of the Code.
Further, unless otherwise indicated in the Adoption Agreement, Compensation
shall be reduced by each of the following items: reimbursements or other expense
allowances, fringe benefits (cash and non-cash), moving expenses, deferred
compensation and welfare benefits.
Compensation is determined for the Plan Year, or for any other 12-consecutive
month period selected in the Adoption Agreement (the Plan Year or such other
period for which Compensation is determined, as applicable, is referred to below
in this Section 1.09 as the "Determination Period"). Compensation includes, for
any Determination Period, only amounts actually paid to the Employee during such
period.
For each Determination Period, the amount of Compensation taken into account
under the Plan for any Participant shall not exceed $150,000, as adjusted for
increases in the cost-of-living in accordance with Section 401(a)(17) of the
Code ($200,000 for Determination Periods beginning before 1994, as so adjusted),
subject to any "grandfather" rules that may be permitted under applicable law,
which are incorporated in this definition by reference. The cost-of-living
adjustment in effect for a calendar year applies to any Determination Period
beginning in that calendar year.
If a Determination Period consists of fewer than 12 months, the Compensation
limit for that Determination Period is the dollar amount described in the
preceding paragraph, multiplied by a fraction, the numerator of which is the
number of months in that Determination Period and the denominator of which is
12.
Unless otherwise indicated in the Adoption Agreement, if an Employee becomes a
Participant on any day other than the first day of a Determination Period, the
Employee's Compensation for that Determination Period includes all amounts paid
to him or her during the entire such period.
1.10 Disability
The inability to engage in any substantial, gainful activity by reason of any
medically determinable physical or mental impairment that can be expected to
result in death or that has lasted or can be expected to last for a continuous
period of not less than 12 months. The permanence and degree of the impairment
must be supported by medical evidence.
If indicated in the Adoption Agreement, nonforfeitable contributions will be
made on behalf of (if this Plan is a money purchase plan) or allocated to (if
this Plan is a profit sharing plan) each Participant with a Disability or, if
the Employer so selects in the Adoption Agreement, each Participant other than a
Highly Compensated Employee with a Disability.
1.11 Earned Income
The net earnings from self-employment of an individual in the trade or business
with respect to which the Plan is established, for which personal services of
such individual are a material income-producing factor, but excluding (a) items
not included in gross income and the deductions allocable to those items, (b)
such individual's Employer contributions to a qualified plan to the extent
deductible under Section 404 of the Code and (c) the deduction allowed to such
individual under Section 164(f) of the Code for taxable years beginning after
December 31, 1989.
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1.12 Effective Date
The date the Plan becomes effective as indicated on the Adoption Agreement.
However, if a different effective date is stated for a particular Plan
provision, that date applies to that provision.
1.13 Eligibility Testing Period
An Employee's first Eligibility Testing Period is the 12-consecutive month
period beginning with the date the Employee first performs an Hour of Service
(that is, his or her employment commencement date). The Employee's subsequent
Eligibility Testing Periods are the 12-consecutive month periods beginning on
the anniversaries of his or her employment commencement date with the Employer;
however, if under the Adoption Agreement, an Employee is required to complete no
more than one Year of Eligibility Service to become a Participant, then his or
her subsequent Eligibility Testing Periods are the Plan Years starting with the
Plan Year beginning during the first Eligibility Testing Period.
1.14 Employee
Any person employed by the Employer or any Affiliated Company and any Leased
Employee, except as otherwise provided in the definition of "Leased Employee" in
Section 1.27. For a non-standardized plan, the term "Employee" shall not include
any individual who the Employer or an Affiliated Company, as applicable, treats
as an independent contractor, notwithstanding any determination by a court or
any government agency that such individual is, in fact, an "Employee," as such
term is defined in the preceding sentence.
1.15 Employer
Any corporation, partnership, sole-proprietorship or other entity named in the
Adoption Agreement and any successor who by merger, consolidation, purchase or
otherwise assumes the obligations of the Plan. A partnership is the Employer of
each of its partners and a sole-proprietorship is the Employer of its sole
proprietor.
1.16 Employer Contribution
The amount contributed to the Plan by the Employer for any Plan Year.
1.17 Entry Date
The first day of the Plan Year and the first day of the seventh month of the
Plan Year (unless different dates are selected in the Adoption Agreement).
1.18 ERISA
The Employee Retirement Income Security Act of 1974, including amendments.
1.19 Forfeiture
The reduction of the portion of a Participant's Individual Account derived from
Employer Contributions in which he or she is not Vested.
1.20 Fund
The Plan assets held by the Trustee, in trust, for the Participants' exclusive
benefit.
1.21 Highly Compensated Employee
The term Highly Compensated Employee means a "highly compensated active
employee" or a "highly compensated former employee."
Highly Compensated Active Employee: A "highly compensated active employee," for
any Plan Year, is any Employee who performs service for the Employer or an
Affiliated Company during the Plan Year, and who (a) was a 5-percent owner at
any time during the Plan Year or the preceding Plan Year, or (b) for the
preceding Plan Year, or, if elected in the Adoption Agreement, for the calendar
year which begins with or within the preceding Plan Year, (1) had compensation
from the Employer or such Affiliated Company in excess of $80,000 (as adjusted
for cost-of-living increases under Section 414(q)(1) of the Code) and (2) if
elected in the Adoption Agreement, was in the top-paid group. If any election
referred to in clause (b) of the preceding sentence is made in the Adoption
Agreement for any Plan Year of this Plan, such election shall also apply to any
other plan of the Employer and the Affiliated Companies for the plan year of
such other plan that starts in the same calendar year as such Plan Year of this
Plan, except as otherwise provided in Internal Revenue Service Notice 97-45, or
in any other regulation, ruling, notice or announcement issued by the Treasury
Department or the Internal Revenue Service.
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Highly Compensated Former Employee: A "highly compensated former employee", for
any Plan Year, is any former Employee who (a) separated from service (or was
treated as if he or she had separated from service) before the Plan Year, (b)
performed no service for the Employer or any Affiliated Company during the Plan
Year, and (c) was a highly compensated active employee either for his or her
separation year or for any Plan Year ending on or after his or her 55th
birthday.
The definition of "Highly Compensated Employee," as set forth above, applies to
Plan Years beginning on or after January 1, 1997, except that, in identifying
Highly Compensated Employees for the Plan Year beginning in 1997, such
definition shall be treated as having been in effect for the Plan Year beginning
in 1996. For Plan Years beginning before January 1, 1997, the definition of
"highly compensated employee" in Section 414(q) of the Code, prior to amendment
by the Small Business Job Protection Act of 1996 (P.L. 104-188), shall apply. In
particular, with respect to any former Employee, if his or her separation year,
or any Plan Year ending on or after his or her 55th birthday, begins before the
start of the Plan Year beginning in 1997, the determination of whether such
former Employee was a highly compensated active employee for his or her
separation year, or for such Plan Year, as applicable, shall be based on the
definition of "highly compensated employee" in Section 414(q) of the Code prior
to such amendment.
1.22 Hours 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 are credited to the
Employee for the Eligibility Testing Period or Plan Year, as applicable, in
which the duties are performed;
B. Each hour for which an Employee is paid, or entitled to payment, by the
Employer on account of a period occurring in an Eligibility Testing Period
or Plan Year, as applicable, during which no duties are performed
(regardless of whether his or her employment terminated) due to vacation,
holiday, illness, incapacity (including Disability), layoff, jury duty,
military duty or leave of absence. No more than 501 Hours of Service will
be credited under this subsection (B) for any single continuous period
(whether or not that period occurs in a single Eligibility Testing Period
or Plan Year, as applicable). Hours under this subsection (B) will be
calculated and credited as required under Department of Labor Regulation
Section 2530.200b-2, which Section is incorporated in this subsection (B)
by this reference; and
C. Each hour for which back pay, irrespective of mitigation of damages, is
either awarded or agreed to by the Employer. The same Hours of Service will
not be credited both under subsection (A) or subsection (B), as the case
may be, and under this subsection (C). These hours are credited to the
Employee for the Eligibility Testing Period or Plan Year, as applicable, to
which the award or agreement pertains, rather than the Eligibility Testing
Period or Plan Year, as applicable, in which the award, agreement, or
payment is made.
D. In determining whether a Break in Eligibility Service or a Break in Vesting
Service has occurred in an Eligibility Testing Period or Plan Year, as
applicable, an Employee who has taken a Maternity or Paternity Absence will
receive credit for the number of Hours of Service that would otherwise have
been credited to him or her, if not for that absence, or in any case in
which such number of hours cannot be determined, 8 Hours of Service per day
of such absence. The Hours of Service credited under this subsection (D)
are credited to the Eligibility Testing Period or Plan Year, as applicable,
in which the absence begins, if the crediting is necessary to prevent a
Break in Eligibility Service or a Break in Vesting Service in such period
or year, or in all other cases, in the following Eligibility Testing Period
or Plan Year.
E. Hours of Service are credited for employment with any Affiliated Company.
Hours of Service will also be credited for any Leased Employee who is
treated as an Employee hereunder.
F. If the Employer maintains the plan of a predecessor employer, service for
that predecessor employer is treated as service for the Employer. If the
Employer maintains a plan which was not maintained by a predecessor
employer, then service for such predecessor employer shall be treated as
service for the Employer, to the extent selected in the Adoption Agreement.
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G. Service will be determined on the basis of the method selected in the
Adoption Agreement.
1.23 Immediately Distributable
A Participant's Individual Account is Immediately Distributable, as of any date,
if the Participant will not have attained the later of his or her Normal
Retirement Age or age 62 by such date.
1.24 Individual Account
The separate bookkeeping account established and maintained under this Plan for
each Participant under Section 4.01. Any Employee who makes or receives a
rollover contribution or a transfer contribution before becoming a Participant
shall thereafter be treated as a Participant for purposes of establishing and
maintaining an Individual Account on his or her behalf, and for purposes of
taking withdrawals or receiving distributions therefrom.
1.25 Investment Fund
A subdivision of the Fund established under the Trust Agreement.
1.26 Key Employee
Any person who is a Key Employee under Section 10.07(B).
1.27 Leased Employee
Any person (other than an employee of the Employer) who performed services for
the Employer under an agreement between the Employer and any other person (the
"leasing organization") on a substantially full time basis for a period of at
least one year, if those services are performed under the primary direction or
control of the Employer. Contributions or benefits provided to a Leased Employee
by the leasing organization which are attributable to services performed for the
Employer are treated as provided by the Employer. For the purpose of this
Section, the term "Employer" shall include any Affiliated Company and any other
person who is a "related person" of the Employer (within the meaning of Section
414(n)(6) of the Code).
The above definition of "Leased Employee" applies in any Plan Year which begins
on or after January 1, 1997. In Plan Years beginning before that date, the
definition of "leased employee" in Section 414(n)(2) of the Code, prior to
amendment by the Small Business Job Protection Act of 1996 (P.L. 104-188), shall
apply.
Notwithstanding any other provision of the Plan to the contrary, a Leased
Employee is not considered an Employee if: (a) the Leased Employee is covered by
a money purchase pension plan which is maintained by the leasing organization,
and which provides: (1) a nonintegrated employer contribution rate of at least
10% of "compensation," as defined in Section 415(c)(3) of the Code, but
including amounts contributed under a salary reduction agreement which are
excludible from the Leased Employee's gross income under Section 125, 402(e)(3),
402(h)(1)(B) or 403(b) of the Code, (2) immediate participation and (3) full and
immediate vesting; and (b) Leased Employees do not constitute more than 20% of
the Employer's nonhighly compensated work force.
1.28 Maternity or Paternity Absence
An absence by an Employee (a) by reason of the Employee's pregnancy, (b) by
reason of the birth of the Employee's child, (c) by reason of the placement of a
child with the Employee in connection with the adoption of such child by the
Employee, or (d) for purposes of caring for such child for a period beginning
immediately following such birth or placement.
1.29 Normal Retirement Age
The age indicated in the Adoption Agreement, but if none is indicated age 65.
However, if the Employer enforces a mandatory retirement age, the Normal
Retirement Age is the lesser of that mandatory age or the age determined under
the preceding sentence.
1.30 Owner-Employee
An individual who is a sole proprietor, or who is a partner owning more than 10%
of either the capital or profits interest of the partnership. For Plan Years
which begin before January 1, 1997, the requirements for plans which benefit
Owner-Employees under Section 401(d) of the Code, prior to amendment by the
Small Business Job Protection Act of 1996 (P.L. 104-188), shall apply.
1.31 Participant
Any Employee or former Employee of the Employer who has met the Plan's
eligibility requirements, has entered the Plan and who is or may become eligible
to receive a benefit of any type from this Plan or whose Beneficiary may be
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eligible to receive any Plan benefit. As of the date an individual's benefits
under the Plan have been fully distributed, that individual will cease to be a
Participant.
1.32 Plan
The prototype defined contribution plan adopted by the Employer. The Plan
consists of the Basic Plan Document plus the corresponding Adoption Agreement as
completed and signed by the Employer.
1.33 Plan Administrator
The person or persons described in Section 8.01.
1.34 Plan Year
The Employer's fiscal year or any other 12-consecutive month period selected in
the Adoption Agreement.
1.35 Prior Plan
A plan which was amended or replaced by adoption of this Plan document, as
indicated in the Adoption Agreement.
1.36 Prototype Sponsor
UBS PaineWebber Inc., a Delaware corporation, and any successor corporation by
merger, consolidation or liquidation, as well as any other entity to which UBS
PaineWebber Inc. has transferred all or a substantial portion of its retail
brokerage business. Each Prototype Sponsor must meet the definition of a
"sponsor" in Section 4.09 of Revenue Procedure 2000-20 (or a "sponsoring
organization" in Section 3.07 of Revenue Procedure 89-9 for any period prior to
February 7, 2000).
1.37 Self-Employed Individual
An individual who has Earned Income for the taxable year from the trade or
business for which the Plan is established (and an individual who would have had
Earned Income but for the fact that the trade or business had no net profits for
the taxable year).
1.38 Separate Fund
A subdivision of the Fund held in the name of a particular Participant
representing certain assets held for that Participant. The assets which comprise
a Participant's Separate Fund are those assets earmarked for him or her and
those assets subject to the Participant's individual direction under the terms
of the Trust Agreement and Article 5.
1.39 Taxable Wage Base
The contribution and benefit base in effect under Section 230 of the Social
Security Act at the beginning of the Plan Year.
1.40 Termination of Employment
The date on which an individual ceases to be an Employee of the Employer and the
Affiliated Companies for any reason. An Employee who does not return to work for
the Employer and the Affiliated Companies before the expiration of an authorized
leave of absence incurs a Termination of Employment on the date on which that
leave ends.
1.41 Top-Heavy Plan
The determination of whether this Plan is a Top-Heavy for any Plan Year is made
under Section 10.07.
1.42 Trust Agreement
The UBS PaineWebber Prototype Plan Standard Form Trust Agreement.
1.43 Trustee
An individual, individuals or corporation named in the Adoption Agreement as
Trustee or any successor under the terms of the Trust Agreement.
1.44 Valuation Date
The last day of the Plan Year and each other date selected by the Plan
Administrator, in a uniform and nondiscriminatory manner, for determining the
fair market value of the Fund's assets.
1.45 Vested
Nonforfeitable; an interest that is unconditional and legally enforceable
against the Plan in all or a portion of an immediate or deferred Plan benefit
which arises from completion of Years of Vesting Service or the other events
described in Section 6.01(C)(3).
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1.46 Years of Eligibility Service
If the Employer elects in the Adoption Agreement to determine Years of
Eligibility Service on the basis of an Employee's number of Hours of Service, an
Eligibility Testing Period during which an Employee completes at least 1,000
Hours of Service (or a lesser number of Hours of Service indicated in the
Adoption Agreement).
If the period of eligibility service selected in the Adoption Agreement is or
includes a fractional year, an Employee will not be required to complete any
specified number of Hours of Service to receive credit for such fractional year.
If the Employer elects in the Adoption Agreement to determine Years of
Eligibility Service on the basis of elapsed time, each 12-consecutive month
period of employment with the Employer (or fraction thereof), beginning on his
or her employment commencement date or reemployment commencement date, as
applicable, or on an anniversary of such date, during which the Employee does
not have a Break in Eligibility Service. An Employee's employment or
reemployment commencement date is the first day the Employee performs an Hour of
Service. Fractional periods of a year will be expressed in terms of days.
Service by the Employee with any Affiliated Company will be credited to the
Employee.
Years of Eligibility Service include certain specified periods of service with
predecessor employers, as indicated in the Adoption Agreement. However, if the
Employer is maintaining this Plan as a plan of a predecessor employer (as
defined in Section 411 of the Code), Years of Eligibility Service include
periods of service with that predecessor employer.
1.47 Years of Vesting Service
If the Employer elects in the Adoption Agreement to determine Years of Vesting
Service on the basis of an Employee's number of Hours of Service, a Plan Year
during which an Employee completes at least 1,000 Hours of Service (or a lesser
number of Hours of Service indicated in the Adoption Agreement).
If the Employer elects in the Adoption Agreement to determine Years of Vesting
Service on the basis of elapsed time, each 12-consecutive month period of
employment with the Employer (or fraction thereof), beginning on the date
selected in the Adoption Agreement, or on an anniversary of such date, during
which the Employee does not have a Break in Vesting Service. Fractional periods
of a year will be expressed in terms of days. Service by the Employee with any
Affiliated Company will be credited to the Employee.
Years of Vesting Service (a) include certain specified periods of service with
predecessor employers and (b) do not include excluded periods of time, in each
case, as selected in the Adoption Agreement. However, if the Employer is
maintaining this Plan as a plan of a predecessor employer (as defined in Section
411 of the Code), Years of Vesting Service include periods of service with that
predecessor employer.
Article 2 - Eligibility and Participation
2.1 Eligibility to Participate
All Employees of the Employer, except those excluded from participation under
the Adoption Agreement, are eligible to participate in this Plan after
satisfying the age and service requirements indicated in the Adoption Agreement.
Union Employees and Nonresident Aliens are excluded from Plan participation,
except to the extent that the Employer specifies otherwise in the Adoption
Agreement.
As used in the Adoption Agreement, the terms "Union Employees" and "Nonresident
Aliens" refer to the following:
Union Employees: Employees included in a unit of employees covered by a
collective bargaining agreement between the Employer and employee
representatives, if retirement benefits were the subject of good faith
bargaining and if two percent or less of the Employees who are covered pursuant
to that agreement are professionals as defined in Treasury Regulation Section
1.410(b)-9. For this purpose, the term "employee representatives" does not
include any organization more than half of whose members are Employees who are
owners, officers, or executives of the Employer.
Nonresident Aliens: Employees who are nonresident aliens (within the meaning of
Section 7701(b)(1)(B) of the Code) and who receive no earned income (within the
meaning of Section 911 (d)(2) of the Code) from the Employer which constitutes
income from sources within the United States (within the meaning of Section
861(a)(3) of the Code).
Unless otherwise indicated in the Adoption Agreement, an individual who becomes
an Employee as the result of a "Section 410(b)(6)(C) transaction" (as defined
-7-
below) will not be eligible to participate in the Plan until the expiration of
the "transition period" (as defined below). A "Section 410(b)(6)(C) transaction"
is an asset or stock acquisition, a merger or a similar type of transaction in
which the individual in question becomes employed by a new employer (taking into
account the aggregation requirements of Section 414(b), (c), (m) or (o) of the
Code). The "transition period" is the period which begins on the date of the
Section 410(b)(6)(C) transaction, and which ends on the last day of the first
Plan Year that starts after the date of such transaction.
2.2 Plan Entry
A. If this Plan replaces a Prior Plan, each Employee of the Employer who
participated in the Prior Plan on the day immediately before the Effective
Date continues to be a Participant in this Plan.
B. An Employee will enter the Plan, and begin to participate in the Plan, as
of the Effective Date if he or she has met the eligibility requirements of
Section 2.01 as of that date. After the Effective Date, each Employee will
enter the Plan, and begin to participate in the Plan, as of the Entry Date
which coincides with or next follows the first date on which he or she
meets the eligibility requirements of Section 2.01.
C. The Plan Administrator must notify each Employee as to his or her
eligibility to participate in this Plan, furnish such Employee with
whatever enrollment forms and other documents that Employee must complete
in order to so participate, and furnish such Employee with whatever notices
and other documents are required by applicable law to be provided to
eligible Employees, including but not limited to summary plan descriptions.
Prior to entering the Plan, the eligible Employee must execute those forms
or documents and make available to the Plan Administrator whatever
information is reasonably required for the administration of the Plan,
including his or her investment elections pursuant to Section 5.05, if
applicable. If this is a "standardized plan," and the Employee does not
provide the required information, the Employer shall provide the necessary
information from its best available records.
2.3 Transfer To or From Ineligible Class
A Participant shall no longer participate in the Plan if he or she ceases to be
a member of an eligible class of employees (an "Eligible Class"). Such Employee
will resume participation in the Plan as of the day on which he or she returns
to membership in an Eligible Class if he or she has not had a Break in
Eligibility Service. If the Employee had a Break in Eligibility Service, his or
her resumption of participation is determined under Section 2.04.
An Employee, who is not a member of an Eligible Class, will enter the Plan, and
begin to participate in the Plan, as of the day on which he or she joins an
Eligible Class, or, if later, as of the Entry Date which coincides with or next
follows the day on which he or she first satisfies the Plan's age and service
requirements for eligibility.
2.4 Returning After Break in Eligibility Service
A. Before Becoming Eligible - If an Employee has a Break in Eligibility
Service before he or she meets the Plan's eligibility requirements, his or
her Years of Eligibility Service before the Break in Eligibility Service
will not count under the Plan. This subsection (A) applies only if the
2-year service requirement is elected and the Employee is 100% Vested in
his or her Individual Account upon meeting the Plan's eligibility
requirements.
B. Before Becoming Vested - If a Participant has a Break in Eligibility
Service at a time when he or she has no Vested interest in the portion of
his or her Individual Account derived from Employer contributions, his or
her Years of Eligibility Service before a period of consecutive Breaks in
Eligibility Service will not count for eligibility purposes if the number
of consecutive Breaks in Eligibility Service in that period equals or
exceeds the greater of 5 or the aggregate number of Years of Eligibility
Service before that Break. The aggregate number of Years of Eligibility
Service does not include any Years of Eligibility Service that are not
counted under the preceding sentence because of earlier Breaks.
If a Participant's Years of Eligibility Service are not counted under the
Plan because of the previous paragraph, he or she is treated as a new
Employee for eligibility purposes. If the Participant's Years of
Eligibility Service may not be disregarded under the preceding paragraph,
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such Participant shall continue to participate in the Plan, or, if
terminated, shall resume participation immediately upon reemployment with
the Employer.
C. After Becoming Vested - A Participant who has a Break in Eligibility
Service after obtaining a Vested interest in any portion of his or her
Individual Account derived from Employer contributions continues to
participate in the Plan, or, if he or she is not employed by the Employer,
participates when reemployed by the Employer.
2.5 Waiver of Participation
Prior to the date on which an Employee first becomes a Participant, an Employee
may, if permitted by the Plan Administrator and by executing such forms and
agreements as the Plan Administrator shall require, waive participation in the
Plan. This Section 2.05 shall not apply if this Plan is a standardized plan.
Article 3 - Contributions
3.1 Employer Contributions
A. Obligation to Contribute - If this Plan is a money purchase plan, the
Employer makes contributions to the Plan according to the contribution
formula indicated in the Adoption Agreement. If this Plan is a
profit-sharing plan, the amount of the Employer Contribution is determined
in the Employer's sole discretion, and the Employer, in its sole
discretion, may make contributions whether or not it has current or
accumulated earnings or profits. Neither the Trustee nor the Prototype
Sponsor has any duty to question the correctness of a contribution, or to
collect any amount that the Employer fails to pay.
B. Allocation Formula and the Right to Share in the Employer Contribution -
1. General - A portion of the Employer Contribution for a Plan Year is
allocated, in accordance with the method selected in the Adoption
Agreement, to each individual who is a qualifying Participant for that
Plan Year.
If the non-integrated method is selected in the Adoption Agreement,
the Employer Contribution to the Plan for each Plan Year will be
allocated to each qualifying Participant in the ratio which such
Participant's Compensation for that year bears to the Compensation of
all qualifying Participants for that year. If the integrated method is
selected in the Adoption Agreement, the Employer Contribution to the
Plan for each Plan Year is allocated as described in paragraph (3)
below. However, the Employer cannot select the integrated method if
the Employer or any Affiliated Company maintains another qualified
plan which is integrated, and which benefits any of the Participants.
If this Plan is a non-standardized profit sharing plan, and the points
method is selected in the Adoption Agreement, the Employer
Contribution to the Plan for each Plan Year will be allocated to each
qualifying Participant in the ratio that such Participant's points for
that year bears to the points of all qualifying Participants for that
year. However, allocations to Highly Compensated Employees in any Plan
Year must be reduced to that extent that the average of the allocation
rates for Participants who are Highly Compensated Employees exceeds
such average for all other Participants.
2. Qualifying Participants - A Participant is a qualifying Participant
for any Plan Year if he or she (a) was a Participant on at least 1 day
during the Plan Year and (b) satisfied any other requirements selected
in the Adoption Agreement for receiving an allocation for such Plan
Year.
3. Special Rules for Integrated Plans - If the Employer selected an
integrated contribution or allocation formula in the Adoption
Agreement, then the amount by which the "Excess Contribution
Percentage" exceeds the "Base Contribution Percentage" cannot be
larger than the maximum disparity rate under the following table
(depending on the type of plan):
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----------------------------------------------------------------------------------------------------------------------
MAXIMUM DISPARITY RATE
Standardized and
Top-Heavy Non-Top-Heavy
Money Nonstandardized Nonstandardized
Integration Level Purchase Profit-Sharing Profit-Sharing
Taxable Wage Base (TWB) 5.7% 2.7% 5.7%
More than $0 but not more than 20% of TWB* 5.7% 2.7% 5.7%
More than 20% of TWB* but not more than 80% of TWB 4.3% 1.3% 4.3%
More than 80% of TWB but not more than TWB 5.4% 2.4% 5.4%
*If 20% of TWB is less than $10,000, substitute $10,000 for "20% of TWB."
----------------------------------------------------------------------------------------------------------------------
As used above:
(a) The "Excess Contribution Percentage" is the percentage of Compensation
which is contributed under the Plan for the portion of each
Participant's Compensation which is greater than the Integration Level
selected in the Adoption Agreement.
(b) The "Base Contribution Percentage" is the percentage of Compensation
which is contributed under the Plan for the portion of each
Participant's Compensation which is not greater than the Integration
Level indicated in the Adoption Agreement.
(c) The "Integration Level" is the Taxable Wage Base or a lesser amount
indicated in the Adoption Agreement. The Integration Level cannot be
greater than the contribution and benefit base in effect under Section
230 of the Social Security Act for the Plan Year.
The Employer Contributions are allocated to qualifying Participants in four
(4) steps as follows (only Steps 3 and 4 are required if the Plan is not a
Top-Heavy Plan):
Step 1 Employer Contributions are allocated to each qualifying Participant
in the ratio that his or her Compensation for the Plan Year bears to the
aggregate Compensation of all qualifying Participants for the Plan Year,
but not in excess of 3 % of such qualifying Participant's Compensation for
such year.
Step 2 Any remaining Employer Contributions are then allocated to each
qualifying Participant in the ratio that his or her Excess Compensation for
the Plan Year bears to the aggregate Excess Compensation of all qualifying
Participants for the Plan Year, but not in excess of 3% of such qualifying
Participant's Compensation for such year. For purposes of this Step 2, in
the case of any Participant who has exceeded the "cumulative permitted
disparity limit" described below, that Participant's total Compensation for
the Plan Year will be taken into account.
Step 3 Employer Contributions remaining after Step 2 (or, in the case of a
non-Top-Heavy Plan, all Employer Contributions) are allocated to each
qualifying Participant in the ratio that the sum of that Participant's
Compensation and Excess Compensation for the Plan Year bears to the
aggregate of the sum of all qualifying Participants' Compensation and
Excess Compensation for the Plan Year, but not in excess of the maximum
disparity rate. For purposes of this Step 3, in the case of any Participant
who has exceeded the "cumulative permitted disparity limit" described
below, 200% of such Participant's total Compensation for the Plan Year will
be taken into account.
Step 4 Employer Contributions remaining after Step 3 are allocated as
described in Step 1, without the 3 % Compensation limit.
Overall Permitted Disparity Limits:
Annual Overall Permitted Disparity Limit - Notwithstanding the preceding
paragraphs, for any Plan Year for which this Plan benefits any Participant who
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benefits under another qualified plan or simplified employee pension (as defined
in Section 408(k) of the Code), maintained by the Employer and which provides
for permitted disparity (or imputes disparity), (x) if this Plan is a
profit-sharing plan, Employer Contributions will be allocated to each
Participant who either completes more than 500 Hours of Service during the Plan
Year or who is employed on the last day of the Plan Year in the ratio that each
such Participant's total Compensation bears to the total Compensation of all
such Participants, or (y) if this Plan is a money purchase plan, the Employer
will contribute for each Participant who either completes more than 500 Hours of
Service during the Plan Year or is employed on the last day of the Plan Year an
amount equal to the Excess Contribution Percentage multiplied by such
Participant's Total Compensation.
