His Company, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
The Employee Stock Ownership Plan (ESOP) is comprised of a Stock Bonus Plan and a Money Purchase Pension Plan. Employees who have completed 1,000 hours of service in a plan year are eligible to participate in the plan. Contributions to the stock bonus plan portion are discretionary up to 20%. Effective November 1, 2007, contributions to the Money Purchase Pension Plan were suspended. Prior to this date, mandatory contributions of 10% of eligible employees’ wages were required. Contributions are allocated based upon the ratio that the covered compensation of each participant bears to the aggregate covered compensation of all participants. Employees’ accounts are 20% vested after two years with vesting increasing 20% per year thereafter until 100% vested after 6 years of service. Participants will become fully vested in the Plan upon normal retirement age, death, total disability or termination of the plan.
Upon termination of service, a participant will receive their vested account balance as follows: a) if a participant’s vested balance is less than $250,000, the participant will receive one lump sum payment b) if a participant’s vested balances is at least $250,000 but does not exceed $500,000, a distribution of $250,000 will be made in the first year in which distributions are to begin, and the remaining balance will be distributed in the second year c) if a participant’s vested balance exceeds $500,000 but does not exceed $750,000, a distribution of $250,000 will be made for the first year in which distributions are to begin and for the second year, and the remaining balance will be distributed in the third year and d) if a participant’s vested balance exceeds $750,000, distributions will be made in annual installments over three years. When distributions are made in installments, the first installment distribution is calculated by dividing the participant’s vested account balance by the number of installment distributions to be made. The remaining account balance is revalued as of each subsequent valuation date. Subsequent installment distributions are calculated by dividing the value of the remaining vested balance by the number of installments remaining.
Effective November 1, 2021, the Plan was amended such that upon termination of service, a participant will receive their vested account balance as follows: a) if the vested balance does not exceed $1,000, the balance will be distributed in a single sum, b) above $1,000 distributions shall be made in either a lump sum, or annual installments over a period not to extend beyond ten years, c) Notwithstanding the foregoing, for a distribution on account of a participant’s termination of employment on his or her retirement date, death, or total and permanent disability, unless a longer distribution period is elected by the participant (limited to annual installments over ten years), the participants vested account balance shall be distributed as follows: i) if a participant’s vested balance is less than $25,000, the participant will receive one lump sum payment, ii) if a participant’s vested balances is at least $25,000 but does not exceed $50,000, a distribution of $25,000 will be made in the first year in which distributions are to begin, and the remaining balance will be distributed in the second year, iii) if a participant’s vested balance exceeds $50,000 but does not exceed $75,000, a distribution of $25,000 will be made for the first and second year of distributions, and the remaining balance will be distributed in the third year and, iv) if a participant’s vested balance exceeds $75,000, distributions will be made in annual installments over three years (subject to a $25,000 minimum installment requirement), and d) Notwithstanding the foregoing, for a distribution for reasons other than on account of a participant’s termination of employment on his or her retirement date, death, or total and permanent disability, unless a longer distribution period is elected by the participant (limited to annual installments over ten years), the participants vested account balance shall be distributed as follows: i) if a participant’s vested balance is less than $25,000, the participant will receive one lump sum payment, ii) if a participant’s vested balances is at least $25,000 but does not exceed $50,000, a distribution of $25,000 will be made in the first year in which distributions are to begin, and the remaining balance will be distributed in the second year, iii) if a participant’s vested balance exceeds $50,000 but does not exceed $75,000, a distribution of $25,000 will be made for the first and second year of distributions, and the remaining balance will be distributed in the third year and, iv) if a participant’s vested balance exceeds $75,000 but does not exceed $100,000, a distribution of $25,000 will be made for the first, second, and third year of distributions,
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