EXHIBIT 4.3
PROTOTYPE DEFINED CONTRIBUTION PLAN
Sponsored By
SBERA
BASIC PLAN DOCUMENT #01
DECEMBER 2001
THIS DOCUMENT IS COPYRIGHTED UNDER THE LAWS OF THE UNITED STATES. ITS USE,
DUPLICATION OR REPRODUCTION, INCLUDING THE USE OF ELECTRONIC MEANS, IS
PROHIBITED BY LAW WITHOUT THE EXPRESS CONSENT OF THE AUTHOR.
TABLE OF CONTENTS
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PARAGRAPH PAGE
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ARTICLE I
DEFINITIONS
1.1 Actual Contribution Percentage (ACP) 1
1.2 Actual Deferral Percentage (ADP) 1
1.3 Adoption Agreement 2
1.4 Aggregate Limit 2
1.5 Allocation Date(s) 2
1.6 Annual Additions 2
1.7 Annuity Starting Date 3
1.8 Applicable Calendar Year 3
1.9 Applicable Life Expectancy 3
1.10 Average Annual Compensation 3
1.11 Average Contribution Percentage (ACP) 3
1.12 Average Deferral Percentage (ADP) 4
1.13 Beneficiary 4
1.14 Break In Service 4
1.15 Code 5
1.16 Compensation 5
1.17 Covered Compensation 8
1.18 Custodian 8
1.19 Xxxxx-Xxxxx Act 8
1.20 Defined Benefit Plan 8
1.21 Defined Benefit (Plan) Fraction 8
1.22 Defined Contribution Dollar Limitation 8
1.23 Defined Contribution Plan 9
1.24 Defined Contribution (Plan) Fraction 9
1.25 Direct Rollover 9
1.26 Disability 9
1.27 Distribution Calendar Year 9
1.28 Early Retirement Age 9
1.29 Early Retirement Date 9
1.30 Earned Income 10
1.31 Effective Date 10
1.32 Election Period 10
1.33 Elapsed Time 10
1.34 Elective Deferrals 10
1.35 Eligible Employee 10
1.36 Eligible Employer 10
1.37 Eligible Participant 11
1.38 Eligible Retirement Plan 11
1.39 Eligible Rollover Distribution 11
1.40 Employee 11
1.41 Employer 12
1.42 Entry Date 12
1.43 ERISA 12
1.44 Excess Aggregate Contributions 12
1.45 Excess Annual Additions 12
1.46 Excess Contribution 13
1.47 Excess Elective Deferrals 13
1.48 Expected Year Of Service 13
1.49 First Distribution Calendar Year 13
1.50 Hardship 13
1.51 Highest Average Compensation 13
1.52 Highly Compensated Employee 13
1.53 Hour Of Service 14
1.54 Integration Level 14
1.55 Key Employee 15
1.56 Leased Employee 15
1.57 Limitation Year 15
1.58 Master Or Prototype Plan 15
1.59 Matching Contribution 15
1.60 Maximum Permissible Amount 15
1.61 Net Profit 16
1.62 Normal Retirement Age 16
1.63 Normal Retirement Date 16
1.64 Owner-Employee 16
1.65 Paired Plans 16
1.66 Participant 16
1.67 Participant's Benefit 16
1.68 Period Of Severance 16
1.69 Permissive Aggregation Group 16
1.70 Plan 16
1.71 Plan Administrator 17
1.72 Plan Sponsor 17
1.73 Plan Year 17
1.74 Present Value 17
1.75 Prior Plan Year 17
1.76 Prior Safe Harbor Plan 17
1.77 Projected Annual Benefit 17
1.78 Projected Participation 17
1.79 Qualified Domestic Relations Order (QDRO Or Order) 18
1.80 Qualified Early Retirement Age 18
1.81 Qualified Joint And Survivor Annuity (QJSA) 18
1.82 Qualified Matching Contributions (QMACs) 18
1.83 Qualified Non-Elective Contributions (QNECs) 18
1.84 Qualified Plan 18
1.85 Qualified Pre-Retirement Survivor Annuity 18
1.86 Qualified Voluntary Contribution 18
1.87 Required Aggregation Group 19
1.88 Required Beginning Date 19
1.89 Required After-tax Contributions 19
1.90 Rollover Contribution 19
1.91 Salary Deferral Agreement 19
1.92 Savings Incentive Match Plan For Employees (SIMPLE) 19
1.93 Self-Employed Individual 19
1.94 Service 19
1.95 Severance Date 20
1.96 Severance Period 20
1.97 Service Provider 20
1.98 Shareholder Employee 20
1.99 Simplified Employee Pension Plan 20
1.100 Sponsor 20
1.101 Spouse 20
1.102 Stated Benefit Formula 20
1.103 Super Top-Heavy Plan 20
1.104 Taxable Wage Base 20
1.105 Top-Heavy Determination Date 20
1.106 Top-Heavy Plan 20
1.107 Top-Heavy Ratio 21
1.108 Top-Paid Group 22
1.109 Transfer Contribution 22
1.110 Trust 22
1.111 Trustee 22
1.112 Uniformed Services Employment And Reemployment
Rights Act Of 1994 (USERRA) 22
1.113 Valuation Date 22
1.114 Vested Account Balance 22
1.115 Voluntary After-tax Contribution 23
1.116 Welfare Benefit Fund 23
1.117 Year Of Service 23
ARTICLE II
ELIGIBILITY REQUIREMENTS
2.1 Eligibility 26
2.2 Determination Of Eligibility 26
2.3 Change In Classification Of Employment 26
2.4 Participation 27
2.5 Employment Rights 27
2.6 Service With Controlled Groups 27
2.7 Leased Employees 27
2.8 Thrift Plan 28
2.9 Target Benefit Plan 28
2.10 Xxxxx-Xxxxx Plan 28
2.11 Waiver Of Participation 28
2.12 Omission Of Eligible Employee 28
2.13 Inclusion Of Ineligible Employee 29
ARTICLE III
EMPLOYER CONTRIBUTIONS
3.1 Contribution Amount 30
3.2 Contribution Amount For A SIMPLE 401(k) Plan 30
3.3 Responsibility For Contributions 31
3.4 Return Of Contributions 31
3.5 Merger Of Assets From Another Plan 31
3.6 Coverage Requirements 32
3.7 Eligibility For Contribution 32
3.8 Target Benefit Plan Contribution 33
3.9 Xxxxx-Xxxxx Plan Contribution 34
3.10 Uniform Dollar Contribution 34
3.11 Uniform Points Contribution 34
3.12 403(b) Matching Contribution 34
ARTICLE IV
EMPLOYEE CONTRIBUTIONS
4.1 Voluntary After-tax Contributions 35
4.2 Required After-tax Contributions 35
4.3 Qualified Voluntary Contributions 35
4.4 Rollover Contributions 35
4.5 Plan To Plan Transfer Contributions 36
4.6 Voluntary Direct Transfers Between Plans 36
4.7 Elective Deferrals In A 401(k) Plan 37
4.8 Elective Deferrals In A SIMPLE 401(k) Plan 38
4.9 Automatic Enrollment 39
4.10 Make-Up Contributions Under USERRA 40
ARTICLE V
PARTICIPANT ACCOUNTS
5.1 Separate Accounts 41
5.2 Valuation Date 41
5.3 Allocations To Participant Accounts 42
5.4 Allocating Employer Contributions 42
5.5 Allocating Investment Earnings And Losses 43
5.6 Allocation Adjustments 43
5.7 Participant Statements 44
5.8 Changes In Method And Timing Of
Valuing Participants' Accounts 44
ARTICLE VI
RETIREMENT BENEFITS AND DISTRIBUTIONS
6.1 Normal Retirement Benefits 45
6.2 Early Retirement Benefits 45
6.3 Benefits On Termination Of Employment 45
6.4 Restrictions On Immediate Distributions 46
6.5 Normal And Optional Forms Of Payment 47
6.6 Commencement Of Benefits 48
6.7 Transitional Rules For Cash-Out Limits 49
6.8 In-Service Withdrawals 50
6.9 Hardship Withdrawals 52
6.10 Direct Rollover Of Benefits 53
6.11 Participant's Notice 53
6.12 Assets Transferred From Money Purchase Pension Plans 54
6.13 Assets Transferred From A Code Section 401(k) Plan 54
ARTICLE VII
DISTRIBUTION REQUIREMENTS
7.1 Joint And Survivor Annuity Requirements 55
7.2 Minimum Distribution Requirements 55
7.3 Limits On Distribution Periods 55
7.4 Required Distributions On Or After The
Required Beginning Date 55
7.5 Required Beginning Date 56
7.6 Transitional Rules 58
7.7 Designation Of Beneficiary 58
7.8 Beneficiary 59
7.9 Distribution Beginning Before Death 59
7.10 Distribution Beginning After Death 59
7.11 Distribution Of Excess Elective Deferrals 60
7.12 Distribution Of Excess Contributions 61
7.13 Distribution Of Excess Aggregate Contributions 61
7.14 Distributions To Minors And Individuals
Who Are Legally Incompetent 62
7.15 Unclaimed Benefits 62
ARTICLE VIII
JOINT AND SURVIVOR ANNUITY REQUIREMENTS
8.1 Applicability Of Provisions 64
8.2 Payment Of Qualified Joint And Survivor Annuity 64
8.3 Payment Of Qualified Pre-Retirement Survivor Annuity 64
8.4 Qualified Election 64
8.5 Notice Requirements For Qualified
Joint And Survivor Annuity 65
8.6 Notice Requirements For Qualified
Pre-Retirement Survivor Annuity 65
8.7 Special Safe Harbor Exception For
Certain Profit-Sharing Or 401(k) Plans 66
8.8 Transitional Joint And Survivor Annuity Rules 66
8.9 Automatic Joint And Survivor Annuity
And Early Survivor Annuity 67
8.10 Annuity Contracts 68
ARTICLE IX
VESTING
9.1 Employee Contributions 69
9.2 Employer Contributions 69
9.3 Vesting Of Employer Contributions
In A SIMPLE 401(k) Plan 69
9.4 Computation Period 69
9.5 Requalification Prior To Five Consecutive
One-Year Breaks In Service 69
9.6 Requalification After Five Consecutive
One-Year Breaks In Service 69
9.7 Calculating Vested Interest 69
9.8 Forfeitures 70
9.9 Amendment Of Vesting Schedule 70
9.10 Service With Controlled Groups 71
9.11 Compliance With Uniformed Services Employment And
Reemployment Rights Act Of 1994 71
ARTICLE X
LIMITATIONS ON ALLOCATIONS
10.1 Participation In This Plan Only 72
10.2 Disposition Of Excess Annual Additions 72
10.3 Participation In Multiple Defined
Contribution Plans 73
10.4 Disposition Of Excess Annual
Additions Under Two Plans 73
10.5 Participation In This Plan And A Defined Benefit Plan 73
ARTICLE XI
ANTIDISCRIMINATION TESTING
11.1 General Testing Requirements 74
11.2 ADP Testing Limitations 74
11.3 Special Rules Relating To The
Application Of The ADP Test 75
11.4 Calculation And Distribution Of Excess Contributions
And Excess Aggregate Contributions 75
11.5 Qualified Non-Elective And/Or Matching Contributions 76
11.6 ACP Testing Limitations 76
11.7 Special Rules Relating To The
Application Of The ACP Test 77
11.8 Recharacterization 78
11.9 Nondiscrimination Tests In A SIMPLE 401(k) Plan 78
11.10 Safe Harbor Rules Of Application 78
11.11 Safe Harbor Definitions 80
11.12 Required Restrictions On Safe Harbor Contributions 80
11.13 ADP Test Safe Harbor 81
11.14 ACP Test Safe Harbor 81
11.15 Safe Harbor Status 81
11.16 Safe Harbor Notice Requirement 82
11.17 Satisfying Safe Harbor Contribution Requirements
Under Another Defined Contribution Plan 83
ARTICLE XII
ADMINISTRATION
12.1 Plan Administrator 85
12.2 Persons Serving As Plan Administrator 86
12.3 Action By Employer 86
12.4 Responsibilities Of The Parties 86
12.5 Allocation Of Investment Responsibility 86
12.6 Appointment Of Investment Manager 86
12.7 Participant Investment Direction 87
12.8 Application Of ERISA Section 404 (c) 88
12.9 Participant Loans 88
12.10 Insurance Policies 90
12.11 Determination Of Qualified Domestic Relations Order
(QDRO Or Order) 92
12.12 Receipt And Release For Payments 93
12.13 Resignation And Removal 93
12.14 Claims and Claims Review Procedure 93
12.15 Bonding 94
ARTICLE XIII
TRUST PROVISIONS
13.1 Establishment Of The Trust 95
13.2 Control Of Plan Assets 95
13.3 Discretionary Trustee 95
13.4 Nondiscretionary Trustee 96
13.5 Provisions Relating To Individual Trustees 96
13.6 Investment Instructions 96
13.7 Fiduciary Standards 96
13.8 Powers Of The Trustee 97
13.9 Appointment Of Additional Trustee And Allocation Of
Responsibilities 99
13.10 Compensation, Administrative Fees And Expenses 100
13.11 Records 100
13.12 Limitation On Liability And Indemnification 101
13.13 Custodian 103
13.14 Investment Alternatives Of The Custodian 104
13.15 Prohibited Transactions 104
13.16 Exclusive Benefit Rules 104
13.17 Assignment And Alienation Of Benefits 104
13.18 Liquidation Of Assets 104
13.19 Resignation and Removal 105
ARTICLE XIV
TOP-HEAVY PROVISIONS
14.1 Applicability Of Rules 106
14.2 Minimum Contribution 106
14.3 Minimum Vesting 106
14.4 Limitations On Allocations 107
14.5 Use Of Safe Harbor Contributions To Satisfy
Top-Heavy Contribution Rules 107
14.6 Top-Heavy Rules For SIMPLE 401(k) Plans 107
ARTICLE XV
AMENDMENT AND TERMINATION
15.1 Amendment By Sponsor 108
15.2 Amendment By Employer 108
15.3 Protected Benefits 108
15.4 Plan Termination 108
15.5 Distribution Restrictions
Under A Code Section 401(k) Plan 109
15.6 Qualification Of Employer's Plan 109
15.7 Mergers And Consolidations 109
15.8 Qualification Of Prototype 109
ARTICLE XVI
GOVERNING LAW
16.1 Governing Law 110
16.2 State Community Property Laws 110
IRS MODEL AMENDMENT 111
PROTOTYPE DEFINED CONTRIBUTION PLAN
Sponsored By
SBERA
The Sponsor hereby establishes this Plan for use by its clients who wish to
adopt a qualified retirement plan. This Plan shall be interpreted in a manner
consistent with the intention of the adopting Employer that this Plan satisfy
Internal Revenue Code Sections 401 and 501. Any Plan and Trust established
hereunder shall be so established for the exclusive benefit of Plan Participants
and their Beneficiaries and shall be administered under the following terms and
conditions:
ARTICLE I
DEFINITIONS
1.1 ACTUAL CONTRIBUTION PERCENTAGE (ACP) The ratio (expressed as a
percentage and calculated separately for each Participant) of:
(a) the Participant's Contribution Percentage Amounts [as defined at
(c)-(f)] for a Plan Year, to
(b) the Participant's Compensation for such Plan Year. [Unless
otherwise specified in the Adoption Agreement, Compensation will
only include amounts for the period during which the Employee was
eligible to participate.]
Contribution Percentage Amounts on behalf of any Participant shall include:
(c) the amount of Voluntary After-tax Contributions, Required
After-tax Contributions, Matching Contributions (except to the
extent such Matching Contributions may be disregarded in accordance
with IRS Notice 98-1), 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,
(d) forfeitures of Excess Aggregate Contributions or Matching
Contributions allocated to the Participant's account which shall
be taken into account in the year in which such forfeiture is
allocated,
(e) at the election of the Employer, Qualified Non-Elective
Contributions, and
(f) the Employer may elect to use Elective Deferrals in the Contribution
Percentage Amounts as long as the ADP test is met before the
Elective Deferrals are used in the ACP test and continues to be met
following the exclusion of those Elective Deferrals that are used to
meet the ACP test.
Contribution amounts shall not include Matching Contributions, whether or not
Qualified, that are forfeited either to correct Excess Aggregate Contributions,
or because the contributions to which they relate are Excess Deferrals, Excess
Contributions, or Excess Aggregate Contributions.
1.2 ACTUAL DEFERRAL PERCENTAGE (ADP) The ratio (expressed as a percentage
and calculated separately for each Participant) of:
(a) the amount of Employer contributions [as defined at (c) - (d)]
actually contributed to the Trust on behalf of such Participant
for a Plan Year, to
(b) the Participant's Compensation for such Plan Year. [Unless
otherwise specified in the Adoption Agreement, Compensation will
only include amounts received for the period during which the
Employee was eligible to participate.]
Employer contributions on behalf of any Participant shall include:
(c) any Elective Deferrals made pursuant to the Participant's Salary
Deferral Agreement, including Excess Elective Deferrals of Highly
Compensated Employees, but excluding Excess Elective Deferrals
distributed to Non-Highly Compensated Employees and Elective
Deferrals that are either taken into account in the Contribution
Percentage test (provided the ADP test is satisfied both with and
without exclusion of these Elective Deferrals) or are returned as
excess Annual Additions,
(d) at the election of the Employer, Qualified Non-Elective
Contributions and Qualified Matching Contributions.
For purposes of computing Actual Deferral Percentages, an eligible Employee who
fails to make Elective Deferrals shall be treated as a Participant on whose
behalf no Elective Deferrals are made.
1.3 ADOPTION AGREEMENT The document attached to this Plan by which an
Employer who adopts a Plan elects the terms and conditions of a Qualified Plan
established under this Basic Plan Document #01.
1.4 AGGREGATE LIMIT The sum of:
(a) 125% of the greater of the Average Deferral Percentage of the Non-
Highly Compensated Employees for the Prior Plan Year or the Average
Contribution Percentage of Non-Highly Compensated Employees under
the 401(k) Plan subject to Code Section 401(m) for the Plan Year
beginning with or within the Prior Plan Year, and
(b) the lesser of 200% or two percent plus the lesser of such ADP or
ACP.
Alternatively, the Aggregate Limit can be determined by substituting "the
lesser of 200% or two percent plus" for "125% of" in (a) above, and
substituting "125% of" for "the lesser of 200% or two percent plus" in (b) above
if it would result in a larger Aggregate Limit.
If the Employer has elected in the Adoption Agreement to use the Current Year
Testing Method, then, in calculating the Aggregate Limit for a particular Plan
Year, the Non-Highly Compensated Employees' ADP and ACP for that Plan Year,
instead of the prior Plan Year, is used.
1.5 ALLOCATION DATE(S) The date or dates on which Participant recordkeeping
accounts are adjusted to reflect account activity including but not limited to
contributions, loans distributions, Hardship withdrawals, as well as earnings
activity including but not limited to income, capital gains or market
fluctuations in accordance with Article V hereof. Unless the Plan Administrator
in a uniform and nondiscriminatory manner designates otherwise, all allocations
for a particular Plan Year will be made as of the Valuation Date of that Plan
Year.
1.6 ANNUAL ADDITIONS The sum of the following amounts credited to a
Participant's account for the Limitation Year:
(a) Employer contributions (under Article III),
(b) Employee contributions (under Article IV),
(c) forfeitures,
(d) Employer allocations under a Simplified Employee Pension Plan,
(e) amounts allocated after March 31, 1984, to an individual medical
account as defined in Code Section 415(l)(2), which is part of a
pension or annuity plan maintained by the Employer (these amounts
are treated as Annual Additions to a Defined Contribution Plan
though they arise under a Defined Benefit Plan), and
(f) amounts derived from contributions paid or accrued after 1985, in
taxable years ending after 1985, which are either attributable to
post-retirement medical benefits allocated to the account of a Key
Employee or to a Welfare Benefit Fund maintained by the Employer.
For purposes of this paragraph, an Employee is a Key Employee if he
or she meets the requirements of paragraph 1.55 at any time during
the Plan Year or any preceding Plan Year.
For purposes of applying the limitations of Code Section 415, the transfer of
funds from one Qualified Plan to another is not considered an Annual Addition.
The following are not Employee contributions for the purposes of Annual
Additions:
(g) Rollover Contributions [as defined in Code Sections 402(e)(6),
403(a)(4), 403(b)(8) and 408(d)(3)];
(h) repayments of loans made to a Participant from the Plan;
(i) repayments of distributions received by an Employee pursuant to
Code Section 411(a)(7)(B) (cash-outs);
(j) repayments of distributions received by an Employee pursuant to Code
Section 411(a)(3)(D) (mandatory contributions); and
(k) Employee contributions to a Simplified Employee Pension Plan
excludible from gross income under Code Section 408(k)(6).
Employee and Employer make-up contributions under USERRA received during the
current Limitation Year shall be treated as Annual Additions with respect to the
Limitation Year to which the make-up contributions are attributable. Excess
Amounts applied in a Limitation Year to reduce Employer contributions will be
considered Annual Additions for such Limitation Year, pursuant to the provisions
of Article X.
1.7 ANNUITY STARTING DATE The first day of the first period for which an
amount is paid as an annuity or in any other form.
1.8 APPLICABLE CALENDAR YEAR The First Distribution Calendar Year, and in
the event of the recalculation of life expectancy, such succeeding calendar
year. If payments commence in accordance with paragraph 7.4(d) before the
Required Beginning Date, the Applicable Calendar Year is the year such payments
commence. If distribution is in the form of an immediate annuity purchased
after the Participant's death with the Participant's remaining interest, the
Applicable Calendar Year is the year of purchase.
1.9 APPLICABLE LIFE EXPECTANCY The life expectancy or joint and last
survivor expectancy calculated using the attained age of the Participant or
Beneficiary as of the Participant's or Beneficiary's birthday in the Applicable
Calendar Year, reduced by one for each calendar year which has elapsed since
the date life expectancy was first calculated. If life expectancy is being
recalculated, the Applicable Life Expectancy shall be the life expectancy as
so recalculated. The life expectancy of a non-Spouse Beneficiary may not be
recalculated.
1.10 AVERAGE ANNUAL COMPENSATION The average of a Participant's annual
Compensation as defined in paragraph 1.16 of this Basic Plan Document #01,
over the three (3) consecutive Plan Year period ending in either the current
year or any prior year that produces the highest average. If the Participant
has fewer than three (3) years of participation in this Plan, Compensation is
averaged over the Participant's total period of participation.
1.11 AVERAGE CONTRIBUTION PERCENTAGE (ACP) The average of the Actual
Contribution Percentages for the eligible Participants in a specified group of
Participants for a Plan Year.
1.12 AVERAGE DEFERRAL PERCENTAGE (ADP) The average of the Actual Deferral
Percentages for Participants in a specified group of Participants for a Plan
Year.
1.13 BENEFICIARY A "Beneficiary" is any person other than the Participant
and an estate or trust who by operation of law, or under the terms of the Plan
is entitled to receive any Vested Account Balance of a Participant under the
Plan. A "Designated Beneficiary" is any individual designated or determined
in accordance with Code Section 401(a)(9) and the Regulations issued thereunder,
except that it shall not include any person who becomes a beneficiary by virtue
of the laws of inheritance or intestate succession.
1.14 BREAK IN SERVICE
(a) If the Hours of Service method is used in determining either an
Employee's initial or continuing eligibility to participate in the
Plan, or the nonforfeitable interest in the Employee's account
balance derived from Employer contributions, a Break in Service
is a twelve (12) consecutive month period during which the Employee
has not completed more than five hundred (500) Hours of Service.
(b) For purposes of determining whether a Break in Service has occurred
in a particular computation period, an Employee who is absent from
work for maternity or paternity reasons shall receive credit for
Hours of Service which would otherwise have been credited to such
Employee but for such absence, or in any case in which such hours
cannot be determined, with eight (8) Hours of Service per day of
such absence. The Hours of Service to be so credited shall be
credited in the computation period in which the absence begins if
the crediting is necessary to prevent a Break in Service in that
period or, in all other cases, in the following computation periods.
(c) With respect to determinations based on the Elapsed Time method, a
severance period of not less than twelve (12) consecutive months.
In the case of an Employee who is absent from work for maternity or
paternity reasons, the twelve (12) consecutive month period
beginning on the first anniversary of the first day of such absence
shall not constitute a Break in Service.
(d) Notwithstanding the foregoing, in the case of an Employee who is
absent from work beyond the first anniversary of the first day of
absence from work for maternity or paternity reasons, such period
begins on the second anniversary of the first day of such absence.
The period between the first and second anniversaries of said first
day of absence from work is neither a Period of Service for which
the Employee will receive credit nor is such period a Break in
Service. For purposes of this paragraph, an absence from work for
maternity or paternity reasons means an absence (1) by reason of the
pregnancy of the Employee, (2) by reason of the birth of a child of
the Employee, (3) by reason of the placement of a child with the
Employee in connection with the adoption of such child by such
Employee, or (4) for purposes of caring for such child for a
period beginning immediately following such birth or placement.
(e) An Employer adopting the Elapsed Time method is required to credit
periods of Service and, under the Service spanning rules, certain
periods of severance of twelve (12) months or less. Under the first
Service spanning rule, if an Employee xxxxxx from Service as a
result of resignation, discharge or retirement and then returns to
Service within twelve (12) months, the Period of Severance is
required to be taken into account. A situation may arise in which
an Employee is absent from Service for any reason other than
resignation, discharge, retirement and during the absence a
resignation, discharge or retirement occurs. The second Service
spanning rule provides that, under such circumstances, the Plan is
required to take into account the period of time between the
severance from Service date (i.e., the date of resignation,
discharge or retirement) and the first anniversary of the date on
which the Employee was first absent, if the Employee returns to
Service on or before such first anniversary date.
1.15 CODE The Internal Revenue Code of 1986, including any amendments
thereto. Reference to any section or subsection of the Code, includes reference
to any comparable or succeeding provisions of any legislation which amends,
supplements or replaces such section or subsection, and also includes reference
to any Regulation issued pursuant to or with respect to such section or
subsection.
1.16 COMPENSATION The Employer may select one of the following three safe
harbor definitions of Compensation in the Adoption Agreement. The definition
of Compensation (for Employers who adopt) under standardized plans, plans that
provide permitted disparity (other than the CODA portion of these plans), Target
Benefit Plans and for Employers determining top-heavy minimum contributions must
be one of the three safe harbor definitions of Compensation. In a
nonstandardized Adoption Agreement, the Employer may modify the definition of
Compensation provided that such definition, as modified, satisfies the
provisions of Code Sections 414(s) and 401(a)(4). Compensation will also
include Compensation by the Employer through another employer or entity under
the provisions of Code Sections 3121 and 3306.
(a) CODE SECTION 3401(A) WAGES - All remuneration received by an
Employee for services performed for the Employer which are subject
to Federal income tax withholding at the source. Unless elected
otherwise in the Adoption Agreement, Compensation shall include any
amount deferred under a Salary Deferral Agreement which is not
includible in the gross income of a Participant under Code Section
125 in connection with a cafeteria plan, Code Section 402(e)(3) in
connection with a cash or deferred plan, Code Section 402(h)(1)(B)
in connection with a Simplified Employee Pension Plan, Code Section
401(k) in connection with a SIMPLE Retirement Account, Code Section
457 in connection with a Plan maintained under said Section, and
Code Section 403(b) in connection with a tax-sheltered annuity plan.
Wages are 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)]. For Limitation
Years beginning after December 31, 1997, for purposes of applying
the limitations of this paragraph, Compensation paid or made
available during such Limitation Year shall include any Elective
Deferral [as defined in Code Section 402(g)(3)], and any amount
which is contributed or deferred by the Employer at the election of
the Employee and which is not includible in the gross income of the
Employee by reason of Code Sections 125, 132(f)(4), 402(e)(3),
402(h)(1). or 403(b).
(b) CODE SECTIONS 6041, 6051 AND 6052 REPORTABLE WAGES - All
remuneration received by an Employee for services performed for
the Employer which are required to be reported on Form W-2. Unless
otherwise elected in the Adoption Agreement, Compensation shall
include any amount deferred under a Salary Deferral Agreement which
is not includible in the gross income of a Participant under Code
Section 125 in connection with a cafeteria plan, Code Section
402(e)(3) in connection with a cash or deferred plan, Code Section
402(h)(1)(B) in connection with a Simplified Employee Pension Plan,
and Code Section 403(b) in connection with a tax-sheltered annuity
plan. A Participant's wages includes remuneration defined at
subparagraph (a) above and all other remuneration paid 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), 6051(a)(3) and
6052. Such amount must be 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)]. For
Limitation Years beginning after December 31, 1997, for purposes of
applying the limitations of this paragraph, Compensation paid or
made available during such Limitation Year shall include any
Elective Deferral [as defined in Code Section 402(g)(3)], and any
amount which is contributed or deferred by the Employer at the
election of the Employee and which is not includible in the gross
income of the Employee by reason of Code Sections 125, 132(f)(4),
402(e)(3), 402(h)(1) or 403(b).
(c) CODE SECTION 415 COMPENSATION - A Participant's Earned Income,
wages, salaries, and fees for professional services and other
amounts received, without regard to whether or not an amount is
paid in cash, for personal services actually rendered in the course
of employment with the Employer maintaining the Plan. Compensation
includes, but is not limited to, commissions paid salesmen,
Compensation for services on the basis of a percentage of profits,
commissions on insurance premiums, tips, bonuses, fringe benefits
and reimbursements or other expense allowances under a
nonaccountable plan [as described in Regulation Section 1.62-2(c)].
For Limitation Years beginning after December 31, 1997, for
purposes of applying the limitations of this paragraph, Compensation
paid or made available during such Limitation Year shall include any
Elective Deferral [as defined in Code Section 402(g)(3)], and any
amount which is contributed or deferred by the Employer at the
election of the Employee and which is not includible in the gross
income of the Employee by reason of Code Sections 125, 132(f)(4),
402(e)(3), 402(h)(1) or 403(b). Compensation excludes the
following:
(1) for Plan Years beginning before January 1, 1998, Employer
contributions made under the terms of a Salary Deferral
Agreement between an Employee and the Employer to a plan of
deferred compensation which are not includible in the
Employee's gross income for the taxable year in which
contributed. Such contributions shall include any amount
deferred under Code Section 125 in connection with a cafeteria
plan, Code Section 402(e)(3) in connection with a cash or
deferred plan, Code Section 402(h)(1)(B) in connection with
a Simplified Employee Pension Plan, Code Section 402(k) in
connection with a SIMPLE Retirement Account, Code Section 457
in connection with a Plan maintained under said Section, and
Code Section 403(b) in connection with a tax-sheltered annuity
plan,
(2) distributions received from a plan of deferred compensation,
(3) 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,
(4) amounts realized from the sale, exchange or other disposition
of stock acquired under a qualified stock option, and
(5) amounts deferred by an Employee under the terms of a non-
qualified deferred compensation plan.
Unless otherwise specified by the Employer in the Adoption Agreement,
Compensation shall be determined as provided in Code Section 3401(a) [paragraph
(a) above]. Notwithstanding the foregoing, the Compensation of a Participant
who is a sole proprietor, partner or a member of a limited liability corporation
(LLC) shall be determined under Code Section 415. Unless indicated otherwise in
the Adoption Agreement, the definition of Compensation used in nondiscrimination
testing (ADP/ACP Testing) will be determined by the Employer. Notwithstanding
any other provision to the contrary, if the Plan is an amendment and restatement
of a Qualified Plan, for Plan Years ending prior to the Plan Year in which the
amendment or restatement is adopted, Compensation shall have the meaning set
forth in the Qualified Plan prior to its amendment.
EXCLUSIONS FROM COMPENSATION A Participant's Compensation shall be determined
in accordance with paragraph (a), (b) or (c) above and shall not exclude any
item of income unless provided in the basic definition or elected by the
Employer in the Adoption Agreement.
ANNUAL ADDITIONS AND TOP-HEAVY RULES Except as elected on the Adoption
Agreement, for purposes of Article X and XIV, Compensation shall be Code Section
415 Compensation as described in paragraph 1.16(c). For Plan Years beginning
before January 1, 1998, Compensation excludes amounts deferred under a plan of
deferred Compensation as described at paragraph 1.16(c)(1). For Plan Years
beginning after December 31, 1997, Compensation includes amounts deferred under
a plan of deferred compensation as described at paragraph 1.16(c)(1). For
purposes of applying the limitations of Article X, Compensation for a Limitation
Year is the Compensation actually paid or made available during such Limitation
Year. For Limitation Years beginning after December 31, 1997, for purposes of
applying the limitations of this paragraph, Compensation paid or made available
during such Limitation Year shall include any Elective Deferral [as defined in
Code Section 402(g)(3)], and any amount which is contributed or deferred by the
Employer at the election of the Employee and which is not includible in the
gross income of the Employee by reason of Code Sections 125, 132(f)(4),
402(e)(3), 402(h)(1)(B) or 403(b).
If the Plan is or becomes Top-Heavy in any Plan Year beginning after December
31, 1983, the provisions of Article XIV will supersede any conflicting
provisions in the Basic Plan Document #01 or Adoption Agreement.
CONTRIBUTIONS MADE ON BEHALF OF DISABLED PARTICIPANTS Compensation with respect
to a Participant in a Defined Contribution Plan who is permanently and totally
disabled [as defined in Code Section 22(e)(3)] is the Compensation such
Participant would have received for the Limitation Year if the Participant had
been paid at the rate of Compensation paid immediately before becoming
permanently and totally disabled; for Limitation Years beginning before January
1, 1997, but not for Limitation Years beginning after December 31, 1996, such
imputed Compensation for the disabled Participant may be taken into account only
if the Participant is not a Highly Compensated Employee (defined at paragraph
1.52) and contributions made on behalf of such Participant are nonforfeitable
when made. Compensation will mean Compensation as that term is defined in this
paragraph.
HIGHLY COMPENSATED AND KEY EMPLOYEES For purposes of paragraphs 1.52 and 1.55,
Compensation shall be Code Section 415 Compensation as described in paragraph
1.16(c). Such definition shall include any amount deferred under Code Section
125 in connection with a cafeteria plan, Code Section 402(e)(3) in connection
with a cash or deferred plan, Code Section 402(h)(1)(B) in connection with a
Simplified Employee Pension Plan, Code Section 402(k) in connection with a
SIMPLE Retirement Account (SIMPLE), Code Section 457 in connection with a Plan
maintained under said Section, and Code Section 403(b) in connection with a
tax-sheltered annuity plan. The Employer, if elected in the Adoption Agreement,
may limit Compensation considered for purposes of the Plan for these
Participants.
COMPUTATION PERIOD The Plan Year, while eligible to participate, shall be the
computation period for purposes of determining a Participant's Compensation,
unless the Employer selects a different computation period in the Adoption
Agreement.
LIMITATION ON COMPENSATION The annual Compensation of each Participant which
may be taken into account for determining all benefits provided under the Plan
for any year, shall not exceed the limitation as imposed by Code Section
401(a)(17), as adjusted under Code Section 401(a)(17)(B). If a Plan has a Plan
Year that contains fewer than twelve (12) calendar months, the annual
Compensation limit for that period is an amount equal to the limitation as
imposed by Code Section 401(a)(17) as adjusted for the calendar year in which
the Compensation period begins, multiplied by a fraction, the numerator of which
is the number of full months in the short Plan Year and the denominator of which
is twelve (12).
USERRA For purposes of Employee and Employer make-up contributions,
Compensation during the period of military service shall be deemed to be the
Compensation the Employee would have received during such period if the Employee
were not in qualified military service, based on the rate of pay the Employee
would have received from the Employer but for the absence due to military leave.
If the Compensation the Employee would have received during the leave is not
reasonably certain, Compensation will be equal to the Employee's average
Compensation from the Employer during the twelve (12) month period immediately
preceding the military leave or, if shorter, the Employee's actual period of
employment with the Employer.
DEFINITION OF COMPENSATION FOR PURPOSES OF SAFE HARBOR CODA PROVISIONS
Compensation for the purposes of a Safe Harbor CODA is defined in this
paragraph 1.16 of this Basic Plan Document #01. No dollar limit other than
the limit imposed by Code Section 401(a)(17) applies to the Compensation of a
Non-Highly Compensated Employee. For purposes of determining the Compensation
subject to a Participant's salary deferral election, the Employer may use an
alternative definition to the one described above provided such alternative
definition is a reasonable definition within the meaning of Section 1.414(s)-
1(d)(2) of the Regulations and permits each Participant to contribute sufficient
Elective Deferrals to receive the maximum amount of Matching Contributions
(determined using the definition of Compensation described above) available to
the Participant under the Plan.
DEFINITION OF COMPENSATION FOR PURPOSES OF 401(K) SIMPLE PROVISIONS For
purposes of paragraphs 1.36 and 3.2, of this Basic Plan Document #01,
Compensation is the sum of the wages, tips and other compensation from the
Employer subject to Federal income tax withholding [as described in Code Section
6051(a)(3)] and the Employee's salary reduction contributions made under Code
Section 125 in connection with a cafeteria plan, Code Section 402(e)(3) in
connection with a cash or deferred plan, Code Section 402(h)(1)(B) in connection
with a Simplified Employee Pension Plan, Code Section 402(k) in connection with
a SIMPLE Retirement Account, Code Section 457 in connection with a plan
maintained under said Section and Code Section 403(b) in connection with a tax-
sheltered annuity plan, required to be reported by the Employer on Form W-2 [as
described in Code Section 6051(a)(8)]. For self-employed individuals,
Compensation means net earnings from self-employment determined under Code
Section 1402(a) prior to subtracting any contributions made to this Plan on
behalf of any Employee. The provisions of the Plan implementing the limit on
Compensation under Code Section 401(a)(17) apply to the Compensation under
paragraph 4.8 of Article IV.
1.17 COVERED COMPENSATION A Participant's Covered Compensation for a Plan
Year is the average (without indexing) of the Taxable Wage Bases in effect
for each calendar year in the thirty-five (35) year period ending with the
calendar year in which the Participant attains (or will attain) social security
retirement age. In determining a Participant's Covered Compensation for a Plan
Year, the Taxable Wage Base in effect for the current Plan Year and any
subsequent Plan Year will be assumed to be the same as the taxable wage base in
effect as of the beginning of the Plan Year for which the determination is being
made. Covered Compensation will be determined for the year designated by the
Employer in Section III(C) of the Target Benefit Plan Adoption Agreement.
A Participant's Covered Compensation for a Plan Year before the end of the
thirty-five (35) year period ending with the last day of the calendar year
in which the Participant attains social security retirement age is the Taxable
Wage Base in effect as of the beginning of the Plan Year. A Participant's
Covered Compensation for a Plan Year after such thirty-five (35) year period
is the Participant's Covered Compensation for the Plan Year during which the
thirty-five (35) year period ends.
1.18 CUSTODIAN The institution or institutions (who may be the Sponsor or
an affiliate) and any successors or assigns thereto, appointed by the Employer
to hold the assets of the Trust as provided at paragraph 13.2 herein.
1.19 XXXXX-XXXXX ACT 40 U.S.C. Section 276a et seq. as may be amended from
time to time.
1.20 DEFINED BENEFIT PLAN A plan under which a Participant's benefit is
determined by a formula contained in the plan and no Employee accounts are
maintained for Participants.
1.21 DEFINED BENEFIT (PLAN) FRACTION For Limitation Years beginning before
January 1, 2000, a fraction, the numerator of which is the sum of the
Participant's Projected Annual Benefits under all the Defined Benefit Plans
(whether or not terminated) maintained by the Employer, and the denominator
of which is the lesser of 125% of the dollar limitation determined for the
Limitation Year under Code Sections 415(b) and (d) or 140% of the Highest
Average Compensation, including any adjustments under Code Section 415(b).
TRANSITIONAL RULE If an Employee was a Participant as of the first day of the
first Limitation Year beginning after 1986, in one or more Defined Benefit Plans
maintained by the Employer which were in existence on May 6, 1986, the
denominator of this fraction will not be less than 125% of the sum of the annual
benefits under such Plans which the Participant had accrued as of the close of
the last Limitation Year beginning before 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 1987.
1.22 DEFINED CONTRIBUTION DOLLAR LIMITATION Thirty thousand dollars
($30,000) as adjusted by the Secretary of the Treasury for increases in the
cost-of-living. This limitation shall be adjusted by the Secretary at the same
time and in the same manner as under Code Section 415(d). Such increases will
be in multiples of five thousand dollars ($5,000).
1.23 DEFINED CONTRIBUTION PLAN A plan under which Employee accounts are
maintained for each Participant to which all contributions, forfeitures,
investment income and gains or losses, and expenses are credited or deducted.
A Participant's benefit under such plan is based solely on the fair market
value of his or her account balance.
1.24 DEFINED CONTRIBUTION (PLAN) FRACTION For Limitation Years beginning
before January 1, 2000, a fraction, the numerator of which is the sum of the
Annual Additions to the Participant's account under all the Defined Contribution
Plans (whether or not terminated) maintained by the Employer for the current
and all prior Limitation Years (including the Annual Additions attributable
to the Participant's nondeductible Employee contributions to all Defined Benefit
Plans, whether or not terminated, maintained by the Employer, and the Annual
Additions attributable to all Welfare Benefit Funds as defined in paragraph
1.116, individual medical accounts as defined in Code Section 415(l)(2) and
Simplified Employee Pension Plans as defined in paragraph 1.99, maintained
by the Employer), and the denominator of which is the sum of the maximum
aggregate amounts for the current and all prior Limitation Years of Service
with the Employer (regardless of whether a Defined Contribution Plan was
maintained by the Employer). The maximum aggregate amount in the Limitation
Year is the lesser of 125% of the dollar limitation determined under Code
Sections 415(b) and (d) in effect under Code Section 415(c)(1)(A) or 35%
of the Participant's Compensation for such year.
TRANSITIONAL RULE If an Employee was a Participant as of the end of the first
day of the first Limitation Year beginning after 1986, in one or more Defined
Contribution Plans maintained by the Employer which were in existence on May 6,
1986, the numerator of this fraction will be adjusted if the sum of this
fraction and the Defined Benefit Fraction would otherwise exceed 1.0 under the
terms of this Plan. Under the adjustment, an amount equal to the product of the
excess of the sum of the fractions over 1.0 multiplied by the denominator of
this fraction, will be permanently subtracted from the numerator of this
fraction. The adjustment is calculated using the fractions as they would be
computed as of the end of the last Limitation Year beginning before 1987, and
disregarding any changes in the terms and conditions of the Plan made after May
6, 1986, but using the Code Section 415 limitation applicable to the first
Limitation Year beginning on or after January 1, 1987. The Annual Addition
for any Limitation Year beginning before 1987, shall not be re-computed to
treat all Employee contributions as Annual Additions.
1.25 DIRECT ROLLOVER A payment made by the Plan to an Eligible Retirement
Plan that is specified by the Participant or a payment received by the Plan
from an Eligible Retirement Plan on behalf of a Participant or an Employee,
if selected in the Adoption Agreement by the Employer.
1.26 DISABILITY Unless the Employer has elected a different definition in
the Adoption Agreement, Disability is defined as an illness or injury of a
potentially permanent nature, expected to last for a continuous period of not
less than 12 months or can be expected to result in death, certified by a
physician selected by or satisfactory to the Employer, which prevents the
Participant from engaging in any occupation for wage or profit for which the
Employee is reasonably fitted by training, education or experience. If elected
by the Employer in the Adoption Agreement, nonforfeitable contributions will be
made to the Plan on behalf of each disabled Participant who is not a Highly
Compensated Employee (as defined at paragraph 1.52). Compensation for purposes
of calculating the contribution will mean Compensation as defined at paragraph
1.16 herein.
1.27 DISTRIBUTION CALENDAR YEAR A calendar year for which a minimum
distribution is required.
1.28 EARLY RETIREMENT AGE The age set by the Employer in the Adoption
Agreement, not less than age fifty five (55), at which a Participant becomes
fully vested and is eligible to retire and receive his or her benefits under the
Plan.
1.29 EARLY RETIREMENT DATE The date elected by the Employer in the Adoption
Agreement on which a Participant or former Participant has satisfied the Early
Retirement Age requirements. If no election is made on the Adoption Agreement,
it shall mean the date on which a Participant attains his or her Early
Retirement Age.
A former Participant who has separated from Service after satisfying any service
requirement but before satisfying the Early Retirement Age and who thereafter
reaches the age requirement elected on the Adoption Agreement shall be entitled
to receive benefits under the Plan (other than full vesting and any allocation
of Employer contributions) as though the requirements for Early Retirement Age
had been satisfied.
1.30 EARNED INCOME Net earnings from self-employment in the trade or business
with respect to which the Plan is established, determined without regard to
items not included in gross income and the deductions allocable to such items,
provided that personal services of the individual are a material income-
producing factor. Earned Income shall be reduced by contributions made by an
Employer to a Qualified Plan to the extent deductible under Code Section 404.
Net earnings shall be determined taking into account the deduction for one-half
of self-employment taxes allowed to the taxpayer under Code Section 164(f), to
the extent deductible for taxable years beginning after December 31, 1989.
1.31 EFFECTIVE DATE The date on which the Employer's Plan or amendment to
such Plan becomes effective. For amendments reflecting statutory and regulatory
changes contained in The Uruguay Round Agreements Act of the General Agreement
on Tariffs and Trade (GATT), The Uniformed Services Employment and Reemployment
Rights Act of 1994 (USERRA), The Small Business Job Protection Act of 1996
(SBJPA), The Taxpayer Relief Act of 1997 (TRA'97), The Internal Revenue Service
Restructuring and Reform Act of 1998 (IRSRRA), and the Community Renewal Tax
Relief Act of 2000 (CRA), the Effective Date(s) of the applicable provisions
of this legislation will be the earlier of the date upon which such amendment
is first administratively applied or the first day of the Plan Year following
the date of adoption of such amendment or adoption of the Basic Plan Document
#01 and accompanying Adoption Agreement.
1.32 ELECTION PERIOD The period which begins on the first day of the Plan
Year in which the Participant attains age thirty-five (35) and ends on the date
of the Participant's death. If a Participant separates from Service prior to
the first day of the Plan Year in which age thirty-five (35) is attained, the
Election Period shall begin on the date of separation, with respect to the
account balance as of the date of separation.
1.33 ELAPSED TIME A method of determining an Employee's entitlement under
the Plan with respect to eligibility to participate, as well as vesting, which
is not based on the Employee's completion of a specified number of Hours of
Service during a consecutive twelve (12) month period, but rather with reference
to the total period of time which elapses during which the Employee is employed
by the Employer maintaining the Plan.
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)], a
group of trades or businesses under common control [under Code Section 414(c)]
or any other entity required to be aggregated with the Employer pursuant to
Code Section 414(o), Service will be credited for any employment for any period
of time for any other member or such group. Service will also be credited for
any individual required under Code Section 414(n) or Code Section 414(o) to be
considered an Employee of any Employer aggregated under Code Section 414(b), (c)
or (m).