Cumulative Permitted Disparity Limit - Effective for Plan Years beginning on or
after January 1, 1995, the cumulative permitted disparity limit for a
Participant is 35 "total cumulative permitted disparity years." '"Total
cumulative permitted disparity years" means the number of years credited to the
Participant for allocation or accrual purposes reader this Plan, or under any
other qualified plan or any simplified employee pension plan (whether or not
terminated) ever maintained by the Employer. For purposes of determining the
Participant's cumulative permitted disparity limit, all Plan Years ending in the
same calendar year are treated as the same Plan Year. If the Participant has not
benefited (within the meaning of Treasury Regulation Section 1.410(b)-3(a))
under a defined benefit plan or target benefit plan for any Plan Year beginning
on or after January 1, 1994, the Participant has no cumulative permitted
disparity limit.
4. Disabled Participants - Except as otherwise elected in the Adoption
Agreement, a Participant shall not be treated as a qualifying
Participant for any Plan Year in which he or she has a Disability. To
the extent elected in the Adoption Agreement, and if this Plan is a
money purchase plan, for each Plan Year an Employer contribution shall
be made on behalf of, and allocated to, any Participant who has a
Disability during such year, as if such Participant was a qualifying
Participant for such year. To the extent elected in the Adoption
Agreement, and if this Plan is a profit sharing plan, a portion of the
employer profit sharing contribution, and of any Forfeitures which are
allocable to Participants in general under subsection (C) below, for
each Plan Year shall be allocated to any Participant who has a
Disability during such year, as if such Participant was a qualifying
Participant for such year. For these purposes, for any period during
which a Participant has a Disability, the Participant will be deemed
to earn Compensation at the same rate at which he or she was earning
Compensation immediately prior to the start of the Disability. Any
amounts in a Participant's Individual Account which are attributable
to contributions and Forfeitures allocated to a Participant under this
paragraph (4) shall be nonforfeitable.
C. Allocation of Forfeitures - Forfeitures for a Plan Year that arise as a
result of the application of Section 6.01(F) are treated as follows:
Forfeitures reduce Employer Contributions to the Plan for that Plan Year,
unless this Plan is a profit-sharing plan and the Adoption Agreement
indicates otherwise. If dais Plan is a profit sharing plan and the Adoption
Agreement indicates that Forfeitures are allocated to Participants, then
the Forfeitures for that Plan Year shall be allocated under Section 3.01(B)
to the individuals who are qualifying Participants for that Plan Year, as
if the Forfeitures were part of the Employer Contribution for that year.
D. Timing of Employer Contribution - The Employer Contribution for each Plan
Year must be delivered to the Trustee by the due date, including
extensions, for filing the Employer's income tax return for its fiscal year
in which the Plan Year ends.
E. Minimum Allocation for Top-Heavy Plans - The contribution and allocation
provisions of this subsection (E) apply in any Plan Year in which this Plan
is a Top-Heavy Plan.
1. Except as otherwise provided in paragraph (2) below, the Employer
Contributions and Forfeitures allocated on behalf of any Participant
who is not a Key Employee shall not be less than the lesser of (a) 3 %
of such Participant's Compensation or (b) the largest percentage of
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Employer Contributions and Forfeitures, as a percentage of a Key
Employee's Compensation, allocated on behalf of any Key Employee for
that year. Clause (b) shall not apply if this Plan enables any defined
benefit plan of the Employer to satisfy the requirements of Section
401(a)(4) or 410(b) of the Code. The minimum allocation is determined
without regard to any Social Security contribution. The minimum
allocation shall be made even though, under other Plan provisions, the
Participant would not otherwise be entitled to receive an allocation,
or would have received a lesser allocation for the year, because of
(a) the Participant's failure to complete 1,000 Hours of Service (or
any equivalent provided in the Plan), (b) the Participant's failure to
make mandatory Employee contributions or 401 (k) contributions to the
Plan, or (c) the Participant's Compensation is less than a stated
amount. If a Participant participates in any defined benefit plan
maintained by the Employer or any Affiliated Company and this Plan,
and if needed to satisfy the requirements of Treasury Regulation
Section 1.416-1, M-12, this Plan will provide the additional minimum
contribution described in that Section unless the Employer elects
otherwise in the Adoption Agreement.
2. The provision in paragraph (1) above does not apply to any Participant
(a) who was not employed by the Employer on the last day of the Plan
Year or (b) to the extent the top-heavy minimum allocation, and if
applicable the additional minimum contribution, has been provided, for
the Plan Year in question, under any other qualified defined
contribution plan or plans of the Employer or any Affiliated Company
in which the Participant participates.
3. The minimum allocation required under this subsection (E) and
subsection (F)(1) (to the extent required to be nonforfeitable under
Section 416(b) of the Code) is not forfeitable under Section
411(a)(3)(B) or 411(a)(3)(D) of the Code.
F. Special Requirements for Paired Plans - The Employer maintains paired plans
if the Employer has adopted either (x) a combination of two defined
contribution standardized prototype plans of the Prototype Sponsor or (y) a
combination of one or two defined contribution standardized prototype plans
of the Prototype Sponsor and one defined benefit standardized prototype
plan of the Prototype Sponsor. The following rules apply for paired plans:
1. Minimum Top-Heavy Allocation - When each of the paired plans are
Top-Heavy, the Employer is required to provide a minimum contribution
equal to 3 % of Compensation for each non-Key Employee in each plan
who is entitled to a minimum contribution. That minimum contribution
will be made under only one defined contribution plan. If an Employee
is a participant in only one defined contribution plan, the minimum
contribution on his or her behalf is made to that plan. If the
Employee is a participant in two plans, the minimum contribution on
his or her behalf is made to the money purchase pension plan.
2. Only One Plan can be Integrated - If the Employer maintains paired
plans, only one of the plans may utilize the disparity in
contributions or benefits permitted under Section 401(1) of the Code.
If the Adoption Agreements for more than one of the plans provides for
integration, permitted disparity is allowed only (i) under another of
the paired plans which is a defined contribution plan or (ii) under
this Plan if the only other plan is a defined benefit plan.
G. Return of Employer Contribution to the Employer Under Special Circumstances
- If the Employer makes a contribution to the Plan by reason of a mistake
of fact, the Employer is entitled to recover that contribution provided
that the recovery occurs within 1 year of the date on which the
contribution was made.
Any contribution made to the Plan by the Employer is conditioned on the
Plan's initial qualification under the Code. If the Commissioner of
Internal Revenue determines that the Plan is not initially qualified under
the Code, any contributions made to the Plan by the Employer prior to such
determination shall be returned to the Employer within 1 year after the
date on which such determination is issued, but only if the application for
-12-
the determination is made by the time prescribed by law for filing the
Employer's federal income tax return for the taxable year in which the Plan
is adopted, or such later date as the Secretary of the Treasury may
prescribe.
Any contribution made to the Plan by the Employer is conditioned on its
deductibility under Section 404 of the Code. If the deduction for any
contribution is fully or partially disallowed, the contribution shall be
returned to the Employer to the extent of the amount disallowed, provided
that it is returned to the Employer within 1 year of the date on which the
deduction is disallowed.
H. Additional Contributions - The Employer may, in its discretion, make
additional contributions to the Plan for any Plan Year, on behalf of any
Employee or group of Employees, in such amounts and subject to such vesting
requirements as the Employer deems necessary in order to preserve the
Plan's qualification under Section 401(a) of the Code, and is consistent
with the requirements of Revenue Procedure 2001-17 or the applicable
successor Revenue Procedure. Any additional contributions so made shall be
allocated to the Employee or Employees on whose behalf they are made. Any
Employee who receives an allocation under this subsection (H), but who is
not a Participant at the time that he or she receives such allocation,
shall thereafter be treated as a Participant for purposes of establishing
and maintaining an Individual Account on his or her behalf, and taking
withdrawals or receiving distributions therefrom. This subsection (H) shall
not apply if this Plan is a standardized plan.
3.2 Employee Contributions
Except as provided under Section 1 1.03(B), this Plan does not accept
nondeductible Employee contributions for Plan Years beginning after the Plan
Year in which this Plan is adopted by the Employer as a prototype plan of the
Prototype Sponsor.
This Plan does not accept deductible Employee contributions made for a taxable
year beginning after December 31, 1986. No amounts attributable to deductible
Employee contributions may be used to purchase life insurance.
Employee contributions for Plan Years beginning after December 31, 1986,
together with any matching contributions (as defined in Section 401(m) of the
Code), are limited to the extent necessary to meet the nondiscrimination test of
Section 401(m) of the Code. No Forfeiture occurs as a result of a Participant's
withdrawal of any Employee contributions.
3.3 Rollover Contributions
If this option is selected in the Adoption Agreement, and if permitted by the
Plan Administrator on a uniform and nondiscriminatory basis, a Participant, or
an Employee who is eligible to participate in the Plan or who is in a class of
Employees who, upon satisfaction of any applicable age and/or service
requirements, will become eligible to participate in the Plan, may make a
"rollover contribution" (as defined below) to the Plan, but only if the
Participant or Employee submits a written certification, satisfactory to the
Plan Administrator, that the contribution qualifies as a rollover contribution.
For purposes of this Section 3.03, a "rollover contribution" is a contribution
described in Section 402(c)(1), 403(a)(4) or 408(d)(3) of the Code or in any
other provision that may be added to the Code authorizing rollovers to qualified
plans.
3.4 Transfer Contributions
If this option is selected in the Adoption Agreement, and if permitted by the
Plan Administrator on a uniform and nondiscriminatory basis, the Trustee may
receive any amounts transferred to it from the trustee of another plan qualified
under Section 401(a) of the Code on behalf of any Participant or Employee who is
eligible to participate in the Plan or who is in a class of Employees who, upon
satisfaction of any applicable age and/or service requirements, will become
eligible to participate in the Plan. It is provided, however, that the Plan may
not accept a transfer contribution from a plan which allows a participant's
accounts to be distributed or withdrawn in any form in which, or upon any event
under which, a distribution or withdrawal is not permitted under this Plan.
3.5 Limitation on Allocations
A. No Other Plan - If the Participant has never participated in another
qualified plan, a "welfare benefit fund" (as defined in Section 419(e) of
the Code), an "individual medical account" (as defined in Section 415(1)(2)
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of the Code) or a "simplified employee pension" (as defined in Section
408(k) of the Code) maintained by the Employer (any such qualified plan,
welfare benefit fund, individual medical account or simplified employee
pension shall be referred to hereinafter as an "Other Plan"), the following
rules apply:
1. The amount of Annual Additions credited to the Participant's
Individual Account for any "Limitation Year" (as defined in subsection
(E)(9)) cannot exceed the lesser of the "Maximum Permissible Amount"
(as defined in subsection (E)(10)) or any other limitation contained
in this Plan. Employer Contributions contributed or allocated to a
Participant's Individual Account must be reduced, if necessary, so
that the Annual Additions for the Limitation Year do not exceed the
Maximum Permissible Amount.
2. Before determining the Participant's actual "415 Compensation" (as
defined in subsection (E)(7)) 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 415 Compensation
for the Limitation Year, uniformly determined for all similarly
situated Participants.
3. Then, as soon as is administratively feasible after the end of the
Limitation Year, the Maximum Permissible Amount for the Limitation
Year is determined based on the Participant's actual 415 Compensation
for the Limitation Year.
4. If, under paragraph (3) or as a result of the allocation of
Forfeitures, there is an "Excess Amount" (as defined in subsection
(E)(6)), the Excess Amount is eliminated as follows:
(a) Any nondeductible voluntary employee contributions (plus attributable
earnings), to the extent they would reduce the Excess Amount, are
returned to the Participant.
(b) If an Excess Amount still exists after (a), any "Elective Deferrals"
(as defined in Section 11.01(J) (plus attributable earnings), to the
extent they would reduce the Excess Amount, plus attributable earnings
are returned to the Participant.
(c) If an Excess Amount still exists after (b), and the Participant is
covered by the Plan at the end of the Limitation Year, the Excess
Amount in the Participant's Individual Account is used to reduce
Employer Contributions (including any allocation of Forfeitures) for
that Participant in the next Limitation Year, and each future
Limitation Year if necessary.
(d) If an Excess Amount still exists after (b), and the Participant is not
covered by the Plan at the end of a Limitation Year, the Excess Amount
attributable to the Participant will be held unallocated in a suspense
account. The suspense account will be applied to reduce future
Employer contributions for all remaining Participants in the next
Limitation Year, and each succeeding Limitation Year if necessary.
(e) If a suspense account is in existence at any time during a Limitation
Year pursuant to this Section 3.05, it will not participate in the
allocation of investment gains and losses. If a suspense account is in
existence at any time during a particular Limitation Year, all amounts
in the suspense account must be allocated and reallocated to
Participants' Individual Accounts before any Employer or any employee
contributions may be made to the Plan for that Limitation Year. Excess
Amounts may not be distributed to Participants or former Participants.
B. One or More Other Plans - If a Participant is covered under this Plan and
one or more Other Plans, the following rules apply:
1. The Annual Additions which may be credited to a Participant's
Individual Account under this Plan for any such Limitation Year cannot
exceed the Maximum Permissible Amount reduced by the Annual Additions
credited to the Participant's accounts under the Other Plans for the
same Limitation Year. If the Annual Additions with respect to the
Participant under the Other Plans are less than the Maximum
Permissible Amount and the Employer Contribution that would have been
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contributed or allocated to the Participant's Individual Account under
this Plan would cause the Annual Additions for the Limitation Year to
exceed this limit, the amount that would have been so contributed or
allocated under this Plan is reduced until the Annual Additions under
this Plan and the Other Plans for the Limitation Year equal the
Maximum Permissible Amount. If the Annual Additions with respect to
the Participant under the Other Plans are equal to or greater than the
Maximum Permissible Amount, no amount may be contributed or allocated
to the Participant's Individual Account under this Plan for the
Limitation Year.
2. Before determining the Participant's actual 415 Compensation for the
Limitation Year, the Employer may determine the Maximum Permissible
Amount for a Participant as described in subsection (A)(2).
3. Then, as soon as is administratively feasible after the end of the
Limitation Year, the Maximum Permissible Amount for the Limitation
Year is determined on the basis of the Participant's actual 415
Compensation for the Limitation Year.
4. If, under paragraph (3) or as a result of the allocation of
Forfeitures, a Participant's Annual Additions under this Plan and the
Other Plans would result in an Excess Amount for a Limitation Year,
the Excess Amount is treated as if it were all from the last allocated
Annual Additions, except that Annual Additions attributable to a
simplified employee pension are treated as having been allocated
first, followed by Annual Additions to a welfare benefit fund or
individual medical account, regardless of the actual allocation date.
5. If an Excess Amount is allocated to a Participant on an allocation
date of this Plan which coincides with an allocation date of any Other
Plan, the Excess Amount attributed to this Plan is the product of:
(a) The total Excess Amount allocated as of that date, multiplied by
(b) The ratio of (i) the Annual Additions allocated to the Participant for
the Limitation Year as of that date under this Plan to (ii) the total
Annual Additions allocated to the Participant for the Limitation Year
as of that date under this Plan and all Other Plans.
6. Any Excess Amount attributed to this Plan is then eliminated as
described in subsection (A)(4).
C. If the Participant is covered under another qualified defined contribution
plan maintained by the Employer, and if indicated in the Adoption
Agreement, the Annual Additions credited to the Participant's Individual
Account under this Plan for any Limitation Year shall be limited, and
excess amounts shall be reduced, in the manner which the Employer specifies
in the Adoption Agreement, instead of as indicated in subsections (B)(1)
through (B)(6) above.
D. If the Employer has ever maintained a qualified defined benefit plan (other
than a paired plan as shown in the Adoption Agreement) covering any
Participant in this Plan, the sum of the Participant's "Defined Benefit
Plan Fraction" (as defined in subsection (E)(2)) and "Defined Contribution
Plan Fraction" (as defined in subsection (E)(4)) cannot exceed 1.0 in any
Limitation Year beginning before January 1, 2000. To comply with the
preceding sentence, the Annual Additions that may be credited to the
Participant's Individual Account under this Plan for any Limitation Year
are limited as described under the Adoption Agreement. For any Limitation
Year beginning before January 1, 2000 in which the Plan is top-heavy, the
Defined Benefit Plan Fraction and Defined Contribution Plan Fraction shall
be adjusted as required under Section 416(h)(1) of the Code as in effect
for such Plan Year, unless such adjustment is not required because the
Employer has provided the extra minimum contributions described in Section
416(h)(2)(A) (as so in effect) for the applicable Plan Year and the
requirements of 416(h)(2)(B) (as so in effect) have been satisfied.
E. The terms below have the following meanings when used in this Section 3.05:
-15-
1. Annual Additions: The following amounts:
(a) Employer Contributions, Employee contributions and Forfeitures
credited to a Participant's Individual Account under this Plan;
(b) Employer contributions, before-tax contributions, after-tax
contributions and forfeitures credited to a Participant's accounts
under any Other Plan;
(c) Amounts allocated, after March 31, 1984, to an "individual medical
account" (as defined in Section 415(1)(2) of the Code), which is part
of a pension or annuity plan maintained by the Employer;
(d) Amounts derived from contributions paid or accrued after December 31,
1985, in taxable years ending after that date, which relate to
post-retirement medical benefits, allocated to the separate account of
a "key employee" (as defined in Section 419A(d)(3) of the Code) under
a "welfare benefit fund" (as defined in Section 419(e) of the Code)
maintained by the Employer; and
(e) Allocations under a "simplified employee pension" (as defined in
Section 408(k) of the Code) maintained by the Employer.
For this purpose, any Excess Amount applied under subsection
(A)(4) or (B)(6) in a Limitation Year to reduce Employer
Contributions will be treated as an Annual Addition for such
Limitation Year.
2. Defined Benefit Plan Fraction: A fraction, the numerator of which is
the sum of the Participant's projected annual benefits under all
defined benefit plans (whether or not terminated) maintained by the
Employer, and the denominator of which is the lesser of 125% of the
dollar limitation determined for the Limitation Year under Section
415(b) and (d) of the Code or 140% of the "Highest Average 415
Compensation" (as defined in subsection (E)(8)), including any
adjustments under Section 415(b) of the Code.
However, 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 existed on
May 6, 1986, the denominator of this Fraction is not less than 125% of
the sum of the annual benefits under those plans which the Participant
had accrued as of the close of the last Limitation Year beginning
before January 1, 1987, ignoring any changes in the terms and
conditions of the plan after May 5, 1986, but only if the defined
benefit plans individually and together satisfied the requirements of
Section 415 of the Code for all Limitation Years beginning before
January 1, 1987.
3. Defined Contribution Plan Dollar Limit: $30,000, as increased by the
cost-of-living adjustment in effect for the applicable Limitation Year
under Section 415(d)(1)(C) of the Code.
4. Defined Contribution Plan Fraction: A fraction, the numerator of which
is the sum of the Annual Additions to the Participant's accounts under
all defined contribution plans (whether or not terminated) maintained
by the Employer for the current and all prior Limitation Years
(including the Annual Additions from (a) the Participant's
nondeductible employee contributions to all defined benefit plans
(whether or not terminated), (b) "welfare benefit funds" (as defined
in Section 419(e) of the Code) maintained by the Employer, (c)
"individual medical accounts" (as defined in Section 415(1)(2) of the
Code) maintained by the Employer and (d) "simplified employee
pensions" (as defined in Section 408(k) of the Code) maintained by the
Employer, and the denominator of which is the sum of the maximum
aggregate amounts for the current and all prior Limitation Years of
service with the Employer (regardless of whether the Employer
maintained a defined contribution plan). The maximum aggregate amount
in any Limitation Year is the lesser of 125% of the dollar limit under
Section 415(b) and (d) of the Code in effect under Section
415(c)(1)(A) of the Code or 35% of the Participant's 415 Compensation
for that Year.
-16-
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
existed on May 6, 1986, the numerator of this Fraction is adjusted if
the sum of this Fraction and the Defined Benefit Plan Fraction would
otherwise exceed 1.0 under the terms of this Plan. Under the
adjustment, an amount equal to the product of (i) the excess of the
sum of the Fractions over 1.0, multiplied by (ii) the denominator of
this Fraction, is permanently subtracted from the numerator of this
Fraction. The adjustment is calculated using the Fractions as they
would be computed as of the end of the last Limitation Year beginning
before January 1, 1987, and disregarding any changes in the terms and
conditions of the Plan made after May 5, 1986, but using the limit
under Section 415 of the Code that applied on the first Limitation
Year beginning on or after January 1, 1987.
The Annual Addition for any Limitation Year beginning before January
1, 1987, is not recomputed to treat all Employee contributions as
Annual Additions.
5. Employer: The Employer that adopts this Plan, and all members of a
"controlled group of corporations" (as defined in Section 414(b) of
the Code as modified by Section 415(h)), all "commonly controlled
trades or businesses" (as defined in Section 414(c) of the ('ode as
modified by Section 415(h)) or "affiliated service groups" (as defined
in Section 414(m) of the Code) of which the adopting Employer is a
part, and any other entity required to be aggregated with the Employer
under the Treasury Regulations under Section 414(o) of the Code.
6. Excess Amount: The excess of the Participant's Annual Additions for
the Limitation Year over the Maximum Permissible Amount.
7. 415 Compensation: 415 Compensation is defined as wages, salaries and
fees for professional services and other amounts received (without
regard to whether or not an amount is paid in cash) for personal
services actually rendered in the course of employment with the
Employer maintaining the Plan to the extent that the amounts are
included in gross income (including, but not limited to, commissions
paid salesmen, compensation for services on the basis of a percentage
of profits, commissions on insurance premiums, tips, bonuses, fringe
benefits and reimbursements or other expense allowances under a
nonaccountable plan (as described in Treasury Regulation Section
1.62-2(c)), and excluding the following:
(a) Employer contributions to a plan of deferred compensation which are
not includible in the Employee's gross income for the taxable year in
which contributed, or Employer contributions under a simplified
employee pension plan, or any distributions from a plan of deferred
compensation;
(b) Amounts realized from the exercise of a nonqualified stock option, or
when restricted stock (or property) held by the Employee either
becomes freely transferable or is no longer subject to a substantial
risk of forfeiture;
(c) Amounts realized from the sale, exchange or other disposition of stock
acquired under a qualified stock option; and
(d) Other amounts which received special tax benefits, or contributions
made by the Employer (whether or not under a salary reduction
agreement) towards the purchase of an annuity described in Section
403(b) of the Code (whether or not the contributions are actually
excludible from the gross income of the Employee).
For any Self-Employed Individual, 415 Compensation means Earned
Income.
-17-
For Limitation Years beginning after December 31, 1991, for purposes
of applying the limits of this Section 3.05, 415 Compensation for a
Limitation Year is the 415 Compensation actually paid or made
available during that Limitation Year. For any Limitation Year
beginning after December 31, 1997, 415 Compensation shall include any
before-tax contributions which (i) were elected by the Participant,
(ii) would have been paid to the Participant for such Limitation Year
but for such election, and (iii) were not includible in the gross
income of the Participant by reason of Code Section 402(e)(3), 125,
132(f)(4) or 457.
However, 415 Compensation for a Participant in a defined contribution
plan who has a Disability is the 415 Compensation that Participant
would have received for the Limitation Year if the Participant had
been paid at his or her rate of 415 Compensation in effect immediately
before incurring the Disability; provided that imputed 415
Compensation for a Participant with a Disability is taken into account
only if (x) the contributions made on behalf of or allocated to the
Participant with respect to the imputed 415 Compensation are fully
Vested when so made or allocated, and (y) the Participant is not a
Highly Compensated Employee, unless the Employer elects in the
Adoption Agreement to have nonforfeitable contributions made on behalf
of or allocated to all Participants who have a Disability, or the
Limitation Year in question started before January 1, 1997.
8. Highest Average 415 Compensation: The average 415 Compensation for the
3 consecutive Years of Vesting Service with the Employer that produces
the highest average.
9. Limitation Year: The Plan Year, or any other 12-consecutive month
period selected for this purpose in the Adoption Agreement. All
qualified plans maintained by the Employer must use the same
Limitation Year. If the Limitation Year is amended to be the Plan
Year, or to be a different 12-consecutive month period, the new
Limitation Year must begin on a date within the Limitation Year in
which the amendment is made.
10. Maximum Permissible Amount: The maximum amount of Annual Additions
that may be contributed or allocated to a Participant's Individual
Account under the Plan for any Limitation Year is the lesser of:
(a) The Defined Contribution Plan Dollar Limit; or
(b) 25% of the Participant's 415 Compensation for the Limitation Year.
The compensation limit referred to in (b) does not apply to any
contribution for medical benefits (within the meaning of Section
401(h) or Section 419A(f)(2) of the Code) which is otherwise treated
as an Annual Addition under Section 415(1)(1) or 419A(d)(2) of the
Code.
If a short Limitation Year is created because of an amendment changing
the Limitation Year to a different 12-consecutive month period, the
Maximum Permissible Amount for the short year must not exceed the
Defined Contribution Plan Dollar Limit multiplied by the following
fraction:
Number of months
in the short Limitation Year
----------------------------
12
11. Projected Annual Benefit: The annual retirement benefit (adjusted to
an actuarially equivalent straight life annuity if that benefit is
stated other than as a straight life annuity or qualified joint and
survivor annuity) to which the Participant would be entitled under the
terms of the Plan assuming:
(a) The Participant continues employment until Normal Retirement Age (or
current age, if later); and
(b) The Participant's 415 Compensation for the current Limitation Year and
all other relevant factors used to determine benefits under the Plan
remain constant for all future Limitation Years.
-18-
Article 4 - Individual Accounts and Valuation
---------------------------------------------
4.1 Individual Accounts
A. The Plan Administrator must establish and maintain an Individual Account in
the name of each Participant to reflect the total value of his or her
interest in the Fund. Each Individual Account is made up of whatever
sub-accounts may be needed for each Participant, including:
1. A sub-account to reflect a Participant's Employer Contributions and
Forfeitures;
2. A sub-account to reflect a Participant's rollover contributions;
3. A sub-account to reflect a Participant's transfer contributions;
4. A sub-account to reflect a Participant's nondeductible Employee
contributions; and
5. A sub-account to reflect a Participant's deductible Employee
contributions.
These sub-accounts are only for accounting purposes and do not require a
segregation of the Fund.
B. The Plan Administrator is authorized to establish any other accounts or
sub-accounts it believes are appropriate for the proper administration of
the Plan.
4.2 Valuation of Fund
The Fund is valued on each Valuation Date at fair market value.
4.3 Valuation of Individual Accounts
A. If any portion of a Participant's Individual Account is invested in a
Separate Fund, then the value of such portion, at any Valuation Date, is
the sum of the fair market value of each of the assets in that Separate
Fund at the close of such date, reduced by any applicable charges and
penalties.
B. The value of any other portion of a Participant's Individual Account, at
any Valuation Date, is determined as follows:
1. First, such portion of the Participant's Individual Account is (a)
reduced by any distribution, withdrawal, transfer, Forfeiture or other
amount charged to such portion since the immediately preceding
Valuation Date, and (b) increased by any contribution, transfer,
Forfeiture or other amount credited to such portion since the
immediately preceding Valuation Date.
2. Second, such portion of the Participant's Individual Account is
increased or decreased, as the case may be, by the earnings or losses
of each Investment Fund since the immediately preceding Valuation
Date, based on the ratio, determined for each Investment Fund, that
the balance of such portion of the Participant's Individual Account
invested in the Investment Fund at the close of such date bears to the
total amount of Participants' Individual Account balances invested in
the Investment Fund (except through a Separate Fund) at the close of
such date.
3. Distributions and withdrawals from the Plan are charged to a
Participant's Individual Account on the day on which they are paid
from the Plan. Contributions to the Plan are credited to a
Participant's Individual Account on the day on which they are received
by the Plan. For this purpose, Employer Contributions made for a Plan
Year, which are received by the Plan after the close of such Plan
Year, are treated as if they had been received on the last day of such
Plan Year. Transfers, Forfeitures and other amounts shall be charged
or credited, as the case may be, to the Participant's Individual
Account on the day provided in the Plan, or, in the absence of any
applicable provision in the Plan, on the day determined by the Plan
Administrator.
4.4 Date for Determining Individual Account Balance
The balance of a Participant's Individual Account, as of any date, shall be
determined at the close of the Valuation Date which coincides with or
immediately precedes that date.
-19-
4.5 Use of Separate Fund
If a Participant elects to receive a distribution in the form of installments
(or as required in Article Five or as determined by the Plan Administrator in
any other circumstance in which the Plan Administrator believes it is necessary
or appropriate to do so), the Plan Administrator may place the balance of the
Participant's Individual Account in a Separate Fund.
4.6 Modification of Method for Valuing Individual Accounts
The Plan Administrator is authorized to establish other procedures (in a uniform
and nondiscriminatory manner) for determining the fair market value of the
Individual Accounts, if the Plan Administrator believes it would be necessary or
appropriate to do so.
