MONETTA FUNDS
PROTOTYPE DEFINED CONTRIBUTION
RETIREMENT PLAN
Profit Sharing Plan AA - Plan No. 01-001 Pension Plan AA - Plan No. 01-002
Table of Contents
Monetta Funds Prototype Defined Contribution
Retirement Plan.....................................................Section A
Adoption Agreement - Standardized
(Profit-Sharing Plan)...............................................Section B
Adoption Agreement - Standardized
(Pension Plan)......................................................Section C
Summary Plan Description............................................Section D
Employee Forms......................................................Section E
SECTION A
MONETTA FUNDS
PROTOTYPE DEFINED CONTRIBUTION
RETIREMENT PLAN
Table of Contents
ARTICLE I. INTRODUCTION............................................... 1
ARTICLE II. DEFINITIONS................................................ 2
ARTICLE III. PARTICIPATION..............................................10
Section 3.1. Participation at Effective Date............................10
Section 3.2. Participation after Effective Date.........................10
Section 3.3. Reentry....................................................10
Section 3.4. Participation by an Owner-Employee of More Than
One Trade or Business......................................10
ARTICLE IV. CONTRIBUTIONS..............................................12
Section 4.1. Employer Profit Sharing Contributions......................12
Section 4.2. Employer Pension Contributions.............................13
Section 4.3. Participant Voluntary Contributions........................14
Section 4.4 Time for Making Contributions..............................14
Section 4.5. Leased Employees...........................................15
Section 4.6. Rollovers and Transfers....................................15
ARTICLE V. CASH OR DEFERRED ARRANGEMENT
(CODE SECTION 401(k))......................................16
Section 5.1. Cash or Deferred Arrangement (Code Section 401(k)).........16
Section 5.2. Elective Deferrals.........................................16
Section 5.3. Matching Contributions.....................................20
Section 5.4. Qualified Matching Contributions and Qualified Non-Elective
Contributions................................................ 23
Section 5.5. Special Distribution Rules................................... 24
Section 5.6. Definitions.................................................. 25
ARTICLE VI SECTION 415 LIMITATIONS...................................... 29
Section 6.1. Employers Maintaining Only this Plan......................... 30
Section 6.2. Employers Maintaining Other Master or Prototype Defined
Contribution Plans......................................... 30
Section 6.3. Employers Maintaining Other Defined Contribution Plans....... 31
Section 6.4. Employers Maintaining Defined Benefit Plans.................. 31
Section 6.5. Definitions.................................................. 31
ARTICLE VII. PARTICIPANTS' ACCOUNTS....................................... 35
Section 7.1. Separate Accounts............................................ 35
Section 7.2. Vesting...................................................... 35
Section 7.3. Computation of Vesting Service............................... 35
Section 7.4. Allocation of Forfeitures.................................... 36
ARTICLE VIII. PAYMENT OF BENEFITS.......................................... 37
Section 8.1. Benefits Payable Under the Plan.............................. 37
Section 8.2. Manner of Distributions...................................... 38
Section 8.3. Commencement of Payments..................................... 42
Section 8.4. Payment of Small Accounts.................................... 46
Section 8.5. Persons Under Legal or Other Disability...................... 46
Section 8.6. Withdrawals from Profit Sharing Plan......................... 46
Section 8.7. Transfer of Benefits to Eligible Retirement Plan............. 47
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ARTICLE IX. ESTABLISHMENT OF CUSTODIAL ACCOUNT; INVESTMENTS............... 49
Section 9.1. Custodial Account............................................. 49
Section 9.2. Receipt of Contributions...................................... 49
Section 9.3. Investment of Account Assets.................................. 49
Section 9.4. Exclusive Benefit............................................. 50
Section 9.5. Expenses...................................................... 50
Section 9.6. Voting........................................................ 50
Section 9.7. Reports of the Custodian and Administrator.................... 50
Section 9.8. Limitation of Custodian's Duties and Liability................ 51
ARTICLE X. AMENDMENT AND TERMINATION..................................... 53
Section 10.1. Amendment..................................................... 53
Section 10.2. Termination................................................... 54
ARTICLE XI. FIDUCIARY RESPONSIBILITIES.................................... 55
Section 11.1. Administrator................................................. 55
Section 11.2. Powers of Administrator....................................... 55
Section 11.3. Records and Reports........................................... 55
Section 11.4. Other Administrative Provisions............................... 55
Section 11.5. Claims Procedure.............................................. 56
Section 11.6. Claims Review Procedure....................................... 56
ARTICLE XII. AMENDMENT AND CONTINUATION OF ORIGINAL PLAN................... 58
ARTICLE XIII. TOP-HEAVY PROVISIONS.......................................... 60
Section 13.1. Effect of Top-Heavy Status.................................... 60
Section 13.2. Additional Definitions........................................ 60
Section 13.3. Minimum Allocations........................................... 62
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Section 13.4. Benefit Limit Change........................................ 63
ARTICLE XIV. MISCELLANEOUS............................................... 64
Section 14.1. Rights of Employees and Participants........................ 64
Section 14.2. Merger With Other Plans..................................... 64
Section 14.3. Non-Alienation of Benefits.................................. 64
Section 14.4. Failure to Qualify.......................................... 64
Section 14.5. Mistake of Fact: Disallowance of Deduction.................. 65
Section 14.6. Participation under Prototype Plan.......................... 65
Section 14.7. Gender...................................................... 65
Section 14.8. Headings.................................................... 65
Section 14.9. Governing Law............................................... 65
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MONETTA FUNDS
PROTOTYPE DEFINED CONTRIBUTION
RETIREMENT PLAN
ARTICLE I.
INTRODUCTION
------------
This Plan, which is made available by Monetta Financial Services, Inc.
has been adopted by the Employer named in the Adoption Agreement(s) as a
qualified money purchase pension and/or profit sharing plan for its eligible
employees which is intended to qualify under Code Section 401(a). The Employer's
Plan shall consist of the following provisions, together with the Adoption
Agreement(s).
1
ARTICLE II.
DEFINITIONS
-----------
Section 2.1. "Account" means the account or accounts maintained by the
Custodian for a Participant, as described in Article VII.
Section 2.2. "Administrator" means the plan administrator and
fiduciary of the Plan with authority and responsibility to control and manage
the operation and administration of the Plan in accordance with its terms and to
comply with the reporting, disclosure and other requirements of ERISA. Unless a
different Administrator is appointed by the Employer, the Administrator shall be
the Employer.
Section 2.3. "Beneficiary" means the person or persons designated by a
Participant or otherwise entitled to receive benefits in the event of the
Participant's death as provided herein. Such designation shall be made in
writing and in such form as may be required by the Administrator, and shall be
filed with the Administrator. Any designation may include contingent or
successive Beneficiaries. Where such designation has been properly made,
distribution of benefits shall be made directly to such Beneficiary or
Beneficiaries. The Beneficiary or Beneficiaries designated by a Participant may
be changed or withdrawn at any time from time to time, by the Participant, but
only by filing with the Administrator a new designation, and revoking all prior
designations. The most recent valid designation on file with the Administrator
at the time of the Participant's death shall be the Beneficiary.
Notwithstanding the foregoing, in the event the Participant is married at the
time of his death, the Beneficiary shall be the Participant's surviving spouse
unless such spouse consented in writing to the designation of an alternative
Beneficiary after notice of the spouse's rights and such consent was witnessed
by a Plan representative appointed by the Administrator or a notary public as
provided in Section 8.2(a) hereof. In the event no valid designation of
Beneficiary is on file with the Administrator at the date of death or no
designated Beneficiary survives him, the Participant's spouse shall be deemed
the Beneficiary; in the further event the Participant is unmarried or his spouse
does not survive him, the Participant's estate shall be deemed to be his
Beneficiary.
Section 2.4. "Break in Service" means a Plan Year in which a
Participant fails to complete at least five hundred one (501) Hours of Service.
Breaks in Service and Years of Service will be measured on the same vesting
computation period.
Section 2.5. "Code" means the Internal Revenue Code of 1986, as
interpreted by applicable regulations and rulings issued pursuant thereto, all
as amended and in effect from time to time. Reference to a Code Section shall
include that Section, and any comparable section or sections of any future
legislation that amends, supplements or supersedes that Section.
Section 2.6. "Compensation" is defined as wages within the meaning of
Section 3401(a) of the Code and all other payments of compensation to the
Employee by the Employee (in the course of the Employer's trade or business) for
which the Employer is required to furnish the Employee a written statement under
Sections 6041(d), 6051(a)(3) and 6052 of the Code, determined without regard to
any rules under Section 3401(a) that limit the
2
remuneration included in wages based on the nature or locations of the
employment or the services performed. For any Self-Employed Individual covered
under the Plan, Compensation shall mean such individual's Earned Income.
For Plan Years beginning after December 31, 1988, the maximum amount
of Compensation taken into account under the Plan for a Participant in any Plan
Year shall not exceed two hundred thousand dollars ($200,000) or such greater
amount as permitted by the Secretary of the Treasury, except that the dollar
increase in effect on January 1 of any calendar year is effective for years
beginning in such calendar year and the first adjustment to the S200,000
limitation is effective on January 1, 1990. If the Plan determines Compensation
on a period of time that contains fewer than 12 calendar months, then the annual
compensation limit is an amount equal to the annual compensation limit for the
calendar year in which the compensation period begins multiplied by the ratio
obtained by dividing the number of full months in the period by 12.
For purposes of this limitation, the family aggregation rules of Code
Section 414(q)(6) shall apply, except that the term "family" shall include only
the spouse of the Participant and any lineal descendants of the Participant who
have not attained age nineteen (19) before the close of such year. If, as a
result of the application of such rules the adjusted two hundred thousand
dollars ($200,000) limitation is exceeded, then (except for purposes of
determining the portion of Compensation up to the integration level if the Plan
provides for permitted disparity), the limitation shall be prorated among the
affected individuals in proportion to each such individual's Compensation as
determined under this Section prior to the application of this limitation. If
Compensation for any prior Plan Year is taken into account in determining an
Employee's contributions or benefits for the current year, the Compensation for
such prior year is subject to the applicable annual compensation limit in effect
for that prior year. For this purpose, for years beginning before January 1,
1990, the applicable annual compensation limit is $200,000.
In addition to other applicable limitations set forth in the plan, and
notwithstanding any other provision of the plan to the contrary, for plan years
beginning on or after January 1, 1994, the annual Compensation of each employee
taken into account under the plan shall not exceed the OBRA '93 annual
compensation limit. The OBRA '93 annual compensation limit is $150,000, as
adjusted by the Commissioner for increases in the cost of living in accordance
with section 401(a)(17)(B) of the Internal Revenue Code. The cost-of-living
adjustment in effect for a calendar year applies to any period, not exceeding
12 months over which compensation is determined (determination period) beginning
in such calendar year. If a determination period consists of fewer than 12
months, the OBRA '93 annual compensation limit will be multiplied by a fraction,
the numerator of which is the number of months in the determination period, and
the denominator of which is 12.
For plan years beginning on or after January 1, 1994, any reference in
this plan to the limitation under section 401(a)(17) of the Code shall mean the
OBRA '93 annual compensation limit set forth in this provision.
If Compensation for any prior determination period is taken into
account in determining an employee's benefits accruing in the current plan year,
the compensation for that prior determination period is subject to OBRA '93
annual compensation limit in effect for that prior determination period. For
this purpose, for determination periods beginning before the first day of the
first plan year beginning on or after January 1, 1994, the OBRA '93 annual
compensation limit is $150,000.
Section 2.7. "Custodial Account" means the account established by the
Custodian, in accordance with Article IX, in the name of the Employer or for
each Participant as elected in the Adoption Agreement.
Section 2.8. "Custodian" means ________________________________, or
any successor thereto.
Section 2.9. "Disability" means a mental or physical condition of
injury or sickness, as determined by the Administrator based upon the report of
a medical examiner satisfactory to the Employer, which prevents a Participant
from carrying out the duties of his position and which is likely to be
permanent. Any such determination by the Administrator shall be made in a
uniform and nondiscriminatory manner.
3
Section 2.10. "Earned Income" means net earnings from self-employment
in the trade or business with respect to which the Plan is established for which
the personal services of the individual are a material income-producing factor.
Net earnings shall be determined without regard to items not included in gross
income and the deductions allocable to such items. Net earnings shall be
reduced by contributions by the Employer to a qualified plan to the extent
deductible under Code Section 404. Net earnings shall be determined with regard
to the deduction allowed to the Employer under Code Section 164(f) for taxable
years beginning after December 31, 1989.
Section 2.11. "Effective Date" means the date as of which this Plan is
initially effective as indicated in item 3 of the Adoption Agreement.
Section 2.12. "Elective Deferrals" means any Employer contributions
made to the Plan at the election of a participating Employee, in lieu of payment
of an equal amount to the participating Employee in cash as Compensation
pursuant to Section 5.2 hereof, and shall include contributions made pursuant to
a salary reduction agreement or other deferral method. With respect to any
taxable year, a participating Employee's Elective Deferrals are the sum of all
employer contributions made on behalf of such Employee pursuant to an election
to defer under any qualified CODA as described in Code Section 401(k), any
simplified employee pension cash or deferred arrangement as described in Code
Section 402(h)(1)(B), any eligible deferred compensation plan under Code Section
457, any plan as described under Code Section 501(c)(18), and any employer
contributions made on the behalf of a participating Employee for the purchase of
an annuity contract under Code Section 403(b) pursuant to a salary reduction
agreement.
Section 2.13. "Employee" means an individual employed by the Employer
(including any eligible Self-Employed Individual) or any Related Employer
adopting this Plan except as excluded pursuant to item 4 of the Adoption
Agreement. The term Employee shall also include any individual who is a Leased
Employee, unless excluded pursuant to item 4 of the Adoption Agreement.
Section 2.14. "Employer" means any entity adopting the Plan.
Section 2.15. "Employer Pension Contributions" means the contributions
made by the Employer pursuant to Section 4.2 hereof if elected in item 6 of the
Adoption Agreement (Pension Plan).
Section 2.16. "Employer Profit Sharing Contributions" means the
contributions made by the Employer pursuant to Section 4.1 hereof if elected in
item 6 of the Adoption Agreement (Profit Sharing Plan).
Section 2.17. "ERISA" means the Employee Retirement Income Security
Act of 1974, as interpreted and applied under regulations and rulings issued
pursuant thereto, all as amended and in effect from time to time.
Section 2.18. "Hour of Service" means:
4
(a) Each hour for which an Employee is paid, or entitled to payment
for the performance of duties for the Employer. These hours shall be credited
to the Employee for the computation period in which the duties are performed;
and
(b) Each hour for which an Employee is paid, or entitled to payment,
by the Employer on account of a period of time during which no duties are
performed (irrespective of whether the employment relationship has terminated)
due to vacation, holiday, illness, incapacity (including disability), layoff,
jury duty, military duty or leave of absence. No more than five hundred one
(501) Hours of service shall be credited under this paragraph for any single
continuous period (whether or not such period occurs in a single computation
period). Hours of Service 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 subsection (a) or subsection (b), as
the case may be, and under this subsection (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) Solely for purposes of determining whether a Break in Service, as
defined in Section 2.4, 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
normal workday of such absence. For purposes of this paragraph, an absence from
work for maternity or paternity reasons means an absence:
(i) by reason of the pregnancy of the individual;
(ii) by reason of a birth of a child of the individual;
(iii) by reason of the placement of a child with the individual in
connection with the adoption of such child by such individual;
or
(iv) for purposes of caring for such child for a period beginning
immediately following such birth or placement.
The Hours of Service credited under this Section 2.18 shall be credited (i) in
the computation period in which the absence begins if the crediting is necessary
to prevent a Break in Service in that period, or (ii) in all other cases the
following computation period.
(e) Hours of Service shall be determined on the basis of actual hours
for which an Employee is paid or entitled to payment unless a different method
of determining Hours of Service is selected in item 4(A) of the Adoption
Agreement.
5
(f) In the event the Employer maintains the plan of a predecessor
employer, service for such predecessor employer shall be treated as service for
the Employer. Hours of Service will be credited for employment with members of
an affiliated service group under Code Section 414(m), a controlled group of
corporations under Code Section 414(b), or a group of trades or businesses under
common control under Code Section 414(c) of which the 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 will also be
credited for any Leased Employee for purposes of this Plan under Code Sections
414(n) or (o) and the Regulations thereunder, unless excluded under item 4 of
the Adoption Agreement.
Section 2.19. "Investment Advisor" means Monetta Financial Services,
Inc.
Section 2.20. "Investment Company" means any regulated investment
company(ies) designated by the Investment Advisor.
Section 2.21. "Investment Company Shares" means the shares of each
Investment Company.
Section 2.22. "Leased Employee" means any individual who is considered
a leased employee within the meaning of Code Sections 414(n) or (o). For
purposes of this Section, a Leased Employee means any person who, pursuant to an
agreement between the Employer and any other person (which may include the
Leased Employee), has performed services for the Employer (or for the Employer
and any Related Employer) in a capacity other than as a common law employee on a
substantially full-time basis for a period of at least one year, and such
services are of a type historically performed by employees in the business field
of the Employer. Notwithstanding the foregoing, no individual shall be
considered to be a Leased Employee if (a) such individual is covered by a money
purchase pension plan providing: (i) a non-integrated employer contribution rate
of at least ten percent (10%) of compensation, as defined in Code Section
415(c)(3), but including amounts contributed pursuant to a salary reduction
agreement which are excludable from the individual's gross income under Code
Sections 125, 402(a)(8), 402(h) or 403(b), (ii) immediate participation, and
(iii) full and immediate vesting and (b) Leased Employees do not constitute more
than twenty percent (20%) of the Employer's nonhighly compensated work force.
Contributions or benefits provided to a Leased Employee by the leasing
organization which are attributable to services performed for the Employer shall
be treated as provided by the Employer.
Section 2.23. "Matching Contribution" means an Employer contribution
made to the Plan or any other defined contribution plan on behalf of a
participating Employee on account of a participating Employee's Elective
Deferrals pursuant to Section 5.3 hereof or on account of any employee
contributions or elective deferrals made to any other plan.
Section 2.24. "Net Profits" means the current or accumulated earnings
of the Employer before federal and state taxes and contributions to this or any
other qualified plan.
Section 2.25. "Normal Retirement Age" means age 65 or such other age
as selected in item 11 of the Adoption Agreement (Profit Sharing Plan) and item
9 of the Adoption
6
Agreement (Pension Plan). If the Employer enforces a mandatory retirement age,
the Normal Retirement Age shall be the lesser of such mandatory retirement age
or the age specified in the Adoption Agreement.
Section 2.26. "Original Plan" means any defined-contribution plan
which meets the requirements of Code Section 401 and referred to in Article XII
of the Plan.
Section 2.27. "Owner-Employee" means an individual who is a sole
proprietor, or who is a partner owning more than ten percent (10%) of either the
capital or profits interest of the partnership.
Section 2.28. "Participant" means each Employee (including any
eligible Self-Employed Individual) who has completed the requirements for
eligibility specified in Section 3.1 hereof. Each such Employee shall become a
Participant as of the earlier of: (i)the first day of the Plan Year or (ii) the
first day of the seventh month of the Plan Year beginning after he completes
such requirements.
Section 2.29. "Participant Voluntary Contributions" means
contributions by a Participant under the Plan pursuant to Section 4.3, if
elected in item 9 of the Adoption Agreement (Profit Sharing Plan) and item 8 of
the Adoption Agreement (Pension Plan).
Section 2.30. "Pension Plan" means the feature of the Plan pursuant to
which the Employer makes Employer Pension Contributions. Such feature applies
only to the extent elected in item 6 of the Adoption Agreement (Pension Plan).
Section 2.31. "Plan" means this prototype profit sharing plan and/or
money purchase pension plan, together with the appropriate Adoption
Agreement(s), as set forth herein and as may be amended from time to time. As
used herein, the term Plan shall mean either or both the money purchase pension
plan and the profit-sharing plan depending on whether the Employer has adopted
one or both plans.
Section 2.32. "Plan Year" means the twelve (12) consecutive month
period designated in item 2 of the Adoption Agreement. The first Plan Year shall
commence on the Effective Date.
Section 2.33. "Profit Sharing Plan" means the features of the Plan
pursuant to which all contributions, other than Employer Pension Contributions,
are made to the Plan, including any contributions pursuant to the cash or
deferred arrangement (Section 401(k)) described in Article V hereof. Such
features apply only to the extent elected in items 6 and/or 8 of the Adoption
Agreement (Profit Sharing Plan).
Section 2.34. "Related Employer" means an organization which, together
with the Employer, constitutes (i) a controlled group of corporations as defined
in Code Section 414(b); (ii) trades or businesses under common control as
defined in Code Section 414(c); (iii) an affiliated service group as defined in
Code Section 414(m); or (iv) a group of employers required to be aggregated
under Code Section 414(o).
7
Section 2.35. "Self-Employed Individual" means an individual who has
Earned Income for the taxable year from the trade or business for which the Plan
was established or who would have had Earned Income but for the fact that the
trade or business had no Net Profits for the taxable year.
Section 2.36. "Valuation Date" means the last day of each Plan Year
and such other times as shall be determined by the Administrator.
Section 2.37. "Year of Employment" means the twelve (12) consecutive
month period, beginning on the date the Employee first performs an Hour of
Service or any anniversary thereof, in which the Employee completes at least one
thousand (1,000) Hours of Service or such lesser number of Hours of Service as
selected in item 4 of the Adoption Agreement.
Section 2.38. "Year of Service" means a Plan Year in which the
Employee completes at least one thousand (1,000) Hours of Service or such lesser
number of Hours of Service as selected in item 7 of the Adoption Agreement.
8
ARTICLE III.
PARTICIPATION
-------------
Section 3.1. Participation at Effective Date. Each Employee shall
become a Participant on the Effective Date, if on the Effective Date such
Employee has completed the number of Years of Employment and has attained age 21
or such lesser age as elected in item 4 of the Adoption Agreement.
Section 3.2. Participation after Effective Date. Each Employee who did
not become a Participant as of the Effective Date, including future Employees,
shall be entitled to become a Participant in accordance with Section 2.28 after
such Employee has completed the number of Years of Employment and has attained
age 21 or such lesser age as elected in item 4 of the Adoption Agreement.
Section 3.3. Reentry. A former Participant shall become a Participant
immediately upon his return to employment with the Employer or his return to an
eligible class of Employees, whichever is applicable. In the event an Employee
who is not a member of the eligible class of Employees becomes a member of the
eligible class, such Employee will become a Participant in accordance with
Section 3.2 above; provided that if the Employee has previously satisfied the
eligibility requirements of Section 3.2, the Employee shall become a Participant
immediately upon becoming a member of the eligible class of Employees.
Section 3.4. Participation by an Owner-Employee of More Than One Trade
or Business.
(a) If this Plan provides contributions or benefits for one or more
Owner-Employees who control both the business with respect to which this Plan is
established, and one or more other trades or businesses, this Plan and the plan
established with respect to such other trades or businesses must, when looked at
as a single plan, satisfy Code Sections 401(a) and (d) with respect to the
employees of this and all such other trades or businesses.
(b) If this Plan provides contributions or benefits for one or more
Owner-Employees who control one or more other trades or businesses, the
employees of each such other trade or business must be included in a plan which
satisfies Code Section 401(a) and (d) and which provides contributions and
benefits not less favorable than provided for such Owner-Employees under this
Plan.
(c) If an individual is covered as an Owner-Employee under the plans
of two or more trades or businesses which he does not control, and such
individual controls a trade or business, then the contributions or benefits of
the employees under the plan of the trade or business which he or she does
control must be as favorable as those provided for him or her under the most
favorable plan of the trade or business which he or she does not control.
(d) For purposes of the preceding subparagraphs, an Owner-Employee, or
two or more Owner-Employees, shall be considered to control a trade or business
if such Owner-
9
Employee, or such two or more Owner-Employees together, own the entire interest
in an unincorporated trade or business, or, in the case of a partnership, own
more than fifty percent (50%) of either the capital interest or the profits
interest in such partnership. For purposes of the preceding sentence, an Owner-
Employee, or two or more Owner-Employees, shall be treated as owning any
interest in a partnership which is owned, directly or indirectly, by a
partnership which such Owner-Employee, or such two or more Owner-Employees, are
considered to control within the meaning of the preceding sentence.
(e) Employees and Owner-Employees of trades or businesses which are
under common control (within the meaning of Code Section 414(c)) and Employees
and Owner-Employees of the members of an affiliated service group (within the
meaning of Code Section 414(m)) or of a group of aggregated employers (under
Code Section 414(o)) will be treated as employed by a single Employer for
purposes of employee benefit requirements of Code Section 414(m) (4).
10
ARTICLE IV.
CONTRIBUTIONS
-------------
Section 4.1. Employer Profit Sharing Contributions.
(a) If elected in item 6 of the Adoption Agreement (Profit Sharing
Plan), the Employer shall make an Employer Profit Sharing Contribution for each
Plan Year ending on or after the Effective Date in the amount determined under
such Adoption Agreement.
(b) The total amount of such Employer Profit Sharing Contribution for
a Plan Year shall be allocated to the Account of each eligible Participant as
follows:
(i) Unless otherwise elected in item 6(C) of the Adoption Agreement,
the total amount of such Employer Profit Sharing Contribution shall be allocated
based on the ratio that such eligible Participant's Compensation and/or Earned
Income for the Plan Year bears to the total Compensation and Earned Income of
all eligible Participants for the Plan Year.
(ii) If the Integration Formula is selected in item 6(C) of the
Adoption Agreement, the total amount of such Employer Profit Sharing
Contribution shall be allocated based on the ratio that such eligible
Participant's Compensation and/or Earned Income for the Plan Year in excess of
the integration level for the Plan Year bears to the total Compensation and
Earned Income for all eligible Participants in excess of the integration level
for the Plan Year; provided, however, that contributions allocated to a
Participant with respect to Compensation and/or Earned Income in excess of the
integration level shall not represent a greater percentage of such excess
Compensation and/or Earned Income than the lesser of
(A) 200% of the base contribution percentage, or
(B) the base contribution percentage plus the greater of
(I) 5.7%, or
(II) the rate of tax under Code Section 3111 (a) which is
attributable to old-age insurance in effect at the
beginning of the Plan Year.
Any Employer Profit Sharing Contribution remaining after the
allocation in this subsection (ii) shall be allocated in accordance with
subsection (i) above. The "integration level" shall be the taxable wage base or
such lesser level of Compensation and/or Earned Income selected in item 6(C) of
the Adoption Agreement. The "base contribution percentage" shall mean the
percentage of Compensation and/or Earned Income which is contributed under the
Plan with respect to each Participant's Compensation and/or Earned Income not in
excess of the integration level.
If the integration level exceeds the greater of ten thousand dollars
($10,000) or one-fifth (1/5) of the taxable wage base but is not more than
eighty percent (80%) of the taxable wage base, the percentage referred to in (I)
above shall be reduced to 4.3% and a proportionate
11
reduction shall be made to the rate described in (II) above. If the integration
level is more than eighty percent (80%) but less than one hundred percent (100%)
of the taxable wage base, the percentage referred to in (I) above shall be
reduced to 5.4% and a proportionate reduction shall be made to the rate
described in (II) above. The "taxable wage base" shall be the maximum amount of
earnings which may be considered wages for a year under Code Section 3121(a)(1)
in effect as of the beginning of the applicable Plan Year.
