Costco 401(k) Retirement Plan
August 1, 2004
i
Costco 401(k) Retirement Plan
Table of Contents
Article 1 Definitions........................................................1
Article 2 Eligibility and Participation.....................................10
2.1 ELIGIBILITY FOR SALARY DEFERRAL AND MATCHING CONTRIBUTIONS......10
2.2 ELIGIBILITY FOR DISCRETIONARY AND COMPANY CONTRIBUTIONS.........10
2.3 CONTINUANCE OF PARTICIPATION....................................10
2.4 PARTICIPATION UPON RE-EMPLOYMENT................................10
2.5 INELIGIBLE EMPLOYEE STATUS......................................10
2.6 ELECTION NOT TO PARTICIPATE.....................................11
Article 3 Employer Contributions............................................11
3.1 AMOUNT OF CONTRIBUTION..........................................11
3.2 RETURN OF CONTRIBUTION..........................................13
3.3 TIME OF PAYMENT OF CONTRIBUTION AND ACCRUAL OF BENEFIT..........14
Article 4 Limits on Contributions and Correction of Excess Amounts..........14
4.1 DISTRIBUTION OF EXCESS DEFERRALS................................14
4.2 SALARY DEFERRAL LIMITATIONS.....................................14
4.3 MATCHING CONTRIBUTION LIMITATIONS...............................15
4.4 DISCRETIONARY CONTRIBUTION LIMITATIONS..........................16
Article 5 Allocation to Accounts............................................17
5.1 CONTRIBUTION ALLOCATION.........................................17
5.2 ALLOCATION OF INVESTMENT INCOME (OR LOSS) AND ALLOCATION OF PLAN
EXPENSES........................................................17
5.3 LIMITATION ON ANNUAL ADDITIONS..................................17
5.4 ADJUSTMENTS FOR EXCESS ANNUAL ADDITIONS.........................17
Article 6 Participant Contributions.........................................18
6.1 PARTICIPANT ROLLOVER CONTRIBUTIONS..............................18
6.2 WITHDRAWAL OF ROLLOVER AND TRANSFER CONTRIBUTIONS...............18
Article 7 Investment of Accounts............................................18
7.1 INVESTMENT OF ACCOUNTS..........................................18
7.2 LIMITATION ON INVESTMENT DIRECTION BY INSIDERS..................19
7.3 OPTIONAL PASS-THROUGH VOTING OF NON-EMPLOYER STOCK..............19
7.4 PASS-THROUGH VOTING OF EMPLOYER STOCK...........................19
7.5 INVESTMENT IN EMPLOYER STOCK....................................20
Article 8 Vesting and Forfeitures...........................................22
8.1 FULL VESTING....................................................22
8.2 NORMAL VESTING SCHEDULE.........................................22
8.3 ALTERNATIVE VESTING SCHEDULE FOR MISCONDUCT.....................22
8.4 INCLUDED YEARS OF SERVICE - VESTING.............................23
8.5 FORFEITURES.....................................................23
8.6 RESTORATION OF FORFEITURES......................................23
Article 9 Distribution of Benefits..........................................23
9.1 DISTRIBUTION AFTER AGE 59 1/2 OR UPON TOTAL DISABILITY..........23
9.2 DISTRIBUTION UPON SEVERANCE FROM EMPLOYMENT.....................23
9.3 FORM OF DISTRIBUTION............................................24
9.4 LATEST DATE FOR COMMENCEMENT OF BENEFITS........................24
9.5 DEATH DISTRIBUTION PROVISIONS...................................24
9.6 MINIMUM DISTRIBUTION REQUIREMENTS...............................24
9.7 DISTRIBUTION UNDER QUALIFIED DOMESTIC RELATIONS ORDER...........25
9.8 HARDSHIP DISTRIBUTIONS..........................................26
9.9 DIRECT ROLLOVER FOR ELIGIBLE DISTRIBUTIONS......................26
9.10 AMOUNT OF DISTRIBUTION..........................................27
Article 10 Loans to Participants............................................27
10.1 LOAN PROGRAM....................................................27
10.2 AMOUNT OF LOAN..................................................27
10.3 TERM OF LOAN....................................................28
10.4 INTEREST RATE...................................................28
10.5 LOAN ORIGINATION FEE............................................28
10.6 REPAYMENT SCHEDULE..............................................28
10.7 SECURITY........................................................28
10.8 LOAN APPLICATION AND DOCUMENTATION..............................29
10.9 SOURCE OF LOAN..................................................29
10.10 LOANS IN ARREARS................................................29
10.11 DEEMED DISTRIBUTIONS............................................29
10.12 PARTICIPANT LOAN OFFSET.........................................29
Article 11 Rights and Remedies of Participants..............................30
11.1 ANNUAL STATEMENTS...............................................30
11.2 ASSIGNMENT OR ALIENATION........................................30
11.3 SUMMARY PLAN DESCRIPTION; NOTICE OF CHANGE IN TERMS.............30
11.4 DENIAL OF BENEFITS..............................................30
11.5 APPEAL PROCEDURE................................................30
11.6 LITIGATION AGAINST THE TRUST....................................30
11.7 DISTRIBUTION TO INCOMPETENTS OR MINORS..........................31
Article 12 Employer Administrative Provisions...............................31
12.1 INFORMATION TO PLAN ADMINISTRATOR...............................31
12.2 NO LIABILITY....................................................31
12.3 INDEMNITY OF COMMITTEE..........................................31
Article 13 Participant Administrative Provisions............................31
13.1 BENEFICIARY DESIGNATION.........................................31
13.2 NO BENEFICIARY DESIGNATION......................................32
13.3 PERSONAL DATA TO PLAN ADMINISTRATOR.............................32
13.4 ADDRESS FOR NOTIFICATION........................................32
13.5 NO RIGHT TO CONTINUED EMPLOYMENT................................32
13.6 PARTICIPANTS MUST REVIEW RECORDS................................32
13.7 COMMUNICATIONS..................................................33
Article 14 Powers and Duties of Plan Administrator..........................33
14.1 THE COMMITTEE...................................................33
14.2 VACANCY.........................................................33
14.3 POWERS OF PLAN ADMINISTRATOR....................................33
14.4 FUNDING POLICY..................................................34
14.5 AUTHORIZED REPRESENTATIVE.......................................34
14.6 INTERESTED MEMBER...............................................34
14.7 INDIVIDUAL ACCOUNTS.............................................34
14.8 VALUE OF PARTICIPANTS' ACCOUNTS.................................34
14.9 ACCOUNT CHARGED.................................................34
14.10 UNCLAIMED ACCOUNT PROCEDURES....................................34
14.11 POWERS OF PLAN SPONSOR..........................................35
14.12 DISPUTED PAYMENTS...............................................35
Article 15 Exclusive Benefit, Amendment, Termination........................35
15.1 EXCLUSIVE BENEFIT...............................................35
15.2 AMENDMENT BY EMPLOYER...........................................35
15.3 DEEMED AMENDMENT FOR CORRECTION OF MISTAKES AND ADJUSTMENT TO
ACCOUNTS........................................................36
15.4 AMENDMENT TO VESTING SCHEDULE...................................36
15.5 DISCONTINUANCE..................................................36
15.6 FULL VESTING ON TERMINATION.....................................36
15.7 MERGER..........................................................37
15.8 TERMINATION.....................................................37
Article 16 General Provisions...............................................37
16.1 EVIDENCE........................................................37
16.2 NO RESPONSIBILITY FOR EMPLOYER ACTION...........................37
16.3 FIDUCIARY DUTIES................................................37
16.4 BENEFITS NOT INSURED............................................37
16.5 WAIVER OF NOTICE AND SUCCESSORS.................................37
16.6 RIGHTS ON RETURN FROM MILITARY LEAVE OF ABSENCE.................37
16.7 SUNSET PROVISIONS OF EGTRRA.....................................37
Article 17 Top-Heavy Provisions.............................................38
17.1 TOP-HEAVY PROVISIONS............................................38
17.2 TOP-HEAVY DEFINITIONS...........................................38
17.3 DETERMINATION OF TOP-HEAVY STATUS...............................38
17.4 TOP-HEAVY RATIO.................................................39
17.5 MINIMUM ALLOCATION..............................................39
17.6 MINIMUM VESTING IN TOP-HEAVY YEARS..............................40
Article 18 Execution........................................................41
APPENDIX A - Costco 401(k) Retirement Plan Participating Employers....42
APPENDIX B - Costco 401(k) Retirement Plan Pay Code Chart.............43
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Costco 401(k) Retirement Plan Page 1
Costco 401(k) Retirement Plan
Costco Wholesale Corporation ("Costco") maintains this Plan for the exclusive
benefit of eligible employees of Costco and its designated subsidiaries. The
Plan was formerly known as the PriceCostco 401(k) Retirement Plan and was
established effective January 1, 1995, by merging the Costco Wholesale
Corporation Employees' 401(k) Retirement Plan and The Price Company Profit
Sharing Plan into The Price Company 401(k) Plan. The Costco 401(k) Plan for
California Union Employees was established effective June 1, 1995. That Plan
merged into the Costco 401(k) Retirement Plan effective December 31, 2002. The
Plan is intended to be a qualified profit sharing plan under the Internal
Revenue Code, with a salary reduction arrangement under Code Section 401(k) and
a matching contribution under Code Section 401(m).
Article 1 ........ Definitions
Whenever used in this Plan, the following terms shall have the meanings set out
below, unless the context clearly indicates otherwise, and when the defined
meaning is intended the term is capitalized:
1.1 "Account" means the aggregate of the accounts maintained for a
Participant under the Plan.
1.2 "Act" means the Employee Retirement Income Security Act of 1974
(also known as ERISA), as it may be amended from time to time.
1.3 "Actual Contribution Percentage (ACP)" means the average (expressed
as a percentage calculated to the nearest one-hundredth of one
percent) of the Contribution Percentages of the Participants in a
specified group of eligible Highly Compensated Employees or
Non-Highly Compensated Employees.
1.4 "Actual Deferral Percentage (ADP)" means the average (expressed as a
percentage calculated to the nearest one-hundredth of one percent) of
the Deferral Percentages of the Participants in a specified group of
eligible Highly Compensated Employees or Non-Highly Compensated
Employees.
1.5 "Affiliated Company" means any corporation, trade, or business
comprising with the Employer part of a controlled group (as defined
in Code Sections 414(b) and (c) as modified by Code Section 414(h)),
any organization comprising with the Employer part of an affiliated
service group (as defined in Code Section 414(m)), or any employer of
"leased employees" (as defined in Code Section 414(n)) of the
Employer or other Affiliated Company, and any other entity required
to be aggregated with the Employer under Code Section 414(o) and the
regulations issued thereunder.
1.6 "Anniversary Date" means the last day of the Plan Year.
1.7 "Annual Addition" means (for purposes of applying the limitations of
Code Section 415) contributions and additions allocated with respect
to a Participant for a Limitation Year, as defined in Code Section
415(c).
1.8 "Approved Absence" means an Employee's leave without pay for a
specified period of time approved by a Participating Employer in
advance and in writing, in accordance with an established leave
policy that is applied in a uniform and nondiscriminatory manner to
similarly situated Participants. Other unpaid leaves of absence shall
be considered a Period of Severance under the Plan.
1.9 "Beneficiary" means a person or entity designated by a Participant or
by the terms of the Plan who is entitled to a benefit under the Plan
in the event of the Participant's death. A Beneficiary who becomes
entitled to a benefit under the Plan shall remain a Beneficiary under
the Plan until the Trustee has fully distributed the Beneficiary's
interest. A Beneficiary's right to (and the Plan Administrator's or
the Trustee's duty to provide to the Beneficiary) information or data
concerning the Plan shall not arise until the Beneficiary first
becomes entitled to receive a benefit under the Plan.
1.10 "Break in Service" means a Period of Severance of 12 consecutive
months, during which a Participant completes no Hours of Service.
1.11 "Code" means the Internal Revenue Code of 1986, as amended.
1.12 "Committee" means the Costco Benefits Committee. A member appointed
to the Committee shall serve until the first to occur of such
member's resignation, removal by the Board of Directors, or
termination of employment with Costco and its Affiliated Companies.
1.13 "Company Contribution" or "Company Contribution for California
Teamster Employees" means the contribution made by a Participating
Employer pursuant to Section 3.1(c)(2). An Employee is eligible for
this contribution only to the extent such contribution is required by
the Participating Employer's collective bargaining agreement with the
International Brotherhood of Teamsters in California. Compensation,
hours, and work not covered by that agreement is ineligible for this
contribution.
1.14 "Compensation" means those items on the Costco 401(k) Retirement Pay
Code Chart reflected as included for purposes of the Salary Deferral
and Matching Contributions, and the Discretionary and Company
Contribution. The Chart, attached hereto as Appendix B, may be
amended from time to time by the Employer. Compensation taken into
account for purposes of the Salary Deferral and Matching Contribution
portions of the Plan shall not include the Compensation earned by the
Participant prior to the Participant's Entry Date for Salary Deferral
Contributions, and Compensation for purposes of the Employer
Discretionary and Company Contribution shall not include the
Compensation earned by the Participant prior to the Participant's
Entry Date for Discretionary and Company Contributions. Furthermore,
the annual Compensation of any Participant taken into account for
determining any benefit provided under the Plan shall not exceed
$200,000, as adjusted in accordance with Section 401(a)(17) of the
Code.
1.15 "Contribution Percentage" means the ratio (expressed as a percentage
calculated to the nearest one-hundredth of one percent) of the
Matching Contributions made under the Plan on behalf of a Participant
for the Plan Year to the Section 414 Compensation of the Participant
for the Plan Year. Provided, however, that in the case of a Highly
Compensated Employee who is eligible to participate in two or more
Code Section 401(k) plans of a Participating Employer to which
matching contributions or employee contributions are made, all such
contributions on behalf of the Highly Compensated Employee must be
aggregated for purposes of determining the Highly Compensated
Employee's Contribution Percentage. Only Matching Contributions not
recharacterized as Qualified Non-Elective Contributions for purposes
of satisfying the ADP Test are considered. The Employer may also
elect, with respect to Employees eligible for Matching Contributions,
to treat elective deferrals (as defined in Treasury Regulation
1.402(g)) and qualified non-elective contributions (as defined in
Code Section 401(m)) contributed to any plan maintained by a
Participating Employer as Matching Contributions, subject to Treasury
Regulation 1.401(m)-1(b)(5) (which is incorporated herein by
reference), provided that the Plan Year is the same as the plan year
of the plan to which such elective deferrals and qualified
non-elective contributions are made.
1.16 "Costco" means Costco Wholesale Corporation, a Washington corporation.
1.17 "Deferral Percentage" means the ratio (expressed as a percentage
calculated to the nearest one-hundredth of one percent) of the Salary
Deferral Contributions made under the Plan on behalf of a Participant
for a Plan Year to the Section 414 Compensation of the Participant
for the Plan Year. Provided, however, that in the case of a Highly
Compensated Employee who is eligible to participate in two or more
Code Section 401(k) plans of a Participating Employer to which salary
reduction contributions, or other elective contributions, may be
made, all such contributions on behalf of the Highly Compensated
Employee shall be aggregated for purposes of determining the Highly
Compensated Employee's Deferral Percentage. Only Salary Deferral
Contributions not recharacterized as Matching Contributions for
purposes of satisfying the ACP test are considered. The Employer may
also elect to treat qualified non-elective contributions (as defined
in Code Section 401(m)) that are not recharacterized as Matching
Contributions and are contributed to any plan maintained by a
Participating Employer and matching contributions (as defined in Code
Section 401(m)(4)) contributed to any plan maintained by a
Participating Employer, including Matching Contributions
recharacterized as qualified non-elective contributions (provided the
Matching Contributions meet the vesting and distribution requirements
of Code Section 401(k)(3)(D)(ii)(I)), as Salary Deferral
Contributions, provided that the Plan Year is the same as the plan
year of the plan to which such Matching Contribution and qualified
non-elective contributions are made.
1.18 "Discretionary Contribution" means the contribution made by a
Participating Employer pursuant to Section 3.1(c)(1). Employees whose
work is covered by a collective bargaining agreement are ineligible
for the Discretionary Contribution at Section 3.1(c)(1) unless such
agreement provides for participation in the Plan to the same extent
as Employees not covered by that or any other collective bargaining
agreement. Compensation, hours, and work that is covered by the
collective bargaining agreement with the International Brotherhood of
Teamsters in California is ineligible for the Discretionary
Contribution at Section 3.1(c)(1).
1.19 "Effective Date" means January 1, 1995.
1.20 "Eligibility Computation Period for Discretionary and Company
Contributions" means a 12-consecutive-month period during which an
Employee completes not less than 1,000 Hours of Service, measuring
the beginning of the initial 12-month period from the Employee's
Employment Commencement Date. If an Employee does not complete 1,000
Hours of Service during his or her initial Eligibility Computation
Period, each succeeding Eligibility Computation Period shall be the
12-consecutive-month period ending on the last day of each bi-weekly
payroll period. Provided, however, that an Eligibility Computation
Period for an Employee who does not complete 1,000 Hours of Service
during his or her initial Eligibility Computation Period shall also
be any Plan Year in which the Employee completes not less than 1,000
Hours of Service, beginning with the Plan Year in which occurs the
first anniversary of the Employee's Employment Commencement Date. The
elapsed time method does not apply for this purpose.
1.21 "Eligible Employment" means work classified on a Participating
Employer's payroll as performed by an Employee. Eligible Employment
does not include work performed pursuant to a collective bargaining
agreement, except to the extent such agreement provides for
participation in this Plan. Eligible Employment does not include work
as a Leased Employee, work in Puerto Rico, or work compensated
through a payroll system other than a Participating Employer's
payroll administered in Issaquah, Washington.
1.22 "Employee" means any employee of a Participating Employer, including a
Leased Employee.
1.23 "Employee Contribution Account" means the Accounts maintained for a
Participant to record his or her contributions to the Plan, including
a Participant's "Rollover Account" (but excluding accounts for Salary
Deferral Contributions, which are considered employer contributions
under the Act).
1.24 "Employer" means Costco Wholesale Corporation, a Washington
corporation. As Plan sponsor, the Employer shall have the power to
design, amend and terminate the Plan, to execute Plan and Trust
documents; and to perform similar settlor functions, provided the
Employer may delegate the performance of such functions to specific
employees or officers, or the Committee.
1.25 "Employer Contribution Account" means the Accounts maintained for a
Participant to record his or her share of the contributions made by a
Participating Employer that are subject to the Plan's vesting
schedule, including accounts for Matching Contributions, and
Discretionary and Company Contributions.
1.26 "Employer Stock" means stock of the Employer which is a Qualifying
Employer Security.
1.27 "Employer Stock Ownership Plan" or "ESOP" means the portion of this
Plan described in Section 7.5 hereof.
1.28 "Employment Commencement Date" means the date an Employee first
performs an Hour of Service for a Participating Employer.
1.29 "Entry Date for Discretionary and Company Contributions" means
January 1 and July 1 of each Plan Year.
1.30 "Entry Date for Salary Deferral Contributions" means the first day of
the first pay period ending after an Employee completes 90 days of
Service within a 12-month period, as described in Section 2.1. The
Participant's Participating Employer may extend the end of a pay
period to a date that is before the pay date for that pay period, to
the extent such extension is done on an administratively practicable
and reasonably consistent basis.