Article 5 - Trust Fund
----------------------
5.1 Creation of Fund
By adopting this Plan, the Employer is establishing the Fund consisting of the
assets of the Plan held by the Trustee under the Trust Agreement. Assets within
the Fund may be pooled on behalf of all Participants, earmarked on behalf of
each Participant or be a combination of pooled and earmarked. To the extent that
assets are earmarked for a particular Participant, they are held in a Separate
Fund for that Participant.
No part of the corpus or income of the Fund may be used for, or diverted to,
purposes other than for the exclusive benefit of Participants and their
Beneficiaries.
5.2 Investment Authority
Except as provided in the Adoption Agreement (relating to Participant-directed
investments) or the Trust Agreement, the Employer has the exclusive authority to
determine who will exercise exclusive management and control over the investment
of the Fund. The Employer, and any other person appointed by the Employer to
exercise such management and control, shall be a "named fiduciary" of the Plan
(within the meaning of Section 402(a) of ERISA) with respect to the management
and control of the Plan's assets.
5.3 Indemnification of Prototype Sponsor and Trustee
Regardless of any other Plan provision, to the fullest extent permitted by
applicable law, the Employer agrees to indemnify and hold harmless the Trustee
and the Prototype Sponsor, and each of their officers, directors, employees and
agents (collectively, the "Indemnified Parties") from and against any and all
claims, liabilities, damages, judgments, settlements, losses, costs, charges, or
expenses (including legal fees and disbursements) asserted against any
Indemnified Party at any time as a result of, arising out of or based upon the
adoption, maintenance, administration, operation or termination of this Plan, or
any action taken by those parties in the performance of their duties with
respect to this Plan, unless there is a final adjudication against them of gross
negligence or willful misconduct in the performance of those duties. Further, to
the fullest extent permitted by applicable law, the Employer agrees to indemnify
the Indemnified Parties from any loss, liability, cost, damage, claim or expense
(including legal fees and disbursements) which the Trustee and/or the Prototype
Sponsor incurs by reason of or which results, in whole or in part, from the
Trustee's or Prototype Sponsor's reliance on the facts and other directions and
elections the Employer communicates or fails to communicate, or resulting from
any failure by the Employer to timely take any action it has agreed to take in
this Plan.
5.4 Life Insurance Purchases
A. If any life insurance policy is purchased for a Participant, the total
premiums are limited as follows:
1. Ordinary Life Insurance - If ordinary life insurance contracts (that
is, contracts with both nondecreasing death benefits and nonincreasing
premiums) are purchased, less than 50% of the total Employer
Contributions and Forfeitures allocated to any Participant's
Individual Account may be applied to pay the premiums on such
contracts.
2. Term and Universal Life Insurance - Less than 25 % of the total
Employer Contributions and Forfeitures allocated to any Participant's
Individual Account may be applied to pay the premiums on term life
insurance contracts, universal life insurance contracts, and all other
life insurance contracts that are not ordinary life.
-20-
3. Combination - The sum of 50% of the ordinary life insurance premiums
and all other life insurance premiums must be less than 25% of the
aggregate Employer Contributions and Forfeitures allocated to any
Participant's Individual Account.
B. Dividends or credits earned on insurance contracts for a Participant are
allocated to his or her Individual Account.
C. Subject to the notice, consent and form of payment requirements of Section
6.02 (if applicable), the insurance contracts on a Participant's life are
converted to cash, converted into an annuity or distributed to the
Participant when the payment of his or her benefits start.
D. The Trustee applies for and is the owner of any life insurance contracts
purchased under this Plan. The life insurance contract(s) must provide that
proceeds are payable to the Trustee. However, the Trustee is required to
credit all proceeds of the contract(s) to the Participant's Individual
Account for payment to the Participant's Beneficiary in accordance with the
distribution provisions of this Plan. Under no circumstances may the Fund
retain any part of the proceeds. If the terms of this Plan and the terms of
any purchased insurance contract conflict, the Plan provisions control.
E. The Employer may direct the Trustee to sell and distribute insurance or
annuity contracts to a Participant (or any other permitted party) to the
extent permitted by applicable law.
5.5 Participants' Direction of Investments
To the extent indicated in the Adoption Agreement, each Participant may direct
the Trustee regarding the investment of his or her Individual Account. To the
extent of that direction, the Employer, Plan Administrator, Trustee and all
other fiduciaries are relieved of their fiduciary responsibility under Section
404 of ERISA, and this Plan is intended to be a Plan described in Section 404(c)
of ERISA.
The Employer will cause a Separate Fund to be established in the name of each
Participant who directs the investment of part or all of his or her Individual
Account. Each Separate Fund is charged or credited (as appropriate) with the
earnings, gains, losses and/or expenses relating to that Separate Fund. No
fiduciary is liable for any loss resulting from a Participant's individual
investment direction. The assets subject to individual direction cannot be
invested (a) in "collectibles" as that term is defined in Section 408(m) of the
Code, (b) in any investment that would result in a non-exempt "prohibited
transaction" within the meaning of Section 406 of ERISA or Section 4975 of the
Code or (c) in any investment which would result in the failure to satisfy the
requirements of Section 404(c) of ERISA.
The Plan Administrator is authorized and directed to establish uniform and
nondiscriminatory rules relating to participant investment direction which it
determines to be necessary or advisable including, but not limited to, rules
describing: (a) the frequency of investment changes; (b) the forms, manner and
procedure for making investment changes; and (c) the effect of a Participant's
failure to make a valid direction.
The Employer may, in a uniform and non discriminatory manner, limit the
available investments for Participants' direction to certain specified
investment options (including, but not limited to, certain mutual funds,
investment contracts, deposit accounts and group trusts). The Employer may
permit, in a uniform and nondiscriminatory manner, a Beneficiary of a deceased
Participant to direct investments under this Section 5.05.
Article 6 - Vesting and Distribution
------------------------------------
6.1 Distribution to Participant
A. When Distributable -
1. Entitlement to Distribution - The Vested portion of a Participant's
Individual Account becomes distributable to him or her as of the
earliest to occur of any of the following:
(a) his or her Termination of Employment (except by reason of death);
(b) he or she attains Normal Retirement Age;
(c) his or her Disability; or
(d) the termination of the Plan.
-21-
2. Written Request: When Distributed - If a Participant's Individual
Account has become distributable under paragraph (1) above, and the
Participant wishes to receive a distribution, the Participant must
submit a written request to the Plan Administrator on a form furnished
by the Plan Administrator for this purpose. It is provided, however,
that if the Plan Administrator so permits (and subject to such rules
as the Plan Administrator may have promulgated), any Participant may
use an electronic medium to communicate to the Plan Administrator (or
any service provider designated by the Plan Administrator to receive
such communication on behalf of the Plan Administrator) his or her
request for a distribution. After receiving the request, the Plan
Administrator shall direct the Trustee to begin the distribution, as
of the date selected by the Plan Administrator. Such date shall be the
first day of any month, and shall also be no more than 90 days after
the later of:
(a) the last day of the Plan Year in which the event described in
paragraph (1) occurs; or
(b) the last day of the Plan Year in which the request is received.
The date so selected by the Plan Administrator shall be treated as the
Participant's Annuity Starting Date.
3. Cash-out of Small Account Balances - Notwithstanding any other
provision of the Plan to the contrary, if, as of the date on which an
event described in paragraph (1) occurs, the Vested portion of the
balance of the Participant's Individual Account does not exceed, or if
such event occurred before October 17, 2000 never exceeded, $5,000
($3,500 for Plan Years beginning before August 6, 1997), the following
shall apply. The Participant's Individual Account shall be distributed
to the Participant in the form of a single lump-sum payment. The
amount of such payment shall be equal to the Vested portion of the
balance of the Participant's Individual Account as of the date of said
event. The payment shall be made as soon as practicable after the date
on which said event occurs. For purposes of this paragraph (3) (and
subsection (F)(1) below), a Participant's Vested Individual Account
balance does not include any "accumulated deductible Employee
contributions," within the meaning of Section 72(o)(5)(B) of the Code,
which were made to the Plan for Plan Years beginning before January 1,
1989.
B. Withdrawals by Participants -
1. In-Service Withdrawals of Employer Contributions - If the Plan is a
profit-sharing plan and to the extent indicated in the Adoption
Agreement, a Participant may withdraw all or a part of the Vested
portion of his or her Individual Account attributable to Employer
Contributions, as follows:
(a) Participant for 5 or more Years - A Participant who has participated
in the Plan for 5 or more years may withdraw Vested Employer
Contributions and their investment earnings.
(b) Participant for Less than 5 Years - A Participant who has participated
in the Plan for less than 5 years may withdraw Vested Employer
Contributions that have been in his or her Individual Account for at
least 2 full Plan Years and their investment earnings.
(c) After Attaining Age 59 1/2 - A Participant who has attained age 59 1/2
may withdraw Employer Contributions and their investment earnings.
2. Financial Hardship Withdrawals of Employer Contributions - If this
Plan is a profit-sharing plan, and to the extent indicated in the
Adoption Agreement, in-service withdrawals may be made by a
Participant of all or any part of the Vested portion of his or
Individual Amount attributable to Employer Contributions, on account
of financial hardship which cannot be met from the Participant's other
available resources. The Plan Administrator, in a uniform and
nondiscriminatory manner consistent with applicable Code requirements,
will establish written guidelines for such hardship withdrawals. The
-22-
Plan Administrator may require appropriate documentation to
substantiate any such financial need as a condition for such a
withdrawal and may establish any limitations on such withdrawal as the
Plan Administrator believes are necessary or appropriate for effective
administration of the Plan.
3. In-Service Withdrawals of Rollovers, Transfers and Employee
Contributions - To the extent elected in the Adoption Agreement, a
Participant may withdraw all or a portion of his or her Individual
Account attributable to the rollover contributions, transfer
contributions, nondeductible Employee contributions and deductible
Employee contributions made to this Plan.
4. Other Rules and Requirements - A Participant may not take a withdrawal
under this subsection (B) unless he or she is an Employee and is not
entitled to receive a distribution under subsection (A)(1) above. A
Participant requests a withdrawal in the same manner as he or she
would request a distribution under subsection (A)(2) above. Any
withdrawal under this subsection (B) shall be subject to the notice,
consent and form of payment requirements of Section 6.02 (to the
extent applicable).
C. Determining the Vested Portion - In determining the Vested portion of a
Participant's Individual Account, the following rules apply:
1. Employer Contributions and Forfeitures - The Vested portion of a
Participant's Individual Account derived from Employer Contributions
and Forfeitures is set by the vesting schedule selected or indicated
in the Adoption Agreement (or the vesting schedule described in
subsection (D) below if the Plan is a Top-Heavy Plan).
2. Rollover and Transfer Contributions - A Participant is fully Vested in
his or her rollover contributions, transfer contributions and the
investment earnings on these contributions.
3. Fully Vested Under Certain Circumstances - A Participant is fully
Vested in all amounts in his or her Individual Account if any of the
following happens:
(a) he or she attains Normal Retirement Age while an Employee;
(b) he or she incurs a Disability while an Employee;
(c) he or she dies while an Employee;
(d) the Plan is terminated, or the Participant is affected by a partial
termination of the Plan; or
(e) a total discontinuance of Plan contributions (if this Plan is a
profit-sharing plan).
4. Employee Contributions - Employee contributions and earnings thereon
will be nonforfeitable at all times.
D. Minimum Vesting Schedule for Top-Heavy Plans - The following vesting
provisions apply for any Plan Year in which this Plan is a Top-Heavy Plan.
(This subsection (D) does not apply to the Individual Account of any
Employee who does not have an Hour of Service after the Plan first becomes
a Top-Heavy Plan.)
Regardless of the other vesting rules of this Section 6.01 or the vesting
schedule selected or indicated in the Adoption Agreement (unless those
provisions or that schedule provide faster vesting), the Vested portion of
a Participant's Individual Account derived from Employer Contributions and
Forfeitures is determined from this minimum vesting schedule:
Years of Vesting Service Vested Percentage
1 0%
2 20%
3 40%
4 60%
5 80%
6 100%
-23-
This minimum vesting schedule applies to all benefits (within the meaning of
Section 411(a)(7) of the Code), except benefits derived from Employee
contributions. A Participant's Vested percentage does not decrease if the Plan's
status as a Top-Heavy Plan subsequently changes for any Plan Year.
If this Plan stops being a Top-Heavy Plan, the vesting schedule selected or
indicated in the Adoption Agreement applies again, subject to the restrictions
above. If the vesting schedule under the Plan shifts in or out of Top-Heavy Plan
status, that shift is an amendment to the vesting schedule and the election in
Section 9.04 applies.
E. Break in Vesting Service and Loss of Service -
1. One Break in Vesting Service - In the case of a Participant who has a
Termination of Employment, incurs a Break in Vesting Service, and
thereafter returns to employment with the Employer, the Participant's
pre-break Years of Vesting Service will not be taken into account
after such return, for the purpose of determining the extent to which
the Participant is vested in the portion of his or her Individual
Account balance which accrues after such return, until the Participant
has completed a Year of Vesting Service after such return.
2. 5 or More Breaks in Vesting Service - In the case of a Participant who
has a Termination of Employment, incurs 5 or more consecutive Breaks
in Vesting Service, and thereafter returns to employment with the
Employer, no service after such breaks will be taken into account for
the purpose of determining the extent to which the Participant is
vested in the portion of his or her Individual Account balance that
accrued before such breaks commenced. Further, in addition to
paragraph (1) above, the Participant's pre-break Years of Vesting
Service will not be taken into account after such return, for the
purpose indicated in paragraph (1), unless:
(a) the Participant had any nonforfeitable interest in the portion of his
or her Individual Account attributable to Employer Contributions at
the time such breaks began, or
(b) his or her number of consecutive Breaks in Vesting Service is less
than the number of his or her pre-break Years of Vesting Service.
3. Separate Sub-Accounts - If paragraph (1) or (2) becomes applicable,
separate sub-accounts will be maintained for the Participant's
pre-break and post-break Employer-derived Individual Account balance.
Both sub-accounts will share in the earnings and losses of the Trust
Fund.
F. Break in Vesting Service and Forfeitures -
1. Cash-out of Participants - If a Participant has a Termination of
Employment, and he or she receives a distribution of the Vested
portion of his or her Individual Account under subsection (A)(3)
above, then the non-Vested portion of his or her Individual Account is
treated as a Forfeiture. For purposes of this paragraph (l), if, on
the day on which a Participant has Termination of Employment, the
value of the Vested portion of a Participant's Individual Account is
zero, the Participant is treated as if he or she had received a
distribution of such portion of his or her Individual Account on such
day.
2. Participants Who Elect to Receive Distributions - If a Participant has
a Termination of Employment, and he or she receives a distribution of
the Vested portion of his or her Individual Account by request made
under subsection (A)(2) above, the nonVested portion of his or her
Individual Account is treated as a Forfeiture. However, if the
Participant takes a distribution of less than the entire Vested
portion of his or her Individual Account balance attributable to
Employer Contributions by request under subsection (A)(2) above, the
part of the nonVested portion of his or her Individual Account
attributable to such contributions which will be treated as a
Forfeiture is the value of such nonVested portion, multiplied by a
fraction, the numerator of which is the amount of the distribution
attributable to Employer Contributions, and the denominator of which
is the value of the Vested portion of the Participant's Individual
Account balance attributable to such contributions.
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3. Re-employed Participants - If a Participant receives a distribution
described in paragraph (1) or (2) above and the Participant resumes
employment covered under this Plan, the Participant's Employer-derived
Individual Account balance is restored to the amount on the date of
distribution if he or she repays to the Plan the full amount of the
portion of the distribution attributable to Employer Contributions
before the earlier of: (i) 5 years after the date on which he or she
again becomes an Employee or (ii) the date he or she incurs 5
consecutive Breaks in Vesting Service after the date of the
distribution. If a Participant is deemed to have received a
distribution pursuant to paragraph (1), and the Participant resumes
employment covered under this Plan before the date on which he or she
incurs 5 consecutive Breaks in Vesting Service, the portion of the
Participant's Individual Account balance attributable to Employer
Contributions will be restored, as of the date on which the
Participant resumes employment, to the value of such balance on the
day of the deemed distribution.
4. Regardless of anything in this subsection (F) to the contrary, if a
Participant has a Termination of Employment but does not receive or is
not treated as receiving a distribution described in paragraph (1) or
(2) above, and he or she has 5 consecutive Breaks in Vesting Service,
the nonVested portion of his or her Individual Account shall be
treated as a Forfeiture upon the completion of the 5th such Break in
Vesting Service.
G. Distribution Prior to Full Vesting - If a distribution described in
subsection (F)(1) or (2) is made to a Participant who was not fully Vested
in the portion of his or her Individual Account derived from Employer
Contributions, and that Participant could increase the percentage in such
portion of the account in which he or she is Vested (for example by timely
returning to employment with the Employer), then the following rules apply:
1. A separate account is established for the Participant's interest in
the Plan attributable to Employer Contributions as of the time of the
distribution, and
2. At any relevant time the Participant's Vested portion of the separate
account equals an amount ("X"), determined by the formula: X = P (AB +
(R x D)) - (R x D) where "P" is the Vested percentage at the relevant
time, "AB" is the separate account balance at the relevant time, "D"
is the amount of the distribution and "R" is the ratio of the separate
account balance at the relevant time to the separate account balance
after the distribution.
6.2 Form of Distribution to a Participant
A. Available Forms - The Participant's Individual Account shall be distributed
to the Participant in one of the following forms:
Option 1 - a single lump-sum payment.
Option 2- periodic installments.
Option 3 - an annuity.
The following rules shall apply:
1. Under Option 1, the Participant's Individual Account shall be
distributed in the form of a single lump-sum payment. The amount of
the payment shall be equal to the Vested portion of the balance of the
Participant's Individual Account as of the date on which the payment
is made.
2. Under Option 2, the Participant's Individual Account shall be
distributed in the form of periodic installments. The installments
shall be paid over a period certain which may not exceed the
Participant's life expectancy, or, if elected by the Employer in the
Adoption Agreement, the joint life expectancy of the Participant and
his or her Beneficiary. The installments shall be so paid on a
monthly, quarterly, semi-annual or annual basis, as elected by the
Employer in the Adoption Agreement. The installment payment made for
each monthly, quarterly, semi-annual or annual period, as the case may
be, shall be due on the first day of such period. If the Participant
does not survive to receive any of the installment payments, the
remaining payments shall be made to the Participant's Beneficiary, in
the same amount and at the same times that the payments would have
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been made to the Participant if he or she had not died. All
installments will be paid from the Plan. The amount of each
installment payment shall be equal to the Vested portion of the
balance of the Participant's Individual Account, as of the date on
which the payment is due, divided by the remaining number of
installment payments to be made, including the current payment.
3. Under Option 3, the Participant's Individual Account shall be applied
to purchase from an insurance company a non-transferable,
non-surrenderable, single-premium annuity contract under which the
annuity will be paid, and such contract shall be transferred to the
Participant. The amount to be paid for such contract shall be equal to
the Vested portion of the balance of the Participant's Individual
Account, as of the date on which the payment of the annuity is to
begin. If the Participant is married on his or her Annuity Starting
Date, then the annuity under the contract shall be paid in the form of
a "qualified joint and survivor annuity," or in any other form which
is required by law, or which complies with the applicable requirements
of the Code and the Treasury Regulations. Under a "qualified joint and
survivor annuity," monthly payments will be made to the Participant
for his or her lifetime, and, upon the Participant's death, monthly
payments will be made to the Participant's surviving spouse for the
surviving spouse's lifetime, with each monthly payment to the
surviving spouse equal to 50% of each monthly payment that was being
made to the Participant before his or her death. If the Participant is
not married on his or her Annuity Starting Date, then the annuity,
under the contract shall be paid to the Participant in form of a
monthly annuity for his or her lifetime, or in any other form which is
required by law, or which complies with the applicable requirements of
the Code and the Treasury Regulations.
4. Notwithstanding the foregoing, the distribution of a Participant's
Individual Account may not be made under an Option which the Employer
does not elect, in the Adoption Agreement, to make available under the
Plan. It is provided, however, that if this Plan is a money purchase
plan, Option 3 will be available under the Plan.
5. If Option 3 is available under the Plan, distribution to the
Participant is required to begin under Section 6.06, and the
Participant has not elected a form in which the distribution will be
paid by the date on which it is required to begin, then such
distribution will be made under Option 3 in the form of a qualified
joint and survivor annuity if the Participant is married on such date,
or under Option 3 in the form of a monthly single life annuity
otherwise.
6. If Option 3 is not available under the Plan, distribution to the
Participant is required to begin under Section 6.06, and the
Participant has not elected a form in which the distribution will be
paid by the date on which it is required to begin, then such
distribution will be paid under Option 2 if it is available under the
Plan, or under Option 1 otherwise.
B. Notice as to Distribution - The Plan Administrator shall furnish each
Participant, by mail or personal delivery, with a written notice regarding
the distribution of the Participant's Individual Account. To the extent
permitted, and in the manner required, by the applicable Treasury
Regulations or any notice or other promulgation issued by the Internal
Revenue Service, the Plan Administrator may furnish the notice to each
Participant over an electronic medium, instead of in writing on paper.
The notice shall be so furnished no more than 90 days, and no less then 30
days, prior to the Participant's Annuity Starting Date. The notice shall
advise the Participant as to (a) the circumstances under which his or her
Individual Account becomes distributable, (b) the forms in which it may be
distributed, (c) the material features and relevant value of, and the
amounts payable under, each such form of distribution, (d) all elections
that may be available for the Participant to make with respect to the
distribution of his or her Individual Account, including information as to
the eligibility conditions, time and method of making such elections, (e)
the right to defer any distribution until the Individual Account is no
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longer Immediately Distributable, and (f) any other information that is
required to be provided to Participants under Section 417(a)(3) of the Code
and the Treasury Regulations thereunder.
In the case of a married Participant, if Option 3 is available under the
Plan, the notice shall also contain an explanation of (1) the terms and
conditions of the qualified joint and survivor annuity, (2) the
Participant's right to make, and the effect of, an election to have his or
her Individual Account distributed in a form other than a qualified joint
and survivor annuity, (3) the rights of the Participant's spouse in
connection with such election, and (4) the Participant's right to make, and
the effect of, a revocation of such election.
To the extent permitted in the applicable Treasury regulations or any
notice or promulgation issued by the Internal Revenue Service, the Plan
Administrator (i) may furnish the Participant with a summary of the notice
otherwise required under this subsection (B), and (ii) may furnish the
notice or such summary, as applicable, to the Participant by using an
electronic medium.
C. The Participant's Election - The Participant elects the particular Option
under which his or her Individual Account will be distributed. The
Participant shall, as a part of the election:
1. if the Participant elects Option 2, choose the period over which the
installments will be paid, and designate a Beneficiary to receive any
installment payments remaining to be made after the Participant's
death;
2. if the Participant elects Option 3, choose the particular annuity form
which will be paid under the annuity contract, and designate a
Beneficiary to receive any payments which are to be made under such
form after the Participant's death; and
3. if the Participant's Individual Account is Immediately Distributable
on his or her Annuity Starting Date, consent to the start of the
distribution as of the Annuity Starting Date.
The Participant elects the Option on a form provided by and filed with the
Plan Administrator. It is provided, however, that if the Plan Administrator
so permits, and subject to such rules as the Plan Administrator may have
promulgated and to any requirements set forth in the applicable Treasury
Regulations or any notice or promulgation issued by the Internal Revenue
Service, the Participant may use an electronic medium to communicate such
election to the Plan Administrator (or any service provider designated by
the Plan Administrator to receive such communication on behalf of the Plan
Administrator). The Participant may so make his or her election at any time
after receiving the notice or summary described in subsection (B), and
during the 90-day period which ends on the Participant's Annuity Starting
Date. At any time prior to the Annuity Starting Date the Participant may
revoke his or her election, and, after revoking an election, make a new
election. The number of such revocations and new elections is not limited.
D. Earlier Start of Payment - Distribution to the Participant may start or be
made prior to the Annuity Starting Date, but after the close of the 7-day
period which starts on the day after the date on which the notice or
summary described in subsection (B) is furnished to the Participant,
provided that (1) the Plan Administrator clearly informs the Participant
that the Participant has a right to a period of at least 30 days after the
notice or summary has been furnished to consider whether to consent to an
immediate distribution and, if applicable, to elect a particular option for
the form of payment of the distribution, (2) after receiving the notice or
summary, the Participant consents to the immediate distribution and, if
applicable, selects an Option, and (3) the Participant may revoke any
consent and election made in (2) prior to the close of said 7-day period.
This subsection (D) shall not apply in any Plan Year which begins before
1997.
E. Spousal Consent - If the Participant is married on his or her Annuity
Starting Date, Option 3 is available under the Plan and the Participant
elects to have his or her Individual Account distributed in a form other
than a qualified joint and survivor annuity under Option 3, the
Participant's spouse must provide consent to such election. Such consent
shall (1) be in writing, (2) Specifically acknowledge the form of
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distribution elected, and any non-spouse Beneficiary designated, by the
Participant, (3) if the Participant's Individual Account is Immediately
Distributable on his or her Annuity Starting Date, agree to the start of
the distribution as of the Annuity Starting Date or such earlier date as
permitted in subsection (D), and (4) be witnessed by a Plan representative
or a notary public. If permitted by the Plan Administrator, and subject to
any requirements set forth in the applicable Treasury Regulations or any
notice or other promulgation issued by the Internal Revenue Service, the
Participant's spouse may provide such consent over an electronic medium,
instead of in writing on paper.
6.3 Distribution Upon the Death of a Participant
A. Distribution Upon Participant's Death - If the Participant dies before the
distribution of his or her Individual Account has started, the Individual
Account shall be distributed as set forth below. For purposes of this
Section 6.03, the proceeds of any life insurance policy on the
Participant's life shall be treated as part of the balance of the
Participant's Individual Account. This Section 6.03 will not apply if the
Participant dies after the applicable portion of the balance of his
Individual Account has been applied to purchase an annuity contract under
Section 6.02.
B. Beneficiary Requests for Distribution - A surviving spouse or other
Beneficiary of a deceased Participant who is entitled to a Plan
distribution and who wishes to receive a distribution must submit a written
request to the Plan Administrator on a form provided by the Plan
Administrator and accompanied by those documents the Plan Administrator may
require. After a request is received, the Plan Administrator will direct
the Trustee to start distribution, as of a date which is selected by the
Plan Administrator, and which is not more than 90 days after the later of:
1. The last day of the Plan Year in which the Participant dies; or
2. The last day of the Plan Year in which the request is received.
C. Qualified Pre-retirement Survivor Annuity - The Participant's Individual
Account shall be distributed to the Participant's surviving spouse, in the
form of a "qualified pre-retirement survivor annuity," if (1) the
Participant is married on the date of his or her death, (2) the Participant
did not waive distribution in such form, in the manner described in
subsection (D) below, and (3) Option 3, described in Section 6.02(A), is
available under the Plan. The "qualified pre-retirement survivor annuity"
is a monthly annuity, which is payable to the Participant's surviving
spouse for his or her lifetime. The Vested portion of the balance of the
Participant's Individual Account, as of the date on which the payment of
such annuity is to begin, shall be applied to purchase from an insurance
company a non-transferable, non-surrenderable, single-premium annuity
contract from which the payments under such annuity will be made, and such
contract shall be transferred to the surviving spouse.
D. Waiver of the Qualified Pre-Retirement Survivor Annuity - A married
Participant may waive distribution of the qualified pre-retirement survivor
annuity form of payment by making a Qualified Election at any time after
receiving the written explanation furnished by the Plan Administrator
pursuant to the Notice Requirement, and during the Election Period. The
following definitions and rules shall apply for the purposes of this
subsection (D).
1. Election Period: The period starting on the first day of the Plan Year
in which the Participant attains age 35 and ending on the date of his
or her death. If a Participant incurs a Termination of Employment
before the first day of the Plan Year in which he or she attains age
35, the Election Period with respect to the balance of his or her
Individual Account (as of the date of the termination) begins on the
date of the termination.
2. Pre-Age 35 Waiver: A married Participant who will not attain age 35 by
the end of any given Plan Year may make a special Qualified Election
to waive the qualified pre-retirement survivor annuity form of
payment. The special election applies to the period which starts on
the day on which it is made, and which ends at the close of the Plan
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Year which immediately precedes the Plan Year which the Participant
will attain age 35. The election is not valid unless, before the
election is made, the Participant receives a written explanation of
the qualified pre-retirement survivor annuity which is comparable to
the written explanation to be furnished under the Notice Requirement.
Qualified pre-retirement survivor annuity coverage is automatically
reinstated as of the first day of the Plan Year in which the
Participant attains age 35. Any new waiver on or after that date is
subject to the full requirements of this subsection (D).
