Exhibit 4.1
QUALIFIED RETIREMENT PLAN AND TRUST
DEFINED CONTRIBUTION BASIC PLAN DOCUMENT 01
DEFINITIONS
The following words and phrases when used in the Plan with initial capital
letters shall, for the purpose of this Plan, have the meanings set forth below
unless the context indicates that other meanings are intended.
ACP TEST SAFE HARBOR MATCHING CONTRIBUTIONS
Means Matching Contributions described in Section 3.15(B) of the Plan.
ACTUAL DEFERRAL PERCENTAGE (ADP)
Means, for a specified group of Participants for a Plan Year, the average of
the ratios (calculated separately for each Participant in such group) of (1)
the amount of Employer Contributions actually paid to the Fund on behalf of
such Participant for the Plan Year to (2) the Participant's Compensation for
such Plan Year (taking into account only that Compensation paid to the Employee
during the portion of the Plan Year he or she was an Eligible Participant,
unless otherwise indicated in the Adoption Agreement). For purposes of
calculating the ADP, Employer Contributions on behalf of any Participant shall
include: (1) any Elective Deferrals made pursuant to the Participant's salary
deferral election, (including Excess Elective Deferrals of Highly Compensated
Employees), but excluding (a) Excess Elective Deferrals of Participants who are
not Highly Compensated Employees that arise solely from Elective Deferrals made
under the Plan or plans of this Employer and (b) Elective Deferrals that are
taken into account in the Contribution Percentage test (provided the ADP test
is satisfied both with and without exclusion of such Elective Deferrals); and
(2) at the election of the Employer, Qualified Nonelective Contributions and
Qualified Matching Contributions. For purposes of computing Actual Deferral
Percentages, an Employee who would be a Participant but for the failure to make
Elective Deferrals shall be treated as a Participant on whose behalf no
Elective Deferrals are made.
ADOPTING EMPLOYER
Means any corporation, sole proprietor or other entity named on the Adoption
Agreement and any successor who by merger, consolidation, purchase or otherwise
assumes the obligations of the Plan.
ADOPTION AGREEMENT
Means the document executed by the Adopting Employer through which it adopts
the Plan and trust, and thereby agrees to be bound by all terms and conditions
of the Plan and Trust.
ADP TEST SAFE HARBOR CONTRIBUTIONS
Means any Basic Matching Contributions, Enhanced Matching Contributions and
Safe Harbor Nonelective Contributions.
AGGREGATE LIMIT
Means the sum of 1) 125 percent of the greater of the ADP of the Participants
who are not Highly Compensated Employees for the applicable Plan Year or the
ACP of the Participants who are not Highly Compensated Employees under the Plan
subject to Code Section 401(m) for the Plan Year beginning with or within the
applicable Plan Year of the cash or deferred arrangement; and 2) the lesser of
200 percent or two plus the lesser of such ADP or ACP Notwithstanding the
foregoing, Aggregate Limit shall mean the sum of 1) 125 percent of the lesser
of the ADP of the Participants who are not Highly Compensated Employees under
the Plan subject to Code Section 401(m) for the Plan Year beginning with or
within the Plan Year of the cash or deferred arrangement; and 2) the lesser of
200 percent or two plus the greater of such ADP or ACP if it would result in a
larger Aggregate Limit than determined under the previous sentence. If the
employer has elected in the adoption agreement to use the Current Year Testing
method, then, in calculating the Aggregate Limit for a particular Plan Year,
the Non-highly Compensated Employees' ADP and ACP for that Plan Year, instead
of for the prior Plan Year, is used.
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ALTERNATE PAYEE
Means any Spouse, former Spouse, child, or other dependent of a Participant who
is recognized by a Domestic Relations Order as having a right to receive all,
or a portion of, the benefits payable under the Plan with respect to such
Participant.
ANNUAL ADDITIONS
Means the sum of the following amounts credited to a Participant for the
Limitation Year: a. Employer Contributions, b. Nondeductible Employee
Contributions, c. Forfeitures, d. amounts allocated, after March 31, 1984, to
an individual medical account, as defined in Section 415(l)(2) of the Code,
which is part of a pension or annuity plan maintained by the Employer. Also
amounts derived from contributions paid or accrued after December 31, 1985, in
taxable years ending after such date, which are attributable to post-retirement
medical benefits, allocated to the separate account of a key employee, as
defined in Section 419A(d)(3) of the Code, under a welfare benefit fund, as
defined in Section 419(e) of the Code, maintained by the Employer, e. amounts
allocated under a simplified employee pension plan, f. Excess Contributions
(including amounts recharacterized), and g. Excess Aggregate Contributions. For
this purpose, any Excess Annual Additions applied under Section 3.12(A)(4) or
3.12(B)(1)(f) of the Plan in the Limitation Year to reduce Employer
Contributions will be considered Annual Additions for such Limitation Year.
ANNUITY STARTING DATE
Means the first day of the first period for which an amount is paid as an
annuity or any other form.
APPLICABLE LIFE EXPECTANCY
Means the Life Expectancy (or joint and last survivor expectancy) calculated
using the attained age of the Participant (or designated Beneficiary) as of the
Participant's (or designated Beneficiary's) birthday in the applicable calendar
year reduced by one for each calendar year, which has elapsed since the date
Life Expectancy was first calculated. However, if Life Expectancy is being
recalculated, the Applicable Life Expectancy shall be the Life Expectancy as so
recalculated. The applicable calendar year shall be the first Distribution
Calendar Year, and if Life Expectancy is being recalculated, such succeeding
calendar year.
AVERAGE CONTRIBUTION PERCENTAGE (ACP)
Means the average of the Contribution Percentages of the Eligible Participants
in a group of either Highly Compensated Employees or Employees who are not
Highly Compensated Employees.
BASIC MATCHING CONTRIBUTIONS
Means Matching Contributions made pursuant to the formula described in Section
3.15(A) of the Plan.
BASIC PLAN DOCUMENT
Means this prototype Plan and trust document.
BENEFICIARY
Means the individual(s) or entity(ies) designated pursuant to Section 5.03(A)
of the Plan.
BREAK IN ELIGIBILITY SERVICE
Means a 12 consecutive month period which coincides with an Eligibility
Computation Period during which an Employee fails to complete more than 500
Hours of Service (or such lesser number of Hours of Service specified in the
Adoption Agreement for this purpose).
BREAK IN VESTING SERVICE
Means a Plan Year (or other vesting computation period described in the
definition of Year of Vesting Service) during which an Employee fails to
complete more than 500 Hours of Service (or such lesser number of Hours of
Service specified in the Adoption Agreement for this purpose).
CODE
Means the Internal Revenue Code of 1986 as amended from time-to-time.
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COMPENSATION
A. General Definition
The following definition of Compensation shall apply. As elected by the
Adopting Employer in the Adoption Agreement (and if no election is made, W-2
wages will be deemed to have been selected), Compensation shall mean one of
the following:
1. W-2 wages. Compensation is defined as information required to be reported
under Sections 6041 and 6051, and 6052 of the Code (wages, tips and other
compensation as reported on Form W-2). Compensation is defined as wages
within the meaning of Section 3401(a) of the Code and all other payments
of compensation to an Employee by the Employer (in the course of the
Employer's trade or business) for which the Employer is required to
Furnish the Employee a written statement under Sections 6041(d) and 6051
(a)(3), and 6052 of the Code. Compensation must be determined without
regard to any rules under Section 3401(a) that limit the remuneration
included in wages based on the nature or location of the employment or
the services performed(such as the exception for agricultural labor in
Section 3401(a)(2) of the Code).
2. Section 3401(a) wages. Compensation is defined as wages within the
meaning of Section 3401(a) of the Code, for the purposes of income tax
withholding at the source but determined without regard to any rules that
limit the remuneration included in wages based on the nature or location
of the employment or the services performed (such as the exception for
agricultural labor in Section 3401(a)(2) of the Code).
3. 415 safe-harbor compensation. Compensation is defined as wages, salaries,
and fees for professional services and other amounts received (without
regard to whether or not an amount is paid in cash) for personal services
actually rendered in the course of employment with the Employer
maintaining the Plan to the extent that the amounts are includible in
gross income (including, but not limited to, commissions paid to
salespersons, compensation for services on the basis of a percentage of
profits, commissions on insurance premiums, tips, bonuses,' fringe
benefits, and reimbursements or other expense allowances under a
nonaccountable plan (as described in Section 1.62-2(C) of the Treasury
Regulations), and excluding the following:
a. Employer contributions to a plan of deferred compensation which are not
includible in the Employee's gross income for the taxable year in which
contributed, or employer contributions under a simplified employee
pension plan to the extent such contributions are deductible by the
Employee, or any distributions from a plan of deferred compensation;
b. Amounts realized from the exercise of a nonqualified stock option, or
when restricted stock (or property) held by the Employee either becomes
freely transferable or is no longer subject to a substantial risk of
forfeiture;
c. Amounts realized from the sale, exchange or other disposition of stock
acquired under a qualified stock option; and
d. Other amounts which received special tax benefits, or contributions made
by the Employer (whether or not under a salary reduction agreement)
towards the purchase of an annuity contract described in Section 403(b)
of the Code (whether or not the contributions are actually excludable
from the gross income of the Employee). For any Self-Employed Individual
covered under the Plan, Compensation will mean Earned Income.
B. Determination Period And Other Rules Unless otherwise indicated in the
Adoption Agreement, where an Employee becomes an eligible Participant on any
date subsequent to the first day of the applicable Determination Period,
Compensation shall include only that Compensation paid to the Employee
During the portion of the Determination Period he or she was an eligible
Participant, unless otherwise required by either the Code or ERISA. Unless
otherwise indicated in the Adoption Agreement, Compensation shall include
any amount which is contributed by the Employer pursuant to a salary
reduction agreement and which is not includible in the gross income of the
Employee under Sections 125, 402(e)(3), 402(h)(1)(B) or 403(b) of the Code.
For Plan Years beginning on or after January 1, 2001, except as otherwise
provided in the Adoption Agreement, Compensation shall also include elective
amounts that are not includible in the gross income of the Employee by
reason of Section 132(f)(4) of the Code. Except as otherwise provided in
this Plan (e.g., in situations involving continued coverage of disabled
Participants), Compensation received by an Employee during a Determination
Period in which the Employee does not perform services for the Employer will
be disregarded. For purposes of applying the limitations of Section 3.12 of
the Plan, Compensation for a Limitation Year is the Compensation actually
paid or made available in gross income during
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such Limitation Year. Notwithstanding the preceding sentence, compensation
for a participant in a defined contribution plan who is permanently and
totally disabled (as defined in Section 22(e)(3) of the Code) is the
compensation such Participant would have received for the Limitation Year
if the Participant had been paid at the rate of Compensation paid
immediately before becoming permanently and totally disabled; for
Limitation Years beginning before January 1, 1997, but not for Limitation
Years beginning after December 31, 1996, such imputed compensation for the
disabled Participant may be taken into account only if the Participant is
not a Highly Compensated Employee (as defined in the Definition section of
the Basic Plan Document) and contributions made on behalf of such
Participant are nonforfeitable when made. For Limitation Years beginning
after December 31,1997, for purposes of applying the limitations of Section
3.12 of the Plan Compensation paid or made available during such Limitation
Year shall include any elective deferral (as defined in Section 402(g)(3) of
the Code), and 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 Section 125 or 457 of the Code. For
Limitation Years beginning on or after January 1, 2001, for purposes of
applying the limitations under Section 3.12 of the Plan, Compensation
paid or made available during such Limitation Years shall include elective
amounts that are not includible in the gross income of the Employee by
reason of Section 132(f)(4) of the Code.
C. Limits On Compensation For Plan Years beginning on or after January 1, 1989,
and before January 1, 1994, the annual Compensation of each Participant
taken into account for determining all benefits provided under the Plan for
any Plan Year shall not exceed $200,000. This limitation shall be adjusted
by the Secretary at the same time and in the same manner as under Section
415(d) of the Code, except that the dollar increase in effect on January 1
of any calendar year is effective for Plan Years beginning in such calendar
year and the first adjustment to the $200,000 limitation is effective on
January 1, 1990. For Plan Years beginning on or after January 1, 1994, the
annual Compensation of each Participant taken into account for determining
all benefits provided under the Plan for any Plan Year shall not exceed
$150,000, as adjusted for increases in the cost-of-living in accordance
with Section 401(a)(17)(B) of the Code. The cost-of-living adjustment in
effect for a calendar year applies to any Determination Period beginning
in such calendar year. if a Determination Period consists of fewer than 12
months, the annual Compensation limit is an amount equal to the otherwise
applicable annual Compensation limit multiplied by a fraction, the numerator
of which is the number of months in the short Determination Period, and the
denominator of which is 12. If Compensation for any prior Determination
Period is taken into account in determining an Employee's allocations or
benefits for the current Determination Period, the Compensation for such
prior Determination Period is subject to the applicable annual Compensation
limit in effect for that prior period. For this purpose, in determining
allocations in Plan Years beginning on or after January 1, 1989, the annual
Compensation limit in effect for Determination Periods beginning before that
date is $200,000. In addition, in determining allocations in Plan Years
beginning on or after January 1, 1994, the annual Compensation limit in
effect for Determination Periods beginning before that date is $150,000.
D. SIMPLE 401(k) Rules Notwithstanding anything in this Plan to the contrary,
if an Eligible Employer has established a SIMPLE 401(k) plan, Compensation
means, for purposes of the definition of Eligible Employer and for purposes
of Sections 3.06(F) and 3.07 of the Plan, the sum of the wages, tips, and
other compensation from the Employer subject to federal income tax
withholding (as described in Section 6051(a)(3) of the Code) and the
Employee's Elective Deferral contributions made under this or any other
401(k) plan, and, if applicable, elective deferrals under a Section 408(p)
SIMPLE IRA plan, a SA RSEP plan, or a Section 403(b) annuity contract and
compensation deferred under a Section 457 plan, required to be reported by
the Employer on Form W-2 (as described in Section 6051(a)(8) of the Code)
For Self-Employed Individuals, Compensation means net earnings from self-
employment determined under Section 1402(a) of the Code prior to subtracting
any contributions made under this Plan on behalf of the individual. The
provisions of the Plan implementing the limit on Compensation under Section
401(a)(17) of the Code apply to the Compensation under Sections 3.06(F) and
3.07 of the Plan. E. Safe Harbor CODA Rules Notwithstanding anything in this
Plan to the contrary if an Adopting Employer has elected in the Adoption
Agreement to apply the safe harbor CODA provisions to this Plan,
Compensation means Compensation as defined in this Definitions Section of
the Plan, except, for purposes of Section 3.15, no dollar limit, other than
the limit imposed by Section 401(a)(17) of the Code, applies to the
Compensation of a non-Highly Compensated Employee. However, solely for
purposes of determining the Compensation subject to a Participant's salary
reduction agreement, the Employer may use an alternative definition to the
one described in the preceding sentence, provided such alternative
definition is a reasonable definition within the meaning of Section
1.414(s)-1(d)(2) of the Income Tax
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Regulations and permits each Participant to elect sufficient Elective
Deferrals to receive the maximum amount of Matching Contributions (determined
using the definition of Compensation described in the preceding sentence)
available to the Participant under the Plan.
CONTRIBUTING PARTICIPANT
Means a Participant who has enrolled as a Contributing Participant pursuant to
either Section 3.06 of the Plan or Section 3.08 of the Plan and on whose behalf
the Employer is contributing Elective Deferrals to the Plan (or is making
Nondeductible Employee Contributions).
CONTRIBUTION PERCENTAGE
Means the ratio (expressed as a percentage) of the Participant's Contribution
Percentage Amounts to the Participant's Compensation for the Plan Year (taking
into account only the Compensation paid to the Employee during the portion of
the Plan Year he or she was an Eligible Participant, unless otherwise indicated
in the Adoption Agreement).
CONTRIBUTION PERCENTAGE AMOUNTS
Means the sum of the Nondeductible Employee Contributions, Matching
Contributions and Qualified Matching Contributions (to the extent not taken
into account for purposes of the ADP test) made under the Plan on behalf of the
Participant for the Plan Year. Such Contribution Percentage Amounts shall not
include Matching Contributions that are forfeited either to correct Excess
Aggregate Contributions or because the contributions to which they relate are
Excess Deferrals, Excess Contributions, Excess Aggregate Contributions or
Excess Annual Additions which are distributed pursuant to Section 3.12(A)(4)(c)
of the Plan. The Employer may elect to use either Qualified Nonelective
Contributions or Elective Deferrals, or both, in the Contribution Percentage
Amounts. Elective Deferrals may only be included in the Contribution Percentage
Amounts if the Plan passes the ADP test both prior to and following the
exclusion of such Elective Deferrals.
CUSTODIAN
Means an entity specified in the Adoption Agreement as Custodian or any duly
appointed successor as provided in Section 8.05 of the Plan.
DEDUCTIBLE EMPLOYEE CONTRIBUTIONS
Means any qualified voluntary employee contributions (as defined in Section
219(e)(2) of the Code made after December 31, 1981, in a taxable year beginning
after such date and made for a taxable year beginning before January 1, 1987,
and allowable as a deduction under Section 219(a) of the Code for such taxable
year.
DEFINED BENEFIT FRACTION
Means a fraction, the numerator of which is the sum of the Participant's
Projected Annual Benefits under all the defined benefit plans (whether or not
terminated) maintained by the Employer, and the denominator of which is the
lesser of 125 percent of the dollar limitation determined for the Limitation
Year under Section 415(b) and (d) of the Code or 140 percent of the Highest
Average Compensation, including any adjustments under Section 415(b) of the
Code. Notwithstanding the above, if the Participant was a Participant as of the
first day of the first Limitation Year beginning after December 31, 1986, in
one or more defined benefit plans maintained by the Employer which were in
existence on May 6, 1986, the denominator of this fraction will not be less
than 125 percent of the sum of the annual benefits under such plans which the
Participant had accrued as of the close of the last Limitation Year beginning
before January 1, 1987, disregarding any changes in the terms and conditions of
the plan after May 5, 1986. The preceding sentence applies only if the defined
benefit plans individually, and in the aggregate, satisfied the requirements of
Section 415 of the Code for all Limitation Years beginning before January 1,
1987.
DEFINED CONTRIBUTION DOLLAR LIMITATION
Means $30,000, as adjusted under Section 415(d) of the Code.
DEFINED CONTRIBUTION FRACTION
Means a fraction, the numerator of which is the sum of the Annual Additions to
the Participant's account under all the defined contribution plans (whether or
not terminated) maintained by the Employer for the current and all prior
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Limitation Years (including the Annual Additions attributable to the
Participant's Nondeductible Employee Contributions to all defined benefit
plans, whether or not terminated, maintained by the Employer, and the Annual
Additions attributable to all welfare benefit funds, as defined in Section
419(e) of the Code, individual medical accounts, and simplified employee
pension plans, maintained by the Employer), and the denominator of which is the
sum of the maximum aggregate amounts for the current and all prior Limitation
Years of service with the Employer (regardless of whether a defined
contribution plan was maintained by the Employer). The maximum aggregate amount
in any Limitation Year is the lesser of 125 percent of the dollar limitation
determined under Sections 415(b) and (d) of the Code in effect under Section
415(c)(1)(A) of the Code or 35 percent of the Participant's Compensation for
such year. If the Employee was a Participant as of the end of the first day of
the first Limitation Year beginning after December 31, 1986, in one or more
defined contribution plans maintained by the Employer which were in existence
on May 6, 1986, the numerator of this fraction will be adjusted if the sum of
this fraction and the Defined Benefit Fraction would otherwise exceed 1.0 under
the terms of this Plan. Under the adjustment, an amount equal to the product of
(1) the excess of the sum of the fractions over 1.0 times (2) the denominator
of this fraction, will be permanently subtracted from the numerator of this
fraction. The adjustment is calculated using the fractions as they would be
computed as of the end of the last Limitation Year beginning before January 1,
1987, and disregarding any changes in the terms and conditions of the Plan made
after May 5, 1986, but using the Section 415 limitation applicable to the first
Limitation Year beginning on or after January 1, 1987. The Annual Addition for
any Limitation Year beginning before January 1, 1987, shall not be recomputed
to treat all Nondeductible Employee Contributions as Annual Additions.
DETERMINATION DATE
Means for any Plan Year subsequent to the first Plan Year, the last day of the
preceding Plan Year. For the first Plan Year of the Plan, Determination Date
means the last day of that year.
DETERMINATION PERIOD
Means, except as provided elsewhere in this Plan, the Plan Year unless the
Adopting Employer has selected another period in the Adoption Agreement.
DIRECT ROLLOVER
Means a payment by the Plan to the Eligible Retirement Plan specified by the
Recipient (or, if necessary pursuant to Sect-ion 5.02(A) of the Plan, an
individual retirement account (IRA) under either Section 408(a) or Section
408(b) of the Code, selected by the Plan Administrator).
DIRECTED TRUSTEE
Means a Trustee that is designated as a Directed Trustee on the Adoption
Agreement. A Directed Trustee shall be responsible for investing the Fund and
performing the responsibilities set forth in Section Eight of the Plan in
accordance with specific instructions provided by the Adopting Employer or Plan
Administrator (or Participant or Beneficiary if applicable).
DISABILITY
Unless the Adopting Employer has elected a different definition in the Adoption
Agreement, Disability means the inability to engage in any substantial, gainful
activity by reason of any medically determinable physical or mental impairment
that can be expected to result in death or which has lasted or can be expected
to last for a continuous period of not less than 12 months. The permanence and
degree of such impairment shall be supported by medical evidence.
DISCRETIONARY TRUSTEE
Means a Trustee which is designated as a Discretionary Trustee on the Adoption
Agreement and enters into an agreement with the Adopting Employer whereby the
Trustee and not the Adopting Employer will select the appropriate investments
for the Fund in accordance with the Plan's funding policy statement or will
perform such other tasks identified in such agreement between the Trustee and
Adopting Employer.
DISTRIBUTION CALENDAR YEAR
Means a calendar year for which a minimum distribution is required. For
distributions beginning before the Participant's death, the first Distribution
Calendar Year is the calendar year immediately preceding the calendar year
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which contains the Participant's Required Beginning Date. For distributions
beginning after the Participant's death, the first Distribution Calendar Year
is the calendar year in which distributions are required to begin pursuant to
Section 5.05(E) of the Plan.
DOMESTIC RELATIONS ORDER
Means any judgment, decree or order (including approval of a property
settlement agreement) that: a. relates to the provision of child support,
alimony payments, or marital property rights to a spouse, former spouse, child,
or other dependent of a Participant, and b. is made pursuant to state domestic
relations law (including a community property law).
EARLIEST RETIREMENT AGE
Means, for purposes of the Qualified Joint and Survivor Annuity provisions of
the Plan, the earliest date on which, under the Plan, the Participant could
elect to receive retirement benefits.
EARLY RETIREMENT AGE
Means the age specified in the Adoption Agreement. The Plan will not have an
Early Retirement Age if none is specified in the Adoption Agreement.
EARNED INCOME
Means the net earnings from self-employment in the trade or business with
respect to which the Plan is established, for which personal services of the
individual are a material income-producing factor. Net earnings will be
determined without regard to items not included in gross income and the
deductions allocable to such items. Net earnings are reduced by contributions
by the Employer to a qualified plan to the extent deductible under Section 404
of the Code. Net earnings shall be determined with regard to the deduction
allowed to the Employer by Section 164(f) of the Code for taxable years
beginning after December 31,1989.
EFFECTIVE DATE
Means the date the Plan becomes effective as indicated in the Adoption
Agreement. Notwithstanding the foregoing, unless otherwise provided in this
Basic Plan Document, the Effective Date of Plan provisions attributable to the
Uruguay Round Agreements Act Of 1994 (GATT), the Uniform Services Employment
and Reemployment Rights Act of 1994 (USERRA), the Small Business Job Protection
Act of 1996 (SBJPA), the Taxpayer Relief Act of 1997 (TRA-97) and the Tax
Technical Corrections Act of 1998 (TTCA-98) shall be the later of the first day
of the Employer's 1997 Plan Year or the original Effective Date of the Plan.
ELECTION PERIOD
Means the period which begins on the first day of the Plan Year in which the
Participant attains age 35 and ends on the date of the Participant's death. If
a Participant separates from service prior to the first day of the Plan Year in
which age 35 is attained, with respect to the account balance as of the date of
separation, the Election Period shall begin on the date of separation.
ELECTIVE DEFERRALS
Means any Employer Contributions made to the Plan at the election of the
Participant, in lieu of cash compensation, and shall include contributions made
pursuant to a salary reduction agreement or other deferral mechanism. With
respect to any taxable year, a Participant's Elective Deferral is the sum of
all Employer contributions made on behalf of such Participant pursuant to an
election to defer under any qualified cash or deferred arrangement as described
in Section 401(k) of the Code, any simplified employee pension plan cash or
deferred arrangement as described in Section 402(h)(1)(B) of the Code, any
SIMPLE IRA Plan described in Section 408(p) of the Code, any eligible deferred
compensation plan under Section 457 of the Code, any plan as described under
Section 501(c)(18) of the Code, any Employer contributions made on the behalf
of a Participant for the purchase of an annuity contract under Section 403(b)
of the Code pursuant to a salary reduction agreement and any elective Employer
contribution under Section 408(p)(2)(A)(i) of the Code. Elective Deferrals
shall not include any deferrals properly distributed as Excess Annual
Additions. No Participant shall be permitted to have Elective Deferrals made
under this Plan, or any other qualified
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plan maintained by the Employer, during any taxable year, in excess of the
dollar limitation contained in Section 402(g) of the Code in effect at the
beginning of such taxable year.