1.31 "Excess Aggregate Contributions" means with respect to any Plan Year
the excess of (a) the aggregate amount of Matching Contributions,
including the aggregate amount of elective deferrals and qualified
non-elective contributions (as defined in Code Section 401(m))
actually taken into account in computing the Actual Contribution
Percentage of Highly-Compensated Employees for a Plan Year, over (b)
the maximum amount of such contributions permitted by the Actual
Contribution Percentage (ACP) test (determined hypothetically by
reducing contributions made on behalf of Highly-Compensated Employees
in order of Contribution Percentages beginning with the highest of
such Contribution Percentages and continuing until the ACP test is
satisfied).
1.32 "Excess Contributions" means, with respect to any Plan Year the
excess of (a) the aggregate amount of Salary Deferral Contributions
including Matching Contributions and qualified non-elective
contributions (as defined in Code Section 401(m)) actually taken into
account in computing the Actual Deferral Percentage of
Highly-Compensated Employees for such Plan Year, over (b) the maximum
amount of such contributions permitted by the Actual Deferral
Percentage (ADP) test (determined hypothetically by reducing
contributions made on behalf of Highly-Compensated Employees in order
of Deferral Percentages beginning with the highest of such Deferral
Percentages and continuing until the ADP test is satisfied).
1.33 "Excess Deferrals" means the amount of Salary Deferral Contributions
for a calendar year which, when added to amounts deferred under other
plans or arrangements described in Sections 401(k), 403(b) or 408(k)
of the Code, exceeds the limit imposed on such deferrals by Section
402(g) of the Code for such calendar year, exclusive of Catch-Up
Contributions permitted under Section 3.1(e) of the Plan and Section
414(v) of the Code.
1.34 "Five Percent Owner" means any person described as a 5% owner of a
Participating Employer within the meaning
of Section 416(i)(1) of the Code.
1.35 "Highly-Compensated Employee" means any employee who was a Five
Percent Owner at any time during the Plan Year in question or the
preceding Plan Year, and any employee who, during the preceding Plan
Year, received Section 414 Compensation from a Participating Employer
in excess of $90,000, as adjusted pursuant to the Code, and was in
the top-paid 20% of employees when ranked on the basis of Section 414
Compensation for the year. In addition, a former employee shall be
treated as a Highly-Compensated Employee if the former employee was a
Highly-Compensated Employee when the employee separated from service
with a Participating Employer or was a Highly-Compensated Employee at
any time after attaining age 55. For purposes of determining the
number of employees in the top-paid group only, there shall be
excluded all employees who (i) have not completed six months of
service with a Participating Employer, (ii) normally work less than
17 1/2 hours per week, (iii) normally work during not more than six
months during any year, (iv) have not attained age 21, (v) are
included in a unit of employees covered by a collective bargaining
agreement (unless the collective bargaining agreement requires
coverage under this Plan), or (vi) are nonresident aliens receiving
no U.S. source income from a Participating Employer.
1.36 "Hour of Service" means:
(a) Each hour for which a Participating Employer, either directly
or indirectly, pays an Employee or for which the Employee is
entitled to payment for the performance of duties during the
Plan Year. These hours shall be credited to the Employee for
the Plan Year in which the Employee performs the duties,
irrespective of when paid;
(b) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by a Participating
Employer. Hours under this subsection shall be credited to the
Employee for the Plan Year to which the award or the agreement
pertains rather than to the Plan Year in which the award,
agreement, or payment is made; and
(c) Each hour for which a Participating Employer, either
directly or indirectly, pays an Employee or for which the
Employee is entitled to payment (irrespective of whether the
employment relationship is terminated) for reasons other
than for the performance of duties during a Plan Year, such
as leave of absence, vacation, holiday, illness, incapacity
(including disability), layoff, jury duty, or Military
Leave. Hours under this subsection shall be credited to the
Plan Year in which the Employee is paid, the Employee
becomes entitled to payment, or the payment becomes due,
whichever occurs first. Notwithstanding the preceding
provisions of this subsection, no credit shall be given for:
(1) More than 501 hours under this subsection on account
of any single continuous period during which the
Employee does not perform any duties (whether or not
such period occurs during a single Plan Year);
(2) Any hour on account of a period during which the
Employee does not perform any duties if the payment
is under a plan maintained solely for the purpose of
complying with the applicable workman's compensation
law, unemployment compensation law, or disability
insurance law; and
(3) Any hour for a payment that solely reimburses the
Employee for medical or medically related expenses
incurred by the Employee.
Credit shall not be given under more than one of the foregoing
subsections (a), (b), and (c). If credit is to be given for
the 12-month period beginning with the Employee's employment
commencement date, then the 12-month period beginning with the
date an Employee first completes an Hour of Service for a
Participating Employer shall be substituted for the term "Plan
Year" wherever the latter term appears in this section. Any
ambiguity with respect to the crediting of an Hour of Service
shall be resolved in favor of the Employee. Hours of Service
shall be calculated and credited pursuant to Section
2530.200b-2 of the Department of Labor Regulations, which are
specifically incorporated herein by this reference.
1.37 "Inactive Participant" means a Participant who has terminated
employment with a Participating Employer and has an interest in the
Plan that has not been distributed, or a Participant who has become
an Ineligible Employee.
1.38 "Ineligible Employee" means an Employee who is not eligible to
participate in this Plan.
1.39 "Investment Funds" means the investment funds established pursuant to
the Plan as the Plan Administrator may authorize from time to time.
1.40 "Leased Employee" means any individual (other than an Employee of a
Participating Employer) who, pursuant to an agreement between a
Participating Employer and any other person (the "leasing
organization"), has performed services for a Participating Employer
or for a Participating Employer and related persons on a
substantially full-time basis for a period of at least one year and
such services are performed under the primary direction or control of
a Participating Employer. Contributions or benefits provided by the
leasing organization which are attributable to the services performed
for a Participating Employer shall be treated as provided by a
Participating Employer. The preceding sentence shall not apply to any
Leased Employee if (a) the total of Leased Employees constitute less
than 20% of a Participating Employer's non-highly compensated
workforce within the meaning of Section 414(n)(5)(C)(ii) of the Code,
and (b) such individual is covered by a money purchase pension plan
providing immediate participation, full and immediate vesting, and a
non-integrated employer contribution of 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 individual's gross income under Sections 125,
402(e)(3), 402(h)(1)(B) or 403(b) of the Code.
1.41 "Limitation Year" means the Plan Year.
1.42 "Matching Contribution" means the contribution to the Plan made by a
Participating Employer for the Plan Year and allocated to a
Participant's Matching Contribution Account under Section 3.1(b) by
reason of the Participant's Salary Deferral Contributions to the
Plan. Employees whose work is covered by a collective bargaining
agreement are ineligible for this contribution, unless such agreement
provides for such contribution or provides that Employees whose work
is covered by that agreement will participate in the Plan to the same
extent as Employees not covered by that or any other collective
bargaining agreement.
1.43 "Matching Contribution Account" means the Account maintained by the
Plan Administrator for each Participant which is to be credited with
the Matching Contributions allocated to the Participant and
adjustments related thereto.
1.44 "Maternity or Paternity Leave" means an absence from work for any of
the following reasons:
(a) The pregnancy of the Employee;
(b) The birth of a child of the Employee;
(c) The placement of a child with the Employee in connection with
the adoption of such child by the Employee; or
(d) For purposes of the care of a child referred to in subsections
(b) or (c), immediately following the child's birth or
placement for adoption.
An Employee must furnish the Plan Administrator with reasonable
information in a timely manner establishing that any absence from work
is for one of the reasons listed above. In such event, the 12
consecutive month period beginning on the first anniversary of the
first date of such absence shall not constitute a Break in Service.
Maternity or Paternity Leave shall be considered only for purposes of
determining whether or not a Break in Service has occurred and not for
any other purpose.
1.45 "Military Leave" means qualified military service described in Code
Section 414(u).
1.46 "Nondeductible Voluntary Contribution Account" means an account
holding after-tax voluntary contributions made by a Participant under
a Prior Plan or pursuant to a defaulted loan.
1.47 "Nonforfeitable" means a Participant's or Beneficiary's unconditional
claim, legally enforceable against the Plan and Trust, to that
portion of a Participant's Account balance that has become vested in
accordance with Article 8.
1.48 "Non-Highly-Compensated Employee" means any Employee who is not a
Highly-Compensated Employee.
1.49 "Normal Retirement Age" means age 65 while in the active employment of
a Participating Employer.
1.50 "Participant" means an active Employee who has entered the Plan or
an Inactive Participant.
1.51 "Participating Employer" means Costco Wholesale Corporation and the
Affiliated Companies listed on Appendix A attached hereto.
1.52 "Period of Severance" means a continuous period of time during which
an Employee is not employed by a Participating Employer. Such period
begins on the date the Employee retires, quits, or is discharged or,
if earlier, on the 12 month anniversary of the date on which the
Employee was otherwise first absent from service. Approved Absence
and Maternity or Paternity Leave shall not constitute a Period of
Severance, provided, however, that (a) continuation upon a temporary
layoff for lack of work for a period in excess of three months shall
be deemed a termination of employment effective as of the end of the
third month of such period, and (b) failure to return to work upon
the expiration of any Approved Absence, Maternity or Paternity Leave,
sick leave, vacation, or within three days after recall from a
temporary layoff for lack of work shall be deemed a termination of
employment effective as of the expiration of such Approved Absence,
Maternity or Paternity Leave, sick leave, vacation or layoff. A
Period of Severance shall not include Military Leave, unless required
by Code Section 414(u) or Treasury Regulations 1.410(a)-7.
1.53 "Plan" means the plan reflected in this document, and any amendments
thereto.
1.54 "Plan Administrator" means the Committee. The Plan Administrator
shall be the Named Fiduciary of the Plan.
1.55 "Plan Year" means the 12 consecutive month period commencing on
January 1 and ending on December 31 of each calendar year.
1.56 "Prior Plan" means The Costco Wholesale Corporation Employees'
401(k) Retirement Plan, The Price Company
Profit Sharing Plan, or The Price Company 401(k) Plan.
1.57 "Qualifying Employer Security" means the common stock issued by the
Employer which is tradable on an established securities market, or
any other securities of the Employer which meet the requirements of
Code Section 409(l) and are specified in writing to the Plan
Administrator by the Employer.
1.58 "Qualified Non-Elective Contribution" means a contribution made
pursuant to Section 3.1(d) and allocated to Participants' Accounts
when such contribution is designated by the Employer as
Nonforfeitable and subject to the Limitations on withdrawal for
Salary Deferral Contributions described in Code Section 401(k)(2)(B).
1.59 "Salary Deferral Account" means the Account maintained for a
Participant to record his or her share of the contributions made by a
Participating Employer that are made pursuant to Participants' Salary
Deferral Agreements.
1.60 "Salary Deferral Agreement" means a written agreement or enrollment
form (or written confirmation of a voice enrollment) in which a
Participant elects to have his or her Compensation reduced by a
specified amount, in whole percentages. A Participant may elect to
reduce Compensation for non-Catch-Up Contributions not less than 1%
or more than 50% per pay period. A Participant may elect to reduce
Compensation for Catch-Up Contributions not less than 1% or more than
50% per pay period. The determination of whether a contribution is a
Catch-Up Contribution is, however, determined in accordance with
Section 3.1(e) and Code Section 414(v). Salary Deferral Agreements
shall be governed by the following:
(a) Enrollment. A Participant's initial Salary Deferral
Agreement must be submitted to the Plan prior to the end of
the pay period within which falls the Participant's Entry
Date for Salary Deferral Contributions, in order to be
effective on such Entry Date. If a Participant does not
enroll for salary deferrals when first eligible, the
Participant may submit a Salary Deferral Agreement at any
time thereafter, to be effective on the first day of the pay
period within which enrollment is completed. The
Participant's Participating Employer may extend the end of a
pay period to a date that is before the pay date for that
pay period, to the extent such extension is done on an
administratively practicable and reasonably consistent
basis. The effective date of enrollment is subject to
administrative practicability.
(b) Effective Time. A Salary Deferral Agreement shall apply to
each payroll period during which an effective Salary Deferral
Agreement is in effect with a Participating Employer and shall
be effective as of the beginning of the first payroll period
that includes the effective date of the Salary Deferral
Agreement. Salary Deferral Agreements may be entered into
telephonically or by such other method as the Plan
Administrator shall determine from time to time.
(c) Suspension or Amendment. A Salary Deferral Agreement may be
suspended or may be amended by a Participant at any time by
such method as the Plan Administrator may announce, from time
to time (including automated voice response or electronic mail
procedures) or by giving written notice to a Participating
Employer and the Plan Administrator on or before such
reasonable prior deadline as the Plan Administrator shall
establish from time to time.
(d) Verification by Participant. A Participant is responsible for
reviewing account statements and payroll stubs to verify that
the correct salary reduction amount is being taken from the
Participant's wages and credited to the Plan, and the
Participant must notify the Plan Administrator of any error
within 60 days. Failure to do so will be considered the
Participant's consent to the amount of the actual salary
reduction being taken.
(e) Maximum annual deferral. No Salary Deferral Agreement shall
allow deferrals under this Plan and any other qualified plan
maintained by a Participating Employer during any taxable year
to exceed the dollar limitation contained in Section 402(g)
and 414(v) of the Code in effect for such taxable year.
1.61 "Salary Deferral Contribution" means a contribution made by a
Participating Employer to a Participant's Salary Deferral Account on
behalf of the Participant for such Plan Year in an amount equal to
the total amount by which the Participant's Compensation from a
Participating Employer was reduced during the Plan Year pursuant to
the Salary Deferral Agreement. Employees whose work is covered by a
collective bargaining agreement are ineligible for this contribution,
unless such agreement provides for such contribution or provides that
Employees whose work is covered by that agreement will participate in
the Plan to the same extent as Employees not covered by that or any
other collective bargaining agreement. The dollar limitation of Code
Section 402(g), as adjusted, shall apply in the aggregate to Elective
Contributions under this Plan and elective contributions on behalf of
the Participant for the same taxable year under all cash and deferred
arrangements described in Code Section 402(h)(1)(B), 457, 501(c)(18)
and 403(b) covering such Participant, regardless of employer, except
to the extent permitted for Catch-Up Contributions under Section
3.1(e) of the Plan.
1.62 "Section 414 Compensation" is used for calculating the ADP, ACP and
Section 401(a)(4) discrimination tests and for determining whether a
Participant is a Highly Compensated Employee or a Key Employee and
means Section 415 Compensation.
1.63 "Section 415 Compensation" or "415 Compensation" is used for
determining the maximum allowable Annual Addition to a Participant's
Account and means compensation as defined in Code Section 415(c)(3)
and Treasury Regulation 1.415-2(d)(11)(i), including (i) any
elective deferral (as defined in Code Section 402(g)(3)), and (ii)
any amount which is contributed or deferred by the Employer at the
election of the Employee and which is not includible in the gross
income of the Employee by reason of Code Section 125, 132(f)(4), or
457. Section 415 Compensation includes amounts under Code Section
125 not available to a Participant in cash in lieu of group health
coverage because the Participant is unable to certify that he or she
has other health coverage. For this purpose, an amount will be
treated as a 125 Deferral only if the Participating Employer does
not otherwise request or collect information regarding the
Participant's other health coverage as part of the enrollment
process for the health plan. Notwithstanding the foregoing, the
annual Section 415 Compensation of any Participant shall not exceed
the maximum permitted under Sections 401(a)(17) and 415 of the Code.
1.64 "Service" means an Employee's period or periods of employment with a
Participating Employer, which are counted as Service in accordance
with the following:
Each Employee shall be credited with Service under the Plan for the
period or periods during which such Employee maintains an employment
relationship with a Participating Employer. An Employee's employment
relationship shall be deemed to commence on the date the Employee
first renders one Hour of Service to a Participating Employer or any
Affiliated Company and shall be deemed to continue during the
following periods:
(a) An Employee shall not be considered to have terminated
employment during a period of Approved Absence unless the
Employee fails to return to the employ of a Participating
Employer at or prior to the expiration date of such Approved
Absence, in which case he or she shall be deemed to have
terminated as of the date of expiration of such Approved
Absence.
(b) In the case of an Employee who terminates employment and who
is subsequently reemployed by a Participating Employer without
having incurred a Break in Service, the period between the
date of termination and date of reemployment.
All periods of an Employee's Service, whether or not consecutive,
shall be aggregated.
1.65 "Spouse" means the spouse of the Participant who is married to the
Participant on the date distribution of benefits under the Plan
commences or who was married to the Participant on the date of the
Participant's death. However, a former spouse will be treated as the
Spouse to the extent provided under a qualified domestic relations
order as described in Section 414(p) of the Code.
1.66 "Total Disability" means the Participant's 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 that has lasted or can be expected to last for a
continuous period of not less than 12 months, or for a blind
Participant age 55 and over, the inability to engage in the
Participant's usual occupation. Total Disability shall be evidenced
by the Participant's eligibility for Social Security disability
benefits, and a disabled Participant must furnish proof satisfactory
to the Plan Administrator of a determination by Social Security that
the Participant is entitled to Social Security disability benefits.
1.67 "Trust" means the trust established to hold and invest the
contributions made to the Plan.
1.68 "Trust Fund" means all property of every kind held or acquired by
the Trustee under the agreement under which the Trust is
established.
1.69 "Trustee" means T. Rowe Price Trust Company, as Trustee, pursuant to
the agreement under which the Trust is maintained, or any successor
appointed by the Employer who in writing accepts the position of
Trustee.
1.70 "Uniformed Services" means the United States Armed Forces (including
the Coast Guard), the Army National Guard and the Air National Guard
(when engaged in active duty for training, inactive duty training,
or full-time National Guard duty), the commissioned corps of the
Public Health Service, and any other category of persons designated
by the President of the United States in time of war or emergency,
as required under the Uniformed Services Employment and Reemployment
Rights Act.
1.71 "Valuation Date" means, with respect to the Trust Fund, the
Anniversary Date, the last business day of each calendar month, and
such other interim valuation date or dates as directed by the Plan
Administrator.
1.72 "Years of Service" means the length of an Employee's Service
determined by dividing the Employee's days of Service by 365 and
rounding any fractional result down to the nearest whole year.
Employees who participated in the Costco Wholesale Corporation
Employees' 401(k) Retirement Plan prior to the Effective Date shall
receive credit for the number of Years of Service credited under the
"hours of service" method used by that plan prior to the Effective
Date, in accordance with Treasury Regulation 1.410(a)-7(g).
Thereafter, such employees shall receive credit for additional Years
of Service under the "elapsed time" method used by this Plan
counting only Service after the Effective Date. Years of Service
with a prior Affiliated Company or under a prior Plan shall not
count under this Plan, unless stated otherwise herein or required by
law.
Article 2 Eligibility and Participation
2.1 eligibility for salary deferral and matching contributions
Each Employee who is at least 18 years of age and is in Eligible Employment
shall be eligible to participate in the Plan, for purposes of making Salary
Deferral Contributions and receiving Matching Contributions only, on the Entry
Date for Salary Deferral Contributions following the completion of 90 days of
Service within a 12 consecutive month period, and after timely filing a Salary
Deferral Agreement. An Employee who has met the requirements described above but
who is not in Eligible Employment on such Entry Date shall become eligible for
participation on the date the Employee subsequently enters Eligible Employment
and timely files a Salary Deferral Agreement. A Participant shall not be
eligible to share in the Employer's Discretionary or Company Contribution until
the requirements of Section 2.2 are met.
2.2 eligibility for discretionary and company contributions
Each Employee who is at least 18 years of age and is in Eligible Employment
shall be eligible to participate in the Plan for purposes of the Employer's
Discretionary or Company Contribution on the Entry Date for Discretionary and
Company Contributions after completing the Eligibility Computation Period for
Discretionary and Company Contributions. An Employee who has met the
requirements described above but who is not in Eligible Employment on such Entry
Date shall become eligible for participation on the date the Employee
subsequently enters Eligible Employment.