3. Qualified Election: An election by a married Participant not to
receive (i.e., a waiver of) the qualified pre-retirement survivor
annuity form of payment. Such election shall not be effective unless:
(a) the Participant's spouse consents in writing to the election, (b)
the election names 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 the
Participant to make changes without any further spousal consent,
referred to hereinafter as a "General 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 a notary public. Any
spousal consent under this paragraph (3) is effective only for the
spouse that provides it. A consent shall not be treated as a General
Consent unless it acknowledges that the spouse has the right to limit
consent to a specific beneficiary, and that the spouse voluntarily
elects to give up this right. No election under this paragraph (3) is
valid unless the Participant receives the written explanation
described in the Notice Requirement before the election is made.
At any time before the distribution of the Participant's Individual
Account begins, the Participant may revoke an election that he or she
has made under this paragraph (3), and after revoking an election, the
Participant may make a new Qualified Election. Any revocation shall
not be subject to spousal consent. A new election shall be subject to
spousal consent unless the Participant's spouse at the time the new
election is made previously provided a General Consent. The number of
such revocations and new elections is not limited.
4. Notice Requirement: The Plan Administrator shall provide each
Participant within his or her "applicable period" (as defined below) a
written explanation of the qualified pre-retirement survivor annuity
which is comparable to the notice required under Section 6.02(B) for a
qualified joint and survivor annuity.
The "applicable period" for a Participant is whichever of the
following periods ends last: (a) the period which starts on the first
day of the Plan Year in which the Participant attains age 32, and
which ends on the last day of the Plan Year immediately preceding the
Plan Year in which the Participant attains age 35; (b) the period
which starts one year before the date on which the individual becomes
a Participant, and which ends one year after such date; or (c) the
period which starts one year before the date on which this subsection
(D) first applies to the Participant, and which ends one year after
such date. However, if the Participant incurs a Termination of
Employment before the Plan Year in which he or she attains age 35, the
written explanation must be provided during the two-year period which
begins one year before the date of the termination, and which ends one
year after such date. If the Participant returns to employment with
the Employer, the applicable period for that Participant is
redetermined.
E. Other Forms of Payment - If the Participant's Individual Account is not
payable in the form of a qualified pre-retirement survivor annuity under
subsection (C) above, or if the Participant has waived the qualified
pre-retirement survivor annuity form of payment under subsection (D) above,
the Participant's Individual Account shall be distributed to the
Participant's Beneficiary, in either (1) a single lump-sum payment or (2)
installment payments over a period certain which does not exceed the
Beneficiary's life expectancy. Any installments shall be so paid on a
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monthly, quarterly, semiannual or annual basis, as elected by the Employer
in the Adoption Agreement, with each payment due on the first day of the
period for which it is made. The following rules shall apply:
1. If the Participant has waived the qualified pre-retirement survivor
annuity form of payment under subsection (D), the Participant's
Beneficiary shall be the person(s) designated as such under subsection
(D). Otherwise, paragraph (2) below shall apply to identify the
Beneficiary.
2. The Participant may designate any person as the Beneficiary. However,
if the Participant is married, and designates a non-spouse
Beneficiary, such designation is not valid unless the Participant's
spouse consents to such designation in writing. Such consent must
acknowledge its effect on such spouse and must be witnessed by a Plan
representative or a notary public. Such consent may be limited to the
specific individual designated by the Participant as the Beneficiary,
or may be a General Consent (as defined in subsection (D)(3) above). A
consent will not be treated as a General Consent unless it
acknowledges that the spouse has the right to limit consent to a
specific beneficiary, and that the spouse voluntarily elects to give
up this right. Any spousal consent under this paragraph (2) is
effective only for the spouse that provided it. The Participant may,
at any time prior to his or her death and (in the case of a married
Participant) without any spousal consent, revoke a Beneficiary
designation. After such revocation, the Participant may, at any time
prior to his or her death, make a new Beneficiary designation. If the
Participant is married at the time that he or she makes a new
designation, such new designation must be accompanied by the consent
of the Participant's spouse at such time, unless such spouse
previously provided a General Consent. The number of revocations of a
Beneficiary designation and the number of new Beneficiary designations
shall not be limited. Any designation of a Beneficiary, any revocation
and new designation of a Beneficiary, and any spousal consent to a
Beneficiary designation must be made on a form provided by and filed
with the Plan Administrator. If the Participant fails to designate a
Beneficiary in the foregoing manner, the following shall apply. If the
Participant is married on the date of his or her death, the
Participant's spouse shall be the Beneficiary. If the Participant is
not married on such date, the Participant's estate shall be the
Beneficiary.
3. The Beneficiary shall elect the form in which the Participant's
Individual Account will be distributed upon the Participant's death.
If the Beneficiary elects to have the Individual Account distributed
in installments, the Beneficiary shall, as part of such election,
select the period over which the installments are to be paid. A
Beneficiary may, at any time prior to the date on which the
distribution starts or is made, revoke an election, and after revoking
an election, make a new one. The number of revocations and new
elections is not limited. The Beneficiary shall make an election as to
the form in which the Participant's Individual Account will be
distributed upon the Participant's death, any revocation of such an
election, and any new such election on a form provided by and filed
with the Plan Administrator. If the Beneficiary fails to elect the
form in which the Participant's Individual Account will be distributed
upon the Participant's death, distribution shall be made in the form
of a single lump-sum payment.
4. If the Participant's Individual Account is distributed under this
subsection (E) in the form of a single lump-sum payment, the amount of
such payment shall be equal to the Vested portion of the balance of
the Participant's Individual Account as of the date on which the
payment is to be made. If the Participant's Individual Account is
distributed in the form of installments, the amount of each
installment shall be equal to the Vested portion of the balance of the
Participant's Individual Account as of the date on which the
installment is due, divided by the remaining number of installment
payments to be made including the current payment.
-30-
F. Cash-Out of Small Account Balances - Notwithstanding any other provision of
the Plan to the contrary, if, as of the date of the Participant's death,
the Vested portion of the balance of the Participant's Individual Account
does not exceed, or if the Participant died before October 17, 2000 never
exceeded, $5,000 ($3,500 for Plan Years beginning before August 6, 1997),
the following shall apply. The Participant's Individual Account shall be
distributed in the form of a single lump-sum payment. Such payment shall be
made as soon as practicable after the date of the Participant's death. The
amount of such payment shall be equal to the Vested portion of the balance
of the Participant's Individual Account as of such date. If the Individual
Account would otherwise be distributed to the Participant's surviving
spouse as a qualified pre-retirement survivor annuity, then such payment
shall be made to such surviving spouse. Otherwise, such payment shall be
made to the Participant's Beneficiary.
6.4 Rules for Participant's Spouse
A. In General - The Participant's "spouse" is 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" (described in Section 414(p) of the Code).
B. One Year Marriage Requirement - A Participant shall not be treated as
married on his or her Annuity Starting Date, or on the date of his or her
death, as applicable, unless the Participant and his or her spouse have
been married throughout the 1-year period ending on the earlier of the
Participant's Annuity Starting Date or the date of the Participant's death,
except as otherwise provided in a qualified domestic relations order
described in Section 414(p) of the Code. For purposes of the preceding
sentence, the Participant and his or her spouse shall be treated as having
been married throughout the 1-year period ending on the Participant's
Annuity Starting Date if the Participant marries such spouse within one
year before the Annuity Starting Date, and the Participant and such spouse
remain married for at least a 1-year period ending on or before the date of
the Participant's death.
C. Spousal Consent Not Required - Notwithstanding any other provisions of the
Plan to the contrary, the consent of the Participant's spouse to any
election, consent or beneficiary designation made or provided by the
Participant shall not be required if it is established to the satisfaction
of the Plan Administrator that there is no spouse, the spouse cannot be
located or such other circumstances exist as may be prescribed by Treasury
regulations, or any rulings or other promulgations issued by the Internal
Revenue Service.
6.5 Unallocated Participant or Beneficiary
If any amount which would otherwise be paid hereunder to a Participant or his or
her Beneficiary remains unpaid solely because the Plan Administrator has not
been able to locate the Participant or Beneficiary, as the case may be, after
sending a certified letter, return receipt requested, to his or her last known
address, and after further diligent effort, then such amount shall be forfeited
and applied to reduce Employer Contributions. If any amount is forfeited because
the Participant or Beneficiary cannot be located, such amount will be reinstated
if a claim is made therefore by the Participant or Beneficiary.
6.6 Distribution Requirements
A. General Rules - The requirements of this Section 6.06 shall apply to
any distribution of a Participant's interest in the Plan, and shall
control over any inconsistent provisions of this Plan.
B. Commencement of Benefits - Unless the Participant elects otherwise,
distribution of a Participant's Individual Account to the Participant
must begin no later than 60 days after the last day of the Plan Year
in which the latest of the following occurs:
1. he or she attains the earlier of Normal Retirement Age or age 65;
2. the 10th anniversary of the date on which he or she became a
Participant; or
3. he or she has a Termination of Employment.
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However, if the Participant and (if applicable) his or her spouse fail to
consent to the start of a distribution while the Participant's Individual
Account is Immediately Distributable, the failure to so consent is treated as an
election to defer the start of distribution, and the requirements of this
Section 6.06(B) are satisfied.
C. Age 70 1/2 or Death -
1. In General - Any distribution required under this Section 6.06(C)
shall be determined and made in accordance with the requirements of
Section 401(a)(9) of the Code and any applicable Treasury Regulations,
including the incidental death benefit requirement under Section
401(a)(9)(G) of the Code and Section 1.401(a)(9)-2 of the proposed
Treasury Regulations. These requirements are incorporated into this
Plan by reference, to the extent not fully reflected below.
2. Required Beginning Date - The entire interest of a Participant in the
Plan must be distributed or begin to be distributed no later than by
the Participant's "Required Beginning Date" (as defined in paragraph
(6)(e) below).
3. Limits on Distribution Periods - As of the first "Distribution
Calendar Year" (as defined in paragraph (6)(b) below), the
distribution of a Participant's interest in the Plan, if not made in
the form of a single lump-sum payment, may only be made over one (or a
combination) of the following periods:
(a) the life of the Participant;
(b) the life of the Participant and his or her Beneficiary;
(c) a specified period not longer than the "Life Expectancy" (as defined
in paragraph (6)(c) below) of the Participant; or
(d) a specified period not longer than the "Joint Life and Last Survivor
Expectancy" (as defined in paragraph (6)(c) below) of the Participant
and his or her Beneficiary.
4. Determination of Amount to be Distributed Each Year - If the
Participant's interest in the Plan is not being distributed in the
form of a single lump-sum payment, the following minimum distribution
rules apply on or after the Participant's Required Beginning Date:
(a) Individual Account -
(i) If the Participant's Individual Account is to be distributed over
a period not longer than his or her Life Expectancy or the Joint
Life and Last Survivor Expectancy of the Participant and his or
her Beneficiary, the amount required to be distributed for each
calendar year, beginning with the first Distribution Calendar
Year, must not be less than the amount determined by dividing the
"Participant's Benefit" (as defined in paragraph (6)(d) below)
for that calendar year by the lesser of (I) the "Applicable Life
Expectancy" (as defined in paragraph (6)(a) below) for that
calendar year or (II) if his or her spouse is not the
Beneficiary, the applicable divisor determined from the table
contained in proposed Treasury Regulation Section 1.401(a)(9)-2,
Q&A-4 in that Calendar Year.
(ii) 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 falls, must be made on or before December
31 of that Distribution Calendar Year.
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(b) Other Forms - If the Participant's interest in the Plan is distributed
in the form of an annuity, the annuity payments shall be made in
accordance with the requirements of Section 401(a)(9) of the Code and
the applicable Treasury Regulations.
5. Death Distribution Provisions -
(a) Distribution Beginning Before Death - If the Participant dies after
distribution of his or her Plan interest begins, the remaining portion
of that interest must continue to be distributed at least as rapidly
as under the method of distribution being used before the
Participant's death.
(b) Distribution Beginning After Death - If the Participant dies before
distribution of his or her Plan interest begins, distribution of the
Participant's entire Plan interest must be completed by December 31 of
the calendar year containing the fifth anniversary of his or her
death, except to the extent that an election is made to receive the
distribution under clause (i) or (ii) below:
(i) If the Participant's Plan interest is payable to a Beneficiary,
distribution of such interest may be made over the life, or over
a period certain not greater than the Life Expectancy, of the
Beneficiary beginning by December 31 of the calendar year
immediately following the calendar year in which the Participant
died.
(ii) If the Participant's surviving spouse is the Beneficiary,
distribution of the Participant's Plan interest is made as under
(i) above, except that distribution is not required to begin
until the later of (I) December 31 of the calendar year
immediately following the calendar year in which the Participant
died or (II) December 31 of the calendar year in which the
Participant would have attained age 70 1/2.
(c) If the Participant has not made an election under subparagraph (b) by
the time of his or her death, the Beneficiary must elect the method of
distribution no later than by the earlier of (x) December 31 of the
calendar year in which distribution must begin under clause (i) or
(ii) of subparagraph (b), whichever is applicable, or (y) December 31
of the calendar year which contains the fifth anniversary of the
Participant's date of death. If the Participant has no Beneficiary, or
if the Beneficiary does not elect a method of distribution, the
distribution of the Participant's entire Plan interest must be
completed by December 31 of the calendar year containing the fifth
anniversary of the Participant's death.
(d) For purposes of subparagraph (b), if the Participant's spouse is the
Beneficiary, and that spouse dies after the Participant but before
payments to that spouse begin, the provisions of subparagraph (b),
with the exception of clause (ii) thereof, shall apply as if the
surviving spouse were the Participant.
(e) For purposes of this paragraph (5), distribution of a Participant's
Plan interest is considered to begin on the Participant's Required
Beginning Date (or, if subparagraph (d) above is applicable, the date
on which distribution is required to begin to the Participant's
surviving spouse hereunder). However, if a distribution to the
Participant irrevocably commences in the form of an annuity before the
Required Beginning Date, the date that the distribution is considered
to begin is the date on which the distribution actually commences.
6. Definitions - The following definitions apply for purposes of this
subsection (C):
(a) Applicable Life Expectancy: The Life Expectancy (or Joint Life and
Last Survivor Expectancy) for the applicable calendar year, calculated
using the age of the Participant (and Beneficiary), as of the
Participant's (and Beneficiary's) birthday in the applicable calendar
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year, reduced by one for each calendar year which has elapsed since
the date Life Expectancy (or Joint Life and Last Survivor Expectancy)
was first calculated. However, if Life Expectancy (or Joint Life and
Last Survivor Expectancy) is being recalculated, the Applicable Life
Expectancy for the applicable calendar year is the recalculated life
expectancy in that calendar year.
(b) Distribution Calendar Year: A calendar year for which a minimum
distribution is required. The first "Distribution Calendar Year" is
the calendar year immediately preceding the calendar year containing
the Participant's Required Beginning Date.
(c) Life Expectancy and Joint Life and Last Survivor Expectancy: Life
expectancy and joint life and last survivor expectancy are computed
using the expected return multiples in Tables V and VI of Treasury
Regulation Section 1.72-9.
Unless the Participant (or the Participant's spouse, if paragraph
(5)(d) applies) otherwise elects by the time distribution is
required to begin, the life expectancy or the joint life and last
survivor expectancy, as applicable, is recalculated annually. Any
such election is irrevocable for the Participant (or spouse) and
applies to the calendar year in which it is made and for all
subsequent calendar years. It is provided, however, that the life
expectancy of a nonspouse Beneficiary may not be recalculated.
(d) Participant's Benefit:
(i) The Vested portion of the balance of the Participant's
Individual Account as of the last Valuation Date in the
valuation calendar year (that is, the calendar year before
the calendar year for which the Participant's Benefit is
being determined), increased by the amount of any
contributions and Forfeitures allocated to the Participant
for the valuation calendar year after the last Valuation
Date, and decreased by distributions or withdrawals made in
the valuation calendar year after the last Valuation Date.
(ii) Exception For Second Distribution Calendar Year - For
purposes of clause (i) above, if any portion of the minimum
distribution for the first Distribution Calendar Year is
made in the second Distribution Calendar Year on or before
the Required Beginning Date, the amount of the minimum
distribution made in the second Distribution Calendar Year
is treated as if it had been made in the previous
Distribution Calendar Year.
(e) Required Beginning Date:
(i) General Rule - A Participant's "Required Beginning Date"
shall be one of the following, as indicated in the Adoption
Agreement:
Option A - A Participant's Required Beginning Date is the
April 1 of the calendar year following the calendar year in
which the Participant attains age 70 1/2.
Option B - A Participant's Required Beginning Date is the
April 1 of the calendar year following the calendar year in
which the Participant attains age 70 1/2, except that the
"Required Beginning Date" of any Participant (other than a
5% Owner), with respect to benefits which accrue after the
later of the adoption date or the effective date of this
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Option B, is the April 1 of the calendar year following the
later of the calendar year in which the Participant attains
age 70 1/2 or the calendar year in which the Participant has
a Termination of Employment.
Option C -A Participant's Required Beginning Date is the
April 1 of the calendar year following the later of the
calendar year in which the Participant attains age 70 1/2 or
the calendar year in which the Participant has a Termination
of Employment, except that the "Required Beginning Date" of
any Participant who is a 5% Owner is the April 1 of the
calendar year following the calendar year in which such
Participant attains age 70 1/2.
(ii) Special Rules - If Option B or C in clause (i) above is
elected in the Adoption Agreement, the following shall
apply. If elected in the Adoption Agreement, any Participant
who attained age 70 1/2 in a calendar year prior to 1997,
but who did not have a Termination of Employment prior to
January 1, 1997, may elect to stop any benefit payments
which have begun under the Plan (other than under an annuity
contract), but which are not yet required to be made under
Option B or C, whichever has been elected, and have such
payments recommence by April 1 of the calendar year
following the calendar year in which the Participant has a
Termination of Employment. There is either, as elected in
the Adoption Agreement:
(x) a new annuity starting date upon recommencement, or
(y) no new annuity starting date upon recommencement.
In the case of a Participant who attained age 70 1/2,
but did not incur a Termination of Employment, before
January 1, 1997, and who does not make the election
described above in this clause (ii) (or if such election
is not made available under the Adoption Agreement) even
though Option B or C is elected in the Adoption
Agreement, the following shall apply. Such Participant's
Required Beginning Date is (x) the April 1 of the
calendar year following the calendar year in which the
Participant attained age 70 1/2, if he or she attained
age 70 1/2 before 1996, or (y) December 31, 1997
otherwise.
Notwithstanding the above, the Plan's "preretirement age
70 1/2 distribution provision" is eliminated only to the
extent indicated in Option B or C, whichever has been
elected, and only with respect to Participants who
attain age 70 1/2 during a calendar year which begins
after the later of December 31, 1998 or the date on
which Option B or C is adopted. The Plan's
"preretirement age 70 1/2 distribution provision" is a
provision under which benefit payments commence during
the period that (x) begins on or after January 1 of the
calendar year in which a Participant attains age 70 1/2
and (y) ends April 1 of the immediately following
calendar year.
(f) 5% Owner:
(i) 5% Owner - A Participant is treated as a 5% Owner for
purposes of this Section 6.06 if he or she is a "5% Owner"
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as defined in Section 416(i)(1)(B)(i) of the Code (without
regard to whether the Plan is a Top-Heavy Plan) at any time
during the Plan Year ending with or within the calendar year
in which the Participant attains age 70 1/2.
(ii) Once distributions have begun to a 5% Owner under this
Section 6.06 they must continue to be made, even if the
Participant ceases to be a 5% Owner in a subsequent Plan
Year.
7. Application of Proposed Regulations - With respect to distributions
under the Plan made on or after the date determined by the Employer
(the "Application Date"), the Plan will apply the minimum distribution
requirements of Section 401(a)(9) of the Code in accordance with the
regulations under Section 401(a)(9) that were proposed on January 17,
2001 (the "2001 Proposed Regulations"), notwithstanding any provision
of the Plan to the contrary. It is provided, however, that the
Application Date must be either (a) a date occurring during the
calendar year 2001, or (b) the first day of a calendar year starting
after December 31, 2001. If the Application Date occurs during
calendar year 2001, then (1) if the total amount of required minimum
distributions made to a Participant for 2001 prior to the Application
Date are equal to or greater than the amount of required minimum
distributions determined under the 2001 Proposed Regulations, then no
additional distributions are required for such Participant for 2001 on
or after such date or (2) if the total amount of required minimum
distributions made to a Participant for 2001 prior to the Application
Date are less than the amount determined under the 2001 Proposed
Regulations, then the amount of required minimum distributions for
2001 on or after such date will be determined so that the total amount
of required minimum distributions for 2001 is the amount determined
under the 2001 Proposed Regulations. This paragraph (7) shall continue
in effect until the last calendar year beginning before the effective
date of the final regulations under Section 401(a)(9) or such other
date as may be published by the Internal Revenue Service.
D. Pre-1984 Elections -
1. Notwithstanding the requirements of subsection (C) above, a Plan
distribution on behalf of any Participant, including a Participant who
is a 5% Owner (as defined in subsection (C)(6)(f)(i) above), may be
made in accordance with the following requirements:
(a) The distribution by the Plan is one which would not have disqualified
the Plan under Section 401 (a)(9) of the Code as in effect prior to
amendment by the Deficit Reduction Act of 1984;
(b) The distribution follows a method of distribution designated by the
Participant whose interest in the Plan is being distributed or, if the
Participant is deceased, by the Participant's Beneficiary;
(c) That designation was in writing, signed by the Participant or the
Beneficiary, and made before January 1, 1984;
(d) The Participant had accrued a benefit under the Plan as of December
31, 1983; and
(e) The method of distribution designated by the Participant or the
Beneficiary specifies the time at which distribution begins, the
period over which distributions will be made, and, in the case of any
distribution to be made upon the Participant's death, lists the
Beneficiaries of the Participant in order of priority.
2. A distribution upon the Participant's death will not be covered by
this subsection (D) unless the information in the designation contains
the required information described above for distributions to be made
upon the death of the Participant.
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3. For any distribution beginning before January. 1, 1984, but continuing
after December 31, 1983, the Participant, or the Beneficiary to whom
the distribution is being made, is 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 paragraph (1)(a) and (e)
above.
4. If a designation is revoked, any subsequent distribution must satisfy
the requirements of Section 401(a)(9) of the Code. If a designation is
revoked after the date distributions are required to begin, the Plan
must distribute, by the end of the calendar year after the calendar
year in which the revocation occurs, the total amount not yet
distributed that would have been distributed to satisfy Section
401(a)(9) of the Code if not for the pre-1984 designation. For
calendar years beginning after December 31, 1988, these distributions
must meet the minimum distribution incidental benefit requirements
under Proposed Treasury Regulation Section 1.401(a)(9)-2. Any changes
in the designation will generally be considered to revoke the
designation. However, a mere substitution or addition of another
Beneficiary (not named in the designation) under the designation will
not be considered a revocation of the designation, if the substitution
or addition does not change the period over which distributions are to
be made under the designation, directly or indirectly (for example, by
changing the relevant measuring life). If an amount is transferred or
rolled over from one plan to another plan, the rules under Proposed
Treasury Regulation Section 1.401(a)(9)-1, Q&A J-2 and Q&A J-3 will
apply.
E. Transitional Rules -
1. Any living Participant who separated from employment with at least 10
Years of Vesting Service but who was not receiving benefits on August
23, 1984, and who had not been credited with at least one Hour of
Service on or after said date and therefore would not have been
covered by the qualifying annuity rules of this Article 6, must be
given the opportunity to elect to have those rules apply if the
Participant is credited with at least one hour of service under this
Plan or a predecessor plan in a Plan Year starting on or after January
1, 1976.
2. Any living Participant who was not receiving benefits on August 23,
1984, but who had 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 (4) below.
3. The opportunities to make elections (as described in paragraphs (1)
and (2) above) must be given to the appropriate Participants during
the period starting on August 23, 1984, and ending on the date when
Plan benefits would otherwise begin to be paid to them.
4. Any Participant who has elected under paragraph (2), and any
Participant who is described in paragraph (1) but does not elect under
paragraph (1) or who meets the requirements of paragraph (1) except
that the 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 the 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:
(i) Begins to receive payments under the Plan on or after Normal
Retirement Age; or
(ii) Dies on or after Normal Retirement Age while still working for
the Employer; or
(iii) Begins to receive payments on or after the "Qualified Early
Retirement Age" (as defined in subparagraph (c) below); or
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(iv) Separates from service on or after attaining Normal Retirement
Age (or the Qualified Early Retirement Age) and after
satisfying the eligibility requirements for the payment of
benefits under the Plan and then dies before beginning to
receive those benefits;
then those benefits will be received under this Plan in the form of
a Qualified Joint and Survivor Annuity, unless the Participant has
elected otherwise during the election period. The election period
must begin at least 6 months before the Participant attains
Qualified Early Retirement Age and ends not more than 90 days
before the commencement of benefits. Any election hereunder will be
in writing and may be changed by the Participant at any time.
(b) Election of Early Survivor Annuity - A Participant who is employed
after attaining the Qualified Early Retirement Age will be given the
opportunity to elect, during the election period, to have a survivor
annuity payable on death. If the Participant elects the survivor
annuity, payments under that 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 Qualified Early Retirement Age, or (2) the date on
which Plan participation begins, and ends on the date the Participant
terminates employment with the Employer.
(c) For purposes of this paragraph (4):
(i) Qualified Early Retirement Age is the latest of:
(1) The earliest date, under the Plan, on which the
Participant may elect or receive retirement benefits;
(2) The first day of the 120th month beginning before the
Participant attains Normal Retirement Age; or
(3) The date the Participant begins participation in the Plan.
(ii) Qualified Joint and Survivor Annuity is an annuity for the
life of the Participant with a survivor annuity for life of
the spouse as described in Section 6.02(A)(3) of the Plan.
F. Safe Harbor Distribution Rules -
1. This subsection (F) shall apply 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 December 31, 1988, from or under a
separate account attributable solely to "accumulated deductible
employee contributions" as defined in Section 72(o)(5)(B) of the Code,
which is maintained on behalf of a Participant in a money purchase
pension plan, if the following conditions are satisfied: (a) the
Participant does not or cannot elect payments in the form of a life
annuity; and (b) on the death of a Participant, the Participant's
Vested account balance will be paid to the Participant's surviving
spouse, but if there is no surviving spouse, or if the surviving
spouse has consented in a manner conforming to a qualified election,
then to the Participant's Beneficiary. The surviving spouse may elect
to have distribution of the Vested account balance commence within the
90-day period following the date of the Participant's death. The
account balance shall be adjusted for gains or losses occurring after
the Participant's death in accordance with the provisions of the Plan
governing the adjustment of account balances for other types of
distributions. This subsection (F) shall not be operative with respect
to a Participant in a profit-sharing plan if the Plan is a direct or
-38-
indirect transferee of a defined benefit plan, money purchase plan,
target benefit plan, stock bonus plan or profit-sharing plan which is
subject to the survivor annuity requirements of Section 401(a)(11) and
Section 417 of the Code. If this subsection (F) is operative, then the
other provisions of Article 6, other than subsection (E), shall be
inoperative.
2. The Participant may waive the spousal death benefit described in this
subsection (F) at any time provided that no such waiver shall be
effective unless it satisfies the conditions of subsection 6.03(D)(3)
(other than the notification requirement referred to therein) that
would apply to the Participant's waiver of the qualified preretirement
survivor annuity.
3. For purposes of this subsection (F), "Vested account balance" shall
mean, in the case of a money purchase pension plan, the Participant's
separate account balance attributable solely to accumulated deductible
employee contributions within the meaning of Section 72(o)(5)(B) of
the Code. In the case of a profit-sharing plan, "Vested account
balance" shall mean the Participant's Vested Individual Account,
taking into account the amount the proceeds of any life insurance
policy on the Participant's Life.
G. Consent Not Required - Neither the consent of the Participant nor the
Participant's Spouse is required to the extent that a distribution is
required to satisfy Section 401(a)(9) or Section 415 of the Code.
6.7 Payments in Kind
The Plan Administrator may cause any distribution or withdrawal under this Plan
to be made either in the form of assets actually held in the Fund, or in cash by
converting Fund assets into cash, or in any combination thereof.
6.8 Annuity Contracts
Any annuity contract distributed under the Plan (if permitted or required by
this Article 6) must be nontransferable. The terms of any annuity contract
purchased and distributed by the Plan to a Participant or spouse must comply
with the requirements of the Plan.
6.9 Loans to Participants
If the Adoption Agreement so indicates, a Participant may take a loan from the
Fund, under the following rules:
A. Loans are made available to all Participants and Beneficiaries on a
reasonably equivalent basis.
B. Loans are not made available to Participants who are Highly Compensated
Employees in amounts greater than the amounts made available to other
Participants.
C. Loans must be adequately secured and bear interest at a rate consistent
with that which would be charged by commercial lenders for loans to
unrelated parties made for similar purposes.
D. This subsection (D) applies if the Plan allows Individual Accounts to be
distributed in the form of an annuity. A Participant must obtain the
consent of his or her spouse, if any, to the use of the Participant's
Individual Account as security for the loan. The spouse's consent must be
obtained no earlier than 90 days before the date on which the loan is to be
so secured. The consent must be in writing, must acknowledge the effect of
the loan, and must be witnessed by a Plan representative or notary Public.
The consent is binding on the consenting spouse and on any future spouse
with respect to that loan. A new consent is required if the Participant's
Individual Account is used as security in connection with any
renegotiation, extension, renewal or other revision of the loan.