1.34 ELECTIVE DEFERRALS Employer contributions in lieu of cash Compensation
made to the Plan on behalf of the Participant pursuant to a Salary Deferral
Agreement or other deferral mechanism. With respect to any taxable year, a
Participant's Elective Deferral is the sum of all Employer contributions made
on behalf of such Participant pursuant to an election to defer under any
qualified cash or deferred arrangement as described in Code Section 401(k),
any Simplified Employee Pension Plan with a cash or deferred arrangement as
described in Code Section 408(k)(6), any SIMPLE IRA Plan described in Code
Section 408(p), 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 Deferral Agreement.
Elective Deferrals shall not include any deferrals properly distributed as
excess Annual Additions.
1.35 ELIGIBLE EMPLOYEE For purposes of the SIMPLE 401(k) Plan provisions,
any Employee who is entitled to make Elective Deferrals under the terms of
the SIMPLE 401(k) Plan.
1.36 ELIGIBLE EMPLOYER An Eligible Employer means with respect to any Plan
Year, an Employer who had no more than one hundred (100) Employees who received
at least $5,000 of Compensation from the Employer for the preceding year. In
applying the preceding sentence, all Employees of controlled groups of
corporations under Code Section 414(b), all Employees of trades or businesses
(whether incorporated or not) under common control under Code Section 414(c),
all Employees of affiliated service groups under Code Section 414(m), and Leased
Employees required to be treated as the Employer's Employees under Code Section
414(n), are taken into account.
An Eligible Employer that elects to have the SIMPLE 401(k) Plan provisions
apply to the Plan that fails to be an Eligible Employer for any subsequent year,
is treated as an Eligible Employer for the two (2) years following the last year
the employer was an Eligible Employer. If the failure is due to any
acquisition, disposition, or similar transaction involving an Eligible Employer,
the preceding sentence applies only if the provisions of Code Section
410(b)(6)(C)(I) are satisfied.
1.37 ELIGIBLE PARTICIPANT Any Employee who is eligible to make a Voluntary
or Required After-tax Contribution or an Elective Deferral (if the Employer
takes such contributions into account in the calculation of the Actual
Contribution Percentage), or to receive a Matching Contribution (including
forfeitures) or a Qualified Matching Contribution. If a Required After-tax
Contribution is required as a condition of participation in the Plan, any
Employee who would be a Participant in the Plan if such Employee made such a
contribution shall be treated as an Eligible Participant even though no Employee
contributions are made.
1.38 ELIGIBLE RETIREMENT PLAN An individual retirement account (IRA) as
described in Code Section 408(a), an individual retirement annuity (IRA) as
described in Code Section 408(b), an annuity plan as described in Code Section
403(a), or a qualified trust as described in Code Section 401(a), which accepts
Eligible Rollover Distributions. However, in the case of an Eligible Rollover
Distribution paid to a surviving Spouse, an Eligible Retirement Plan is an
individual retirement account or individual retirement annuity.
1.39 ELIGIBLE ROLLOVER DISTRIBUTION An Eligible Rollover Distribution is any
distribution of all or any portion of the balance to the credit of the
Participant except that an Eligible Rollover Distribution does not include:
(a) any distribution that is one of a series of substantially equal
periodic payments made not less frequently than annually for the
life (or life expectancy) of the Participant or the joint lives
(or joint life expectancies) of the Participant and the
Participant's Beneficiary, or for a specified period of ten (10)
years or more,
(b) any distribution to the extent such distribution is required
under Code Section 401(a)(9),
(c) any Hardship withdrawals under Code Section 401(k)(2)(B)(i)(IV)
received after December 31, 1998, (or if elected by the Employer in
accordance with IRS Notice 99-5, received after December 31, 1999).
(d) the portion of any distribution that would not be includible in
gross income if paid to the Participant (determined without regard
to the exclusion for net unrealized appreciation with respect to
Employer securities),
(e) excess amounts which are returned to a Participant in accordance
with paragraphs 7.11, 7.12, 7.13, and 10.2,
(f) any other distribution(s) that is reasonably expected to total less
than $200 during a year,
(g) corrective distributions of Excess Elective Deferrals under Code
Section 402(g), and the income allocable thereto,
(h) Excess Contributions and Excess Aggregate Contributions under Code
Section 401(k) and Code Section 401(m), and the income allocable
thereto,
(i) PS 58 costs, and
(j) dividends paid on securities under Code Section 404(k).
1.40 EMPLOYEE A person employed by an Employer maintaining the Plan
(including Self-Employed Individuals and partners). The term Employee shall
include Employees of a member of an affiliated service group [as defined in Code
Section 414(m)], all Employees of a controlled group of corporations [as defined
in Code Section 414(b)], all Employees of any incorporated or unincorporated
trade or business which is under common control [as defined in Code Section
414(c)], Leased Employees [as defined in Code Section 414(n)], and any Employee
required to be aggregated by Code Section 414(o). All such Employees shall be
treated as employed by a single Employer.
Leased Employees shall not be Employees for purposes of participation in any
Plan established under a nonstandardized Adoption Agreement, unless otherwise
elected by the Employer in the Adoption Agreement. Leased Employees [as
defined in Code Sections 414(n) or 414(o)] shall be considered Employees
in a Plan established under a standardized Adoption Agreement except as
otherwise provided in this paragraph. Exclusion under a standardized Adoption
Agreement is available only if Leased Employees do not constitute more than
20% of the recipient Employer's non-highly compensated work force, and the
Employer complies with the requirements as outlined in paragraph 2.7, and so
elects in the Adoption Agreement.
An individual shall only be treated as an Employee if he or she is reported
on the payroll records of the Employer or an employer who is a member of the
same controlled group or affiliated service group as a common law employee.
The term does not include any other common law employee or any Leased Employee.
It is expressly intended that individuals not treated as common law employees
by the Employer or a member of the same controlled group or affiliated service
group on their payroll records, as identified by a specific job code or work
status code, are to be excluded from plan participation even if a court or
administrative agency subsequently determines that such individuals are common
law employees and not independent contractors.
1.41 EMPLOYER The Self-Employed Individual, partnership, corporation or
other organization which adopts this Plan including any entity that succeeds
the Employer and adopts this Plan. For purposes of Article X, Limitations on
Allocations, Employer shall mean the Employer that adopts this Plan, and all
members of a controlled group of corporations [as defined in Code Section
414(b) as modified by Code Section 415(h)], all commonly controlled trades or
businesses [as defined in Code Section 414(c) as modified by Code Section
415(h)] or affiliated service groups [as defined in Code Section 414(m)] of
which the adopting Employer is a part, and any other entity required to be
aggregated with the Employer pursuant to Regulations under Code Section 414(o).
In addition to such required treatment, the Plan Sponsor may, in its discretion,
designate as an Employer any business entity which is not such a "common
control," "affiliated service group" or "predecessor" business entity which
is otherwise affiliated with the Employer, subject to such nondiscriminatory
limitations as the Employer may impose.
1.42 ENTRY DATE The date as of which an Employee who has satisfied the
Plan's eligibility requirements enters or reenters the Plan, as defined in the
Adoption Agreement.
1.43 ERISA The Employee Retirement Income Security Act of 1974, as amended
and any successor statute.
1.44 EXCESS AGGREGATE CONTRIBUTIONS The excess, with respect to any Plan
Year, of:
(a) the aggregate Contribution Percentage Amounts taken into account
in computing the numerator of the Contribution Percentage actually
made on behalf of Highly Compensated Employees for such Plan Year,
over
(b) the maximum Contribution Percentage Amounts permitted by the ACP
test (determined hypothetically by reducing contributions made on
behalf of Highly Compensated Employees in order of their
Contribution Percentages beginning with the highest of such
percentages).
(c) Such determination shall be made after first determining Excess
Elective Deferrals pursuant to paragraph 1.47 and then determining
Excess Contributions pursuant to paragraph 1.46.
1.45 EXCESS ANNUAL ADDITIONS The excess of the Participant's Annual
Additions for the Limitation Year over the Maximum Permissible Amount.
1.46 EXCESS CONTRIBUTION With respect to any Plan Year, the excess of:
(a) the aggregate amount of Employer contributions actually taken into
account in computing the ADP of Highly Compensated Employees for
such Plan Year, over
(b) the maximum amount of such contributions permitted by the ADP Test
(determined by hypothetically reducing contributions made on behalf
of Highly Compensated Employees in order of the ADPs, beginning with
the highest of such percentages).
1.47 EXCESS ELECTIVE DEFERRALS Those Elective Deferrals that are includible
in a Participant's gross income under Code Section 402(g) to the extent such
Participant's Elective Deferrals for a taxable year exceed the dollar limitation
under Code Section 402(g). Excess Elective Deferrals shall be treated as Annual
Additions under the Plan, unless such amounts are distributed no later than the
first April 15 following the close of the Participant's taxable year.
1.48 EXPECTED YEAR OF SERVICE An eligibility computation period during which
an Employee in an eligible class is expected to complete a Year of Service.
If an Employee who is not expected to complete a Year of Service actually
completes a Year of Service during an applicable computation period, he shall
be deemed to have become an Employee in the eligible class as of the first day
of the eligibility computation period in which he first completes a Year of
Service.
1.49 FIRST DISTRIBUTION CALENDAR YEAR For distributions beginning before
the Participant's death, the First Distribution Calendar Year is the calendar
year immediately preceding the calendar year which contains the Participant's
Required Beginning Date. For distributions beginning after the Participant's
death, the First Distribution Calendar Year is the calendar year in which
distributions are required to begin pursuant to paragraph 7.10.
1.50 HARDSHIP An immediate and heavy financial need of the Employee where
such Employee lacks other available financial resources to satisfy such
financial need.
1.51 HIGHEST AVERAGE COMPENSATION For Limitation Years beginning before
January 1, 2000, the average Compensation for the three (3) consecutive Years
of Service with the Employer that produces the highest average. A Year of
Service with the Employer is the twelve (12) consecutive month period defined
in the Adoption Agreement, or, if not indicated in the Adoption Agreement, as
defined in paragraph 1.117.
1.52 HIGHLY COMPENSATED EMPLOYEE Effective for years after December 31,
1996, the term Highly Compensated Employee means any Employee who: (1) is
a 5% owner at any time during the year or preceding year, or (2) for the
preceding year had Compensation from the Employer in excess of $80,000 and
if the Employer so elects in the Adoption Agreement, is in the Top-Paid Group
for the preceding year. The $80,000 amount is adjusted at the same time and
in the same manner as under Code Section 415(d), except that the base period
is the calendar quarter ending September 30, 1996.
For the determination of who is a Highly Compensated Employee, the applicable
year of the Plan for which a determination is being made is called a
determination year and the preceding twelve (12) month period is called a
look-back year. Employees who do not meet the Highly Compensated Employee
definition are considered Non-Highly Compensated Employees.
A Highly Compensated former Employee is based on the rules applicable to
determining Highly Compensated Employee status in effect for that
determination year, in accordance with Section 1.414(q)-1T, A-4 of the
temporary Income Tax Regulations and IRS Notice 97-45.
In determining whether an Employee is a Highly Compensated Employee for
years beginning in 1997, the amendments to Code Section 414(q) stated above
are treated as having been in effect for years beginning in 1996. In order
to be effective, a Top-Paid Group election or calendar year data election
must apply consistently to all plans of the Employer that begin with or within
the same calendar year.
1.53 HOUR OF SERVICE
(a) Unless otherwise specified in the Adoption Agreement, 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 and one (501) Hours of
Service shall be credited under this paragraph for any single
continuous period (whether or not such period need occur 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 damages,
is either awarded or agreed to by the Employer. The same Hours of
Service shall not be credited both under paragraph (a) or paragraph
(b), as the case may be, and under this paragraph (c). These hours
shall be credited to the Employee for the computation period or
periods to which the award or agreement pertains rather than the
computation period in which the award, agreement or payment is made.
(d) Hours of Service shall be credited for employment with the Employer
and with other members of an affiliated service group [as defined
in Code Section 414(m)], a controlled group of corporations [as
defined in Code Section 414(b)], or a group of trades or businesses
under common control [as defined in Code Section 414(c)] of which
the adopting Employer is a member, and any other entity required
to be aggregated with the Employer pursuant to Code Section 414(o)
and the Regulations thereunder. Hours of Service shall also be
credited for any individual considered an Employee for purposes
of this Plan under Code Section 414(n) or Code Section 414(o)
and the Regulations thereunder.
(e) Solely for purposes of determining whether a Break in Service,
as defined in paragraph 1.14, 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 by
reason of the pregnancy of the individual, by reason of a birth
of a child of the individual, by reason of the placement of a child
with the individual in connection with the adoption of such child
by such individual, or for purposes of caring for such child for a
period beginning immediately following such birth or placement. The
Hours of Service credited under this paragraph shall be credited in
the computation period in which the absence begins if the crediting
is necessary to prevent a Break in Service in that period, or in
all other cases, in the following computation period. No more than
five hundred and one (501) hours will be credited under this
paragraph.
(f) Hours of Service shall be determined under the hours counting method
as elected by the Employer in the Adoption Agreement. If no
election is made, actual hours under the hours counting method will
be used.
1.54 INTEGRATION LEVEL The amount of Compensation specified in the Adoption
Agreement at or below which the rate of contributions or benefits (expressed
in each case as a percentage of such Compensation) provided under the Plan is
less than the rate of contributions or benefits (expressed in each case as a
percentage of such Compensation) provided under the Plan with respect to
Compensation above such level. The Adoption Agreement must specify an
Integration Level in effect for the Plan Year for each Participant. No
Integration Level in effect for a particular year may exceed the contribution
and benefit base ("Taxable Wage Base") under Section 230 [Code Section
3121(a)(1)] of the Social Security Act in effect on the first day of the Plan
Year.
1.55 KEY EMPLOYEE Any Employee or former Employee (and the Beneficiaries
of such Employee) who at any time during the determination period was:
(a) an officer of the Employer if such individual's annual Compensation
exceeds 50% of the dollar limitation under Code Section 415(b)(1)(A)
(the defined benefit maximum annual benefit),
(b) an owner or an individual considered an owner under Code Section 318
of one of the ten (10) largest interests in the Employer if such
individual's Compensation exceeds 100% of the dollar limitation
under Code Section 415(c)(1)(A) and such ownership exceeds 1/2%,
(c) a more than 5% owner of the Employer, or
(d) a 1% owner of the Employer who has an annual Compensation of more
than $150,000.
The determination period is the Plan Year containing the Top-Heavy Determination
Date and the four (4) preceding Plan Years. The determination of Key Employee
status will be made in accordance with Code Section 416(i)(1) and the
Regulations thereunder.
1.56 LEASED EMPLOYEE Effective for Plan Years beginning after December 31,
1996, any person (other than an Employee of the recipient) who, pursuant to an
agreement between the recipient and any other person ("leasing organization"),
has performed services for the recipient [or for the recipient and related
persons determined in accordance with Code Section 414(n)(6)] on a substantially
full-time basis for a period of at least one year and such services are
performed under the primary direction or control of the recipient Employer.
If a Leased Employee is treated as an Employee by reason of this paragraph
1.56, "Compensation" includes Compensation from the leasing organization
which is attributable to services performed for the Employer.
1.57 LIMITATION YEAR The calendar year or such other twelve (12) consecutive
month period designated by the Employer in the Adoption Agreement for purposes
of determining the maximum Annual Additions to a Participant's account. All
Qualified Plans maintained by the Employer must use the same Limitation Year.
If the Limitation Year is amended to a different twelve (12) consecutive month
period, the new Limitation Year must begin on a date within the Limitation Year
in which the amendment is made. If no designation is made on the Adoption
Agreement, the Limitation Year will automatically default to the Plan Year.
1.58 MASTER OR PROTOTYPE PLAN A plan, the form of which is the subject
of a favorable opinion letter from the Internal Revenue Service.
1.59 MATCHING CONTRIBUTION An Employer contribution made to this or any
other Defined Contribution Plan on behalf of a Participant on account of a
Voluntary or Required After-tax Contribution made by such Participant, or
on account of a Participant's Elective Deferral made by such Participant under
a Plan maintained by the Employer.
1.60 MAXIMUM PERMISSIBLE AMOUNT The maximum Annual Additions that may be
contributed or allocated to a Participant's account under the Plan for any
Limitation Year shall not exceed the lesser of:
(a) the Defined Contribution Dollar Limitation, or
(b) 25% of the Participant's Compensation for the Limitation Year.
The Compensation limitation referred to in (b) shall not apply to any
contribution for medical benefits [within the meaning of Code Section 401(h)
or Code Section 419A(f)(2)] which is otherwise treated as an Annual Addition
under Code Sections 415(l)(1) or 419(d)(2). If a short Limitation Year is
created because of an amendment changing the Limitation Year to a different
twelve (12) consecutive month period, the Maximum Permissible Amount will not
exceed the Defined Contribution Dollar Limitation multiplied by a fraction,
the numerator of which is the number of months in the short Limitation Year
and the denominator of which is twelve (12).
1.61 NET PROFIT The current and accumulated operating earnings of the Employer
after Federal and state income taxes, excluding nonrecurring or unusual items of
income, and before contributions to this and any other Qualified Plan of the
Employer, unless the Employer has elected a different definition in the Adoption
Agreement.
1.62 NORMAL RETIREMENT AGE The age set by the Employer in the Adoption
Agreement, not to exceed age sixty-five (65), at which a Participant becomes
fully vested and is eligible to retire and receive his or her benefits under
the Plan.
1.63 NORMAL RETIREMENT DATE The date on which the Participant attains the
Normal Retirement Age as elected in the Adoption Agreement. If no election
is made on the Adoption Agreement, it shall mean the date on which a Participant
attains his or her Normal Retirement Age.
1.64 OWNER-EMPLOYEE A sole proprietor or a partner owning more than 10% of
either the capital or profits interest of the partnership.
1.65 PAIRED PLANS Two (2) or more plans which are either a combination of
two (2) or more standardized Defined Contribution Plans or a combination of
one (1) or more standardized Defined Contribution Plan(s) and one (1) Defined
Benefit Plan offered by the same sponsor, which have been designed so that any
single Plan, or combination of Plans adopted by an Employer, where each Plan by
itself or the Plans together will meet the requirements of the
antidiscrimination rules, the contribution and benefit limitations, and the Top-
Heavy provisions of Code Sections 401(a)(4), 415 and 416.
1.66 PARTICIPANT Any current Employee who met the applicable eligibility
requirements and reached his or her Entry Date and, where the context so
requires, pursuant to the terms of the Plan, any living former Employee on
whose behalf an Account is maintained or former Employee who has met the
eligibility requirements.
1.67 PARTICIPANT'S BENEFIT With respect to required distributions pursuant
to paragraph 7.4, the account balance as of the last Valuation Date in the
calendar year immediately preceding the Distribution Calendar Year increased
by the amount of any contributions or forfeitures allocated to the account
balance as of the dates in the calendar year after the Valuation Date and
decreased by distributions made in the calendar year after the Valuation Date.
A special exception exists for the second Distribution Calendar Year. For
purposes of this paragraph, if any portion of the minimum distribution for
the First Distribution Calendar Year is made in the second Distribution Calendar
Year on or before the Required Beginning Date, the amount of the minimum
distribution made in the second Distribution Calendar Year shall be treated
as if it had been made in the immediately preceding Distribution Calendar Year.
1.68 PERIOD OF SEVERANCE For Plans using Elapsed Time for purposes of
crediting Service:
(a) a Break in Service shall mean a Period of Severance of at least
twelve (12) months;
(b) a Period of Severance is a continuous period of time during
which the Employee is not employed by the Employer;
(c) a Period of Severance begins on the date the Employee retires,
quits, or is discharged, or if earlier, the twelve (12) month
anniversary of the date on which the Employee was otherwise first
absent from Service.
1.69 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 Code Sections 401(a)(4) and 410.
1.70 PLAN The Defined Contribution Plan of the Employer in the form of this
Prototype Defined Contribution Plan and the applicable Adoption Agreement
executed by the Employer as may be amended from time to time (which includes
any addendum thereto). The Plan shall have the name specified in the Adoption
Agreement.
1.71 PLAN ADMINISTRATOR For Employers who are members of the Savings Banks
Employees Retirement Association (SBERA), Xxxxxx Xxxxxx, Xx. shall be the Plan
Administrator. All other Employers shall select their own Plan Administrator.
If no Plan Administrator is selected, the Employer shall be the Plan
Administrator.
1.72 PLAN SPONSOR The Employer who adopts this Prototype Defined Contribution
Plan and accompanying Adoption Agreement.
1.73 PLAN YEAR For Employers who are members of the Savings Bank Employees
Retirement Associations (SBERA), the twelve (12) consecutive month period
beginning on November 1 of each year. Effective January 1, 2000, for employers
who are members of SBERA, the twelve (12) consecutive month period beginning on
January 1 of each year shall become the Plan Year. For all other Employers, the
twelve (12) consecutive month period designated by the Employer in the Adoption
Agreement.
1.74 PRESENT VALUE The actuarial equivalent of a Participant's accrued
benefit under a Defined Benefit Plan maintained by the Employer expressed in
the form of a lump sum. Actuarial equivalence shall be based on reasonable
interest and mortality assumptions determined in accordance with the Top-Heavy
provisions of the respective plan. Present Value is used for the purposes of
the Top-Heavy test and the determination with respect thereto.
1.75 PRIOR PLAN YEAR The Plan Year immediately preceding the current Plan
Year.
1.76 PRIOR SAFE HARBOR PLAN A Target Benefit Plan that:
(a) was adopted and in effect on September 19, 1991,
(b) which on that date contained a Stated Benefit Formula applicable
to Target Benefit Plans that took into account Service prior to that
date, and
(c) satisfied the applicable nondiscrimination requirements for Target
Benefit Plans for those prior years. For purposes of determining
whether a plan satisfies the applicable nondiscrimination
requirements for Target Benefit Plans for Plan Years beginning
before January 1, 1994, no amendments after September 19, 1991,
other than amendments necessary to satisfy Code Section 401(l), will
be taken into account.
1.77 PROJECTED ANNUAL BENEFIT For Limitation Years beginning before January
1, 2000, the annual retirement benefit (adjusted to an actuarial equivalent
straight life annuity if such benefit is expressed in a form other than a
straight life annuity or Qualified Joint and Survivor Annuity) to which the
Participant would be entitled under the terms of a Defined Benefit Plan or
Plans, assuming:
(a) the Participant will continue employment until Normal Retirement
Age under the Plan (or current age, if later), and
(b) the Participant's Compensation for the current Limitation Year
and all other relevant factors used to determine benefits under
the Plan will remain constant for all future Limitation Years.
1.78 PROJECTED PARTICIPATION For purposes of determining a Participant's
stated benefit, a Participant's years of Projected Participation under the
Plan is the sum of (a) and (b), where
(a) is the number of years during which the Participant benefited under
this Plan beginning with the latest of:
(1) the first Plan Year in which the Participant benefited under
the Plan,
(2) the first Plan Year taken into account in the Stated Benefit
Formula, and
(3) any Plan Year immediately following a Plan Year in which the
Plan did not satisfy the safe harbor for Target Benefit Plans
in Regulations Section 1.401(a)(4)-8(b)(3), and ending with
the last day of the current Plan Year, and
(b) is the number of years if any, subsequent to the current Plan Year
through the end of the Plan Year in which the Participant attains
Normal Retirement Age.
For purposes of this definition of years of Projected Participation, if this
Plan is a Prior Safe Harbor Plan, the Plan is deemed to satisfy the safe harbor
for Target Benefit Plans in Regulations Section 1.401(a)(4)-8(b)(3) and a
Participant is treated as benefiting under the Plan in any Plan Year beginning
prior to January 1, 1994.
1.79 QUALIFIED DOMESTIC RELATIONS ORDER (QDRO Order) A Qualified Domestic
Relations Order (QDRO) is a signed domestic relations order issued by a state
court or agency which creates, recognizes or assigns to an alternate payee(s)
the right to receive all or part of a Participant's Plan benefit and which
meets the requirements of Code Section 414(p). An alternate payee is a Spouse,
former Spouse, child, or other dependent who is treated as a Beneficiary under
the Plan as a result of the QDRO. Unless elected otherwise by the Employer in
the Adoption Agreement, the earliest date for payment of a QDRO to an alternate
payee, is the date upon which the order is deemed qualified.
1.80 Qualified Early Retirement Age For purposes of paragraph 8.9, Qualified
Early Retirement Age is the latest of:
(a) the earliest date under the Plan on which the Participant may
elect to receive retirement benefits, or
(b) the first day of the 120th month beginning before the Participant
reaches Normal Retirement Age, or
(c) the date the Participant begins participation.
1.81 QUALIFIED JOINT AND SURVIVOR ANNUITY (QJSA) An immediate annuity for
the life of the Participant with a survivor annuity for the life of the
Participant's Spouse which is at least 50% of but not more than 100% of the
annuity payable during the joint lives of the Participant and the Participant's
Spouse. The exact amount of the survivor annuity is to be specified by the
Employer in the Adoption Agreement. If not designated by the Employer, the
survivor annuity will be 50% of the amount paid to the Participant during his
or her lifetime. The Qualified Joint and Survivor Annuity will be the amount
of benefit which can be provided by the Participant's Vested Account Balance.
1.82 QUALIFIED MATCHING CONTRIBUTIONS (QMACs) Matching contributions which
when made are subject to the distribution and nonforfeitability requirements
under Code Section 401(k).
1.83 QUALIFIED NON-ELECTIVE CONTRIBUTIONS (QNECs) Contributions (other than
Matching Contributions or Qualified Matching Contributions) made by the Employer
and allocated to Participants' accounts that the Participants may not elect to
receive in cash until distributed from the Plan, that are nonforfeitable when
made, and that are distributable only in accordance with the distribution
provisions that are applicable to Elective Deferrals and Qualified Matching
Contributions.
1.84 QUALIFIED PLAN Any pension, profit-sharing, stock bonus, or other plan
which meets the requirements of Code Section 401 and includes a trust exempt
from tax under Code Section 501(a) or any annuity plan described in Code Section
403(a).
1.85 Qualified Pre-Retirement Survivor Annuity An annuity for the life of
the Surviving Spouse of a Participant the actuarial equivalent of which is not
less than 50% of the vested Participant's Account Balance as of the date of
the Participants' death, as elected by Employer in the Adoption Agreement.
If no election is made on the Adoption Agreement the Qualified Pre-Retirement
Survivor Annuity shall be 50% of the Participant's Vested Account Balance as
of the date of the death of the Participant, unless the Employer in a prior
version of the Adoption Agreement or Plan, the Employer had elected the
Qualified Pre-Retirement Survivor Annuity shall be 100% of the Account Balance.
1.86 QUALIFIED VOLUNTARY CONTRIBUTION A tax-deductible Voluntary Employee
Contribution which was permitted to be made for the tax years 1982 through 1986.
This type of contribution is no longer permitted to be made by a Participant.
This Plan shall accept such type of contribution if made in a prior plan and
an appropriate recordkeeping account will be established on behalf of the
Participant.
1.87 REQUIRED AGGREGATION GROUP A group of plans including:
(a) each Qualified Plan of the Employer in which at least one (1) Key
Employee participates or participated at any time during the
determination period (regardless of whether the plan has
terminated), and
(b) any other Qualified Plan of the Employer which enables a plan
described in (a) to meet the requirements of Code Sections 401(a)(4)
or 410.
1.88 REQUIRED BEGINNING DATE The date on which a Participant is required to
take his or her first minimum distribution under the Plan as elected by the
Employer in the Adoption Agreement. The rules regarding the determination of
the Required Beginning Date are set forth at paragraph 7.5 herein.
1.89 REQUIRED AFTER-TAX CONTRIBUTIONS Employee after-tax contributions
required as a condition of participation in the Plan.
1.90 Rollover Contribution A contribution made by a Participant of an
amount distributed to such Participant from another Qualified Plan in accordance
with Code Section 402(c).
1.91 SALARY DEFERRAL AGREEMENT An agreement between the Employer and an
Employee where the Employee authorizes the Employer to withhold a specified
percentage or dollar amount of his or her Compensation (otherwise payable in
cash) for deposit to the Plan on behalf of such Employee.
1.92 SAVINGS INCENTIVE MATCH PLAN FOR EMPLOYEES (SIMPLE) A plan adopted by
an Eligible Employer under Code Section 401(k)(11) under which Eligible
Employees are permitted to make Elective Deferrals to a Qualified Plan
established under the SIMPLE 401(k) Plan Adoption Agreement.
1.93 SELF-EMPLOYED INDIVIDUAL An individual who has Earned Income for the
taxable year from the trade or business for which the Plan is established
including an individual who would have had Earned Income but for the fact that
the trade or business had no Net Profit for the taxable year.
1.94 SERVICE The period of current or prior employment with the Employer
including any imputed period of employment which must be counted under USERRA.
If the Employer maintains a plan of a predecessor employer, service for such
predecessor shall be treated as Service for the Employer for the purpose(s)
specified in the Adoption Agreement. Service is determined under an hours
counting method or Elapsed Time method as selected by the Employer in the
Adoption Agreement.
If the Employer has elected to use the Elapsed Time method to determine
eligibility and/or vesting Service, the aggregate of the following (applied
without duplication and except for periods of Service that may be disregarded
under paragraph 9.6);
(a) Each period from an Employee's date of hire (or reemployment date)
to his next Severance Date; and
(b) If an Employee performs an Hour of Service within twelve (12)
months of a Severance Date, the period from such Severance Date to
such Hour of Service. Service shall be credited for all periods
whether the Employee is employed by an Employer or an Affiliate.
Service shall be measured in whole years and fractions of a year in months.
For this purpose, (a) periods of less than a full year shall be aggregated on
the basis that twelve (12) months or three hundred and sixty five (365) days
equals a year, and (b) in aggregating days into month, thirty (30) days shall
be rounded up to the nearest whole month. For purposes of determining Service,
"Date of Hire" means the date on which an Employee first completes an Hour of
Service and "Reemployment Date" means the date on which an Employee first
completes an Hour of Service after a Severance Date.
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)], a
group of trades or businesses under common control [under Code Section 414(c)]
or any other entity required to be aggregated with the Employer pursuant to
Code Section 414(o), 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) or Code Section 414(o) to be
considered an Employee of any Employer aggregated under Code Section 414(b),
(c), or (m).
1.95 SEVERANCE DATE The date which is the earlier of:
(a) the date on which an Employee quits, retires, is discharged or dies;
or
(b) the first anniversary of the first date of a period in which an
Employee remains continuously absent from Service with an Employer
or affiliate (with or without pay) for any reason other than quit,
retirement, discharge or death.
1.96 SEVERANCE PERIOD Each period from an Employee's Severance Date to his
next Reemployment Date.
1.97 SERVICE PROVIDER An individual or business entity who is retained by
the Plan Administrator on behalf of the Plan to provide specified administrative
services to the Plan.
1.98 SHAREHOLDER EMPLOYEE An Employee or officer who owns [or is considered
as owning within the meaning of Code Section 318(a)(1)], on any day during the
taxable year of an electing small business corporation (S Corporation), more
than 5% of such corporation's outstanding stock.
1.99 SIMPLIFIED EMPLOYEE PENSION PLAN A plan under which the Employer makes
contributions for eligible Employees pursuant to a written formula.
Contributions are made to an individual retirement account which meets the
requirements of Code Section 408(k).
1.100 SPONSOR SBERA, or any successor(s) or assign(s).
1.101 SPOUSE The individual to whom a Participant is married, or was married
in the case of a deceased Participant who was married at the time of his or her
death. A former Spouse will be treated in the same manner as a Spouse to the
extent provided under a Qualified Domestic Relations Order as described in Code
Section 414(p).
1.102 STATED BENEFIT FORMULA The formula elected by the Employer in the
Adoption Agreement expressed in the form of a straight life annuity without a
term certain, refund feature or survivor benefit.
1.103 SUPER TOP-HEAVY PLAN A Plan described at paragraph 1.106 under which
the Top-Heavy Ratio exceeds 90%.
1.104 TAXABLE WAGE BASE For plans with an allocation formula which takes
into account the Employer's contribution under the Federal Insurance
Contributions Act (FICA), the contribution and benefit base in effect under
the Social Security Act (Section 203) at the beginning of the Plan Year.
1.105 TOP-HEAVY DETERMINATION DATE For the first Plan Year of the Plan,
the last day of the first Plan Year. For any Plan Year subsequent to the
first Plan Year, the last day of the preceding Plan Year.
1.106 TOP-HEAVY PLAN For any Plan Year, the Employer's Plan is Top-Heavy
if any of the following conditions exist:
(a) The Top-Heavy Ratio for the Employer's Plan exceeds 60% and
this Plan is not part of any Required Aggregation Group or
Permissive Aggregation Group of plans.
(b) The Employer's Plan is a part of a Required Aggregation Group
of plans but not part of a Permissive Aggregation Group and the
Top-Heavy Ratio for the group of plans exceeds 60%.
(c) The Employer's Plan is a part of a Required Aggregation Group
and part of a Permissive Aggregation Group of plans and the Top-
Heavy Ratio for the Permissive Aggregation Group exceeds 60%.
1.107 TOP-HEAVY RATIO
(a) If the Employer maintains one or more Defined Contribution Plans
(including any Simplified Employee Pension Plan) and the Employer
has not maintained any Defined Benefit Plan which during the five
(5) year period ending on the Determination Date(s) has or has had
accrued benefits, the Top-Heavy Ratio for this Plan alone, or for
the Required or Permissive Aggregation Group as appropriate, is a
fraction,
(1) the numerator of which is the sum of the account balances of
all Key Employees as of the Determination Date(s) [including
any part of any account balance distributed in the five year
period ending on the Determination Date(s)], and
(2) the denominator of which is the sum of all account balances
[including any part of any account balance distributed in the
five (5) year period ending on the Determination Date(s)], both
computed in accordance with Code Section 416 and the
Regulations thereunder.
Both the numerator and denominator of the Top-Heavy Ratio are
increased to reflect any contribution not actually made as of
the Determination Date but which is required to be taken into
account on that date under Code Section 416 and the Regulations
thereunder.
(b) If the Employer maintains one or more Defined Contribution Plans
(including any Simplified Employee Pension Plan) and the Employer
maintains or has maintained one or more Defined Benefit Plans
which during the five (5) year period ending on the Determination
Date(s) has or has had any accrued benefits, the Top-Heavy Ratio
for any Required or Permissive Aggregation Group, as appropriate,
is a fraction, the numerator of which is the sum of account
balances under the aggregated Defined Contribution Plan or Plans
for all Key Employees, determined in accordance with (a) above,
and the Present Value of accrued benefits under the aggregated
Defined Benefit Plan or Plans for all Key Employees as of the
Determination Date(s), and the denominator of which is the sum of
the account balances under the aggregated Defined Contribution
Plan or Plans for all Participants, determined in accordance with
(a) above, and the Present Value of accrued benefits under the
Defined Benefit Plan or Plans for all Participants as of the
Determination Date(s), all determined in accordance with Code
Section 416 and the Regulations thereunder. The accrued benefits
under a Defined Benefit Plan in both the numerator and denominator
of the Top-Heavy Ratio are increased for any distribution of an
accrued benefit made in the five (5) year period ending on the
Determination Date.
(c) For purposes of (a) and (b) above, the value of account balances
and the Present Value of accrued benefits will be determined as
of the most recent Valuation Date that falls within or ends with
the twelve (12) month period ending on the Determination Date,
except as provided in Code Section 416 and the Regulations
thereunder for the first and second Plan Years of a Defined Benefit
Plan. The account balances and accrued benefits of a Participant
who is not a Key Employee but who was a Key Employee in a prior
year, or who has not been credited with at least one (1) Hour of
Service with any Employer maintaining the Plan at any time during
the five (5) year period ending on the Determination Date, will be
disregarded. The calculation of the Top-Heavy Ratio, and the
extent to which distributions, rollovers, and transfers are taken
into account will be made in accordance with Code Section 416 and
the Regulations thereunder. Qualified Voluntary Employee
Contributions will not be taken into account for purposes of
computing the Top-Heavy Ratio. When aggregating plans, the value
of account balances and accrued benefits will be calculated with
reference to the Determination Dates that fall within the same
calendar year. The accrued benefit of a Participant other than a
Key Employee shall be determined under the method, if any, that
uniformly applies for accrual purposes under all Defined Benefit
Plans maintained by the Employer, or if there is no such method, as
if such benefit accrued not more rapidly than the slowest accrual
rate permitted under the fractional rule of Code Section
411(b)(1)(C).
1.108 TOP-PAID GROUP The group consisting of the top 20% of Employees when
ranked on the basis of Compensation paid during such year. For purposes of
determining the number of Employees in the group (but not who is in it),
Employees identified in (a) through (d) may be excluded and Employees identified
in (e) through (f) shall be excluded:
(a) Employees who have not completed six (6) months of Service by
the end of the year;
(b) Employees who normally work less than seventeen and one-half
(171/2) hours per week by the end of the year;
(c) Employees who normally work not more than six (6) months during
any year;
(d) Employees who have not attained age twenty-one (21) by the end
of the year;
(e) Employees included in a collective bargaining unit, covered by
an agreement between Employee representatives and the Employer,
where retirement benefits were the subject of good faith bargaining,
if they constitute at least 90% of the Employer's workforce and the
Plan covers only non-union Employees; and
(f) Employees who are nonresident aliens and who receive no Earned
Income which constitutes income from sources within the United
States.
1.109 TRANSFER CONTRIBUTION A non-taxable transfer of a Participant's benefit
directly from a Qualified Plan to this Plan. This type of transfer does not
constitute constructive receipt of plan assets.
1.110 TRUST The trust established in conjunction with the Plan, together
with any and all amendments thereto which holds assets of the Plan held by
or in the name of the Trustee or Custodian.
1.111 TRUSTEE For employers who are members of SBERA, the Trustee shall be
the Trustees of the Savings Banks Employees Retirement Association. For all
other Employers, the Trustee shall be the individual, individuals or institution
appointed by the Employer to serve as Trustee of the Plan. In the event the
Employer does not name an individual, individuals or institution to serve as
Trustee of the Plan, the Employer will be deemed to be the Trustee.
1.112 UNIFORMED SERVICES EMPLOYMENT AND REEMPLOYMENT RIGHTS ACT OF 1994
(USERRA) The Uniform Services Employment and Reemployment Rights Act of 1994,
as amended. Notwithstanding any provision of the Plan to the contrary,
contributions, benefits, Plan loan repayment, suspensions and service credit
with respect to qualified military service will be provided in accordance with
Code Section 414(u).
1.113 VALUATION DATE The last day of the Plan Year and such other date(s) as
specified in the Adoption Agreement on which the fair market value of Plan
assets is determined. The Trustee and/or Custodian must also value the Trust
on such other Valuation Dates as directed by the Plan Administrator.
1.114 VESTED ACCOUNT BALANCE The aggregate value of the Participant's Vested
Account Balances derived from Employer and Employee contributions (including
Rollovers), whether vested before or upon death, including the proceeds of
insurance contracts, if any, on the Participant's life. The provisions of
Article VIII shall apply to a Participant who is vested in amounts attributable
to Employer contributions, Employee contributions (or both) at the time of
death or distribution.
1.115 VOLUNTARY AFTER-TAX CONTRIBUTION Any contribution made to the Plan by
or on behalf of a Participant that is included in the Participant's gross income
in the year in which made and that is maintained under a separate account to
which earnings and losses are allocated.
1.116 WELFARE BENEFIT FUND Any fund that is part of a plan of the Employer,
or has the effect of a plan, through which the Employer provides welfare
benefits to Employees or their beneficiaries. For these purposes, Welfare
Benefit means any benefit other than those with respect to which Code Section
83(h) (relating to transfers of property in connection with the performance
of services), Code Section 404 (relating to deductions for contributions to
an Employees' trust or annuity and Compensation under a deferred payment plan),
Code Section 404A (relating to certain foreign deferred compensation plans)
apply. A "Fund" for purposes of this paragraph, is any social club, voluntary
employee benefit association, supplemental unemployment benefit trust or
qualified group legal service organization described in Code Section
501(c)(7), (9), (17) or (20); any trust, corporation, or other organization
not exempt from income tax, or to the extent provided in regulations, any
account held for an Employer by any person.
1.117 YEAR OF SERVICE
(a) If elected in the Adoption Agreement, the hours counting method
will be used in determining either an Employee's initial or
continuing eligibility to participate in the Plan, or the
nonforfeitable interest in the Participant's account balance
derived from Employer contributions. A Year of Service is a twelve
(12) consecutive month period in which an Employee has completed
one-thousand (1,000) Hours of Service (or such lower number as is
specified in the Adoption Agreement).
(1) The eligibility computation period starts with the day the
Employee first performs an Hour of Service and is a twelve
(12) consecutive month period during which the Employee has
completed the number of Hours of Service [not to exceed one-
thousand (1,000)] as elected in the Adoption Agreement and
each anniversary thereof.
(2) The vesting computation period is a twelve (12) consecutive
month period as elected by the Employer in the Adoption
Agreement during which the Employee completed the number
of Hours of Service [not to exceed one-thousand (1,000)]
as elected in the Adoption Agreement. If no election is made,
the Plan Year shall be used provided that in the event the
Plan Year is changed, the "vesting computation period" shall
be the twelve (12) consecutive month period determined in
accordance with Department of Labor Regulation Section
2530.203-2(c), the provisions of which are incorporated herein
by reference.
(b) If elected in the Adoption Agreement, the Elapsed Time method
will be used in determining either an Employee's initial or
continuing eligibility to participate in the Plan, or the
nonforfeitable interest in the Participant's account balance derived
from Employer contributions. An Employee will receive credit for
the aggregate of all time period(s) commencing with the Employee's
first day of employment or reemployment and ending on the date a
Break in Service begins. The first day of employment or
reemployment is the first day the Employee performs an Hour of
Service for the Employer. An Employee will also receive credit
for any Period of Severance of less than twelve (12) consecutive
months. Fractional periods of a year will be expressed in terms
of days. Years of Service will be determined in accordance with
paragraph 1.94.
(1) A Break in Service under the Elapsed Time method is a Period
of Severance of at least twelve (12) consecutive months. A
Period of Severance is a continuous period of time during
which the Employee is not employed by the Employer. The
continuous period begins on the date the Employee retires,
quits, is discharged or if earlier, the first twelve (12)
month anniversary of the date on which the Employee is first
absent from Service.
(2) In the case of an individual who is absent from work for
maternity or paternity reasons, the twelve (12) consecutive
month period beginning on the first anniversary of the first
date of such absence from work for maternity or paternity
reasons means an absence (a) by reason of the pregnancy of the
individual, (b) by reason of the birth of the child of the
individual, (c) by reason of the placement of a child with
the individual in connection with the adoption of such child
by such individual, or (d) for purposes of caring for such
child for a period beginning immediately following such birth
or placement.
(c) Each Employee will share in Employer contributions for the period
beginning on the date the Employee commences participation under
the Plan and ending on the date on which such Employee terminates
employment with the Employer or is no longer a member of an eligible
class of Employees.
(d) If two (2) Years of Service are required as a condition of
eligibility, a Participant will only have completed two (2) Years
of Service for eligibility purposes upon the actual completion of
two (2) consecutive Years of Service.
(e) The Employer may elect in the Adoption Agreement for purposes of
determining a Participant's vested interest to disregard Years of
Service prior to:
(1) the time the Employer or any affiliate maintained the Plan or
any predecessor plan; and
(2) an Employee's attainment of a certain age, not to exceed age
eighteen (18).
(f) An Employee's Years of Service under this Plan may be determined
using the hours counting method or the Elapsed Time method or both.
Unless otherwise elected in the Adoption Agreement, Years of Service
shall be determined using the hours counting method on the basis of
actual hours worked.
(g) If the Plan determines Service for a given purpose on one basis
and an Employee transfers to Employment covered by this Plan from
Employment covered by another Qualified Plan which determines
Service for such purpose on the other basis, and if the Employee's
Service for the period during which he was covered by such other
plan is required to be taken into consideration under this Plan
for that purpose, then the following rules shall apply:
(1) If such Service was determined under the other plan using
the hours counting method, then the period so taken into
consideration through the close of the computation period
in which such transfer occurs shall be:
(i) the number of Years of Service credited to the Employee
for such purpose under such other plan as of the start
of such computation period, and
(ii) for the computation period in which such transfer occurs,
the greater of:
(A) his Service for such period as of the date of
transfer determined under the rules of such other
plan, or
(B) his Service for such period determined under the
Elapsed Time rules of this Plan.
Service after the close of that computation period shall be
determined for such purpose solely under the Elapsed Time
rules of this Plan.
(2) If such Service was determined under the other plan using
the Elapsed Time method, then the period taken into
consideration shall be (1) the number of one-year periods of
Service credited to the Employee under such other plan as of
the date of the transfer, and (2) for the computation period
which includes the date of transfer, the Hours of Service
equivalent to any fractional part of a Year of Service credited
to him under such other plan. In determining such equivalency,
the Employee shall be credited with one-hundred-ninety (190)
Hours of Service for each month or fraction thereof.
If this Plan is an amendment and continuation of another Qualified Plan or if
this Plan is amended and an effect of the amendment is to change the basis on
which Years of Service are determined, the foregoing rules shall be applied as
if each Employee had transferred employment on the effective date of such
amendment.
If no election is made on the Adoption Agreement, the Plan will define a Year
of Service as a twelve (12) consecutive month period in which an individual has
completed one-thousand (1,000) Hours of Service under the hours counting method.
ARTICLE II
ELIGIBILITY REQUIREMENTS
2.1 ELIGIBILITY Employees who meet the eligibility requirements in the
Adoption Agreement on the Effective Date of the Plan shall become Participants
as of the Effective Date of the Plan. If elected in the Adoption Agreement, all
Employees employed on the Effective Date of the Plan may participate, even if
they have not satisfied the Plan's specified eligibility requirements. Employees
hired after the Effective Date of the Plan, upon meeting the eligibility
requirements, shall become Participants on the applicable Entry Date. For
amended and restated Plans, Employees who were Participants in the Plan prior
to the Effective Date will continue to participate in the Plan, regardless of
whether the Employee satisfies the eligibility requirements in the restated or
amended Plan, unless otherwise elected in the Adoption Agreement. If no age
and Service requirement are elected in the Adoption Agreement, an Employee will
become a Participant on the date the individual first performs an Hour of
Service for the Employer. The Employee must satisfy the eligibility
requirements specified in the Adoption Agreement and be employed on the Entry
Date to become a Participant in the Plan.
(a) In the event that an Employee has satisfied the eligibility
requirements, but is not employed on the applicable Entry Date,
such Employee will become a Participant for the purpose(s) for
which an Employee had previously qualified upon his or her rehire.