2.3 continuance of participation
An eligible Employee shall continue to be a Participant as long as the
Participant has an Account balance in the Plan. However, active participation
shall cease when a Participant terminates employment with the Employer. Active
participation shall also cease if a Participant's Eligible Employment ceases,
whether or not the Participant remains an Employee, in accordance with the
provisions of Section 2.5. Such a Participant may become an active Participant
again as of the date he or she returns to Eligible Employment. In addition,
active participation shall cease if a Participant is on an unpaid Approved
Absence. However, if a Participant returns to the Service of a Participating
Employer on or before the end of an Approved Absence, that Participant may
become an active Participant again as of the date he or she returns to Eligible
Employment. Active participation shall also cease if a Participant voluntarily
waives participation in accordance with the provisions of Section 2.6. This
Section shall not be construed to grant former Participants, Participants or
Employees who are re-employed greater rights, contributions or benefits than
former Participants, Participants or Employees whose employment does not
terminate. The re-employed person must also timely file a Salary Deferral
Agreement following re-employment to participate in the Salary Deferral and
Matching Contributions.
2.4 participation upon re-employment
A Participant or former Participant whose employment terminates and who is
subsequently re-employed or an Employee who has satisfied the eligibility
requirements of the Plan but terminates prior to an applicable Entry Date (for
either Salary Deferral Contributions or for Discretionary and Company
Contributions, or both) shall re-enter the Plan as a Participant (with respect
to the portions of the Plan for which the Employee was eligible) on the date of
re-employment. Any other Employee whose employment terminates and who is
subsequently re-employed shall become a Participant in accordance with the
normal provisions of the Plan. This Section shall not be construed to grant
former Participants, Participants or Employees who are re-employed greater
rights, contributions or benefits than former Participants, Participants or
Employees whose employment does not terminate. The re-employed person must also
timely file a Salary Deferral Agreement following re-employment to participate
in the Salary Deferral and Matching Contributions.
2.5 ineligible employee status
If a Participant does not terminate employment but becomes an Ineligible
Employee, the Plan Administrator shall limit that Participant's share of the
allocation of employer contributions and Participant forfeitures, if any, to
relate to the Participant's Compensation paid by the Employer for services while
the Participant was in Eligible Employment. However, during the period that the
Participant is an Ineligible Employee, his or her Account shall continue to
share fully in Trust Fund allocations of net income (or loss). If an Ineligible
Employee becomes eligible to participate by reason of a change to Eligible
Employment, the Employee may participate in the Plan immediately if he or she
has satisfied the normal eligibility requirements and would have been a
Participant had he or she been in Eligible Employment during his or her period
of Service with the Participating Employer. 2.6 election not to participate With
the consent of the Plan Administrator, an eligible Employee may voluntarily
elect not to participate in the Plan and may waive coverage prospectively by
signing forms acceptable to the Plan Administrator. Such waiver must be knowing
and voluntary, and the reason for the waiver must be reflected in writing. A
Participant who has waived coverage may not elect to resume participation in the
plan before the time specified in the waiver, if any, and must notify the Plan
Administrator in writing of the election to resume participation in the Plan no
later than 30 days prior to the beginning of the Plan Year in which
participation shall be reinstated.
Article 3 Employer Contributions
3.1 amount of contribution
(a) Salary Deferral Contribution. Participating Employers shall contribute
an amount to the Account of each Participant who satisfies the
eligibility requirements of Article 2 equal to the Salary Deferral
Contribution made pursuant to such Participant's Salary Deferral
Agreement for such Plan Year.
(b) Matching Contribution. Participating Employers may contribute an
amount to the Account of each Participant who satisfies the
eligibility requirements of Article 2 equal to a percentage of a
Participant's Salary Deferral Contributions made for a Plan Year, up
to a certain amount. Such percentage and amount are established
annually by the Employer. The Matching Contribution for Participants
whose work is covered by the collective bargaining agreement with the
International Brotherhood of Teamsters in California is that which is
required by that agreement and memorialized by the Employer.
Participating Employers reserve the right to make no Matching
Contribution, and to modify the Matching Contribution formula or
allocation within the time prescribed by law.
A Participating Employer makes the Matching Contribution for work covered by the
collective bargaining agreement with the International Brotherhood of Teamsters
in California only if the Plan otherwise requires such Matching Contribution,
and if such Matching Contribution is with respect to work covered by that
agreement. Participating Employers do not make that Matching Contribution for
work not covered by such agreement. A Participating Employer makes the Matching
Contribution for work by other Participants only if the Plan otherwise requires
such Matching Contribution, and if such Matching Contribution is with respect to
work not performed pursuant to the collective bargaining agreement with the
International Brotherhood of Teamsters in California. Participating Employers do
not make that Matching Contribution for work covered by such agreement.
(c) Discretionary and Company Contribution. Participating Employers
may make a Company or Discretionary Contribution for a Plan Year to
the Account of a Participant who satisfies the eligibility
requirements for Discretionary or Company Contributions in Article 2
and who is employed by the Employer on the last day of the Plan Year
for which any such contribution is made. The Employer will declare any
such Company or Discretionary Contribution in writing and make it
within the time period prescribed by law, both of which may occur
after the Plan Year to which it relates, and any such Contribution
shall be allocated based on the terms of the Plan (including but not
limited to this Section and subsections (1) and (2)), and on
Participants' status on the last day of the Plan Year for which the
contribution is declared and made. Participating Employers reserve the
right to make no Company or Discretionary Contribution, and to modify
the Company or Discretionary Contribution formula or allocation within
the time prescribed by law. For this purpose a Participant whose
employment has terminated under a severance agreement but who is still
receiving severance pay shall not be considered to be employed by a
Participating Employer after the termination date specified in the
severance agreement. If a Participating Employer makes a Company
Contribution under 3.1(c)(2) for a Participant's hours of work, a
Participating Employer will not also make a Discretionary Contribution
under 3.1(c)(1) for Compensation earned with respect to the same hours
of work. If a Participating Employer makes a Discretionary
Contribution under 3.1(c)(1) for a Participant's Compensation, a
Participating Employer will not also make a Company Contribution under
3.1(c)(2) for hours of work with respect to the same Compensation.
Solely for purposes of determining Years of Service under this
subsection, Years of Service prior to a Break in Service shall be
excluded. Moreover, an Employee who was employed by The Price Company
on the effective date of the merger of The Price Company and Costco
Wholesale Corporation shall not be entitled to count as service any
period of time that he or she was previously employed by Costco
Wholesale Corporation, and an Employee who was employed by Costco
Wholesale Corporation on the effective date of the merger of The Price
Company and Costco Wholesale Corporation shall not be entitled to count
as service any period of time that he or she was previously employed by
The Price Company.
(1) Discretionary Contribution. This Discretionary Contribution is
a percentage of Compensation established annually by the
Employer within the time prescribed by law. The contribution
under this Section 3.1(c)(1) may vary according to a
Participant's Years of Service but all Participants with the
same Years of Service (as grouped below) will receive a
Discretionary Contribution under this Section 3.1(c)(1) that
is the same percentage of Compensation. This Section 3.1(c)(1)
Discretionary Contribution is based on Compensation earned
while a Participant is in Eligible Employment and after such
Participant's Entry Date for Discretionary and Company
Contributions. The Employer will notify the Trustee in writing
of the percentage of Compensation to be contributed for each
Years of Service group.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Years of Service
- ------------------------------------------------------------------------------
- ------------------------------ -------------------------------------- --------
Less than 2 Less than 12 Less than 22
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- ---------------------- ----------------------- ------------------------------
Less than 3 Less than 13 Less than 23
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- ---------------------- ----------------------- -------------------------------
Less than 4 Less than 14 Less than 24
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- ---------------------- ----------------------- -------------------------------
Less than 5 Less than 15 Less than 25
- ---------------------- ----------------------- -------------------------------
- ---------------------- ----------------------- -------------------------------
Less than 6 Less than 16 Less than 26
- ---------------------- ----------------------- -------------------------------
- ---------------------- ----------------------- -------------------------------
Less than 7 Less than 17 Less than 27
- ---------------------- ----------------------- -------------------------------
- ---------------------- ----------------------- -------------------------------
Less than 8 Less than 18 Less than 28
- ---------------------- ----------------------- -------------------------------
- ---------------------- ----------------------- -------------------------------
Less than 9 Less than 19 Less than 29
- ---------------------- ----------------------- -------------------------------
- ---------------------- ----------------------- -------------------------------
Less than 10 Less than 20 Less than 30
- ---------------------- ----------------------- -------------------------------
- ---------------------- ----------------------- -------------------------------
Less than 11 Less than 21 30 or more
- ---------------------- -------- -------------- ----------- -------------------
For purposes of this Section 3.1(c)(1) Discretionary
Contribution, Compensation does not include amounts earned
pursuant to work covered by the collective bargaining
agreement with the International Brotherhood of Teamsters in
California.
(2) Company Contribution for California Teamster Employees. The
Company Contribution is the amount required by collective
bargaining agreement, and memorialized and made by the
Employer within the time prescribed by law. The contribution
under this Section 3.1(c)(2) may vary according to a
Participant's Years of Service, but all Participants with the
same Years of Service will receive a Company Contribution
under this Section 3.1(c)(2) that is the same amount for each
straight time hour. The Employer will notify the Trustee in
writing of the contribution amount per straight time hour
according to a Participant's Years of Service. Only straight
time hours worked pursuant to the collective bargaining
agreement with the International Brotherhood of Teamsters in
California, and only straight time hours worked while a
Participant is in Eligible Employment and after such
Participant's Entry Date for Discretionary and Company
Contributions, is taken into account when computing this
contribution.
For this purpose, "straight time hour" means straight time
hours worked, including hours worked on Sunday, up to a
maximum of 80 hours per normal two week pay period.
(d) Qualified Non-Elective Contribution. The Employer may
designate all or a portion of the Discretionary or Company
Contribution or certain Matching Contributions made for a Plan
Year as a Qualified Non-Elective Contribution in order to help
meet the ADP test described in Section 4.2 or the ACP test
described in Section 4.3. The Employer may also, in its
discretion, make a separate contribution, which the Employer may
designate as a Qualified Non-Elective Contribution. Such separate
contribution shall be made in an amount and allocated under one
of the following methods to Participants in a disaggregated plan
(as defined by Treasury Regulations issued under Code Section
410), or any other method elected by the Employer and permitted
by law:
(1) Within twelve (12) months after the end of the Plan Year, the
Employer may in its discretion make a Qualified Non-Elective
Contribution to be allocated first to those Participants with
the lowest Deferral Percentage or Contribution Percentage, as
applicable, in the minimum amount necessary to meet the test
in question or to cause such Participants' Deferral
Percentages or Contribution Percentages to equal the Deferral
or Contribution Percentages of Participants with the next
lowest percentages, whichever occurs first. Then the remaining
Qualified Non-Elective Contribution may be allocated to the
group with the next lowest Deferral or Contribution
Percentage, including those Participants brought up to such
percentage by the previous allocation, in the minimum amount
necessary to meet the test in question or to cause such
percentages to equal the percentage of Participants with the
next lowest percentage. This process is continued until the
applicable test is met and the contribution is allocated in
its entirety.
(2) Within twelve (12) months after the end of the Plan Year, the
Employer may in its discretion make a Qualified Non-Elective
Contribution to be allocated to the Accounts of Non-Highly
Compensated Employees in the following manner. The Employer
may first allocate the Qualified Non-Elective Contribution to
the Account of the lowest paid Non-Highly Compensated Employee
up to that Employee's "Maximum Permissible Amount" in
accordance with Code Section 415 and Section 5.3 of this Plan.
If after making this contribution the Plan does not pass the
ADP or ACP Test, as applicable, the Employer may allocate a
contribution to the Account of the next lowest paid Non-Highly
Compensated Employee up to that Employee's "Maximum
Permissible Amount" in accordance with Code Section 415 and
Section 5.3 of this Plan, and so forth until the Plan passes
the ADP or ACP Test, as applicable. To determine which
Employee is the "lowest paid" Non-Highly Compensated Employee
for purposes of this section, only 414 Compensation earned
while the Employee is eligible to participate in this Plan
shall be taken into account.
(e) Catch-Up Contribution. All Employees who are eligible
for Salary Deferral Contributions under the Plan and who
will attain age 50 or older before the close of the Plan
Year shall be eligible to make catch-up contributions in
accordance with and subject to the limitations of Section
414(v) of the Code. Such catch-up contributions shall not be
taken into account for purposes of the provisions of the
Plan implementing the limitations of Sections 402(g) and 415
of the Code or the non-Catch-up Contribution 50% of
compensation limitation of Section 1.58 of the Plan.
Moreover, the Plan shall not be treated as failing to
satisfy the provisions of the Plan implementing the
requirements of Section 401(k)(3), 401(k)(11), 410(b), or
416 of the Code, as applicable, by reason of the making of
such catch-up contributions. 3.2 return of contribution The
Trustee, upon written request from the Employer, shall
return to the Employer the amount of a Participating
Employer's contribution made by a Participating Employer by
mistake of fact or the amount of a Participating Employer's
contribution disallowed as a deduction under Section 404 of
the Code. The Trustee shall not return any portion of a
Participating Employer's contribution under the provisions
of this section more than one year after:
(a) The date of determination that a Participating Employer made the
contribution by mistake of fact; or
(b) The date of disallowance of the contribution as a deduction.
The Trustee shall not increase the amount of a Participating Employer's
contribution returnable under this section for any earnings attributable to the
contribution, but the Trustee shall decrease a Participating Employer's
contribution returnable for any losses attributable to it. The Trustee may
require a Participating Employer to furnish it whatever evidence the Trustee
deems necessary to enable the Trustee to confirm the amount the Employer has
requested be returned is properly returnable under Section 403(c) of the Act.
3.3 time of payment of contribution and accrual of benefit
Participating Employers shall pay their contributions to the Trustee for each
Plan Year within the time prescribed (including extensions) by the Code for
filing its federal income tax return for the taxable year for which it claims a
deduction for its contribution, or as otherwise required by law. A Participant
accrues no Matching, Company, Discretionary, or Qualified Non-Elective
Contribution until satisfying all requirements of the Plan, and until the
Employer formally establishes or declares such Contribution.
Article 4 Limits on Contributions and Correction of Excess Amounts 4.1
distribution of excess deferrals Excess Deferrals and income or loss allocable
thereto shall be distributed no later than each April 15 to Participants who
make a timely claim for such Excess Deferrals for the preceding calendar year.
The income or loss allocable to Excess Deferrals shall be the product of the
income or loss allocable to the Participant's Salary Deferral Account (and other
amounts treated as elective contributions under the Code) for the preceding
calendar year multiplied by a fraction, the numerator of which is the
Participant's Excess Deferral for the preceding calendar year and the
denominator of which is the sum of (i) the Participant's Account balance
attributable to Salary Deferral Contributions (and other amounts treated as
elective contributions under the Code) determined as of the beginning of the
preceding calendar year and (ii) the Participant's Salary Deferral Contributions
(and other amounts treated as elective contributions under the Code) for the
preceding calendar year. A Participant's claim for Excess Deferrals must be in
writing and shall be submitted to the Plan Administrator no later than March 1
of the year following the calendar year in which such Excess Deferrals were
made. If, after distribution of Excess Deferrals, the effective availability
rule of Treasury Regulation 1.401(a)(4)-4(c) is not met for a Highly Compensated
Employee, Matching Contributions attributable to such Excess Deferrals plus any
income and any loss allocable thereto shall be distributed to such Highly
Compensated Employee(s) as wages; provided, however, that if such distribution
is prohibited by Internal Revenue Code Section 401(m), then such amounts shall
instead be forfeited and allocated in the same manner as provided in Section
8.5. The income and loss allocable to such Matching Contributions shall be
calculated using a methodology similar to that described above.
4.2 salary deferral limitations
(a) ADP Discrimination Tests for Salary Deferral Contributions. In order
for the discrimination standards of Internal Revenue Code Section
401(k) to be satisfied in any Plan Year, the Actual Deferral Percentage
(ADP) for the Plan Year in question for Participants who are Highly
Compensated Employees and the ADP for Participants who are not Highly
Compensated Employees must satisfy one of the following tests:
(1) The current year ADP for Participants who are Highly
Compensated Employees is not more than the current year ADP
for Participants who are not Highly Compensated Employees
multiplied by 1.25; or
(2) The excess of the current year ADP for Participants who are
Highly Compensated Employees over the current year ADP for
Participants who are not Highly Compensated Employees is not
more than two percentage points, and the current year ADP for
Participants who are Highly Compensated Employees is not more
than the current year ADP for Participants who are not Highly
Compensated Employees multiplied by 2.
Compliance with the discrimination standards set forth above shall be
determined in accordance with Code Section 401(k), as amended from time
to time, and any related laws and regulations as may be in effect from
time to time. Under those rules, effective January 1, 1997, the plan
elects to use current year data for determining the ADP of both Highly
Compensated and non-Highly Compensated Employees. Moreover, if this
plan is aggregated with any other plan or plans for purposes of the
nondiscrimination standards of Code Section 401(a)(4) or the minimum
coverage requirements of Code Section 410(b) (other than Section
410(b)(2)(A)(ii)), all elective contributions made under all such plans
shall be treated as if made under a single plan. In addition, if two or
more plans are permissively aggregated for purposes of the
nondiscrimination standards of Code Section 401(k), the aggregated
plans must satisfy the nondiscrimination standards of Section 401(a)(4)
and the minimum coverage requirements of Section 410(b) as though they
were a single plan. The mandatory disaggregation rule in Treasury
Regulations issued under Code Section 410 shall apply to the extent
required by law, and correction shall apply separately to each
disaggregated plan, including a Qualified Non-Elective Contribution
under Section 3.1(d).
(b) Corrections to ADP Tests. In the event the Plan does not satisfy the
ADP test set forth herein, the Employer shall take corrective action
until the test is satisfied. The corrective action shall be undertaken
pursuant to one or more of the options, or any combination of the
options, set forth below.
(1) Distribution of Excess Contributions. The Excess Contributions
may be distributed to Highly Compensated Employees on the
basis of the dollar amount of the Salary Deferral
Contributions attributable to each Highly Compensated
Employee. The Excess Contributions for a Plan Year are
distributed by the following method, under which the aggregate
dollar amount of the Salary Deferral Contribution of the
Highly Compensated Employee(s) with the largest such
contribution is reduced to the extent required to:
(i) Distribute all Excess Contributions; or
(ii) Cause the dollar amount of the Salary Deferral
Contribution of such Highly Compensated Employee(s)
to equal the dollar amount of the Salary Deferral
Contribution of the Highly Compensated Employee(s)
with the next largest Salary Deferral Contribution.
This process may be repeated until all Excess Contributions
are distributed. Any Salary Reduction Agreement shall be
deemed to direct and authorize the Employer to abate a
Participant's Salary Reduction Account and to distribute
Excess Contributions as specified above. Any Excess
Contributions so distributed, plus any income and any loss
allocable thereto, shall be distributed and returned to Highly
Compensated Employees as wages if possible within 2 1/2 months
after the close of the Plan Year and in all events by the end
of the following Plan Year. The income and loss allocable to
an Excess Contribution shall include income and loss for the
Plan Year for which the Excess Contributions were made and
shall not include income and loss for the period between the
end of the Plan Year and the date of distribution (gap
period), and shall be calculated using a methodology similar
to that described in Section 4.1. If, after distribution of
Excess Contributions, the effective availability rule of
Treasury Regulation 1.401(a)(4)-4(c) is not met for a Highly
Compensated Employee, Matching Contributions attributable to
such Excess Contributions plus any income and any loss
allocable thereto shall be distributed to such Highly
Compensated Employee(s) as wages; provided, however, that if
such distribution is prohibited by Internal Revenue Code
Section 401(m), then such amounts shall instead be forfeited
and allocated in the same manner as provided in Section 8.5.