Notwithstanding the above, for any Plan Year in which the Plan is top-
heavy (as defined in Section 13.1 hereof) the Employer Profit Sharing
Contribution shall be allocated
(A) first, to each eligible Participant based on the ratio that such
Participant's Compensation and/or Earned Income for the Plan Year
bears to the total Compensation and Earned Income of all eligible
Participants for the Plan Year, but not more than three percent
(3%) of such Participant's Compensation and/or Earned Income,
(B) second, to each eligible Participant based on the ratio that such
Participant's Compensation and/or Earned Income in excess of the
integration level for the Plan Year bears to the total
Compensation and Earned Income of all eligible Participants in
excess of the integration level for the Plan Year, but not more
than three percent (3%) of such Participant's excess
Compensation and/or Earned Income, and
(C) any remaining Employer Profit Sharing Contribution shall be
allocated pursuant to the provisions of this subsection (ii)
above.
(c) A Participant will be considered eligible for an allocation of
the Employer Profit Sharing Contribution if the Participant (i) is employed by
the Employer on the last day of the Plan Year or (ii) has completed at least
Five Hundred one (501) Hours of Service during the Plan Year.
(d) If elected in item 6(B) of the Adoption Agreement, Employer
Profit Sharing Contributions for a Plan Year shall not exceed the Net Profits of
the Employer for such Plan Year.
Section 4.2. Employer Pension Contributions.
(a) If elected in item 6 of the Adoption Agreement (Pension Plan),
the Employer shall make an Employer Pension Contribution for each eligible
Participant for each Plan Year ending on or after the Effective Date in an
amount determined under such Adoption Agreement.
(b) The total amount of such Employer Pension Contribution for a Plan
Year shall be allocated to the Account of each eligible Participant as follows:
12
(i) Unless otherwise elected in item 6(B) of the Adoption Agreement,
each eligible Participant shall be allocated an amount equal to the percentage
of such eligible Participant's Compensation and/or Earned Income as specified in
the Adoption Agreement.
(ii) If the Integration Formula is selected in item 6(B) of the
Adoption Agreement, the total amount of such Employer Pension Contribution shall
be allocated in accordance with the method described in Section 4.l (b)(ii)
above. Notwithstanding the foregoing, if the Integration Formula is selected
under the Profit Sharing Plan, the Employer Pension Contribution shall be
allocated in accordance with subsection (b)(i) above.
(c) A Participant will be considered eligible for an Employer Pension
Contribution if the Participant (i) is employed by the Employer on the last day
of the Plan Year or (ii) has completed at least Five Hundred one (501) Hours of
Service during the Plan Year.
Section 4.3. Participant Voluntary Contributions.
(a) If elected in item 9 of the Adoption Agreement (Profit Sharing
Plan) or item 8 of the Adoption Agreement (Pension Plan), a Participant may
voluntarily contribute to the Plan an amount up to ten percent (10%) of his
aggregate Compensation for all years since becoming a Participant under this
Plan and all other qualified plans of the Employer. Any Participant Voluntary
Contributions shall be limited in accordance with the provisions of Section 5.3,
even if the Employer does not elect the Cash or Deferred Arrangement (Section
401(k)) under item 8 of the Adoption Agreement (Profit Sharing Plan). If the
Profit Sharing Plan is elected, all Participant Voluntary Contributions shall be
deemed made to such plan. Participant Voluntary Contributions shall be limited
to Participants who are not highly compensated employees (within the meaning of
Code Section 414(q)) if elected in the Adoption Agreement.
(b) A Participant shall be entitled to withdraw from his appropriate
Account at any time upon thirty (30) days' notice from the Administrator to the
Custodian (which notice shall specify the amount of the withdrawal), a sum not
in excess of the capital amount contributed by him as Participant Voluntary
Contributions under the provisions of this Section 4.3, or the value of such
Account, whichever is less, provided that no ordinary income or capital gains
attributable to such contributions shall be subject to withdrawal.
Notwithstanding anything to the contrary herein, (i) all withdrawals are subject
to the provisions of Article VIII, and (ii) no forfeiture shall occur solely as
a result of a Participant's withdrawal of all or any portion of his Participant
Voluntary Contributions.
(c) No deductible voluntary employee contributions may be made for
taxable years beginning after December 31, 1986. Such contributions made prior
to that date will be maintained in a separate Account which will be
nonforfeitable at all times. The Account will share in the gains or losses in
the same manner as described in Section 9.3 of the Plan. Subject to Section 8.2,
a Participant may withdraw any part of the deductible voluntary contribution
Account by making a written application to the Administrator.
Section 4.4. Time for Making Contributions. Employer Pension
Contributions and Employer Profit Sharing Contributions must be made no later
than the due date, including
13
extensions thereof, for filing the Employer's Federal income tax return for the
year coincident with or within which the Plan Year ends (or such later time as
authorized by Treasury Regulations). Participant Voluntary Contributions for any
Plan Year shall be made no later than thirty (30) days after the end of such
Plan Year. The Employer may establish a payroll deduction system or other
procedure to assist the making of Participant Voluntary Contributions and shall
transfer such contributions to the Custodian as soon as practicable after
collected.
Section 4.5. Leased Employees. Contributions or benefits provided to
a Leased Employee by the leasing organization (within the meaning of Code
Section 414(n)) which are attributable to services performed for the Employer
shall be treated as provided by the Employer for purposes of this Plan.
Section 4.6. Rollovers and Transfers. In the discretion of the
Administrator according to such uniform and nondiscriminatory rules established
by the Administrator, and in accordance with Sections 402 and 408 of the Code, a
Participant may make a rollover to the Plan or the Plan may accept a direct
transfer (including voluntary after-tax contributions) from another plan
qualified under Section 401(a) of the Code or from an individual retirement
account. If the Employer has adopted the Profit Sharing Plan, any rollover or
transfer shall be made to such Plan.
14
ARTICLE V. CASH OR DEFERRED ARRANGEMENT
----------------------------------------
(CODE SECTION 401(k))
----------------------
Section 5.1. Cash or Deferred Arrangement (Code Section 401(k)). The
provisions of this Article shall be effective as of the first day of the Plan
Year in which this cash or deferred arrangement is elected in item 8 of the
Adoption Agreement (Profit Sharing Plan). Under no circumstances shall the
provisions of this Article apply prior to the time specified in the preceding
sentence.
Section 5.2. Elective Deferrals. (a) Election. (i) An Employee who
has satisfied the minimum age and service requirements set forth in item 8(A) of
the Adoption Agreement (Profit Sharing Plan) may elect to have Elective
Deferrals made to the Plan pursuant to a salary reduction agreement to the
extent permitted in item 8(A) of the Adoption Agreement (Profit Sharing Plan).
Such an election shall be effective as of the time specified in item 8(A) of the
Adoption Agreement (Profit Sharing Plan) and may not be made effective
retroactively.
(ii) An eligible Employee may also base Elective Deferrals, to the
extent provided in item 8(A) of the Adoption Agreement (Profit Sharing Plan), on
cash bonuses that, at the Employee's election, may be contributed to the Plan or
received by the Employee. Such an election shall be effective as of the time
specified in item 8(A) of the Adoption Agreement (Profit Sharing Plan) and may
not be made effective retroactively.
(b) Change in Rate. The rate at which Elective Deferrals are made
shall remain in effect until modified in accordance with item 8(A) of the
Adoption Agreement (Profit Sharing Plan). Notwithstanding the foregoing,
Elective Deferrals may be suspended entirely by an Employee at any time by
written notice to the Administrator. Any such suspension shall be effective as
soon as administratively practicable following the Administrator's receipt of
such notice.
(c) Vesting. A Participant shall at all times have a fully vested and
nonforfeitable interest in his Elective Deferrals.
(d) Excess Elective Deferrals. (i) No Participating Employee shall be
permitted to have Elective Deferrals made under this Plan or any other qualified
plan maintained by the Employer during any taxable year pursuant to Code
Sections 401(k), 408(k) or 403(b) in excess of the dollar limitation contained
in Code Section 402(g) in effect at the beginning of such taxable year.
(ii) A Participating Employee may assign to the Plan any Excess
Elective Deferrals made during a taxable year of such Employee by notifying the
Administrator on or before the date specified below of the Excess Elective
Deferrals to be assigned to the Plan. Notwithstanding any other provision of the
Plan, Excess Elective Deferrals, plus any income and minus any loss allocable
thereto, may be distributed no later than April 15 to any Participating Employee
to whose Accounts Excess Elective Deferrals were assigned for the preceding year
and who claims Excess Elective Deferrals for such taxable year. A Participating
Employee's claim for Excess Elective Deferrals shall be made in writing and
shall be submitted to the
15
Administrator not later than the March 1 immediately preceding the relevant
April 15. Such claim shall specify the amount of the Participating Employee's
Excess Elective Deferrals for the preceding taxable year and shall be
accompanied by the Participating Employee's written statement that if such
amounts are not distributed, such Excess Elective Deferrals, when added to
amounts deferred under other plans or arrangements described in Code Sections
401(k), 408(k) or 403(b), exceed the limit imposed on the Participating Employee
by Code Section 402(g) for the year of the deferral.
(iii) 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:
(A) income or loss allocable to the participating Employee's Elective
Deferrals Account for the taxable year for which the Excess
Elective Deferrals occurred multiplied by a fraction, the
numerator of which is such Participating Employee's Excess
Elective Deferrals for such taxable year and the denominator of
which is such Participating Employee's Elective Deferrals Account
balance as of the end of the taxable year without regard to any
income or loss occurring during such taxable year; and
(B) income or loss allocable to the Participating Employee's Elective
Deferrals Account for the period between the end of such taxable
year and the date of distribution under (A) above; or, at the
option of the Employer, ten percent (10%) of the amount
determined under (A) above multiplied by the number of whole
calendar months between the end of such taxable year and the date
of distribution, counting the month of distribution if
distribution occurs after the fifteenth (l5th) of such month.
The amount of Excess Elective Deferrals that may be distributed with respect to
a Participating Employee shall be reduced by any Excess Contributions previously
distributed or recharacterized with respect to such Participating Employee for
the Plan Year beginning with or within such taxable year. In no event may the
amount distributed exceed the Participating Employee's total Elective Deferrals
for such taxable year.
(e) Actual Deferral Percentage. (i) The Actual Deferral Percentage
for Participating Employees who are Highly Compensated Employees for each Plan
Year and the Actual Deferral Percentage for Participating Employees who are not
Highly Compensated Employees for the same Plan Year must satisfy one of the
following tests:
(A) The Actual Deferral Percentage for Participating Employees who
are Highly Compensated Employees for the Plan Year shall not
exceed the Actual Deferral Percentage for Participating Employees
who are not Highly Compensated Employees for the same Plan Year
multiplied by 1.25; or
(B) The Actual Deferral Percentage for Participating Employees who
are Highly Compensated Employees for the Plan Year shall not
exceed the
16
Actual Deferral Percentage for Participating Employees who are
not Highly Compensated Employees for the same Plan Year
multiplied by 2.0, provided that the Actual Deferral Percentage
for Participating Employees who are Highly Compensated Employees
does not exceed the Actual Deferral Percentage for Participating
Employees who are not Highly Compensated Employees by more than
two (2) percentage points.
(ii) The Actual Deferral Percentage for any Participating Employee
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) allocated to his Accounts under two or more
arrangements described in Code Section 401(k), that are maintained by the
Employer, shall be determined as if such Elective Deferrals (and, 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 or more cash or deferred arrangements that have different
Plan Years, contributions for such employee shall be aggregated for purposes of
this subsection (e). Contributions which are required to be aggregated are any
contributions made under all cash or deferred arrangements ending with or within
the same calendar year.
(iii) In the event that the Plan satisfies the requirements of Code
Sections 401(k), 401(a)(4) or 410(b) only if aggregated with one or more other
plans, or if one or more other plans satisfy the requirements of such Code
Sections only if aggregated with this Plan, then this subsection shall be
applied by determining the Actual Deferral Percentage of Participating Employees
as if all such plans were a single plan. For Plan Years beginning after December
31, 1989, plans may be aggregated in order to satisfy Code Section 401(k) only
if they have the same Plan Year.
(iv) For purposes of determining the Actual Deferral Percentage of a
Participating Employee who is a five (5) percent owner or one of the ten (10)
most highly-paid Highly Compensated Employees, the Elective Deferrals (and
Qualified Non-Elective Contributions and Qualified Matching Contributions, or
both) and Compensation of such Participating Employee shall include the Elective
Deferrals (and, if applicable, Qualified Non-Elective Contributions and
Qualified Matching Contributions, or both) and Compensation for the Plan Year of
Family Members. Family Members, with respect to such Highly Compensated
Employees, shall be disregarded as separate employees in determining the Actual
Deferral Percentage both for Participating Employees who are not Highly
Compensated Employees and for Participating Employees who are Highly Compensated
Employees.
(v) For purposes of determining the Actual Deferral Percentage test,
Elective Deferrals, Qualified Non-Elective Contributions and Qualified Matching
Contributions must be made before the last day of the twelve-month period
immediately following the Plan Year to which such contributions relate.
17
(vi) The Employer shall maintain records sufficient to demonstrate
satisfaction of the Actual Deferral Percentage test and the amount of Qualified
Non-Elective Contributions or Qualified Matching Contributions, or both, used in
such test.
(vii) The determination and treatment of the Actual Deferral
Percentage amounts of any Participating Employee shall satisfy such other
requirements as may be prescribed by the Secretary of the Treasury.
(f) Distribution of Excess Contributions. (i) Notwithstanding any
other provision of this Plan, Excess Contributions, plus any income and minus
any loss allocable thereto, shall be distributed no later than the last day of
each Plan Year to Participating Employees to whose Accounts such Excess
Contributions were allocated for the preceding Plan Year. If such excess amounts
are distributed more than two and one-half (2-1/2) months after the last day of
the Plan Year in which such excess amounts arose, a ten percent (10%) excise tax
will be imposed on the Employer with respect to such amounts. Such distributions
shall be made to Highly Compensated Employees on the basis of the respective
portions of the Excess Contributions attributable to each of such Employees.
Excess Contributions shall be allocated to Participating Employees who are
subject to the family member aggregation rules of Code Section 414(q)(6) in the
manner prescribed by the regulations. Excess Contributions (including any
amounts recharacterized) shall be treated as Annual Additions for purposes of
Article VI of the Plan.
(ii) Excess Contributions shall be adjusted for any income or loss up
to the date of distribution. The income or loss allocable to Excess
Contributions is the sum of:
(A) income or loss allocable to the Participating Employee's Elective
Deferrals Account (and, if applicable, the Qualified Non-Elective
Contributions Account or the Qualified Matching Contributions
Account, or both) for the Plan Year for which the Excess
Contributions occurred multiplied by a fraction, the numerator of
which is such Participating Employee's Excess Contributions for
such Plan Year and the denominator of which is such Participating
Employee's Account balance(s) attributable to Elective Deferrals
(and Qualified Non-Elective Contributions or Qualified Matching
Contributions, or both) as of the end of the Plan Year without
regard to any income or loss occurring during such Plan Year; and
(B) income or loss allocable to the Participant's Elective Deferrals
Account (and, if applicable, the Qualified Non-Elective
Contribution Account or the Qualified Matching Contribution
Account, or both) for the period between the end of such Plan
Year and the date of distribution multiplied by the fraction
determined under (A) above; or, at the option of the Employer,
ten percent (10%) of the amount determined under (A) above
multiplied by the number of whole calendar months between the end
of such Plan Year and the date of distribution, counting the
month of distribution if distribution occurs after the fifteenth
(15th) of such month.
18
(iii) Excess Contributions shall be distributed from the
Participating Employee's Elective Deferrals Account and Qualified Matching
Contributions Account (if applicable) in proportion to the Participating
Employee's Elective Deferrals and Qualified Matching Contributions (to the
extent used in the Actual Deferral Percentage test) for the Plan Year. Excess
Contributions shall be distributed from the Participating Employee's Qualified
Non-Elective Contributions Account only to the extent that such Excess
Contributions exceed the balance in the Participating Employee's Elective
Deferrals Account and Matching Contributions Account.
(g) Recharacterization. (i) A Participating Employee may treat his
Excess Contributions as an amount distributed to the Participating Employee and
then contributed by the Participating Employee 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 Participant Voluntary Contributions would exceed any stated limit under
the Plan on Participant Voluntary Contributions. Recharactenzing Excess
Contributions shall be limited to Participants who are not Highly Compensated
Employees if elected in the Adoption Agreement.
(ii) Recharacterization must occur no later than two and one-half (2-
1/2) months after the end of the Plan Year in which such Excess Contributions
arose and is deemed to occur no earlier than the date the last Highly
Compensated Employee is informed in writing of the amount recharacterized and
the consequences thereof. Recharacterized amounts will be taxable to the
Participating Employee for such Participating Employee's taxable year in which
the Participating Employee would have received them in cash.
Section 5.3. Matching Contributions. (a) The Employer shall make
employer Matching Contributions to the Plan to the extent elected in item 8(B)
of the Adoption Agreement (Profit Sharing Plan).
(b) A Participant shall have a vested interest in his Matching
Contributions Account as determined under the vesting schedule elected in item
8(B) of the Adoption Agreement (Profit Sharing Plan). Forfeitures derived from
Matching Contributions which become available because of the vesting provisions
above, shall be applied to reduce the Employer Matching Contributions that would
otherwise be due for the Plan Year, or subsequent Plan Years.
(c) Actual Contribution Percentage. (i) The Actual Contribution
Percentage for Participating Employees who are Highly Compensated Employees for
each Plan Year and the Actual Contribution Percentage for Participating
Employees who are not Highly Compensated Employees for the same Plan Year must
satisfy one of the following tests:
(A) The Actual Contribution Percentage for Participating Employees
who are Highly Compensated Employees for the Plan Year shall not
exceed the Actual Contribution Percentage for Participating
Employees who are not
19
Highly Compensated Employees for the same Plan Year multiplied by
1.25; or
(B) The Actual Contribution Percentage for Participating Employees
who are Highly Compensated Employees for the Plan Year shall not
exceed the Actual Contribution Percentage for Participating
Employees who are not Highly Compensated Employees for the same
Plan Year multiplied by two (2), provided that the Actual
Contribution Percentage for Participating Employees who are
Highly Compensated Employees does not exceed the Actual
Contribution Percentage for Participating Employees who are not
Highly Compensated Employees by more than two (2) percentage
points.
(ii) If one or more Highly Compensated Employees participate in both
a cash or deferred arrangement and a plan subject to the Actual Contribution
Percentage test maintained by the Employer and the sum of the Actual Deferral
Percentage and the Actual Contribution Percentage of those Highly Compensated
Employees subject to either or both tests exceeds the Aggregate Limit, then the
Actual Contribution Percentage of those Highly Compensated Employees who also
participate in a cash or deferred arrangement will be reduced (beginning with
such Highly Compensated Employee whose Actual Contribution Percentage is the
highest) so that the limit is not exceeded. The amount by which each Highly
Compensated Employee's Contribution Percentage Amount is reduced shall be
treated as an Excess Aggregate Contribution. The Actual Deferral Percentage and
the Actual Contribution Percentage of the Highly Compensated Employees are
determined after any corrections required to meet the Actual Deferral Percentage
and the Actual Contribution Percentage tests. Multiple use does not occur if
both the Actual Deferral Percentage and the Actual Contribution Percentage of
the Highly Compensated Employees does not exceed 1.25 multiplied by the Actual
Deferral Percentage and the Actual Contribution Percentage of the Participating
Employees who are not Highly Compensated Employees.
(iii) For purposes of this subsection, the Contribution Percentage
for any Participating Employee who is a Highly Compensated Employee and who is
eligible to have Contribution Percentage Amounts allocated to his account under
two or more plans described in Code Section 401(a), or arrangements described in
Code Section 401(k) that are maintained by the Employer, shall be determined as
if the total of such Contribution Percentage Amounts was made under each plan.
If a Highly Compensated Employee participates in two or more cash or deferred
arrangements that have different plan years, all cash or deferred arrangements
ending with or within the same calendar year shall be treated as a single
arrangement.
(iv) In the event that this Plan satisfies the requirements of Code
Sections 401(m), 401(a)(4) or 410(b) only if aggregated with one or more other
plans, or if one or more other plans satisfy the requirements of such Code
Sections only if aggregated with this Plan, then this subsection shall be
applied by determining the Contribution Percentage of employees as if all such
plans were a single plan. For plan years beginning after December 31, 1989,
plans may be aggregated in order to satisfy Code Section 401(m) only if they
have the same plan year.
20
(v) For purposes of determining the Contribution Percentage of a
Participating Employee who is a five percent owner or one of the ten (l0) most
highly-paid Highly Compensated Employees, the Contribution Percentage Amounts
and Compensation of such Participating Employee shall include the Contribution
Percentage Amounts and Compensation for the Plan Year of Family Members. Family
Members, with respect to Highly Compensated Employees, shall be disregarded as
separate employees in determining the Contribution Percentage both for
Participating Employees who are not Highly Compensated Employees and for
Participating Employees who are Highly Compensated Employees.
(vi) For purposes of determining the Contribution Percentage test,
Employee Contributions are considered to have been made in the Plan Year in
which contributed to the Plan. Matching Contributions and Qualified Non-Elective
Contributions shall be considered made for a Plan Year if made no later than the
end of the twelve-month period beginning on the day after the close of the Plan
Year.
(vii) The Employer shall maintain records sufficient to demonstrate
satisfaction of the Actual Contribution Percentage test and the amount of
Qualified Non-Elective Contributions or Qualified Matching Contributions, or
both, used in such test.
(viii) The determination and treatment of the Contribution Percentage
of any Participating Employee shall satisfy such other requirements as may be
prescribed by the Secretary of the Treasury.
(d) Distribution of Excess Aggregate Contributions. (i)
Notwithstanding any other provision of this Plan, Excess Aggregate
Contributions, plus any income and minus any loss allocable thereto, shall be
forfeited, if forfeitable, or if not forfeitable, distributed no later than the
last day of each Plan Year to Participating Employees to whose Accounts such
Excess Aggregate Contributions were allocated for the preceding Plan Year.
Excess Aggregate Contributions shall be allocated to Participating Employees who
are subject to the family member aggregation rules of Code Section 414(q)(6) in
the manner prescribed by the regulations. If such Excess Aggregate Contributions
are distributed more than two and one-half (2 1/2) months after the last day of
the Plan Year in which such excess amounts arose, a ten percent (10%) excise tax
will be imposed on the Employer with respect to those amounts. Excess Aggregate
Contributions shall be treated as Annual Additions for purposes of Article VI of
the Plan.
(ii) Excess Aggregate Contributions shall be adjusted for any income
or loss up to the date of distribution. The income or loss allocable to Excess
Aggregate Contributions is the sum of:
(A) income or loss allocable to the Participating Employee's
Participant Voluntary Contributions Account, Matching
Contributions Account, Qualified Matching Contribution Account
(if any, and if all amounts therein are not used in the Actual
Deferral Percentage test) and, if applicable, Qualified Non-
Elective Contributions Account and Elective Deferrals Account for
the Plan Year for which the Excess Aggregate
21
Contributions occurred multiplied by a fraction, the numerator of
which is such Participating Employee's Excess Aggregate
Contributions for such Plan Year and the denominator of which is
the Participating Employee's Account balance(s) attributable to
Contribution Percentage Amounts as of the end of the Plan Year
without regard to any income or loss occurring during such Plan
Year; and
(B) income or loss allocable to the Participating Employee's
Participant Voluntary Contribution Account, Matching
Contributions Account, Qualified Matching Contribution Account
(if any, and if all amounts therein are not used in the Actual
Deferral Percentage test) and, if applicable, Qualified Non-
Elective Contributions Account and Elective Deferrals Account for
the period between the end of such Plan Year and the date of
distribution multiplied by the fraction determined under (A)
above; or, at the election of the Employer, ten percent (10%) of
the amount determined under (A) above multiplied by the number of
whole calendar months between the end of such Plan Year and the
date of distribution, counting the month of distribution if
distribution occurs after the fifteenth (15th) of such month.
(iii) Forfeitures of Excess Aggregate Contributions shall be applied
to reduce Employer contributions for subsequent Plan Years.
(iv) Excess Aggregate Contributions shall be forfeited, if
forfeitable, or distributed on a pro rata basis from the Participating
Employee's Participant Voluntary Contributions Account, Matching Contributions
Account and Qualified Matching Contribution Account (and, if applicable, the
Participating Employee's Qualified Non-Elective Contributions Account or
Elective Deferrals Account, or both).
Section 5.4. Qualified Matching Contributions and Qualified Non-
Elective Contributions.
(a) Qualified Matching Contributions. The Employer may elect to make
Qualified Matching Contributions under the Plan in item 8(C) of the Adoption
Agreement. Qualified Matching Contributions may be made in lieu of distributing
Excess Contributions as provided in Section 5.2(f) hereof. Qualified Matching
Contributions may be either (i) additional amounts contributed to the Plan by
the Employer and allocated to the Accounts of Participating Employees who are
not Highly Compensated Employees based on such Employees' Elective Deferrals or
(ii) Matching Contributions otherwise made to the Plan pursuant to Section
5.3(a) hereof which the Employer designates as Qualified Matching Contributions.
The amount of Qualified Matching Contributions (if any) shall be determined by
the Employer for each year. All Qualifying Matching Contributions shall be used
to satisfy the Actual Deferral Percentage test pursuant to regulations under the
Code.
(b) The Employer may elect to make Qualified Non-Elective
Contributions under the Plan in item 8(C) of the Adoption Agreement. Qualified
Non-Elective Contributions
22
may be made in lieu of distributing Excess Contributions as provided in Section
5.2(f) or Excess Aggregate Contributions as provided in Section 5.3(d) hereof.
Qualified Non-Elective Contributions may be either (i) additional amounts
contributed to the Plan by the Employer and allocated to the Accounts of
Participating Employees who are not Highly Compensated Employees based on such
Employees' Compensation or (ii) Profit Sharing Contributions otherwise made to
the Plan pursuant to Section 4.l(a) hereof which the Employer designates as
Qualified Non-Elective Contributions. The amount of Qualified Non-Elective
Contributions (if any) shall be determined by the Employer for each year. All
Qualified Non-Elective Contributions shall be used to satisfy either the Actual
Deferral Percentage test or the Average Contribution Percentage test, or both,
pursuant to regulations under the Code.
(c) Separate accounts for Qualified Non-Elective Contributions and
Qualified Matching Contributions will be maintained for each Participant
consistent with Section 7.1 hereof. Each account will be credited with the
applicable contributions and earnings thereon.
(d) For purposes of the special distribution rules in Section 5.5,
Qualified Matching Contributions and Qualified Non-Elective Contributions shall
be treated as Elective Deferrals.
(e) Qualified Matching Contributions and Qualified Non-Elective
Contributions shall be appropriately designated when contributed.
Section 5.5. Special Distribution Rules. Except as provided below,
Elective Deferrals, Qualified Non-Elective Contributions and Qualified Matching
Contributions, and income allocable to each, are not distributable to a
Participant or a Beneficiary, in accordance with such Participant's or
Beneficiary's election, earlier than upon separation from service, death, or
disability.
