Exhibit 14
Retirement Plan Model
INSTRUCTIONS FOR OPENING A INDIVIDUAL RETIREMENT ACCOUNT
FOR INVESTING IN:
Fund for Government Investors, Inc.
The Rushmore Fund, Inc.
American Gas Index Fund, Inc.
Xxxxxxxxx-Xxxxxxxx Trust
1. The Individual Retirement Custodial Account Agreement and
Adoption Agreement are the basic legal documents by which you
open an IRA with Rushmore Trust and Savings, FSB
(''Rushmore'') as custodian. They should be read and
considered carefully.
The following information should be inserted to complete the
Adoption Agreement:
(a) the full name of the individual opening the IRA as well as
his or her date of birth, social security number, current
mailing address and telephone number (identical information
should be provided for a spouse if a spousal IRA is being
opened);
(b) the amount of cash being deposited into the IRA (the
minimum initial contribution is $500); and
(c) the individual(s) opening the IRA must sign the last page
of the Adoption Agreement and date the Agreement.
2.Complete the Beneficiary Designation Form.
3. If funds are being transferred from an existing IRA,
complete the transfer forms authorizing a direct transfer of
funds between retirement programs.
Return all completed forms along with a check, if applicable,
for the IRA contribution, made payable to "Rushmore Trust &
Savings, FSB" to:
Rushmore Trust and Savings, FSB
Attn: Retirement Plan Department
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx00000
Rushmore Trust and Savings, FSB is a federally chartered
savings bank.
Once the account has been accepted and the contribution has
been received by the Custodian, you will be notified.
This booklet is authorized for distribution to prospective
investors only when preceded or accompanied by an effective
Prospectus or Prospectuses of Fund for Government Investors,
Inc.; The Rushmore Fund, Inc., American Gas Index Fund, Inc.,
Xxxxxxxxx-Xxxxxxxx Trust or any other authorized fund which
includes information concerning management fees and other
expenses. Please read it carefully before you invest or send
money.
INDIVIDUAL RETIREMENT ACCOUNT IRA DISCLOSURE STATEMENT FOR
PARTICIPANTS
By considering the establishment of an Individual Retirement
Account (IRA), you are taking a significant step in planning
your own retirement. Thus, it is important that you
understand how an Individual Retirement Account operates.
The Internal Revenue Code provides substantial tax incentives
to encourage workers to establish IRAs. Annual contributions
to an IRA equal to the lesser of $2,000 or 100 percent of
compensation are potentially deductible for federal income tax
purposes and the earnings in the account are tax-deferred.
The dollar limitation is $2,250 if a spousal IRA is opened.
In addition, if both spouses have compensation, each can set
up his or her own IRA for a combined deduction of up to
$4,000.
In general, distributions from the account after retirement
will be taxable as ordinary income but the taxpayer is often
in a lower tax bracket at that time. A taxpayer does not have
to itemize tax deductions in order to benefit from the IRA
deduction. A Participant can claim both the standard deduction
and the IRA deduction. You can make contributions to your IRA
at any time during the tax year. The last day you may
contribute is the due date for filing your tax return for that
year, not including extensions.
However, Congress also imposed restrictions to ensure that the
money contributed to an IRA could be used only for retirement
purposes except in the event of severe disability or death.
For example, if you take any money out of an IRA before you
reach age 59 1/2 (except in the case of severe disability,
death or for a rollover into another qualified retirement
arrangement) the amount withdrawn will generally be taxable as
ordinary income and, in addition, you will be charged a
penalty tax equal to 10 percent of the amount withdrawn which
is taxable to you. Furthermore, borrowing from your IRA or
using your account as collateral for a loan will also result
in severe tax penalties.
If you or your spouse is an active participant in an employer-
sponsored retirement plan, you can fully deduct your IRA
contributions if your "modified adjusted gross income" is less
than $40,000 on a joint return or less than $25,000 for single
taxpayers. Your deduction is reduced, i.e. phased out, by $10
for every $50 that your adjusted gross income is greater than
$40,000 on a joint return or greater than $25,000 on a single
return. However, if you are eligible to deduct any amount,
you can deduct a minimum of $200.
Generally, married individuals who file separate returns begin
their phase-out at zero dollars. However, married individuals
who file separate returns and live apart at all times during
the taxable year are to be treated as unmarried for purposes
of the IRA deduction. Married individuals treated as
unmarried will not be deemed to be covered by an employer plan
due to their spouse's participation and, as a result, the IRA
deduction will not be subject to the phase out rules. Also, a
married individual who files separately, who is covered by a
plan, and who does not live with his or her spouse during the
tax year, is treated as unmarried for purposes of the IRA
deduction and therefore uses the larger phase-out amount that
applies to single individuals.
Due to the complexity of the IRA rules enacted by Congress,
particularly those relating to rollovers and excess
contributions, it is advisable for you to consult your own tax
advisor to determine if this IRA will fit your present
circumstances and needs.
In addition to the federal rules on IRAs as explained in this
Disclosure Statement, you should be familiar with the state
income tax treatment of IRAs under the laws of the state in
which you live. This statement describes the federal
statutory and regulatory provisions applicable to the
operation and tax treatment of Individual Retirement Accounts.
A. Right of Revocation by Participant
Each individual who signs the IRA Adoption Agreement which
incorporates the IRA Custodial Agreement shall have the right
to revoke his Adoption Agreement for a period of seven days
from the date of execution of the Adoption Agreement. A
notification of revocation shall be in writing directed to:
Rushmore Trust and Savings, FSB
Attn Retirement Plan Department
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx00000
Such notice by the individual shall be deemed mailed on the
date of the postmark (or if sent by certified or registered
mail, the date of certification or registration) if it is
deposited in the mail in the United States in an envelope, or
other appropriate wrapper, first class postage prepaid,
properly addressed. Such notice shall be deemed to have been
received seven days after the date of mailing and after such
time any revocation shall be null and void. If you give
timely notice of revocation in accordance with this paragraph,
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your entire original contribution, paid into the IRA without
adjustment for any administrative expense or commissions will
be returned to you.
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B. Statutory Requirements With Respect To A Custodial Account
The Internal Revenue Code of 1986, as amended, says that an
Individual Retirement Account is a trust or custodial account
created by a written instrument for the exclusive benefit of
the Participant or his beneficiaries which has the following
provisions:
1.Contributions must be in cash (unless made by direct
rollover) and yearly contributions will not exceed the lesser
of $2,000 or 100 percent of compensation or alimony or $2,250
if a spousal IRA is opened.
2.The Custodian must be a bank or such other person or
organization who demonstrates to the Internal Revenue Service
that he can manage a custodial account properly.
0.Xx custodial funds will be invested in life insurance
contracts.
4.The interests of a Participant in his custodial account are
non-forfeitable.
5.The custodial account assets will not be commingled with
other property except in a common trust fund or common
investment fund.
6.Your custodial account will be distributed to you no later
than the first day of April following the calendar year in
which you attain age 70 1/2, or distribution will begin at
that time, in installments, over your life or the lives of you
and your designated beneficiary. If you die before receiving
the entire interest in the account, the remaining interest
must be distributed to your beneficiaries (or used to purchase
an immediate annuity) within five years after death (except
for surviving spouses and certain designated beneficiaries)
and must be made using a method which distributes such
benefits at least as rapidly as under the method used prior to
death.
C. Additional Requirements Under The Agreement
0.Xxx shall direct the Custodian to invest specific amounts of
your account either in shares of Fund for Government
Investors, Inc.; The Rushmore Fund, Inc.; American Gas Index
Fund, Inc.; Xxxxxxxxx- Xxxxxxxx Trust or any other fund
authorized by the Custodian. The shares of the Fund or Funds
you select will be purchased at the net asset value next
determined after receipt of the order to purchase. Account
earnings are primarily dividends and may include capital gain
distributions. Earnings are automatically used to purchase
additional shares of the Fund from which the earnings accrued.
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2.The minimum contribution for purposes of establishing an
account is $500, disregarding whether the amount is divided
between the individual funds.
0.Xxx shall notify the Custodian in writing as to when you
wish to receive your benefits and the manner of payout
pursuant to section 4.3 of the Agreement.
4.If you amend your Agreement, other than by changing an
election or designation provided in the Adoption Agreement,
you will no longer be a participant in the Agreement. You
hereby delegate to the Custodian the power to amend the
Agreement and you shall be deemed to have consented to any
such amendment. However, neither you nor the Custodian shall
have the power to amend the Agreement in such manner as would
cause or permit any part of the benefits in a custodial
account to be diverted to purposes other than for the
exclusive benefit of participants or their beneficiaries
unless such amendment is necessary to conform the Agreement to
or satisfy the conditions of any law, governmental regulation
or ruling.
If a new Custodian is appointed, that Custodian shall be
responsible for making amendments and furnishing copies
thereof to each participant.
D. Income Tax Consequences of
Establishing A Custodial Account
1.Limitations and Restrictions on Deductions
Pursuant to section 219 of the Code, a participant's
contributions and deductions for his taxable year may not
exceed the lesser of 100% of his compensation or $2,000. The
limitation is $2,250 if a spousal IRA is opened.
2. Additional Rules
(a) You may not deduct amounts from a "roll-over contribution"
such as the transfer of retirement funds from a qualified
employee pension plan to an IRA custodial account.
(b) "Compensation" means payments received from any employer
during a taxable year including salary, wages, professional
fees, bonuses, commissions and overtime pay. Income from
property such as dividends, interest and rent does not qualify
as compensation. Compensation also includes all taxable
alimony or separate maintenance payments received in
connection with a divorce or separation decree or a written
instrument incident to such a decree.
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(c) No deduction is allowed with respect to any contribution
made during the taxable year (or thereafter) during which you
have attained age 70 1/2 before the close of such taxable
year.
(d) The deductions for an IRA contribution will reduce your
gross income so that even if you do not itemize deductions,
you can take the standard deduction and still claim a
deduction for contributions to your custodial account.
(e) You may claim a deduction even if you establish the plan
or make the contribution as late as your federal tax filing
date, but not after April 15 of the next year.
(f) If a husband and wife each receive compensation during the
year and are otherwise eligible, each may establish his or her
own IRA for a total annual contribution of up to $4,000
($2,000 for each).
(g) State Community property laws have no effect on any
provision of the Agreement, including those relating to
deductions.
3. Taxation of Distributions After Age 59 1/2
(a) Lump sum: The full amount of the distribution is taxable
as ordinary income in the year of distribution (assuming no
nondeductible contributions were made).
(b) Payments in installments or from an annuity contract.
The full amount of such distributions are taxable to the
recipient as ordinary income in the years received (assuming
no nondeductible contributions were made).
4. "Rollover Contributions" and "Transfers"
Tax-free transfer of funds from one retirement program to
another are allowed for rollover transactions and for certain
direct "IRA-to-IRA transfers." These transactions are separate
from your annual tax deductible contribution to your IRA. You
do not get a tax deduction for these transfers. However, the
transfer itself is not taxed and the earnings of the account
are not taxed until distribution.
A "rollover" transaction occurs when an individual receives
funds from one qualified retirement program and within sixty
days that individual invests the eligible funds in another
qualified retirement arrangement. For distributions in 1993
and later, you may be subject to a 20% withholding tax on
amounts that you receive directly, even if you make a rollover
within 60 days. In comparison, "IRA-to-IRA" transfers involve
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the direct transfer of IRA funds from one financial
institution (such as a bank or savings and loan association)
to another financial institution. Those transfers are not
subject to the 20% withholding tax.
As an example, if you are presently participating in a
corporate employer's qualified plan, and you sever your
employment and receive a qualified lump sum distribution of
your entire interest in the plan, you can invest the portion
of the distribution attributable to your employer's
contributions, and the accumulations on your own
contributions, if any, in a separate rollover IRA tax free. A
rollover contribution must be made directly to an IRA
Custodian to avoid withholding tax. You may rollover a
qualifying lump sum distribution into more than one IRA.
Rollover contributions between individual retirement savings
programs may occur only once every twelve months. However,
this limitation does not apply when IRA funds are transferred
directly from one Custodian or trustee to another in an "IRA-
to-IRA transfer".
If you receive a distribution from your employer's plan and
roll it over to an IRA, you may later rollover those assets
into a new employer's plan if the new employer's plan permits.
Your IRA would serve as a holding area or conduit for those
assets. You may not make additional contributions to this IRA
if you want to rollover into a new employer's plan.
Also, a surviving spouse may rollover the lump sum
distribution received on the death of a spouse who
participated in a qualified pension or profit-sharing plan. A
distribution made from a qualified plan to a surviving spouse
may be directly rolled over to an IRA or to a qualified plan
in which the surviving spouse participates.
It should be pointed out that the special tax treatment
available for "qualified" lump sum distributions from
employer-sponsored pension plans will not be available if such
funds are placed in a rollover IRA. Taxable distributions
from an IRA, including a rollover IRA, are not eligible for
capital gain treatment or the 5 or 10-year averaging rules.
Tax-free rollover treatment is denied for any amount received
by an individual from an inherited IRA (an IRA acquired by an
individual because of the death of another individual
occurring after 1983). The spouse of an individual may, under
certain circumstances, continue the individual's IRA.
Distributions of less than the balance to the credit of an
employee under a qualified pension or annuity plan or tax-
sheltered annuity may be rolled
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over tax-free by the employer to an IRA if the distribution is
an "eligible rollover distribution" under the section 402 of
the Code. Other restrictions apply to such accounts.
Benefits distributed to a recipient under a qualified domestic
relations order can be rolled over tax free from a qualified
plan to an IRA.
5. Tax Status Of Your Custodial Account
Your custodial account will be exempt from tax unless you
engage in a prohibited transaction discussed in section H
below.
6. State Tax Rules
Some states and localities may have tax rules differing from
the federal rules with respect to Individual Retirement
Accounts, and you should consult your individual tax advisor
in this regard.
7. Transfer Of Account Incident To Divorce
The transfer of an IRA to a former spouse under a divorce
decree or under a written instrument incident to such divorce
is not a taxable transfer. The IRA is treated as belonging to
such former spouse after the transfer.
E. Spousal Accounts
You and your spouse may adopt a "spousal" IRA which permits
deductible contributions greater than those allowed under a
plan providing for contributions for only the participant.
Such a plan is available only for years for which the
participant and spouse file joint returns and only if the
spouse does not have "compensation" for work outside of the
home at any time during the year or elects to be treated as
having no compensation. Contributions on behalf of the spouse
may be made to a spousal IRA after the Participant has reached
age 70 1/2 if the spouse is under age 70 1/2.
Under a spousal IRA, you may contribute into two accounts the
lesser of $2,250 or 100% of your compensation. In addition,
no more than $2,000 may be contributed to either the IRA of
the participant or the separate IRA account of the spouse.
For example, you could contribute $1,125 to both your own IRA
and the spousal IRA. As another example, $2,000 could be
contributed to your IRA and $250 to the spousal IRA.
In general, all provisions of the custodial account agreement
pertaining to a sole participant shall apply to a spousal
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participant. Thus, each spouse becomes the owner or "grantor"
of his or her own IRA account and must execute the documents
relating thereto. Once an IRA is established for a non-
working spouse, that spouse, as the owner and grantor of that
IRA, becomes subject to rules and restrictions applicable to
IRAs generally, including conditions of eligibility for
distributions; penalties for premature distributions,
excessive accumulations and prohibited transactions; and
designation of beneficiaries and distribution in the event of
death.
F. IRAs Of Certain Divorced Persons
The annual contribution ceiling is the lesser of $2,000 or the
divorced individual's compensation including alimony and
separate maintenance payments includible in gross income under
section 71(a)(1) of the Code for the year and without regard
as to when the IRA was established.
G. Estate And Gift Tax Considerations
Generally, for any descendant who was a Participant in any
plan who was in pay status on December 31, 1984, and who
irrevocably elected the form of benefit before July 18, 1984,
if an individual who established an IRA dies, and if such
individual's interest in the IRA is distributed in
substantially equal installments over a period of at least
thirty-six months to a beneficiary, other than the executor,
the amount distributed will be excluded from the individual's
estate for federal estate tax purposes.
For all other Participants, most specifically Participants who
die on or after January 1, 1985, and who were not in pay
status before that date, the entire value of the individual's
interest is included in the individual's estate for federal
estate tax purposes.
A Participant should name the beneficiaries of his IRA and the
method of distribution by filing a Designation of Beneficiary
Form with the Custodian. If no such designation is in effect
upon a participant's death, the IRA will be distributed in a
lump sum to his estate.
Naming a person as a beneficiary of an IRA or receiving a
distribution from an IRA as a beneficiary does not constitute
the making of a gift subject to federal gift tax.
H. Other Information
1. If you or your beneficiary engage(s) in a pro-hibited
transaction described in section 4975 of the Code with respect
to your custodial account, the account will lose its exemption
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from tax, and you must include in gross income, for the
taxable year during which you or your beneficiary engage(s) in
the prohibited transaction, the fair market value of the
entire account that would be taxable to you in a distribution.
Examples of prohibited transactions include borrowing money
from the IRA, selling property to or buying property from the
account or leasing property from the account.
2. If you use all or any portion of a custodial account as
security for a loan, then the portion so used will be treated
as a distribution and you must include such distribution in
gross income for the taxable year during which you so use such
account.
3. If any person other than you or a beneficiary engages in
any prohibited transaction described in section 4975, such
person will be subject to the special excise taxes imposed by
section 4975.
4. An additional tax of 10% is imposed on distributions
(including amounts deemed distributed as the result of a
prohibited loan or as the result of being used as security for
a loan) made before you have attained age 59 1/2, unless such
distribution is made on account of death or disability, or
unless a rollover contribution is made with such distribution.
5. As stated above, taxable distributions from your custodial
account are taxed as ordinary income regardless of their
source. Such distributions are not eligible for capital gain
treatment or the special five or ten-year averaging rules that
apply to lump sum distributions from qualified employer plans.
6. Generally, the earliest age at which distributions may be
made from your custodial account to you without incurring an
additional 10% penalty tax is age 59 1/2. In addition,
distributions must be made before April 1 following the end of
the tax year in which you reach age 70 1/2 in one of two ways
(a) Your entire interest in your custodial account can be
distributed directly to you; and
(b) Your interest in your account can be distributed in
payments over your life (or the lives of you and your
designated beneficiary), or over a period certain not
exceeding your life expectancy (or the life expectancies of
you and your designated beneficiary), determined at age 70
1/2. Failure to payout the "minimum distribution," as defined
below, for a year will result in the imposition of an excise
tax.
A 50% excise tax will be imposed on the underdistribution,
representing the difference between the minimum payout
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required for the tax year in question and the amount actually
received by you. For example, if the minimum payout that you
should have received is $1,000 for the tax year and you only
receive $600, you will owe an excise tax of $200 (50% of the
$400 underpayment).
The minimum distribution each year must not be less than the
lesser of the balance of your entire interest or an amount
equal to the quotient obtained by dividing your entire
interest at the beginning of such year (including amounts not
in your account at the beginning of the year because they have
been withdrawn to make a rollover contribution to another
individual retirement plan) by your life expectancy or the
joint and last survivor expectancy of yourself and your spouse
(whichever is applicable). Life expectancy in either case is
determined in accordance with the expected return multiples in
Treasury Regulation Section 1.72-9 reduced by one for each
taxable year commencing with the first day of April following
the year in which you attain age 70 1/2.
However, you may distribute a lesser amount, or nothing, for
any year if for each year beginning with the first day of
April following the year in which you attain age 70 1/2 the
aggregate amounts distributed by the end of any year at least
equal the aggregate of the minimum amounts required to have
been distributed by the end of such year. This will allow you
to receive larger payments in early years when more money may
be needed than for later years.
7.Generally, you may contribute only the deductible amount to
your custodial account. Any other contributions are
considered excess contributions. Thus, an excess contribution
arises if you contribute to your account a total amount for
the tax year that exceeds the lesser of $2,000 or 100% of your
compensation or $2,250 in the case of a spousal IRA.
There is a 6% excise tax on the amount of an excess
contribution for the tax year in which it is made and for each
later year until the excess amount is eliminated. The amount
of the tax for any tax year cannot exceed 6% of the value of
the account, as of the close of that tax year.
If the excess contribution is withdrawn before the due date
(including extensions) of your tax return, it is not
includible in income or subject to the 6% penalty if no
deduction was allowed for the excess contribution and if any
net income earned by the excess contribution also is
withdrawn. However, the net income which is withdrawn is
subject to tax (and may also be subject to a 10% penalty if it
constitutes a premature distribution) in the tax year in which
the excess contribution was made.
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Even if the time for filing your return (including extensions)
has passed, you can withdraw an excess contribution for the
year without being subjected to the 10% penalty tax on
premature distributions or being required to include the
withdrawn excess contribution in your gross income for the
year of the withdrawal. The foregoing is inapplicable if (1)
a deduction was allowed for the excess contribution or (2)
total contributions (including the excess contribution) for
the year exceeded $2,250. However, the earnings on a
withdrawn excess contribution will be taxable as ordinary
income and may be subject to a 10% penalty tax.
8. You may have to pay a 15% excess distribution tax on
retirement plan distributions you receive in a taxable year
that exceed the greater of $150,000 or $112,500 (as indexed
for inflation). The dollar limitation may be higher if, on a
return filed for a tax year ending before January 1, 1989, you
elected special "grandfather provisions" for your accrued
benefits as of August 1, 1986, that exceeded $562,500. For
purposes of the excess distribution tax, distributions from
IRAs are aggregated with distributions from qualified
retirement plans and tax sheltered annuities. The excess
distribution tax is reduced by the 10% tax on premature
distributions, if any, that applies to the same distribution.
There are special provisions for lump sum distributions and
the IRAs of surviving spouses.
9. The Federal estate tax is increased by 15% of the excess
retirement accumulations of a decedent. The excess retirement
accumulation is the excess, if any, of the decedent's
interests in all qualified employee plans, tax-sheltered
annuities, qualified annuity plans, and IRAs over the "present
value" of an annuity for a term certain, with payments equal
to the limitation on excess distributions for the year in
which the death occurs which is payable for a period equal to
the life expectancy of the decedent immediately before death.
10. You are required to file Form 5329 (Return for Individual
Retirement Arrangement Taxes) with the Internal Revenue
Service for the taxable year during which the custodial
account is maintained if you are subject to a penalty tax for
a premature distribution, excess contribution, excess
accumulation or excess distribution.
11.Unless the participant dies, is disabled (as defined in
section 72(m) of the Code), or reaches age 59 1/2 before any
amount is distributed from the account, the Custodian must
receive from the participant a statement explaining how he or
she intends to dispose of the amount distributed.
12. The participant agrees to provide the Custodian with
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information necessary for the Custodian to prepare any reports
required under section 408(i) of the Code and the related
regulations.
13. The Custodian agrees to submit reports to the Internal
Revenue Service and the Participant as prescribed by the
Internal Revenue Service.
14. The Custodian agrees to provide a separate accounting for
the interest of each Participant including an annual valuation
of custodial assets and allocation of valuation changes.
15.The assets in a custodial account cannot be invested in
collectibles such as works of art, rugs, antiques, metals,
gems, stamps, coins, alcoholic beverages or other tangible
personal property specified by the regulations pursuant to
section 408(m) of the Code, except gold coins described in
United States Code, Title 31, Section 5112(a)(7), (8), (9), or
(10), or silver coins described in United States Code. Title
31, Section 5112(e).
16. Further information can be obtained from any District
Office of the Internal Revenue Service.
17. Masculine pronouns, wherever used herein, shall be deemed
to include the feminine, and the use of the masculine pronouns
shall not be deemed to imply any preference for them or any
subordination, disqualification or exclusion of the feminine.
18. This custodial account is established for the exclusive
benefit of the Participant or his beneficiary.
I. Additional Financial Matters
1. Fees And Expenses
The charges of the Custodian shall be those charges normally
charged by Fund for Government Investors, Inc.; The Rushmore
Funds, Inc.; American Gas Index Fund, Inc.; Xxxxxxxxx-Xxxxxxxx
Trust or other designated Fund as described in the
prospectuses accompanying this Disclosure Statement. A
separate maintenance fee of $10.00 will be charged annually in
addition to a $10.00 liquidation fee when closing your
Individual Retirement Account. The Custodian may change its
fees with respect to any calendar year by giving thirty (30)
days written advance notice of such change in charge.
2. Earnings
The earnings of each separate custodial account shall be
allocated to such account, including
disclosure of the earnings of each fund.
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3. Growth In Value
The custodial account will be invested at your direction in
shares of Fund for Government Investors, Inc.; The Rushmore
Funds, Inc.; American Gas Index Fund, Inc.; Xxxxxxxxx-Xxxxxxxx
Trust or other designated Fund. The size of the account at
any point in time will depend entirely on the value of the
Funds' shares in the account. Thus, the growth in value of a
custodial account is neither guaranteed nor projected.
Fund for Government Investors, Inc.; The Rushmore Fund, Inc.;
American Gas Index Fund, Inc.; Xxxxxxxxx-Xxxxxxxx Trust, or
other prospectus, if applicable, accompanies this IRA
Disclosure Statement
RUSHMORE TRUST AND SAVINGS, FSB
INDIVIDUAL RETIREMENT ACCOUNT CUSTODIAL AGREEMENT
This Individual Retirement Account (IRA) Custodial Agreement
is made between Rushmore Trust and Savings, FSB, the
Custodian, and each individual who executes an Adoption
Agreement incorporating this Agreement.
ARTICLE I: DEFINITIONS
"Participant" means an individual, a spouse who has a separate
custodial account pursuant to Section 3.2 of this Agreement
and a divorced individual who has a separate custodial account
pursuant to Section 3.3 of this Agreement who has executed the
Adoption Agreement.
"Beneficiary" means a person so designated by a Participant.
"Benefits" means a Participant's or Beneficiary's share of the
balance of his Custodial Account.
"Code" means the Internal Revenue Code of 1986, as amended.
"Compensation" means wages, salaries, professional fees, or
other amounts derived from or received for personal service
actually rendered (such as commissions paid salespersons,
compensation for services on the basis of a percentage of
profits, commissions on insurance premiums, tips, bonuses,
etc.), including earned income as defined in Section 401(c)(2)
(reduced by the deduction the self-employed individual takes
for contributions made to a tax-qualified retirement plan).
Compensation does not include earnings or profits from
property (such as interest and dividends), amounts not
includible in gross income or any amount received as a pension
or annuity or as deferred compensation. For years commencing
January 1, 1985, and thereafter, compensation shall include
all taxable alimony or separate maintenance payments received
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in connection with a divorce or separation decree or a written
instrument incident to such a decree.
"Custodial Account" means an account established for a
Participant pursuant to this Agreement.
"Custodial Year" means for all Participants, this shall be a
calendar year and if the Participant's first year of
participation hereunder begins after January 1, his first
Custodial Year shall end on December 31 of said year.
"Disability" means the state of being unable to engage in any
substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be
expected to result in death or to be of long-continued and
indefinite duration pursuant to Section 72(m)(7) of the Code.
"Fund" means the Fund for Government Investors, Inc.; Rushmore
Funds, Inc.; American Gas Index Fund, Inc.; Xxxxxxxxx-Xxxxxxxx
Trust or other similar fund designated by the Custodian.
ARTICLE II: ELIGIBILITY TO BE A PARTICIPANT
2.1Regular IRA - An individual is eligible to contribute to an
IRA Custodial Account during any year in which he has
compensation if he does not reach age 70 1/2 before the close
of such year.
2.2Spousal IRA - An individual may be able to contribute to a
separate Spousal IRA Custodial Account created for the benefit
of his non-working spouse pursuant to section 3.2 of this
Agreement.