(b) Except as otherwise provided in the Adoption Agreement, all Years
of Service will be counted for purposes of determining whether an
Employee has satisfied the Plan's Service eligibility requirement,
if any. If a Participant has a Break in Service or Period of
Severance, Service before that Break in Service or Period of
Severance shall be reinstated as of the date the Employee is
credited with an Hour of Service after incurring such Break in
Service or Period of Severance.
(c) 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 immediately if such Employee has satisfied the
minimum age and Service requirements and would have previously
become a Participant had he or she been in an eligible class.
(d) A former Participant shall be eligible to authorize Elective
Deferrals and may make other Employee Contributions as permitted
under the Plan as of the date on which the individual is rehired.
Such contributions shall resume immediately (or as soon as
administratively feasible) on or after his or her date of rehire.
A former Employee who had become a Participant for the purpose of
Employer contributions shall again become a Participant with respect
to Employer Contributions on the date on which the individual is
rehired.
(e) An Employee who has become a Participant under the Plan will
remain a Participant for as long as an account is maintained under
the Plan for his or her benefit, or until his or her death, if
earlier.
(f) Each Employee will share in Employer contributions for the period
beginning on the date the Employee commences participation under
the Plan and ending on the date on which such Employee terminates
employment with the Employer or is no longer a member of an eligible
class of Employees.
2.2 DETERMINATION OF ELIGIBILITY The Plan Administrator shall determine the
eligibility of each Employee for participation in the Plan based upon
information provided by the Employer. Such determination shall be conclusive
and binding on all individuals except as otherwise provided herein or by
operation of law.
2.3 CHANGE IN CLASSIFICATION OF EMPLOYMENT In the event a Participant
becomes ineligible to participate because he or she is no longer a member of
an eligible class of Employees (as elected by the Employer in the Adoption
Agreement), Elective Deferrals and/or other Employee contributions will cease
as soon as administratively practicable after the Participant becomes
ineligible. Such Participant shall participate for the purpose(s) for which
the Participant had previously qualified immediately (or as soon as
administratively feasible) upon his or her return to an eligible class of
Employees.
2.4 PARTICIPATION A Year of Service for participation in the Plan is an
eligibility computation period during which an Employee completes the Hours
of Service requirement [one-thousand (1,000) hours or less] elected by the
Employer in the Adoption Agreement. If the Plan utilizes the Elapsed Time
method of crediting Service, an eligibility computation period for which the
Employee receives credit for a Year of Service will be determined under the
Service crediting rules of paragraph 1.117.
The initial eligibility computation period shall be the twelve (12) consecutive
month period beginning on the Employee's employment commencement date (the first
day an Employee completes an Hour of Service for the Employer). The Plan will
measure succeeding eligibility computation periods based on the Plan Year,
unless otherwise elected in the Adoption Agreement. Where the subsequent
computation periods are calculated on the basis of the Plan Year, an Employee
who receives credit for the required number of Hours of Service during the
initial computation period and then earns an additional Year of Service credit
during the Plan Year commencing during the subsequent twelve (12) month period
will be credited with two (2) Years of Service for purposes of eligibility to
participate.
An Employer may specify in the Adoption Agreement a Service requirement for
eligibility for participation in the Plan after completion of a specified number
of months or Hours of Service. Any Service requirement based on months of
Service may not require an Employee to complete more than one (1) Year of
Service [one-thousand (1,000) Hours of Service] in a twelve (12) consecutive
month period, or if applicable, two (2) Years of Service.
2.5 EMPLOYMENT RIGHTS Participation in the Plan shall not confer upon a
Participant any employment rights, nor shall it interfere with the Employer's
right to terminate the employment of any Employee at any time.
2.6 SERVICE WITH CONTROLLED GROUPS All Years of Service with other members
of a controlled group of corporations [as defined in Code Section 414(b)],
trades or businesses under common control [as defined in Code Section 414(c)],
or members of an affiliated service group [as defined in Code Section 414(m)]
and any other entity required to be aggregated with the Employer pursuant to
Code Section 414(o) shall be credited for purposes of determining an Employee's
eligibility to participate.
2.7 LEASED EMPLOYEES A Leased Employee shall be treated as an Employee
of the recipient Employer. Notwithstanding the foregoing, a Leased Employee
shall not be considered an Employee of the recipient Employer for purposes of
participation in any Plan established under a nonstandardized Adoption
Agreement, unless otherwise elected in the Adoption Agreement. Contributions
or benefits provided by the leasing organization which are attributable to
services performed for the recipient Employer shall be treated as provided by
the recipient Employer.
A Leased Employee shall not be considered an Employee of the recipient if such
Employee is covered by a money purchase pension plan sponsored by the leasing
organization providing:
(a) a non-integrated Employer contribution rate of at least 10% of
Compensation, [as defined in Code Section 415(c)(3)], but including
amounts contributed pursuant to a salary reduction agreement which
are excludable from the Employee's gross income under Code Sections
125, 132(f)(4), 402(e)(3), 402(h)(1)(B) or 403(b).
(b) immediate participation, and
(c) full and immediate vesting.
This exclusion is only available if Leased Employees do not constitute more
than 20% of the recipient's Non-Highly Compensated work force. The Plan
Administrator must apply this paragraph 2.7 consistent with Code Sections 414(n)
and 414(o) and the Regulations issued thereunder. The Employer must specify in
an addendum to the Adoption Agreement the manner in which the Plan will
determine the allocation of Employer contributions and Participant forfeitures
on behalf of a Participant if the Participant is a Leased Employee covered by
a plan maintained by the leasing organization.
2.8 THRIFT PLAN The Employer may make an election in the Adoption Agreement
to require Employee after-tax contributions (Required After-tax Contributions)
as a condition of participation in the Plan. The Employer shall notify each
eligible Employee of his or her eligibility for participation prior to the
appropriate Entry Date. The Employee shall indicate his or her intention to
join the Plan by authorizing the Employer to withhold a percentage of his or
her Compensation as provided in the Plan. Such authorization shall be returned
to the Employer within the time prescribed. The Employee may decline
participation by so indicating in accordance with the procedures prescribed
by the Employer. If the Employee declines to participate, such Employee shall
be given the opportunity to join the Plan on any subsequent Entry Date.
2.9 TARGET BENEFIT PLAN A Target Benefit Plan may be established by
executing a Target Benefit Plan Adoption Agreement. The Employer shall notify
each eligible Employee of his or her eligibility for participation prior to
the appropriate Entry Date. The Employer will make contributions for each
Participant in level annual contributions which will fund the Participant's
target benefit at the Plan's Normal Retirement Age.
2.10 XXXXX-XXXXX PLAN A Xxxxx-Xxxxx Plan may be established by executing a
Xxxxx-Xxxxx Plan Adoption Agreement. The Employer shall notify each Employee
covered by any Xxxxx Xxxxx or prevailing wage contract of his or her eligibility
for participation prior to the appropriate Entry Date. The Employer will make
contributions for each Participant in accordance with the formula or any public
contract subject to the Xxxxx-Xxxxx Act or to any other Federal, state or
municipal prevailing wage law as specified in the Adoption Agreement or the
schedule attached thereto.
For the purposes of this paragraph, Employees covered by a Xxxxx Xxxxx or
prevailing wage contract will be those who are included in a unit of Employees
covered by a collective bargaining agreement between the Employer and Employee
representatives, if retirement benefits were the subject of good faith
bargaining and if two percent or less of the Employees who are covered pursuant
to that agreement are professionals as defined in Code Section 1.410(b)-9 of
the Regulations. For this purpose, the term "Employee representatives" does
not include any organization more than half of whose members are Employees who
are owners, officers, or executives of the Employer.
2.11 WAIVER OF PARTICIPATION A Plan established under a standardized Adoption
Agreement may not permit an otherwise eligible Employee or Participant to elect
not to participate in the Plan. A Plan established under a nonstandardized
Adoption Agreement may treat Employees who waive participation in the Plan as a
nondiscriminatory class of Employees who are ineligible to participate therein
by making the proper designation in the Adoption Agreement. Waivers of Plan
participation must not constitute cash or deferred arrangements [within the
meaning of Code Section 401(k)] or they shall be ineffective. A waiver shall
not be considered a cash or deferred arrangement if it is irrevocable, applies
to all Plans maintained by the Employer, and is made prior to the date on which
the Employee is first eligible to participate in the Plan of the Employer. The
Plan Administrator shall establish uniform and nondiscriminatory procedures as
it deems necessary to carry out this provision including, but not limited to,
rules prescribing the timing and filing of elections not to participate. The
Plan Administrator shall determine the propriety of any such waiver.
An Employee or Participant continues to earn credit for each Year of Service
for eligibility or vesting purposes he or she completes and his or her account
(if any) will share in the gains or losses of the Plan during the periods he
or she elects not to participate.
2.12 OMISSION OF ELIGIBLE EMPLOYEE If, in any Plan Year, an Employee who
should be included as a Participant in the Plan is erroneously omitted and
discovery of such omission is not made until after a contribution by his or
her Employer for the Plan Year has been made, the Employer shall make any
such correction regarding the Employee's eligibility under one of the IRS
approved correction programs.
2.13 INCLUSION OF INELIGIBLE EMPLOYEE If, in any Plan Year, any person
who should not have been included as a Participant in the Plan is erroneously
included and discovery of such incorrect inclusion is not made until after a
contribution for the Plan Year has been made, the Employer shall not be entitled
to recover the contribution made with respect to the ineligible individual
regardless of the deductibility of the contribution in question. The
contribution and any earnings made with respect to the ineligible person shall
be forfeited in the Plan Year in which the discovery is made. If any person
made Elective Deferrals erroneously, the Elective Deferrals and the associated
earnings shall be distributed to that individual in the Plan Year in which the
discovery was made. Alternatively, the Employer may determine if an alternative
correction method may be available and use said method to make the correction.
ARTICLE III
EMPLOYER CONTRIBUTIONS
3.1 CONTRIBUTION AMOUNT
(a) The Employer will make periodic contributions to the Plan in
accordance with the contribution formula or formulas elected in
the Adoption Agreement.
(b) The Employer shall also make Matching, Top-Heavy minimum
contributions and any other Employer contribution for the benefit
of Participants who are covered by USERRA. Employer Matching
Contributions under USERRA shall be made in the Plan Year for which
the Participant exercises his or her right to make-up Elective
Deferrals and/or other Employee contributions for prior years.
Top-Heavy minimum contributions and other Employer contributions
for USERRA protected Service shall be made during the Plan Year in
which the individual returns to employment with the Employer.
(c) Employer contributions required under USERRA are not increased or
decreased with respect to Plan investment earnings for the period
to which such contributions relate. The Employer's contribution
for any Plan Year shall be subject to the limitations on allocations
contained in Article X.
3.2 CONTRIBUTION AMOUNT FOR A SIMPLE 401(K) PLAN If the Employer has
executed the SIMPLE 401(k) Adoption Agreement the provisions of the following
paragraphs shall apply for a Plan Year if the Employer is an Eligible Employer
and no contributions are made or benefits accrued for services during the Plan
Year on behalf of any Eligible Employee under any other plan, contract, pension
or trust described in Code Section 219(g)(5)(A) or (B) maintained by the
Employer.
(a) SIMPLE 401(K) MATCHING CONTRIBUTION FORMULA - For each Plan Year,
the Employer shall contribute and allocate to each Eligible
Employee's account an amount equal to the Employee's Elective
Deferral contribution up to a limit of 3% of the Employee's
Compensation for the full Plan Year. If the Employer elects in
the Adoption Agreement to make the Non-Elective Contribution as
specified in paragraph 3.2(b) below, this Matching Contribution
will not be made.
(b) SIMPLE 401(K) NON-ELECTIVE CONTRIBUTION FORMULA - For any Plan Year,
the Employer may elect to contribute a Non-Elective Contribution
of 2% of Compensation for the full Plan Year for each Eligible
Employee who received at least $5,000 of Compensation (or such
lesser amount as elected by the Employer in the SIMPLE 401(k) Plan
Adoption Agreement) for the Plan Year. The allocation thereof shall
be unrelated to any Participant Elective Deferral contributions made
hereunder. If the Employer elects in the Adoption Agreement to make
the Non-Elective Contribution for a Plan Year, the Employer shall
not make the Matching Contribution described in paragraph 3.2(a)
above with respect to the same Plan Year. The Employer shall notify
Eligible Employees within a reasonable period of time (before the
sixtieth day) prior to the beginning of each Plan Year of its
election to make the 2% Non-Elective Contribution in lieu of the
Matching Contribution.
(c) The provisions of the Plan implementing the limitations of Code
Section 415 apply to contributions made pursuant to paragraphs
3.2(a) and (b).
(d) In the event that the contribution and allocation formula above
results in an Excess Annual Addition, such excess shall be corrected
as provided for at paragraph 10.2 of the Basic Plan Document #01.
The Employer's contribution for any Plan Year shall be subject to
the overall limitations on allocations contained in Article X.
(e) No other Employer or Employee contributions may be made to the
SIMPLE 401(k) Plan for the Plan Year other than Elective Deferrals
described in paragraph 4.8, Matching or Non-Elective Contributions
described in paragraphs 3.2(a) and (b), and Rollover Contributions
described in Regulations Section 1.402(c)-2, Q&A1 (a).
(f) In the event the deduction of a contribution made by the Employer
is disallowed under Code Section 404, such contribution (to the
extent disallowed) must be returned to the Employer within one
year of the disallowance of the deduction.
(g) All benefits attributable to contributions described in paragraphs
3.2(a) and (b) are nonforfeitable at all times, and all previous
contributions made under the Plan provisions are nonforfeitable as
of the beginning of the Plan Year the SIMPLE 401(k) provisions
apply.
3.3 RESPONSIBILITY FOR CONTRIBUTIONS The Trustee, the Sponsor or the
Custodian shall not be required to determine if the Employer has made a
contribution or if the amount contributed from its general assets is in
accordance with the Code and the provisions elected in the Adoption Agreement.
The Employer shall have sole responsibility in this regard. The Trustee shall
be accountable solely for contributions actually received within the limits of
Article X.
3.4 RETURN OF CONTRIBUTIONS Contributions made to the Plan by the Employer
shall be irrevocable except as provided below:
(a) Any contribution forwarded to the Trustee or Custodian due to a
mistake of fact, provided that the contribution is returned to
the Employer within one year of the date of the contribution.
The Trustee will not increase the amount of the Employer
contribution returnable under this paragraph 3.3 for any earnings
attributable to the contribution but the Trustee will reduce the
amount returned to the Employer for any losses incurred attributable
to the excess contribution.
(b) In the event that the Commissioner of Internal Revenue determines
that the Plan is not initially qualified under the Internal Revenue
Code, any contribution dependent on the initial qualification by
the Employer must be returned to the Employer within one year after
the date the initial qualification is denied, but only if the
application for the qualification is made by the time prescribed by
law for filing the Employer's return for the taxable year in which
the Plan is adopted, or such later date as the Secretary of the
Treasury may prescribe.
(c) Contributions forwarded to the Trustee or Custodian are presumed
to be deductible and are conditioned on their deductibility.
Contributions which are determined by the Internal Revenue Service
to not be deductible will be returned to the Employer.
3.5 MERGER OF ASSETS FROM ANOTHER PLAN
(a) The Employer may in its sole discretion direct the Trustee or
Custodian to accept assets from another Defined Contribution Plan,
or to transfer assets to another Defined Contribution Plan,
provided that such transfer satisfies the requirements of Code
Section 414(l) and the Regulations thereunder. The Employer, Plan
Administrator, Trustee or Custodian shall have the right to refuse
to accept or transfer assets for any reason, provided that nothing
in this paragraph 3.5 shall give the Trustee or Custodian the right
to refuse to make a direct transfer of an Eligible Rollover
Distribution if requested to do so by a Participant in accordance
with paragraph 6.10.
(b) When the transferor plan is a money purchase pension plan and the
transferee plan (the Plan established under this document), is not
a money purchase pension plan as set forth in Code Section
401(a)(11)(B)(iii)(III), the Qualified Joint and Survivor Annuity
option may not be eliminated at least with respect to the benefits
which are transferred.
When the transferor plan is a profit-sharing, stock bonus or cash
or deferred arrangement [401(k) plan] which included the Qualified
Joint and Survivor Annuity provisions but was not required to do
so, upon the transfer of those assets, the transferee plan may be
amended to entirely eliminate the annuity option.
3.6 COVERAGE REQUIREMENTS For purposes of coverage testing, a Participant
is treated as benefiting under the Plan for any Plan Year during which the
Participant received or is deemed to receive an allocation in accordance with
Code Section 1.410(b)-3(a). If the number of Participants who are eligible to
share in any contribution for a Plan Year is such that the Plan established
under a nonstandardized Adoption Agreement would fail to meet the requirements
of Code Section 410(b)(1) or 410(b)(2)(A)(i), then the group of Participants
eligible to share in the contribution for the Plan Year will be increased to
include such minimum number of Participants who are not employed by the Employer
on the last day of the Plan Year and who did not meet the hours requirement, as
may be necessary to satisfy the applicable tests under the Code Sections
referenced above. The Participants who will become eligible to share in the
contribution will be those Participants when compared to Participants who are
similarly situated, are those who completed the greatest number of Hours of
Service in the Plan Year before the termination of their Service. If after
such allocation, the coverage requirements of the Code are still not satisfied,
allocation shall continue to be made to Participants with decreasing Hours of
Service until the coverage requirements of the ratio percentage test of Code
Section 410(b)(1)(A) are satisfied.
If after the application of the correction procedure in the preceding paragraph
the coverage requirements are still not satisfied, the Employer may apply the
same correction procedure to an otherwise excludable class of Employees until
the coverage requirements of the ratio percentage test of Code Section
410(b)(1)(A) are satisfied.
The preceding paragraph will not be construed to permit the reduction of any
Participant's account balance, and any amounts which were allocated to
Participants whose eligibility to share in the contribution did not result
from the application of the preceding paragraph will not be reallocated to
satisfy such requirements. Instead, the Employer will make an additional
contribution equal to the amount which the affected Participants would have
received had they been included initially in the allocation of the Employer's
contribution, even if it would cause the contributions of the Employer for the
applicable Plan Year to exceed the amount which is deductible by the Employer
for such Plan Year under Code Section 404. Any adjustments pursuant to this
paragraph will be considered a retroactive amendment of the Plan which was
adopted by the last day of the Plan Year.
Specifically excluded from the Code Section 410(b) coverage tests are those
Employees who are excluded from participation in the Plan for the entire Plan
Year which includes those Employees whose retirement benefits are subject to
a collective bargaining agreement, nonresident aliens, those Employees excluded
from Plan participation by age and Service requirements imposed by the Plan and
those Employees who incur a Separation from Service during the applicable Plan
Year and for the Plan Year fail to complete more than five hundred (500) Hours
of Service or three (3) consecutive calendar months under the Elapsed Time
method.
3.7 ELIGIBILITY FOR CONTRIBUTION The Employer will determine on the
Adoption Agreement the conditions which Participants must meet in order to
receive an allocation of an Employer contribution and any forfeitures, subject
to the following:
(a) In a Plan established under a standardized Adoption Agreement, a
Participant who is employed on the last day of the Plan Year will
share in the allocation of the Employer contribution and that Plan
Year without regard to the Participant's Hours of Service.
In a Plan established under a standardized Adoption Agreement, a
Participant who completed more than five hundred (500) Hours of
Service or three (3) consecutive calendar months under the Elapsed
Time method will share in the allocation of Employer contributions
for the Plan Year, regardless of whether employed on the last day
of the Plan Year.
(b) In a Plan established under a nonstandardized Adoption Agreement,
the Employer will elect in the Adoption Agreement whether any
Employer contribution will be allocated to any Participant who does
not complete the necessary Hours of Service or consecutive calendar
months requirement elected in the Adoption Agreement, subject to
the Top Heavy minimum contribution requirements, if applicable.
In a Plan established under a nonstandardized Adoption Agreement,
the Employer will elect in the Adoption Agreement whether a
Participant will receive an allocation of the Employer's
contribution if not employed on the last day of the Plan Year.
(c) The Employer may elect in the standardized or nonstandardized
Adoption Agreement any other conditions a Participant must meet
to receive an allocation under the Plan.
3.8 TARGET BENEFIT PLAN CONTRIBUTION The Employer's annual contribution to
a Target Benefit Plan shall be determined by a Stated Benefit Formula and
corresponding factor tables contained in the Adoption Agreement and shall be
allocated to Participants as provided in paragraph 5.3. This notwithstanding,
the Employer's contribution for any Plan Year shall be subject to the
limitations on allocations contained in Article X and shall not be less than
the minimum contribution required at Article XIV for Top-Heavy Plans. The
annual Employer contribution necessary to fund the stated benefit with respect
to a Participant will be determined each year as follows:
(a) STEP 1: PRESENT VALUE OF BENEFIT - If the Participant has not
yet reached Normal Retirement Age, calculate the present
value of the stated benefit by multiplying the stated benefit
by the factor that is the product of (i) the applicable
factor in Table I [if attained age is less than sixty-five
(65)] or Table IA [if attained age is greater than or equal
to sixty-five (65)], multiplied by (ii) the applicable factor
in Table III. If the Participant is at or beyond Normal
Retirement Age, calculate the present value of the stated
benefit by multiplying the stated benefit by the factor in
Table IV corresponding to that Normal Retirement Age.
(b) STEP 2: THEORETICAL RESERVE - The Theoretical Reserve
is determined according to (1) and (2) below:
(1) Initial Theoretical Reserve. A Participant's Theoretical
Reserve as of the last day of the Participant's first
year of Projected Participation (year 1) is zero.
However, if this Plan is a Prior Safe Harbor Plan with
a Stated Benefit Formula that takes into account Plan
Years prior to the first Plan Year and this Plan
satisfies the safe harbor in Regulations Section
1.401(a)(4)-8(b)(3)(C), the Initial Theoretical Reserve
is determined as follows:
(i) Calculate as of the last day of the Plan Year
immediately preceding year 1, the present value
of the stated benefit using the actuarial
assumptions, the provisions of the Plan, and the
Participant's Compensation as of such date. For
a Participant who is beyond Normal Retirement Age
during year 1, the stated benefit will be
determined using the actuarial assumptions, the
provisions of the Plan, and the Participant's
Compensation as of such date, except that the
straight life annuity factor used in that
determination will be the factor applicable for
the Participant's Normal Retirement Age.
(ii) Calculate as of the last day of the Plan Year
immediately preceding year 1 the present value
of future Employer contributions, i.e., the
contributions due each Plan Year using the
actuarial assumptions, the provisions of the
Plan, (disregarding those provisions of the Plan
providing for the limitations of Code Section 415
or the minimum contributions under Code Section
416), and the Participant's Compensation as of
such date, beginning with year 1 through the end
of the Plan Year in which the Participant attains
Normal Retirement Age.
(iii) Subtract the amount determined in (ii) from the
amount determined in (i).
(2) Accumulate the Initial Theoretical Reserve determined in
(1) and the Employer contribution (as limited by Code
Section 415, without regard to any required minimum
contributions under Code Section 416) for each Plan Year
beginning in year 1 up through the last day of the
current Plan Year (excluding contributions, if any, for
the current Plan Year) using the Plan's interest
assumption in effect for each such year. In any Plan
Year following the Plan Year in which the Participant
attains Normal Retirement Age, the accumulation is
calculated assuming an interest rate of 0%.
For purposes of determining the level of annual Employer
contribution necessary to fund the stated benefit, the
calculations in (1) and (2) above will be made as of the last
day of each Plan Year, on the basis of the Participant's age
on the Participant's last birthday, using the interest rate
in effect on the last day of the prior year.
(c) STEP 3: UNFUNDED AMOUNT - The excess, if any, of the amount
determined in Step 1 over the amount determined in Step 2.
(d) STEP 4: CONTRIBUTION - Amortize the result in Step 3 by multiplying
it by the applicable factor from Table II. For the Plan Year in
which the Participant attains Normal Retirement Age and for any
subsequent Plan Year, the applicable factor is 1.0.
3.9 XXXXX-XXXXX PLAN CONTRIBUTION The Employer will irrevocably contribute
the amount determined in accordance with the contribution formula or formulas
elected on the Xxxxx-Xxxxx Adoption Agreement. An Employer may take credit
for purposes of the Xxxxx-Xxxxx Act or other prevailing wage law at the hourly
rate specified in an addendum attached to the Xxxxx-Xxxxx Adoption Agreement.
Contributions made by the Employer to a Xxxxx-Xxxxx plan for the Xxxxx-Xxxxx
work performed by the Employer's covered Employees during the Plan Year may
be used as an offset for any Employer contributions to be made to another
Defined Contribution Plan sponsored by the Employer. The Employer may make
Qualified Non-Elective Contributions to the Plan, designated as "Xxxxx-Xxxxx
or Prevailing Wage Contributions", in order to satisfy the Employer's
obligations under the Xxxxx-Xxxxx Act, or any other Federal, state or
municipal Xxxxx-Xxxxx or prevailing wage law. Contributions made on behalf
of Participants who do not perform prevailing wage work cannot be used as a
credit towards meeting the Employer's obligation under the prevailing wage plan.
3.10 UNIFORM DOLLAR CONTRIBUTION The Employer's contribution to a plan
utilizing a uniform dollar allocation formula for a Plan Year shall be the
same dollar amount to each Participant regardless of Compensation, Years of
Service, age or any other variable set forth in the Adoption Agreement.
3.11 UNIFORM POINTS CONTRIBUTION The Employer's contribution to a Plan
utilizing a uniform points allocation formula for a Plan Year shall be in the
same ratio that each Participant's points, as elected in the Adoption Agreement,
bears to the total points awarded to all Participants for the Plan Year.
3.12 403(B) MATCHING CONTRIBUTION If a tax-exempt Employer elects in the
401(k) Adoption Agreement to make a Matching Contribution based on the
Employee's Elective Deferral contributions under the Code Section 403(b) Plan,
the Employer shall make a Matching Contribution to the Matching Contribution
Account of those Participants who make Elective Deferrals (while an Employee
and a Participant in the Plan) and who are eligible under the Adoption Agreement
to receive the Matching Contribution. Any such Matching Contribution made to
the Plan will be allocated under the formula elected in the Adoption Agreement.
In the event the rate of Matching Contribution is determined to be
discriminatory in favor of one or more Highly Compensated Employees, that
part of the Matching Contribution as is necessary to make such rate
nondiscriminatory shall be forfeited. Any such amounted forfeited shall be
disregarded under the Plan's provisions relating to Code Section 401(k)(3) and
401(m)(2) of the Code.
ARTICLE IV
EMPLOYEE CONTRIBUTIONS
4.1 VOLUNTARY AFTER-TAX CONTRIBUTIONS If elected by an Employer in the
Adoption Agreement, a Participant may make Voluntary After-tax Contributions
to the Plan. These contributions are not excludable from the Participant's
gross income. Such contributions must be made in a uniform and
nondiscriminatory manner. Such contributions are subject to the limitations
on Annual Additions and are subject to antidiscrimination testing. Any
Voluntary After-tax Contribution will not be a condition precedent to the
contribution or allocation of any Employer contribution to the Participant.
Under any Plan which can be established hereunder and if permitted in the
Plan's loan policy document, a Participant may repay a defaulted loan with
after-tax dollars. The Employer may permit buy-back of amounts previously
forfeited with after-tax dollars even if Voluntary After-tax Contributions
are not permitted in the Plan. Any buy-back of amounts previously forfeited
must be subject to uniform and nondiscriminatory rules which do not operate
in favor of Highly Compensated Employees. Repayment of loans made to a
Participant and buy-backs of cash-outs as described in Code Section 411(a)(7)(B)
will not be considered Annual Additions as described in Regulations Section
1.415-6(b)(6). These amounts are not subject to the limitation contained in
Code Section 401(m) in the year in which made, as they are not considered Annual
Additions pursuant to Code Section 415.
4.2 REQUIRED AFTER-TAX CONTRIBUTIONS If elected by the Employer in the
Adoption Agreement, each Eligible Participant shall be required to make Required
After-tax Contributions to the Plan as a condition of participation in the Plan.
Such contributions shall be withheld from the Employee's Compensation and shall
be transmitted by the Employer to the Trustee/Custodian. A Participant may
discontinue participation or change his or her contribution percentage in
accordance with either an election on the Adoption Agreement or uniform and
nondiscriminatory rules established by the Employer. If a Participant
discontinues his or her contributions, such Participant may not again authorize
such contributions until a change is permitted in accordance with uniform and
nondiscriminatory rules established by the Employer. The Employer may reduce a
Participant's contribution percentage if required to satisfy the ACP Test
described in Article XI.
4.3 QUALIFIED VOLUNTARY CONTRIBUTIONS A Participant may no longer make
Qualified Voluntary Contributions to the Plan. Xxxxxxx already contributed
may remain in the Plan until distributed to the Participant. Such amounts
will be maintained in a separate account which will be nonforfeitable at all
times. The account will share in the gains and losses of the Trust in the
same manner as described at paragraph 5.5 of the Plan. No part of the Qualified
Voluntary Contribution Plan account will be used to purchase life insurance.
Subject to Article VIII, Joint and Survivor Annuity Requirements (if
applicable), the Participant may withdraw any part of the Qualified Voluntary
Contribution account by making written application to the Plan Administrator.
4.4 ROLLOVER CONTRIBUTIONS Unless elected otherwise in the Adoption
Agreement, a Participant/Employee may make a Rollover Contribution to a Defined
Contribution Plan established hereunder of all or any part of an amount
distributed or distributable to him or her from a Qualified Plan or an
individual retirement account (IRA) qualified under Code Section 408 where
the IRA was used as a conduit from a Qualified Plan provided:
(a) the amount distributed to the Participant/Employee is deposited
to the Plan no later than the sixtieth day after such distribution
was received by the Participant/Employee,
(b) the amount distributed is not one of a series of substantially
equal periodic payments made for the life (or life expectancy) of
the Participant/Employee or the joint lives (or joint life
expectancies) of the Participant/Employee and the
Participant's/Employee's Beneficiary, or for a specified period of
ten (10) years or more,
(c) the amount distributed is not a required minimum distribution under
Code Section 401(a)(9),
(d) if the amount distributed included property, such property is
rolled over only upon the Trustee, Custodian and/or Employer's
approval, or if sold, the proceeds of such property may be rolled
over,
(e) the amount distributed would otherwise be includible in gross
income (determined without regard to the exclusion for net
unrealized appreciation with respect to Employer securities), and
(f) the amount rolled over does not include any amounts contributed on
an after-tax basis by the Participant to the Qualified Plan.
The Plan Administrator shall be held solely responsible for determining the
tax free status of any Rollover Contribution made to this Plan, and the
Trustee/Custodian shall have no responsibility for any such determination.
4.5 PLAN TO PLAN TRANSFER CONTRIBUTIONS
(a) If elected by the Employer in the Adoption Agreement, a Participant
or an Employee may arrange for the direct transfer of his or her
entire benefit from another Qualified Plan to the Plan established
hereunder. Such transfer shall be made for any reason and may be
in cash and/or in-kind. The Employer and/or the Trustee/Custodian
in their sole discretion shall have the right to refuse to accept a
transfer for any reason including but not limited to if such assets
do not comply operationally, would result in a prohibited
transaction, are not readily marketable or are not compatible with
the Employer's investment policy objectives. If necessary, for
accounting and recordkeeping purposes, Transfer Contributions shall
be treated in the same manner as Rollover Contributions.
(b) The Employer may arrange for the direct transfer of a
Participant's/Employee's benefit from a Qualified Plan to this Plan.
If necessary, for accounting and recordkeeping purposes, Transfer
Contributions shall be treated in the same manner as Rollover
Contributions.
(c) In the event the Employer accepts a Transfer Contribution from a
Plan in which the Participant/Employee was directing the investment
of his or her account, the Employer may, if the Employer determines
that it is appropriate and not in violation of the nondiscrimination
rules under Regulation Section 1.401(a)(4)-4, permit the Employee
to continue to direct his or her investments in accordance with
paragraph 12.7 with respect only to such Transfer Contribution.
(d) Notwithstanding any provision of this Plan to the contrary, to the
extent that any optional form of benefit under the Plan established
hereunder permits a distribution prior to the Employee's Normal
Retirement Age, death, Disability, or severance from employment,
and prior to Plan termination, the optional form of benefit is
not available with respect to benefits attributable to assets
(including the post-transfer earnings thereon) and liabilities
that are transferred, within the meaning of Code Section 414(1),
to this Plan from a money purchase pension plan qualified under
Code Section 401(a) (other than any portion of those assets and
liabilities attributable to Voluntary After-tax Contributions).
4.6 VOLUNTARY DIRECT TRANSFERS BETWEEN PLANS A Participant or Employee shall
be able to transfer his or her entire benefit between qualified Defined
Contribution Plans [other than a direct transfer described in Code Section
401(a)(31)] without regard to whether the Participant's benefit is immediately
distributable or results in the elimination or reduction of Code Section
411(d)(6) protected benefits. Such a transfer does not violate Code Section
411(d)(6) if the following requirements are met:
(a) The plan from which the benefits are transferred must provide that
the transfer is conditioned upon a voluntary, fully informed
election by the Participant to transfer his or her entire benefit
to another qualified Defined Contribution Plan. As an alternative
to the transfer, the Participant must be offered the opportunity
to retain the Participant's Code Section 411(d)(6) protected
benefits under the Plan [or if the Plan is terminating, to receive
any optional form of benefit for which the Participant is eligible
under the Plan as required by Code Section 411(d)(6)].
(b) The transferring plan must be the same plan type as the Plan
sponsored by the Employer. When benefits are being transferred
from a qualified cash or deferred arrangement under Code Section
401(k), the benefits must be transferred to a qualified cash or
deferred arrangement under Code Section 401(k). Money purchase
pension plans must be transferred to money purchase pension plans.
Benefits transferred from a profit-sharing plan other than a 401(k)
plan or employee stock ownership plan may be transferred to any
type of Defined Contribution Plan, even if the event is not one
that allows a distribution.
(c) The transfer must be made in connection with certain corporate
transactions such as an asset or stock acquisition, merger or other
similar transaction involving a change in Employer of the Employees
of a trade or business [i.e., an acquisition or disposition within
the meaning of Regulation Section 1.410(b)-2(f)] or in connection
with the Participant's transfer of employment to a different job
for which Service does not result in additional allocations under
the transferor plan.
(d) This type of elective transfer is only available for transfers
made on or after September 6, 2000, even if the transaction or
change of employment occurred prior to that date.
(e) If the conditions outlined in (a), (b), (c) and (d) above are met,
the Employer's Plan is not required to protect optional forms of
benefits available under the prior plan with respect to any benefit
transferred [except as required by the Qualified Joint and Survivor
Annuity requirements under Code Sections 401(a)(11) and 417]. Such
a transfer is not a protected optional form of benefit, but rather
is a "right or feature" under Regulation Section 1.401(a)(4)-4(e).
4.7 ELECTIVE DEFERRALS IN A 401(K) PLAN
(a) A Participant may enter into a Salary Deferral Agreement with the
Employer authorizing the Employer to withhold a portion of such
Participant's Compensation not to exceed the dollar limit under
Code Section 402(g), as adjusted under Code Section 415(d), for
the Applicable Calendar Year, or the percentage or dollar amount
of Compensation specified in the Adoption Agreement.
(b) Any Salary Deferral Agreement may not be effective earlier than
the latest date of the following:
(1) The date of the Participant's entry (or reentry) into the Plan;
(2) the execution of the Participant's Salary Deferral Agreement;
(3) the date the Employer adopts the 401(k) Plan by executing the
Adoption Agreement;
(4) the Effective Date of the Elective Deferral provisions as
specified in the Adoption Agreement.
(c) Any such contribution shall be credited to the Employee's
Elective Deferral account. A Participant may terminate deferrals
at any time. A Participant may amend his or her Salary Deferral
Agreement to increase or decrease his or her deferral percentage
upon notice in accordance with the provisions in the Adoption
Agreement or such uniform and nondiscriminatory procedures. The
Employer shall determine the permitted frequency of such changes
which shall be no less frequently than once each calendar year.
Any such election will be effective as soon as practicable
following the receipt of the notification by the Employer in
accordance with uniform and nondiscriminatory procedures
established and communicated to the Participants. The
Participant shall notify the Employer of any change in his or
her deferral election in writing or in such other form or manner
as permitted. The Employer may, notwithstanding any limit to
the contrary in the Adoption Agreement, limit the maximum deferral
percentage for Highly Compensated Employees. If a Participant
terminates his or her agreement, such Participant shall be
permitted to put a new Salary Deferral Agreement into effect as
provided in the Adoption Agreement or any other uniform and
nondiscriminatory procedures established. The Employer may also
amend or terminate said agreement on notice to the affected
Participant, if required to maintain the qualified status of the
Plan.
(d) If permitted by the Employer, when a Participant who has not
authorized the Employer to withhold the maximum annual deferral
amount pursuant to Code Section 402(g) and desires to increase the
total amount withheld for a Plan Year, the Participant may authorize
the Employer to withhold a supplemental amount up to 100% of his or
her Compensation for one or more pay periods. In no event may the
amounts withheld under the Salary Deferral Agreement plus any
additional amount deferred exceed the lesser of 25% of a
Participant's Compensation or any other limitation elected in the
Adoption Agreement by the Employer.
(e) If the Plan permits Voluntary After-tax Contributions and the
Employer has elected in the Adoption Agreement, all or any portion
of amounts previously withheld under any Salary Deferral Agreement
may be recharacterized as Voluntary After-tax Contributions within
the Plan Year.
(f) Elective Deferrals shall be deposited in the Plan's Trust as soon
as administratively feasible after being withheld from the
Participant's Compensation at the earliest date on which the
contributions can reasonably be segregated from the Employer's
general assets, but no later than the time prescribed by the Code,
ERISA or by applicable Treasury or Department of Labor Regulations.
4.8 ELECTIVE DEFERRALS IN A SIMPLE 401(K) PLAN
(a) An Eligible Employee may enter into a Salary Deferral Agreement
with the Employer authorizing the Employer to withhold a portion
of such Eligible Employee's Compensation, not to exceed $6,000 per
calendar year, as adjusted to reflect any annual cost-of-living
increases announced by the Internal Revenue Service. No Eligible
Employee shall be permitted to make Elective Deferrals under this
Plan, or any other Qualified Plan maintained by the Employer,
during any taxable year in excess of the dollar limitation contained
in Code Section 402(g) in effect in at the beginning of such taxable
year. The $6,000 limit may be reduced if an Eligible Employee
contributes pre-tax contributions to Qualified Plans of other
employers.
(b) In addition to any other election periods provided, each Participant
may make or modify his Salary Deferral Agreement during the sixty
(60) day election period immediately preceding each January 1.
(c) For the Plan Year in which an Eligible Employee becomes eligible
to make Elective Deferrals under the SIMPLE 401(k) Plan provisions,
the sixty (60) day election period requirement of paragraph 4.8(b)
above is deemed satisfied if the Eligible Employee may make or
modify a Salary Deferral Agreement election during a sixty (60) day
period that includes either the date the Employee becomes eligible,
or the day before.
(d) An Eligible Employee may amend his or her Salary Deferral Agreement
to increase or decrease the percentage upon proper and timely notice
to the Employer. The Employer shall determine the permitted
frequency of such changes. An Eligible Employee may terminate his
or her Salary Deferral Agreement at any time during the Plan Year
upon notice to the Employer. If an Eligible Employee terminates his
or her Salary Deferral Agreement, such Eligible Employee will be
permitted to execute a new Salary Deferral Agreement in accordance
with the provisions elected in the Adoption Agreement or any other
uniform and nondiscriminatory procedure. The Employer may also amend
or terminate any Salary Deferral Agreement on notice to the affected
Eligible Employee, if required to maintain the qualified status of
the Plan.
(e) If permitted by the Employer, a Participant who has not authorized
the Employer to withhold at the maximum annual deferral amount and
desires to increase the total amount withheld for a Plan Year, such
Participant may authorize the Employer to withhold an amount up to
100% of his or her Compensation for one or more pay periods.
(f) Elective Deferrals shall be deposited in the Plan's Trust as soon
as administratively feasible after being withheld from the
Participant's Compensation at the earliest date on which the
contributions can reasonable be segregated from the Employer's
general assets but no later than the time prescribed by the Code,
ERISA or by applicable Treasury or Department of Labor Regulations.
(g) The Employer will notify each Eligible Employee prior to the sixty
(60) day election period described in paragraph 4.8(b) that he or
she can make an Elective Deferral or modify a prior election during
that period.
(h) The notification described in this subparagraph 4.8(h) will indicate
whether the Employer will provide a Matching Contribution described
in paragraph 3.2(a) or a 2% Non-Elective Contribution described in
paragraph 3.2(b).
(i) The Plan is not treated as a Top-Heavy Plan under Code Section 416
for any Plan Year for which the SIMPLE 401(k) Plan provisions apply.
4.9 AUTOMATIC ENROLLMENT
(a) If the Employer so elects in the Adoption Agreement, each Employee
eligible under the Employer's Code Section 401(k) cash or deferred
arrangement shall automatically become a Participant in the Plan
as of the first Entry Date after satisfying the Plan's eligibility
requirements. The Employer may elect on the Adoption Agreement to
apply the automatic enrollment provisions to current Employees and
Participants or only to Employees hired on or after the Effective
Date of the adoption of or the amendment to the Plan providing for
the automatic enrollment provisions. If the Employer elects the
provision to apply to current Employees, the Employer will apply
the automatic enrollment provision to Employees and Participants
who are deferring at less than the amount elected on the Adoption
Agreement on or after the Effective Date of the adoption of or the
amendment to the Plan, except for those Employees and Participants
who make an affirmative election to receive the Compensation in
cash.
(b) After satisfying the Plan's eligibility requirements, each Employee
will have his or her Compensation automatically reduced by the
percentage elected in the Adoption Agreement. These amounts will
be contributed to the Plan. An election by the Employee not to make
Elective Deferrals or to contribute a different percentage may be
made at any time. The election is effective for the first pay
period and subsequent pay periods (until superseded by a subsequent
election) if filed when the Employee is hired, or within a
reasonable period thereafter ending before the Compensation for
the first pay period is currently made available. In the event
an Employee has Elective Deferrals withheld pursuant to this
provision and no investment directive has been received, any cash
received shall be invested as provided for in paragraph 13.8 herein.
If an Employee elects to receive cash in lieu of Elective Deferrals
and the election is made when the Employee is hired or within a
reasonable period thereafter ending before the Compensation is
currently available, then no Elective Deferrals for the first pay
period or subsequent pay periods are made on the Employee's behalf
to the Plan until the Employee makes a subsequent affirmative
election to reduce his or her Compensation. Elections filed at a
later date are effective for payroll periods beginning in the month
next following the date the election is filed.
(c) For those current Participants who are deferring at a percentage
or dollar amount less the amount elected on the Adoption Agreement,
the Employer will in the first payroll period after the effective
date of the amendment reduce the Participant's Compensation by the
difference between the Participant's current deferral election and
the election as stated on the Adoption Agreement.
(d) At the time an Employee is hired, the Plan Administrator shall
provide the Employee a notice that explains the automatic enrollment
provision. This notice will also explain the Employee's right to
elect to have no such Elective Deferrals made to the Plan or to
alter the amount of those contributions. This notice will include
the procedure for exercising the right and the timing for
implementation of any such election. The Plan Administrator shall
provide each Participant in the Plan with an annual notice of his
or her Elective Deferral percentage and each Participant's right
to change the percentage, including the procedure for exercising
that right and the timing for implementation of any such election.
Prior to an Employee's automatic enrollment becoming effective,
the Plan Administrator will provide such Employee with appropriate
guidance as to the procedures then in effect, for the Employee to
make alternative elections referenced above. Each Employee
deferring Compensation pursuant to this paragraph shall be deemed
to have consented to an Elective Deferral contribution in the amount
specified by the Employer in the Adoption Agreement, unless he/she
has filed an election to the contrary with the Plan Administrator
pursuant to the Plan's administrative procedures.
4.10 MAKE-UP CONTRIBUTIONS UNDER USERRA A Participant who has the right to
make-up Elective Deferrals, Voluntary After-tax Contributions and/or Required
After-tax Contributions under USERRA shall be permitted to increase his or her
Elective Deferral with respect to a make-up year without regard to any
provision limiting contributions for such Plan Year. Make-up contributions
shall be limited to the maximum amount permitted under the Plan and the
statutory limitations applicable with respect to the make-up year. Employee-
related make-up contributions must be made within the time period beginning
on the date of reemployment and continuing for the lesser of five (5) years
or three (3) times the period of military service.
ARTICLE V
PARTICIPANT ACCOUNTS
5.1 SEPARATE ACCOUNTS The Plan Administrator or its agent shall establish
a separate recordkeeping account for each Participant showing the fair market
value of his or her Plan benefits. Each Participant's account may be separated
for recordkeeping purposes into the following sub-accounts:
(a) Employer contributions:
(1) Non Safe-Harbor Matching Contribution Formula 1 Contributions
(2) Non Safe-Harbor Matching Contribution Formula 2 Contributions
(3) Qualified Matching Contributions
(4) Qualified Non-Elective Contributions
(5) Discretionary Contributions
(6) Safe Harbor Matching Contributions
(7) Safe Harbor Non-Elective Contributions
(8) Xxxxx-Xxxxx Contributions
(9) Target Benefit Contributions
(10) SIMPLE 401(k) Matching Contributions
(11) SIMPLE 401(k) Non-Elective Contributions
(12) Money Purchase Pension Plan Contributions
(b) Employee contributions:
(1) Voluntary After-tax Contributions
(2) Qualified Voluntary Contributions
(3) Elective Deferrals
(4) Required After-tax Contributions
(5) Rollover Contributions
(6) Transfer Contributions
(7) Elective Deferrals in a SIMPLE 401(k) Plan
5.2 VALUATION DATE The Trustee shall value the Trust at the fair market
value as of each Valuation Date and those Valuation Dates elected in the
Adoption Agreement or as directed in writing by the Plan Administrator.
(a) Plan Administrators utilizing a daily valuation system for
Participant recordkeeping purposes shall process any contributions,
distributions, investment income or loss, any appreciation or
depreciation, investment transactions (including a purchase or
sale of an investment alternative) and any other transactions
which affect a Participant on each business day that securities
are traded on the New York Stock Exchange or any other national
securities market. Individual Participant recordkeeping accounts
are updated in accordance with paragraph 5.3 hereof as of each
Valuation Date specified in the Adoption Agreement or such other
date as elected by the Plan Administrator.
(b) Plan Administrators utilizing a balance forward valuation system
for Participant recordkeeping purposes will process contributions,
distributions, investment income or loss, investment transactions
(including a purchase or sale of an investment alternative) and
any other transactions at the Plan level on the Valuation Date and
those other Valuation Dates as specified in the Adoption Agreement
or any other date(s) as the determined by the Plan Administrator.
