EXHIBIT 4.1
OCTOBER 1, 1998
SUMMARY PLAN DESCRIPTION
FOR
COMFORT SYSTEMS USA, INC. 401(K) PLAN
This is only a summary intended to familiarize you with the major provisions of
the Plan. You should read this summary closely. If you have any questions and
before you make any important decisions based on your understanding of the Plan
from this summary, you should contact the Plan administrator at the address
shown on the last page of this summary.
OCTOBER 1, 1998
BENEFITS HIGHLIGHTS
FOR
COMFORT SYSTEMS USA, INC. 401(K) PLAN
INTRODUCTION
The Comfort Systems USA, Inc. 401(k) Plan helps you provide for your retirement
security by making it simple and convenient for you to contribute to your
retirement savings regularly. To encourage you to save, the Plan permits your
Employer to match a portion of what you contribute at the rate set forth in the
Plan. The Plan also permits your Employer to make contributions to the Plan to
provide you with additional savings. Because the Plan is qualified by the
Internal Revenue Service, special tax exclusions allow you to save more dollars
for your retirement.
Your savings are held for you in your personal Plan account until they are
distributed as provided under the Plan.
HOW YOU SAVE
* You can contribute from one to 15 percent of your pay as Tax-Deferred
Contributions.
* For every $1.00 you contribute as Tax-Deferred Contributions while you are
an eligible employee, your Employer may contribute on your behalf an
amount it determines each year as matching Employer Contributions.
* For each year that you are an eligible employee, your Employer may make
contributions based on your pay as profit-sharing Employer Contributions.
* For each year that you are an eligible employee, your Employer may make
contributions on your behalf based on your pay as qualified non-elective
Employer Contributions.
* Dollars you save as Tax-Deferred Contributions are not currently included
as part of your Federal taxable income. Taxes are also deferred on
investment earnings in your personal Plan account and any Employer
Contributions. You therefore pay no Federal income taxes on your Plan
savings until they are distributed to you.
If you are a Highly Compensated Employee, your Employer will make no Qualified
Non-elective Employer Contributions on your behalf for the year. To find out if
you are a Highly Compensated Employee, check your Summary Plan Description.
WHO IS COVERED
You are an employee covered by the Plan if you are employed in any capacity by
Comfort Systems USA, Inc., unless you are a union employee to whom coverage has
not been extended. You are not a covered employee if you are a nonresident alien
and do not receive United States source income.
If you were employed at the main corporate office of Comfort Systems USA, Inc.
on December 31, 1998, you became eligible to make contributions on January 1,
1999. Otherwise, if you are a covered employee, you may begin to make
contributions under the Plan if you have completed at least one year of service.
INVESTMENT OF YOUR PERSONAL PLAN ACCOUNT
You direct how your personal Plan account is invested. You may direct the
investment of your personal Plan account by selecting among specified Investment
Funds that are made available to you.
VESTING OF YOUR PERSONAL PLAN ACCOUNT
You will always be 100 percent vested in the value of your personal Plan account
resulting from your contributions.
Your vested interest in the value of your personal Plan account resulting from
Employer Contributions, other than qualified non-elective Employer
Contributions, will be determined in accordance with the following schedule:
YEARS OF VESTING SERVICE VESTED INTEREST
Less than 1 0%
1 but less than 2 20%
2 but less than 3 40%
3 but less than 4 60%
4 but less than 5 80%
5 or more 100%
You will always be 100 percent vested in the value of your personal Plan account
resulting from qualified non-elective Employer Contributions.
You will be 100 percent vested in the value of your personal Plan account
resulting from Employer Contributions even if you have not completed the
required years of Vesting Service if you continue employment with your Employer
until:
* You reach your Normal Retirement Date under the Plan.
* You die.
* You become totally and permanently disabled.
* You reach age 55 and complete 5 years of Vesting Service.
Of course, even if you are 100 percent vested in the value of your personal Plan
account, the amount in your account may vary depending on investment gains and
losses.
LOANS
You may receive a loan from your personal Plan account in accordance with the
Plan loan procedures.
IN-SERVICE WITHDRAWALS
You may make a withdrawal from your vested personal Plan account while you are
still employed if you meet the requirements set forth in the Plan. The Plan
provisions control the amount you may withdraw. Because your savings under the
Plan are not currently taxable, special IRS tax rules govern in-service
withdrawals.
If you make an in-service withdrawal from your personal Plan account before age
59 1/2, your withdrawal may be subject to an additional 10 percent excise tax.
DISTRIBUTION OF BENEFITS
You may receive distribution of your vested personal Plan account when any of
the following happens:
* You retire from employment after you reach your Normal Retirement
Date, which is age 59-1/2.
* You die.
* Your employment terminates.
* You reach age 70 1/2 while you are still employed.
If distribution is made from your personal Plan account before you reach age 59
1/2 for any reason other than your death or termination of your employment after
you reach age 55, the distribution may be subject to an additional 10 percent
excise tax.
FURTHER PLAN INFORMATION
This Benefits Highlights is an introduction to some of the Plan's basic
features. It is not a full description of your benefits under the Plan or any
restrictions applicable to your benefits under the Plan. To determine your
rights to any particular benefits under the Plan, you should refer to the more
detailed information concerning the Plan contained in the Summary Plan
Description and in the Plan documents themselves. You can inspect a copy of the
complete Plan documents at the Human Resources Department of the Sponsor during
regular business hours.
TABLE OF CONTENTS
INTRODUCTION.................................................................1
CONTRIBUTIONS..........................................................1
YOUR PLAN ACCOUNT......................................................1
FORMAL PLAN TERMS FOUND IN PLAN DOCUMENT...............................2
SPONSOR HAS DISCRETION TO INTERPRET PLAN...............................2
SPECIAL DEFINITIONS..........................................................3
SERVICE CREDITING............................................................7
ELIGIBILITY SERVICE....................................................7
CREDITING OF ELIGIBILITY SERVICE.......................................7
VESTING SERVICE........................................................7
CREDITING OF VESTING SERVICE...........................................7
CHANGE IN SERVICE CREDITING............................................7
ELIGIBILITY..................................................................8
HOW TO MAKE AN ELECTION................................................8
TRANSFERS OF EMPLOYMENT................................................8
REEMPLOYMENT...........................................................8
TAX-DEFERRED CONTRIBUTIONS...................................................9
AMOUNT OF TAX-DEFERRED CONTRIBUTIONS...................................9
CHANGE IN AMOUNT OF TAX-DEFERRED CONTRIBUTIONS.........................9
SUSPENSION OF TAX-DEFERRED CONTRIBUTIONS...............................9
RESUMPTION OF TAX-DEFERRED CONTRIBUTIONS..............................10
VESTED INTEREST IN TAX-DEFERRED CONTRIBUTIONS.........................10
ROLLOVER CONTRIBUTIONS......................................................11
ROLLOVER CONTRIBUTIONS................................................11
VESTED INTEREST IN ROLLOVER CONTRIBUTIONS.............................11
EMPLOYER CONTRIBUTIONS......................................................12
AMOUNT OF MATCHING CONTRIBUTIONS......................................12
AMOUNT OF QUALIFIED NON-ELECTIVE EMPLOYER CONTRIBUTIONS...............12
AMOUNT OF PROFIT-SHARING CONTRIBUTIONS................................12
ELIGIBILITY TO PARTICIPATE IN EMPLOYER CONTRIBUTIONS..................12
ANNUAL SERVICE REQUIREMENT............................................13
REEMPLOYMENT..........................................................13
VESTED INTEREST IN EMPLOYER CONTRIBUTIONS.............................13
(i)
LIMITATIONS ON CONTRIBUTIONS................................................15
WHERE PLAN CONTRIBUTIONS ARE INVESTED.......................................16
404(C) PROTECTION.....................................................16
MAKING INVESTMENT ELECTIONS.................................................17
INVESTMENT ELECTIONS..................................................17
FAILURE TO DIRECT INVESTMENTS.........................................17
CHANGE OF INVESTMENT ELECTIONS........................................17
ELECTION TO TRANSFER BETWEEN INVESTMENT FUNDS.........................17
LOANS FROM YOUR PLAN ACCOUNT................................................19
INTERNAL REVENUE CODE RULES...........................................19
COLLATERAL FOR LOAN...................................................19
DEFAULT ON A LOAN.....................................................20
ADDITIONAL PLAN LOAN RULES............................................20
IN-SERVICE WITHDRAWALS......................................................21
WITHDRAWAL OF PRIOR AFTER-TAX CONTRIBUTIONS...........................21
WITHDRAWAL OF EMPLOYER CONTRIBUTIONS EXCEPT HARDSHIP WITHDRAWALS......21
WITHDRAWAL OF TAX-DEFERRED CONTRIBUTIONS EXCEPT HARDSHIP WITHDRAWALS..21
OVERALL CONDITIONS AND LIMITATIONS ON WITHDRAWALS EXCEPT HARDSHIP