2.3Certain Divorced Person's IRA - Certain divorced persons
are eligible to contribute to their own IRA Custodial Account
pursuant to section 3.3 of this Agreement.
2.4Rollover IRA - An individual making a rollover contribution
as described in sections 402(c), 403(a)(4), 403(b)(8), or
408(d)(3) of the Code may be eligible to create a separate
Rollover IRA Custodial Account pursuant to section 3.4 of this
Agreement.
ARTICLE III: CONTRIBUTIONS AND THE INVESTMENT THEREOF
3.1For each Custodial Year, a Participant may contribute to
his Custodial Account an amount or amounts not to exceed, in
the aggregate, the lesser of $2,000 or 100 percent of
compensation. No contribution shall be made for a Custodial
Year during which the Participant attained age 70 1/2 or
thereafter. The limitation of the lesser of $2,000 or 100
percent of compensation does not apply to rollover
17
contributions as described in section 3.4 of this Agreement.
3.2 For taxable years of a Participant during which such
Participant has a spouse who does not receive compensation,
the Participant may contribute up to $2,000 to a separate
Spousal Custodial Account for his spouse. However, in no
event may the aggregate contributions of a Participant to his
own account and to his spouse's account exceed the lesser of
$2,250 or 100 percent of compensation for the year. No
contribution shall be made under this subsection for a
Custodial Year during which the Participant has attained age
70 1/2 or thereafter unless the Participant's spouse has not
attained age 70 1/2. No contribution shall be made under this
subsection for a Custodial Year during which both spouses have
attained age 70 1/2 or thereafter.
3.3 For divorced individuals, the annual contribution ceiling
shall be the lesser of $2,000 or the divorced individual's
compensation including alimony includible in gross income
under section 71(a)(1) of the Code for the year and without
regard as to when the IRA was established.
3.4 The Custodian may receive from any individual a rollover
contribution as described in sections 402(c), 403(a)(4),
403(b)(8) and 408(d)(3) of the Code to be invested and
distributed, pursuant to this Agreement, in the same manner as
other contributions and to be held in a separate Custodial
Account. The Custodian shall have no obligation to ascertain
whether or not such rollover is proper pursuant to the Code or
the provisions of any other plan.
3.5Contributions made to open an account must be in cash and
must equal or exceed $500, disregarding whether the amount is
divided between the individual Fund.
3.6 All contributions made to a Custodial Account and all
investments made with such contributions and the earnings
thereon shall immediately become, and at all times remain,
non-forfeitable.
3.7Each Participant is to direct the Custodian to invest the
amount of each contribution in shares of one or more Funds at
the price and in the manner in which such shares are then
being publicly offered by the Funds. All dividends and
capital gain distributions received on such shares that are
held in each account shall be reinvested in such additional
shares of the fund from which the earnings accrued which shall
be credited to such account. If any distribution on shares
may be received at the election of the shareholder in
additional shares or in cash or other property, the Custodian
shall elect to receive it in additional shares. Sales
charges, if any, attributable to the acquisition of shares
18
shall be charged to the account for which such shares are
acquired.
3.8The Participant may delegate the investment responsibility
for all of his or her Account to an agent or attorney in fact
by notifying the Custodian in writing on a form acceptable to
the Custodian of the delegation of such investment
responsibility and the name of the person or persons to whom
such responsibility is delegated. The Custodian shall follow
the directions of such agent or attorney in fact and shall be
under no duty to review or question any direction, action or
failure to direct or act of such agent or attorney in fact.
The Participant may revoke the authority of any agent or
attorney in fact at any time by notifying the Custodian in
writing of such revocation and the Custodian shall not be
liable in any way for transactions initiated prior to receipt
of such notice.
3.9Each Custodial Account shall be created and held for the
exclusive benefit of the Participant or his beneficiaries.
3.10If a Participant makes a contribution to a Custodial
Account which the Participant deems to be in excess of the
limitations set forth in this Article, he may withdraw such
excess amount, plus any earnings thereon, upon notice to the
Custodian in writing that there has been such excess
contribution. The Custodian shall have no duty to determine
whether there has been an excess contribution.
ARTICLE IV: PAYMENT OF BENEFITS
4.1 The Code provides penalties for distributions prior to a
Participant attaining age 59 1/2 except on account of
rollovers, disability or death.
4.2 If a Participant becomes disabled, benefits shall be
distributed to him commencing on the first day of the month
following notice in writing to the Custodian, from the
Participant or his legal representative, to the effect that
the Participant has become disabled. Such disability may be
evidenced by approval of his application for disability
benefits under the Federal Social Security Act, or by a
certification made by a licensed physician. However, the
Custodian may rely on the aforesaid notice and shall have no
duty to ascertain the fact of disability.
4.3Notwithstanding any provision in the Custodial Account to
the contrary, the distribution of a Participant's or
beneficiary's interest shall be made in accordance with the
minimum distribution requirements of section 408(a)(6) or
408(b)(3) of the Code and the regulations thereunder,
including the incidental death benefit provisions of section
19
1.401(a)(9)-2 of the proposed regulations, all of which are
herein incorporated by reference.
A Participant or Beneficiary may satisfy the minimum
distribution requirements under Section 408(a)(6) and
408(b)(3) of the Code by receiving a distribution from one IRA
that is equal to the amount required to satisfy the minimum
distribution requirements for two or more IRAs. For this
purpose, the owner of two or more IRAs may use the
"alternative method" described in Notice 88-38, 1988-1 C.B.
524, to satisfy the minimum distribution requirements
described above. If a Participant or Beneficiary elects to
satisfy the minimum distribution requirements by receiving a
distribution from another IRA, the Participant or Beneficiary
shall provide the Custodian with evidence satisfactory to the
Custodian of any such distribution. If the Participant or
Beneficiary does not provide such evidence to the Custodian,
the Custodian shall be entitled to apply the terms of this
Custodial Agreement as if no other distributions had been made
to the Participant or Beneficiary.
4.4The entire interest of the Participant in the Custodial
Account must be, or commence to be, distributed before the
first day of April following the year in which the Participant
attains age 70 1/2. Not later than the close of such taxable
year the Participant may elect, in a form and at such time as
may be acceptable to the Custodian, to have the balance in the
Custodial Account distributed in:
(a)a single sum payment;
(b)to purchase an annuity contract selected by the Participant
that provides equal or substantially equal monthly, quarterly,
or annual payments commencing at the close of such taxable
year over the life of the participant;
(c)to purchase an annuity contract selected by the Participant
that provides equal or substantially equal monthly, quarterly,
or annual payments commencing at the close of such taxable
year over the joint lives of the Participant and his
designated beneficiary;
(d)equal or substantially equal monthly, quarterly, or annual
payments commencing at the close of such taxable year over a
specified period not extending beyond the life expectancy of
the Participant; or
(e)equal or substantially equal monthly, quarterly, or annual
payments commencing at the close of such taxable year over a
specified period not extending beyond the joint life and last
survivor expectancy of the Participant and his designated
beneficiary. For each succeeding year, a distribution must be
20
made on or before December 31. Even if distributions have
begun to be made under option (d) or (e), the Participant may
receive a distribution of the balance in the Custodial Account
at any time by giving written notice to the Custodian. If the
Participant does not choose any of the methods of distribution
described above by the first day of April following the year
in which he or she reaches age 70 1/2, distribution to the
Participant will be made before the end of that tax year by a
single-sum payment. If the Participant elects as a means of
distribution (b) or (c) above, the annuity contract must
satisfy the requirements of Section 408(b)(1), (3), and (4) of
the Code. If the Participant elects as a means of
distribution (d) or (e) above, figure the Payments made in tax
years beginning in the tax year the Participant reaches age 70
1/2 as follows:
(i)For the minimum annual payment, divide the Participant's
entire interest in the Custodial Account at the beginning of
each year by the life expectancy of the Participant (or the
joint life and last survivor expectancy of the Participant and
his or her designated beneficiary, or the period specified in
(d) or (e), whichever applies). Determine the life expectancy
in either case on the date the Participant reaches 70 1/2
minus the number of whole years passed since the Participant
became 70 1/2.
(ii)For the minimum monthly payment, divide the result in (i)
above by 12.
(iii)For the minimum quarterly payment, divide the result in
(i) above by 4.
If elected by the Participant prior to the commencement of
distributions, or, if applicable, by the surviving spouse
where the Participant dies before distributions have
commenced, life expectancies of a Participant or spouse
beneficiary shall be recalculated annually for purposes of
distributions. An election to recalculate shall be
irrevocable and shall apply to all subsequent years. The life
expectancy of a nonspouse beneficiary shall not be
recalculated.
4.5If the Participant dies before his or her entire interest
in the account is distributed to him or her, the entire
remaining undistributed interest will be distributed as
follows:
(a)If the Participant dies on or after distributions have
begun under Section 4.4, the entire remaining interest must be
distributed at least as rapidly as provided in Section 4.4.
(b) If the Participant dies before distributions have begun
21
under Section 4.4, the entire remaining interest must be
distributed as elected by the Participant or, if the
participant has not so elected, as elected by the beneficiary
or beneficiaries as follows:
(i)by December 31st of the year containing the fifth
anniversary of the Participant's death; or
(ii) in equal or substantially equal payments over the life or
life expectancy of the designated beneficiary or beneficiaries
starting by December 31st of the year following the year of
the Participant's death. If, however, the beneficiary is the
Participant's surviving spouse, then this distribution is not
required to begin before December 31 of the year in which the
owner would have turned 70 1/2.
If the Beneficiary does not make arrangements for distribution
before the fifth year following the death of the Participant,
the entire remaining interest will be distributed to the
Beneficiary in a single-sum distribution.
4.6If the Participant dies before his or her entire interest
is distributed to him or her and the beneficiary of the IRA is
other than the surviving spouse, no additional cash
contributions or rollover contributions may be accepted by the
IRA.
4.7If no designation of a beneficiary is in effect on a
Participant's death, his beneficiary shall be his estate.
ARTICLE V: AMENDMENT
A Participant may at any time change an election or
beneficiary designation under this Agreement.
Each Participant hereby delegates to the Custodian the power
to amend this Custodial Account Agreement and each Participant
shall be deemed to have consented to any such amendment. Each
Participant shall be furnished a copy of any such amendment.
However, the Custodian shall not have the power to amend the
Custodial Account Agreement in such manner as would cause or
permit any part of the benefits in a Custodial Account to be
diverted to purposes other than for the exclusive benefit of
Participants or their beneficiaries unless such amendment is
necessary to conform the Custodial Account Agreement to or
satisfy the conditions of any law, governmental regulation or
ruling. In addition, no amendment shall enable the Custodian
to invest contributions in anything other than investments
allowable by the Custodian Account Agreement.
If a new Custodian is appointed, such Custodian shall be
22
responsible for making amendments and furnishing copies
thereof to each participant.
ARTICLE VI: TERMINATION AND TRANSFER
6.1 A Participant may terminate his Custodial Account at any
time by delivery of written notice of such termination to the
Custodian. Upon such termination, the Custodian shall
distribute the assets in accordance with the instructions of
the Participant.
Unless the Participant dies, is disabled (as defined in
section 72(m) of the Code), or reaches age
59 1/2 before any amount is distributed from the account, the
Custodian must receive from the Participant a statement
explaining how he or she intends to dispose of the amount
distributed. If such instructions involve a payout of the
Participant's benefits, the Custodian's accounting procedures
set forth in Article VIII hereof shall be applicable.
6.2 Upon request of a Participant in writing to the
Custodian, the Custodian shall transfer all benefits of the
Participant to the Participant, to a qualified retirement
plan, or to another Individual Retirement Account established
by the Participant. The Custodian is authorized, however, to
reserve such sum of money as it may deem advisable for payment
of all of its fees, compensation, costs and expenses, or for
any other liabilities constituting a charge against the assets
of the Custodial Account or against the Custodian, with any
balance of such reserve remaining after the payment of all
such items to be paid over to the successor trustee or
Custodian.
Upon any such transfer, the Custodian's accounting procedures
set forth in Article VIII hereof shall be applicable.
ARTICLE VII: RESIGNATION OR REMOVAL OF CUSTODIAN
The Custodian may resign at any time not less than thirty (30)
days notice in writing to the Participant and may be removed
by the Participant at any time upon thirty days' notice in
writing to the Custodian. Upon such resignation or removal,
the individual Participant shall appoint a qualified successor
trustee or Custodian. Upon receipt by the Custodian of
written acceptance of such appointment by the successor
trustee or Custodian, the Custodian shall transfer and pay
over to the successor the assets of the Custodial Accounts or
Account and all records pertaining thereto. The Custodian is
authorized, however, to reserve such sum of money as it may
deem advisable for payment of all its fees, compensation,
costs and expenses, or for payment of any other liabilities
constituting a charge against the assets of the Custodial
23
Accounts or Account or against the Custodian, with any balance
of such reserve remaining after the payment of all such items
to be paid over to the successor trustee or Custodian.
It shall be a condition of the removal of the Custodian that
the Participant shall have appointed a qualified successor
trustee or Custodian. In the event of the resignation of the
Custodian and failure to appoint a qualified successor, the
Custodian may apply to a court of competent jurisdiction for
the appointment of such successor and the costs of such a
proceeding shall be treated as an expense under Article IX
hereof.
Upon such resignation or removal, the Custodian's accounting
procedures set forth in Article VIII hereof shall be
applicable.
ARTICLE VIII: RECORDS AND REPORTS OF THE CUSTODIAN
The Custodian shall keep accurate and detailed records of all
contributions, receipts, distributions, disbursements and all
other transactions.
Within one hundred and twenty days from the close of each plan
year (or after a distribution or transfer of a Participant's
benefits or the Custodian's resignation or removal) the
Custodian shall file with the Participant a written report
(which may consist of copies of regularly issued Fund account
statements) reflecting all transactions effected by it during
the period in question and including a statement of the assets
in the Custodial Account and their value.
In the absence of the filing in writing with the Custodian by
the Participant of exceptions or objections to the report
within sixty days after mailing such report, the Participant
shall be deemed to have approved such report and the Custodian
shall be released, relieved and discharged from all liability
to anyone (including any beneficiary) with respect to all
matters set forth in such report as though such account had
been settled by the decree of a court of competent
jurisdiction. No person other than a Participant may require
an accounting or bring any action against the Custodian.
The Custodian shall have the right at any time to apply to a
court of competent jurisdiction for judicial settlement of its
accounts or for determination of any questions of construction
which may arise or for instructions. The only necessary party
defendant to such action shall be the Participant but the
Custodian may, if it so elects, bring in as a party defendant
any other person or persons. The cost, including attorney's
fee, of any such account shall be charged to the Custodian
Account as an administrative expense under Article IX.
24
The Custodian shall prepare and distribute such other reports
as are required under the Internal Revenue Code, the Employee
Retirement Income Security Act (ERISA) and Federal securities
law.
ARTICLE IX: CUSTODIAN'S FEES AND OTHER EXPENSES
The Participant shall be charged by the Custodian for its
services under this Agreement in accordance with the current
posted fee schedule as may be amended from time to time by the
Custodian.
Any income taxes or other taxes of any kind whatsoever that
may be levied or assessed upon or in respect of a Custodial
Account, any transfer taxes incurred in connection with the
investment and reinvestment of the assets of the Custodial
Account, and all other administrative expenses incurred by the
Custodian in the performance of its duties including fees for
legal services rendered to the Custodian and compensation of
the Custodian, shall be paid by the Participant and the
Participant hereby covenants and agrees to pay the same.
In the event that the Participant fails to discharge any
liability under this Article, such liability shall be charged
to the Participant's Custodial Account.
25
ARTICLE X: CUSTODIAN'S DUTIES AND OBLIGATIONS
The Custodian shall be under no duties whatsoever except such
duties as are specifically set forth in this Agreement. The
Custodian shall not make any investments or dispose of any
investment held in a Custodial Account, except upon the
written direction of the Participant.
The Custodian shall be fully protected in acting upon any
instrument, certificate or paper believed by it to be genuine
and to be signed or presented by the proper person or persons,
and the Custodian shall be under no duty to make any
investigation or inquiry as to any statement contained in any
such writing but may accept the same as conclusive evidence of
the trust and accuracy of the statements therein contained.
The Participant shall at all times duly indemnify and hold
harmless the Custodian from any liability which may arise
hereunder except liability arising from the negligence or
willful misconduct of the Custodian.
ARTICLE XI: MISCELLANEOUS
11.1 It is a condition of this Custodial Account Agreement
and each Participant herein agrees that he shall look solely
to the assets of his Custodial Account for the payment of any
benefits to which he is entitled.
11.2 The benefits hereunder shall not be subject to
alienation, assignment, garnishment, attachment, execution or
levy of any kind, and any attempt to cause such benefits to be
so subjected shall not be recognized except to such extent as
may be required by law.
11.3 The Code provides tax penalties for excess
contributions. The Code also imposes penalties for premature
distributions made before age 59 1/2, except in the event of
death, disability or for rollovers.
11.4 No investments will be made in life insurance
contracts.
11.5 The assets of a Custodial Account will not be
commingled with other property except in a common trust fund
or common investment fund within the meaning of section
408(a)(5) of the Code.
11.6 The terms and conditions of this Custodial Account
Agreement shall be applicable without regard to the community
property laws of any state.
11.7 Masculine pronouns, whenever used herein, shall be
deemed to include the feminine, and the use of the masculine
26
pronouns shall not be deemed to imply any preference for them
or any subordination, disqualification or exclusion of the
feminine.
11.8 The provisions of this Custodial Account Agreement
shall be construed and interpreted under the laws of the
United States of America and, to the extent applicable, the
State of Maryland.
11.9 The Participant agrees to provide the Custodian with
information necessary for the Custodian to prepare any reports
required under section 408(i) of the Code and the related
regulations.
11.10 The Custodian agrees to submit reports to the Internal
Revenue Service and the Participant as prescribed by the
Internal Revenue Service.
11.11 The Custodian agrees to provide a separate accounting
for the interest of each Participant including an annual
valuation of custodial assets and allocation of valuation
changes.
11.12 The assets in a Custodial Account cannot be invested in
collectibles such as works of art, rugs, antiques, metals,
gems, stamps, coins, alcoholic beverages or other tangible
personal property specified by the regulations pursuant to
section 408(m) of the Code.
27
RUSHMORE TRUST & SAVINGS FSB
EMPLOYER'S ADOPTION AGREEMENT
DEFINED CONTRIBUTION PLAN
PROFIT SHARING PLAN AND
CASH OR DEFERRED ARRANGEMENT
The Custodian may be contacted at the following address:
Rushmore Trust & Savings FSB
Attention: Retirement Plan Department
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
(000) 000-0000
(000) 000-0000
WHEREAS the Employer desires to establish a retirement plan
for the purpose of providing retirement benefits for its
eligible Employees in accordance with the terms and conditions
set forth herein, and
WHEREAS the Employer has approved and adopted the Plan and
Custodial Account embodied herein.
NOW, it is agreed by and between the Employer and Custodian
and Plan Administrator named below that the Employer has
adopted this Plan and Custodial Account set forth in this Plan
of retirement and the Plan Administrator and Custodian accept
the Plan and Custodial Account terms created hereunder and
agree to perform the duties under this Agreement as follows:
1.1 X.XXXX OF EMPLOYER:
SOLE PROPRIETORSHIP
PARTNERSHIP
CORPORATION
(check one)
ADDRESS OF EMPLOYER:
Street
28
CityStateZip Code
EMPLOYER'S IDENTIFICATION NUMBER:
NAME OF EMPLOYER'S PLAN:
B. PLAN EFFECTIVE DATE:
(check one)
1. ( ) New Plan with effective date of
2. ( ) Amended Plan
- original Plan effective date
_________________________________________
- a m e n d m e n t e f f e c t i v e d a t e
_______________________________________________
PLAN YEAR ENDS:
C. ADMINISTRATOR:( )EMPLOYER
( )OTHER:
D. TRUSTEE:
1.2SUPPLEMENTARY PROVISIONS AND SPECIFICATIONS OF EMPLOYER'S
PLAN:
(ALL "SECTION" REFERENCES ARE MADE TO THE PLAN DOCUMENT UNLESS
OTHERWISE NOTED)
A.Employee Eligibility Requirements:
1. Classification:
(a) ()All employees
(b) ( )Those not covered under a collective bargaining
agreement if those covered under a collective bargaining
agreement have had retirement benefits as the subject of good
faith bargaining between the Employer and employee
representatives.
(c) ( )All Employees except the following class(es) of
employees:
______________________________________________________________
______________________________________________________________
____________________
29
30
2.Service Requirements:
(a) Months (less than 12) of Service
(b) One (1) Year of Service
(c) Two (2) Years of Service
3.Age Requirements:
( )The Plan shall have no age requirement.
( )Minimum age (cannot exceed age 21).
4.Employees on Effective Date.
( )Notwithstanding the above, Employees employed by the
Employer on the Effective Date of this Adoption Agreement
shall be Participants as of such Effective Date. All other
Employees shall become Participants in accordance with the age
and service requirements, described above.
( )Employees employed by the Employer on the Effective Date of
this Adoption Agreement and all other Employees shall become
Participants in accordance with the age and service
requirements, as described above.
B.Hours of Service :
1.Calculation of Service.
Hours of Service shall be determined on the basis of the
method selected below. Only one method may be selected. The
method selected shall be applied to all Employees covered
under the Plan.
(a)( ) On the basis of actual hours for which an Employee is
paid or entitled to payment. (If this option is selected, the
Employer must maintain records as to actual hours worked for
each Employee.)
(b)( ) On the basis of days worked. An Employee shall be
credited with ten (10) Hours of Service if under Section 2.17
such Employee would be credited with at least one (1) Hour of
Service during the day.
(c)( ) On the basis of weeks worked. An Employee shall be
credited with forty-five (45) Hours of Service if under
Section 2.17 such Employee would be credited with at least one
(1) Hour of Service during the week.
(d)( ) On the basis of semi-monthly payroll periods. An
Employee shall be credited with ninety-five (95) Hours of
Service if under Section 2.17 such Employee would be credited
31
with at least one (1) Hour of Service during the semi-monthly
payroll period.
(e)( ) On the basis of months worked. An Employee shall be
credited with one hundred ninety (190) Hours of Service if
under Section 2.17 such Employee would be credited with at
least one (1) Hour of Service during the month.
2.Excluded Service.
In determining the Years of Service of an Employee for the
purpose of vesting, all Years of Service with the Company and
Related Companies shall be included except for the following
Years of Service:
(a)( )Years of Service before the Employer maintained this
Plan or a predecessor plan. No more than five prior Years of
Service may be credited to an Employee. If you have
maintained a predecessor plan, please state the name, type of
plan and effective date of the predecessor plan:
.
( )_____________________________________________________.
( )Years of Service prior to the Employee's attainment of age
_____ (not to exceed age 18).
C.Normal Retirement Age
1.( )Age (not less than 59-1/2 or more than 65).
2.( )Age or the anniversary of the commencement of
participation in the Plan, whichever is later. (Not less than
59-1/2 nor more than age 65, or more than the 5th anniversary
of commencement of participation.
D.Normal Retirement Date
1.( ) The Anniversary Date coincident with or next following
the date a Participant attains his Normal Retirement Age.
2.( )The first day of the month coincident with or next
following the date a Participant attains his Normal Retirement
Age, but not later than the last day of the Plan Year.
E.Vesting Schedule
1.( )100% immediately after satisfaction of the eligibility
requirements. (This must be checked if Section A 2(c) is
32
selected.)
2.( )Graded Vesting. Insert percentages. The vesting
percentages must be at least equal to the percentage below the
election blank for each year.
Years of
Credited Service123456
Percent Vested
020406080 100
F.Compensation.
1.Definition of Compensation. For purposes of the Plan, the
following definition of Compensation shall be used unless a
different definition is provided in a specific Plan provision.
( )Compensation as shown on Form W-2, which is the information
required to be reported under Code sections 6041 and 6051,
(Wages, Tips and Other Compensation Box on Form W-2).
Compensation is defined as wages as defined in Code section
3401(a) and all other payments of compensation to an employee
by the employer (in the course of the employer's trade or
business) for which the employer is required to furnish the
employee a written statement under Code sections 6041(d) and
6051(a)(3). Compensation must be determined without regard to
any rules under Code section 3401(a) that limit the
remuneration included in wages based on the nature or location
of the employment or the services performed (such as the
exception for agricultural labor in Code section 3401(a)(2)).
( )Section 415 Compensation (as that term is defined in
Section VII of the Plan).
( )Section 3401(a) wages, as defined in Code section 3401(a)
for the purposes of income tax withholding at the source, but
determined without regard to any rules that limit the
remuneration included in wages based on the nature or location
of the employment or the services performed (such as the
exception for agricultural labor in Code section 3401(a)(2)).
( )In addition to the foregoing, 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 Code sections 125,
402(a)(8), 402(h) or 403(b).
2.Exclusions. If the Employer chooses a non-integrated
formula for Employer Contributions, Compensation, as defined
above, shall exclude:
33
( )overtime.
( )bonuses.
( )commissions.
( )other extraordinary remuneration as follows:
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
3.Time of Payment. Compensation will include Compensation
which is actually paid during:
( )the Plan Year.
( )the taxable year ending with or within the Plan Year.
( )that portion of the Plan Year in which the Employee was a
Participant in the Plan.
( )that portion of the taxable year ending with or within the
Plan Year in which the Employee was a Participant in the Plan.
G.Employer's Contribution Formula:
If Employer selects both a Profit Sharing Plan and Money
Purchase Pension Plan by signing two Adoption Agreements, the
Employer will contribute each Plan Year on
behalf of each Participant no more than ten percent (10%) of
such Participant's Compensation for said Plan Year to the
Money Purchase Pension Plan. Employer, at its sole
discretion, may also contribute an additional amount to the
Profit Sharing Plan which may not exceed fifteen percent (15%)
of the aggregate Compensation of all Participants. These
amounts are subject to the limitations set forth in Sections
VI and VII.
1.Discretionary Contribution. The Employer Contributions
shall be subject to the discretion of the Board of Directors
of the Employer. If more than one Employer has adopted the
Plan, each Employer shall make contributions on behalf of its
own Employees. The contribution will be allocated as follows:
( )In the same proportion that each Participant's Compensation
bears to all Participants' Compensation
34
( )In accordance with the formula described below:
35
(i)For any Plan Year in which the Plan is Top Heavy, the
annual Employer Contribution will be allocated to each
Participant's Account in the same proportion that each
Participant's Compensation for the Plan Year bears to all
Participants' Compensation for the Plan Year, but not in
excess of 3% of each Participant's Compensation for the Plan
Year. Any remaining annual Employer Contribution will be
allocated to each Participant's Account in the same proportion
that each Participant's Compensation in excess of the
Integration Level for the Plan Year bears to all Participants'
Compensation in excess of the Integration Level for the Plan
Year, but not to exceed 3% of each Participant's Compensation
in excess of the Integration Level for the Plan Year.
(ii)Any remaining annual Employer Contribution after the
allocation described in (i), if applicable, will be allocated
to each Participant's Account in the ratio that the sum of
each Participant's Compensation for the Plan Year plus such
Participant's Compensation in excess of the Integration Level
for the Plan Year bears to the sum of all Participants'
Compensation for the Plan Year plus such Participants'
Compensation in excess of the Integration Level for the Plan
Year. Notwithstanding the above, the percentage of
Compensation in excess of the Integration Level allocated to
each Participant's Account may not exceed the lesser of the
following:
(A)The greater of (1) 5.7% or (2) the tax rate applicable to
the old age portion of the Employer contribution for Old Age,
Survivors and Disability Insurance (OASDI) under the Social
Security Act (as in effect on the first day of the Plan Year);
or
(B)Two times the percentage of Compensation not in excess of
the Integration Level allocated to each Participant's Account.