The income and loss allocable to such Matching Contributions
shall be calculated using a methodology similar to that
described in Section 4.1.
(2) Qualified Non-Elective Contributions. The Employer may make
Qualified Non-Elective Contributions in accordance with either
of the methods described in Section 3.1(d) of this Plan, or
any other method permitted by law.
4.3 matching contribution limitations
(a) ACP Discrimination Tests for Matching Contributions. In order for the
discrimination standards of Internal Revenue Code Section 401(m) to be
satisfied in any Plan Year, the Actual Contribution Percentage (ACP)
for the Plan Year in question for Participants who are Highly
Compensated Employees and the ACP for Participants who are not Highly
Compensated Employees must satisfy one of the following tests:
(1) The current year ACP for Participants who are Highly
Compensated Employees is not more than the current year ACP
for Participants who are not Highly Compensated Employees
multiplied by 1.25; or
(2) The excess of the current year ACP for Participants who are
Highly Compensated Employees over the current year ACP for
Participants who are not Highly Compensated Employees is not
more than two percentage points, and the current year ACP for
Participants who are Highly Compensated Employees is not more
than the current year ACP for Participants who are not Highly
Compensated Employees multiplied by 2.
Compliance with the discrimination standards set forth above shall be
determined in accordance with Code Section 401(m), as amended from time
to time, and any related laws and regulations as may be in effect from
time to time. Under those rules, effective January 1, 1997, the plan
elects to use current year data for determining the ACP of both Highly
Compensated and Non-Highly Compensated Employees. Moreover, if this
plan is aggregated with any other plan or plans for purposes of the
nondiscrimination standards of Code Section 401(a)(4) or the minimum
coverage requirements of Code Section 410(b) (other than Section
410(b)(2)(A)(ii)), all employee and matching contributions made under
all such plans shall be treated as if made under a single plan. In
addition, if two or more plans are permissively aggregated for purposes
of the nondiscrimination standards of Code Section 401(m), the
aggregated plans must satisfy the nondiscrimination standards of
Section 401(a)(4) and the minimum coverage requirements of Section
410(b) as though they were a single plan. The mandatory disaggregation
rule in Treasury Regulations issued under Code Section 410 shall apply
to the extent required by law, and the exception for collectively
bargained plans in the Code shall apply, and correction shall apply
separately to each disaggregated plan, including a Qualified
Non-Elective Contribution under Section 3.1(d).
(b) Corrections to ACP Tests. In the event the Plan does not satisfy the
ACP tests set forth herein, the Employer shall take corrective action
until one of the tests is satisfied. The corrective action shall be
pursuant to one or more of the options, or any combination of the
options, set forth below.
(1) Distribution of Excess Aggregate Contributions. The Excess
Aggregate Contributions may be distributed to Highly
Compensated Employees on the basis of the dollar amount of the
Matching Contributions attributable to each Highly Compensated
Employee. The Excess Aggregate Contributions for a Plan Year
are reduced by the following method, under which the dollar
amount of the Matching Contribution of the Highly Compensated
Employee(s) with the largest such contribution is reduced to
the extent required to:
(i) Distribute all Excess Aggregate Contributions; or
(ii) Cause the dollar amount of the Matching Contribution
of such Highly Compensated Employee(s) to equal the
dollar amount of the Matching Contribution of the
Highly Compensated Employee(s) with the next largest
Matching Contribution.
This process may be repeated until all Excess Aggregate
Contributions are distributed. Matching Contributions (and the
income allocable thereto) that are not vested (determined
without regard to any increase in vesting that may occur after
the date of the forfeiture) may be forfeited to correct Excess
Aggregate Contributions. Any Excess Aggregate Contributions
that are vested shall be distributed to the Participant within
2 1/2 months after the close of the Plan Year, if possible,
and in all events by the end of the following Plan Year. The
income and loss allocable to an Excess Aggregate Contribution
shall include income and loss for the Plan Year for which the
Excess Aggregate Contributions were made and shall not include
income and loss for the period between the end of the Plan
Year and the date of distribution (gap period), and shall be
calculated using a methodology similar to that described in
Section 4.1.
(2) Qualified Non-Elective Contributions. The Employer may make
Qualified Non-Elective Contributions in accordance with either
of the methods described in Section 3.1(d) of this Plan, or
any other method permitted by law.
4.4 discretionary contribution limitations
The Discretionary Contribution must satisfy Code Sections 401(a)(4) and 410(b).
The mandatory disaggregation rule in Treasury Regulations issued under Code
Section 410 and exceptions for collectively bargained plans in the Code shall
apply. The Employer may correct an initial failure to pass Code Section
401(a)(4) or 410(b) as provided in Section 3.1(d), pursuant to Treasury
Regulations at 1.401(a)(4) (including 1.401(a)(4)-7, -8, -9 or -11(g)) and
1.410(b), or pursuant to any other method legally available. Correction shall
apply separately to each disaggregated plan. Article 5 Allocation to Accounts
5.1 contribution allocation (a) The Salary Deferral Contribution for a Plan Year
shall be allocated to each Participant's Salary Deferral
Account in accordance with the Salary Deferral Agreement entered into
by the Participant so that each Account shall be credited with the
amount by which that Participant's salary was reduced.
(b) The Matching Contribution payable on behalf of a Participant for a Plan
Year shall be allocated to the Participant's Employer Contribution
Account in the amount payable under Section 3.1(b).
(c) The Discretionary and Company Contribution payable on behalf of a
Participant for a Plan Year shall be allocated to the Employer
Contribution Account of each Participant who is employed by a
Participating Employer on the last day of the Plan Year, and to such
other Participants as may be determined under Section 3.1(d).
(d) The Qualified Non-Elective Contributions, if any contributions are
designated as such by the Employer, shall be allocated as soon as
administratively practicable to the Employer Qualified Non-Elective
Contribution Account of those Participants who are entitled to an
allocation of such Qualified Non-Elective Contributions for that Plan
Year under Section 3.1(d).
(e) In no event shall a Participating Employer make a contribution to a
Participant's Account if the contribution would cause the Participant's
Annual Addition for that Plan Year to exceed the maximum annual
limitations described in Section 5.3.
5.2 allocation of investment income (or loss) and allocation of plan expenses
All contributions to the Accounts of each Participant in the Plan shall be
reflected in units or shares of each Investment Fund and, in the case of the
ESOP, in shares of Employer Stock, according to the investments elected by the
Participant. As of each Valuation Date, the Plan Administrator (or its agent,
the third party recordkeeper) shall adjust accounts to reflect the net income,
gains and losses since the last Valuation Date, and any administrative expenses
charged to the Accounts. Dividends with respect to Employer Stock shall be
allocated and reinvested or paid as provided in Section 7.5 hereof. The Plan
Administrator may allocate the reasonable and necessary fees and expenses of
administering the Plan to the Accounts of Participants and Beneficiaries, and it
may pay such fees and expenses from the Accounts to the extent they are not paid
by the Employer; provided such fees and expenses are incurred for the
administration and operation of the Plan and are not "settlor" expenses. 5.3
limitation on annual additions The Annual Addition to the Account of any
Participant for a Limitation Year under this Plan may not exceed the maximum
permissible amount, in accordance with Code Section 415 and the regulations
thereunder, which are incorporated herein by this reference.
5.4 adjustments for excess annual additions
If the Annual Addition under this Plan would cause the maximum Annual Addition
to be exceeded for any Participant, the amount allocated under this Plan shall
be reduced so that the Annual Additions for the year will equal the maximum
allowable Annual Addition. If the Annual Addition allocated under other defined
contribution plans and welfare benefit funds that must be aggregated with this
Plan are equal to or greater than the maximum allowable addition to the
Participant's account for the year in question, no amount shall be contributed
or allocated under this Plan for that Plan Year. If a Participant's Annual
Addition under this Plan and such other plans results in an excess Annual
Addition for the Plan Year, the excess amount shall be disposed of as follows:
(a) First, the excess Annual Addition shall be deducted
from the Participant's Discretionary and Company
Contribution Accounts to the extent thereof and then, if
necessary, from the Matching Contribution Account, to the
extent thereof, and then, if necessary, from the Salary
Deferral Account. Such amounts shall be held unallocated in
a suspense account. The suspense account shall be applied to
reduce future Participating Employer contributions for all
remaining Participants in the next Plan Year and each Plan
Year thereafter until disposed of. If a suspense account is
in existence at any time during the Plan Year pursuant to
this section, such suspense account shall not participate in
the allocation of the trust's investment gains and losses.
(b) Second, if upon termination of the Plan there remain
unallocated amounts in such a suspense account, the
remaining balance may be repaid to the Employer upon
termination of the Plan.
Article 6 Participant Contributions
6.1 participant rollover contributions
A Participant who is also an Eligible Employee, with the Plan Administrator's
written consent and after filing with the Trustee the form prescribed by the
Plan Administrator, may contribute cash or other property to the Trust other
than as a voluntary contribution if the contribution is a qualified "rollover
contribution" which the Code permits an Employee to transfer either directly or
indirectly from a qualified plan, from a Code Section 403(a) annuity plan or
403(b) tax-sheltered annuity contract or from a Code Section 457(b) qualified
deferred compensation plan, to another qualified plan ("Rollover Contribution"),
as long as the Rollover Contribution does not include after-tax contributions
and will not require any changes to the operation and administration of this
Plan or the provision of any form of distribution other than a lump sum
distribution. Before accepting a Rollover Contribution, the Trustee may require
an Employee to furnish satisfactory evidence that the proposed transfer is in
fact a qualified Rollover Contribution that is acceptable to the Plan. If a
contribution is made to the Trust under this section, the Trustee shall hold the
amount contributed in a segregated Account for the Participant's sole benefit.
The interest of each Participant in all such Employee Contribution Accounts
shall be 100% vested and Nonforfeitable at all times. 6.2 withdrawal of rollover
and transfer contributions A Participant, upon 30 days' prior written notice to
the Trustee, may request withdrawal of all or any part of the Participant's
Rollover Contribution. The Trustee shall comply with a request to withdraw as
soon as administratively practicable.
Article 7 Investment of Accounts
7.1 investment of accounts
A Participant shall direct investment of his or her Account in Investment Funds
and/or the ESOP in accordance with this section and Section 7.5.
(a) Investment of Account Balance and Future Contributions. A Participant's
Account balance and a Participant's future contributions shall be
invested among the Investment Funds and/or the ESOP as directed by the
Participant from time to time. Such directions shall be subject to the
limitations in amount or increment and to such other requirements as
the Plan Administrator shall communicate to Participants. Investment
directions may be made telephonically, electronically, or by such other
methods as the Plan Administrator shall make available to Participants
from time to time.
(b) Direction of Investment by Beneficiary of Participant. After the death
of a Participant, prior to distribution of the Participant's Account,
the Participant's Beneficiary shall be entitled to direct the
investment of the Account among the Investment Funds and/or the ESOP
and exercise all ownership rights with respect to such investments.
(c) Participant Loans. The Plan Administrator will treat a loan made to a
Participant under Section 10 as a Participant direction of investment
under this Section 7.1. To the extent of the loan outstanding at any
time, the borrowing Participant's account alone shares in any interest
paid on the loan, and it alone bears any expense or loss it incurs in
connection with the loan. The Trustee shall deposit principal and
interest paid on such loan when administratively practicable to the
Participant's Account under the Plan.
(d) Investment Funds. The Plan Administrator shall select the Investment
Funds and monitor their performance. The Investment Funds shall include
at least three diversified funds which have materially different risk
and return characteristics. Each Investment Fund sponsor shall provide
prospectuses and other disclosures required by regulations under
Section 404(c) of the Act, and the Plan Administrator shall take
appropriate steps to assure that Participants (and Beneficiaries, in
the case of deceased Participants) will receive the information and
disclosure required by such regulations.
7.2 limitation on investment direction by insiders
Notwithstanding the foregoing, any Participant who is an insider ("Insider") for
purposes of the requirements of Section 16 of the Securities Exchange Act of
1934, as amended, and related rules of the Securities and Exchange Commission,
may not direct the investment of any portion of such Participant's account in
Employer Stock. Under current rules Insider includes the executive officers of
the Employer, any directors of the Employer, and any shareholder holding ten
percent or more of any class of any equity security of the Employer that is
registered pursuant to the Securities Exchange Act of 1934. The executive
officers included are the Employer's president, principal financial officer,
principal accounting officer (or if there is no such accounting officer, the
controller), any vice president in charge of a principal business unit,
division, or function (such as sales, administration, or finance), any other
officer who performs a policy-making function, or any other person who performs
similar policy-making functions for the Employer. Officers of the Employer's
subsidiaries and Affiliated Companies shall be included as Insiders if they
perform such policy-making functions for the Employer or otherwise qualify as
Insiders. Under the current employment structure, Insiders include all employees
at the level of Executive Vice-President or higher and the chief accounting
officer. The Employer shall identify Participants who are Insiders from time to
time and shall instruct the Plan's third-party recordkeeper that such Insiders
may not elect investments in Employer Stock.
7.3 optional pass-through voting of non-employer stock
The Plan Administrator may direct the Trustee, from time to time, to allow
Participants to direct the Trustee as to the manner in which shares of the
Investment Funds, other than Employer Stock, allocated to each Participant's
Account shall be voted or how the Trustee should respond to a tender offer or
similar ownership right. If the Plan Administrator permits such pass-through
voting, the Trustee shall deliver to each Participant a copy of any proxy
solicitation materials, tender offer, or other information given to shareholders
of the securities, together with a form by which the Participant may instruct
the Trustee how to vote or whether to tender the securities. The Trustee shall
vote such securities through proxy in accordance with the instructions received
from the Participant entitled to vote the securities and shall tender or
exercise other ownership rights in accordance with the instructions of the
Participant. The Trustee shall not vote, tender, or otherwise exercise ownership
rights for any such securities for which instructions are not received from the
Participant.
(a) 7.4 pass-through voting of employer stock Information
and Procedures. Participants who have investments in
Employer Stock shall be provided with the same information
as that which is provided to other shareholders, including
all proxies and proxy solicitation material, and the
Participant shall have the right to direct the Trustee as to
the voting, tender, and other similar rights of the Employer
Stock allocated to the Participant's Account. Information
regarding a Participant's exercise of such rights shall be
maintained in accordance with procedures designed to
safeguard the confidentiality of the purchase, holding, or
sale of Employer Stock and the exercise of voting, tender,
and other ownership rights, except to the extent necessary
to comply with federal or state laws that are not preempted
by ERISA (such as the reporting requirement for Insiders
under Section 16 of the Securities Exchange Act of 1934).
(b) Appointment of Special Fiduciaries. The Plan
Administrator shall designate a fiduciary (the "Employer
Stock Fiduciary") responsible for ensuring that the
procedures for safeguarding the confidentiality of the
information as to the ownership and exercise of ownership
rights described in Section 7.4(a) are sufficient and being
followed. The Employer Stock Fiduciary may be an officer of
the Employer or a committee of officers or employees of the
Employer. In addition, the Employer Stock Fiduciary shall
appoint an independent fiduciary (the "Independent
Fiduciary") who may not be employed by or affiliated with
the Employer or any Affiliated Company to carry out any
activities that the Employer Stock Fiduciary determines
involve a potential for undue employer influence on
Participants with regard to the direct or indirect exercise
of shareholder rights.
(c) Voting of Employer Stock. A Participant may direct the
Trustee as to the manner in which Employer Stock allocated
to the Participant's Account shall be voted. Before each
meeting of the shareholders, the Employer Stock Fiduciary or
the Independent Fiduciary shall deliver or arrange for
delivery to each Participant a copy of any proxy
solicitation materials together with a form by which the
Participant may instruct the Trustee how to vote the
Employer Stock. The Trustee shall vote Employer Stock
through proxy in accordance with instructions received from
the Participant entitled to vote such Employer Stock. The
Trustee shall not vote Employer Stock for which voting
instructions are not received from Participants entitled to
vote such Employer Stock. Neither the Trustee, the Employer
Stock Fiduciary, nor the Independent Fiduciary shall express
any opinion, make any recommendation, or exert any undue
influence with respect to Participants' voting of Employer
Stock.
(d) Tender Offers. In the event of a tender offer for
shares of Employer Stock, the Trustee shall sell, convey or
transfer Employer Stock only in accordance with the written
instructions of the Participant. The Independent Fiduciary
shall deliver or arrange for delivery to each Participant
all information provided to other shareholders, including
(a) a copy of the description of the terms and conditions of
the tender offer filed with the Securities and Exchange
Commission, (b) a copy of the statement from management
setting forth its position with respect to the tender offer
filed with the Securities and Exchange Commission, (c) an
instruction form to be completed by a Participant who wishes
to instruct the Trustee to tender Employer Stock in response
to the tender offer and written instructions which state
that Employer Stock allocated to the Participant will not be
tendered if the instruction form is not returned to the
Trustee by the indicated deadline, and (d) such other
materials or information as the Independent Fiduciary may
deem necessary or appropriate. The Trustee shall sell,
convey, or transfer shares of Employer Stock pursuant to the
terms of the tender offer as directed by the Participants on
the instruction forms. Neither the Trustee, the Employer
Stock Fiduciary, nor the Independent Fiduciary shall express
any opinion or recommendation, or exert any undue influence
with respect to Participants' exercise of their rights under
the tender offer.
(e) Beneficiaries. Upon the death of a Participant, the
rights of such Participant pursuant to this Section 7.4
shall apply to his or her Beneficiaries prior to the
distribution of such Participant's Account.
7.5 investment in employer stock
(a) Participants may direct investment of their Accounts into Employer
Stock. The portion of this Plan which is invested in Employer Stock is
hereby designated as an ESOP and a stock bonus plan, and it is designed
to invest primarily in Qualifying Employer Securities. Up to 100% of
the assets of Accounts may be invested in Employer Stock.
(b) Employer Stock shall be held in one or more ESOP funds established by
the Plan Administrator and maintained by the Trustee. Assets of
Accounts invested in Employer Stock at the direction of Participants in
shall be held in such ESOP fund or funds.
(c) The following shall apply to dividends payable on Employer Stock held
in the ESOP:
(1) Dividends on Employer Stock held in one or more ESOP funds
shall be reinvested in Employer Stock unless the procedures
under Section 7.5(c)(2) are followed.
(2) Dividends on Employer Stock held in one or more ESOP
funds may be distributed to Participants as follows:
(i) The Employer may notify the Plan Administrator from
time to time that it intends to distribute dividends on
Employer Stock to Participants in the ESOP. Thereafter, the
Employer shall either pay the dividends in cash directly to
Participants, or it shall pay the dividends to the Trust and
the Trustee shall distribute the dividends in cash to
Participants. If dividends are paid to the Trust, they shall
be distributed to Participants by the Trustee at such time
and with such frequency as directed by the Plan
Administrator, but in no event later than 90 days after the
end of the Plan Year in which the dividends are paid to the
Trust. The Employer's notice to the Plan Administrator
herein shall apply only to dividends with a record date
after the Plan Administrator receives the Employer's notice.
(ii) If the Plan Administrator receives the notice described
above, it may provide to ESOP Participants an election
either to receive the dividends allocable to their Accounts
in cash or to reinvest the dividends in Employer Stock. The
initial election shall be provided and shall become
irrevocable, as determined by the Plan Administrator with
notice to Participants, within a reasonable period of time
before a dividend is paid, and thereafter Participants shall
have a reasonable opportunity to change their elections at
least annually. If a Participant fails to make an election,
the Participant shall be deemed to have elected to reinvest
dividends in Employer Stock. Dividends reinvested in
Employer Stock at the election or deemed election of a
Participant shall be 100% vested.