(a) Financial Hardship. (i) If elected by the Employer in item 8(D)
of the Adoption Agreement (Profit Sharing Plan), a Participant may elect to
withdraw all or any portion of his Elective Deferrals (excluding net earnings
credited thereto after December 31, 1988) on account of financial hardship. For
purposes of this Section 5.5, a financial hardship shall mean an immediate and
heavy financial need of the Participant which cannot be satisfied from other
resources reasonably available to such Participant. Hardship withdrawals are
subject to the spousal consent requirements of Code Sections 401(a)(11) and 417.
(ii) A withdrawal is made on account of an immediate and heavy
financial need of a Participant only if it is made on account of: (A)
unreimbursed medical expenses described in Code Section 213(d) of the
Participant or the Participant's spouse or dependents (as defined in Code
Section 152); (B) the purchase (excluding mortgage payments) of a principal
residence for the Participant; (C) payment of tuition for the next term of post-
secondary education for the Participant or the Participant's spouse, children or
dependents; or (D) the need to prevent the Participant's eviction from, or
foreclosure on the mortgage of, the Participant's principal residence or such
other events as may be approved by the Commissioner of Internal Revenue in
rulings, notices or other published documents.
23
(iii) A distribution will be considered as necessary to satisfy an
immediate and heavy financial need of the Participant only if: (A) the
Participant has obtained all distributions, other than hardship distributions,
and all nontaxable loans under all plans maintained by the Employer; (B) all
plans maintained by the Employer provide that the Participant's Elective
Deferrals and any other elective contributions or employee contributions under
this Plan and any other plan maintained by the Employer (both qualified and
nonqualified) will be automatically suspended for twelve (12) months after the
receipt of the hardship distribution; (C) the distribution is not in excess of
the amount of an immediate and heavy financial need; and (D) all plans
maintained by the Employer provide that the 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 of the hardship distribution.
(iv) A request for a hardship distribution shall be made in writing
and in such form as may be prescribed by the Administrator. Processing of
applications and distributions of amounts under this Section, on account of a
bona fide financial hardship, shall be made as soon as administratively
feasible.
(b) Elective Deferrals at Age 59-1/2. Upon attaining age fifty-nine
and one-half (59 1/2), a Participant may elect to withdraw all or any portion of
his Elective Deferrals Account and/or Employer Matching Contributions Account,
as of the last day of any month, even if he is still employed.
Section 5.6. Definitions. For purposes of this Article, the following
words and phrases shall have the following meanings:
(a) "Actual Deferral Percentage" means, for a specified group of
Participating Employees for a Plan Year, the average of the ratios (calculated
separately for each Participating Employee in such group) of (i) the amount of
Employer contributions actually paid over to the Plan on behalf of such
Participating Employee for the Plan Year to (ii) the Participating Employee's
Compensation for such Plan Year (whether or not the Employee was a Participating
Employee for the entire Plan Year). Employer contributions on behalf of any
Participating Employee shall include: (i) any Elective Deferrals made pursuant
to the Participating Employee's, deferral election, including Excess Elective
Deferrals of Highly Compensated Employees, but excluding Elective Deferrals that
are taken into account in the Contribution Percentage test (provided the Actual
Deferral Percentage test is satisfied both with and without exclusion of these
Elective Deferrals); and (ii) at the election of the Employer, Qualified Non-
Elective Contributions and Qualified Matching Contributions. For purposes of
computing Actual Deferral Percentages, an Employee who would be a Participating
Employee but for the failure to make Elective Deferrals shall be treated as a
Participating Employee on whose behalf no Elective Deferrals are made.
(b) "Aggregate Limit" means the sum of (i) one hundred twenty-five
percent (125%) of the greater of the Actual Deferral Percentage of the
Participating Employees who are
24
not Highly Compensated Employees for the Plan Year or the Actual Contribution
Percentage of Participating Employees who are not Highly Compensated Employees
under the Plan subject to Code Section 401(m) for the Plan Year beginning with
or within the Plan Year of the cash or deferred arrangement and (ii) the lesser
of two hundred percent (200%) or two (2) plus the lesser of such Actual Deferral
Percentage or Actual Contribution Percentage. "Lesser" is substituted for
"greater" in (i) above and "greater" is substituted for "lesser" after "two plus
the" in (ii) above if it would result in a larger Aggregate Limit.
(c) "Average Contribution Percentage" means the average of the
Contribution Percentages of the Employees in a group who are eligible to make
Participant Voluntary Contributions, or Elective Deferrals (if the Employer
takes such contributions into account in the calculation of the Contribution
Percentage), or to receive Matching Contributions (including forfeitures) or
Qualified Matching Contributions.
(d) "Contribution Percentage" means the ratio (expressed as a
percentage) of the Participating Employee's Contribution Percentage Amounts to
the Participating Employee's Compensation for the Plan Year (whether or not the
Employee was a Participating Employee for the entire Plan Year).
(e) "Contribution Percentage Amounts" means the sum of the
Participant Voluntary Contributions, Matching Contributions, and Qualified
Matching Contributions (to the extent not taken into account for purposes of the
Actual Deferral Percentage test) made under the Plan on behalf of the
Participating Employee for the Plan Year. Such Contribution Percentage Amounts
shall include forfeitures of Excess Aggregate Contributions or Matching
Contributions allocated to the Participating Employee's Accounts which shall be
taken into account in the year in which such forfeiture is allocated. The
Employer may elect to include Qualified Non-Elective Contributions in the
Contribution Percentage Amounts. The Employer also may elect to use all or part
of the Elective Deferrals for the Plan Year in the Contribution Percentage
Amounts so long as the Actual Deferral Percentage test is satisfied both
including and excluding the Elective Deferrals that are included in the
Contribution Percentage Amounts.
(f) "Excess Aggregate Contributions" means, with respect to any Plan
Year, the excess of:
(i) the aggregate Contribution Percentage Amounts taken into account
in computing the numerator of the Contribution Percentage actually made on
behalf of Highly Compensated Employees for such Plan Year, over
(ii) the maximum Contribution Percentage Amounts permitted by the
Actual Contribution Percentage test (determined by reducing contributions made
on behalf of Highly Compensated Employees in order of their Contribution
Percentages beginning with the highest of such percentages).
Such determination shall be made after first determining Excess Elective
Deferrals pursuant to Section 5.2(d) hereof and then determining Excess
Contributions pursuant to Section 5.2(f) hereof.
25
(g) "Excess Contributions" means, with respect to any Plan Year, the
excess of:
(i) the aggregate amount of Employer contributions actually taken into
account in computing the Actual Deferral Percentage of Highly Compensated
Employees for such Plan Year, over
(ii) the maximum amount of such contributions permitted by the Actual
Deferral Percentage test (determined by reducing contributions made on behalf of
Highly Compensated Employees in order of the Actual Deferral Percentages,
beginning with the highest of such percentages).
(h) "Excess Elective Deferrals" means those Elective Deferrals that
are includible in a Participating Employee's gross income for a taxable year
under Code Section 402(g) because they exceed the limitation specified in
Section 5.2(d)(i) hereof. Excess Elective Deferrals shall be treated as Annual
Additions under the Plan.
(i) "Family Member" means the spouse, lineal ascendants and
descendants of the employee or former employee and the spouses of such lineal
ascendants and descendants, all within the meaning of Code Section 414(q)(6).
(j) "Highly Compensated Employee" means both highly compensated
active employees and highly compensated former employees.
(i) A highly compensated active employee includes any Employee who
performs service for the Employer during the determination year and who, during
the look-back year: (i) received compensation from the Employer in excess of
$75,000 (as adjusted pursuant to Code Section 415(d)); (ii) received
compensation from the Employer in excess of $50,000 (as adjusted pursuant to
Code Section 415(d)) and was a member of the top-paid group for such year; or
(iii) was an officer of the Employer and received compensation during such year
that is greater than 50 percent of the dollar limitation in effect under Code
Section 415(b)(1)(A).
The term Highly Compensated Employee also includes: (i) employees who are both
described in the preceding sentence if the term "determination year" is
substituted for the term "look-back year" and the employee is one of the 100
employees who received the most compensation from the Employer during the
determination year; and (ii) employees who are 5 percent owners at any time
during the look-back year or determination year. If no officer has satisfied the
compensation requirement of (iii) above during either a determination year or
look-back year, the highest paid officer for such year shall be treated as a
Highly Compensated Employee. For this purpose, the determination year shall be
the Plan Year. The look-back year shall be the twelve-month period immediately
preceding the determination year.
(ii) A highly compensated former employee includes any Employee who
separated from service (or was deemed to have separated) prior to the
determination year, performs no service for the Employer during the
determination year, and was a highly
26
compensated active employee for either the separation year or any determination
year ending on or after the employee's fifty-fifth (55th) birthday.
(iii) If an employee is, during a determination year or look-back
year, a Family Member of either a five percent owner who is an active or former
employee or a Highly Compensated Employee who is one of the ten (10) most highly
compensated employees ranked on the basis of Compensation paid by the Employer
during such year, then the Family Member and the five percent owner or top-ten
Highly Compensated Employee shall be aggregated. In such case, the Family
Member and five percent owner or top-ten Highly Compensated Employee shall be
treated as a single employee receiving Compensation and Plan contributions or
benefits equal to the sum of such Compensation and contributions or benefits of
the Family Member and five percent owner or top-ten Highly Compensated Employee.
(iv) The determination of who is a Highly Compensated Employee,
including the determinations of the number and identity of employees in the top-
paid group, the top 100 employees, the number of employees treated as officers
and the Compensation that is considered, will be made in accordance with Code
Section 414(q).
(k) "Participating Employee" means an Employee who is eligible to
make Elective Deferrals or Participant Voluntary Contributions (if the Employer
takes such contributions into account in the calculation of the Contribution
Percentage), or to receive Matching Contributions (including forfeitures) or
Qualified Matching Contributions. If an Employee contribution is required as a
condition of participation in the Plan, any Employee who would be a Participant
in the Plan if such Employee made such a contribution shall be treated as a
Participating Employee on behalf of whom no Employee contributions are made.
(1) "Qualified Matching Contributions" means Matching Contributions
which are one hundred percent (100%) vested and nonforfeitable at all times and
which are distributable only in accordance with the distribution provisions
applicable to Elective Deferrals.
(m) "Qualified Non-Elective Contributions" means contributions
(other than Matching Contributions or Qualified Matching Contributions) made by
the Employer and allocated to Participating Employees' Accounts that the
Participating Employees may not elect to receive in cash until distributed from
the Plan, are one hundred percent (100%) vested and nonforfeitable when made,
and are distributable only in accordance with the distribution provisions
applicable to Elective Deferrals.
27
ARTICLE VI.
SECTION 415 LIMITATIONS
-----------------------
Section 6.1. Employers Maintaining Only this Plan.
(a) If the Participant does not participate in, and has never
participated in another qualified plan, a welfare benefit fund (as defined in
Code Section 419(e)) or an individual medical account (as defined in Code
Section 415(1)(2)) maintained by the Employer, the amount of Annual Additions
which may be credited to a Participant's Account under this Plan for a
Limitation Year shall not exceed the lesser of the Maximum Permissible Amount or
any other limitation contained in this Plan. If the Employer's 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.
(b) Prior to the determination of the Participant's actual
compensation for a Limitation Year, the Maximum Permissible Amount may be
determined on the basis of the Participant's estimated annual compensation for
such Limitation Year. Such estimated annual compensation shall be determined on
a reasonable basis and shall be uniformly determined for all Participants
similarly situated. Any Employer contributions based on estimated annual
compensation shall be reduced by any Excess Amounts carried over from prior
years.
(c) As soon as it is administratively feasible after the end of the
Limitation Year, the Maximum Permissible Amount for such Limitation Year shall
be determined on the basis of the Participant's actual Compensation for such
Limitation Year.
(d) If, pursuant to Section 6.1(c) and notwithstanding the
provisions of Section 6.l(a) hereof which require a reduction of contributions
so as not to exceed the limitations of this Article VI, there is an Excess
Amount with respect to a Participant for a Limitation Year, such Excess Amount
shall be disposed of as follows:
(i) Any Participant Voluntary Contributions, to the extent that the
return would reduce the Excess Amount, shall be returned to the Participant.
(ii) In the event that the Participant is covered by this Plan at the
end of the Limitation Year, remaining Excess Amounts after the application of
clause (i) shall be applied to reduce future Employer contributions (including
any allocation of forfeitures) for such Participant under this Plan in the next
Limitation Year (and each succeeding year, as necessary).
(iii) In the event that the Participant is not covered by this Plan
at the end of the Limitation Year, remaining Excess Amounts after the
application of clause (i) shall not be distributed to the Participant, but shall
be held unallocated in a suspense account and shall be applied to reduce future
Employer contributions (including any allocation of forfeitures) for all
remaining Participants in the next Limitation Year (and each succeeding year, as
necessary).
28
(iv) If a suspense account is in existence at any time during the
Limitation Year pursuant to this Section, it will not participate in the
allocation of any investment gains and losses, and all amounts in the suspense
account must be allocated and reallocated to Participants' Accounts before any
Employer or Employee contributions may be made to the Plan for such Limitation
Year. Excess amounts may not be distributed to Participants or former
Participants.
Section 6.2. Employers Maintaining Other Master or Prototype Defined
Contribution Plans.
(a) If, in addition to this Plan, the Participant is covered under
another qualified defined contribution plan which qualifies as a Master or
Prototype Plan or a welfare benefit fund (as defined in Code Section 419(e)) or
an individual medical account (as defined in Code Section 415(1)(2)) maintained
by the Employer during any Limitation Year, the amount of Annual Additions which
may be allocated under this Plan on the Participant's behalf for such Limitation
Year, shall not exceed the Maximum Permissible Amount reduced by the Annual
Additions credited to a Participant's account under such other plans, welfare
benefit funds or individual medical accounts for the same Limitation Year. If
the Annual Additions with respect to the Participant under other defined
contribution plans and welfare benefit funds maintained by the Employer are less
than the Maximum Permissible Amount and the Employer contribution that would
otherwise be contributed or allocated to the Participant's Account under this
Plan would cause the Annual Additions for the Limitation Year to exceed this
limitation, the amount contributed or allocated will be reduced so that the
Annual Additions under all such plans and funds for the Limitation Year will
equal the Maximum Permissible Amount. If the Annual Additions with respect to
the Participant under such other 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.
(b) Prior to the determination of the Participant's actual
Compensation for the Limitation Year, the amounts referred to in subsection (a)
above may be determined on the Participant's estimated annual compensation for
such Limitation Year. Such estimated annual compensation shall be determined on
a reasonable basis and shall be uniformly determined for all Participants
similarly situated. Any Employer contribution based on estimated annual
compensation shall be reduced by any Excess Amounts carried over from prior
years.
(c) As soon as it is administratively feasible after the end of the
Limitation Year, the amounts referred to in subsection (a) above shall be
determined on the basis of the Participant's actual Compensation for such
Limitation Year.
(d) If a Participant's Annual Additions under this Plan and all such
other plans result in an Excess Amount for a Limitation Year, such Excess Amount
shall be deemed to consist of the Annual Additions last allocated, except that
Annual Additions attributable to a welfare benefit fund or individual medical
account will be deemed to have been allocated first regardless of the actual
allocation date.
29
(e) If an Excess Amount was allocated to a Participant on an
allocation date of this Plan which coincides with an allocation date of another
plan, the Excess Amount attributed to this Plan will be the product of:
(i) the total Excess Amount allocated as of such date (including any
amount which would have been allocated but for the limitations of Code Section
415), times
(ii) the ratio of (A) the amount allocated to the Participant as of
such date under this Plan, divided by (B) the total amount allocated as of such
date under all qualified master or prototype defined contribution plans
(determined without regard to the limitations of Code Section 415).
(f) Any Excess Amounts attributed to this Plan shall be disposed of
as provided in Section 6.1(d).
Section 6.3. Employers Maintaining Other Defined Contribution Plans.
If the Participant is covered under another plan which is a qualified defined
contribution plan which is not a Master or Prototype Plan maintained by the
Employer, Annual Additions allocated under this Plan on behalf of any
Participant shall be limited in accordance with the provisions of Section 6.2,
as though the other plan were a Master or Prototype Plan, unless the Employer
provides other limitations in the Adoption Agreement.
Section 6.4. Employers Maintaining Defined Benefit Plans. If the
Participant is covered or was covered at any time under a qualified defined
benefit plan maintained by the Employer, the projected annual benefit thereunder
and the Annual Additions credited to any such Participant's Account under this
Plan and any other qualified defined contribution plan in any Limitation Year
will be limited so that the sum of the Defined Contribution Fraction and the
Defined Benefit Fraction with respect to such Participant will not exceed 1.0 in
any Limitation Year. 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.
Section 6.5. Definitions. For purposes of this Article VI, the
following terms shall be defined as follows:
(a) Annual Additions -- The sum of the following amounts allocated to
a Participant's Account for a Limitation Year: (i) all Employer contributions;
(ii) all Participant contributions (other than a qualified rollover contribution
as described in Code Section 402(a)(5)); (iii) all forfeitures; (iv) all amounts
allocated, after March 31, 1984, to an individual medical account (as defined in
Code Section 415(1)(2)) which is part of a defined benefit or annuity plan
maintained by the Employer are treated as Annual Additions to a defined
contribution plan; and (v) amounts derived from contributions paid or accrued
after December 31, 1985, in taxable years ending after such date, which are
attributable to post-retirement medical benefits allocated to the separate
account of a "key employee" (as defined in Code Section 419A(d)(3)) under a
welfare benefit fund (as defined in Code Section 419(e)) maintained by the
Employer, are treated as Annual Additions to a defined contribution plan.
30
For the purposes of this Article VI, amounts reapplied under Sections 6.1(d) and
6.2(f) of the Plan to reduce Employer contributions shall also be included as
Annual Additions.
(b) Compensation--A Participant's wages as defined in Code Section
3121(a), for purposes of calculating social security taxes, but determined
without regard to the wage base limitation in Code Section 3121(a)(1), the
limitations on the exclusions from wages in Code Section 3121(a)(5)(C) and (D)
for elective contributions and payments by reason of salary reduction
agreements, the special rules in Code Section 3121(v), any rules that limit
covered employment based on the type or location of an employee's employer, and
any rules that limit the remuneration included in wages based on familial
relationship or based on the nature or location of the employment or the
services performed (such as the exceptions to the definition of employment in
Code Section 3121(b)(1) through (20)). For any Self-Employed Individual
Compensation means Earned Income.
For Limitation Years beginning after December 31, 1991, for purposes
of applying the limitations of this Article, Compensation for a Limitation Year
is the Compensation actually paid or includible in gross income during such
Limitation Year. Notwithstanding the preceding sentence, Compensation for 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. Such imputed Compensation for a disabled
participant may be taken into account-only if the participant is not a highly
compensated employee (as defined in Code Section 414(q)) and contributions made
on behalf of such participant are nonforfeitable when made.
(c) Defined Benefit Fraction--A fraction, the numerator of which is
the sum of a Participant's Projected Annual Benefits under all the qualified
defined benefit plans whether or not terminated) maintained by the Employer
determined at the end of the Limitation Year, and the denominator of which is
the lesser of (i) one hundred and twenty-five percent (125%) of the dollar
limitation for such Limitation Year under Code Sections 415(b) and (d) (or such
higher amount determined by the Commissioner of Internal Revenue applicable to
the calendar year with which or within which the Limitation Year ends) or (ii)
one hundred and forty percent (140%) of the Participant's average Compensation
(or Earned Income) for the three highest consecutive calendar years of service
during which the Participant was in the Plan including any adjustments under
Code Section 415(b). Notwithstanding the above, if the Participant was a
Participant as of the first limitation year beginning after December 31, 1986 in
one or more defined benefit plans maintained by the Employer which were in
existence on May 6, 1986, the denominator of this fraction will not be less than
the product of 1.25 times the sum of the annual benefits under such plans which
the Participant had accrued as of the close of the last Limitation Year
beginning after January 1, 1987, disregarding any changes in the terms and
conditions of the Plan after May 5, 1986. The preceding sentence applies only if
the defined benefit plans individually and in the aggregate satisfied the
requirements of Code Section 415 for all Limitation Years beginning before
January 1, 1987.
31
(d) Employer--The Employer that adopts this Plan and in the case of a
group of employers which constitutes (i) a controlled group of corporations (as
defined in Code Section 414(b) as modified by Code Section 415(h)); (ii) trades
or businesses (whether or not incorporated) which are under common control (as
defined in Section 414(c) as modified by Code Section 415(h)); (iii) an
affiliated service group (as defined in Code Section 414(m)); or (iv) a group of
entities required to be aggregated (pursuant to Code Section 414(o)) all such
employers shall be considered a single employer for purposes of applying the
limitations of this Article VI.
(e) Excess Amount--The excess of the Participant's Annual Additions
for the Limitation Year over the Maximum Permissible Amount.
(f) Limitation Year--A calendar year or any other twelve (12)
consecutive month period adopted by the Employer in item 12 of the Adoption
Agreement (Profit Sharing Plan) or item 10 of the Adoption Agreement (Pension
Plan). All qualified plans maintained by the Employer shall use the same
Limitation Year. If the Limitation Year is amended to a different twelve (12)
consecutive month period, the new Limitation Year shall begin on the date within
the Limitation Year in which the amendment is made.
(g) Master or Prototype Plan--A plan the form of which is the subject
of a favorable opinion letter from the Internal Revenue Service.
(h) Maximum Permissible Amount--For a Limitation Year, the Maximum
Permissible Amount with respect to any Participant shall be the lesser of (i)
the Defined Contribution Dollar Limitation or (ii) twenty-five percent (25%) of
the Participant's Compensation for the Limitation Year. The Compensation
limitation described in (ii) shall not apply to any contribution for medical
benefits (within the meaning of Code Sections 401(h) or 419A(f)(2)) which is
otherwise treated as an Annual Addition under Code Sections 415(1)(1) or
419A(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 shall not exceed the defined contribution
dollar limitation in Code Section 415(c)(1)(A) 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).
(i) Projected Annual Benefit--A Participant's annual retirement
benefit (adjusted to the actuarial equivalent of a straight life annuity if
expressed in a form other than a straight life or qualified joint and survivor
annuity) under the Plan, assuming that the Participant will continue employment
until the later of current age or Normal Retirement Age, and that the
Participant's Compensation for the Limitation Year and all other relevant
factors used to determine benefits under the Plan will remain constant for all
future Limitation Years.
(j) Defined Contribution Fraction--A fraction, the numerator of
which is the sum of the Annual Additions credited to the Participant's account
under this and all other qualified 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 non-
deductible employee contributions to all qualified defined benefit plans
32
(whether or not terminated) maintained by the Employer for the current and all
prior Limitation Years and the Annual Additions attributable to all welfare
benefit funds (as defined in Code Section 419(e)) and individual medical
accounts (as defined in Code Section 415(1)(2) maintained by the Employer), and
the denominator of which is the sum of the maximum aggregate amounts for the
current and all prior Limitation Years of service with the Employer (regardless
of whether a defined contribution plan was maintained by the Employer). The
maximum aggregate amount in any Limitation Year is the lesser of (i) one hundred
and twenty-five percent (125%) of the dollar limitation determined under Code
Sections 415(b) and (d) in effect under Code Section 415(c)(1)(A) or (ii)
thirty-five percent (35%) of the Participant's Compensation for such
Limitation Year.
If the Employee was a participant as of the end of the first day of
the first Limitation Year beginning after December 31, 1986, in one or more
defined contribution plans maintained by the Employer which were in existence on
May 5, 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: (i)
the excess of the sum of the fractions over 1.0 times (ii) the denominator of
this fraction, will be permanently subtracted from the numerator of this
fraction. The adjustment is calculated using the fractions as they would be
computed as of the end of the last Limitation Year beginning before January 1,
1987, and disregarding any changes in the terms and conditions of the Plan made
after May 5, 1986, but using the 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 January 1, 1987, shall not be computed
to treat all Employee contributions as Annual Additions.
(k) Defined Contribution Dollar Limitation--For a Limitation Year,
thirty thousand dollars ($30,000) or, if greater, one-fourth of the defined
benefit dollar limitation set forth in Code Section 415(b)(1) as in effect for
such Limitation Year.
(1) Highest Average Compensation--The average Compensation for the
three consecutive Years of Service with the Employer which produces the highest
average.
33
ARTICLE VII.
PARTICIPANTS' ACCOUNTS
----------------------
Section 7.1. Separate Accounts. Separate Accounts will be maintained
for each Participant for each of the following types of contributions, and the
income, expenses, gains and losses attributable thereto:
(a) Employer Profit Sharing Contributions pursuant to
Section 4.1 hereof;
(b) Employer Pension Contributions pursuant to Section 4.2 hereof;
(c) Participant Voluntary Contributions pursuant to Section 4.3
hereof;
(d) Elective Deferrals pursuant to Section 5.2 hereof;
(e) Matching Contributions pursuant to Section 5.3 hereof;
(f) Rollover Contributions pursuant to Section 4.6 hereof.
The Custodian shall establish such other separate Accounts as may be necessary
under the Plan. These Accounts shall be for accounting purposes only and the
Custodian shall not be required to establish separate Custodial Accounts for
these contributions.
Section 7.2. Vesting. (a) A Participant shall at all times have a
fully vested and nonforfeitable interest in all his Accounts except his Employer
Profit Sharing Contributions Account and/or his Employer Pension Contributions
Account.
(b) A Participant shall have a vested interest in his Employer Profit
▇▇▇▇▇▇▇ Contributions Account and/or his Employer Pension Contributions Account
as determined under the vesting schedule elected in item 7 of the Adoption
Agreement.
Section 7.3. Computation of Vesting Service. All of a Participant's
Years of Service with the Employer shall be counted to determine the
nonforfeitable percentage of his Employer Profit Sharing Contributions Account
and/or his Employer Pension Contributions Account except those Years of Service
excluded under item 7 of the Adoption Agreement. A former Participant who had a
nonforfeitable right to all or a portion of his Account balance derived from
Employer contributions at the time of his termination shall receive credit for
Years of Service prior to his Break in Service upon completing a Year of Service
after his return to the employ of the Employer. A former Participant who did
not have a nonforfeitable right to any portion of his Account balance derived
from Employer contributions at the time of termination from service will be
considered a new employee for vesting purposes, if the number of consecutive one
year Breaks in Service equals or exceeds the greater of (i) five (5) years or
(ii) the aggregate number of Years of Service before such Breaks in Service. If
such a former Participant's Years of Service before termination from service may
not be disregarded pursuant to the preceding sentence, such former Participant's
prior Years of Service shall not be cancelled hereunder.
34
Section 7.4. Allocation of Forfeitures.
(a) As of the end of the Plan Year, forfeitures derived from Employer
Profit Sharing Contributions Accounts which become available for reallocation
during such Plan Year because of the operation of the vesting provisions of
Section 7.2tb), shall be allocated to the Employer Profit Sharing Contribution
Accounts of the Participants who are eligible to share in an Employer Profit
Sharing Contributions for the Plan Year. Such amounts shall be allocated
according to the ratio that each such Participant's Compensation or Earned
Income for the Plan Year bears to the total Compensation and Earned Income of
all such Participants for the Plan Year. Forfeitures under this subsection (a)
will be allocated only for the benefit of Participants of the Employer adopting
this Plan.
