Common use of Methods of Distribution Clause in Contracts

Methods of Distribution. (a) The value of the Custodial Account may be distributed in one of the following ways: (1) A single sum payment, in cash and/or in kind, consisting of the entire balance in the Custodial Account; or a single sum payment, in cash and/or in kind, consisting of part of the balance in the Custodial Account with the remainder distributed pursuant to sub-paragraph (b) or (c); (2) In installments, in cash and/or in kind, over a period of years not to exceed the life expectancy of the Employee or the joint life and last survivor expectancy of the Employee and his beneficiary. The installment payments shall be made in approximately equal amounts or approximately equal fractions of the Employee's Custodial Account and may be paid in monthly or other regular increments as elected by the Employee and as agreed to by the Custodian. (3) By the purchase and distribution of an annuity contract, utilizing all available assets of the Custodial Account, from an insurance company designated by the Employee, with either fixed or variable annuity payments for the life of the Employee or, if the Employee so elects, for the lives of the Employee and his beneficiary. Such policy may provide for installment payments over a period measured by the life expectancy of the Employee or the joint life expectancy of the Employee and his beneficiary and the survivor, or over a shorter period. If the Employee elects the method of distribution described in (3) above, the annuity contract must satisfy the requirements of Section 401(a)(9) of the Code. If the Employee elects the method of distribution described in (2), the annual payment required to be made by the Employee's Required Distribution Date is for the calendar year the Employee reached age 70 1/2. Annual payments for subsequent years, including the year the Employee's Required Distribution Date occurs, must be made by December 31 of that year. (4) In the case of an Eligible Rollover Distribution, by a Direct Rollover to an Eligible Retirement Plan, an Eligible Rollover Distribution is any distribution of all or any portion of the balance to the credit of the Employee, except that an Eligible Rollover Distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the Employee or the joint lives (or life expectancies) of the Employee and the Employee's designated beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under Section 401(a)(9) of the Code; and the portion of any distribution that is not includible in gross income. An Eligible Retirement Plan is an individual retirement account describedin Section 408(a) of the Code, an individual retirement annuity described in Section 408(b) of the Code, an annuity or custodial account described in Section 403(b) of the Code. A Direct Rollover is a payment by the Custodian to the Eligible Retirement Plan specified by the Employee. (b) If, and only if, contributions have been made to the Custodial Account under this Agreement after December 31, 1986, the method of distribution (1) may not extend the payment of such Employee's benefits beyond the life expectancy of the Employee or the joint life and last survivor expectancy of the Employee and his beneficiary (determined using attained ages as of the calendar year in which payments commence under Section 1.72-9 of the Treasury Regulations) and (2) if someone other than the Employee's spouse is the beneficiary, then the period of years over which installment payments are to be paid shall be such that any period of years remaining as of the calendar year in which the Employee attains age 70 1/2 or any subsequent calendar year shall meet the minimum distribution incidental benefit requirement which shall be determined in accordance with the regulations promulgated under Section 401(a)(9) of the Code. (c) Notwithstanding the foregoing, if the value of the Custodial Account at the time distribution is to be made or commenced is less than $250, the full amount in the Custodial Account shall be distributed as a single-sum payment in cash. (d) The Employee (or his beneficiary, if applicable) shall be responsible for insuring that distributions are made in accordance with this Agreement and with all requirements of applicable law. The Custodian shall have no responsibility regarding the method and timing of distributions other than to follow the written instructions of the Employee (or his beneficiary, if applicable). (e) In the case of distributions to be made over the life expectancy of the Employee (or over the joint lives of the Employee and his beneficiary or the life expectancy of the beneficiary) in equal or substantially equal annual payments, to determine the minimum annual payments, to determine the minimum annual payment for each year, divide the Employee's entire interest in the Custodial Account as of the close of business on December 31 of the preceding year by the life expectancy of the Employee (or the joint life and last survivor expectancy of the Employee and his beneficiary, or the life expectancy of the beneficiary, whichever applies). In the case of distributions under paragraph 2, determine the initial life expectancy (or joint life and last survivor