E. If there is a default on the loan, foreclosure on the note and attachment
of security will not occur until a distributable event occurs under the
Plan. When such event occurs, the Participant's Individual Account, to the
extent it is then securing the loan, shall be reduced as an offset against
the Participant's obligations under the loan. In addition, the Plan
Administrator shall take any commercially reasonable action it deems
necessary or desirable to satisfy any remaining obligations under the loan.
F. No loan will be made to any "shareholder-employee" or Owner-Employee. (A
"shareholder-employee" is an employee or officer of an electing small
-39-
business (Subchapter S) corporation who owns (or is considered as owning
within the meaning of Section 318(a)(l) of the Code), on any day during the
taxable year of that corporation, more than 5 % of the outstanding stock of
the corporation).
G. Loans are not made to any individuals who are not "parties in interest" (as
defined in Section 3 (14) of ERISA) with respect to the Plan.
H. Loan repayments may be suspended under this Plan as permitted by the Plan
Administrator in its discretion, under Section 414(u)(4) of the Code.
I. A loan to the Participant from the Plan (the "New Loan"), when added to the
aggregate outstanding balance of all previous loans to the Participant from
this Plan and any other qualified plan maintained by the Employer (the "Old
Loans"), may not exceed the lesser of: (a) $50,000, reduced by the excess
(if any) of the highest aggregate outstanding balance of the Old Loans
during the one-year period ending on the day before the date on which the
New Loan is made over the aggregate outstanding balance of the Old Loans on
such date, or (b) the greater of one-half of the value of the Vested
Individual Account of the Participant or such value up to $10,000. For this
purpose, the "Employer" shall include all Affiliated Companies.
J. The terms of the loan require that the loan repayment (principal and
interest) be amortized in level payments, at least quarterly, over a period
not longer than 5 years from the date on which the loan is made, unless the
loan is used to acquire a dwelling unit which, within a reasonable time
(determined at the time the loan is made), will be used as the
Participant's principal residence, in which case the loan must be amortized
in level payments, at least quarterly, over a period which is longer than 5
years, as determined by the Plan Administrator on a uniform and
nondiscriminatory basis. 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, is treated as a
loan under this Section 6.09.
K. The Plan Administrator shall establish and administer the loan program. In
establishing the program, the Plan Administrator shall prepare a written
loan program policy, which shall include, without limitation, all of the
information pertaining to the program that is required by Section
2550.408-l(d)(2) of the PWBA regulations, and which shall be set forth in
the summary plan description for the Plan. The loan program shall be
administered in accordance with the rules set forth above, the loan program
policy and with such other uniform and nondiscriminatory rules and
regulations as the Plan Administrator may establish from time to time.
6.10 Direct Rollovers
A. This Section 6.10 applies to Plan distributions and withdrawals made or
taken on or after January 1, 1993. Notwithstanding any Plan provision to
the contrary, a "Distributee" (as defined in subsection (B)(3)) may elect,
at the time and in the manner prescribed by the Plan Administrator, to have
any portion of an "Eligible Rollover Distribution" (as defined in
subsection (B)(1)) of at least $500 paid directly to an "Eligible
Retirement Plan" (as defined in subsection (B)(2)) specified by the
Distributee in a "Direct Rollover" (as defined in subsection (B)(4)).
B. Definitions -
1. Eligible Rollover Distribution: Any payments, including a withdrawal,
of all or any portion of the balance under the Plan to the credit of
the Distributee, except that an Eligible Rollover Distribution does
not include:
(a) any payment that is part of a series of substantially equal periodic
payments which are made not less frequently than annually, and which
are made for either (i) the life (or life expectancy) of the
Distributee, (ii) the joint lives (or joint life expectancies) of the
Distributee and the Distributee's Beneficiary, or (iii) a specified
period of 10 years or more;
(b) any payment to the, extent it is required to be made under Section
401(a)(9) of the Code;
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(c) the portion of any payment that is not includible in gross income
(determined without regard to the exclusion for net unrealized
appreciation with respect to Employer securities);
(d) any withdrawal after December 31, 1998 (or such later date as is
established under Internal Revenue Service rulings, notices or other
guidance) to the extent it consists of Elective Deferrals being
withdrawn on account of hardship; and
(e) any other payment(s) that is (are) reasonably expected to total less
than $200 per year.
2. Eligible Retirement Plan:
(a) An individual retirement account described in Section 408(a) of the
Code,
(b) an individual retirement annuity described in Section 408(b) of the
Code,
(c) an annuity plan described in Section 403(a) of the Code, or
(d) a qualified plan described in Section 401(a) of the Code
that accepts the Distributee's Eligible Rollover Distribution. For an
Eligible Rollover Distribution to a Participant's surviving spouse, an
"Eligible Retirement Plan" is limited to an individual retirement
account or individual retirement annuity.
3. Distributee: A Distributee is (a) an Employee or former Employee, (b)
the Employee's or former Employee's surviving spouse or (c) an
Employee's or former Employee's spouse or former spouse who is an
alternate payee under a "qualified domestic relations order" (as
defined in Section 414(p) of the Code).
4. Direct Rollover: A payment by the Plan to the Eligible Retirement Plan
specified by the Distributee.
6.11 Conversion of Money Purchase Plan to Profit Sharing Plan
If this Plan is a profit sharing plan, and was previously maintained as a money
purchase plan which was converted, by amendment and restatement, into this
profit sharing plan, then the account balances of each Participant attributable
to employer contributions made to the Plan while the Plan was a money purchase
plan shall be credited to a separate sub-account for such Participant to which
no other contributions may be credited, called the Participant's "Conversion
Sub-Account." The Conversion Sub-Account shall be subject to the same provisions
of the Plan, and shall be treated as, a sub-account which reflects the
Participant's Employer Contributions and Forfeitures except that (1) no
withdrawal may be made from the Conversion Sub-Account by the Participant while
he is an Employee, (2) any distribution from the Conversion Sub-Account shall be
subject to the requirements of Sections 401(a)(11)(A), 41l(d)(6) and 417 of the
Code and (3) if the conversion had resulted in a partial termination of the
Plan, the Participant shall be fully Vested in the balance of his Conversion
Sub-Account.
Article 7 - Claims Procedure
----------------------------
7.1 Claims Procedure
Any claim for benefits or other payments under the Plan shall be determined in
accordance with the procedure set forth below. A claim for benefits or other
payments may be filed by a Participant, a beneficiary of a Participant or the
authorized representative of such Participant or beneficiary (the "claimant").
7.2 Initial Claim Determination
Any claim for benefits or other payments under the Plan shall be made by filing
a written statement of such claim with the person or persons designated by the
Plan Administrator to process and make initial determinations as to such claims.
In the event such claim is denied in whole or in part, such person or persons
shall notify the claimant of the denial within 90 days after the date on which
the claim was filed. However, if the Plan Administrator determines that special
circumstances require an extension of time for deciding the claim, the Plan
Administrator shall furnish written notice of the extension to the claimant
prior to the expiration of such 90-day period. This notice shall indicate the
special circumstances requiring the extension, and the date by which the Plan
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expects to render the determination on the claim. If an extension is taken, and
if the claim is denied in whole or in part, the person or persons who processed
and denied the claim shall notify the claimant of the denial within 180 days
after the date on which the claim was filed.
7.3 Initial Notification of Claim Denial
Any notification of a whole or partial denial of a claim shall be in writing, or
shall be provided through an electronic medium in a manner which satisfies the
requirements of the Department of Labor's regulations at 29 CFR
2520.104b-1(c)(1)(i), (iii) and (iv). Such notification shall set forth, in a
manner calculated to be understood by the claimant:
(1) the specific reason or reasons for the denial;
(2) reference to the specific provisions of the Plan on which the denial was
based;
(3) a description of any additional material or information necessary for the
claimant to perfect the claim, and an explanation of why such material or
information is necessary; and
(4) an explanation of the review procedure under Section 7.04, including a
description of the time limits applicable to such procedure and a statement
of the claimant's right to bring a civil action under Section 502(a) of
ERISA following an adverse determination of the claim on review.
7.4 Review Procedure
A claimant whose claim is denied in whole or in part under Section 7.02 shall be
entitled to have such denial reviewed by the Plan Administrator, by filing a
written request for such review with the Plan Administrator within 60 days after
his or her receipt of the notification of the claim denial under Section 7.03.
The claimant may request and shall be provided, free of charge, reasonable
access to, and copies of, all documents, records and other information which is
relevant to the claim, and which is in the possession of the Plan Administrator
or the Employer. The claimant may provide comments, documents, records and other
information relating to the claim to the Plan Administrator to consider when
reviewing the claim. Upon receipt of a request for a review of a denied claim,
the Plan Administrator shall make a full and fair review of the claim. Such
review shall take into account all comments, documents, records and other
information submitted by the claimant relating to the claim, without regard to
whether the same was submitted or considered in the initial claim determination.
7.5 Decision on Review
The Plan Administrator shall make a decision with respect to such claim, and
shall notify the claimant of its decision, within 60 days after its receipt of
the claimant's written request for review. However, if the Plan Administrator
determines that special circumstances, such as the need to hold a hearing,
require an extension of time for deciding the claim, the Plan Administrator
shall provide a written notice of the extension to the claimant prior to the
expiration of such 60-day period. This notice shall indicate the special
circumstances requiring the extension, and the date by which the Plan expects to
render the determination on review. If an extension is taken, the Plan
Administrator shall notify the claimant of its decision on the claim within 120
days after the date on which the request to review the denial of the claim was
filed. However, if the Plan Administrator determines that an extension is needed
because the claimant must submit additional information in order for the Plan
Administrator to make its determination on the claim, and the Plan Administrator
requests such additional information from the claimant in the notification of
extension, then the 120-day period for making the determination on review shall
be tolled for the period which starts on the date on which such notification is
sent to the claimant, and which ends on the date on which the claimant provides
such additional information to the Plan Administrator.
7.6 Notification of Decision on Review
The notification of the Plan Administrator's decision on review shall be in
writing, or shall be provided through electronic medium in a manner which
satisfies the requirements described in Section 7.03. If the claim is denied,
the notification shall set forth, in a manner calculated to be understood by the
claimant:
(1) the specific reason or reasons for the claim denial;
(2) reference to the specific Plan provisions on which the claim denial was
based;
(3) a statement that the claimant is entitled to receive, upon request and free
of charge, reasonable access to, and copies of, all documents, records and
other information which is relevant to the claim, and which is in the
possession of the Plan Administrator or the Employer; and
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(4) a statement of the claimant's right to bring an action with respect to the
matter raised in the claim under Section 502(a) of ERISA.
The Plan Administrator shall provide the claimant with reasonable access to, and
copies of, any documents, records and other information which the claimant is
entitled to receive, as indicated in the notification.
7.7 Special Rules for Collectively Bargained Plans
If the Plan is established pursuant to a collective bargaining agreement, the
provisions of this Article 7 shall not apply if such agreement sets forth or
incorporates by specific reference:
(1) provisions concerning the filing of benefit claims and the initial
disposition of benefit claims; and
(2) a grievance and arbitration procedure to which adverse benefit claim
determinations are subject.
Alternatively, Sections 7.04, 7.05 and 7.06 above shall not apply if the
collective bargaining agreement sets forth or incorporates by specific reference
a grievance and arbitration procedure to which adverse benefit claim
determinations are subject (but not provisions concerning the filing and initial
disposition of benefit claims).
Article 8 - Plan Administrator
8.1 Employer is the Plan Administrator
A. The Employer is the Plan Administrator unless the Employer properly names a
person or persons other than the Employer as the Plan Administrator and
notifies the Trustee. The Employer is also the Plan Administrator if the
named person or persons cease to be the Plan Administrator or refuse to
perform the functions of the Plan Administrator. The Plan Administrator is
a "named fiduciary" of the Plan (within the meaning of Section 402(a) of
ERISA) with respect to the administration of the Plan.
B. If the Employer names a person or persons other than the Employer as Plan
Administrator, that person or persons serves at the pleasure of the
Employer and under whatever procedures are set by the Employer's managing
body. Each Plan Administrator must be bonded, to the extent required by
law.
8.2 Powers and Duties of the Plan Administrator
A. The Plan Administrator may, by appointment, allocate the duties of the Plan
Administrator among several individuals or entities, but those appointments
are not effective until the designated parties accept the appointments in
writing.
B. The Plan Administrator has the exclusive authority to control and manage
the operation and administration of the Plan. The Plan Administrator must
administer the Plan for the exclusive benefit of the Participants and their
Beneficiaries in accordance with the specific terms of the Plan.
C. The Plan Administrator is charged with the duties of the general
administration of the Plan, including, but not limited to, the following:
1. To determine all questions of interpretation or policy in a manner
consistent with the Plan's documents, and the Plan Administrator's
good faith construction or determination is conclusive and binding on
all persons. Any interpretation or construction must be
nondiscriminatory and consistent with the intent that the Plan should
be a qualified plan under Section 401(a) of the Code, and must comply
with ERISA;
2. To determine all questions relating to the eligibility of Employees to
become or remain Participants;
3. To compute the amounts necessary or desirable to be contributed to the
Plan;
4. To compute the amount and kind of benefits to which a Participant or
Beneficiary is entitled under the Plan and to direct the Trustee with
respect to all disbursements under the Plan, and when requested by the
Trustee, to furnish the Trustee with instructions, in writing, on
matters pertaining to the Plan and the Trustee may rely and act
thereon;
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5. To maintain all records necessary for the administration of the Plan;
6. To be responsible for preparing and filing any disclosure and tax
forms as may be required from time to time under the Code, ERISA or
other applicable law by the Secretary of the Treasury, the Secretary
of Labor or any other appropriate official with respect to the Plan;
and
7. To furnish each Employee, Participant or Beneficiary any notice,
information and report under any circumstance required under the Code,
ERISA or other applicable law.
D. The Plan Administrator has all of the powers necessary or appropriate
to accomplish its duties under the Plan, including, but not limited
to, the following:
1. To appoint and retain any persons as may be necessary or appropriate
to carry out the functions of the Plan Administrator;
2. To appoint and retain counsel, specialists or other persons that the
Plan Administrator deems necessary, or advisable in the administration
of the Plan;
3. To resolve all questions relating to the administration of the Plan;
4. To establish any uniform and nondiscriminatory rules which the Plan
Administrator deems necessary to carry out the terms of the Plan;
5. To make any adjustments in a uniform and nondiscriminatory manner
which the Plan Administrator deems necessary to correct any
arithmetical or accounting errors which may have been made for any
Plan Year; and
6. To correct any defect or omission or reconcile any inconsistency in
any manner and to any extent that the Plan Administrator deems
necessary or appropriate to carry out the purposes of the Plan.
8.3 Expenses and Compensation
All reasonable expenses of Plan administration including, but not limited to,
those involved in retaining necessary professional assistance may be paid from
the assets of the Fund. Alternatively, the Employer may, in its discretion, pay
those expenses. The Employer will furnish the Plan Administrator with any
clerical and other assistance as the Plan Administrator may need in the
performance of its duties.
8.4 Information from Employer
To enable the Plan Administrator to perform its duties, full and timely
information must be provided to the Plan Administrator (or its designated
agents) on all matters relating to the Compensation of Participants, their
regular employment, retirement, death, Disability or Termination of Employment,
and any other pertinent facts as the Plan Administrator (or its agents) may
require. The Plan Administrator will advise the Trustee of any of the foregoing
facts as may be pertinent to the Trustee's duties under the Plan. The Plan
Administrator (or its agents) is entitled to rely on any information supplied by
the Employer and will have no duty or responsibility to verify that information.
Article 9 - Amendment and Termination
-------------------------------------
9.1 Right of Prototype Sponsor to Amend the Plan
A. The Employer, by adopting the Plan, has delegated to the Prototype Sponsor
the power, but not the duty, to amend the Plan without any further action
or consent of the Employer. Specifically, Plan amendments may be made
unilaterally by the Prototype Sponsor. However, except as otherwise
provided by law, the Prototype Sponsor has no obligation to amend the Plan
documents. The Employer shall timely and promptly furnish to the Prototype
Sponsor copies of, or confirm or certify as to its adoption of, any
amendments to the Plan or the Adoption Agreement required to be adopted by
the Employer. The Employer agrees to take timely action required of the
Employer with respect to any amendment to the Plan by the Prototype Sponsor
necessary, in the Prototype Sponsor's sole judgment, to maintain the Plan
as a qualified plan under Section 401(a) of the Code, and, upon the request
of the Prototype Sponsor to confirm or certify its timely action with
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respect to any such amendment. The Employer expressly waives any rights or
claims against the Prototype Sponsor for not exercising its power to amend.
Each Employer has an obligation, and, by execution of the Adoption
Agreement hereby agrees, to keep the Prototype Sponsor informed as to its
current address, the cessation by the Employer of the use of this Plan as
its plan and such other information as the Prototype Sponsor shall request.
Any Employer who ceases using the services or facilities of the Prototype
Sponsor, PW Trust Company or any of their affiliates in connection with the
investment of the assets of its Plan will be deemed to have simultaneously
ceased to so use this Plan.
B. The Prototype Sponsor may amend the Plan by giving written notice to the
Employer of the amendment to be made, which notice can be given in any form
and by any methods, such as by mail or by including a notice in materials
regularly distributed by the Prototype Sponsor to customers generally. The
notice must include the text of the amendment and the date the amendment is
to be effective. The amendment is effective after that written notice,
unless within the 30-day period after the notice is provided, or within any
shorter period that the notice may specify, the Employer gives the
Prototype Sponsor written notice of its refusal to consent to the
amendment. That written notice of its refusal has the effect of withdrawing
the Plan as a prototype plan and causes the Plan to be considered an
individually-designed plan. The right of the Prototype Sponsor to cause the
Plan to be amended terminates if the Plan ceases to be a prototype plan as
provided in this or any other Plan Section.
9.2 Right of Employer to Amend the Plan
The Employer may (1) change any of the options it has selected in the Adoption
Agreement, (2) add overriding language in the Adoption Agreement when that
language is necessary to satisfy Section 415 or Section 416 of the Code because
of the required aggregation of multiple plans, and (3) add any model amendments
published by the Internal Revenue Service that specifically provide that their
adoption will not cause the Plan to be treated as individually-designed. An
Employer that amends the Plan for any other reason, including a waiver of the
minimum funding requirement under Section 412(d) of the Code, will no longer
participate in this prototype plan and will be considered to have an
individually-designed plan. The Employer amends dais Plan by action of its
managing body sufficient to be the binding act of the Employer under applicable
State law.
An Employer that wishes to amend the Plan to change any of the options it has
selected in the Adoption Agreement must complete a new Adoption Agreement. That
amendment becomes effective upon execution by the Employer.
The Employer further reserves the right to replace the Plan in its entirety by
adopting a replacement plan.
9.3 Limitation on Power to Amend
No amendment to the Plan shall be effective to the extent that it has the effect
of decreasing a Participant's accrued benefit. Notwithstanding the preceding
sentence, a Participant's Individual Account balance may be reduced to the
extent permitted under Section 412(c)(8) of the Code. For purposes of this
Section 9.03, a Plan amendment which has the effect of decreasing a
Participant's Individual Account balance, with respect to benefits attributable
to service before the amendment, shall be treated as reducing an accrued
benefit. Furthermore, if the vesting schedule of the Plan is amended, in the
case of an Employee who is a Participant as of the later of the date such
amendment is adopted or the date it becomes effective, the nonforfeitable
percentage (determined as of such date) of such Employee's Employer-derived
accrued benefit will not be less than the percentage computed under the Plan
without regard to such amendment.
No amendment to the Plan shall be effective to eliminate or restrict an optional
form of benefit. The preceding sentence shall not apply to a plan amendment that
eliminates or restricts the ability of a Participant to receive payment of his
or her Individual Account balance under a particular optional form of benefit if
the amendment satisfies the conditions in (1) and (2) below:
1. The amendment provides a single-sum distribution form that is
otherwise identical to the optional form of benefit eliminated or
restricted. For purposes of this condition (1), a single-sum
distribution form is otherwise identical only if it is identical in
all respects to the eliminated or restricted optional form of benefit
(or would be identical except that it provides greater rights to the
Participant) except with respect to the timing of payments after
commencement.
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2. The amendment is not effective unless the amendment provides that it
shall not apply to any distribution with an annuity starting date
earlier than the earlier of: (i) the 90th day after the date the
Participant receiving the distribution has been furnished a summary
that reflects the amendment and that satisfies the ERISA requirements
at 29 CFR 2520.104b-3 relating to a summary of material modifications
or (ii) the first day of the second Plan Year following the Plan Year
in which the amendment is adopted.
9.4 Amendment of Vesting Schedule
If the Plan's vesting schedule is amended, or the Plan is amended in any way
that directly or indirectly affects the computation of the Participant's Vested
percentage, or if the Plan is treated as if it were amended by an automatic
change to or from a top-heavy vesting schedule, each Participant with at least 3
Years of Vesting Service may elect, within the time identified below, to have
his or her Vested percentage computed under the Plan without regard to such
amendment.
For Participants who do not have at least 1 Hour of Service in any Plan Year
beginning after December 31, 1988, the preceding paragraph is applied by
substituting "5 Years of Vesting Service" for "3 Years of Vesting Service" where
that language appears.
The period during which the election may be made begins with the date the
amendment is adopted or deemed to be made and ends at the latest of:
A. 60 days after the amendment is adopted or deemed to be made;
B. 60 days after the amendment becomes effective; or
C. 60 days after the Participant is issued written notice of the amendment by
the Employer or Plan Administrator.
9.5 Permanency
The Employer expects to continue this Plan and make the necessary contributions
to it indefinitely, but reserves the right to terminate the Plan or any of its
features.
9.6 Plan Termination Procedures
The Employer may terminate the Plan at any time by appropriate action of its
managing body. The termination becomes effective on the date specified by the
Employer. Until all of the assets have been distributed from the Fund, the
Employer must keep the Plan in compliance with current laws and regulations by
(a) making appropriate amendments to the Plan and (b) taking other measures that
may be required.
If the Plan is terminated, the Individual Account balances of the Participants
shall be distributed in the time and manner determined by the Employer, subject
to the applicable notice, election and consent requirements of Sections
401(a)(11), 411(a)(11) and 417 of the Code, and the restriction on distributions
under Section 11.06(B)(1) of the Plan. However, if the Plan does not offer an
annuity form of benefit payment, and if neither the Employer nor any of the
Affiliated Companies maintain any defined contribution plan (other than an
"employee stock ownership plan," as defined in Section 4975(e)(7) of the Code),
then, if the employer so determines, each Participant's Individual Account
balance shall be distributed to him or her, in the form of a single lump-sum
payment, without the requirement that any consent be obtained.
9.7 Plan Continued by Successor Employer
Notwithstanding Section 9.06, a successor of the Employer may continue the Plan
and be substituted in the place of the present Employer. The successor and the
present Employer (or, if deceased, the executor of the estate of a deceased
Self-Employed Individual who was the Employer) must execute a written instrument
authorizing that substitution and the successor must complete and sign a new
Adoption Agreement.
9.8 Failure of Plan Qualification
If the Plan fails to satisfy the qualification requirements under Section 401(a)
of the Code, the Plan will no longer be considered to be part of a prototype
plan, and the Employer may no longer participate under this prototype. If that
happens, the Plan will be considered an individually-designed plan. If the Plan
may no longer be a qualified plan under Section 401(a) of the Code, the Employer
alone (and not the Prototype Sponsor) shall have the responsibility to correct
the qualification failure.
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Article 10 - Miscellaneous
--------------------------
10.1 State Community Property Laws
The terms and conditions of this Plan apply without regard to the community
property laws of any State.
10.2 Headings
The headings of the Plan are only for convenience and are to be ignored in any
construction of the Plan's terms.
10.3 Gender and Number
Words used in the masculine gender shall be read as if they were also used in
tile feminine gender in all cases, except where the context clearly indicates
otherwise, and words used in the singular form shall be read as if they were
also used in the plural form, except where the context clearly indicates
otherwise.
10.4 Plan Merger or Consolidation
If there is a merger or consolidation of the Plan with, or transfer of assets or
liabilities of the Plan to, any other plan, each Participant must be entitled to
receive benefits from the resulting plan immediately after the merger,
consolidation, or transfer (as if the resulting plan had then terminated) equal
to or greater than the benefits he or she would have been entitled to receive
under this Plan immediately before the merger, consolidation, or transfer (if
this Plan had then terminated). The Trustee has the authority to enter into
merger agreements or agreements to transfer directly the assets of this Plan but
only if those agreements are in accordance with the terms and provisions of this
Plan and made with trustees or custodians of other retirement plans described in
Section 401(a) of the Code.
10.5 Terms of Employment
Nothing in this Plan gives an Employee, whether or not a Participant, any right
to be employed by the Employer or to continue employment with the Employer, and
nothing in this Plan limits the Employer's right to discharge an Employee.
10.6 Agreement Binds Heirs, Etc.
This Plan binds the heirs, executors, administrators, successors and assigns, as
those terms apply to any and all Plan parties, present and future.
10.7 Determination of Top-Heavy Status
A. For any Plan Year beginning after December 31, 1983, this Plan is a
Top-Heavy Plan if any of the following conditions exist as of the
"Determination Date" (as defined in subsection (D)(3) below) for such Plan
Year:
1. If the "Top-Heavy Ratio" (as defined in subsection (C)) for this Plan
exceeds 60% and this Plan is not part of any "Required Aggregation
Group" (as defined in subsection (D)(1)) or "Permissive Aggregation
Group" (as defined in subsection (D)(2));
2. If this Plan is part of a Required Aggregation Group but not part of a
Permissive Aggregation Group and the Top-Heavy Ratio for the Required
Aggregation Group exceeds 60%; or
3. If this Plan is a part of a Required Aggregation Group and part of a
Permissive Aggregation Group and the Top-Heavy Ratio for the
Permissive Aggregation Group exceeds 60%.
B. Key Employee - Any Employee or former Employee (and the Beneficiaries of
that Employee) who, during any Plan Year in the "determination period" (as
defined below), was (1) an officer of the Employer with "compensation" (as
defined below) from the Employer which exceeds 50% of the dollar limit
under Section 415(b)(1)(A) of the Code for such Plan Year; (2) an owner (or
considered an owner under Section 318 of the Code) of one of the 10 largest
interests in the Employer with compensation from the Employer which exceeds
100% of the dollar limit under Section 415(c)(1)(A) of the Code for such
Plan Year; (3) a 5% Owner of the Employer; or (4) a 1% Owner of the
Employer who has compensation from the Employer which exceeds $150,000 for
such Plan Year. "Compensation" has the meaning assigned to such term under
Section 406(i)(1)(D) of the Code. The "determination period" is the Plan
Year containing the Determination Date in question and the 4 preceding Plan
Years.
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The determination of who is a Key Employee shall be made in a manner which
is consistent with Section 416(i)(1) of the Code and its Treasury
Regulations.
C. Top-Heavy Ratio -
1. If the Employer maintains one or more defined contribution plans
(including any simplified employee pension plan) and the Employer has
not maintained any defined benefit plan which during the 5-year period
ending on the Determination Date in question has or has had accrued
benefits, the Top-Heavy Ratio for this Plan alone or for the Required
or Permissive Aggregation Group, as applicable, is a fraction, the
numerator of which is the sum of the account balances of all Key
Employees under this Plan, or under the plans in such group, as
applicable, as of such Determination Date, and the denominator of
which is the sum of all account balances of all participants in this
Plan, or under the plans in such group, as applicable, as of such
Determination Date, both computed in accordance with Section 416 of
the Code and its Treasury Regulations. Both the numerator and the
denominator of the Top-Heavy Ratio are increased to reflect any
contribution not actually made as of the appropriate Determination
Date, but which is required to be taken into account on that date
under Section 416 of the Code and its Treasury Regulations, and are
further increased to reflect any amounts distributed in the 5-year
period ending on the appropriate Determination Date.
2. If the Employer maintains one or more defined contribution plans
(including any simplified employee pension plan) and the Employer
maintains or has maintained one or more defined benefit plans which
during the 5-year period ending on the Determination Date in question
has or has had any accrued benefits, the Top-Heavy Ratio for any
Required or Permissive Aggregation Group, as applicable, is a
fraction, the numerator of which is the sum of the account balances of
all Key Employees under the plans in such group, plus the present
value of accrued benefits of all Key Employees in the plans in such
group, as of such Determination Date, and the denominator of which is
the sum of the account balances of all participants under the plans in
such group, plus the present value of accrued benefits of all
participants in the plans in such group, as of such Determination
Date, all determined in accordance with Section 416 of the Code and
its Treasury Regulations. The numerator and denominator of the
Top-Heavy Ratio are increased in the manner described in paragraph (1)
above.