(b) Forfeitures derived from Employer Pension Contributions which
become available for reallocation during a Plan Year shall be applied to reduce
the Employer Pension Contributions that would otherwise be due for such Plan
Year under Section 4.2. Forfeitures under this subsection (b) will only be used
to reduce the Employer Pension Contributions of the Employer adopting this Plan.
(c) If a benefit is forfeited because a Participant or Beneficiary
cannot be found, such benefit will be reinstated if a claim is made by the
Participant or Beneficiary.
(d) No forfeiture will occur solely as a result of a Participant's
withdrawal of any Employee contributions.
35
ARTICLE VIII.
PAYMENT OF BENEFITS
-------------------
Section 8.1. Benefits Payable Under the Plan.
(a) Normal Retirement. A Participant's interest in all Employer
contributions allocated to his Accounts shall be fully vested and nonforfeitable
on and after his Normal Retirement Age. Such Participant may retire at any time
on or after that date and shall be entitled to receive, in accordance with the
provisions of Sections 8.2 and 8.3 hereof, the total amount credited to his
Accounts. Any Participant who is employed beyond his Normal Retirement Age
shall continue to share in Employer contributions until his actual retirement.
(b) Death Benefits. Upon the death of a Participant while employed by
the Employer, the total amount credited to such Participant's Accounts (plus
such Participant's share of the Employer contributions for the year of his
death), shall be payable to such Participant's Beneficiary in accordance with
Sections 8.2 and 8.3 hereof. Upon the death of a Participant following his
termination of employment with the Employer, the vested portion of his Accounts
which has not been distributed shall be payable to such Participant's
Beneficiary in accordance with Sections 8.2 and 8.3 hereof.
(c) Other Termination of Employment. A Participant who terminates
employment with the Employer on account of Disability shall be entitled to
receive, in accordance with Sections 8.2 and 8.3 hereof, the total amount
credited to his Account. A Participant whose employment with the Employer is
terminated prior to his Normal Retirement Date for any reason other than death
or Disability shall be entitled to receive, in accordance with the provisions of
Sections 8.2 and 8.3 hereof, the portions of his Accounts that have vested
pursuant to Section 7.2 hereof.
(d) Forfeitures. Any amounts in a Participant's Accounts which are not
payable under subsection (c) above when his employment with the Employer is
terminated shall remain in such Accounts and shall continue to share in profits
or losses on investments under Section 9.3 hereof until such former Participant
incurs five (5) consecutive Breaks in Service, whereupon they shall be forfeited
and administered in accordance with Section 7.4 hereof. In the event a former
Participant is reemployed by the Employer before incurring five (5) consecutive
Breaks in Service his Accounts shall continue to vest in accordance with the
vesting schedule specified in the applicable Adoption Agreement.
Notwithstanding the foregoing, if a terminated Participant receives a
distribution on account of termination of his Participation in the Plan of his
entire vested interest in the Pension Plan or the Profit Sharing Plan, such
Participant's nonvested interest in the relevant plan shall be treated as a
forfeiture and administered in accordance with Section 7.4 hereof. If the
Participant elects to have distributed less than the entire vested portion of
his Account balance derived from Employer contributions, the part of the
nonvested portion that will be treated as a forfeiture is the total nonvested
portion multiplied by a fraction, the numerator of which is the amount of the
distribution attributable to Employer contributions and the denominator of which
is the total value of the vested Employer derived Account balance. For purposes
of this Section, if the value of an employee's vested account balance is zero,
the
36
Employee shall be deemed to have received a distribution of such vested
account balance. A Participant's vested account balance shall not include
accumulated deductible employee contributions within the meaning of Code Section
72(o)(5)(B) for plan years beginning prior to January 1, 1989. If a Participant
receives or is deemed to receive a distribution pursuant to this subsection (d)
and such Participant subsequently resumes employment covered under the Plan, the
forfeited amounts shall be restored from current forfeitures, or if those are
insufficient by a special Employer contribution, provided that the Participant
repays to the Plan the full amount of the distribution attributable to Employer
contributions prior to the earlier of (i) five (5) years after the Participant
is reemployed, or (ii) the time the Participant incurs five (5) consecutive
Breaks in Service. In the event a former Participant is reemployed after
incurring five (5) consecutive Breaks in Service, separate Accounts will be
maintained for Employer contributions allocated before and after the Break in
Service, and Years of Service earned after his return to employment shall be
disregarded in determining the Participant's vested percentage in his prebreak
Employer contributions.
Section 8.2. Manner of Distributions.
(a) Distributions From Pension Plan. Distributions from the Pension
Plan shall be made as follows:
(i) A Participant's vested interest in the Plan shall be paid by
purchasing an annuity contract from a licensed insurance company, unless the
Participant elects to receive his interest in one of the alternate forms of
benefit described in subsection (c) below. If a Participant is not married at
his annuity starting date, the annuity contract shall provide a monthly benefit
for his life. If a Participant is married at his annuity starting date, the
annuity shall be in the form of a qualified joint and survivor annuity. A
"qualified joint and survivor annuity" is an immediate annuity for the life of
the Participant with a survivor annuity for the life of the spouse which is
equal to fifty percent (50%) of the amount of the annuity which is payable
during the joint lives of the Participant and the spouse and which is the amount
of benefit which can be purchased with the Participant's vested Account balance.
The Participant may elect to have such annuity distributed upon attainment of
the earliest retirement age under the Plan. Any annuity contract purchased
hereunder and distributed in accordance with this Section 8.2 shall be
nontransferable and shall comply with the terms of this Plan. For purposes of
this Section, the earliest retirement age shall be the Participant's age on the
earliest date on which the Participant could elect to receive retirement
benefits.
(ii) Unless an optional form of benefit is selected in accordance with
subsection (c) below, if a Participant has a spouse and dies prior to his
annuity starting date (the date annuity payments commence), the Participant's
vested Account balance in the Plan shall be applied toward the purchase of a
life only annuity contract from a licensed insurance company providing a benefit
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. (iii) For any distribution subject to the annuity requirements in
subsection (i) above, a Participant or Beneficiary may elect in writing, within
the ninety (90) day period ending on the annuity starting date (the date annuity
or any other form of benefit payments commence), to receive his vested
37
interest in the Plan in one of the alternate forms of benefit set forth in
subsection (c) below in lieu of the form of benefit otherwise payable hereunder.
Any waiver of the joint and survivor annuity by a married Participant shall not
be effective unless: (A) the Participant's spouse consents in writing to the
election; (B) the election designates a specific Beneficiary, including any
class of beneficiaries or any contingent beneficiaries, which may not be changed
without spousal consent (or the spouse expressly permits designations by the
Participant without any further spousal consent); (C) the spouse's consent
acknowledges the effect of the election; and (D) the spouse's consent is
witnessed by a Plan representative or notary public. Additionally, a
Participant's waiver of the joint and survivor annuity shall not be effective
unless the election designates a form of benefit payment which may not be
changed without spousal consent (or the spouse expressly permits designations by
the Participant without any further spousal consent). If it is established to
the satisfaction of a Plan representative that there is no spouse or that the
spouse cannot be located, a waiver will be deemed a qualified election. Any
consent by a spouse obtained under this provision (or establishment that the
consent of a spouse may not be obtained) shall be effective only with respect to
such spouse. A consent that permits designations by the Participant without any
requirement of further consent by such spouse must acknowledge that the spouse
has the right to limit consent to a specific Beneficiary, and a specific form of
benefit where applicable, and that the spouse voluntarily elects to relinquish
either or both of such rights. A revocation of a prior election 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 and
the spouse have received notice as provided in subsection (v) below.
(iv) A Participant may elect in writing to waive the surviving spouse
benefit otherwise payable under subsection (ii) above. The benefit may be
waived at any time during the period which begins on the first day of the Plan
Year in which the Participant attains age 35 and ends on the date of the
Participant's death. A Participant and the spouse may waive the pre-retirement
survivor death benefit prior to age 35, provided that such early waiver becomes
invalid in the Plan Year the Participant attains age 35 and a new waiver must be
made pursuant to this subsection (iv). If the Participant separates from
service prior to the first day of the Plan Year in which he attains age 35, the
surviving spouse benefit may be waived, with respect to the Participant's
account balance as of the date of separation, at any time during the period
which begins on the date of such separation and ends on the date of the
Participant's death. Notwithstanding the foregoing, any election by a
Participant to waive the surviving spouse benefit payable under subsection (ii)
above shall not be effective unless: (A) the Participant's spouse consents in
writing to the election; (B) the spouse's consent acknowledges the effect of the
election; and (C) the spouse's consent is witnessed by a Plan representative or
notary public. If it is established to the satisfaction of a Plan representative
that there is no spouse or that the spouse cannot be located, a waiver will be
deemed a qualified election. Any consent by a spouse obtained under this
provision (or establishment that the consent of a spouse may not be obtained)
shall be effective only with respect to such spouse. A revocation of a prior
election 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 and the spouse have received notice as provided in subsection (v)
below.
38
(v) The Administrator shall provide the Participant and the Spouse, as
applicable, with a written explanation of: (A) the terms and conditions of the
annuity described in subsections (i) or (ii), as applicable; (B) the
Participant's or Spouse's, as applicable, right to waive the payment of benefits
in the form of an annuity; (C) the rights of the Participant's spouse; and (D)
the right to make, and the effect of, the revocation of a previous election to
waive the payment of benefits in the form of an annuity described in subsections
(i) or (ii) hereof. In the case of the annuity described in subsection (i), such
explanation shall be provided no less than thirty (30) days and no more than
ninety (90) days prior to the annuity starting date. In the case of the annuity
described in subsection (ii), such explanation shall be provided within the
applicable period for such Participant. The applicable period for a Participant
is whichever of the following periods ends last: (A) the period beginning with
the first day of the Plan Year in which the Participant attains age 32 and
ending with the close of the Plan Year preceding the Plan Year in which the
Participant attains age 35; (B) a reasonable period ending after the individual
becomes a Participant; (C) a reasonable period ending after this Article first
applies to the Participant. Notwithstanding the foregoing, notice must be
provided within a reasonable period ending after separation from service in the
case of a Participant who separates from service before attaining age 35. For
purposes of applying the preceding paragraph, a reasonable period ending after
the enumerated events described in (B) and (C) is the end of the two-year period
beginning one year prior to the date the applicable event occurs, and ending one
year after that date. In the case of a Participant who separates from service
before the Plan Year in which age 35 is attained, notice shall be provided
within the two-year period beginning one year prior to separation and ending one
year after separation. If such a Participant thereafter returns to employment
with the Employer, the applicable period for such Participant shall be
redetermined. A written explanation comparable to the notices described above
shall be provided to a Participant who is waiving the surviving spouse benefit
prior to attaining age 35.
(vi) The Administrator shall be responsible for the purchase of any
annuity contracts required to be purchased in accordance with the terms of this
Plan.
(b) Distributions from Profit Sharing Plan. Distributions from the
Profit Sharing Plan shall be made in the form elected by the Participant (or
Beneficiary) as described in subsection (c) below. Notwithstanding the
foregoing, if the Profit Sharing Plan is a direct or indirect transferee of a
defined benefit plan, a money purchase pension plan (including a target benefit
plan), or a stock bonus or profit sharing plan or is an amendment of an original
Plan which is (or was) subject to the survivor annuity requirements of Code
Sections 401(a)(11) or 417 then distributions shall be made in accordance with
the provisions of subsection (a) above.
(c) Optional Forms of Distribution. All distributions required under
this subsection shall be determined and made in accordance with the Income Tax
Regulations under Code Section 401(a)(9), including the minimum distribution
incidental benefit requirement of Section 1.401(a)(9)-2 of such Regulations.
(i) Amounts payable to a Participant shall be distributed in one of
the following forms as elected by the Participant, with spousal consent, as
applicable:
39
(A) a lump sum; or
(B) installments over a period certain not to exceed the life
expectancy of the Participant or the joint life expectancy of the
Participant and his Beneficiary.
Such election shall be made in writing and in such form as shall be acceptable
to the Administrator. If the Participant fails to elect any of the methods of
distribution described above within the time specified for such election, the
Administrator shall distribute the Participant's Account in the form of a single
sum cash payment by the April 1 following the calendar year in which the
Participant attains age seventy and one-half (70-1/2).
(ii) If a Participant's benefit is to be distributed in installment
payments under (B) above, the amount distributed for each calendar year,
beginning with distributions for the first distribution calendar year, must at
least equal the quotient obtained by dividing the Participant's benefit by the
applicable life expectancy. The life expectancy (or joint and last survivor
expectancy) is 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 applicable calendar year shall be the first distribution
calendar year, and, if life expectancy is being recalculated, such succeeding
calendar year.
Unless otherwise elected by the Participant (or the Participant's
spouse) by the time distributions are required to begin, life expectancies shall
be recalculated annually. Such election shall be irrevocable as to the
Participant (or spouse) and shall apply to all subsequent years. The life
expectancy of a nonspouse Beneficiary may not be recalculated. Life expectancy
and joint life expectancy are computed by use of the expected return multiples
in Tables V and VI of Section 1.72-9 of the Income Tax Regulations.
Notwithstanding anything herein to the contrary, for calendar years
beginning before January 1, 1989, if the Participant's spouse is not the
designated Beneficiary, the method of distribution selected must assure that at
least fifty percent (50%) of the present value of the amount available for
distribution is paid within the life expectancy of the Participant. For
calendar years beginning after December 31, 1988, the amount to be distributed
each year shall not be less than the quotient obtained by dividing the
Participant's benefit by the lesser of (A) the applicable life expectancy or (B)
if the Participant's spouse is not the designated Beneficiary, the applicable
divisor determined from the table set forth in Q&A-4 of Section 1.401(a)(9)-2 of
the Income Tax Regulations. Distributions after the death of the Participant
shall be distributed using the applicable return multiple specified in Section
1.72-9 of the Income Tax Regulations as the relevant divisor without regard to
Section 1.401(a)(9)-2 of the Income Tax Regulations.
(iii) The minimum distribution required for the Participant's first
distribution calendar year must be made on or before the Participant's required
beginning date as described in Section 8.3(c) hereof. The minimum distribution
for other calendar years, including the minimum
40
distribution for the distribution calendar year in which such required beginning
date occurs, must be made on or before December 31 of that distribution calendar
year.
(d) In any case where the Participant or Beneficiary has determined
payment to be on an installment basis, such Participant or Beneficiary may by
written request directed to the Administrator, at any time following
commencement of such installment payments, accelerate all or any portion of the
unpaid balance.
(e) For purposes of this Section a "spouse" shall include the spouse
or surviving spouse of a Participant, provided that a former spouse-shall be
treated as the spouse or surviving spouse and a current spouse will not be
treated as a spouse or surviving spouse to the extent provided under a qualified
domestic relations order as described in Code Section 414(p).
(f) The payment of benefits in either a lump sum or in installments
under this Section 8.2 may be made in cash or in Investment Company Shares.
Section 8.3. Commencement of Payments. (a) Subject to the provisions
of this Section 8.3, payment of benefits, under whichever method is selected,
shall- be made or commence as soon as administratively practicable after the
Valuation Date immediately following the Participant's retirement, death or
other termination of employment.
(b) If the Participant's vested Account balance in the Pension Plan or
the Profit Sharing Plan exceeds (or at the time of any prior distribution
exceeded) three thousand five hundred dollars ($3,500), no distribution of that
interest shall be made prior to the time the Participant's Account becomes
immediately distributable without the written consent of the Participant and, in
the case of the Pension Plan, the Participant's spouse (or where either the
Participant or the spouse has died, the survivor). The consent of the
Participant and the Participant's spouse shall be obtained in writing within the
ninety (90) day period ending on the annuity starting date. The annuity starting
date is the first day of the first period for which an amount is paid as an
annuity or any other form. The Administrator shall notify the Participant and
the Participant's spouse of the right to defer any distribution until the
Participant's Account balance is no longer immediately distributable. Such
notification shall include a general description of the material features, and
an explanation of the relative values of the optional forms of benefit available
under the Plan in a manner that would satisfy the notice requirements of Code
Section 417(a)(3), and shall be provided no less than thirty (30) days and no
more than ninety (90) days prior to the annuity starting date; provided that if
a distribution is one to which Sections 401(a)(11) and 417 of the Internal
Revenue Code do not apply, such distribution may commence less than 30 days
after the notice required under Section 1.411(a)-ll(c) of the Income Tax
Regulations is given, provided that:
(1) the Administrator clearly informs the Participant that the Participant
has a right to a period of at least 30 days 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.
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 Section 8.2(b) 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 Sections 401(a)(9) or 415. In addition, upon
termination of this Plan if the Plan does not offer an annuity option (purchased
from a commercial insurance company), the Participant's Account balance may,
without the Participant's consent, be distributed to the Participant or
transferred to another
41
defined contribution plan (other than an employee stock ownership plan as
defined in Code Section 4975(e)(7)) within the same controlled group.
An Account balance is immediately distributable if any part of the
Account balance could be distributed to the Participant (or surviving spouse)
before the Participant attains (or would have attained if not deceased) the
later of his Normal Retirement Age or age sixty-two (62).
For purposes of determining the applicability of the foregoing consent
requirements to distributions made before the first day of the first Plan Year
beginning after December 31, 1988, a Participant's vested Account balance shall
not include amounts attributable to accumulated deductible employee
contributions within the meaning of Code Section 72(o)(5)(B).
(c) Unless the Participant (or the Participant's Beneficiary, if the
Participant is dead) elects to defer commencement under (b) above, distribution
of benefits shall begin no later than the sixtieth (60th) day after the close of
the Plan Year in which occurs the latest of (i) the Participant's attainment of
age 65 (or normal retirement age, if earlier); (ii) the tenth (10th) anniversary
of the year in which the Participant commenced participation in the Plan; or
(iii) the date the Participant terminates service with the Employer.
Notwithstanding the foregoing, the failure of a Participant and the spouse to
consent to a distribution while a benefit is immediately distributable, within
the meaning of Section 8.1 of the Plan, shall be deemed to be an election to
defer commencement of payment of any benefit sufficient to satisfy this Section.
(d) Notwithstanding anything herein to the contrary, payment of
benefits to a Participant shall commence by the Participant's required beginning
date, even if the Participant is still employed. A Participant's required
beginning date is the April 1 of the calendar year following the calendar year
in which the Participant attains age seventy and one-half (70-1/2); provided
that the required beginning date of a Participant who attains age 70-1/2: before
January 1, 1988, shall be determined in accordance with (i) or (ii) below:
(i) The required beginning date of a Participant who is not a 5-
percent owner is the first day of April of the calendar year following the
calendar year in which the later of retirement or attainment of age seventy and
one-half (70-1/2) occurs.
(ii) The required beginning date of a Participant who is a 5-percent
owner during any year beginning after December 31, 1979, is the first day of
April following the later of the calendar year in which the Participant attains
age seventy and one-half (70-1/2), or the earlier of the calendar year with or
within which ends the Plan Year in which the Participant becomes a 5-percent
owner, or the calendar year in which the Participant retires.
The required beginning date of a Participant who is not a 5-percent
owner who attains age seventy and one-half (70-1/2) during 1988 and who has not
retired as of January 1, 1989, is April 1, 1990.
42
A Participant is treated as a 5-percent owner for purposes of this
subsection (d) if such Participant is a 5-percent owner as defined in Code
Section 416(i) (determined in accordance with Code Section 416, but without
regard to whether the Plan is top-heavy) at any time during the Plan Year ending
with or within the calendar year in which such owner attains age sixty-six and
one-half (66-1/2) or any subsequent Plan Year.
Once distributions have begun to a 5-percent owner under this
subsection (d), they must continue to be distributed, even if the Participant
ceases to be a 5-percent owner in a subsequent year.
Distributions may be delayed pursuant to an election made prior to
January 1, 1984, under Section 242 of the Tax Equity and Fiscal Responsibility
Act of 1982; provided that the method of distribution selected must be in
accordance with the requirements of Code Section 401(a)(9) as in effect prior to
amendment by the Deficit Reduction Act of 1984 If such an election is revoked,
any subsequent distribution must satisfy the requirements of Code Section
401(a)(9). 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), but for such Section 242(b)(2) election. For
calendar years beginning after December 31, 1988, such distributions must meet
the minimum distribution incidental benefit requirements in Section 1.401(a)(9)-
2 of the 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).
(e)(i) If a Participant dies after benefit payments have begun, the
Participant's remaining interest in the Plan shall be distributed to his
designated Beneficiary at least as rapidly as under the method of distribution
being used prior to the Participant's death.
(ii) If the Participant dies before benefit payments have commenced,
distribution of the Participant's entire interest in the Plan shall be completed
by the December 31 of the calendar year containing the fifth (5th) anniversary
of the Participant's death, except to the extent that an election is made to
receive distributions in accordance with the following: (A) if any portion of
the Participant's interest is payable to a designated Beneficiary, distributions
may be made over the life or over a period certain not greater than the life
expectancy of the designated Beneficiary commencing on or before December 31 of
the calendar year immediately following the calendar year in which the
Participant died; (B) if the designated Beneficiary is the Participant's
surviving spouse, the date distributions are required to begin in accordance
with (A) above shall not be earlier than the later of December 31 of the
calendar year immediately following the calendar year in which the Participant
died and December 31 of the calendar year in which the Participant would have
attained age seventy and one-half (70-1/2).
43
If the Participant has not made an election pursuant to this
subsection (ii) by the time of his death, the designated Beneficiary must elect
the method of distribution no later than the earlier of December 31 of the
calendar year in which distributions would be required to begin under this
subsection (e) or December 31 of the calendar year which contains the fifth
anniversary of the date of death of the Participant. If the Participant has no
designated Beneficiary, or if the designated Beneficiary does not elect a method
of distribution, distribution of the Participant's entire interest in the Plan
must be completed by December 31 of the calendar year containing the fifth
anniversary of the Participant's death.
For purposes of this subsection (ii), if the surviving spouse dies
after the Participant, but before payments to such spouse begin, the provisions
of this subsection (ii), with the exception of paragraph (B) above, shall be
applied as if the surviving spouse were the Participant. Any amount paid to a
child of the Participant will be treated as if it had been paid to the surviving
spouse if the amount becomes payable to the surviving spouse when the child
reaches the age of majority.
For the purposes of this subsection (e), distribution of a
Participant's interest is considered to begin on the Participant's required
beginning date (or the date distribution is required to begin to the surviving
spouse). If a distribution in the form of an annuity irrevocably commences to
the Participant before the required beginning date, the date the distribution is
considered to begin is the date distribution actually commences.
(iii) A Participant's interest in the Plan is his Account balance as
of the last valuation date in the calendar year immediately preceding the
distribution calendar year (the valuation calendar year) increased by the amount
of any contributions or forfeitures allocated to the Account balance as of dates
in the valuation calendar year after the valuation date and decreased by
distributions made in the valuation calendar year after the valuation date. 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.
The distribution calendar year is a calendar year for which a minimum
distribution is required. For distributions beginning before the Participant's
death, the first distribution calendar year is the calendar year immediately
preceding the calendar year which contains the Participant's required beginning
date. For distributions beginning after the Participant's death, the first
distribution calendar year is the calendar year in which distributions are
required to begin pursuant to subsection (ii) above.
For purposes of this subsection (e), the designated Beneficiary is the
individual who is designated as the Beneficiary under the Plan in accordance
with Code Section 401(a)(9) and the proposed regulations thereunder.
Section 8.4. Payment of Small Amounts. Notwithstanding anything herein
to the contrary, if the present value of the Participant's vested interest in
the Pension Plan does not exceed (nor at the time of any prior distribution
exceeded) three-thousand five hundred dollars
44
($3,500) as of the date the Participant's employment with the Employer
terminates, the Administrator shall distribute the present value of such
interest to the Participant in a lump sum as soon as administratively
practicable after the end of the Plan Year in which termination occurs.
Likewise, if the total present value of the Participant's vested interest in the
Profit Sharing Plan and Cash or Deferred Arrangement does not exceed (nor at any
time of any prior distribution exceeded) three thousand five hundred dollars
($3,500) as of the date the Participant's employment with the Employer
terminates, the Administrator shall distribute the present value of this
interest to the Participant in a lump sum as soon as administratively
practicable after the end of the Plan Year in which termination occurs. A
Participant whose entire vested interest in the Pension Plan and/or the Profit
Sharing Plan has been distributed or who has no vested interest in the Pension
Plan and/or the Profit Sharing Plan shall be deemed cashed out from the Pension
Plan and/or the Profit Sharing Plan, as applicable.
Section 8.5. Persons Under Legal or Other Disability. In the event a
Participant or Beneficiary is declared incompetent and a guardian or other
person legally charged with the care of his person or of his property is
appointed, any benefits to which such Participant or Beneficiary is entitled
shall be paid to such guardian or other person legally charged with the care of
his person or of his property.
Section 8.6. Withdrawals from Profit Sharing Plan. (a) If elected in
item 10 of the Adoption Agreement (Profit Sharing Plan), a Participant shall be
permitted to withdraw the specified percentage of his vested Employer Profit
Sharing Account while he is still employed after attainment of age fifty-nine
and one-half (59 1/2) or prior to attainment of such age on account of a
financial hardship; provided, that such Participant has been an active
Participant in the Plan for at least five (5) years. A Participant may not make
another withdrawal on account of financial hardship under this Section 8.6 until
he has been an active Participant for at least an additional five (5) years from
the date of his last hardship withdrawal. For purposes of this Section 8.6, a
financial hardship shall mean a financial need or emergency which requires the
distribution of a Participant's Plan account in order to meet such need or
emergency. The determination of the existence of a financial hardship and the
amount required to be distributed to meet the hardship shall be made by the
Administrator in accordance with such uniform and nondiscriminatory rules as may
be established by the Administrator. A request for a withdrawal shall be made in
writing in a form prescribed by the Administrator and shall be made in
accordance with procedures and limitations established by the Administrator.
Notwithstanding the above, no withdrawal under this Section 8.6 shall be
permitted if the Integration Formula is selected in item 6 of the Adoption
Agreement (Profit Sharing Plan).
(b) If a distribution is made pursuant to this Section 8.6 at a time
when the Participant has a nonforfeitable right to less than one hundred percent
(100%) of his Account balance derived from Employer contributions and the
Participant may increase the nonforfeitable percentage in the Account:
(i) A separate Account will be established for the Participant's
interest in the Plan as of the time of the distribution; and
45
(ii) 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+(RxD))-(RxD)
For purposes of applying the formula above: 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, and R is the ratio of the Account balance at the
relevant time to the Account balance after distribution.
Section 8.7. Transfer of Benefits to Eligible Retirement Plan. (a)
This Section applies to distributions made on or after January 1, 1993.
Notwithstanding any provision of the Plan to the contrary that would otherwise
limit a distributee's election under this Article VIII, a distributee may elect,
at the time and in the manner prescribed by the Administrator, to have any
portion of an eligible rollover distribution paid directly to an eligible
retirement plan specified by the distributee in a direct rollover.