(iii)Any remaining annual Employer Contribution will be
allocated to each Participant's Account in the ratio that each
Participant's Compensation for the Plan Year bears to all
Participants' Compensation for the Plan Year.
( )Subject to the Top Heavy minimum allocation, as provided in
Section 18.2, the contribution will be allocated as follows:
(i) ______ percent of each Participant's Compensation; plus
(ii) ______ percent of the amount of such Participant's
Compensation in excess of the Integration Level for the Plan
Year.
Notwithstanding the above, the percentage selected in (ii) may
not exceed the lesser of the following:
36
(A)The greater of (1) 5.7% or (2) the tax rate applicable to
the old age portion of the Employer contribution for Old Age,
Survivors and Disability Insurance (OASDI) under the Social
Security Act (as in effect on the first day of the Plan Year);
or
(B)Two times the percentage chosen in (i).
2.Integration Level. The Employer shall use the following
amount as the Integration Level for purposes of paragraph 1,
above:
( )The Taxable Wage Base (as defined in Section XIV.)
( )$___________ (enter an amount not to exceed the Taxable
Wage Base.)
[Note: If you choose this option, the following rules apply:
(i) If the amount chosen as the Integration Level exceeds the
greater of (A) $10,000 or (B) 1/5 of the Taxable Wage Base in
effect on the first day of the Plan Year, but does not exceed
80% of the Taxable Wage Base in effect on the first day of the
Plan Year, the reference to 5.7% in paragraph A (1) of this
Section V shall be changed to 4.3%.
(ii) If the amount chosen as the Integration Level exceeds
the greater of (A) $10,000 or (B) 1/5 of the Taxable Wage Base
in effect on the first day of the Plan Year and exceeds 80% of
the Taxable Wage Base in effect on the first day of the Plan
Year, the reference to 5.7% in paragraph A (1) of this Section
V shall be changed to 5.4%.]
3.Rollover Contributions under Section 6.04.
[ ]will be permitted.
[ ]will not be permitted.
4.Eligible Participants. Participants who are eligible to
receive an allocation of the Employer Contribution for the
Plan Year shall be:
( )All Participants.
( )All Participants except those Participants who complete
less than _____ Hours of Service (not to exceed 500) during
the Plan Year and who are not Eligible Employees as of the
last day of the Plan Year.
( )Those Participants who complete _____ (not to exceed 1000)
Hours of Service in the Plan Year.
37
( )Those Participants who are Employees on the last day of the
Plan Year.
NOTE: If either the third or fourth option is chosen, the
Employer's Plan may not satisfy coverage under Code section
410(b).
Notwithstanding the election made above, the Employer shall
also make a contribution for each Participant who separated
from service during the Plan Year as a result of:
( )Retirement.
( )Disability.
( )Death.
( )Termination of employment, after completing 500 Hours of
Service.
( )Termination of employment, after completing 1,000 Hours of
Service.
H.Form of Investment:
1.( ) Investment Fund Only.
The Employer's contributions for each Participant shall be
applied to purchase shares in the Funds, subject to the
provisions of Section X.
2.( ) Combination Funding:
% (not to exceed forty-nine percent (49%)) of the
Employer's contributions for each Participant shall be applied
to purchase ordinary life insurance on the Participant's life
from the Insurer, subject to the provisions of Section X.
I. Directed Investments.
1. Employer Election. Employee investment direction, as
provided in Section 10.01 of the Plan:
( )is permitted.
( )is not permitted.
38
2. Applicable Accounts. If the Employer elects to permit
Participants to direct the investment of their Accounts, each
Participant may direct the investment of the following
Accounts:
( )Rollover Account.
( )Employer Contributions Account.
( )Elective Deferral Account.
( )All Accounts.
I.In-Service Withdrawals:
1.In-service withdrawals from all Participant Accounts, as
described in Section 9.04:
( )are permitted.
( )are not permitted.
2.If the Employer elects to permit Participants to make in-
service withdrawals from the Plan, such withdrawals are
limited as follows:
( )There are no restrictions on in-service withdrawals.
( )Each in-service withdrawal must be for an amount not less
than $500.
( )A Participant may make only one in-service withdrawal in
each Plan Year.
( )A Participant may make only one in-service withdrawal
within each 6 consecutive month period.
J.Modifications for Multiple Plans:
If the Employer has multiple plans, the Employer may override
the Plan language in order to comply with Code sections 415
and 416. The Employer should use the space below to add the
language necessary for this purpose, including the
specification of interest rates and mortality tables for
determining the present value of accrued benefits under Code
section 416, as appropriate.
39
1.3CASH OR DEFERRED ARRANGEMENT (CODA) PROVISIONS
[ ]Check here and complete the provisions below if Elective
Deferrals are permitted under this plan.
A.Employer Contributions under the CODA Adoption Agreement
The Employer may make contributions to the CODA without regard
to current or accumulated earnings and profits for the taxable
year or years ending with or within the Plan Year. _____
Check here if applicable.
B.Elective Deferrals
B.1.A Participant may elect to have his or her Compensation
reduced by the following percentage or amount per pay period,
or for a specified pay period or periods,
as designated in writing to the plan administrator [CHECK ANY
APPLICABLE OPTIONS AND FILL IN THE APPROPRIATE BLANKS]:
[ ]a. An amount not in excess of percent of
a Participant's Compensation.
[ ]b. An amount not in excess of [ENTER A
SPECIFIED DOLLAR AMOUNT] of a Participant's Compensation.
No Participant shall be permitted to have Elective Deferrals
made under this plan during any calendar year in excess of
$7,000, multiplied by the Adjustment Factor.
B.1(a).A Participant may elect to commence Elective Deferrals
as of [ENTER AT LEAST ONE DATE
OR PERIOD DURING A CALENDAR YEAR]. Such election shall become
effective as of the [ENTER
NUMBER] pay period following the pay period during which the
Participant's election to commence elective Deferrals was
made, or as soon as administratively feasible thereafter.
B.1(b).A Participant's election to have Elective Deferrals
made pursuant to a salary reduction agreement shall remain in
effect until modified or terminated. A Participant who has
elected to have Elective Deferrals made to the Plan on his
behalf may elect to revise the amount of his or her Elective
Deferrals on the following date:
40
( )The first day of each calendar quarter.
( )The first day of each month.
( )The first day of each payroll period of the Employer.
An Employee who wishes to revise the amount of deferral
contributions to the Plan must file an application to revise
the amount of deferral contributions at least _______ days
before the payroll period for which the election is to be
effective.
B.1(c).Revocation of Election. A Participant may revoke his
election to have Elective Xxxxxxxxx made on his behalf at any
time, effective as of the payroll period next following such
revocation. If the Participant revokes his or her election to
have Elective Deferrals made to the Plan, the Participant may
not make Elective Deferrals:
( )Until the first election date, following the expiration of
twelve consecutive months after the revocation of the prior
deferral election.
( )Until the first day of the Plan Year after the revocation
of the prior deferral election.
B.2.A Participant may base Elective Deferrals on cash bonuses
that, at the Participant's election, may be contributed to the
CODA or received by the Participant in cash. [ ] Check here
if such Elective Deferrals may be made under the plan.
B.2(a).A Participant shall be afforded a reasonable period to
elect to defer amounts described in section B.2 above. Such
election shall become effective as of the
[ENTER NUMBER] pay period following the pay period during
which the Participant's election to make such Elective
Deferrals was made, or as soon as administratively feasible
thereafter.
B.3.A Participant shall designate the amount and frequency of
his or her Elective Deferrals in the form and manner specified
by the plan administrator.
C.MATCHING EMPLOYER CONTRIBUTION.
1.Contribution. The Employer shall make a matching
contribution as follows:
( )The Employer shall not make a matching contribution.
( )The Employer may, in its discretion, contribute and
allocate to each eligible Participant's Matching Contributions
41
Account a percentage of the Participant's Elective Deferral
made during the Plan Year.
42
( )The Employer shall contribute and allocate to each eligible
Participant's Matching Contributions Account _____ percent of
the Participant's Elective Deferral Contributions made during
the Plan Year.
2.Limits on Contribution. The Matching Contribution shall be
limited as follows:
( )The Employer shall not match a Participant's Elective
Deferral Contributions which exceed $_______ , ____ percent
of the Participant's Compensation or (describe any other
limits):
.
3.Eligibility. Participants who are eligible to receive an
allocation of the Matching Contribution for the Plan Year
shall be:
( )All Participants who elect to make Elective Deferral
Contributions.
( )All Participants except those Participants who elect to
make Elective Deferral Contributions, who complete less than
____ Hours of Service (not to exceed 500) during the Plan Year
and who are not Eligible Employees during the Plan Year.
( )Those Participants who elect to make Elective Deferral
Contributions and who complete _____ Hours of Service (not to
exceed 1000) in the Plan Year.
( )Those Participants who elect to make Elective Deferral
Contributions and who are Employees on the last day of the
Plan Year.
NOTE: If either the third or fourth option is chosen, there
is a risk that the Employer's Plan will not satisfy coverage
under Code section 410(b).
Notwithstanding the election made above, the Employer shall
also make a Matching Employer Contribution for each
Participant who separated from service during the Plan Year as
a result of:
( )Retirement.
( )Disability.
43
( )Death.
( )Termination of employment with the Employer, after
completing 500 Hours of Service.
( )Termination of employment with the Employer, after
completing 1,000 Hours of Service.
D.Qualified Non-Elective Contributions
D.1The Employer [elect one] [ ] will [ ] will not make
Qualified Non-elective Contributions to the plan. If the
Employer does make Qualified Non-elective Contributions to the
plan, then the amount of such contributions to the plan for
each Plan Year shall be [elect one]:
[ ]a.[ ] percent (not to exceed 15 percent) of the
Compensation of all Participants eligible to share in the
allocation.
[ ] b.[ ] percent of the net profits, but in no event more
than $ for any Plan Year.
[ ]c.An amount as determined by the Employer.
The amount of the special Qualified Non-elective Contributions
allocated under section E.2 below will be the amount needed to
meet the Average Actual Deferral Percentage test stated in
Section 3.6 of the CODA. Allocations of Qualified Non-
elective Contributions shall be made in accordance with
Section IV below.
E.Allocation of Qualified Non-Elective Contributions
E.1.Allocations of Qualified Non-elective Contributions to
each Participant's account shall be made [select one]:
[ ]x.Xx the ratio in which each Participant's Compensation for
the Plan Year bears to the total Compensation of all
Participants for such Plan Year.
[ ]x.Xx the ratio in which each Participant's Compensation not
in excess of $ for the Plan Year bears to the total
Compensation of all Participants not in excess of $
for such Plan Year.
X.0.Xx accordance with Section 3.9(b) of the CODA, allocations
of special Qualified Non-elective Contributions to each Non-
highly Compensated Employee's account shall be made [elect
one]:
44
[ ]x.Xx the ratio in which each Non-Highly Compensated
Employee's Compensation for the Plan Year bears to the total
Compensation of all Non-highly Compensated Employees for such
Plan Year.
[ ]x.Xx the ratio in which each Non-highly Compensated
Employee's Compensation not in excess of $ for the Plan
Year bears to the total Compensation of all Non-highly
Compensated Employees not in excess of $ for such Plan
Year.
F.Limitations on Contributions
F.1.Amounts that are contributed or allocated to the accounts
of each Participant under the plan must not, when aggregated
with amounts that are contributed or allocated to the accounts
of each Participant under any other plan or plans in
accordance with the provisions of the underlying plan
document, exceed the applicable limitations on contributions
and allocations as stated in the underlying plan document and
otherwise required under Code section 415 and the regulations
thereunder.
G.Special Distributions
G.1.Elective Deferrals, Qualified Non-elective Contributions
and income allocable to such amounts shall be distributable
upon separation from service, death, or disability, as defined
in the underlying Plan document, and, in addition [elect
options, if any]:
[ ]a.Termination of the plan without the establishment of a
successor plan.
[ ]x.Xx soon as administratively feasible after the sale to an
entity that is not an Affiliated Employer, of substantially
all of the assets used by the Employer in the trade or
business in which the Participant is employed.
[ ]x.Xx soon as administratively feasible after the sale, to
an entity that is not an Affiliated Employer, of an
incorporated affiliated Employer's interest in a subsidiary.
[ ]d.Upon the attainment of age 59 1/2 by the Participant.
G.2. HARDSHIP WITHDRAWALS.
1.Employer Election. Hardship withdrawals, as described in
Section 9.04:
( )are permitted.
45
( )are not permitted.
NOTE: The Hardship Distribution rules set forth in Section IX
apply to all Participant Accounts in a profit sharing plan
with a qualified cash or deferred arrangement.
2.Withdrawal Restrictions. If the Employer elects to permit
Participants to make hardship withdrawals from the Plan, such
withdrawals are limited as follows:
( )There are no restrictions on hardship withdrawals.
( )A Participant may make only one hardship withdrawal in each
Plan Year.
( )A Participant may make only one hardship withdrawal within
each 6 consecutive month period.
X.Xxxxxx for Excess Elective Deferrals
H.1.Participants who claim Excess Elective Deferrals for the
preceding calendar year must submit their claims in writing to
the plan administrator by [SPECIFY A DATE
BETWEEN JANUARY 1 AND APRIL 15].
I.Compensation (Optional)
I.1.[ ](Check if applicable) In addition to Compensation as
defined in Section 2.5 of the CODA, Compensation shall also
include compensation which is not currently includible in the
Participant's gross income by reason of the application of
Code sections 125, 402(a)(8), 402(h)(1)(B), or 403(b).
1.4 This Adoption Agreement sets forth the Employer's election
as to the variable provisions contained herein as provided for
in the Plan to which this Adoption Agreement is attached and
made a part. The failure to properly fill out this Adoption
Agreement may result in the disqualification of the Plan. The
Custodian shall inform the Employer of any amendments made to
the Plan or of the discontinuance or abandonment of the Plan.
The Employer, by executing this document, acknowledges that he
has read this Plan in its entirety, that he has consulted his
legal counsel, and that this Plan is suitable for his purposes
and the Employer accepts full responsibility for his
participation hereunder. Each Owner-Employee who is to be a
participant must execute this Adoption Agreement. An Owner-
Employee who does not execute this Adoption Agreement will not
participate in this Plan.
46
The Rushmore Trust & Savings FSB is not responsible for any
record keeping or administrative functions with respect to the
Plan. The Rushmore Trust & Savings FSB will notify the
sponsoring Company (as described on the first page of this
Adoption Agreement) if any amendment is made to the Plan by
the Bank or if the Plan is discontinued by the Bank.
The Employer who adopts this Plan may not rely on the
notification letter issued by the Internal Revenue Service as
evidence that this Plan is qualified under Code section
401(a). If the Employer who adopts this Plan or maintains
multiple plans wishes to obtain reliance that the plan is
qualified, an application for a determination letter should be
made to the appropriate Key District Director of the Internal
Revenue Service. This Adoption Agreement (#001) may be used
only in conjunction with basic plan document #001.
EXECUTED:EMPLOYER:
DATE: By:
Name and Title
ADMINISTRATOR/FIDUCIARY
DATE: By:
CUSTODIAN:
RUSHMORE TRUST & SAVINGS BANK
DATE: By:
Name and Title
47
The Trustee hereby accepts the appointment as Trustee.
(Insert name of Trustee)
: By:
Date Name and Title
48
RUSHMORE TRUST & SAVINGS FSB
EMPLOYER'S ADOPTION AGREEMENT
DEFINED CONTRIBUTION PLAN
MONEY PURCHASE PENSION PLAN
The Custodian may be contacted at the following address:
Rushmore Trust & Savings FSB
Attn: Retirement Plan Department
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx00000
(000) 000-0000
(000) 000-0000
WHEREAS, the Employer desires to establish a retirement plan
for the purpose of providing retirement benefits for its
eligible Employees in accordance with the terms and conditions
set forth herein, and
WHEREAS, the Employer has approved and adopted the Plan and
Custodial Account embodied herein.
NOW, it is agreed by and between the Employer and Custodian
and Plan Administrator named below that the Employer has
adopted this Plan and Custodial Account set forth in this Plan
of retirement and the Plan Administrator and Custodian accept
the Plan and Custodial Account terms created hereunder and
agree to perform the duties under this Agreement as follows.
1.1 X.XXXX OF EMPLOYER:
SOLE PROPRIETORSHIP
PARTNERSHIP
CORPORATION
(check one)
ADDRESS OF EMPLOYER:
Street
1
CityStateZip Code
EMPLOYER'S IDENTIFICATION NUMBER:
NAME OF EMPLOYER'S PLAN:
B.PLAN EFFECTIVE DATE:
(Check One)
1.( ) New Plan with effective date of
2.( ) Amended Plan
- original Plan effective date
_________________________________________
- a m e n d m e n t e f f e c t i v e d a t e
_______________________________________________
P L A N Y E A R E N D S :
________________________________________________
C.ADMINISTRATOR:( )EMPLOYER
( )OTHER:
D.TRUSTEE:
1.2SUPPLEMENTARY PROVISIONS AND SPECIFICATIONS OF EMPLOYER'S
PLAN:
(ALL "SECTION" REFERENCES ARE MADE TO THE PLAN DOCUMENT UNLESS
OTHERWISE NOTED)
A.Employee Eligibility Requirements:
1. Classification:
(a) () All employees
(b) () Those not covered under a collective bargaining
agreement if those covered under a collective bargaining
agreement have had retirement benefits as the subject of good
faith bargaining between the Employer and employee
representatives.
(c)( )All Employees except the following class(es) of
employees:
______________________________________________________________
2 2
_____________________________________________________________
3 3
2.Service Requirements:
(a) Months (less than 12) of Service
(b) One (1) Year of Service
(c) Two (2) Years of Service
3.Age Requirements:
( )The Plan shall have no age requirements
( )Minimum age (cannot exceed age 21).
4.Employees on Effective Date.
( )Notwithstanding the above, Employees employed by the
Employer on the Effective Date of this Adoption Agreement
shall be Participants as of such Effective Date. All other
Employees shall become Participants in accordance with the age
and service requirements, described above.
( )Employees employed by the Employer on the Effective Date of
this Adoption Agreement and all other Employees shall become
Participants in accordance with the age and service
requirements, as described above.
B.Hours of Service :
1.Calculation of Service.
Hours of Service shall be determined on the basis of the
method selected below. Only one method may be selected. The
method selected shall be applied to all Employees covered
under the Plan.
(a)( ) On the basis of actual hours for which an Employee is
paid or entitled to payment. (If this option is selected, the
Employer must maintain records as to actual hours worked for
each Employee.)
(b)( ) On the basis of days worked. An Employee shall be
credited with ten (10) Hours of Service if under Section 2.17
such Employee would be credited with at least one (1) Hour of
Service during the day.
(c)( ) On the basis of weeks worked. An Employee shall be
credited with forty-five (45) Hours of Service if under
Section 2.17 such Employee would be credited with at least one
(1) Hour of Service during the week.
(d)( ) On the basis of semi-monthly payroll periods. An
4 4
Employee shall be credited with ninety-five (95) Hours of
Service if under Section 2.17 such Employee would be credited
with at least one (1) Hour of Service during the semi-monthly
payroll period.
(e)( ) On the basis of months worked. An Employee shall be
credited with one hundred ninety (190) Hours of Service if
under Section 2.17 such Employee would be credited with at
least one (1) Hour of Service during the month.
2. Excluded Service.
In determining the Years of Service of an Employee for the
purpose of vesting, all Years of Service with the Company and
Related Companies shall be included except for the following
Years of Service:
(a)( ) Years of Service before the Employer maintained this
Plan or a predecessor plan. No more than five prior Years of
Service may be credited to an Employee. If you have
maintained a predecessor plan, please state the name, type of
plan and effective date of the predecessor plan:
( )_____________________________________________________.
( )Years of Service prior to the Employee's attainment of age
_____ (not to exceed age 18).
C.Normal Retirement Age
1.( )Age (not less than 59-1/2 or more than 65).
2.( )Age or the anniversary of the commencement of
participation in the Plan, whichever is later. (Not less than
59-1/2 nor more than age 65, or more than the 5th anniversary
of commencement of participation.
D.Normal Retirement Date
1.( )The Anniversary Date coincident with or next following
the date a Participant attains his Normal Retirement Age.
2.( )The first day of the month coincident with or next
following the date a Participant attains his Normal Retirement
Age, but not later than the last day of the Plan Year.
5 5
E.Vesting Schedule
1.( )100% immediately after satisfaction of the eligibility
requirements. (This must be checked if Section A 2(c) is
selected.)
2.( )Graded Vesting. Insert percentages. The vesting
percentages must be at least equal to the percentage below the
election blank for each year.
Years of
Credited Service123456
Percent Vested
020406080 100
F.Compensation.
1.Definition of Compensation. For purposes of the Plan, the
following definition of Compensation shall be used unless a
different definition is provided in a specific Plan provision.
( )Compensation as shown on Form W-2, which is the information
required to be reported under Code sections 6041 and 6051,
(Wages, Tips and Other Compensation Box on Form W-2).
Compensation is defined as wages as defined in Code section
3401(a) and all other payments of compensation to an employee
by the employer (in the course of the employer's trade or
business) for which the employer is required to furnish the
employee a written statement under Code sections 6041(d) and
6051(a)(3). Compensation must be determined without regard to
any rules under Code section 3401(a) that limit the
remuneration included in wages based on the nature or location
of the employment or the services performed (such as the
exception for agricultural labor in Code section 3401(a)(2)).
( )Section 415 Compensation (as that term is defined in
Section VII of the Plan).
( )Section 3401(a) wages, as defined in Code section 3401(a)
for the purposes of income tax withholding at the source, but
determined without regard to any rules that limit the
remuneration included in wages based on the nature or location
of the employment or the services performed (such as the
exception for agricultural labor in Code section 3401(a)(2)).
( )In addition to the foregoing, 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 Code sections 125,
6 6
402(a)(8), 402(h) or 403(b).
2.Exclusions. If the Employer chooses a non-integrated
formula for Employer Contributions, Compensation, as defined
above, shall exclude:
( )overtime.
( )bonuses.
( )commissions.
( )other extraordinary remuneration as follows:
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
3.Time of Payment. Compensation will include Compensation
which is actually paid during:
( )the Plan Year.
( )the taxable year ending with or within the Plan Year.
( )that portion of the Plan Year in which the Employee was a
Participant in the Plan.
( )that portion of the taxable year ending with or within the
Plan Year in which the Employee was a Participant in the Plan.
G.Employer's Contribution Formula:
If Employer selects both a Profit Sharing Plan and Money
Purchase Pension Plan by signing two Adoption Agreements, the
Employer will contribute each Plan Year on behalf of each
Participant no more than ten percent (10%) of such
Participant's Compensation for said Plan Year to the Money
Purchase Pension Plan. Employer, at its sole discretion, may
also contribute an additional amount to the Profit Sharing
Plan which may not exceed fifteen percent (15%) of the
aggregate Compensation of all Participants. These amounts are
subject to the limitations set forth in Sections VI and VII.
1.If more than one Employer has adopted the Plan, each
Employer shall make contributions on behalf of its own
Employees. The Employer Contribution will be:
7 7
( )_____ percent of each Participants' Compensation (not
greater than 25%, provided that the percentage limitation
shall not exceed ten (10%) percent if the profit sharing Plan
is also elected).
( )Subject to the Top Heavy minimum allocation (as provided in
Section 18.2), the contribution shall be:
(i) ______ percent of each Participant's Compensation; plus
(ii) ______ percent of the amount of such Participant's
Compensation in excess of the Integration Level for the Plan
Year.
Notwithstanding the above, the percentage selected in (ii) may
not exceed the lesser of the following:
(A)The greater of (1) 5.7% or (2) the tax rate applicable to
the old age portion of the Employer's contribution for Old
Age, Survivors and Disability Insurance (OASDI) under the
Social Security Act (as in effect on the first day of the Plan
Year); or
(B)Two times the percentage chosen in (i).
2.The Employer shall use the following amount as the
Integration Level for purposes of paragraph 1, above:
( )The Taxable Wage Base (as defined in Section XIV.
( )$_________(enter an amount not to exceed the Taxable Wage
Base.)
[Note: If you choose this option, the following rules apply:
(i) If the amount chosen as the Integration Level exceeds the
greater of (A) $10,000 or (B) 1/5 of the Taxable Wage Base in
effect on the first day of the Plan Year, but does not exceed
80% of the Taxable Wage Base in effect on the first day of the
Plan Year, the reference to 5.7% in paragraph F(1) of this
Section shall be changed to 4.3%.
(ii) If the amount chosen as the Integration Level exceeds
the greater of (A) $10,000 or (B) 1/5 of the Taxable Wage Base
in effect on the first day of the Plan Year and exceeds 80% of
the Taxable Wage Base in effect on the first day of the Plan
Year, the reference to 5.7% in paragraph F(1) of this Section
shall be changed to 5.4%.]
3.Rollover Contributions under Section 6.04.
8 8
[ ]will be permitted.
[ ]will not be permitted.
4.Eligible Participants. Participants who are eligible to
receive an allocation of the Employer Contribution for the
Plan Year shall be:
( )All Participants.
( )All Participants except those Participants who complete
less than _____ Hours of Service (not to exceed 500) during
the Plan Year and who are not Eligible Employees as of the
last day of the Plan Year.
( )Those Participants who complete _____ (not to exceed 1000)
Hours of Service in the Plan Year.
( )Those Participants who are Employees on the last day of the
Plan Year.
NOTE: If either the third or fourth option is chosen, the
Employer's Plan may not satisfy coverage under Code section
410(b).
Notwithstanding the election made above, the Employer shall
also make a contribution for each Participant who separated
from service during the Plan Year as a result of:
( )Retirement.
( )Disability.
( )Death.
( )Termination of employment, after completing 500 Hours of
Service.
( )Termination of employment, after completing 1,000 Hours of
Service.
H.Form of Investment:
1.( ) Investment Fund Only.
The Employer's contributions for each Participant shall be
applied to purchase shares in the Funds, subject to the
provisions of Section X.
9 9
2.( ) Combination Funding:
% (not to exceed forty-nine percent (49%)) of the
Employer's contributions for each Participant shall be applied
to purchase ordinary life insurance on the Participant's life
from the Insurer, subject to the provisions of Section X.
I.In-Service Withdrawals:
1.In-service withdrawals from all Participant Accounts, as
described in Section 9.04 of the Plan:
( ) are permitted.
( ) are not permitted.
2.If the Employer elects to permit Participants to make in-
service withdrawals from the Plan, such withdrawals are
limited as follows:
( )There are no restrictions on in-service withdrawals.
( )Each in-service withdrawal must be for an amount not less
than $500.
( )A Participant may make only one in-service withdrawal in
each Plan Year.
( )A Participant may make only one in-service withdrawal
within each 6 consecutive month period.
J.Modifications for Multiple Plans:
If the Employer has multiple plans, the Employer may override
the Plan language in order to comply with Code sections 415
and 416. The Employer should use the space below to add the
language necessary for this purpose, including the
specification of interest rates and mortality tables for
determining the present value of accrued benefits under Code
section 416, as appropriate.
10 10
1.3 This Adoption Agreement sets forth the Employer's election
as to the variable provisions contained herein as provided for
in the Plan to which this Adoption Agreement is attached and
made a part. The failure to properly fill out this Adoption
Agreement may result in the disqualification of the Plan. The
Custodian shall inform the Employer of any amendments made to
the Plan or of the discontinuance or abandonment of the Plan.