WITHDRAWALS.....................................................22
HARDSHIP WITHDRAWALS..................................................22
FINANCIAL NEEDS FOR WHICH HARDSHIP WITHDRAWALS ARE AVAILABLE..........22
DEMONSTRATING NEED FOR HARDSHIP WITHDRAWAL............................23
APPLICATION FOR HARDSHIP WITHDRAWALS..................................23
FORFEITURE OF NON-VESTED AMOUNTS............................................24
TIMING OF FORFEITURE..................................................24
RECREDITING OF FORFEITED AMOUNTS......................................24
TREATMENT OF FORFEITED AMOUNTS........................................25
DISTRIBUTION OF YOUR PLAN ACCOUNT...........................................26
TIMING OF DISTRIBUTION................................................26
APPLICATION FOR DISTRIBUTION..........................................26
SUSPENSION OF DISTRIBUTION............................................26
DISTRIBUTION TO YOU...................................................26
DISTRIBUTION TO YOUR BENEFICIARY......................................27
CASH OUTS OF PLAN ACCOUNTS AND CONSENT TO DISTRIBUTION................27
DIRECT ROLLOVER REQUIREMENTS..........................................27
REQUIRED DISTRIBUTIONS................................................28
FORM OF PAYMENT.............................................................29
(ii)
NORMAL FORM OF PAYMENT................................................29
OPTIONAL FORMS OF PAYMENT.............................................29
AUTOMATIC FORM OF ANNUITY PAYMENT.....................................29
FORM OF PAYMENT TO YOUR BENEFICIARY...................................30
QUALIFIED PRERETIREMENT SURVIVOR ANNUITY REQUIREMENTS.................30
SPOUSAL CONSENT REQUIREMENTS..........................................30
EFFECT OF REEMPLOYMENT ON FORM OF PAYMENT ELECTION....................31
DISTRIBUTION IN EMPLOYER STOCK........................................31
OVERRIDING CASH OUT PROVISION.........................................31
YOUR BENEFICIARY UNDER THE PLAN.............................................32
BENEFICIARY IF YOU ARE MARRIED........................................32
EFFECT OF ELECTION OF OPTIONAL ANNUITY FORM OF PAYMENT ON PRIOR
BENEFICIARY DESIGNATION.........................................32
EFFECT OF MARRIAGE ON PRIOR BENEFICIARY DESIGNATION...................32
BENEFICIARY WHERE THERE IS NO DESIGNATED BENEFICIARY..................33
SPOUSAL CONSENT TO BENEFICIARY DESIGNATION............................33
CLAIMS FOR BENEFITS.........................................................34
AMENDMENT AND TERMINATION OF THE PLAN.......................................35
PLAN AMENDMENT........................................................35
PLAN TERMINATION......................................................35
MISCELLANEOUS INFORMATION...................................................36
PLAN BOOKLET DOES NOT CREATE EMPLOYMENT CONTRACT......................36
NO GUARANTEES REGARDING INVESTMENT PERFORMANCE........................36
IF CIRCUMSTANCES REQUIRE THE DELAY OF A WITHDRAWAL....................36
TRANSFERS FROM THE GUARANTEED INCOME FUND MAY BE LIMITED..............36
PAYMENT OF ADMINISTRATIVE EXPENSES....................................36
QUALIFIED DOMESTIC RELATIONS ORDERS...................................37
RETURN OF CONTRIBUTIONS TO YOUR EMPLOYER..............................37
TOP-HEAVY PROVISIONS........................................................38
MORE THINGS YOU SHOULD KNOW.................................................39
YOUR RIGHTS UNDER THE PLAN..................................................40
ADDITIONAL INFORMATION......................................................42
PLAN ADMINISTRATOR....................................................42
AGENT FOR SERVICE OF LEGAL PROCESS....................................42
SPONSOR...............................................................42
(iii)
EMPLOYER IDENTIFICATION NUMBER........................................42
PLAN NUMBER...........................................................42
TRUSTEE...............................................................42
(iv)
INTRODUCTION
The Comfort Systems USA, Inc. 401(k) Plan helps you build financial security for
your retirement by providing you an opportunity to save for your retirement
while simultaneously reducing your Federal income tax liability (and in some
States, your State income tax liability as well).
This booklet describes the Plan as in effect on October 1, 1998.
CONTRIBUTIONS
You may contribute a portion of your COMPENSATION to the Plan on a before-tax
basis. These contributions are called TAX-DEFERRED CONTRIBUTIONS. This reduces
the amount of your taxable income for the year under the Federal income tax
rules.
Your TAX-DEFERRED CONTRIBUTIONS remain invested in the Plan until they are
distributed under the terms of the Plan. Your TAX-DEFERRED CONTRIBUTIONS, and
any earnings on your TAX-DEFERRED CONTRIBUTIONS, are not taxable under Federal
income tax rules until they are distributed to you from the Plan.
In addition to your contributions, the Plan permits your EMPLOYER to make
contributions to the Plan on your behalf. These contributions are called
EMPLOYER CONTRIBUTIONS. Like your TAX-DEFERRED CONTRIBUTIONS, these EMPLOYER
CONTRIBUTIONS, and the earnings on them, are not taxable to you until they are
distributed to you from the Plan.
Finally, you may elect to roll over qualified cash distributions from another
plan or a rollover IRA into the Plan. These contributions are called ROLLOVER
CONTRIBUTIONS. Like your TAX-DEFERRED CONTRIBUTIONS, these ROLLOVER
CONTRIBUTIONS, and the earnings on them, are not taxable to you until they are
distributed to you from the Plan.
YOUR PLAN ACCOUNT
You have your own account under the Plan to hold all contributions you make to
the Plan and any contributions your EMPLOYER makes to the Plan on your behalf.
Your Plan account also holds any investment earnings on those contributions.
Your Plan account keeps track of your share of the assets held in the Plan.
FORMAL PLAN TERMS FOUND IN PLAN DOCUMENT
This booklet describes in easy-to-understand terms the principal features of the
Plan as in effect on October 1, 1998. Some technical details and legal
expressions contained in the formal Plan documents have been omitted. The formal
Plan documents govern in administering and interpreting the rights of
participants and their beneficiaries.
SPONSOR HAS DISCRETION TO INTERPRET PLAN
The SPONSOR has discretionary authority to interpret and construe the provisions
of the Plan, to determine your eligibility for benefits under the Plan, and to
resolve any disputes that arise under the Plan. The SPONSOR may delegate this
authority as provided under the Plan.
2
SPECIAL DEFINITIONS
To help you better understand how the Plan works, the following Plan terms have
the special meanings given in SPECIAL DEFINITIONS when they are used in this
booklet. When you see a capitalized term in bold-face print and are not certain
what it means, you can refer back to SPECIAL DEFINITIONS for the meaning.
In addition to these "SPECIAL DEFINITIONS" which are used throughout the
booklet, you may see some TERMS that are also in bold-face print, but that are
not capitalized. These TERMS have special meanings that are given in the
particular section of the booklet where the TERM is used.
* The "ADMINISTRATOR" is responsible for the day-to-day administration of
the Plan such as collecting election forms from EMPLOYEES. The
ADMINISTRATOR is Comfort Systems USA, Inc.
* The "ANSWERLINE" is the 1-800-253-2287 service from Connecticut General
where, among other services, participants can model loans, transfer
between Investment Funds, and change the investment election for future
contributions.
* Your "BENEFICIARY" means the person (or persons) entitled to receive
distribution of your Plan account if you die before your Plan account has
been fully distributed to you.
* A "BREAK IN SERVICE" means a service crediting period in which you
complete fewer than 501 Hours of Service.
* Your "COMPENSATION" means the compensation from your EMPLOYER that is
taken into account in determining the amount of contributions that you
can make to the Plan or that your EMPLOYER can make to the Plan on your
behalf. COMPENSATION means the wages, salaries, fees for professional
services, and all other amounts paid to you for personal services
rendered to your EMPLOYER in the course of employment covered under the
Plan that would be considered compensation for purposes of Section 415
of the Internal Revenue Code and any such amounts that would be paid to
you but for your election to defer such amounts under the Plan or under
any other 401(k) or Section 125 plan maintained by your EMPLOYER or a
RELATED COMPANY.
Generally, COMPENSATION that you earn before you become eligible to
participate in the Plan is not included in determining the amount of
contributions that you can make to the Plan. Tax rules limit the amount of
COMPENSATION that may be taken into account under the Plan each year. For
1999, the maximum amount is $160,000 (this amount may be adjusted in
future years).
3
* A "CONTRIBUTION PERIOD" is the period for which EMPLOYER CONTRIBUTIONS
will be made to the Plan. The CONTRIBUTION PERIOD for MATCHING
CONTRIBUTIONS is each month. The CONTRIBUTION PERIOD for QUALIFIED
NON-ELECTIVE CONTRIBUTIONS and PROFIT-SHARING CONTRIBUTIONS is each PLAN
YEAR.
* Your "ELIGIBILITY SERVICE" means the service credited to you that is used
for determining whether you are eligible to participate in the Plan by
making TAX-DEFERRED CONTRIBUTIONS to the Plan or by sharing in EMPLOYER
CONTRIBUTIONS.
* You are an "EMPLOYEE" covered by the Plan if you are employed by your
EMPLOYER in any capacity. If you are a nonresident alien and do not
receive United States source income, you are not an EMPLOYEE. If you are
covered by a collective bargaining agreement that does not provide for
your coverage under the Plan, you are not an EMPLOYEE.