expectancy) using the attained ages of the Employee and beneficiary as of their birthdays in the year the Employee reaches age 70 1/2. In the case of distributions in accordance with paragraph 4, determine life expectancy using the attained age of the beneficiary as of the beneficiary's birthday in the year distributions are required to commence. The recalculation of the life expectancy of the Employee and/or the Employee's spouse shall only be made at the written election of the Employee. The recalculation of the life expectancy of the Employee's surviving spouse shall only be made at the written election of the surviving spouse. Any recalculation of the Employee's and/or spouse's life expectancy will be done annually using their attained ages as of their birthdays in the year for which the minimum annual payment is being determined. The life expectancy of a beneficiary (other than the spouse) will not be recalculated. The minimum annual payment may be made in a series of installments (e.g., monthly, quarterly, etc.) as long as the total payments for the year made by the date required are not less than the minimum amounts required. (f) If the Employee maintains one or more 403(b) accounts or annuities with any institution other than the Custodian, the Employee may elect to withdraw the minimum distribution required under sub-paragraph (e) above from such other accounts or annuities. (g) Within a reasonable time period before making an Eligible Rollover Distribution, the Custodian shall provide an explanation to the Employee of his right to elect a Direct Rollover and the income tax withholding consequences of not electing a Direct Rollover.

Methods of Distribution. Distribution by the Trustee of the nonforfeitable portion of a Participant's Accounts will be made or commence at the time prescribed by Article IV or Article VII in any one or a combination of the following methods: (a) The value of the Custodial Account may be distributed in one of the following ways:a lump sum; (1) A single sum payment, in cash and/or in kind, consisting of the entire balance in the Custodial Account; or a single sum payment, in cash and/or in kind, consisting of part of the balance in the Custodial Account with the remainder distributed pursuant to sub-paragraph (b) a fixed number of substantially equal annual or (c); (2) In installments, in cash and/or in kind, more frequent installments over a period of years not to exceed exceeding the life expectancy of the Employee or the joint life and last survivor expectancy of the Employee and his beneficiary. The installment payments shall be made in approximately equal amounts or approximately equal fractions of the Employee's Custodial Account and may be paid in monthly or other regular increments as elected by the Employee and as agreed to by the Custodian. (3) By the purchase and distribution of an annuity contract, utilizing all available assets of the Custodial Account, from an insurance company designated by the Employee, with either fixed or variable annuity payments for the life of the Employee or, if the Employee so elects, for the lives of the Employee and his beneficiary. Such policy may provide for installment payments over a period measured by the life expectancy of the Employee Participant or the joint life expectancy of the Employee Participant and his beneficiary; provided that, if such beneficiary is not the Participant's Spouse and is more than 10 years younger than the Participant, the installments shall be paid over a period not exceeding the joint life expectancy of the Participant and a beneficiary 10 years younger than the Participant; or (c) a fixed number of annual installments each of which is equal to the balance in the Participant's Accounts as of the Valuation Date preceding such installment multiplied by a fraction, the numerator of which is one and the survivordenominator of which is the number of remaining installments; provided, or over however, that the present value of the distributions to the Participant, based on his life expectancy at the date the distributions commence, shall exceed 50% of the then present value of the total distributions to be made to the Participant and his beneficiaries; or (d) pursuant to Subparagraph 7.5 of the Plan, a shorter perioddirect rollover to an eligible retirement plan of the portion of the Participant's Accounts that qualifies for such a direct transfer. Each Participant may designate the method of distribution, and may also permit his Beneficiary to designate the method of distribution. If a Participant fails to specify a method of distribution to his Beneficiary, the Employee elects Beneficiary shall designate the method of distribution described in (3) above, the annuity contract must satisfy the requirements of Section 401(a)(9) of the Code. If the Employee elects the method of distribution described in (2), the annual payment required to be made by the Employee's Required Distribution Date is for the calendar year the Employee reached age 70 1/2. Annual payments for subsequent years, including the year the Employee's Required Distribution Date occurs, must be made by December 31 of that year. (4) In the case of an Eligible Rollover Distribution, by a