The Employer, by executing this document, acknowledges that he
has read this Plan in its entirety, that he has consulted his
legal counsel, and that this Plan is suitable for his purposes
and the Employer accepts full responsibility for his
participation hereunder. Each Owner-Employee who is to be a
participant must execute this Adoption Agreement. An Owner-
Employee who does not execute this Adoption Agreement will not
participate in this Plan.
The Rushmore Trust & Savings FSB is not responsible for any
record keeping or administrative functions with respect to the
Plan. The Rushmore Trust & Savings FSB will notify the
sponsoring Company (as described on the first page of this
Adoption Agreement) if any amendment is made to the Plan by
the Bank or if the Plan is discontinued by the Bank.
The Employer who adopts this Plan may not rely on the
notification letter issued by the Internal Revenue Service as
evidence that this Plan is qualified under Code section
401(a). If the Employer who adopts this Plan or maintains
multiple plans wishes to obtain reliance that the plan is
qualified, an application for a determination letter should be
made to the appropriate Key District Director of the Internal
Revenue Service. This Adoption Agreement (#001) may be used
only in conjunction with basic plan document #001.
EXECUTED:EMPLOYER:
DATE: By:
Name and Title
ADMINISTRATOR/FIDUCIARY
11 11
DATE: By:
CUSTODIAN:
RUSHMORE TRUST & SAVINGS FSB
DATE: By:
Name and Title
The Trustee hereby accepts the appointment as Trustee.
(Insert name of Trustee)
DATE: By:
Name and Title
12 12
RUSHMORE TRUST & SAVINGS FSB
DEFINED CONTRIBUTION PLAN
13 13
TABLE OF CONTENTS
SECTIONPAGE
SECTION IPRELIMINARY MATTERS1
SECTION IIDEFINITIONS1
SECTION IIIELIGIBILITY10
SECTION IVRETIREMENT12
SECTION V ABENEFITS PAYABLE UPON DEATH IF
PROFIT SHARING PLAN ONLY (AND NOT A TRANSFEREE PLAN)14
SECTION V BBENEFITS PAYABLE UPON DEATH IF OTHER THAN A
PROFIT SHARING PLAN WHICH IS NOT A TRANSFEREE PLAN16
SECTION VICONTRIBUTIONS AND FORFEITURES22
SECTION VIILIMITATIONS ON ALLOCATIONS24
SECTION VIIITERMINATION OF EMPLOYMENT30
SECTION IXBENEFIT PAYMENT PROVISIONS32
SECTION XINVESTMENT38
SECTION XIAMENDMENT OF THE PLAN40
SECTION XIITERMINATION OF THE PLAN42
SECTION XIIIPLAN ADMINISTRATOR43
SECTION XIVPROVISIONS RELATING TO THE INSURER46
SECTION XVMISCELLANEOUS46
SECTION XVIPOWERS OF THE CUSTODIAN48
SECTION XVIITRUSTEES, TRUST AND TRUST AGREEMENT51
SECTION XVIIINON-ALIENATION AND EMPLOYEE RIGHTS51
SECTION XIXTOP-HEAVY PROVISIONS53
SECTION XXCASH OR DEFERRED ARRANGEMENT57
1 1
RUSHMORE TRUST & SAVINGS FSB
DEFINED CONTRIBUTION PLAN
SECTION I
PRELIMINARY MATTERS
1.01 This Plan and Custodial Account has been
established for the exclusive benefit of eligible Self-
Employed Individuals and/or Owner-Employees and/or
Corporations who adopt the provisions of this Plan and
Custodial Account and for their eligible Employees and
Beneficiaries. It shall be interpreted and administered in a
manner consistent with this intent and with the provisions of
the Employee Retirement Income Security Act of 1974 and the
Internal Revenue Code of 1986, as amended.
1.02 This Plan shall be interpreted and administered in
a manner which is uniformly and consistently applicable to all
Participants under similar circumstances. At no time shall
there be discrimination in favor of highly compensated
Employees as against other Employees, whether or not they are
Participants.
1.03 Except as provided in Section 6.03, it shall be
impossible at any time prior to the satisfaction of all
liabilities with respect to Participants and their
Beneficiaries under this Plan for any part of the corpus or
income of this Plan to be used for, or diverted to, purposes
other than the exclusive benefit of the Participants or their
Beneficiaries.
SECTION II
DEFINITIONS
As used in this instrument, the following words and
phrases shall have the following meanings, unless a different
meaning is clearly required by the context:
2.01 "Adoption Agreement" shall mean the agreement
attached which is signed by the Employer, Plan Administrator,
Trustee and Custodian which sets forth the elective provisions
of this Plan designated by the Employer.
2.02 "Age" shall mean the age of a person at his last
birthday.
1
2.03 "Alternate Payee" shall mean a Spouse, former
Spouse, child or other dependent of a Participant recognized
by a Qualified Domestic Relations Order to have a right to
receive all, or a portion of, the benefits under this Plan
with respect to the Participant.
2.04 "Anniversary Date" shall mean each anniversary of
the Effective Date or the date designated in the Adoption
Agreement, if any, and each anniversary thereof.
2.05 "Beneficiary" shall mean each person designated in
writing to receive any benefits upon the death of a
Participant.
2.06 "Board of Directors" shall mean the Board of
Directors of the Employer.
2.07 "Break in Service" shall mean a twelve
(12) consecutive month period during which an Employee does
not complete more than five hundred (500) Hours of Service
with the Employer.
2.08 "Code" means the Internal Revenue Code of 1986, as
amended.
2.09 As elected by the Employer in the Adoption
Agreement, "Compensation" shall mean all of each Participant's
(a) W-2 earnings or (b) compensation (as that term is defined
in Code section 415(c)(3)). For any Self-Employed Individual
covered under the Plan, compensation will mean Earned Income.
Compensation shall include only that compensation which is
actually paid to the Participant during the applicable period.
Except as provided elsewhere in this Plan, the applicable
period shall be the period elected by the Employer in the
Adoption Agreement. If the Employer makes no election, the
applicable period shall be the Plan Year.
Notwithstanding the above, if elected by the Employer 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 Code sections 125, 402(a)(8),
402(h) or 403(b).
The annual compensation of each Participant taken into
account, under the Plan for any year shall not exceed
$200,000, as adjusted by the Secretary at the same time and in
the same manner as under Code section 415(d). In determining
the compensation of a Participant for purposes of this
limitation, the rules of Code section 414(g)(6) shall apply,
2 2
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 nineteen (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.
2.10 "Custodial Account" shall mean the account or
accounts established by the Custodian under the Plan.
2.11 "Custodian" means the Rushmore Trust & Savings
FSB.
2.12 "Domestic Relations Order" shall mean a judgment,
decree or order that (i) relates to the provision of child
support, alimony payments, or marital property rights to a
Spouse, former Spouse, child or other dependent of a
Participant, and (ii) is made pursuant to a state domestic
relations law.
2.13 "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
Code section 404.
Net earnings shall be determined with regard to the
deduction allowed to the Employer by Code section 164(f) for
taxable years beginning after December 31, 1989.
2.14 "Effective Date" shall mean the date designated in
the Adoption Agreement.
2.15 "Employee" shall mean any person employed by the
Employer any portion of whose Compensation and/or Earned
Income is subject to withholding of income tax and/or for whom
Social Security or Railroad Retirement contributions are made
by the Employer as well as any other person who is a common
law employee of the Employer. Employee shall include any
individual employed by an Employer aggregated under Code
sections 414(b), (c), or (o), any person deemed to be an
3 3
Employee of an "affiliated service group", as defined in Code
section 414(m), in which the Employer is a member, or a
"leased Employee" within the meaning of Code section 414(n).
Contributions or benefits provided by a leasing organization
for any leased Employee which are attributable to services
performed for the Employer shall be treated as provided by the
Employer. A leased Employee will not be deemed an Employee if
(i) such leased Employee is covered by a money purchase
pension plan with (1) a non-integrated Employer contribution
rate of at least ten percent (10%) of compensation as defined
in Code section 415(c)(3), but including amounts contributed
pursuant to a salary reduction agreement which are excludable
from the Employee's gross income under Code sections 125,
402(a)(8), 402(h), or 403(b), and (2) immediate participation
and full and immediate vesting, and (ii) leased Employees do
not constitute more than 20 percent of the Employer's
nonhighly compensated workforce. For purposes of this
Section, "leased Employee" shall mean any person who pursuant
to an agreement between the Employer and any other person
("Leasing Organization") has performed services for the
Employer (or for the Employer and Related Persons determined
in accordance with Code section 414(n)(6)) on a substantially
full-time basis for a period of at least one (1) year and such
services are of the type historically performed by Employees
in the business field of the Employer; provided that "leased
Employee" shall not mean an individual who is an employee of
the Employer. For purposes of this Section, "affiliated
service group" shall mean a group consisting of a service
organization ("FSO"), any other service organization which is
a shareholder in the FSO and regularly performs service for
the FSO or is regularly associated with the FSO in performing
services for third parties ("A Org."), and any other
organization which performs, as a significant part of its
business, services for the FSO or the A Org. which services
are historically performed in such service field by Employees
(or management services as provided in Code section
414(m)(5)), and ten percent or more of its interests are held
by officers, highly compensated Employees or owners of the FSO
or A Org.
2.16 "Employer" shall mean any sole proprietor who, or
partnership which, or any corporation which has adopted the
provisions of this Plan and shall include any trade or
business (whether or not incorporated) which is under common
control with the Employer as determined pursuant to Code
section 414(c) and any regulations promulgated thereunder and
any Related Entity.
2.17 "Employment Commencement Date" shall mean the day
on which an Employee first completes an Hour of Service.
4 4
2.18 "Entry Date" shall mean the first day of the
earlier of the first or seventh month of the Plan Year
immediately following the satisfaction of the eligibility
requirements.
2.19 "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended, and regulations promulgated
thereunder.
2.20 "Funds" shall mean the Fund For Government
Investors, Inc., the Rushmore Fund, Inc., the American Gas
Index Fund, Inc., their qualified affiliates, or an account
established with Rushmore Investment Brokers, Inc., any other
regulated investment company whose investment adviser or
investment manager is Money Management Associates or its
successor, and any other investment that is approved for use
under the Plan by the Plan Sponsor.
2.21 "Hour of Service" shall mean:
(a) each hour for which an Employee is paid, or
entitled to payment, for the performance of duties for the
Employer. These hours shall be credited to the Employee for
the computation period in which the duties are performed; and
(b) each hour for which an Employee is paid, or
entitled to payment by the Employer on account of a period of
time during which no duties are performed (irrespective of
whether the employment relationship has terminated) due to
vacation, holiday, illness, incapacity (including disability),
layoff, jury duty, military duty or leave of absence. No more
than five hundred one (501) Hours of Service shall be credited
under this paragraph for any single continuous period (whether
or not such period occurs in a single computation period).
Hours under this paragraph shall be calculated and credited
pursuant to section 2530.200b-2 of the Department of Labor
Regulations which are incorporated herein by this reference;
and
(c) each hour for which back pay, irrespective of
mitigation of damage, is either awarded or agreed to by the
Employer. The same Hours of Service shall not be credited
both under paragraph (a) or paragraph (b), as the case may be,
and under this paragraph (c). These hours shall be credited
to the Employee for the computation period or periods to which
the award, agreement or payment is made.
(d) Hours of Service shall be determined on the
basis of the method selected in the Adoption Agreement.
5 5
(e) If the Employer is a member of an affiliated
service group (under Code section 414(m)), a controlled group
of corporations (under Code section 414(b)) or a group of
trades or businesses under common control (under Code section
414(c) of), 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 Code section 414(n) to be considered an employee of any
employer aggregated under Code sections 414(b), (c), or (m).
Service will also be credited to the extent required under
regulations issued pursuant to Code section 414(o).
Solely for purposes of determining whether a Break in
Service, as defined in Section 2.07, for participation and
vesting purposes has occurred in a computation period, an
individual who is absent from work for maternity or paternity
reasons shall receive credit for the hours of service which
would otherwise have been credited to such individual but for
such absence, or in any case in which such hours cannot be
determined, eight (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 computation period in which the absence begins if the
crediting is necessary to prevent a Break in Service in that
period, or (2) in all other cases, in the following
computation period.
2.22 "Individual Participant Account" shall mean the
individual account established for each Participant for
accounting purposes. All contributions made for a Participant
and earnings thereon shall be allocated to his Individual
Participant Account. The amount of the Individual Participant
Account shall include the cash value of life insurance or
annuity policies purchased for the Participant.
2.23 "Insurer" shall mean any legal reserve life
insurance company which shall issue a policy under this Plan.
2.24 "Internal Revenue Code" or "Code" shall mean the
Internal Revenue Code of 1986 with all amendments thereto and
all applicable regulations and rulings issued thereunder or
with respect to the Internal Revenue Code and also any future
Internal Revenue Code or similar Internal Revenue laws,
6 6
regulations and rulings.
2.25 "Net Profit" shall mean current and accumulated
earnings of the Employer as calculated on its books in
accordance with the established methods of accounting
regularly used by the Employer but before deduction of federal
income and state income taxes and before deduction of the
Employer's contributions under this Plan and any other
qualified plan. In determining the profits of a partnership,
no account shall be taken of the share of profits allocable or
payable to a partner except for amounts paid to him in the
form of a salary or wages which, under the partnership
agreement, are treated as expenses of the partnership in
determining its net income.
2.26 "Normal Retirement Age" shall mean the age
designated in the Adoption Agreement, but not exceeding age
65.
2.27 "Normal Retirement Date" shall mean a
Participant's anticipated date of retirement as designated in
the Adoption Agreement.
2.28 "Owner-Employee" shall mean a person who owns the
entire interest in an unincorporated trade or business as a
sole proprietor or, in the case of a partnership, is a partner
who owns more than ten percent (10%) of either the capital
interest or the profit interest in such partnership. To the
extent provided in regulations prescribed by the Secretary of
the Treasury or his delegate, such term shall also mean an
individual who has been an Owner-Employee within the meaning
of the preceding sentence.
2.29 "Participant" shall mean any Employee who
satisfies the eligibility requirements hereof.
2.30 "Permitted Absence" shall mean absence due to (1)
pregnancy of the Employee; (2) birth of a child of the
Employee; (3) placement of a child in connection with adoption
of the child by an Employee; or (4) caring for the Employee's
child during the period immediately following the birth or
placement for adoption.
2.31 "Plan" shall mean this Defined Contribution Plan
and Adoption Agreement.
2.32 "Plan Administrator" and "Administrator" shall
mean the person designated in the Adoption Agreement or any
duly appointed successor. If no designation is effective at
any time, the Plan Administrator shall be the Employer. The
7 7
Plan Administrator shall also be the named fiduciary.
2.33 "Plan Sponsor" shall mean Rushmore Trust & Savings
FSB, or its delegate.
2.34 "Plan Year" shall mean the 12 consecutive month
period beginning with the Effective Date or an Anniversary
Date and ending on the day preceding the next Anniversary
Date.
2.35 "Qualified Domestic Relations Order" shall mean a
Domestic Relations Order which (i) creates or recognizes the
existence of an Alternate Payee's right to, or assigns to an
Alternate Payee, the right to receive all or a portion of the
benefits payable with respect to a Participant under a Plan
and (ii) meets the requirements of Sections 18.2 and 18.6.
2.36 "Qualified Joint and Survivor Annuity" shall mean
an immediate annuity for the life of the Participant with a
survivor annuity for the life of his spouse which is equal to
one-half of the amount of the annuity payable during the joint
lives of the Participant and his spouse and which is the
actuarial equivalent of a single life annuity for the life of
the Participant that can be purchased with the Participant's
vested account balance, or for an unmarried Participant, a
single life annuity.
2.37 "Qualified Pre-Retirement Survivor Annuity" shall
mean an annuity for the life of the Participant's surviving
Spouse the actuarial equivalent of which is not less than
fifty (50) percent of the vested account balance of the
Participant as of the date of death.
2.38 "Related Entity" shall mean (i) all corporations
which are affiliated with the Employer in a controlled group
of corporations within the meaning of Code section 1563(a),
determined without regard to Code sections 1563(a)(4) and
(e)(3)(C), and (ii) all trades or businesses (whether or not
incorporated) which are under common control with the Employer
as determined by regulation promulgated under Code section
414(c).
2.39 "Rollover Account" shall mean the account
established and maintained pursuant to Section 6.04 to which a
participant's rollover contributions, if any, are credited.
2.40 "Self-Employed Individual" shall mean 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
8 8
that the trade or business had no net profits for the taxable
year.
2.41 "Spouse" shall mean the spouse or surviving spouse
of the Participant provided that a former spouse will be
treated as the spouse to the extent provided under a qualified
domestic relations order within the meaning of Code section
414(p).
2.42 "Taxable Wage Base" shall mean the Compensation
paid by the Employer which is the base for computing each
Employee's employment taxes under the Federal Insurance
Contribution Act, and which amount represents the maximum
earnings that may be considered wages for such year under Code
section 3121(a)(1). For purposes of this Plan, the Taxable
Wage Base shall be the amount in effect for the calendar year
with or in which the Plan Year begins.
2.43 "Transferee Plan" shall mean a qualified plan
which receives a distribution from another qualified plan
which provides a qualified joint and survivor annuity benefit
and/or qualified pre-retirement survivor annuity benefit.
2.44 "Trust" or "Trust Agreement" shall mean the entity
which will be maintained by the Trustee pursuant to this Plan.
2.45 "Trustee" shall mean the individual or individuals
selected by the Employee, as set forth in the Adoption
Agreement, and any successor appointed by the Employee.
2.46 "Year of Service" shall mean the twelve (12)
consecutive month period during which the Employee completes
one thousand (1,000) or more Hours of Service.
For purposes of determining Years of Service and Breaks
in Service for purposes of eligibility, the initial twelve
(12) month period shall commence on the Employee's Employment
Commencement Date. The succeeding 12-consecutive month
periods commence with the first Plan Year which commences
prior to the first anniversary of the Employee's employment
commencement date regardless of whether the Employee is
entitled to be credited with 1,000 hours of service during the
initial eligibility computation period. An Employee who is
credited with 1,000 Hours of Service in both the initial
eligibility computation period and the first plan year which
commences prior to the first anniversary of the Employee's
initial eligibility computation period will be credited with
two Years of Service for the purposes of eligibility to
participate.
9 9
In any case in which the Employer maintains the plan of a
predecessor employer, service for such predecessor shall be
treated as service for the Employer.
For purposes of computing a Participant's nonforfeitable
right to the accrued benefit derived from Employer
contributions, Years of Service and Breaks in Service shall be
measured by reference to the Plan Year.
If the Employer maintains the plan of a Predecessor
employer, service with such employer will be treated as
service for the Employer.
10 10
SECTION III
ELIGIBILITY
3.01 Each Employee shall become a Participant on the
Entry Date coincident with or immediately following the date
he fulfills the eligibility requirements of this Section III
and those designated in the Adoption Agreement. Employees who
meet the eligibility requirements as of the Effective Date
shall be Participants as of such date, if the Employer elects
in the Adoption Agreement. In the event an Employee who is
not a member of an eligible class of Employees becomes a
member of an eligible class, such Employee shall participate
as of the next Entry Date if such Employee has satisfied the
minimum age and service requirements as provided in the
Adoption Agreement. An individual who is a non-resident alien
and who has no earnings from sources within the United States
(within the meaning of Code section 861(a)(3)) shall not be
eligible to participate in the Plan.
3.02 Each Owner-Employee who desires to become a
Participant under this Plan shall consent in writing to be a
Participant. Each Participant shall execute a written
application to participate on the form provided by the Plan
Administrator. In such application, each Participant shall
designate his Beneficiary under this Plan, which designation
may be changed from time to time. Each Participant shall be
conclusively deemed for all purposes to have assented to and
be bound by the terms and conditions of this Plan and any and
all amendments thereto which may be adopted.
3.03 Notwithstanding anything herein to the contrary,
no Owner-Employee may become a Participant initially, or
remain a Participant if such Owner-Employee, either alone or
in conjunction with one or more other Owner-Employees, (1)
controls an unincorporated trade or business other than the
business of his Employer, unless the employees of such other
trade or business are included under a plan which meets the
requirements of the Code and which provides contributions and
benefits which are not less favorable than the contributions
and benefits provided for Owner-Employees under this Plan, or
(2) controls both the business of the Employer and one or more
other unincorporated trades or businesses, unless plans are
established with respect to such other trades or businesses
and such plans and this Plan, when coalesced, would form a
single plan which meets the requirements of the Code; or (3)
if such Owner-Employee is covered under a plan of a trade or
business, or under the plans of two or more trades or
businesses which he does not control, and such individual
controls a trade or business, unless the contributions and
11 11
benefits of the employees under the plan of the trade or
business which he does control are as favorable as those
provided for him under the most favorable plan of the trade or
business which he does not control. As used in this paragraph
"control" means direct or indirect ownership of more than
fifty percent (50%) of either the capital interest or the
profits interest in the trade or business involved. In the
event an Owner-Employee becomes a Participant and thereafter,
fails to meet the requirements of this paragraph at any time,
he shall thereupon cease to be considered a Participant
hereunder for all purposes of Section VI until such time as he
again meets the requirements of this paragraph.
3.04 (a) An Employee who has satisfied the eligibility
requirements of Section 3.01 and who subsequently terminates
service with the Employer shall become a Participant in the
Plan as of the first Entry Date following the Participant's
date of rehire.
(b) An Employee who has not met the eligibility
requirements for participation, and later returns to
employment before incurring a Break in Service, shall be
treated as having been continuously employed for purposes of
determining Years of Service, so that there is no change in
his eligibility computation period.
(c) An Employee who incurs a Break in Service and
who is subsequently reemployed shall become a Participant in
accordance with the provisions of Section 3.01 as if he were a
new Employee.
(d) A former Participant who did not have a
nonforfeitable right to any portion of the account balance
derived from Employer contributions at the time of termination
from service will be considered a new Employee, for
eligibility purposes, if the number of consecutive one year
Breaks in Service equals or exceeds the greater of five (5) or
the aggregate number of Years of Service before such Breaks in
Service. If such former Participant's Years of Service before
termination from service may not be disregarded pursuant to
the preceding sentence, such former Participant shall
Participate immediately upon reemployment.
(e) In the event a Participant is no longer a
member of an eligible class of Employees and becomes
ineligible to participate but has not incurred a break in
service, the Employee will participate immediately upon
returning to an eligible class of Employees. If such
Participant incurs a break in service, eligibility will be
determined under the break in service rules of the Plan. In
12 12
the event an Employee who is not a member of an eligible class
of Employees becomes a member of an eligible class, the
Employee will participate immediately if the Employee has
satisfied the minimum age and service requirements and would
have otherwise previously become a Participant.
3.05 (a) For purposes of determining whether a Break
in Service has occurred for participation purposes, an
Employee shall receive credit for the number of Hours of
Service provided in Section 3.05(b) for any "Permitted
Absence".
(b) The Employee shall be treated as completing
either: (i) the number of hours the Employee normally would
have been credited, except for the Permitted Absence, or, (ii)
if normal work hours are unknown, eight (8) Hours of Service
for each normal work day during the period of leave. The
total number of hours to be credited pursuant to this Section
shall not exceed five hundred one (501).
(c) The Hours of Service treated as completed in
this Section shall be credited in either (i) the year in which
the Permitted Absence begins if crediting is necessary to
prevent a Break in Service, or (ii) the immediately following
year. "Year" shall have the same meaning for purposes of this
Section as is provided for "Year of Service" in Section 2.46.
(d) The Employee shall provide certification to
the Employer that leave was taken for one of the Permitted
Absences. The Employee shall supply the Employer with
information as to the number of normal work days for which
there was a Permitted Absence.
SECTION IV
RETIREMENT
4.01 Each Participant shall be entitled to retire on
his Normal Retirement Date and shall be entitled to receive a
retirement benefit commencing as soon as practicable after his
Normal Retirement Date of the amount which can be provided
pursuant to the form of distribution to be effected by the
total amount in his Individual Participant Account. However,
no benefits shall be paid to an Owner-Employee, except in the
case of his becoming disabled (as set forth in Section 8.03),
prior to his attaining Age 59-1/2.
4.02 A Participant may, with the consent of the
Employer, postpone his actual retirement to some date beyond
13 13
his Normal Retirement Date. A Participant shall be entitled
to actual retirement on the first day of any month thereafter
upon at least fifteen (15) days' written notice to the Plan
Administrator and the Employer. The Employer shall continue
to make contributions (based on Compensation up to the date of
the Participant's retirement) for a Participant who postpones
his retirement until his actual retirement date. Each
Participant who retires on a deferred retirement date shall be
entitled to receive a retirement benefit, commencing as soon
as practicable after his actual retirement date, of the amount
which can be provided pursuant to the form of distribution to
be effected by the total amount in his Individual Participant
Account.
4.03 A Participant who is married shall receive
payments under this Plan in the form of a Qualified Joint and
Survivor Annuity as provided in Section IX.
4.04 Notwithstanding the vesting schedule elected by
the Employer in Section 1.2E of the Adoption Agreement, a
Participant's right to his normal retirement benefit shall be
nonforfeitable upon the Participant's attainment of Normal
Retirement Age.
4.05 (a) Subject to Section IX, the requirements of
Sections 4.05-4.09 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 apply to calendar
years beginning after December 31, 1984.
(b) All distributions required under Sections
4.05-4.09 shall be determined and made in accordance with the
proposed regulations under Code section 401(a)(9), including
the minimum distribution incidental benefit requirement of
section 1.401(a)(9)-2 of the proposed regulations.
4.06 The entire interest of a Participant must be
distributed or begin to be distributed no later than the
Participant's required beginning date as defined in Section
5.08B(f).
4.07 As of the first distribution calendar year,
distributions, if not made in a single-sum, may only be made
over one of the following periods (or a combination thereof):
(a) the life of the Participant;
(b) the life of the Participant and a designated
Beneficiary;
14 14
(c) a period certain not extending beyond the
life expectancy of the Participant; or
(d) a period certain not extending beyond the
joint and last survivor expectancy of the Participant and a
designated Beneficiary.
4.08 If the Participant's interest is to be distributed
in other than a single sum, the following minimum distribution
rules in Section 4.09 shall apply on or after the required
beginning date.
4.09 (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 fifty percent (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 regulations. Distributions after the death of the
Participant shall be distributed using the applicable life
expectancy in Section 4.09(a) above as the relevant divisor
without regard to section 1.401(a)(9)-2 of the proposed
regulations.
(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
15 15
made on or before December 31 of that distribution calendar
year.
(e) If the Participant's benefit is distributed
in the form of an annuity purchased from an insurance company,
distributions thereunder shall be made in accordance with the
requirements of Code section 401(a)(9) and the proposed
regulations thereunder.
SECTION V A
BENEFITS PAYABLE UPON DEATH IF
PROFIT SHARING PLAN ONLY (AND NOT A TRANSFEREE PLAN)
If in the Adoption Agreement a Profit Sharing Plan is the
only Plan adopted and it is not a Transferee Plan, then the
following provisions shall apply:
5.01A Upon the death of a Participant, the Participant's
accrued benefit in his account on the date of death shall be
paid to the Participant's surviving Spouse in accordance with
Section 9.01, provided that if a Participant who receives a
benefit at the time of death, such benefit shall be
distributed at least as rapidly as the method being used under
Section 9.01 as of the date of the retired participant's
death.
5.02A Notwithstanding Section 5.01A, if (i) the
Participant is unmarried, (ii) the Participant's Spouse does
not survive the Participant, or (iii) the surviving Spouse
consents to the designation of another Beneficiary by the
Participant, then the amounts payable as a result of death
shall be paid to the Participant's Beneficiary.