* Your "EMPLOYER" means Comfort Systems USA, Inc. and any RELATED COMPANY
that adopts the Plan.
* An "EMPLOYER CONTRIBUTION" means any contribution that your EMPLOYER makes
to the Plan on your behalf.
* An "ENROLLMENT DATE" means the date on which you are eligible to begin
participation in the Plan by making TAX-DEFERRED CONTRIBUTIONS or by
sharing in EMPLOYER CONTRIBUTIONS. An ENROLLMENT DATE occurs on the first
day of each month of the PLAN YEAR.
* A "HIGHLY COMPENSATED EMPLOYEE" means an employee who is highly
compensated in accordance with specific IRS rules. Generally, you may
be a HIGHLY COMPENSATED EMPLOYEE under the IRS rules if you are paid
more than $80,000 (as adjusted by the federal government) during the
preceding Plan Year and, if the Employer so elects, you are in the
top-paid group of employees, or you own five percent of an EMPLOYER.
If you are concerned that you may be a HIGHLY COMPENSATED EMPLOYEE, you
should consult the ADMINISTRATOR.
* An "HOUR OF SERVICE" means each hour that is used for determining your
ELIGIBILITY SERVICE and your VESTING SERVICE. An HOUR OF SERVICE is
each hour for which you are paid or entitled to be paid by your
Employer, a PREDECESSOR EMPLOYER, or a RELATED COMPANY and includes
your time at work, vacations, holidays, paid sick days, jury duty,
military duty, approved leaves of absence, and certain maternity and
paternity leaves of absence. However, no more than 501 HOURS OF
Service will be used to determine your service for any period for which
you are not actually working, unless you are absent because of military
duty and you return to employment while your reemployment rights are
protected under Federal law.
4
* An "INVESTMENT FUND" is a separate fund in which your Plan account or part
of your Plan account may be invested.
* A "MATCHING CONTRIBUTION" means any EMPLOYER CONTRIBUTION your EMPLOYER
makes to the Plan on your behalf because of your TAX-DEFERRED
CONTRIBUTIONS.
* Your "NORMAL RETIREMENT DATE" means the date you reach age 59-1/2.
* A "PLAN YEAR" means the 12-consecutive-month period beginning October 1,
1998 and ending December 31, 1998 and each 12-consecutive-month period
ending December 31 thereafter.
* A "PREDECESSOR EMPLOYER" means a prior organization of your EMPLOYER for
whom your EMPLOYER maintains a plan of the prior organization. A
PREDECESSOR EMPLOYER also includes a prior company or business that was
acquired by your EMPLOYER, provided the prior company or business
maintained a SIMPLE IRA for its employees prior to the acquisition.
* A "PROFIT-SHARING CONTRIBUTION" means any EMPLOYER CONTRIBUTION made to
the Plan by your EMPLOYER as described in detail in EMPLOYER
CONTRIBUTIONS.
* A "QUALIFIED NON-ELECTIVE CONTRIBUTIONS" means any EMPLOYER Contribution
made to the Plan by your EMPLOYER as described in detail in EMPLOYER
CONTRIBUTIONS.
* A "RELATED COMPANY" means any company or business that is considered to be
related to an EMPLOYER under Internal Revenue Code rules.
* A "ROLLOVER CONTRIBUTION" means any qualified cash contribution that you
elect to roll over to the Plan from another retirement plan or from a
rollover IRA.
* The "SPONSOR" of the Plan is Comfort Systems USA, Inc.
* A "TAX-DEFERRED CONTRIBUTION" means any contribution that you elect to
make to the Plan on a before-tax basis.
* The "TRUSTEE" holds the Plan assets for the benefit of covered EMPLOYEES,
and may be a bank, an insurance company, or a group of individuals chosen
by the SPONSOR.
* A "VALUATION DATE" means a date on which the trust is valued and Plan
accounts are adjusted to reflect investment earnings or losses. A
VALUATION DATE under the Plan is the date or dates designated by the
SPONSOR.
5
* Your "VESTING SERVICE" means the service credited to you that is used for
determining your vested interest in the value of the EMPLOYER
CONTRIBUTIONS in your Plan account.
6
SERVICE CREDITING
ELIGIBILITY SERVICE
ELIGIBILITY SERVICE is used to determine whether you may participate in the Plan
by making TAX-DEFERRED CONTRIBUTIONS or by sharing in EMPLOYER CONTRIBUTIONS.
CREDITING OF ELIGIBILITY SERVICE
You are credited with a year of ELIGIBILITY SERVICE if you complete at least
1,000 HOURS OF SERVICE by the anniversary of your hire date. If you do not
complete at least 1,000 HOURS OF SERVICE during that period, you will be
credited with a year of ELIGIBILITY SERVICE for the first 12-month period
beginning on the anniversary of your hire date in which you complete at least
1,000 HOURS OF SERVICE.
VESTING SERVICE
VESTING SERVICE is used to determine your vested interest in the value of the
EMPLOYER CONTRIBUTIONS in your Plan account. Your vested interest means the
percentage of your Plan account that you are entitled to receive upon
distribution.
CREDITING OF VESTING SERVICE
You are credited with a year of VESTING SERVICE for each PLAN YEAR (including
PLAN YEARS before the effective date of the Plan) in which you complete at least
1,000 HOURS OF SERVICE.
CHANGE IN SERVICE CREDITING
If there is a change in the way VESTING SERVICE or ELIGIBILITY SERVICE is
credited under the Plan, special rules apply to assure that the change does not
affect the way service is credited to you for the transition period to your
disadvantage. In some cases, application of these rules may result in a person
being credited with two years of VESTING SERVICE or ELIGIBILITY Service for the
same period, but it will never result in a person being crediting with fewer
years of VESTING SERVICE or ELIGIBILITY SERVICE than if service crediting under
the Plan had not changed.
7
ELIGIBILITY
If you were employed at the main corporate office of Comfort Systems USA, Inc.
on December 31, 1998, you became an Eligible Employee as of January 1, 1999.
Otherwise, if you are an EMPLOYEE, you may elect to make TAX-DEFERRED
CONTRIBUTIONS beginning on the ENROLLMENT DATE that coincides with or
immediately follows the date you complete one year of ELIGIBILITY SERVICE.
If you do not elect to make TAX-DEFERRED CONTRIBUTIONS beginning on the first
ENROLLMENT DATE that you are eligible to make an election, you may elect to make
TAX-DEFERRED CONTRIBUTIONS beginning on any subsequent ENROLLMENT DATE.
HOW TO MAKE AN ELECTION
To elect to make TAX-DEFERRED CONTRIBUTIONS, you must file your election with
the ADMINISTRATOR at least such number of days before the ENROLLMENT DATE on
which your election is to become effective as the ADMINISTRATOR prescribes.
TRANSFERS OF EMPLOYMENT
If you are transferred from other employment with your EMPLOYER or a RELATED
COMPANY to employment as an EMPLOYEE, you may elect to make TAX-DEFERRED
CONTRIBUTIONS beginning on your transfer date if you met the service
requirements above on an ENROLLMENT DATE coinciding with or preceding your
transfer date. Otherwise, you may elect to make TAX-DEFERRED CONTRIBUTIONS
beginning on the first ENROLLMENT DATE coinciding with or immediately following
the date you meet the service requirements above.
REEMPLOYMENT
If your employment terminates and you are later reemployed as an EMPLOYEE, you
may elect to make TAX-DEFERRED CONTRIBUTIONS beginning on your reemployment date
if you were eligible to elect to make TAX-DEFERRED CONTRIBUTIONS at the time you
terminated employment. Otherwise, you may elect to make TAX-DEFERRED
CONTRIBUTIONS beginning on the first ENROLLMENT DATE coinciding with or
immediately following the date you meet the service requirements above.
8
TAX-DEFERRED CONTRIBUTIONS
Your election to make TAX-DEFERRED CONTRIBUTIONS to the Plan authorizes your
EMPLOYER to reduce the amount of your COMPENSATION by a specified amount and to
contribute that amount to the Plan. Your COMPENSATION will be reduced and your
TAX-DEFERRED CONTRIBUTIONS commenced in accordance with your election beginning
with the first payment of COMPENSATION made to you on or after the date your
election is effective.
Your election to make TAX-DEFERRED CONTRIBUTIONS will also include your election
as to the investment of those contributions. Investment elections are discussed
in further detail in WHERE PLAN CONTRIBUTIONS ARE INVESTED and MAKING INVESTMENT
ELECTIONS.
AMOUNT OF TAX-DEFERRED CONTRIBUTIONS
The amount you authorize your EMPLOYER to withhold from your COMPENSATION as a
TAX-DEFERRED CONTRIBUTION may be a percentage of your COMPENSATION (in whole
percentage points) of not less than one percent nor more than 15 percent.
CHANGE IN AMOUNT OF TAX-DEFERRED CONTRIBUTIONS
You may change the amount you authorize your EMPLOYER to withhold from your
future COMPENSATION quarterly. To change the amount of your TAX-DEFERRED
CONTRIBUTION, you must file a new election with the ADMINISTRATOR at least such
number of days before the date the change is to take effect as the ADMINISTRATOR
prescribes.