ELIGIBLE EMPLOYEE
Means, if the Employer has adopted a SIMPLE 401(k) Plan, any Employee who is
entitled to make Elective Deferrals under the terms of the Plan.
Notwithstanding the foregoing, if the Employer has elected to apply the safe
harbor CODA provisions of Section 3.15 of the Plan, means an Employee eligible
to make Elective Deferrals under the Plan for any part of the Plan Year or who
would be eligible to make Elective Deferrals but for a suspension due to a
hardship distribution described in Section 5.01(A)(6) of the Plan or to
statutory limitations, such as Sections 402(g) and 415 of the Code.
ELIGIBLE EMPLOYER
Means, with respect to any Year, an Employer that had no more than 100
Employees who received at least $5,000 of Compensation from the Employer for
the preceding Year and is therefore eligible to establish a SIMPLE 401(k) Plan.
In applying the preceding sentence, all Employees of controlled groups of
corporations under Section 414(b) of the Code, all Employees of trades or
businesses (whether incorporated or not) under common control under Section
414(c) of the Code, all Employees of affiliated service groups under Section
414(m) of the Code, and Leased Employees required to be treated as the
Employer's Employees under Section 414(n) of the Code, are taken into account.
An Eligible Employer that adopts a SIMPLE 401(k) and that fails to be an
Eligible Employer for any subsequent Year, is treated as an Eligible Employer
for the two Years following the last Year the Employer was an Eligible
Employer. If the failure is due to any acquisition, disposition, or similar
transaction involving an Eligible Employer, the preceding sentence applies only
if the provisions of Section 410(b)(6)(C)(i) of the Code are satisfied.
ELIGIBLE PARTICIPANT
Means any Employee who is eligible to make a Nondeductible Employee
Contribution or an Elective Deferral, or to receive a Matching Contribution
(including Forfeitures thereof) or a Qualified Matching Contribution. If a
Nondeductible Employee Contribution is required as a condition of participation
in the Plan, any Employee who would be a Participant in the Plan if such
Employee made such a contribution shall be treated as an Eligible Participant
on behalf of whom no Nondeductible Employee Contributions are made.
ELIGIBLE RETIREMENT PLAN
Means an individual retirement account described in Section 408(a) of the Code,
an individual retirement annuity described in Section 408(b) of the Code, an
annuity plan described in Section 403(a) of the Code, or a qualified trust
described in Section 401(a) of the Code, that accepts the Recipient's Eligible
Rollover Distribution. However, in the case of an Eligible Rollover
Distribution to the surviving Spouse, an Eligible Retirement Plan is an
individual. retirement account or individual retirement annuity.
ELIGIBLE ROLLOVER DISTRIBUTION
Means any distribution of all or any portion of the balance to the credit of
the Recipient, except that an Eligible Rollover Distribution does not include
a. any distribution that is one of a series of substantially equal periodic
payments (not less frequently than annually) made for the life (or Life
Expectancy) of the Recipient or the joint lives (or joint life expectancies) of
the Recipient and the Recipient's designated Beneficiary, or for a specified
period of ten years or more; b. any distribution to the extent such
distribution is required under Section 401(a)(9) of the Code; c. the portion of
any other distribution that is not includible in gross income (determined
without regard to the exclusion for net unrealized appreciation with respect to
employer securities); d. any hardship distribution described in Section
5.01(A)(6) of the Plan received after December 31, 1998; and e. any other
distribution(s) that is reasonably expected to total less than $200 during a
year.
ELIGIBILITY COMPUTATION PERIOD
Means, with respect to an Employee's initial Eligibility Computation Period,
the 12 consecutive month period commencing on the Employee's Employment
Commencement Date. Unless otherwise specified in the Adoption Agreement, the
Employee's subsequent Eligibility Computation Periods shall be the 12
consecutive month periods commencing on the anniversaries of his or her
Employment Commencement Date. An Employee is not credited with a
8
Year of
Eligibility Service before the end of the 12 consecutive month period
regardless of when during such period the Employee completes the required
number of Hours of Service.
EMPLOYEE
Means any person employed by an Employer maintaining the Plan or of any other
employer required to be aggregated with such Employer under Sections 414(b),
(c), (m) or (o) of the Code. The term Employee shall also include any Leased
Employee deemed to be an Employee of any Employer described in the previous
paragraph as provided in Sections 414(n) or (o) of the Code.
EMPLOYER
Means the Adopting Employer, and, unless otherwise provided in the Adoption
Agreement, all members of a controlled group of corporations (as defined in
Section 414(b) of the Code as modified by Section 415 (h) of the Code), all
commonly controlled trades or businesses (as defined in Section 414(c) of the
Code as modified by Section 415(h) of the Code) or affiliated service groups
(as defined in Section 414(m) of the Code) of which the adopting Employer is a
part, and any other entity required to be aggregated with the Employer pursuant
to regulations under Section 414(o) of the Code. A partnership is considered to
be the Employer of each of the partners and a sole-proprietorship is considered
to be the Employer of a sole proprietor.
EMPLOYER CONTRIBUTION
Means the amount contributed by the Employer each year as determined under this
Plan. The term Employer Contribution shall include Elective Deferrals made to
the Plan unless such contributions are intended to be excluded for purposes of
any act under the Code, ERISA or any additional rules, regulations or other
pronouncements promulgated by either the Internal Revenue Service (IRS) or the
Department of Labor.
EMPLOYER MONEY PURCHASE PENSION CONTRIBUTION
Means an Employer Contribution made pursuant to the section of the Adoption
Agreement titled, "Employer Money Purchase Pension Contributions." The Employer
must make Employer Money Purchase Pension Contributions without regard to
current or accumulated earnings or profits.
EMPLOYER TARGET BENEFIT PENSION CONTRIBUTION
Means an Employer Contribution made pursuant to the section of the Adoption
Agreement titled, "Employer Target Benefit Pension Contributions." The Employer
must make Employer Target Benefit Pension Contributions without regard to
current or accumulated earnings or profits.
EMPLOYER PROFIT SHARING CONTRIBUTION
Means an Employer Contribution made pursuant to the section of the Adoption
Agreement titled, "Employer Profit Sharing Contributions." The Employer may
make Employer Profit Sharing Contributions without regard to current or
accumulated earnings or profits.
EMPLOYMENT COMMENCEMENT DATE
Means, with respect to an Employee, the date such Employee first performs an
Hour of Service for the Employer.
ENHANCED MATCHING CONTRIBUTIONS
Means Matching Contributions described in Section 401(k)(12)(B)(iii) of the
Code and made pursuant to the formula elected by the Employer in the Adoption
Agreement.
ENTRY DATES
Means the first day of the Plan Year and the first day of the seventh month of
the Plan Year, unless the Adopting Employer has specified different dates in
the Adoption Agreement.
ERISA
Means the Employee Retirement Income Security Act of 1974 as amended from time-
to-time.
9
EXCESS AGGREGATE CONTRIBUTIONS
Means, with respect to any Plan Year, the excess of a. the aggregate
Contribution Percentage Amounts taken into account in computing the numerator
of the Contribution Percentage actually made on behalf of Highly Compensated
Employees for such Plan Year, over b. the maximum Contribution Percentage
Amounts permitted by the ACP test (determined by hypothetically reducing
contributions made on behalf of Highly Compensated Employees in order of their
Contribution Percentages beginning with the highest of such percentages). Such
determination shall be made after first determining Excess Elective Deferrals
pursuant to the definition provided herein and then determining Excess
Contributions pursuant to the definition provided herein.
EXCESS ANNUAL ADDITIONS
Means the excess of the Participant's Annual Additions for the Limitation Year
over the Maximum Permissible Amount.
EXCESS CONTRIBUTIONS
Means, with respect to any Plan Year, the excess of a. the aggregate amount of
Employer Contributions actually taken into account in computing the ADP of
Highly Compensated Employees for such Plan Year, over b. the maximum amount of
such contributions permitted by the ADP test (determined by hypothetically
reducing contributions made on behalf of Highly Compensated Employees in order
of the ADPs, beginning with the highest of such percentages).
EXCESS ELECTIVE DEFERRALS
Means those Elective Deferrals that are includible in a Participant's gross
income under Section 402(g) of the Code to the extent such Participant's
Elective Deferrals for a taxable year exceed the dollar limitation under such
Code section. Excess Elective Deferrals shall be treated as Annual Additions
under the Plan, unless such amounts are distributed no later than the first
April 15 following the close of the Participant's taxable year.
FIDUCIARY
Means a person who exercises any discretionary authority or control respecting
management of the Plan, renders investment advice as defined in Section 3(21)
of ERISA or has any discretionary authority or responsibility regarding the
administration of the Plan. The Employer and such other individuals either
appointed by the Employer or deemed to be fiduciaries as a result of their
actions shall serve as Fiduciaries under this Plan and fulfill the fiduciary
responsibilities described in Part 4, Title I of ERISA.
FISCAL YEAR
Means the 12-month period coinciding with the Adopting Employer's tax year.
FORFEITURE
Means that portion of a Participant's Individual Account derived from Employer
Contributions which he or she is not entitled to receive (i.e., the nonvested
portion).
FUND
Means the Plan assets held by the Trustee (or Custodian, if applicable) for the
Participants' exclusive benefit.
HIGHEST AVERAGE COMPENSATION
Means the average compensation for the three consecutive years of service with
the Employer that produces the highest average.
HIGHLY COMPENSATED EMPLOYEE
Means, effective for years beginning after December 31, 1996, any Employee who
1) was a five-percent owner at any time during the year or the preceding year,
or 2) for the preceding year had Compensation from the Employer in excess of
$80,000 and, if elected by the Adopting Employer in the Adoption Agreement, was
in the top-paid group for the preceding year. The $80,000 amount is adjusted at
the same time and in the same manner as under Section 415(d) of the Code,
except that the base period is the calendar quarter ending September 30,1996.
10
For this purpose the applicable year of the Plan for which a determination is
being made is called a determination year and the preceding 12month period is
called a took-back year. Unless otherwise elected by the Adopting Employer in
the Adoption Agreement, however, the Employer shall be deemed to have made a
calendar year data election. If a calendar year data election is made or is
deemed to be made, the look-back year shall be the calendar year ending within
the Plan Year for purposes of determining who is a Highly Compensated Employee
(other than as a five-percent owner). A highly compensated former employee is
based on the rules applicable to determining Highly Compensated Employee status
as in effect for that determination year, in accordance with Section 1.414(q)-
1T, A-4 of the Treasury Regulations, Notice 97-45 and any subsequent guidance
issued by the IRS. In determining whether a Participant is a Highly Compensated
Employee for years beginning in 1997, the definition of Highly Compensated
Employee provided herein shall be deemed to have been in effect for years
beginning in 1996. The determination of who is a Highly Compensated Employee,
including, but not limited to, the determinations of the number and identity of
Employees in the top-paid group and the Compensation that is considered, will
be made in accordance with Section 414(q) of the Code and the regulations
thereunder.
HOURS OF SERVICE - MEANS
A. General Rules For Crediting Hours of Service
1. Each hour for which an Employee is paid, or entitled to payment, for the
performance of duties for the Employer. These hours will be credited to
the Employee for the computation period in which the duties are
performed; and
2. Each hour for which an Employee is paid, or entitled to payment, by the
Employer on account of a period of time during which no duties are
performed (irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty or leave of absence. No
more than 501 Hours of Service will be credited under this paragraph for
any single continuous period (whether or not such period occurs in a
single computation period). Hours under this paragraph shall be
calculated and credited pursuant to Section 2530.200b-2 of the Labor
Regulations which is incorporated herein by this reference; and
3. Each hour for which back pay, irrespective of mitigation of damages, is
either awarded or agreed to by the Employer. The same Hours of Service
will not be credited both under paragraph (1) or paragraph (2), as the
case may be, and under this paragraph (3). These hours will be credited
to the Employee for the computation period or periods to which the award
or agreement pertains rather than the computation period in which the
award, agreement, or payment is made.
4. Solely for purposes of determining whether a Break in Eligibility Service
or a Break in Vesting Service has occurred in a computation period (the
computation period for purposes of determining whether a Break in Vesting
Service has occurred is the Plan Year or other vesting computation period
described in the definition of a Year of Vesting Service), an individual
who is absent from work for maternity or paternity reasons shall receive
credit for the Hours of Service which would otherwise have been credited
to such individual but for such absence, or in any case in which such
hours cannot be determined, eight Hours of Service per day of such
absence. For purposes of this paragraph, an absence from work for
maternity or paternity reasons means an absence 1) by reason of the
pregnancy of the individual, 2) by reason of a birth of a child of the
individual, 3) by reason of the placement of a child with the individual
in connection with the adoption of such child by such individual, or 4)
for purposes of caring for such child for a period beginning immediately
following such birth or placement. The Hours of Service credited under
this paragraph shall be credited 1) in the Eligibility Computation Period
or Plan Year or other vesting computation period described in the
definition of a Year of Service in which the absence begins if the
crediting is necessary to prevent a Break in Eligibility Service or a
Break in Vesting Service in the applicable period, or 2) in all other
cases, in the following Eligibility Computation Period or Plan Year or
other vesting computation period described in the definition of a Year
of Service.
5. Hours of Service will be credited for employment with other members of an
affiliated service group (under Section 414(m) of the Code), a controlled
group of corporations (under Section 414(b) of the Code), or a group of
trades or businesses under common control (under Section 414(c) of the
Code) of which the Adopting Employer is a member, and any other entity
required to be aggregated with the Employer pursuant to Section 414(o) of
the Code and the regulations thereunder. Hours of Service will also be
credited for any individual
11
considered an Employee for purposes of this Plan under Sections 414(n)
or 414(o) of the Code and the regulations thereunder.
6. Where the Employer maintains the plan of a predecessor employer, service
for such predecessor employer shall be treated as service for the
Employer.
7. The above method for determining Hours of Service may be altered as
specified in the Adoption Agreement.
B. Special Rules Where Elapsed Time Method is Being Used This paragraph (B)
shall apply where the Adopting Employer has indicated in the Adoption
Agreement that the elapsed time method of determining service will be used.
When this paragraph applies, the definitions of break in service and hour of
service in this paragraph will replace the definitions of Break in
Eligibility Service, Break in Vesting Service and Hours of Service found in
the Definitions Section of the Plan. For purposes of determining an
Employee's initial or continued eligibility to participate in the Plan or
the Vested interest in the Participant's Individual Account balance derived
from Employer Contributions, (except for periods of service which may be
disregarded on account of the "rule of parity" described in the definition
of a Year of Vesting Service and in Section 2.04 of the Plan) an Employee
will receive credit for the aggregate of all time period(s) commencing with
the Employee's first day of employment or reemployment and ending on the
date a break in service begins. The first day of employment or reemployment
is the first day the Employee performs an Hour of Service. An Employee wilt
also receive credit for any period of severance of less than 12 consecutive
months. Fractional periods of a year will be expressed in terms of months or
days. For purposes of this paragraph (B), hour of service will mean each
hour for which an Employee is paid or entitled to payment for the
performance of duties for the Employer. Break in service is a period of
severance of at least 12 consecutive months. Period of severance is a
continuous period of time during which the Employee is not employed by the
Employer. Such period begins on the date the Employee retires, quits or is
discharged, or if earlier, the 12 month anniversary of the date on which the
Employee was otherwise first absent from service. In the case of an
individual who is absent from work for maternity or paternity reasons, the
12 consecutive month period beginning on the first anniversary of the first
date of such absence shall not constitute a break in service. For purposes
of this paragraph (B), an absence from work for maternity or paternity
reasons means an absence 1) by reason of the pregnancy of the individual, 2)
by reason of the birth of a child of the individual, 3) by reason of the
placement of a child with the individual in connection with the adoption of
such child by such individual, or 4) for purposes of caring for such child
for a period beginning immediately following such birth or placement. If the
Employer is a member of an affiliated service group (under Section 414(m) of
the Code), a controlled group of corporations (under Section 414(b) of the
Code), a group of trades or businesses under common control (under Section
414(c) of the Code), or any other entity required to be aggregated with the
Employer pursuant to Section 414(o) of the Code, service will be credited
for any employment for any period of time for any other member of such
group. Service will also be credited for any individual required under
Section 414(n) or Section 414(o) of the Code to be considered an Employee of
any Employer aggregated under Section 414(b), (c), or (m) of the Code.
C. Changes In Methods of Crediting Service A plan may be amended to change the
method of crediting service between the general rules discussed in paragraph
(A) and the elapsed time method discussed in paragraph (B) provided each
Employee with respect to whom the method of crediting service is changed is
afforded the protection described in Section 1.410(a)7(g) of the Treasury
Regulations and other applicable rules promulgated by the IRS.
INDIVIDUAL ACCOUNT
Means the account established and maintained under this Plan for each
Participant in accordance with Section 7.02(A) of the Plan.
INVESTMENT FUND
Means a subdivision of the Fund established pursuant to Section 7.01(B) of the
Plan.
KEY EMPLOYEE
Means any Employee or former Employee (and the Beneficiaries of such Employee)
who at any time during the determination period was an officer of the Employer
if such individual's annual compensation exceeds 50 percent of the dollar
limitation under Section 415(b)(1)(A) of the Code, an owner (or considered an
owner under Section 318 of the Code) of one of the 10 largest interests in the
Employer if such individual's compensation exceeds 100 percent of the
12
dollar limitation under Section 415(c)(1)(A) of the Code, a five percent owner
of the Employer, or a one percent owner of the Employer who has annual
compensation of more than $150,000. Annual compensation means compensation as
defined in Section 415(c)(3) of the Code, but including amounts contributed by
the Employer pursuant to a salary reduction agreement which are excludable
from the Employee's gross income under Section 125, Section 402(e)(3), Section
402(h)(1)(B) or Section 403(b) of the Code. The determination period is the
Plan Year containing the Determination Date and the four preceding Plan Years.
For Plan Years beginning on or after January 1, 2001, except as otherwise
provided in the Adopt ion Agreement, Compensation shall also include elective
amounts that are not includible in the gross income of the Employee by reason
of Section 132(f)(4) of the Code. The determination of who is a Key Employee
will be made in accordance with Section 416(i)(1) of the Code and the Income
Tax Regulations thereunder.
LEASED EMPLOYEE
Means, effective for Plan Years beginning on or after January 1, 1997, any
person (other than an Employee of the recipient Employer) who pursuant to an
agreement between the recipient Employer and any other person ("leasing
organization") has performed services for the recipient Employer (or for the
recipient Employer and related persons determined in accordance with Section
414(n)(6) of the Code) on a substantially full time basis for a period of at
least one year, and such services are performed under primary direction or
control by the recipient Employer. Contributions or benefits provided a Leased
Employee by the leasing organization which are attributable to services
performed for the recipient Employer shall be treated as provided by the
recipient Employer.
A Leased Employee shall not be considered an Employee of the recipient if 1)
such Leased Employee is covered by a money purchase pension plan providing a) a
nonintegrated employer contribution rate of at least 10 percent 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 Leased Employee's gross income under Section 125, Section
402(e)(3), Section 402(h)(1)(B) or Section 403(b) of the Code, b) immediate
participation, and c) full and immediate vesting; and 2) Leased Employees do
not constitute more than 20 percent of the recipient's nonhighly compensated
work force. For Plan Years beginning on or after January 1, 2001, except as
otherwise provided in the Adoption Agreement, Compensation shall also include
elective amounts that are not includible in the gross income of the Employee by
reason of Section 132(f)(4) of the Code.
LIFE EXPECTANCY
Means life expectancy or joint and last survivor expectancy as computed using
the expected return multiples in Tables V and VI of Section 1.72-9 of the
Income Tax Regulations.
Unless otherwise elected by the Participant (or Spouse, in the case of
distributions described in Section 5.05(E)(2)(b) of the Plan) by the time
distributions are required to begin, life expectancies shall not be
recalculated annually. Such election shall be irrevocable as to the Participant
(or Spouse) and shall apply to all subsequent years. The Life Expectancy of a
non-Spouse Beneficiary may not be recalculated.
LIMITATION YEAR
Means the Plan Year, or the 12-consecutive month period elected by the Employer
in the Adoption Agreement. All qualified plans maintained by the Employer must
use the same Limitation Year. If the Limitation Year is amended to a different
12-consecutive month period, the new Limitation Year must begin on a date
within the Limitation Year in which the amendment is made.
MASTER OR PROTOTYPE PLAN
Means a plan, the form of which is the subject of a favorable opinion letter
from the IRS.
MATCHING CONTRIBUTION
Means an Employer Contribution made to this or any other defined contribution
plan on behalf of a Participant on account of an Elective Deferral or a
Nondeductible Employee Contribution made by such Participant under a plan
maintained by the Employer. Notwithstanding the foregoing, if the Adopting
Employer has elected to apply the Safe Harbor CODA provisions of Section 3.15
of the Plan, Matching Contribution means contributions made by the Employer on
account of an Eligible Employee's Elective Deferrals. For Plan Years beginning
on or after January 1,
13
1998, Matching Contributions made by self-employed Participants (as defined in
Section 401(c) of the Code) shall not be treated as Elective Deferrals.
MAXIMUM PERMISSIBLE AMOUNT
Means the maximum Annual Addition that may be contributed or allocated to a
Participant's Individual Account under the Plan for any Limitation Year which
shall not exceed the lesser of
a. the Defined Contribution Dollar Limitation, or
b. 25 percent of the Participant's Compensation for the Limitation Year.
The compensation limitation referred to in (b) shall not apply to any
contribution for medical benefits (within the meaning of Section 401(h) or
Section 419A(f)(2) of the Code) which is otherwise treated as an Annual
Addition under Section 415(l)(1) or 419A(d)(2) of the Code. If a short
Limitation Year is created because of an amendment changing the Limitation Year
to a different 12-consecutive month period, the Maximum Permissible Amount will
not exceed the Defined Contribution Dollar Limitation multiplied by the
following fraction: NUMBER OF MONTHS IN THE SHORT LIMITATION YEAR - 12
NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS
Means any contribution made to the Plan by or on behalf of a Participant that
is included in the Participant's gross income in the year in which made and
that is maintained under a separate account to which earnings and losses are
allocated.
NORMAL RETIREMENT AGE
Means the age specified in the Adoption Agreement. If the Employer enforces a
mandatory retirement age, the Normal Retirement Age is the lesser of that
mandatory age or the age specified in the Adoption Agreement. If no age is
specified in the Adoption Agreement, the Normal Retirement Age shall be age 59
1/2.
OWNER - EMPLOYEE
Means an individual who is a sole proprietor, or who is a partner owning more
than 10 percent of either the capital or profits interest of the partnership.
PARTICIPANT
Means any Employee or former Employee of the Employer who has met the Plan's
age and service requirements, has entered the Plan and who is or may become
eligible to receive a benefit of any type from this Plan or whose Beneficiary
may be eligible to receive any such benefit.
PARTICIPANT'S BENEFIT
A. General Definition:
Means the Individual Account as of the last Valuation Date in the valuation
calendar year (the calendar year immediately preceding the Distribution
Calendar Year) increased by the amount of any Contributions or Forfeitures
allocated to the account balance as of dates in the valuation calendar year
after the Valuation Date and decreased by distributions made in the
valuation calendar year after the Valuation Date.
B. Exception For Second Distribution Calendar Year: For purposes of paragraph
(a) above, if any portion of the minimum distribution for the first
Distribution Calendar Year is made in the second Distribution Calendar Year
on or before the Required Beginning Date, the amount of the minimum
distribution made in the second Distribution Calendar Year shall be treated
as if it had been made in the immediately preceding Distribution Calendar
Year.
PERMISSIVE AGGREGATION GROUP
Means the Required Aggregation Group of plans plus any other plan or plans of
the Employer which, when considered as a group with the Required Aggregation
Group, would continue to satisfy the requirements of Sections 401(a)(4) and 410
of the Code.
14
PLAN
Means the prototype defined contribution plan adopted by the Employer that is
intended to satisfy the requirements of Sections 401 and 501 of the Code and
ERISA respectively. The Plan consists of this Basic Plan Document plus the
corresponding Adoption Agreement as completed and signed by the Adopting
Employer.
PLAN ADMINISTRATOR
The Adopting Employer shall be the Plan Administrator unless the managing body
of the Adopting Employer designates a person or persons other than the Adopting
Employer as the Plan Administrator and so notifies the Trustee (or Custodian,
if applicable). The Adopting Employer shall also be the Plan Administrator if
the person or persons so designated ceases to be the Plan Administrator. The
Adopting Employer may establish an administrative committee that will carry out
the Plan Administrator's duties. Members of the administrative committee may
allocate the Plan Administrator's duties among themselves. If the managing body
of the Adopting Employer designates a person or persons other than the Adopting
Employer as Plan Administrator, such person or persons shall serve at the
pleasure of the Adopting Employer and shall serve pursuant to such procedures
as such managing body may provide. Each such person shall be bonded as may be
required by law.