5.03A Should a Beneficiary survive the deceased
Participant but die prior to receiving full payment of all
amounts distributable hereunder, the balance of such payments
shall be distributable to the surviving Spouse, unless (i) the
Participant was unmarried, (ii) the surviving Spouse is the
deceased Beneficiary, or (iii) the surviving Spouse consented
to the designation of another Beneficiary, in which event such
Payments shall be distributable to the contingent Beneficiary
or Beneficiaries in the order of priority designated by the
deceased Participant, unless the deceased Participant clearly
designated otherwise, in writing.
5.04A If the Participant dies before distribution of his
interest commences, all amounts payable pursuant to this
Section VA shall be fully distributed to the Beneficiary by no
16 16
later than five (5) years after the death of the Participant.
This five-year rule shall not apply to (i) any Portion of the
Participant's interest payable to a designated Beneficiary,
where such portion is to be distributed over the life of such
designated Beneficiary and such distribution commences not
later than one year after the date of Participant's death (or
such later date as the Secretary may prescribe); or (ii) to
any portion of the Participant's interest payable to the
Participant's Spouse where such portion is to be distributed
over the life of the Participant's Spouse, and such
distributions commence no later than the date on which the
Participant would have attained age 70-1/2. For purposes of
this Section, payments will be calculated by use of the return
multiples specified in Treasury Regulation 1.72-9. Life
expectancy of a Spouse may be recalculated annually. In the
case of any other designated beneficiary, life expectancy will
be calculated at the time payment first commences and payments
for any 12-consecutive month period will be based on such life
expectancy minus the number of whole years that have elapsed
since distribution first commenced.
5.05A (a) Except as otherwise provided in this Section,
every Employee shall have the right to designate a Beneficiary
or Beneficiaries for any death benefits. Such designation of
a Beneficiary or Beneficiaries and the methods of settlement
may be changed from time to time by the Participant by filing
a new designation with the Administrator.
(b) Upon receipt by the Administrator of such
designation or change in designation, the Administrator shall
take such action as may be required to effectuate such
designation or change in designation. If any Participant
shall fail to designate a Beneficiary, the Beneficiary or
Beneficiaries shall be named in the following order:
(i) Spouse
(ii) Children, per stirpes
(iii) Parents
(iv) Brothers and sisters or children of
deceased brothers and sisters, per stirpes
(v) Estate of Participant.
17 17
SECTION V B
BENEFITS PAYABLE UPON DEATH IF OTHER THAN A
PROFIT SHARING PLAN WHICH IS NOT A TRANSFEREE PLAN
If in the Adoption Agreement any Plan or Plans other than
a Profit Sharing Plan which is not a Transferee Plan is
selected, then the following provisions shall apply:
5.01B Except as provided in 5.02B, upon the death of a
Participant prior to complete distribution of any vested
interest in the account, the Participant's accrued benefit in
his account on the date of death shall be paid to his
Beneficiary in accordance with Section 9.03.
5.02B Upon the death of a retired Participant while
receiving distributions from the Plan, the Participant's
accrued benefit in his account on the date of death shall be
paid to his Beneficiary in accordance with Section 9.02, which
shall be distributed at least as rapidly as the method being
used under Section 9.02 as of the date of the retired
Participant's death.
5.03B Should a Beneficiary survive the deceased
Participant but die prior to receiving full payment of all
amounts distributable hereunder, the balance of such payments
shall be distributable to the contingent Beneficiary or
Beneficiaries in the order of priority designated by the
deceased Participant, unless the deceased Participant clearly
designated otherwise, in writing.
5.04B If the Participant dies before distribution of his
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
distribution in accordance with (a) or (b) below:
(a) if any portion of the Participant's interest
is payable to a designated Beneficiary, distributions may be
made over the life or over a period certain not greater than
the life expectancy of the designated Beneficiary commencing
on or before December 31 of the calendar year immediately
following the calendar year in which the Participant died;
(b) if the designated Beneficiary is the
Participant's surviving spouse, the date distributions are
required to begin in accordance with (a) above shall not be
earlier than the later of (1) December 31 of the calendar year
immediately following the calendar year in which the
18 18
Participant died and (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 by the time of his death, the Participant's
designated Beneficiary must elect the method of distribution
no later than the earlier of (1) December 31 of the calendar
year in which distributions would be required to begin under
this section, or (2) December 31 of the calendar year which
contains the fifth anniversary of the date of death of the
Participant. If the Participant has 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.
5.05B (a) For purposes of Section 5.04B above, if the
surviving spouse dies after the Participant, but before
payments to such spouse begin, the provisions of Section
5.04B, with the exception of paragraph (b) therein, shall be
applied as if the surviving spouse were the Participant.
(b) For purposes of this Section, 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.
(c) For the purposes of this Section,
distribution of a Participant's interest is considered to
begin on the Participant's required beginning date (or, if
Section 5.05B(a) above is applicable, the date distribution is
required to begin to the surviving spouse pursuant to Section
5.04B 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.
5.06B (a) Unless no spousal consent is required, the
Beneficiary of the death benefit shall be the Participant's
Spouse.
(b) No spousal consent is required:
(i) if the Participant has no Spouse; or
(ii) if the Participant's Spouse cannot be
located; or
19 19
(iii) because of other circumstances under
which no spousal consent is required in accordance
with applicable Treasury or Department of Labor
regulations.
(c) Each Participant for whom spousal consent is
required and who wishes to designate a Beneficiary other than
his Spouse or who wishes to designate a form of benefit
payment other than an annuity shall obtain the consent of his
Spouse on the designation of beneficiary form or method of
payment option request, as the case may be. The Spouse's
written consent shall acknowledge the effect of the consent
and shall be witnessed by a representative of the Plan
Administrator or by a notary public. Any designation by a
Participant for whom no spousal consent was required prior to
the time of payment of benefits but for whom spousal consent
is required when benefits are paid shall be void, unless
consented to by the Spouse. If spousal consent is required
and not obtained, the Participant shall be deemed to have
designated his Spouse as Beneficiary.
5.07B (a) If (i) no spousal consent is required or
(ii) the Participant and his Spouse have validly waived the
Qualified Joint and Survivor Annuity or Qualified Pre-
Retirement Survivor Annuity in the manner prescribed in
Section 9.02(a)(2) or 9.03(b), and the Spouse has waived his
right to be the Participant's Beneficiary, the Participant
shall have the right to designate a Beneficiary or
Beneficiaries for any death benefits. Such designation of a
Beneficiary or beneficiaries and the methods of settlement may
be changed from time to time by the Participant by filing a
new designation with the Plan Administrator.
(b) Upon receipt of such designation or change in
designation, the Plan Administrator shall forthwith take such
action as may be required to effectuate such designation or
change in description. If any Participant shall fail to
designate a Beneficiary, the Beneficiary or Beneficiaries
shall be the following in the order named:
(i) Spouse
(ii) Children per stirpes
(iii) Parents or survivors of them
(iv) Brothers and sisters and children of
deceased brothers and sisters per stirpes
(v) Estate of the Participant.
20 20
5.08B Definitions
(a) 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.
(b) Designated Beneficiary. The individual who
is designated as the beneficiary under the Plan in accordance
with Code section 401(a)(9) and the proposed regulations
thereunder.
(c) 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 this Section.
(d) 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 5.04B 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.
(e) Participant's Benefit
(i) The account balance as of the last
valuation date in the calendar year immediately
preceding the distribution calendar year
(valuation calendar year) increased by the amount
of any contributions or forfeitures allocated to
21 21
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.
(ii) 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.
(f) 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 l, 1988, shall be determined in accordance with (1) or
(2) below:
(1) Non-5 percent owners. The required
beginning date of a Participant who is not a 5-percent owner
is the first day of April of the calendar year following the
calendar year in which the later of retirement or attainment
of age 70-1/2 occurs.
(2) 5-percent owners. The required
beginning date of a Participant who is a 5-percent owner
during any year beginning after December 31, 1979, is the
first day of April following the later of:
(i) the calendar year in which the
Participant attains age 70-1/2, or
(ii) The earlier of the calendar
year with or within which ends the Plan Year in which the
Participant becomes a 5-percent owner, or the calendar year in
which the Participant retires.
The required beginning date of a Participant who is not a
5-percent owner who attains age 70-1/2 during 1988 and who has
not retired as of January 1, 1989, is April 1, 1990.
22 22
(c) A Participant is treated as a 5-percent owner
for purposes of this Section if such Participant is a 5-
percent owner as defined in Code section 416(i) (determined in
accordance with Code section 416 but without regard to whether
the Plan is top-heavy) at any time during the Plan Year in
which such owner attains age 66-1/2 or any subsequent Plan
Year.
(d) Once distributions have begun to a 5-percent
owner under this Section, they must continue to be
distributed, even if the Participant ceases to be a 5-percent
owner in a subsequent year.
5.09B Transitional Rule
(a) Notwithstanding the other requirements of
this Section and subject to the requirements of Section IX,
distribution on behalf of any Employee, including a 5-percent
owner, may be made in accordance with all of the following
requirements (regardless of when such distribution commences):
(i) The distribution by the trust is one
which would not have disqualified such trust under
Code section 401(a)(9) as in effect prior to
amendment by the Deficit Reduction Act of 1984.
(ii) The distribution is in accordance with
a method of distribution designated by the
Employee whose interest in the trust is being
distributed or, if the Employee is deceased, by a
Beneficiary of such Employee.
(iii) Such designation was in writing, was
signed by the Employee or the Beneficiary, and was
made before January l, 1984.
(iv) The Employee has accrued a benefit
under the Plan as of December 31, 1983.
(v) The method of distribution designated by
the Employee or the Beneficiary specifies the time
at which distribution will commence, the Period
over which distributions will be made, and, in the
case of any distribution upon the Employee's
death, the beneficiaries of the Employee listed in
order of priority.
(b) A distribution upon death will not be covered
by this transitional rule unless the information in the
designation contains the required information described above
23 23
with respect to the distributions to be made upon the death of
the Employee.
(c) For any distribution which commences before
January 1, 1984, but continues after December 31, 1983, the
Employee, or the Beneficiary to whom such distribution is
being made, will be presumed to have designated the method of
distribution under which the distribution is being made if the
method of distribution was specified in writing and the
distribution satisfies the requirements in subsections
5.09B(a)(i) and (v).
(d) If a designation is revoked, any subsequent
distribution must satisfy the requirements of Code section
401(a)(9) and the proposed regulations thereunder. If a
designation is revoked subsequent to the date distributions
are required to begin, the trust must distribute by the end of
the calendar year following the calendar year in which the
revocation occurs the total amount not yet distributed which
would have been required to have been distributed to satisfy
Code section 401(a)(9) and the proposed regulations
thereunder, but for the Code 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
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 Section 1.401(a)9-2 Q&A J-2 and Q&A J-3 of the
proposed regulations shall apply.
SECTION VI
CONTRIBUTIONS AND FORFEITURES
6.01 The Employer shall pay to the Custodian, from time
to time, such sums of money as specified in the Adoption
Agreement on behalf of each Participant. Employer
contributions for each Plan Year shall be delivered to the
Custodian not later than the due date for filing the
Employer's income tax return, including extensions thereof.
No contributions shall be accepted by the Custodian from any
24 24
person other than the Employer. Any payments from this Plan
shall be made by the Custodian or Employer pursuant to the
provisions of the Plan.
6.02 As of each Anniversary Date and any more frequent
dates as determined by the Administrator ("Adjustment Dates"),
the Employer shall allocate to each Participant's Account
contributions which have been made since the last Adjustment
Date in the following manner:
(a) The Participant's share of Employer
contributions, and Matching Employer Contributions shall be
allocated to each Participant's Account in accordance with the
method selected by the Employer in the Adoption Agreement.
(b) The Participant's Elective Deferrals made
since the last Adjustment Date shall be allocated to the
Participant's Elective Deferrals Account.
6.03 Any contribution made by the Employer because of a
mistake of fact may be returned to the Employer within one (1)
year of such contribution.
Any contribution made by the Employer which is
conditional upon the Plan's initial qualification under the
Code may be returned to the Employer within one (1) year after
the date such initial qualification is denied.
Any contribution made by the Employer which is
conditioned on the deductibility of such amount under Code
section 404 may be returned to the Employer, to the extent of
the amount disallowed within one (1) year after the
disallowance of the deduction.
In the event that the Commissioner of Internal
Revenue determines that the Plan is not initially qualified
under the Code, any contribution made incident to that initial
qualification by the Employer must be returned to the Employer
within one year after the date the initial qualification is
denied, but only if the application for the qualification is
made by the time prescribed by law for filing the Employer's
return for the taxable year in which the Plan is adopted, or
such later date as the Secretary of the Treasury may
Prescribe.
6.04 Receipt of Rollovers and Trustee to Trustee
Transfers.
(a) If elected by the Employer in the Adoption
Agreement, the Custodian may receive, with the consent of
25 25
the Plan Administrator and the Trustee, the transfer of
assets previously held under another qualified plan for
the benefit of a person who is a Participant in this Plan
or who is eligible to be a Participant except for
fulfilling the service requirements for participation
pursuant to Section III. If this Plan, as adopted by the
Employer, is a profit sharing plan and if the transfer of
assets is a direct trustee to trustee transfer, such
assets may not have been held in any defined benefit plan
or defined contribution plan that is subject to the
funding standards of Code section 412. The assets may be
received directly from the trustee of a qualified plan,
or they may be received as a rollover contribution from a
qualified plan or from an individual retirement account.
Any plan from which assets are received must be a plan
qualified under Code section 401 at the time of the
transfer, and any rollover individual retirement account
must be an individual retirement account within the
meaning of Code section 408, which consists solely of
assets transferred from another qualified plan.
(b) The Custodian shall invest the transferred
assets as part of the Trust Fund. The transferred
assets, and the earnings and losses attributable to them,
shall be held in a separate account ("Rollover Account")
on the books of the Trust for the benefit of the
Participant. The account shall share in allocations of
earnings and adjustments pursuant to Section X. The
interest of a Participant in his Rollover Account
attributable to transferred assets shall be fully vested
at all times. Payment of the Rollover Account shall be
made on the same basis as payment of the Participant's
Employer contributions.
(c) The Administrator, Custodian and Trustee
shall be fully protected in relying on data,
representations, or other information provided by the
trustee or custodian of a qualified plan or individual
retirement account for the purpose of determining that
the requirements of subsection (a) have been satisfied.
6.05 If the Employer has adopted the Money Purchase
Plan in the Adoption Agreement, forfeitures arising under
Section VIII shall be used to reduce the Employer's
contribution to the Plan in the current and/or subsequent
years. If the Employer has adopted the Profit Sharing Plan in
the Adoption Agreement, forfeitures arising under Section VIII
shall be allocated to Participants on the same basis as
Employer contributions under Section 6.01. In any case,
forfeitures arising under Section VIII shall not be allocated
26 26
for the benefit of any other employer that has adopted this
Plan.
SECTION VII
LIMITATIONS ON ALLOCATIONS
[See Sections 7.13 - 7.19 for definitions of terms used
in this Section.]
[Sections 7.01 - 7.04 apply to Employers who do not
maintain any qualified plan in addition to this Plan.]
7.01 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 Code
section 419(e) maintained by the Employer, or an individual
medical account, as defined in Code section 415(l)(2),
maintained by the Employer, which provides an Annual Addition
as defined in Section 7.13, the amounts of Annual Additions
which may be credited to the Participant's account for any
Limitation Year will not exceed the lesser of the maximum
permissible amount or any other limitation contained in this
Plan. If the Employer contribution that would otherwise be
contributed or allocated to the Participant's account would
cause the Annual Additions for the Limitation Year to exceed
the maximum permissible amount, the amount contributed or
allocated will be reduced so that the Annual Addition for the
Limitation Year will equal the maximum permissible amount.
7.02 Prior to the determination of the Participant's
actual Compensation for a Limitation Year, the Maximum
Permissible Amount may be determined on the basis of the
Participant's estimated annual Compensation for such
Limitation Year. Such estimated annual Compensation shall be
determined on a reasonable basis and shall be uniformly
determined for all Participants similarly situated. Any
Employer contributions based on estimated annual Compensation
shall be reduced by any Excess Amounts carried over from prior
years.
7.03 As soon as is administratively feasible after the
end of the Limitation Year, the Maximum Permissible Amount for
such Limitation Year shall be determined on the basis of the
Participant's actual Compensation for such Limitation Year.
7.04 If, pursuant to Section 7.03 or as a result of the
allocation of forfeitures, there is an Excess Amount with
respect to a Participant for a Limitation Year, such Excess
27 27
Amount shall be disposed of as follows:
(a) First, any Employee voluntary contributions,
to the extent that the return would reduce the Excess Amount,
shall be returned to the Participant. Next, any Elective
Deferrals (as defined in Section XII) and nondeductible
Employer contribution on behalf of a Self-Employed Individual
to the extent that the return would reduce the Excess Amount
shall be returned to the Employer.
(b) In the event that the Participant is employed
by the Employer at the end of the Limitation Year, then
remaining Excess Amounts must not be distributed to the
Participant, but shall be reapplied to reduce future Employer
contributions under this Plan for the next Limitation Year
(and for each succeeding year, as necessary) for such
Participant, so that in each such year the sum of actual
Employer contributions plus the reapplied amount shall equal
the amount of Employer Contributions which would otherwise be
allocated to each Participant's account.
(c) In the event that the Participant is not
employed by the Employer at the end of the Limitation Year,
the remaining Excess Amounts must not be distributed to the
Participant, but shall be reapplied to reduce future Employer
contributions for all remaining Participants.
(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 trust'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' accounts before any Employer or
any Employee contributions may be made to the Plan for that
Limitation Year. Excess amounts may not be distributed to
Participants or former Participants.
(Sections 7.05 - 7.10 apply to Employers who, in addition
to this Plan, maintain one or more plans, all of which are
qualified defined contribution plans, or a welfare benefit
fund.)
7.05 If, in addition to this Plan, the Employer
maintains any other qualified defined contribution plan (all
of which are qualified plans), a welfare benefit fund, as
defined in Code section 419(e) or an individual medical
account, as defined in Code section 415(1)(2), maintained by
the Employer, which provides an Annual Addition as defined in
Section 7.13, the amount of Annual Additions which may be
28 28
allocated under this Plan on a Participant's behalf for a
Limitation Year, shall not exceed the lesser of:
(a) the Maximum Permissible Amount, reduced by the
sum of any Annual Additions allocated to the Participant's
accounts for the same Limitation Year under this Plan and such
other defined contribution plans and welfare benefit fund; or
(b) any other limitation contained in this Plan.
If the Annual Additions with respect to the Participant
under other defined contribution plans and welfare benefit
funds maintained by the Employer are less than the maximum
permissible amount and the Employer contribution that would
otherwise be contributed or allocated to the Participant's
account under this Plan would cause the Annual Additions for
the Limitation Year to exceed the 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 other defined
contribution plans and welfare benefit funds in the aggregate
are equal to or greater than the maximum Permissible amount,
no amount will be contributed or allocated to the
Participant's account under this Plan for the Limitation Year.
7.06 Prior to the determination of the Participant's
actual Compensation for the Limitation Year, the amounts
referred to in Section 7.05(a) above, may be determined on the
basis of the Participant's estimated annual Compensation for
such Limitation Year. Such estimated annual Compensation
shall be determined on a reasonable basis and shall be
uniformly determined for all Participants similarly situated.
Any Employer contribution based on estimated annual
Compensation shall be reduced by Excess Amounts carried over
for prior years.
7.07 As soon as is administratively feasible after the
end of the Limitation Year, the amounts referred to in Section
7.05(a) shall be determined on the basis of the Participant's
actual Compensation for such Limitation Year.
7.08 If a Participant's Annual Additions under this
Plan and all such other plans result in an Excess Amount, such
Excess Amount shall be deemed to consist of the amounts last
allocated except that Annual Additions attributable to a
welfare benefit fund or individual medical account will be
deemed to have been allocated first regardless of the actual
allocation date.
29 29
7.09 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 on such date
(including any amount which would have been allocated but for
the limitations of Code section 415), times
(b) the ratio of (i) the amount allocated to the
Participant as of such date under this Plan, divided by (ii)
the total amount allocated as of such date under all qualified
defined contribution plans (determined without regard to the
limitations of Code section 415).
7.10 Any Excess Amounts attributed to this Plan shall
be disposed of as provided in Section 7.04.
[Section 7.11 applies only to Employers who, in addition
to this Plan, maintain one or more qualified plans which are
qualified defined contribution plans other than a Master or
Prototype Plan.]
7.11 This Plan may only be adopted or maintained by
such Employer if the limitations of Sections 7.05 to 7.10 of
this Plan are in all plans.
[Section 7.12 applies to Employers, who in addition to
this Plan, maintain one or more defined benefit plans.]
7.12 If the Employer maintains a defined benefit plan
in addition to this Plan, then the Maximum Permissible Amount
allocated to the Account of any Participant under all defined
contribution plans maintained by the Employer cannot exceed
the maximum allocation set forth herein. The maximum
allocation is the amount of Annual Additions which may be made
to a Participant's Account without permitting the sum of the
defined benefit plan fraction (as hereinafter defined) and the
defined contribution plan fraction (as hereinafter defined)
from exceeding 1.0 for any Limitation Year. The defined
benefit plan fraction applicable to a Participant for any
Limitation Year is a fraction, the numerator of which is the
Projected annual benefit of the Participant under the Plan
determined as of the close of the Limitation Year and the
denominator of which is the lesser of:
(1) 1.25 multiplied by the dollar limitation in
effect under Code section 415(b)(1)(A) for such year, or
30 30
(2) the product of 1.4 multiplied by the amount
which may be taken into account under Code section
415(b)(1)(B) with respect to such Participant under the Plan
for such year.
For purposes of this Section 7.12, a Participant's
projected annual benefit is equal to the annual benefit,
expressed in the form of a straight life annuity, to which the
Participant would be entitled under the terms of the defined
benefit plan based on the assumptions that (i) the Participant
will continue employment until reaching his Normal Retirement
Age under the Plan (or current age, if later) at a rate of
compensation equal to that for the Limitation Year in
consideration and (ii) all other relevant factors used to
determine benefits under the Plan for the Limitation Year
under consideration will remain constant for future Limitation
Years. The defined contribution plan fraction applicable to a
Participant for any Limitation Year is a fraction, the
numerator of which is the sum of the Annual Additions
allocated to the Participant as of the close of the Limitation
Year and for all prior Limitation Years 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 one hundred twenty-
five percent (125%) of the dollar limitation determined under
Code sections 415(b) and (d) in effect under Code section
415(c)(1)(A) or thirty-five percent (35) of the Participant's
Compensation for such year. Notwithstanding the above, if the
Participant was a participant as of the first day of the first
limitation year beginning after December 31, 1986 in one or
more defined benefit plans maintained by the Employer which
were in existence on May 6, 1986, the denominator of this
fraction will not be less than 125 percent of the sum of the
annual benefits under such plans which the Participant had
accrued as of the close of the last limitation year beginning
before January 1, 1987, disregarding any changes in the terms
and conditions of the Plan after May 5, 1986. The preceding
sentence applies only if the defined benefit plans
individually and in the aggregate satisfied the requirements
of Code section 415 for all limitation years beginning before
January 1, 1987.
[Sections 7.13 - 7.19 are definitions used in this
Section VII.]
7.13 Annual Additions - The sum of the following
amounts allocated on behalf of a Participant for a Limitation
Year:
31 31
(a) all Employer contributions;
(b) all forfeitures; and
(c) all Employee contributions.
For purposes of this Section, amounts reapplied to reduce
Employer contributions under Section 7.04 shall also be
included as Annual Additions. Amounts allocated, after March
31, 1984, to an individual medical account, as defined in Code
section 415(l)(2), which is part of a pension or annuity plan
maintained by the Employer, are treated as Annual Additions to
a defined contribution plan. Also, amounts derived from
contributions paid or accrued after December 31, 1985, in
taxable years ending after such date, which are attributable
to post-retirement medical benefits allocated to the separate
account of a key employee, as defined in Code section
419A(d)(3), under a welfare benefit fund, as defined in Code
section 419, maintained by the Employer, are treated as Annual
Additions to a defined contribution plan.
7.14 Compensation -- A Participant's Earned Income,
wages, salaries, and fees for professional services and other
amounts received for personal services actually rendered in
the course of employment with the Employer maintaining the
Plan (including, but not limited to, commissions paid
salesmen, compensation for services on the basis of a
percentage of profits, commissions on insurance premiums, tips
and bonuses), 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;
(b) Amounts realized from the exercise of a non-
qualified stock option, or when restricted stock or
property held by the Employee either becomes freely
transferable or is no longer subject to a substantial
risk of forfeiture;
(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
32 32
or not under a salary reduction agreement) towards the
purchase of an annuity described in Code section 403(b)
(whether or not the amounts are actually excludable from
the gross income of the Employee).
For purposes of applying the limitations of this Section,
compensation for a Limitation Year is the compensation
actually paid or includible in gross income during such
Limitation Year.
7.15 Employer - The Employer that adopts this Plan. In
the case of a group of employers which constitutes a
controlled group of corporations (as defined in Code section
414(b) as modified by Code section 415(h)), trades or
businesses (whether or not incorporated) which are under
common control (as defined in Code section 414(c) as modified
by Code section 415(h)), an affiliated service group (as
defined in Code section 414(m), or are required to be
aggregated under Code section 414(o), all such employers shall
be considered a single employer for purposes of applying the
limitations of this Section.
7.16 Excess Amount - The excess of the Participant's
Annual Additions for the Limitation Year over the Maximum
Permissible Amount, less loading and other administrative
charges allocable to such excess.
7.17 Limitation Year - A calendar year (or any other
twelve (12) consecutive month period adopted for all plans of
the Employer pursuant to a written resolution adopted by the
Employer). 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.
7.18 Master or Prototype Plan - A plan the form of
which is the subject of a favorable opinion letter from the
Internal Revenue Service.
7.19 Maximum Permissible Amount - The maximum annual
addition that may be contributed or allocated to a
Participant's account under the Plan for any Limitation Year
shall not exceed the lesser of:
(a) the defined contribution dollar limitation, or
(b) twenty-five percent (25%) of the Participant's
Compensation for the Limitation Year
33 33
The Compensation limitation referred to in (b) shall not
apply to any contribution for medical benefits (within the
meaning of Code sections 401(h) or 419A(f)(2)) which is
otherwise treated as an annual addition under Code sections
415(l)(1) or 419A(d)(2).
If a short Limitation Year is created because of an
amendment changing the Limitation Year to a different 12-
consecutive month period, the maximum permissible amount will
not exceed the defined contribution dollar limitation
multiplied by the following fraction:
Number of months in the short Limitation Year
12
The defined contribution dollar limitation is $30,000 or
if greater, one-fourth of the defined benefit dollar
limitation set forth in Code section 415(b)(1) as in effect
for the Limitation Year.
SECTION VIII
TERMINATION OF EMPLOYMENT
8.01 On termination of employment, all restrictions on
distributions of benefits continue to apply. Upon such
termination, a Participant shall have no further right or
interest whatsoever under this Plan, or receive any benefit
other than as provided in this Section VIII. Compensation up
to the date of termination shall be taken into account in
determining contributions.
8.02 A Participant's benefit at termination shall be
determined by applying the applicable percentage from the
vesting schedule selected in the Adoption Agreement to the
amount in his Individual Participant Account. Any unvested
amount in the Individual Participant Account shall be a
forfeiture after the Participant incurs a Break in Service.