(b) An eligible rollover distribution is any distribution of all or
any portion of the balance to the credit of the distributee, except that an
eligible rollover distribution does not include (i) any distribution that is one
of a series of substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the distributee or the joint
lives (or joint life expectancies) of the distributee and the distributee's
designated beneficiary, or for a specified period of ten years or more; (ii) any
distribution to the extent such distribution is required under Section 401(a)(9)
of the Code; and (iii) the portion of any distribution that is not includible in
gross income (determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
(c) An eligible retirement plan is an individual retirement account
described in Section 408(a) of the Code, an individual retirement annuity
described in Section 408(b) of the Code, an annuity plan described in Section
403(a) of the Code, or a qualified trust described in Section 401(a) of the
Code, that accepts the distributee's eligible rollover distribution. However, in
the case of an eligible rollover distribution to the surviving spouse, an
eligible retirement plan is an individual retirement account or individual
retirement annuity.
(d) A distributee includes an employee or former employee. In
addition, the employee's or former employee's surviving spouse and the
employee's or former employee's spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as defined in Section 414(p)
of the Code, are distributees with regard to the interest of the spouse or
former spouse.
(e) A direct rollover is a payment by the plan to the eligible
retirement plan specified by the distributee.
46
ARTICLE IX.
ESTABLISHMENT OF
CUSTODIAL ACCOUNT; INVESTMENTS
------------------------------
Section 9.1. Custodial Account. (a) Unless the Employer elects
otherwise in the Adoption Agreement, the Custodian shall open and maintain
separate Custodial Accounts for each individual that the Employer shall from
time to time certify to the Custodian as a Participant in the Plan. Such
Custodial Accounts shall reflect the various Participant Accounts described at
Section 7.1 hereof.
(b) If the Employer so elects in the Adoption Agreement the Custodian
shall open and maintain a single Custodial Account in the name of the Employer.
If only a single Custodial Account is established, the Employer shall be
responsible for maintaining the records for the individual Participant accounts.
(c) In the event that separate balances are not maintained for the
portion of a Participant's Account balance derived from Employer contributions
and Participant Voluntary Contributions, the Account balance derived from
Participant Voluntary Contributions shall be the Participant's total account
balance multiplied by a fraction, the numerator of which is the total amount of
Participant Voluntary Contributions (less any withdrawals) and the denominator
of which is the sum of the numerator and the total Employer contributions
(including Elective Deferrals) made on behalf of such Participant.
Section 9.2. Receipt of Contributions. The Custodian shall accept such
contributions of money on behalf of Participants as it may receive from time to
time from the Employer. The Custodian may, in its sole discretion, also accept
money or Investment Company Shares held under a preceding plan of the Employer
qualified under Code Section 401(a) or which qualify as rollover contributions
or transfers under Section 4.6 of the Plan. All such contributions shall be
accompanied by written instructions, in a form acceptable to the Custodian, from
the Employer specifying the Participant Accounts to which they are to be
credited.
Section 9.3. Investment of Account Assets. (a) Upon written
instructions given by the Employer on a uniform and nondiscriminatory basis as
between Participants, the Custodian shall invest and reinvest contributions
credited to a Participant Account(s) in Investment Company Shares. All
Participant Accounts shall share in the profits or losses of the investments on
a pro rata basis (i.e., in the ratio that the Participant's Account balance
bears to all Account balances, other than Accounts which are self-directed under
subsection (b) below), subject to adjustment by the Administrator on a fair and
equitable basis for contributions, distributions and/or withdrawals during the
year. The amount of each contribution credited to a Participant Account to be
applied to the purchase of Investment Company Shares shall be invested by the
Custodian at the applicable offering price. These purchases shall be credited to
such Account with notation as to cost. The Custodian shall have no discretionary
investment responsibility and in no event be liable to any person for following
investment instructions given by the Employer or the Participant in the manner
provided herein.
47
(b) Each Participant, through his separate Participant Account(s),
shall be the beneficial owner of all investments held in such Account(s). The
Employer however shall direct the Custodian (in a nondiscriminatory manner)
regarding the selection of specific Investment Company Shares to be purchased
for the Accounts of the Participants. The Employer may permit (in a
nondiscriminatory manner) the individual Participants to select and direct the
purchase of specific Investment Company Shares for their own Account(s). In such
a situation, the Employer shall transmit all such directions to the Custodian.
Notwithstanding the foregoing, unless otherwise elected in the Adoption
Agreement the individual Participant may direct the investment of his Account(s)
and select the specific Investment Company Shares for purchase for his
individual Account(s) by directly communicating with the Custodian.
(c) All income, dividends and capital gain distributions received on
the Investment Company Shares held in each Participant Account shall be
reinvested in such shares which shall be credited to such Account. If any
distribution on Investment Company Shares may be received at the election of the
Participant in additional shares or in cash or other property, the Custodian
shall elect to receive it in additional shares. Al1 investments acquired by the
Custodian shall be registered in the name of the Custodian or its registered
nominee.
Section 9.4. Exclusive Benefit. The Custodial Account or Accounts
established hereby shall not be used or diverted to purposes other than the
exclusive benefit of Participants or their Beneficiaries.
Section 9.5. Expenses. All expenses and charges in respect of the Plan
and the Custodial Account, including, without limitation, the Custodian's fees
and commissions and taxes of any kind upon or with respect to the Plan, shall be
paid by the Employer; provided, however, that the Custodian shall be authorized
to pay such charges and expenses from the Plan if the Employer shall fail to
make payment within thirty (30) days after it has been billed therefor by the
Custodian or such charges have otherwise become due.
Section 9.6. Voting. The Custodian shall deliver, or cause to be
executed and delivered, to the Employer all notices, prospectuses, financial
statements, proxies and proxy soliciting materials received by the Custodian
relating to investments held in Participants' Accounts. The Custodian shall vote
all proxies only in accordance with instructions received from the Employer.
Section 9.7. Reports of the Custodian and Administrator. (a) The
Custodian shall keep accurate and detailed records of all receipts, investments,
disbursements and other transactions required to be performed hereunder. Not
later than sixty (60) days after the close of each calendar year (or after the
Custodian's resignation or removal), the Custodian shall file with the Employer
a written report reflecting the receipts, disbursements and other transactions
effected by it during such year (or period ending with such resignation or
removal) and the assets of this Plan at its close. Such report shall be open to
inspection by any Participant for a period of thirty (30) days immediately
following the date on which it is filed with the Employer. Upon the expiration
of such thirty (30) day period, the Custodian shall be forever released and
discharged from all liability and accountability to anyone with respect to its
acts, transactions, duties,
48
obligations or responsibilities as shown in or reflected by such report, except
with respect to any such acts or transactions as to which the Employer shall
have filed written objections with the Custodian within such thirty (30) day
period.
(b) Annual reports provided to the Employer by the Custodian shall be,
in the Custodian's discretion, on a calendar year basis unless otherwise
required by law. The Employer shall compute the valuation of all Plan assets at
least annually at the fair market value as of the last day of each calendar
year.
(c) The Custodian shall keep such records, make such identifications
and file such returns and other information concerning the Plan as may be
required of the Custodian under the Code or forms adopted thereunder.
(d) The Administrator shall be solely responsible for the filing of
any reports or information required under the Code or forms adopted thereunder.
Section 9.8. Limitation of Custodian's Duties and Liability. (a) The
Custodian's duties are limited to those set forth in this Plan, and the
Custodian shall have no other responsibility in the administration of the Plan
or for compliance by the Employer with any provision thereof. The Custodian
shall not be responsible for the collection of contributions provided for under
the Plan; the purpose or propriety of any distribution; or any action or
nonaction taken by the Employer or pursuant to the Employer's request. The
Custodian shall have no responsibility to determine if instructions received by
it from the Employer, or the Employer's designated agent, comply with the
provisions of the Plan. The Custodian shall not have any obligation either to
give advice to any Participant on the taxability of any contributions or
payments made in connection with the Plan or to determine the amount of excess
contribution and net income attributable thereto. The Custodian may employ
suitable agents and counsel and pay their reasonable expenses and compensation,
and such agents or counsel may or may not be agent or counsel for the Employer,
and may be the Investment Advisor or an Investment Company.
(b) The Employer shall at all times fully indemnify and hold harmless
the Custodian, its agents, counsel, successors and assigns, from any liability
arising from distributions made or actions taken, and from any and all other
liability whatsoever which may arise in connection with this Plan, except
liability arising from the negligence or willful misconduct of the Custodian.
The Custodian shall be under no duty to take any action other than as herein
specified with respect to this Plan unless the Employer shall furnish the
Custodian with instructions in a form acceptable to the Custodian; or to defend
or engage in any suit with respect to this Plan unless the Custodian shall have
first agreed in writing to do so and shall have been fully indemnified to the
satisfaction of the Custodian. The Custodian (and its agents) may conclusively
rely upon and shall be protected in acting upon any written order from the
Employer or any other notice, request, consent, certificate or other instrument
or paper believed by it to be genuine and to have been properly executed, and,
so long as it acts in good faith, in taking or omitting to take any other
action. No amendment to the Plan shall place any greater
49
burden on the Custodian without its written consent. The Custodian shall not be
liable for interest on any cash balances maintained in the Plan.
(c) The Employer shall have the sole authority to enforce the terms of
the Plan on behalf of any and all persons having or claiming any interest
therein by virtue of the Plan.
(d) The Custodian, its agents, counsel, successors and assigns, shall
not be liable to the Employer, or to any Participants or Beneficiary for any
depreciation or loss of assets, or for the failure of this Plan to produce any
or larger net earnings. The Custodian further shall not be liable for any act or
failure to act of itself, its agents, employees, or attorneys, so long as it
exercises good faith, is not guilty of negligence or willful misconduct, and has
selected such agents, employees, and attorneys with reasonable diligence. The
Custodian shall have no responsibility for the determination or verification of
the offering or redemption prices or net asset values of Investment Company
Shares, and shall be entitled to rely for such prices and net asset values upon
statements issued by or on behalf of the Investment Company issuing the
Investment Company Shares. The Custodian shall have no duty to inquire into the
investment practices of such Investment Company; such Investment Company shall
have the exclusive right to control the investment of its funds in accordance
with its stated policies, and the investments shall not be restricted to
securities of the character now or hereafter authorized for trustees by law or
rules of court. The Custodian shall not be liable or responsible for any
omissions, mistakes, acts or failures to act of such Investment Company, or its
successors, assigns or agents. Notwithstanding the foregoing, nothing in this
Plan shall relieve the Custodian of any responsibility or liability under ERISA.
50
ARTICLE X.
AMENDMENT AND TERMINATION
-------------------------
Section 10.1. Amendment. (a) The Employer reserves the right at any
time and from time to time to amend or terminate the Plan. No part of the Plan
shall by reason of any amendment or termination be used for or diverted to
purposes other than the exclusive benefit of Participants and their
Beneficiaries, and further that no amendment or termination may retroactively
change or deprive any Participant or Beneficiary of rights already accrued under
the Plan except insofar as such amendment is necessary to preserve the
qualification and tax exemption of the Plan pursuant to Code Section 401. No
amendment shall increase the duties of the Custodian or otherwise adversely
affect the Custodian unless the Custodian expressly agrees thereto. However, if
the Employer amends any provision of this Plan (including a waiver of the
minimum funding requirements under Code Section 412(d)) other than by changing
any election made in the Adoption Agreement, adopting an amendment stated in the
Adoption Agreement which allows the Plan to satisfy Code Section 415, to avoid
duplication of minimum benefits under Code Section 416 or to add certain model
amendments published by the Internal Revenue Service which specifically provide
that their adoption will not cause the Plan to be treated as an individually
designed plan, such Employer shall no longer participate under this prototype
plan and the Employer's Plan shall be deemed to be an individually designed
plan. The Employer hereby irrevocably delegates (retaining, however, the right
and power to change any election made in the Adoption Agreement) to the
Investment Advisor the right and power to amend the Plan at any time, and from
time to time, and the Employer by adopting the Plan shall be deemed to have
consented thereto. The Investment Advisor shall notify the Employer of any
amendment to the Plan. For purposes of any Investment Advisor amendments, the
mass submitter shall be recognized as the agent of the Investment Advisor. If
the Investment Advisor 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.
(b) No amendment to the Plan shall be effective to the extent that it
has the effect of decreasing a Participant's accrued benefit except to the
extent permitted by Code Sections 412(c)(8) and 411(d)(6). For purposes of this
subsection, a Plan amendment which has the effect of decreasing a Participant's
Account balance or eliminating an optional form of benefit, with respect to
benefits attributable to service before the amendment shall be treated as
reducing an accrued benefit. 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 right
to his Employer-derived accrued benefit will not be less than his percentage
computed under the Plan without regard to such amendment.
(c) Notwithstanding subsection (a) above, an Employer may amend the
Plan by adding overriding plan language to the Adoption Agreement where such
language is necessary to satisfy Code Sections 415 or 416 because of the
required aggregation of multiple plans under such Code Sections.
51
Section 10.2. Termination. Upon complete discontinuance of the
Employer's Profit Sharing Contributions (if the Employer has adopted a Profit
Sharing Plan by completing the appropriate Adoption Agreement) or termination or
partial termination of the Plan, each affected Participant's Account shall
become nonforfeitable. Upon termination or partial termination of the Plan, the
Employer shall instruct the Custodian whether currently to distribute to each
Participant the entire amount of the Participant's Account, in such one or more
of the methods described in Article VIII, or whether to continue the Plan and to
make distributions therefrom as if the Plan had continued; provided that, in the
event the Plan is continued, the Plan must continue to satisfy the requirements
of Code Section 401(a). The Employer shall in all events exercise such
discretion in a nondiscriminatory manner. The Plan shall continue in effect
until the Custodian shall have completed the distribution of all of the Plan
asset and the accounts of the Custodian have been settled.
52
ARTICLE XI
FIDUCIARY RESPONSIBILITIES
--------------------------
Section 11.1. Administrator. The Administrator shall have the power
to allocate fiduciary responsibilities and to designate other persons to carry
out such fiduciary responsibilities; provided such allocation is in writing and
filed with the Plan records. The Administrator may employ one or more persons to
render advice to the Administrator with regard to its responsibilities under the
Plan, and consult with counsel, who may be counsel to the Employer.
Section 11.2. Powers of Administrator. The Administrator shall
administer the Plan in accordance with its terms and shall have all powers
necessary to carry out its terms. The Administrator shall have discretionary
authority to determine eligibility for benefits and to interpret and construe
the terms of the Plan, and any such determination, interpretation or
construction shall be final and binding on all parties unless arbitrary and
capricious. Any such discretionary authority shall be carried out in a uniform
and nondiscriminatory manner.
Section 11.3. Records and Reports. The Administrator, or those to
whom it has delegated fiduciary duties, shall keep a record of all proceedings
and actions, and shall maintain all such books of account, records and other
data as shall be necessary for the proper administration of the Plan. The
Administrator, or those to whom it has delegated fiduciary duties, shall have
responsibility for compliance with the provisions of ERISA relating to such
office, including filing with the Secretary of Labor and Internal Revenue
Service of all reports required by the Code and/or ERISA and furnishing
Participants and Beneficiaries with descriptions of the Plan and reports
required by ERISA.
Section 11.4. Other Administrative Provisions.
(a) No bond or other security shall be required of the Administrator,
and/or any officer or Employee of the Employer to whom fiduciary
responsibilities are allocated, except as may be required by ERISA.
(b) The Administrator or the Employer may shorten, extend or waive
the time (but not beyond sixty days) required by the Plan for filing any notice
or other form with the Administrator or the Employer, or taking any other action
under the Plan, except a response to an appeal under Section 11.6, from a
decision of the Administrator.
(c) The Administrator or the Employer may direct that such reasonable
expenses as may be incurred in the administration of the Plan shall be paid out
of the funds of the Plan, unless the Employer shall pay them.
(d) The Administrator, the Custodian, and any other persons
performing fiduciary duties under the Plan shall act with the care, skill,
prudence and diligence under the circumstances then prevailing that a prudent
man acting in a like capacity and familiar with such matters would use in the
conduct of an enterprise of like character and with like aims, and no
53
such person shall be liable, to the maximum extent permitted by ▇▇▇▇▇, for any
act of commission or omission in accordance with the foregoing standard.
Section 11.5. Claims Procedure. Any claim relating to benefits under
the Plan shall be filed with the Administrator on a form prescribed by the
Administrator. If a claim is denied in whole or in part, the Administrator shall
give the claimant written notice of such denial within ninety (90) days after
the filing of such claim, which notice shall specifically set forth:
(a) The reasons for the denial;
(b) The pertinent Plan provisions on which the denial was based;
(c) Any additional material or information necessary for the claimant
to perfect the claim and an explanation of why such material or information is
needed; and
(d) An explanation of the Plan's procedure for review of the denial
of the claim.
In the event that the claim is not granted and notice of denial of a claim is
not furnished by the ninetieth (90th) day after such claim was filed, the claim
shall be deemed to have been denied on that day for the purpose of permitting
the claimant to request review of the claim.
Section 11.6. Claims Review Procedure.
(a) Any person whose claim filed pursuant to Section 11.5 has been
denied in whole or in part by the Administrator may request review of the claim
by the Employer, by filing a written request with the Administrator. The
claimant shall file such request (including a statement of his position) with
the Employer no later than sixty (60) days after the mailing or delivery of the
written notice of denial provided for in Section 11.5, or, if such notice is not
provided, within sixty (60) days after such claim is deemed denied pursuant to
Section 10.5. The claimant shall be permitted to review pertinent documents. A
decisions shall be rendered by the Employer and communicated to the claimant not
later than sixty (60) days after receipt of claimant's written request for
review. However, if the Employer finds it necessary, due to special
circumstances (for example, the need to hold a hearing), to extend this period
and so notifies the claimant in writing, the decision shall be rendered as soon
as practicable, but in no event later than one hundred and twenty (120) days
after the claimant's request for review. The employer's decision shall be in
writing and shall specifically set forth:
(i) The reasons for the decision; and
(ii) The pertinent Plan provisions on which the decision is based.
Any such decision of the Employer shall bind the claimant and the Employer, and
the Administrator shall take appropriate action to carry out such decision.
54
(b) Any person whose claim has been denied in whole or in part must
exhaust the administrative review procedures provided in subsection (a) above
prior to initiating any claim for judicial review.
55
ARTICLE XII.
AMENDMENT AND CONTINUATION OF ORIGINAL PLAN
-------------------------------------------
Notwithstanding any of the foregoing provisions of the Plan to the
contrary, an employer that has previously established an Original Plan may, in
accordance with the provisions of the Original Plan, amend and continue the
Original Plan in the form of this Plan and become an Employer hereunder, subject
to the following:
(a) subject to the conditions and limitations of the Plan, each
person who is a Participant under the Original Plan immediately prior to the
effective date of the amendment and continuation thereof in the form of this
Plan will continue as a Participant in this Plan;
(b) no election may be made in the Adoption Agreement if such
election would reduce the benefits of a Participant under the Original Plan to
less than the benefits to which he would have been entitled if he had resigned
from the employ of the Employer on the date of the Amendment and continuation of
the Original Plan in the form of this Plan;
(c) the amounts, if any, of a Participant's or-former Participant's
Accounts immediately prior to the effective date of the amendment and
continuation of the Original Plan in the form of this Plan shall be reduced to
cash, deposited with the Custodian and constitute the opening balances in such
Participant's Account under this Plan;
(d) amounts being paid to individuals in accordance with the
provisions of the Original Plan shall continue to be paid under this Plan, but
in the form that they were being paid under the Original Plan;
(e) any Beneficiary designation in effect under the Original Plan
immediately before its amendment and continuation in the form of this Plan which
effectively meets the requirements contained in Section 2.3 hereof shall be
deemed to be a valid Beneficiary designation pursuant to Section 2.3 of this
Plan, unless and until the Participant or former Participant revokes such
Beneficiary designation or makes a new Beneficiary designation under this Plan.
If the Beneficiary designation form does not meet the requirements of Section
2.3 hereunder, the Participant's spouse shall be deemed to be his Beneficiary.
If the Participant is unmarried, or his spouse does not survive him, his estate
shall be deemed his Beneficiary.
(f) if the Original Plan's vesting schedule (or this Plan's vesting
schedule) or the Plan is amended or changed in any way that directly or
indirectly affects the computation of a Participant's nonforfeitable interest in
his Account derived from Employer contributions, each such Participant with at
least three (3) Years of Service with the Employer may elect, within a
reasonable period after the adoption of the amendment or change, to have his
nonforfeitable percentage computed under the Plan without regard for the
amendment or change. For any Participant who does not have at least one (1) Hour
of Service in any Plan Year beginning after December 31, 1988, the preceding
sentence shall be applied by substituting "five (5) Years of Service" for "three
(3) Years of Service" where such language appears therein. Any such election
must be made during the period commencing on the date of the amendment or change
and ending
56
on the latest of: (i) sixty (60) days after that date; (ii) sixty (60) days
after the effective date of the amendment or change; or (iii) sixty (60) days
after such Participant is issued written notice of the amendment or change by
the Plan Administrator or Employer.
57
ARTICLE XIII.
TOP-HEAVY PROVISIONS
--------------------
Section 13.1. Effect of Top-Heavy Status. The Plan shall be a "top-
heavy Plan" for any Plan Year commencing after December 31, 1983, if any of the
following conditions exist:
(a) If the Top-Heavy Ratio for this Plan exceeds sixty percent (60%)
and this Plan is not part of any Required Aggregation Group or Permissive
Aggregation Group.
(b) If this Plan is a part of a Required Aggregation Group but not
part of a Permissive Aggregation Group and the Top-Heavy Ratio for the group of
plans exceeds sixty percent (60%).
(c) If this Plan is a part of a Required Aggregation Group and part
of a Permissive Aggregation Group and the Top-Heavy Ratio for the Permissive
Aggregation Group exceeds sixty percent (60%).
If the Plan is a Top-Heavy Plan in any Plan Year beginning after
December 31, 1983, the provisions of Sections 13.3 through 13.6 shall supersede
any conflicting provisions of the Plan or the Adoption Agreement.
Section 13.2. Additional Definitions. Solely for purposes of this
Article, the following terms shall have the meanings set forth below:
(a) "Key Employee" means any Employee or former Employee (and the
Beneficiaries of such Employee) who at any time during the Determination Period
was an officer of the Employer if such individual's annual compensation exceeds
50 percent of the dollar limitation under Code Section 415(b)(1)(A), an owner
(or considered an owner under Code Section 318) of one of the ten largest
interests in the Employer if such individual's compensation exceeds 100 percent
(100%) of the dollar limitation under Code Section 415(c)(1)(A), a five percent
(5%) owner of the Employer, or one percent (1%) owner of the Employer who has an
annual compensation of more than $150,000. Annual compensation means
compensation as defined in Code Section 415(c)(3), of the Code, but including
amounts contributed by the Employer pursuant to a salary reduction agreement
which are excludible from the Employee's gross income under Code Sections 125,
402(a)(8), 402(h) or 403(b). The determination period is the plan year
containing the Determination Date and the four (4) preceding Plan Years.
The determination of who is a Key Employee will be made in accordance
with Code Section 416(i)(1) and the Regulations thereunder.
(b) "Determination Date" means the last day of the preceding Plan
Year. For the first Plan Year of the Plan Determination Date shall mean the last
day of that year.
(c) "Top-Heavy Ratio" means:
58
(i) If the Employer maintains one or more defined contribution
plans (including any simplified employee pension plan) and the Employer has not
maintained any defined benefit plan which during the five (5) year period ending
on the Determination Date(s) has or has had accrued benefits, the Top-Heavy
Ratio for this plan alone or for the Required or Permissive Aggregation Group as
appropriate is a fraction, the numerator of which is the sum of the account
balances of all Key Employees as of the determination date(s) (including any
part of any account balance distributed in the five (5) year period ending on
the Determination Date(s)), and the denominator of which is the sum of all
account balances (including any part of any account balance distributed in the
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.
(ii) If the Employer maintains one or more defined contribution
plans (including any simplified employee pension plan) and the Employer
maintains or has maintained one or more defined benefit plans which during the
five (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 (i) 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 (i) above, and the
present value of accrued benefits under the defined benefit plan or plans for
all participants as of the Determination Date(s), all determined in accordance
with Code Section 416 and the Regulations thereunder. The accrued benefits under
a defined benefit plan in both the numerator and denominator of the Top-Heavy
Ratio are increased for any distribution of an accrued benefit made in the five
(5) year period ending on the Determination Date.
(iii) For purposes of (i) and (ii) above the value of account
balances and the present value of accrued 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 (A) who is not a Key Employee but who was a Key
Employee in a prior year, or (B) who has not been credited with at least one (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. Deductible employee
contributions will not be taken into account for purposes of computing the Top-
Heavy Ratio.
When aggregating plans the value of account balances and accrued
benefits will be calculated with reference to the determination dates that fall
within the same calendar year.
59
(iv) The accrued benefit of a participant other than a Key Employee
shall be determined under (i) the method, if any, that uniformly applies for
accrual purposes under all defined benefit plans maintained by the employer, or
(ii) if there is no such method, as if such benefit accrued not more rapidly
than the slowest accrual rate permitted under the fractional rule of Code
Section 411(b)(1)(C).
(d) "Permissive Aggregation Group" means 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.
(e) "Required Aggregation Group" means (i) each qualified plan of the
Employer in which at least one Key Employee participates or participated at any
time during the five (5) year period ending on the Determination Date
(regardless of whether the plan has terminated), and (ii) any other qualified
plan of the Employer which enables a plan described in (i) to meet the
requirements of Code Sections 401(a)(4) or 410.
(f) "Valuation Date" means (i) in the case of a defined contribution
plan, the Determination Date, and (ii) in the case of a defined benefit plan,
the date as of which funding calculations are generally made within the twelve
(12) month period ending on the Determination Date.
(g) "Employer" means the employer or employers whose employees are
covered by this Plan and any other employer which must be aggregated with any
such employer under Code Sections 414(b), (c), (m) and (o).
(h) "Present Value" means the value based on an interest rate of five
percent (5%) and mortality assumptions based on the 1971 GAM Mortality Table or
such other interest rate or mortality assumptions as may be specified in the
Adoption Agreement.
Section 13.3. Minimum Allocations. (a) For any year in which the Plan
is a Top-Heavy Plan, each Participant who is not a Key Employee and who is not
separated from service at the end of the Plan Year shall receive allocations of
Employer contributions and forfeitures under this Plan at least equal to three
percent (3%) of Compensation (as defined in Section 2.6) for such year or, if
less, the largest percentage of the first two hundred thousand dollars
($200,000) of compensation allocated on behalf of the Key Employee for the Plan
Year where the Employer has no defined benefit plan which designates this Plan
to satisfy Code Section 401. This minimum allocation shall be determined without
regard for any Social Security contribution and shall be provided even though
under other provisions the Participant would not otherwise be entitled to
receive an allocation or would have received a lesser allocation because of (i)
the Participant's failure to complete One Thousand (1,000) Hours of Service (or
any equivalent provided in the Plan), or (ii) the Participant's failure to make
mandatory Employee contributions to the Plan, or (iii) Compensation less than a
stated amount.
(b) The provision in (a) above shall not apply to any Participant to
the extent the Participant is covered under any other plan or plans of the
employer and the employer has
60
provided in the Adoption Agreement that the minimum allocation or benefit
requirement applicable to top-heavy plans will be met in the other plan or
plans.