(iii) If dividends are to be paid directly to Participants,
the Plan Administrator shall provide the Employer
with information reasonably requested by the Employer
for the purpose of identifying Participants entitled
to a distribution with respect to shares allocated to
their Accounts as of the dividend record date. If
dividends are to be paid from the Trust or
reinvested, the amount paid to each Participant or
the amount reinvested shall be equal to the amount of
the dividend with respect to shares allocated to the
Participant's Account as of the dividend record date.
(4) The payment or reinvestment of dividends shall not constitute
an Annual Addition for purposes of Code section 415(c) or a
contribution to the Plan, including an elective deferral for
purposes of Code section 402(g), an elective contribution for
purposes of Code section 401(k), or an employee contribution
for purposes of Code section 401(m).
(d) Participants may purchase and sell their investments in the ESOP funds
and diversify their investments in accordance with the general
procedures otherwise applicable to Investment Funds. Such rights are
available to all Participants without regard to age or Years of
Service.
(e) Distribution from the ESOP to Participants shall be made pursuant to
Section 9.3. A Participant has the right to demand that the
Participant's benefit under the ESOP be distributed in the form of
Employer Stock. Such distribution shall be in whole shares, and the
value of any fractional share shall be distributed in cash.
(f) Other ESOP Provisions.
(1) Any loan to the ESOP shall be for the primary benefit of
Participants and Beneficiaries and shall bear a reasonable
rate of interest. Collateral which is given to a disqualified
person by the ESOP with respect to any such loan shall consist
only of Qualifying Employer Securities.
(2) All assets acquired with the proceeds of an exempt loan (as
defined in Treas. Reg. ss.54.4975-7(b)(1)(iii)) must be added
to and maintained in a suspense account. The assets of such
suspense account are assets of the ESOP. Assets shall be
withdrawn from such suspense account by applying Treas. Reg.
ss.54.4875-7(b)(8) and (15) as if all securities in the
suspense account were encumbered.
(3) Participants shall have the following protections and rights
with respect to Plan assets acquired with the proceeds of an
exempt loan. Except as provided in Treas. Reg.
ss.54.4975-7(b)(9) and (10) or as otherwise required by
applicable law, no security acquired with the proceeds of an
exempt loan may be subject to a put, call, or other option, or
buy-sell or similar arrangement while held by and when
distributed from the Plan, whether or not the Plan is then an
ESOP. Qualifying Employer Securities acquired with the
proceeds of an exempt loan shall be subject to a put option
("Put Option") if they are not readily tradable on an
established market at the time of distribution. The Put Option
may be exercised only by the Participant (or his or her Spouse
or Beneficiary, upon the Participant's death) and must permit
the Participant to put the security to the Employer. The Put
Option may grant the ESOP an option to assume the rights and
obligations of the Employer at the time the Put Option is
exercised. The Put Option must be exercisable at least during
a 15-month period which begins on the date the security
subject to the Put Option is distributed by the ESOP. The
holder of the Put Option may exercise the Put Option by
notifying the Employer in writing that the Put Option is being
exercised. The exercise price shall be the fair market value
of the security determined in accordance with Treas. Reg.
ss.54.4975-11(d)(5). Payment of the Put Option shall be, in
the discretion of the Employer, either by lump sum payable
within 30 days after the exercise of the Put Option, or by
promissory note which provides for substantially equal annual
installments commencing within 30 days from the date of the
exercise of the Put Option and extending over a period not
exceeding 5 years, with interest payable at a reasonable rate
(as determined by the Employer), with adequate security
provided, and without penalty for prepayment. The provisions
of this Section 7.5(f)(3) are nonterminable and shall continue
to apply to shares of Employer Stock even if the portion of
the Plan described in Section 7.5 herein ceases to be an ESOP
within the meaning of Section 4975(e)(7) of the Code.
Article 8 Vesting and Forfeitures
8.1 full vesting
The interest of each Participant in that Participant's Matching, Company, and
Discretionary Contribution Accounts shall become fully vested and Nonforfeitable
upon the first to occur of any one of the following events while the Participant
is employed by a Participating Employer:
(a) Upon the attainment of Normal Retirement Age; or
(b) Upon the death or Total Disability of the Participant.
In addition, the interest of each Participant in that Participant's Matching,
Company, and Discretionary Contribution Accounts shall become fully vested and
Nonforfeitable upon the attainment of 100% vesting under the applicable vesting
schedule set forth in this Article. A Participant's Salary Deferral Account,
Employer Qualified Non-Elective Contribution Account, and Employee Contribution
Account shall be 100% vested and Nonforfeitable at all times. 8.2 normal vesting
schedule In the event that the employment of a Participant with all
Participating Employers terminates and none of the events resulting in full
vesting under Section 8.1 or alternative vesting under Section 8.3 have
occurred, such Participant shall be vested with a percentage portion of that
Participant's Matching Contribution Account and Discretionary and Company
Contribution Accounts, in accordance with the following normal vesting schedule:
- ----------------------------------------------------------------------
Years of Service Percent Vested
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Less than 2 0%
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
2 but less than 3 20%
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
3 but less than 4 40%
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
4 but less than 5 60%
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
5 or more 100%
- ----------------------------------------------------------------------
Notwithstanding the vesting schedule set forth in this section, the interest of
each Participant who was a Participant in the Prior Plans shall be vested under
this Plan at least to the extent that the interest of that Participant was
vested under the Prior Plans as of the Effective Date.
8.3 Alternative Vesting schedule for misconduct
Notwithstanding the foregoing, if a Participant is discharged or resigns and the
Plan Administrator is notified that the Employer has determined that such
Participant committed an act of dishonesty, disclosed confidential information,
or engaged in misconduct that resulted in or might result in material loss or
detriment to the Employer or an Affiliated Company, such Participant shall be
vested in his or her Discretionary and Company Contribution Accounts in
accordance with the following alternative vesting schedule for misconduct,
unless full vesting has already occurred under Section 8.1:
---------------------------- -----------------------------------------------
Years of Service Percent Vested
------------------------------------- -------------------------------------
------------------------------------- -------------------------------------
Less than 5 0%
------------------------------------- -------------------------------------
------------------------------------- -------------------------------------
5 or more 100%
------------------------------------- -------------------------------------
The alternative vesting schedule shall apply only if the Employer determines
that the Participant engaged in one of the specific acts described above. If no
such determination is made, then the normal vesting schedule set forth in the
previous section shall apply.
8.4 included years of service - vesting
For purposes of determining Years of Service under this Article, the Plan shall
take into account all Years of Service an Employee completes with a
Participating Employer, including Years of Service as an Ineligible Employee.
8.5 forfeitures The Plan Administrator shall forfeit the non-vested portion of a
terminated Participant's Employer Contribution Account on the earliest of (a)
the date of distribution of the Participant's Nonforfeitable Account balance,
(b) the date the Participant has five consecutive Breaks in Service, or (c) as
soon as administratively feasible after the date the Plan Administrator makes a
determination that, because of misconduct, the Participant has zero vesting
under the alternative vesting schedule described at Section 8.3. For purposes of
this section, if the value of the Participant's Nonforfeitable Account balance
is zero, the Participant shall be deemed to have received a distribution of such
Nonforfeitable Account balance as of the date of the Participant's termination
of employment with all Participating Employers. All forfeitures shall be applied
to pay administrative expenses of the Plan not otherwise paid pursuant to
Section 5.2, or to reduce employer contributions to the Plan, including
Matching, Company and Discretionary Contributions and restoration of forfeitures
under Sections 8.6 and 14.10. 8.6 restoration of forfeitures If a terminated
Participant who has forfeited some portion of his or her account is subsequently
reemployed by a Participating Employer prior to the expiration of five
consecutive Breaks in Service, the amount forfeited (without benefit of
investment gains or losses) shall be restored if the Participant received a
distribution of Plan benefits on account of termination of participation in the
Plan and the Participant repays to the Trust Fund the full dollar amount
distributed on account of the termination within five years of the reemployment
date. Any such amounts shall be restored to the account of the reemployed
Participant as of the last day of the Plan Year in which the repayment was made.
The restoration shall be made from any forfeitures available. If no forfeitures
are available, a Participating Employer shall make a special contribution for
this purpose.
Article 9 Distribution of Benefits
9.1 distribution after age 59 1/2 or upon total disability
A Participant may apply for a distribution of all or a portion of the
Participant's Nonforfeitable Account balance at any time after attaining age 59
1/2 or upon reaching Total Disability. However, if a Participant is in default
on the payment of a loan to the Plan, the Trustee shall make a distribution
under this section in the form of a loan offset of the amount necessary to bring
the loan current once a Participant has attained age 59 1/2 or reached Total
Disability, in accordance with the terms of the security agreement for the loan.
9.2 distribution upon severance from employment
The Participant's benefit upon severance from employment with all Participating
Employers for any reason shall be the total of the Participant's Nonforfeitable
Account balances less any administrative expense chargeable to the Participant's
Account. Payment shall be made within an administratively practicable period
after receipt of all required documents and the Participant's application for
benefits. If the value of a Participant's Nonforfeitable Account balance
(derived from combined employer and Employee contributions, other than any
accumulated deductible employee contributions, if the Plan is hereafter amended
to allow such deductible employee contributions) exceeds $5,000, distribution
may not be made before Normal Retirement Age without the consent of the
Participant. If the Participant has attained or subsequently attains Normal
Retirement Age, or if the Participant's Nonforfeitable Account balance (derived
from combined employer and Employee contributions, other than any accumulated
deductible Employee contributions) does not exceed $5,000, no consent to a
distribution of the Participant's benefit shall be required. For purposes of
determining when a distribution may be made without the consent of the
Participant, the value of a Participant's Nonforfeitable Account balance shall
not include the Participant's Employee Contribution Account, which contains
rollover contributions. If a Participant has an outstanding loan from the Plan,
distributions shall be offset by the amount necessary to repay the loan.
9.3 form of distribution
The normal form of benefit shall be a single-sum distribution of the
Participant's Nonforfeitable Account balance, which shall be made to the
Participant, if living, or if not, to the Participant's surviving Spouse, but if
there is no surviving Spouse or if the Spouse has consented in a manner
conforming to Section 13.1, then to the Participant's designated Beneficiary.
The distribution shall be made as a lump-sum payment in cash, with the exception
of the portion of an account invested in Employer Stock, with respect to which
the Participant may elect a distribution in kind. There shall be no installment
form of distribution except as provided under Section 9.6 with respect to
Participants who have reached their Required Beginning Date and under 9.6(b)
with respect to a Spouse or other Beneficiary receiving required minimum
distributions.
9.4 latest date for commencement of benefits
Under the Act, distribution of the Participant's vested Account shall begin no
later than the 60th day after the latest of the following:
(a) The close of the Plan Year in which the Participant attains age 65 or
Normal Retirement Age, if earlier;
(b) The close of the Plan Year in which occurs the 10th anniversary of the
year in which the Participant commenced participation in the Plan; or
(c) The close of the Plan Year in which the Participant terminates Service
with all Participating Employers.
Notwithstanding the foregoing, the failure of a Participant to elect a
distribution shall be deemed to be an election to defer commencement of
distribution of any benefit sufficient to satisfy this section. 9.5 death
distribution provisions If the Participant dies before distribution of the
Participant's entire interest has been made, distribution of the Participant's
remaining interest shall be made to the Participant's Beneficiary in a single
sum as soon as administratively feasible, and in no event later than December 31
of the calendar year containing the fifth anniversary of the Participant's
death. However, if the Participant's Beneficiary is the Participant's Spouse,
and if the Participant's Account balance exceeds $5,000, the Spouse may elect to
defer commencement of distribution until a time designated by the Spouse but no
later than December 31 of the calendar year in which the Participant would have
attained age 70 1/2. If a Participant has an outstanding loan from the Plan,
distributions shall be offset by the amount necessary to repay the loan.
9.6 minimum distribution requirements
(a) Before Death. Notwithstanding any other provision in this Plan, the
entire interest of each Participant shall be distributed as follows:
(1) to the Participant not later than the Required Beginning Date
, as defined in Section 9.6(c), or
(2) beginning not later than the Required Beginning Date, in
accordance with regulations prescribed by the Secretary under
Code ss. 401(a)(9),
(i) over the life of such Employee or over the lives of
such Employee and his or her designated Beneficiary,
or
(ii) over a period not extending beyond the life
expectancy of such Employee or the life expectancy of
such Employee and his or her designated Beneficiary.
(3) If the Participant's spouse is not his designated Beneficiary,
a method of payment to the Participant may not provide more
than incidental benefits to the Beneficiary pursuant to the
minimum distribution incidental benefit requirement in the
Treasury Regulations issued under Code ss. 401(a)(9).
(4) Participants who are not 5% owners and who have not terminated
service with all Participating Employers but who were
receiving minimum distributions under prior law may elect to
discontinue such distributions.
(b) After Death. Notwithstanding any other provisions of this Plan, the
entire interest of each Participant shall be distributed as follows:
(1) If the Participant's death occurs after his or her Required
Beginning Date, the remaining portion of the Participant's
interest shall be distributed to the Participant's
Beneficiary, in accordance with regulations prescribed by the
Secretary under Code ss. 401(a)(9), at least as rapidly as
under the method of distributions to the Participant being
used under Section 9.3 or 9.6(a) as of the date of the
Participant's death. For this purpose, the Participant's
entire remaining interest may be distributed to the
Beneficiary in a single lump sum not later than the date that
payment to the Beneficiary is required to commence under Code
ss. 401(a)(9).
(2) If the Participant's death occurs prior to his or her Required
Beginning Date, distribution shall be made to the
Participant's Beneficiary as a lump sum as soon as
administratively feasible, and in no event later than the end
of the calendar year containing the fifth anniversary of the
Participant's death. If the Participant's designated
Beneficiary is the Participant's Spouse, and if the
Participant's Nonforfeitable Account Balance (as determined
under Section 9.2) exceeds $5,000, then, notwithstanding the
above, the Spouse may elect, in accordance with regulations
prescribed by the Secretary under Code ss. 401(a)(9), to
receive distribution of the Participant's entire interest over
a period not exceeding the Spouse's life expectancy, provided
that distribution to the Spouse commences no later than
December 31 of the calendar year in which the Participant
would have attained age 70 1/2.
(c) Required Beginning Date. For a Participant who is a 5% owner, a
Participant's Required Beginning Date is the April 1 following the
calendar year in which the Participant attains age 70 1/2. For a
Participant who is not a 5% owner, a Participant's Required Beginning
Date is the April 1 following the later of the calendar year in which
the Participant attains age 70 1/2 or the calendar year in which the
Participant terminates employment with all Participating Employers.
(d) Notwithstanding any other provision in the Plan to the contrary, all
distributions will be made in accordance with Code Section 401(a)(9)
and the regulations thereunder.
9.7 distribution under qualified domestic relations order
Distribution of all or a portion of a Participant's Nonforfeitable Accounts will
be made according to the terms of a "qualified domestic relations order" to the
child, spouse, or former spouse of a Participant, even though the Participant is
not otherwise eligible for a distribution under the Plan. A qualified domestic
relations order is a domestic relations order, judgment, or decree (including
the approval of a property settlement agreement) that (a) relates to the
provision of child support, alimony, or property rights to a spouse, former
spouse, child, or other dependent of a Participant and (b) is made pursuant to
the domestic relations law of any state; provided that the Plan Administrator
determines that such order meets the requirements of Code Section 414(p) and the
Plan's Procedures for Processing Domestic Relations Orders ("QDRO Procedures").
Reasonable legal fees and expenses incurred in determining if an order is a
qualified domestic relations order, shall be charged to the account of the
Participant and the account of the alternate payee (as defined in Code Section
414(p)) seeking the determination, as provided in the QDRO Procedures.
9.8 hardship distributions
A current Employee who is also a Participant may request a distribution of funds
from the Participant's Salary Deferral Account in the event of certain financial
hardships, if the distribution meets the requirements of this section and the
deemed hardship distribution standards of Treasury Regulation
1.401(k)-1(d)(2)(iv) (as modified by subsequent laws). The amount of a hardship
distribution shall not exceed Salary Deferral Contributions (excluding amounts
received as a loan), excluding earnings.
(a) The distribution must satisfy the deemed immediate and heavy financial
need requirements of Treasury Regulations, which at present constitute
the following financial needs:
(1) Expenses for medical care described in Section 213(d)
previously incurred by the Participant, the Participant's
spouse, or any dependents of the Participant (as defined in
Section 152) or necessary for these persons to obtain medical
care described in Section 213(d);
(2) Costs directly related to the purchase of a principal
residence for the Participant (excluding mortgage payments);
(3) Payment of tuition, related educational fees, and room and
board expenses, for the next 12 months of post-secondary
education for the Participant, or the Participant's spouse,
children, or dependents (as defined in Section 152); or
(4) Payments necessary to prevent the eviction of the Participant
from the Participant's principal residence or foreclosure on
the mortgage on that residence.
(b) The distribution must be deemed necessary to satisfy an immediate and
heavy financial need of the Participant under Treasury Regulations.
Those Treasury Regulations at present require:
(1) The distribution is not in excess of the amount of the
immediate and heavy financial need of the Participant. The
amount of an immediate and heavy financial need may include
any amounts necessary to pay any federal, state, or local
income taxes or penalties reasonably anticipated to result
from the distribution.
(2) The Participant has obtained all distributions (including ESOP
dividend payments or distributions to the extent currently
available to the Participant under Section 7.5), other than
hardship distributions, and all nontaxable (at the time of the
loan) loans currently available under all plans maintained by
Participating Employers.
(3) The Participant may make no further Salary Deferral
Contributions, (or any other employee contributions) to this
Plan or to any other plan maintained by Participating
Employers for a period of 6 months from the date the hardship
distribution is posted to the Participant's Account by the
Trustee. For this purpose the phrase "any other plan
maintained by Participating Employers" includes all qualified
and non-qualified plans of deferred compensation maintained by
Participating Employers. However, the phrase does not include
contributions to health or welfare benefit plans including
health and welfare plans that are part of a cafeteria plan
within the meaning of Code Section 125.
9.9 direct rollover for eligible distributions
A distributee may elect, at the time and in the manner prescribed by the
Administrator, to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the distributee in a direct
rollover.
The following definitions shall apply to the foregoing:
(a) 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: 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; any distribution to
the extent such distribution is required under Section
401(a)(9) of the Code; any distribution made on account of
hardship; and amounts that are not includable in gross
income ("after-tax amounts") if the accepting account or
plan does not agree to separately account for the after-tax
amounts.
(b) Eligible retirement plan: An eligible retirement plan is an individual
retirement account described in Code Section 408(a), an individual
retirement annuity described in Code Section 408(b), an annuity plan
described in Code Section 403(a), an annuity contract under Code
Section 403(b) and an eligible Code Section 457(b) deferred
compensation plan maintained by a state, political subdivision of a
state, or any agency or instrumentality of a state or political
subdivision of a state, as long as the accepting account or plan agrees
to separately account for amounts transferred from this Plan, or a
qualified trust described in Code Section 401(a), that accepts the
distributee's eligible rollover distribution.
(c) 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 Code Section 414(p), are distributees with regard to the interest of
the Spouse or former spouse.
(d) Direct rollover: A direct rollover is a payment by the plan to the
eligible retirement plan specified by the distributee.
9.10 amount of distribution
The amount of a distribution to a Participant or Beneficiary shall not exceed
the value of such individual's vested Account on the distribution date, reduced
for outstanding loans, administrative expenses, and other appropriate amounts.