8.03 (a) If a Participant's Vested Account Balance
derived from Employer and Employee contributions is not
greater than $3,500, a Participant's termination benefit under
this Section VIII shall be payable, unless the Participant is
a Self-Employed Individual, and payment shall commence at the
Participant's election, on the date of his termination of
employment or any date thereafter up to and including his
Normal Retirement Date, subject to the Benefit Payment
Provisions of Section IX. For purposes of this section, if
the value of a Participant's termination benefit is zero, the
34 34
Participant shall be deemed to have received a distribution of
such vested account balance.
(b) If a Participant receives or is deemed to
receive a distribution pursuant to this section and the
Participant resumes employment covered by this Plan, the
Participant's employer-derived 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
Service following the date of the distribution. If a
Participant is deemed to receive a distribution pursuant to
this section and the Participant resumes employment covered by
this Plan, the Participant's Employer-derived account balance
will be restored to the amount on the date of 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 1-year Breaks in Service
following the date of the distribution.
(c) If the value of a Participant's Vested
Account Balance derived from Employer and Employee
contributions exceeds (or at the time of any prior
distribution exceeded) $3,500, and the account balance is
immediately distributable, the Participant and the
Participant's spouse (or where either the Participant or the
spouse has died, the survivor) must consent to any
distribution of such account balance. The consent of the
Participant and the Participant's spouse shall be obtained in
writing within the 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 Administrator shall notify the
Participant and the Participant's spouse of the right to defer
any distribution until the Participant's account balance is no
longer immediately distributable. Such notification shall
include a general description of the material features, and an
explanation of the relative values of, the optional forms of
benefit available under the Plan in a manner that would
satisfy the notice requirements of Code section 417(a)(3), and
shall be provided no less than 30 days and no more than 90
days prior to the annuity starting date.
Notwithstanding the foregoing, only the Participant need
consent to the commencement of a distribution in the form of a
Qualified Joint and Survivor Annuity while the account balance
35 35
is immediately distributable. (Furthermore, if payment in the
form of a Qualified Joint and Survivor Annuity is not required
with respect to the Participant pursuant to Section 9.01 only
the Participant need consent to the distribution of an account
balance that is immediately distributable). Neither the
consent of the Participant nor the Participant's spouse shall
be required to the extent that a distribution is required to
satisfy Code section 401(a)(9) or Code section 415. In
addition, upon termination of this Plan if the Plan does not
offer an annuity option (purchased from a commercial
provider), the Participant's account balance may, without the
Participant's consent, be distributed to the Participant or
transferred to another defined contribution plan (other than
an employee stock ownership plan as defined in Code section
4975(e)(7)) within the same controlled group.
An account balance is immediately distributable if any
part of the account balance could be distributed to the
Participant (or surviving spouse) before the Participant
attains or would have attained (if not deceased) the later of
normal retirement age or age 62.
(d) For purposes of determining the applicability
of the foregoing consent requirements to distributions made
before the first day of the first Plan Year beginning after
December 31, 1988, the Participant's vested account balance
shall not include amounts attributable to accumulated
deductible employee contributions within the meaning of Code
section 72(o)(5)(B).
8.04 No benefits shall be paid to an Owner-Employee
prior to his attainment of Age 59-1/2, except in the case of
disability as hereinafter defined. A Participant shall be
considered to be disabled if he is unable to engage in any
substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be
expected to result in death or to be of long-continued and
indefinite duration.
SECTION IX
BENEFIT PAYMENT PROVISIONS
9.01 If a Profit Sharing Plan which is not a Transferee
Plan is selected in the Adoption Agreement, or if the
Qualified Joint and Survivor Annuity and/or the Qualified Pre-
Retirement Survivor Annuity are waived as provided in this
Plan, the Custodian shall distribute to the Participant (or
Beneficiary) the Account balance according to one of the
36 36
following payment methods selected by the Participant (or
Beneficiary):
(a) Distribution in a lump sum;
(b) Distribution in regular installments over a
period of years not to exceed the life expectancy of the
Participant or the life expectancies of the Participant and a
designated Beneficiary;
(c) A combination of cash payment at retirement
and regular installments thereafter;
If a distribution to a Participant is made in other than
a lump sum, the balance remaining in the Participant's account
shall share in the allocation of income and increase in equity
of the Fund, but in no event shall such account share in the
allocation of Employer contributions.
9.02 (a) (1) If (i) a Money Purchase Pension Plan or
(ii) a Profit Sharing Plan which is a Transferee Plan is
selected in the Adoption Agreement, a Participant who is
married on the "Annuity Starting Date" and who retires,
terminates or becomes totally and permanently disabled under
the Plan shall receive the value of his accrued benefit in the
form of a Qualified Joint and Survivor Annuity. In the case
of an unmarried Participant, the normal form of benefit shall
be a life annuity, in the narrowest sense as such term may be
construed by the Secretary of the Treasury, unless an optional
form of benefit is selected within the 90-day period ending on
the date benefit payments would commence.
(2) Any election to waive the Qualified
Joint and Survivor Annuity must be made by the Participant in
writing during the Election Period and be consented to by the
Participant's Spouse in writing. Such Spouse's consent must
acknowledge the effect of such election, be witnessed by a
Plan representative or a notary public, and acknowledge the
specific non-spouse beneficiary, if any. Such consent shall
not be required if it is established to the satisfaction of
the Administrator that the required consent cannot be obtained
because there is no Spouse, the Spouse cannot be located, or
other circumstances that may be prescribed by Treasury
regulations. The election made by the Participant and
consented to by his Spouse may be revoked by the Participant
in writing without the consent of the Spouse at any time
during the Election Period. Any new election must comply with
the requirements of this paragraph. A Spouse's waiver shall
not be binding on a subsequent Spouse. Additionally, a
Participant's waiver of the Qualified Joint and Survivor
37 37
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. No consent
obtained under this provision shall be valid unless the
Participant has received notice as provided in Section
9.02(a)(5) below.
(3) The Election Period to waive the
Qualified Joint and Survivor Annuity shall be the 90-day
period ending on the Annuity Starting Date.
(4) The Annuity Starting Date shall mean the
first day of the first period for which an amount is paid as
an annuity or any other form.
(5) With regard to the election, the
Administrator shall provide the Participant no less than
thirty (30) days and nor more than ninety (90) days prior to
the Annuity Starting Date (and consistent with Treasury
regulations), a written explanation of:
(i) the terms and conditions of the
Qualified Joint and Survivor Annuity, and
(ii) the Participant's right to make an
election to waive the Qualified Joint and Survivor Annuity,
and
(iii) the right of the Participant's
Spouse to consent to any election to waive the Qualified Joint
and Survivor Annuity, and
(iv) the right of the Participant to
revoke such election, and the effect of such revocation.
(b) In the event a Participant duly elects
pursuant to paragraph (a)(2) above not to receive the
retirement benefit in the form of a Qualified Joint and
Survivor Annuity, or if an unmarried Participant elects not to
receive a life annuity, the Administrator shall direct the
Custodian to distribute to a Participant or his Beneficiary
any amount to which he is entitled under the form of benefit
payment selected by the Participant or Beneficiary under
Section 9.01.
38 38
(c) If the present value of the retired
Participant's vested benefit is less than $3,500, the
Administrator shall immediately distribute such benefit prior
to the Annuity Starting Date without such retired
Participant's consent. However, a retired Participant's
vested benefit may not be paid without his written consent,
and the consent of his Spouse, if the value exceeds $3,500 or
if the amount is paid after the Annuity Starting Date. The
present value of the accrued benefit shall be determined as of
the date of distribution using an interest rate as required by
law.
(d) Any annuity contract distributed from the
Plan must be nontransferable. The terms of any annuity
contract purchased and distributed by the Plan to a
Participant or Spouse shall comply with the requirements of
this Plan.
(e) For purposes of Sections 9.02 and 9.03, a
Participant's vested account balance is the aggregate value of
the Participant's vested account balances derived from
Employer and Employee contributions (including rollovers),
whether vested before or upon death, including the proceeds of
insurance contracts, if any, on the Participant's life. The
provisions of this Section shall apply to a Participant who is
vested in amounts attributable to Employer contributions,
Employee contributions (or both) at the time of death or
distribution.
9.03 (a) If a Money Purchase Pension Plan is selected
in the Adoption Agreement, and unless otherwise elected as
provided in this Plan, a vested Participant who dies before
the Annuity Starting Date and who has a surviving Spouse shall
have his accrued benefit paid to his surviving Spouse in the
form of a Qualified Pre-Retirement Survivor Annuity. Payment
of such accrued benefits must commence by the date the
Participant would have attained the Normal Retirement Age
under the Plan, unless the surviving Spouse elects a later
date.
(b) Any election to waive the Qualified Pre-
Retirement Survivor Annuity must be made by the Participant in
writing during the Election Period and shall require the
Spouse's consent in the same manner provided for in this Plan.
(c) The Election Period to waive the Qualified
Pre-Retirement Survivor Annuity shall begin on the first day
of the Plan Year in which the Participant attains age 35 and
end on the date of the Participant's death. In the event a
vested Participant separates from service prior to the
39 39
beginning of the Election Period, the Election Period shall
begin on the date of such separation from service.
(d) In the case of a Qualified Preretirement
Survivor Annuity, the 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 9.02(a)(5), applicable to a Qualified
Joint and Survivor Annuity. The applicable period for a
Participant is whichever of the following periods ends last:
(i) the period beginning with the first day of the Plan Year
in which the Participant attains age thirty-two (32) and
ending with the close of the Plan Year preceding the Plan Year
in which the Participant attains age thirty-five (35); (ii) a
reasonable period ending after the individual becomes a
Participant; (iii) a reasonable period ending after this
Section 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
thirty-five (35).
For purposes of applying the preceding paragraph, a
reasonable period ending after the enumerated events described
in (ii) and (iii) 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
thirty-five (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.
(e) The Qualified Pre-Retirement Survivor Xxxxxxx
provided for in this Section shall apply only to Participants
who are credited with an Hour of Service on or after August
23, 1984. Former Participants who are not credited with an
Hour of Service on or after August 23, 1984 shall be provided
with rights to the Qualified Pre-Retirement Survivor Annuity
in accordance with Section 303(e)(2) of the Retirement Equity
Act of 1984.
(f) If the value of the Qualified Pre-Retirement
Survivor Annuity is less than $3,500, the Administrator shall
direct the immediate distribution of such amount to the
Participant's Spouse prior to the Annuity Starting Date. If
the value exceeds $3,500 or if the amount is paid after the
40 40
Annuity Starting Date, an immediate distribution of the entire
amount shall be made to the surviving Spouse, provided such
surviving Spouse Consents in writing to such distribution.
The present value of the accrued benefit shall be determined
as of the date of distribution and by using an interest rate
as required by law.
(g) In the event the accrued benefit is not paid
in the form of a Qualified Pre-Retirement Survivor Annuity, it
shall be paid to the Participant's Beneficiary as provided in
Sections 9.01 or 9.02.
9.04 The Employer may elect in the Adoption Agreement
to have subsection (a), (b) or (c) below, apply:
(a) Subject to any restrictions the Employer
chooses in the Adoption Agreement, a Participant may withdraw
from his Account in a profit sharing plan all or a portion of
his or her Account. Such withdrawal must be requested in
writing on forms provided by the Administrator. Such
withdrawal shall be based upon the Participant's Account
balance as of the Adjustment Date immediately preceding the
withdrawal or, in the discretion of the Trustee, may be based
upon the Participant's Account balance as of a valuation date
as close as practicable to the date of the withdrawal.
(b) If the Employer maintains a profit sharing
plan with a qualified cash or deferred arrangement, subject to
any restrictions the Employer chooses in the Adoption
Agreement and the requirements of Section 4.2 a Participant
may request a withdrawal from the vested portion of his
Accounts (including his Elective Deferral Account) if the
Participant has incurred a financial hardship.
(c) A Participant may, upon attaining age 59-1/2,
elect to have some or all of the balance to the credit of his
Account distributed to him at any time in the manner provided
for in the Plan.
The Administrator shall furnish the Participants with
appropriate information and election forms for any of these
distributions, and the Custodian shall make distributions to
the Participant in accordance with the Participant's election
as submitted to the Custodian by the Administrator. A
Participant's election to receive any distribution under this
Section shall not affect his eligibility to continue to
participate in the Plan or to have contributions made to the
Plan on his behalf by the Employer.
41 41
(d) If a distribution is made at a time when a
Participant has a vested interest in less that 100% of his
Accounts (other than his Rollover Account and Elective
Deferral Account) and the Participant may increase his vested
interest in such Accounts, the following rules apply:
(i) A separate account will be established
for the Participant's interest in the Plan as of the time
of the distribution, and
(ii) At any relevant time, the Participant's
vested interest in his separate account will be equal to
an amount "X", determined by the following formula:
X = P(AB + (R x D)) - (R x D)
For purposes of applying the formula, P is the
vested interest at the relevant time; AB is the
Account balance at the relevant time; D is the
amount of the distribution and R is the ratio of
the Account balance at the relevant time to the
Account balance after distribution.
9.05 (a) If a Participant with vested benefits under
the Plan or his Beneficiary cannot be located by the Plan, the
credited benefits to such Participant's Account shall remain
in the Fund, accounted for separately, until a claim is made
by such Participant or Beneficiary.
(b) In the event the Plan shall terminate, the
Administrator shall attempt to locate such Participant at his
last known address. If such attempt is unsuccessful, the
unlocated Participant's funds shall be placed in a separate
custodial account.
(c) Unclaimed benefits shall thereafter be
distributed in accordance with ERISA and the rules and
regulations promulgated thereunder. If a benefit is forfeited
because the Participant or Beneficiary cannot be found, the
benefit will be reinstated if a claim is made by the
Participant or Beneficiary.
9.06 Unless the Participant elects otherwise in
writing, distribution of a Participant's accrued benefit shall
commence not later than sixty (60) days after the close of the
Plan Year in which the latest of the following events occurs:
(i) The Participant attains Normal Retirement
Age, or
42 42
(ii) The close of the Plan Year in which occurs the
tenth (10th) anniversary of the year in which the Participant
commenced participation in the Plan, or
(iii) April 1 of the calendar year following the
calendar year on which the Participant attains age 70-1/2 (the
"Distribution Date").
If the Participant's entire interest is to be distributed
in other than a lump sum, then the amount to be distributed
each year must be at least an amount equal to the quotient
obtained by dividing the Participant's entire interest by the
life expectancy of the Participant or joint and last survivor
expectancy of the Participant and his Beneficiary. Life
expectancy and joint life expectancy are computed by the use
of the return multiples contained in Treasury Regulation
Section 1.72-9. The life expectancy of the Participant and
the Participant's Spouse may be recalculated no more
frequently than annually, but the life expectancy of a
nonspouse beneficiary may not be recalculated.
SECTION X
INVESTMENT
10.01 All contributions made pursuant to the Plan shall
be invested by the Custodian solely in full or fractional
shares of the Funds, and if so elected, in life
insurance policies issued by an Insurer. The form of
investment shall be designated in the Adoption Agreement. If
the Trust is invested as a single fund, each Participant will
have a ratable interest in all assets of the Trust, in the
ratio that the Individual Participant Account bears to the
total of all Individual Participant Accounts. If the Employer
permits Participants to have a choice of investments under the
Funds, net earnings and losses will be allocated to each
Participant's account on the basis of the Participant's
investment selections.
10.02 All policies or coverage issued under this Plan
will be subject to the following conditions:
(a) any life insurance policies applied for on the
lives of Participants shall be in accordance with uniform
rules established by the Plan Administrator;
(b) the Participant shall have the sole and
exclusive right to designate and change the Beneficiary under
each policy issued on his life and the manner in which such
43 43
Beneficiary shall be paid in event of his death prior to
retirement subject to the provisions of Sections V A and V B;
(c) the Insurer shall not be obligated to issue
any policy contrary to its rules;
(d) at the request of the Participant and with the
approval of the Plan Administrator, a policy of a larger or
smaller amount than the uniform percentage may be applied for,
subject to (e) below;
(e) if ordinary life insurance policies are to be
purchased, the total annual premium for such policies must
always be less than one-half (1/2) of the total Employer
contributions allocated to his Individual Participant Account.
If retirement income policies are to be purchased, the death
benefit provided by such policies must not exceed the greater
of (i) one hundred (100) times the monthly income provided by
the policies at normal retirement or (ii) the cash value of
the policies. No term insurance shall be purchased under this
Plan;
(f) no insurance shall be applied for on the life
of any Participant for a face amount of less than $2,500;
(g) any dividend or refund payable under a policy
shall be applied for the benefit of the Participant on whose
life such policy is issued;
(h) each policy purchased hereunder shall be
nontransferable, and no Participant may sell, assign, discount
or pledge as collateral for a loan, or as security for the
performance of an obligation, or for any other purpose, his
policy or any interest therein to any person other than the
Insurer;
(i) subject to the requirements of Section IV and
subject to the benefit payment provisions of Section IX, any
life insurance policy on a Participant's life shall be either
distributed to the Participant or converted into cash or an
annuity to provide retirement income for the Participant;
(j) the Custodian shall apply for and will be the
owner of any insurance contract purchased under the terms of
this Plan. The insurance contract(s) must provide that
proceeds will be payable to the Custodian, however the
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
44 44
proceeds in all circumstances unless a qualified election has
been made in accordance with Sections VA and VB. Under no
circumstances shall the Custodial Account 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.
10.03 When an increase or decrease in the life insurance
coverage on the life of a Participant is required, the Plan
Administrator shall advise the Insurer to either increase or
decrease the Participant's insurance coverage, provided,
however, that no increase shall be made until the face amount
of a Participant's insurance coverage can be increased by at
least $2,500. In the event of a decrease in the amount of a
Participant's insurance, the insurance may be placed on a
paid-up basis or the surrender value may be deposited in an
annuity policy and credited to the Participant's Individual
Participant Account.
10.04 If a Profit Sharing Plan is selected in the
Adoption Agreement, any Participant upon whose life a policy
of life insurance is in existence may apply for a
supplementary agreement providing for additional death benefit
or waiver of premium in accordance with and subject to the
rules and practices of the Insurer.
The premium for such benefits shall be paid by the
Participant who requests the same through his Employer who
shall pay the premium to the Insurer. The proceeds payable
under the supplementary agreement shall be payable to the
Beneficiary or Beneficiaries designated by the Participant and
in the manner requested in such designation, subject to the
terms of such supplementary agreement and to the rules and
practices of the Insurer. However, no contribution for the
payment of premium can exceed the amount of contribution
permitted under the Plan.
10.05 Any assignment or pledge (or agreement to assign
or pledge) by an Owner-Employee, of any interest in the Plan
shall be considered a distribution of such interest. If an
Owner-Employee receives, either directly or indirectly, any
amount from the Insurer as a loan under a policy, the amount
so received shall be considered a distribution under the Plan.
45 45
SECTION XI
AMENDMENT OF THE PLAN
11.01 Subject to the provisions of Sections 11.04 and
11.05, the Plan Sponsor shall have the right to amend the Plan
at any time without the consent of any Employer, Plan
Administrator, Participant or Beneficiary hereunder. Any
Employer or Plan Administrator who has signed the Adoption
Agreement is deemed to have delegated to the Plan Sponsor the
authority to amend the Plan, and such Employer or Plan
Administrator shall be deemed to have consented to such
amendment. However, any such amendment shall be restricted to
those necessary to maintain qualification of the Plan under
Code section 401, or as may be deemed necessary to meet the
requirements of ERISA, as from time to time amended, or any
other applicable statute. However, no elective provisions may
be deleted retroactively with respect to any Employer who
elected the provisions with the Employer's consent. Any such
amendment by the Plan Sponsor shall be stated in an instrument
executed by the Plan Sponsor and each participating Employer
shall be given a copy of such amendment.
11.02 Subject to the provisions of Sections 11.04 and
11.05, the Employer shall have the right to (i) amend any
elective provisions of its Adoption Agreement, without the
consent of any Participant or Beneficiary, (ii) add overriding
language in the Adoption Agreement when such language is
necessary to satisfy Code sections 415 or 416 because of the
required aggregation of multiple plans and (iii) 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. Such
amendment shall be stated in an instrument executed by the
Employer in substantially the same form as the Adoption
Agreement and delivered to the Plan Administrator and Plan
Sponsor. Upon the execution and delivery of such amendment,
the Plan shall be deemed to have been amended in the manner
therein set forth, and the Employer, Plan Administrator,
Participants and Beneficiaries hereunder shall be bound
thereby.
11.03 Subject to the provisions of Sections 11.04 and
11.05, the Employer shall have the right to amend any
nonelective provisions of this Plan without the consent of any
other party. Such amendment shall apply only to the Employer
and its Employees and shall not apply to this Prototype
sponsored by the Plan Sponsor as it applies to other
Participating employers. If the Employer amends the Plan,
other than as provided in Section 11.02 including a waiver of
46 46
the minimum funding requirement under Code section 412(d), the
amended Plan shall no longer be deemed to be a Prototype and
the Employer shall be deemed to have adopted his own
individually-designed plan.
11.04 No amendments shall vest in the Employer any
right, title, interest or control over any policies purchased
hereunder, or over any other asset held under the Plan. No
assets of the Plan shall, by reason of any amendment be used
for, or diverted to, purposes other than for the exclusive
benefit of the Participants and their Beneficiaries. No
amendment to the Plan shall be effective to the extent that it
has the effect of decreasing a Participant's accrued benefit.
Notwithstanding the preceding sentence, a Participant's
account balance may be reduced to the extent permitted under
Code section 412(c)(8). For purposes of this paragraph, a
plan amendment which has the effect of decreasing a
Participant's account balance or eliminating an optional form
of benefit, with respect to benefits attributable to service
before the amendment shall be treated as reducing an accrued
benefit.
If the vesting schedule of the Plan is amended, in the
case of an Employee who is a Participant as of the later of
the date such amendment is adopted or the date it becomes
effective, the nonforfeitable percentage (determined as of
such date) of such Employee's right to his Employer-derived
accrued benefit will not be less than his percentage computed
under the Plan without regard to such amendment.
However, the Employer may make such amendments, including
retroactive amendments, as may be required by the Internal
Revenue Service in order to initially qualify, or maintain the
qualification of the Plan under Code section 401 and the ERISA
as from time to time amended. An Employer may amend the Plan
by adding overriding Plan language to the Adoption Agreement
where such language is necessary to satisfy Code sections 415
or 416 because of the required aggregation of multiple plans.
If an Employer amends the Plan because of the Code, the
amended Plan shall no longer be deemed to be a prototype and
the Employer shall be deemed to have adopted its own
individually-designed plan.
Except for the amendments described in the foregoing
paragraph and except for changes to the choice of options in
the Adoption Agreement, if the Employer amends the Plan or
nonelective portions of the Adoption Agreement, the Employer
will no longer participate in this Plan but will be considered
to have an individually designed plan.
47 47
11.05 No amendment shall, without the written consent of
the Plan Sponsor, affect the rights or immunities of the Plan
Sponsor; nor shall such amendment change the duties,
responsibilities, rights or privileges of the Insurer or
change any provisions of any policy. No amendment shall
affect the rights, duties or responsibilities of the Plan
Administrator without his written consent.
SECTION XII
TERMINATION OF THE PLAN
12.01 The Employer expressly reserves the right to
terminate this Plan and its contributions hereunder, if such
termination is delivered in writing to the Plan Administrator,
provided, however, that it is the express intention of the
Employer to continue the Plan unless changes in business
conditions require otherwise. This Plan shall automatically
terminate upon the happening of any of the following events:
(a) the adjudication of the Employer as bankrupt;
(b) the general assignment by the Employer to or
for the benefit of creditors;
(c) the dissolution of the business of the
Employer; or
(d) the Plan loses its status as a qualified plan
under the Code;
provided, however, that this Plan may be continued
by any successor business organization or any business
organization into which the Employer is merged or
consolidated, which employs some or all of the Participants,
if such business organization agrees with the Employer in
writing to accept the obligations of this Plan and to continue
it in full force and effect in accordance with Section 15.06.
12.02 Upon the termination or partial termination of
this Plan and Custodial Account or upon the complete
discontinuance of contributions to this Plan and Custodial
Account, all amounts allocated to each Participant's
Individual Participant Account shall become fully vested and
nonforfeitable. The amount to then be distributed to each
Participant may be applied to purchase a nontransferable
deferred annuity with the Participant as owner or it may be
distributed in cash with the ownership of any insurance
policies transferred to the Participant, subject to the
48 48
benefit payment provisions of Section IX. However, all
restrictions on distributions shall continue to apply after
the Plan has terminated.
SECTION XIII
PLAN ADMINISTRATOR
13.01 The Plan Administrator shall evidence his
acceptance as the named fiduciary of this Plan by executing
the Adoption Agreement. If more than one (1) person is
designated as Plan Administrator, the committee formed will be
referred to as the administrative committee. The Plan
Administrator shall have the responsibility for the
administration of this Plan.
13.02 The Plan Administrator shall have the exclusive
duty and authority to interpret the provisions of this Plan,
to direct its administration and to decide any disputes which
may arise in regard to the rights of the Employer or any
Employee, Participant or Beneficiary under it. The Plan
Administrator shall interpret and apply all provisions of this
Plan in a manner which is uniformly and consistently
applicable to all Employees, Participants and Beneficiaries
under similar circumstances. The Plan Administrator shall
have all the powers necessary to accomplish his duties under
this Plan.
In addition to the duties set out elsewhere in this Plan,
the Plan Administrator's duties include, but are not limited
to, the following:
(a) to determine all questions that relate to the
eligibility of Employees to participate in or remain
Participants under this Plan;
(b) to compute and certify the amount and kind of
benefits to which any Participant is entitled;
(c) to authorize all disbursements from this Plan;
(d) to maintain all necessary records for the
administration of this Plan;
(e) to interpret the provisions of this Plan and
make and publish such rules which are not inconsistent with
the terms of this Plan;
49 49
(f) to determine the amount and type of policy to
be purchased from an Insurer for any Participant;
(g) to compute and certify to the Employer,
initially and from time to time, the sums necessary to be
contributed to the Plan;
(h) to determine the liquidity needs of this Plan
and direct its investment accordingly;
(i) to advise, consult and assist any Employee,
Participant or Beneficiary with regard to any rights, benefits
and elections available under this Plan.
The Plan Administrator also shall be responsible
for the preparation and filing of such information and reports
as may be required by law.
The Plan Administrator must furnish to each Participant
covered under the Plan and to each Beneficiary who is entitled
to receive benefits under the Plan such information and
reports as may be required by law.
The Plan Administrator shall make copies of the Plan
description and the latest annual report and any bargaining
agreement, trust agreement, policies or other instruments
under which this Plan was established or is operated available
for examination by any Employee, Participant or Beneficiary in
the principal office of the Employer or Plan Administrator and
such other places as may be necessary to make available all
pertinent information to all Participants.
The Plan Administrator may request such variances,
extensions or exemptions for this Plan as may be available
under this Plan when he determines it to be in the best
interest of the Participants and their Beneficiaries.
13.03 As a named fiduciary, the Plan Administrator may
engage agents to assist him in carrying out his functions.
If there is an administrative committee, its
members are expressly authorized to allocate fiduciary
responsibilities to named persons or parties, provided such
allocation or delegation is evidenced in writing.
13.04 The necessary expenses to administer this Plan
shall be borne by the Employer and shall be reimbursed to this
Plan. These expenses include, but are not limited to, those
involved in retaining necessary professional assistance from
an attorney, accountant, actuary or investment advisor. The
50 50
Employer shall furnish the Plan Administrator with such
clerical and other assistance as is necessary in the
performance of his duties. Nothing shall prevent the Plan
Administrator from receiving reasonable compensation for
services rendered in administering this Plan, provided the
Plan Administrator is not a full-time Employee of the Employer
creating this Plan.