(c) The minimum allocation required (to the extent required to be
nonforfeitable under Section 416(b)) may not be forfeited under Code Sections
411(a)(3)(B) or 411(a)(3)(D)
(d) For purposes of subsection (a) above, neither Elective Deferrals
nor Employer Matching Contributions shall be taken into account for the purposes
of satisfying the minimum top-heavy benefits requirement.
Section 13.4. Benefit Limit Change. If the Employer maintains both
the Plan and a defined benefit plan which cover one or more of the same Key
Employees and the plans are Top-Heavy in a Plan Year, then Section 6.5(c) and
(j) hereof shall be amended to substitute "one hundred percent (100%)" for the
number "one hundred and twenty-five percent (125%)" where the latter appears
therein.
61
ARTICLE XIV.
MISCELLANEOUS
-------------
Section 14.1. Rights of Employees and Participants. No Employee or
Participant shall have any right or claim to any benefit under the Plan except
in accordance with the provisions of the Plan, and then only to the extent that
there are funds available therefor in the hands of the Custodian. The
establishment of the Plan shall not be construed as creating any contract of
employment between the Employer and any Employee or otherwise conferring upon
any Employee or other person any legal right to continuation of employment, nor
as limiting or qualifying the right of the Employer to discharge any Employee
without regard to the effect that such discharge might have upon his rights
under the Plan.
Section 14.2. Merger With Other Plans. The Plan shall not be merged
or consolidated with, nor transfer its assets or liabilities to, any other plan
unless each Participant, Beneficiary and other person entitled to benefits,
would (if the Plan then terminated) receive a benefit immediately after the
merger, consolidation or transfer which is equal to or greater than the benefit
he would have been entitled to receive if the Plan had terminated immediately
prior to the merger, consolidation or transfer.
Section 14.3. Non-Alienation of Benefits. The right to receive a
benefit under the Plan shall not be subject in any manner to anticipation,
alienation, or assignment, nor shall such right be liable for or subject to
debts, contracts, liabilities or torts, either voluntarily or involuntarily. Any
attempt by the Participant, Beneficiary or other person to anticipate, alienate
or assign his interest in or right to a benefit or any claim against him seeking
to subject such interest or right to legal or equitable process shall be null
and void for all purposes hereunder to the extent permitted by ▇▇▇▇▇ and the
Code. Notwithstanding the foregoing or any other provision of the Plan, the
Administrator shall recognize and give effect to a qualified domestic relations
order with respect to child support, alimony payments or marital property rights
if such order is determined by the Administrator to meet the applicable
requirements of Code Section 414(p). If any such order so directs, distribution
of benefits to the alternate payee may be made at any time, even if the
Participant is not then entitled to a distribution. The Administrator shall
establish reasonable procedures relating to notice to the Participant and
determinations respecting the qualified status of any domestic relations order.
Section 14.4. Failure to Qualify. Notwithstanding anything in this
Plan to the contrary, all contributions under the Plan made prior to the receipt
by the Employer of a determination by the Internal Revenue Service to the effect
that the Plan is qualified under Code Section 401 shall be made on the express
condition that such a determination will be received, and in the event that the
Internal Revenue Service determines upon initial application for a determination
that the Plan is not so qualified or tax exempt, all contributions made by the
Employer or Participants prior to the date of determination must be returned
within one (1) year from the date of such determination, but only if the
application for qualification is made by the time prescribed by law for filing
the Employer's return for the taxable year in which the Plan is adopted or such
later date as the Secretary of the Treasury may prescribe.
62
Section 14.5. Mistake of Fact: Disallowance of Deduction.
Notwithstanding anything in this Plan to the contrary, any contributions made by
the Employer which are conditioned on the deductibility of such amount under
Code Section 404, to the extent of the amount disallowed, or which are made
because of a mistake of fact must be returned to the Employer within one year
after such disallowance or such mistaken contribution.
Section 14.6. Participation under Prototype Plan. If the Plan as
adopted by the Employer either fails to attain or maintain qualification under
the Code, such Plan will no longer participate in this prototype plan and will
be considered an individually designed plan.
Section 14.7. Gender. Where the context admits, words used in the
singular include the plural, words used in the plural include the singular, and
the masculine gender shall include the feminine and neuter genders.
Section 14.8. Headings. The headings of Sections are included solely
for convenience of reference, and if there is any conflict between such headings
and the text of the Plan, the text shall control.
Section 14.9. Governing Law. Except to the extent governed by ERISA
and any other applicable federal law, the Plan shall be construed, administered
and enforced according to the laws of the state in which the Employer has its
principal place of business.
63
Section B
MONETTA FUNDS
PROTOTYPE DEFINED CONTRIBUTION RETIREMENT PLAN
ADOPTION AGREEMENT
[STANDARDIZED]
(PROFIT-SHARING PLAN)
The undersigned Employer hereby adopts and establishes the Monetta
Funds Prototype Defined Contribution Retirement Plan. This Plan is subject to
the terms set forth below in this Adoption Agreement.
1. EMPLOYER INFORMATION
Name:___________________________________________________________________
Address:________________________________________________________________
________________________________________________________________
Telephone Number: (____) ______________________________________________
Employer Identification Number:_________________________________________
Type of Entity: [_] Corporation
[_] Partnership
[_] Sole Proprietorship
[_] Other (please describe)
__________________________________________________
Employer's Taxable Year is [_] calendar year or [_] fiscal year
beginning ____________________________________________________________.
2. PLAN INFORMATION
Plan Administrator (if other than the Employer):
Name: _______________________________________________________________
Address: _______________________________________________________________
_______________________________________________________________
Telephone Number: (___) _____________________________
Plan Year is the [_] calendar year, [_] Employer's fiscal year, or [_] year
beginning _______________.
3. EFFECTIVE DATE
Execution of this Adoption Agreement (elect one):
[_] Establishes a new plan.
[_] Is an amendment to an Original Plan.
This amendment is effective ____________, 19__.
[_] Is an amendment to an Original Plan under which no further
contributions will be made or participation permitted (a "frozen
plan"). This amendment is effective _____________, 19__. (You need not
complete items 4, 5 or 6 and check item 7(A)(l).)
The Effective Date of the Plan is ________________, 19__. (If this is
an amended plan enter the date the Original Plan first started.)
4. ELIGIBILITY REQUIREMENTS
(A) Please check one:
[_] An Employee need not complete any waiting period.
[_] In order to become a Participant, an Employee must satisfy the
following Age and Service Requirements (please fill in the blanks):
(1) An Employee must complete ___ (enter 1 or 2 years) Year(s) of
Employment. If more than 1 year is selected, you must also check
item 7(A)(1).
A Year of Employment shall mean the 12 consecutive month period
beginning on the date an Employee first performs an Hour of
Service or an anniversary thereof during which the Employee has
completed __________ (insert 1,000 or less) Hours of Service.
Hours of Service shall be determined on the basis of the method
elected below. Only one method may be elected. The method elected
shall be applied to all Employees covered under the Plan.
[_] On the basis of actual hours for which an Employee is paid or entitled
to payment.
[_] On the basis of days worked:
An Employee shall be credited with 10 Hours of Service if the Employee
would be credited with at least l Hour of Service during the day.
[_] On the basis of weeks worked:
An Employee shall be credited with 45 Hours of Service if the
Employee would be credited with at least 1 Hour of Service during
the week.
[_] On the basis of months worked:
[_] Employee shall be credited with 190 Hours of Service if the
Employee would be credited with at least 1 Hour of Service during
the month.
(2) An Employee must attain age _____ (not greater than age 21).
(B) Union Employees shall be:
[_] Included as eligible employees.
[_] Excluded from participation in the Plan.
Note: Union Employees must be covered by a collective bargaining
agreement between the Employer and employee representatives
under which retirement benefits were the subject of good faith
bargaining. The term "employee representatives" does not include
any organization more than one-half of whose members are
officers, executives or owners of the Employer.
5. COMPENSATION
(A) A Participant's "Compensation" shall include (check one):
[_] All taxable earnings for the Plan Year.
[_] Only amounts earned after completion of the eligibility
requirements selected in item 4 above.
(B) For any self-employed individual, Compensation means Earned Income.
6. EMPLOYER PROFIT SHARING CONTRIBUTIONS
(A) The Employer Profit Sharing Contributions for each Plan Year shall be
(check one):
[_] A discretionary amount determined by the Employer, but not more
than 15% of the aggregate Compensation and Earned Income of
Participants eligible to share in such contribution for the Plan
Year.
[_] An amount equal to ___% (not more than 15%) of the aggregate
Compensation and Earned Income of Participants eligible to share
in such contribution for the Plan Year.
(B) Employer Profit Sharing Contributions:
[_] Shall be made out of Net Profits.
[_] May be made without regard to Net Profits.
(C) Allocation Formulas
The Employer Profit Sharing Contributions (and) forfeitures) shall be
allocated to the accounts of eligible Participants pursuant to the
following formula (elect one):
(1) [_] Compensation Formula
[_] Employer Profit Sharing Contributions (and forfeitures)
shall be allocated based on each eligible Participant's
total Compensation for the Plan Year.
NOTE: If the Integration Formula is selected under the Pension Plan,
the Compensation Formula must be selected under this Plan.
(2) [_] Integration Formula
Employer Profit Sharing Contributions (and forfeitures)
shall be allocated based on each eligible Participant's
Compensation in excess of the Integration Level and total
Compensation for the Plan Year, subject to the limitation
set forth in Section 4.1(b) of the Plan.
[_] The Integration Level shall be the taxable wage base for
FICA tax purposes.
[_] The Integration Level shall be $_________ (not to exceed
the FICA taxable wage base).
NOTE: If the Plan is top-heavy all eligible Participants must first
be allocated 3% of their total Compensation and any remaining
contributions may be allocated pursuant to the Integration Formula.
7. VESTING
(A) A Participant shall have a nonforfeitable and fully vested interest in
his Employer Profit Sharing Contribution Account under the following
vesting schedule (check one):
(1) [_] A Participant shall at all times have a nonforfeitable and
fully vested interest.
(2) [_] A Participant shall be fully vested after ___ (not more than
3) Years of Service.
(3) [_] A Participant shall become vested in accordance with the
following schedule:
Vested
Years of Service Percentage
---------------- ----------
Less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 or more 100%
(B) A "Year of Service" shall mean any Plan Year in which an Employee
completes at least _________ (insert 1,000 or less) Hours of Service.
Years of Service shall include all Years of Service with the Employer
except as noted below (check one, both or none).
(1) [_] All Years of Service prior to the effective date of this
Plan (or a predecessor plan) shall be excluded.
(2) [_] All Years of Service before the Plan Year in which the
Participant attained age 18 shall be excluded.
8. CASH OR DEFERRED ARRANGEMENT (SECTION 401(K))
Please check one:
[_] This Plan will include a cash or deferred arrangement (complete the
remainder of this Section). The Effective Date of this Cash or
Deferred Arrangement (Section 401(k)) is ______________, 19__.
[_] This Plan will not include a cash or deferred arrangement (do not
complete the remainder of this Section).
(A) Elective Deferrals.
(1) An Employee shall be eligible to make Elective Deferrals
under Article V of the Plan upon satisfying the following
eligibility requirements:
[_] An Employee must complete ______ (not greater than 1 year)
Years of Employment.
[_] An Employee must attain age ______ (not greater than 21).
[_] Union Employees are excluded from making Elective Deferrals.
[_] All Employees are eligible to make Elective Deferrals.
(2) An Employee may elect to make Elective Deferrals to the Plan
equal to a percentage of regular salary or wages for a pay period
as specified in a salary reduction agreement. The maximum
percentage of Elective Deferrals shall be ________%.
[_] Elective Deferrals may be based on cash bonuses paid to the
Employee. The maximum percentage of such Elective Deferrals
shall be ____%.
(3) An Employee may change the rate of his Elective Deferrals:
[_] On the first day of each Plan Year.
[_] And on the following additional dates:
(4) [_] Recharacterization of excess contributions will be
available only for non-highly compensated employees.
(B) Matching Contributions
(1) [_] The percentage of Elective Deferral contributions which are
matched is:
[_] %.
[_] of the first % of Elective Deferrals.
[_] A percentage determined by the Employer, but will not be more
than 100%.
(2) Matching Contributions are made:
[_] Each pay period in which Elective Deferrals are made.
[_] At the end of the Plan Year for Employees meeting the
requirements for annual contributions.
(3) [ ] Matching Contributions will vest under the following schedule
(elect one):
[ ] Employee shall at all times have a nonforfeitable and fully
vested interest in any Matching Contributions.
[ ] An Employee shall be fully vested in any Matching Contributions
after (not more than 3) Years of Service.
[ ] An Employee shall become vested in any Matching Contributions in
accordance with the following schedule:
Nonforfeitable
Years of Service Percentage
----------------
Less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 or more 100%
(C) Special Contributions
[ ] The Employer may make Qualified Matching Contributions subject
to Section 5.4 of the Plan.
[ ] The Employer may make Qualified Non-Elective Contributions,
subject to Section 5.4 of the Plan.
Note: These special contributions are used to satisfy the
nondiscrimination tests which apply to elective deferral and
matching contributions.
(D) Hardship Withdrawals
[ ] Withdrawals on account of financial hardship are allowed in
accordance with Section 5.5(a) of the Plan.
[ ] Withdrawals on account of financial hardship are not allowed.
9. PARTICIPANT AFTER-TAX CONTRIBUTIONS
Participant Voluntary Contributions (check one):
[ ] Participant Voluntary Contributions are permitted.
[ ] Participant Voluntary Contributions are permitted only for non-highly
compensated employees.
[ ] Participant Voluntary Contributions are not permitted.
10. WITHDRAWAL OF EMPLOYER PROFIT SHARING CONTRIBUTIONS
[ ] A Participant who has participated in the Plan for at least 5 years
may withdraw up to -% of his vested Employer Profit Sharing
Contribution Account after attaining age 59 1/2 or on account of a
financial hardship in accordance with Section 8.6 of the Plan.
Note: Withdrawals are not permitted if the Integration Formula is
selected in item 6(C)(2).
[ ] Withdrawals are not permitted.
11. NORMAL RETIREMENT AGE
The Normal Retirement Age shall be age ___ [insert an age not to exceed
65].
12. LIMITATION ON ALLOCATIONS
"Limitation Year", if other than a calendar year, shall mean the 12
consecutive month period ending on the last day of________________________.
Follow these instructions only if the Employer maintains (or has ever
maintained) another qualified plan (other than the Pension Plan) which is
either (i) a qualified defined contribution plan other than a Master or
Prototype Plan or (ii) a qualified defined benefit plan in which any
Participant in this Plan is (or was) a participant or could become a
participant, or if the Employer maintains a welfare benefit fund or an
individual medical account.
To comply with Internal Revenue Code requirements, please attach
appropriate provisions that limit the amount of Annual Additions allocated
to any Participant's Account.
If you do not attach the appropriate provisions, Sections 6.3. and 6.4 of
the Plan will automatically apply.
13. TOP-HEAVY PROVISIONS
The interest rate and mortality assumptions for determining Top-Heavy
status shall be the assumptions designated under Section 13.2(h) of the
Plan, unless different assumptions are selected below.
The interest rate and mortality assumptions for determining present values
to compute the Top-Heavy ratio shall be:
Interest Rate: ___%
Mortality Table: ___________________
14. ESTABLISHMENT OF ACCOUNTS
(A) Unless elected below, the Custodian shall establish individual
Custodial Accounts for each Participant.
[ ] The Custodian shall establish a single Custodial Account in the
name of the Employer and the Employer shall keep all records for
the individual Participants.
(B) Unless elected below, a Participant shall be permitted to direct the
investment of his Account balance.
[ ] Participant self-direction of the investment of his Account
balance is not permitted.
15. CUSTODIAN
The undersigned as Employer hereby appoints ________________ as Custodian.
16. FEES
The Custodian shall receive fees for its services in respect to each
Participant's Account in accordance with the attached fee schedule. The fee
schedule may be changed by the Custodian with advance notice. If not
separately included, any acceptance fee listed in the attached schedule
will be deducted from the initial contribution received from the Employer.
Any acceptance or other Custodian fees included will be deducted equally
from each Owner-Employee's contribution or Account. Annual maintenance fees
for each Participant's Account and any fees directly related to activity in
that Participant's Account shall be deducted annually and activity fees
will be deducted at the time incurred. Sufficient Investment Company Shares
will be redeemed to cover this fee.
Extraordinary services resulting from unusual administrative
responsibilities not contemplated by this schedule will be subject to such
additional charges as will reasonably compensate the Custodian for the
services performed.
17. REPRESENTATION OF EMPLOYER
The Employer represents that it has consulted its legal and tax advisors
with respect to the Plan. The Employer acknowledges that it may not
continue participation under the Plan if it fails to attain or maintain tax
qualification of the Plan or if it amends the Plan other than by a change
in the Adoption Agreement. The Employer agrees that whenever a Participant
Contribution is made, the Employer will determine that the Participant has
received the appropriate current Investment Company prospectus. The
Employer represents that the Participant has received such prospectus by
depositing contributions with the Custodian.
The Employer acknowledges that if it has ever maintained or later adopts
any plan (including after December 31, 1985, a welfare benefit fund, as
defined in Code Section 419(e), which provides post-retirement medical
benefits allocated to separate accounts for key employees, as defined in
Code Section 419A(d)(3) or an individual medical account, as defined in
Code Section 415(1)(2)) in addition to this Plan (or the Pension Plan), it
may not rely on an opinion letter issued by the National Office of the
Internal Revenue Service as evidence that this Plan is qualified under Code
Section 401. If the Employer adopts or maintains multiple plans and wishes
reliance that the Plan is qualified, application for an individual
determination letter should be made to the appropriate District Office of
the Internal Revenue Service.
18. ADDITIONAL INFORMATION
This Plan is sponsored by:
Monetta Financial Services, Inc.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇.
Wheaton, IL 60187
(▇▇▇) ▇▇▇-▇▇▇▇
Further information regarding this Plan may be obtained by contacting the
Plan Sponsor at the address or telephone number listed above.
The Plan Sponsor will inform the undersigned Employer of any amendments
made to this Plan or of the discontinuance or abandonment of this Plan.
Failure to properly fill out this Adoption Agreement may result in
disqualification of this Plan.
This Adoption Agreement can only be used with Plan document No. 01.
Signature of Employer: _________________________________________________
Name of person signing above (please print): ___________________________
Date: ___________________
CUSTODIAN ACCEPTANCE
The undersigned hereby accepts appointment as Custodian under the Plan.
------------------------------
By:
---------------------------
Date:
-------------------------
SECTION C
MONETTA FUNDS
PROTOTYPE DEFINED CONTRIBUTION RETIREMENT PLAN
ADOPTION AGREEMENT
[STANDARDIZED]
(PENSION PLAN)
The undersigned Employer hereby adopts and establishes the Monetta
Funds Prototype Defined Contribution Retirement Plan. This Plan is subject to
the terms set forth below in this Adoption Agreement.
1. EMPLOYER INFORMATION
Name:
----------------------------------------------------------------------
Address:
--------------------------------------------------------------------
--------------------------------------------------------------------
Telephone Number: ( )
---- -------------------------------------------------
Employer Identification Number:
Type of Entity: [ ] Corporation
[ ] Partnership
[ ] Sole Proprietorship
[ ] Other (please describe)
--------------------------------------------------
Employer's Taxable Year is [ ] calendar year or [ ] fiscal year
beginning
-----------------------------------------------------------------
2. PLAN INFORMATION
Plan Administrator (if other than the Employer):
Name:
---------------------------------------------------------------------
Address:
------------------------------------------------------------------
------------------------------------------------------------------
Telephone Number: ( )
---- -------------------------------------------------
Plan Year is the [ ] calendar year, [ ] Employer's fiscal year, or [ ] year
beginning _______________.
3. EFFECTIVE DATE
Execution of this Adoption Agreement (check one):
[ ] Establishes a new plan.
[ ] Is an amendment to an Original Plan.
This amendment is effective _____________, 19__.
[ ] Is an amendment to an Original Plan under which no further
contributions will be made or participation permitted (a "frozen
plan"). This amendment is effective _____________, 19__. (You need not
complete items 4, 5 or 6 and check item 7(A)(l)).
The Effective Date of the Plan is ________________, 19__. (If this is
an amended plan enter the date the Original Plan first started.)
4. ELIGIBILITY REQUIREMENTS
(A) Please check one:
[ ] An Employee need not complete any waiting period.
[ ] In order to become a Participant, an Employee must satisfy the
following Age and Service Requirements:
(1) An Employee must complete _____ (enter 1 or 2 years) Year(s)
of Employment. If more than 1 year is selected, you must
also check item 7(A)(1).
A Year of Employment shall mean the 12 consecutive month
period beginning on the date an Employee first performs an
Hour of Service or an anniversary thereof during which the
Employee has completed __________ (insert 1,000 or less)
Hours of Service.
Hours of Service shall be determined on the basis of the
method elected below. Only one method may be elected. The
method elected shall be applied to all Employees covered
under the Plan.
[ ] On the basis of actual hours for which an Employee is paid
or entitled to payment.
[ ] On the basis of days worked:
An Employee shall be credited with 10 Hours of Service if
the Employee would be credited with at least l Hour of
Service during the day.
[ ] On the basis of weeks worked:
An Employee shall be credited with 45 Hours of Service if
the Employee would be credited with at least 1 Hour of
Service during the week.
[ ] On the basis of months worked:
Employee shall be credited with 190 Hours of Service if the
Employee would be credited with at least 1 Hour of Service
during the month.
(2) An Employee must attain age _____ (not greater than age 21).
(B) Union Employees shall be:
[ ] Included as eligible employees.
[ ] Excluded from participation in the Plan.
Note: Union Employees must be covered by a collective bargaining
agreement between the Employer and employee representatives under
which retirement benefits were the subject of good faith
bargaining. The term "employee representatives" does not include
any organization more than one-half of whose members are
officers, executives or owners of the Employer.
5. COMPENSATION
(A) A Participant's "Compensation" shall include (check one):
[ ] All taxable earnings for the Plan Year.
[ ] Only amounts earned after completion of the eligibility
requirements selected in 4 above.
(B) For any self-employed individual, Compensation means Earned Income.
6. EMPLOYER PENSION CONTRIBUTIONS
(A) The Employer Pension Sharing Contributions for each Plan Year shall be
____% (not more than 25%) of the aggregate Compensation and Earned
Income of eligible Participants. This contribution will be reduced by
the amount of any forfeitures allocated to the accounts of
Participants for such Plan Year.
(B) Allocation Formulas
The Employer Pension Contributions shall be allocated pursuant to the
following formula (check one):
(1) [_] Compensation Formula
Employer Pension Contributions shall be allocated based on
each eligible Participant's total Compensation for the Plan
Year.
Note: If the Integration Formula is elected under the Profit Sharing
Plan, the Compensation Formula must be elected under this Plan
(2) [_] Integration Formula
Employer Pension Contributions (and forfeitures) shall be
allocated based on each eligible Participant's Compensation
in excess of the Integration Level and total Compensation
for the Plan Year, subject to the limitations set forth in
Section 4.2(b) or the Plan.
[_] The Integration Level shall be the taxable wage base for
FICA tax purposes.
[_] The Integration Level shall be $_____ (not to exceed the
FICA taxable wage base).
Note: If the Plan is top-heavy all eligible Participants must first be
allocated 3% of their total Compensation and any remaining
contributions may be allocated pursuant to the Integration Formula.
7. VESTING
(A) A Participant shall have a nonforfeitable and fully vested interest in
his Employer Pension Contribution Account under the following vesting
schedule (check one):
(1) [_] A Participant shall at all times have a nonforfeitable and
fully vested interest.
(2) [_] A Participant shall be fully vested after ___ (not more than
3) Years of Service.
(3) [_] A Participant shall become vested in accordance with the
following schedule:
Vested
Years of Service Percentage
---------------- ----------
Less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 or more 100%
(B) A "Year of Service" shall mean any Plan year in which an Employee
completes at least _________ (insert 1,000 or less) Hours of Service.
Years of Service shall include all Years of Service with the Employer
except as noted below (check one, both or none).
(1) [_] All Years of Service prior to the effective date of this
Plan (or a predecessor plan) shall be excluded.
(2) [_] All Years of Service before the Plan Year in which the
Participant attained age 18 shall be excluded.
8. PARTICIPANT AFTER-TAX CONTRIBUTIONS
[_] Participant Voluntary Contributions (check one):
[_] Participant Voluntary Contributions are permitted.
[_] Participant Voluntary Contributions are permitted only for non-highly
compensated employees.
[_] Participant Voluntary Contributions are not permitted.
9. NORMAL RETIREMENT AGE
The Normal Retirement Age shall be age ___ [insert an age not to exceed
65].
10. LIMITATION ON ALLOCATIONS
"Limitation Year", if other than a calendar year, shall mean the 12
consecutive month period ending on the last day of_______________________.
Follow these instructions only if the Employer maintains (or has ever
maintained) another qualified plan (other than the Profit Sharing Plan)
which is either (i) a qualified defined contribution plan other than a
Master or Prototype Plan or (ii) a qualified defined benefit plan in which
any Participant in this Plan is (or was) a participant or could become a
participant, or if the Employer maintains a welfare benefit fund or an
individual medical account.
To comply with Internal Revenue Code requirements, please attach
appropriate provisions that limit the amount of Annual Additions allocated
to any Participant's Account.
If you do not attach the appropriate provisions, Sections 6.3. and 6.4 of
the Plan will automatically apply.
11. TOP-HEAVY PROVISIONS
The interest rate and mortality assumptions for determining Top-Heavy
status shall be the assumptions designated under Section 13.2(h) of the
Plan, unless different assumptions are selected below.
The interest rate and mortality assumptions for determining present values
to compute the Top-Heavy ratio shall be:
Interest Rate: ___%
Mortality Table: ___________________
12. ESTABLISHMENT OF ACCOUNTS
(A) Unless elected below, the Custodian shall establish individual
Custodial Accounts for each Participant.
[_] The Custodian shall establish a single Custodial Account in the
name of the Employer and the Employer shall keep all records for
the individual Participants.
(B) Unless elected below, a Participant shall be permitted to direct the
investment of his Account balance.
[_] Participant self-direction of the investment of his Account
balance is not permitted.
13. CUSTODIAN
The undersigned as Employer hereby appoints ________________ as Custodian.
14. FEES
The Custodian shall receive fees for its services in respect to each
Participant's Account in accordance with the attached fee schedule. The fee
schedule may be changed by the Custodian with advance notice from time to
time. If not separately included, any acceptance fee listed in the attached
schedule will be deducted from the initial contribution received from the
Employer. Any acceptance or other Custodian fees included will be deducted
equally from each Owner-Employee's contribution or Account. Annual
maintenance fees for each Participant's Account and any fees directly
related to activity in that Participant's Account shall be deducted
annually and activity fees will be deducted at the time incurred.
Sufficient Investment Company Shares will be redeemed to cover this fee.
Extraordinary services resulting from unusual administrative
responsibilities not contemplated by this schedule will be subject to such
additional charges as will reasonably compensate the Custodian for the
services performed.
15. FUNDING WAIVER
In the event the Employer obtains a funding waiver under Code Section 412
from the Internal Revenue Service, the Employer shall amend the Plan by
adding language which will override the affected provisions of the Plan and
this Adoption Agreement (attach appropriate overriding language to this
Adoption Agreement to comply with the Code).