SUSPENSION OF TAX-DEFERRED CONTRIBUTIONS
You may withdraw your authorization for your EMPLOYER to withhold amounts from
your future COMPENSATION and suspend your TAX-DEFERRED CONTRIBUTIONS at any
time. To suspend your TAX-DEFERRED CONTRIBUTIONS, you can call AnswerLine or
file written notice with the ADMINISTRATOR at least such number of days before
the date the suspension is to take effect as the ADMINISTRATOR prescribes. The
suspension will take effect for COMPENSATION paid to you after the required
notice period is over.
If you suspend your TAX-DEFERRED CONTRIBUTIONS, the suspension will remain in
effect until you elect to resume making TAX-DEFERRED CONTRIBUTIONS again.
9
RESUMPTION OF TAX-DEFERRED CONTRIBUTIONS
If you suspend your TAX-DEFERRED CONTRIBUTIONS, you may elect to resume making
TAX-DEFERRED CONTRIBUTIONS on any day of the PLAN YEAR. To resume TAX-DEFERRED
CONTRIBUTIONS you must file a new election with the Administrator at least such
number of days before the date TAX-DEFERRED CONTRIBUTIONS are to resume as the
ADMINISTRATOR prescribes.
VESTED INTEREST IN TAX-DEFERRED CONTRIBUTIONS
You are always 100 percent vested in the value of the TAX-DEFERRED CONTRIBUTIONS
in your Plan account.
10
ROLLOVER CONTRIBUTIONS
ROLLOVER CONTRIBUTIONS
If you are an EMPLOYEE, you may elect to roll over qualified distributions from
another plan or a rollover IRA into the Plan. Internal Revenue Code rules govern
whether a distribution from another plan or an IRA qualifies for roll over into
the Plan. The ADMINISTRATOR may require you to provide information to show that
the distribution you want to roll over qualifies under the Internal Revenue Code
rules.
If the distribution qualifies, you may roll it over into the Plan within 60 days
of the date you received it.
Your ROLLOVER CONTRIBUTION will become subject to all the terms and conditions
of the Plan and will only be distributable to you under the terms of the Plan.
VESTED INTEREST IN ROLLOVER CONTRIBUTIONS
You are always 100 percent vested in the value of the ROLLOVER CONTRIBUTIONS
(including any investment gains or losses on them) in your Plan account.
11
EMPLOYER CONTRIBUTIONS
In addition to your TAX-DEFERRED CONTRIBUTIONS, the Plan permits your Employer
to make EMPLOYER CONTRIBUTIONS to the Plan on your behalf. You are not taxed on
any EMPLOYER CONTRIBUTIONS that may be made on your behalf until distribution is
made to you.
The percentage of the value of the EMPLOYER CONTRIBUTIONS invested in your Plan
account that you are entitled to receive upon distribution is your vested
interest in your EMPLOYER CONTRIBUTIONS Plan account.
AMOUNT OF MATCHING CONTRIBUTIONS
Your EMPLOYER, in its discretion, may make a MATCHING CONTRIBUTION for a
CONTRIBUTION PERIOD on your behalf equal to a percentage, determined by your
EMPLOYER, of your TAX-DEFERRED CONTRIBUTIONS for the CONTRIBUTION PERIOD.
AMOUNT OF QUALIFIED NON-ELECTIVE EMPLOYER CONTRIBUTIONS
Your EMPLOYER, in its discretion, may make a QUALIFIED NON-ELECTIVE CONTRIBUTION
for a CONTRIBUTION PERIOD on your behalf equal to a percentage, determined by
your EMPLOYER, of your COMPENSATION for the CONTRIBUTION Period. Your EMPLOYER
will NOT make a QUALIFIED NON-ELECTIVE CONTRIBUTION on your behalf for a
CONTRIBUTION PERIOD if you are a HIGHLY COMPENSATED Employee for that
CONTRIBUTION PERIOD.
AMOUNT OF PROFIT-SHARING CONTRIBUTIONS
Your EMPLOYER, in its discretion, may make a PROFIT-SHARING CONTRIBUTION for a
CONTRIBUTION PERIOD on your behalf equal to a percentage, determined by your
EMPLOYER, of your COMPENSATION for the CONTRIBUTION PERIOD.
ELIGIBILITY TO PARTICIPATE IN EMPLOYER CONTRIBUTIONS
You are eligible to begin participating in EMPLOYER CONTRIBUTIONS under the Plan
on the same day that you are eligible to begin making TAX-DEFERRED CONTRIBUTIONS
to the Plan.
12
ANNUAL SERVICE REQUIREMENT
If you have met the eligibility requirements to begin participating in EMPLOYER
CONTRIBUTIONS, you will share in the allocation of PROFIT-SHARING CONTRIBUTIONS
for a particular CONTRIBUTION PERIOD only if you also: (1) complete at least
1,000 HOURS OF SERVICE during the PLAN YEAR; and (2) are employed by an EMPLOYER
on the last day of the CONTRIBUTION PERIOD. However, you will share in the
allocation of PROFIT-SHARING CONTRIBUTIONS for a particular CONTRIBUTION PERIOD
even if you do not complete at least 1,000 HOURS OF SERVICE or are not employed
by an EMPLOYER on the last day of the CONTRIBUTION PERIOD because you retired at
or after your NORMAL RETIREMENT DATE or at or after age 55 with at least 5 years
of VESTING SERVICE, or because you died or became permanently and totally
disabled. You are permanently and totally disabled if the ADMINISTRATOR
determines, on the basis of an acceptable physician's certificate, that you are
permanently disabled such that you can no longer continue in the service of your
Employer.
REEMPLOYMENT
If your employment terminates and you are later reemployed as an EMPLOYEE, you
will be eligible to begin participating in EMPLOYER CONTRIBUTIONS on your
reemployment date if you were eligible to participate in EMPLOYER CONTRIBUTIONS
at the time you terminated employment. Otherwise, you will be able to begin
participating in EMPLOYER CONTRIBUTIONS on the same day that you are first
eligible to make TAX-DEFERRED CONTRIBUTIONS to the Plan.
VESTED INTEREST IN EMPLOYER CONTRIBUTIONS
You are always 100 percent vested in the value of the QUALIFIED NON-ELECTIVE
CONTRIBUTIONS in your Plan account. Your vested interest in the value of the
MATCHING and PROFIT-SHARING CONTRIBUTIONS in your Plan account is determined in
accordance with the following schedule:
YEARS OF VESTING SERVICE VESTED INTEREST
------------------------ ---------------
Less than 1 0%
1 but less than 2 20%
2 but less than 3 40%
3 but less than 4 60%
4 but less than 5 80%
5 or more 100%
13
Even if you have not otherwise completed enough years of VESTING SERVICE to be
100 percent vested in the value of the EMPLOYER CONTRIBUTIONS in your Plan
account, you will become 100 percent vested if you retire from employment with
your EMPLOYER on or after your NORMAL RETIREMENT DATE, you die or become
permanently and totally disabled while still in the employment of your EMPLOYER,
or your employment terminates with your EMPLOYER after you reach age 55 and
complete 5 years of VESTING SERVICE. You are permanently and totally disabled if
the ADMINISTRATOR determines, on the basis of an acceptable physician's
certificate, that you are permanently disabled such that you can no longer
continue in the service of your EMPLOYER.
14
LIMITATIONS ON CONTRIBUTIONS
Federal law limits the maximum amount of TAX-DEFERRED CONTRIBUTIONS that you can
make to the Plan each calendar year. For 1999, the maximum amount is $10,000
(this amount is adjusted upward each year). If the ADMINISTRATOR determines that
the amount you authorize your EMPLOYER to withhold from your COMPENSATION would
exceed the maximum amount permitted for the year, the ADMINISTRATOR will adjust
the amount withheld so that it does not exceed the maximum.
If you are a HIGHLY COMPENSATED EMPLOYEE, Federal law also limits the amount of
TAX-DEFERRED CONTRIBUTIONS that you can make to the Plan and the amount of
MATCHING CONTRIBUTIONS that your EMPLOYER can make to the Plan on your behalf.
If the ADMINISTRATOR determines that contributions for HIGHLY COMPENSATED
EMPLOYEES would exceed the amount that may be contributed to the Plan, it may
adjust the amount of TAX-DEFERRED CONTRIBUTIONS, AFTER-TAX CONTRIBUTIONS, and
MATCHING CONTRIBUTIONS that would otherwise be made for HIGHLY COMPENSATED
EMPLOYEES.
In addition, contributions to the Plan are subject to other maximum limitations
under the Internal Revenue Code and other applicable law. Amounts that would
exceed those limits will be distributed or forfeited as provided under the Plan.
15
WHERE PLAN CONTRIBUTIONS ARE INVESTED
You direct how your TAX-DEFERRED CONTRIBUTIONS and ROLLOVER CONTRIBUTIONS and
how the EMPLOYER CONTRIBUTION made on your behalf are invested. You may direct
that contributions be invested in any of the INVESTMENT FUNDS made available to
you under the Plan. Upon request, the ADMINISTRATOR will provide you with
additional information of the different INVESTMENT FUNDS available. New
INVESTMENT FUNDS may be added and existing INVESTMENT FUNDS changed. The
ADMINISTRATOR will update the description of the available INVESTMENT FUNDS to
reflect any changes.