13.05 The Employer shall supply full and timely
information to the Plan Administrator to enable him to perform
his functions. Such information includes the Compensation of
all Participants, their continuous regular employment, their
retirement, death, disability or termination of employment and
all other pertinent facts that the Plan Administrator may
require. The Plan Administrator is entitled to rely on such
information as is supplied by the Employer and shall have no
duty or responsibility to verify such information.
13.06 If the Plan Administrator is an administrative
committee, all acts and decisions of the administrative
committee shall be by a vote of the majority of them;
provided, however, that the signature of any member of the
administrative committee on any contract or other document
shall be sufficient evidence to any party that such contract
or document is valid and in accordance with the terms of this
Plan.
13.07 The Plan Administrator, or any member of the
administrative committee, may resign at any time. He shall
deliver to the Employer a written notice of resignation to
take effect at a date specified therein, which shall not be
less than thirty (30) days after the delivery of the notice,
unless such notice shall be waived.
The Employer may remove the Plan Administrator,
with or without cause, by delivery of a written notice of
removal to take effect at a date specified therein, which
shall not be less than thirty (30) days after the delivery of
the notice, unless such notice shall be waived.
Upon such resignation or removal, the Employer
shall promptly name a successor Plan Administrator who must
signify his acceptance of this position in writing. In the
event no successor is appointed, the Employer will function as
the administrator until a Plan Administrator has been
designated and has accepted such appointment.
13.08 No Insurer or party who had previous dealings with
the Plan Administrator or administrative committee shall be
chargeable with the knowledge of the appointment of a new Plan
51 51
Administrator or a change in the signature requirement to bind
the committee until the Insurer or other party is furnished
with a notice of such change at its home office. Until then,
the Insurer or other party is fully protected in relying upon
any action taken or signature presented in accordance with the
information previously received.
13.09 A fiduciary is any person who exercises any
discretionary authority or discretionary control respecting
the management or disposition of Plan assets, renders any
investment advice for a fee or other compensation, or
exercises any discretionary authority or responsibility for
Plan administration.
13.10 Each fiduciary of this Plan shall discharge his
duties solely in the interest of the Participants and their
Beneficiaries and for the purpose of providing benefits to the
Participants and their Beneficiaries and defraying reasonable
expenses of administering this Plan. Each fiduciary shall act
with the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent man acting in a
like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like
aims. Such conduct must be in accordance with the documents
and instruments which govern this Plan insofar as such
documents and instruments are consistent with this standard.
SECTION XIV
PROVISIONS RELATING TO THE INSURER
14.01 The Insurer may rely on any instrument executed by
the Employer, Plan Administrator, Employee, Participant or
Beneficiary as conclusive evidence of any of the matters
mentioned in this Plan with respect to which they may act and
the Insurer shall be fully protected in taking, permitting or
omitting any action on the faith thereof and shall incur no
liability or responsibility for doing so.
14.02 The Insurer shall not be required to take or
permit any action contrary to the provisions of its policy nor
be bound to allow any benefit or privilege to any person
interested in any policy it has issued which is not provided
for in such policy. The obligations of the Insurer shall be
determined solely by the terms and provisions of its policy
and of any other agreements in writing entered into by the
Insurer. Only policies that conform to the provisions of the
Plan will be issued by the Plan.
52 52
14.03 Until notice of any amendment of the Adoption
Agreement or Plan or termination of this Plan or change in
Plan Administrator has been received by the Insurer at its
home office, the Insurer shall be fully protected in assuming
that the Adoption Agreement or Plan has not been amended, that
this Plan has not been terminated and that the Plan
Administrator has not been changed in dealing with any party
acting for the Employer according to the latest information
received by the Insurer at its home office.
SECTION XV
MISCELLANEOUS
15.01 Neither the establishment of this Plan nor any
modification of it, nor the creation of any fund or account,
nor the payment of any benefits, shall be construed as giving
any legal or equitable right to any Participant or Beneficiary
or other person against the Employer, its Employees and the
Plan Administrator, except as provided herein. Participation
in this Plan shall not give any Participant the right to be
retained in the employ of the Employer, the Employer reserving
the right to discharge any Employee at any time with or
without cause, and any Employee so discharged shall have only
such rights or interests in this Plan as may be specifically
provided for herein.
15.02 Words used herein in the masculine gender shall be
read and construed as though they were also used in the
feminine gender in all cases where they would so apply. Words
used herein in the singular form shall be read and construed
as though they were also used in the plural form in all cases
where they would so apply.
15.03 The validity, construction and administration of
this Plan shall be determined according to the laws of the
state of domicile of the Employer's business and of the United
States of America.
15.04 This Plan shall be binding upon the Beneficiary
and the heirs, executors, administrators, distributees and
assigns of each Participant.
15.05 In addition to the specific procedures set out in
this Plan, claims for benefits under this Plan may be filed
with the Plan Administrator. These claims may be either oral
or in writing. They shall set forth the basis for the claim,
authorize the Plan Administrator to investigate the validity
of the claim, and take the steps necessary to facilitate the
53 53
payment of any benefits to which the claimant may be entitled
under this Plan. If for any reason a claim is wholly or
partially denied, the claimant shall be provided with a
written statement, prepared in a manner calculated to be
understood by the claimant, which sets forth the specific
reasons for the denial, specific references to the pertinent
Plan provisions on which the denial is based, a description of
any additional material or information necessary for the
claimant to perfect the claim and an explanation of why such
material or information is necessary and an explanation of the
right of appeal of the claim. If a claim is wholly or
partially denied, the claimant shall be entitled, either in
his own name or through his duly authorized representative, to
request a review upon written notice to the Plan
Administrator, to review pertinent documents and to submit
issues and comments in writing. This appeal shall be made
within ninety (90) days after the claimant receives written
notification of the claim denial. The Plan Administrator
shall promptly review such appeal and shall, within sixty (60)
days after receipt of an appeal, issue a decision in writing
to the claimant. This decision shall be in writing in a
manner calculated to be understood by the claimant and shall
include specific reasons for the decision and specific
references to the pertinent Plan provisions on which the
decision is based.
15.06 No merger of or consolidation with, or transfer of
assets or liabilities of this Plan and Custodial Account to
any other plan shall be permitted unless each Participant
would receive a benefit immediately after such merger,
consolidation or transfer, if the Plan then terminated, which
is equal to or greater than the benefit he would have received
immediately before such merger, transfer or consolidation, if
the Plan then terminated.
15.07 No party to this Plan shall engage in any
transactions with a disqualified person which are not in
accordance with Code section 4975.
15.08 In the event of a conflict between the provisions
of this Plan and any policy issued hereunder, the provisions
of the Plan shall control.
15.09 Any annuity policy issued under this Plan and
distributed to a Participant must contain a provision that it
will be nontransferable when distributed.
15.10 Assets must be valued at least annually, at their
fair market value. The annual asset valuation date shall be
December 31 of each year. As of such date the respective
54 54
accounts of the Participants must be adjusted to reflect any
increase or decrease in the fair market value of account
assets since the previous valuation date, and to reflect any
earnings of the account.
15.11 If the Plan of a participating Employer fails to
retain its qualified status, the Plan will no longer be
considered as a prototype plan.
SECTION XVI
POWERS OF THE CUSTODIAN
16.01 The Custodian shall have all powers necessary for
the performance of its duties as specified in this Section
XVI.
16.02 The Employer has appointed Rushmore Trust &
Savings FSB as Custodian of the Plan.
16.03 Acts and decisions of the Custodian shall be by
its sole act and decision. Any authorized officer or employee
of the Custodian may sign documents or other such matters on
behalf of the Custodian.
16.04 The Employer agrees to pay the routine
administration expenses of the Plan and such other expenses
and compensation to the Custodian and Administrator as may be
agreed upon, in writing, from time to time, by them with the
Employer. However, the Custodian may charge the Plan for such
expenses until paid by the Employer.
16.05 The Custodian shall open and maintain a separate
Custodial Account on behalf of each adopting Employer and
shall certify to each Employer such establishment as soon as
possible from receipt date of usual Employer contributions.
16.06 The Custodian shall accept and hold in the
Custodial Account such contributions on behalf of the Employer
and Participants as it may receive from time to time from the
Employer in accordance with the provisions of the Plan. The
Custodian shall not be responsible for the collection of any
contributions under the Plan nor shall it have any obligation
to verify the allowability of such contributions under the
Plan. The Custodian may rely solely on the representatives of
the Administrator with respect to the allowability of any
contributions under the Plan.
55 55
16.07 The amount of each contribution credited to the
Custodial Account shall be applied to the purchase of full and
fractional shares of the Funds, at the price and the manner in
which such shares are then being publicly offered or life
insurance policies, if applicable. Such share purchases shall
be made on the business day next succeeding receipt of the
contributions provided it is remitted in cash and accompanied
by the information prescribed in the Plan. All dividends and
capital gain distributions received on the shares held in each
Participant's Custodial Account shall be reinvested in such
shares which shall be credited to such Participant's Custodial
Account. If any distribution declared may be received at the
election of the shareholder in additional shares or in cash,
the Custodian shall receive such distribution only in
additional shares. All shares acquired hereunder shall be
held in the Custodial Account until distributed in accordance
with the provisions of the Plan.
At any time and from time to time, the Employer may
direct the Custodian to redeem part or all of the shares held
in the Custodial Account and apply the payment with respect to
any such redemption to the purchases of such other shares of
the Funds as the Employer may select. The Custodial Account
will be adjusted to reflect each such redemption and purchase.
If applicable, such redemptions and purchases of shares of the
Funds shall be made in accordance with the Exchange Privilege
described in the current prospectus(es) relating to those
shares purchased as approved by the Securities and Exchange
Commission.
16.08 Distributions shall be made on the written
directions of the Administrator to such person, in such
manner, in such amounts, and for such purposes, as may be
specified in such directions. In no event, however, shall it
be possible for any part of the assets of the Custodial
Account to be used for or diverted for purposes other than for
the exclusive benefit of Participants in the Plan and their
Beneficiaries. In connection with the making of any
distributions, the Custodian may rely solely on the accuracy
of all facts and representations supplied or made at any time
by the Administrator, including any written designation of a
Beneficiary.
16.09 The Custodian shall deliver or cause to be
delivered to the Employers all notices, prospectuses,
financial statements, and such other material relating to the
shares held hereunder.
16.10 The Custodian shall keep accurate and detailed
records of all contributions, receipts, investments,
56 56
distributions, disbursements, and all other transactions
hereunder. Within ninety (90) days from the close of each
Plan Year (or after the Custodian's resignation or removal as
provided herein) the Custodian shall file with the
Administrator, a written report reflecting all transactions
effected by it during the Plan Year or such other appropriate
period. In the absence of the filing in writing with the
Custodian by the Administrator of exceptions or objections to
any report within sixty (60) days after mailing such report,
the Administrator shall be deemed to have approved such report
and the Custodian shall be released, relieved, and discharged
from all liability to anyone with respect to all matters set
forth in such report.
The Administrator shall furnish to the Custodian and the
Custodian shall furnish to the Administrator, such information
relevant to the Plan and Custodial Account as may be required
under the Code.
16.11 The Custodian shall be under no duties whatsoever
except such duties as are specifically set forth in the Plan
and the Adoption Agreement and no implied covenant or
obligation shall be read into this Plan or Adoption Agreement
against the Custodian. The Custodian shall have no obligation
to make payments beyond the period determined in accordance
with Section III of the Plan. In performance of its duties
the Custodian shall be liable for its own negligence or
willful misconduct. The Employer shall have the sole
authority and responsibility for the enforcement or defense of
the terms and conditions of this Plan. The Custodian shall
not be required to prosecute, defend, or respond to any action
or any judicial proceeding relating to the Custodial Account
unless it has previously received indemnification satisfactory
to it in form and substance. The Employer shall, at all
times, fully indemnify and save harmless the Custodian from
any liability which may arise hereunder except liability
arising from the negligence or willful misconduct of the
Custodian.
At no time shall the Custodian engage in any prohibited
transactions specified in Code section 4975.
16.12 The Custodian may resign at any time upon thirty
(30) days notice in writing to the Employer, and may be
removed by the Employer at any time upon thirty (30) days'
notice in writing to the Custodian. Upon such resignation or
removal, the Employer shall appoint a successor Custodian,
which shall be a "bank" as defined in Code section 401(d)(1).
Upon receipt by the Custodian of written acceptance of such
appointment by the successor Xxxxxxxxx, the Custodian shall
57 57
transfer and pay over to such successor the assets of the
Custodial Account and all records pertaining thereto. The
Custodian is authorized, however, to reserve such sum of money
as it may deem advisable for payment of all its fees,
compensation, costs, and expenses; or for payment of any other
liabilities constituting a charge on or against the assets of
the Custodial Account or on or against the Custodian, with any
balance of such reserve remaining after the payment of all
such items to be paid over to the successor Custodian. The
successor Custodian shall hold the assets paid over to it
under the same terms as contained herein. If, within thirty
(30) days after the Custodian's resignation or removal, the
Employer has not appointed a successor Xxxxxxxxx which has
accepted such appointment, the Custodian shall appoint such
successor itself.
SECTION XVII
TRUSTEE, TRUST AND TRUST AGREEMENT
17.01 The Employer has entered into a Trust Agreement
with the Trustee. The Trust Agreement is incorporated by
reference as a part of the Plan, and the rights of all persons
under the Plan are subject to the terms of the Trust
Agreement. The Trust Agreement provides for the investment
and reinvestment of Plan assets in the Custodial Accounts, the
responsibilities and immunities of the Trustee, the removal of
the Trustee and appointment of a successor, the accounting of
the Trustee and the disbursement of the Funds held in the
Custodial Account.
17.02 The Trustee shall hold in trust and administer the
Trust subject to all the terms and conditions of this Plan and
of the Trust Agreement described in Section 17.01. The
Trustee shall not be responsible for the administration of the
Plan. The Trustee's responsibility shall be limited to
supervising the Custodian in the maintenance of the Custodial
Account. The Trustee shall not be responsible for the
correctness of any payment or disbursement or action if made
in accordance with the instructions of the Administrator.
17.03 If, at any time, the Employer or Administrator
shall be incapable, for any reason, of giving instructions or
authorizations to the Trustee or Custodian, as herein
provided, the Trustee may act, without such directions,
instructions or authorizations, as it, in its discretion,
shall deem appropriate and advisable under the circumstances
for carrying out the provisions of the Plan.
58 58
SECTION XVIII
NON-ALIENATION AND EMPLOYEE RIGHTS
18.01 None of the payments, benefits or rights of any
Participant shall be subject to any claim of any creditor of
such Participant and, in particular, to the fullest extent
permitted by law, shall be free from attachment, garnishment,
Trustee's process, or any other legal or equitable process
available to any creditor of such Participant. No Participant
shall have the right to alienate, anticipate, commute, pledge,
encumber or assign any of the benefits or payments which he
may expect to receive, contingently or otherwise, under this
Plan, except the right to designate a beneficiary or
beneficiaries as hereinabove provided. This Section 18.1
shall not preclude payment of Trust assets in accordance with
a Qualified Domestic Relations Order as detailed in Sections
18.2 through 18.6 of the Plan.
18.02 A Qualified Domestic Relations Order must specify
(1) the name and last known mailing address of the Participant
and the name and mailing address of each Alternate Payee
covered by the order, (2) the amount or percentage of the
Participant's benefits to be paid by the Plan to each
Alternate Payee, or the manner in which such amount or
percentage is to be determined, (3) the number of payments or
the period to which the order applies, and (4) each plan to
which the order relates. The order must not alter the amount
or form of Plan benefits.
18.03 If a Qualified Domestic Relations Order provides
that payments are to be paid to an Alternate Payee on or after
the date on which the Participant attains the Earliest
Retirement Age, such payments are to be computed as if the
Participant had retired on the date on which the benefit
payments commence under the order, taking the present value of
the benefits actually accrued at an interest rate of five
percent (5%) per annum. For purposes of this Section,
"Earliest Retirement Age" is the earliest date on which the
Participant could elect to receive retirement benefits.
18.04 The Administrator shall notify the Participant and
Alternate Payee of receipt of a Domestic Relations Order and
of the Plan's procedure for determining whether the order is
qualified. The Plan Administrator shall make a determination
as to whether the order is qualified and shall notify the
Participant and Alternate Payee of such determination, such
notice to be sent to the address specified in the order or, if
the order fails to specify an address, to the last address of
the Participant or Alternate Payee known to the Plan
59 59
Administrator. The Plan Administrator shall develop
procedures to determine the qualification of the order, which
procedures are to be in writing. The procedures shall provide
for prompt notification of each person specified in the order
as being entitled to payment of benefits under the Plan. The
Alternate Payee may designate a representative for receipt of
copies of notices sent to the Alternate Payee with respect to
the Domestic Relations Order.
Prior to making a determination as to whether the
order is qualified, the Plan Administrator shall segregate
into a separate account in the Plan, or in an escrow account,
the amounts that would have been payable to the Alternate
Payee during such period if the order had been determined to
be a Qualified Domestic Relations Order.
18.05 If the order is determined to be a Qualified
Domestic Relations Order within eighteen (18) months after the
deferral of benefits, the Plan Administrator shall pay the
segregated amounts (plus interest) to the persons entitled to
receive them. If a determination is not made within the 18-
month period, or if the order is determined not to be a
Qualified Domestic Relations Order, the segregated amounts
(plus interest) shall be paid to the persons who would have
received the amounts if the order had not been issued.
Determinations made after the expiration of the 18-month
period are applied prospectively only.
18.06 The order shall not require (1) the Plan to
provide any type or form of benefit not otherwise provided
under the Plan, (2) the Plan to provide increased benefits,
and (3) the payment of benefits to an Alternate Payee that are
required to be paid to another Alternate Payee under another
order previously determined to be a Qualified Domestic
Relations Order.
18.07 Neither the establishment of the Plan, nor any
modification thereof, nor the creation of any fund, trust or
account, nor the payment of any benefit shall be construed as
giving any Participant or Employee, or any other person, any
rights against the Employer, the Custodian, or the
Administrator, unless such right shall be specifically
provided for in the Custodial Agreement or the Plan or
conferred by direct action of the Administrator or the
Employer in accordance with the terms and provisions of the
Plan or as giving any Participant or Employee the right to be
retained in the employ of the Employer. All Participants and
other Employees shall remain subject to discharge to the same
extent as if the Plan had never been adopted.
60 60
SECTION XIX
TOP-HEAVY PROVISIONS
19.01 If this Plan is or becomes top-heavy as defined in
Section 19.03(b) below, the provisions of this Section XIX
will supersede any conflicting provisions in the Plan or the
Adoption Agreement.
19.02 Minimum Allocation Rules.
(a) For years in which the Plan is Top Heavy,
except as otherwise provided in (b) and (c), below, the
Employer Contributions, Matching 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 Code section 401, the largest percentage of Employer
Contributions, Matching Contributions and forfeitures, as a
percentage 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. 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 (i) the
Participant's failure to complete 1,000 Hours of Service, or
any equivalent provided in the Plan, (ii) the Participant's
failure to make mandatory Employee contributions to the Plan,
or (iii) Compensation less than a stated amount.
(b) For purposes of computing the minimum
allocation, Compensation shall mean Compensation as defined in
Section 7.14 of the Plan.
(c) The provision in (a) above, shall not apply
to any Participant who is not employed by the Employer on the
last day of the Plan Year.
(d) The provision in (a) above, shall not apply
to any Participant to the extent the Participant is covered
under any 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.
(e) In the event that the Employer has selected a
contribution/allocation formula which takes advantage of the
permitted disparity rules of Code section 401(1), the minimum
61 61
allocation described in subsection (a), above, shall not be
less than 3% of each Participant's Compensation.
19.03 For the purpose of this Section XVIII, the
following words and phrases shall have the following meanings:
(a) Key Employee. A "Key Employee" is any
Employee or former Employee (and the beneficiaries of such an
Employee) who at any time during the termination period was an
officer of the Employer or an Affiliate having an annual
Compensation greater than 50 percent of the amount in effect
under Code section 415(b)(1)(A), an owner (or considered an
owner under Code section 32) of one of the ten largest
interests in the Employer and its Affiliates if such
individual's Compensation exceeds the dollar limitation under
Code section 415(c)(1)(A), a 5-percent Owner of the Employer
and its Affiliates, or a 1-percent owner of the Employer and
its Affiliates who has an annual Compensation of more than
$150,000. Annual compensation means Compensation as defined
in Code section 415(c)(3), but including amounts contributed
by the Employer pursuant to a salary reduction agreement which
are excludable from the Employee's gross income under Code
section 125, 402(a)(8), 402(h), or 403(b). The determination
period of the Plan is the Plan year containing the
determination date and the four preceding Plan Years. The
determination of who is a Key Employee will be made by the
Administrator in accordance with Code section 416(i)(1) and
the regulations thereunder.
(b) Top-Heavy Plan. For any Plan Year beginning
after December 31, 1983, this Plan is top-heavy if any of the
following conditions exists:
(i) If the top-heavy ratio for this Plan
exceeds 60 percent and this Plan is not part of any
required aggregation group or permissive aggregation
group of plans.
(ii) If this Plan is a part of a required
aggregation group of plans, but is not part of a
permissive aggregation group and the top-heavy ratio for
the group of plans exceeds 60 percent, or
(iii) If this Plan is a part of a required
aggregation group of plans and part of a permissive
aggregation group and the top-heavy ratio for the
permissive aggregation group excess 60 percent.
62 62
(c) Top-Heavy Ratio.
(i) 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 five
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 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 five 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 five
year period ending on the Determination Date(s)), both
computed in accordance with Code section 416 and the
regulations thereunder. Both the numerator and
denominator of the Top Heavy Ratio are increased to
reflect any contribution actually made as of the
Determination Date, or which is required to be taken into
account on that date under Code section 416 and
regulations thereunder.
(ii) 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 five 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 (i), above, and the present
value of accrued benefits under this 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 (i) above, and the present
value of accrued benefits under the defined benefit plan
or plans for all Participants as of the Determination
Date(s), all determined in accordance with Code section
416 and the regulations thereunder. The accrued benefits
under a defined benefit plan in both the numerator and
denominator of the Top Heavy Ratio are increased for any
distribution of an accrued benefit made in the five year
period ending on the Determination Date(s).
63 63
(iii) For purpose of (i) and (ii), 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 twelve
month period ending on the Determination Date, except as
provided in Code section 416 and the regulations
thereunder for the first and second plan years of a
defined benefit plan. The Account balances and accrued
benefits of a Participant (1) who is not a Key Employee
but who was a Key Employee in a prior year, or (2) who
has not been credited with at least one Hour of Service
with any Employer maintaining the Plan at any time during
the five year period ending on the Determination Date
will be disregarded. The calculation of the Top Heavy
Ratio, and the extent to which distributions, rollovers,
and transfers are taken into account will be made in
accordance with Code section 416 and the regulations
thereunder. 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 the Participant other than a Key
Employee shall be determined under (a) the method, if any,
that uniformly applies for accrual purposes under all defined
benefit plans maintained by the Employer, or (b) if there is
no such method, as if such benefit accrued not more rapidly
than the slowest accrual rate permitted under the fractional
rule of Code section 411(b)(1)(C).
(d) Permissive Aggregation Group. The Required
Aggregation Group of plans plus any other plan or plans of the
Employer which, when considered as a group with the required
aggregation group, would continue to satisfy the requirements
of the Code sections 401(a)(4) and 410.
(e) Required Aggregation Group. (i) 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
terminated, and (ii) any other qualified plan of the Employer
which enables a plan described in (i) to meet the requirements
of Code sections 401(a)(4) or 410.
(f) 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.
64 64
(g) Valuation Date. The date designated in the
Adoption Agreement as of which Account balances or accrued
benefits are valued for purposes of calculating the top-heavy
ratio.
(h) Present Value. Present value shall be based
only on the interest and mortality rates specified in the
Adoption Agreement.
SECTION XX
CASH OR DEFERRED ARRANGEMENT
Section I: Purpose and Effective Date
1.1. Purpose. If so elected in the Adoption Agreement,
it is the intention of the Employer to incorporate a Cash or
Deferred Arrangement (CODA), which satisfies the requirements
of Code section 401(k), as part of its profit-sharing Plan.
1.2. Effective Date. The CODA is effective upon
adoption by the adopting Employer subject to the limitations
specified in section 1.1 of the Adoption Agreement. However,
under no circumstances may a salary reduction agreement or
other deferral mechanism be adopted retroactively.
Section II: Definitions
The following definitions shall apply for purposes of this
CODA only:
2.1. "Actual Deferral Percentage" shall mean the ratio
(expressed as a percentage) of Elective Deferrals and
Qualified Non-elective Contributions on behalf of a
Participant for the Plan Year to the Participant's
Compensation for the Plan Year. The Actual Deferral
Percentage of an employee who is eligible to, but does not
make an Elective Deferral, and who does not receive an
allocation of a Qualified Non-elective Contribution, is zero.
2.2. "Adjustment Factor" shall mean the cost of living
factor prescribed by the Secretary of the Treasury under Code
section 415(d) for years beginning after December 31, 1987, as
applied to such items and in such manner as the Secretary
shall provide.
2.3. "Affiliated Employer" shall mean any corporation
which is a member of a controlled group of corporations (as
defined in Code section 414(b)) which includes the Employer;
65 65
any trade or business (whether or not incorporated) which is
under common control (as defined in Code section 414(c)) with
the Employer; any organization (whether or not incorporated)
which is a member of an affiliated service group (as defined
in Code section 414(m)) which includes the Employer; and any
other entity required to be aggregated with the Employer
pursuant to regulations under Code section 414(o).
2.4. "Average Actual Deferral Percentage" shall mean
the average (expressed as a percentage) of the Actual Deferral
Percentages of the Participants in a group.
2.5. "Compensation" shall mean, unless otherwise
elected in the Adoption Agreement, compensation paid by the
Employer to the Participant during the Plan Year which is
required to be reported as wages on the Participant's Form W-
2, or which, in the case of a self-employed individual,
constitutes payment for services includible in the self-
employed individual's gross income. This definition shall
apply solely for purposes of determining the Actual Deferral
Percentage under CODA section 3.6. Compensation shall not
exceed $200,000 for any Plan Year (or such greater amount as
subsequently determined under Code section 401(a)(17)).
2.6. "Elective Deferrals" shall mean contributions made
to the Plan during the Plan Year by the Employer, at the
election of the Participant, in lieu of cash compensation and
shall include contributions that are made pursuant to a salary
reduction agreement. 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
any qualified CODA as described in Code section 401(k), any
simplified employee pension cash or deferred arrangement as
described in Code section 402(h)(1)(B), any eligible deferred
compensation Plan under Code section 457, any Plan as
described under Code section 501(c)(18), and any employer
contributions made on behalf of a Participant for the purchase
of an annuity contract under Code section 403(b) pursuant to a
salary reduction agreement. Such contributions must be
nonforfeitable when made and distributable only as specified
in section 5.1 below.
2.7. "Employee" shall mean employees of the Employer
and shall include leased employees within the meaning of Code
section 414(n)(2). Notwithstanding the foregoing, if such
leased employees constitute less than twenty (20) percent of
the Employer's Non-highly Compensated work force within the
meaning of Code section 414(n)(5)(C)(ii), the term "Employee"
shall not include those leased employees covered by a Plan
described in Code section 414(n)(5)(B) unless otherwise
66 66
provided by the terms of this Plan other than this CODA.