Individual Participant recordkeeping accounts will be updated within
the allocation period on the date or dates determined by the Plan
Administrator with respect to contributions and distributions.
Investment earnings will be allocated at the end of the valuation
period. Any other transactions which affect Participant accounts
will be posted or allocated to individual Participant accounts on
the next following Valuation Date unless the Plan Administrator
elects, in a uniform and nondiscriminatory manner, to allocate
such transactions as they occur. The Employer may utilize a daily
valuation system for a portion of the Plan and a balance forward
valuation system for the balance of the Plan.
All allocations for a particular Plan Year will be made as of the last
Valuation Date(s) of that Plan Year or such other dates determined by the Plan
Administrator.
5.3 ALLOCATIONS TO PARTICIPANT ACCOUNTS As of each Valuation Date elected
by the Employer in the Adoption Agreement and/or on any date within the
allocation period selected in writing by the Plan Administrator, each
Participant's account shall be adjusted to reflect:
(a) the Participant's share of the Employer's contribution and
forfeitures as determined in the Adoption Agreement,
(b) any Employee contributions,
(c) any repayment of amounts previously distributed to a Participant
upon a separation from Service and repaid by the Participant since
the last Allocation Date,
(d) the Participant's proportionate share of any investment earnings
and increase in the fair market value of the Trust since the last
Allocation Date, and
(e) loan repayments of principal and interest.
The Employer shall deduct from each account:
(f) any withdrawals or payments made from the Participant's account
since the last Allocation Date,
(g) the Participant's proportionate share of any decrease in the fair
market value of the Trust since the last allocation Date, and
(h) the Participant's proportionate share of any fees and expenses paid
from the Plan.
5.4 ALLOCATING EMPLOYER CONTRIBUTIONS
(a) The Employer must specify in the Adoption Agreement the manner in
which the Employer's contribution shall be allocated to
Participants including any minimum contribution for Top-Heavy
Plans. Employer contributions shall be allocated to all
Participants eligible to receive a contribution as provided in
the Adoption Agreement.
(b) Notwithstanding any provision of this Plan to the contrary,
Participants will accrue the right to share in allocations of
Employer contributions with respect to periods of qualified military
service as provided in Code Section 414(u).
(c) At the end of each Plan Year the Plan Administrator shall
redetermine any Matching Contribution for each Participant based
on his or her eligible annual Compensation in accordance with the
Matching Contribution formula elected by the Employer in the
Adoption Agreement. Any Participant for whom any Matching
Contribution has not been sufficiently made in accordance with
the Matching Contribution formula elected by the Employer shall
receive an additional Matching Contribution so that the total
annual deferrals (whether pre-tax or after-tax) reflected as a
percentage of eligible annual Compensation are matched in
accordance with the Matching Contribution formula ("true-up" of
Matching Contributions) selected by the Employer in the Adoption
Agreement. If no election is made on the Adoption Agreement, no
true-up of Matching Contributions will occur.
5.5 ALLOCATING INVESTMENT EARNINGS AND LOSSES Account balances are adjusted
to reflect actual income and investment gains and losses from the period
beginning on the day following the last Valuation Date and ending on the
current Valuation Date. Each Participant's account shall receive a
proportionate share of the actual income and investment gains and losses during
the period. The value of accounts for allocation purposes shall be based on
the value of all Participant accounts (without regard to any portion of any
such account attributable to segregated investments) as of the last Valuation
Date less withdrawals, distributions and expenses plus any contributions
including deferrals (whether pre-tax or after-tax) if any, paid from the Trust
since the last Valuation Date. Investment gains and losses shall be credited
to all Participant accounts having a balance on the Valuation Date regardless
of the vested status of such account and regardless of the Participant's
employment status. The Plan Administrator shall also have the right to adopt
an alternative procedure for allocating income and investment gains and losses
provided that such alternative procedure is uniform and does not discriminate
in favor of Highly Compensated Employees. Any change in procedure shall be
effective as of the next following Valuation Date or such other date as agreed
to by the Employer and the Plan Administrator. Accounts with segregated
investments shall receive the income or loss on such segregated investments.
Investment gains or losses are determined separately for each investment
alternative offered under the Plan.
(a) The value of a Participant's account invested in a mutual fund
(Registered Investment Company) will equal the value of a share
in such fund multiplied by the number of shares credited to the
Participant's account.
(b) In the case of any pooled investment vehicle, earnings, gains or
losses on the pooled investment vehicle will be allocated among
the Participant's accounts in proportion to the value of each
Participant's account invested in that investment vehicle
immediately prior to the Valuation Date. The gain or loss
attributed to each investment vehicle will be credited to or
charged against the Participants' account. Alternatively, the
Plan Administrator or his designate may establish unit values
for each pooled investment vehicle offered under the Plan in
accordance with uniform procedures established by the Plan
Administrator for this purpose. The value of the portion of a
Participant's account invested in a pooled investment vehicle will
equal the value of a unit in such investment vehicle multiplied by
the number of units credited to the account.
(c) In the case of any investment that is held specifically for a
Participant's account, any gain or loss on such investment will be
charged or credited to that Participant's account.
5.6 ALLOCATION ADJUSTMENTS The Plan Administrator or his designate, if
applicable, shall have the right to redetermine the value of Participant
accounts if a previous allocation or valuation was performed incorrectly. Such
redetermination shall be made without regard to the reason for the incorrect
allocation. Such reasons may include, but are not limited to, incorrect
contribution or Employee information provided by the Employer or
representative of the Employer, incorrect valuation of Plan assets, incorrect
determination of investment income and gains or losses, improper interpretation
of the Plan's allocation formulas or procedures, erroneous omission of
Top-Heavy minimum contributions and failure to transmit, receive or interpret
amendments to the allocation formulas, methods or procedures. Subject to
express limits that may be imposed under the Code, the Plan Administrator
reserves the right to delay the processing of any contribution, distribution
or other transaction for any legitimate business reason (including, but not
limited to, failure of systems or computer programs, failure of means of
transmission of data, force majeure, the failure of any Service Provider to
timely receive values or prices, or to correct for its errors omissions or
the errors or omissions of any Service Provider). After having made any
necessary adjustments, the Plan Administrator or his designate, if applicable,
may issue either revised or adjusted statements to Participants with an
explanation of the allocation adjustments.
5.7 PARTICIPANT STATEMENTS The Plan Administrator shall prepare a statement
for each Participant not less frequently than annually. Statements may be
prepared more frequently as agreed between the Plan Administrator and the
Service Provider or other entity responsible for the maintenance of Plan
records or for valuing Plan assets. Each statement shall show the additions
to and subtractions from the Participant's account for the period since the
last such statement and shall show the fair market value of the Participant's
account as of the current statement date.
5.8 CHANGES IN METHOD AND TIMING OF VALUING PARTICIPANTS' ACCOUNTS If
necessary or appropriate, the Plan Administrator may establish different or
additional uniform and nondiscriminatory procedures for determining the fair
market value of Participant's accounts under the Plan.
ARTICLE VI
RETIREMENT BENEFITS AND DISTRIBUTIONS
6.1 NORMAL RETIREMENT BENEFITS A Participant shall be entitled to receive
the balance held in his or her account upon attaining his or her Normal
Retirement Age or at such earlier dates as the provisions of this Article VI
may permit. If a Participant elects to continue working past his or her Normal
Retirement Age, he or she will continue as an active Participant. Unless the
Employer elects otherwise in the Adoption Agreement, distribution shall be
made to such Participant at his or her request prior to his or her actual
retirement. Distribution shall be made in the normal form, or if elected,
in one of the optional forms of payment provided below.
6.2 EARLY RETIREMENT BENEFITS An Early Retirement benefit may be available
if elected in the Adoption Agreement to individuals who meet the age and Service
requirements specified in the Adoption Agreement. A Participant who attains his
or her Early Retirement Date will become fully vested, regardless of any vesting
schedule which otherwise might apply. If a Participant separates from Service
with a nonforfeitable benefit before satisfying the age requirements, but after
having satisfied the Service requirement, the Participant will be entitled to
elect an Early Retirement benefit upon satisfaction of the age requirement.
6.3 BENEFITS ON TERMINATION OF EMPLOYMENT
(a) If a Participant terminates employment prior to Normal Retirement
Age, such Participant shall be entitled to receive the vested
balance held in his or her account payable at Normal Retirement
Age in the normal form, or if elected, in one of the other forms
of payment provided hereunder. If applicable, the Early Retirement
benefit provisions may be elected. Notwithstanding the preceding,
a former Participant may, if allowed in the Adoption Agreement,
make application to the Employer requesting early payment of any
deferred vested and nonforfeitable benefit due.
(b) If a Participant terminates employment, and the value of the
Participant's Vested Account Balance is not greater than $5,000,
the Participant may receive a lump sum distribution of the value
of the entire vested portion of such account balance and the
nonvested portion will be treated as a forfeiture. The Plan
Administrator shall follow a consistent and nondiscriminatory
policy, as may be established, regarding immediate cash-outs of
Vested Account Balances.
(c) For purposes of this Article, if the value of a Participant's
Vested Account Balance is zero, the Participant shall be deemed to
have received a distribution of such Vested Account Balance
immediately following termination. If the Participant is reemployed
prior to incurring five (5) consecutive one (1) year Breaks in
Service or Periods of Severance, he or she will be deemed to have
immediately repaid such distribution. Notwithstanding the above,
if the Employer maintains or has maintained a policy of not
distributing any amounts until the Participant's Normal Retirement
Age, the Employer can continue to uniformly apply such policy.
(d) If a Participant terminates employment with a Vested Account Balance
greater than $5,000, and elects (with his or her Spouse's consent,
if required) to receive 100% of the value of his or her Vested
Account Balance in a lump sum, the nonvested portion will be treated
as a forfeiture. The Participant (and his or her Spouse, if
required) must consent to any distribution when the Vested Account
Balance described above exceeds $5,000.
(e) If a Participant who is not 100% vested receives or is deemed to
receive a distribution pursuant to this paragraph and resumes
employment covered under this Plan, the Participant shall have the
right to repay to the Plan the full amount of the distribution
attributable to both Employer contributions and Elective Deferrals
on or before the earlier of the date the Participant incurs five (5)
consecutive one (1) year Breaks in Service following the date of
distribution or five (5) years after the first date on which the
Participant is subsequently reemployed. In such event, the
Participant's account shall be restored to the value thereof at the
time the distribution was made. The account may be further
increased by the Plan's income and investment gains and/or losses on
the undistributed amount from the date of the distribution to the
date of repayment.
(f) If the Participant's Vested Account Balance is greater than $5,000,
a Participant shall have the option to postpone payment of his or
her Plan benefits until his or her Required Beginning Date. If
elected in the Adoption Agreement, any balance in a Participant's
account resulting from his or her Employee contributions listed at
paragraph 5.1(b), hereof, not previously withdrawn, may be withdrawn
by the Participant immediately following separation from Service.
(g) If a Participant ceases to be an active Employee as a result of a
Disability, such Participant shall have the right to make an
application for a disability retirement benefit payment. The
Participant's account balance will be deemed "immediately
distributable" as set forth in paragraph 6.4, and will be fully
vested pursuant to paragraph 9.2.
(h) If elected in the Adoption Agreement, when a terminating Participant
or Employee does not make a timely election with respect to the
cash out distribution of amounts greater than $1,000 but less than
or equal to $5,000, pursuant to Code Sections 411(a)(7), 411(a)(11)
and 417(e)(7), the Plan Administrator will make a direct rollover
into an individual retirement account or annuity ("IRA"). The
Plan Administrator will select the IRA trustee or custodian,
establish the IRA and make the initial IRA investment selection.
6.4 RESTRICTIONS ON IMMEDIATE DISTRIBUTIONS
(a) An account balance is immediately distributable if any part of
the account balance could be distributed to the Participant (or
Surviving Spouse) before the Participant attains (or would have
attained if not deceased) the later of the Normal Retirement Age
or age sixty-two (62).
(b) If payment in the form of a Qualified Joint and Survivor Annuity
is required and the value of a Participant's Vested Account Balance
exceeds $5,000, or there are remaining payments to be made with
respect to a particular distribution option that previously
commenced, and the account balance is immediately distributable,
the Participant and his or her Spouse (or where either the
Participant or the Spouse has died, the survivor) must consent
to any distribution of such account balance.
(c) If payment in the form of a Qualified Joint and Survivor Annuity
is not required with respect to a Participant and the value of a
Participant's Vested Account Balance exceeds $5,000, and the
account balance is immediately distributable, only the Participant
must consent to any distribution of such account balance.
(d) The consent of the Participant and/or the Spouse shall be obtained
in writing or in such other form accepted by the Plan Administrator
within the ninety (90) day period ending on the Annuity Starting
Date, which is the first day of the first period for which an amount
is paid as an annuity or in any other form. The Plan Administrator
shall notify the Participant and the Participant's Spouse of the
right to defer any distribution until the Participant's account
balance is no longer immediately distributable. Such notification
shall include a general description of the material features, and
an explanation of the relative values of, the optional forms of
benefit available under the Plan in a manner that would satisfy
the notice requirements of Code Section 417(a)(3), and shall be
provided no less than thirty (30) days and no more than ninety (90)
days prior to the Annuity Starting Date.
(e) If the distribution is one to which Code Sections 401(a)(11) and
417 do not apply, such distribution may commence less than thirty
(30) days after the notice required under Regulation Section
1.411(a)-11(c) is given provided that:
(1) the Plan Administrator clearly informs the Participant that
the Participant has the right to a period of at least thirty
(30) days after receiving the notice to consider the decision
of whether or not to elect a distribution (and, if applicable,
a particular distribution option), and
(2) the Participant after receiving the notice affirmatively
elects a distribution.
If a distribution is one to which Code Section 417 does apply,
the distribution may commence less than thirty (30) days, but not
less than seven (7) days after the notice required under Regulations
Section 1.411(a)-11(c) is given, provided that the conditions of
sub-paragraphs (1) and (2) above are satisfied with regard to both
the Participant and the Participant's Spouse.
(f) Notwithstanding the foregoing, only the Participant need consent to
the commencement of a distribution in the form of a Qualified Joint
and Survivor Annuity while the account balance is immediately
distributable. Furthermore, if payment in the form of a Qualified
Joint and Survivor Annuity is not required with respect to the
Participant pursuant to paragraph 8.7 of the Plan, only the
Participant need consent to the distribution of an account balance
that is immediately distributable. Neither the consent of the
Participant nor the Participant's Spouse shall be required to the
extent that a distribution is required to satisfy Code Section
401(a)(9) or Code Section 415 or constitutes Excess Deferrals,
Excess Contributions or Excess Aggregate Contributions. 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.
6.5 NORMAL AND OPTIONAL FORMS OF PAYMENT
(a) The normal form of payment for a profit sharing, 401(k) or SIMPLE
401(k) plan satisfying the requirements of paragraph 8.7 herein
shall be a lump sum.
(b) A Plan other than a money purchase pension plan, a target benefit
plan or a profit-sharing plan required to provide a Joint and
Survivor benefit may be amended to eliminate or restrict optional
payment forms provided that a single lump sum payment options
remains available, that is an otherwise identical distribution form
to the eliminated or restricted option, except with respect to the
timing of payments after commencement. The form must have the same
(or less restrictive) timing of distribution, medium of
distribution and eligibility conditions that were available for the
eliminated forms of payment, and any such amendment will not be
effective until the earlier of ninety (90) days after the date that
Plan Participants are provided with the written notice of the Plan
amendment in the form of a summary of material modification (SMM) or
the first day of the second Plan Year after the Plan Year in which
the amendment is adopted.
Each optional form of benefit provided under a standardized or non-
standardized safe-harbor plan (other than any that have been
prospectively eliminated) must be currently available to all
Employees benefiting under the Plan. This is the case regardless
of whether a particular form of benefit is the actuarial equivalent
of any other optional form of benefit under the Plan. Code Section
411(d)(6) prevents a Plan from being amended to eliminate or
restrict optional forms of benefits and any other Code Section
411(d)(6) protected benefits with respect to benefits attributable
to Service before the amendments except as expressly provided under
the Regulations Section 1.411(d)-4.
(c) For money purchase and target benefit plans, the normal form of
payment hereunder shall be a Qualified Joint and Survivor Annuity
as provided under Article VIII. Effective January 1, 2002, the
Employer may elect in the Adoption Agreement to eliminate any
periodic payment options that are not required by the Qualified
Joint and Survivor Annuity rules such as but not limited to
installment payments.
(d) The normal form of payment shall be automatic, unless the
Participant files a written request with the Employer prior to
the date on which the benefit is automatically payable, electing
another option available under the Plan.
(e) A Participant whose Vested Account Balance exceeds $5,000 shall
(with the consent of his or her spouse, if applicable) have the
right to receive his or her benefit in a single lump sum or in
installment payments. Installment payments need not be equal or
substantially equal until such time as the individual reaches his
or her Required Beginning Date. Installment payments which are
intended to be equal or substantially equal can be made monthly,
quarterly, semi-annually or annually based on any period not
extending beyond the Joint and Survivor life expectancy of the
Participant and his or her Beneficiary.
(f) Benefits payable under the Plan may be distributed in cash or in-
kind as elected in the Adoption Agreement.
(g) The Employer may elect on the Adoption Agreement to limit a
Participant's right to receive distributions in the form of
marketable securities (other than Employer securities) and to
require distributions in the form of cash only. Only the right to
receive a distribution in the form of cash, Employer securities
and/or other property that is not marketable is protected. Any such
amendment to the Plan will not be effective until the earlier of
ninety (90) days after the date that Plan Participants are provided
with the written notice of the Plan amendment in the form of a
summary of material modification (SMM) or the first day of the
second Plan Year after the Plan Year in which the amendment is
adopted.
(h) A Plan that permits its Participants to receive in-kind
distributions may limit the available in-kind distributions to
the investments listed in the Adoption Agreement and only to the
extent the investments are held in the Participant's account at
the time of the distribution. A Plan may be amended to limit the
investments which will be distributed in-kind. The amendment must
include all investments (other than marketable securities for which
cash may be substituted) that are held in a Participant's account
at the time of the amendment and for which the Plan, prior to such
amendment, allowed for distribution of those investments in kind.
The right to an in-kind distribution for investments held at the
time of the distribution would only have to be protected to the
extent such investment was in the Participant's account at the
time the amendment was adopted or effective, if later. Any such
amendment will not be effective until the earlier of ninety (90)
days after the date that Plan Participants are provided with the
written notice of the Plan amendment in the form of a summary of
material modification (SMM) or the first day of the second Plan
Year after the Plan Year in which the amendment is adopted.
(i) Promissory notes of Participants may be distributed in-kind
pursuant to the Employer's loan policy document.
(j) Distribution of benefits payable in the form of installments
shall be paid in cash.
(k) The propriety, amount, and form of any distribution made under
the terms of this Plan shall be determined by the Plan
Administrator. Upon such determination, the Plan Administrator
shall direct the Trustee or Custodian in writing or by any such
other means as expressly agreed upon, to make such a distribution.
6.6 COMMENCEMENT OF BENEFITS
(a) Unless the Participant elects otherwise, distribution of benefits
will begin no later than the sixtieth day after the close of the
Plan Year in which the latest of the following events occurs:
(1) the Participant attains age sixty-five (65) (or Normal
Retirement Age if earlier),
(2) the tenth anniversary of the year in which the Participant
commenced participation in the Plan, or
(3) the Participant terminates Service with the Employer.
(b) Notwithstanding the foregoing, the failure of a Participant and
Spouse (if necessary) to consent to a distribution while a benefit
is immediately distributable within the meaning of paragraph 6.4
hereof, shall be deemed an election to defer commencement of payment
of any benefit sufficient to satisfy this paragraph.
(c) If elected in the Adoption Agreement, if a terminating Participant
or Employee does not make a timely election with respect to the
cash-out distribution pursuant to Code Sections 411(a)(7),
411(a)(11) and 417(e)(1), the Plan Administrator will make a direct
rollover into an individual retirement account or annuity (IRA).
The Plan Administrator will select the IRA trustee or custodian,
establish the IRA account and make the initial IRA investment
selection.
6.7 TRANSITIONAL RULES FOR CASH-OUT LIMITS This paragraph provides
transitional rules with regard to the cash-out limits for distributions made
prior to October 17, 2000.
(a) DISTRIBUTIONS SUBJECT TO CODE SECTION 417 - If payments in the form
of a Qualified Joint and Survivor Annuity are required with regard
to a Participant, the rules in this sub-paragraph 6.7(a) are
substituted for the rule in the first sentence of paragraph 6.4(b).
If the value of the Participant's Vested Account Balance exceeds
$5,000 (or at the time of any distribution (1) in Plan Years
beginning before August 6, 1997, exceeded $3,500 or (2) in Plan
Years beginning after August 5, 1997, exceeded $5,000), 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.
(b) DISTRIBUTIONS NOT SUBJECT TO CODE SECTION 417 - If payment in the
form of a Qualified Joint and Survivor Annuity is not required with
respect to a Participant, the rules in this subparagraph 6.7(b) are
substituted for the rules in paragraph 6.4(c).
If the value of a Participant's Vested Account Balance derived from
Employer and Employee contributions:
(1) for Plan Years beginning before August 6, 1997, exceeds $3,500
(or exceeded $3,500 at the time of any prior distribution),
(2) for Plan Years beginning after August 5, 1997, exceeds $3,500
(or exceeded $3,500 at the time of any prior distribution),
(3) for Plan Years beginning after August 5, 1997 and for a
distribution made after March 21, 1999, that either exceeds
$5,000 or is a remaining payment under a selected optional
form of payment that exceeded $5,000 at the time the selected
payment began, and the account balance is immediately
distributable, the Participant and the Participant's Spouse
(or where either the Participant or the Spouse had died, the
survivor) must consent to any distribution of such account
balance.
6.8 IN-SERVICE WITHDRAWALS If elected in the Adoption Agreement, an
Employer may elect to permit a Participant in the Plan to make an in-service
withdrawal subject to any limitation(s) specified in the Adoption Agreement.
(a) An Participant may withdraw all or any part of the fair market value
of his or her Voluntary or Required After-tax Contributions as
described in Article IV, other than Elective Deferrals, upon request
to the Plan Administrator unless indicated otherwise on the Adoption
Agreement. No amount will be forfeited solely as a result of a
Participant's withdrawal of an amount pursuant to this paragraph
6.8. Employee Rollover and Transfer Contributions and the income
allocable to each may be withdrawn at any time unless indicated
otherwise on the Adoption Agreement.
(b) Subject to Article VIII, Joint and Survivor Annuity Requirements
(if applicable) and pursuant to the Employer's election in the
Adoption Agreement, a Participant may be eligible to withdraw
any part of his or her Qualified Voluntary Contribution account
by making application to the Plan Administrator. A request to
withdraw amounts pursuant to this paragraph must be consented to
by the Participant's Spouse unless the Plan satisfies the safe
harbor under paragraph 8.7 hereof. Spousal consent, if required,
shall comply with the requirements of paragraph 6.4 relating to
immediate distributions.
(c) A Participant may withdraw all or any part of the fair market
value of his or her pre-1987 Voluntary Contributions with or
without withdrawing the earnings attributable thereto. Post-1986
Voluntary Contributions may only be withdrawn along with a portion
of the earnings thereon. The amount of the earnings to be
withdrawn is determined by using the formula: DA [1-(V / V+E)],
where DA is the distribution amount, V is the amount of Voluntary
Contributions and V+E is the amount of Voluntary Contributions plus
the earnings attributable thereto. The aggregate value of the
Participant's Vested Account Balance derived from Employer and
Employee contributions (including Rollovers), whether vested
before or upon death, includes the proceeds of insurance contracts,
if any, on the Participant's life. The provisions of this Article
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.
(d) Under a Profit Sharing Plan to the extent that the Employer elects
in the Adoption Agreement, one of the following conditions is
required to withdraw all or any part of the vested Non-Safe Harbor
Matching Contributions and discretionary contributions.
(1) An Employee who has been a Participant in the Plan for at
least five (5) years may, prior to separating from Service
with the Employer, elect to withdraw all or any part of the
vested Non-Safe Harbor Matching Contributions, and
discretionary contributions.
(2) An Employee who has been a Participant in the Plan for at
least two (2) years may, prior to separating from Service with
the Employer, elect to withdraw all or any part of the vested
Non-Safe Harbor Matching Contributions and discretionary
contributions.
(3) A Participant who had attained age 591/2 may, prior to
separation from Service, elect to withdraw all of any part
of the vested Non-Safe Harbor Matching Contributions and
discretionary contributions,
(e) Unless otherwise elected by the Employer in the Adoption Agreement,
Elective Deferrals, Qualified Non-Elective Contributions, Safe
Harbor Matching and Non-Elective Contributions, and Qualified
Matching Contributions, and income allocable to each, are not
distributable to a Participant earlier than upon separation from
Service, death, or Disability. Such amounts may also be
distributed upon:
(1) termination of the Plan without the establishment of another
Defined Contribution Plan other than an employee stock
ownership plan [as defined in Code Section 4975(e)(7)] or a
Simplified Employee Pension Plan [as defined in Code Section
408(k)], or a SIMPLE IRA plan [as defined in Code Section
408(p)],
(2) the disposition by a corporation to an unrelated corporation
of substantially all of the assets [within the meaning of Code
Section 409(d)(2)] used in a trade or business of such
corporation if such corporation continues to maintain this
Plan after the disposition, but only with respect to Employees
who continue employment with the corporation acquiring such
assets,
(3) the disposition by a corporation to an unrelated entity of
such corporation's interest in a subsidiary [within the meaning
of Code Section 409(d)(3)] if such corporation continues to
maintain this Plan, but only with respect to Employees who
continue employment with such subsidiary,
(4) the attainment of age 591/2, or
(5) the hardship of a Participant as described in paragraph 6.9.
(f) An in-service withdrawal shall not be eligible for redeposit to the
Trust. A withdrawal under this paragraph shall not prohibit such
Participant from sharing in any future Employer contribution he or
she would otherwise be eligible to receive.
(g) Money purchase pension plans and target benefit plans may not allow
in-service withdrawals prior to attainment of the Normal Retirement
Age as specified in the Adoption Agreement.
(h) Notwithstanding any provisions of the Plan to the contrary, to
the extent that any optional form of benefit under this Plan permits
a distribution prior to the Participant's retirement, death,
Disability, or separation from Service, and prior to Plan
termination, the optional form of benefits is not available with
respect to benefits attributable to assets (including the post-
transfer earnings thereon) and liabilities that are transferred
within the meaning of Code Section 414(l), to this Plan from a money
purchase pension plan qualified under Code Section 401(a) (other
than any portion of those assets and liabilities attributable to
Voluntary After-tax Contributions).
(i) A Participant may withdraw any amount attributable to profit-
sharing contributions, Elective Deferrals, Matching Contributions,
Rollover and Transfer Contributions, not in excess of the vested
amount of such contributions, if the withdrawal is made after the
Participant attains age 591/2, as elected in the Adoption Agreement.
(j) PARTIALLY VESTED PARTICIPANTS - If a distribution is made at a
time when a Participant has a nonforfeitable right to less than
100% of the account balance derived from Employer contributions
and the Participant may increase the nonforfeitable percentage in
the account:
(1) a separate account will be established for the Participant's
interest in the Plan as of the time of the distribution, and
(2) at any relevant time the Participant's nonforfeitable portion
of the separate account will be equal to an amount ("X")
determined by the formula:
X = P [AB + D] - D
For purposes of applying the formula: "P" is the nonforfeitable
percentage at the relevant time, "AB" is the account balance at
the relevant time, "D" is the amount of the distribution.
6.9 HARDSHIP WITHDRAWALS If elected in the Adoption Agreement, a Participant
may request a Hardship withdrawal as provided in this paragraph. If applicable,
Hardship withdrawals are subject to the spousal consent requirements in Code
Sections 401(a)(11) and 417. A request to withdraw amounts must be consented to
by the Participant's Spouse unless the Plan satisfies the safe harbor provisions
under paragraph 8.7 hereof. Spousal consent, if required, shall comply with the
requirements of paragraph 6.4 relating to immediate distributions.
If elected in the Adoption Agreement, a Participant shall be permitted to make
a Hardship withdrawal of any amount attributable to the vested portion of
Elective Deferral Contributions (and any earnings credited to a Participant's
account as of the later of December 31, 1988, and the end of the last Plan Year
ending before July 1, 1989). If elected in the Adoption Agreement, fully
vested profit-sharing contributions, Matching Contributions, Rollover
Contributions, Transfer Contributions and the income allocable to each (without
regard to attainment of age 591/2 or Disability) may be available for Hardship
withdrawal if the Participant establishes that an immediate and heavy financial
need exists and the withdrawal is necessary to satisfy such financial need. A
Participant may withdraw all or any part of the fair market value of his or
her Voluntary or Required After-tax Contributions due to a Hardship upon
request to the Plan Administrator. Such request shall be made in accordance
with procedures adopted by the Plan Administrator or his or her designate who
shall have sole authority to authorize and direct a Hardship withdrawal
pursuant to the following rules:
(a) ADMINISTRATIVE REQUIREMENTS - A distribution will be considered
as necessary to satisfy an immediate and heavy financial need
of the Participant only if:
(1) The Participant has obtained all distributions, other than
Hardship distributions, and all nontaxable loans under all
plans maintained by the Employer.
(2) The Participant's Elective Deferrals, Voluntary After-tax
Contributions and Required After-tax Contributions will be
suspended for all plans maintained by the Employer (other
than benefits under Code Section 125 plans) for twelve (12)
months after the receipt of the Hardship distribution.
(3) The distribution is not in excess of the amount of the
immediate and heavy financial need described at paragraph
(b) including amounts necessary to pay any Federal, state
or local income taxes or penalties reasonably anticipated to
result from the distribution.
(4) All plans maintained by the Employer must provide that a
Participant may not make Elective Deferrals for the
Participant's taxable year immediately following the taxable
year of the Hardship distribution in excess of the applicable
limit under Code Section 402(g) for such taxable year, less
the amount of such Participant's Elective Deferrals for the
taxable year during which the Hardship distribution was
received.
(b) EXCLUSIVE REASONS FOR HARDSHIP WITHDRAWAL - An immediate and heavy
financial need exists when the Hardship withdrawal will be used to
pay the following:
(1) expenses incurred or necessary for medical care [described
in Code Section 213(d)] of the Participant, his or her Spouse,
children and other dependents,
(2) the cost directly related to the purchase (excluding mortgage
payments) of the principal residence of the Participant,
(3) payment of tuition and related educational expenses (including
but not limited to expenses associated with room and board)
for the next twelve (12) months of post-secondary education
for the Participant, his or her Spouse, children or other
dependents, or
(4) the need to prevent eviction of the Participant from or a
foreclosure on the mortgage of, the Participant's principal
residence.
(c) If a request for a Hardship withdrawal is approved by the Plan
Administrator, funds shall be withdrawn from the contribution
sources as elected in the Adoption Agreement unless provided
otherwise by the Plan Administrator in an administrative procedure.
Liquidation of a Participant's assets for the purpose of a Hardship
withdrawal will be allocated on a pro-rata basis across all the
investment alternatives in a Participant's account, unless otherwise
provided by administrative procedure or by a directive from the
Plan Administrator or by the Plan Participant.
6.10 DIRECT ROLLOVER OF BENEFITS
(a) Notwithstanding any provision of the Plan to the contrary that
would otherwise limit a Participant's election under this paragraph,
for distributions made on or after January 1, 1993, a Participant
may elect, at the time and in the manner prescribed by the Plan
Administrator, to have any portion of an Eligible Rollover
Distribution paid directly to an Eligible Retirement Plan or
individual retirement account specified by the Participant in a
Direct Rollover. Any portion of a distribution which is not paid
directly to an Eligible Retirement Plan or individual retirement
account shall be distributed to the Participant. For purposes of
this paragraph, a surviving Spouse or a Spouse or former Spouse who
is an alternate payee under a Qualified Domestic Relations Order as
defined in Code Section 414(p), will be permitted to elect to have
any Eligible Rollover Distribution paid directly to an individual
retirement account (IRA) or an individual retirement annuity (IRA)
or to another Qualified Plan in which the alternate payee is a
participant.
(b) If the entire Vested Account Balance is not eligible for a Direct
Rollover of benefits as described in (a) above, the Participant
may either make an elective transfer of the entire Vested Account
Balance pursuant to the procedure described at paragraph 4.5 or a
direct rollover of the portion which can be rolled over as described
in (a) above and an elective transfer of the rest as described in
paragraph 4.5 herein.
(c) After December 31, 2001, the elective transfer of distributable
benefits will be available only if the direct rollover provisions
of Code Section 401(a)(31) would not be available to transfer the
Participant's entire Vested Account Balance to the transferee plan.
This elective transfer option will only be available in the
following circumstances;
(1) The Plan does not have a single sum distribution option
available. The benefits are distributable only in a periodic
payment method.
(2) The distribution includes benefits that are not eligible for
rollover treatment, including benefits attributable to After-
tax Contributions, required minimum distributions or other
amounts that have previously been included in income.
(d) Distributions that consist of the Participant's entire account
balance which is entirely eligible for rollover treatment will be
transferred as a direct rollover rather than an elective transfer.
6.11 PARTICIPANT'S NOTICE In the event that a Participant's benefit becomes
payable under Plan terms or if a Participant requests distribution of his or
her benefit, the Plan Administrator shall provide such Participant with a notice
regarding distribution of such benefit. The notice shall describe any Plan
related information regarding the distribution including the Joint and Survivor
Annuity requirements provided at paragraph 6.4(d), if applicable, the normal
and optional forms of payment provided at paragraph 6.5, and the information
required in connection with an Eligible Rollover Distribution. Information
in connection with an Eligible Rollover Distribution shall include the right
to have the funds transferred directly to another Qualified Plan or individual
retirement account, the income tax withholding requirements, the rollover rules
with respect to amounts distributed to the Participant, the default direct
rollover provisions of Vested Account Balances greater than $1,000 but less
than or equal to $5,000 (any other appropriate information such as the name
and address, and telephone number of the IRA Trustee and information regarding
IRA maintenance and withdrawal fees and how the IRA funds will be invested)
and the general tax rules which apply to such distributions. Such notice
shall be provided to the Participant within the time period prescribed at
paragraph 6.4(d) hereof or, if the safe harbor provisions of paragraph 8.7
are applicable, not less than thirty (30) days prior to the Annuity Starting
Date, subject to a waiver period of a lesser number of days if elected by
the Participant and if applicable, their Spouse. A default direct rollover
will occur not less than thirty (30) days and not more than ninety (90) days
after such notice with the explanation of the default direct rollover is
provided to the separating Participant.
6.12 ASSETS TRANSFERRED FROM MONEY PURCHASE PENSION PLANS Notwithstanding
any provision of this Plan to the contrary, to the extent that any optional
form of benefit under this Plan permits a distribution prior to the Employee's
retirement, death, Disability, or severance from employment, and prior to Plan
termination, the optional form of benefit is not available with respect to
benefits attributable to assets (including the associated post-transfer
earnings) and liabilities that are transferred, within the meaning of Code
Section 414(l), to this Plan from a money purchase pension plan qualified under
Code Section 401(a) (other than any portion of those assets and liabilities
attributable to Voluntary After-tax Contributions).
6.13 ASSETS TRANSFERRED FROM A CODE SECTION 401(K) PLAN If the Plan receives
a direct transfer (by merger or otherwise) of Elective Deferrals (or amounts
treated as Elective Deferrals) under a Plan with a Code Section 401(k)
arrangement, the distribution restrictions of Code Sections 401(k)(2) and
401(k)(10) continue to apply to those transferred Elective Deferrals.
ARTICLE VII
DISTRIBUTION REQUIREMENTS
7.1 JOINT AND SURVIVOR ANNUITY REQUIREMENTS All distributions made under
the terms of this Plan must comply with the provisions of Article VIII
including, if applicable, the safe harbor provisions thereunder.
7.2 MINIMUM DISTRIBUTION REQUIREMENTS All distributions required under
this Article shall be determined and made in accordance with the minimum
distribution requirements of Code Section 401(a)(9) and the Regulations issued
thereunder, including the minimum distribution incidental benefit rules found
at Regulations Section 1.401(a)(9)-2. The entire interest of a Participant must
be distributed or begin to be distributed no later than the Participant's
Required Beginning Date. Life expectancy and joint and last survivor life
expectancies are computed by using the expected return multiples found in Tables
V and VI of Regulations Section 1.72-9.
7.3 LIMITS ON DISTRIBUTION PERIODS As of the First Distribution Calendar
Year, distributions, if not made in a single sum, may only be made over one of
the following periods (or a combination thereof):
(a) the life of the Participant,
(b) the life of the Participant and their Beneficiary,
(c) a period certain not extending beyond the life expectancy of the
Participant, or
(d) a period certain not extending beyond the joint and last survivor
life expectancy of the Participant and their Beneficiary.
7.4 REQUIRED DISTRIBUTIONS ON OR AFTER THE REQUIRED BEGINNING DATE
(a) If a Participant's benefit is to be distributed over (i) 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 Beneficiary or (ii) a period not extending beyond the
life expectancy of the 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
sum obtained by dividing the Participant's benefit by the Applicable
Life Expectancy.
(b) For calendar years beginning before January 1, 1988, if the
Participant's Spouse is not the designated Beneficiary, the method
of distribution selected must assure that at least 50% of the
Present Value of the amount available for the distribution is paid
within the life expectancy of the Participant.
(c) For calendar years beginning after December 31, 1989, 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 (i) the Applicable Life Expectancy or (ii) if the
Participant's Spouse is not the Beneficiary, the applicable divisor
determined from the table set forth in Q&A-4 of Regulations Section
1.401(a)(9)-2. Distributions after the death of the Participant
shall be distributed using the Applicable Life Expectancy as the
relevant divisor without regard to Regulations Section 1.401(a)(9)-
2.
(d) The minimum distribution required for the Participant's First
Distribution Calendar Year must be made on or before the
Participant's Required Beginning Date. The minimum distribution
for other calendar years, including the minimum distribution for
the Distribution Calendar Year in which the Participant's Required
Beginning Date occurs, must be made on or before December 31 of
that Distribution Calendar Year.
(e) If the Participant's Benefit is distributed in the form of an
annuity, distributions thereunder shall be made in accordance with
the requirements of Code Section 401(a)(9) and the Regulations
thereunder.
(f) Distributions made to a Participant and the Participant's
Beneficiary shall be made in accordance with the incidental death
benefit requirements of Code Section 401(a)(9) and the Regulations
issued thereunder.
(g) For purposes of determining the amount of the required distribution
for each Distribution Calendar Year, the account balance to be
used is the account balance determined as of the last Valuation
Date preceding the Distribution Calendar Year. This balance will
be increased by the amount of any contributions or forfeitures
allocated to the account balance after the Valuation Date in such
preceding calendar year. Such balance will also be decreased by
distributions made after the Valuation Date in such preceding
Calendar Year.
(h) For purposes of paragraph 7.4(g), if any portion of the minimum
distribution for the First Distribution Calendar Year is made in
the second Distribution Calendar Year on or before the Required
Beginning Date, the amount of the minimum distribution made in
the second Distribution Calendar Year shall be treated as if it
had been made in the immediately preceding Distribution Calendar
Year.
7.5 REQUIRED BEGINNING DATE If this Plan is an amendment or restatement of
a Plan which included the provisions of the minimum distribution rules as in
effect prior to the enactment of the Small Business Job Protection Act of 1996
(SBJPA), the Employer may elect in the Adoption Agreement to substitute the
minimum distribution rules in effect after the enactment of SBJPA. The
Employer, so electing, must also elect in the Adoption Agreement those
transitional rules that shall apply to its Plan.
(a) The Required Beginning Date for a Participant who is a 5% owner
with respect to the Plan Year ending in the calendar year in which
the Participant attains age 701/2 is the April 1 of the calendar
year following the calendar year in which the Participant attains
age 701/2. Once distributions have begun to a 5% owner under this
paragraph, they must continue to be distributed even if the
Participant ceases to be a 5% owner in any subsequent year.
(b) Unless the Employer has elected to continue to operate the
provisions of the minimum required distribution in accordance with
the provisions prior to the enactment of the SBJPA, or if elected
otherwise in the Adoption Agreement or by operation of the Plan, the
Required Beginning Date for a Participant who is not a 5% owner is
no later than the April 1 of the calendar year following the later
of the calendar year in which the Participant attains age 701/2 or
the calendar year in which the Participant retires.
(c) If the Employer has elected to continue under the prior provisions
of the law, then except as provided below, the Required Beginning
Date is the April 1 of the calendar year following the calendar year
in which a Participant attains age 701/2.
(1) A Participant who:
(i) is not a 5% owner,
(ii) has not had a Separation from Service,
(iii) had attained age 701/2 prior to 1997, and
(iv) had previously commenced required minimum distributions
under the distribution rules (as then in effect) may
elect to discontinue receiving distributions under the
Plan. A Participant who makes such an election to
discontinue distributions must establish a new Annuity
Starting Date when benefits recommence under the Plan.
A married Participant who is subject to the Qualified
Joint and Survivor Annuity provisions of 8.9 must
obtain spousal consent to discontinue his or her
distributions if distributions are in the form of a
Qualified Joint and Survivor Annuity and to recommence
benefits in a form other than a Qualified Joint and
Survivor Annuity. Any such election will be made
pursuant to the uniform and nondiscriminatory
procedures established by the Plan Administrator.
(2) A Participant who:
(i) is not a more than 5% owner, and
(ii) had attained age 701/2 in 1997 or in a later year (or
attained age 701/2 in 1996, but had not commenced
required minimum distributions in 1996) may elect to
postpone distribution of the required minimum
distributions until the Participant's Required
Beginning Date as established in this paragraph. If a
Participant attained age 701/2 in 1996, he or she must
have elected under this paragraph to postpone
distribution by December 31, 1997. If the Participant
attains age 701/2 in 1997 or later, he or she must
elect to postpone distributions under this paragraph
not later than April 1 of the year following the year
in which the Participant attained age 701/2.
(iii) Notwithstanding the foregoing, a Participant who is not
a more than 5% owner, has not had a separation from
service, and is currently in benefit payment status
because of attainment of age 701/2 in 1997 or in a
later year (or attained age 701/2 in 1996) may elect to
discontinue receiving distributions under the Plan and
recommence payments by April 1 of the calendar year
in which the Participant retires. A Participant who
makes such an election to discontinue distributions
must establish a new Annuity Starting Date when
benefits recommence under the Plan. A married
Participant who is subject to the Qualified Joint and
Survivor Annuity provisions of paragraph 8.9 must
obtain spousal consent to discontinue his or her
distributions if distributions are in the form of a
Qualified Joint and Survivor Annuity and to recommence
benefits in the form other than a Qualified Joint and
Survivor Annuity. Any such election will be made
pursuant to the uniform and nondiscriminatory
procedures established by the Plan Administrator.
(3) The Required Beginning Date for a Participant who:
(i) had attained age 701/2 prior to January 1, 1998, and
(ii) was not a 5% owner at any time during the Plan Year
ending with or within the calendar year in which the
Participant attained age 661/2 or any subsequent Plan
Year, is April 1 of the calendar year following the
calendar year in which the Participant retires.
(4) Except as provided above, the Required Beginning Date for a
Participant who was a 5% owner at any time during the five (5)
Plan Year period ending in the calendar year in which the
Participant attained age 701/2 is April 1 of the calendar year
following the calendar year in which the Participant attained
age 701/2. For a Participant who became a 5% owner during any
Plan Year after the calendar year in which the Participant
attained age 701/2, the Required Beginning Date is April 1 of
the calendar year in which such subsequent Plan Year ends.
For purposes of this Article, the term 5% owner shall have the same meaning as
the term is defined under Code Section 416. A Participant is treated as a 5%
owner under this paragraph if such Participant is a 5% owner at any time during
the Plan Year ending with or within the calendar year the Participant attains
age 701/2. Once distributions have begun to a 5% owner under this paragraph,
they must continue to be distributed even if the Participant ceases to be a 5%
owner in a subsequent year.
7.6 TRANSITIONAL RULES
(a) Notwithstanding the other requirements of this Article and subject
to the requirements of Article VIII, Joint and Survivor Annuity
Requirements, distribution on behalf of any Employee, including
a 5% owner may be made in accordance with all of the following
requirements, regardless of when such distribution commences:
(1) 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,
(2) the distribution is in accordance with a method of
distribution designated by the Participant whose interest
in the Trust is being distributed or, if the Participant is
deceased, by a Beneficiary of such Participant,
(3) such designation was in writing, was signed by the Participant
or the Beneficiary, and was made before January 1, 1984,
(4) the Participant had accrued a benefit under the Plan as of
December 31, 1983, and
(5) the method of distribution designated by the Participant 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 Participant's
death, the Beneficiaries of the Participant listed in order
of priority.
(b) A distribution upon death will not be covered by this transitional
rule unless the information in the designation contains the required
information described above with respect to the distributions to be
made upon the death of the Participant.
(c) For any distribution which commences before January 1, 1984, but
continues after December 31, 1983, the Participant 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 subparagraphs (a)(1) through (5) above.
(d) If a designation is revoked, any subsequent distribution must
satisfy the requirements of Code Section 401(a)(9) and the
Regulations thereunder. If a designation is revoked subsequent to
the date distributions are required to begin, the Plan must
distribute by the end of the calendar year following the calendar
year in which the revocation occurs the total amount not yet
distributed which would have been required to have been distributed
to satisfy Code Section 401(a)(9) and the Regulations thereunder,
but for the Code Section 242(b)(2) election of the Tax Equity and
Fiscal Responsibility Act of 1982. For calendar years beginning
after 1988, such distributions must meet the minimum distribution
incidental benefit requirements in Section 1.401(a)(9)-2 of the
Income Tax Regulations. Any changes in the designation will be
considered to be a revocation of the designation. However, the
mere substitution or addition of another Beneficiary (one not
named in the designation) under the designation will not be
considered to be a revocation of the designation, so long as
such substitution or addition does not alter the period over
which distributions are to be made under the designation,
directly or indirectly (for example, by altering the relevant
measuring life). In the case in which an amount is transferred
or rolled over from one plan to another plan, the rules in Q&A
J-2 and Q&A J-3 of the Regulations shall apply.
7.7 DESIGNATION OF BENEFICIARY Each Participant shall file a written
designation of Beneficiary with the Plan Administrator upon qualifying for
participation in this Plan. Such designation shall remain in force until
revoked by the Participant by filing a new Beneficiary designation form with
the Employer. A profit-sharing or 401(k) Plan satisfying the requirements of
paragraph 8.7 requires the Beneficiary shall be the Participant's Spouse, if
any, unless such Spouse properly consents otherwise.