PLAN SEQUENCE NUMBER
Means the three digit number the Adopting Employer assigned to the Plan on the
Adoption Agreement. The Plan Sequence Number identifies the number of qualified
retirement plans the Employer maintains or has maintained. The Plan Sequence
Number is 001 for the Employers first qualified retirement plan, 002 for the
second, etc.
PLAN YEAR
Means the 12 consecutive month period which coincides with the Adopting
Employer's Fiscal Year or such other 12 consecutive month period as is
designated in the Adoption Agreement. Notwithstanding the foregoing, a Plan
Year may be a 52 to 53 week period as defined in the Adoption Agreement.
PRE-AGE 35 WAIVER
A Participant who will not yet attain age 35 as of the end of any current Plan
Year may make a special Qualified Election to waive the Qualified Preretirement
Survivor Annuity for the period beginning on the date of such election and
ending on the first day of the Plan Year in which the Participant will attain
age 35. Such election shall not be valid unless the Participant receives an
explanation of the Qualified Preretirement Survivor Annuity in such terms as
are comparable to the explanation required under Section 5.13(D)(1) of the
Plan. Qualified Preretirement Survivor Annuity coverage will be automatically
reinstated as of the first day of the Plan Year in which the Participant
attains age 35. Any new waiver on or after such date shall be subject to the
full requirements of Section 5.13 of the Plan.
PRESENT VALUE
Unless otherwise indicated in the Adoption Agreement, for purposes of
establishing the Present Value of benefits under a defined benefit plan to
compute the top-heavy ratio, any benefit shall be discounted only for mortality
and interest based on the interest rate and mortality table specified for this
purpose in the defined benefit plan.
PRIOR PLAN
Means a plan which was replaced by adoption of this Plan document as indicated
in the Adoption Agreement.
PROJECTED ANNUAL BENEFIT
Means the annual retirement benefit (adjusted to an actuarially equivalent
straight life annuity if such benefit is expressed in a form other than a
straight life annuity or Qualified Joint and Survivor Annuity) to which the
Participant would be entitled under the terms of the Plan assuming
a. the Participant will continue employment until Normal Retirement Age under
the Plan (or current age, if later), and
b. the Participant's Compensation for the current Limitation Year and all other
relevant factors used to determine benefits under the Plan will remain
constant for all future Limitation Years.
Straight life annuity means an annuity payable in equal installments for the
life of the Participant that terminates upon the Participant's death.
15
PROTOTYPE SPONSOR
Means the entity specified in the Adoption Agreement that makes this prototype
Plan available to employers for adoption.
QUALIFIED DOMESTIC RELATIONS ORDER
A. In General
Means a Domestic Relations Order
a. which creates or recognizes the existence of an Alternate Payee's rights
to, or assigns to an Alternate Payee the right to receive all or a portion
of the benefits payable with respect to a Participant under the Plan, and
b. with respect to which the requirements described in the remainder of this
section are met.
B. Specification of Facts
A Domestic Relations Order shall be a Qualified Domestic Relations Order only
if the order clearly specifies
a. the name and last known mailing address (if any) of the Participant and
the name and mailing address of each Alternate Payee covered by the order,
b. the amount or percentage of the Participant's benefits to be paid by the
Plan to each such Alternate Payee, or the manner in which such amount or
percentage is to be determined,
c. the number of payments or period to which such order. applies, and
d. each plan to which such order applies.
C. Additional Requirements
In addition to paragraph (B) above, a Domestic Relations Order shall be
considered a Qualified Domestic Relations Order only if such order
a. does not require the Plan to provide any type or form of benefit, or any
option not otherwise provided under the Plan,
b. does not require the Plan to provide increased benefits, and
c. does not require payment of benefits to an Alternate Payee which is
required to be paid to another Alternate Payee under another order
previously determined to be a Qualified Domestic Relations Order.
D. Exception for Certain Payments
A Domestic Relations Order shall not be treated as failing to meet the
requirements above solely because such order requires that payment of
benefits be made to an Alternate Payee
a. on or after the date on which the Participant attains (or would have
attained) the earliest retirement age as defined in Section 414(p)(4)(B)
of the Code,
b. as if the Participant had retired on the date on which such payment is to
begin under such order, and
c. in any form in which such benefits may be paid under the Plan to the
Participant (other than in a Qualified Joint and Survivor Annuity) with
respect to the Alternate Payee and his or her subsequent spouse.
QUALIFIED ELECTION
Means a waiver of a Qualified Joint and Survivor Annuity or a Qualified
Preretirement Survivor Annuity. Any waiver of a Qualified Joint and Survivor
Annuity or a Qualified Preretirement Survivor Annuity shall not be effective
unless a) the Participant's Spouse consents to the election (either in writing
or in any other form permitted under rules promulgated by the IRS and DOL), b)
the election designates a specific Beneficiary, including any class of
beneficiaries or any contingent beneficiaries, which may not be changed without
spousal consent (or the Spouse expressly permits designations by the
Participant without any further spousal consent); c) the Spouse's consent
acknowledges the effect of the election; and d) the Spouse's consent is
witnessed by a plan representative or notary public. Additionally, a
Participant's waiver of the Qualified Joint and Survivor Annuity shall not be
effective unless the election designates a form of benefit payment which may
not be changed without spousal consent (or the Spouse expressly permits
designations by the Participant without any further spousal consent). If it is
established to the satisfaction of a plan representative that there is no
Spouse or that the Spouse cannot be located, a waiver will be deemed a
Qualified Election. In addition, if the Spouse is legally incompetent to give
consent, the Spouse's legal
16
guardian, even if the guardian is the Participant,
may give consent. If the Participant is legally separated or the Participant
has been abandoned (within the meaning of local law) and the Participant has a
court order to such effect, spousal consent is not required unless a Qualified
Domestic Relations Order provides otherwise.
Any consent by a Spouse obtained under this provision (or establishment that
the consent of a Spouse may not be obtained) shall be effective only with
respect to such Spouse. A consent that permits designations by the Participant
without any requirement of further consent by such Spouse must acknowledge that
the Spouse has the right to limit consent to a specific Beneficiary, and a
specific form of benefit where applicable, and that the Spouse voluntarily
elects to relinquish either or both of such rights. A revocation of a prior
waiver may be made by a Participant without the consent of the Spouse at any
time before the commencement of benefits. The number of revocations shall not
be limited. No consent obtained under this provision shall be valid unless the
Participant has received notice as provided in Section 5.13(D) of the Plan.
QUALIFIED JOINT AND SURVIVOR ANNUITY
Means an immediate annuity for the life of the Participant with a survivor
annuity for the life of the Spouse which is not less than 50 percent and not
more than 100 percent of the amount of the annuity which is payable during the
joint lives of the Participant and the Spouse and which is the amount of
benefit which can be purchased with the Participant's vested account balance.
The percentage of the survivor annuity under the Plan shall be 50 percent
(unless a different percentage is elected by the Adopting Employer in the
Adoption Agreement).
QUALIFIED MATCHING CONTRIBUTIONS
Means Matching Contributions which are subject to the distribution and
nonforfeitability requirements under Section 401(k) of the Code when made.
QUALIFIED NONELECTIVE CONTRIBUTIONS
Means contributions (other than Matching Contributions or Qualified Matching
Contributions) made by the Employer and allocated to Participants' Individual
Accounts that the Participants may not elect to receive in cash until
distributed from the Plan; that are nonforfeitable when made; and that are
distributable only in accordance with the distribution provisions that are
applicable to Elective Deferrals and Qualified Matching Contributions.
QUALIFIED PRERETIREMENT SURVIVOR ANNUITY
Means a survivor annuity for the life of the surviving Spouse of the
Participant if the payments are not less than the amounts which would be
payable as a survivor annuity under the Qualified Joint and Survivor Annuity
under the Plan in accordance with Section 417(c) of the Code.
QUALIFYING CONTRIBUTING PARTICIPANT
Means a Contributing Participant who satisfies the requirements described in
Section 3.07 of the Plan to be entitled to receive a Matching Contribution (and
Forfeitures, if applicable) for a Plan Year.
QUALIFYING PARTICIPANT
A Participant is a Qualifying Participant and is entitled to share in the
Employer Contribution for any Plan Year if the Participant was a Participant on
at least one day during the Plan Year and satisfies any additional conditions
specified in the Adoption Agreement. If this Plan is a standardized plan,
unless the Employer specifies more favorable conditions in the Adoption
Agreement, a Participant will be a Qualifying Participant for a Plan Year if he
or she either completes more than 500 Hours of Service (three consecutive
calendar months if the elapsed time method of determining service applies)
during the Plan Year or is employed on the last day of the Plan Year. The
determination of whether a Participant is entitled to share in the Employer
Contribution shall be made as of the last day of each Plan Year. If the elapsed
time method of determining service applies, each Employee will share in
Employer Contributions for the period beginning on the date the Employee
commences participation under the Plan and ending on the date on which such
Employee severs employment with the Employer or is no longer a member of an
eligible class of Employees.
RECIPIENT
A Recipient 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
17
Qualified Domestic Relations Order, as defined in Section 414(p) of the Code,
Are Recipients with regard to the interest of the Spouse or former Spouse.
RELATED EMPLOYER
Means an employer that shares common ownership or control with the Employer but
that is not required to be aggregated with the Employer for certain
qualification requirements under Sections 414(b), (c), (m) or (o) of the Code.
Unless the Adoption Agreement prohibits participation by a Related Employer, a
Related Employer may participate in this Plan only if such Related Employer
executes a Related Employer Participation Agreement. If one or more Related
Employers participate, the Plan shall constitute a multiple employer plan as
defined in Section 413(c) of the Code.
RELATED EMPLOYER PARTICIPATION AGREEMENT
Means the agreement under this prototype Plan that a Related Employer must
execute to participate in this Plan.
REQUIRED AGGREGATION GROUP
Means (a) each qualified plan of the Employer in which at least one Key
Employee participates or participated at any time during the determination
period (regardless of whether the Plan has terminated), and (b) any other
qualified plan of the Employer which enables a plan described in (a) to meet
the requirements of Sections 401(a)(4) or 410 of the Code.
REQUIRED BEGINNING DATE
Means April 1 of the calendar year following the calendar year in which the
Participant attains age 70 1/2 or retires, whichever is later, except that
benefit distributions to a five-percent owner must commence by the April 1 of
the calendar year following the calendar year in which the Participant attains
age 70 1/2. Any Participant attaining age 70 1/2 in years after 1995 may
elect by the April 1 of the calendar year following the year in which the
Participant attained age 70 1/2, (or by December 31, 1997, in the case of a
Participant attaining age 70 1/2 in 1996) to defer distributions until the
calendar year following the calendar year in which the Participant retires. If
no such election is made, the Participant will begin receiving distributions by
the April 1 of the calendar year following the year in which the Participant
attained age 70 1/2 (or by December 31, 1997, in the case of a Participant
attaining age 70 1/2 in 1996). Any Participant attaining age 70 1/2 in years
prior to 1997 may elect to stop distributions and recommence by the April 1 of
the calendar year following the year in which the Participant retires. There is
no new annuity starting date upon recommencement. The preretirement age 70 1/2
distribution option is only eliminated with respect to Employees who reach age
70 1/2 in or after a calendar year that begins after the later of December 31,
1998, or the adoption date of the amendment. The preretirement age 70 1/2
distribution option is an optional form of benefit under which benefits payable
in a particular distribution form (including any modifications that may be
elected after benefit commencement) commence at a time during the period that
begins on or after January 1 of the calendar year in which an Employee attains
age 70 1/2 and ends April 1 of the immediately following calendar year.
Notwithstanding the foregoing, the Required Beginning Date may be one of the
following if so selected by the Adopting Employer in the Adoption Agreement;
(a)the Required Beginning Date of a Participant is the April 1 of the
calendar year following the calendar year in which the Participant attains
age 70 1/2, or
(b)the Required Beginning Date of a Participant is the April 1 of the
calendar year following the calendar year in which the Participant attains
age 70 1/2, except that benefit distributions to a Participant (other
than a five-percent owner) with respect to benefits accrued after the
later of the adoption or effective date of the amendment to the Plan must
commence by the later of the April 1 of the calendar year following the
calendar year in which the Participant attains age 70 1/2 or retires;
(c)the Required Beginning Date of a Participant is the later of the April 1
of the calendar year following the calendar year in which the Participant
attains age 70 1/2 or retires except that benefit distributions to a
five-percent owner must commence by the April 1 of the calendar year
following the calendar year in which the Participant attains age 70 1/2,
(1)any Participant attaining age 70 1/2 in years after 1995 may elect by
the April 1 of the calendar year following the year in which the
Participant attained age 70 1/2, (or by December 31, 1997, in the case
of a Participant attaining age 70 1/2 in 1996) to defer distributions
until the calendar year following the calendar year in which the
Participant retires. If no such election is made the Participant will
begin receiving
18
distributions by the April 1 of the calendar year following the year in
which the Participant attained age 70 1/2 (or by December 31, 1997, in
the case of a Participant attaining age 70 1/2 in 1996);
(2)any Participant attaining age 70 1/2 in years prior to 1997 may elect
to stop distributions and recommence by the April 1 of the calendar year
following the year in which the Participant retires. There is either 1)
a new annuity starting date upon recommencement or 2) no new annuity
starting date upon recommencement; or
(3)the preretirement age 70 1/2 distribution option is only eliminated
with respect to Employees who reach age 70 1/2 in or after a calendar
year that begins after the later of December 31,1998, or the adoption
date of the amendment. The preretirement age 70 1/2 distribution option
is an optional form of benefit under which benefits payable in a
particular distribution form (including any modifications that may be
elected after benefit commencement) commence at a time during the period
that begins on or after January 1 of the calendar year in which an
Employee attains age 70 1/2 and ends April 1 of the immediately
following calendar year.
A Participant is treated as a Five-percent owner for purposes of this section
if such Participant is a five-percent owner as defined in Section 416 of the
Code at any time during the Plan Year ending with or within the calendar year
in which such owner attains age 70 1/2. Once distributions have begun to a
five-percent owner under this section, they must continue to be distributed,
even if the Participant ceases to be a five-percent owner in a subsequent year.
SAFE HARBOR NONELECTIVE CONTRIBUTIONS
Means Employer Contributions made in an amount equal to at least three percent
of each Participants Compensation on behalf of each Participant who is not a
Highly Compensated Employee. Such contributions shall be made without regard to
whether a Participant makes an Elective Deferral or a Nondeductible Employee
Contribution.
SELF-EMPLOYED INDIVIDUAL
Means an individual who has Earned Income for the taxable year from the trade
or business for which the Plan is established, including an individual who
would have had Earned Income but for the fact that the trade or business had no
net profits for the taxable year.
SEPARATE FUND
Means a subdivision of the Fund held in the name of a particular Participant
representing certain assets held for that Participant. The assets which
comprise a Participant's Separate Fund are those assets earmarked for him or
her and those assets subject to the Participant's individual direction pursuant
to Section 7.22(B) of the Plan.
SPOUSE
Means the Spouse or surviving Spouse of the Participant, provided that a former
Spouse will be treated as the Spouse or surviving Spouse and a current Spouse
will not be treated as the Spouse or surviving Spouse to the extent provided
under a Qualified Domestic Relations Order.
TAXABLE WAGE BASE
Means, with respect to any taxable year, the contribution and benefit base in
effect under Section 230 of the Social Security Act at the beginning of the
Plan Year.
TERMINATION OF EMPLOYMENT
A Termination of Employment of an Employee of an Employer shall occur whenever
his or her status as an Employee of such Employer ceases for any reason other
than death. An Employee who does not return to work for the Employer on or
before the expiration of an authorized leave of absence from such Employer
shall be deemed to have incurred a Termination of Employment when such leave
ends.
TOP-HEAVY PLAN
This Plan is a Top-Heavy Plan for any Plan Year if it is determined to be such
pursuant to Section 7.19 of the Plan.
19
TRUSTEE
Means, if applicable, an individual, individuals or corporation specified in
the Adoption Agreement as Trustee or any duty appointed successor as provided
in Section 8.05 of the Plan.
VALUATION DATE
Means the date or dates as specified in the Adoption Agreement. If no date is
specified in the Adoption Agreement, the Valuation Date shall be the last day
of the Plan Year and each other date designated by the Plan Administrator which
is selected in a uniform and nondiscriminatory manner when the assets of the
Fund are valued at their then fair market value. Notwithstanding the foregoing,
for purposes of calculating the top heavy ratio, the Valuation Date shall be
the last day of the initial Plan Year of the Plan and the last day of the
preceding Plan Year for each subsequent Plan Year.
VESTED
Means nonforfeitable, that is, an unconditional and legally enforceable claim
against the Plan which is obtained by a Participant or the Participant's
Beneficiary to that part of an immediate or deferred benefit under the Plan
which arises from a Participant's Years of Vesting Service.
VESTED ACCOUNT BALANCE
Means the aggregate value of the Participant's Vested account balances derived
from Employer and Nondeductible Employee Contributions (including rollovers),
whether Vested before or upon death, including the proceeds of insurance
contracts, if any, on the Participant's life.
YEAR
Means the calendar year and is applicable only if the Employer has adopted a
SIMPLE 401(k) Plan.
YEAR OF ELIGIBILITY SERVICE
Means a 12 consecutive month period which coincides with an Eligibility
Computation Period during which an Employee completes at least 1,000 Hours of
Service (or such lesser number of Hours of Service specified in the Adoption
Agreement for this purpose). An Employee does not complete a Year of
Eligibility Service before the end of the 12 consecutive month period
regardless of when during such period the Employee completes the required
number of Hours of Service.
YEAR OF VESTING SERVICE
Means a Plan Year during which an Employee completes at least 1,000 Hours of
Service (or such lesser number of Hours of Service specified in the Adoption
Agreement for this purpose). Notwithstanding the preceding sentence, where the
Adopting Employer so indicates in the Adoption Agreement, vesting shall be
computed by reference to the 12 consecutive month period beginning with the
Employee's Employment Commencement Date and each successive 12 month period
commencing on the anniversaries thereof. in the case of a Participant who has
five or more consecutive Breaks in Vesting Service, all Years of Vesting
Service after such Breaks in Vesting Service will be disregarded for the
purpose of determining the Vested portion of his or her Individual Account
derived from Employer Contributions that accrued before such breaks. Such
Participant's pre-break service will count in vesting the postbreak Individual
Account derived from Employer Contributions only if either
(a)such Participant had any Vested right to any portion of his or her
Individual Account derived from Employer Contributions at the time of his or
her Termination of Employment; or
(b)upon returning to service, the number of consecutive Breaks in Vesting
Service is less than his or her number of Years of Vesting Service before
such breaks.
Separate subaccounts will be maintained for the Participant's pre-break and
postbreak portions of his or her Individual Account derived from Employer
Contributions. Both subaccounts will share in the gains and losses of the Fund.
Years of Vesting Service shall not include any period of time excluded from
Years of Vesting Service in the Adoption Agreement. However, if an Employee
becomes ineligible to participate in the Plan because he or she is no longer a
member of an eligible class of Employees, but has not incurred a break in
service, such Employee shall continue to accumulate Years of Vesting Service.
20
In the event the Plan Year is changed to a new 12-month period, Employees shall
receive credit for Years of Vesting Service, in accordance with the preceding
provisions of this definition, for each of the Plan Years (the old and new Plan
Years) which overlap as a result of such change.
SECTION ONE: EFFECTIVE DATES
Pursuant to the Definitions section of the Plan, the Effective Date means the
date the Plan becomes effective as indicated in the Adoption Agreement.
However, certain provisions of the Plan may have an effective date different
from the Plan Effective Date, if, for example, the Plan is amended subsequent
to the Effective Date.
SECTION TWO: ELIGIBILITY REQUIREMENTS
2.01 ELIGIBILITY TO PARTICIPATE
Each Employee of the Employer, except those Employees who belong to a class of
Employees which is excluded from participation as indicated in the Adoption
Agreement, shall be eligible to participate in this Plan upon the satisfaction
of the age and Years of Eligibility Service requirements specified in the
Adoption Agreement. Notwithstanding the preceding sentence, where the Adoption
Agreement does not permit Employer designation with respect to participation of
classes of Employees, the following Employees will be excluded from
participation in the Plan
A. Union Employees - Employees included in a unit of Employees covered by a
collective bargaining agreement between the Employer and Employee
representatives, if retirement benefits were the subject of good faith
bargaining and if two percent or less of the Employees who are covered
pursuant to that agreement are professionals as defined in Section 1.410(b)-
9 of the regulations. For this purpose, the term "Employee representatives"
does not include any organization more than half of whose members are
Employees who are owners, officers, or executives of the Employer.
B. Nonresident Aliens - Employees who are non-resident aliens (within the
meaning of Section 7701(b)(1) (B) of the Code) who received no earned income
(within the meaning of Section 911(d)(2) of the Code) from the Employer
which constitutes income from sources within the United States (within the
meaning of Section 861(a)(3) of the Code).
C. Acquired Employees - Employees who became Employees as the result of a
transaction under Section 410(b)(6)(C) of the Code. Such Employees will be
excluded during the period beginning on the date of the transaction and
ending on the last day of the first Plan Year beginning after the date of
the transaction. A transaction under Section 410(b)(6)(C) of the Code is an
asset or stock acquisition, merger, or similar transaction involving a
change in the employer of the employees of a trade or business.
2.02 PLAN ENTRY
A. Plan Restatement - If this Plan is a replacement of a Prior Plan by
restatement, each Employee of the Employer who was a Participant in said
Prior Plan before the Effective Date shall continue to be a Participant in
this Plan.
B. Effective Date - An Employee will become a Participant in the Plan as of the
Effective Date if the Employee has met the eligibility requirements of
Section 2.01 of the Plan as of such date. After the Effective Date, each
Employee shall become a Participant on the first Entry Date coincident with
or following the date the Employee satisfies the eligibility requirements of
Section 2.01 of the Plan unless otherwise indicated in the Adoption
Agreement.
C. Notification -The Plan Administrator shall notify each Employee who becomes
eligible to be a Participant under this Plan and shall furnish the Employee
with the application form, enrollment forms or other documents which are
required of Participants. The eligible Employee shall execute such forms or
documents and make available such information as may be required in the
administration of the Plan. Such notification shall be in writing (or any
other form permitted under rules promulgated by the IRS or, DOL).
2.03 TRANSFER TO OR FROM INELIGIBLE CLASS
If an Employee who had been a Participant becomes ineligible to participate
because he or she is no longer a member of an eligible class of Employees, but
has not incurred a Break in Eligibility Service, such Employee shall
participate
21
immediately upon his or her return to an eligible class of Employees. If such
Employee incurs a Break in Eligibility Service, his or her eligibility to
participate shall be determined by Section 2.04 of the Plan. An
Employee who is not a member of the eligible class of Employees wilt become a
Participant immediately upon becoming a member of the eligible class, provided
such Employee has satisfied the age and Years of Eligibility Service
requirements. If such Employee has not satisfied the age and Years of
Eligibility Service requirements as of the date he or she becomes a member of
the eligible class, such Employee shall become a Participant on the first Entry
Date coincident with or following the date he or she satisfies those
requirements unless otherwise indicated in the Adoption Agreement.
2.04 RETURN AS A PARTICIPANT AFTER BREAK IN ELIGIBILITY SERVICE
A. Employee Not Participant Before Break - If an Employee incurs a Break in
Eligibility Service before satisfying the Plan's eligibility requirements,
such Employee's Years of Eligibility Service before such Break in
Eligibility Service will not be taken into account.
B. Nonvested Participants - In the case of a Participant who does not have a
Vested interest in his or her Individual Account derived from Employer
Contributions, Years of Eligibility Service before a period of consecutive
Breaks in Eligibility Service will not be taken into account for eligibility
purposes if the number of consecutive Breaks in Eligibility Service in such
period equals or exceeds the greater of five or the aggregate number of
Years of Eligibility Service before such break. Such aggregate number of
Years of Eligibility Service will not include any Years of Eligibility
Service disregarded under the preceding sentence by reason of prior breaks.
If a Participant's Years of Eligibility Service are disregarded pursuant to
the preceding paragraph, such Participant will be treated as a new Employee
for eligibility purposes. If a Participant's Years of Eligibility Service
may not be disregarded pursuant to the preceding paragraph, such Participant
shall continue to participate in the Plan, or, if terminated, shall
participate on the first Entry Date coincident with or following the date of
reemployment.
C. Vested Participants -A Participant who has sustained a Break in Eligibility
Service and who had a Vested interest in all or a portion of his or her
Individual Account derived from Employer Contributions shall continue to
participate in the Plan, or, if terminated, shall participate on the first
Entry Date coincident with or following the date of reemployment.
2.05 DETERMINATIONS UNDER THIS SECTION
The Plan Administrator shall determine the eligibility of each Employee to be a
Participant. This determination shall be conclusive and binding upon all
persons except as otherwise provided herein or by law.