3. For purposes of paragraphs (1) and (2) above, the value of account
balances under this Plan is determined as of the most recent Valuation
Date of the Plan that falls in or ends with the 12-month period ending
on the Determination Date in question. The value of account balances
or accrued benefits under any plan which belongs to the same Required
or Permissive Aggregation Group as this Plan is determined in the
manner, and is taken into account as of the Determination Date,
specified in said Treasury Regulations. The present value of accrued
benefits shall be based on the interest and mortality rates specified
in the Adoption Agreement. The account balances and accrued benefits
of a participant (a) who is not a Key Employee but who was a Key
Employee in a prior Plan Year, or (b) who has not been credited with
at least one Hour of Service with the Employer at any time during the
5-year period ending on the appropriate 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
when making such calculation, is determined in accordance with Section
416 of the Code and its Treasury Regulations. Deductible Employee
contributions are not taken into account in computing the Top-Heavy
Ratio.
The accrued benefit of a participant other than a Key Employee is
determined under (a) the method, if any, that uniformly applies for
benefit accrual purposes under all defined benefit plans maintained by
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the Employer, or (b) if there is no uniform method, as if the benefit
accrued not more rapidly than under the slowest accrual rate permitted
under the fractional rule of Section 411(b)(1)(C) of the Code.
D. Definitions -
1. Determination Date: For any Plan Year after 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.
2. Employer: For purposes of this Section 10.07, the term "Employer"
shall include the Affiliated Companies to the extent required by
Section 416 of the Code and the Treasury regulations thereunder.
3. Permissive Aggregation Group: The Required Aggregation Group and any
other plan or plans of the Employer which, when considered as a group
with the Required Aggregation Group, would continue to satisfy the
requirements of Sections 401(a)(4) and 410(b) of the Code at any time
during the 5-year period ending on the Determination Date in question.
4. Required Aggregation Group: (a) Each qualified plan of the Employer in
which at least one Key Employee participates or participated at any
time during the 5-year period ending on the Determination Date in
question (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 Section 401 (a)(4) or 410(b) of the
Code at any time during said 5-year period.
5. Valuation Date: For purposes of calculating the Top-Heavy Ratio, the
valuation date of this Plan is the last day of each Plan Year.
10.8 Inalienability of Benefits
No benefit or interest available under this Plan is subject to alienation,
anticipation, assignment, charge, encumbrance, pledge, sale or transfer, either
voluntarily or involuntarily. The preceding sentence applies to any attempt to
obtain any portion of a Participant's Plan benefits under a domestic relations
order, unless that order is determined to be a qualified domestic relations
order under Section 414(p) of the Code.
A domestic relations order cannot be a qualified domestic relations order unless
it is entered on or after January 1, 1985. However, if a domestic relations
order was entered before that date, the Plan Administrator:
1. will treat the order as a qualified domestic relations order if the
Plan Administrator is paying benefits under that order on that date,
and
2. may treat the order as a qualified domestic relations order otherwise.
The rules of this Section 10.08 shall not apply to the extent provided in
Section 401(a)(13) of the Code.
10.9 No Duties or Responsibilities of Prototype Sponsor
Except as otherwise required by law, the Prototype Sponsor has no duties or
responsibilities with respect to the adoption, operation or termination of this
Plan or with respect to its administration, all of which are the sole
responsibility of the Employer. Furthermore, no duties or responsibilities with
respect to the Plan will be presumed or implied by reason of any services or
facilities provided to the Plan, the Employer, the Trustee (whether or not an
affiliate of the Prototype Sponsor) or any Participant by the Prototype Sponsor
or any of its affiliates. Any forms of elections, notices, summary plan
descriptions or other documents made available to the Employer by the Prototype
Sponsor are only samples of forms of elections, notices, summary plan
descriptions or other documents and are furnished by the Prototype Sponsor to
the Employer to assist the Employer, along with its attorney or tax advisor, to
prepare and timely distribute any such elections, notices, summary plan
descriptions or other documents which the Employer is obligated to prepare and
distribute as a result of the Employer's adoption, maintenance, operation or the
termination of the Plan. No duties or responsibilities of the Prototype Sponsor
for the preparation, adequacy or use of any such elections, notices, summary
plan descriptions or other documents will be presumed or implied by reason of
the furnishing of such sample elections, notices, summary plan descriptions or
other documents to the Employer, nor does the Prototype Sponsor undertake any
duties or responsibilities to either continue to provide such elections,
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notices, summary plan descriptions or other documents to the Employer or to
advise the Employer of any changes in the applicable laws, rules or regulations
which require any sample elections, notices, summary plan descriptions or other
documents previously furnished to the Employer by the Prototype Sponsor to be
changed or revised.
10.10 Governing Law
This Plan is interpreted and governed under the laws of the State of New York
applicable to contracts to be performed entirely in that State, except to the
extent ERISA supersedes the application of State law.
10.11 Right of Veterans
Notwithstanding any provision of this Plan to the contrary, contributions,
benefits and service credit with respect to qualified military service will be
provided in accordance with Section 414(u) of the Code.
Article 11 - 401 (k) Provisions
In addition to Articles 1 through 10, the provisions of this Article 11 apply if
the Employer establishes a 40l(k) cash or deferred arrangement (a "CODA") by
completing and signing the appropriate Adoption Agreement.
11.1 Definitions
Capitalized words and phrases in this Article 11 have the following meanings
unless previously defined in Article 1 or where the context clearly indicates
otherwise:
A. Actual Deferral Percentage ("ADP"): For any specified group of Participants
for a Plan Year, the average of the ratios (calculated separately for each
Participant in the group) of (1) the amount of Employer Contributions
actually paid over to the Fund on behalf of each Participant for the Plan
Year to (2) that Participant's 401(k) Compensation for that Plan Year
(regardless of whether he or she was a Participant for the entire Plan
Year). In calculating the ADP, Employer Contributions shall be: (1) any
Elective Deferrals made under the Participant's deferral election,
including Excess Elective Deferrals of Highly Compensated Employees, but
excluding (a) Excess Elective Deferrals of Participants who are not Highly
Compensated Employees that arise solely from Elective Deferrals made under
the Plan, and (b) Elective Deferrals that are taken into account in the
Average Contribution Percentage test (so long as the ADP test is satisfied
both with and without including these Elective Deferrals), and (2) to the
extent indicated in the Adoption Agreement, Qualified Nonelective
Contributions and Qualified Matching Contributions. In determining the
Actual Deferral Percentages, an Employee who would be a Participant but for
the failure to make Elective Deferrals is treated as a Participant on whose
behalf no Elective Deferrals are made.
B. ACP Test Safe Harbor: The safe harbor, described in Section 11.05, for
meeting the ACP test.
C. ADP Test Safe Harbor: The safe harbor, described in Section 11.05, for
meeting the ADP test.
D. After-Tax Employee Contribution: Any contribution made to the Plan by or on
behalf of a Participant that is included in the Participant's gross income
in the year in which made.
E. Aggregate Limit: The sum of (1) 125 percent of the greater of (a) the prior
Plan Year's ADP under the CODA of the Participants who were not Highly
Compensated Employees for the prior Plan Year or (b) the ACP under the
Section 401(m) arrangement for the Plan Year of such arrangement that
begins with or within the prior Plan Year of the CODA of the Participants
who were not Highly Compensated Employee for that Plan Year of the Section
401(m) arrangement, and (2) the lesser of (a) 200 percent of the lesser of
such ADP or ACP or (b) 2 percent plus the lesser of such ADP or ACP.
"Lesser" is substituted for "greater" in (1) above, and '"greater" is
substituted for "lesser" after "200 percent of the" in 2(a) above and after
"2 percent plus the" in (2)(b) above, if the substitutions would result in
a larger Aggregate Limit. If current year testing has been elected in the
Adoption Agreement then, in calculating the Aggregate Limit for a
particular Plan Year, the current Plan Year's ADP and ACP of the
Participants who are not Highly Compensated Employees for the current Plan
Year is used.
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F. Average Contribution Percentage ("ACP"): The average of the Contribution
Percentages of the Eligible Participants in a group.
G. Contributing Participant: A Participant who has enrolled as a Contributing
Participant under Section 11.02 and on whose behalf the Employer is
contributing Elective Deferrals to the Plan.
H. Contribution Percentage: The ratio (expressed as a percentage) of a
Participant's Contribution Percentage Amounts to his or her 401(k)
Compensation for the Plan Year (regardless of whether he or she was a
Participant for the entire Plan Year).
I. Contribution Percentage Amounts: "The sum of the After-Tax Employee
Contributions, Matching Contributions, and Qualified Matching Contributions
(to the extent not counted for purposes of the ADP test) made under the
Plan on behalf of the Participant for the Plan Year. Contribution
Percentage Amounts do not include Matching Contributions forfeited either
to correct Excess Aggregate Contributions or because the contributions to
which they relate are Excess Deferrals, Excess Contributions or Excess
Aggregate Contributions. If selected in the Adoption Agreement, Qualified
Nonelective Contributions may be included in the Contribution Percentage
Amounts. Also, if selected in the Adoption Agreement, Elective Deferrals
may be included in the Contribution Percentage Amounts, so long as the ADP
test is passed before the Elective Deferrals are used in the ACP test and
continues to be passed after excluding any Elective Deferrals that are used
to meet the ACP test.
J. Elective Deferrals: Any Employer contributions made to the Plan (and, where
the text of the Plan expressly requires, any other qualified plan of the
Employer or any Affiliated Company) at the election of the Participant,
instead of cash compensation, including contributions made under a salary
reduction agreement or other deferral mechanism. For any taxable year, for
purposes of determining a Participant's "Excess Elective Deferrals" (as
defined in subsection (N) below), a Participant's Elective Deferrals is the
sum of all employer contributions made on behalf of the Participant under
an election to defer under any CODA (as described in Section 401(k) of the
Code), any SIMPLE XXX (described in Section 408(p) of the Code) (for
taxable years beginning after 1996), any salary reduction simplified
employee pension (as described in Section 408(k)(6) of the Code), any
eligible deferred compensation plan under Section 457 of the Code and any
plan described under Section 501(c)(18) of the Code, and any employer
contributions made on the behalf of a Participant for the purchase of an
annuity contract under Section 403(b) of the Code (or such Employer
contributions to a custodial account under Section 403(b)(7) of the Code)
under a salary reduction agreement. Elective Deferrals do not include any
deferrals properly distributed as excess annual additions.
In the case of a standardized plan, and to the extent indicated in the
Adoption Agreement of a non-standardized plan, Elective Deferrals will be
made from cash bonuses.
A Participant's Elective Deferrals under this Plan and any other qualified
plan maintained by the Employer or any Affiliated Company, during any
taxable year, cannot exceed the dollar limit of Section 402(g) of the Code
in effect at the beginning of that taxable year.
Elective Deferrals do not count towards satisfying the Top-Heavy Plan
minimum allocation requirement of Section 3.01(E).
K. Eligible Participant: Any Employee who is eligible to make an After-Tax
Employee Contribution or an Elective Deferral (if the Employer takes those
contributions into account in the calculation of the Contribution
Percentages), or to receive a Matching Contribution (including any
Forfeitures) or a Qualified Matching Contribution. If an After-Tax Employee
Contribution is required as a condition of participation in the Plan, any
Employee who would be a Participant in the Plan if he or she made an
After-Tax Employee Contribution is treated as an Eligible Participant on
behalf of whom no After-Tax Employee Contributions are made.
An Employee's eligibility to make Elective Deferrals under a CODA may not
be conditioned upon the completion of more than one (1) Year of Eligibility
Service or the attainment of more than age twenty-one (21). An Employee's
eligibility to receive Matching Contributions, Qualified Matching
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Contributions, or Qualified Nonelective Contributions may be conditioned
upon the completion of up to two (2) Years of Eligibility Service. No
contributions or benefits (other than Matching Contributions or Qualified
Matching Contributions) may be conditioned upon an Employee's Elective
Deferrals.
L. Excess Aggregate Contributions: For any Plan Year, the excess of:
1. The total Contribution Percentage Amounts counted in computing the
numerator of the Contribution Percentages actually made on behalf of
Highly Compensated Employees for that Plan Year, less
2. The maximum Contribution Percentage Amounts permitted by the ACP test
for that Plan Year (determined by hypothetically reducing
contributions made on behalf of Highly Compensated Employees in order
of their Contribution Percentages, beginning with the Highly
Compensated Employee with the largest Contribution Percentage).
Excess Aggregate Contributions are determined only after determining Excess
Elective Deferrals under subsection (N) and then determining Excess
Contributions under subsection (M).
M. Excess Contributions: For any Plan Year, the excess of:
1. The total amount of Employer Contributions taken into account in
computing the ADP of Highly Compensated Employees for that Plan Year,
less
2. The maximum amount of Employer Contributions permitted by the ADP test
for that Plan Year (determined by hypothetically reducing
contributions made on behalf of Highly Compensated Employees in order
of the ADPs, beginning with the Highly Compensated Employee with the
highest ADP).
N. Excess Elective Deferrals: Any Elective Deferrals that are includible in a
Participant's gross income under Section 402(g) of the Code to the extent
such Participant's Elective Deferrals for a taxable year exceed the dollar
limit under that Code section. A Participant's Excess Elective Deferrals
attributable to contributions of the Employer are treated as annual
additions under the Plan unless such amounts are distributed no later than
by the April 15 following the close of the Participant's taxable year in
which the excess arises.
O. 401(k) Compensation: This term shall mean "compensation" within the meaning
of Section 415(c)(3) of the Code. An Employer may elect to reduce 401(k)
Compensation by all of the following items: reimbursements or other expense
allowances, fringe benefits (cash and noncash), moving expenses, deferred
compensation and welfare benefits. Further, for Plan Years beginning after
December 31, 1997, the Employer may elect to exclude from 401(k)
Compensation any amount which is contributed to a plan or arrangement by
the Employer pursuant to a salary reduction agreement and which is not
includible in the gross income of an Employee under Section 125, 132(f)(4),
402(e)(3), 402(h) or 403(b) of the Code. For Plan Years beginning before
January 1, 1998, the Employer may elect to include all of the items
described in Treasury Regulation Section 1.414(s)- 1(c)(4) in 40l(k)
Compensation. In the case of any non-standardized plan, the Employer may
elect to further adjust 401(k) Compensation in any manner which is
permitted by the Treasury regulations under Section 414(s)(3), and which
will not cause 401(k) Compensation to fail to be described in Section
414(s) of the Code. The amount of any Participant's 401(k) Compensation
which is taken into account under the Plan for a Plan Year shall be subject
to the limitation of Section 401(a)(17) of the Code in effect for such
year.
P. Matching Contribution: An Employer contribution made to this Plan on behalf
of a Participant on account of an After-Tax Employee Contribution made by
the Participant, or on account of a Participant's Elective Deferrals.
Matching Contributions do not count towards satisfying the Top-Heavy Plan
minimum allocation requirement described in Section 3.01(E), except as the
applicable Treasury Regulations otherwise permit.
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Q. Qualified Matching Contributions (sometimes referred to as "QMACs"):
Matching Contributions subject to the distribution and nonforfeitability
requirements under Section 401(k) of the Code when made.
R. Qualified Nonelective Contributions (sometimes referred to as "QNECs"):
Contributions (other than Matching Contributions or Qualified Matching
Contributions) made by the Employer under this Plan and allocated to
Participants' Individual Accounts under the Plan that (i) the Participants
may not elect to receive in cash until distributed from the Plan, (ii) are
nonforfeitable when made and (iii) are distributable only under the
distribution provisions that apply to Elective Deferrals and Qualified
Matching Contributions.
S. Safe Harbor Matching Contributions: Matching Contributions which the
Employer elects to make in the Adoption Agreement to meet the ADP Test Safe
Harbor.
T. Safe Harbor Nonelective Contributions: Contributions, other than Matching
Contributions, which the Employer elects to make in the Adoption Agreement
to meet the ADP Test Safe Harbor.
U. Safe Harbor Rules: The rules described in Section 11.05 of the Plan under
which the Plan can meet the ADP Test Safe Harbor and, if applicable, the
ACP Test Safe Harbor.
11.2 Participation
A. Enrolling As A Participant -
1. Each Employee who becomes a Participant may enroll as a Contributing
Participant. A Participant is eligible to enroll as a Contributing
Participant on the Entry Date as of which he or she enters the Plan.
If a Participant does not enroll at that time, he or she may enroll on
the first day of any later Plan Year, or, if the Plan Administrator
permits in a uniform and nondiscriminatory manner, on any later Entry
Date. A Participant who wishes to enroll as a Contributing Participant
must complete, sign and file with the Plan Administrator, within a
reasonable time prescribed by the Plan Administrator before the date
of enrollment, (a) an election form, indicating by percentage or
dollar figure (up to the limitation (if any) indicated in the Adoption
Agreement), the amount of Compensation that the Participant wishes to
defer under the Plan (an "Elective Deferral election"), and (b) a
salary reduction agreement.
2. In addition to the times specified in paragraph (1) above, the Plan
Administrator has the authority to designate, in a nondiscriminatory
manner, other enrollment times during the 12-month period beginning on
the Effective Date so that an orderly first enrollment can be
completed. If Elective Deferrals are made from cash bonuses,
Participants will be given a reasonable period of time before the
payment of those bonuses to elect to defer part or all of those
bonuses under the Plan.
B. Changing An Elective Deferral Election -
A Contributing Participant may change his or her Elective Deferral
election, so as to increase (up to the limitation (if any) indicated in the
Adoption Agreement) or decrease the amount of his or her Compensation
deferred under the Plan. A change may only be made as of the first day of a
Plan Year, or as of any other more frequent date(s) indicated in the
Adoption Agreement for changes to Elective Deferral elections. A
Contributing Participant must complete, sign and file a new Elective
Deferral election form with the Plan Administrator within a reasonable time
prescribed by the Plan Administrator before the change is to become
effective.
C. Withdrawal As A Contributing Participant -
A Participant may withdraw as a Contributing Participant as of the last day
preceding any Entry Date (or as of any other date if the Plan Administrator
so permits in a uniform and nondiscriminatory manner) by revoking his or
her authorization to the Employer to make Elective Deferrals on his or her
behalf. A Participant who wishes to withdraw as a Contributing Participant
must give a written notice of withdrawal to the Plan Administrator at least
30 days (or any shorter period of days as the Plan Administrator permits in
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a uniform and nondiscriminatory manner) before the effective date of
withdrawal. A Participant stops being a Contributing Participant on his or
her Termination of Employment or on termination of the Plan.
D. Return As A Contributing Participant After Withdrawal -
A Participant who has withdrawn as a Contributing Participant under
subsection (C) above may not again become a Contributing Participant until
the first day of the first Plan Year after the effective date of his or her
withdrawal as a Contributing Participant or as of any other date if the
Plan Administrator permits it, in a uniform and nondiscriminatory manner.
To again become a Contributing Participant, the Participant must complete,
sign and file with the Plan Administrator a new Elective Deferral election
and a new salary reduction agreement within a reasonable time prescribed by
the Plan Administrator before such new election and agreement become
effective.
E. Negative Elections - If the Plan provides negative elections for Elective
Deferrals under the Adoption Agreement, the following shall apply.
1. A "negative election" is an election to make Elective Deferrals which
a Participant is deemed to make if he or she fails to enroll in the
Plan, or fails to elect not to make Elective Deferrals, by the start
of the first payroll period after the Entry Date as of which he or she
becomes a Participant.
2. Within a reasonable time prior to the Entry Date as of which an
individual becomes a Participant, the Participant will be provided
with a notice which explains the negative election, the Participant's
right to elect not to make Elective Deferrals, and his or her right to
revoke, at any time, a negative election that has become effective,
including an explanation as to how any such election or revocation is
made. A Participant shall be given a reasonable period of time before
the start of the first payroll period after such Entry Date to elect
not to make Elective Deferrals. If a negative election becomes
effective with respect to a Participant, the Participant will be
notified annually of the amount of Elective Deferrals being made on
his or her behalf under the negative election and the Participant's
right to revoke the negative election at any time, including an
explanation as to how such revocation is made.
3. If a Participant does not enroll as a Contributing Participant, and
does not file an election not to make Elective Deferrals, by the start
of the first payroll period that begins after the Entry Date referred
to in paragraph (2) above, the Participant will automatically be
treated as if he or she had so enrolled, in accordance with subsection
(A) above, prior to the start of such payroll period, and had elected
to make Elective Deferrals in the amount indicated for a negative
election in the Adoption Agreement. Notwithstanding any other
provision of the Plan to the contrary, the Participant may revoke a
negative election at any time by notifying the Plan Administrator in
writing. A revocation will become effective as of the start of the
first payroll period that begins on or after the date on which such
revocation is made. After a revocation of a negative election has been
made, a Participant may thereafter make an Elective Deferral election,
in the manner described in subsection (A) for an initial Elective
Deferral election.
F. Use of Electronic Media - If the Plan Administrator so permits (and subject
to such rules as the Plan Administrator may have promulgated), any
Participant may use an electronic medium to communicate to the Plan
Administrator (or any service provider designated by the Plan Administrator
to receive such communication) any change in his or her Elective Deferral
election, any notice of withdrawal as a Contributing Participant, or any
revocation of a negative election for Elective Deferrals in lieu of a paper
form or notice.
11.3 Contributions
A. Employer Contributions -
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Matching Contributions, Qualified Matching Contributions and Qualified
Nonelective Contributions will be made by the Employer and allocated to
Participants in accordance with the Adoption Agreement.
B. After-Tax Employee Contributions -
If elected in the Adoption Agreement, a Participant may make After-Tax
Employee Contributions to the Plan, without regard to Section 3.02, up to
the amounts indicated in the Adoption Agreement. To the extent indicated in
the Adoption Agreement, After-Tax Employee Contributions will be suspended
following any in-service withdrawal which includes such contributions.
11.4 Nondiscrimination Testing
A. Actual Deferral Percentage Test
1. Limits on Highly Compensated Employees
Prior Year Testing - The Actual Deferral Percentage ("ADP") for a Plan
Year of the Participants who are Highly Compensated Employees for that
Plan Year and the ADP for the prior Plan Year of the Participants who
were not Highly Compensated Employees for the prior Plan Year must
satisfy one of the following tests:
(a) The ADP for the Plan Year of the Participants who are Highly
Compensated Employees for that Plan Year must not be greater than the
ADP for the prior Plan Year of the Participants who were not Highly
Compensated Employees for the prior Plan Year multiplied by 1.25; or
(b) The ADP for the Plan Year of the Participants who are Highly
Compensated Employees for that Plan Year must not be greater than the
ADP for the prior Plan Year of the Participants who were not Highly
Compensated Employees for the prior Plan Year multiplied by 2, and the
ADP for the Plan Year of the Participants who are Highly Compensated
Employees for that Plan Year is not more than 2 percentage points
greater than the ADP for the prior Plan Year of the Participants who
were not Highly Compensated Employees for the prior Plan Year.
For the first Plan Year for which the Plan permits any
Participant to make Elective Deferrals (if this Plan is not a
successor plan), for the purpose of the foregoing tests, the
prior Plan Year's ADP of the Participants who were not Highly
Compensated Employees for the prior Plan Year shall be 3 percent,
unless the Employer elects in the Adoption Agreement to use (in
lieu of the prior year's ADP) the first Plan Year's ADP of the
Participants who are not Highly Compensated Employees for the
first Plan Year, or unless current year testing has been elected
in the Adoption Agreement. The determination of whether a Plan
Year is the "first Plan Year" or whether the Plan is a "successor
plan," for these purposes shall be made in accordance with
Internal Revenue Service Notice 98-1 or any other applicable
guidance.
Current Year Testing - If current year testing is elected in the
Adoption Agreement, the ADP tests in (a) and (b) above will be
applied by comparing the ADP for the current Plan Year of the
Participants who are Highly Compensated Employees for the current
Plan Year with the ADP for the current Plan Year of the
Participants who are not Highly Compensated Employees for the
current Plan Year. Once made, the election to use current year
testing can be changed only as set forth in Notice 98-1 (or
superseding guidance).
2. Special Rules -
(a) A Participant is, or is not, as applicable, a Highly Compensated
Employee for a particular Plan Year if he or she meets, or fails to
meet, the definition of "Highly Compensated Employee" in effect under
the Plan for that Plan Year.
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(b) The ADP for any Participant who is a Highly Compensated Employee for
the Plan Year and who is eligible to have Elective Deferrals (and
Qualified Nonelective Contributions, or Qualified Matching
Contributions, or both, if treated as Elective Deferrals for purposes
of the ADP test) allocated to his or her accounts under two or more
CODAs maintained by the Employer or any Affiliated Company is
determined as if the Elective Deferrals (and, if applicable, the
Qualified Nonelective Contributions or Qualified Matching
Contributions, or both) were made under a single arrangement. If a
Highly Compensated Employee participates in two or more such plans or
CODAs, that have different plan years, all such plans or CODAs ending
with or within the same calendar year are treated as a single
arrangement; however, certain plans (and the CODAS in these plans)
shall be treated as separate if they are mandatorily disaggregated
under Treasury Regulations under Section 401(k) of the Code.
(c) If this Plan satisfies the requirements of Section 401(k), 401(a)(4),
or 410(b) of the Code only when considered together with one or more
other plans, or if one or more other plans satisfy the requirements of
those Code Sections only when considered together with this Plan, then
subsection (A)(1) is applied by determining the ADP of Employees as if
all the plans were one plan. For the purpose of so applying subsection
(A)(1), unless current year testing has been elected in the Adoption
Agreement, the ADP for the prior Plan Year of the Participants who
were not Highly Compensated Employees for the prior Plan Year will be
adjusted as set forth in Notice 98-1 and any superseding guidance.
Plans may be aggregated in order to satisfy Section 401(k) of the Code
only if they have the same Plan Year and use the same ADP testing
method.
(d) In order to count for the ADP test, Elective Deferrals, Qualified
Nonelective Contributions and Qualified Matching Contributions must
actually be paid to the Plan before the end of the Plan Year
immediately following the Plan Year to which such contributions
relate. However, if prior year testing has been elected, QNECs or
QMACs may not count as Elective Deferrals of Participants who are not
Highly Compensated Employees unless such QNECs or QMACs are credited
to the Individual Accounts of such Participants as of any date in the
Plan Year for which the ADP of such Participants is being determined,
and are actually paid to the Plan by the close of the following Plan
Year.
(e) The Employer must maintain records to demonstrate satisfaction of the
ADP test and the amount of Qualified Nonelective Contributions or
Qualified Matching Contributions, or both, used in the test.
(f) If the Plan Administrator determines that it is not likely that the
ADP test will be satisfied for a particular Plan Year unless certain
steps are taken prior to the end of the Plan Year, the Plan
Administrator may require Contributing Participants who are Highly
Compensated Employees to reduce their Elective Deferrals for the Plan
Year in order to pass the test. The Plan Administrator may take
similar actions if it anticipates that the Employer will not be able
to deduct all Employer Contributions for Federal income tax purposes.
(g) The determination and treatment of the ADP amounts of any Participant
must satisfy any other requirements prescribed by the Secretary of the
Treasury.
B. Limits on After-Tax Employee Contributions and Contributions -
1. Limits on Highly Compensated Employees
Prior Year Testing - The Average Contribution Percentage ("ACP") for a
Plan Year of the Participants who are Highly Compensated Employees for
that Plan Year and the ACP for the prior Plan Year of the Participants
who were not Highly Compensated Employees for the prior Plan Year must
satisfy one of the following tests:
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(a) The ACP for the Plan Year of the Participants who are Highly
Compensated Employees for that Plan Year must not be greater than the
ACP for the prior Plan Year of the Participants who were not Highly
Compensated Employees for the prior Plan Year multiplied by 1.25; or
(b) The ACP for the Plan Year of the Participants who are Highly
Compensated Employees for that Plan Year must not be greater than the
ACP for the prior Plan Year of the Participants who were not Highly
Compensated Employees for the prior Plan Year multiplied by 2, and the
ACP for the Plan Year of the Participants who are Highly Compensated
Employees for that Plan Year is not more than 2 percentage points
greater than the ACP for the prior Plan Year of the Participants who
were not Highly Compensated Employees for the prior Plan Year.
For the first Plan Year for which the Plan permits any
Participant to make After-Tax Employee Contributions, provides
for Matching Contributions, or both (if this Plan is not a
successor plan), for the purpose of the foregoing tests, the
prior Plan Year's ACP of the Participants who were not Highly
Compensated Employees for the prior Plan Year shall be 3 percent,
unless the Employer elects in the Adoption Agreement to use (in
lieu of the prior year's ACP) the first Plan Year's ACP of the
Participants who are not Highly Compensated Employees for the
first Plan Year, or unless current year testing has been elected
in the Adoption Agreement. The determination of whether a Plan
Year is the "first Plan Year", or whether the Plan is a
"successor plan", for these purposes shall be made in accordance
with Internal Revenue Service Notice 98-1 or any other applicable
guidance.
Current Year Testing - If current year testing is elected in the
Adoption Agreement, the ACP tests in (a) and (b) above will be
applied by comparing the ACP for the current Plan Year of the
Participants who are Highly Compensated Employees for the current
Plan Year with the ACP for the current Plan Year of the
Participants who are not Highly Compensated Employees for the
current Plan Year. Once made, the election to use current year
testing can be changed only as set forth in Notice 98-1 (or
superseding guidance).
2. Special Rules -
(a) A Participant is, or is not, as applicable, a Highly Compensated
Employee for a particular Plan Year if he or she meets, or fails to
meet, the definition of "Highly Compensated Employee" in effect under
the Plan for that Plan Year.