404(C) PROTECTION
Because you direct how contributions to your Plan account are invested, the
SPONSOR and the TRUSTEE, who would otherwise be responsible under Federal rules
for directing investments, are relieved of this responsibility with respect to
those contributions. Therefore, they are no longer liable under the law for any
losses to your Plan account that are the direct and necessary result of your
investment directions. They are still responsible, however, for being sure that
you have diverse investment opportunities and sufficient opportunity to direct
the investment of your Plan account.
16
MAKING INVESTMENT ELECTIONS
INVESTMENT ELECTIONS
At least such number of days as the ADMINISTRATOR prescribes before the
effective date of your participation in the Plan, you must file an investment
election with the ADMINISTRATOR directing how contributions to your Plan account
are to be invested.
Your investment election must specify the percentage of the contributions to
your Plan account that is to be invested among the INVESTMENT FUNDS.
FAILURE TO DIRECT INVESTMENTS
If you do not direct how contributions to your Plan account are to be invested,
the contributions will be invested among the INVESTMENT FUNDS selected by the
ADMINISTRATOR.
CHANGE OF INVESTMENT ELECTIONS
You may change how contributions to your Plan account are invested on any day of
the PLAN YEAR. To perform this transaction, you may call ANSWERLINE or contact
the ADMINISTRATOR.
ELECTION TO TRANSFER BETWEEN INVESTMENT FUNDS
You may transfer any amount held in your Plan account from one INVESTMENT Fund
to another INVESTMENT FUND. You must specify the amount that is to be
transferred. To perform this transaction, you may call ANSWERLINE or contact the
ADMINISTRATOR.
Direct transfers may not be made between one of the guaranteed long term
vehicles (Guaranteed Income Fund) and any fund deemed to be a competing fund,
such as a bond fund, without first going through an equity vehicle for at least
90 days.
A transfer may be made effective as of any day of the PLAN YEAR.
ANSWERLINE 1-800 SERVICE
17
The ANSWERLINE Service is a state-of-the-art system that allows you to access
information about your account using a touch-tone telephone. To access
ANSWERLINE, call 1-800-253-2287. ANSWERLINE enables you to perform certain
transactions, investment transfers, and investment changes in accordance with
the terms of your Plan. You should contact the ADMINISTRATOR for materials that
describe the features and options that are available.
ANSWERLINE is normally available 24 hours a day, seven days a week, except
during a brief period of approximately 20 minutes each morning between the hours
of 3:30 a.m. and 7:00 a.m., eastern time.
18
LOANS FROM YOUR PLAN ACCOUNT
You may apply for a loan from your Plan account, by calling ANSWERLINE, while
you are employed by your EMPLOYER. If you have made a ROLLOVER CONTRIBUTION to
the Plan, but have not yet met the eligibility requirements to participate in
the Plan, you may not receive a Plan loan until you have met the eligibility
requirements to participate. The ADMINISTRATOR will provide you with a copy of
the rules governing Plan loans.
Any Plan loan made to you will be treated as a separate investment of the assets
held in your Plan account.
INTERNAL REVENUE CODE RULES
Specific Internal Revenue Code rules govern loans from tax-qualified plans. Any
Plan loan must meet the minimum requirements set forth in the IRS rules. The
loan guidelines provided by the ADMINISTRATOR may, however, set forth more
stringent requirements than the IRS minimum. In that case, any Plan loan must
meet the more stringent requirements set forth in the loan guidelines.
The interest rate charged on a Plan loan must be a reasonable rate similar to
the rate charged for a loan made under similar circumstances by persons in the
business of lending money.
The amount of any Plan loan, when added to the outstanding balance of all other
loans made to you from the Plan or any other plan maintained by your EMPLOYER or
a RELATED COMPANY, may not exceed specified limits.
The term of any Plan loan may not exceed five years, unless it is used to
purchase your principal residence. If you are using the loan to purchase your
principal residence, your ADMINISTRATOR may allow a longer repayment period of
up to 10 years.
Any Plan loan must be repaid in substantially equal installments through payroll
deductions over the term of the loan. Payments must be made not less frequently
than quarterly.
COLLATERAL FOR LOAN
19
If you receive a Plan loan, a portion of your vested Plan account equal to the
loan amount will be used as collateral for the loan. If a Plan loan is still
outstanding at the time distribution of your Plan account is to be made, the
amount distributed to you will be reduced by the amount of your vested Plan
account that is held as collateral for the loan, but only to the extent
necessary to repay the loan. If you terminate employment with an outstanding
loan, the loan will become immediately due and payable and your vested Plan
account will be reduced by the amount of the outstanding loan balance.
DEFAULT ON A LOAN
You will not receive a Plan loan unless you agree that your Plan account may be
charged for unpaid principal and interest if you default on the loan. A Plan
loan may be declared by the ADMINISTRATOR to be in default if you fail to make
required payments on the loan within 90 days of the due date or there is an
outstanding balance on the last scheduled repayment date. If a loan is declared
to be in default, the entire unpaid balance of the loan, together with accrued
interest, is immediately due and payable. If the balance and interest is not
then paid, your Plan account will be charged with the amount of the balance and
interest at the earliest date that distribution may be made to you without
affecting the tax qualification of the Plan.
ADDITIONAL PLAN LOAN RULES
The minimum amount of any Plan loan that you may receive is $1,000.
You may not have more than one outstanding Plan loan at any time.
You may pre-pay the balance of any Plan loan before its due date without
incurring a penalty.
If your employment terminates, the outstanding balance of any Plan loan made to
you shall be immediately due and owing unless you elect to roll over an
outstanding loan to another qualified plan that accepts such rollovers.
20
IN-SERVICE WITHDRAWALS
Under certain circumstances, you may make a cash withdrawal or a withdrawal
through the purchase of a single life annuity or a qualified joint and survivor
annuity (as described in AUTOMATIC FORM OF ANNUITY PAYMENT in FORMS OF PAYMENT)
from your Plan account while you are still employed by your EMPLOYER.
WITHDRAWAL OF PRIOR AFTER-TAX CONTRIBUTIONS
You may withdraw the value of the AFTER-TAX CONTRIBUTIONS in your Plan account,
subject to the overall conditions and limitations on withdrawals listed below.
WITHDRAWAL OF ROLLOVER CONTRIBUTIONS
You may withdraw the value of the ROLLOVER CONTRIBUTIONS in your Plan account,
subject to the overall conditions and limitations on withdrawals listed below.
WITHDRAWAL OF EMPLOYER CONTRIBUTIONS EXCEPT HARDSHIP WITHDRAWALS
If you have reached age 59 1/2, you may withdraw the value of the EMPLOYER
CONTRIBUTIONS in your Plan account.
Any withdrawal of EMPLOYER CONTRIBUTIONS that you make is subject to the overall
conditions and limitations on withdrawals listed below.
Please note, Federal law prohibits withdrawal from the Plan while you are still
employed and before age 59 1/2 of certain EMPLOYER CONTRIBUTIONS that are used
by your EMPLOYER in meeting Federal nondiscrimination tests.
WITHDRAWAL OF TAX-DEFERRED CONTRIBUTIONS EXCEPT HARDSHIP WITHDRAWALS
If you have reached age 59 1/2, you may withdraw the value of the TAX-DEFERRED
CONTRIBUTIONS in your Plan account. Any withdrawal of TAX-DEFERRED CONTRIBUTIONS
that you make is subject to the overall conditions and limitations on
withdrawals listed below.
21
OVERALL CONDITIONS AND LIMITATIONS ON WITHDRAWALS EXCEPT HARDSHIP WITHDRAWALS
You may make a withdrawal from your Plan account effective as soon as reasonably
practicable following the ADMINISTRATOR'S approval of your application.
If you are married at the time you wish to make a withdrawal, and your Plan
account is subject to the spousal consent requirements described in FORM OF
PAYMENT, your spouse must consent in writing to the withdrawal, unless you
receive payment through the purchase of a qualified joint and survivor annuity
(as described in AUTOMATIC FORM OF ANNUITY in FORM OF PAYMENT).
HARDSHIP WITHDRAWALS
If you incur an immediate and heavy financial need, you may make a hardship
withdrawal of your TAX-DEFERRED CONTRIBUTIONS and the EMPLOYER CONTRIBUTIONS in
your Plan account, but only if the ADMINISTRATOR determines that the withdrawal
is necessary to meet your financial need.
Federal law prohibits hardship withdrawals of investment earnings on
TAX-DEFERRED CONTRIBUTIONS.
FINANCIAL NEEDS FOR WHICH HARDSHIP WITHDRAWALS ARE AVAILABLE
The financial needs for which you can get a hardship withdrawal are:
* medical expenses of you, your spouse, or your dependents for the
diagnosis, cure, mitigation, treatment, or prevention of disease;
* purchase of your principal residence (excluding mortgage payments);
* tuition payments, related educational fees, and room and board
expenses for post-secondary education for you, your spouse, or your
dependents; or
* prevention of your eviction from your principal residence or
foreclosure on the mortgage of your principal residence.