7.8 BENEFICIARY
(a) For purposes of the Plan, a Beneficiary is the person or persons
designated as such in accordance with Code Section 401(a)(9) and
the Regulations thereunder by the Participant or by the
Participant's surviving Spouse if the Participant's surviving Spouse
is entitled to receive distributions under the Plan. Such a
designation by the Participant's surviving Spouse, however, shall
relate solely to the distributions to be made under the Plan after
the death of both the Participant and the surviving Spouse. A
Beneficiary designation shall be communicated to the Plan
Administrator on a form or other type of communication acceptable
to the Plan Administrator for use in connection with the Plan,
signed by the designating person, and subject to the last sentence
of this subparagraph (a), filed with the Plan Administrator in
accordance with this paragraph 7.8 not later than thirty (30) days
after the designating person's death. The form may name
individuals, trusts or estates to take upon the contingency of
survival and may specify or limit the manner of distribution
thereto. In the event a Participant or the Participant's surviving
Spouse, as the case may be, fails to properly designate a
Beneficiary (including, as improper, a designation to which the
Participant's surviving Spouse did not properly consent) or in
the event that no properly designated Beneficiary survives the
Participant or the Participant's surviving Spouse, as applicable,
then the Beneficiary of such person shall be his surviving Spouse
or, if none, his issue per stirpes or, if no issue, the
Participant's surviving parents in equal shares, or if no surviving
parents, then to the Participant's estate.
The Beneficiary designation last accepted by the Plan Administrator
during the designating person's lifetime before such distribution
is to commence shall be controlling and, whether or not fully
dispositive of the vested portion of the account of the Participant
involved, thereupon shall revoke all such forms previously filed
by that person.
(b) Notwithstanding subparagraph (a) of this paragraph 7.8, the
designation by a married Participant of any Beneficiary other than
the Participant's Spouse, or the change of any such Beneficiary
to a new Beneficiary other than the Participant's Spouse, shall
not be valid unless made in writing and consented to by the
Participant's Spouse. The Spouse's consent to such designation
must be made in the manner described in this paragraph 7.8.
(c) Any Beneficiary designation made and in effect under a Qualified
Plan immediately prior to that Plan's amendment and continuation
in the form of this Plan shall be deemed to be a valid Beneficiary
designation filed under this Plan to the extent consistent with
this Plan. If such Beneficiary designation was made with respect
to a Qualified Plan that permitted the Participant to designate
without spousal consent a Beneficiary to receive 50% of the
Participant's account balance in the event of the Participant's
death, with respect to such Beneficiary designation under this
Plan, paragraph 7.8 shall be applied by application of 50% of
the vested portion of the Participant's account toward the
purchase of a Qualified Pre-Retirement Survivor Annuity and the
balance of the Participant's account shall be paid to the
designated Beneficiary pursuant to the provisions of Article
VIII. In such event, the amount of Voluntary After-tax
Contributions applied to the purchase of the annuity shall be
in the same proportion as the Voluntary After-tax Contributions
bear to the entire Participant's account.
7.9 DISTRIBUTION BEGINNING BEFORE DEATH This paragraph is applicable only
after the Participant's Required Beginning Date as elected by the Employer
in the Adoption Agreement. If the Participant dies after distribution of his
or her interest has begun, the remaining portion of such interest will continue
to be distributed at least as rapidly as under the method of distribution being
used prior to the Participant's death.
7.10 DISTRIBUTION BEGINNING AFTER DEATH This paragraph is applicable before
the Participant's Required Beginning Date as elected by the Employer in the
Adoption Agreement, even if distributions have commenced from the Plan. If
the Participant dies before distribution of his or her interest begins,
distribution of the Participant's entire interest shall be completed by
December 31 of the calendar year containing the fifth anniversary of the
Participant's death, except to the extent that an election is made to receive
distributions in accordance with (a) or (b) below:
(a) if any portion of the Participant's interest is payable to a
Beneficiary, distributions may be made over the life or over a
period certain not greater than the life expectancy of the
Beneficiary commencing on or before December 31 of the calendar
year immediately following the calendar year in which the
Participant died;
(b) if the 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 (i) December 31 of the
calendar year immediately following the calendar year in which the
Participant died or (ii) December 31 of the calendar year in which
the Participant would have attained age 701/2.
If the Participant has not made an election pursuant to this paragraph 7.10 by
the time of his or her death, the Participant's Beneficiary must elect the
method of distribution no later than the earlier of (i) December 31 of the
calendar year in which distributions would be required to begin under this
section, or (ii) December 31 of the calendar year which contains the fifth
anniversary of the date of death of the Participant. If the Participant has
no Beneficiary, or if the Beneficiary does not elect a method of distribution,
then distribution of the Participant's entire interest must be completed by
December 31 of the calendar year containing the fifth anniversary of the
Participant's death. If the surviving Spouse dies after the Participant but
before payments to such Spouse begin, the provisions of this paragraph with
the exception of subparagraph (b) herein, shall be applied as if the surviving
Spouse were the Participant. For the purposes of this paragraph and paragraph
7.9, distribution of a Participant's interest is considered to begin on the
Participant's Required Beginning Date (or, if the preceding sentence is
applicable, the date distribution is required to begin to the Surviving Spouse).
If distribution in the form of an annuity described in paragraph 7.4(d)
irrevocably commences to the Participant before the Required Beginning Date,
the date distribution is considered to begin is the date distribution actually
commences.
7.11 DISTRIBUTION OF EXCESS ELECTIVE DEFERRALS
(a) No Participant shall be permitted to defer under this Plan with
respect to a calendar year more than the maximum dollar amount
permitted under Code Section 402(g), as indexed, for such calendar
year. If a Participant defers more than the maximum allowed due to
mistake of fact, such Excess Elective Deferrals shall be distributed
to the Participant no later than April 15 following the calendar
year to which the excess is attributable. If a Participant who
participates in this Plan and in another plan which permits Elective
Deferrals defers more than the Code Section 402(g) maximum, such
Participant shall have the right to notify one or both plans by
March 1 of the calendar year following the year to which the excess
is attributable requesting a distribution of the Excess Elective
Deferral. A Participant is deemed to notify the Plan Administrator
of any Excess Elective Deferrals that arise by taking into account
only those Elective Deferrals made to the Plan of the Employer.
If distribution is requested, the applicable plan(s) shall make
distribution of the Excess Elective Deferrals, plus any income and
minus any loss allocable thereto, no later than April 15 following
the calendar year to which the excess is attributable. Excess
Elective Deferrals which are distributed on a timely basis shall
not be considered Annual Additions for the Limitation Year during
which such amounts are deferred.
(b) Excess Elective Deferrals shall be adjusted for any income or loss
up to the date of distribution. The income or loss allocable to
Excess Elective Deferrals is the sum of (1) income or loss allocable
to the Participant's Elective Deferral account for the taxable year
multiplied by a fraction, the numerator of which is such
Participant's Excess Elective Deferrals for the year and the
denominator is the Participant's account balance attributable to
Elective Deferrals without regard to any income or loss occurring
during such taxable year; and (2) ten percent (10%) of the amount
determined under (1) multiplied by the number of whole calendar
months between the end of the Participant's taxable year and the
date of the distribution, counting the month of the distribution if
the distribution occurs after the fifteenth (15th) of such month.
(c) The amount a Participant receives as a distribution of his or her
Excess Elective Deferrals is includible in income with respect to
the taxable year to which the excess is attributable.
(d) Any income attributable to the Excess Elective Deferrals determined
in (b) above shall be includible in income with respect to the
taxable year in which the excess is distributed.
7.12 DISTRIBUTION OF EXCESS CONTRIBUTIONS
(a) Excess Contributions plus any income and minus any loss allocable
thereto, shall be distributed to affected Participants no later
than the last day of the Plan Year following the Plan Year to which
the Excess Contributions are attributable. Excess Contributions
are allocated to the Highly Compensated Employees with the largest
amounts of Employer contributions taken into account in calculating
the ADP Test for the year in which the excess arose beginning with
the Highly Compensated Employee with the largest amount of such
Employer contributions and continuing in descending order until
all the Excess Contributions have been allocated. For purposes of
the preceding sentence, the "largest amount" is determined after
distribution of any Excess Contributions. If such Excess
Contributions are distributed more than two and one-half (21/2)
months after the last day of the Plan Year to which the Excess
Contributions are attributable, a 10% excise tax will be imposed
on the Employer maintaining the Plan with respect to the principal
amount of the excess.
(b) Excess Contributions, including any amount recharacterized as a
Voluntary After-tax Contribution, shall be treated as Annual
Additions with respect to the Plan Year to which the excess is
attributable.
(c) Excess Contributions shall be adjusted for any income or loss up
to the date of distribution. The income or loss allocable to Excess
Contributions allocated to each Participant is the sum of (1)
income or loss allocable to the Participant's Elective Deferral
account (and, if applicable, the Qualified Nonelective Contribution
Account or the Qualified Matching Contribution Account or both) for
the Plan Year multiplied by a fraction, the numerator of which is
such Participant's Excess Contributions for the year and the
denominator is the Participant's account balance attributable to
Elective Deferrals (and Qualified Nonelective Contributions or
Qualified Matching Contributions, or both, if any of such
contributions are included in the ADP test) without regard to any
income or loss occurring during such Plan Year; and (2) ten percent
(10%) of the amount determined under (1) multiplied by the number
of whole calendar months between the end of the Plan Year and the
date of distribution, counting the month of distribution if the
distribution occurs after the fifteenth (15th) of such month.
(d) Excess Contributions shall be distributed from the Participant's
Elective Deferral account and Qualified Matching Contribution
account (if applicable) in proportion to the Participant's Elective
Deferrals and Qualified Matching Contributions (to the extent used
in the ADP Test) for the test year. Excess Contributions shall
be distributed from the Participant's Qualified Non-Elective
Contribution account only to the extent that such Excess
Contributions exceed the Participant's Elective Deferrals and
Qualified Matching Contributions account for the applicable test
year.
(e) The return of an Excess Contribution under a Plan established
under a Xxxxx-Xxxxx Adoption Agreement will be reported as
additional wages paid to the affected Participant.
7.13 DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS
(a) Notwithstanding any other provisions 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 are allocated to the Highly Compensated Employees
with the largest Contribution Percentage Amounts taken into account
in calculating the ACP test for the year in which the excess arose,
beginning with the Highly Compensated Employee with the largest
amount of such Contribution Percentage and continuing in descending
order until all the Excess Aggregate Contributions have been
allocated. For purposes of the preceding sentence, the "largest
amount" is determined after distribution of any Excess Aggregate
Contributions.
(b) If such Excess Aggregate Contributions are distributed more than
two and one-half (21/2) months after the last day of the Plan Year
in which such excess amount arose, a 10% excise tax will be imposed
on the Employer maintaining the Plan with respect to those amounts.
Excess Aggregate Contributions shall be treated as Annual Additions
for purposes of Article X, Limitations On Allocations.
(c) Excess Aggregate Contributions shall be adjusted for any income
or loss up to the date of the distribution. The income or loss
allocable to the Excess Aggregate Contributions allocated to each
Participant is the sum of (1) income or loss allocable to each
Participant's Employee Contribution account, Matching Contribution
account, Qualified Matching Contribution account (if any, and if
all amounts therein are not used in the ADP test) and, if
applicable, Qualified Nonelective Contribution account and the
Elective Deferral account of the Plan Year multiplied by a fraction,
the numerator of which is such Participant's Excess Aggregate
Contributions for the year end the denominator is the Participant's
account balance(s) attributable to Contribution Percentage amounts
without regard to any income or loss occurring during such Plan
Year; and (2) ten percent (10%) of the amount determined under (1)
multiplied by the number of whole calendar months between the end
of the Plan Year and the date of distribution, counting the month
of distribution if distribution occurs after the fifteenth (15th)
of such month.
(d) Excess Aggregate Contributions shall be forfeited if forfeitable,
or distributed on a pro-rata basis, from the Participant's Voluntary
After-tax Contribution account, Required After-tax Contribution
account, Matching Contribution account and Qualified Matching
Contribution account (and if applicable the Participant's Qualified
Matching Contribution account, and/or Elective Deferral account, or
both).
(e) Forfeitures of Excess Aggregate Contributions may be reallocated to
the accounts of other Participants or applied to reduce Employer
contributions, or as otherwise elected by the Employer in the
Adoption Agreement.
7.14 DISTRIBUTIONS TO MINORS AND INDIVIDUALS WHO ARE LEGALLY INCOMPETENT
Benefits payable to either a minor or an individual who has been declared
legally incompetent shall be paid, at the direction of the conservator appointed
either under a court order or applicable state law which permits such an
individual to be a guardian for the benefit of said minor or incompetent. for
the benefit of said minor or incompetent
7.15 UNCLAIMED BENEFITS
(a) If elected on the Adoption Agreement, the default form of payment
will be a direct rollover into an individual retirement account or
annuity for any cash out distribution of amounts greater than
$1,000 but less than or equal to $5,000 made pursuant to Code
Sections 411(a)(7), 411(a)(11) and 417(e)(1). If an individual
retirement account or annuity is established, no amounts contributed
to these accounts may be forfeited under the Plan.
(b) The Plan Administrator shall notify Participants or Beneficiaries
by certified or registered mail sent to his or her last known
address of record with the Employer when their benefits become
distributable as provided at paragraph 6.11 hereof. If a
Participant or Beneficiary does not respond to the notice within
ninety (90) days of the date of the notice, the Plan Administrator
may take reasonable steps to locate the Participant or Beneficiary
including, but not limited to, requesting assistance from the
Employer, Employees, Social Security Administration and/or the
Internal Revenue Service
(c) If the Participant cannot be located after a period of twelve (12)
months, or such other period determined in a uniform and
nondiscriminatory manner by the Plan Administrator, the Plan
Administrator shall treat the benefit as a forfeiture pursuant to
paragraph 9.8. The forfeiture provisions of this subparagraph
7.15(c) apply only to the Participant's or Beneficiary's account
balance which is less than $5,000. If the Employer does not make a
contribution for the Plan Year during which the forfeiture takes
place, such amount shall first be applied to pay Plan expenses and,
if there are no such expenses, it shall then be allocated to
eligible Participant accounts as if the amount were the Employer's
contribution for such Plan Year
(d) If a Participant or Beneficiary later makes a claim for such
benefit, the Plan Administrator shall validate such claim and
provide the Participant or Beneficiary with all notices and other
information necessary for the Participant or Beneficiary to perfect
the claim. If the Plan Administrator validates the claim for
benefits, the Participant's account balance shall be restored to the
benefit amount treated as a forfeiture. Such benefit shall not be
adjusted for investment earnings or losses during the period
beginning on the date of forfeiture and ending on the date of
restoration. The funds necessary to restore the Participant's
account will first be taken from amounts eligible for reallocation
or other disposition as forfeitures with respect to the Plan Year.
If such funds do not exist or if such funds are insufficient, the
Employer will make a contribution prior to the date on which the
benefit is payable to restore such Participant's account. Such
benefit shall be paid or commence to be paid in the same manner as
if the benefit was eligible for distribution on the date the claim
for benefit is validated.
(e) The Plan Administrator shall follow the same procedure in locating
and subsequently treating as a forfeiture the benefit of a
Participant or Beneficiary whose benefit has been properly paid
under Plan terms but where the Participant or Beneficiary has not
negotiated the benefit check(s).
(f) Notwithstanding the foregoing, the Plan Administrator in his
discretion may establish alternative procedures for locating and
administering the benefits of missing Plan Participants.
ARTICLE VIII
JOINT AND SURVIVOR ANNUITY REQUIREMENTS
8.1 APPLICABILITY OF PROVISIONS The provisions of this Article shall
apply to any Participant who is credited with at least one (1) Hour of Service
with the Employer and such other Participants as provided in paragraph 8.8.
8.2 PAYMENT OF QUALIFIED JOINT AND SURVIVOR ANNUITY Unless an optional form
of benefit is selected pursuant to a Qualified Election within the ninety (90)
day period ending on the Annuity Starting Date, a Participant's Vested Account
Balance will be paid in the form of a Qualified Joint and Survivor Annuity.
For this purpose, a Qualified Joint and Survivor Annuity with respect to an
unmarried Participant's Vested Account Balance will be paid in the form of a
straight life annuity. A straight life annuity means an annuity payable in
equal installments for the life of the Participant that terminates upon the
Participant's death. The Participant may elect to have such annuity distributed
upon attainment of the Early Retirement Age under the Plan, if any.
8.3 PAYMENT OF QUALIFIED PRE-RETIREMENT SURVIVOR ANNUITY Unless an optional
form of benefit has been elected within the Election Period pursuant to a
Qualified Election, if a Participant dies before benefits have commenced
then the Participant's Vested Account Balance shall be paid in the form of a
life annuity for the life of the surviving Spouse. The surviving Spouse may
elect to have such annuity distributed within a reasonable period after the
Participant's death. If no election has been made within the Election Period
prior to the Participant's death, the surviving Spouse shall have the right to
select an optional form of benefit after the Participant's death. Such election
will only be permitted if the surviving Spouse is provided with a notice similar
to that required under paragraph 8.5 except that the notice will be modified to
explain a life annuity rather than a Qualified Joint and Survivor Annuity.
A Participant who does not meet the age thirty-five (35) requirement set forth
in the Election Period as of the end of any current Plan Year may make a special
qualified election to waive the Qualified Pre-Retirement Survivor Annuity for
the period beginning on the date of such election and ending on the first day
of the Plan Year in which the Participant will attain age thirty-five (35).
Such election shall not be valid unless the Participant receives a written
explanation of the Qualified Pre-Retirement Survivor Annuity in such terms as
are comparable to the explanation required under paragraph 8.5. Qualified Pre-
Retirement Survivor Annuity coverage will be automatically reinstated as of the
first day of the Plan Year in which the Participant attains age thirty-five
(35). Any new waiver on or after such date shall be subject to the full
requirements of this Article.
8.4 QUALIFIED ELECTION A Qualified Election is an election to either waive
a Qualified Joint and Survivor Annuity or a Qualified Pre-Retirement Survivor
Annuity. Any such election shall not be effective unless:
(a) the Participant's Spouse consents in writing to the election,
(b) the election designates a specific Beneficiary, including any class
of Beneficiaries or any contingent Beneficiaries, which may not be
changed without spousal consent unless the Spouse expressly permits
designations by the Participant without any further spousal consent,
(c) the Spouse's consent acknowledges the effect of the election, and
(d) the Spouse's consent is witnessed by a Plan representative or notary
public.
A Participant's waiver of the Qualified Joint and Survivor Annuity shall not be
effective unless the election designates a form of benefit payment which may not
be changed without spousal consent unless the Spouse expressly permits
designations by the Participant without any further spousal consent. If it is
established to the satisfaction of the Plan Administrator that the Participant
is unmarried or that the Spouse cannot be located, a waiver will be deemed a
Qualified Election. Any consent by a Spouse obtained under this provision (or
establishment that the consent of a Spouse cannot be obtained) shall be
effective only with respect to such Spouse. A consent that permits designations
by the Participant without any requirement of further consent by such Spouse
must acknowledge that the Spouse has the right to limit consent to a specific
Beneficiary, and a specific form of benefit where applicable, and that the
Spouse voluntarily elects to relinquish either or both of such rights. A
revocation of a prior waiver may be made by a Participant without the consent
of the Spouse at any time before the commencement of benefits. The number of
revocations shall not be limited. No consent obtained under this provision
shall be valid unless the Participant has received notice as provided in
paragraphs 8.5 and 8.6 below.
8.5 NOTICE REQUIREMENTS FOR QUALIFIED JOINT AND SURVIVOR ANNUITY In the
case of a Qualified Joint and Survivor Annuity, the Plan Administrator shall,
no less than thirty (30) days and no more than ninety (90) days prior to the
Annuity Starting Date, provide each Participant a written explanation of:
(a) the terms and conditions of a Qualified Joint and Survivor Annuity,
(b) the Participant's right to make and the effect of an election to
waive the Qualified Joint and Survivor Annuity form of benefit,
(c) the rights of a Participant's Spouse, and
(d) the right to make and the effect of a revocation of a previous
election to waive the Qualified Joint and Survivor Annuity.
The Annuity Starting Date may be less than thirty (30) days after and may be
before receipt of the written explanation described in the preceding paragraph
provided that:
(e) the Plan Administrator clearly informs the Participant and the
Participant's Spouse that they have a right to a period of at least
thirty (30) days after receiving the notice to consider the decision
of whether to waive the Qualified Joint and Survivor Annuity and
elect (with spousal consent) a form of distribution other than a
Qualified Joint and Survivor Annuity; and
(f) the Participant is permitted to revoke any affirmative distribution
election at least until the Annuity Starting Date or, if later, at
any time prior to the expiration to the seven (7) day period that
begins the day after the explanation of the Qualified Joint and
Survivor Annuity is provided to the Participant.
8.6 NOTICE REQUIREMENTS FOR QUALIFIED PRE-RETIREMENT SURVIVOR ANNUITY In
the case of a Qualified Pre-Retirement Survivor Annuity as described in
paragraph 8.3, the Plan Administrator shall provide each Participant within
the applicable period for such Participant a written explanation of the
Qualified Pre-Retirement Survivor Annuity in such terms and in such manner as
would be comparable to the explanation provided for meeting the requirements
of paragraph 8.5 applicable to a Qualified Joint and Survivor Annuity. The
applicable period for a Participant is whichever of the following periods
ends at the latest date:
(a) 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),
(b) a reasonable period ending after the individual becomes a
Participant, or
(c) a reasonable period ending after this article first applies to the
Participant.
(d) 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). If such a Participant subsequently returns to
employment with the Employer, the applicable period for such
Participant shall be redetermined.
For purposes of applying the preceding paragraph, a reasonable period ending
after the events described in (b) and (c) is the end of the two (2) year
period beginning one (1) year prior to the date the applicable event occurs,
and ending one (1) year after that date. In the case of a Participant who
separates form Service before the Plan Year in which age thirty-five (35) is
attained, notice shall be provided within the two (2) year period beginning
one (1) year prior to separation and ending one (1) year after separation.
8.7 SPECIAL SAFE HARBOR EXCEPTION FOR CERTAIN PROFIT-SHARING OR 401(K) PLANS
This paragraph shall apply to a Participant in a profit-sharing or 401(k) plan,
and to any distribution, made on or after the first day of the first Plan Year
beginning after 1988, from or under a separate account attributable solely to
Qualified Voluntary Contributions, as maintained on behalf of a Participant in
a money purchase pension plan or target benefit plan, if the following
conditions are satisfied:
(a) the Participant does not elect payments in the form of a life
annuity, and
(b) on the death of a Participant, the Participant's Vested Account
Balance will be paid to the Participant's Surviving Spouse, but if
there is no surviving Spouse, or if the Surviving Spouse has
consented to, in a manner conforming to a Qualified Election, then
to the Participant's Beneficiary.
(c) The surviving Spouse may elect to have distribution of the Vested
Account Balance commence within the ninety (90) day period following
the date of the Participant's death. The account balance shall be
adjusted for gains or losses occurring after the Participant's death
in accordance with the provisions of the Plan governing the
adjustment of account balances for other types of distributions.
(d) If a Plan is otherwise exempt from the Qualified Joint and Survivor
Annuity requirements, the Qualified Joint and Survivor Annuity
requirements are not triggered unless the Participant in the Plan
actually elects a life annuity as a distribution option.
(e) These safe harbor rules shall not be applicable to a Participant
in a profit-sharing or 401(k) plan if the Plan is the recipient of
a merger of assets from a plan which was subject to the survivor
annuity requirements of Code Sections 401(a)(11) and 417, and would
therefore have a Qualified Joint and Survivor Annuity as its normal
form of benefit, unless separate accounts or separate accounting
was monitored for the assets of the merged plan.
(f) Money purchase and target benefit plans are required to include
the Qualified Joint and Survivor Annuity option. These Plans may
eliminate any periodic payment options that are not required by the
Qualified Joint and Survivor Annuity rules such as installment
payments.
(g) The Participant may waive the spousal death benefit described in
this paragraph at any time provided that no such waiver shall be
effective unless it satisfies the conditions (described in paragraph
8.4) that would apply to the Participant's waiver of the Qualified
Pre-Retirement Survivor Annuity.
(h) Profit Sharing Plans satisfying all of the requirements of this
paragraph for a Participant such that the Plan is not required to
provide a Qualified Joint and Survivor Annuity for the Participant,
but that do provide such annuity (even if the annuity is the normal
form), may replace the Qualified Joint and Survivor Annuity with
payment in a single-sum distribution form that is otherwise
identical to such annuity in accordance with the requirements under
the Regulations Section 1.411(d)-4.
(i) If this paragraph 8.7 is operative, then all other provisions of
this Article VIII other than paragraph 8.8 are inoperative.
8.8 TRANSITIONAL JOINT AND SURVIVOR ANNUITY RULES Special transitional rules
apply to Participants who were not receiving benefits on August 23, 1984.
(a) Any living Participant not receiving benefits on August 23, 1984,
who would otherwise not receive the benefits prescribed by the
previous paragraphs of this Article, must be given the opportunity
to elect to have the prior paragraphs of this Article apply if such
Participant is credited with at least one (1) Hour of Service under
this Plan or a predecessor Plan in a Plan Year beginning on or after
January 1, 1976 and such Participant had at least ten (10) Years of
Service for vesting purposes when he or she separated from Service.
(b) Any living Participant not receiving benefits on August 23, 1984,
who was credited with at least one (1) Hour of Service under this
Plan or a predecessor plan on or after September 2, 1974, and who
is not otherwise credited with any Service in a Plan Year beginning
on or after January 1, 1976, must be given the opportunity to have
his or her benefits paid in accordance with paragraph 8.9.
(c) The respective opportunities to elect [as described in (a) and (b)
above] must be afforded to the appropriate Participants during the
period commencing on August 23, 1984 and ending on the date benefits
would otherwise commence to said Participants.
8.9 AUTOMATIC JOINT AND SURVIVOR ANNUITY AND EARLY SURVIVOR ANNUITY Any
Participant who has elected pursuant to paragraph 8.8(b) and any Participant
who does not elect under paragraph 8.8(a) or who meets the requirements of
paragraph 8.8(a), except that such Participant does not have at least ten (10)
years of vesting Service when he or she separates from Service, shall have his
or her benefits distributed in accordance with all of the following requirements
if benefits would have been payable in the form of a life annuity in accordance
with all of the following requirements:
(a) If benefits in the form of a life annuity become payable to a
married Participant who:
(1) begins to receive payments under the Plan on or after Normal
Retirement Age, or
(2) dies on or after Normal Retirement Age while still working
for the Employer, or
(3) begins to receive payments on or after the Qualified Early
Retirement Age, or
(4) separates from Service on or after attaining Normal Retirement
Age (or the Qualified Early Retirement Age) and after
satisfying the eligibility requirements for the payment of
benefits under the Plan and thereafter dies before beginning
to receive such benefits, such benefits will be received under
this Plan in the form of a Qualified Joint and Survivor
Annuity, unless the Participant has elected otherwise during
the Election Period. The Election Period must begin at least
six (6) months before the Participant attains Qualified Early
Retirement Age and end not more than ninety (90) days before
the commencement of benefits. Any election will be in writing
and may be changed by the Participant at any time.
(b) A Participant who is employed after attaining the Qualified Early
Retirement Age will be given the opportunity to elect, during the
Election Period, to have a survivor annuity payable on death. If
the Participant elects the survivor annuity, payments under such
annuity must not be less than the payments which would have been
made to the Spouse under the Qualified Joint and Survivor Annuity if
the Participant had retired on the day before his or her death. Any
election under this provision will be in writing and may be changed
by the Participant at any time. The Election Period begins on the
later of:
(1) the ninetieth day before the Participant attains the Qualified
Early Retirement Age, or
(2) the date on which participation begins, and ends on the date
the Participant terminates employment.
For purposes of this paragraph 8.9, Qualified Early Retirement Age is defined
at paragraph 1.80 herein.
8.10 ANNUITY CONTRACTS Any annuity contract distributed under this Plan must
be nontransferable. The terms of any annuity contract purchased and distributed
by the Plan to a Participant or Spouse shall comply with the requirements of
this Plan.
ARTICLE IX
VESTING
9.1 EMPLOYEE CONTRIBUTIONS A Participant shall always have a 100% vested
and nonforfeitable interest in his or her Elective Deferrals, Voluntary After-
tax Contributions, Qualified Voluntary Contributions, Required After-tax
Contributions, Qualified Non-Elective Contributions, Safe Harbor Matching
Contributions, Safe Harbor Non-Elective Contributions, SIMPLE 401(k), Qualified
Matching Contributions, Rollover and Transfer Contributions plus the earnings
thereon. No forfeiture of Employer contributions (including any minimum
contributions made under paragraph 15.2) will occur solely as a result of a
Participant's withdrawal of any Employee contributions.
9.2 EMPLOYER CONTRIBUTIONS A Participant shall acquire a vested and
nonforfeitable interest in his or her account attributable to Employer
contributions in accordance with the schedule selected in the Adoption
Agreement, provided that if a Participant is not already fully vested, he or
she shall become so upon attaining Normal Retirement Age, Early Retirement
Age, on death prior to normal retirement (provided the Participant has not
terminated employment prior to death), on retirement due to Disability, or
on termination of the Plan. Any contributions made on behalf of a Participant
with a Disability within the meaning of Code Section 22(e)(3) at the election
of the Employer must be fully vested when made.
9.3 VESTING OF EMPLOYER CONTRIBUTIONS In A SIMPLE 401(k) Plan A Participant
shall have a 100% vested and nonforfeitable interest in his or her account
attributable to any Employer contributions made under a SIMPLE 401(k) Plan.
9.4 COMPUTATION PERIOD A period used for determining Years of Service and
Breaks in Service used in calculating the vesting of a Participant. A Year
of Service means any twelve (12) consecutive month vesting computation period
as elected in the Adoption Agreement during which an Employee completes the
number of Hours of Service [not to exceed one-thousand (1,000)] as specified
in the Adoption Agreement. If the Plan utilizes the Elapsed Time method of
crediting Service, a vesting computation period for which the Employee receives
credit for a Year of Service will be determined under the Service crediting
rules of paragraph 1.117.
9.5 REQUALIFICATION PRIOR TO FIVE CONSECUTIVE ONE-YEAR BREAKS IN SERVICE
Subject to Article VI, the account balance of a Participant who is re-employed
prior to incurring five (5) consecutive one (1) year Breaks in Service or
Periods of Severance shall consist of any undistributed amount in his or her
account as of the date of re-employment plus any future contributions added to
such account plus the investment earnings on the account. The Vested Account
Balance of such Participant shall be determined by multiplying the Participant's
account balance (adjusted to include any distribution or redeposit made under
paragraph 6.3) by such Participant's vested percentage. All Service of the
Participant, both prior to and following the break, shall be counted when
computing the Participant's vested percentage.
9.6 REQUALIFICATION AFTER FIVE CONSECUTIVE ONE-YEAR BREAKS IN SERVICE
Subject to Article VI, if a Participant was not fully vested prior to
termination of employment and is re-employed after incurring five (5)
consecutive one (1) year Breaks in Service or Periods of Severance, a new
account shall be established for such Participant to separate his or her
deferred vested and nonforfeitable account, if any, from the account to which
new allocations will be made. The Participant's deferred account to the extent
remaining shall be fully vested and shall continue to share in earnings and
losses of the Trust. When computing the Participant's vested portion of the new
account, all pre-break and post-break Service shall be counted. However,
notwithstanding this provision, no such former Participant who has had five (5)
consecutive one (1) year Breaks in Service or Periods of Severance shall acquire
a larger vested and nonforfeitable interest in his or her prior account balance
as a result of requalification hereunder.
9.7 CALCULATING VESTED INTEREST A Participant's vested and nonforfeitable
interest, as determined by the Plan Administrator shall be calculated by
multiplying the fair market value of his or her account attributable to Employer
contributions on the Valuation Date concurrent with or preceding distribution
by the decimal equivalent of the vested percentage as of his or her termination
date. The amount attributable to Employer contributions for purposes of the
calculation includes amounts previously paid out pursuant to paragraph 6.3 and
not repaid. The Participant's vested and nonforfeitable interest, once
calculated above, shall be reduced to reflect those amounts previously paid out
to the Participant and not repaid by the Participant. The Participant's vested
and nonforfeitable interest so determined shall continue to share in the
investment earnings and any increase or decrease in the fair market value of
the Trust up to the Valuation Date preceding or coinciding with payment.
9.8 Forfeitures Any balance in the account of a Participant who has separated
from Service to which he or she is not entitled under the foregoing provisions,
shall be forfeited and applied as provided in the Adoption Agreement, or in
accordance with a uniform and nondiscriminatory policy established by the Plan
Administrator. The reallocation or other disposition of a nonvested benefit
may only occur if the Participant has received payment of his or her entire
vested benefit from the Plan or if the Participant has incurred five (5)
consecutive one (1) year Breaks in Service. To the extent that forfeitures
are reallocated, in the year in which the Participant terminates Service, a
Participant shall not share in the allocation of a forfeiture of any portion
of his account balance or of the forfeitures of any other Participant who has
terminated Service in the same or prior Plan Year(s). While awaiting
reallocation or other disposition, the Plan Administrator or his designate,
if applicable, shall have the right to leave the nonvested benefit in the
Participant's account or may transfer the nonvested benefit to a forfeiture
suspense account. Amounts held in a forfeiture suspense account may share
in any increase or decrease in fair market value of the assets of the Trust
in accordance with Article V of the Plan. Such determination shall be made
by the Plan Administrator or his designate, if applicable. If a Participant's
account balance is forfeited prior to five consecutive one-year Breaks in
Service, the amount necessary to restore the account balance to a Participant
will be obtained from one of the following sources; current Plan Years
forfeitures, an additional Employer contribution, or earnings on investments
for the applicable Plan Year, as determined by the Plan Administrator. For
purposes of this paragraph, if the value of a Participant's Vested Account
Balance is zero, the Participant shall be deemed to have received a distribution
of such Vested Account Balance. A Highly Compensated Employee's Matching
Contributions may be forfeited, even if vested, if the contributions to which
they relate are Excess Deferrals, Excess Contributions or Excess Aggregate
Contributions. Benefits with respect to Participants who cannot be located
as provided at paragraph 7.15 hereof will be treated in the same manner as a
forfeiture.
9.9 AMENDMENT OF VESTING SCHEDULE No amendment to the Plan shall have the
effect of decreasing a Participant's Vested Account Balance determined without
regard to such amendment as of the later of the date such amendment is adopted
or the date it becomes effective. Further, if the vesting schedule of the Plan
is amended, or the Plan is amended in any way that directly or indirectly
affects the computation of any Participant's nonforfeitable percentage or if
the Plan is deemed amended by an automatic change to or from a Top-Heavy vesting
schedule, each Participant with at least three (3) Years of Service with the
Employer may elect, during the election period defined herein, to have his or
her nonforfeitable percentage computed under the Plan without regard to such
amendment. For Participants who do not have at least one (1) Hour of Service
in any Plan Year beginning after 1988, the preceding sentence shall be applied
by substituting "five (5) Years of Service" for "three (3) Years of Service"
where such language appears. The period during which the election may be made
shall commence with the date the amendment is adopted and shall end on the
later of:
(a) sixty (60) days after the amendment is adopted,
(b) sixty (60) days after the amendment becomes effective, or
(c) sixty (60) days after the Participant is issued written notice
of the amendment by the Employer or the Trustee.
If the Trustee notifies the Participants involved, the Plan may be charged
for the costs thereof.
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) relating to financial hardships. For
purposes of this paragraph, a Plan amendment which has the effect of decreasing
a Participant's account balance with respect to benefits attributable to Service
before the amendment, shall be treated as reducing an accrued benefit.
Furthermore, if the vesting schedule of a Plan is amended, in the case of an
Employee who is a Participant as of the later of the date such amendment is
adopted or the date it becomes effective, the nonforfeitable percentage
(determined as of such date) of such Employee's Employer-derived accrued benefit
will not be less than the percentage computed under the Plan without regard to
such amendment.
No amendment to the Plan shall be effective to eliminate or restrict an optional
form of benefit. The preceding sentence shall not apply to a Plan amendment
that eliminates or restricts the ability of a Participant to receive payment of
his or her account balance under a particular form of benefit if the amendment
satisfies the conditions in (d) or (e) below:
(d) The amendment provides a single sum distribution form that is
otherwise identical to the optional form of benefit restricted.
For purposes of this condition, a single-sum distribution form is
otherwise identical only if it is identical in all respects to the
eliminated or restricted optional form of benefit (or would be
identical except that it provides greater rights to the Participant)
except with respect to the timing of payments after commencement.
(e) The amendment is not effective unless it provides that the amendment
shall not apply to any distribution with an Annuity Starting Date
earlier than the earlier of (i) the ninetieth (90th) day after the
date the Participant receiving the distribution has been furnished a
summary that reflects the amendment and that satisfies the ERISA
requirements at 29 CFR 2520.104b-3 relating to a summary of material
modifications or (ii) the first day of the second Plan Year
following the Plan Year in which the amendment is adopted.
9.10 SERVICE WITH CONTROLLED GROUPS All Years of Service with all members of
a controlled group of corporations [as defined in Code Section 414(b) as
modified by Code Section 415(h)], all commonly controlled trades or businesses
[as defined in Code Section 414(c) as modified by Code Section 415(h)], or
members of an affiliated service group [as defined in Code Section 414(m)] of
which the Employer is a part, and any other entity required to be aggregated
with the Employer pursuant to Regulations under Code Section 414(o), shall be
considered for purposes of determining a Participant's nonforfeitable
percentage.
9.11 COMPLIANCE WITH UNIFORMED SERVICES EMPLOYMENT AND REEMPLOYMENT RIGHTS
ACT OF 1994 Notwithstanding any provision of this Plan to the contrary, Years
of Service for vesting will be credited to Participants with respect to periods
of qualified military service as provided in Code Section 414(u).
ARTICLE X
LIMITATIONS ON ALLOCATIONS
10.1 PARTICIPATION IN THIS PLAN ONLY If the Participant does not
participate in and has never participated in another Qualified Plan, a
Welfare Benefit Fund, individual medical account as defined in Code Section
415(l)(2), or a Simplified Employee Pension Plan maintained by the adopting
Employer, which provides an Annual Addition, the amount of Annual Additions
which may be credited to the Participant's account for any Limitation Year
will not exceed the lesser of the Maximum Permissible Amount or any other
limitation contained in this Plan. If the Employer contribution that would
otherwise be contributed or allocated to the Participant's account would cause
the Annual Additions for the Limitation Year to exceed the Maximum Permissible
Amount, the amount contributed or allocated will be reduced so that the Annual
Additions for the Limitation Year will equal the Maximum Permissible Amount.
Prior to determining the Participant's actual Compensation for the Limitation
Year, the Employer may determine the Maximum Permissible Amount for a
Participant on the basis of a reasonable estimate of the Participant's
Compensation for the Limitation Year, uniformly determined for all Participants
similarly situated. As soon as is administratively feasible after the end of
the Limitation Year, the Maximum Permissible Amount for the Limitation Year
will be determined on the basis of the Participant's actual Compensation for
the Limitation Year.
10.2 DISPOSITION OF EXCESS ANNUAL ADDITIONS If there is an Excess Annual
Addition due to an error in estimating a Participant's Compensation for a
Limitation Year under paragraph 10.1, an error in estimating the amount of
Elective Deferrals of the Participant, or as a result of the allocation of
forfeitures, the excess will be distributed to the affected Participant in
the order which follows:
(a) Any Voluntary or Required After-tax Contributions plus the
investment earnings thereon, to the extent they would reduce
the excess, shall be returned to the Participant.
(b) Simultaneously, with the return of any Voluntary or Required
After-tax Contributions (plus attributable earnings), any
associated Employer Matching Contribution(s) plus the investment
earnings thereon that relate to the returned Voluntary or Required
After-tax Contributions, to the extent they would reduce the excess,
will be held either unallocated in a suspense account or forfeited
in accordance with the "spillover method" as elected in the Adoption
Agreement.
(c) Elective Deferrals plus the investment earnings thereon shall be
returned to the Participant to the extent they would reduce the
excess.
(d) Simultaneously with the return of the Elective Deferrals (plus
attributable earnings), any associated Employer Matching
Contribution(s) plus the investment earnings thereon that relate
to the returned Elective Deferrals, to the extent they would reduce
the excess, will be either held unallocated in a suspense account
or forfeited in accordance with the "spillover method" as elected
in the Adoption Agreement.
(e) If, after the application of subparagraphs (a) through (d), an
excess still exists, the excess will be held either unallocated
in a suspense account or forfeited in accordance with the "spillover
method" as elected in the Adoption Agreement.
(f) When the suspense account method is used, and the Participant is
not covered by the Plan at the end of the Limitation Year, the
Plan Administrator will apply the suspense account to reduce future
Employer contributions for all remaining Participants in the next
Limitation Year, and each succeeding Limitation Year until the
Excess Annual Addition is eliminated. If a suspense account is in
existence at any time during a Limitation Year, all amounts in the
suspense account must be allocated to Participant accounts before
any Employer contributions or any Employee contributions may be
made to the Plan for that Limitation Year. If a suspense account
is in existence at any time during a Limitation Year pursuant to
this paragraph, it will not participate in the allocation of
investment gains or losses.
10.3 PARTICIPATION IN MULTIPLE DEFINED CONTRIBUTION PLANS The Annual
Additions which may be credited to a Participant's account under this Plan
for any Limitation Year will not exceed the Maximum Permissible Amount. With
respect to this Plan, the Maximum Permissible Amount is reduced by the Annual
Additions credited to a Participant's account under any other qualified Master
or Prototype Defined Contribution plans, Welfare Benefit funds, individual
medical accounts as defined in Code Section 415(l)(2), and Simplified Employee
Pension Plans maintained by the Employer, which provide an Annual Addition
for the same Limitation Year. If the Annual Additions with respect to the
Participant under other Defined Contribution Plans, Welfare Benefit funds,
individual medical accounts and Simplified Employee Pension Plans maintained
by the Employer are less than the Maximum Permissible Amount and the Employer
contribution that would otherwise be contributed or allocated to the
Participant's account under this Plan would cause the Annual Additions for
the Limitation Year to exceed this limitation, the amount contributed or
allocated under this Plan will be reduced so that the Annual Additions under
all such plans and funds for the Limitation Year will equal the Maximum
Permissible Amount. If the Annual Additions with respect to the Participant
under such other Defined Contribution Plans and Welfare Benefit funds in the
aggregate are equal to or greater than the Maximum Permissible Amount, no
amount will be contributed or allocated to the Participant's account under
this Plan for the Limitation Year. Prior to determining the Participant's
actual Compensation for the Limitation Year, the Employer may determine the
Maximum Permissible Amount for a Participant in the manner described in
paragraph 10.1. As soon as administratively feasible after the end of the
Limitation Year, the Maximum Permissible Amount for the Limitation Year will
be determined on the basis of the Participant's actual Compensation for the
Limitation Year. If the Participant is covered under another qualified Defined
Contribution Plan maintained by the Employer which is not a Master or Prototype
Plan, Annual Additions which may be credited to the Participant's account under
this Plan for any Limitation Year will be limited in accordance with this
paragraph as though the other plan were a Master or Prototype Plan unless the
Employer specifies other limitations in the Adoption Agreement.
10.4 DISPOSITION OF EXCESS ANNUAL ADDITIONS UNDER TWO PLANS If a
Participant's Annual Additions under this Plan and such other plans as described
in the preceding paragraph would result in an Excess Annual Additions for a
Limitation Year due to an error in estimating a Participant's Compensation for
a Limitation Year under paragraph 10.3 or as a result of forfeitures, the Excess
Annual Additions will be deemed to consist of the Annual Additions last
allocated except that Annual Additions attributable to a Simplified Employee
Pension Plan will be deemed to have been allocated first and then Annual
Additions to a Welfare Benefit Fund or individual medical account as defined
in Code Section 415(l)(2) will be deemed to have been allocated next regardless
of the actual Allocation Date. If an Excess Annual Addition was allocated to
a Participant on a Valuation or Allocation Date of this Plan which coincides
with a valuation or allocation date of another plan, the Excess Annual Additions
attributed to this Plan will be the product of:
(a) the total Excess Annual Additions allocated as of such date, times
(b) the ratio of:
(1) the Annual Additions allocated to the Participant for the
Limitation Year as of such date under this Plan, to
(2) the total Annual Additions allocated to the Participant for
the Limitation Year as of such date under this and all the
other qualified Master or Prototype Defined Contribution
Plans.
Any Excess Annual Additions attributed to this Plan will be disposed of in the
manner described in paragraph 10.2.
10.5 PARTICIPATION IN THIS PLAN AND A DEFINED BENEFIT PLAN If the Employer
maintains, or at any time maintained, a qualified Defined Benefit Plan (other
than Paired Plan #02001 or #02002,) covering any Participant in this Plan,
the sum of the Participant's Defined Benefit Plan Fraction and Defined
Contribution Plan Fraction will not exceed 1.0 in any Limitation Year. For
any Plan Year during which the Plan is Top-Heavy, the Defined Benefit and
Defined Contribution Plan Fractions shall be calculated in accordance with Code
Section 416(h). The Annual Additions which may be credited to the Participant's
account under this Plan for any Limitation Year will be limited in accordance
with the Adoption Agreement. This paragraph does not apply for Limitation Years
beginning on or after January 1, 2000.
ARTICLE XI
ANTIDISCRIMINATION TESTING
11.1 GENERAL TESTING REQUIREMENTS With respect to each Plan Year, an
Employer's Plan which offers a Code Section 401(k) cash or deferred arrangement
and any contributions made thereunder must satisfy the Average Deferral
Percentage Test ("ADP Test") and, if applicable, the Average Contribution
Percentage Test ("ACP Test"). Under each of these tests, the Average Deferral
Percentage (ADP) and the Average Contribution Percentage (ACP) for Highly
Compensated Employees may not exceed the ADP and ACP for Non-Highly Compensated
Employees by more than the amount permitted by application of the basic limit
or the alternative limit. These limits are described at paragraphs 11.2 and
11.6 herein. If the ADP or ACP for Highly Compensated Employees exceeds the
basic limit or the alternative limit, the applicable average for Highly
Compensated Employees either must be reduced to the maximum permitted under
the most liberal limit or the average of the Non-Highly Compensated Employees
is increased.
The reduction in the average is determined in accordance with paragraph 11.4
herein. In lieu of reducing the applicable average for the Highly Compensated
Employees, the Employer may elect to make an additional Qualified Non-Elective
Contribution (QNEC) and/or a Qualified Matching Contribution (QMAC) for Non-
Highly Compensated Employees to increase their Average Deferral Percentage
and/or Average Contribution Percentage to the point where the Plan satisfies
the ADP and/or the ACP Test. These qualified contributions are described at
paragraph 11.5 herein.