(b) If one or more Highly Compensated Employees participate in both a CODA
and an Employer plan subject to the ACP test 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 ACP of the Highly
Compensated Employees who also participate in a CODA are reduced in
the manner described in Section 11.06(G)(1) until the limit is not
exceeded. The amount by which each Highly Compensated Employee's
Contribution Percentage Amounts is reduced is 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 and are deemed to be the maximum permitted under
such tests for the Plan Year. The Aggregate Limit will not apply if
either the ADP or ACP of the Highly Compensated Employees does not
exceed 1.25 multiplied by the ADP and ACP, respectively, of the
Participants who are not Highly Compensated Employees.
(c) The Contribution Percentage for any Participant who is a Highly
Compensated Employee for the Plan Year and who is eligible to have
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Contribution Percentage Amounts allocated to his or her accounts under
two or more plans described in Section 401(a) of the Code, or two or
more CODAs, that are maintained by the Employer or any Affiliated
Company is determined as if all those Contribution Percentage Amounts
were made under a single plan or arrangement. If a Highly Compensated
Employee participates in two or more such plans or CODAs that have
different plan years, all such plans or CODAs ending with or within
the same calendar year are treated as a single arrangement; however,
certain plans (and the CODAs in those plans) shall be treated as
separate if they are mandatorily disaggregated under Treasury
Regulations under Section 401(m) of the Code.
(d) If this Plan satisfies the requirements of Section 401(m), 401(a)(4)
or 410(b) of the Code only when considered together with one or more
other plans, or if one or more other plans satisfy the requirements of
those Code Sections only when considered together with this Plan, then
subsection (B)(1) is applied by determining the Contribution
Percentage of Employees as if all the plans were one plan. For the
purpose of so applying subsection (B)(1), unless current year testing
has been elected in the Adoption Agreement, the ACP for the prior Plan
Year of the Participants who were not Highly Compensated Employees for
the prior Plan Year will be adjusted as set forth in Notice 98-1 and
any superseding guidance. Plans may be aggregated in order to satisfy
Section 401(m) of the Code only if they have the same Plan Year and
use the same ACP testing method.
(e) In determining the Contribution Percentages, After-Tax Employee
Contributions are considered to have been made to the Plan in the Plan
Year in which they are contributed to the Fund. Matching Contributions
and Qualified Nonelective Contributions must actually be paid to the
Plan before the end of the Plan Year immediately following the Plan
Year to which such contributions relate. However, if prior year
testing has been elected, QNECs may not count as Contribution
Percentage Amounts of Participants who are not Highly Compensated
Employees unless such QNECs are credited to the Individual Accounts of
such Participants as of any date in the Plan Year for which the ACP of
such Participants is being determined, and are actually paid to the
Plan by the close of the following Plan Year.
(f) The Employer must maintain records to demonstrate satisfaction of the
ACP test and the amount of Qualified Nonelective Contributions or
Qualified Matching Contributions, or both, used in the test.
(g) The determination and treatment of the Contribution Percentage of any
Participant must satisfy any other requirements prescribed by the
Secretary of the Treasury.
C. Effective Dates - The provisions of this Section 11.04 are effective for
any Plan Year beginning on or after January 1, 1997. For Plan Years which
begin prior to said date, the nondiscrimination tests set forth in Sections
401(k)(3) and 401(m) of the Code, prior to amendment by the Small Business
Job Protection Act of 1996 (P.L. 104-188), shall apply.
11.5 Safe Harbor Rules
A. ADP Test Safe Harbor - The Plan will satisfy the ADP Test Safe Harbor for a
Plan Year if (x) the Employer has elected in the Adoption Agreement to make
Safe Harbor Matching Contributions or Safe Harbor Nonelective
Contributions, (y) the Employer actually makes such contributions to the
Plan for such year, in such amounts, and on behalf of such Participants, as
are indicated in the Adoption Agreement and (z) the following requirements
are met for such year:
1. The Employer furnishes, for such Plan Year, a written notice to each
Participant who is eligible to make Elective Deferrals for such year,
stating his or her rights and obligations under the Plan. At a
minimum, this notice shall describe:
(a) The formula selected in the Adoption Agreement for providing either
Safe Harbor Matching Contributions or Safe Harbor Nonelective
Contributions;
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(b) The Elective Deferrals and any other contributions that may be made
under the Plan;
(c) The type and amount of compensation which may be deferred under the
Plan;
(d) How and when to make, change or revoke Elective Deferral elections,
including a description of the period available to make, change or
revoke such elections under paragraph (3) below; and
(e) The withdrawal and vesting provisions which apply to the contributions
made under the Plan.
For a Plan Year that begins before January 1, 2000, the notice will
not fail to satisfy the foregoing content requirement merely because
it fails to include all of listed items, provided that the notice
satisfies a reasonable good faith interpretation of the notice
requirements of Section 401(k)(12) and 401(m)(10) of the Code.
Further, notwithstanding the above, the notice for any Plan Year may
provide the information described in subparagraph (b) (other than as
to Elective Deferrals), (c) and (e) above by reference to the relevant
portions of a summary plan description for the Plan that has been
provided (or concurrently is provided) to the Participants, instead of
by setting forth such information in the text of notice itself.
However, such notice must describe the Safe Harbor Matching
Contribution formula or Safe Harbor Nonelective Contribution formula
used under the Plan, and state that the contributions made under said
formula (as well as Elective Deferrals) are fully vested when made to
the Plan. In addition, such notice must provide information which will
help a Participant obtain additional information about the Plan
(including an additional copy of the summary plan description).
2. The notice described in paragraph (1) must be so furnished within a
reasonable period before the beginning of such Plan Year, or, in the
case of a Participant who first becomes eligible to make Elective
Deferrals on any date during such year, within a reasonable period
before such date. This requirement is deemed to be satisfied if the
notice is furnished at least 30 days, and no more than 90 days, before
the beginning of such Plan Year, or, in the case of a Participant who
first becomes eligible to make Elective Deferrals after the 90th day
before the beginning of such Plan Year, no later than, and no more
than 90 days before, the day on which the Participant first becomes so
eligible. Notwithstanding the foregoing, for a Plan Year that begins
before April 1, 1999, the notice need not be provided until March 1,
1999. In addition, if the first Plan Year during which the Employer
will apply the Safe Harbor Rules is the Plan Year which begins on or
after January 1, 2000, and on or before June 1, 2000, the notice need
not be given to any Participant on or before May 1, 2000. In lieu of
furnishing the notice in written paper form, the Employer may furnish
the notice through an electronic medium, in accordance with the
applicable Treasury regulations and IRS rulings, notices and
announcements.
3. Notwithstanding ,any election made in the Adoption Agreement, or any
other provision of the Plan to the contrary, a Participant may make,
change or revoke an Elective Deferral election at any time during any
reasonable period, established by the Plan Administrator, immediately
after the Participant receives the notice described in paragraph (1).
For the purpose of the preceding sentence, a 30-day period shall be
deemed to be a reasonable period.
4. For purposes of this subsection (A), a Participant shall be treated as
eligible to make Elective Deferrals for a Plan Year, if he or she
would be so eligible but for a suspension of, or any limitation
imposed on the amount of, his or her Elective Deferrals under the
Plan.
If the Plan satisfies the ADP Test Safe Harbor for any Plan Year, the Plan
shall automatically be treated as satisfying the ADP test for such year,
and the provisions of the Plan, and any elections made in the Adoption
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Agreement, pertaining to the ADP test shall not apply for Such year. If the
Employer has elected in the Adoption Agreement to make Safe Harbor Matching
Contributions or Safe Harbor Nonelective Contributions, but fails to make
such contributions, or otherwise fails to satisfy the ADP Test Safe Harbor,
for any Plan Year to which such election applies (except pursuant to
Section 11.05(C)(9)), the Employer must correct such failure in accordance
with Revenue Procedure 2001 - 17 or the applicable successor Revenue
Procedure.
B. ACP Test Safe Harbor -The Plan will satisfy the ACP Test Safe Harbor for a
Plan Year if the following requirements are met for such year:
1. The Plan satisfies the ADP Test Safe Harbor for such Plan Year.
2. The Matching Contributions made under the Plan for such Plan Year
satisfy at least one of the following:
(a) If the matching contribution formula in Option 1 of Section IX(a)(3)
of the Adoption Agreement has been elected, (i) the Employer makes
Safe Harbor Matching Contributions to the Plan in accordance with such
formula, and (ii) no other Matching Contributions are made to the
Plan.
(b) If the matching contribution formula in Option 2 of Section IX(a)(3)
of the Adoption Agreement has been elected, (i) the Safe Harbor
Matching Contributions under such formula are made only with respect
to a Participant's Elective Deferrals which do not exceed 6% of his or
her 401(k) Compensation, (ii) the Employer makes Safe Harbor Matching
Contributions to the Plan in accordance with such formula, and (iii)
no other Matching Contributions are made to the Plan.
(c) Under the terms of the Plan, for such Plan Year, (i) Matching
Contributions are not made with respect to any Participant's After-Tax
Employee Contributions or Elective Deferrals which, in the aggregate,
exceed 6% of his or her 401(k) Compensation, (ii) the rate of Matching
Contributions does not increase as the rate of After-Tax Employee
Contributions or Elective Deferrals increases, and (iii) at any rate
of After-Tax Employee Contributions or Elective Deferrals, the rate of
Matching Contributions for any Participant who is a Highly Compensated
Employee is not higher than the rate of Matching Contributions for any
Participant who is not a Highly Compensated Employee.
If the Plan satisfies the ACP Test Safe Harbor for any Plan Year, the Plan
shall automatically be treated as satisfying the ACP test as to Matching
Contributions for such year, and the provisions of the Plan, and any
elections made in the Adoption Agreement, pertaining to the ACP test as to
Matching Contributions shall not apply for such year. If the Employer has
elected in the Adoption Agreement to make Safe Harbor Matching
Contributions, but fails to satisfy the ADP Test Safe Harbor for any Plan
Year to which such election applies (except pursuant to Section
11.05(C)(9)), the Employer shall not be treated as having satisfied the ACP
Test Safe Harbor for that Plan Year and must correct such failure in
accordance with Revenue Procedure 2001 - 17 or the applicable successor
Revenue Procedure.
C. Special Rules - The following rules shall apply for the purpose of this
Section 11.05.
1. This Section 11.05 shall not apply in any Plan Year which begins
before January 1, 1999. Notwithstanding the above, for any Plan Year
beginning on or after January 1, 2000, the Plan will not satisfy the
ACP Test Safe Harbor for such year if the Plan provides for Matching
Contributions made at the Employer's discretion on behalf of any
Participant which could, for such year, exceed a dollar amount which
is at least equal to 4% of his or her 401(k) Compensation.
2. Any Safe Harbor Matching Contributions or Safe Harbor Nonelective
Contributions must be allocated to the Participants' accounts as of a
date within the Plan Year to which such contributions relate, and must
actually be paid to the Plan within twelve months after the close of
such year. Matching Contributions are treated as covered under the ACP
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Test Safe Harbor only if they are allocated to the Participants'
accounts as of any date within the Plan Year to which such
contributions relate, are actually paid to the Plan within twelve
months after the close of such year, and are made with respect to
Elective Deferrals or After-Tax Employee Contributions which relate to
such year.
3. Safe Harbor Matching Contributions and Safe Harbor Nonelective
Contributions must meet the ADP Test Safe Harbor and, where
applicable, the ACP Test Safe Harbor without regard to permitted
disparity under Section 401(1) of the Code.
4. Any Matching Contributions, which are covered by the Safe Harbor Rules
for a Plan Year, may be made to the Plan either (a) with respect to
such Plan Year as a whole, or (b) separately with respect to the
Elective Deferrals made for each payroll period, or with respect to
the Elective Deferrals made for all payroll periods ending with or
within each month or quarter, within such Plan Year (the "Payroll
Period Method"). If the Payroll Period Method is used, however, any
such Matching Contributions, made with respect to Elective Deferrals
or After-Tax Employee Contributions that are made during a Plan Year
quarter beginning after May l, 2000, must be contributed to the Plan
by the last day of the following Plan Year quarter. In addition to the
foregoing, either (i) the amount of any such Matching Contributions
made with respect to a Participant's Elective Deferrals for such Plan
Year cannot be affected by the amount of that Participant's After-Tax
Employee Contributions for such year or (ii) any such Matching
Contributions must be made with respect to the sum of a Participant's
Elective Deferrals and After-Tax Employee Contributions for such Plan
Year under the same terms as such Matching Contributions are made with
respect to that Participant's Elective Deferrals for such year.
5. Safe Harbor Nonelective Contributions may be treated as "Employer
Contributions" for the purpose of satisfying the top-heavy minimum
contribution requirements. In addition, Safe Harbor Nonelective
Contributions, which are made to the Plan on behalf of any Participant
for a Plan Year for which the ADP Test Safe Harbor is satisfied, may
be treated as Qualified Nonelective Contributions to the extent they
(i) exceed 3% of the Participant's 401(10 Compensation, (ii) are
needed to satisfy the ACP Test for such year and (iii) satisfy the
applicable requirements of Section 1.401 (m)- 1 (b)(5) of the Treasury
regulations.
6. If, for any Plan Year, the Plan satisfies the ACP Test Safe Harbor but
permits After-Tax Employee Contributions, or satisfies the ADP Test
Safe Harbor but not the ACP Test Safe Harbor, then for such Plan Year,
the Plan must satisfy the ACP Test with respect to such After-Tax
Employee Contributions, or with respect to any After-Tax Employee
Contributions and Matching Contributions, as applicable, in the
following manner. Current year testing must be used for the ACP test.
However, in applying the ACP test, the Employer may elect to
disregard, with respect to all Participants, (a) if the ACP Test Safe
Harbor is satisfied, all Matching Contributions, or (b) otherwise, all
Matching Contributions made on behalf of any Participant that do not
exceed 4% of the Participant's 401(k) Compensation. In addition,
Elective Deferrals may not be treated as Matching Contributions for
the purpose of the ACP test.
7. If, for any Plan Year, the Plan satisfies the ADP Test Safe Harbor, or
both the ADP Test Safe Harbor and the ACP Test Safe Harbor, then the
multiple use test of Section 1.401(m)-2 of the Treasury regulations,
and the rules in Code Section 401(k) and 401(m) and the underlying
Treasury Regulations which pertain to the aggregation and
disaggregation of plans, or of any qualified cash or deferred
arrangements within a single Plan, shall be applied in the manner set
forth in Internal Revenue Service Notice 98-52 (or any successor
authority).
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8. To apply the ADP Test Safe Harbor and, if applicable, the ACP Test
Safe Harbor for a Plan Year, prior to the beginning of such year the
Employer must adopt and execute an Adoption Agreement in which it
elects to make either Safe Harbor Matching Contributions or Safe
Harbor Nonelective Contributions to the Plan for such year.
The preceding paragraph shall not apply to the extent set forth in
Section XI.B. of Internal Revenue Service Notice 98-52 and Internal
Revenue Service Rev. Proc. 99-23, regarding the remedial amendment
period applicable to the incorporation of the Safe Harbor Rules. In
addition, unless otherwise indicated in the Adoption Agreement, the
Employer may, during a Plan Year, elect to apply the Safe Harbor Rules
for such Plan Year by making Safe Harbor Nonelective Contributions, if
the following requirements are satisfied:
(a) The Employer makes such election, by appropriate action of its
managing body, by no later than 30 days before the final day of such
Plan Year.
(b) Instead of describing the formula for providing Safe Harbor
Nonelective Contributions, the notice given to Participants before the
beginning of the Plan Year under subsection (A)(1) must indicate that
(i) the Employer may elect, during the Plan Year, to make a Safe
Harbor Nonelective Contribution equal to 3 percent of pay to the Plan
for such year on behalf of each Participant, and (ii) if the Employer
makes this election, a supplemental notice will be given to
Participants at least 30 days prior to the last day of the Plan Year
informing them that such election has been made.
(c) A supplemental notice must be provided to all Participants, by no
later than 30 days prior to the last day of such Plan Year, stating
that a 3 percent Safe Harbor Nonelective Contribution will be made to
the Plan for that year on behalf of each Participant.
(d) The Employer must actually make the Safe Harbor Nonelective
Contributions to the Plan for such year, and the Plan must otherwise
meet all of the requirements in this Section 11.05 for qualifying for
the ADP Test Safe Harbor for such Plan Year.
If the Employer makes this election for any Plan Year, and the
foregoing requirements are satisfied for such year, the Plan will be
treated as satisfying the ADP Test Safe Harbor (and, if applicable,
the ACP Test Safe Harbor) for such year. Any such election made for a
Plan Year shall not apply to the following Plan Year, unless the
Employer again makes the election during such following Plan Year.
9. Unless otherwise indicated in the Adoption Agreement, the Employer
may, at any time during a Plan Year, elect to reduce or stop Safe
Harbor Matching Contributions with respect to Elective Deferrals made
for the remainder of such Plan Year, if the following requirements are
satisfied:
(a) The Employer makes such election by appropriate action of its managing
body. The election must specify the extent to which the Safe Harbor
Matching Contributions are to be reduced or stopped, and the date as
to which such election will be effective (the "Effective Date"). For
these purposes, the election is treated as being effective as of a
date if the Elective Deferrals made for the first payroll period that
begins on or after such date are subject to the reduction or stoppage
of Safe Harbor Matching Contribution specified in the election. The
Effective Date cannot be earlier than the later of (i) 30 days after
the date on which the Participants are given the supplemental notice
in (b) below or (ii) the date on which the election is made by the
Employer.
(b) A supplemental notice is given to all Participants explaining the
consequences of the election and informing them of the Effective Date,
and that they have a reasonable opportunity (including a reasonable
period) to change their Elective Deferral elections and, if
applicable, their After-Tax Employee Contribution elections prior to
the Effective Date.
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(c) Participants are given a reasonable opportunity (including a
reasonable period) prior to the Effective Date to make the changes
described in (b) above.
(d) For the Plan Year which includes the Effective Date, the ADP test and,
if applicable, the ACP test will be performed and satisfied for the
entire Plan Year using the current year testing method.
(e) All of the requirements in this Section 11.05 for qualifying for the
ADP Test Safe Harbor and, if applicable, the ACP Test Safe Harbor are
satisfied through the Effective Date.
Any such election made for a Plan Year shall not apply to the
following Plan Year, unless the Employer again makes the election
during such following Plan Year.
10. Unless otherwise indicated in the Adoption Agreement, the Safe Harbor
Rules will not apply, for a Plan Year, to any Participant who has not
attained age 21, or who has not completed at least one Year of
Eligibility Service, by the close of such year. In any Plan Year in
which the Safe Harbor Rules will not so apply, Section 410(b) of the
Code will be applied separately to the portion of the Plan which
benefits the Participants described in the preceding sentence in
accordance with Section 410(b)(4), and the Elective Deferrals and any
Matching Contributions of such Participants for such Plan Year must
pass the ADP test and ACP test for such year, disregarding the
Participants who benefit under the other portion of the Plan.
11. If indicated in the Adoption Agreement, any Safe Harbor Matching
Contributions or Safe Harbor Nonelective Contributions shall be made
to the qualified defined contribution plan (the "other plan")
specified in the Adoption Agreement, instead of to this Plan, if the
following requirements are met:
(a) each Employee eligible to participate in this Plan is also eligible to
participate in the other plan,
(b) the other plan has the same plan year as this Plan (except as
otherwise provided in Internal Revenue Service Notice 98-52),
(c) this Plan is a nonstandarized plan or a plan that is paired with the
other plan, and
(d) under the other plan, the contributions will be subject to the same
vesting requirements and restrictions on distributions and withdrawals
as they would have been if they had been made to this Plan.
12. If a CODA is first added to the Plan during a Plan Year, and the Plan
is an existing defined contribution plan at the time of such addition,
the Plan will be treated as satisfying the Safe Harbor Rules as to the
CODA for such year, provided that (a) the Plan is not a "successor
plan" (within the meaning of Internal Revenue Service Notice 98-1),
(b) the CODA is made effective no later than 3 months prior to the
final day of such Plan Year and (c) the requirements of this Section
11.05 are otherwise satisfied for the period which begins on the
effective date of the CODA, and which ends on the final day of such
year. Similar rules shall apply to Matching Contributions which are
first added to the Plan at the same time as the CODA is added,
provided that, at such time, the Plan is an existing defined
contribution plan.
11.6 Distribution and Withdrawal Provisions
A. General Rule -
Distributions and withdrawals from the Plan are subject to the provisions
of Article 6 and the provisions of this Article 11. If there is a conflict
between the provisions of Article 6 and Article 11, the provisions of this
Article 11 will control.
B. Distribution and Withdrawal Requirements -
Elective Deferrals, Qualified Matching Contributions, Qualified Nonelective
Contributions, Safe Harbor Matching Contributions and Safe Harbor
Nonelective Contributions, and the income allocable to each, may not be
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distributed to or withdrawn by a Participant prior to the Participant's
Termination of Employment, death or Disability.
These amounts may also be distributed or withdrawn after:
1. Termination of the Plan without the establishment of another defined
contribution plan by the Employer or any Affiliated Company, other
than an "employee stock ownership plan" (as defined in Section
4975(e)(7) of the Code), a "simplified employee pension" (as defined
in Section 408(k) of the Code) or a "SIMPLE XXX Plan" (as defined in
Section 408 (p) of the Code);
2. The disposition by a corporation to an unrelated corporation of
substantially all of the assets (within the meaning of Section
409(d)(2) of the Code) used in a trade or business of that
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 the assets;
3. The disposition by a corporation to an unrelated entity of that
corporation's interest in a subsidiary (within the meaning of Section
409(d)(3) of the Code), if such corporation continues to maintain this
Plan, but only with respect to Employees who continue employment with
that subsidiary;
4. If elected in the Adoption Agreement, the attainment of age 59 1/2; or
5. If elected in the Adoption Agreement, the hardship of the Participant
as described in subsection (C).
Each of these distributions or withdrawals is subject to any applicable
notice, election and consent requirements of Sections 401 (a)(11),
411(a)(11) and 417 of the Code. In addition, distributions after March 31,
1988 which are triggered by any of the events described in items 1, 2 or 3
of this subsection (B) must be made in the form of a lump sum.
C. Hardship Withdrawals -
1. General - If elected in the Adoption Agreement, Elective Deferrals
(and any earnings which are attributable to Elective Deferrals and
which were credited to a Participant's Individual Account as of the
later of December 31, 1988, or the end of the last Plan Year ending
before July 1, 1989) may be withdrawn by a Participant in the event
that the Participant needs such withdrawal to meet a "hardship." For
this purpose, a "hardship" is the immediate and heavy financial need
the Participant.
2. Special Rules -
(a) Only the following are treated by the Plan as an immediate and heavy
financial need: expenses incurred or necessary for medical care,
described in Section 213(d) of the Code, of the Participant, or the
Participant's spouse or dependents; the purchase (excluding mortgage
payments) of a principal residence for the Participant; payment of
tuition and related educational fees for the next 12 months of
post-secondary education for the Participant, or the Participant's
spouse, children or dependents; or the need to prevent the eviction of
the Participant from, or a foreclosure of the mortgage on, the
Participant's principal residence.
(b) A withdrawal will be treated as needed to meet a hardship of the
Participant only if:
(i) The Participant has received all distributions and
withdrawals, other than hardship withdrawals, and all
nontaxable loans under all plans of the Employer and the
Affiliated Companies;
(ii) All plans of the Employer and the Affiliated Companies
provide that the Participant's Elective Deferrals (and any
other elective contributions) will be suspended for 12
months after the withdrawal is received;
(iii) The amount of the withdrawal is not greater than the amount
of the immediate and heavy financial need (including
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amounts necessary to pay any Federal, state or local income
taxes or penalties reasonably anticipated to result from
the withdrawal); and
(iv) Al1 plans of the Employer and the Affiliated Companies
prohibit the Participant from making Elective Deferrals for
the Participant's taxable year immediately following the
Participant's taxable year in which the withdrawal is taken
in excess of (x) the limit under Section 402(g) of the Code
for that taxable year less (y) the amount of the
Participant's Elective Deferrals for the Participant's
taxable year in which the withdrawal is taken.
If the withdrawal is made, the suspension described in (ii) above, and the
prohibition described in (iv) above, will apply under this Plan.
D. Withdrawals of After-Tax Employee Contributions -
1. If elected in the Adoption Agreement, a Participant may withdraw all
or a portion of his Individual Account attributable to After-Tax
Employee Contributions. The rules set forth in Section 6.01(B)(4) of
the Plan shall apply to a request for any such withdrawal.
E. Distribution of Excess Elective Deferrals -
1. General Rule - A Participant may assign to this Plan any Excess
Elective Deferrals made during a taxable year of the Participant by
notifying the Plan Administrator by the following April 15, or by such
earlier date specified in the Adoption Agreement, of the amount of the
Excess Elective Deferrals to be assigned to this Plan. The Participant
will be treated as if he or she had notified the Plan Administrator of
any Excess Elective Deferrals arising only from Elective Deferrals
under this Plan and other plans of the Employer or any Affiliated
Company.
Regardless of any other Plan provision, Excess Elective Deferrals
assigned to this Plan, as adjusted for earnings and losses, will be
distributed to the Participant on or before the April 15 following the
taxable year in which they arose.
2. Determination of Earnings or Loss - Excess Elective Deferrals assigned
to this Plan are adjusted for earnings and losses only until the end
of the taxable year preceding or coinciding with the date of
distribution, unless the Employer elects in the Adoption Agreement to
have them adjusted for earnings and losses through the date of
distribution. The earnings or loss allocable to each Participant's
Excess Elective Deferrals assigned to this Plan is: (1) earnings or
loss allocable to the Participant's Elective Deferral sub-account for
the taxable year multiplied by a fraction, the numerator of which is
the Participant's Excess Elective Deferrals assigned to this Plan for
the year and the denominator of which is the Participant's Individual
Account balance at the close of the year attributable to Elective
Deferrals, without regard to any earnings or loss occurring during
that taxable year, plus (2) if the Adoption Agreement indicates that
earnings and losses through the date of distribution are to be paid
out, 10% of the amount determined under (1) multiplied by the number
of whole calendar months between the end of the Participant's taxable
year and the date of distribution, counting the month of distribution
if the distribution occurs after the 15th of that month.
F. Distribution of Excess Contributions -
1. General Rule - Regardless of any other Plan provision, Excess
Contributions, as adjusted for earnings and losses, will be
distributed on or before the last day of each Plan Year to
Participants to whose Individual Accounts those Excess Contributions
were allocated for the preceding Plan Year. Excess Contributions are
allocated to the Highly Compensated Employees with the highest amounts
of Employer contributions taken into account in calculating the ADP
test for the Plan Year in which the excess arises, beginning with the
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Highly Compensated Employee with the highest such amount, and
continuing in descending order until all the Excess Contributions have
been allocated. For the purpose of the preceding sentence, the
"highest amount" is determined after any Excess Elective Deferrals
have been distributed to Participants. If the Excess Contributions are
distributed more than 2 1/2 months after the last day of the Plan Year
in which they arose, a 10-percent excise tax will be imposed on the
Employer on the amount of the Excess Contributions. Excess
Contributions (including the amounts recharacterized) are treated as
"annual additions" under the Plan.
2. Determination of Earnings or Loss - Excess Contributions are adjusted
for earnings and losses only until the end of the Plan Year preceding
or coinciding with the date of distribution, unless the Employer
elects in the Adoption Agreement to have them adjusted for earnings
and losses through the date of distribution. The earnings or loss
allocable to each Participant's Excess Contributions is: (1) earnings
or loss allocable to the Participant's Elective Deferral sub-account
(and the Qualified Nonelective Contribution sub-account and/or the
Qualified Matching Contribution sub-account if QNECs and/or QMACs are
included in the ADP test for the year) for the Plan Year multiplied by
a fraction, the numerator of which is the Participant's Excess
Contributions for the year and the denominator of which is the
Participant's Individual Account balance at the close of the year
attributable to Elective Deferrals (and QNECs and/or QMACs, if QNECs
and/or QMACs are included in the ADP test for the year), without
regard to any earnings or loss occurring during that Plan Year, plus
(2) if the Adoption Agreement indicates that earnings and losses
through the date of distribution are to be paid out, 10% of the amount
determined under (1) multiplied by the number of whole calendar months
between the end of the Plan Year and the date of distribution,
counting the month of distribution if the distribution occurs after
the 15th of that month.
3. Accounting for Excess Contributions - Excess Contributions allocated
to a Participant are distributed from the Participant's Elective
Deferral sub-account and Qualified Matching Contribution sub-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 so allocated are
distributed from the Participant's Qualified Nonelective Contribution
sub-account only to the extent that the Excess Contributions exceed
the balance in the Participant's Elective Deferral sub-account and
Qualified Matching Contribution sub-account attributable to
contributions made for the year.