Note: An Employer that amends the Plan because of a waiver of the minimum
funding requirements under Code Section 412 will no longer participate in
this prototype Plan and will be considered to have adopted an individually
designed plan.
16. REPRESENTATION OF EMPLOYER
The Employer represents that it has consulted its legal and tax advisors
with respect to the Plan. The Employer acknowledges that it may not
continue participation under the Plan if it fails to attain or maintain tax
qualification of the Plan or if it amends the Plan other than by a change
in the Adoption Agreement. The Employer agrees that whenever a Participant
contribution is made, the Employer will determine that the Participant has
received the appropriate current Investment Company prospectus. The
Employer represents that the Participant has received such prospectus by
depositing contributions with the Custodian.
The Employer acknowledges that if it has ever maintained or later adopts
any plan (including after December 31, 1985, a welfare benefit fund, as
defined in Code Section 419(e), which provides post-retirement medical
benefits allocated to separate accounts for key employees, as defined in
Code Section 419A(d)(3) or an individual medical account, as defined in
Code Section 415(1)(2)) in addition to this Plan (or the Profit Sharing
Plan), it may not rely on an opinion letter issued by the National Office
of the Internal Revenue Service as evidence that this Plan is qualified
under Code Section 401. If the Employer adopts or maintains multiple plans
and wishes reliance that the Plan is qualified, application for an
individual determination letter should be made to the appropriate District
Office of the Internal Revenue Service.
17. ADDITIONAL INFORMATION
This Plan is sponsored by:
Monetta Financial Services, Inc.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇.
Wheaton, IL 60187
(▇▇▇) ▇▇▇-▇▇▇▇
Further information regarding this Plan may be obtained by contacting the
Plan Sponsor at the address or telephone number listed above.
The Plan Sponsor will inform the undersigned Employer of any amendments
made to this Plan or of the discontinuance or abandonment of this Plan.
Failure to properly fill out this Adoption Agreement may result in
disqualification of this Plan.
This Adoption Agreement can only be used with Plan document No. 01.
Signature of Employer: ____________________________________________
Name of person signing above (please print): ___________________________
Date: ___________________
CUSTODIAN ACCEPTANCE
The undersigned hereby accepts appointment as Custodian under the
Plan.
____________________________
By: __________________________
Date:_________________________
SECTION D
MONETTA FUNDS
PROTOTYPE DEFINED CONTRIBUTION RETIREMENT PLAN
SUMMARY PLAN DESCRIPTION
FOR ILLUSTRATIVE PURPOSES ONLY
------------------------------
NOTE TO EMPLOYERS:
This form of Summary Plan Description for the Monetta Funds Prototype
Defined Contribution Retirement Plan is intended for illustrative purposes only.
Each Employer adopting the Plan should have its own legal advisor carefully
review the form of Summary Plan Description with respect to the individual
elections made in the Adoption Agreements. An Employer may wish to revise the
language of this form of Summary and include examples for clarification.
To use this form, an Employer must fill in the appropriate blanks and
check the appropriate boxes according to the elections made in the Adoption
Agreements. Please see the attached instructions for assistance in completing
your Summary Plan Description.
Department of Labor regulations require that a Summary Plan
Description be filed with the Department of Labor and distributed to Plan
participants no later than 120 days after the Plan is adopted. Thereafter, each
employee must be given a copy no later than 90 days after becoming a Plan
participant.
TABLE OF CONTENTS
-----------------
Page
----
ADMINISTRATIVE INFORMATION................................................ 1
INTRODUCTION............................................................... 2
WHO IS COVERED............................................................. 2
EMPLOYER CONTRIBUTIONS..................................................... 3
Profit Sharing Plan................................................... 3
Money Purchase Pension Plan........................................... 3
Compensation.......................................................... 4
Allocations of Employer Contributions................................. 4
Profit Sharing Plan................................................... 4
Money Purchase Pension Plan........................................... 5
EMPLOYEE CONTRIBUTIONS..................................................... 5
After-Tax Voluntary Contributions..................................... 5
Rollover Contributions................................................ 5
ELIGIBILITY FOR BENEFITS................................................... 6
Retirement or Disability.............................................. 6
Death................................................................. 6
Other Termination of Employment....................................... 6
VESTING.................................................................... 7
Year of Service....................................................... 7
PAYMENT OF BENEFITS........................................................ 8
Form of Benefit....................................................... 8
WITHDRAWALS FROM THE PLAN.................................................. 9
Withdrawals from Profit Sharing Plan.................................. 9
Withdrawals of After-Tax Contributions................................ 10
Distributions Prior to Age 59-1/2..................................... 10
i
Page
----
PLAN INVESTMENTS.......................................................... 10
ANNUAL STATEMENTS......................................................... 10
TRANSFERS FROM OTHER PLANS................................................ 10
AMENDMENT OR TERMINATION OF THE PLAN...................................... 11
LIMITATIONS ON BENEFITS................................................... 11
CLAIMS PROCEDURE.......................................................... 11
ERISA RIGHTS.............................................................. 11
ii
ADMINISTRATIVE INFORMATION
Plan Name _____________________________________
Prototype Defined Contribution
Retirement Plan
Plan Sponsor/Employer ______________________________________
______________________________________
______________________________________
(____)________________________________
Plan Sponsor Identification No: ______________________________________
Plan Number: [_] 001 Profit Sharing Plan
[_] 002 Money Purchase Pension Plan
Type of Plan [_] Defined Contribution Profit
Sharing Retirement Plan
[_] Defined Contribution Money
Purchase Pension Plan
Plan Administrator ______________________________________
______________________________________
______________________________________
(____)________________________________
Plan Year: __________________to__________________
Funding Medium: Custodial Accounts
Custodian: First Trust Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Agent for Service Service of legal process may
of Legal Process: be made on the Plan Administrator
INTRODUCTION
------------
______________________________________ (the "Employer'') has adopted
the Monetta Funds Prototype Defined Contribution Retirement Plan (the "Plan") to
provide its eligible employees with an opportunity to accumulate retirement
benefits on a tax-advantaged basis. The Plan when combined with Social Security
benefits and personal savings is intended to assist you in providing financial
security when you retire.
This Summary Plan Description is intended to serve as an easy-to-read
explanation of the Plan as effective ______________. It summarizes, in a very
condensed form, the Plan's important provisions as they apply to you and other
Plan participants. Only the portions of this Summary which have been completed
or checked are applicable to your Plan. Any sections which have not been checked
or completed should be ignored.
Although every effort has been made to make this Summary as accurate
as possible, this Summary is not a substitute for the Plan itself. Thus, the
requirements for participation and the benefits payable will be determined
strictly in accordance with the Plan document. In the event of any conflict
between the terms of the Plan and this Summary Plan Description, the provisions
of the Plan, and not this Summary, will govern the actual rights and benefits to
which you may be or become entitled.
If you have any questions concerning your participation or benefits
under the Plan, please to contact the Plan Administrator, at the address and
phone number listed in the Administrative Information on page 1.
WHO IS COVERED
--------------
An employee of the Employer will become a participant in the Plan on
the earlier of the first day of the Plan Year or the first day of the seventh
month of the Plan Year following
[_] the date of his or her employment.
[_] completion of _____ Years of Employment and atttainment of age _____.
A "Year of Employment" is a 12 consecutive month period beginning with your
employment commencement date or any anniversary of that date during which you
complete at least ________ Hours of Service. An "Hour of Service" means each
hour for which you are paid or entitled to payment for the performance of
services for the Employer. However, you will receive credit for only a limited
number of hours during any single continuous period of absence for which you are
paid for reasons other than performance of work, such as vacation, illness,
disability, leave of absence or similar reasons.
2
EMPLOYER CONTRIBUTIONS
----------------------
Contributions to the Plan made by your Employer each Plan Year are
determined as follows:
[_] Profit Sharing Plan
-------------------
[_] The Employer may, but is not required to, make a discretionary
profit sharing contribution to the Plan in an amount determined
by the Employer.
[_] The Employer will make a profit sharing contribution to the Plan
in an amount equal to _____________% of the aggregate
compensation and earned income of all of the participants
eligible to share in such contribution.
The profit sharing contribution will be made to the Plan
[_] only if the Employer has net profits for the year.
[_] regardless of whether the Employer has net profits for the year.
[_] Money Purchase Pension Plan
---------------------------
The Employer will make a money purchase pension contribution to the
Plan in an amount equal to _____________% of the aggregate compensation and
earned income of all of the participants eligible to share in such contribution.
Compensation
------------
For purposes of the Plan, your compensation includes
[_] all of your taxable earnings for the plan year.
[_] only amounts earned during the plan year after completion of the
eligibility requirements described above.
For self-employed individuals, compensation means their earned income for the
applicable year. The maximum amount of compensation and/or earned income which
can be considered for a participant during any plan year is $235,840 for 1993
(adjusted annually for cost-of-living increases).
Allocations of Employer Contributions
-------------------------------------
Amounts contributed by the Employer will be allocated among the
accounts of eligible participants on the following basis:
3
[_] Profit Sharing Plan
-------------------
[_] The amount credited to each eligible participant's account will
be based on his or her compensation and/or earned income for the
year in relation to the total compensation and earned income of
all participants for such year.
[_] The amount credited to each eligible participant's account will
be based on his or her compensation and/or earned income in
excess of the Integration Level in relation to the aggregate of
such excess compensation and earned income of all participants
for such year. However, the allocation is subject to certain
limits on the amount of the contribution which may be allocated
to highly compensated employees.
[_] The Integration Level is the maximum taxable wage base for
Social Security (FICA) tax purposes.
[_] The Integration Level is $_________.
[_] Money Purchase Pension Plan
---------------------------
[_] The amount credited to each eligible participant's account will
be based on his or her compensation and/or earned income for the
year in relation to the total compensation and earned income of
all participants for such year.
[_] The amount credited to each eligible participant's account will
be based on his or her compensation and/or earned income in
excess of the Integration Level in relation to the aggregate of
such excess compensation and earned income of all participants
for such year. However, the allocation is subject to certain
limits on the amount of the contribution which may be allocated
to highly compensated employees.
[_] The Integration Level is the maximum taxable wage base for
Social Security (FICA) tax purposes.
[_] The Integration Level is $_________.
You will be eligible to receive allocation for any plan year during which you
complete at least 501 hours of service or if you are employed on the last day of
the plan year.
EMPLOYEE CONTRIBUTIONS
----------------------
[_] After-Tax Voluntary Contributions
---------------------------------
You may also make voluntary contributions to the Plan in an amount up
to 10% of your total compensation or earned income. Although these voluntary
contributions are not tax deductible, as long as the Plan maintains its tax
qualified status, there will be no tax payable on the income or gains
attributable to such contributions until your account is distributed to you.
4
Rollover Contributions
----------------------
Under special circumstances, you may be permitted to "rollover"
certain distributions from other tax qualified plans. The specific requirements
for a distribution to qualify for rollover treatment are very technical and are
provided U1 the Plan. A qualifying rollover contribution, if done in accordance
with the Plan provisions, permits you to avoid tax at the time of the
distribution from the other plan. Such amounts, however, will be taxed at the
time they are distributed from this Plan.
ELIGIBILITY FOR BENEFITS
------------------------
Retirement or Disability
------------------------
If your employment terminates on or after you attain age ___ (the Plan's
normal retirement age) or on account of a total and permanent disability, you
will be entitled to receive the total of all balances in your plan accounts. The
forms of payment available to you are discussed under the section entitled
"Payment of Benefits" below.
Death
-----
Your beneficiary is entitled to receive a benefit from the Plan upon your
death. If you die prior to receiving any of your plan benefits, the amount
payable to your beneficiary will be the total of all balances in your Plan
accounts. If you have already begun to receive benefits from the Plan due to
retirement or other termination of employment, your beneficiary will receive the
total of all remaining balances in your Plan accounts.
When you join the Plan, you are given the opportunity to designate a
beneficiary. If you are married at the date of your death, your designation of
someone other than your spouse as beneficiary will not be effective unless your
spouse has consented in writing to such designation. A spousal consent must be
made on the prescribed form provided by the Plan Administrator and witnessed by
a Plan representative or notary public. Subject to the spousal consent
requirements, you may change your beneficiary at any time by filing a new
written designation with the Plan Administrator.
If you do not have a properly designated beneficiary at the date of your
death, your surviving spouse will receive any benefits payable under the Plan.
If you have no surviving spouse, your estate will receive such benefits.
Other Termination of Employment
-------------------------------
If your employment with the Company terminates before the Plan's normal
retirement age for any reason other than death or disability, you will be
entitled only to the portion of your plan accounts that are vested.
5
VESTING
-------
You will become vested in your plan accounts attributable to employer
profit sharing and/or money purchase pension contributions based on the
following:
[ ] You will also have a fully vested and nonforfeitable interest in all
of your other plan accounts. You, or your designated beneficiary, will
always be paid these amounts.
[ ] The amounts in your plan accounts will become fully vested and
nonforfeitable after ________Years of Service with the Employer.
[ ] The amounts in your plan accounts will become fully vested and
nonforfeitable according to the following schedule:
Vested
Years of Service Percentage
---------------- ----------
2 or less 0%
2 20%
3 40%
4 60%
5 80%
6 or more 100%
You are always 100% vested in any voluntary aftertax contributions you make
under the Plan.
Year of Service
---------------
A "Year of Service" means any plan year during which you complete at least
______Hours of Service.
[ ] You will receive credit for all of your Years of Service, except all
Years of Service prior to the effective date of the Plan.
[ ] You will receive credit for all of your Years of Service except any
Years of Service before the plan year in which you had attained age
18.
[ ] All your Years of Service with the Employer will count towards the
vesting of the amounts in your plan accounts.
Any percentage of your plan accounts which is not vested at the time you
terminate employment will be forfeited after you incur a "Break in Service". A
Break in Service is defined as any period of twelve (12) consecutive months
during which you do not complete at least 501 Hours of Service for the Employer.
The amount forfeited from your accounts when you incur a Break in Service will
be reinstated, and continue to vest, if you are reemployed by the Employer
before you incur 5 consecutive Breaks in Service. Your employment with the
Employer both
6
before and after a Break in Service is then combined to determine your vested
percentage. If you are reemployed by the Employer after incurring 5 or more
consecutive Breaks in Service, the amount previously forfeited from your
accounts will not be reinstated, however, your Years of Service earned before
the Break in Service will be aggregated with Years of Service earned following
your reemployment for purposes of determining your vested percentage in
subsequent Employer contributions or matching contributions.
PAYMENT OF BENEFITS
-------------------
Form of Benefit
---------------
Generally, you may elect to receive distributions from the Profit Sharing
Plan in either of the following optional payment forms:
(1) a lump sum payment, or
(2) installments over a period of time not exceeding your life
expectancy or the joint life expectancy of you and your
beneficiary.
Distributions from the Money Purchase Pension Plan will be made to you in
the form of an annuity contract purchased from an insurance company, unless you
(and your Spouse, if any) elect otherwise. If you are unmarried, you will
receive a "life only annuity" payable monthly until your death. If you are
married, you will receive a "joint and 50% survivor annuity" with monthly
payments made to you for life, and upon your death, monthly payments will be
made to your surviving spouse equal to 50% of the monthly benefit you received
prior to your death. You may waive this annuity form of payment and receive your
distribution(s) in one of the forms described above. However, if you are
married, your selection of an alternate payment form will be effective only with
your spouse's written consent. A spousal consent must be made on the prescribed
form provided by the Plan Administrator and witnessed by a Plan representative
or notary public. If you die before any distribution and, your spouse is your
beneficiary, an annuity payable for the life of your spouse will be purchased
from an insurance company. Your spouse, however, may elect another form of
payment.
Normally, distributions will be made or commence as soon as
administratively practicable following the date of your retirement, death or
other termination of employment. However, if your vested Plan account balances
exceed $3,500, no distribution can be made prior to your normal retirement age
without your written consent. You may also elect to defer payments even after
your normal retirement age. However, certain minimum distributions must be made
starting with the April 1 following the year in which you attain age 70-1/2.
These minimum distributions are based on your life expectancy or the joint life
expectancy of you and your designated beneficiary. If you do not receive the
minimum required amount, you may be subject to a 50% federal excise tax.
7
If your Plan account balances are less than $3,500, your distribution will
be made in a lump sum as soon as practicable after the end of the plan year in
which your employment terminates.
In the event of your death, your account balances, if not used to purchase
an annuity contract for your surviving spouse, must be completely distributed to
your beneficiary within 5 years of the date of your death. However, there are
several exceptions to this rule. Payments may be made over the life or life
expectancy of your beneficiary, if those payments commence within 1 year of the
date of your death. If your spouse is your beneficiary, these annual life
expectancy distributions may be delayed until the date you would have attained
age 70-1/2. If you had begun receiving installment payments from your account
prior to your death, your beneficiary may elect to continue to receive the
remaining installment payments.
Withdrawals From The Plan
-------------------------
Generally, contributions to the Plan cannot be withdrawn while you are
still employed.
[ ] Withdrawals from Profit Sharing Plan
------------------------------------
If you have participated in the Plan for at least 5 years, you may withdraw
up to ____% of the vested portion of your profit sharing plan account after
attaining age 59-1/2 or on account of financial hardship. A financial hardship
means a financial need or emergency which requires the distribution of the
participant's plan account in order to meet this emergency. The determination
whether a financial hardship exists will be made by the Plan Administrator. Once
you have made a withdrawal, you may not make another withdrawal until you have
completed at least 5 more years of participation after the date of the prior
withdrawal.
Withdrawals of After-Tax Contributions
--------------------------------------
You may withdraw all or any part of your voluntary after-tax contributions
by giving the Plan Administrator at least 30 days written notice.
Distributions Prior to Age 59-1/2
---------------------------------
It is important for you to note that distributions or withdrawals prior to age
59-1/2 may be subject to an additional 10% penalty tax. This penalty tax does
not apply to distributions following death or disability or to distributions
which are rolled over to another plan or an individual retirement account
("IRA"). There are a few other exceptions to this tax. If you are considering a
distribution or withdrawal prior to age 59-1/2, you should contact your tax
advisor.
Direct Transfer to Eligible Retirement Plans
--------------------------------------------
The rules governing the rollover/transfer and withholding requirements on
distributions from qualified retirement have been changed effective January 1,
1993. In general, most distributions from a plan may now be rolled over to an
IRA. However, the following distributions may not be rolled over:
8
(1) A distribution that is part of a series of periodic payments
made over a specified period of 10 or more years or over the
life expectancy or the joint life expectancy or the
participant and/or his or her beneficiary.
(2) Any distribution (or part thereof) made to satisfy minimum
distribution requirements.
(3) Any portion of a distribution that is a nontaxable return of after-tax
contributions.
(4) Corrective distributions of excess deferral or contributions under a
401(k) plan.
(5) Loans that are deemed distributions.
(6) The "P.S. 58" cost of life insurance coverage.
If a distribution can be rolled over it is subject to mandatory 20% Federal tax
withholding. Distributions of under $200 (aggregating all distributions received
in one calendar year) are exempt from withholding. A distributee may avoid the
mandatory withholding by directly transferring the distribution to an IRA. Prior
to any distribution, the administrator of your plan must provide you a notice of
the withholding and rollover rules. The notice should be provided no earlier
than 90 days and no less than 30 days prior to any distribution.
PLAN INVESTMENTS
----------------
Contributions to the Plan will be held by the Custodian and invested in one
or more of the Monetta Funds.
[ ] You will be able to direct the investment of your plan accounts. Your
plan accounts will be credited with the income, gains and losses based
on the Monetta Fund investment(s) you select.
[ ] All of the assets of the Plan are invested as directed by the
Employer. Your accounts will be credited with your proportionate share
of the income, gains and/or losses of the Plan's investments.
ANNUAL STATEMENTS
-----------------
Following the end of each plan year, you will receive a statement of each
of your plan account balances. In addition, financial information with respect
to the Plan's assets and gains, losses, income and expenses will be distributed
annually to all participants.
TRANSFERS FROM OTHER PLANS
--------------------------
The Plan permits direct transfers of monies from similar eligible tax
qualified plans. Direct transfers go from trustee to trustee and are not subject
to the special rollover rules described above.
9
AMENDMENT OR TERMINATION OF THE PLAN
------------------------------------
The Employer may amend or terminate the Plan at any time. If the Employer
terminates the Plan, all participants will be fully vested in their plan
accounts.
LIMITATIONS ON BENEFITS
-----------------------
No benefit under this Plan may be assigned or pledged, nor may any benefit
the subject to your debts or other legal obligations, except as provided by law.
One exception is that benefits may be paid pursuant to qualified domestic
relations order issued by a court. Benefits under the Plan are also subject to
maximum limitations imposed by the Internal Revenue Service regulations. These
restrictions typically apply to the highly compensated employees of the
Employer. Any participant affected by these restrictions will be fully advised.
CLAIMS PROCEDURE
----------------
You (or other claimant) may claim your benefits under the Plan by filing a
written request for such benefits with the Plan Administrator. The Plan
Administrator makes all determinations as to whether a claimant is entitled to
any benefits under the Plan and the amount of such benefits. Within 90 days
after receipt of the request, the Plan Administrator shall duly consider the
claim. If the claim is denied in whole or in part, the Plan Administrator shall,
writing state the reasons for the denial, the Plan provisions upon which the
denial is based, a description of any additional information or material
required by the Plan Administrator and the procedure for review of the denial.
If notice is not furnished by the Plan Administrator within the 90 day period of
time, the claim shall be deemed denied and the claimant shall be permitted to
request review of the claim.
In the event of a denial of a claim, a claimant may request the Employer to
review the denied claim. The request must be made within 60 days after receipt
of written denial of the claim. The claimant may review pertinent Plan documents
and submit issues and comments in writing to the Employer. Within 60 days after
receipt of the request for review, the Employer shall notify the claimant in
writing of its final decision. However, if the Employer finds it necessary, due
to special circumstances (for example, the need to hold a hearing), to extend
this period and so notifies the claimant in writing, the decision shall be
rendered as soon as practicable, but in no event later than 120 days after the
claimant's request for review.
ERISA RIGHTS
------------
As a participant in this Plan, you are entitled to certain rights and
protections under the Employee Retirement Income Security Act of 1974 (ERISA).
This law provides that all Plan participants shall be entitled to:
Examine, without charge, at the office of the Plan Administrator (and at
other specified locations, if appropriate), all Plan documents, including
copies of all documents filed by the Plan with the U. S. Department of
Labor, such as detailed annual reports.
10
Obtain copies of all Plan documents and other Plan information upon written
request to the Plan Administrator. The Plan Administrator may make a
reasonable charge for the copies.
Receive a summary of the Plan's annual financial report. The Plan
Administrator is required by law to furnish each Participant with a copy of
this summary annual report.
Obtain a statement telling you whether you have an earned current vested
interest in your account and whether, under the terms of the Plan, you will
be entitled to receive a retirement income if you stop working under the
Plan now. If you do not have a current vested interest or right to a
benefit at age 65, the statement will tell you how many more years you have
to work to obtain these rights. This statement must be requested in writing
and is not required to be given more than once a year. The Plan must
provide the statement free of charge.
In addition to creating rights for Plan participants, ▇▇▇▇▇ imposes duties
upon the people who are responsible for the operation of the employee benefit
plan. The people who operate your Plan, called "fiduciaries" of the Plan, have a
duty to do so prudently and in the interest of you and other Plan participants
and beneficiaries.
No one, including your Employer or any other person, may fire you or
otherwise discriminate against you in any way to prevent you from obtaining your
benefits or exercising your rights under ERISA. If your claim for your benefit
is denied in whole or in part you must receive a written explanation of the
reason for the denial. You have the right to have your Employer review and
reconsider your claim.
Under ERISA, there are steps you can take to enforce the above rights. For
instance, if you request materials from the Plan Administrator and do not
receive them within 30 days, you may file suit in a federal court. In such a
case, the court may require the Plan Administrator to provide the material and
pay you up to $100 a day until you receive the materials, unless the materials
were not sent because of reasons beyond the control of the Plan Administrator.
If you have a claim for benefits which is denied or ignored, in whole or in
part, you may file suit in a state or federal court. If it should happen that
Plan fiduciaries misuse the Plan's money, or if you are discriminated against
for asserting your rights, you may seek assistance from the U. S. Department of
Labor, or you may file suit in a federal court. The court will decide who should
pay court costs and legal fees. If you are successful, the court may order the
person you have sued to pay these costs and fees. If you lose, the court may
order you to pay these costs and fees, for example, if it finds your claim is
frivolous.
If you have any questions about your Plan, you should contact the Plan
Administrator. If you have any questions about this statement or about you
rights under ERISA, you should contact the nearest Area Office of the U. S.
Labor-Management Services Administration, Department of Labor.
Because the Plan is a defined contribution plan, plan benefits are not
guaranteed by the Pension Benefit Guaranty Corporation.
11
SECTION E
EMPLOYEE FORMS
MONETTA FUNDS
PROTOTYPE DEFINED CONTRIBUTION RETIREMENT PLAN
ACCOUNT APPLICATION
1. EMPLOYEE INFORMATION
Name Telephone Number ( )
------------------------------- --- ---------------------
Address
------------------------------------------------------------------------
City State Zip
------------------------------- ---------------- ----------------
Birth Date Social Security Number
------------------------- --------------------
2. EMPLOYER INFORMATION
Employer Name
------------------------------------------------------------------
Address
------------------------------------------------------------------------
City State Zip
------------------------------- ---------------- ----------------
Employer Tax ID Telephone Number ( )
-------------------- --- ---------------------
3. INVESTMENTS
Contributions will be invested in the following Monetta Funds:
[_] Monetta Fund, Inc. (____%)
[_] Monetta Mid-Cap Equity Fund (____%)
[_] Monetta Large-Cap Equity Fund (____%)
[_] Monetta Balanced Fund (____%)
[_] Monetta Intermediate Bond Fund (____%)
[_] Monetta Government Market Fund (____%)
If a specific fund is not selected, contributions will be invested in the
Monetta Government Money Market Fund. You may change your fund investments by
filing a Change of Investments form with the Monetta Funds.
4. EMPLOYEE SIGNATURE
I adopt the Monetta Funds Prototype Defined Contribution Retirement Plan and
appoint Firstar Trust Company as Custodian. I acknowledge that I have received
and read the Prospectus for the Monetta Fund(s) in which I am invested. If I am
contributing a distribution form from another employer-sponsored retirement
plan, I certify that such distribution is a qualifying transfer or rollover. I
certify under penalties of perjury that my Social Security Number (above) is
correct. I understand that the Custodian will charge fees that are shown in the
plan materials and they may be separately billed or collected by redeeming
sufficient shares from my fund account balance(s).
------------------------------ --------------------------
Employee Signature Date
5. EMPLOYER ADOPTION
I am a participant in the Monetta Funds Prototype Defined Contribution
Retirement Plan and appoint the Custodian or its agent to perform those
functions and appropriate administrative services specified in the Plan
Document. I have received and read the prospectus for the Fund(s) in which I am
making my contribution. I (the Participant) certify under penalties of perjury
that my Social Security number is correct. I am not currently under IRS
notification that I am subject to backup, withholding (strike out this clause if
under notification), and I am of legal age. I (the Employer) certify under
penalties of perjury that my Tax I.D. number is correct. If I am opening this
Defined Contribution Retirement Plan with a distribution from an
employer-sponsored retirement plan, I certify that the distribution qualifies as
a rollover contribution. I understand that the Custodian's fees, as determined
in accordance with the fee schedule distributed by the Custodian from time to
time, may be collected by redeeming sufficient shares from each fund account
balance. The Custodian may change the fee schedule from time to time.