22
DEMONSTRATING NEED FOR HARDSHIP WITHDRAWAL
The ADMINISTRATOR will approve a hardship withdrawal to you if all of the
following requirements are met: (1) the withdrawal amount does not exceed the
amount you need to meet your financial need; (2) you have obtained all other
distributions and all non-taxable loans available to you from any plan
maintained by your EMPLOYER or any RELATED COMPANY; (3) you suspend your
TAX-DEFERRED CONTRIBUTIONS to the Plan (and any other plan maintained by your
EMPLOYER or any RELATED COMPANY) for at least 12 months after receipt of the
withdrawal; and (4) the maximum amount of the TAX-DEFERRED CONTRIBUTIONS you are
permitted under Internal Revenue Code rules to make to the Plan (and any other
plan maintained by your EMPLOYER or any RELATED COMPANY) for the calendar year
following the calendar year in which you receive the withdrawal is reduced by
the amount of the TAX-DEFERRED CONTRIBUTIONS you made during the calendar year
in which you received the withdrawal.
APPLICATION FOR HARDSHIP WITHDRAWALS
You may make a withdrawal from your Plan account effective as soon as reasonably
practicable following the ADMINISTRATOR'S approval of your hardship application.
If you are married at the time you wish to make a withdrawal, and your Plan
account is subject to the spousal consent requirements described in FORM OF
PAYMENT, your spouse must consent in writing to the withdrawal, unless you
receive payment through the purchase of a qualified joint and survivor annuity
(as described in AUTOMATIC FORM OF ANNUITY in FORM OF PAYMENT).
23
FORFEITURE OF NON-VESTED AMOUNTS
If your employment terminates with your EMPLOYER (and all RELATED COMPANIES) and
you are not 100 percent vested in the value of the EMPLOYER CONTRIBUTIONS in
your Plan account at the time that your employment terminates, you will forfeit
the non-vested portion of your Plan account. If you forfeit a portion of your
Plan account, the forfeited amount will be used to reduce the amount of EMPLOYER
CONTRIBUTIONS for the PLAN YEAR in which the forfeiture occurs
TIMING OF FORFEITURE
If you have no vested interest in your Plan account, your Plan account will be
forfeited on the date you first incur a BREAK-IN-SERVICE following your
termination of employment.
If you have a vested interest in your Plan account and receive distribution of
that interest before the end of the second PLAN YEAR beginning on or after the
date your employment terminates, the non-vested portion of your Plan account
will be forfeited on the date you first incur a BREAK-IN-SERVICE following the
distribution.
If you have a vested interest in your Plan account, but do not receive
distribution of that interest within the time period described above, the
non-vested portion of your Plan account will be forfeited on the date you incur
five consecutive BREAKS-IN-SERVICE following your termination of employment.
If you return to employment with your EMPLOYER (or a RELATED COMPANY) before the
non-vested portion of your Plan account is forfeited, the forfeiture will not
occur.
RECREDITING OF FORFEITED AMOUNTS
If you return to employment with your EMPLOYER (or a RELATED COMPANY) after
forfeiting the non-vested portion of your Plan account, the amount you forfeited
will be recredited to your Plan account if you are reemployed by your EMPLOYER
(or a RELATED COMPANY) before the date you incur five consecutive
BREAKS-IN-SERVICE beginning on the later of the date your employment terminated
or the date distribution of the vested portion of your Plan account was made to
you. If you received distribution of the vested portion of your Plan account,
you may elect to repay to the Plan the full amount of the distribution that is
attributable to Employer Contributions before the earlier of the end of the
five-year period that begins on the date you are reemployed or the date you
incur five consecutive BREAKS-IN-SERVICE beginning on the date distribution of
the vested portion of your Plan account was made to you.
24
TREATMENT OF FORFEITED AMOUNTS
Amounts that are forfeited during the PLAN YEAR are used to reduce your
EMPLOYER'S contribution obligations to the Plan.
25
DISTRIBUTION OF YOUR PLAN ACCOUNT
TIMING OF DISTRIBUTION
If your employment terminates with your EMPLOYER (and all RELATED COMPANIES),
the Plan permits distribution of your Plan account. Distribution may be made as
soon as reasonably practicable following the date your employment terminates.
APPLICATION FOR DISTRIBUTION
Unless your Plan account is CASHED OUT as provided below, distribution of your
Plan account will not be made until April 1 of the calendar year following the
calendar year in which you reach age 70 1/2 unless you have filed an application
for distribution with the ADMINISTRATOR.
You must pay for all fees and expenses to maintain your vested interest in the
Plan. These expenses will be withdrawn directly from your account.
SUSPENSION OF DISTRIBUTION
If you are reemployed by your EMPLOYER (or a RELATED COMPANY) before
distribution of the full value of your Plan account has been made, distribution
of your Plan account will be suspended until your reemployment terminates.
DISTRIBUTION TO YOU
If distribution of your Plan account is to be made to you in a single-sum
payment, the full value of your Plan account will be distributed to you when you
receive the single-sum payment. If distribution of your Plan account is to be
made to you in a series of installment payments, the full value of your Plan
account will be distributed to you when you receive the final installment
payment. If distribution of your Plan account is to be made to you through the
purchase of an annuity contract from an insurance company, the full value of
your Plan account will be distributed to you when the annuity contract is
purchased from the insurance company, even though your distribution for Federal
income tax purposes extends over the period of annuity payments. If distribution
of your Plan account is to be made to you in more than one of the above forms of
payment, then the full value of your Plan account will be distributed to you
only when the full value of the portion of your Plan account payable in each
form is distributed to you.
26
DISTRIBUTION TO YOUR BENEFICIARY
If you die before distribution of the full value of your Plan account has been
made to you, distribution of your Plan account will be made to your BENEFICIARY
as soon as reasonably practicable following the date your BENEFICIARY files an
application for distribution with the ADMINISTRATOR. Unless distribution of your
Plan account is to be made to your BENEFICIARY by purchase of an annuity
contract from an insurance company or in a series of installment payments,
distribution to your BENEFICIARY must be made no later than the end of the fifth
calendar year beginning after your death.
If distribution of your Plan account is to be made to your BENEFICIARY by
purchase of an annuity contract from an insurance company or in a series of
installment payments, then distribution to your BENEFICIARY for Federal income
tax purposes must begin:
(1) if your BENEFICIARY is your spouse, no later than the end of the first
calendar year beginning after your death or the end of the calendar
year in which you would have reached age 70 1/2, whichever is later; or
(2) if your BENEFICIARY is someone other than your spouse, no later than
the end of the first calendar year beginning after your death.
CASH OUTS OF PLAN ACCOUNTS AND CONSENT TO DISTRIBUTION
If the value of your vested interest in your Plan account is $5,000 or less,
your Plan account will be "CASHED OUT" by distributing your vested interest in
your Plan account in a single-sum payment as soon as reasonably practicable
following the date your employment terminates. Your Plan account will be CASHED
OUT even if you do not consent to the distribution.
If the value of your vested interest in your Plan account is more than $5,000,
distribution of your Plan account cannot be made before your NORMAL RETIREMENT
DATE without your written consent and the written consent of your spouse if your
Plan account is subject to the spousal consent requirements described in FORM OF
PAYMENT and distribution is to be made other than by purchase of an annuity
contract from an insurance company to be paid in the form of a QUALIFIED JOINT
AND SURVIVOR ANNUITY, as described in FORM OF PAYMENT.
DIRECT ROLLOVER REQUIREMENTS
27
If the distribution of your Plan account is eligible for rollover into an
Individual Retirement Account (or "IRA") or other eligible retirement plan, you
can elect to have the distribution transferred directly into the Individual
Retirement Account or other eligible retirement plan. If you do not elect to
have a distribution eligible for rollover directly transferred into an
Individual Retirement Account or other eligible retirement plan, a 20 percent
mandatory Federal income tax withholding applies to the distribution. If a
distribution of your Plan account to your Beneficiary is eligible for rollover,
the rollover election and mandatory tax withholding apply to the distribution.
REQUIRED DISTRIBUTIONS
Distribution of your Plan account must be made no later than the April 1
following the close of the calendar year in which you reach age 70 1/2 ,
regardless of whether your employment has terminated at that time or whether you
have filed an application for distribution with the ADMINISTRATOR. Special rules
apply if you reached age 70 1/2 before January 1, 1988.
28
FORM OF PAYMENT
NORMAL FORM OF PAYMENT
Unless you elect one of the optional forms of payment described below,
distribution of your Plan account will be made to you in a single-sum payment.
OPTIONAL FORMS OF PAYMENT
You may elect to have distribution of all or a portion of your Plan account made
in one of the optional forms of payment provided under the Plan. The optional
forms of payment available under the Plan are:
* A SERIES OF INSTALLMENT PAYMENTS. You specify the period over which
installment payments will be paid. Under Federal law, however, the
maximum period over which installment payments may be paid cannot
exceed your life expectancy or the joint life expectancies of you and
your BENEFICIARY. For purposes of determining the maximum payment
period, your life expectancy, and the life expectancy of your
BENEFICIARY, if applicable, will be calculated only once, at the time
installment payments begin.
Installment payments will be paid in reasonably equal payments, except
as necessary to reflect increases or decreases in the value of your
Plan account.
* THE PURCHASE OF AN ANNUITY CONTRACT FROM AN INSURANCE COMPANY. You may
specify the period over which the annuity is to be paid. Under Federal
law, however, the maximum period over which an annuity may be paid
cannot exceed your life or the joint lives of you and your BENEFICIARY.
