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