If the Plan can only satisfy the ADP Test and the ACP Test by application of
the alternative limit, the Plan must apply the multiple use test as described
at paragraph 11.7(b) hereof. If the Plan fails to satisfy the multiple use
test, the Employer must either make correcting distributions to affected Highly
Compensated Employees or make QNEC and/or QMAC contributions for Non-Highly
Compensated Employees to the point where the Plan satisfies the multiple use
test.
11.2 ADP TESTING LIMITATIONS
(a) PRIOR YEAR TESTING - If elected by the Employer in the Adoption
Agreement, the ADP for a Plan Year for Participants who are Highly
Compensated Employees for each Plan Year and the Prior Plan Year's
ADP for Participants who were Non-Highly Compensated Employees for
the Prior Plan Year must satisfy the basic limit set forth in (1)
or the alternative limit set forth at (2):
(1) The ADP for the Plan Year for Participants who are Highly
Compensated Employees for the Plan Year shall not exceed the
Prior Plan Year's ADP for Participants who were Non-Highly
Compensated Employees for the Prior Plan Year multiplied by
1.25; or
(2) The ADP for a Plan Year for Participants who are Highly
Compensated Employees for the Plan Year shall not exceed the
Prior Year's ADP for Participants who were Non-Highly
Compensated Employees for the Prior Plan Year multiplied by
2.0, provided that the ADP for Participants who are Highly
Compensated Employees does not exceed the ADP for Participants
who were Non-Highly Compensated Employees in the Prior Plan
Year by more than two (2) percentage points.
(b) For the first Plan Year of a Plan, where the Plan permits a
Participant to make Elective Deferrals and the Plan is not a
successor Plan, for purposes of the foregoing limits, the Prior Plan
Year's Non-Highly Compensated Employees' ADP shall be 3%, unless the
Employer has elected in the Adoption Agreement to use the current
Plan Year's ADP for these Participants.
(c) CURRENT YEAR TESTING - If no election is made by the Employer in
the Adoption Agreement, the ADP limits in (1) and (2), above, will
be applied by comparing the current Plan Year's ADP for Participants
who are Highly Compensated Employees with the current Plan Year's
ADP for Participants who are Non-Highly Compensated Employees. This
election can only be changed if the Plan meets the requirements for
changing to Prior Plan Year testing set forth in IRS Notice 98-1 (or
superseding guidance).
11.3 SPECIAL RULES RELATING TO APPLICATION OF THE ADP TEST
(a) A Participant is a Highly Compensated Employee for a particular Plan
Year if he or she meets the definition of a Highly Compensated
Employee in effect for that Plan Year. Similarly, a Participant is
a Non-Highly Compensated Employee for a particular Plan Year if he
or she does not meet the definition of a Highly Compensated Employee
in effect for that Plan Year.
(b) The Actual Deferral Percentage for any Participant who is a Highly
Compensated Employee for the Plan Year and who is eligible to have
Elective Deferrals (and Qualified Non-Elective Contributions or
Qualified Matching Contributions, or both, if treated as Elective
Deferrals for purposes of the ADP Test) allocated to his or her
accounts under two (2) or more arrangements described in Code
Section 401(k), that are maintained by the Employer, shall be
determined as if such Elective Deferrals (and, if applicable, such
Qualified Non-Elective Contributions or Qualified Matching
Contributions, or both) were made under a single arrangement. If a
Highly Compensated Employee participates in two (2) 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 issued under Code Section 401(k).
(c) In the event that this Plan satisfies the requirements of Code
Sections 401(k), 401(a)(4), or 410(b) only if aggregated with one
(1) or more other plans, or if one (1) 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 Participants as if all such plans were a
single plan. Any adjustments to the Non-Highly Compensated Employee
ADP for the Prior Plan Year will be made in accordance with IRS
Notice 98-1 and any superseding guidance, unless the Employer has
elected in the Adoption Agreement to use the current year testing
method. Plans may be aggregated in order to satisfy Code Section
401(k) only if they have the same Plan Year and use the same ADP
testing method.
(d) The Employer shall maintain records sufficient to demonstrate
satisfaction of the ADP Test and the amount of Qualified Non-
Elective Contributions or Qualified Matching Contributions, or both,
used in such test.
(e) For purposes of the ADP Test, Elective Deferrals, Qualified Non-
Elective Contributions and Qualified Matching Contributions must
be made before the end of the twelve (12) month period immediately
following the Plan Year to which the contributions relate.
11.4 CALCULATION AND DISTRIBUTION OF EXCESS CONTRIBUTIONS AND EXCESS
AGGREGATE CONTRIBUTIONS
(a) REDUCING THE AVERAGE FOR HIGHLY COMPENSATED EMPLOYEES - If
necessary, the ADP and/or ACP for Highly Compensated Employees must
be reduced to the maximum allowed by the applicable limit at
paragraph 11.2 and 11.6. The average is reduced on a step-by-step
leveling basis beginning by reducing the Actual Deferral Percentage
or the Actual Contribution Percentage for the Highly Compensated
Employee with the highest percentage until the average is reduced to
the maximum allowed or until the Actual Deferral Percentage or
Actual Contribution Percentage for such Highly Compensated Employee
is lowered to that of the Highly Compensated Employee with the next
highest percentage. This process continues until the ADP and/or
the ACP is lowered to the maximum allowed for the Plan Year. The
excess dollar amount attributable to each affected Highly
Compensated Employee is then totaled for purposes of correcting
distributions determined at paragraph (b) below.
(b) CORRECTING DISTRIBUTIONS TO HIGHLY COMPENSATED EMPLOYEES - The total
amount to be distributed as determined under paragraph (a) is
allocated to Highly Compensated Employees on the basis of the dollar
amount included for such Employee in the numerator of the Actual
Deferral Percentage or the Actual Contribution Percentage, as
applicable. The distribution for each affected Highly Compensated
Employee is determined on a leveling basis similar to that described
at paragraph (a) except that the process is based on dollars rather
than percentages. Excess Contributions and Excess Aggregate
Contributions are allocated to the Highly Compensated Employees with
the largest amount of Employer contributions taken into account in
calculating the ADP or ACP Test for the year in which the excess
arose, beginning with the Highly Compensated Employee with the
largest amount of such Employer contributions and continuing in
descending order until all the Excess Contributions and Excess
Aggregate Contributions have been allocated. For purposes of the
preceding sentence, the "largest amount" is determined after
distribution of any Excess Contribution and Excess Aggregate
Contributions. After correcting distributions are allocated, it is
not necessary to recompute the Highly Compensated Employee averages
to determine if they satisfy the ADP Test and/or the ACP Test.
Distributions of Excess Contributions and Excess Aggregate
Contributions are to be made in accordance with paragraphs 7.12 and
7.13 hereof.
11.5 QUALIFIED NON-ELECTIVE AND/OR MATCHING CONTRIBUTIONS The Employer may
make a Qualified Non-Elective Contribution (QNEC) or Qualified Matching
Contribution (QMAC) for Non-Highly Compensated Employees (whether or not so
designated in the Adoption Agreement) to increase the Average Deferral
Percentage and/or Average Contribution Percentage to the point where the Plan
passes the ADP Test and/or the ACP Test. The following rules apply with respect
to such contributions:
(a) A QNEC or QMAC used in the ADP Test may not also be included in the
ACP Test.
(b) If testing is done on the basis of current Plan Year data, QNECs
and/or QMACs must be made and credited to Participant accounts not
later than the last day of the twelve (12) consecutive month period
following the end of the Plan Year being tested.
(c) If testing is done on the basis of Prior Plan Year data for Non-
Highly Compensated Employees, QNECs and/or QMACs for such Employees
must be contributed not later than the last day of the Plan Year
being tested.
(d) If the Employer makes Non-Elective Contributions which are not
designated as Qualified Non-Elective Contributions at the time
of the contribution to the Plan, the Plan Administrator may
redesignate such contributions as Qualified Non-Elective
Contributions if the contributions otherwise satisfy the
requirements of a Qualified Non-Elective Contribution.
(e) The Employer's contribution will be allocated to a group of Non-
Highly Compensated Participants designated by the Plan
Administrator. The allocation will be the lesser of the amount
required to pass the ADP/ACP Test, or the maximum permitted under
Code Section 415.
11.6 ACP TESTING LIMITATIONS Employee contributions and Matching
Contributions must meet the nondiscrimination requirements of Code Section
401(a)(4) and the Average Contribution Percentage (hereinafter ACP) Test of Code
Section 401(m). If Employee contributions (including any Elective Deferrals
recharacterized as Voluntary After-tax Contributions) or Matching Contributions
are made in connection with a cash or deferred arrangement, the ACP Test is in
addition to the ADP Test under Code Section 401(k). Qualified Matching
Contributions and Qualified Non-Elective Contributions used to satisfy the ADP
test may not be used to satisfy the ACP test.
(a) PRIOR YEAR TESTING - If elected by the Employer in the Adoption
Agreement, the ACP for a Plan Year for eligible Participants who
are Highly Compensated Employees for each Plan Year and the prior
Plan Year's ACP for eligible Participants who were Non-Highly
Compensated Employees for the Prior Plan Year must satisfy one
of the following tests:
(1) The ACP for a Plan Year for Participants who are Highly
Compensated Employees for the Plan Year shall not exceed
the prior Plan Year's ACP for eligible Participants who were
Non-Highly Compensated Employees for the Prior Plan Year
multiplied by 1.25; or
(2) The ACP for a Plan Year for Participants who are Highly
Compensated Employees for the Plan Year shall not exceed the
prior year's ACP for eligible Participants who were Non-Highly
Compensated Employees for the Prior Plan Year multiplied by
2.0, provided that the ACP for eligible Participants who are
Highly Compensated Employees does not exceed the ACP for
eligible Participants who were Non-Highly Compensated
Employees in the Prior Plan Year by more than two (2)
percentage points.
(b) For the first Plan Year of a Plan, where this Plan permits any
eligible Participant to make Employee contributions, provides for
Matching Contributions, or both, and the Plan is not a successor
Plan, for purposes of the foregoing limits, the Prior Plan Year's
Non-Highly Compensated Employees' ACP shall be 3% unless the
Employer has elected in the Adoption Agreement to use the current
Plan Year's ACP for these Participants.
(c) CURRENT YEAR TESTING - If no election is made by the Employer in
the Adoption Agreement, the ACP limits in (1) and (2), above, will
be applied by comparing the current Plan Year's ACP for eligible
Participants who are Highly Compensated Employees for the Plan Year
with the current Plan Year's ACP for eligible Participants who are
Non-Highly Compensated Employees. This election can only be changed
if the Plan meets the requirements for changing to Prior Plan Year
testing set forth in IRS Notice 98-1 (or superseding guidance).
11.7 SPECIAL RULES RELATING TO THE APPLICATION OF THE ACP TEST
(a) A Participant is a Highly Compensated Employee for a particular Plan
Year if he or she meets the definition of a Highly Compensated
Employee in effect for that Plan Year. Similarly, a Participant
is a Non-Highly Compensated Employee for a particular Plan Year if
he or she does not meet the definition of a Highly Compensated
Employee in effect for that Plan Year.
(b) If one or more Highly Compensated Employees participate in both a
cash or deferred arrangement and a plan subject to the ACP Test
maintained by the Employer and the sum of the ADP and ACP of those
Highly Compensated Employees subject to either or both tests exceeds
the Aggregate Limit, then the ADP or ACP of those Highly Compensated
Employees who also participate in a cash or deferred arrangement
will be reduced in accordance with paragraph 11.4 so that the limit
is not exceeded. The amount by which each Highly Compensated
Employee's Contribution Percentage Amounts is reduced shall be
treated as an Excess Aggregate Contribution. The ADP and ACP of
the Highly Compensated Employees are determined after any
corrections required to meet the ADP and ACP tests and are deemed
to be the maximum permitted under such tests for the Plan Year.
Multiple use of the aggregate limit does not occur if either 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 paragraph, the Actual 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 (2) or more plans described in Code Section
401(a) or arrangements described in Code Section 401(k) that are
maintained by the Employer, shall be determined as if the total of
such Contribution Percentage Amounts were made under a single plan.
If a Highly Compensated Employee participates in two (2) 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 mandatory disaggregation under the Regulations issued
under Code Section 410(b) apply.
(d) In the event that this Plan satisfies the requirements of Code
Sections 401(a)(4), 401(m), or 410(b) only if aggregated with one
(1) or more other plans, or if one (1) 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
Contribution Percentage of Eligible Participants as if all such
plans were a single plan. Any adjustments to the Non-Highly
Compensated Employee ACP for the Prior Plan Year will be made in
accordance with IRS Notice 98-1 and any superseding guidance, unless
the Employer has elected in the Adoption Agreement to use the
Current Year testing method. Plans may be aggregated in order to
satisfy Code Section 401(m) only if the aggregated plans have the
same Plan Year and use the same ACP testing method.
(e) For purposes of the ACP Test, Employee contributions are considered
to have been made for the Plan Year in which contributed to the
Plan. Matching Contributions and Qualified Matching and Non-Elective
Contributions will be considered made for a Plan Year if made no
later than the end of the twelve (12) month period beginning on
the day after the close of the Plan Year.
(f) The determination and treatment of the Actual Contribution
Percentage of any Participant shall satisfy such other requirements
as may be prescribed by the Secretary of the Treasury.
11.8 RECHARACTERIZATION If the Employer allows for Voluntary After-tax
Contributions in the Adoption Agreement, a Participant may treat his or her
Excess Contributions allocated to him or her as an amount distributed to the
Participant and then contributed by the Participant to the Plan.
Recharacterized amounts will remain nonforfeitable and subject to the same
distribution requirements as Elective Deferrals. Amounts may not be
recharacterized by a Highly Compensated Employee to the extent that such
amount in combination with other Employee contributions made by that Employee
would exceed any stated limit under the Plan on Voluntary After-tax
Contributions.
Recharacterization must occur no later than two and one-half (21/2) months
after the last day of the Plan Year for which such Excess Contributions arose
and is deemed to occur no earlier than the date the last Highly Compensated
Employee is informed in writing of the amount recharacterized and the
consequences thereof. Recharacterized amounts will be taxable to the
Participant for the Participant's tax year in which the Participant would have
received them in cash.
11.9 NONDISCRIMINATION TESTS In A SIMPLE 401(k) Plan The ADP/ACP Tests
described this Article XI are treated as satisfied for any Plan Year for which
the Employer has adopted and complied with the provisions of the SIMPLE 401(k)
Adoption Agreement.
11.10 SAFE HARBOR RULES OF APPLICATION
(a) The Employer may elect in a cash or deferred adoption agreement to
apply the safe harbor plan provisions found in paragraphs 11.10
through 11.17. Except as otherwise permitted, an Employer must
elect the Safe Harbor Plan provisions and must satisfy the notice
requirements of paragraph 11.16 prior to the beginning of the Plan
Year to which the Safe Harbor provisions will be applied. The
Employer must apply the Safe Harbor provisions for the entire Plan
Year, including any short Plan Year. An Employer who elects in the
Adoption Agreement and operationally satisfies the Safe Harbor
provisions of paragraphs 11.10 through 11.17 is not subject to the
nondiscrimination requirements of 11.2. An Employer who elects to
provide additional Matching Contributions as set forth in paragraph
11.14 will be subject to the nondiscrimination provisions of
paragraph 11.6, unless the additional Matching Contributions satisfy
the ACP test safe harbor provisions in paragraph 11.14.
(b) The Employer may elect in the Adoption Agreement either to make a
Safe Harbor Non-Elective Contribution on behalf of each eligible
Employee who is eligible to participate in the Plan, or to make a
Safe Harbor Matching Contribution on behalf of each eligible
Employee who is eligible to participate in the Plan and who is
making Elective Deferrals.
(c) The Safe Harbor Non-Elective Contribution will be made on behalf
of each eligible Employee who is eligible to participate in the Plan
equal to at least 3% of the Employee's Compensation.
(d) The Safe Harbor Matching Contribution shall be made under the Basic
Matching Formula or an Enhanced Matching Formula as described below.
(e) A Plan intending to satisfy the requirements of Code Sections
401(k)(12) and 401(m)(11) a "Safe Harbor CODA" generally must
satisfy such requirements, including the notice requirement, for the
entire Plan Year. See Notice 98-52, 1988-46 I.R. B. 16, Notice
2000-3, 2000-4 I.R.B. 413, and Revenue Procedure 200-29, 2000-6
I.R.B. 553.
(1) BASIC MATCHING CONTRIBUTION FORMULA - The Basic Matching
Formula provides a Matching Contribution on behalf of each
eligible Employee who is making Elective Deferrals to the Plan
in an amount equal to 100% of the amount of the Employee's
Elective Deferrals that do not exceed 3% of the Employee's
Compensation and 50% of the amount of the Employee's Elective
Deferrals that exceed 3% of the Employee's Compensation but
do not exceed 5% of the Employee's Compensation. A Plan
satisfying the ADP Safe Harbor using the Basic Matching
Formula automatically satisfies the ACP Test, if no After-
tax or other Matching Contribution is made under the Plan.
(2) ENHANCED MATCHING FORMULA - The Enhanced Matching Formula
provides a Matching Contribution on behalf of each Eligible
Employee who is making Elective Deferrals to the Plan under
a formula, that, at any rate of Elective Deferrals, provides
an aggregate amount of Matching Contributions at least equal
to the aggregate amount of Matching Contributions that would
have been provided under the Basic Matching Formula. In no
event shall the aggregate amount of Matching Contributions
under an Enhanced Matching Formula exceed 6% of an eligible
Employee's Compensation. Under the Enhanced Matching Formula,
the rate of Matching Contributions may not increase as a
Participant's rate of Elective Deferrals increases. A Plan
satisfying the ADP Safe Harbor using the Enhanced Matching
Formula under which Matching Contributions made with respect
to Elective Deferrals are not made in excess of 6% of the
eligible Employee's Compensation, automatically satisfies the
ACP Test if no other Matching Contribution is made under the
Plan.
(3) ADDITIONAL DISCRETIONARY MATCHING CONTRIBUTION - An Employer
may elect in the Adoption Agreement for Plan Years [beginning
after January 1, 2000] to provide an additional discretionary
Matching Contribution. Any such contribution cannot exceed 4%
of a Participant's Compensation. This is a limit on the total
Matching Contribution formula, and is not a limit on the
percentage of Compensation which is deferred and taken into
account under the matching formula.
(4) LIMITATION ON MATCHING CONTRIBUTIONS TO HIGHLY COMPENSATED
EMPLOYEES - The Matching Contribution requirement will not be
satisfied if, at any rate of Elective Deferrals, the rate of
Matching Contributions that would apply with respect to any
Highly Compensated Employee who is making Elective Deferrals
under the Plan is greater than the rate of Matching
Contributions that would apply with respect to any Non-Highly
Compensated Employee who is making Elective Deferrals to the
Plan and who has the same rate of Elective Deferrals.
11.11 SAFE HARBOR DEFINITIONS
(a) "ACP TEST SAFE HARBOR" is the method described in paragraph 11.14
for satisfying the ACP Test of Code Section 401(m)(2).
(b) "ACP TEST SAFE HARBOR MATCHING CONTRIBUTIONS" are Matching
Contributions described in paragraph 11.5.
(c) "ADP TEST SAFE HARBOR" is the method described in paragraph 11.13
for satisfying the ADP Test of Code Section 401(k)(3).
(d) "ADP TEST SAFE HARBOR CONTRIBUTIONS" are Matching Contributions
and Non-Elective Contributions described in paragraph 11.10.
(e) "COMPENSATION" is defined in paragraph 1.16 with no dollar limit
other than the limit imposed by Code Section 401(a)(17) as it
applies to the Compensation of a Non-Highly Compensated Employee.
Solely for purposes of determining the Compensation subject to a
Participant's Salary Deferral Agreement, the Employer may use an
alternative definition to the one described in the preceding
sentence, provided such alternate definition is a reasonable
definition with the meaning of Section 1.414(s)-1(d)(2) of the
Regulations, and permits each Participant to elect sufficient
Elective Deferrals to receive the maximum amount of Matching
Contributions (determined using the definition of Compensation
described in the preceding sentence) available to the Participant
under this Plan.
(f) "ELIGIBLE EMPLOYEE" means an Employee eligible to make Elective
Deferrals under the Plan for any part of the Plan Year or who would
be eligible to make Elective Deferrals but for a suspension due to a
Hardship distribution described in paragraph 6.9 of the Plan or to
statutory limitations, such as Code Sections 402(g) and 415.
(g) "MATCHING CONTRIBUTIONS" are contributions made by the Employer on
account of an Eligible Employee's Elective Deferrals.
11.12 REQUIRED RESTRICTIONS ON SAFE HARBOR CONTRIBUTIONS
(a) Safe Harbor Matching Contributions and Safe Harbor Non-Elective
Contributions are Matching and Non-Elective Contributions
respectively, that are:
(1) nonforfeitable within the meaning of Treasury Regulations
Section 1.401(k)-1(c),
(2) are subject to the distribution restrictions of Code Section
401(k)(2)(B) and Treasury Regulations Section 1.401(k)-1(d),
and
(3) used to satisfy the Safe Harbor Contribution requirements.
(b) Pursuant to Code Section 401(k)(2)(B) and Treasury Regulations
Section 1.401(k)-1(d), such contributions (and earnings thereon)
must not be distributable earlier than separation from Service,
death, Disability, an event described in Code Section 401(k)(10),
or in the case of a profit-sharing or stock bonus plan, the
attainment of age 591/2. Pursuant to Code Section 401(k)(2)(B)
and Treasury Regulations Section 1.401(k)-1(d)(2)(ii), these
contributions shall not be eligible for distribution for reasons
of Hardship. A Plan electing to use either of the Safe Harbor
Matching or the Non-Elective Contribution provisions shall not
require that an Employee be employed on the last day of the Plan
Year or impose an hourly requirement in order for the Employee to
be eligible to receive a Safe Harbor Non-Elective Contribution or
a Safe Harbor Matching Contribution.
(c) Such contributions must satisfy the ADP Test Safe Harbor without
regard to permitted disparity under Code Section 401(l).
(d) Safe Harbor Matching or Non-Elective Contributions cannot be used
to satisfy the Safe Harbor Contribution requirements with respect
to more than one (1) Plan.
(e) A Plan will fail to satisfy the ADP Test Safe Harbor or the ACP Test
Safe Harbor for a Plan Year unless the Plan Year is twelve (12)
months in duration or in the case of the first Plan Year of a newly
established Plan (other than a successor Plan), the Plan Year is at
least three (3) months in duration (or any shorter period in the
case of a newly established Employer that establishes the Plan as
soon as administratively feasible after the Employer came into
existence). If the Employer amends an existing Defined Contribution
Plan to offer the Safe Harbor provisions, the 401(k) arrangement of
the Plan must be at least three (3) months in duration.
(f) If the Safe Harbor provisions are an amendment and restatement of
an existing Plan, any contributions made prior to the adoption of
the Safe Harbor provisions which are subject to a vesting schedule
will continue to vest according to the vesting schedule in effect
prior to the amendment or restatement of the Plan.
11.13 ADP TEST SAFE HARBOR
(a) The Employer may elect in the Adoption Agreement to make Basic Safe
Harbor Matching Contributions, Enhanced Safe Harbor Matching
Contributions or Safe Harbor Non-Elective Contributions.
(b) Notwithstanding the requirement in (a) above that the Employer make
the ADP Test Safe Harbor Contributions to the Defined Contribution
Plan indicated in the Adoption Agreement, such contributions will
not be made to this Plan unless the requirements of paragraph 11.17
are met.
11.14 ACP TEST SAFE HARBOR The Employer maintaining a 401(k) Plan may elect
in the Adoption Agreement to make additional Matching Contributions in addition
to the Safe Harbor Matching Contributions made to the Plan. These additional
Matching Contributions may be subject to the ACP Test Safe Harbor requirements
instead of testing the contributions under paragraph 11.2. If the Employer
elects using the current year testing method to test the additional Matching
Contributions for nondiscrimination as set forth in paragraph 11.2, the ACP
Test Safe Harbor will be satisfied if the following conditions are met:
(a) no Matching Contribution may be made with respect to a Participant's
Elective Deferrals and/or Voluntary After-tax Contributions which
exceed 6% of Compensation;
(b) the amount of any discretionary Matching Contribution made after the
1999 Plan Year may not exceed 4% of the Participant's Compensation;
(c) the rate of Matching Contributions made to the Plan may not increase
as the rate of Elective Deferrals increase;
(d) no Highly Compensated Employee may receive a greater rate of match
than a Non-Highly Compensated Employee; and
(e) the Employer must elect in the Adoption Agreement the vesting
schedule distribution restrictions and eligibility to receive an
allocation of these additional Matching Contributions.
11.15 SAFE HARBOR STATUS The Employer may amend a profit-sharing or 401(k)
plan during a Plan Year to comply with the Safe Harbor provisions of this
Article for the Plan Year. In order to comply with these provisions, the
Employer must:
(a) use the current year testing method;
(b) amend the Plan to add the Safe Harbor provisions no later than
thirty (30) days prior to the end of the Plan Year and apply the
Safe Harbor provisions for the entire Plan Year;
(c) satisfy the Safe Harbor contribution requirements using the Safe
Harbor Non-Elective Contribution;
(d) provide the Safe Harbor notice to Participants prior to the
beginning of the Plan Year for which the Plan amendment applies
which indicates the Employer will provide Basic or Enhanced Matching
Contributions or indicates that the Employer may later amend the
Plan to comply with the Safe Harbor provisions by use of the Safe
Harbor Non-Elective Contribution;
(e) provide an additional notice to Participants at least thirty (30)
days prior to the end of the Plan Year only in the case of Safe
Harbor Non-Elective Contribution advising Participants of the
amendment; and
(f) actually provide the notice described in (e) above, should the
Employer amend the Plan to comply with the Safe Harbor requirements.
A Safe Harbor 401(k) Plan may be amended during a Plan Year to reduce or
entirely eliminate on a prospective basis any safe harbor contribution which
is either a Basic or Enhanced Matching Contribution conditioned on the Employer
providing a notice to the Participants which explains the effect of the
amendment and specifies the following:
(g) informs the Participants they will have the opportunity to amend
their Salary Deferral Agreements;
(h) the effective date of the amendment is specified;
(i) Participants are given the opportunity prior to the effective date
of the amendment to amend their Salary Deferral Agreement; and
(j) the amendment to the Plan does not take effect until the later of
thirty (30) days after the notice of the amendment is provided to
the Participant or the date the Employer adopts the amendment.
An Employer who amends a Safe Harbor Plan to either reduce or eliminate the Safe
Harbor Matching Contribution under this paragraph or terminates the Plan during
the Plan Year, must continue to comply with all of the Safe Harbor requirements
of this paragraph until the amendment or Plan termination becomes effective.
The Plan must continue to use the current year testing method for the entire
Plan Year and satisfy the nondiscrimination test under paragraph 11.2, and if
applicable the nondiscrimination tests under paragraph 11.6.
11.16 SAFE HARBOR NOTICE REQUIREMENT The notice requirement is satisfied if
each Eligible Employee is given an annual written notice of the Employee's
rights and obligations under the Plan and the notice provided to the Employee
satisfies the content requirement and the timing requirement mandated under IRS
Notices 98-52 and 2000-3.
(a) The notice shall be sufficiently accurate and comprehensive to
inform the Employee of the Employee's rights and obligations under
the Plan and written in a manner calculated to be understood by the
average Employee eligible to participate in the Plan. The notice
shall accurately describe:
(1) the Safe Harbor Matching or Non-Elective Contribution Formula
(including a description of the levels of Matching
Contributions, if any, available under the Plan);
(2) any other contributions under the Plan (including the
potential for discretionary Matching Contributions) and the
conditions under which such contributions are made;
(3) the Plan to which the Safe Harbor Contributions will be made
(if different than the Plan containing the cash or deferred
arrangement);
(4) the type and amount of Compensation that may be deferred under
the Plan;
(5) how to make cash or deferred elections, including any
administrative requirements that apply to such elections;
(6) the periods available under the Plan for making cash or
deferred elections; and
(7) withdrawal and vesting provisions applicable to contributions
under the Plan.
(b) If the notice is provided to eligible Employees within a reasonable
period before the beginning of each Plan Year (or in the Plan Year
an Employee becomes eligible within a reasonable period before the
Employee becomes eligible), the Plan shall satisfy the Safe Harbor
notice requirements. Notwithstanding the foregoing general rule, a
notice shall only be deemed to be provided in timely manner if the
notice is provided to each Employee who is eligible to participate
in the Plan for the Plan Year at least thirty (30) days [and no more
than ninety (90) days] before the beginning of the Plan Year. If an
Employee does not receive the notice because he or she only becomes
eligible to participate in the Plan after the ninetieth day before
the beginning of the Plan Year, the requirement to give the notice
will be satisfied if the notice is provided not more than ninety
(90) days before the Employee becomes eligible to participate, but
in no event later than the date the Employee becomes eligible. The
preceding sentence shall apply in the case of any Employee eligible
for the first Plan Year in which an Employee becomes eligible under
an existing Code Section 401(k) cash or deferred arrangement.
(c) The Plan may provide the Safe Harbor notice in writing or by
electronic means. If provided electronically, the notice must be
no less understandable than a written paper document and at the
time of delivery of the electronic notice, the Employee is advised
that he or she may request to receive the notice in writing at no
additional charge. Supplemental notices may also be given
electronically under the same conditions.
(d) The Plan may also comply with the notice requirements by use of the
Summary Plan Description. The Safe Harbor notice must cross-
reference the applicable sections in the Summary Plan Description.
The information which may be contained in the Summary Plan
Description, as well as the notice, is the Safe Harbor Contribution
Formula, including a description of the levels of Matching
Contributions, if any, how to make Salary Deferral elections,
including any administrative requirements that apply to such
elections, and the periods available under the Plan for making
deferral elections.
11.17 SATISFYING SAFE HARBOR CONTRIBUTION REQUIREMENTS UNDER ANOTHER DEFINED
CONTRIBUTION PLAN
(a) GENERAL REQUIREMENTS - A Safe Harbor Matching or Non-Elective
Contribution may be made to this Plan or to another Defined
Contribution Plan maintained by the Employer that satisfies Code
Sections 401(a) or 403(a). The Employer electing this option shall
do so by identifying the plan that makes the Safe Harbor
Contribution in the Adoption Agreement. If the Safe Harbor
Contributions are made to another Defined Contribution Plan, the
Safe Harbor Contribution requirements must be satisfied in the same
manner as if the contributions were being made to this Plan. A Safe
Harbor Contribution made to another Defined Contribution Plan shall
not satisfy this Safe Harbor requirement unless each Employee
eligible to participate in this Plan is eligible to participate in
the other Defined Contribution Plan under the same terms and
conditions.
(b) SAME PLAN YEAR REQUIREMENT - In order to satisfy the Safe Harbor
Contribution requirements, this Plan and the other Defined
Contribution Plan to which the Safe Harbor Contribution is to be
made must have the same Plan Year.
(c) AGGREGATION AND DISAGGREGATION RULES - The rules that apply for
purposes of aggregating and disaggregating cash or deferred
arrangement and Plans under Code Sections 401(k) and 401(m) also
apply for purposes of Code Sections 401(k)(12) and 401(m)(11),
respectively. All cash or deferred arrangements included in a
Plan are treated as a single cash or deferred arrangement that
must satisfy the Safe Harbor Contribution and notice requirements.
Moreover, two (2) Plans within the meaning of Regulations Section
1.410(b)-7(b) that are treated as a single Plan pursuant to the
permissive aggregation rules of Treasury Regulations 1.410(b)-7(d)
are treated as a single Plan for purposes of the Safe Harbor
requirements. Conversely, a Plan [within the meaning of Code
Section 414(l)] that includes a cash or deferred arrangement
covering both collectively bargained employees and noncollectively
bargained employees is treated as two (2) separate Plans for
purposes of Code Section 401(k), and the ADP Safe Harbor need not
be satisfied with respect to both Plans in order for one (1) of
the Plans to take advantage of the ADP Test Safe Harbor. Similarly,
if, pursuant to Code Section 410(b)(4)(B), an Employer applies Code
Section 410(b) separately to the portion of the Plan [within the
meaning of Code Section 414(l)] that benefits only Employees who
satisfy age and Service conditions under the Plan that are lower
than the greatest minimum age and Service conditions permitted under
Code Section 410(a), the Plan is treated as two (2) separate Plans
for purposes of Code Section 401(k), and the ADP Test Safe Harbor
need not be satisfied with respect to both plans in order for one
(1) of the Plans to take advantage of the ADP Test Safe Harbor.
ARTICLE XII
ADMINISTRATION
12.1 PLAN ADMINISTRATOR Unless otherwise provided in a separate Trust
agreement, the Plan shall be administered by the Plan Administrator who shall
have the authority to enforce the Plan on behalf of any persons having or
claiming any interest under the Plan and who shall be responsible for the
operation of the Plan in accordance with its terms. The Plan Administrator
shall be the "named fiduciary" for purposes of ERISA Section 402(a)(2) with
the sole authority to control and manage the operation and administration of
the Plan, and will be responsible for complying with the reporting and
disclosure requirements of Part 1 of Subtitle B of Title I of ERISA and agent
for service of legal process with respect to the Plan. The Plan Administrator
shall determine by rules of uniform application all questions arising out of
the administration, interpretation and application of the Plan which
determination(s) shall be conclusive and binding on all parties. The Employer
shall be the named fiduciary and Plan Administrator except to the extent the
Employer is a member of SBERA or unless an individual or other entity (excluding
the Trustee or Custodian, unless they are the Employer sponsoring the Plan) is
named to serve in such capacity. The Plan Administrator may appoint or allocate
the duties of the Plan Administrator among several individuals or entities. The
Plan Administrator's duties shall include:
(a) appointing the Plan's attorney, accountant, Service Provider,
actuary, Trustee, Custodian, investment manager, or any other party
needed to administer the Plan;
(b) directing the appropriate party with respect to payments from the
Trust;
(c) communicating with Employees regarding their participation and
benefits under the Plan, including the administration of all claims
procedures;
(d) maintaining all necessary records for the administration of the
Plan, antidiscrimination testing, and filing any returns and
reports with the Internal Revenue Service, Department of Labor, or
any other governmental agency;
(e) reviewing and approving any financial reports, investment reviews,
or other reports prepared by any party appointed by the Employer
under paragraph (a);
(f) establishing a funding policy and investment objectives consistent
with the purposes of the Plan and ERISA;
(g) construing and resolving any question of Plan interpretation and
questions of fact. The Plan Administrator's interpretation of Plan
provisions and resolution of questions of facts including
eligibility and amount of benefits under the Plan is final and
unless it can be shown to be arbitrary and capricious, will not be
subject to "de novo" review;
(h) monitoring the activities of the Trustee and the performance of, and
making changes when necessary to, the portfolio of the Plan;
(i) obtaining a legal determination of the qualified status of all
domestic relations orders and complying with the requirements of
the law with regard thereto;
(j) administering the loan program including ensuring that any and all
loans made by the Plan are in compliance with the requirements of
the Internal Revenue Code and the Regulations issued thereunder,
and the Regulations issued by the Department of Labor;
(k) determining from the records of the Employer, the Compensation,
Service, records, status, and the other facts regarding Participants
and Employees;
(l) to the extent provided in the Adoption Agreement, directing the
Trustee or Custodian with respect to the investments, in the Plan
Administrator's capacity as named fiduciary; and
(m) the right to employ others, including legal counsel who may, but
need not, be counsel to the Employer, to render advice regarding
any questions which may arise with respect to its rights, duties
and responsibilities under the Plan, and may rely upon the opinions
or certificates of any such person.
12.2 PERSONS SERVING AS PLAN ADMINISTRATOR Unless otherwise provided in a
separate Trust agreement, if the Employer is no longer in existence, and the
Plan or the Employer does not specify the person to take an action or otherwise
serve in the place of the Employer in connection with the operation of the Plan,
the Plan Administrator shall so act or serve, but if there is no person serving
as Plan Administrator, then a successor shall be designated in writing by a
majority of Participants whose accounts under the Plan have not yet been fully
distributed at such time. A majority of the legally competent Beneficiaries
of a deceased Participant then entitled to receive benefits may exercise the
deceased Participant's rights to participate in that designation and shall be
considered for that purpose to be one Participant, in the Participant's place.
12.3 ACTION BY EMPLOYER Action by the Employer under the Plan shall be
carried out by the sole proprietor, if the Employer is a sole proprietorship,
by a general partner of the Employer, if the Employer is a partnership, or by
the board of directors or a duly authorized officer of the Employer, if the
Employer is a corporation. If the Employer is no longer in existence, and
the Plan does not specify the person to take an action, or otherwise serve
in the place of the Employer, in connection with the operation of the Plan,
the Plan Administrator shall so act or serve, but if there is no person serving
as Plan Administrator, such action shall be taken by a person selected following
the approach referred to in paragraph 12.2. The Trustee/Custodian shall have,
and assume, no responsibility for inquiring into the authority of any person
purporting to act on behalf of an Employer.
12.4 RESPONSIBILITIES OF THE PARTIES UNLESS OTHERWISE PROVIDED IN A SEPARATE
TRUST AGREEMENT:
(a) The Employer and the Plan Administrator shall cooperate with each
other in all respects, including the provision to each other of
records and other information relating to the Plan, as may be
necessary or appropriate for the proper operation of the Plan or as
may be required under the Code or ERISA.
(b) The Plan Administrator may delegate in writing all or any part of
the Plan Administrator's responsibilities under the Plan to agents
or others by written agreement communicated to the delegate and to
the Employer or, if the Employer is no longer in existence, to such
person or persons selected following the approach in paragraph 12.2
and, in the same manner, may revoke any such delegation of
responsibility. Any action of a delegate in the exercise of such
delegated responsibilities shall have the same force and effect for
all purposes as if such action had been taken by the Plan
Administrator. The delegate shall have the right, in such person's
sole discretion, by written instrument delivered to the Plan
Administrator, to reject and refuse to exercise any such delegated
authority. The Trustee/Custodian need not act on instructions of
such a delegate despite any knowledge of such delegation, but may
require the Plan Administrator to give the Trustee/Custodian all
instructions necessary under the Plan.
12.5 ALLOCATION OF INVESTMENT RESPONSIBILITY Unless otherwise provided in
a separate Trust agreement, responsibility with respect to the investment of
the Trust shall as elected in the Adoption Agreement. The amounts allocated
to Participants' accounts shall be invested by the Trustee or Custodian pursuant
to the elections in the Adoption Agreement, Articles XII, XIII as applicable,
and in accordance with investment directions from authorized parties as provided
hereunder.
12.6 APPOINTMENT OF INVESTMENT MANAGER Unless otherwise provided in a
separate Trust agreement, the appointment of an investment manager shall
be given in accordance with this Article. If an investment manager is
appointed, such entity or individual must be registered as an investment
manager under the Investment Advisors Act of 1940 or under applicable state
law, meet the requirements of ERISA Section 3(38) or be a bank as defined in
said Act or an insurance company qualified under the laws of more than one
state to perform investment management services. An investment manager shall
acknowledge in writing its appointment and fiduciary status hereunder and
shall agree to comply with all applicable provisions of this document. The
investment manager shall have the investment powers granted the Trustee in
paragraph 13.8 except to the extent the investment manager's powers are limited
by the investment management agreement. A copy of the investment management
agreement (and any modifications or termination thereof) must be provided to
the Trustee or Custodian. Written notice of each appointment of an investment
manager shall be given to the Trustee or Custodian in advance of the effective
date of the appointment. Such notice or agreement shall specify what portion
of the Trust Fund will be subject to the investment manager's discretion.
12.7 PARTICIPANT INVESTMENT DIRECTION Unless otherwise provided in a separate
Trust agreement, and If elected by the Employer in the Adoption Agreement,
Participants shall be given the option to direct the investment of such part
of their account balances as specified therein. The Employer or the Named
Investment Fiduciary from time to time shall select the investments to be
made available, including the appointment of any investment manager who meets
the requirements of ERISA Section 3(38) to manage the assets of any
Participant's account. The Employer or the Named Investment Fiduciary,
independent of the Trustee, shall be responsible for reviewing the performance
of such investments. The following administrative procedures shall apply to
the administration of investments selected by the Employer or the Employer's
designated fiduciary:
(a) The Plan Administrator shall administer the program.
(b) At the time an Employee becomes eligible for the Plan, he or she
shall provide the Plan Administrator an investment designation
stating the percentage of his or her contributions to be invested in
the available investments.
(c) A Participant may change his or her election with respect to future
contributions by notifying the Employer, Trustee/Custodian or other
Service Provider, as they shall mutually agree, in accordance with
the procedures established by the Plan Administrator.
(d) A Participant may transfer or exchange his or her balance from one
investment alternative to another by notifying the Employer,
Trustee/Custodian or other Service Provider, as they shall mutually
agree, in accordance with the procedures established by the Plan
Administrator.
(e) The investment alternatives offered under the Plan may be limited in
a uniform and nondiscriminatory manner. Investments may be
restricted to specific investment alternatives selected, including
but not limited to, certain mutual funds, investment contracts,
collective funds or deposit accounts. If investments outside the
alternatives selected are permitted, Participants may not direct
that investments be made in collectibles other than U.S. Government
or state issued gold and silver coins.
(f) The Plan Administrator may permit, in a uniform and
nondiscriminatory manner, a Beneficiary of a deceased Participant
or alternate payee under a Qualified Domestic Relations Order [as
defined in Code Section 414(p)] to individually direct their account
in accordance with this paragraph.
(g) Investment directions will be processed as soon as administratively
practicable after proper investment directions are received from
the Participant. The Employer, Plan Administrator, Service
Provider, Trustee and/or Custodian cannot provide any guarantee of
the timing of processing of any investment directive. The Employer,
Plan Administrator, Service Provider, Trustee and/or Custodian
reserve the right not to value an investment alternative or a
Participant's account on any given Valuation Date for any reason
deemed appropriate by the Employer or Plan Administrator. The
Employer, Plan Administrator, Service Provider, Trustee and/or
Custodian further reserve the right to delay the processing of any
investment transaction for any legitimate business reason including
but not limited to, failure of systems or computer programs, failure
of the means of the transmission of data, force major, the failure
of a Service Provider to timely receive values or prices, to correct
its errors or omissions or the errors or omissions of any Service
Provider.
(h) Notwithstanding the foregoing, and regardless of a Participant's
authority to direct the investment of assets allocated to his or
her account, the Named Investment Fiduciary is authorized and
empowered to direct the Trustee to invest funds in short term
investments pending other investment instructions by the Plan
Administrator.
12.8 APPLICATION OF ERISA SECTION 404(C) Unless otherwise provided in a
separate Trust agreement, if elected by the Employer in the Adoption Agreement,
all Participant accounts under the Plan shall be invested as elected by each
Participant in a broad range of investment options made available from time
to time by the Employer for this purpose. If the Employer further elects that
the Plan is intended to qualify as an "ERISA Section 404(c) Plan" within the
meaning of Regulations issued pursuant to such section, Participants shall have
the opportunity, at least once in any three (3) month period, to give investment
instructions (with an opportunity to obtain written conformation of such
instructions) as to the investment of contributions made on his or her behalf
among the available investment options. The Plan Administrator shall be
obligated to comply with such instructions except as otherwise provided in
the Regulations issued under ERISA Section 404(c).
The Plan Administrator will provide or will make arrangement to provide each
Participant with a description of the investment alternatives available under
the Plan; and with respect to each designated investment alternative, a general
description of the investments objectives, risk and return characteristics of
each alternative, including information relating to the type and diversification
of assets comprising the investment portfolio.
The Plan Administrator by separate document may prescribe the form and the
manner in which such direction shall be made, as well as the frequency with
which such directions may be made or changed and the dates as of which they
shall be effective, in a manner consistent with the foregoing. The Plan
Administrator (or a person or entity so designated by the Employer) shall be
the fiduciary identified to furnish the information as contemplated by ERISA
Section 404(c), but may designate on its behalf another person or entity to
provide such information or to perform any of the obligations of the Plan
Administrator under this paragraph.
Except as otherwise provided in this Basic Plan Document #01, the Trustee,
Custodian, the Employer, or any fiduciary of the Plan shall not be liable to
the Participant or any of his or her Beneficiaries for any loss resulting from
action taken at the direction of the Participant. All fiduciaries of the Plan
shall be relieved of their fiduciary liability with respect to the Participant
directing his or her investments pursuant to ERISA Section 404(c) if elected by
the Employer in the Adoption Agreement of their intention to comply with ERISA
Section 404(c).
Any costs and expenses related to compliance with the Participant's directions
shall be borne by the Participant's directed account, unless paid by the
Employer.
12.9 PARTICIPANT LOANS Unless otherwise provided in a separate Trust
agreement, if permitted by the Employer in the Adoption Agreement, a Plan
Participant and Beneficiaries who are parties-in-interest as defined in ERISA
Section 3(14) may make application to the Plan Administrator requesting a loan
from the Plan. The Plan Administrator shall have the sole right to approve or
deny a Participant's application provided that loans shall be made available to
all Participants on a reasonably equivalent basis. Loans shall not be made
available to Highly Compensated Employees in an amount greater than the amount
made available to other Participants. Any loan granted under the Plan shall be
made in accordance with the terms of a written loan policy adopted by the
Employer which is hereby incorporated by reference and made a part of this Basic
Plan Document #01. The loan policy may be amended in writing from time to time
without the necessity of amending this paragraph and shall be subject to the
following rules to the extent such rules are not inconsistent with such loan
policy.
(a) No loan, when aggregated with any outstanding loan(s) to the
Participant, shall exceed the lesser of (i) $50,000 reduced by the
excess, if any, of the Participant's highest outstanding balance of
all loans on any day during the one (1) year period ending on the
day before the loan is made, over the outstanding balance of loans
from the Plan on the date the Participant's loan is made or (ii)
one-half of the fair market value of the Participant's Vested
Account Balance consisting of contributions as specified in the
loan policy. An election may be made in the loan policy, that
if the Participant's Vested Account Balance is $20,000 or less,
the maximum loan shall not exceed the lesser of $10,000 or 100%
of the Participant's Vested Account Balance. For the purpose of
the above limitation, all loans from all plans of the Employer
and other members of a group of employers described in Code Sections
414(b), 414(c), and 414(m) are aggregated. An assignment or pledge
of any portion of the Participant's interest in the Plan and a loan,
pledge, or assignment with respect to any insurance contract
purchased under the Plan, will be treated as a loan under this
paragraph.
(b) All applications must be in accordance with procedures adopted by
the Plan Administrator.
(c) Any loan shall bear interest at a rate reasonable at the time of
application, considering the purpose of the loan and the rate being
charged by representative commercial banks in the local area for a
similar loan unless the Plan Administrator sets forth a different
method for determining loan interest rates in its written loan
procedures. The loan agreement shall also provide that the payment
of principal and interest be amortized in level payments not less
frequently than quarterly.