Unless you elect otherwise, the annuity purchased for you will be the
automatic form of annuity provided under the Plan.
AUTOMATIC FORM OF ANNUITY PAYMENT
If you are not married, the automatic form of annuity purchased for you will be
a SINGLE LIFE ANNUITY. Under a "SINGLE LIFE ANNUITY", monthly payments are made
to you for your life and end on your death.
29
If you are married, the automatic form of annuity purchased for you will be a 50
PERCENT QUALIFIED JOINT AND SURVIVOR ANNUITY. Under a "50 PERCENT QUALIFIED
JOINT AND SURVIVOR ANNUITY", monthly payments are made to you for your life with
monthly payments continuing to your surviving spouse after your death equal to
50 percent of the monthly amount you were getting at death. These monthly
payments continue to your surviving spouse for your spouse's life and end on
your spouse's death. To receive these continuing payments, your surviving spouse
must be the same spouse to whom you were married at the time distribution of
your Plan account was made.
FORM OF PAYMENT TO YOUR BENEFICIARY
Subject to the requirements in QUALIFIED PRERETIREMENT SURVIVOR ANNUITY
REQUIREMENTS, if you die before distribution of your Plan account is made,
distribution of your Plan account will be made to your BENEFICIARY in any of the
forms of payment available under the Plan that your BENEFICIARY selects. Your
BENEFICIARY may not, however, select an annuity payable over the joint lives of
your BENEFICIARY and another person. If you die after distribution of your Plan
account has begun in a series of installment payments, but before distribution
of the full value of your vested interest in your Plan account is made,
installment payments will continue to your BENEFICIARY after your death.
QUALIFIED PRERETIREMENT SURVIVOR ANNUITY REQUIREMENTS
If you are married and elect an annuity form of payment, and if you die before
any distribution of your Plan account is made, distribution of your Plan account
will be made to your spouse through the purchase of a QUALIFIED PRERETIREMENT
SURVIVOR ANNUITY from an insurance company. A "QUALIFIED PRERETIREMENT SURVIVOR
ANNUITY" is an annuity payable for the life of your spouse.
Your spouse may elect instead to have distribution of your Plan account made in
the other form of payment available under the Plan. Your spouse may not,
however, select an annuity payable over the joint lives of your spouse and any
other person.
You may designate a person other than your spouse to receive distribution of
your Plan account. If your designation is made before the first day of the PLAN
YEAR in which you either reach age 35 or your employment terminates with your
EMPLOYER and all RELATED COMPANIES, whichever is earlier, your designation will
become ineffective on the first day of the PLAN YEAR in which you reach age 35
and you will have to make a new designation or your Plan account will once more
be payable to your spouse as a QUALIFIED PRERETIREMENT SURVIVOR ANNUITY. Your
spouse must consent in writing to your designation, as described in SPOUSAL
CONSENT REQUIREMENTS.
SPOUSAL CONSENT REQUIREMENTS
30
If you elect to have distribution of your Plan account made through the purchase
of an annuity contract, but wish to have annuity payments in a form other than
the automatic form of annuity payment or wish to change your election to have
distribution of your Plan account made in a form of payment other than an
annuity, your spouse must sign a written consent. In addition, if you wish to
designate a non-spouse BENEFICIARY to receive distribution of your Plan account,
your spouse must sign a written consent to your designation.
Your spouse's written consent must be witnessed by a Plan representative or a
notary public and must specifically acknowledge the form of payment other than
the automatic form of annuity that you have elected, if applicable, and any
non-spouse BENEFICIARY you have designated. Instead of specifically
acknowledging your selections, your spouse's consent may be a general consent
that permits you to change the form of payment or designation of BENEFICIARY
without further spousal consent being required.
Your spouse's written consent is not required if your spouse cannot be located,
if you have a court order stating that you are legally separated from your
spouse, or if you have a court order stating that your spouse has abandoned you.
EFFECT OF REEMPLOYMENT ON FORM OF PAYMENT ELECTION
If you are reemployed by your EMPLOYER (or a RELATED COMPANY) before
distribution of the full value of your vested interest in your Plan account is
made, any form of payment election that you made will be ineffective with
respect to your Plan account, except that if you have elected the optional
annuity form of payment the requirements in SPOUSAL CONSENT REQUIREMENTS and in
QUALIFIED PRERETIREMENT SURVIVOR ANNUITY REQUIREMENTS will continue to apply to
your Plan account.
DISTRIBUTION IN EMPLOYER STOCK
Instead of receiving a cash distribution from the Plan, you may elect to receive
distribution of the portion of your Plan account that is invested in EMPLOYER
stock in EMPLOYER stock. Partial shares of EMPLOYER stock held in your Plan
account will not be distributed to you. Instead, you will receive a cash
distribution of the value of any partial shares of EMPLOYER stock.
OVERRIDING CASH OUT PROVISION
If the value of your vested interest in your Plan account is $5,000 or less,
your Plan account will be "CASHED OUT" by distributing your vested interest in
your Plan account to you in a single-sum payment. Your Plan account will be
CASHED OUT even if you have elected a form of payment other than a single-sum
payment.
31
YOUR BENEFICIARY UNDER THE PLAN
You may designate a BENEFICIARY on the form provided by the ADMINISTRATOR to
receive distribution of your Plan account if you die. Unless you marry (or
remarry) or elect an annuity form of payment, your BENEFICIARY will not change
until you file a new designation of BENEFICIARY form with the ADMINISTRATOR
designating a different BENEFICIARY.
BENEFICIARY IF YOU ARE MARRIED
If you are married, your BENEFICIARY under the Plan is your spouse. Unless you
have elected the optional annuity form of payment and are therefore subject to
the further restrictions discussed below, you may designate a non-spouse
BENEFICIARY on the form provided by the ADMINISTRATOR with your spouse's written
consent.
If you elect the optional annuity form of payment, you may designate a
non-spouse BENEFICIARY on the form provided by the ADMINISTRATOR to receive
distribution of your Plan account with your spouse's written consent. If your
designation is made before the first day of the PLAN YEAR in which you either
reach age 35 or your employment terminates with your EMPLOYER and all RELATED
COMPANIES, whichever is earlier, your designation will become ineffective on the
first day of the PLAN YEAR in which you reach age 35 and you will have to make a
new designation or your Plan account will once more be payable to your spouse as
a QUALIFIED PRERETIREMENT SURVIVOR ANNUITY.
EFFECT OF ELECTION OF OPTIONAL ANNUITY FORM OF PAYMENT ON PRIOR BENEFICIARY
DESIGNATION
If you are married and have designated a non-spouse BENEFICIARY with your
spouse's written consent, and if you then elect the optional annuity form of
payment, your prior BENEFICIARY designation will be ineffective.
EFFECT OF MARRIAGE ON PRIOR BENEFICIARY DESIGNATION
If you designate a non-spouse BENEFICIARY and then get married, your prior
BENEFICIARY designation will be ineffective.
32
BENEFICIARY WHERE THERE IS NO DESIGNATED BENEFICIARY
If you die without designating a BENEFICIARY or if no BENEFICIARY survives you,
your BENEFICIARY will be your surviving spouse or, if you have no surviving
spouse, your estate.
SPOUSAL CONSENT TO BENEFICIARY DESIGNATION
If you designate a BENEFICIARY other than your spouse, your spouse must sign a
written consent to your designation of a BENEFICIARY. Your spouse's written
consent must specifically acknowledge the non-spouse BENEFICIARY you have
designated and must be witnessed by a Plan representative or a notary public.
Instead of specifically acknowledging your designated, non-spouse BENEFICIARY,
your spouse's consent may be a general consent that permits you to change your
designation of BENEFICIARY without further spousal consent.
Your spouse's written consent will not be required if your spouse cannot be
located, you have a court order stating that you are legally separated from your
spouse, or you have a court order stating that your spouse has abandoned you.
33
CLAIMS FOR BENEFITS
Your application for benefits under the Plan should be sent to the
ADMINISTRATOR.
If you disagree with a decision made by the ADMINISTRATOR regarding a claim
under the Plan, you have the right to ask the ADMINISTRATOR for a review of its
decision. You should contact the ADMINISTRATOR at its business address or at its
business phone number within 60 days of the date on which you receive notice of
denial of the claim. A request for review must contain the following
information:
(a) the date you received notice of denial of your claim and the
date your request for review is filed;
(b) the specific part of the claim you want reviewed;
(c) a statement setting forth the basis upon which you think the
decision should be reversed; and
(d) any written material that you think is pertinent to your claim
and that you want the ADMINISTRATOR to examine.
Unless additional time is required, the ADMINISTRATOR will review the denial of
your claim and notify you in writing of its decision, within 60 days of the
filing of your request.
34
AMENDMENT AND TERMINATION OF THE PLAN
PLAN AMENDMENT
The SPONSOR reserves the right to amend the Plan, either prospectively or
retroactively.
PLAN TERMINATION
The SPONSOR reserves the right to terminate the Plan at any time. In addition,
an EMPLOYER may withdraw from the Plan at any time. If an EMPLOYER withdraws
from the Plan, the EMPLOYER will determine whether the withdrawal should be
treated as a termination of the Plan with respect to its EMPLOYEES.