Article 10 Loans to Participants
10.1 loan program
A Participant may borrow limited amounts from the Participant's Salary Deferral
Account, Matching Contribution Account (to the extent vested), any Nondeductible
Voluntary Contribution Account established under a Prior Plan, and any Rollover
Account established under Section 6.1 (referred to collectively in this Article
as "eligible accounts"). Participant loans shall not be made from a
Participant's Company or Discretionary Contribution Accounts, Qualified
Non-Elective Contribution Account, or from the non-vested portion of the
Participant's Matching Contribution Account. Only one loan from the plan may be
outstanding at any time, and outstanding loans may not be amended or refinanced.
Moreover, a Participant who has an outstanding loan from any other plan of a
Participating Employer is not eligible for a loan from this Plan until the loan
to the other plan is repaid in full. In the event of default on a plan loan, a
Participant may not apply for another loan earlier than six months after the
defaulted loan is repaid in full.
The Trustee may make a loan to a Participant from the Participant's eligible
accounts, in accordance with the terms of this Article and any written loan
policy, upon the application of a Participant who is in Eligible Employment and
who meets objective criteria established in loan documents to ensure that the
loan will be repaid according to its terms. The loan program shall be
administered in a uniform and nondiscriminatory manner in accordance with
established rules and procedures, which may be changed from time to time. The
Plan Administrator may establish a written loan policy separate from this
document, and any such policy, as amended from time to time, is incorporated
herein by this reference. Loans shall be made on a reasonably equivalent basis
and shall be available without regard to a Participant's race, color, religion,
gender, age, or national origin. Furthermore, loans shall not be made available
to Highly Compensated Employees in an amount greater than the amount made
available to other Participants. 10.2 amount of loan A Participant loan shall
not be granted for less than $1000, and the maximum amount of a loan (when added
to the outstanding balance of all other loans from all qualified plans of
Participating Employers after application of the employer aggregation rules of
Code Section 414(b), (c) and (m)) shall not exceed $50,000, reduced by the
highest outstanding balance of all such loans during the one year period ending
on the day before the day on which the loan is made minus the outstanding
balance of all loans from the plan on the date on which the loan is made. In
addition, no loan shall exceed the amount that is 45% of the fair market value
of the vested portion of a Participant's aggregate account balance (excluding
accumulated deductible employee contributions as defined in Code Section
72(p)(5)(B), if any) at the time the loan is requested and 50% of such amount at
the time the loan is made. Furthermore, a Participant loan shall not be granted
in an amount that would require loan payments that exceed 25% of the
Participant's normal bi-weekly pay that is available for payroll deduction for
repayment of the loan. 10.3 term of loan Participant loans shall provide for
repayment within four years, except that a Participant may request a repayment
period of up to 15 years if the purpose of the loan is to acquire a dwelling
unit that is to be used as the principal residence of the Participant within a
reasonable period of time, determined at the time the loan is made. The
determination of whether a loan qualifies for the longer repayment period shall
be made in accordance with regulations established under Code Section
72(p)(2)(B)(ii), as amended from time to time. Under current regulations,
"principal residence" has the same meaning as under Code Section 121, and the
tracing rules of Code Section 163(h)(3)(B) shall be used in determining whether
a loan is used for the acquisition of such a residence. Loans for the purpose of
remodeling a current residence or for refinancing do not qualify for the longer
repayment period. However, a loan used to repay a loan from a third party in the
acquisition of a principal residence, within a reasonably short period after the
acquisition, may qualify for the longer repayment period if the loan otherwise
qualifies as a loan for the acquisition of a principal residence under the rules
described above. 10.4 interest rate Participant loans shall bear a reasonable
rate of interest, determined quarterly by the Plan Administrator or its
designated agent. The rate of interest shall be the rate in effect at the time
the Trustee issues the loan documents, so long as the Participant completes and
returns the documents to the Trustee within 30 days of the issue date. The
interest rate shall comply with Section 526 of the Soldiers' and Sailors' Civil
Relief Act to the extent it is applicable to a Participant's loan.
10.5 loan origination fee
The Trustee may charge a reasonable loan origination fee, which shall be
deducted from the Participant's eligible accounts at the time the loan is made.
10.6 repayment schedule All loans shall provide for level amortization over the
term of the loan and shall require repayment through payroll deduction on a
bi-weekly basis. If a Participant refuses to authorize payroll deductions for
repayment of the loan, the loan shall not be made. If pay is insufficient to
cover the payments or if payroll deductions are discontinued for any reason,
payments must be remitted to the Trustee directly by the Participant on the same
bi-weekly basis. A Participant may prepay the entire outstanding balance of a
loan, including accrued interest, without penalty at any time but may not make
partial pre-payments. Upon termination of employment, a loan shall become due
and payable within 30 days of the date of the termination, regardless of whether
or not the Participant seeks a distribution from the Plan, and shall be in
default and offset as provided in Section 10.12 if not paid in full within 30
days of the date of termination. Loan repayments will not be suspended under
Code Section 414(u). 10.7 security In order to secure repayment of the loan, a
Participant seeking a loan from the Plan must grant the Trustee a security
interest in 50% of the Participant's aggregate vested account balance at the
time of the loan. At the time of any distribution to a Participant who has
terminated employment with all Participating Employers, the amount of the actual
cash distribution shall be reduced by the outstanding balance of any loan to the
Participant, to the extent of the Trustee's security interest in the
Participant's accounts, and the distribution shall be reported as a distribution
of the actual cash amount plus the loan offset amount, in accordance with
applicable law. In the event a Participant's loan is in default, the Trustee
shall make a distribution under Section 9.1, in the amount necessary to bring
the loan current, once the Participant has attained the age of 59 1/2 or become
Totally Disabled, in accordance with the terms of the security agreement for the
loan.
10.8 loan application and documentation
A Participant who wishes to take a loan from his or her qualified accounts shall
complete the application required by the Plan. The application shall be reviewed
by an agent designated by the Plan Administrator to review loan applications,
and the agent shall determine whether or not the Participant meets the objective
criteria specified herein and in policies, standards, criteria, and forms
applicable to the Plan. If the agent approves a loan application, the Trustee
shall be instructed to make the loan upon receipt of a legally binding
promissory note and security agreement properly executed by the Participant. The
Plan Administrator may permit Participants to apply for loans and to enter into
loan agreements, including promissory notes, security agreements and salary
reduction agreements, in an electronic medium that is reasonably accessible to
Participants and that is provided under a system that satisfies the requirements
of Treasury Regulation ss. 1.72(p) - 3(b)(2). Such agreements shall be legally
binding and enforceable to the same extent as agreements in writing and shall be
deemed to be in writing and signed by the Participant for any and all purposes.
10.9 source of loan
A loan that is approved by the Plan Administrator or its agent shall be made on
a pro-rata basis from all of the Participant's eligible accounts and investment
funds. Repayment of such loans shall be made pro-rata back to such accounts and
shall be invested as other funds in the accounts at the time the repayment is
made. 10.10 loans in arrears If a loan payment is not made within 30 days of the
time it is due, the loan payment shall be considered in arrears. Interest on the
outstanding amount will continue to accrue, and subsequent payments shall be
applied first to accrued interest and then, if sufficient, to principal. The
Trustee shall inform the Plan Administrator or its designated agent promptly of
any loan payment that is in arrears, and the Plan Administrator or its
designated agent shall press the Participant for repayment. When a Participant
whose loan payment is in arrears (but is not yet in default) returns to active
employment, payroll deductions to repay the loan shall recommence immediately,
and multiple payroll deductions may be taken or the Plan Administrator may take
other action as permitted by law to bring the loan current. If the applicable
loan agreement and promissory note do not provide otherwise, a Participant may
elect either reamortization or multiple payroll deductions, or both, in order to
bring the loan current. If the Participant does not make a timely election of
the method to be used to bring the loan current, the Plan Administrator or its
designated agent may institute any and all collection methods allowed by the
loan agreement, promissory note, and applicable law. For loans made on or after
January 1, 2004, loans will be considered in arrears when a loan payment is not
made when due. Further, in order to bring a loan in arrears current, a
Participant must make the missed payment plus accrued interest. Reamortization
will not be allowed as a way to bring a loan in arrears current.
10.11 deemed distributions
Subject to Section 10.12, the Trustee shall report a Participant loan with a
loan payment in arrears as a "deemed distribution" for income tax purposes when
the loan is in default, as required by Code Section 72(p) and regulations
thereunder. A loan is in default and is a deemed distribution under Code Section
72(p) when a missed payment is not made by the end of the applicable cure
period. For loans made prior to January 1, 2004, the cure period extends to the
last day of the calendar quarter following the calendar quarter in which the
loan payment in arrears was due. For loans made on or after January 1, 2004, the
cure period extends to the 90th day following the date the loan payment was due.
For loans made after 2001, the cure period for purposes of a deemed distribution
shall not be further extended due to an Approved Absence. In the event that a
deemed distribution is required, the Trustee shall report as the deemed
distribution the entire outstanding balance of the loan, including accrued
interest, at the time of the deemed distribution. A deemed distribution shall be
treated as an actual distribution for all purposes under the Plan and Code ss.
72(p) and as a repayment in full of the Participant's loan that is in default.
Not withstanding the above, a loan that is deemed distributed (including
interest accruing thereafter) and that has not been actually repaid (such as by
offset) is considered outstanding for purposes of determining the maximum
permissible amount of a subsequent loan under Section 10.2.
10.12 participant loan offset
If a Participant Loan is in default, the Trustee will report the loan as a loan
offset if (1) the Participant attains or has attained age 59 1/2, (2) the
Participant has severed his or her employment from all Participating Employers,
or (3) the Participant has reached Total Disability. The date of the offset will
be the date the loan was first in default and deemed distributed, or, if later,
the date on which the Participant attained age 59 1/2, severed employment, or
reached Total Disability. In the case of a loan in default that has previously
been reported as a deemed distribution, the Trustee shall report an offset in a
manner that does not cause the Participant to suffer tax liability twice. A loan
offset shall be treated as an actual distribution for all purposes under the
Plan and the Code and as a repayment in full of the Participant's loan that is
in default.
Article 11 Rights and Remedies of Participants
11.1 annual statements
As soon as practicable after the Anniversary Date of each Plan Year but within
the time prescribed by law, the Plan Administrator shall deliver to each
Participant (and to any Beneficiary of a deceased Participant) a written
statement showing as of that Anniversary Date the following:
(a) The balance of the Participant's Accounts as of that Anniversary Date; (b)
The amount and source of allocations to the Participant's Accounts for the Plan
Year; (c) The adjustments to the Participant's Accounts reflecting the
Participant's allocable share of the earnings,
losses and expenses of the Trust for the Plan Year; and
(d) The Nonforfeitable portion of the new balances in each of the Participant's
Accounts.
In addition, within the time prescribed by law, the Plan Administrator shall
furnish to Participants a summary of the annual report filed by the Plan
Administrator with the United States Department of Labor.
No Participant, except a member of the Committee, shall have the right to
inspect the records reflecting the Account of any other Participant. 11.2
assignment or alienation Except with respect to federal income tax withholding
and with respect to participant loans described in Article X hereof, neither a
Participant nor a Beneficiary shall assign or alienate any benefit provided
under the Plan, and the Trustee shall not recognize any such assignment or
alienation. The preceding sentence shall not 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 if such order is determined to be a
qualified domestic relations order, as defined in Section 414(p) of the Code and
Section 9.7 of the Plan; and the preceding sentence shall also not apply to
certain voluntary revocable assignments made pursuant to a written policy
permitting such assignments and Section 401(a)(13) of the Code and Treasury
Regulation Section 1.401(a)-13(e).
11.3 summary plan description; notice of change in terms
The Plan Administrator, within the time prescribed by the Act and the applicable
regulations, shall furnish to Participants and Beneficiaries a summary plan
description and shall furnish thereafter a summary of any material modification
to the Plan or change in the information required to be included in the summary
plan description. 11.4 denial of benefits
The procedure for claims and denial of benefits is set forth in the summary plan
description or a summary of material modifications for the Plan. 11.5 appeal
procedure The procedure for appeal of denied benefits is set forth in the
summary plan description or a summary of material modifications for the Plan.
11.6 litigation against the trust
If any legal action filed against the Trust, the Plan Administrator, or any
member or members of the Committee, by or on behalf of any Participant or
Beneficiary, results adversely to the Participant or to the Beneficiary, the
Plan Administrator may direct the Trustee to reimburse the Plan Administrator,
or any member or members of the Committee for all costs and fees expended by it
or them by surcharging all costs and fees against the sums payable under the
Plan to the Participant or to the Beneficiary, but only to the extent a court of
competent jurisdiction specifically authorizes and directs any such surcharges.
11.7 distribution to incompetents or minors
In the event a distribution is to be made to an incompetent person or to a
minor, then the Plan Administrator may direct that such distribution be paid
directly to such person, the legal conservator or guardian of the estate of such
person, to a parent of a minor, to a responsible adult with whom an incompetent
person or minor resides, or to the custodian for a minor under a gift or
transfer to minors act applicable under the laws of the state in which said
person resides. The executed receipt of any of the foregoing persons shall fully
discharge the Plan Administrator, all Participating Employers, and the Plan from
further liability on account thereof.
Article 12 Employer Administrative Provisions
12.1 information to plan administrator
Participating Employers shall supply current information to the Plan
Administrator as to the name, Social Security number, date of birth, date of
employment, annual Compensation, leaves of absence, Years of Service and date of
termination of employment of each Employee who is, or who will be eligible to
become, a Participant under the Plan, together with any other information which
the Plan Administrator considers necessary. The Participating Employer's records
as to the current information the Participating Employer furnishes to the Plan
Administrator shall be conclusive as to all persons.
12.2 no liability
Except as may otherwise be required by the Act, the Participating Employers
assume no obligation or responsibility to any of its Employees, Participants, or
Beneficiaries for any act, or failure to act, on the part of the Trustee or the
Plan Administrator.
12.3 indemnity of committee
The Employer indemnifies and holds harmless the members of the Committee, and
each of them, from and against any and all loss resulting from liability to
which the members of the Committee may be subjected by reason of any act or
conduct (except willful misconduct or gross negligence) in their official
capacities in the administration of the Trust or Plan, or both, including all
reasonable attorney's fees and costs incurred in their defense, in case the
Employer fails to provide such defense. Pursuant to the foregoing, indemnified
loss shall include the cost of reasonable settlement of litigation or threatened
litigation. The Employer may also purchase insurance for Committee members that
covers liability for breach of fiduciary duties.
Article 13 Participant Administrative Provisions
13.1 beneficiary designation
Any Participant may from time to time designate, in writing, any persons or
entities, contingently or successively, to whom the Trustee shall distribute the
Participant's Account balance in the event of the Participant's death. The Plan
Administrator shall prescribe the form for the written designation of
Beneficiary. When the Participant files a form with the Plan Administrator, the
latest form filed shall revoke all designations filed prior to that date by the
same Participant. A designated Beneficiary, or the Beneficiary's agent or
representative (including a representative of the Beneficiary's estate), may
disclaim the Beneficiary's interest in the Plan. If such disclaimer is effective
under applicable law, distribution of the Participant's account shall be made as
if the disclaiming Beneficiary had predeceased the Participant.
Except as otherwise provided herein or in a qualified domestic relations order,
if a Participant is married the Participant's sole primary Beneficiary shall be
his or her Spouse, unless the Spouse consents in writing in the manner specified
herein. Such consent shall not be required, however, if it is established to the
satisfaction of the Plan Administrator that the consent of the Participant's
Spouse may not be obtained because there is no Spouse, because the Spouse cannot
be located, or because of such other circumstances as may be permitted under
Section 417(a)(2) of the Code. The written consent of the Spouse must
acknowledge the effect of the consent, and the signature of the Spouse must be
witnessed by a notary public or, if permitted by the Plan Administrator, by a
representative of the Plan Administrator. The written consent of a Participant's
Spouse must state the specific beneficiary (including any class of beneficiaries
or any contingent beneficiaries) who will receive the benefit, and must be
received by the Plan Administrator prior to the Participant's death. A
designation of Beneficiary inconsistent with this paragraph shall not be binding
on the Plan Administrator, and the Plan Administrator shall distribute benefits
first to the Participant's surviving Spouse.
A designation of Beneficiary shall be deemed automatically revoked on the
subsequent marriage (other than a common-law marriage) of a Participant unless a
qualified domestic relations order provides otherwise. Unless otherwise provided
in a qualified domestic relations order, a designation of the Spouse as
Beneficiary shall be deemed automatically revoked upon the final dissolution (or
annulment) of marriage of a Participant subsequent to the date of filing of the
designation of the Beneficiary, and the Participant's Account shall be paid as
if the former Spouse had predeceased the Participant. A Participant may retain
or reinstate a former Spouse as beneficiary by filing a new designation of
Beneficiary form subsequent to a final dissolution or annulment. Except as
specifically provided in a qualified domestic relations order, a Spouse cannot
designate a beneficiary of the Spouse's interest in the Plan if the Spouse
predeceases the Participant. The deemed revocations in this paragraph are
effective only if the Plan Administrator receives written notice of marriage or
divorce a reasonable period of time before distributing Plan benefits.
13.2 no beneficiary designation
If a Beneficiary is not designated pursuant to Section 13.1, or if the
Beneficiary predeceases the Participant or dies before complete distribution of
the Participant's Account balance, then the Trustee shall pay the Participant's
Account balance in the following order of priority to the following:
(a) The Participant's surviving Spouse;
(b) The Participant's issue, including adopted persons, in equal shares, by
right of representation; (c) The Participant's estate, provided, however, that
if the Plan Administrator cannot locate a qualified
representative of the deceased Participant's estate or if no such
representative has been appointed by an appropriate court, then the
Participant's heirs-at-law as determined in the reasonable judgment of
the Plan Administrator.
If none of the foregoing can be located, the deceased Participant's account
shall be treated as an Unclaimed Account under Section 14.10. 13.3 personal data
to plan administrator Each Participant and each Beneficiary of a deceased
Participant must furnish to the Plan Administrator current information as to
that person's Social Security number, date of birth, current employment, current
marital status, and name of Spouse, and such other information or confirmation
of status as the Plan Administrator shall reasonably require. The provisions of
this Plan are effective for the benefit of each Participant upon the condition
precedent that each Participant will furnish promptly full, true, and complete
evidence, data, and information when requested by the Plan Administrator.
13.4 address for notification
Each Participant and each Beneficiary of a deceased Participant shall file with
the Plan Administrator from time to time, in writing, his or her current address
and any change of address. Any communication, statement, or notice addressed to
a Participant or Beneficiary at the last address filed with the Plan
Administrator, or as shown on the records of the Participating Employers, shall
bind the Participant, or Beneficiary, for all purposes of this Plan. 13.5 no
right to continued employment Nothing contained in this Plan, or with respect to
the establishment of the Trust, or in the creation of any Account, or the
payment of any benefit, shall give any Employee, Participant, or Beneficiary any
right to continued employment, any legal or equitable right against a
Participating Employer or any officer or Employee of a Participating Employer,
or against the Trustee, or its agents or employees, or against the Plan
Administrator, except as expressly provided by the Plan, the Trust, the Act, or
a separate written agreement. 13.6 participants must review records Each
Participant is responsible for reviewing account statements and payroll records
to verify that the correct salary deferral amounts are being taken and
transferred to the Plan. Such review must be made upon the receipt of each
account statement, and the Participant must notify the Plan Administrator of any
error within 60 days. Failure to do so will be considered the Participant's
consent to amend the Salary Deferral Agreement to the amount of the payroll
deductions that are actually made.