(d) The term of such loan shall not exceed a period of five (5) years
except in the case of a loan for the purpose of acquiring any house,
apartment, condominium, or mobile home that is used or is to be used
within a reasonable time as the principal residence of the
Participant. The Plan Administrator in accordance with the Plan's
loan policy shall determine the term of such loan.
(e) The principal and interest paid by a Participant on his or her loan
shall be credited to the Plan in the same manner as for any other
Plan investment. Unless otherwise provided in the loan policy, loans
will be treated as segregated investments of the individual
Participant on whose behalf the loan was made. This provision is
not available if its election will result in discrimination in the
operation of the Plan.
(f) If the Plan Administrator approves a Participant's loan request, it
shall be evidenced by a note, loan agreement, and assignment of up
to 50% of his or her interest in the Trust as collateral for the
loan. The Participant, except in the case of a profit-sharing plan
satisfying the requirements of paragraph 8.7, must obtain the
consent of his or her Spouse, if any, within the ninety (90) day
period before the time his or her account balance is used as
security for the loan. A new consent is required if the account
balance is used for any renegotiation, extension, renewal or other
revision of the loan, including an increase in the loan amount.
The consent must be written, must acknowledge the effect of the
loan, and must be witnessed by a Plan representative or notary
public. Such consent shall subsequently be binding with respect
to the consenting Spouse or any subsequent Spouse.
(g) If a valid Spousal consent has been obtained in accordance with
(f), then, notwithstanding any other provision of this Plan, the
portion of the Participant's Vested Account Balance used as a
security interest held by the Plan by reason of a loan outstanding
to the Participant shall be taken into account for purposes of
determining the amount of the account balance payable at the time of
death or distribution, but only if the reduction is used as
repayment of the loan. If less than 100% of the Participant's
Vested Account Balance (determined without regard to the preceding
sentence) is payable to the surviving Spouse, then the account
balance shall be adjusted by first reducing the Vested Account
Balance by the amount of the security used as repayment of the
loan, and then determining the benefit payable to the surviving
Spouse.
(h) Any loan made hereunder shall be subject to the provisions of a
loan agreement, promissory note, security agreement, payroll
withholding authorization and, if applicable, financial disclosure.
Such documentation may contain additional loan terms and conditions
not specifically itemized in this section provided that such terms
and conditions do not conflict with this section. Such additional
terms and conditions may include, but are not limited to, procedures
regarding default, a grace period for missed payments, and
acceleration of a loan's maturity date on specific events such as
termination of employment.
(i) No loans will be made to Owner-Employees or Shareholder Employees,
unless the Employer obtains a prohibited transaction exemption from
the Department of Labor.
(j) Liquidation of a Participant's assets for the purpose of the loan
will be allocated on a pro-rata basis across all the investment
alternatives in a Participant's account, unless otherwise specified
by the Participant, Plan Administrator, or the Plan's loan policy.
(k) If a request for a loan is approved by the Plan Administrator, funds
shall be withdrawn from the recordkeeping subaccounts specified by
the Participant or in the absence of such a specification, from the
recordkeeping subaccounts in the order specified in the loan policy.
(l) If a Plan permits loans to Participants, the Trustee/Custodian may
appoint the Employer as its agent, and if the Employer accepts such
appointment, agree to hold all notes and other evidence of any
loans made to Participants. If provided in the loan policy, the
Plan Administrator may also require additional collateral in order
to adequately secure the loan. The Employer shall hold such notes
and evidence under such conditions of safekeeping as is prudent and
as required by ERISA. The Trustee/Custodian may account for all
loans in the aggregate so that all Participant loans will be shown
collectively as a single asset of the Plan.
(m) Unless otherwise elected in the Adoption Agreement, loan payments
will be suspended under this Plan as permitted under Code Section
414(u).
12.10 INSURANCE POLICIES Unless otherwise provided in a separate Trust
agreement, if elected by the Employer in the Adoption Agreement and agreed to
by the Trustee or Custodian, Participants may purchase life insurance policies
under the Plan. Any life insurance premium paid for any Participant out of the
Employer contributions will be made on behalf of the Participant unless the
amount of such payment, plus all premiums previously paid on behalf of such
Participant is (a) with respect to ordinary life insurance policies, less than
fifty percent (50%) of the Employer Contributions and forfeitures allocated
to the Participant's account determined on the date the premium is paid, (b)
with respect to term and universal life policies, less than twenty-five percent
(25%) of such allocation amounts, or (c) a combination of ordinary life and term
and/or universal life insurance policies are purchased, the sum of the term and
universal life insurance premiums plus one-half of the ordinary life premiums
may not exceed twenty-five percent (25%) of such amounts allocated. Dividends
received on life insurance policies shall be considered a reduction of premiums
paid in such computations. If the Plan established is a profit sharing plan,
the incidental insurance benefit requirement is not applicable if the Plan
purchases life insurance benefits from only Employer contributions which have
been allocated to the Participant's account for at least two years.
(a) The Named Investment Fiduciary or its agent shall select the
insurance company and the policy and direct the Trustee (or
Custodian) as to the purchase of the insurance contract. Such
direction shall include but not be limited to the term, price and
the insurance company from which the policy should be purchased.
(b) The Trustee, if the Plan is trusteed, or Custodian, if the Plan has
a custodial account, shall apply for and will be the owner of any
insurance contract and named beneficiary of any policies purchased
under the terms of this Plan. The insurance contract(s) must
provide that proceeds will be payable to the Trustee (or Custodian,
if applicable), however the Trustee (or Custodian) shall be required
to pay over all the proceeds of the contract(s) to the Participant's
designated Beneficiary in accordance with the distributions
provisions of this Plan. A Participant's Spouse will be the
designated Beneficiary of the proceeds in all circumstances unless
a qualified election has been made in accordance with paragraph 8.4,
Joint and Survivor Annuity requirements, if applicable. Under no
circumstances shall the Trust (or custodial account) retain any
part of the proceeds. In the event of any conflict between the
terms of this Basic Plan Document #01 and the terms of any insurance
contract purchased hereunder, these Plan provisions shall control.
The Beneficiary of a deceased Participant shall receive, in addition
to the proceeds of the Participant's policy or policies, the amount
credited to such Participant's account.
(c) A Participant who is uninsurable or insurable at substandard rates
may elect to receive a reduced amount of insurance, if available,
or may waive the purchase of any insurance.
(d) All dividends or other returns received on any policy purchased
shall be applied to reduce the next premium due on such policy, or
if no further premium is due, such amount shall be credited to the
Trust as part of the account of the Participant for whom the policy
is held.
(e) If Employer contributions are inadequate to pay all premiums on all
insurance policies, the Trustee or Custodian may, at the option of
the Employer, utilize other amounts remaining in each Participant's
account to pay the premiums on his or her respective policy or
policies, allow the policies to lapse, reduce the policies to a
level at which they may be maintained, or borrow against the
policies on a prorated basis, provided that the borrowing does not
discriminate in favor of the policies on the lives of Highly
Compensated Employees.
(f) On retirement or termination of employment of a Participant,
termination of the Plan, or the contract would but for the sale, be
surrendered by the Plan, the Employer shall direct the Trustee or
Custodian to surrender the Participant's policy and credit the
proceeds to his or her account for distribution under the terms of
the Plan. However, before so doing, the Trustee or Custodian shall
first offer to transfer ownership of the policy to the Participant.
Prior to such transfer, the Participant may elect to make payment to
the Trust of the cash value of the policy. Such payment shall be
credited to the Participant's account for distribution under the
terms of the Plan. All distributions resulting from the application
of this paragraph shall be subject to the Joint and Survivor
Annuity Rules of Article VIII, if applicable.
(g) The Employer shall be solely responsible to ensure the insurance
provisions are administered properly and that if there is any
conflict between the provisions of this Plan and any insurance
contracts issued, the terms of this document will control.
(h) Notwithstanding the above, in profit-sharing plans, the limitations
imposed herein with respect to the purchase of life insurance shall
not apply to any Participant who has participated in this Plan for
five (5) or more years or to the portion of a Participant's Vested
Account Balance, that would be eligible for withdrawal under
paragraph 6.8 whether or not in-service withdrawals are actually
allowed under the Plan, that has accumulated for at least two (2)
Plan Years. No amount of Qualified Voluntary Contributions made to
the Plan may be used to purchase life insurance. In addition,
under such Plans, a Participant may, subject to the limitations set
forth in this subparagraph, elect to have keyman life insurance
purchased on the life of any Participant who is considered essential
to the success of the Employer's business. In such case, the
proceeds of such a life insurance contract in excess of such
contract's cash value as of the date of death of such insured shall
be paid to the Beneficiaries named with respect to such contract.
Death benefits, including those in the previous sentence, payable
from a life insurance contract shall be paid in accordance with
paragraph 8.7, if this Plan meets the safe harbor provisions in that
paragraph, or in accordance with paragraph 8.2 or 8.3, whichever
may be applicable. The cash value of the contract shall be added
to the Participant's Vested Account Balance.
(i) No insurance contract will be purchased under the Plan unless such
contract or a separate definite written agreement between the
Employer and the insurer provides that no value under contracts
providing benefits under the Plan or credits determined by the
insurer (on account of dividends, earnings, or other experience
rating credits, or surrender or cancellation credits) with respect
to such contracts may be paid or returned to the Employer or
diverted to or used for other than the exclusive benefit of the
Participants or their Beneficiaries. However, any contribution
made by the Employer because of a mistake of fact must be returned
to the Employer within one (1) year of the contribution.
(j) If this Plan is funded by individual contracts that provide a
Participant's benefit under the Plan, such individual contracts
shall constitute the Participant's account balance. If this Plan
is funded by group contracts, under the group annuity or group
insurance contract, premiums or other consideration received by
the insurance company must be allocated to Participants' accounts
under the Plan.
(k) For Plans funded with individual or group annuity contracts, no
Trustee or Custodian is required to hold the assets of the Plan.
Accordingly, any references to the Trust, the Trust fund or the
fund collectively refers to any contracts issued by an insurance
company to fund a Plan established under this document.
12.11 DETERMINATION OF QUALIFIED DOMESTIC RELATIONS ORDER (QDRO OR ORDER)
Unless otherwise provided in a separate Trust agreement, a domestic relations
order shall specifically state all of the following in order to be deemed a
Qualified Domestic Relations Order ("QDRO"):
(a) The name and last known mailing address (if any) of the Participant
and of each alternate payee covered by the QDRO. However, if the
QDRO does not specify the current mailing address of the alternate
payee, but the Plan Administrator has independent knowledge of that
address, the QDRO will still be valid.
(b) The dollar amount or percentage of the Participant's benefit to be
paid by the Plan to each alternate payee, or the manner in which
the amount or percentage will be determined.
(c) The number of payments or period for which the order applies.
(d) The specific Plan (by name) to which the domestic relations order
applies.
The domestic relations order shall not be deemed a QDRO if it requires the Plan
to provide:
(e) any type or form of benefit or any option not already provided
for in the Plan;
(f) increased benefits or benefits in excess of the Participant's
vested rights;
(g) payment of a benefit earlier than allowed by the Plan's earliest
retirement provisions or, in the case of a profit-sharing or 401(k)
plan, prior to the first date on which an in-service withdrawal is
allowed; or
(h) payment of benefits to an alternate payee which are required to be
paid to another alternate payee under another QDRO.
Upon receipt of a domestic relations order ("Order") which may or may not be
"qualified", the Plan Administrator shall notify the Participant and any
alternate payee(s) named in the Order of such receipt, and forward either a
copy of this paragraph or other written QDRO policies and procedures. The Plan
Administrator shall establish written procedures to establish the qualified
status of a domestic relations order, which may include forwarding the Order
to the Plan's legal counsel for an opinion as to whether or not the Order is
in fact "qualified" as defined in Code Section 414(p). Within a reasonable
time after receipt of the Order, not to exceed sixty (60) days, the Plan
Administrator shall make a determination as to its "qualified" status and the
Participant and any alternate payee(s) shall be promptly notified in writing
of the determination.
If the "qualified" status of the Order is in question, there will be a delay
in any payout to any payee including the Participant, until the status is
resolved. In such event, the Plan Administrator shall segregate the amount
that would have been payable to the alternate payee(s) if the Order had been
deemed a QDRO. If the Order is not qualified or the status is not resolved
(for example, it has been sent back to the court for clarification or
modification) within eighteen (18) months beginning with the date the first
payment would have to be made under the Order, the Plan Administrator shall
pay the segregated amounts plus interest to the person(s) who would have been
entitled to the benefits had there been no Order. If a determination as to
the qualified status of the Order is made after the eighteen (18) month period
described above, then the Order shall only be applied on a prospective basis.
If the Order is determined to be a QDRO, the Participant and alternate payee(s)
shall again be notified promptly after such determination. Once an Order is
deemed a QDRO, the Plan Administrator shall pay to the alternate payee(s) all
the amounts due under the QDRO, including segregated amounts plus earnings, if
any, which may have accrued during a dispute as to the Order's qualification.
Unless specified otherwise in the Adoption Agreement or in a separate Trust
agreement, the QDRO retirement age with regard to the Participant against
whom the order is entered shall be the date the order is determined to be
qualified. These provisions will only allow distributions to the alternate
payee(s) and not the Participant.
12.12 RECEIPT AND RELEASE FOR PAYMENTS Unless otherwise provided in a
separate Trust agreement, any payment to any Participant, his legal
representative, Beneficiary, or to any guardian or committee appointed for
such Participant or Beneficiary in accordance with the provisions of the Plan
shall be in full satisfaction of all claims hereunder against the Trustee,
Employer or Plan Administrator each of whom may require such Participant,
legal representative, Beneficiary, guardian or committee as a condition prior
to such payment, to execute a receipt and release in such form as shall be
determined by the Trustee, Employer or Plan Administrator.
12.13 RESIGNATION AND REMOVAL Unless otherwise provided in a separate Trust
agreement, an individual serving as Plan Administrator may resign by giving
written notice to the Employer, or if the Employer is no longer in existence,
to the Trustee/Custodian, not less than thirty (30) days before the effective
date of the individual's resignation. The Plan Administrator may be removed
upon thirty (30) days prior written notice to the Plan Administrator, with or
without cause, by the Employer, or if the Employer is no longer is existence,
by a majority of the Participants and Beneficiaries following the approach
referred to in paragraph 12.2. A notice period provided for in this paragraph
12.13 may be waived or reduced if acceptable to the parties involved. The
Employer, if in existence, shall be the successor to the position involved,
or the Employer may appoint a successor to a person who has resigned or been
removed as Plan Administrator, but if the Employer is no longer in existence,
the appointment shall be made by a majority of the Participants and
Beneficiaries following the approach referred to in paragraph 12.2. When the
Plan Administrator's resignation or removal becomes effective, the Plan
Administrator shall perform all acts necessary to transfer all relevant records
to its successor. A successor Plan Administrator shall have all the rights
and powers and all of the duties and obligations of the original Plan
Administrator but shall have no responsibility for acts or omissions before
the successor became Plan Administrator.
12.14 CLAIMS AND CLAIMS REVIEW PROCEDURE Unless otherwise provided in a
separate Trust agreement, If any Employee, Participant, Beneficiary or any
other person claims to be entitled to benefits under the Plan, and the Plan
Administrator denies that claim in whole or in part, the Plan Administrator
shall, in writing, notify the claimant that his claim has been denied in whole
or in part, setting forth the specific reason or reasons for the denial,
specific reference to pertinent Plan provisions upon which the denial is based,
a description of any additional material or information which may be needed to
clarify the claim, including an explanation of why such information is
necessary, and shall refer to the claims review procedure as set forth in this
paragraph 12.14. Within sixty (60) days after the mailing or delivery by the
Plan Administrator of such notice, the claimant may request, by written notice
to the Plan Administrator, a review by the Employer of the decision denying
the claim. The claimant may examine documents pertinent to the review and may
submit written issues and comments to the Plan Administrator. If the claimant
fails to request such a hearing within such sixty (60) day period, it shall be
conclusively determined for all purposes of this Plan that the denial of such
claim is correct. If the claimant requests a review within the sixty (60) day
period, the Plan Administrator shall designate a time, which time shall be no
less than ten (10) nor more than forty-five (45) days from the date of receipt
by the Plan Administrator of the claimant's notice to the Plan Administrator,
and a place for such hearing, and shall promptly notify such claimant of such
time and place. Within forty-five (45) days after the conclusion of the
hearing, including any extensions of the date thereof mutually agreed to by
the claimant and the Plan Administrator, the Plan Administrator shall
communicate to the claimant the Plan Administrator's decision in writing, and
if the Plan Administrator confirms the denial, in whole or in part, the
communication shall set forth the specific reason or reasons for the decision
and specific reference to those Plan provisions upon which the decision is
based.
12.15 BONDING Every fiduciary, except for a bank, trust company or an
insurance company, unless otherwise exempted by ERISA and the Regulations
issued thereunder shall be bonded in an amount not less than 10% of the amount
of the funds such fiduciary handles; provided however, that the minimum bond
shall be $1,000 and the maximum bond $500,000. The amount of funds handled
shall be determined at the beginning of each Plan Year by the amount of funds
handled by such person, group or class to be covered and their predecessors,
if any, during the preceding Plan Year, or if there is no preceding Plan Year,
then by the amount of the funds to be handled during the then current year.
The bond shall provide protection to the Plan against any loss by reason of
acts of fraud or dishonesty by the fiduciary either acting alone or in concert
with others. The surety shall be a corporate surety company [as the term is
used in ERISA Section 412(a)(2)], and the bond shall be in a form approved by
the Secretary of Labor. Notwithstanding anything in the Plan to the contrary,
the costs of such bonds shall be an expense of and may, at the election of the
Plan Administrator, be paid from the Trust or by the Employer.
ARTICLE XIII
TRUST PROVISIONS
13.1 ESTABLISHMENT OF THE TRUST
(a) The Employer shall appoint within the Adoption Agreement who may
be the Sponsor (or an affiliate) of this Basic Plan Document #01
or an individual(s), institution or other party, to serve as Trustee
or Custodian (if applicable) of the Plan. The Employer shall also
have the right, but is not required, to appoint a Custodian in the
Adoption Agreement to have custody of the Plan's assets. The
Employer may execute a separate trust or custodial agreement
outlining the Trustee's or Custodian's duties and responsibilities
which shall be incorporated by reference and made part of this
Basic Plan Document #01. No such ancillary agreement may conflict
with any provision(s) of this document. Any provision which would
jeopardize the tax-qualified status of this Plan shall be null and
void. Unless otherwise elected in the Adoption Agreement, the
Trust and/or Custodial provisions of this Article XIII and Article
XII, as applicable, of the Basic Plan Document #01 together with
any such ancillary agreement shall be operative. If the Sponsor
is a bank, trust company or other financial organization, a person
or institution other than the Sponsor or its affiliate may not serve
as Trustee or Custodian of the Plan without the express written
consent of the Sponsor. If a financial organization is the Sponsor,
and is not named Trustee, the Sponsor may serve as Custodian under
the Plan as provided at paragraph 13.13 herein. The Trustee shall
invest the Trust Fund in any of the investment alternatives as
provided in paragraph 13.8. If a Custodian is appointed, the Trust
Fund shall be invested in accordance with paragraph 13.14.
(b) The Employer establishes with the Trustee a Trust which shall
consist of all money and property received under Articles III and
IV of this document, increased by any income on or increment in
such value of assets and decreased by any investment loss, expense,
benefit payment, withdrawal or other distribution by the Trustee in
accordance with the provisions of the Plan. The Trustee/Custodian
shall hold the Trust fund without distinction between principal and
income. The Trust fund will be held, invested, reinvested and
administered by the Trustee in accordance with this Article and any
ancillary documents as provided for in this Article.
13.2 CONTROL OF PLAN ASSETS The assets of the Trust or evidence of ownership
shall be held by the Trustee and/or the Custodian under the terms of the Basic
Plan Document #01. If the assets represent amounts transferred from another
trustee or custodian under a former plan, the Trustee and/or Custodian named
hereunder shall not be responsible for any actions of the prior fiduciary
including the propriety of any investment decision made by the prior
trustee/custodian under any prior plan. Instead, the Employer shall be
responsible for such actions.
13.3 DISCRETIONARY TRUSTEE If the Employer elects in the Adoption Agreement,
or otherwise appoints the Trustee to act in the capacity of discretionary
Trustee, the Trustee shall invest the Trust in accordance with the Plan's
investment policy statement and the investment alternatives permitted at
paragraph 13.8 herein. The Trustee will have the discretion and authority to
invest, manage and control those Plan assets except those assets which are
subject to the investment direction of a Participant (if Participant direction
is permitted), or an investment manager or Named Investment Fiduciary, or other
agent properly appointed by the Employer. The exercise of any investment
direction hereunder shall be consistent with the investment policy of the Plan.
The Trustee shall also perform custodial functions described at paragraph 13.14
hereof for the Trust with respect to Plan assets over which the Trustee has
investment management responsibility. The Trustee may also perform custodial
functions for the Trust with respect to Plan assets the Trustee does not manage,
to the extent agreed to between the Trustee and the Employer, if the Trustee is
appointed Custodian for some or all of such assets in accordance with the terms
of the Plan. The Trustee may execute any additional documents as required which
shall be treated as an addendum to this Basic Plan Document #01. No such
agreement may conflict with any provision nor shall any provision in such an
agreement jeopardize the tax-qualified status of the Plan. Any such provision
shall be null and void. The Trustee's administrative duties shall be limited to
those agreed to between the parties. The Employer or its designate shall be
responsible for other administrative duties required under the Plan or by
applicable law.
13.4 NONDISCRETIONARY TRUSTEE If the Employer elects in the Adoption
Agreement or as otherwise agreed to in writing, the Trustee may act in the
capacity of a nondiscretionary Trustee. In this capacity, the Trustee shall
have no discretionary authority to invest, manage or control Plan assets and is
authorized solely to make and hold investments only as directed pursuant to
paragraph 12.5. The nondiscretionary Trustee shall have the same rights, powers
and duties as the discretionary Trustee but exercises such authority in
accordance with the direction of the party which has the authority to manage and
control the investment of Plan assets. If directions are not provided to the
Trustee, the Employer will provide such necessary direction.
13.5 PROVISIONS RELATING TO INDIVIDUAL TRUSTEES
(a) Notwithstanding any other provisions of the Plan to the contrary,
the provisions of this paragraph shall apply if one (1) or more
individuals are named as Trustee(s) in the Adoption Agreement and
shall not apply to any institutional Trustee named in the Adoption
Agreement.
(b) If there shall be more than one individual acting in the capacity
of Trustee, they shall act by a majority of their number, unless
they unanimously decide that one (1) or more of them may act on
the matter or category of matters involved without the approval
of the others and they may authorize in writing that one (1) or
more of them shall act on their behalf including but not limited
to executing documents and authorizing distributions on behalf of
the Trustees.
(c) Any person may rely, without having to make further inquiry, upon
instructions appearing to be genuine instructions from any
individual serving as Trustee as being the will, intent and action
of all individuals so serving if no allocation of duties has been
made.
(d) The Trustee shall be paid such reasonable compensation for services
as shall from time to time be agreed upon in writing by the Employer
and the Trustee, provided that an individual serving as Trustee who
already receives full-time Compensation from the Employer shall not
receive compensation for serving as such from the Plan.
13.6 INVESTMENT INSTRUCTIONS Any investment directive shall be made in
writing or such other form as agreed to by the Employer, Trustee/Custodian
and the investment manager. In the absence of such directive, cash shall be
automatically invested in such investment or investments as the Employer or
Named Investment Fiduciary shall select from the investments made available
for that purpose unless and until the person or persons responsible for giving
directions directs otherwise. Such automatic investment shall be made at
regular intervals and pursuant to procedures established by the parties (which
procedures may without limitation, provide for more frequent intervals only if
uninvested balances exceed a stated amount). Absent a contrary direction in
accordance with the preceding provisions of this paragraph 13.6, such
instructions regarding the delegation of investment responsibility shall remain
in force until revoked or amended in writing. Neither the Trustee nor the
Custodian shall be responsible for the propriety of any directed investment
made nor shall they be required to consult with or advise the Employer regarding
the investment quality of any directed investment held hereunder. If the
Employer fails to designate an investment manager, the Trustee shall have full
investment management authority as agreed upon in a duly authorized and executed
investment management agreement. If the Employer does not issue investment
directions with regard to specific assets held in the Trust, the Trustee shall
have authority to invest those assets in the Trust in its sole discretion
subject to paragraph 13.8. While the Employer may direct the Trustee with
respect to Plan investments, the Employer may not:
(a) borrow from the Plan or pledge any of the assets of the Plan as
security for a loan,
(b) buy property or assets from or sell property or assets to the Plan,
(c) charge any fee for services rendered to the Plan, or
(d) receive any services from the Plan on a preferential basis.
13.7 FIDUCIARY STANDARDS Subject to paragraphs 13.6 and 13.8 hereof, the
Trustee, shall invest and reinvest principal and income of the Trust, provided
that:
(a) such investments are prudent under ERISA, as amended, and the
Regulations thereunder,
(b) such investments are sufficiently diversified to minimize the risk
of large losses,
(c) such investments are made in accordance with the provisions of this
Plan and Trust document, and
(d) such investments are made 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 with like
aims.
13.8 POWERS OF THE TRUSTEE The Trustee shall be responsible for the
investment, administration and safekeeping of assets held in the Trust Fund.
The Trustee shall have the following duties and responsibilities, in addition
to powers given by law:
(a) receiving contributions under the terms of the Plan;
(b) implementing an investment program based on the Employer's
investment policy statement, funding policy, investment objectives
and ERISA, as amended;
(c) invest the Trust in any form of property, including common and
preferred stocks, exchange-traded covered put and call options,
bonds, money market instruments, mutual funds (including funds for
which the Sponsor, Trustee or its affiliates receive compensation
for providing investment advisory, custody, transfer agency or other
services), savings accounts, plan loans, certificates of deposit,
securities issued by the U.S. government or by governmental
agencies, insurance policies and contracts, or in any other
property, real or personal, having a ready market, including
securities issued by the Trustee and/or affiliates of the Trustee
as permitted by law. The Trustee may invest in time deposits
(including, if applicable, its own or those of affiliates) which
bear a reasonable interest rate. No portion of any Qualified
Voluntary Contribution, or the earnings thereon, may be invested in
life insurance contracts or, as with any Participant-directed
investment, in tangible personal property characterized by the IRS
as a collectible;
(d) invest any assets of the Trust in a group or collective trust fund
established to permit the pooling of funds of separate pension and
profit-sharing trusts, provided the Internal Revenue Service has
ruled such group or collective trust to be qualified under Code
Section 401(a) and exempt under Code Section 501(a) (or the
applicable corresponding provision of any other Revenue Act) or
to any other common, collective, or commingled trust fund which
has been or may hereafter be established and maintained by the
Trustee, affiliate(s) of the Trustee, the Custodian or investment
manager. Such commingling of assets of the Trust with assets of
other qualified trusts is specifically authorized, and to the extent
of the investment of the Trust in such a group or collective trust,
the terms of the instrument establishing the group or collective
trust shall be a part hereof as though set forth herein. The name
of the group or collective trust fund shall be specified in an
addendum to the Adoption Agreement. The Employer expressly
understands and agrees that any such collective fund may provide
for the lending of its securities by the collective fund trustee
and that such collective fund's trustee will receive compensation
from such collective fund for the lending of securities that is
separate from any compensation of the Trustee hereunder, or any
compensation of the collective fund trustee for the management of
such collective fund;
(e) for collective investment purposes, may combine into one trust
fund the Trust created under this Plan with the Trust created under
any other qualified retirement plan the Employer maintains.
However, the Trustee must maintain separate records of account
for the assets of each Trust in order to reflect properly each
Participant's Vested Account Balance under the Plan(s) in which he
is a Participant;
(f) invest up to 100% of the Trust in the common stock, debt
obligations, or any other security issued by the Employer or by
an affiliate of the Employer within the limitations provided
under ERISA Sections 406, 407, and 408, as amended, and further
provided that such investment does not constitute a prohibited
transaction under Code Section 4975. Any such investment in
Employer securities shall only be made upon written direction of
the Employer who shall be solely responsible for the propriety of
such investment. Additional directives regarding the purchase,
sale, retention or valuing of such securities may be addressed in
an investment management or trust agreement, which is incorporated
by reference. If there are any conflicts between this document
and the above referenced agreements, this document shall govern;
(g) hold cash uninvested and deposit the same with any banking or
savings institution, including its own banking department or
the banking department of an affiliate;
(h) utilize a general disbursement account, i.e., in the form of a
demand deposit account and/or time deposit account, for
distributions from the Trust, without incurring any liability
for payment of interest thereon, notwithstanding the Trustee's
receipt of income with respect to float involving the disbursement
account;
(i) hold contributions in an omnibus account, i.e., in the form of a
demand deposit and/or time deposit account, maintained by the
Trustee for up to three (3) business days (or such longer period
as may result due to circumstances beyond the Trustee's control),
without liability for interest thereon. (The Employer acknowledges
that any float earnings associated with the assets held in such
omnibus account are retained by the Trustee as part of its
compensation for performing services with respect to the allocation
of contributions to Participants' accounts);
(j) join in or oppose the reorganization, recapitalization,
consolidation, sale or merger of corporations or properties,
including those in which it or its affiliates are interested as
Trustee, upon such terms as it deems advisable;
(k) hold investments in nominee or bearer form;
(l) exercise all ownership rights including the voting of proxies and
the exercise of tender offers but only with respect to assets over
which the Trustee has investment management responsibility;
(m) to hold, manage and control all property forming part of the Trust
Fund and to sell, convey, transfer, exchange and otherwise dispose
of the same from time to time;
(n) to apply for and procure from an insurance company as an investment
of the Trust such annuity, or other contracts on the life of any
Participant as the Plan Administrator shall deem proper; to
exercise, at any time or from time to time, whatever rights and
privileges may be granted under such annuity, or other contracts;
to collect, receive, and settle for the proceeds of any such
annuity, or other contracts as and when entitled to do so under
the provisions thereof;
(o) unless otherwise provided by a directive as described by paragraph
13.6, the Employer will pass through shareholder rights (including
voting rights) on Employer securities to Plan Participants. If no
directive is provided, the Trustee shall exercise any shareholder
rights (including voting rights) with respect to any securities
held, but only in accordance with the instructions of the person
or persons responsible for the investment of such securities
subject to and as permitted by, any applicable rules of the
Securities and Exchange Commission and any national securities
exchange. Voting rights with respect to shares of registered
investment companies held in the Trust shall be directed by the
Named Investment Fiduciary responsible for selection of such
registered investment companies as permissible investment
alternatives. In the event of any conflict with any other
provision of this Article or this Basic Plan Document #01, the
provision of this paragraph shall control. The Employer shall be
responsible for preparing and distributing all required prospectuses
for Employer securities and making such materials available to Plan
Participants;
(p) to retain and employ such attorneys, agents and servants as may be
necessary or desirable, in the opinion of the Trustee, in the
administration of the Plan, and to pay them such reasonable
compensation for their services as may be agreed upon as an expense
of administration of the Plan, including power to employ and retain
counsel upon any matter of doubt as to the meaning or interpretation
to be placed upon this Plan or any provisions thereof with reference
to any question arising in the administration of the Plan or
pertaining to the rights and liabilities of the Trustee hereunder.
The Trustee in any such event, any act in reliance upon the advice,
opinions, records, statements and computations of any attorneys and
agents and on the records, statements and computations of any
servants so selected by it in good faith and shall be released and
exonerated of and from all liability to anyone in so doing (except
to the extent that liability is imposed under ERISA);
(q) to institute, prosecute and maintain, or to defend, any proceeding
at law or in equity concerning the Plan or the assets thereof or
any claims thereto, or the interests of Participants and
Beneficiaries hereunder at the sole cost and expense of the Plan
or at the sole cost and expense of the Participant that may be
concerned therein or that may be affected thereby, as, in its
opinion, shall be fair and equitable in each case, and to
compromise, settle and adjust all claims and liabilities asserted
by or against the Plan or asserted by or against it, or such terms
as it, in each such case, shall deem reasonable and proper. The
Trustee shall be under no duty or obligation to institute,
prosecute, maintain or defend any suit, action or other legal
proceeding unless it shall be indemnified to its satisfaction
against all expenses and liabilities (including without limitation,
legal and other professional fees) which it may sustain or
anticipate by reason thereof; and
(r) the Trustee is expressly authorized to the fullest extent permitted
by law to (1) retain the services of any broker-dealer, registered
investment advisor or other financial services entity (including the
Trustee and any of its affiliates) and any future successors in
interest thereto collectively, for the purposes of this paragraph
referred to as the "Affiliated Entities"), to provide services to
assist or facilitate the purchase or sale of investments in the
Trust, (2) acquire as assets of the Trust shares of mutual funds to
which Affiliated Entities provide, for a fee, services in any
capacity and (3) acquire in the Trust any other services or products
of any kind or nature from the Affiliated Entities regardless of
whether the same or dissimilar services or products are available
from other institutions. The Trust may pay directly or indirectly
(through mutual funds fees and charges for example) pay management
fees, transaction fees and other commissions to the Affiliated
Entities for the services or products provided to the Trust and/or
such mutual funds at such Affiliated Entities' standard or published
rates without offset (unless required by law) from any fees charged
by the Trustee for its services as Trustee. The Trustee may also
deal directly with the Affiliated Entities regardless of the
capacity in which it is then acting, to purchase, sell, exchange or
transfer assets of the Trust even though the Affiliated Entities are
receiving compensation or otherwise profiting from such transaction
or are acting as principal in such transaction. Each of the
Affiliated Entities is authorized to effect transactions on national
securities exchanges for the Trust as directed by the Trustee, and
retain any transactional fees related thereto, consistent with
Section 11(a)(1) of the Securities and Exchange Act of 1934, as
amended and related Rule 11a2-2(T). Included specifically, but
not by way of limitation in the transactions authorized by this
provision, are transactions in which any of the Affiliated Entities
is serving as an underwriting or member of an underwriting syndicate
for a security being purchased or is purchasing or selling a
security for its own account. In the event the Trustee is directed
by the Plan Administrator, any named fiduciary, designated
Investment Manager, Participant and/or Beneficiary, as applicable
hereunder (collectively referred to as for purposes of this
paragraph as the "Directing Party"), the Directing Party shall be
authorized, and expressly retains the right hereunder, to direct the
Trustee to retain the services of, and conduct transactions with,
Affiliated Entities fully in the manner described above.
13.9 APPOINTMENT OF ADDITIONAL TRUSTEE AND ALLOCATION OF RESPONSIBILITIES
Assets for which the Trustee is not serving in the capacity of Trustee may be
held by a second Trustee appointed by the Employer to hold specified
investments. In the event that an additional Trustee is appointed for the
Plan to serve as the Trustee of specific investments for which the Trustee is
not acting in the capacity of Trustee, the second Trustee shall have no
responsibilities to these assets other than as set forth herein. The Trustee
shall have no duties with respect to investment held by any other person
including, without limitation, any other Trustee for the Plan. Any other
secondary Trustee of the Plan shall have no duties with respect to assets held
in the Plan by the Trustee.
13.10 COMPENSATION, ADMINISTRATIVE FEES AND EXPENSES All reasonable fees,
charges and expenses incurred by the Trustee or the Custodian in connection
with the administration of the Trust and all reasonable fees, charges and
expenses incurred by the Plan Administrator in connection with the
administration of the Plan (including such reasonable compensation to the
Trustee/Custodian and the Plan Administrator as may be agreed upon from time
to time between the Employer, the Trustee/Custodian and Plan Administrator)
and fees for legal services rendered to the Trustee/Custodian or Plan
Administrator shall be paid from the Trust unless:
(a) The payment of such expense would constitute a "prohibited
transaction" within the meaning of ERISA Section 406 or Code
Section 4975 for which no statutory or administrative exemption is
available.
(b) The Employer actually pays such expenses directly. Any and all
reasonable additional administrative expenses incurred to effect
investment directives made by the Participants and by each
Beneficiary under this Plan shall be paid by the Trust and as
determined by the Employer shall either be charged (in accordance
with such reasonable nondiscriminatory rules as the Employer deems
appropriate under the circumstances) to the account of the
individual issuing such directive, or treated as a general expense
of the Trust. If charged to a Participant's account and if the
assets of such account are insufficient to satisfy such charges, the
Employer shall pay any deficit to the Trustee. Notwithstanding the
foregoing, nothing in this section shall prevent the Employer from
paying the administrative expenses of the Plan directly.
(c) All transaction related expenses incurred to effect a specific
investment for a Participant directed account (such as brokerage
commissions and other transaction related expenses), shall, as
determined by the Employer, either be paid from or otherwise be
charged directly to the account of the Participant providing such
direction or treated as a general expense of the Trust.
(d) If there are insufficient liquid assets of the Trust to cover the
fees of the Trustee or the Custodian, then assets of the Trust shall
be liquidated to the extent necessary to cover fees.
(e) Notwithstanding the foregoing, no compensation other than
reimbursement for expenses incurred shall be paid to a Plan
Administrator who is the Employer or Employee of the Employer.
(f) In the event any part of the Plan becomes subject to tax, all taxes
incurred will be paid from the Plan at the direction of the Plan
Administrator.
(g) Any investment gain or loss of the Trust that is not directly
attributable to the investment of the account of any Participant
(including, but not limited to, for example, any "float" earned on
the disbursement account established for the Plan and not treated
as part of the compensation of the Trustee or paying agent for the
Plan, and any 12b-1 or similar fees paid to the Plan) will be
applied to pay administrative expenses of the Plan, with any excess
remaining at the close of the Plan Year being allocated among the
Participant's accounts in accordance with the procedure established
by the Plan Administrator for this purpose.
13.11 RECORDS Within ninety (90) days following the close of each Plan Year,
or at such other times as may be agreed to between the Employer and the Trustee,
and within ninety (90) days following its removal or resignation, the Trustee
shall file with the Employer a report of that part of the Trust under the
investment management of the Trustee during such year or from the end of the
preceding Plan Year to the date of removal or resignation. Such report shall
include a statement of receipts and disbursements, the net income or loss of
the Trust, the gains or losses realized by the Trust upon sale or other
disposition of the assets, the increase or decrease in the value of the Trust,
all payments and distributions made from the Trust since the date of its last
report, and shall contain a schedule of assets listing the fair market value
of investments held in the Trust as of the end of the Plan Year or the date of
removal or resignation, as applicable. The fair market value of investments
for which there is a ready market shall be determined using the most recent
price quoted on a national or other recognized securities exchange or over-the-
counter market. The fair market value of illiquid investments shall be obtained
by a valuation performed by an independent appraiser appointed by the Trustee
or appointed by the Employer and approved by the Trustee for this purpose whose
determination shall be final. The Employer shall review the Trustee's report
and notify the Trustee in the event of its disapproval of the report within
thirty (30) days, providing the Trustee with a written description of the items
in question. The Trustee shall have sixty (60) days to provide the Employer
with a written explanation of the items in question. If the Employer again
disapproves, the Trustee shall have the right to file its report in a court of
competent jurisdiction for audit and adjudication. In the event the Employer
fails to file a written objection to the Trustee's report within the ninety
(90) day period following receipt of the report, the Employer shall be deemed
to have approved the report. In such case, the Trustee shall be released and
discharged with respect to all matters contained in the report.
13.12 LIMITATION ON LIABILITY AND INDEMNIFICATION
(a) The Trustee shall have the authority to manage and govern the Trust
to the extent provided in this instrument, but does not guarantee
the Trust in any manner against investment loss or depreciation in
asset value, or guarantee the adequacy of the Trust to meet and
discharge all or any liabilities of the Plan.
(b) The Trustee and/or Custodian shall not be liable for the making,
retention, or sale of any investment or reinvestment made by it,
as herein provided, or for any loss to, or diminution of the Trust,
or for any other loss or damage which may result from the discharge
of its duties hereunder except to the extent it is judicially
determined such loss or damage is attributable to the
Trustee/Custodian's breach of its duties hereunder or under ERISA.
(c) An institution acting as a Custodian or nondiscretionary Trustee
shall have no discretion or investment management responsibility,
unless otherwise expressly agreed in writing (pursuant to an
investment management agreement, for example) and shall only be
responsible to perform the functions described at paragraph 13.5
hereof. Neither the Custodian nor Trustee (whether nondiscretionary
or discretionary) shall have any responsibility with respect to Plan
investments and does not guarantee the adequacy of the Trust to meet
and discharge any or all liabilities associated with the Plan.
(d) The Employer warrants that all directions issued to the Trustee or
Custodian by it or the Plan Administrator will be in accordance with
the terms of the Plan and the auxillary agreement and not contrary
to the provisions of ERISA, as amended, and the Regulations issued
thereunder.
(e) Neither the Trustee nor the Custodian shall be answerable for any
action taken pursuant to any direction, consent, certificate, or
other paper or document in the belief that the same is genuine.
All directions by the Employer, Participant, the Plan Administrator,
Named Fiduciary or an investment manager shall be made pursuant to
pre-approved communication procedures to which all such parties,
as applicable, shall have consented to in writing. The Employer
shall deliver to the Trustee and Custodian written notification
identifying the individual or individuals authorized to act on
behalf the Plan and shall deliver specimens of their signatures to
the Trustee/Custodian.
(f) The duties and obligations of the Trustee and the Custodian shall
be limited to those expressly imposed by this instrument or
subsequently agreed upon by the parties in writing. Responsibility
for administrative duties required under the Plan or applicable law
not expressly imposed upon or agreed to by the Trustee or the
Custodian shall rest solely with the Employer.
(g) The Employer shall indemnify the Trustee/Custodian against, and
agrees to hold the Trustee/Custodian harmless from, all liabilities
and claims and expenses including attorney's fees and expenses
incurred in defending against such liability or claims against the
Trustee/Custodian, unless such liability or claim results from the
negligent action or inaction of the Trustee/Custodian, or where the
Trustee/Custodian is found to have breached its duties under this
Article or Part 4 of Title I of ERISA by a final judgment of a
court of competent jurisdiction. Except as otherwise provided by
the preceding sentence, the Employer also shall indemnify the
Trustee/Custodian against and agrees to hold the Trustee/Custodian
harmless from all liabilities, claims and expenses including
attorney's fees and other expenses incurred in defending against
such liabilities or claims, arising from any actions or breach or
responsibility by any party other than the Trustee/Custodian,
including without limitation by specification any acts of a prior
Trustee or of another Trustee or Custodian appointed the Employer.
(h) Without limiting any provision in the prior paragraph, the Employer
expressly agrees to indemnify the Trustee/Custodian against any
liability or claim (including attorney's fees and expenses in
defending against such liabilities or claims) arising as a result
of any act taken or failure to act, in accordance with the
directions received from the Employer, Plan Administrator,
investment manager, Participant, or a designee specified by the
Employer directly or transmitted by a designated Service Provider
to the Plan and without limitation by specification.
(i) The Trustee/Custodian will take all reasonable steps to assure the
security of any data received from the Employer in connection with
services provided to the Plan. The Employer will be responsible
for retaining duplicate copies of any such data or materials it
forwards to the Trustee/Custodian and for taking all other
reasonable and necessary precautions in event such data or materials
are lost or destroyed, regardless of cause, or in the event
reprocessing is needed for any reason. The Trustee/Custodian will
maintain records in connection with the performance of services
hereunder for the applicable period as required by law, or if no
period is required, for such period as is reasonable under the law.
(j) No waiver of any breach of this agreement shall constitute a waiver
of any other breach, whether of the same or any other covenant, term
or condition. The subsequent performance of any of the terms,
covenants and conditions of this Article shall not constitute a
waiver of any preceding breach, nor shall any delay or omission of
any party's exercise of any rights arising from any default effect
or impair the party's rights as to the same or future default.
(k) Neither the Trustee or the Custodian shall be responsible in any
way for any actions taken, or failure to act, by a prior
trustee/custodian. The Employer shall indemnify and hold harmless
the Trustee/Custodian for such prior trustee/custodian's acts or
inactions for any periods applicable, including periods for which
the Plan must retroactively to comply with any tax law or
regulations thereunder.
(l) A fiduciary with respect to the Plan shall not be liable for a
breach of fiduciary responsibility of another fiduciary with
respect to the Plan except to the extent that:
(1) it participates knowingly in, or knowingly undertakes to
conceal, an act or omission of such other fiduciary, knowing
such act or omission is a breach;
(2) by its failure to comply with ERISA Section 404(a)(1) in the
administration of its specific responsibilities which give
rise to its status as a fiduciary, it has enabled such other
fiduciary to commit a breach; or
(3) it has knowledge of a breach by such other fiduciary, unless
it makes reasonable efforts under the circumstances to remedy
the breach.
(m) If the assets of the Plan are held by two (2) or more Trustees, each
Trustee will use reasonable care to prevent a co-Trustee from
committing a breach of duty under the Employee Retirement Income
Security Act of 1974, as amended, and they shall jointly manage and
control the assets of the Plan; provided however, that such co-
Trustee shall be authorized to allocate specific responsibilities,
obligations or duties among the co-Trustees pursuant to a written
agreement. If co-Trustees do enter into such an agreement, then a
Trustee to whom certain responsibilities, obligations or duties have
not been allocated shall not be liable either individually or as
Trustee for any loss resulting to the Plan arising from the acts or
omissions on the part of another Trustee to which such
responsibilities, obligations or duties have been allocated.
13.13 CUSTODIAN If a discretionary Trustee has been appointed, the Employer
may appoint a Custodian as provided for in the Adoption Agreement. A Custodian
shall have the same rights, powers and duties as a nondiscretionary Trustee.
Any reference in the Plan to a Trustee is also a reference to the Custodian
unless the context indicates otherwise. Any limitation of the Trustee's
liability in the Plan shall act as a limitation of the Custodian's liability.
Where a discretionary Trustee has provided direction, any action taken by the
Custodian satisfies the requirement in the Plan referencing the Trustee taking
that action. The resignation or removal of the Custodian shall be made in
accordance with paragraph 13.19 as though the Custodian were the Trustee. The
Custodian shall be responsible for the holding and safekeeping of all or a
portion of the Plan's assets. One or more Custodian(s) appointed under this
Plan may hold all or any portion of the Plan's assets. Such separate assets
shall be held pursuant to the terms of a separate custodial agreement with such
Custodian. The separate custodial agreement shall be treated as an addendum
and, as such, may not conflict with any provision of this document. In
addition, any provision of a separate custodial agreement which would
jeopardize the tax qualified status of this Defined Contribution Plan shall
be null and void. In addition to the holding and safekeeping of Plan assets,
the Custodian's duties shall include:
(a) receiving contributions under the terms of the Plan, but not
determining the amount or enforcing the payment thereof,
(b) making distributions from the Plan in accordance with instructions
received from the Plan Administrator or an authorized representative
of the Employer,
(c) keeping records reflecting its administration of the Trust or the
custodial account and making such records, statements and reports
available to the Employer for review and audit at such times as
agreed to between the Custodian, Plan Administrator, and the
Employer, and
(d) retaining and employing such attorneys, agents and servants as may
be necessary or desirable, in the opinion of the Custodian, in the
administration of the Plan, and to pay them such reasonable
compensation for their services as may be agreed upon as an expense
of administration of the Plan, including power to employ and retain
counsel upon any matter of doubt as to the meaning or interpretation
to be placed upon this Plan or any provisions thereof with reference
to any question arising in the administration of the Plan or
pertaining to the rights and liabilities of the Trustee hereunder.