If the Plan is terminated, you will be 100 percent vested in the value of the
EMPLOYER CONTRIBUTIONS (including any investment gains or losses on them) in
your Plan account and distribution of your Plan account will be made as
permitted under Federal law.
35
MISCELLANEOUS INFORMATION
PLAN BOOKLET DOES NOT CREATE EMPLOYMENT CONTRACT
The only purpose of this booklet is to provide you with information about the
benefits available under the Plan. The benefits described are not conditions of
employment. Nor is the booklet intended to create an employment contract between
you and your EMPLOYER. Nothing in this booklet should be construed as a
limitation on your or your EMPLOYER'S right to terminate your employment at any
time, with or without cause.
NO GUARANTEES REGARDING INVESTMENT PERFORMANCE
Neither the SPONSOR, your EMPLOYER, nor the ADMINISTRATOR guarantees any
particular investment gain or appreciation on your Plan account nor guarantees
your Plan account against investment losses or depreciation.
IF CIRCUMSTANCES REQUIRE THE DELAY OF A WITHDRAWAL
All withdrawals may be delayed by Connecticut General Life Insurance Company
under certain circumstances. A description of these situations may be obtained
from your ADMINISTRATOR. Regardless of the circumstances, there will be no delay
in payment in cases of death, retirement, termination of employment, or total
and permanent disability.
TRANSFERS FROM THE GUARANTEED INCOME FUND MAY BE LIMITED
Under certain circumstances the amount transferred from the Guaranteed Income
Fund to other investment funds may be limited by Connecticut General Life
Insurance Company. Please see your ADMINISTRATOR for further information on
transferring funds from the Guaranteed Income Fund.
PAYMENT OF ADMINISTRATIVE EXPENSES
Generally, the expenses of administering the Plan are paid from Plan assets,
unless your EMPLOYER elects to make the payment. In addition, your particular
Plan account may be charged for the cost of administrative expenses that are
attributable directly to your Plan account, unless your EMPLOYER elects to make
the payment.
36
QUALIFIED DOMESTIC RELATIONS ORDERS
Generally, Federal law prohibits payment of your Plan account to someone other
than you, unless you have died. An exception to this rule is made for QUALIFIED
DOMESTIC RELATIONS ORDERS. A QUALIFIED DOMESTIC RELATIONS ORDER may require that
a portion of your Plan account be paid to someone other than you or your
BENEFICIARY.
"QUALIFIED DOMESTIC RELATIONS ORDERS" are court judgments, decrees, etc. that
pertain to child support, alimony, or marital property and that meet specific
legal requirements. The ADMINISTRATOR has procedures for determining whether a
court judgment or decree meets the specific legal requirements to be a QUALIFIED
DOMESTIC RELATIONS ORDER.
RETURN OF CONTRIBUTIONS TO YOUR EMPLOYER
If your EMPLOYER makes a contribution to the Plan on your behalf by mistake or
if your EMPLOYER cannot deduct a contribution made to the Plan on its tax
return, that contribution will be returned to your EMPLOYER in accordance with
Federal law.
37
TOP-HEAVY PROVISIONS
Federal law requires that the Plan contain certain provisions that become
effective only if the Plan becomes TOP-HEAVY. The Plan will become "TOP-HEAVY"
if the aggregate value of Plan accounts for certain officers and shareholders is
60 percent or more of the value of all assets held under the Plan. If the Plan
becomes TOP-HEAVY, specific minimum vesting and minimum benefits provisions
become effective. If the Plan becomes TOP-HEAVY, the ADMINISTRATOR will notify
you and give you additional details regarding these provisions.
38
MORE THINGS YOU SHOULD KNOW
Your EMPLOYER makes contributions to the Plan solely for your benefit. All the
assets of the Plan are held for the exclusive benefit of participants and their
beneficiaries. The Plan is qualified under the Internal Revenue Code as a
profit-sharing plan.
Even though the Plan generally provides for distribution after termination of
your employment, under certain circumstances which involve a termination of
employment with your EMPLOYER because of a sale of the business in which you
work, if you continue working for the successor employer you may not be eligible
for distribution of your Plan account until your employment terminates with the
successor employer and any companies related to it.
If your employment terminates with your EMPLOYER (and all RELATED COMPANIES)
before you are fully vested in your Plan account, you will lose the non-vested
portion of your Plan account.
The Plan does not make annuity payments from your Plan account. Your Plan
account is used to purchase an annuity contract from an insurance company. Once
an annuity contract is purchased from an insurance company, the Plan and its
fiduciaries have no further responsibility and do not guarantee your annuity
payments.
Because the Plan assets are held in individual accounts and are never less than
the total benefits payable to participants, no insurance of benefits by the
Pension Benefit Guaranty Corporation under Title IV of the Employee Retirement
Income Security Act of 1974 ("ERISA") is necessary or available. The Plan is
subject, however, to the applicable provisions of Title I of ERISA (protection
of employee benefit rights) and Title II of ERISA (amendments to the Internal
Revenue Code relating to retirement plans).
39
YOUR RIGHTS UNDER THE PLAN
The Plan is covered by ERISA, which was designed to protect employees' rights
under benefit plans. As a participant of the Plan, you should know as much as
possible about your Plan benefits. You are entitled to:
* Examine, without charge, at the Plan administrator's office and at
other specified locations, copies of all Plan documents and other Plan
information filed by the Plan administrator with the U.S. Department of
Labor, such as annual reports and Plan descriptions.
* Obtain copies of all Plan documents and other Plan information, upon
written request addressed to the Plan administrator and for which the
Plan administrator may make a reasonable charge.
* Receive from the Plan administrator at no charge a summary of the
Plan's annual financial report.
* Obtain a statement once a year, upon written request addressed to the
Plan administrator, of your accrued benefits under the Plan and, if you
are not fully vested, the earliest date on which you will have a
nonforfeitable right to such benefits.
* Obtain information as to whether a particular employer has adopted the
Plan and, if so, the employer's address, upon written request addressed
to the Plan administrator.
* Receive a written explanation with respect to any denied benefit claim
regarding the reasons for the denial and the steps you must take in
order to have the denial reviewed and reconsidered.
ERISA imposes duties upon the people who are responsible for the operation of
the Plan. Such people are called "fiduciaries" and have a duty to act prudently
and in the best interest of participants and their beneficiaries. No one,
including your EMPLOYER, may fire your or otherwise discriminate against you in
any way to prevent you from obtaining a Plan benefit or exercising your rights
under ERISA.
40
There are steps you can take to enforce your rights under ERISA. Although the
ADMINISTRATOR carefully administers the Plan, if for some reason you believe
that you have been improperly denied a benefit or that your rights under ERISA
have been violated, you have a right to file suit in state or Federal court. If
you believe a Plan fiduciary has misused Plan funds, or if documents you have
requested are not furnished within 30 days (barring circumstances beyond the
Plan administrator's control), you have the right to file suit in Federal court
or request assistance from the U.S. Department of Labor. A court may award you
certain penalties (up to $110.00 per day) if the Plan administrator refused to
provide documents you requested, until you receive the documents. If you
disagree with the ADMINISTRATOR'S decision (or lack thereof) concerning the
qualified status of a domestic relations order, you may file suit in Federal
court. Service of legal process may be made upon the agent designated at the end
of this booklet.
The SPONSOR does not believe that filing suit will ever be necessary, but should
you feel that it is, the law protects you from being fired or otherwise
discriminated against to prevent you from enforcing your rights under ERISA.
After deciding your case, the court may also decide whether the losing party
should pay court costs and the legal fees and expenses of the winning party. If
you are successful, the court may order the party you have sued to pay these
costs and fees for you. However, if you lose, the court may order you to pay
theses costs and fees for the party you sued, for example, if the court finds
your claim to be frivolous.
If you have any questions, you should contact the Plan administrator at the
address indicated at the end of this booklet.
If you have any questions about this statement of your rights under ERISA, you
may contact the nearest Office of the Pension and Welfare Benefit
Administration, U.S. Department of Labor, listed in your telephone directory or
contact the Division of Technical Assistance and Inquiries, Pension and Welfare
Benefits Administration, U.S. Department of Labor, 200 Constitution Avenue,
N.W., Washington, DC 20210.
41
ADDITIONAL INFORMATION
PLAN ADMINISTRATOR
The Plan administrator (which may or may not also be the ADMINISTRATOR) is:
Comfort Systems USA, Inc., Three Riverway, Suite 200, Houston, TX 77056.
AGENT FOR SERVICE OF LEGAL PROCESS
Legal process may be served on: Comfort Systems USA, Inc., Three Riverway,
Suite 200, Houston, TX 77056. Legal process may also be served on the
TRUSTEE at its address listed below.
SPONSOR
The SPONSOR is: Comfort Systems USA, Inc., Three Riverway, Suite 200,
Houston, TX 77056.
EMPLOYER IDENTIFICATION NUMBER
The SPONSOR'S Employer identification number for purposes of helping to
identify the Plan is: 76-0526487.
PLAN NUMBER
The Plan number for purposes of helping to identify the Plan is: 001.
TRUSTEE
The TRUSTEE is: CG Trust Company, an Illinois Company, 525 West Monroe St.,
Suite 1900, Chicago, IL 60661-3629.
42