------------------------------------------------ --------------------------
Employer Authorized Signature Title Date
6. CUSTODIAN ACCEPTANCE
FIRSTAR TRUST COMPANY
------------------------------------------------ --------------------------
Authorized Signature Title Date
------------------------------------------------ --------------------------
Employee Signature Date
MONETTA FUNDS
PROTOTYPE DEFINED CONTRIBUTION RETIREMENT PLAN
BENEFICIARY DESIGNATION AND SPOUSAL CONSENT
Employee:
----------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
Social Security No.: Date of Birth:
----------------------- --------------------
1. Primary Beneficiary* (If you are married and if someone other than or
in addition to your spouse is designated, the Spousal Consent below
must be completed).
Name:
--------------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
Social Security No.: Relationship:
----------------------- ---------------------
2. Secondary Beneficiary*
Name:
--------------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
Social Security No.: Relationship:
----------------------- ---------------------
*Multiple Primary and/or Secondary Beneficiaries can be designated by
inserting "See Attached Sheet" in the appropriate beneficiary category
and by providing the information required above, as well as the
percentage of the death benefit that each beneficiary is to receive,
on a separate sheet and attaching it to this designation. If you have
not provided otherwise in completing this designation, all sums
payable to more than one beneficiary in the applicable category shall
be paid equally to those beneficiaries living at the time of your
death.
----------------------------------- ------------------------------------
Employee Signature Date
SPOUSAL CONSENT
---------------
As the spouse of the Employee, I consent to the Beneficiary Designation made
above (or on the attached sheet, if any) and acknowledge that by doing so I am
waiving my right to be the sole Primary Beneficiary of any death benefits due
under the Plan.
-----------------------------------
Name of Spouse (Print)
------------------------------------ -------------------------------------
Signature of Spouse Date
Subscribed before me this day of , 19 .
----- ---------------------------- --
Notary Public, County,
---------------------- ------------------------------
My Commission (expires):
-------------------------------------------------------
MONETTA FUNDS
PROTOTYPE DEFINED CONTRIBUTION RETIREMENT PLAN
INVESTMENT ALLOCATIONS
1. EMPLOYEE INFORMATION
Name Telephone Number
------------------------------ (------)----------------------
Address
-------------------------------------------------------------------------
City State Zip
---------------------------- ------------------------ ----------------
Social Security Number
----------------------------------------------------------
2. ALLOCATIONS OF CONTRIBUTIONS AND ACCOUNTS
Please allocate my future contributions and my existing account balances
among the following Monetta Funds as designated below. If you do not have any
existing account balances, insert "N/A" in the applicable blanks.
Contributions will be invested in the following Monetta Funds:
Future Existing
Contributions Account Balances
------------- ----------------
[ ] Monetta Mid-Cap Equity Fund _____% _____%
[ ] Monetta Intermediate Bond Fund _____% _____%
[ ] Monetta Government Money Market Fund _____% _____%
If a specific fund is not selected, all contributions will be invested in the
Government Money Market Fund. You may change your fund investments at a later
date by filing a new Investment Allocations form with the Monetta Funds.
3. EMPLOYEE SIGNATURE
I understand that the allocations I have elected above will continue to be
effective until I file a new Change of Investments form. I acknowledge that I
have received and read the Prospectus for the Monetta Fund(s) in which I am
investing.
---------------------------------- -----------------------------------------
Employee Signature Date
4. CUSTODIAN ACCEPTANCE
FIRSTAR TRUST COMPANY
---------------------------------- -----------------------------------------
Authorized Signature Title Date
MONETTA FUNDS
PROTOTYPE DEFINED CONTRIBUTION RETIREMENT PLAN
(SECTION 401(K) CASH OR DEFERRED ARRANGEMENT)
SALARY REDUCTION AGREEMENT
I hereby elect to have my Employer reduce my salary by ____________ (insert a
whole percentage/dollar amount not less than __________ or more than __________)
for each pay period and to have such amount paid to the Custodian of the Plan as
Elective Deferrals. I understand that the rate of my Elective Deferrals can be
changed only as of each __________, but that I can discontinue such
contributions at any time. I also understand that the Plan Administrator may
limit the amount of my Elective Deferrals to satisfy certain tax law
requirements, and that amount of my Elective Deferrals cannot in any event
exceed $8,994 for 1993 (the maximum amount of Elective Deferrals is indexed
annually for cost of living increases).
----------------------------------- ------------------------------------
Employee Signature Date
A direction to reduce salary can be modified only as of ____________,
but can be discontinued at any time. To discontinue your Elective Deferrals,
complete a new form and enter 0%.
* * * * * * * *
Received by Employer
------------------------------------ ------------------------------------
Employer Authorized Signature Title Date
Two copies of this form must be completed and signed by the Employee, and both
copies should be filed with the Employer. One copy will be marked to show
receipt by the Employer and returned to the Employee.
MONETTA FUNDS
PROTOTYPE DEFINED CONTRIBUTION RETIREMENT PLAN
TRANSFER AUTHORIZATION
Use this form to transfer an existing tax-sheltered annuity or Prototype Defined
Contribution Retirement Plan custodial account to the Monetta Funds Prototype
Defined Contribution Retirement Plan. Provide Monetta Funds with the completed
form, along with your application form and salary reduction agreement (if
applicable).
1. EMPLOYEE INFORMATION
Name Telephone Number ( )
---------------------------------------- --- ------------
Address
------------------------------------------------------------------------
City State Zip
----------------------------- ---------------------- ------------
Social Security Number
---------------------------------------------------------
2. EMPLOYER INFORMATION
Employer Name
------------------------------------------------------------------
Address
------------------------------------------------------------------------
City State Zip
----------------------------- ---------------------- ------------
Employer Tax ID Telephone Number ( )
----------------------------- --- ------------
3. CURRENT QUALIFIED PLAN TRUSTEE/CUSTODIAN INFORMATION
--------------------------------------------------------------------------------
Name of Current Trustee/Custodian
--------------------------------------------------------------------------------
Address
--------------------------------------------- ----------------------------------
City State Zip Account Number
4. INVESTMENT INSTRUCTIONS
Transfer into my existing Monetta Funds Prototype Defined Contribution
Retirement Plan account # .
---------------
Transfer into a new Monetta Fund Prototype Defined Contribution Retirement
Plan account as designated in my Investment Allocations form.
5. AUTHORIZATION TO TRANSFER
This letter shall serve as notification of my intention to effect a direct
transfer of my existing qualified plan account. This letter directs you to
transfer [_] all or [_] part ($_____) of my plan account listed in Section 3
and transfer such amounts to my Monetta Funds Prototype Defined Contribution
Retirement Plan account.
6. EMPLOYEE/EMPLOYER SIGNATURES
Both the undersigned Employer and Employee understand that this agreement is
irrevocable and binding. In the event that either of the undersigned receives a
check for the proceeds of the liquidated plan account, such check will
immediately be endorsed over to Firstar Trust Company, Custodian of the Monetta
Funds Prototype Defined Contribution Retirement Plan, in accordance with the
terms of this agreement. Employer agrees to serve as the agent of the Employee
whose signature appears below for the purpose of this transfer. Finally, the
undersigned Employer and Employee intend that the transfer of funds contemplated
herein be deemed a single, integrated transaction. Firstar Trust Company agrees
to accept any funds transferred in accordance with this request.
------------------------------------- ---------------------------------------
Employee Signature Employer Signature Title
------------------------------------- ---------------------------------------
Date Date
-------------------------------------
Signature Guarantee (if required)*
*Important: Please check with your current trustee/custodian to determine if
a signature guarantee is required.
Firstar Trust Company will complete this Acceptance Agreement
As Custodian for Monetta Funds Prototype Defined Contribution Retirement Plan,
we have been appointed to serve as successor custodian of the qualified plan
account. Please prepare a check representing liquidation of the investment
referenced above. To ensure proper credit, please return a copy of this form
along with the check.
Please send to: Monetta Funds
c/o Firstar Trust Company
P.O. Box 2936
Milwaukee, WI 53201-2936
FIRSTAR TRUST COMPANY
------------------------------------------------ -------------------------
Authorized Signature Title Date
MONETTA FUNDS
PROTOTYPE DEFINED CONTRIBUTION RETIREMENT PLAN
DISTRIBUTION/TRANSFER REQUEST
1. EMPLOYEE INFORMATION
Name Telephone Number ( )
------------------------------ ----------------
Address
-------------------------------------------------------------
City State Zip
------------------------------ ------------ ---------
Birth Date Social Security Number
-------------------- ------------
2. EMPLOYER INFORMATION
Employer Name
-------------------------------------------------------
Address
-------------------------------------------------------------
City State Zip
-------------------------------------- --------- -------
Employer Tax ID Telephone Number ( )
------------------- -------------
3. DISTRIBUTION/TRANSFER REQUEST
The distribution or transfer of my account shall be made as follows:
[_] Single lump-sum payment.
[_] Other (please describe - monthly, quarterly or annual payments over a
period not longer than your life expectancy of you and your
beneficiary)
--------------------------------------------------------
[_] Transfer to (indicate successor trustee/custodian)
------------------
If the direct transfer option is not selected, 20% of your distribution may be
required to be withheld. See the Federal Withholding/Distribution Information
Form for more details. That Form also describes the federal income tax treatment
of your distribution, including averaging and roll-overs.
Note: If your account balance exceeds S3,500, you may need the consent of your
spouse before any distribution is made.
4. REQUIREMENTS FOR DISTRIBUTIONS
The distribution or transfer is made on account of:
[_] Termination of Employment.
[_] Retirement.
[_] Death (name of beneficiary _______________________________________).
[_] Disability.
[_] Attainment of Age 59-1/2.
[_] Termination of Plan.
5. EMPLOYEE OR BENEFICIARY SIGNATURE
I consent to the distribution or transfer of my Monetta Funds Prototype Defined
Contribution Retirement Plan account balance as elected above.
--------------------------------- ------------------------
Employee or Beneficiary Signature Date
--------------------------------- ------------------------
Spouse's Signature (if required) Date
6. PLAN ADMINISTRATOR SIGNATURE
The Plan Administrator certifies that the distribution or transfer
elected above is permitted under the terms of the Plan and that, if required,
the proper spousal consent has been obtained.
-------------------------------------------------- ----------------
Plan Administrator Authorized Signature Title Date
MONETTA FUNDS
PROTOTYPE DEFINED CONTRIBUTION RETIREMENT PLAN
(SECTION 401(1c) CASH OR DEFERRED ARRANGEMENT)
FINANCIAL HARDSHIP DISTRIBUTION REQUEST
1. EMPLOYEE INFORMATION
Name Telephone Number ( )
---------------------------------------- ----------------
Address
-------------------------------------------------------------------------
City State Zip
---------------------------------------- ------------ -----------
Birth Date Social Security Number
------------------ -----------------------------
2. HARDSHIP DISTRIBUTION REQUEST
I request a hardship distribution from my account in the amount of
$ . (Distributions shall be made pro rata from each
----------------
of your investment funds.)
I intend to use the funds requested for the following purpose:
[_] To purchase my primary place of residence.
[_] To pay the upcoming post-secondary educational expenses for me or my
dependents.
[_] To pay medical and/or hospital expenses for myself or my dependents.
(NOTE: The 10% additional tax penalty will not apply when the
withdrawal is used to pay medical expenses that exceed 7-1/2% of my
adjusted gross income.)
[_] To prevent the eviction from, or foreclosure on the mortgage of, my
principal residence.
3. CERTIFICATION
As a participant under the Plan, I certify that:
i. I have no other reasonably available resources from which these funds
may be obtained;
ii. The withdrawal is not in excess of the amount needed to satisfy the
need;
iii. I have taken all possible distributions from all of my employer's
plans, excluding hardship distributions, but including nontaxable
loans;
iv. I will not be allowed to make any contributions or salary deferrals
(if applicable) to any employer plan for at least 12 months after
receiving the hardship distribution;
v. My elective deferrals to all of the employer's plans in the calendar
year immediately following receipt of the hardship withdrawal will be
restricted to the maximum amount ($9,500 as indexed) less my elective
contributions in the year of the hardship distribution; and
vi. The amount I have requested to withdraw is not subject to a qualified
domestic relations order.
4. EMPLOYEE SIGNATURE
I request the distribution from my Monetta Fund Prototype Defined
Contribution Retirement Plan account on account of financial hardship.
I certify that the information indicated above is true and correct. I
understand that this distribution is subject to normal income tax, and
may also be subject to an additional 10% early distribution penalty if
I have not attained age 59 1/2.
--------------------------------------- ---------------------
Employee Signature Date
--------------------------------------- ---------------------
Spouse's Signature (if required) Date
5. PLAN ADMINISTRATOR SIGNATURE
The Plan Administrator approves the hardship distribution request by the
Employee as described above, and certifies that the distribution is permitted
under the terms of the Plan and that, if required, the proper spousal consent
has been obtained.
--------------------------------------- ---------------------
Plan Administrator Authorized Signature Date
MONETTA FUNDS
PROTOTYPE DEFINED CONTRIBUTION RETIREMENT PLAN
FEDERAL WITHHOLDING TAX FORM
FOR CERTAIN DISTRIBUTIONS
The distributions you receive from your retirement plan are generally
subject to federal income tax withholding. See Federal Withholding Distribution
information Form. However, for certain distributions, you may elect not to have
withholding apply. This withholding election applies only to (1) distributions
which are part of a Series of payments which will last for your life expectancy,
the joint life expectancy of you and your beneficiary or a period of 10 years or
more, and (2) any distribution (or portion thereof) which is made to satisfy the
minimum distribution requirements. IF YOU ARE RECEIVING ANOTHER FORM OF
DISTRIBUTION, DO NOT USE THIS FORM. Withholding will only apply to the portion
of one of these distributions that is included in your income subject to federal
income tax. Thus, for example, there will be no withholding on the return of
your own nondeductible contributions to the plan.
You may elect not to have withholding apply to a distribution described above
by returning the signed and dated election to your plan administrator.
Unless you elect not to have withholding apply, withholding will apply to the
taxable portion of your distribution as prescribed by the Internal Revenue
Service.
If you elect not to have withholding apply to your distribution, or if you do
not have enough federal income tax withheld from your distribution, you may be
responsible for payment of estimated tax. You may incur penalties under the
estimated tax rules if your withholding and estimated tax payments are not
sufficient.
--------------------------------------------------------------------------------
Instructions:
Indicate below whether you want any federal income tax withheld from your
distribution. Return the signed and dated election to your plan administrator.
Even if you elect not to have federal income tax withheld, you are liable for
payment of federal income tax on the taxable portion of your distribution. You
also may be subject to tax penalties under the estimated tax payment rules if
your payments of estimated tax and withholding, if any, are not adequate.
______ I do not want to have federal income tax withheld from my
distribution.
______ I want to have federal income tax withheld from my distribution.
I want $ or % withheld from the gross taxable
-------- ---------- ----------
distribution.
-------------------------------- -------- ---------------------------
Employee Signature Date Social Security Number
MONETTA FUNDS
PROTOTYPE DEFINED CONTRIBUTION RETIREMENT PLAN
FEDERAL WITHHOLDING/DISTRIBUTION INFORMATION FORM
This notice contains important information you will need before you
decide how to receive your benefits from the Monetta Funds Prototype Defined
Contribution Retirement Plan (the "Plan").
SUMMARY
A payment from the Plan that is eligible for "rollover" can be taken
in two ways. You have all or any portion of your payment either (1) PAID IN A
"DIRECT ROLLOVER" or (2) PAID TO YOU. A rollover is a payment of your Plan
benefits to your individual retirement arrangement (IRA) or to another employer
plan. This choice will affect the tax you owe.
If you choose a DIRECT ROLLOVER
[_] Your payment will not be taxed in the current year and no income tax
will be withheld.
[_] Your payment will be made directly to your IRA or, if you
choose, to another employer plan that accepts your rollover.
[_] Your payment will be taxed later when you take it out of the IRA or
the employer plan.
If you choose to have your Plan benefits PAID TO YOU
. You will receive only 80% of the payment, because the Plan Administrator
is required to withhold 20% of the payment and send it to the IRS as
income tax withholding to be credited against your taxes.
. Your payment will be taxed in the current year unless you roll it over.
You may be able to use special tax rules that could reduce the tax you
owe. However, if you receive the payment before age 59-1/2, you also may
have to pay an additional 10% tax.
. You can roll over the paying it to your IRA or to another employer plan
that accepts your rollover within 60 days of receiving the payment. The
amount rolled over will not be taxed until you take it out of the IRA or
employer plan.
. If you want to roll over 100% of the payment to an IRA or an employer
plan, you must find other money to replace the 20% that was withheld. If
you roll over only the 80% that you received, you will be taxed on the
20% that was withheld and that is not rolled over.
I. PAYMENTS THAT CAN AND CANNOT BE ROLLED OVER
Payments from the Plan may be "eligible rollover distributions." This
means that they can be rolled over to an IRA or to another employer plan that
accepts rollovers. Your Plan Administrator should be able to tell you what
portion of your payment is an eligible rollover distribution. The following
types of payments cannot be rolled over:
Non-Taxable Payments. In general, only the "taxable portion" of your
payment is an eligible rollover distribution. If you have made "after-
tax" employee contributions to the Plan, these contributions will be
non-taxable when they are paid to you, and they cannot be rolled over.
(After-tax employee contributions generally are contributions you made
from your own pay that were already taxed.)
Payments Spread Over Long Periods. You cannot roll over a payment if
it is part of a series of equal (or almost equal) payments that are
made at least once a year and that will last for
. your lifetime (or your life expectancy), or
. your lifetime and your beneficiary's lifetime (or life
expectancies), or
. a period of ten years or more.
"Required Minimum Payments. Beginning in the year you reach age 70-1/2, a
certain portion of your payment cannot be rolled over because it is a "required
minimum payment" that must be paid to you.
2
II. DIRECT ROLLOVER
You can choose a direct rollover of all or any portion of your payment that
is an "eligible rollover distribution," as described above. In a direct
rollover, the eligible rollover distribution is paid directly from the Plan to
an IRA or another employer plan that accepts rollovers. If you choose a direct
rollover, you are not taxed on a payment until you later take it out of the IRA
or the employer plan.
Direct Rollover to an IRA. You can open an IRA to receive the direct
rollover. (The term "IRA," as used in this notice, includes individual
retirement accounts and individual retirement annuities.) If you choose to have
your payment made directly to an IRA, contact an IRA sponsor (usually a
financial institution) to find out how to have your payment made in a direct
rollover to an IRA at that institution. If you are unsure of how to invest your
money, you can temporarily establish an IRA to receive the payment. However, in
choosing an IRA, you may wish to consider whether the IRA you choose will allow
you to move all or a part of your payment to another IRA at a later date,
without penalties or other limitations. See IRS Publication 590, Individual
Retirement Arrangements, for more information on IRAs (including limits on how
often you can roll over between IRAs).
Direct Rollover to a Plan. If you are employed by a new employer that has
a plan, and you want a direct rollover to that plan, ask the administrator of
that plan whether it will accept your rollover. If your new employer's plan does
not accept a rollover, you can choose a direct rollover to an IRA.
Direct Rollover of a Series of Payments. If you receive eligible rollover
distributions that are paid in a series for less than ten years, your choice to
make or not make a direct rollover for a payment will apply to all later
payments in the series until you change your election. You are free to change
your election for any later payment in the series.
III. PAYMENT PAID TO YOU
If you have the payment made to you, it is subject to 20% income tax
withholding. The payment is taxed in the year you receive it unless, within 60
days, you roll it over to an IRA or another plan that accepts rollovers. If you
do not roll it over, special tax rules may apply.
Income Tax Withholding:
Mandatory Withholding. If any portion of the payment to you is an eligible
rollover distribution, the Plan is required by law to withhold 20% of that
amount. This amount is sent to the IRS as income tax withholding. For example,
if your eligible rollover
3
distribution is $10,000, only $8,000 will be paid to you because the Plan must
withhold $2,000 as income tax. However, when you prepare your income tax return
for the year, you will report the full $10,000 as payment from the Plan. You
will report the $2,000 as tax withheld, and it will be credited against any
income tax you owe for the year.
Voluntary Withholding. If any portion of your payment is not an eligible
rollover distribution but is taxable, the mandatory withholding rules described
above do not apply. In this case, you may elect not to have withholding apply to
that portion. To elect out of withholding, ask the Plan Administrator for the
election form and related information.
Sixty-Day Rollover Option. If you have an eligible rollover distribution
paid to you, you can still decide to roll over all or part of it to an IRA or
another employer plan that accepts rollovers. If you decide to roll over, you
must make the rollover within 60 days after you receive the payment. The portion
of your payment that is rolled over will not be taxed until you take it out of
the IRA or the employer plan.
You can roll over up to 100% of the eligible rollover distribution,
including an amount equal to the 20% that was withheld. If you choose to roll
over 100%, you must find other money within the 60-day period to contribute to
the IRA or the employer plan to replace the 20% that was withheld. On the other
hand, if you roll over only the 80% that you received, you will be taxed on the
20% that was withheld.
Example: Your eligible rollover distribution is $10,000, and you choose to
have it paid to you. You will receive $8,000, and $2,000 will be sent to the IRS
as income tax withholding. Within 60 days after receiving the $8,000, you may
roll over the entire $10,000 to an IRA or employer plan. To do this, you roll
over the $8,000 you received from the Plan, and you will have to find $2,000
from other sources (your savings, a loan, etc.). In this case, the entire
$10,000 is not taxed until you take it out of the IRA or employer plan. If you
roll over the entire $10,000, when you file your income tax return you may get a
refund of the $2,000 withheld.
If, on the other hand, you roll over only $8,000, the $2,000 you did not
roll over is taxed in the year it was withheld. When you file your income tax
return you may get a refund of part of the $2,000 withheld. (However, any refund
is likely to be larger if you roll over the entire $10,000.)
Additional 10% Tax If You Are Under Age 59-1/2. If you receive a payment
before you reach age 59-1/2 and you do not roll it over, then, in addition to
the regular income tax, you may have to pay an extra tax equal to 10% of the
taxable portion of the payment. The additional 10% tax does not apply to your
payment if it is (1) paid to you because you separate from service with your
employer during or after the year you reach age 55, (2) paid because you retire
due to disability, (3) paid to you as equal (or almost equal)
4
payments over your life or life expectancy (or your and your beneficiary's lives
or life expectancies), or (4) used to pay certain medical expenses. See IRS Form
5329 for more information on the additional 10% tax.
Special Tax Treatment. If your eligible rollover distribution is not
rolled over, it will be taxed in the year you receive it. However, if it
qualifies as a "lump sum distribution," it may be eligible for special tax
treatment. A lump sum distribution is a payment, within one year, of your entire
balance under the Plan (and certain other similar plans of the employer) that is
payable to you because you have reached age 59-1/2 or have separated from
service with your employer (or, in the case of a self-employed individual,
because you have reached age 59-1/2 or have become disabled). For a payment to
qualify as a lump sum distribution, you must have been a participant in the Plan
for at least 5 years. The special tax treatment for lump sum distributions is
described below.
Five-Year Averaging. If you receive a lump sum distribution after you are
age 59-1/2, you may be able to make a one-time election to figure the tax on the
payment by using "5-year averaging." Five-year averaging often reduces the tax
you owe because it treats the payment much as if it were paid over 5 years.
Ten-Year Averaging If You Were Born Before January 1, 1936. If you receive
a lump sum distribution and you were born before January 1, 1936, you can make a
one-time election to figure the tax on the payment by using "10-year averaging"
(using 1986 tax rates) instead of 5-year averaging (using current tax rates).
Like the 5-year averaging rules, 10-year averaging often reduces the tax you
owe.
Capital Gain Treatment If You Were Born Before January 1, 1936. In
addition, if you receive a lump sum distribution and you were born before
January 1, 1936, you may elect to have the part of your payment that is
attributable to your pre-1974 participation in the Plan (if any) taxed as long-
term capital gain at a rate of 20%.
There are other limits on the special tax treatment for lump sum
distributions. For example, you can generally elect this special tax treatment
only once in your lifetime, and the election applies to all lump sum
distributions that you receive in that same year. If you have previously rolled
over a payment from the Plan (or certain other similar plans of the employer),
you cannot use this special tax treatment for later payments from the Plan. If
you roll over your payment to an IRA, you will not be able to use this special
tax treatment for later payments from the IRA. Also, if you roll over only a
portion of your payment to an IRA, this special tax treatment is not available
for the rest of the payment. Additional restrictions are described in IRS Form
4972, which has more information on lump sum distributions and how you elect the
special tax treatment.
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IV. SURVIVING SPOUSES, ALTERNATIVE PAYEES, AND OTHER BENEFICIARIES
In general, the rules summarized above that apply to payments to employees
also apply to payments to surviving spouses of employees and to spouses or
former spouses who are "alternate payees." You are an alternate payee if your
interest in the Plan results from a "qualified domestic relations order," which
is an order issued by a court, usually in connection with a divorce or legal
separation. Some of the rules summarized above also apply to a deceased
employee's beneficiary who is not a spouse. However, there are some exceptions
for payments to surviving spouses, alternate payees, and other beneficiaries
that should be mentioned.
If you are a surviving spouse, you may choose to have an eligible rollover
distribution paid in a direct rollover to an IRA or paid to you. If you have the
payment paid to you, you can keep it or roll it over yourself to an IRA but you
cannot roll it over to an employer plan. If you are an alternate payee, you have
the same choices as the employee. Thus, you can have the payment paid as a
direct rollover or paid to you. If you have it paid to you, you can keep it or
roll it over yourself to an IRA or to another employer plan that accepts
rollovers. If you are a beneficiary other than the surviving spouse, you cannot
choose a direct rollover, and you cannot roll over the payment yourself.
If you are a surviving spouse, an alternate payee, or another beneficiary,
your payment is not subject to the additional 10% tax described in section III
above, even if you are younger than age 59-1/2.
If you are a surviving spouse, an alternate payee or another beneficiary,
you may be able to use the special tax treatment for lump sum distributions, as
described in section III above. If you receive a payment because of the
employee's death, you may be able to treat the payment as a lump sum
distribution if the employee met the appropriate age requirements, whether or
not the employee had 5 years of participation in the Plan.
HOW TO OBTAIN ADDITIONAL INFORMATION
This notice summarizes only the federal (not state or local) tax rules that
might apply to your payment. The rules described above are complex and contain
many conditions and exceptions that are not included in this notice. Therefore,
you may want to consult with a professional tax advisor before you take a
payment of your benefits from the Plan. Also, you can find more specific
information on the tax treatment of payments from qualified retirement plans in
IRS Publication 575, Pension and Annuity Income, and IRS Publication 590,
Individual Retirement Arrangements. These publications are available from your
local IRS office or by calling ▇-▇▇▇-▇▇▇-▇▇▇▇▇.
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