2.8. "Employer" shall mean the entity that establishes
or maintains the Plan, any successor to such entity, and any
Affiliated Employer.
2.9. "Excess Contributions" shall mean, with respect to
any Plan Year, the aggregate amount of Elective Deferrals and
Qualified Non-elective Contributions actually paid over to the
trust on behalf of Highly Compensated Employees for such Plan
Year, over the maximum amount of such contributions permitted
under CODA section 3.6 below (determined by reducing
contributions made on behalf of Highly Compensated Employees
in order of Actual Deferral Percentages, beginning with the
highest of such percentages.)
2.10. "Excess Elective Deferrals" shall mean the amount
of Elective Deferrals for a calendar year that the Participant
allocates to this Plan pursuant to the claim procedure set
forth in CODA section 3.5(a)(1).
2.11. "Family Member" shall mean an individual described
in Code section 414(q)(6)(B).
2.12. "Highly Compensated Employee" shall mean 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: (i) received
compensation from the Employer in excess of $75,000 (as
adjusted pursuant to Code section 415(d)); (ii) received
compensation from the Employer in excess of $50,000 (as
adjusted pursuant to Code section 415(d)) and was a member of
the top-paid group for such year; or (iii) was an officer of
the Employer and received compensation during such year that
is greater than fifty percent (50%) of the dollar limitation
in effect under Code section 415(b)(1)(A). The term highly
compensated employee also includes: (i) 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 (ii) Employees who are five percent
(5%) owners at any time during the look-back year or
determination year.
A Highly Compensated Former Employee includes any Employee who
separated from service (or was deemed to have separated) prior
67 67
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 five percent (5%) owner who
is an active or former employee or a Highly Compensated
Employee who is one of the ten (10) most highly compensated
employees ranked on the basis of compensation paid by the
Employer during such year, then the family member and the five
percent (5%) owner or top-ten highly compensated employee
shall be aggregated. In such case, the family member and the
five percent (5%) owner or top-ten 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 five percent (5%) owner or top-ten Highly
Compensated Employee. For purposes of this section, family
member includes the spouse, lineal ancestors and descendants
of the employee or former employee and the spouses of such
lineal ancestor 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 Code section 414(q) and the regulations thereunder.
2.13. "Matching Contributions" shall mean Employer
Contributions made under CODA section VI.
2.14. "Non-highly Compensated Employee" shall mean an
Employee of the Employer who is neither a Highly Compensated
Employee nor a Family Member.
2.15. "Participant" shall mean any Employee of the
Employer who has met the eligibility and participation
requirements of the Plan.
2.16. "Qualified Non-elective Contributions" shall mean
contributions made by the Employer and allocated to
Participant's 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 as
specified in CODA section 5.1.
Section III: Elective Deferrals
68 68
3.1. Allocation of Deferrals. The Employer shall
contribute and allocate to each Participant's Elective
Deferrals account an amount equal to the amount of a
Participant's Elective Deferrals.
3.2. Elective Deferrals Pursuant to a Salary Reduction
Agreement. To the extent provided in the Adoption Agreement,
a Participant may elect to have Elective Deferrals made under
this Plan. Elective Deferrals shall include both single-sum
and continuing contributions made pursuant to a salary
reduction agreement.
(a) Commencement of Elective Deferrals. A
Participant shall be afforded a reasonable period at least
once each calendar year, as specified in section 1.3B.1(a) of
the Adoption Agreement, to elect to commence Elective
Deferrals. Such election shall not become effective before
the time specified in section 1.3B.1(a) of the Adoption
Agreement.
(b) Modification and Termination of Elective
Deferrals. A Participant's election to commence Elective
Deferrals shall remain in effect until modified or terminated.
A Participant shall be afforded a reasonable period at least
once each calendar quarter, as specified in section 1.3B.1(b)
of the Adoption Agreement, to modify the amount or frequency
of his or her Elective Deferrals. A Participant may terminate
his or her election to make Elective Deferrals at any time.
3.3. Cash Bonuses. To the extent provided in section
1.3B.2 of the Adoption Agreement, a Participant may also base
Elective Deferrals on cash bonuses that, at the Participant's
election, may be contributed to the CODA or received by the
Participant in cash.
(a) Time and Manner of Election. A Participant
shall be afforded a reasonable period, as provided in section
1.3B.2 of the Adoption Agreement, to elect to defer amounts
described in section 1.3C.3 above to the CODA. Such election
shall not become effective before the time specified in
section 1.3B.2(a) of the Adoption Agreement.
3.4. Maximum Amount of Elective Deferrals. A
Participant's Elective Deferrals are subject to any
limitations imposed in section 1.3B.1 of the Adoption
Agreement and any further limitations under the Plan. No
Participant shall be permitted to have Elective Deferrals made
under this Plan or any other qualified Plan maintained by the
Employer, during any calendar year in excess of $7,000,
multiplied by the Adjustment Factor. Other dollar limitations
69 69
may apply under Code section 402(g) to the extent that a
Participant makes Elective Deferrals to arrangements other
than qualified CODAs (see also Code sections 402(h)(1)(B),
403(b), 457, and 501(c)(18)).
3.5. Distribution of Excess Elective Deferrals.
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 each
April 15 to Participants to whose accounts Excess Elective
Deferrals were allocated for the preceding calendar year and
who claim Excess Elective Deferrals for such calendar year.
Excess Elective Deferrals shall be treated as Annual Additions
under the Plan.
(a) (1) The Participant's claim shall be in
writing; shall be submitted to the Plan administrator not
later than the date elected in section 1.3G.1 of the Adoption
Agreement; shall specify the amount of the Participant's
Excess Elective Deferral for the preceding calendar year; and
shall be accompanied by the Participant's written statement
that if such amounts are not distributed, such Excess Elective
Deferrals, when added to amounts deferred under other Plans or
arrangements described in Code sections 401(i), 408(k), or
403(b), will exceed the limit imposed on the Participant by
Code section 402(g) for the year in which the deferral
occurred.
(2) Determination of Income or Loss. Excess
Elective Deferrals shall be adjusted for any income or loss up
to the last day of the Plan Year. The income or loss
allocable to Excess Elective Deferrals is the income or loss
allocable to the Participant's Elective Deferral account for
the Participant's taxable year for which the Excess Elective
Deferrals occurred multiplied by a fraction, the numerator of
which is the Participant's Excess Elective Deferrals for such
taxable year and the denominator of which is the Participant's
account balance attributable to Elective Deferrals as of the
end of the taxable year without regard to any income or loss
occurring during such taxable year.
The amount of Excess Elective Deferrals that may be
distributed with respect to a Participant shall be reduced by
any Excess Contributions previously distributed or
recharacterized with respect to such Participant for the Plan
Year beginning with or within such taxable year. In no event
may the amount distributed exceed the Participant's total
Elective Deferrals for such taxable year.
70 70
3.6. Average Actual Deferral Percentage. The Average
Actual Deferral Percentage for Highly Compensated Employees
for each Plan Year and the Average Actual Deferral Percentage
for Non-highly Compensated Employees for the same Plan Year
must satisfy one of the following tests:
(a) The Average Actual Deferral Percentage for
Participants who are Highly Compensated Employees for the Plan
Year shall not exceed the Average Actual Deferral Percentage
for Participants who are Non-highly Compensated Employees for
the Plan Year multiplied by 1.25; or
(b) The Average Actual Deferral Percentage for
Participants who are Highly Compensated Employees for the Plan
Year shall not exceed the Average Actual Deferral Percentage
for Participants who are Non-highly Compensated Employees for
the Plan Year multiplied by 2.0, Provided that the Average
Actual Deferral Percentage for Participants who are Highly
Compensated Employees does not exceed the Average Actual
Deferral Percentage for Participants who are Non-highly
Compensated Employees by more than two (2) percentage points
or such lesser amount as the Secretary of the Treasury shall
prescribe to prevent the multiple use of this alternative
limitation with respect to any Highly Compensated Employee.
3.7. Special Rules.
(a) The Actual Deferral Percentage for any
Participant who is a Highly Compensated Employee for the Plan
Year and who is eligible to have Elective Deferrals or
Qualified Non-elective Contributions allocated to his or her
account under two or more arrangements described in Code
section 401(k) that are maintained by the Employer shall be
determined as if such Elective Deferrals and Qualified Non-
elective Contributions 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 Code section 401(k).
(b) For purposes of determining the Actual
Deferral Percentage of a Participant who is a five percent
(5%) owner or one of the ten most highly-paid Highly
Compensated Employee, the Elective Deferrals, Qualified Non-
elective Contributions, and Compensation of such Participant
shall include the Elective Deferrals, Qualified Non-elective
Contributions, and Compensation of Family Members as defined
71 71
in Code section 414(q)(6)). Family Members, with respect to
Highly Compensated Employees, shall be disregarded as separate
employees in determining the Actual Deferral Percentage both
for Participants who are Non-highly Compensated Employees and
for Participants who are Highly Compensated Employees.
(c) The determination and treatment of the
Elective Deferrals, Qualified Non-elective Contributions, and
Actual Deferral Percentage of any Participant shall satisfy
such other requirements as may be prescribed by the Secretary
of the Treasury.
(d) In the event that this Plan satisfies the
requirements of Code sections 401(k), 401(a), or 410(b) only
if aggregated with one or more other plans, or if one or more
other plans satisfy the requirements of such Code sections
only if aggregated with this Plan, then this section shall be
applied by determining the Actual Deferral Percentage of the
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 Code section 401(k) only if
they have the same Plan Year.
(e) The Employer shall maintain records
sufficient to demonstrate satisfaction of the Actual Deferral
Percentage test and the amount of Qualified Non-elective
Contributions used in such test.
3.8. Notwithstanding any other provision of the Plan,
except CODA section 3.9(b), Excess Contributions, plus any
income and minus any loss allocable thereto, shall be
distributed no later than the last day of each Plan Year to
Participants to whose accounts such Excess Contributions were
allocated for the preceding Plan Year. If such excess amounts
are distributed more than 2-1/2 months after the last day of
the Plan Year in which such excess amounts arose, a ten (10)
percent excise tax will be imposed on the Employer maintaining
the Plan with respect to such amounts. Excess Contributions
(including the amounts recharacterized) shall be treated as
Annual Additions under the Plan. Such distributions shall be
made to Highly Compensated Employees on the basis of the
respective portions of the Excess Contributions attributable
to each of such employees. Excess Contributions shall be
allocated to Participants who are subject to the family member
aggregation rules of Code section 414(q)(6) in the manner
prescribed by the regulations.
(a) Determination of Income or Loss. Excess
Contributions shall be adjusted for income or loss up to the
last day of the Plan Year. The income or loss allocable to
72 72
Excess Contributions is the income or loss allocable to the
Participant's Elective Deferral account and Qualified Non-
elective Contributions account for the Plan Year for which the
Excess Contributions occurred multiplied by a fraction, the
numerator of which is the Participant's Excess Contributions
for such Plan Year and the denominator of which is the
Participant's account balances attributable to Elective
Deferrals and Qualified Non-elective Contributions as of the
end of the Plan Year without regard to any income or loss
occurring during such Plan Year; and
(b) Amounts distributed under this section shall
first be treated as distributions from the Participant's
Elective Deferral account and shall be treated as distributed
from the Participant's Qualified Non-elective Contribution
account only to the extent such Excess Contributions exceed
the balance in the Participant's Elective Deferral account.
(c) To the extent that any Excess Contributions
are not timely distributed under this CODA section 3.8, the
Employer shall be subject to the ten-percent excise tax
imposed under Code section 4979.
3.9. Qualified Non-elective Contributions.
(a) The Employer may elect to make Qualified Non-
elective Contributions under the Plan on behalf of Employees
as provided in sections 1.3C.1 and 1.3D.1 of the Adoption
Agreement.
(b) In lieu of distributing Excess Contributions
as provided in CODA sections 3.8(a)-(c) above, and to the
extent provided in sections 1.3C.1 and 1.3D.2 of the Adoption
Agreement, the Employer may make special Qualified Non-
elective Contributions on behalf of Non-highly Compensated
Employees that are sufficient to satisfy either of the Average
Actual Deferral Percentage tests. Allocations of Qualified
Non-elective Contributions to each Non-highly Compensated
Employee's account shall be made in accordance with section
1.3D.2 of the Adoption Agreement.
3.10. Separate Accounts. A Participant's accrued
benefit derived from Elective Deferrals and Qualified Non-
elective Contributions is nonforfeitable. A separate account
shall be maintained for that portion of a Participant's
accrued benefit that is attributable to Elective Deferrals and
a separate account shall be maintained for that portion of a
Participant's accrued benefit that is attributable to
Qualified Non-elective Contributions. Each separate account
shall be credited with the applicable contributions, earnings
73 73
and losses, distributions, and other applicable adjustments.
3.11. Under no circumstances may Elective Deferrals and
Qualified Non-elective Contributions be contributed and
allocated to the Trust under the Plan later than thirty (30)
days after the close of the Plan Year for which the
contributions are deemed to be made, or such other time as
provided in applicable regulations under the Code.
Section IV: Special Distribution Rules
4.1. Except as provided in section 1.3F.1 of the
Adoption Agreement, Elective Deferrals, Qualified Non-elective
Contributions and income allocable thereto are not
distributable to the Participant, or the Participant's
beneficiary or beneficiaries, in accordance with the
Participant's or beneficiary's election, before one of the
following events occurs:
(a) The Participant incurs a Permanent
Disability, terminates employment, attains age 59-1/2 or
incurs a financial hardship, as described in CODA section 4.2,
below;
(b) The Participant transfers employment to an
employer that is not related (as described in Code section
414) to the Employer and that has acquired substantially all
the assets used by the Participant's former Employer in its
trade or business;
(c) The Participant is and continues to be
employed by a corporation that was formerly a subsidiary of
the Employer and whose stock has been disposed by the Employer
to an individual or an entity which is not related (as
described in Code section 414) to the Employer; or
(d) The Plan is terminated and no other defined
contribution plan (other than an employee stock ownership
plan) is maintained by the Employer.
All distributions made under (b), (c), or (d) after March
31, 1988 must be made only in a lump sum.
4.2. If the Employer elects in the Adoption Agreement,
a Participant may request a withdrawal from the vested portion
of his Accounts (including his Elective Deferral Account) if
the Participant has incurred a financial hardship, as
described below. However, effective for all Plan Years
beginning after December 31, 1988, a Participant may not
withdraw earnings from his Elective Deferral Account and may
74 74
not make any withdrawal of his Qualified Matching
Contributions and Qualified Non-Elective Contributions. In no
event may a Participant withdraw more than the value of his
Elective Deferral Account as of the date of the hardship
distribution.
(a) A Participant will be considered to have
incurred financial hardship if he has immediate and heavy
financial needs that cannot be fulfilled through other
reasonably available financial resources of the Participant.
Immediate and heavy financial needs shall be limited to:
(i) Medical expenses described in Code
section 213(d) incurred by the Participant, the
Participant's Spouse, or any dependents of the
Participant (as defined in Code section 152) or necessary
for these persons to obtain medical care described in
Code section 213(d);
(ii) The purchase (excluding mortgage
payments) of a principal residence for the Participant;
(iii) Payment of tuition and related
educational fees for the next 12 months of post-secondary
education for the Participant or his Spouse, children or
dependents;
(iv) The need to prevent the eviction of the
Participant from his personal residence or foreclosure on
the mortgage of the Participant's principal residence; or
(v) Any other immediate and heavy financial
need approved by the Internal Revenue Service.
(b) The determination of financial hardship shall
be made by the Administrator in a uniform and non-
discriminatory manner in accordance with such standards as may
be promulgated from time to time by the Internal Revenue
Service.
(c) The Administrator may rely on the
Participant's representation that the financial needs cannot
be relieved:
(i) Through reimbursement or compensation by
insurance or otherwise;
(ii) By reasonable liquidation of
Participant's assets to the extent such liquidation would
not itself cause an immediate and heavy financial need;
75 75
(iii) By cessation of Elective Deferrals
under the Plan; or
(iv) By other distributions or non-taxable
loans from plans maintained by the Employer or by any
other employer, or by borrowing from commercial sources
on reasonable commercial terms.
(d) A Participant who receives a distribution
from the Plan due to financial hardship will be subject to the
following requirements:
(i) The distribution must not be in excess
of the amount of the immediate and heavy financial need
of the Participant, and the amount may include any
amounts necessary to pay any federal, state, or local
income taxes or penalties reasonably anticipated to
result from the distribution;
(ii) The Participant must obtain all
distributions, other than hardship withdrawals, and all
non-taxable loans currently available under all plans
maintained by the Employer or an Affiliate;
(iii) The Participant's Elective Deferrals to
this Plan and to any other plan maintained by the
Employer will be suspended for 12 months after receipt of
the withdrawal; and
(iv) The Participant may not make Elective
Deferrals to this Plan or to any other plan maintained by
the Employer for the calendar year that immediately
follows the year of the withdrawal in excess of the
$7,000 limit (as adjusted pursuant to Code section
415(d)) for the year, minus the amount of the
Participant's Elective Deferrals for the year in which
the withdrawal is made.
(e) A Participant who wishes to make a withdrawal
shall apply in writing to the Administrator, on forms provided
by the Administrator. The Participant must furnish such
information in support of his application as may be requested
by the Administrator. The Administrator shall determine the
amount, if any, of withdrawal that shall be made and may
direct distribution of as much of the Participant's vested
Account as it deems necessary to alleviate or help alleviate
the hardship.
(f) The amount of the withdrawal shall be based
upon the Participant's Account balance as of the Adjustment
76 76
Date next preceding the date of the withdrawal or, in the
discretion of the Trustee, may be based upon the Participant's
Account balance as of a valuation date as close as practicable
to the date of the withdrawal.
(g) The distribution shall be made as soon as
possible after the hardship withdrawal is approved. The
Administrator may not authorize a hardship withdrawal in
excess of the amount deemed necessary to alleviate the
hardship. All distributions permitted to be made under this
CODA section 4.2 are subject to the spousal and Participant
consent requirements (if applicable) contained in Code
sections 401(a)(11) and 417.
(h) The distribution will be made first from the
Participant's Rollover Account. Any remaining amounts will be
distributed in the following order: Voluntary Contributions
Account, Employer Contributions Account, Matching
Contributions Account and Elective Deferral Account.
Section V: Profits not Required Under the CODA
5.1. If the Employer elects, employer contributions to
the CODA may be made without regard to profits in accordance
with section 1.3A.1 of the Adoption Agreement. The Plan shall
continue to be designed to qualify as a profit-sharing Plan
for purposes of Code sections 401(a), 402, 412, and 417.
Section VI. Matching Contributions
6.1. Matching and Other Employer Contributions.
(a) If elected in the Adoption Agreement, the
Employer may make Matching Contributions to the Plan.
(b) If elected in the Adoption Agreement, the
Employer may make Qualified Matching Contributions to the
Plan.
(c) The Employer may elect to make Qualified Non-
Elective Contributions to the Plan on behalf of Employees as
provided in the Adoption Agreement. In addition, in lieu of
distributing Excess Contributions as provided in CODA section
3.8, or Excess Aggregate Contributions as provided in CODA
section 6.3, and to the extent elected by the Employer in the
Adoption Agreement, the Employer may make Qualified Non-
Elective Contributions on behalf of Non-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
77 77
Code. All Qualified Matching Contributions and Qualified Non-
Elective Contributions made by the Employer to the Plan shall
be non-forfeitable and shall be allocated to Participants'
Salary Deferral Contributions Accounts.
(d) "Qualified Matching Contributions" shall mean
Matching Contributions which are fully vested when made and
which are subject to the distribution restrictions contained
in CODA section 4.1.
(e) "Qualified Non-Elective Contributions" shall mean
contributions (other than Matching Contributions or Qualified
Matching Contributions) made by the Employer and allocated to
Participant Accounts that the Participants may not elect to
receive in cash until distributed from the Plan; that are non-
forfeitable when made; and that are subject to the same
distribution restrictions as provided in CODA section 4.1.
6.2. Average Contribution Percentage Testing. Matching
Contributions must satisfy the Average Contribution Percentage
(hereinafter "ACP") test of Code section 401(m).
(a) The ACP for Participants who are Highly
Compensated Employees for each Plan Year and the ACP for
Participants who are Non-Highly Compensated Employees for the
same Plan Year must satisfy one of the following tests:
(i) The ACP for Participants who are Highly
Compensated Employees for the Plan Year shall not exceed
the ACP for Participants who are Non-Highly Compensated
Employees for the same Plan Year multiplied by 1.25; or
(ii) The ACP for Participants who are Highly
Compensated Employees for the Plan Year shall not exceed
the ACP for Participants who are Non-Highly Compensated
Employees for the same Plan Year multiplied by 2.0,
provided that the ACP for Participants who are High
Compensated Employees does not exceed the ACP for
Participants who are Non-Highly Compensated Employees by
more than two (2) percentage points.
(b) If one or more Highly Compensated Employees
participate in both the Plan and a plan subject to the ACP
test maintained by the Employer or an Affiliate and the sum of
the ADP and ACP of those Highly Compensated Employees subject
to either or both tests exceeds the Aggregate Limit, then the
ACP of those Highly Compensated Employees who also participate
in the Plan will be reduced (beginning with such Highly
Compensated Employee whose ACP is the highest) so that the
limit is not exceeded. The amount by which each Highly
78 78
Compensated Employee's Contribution Percentage Amount is
reduced shall be treated as an Excess Aggregate Contribution.
The ADP and ACP of the Highly Compensated Employees are
determined after any correction required to meet the ADP and
ACP tests. Multiple use does not occur if both the ADP and
ACP of the Highly Compensated Employees does not exceed 1.25
multiplied by the ADP and ACP of the Non-Highly Compensated
Employees.
(c) For purposes of this Section, the
Contribution Percentage for any Participant who is a Highly
Compensated Employee and who is eligible to have Contribution
Percentage Amounts allocated to his or her account under two
or more plans described in Code section 401(a), or
arrangements described in Code section 401(k) that are
maintained by the Employer or an Affiliate, shall be
determined as if the total of such Contribution Percentage
Amount 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 Code section 401(m).
(d) In the event that this Plan satisfies the
requirement of Code sections 401(m), 401(a)(4) or 410(b) only
if aggregated with one or more other plans, or if one or more
other plans satisfy the requirements of such 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 Code section 401(m) only if
they have the same Plan Year.
(e) For purposes of determining the Contribution
Percentage of a Participant who is a 5% Owner or one of the
ten most highly paid Highly Compensated Employees, the
Contribution Percentage Amounts and Compensation of such
Participants shall include the Contribution Percentage Amount
and Compensation for the Plan Year of family members (as
defined in Code section 414(q)(6)). Family members, with
respect to Highly Compensated Employees, shall be disregarded
as separate Employees in determining the Contribution
Percentage both for Participants who are Non-Highly
Compensated Employees and for Participants who are Highly
Compensated Employees.
79 79
(f) For purposes of determining the Contribution
Percentage Test, Matching Contributions, Qualified Matching
Contributions and Qualified Non-Elective Contributions shall
be considered made for a Plan Year if made no later than the
end of the twelve month period beginning on the day after the
close of the Plan Year.
(g) The Employer shall maintain records
sufficient to demonstrate satisfaction of the ACP test and the
amount of Qualified Non-Elective Contributions or Qualified
Matching Contributions, or both, used in such tests. The
determination and treatment of the Contribution Percentage of
any Participant shall satisfy such other requirements as may
be prescribed by the Secretary of the Treasury.
(h) For purposes of this Section, the following
terms shall have the following meanings:
(i) "Aggregate Limit" shall mean the greater
of:
(A) the sum of (1) 125% of the greater
of the ADP of the Non-Highly Compensated
Employees for the Plan Year or the ACP of
Non-Highly Compensated Employees under the
plan subject to Code section 401(m) for the
Plan Year beginning with or within the Plan
Year of the Plan and (2) the lesser of 200%
of, or 2 plus, the lesser of such ADP or ACP;
or
(B) the sum of (1) 125% of the lesser of
the ADP of the Non-Highly Compensated
Employees for the Plan Year or the ACP of
Non-Highly Compensated Employees under the
plan subject to Code section 401(m) for the
Plan Year beginning with or within the Plan
Year of the Plan and (2) the greater of 200%
of, or 2 plus, the greater of such ADP or
ACP; or
(ii) "Average Contribution Percentage" shall
mean the average of the Contribution Percentages of the
Eligible Participants in a group.
(iii) "Contribution Percentage" shall
mean the ratio (expressed as a percentage) of the
Participant Contribution Percentage Amounts to the
Participant's Compensation for the Plan Year regardless
of whether the Employee was a Participant for the entire
80 80
Plan Year.
(iv) "Contribution Percentage Amounts" shall
mean the sum of the Matching Contributions and Qualified
Matching Contributions (to the extent not taken into
account for purposes of the ADP test) made under the Plan
on behalf of the Participant for the Plan Year. Such
Contribution Percentage Amounts shall include forfeitures
of Excess Aggregate Contributions or Matching
Contributions allocated to the Participant's Account
which shall be taken into account in the year in which
such forfeiture is allocated. If so elected in the
Adoption Agreement, the Employer may include Qualified
Non-Elective Contributions in the Contribution Percentage
Amounts. The Employer also may elect to use Elective
Deferral Contributions 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 Salary
Deferrals Contributions that are used to meet the ACP
test.
(v) "Eligible Participant" shall mean any
Employee who is eligible to make an Elective Deferral (if
the Employer can take such contributions into account in
the calculation of the Contribution Percentage), or to
receive a Matching Contribution (including forfeitures)
or a Qualified Matching Contribution.
(vi) "Matching Contribution" shall mean a
contribution made by the Employer to this or any other
defined contribution plan on behalf of the Participant on
account of an Elective Deferral made by such Participant,
under a plan maintained by the Employer or an Affiliate.
6.3. Treatment of Excess Aggregate Contributions.
(a) Notwithstanding any other provision of this
Plan, Excess Aggregate Contributions, plus any income and
minus any loss allocable thereto, shall be
forfeited, if forfeitable, or if not forfeitable, distributed
no later than the last day of each Plan Year to Participants
to whose Accounts such Excess Aggregate Contributions were
allocated for the preceding Plan Year. Excess Aggregate
Contributions shall be allocated to Participants who are
subject to the family member aggregation rules of Code section
414(q)(6) in the manner prescribed by the regulations. If
such Excess Aggregate Contributions are distributed more than
2-1/2 months after the last day of the Plan Year in which such
excess amounts arose, a ten percent (10%) excise tax will be
81 81
imposed on the Employer maintaining the Plan with respect to
those amounts. Excess Aggregate Contributions shall be
treated as Annual Additions under the Plan.
(b) Excess Aggregate Contributions shall be
adjusted for any income or loss up to the last day of the Plan
Year. The income or loss allocable to Excess Aggregate
Contributions is the income or loss allocable to the
Participant's Matching Contributions Account (if any, and if
all amounts therein are not used in the ADP test) and, if
applicable, 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 of which is the Participant's Account balance
attributable to Contribution Percentage Amounts without regard
to any income or loss occurring during such Plan Year.
(c) Forfeitures of Excess Aggregate Contributions
will be reallocated to the Accounts of the Non-Highly
Compensated Employees.
(d) Excess Aggregate Contributions shall be
forfeited, if forfeitable, or distributed on a prorata basis
from the Participant's Matching Contributions Account or
Elective Deferral Account.
(e) "Excess Aggregate Contributions" shall mean,
with respect to any Plan Year, the excess of:
(i) 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
(ii) 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 and then
determining Excess Contributions.
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