13.7 communications
Written communications to the Plan Administrator, the Plan, a Participating
Employer, the Trustee, the Committee or other fiduciaries, or their agents or
representatives, must be received before the expiration of any time period
expressed herein or in related documents (including the summary plan description
and policies and procedures for this Plan). The Plan Administrator's (or the
Plan's, a Participating Employer's, the Trustee's, the Committee's or other
fiduciaries', as applicable), or their agents' or representatives' records will
be conclusive as to whether a communication has been received and the date of
such receipt, unless the sender produces a United States Postal Service return
receipt. The common law "mailbox rule" shall not apply to determine receipt or
the date of receipt by the Plan Administrator (or the Plan, a Participating
Employer, the Trustee, the Committee or other fiduciaries, as applicable), or
their agents or representatives. The common law mailbox rule shall apply for all
other purposes under the Plan.
Article 14 Powers and Duties of Plan Administrator
14.1 The Committee
The Plan shall be administered by the Committee, the members of which may or may
not be Participants in the Plan. The members of the Committee who are employees
of a Participating Employer shall serve without compensation for services as
such, but Participating Employers shall pay all expenses of the Committee and
the members of the Committee, including the expense for any bond required under
the Act. The Committee may establish and maintain such organizational policies
and procedures as shall facilitate the performance of its duties hereunder. The
Committee shall act by the decision of a majority of the members appointed and
qualified.
14.2 vacancy
In case of a vacancy in the membership of the Committee, the remaining members
of the Committee may exercise any and all of the powers, authority, duties, and
discretion conferred upon the Committee until the vacancy is filled. 14.3 powers
of plan administrator The Plan Administrator shall have full and exclusive
discretionary authority and control to administer and interpret the Plan,
including the following powers and duties, which shall be exercised in its sole
discretion:
(a) To determine the eligibility of an Employee to participate in the Plan,
the value of a Participant's Account balance, and the Nonforfeitable
percentage of each Participant's Account balance;
(b) To construe and interpret the terms of the Plan and all provisions
thereof;
(c) To adopt rules of procedure and regulations necessary for the proper
and efficient administration of the Plan;
(d) To enforce the terms of the Plan and the rules and regulations of the
Plan; (e) To direct the Trustee as to the crediting and distribution of
the Trust;
(f) To review and render decisions respecting a claim for (or denial of a
claim for) a benefit under the Plan; (g) To furnish a Participating
Employer with information which such Participating Employer may require
for tax
or other purposes;
(h) To engage the service of agents and professional service providers as
it may deem advisable to assist it with the performance of its duties;
(i) To manage, acquire or dispose of Plan assets except to the extent they
are subject to Participant control, and to engage the services of an
investment manager or managers (as defined in Section 3(38) of the
Act), each of whom shall have full power and authority to manage,
acquire or dispose (or direct the Trustee with respect to acquisition
or disposition) of any Plan asset under its control;
(j) To make hardship determinations and grant hardship distributions and
plan loans;
(k) To prepare and distribute any summary plan description, summary of
material modification, employee notice, enrollment and distribution
form, and all forms, schedules, certification or other communications
to Participant and Beneficiaries or to the Internal Revenue Service,
the Department of Labor, or any other state or federal agency
regulating the Plan;
(l) To use or acknowledge the Employer's decision to use any correction
method allowed by the Internal Revenue Service and/or the Department of
Labor in order to remedy any mistake in the operation of the Plan,
after which the Plan shall be deemed to authorize compliance with the
correction method chosen by the Plan Administrator in lieu of the
normal provisions of the Plan;
(m) To allocate its responsibilities among member(s) of the Committee; and
to delegate responsibilities to the extent permitted by ERISA to
persons other than members of the Committee; and
(n) To defray reasonable expenses of administering the Plan and Trust from
Plan assets.
The Plan Administrator shall have responsibility for compliance with the
reporting and disclosure rules applicable to this Plan under the Act or
otherwise. All determinations made by the Plan Administrator with respect to
eligibility for benefits and the terms of this Plan shall be based on the Plan
Administrator's construction and interpretation of this Plan and shall be made
by the Plan Administrator, in its sole discretion. The Plan Administrator shall
maintain records of its activities.
Any exercise of discretion by the Plan Administrator shall be final and binding
upon all persons and shall be entitled to the fullest deference permitted by
law, including the arbitrary or capricious and abuse of discretion standards.
14.4 funding policy
The Plan Administrator shall review, not less often than annually, all pertinent
Employee information and Plan data in order to establish the funding policy of
the Plan and to determine the appropriate methods of carrying out the Plan's
objectives. The Plan Administrator shall communicate annually to the Trustee and
to any Plan investment manager the Plan's short-term and long-term financial
needs so that investment policy can be coordinated with the financial
requirements of the Plan.
14.5 authorized representative
Unless the Employer gives directions to the contrary, the Committee may
authorize any one or more of its members to sign on its behalf any notices,
directions, applications, certificates, consents, approvals, waivers, letters,
or other documents. At the request of the Trustee, the Committee will evidence
this authority by an instrument signed by all members and filed with the
Trustee.
14.6 interested member
No member of the Committee may decide or determine any matter concerning the
distribution, nature, or method of settlement of his or her own benefits under
the Plan. 14.7 individual accounts The Plan Administrator shall maintain, or
direct the Trustee or a third party recordkeeper to maintain, a separate Account
in the name of each Participant to reflect the Participant's Account balance
under the Plan. 14.8 value of participants' accounts The Plan Administrator
shall direct the Trustee to determine the fair market value of the Participants'
Accounts as of each Valuation Date.
14.9 account charged
The Plan Administrator shall charge all distributions made to a Participant or
to his or her Beneficiary against the Account of that Participant when made.
14.10 unclaimed account procedures The Plan Administrator, by first class,
certified or registered mail addressed in accordance with Section 13.4 hereof,
shall notify Participants or Beneficiaries of distributions to which they are
entitled under the Plan. If a Participant or Beneficiary does not respond to
such notice within a reasonable time after it is mailed, if such notice is
returned, or if a distribution check mailed to a Participant or Beneficiary is
not cashed within three months after it is mailed, the Account of such
Participant or Beneficiary may be deemed unclaimed ("Unclaimed Account"). The
Plan Administrator shall invest Unclaimed Accounts in the lowest risk short term
Investment Fund and shall take reasonable steps to locate the lost Participant
or Beneficiary. Such steps may include use of the IRS letter forwarding program,
use of a commercial locator service, or use of the Social Security
Administration search program. After a six month period during which reasonable
steps have been taken to locate the lost Participant or Beneficiary, or such
other period of time which is reasonable under the circumstances, if the lost
Participant or Beneficiary has not been located the Plan Administrator may
forfeit the Unclaimed Account. The amount forfeited shall include interest,
gains, or losses allocated to the Unclaimed Account during the time it was
invested in the Investment Fund described above. Thereafter, if at any time
before the Plan has been terminated the lost Participant or Beneficiary makes a
claim for his or her Account, the Plan Administrator shall restore the forfeited
Account to the same dollar amount as the amount forfeited, unadjusted for gains
or losses occurring subsequent to the forfeiture. The Plan Administrator will
make the restoration first from available Participant forfeitures pursuant to
Section 8.5 hereof. If such forfeitures are not sufficient, a Participating
Employer shall make an additional contribution to the Plan in the amount
necessary to restore the forfeited Account.
14.11 powers of plan sponsor
The Employer retains all plan sponsor powers and functions. The Employer may
delegate to the Committee certain plan sponsor functions, including but not
limited to the power to design, establish, amend or terminate the Plan and
Trust; to execute the Plan and Trust Agreement and any amendments thereto; and
to appoint or remove the Trustee. The Committee may perform such delegated
functions or it may, in turn, delegate their performance to specific Committee
members, a subcommittee, or other officers or employees of the Employer. The
Committee may exercise such plan sponsor functions without specific written
authorization of the Employer. In performing such functions, the Committee or
its designee shall act in a settlor capacity and not in a fiduciary capacity.
14.12 disputed payments
If any controversy or disagreement arises regarding the propriety of any payment
to a Participant, Alternate Payee, or Beneficiary, or if any controversy arises
between or among individuals or with any person claiming a right to assets in an
Account, the Plan Administrator may (i) retain the assets involved, without
liability, until resolution to its satisfaction of the controversy or
disagreement, or (ii) commence an interpleader in a court of competent
jurisdiction. Reasonable expenses incurred in such interpleader, including
attorneys' fees, shall be charged to the Account in controversy to the extent
permitted by law.
Article 15 Exclusive Benefit, Amendment, Termination
15.1 exclusive benefit
Except as provided in Section 3.2, Participating Employers shall have no
beneficial interest in any assets of the Trust; and except as provided in this
Section 15.1, no part of any asset in the Trust shall ever revert to or be
repaid to a Participating Employer, either directly or indirectly. Until the
satisfaction of all liabilities to the Participants and their Beneficiaries
under the Plan, no part of the principal or income of the Trust Fund, or any
asset of the Trust, shall be used for, or diverted to, purposes other than the
exclusive benefit of the Participants or their Beneficiaries, or for defraying
the reasonable expenses of administering the Plan. Notwithstanding the
foregoing, the Trustee may make payments from the Trust to the Employer pursuant
to a Participant's voluntary revocable assignment made in accordance with Code
Section 401(a)(13) and the regulations thereunder and in accordance with
policies and procedures established by the Plan Administrator.
15.2 amendment by employer
The Employer shall have the right at any time to amend this Agreement in any
manner it deems necessary or advisable; provided, however, no amendment shall
authorize or permit any of the Trust Fund (other than the part which is required
to pay taxes and administration expenses) to be used for or diverted to purposes
other than for the exclusive benefit of the Participants or their Beneficiaries;
and no amendment shall cause or permit any portion of the Trust Fund to revert
to or become property of a Participating Employer. All amendments shall be in
writing, approved by action of the Employer's Board of Directors or by the
Committee, if applicable pursuant to Section 14.11 hereof, and shall be signed
by an authorized officer of the Employer or the Committee, as applicable. 15.3
deemed amendment for correction of mistakes and adjustment to accounts (a) In
the event of a mistake in the operation of the Plan, the Employer or the Plan
Administrator may remedy
the mistake by any correction method allowed by the rules, regulations,
and procedures of the Internal Revenue Service, the Department of
Labor, or applicable law. In such event, the Plan shall be deemed
amended subject to the rules and regulations of the Internal Revenue
Service and the Department of Labor to provide for the correction
method selected, and the Plan shall be operated in accordance with the
correction method chosen, to the extent necessary to effect the remedy.
(b Adjustment to Accounts. If any Participant's or
Beneficiary's Account is credited with an incorrect amount
of contributions or earnings or accounting adjustment
(including repayment of loans) to which such Participant or
Beneficiary is not entitled under the Plan, or if an error
is made with respect to the investment of the assets of the
Trust Fund, which error results in an incorrect amount being
credited to a Participant's or Beneficiary's Account,
remedial action may be taken. In such event, Account
balances may be adjusted to the extent necessary to reflect
the Account balances which would have existed had no such
error been made. Further, a Participating Employer may make
additional contributions to the Account of any affected
Participant or Beneficiary to place the affected Account in
the position that it would have been in had the error not
been made. 15.4 amendment to vesting schedule The Employer
reserves the right to amend the Vesting Schedule at any
time. However, the Employer shall not amend the Vesting
Schedule (and no amendment shall be effective) unless the
amendment provides that the Nonforfeitable percentage of any
Participant's Account balance derived from employer
contributions (determined as of the later of the date the
Employer adopts the amendment, or the date the amendment
becomes effective) shall not be less than the Nonforfeitable
percentage of that Account balance computed under the Plan
without regard to the amendment. Except as permitted by law,
no amendment to the Plan shall decrease a Participant's
Account balance or eliminate an optional form of
distribution. If the Employer makes a permissible amendment
to the Vesting Schedule, each Participant having at least
three Years of Service with a Participating Employer may
irrevocably elect to have the percentage of his
Nonforfeitable Account balance computed under the Plan
without regard to the amendment. The Participant must file
his election with the Plan Administrator within 60 days of
the latest of (a) the Employer's adoption of the amendment;
(b) the effective date of the amendment; or (c) the
Participant's receipt of a copy of the amendment. The Plan
Administrator, as soon as practicable, shall forward a true
copy of any amendment to the Vesting Schedule to each
affected Participant, together with an explanation of the
effect of the amendment, the appropriate form upon which the
Participant may make an election to remain under the Vesting
Schedule provided under the Plan prior to the amendment, and
notice of the time within which the Participant must make an
election to remain under the prior Vesting Schedule.
15.5 discontinuance
The Employer shall have the right, at any time, to suspend or discontinue its
contributions under the Plan, and to terminate this Plan and the Trust created
under this Agreement. The Plan shall terminate upon the first to occur of the
following:
(a) The date terminated by action of the Employer or the Committee, acting in a
plan sponsor capacity; (b) The date the Employer shall be judicially declared
bankrupt or insolvent; or (c) The dissolution, merger, consolidation, or
reorganization of the Employer or the sale by the Employer of all
or substantially all of its assets, unless the successor or purchaser
makes provision to continue the Plan, in which event the successor or
purchaser shall substitute itself as the Employer under this Plan.
15.6 full vesting on termination
Notwithstanding any other provision of this Plan to the contrary, upon the date
of either full or partial termination of the Plan, or, if applicable, upon the
date of a complete discontinuance of contributions to the Plan, an affected
Participant's right to his or her Account balance shall be 100% Nonforfeitable
to the extent funded and required by the Code.
15.7 merger
The Trustee shall not consent to, or be a party to, any merger or consolidation
with another plan, or to a transfer of assets or liabilities to another plan,
unless immediately after the merger, consolidation, or transfer, the surviving
Plan provides each Participant a benefit equal to or greater than the benefit
each Participant would have received had the Plan terminated immediately before
the merger, consolidation, or transfer. 15.8 termination Upon termination of the
Plan, the provisions of the Article entitled "Distribution of Benefits," shall
remain operative, and the Trust shall continue until the Trustee has distributed
all of the benefits under the Plan. On each Anniversary Date or other Valuation
Date, the Plan Administrator shall credit any part of a Participant's Account
balance retained in the Trust with its proportionate share of the Trust's
income, expenses, gains, and losses, both realized and unrealized.
Article 16 General Provisions
16.1 evidence
Anyone required to give evidence under the terms of the Plan may do so by
certificate, affidavit, document, or other information that the Plan
Administrator may consider pertinent, reliable, and genuine, and to have been
signed, made, or presented by the proper party or parties. Any action required
of the Employer may be by resolution of the Employer, or by resolution or action
of a person or entity authorized hereunder to act on behalf of the Employer. The
Plan Administrator shall be fully protected in acting and relying upon any
evidence described in this section. 16.2 no responsibility for employer action
The Plan Administrator shall have no obligation or responsibility with respect
to (a) any action required by the Plan to be taken by a Participating Employer,
any Participant, or eligible Employee, (b) the failure of any of the above
persons to act or make any payment or contribution, or to otherwise provide any
benefit contemplated under this Plan, or (c) the collection of any contribution
required under the Plan or the determination of the correctness of the amount of
any employer contribution.
16.3 Fiduciary duties
The Plan Administrator and any other person who has any fiduciary responsibility
with respect to the Plan shall discharge its duties and responsibilities with
respect to the Plan in accordance with the Act, the regulations thereunder, and
other applicable law.
16.4 benefits not insured
The Trustee, the Plan Administrator, and Participating Employers in no way
guarantee the Trust Fund from loss or depreciation. Participating Employers do
not guarantee the payment of any money which may be or become due to any person
from the Trust Fund. The liability of the Plan Administrator and the Trustee to
make any payment from the Trust Fund at any time and all times is limited to the
then-available assets of the Trust. 16.5 waiver of notice and successors To the
extent permitted by law, any person entitled to notice under the Plan may waive
the notice. The Plan shall be binding upon all persons entitled to benefits
under the Plan, their respective heirs and legal representatives, upon
Participating Employers, their successors and assigns, and upon the Trustee, the
Plan Administrator, and their successors.
16.6 rights on return from military leave of absence
If an Employee returns from a qualified Military Leave under circumstances that
entitle the Employee to reemployment rights under the Uniformed Services
Employment and Reemployment Rights Act of 1994, notwithstanding any provision of
this Plan to the contrary, contributions, benefits and service credit with
respect to qualified military service will be provided in accordance with
Section 414(u) of the Internal Revenue Code.
16.7 sunset provisions of egtrra
Any benefit, right, or feature of the Plan may be eliminated, reduced, limited,
or otherwise modified to the extent permitted or required by the "sunset
provision" of Section 901 of the Economic Growth and Tax Relief Reconciliation
Act of 2001 (EGTRRA), which automatically repeals the provisions of EGTRRA,
unless subsequently extended or modified by law.
Article 17 Top-Heavy Provisions
17.1 top-heavy provisions
The following provisions should become effective in any Plan Year in which the
Plan is determined to be a Top-Heavy Plan. 17.2 top-heavy definitions (a)
"Determination Date" means the last day of the preceding Plan Year or the last
day of the first Plan Year. (b) "Key Employee" means each Employee or former
Employee (including a Beneficiary of a Key Employee) who, at
any time during the current Plan Year or any of the four immediately
preceding Plan Years, is or was (i) an officer of a Participating
Employer earning Section 414 Compensation of more than 50% of the
amount specified in Section 415(b)(1)(A) of the Code for such Plan
Year, (ii) among the 10 Employees owning, or considered as owning
within the meaning of Section 318 of the Code, the largest interests
(at least 0.5%) in the Participating Employer and earning Section 414
Compensation of more than the amount specified in Section 415(c)(1)(A)
of the Code for such Plan Year, (iii) a Five Percent Owner of the
Participating Employer, or (iv) an Employee owning more than 1% of the
Participating Employer and receiving more than $150,000 of annual
Section 414 Compensation from the Participating Employer.
Notwithstanding the foregoing, no more than 50 Employees or, if less,
the greater of three or 10% of the Participating Employer's Employees
shall be treated as officers of the Participating Employer. Effective
January 1, 2002, "Key Employee" means each Employee or former Employee
(including a Beneficiary of a Key Employee) who at any time during the
current Plan Year is or was (i) an officer of the Participating
Employer earning Section 414 Compensation greater than $130,000 for
such Plan Year (as adjusted under Code Section 416(i)(1) for Plan Years
beginning after December 31, 2002), (ii) a Five Percent Owner of the
Participating Employer, or (iii) an Employee owning 1% of the
Participating Employer and receiving more than $150,000 of annual
Section 414 Compensation from the Participating Employer.
Notwithstanding the foregoing, no more than 50 Employees, or, if less,
the greater of three or 10% of the Participating Employer's Employees
shall be treated as officers of the Participating Employer.
(c) "Non-Key Employee" means any Employee who is not a Key Employee.
(d) "Permissive Aggregation Group" means the Required Aggregation Group
plus any other plan or plans of the Participating 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.
(e) "Required Aggregation Group" means (i) each qualified plan of the
Participating Employer in which at least one Key Employee participates
or participated at any time during the determination period (regardless
of whether the plan terminated), and (ii) any other qualified plan of
the Participating Employer which enables a plan described in (i) to
meet the requirements of Sections 401(a)(4) or 410 of the Code.
(f) "Top-Heavy Valuation Date" means the most recent Anniversary Date that
falls within or ends with the 12-month period ending on the
Determination Date.