2.06 TERMS OF EMPLOYMENT
Neither the fact of the establishment of the Plan nor the fact that a common
law Employee has become a Participant shall give to that common law Employee
any right to continued employment; nor shall either fact limit the right of the
Employer to discharge or to deal otherwise with a common law Employee without
regard to the effect such treatment may have upon the Employee's rights under
the Plan.
SECTION THREE: CONTRIBUTIONS
3.01 EMPLOYER CONTRIBUTIONS
A. Obligation to Contribute - Except as otherwise indicated in the Adoption
Agreement, the Employer wilt contribute an amount to be determined from year
to year. If this Plan is a profit sharing plan, the Employer may, in its
sole discretion, make contributions without regard to current or accumulated
earnings or profits.
B. Allocation Formula and the Right to Share in the Employer Contribution
1. General - Except as otherwise indicated in the Adoption Agreement,
Employer Profit Sharing Contributions shall be allocated to all
Qualifying Participants pursuant to a pro rata allocation formula.
Under the pro rata allocation formula, Employer Contributions shall be
allocated to the Individual Accounts of Qualifying Participants in the
ratio that each Qualifying Participant's Compensation for the Plan Year
bears to the total Compensation of all Qualifying Participants for the
Plan Year. The Employer Contribution for any Plan Year will be allocated
to each Participant's Individual Account as of the last day of that Plan
Year. Notwithstanding the foregoing, Employer Profit Sharing
Contributions, Employer Money Purchase Pension Contributions and
Employer Target Benefit Pension Contributions shall be allocated to
the Plan on behalf of each Participant who
22
has incurred a Disability and who is not a Highly Compensated Employee
if so specified in the Adoption Agreement.
Any Employer Contribution for a Plan Year must satisfy Section 401(a)(4)
of the Code and the Income Tax Regulations thereunder for such Plan Year.
2. Special Rules for Integrated Plans In the event the Adopting Employer has
selected an integrated allocation formula in the Adoption Agreement,
subject to the overall permitted disparity limits, Employer Profit
Sharing Contributions shall be allocated as follows (the Employer may
start with Step 3 if this Plan is not top-heavy).
Step 1. Employer Profit Sharing Contributions shall first be allocated
pro rata to Qualifying Participants in the manner described in
Section 3.01(B)(1) of the Plan. The percent so allocated shall
not exceed three percent of each Qualifying Participant's
Compensation.
Step 2. Any Employer Profit Sharing Contributions remaining after the
allocation in Step 1 shall be allocated to each Qualifying
Participant's Individual Account in the ratio that each
Qualifying Participant's Compensation for the Plan Year in
excess of the integration level bears to all Qualifying
Participants' Compensation in excess of the integration
level, but not in excess of three percent of each Qualifying
Participant's Compensation.
Step 3. Any Employer Profit Sharing Contributions remaining after the
allocation in Step 2 shall be allocated to Qualifying
Participant's Individual Account in the ratio that the sum of
each Qualifying Participant's total Compensation and Compensation
in excess of the integration level bears to the sum of all
Qualifying Participants' total Compensation and Compensation
in excess of the integration level, but not in excess of the
profit sharing maximum disparity rate as described in this
Section 3.01(B)(2) of the Plan.
Step 4. Any Employer Profit Sharing Contributions remaining after the
allocation in Step 3 shall be allocated pro rata to Qualifying
Participants in the manner described in this Section 3.01(B)(1)
Of the Plan. If the Adopting Employer has selected the integrated
contribution or allocation formula in the Adoption Agreement, the
integration level shall be defined in the Adoption Agreement. The
maximum disparity rate shall be determined in accordance with the
following table.
MAXIMUM DISPARITY RATE
Top-Heavy Nonstandardized and
Integration Level Money Purchase Profit Sharing Non-Top-Heavy Profit Sharing
Taxable Wage Base (TWB) 5.7% 2.7% 5.7%
More than $0 but not more
than 20 percent of TWB 5.7% 2.7% 5.7%
More than 20 percent of TWB but
not more than 80 percent of TWB 4.3% 1.3% 4.3%
More than 80 percent of TWB but
not more than TWB 5.4% 2.4% 5.4%
Annual overall permitted disparity limit: Notwithstanding the preceding
paragraphs, for any Plan Year this Plan benefits any Participant who
benefits under another qualified plan or simplified employee pension, as
defined in Section 408(k) of the Code, maintained by the Employer that
provides for permitted disparity (or imputes disparity), if this is a
profit sharing plan, Employer Profit Sharing Contributions and
forfeitures shall be allocated to the account of each Qualifying
Participant in the ratio that such Qualifying Participant's total
Compensation bears to the total Compensation of all Qualifying
Participants. If this Plan is a money purchase pension plan, Employer
Money Purchase Pension Contributions shall be made to the account of each
Qualifying Participant in an amount equal to the excess contribution
percentage multiplied by the Participant's total Compensation.
Cumulative permitted disparity limit: Effective for Plan Years beginning
on or after January 1, 1995, the cumulative permitted disparity limit for
a Participant is 35 total cumulative permitted disparity years. Total
cumulative permitted years means the number of years credited to the
Participant for allocation or accrual purposes under this Plan, any other
qualified plan or simplified employee pension plan (whether or not
23
terminated) ever maintained by the Employer. For purposes of determining
the Participant's cumulative permitted disparity limit, all years ending
in the same calendar year are treated as the same year. If the
Participant has not benefited under a defined benefit or target benefit
plan for any year beginning on or after January 1, 1994, the Participant
has no cumulative disparity limit. Compensation shall mean compensation
as defined in Definition section of the Plan.
3. Special Rules for Government Contract Plans - If this is a
nonstandardized Plan and the Employer so indicates on the Adoption
Agreement, for each Hour of Service of covered employment under a
government contract, the Employer shall contribute to the Plan such
amounts for each Qualifying Participant as determined by the hourly
rate designated for each Qualifying Participant's work classification
on the wage determination sheet, or part thereof, as determined by the
Employer pursuant to the terms of the contracts to which the Employer
is a party and which are subject to the provisions of any federal, state
or municipal prevailing wage law to which the Employer is a party.
4. Minimum Coverage Test - Unless otherwise specified by the Adopting
Employer in the Adoption Agreement, this paragraph shall apply to any
nonstandardized Plan if, for any Plan Year, the Plan fails to satisfy the
ratio percentage test described in Section 410(b)(1) of the Codes as of
the last day of any such Plan Year. The ratio percentage test is
satisfied if on the last day of the Plan Year, taking into account all
employees, or former employees who were employed by the Employer on any
day during the Plan Year, either the Plan benefits at least 70 percent of
Employees who are not Highly Compensated Employees or the Plan benefits a
percentage of Employees who are not Highly Compensated Employees which is
at least 70 percent of the percentage of Highly Compensated Employees
benefiting under the Plan. If the Plan fails the ratio percentage test,
the Employer Contribution for the Plan Year will be allocated to
Participants in the first class of Participants set forth below. If the
Plan still fails, then the Employer Contribution will also be allocated
to Participants in the next class and each succeeding class until the
Plan satisfies the minimum coverage requirements. A class shall be
covered only if necessary to satisfy those requirements. The classes,
in order of priority, are as follows:
a. Participants who are still employed on the last day of the Plan year
who have completed go percent of the number of Hours of Service to
otherwise be a Qualifying Participant or Qualifying Contributing
Participant, if applicable;
b. Participants who are still employed on the last day of the Plan Year
who have completed 80 percent of the number of Hours of Service to
otherwise be a Qualifying Participant or Qualifying Contributing
Participant, if applicable;
c. Participants who are still employed on the last day of the Plan Year
who have completed 70 percent of the number of Hours of Service to
otherwise be a Qualifying Participant or Qualifying Contributing
Participant, if applicable;
d. Participants who are still employed on the last day of the Plan Year
who have completed 60 percent of the number of Hours of Service to
otherwise be a Qualifying Participant or Qualifying Contributing
Participant, if applicable;
e. Participants who are still employed on the last day of the Plan year
who have completed 50 percent of the number of Hours of Service to
otherwise be a Qualifying Participant or Qualifying Contributing
Participant, if applicable;
f. Any Participant still employed on the last day of the Plan Year;
g. Participants who are not employed on the last day of the Plan Year
because the Participant has died, incurred a Disability or attained
Normal Retirement Age;
h. Participants who are not employed on the last day of the Plan Year who
have completed at least 1,000 Hours of Service during the Plan Year;
i. Participants who are not employed on the last day of the Plan Year who
have completed at least 750 Hours of Service for the Plan Year;
j. Participants who are not employed on the last day of the Plan Year who
have completed at least 500 Hours of Service for the Plan Year.
If the minimum coverage test is performed after any Employer
Contribution has been allocated and the Plan fails the minimum
coverage test, the Employer shall make an additional contribution
to the Plan on behalf of
24
those Participants that are entitled thereto pursuant to items a
through j above. The amount of the contribution for such Participants
shall be determined pursuant to the Plan's allocation formula.
Notwithstanding the foregoing, if the Adopting Employer so provides in
the Adoption Agreement, the ADP Test Safe Harbor Contributions will be
made to the defined contribution plan indicated in the Adoption
Agreement. However, such contributions will be made to this Plan
unless (i) each Eligible Employee under this Plan is also eligible
under the other plan and (ii) the other plan has the same Plan Year
as this Plan.
5. Special Rule for Owner-Employees - If this Plan provides contributions or
benefits for one or more Owner-Employees, contributions on behalf of any
Owner-Employee may be made only with respect to the Earned Income of such
Owner-Employee which is derived from the trade or business with respect
to which the Plan is established.
C. Allocation of Forfeitures - Forfeitures for a Plan Year which arise as a
result of the application of Sections 4.01(C) or 4.01(D) of the Plan may be,
at the Employer's discretion, applied first to the payment of the Plan's
administrative expenses in accordance with Section 7.04 of the Plan or
applied to the restoration of Participant's Individual Accounts pursuant to
Section 4.01(C)(3) of the Plan. Any remaining Forfeitures shall be allocated
as follows:
1. Profit Sharing Plan - If this is a profit sharing plan, unless the
Adoption Agreement indicates otherwise, Forfeitures shall be used to
reduce Employer Contributions.
2. 401(k) Profit Sharing Plan - If this is a 401(k) profit sharing plan,
unless the Adoption Agreement indicates otherwise, Forfeitures of
Employer Profit Sharing Contributions, Matching Contributions and Excess
Aggregate Contributions shall be used to reduce Employer Contributions.
3. Money Purchase Pension Plan and Target Benefit Pension Plan If this Plan
is a money purchase pension plan or a target benefit pension plan, unless
the Adoption Agreement indicates otherwise, Forfeitures shall be applied
toward the reduction of Employer Money Purchase Pension Contributions or
Employer Target Benefit Pension Contributions to the Plan. Forfeitures
must be applied as of the last day of the Plan Year in which the
Forfeitures arose or, if necessary, the last day of the Plan Year
following the Plan Year in which the Forfeiture arose.
Notwithstanding the foregoing, Forfeitures must be applied in a uniform
And nondiscriminatory manner if applied either to the payment of the
Plan's administrative expenses or to the restoration of a Participants
Individual Accounts pursuant to Section 4.01(C)(3) of the Plan.
D. Timing of Employer Contribution - Unless otherwise specified in the Plan,
the Employer Contribution for each Plan Year shall be delivered to the
Trustee (or Custodian, if applicable) not later than the due date for filing
the Employer's income tax return for its Fiscal Year in which the Plan Year
ends, including extensions thereof. Notwithstanding the foregoing, Employer
Contributions made by an Employer that is exempt from Federal income tax
under Section 501(a) of the Code, shall be delivered to the Trustee (or
Custodian, if applicable) no later than the 15th day of the sixth calendar
month following the close of the taxable year (or fiscal year, if no taxable
year) with or within which the particular Limitation Year ends.
E. Minimum Allocation for Top-Heavy Plans - The contribution and allocation
provisions of this Section 3.01(E) of the Plan shall apply for any Plan Year
with respect to which this Plan is a Top-Heavy Plan.
1. Except as otherwise provided in (3) and (4) below, the Employer
Contributions and Forfeitures allocated on behalf of any Participant who
is not a Key Employee shall not be less than the lesser of three percent
of such Participant's Compensation or (in the case where the Employer has
no defined benefit plan which designates this Plan to satisfy Section 401
of the Code) the largest percentage of Employer Contributions and
Forfeitures, as a percentage of the Key Employee's Compensation, as
limited by Section 401(a)(17) of the Code, allocated on behalf of any Key
Employee for that year. The minimum allocation is determined without
regard to any Social Security contribution. The Adopting Employer may,
in the Adoption Agreement, limit the Participants who are entitled to
receive the minimum allocation to those Employees who are not Key
Employees. Notwithstanding the foregoing, if the Employer maintains a
defined benefit plan in addition to this Plan and specifies in the
Adoption Agreement that the minimum allocation will be made to this
Plan, then except as provided in (3) and(4) below, Employer Contributions
and Forfeitures allocated on behalf of any Participant who is not a Key
Employee shall not be less than 5 percent of such Participant's
Compensation. For purposes of the preceding sentences, the largest
percentage of Employer Contributions and Forfeitures as a percentage of
25
each Key Employee's Compensation shall be determined by Elective
Deferrals as Employer Contributions. This minimum allocation shall
be made even though under other Plan provisions, the Participant would
not otherwise be entitled to receive an allocation, or would have
received a lesser allocation for the year because of (a) the
Participant's failure to complete 1,000 Hours of Service (or any
equivalent provided in the Plan), or (b) the Participant's failure to
make mandatory Nondeductible Employee Contributions to the Plan, or (c)
Compensation less than a stated amount.
2. For purposes of computing the minimum allocation, Compensation shall mean
Compensation as provided in the Definitions Section of the Plan as
limited by Section 401(a)(17) of the Code and, for Limitation Years
beginning after December 31, 1997, shall include any amounts contributed
by the Employer pursuant to a salary reduction agreement and which is not
includible in gross income under Sections 402(g), 125, 132(f)(4) or 457
of the Code. For purposes of this Section 3.01(E)(2), such amounts were
excluded for Limitation Years beginning prior to January 1, 1998.
3. The provision in (1) above shall not apply to any Participant who was not
employed by the Employer on the last day of the Plan Year.
4. The provision in (1) above shall not apply to any Participant to the
extent the Participant is covered under any other plan or plans of the
Employer and the Adopting Employer has provided in the Adoption Agreement
that the minimum allocation or benefit requirement applicable to
Top-Heavy Plans will be met in the other plan or plans.
5. The minimum allocation required under this Section 3.01(E) and Section
3.01(F)(1) (to the extent required to be nonforfeitable under Section
416(b) of the Code) may not be forfeited under Section 411(a)(3)(B) or
411(a)(3)(D) of the Code.
6. Neither Elective Deferrals, nor Matching Contributions may be taken into
account for purposes of satisfying the minimum allocation requirement
applicable to Top-Heavy Plans described in Section 3.01(E) of the Plan.
Qualified Nonelective Contributions may, however, be taken into account
for such purposes.
F. Special Requirements for Paired Plans -The Employer maintains paired plans
if the Employer has adopted a standardized profit sharing plan and a
standardized money purchase pension plan using this Basic Plan Document.
1. Minimum Allocation - When the paired plans are top-heavy, the top-heavy
requirements set forth in Section 3.01(E)(1) of the Plan shall apply.
a. Same eligibility requirements. In satisfying the top-heavy minimum
allocation requirements set forth in Section 3.01(E) of the Plan, if
the Employees benefiting under each of the paired plans are identical,
the top-heavy minimum allocation shall be made to the money purchase
pension plan.
b. Different eligibility requirements. In satisfying the top-heavy
minimum allocation requirements set forth in Section 3.01(E) of the
Plan, if the Employees benefiting under each of the paired plans are
not identical, the top-heavy minimum allocation will be made to both
of the paired plans. A Participant is treated as benefiting under the
Plan for any Plan Year during which the Participant received or is
deemed to receive an allocation in accordance with Section 1.410(b)-3
of the Income Tax Regulations.
2. Only One Plan Can Be Integrated - If the Employer maintains paired plans,
only one of the Plans may provide for the disparity in contributions
which is permitted under Section 401(l) of the Code. In the event that
both Adoption Agreements provide for such integration, only the money
purchase pension plan shall be deemed to be integrated.
G. Return of the Employer Contribution to the Employer Under Special
Circumstances -Any contribution made by the Employer because of a mistake of
fact must be returned to the Employer within one year of the contribution.
In the event that the Commissioner of Internal Revenue determines that the
Plan is not initially qualified under the Code, any contributions made
incident to that initial qualification by the Employer must be returned to
the Employer within one year after the date the initial qualification is
denied, but only if the application for qualification is made by the time
prescribed by law for filing the Employer's return for the taxable year in
which the Plan is adopted, or such later date as the Secretary of the
Treasury may prescribe. In the event that a contribution made by the
Employer under this Plan is conditioned on deductibility and is not
deductible under Section 404 of the Code, the contribution, to the extent of
the amount disallowed, must be returned to the Employer within one year
after the deduction is disallowed. If applicable, no contract will be
purchased under the Plan unless such contract or a separate definite written
agreement between the Employer and the insurer provides
26
that no value under contracts providing benefits under the Plan or credits
determined by the insurer (on account of dividends, earnings, or other
experience rating credits, or surrender or cancellation credits) with
respect to such contracts may be paid or returned to the Employer or
diverted to or used for other than the exclusive benefit of the Participants
or their Beneficiaries. However, any contribution made by the Employer
because of a mistake of fact must be returned to the Employer within one
year of the contribution.
3.02 CERTAIN ONE-TIME IRREVOCABLE ELECTIONS
This Section 3.02 of the Plan applies where the Adopting Employer has indicated
in the nonstandardized Adoption Agreement that an Employee may make a one-time
irrevocable election to have the Employer make contributions to the Plan on
such Employee's behalf. In such event, an Employee may elect, upon the
Employee's first becoming eligible to participate in the Plan, to have
contributions equal to a specified amount or percentage of the Employee's
potential Compensation made by the Employer on the Employee's behalf to the
Plan (and to any other plan of the Employer) for the duration of the Employee's
employment with the Employer. Any contributions made pursuant to a one-time
irrevocable election described in this Section 3.02 are not treated as made
pursuant to a cash or deferred election, are not Elective Deferrals and are not
includible in an Employee's Compensation. Such contributions shall be treated
as Employer Profit Sharing Contributions.
The Plan Administrator shall establish such uniform and nondiscriminatory
procedures as it deems necessary or advisable to administer this provision.
3.03 ROLLOVER CONTRIBUTIONS
Unless otherwise indicated in the Adoption Agreement, an Employee may
contribute a rollover contribution to the Plan. The Plan Administrator may
require the Employee to certify, either in writing or in any other form
permitted under rules promulgated by the IRS and DOL, that the contribution
qualifies as a rollover contribution under the applicable provisions of the
Code. If it is later determined that all or part of a rollover contribution was
ineligible to be contributed to the Plan, the Plan Administrator shall direct
that any ineligible amounts, plus earnings or losses attributable thereto
(determined in the manner described in Section 7.02(B) of the Plan) be
distributed from the Plan to the Employee as soon as administratively feasible.
A separate account shall be maintained by the Plan Administrator for each
Employee's rollover contributions which will be nonforfeitable at all times.
Such account will share in the income and gains and losses of the Fund in the
manner described in Section 7.02(B) of the Plan. Where the Adoption Agreement
does not permit Employer designation with respect to rollover contributions,
the Employer may, in a uniform and nondiscriminatory manner, only allow
Employees who have become Participants in the Plan to make rollover
contributions.
3.04 TRANSFER CONTRIBUTIONS
Unless otherwise indicated in the Adoption Agreement, the Trustee (or
Custodian, if applicable) may receive any amounts transferred to it in the name
of an Employee from the trustee or custodian of another plan qualified under
Section 401(a) of the Code. If it is later determined that all or part of a
transfer contribution was ineligible to be transferred into the Plan, the Plan
Administrator shall direct that any ineligible amounts, plus earnings or tosses
attributable thereto (determined in the manner described in Section 7.02(B) of
the Plan) be distributed from the Plan to the Employee as soon as
administratively feasible.
A separate account shall be maintained by the Plan Administrator for each
Employee's transfer contributions which wilt, if applicable, be nonforfeitable
at all times. Such account will share in the income and gains and losses of the
Fund in the manner described in Section 7.02(B) of the Plan. Where the Adoption
Agreement does not permit Employer designation with respect to transfer
contributions, the Employer may, in a uniform and nondiscriminatory manner,
only allow Employees who have become Participants in the Plan to make transfer
contributions. Notwithstanding the foregoing, an Employee's separate account
established solely on account of an event described in Section 414(l) of the
Code shall continue to be subject to the Plan's vesting schedule except as
otherwise provided therein. If transfers occurring on or after January 1, 2002,
are associated with distributable events and the Employees are eligible to
receive single sum distributions consisting entirely of Eligible Rollover
Contributions, the transfers will be considered Direct Rollovers.
27
3.05 DEDUCTIBLE EMPLOYEE CONTRIBUTIONS
The Plan Administrator will not accept Deductible Employee Contributions that
are made for a taxable year beginning after December 31, 1986. Contributions
made prior to that date wilt be maintained in a separate account. The account
will share in the gains and losses of the Fund in the same manner as described
in Section 7.02(B) of the Plan.
3.06 ELECTIVE DEFERRALS
Each Employee who satisfies the eligibility requirements specified in the
Adoption Agreement for Elective Deferrals may begin making Elective Deferrals
to the Plan by enrolling as a Contributing Participant.
A. Requirements To Enroll As A Contributing Participant - Each Employee who
satisfies the eligibility requirements specified in the Adoption Agreement
for Elective Deferrals may enroll as a Contributing Participant on the first
Entry Date coincident with or following the date the Employee satisfies the
eligibility requirements, or if applicable, the first Entry Date following
the date on which the Employee returns to the eligible class of Employees
pursuant to Section 2.03 of the Plan. A Participant who wishes to enroll as
a Contributing Participant must deliver (either in writing or in any other
form permitted by the IRS and the DOL) a salary reduction agreement (or
agreement to make Nondeductible Employee Contributions) with the Plan
Administrator except as set forth in Section 3.06(E) of the Plan below.
Notwithstanding the times set forth in Section 3.06(A) of the Plan as of
which a Participant may enroll as a Contributing Participant, the Plan
Administrator shall have the authority to designate, in a nondiscriminatory
manner, additional enrollment times during the 12 month period beginning on
the Effective Date (or the date that Elective Deferrals may commence, if
later) in order that an orderly first enrollment might be completed. In
addition, if the Adopting Employer has indicated in the Adoption Agreement
that Participants may make separate deferral elections with respect to
bonuses, Participants shall be afforded a reasonable period of time prior to
the issuance of such bonuses to elect to defer all or part of them into the
Plan. Such an election to defer all or part of a bonus shall be independent
of any other salary reduction agreement and shall not constitute a
modification to any pre-existing salary reduction agreement.
Notwithstanding anything in this Plan to the contrary, the Employer shall
deliver Elective Deferrals to the Trustee (or Custodian, if applicable) as
soon as such contributions can reasonably be segregated from the general
assets of the Employer. In no event, however, shall Elective Deferrals be
delivered to the Trustee (or Custodian, if applicable) later than the 15th
business day of the month following the month in which the Elective
Deferrals would otherwise have been payable to a Participant in cash or such
other period determined under rules promulgated by the DOL.
B. Changing Elective Deferral Amounts - A Contributing Participant may modify
his or her salary reduction agreement (or agreement to make Nondeductible
Employee Contributions) to increase or decrease (within the limits placed on
Elective Deferrals or Nondeductible Employee Contributions in the Adoption
Agreement) the amount of his or her Compensation deferred into the Plan.
Except as otherwise provided in the Adoption Agreement, such modification
may only be made as of the first day of the Plan Year and the first day of
the seventh month of the Plan Year, or as of any other more frequent date(s)
if the Plan Administrator so permits in a uniform and nondiscriminatory
manner. A Contributing Participant who desires to make such a modification
shall complete and deliver (either in writing or in any other form permitted
by the IRS and the DOL) a new salary reduction agreement (or agreement to
make Nondeductible Employee Contributions to the Plan Administrator). The
Plan Administrator may prescribe such uniform and nondiscriminatory rules it
deems appropriate to carry out the terms of this Section 3.06(B) of the
Plan.
C. Ceasing Elective Deferrals - Except as otherwise provided in the Adoption
Agreement, a Participant may cease Elective Deferrals (or Nondeductible
Employee Contributions) and thus withdraw as a Contributing Participant as
of the first day of the Plan Year and the first day of the seventh month of
the Plan Year or as of any other date if the Plan Administrator so permits
in a uniform and nondiscriminatory manner by revoking the authorization to
the Employer to make Elective Deferrals (or Nondeductible Employee
Contributions) on his or her behalf A Participant who desires to withdraw as
a Contributing Participant shall give notice of withdrawal to the Plan
Administrator at least 30 days (or such lesser period of days as the Plan
Administrator shall permit in a uniform and nondiscriminatory manner) before
the effective date of withdrawal. A Participant shall cease to be a
Contributing Participant upon his or her Termination of Employment, or on
account of termination of the Plan.