The Custodian in any such event, any act in reliance upon the
advice, opinions, records, statements and computations of any
attorneys and agents and on the records, statements and computations
of any servants so selected by it in good faith and shall be
released and exonerated of and from all liability to anyone in so
doing (except to the extent that liability is imposed under XXXXX).
The Custodian's duties shall be limited to those as agreed to between the
Employer and the Custodian. The Employer shall be responsible for any other
administrative duties required under the Plan or by applicable law.
13.14 INVESTMENT ALTERNATIVES OF THE CUSTODIAN
(a) The Custodian shall hold any or all assets received from the
Trustee or its agents. If the Custodian holds title to Plan assets
and such ownership requires action on the part of the registered
owner, such action will be taken by the Custodian only upon receipt
of specific instructions from the Trustee, or its designated agents
or the Named Investment Fiduciary. Proxies shall be voted by or
pursuant to the express direction of the Trustee its' authorized
agent or the Named Investment Fiduciary. The Custodian shall not
render any investment advice, including any opinion on the prudence
of directed investments. The Employer and Trustee and its agents
thereof assume all responsibility for adherence to fiduciary
standards under ERISA, as amended, and the Regulations issued
thereunder.
(b) Where the Sponsor serves as Custodian, the Trust shall only be
invested in investment alternatives the Custodian makes available
in the ordinary course of business unless the Custodian is directed
otherwise by the Employer, the Trustee or any properly designated
agent thereof. The Custodian under applicable Federal or state
laws, may limit the investment alternatives including but not
limited to savings accounts, savings certificates, or in other
savings instruments offered by the Sponsor or its affiliates.
Such investments shall be made at the direction of the Employer
or Trustee(s) or other Named Investment Fiduciary and the Custodian
shall have no responsibility for the propriety of such investments.
13.15 PROHIBITED TRANSACTIONS The Trustee, Custodian, Employer, investment
manager, the Named Investment Fiduciary or Participant shall not knowingly
enter into any transaction, engage in any activity, or direct the purchase
or acquisition of any investment with respect to the Plan which would constitute
a prohibited transaction under ERISA or the Code for which a statutory or
administrative exemption is not available. The Trustee or Custodian shall
not receive any investment advisory or other fees from a regulated investment
company (a mutual fund) which duplicates investment management fees charged by
the Trustee. The Trustee or Custodian shall be permitted to receive fees from
a regulated investment company if the Trustee or Custodian has made a good faith
determination that the receipt of such fees is not a prohibited transaction
pursuant to any guidance or exemption issued by the Department of Labor from
time to time.
13.16 EXCLUSIVE BENEFIT RULES No part of the Trust shall be used for, or
diverted to, purposes other than for the exclusive benefit of Participants,
former Participants with a vested interest, and the Beneficiary or Beneficiaries
of deceased Participants who have in a vested interest in the Plan at death.
13.17 ASSIGNMENT AND ALIENATION OF BENEFITS Except as provided in paragraphs
12.9 or 12.11, no right or claim to, or interest in, any part of the Plan, or
any payment from the Plan, shall be assignable, transferable, or subject to
sale, mortgage, pledge, hypothecation, commutation, anticipation, garnishment,
attachment, execution, or levy of any kind. Neither the Trustee or Custodian
shall recognize any attempt to assign, transfer, sell, mortgage, pledge,
hypothecate, commute, or anticipate the same, except to the extent required by
law. The preceding sentences shall also apply to the creation, assignment, or
recognition of a right to any benefit payable with respect to a Participant
pursuant to a domestic relations order, unless such order is determined to be
a Qualified Domestic Relations Order, as defined in Code Section 414(p), or any
domestic relations order entered before January 1, 1985 which the Plan's
attorney and Plan Administrator deem to be qualified.
Notwithstanding any provision of this paragraph 13.17 to the contrary, an offset
to a Participant's Vested Account Balance against an amount that the Participant
is ordered or required to pay the Plan with respect to a judgment, order or
decree issued, or a settlement entered into, on or after August 5, 1997, shall
be permitted in accordance with Code Sections 401(a)(13)(C) and (D).
13.18 LIQUIDATION OF ASSETS If the Trustee and/or Custodian must liquidate
assets in order to make distributions, transfer assets, or pay fees, expenses
or taxes assessed against all or a part of the Trust, and the Trustee/Custodian
is not instructed as to the liquidation of such assets, assets will be
liquidated on a pro rata basis across all the investment alternatives in
the Trust. The Trustee and /or Custodian are expressly authorized to liquidate
assets in order to satisfy the Trust's obligation to pay the Trustee and /or
Custodian's fees or other compensation if such fees or compensation is not paid
on a timely basis.
13.19 Resignation And Removal The Trustee may resign upon thirty (30) days
written notice to the Employer. The Employer may remove the Trustee upon sixty
(60) days written notice to the Trustee, or such shorter period of time as may
be agreed to by the parties. The Employer may discontinue its participation in
this Prototype Defined Contribution Plan effective upon thirty (30) days written
notice to the Sponsor. In such event the Employer shall, prior to the effective
date thereof, amend the Plan to eliminate any reference to this Prototype
Defined Contribution Plan and appoint a successor trustee/custodian. The
Trustee shall deliver the Trust to its successor on the effective date of the
resignation or removal, or as soon thereafter as practicable, provided that this
shall not waive any lien the Trustee may have upon the Trust for its
compensation or expenses. Following the effective date of the notice of
termination, the Trustee shall have no further responsibility for providing
services to the Employer or the Plan. If the Employer fails to amend the Plan
and appoint a successor trustee/custodian within the said thirty (30) days, or
such longer period as the Trustee may specify in writing, the Plan shall be
deemed individually designed and the highest ranking officer of the Employer
shall be deemed the successor trustee or custodian as the case may be. In such
event, the Trustee may but shall not be required to continue to hold custody of
the assets of the Plan until such time as appropriate arrangements have been
made for the security of the Plan assets, but for a discretionary Trustee, upon
notification thereof to Plan Participants, shall no longer have any
responsibility for the investment of Plan assets.
ARTICLE XIV
TOP-HEAVY PROVISIONS
14.1 APPLICABILITY OF RULES If the Plan [except in the case of a SIMPLE
401(k) Plan] is or becomes Top-Heavy in any Plan Year, the provisions of this
Article will supersede any conflicting provisions in the Basic Plan Document
#01 and accompanying Adoption Agreement.
14.2 MINIMUM CONTRIBUTION Notwithstanding any other provision in the
Employer's Plan, for any Plan Year in which the Plan is Top-Heavy, the aggregate
Employer contributions and forfeitures allocated on behalf of any Participant
(without regard to any Social Security contribution) under this Plan or a
combination of paired or non-paired Defined Contribution Plans and no Defined
Benefit Plans which are Top-Heavy, the Employer will contribute the lesser of 3%
of such Participant's Compensation or the largest percentage of the Employer
contributions and forfeitures, as a percentage of the Key Employee's
Compensation, up to a maximum permitted under Code Section 401(a)(17), as
indexed, allocated on behalf of any Key Employee for that year.
(a) In any Limitation Year prior to January 1, 2000, if the Employer
maintains or maintained a Defined Benefit Plan which is not paired,
the provisions of the "Limitations on Allocations" section of the
Adoption Agreement shall apply.
(b) Each Participant who is employed by the Employer on the last day of
the Plan Year shall be entitled to receive an allocation of the
Employer's minimum contribution for such Plan Year. The minimum
allocation applies even though under other Plan provisions the
Participant would not otherwise be entitled to receive an
allocation, or would have received a lesser allocation for the year
because the Participant fails to make required contributions to the
Plan, the Participant's Compensation is less than a stated amount,
or the Participant fails to complete one-thousand (1,000) Hours of
Service (or such lesser number designated by the Employer in the
Adoption Agreement) during the Plan Year. A paired profit-sharing
Plan designated to provide the Top-Heavy minimum contribution must
do so regardless of profits. An Employer may elect in the Adoption
Agreement by resolution or by Plan amendment whether the Top-Heavy
minimum Contribution will be made to all Participants or just non-
Key Employees.
The Top-Heavy minimum contribution does not apply to any Participant to the
extent the Participant is covered under any other plan(s) of the Employer
and the Employer has provided in the Adoption Agreement that the minimum
allocation or benefit requirements applicable to this Plan will be satisfied
in the other plan(s).
If a Key Employee makes an Elective Deferral or has an allocation of Matching
Contributions credited to his or her account, a Top-Heavy minimum contribution
will be required for non-Key Employees who are Participants. For purposes of
satisfying the Top-Heavy minimum contribution requirement, Elective Deferrals
and Matching Contributions are not taken into account.
14.3 MINIMUM VESTING For any Plan Year during which this Plan is Top-Heavy,
the minimum vesting schedule selected by the Employer in the Adoption Agreement
will automatically apply to the Plan. If the vesting schedule elected by the
Employer in the Adoption Agreement is less liberal than the allowable schedule,
the schedule will automatically shift to a vesting schedule which satisfies the
Top-Heavy minimum requirements. If the vesting schedule under the Employer's
Plan shifts in or out of the Top-Heavy schedule for any Plan Year, such shift
is an amendment to the vesting schedule and the election in paragraph 9.9 of
the Basic Plan Document #01 applies. The minimum vesting schedule applies to
all accrued benefits within the meaning of Code Section 411(a)(7) except those
attributable to Employee contributions, including benefits accrued before the
effective date of Code Section 416 and benefits accrued before the Plan became
Top-Heavy. No reduction in vested benefits may occur in the event the Plan's
status as Top-Heavy changes for any Plan Year. This paragraph does not apply
to the account balances of any Employee who does not have one (1) Hour of
Service after the Plan initially becomes Top-Heavy and such Employee's account
balance attributable to Employer contributions and forfeitures will be
determined without regard to this paragraph.
14.4 LIMITATIONS ON ALLOCATIONS In any Limitation Year beginning prior to
January 1, 2000 in which the Top-Heavy Ratio exceeds 90% (i.e., the Plan becomes
Super Top-Heavy), the denominators of the Defined Benefit Fraction and Defined
Contribution Fraction shall be computed using 100% of the dollar limitation
instead of 125%.
14.5 USE OF SAFE HARBOR CONTRIBUTIONS TO SATISFY TOP-HEAVY CONTRIBUTION RULES
If elected in the Adoption Agreement, a 3% Safe Harbor Non-Elective Contribution
allocated to all eligible Employees may be used to satisfy the minimum
contribution requirement for a Top-Heavy Plan. A Safe Harbor Matching
Contribution may not be used to satisfy the minimum contribution requirement
for a Top-Heavy Plan.
14.6 Top-Heavy Rules For SIMPLE 401(k) Plans A SIMPLE 401(k) Plan is not
treated as a Top-Heavy Plan under Code Section 416 for any year for which this
article applies.
ARTICLE XV
AMENDMENT AND TERMINATION
15.1 AMENDMENT BY SPONSOR The Sponsor may amend any or all provisions of
this Prototype Defined Contribution Plan at any time without obtaining the
approval or consent of any Employer which has adopted this Plan and Trust
provided that no amendment shall authorize or permit any part of the corpus or
income of the Plan to be used for or diverted to purposes other than for the
exclusive benefit of Participants and their Beneficiaries, or eliminate an
optional form of distribution. For purposes of Sponsor amendments, the mass
submitter of this Basic Plan Document #01 shall be recognized as the agent of
the Sponsor. If the Sponsor does not adopt the amendments made by the mass
submitter, it will no longer be identical to or a minor modifier of the mass
submitter plan.
15.2 AMENDMENT BY EMPLOYER The Employer may amend any option in the Adoption
Agreement, and may include language as permitted in the Adoption Agreement to
satisfy Code Section 415 or to avoid duplication of minimums under Code Section
416 because of the required aggregation of multiple plans. The Employer may
also adopt certain model amendments published by the Internal Revenue Service
which specifically provide that their adoption will not cause the Plan to be
treated as an individually designed plan for which the Employer must obtain a
separate determination letter. An Employer that amends the Plan for any other
reason, including a waiver of the minimum funding requirement under Code Section
412(d), will no longer participate in this Prototype Plan program and will be
considered an individually designed Plan. In such event, all references to the
institution or company as Sponsor shall be deemed null and void.
15.3 PROTECTED BENEFITS An amendment (including the adoption of this Plan
as a restatement of an existing Plan) may not decrease a Participant's accrued
benefit or account balance except to the extent permitted under Code Section
412(c)(8), and may not reduce or eliminate a Code Section 411(d)(6) protected
benefit (except as provided by the Code or the Regulations issued thereunder)
determined immediately prior to the date of adoption, or if later, the
Effective Date of the amendment. Where this Plan is being adopted to amend
another plan that contains a protected benefit not provided for in this
document, the Employer may attach an addendum to the Adoption Agreement that
describes such protected benefit which shall be incorporated in the Plan.
15.4 PLAN TERMINATION The Employer shall have the right to terminate its
Plan at any time. The Sponsor of this Prototype Defined Contribution Plan is
to be given sixty (60) days notice in writing of the Employer's intent to
terminate or transfer the assets of the Plan. If the Plan is terminated,
partially terminated, or if there is a complete discontinuance of contributions
under a profit-sharing plan maintained by the Employer, all amounts credited to
the accounts of Participants shall vest and become nonforfeitable. In the event
of a partial termination, only those who are affected by such partial
termination shall be fully vested. In the event of termination, the Plan
Administrator shall direct the Trustee or the Custodian as applicable with
respect to the distribution of accounts to or for the exclusive benefit of
Participants or their Beneficiaries. Such distribution shall be made directly
to Participants or, at the direction of the Participant, may be transferred
directly to another Eligible Retirement Plan or individual retirement account.
In the absence of an election by a Participant who has received notice from the
Plan Administrator under paragraph 6.11, the Plan Administrator may direct the
Trustee or Custodian to transfer the Participant's benefit to another Defined
Contribution Plan maintained by the Employer, other than an employee stock
ownership plan. If the Employer does not maintain another Defined Contribution
Plan, the Plan Administrator may direct the Trustee or Custodian to transfer the
Participant's benefit to an individual retirement account with an institution
selected by the Plan Administrator, or make a distribution pursuant to paragraph
7.15. Prior to making any distribution, the Plan Administrator shall establish
in a manner acceptable to the Trustee or Custodian, that the Plan has received a
favorable determination letter from the Internal Revenue Service approving the
Plan termination and authorizing the distribution of benefits to Plan
Participants. In the absence of such determination letter, the Trustee or
Custodian may agree to make distributions to Participants if the Plan
Administrator represents that the applicable requirements, if any, of ERISA and
the Code governing the termination of employee benefit plans have been or are
being complied with or that appropriate authorizations, waivers, exemptions, or
variances have been or are being obtained.
15.5 DISTRIBUTION RESTRICTIONS UNDER A CODE SECTION 401(K) PLAN If the
Employer's Plan includes a cash or deferred arrangement or if transferred
assets described in paragraph 6.13 are subject to the distribution restrictions
of Code Sections 401(k)(2) and 401(k)(10), the special distribution provisions
of this paragraph apply. The portion of the Participant's Vested Account
Balance attributable to Elective Deferrals (or to amounts treated under the
cash or deferred arrangement as Elective Deferrals) is not distributable on
account of Plan termination, as described in this paragraph, unless:
(a) the Participant otherwise is entitled under the Plan to a
distribution of that portion of the Vested Account Balance, or
(b) the Plan termination occurs without the establishment of a successor
Plan. A successor Plan under subparagraph (b) is a Defined
Contribution Plan other than an employee stock ownership plan [as
defined in Code Section 4975(e)(7)], a Simplified Employee Pension
Plan [as defined in Code Section 408(k)], or a SIMPLE IRA Plan [as
defined in Code Section 408(p)] maintained by the Employer (or by a
related Employer) at the time of the termination of the Plan or
within the period ending twelve (12) months after the final
distribution of assets. A distribution pursuant to this
subparagraph (b), must be part of a lump sum distribution(s) to the
Participant of his Vested account balance.
(c) The disposition by a corporation to an unrelated entity of such
corporation's interest in a subsidiary [within the meaning of
Code Section 409(d)(3)] if such corporation continues to maintain
the Plan, but only with respect to the Employees who continue
employment with such subsidiary.
(d) In connection with the disposition by an Employer of less than 85%
of the assets used by the Employer in a trade or business to an
unrelated entity, distribution of the entire Vested Account Balance
of an Participant who continues employment with the acquirer will,
if so agreed to by the Employer, be made to the Participant in a
single lump sum. This paragraph shall apply if the acquirer does
not maintain the Plan after disposition and only if such Employee's
change in employment status constitutes a "separation from Service"
within the meaning of Code Section 401(k)(2)(b)(i)(I).
15.6 QUALIFICATION OF EMPLOYER'S PLAN If the adopting Employer fails to
obtain or retain applicable Internal Revenue Service qualification as a
Prototype Plan, such Employer's Plan shall no longer participate in this
Prototype Defined Contribution Plan and will be considered an individually
designed plan.
15.7 MERGERS AND CONSOLIDATIONS
(a) In the case of any merger or consolidation of the Employer's Plan
with, or transfer of assets or liabilities of the Employer's Plan
to any other plan, Participants in the Employer's Plan shall be
entitled to receive benefits immediately after the merger,
consolidation, or transfer which are equal to or greater than the
benefits they would have been entitled to receive immediately
before the merger, consolidation, or transfer if the Plan had then
terminated.
(b) Any corporation into which the Trustee, Custodian or any successor
thereto may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which
the Trustee, Custodian or any successor thereto may be a party,
or any corporation to which all or substantially all the business
of the Trustee, Custodian or any successor thereto may be
transferred, shall automatically be the successor without the
filing of any instrument or performance of any further act, before
any court.
15.8 QUALIFICATION OF PROTOTYPE The Sponsor intends that this Prototype
Defined Contribution Plan will meet the requirements of the Code as a qualified
Defined Contribution Plan. Should the Commissioner of Internal Revenue or any
delegate of the Commissioner at any time determine that the Prototype Defined
Contribution Plan fails to meet the requirements of the Code, the Sponsor will
amend the Basic Plan Document #01 as necessary to maintain its qualified status.
ARTICLE XVI
GOVERNING LAW
16.1 GOVERNING LAW Construction, validity and administration of the
Prototype Defined Contribution Plan and any Employer Plan established under
the terms of this Plan and accompanying Adoption Agreement, shall be governed
by Federal law to the extent applicable and to the extent not applicable by the
laws of the State or Commonwealth in which the principal office of the Prototype
Sponsor or its affiliate is located.
16.2 STATE COMMUNITY PROPERTY LAWS The terms and conditions of the Prototype
Defined Contribution Plan and any Employer's Plan established under the terms
of this Basic Plan Document #01 and accompanying Adoption Agreement shall be
applicable without regard to community property laws of any state.
10/01
IRS MODEL AMENDMENT
With respect to distributions under the Plan made for calendar years
beginning on or after January 1, [2001/2002], the Plan will apply the
minimum distribution requirements of Code Section 401(a)(9) in
accordance with the Regulations under Code Section 401(a)(9) that were
proposed on January 17, 2001, notwithstanding any provision of the Plan
to the contrary. This paragraph shall continue in effect until the
end of the last calendar year beginning before the effective date of
the Regulations under Code Section 401(a)(9) or such other date as may
be specified in guidance published by the Internal Revenue Service.
IRS MODEL AMENDMENT
With respect to distributions under the Plan made on or after
__________ [specify date on which the Plan began operating in
accordance with the 2001 Proposed Regulations] for calendar years
beginning on or after January 1, 2001, the Plan will apply the minimum
distribution requirements of Code Section 401(a)(9) in accordance with
the Regulations that were proposed on January 17, 2001 (the 2001
Proposed Regulations), notwithstanding any provision of the Plan to
the contrary. If the total amount of required minimum distributions
made to a Participant for 2001 prior to __________ [specify date on
which the Plan began operating in accordance with the 2001 proposed
regulations] are equal to or greater than the amount of required minimum
distributions determined under the Proposed Regulations, then no
additional distributions are required for such Participant for 2001
on or after such date. If the total amount of required minimum
distributions made to a Participant for 2001 prior to __________
[specify date on which the Plan began operating in accordance with
the 2001 Proposed Regulations] are less than the amount determined
under the 2001 Proposed Regulations, then the amount of required
minimum distributions for 2001 on or after such date will be determined
so that the total amount of required minimum distributions for 2001
is the amount determined under the 2001 Proposed Regulations. This
paragraph shall continue in effect until the last calendar year
beginning before the effective date of the final Regulations under
Code Section 401(a)(9) or such other date as may be published by the
Internal Revenue Service.
AMENDMENT
TO THE
PROTOTYPE DEFINED CONTRIBUTION PLAN
BASIC PLAN DOCUMENT #01
The Employer named in the Adoption Agreement hereby amends the Plan to reflect
certain provisions of the Economic Growth and Tax Relief Reconciliation Act of
2001 ("EGTRRA"). This amendment is intended as a good faith compliance with
the requirements of EGTRRA and is to be construed in accordance with EGTRRA
and guidance issued thereunder. Except as otherwise provided, this amendment
shall be effective as of the first day of the first Plan Year beginning after
December 31, 2001. This amendment shall supersede the provisions of the Basic
Plan Document #01 to the extent those provisions are inconsistent with the
provisions of this amendment. The Basic Plan Document #01 is hereby amended as
follows:
1. Paragraph 1.16 of the Basic Plan Document #01 entitled "Compensation",
under the paragraph entitled "Limitation on Compensation" is amended by
the addition of the following three sentences at the end of the paragraph:
"The annual Compensation of each Participant taken into account in
determining allocation for any Plan Year beginning after December 31,
2001, shall not exceed $200,000, as adjusted for cost-of-living increases
in accordance with Code Section 401(a)(17)(B). Annual Compensation means
Compensation during the Plan Year or such other consecutive 12-month
period over which Compensation is otherwise determined under the Plan
(the determination period). The cost-of-living adjustment in effect for
a calendar year applies to annual Compensation for the determination
period that begins with or within such calendar year."
2. Paragraph 1.55 of the Basic Plan Document #01 entitled "Key Employee",
is deleted in its entirety and replaced with the following:
"1.55 KEY EMPLOYEE Key Employee means any Employee or former Employee
(including any deceased Employee) who at any time during the Plan Year
that includes the determination date was an officer of the Employer
having annual Compensation greater than $130,000 [as adjusted under
Code Section 416(i)(1) for Plan Years beginning after December 31, 2002],
a five percent (5%) owner of the Employer, or a one percent (1%) owner
of the Employer having annual Compensation of more than $150,000. For
this purpose, annual Compensation means Compensation within the meaning
of Code Section 415(c)(3). The determination of who is a Key Employee
will be made in accordance with Code Section 416(i)(1) and the applicable
Regulations and other guidance of general applicability issued
thereunder."
3. Paragraph 4.4 of the Basic Plan Document #01 entitled "Rollover
Contributions", is amended by the addition of the following paragraph (g)
which shall read as follows:
"(g) If elected by the Employer in the Adoption Agreement, the Plan
will accept Participant Rollover Contributions and/or Direct
Rollovers of distributions made after December 31, 2001, from
the types of plans specified in the Adoption Agreement, beginning
on the Effective Date specified in the Adoption Agreement."
4. Paragraph 4.7 of the Basic Plan Document #01 entitled "Elective Deferrals
in a 401(k) Plan", is amended by the addition of three new paragraphs (g),
(h) and (i) which shall read as follows:
"(g) No Participant shall be permitted to have Elective Deferrals made
under this Plan, or any other Qualified Plan maintained by the
Employer during any taxable year, in excess of the dollar
limitation contained in Code Section 402(g) in effect for such
taxable year, except to the extent permitted under subparagraph (h)
below and Code Section 414(v), if applicable.
(h) If elected by the Employer in the Adoption Agreement, all Employees
who are eligible to make Elective Deferrals under this Plan and who
have attained age fifty (50) before the close of the Plan Year
shall be eligible to make Catch-up contributions in accordance
with, and subject to the limitations of Code Sections 414(v). With
respect to Catch-up contributions, a Highly Compensated Employee
who is otherwise eligible to make a Catch-up contribution for a
Plan Year shall be permitted to make a Catch-up contribution at
such point he or she exceeds the limit established by the Plan
Administrator with respect to the maximum Elective Deferrals a
Highly Compensated Employee can make for the Plan Year. Such Catch-
up contributions shall not be taken into account for purposes of
the provisions of the Plan implementing the required limitations
of Code Sections 402(g) and 415. The Plan shall not be treated as
failing to satisfy the provisions of the Plan implementing the
requirements of Code Section 401(k)(3), 401(k)(11), 401(k)(12),
410(b), or 416, as applicable, by reason of the making of such
Catch-up contributions.
(i) Except to the extent permitted under subparagraph (h) above, the
Adoption Agreement, and EGTRRA Section 631 and Code Section
414A(v), the maximum salary reduction contribution that can be
made to this Plan is the amount determined under Code Section
408(p)(2)(A)(ii) for the calendar year."
5. Paragraph 6.3 of the Basic Plan Document #01 entitled "Benefits on
Termination of Employment " is amended by the addition of paragraphs (i)
and (j) which shall read as follows:
"(i) If elected by the Employer in the Adoption Agreement, this
paragraph shall apply for distributions and severance from
employment occurring after the dates specified in the Adoption
Agreement.
A Participant's Elective Deferrals, Qualified Non-Elective
Contributions, Qualified Matching Contributions, and earnings
attributable to these contributions shall be distributed on account
of the Participant's severance from employment. However, such a
distribution shall be subject to the other provisions of the Plan
regarding distributions, other than provisions that require a
separation from Service before such amounts may be distributed.
(j) If elected by the Employer in the Adoption Agreement, the value
of a Participant's nonforfeitable account balance shall be
determined without regard to that portion of the account balance
that is attributable to rollover contributions (and the earnings
allocable thereto) within the meaning of Code Section 402(c),
403(a)(4), 403(b)(8), 408(d)(3)(A)(ii) and 457(e)(16). If the
value of the Participant's nonforfeitable account balance as so
determined is $5,000 or less, the Plan shall immediately distribute
the Participant's entire nonforfeitable account balance."
6. Paragraph 6.6 of the Basic Plan Document #01 entitled "Commencement of
Benefits", is amended with the addition of paragraph (d) which shall read
as follows:
"(d) If elected by the Employer in the Adoption Agreement, this
paragraph shall apply for distributions and severance from
employment occurring after the dates specified in the Adoption
Agreement.
A Participant's Elective Deferrals, Qualified Non-Elective
Contributions, Qualified Matching Contributions, and earnings
attributable to these contributions shall be distributed on account
of the Participant's severance from employment. However, such a
distribution shall be subject to the other provisions of the Plan
regarding distributions, other than provisions that require a
separation from Service before amounts may be distributed."
7. The following new paragraph (c) is added to paragraph 6.7 of the Basic
Plan Document #01 entitled "Transitional Rules for Cash-Out Limits", and
shall apply if elected by the Employer in the Adoption Agreement and be
effective as specified in the Adoption Agreement.
"(c) If elected by the Employer in the Adoption Agreement, for purposes
of this paragraph 6.7, the value of a Participant's nonforfeitable
account balance shall be determined without regard to that portion
of the account balance that is attributable to Rollover
Contributions (and the earnings allocable thereto) within the
meaning of Code Sections 402(c), 403(a)(4), 403(b)(8),
408(d)(3)(A)(ii), and 457(e)(16). If the value of the
Participant's nonforfeitable account balance as so determined is
$5,000 or less, the Plan shall immediately distribute the
Participant's entire nonforfeitable account balance."
8. Paragraph 6.9 of the Basic Plan Document #01 entitled "Hardship
Withdrawals", is amended effective December 31, 2001 by the addition of
paragraph (d).
"(d) A Participant who receives a distribution of Elective Deferrals
after December 31, 2001, on account of Hardship shall be prohibited
from making Elective Deferrals and Voluntary After-tax
Contributions under this and all other Plans of the Employer for
six (6) months after receipt of the distribution. A Participant
who receives a distribution of Elective Deferrals in calendar year
2001 on account of Hardship shall be prohibited from making
Elective Deferrals and Voluntary After-tax Contributions under this
and all other Plans of the Employer for the period specified by the
Employer in the Adoption Agreement."
9. Paragraph 6.10 of the Basic Plan Document #01 entitled "Direct Rollover
of Benefits", is amended effective January 1, 2002 by the addition of
the following paragraph (e):
"(e) This paragraph shall apply only to distributions made after
December 31, 2001. For purposes of the Direct Rollover provisions
in paragraph 6.10(a) of the Plan, an Eligible Retirement Plan shall
also mean an annuity contract described in Code Section 403(b) and
an Eligible Plan under Code Section 457(b) which is maintained by a
state, political subdivision of a state, or any agency or
instrumentality of a state or political subdivision of a state
which agrees to separately account for amounts transferred into
such plan from this Plan. The definition of Eligible Retirement
Plan shall also apply in the case of a distribution to a surviving
Spouse, or to a Spouse or former Spouse who is the alternate payee
under a Qualified Domestic Relations Order, as defined in Code
Section 414(p).
For purposes of the Direct Rollover provisions in paragraph 6.10
of the Plan, any amount that is distributed on account of Hardship
shall not be an Eligible Rollover Distribution and the distributee
may not elect to have any portion of such a distribution paid
directly to an Eligible Retirement Plan.
For purposes of the Direct Rollover provision in paragraph 6.10 of
the Plan, a portion of the distribution shall not fail to be an
Eligible Rollover Distribution merely because the portion consists
of Voluntary After-tax Contributions which are not includible in
gross income. However, such portion may be transferred only to an
individual retirement account or annuity described in Code Section
408(a) or (b), or to a qualified Defined Contribution Plan
described in Code Section 401(a) or 403(a) that agrees to
separately account for amounts so transferred, including separately
accounting for the portion of such distribution which is includible
in gross income and the portion of such distribution which is not
so includible."
10. Article IX of Basic Plan Document #01 entitled "VESTING", is hereby
amended by adding a new paragraph 9.12 entitled "Vesting of Employer
Matching Contributions" which shall read as follows:
"9.12 VESTING OF EMPLOYER MATCHING CONTRIBUTIONS This section shall
apply to Participants with an account balance derived from Employer
Matching Contributions who complete an Hour of Service under the Plan
in a Plan Year beginning after December 31, 2001. If elected by the
Employer in the Adoption Agreement, this section shall also apply to all
other Participants with an account balance derived from Employer Matching
Contributions.
A Participant's account balance derived from Employer Matching
Contributions shall vest as provided in Section XIII(E) of the Adoption
Agreement if elected."
11. Article X of Basic Plan Document #01 entitled "LIMITATIONS ON
ALLOCATIONS", is amended by the addition of the following paragraph 10.6
entitled "Annual Additions" which shall read as follows:
"10.6 ANNUAL ADDITIONS Except to the extent permitted by the Employer
and Code Section 414(v), the Annual Addition that may be
contributed or allocated to a Participant's account under the Plan
for any Limitation Year beginning after December 31, 2001 shall
not exceed the lesser of:
(a) $40,000, as adjusted for increases in the cost-of-living
under Code Section 415(d), or
(b) 100% of the Participant's Compensation, within the meaning
of Code Section 415(c)(3), for the Limitation Year.
The Compensation limit referred to in (b) above shall not apply
to any contribution for medical benefits after separation from
Service [within the meaning of Code Section 401(h) or Code Section
419A(f)(2)] which is otherwise treated as an Annual Addition."
12. Paragraph 11.7(b) of the Basic Plan Document #01 is amended by the
deletion of this paragraph which outlines the multiple use test described
in Treasury Regulations Section 1.401(m)-2.
13. Paragraph 12.9 entitled "Participant Loans" is amended effective January
1, 2002 by deleting the language at subsection (i) and replacing it with
the following:
"(i) Effective for Plan loans made after December 31, 2001, Plan
provisions prohibiting loans to any Owner-Employee or Shareholder-
Employee shall cease to apply."
14. Paragraph 14.2 of the Basic Plan Document #01 entitled "Minimum
Contribution" is amended by the addition of the following paragraphs
(a) and (b) which shall read as follows:
"(a) MATCHING CONTRIBUTIONS - Employer Matching Contributions shall be
taken into account for purposes of satisfying the minimum
contribution requirements of Code Section 416(c)(2). The preceding
sentence shall apply with respect to Matching Contributions under
the Plan or, if the Plan provides that the minimum contribution
requirement shall be met in another Plan, such other Plan.
Employer Matching Contributions that are used to satisfy the
minimum contribution requirements shall be treated as Matching
Contributions for purposes of the Actual Contribution Percentage
Test and other requirements of Code Section 401(m).
(b) CONTRIBUTIONS UNDER OTHER PLANS - The Employer may provide in the
Adoption Agreement that the minimum benefit requirement shall be
met in another plan, including another plan that consists solely
of a cash or deferred arrangement which meets the requirements of
Code Section 401(k)(12) and Matching Contributions which meet the
requirements of Code Section 401(m)(11)."
15. The Top-Heavy requirements of Code Section 416 and Article XIV of the
Basic Plan Document #01 shall not apply in any Plan Year beginning after
December 31, 2001, in which Plan established under the Basic Plan Document
#01 consists solely of a cash or deferred arrangement which meets the
requirements of Code Section 401(k)(12) and Matching Contributions which
meet the requirements of Code Section 401(m)(11).
This paragraph shall apply for purposes of determining whether the Plan
is a Top-Heavy Plan under Code Section 416(g) for Plan Years beginning
after December 31, 2001, and whether the Plan satisfies the minimum
benefits requirements of Code Section 416(c) for such years. This section
amends Article XIV of the Basic Plan Document #01 by the adding paragraph
14.7 entitled "Determination of Top-Heavy Status". The paragraph shall
read as follows:
"14.7 DETERMINATION OF TOP-HEAVY STATUS
(a) DETERMINATION OF PRESENT VALUES AND AMOUNTS - This paragraph 14.7
shall apply for purposes of determining the Present Values of
accrued benefits and the amounts of account balances of Employees
as of the Top-Heavy Determination Date.
(b) Distributions During the Plan Year Ending on the Top-Heavy
Determination Date - The Present Value of accrued benefits and the
amounts of account balances of an Employee as of the Top-Heavy
Determination Date shall be increased by the distributions made
with respect to the Employee under the Plan and any plan aggregated
with this Plan under Code Section 416(g)(2) during the 1-year
period ending on the Top-Heavy Determination Date. The preceding
sentence shall also apply to distributions under a terminated plan
which, had it not been terminated, would have been aggregated with
this Plan under Code Section 416(g)(2)(A)(i). In the case of a
distribution made for a reason other than separation from Service,
death, or Disability, this provision shall be applied by
substituting "5-year period" for "1-year period".
(c) Employees not Performing Services During the Plan Year ending on
the Top-Heavy Determination Date - The accrued benefits and accounts
of any individual who has not performed services for the Employer
during the 1-year period ending on the Top-Heavy Determination Date
shall not be taken into account."
MINIMUM DISTRIBUTION REQUIREMENTS
MODEL AMENDMENT TO THE
PROTOTYPE DEFINED CONTRIBUTION PLAN
BASIC PLAN DOCUMENT #01
The Employer named in the Adoption Agreement hereby amends the Plan to reflect
certain provisions of the Economic Growth and Tax Relief Reconciliation Act of
2001 ("EGTRRA"). This amendment is intended as a good faith compliance with
the requirements of EGTRRA and is to be construed in accordance with EGTRRA and
guidance issued thereunder. Except as otherwise provided, this amendment shall
be effective as of the first day of the first Plan Year beginning after December
31, 2001. This amendment shall supersede the provisions of the Basic Plan
Document #01 to the extent those provisions are inconsistent with the provisions
of this amendment. The Basic Plan Document #01 is hereby amended as follows:
ARTICLE XVII MINIMUM DISTRIBUTION REQUIREMENTS
17.1 EFFECTIVE DATE Unless an earlier effective date is specified in the
Adoption Agreement, the provisions of this Article will apply for purposes of
determining required minimum distributions for calendar years beginning with the
2003 calendar year.
17.2 COORDINATION WITH MINIMUM DISTRIBUTION REQUIREMENTS PREVIOUSLY IN EFFECT
If the Adoption Agreement specifies an effective date of this Article that is
earlier than calendar years beginning with the 2003 calendar year, required
minimum distributions for 2002 under this Article will be determined as follows.
If the total amount of 2002 required minimum distributions under the Plan made
to the distributee prior to the effective date of this Article equals or exceeds
the required minimum distributions determined under this Article, then no
additional distributions will be required to be made for 2002 on or after such
date to the distributee. If the total amount of 2002 required minimum
distributions under the Plan made to the distributee prior to the effective date
of this Article are less than the amount determined under this Article, then
required minimum distributions for 2002 on and after such date will be
determined so that the total amount of required minimum distributions for 2002
made to the distributee will be the amount determined under this Article.
17.3 PRECEDENCE The requirements of this Article will take precedence over
any inconsistent provisions of the Plan.
17.4 REQUIREMENTS OF TREASURY REGULATIONS INCORPORATED All distributions
required under this Article will be determined and made in accordance with the
Treasury Regulations under Code Section 401(a)(9).
17.5 TEFRA SECTION 242(B)(2) ELECTIONS Notwithstanding the other provisions
of this Article, distributions may be made under a designation made before
January 1, 1984, in accordance with Section 242(b)(2) of the Tax Equity and
Fiscal Responsibility Act ("TEFRA") and the provisions of the Plan that relate
to Section 242(b)(2) of TEFRA.
17.6 REQUIRED BEGINNING DATE The Participant's entire interest will be
distributed, or begin to be distributed, to the Participant no later than the
Participant's Required Beginning Date.
17.7 DEATH OF PARTICIPANT BEFORE DISTRIBUTIONS BEGIN If the Participant
dies before distributions begin, the Participant's entire interest will be
distributed, or begin to be distributed, no later than as follows:
(a) If the Participant's surviving Spouse is the Participant's sole
designated Beneficiary, then, except as provided in the Adoption
Agreement, distributions to the surviving Spouse will begin by
December 31 of the calendar year immediately following the calendar
year in which the Participant died, or by December 31 of the
calendar year in which the Participant would have attained age
701/2, if later.
(b) If the Participant's surviving Spouse is not the Participant's sole
designated Beneficiary, then, except as provided in the Adoption
Agreement, distributions to the designated Beneficiary will begin
by December 31 of the calendar year immediately following the
calendar year in which the Participant died.
(c) If there is no designated Beneficiary as of September 30 of the
year following the year of the Participant's death, the
Participant's entire interest will be distributed by December 31
of the calendar year containing the fifth anniversary of the
Participant's death.
(d) If the Participant's surviving Spouse is the Participant's sole
designated Beneficiary and the surviving Spouse dies after the
Participant but before distributions to the surviving Spouse
begin, this paragraph 17.7, other than paragraph 17.7(a), will
apply as if the surviving Spouse were the Participant.
For purposes of this paragraph and paragraphs 17.11 and 17.12, unless paragraph
17.7(d) applies, distributions are considered to begin on the Participant's
Required Beginning Date. If paragraph 17.7(d) applies, distributions are
considered to begin on the date distributions are required to begin to the
surviving Spouse under paragraph 17.7(a). If distributions under an annuity
purchased from an insurance company irrevocably commence to the Participant
before the Participant's Required Beginning Date [or to the Participant's
surviving Spouse before the date distributions are required to begin to the
surviving Spouse under paragraph 17.7(a)], the date distributions are considered
to begin is the date distributions actually commence.
17.8 FORMS OF DISTRIBUTIONS Unless the Participant's interest is distributed
in the form of an annuity purchased from an insurance company or in a single
sum on or before the Required Beginning Date, as of the First Distribution
Calendar Year distributions will be made in accordance with paragraph 17.9
through paragraph 17.12 of this Article. If the Participant's interest is
distributed in the form of an annuity purchased from an insurance company,
distributions thereunder will be made in accordance with the requirements of
Code Section 401(a)(9) of the Treasury Regulations.
17.9 AMOUNT OF REQUIRED MINIMUM DISTRIBUTION FOR EACH DISTRIBUTION CALENDAR
YEAR During the Participant's lifetime, the minimum amount that will be
distributed for each Distribution Calendar Year is the lesser of:
(a) the quotient obtained by dividing the Participant's account balance
by the distribution period in the Uniform Lifetime Table set forth
in Section 1.401(a)(9)-9 of the Treasury Regulations, using the
Participant's age as of the Participant's birthday in the
Distribution Calendar Year; or
(b) if the Participant's sole designated Beneficiary for the
distribution calendar year is the Participant's Spouse, the quotient
obtained by dividing the Participant's account balance by the number
in the Joint and Last Survivor Table set forth in Section
1.401(a)(9)-9 of the Treasury Regulations, using the Participant's
and Spouse's attained ages as of the Participant's and Spouse's
birthdays in the Distribution Calendar Year.
17.10 LIFETIME REQUIRED MINIMUM DISTRIBUTIONS CONTINUE THROUGH YEAR OF
PARTICIPANT'S DEATH Required minimum distributions will be determined under
this paragraph and paragraph 17.9 beginning with the first Distribution Calendar
Year and up to and including the Distribution Calendar Year that includes the
Participant's date of death.
17.11 DEATH ON OR AFTER DISTRIBUTIONS BEGIN
(a) PARTICIPANT SURVIVED BY DESIGNATED BENEFICIARY - If the Participant
dies on or after the date distributions begin and there is a
designated Beneficiary, the minimum amount that will be distributed
for each Distribution Calendar Year after the year of the
Participant's death is the quotient obtained by dividing the
Participant's account balance by the longer of the remaining life
expectancy of the Participant or the remaining life expectancy of
the Participant's designated Beneficiary, determined as follows:
(1) The Participant's remaining life expectancy is calculated
using the age of the Participant in the year of death, reduced
by one for each subsequent year.
(2) If the Participant's surviving Spouse is the Participant's
sole designated Beneficiary, the remaining life expectancy of
the surviving Spouse is calculated for each Distribution
Calendar Year after the year of the Participant's death using
the surviving Spouse's age as of the Spouse's birthday in that
year. For Distribution Calendar Years after the year of the
surviving Spouse's death, the remaining life expectancy of
the surviving Spouse is calculated using the age of the
surviving Spouse as of the Spouse's birthday in the calendar
year of the Spouse's death, reduced by one for each subsequent
calendar year.
(3) If the Participant's surviving Spouse is not the Participant's
sole designated Beneficiary, the designed Beneficiary's
remaining life expectancy is calculated using the age of the
Beneficiary in the year following the year of the
Participant's death, reduced by one for each subsequent year.
(b) NO DESIGNATED BENEFICIARY - If the Participant dies on or after
the date distributions begin and there is no designated Beneficiary
as of September 30 of the year after the year of the Participant's
death, the minimum amount that will be distributed for each
distribution calendar year after the year of the Participant's death
is the quotient obtained by dividing the Participant's account
balance by the Participant's remaining life expectancy calculated
using the age of the Participant in the year of death, reduced by
one for each subsequent year.
17.12 DEATH BEFORE DATE DISTRIBUTIONS BEGIN
(a) PARTICIPANT SURVIVED BY DESIGNATED BENEFICIARY - Except as provided
in the Adoption Agreement, if the Participant dies before the date
distributions begin and there is a designated Beneficiary, the
minimum amount that will be distributed for each distribution
calendar year after the year of the Participant's death is the
quotient obtained by dividing the Participant's account balance by
the remaining life expectancy of the Participant's designated
Beneficiary, determined as provided in paragraph 17.11
(b) NO DESIGNATED BENEFICIARY - If the Participant dies before the
date distributions begin and there is no designated Beneficiary
as of September 30 of the year following the year of the
Participant's death, distribution of the Participant's entire
interest will be completed by December 31 of the calendar year
containing the fifth anniversary of the Participant's death.
(c) DEATH OF SURVIVING SPOUSE BEFORE DISTRIBUTIONS TO SURVIVING SPOUSE
ARE REQUIRED TO BEGIN - If the Participant dies before the date
distributions begin, the Participant's surviving Spouse is the
Participant's sole designated Beneficiary, and the surviving
Spouse dies before distributions are required to begin to the
surviving Spouse under paragraph 17.7(a), this paragraph 17.12
will apply as if the surviving Spouse were the Participant.
17.13 DESIGNATED BENEFICIARY The individual who is designated as the
Beneficiary under paragraph 1.13 of the Basic Plan Document #01 and is the
designated Beneficiary under Code Section 401(a)(9) and Section 1.401(a)(9)-1,
Q&A-4, of the Treasury Regulations.
17.14 DISTRIBUTION CALENDAR YEAR A calendar year for which a minimum
distribution is required. For distributions beginning before the Participant's
death, the First Distribution Calendar Year is the calendar year immediately
preceding the calendar year which contains the Participant's Required Beginning
Date. For distributions beginning after the Participant's death, the First
Distribution Calendar Year is the calendar year in which distributions are
required to begin under paragraph 17.7. The required minimum distribution for
the Participant's First Distribution Calendar Year will be made on or before
the Participant's Required Beginning Date. The required minimum distribution
for other Distribution Calendar Years, including the required minimum
distribution for the Distribution Calendar Year in which the Participant's
Required Beginning Date occurs, will be made on or before December 31 of that
Distribution Calendar Year.
17.15 LIFE EXPECTANCY Life expectancy as computed by use of the Single Life
Table in Section 1.401(a)(9)-9 of the Treasury regulations.
17.16 PARTICIPANT'S ACCOUNT BALANCE The account balance as of the last
Valuation Date in the calendar year immediately preceding the Distribution
Calendar Year (Valuation Calendar Year) increased by the amount of any
contributions made and allocated or forfeitures allocated to the account balance
as of dates in the Valuation Calendar Year after the Valuation Date and
decreased by distributions made in the Valuation Calendar Year after the
Valuation Date. The account balance for the Valuation Calendar year includes
any amounts rolled over or transferred to the Plan either in the Valuation
Calendar Year or in the Distribution Calendar Year if distributed or transferred
in the Valuation Calendar Year.
17.17 REQUIRED BEGINNING DATE The date specified in paragraph 1.88 of the
Basic Plan Document #01.