17.3 determination of top-heavy status
The Plan shall be considered a Top-Heavy Plan for the Plan Year if, as of the
Determination Date:
(a) The Top-Heavy Ratio for this Plan exceeds 60% and this Plan is not part
of any Required Aggregation Group or
Permissive Aggregation Group; or
(b) This Plan is a part of a Required Aggregation Group but is not part of
a Permissive Aggregation Group and the Top-Heavy Ratio for the group of
plans exceeds 60%; or
(c) This Plan is part of a Required Aggregation Group and part of a
Permissive Aggregation Group and the Top-Heavy Ratio for the Permissive
Aggregation Group exceeds 60%.
17.4 top-heavy ratio
(a) If the Participating Employer maintains one or more
defined contribution plans (including this Plan and any
simplified employee pension plan) and the Participating
Employer has not maintained any defined benefit plan which
during the five-year period ending on the Determination Date
has or has had accrued benefits, the Top-Heavy Ratio for
this Plan alone or for the Required or Permissive
Aggregation Group as appropriate shall be a fraction, the
numerator of which is the sum of the account balances of all
Key Employees as of the Determination Date, and the
denominator of which is the sum of all account balances for
all Employees, both computed in accordance with Section 416
of the Code. Both the numerator and the denominator of the
Top-Heavy Ratio shall be adjusted 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.
(b) If the Participating Employer maintains one or more
defined contribution plans (including this Plan and any
simplified employee pension plan) and the Participating
Employer maintains or has maintained one or more defined
benefit plans which, during the five-year period ending on
the Determination Date, has or has had any accrued benefits,
the Top-Heavy Ratio for any Required or Permissive
Aggregation Group as appropriate shall be 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 subparagraph (a)
above, together with the present value of accrued benefits
under the defined benefit plan or plans for all Employees as
of the Determination Date, and the denominator of which is
the sum of the account balances under the aggregated defined
contribution plan or plans for all Employees, determined in
accordance with subparagraph (a) above, together with the
present value of accrued benefits under the defined benefit
plan or plans for all Employees as of the Determination
Date, all determined in accordance with Section 416 of the
Code.
(c) For purposes of subparagraphs (a) and (b) above, the
value of account balances and the present value of accrued
benefits shall be determined as of the Top-Heavy Valuation
Date, except as provided in Section 416 of the Code for the
first and second plan years of a defined benefit plan and
using the same actuarial equivalent for all defined benefit
plans. The account balances and accrued benefits of any
Participant who has not been credited with at least one Hour
of Service with any Participating Employer maintaining the
Plan at any time during the one year period ending on the
Determination Date shall be disregarded. The calculation of
the Top-Heavy Ratio, and the extent to which account
balances, accrued benefits, distributions, rollovers, and
transfers are taken into account shall be made in accordance
with Sections 416(g)(4)(A), (B) and (E) of the Code.
Deductible Employee Contributions shall not be taken into
account for purposes of computing the Top-Heavy Ratio. When
aggregating plans, the value of account balances and accrued
benefits shall be calculated with reference to the
Determination Dates that fall within the same calendar year.
The amounts of account balances and the present value of
accrued benefits of an Employee as of the Determination Date
shall be increased by the distributions made with respect to
the Employee under the Plan and any plan aggregated with the
Plan under Section 416(g)(2) of the Code during one-year
period ending on the Determination Date. The preceding
sentence shall also apply to distributions under a
terminated plan which, if it had not been terminated, would
have been aggregated with the Plan under Section
416(g)(2)(A)(i) of the Code. In the case of a distribution
made for a reason other than separation from service, death,
or disability, this provision shall be applied substituting
"five-year period" for "one-year period." 17.5 minimum
allocation (a) Except as otherwise provided in subparagraphs
(b) and (c) below, the Participating 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 Section 414 Compensation or, in the
case where the Participating Employer has no defined benefit
plan which designates this Plan to satisfy Section 401 of
the Code, the largest percentage of Participating Employer
contributions (including Salary Deferral Contributions) and
forfeitures, as a percentage of the Key Employee's Section
414 Compensation, as limited by Section 401(a)(17) of the
Code, allocated on behalf of any Key Employee for that Plan
Year (the "Minimum Allocation"). The 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 Plan Year because (i) the Non-Key Employee failed to
complete 1,000 Hours of Service (or any equivalent provided
in the Plan), (ii) the Non-Key Employee failed to make
mandatory employee contributions to the Plan, (iii) the
Non-Key Employee's Section 414 Compensation is less than a
stated amount, or (iv) the Plan is integrated with Social
Security. (b) The provision in subparagraph (a) above shall
not apply to any Participant who was not employed by the
Participating Employer on the last day of the Plan Year.
(c) If the Participating Employer maintains a defined
benefit plan as well as this Plan, the Minimum Allocation
required by this Paragraph shall be increased to 5% of the
Section 414 Compensation of the Participant.
(d) The Minimum Allocation required (to the extent required
to be Nonforfeitable under Section 416(b) of the Code) may
not be forfeited under Sections 411(a)(3)(B) or 411(a)(3)(D)
of the Code.
(e) Matching Contributions shall be taken into account for purposes of
satisfying the minimum contribution requirements of Section 416(c)(2)
of the Code and the Plan. The preceding sentence shall apply with
respect to Matching Contributions under the Plan or, if the Plan
provides that the minimum contribution requirement shall be met in
another plan, matching contributions under such other plan. Matching
Contributions that are used to satisfy the minimum contribution
requirements shall be treated as matching contributions for purposes of
the actual contribution percentage test and other requirements of
Section 401(m) of the Code.
17.6 minimum vesting in top-heavy years
Notwithstanding the normal vesting schedule described in Section 8.2 and the
alternative vesting schedule for misconduct described in Section 8.3, in
Top-Heavy Years a Participant who has completed at least one Hour of Service in
the Top-Heavy Year shall be vested with a percentage portion of that
Participant's Matching Contribution Account, and Discretionary and Company
Contribution Accounts, in accordance with the following Vesting Schedule:
- ------------------------------------- -------------------------------------
Years of Service Percent Vested
- ------------------------------------- -------------------------------------
- ------------------------------------- -------------------------------------
Less than 2 0%
- ------------------------------------- -------------------------------------
- ------------------------------------- -------------------------------------
2 but less than 3 20%
- ------------------------------------- -------------------------------------
- ------------------------------------- -------------------------------------
3 but less than 4 40%
- ------------------------------------- -------------------------------------
- ------------------------------------- -------------------------------------
4 but less than 5 60%
- ------------------------------------- -------------------------------------
- ------------------------------------- -------------------------------------
5 or more 100%
- ------------------------------------- -------------------------------------
If the Plan becomes Top-Heavy and subsequently ceases to be Top-Heavy,
Participants having not less than three Years of Service for Vesting may elect
within a reasonable period whether to continue with the vesting schedule
applicable in the Top-Heavy year or return to the normal vesting schedule
described in Section 8.2. In addition, the portion of the account of any
Participant that was nonforfeitable before the Plan ceased to be Top-Heavy shall
remain nonforfeitable.
Article 18 Execution
Acting in a Plan Sponsor capacity, the Committee hereby restates this Plan
effective August 1, 2004.
Costco Benefits Committee
By:_________________ Date: ________ By: _________________ Date:_______
Charles Burnett John Eagan
By:_________________ Date: ________ By: _________________ Date:_______
Richard Galanti John Matthews
By:_________________ Date: ________ By: _________________ Date:_______
John McKay Mike Mosteller
By:_________________ Date: ________ By: _________________ Date:_______
Monica Smith Jay Tihinen
\\Smserver\clients\- COSTCO 401K PLANS - 89.01\Costco 401k Retirement
Plan\Current Plan\Plan Restated 1-1-04 with Amends 1and 2 incorp.doc
APPENDIX A - Costco 401(k) Retirement Plan
Participating Employers
The following entities are Participating Employers:
Costco Wholesale Corporation
Costco Wholesale Membership, Inc.
CWC Travel, Inc.
APPENDIX B - Costco 401(k) Retirement Plan Pay Code Chart
The Committee, pursuant to Section 14.11, delegates its authority to amend this
Costco 401(k) Retirement Plan Pay Code Chart to the Costco Wholesale Corporation
Assistant Vice President, Benefits & Retirement Plan.
Costco 401(k) Retirement Plan
Definitions of Compensation by Pay Codes - Jan. 2003
X = Include O = Exclude
====== ================================================= ======================
# Pay Code 401(k) Company Hours 414 & 415
& Match Contribution Credited Testing
- ------ ---------------- -------------------------------------
- ------ ------------------------------------------ ----------------------
001 Straight Time Earnings1 X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
002 Standard Holiday Pay2 X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
003 Vacation Premium X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
004 Sick Leave X X X3 X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
005 Overtime X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
006 Sunday Premium X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
007 Retroactive Pay X X X4 X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
008 Executive Bonus5 O O O X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
009 Sick Leave Payoff6 X X O X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
010 Hourly Cost of Living Adjustment X X O X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
011 Nonqualified Stock Options7 O O O X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
012 Double Time X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
013 Severance Pay O O X8 X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
014 Safety Awards9 O O O X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
015 Cash Incentives10 O O O X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
016 Rideshare/Carpool11 O O O X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
020 Inventory Labor12 X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
030 Hourly Bonus - Manual Check X X O X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
035 Salary Continuation13 X X X14 X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
036 [Donated] Vacation Pool Hours15 O O X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
037 Family Leave Act Hours - No Pay O O O O
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
038 Extended Jury Duty X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
101 Alternate Rate - Regular Hrs X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
102 Optional [Floating] Holiday Pay X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
103 CA Nonexempt Vacation Supplement X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
105 Alternate Rate - Overtime X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
106 Alternate Rate - Sunday X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
150 Temporary Lead Pay [CA Union] X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
151 OT Temp Lead Pay [CA Union] X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
152 Sun. Temp Lead Pay [CA Union] X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
201 IS Premium Pay X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
205 IS Premium Pay Plus Overtime X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
206 Sunday Premium CA Teamster X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
207 Sunday Alternate Rate CA Teamster X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
208 Sunday Late CA Teamster X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
228 Sun. Late Alternate Rate CA Teamster X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
O O O O
236 Vacation Pool Hrs. Reduction16
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
250 Temp. Supervisor Pay - Straight X X X X
Time
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
251 Temp. Supervisor Pay - Overtime X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
252 Temp Supervisor Pay - Sunday X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
300 Puerto Rico Lactation Pay17 X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
301 Puerto Rico Witness Pay18 X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
310 Puerto Rico Paid Maternity Leave19 X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
312 Puerto Rico Sunday Double Time [DT] 20 X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
313 Puerto Rico Sunday DT Alternate Rate21 X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
330 Puerto Rico Christmas Bonus22 X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
601 Late Regular X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
602 Late Overtime X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
603 Cooler Regular X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
604 Cooler Overtime X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
605 Late Cooler Regular X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
606 Late Cooler Overtime X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
607 Sunday Cooler Regular X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
608 Sunday Late X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
609 Sunday Cooler Late X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
621 Late Regular - Clerk X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
622 Late Overtime - Clerk X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
623 Cooler Regular - Clerk X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
625 Late Cooler Regular - Clerk X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
627 Sunday Cooler Regular - Clerk X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
628 Sunday Late - Clerk X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
629 Sunday Cooler Late - Clerk X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
900 Hours Only - No Pay23 O O O O
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
902 Taxable Life Insurance O O O X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
903 Vacation Pay - Negotiated24 X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
904 DCP Annual Distribution25 O O O X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
906 Executive Benefits26 O O O X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
907 Flex Credits O O O X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
910 Deferred Comp -- FICA Only27 O O O O
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
912 Relocation Bonus28 O O O X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
915 Stock Options29 O O O X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
916 Gainsharing X O O X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
917 Rideshare/Carpool Gift Card30 O O O X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
918 ss.415 Excesses O O O
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
920 Taxable Domestic Partner Benefits31 O O O X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
921 Dom. Partner Same Sex CA Residents32 O O O X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
Sound Health Solution33
922 O O O X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
925 Retro-Pay X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
926 Retro-Bonus34 X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
927 Eastern Teamsters Overtime X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
930 Expatriate Equalization Adjustment35 O O O X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
931 CN Expatriate W-2 Earnings36 O O O O
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
935 Non-Relocation Gross Up O O O X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
940 Awards/Incentives - Non-Cash O O O X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
941 Cash Awards O O O X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
945 CA Union Committee Salaries37 X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
950 Contract Labor at Warehouse 088 O O X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
955 Company Paid COBRA38 O O O X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
960 Legal Settlement O O O X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
965 Forgiven Debt39 O O O X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
970 Reimbursement of Overpaid Wages40 X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
975 Relocation Expense O O O O
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
980 In-House Relocation O O O X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
985 US Relocation Gross Up O O O X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
990 Third Party Sick Pay O O X41 X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
401(k) Deferrals X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
125 Deferrals42 X X X X
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
Nonqualified Plan [DCP]
Salary Deferrals43 X X X O
- ------ ------------------------------------------------------------- ----------
- ------ ------------------------------------------------------------- ----------
Nonqualified Plan [DCP] O O O O
Bonus Deferrals44
====== ====================================== ================
- --------
1Formerly known as "Regular Hours."
2Compare with #102, which is used for optional or floating holiday pay. 3But not
more than 501 hours in a single continuous absence.
4If pay supplements amount paid for hours already credited, no additional
hours are counted. However, if pay is for previously uncompensated hours,
hours are counted. 5Formerly known as "Bonus Pay - Salaried."
6In lieu of leave.
7 This is the taxable ordinary income on exercise or on grant.
Federal income tax withholding applies, and this amount is
reported in Box 1 of Form W-2.
8But not more than 501 hours in a single continuous absence.
9Formerly known as "Safety Awards." See 940 for non-cash
awards. This pay code is taxable, subject to federal
income tax withholding, and reported in Box 1 of Form W-2.
10Formerly known as "Miscellaneous Incentives." See 940 for
non-cash incentives.
11See 917, Rideshare/Carpool Gift Card.
12Formerly known as "Special Project."
13Formerly known as "Salaried Paid Leave."
14But not more than 501 hours in a single continuous absence.
15But not more than 501 hours in a single continuous absence.
This is hours used, fully taxable to the employee, subject to
federal income tax withholding, and reported in Box 1 of Form
W-2. 16Does not appear on W-2.
17 Employees who receive this pay are ineligible for the Costco
401(k) Retirement Plan. Per instructions from K. Miller, this is
"X" on the Master, "O" on the Plan appendix to account for errors
in keying pay. This pay is ineligible for the corporate plan, but
eligible for the Puerto Rico Plan.
18 Employees who receive this pay are ineligible for the Costco
401(k) Retirement Plan. Per instructions from K. Miller, this is
"X" on the Master, "O" on the Plan appendix to account for errors
in keying pay. This pay is ineligible for the corporate plan, but
eligible for the Puerto Rico Plan.
19 Employees who receive this pay are ineligible for the Costco
401(k) Retirement Plan. Per instructions from K. Miller, this is
"X" on the Master, "O" on the Plan appendix to account for errors
in keying pay. This pay is ineligible for the corporate plan, but
eligible for the Puerto Rico Plan.
20 Employees who receive this pay are ineligible for the Costco
401(k) Retirement Plan. Per instructions from K. Miller, this is
"X" on the Master, "O" on the Plan appendix to account for errors
in keying pay. This pay is ineligible for the corporate plan, but
eligible for the Puerto Rico Plan.
21Employees who receive this pay are ineligible for the Costco
401(k) Retirement Plan. Per instructions from K. Miller, this is
"X" on the Master, "O" on the Plan appendix to account for errors
in keying pay. This pay is ineligible for the corporate plan, but
eligible for the Puerto Rico Plan.
22 Employees who receive this pay are ineligible for the Costco
401(k) Retirement Plan. Per instructions from K. Miller, this is
"X" on the Master, "O" on the Plan appendix to account for errors
in keying pay. This pay is ineligible for the corporate plan, but
eligible for the Puerto Rico Plan.
23Replaces former 901 [Time Off Without Pay]. This is only a
"place holder" so that benefits may be calculated for an employee
who has no hours of any sort reported during the pay cycle. For
example, if a salaried employee is not to be paid the full 80
hours for the past two weeks, the payroll clerk simply re-keys
the correct number of hours to be paid.
24This is fully taxable and reported in Box 1 of Form W-2.
25Formerly known as "Deferred Comp. Distributions." See note at
pay code 910.
26Formerly known as "Auto Allowance." Now includes former 905
[Executive Benefits/Relocation] and former 911 [Executive
Benefits]. This pay code is taxable, subject to federal income
tax withholding, and reported in Box 1 of Form W-2.
27This is used to show the newly vested portion of an employee's
match in the non-qualified deferred compensation plan, which is
subject to FICA tax each year as it vests. This does not appear
in Box 1 of Form W-2. See also pay code DCP Salary and bonus
deferrals. NOTE: Treatment of FICA-only wages is uncertain. This
pay code might, under one interpretation of Treasury Regulation
1.415-2(d)(11)(i), be properly included in 414 and 415 testing.
If so, avoid duplication at pay code 904.
28This pay code is taxable, subject to federal withholding for
income tax, and reported in Box 1 of Form W-2. 29Formerly known
as "Incentive Stock Options." This is a disqualifying disposition
of a Section 422 ISO, reported as income in Box 1 of Form W-2.
Federal income tax and FICA withholding would apply, but for IRS
Notice 2002-47. 30See 016. Compensation under 917 and 016 are
treated similarly and neither are subject to ss. 132(f) elective
deferrals.
31This pay code is taxable, subject to federal income tax
withholding (to the extent cash from which withholding can be
made is paid), and reported in Box 1 of Form W-2. 32This code is
used instead of 920 for California employees with same sex
partners [bc not subject to state income tax there]. It is
otherwise treated like pay code 920.
33This pay code is taxable, subject to federal income tax
withholding (to the extent cash from which withholding can be
made is paid), and reported in Box 1 of Form W-2. 34Expected to
be a one-time event with no hours associated with it [per Kris
Ball 12-26-00. 35This is for payments in kind, such as housing,
cars, and other non-compensation benefits. 36This pay code is
used only for expats working in Canada for whom Costco must issue
W-2s because they are still required to file US tax returns. They
are on the Canadian payroll with Canadian source income and the
W-2 reflects their Canadian income converted to US dollars. They
are not eligible for the US retirement plans. 37This pay code is
an alternate to and not a duplicate of pay code 001 or any other
pay code. It is used to record/accumulate hours and dollars that
will be reimbursed to Costco by the CA Teamsters. 38This pay code
is taxable, subject to federal income tax withholding (to the
extent cash from which withholding can be made is paid), and
reported in Box 1 of Form W-2.
39This pay code is used to reflect loans, advances, and credit
card debts that are not repaid to Costco, typically be former
employees. 40 This should always be a negative number.
41But not more than 501 hours in a single continuous absence.
42 Effective January 1, 1998, this includes amounts not available
in cash in lieu of group health plan coverage because the
participant is unable to certify that he or she has other
coverage. Participating Employers do not otherwise request or
collect information regarding other health coverage as part of
the enrollment process for the health plan.
43This does not appear in Box 1 of the W-2 and is not subject to
federal income tax withholding, but is subject to FICA. NOTE:
Treatment of FICA-only wages is uncertain. This pay code might,
under one interpretation of Treasury Regulation
1.415-2(d)(11)(i), be properly included in 414 and 415 testing
compensation. If so, avoid duplication as pay code 904. See also
pay code 910.
44This does not appear in Box 1 of the W-2 and is not subject to
federal income tax withholding, but is subject to FICA. NOTE:
Treatment of FICA-only wages is uncertain. This pay code might,
under one interpretation of Treasury Regulation
1.415-2(d)(11)(i), be properly included in 414 and 415 testing
compensation. If so, avoid duplication at pay code 904. See also
pay code 910.