28
Notwithstanding anything in this Plan to the contrary, each Employee who has
entered into a salary reduction agreement under a SIMPLE 401(k) Plan may
terminate such agreement at any time during the Year.
D. Return As A Contributing Participant After Ceasing Elective Deferrals -
Except as otherwise provided in the Adoption Agreement, a Participant who
has withdrawn as a Contributing Participant under Section 3.06(C) of the
Plan (or because the Participant has taken a hardship withdrawal pursuant to
Section 5.01(A)(6) of the Plan) may not again become a Contributing
Participant until the first day of the Plan Year and the first day of the
seventh month of the Plan Year following such withdrawal, unless the Plan
Administrator, in a uniform and nondiscriminatory manner, permits
withdrawing Participants to resume their status as Contributing Participants
sooner (provided that Participants who take withdrawals pursuant to Section
5.01(A)(6) of the Plan shall be subject to the conditions of that Section).
E. Automatic Elective Deferrals - Each Employee who satisfies the eligibility
requirements specified in the Adoption Agreement for Elective Deferrals will
be given a reasonable opportunity to enroll as a Contributing Participant.
Notwithstanding the foregoing, if the Adopting Employer has so indicated in
the Adoption Agreement, eligible Employees who fail to provide the Employer
a salary reduction agreement indicating either (1) their desire not to make
Elective Deferrals, or (2) the amount or percentage of Compensation to be
deferred, will automatically have the amount or percentage of Compensation
listed in the Adoption Agreement withheld from their Compensation and
contributed as an Elective Deferral. Elective Deferrals for such
Contributing Participant shall continue at the rate specified in the
Adoption Agreement until the Contributing Participant provides the Employer
a salary reduction agreement (either in writing or in any other form
permitted under rules promulgated by the IRS and DOL) to the contrary or
unless the Employer reduces or ceases deferrals for such Participant
pursuant to Section 3.13(B)(8) of the Plan. Contributions made pursuant to
this Section 3.06(E) of the Plan shall be characterized as Elective
Deferrals and not as Nondeductible Employee Contributions.
An Employer who chooses to utilize the automatic Elective Deferral feature
described in this Section 3.06(E) of the Plan shall establish uniform and
nondiscriminatory procedures designed to insure that each eligible Employee
is provided the effective opportunity to make a salary deferral election.
Such procedures shall include, but not be limited to, the means by which
notice will be provided to each eligible Employee of his or her right to
complete a salary reduction agreement specifying a different amount or
percentage of Compensation (including no Compensation) to be contributed to
the Plan and a reasonable period for completing such a salary reduction
agreement.
F. Elective Deferrals to a SIMPLE 401(k) Plan - Notwithstanding anything to the
contrary, if the Employer is an Eligible Employer and has established a
SIMPLE 401(k) Plan, each Eligible Employee may deliver (either in writing or
in any other form permitted by the IRS and the DOL) a salary reduction
election and have his or her Compensation reduced for the Year in any amount
selected by the Employee subject to the limitation described below. The
Employer will make Elective Deferral contributions to this Plan in the
amount by which the Employee's Compensation has been reduced. The total
Elective Deferral contribution for the Year under this Section 3.06(F) of
the Plan cannot exceed $6,000 for any Employee. To the extent permitted by
law, this amount will be adjusted to reflect any annual cost-of-living
increases announced by the IRS. In addition to any other election periods
provided under the Plan, each Eligible Employee in a SIMPLE 401(k) Plan may
make or modify a salary reduction agreement during the 60-day period
immediately preceding each January 1. For the Year an Employee becomes
eligible to make Elective Deferral contributions under a SIMPLE 401(k) Plan,
the 60-day election period requirement described above is deemed satisfied
if the Employee may make or modify a salary reduction agreement during a 60-
day period that includes either the date the Employee becomes eligible or
the day before.
G. SIMPLE 401(k) Notice Requirements -The Employer will notify each Eligible
Employee prior to the 60-day election period described in Section 3.06(F) of
the Plan that he or she can complete a salary reduction agreement or modify
a prior salary reduction agreement during that period. The notification must
indicate whether the Employer will provide the three-percent Matching
Contribution or a two-percent nonelective contribution described in Section
3.07 of the Plan.
H. ADP Test Safe Harbor Election Periods - In addition to any other election
periods provided under the Plan, each Eligible Employee may make or modify a
deferral election during the 30-day period immediately following receipt of
the notice described in section 3.06(l). Not withstanding the foregoing, the
Employer may change the election periods described above pursuant to rules
promulgated by the IRS.
29
I. ADP Test Safe Harbor Notice Requirement - At least 30 days, but not more
than go days, before the beginning of the Plan Year, the Employer will
provide each Eligible Employee a comprehensive notice of the Employee's
rights and obligations under the Plan, written in a manner calculated to be
understood by the average Eligible Employee. If an Employee becomes eligible
after the 90th day before the beginning of the Plan Year and does not
receive the notice for that reason, the notice must be provided no more than
go days before the Employee becomes eligible but not later than the date the
Employee becomes eligible. Notwithstanding the foregoing, the Employer may
change this notice requirement pursuant to rules promulgated by the IRS.
3.07 MATCHING CONTRIBUTIONS
The Employer may elect to make Matching Contributions under the Plan on behalf
of Qualifying Contributing Participants as provided in the Adoption Agreement.
To be a Qualifying Contributing Participant for a Plan Year, the Participant
must make Elective Deferrals (or Nondeductible Employee Contributions, if the
Employer has agreed to match such contributions) for the Plan Year, satisfy any
age and Years of Eligibility Service and other requirements that are specified
for Matching Contributions in the Adoption Agreement and also satisfy any
additional conditions set forth in the Adoption Agreement for this purpose. The
Employer may make Matching Contributions at the same time as it contributes
Elective Deferrals or at any other time as permitted by law and regulation. The
proper Matching Contribution amount may be determined by the Employer at any
time during a Plan Year, including, but not limited to, such time as Matching
Contributions are delivered to the Trustee (or Custodian, if applicable).
Notwithstanding the foregoing, if an Eligible Employer has established a SIMPLE
401(k) Plan, the Employer will contribute a Matching Contribution to the plan
on behalf of each Employee who makes an Elective Deferral contribution under
Section 3.06(F) of the Plan. The amount of the Matching Contribution wilt be
equal to the Employee's Elective Deferral contribution up to a limit of three
percent of the Employee's Compensation for the full Year. In lieu of a Matching
Contribution to a SIMPLE 401(k) Plan, however, the Employer may elect to
contribute a nonelective contribution of two percent of Compensation for the
full Year for each Eligible Employee who received at least $5,000 of
Compensation (or such lesser amount as elected by the Employer in the Adoption
Agreement) for the Year.
3.08 NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS
This Plan will not accept Nondeductible Employee Contributions and Matching
Contributions thereon for Plan Years beginning after the Plan Year in which
this Plan is adopted by the Employer. Nondeductible Employee Contributions for
Plan Years beginning after December 31, 1986, together with any matching
contributions as defined in Section 401(m) of the Code, will be limited so as
to meet the nondiscrimination test of Section 401(m) of the Code.
Notwithstanding the foregoing, if this Plan is subject to Section 401(k) of the
Code and the Adopting Employer so allows in the Adoption Agreement, a
Participant may contribute Nondeductible Employee Contributions to the Plan by
enrolling as a Contributing Participant pursuant to the applicable provisions
of Section 3.06 of the Plan. The Employer shall establish uniform and
nondiscriminatory rules and procedures for Nondeductible Employee Contributions
as it deems necessary and advisable including, but not limited to, rules
describing any amounts or percentages of Compensation Participants may or must
contribute to the Plan. A separate account will be maintained by the Plan
Administrator for the Nondeductible Employee Contributions of each Participant.
3.09 QUALIFIED NONELECTIVE CONTRIBUTIONS
The Employer may elect to make Qualified Nonelective Contributions under the
Plan. The amount of such contribution to the Plan for each Plan Year, if any,
shall be in an amount determined by the Employer. Unless another allocation
formula is specified in the Adoption Agreement, Qualified Nonelective
Contributions will be allocated to the Individual Accounts of non-Highly
Compensated Employees who are Eligible Employees, in order of each
Participant's Compensation, beginning with the Participant with the least
amount of Compensation, until such Participant has reached his or her Maximum
Permissible Amount. Notwithstanding the foregoing, no allocation shall be
required in excess of the amount required to satisfy the Actual Deferral
Percentage test, the Actual Contribution Percentage test or both.
If the current year testing rules apply to the Plan, in lieu of distributing
Excess Contributions or Excess Aggregate Contributions as provided in Sections
5.16 and 5.17 of the Plan, the Employer may, if permitted in the Adoption
Agreement, use all or any portion of the Qualified Nonelective Contributions to
satisfy either the Actual Deferral Percentage test or the Actual Contribution
Percentage test,, or both, pursuant to regulations under the Code. If the prior
30
year testing rules apply to the Plan and the Employer uses Qualified
Nonelective Contributions to satisfy either the Actual Deferral Percentage test
or the Actual Contribution Percentage test, or both, all Qualified Nonelective
Contributions must be used for purposes of such tests.
3.10 QUALIFIED MATCHING CONTRIBUTIONS
The Employer may elect to make Qualified Matching Contributions under the Plan.
Unless specified otherwise in the Adoption Agreement, the amount of such
contribution to the Plan for each Plan Year, if any, shall be in an amount
determined by the Employer. In addition, in lieu of distributing Excess
Contributions or Excess Aggregate Contributions as provided in Sections 5.16
and 5.17 of the Plan, the Employer may use Qualified Matching Contributions to
satisfy either the Actual Deferral Percentage test or the Actual Contribution
Percentage test, or both, pursuant to regulations under the Code.
Unless another allocation formula is specified in the Adoption Agreement,
Qualified Matching Contributions, if made, shall be in an amount equal to that
percentage of the Elective Deferrals of each nonHighly Compensated Employee
which would be sufficient to cause the Plan to satisfy the Actual Contribution
Percentage test and/or the Actual Deferral Percentage test, as applicable.
Notwithstanding anything in this Section to the contrary, all or any portion of
the Qualified Matching Contributions may be included in the ADP and ACP tests
if the Employer has elected to use the current year testing rules. If the prior
year testing rules apply to the Plan and the Employer uses Qualified Matching
Contributions to satisfy either the ADP or ACP test, or both, ail Qualified
Matching Contributions must be used for purposes of such tests.
3.12 OTHER LIMITATIONS ON SIMPLE 401(K) CONTRIBUTIONS
If the Employer has established a SIMPLE 401(k) Plan, no Employer or Employee
contributions may be made to this Plan for the Year other than Elective
Deferrals described in Section 3.06(F) of the Plan, Matching or nonelective
contributions described in Section 3.07 of the Plan and rollover contributions
described in Section 3.03 of the Plan.
3.12 LIMITATION ON ALLOCATIONS
A. If the Participant does not participate in, and has never participated in
another qualified plan maintained by the Employer, a welfare benefit fund
(as defined in Section 419(e) of the Code) maintained by the Employer, an
individual medical account (as defined in Section 415(t)(2) of the Code), or
a simplified employee pension plan (as defined in Section 408(k) of the
Code) maintained by the Employer, which provides an Annual Addition as
defined in the Definitions Section of the Plan, the following rules shall
apply.
1. The amount of Annual Additions which may be credited to the Participant's
Individual Account for any Limitation Year will not exceed the lesser of
the Maximum Permissible Amount or any other limitation contained in this
Plan. If the Employer Contribution that would otherwise be contributed or
allocated to the Participant's Individual Account would cause the Annual
Additions for the Limitation Year to exceed the Maximum Permissible
Amount, the amount contributed or allocated will be reduced so that the
Annual Additions for the Limitation Year wilt equal the Maximum
Permissible Amount.
2. Prior to determining the Participant's actual Compensation for the
Limitation Year, the Employer may determine the Maximum Permissible
Amount for a Participant on the basis of a reasonable estimate of the
Participant's Compensation for the Limitation Year, uniformly determined
for all Participants similarly situated.
3. As soon as is administratively feasible after the end of the Limitation
Year, the Maximum Permissible Amount for the Limitation Year will be
determined on the basis of the Participant's actual Compensation for the
Limitation Year.
4. If pursuant to Section 3.12(A)(3) of the Plan or as a result of the
allocation of Forfeitures or a reasonable error in determining a
Participant's maximum Elective Deferral or any other circumstance
permitted under rules promulgated by the IRS, there is an Excess Annual
Additions, the excess wilt be disposed of as follows.
a. Profit Sharing Plan - If this Plan is a profit sharing plan, the
Excess Annual Additions shall be deemed Forfeitures and shall be
allocated in accordance with Section 3.01(C) of the Plan to all
Qualifying Participants that have not reached their Annual Additions
limit. If all Qualifying Participants have reached their Annual
Additions limit before all Excess Annual Additions have been
allocated, the remaining amount will be held unallocated in a suspense
account. The suspense account will be applied to reduce future
31
Employer Contributions (including allocation of any Forfeitures) for
all remaining Participants in the next Limitation Year, and each
succeeding Limitation Year if necessary.
b. Money Purchase Pension Plan or Target Benefit Plan - If this Plan is
either a money purchase pension plan or a target benefit plan, Excess
Annual Additions shall be held, unallocated, in a suspense account.
The suspense account shall be used to offset future Employer
Contributions made to Qualifying Participants in the next Limitation
Year and succeeding Limitation Years if necessary.
c. 401(k) Profit Sharing Plan - If this Plan is a 401(k) profit sharing
plan, any Nondeductible Employee Contributions and Elective Deferrals,
plus any income allocable thereto, shall be distributed to the
Participant to the extent they would reduce the Excess Annual
Additions. Income allocable to such Excess Annual Additions shall be
computed in a manner consistent with the manner described in Section
7.02(B) of the Plan (i.e. the usual manner used by the Plan
Administrator for allocating income or loss to Participants'
Individual Accounts);
If, after distributing Nondeductible Employee Contributions (including
any earnings thereon) and Elective Deferrals (including any earnings
thereon), Excess Annual Additions still exist, the Excess Annual
Additions attributable to Employer Profit Sharing Contributions shall
be deemed Forfeitures and shall be allocated in accordance with
Section 3.01(C) of the Plan to all Qualifying Participants that have
not reached their Annual Additions limit. If all Qualifying
Participants have reached their Annual Additions limit before all
Excess Annual Additions have been allocated, the remaining amount will
be held unallocated in a suspense account.
The suspense account will be applied to reduce future Employer
Contributions (including allocation of any Forfeitures) for all remaining
Participants in the next Limitation Year, and each succeeding Limitation
Year if necessary. If a suspense account is in existence at any time
during a Limitation Year pursuant to this Section 3.12 of the Plan, it
will participate in the allocation of the Fund's investment gains and
losses. If a suspense account is in existence at any time during a
particular Limitation Year, all amounts in the suspense account must be
allocated and reallocated to Participants' Individual Accounts before any
Employer Contributions or any Nondeductible Employee Contributions may be
made to the Plan for that Limitation Year. Excess Annual Additions may
not be distributed to Participants or former Participants.
B. This section applies if the Employer maintains or ever maintained another
qualified plan (other than a paired standardized money purchase pension plan
using the same Basic Plan Document as this Plan) in which any Participant in
this Plan is (or was) a Participant or could become a Participant. This
section also applies if the Employer maintains a welfare benefit fund (as
defined in Section 419(e) of the Code), or an individual medical account (as
defined in Section 415(l)(2) of the Code), under which amounts are treated
as Annual Additions with respect to any Participant in this Plan.
1. If, in addition to this Plan, the Participant is covered under another
qualified master or prototype defined contribution plan maintained by the
Employer, a welfare benefit fund maintained by the Employer, an
individual medical account maintained by the Employer, or a simplified
employee pension plan maintained by the Employer that provides an Annual
Addition as defined in the Definitions Section of the Plan during any
Limitation Year, the following rules apply.
a. The Annual Additions which may be credited to a Participant's
Individual Account under this Plan for any such Limitation Year will
not exceed the Maximum Permissible Amount reduced by the Annual
Additions credited to a Participant under the other qualified Master
or Prototype Plans, welfare benefit funds, individual medical accounts
and simplified employee pension plans for the same Limitation Year. If
the Annual Additions with respect to the Participant under other
qualified master or prototype defined contribution plans, welfare
benefit funds, individual medical accounts and simplified employee
pension plans maintained by the Employer are less than the Maximum
Permissible Amount and the Employer Contribution that would otherwise
be contributed or allocated to the Participant's Individual Account
under this Plan would cause the Annual Additions for the Limitation
Year to exceed this limitation, the amount contributed or allocated
will be reduced so that the Annual Additions under all such plans and
funds for the Limitation Year will equal the Maximum Permissible
Amount. If the Annual Additions with respect to the Participant under
such other qualified master or prototype defined contribution plans,
welfare benefit funds, individual medical accounts and simplified
employee pension plans in the aggregate are equal to or greater than
the Maximum Permissible Amount, no amount will be contributed or
allocated to the Participant's Individual Account under this Plan for
the Limitation Year.
32
b. Prior to determining the Participant's actual Compensation for the
Limitation Year, the Employer may determine the Maximum Permissible
Amount for a Participant in the manner described in Section 3.12(A)(2)
of the Plan.
c. As soon as is administratively feasible after the end of the
Limitation Year, the Maximum Permissible Amount for the Limitation
Year will be determined on the basis of the Participant's actual
Compensation for the Limitation Year.
d. If, pursuant to Section 3.12(B)(1)(c) of the Plan or as a result of
the allocation of Forfeitures or a reasonable error in determining a
Participant's Elective Deferral or any other circumstance permitted
under rules promulgated by the IRS a Participant's Annual Additions
under this Plan and such other plans would result in an Excess Annual
Additions for a Limitation Year, the Excess Annual Additions will be
deemed to consist of the Annual Additions last allocated, except that
Annual Additions attributable to a simplified employee pension plan
will be deemed to have been allocated first, followed by Annual
Additions to a welfare benefit fund or individual medical account,
regardless of the actual allocation date.
e. If Excess Annual Additions were allocated to a Participant on an
allocation date of this Plan which coincides with an allocation date
of another plan, the Excess Annual Additions attributed to this Plan
will be the product of:
(i) the total Excess Annual Additions allocated as of such date, times
(ii)the ratio of (i) the Annual Additions allocated to the Participant
for the Limitation Year as of such date under this Plan to (ii) the
total Annual Additions allocated to the Participant for the
Limitation Year as of such date under this and all the other
qualified prototype defined contribution plans.
f. Any Excess Annual Additions attributed to this Plan will be disposed
of in the manner described in Section 3.12(A)(4) of the Plan.
2. If the Participant is covered under another qualified defined
contribution plan maintained by the Employer, other than a Master or
Prototype Plan, the provisions of Section 3.12(B)(1)(a) through 3.12(B)
(1)(f) of the Plan will apply as if the other plan were a Master or
Prototype Plan. In the event this method is unadministerable due to
conflicting language in the other plan, the Employer must provide, via a
written addendum to the Plan, the method under which the plans will limit
total Annual Additions to the Maximum Permissible Amount, and will
properly reduce any Excess Annual Additions, in a manner that precludes
Employer discretion.
3. For Limitation Years beginning before January 1, 2000, if the Participant
is or has ever been a participant in a defined benefit plan maintained by
the Employer, the following rule shall apply with respect to satisfying
the 1.0 limitation of Section 415(e) of the Code. If the projected Annual
Addition to this Plan to the account of a Participant for any Limitation
Year would cause the 1.0 limitation of Section 415(e) of the Code to be
exceeded, the annual benefit of the defined benefit plan for such
Limitation Year shall be reduced so that the 1.0 limitation shall be
satisfied. If it is not possible to reduce the annual benefit of the
defined benefit plan and the projected Annual Addition to this Plan to
the account of a Participant for a Limitation Year would cause the to
limitation to be exceeded, the Employer shall reduce the Employer
Contribution which is to be allocated to this Plan on behalf of such
Participant so that the 1.0 limitation will be satisfied. (The provisions
of Section 415(e) of the Code are incorporated herein by reference under
the authority of Section 1106(h) of the Tax Reform Act of 1986.) As an
alternative, the Employer may provide, in the Adoption Agreement,
alternative language which will satisfy the 1.0 limitation. Such
alternative language must preclude Employer discretion. Notwithstanding
the foregoing, this Section 3.12(B)(3) of the Plan shall not apply to
Plan Years beginning or after January 1, 2000.
C. The provisions of this Section 3.12 of the Plan shall apply to SIMPLE 401(k)
contributions made pursuant to Sections 3.06(F) and 3.07 of the Plan.
3.13 ACTUAL DEFERRAL PERCENTAGE TEST (ADP)
A. Limits on Highly Compensated Employees -The Actual Deferral Percentage
(hereinafter "ADP") for Participants who are Highly Compensated Employees
for each Plan Year and the ADP for Participants who are non-Highly
Compensated Employees for the same Plan Year must satisfy one of the
following tests.
1. The ADP for Participants who are Highly Compensated Employees for the
Plan Year shall not exceed the ADP for Participants who are non-Highly
Compensated Employees for the same Plan Year multiplied by 1.25; or
33
2. The ADP for Participants who are Highly Compensated Employees for the
Plan Year shall not exceed the ADP for Participants who are non-Highly
Compensated Employees for the same Plan Year multiplied by 2.0 provided
that the ADP for Participants who are Highly Compensated Employees does
not exceed the ADP for Participants who are non-Highly Compensated
Employees by more than two percentage points. Effective for Plan Years
beginning on or after January 1, 1997, the Plan must satisfy the ADP test
using either the prior year testing or current year testing requirements
described below. Notwithstanding the foregoing, the prior year testing
method described below will apply to this Plan unless otherwise elected
by the Employer.
3. Prior Year Testing
The ADP for a Plan Year for Participants who are Highly Compensated
Employees for each Plan Year and the prior year's ADP for Participants
who were non-Highly Compensated Employees for the prior Plan Year must
satisfy one of the following tests.
a. The ADP for a Plan Year for Participants who are Highly Compensated
Employees for the Plan Year shall not exceed the prior year's ADP for
Participants who were non-Highly Compensated Employees for the prior
Plan Year multiplied by 1.25; or
b. The ADP for a Plan Year for Participants who are Highly Compensated
Employees for the Plan Year shall not exceed the prior year's ADP for
Participants who were nonHighly Compensated Employees for the prior
Plan Year multiplied by 2.0, provided that the ADP for Participants
who are Highly Compensated Employees does not exceed the ADP for
Participants who were non-Highly Compensated Employees in the prior
Plan Year by more than two percentage points.
For the first Plan Year the Plan permits any Participant to make Elective
Deferrals and this is not a successor Plan, for purposes of the foregoing
tests, the prior year's non-Highly Compensated Employees' ADP shall be
three percent unless the Adopting Employer has elected in the Adoption
Agreement to use the actual Plan Year's ADP for these Participants.
4. Current Year Testing
If the Plan is amended by the Employer to implement current year testing,
the ADP tests in (a) and (b) above will be applied by comparing the
current Plan Year's ADP for Participants who are Highly Compensated
Employees with the current Plan Year's ADP for Participants who are
non-Highly Compensated Employees. Once made, this election can only be
changed if the Plan meets the requirements for changing to prior year
testing set forth in IRS Notice 98-1 (or subsequent guidance provided by
the IRS). Notwithstanding the foregoing, the Plan shall be treated as
meeting the ADP test if, within a reasonable period before any Plan Year,
each Participant eligible to participate is given a notice (either in
writing or in any other form permitted by Treasury regulations or other
rules promulgated by the IRS) which satisfies the requirements of Section
401(k)(12)(D) of the Code and the Employer makes Matching Contributions
or nonelective contributions pursuant to Sections 401(k)(12)(B) and (C)
of the Code respectively.
B. Special Rules
1. A Participant is a Highly Compensated Employee for a particular Plan Year
if he or she meets the definition of a Highly Compensated Employee in
effect for that Plan Year. Similarly, a Participant is a non-Highly
Compensated Employee for a particular Plan Year if he or she does not
meet the definition of a Highly Compensated Employee in effect for that
Plan Year.
2. The ADP for any Participant who is a Highly Compensated Employee for the
Plan Year and who is eligible to have Elective Deferrals (and Qualified
Nonelective Contributions or Qualified Matching Contributions, or both,
if treated as Elective Deferrals for purposes of the ADP test) allocated
to his or her Individual Accounts under two or more arrangements
described in Section 401(k) of the Code, that are maintained by the
Employer, shall be determined as if such Elective Deferrals (and, if
applicable, such Qualified Nonelective Contributions or Qualified
Matching Contributions, or both) were made under a single arrangement.
If a Highly Compensated Employee participates in two or more cash or
deferred arrangements that have different Plan Years, all cash or
deferred arrangements ending with or within the same calendar year shall
be treated as a single arrangement. Notwithstanding the foregoing,
certain plans shall be treated as separate if mandatorily disaggregated
under regulations under Section 401(k) of the Code.