G. Distribution of Excess Aggregate Contributions -
1. General Rule - Regardless of any other Plan provision, Excess
Aggregate Contributions, as adjusted for earnings and losses, are
forfeited, to the extent they are forfeitable under the Adoption
Agreement, or distributed, to the extent they are not forfeitable
under the Adoption Agreement, no later than the last day of each Plan
Year to Participants to whose Individual Accounts those Excess
Aggregate Contributions were allocated for the preceding Plan Year.
Excess Aggregate Contributions are allocated to the Highly Compensated
Employees with the highest Contribution Percentage Amounts taken into
account in calculating the ACP test for the Plan Year in which the
excess arises, beginning with the Highly Compensated Employee with the
highest such amount, and continuing in descending order until all the
Excess Aggregate Contributions have been allocated. For the purpose of
the preceding sentence, the "highest amount" is determined after any
Excess Contributions have been recharacterized under subsection (H).
If the Excess Aggregate Contributions are distributed more than 21/2
months after the last day of the Plan Year in which they arose, a
10-percent excise tax will be imposed on the Employer on the amount of
the Excess Aggregate Contributions. Excess Aggregate Contributions are
treated as "annual additions" under the Plan.
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2. Determination of Earnings or Loss - Excess Aggregate Contributions are
adjusted for earnings and losses only until the end of the Plan Year
preceding or coinciding with the date of distribution, unless the
Employer elects in the Adoption Agreement to have them adjusted for
earnings and losses through the date of distribution. The earnings or
loss allocable to each Participant's Excess Aggregate Contributions
is: (1) earnings or loss allocable to the Participant's After-Tax
Employee Contribution sub-account, Matching Contribution sub-account,
Qualified Matching Contribution sub-account (if any, and if all
amounts therein are not used in the ADP test) and, if QNECs and/or
Elective Deferrals were used in the ACP test for the year, Qualified
Nonelective Contribution sub-account and/or Elective Deferral
sub-account for the Plan Year multiplied by a fraction, the numerator
of which is the Participant's Excess Aggregate Contributions for the
year and the denominator of which is the Participant's Individual
Account balance at the close of the year attributable to Contribution
Percentage Amounts for that year, without regard to any earnings or
loss occurring during the Plan Year, plus (2) if the Adoption
Agreement indicates that earnings and losses through the date of
distribution are to be paid out, 10% of the amount determined under
(I) multiplied by the number of whole calendar months between the end
of the Plan Year and the date of distribution, counting the month of
distribution if the distribution occurs after the 15th of the month.
3. Forfeitures of Excess Aggregate Contributions - Forfeitures of Excess
Aggregate Contributions are either reallocated to the accounts of
Contributing Participants who are not Highly Compensated Employees or
applied to reduce Employer Contributions, as indicated in the Adoption
Agreement.
4. Accounting for Excess Aggregate Contributions - Excess Aggregate
Contributions are forfeited, to the extent they are forfeitable under
the Adoption Agreement, or distributed, to the extent they are not
forfeitable under the Adoption Agreement, ratably from the
Participant's After-Tax Employee Contribution sub-account, Matching
Contribution sub-account, and Qualified Matching Contribution
sub-account (and, if QNECs and/or Elective Deferrals were used in the
ACP test for the applicable year, the Participant's Qualified
Nonelective Contribution sub-account and/or Elective Deferral
sub-account).
H. Recharacterization -
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. These recharacterized amounts remain Vested. Amounts may not be
recharacterized by a Highly Compensated Employee to the extent that those
amounts in combination with other After-Tax Employee Contributions made by
that Highly Compensated Employee would exceed any stated Plan limit on
After-Tax Employee Contributions.
Recharacterization must occur no later than 21/2 months after the last day
of the Plan Year in which the Excess Contributions arose and is deemed to
occur no earlier than the date the last Highly Compensated Employee was
informed in writing of the amount recharacterized and the consequences of
that recharacterization. Recharacterized amounts will be taxable to the
Participant for the Participant's taxable year in which the Participant
would have received them in cash.
11.7 Vesting
A. Certain Contributions are 100% Vested -
The Participant's accrued benefit attributable to Elective Deferrals,
Qualified Matching Contributions, Qualified Nonelective Contributions,
After "Tax Employee Contributions, Safe Harbor Matching Contributions and
Safe Harbor Nonelective Contributions is 100% Vested.
B. Forfeitures and Vesting of Matching Contributions -
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Matching Contributions, other than Qualified and Safe Harbor Matching
Contributions, become Vested according to the vesting schedule, or as
otherwise indicated, in the Adoption Agreement. Such Matching Contributions
always become fully Vested at Normal Retirement Age (if the Participant is
then an Employee) or upon any other event described in Section 6.01(C)(3).
Matching Contributions, other than Excess Aggregate Contributions, become
Forfeitures in the manner described in Section 6.01(F). Such Forfeitures
are applied or allocated in the manner indicated in the Adoption
Agreement for any other amounts which become Forfeitures under that
Section.
11.8 Other Rules
A. Sub-Accounts - Any Elective Deferrals, Qualified Matching Contributions,
Qualified Nonelective Contributions, Safe Harbor Matching Contributions,
Safe Harbor Nonelective Contributions and After-Tax Employee Contributions
made hereunder shall be maintained in a separate fully Vested sub-account
under the Participant's Individual Account.
B. 415 Limits - For purposes of Section 3.05 of the Plan, any Elective
Deferrals, Qualified Matching Contributions, Qualified Nonelective
Contributions, Safe Harbor Matching Contributions and Safe Harbor
Nonelective Contributions made hereunder shall be treated as "Employer
Contributions", and any After-Tax Employee Contributions made hereunder
shall be treated as "Employee contributions."
11.9 Effective Time of CODA
The provisions of the CODA may be made effective as of the first day of the Plan
Year in which the CODA is adopted. However, under no circumstances may a salary
reduction agreement or other deferral mechanism be adopted retroactively.
Article 12 - Provisions Reflecting the Economic
Growth and Tax Relief Reconciliation Act of 2001
------------------------------------------------
12.1 General
The provisions of this Article Twelve (a) are intended to reflect the provisions
of the Economic Growth and Tax Relief Reconciliation Act of 2001 (the "Act")
which apply to this Plan, and (b) shall apply notwithstanding any provision in
Article One to Article Eleven to the contrary.
12.2 Limits on Elective Deferrals
In applying the second paragraph of Section 11.01(J) for any taxable year
beginning after December 31, 2001, the phrase "the Applicable Dollar Limit for
such taxable year" shall be substituted for the phrase "the dollar limit of
Section 402(g) of the Code in effect at the beginning of that taxable year". For
these purposes, the "Applicable Dollar Limit" for any taxable year beginning
after December 31, 2001 and before January 1, 2007 shall be the amount set forth
below:
Taxable Year Applicable
Starting In: Dollar Limit:
--------------------------------------------------------
2002 $11,000
2003 $12,000
2004 $13,000
2005 $14,000
2006 $15,000
For any taxable year starting after December 31, 2006, the "Applicable Dollar
Limit" shall be $15,000, as increased by the cost-of-living adjustment, if any,
in effect for such year under Section 402(g)(4) of the Code.
12.3 Catch-Up Contributions
A. Eligibility And Amount - For any taxable year starting after December 31,
2001, an "Eligible Participant" for such year may elect to have
contributions, in addition to any elective deferrals, made to the Plan out
of his Compensation on a pre-tax basis. Such contributions shall be
referred to hereinafter as "Catch-Up Contributions." An "Eligible
Participant", for any taxable year, is any Participant who has attained at
least age 50 by the end of such year, and for whom no additional elective
deferrals may be made to the Plan for such year. The amount of Catch-Up
Contributions made to the Plan on behalf of any Participant, for any
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taxable year, may not exceed the lesser of (1) the "Applicable Dollar
Amount" for such year, or (2) the excess, for such year, of the
Participant's 415 Compensation (as that term is defined in Section
3.05(E)(7)) over his elective deferrals. The "Applicable Dollar Amount",
for any taxable year beginning after ]December 31, 2001 and before January
1, 2007, shall be the amount set forth below:
Taxable Year Applicable
Starting In: Dollar Limit:
---------------------------------------------------------
2002 $1,000
2003 $2,000
2004 $3,000
2005 $4,000
2006 $5,000
For any taxable year starting after December 31, 2006, the "Applicable
Dollar Amount" shall be $5,000, as increased by the cost-of-living
adjustment, if any, in effect for such year under Section 414(v)(2)(C) of
the Code. No matching contribution shall be made with respect to any
Catch-Up Contribution. Catch-Up Contributions shall not be subject to any
limitation of Section 3.05 or Article Eleven (or any limitation on the
amount of elective deferrals), and shall not be taken into account in
applying any such limitation to any other contribution. No Catch-Up
Contribution shall be 'taken into account when applying the minimum
allocation requirements of Section 3.01(E)(1), or shall be used to satisfy
such requirements.
B. Elections - An Eligible Participant may elect to have Catch-Up
Contributions made to the Plan on his behalf on a form obtained from and
filed with the Plan Administrator. Such form must be so filed by the
Eligible Participant prior to the start of the first pay period for which
Compensation will be reduced to make the Catch-Up Contributions under such
election, or by such earlier time as the Plan Administrator may prescribe
for the filing of such form. The Plan Administrator may, in its discretion,
prescribe any other procedure for making Catch-up contributions that
complies with the requirements of Section 401(a) and (k) and 414(v) of the
Code.
C. Catch-up Contributions Sub-Account - The Plan Administrator shall establish
and maintain a separate sub-account for each Participant on whose behalf
any Catch-Up Contribution is made to the Plan. All Catch-up Contributions
made to the Plan on behalf of a Participant shall be credited to such
sub-account. A Participant's interest in such sub-account shall be fully
vested and nonforfeitable at all times. In addition, such sub-account shall
be valued and adjusted as described in Article Four, and shall otherwise be
treated in the same manner as any other sub-account maintained under the
Plan.
12.4 12.04 Vesting of Regular Matching Contributions
Effective in any Plan Year which starts after December 31, 2001, the portion of
a Participant's Individual Account which is attributable to "Regular Matching
Contributions" (as defined below) must vest at least as rapidly as under one of
the following two schedules.
Schedule 1
----------
Years of Vested
Vesting Service Percentage
---------------------------------------------------------
0 0%
1 0%
2 20%
3 40%
4 60%
5 80%
6 100%
Schedule 2
----------
Years of Vested
Vesting Service Percentage
---------------------------------------------------------
0 0%
1 0%
2 0%
3 100%
If the vesting schedule which would apply under the Plan to amounts attributable
to Regular Matching Contributions in the absence of this Section 12.04 (the
"Pre-Act Schedule") does not satisfy either Schedule 1 or Schedule 2, then
Schedule 1 shall apply to amounts attributable to Regular Matching Contributions
if, under the Pre-Act Schedule, a Participant does not attain 100% vesting until
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he or she completes at least six Years of Vesting Service, and Schedule 2 will
apply to such amounts otherwise; provided, however, that the Vested Percentage
for any number of Years of Vesting Service in Schedule 1 or Schedule 2,
whichever will apply, shall be increased, as needed, so that such Vested
Percentage shall not be less than the Vested Percentage that the Participant
would attain under the Pre-Act Schedule upon completing such number of Years of
Vesting Service.
For purposes of this Section 12.04, a "Regular Matching Contribution" shall be
any Matching Contribution other than a QMAC or a Safe Harbor Matching
Contribution.
12.5 Hardship Withdrawals
In the case of a hardship withdrawal made under Section 11.06(C) after December
31, 2001, "6 months" shall be substituted for "12 months" in Section
11.06(C)(2)(b)(ii), and Section 11.06(C) (2)(b)(iv) shall not apply. Also, in
the case of any Participant who takes a hardship withdrawal under Section
11.06(C), such Participant may not make any Catch-Up Contributions to the Plan
for a period of 6 months following his receipt of such withdrawal.
12.6 New Distributable Event
A Participant's elective deferrals, QNECs, QMACs and Catch-Up Contributions, and
any earnings attributable to such contributions, may be distributed, after
December 31, 2001, on account of the Participant's severance from employment.
However, any such distribution shall be subject to the other provisions of the
Plan regarding distributions, other than any provision that requires a
separation from service before such distribution may be made.
12.7 Multiple Use Test
For any Plan Year starting after December 31, 2001, (a) the, Aggregate Limit in
Section 11.01(E) shall not apply, (b) Section 11.04(B)(2)(b) is deleted, and (c)
the phrase "the multiple use test of Section 1.401(m)-2 of the Treasury
regulations, and" in Section 11.05(C)(7) is deleted.
12.8 Compensation Limit
In applying Section 1.09 for each Determination Period which starts after
December 31, 2001, the amount of Compensation taken into account under the Plan
for any Participant shall not exceed $200,000, as adjusted for increases in the
cost-of-living in accordance with Section 401(a)(17)(B) of the Code. The
cost-of-living adjustment in effect on the January 1 of a calendar year applies
to any Determination Period beginning in that calendar year.
12.9 Section 415 Limit
For any Limitation Year starting after December 31, 2001, the amount "$40,000"
shall be substituted for the amount "$30,000" in Section 3.05(E)(3), and the
percentage "100%" shall be substituted for the percentage "25%" in Section
3.05(E)(11)(b).
12.10 Cash-Outs
For purposes of determining whether a Participant's consent is required with
respect to a distribution to be made after December 31, 2001, the balance of the
Participant's sub-account for rollover contributions shall be disregarded in
determining whether the Vested portion of the balance of the Participant's
Individual Account exceeds $5,000 under Section 6.01(A)(3) or 6.03(I3.
12.11 Direct Rollovers
In the case of a distribution or withdrawal made by or from the Plan after
December 31, 2001, the following shall apply.
A withdrawal shall not be treated as an Eligible Rollover Distribution for
purposes of Section 6.10(B)(1), to the extent that it is made by reason of
hardship. Also, for purposes of Section 6.10(B)(1), a portion of a distribution
or withdrawal shall not fail to be an Eligible Rollover Distribution merely
because that portion consists of after-tax employee contributions which are not
includible in gross income. However, such portion may be transferred (in a
Direct Rollover) only to (a) an individual retirement account or annuity
described in Section 408(a) or (b) of the Code, or (b) a qualified defined
contribution plan described in Section 40l(a) or 403(a) of the Code which
agrees to separately account for the amount so transferred, including separately
accounting for the portion of such amount which is includible in gross income
and the portion of such amount which is not so includible.
Section 6.10(B)(2) shall be applied by (1) treating any eligible deferred
compensation plan which is described in Section 457(b) of the Code and which is
maintained by an eligible employer described in Section 457(e)(1)(A) of the
Code, or any annuity contract which is described in Section 403(b) of the Code,
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that will accept, and in the case of any such eligible deferred compensation
plan will agree to separately account for, a Direct Rollover of a Distributee's
distribution or withdrawal as an "Eligible Retirement Plan," and (2)
disregarding the final sentence thereof.
In the case of any distribution made by the Plan to a Distributee after final
regulations implementing Section 657(c)(2)(A) of the Act are prescribed, if such
distribution exceeds $1,000, but does not exceed $5,000, and if the Distributee
does not elect whether or not all or any portion of such distribution is to be
paid as a Direct Rollover, then the Plan Administrator shall transfer such
distribution, to the extent it constitutes an Eligible Rollover Distribution, to
an individual retirement plan of the trustee or issuer designated for this
purpose in accordance with such regulations, and shall notify the Distributee in
writing (either separately or as part of the notice provided under Section 402(0
of the Code) that the amount so transferred by the Plan Administrator may be
transferred by the Distributee to another individual retirement plan.
12.12 Rollover Contributions
With respect to any distribution from another plan or arrangement received by a
Participant after December 31, 2001, the following paragraph shall be
substituted for the final paragraph of Section 3.03:
For purposes of this Section 3.03, a "rollover contribution" is a contribution
described in Section 402(c)(1), 403(a)(4), 403(b)(8), 408(d)(3) or 457(e)(16) of
the Code or in any other provision that may be added to the Code authorizing
rollovers to qualified plans. An amount distributed from another employer's
qualified plan, which is transferred directly to this Plan in accordance with
Section 401(a)(31) of the Code, shall not fail to be a rollover contribution
merely because such amount includes after-tax employee contributions which are
not includible in gross income; provided, however, that (a) separate
sub-accounts are established and maintained under the Plan for both the portion
of such amount which is includible in gross income (the "Taxable Portion") and
the portion of such amount which is not so includible (the "Nontaxable
Portion"), (b) the Taxable Portion of such amount and the Nontaxable Portion of
such amount are each credited to the sub-account so established for that
portion, and (c) the Plan shall otherwise separately account for the Taxable
Portion of such amount and for the Nontaxable Portion of such amount.
12.13 Top-Heavy Rules
This Section 12.13 shall apply for any Plan Year starting after December 31,
2001.
Section 3.01(E) shall be applied by treating Matching Contributions, or any
"matching contributions" (within the meaning of Section 401(m)(4)(A) of the
Code) made to another plan which is in the same "top-heavy group" (within the
meaning of Section 416(g)(2)(B) of the Code) as the Plan, as Employer
Contributions. Further, Section 3.01(E) shall not apply for any Plan Year for
which the Plan consists solely of a cash or deferred arrangement which meets the
requirements of Section 401(k)(12) of the Code and matching contributions with
respect to which the requirements of Section 401(m)(11) of the Code are met.
Section 10.07(B) is revised in its entirety to provide as follows:
A. Key Employee - Any Employee or former Employee (and any Beneficiary of that
Employee) who, during the "determination period" (as defined below), was
(1) an officer of the Employer with "compensation" (within the meaning of
Section 416(i)(1)(D) of the Code) from the Employer for that determination
period which exceeds $130,000, (2) a 5% Owner of the Employer, or (3) a 1%
Owner of the Employer who has "compensation" (as defined in (1) above) from
the Employer for that determination period which exceeds $150,000. The
"determination period" is the Plan Year containing the Determination Date
in question. The $130,000 amount above shall be adjusted for the
determination period in question in accordance with Section 416(i)(1)(A) of
the Code.
The determination of who is a Key Employee shall be made in a manner which
is consistent with Section 416(i)(1) of the Code and its Treasury
Regulations.
Section 10.07(C)(1) shall be applied by substituting "l-year period" for "5-year
period" in the final place where "5-year period" appears therein, unless the
distribution in question was made for a reason other than separation from
service, death or disability. Section I0.07(C)(3) shall be applied by
substituting "l-year period" for "5-year period" therein. The second sentence of
Section 11.01(P) shall be disregarded.
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12.14 Loans to Shareholder-Employees and Owner-Employees
Section 6.09(F) (which prevents loans from being made to shareholder-employees
and owner-employees) shall not apply, with respect to any loan made after
December 31, 2001:
Article 13 - Minimum Distribution Requirements Under Final Regulations
----------------------------------------------------------------------
13.1 General Rules
A. Effective Date. The provisions of this Article will apply for purposes of
determining required minimum distributions for calendar years beginning
with the 2003 calendar year, and, if the Employer determines, as well as
required minimum distributions for the 2002 distribution calendar year that
are made on or after the date selected by the Employer for this purpose.
B. Coordination with Minimum Distribution Requirements Previously in Effect.
If section 13.01(A) above specifies an effective date of this Article that
is earlier than calendar years beginning with the 2003 calendar year,
required minimum distributions for 2002 under this Article will be
determined as follows. If the total amount of 2002 required minimum
distributions under the Plan made to the distributee prior to the effective
date of this Article equals or exceeds the required minimum distributions
determined under this Article, then no additional distributions will be
required to be made for 2002 on or after such date to the distributee. If
the total amount of 2002 required minimum distributions under the Plan made
to the distributee prior to the effective date of this Article is less than
the amount determined under this Article, then required minimum
distributions for 2002 on and after such date will be determined so that
the total amount of required minimum distributions for 2002 made to the
distributee will be the amount determined under this Article.
C. Precedence. The requirements of this Article will take precedence over any
inconsistent provisions of the Plan.
D. Requirements of Treasury Regulations Incorporated. All distributions
required under this Article will be determined and made in accordance with
the Treasury regulations under section 401(a)(9) of the Code.
E. TEFRA Section 242(b)(2) Elections. Notwithstanding the other provisions of
this Article, distributions may be made under a designation made before
January 1, 1984, in accordance with section 242(b)(2) of the Tax Equity and
Fiscal Responsibility Act (TEFRA) and the provisions of the Plan that
relate to section 242(b)(2) of TEFRA.
13.2 Time and Manner of Distribution
A. Required Beginning Date. The Participant's entire interest will be
distributed, or begin to be distributed, to the Participant no later than
the Participant's Required Beginning Date.
B. Death of Participant Before Distributions Begin. If the Participant dies
before distributions begin, the Participant's entire interest will be
distributed, or begin to be distributed, no later than as follows:
1. If the Participant's surviving spouse is the Participant's sole
designated beneficiary, then distributions to the surviving spouse
will begin by December 31 of the calendar year immediately following
the calendar year in which the Participant died, or by December 31 of
the calendar year in which the Participant would have attained age
70 1/2, if later.
2. If the Participant's surviving spouse is not the Participant's sole
designated beneficiary, then distributions to the designated
beneficiary will begin by December 31 of the calendar year immediately
following the calendar year in which the Participant died.
3. Notwithstanding section 13.02(B)(1) or 13.02(B)(2), if the Participant
dies before distributions begin and there is a designated beneficiary,
and if elected under section 13.06(A), distribution to the designated
beneficiary is not required to begin by the date specified in section
13.02(B)(1) or 13.02(B)(2), but the Participant's entire interest will
be distributed to the designated beneficiary by December 31 of the
calendar year containing the fifth anniversary of the Participant's
death.
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4. If there is no designated beneficiary as of September 30 of the year
following the year of the Participant's death, the Participant's
entire interest will be distributed by December 31 of the calendar
year containing the fifth anniversary of the Participant's death.
5. If the Participant's surviving spouse is the Participant's sole
designated beneficiary and the surviving spouse dies after the
Participant but before distributions to the surviving spouse begin,
this section 13.02(B), other than section 13.02(B)(1), will apply as
if the surviving spouse were the Participant.
For purposes of this section 13.02(B) and section 13.04, unless section
13.02(B)(5) applies, distributions are considered to begin on the Participant's
Required Beginning Date. If section 13.02(B)(5) applies, distributions are
considered to begin on the date distributions are required to begin to the
surviving spouse under section 13.02(B)(1). If distributions under an annuity
purchased from an insurance company irrevocably commence to the Participant
before the Participant's Required Beginning Date (or to the Participant's
surviving spouse before the date distributions are required to begin to the
surviving spouse under section 13.02(B)(1)), the date distributions are
considered to begin is the date distributions actually commence.
C. Forms of Distribution. Unless the Participant's interest is distributed in
the form of an annuity purchased from an insurance company or in a single
sum on or before the Required Beginning Date, as of the first distribution
calendar year distributions will be made in accordance with sections 13.03
and 13.04 of this Article. If the Participant's interest is distributed in
the form of an annuity purchased from an insurance company, distributions
thereunder will be made in accordance with the requirements of section
401(a)(9) of the Code and the Treasury regulations.
13.3 Required Minimum Distributions During Participant's Lifetime
A. Amount of Required Minimum Distribution For Each Distribution Calendar
Year. During the Participant's lifetime, the minimum amount that will be
distributed for each distribution calendar year is the lesser of:
1. the quotient obtained by dividing the Participant's account balance by
the distribution period in the Uniform Lifetime Table set forth in
section 1.401(a)(9)-9 of the Treasury regulations, using the
Participant's age as of the Participant's birthday in the distribution
calendar year; or
2. if the Participant's sole designated beneficiary for the distribution
calendar year is the Participant's spouse, the quotient obtained by
dividing the Participant's account balance by the number in the Joint
and Last Survivor Table set forth in section 1.401(a)(9)-9 of the
Treasury regulations, using the Participant's and spouse's attained
ages as of the Participant's and spouse's birthdays in the
distribution calendar year.
B. Lifetime Required Minimum Distributions Continue Through Year of
Participant's Death. Required minimum distributions will be determined
under this section 13.03 beginning with the first distribution calendar
year and up to and including the distribution calendar year that includes
the Participant's date of death.
13.4 Required Minimum Distributions After Participant's Death
A. Death On or After Date Distributions Begin.
1. Participant Survived by Designated Beneficiary. If the Participant
dies on or after the date distributions begin and there is a
designated beneficiary, the minimum amount that will be distributed
for each distribution calendar year after the year of the
Participant's death is the quotient obtained by dividing the
Participant's account balance by the longer of the remaining life
expectancy of the Participant or the remaining life expectancy of the
Participant's designated beneficiary, determined as follows:
(a) The Participant's remaining life expectancy is calculated using the
age of the Participant in the year of death, reduced by one for each
subsequent year.
(b) If the Participant's surviving spouse is the Participant's sole
designated beneficiary, the remaining life expectancy of the surviving
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spouse is calculated for each distribution calendar year after the
year of the Participant's death using the surviving spouse's age as of
the spouse's birthday in that year. For distribution calendar years
after the year of the surviving spouse's death, the remaining life
expectancy of the surviving spouse is calculated using the age of the
surviving spouse as of the spouse's birthday in the calendar year of
the spouse's death, reduced by one for each subsequent calendar year.
(c) If the Participant's surviving spouse is not the Participant's sole
designated beneficiary, the designated beneficiary's remaining life
expectancy is calculated using the age of the beneficiary in the year
following the year of the Participant's death, reduced by one for each
subsequent year.
2. No Designated Beneficiary. If the Participant dies on or after the
date distributions begin and there is no designated beneficiary as of
September 30 of the year after the year of the Participant's death,
the minimum amount that will be distributed for each distribution
calendar year after the year of the Participant's death is the
quotient obtained by dividing the Participant's account balance by the
Participant's remaining life expectancy calculated using the age of
the Participant in the year of death, reduced by one for each
subsequent year.
B. Death Before Date Distributions Begin.
1. Participant Survived by Designated Beneficiary. Unless the 5-year rule
of section 13.02(B)(3) is elected, if the Participant dies before the
date distributions begin and there is a designated beneficiary, the
minimum amount that will be distributed for each distribution calendar
year after the year of the Participant's death is the quotient
obtained by dividing the Participant's account balance by the
remaining life expectancy of the Participant's designated beneficiary,
determined as provided in section 13.04(A).
2. No Designated Beneficiary. If the Participant dies before the date
distributions begin and there is no designated beneficiary as of
September 30 of the year following the year of the Participant's
death, distribution of the Participant's entire interest will be
completed by December 31 of the calendar year containing the fifth
anniversary of the Participant's death.
3. Death of Surviving Spouse Before Distributions to Surviving Spouse Are
Required to Begin. If the Participant dies before the date
distributions begin, the Participant's surviving spouse is the
Participant's sole designated beneficiary, and the surviving spouse
dies before distributions are required to begin to the surviving
spouse under section 13.02(B)(1), this section 13.04(B) will apply as
if the surviving spouse were the Participant.
13.5 Definitions
A. Designated beneficiary. The individual who is designated as the beneficiary
under the terms of the Plan and is the designated beneficiary under section
401(a)(9) of the Code and section 1.401(a)(9)-1, Q&A-4, of the Treasury
regulations.
B. Distribution calendar year. A calendar year for which a minimum
distribution is required. For distributions beginning before the
Participant's death, the first distribution calendar year is the calendar
year immediately preceding the calendar year which contains the
Participant's Required Beginning Date. For distributions beginning after
the Participant's death, the first distribution calendar year is the
calendar year in which distributions are required to begin under section
13.02(B). The required minimum distribution for the Participant's first
distribution calendar year will be made on or before the Participant's
Required Beginning Date. The required minimum distribution for other
distribution calendar years, including the required minimum distribution
for the distribution calendar year in which the Participant's Required
Beginning Date occurs, will be made on or before December 31 of that
distribution calendar year.
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C. Life expectancy. Life expectancy as computed by use of the Single Life
Table in section 1.401(a)(9)-9 of the Treasury regulations.
D. Participant's account balance. 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
made and allocated or forfeitures allocated to the account balance as of
dates in the valuation calendar year after the valuation date and decreased
by distributions made in the valuation calendar year after the valuation
date. The account balance for the valuation calendar year includes any
amounts rolled over or transferred to the Plan either in the valuation
calendar year or in the distribution calendar year if distributed or
transferred in the valuation calendar year.
E. Required Beginning Date. The date specified in section 6.06(C)(6)(e) of the
Plan.
13.6 Elections
A. Electing the 5-Year Rule. Participants or beneficiaries may elect on an
individual basis whether the 5-year rule in section 13.02(B)(3) applies to
distributions after the death of a Participant who has a designated
beneficiary in lieu of the life expectancy rule. The election must be made
no later than the earlier of September 30 of the calendar year in which
distribution would be required to begin under section 13.02(B), or by
September 30 of the calendar year which contains the fifth anniversary of
the Participant's (or, if applicable, surviving spouse's) death.
B. Transition Rule. A designated beneficiary who is receiving payments under
the 5-year rule may make a new election to receive payments under the life
expectancy rule until December 31, 2003, provided that all amounts that
would have been required to be distributed under the life expectancy rule
for all distribution calendar years before 2004 are distributed by the
earlier of December 31, 2003 or the end of the 5-year period.
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