Direct Rollover to an Eligible Retirement Plan, an Eligible Rollover Distribution is any distribution of all or any portion of the balance to the credit of the Employee, except that an Eligible Rollover Distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the Employee or the joint lives (or life expectancies) of the Employee and the Employee's designated beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under Section 401(a)(9) of the Code; and the portion of any distribution that is not includible in gross income. An Eligible Retirement Plan is an individual retirement account describedin Section 408(a) of the Code, an individual retirement annuity described in Section 408(b) of the Code, an annuity or custodial account described in Section 403(b) of the Code. A Direct Rollover is a payment by the Custodian to the Eligible Retirement Plan specified by the Employee. (b) If, and only if, contributions have been made to the Custodial Account under this Agreement after December 31, 1986, the method of distribution (1) may not extend the payment of such Employee's benefits beyond the life expectancy of the Employee or the joint life and last survivor expectancy of the Employee and his beneficiary (determined using attained ages as of the calendar year in which payments commence under Section 1.72-9 of the Treasury Regulations) and (2) if someone other than the Employee's spouse is the beneficiary, then the period of years over which installment payments are to be paid shall be such that any period of years remaining as of the calendar year in which the Employee attains age 70 1/2 or any subsequent calendar year shall meet the minimum distribution incidental benefit requirement which shall be determined in accordance with the regulations promulgated under Section 401(a)(9) of the Code. (c) Notwithstanding the foregoing, if the value of the Custodial Account at the time distribution is to be made or commenced is less than $250, the full amount in the Custodial Account shall be distributed as a single-sum payment in cash. (d) The Employee (or his beneficiary, if applicable) shall be responsible for insuring that distributions are made in accordance with this Agreement and with all requirements of applicable law. The Custodian shall have no responsibility regarding the method and timing of distributions other than to follow the written instructions of the Employee (or his beneficiary, if applicable). (e) In the case of distributions to be made over the life expectancy of the Employee (or over the joint lives of the Employee and his beneficiary or the life expectancy of the beneficiary) in equal or substantially equal annual payments, to determine the minimum annual payments, to determine the minimum annual payment for each year, divide the Employee's entire interest in the Custodial Account as of the close of business on December 31 of the preceding year by the life expectancy of the Employee (or the joint life and last survivor expectancy of the Employee and his beneficiary, or the life expectancy of the beneficiary, whichever applies). In the case of distributions under paragraph 2, determine the initial life expectancy (or joint life and last survivor expectancy) using the attained ages of the Employee and beneficiary as of their birthdays in the year the Employee reaches age 70 1/2. In the case of distributions in accordance with paragraph 4, determine life expectancy using the attained age of the beneficiary as of the beneficiary's birthday in the year distributions are required to commence. The recalculation of the life expectancy of the Employee and/or the Employee's spouse shall only be made at the written election of the Employee. The recalculation of the life expectancy of the Employee's surviving spouse shall only be made at the written election of the surviving spouse. Any recalculation of the Employee's and/or spouse's life expectancy will be done annually using their attained ages as of their birthdays in the year for which the minimum annual payment is being determinedBeneficiary. The life expectancy of a beneficiary (other than Participant, his Spouse or his designated Beneficiary shall be determined by use of the spouse) will expected return multiples contained in the regulations under Section 72 of the Internal Revenue Code. If a Participant so elects, the life expectancy of the Participant and his Spouse shall be recalculated annually. In the absence of such an election, life expectancies shall not be recalculated. The minimum annual payment may be made in a series of installments (e.g., monthly, quarterly, etc.) as long as the total payments for the year made by the date required are not less than the minimum amounts required. (f) If the Employee maintains one or more 403(b) accounts or annuities with any institution other than the Custodian, the Employee may elect to withdraw the minimum distribution required under sub-paragraph (e) above from such other accounts or annuities. (g) Within a reasonable time period before making an Eligible Rollover Distribution, the Custodian shall provide an explanation to the Employee of his right to elect a Direct Rollover and the income tax withholding consequences of not electing a Direct Rollover.