3. In the event that this Plan satisfies the requirements of Sections
401(k), 401(a)(4), or 410(b) of the Code only if aggregated with one or
more other plans, or if one or more other plans satisfy the requirements
of such sections
34
of the Code only if aggregated with this Plan, then this Section 3.13(B)
(3) of the Plan shall be applied by determining the ADP of Participants
as if all such Plans were a single Plan. Any adjustments to the
non-Highly Compensated Employee ADP for the prior year will be made in
accordance with IRS Notice 98-1 and any subsequent guidance provided by
the IRS, unless the Adopting Employer has elected in the Adoption
Agreement to use the current year testing method. Plans may be aggregated
in order to satisfy Section 401(k) of the Code only if they have the same
Plan Year and use the same ADP testing method.
4. For purposes of determining the ADP test, Elective Deferrals, Qualified
Nonelective Contributions and Qualified Matching Contributions must be
made before the end of the 12 month period immediately following the Plan
Year to which contributions relate.
5. The Employer shall maintain records sufficient to demonstrate
satisfaction of the ADP test and the amount of Qualified Nonelective
Contributions or Qualified Matching Contributions, or both, used in such
test.
6. The determination and treatment of the ADP amounts of any Participant
shall satisfy such other requirements as may be prescribed by the
Secretary of the Treasury.
7. If the Employer elects to take Qualified Matching Contributions into
account as Elective Deferrals for purposes of the ADP test, then (subject
to such other requirements as may be prescribed by the Secretary of the
Treasury) the Employer may elect, in a uniform and nondiscriminatory
manner, to either include all Qualified Matching Contributions in the ADP
test or to include only the amount of such Qualified Matching
Contributions that are needed to meet the ADP test.
8. In the event that the Plan Administrator determines that it is not likely
that the ADP test will be satisfied for a particular Plan Year unless
certain steps are taken prior to the end of such Plan Year, the Plan
Administrator may require Contributing Participants who are Highly
Compensated Employees to reduce or cease future Elective Deferrals for
such Plan Year in order to satisfy that requirement. Said reduction shall
also be required by the Plan Administrator in the event that the Plan
Administrator anticipates that the Employer will not be able to deduct
all Employer Contributions from its income for Federal income tax
purposes. If the Plan Administrator requires Contributing Participants
to reduce or cease making Elective Deferrals under this paragraph, the
reduction or cessation shall begin with the Highly Compensated Employee
with the largest amount of Elective Deferrals for the Plan Year on the
date on which it is determined that the ADP test will not likely be
satisfied. All remaining Highly Compensated Employees' Elective Deferrals
for the Plan Year shall be limited to such amount. Notwithstanding the
foregoing, if it is later determined that the ADP test for the Plan Year
will be satisfied, Highly Compensated Employees shall be permitted to
enroll as Contributing Participants in accordance with the terms of the
Plan.
C. Notwithstanding the foregoing, the ADP test described above is treated as
satisfied for any Year in which an Eligible Employer maintains this Plan as
a SIMPLE 401(k) Plan.
3.14 LIMITS ON NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS AND MATCHING CONTRIBUTIONS
A. Limits on Highly Compensated Employees -The Average Contribution Percentage
(hereinafter "ACP") for Participants who are Highly Compensated Employees
for each Plan Year and the ACP for Participants who are non-Highly
Compensated Employees for the same Plan Year must satisfy one of the
following tests.
1. The ACP for Participants who are Highly Compensated Employees for the
Plan Year shall not exceed the ACP for Participants who are non-Highly
Compensated Employees for the same Plan Year multiplied by 1.25; or
2. The ACP for Participants who are Highly Compensated Employees for the
Plan Year shall not exceed the ACP for Participants who are non-Highly
Compensated Employees for the same Plan Year multiplied by 2.0, provided
that the ACP for the Participants who are Highly Compensated Employees
does not exceed the ACP for Participants who are non-Highly Compensated
Employees by more than two percentage points. Effective for Plan Years
beginning on or after January 1, 1997, the Pan must satisfy the ACP test
using either the prior year testing or current year testing requirements
described below. Notwithstanding the foregoing, the prior year testing
method described below will apply to this Plan unless otherwise elected
in the Adoption Agreement by the Adopting Employer.
35
Prior Year Testing
The ACP for a Plan Year for Participants who are Highly Compensated
Employees for each Plan Year and the prior year's ACP for Participants who
were non-Highly Compensated Employees for the prior Plan Year must satisfy
one of the following tests.
a. The ACP for a Plan Year for Participants who are Highly Compensated
Employees for the Plan Year shall not exceed the prior year's ACP for
Participants who were non-Highly Compensated Employees for the prior Plan
Year multiplied by 1.25; or
b. The ACP for a Plan Year for Participants who are Highly Compensated
Employees for the Plan Year shall not exceed the prior year's ACP for
Participants who were non-Highly Compensated Employees for the prior Plan
Year multiplied by 2.0, provided that the ACP for Participants who are
Highly Compensated Employees does not exceed the ACP for Participants who
were non-Highly Compensated Employees in the prior Plan Year by more than
two percentage points.
For the first Plan Year, if this Plan permits any Participant to make
Nondeductible Employee Contributions, provides for Matching Contributions or
both, and this is not a successor Plan, for purposes of the foregoing tests,
the prior year's non-Highly Compensated Employees' ACP shall be three
percent unless the Employer has elected to use the Plan Year's ACP for these
Participants.
Current Year Testing
If the Plan is amended by the Adopting Employer to implement current year
testing, the ACP tests in (a) and (b), above, will be applied by comparing
the current Plan Year's ACP for Participants who are Highly Compensated
Employees for each Plan Year with the current Plan Year's ACP for
Participants who are non-Highly Compensated Employees. Once made, this
election can only be changed if the Plan meets the requirements for changing
to prior year testing set forth in Notice 98-1 (or additional guidance
provided by the IRS).
B. Special Rules
1. A Participant is a Highly Compensated Employee for a particular Plan Year
if he or she meets the definition of a Highly Compensated Employee in
effect for that Plan Year. Similarly, a Participant is a non-Highly
Compensated Employee for a particular Plan Year if he or she does not
meet the definition of a Highly Compensated Employee in effect for that
Plan Year.
2. Multiple Use: Effective for Plan Years beginning on or after January 1,
1997, if one or more Highly Compensated Employees participate in both a
cash or deferred arrangement (CODA) and a Plan subject to the ACP test
maintained by the Employer, and the sum of the ADP and ACP of those
Highly Compensated Employees subject to either or both tests exceeds
the Aggregate Limit, then the ACP of those Highly Compensated Employees
who also participate in a CODA will be reduced in the manner described in
Section Five of the Plan so that the limit is not exceeded. The amount by
which each Highly Compensated Employee's Contribution Percentage Amounts
is reduced shall be treated as an Excess Aggregate Contribution. The ADP
and ACP of the Highly Compensated Employees are determined after any
corrections required to meet the ADP and ACP tests and are deemed to be
the maximum permitted under such tests for the Plan Year. Multiple use
does not occur if either the ADP and ACP of the Highly Compensated
Employees does not exceed 1.25 multiplied by the ADP and ACP of the
non-Highly Compensated Employees.
3. For purposes of this Section 3.14 of the Plan, the Contribution
Percentage for any Participant who is a Highly Compensated Employee and
who is eligible to have Contribution Percentage Amounts allocated to his
or her Individual Account under two or more plans described in Section
401(a) of the Code, or arrangements described in Section 401(k) of the
Code that are maintained by the Employer, shall be determined as if the
total of such Contribution Percentage Amounts was made under each plan.
If a Highly Compensated Employee participates in two or more cash or
deferred arrangements that have different plan years, all cash or
deferred arrangements ending with or within the same calendar year shall
be treated as a single arrangement. Notwithstanding the foregoing,
certain plans shall be treated as separate if mandatorily disaggregated
under regulations under Section 401(m) of the Code.
4. In the event that this Plan satisfies the requirements of Sections
401(m), 401(a)(4) or 410(b) of the Code only if aggregated with one or
more other Plans, or if one or more other Plans satisfy the requirements
of such sections of the Code only if aggregated with this Plan, then this
section shall be applied by determining the Contribution Percentage of
Employees as if all such Plans were a single Plan. Any adjustments to the
non-Highly
36
Compensated Employee ACP for the prior year will be made in accordance
with IRS Notice 98-1 and any additional guidance issued by the IRS,
unless the Employer has elected to use the current year testing method.
Plans may be aggregated in order to satisfy Section 401(m) of the Code
only if they have the same Plan Year and use the same ACP testing method.
5. For purposes of determining the Contribution Percentage test,
Nondeductible Employee Contributions are considered to have been made in
the Plan Year in which contributed to the Fund. Matching Contributions
and Qualified Nonelective Contributions will be considered made for a
Plan Year if made no later than the end of the 12 month period beginning
on the day after the close of the Plan Year.
6. The Employer shall maintain records sufficient to demonstrate
satisfaction of the ACP test and the amount of Qualified Nonelective
Contributions or Qualified Matching Contributions, or both, used in such
test.
7. The determination and treatment of the Contribution Percentage of any
Participant shall satisfy such other requirements as may be prescribed by
the Secretary of the Treasury.
8. If the Employer elects to take Qualified Nonelective Contributions into
account as Contribution Percentage Amounts for purposes of the ACP test,
then (subject to such other requirements as may be prescribed by the
Secretary of the Treasury) the Employer may elect, in a uniform and
nondiscriminatory manner, to either include all Qualified Nonelective
Contributions in the ACP test or to include only the amount of such
Qualified Nonelective Contributions that are needed to meet the ACP test.
9. If the Employer elects to take Elective Deferrals into account as
Contribution Percentage Amounts for purposes of the ACP test, then
(subject to such other requirements as may be prescribed by the
Secretary of the Treasury) the Employer may elect, in a uniform and
nondiscriminatory manner, to either include all Elective Deferrals in the
ACP test or to include only the amount of such Elective Deferrals that
are needed to meet the ACP test.
C. Notwithstanding the foregoing, the ACP test described above is treated as
satisfied for any Year in which an Eligible Employer maintains this Plan as
a SIMPLE 401(k) Plan.
3.15 SAFE HARBOR CODA
The provisions of this Section 3.15 may only be applied to Plan Years beginning
on or after January 1, 1999.
A. ADP Test Safe Harbor Contributions
Unless the Adopting Employer elects in the Adoption Agreement to make
Enhanced Matching Contributions or Safe Harbor Nonelective Contributions,
the Employer will contribute for the Plan Year a Safe Harbor Matching
Contribution to the Plan on behalf of each Eligible Employee equal to (i)
100 percent of the amount of the Employee's Elective Deferrals that do not
exceed three percent of the Employee's Compensation for the Plan Year, Plus
(ii) 50 percent of the amount of the Employee's Elective Deferrals that
exceed three percent of the Employee's Compensation but that do not exceed
five percent of the Employee's Compensation ("Basic Matching
Contributions"). Not withstanding the foregoing, if the Adopting Employer so
provides in the Adoption Agreement, the ADP Test Safe Harbor Contributions
will be made to the defined contribution plan indicated in the Adoption
Agreement. However, such contributions will be made to this Plan unless (i)
each Eligible Employee under this Plan is also eligible under the other plan
and (ii) the other plan has the same Plan Year as this Plan. In addition,
such contributions cannot be made with regard to permitted disparity under
Section 401(1) of the Code.
B. ACP Test Safe Harbor Matching Contributions In addition to the ADP Test Safe
Harbor Contributions described in the Definition Section of the Plan, the
Employer will make the ACP Test Safe Harbor Matching Contributions, if any,
indicated in the Adoption Agreement for the Plan Year.
SECTION FOUR: VESTING AND FORFEITURES
4.01 DISTRIBUTIONS TO PARTICIPANTS
A. Determining the Vested Portion - In determining the Vested portion of a
Participant's Individual Account, the following rules apply.
1. Employer Contributions and Forfeitures - The Vested portion of a
Participant's Individual Account derived from Employer Contributions and
Forfeitures is determined by applying the vesting schedule selected in
the Adoption Agreement (or the vesting schedule described in Section
4.01(B) of the Plan if the Plan is a Top-
37
Heavy Plan). In the event that there is not a vesting schedule option
provided in the Adoption Agreement, a Participant shall be fully Vested
in his or her Individual Account at all times.
2. Other Contributions - A Participant is fully Vested in his or her
rollover contributions and transfer contributions, Deductible Employee
Contributions and Nondeductible Employee Contributions and any earnings
thereon. No Forfeiture will occur solely as a result of an Employee's
withdrawal of such contributions.
3. Fully Vested Under Certain Circumstances - A Participant is fully Vested
in his or her Individual Account if any of the following occurs:
a. the Participant reaches Normal Retirement Age;
b. the Plan is terminated or partially terminated as defined by rules
promulgated by the IRS; or
c. there exists a complete discontinuance of contributions under the
Plan. Further, unless otherwise indicated in the Adoption Agreement, a
Participant is fully Vested if the Participant dies, incurs a
Disability, or satisfies the conditions for Early Retirement Age
(if applicable). Notwithstanding the foregoing, the portion of a
Participant's Individual Account attributable to Employer Profit
Sharing Contributions, Employer Money Purchase Pension Contributions
or Employer Target Benefit Pension Contributions which are made based
on his or her imputed Compensation on account of incurring a
Disability shall be fully Vested at all times. In the case of a
partial termination, only those Participants who are affected by the
partial termination of the Plan shall become fully Vested.
4. Participants in a Prior Plan - If a Participant was a participant in a
Prior Plan on the Effective Date, his or her Vested percentage shall not
be less than it would have been under such Prior Plan as computed on the
Effective Date.
5. SIMPLE 401(k) Exception Notwithstanding anything in this Plan to the
contrary, all benefits attributable to contributions described in Section
3.06(F) and 3.07 of the Plan are nonforfeitable at all times, and all
previous contributions made under the Plan are nonforfeitable as of the
beginning of the Year in which the SIMPLE 401(k) Plan is adopted.
6. ADP Test Safe Harbor Contribution Exception Notwithstanding anything in
this Plan to the contrary, all benefits attributable to ADP Test Safe
Harbor Contributions shall be nonforfeitable at all times.
7. ACP Test Safe Harbor Matching Contributions Notwithstanding anything in
this Plan to the contrary, ACP Safe Harbor Matching Contributions will be
Vested as indicated in the Adoption Agreement, but, in any event, such
contributions shall be fully Vested at Normal Retirement Age, upon the
complete or partial termination of the Plan, or upon the complete
discontinuance of Employer Contributions. Forfeitures of non-Vested ACP
Test Safe Harbor Matching Contributions will be used to reduce the
Employer's Contribution.
8. Government Contract Contributions - Notwithstanding anything in this Plan
to the contrary, contributions made by an Employer pursuant to Section
3.01(B)(3) of the Plan shall be nonforfeitable at all times.
A Participant shall not be fully Vested in his or her individual Account
solely on account of a transaction described in Section 414(l) of the
Code except as otherwise provided therein.
B. Minimum Vesting Schedule for Top-Heavy Plans - The following vesting
provisions apply for any Plan Year in which this Plan is a Top-Heavy Plan.
Notwithstanding the other provisions of this Section 4.01 of the Plan or the
non-top heavy vesting schedule selected (either affirmatively or by default)
in the Adoption Agreement (unless those provisions or that schedule provide
for more rapid vesting), unless elected otherwise in the Adoption Agreement,
a Participant's Vested portion of his or her Individual Account attributable
to Employer Contributions and Forfeitures shall be determined in accordance
with the vesting schedule described below, provided that if the Adopting
Employer elected a graded nontop-heavy vesting schedule in the Adoption
Agreement, the six year graded schedule described below shall apply, and if
the Adopting Employer elected a cliff non-top-heavy vesting schedule in the
Adoption Agreement, the three year cliff schedule described below shall
apply.
38
SIX YEAR GRADED THREE YEAR CLIFF
Years of Years Of
Vesting Service Vested Percentage Vesting Service Vested Percentage
1 0 1 0
2 20 2 0
3 40 3 100
4 60
5 80
6 100
This minimum vesting schedule applies to all benefits within the meaning of
Section 411(a)(7) of the Code, except those attributable to Nondeductible
Employee Contributions including benefits accrued before the effective date
of Section 416 of the Code and benefits accrued before the Plan became a
Top-Heavy Plan. Further, no decrease in a Participant's Vested percentage
may occur in the event the Plan's status as a Top-Heavy Plan changes for any
Plan Year. However, this Section 4.01(B) of the Plan does not apply to the
Individual Account of any Employee who does not have an Hour of Service
after the Plan has initially become a Top-Heavy Plan and such Employee's
Individual Account attributable to Employer Contributions and Forfeitures
will be determined without regard to this Section 4.01(B) of the Plan.
If this Plan ceases to be a Top-Heavy Plan, then in accordance with the
above restrictions, the vesting schedule as selected in the Adoption
Agreement will govern. If the vesting schedule under the Plan shifts in or
out of top-heavy status, such shift is an amendment to the vesting schedule
and the election in Section 7.06(D) of the Plan applies.
C. Termination of Employment - If a Participant incurs a Termination of
Employment, any portion of his or her Individual Account which is not Vested
shall be held in a suspense account. Such suspense account shall share in
any increase or decrease in the fair market value of the assets of the Fund
in accordance with Section 7.02(B) of the Plan. The disposition of such
suspense account shall be as follows.
1. Cash-out of Certain Terminated Participants - If the value of the Vested
portion of such terminated Participant's Individual Account does not
exceed $5,000, the Participant shall receive a distribution of the entire
Vested portion of such Individual Account. For Plan Years beginning on or
before August 5, 1997, $3,500 shall be substituted for $5,000 in the
preceding sentence. The portion which is not Vested shall be treated as a
Forfeiture and applied in accordance with Section 3.01(C) of the Plan.
For purposes of this Section, if the value of the Vested portion of a
Participant's Individual Account is zero, the Participant shall be deemed
to have received a distribution of such Vested Individual Account. A
Participant's Vested Individual Account balance shall not include
accumulated deductible employee contributions within the meaning of
Section 72(0)(5) (B) of the Code for Plan Years beginning prior to
January 1, 1989.
2. Terminated Participants Who Elect to Receive Distributions - If such
terminated Participant elects to receive a distribution of the Vested
portion of his or her Individual Account in accordance with Section
5.02(B) of the Plan, the portion which is not Vested shall be treated
as a Forfeiture. Such Forfeiture shall be applied in accordance with
Section 3.01(C) of the Plan.
3. Re-employed Participants Who Received Distributions - If such Participant
receives or is deemed to receive a distribution pursuant to Section
4.01(C)(1) or (2) of the Plan and the Participant subsequently resumes
employment, the Participant's Employer-derived Individual Account balance
will be restored to the amount on the date of distribution if the
Participant repays to the Plan the full amount of the distribution
attributable to Employer Contributions before the earlier of
(a)five years after the first date on which the Participant is
subsequently re-employed by the Employer, or
(b)the date the Participant incurs five consecutive Breaks in Vesting
Service following the date of the distribution. Any restoration of a
Participant's Individual Account pursuant to Section 4.01(C)(3) of the
Plan shall be made from other Forfeitures, income or gain to the Fund
or contributions made by the Employer.
4. Re-employed Participants Who Did Not Receive Distributions - If such
Participant neither receives nor is deemed to receive a distribution
pursuant to Section 4.01(C)(1) nor (2) of the Plan and the Participant
returns to
39
the service of the Employer before incurring five consecutive
Breaks in Vesting Service, there shall be no Forfeiture. Rather, the
Amount in such suspense account shall be recredited to such Participant's
Individual Account.
D. Forfeitures Following Five Consecutive Breaks in Vesting Service - If a
Participant who has neither received a distribution nor has been deemed to
receive a distribution incurs five consecutive Breaks in Vesting Service,
the portion of the Participant's Individual Account which is not Vested
shall be treated as a Forfeiture and applied in accordance with Section
3.01(C) of the Plan.
E. Distribution Prior to Full Vesting
If a distribution is made to a Participant who was not then fully Vested in
his or her Individual Account derived from Employer Contributions and the
Participant may increase his or her Vested percentage in his or her
Individual Account, then the following rules shall apply:
1. a separate account will be established for the Participant's interest in
the Plan as of the time of the distribution, and
2. at any relevant time, the Participant's Vested portion of the separate
account will be equal to an amount ("X'') determined in accordance with
the standard formula described below unless the Employer chooses, in a
uniform and nondiscriminatory manner, to apply the alternative formula.
Standard Formula: X=P (AB + (R x D)) - (R x D)
Alternative Formula: X= P(AB+D) - D
For purposes of the standard and alternative formulas described above,
"P" is the Vested percentage at the relevant time; "AB" is the separate
account balance at the relevant time; "D" is the amount of the
distribution; and "R" is the ratio of the separate account balance at the
relevant time to the separate account balance after distribution.
4.02 100 PERCENT VESTING OF CERTAIN CONTRIBUTIONS
The Participant's accrued benefit derived from Elective Deferrals, Qualified
Nonelective Contributions, Nondeductible Employee Contributions, and Qualified
Matching Contributions is nonforfeitable. Separate accounts for Elective
Deferrals, Qualified Nonelective Contributions, Nondeductible Employee
Contributions, Matching Contributions, and Qualified Matching Contributions
will be maintained for each Participant. Each account will be credited with the
applicable contributions and earnings thereon.
4.03 FORFEITURES AND VESTING OF MATCHING CONTRIBUTIONS
Matching Contributions shall be Vested in accordance with the vesting schedule
for Matching Contributions in the Adoption Agreement. In any event, Matching
Contributions shall be fully Vested at Normal Retirement Age, upon the complete
or partial termination of the Plan, or upon the complete discontinuance of
Employer Contributions. Notwithstanding any other provisions of the Plan,
Matching Contributions or Qualified Matching Contributions must be forfeited if
the contributions to which they relate are Excess Elective Deferrals, Excess
Contributions, Excess Aggregate Contributions or Excess Annual Additions which
are distributed pursuant to Section 3.12(A)(4)(c) of the Plan. Such Forfeitures
shall be allocated in accordance with Section 3.01(C) of the Plan.
When a Participant incurs a Termination of Employment, whether a Forfeiture
arises with respect to Matching Contributions shall be determined in accordance
with Section 4.01(C) of the Plan.
SECTION FIVE: DISTRIBUTIONS AND LOANS TO PARTICIPANTS
5.01 DISTRIBUTIONS
A. Distributable Events
1. Entitlement to Distribution - The Vested portion of a Participant's
Individual Account attributable to Employer Contributions other than
those described in Section 5.01(A)(2) Of the Plan shall be distributable
to the Participant upon (1) the occurrence of any of the distributable
events specified in the Adoption Agreement; (2) the Participant's
Termination of Employment after attaining Normal Retirement Age; (3) the
termination of the Plan; and (4) the Participant's Termination of
Employment after satisfying any Early Retirement Age conditions. If a
Participant separates from service before satisfying the Early Retirement
Age requirement, but
40
has satisfied the service requirement, the Participant will be entitled
to elect an early retirement benefit upon satisfaction of such age
requirement. With respect to item (1) above, if the Adoption Agreement
does not allow an Employer to specify distributable events, the Vested
portion of a Participant's Individual Account shall be distributable to
the Participant upon the Participant's Termination of Employment; the
Participant's attainment of Normal Retirement Age; the Participant's
Disability; or the termination of the Plan.
Notwithstanding the foregoing, the following rules shall apply with
respect to entitlement to distribution of rollover and transfer
contributions and Nondeductible Employee Contributions. Except as
otherwise provided in the Adoption Agreement, rollover and transfer
contributions and earnings thereon shall be subject to the Plan's
provisions governing distributions of either Employer Profit Sharing
Contributions (if this Plan is a profit sharing plan), Employer Money
Purchase Pension Contributions (if this Plan is a money purchase pension
plan) or Employer Target Benefit Pension Contributions (if this Plan is a
target benefit pension plan). However, to the extent that any optional
form of benefit under this Plan permits a distribution prior to the
Employee's retirement, death, Disability, attainment of Normal Retirement
Age or severance from employment, and prior to Plan termination, the
optional form of benefit is not available with respect to benefits
attributable to assets (including the posttransfer earnings thereon)
and liabilities that are transferred, within the meaning of Section
414(l) of the Code, to this Plan from a money purchase pension plan or a
target benefit pension plan qualified under Section 401(a) of the Code
(other than any portion of those assets and liabilities attributable
to voluntary employee contributions).
A Participant may, at any time and upon a request (either in writing or in
any other form permitted under rules promulgated by the IRS and DOL)
submitted to the Plan Administrator withdraw an amount from his or her
Individual Account attributable to Nondeductible Employee Contributions
(including earnings thereon). In the event the portion of a Participant's
Individual Account attributable to Nondeductible Employee Contributions
experiences a loss such that the amount remaining in such subaccount is
less than the amount of Nondeductible Employee Contributions made by the
Participant, the maximum amount which the Participant may withdraw is an
amount equal to the remaining Nondeductible Employee Contributions. Subject
to Section 5.13 of the Plan, Joint and Survivor Annuity Requirements (if
applicable), the Participant may withdraw any part of the Deductible
Employee Contribution account by delivering an application (either in
writing or in any other form permitted under rules promulgated by the IRS
and DOL) to the Plan Administrator.
