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