2. Special Requirements For Certain 401(k) Contributions Elective Deferrals,
Qualified Nonelective Contributions, Qualified Matching Contributions and
income allocable to each are not distributable to a Participant or his or
her Beneficiary or Beneficiaries, in accordance with such Participant's
or Beneficiary or Beneficiaries' election, earlier than upon separation
from service, death or disability. Such amounts may also be distributed
upon.
a. termination of the Plan without the establishment of another defined
contribution plan, other than an employee stock ownership plan (as
defined in Section 4975(e) or Section 409 of the Code), a simplified
employee pension plan (as defined in Section 408(k) of the Code), or a
SIMPLE IRA Plan (as defined in Section 408(p) of the Code);
b. the disposition by a corporation to an unrelated corporation of
substantially all of the assets (within the meaning of Section
409(d)(2) of the Code) used in a trade or business of such
corporation if such corporation continues to maintain this Plan
after the disposition, but only with respect to Employees who
continue employment with the corporation acquiring such assets;
c. the disposition by a corporation to an unrelated entity of such
corporation's interest in a subsidiary (within the meaning of Section
409(d)(3) of the Code) if such corporation continues to maintain this
Plan, but only with respect to Employees who continue employment with
such subsidiary;
d. the attainment of age 59 1/2 in the case of a profit sharing plan if
so permitted in the Adoption Agreement; or
e. if the Adopting Employer has so elected in the Adoption Agreement, the
hardship of the Participant as described in Section 5.01(A)(6) of the
Plan. All distributions that may be made pursuant to one or more of
the foregoing distributable events are subject to the spousal and
Participant consent requirements (if applicable) contained in Section
401(a)(11) and 417 of the Code. In addition, distributions after March
31, 1988, which are triggered by either a, b or c above must be made
in a lump sum.
41
Notwithstanding the foregoing, ADP Test Safe Harbor Contributions may
not be distributed earlier than separation from service, death,
Disability, an event described in Section 401(k)(10) of the Code, or,
in the case of a profit sharing plan, the attainment of age 59 1/2.
3. Withdrawal Request: When Distributed -A Participant entitled to a
distribution who wishes to receive a distribution must submit a request
(either in writing or in any other form permitted under rules promulgated
by the IRS and DOL) to the Plan Administrator. If required in writing,
such request shall be made upon a form provided by the Plan
Administrator. Upon a valid request, the Plan Administrator shall direct
the Trustee (or Custodian, if applicable) to commence distribution no
later than the time specified in the Adoption Agreement for this purpose
and, if not specified in the Adoption Agreement, then no later than go
days following the later of
a. the close of the Plan Year within which the event occurs which
entities the Participant to a distribution; or
b. the close of the Plan Year in which the request is received.
Distributions will be made based on the value of the Vested portion of
The Individual Account available at the time of actual distribution.
To the extent the distribution request is for an amount greater than
the Individual Account, the Trustee (or Custodian, if applicable)
shall be entitled to distribute the entire Vested portion of the
Individual Account.
4. Special Rules for Withdrawals During Service - If this is a profit
sharing plan, unless the Adoption Agreement provides otherwise, a
Participant who is not otherwise eligible to receive a distribution of
his or her Individual Account may elect to receive an in-service
distribution of at[or part of the Vested portion of his or her Individual
Account attributable to Employer Contributions other than those described
in Section 5.01(A)(2) of the Plan, subject to the requirements of Section
5.13 of the Plan and further subject to the following limits.
a. Participant for five or more years. An Employee who has been a
Participant in the Plan for five or more years may withdraw up to the
entire Vested portion of his or her Individual Account.
b. Participant for less than five years. Except as otherwise provided in
the Adoption Agreement, an Employee who has been a Participant in the
Plan for less than five years may withdraw only the amount which has
been in his or her Individual Account attributable to Employer
Contributions for at least two full Plan Years, measured from the date
such contributions were allocated.
5. Special Rules for Hardship Withdrawals - If this is a profit sharing plan
and the Adoption Agreement so provides, then notwithstanding Section
5.01(A)(4) of the Plan, a Participant may elect to receive a hardship
distribution of all or part of the Vested portion of his or her
Individual Account attributable to Employer Contributions other than
those described in Section 5.01(A) (2) Of the Plan, subject to the
requirements of Section 5.13 of the Plan.
For purposes of this Section 5.01(A)(5), hardship is defined as an
immediate and heavy financial need of the Participant where such
Participant tacks other available resources. Except as otherwise provided
in the Adoption Agreement, financial needs considered immediate and heavy
include, but are not limited to expenses incurred or necessary for
medical care, described in Section 213(d) of the Code, of the Employee,
the Employee's Spouse or dependents; the purchase (excluding mortgage
payments) of a principal residence for the Employee; payment of tuition
and related educational fees for the next 12 months of post-secondary
education for the Employee, the Employee's spouse, children or
dependents; the need to prevent the eviction of the Employee from, or a
foreclosure on the mortgage of, the Employee's principal residence; or
funeral expenses of a member of the Participant's family.
A distribution will be considered as necessary to satisfy an immediate
and heavy financial need of the Employee only if
1)the Employee has obtained all distributions, other than hardship
distributions, and all nontaxable loans available under all plans
maintained by the Employer;
2)the distribution is not in excess of the amount of an immediate and
heavy financial need (including amounts necessary to pay any federal,
state or local income taxes or penalties reasonably anticipated to
result from the distribution).
42
6. Hardship Distribution of Elective Deferrals
a. General - If the Adopting Employer has so elected in the Adoption
Agreement, distribution of Elective Deferrals including Qualified
Nonelective Contributions and Qualified Matching Contributions that
are treated as Elective Deferrals and any earnings credited to a
Participant's account as of the later of December 31,1988, and the
end of the last Plan Year ending before July 1, 1989 may be made to a
Participant in the event of hardship. For the purposes of this Section
5.01(A) (6), hardship is defined as an immediate and heavy financial
need of the Employee where such Employee tacks other available
resources. Hardship distributions are subject to the spousal consent
requirements contained in Sections 401(a)(11) and 417 of the Code.
b. Special Rules For purposes of determining whether a Participant has a
hardship, rules similar to those described in Section 5.01(A)(5) of
the Plan shall apply except that only the listed financial needs shall
be considered, other than funeral expenses for a member of the
Participant's family, which shall not be included. In addition, a
distribution will be considered as necessary to satisfy an immediate
and heavy financial need of the Employee only if
(1)all plans maintained by the Employer provide that the Employee's
Elective Deferrals (and Nondeductible Employee Contributions) will
be suspended for 12 months after the receipt of the hardship
distribution;
(2)all plans maintained by the Employer provide that the Employee may
not make Elective Deferrals for the Employee's taxable year
immediately following the taxable year of the hardship distribution
in excess of the applicable limit under Section 402(g) of the Code
for such taxable year less the amount of such Employee's Elective
Deferrals for the taxable year of the hardship distribution.
7. One-Time In-Service Withdrawal Option - If this is a profit sharing plan
and the Adopting Employer has elected the one-time in-service withdrawal
option in the Adoption Agreement, then a Participant will be permitted
only one in-service withdrawal during the course of such Participant's
employment with the Employer. The amount which the Participant can
withdraw will be limited to the lesser of the amount determined under
the limits set forth in Section 5.01(A)(4) of the Plan or the percentage
of the Participant's Individual Account specified by the Adopting
Employer in the Adoption Agreement. Distributions under this Section
5.01(A)(7) will be subject to the requirements of Section 5.13 of the
Plan.
8. Commencement of Benefits - Notwithstanding any other provision, unless
the Participant elects otherwise, distribution of benefits will begin no
later than the 60th day after the latest of the close of the Plan Year in
which
a. the Participant attains Normal Retirement Age;
b. occurs the 10th anniversary of the year in which the Participant
commenced participation in the Plan; or
c. the Participant incurs a Termination of Employment. Notwithstanding
the foregoing, the failure of a Participant and Spouse, if
applicable, to consent to a distribution while a benefit is
immediately distributable, within the meaning of Section 5.02(B) of
the Plan, shall be deemed to be an election to defer commencement of
payment of any benefit sufficient to satisfy this Section 5.01(A)(8)
of the Plan.
5.02 FORM OF DISTRIBUTION TO A PARTICIPANT
A. Value of Individual Account Does Not Exceed $5,000 - If the value of the
Vested portion of a Participant's Individual Account does not qualify as an
Eligible Rollover Distribution, distribution from the Plan shall be made to
the Participant in a single lump sum in lieu of all other forms of
distribution from the Plan as soon as administratively feasible. Except as
otherwise provided in the Adoption Agreement, if the value of the Vested
portion of a Participant's Individual Account qualifies as an Eligible
Rollover Distribution, exceeds $1,000 but does not exceed $5,000, and the
Participant fails to elect to receive his or her distribution from the Plan
in either a single lump sum or a Direct Rollover to an Eligible Retirement
Plan, payment shall be made in the form of a Direct Rollover to an
individual retirement account within the meaning of either Section 408(a) or
Section 408(b) of the Code. For purposes of the preceding sentence, the Plan
Administrator will select an IRA trustee, custodian or issuer that is
unrelated to the Employer, establish the individual retirement account with
such trustee in accordance with rules promulgated by the IRS and make the
initial investment choices for the such account. Notwithstanding the
foregoing, if the Participant is re-employed by the Employer prior to the
occurrence of the distribution, no distribution will be made under this
paragraph.
43
B. Value of Individual Account Exceeds $5,000
1. If distribution in the form of a Qualified Joint and Survivor Annuity is
required with respect to a Participant, either the value of the
Participant's Vested Individual Account exceeds $5,000 or there are
remaining payments to be made with respect to a particular distribution
option that previously commenced, and the Individual Account is
immediately distributable, the Participant must consent to any
distribution of such Individual Account.
If distribution in the form of a Qualified Joint and Survivor Annuity is
not required with respect to a Participant, the value of such
Participant's Vested Individual Account exceeds $5,000, and the
Individual Account is immediately distributable, the Participant and
the Participant's Spouse (or where either the Participant or the Spouse
has died, the survivor) must consent to any distribution of such
Individual Account. The consent of the Participant and the Participant's
Spouse shall be obtained (either in writing or in any other form
permitted under rules promulgated by the IRS and DOL) within the go-day
period ending on the Annuity Starting Date. The Plan Administrator shall
notify the Participant and the Participant's Spouse of the right to defer
any distribution until the Participant's Individual Account is no longer
immediately distributable. Such notification shall include a general
description of the material features, and an explanation of the relative
values of, the optional forms of benefit available under the Plan in a
manner that would satisfy the notice requirements of Section 417(a)(3) of
the Code, and shall be provided no less than 30 days and no more than go
days prior to the Annuity Starting Date.
If a distribution is one to which Sections 401(a)(11) and 417 Of the Code
do not apply, such distribution may commence less than 30 days after the
notice required under Section 1.411(a)11(c) of the Income Tax Regulations
is given, provided that:
a. the Plan Administrator clearly informs the Participant that the
Participant has a right to a period of at least 30 days after
receiving the notice to consider the decision of whether or not to
elect a distribution (and, if applicable, a particular distribution
option), and
b. the Participant, after receiving the notice, affirmatively elects a
distribution.
Notwithstanding the foregoing, only the Participant need consent to the
commencement of a distribution which is either made in the form of a
Qualified Joint and Survivor Annuity or is made from a Plan which meets
the Retirement Equity Act safe harbor rules of Section 5.13(E) of the
Plan, while the Individual Account is immediately distributable. Neither
the consent of the Participant nor the Participant's Spouse shall be
required to the extent that a distribution is required to satisfy Section
401(a)(9) or Section 415 of the Code. In addition, upon termination of
this Plan, if the Plan does not offer an annuity option (purchased from a
commercial provider), the Participant's Individual Account may, without
the Participant's consent, be distributed to the Participant or
transferred to another defined contribution plan (other than an employee
stock ownership plan as defined in Section 4975(e)(7) of the Code) within
the same controlled group.
An Individual Account is immediately distributable if any part of the
Individual Account could be distributed to the Participant (or surviving
Spouse) before the Participant attains or would have attained (if not
deceased) the later of Normal Retirement Age or age 62.
2. For purposes of determining the applicability of the foregoing consent
requirements to distributions made before the first day of the first Plan
Year beginning after December 31, 1988, the Vested portion of a
Participant's Individual Account shall not include amounts attributable
to accumulated deductible employee contributions within the meaning of
Section 72(o)(5)(B) of the Code.
3. General Rule -This Section 5.02(B)(3) provides transitional rules with
regard to the cash out limits for distributions made prior to the 90th
day after publication of the Income Tax Regulations in the Federal
Register.
a. Distributions Subject to Section 417 of the Code. If distribution in
the form of a Qualified Joint and Survivor Annuity is required with
regard to a Participant, the rule in this paragraph (a) is substituted
for the rule in the first sentence of Section 5.02(B)(1). if the value
of a Participant's Vested Individual Account exceeds (or at the time
of any prior distribution (1) in Plan Years beginning before August 6,
1997, exceeded $3,500 or (2) in Plan Years beginning after August 5,
1997, exceeded) $5,000, and the Individual Account is immediately
distributable, the Participant and the Participant's Spouse (or where
either the Participant or the Spouse has died, the survivor) must
consent to any distribution of such Individual Account.
44
b. Distributions not subject to Section 417 of the Code. If distribution
in the form of a Qualified Joint and Survivor Annuity is not required
with respect to a Participant, the rule in this paragraph (b) is
substituted for the rule in the second sentence of Section 5.02(B)(1).
If the value of a Participant's Vested Individual Account:
(1) for Plan Years beginning before August 6, 1997, exceeds $3,500 (or
exceeded $3,500 at the time of any prior distribution),
(2) for Plan Years beginning after August 5, 1997, and for a
distribution made prior to March 22, 1999, exceeds $5,000 (or
exceeded $5,000, at the time of any prior distribution),
(3) and for Plan Years beginning after August 5, 1997 and for a
distribution made after March 21, 1999, that either exceeds $5,000
or is a remaining payment under a selected optional form of payment
that exceeded $5,000 at the time the selected payment began, and
the Individual Account is immediately distributable, the
Participant and the Participant's Spouse (or where either the
Participant or the Spouse has died, the survivor) must consent to
any distribution of such Individual Account.
C. Other Forms of Distribution to Participant - If the value of the Vested
portion of a Participant's Individual Account exceeds $5,000, and the
Participant has property waived the Qualified joint and Survivor Annuity, as
described in Section 5.13 of the Plan, the Participant may request (either
in writing or in any other form permitted under rules promulgated by the IRS
and DOL) that the Vested portion of his or her Individual Account be paid to
him or her in one or more of the following forms of payment unless specified
otherwise in the Adoption Agreement: (1) in a lump sum; (2) in installment
payments over a period not to exceed the Life Expectancy of the Participant
or the joint and last survivor Life Expectancy of the Participant and his or
her designated Beneficiary; or (3) applied to the purchase of an annuity
contract. Notwithstanding anything in this Section 5.02 of the Plan to the
contrary, a Participant cannot elect payments in the form of a life annuity
if the Retirement Equity Act safe harbor rules of Section 5.13(E) of the
Plan apply.
5.03 DISTRIBUTIONS UPON THE DEATH OF A PARTICIPANT
A. Designation of Beneficiary - Spousal Consent - Each Participant may
designate, upon a form provided by and delivered to the Plan Administrator,
one or more primary and contingent Beneficiaries to receive all or a
specified portion of the Participant's Individual Account in the event of
his or her death. A Participant may change or revoke such Beneficiary
designation from time to time by completing and delivering the proper form
to the Plan Administrator.
In the event that a Participant wishes to designate a primary Beneficiary
who is not his or her Spouse, his or her Spouse must consent (either in
writing or in any other form permitted under rules promulgated by the IRS
and DOL) to such designation, and the Spouse's consent must acknowledge the
effect of such designation and be witnessed by a notary public or plan
representative. Notwithstanding this consent requirement, if the Participant
establishes to the satisfaction of the Plan Administrator that such consent
may not be obtained because there is no Spouse or the Spouse cannot be
located, no consent shall be required. In addition, if the Spouse is legally
incompetent to give consent, the Spouse's legal guardian, even if the
guardian is the Participant, may give consent. If the Participant is legally
separated or the Participant has been abandoned (within the meaning of local
law) and the Participant has a court order to such effect, spousal consent
is not required unless a Qualified Domestic Relations Order provides
otherwise. Any change of Beneficiary will require a new spousal consent.
B. Payment to Beneficiary - If a Participant dies before the Participant's
entire Individual Account has been paid to him or her, such deceased
Participant's Individual Account shall be payable to any surviving
Beneficiary designated by the Participant, or, if no Beneficiary survives
the Participant, to the Participant's Spouse, or, where no Spouse exists, to
the Participant's estate. If the Beneficiary is a minor, distribution will
be deemed to have been made to such Beneficiary if the portion of the
Participant's Individual Account to which the Beneficiary is entitled is
paid to his or her legal guardian or, if applicable, to his or her custodian
under the Uniform Gifts to Minors Act or the Uniform Transfers to Minors
Act.
C. Withdrawal Request: When Distributed -A Beneficiary of a deceased
Participant entitled to a distribution who wishes to receive a distribution
must submit a request (either in writing or in any other form permitted
under rules promulgated by the IRS and DOL) to the Plan Administrator. If
required in writing, such request shall be made upon a form provided by the
Plan Administrator. Upon a valid request, the Plan Administrator shall
direct the Trustee (or Custodian, if applicable) to commence distribution no
later than the time specified in the Adoption
45
Agreement for this purpose and
if not specified in the Adoption Agreement, then no later than go days
following the later of
1. the close of the Plan Year within which the Participant dies; or
2. the close of the Plan Year in which the request is received.
5.04 FORM OF DISTRIBUTION TO BENEFICIARIES
A. Value of Individual Account Does Not Exceed $5,000 - If the value of the
Vested portion of a Participant's Individual Account does not qualify as an
Eligible Rollover Distribution, the Plan Administrator shall direct the
Trustee (or Custodian, if applicable) to make a distribution to the
Beneficiary in a single lump sum in lieu of at[ other forms of distribution
from the Plan. Except as otherwise provided in the Adoption Agreement, if
the value of the Vested portion of a Participant's Individual Account
qualifies as an Eligible Rollover Distribution, exceeds $1,000 but does not
exceed $5,000, and the Beneficiary(ies) fails to elect to receive his or her
distribution from the Plan in either a single lump sum or a Direct Rollover
to an Eligible Retirement Plan, payment shall be made in the form of a
Direct Rollover to an individual retirement account within the meaning of
either Section 408(a) or Section 408(b) of the Code if the Beneficiary
qualifies as a Recipient under the Plan. For purposes of the preceding
sentence, the Plan Administrator will select an IRA trustee, custodian or
issuer that is unrelated to the Employer, establish the individual
retirement account with such trustee in accordance with rules promulgated by
the IRS and make the initial investment choices for the such account.
B. Value of Individual Account Exceeds $5,000 - If the value of the Vested
portion of a Participant's Individual Account exceeds $5,000, the
preretirement survivor annuity requirements of Section 5.13 of the Plan
shall apply unless waived in accordance with that Section 5.13 of the Plan
or unless the Retirement Equity Act safe harbor rules of Section 5.13(E) of
the Plan apply. However, a surviving Spouse Beneficiary may elect any form
of payment allowable under the Plan in lieu of the preretirement survivor
annuity. Any such payment to the surviving Spouse must meet the requirements
of Section 5.05 of the Plan.
C. Other Forms of Distribution to Beneficiary - If the value of a Participant's
Individual Account exceeds $5,000 and the Participant has property waived
the preretirement survivor annuity, as described in Section 5.13 of the Plan
(if applicable), or if the Beneficiary is the Participant's surviving
Spouse, the Beneficiary may, subject to the requirements of Section 5.05 of
the Plan, request (either in writing or in any other form permitted under
rules promulgated by the IRS and DOL) that the Participant's Individual
Account be paid in any form of distribution permitted to be taken by the
Participant under this Plan other than applying the Individual Account
toward the purchase of an annuity contract. Notwithstanding the foregoing,
installment payments to a Beneficiary cannot be made over a period exceeding
the Life Expectancy of such Beneficiary.
5.05 DISTRIBUTION REQUIREMENTS
A. General Rules
1. Subject to Section 5.13 of the Plan, the requirements of this Section
shall apply to any distribution of a Participant's interest and will take
precedence over any inconsistent provisions of this Plan. Unless
otherwise specified, the provisions of Section 5.13 of the Plan apply to
calendar years beginning after December 31,1984.
2. All distributions required under this Section 5.05 of the Plan shall be
determined and made in accordance with the Proposed Income Tax
Regulations under Section 1.401(a)(9), including the minimum distribution
incidental benefit requirement of Section 1.401(a)(g)-2 of such
regulations. "Unless indicated otherwise in the Adoption Agreement with
respect to distributions under the Plan made in calendar years beginning
on or after January 1, 2001, the Plan will apply the minimum distribution
requirements of Section 401(a)(9) of the Code in accordance with the
regulations under Section 401(a)(9) that were proposed in January 2001,
notwithstanding any provision of the Plan to the contrary. The January 1,
2001 proposed regulations shall continue in effect until the end of the
last calendar year beginning before the effective date of final
regulations under Section 401(a) (9) or such other date specified in
guidance published by the Internal Revenue Service."
B. Required Beginning Date -The entire interest of a Participant must be
distributed or begin to be distributed no later than the Participant's
Required Beginning Date.
C. Limits on Distribution Periods - As of the first Distribution Calendar Year,
distributions, if not made in a single sum, may only be made over one of the
following periods (or a combination thereof):
46
1. the life of the Participant,
2. the life of the Participant and a designated Beneficiary,
3. a period certain not extending beyond the Life Expectancy of the
Participant, or
4. a period certain not extending beyond the joint and last survivor
expectancy of the Participant and a designated Beneficiary.
D. Determination of Amount to be Distributed Each Year - If the Participant's
interest is to be distributed in other than a single sum, the following
minimum distribution rules shall apply on or after the Required Beginning
Date;
1. Individual Account
a. If a Participant's benefit is to be distributed over (i) a period not
extending beyond the Life Expectancy of the Participant or the joint
life and last survivor expectancy of the Participant and the
Participant's designated Beneficiary or (2) a period not extending
beyond the Life Expectancy of the designated Beneficiary, the amount
required to be distributed for each calendar year, beginning with
distributions for the first Distribution Calendar Year, must at least
equal the quotient obtained by dividing the Participant's benefit by
the Applicable Life Expectancy.
b. For calendar years beginning before January 1, 1989, if the
Participant's Spouse is not the designated Beneficiary, the method
of distribution selected must assure that at least 50 percent of the
Present Value of the amount available for distribution is paid within
the Life Expectancy of the Participant.
c. For calendar years beginning after December 31, 1988, the amount to be
distributed each year, beginning with distributions for the first
Distribution Calendar Year shall not be less than the quotient
obtained by dividing the Participant's benefit by the lesser of (1)
the Applicable Life Expectancy or (2) if the Participant's Spouse is
not the designated Beneficiary, the applicable divisor determined from
the table set forth in Q&A-4 of Section 1.401(a)(9)-2 Of the Proposed
Income Tax Regulations. Distributions after the death of the
Participant shall be distributed using the Applicable Life Expectancy
in Section 5.05(D)(1)(a) of the Plan above as the relevant divisor
without regard to Section 1.401(a)(9)-2 of the Proposed Income Tax
Regulations.
d. The minimum distribution required for the Participant's first
Distribution Calendar Year must be made on or before the Participant's
Required Beginning Date. The minimum distribution for other calendar
years, including the minimum distribution for the Distribution
Calendar Year in which the Employee's Required Beginning Date occurs,
must be made on or before December 31 of that Distribution Calendar
Year.
2. Other Forms - If the Participant's benefit is distributed in the form of
an annuity purchased from an insurance company, distributions thereunder
shall be made in accordance with the requirements of Section 401(a)(9) of
the Code and the regulations thereunder.
E. Death Distribution Provisions
1. Distribution Beginning Before Death - If the Participant dies after
distribution of his or her interest has begun, the remaining portion of
such interest wilt continue to be distributed at least as rapidly as
under the method of distribution being used prior to the Participant's
death.
2. Distribution Beginning After Death - If the Participant dies before
distribution of his or her interest begins, distribution of the
Participant's entire interest shall be completed by December 31 of the
calendar year containing the fifth anniversary of the Participant's death
except to the extent that an election is made to receive distributions in
accordance with (a) or (b) below
a. If any portion of the Participant's interest is payable to a
designated Beneficiary, distributions may be made over the life or
over a period certain not greater than the Life Expectancy of the
designated Beneficiary commencing on or before December 31 of the
calendar year immediately following the calendar year in which the
Participant died.
b. If the designated Beneficiary is the Participant's Surviving Spouse,
the date distributions are required to begin in accordance with (a)
above shall not be earlier than the later of (1) December 31 of the
calendar year immediately following the calendar year in which the
Participant dies or (2) December 31 of the calendar year in which the
Participant would have attained age 70 1/2. If the Participant has
not made an election pursuant to this Section 5.05(E)(2) of the Plan
by the time of his or her death, the Participant's designated
Beneficiary must elect the method of distribution no later than the
earlier of (1) December 31 of the calendar
47
year in which distributions would be required to begin under
this Section 5.05(E)(2) Of the Plan, or (2) December 31 of the
calendar year which contains the fifth anniversary of the date of
death of the Participant. If the Participant has no designated
Beneficiary, or if the designated Beneficiary does not elect a method
of distribution, distribution of the Participant's entire interest
must be completed by December 31 of the calendar year containing the
fifth anniversary of the Participant's death.
3. For purposes of Section 5.05(E)(2) of the Plan above, if the surviving
Spouse dies after the Participant, but before payments to such Spouse
begin, the provisions of Section 5.05 (E) (2) of the Plan, with the
exception of paragraph (b) therein, shall be applied as if the surviving
Spouse were the Participant.
4. For purposes of this Section 5.05 (E) of the Plan, any amount paid to a
child of the Participant will be treated as if it had been paid to the
surviving Spouse if the amount becomes payable to the surviving Spouse
when the child reaches the age of majority.
5. For purposes of this Section 5.05 (E) of the Plan, distribution of a
Participant's interest is considered to begin on the Participant's
Required Beginning Date (or, if Section 5.05(E)(3) of the Plan above is
applicable, the date distribution is required to begin to the surviving
Spouse pursuant to Section 5.05(E)(2) of the Plan above). If
distribution in the form of an annuity irrevocably commences to the
Participant before the Required Beginning Date, the date distribution is
considered to begin is the date distribution actually commences.
F. Transitional Rule
1. Notwithstanding the other requirements of this Section 5.05 Of the Plan
and subject to the requirements of Section 5.13 of the Plan, Joint and
Survivor Annuity Requirements, distribution on behalf of any Employee,
including a five-percent owner, may be made in accordance with all of the
following requirements (regardless of when such distribution commences).
a. The distribution by the Fund is one which would not have qualified
such Fund under Section 401(a)(9) of the Code as in effect prior to
amendment by the Deficit Reduction Act of 1984.
b. The distribution is in accordance with a method of distribution
designated by the Employee whose interest in the Fund is being
distributed or, if the Employee is deceased, by a Beneficiary of such
Employee.
c. Such designation was in writing, was signed by the Employee or the
Beneficiary, and was made before January 1, 1984.
d. The Employee had accrued a benefit under the Plan as of December
31,1983.
e. The method of distribution designated by the Employee or the
Beneficiary specifies the time at which distribution wilt commence,
the period over which distributions will be made, and in the case of
any distribution upon the Employee's death, the Beneficiaries of the
Employee listed in order of priority.
2. A distribution upon death will not be covered by this transitional rule
unless the information in the designation contains the required
information described above with respect to the distributions to be made
upon the death of the Employee.
3. For any distribution which commences before January 1, 1984, but
continues after December 31, 1983, the Employee, or the
Beneficiary, to whom such distribution is being made, will be presumed
to have designated the method of distribution under which the
distribution is being made if the method of distribution was specified in
writing and the distribution satisfies the requirements in Sections
5.05(F)(1)(a) and (e) of the Plan.
4. If a designation is revoked, any subsequent distribution must satisfy the
requirements of Section 401(a)(9) of the Code and the regulations
thereunder. If a designation is revoked subsequent to the date
distributions are required to begin, the Plan must distribute, by the end
of the calendar year following the calendar year in which the revocation
occurs the total amount not yet distributed which would have been
required to have been distributed to satisfy Section 401(a)(9) of the
Code and the regulations thereunder, but for an election made under
Section 242(b)(2) of the Tax Equity and Fiscal Responsibility Act Of
1982. For calendar years beginning after December 31, 1988, such
distributions must meet the minimum distribution incidental benefit
requirements in Section 1.401(a)(g)-2 of the Proposed Income Tax
Regulations. Any changes in the designation will be considered to be a
revocation of the designation. However, the mere substitution or
addition of another Beneficiary (one not named in the designation under
the designation will not be considered to be a revocation of the
designation, so long as such substitution or addition does not alter
the period over which distributions are to be made under the designation,
directly or indirectly (for example, by altering the relevant measuring
life). In
48
the case in which an amount is transferred or rotted over from
one plan to another plan, the rules in Section 1.401(a)(9), Q&A J-2 and
Q&A J-3 of the Proposed Income Tax Regulations shall apply.
5.06 ANNUITY CONTRACTS
Any annuity contract distributed under the Plan (if permitted or required by
this Section Five) must be nontransferable. The terms of any annuity contract
purchased and distributed by the Plan Ito a Participant or Spouse shall comply
with the requirements of the Plan.
5.07 DISTRIBUTIONS IN KIND
The Plan Administrator may, but need not, cause any distribution under this
Plan to be made either in a form actually held in the Fund, or in cash by
converting assets other than cash into cash, or in any combination of the two
foregoing ways.
5.08 DIRECT ROLLOVERS OF ELIGIBLE ROLLOVER DISTRIBUTIONS
Notwithstanding any provision of the Plan to the contrary that would otherwise
limit a Recipient's election under this Section 5.08 of the Plan, a Recipient
may elect, at the time and in the manner prescribed by the Plan Administrator,
to have any portion of an Eligible Rollover Distribution that is equal to at
least $500 (or such lesser amount if the Plan Administrator permits in a
uniform and nondiscriminatory manner) paid directly to an Eligible Retirement
Plan (including an individual retirement account described in Section 408(a) or
408(b) of the Code provided by the Prototype Sponsor) specified by the
Recipient in a Direct Rollover.
5.09 PROCEDURE FOR MISSING PARTICIPANTS OR BENEFICIARIES
If a benefit is forfeited because the Participant or Beneficiary cannot be
found, such benefit will be reinstated if a claim is made by the Participant or
Beneficiary.
In the event the Plan is terminated, payments must be made in a manner that
protects the benefit rights of a Participant or Beneficiary. Benefit rights
shall be deemed to be protected if the amount in a Participant's or
Beneficiary's Individual Account is placed into an individual retirement
account, used to purchase an annuity contract, or transferred to another
qualified retirement plan. Benefit rights need not, however, be protected if an
Individual Account becomes subject to state escheat laws or if a payment is
made to satisfy Section 401(a)(9) of the Code.
5.10 FILING A CLAIM FOR PLAN DISTRIBUTIONS
A Participant or Beneficiary who desires to make a claim for the Vested portion
of the Participant's Individual Account shall file a request (either in writing
or in any other form permitted under rules promulgated by the IRS and DOL and
acceptable to the Plan Administrator) with the Plan Administrator. If such
request is required in writing, such request must be made on a form furnished
to him or her by the Plan Administrator for such purpose. The request shall set
forth the basis of the claim. The Plan Administrator is authorized to conduct
such examinations as may be necessary to facilitate the payment of any benefits
to which the Participant or Beneficiary may be entitled under the terms of the
Plan.
5.11 DENIAL OF A CLAIM
Whenever a claim for a Plan distribution by any Participant or Beneficiary has
been wholly or partially denied, the Plan Administrator must furnish such
Participant or Beneficiary notice (either in writing or in any other form
permitted under rules promulgated by the IRS and DOL) of the denial within go
days of the date the original claim was filed. This notice shall set forth the
specific reasons for the denial, specific reference to pertinent Plan
provisions on which the denial is based, a description of any additional
information or material needed to perfect the claim, an explanation of why such
additional information or material is necessary and an explanation of the
procedures for appeal.
5.12 REMEDIES AVAILABLE
The Participant or Beneficiary shall have 60 days from receipt of the denial
notice in which to make written application for review by the Plan
Administrator. The Participant or Beneficiary may request that the review be in
the nature of a hearing. The Participant or Beneficiary shall have the right to
representation, to review pertinent documents and to submit comments in writing
(or in any other form permitted by the IRS or DOL). The Plan Administrator
shall issue a decision on such review within 60 days after receipt of an
application for review as provided for in Section 5.11 of the
49
Plan. Upon a decision unfavorable to the Participant or Beneficiary, such
Participant or Beneficiary shall be entitled to bring such actions in law or
equity as may be necessary or appropriate to protect or clarify his or her
right to benefits under this Plan.
5.13 JOINT AND SURVIVOR ANNUITY REQUIREMENTS
A. The provisions of this Section shall apply to any Participant who is
credited with at least one Hour of Service with the Employer on or after
August 23, 1984, and such other Participants as provided in Section 5.13(F)
of the Plan.
B. Qualified Joint and Survivor Annuity Unless an optional form of benefit is
selected pursuant to a Qualified Election within the 90-day period ending
on the Annuity Starting Date, a married Participant's Vested Account
Balance will be paid in the form of a Qualified Joint and Survivor Annuity
and an unmarried Participant's Vested Account Balance will be paid in the
form of a life annuity. The Participant may elect to have such annuity
distributed upon attainment of the Earliest Retirement Age under the Plan.
C. Qualified Preretirement Survivor Annuity - Unless an optional form of
benefit has been selected within the Election Period pursuant to a
Qualified Election, if a Participant dies before the Annuity Starting Date
then the Participant's Vested Account Balance shall be applied toward the
purchase of an annuity for the life of the surviving Spouse. The surviving
Spouse may elect to have such annuity distributed within a reasonable
period after the Participant's death.
D. Notice Requirements
1. In the case of a Qualified Joint and Survivor Annuity, the Plan
Administrator shall no less than 30 days and not more than go days prior
to the Annuity Starting Date provide each Participant an explanation
(either in writing or in any other form permitted under rules promulgated
by the IRS and DOL) of (a) the terms and conditions of a Qualified Joint
and Survivor Annuity; (b) the Participant's right to make and the effect
of an election to waive the Qualified Joint and Survivor Annuity form of
benefit; (c) the rights of a Participant's Spouse; and (d) the right to
make, and the effect of, a revocation of a previous election to waive the
Qualified Joint and Survivor Annuity. Effective for distributions made on
or after January 1, 1997, the Annuity Starting Date for a distribution in
a form other than a Qualified Joint and Survivor Annuity may be less than
30 days after receipt of the explanation described in the preceding
paragraph provided (a) the Participant has been provided with information
that clearly indicates that the Participant has at least 30 days to
consider whether to waive the Qualified Joint and Survivor Annuity and
elect (with spousal consent) a form of distribution other than a
Qualified Joint and Survivor Annuity; (b) the Participant is permitted to
revoke any affirmative distribution election at least until the annuity
starting date or, if later, at any time prior to the expiration of the
seven-day period that begins the day after the explanation of the
Qualified Joint and Survivor Annuity is provided to the Participant;
and (c) the annuity starting date is a date after the date that the
explanation was provided to the Participant.
2. In the case of a Qualified Preretirement Survivor Annuity as described in
Section 5.13 (C) of the Plan, the Plan Administrator shall provide each
Participant within the applicable period for such Participant an
explanation (either in writing or in any other form permitted under rules
promulgated by the IRS and DOL) of the Qualified Preretirement Survivor
Annuity in such terms and in such manner as would be comparable to the
explanation provided for meeting the requirements of Section 5.13(D)(1)
of the Plan applicable to a Qualified Joint and Survivor Annuity. The
applicable period for a Participant is whichever of the following periods
ends last: (a) the period beginning with the first day of the Plan Year
in which the Participant attains age 32 and ending with the close of the
Plan Year preceding the Plan Year in which the Participant attains age
35; (b) a reasonable period ending after the individual becomes a
Participant; (c) a reasonable period ending after Section 5.13(D)(3) of
the Plan ceases to apply to the Participant; and (d) a reasonable period
ending after this Section 5.13 of the Plan first applies to the
Participant. Notwithstanding the foregoing, notice must be provided
within a reasonable period ending after separation from service in the
case of a Participant who separates from service before attaining age 35.
For purposes of applying the preceding paragraph, a reasonable period
ending after the enumerated events described in (b), (c) and (d) is the
end of the two-year period beginning one year prior to the date the
applicable event occurs, and ending one year after that date. In the case
of a Participant who separates from service before the Plan Year in which
age 35 is attained, notice shall be provided within the two-year period
beginning one
50
year prior to separation and ending one year after separation. If such
a Participant thereafter returns to employment with the Employer, the
applicable period for such Participant shall be redetermined.
3. Notwithstanding the other requirements of this Section 5.13(D) of the
Plan, the respective notices prescribed by this Section 5.13(D) of the
Plan, need not be given to a Participant if (a) the Plan "fully
subsidizes" the costs of a Qualified Joint and Survivor Annuity or
Qualified Preretirement Survivor Annuity, and (b) the Plan does not
allow the Participant to waive the Qualified Joint and Survivor Annuity
or Qualified Preretirement Survivor Annuity and does not allow a married
Participant to designate a non-Spouse Beneficiary.
For purposes of this Section 5.13(D)(3) of the Plan, a plan fully
subsidizes the costs of a benefit if no increase in cost, or decrease in
benefits to the Participant may result from the Participant's failure to
elect another benefit.
E. Retirement Equity Act Safe Harbor Rules
1. Except as provided otherwise in the Adoption Agreement, the safe harbor
provisions of this Section 5.13(E) shall apply to a Participant in a
profit sharing plan, and shall always apply to any distribution, made on
or after the first day of the first Plan Year beginning after December
31, 1988, from or under a separate account attributable solely to
accumulated deductible employee contributions, as defined in Section
72(0)(5)(B) of the Code, and maintained on behalf of a Participant in a
money purchase pension plan, (including a target benefit pension plan) if
the following conditions are satisfied:
a. the Participant does not or cannot elect payments in the form of a life
annuity; and
b. on the death of a Participant, the Participant's Vested Account Balance
will be paid to the Participant's surviving Spouse, but if there is no
surviving Spouse, or if the surviving Spouse has consented in a manner
conforming to a Qualified Election, then to the Participant's designated
Beneficiary. The surviving Spouse may elect to have distribution of the
Vested Account Balance commence within the go-day period following the
date of the Participant's death. The Account balance shall be adjusted
for gains or losses occurring after the Participant's death in
accordance with the provisions of the Plan governing the adjustment of
account balances for other types of distributions. This Section 5.13(E)
of the Plan shall not be operative with respect to a Participant in a
profit sharing plan if the plan is a direct or indirect transferee of a
defined benefit plan, money purchase pension plan, a target benefit
pension plan, stock bonus, or profit sharing plan which is subject to
the survivor annuity requirements of Section 401(a)(11) and Section 417
of the Code. If this Section 5.13(E) of the Plan is operative, then the
provisions of this Section 5.13 of the Plan other than Section 5.13(F)
of the Plan shall be inoperative.
2. The Participant may waive the spousal death benefit described in this
Section 5.13(E) of the Plan at any time provided that no such waiver
shall be effective unless it satisfies the conditions of Section 5.13
(D)(3) (other than the notification requirement referred to therein) that
would apply to the Participant's waiver of the Qualified Preretirement
Survivor Annuity.
3. For purposes of this Section 5.13(E) of the Plan, Vested Account Balance
shall mean, in the case of a money purchase pension plan or a target
benefit pension plan, the Participant's separate account balance
attributable solely to accumulated deductible employee contributions
within the meaning of Section 72(0)(5)(B) of the Code. In the case of a
profit sharing plan, Vested Account Balance shall have the same meaning
as provided in the Definitions Section of this Plan.
4. In the event this Plan is a direct or indirect transferee of or a
restatement of a plan previously subject to the survivor annuity
requirements of Section 401(a)(11) and 401(a)(17) of the Code and the
Employer has selected to have this Section 5.13(E) of the Plan apply, the
provisions of this Section 5.13(E) of the Plan shall not apply to any
benefits accrued (including subsequent adjustments for earnings and
losses) prior to the adoption of these provisions. Such amounts shall be
separately accounted for in a manner consistent with Section 7.02 of the
Plan and administered in accordance with the general survivor annuity
requirements of Section 5.13 of the Plan.
F. Transitional Rules
1. Any living Participant not receiving benefits on August 23, 1984, who
would otherwise not receive the benefits prescribed by the previous
subsections of this Section 5.13 of the Plan must be given the
opportunity to elect to have the prior subsections of this Section 5.13
of the Plan apply if such Participant is credited with at least one Hour
of Service under this Plan or a predecessor plan in a Plan Year beginning
on or after January 1, 1976, and such Participant had at least 10 Years
of Vesting Service when he or she separated from service.
51
2. Any living Participant not receiving benefits on August 23, 1984, who was
credited with at least one Hour of Service under this Plan or a
predecessor plan on or after September 2, 1974, and who is not otherwise
credited with any service in a Plan Year beginning on or after January 1,
1976, must be given the opportunity to have his or her benefits paid in
accordance with Section 5.13(F)(4) of the Plan.
3. The respective opportunities to elect (as described in Section 5.13(F)(1)
and (2) of the Plan above) must be afforded to the appropriate
Participants during the period commencing on August 23, 1984, and ending
on the date benefits would otherwise commence to said Participants.
4. Any Participant who has elected pursuant to Section 5.13(F)(2) of the
Plan and any Participant who does not elect under Section 5.13(F)(1) of
the Plan or who meets the requirements of Section 5.13(F)(1) of the Plan
except that such Participant does not have at least 10 Years of Vesting
Service when he or she separates from service, shall have his or her
benefits distributed in accordance with all of the following requirements
if benefits would have been payable in the form of a life annuity.
a. Automatic Joint and Survivor Annuity - If benefits in the form of a
life annuity become payable to a married Participant who
(1)begins to receive payments under the Plan on or after Normal
Retirement Age; or
(2)dies on or after Normal Retirement Age while still working for the
Employer; or
(3)begins to receive payments on or after the qualified early
retirement age; or
(4)separates from service on or after attaining Normal Retirement Age
(or the qualified early retirement age) and after satisfying the
eligibility requirements for the payment of benefits under the Plan
and thereafter dies before beginning to receive such benefits; then
such benefits will be received under this Plan in the form of a
Qualified Joint and Survivor Annuity, unless the Participant has
elected otherwise during the Election Period. The Election Period
must begin at least six months before the Participant attains
qualified early retirement age and ends not more than go days before
the commencement of benefits. Any election hereunder will be in
writing (or any other form permitted by the IRS and DOL) and may be
changed by the Participant at any time.
b. Election of Early Survivor Annuity - A Participant who is employed
after attaining the qualified early retirement age will be given the
opportunity to elect, during the Election Period, to have a survivor
annuity payable on death. If the Participant elects the survivor
annuity, payments under such annuity must not be less than the
payments which would have been made to the Spouse under the Qualified
Joint and Survivor Annuity if the Participant had retired on the day
before his or her death. Any election under this provision will be in
writing (or any other form permitted by the IRS and DOL) and may be
changed by the Participant at any time. The Election Period begins on
the later of (1) the 90th day before the Participant attains the
qualified early retirement age, or (2) the date on which participation
begins, and ends on the date the Participant terminates employment.
c. For purposes of Section 5.13(F)(4) of the Plan,
(1)qualified early retirement age is the latest of
(a)the earliest date, under the Plan, on which the Participant may
elect to receive retirement benefits,
(b)the first day of the 120th month beginning before the Participant
reaches Normal Retirement Age, or
(c)the date the Participant begins participation.
(2)Qualified Joint and Survivor Annuity is an annuity for the life of
the Participant with a survivor annuity for the life of the Spouse
as described in the Definitions Section of this Plan.
The provisions of this Section 5.13 of the Plan shall apply to a Participant
who is Vested in amounts attributable to Employer Contributions,
Nondeductible Employee Contributions (or both) at the time of death or
distribution.
5.14 LIABILITY FOR WITHHOLDING ON DISTRIBUTIONS
The Plan Administrator shall be responsible for withholding federal income
taxes from distributions from the Plan, unless the Participant (or Beneficiary,
where applicable) elects not to have such taxes withheld. The Trustee (or
Custodian, if applicable) or other payor may act as agent for the Plan
Administrator to withhold such taxes and to make
52
the appropriate distribution reports, if the Plan Administrator furnishes all
the information to the Trustee (or Custodian, if applicable) or other payor
such payor may need to do withholding and reporting.
5.15 DISTRIBUTION OF EXCESS ELECTIVE DEFERRALS
A. General Rule - A Participant may assign to this Plan any Excess Elective
Deferrals made during a taxable year of the Participant by notifying the
Plan Administrator of the amount of the Excess Elective Deferrals to be
assigned to the Plan. Unless specified otherwise in the Adoption Agreement,
Participants who claim Excess Elective Deferrals for the preceding calendar
year must submit their claims (either in writing or in any other form
permitted under rules promulgated by the IRS and DOL) to the Plan
Administrator by March 1. A Participant is deemed to notify the Plan
Administrator of any Excess Elective Deferrals that arise by taking into
account only those Elective Deferrals made to this Plan and any other plans
of the Employer. Notwithstanding any other provision of the Plan, Excess
Elective Deferrals, plus any income and minus any loss allocable thereto,
shall be distributed no later than April 15th to any Participant to whose
Individual Account Excess Elective Deferrals were assigned for the preceding
year and who claims Excess Elective Deferrals for such taxable year.
B. Determination of Income or Loss - Excess Elective Deferrals shall be
adjusted for any income or loss up to the last day of the Plan Year. The
income or loss allocable to Excess Elective Deferrals is equal to the income
or loss allocable to the Participant's Elective Deferral account for the
taxable year multiplied by a fraction, the numerator of which is such
Participant's Excess Elective Deferrals for the year and the denominator is
the Participant's Individual Account balance attributable to Elective
Deferrals without regard to any income or loss occurring during such taxable
year. Notwithstanding the preceding sentence, the Plan Administrator may
compute the income or loss allocable to Excess Elective Deferrals in the
manner described in Section 7.02 (B) of the Plan (i.e., the usual manner
used by the Plan for allocating income or loss to Participants' Individual
Accounts or any reasonable method), provided such method is used
consistently for all Participants and for all corrective distributions under
the Plan for the Plan Year.
5.16 DISTRIBUTION OF EXCESS CONTRIBUTIONS
A. General Rule - Notwithstanding any other provision of this Plan, Excess
Contributions, plus any income and minus any loss allocable thereto, shall
be distributed no later than the last day of each Plan Year to Participants
to whose Individual Accounts such Excess Contributions were allocated for
the preceding Plan Year. Excess Contributions are allocated to the Highly
Compensated Employees with the largest amounts of Employer Contributions
taken into account in calculating the ADP test for the year in which the
excess arose, beginning with the Highly Compensated Employee with the
largest amount of such Employer Contributions and continuing in descending
order until all the Excess Contributions have been allocated. For purposes
of the preceding sentence, the "largest amount" is determined after
distribution of any Excess Deferrals. If such Excess Contributions are
distributed more than 2 1/2 months after the last day of the Plan Year in
which such Contributions arose, a 10 percent excise tax will be imposed on
the Employer maintaining the Plan with respect to such amounts.
B. Determination of Income or Loss - Excess Contributions shall be adjusted for
any income or loss up to the last day of the Plan Year. The income or loss
allocable to Excess Contributions allocated to each Participant is equal to
the income or loss allocable to Participant's Elective Deferral account
(and, if applicable, the Qualified Nonelective Contribution account or the
Qualified Matching Contributions account or both) for the Plan Year
multiplied by a fraction, the numerator of which is such Participant's
Excess Contributions for the year and the denominator is the Participant's
Individual Account balance attributable to Elective Deferrals (and Qualified
Nonelective Contributions or Qualified Matching Contributions, or both, if
any of such contributions are included in the ADP test) without regard to
any income or loss occurring during such Plan Year. Notwithstanding the
preceding sentence, the Plan Administrator may compute the income or loss
allocable to Excess Contributions in the manner described in Section 7.02(B)
of the Plan (i.e., the usual manner used by the Plan for allocating income
or loss to Participants' Individual Accounts or any reasonable method),
provided such method is used consistently for all Participants and for all
corrective distributions under the Plan for the Plan Year.
C. Accounting for Excess Contributions - Excess Contributions allocated to a
Participant shall be distributed from the Participant's Elective Deferral
account and Qualified Matching Contribution account (if applicable) in
proportion to the Participant's Elective Deferrals and Qualified Matching
Contributions (to the extent used in the ADP test) for the Plan Year. Excess
Contributions shall be distributed from the Participant's Qualified
Nonelective Contribution
53
account only to the extent that such Excess Contributions exceed the balance
in the Participant's Elective Deferral account and Qualified Matching
Contribution account.
5.17 DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS
A. General Rule - Notwithstanding any other provision of this Plan, Excess
Aggregate Contributions, plus any income and minus any toss allocable
thereto, shall be forfeited, if forfeitable, or if not forfeitable,
distributed no later than the last day of each Plan Year to Participants to
whose accounts such Excess Aggregate Contributions were allocated for the
preceding Plan Year. Excess Aggregate Contributions are allocated to the
Highly Compensated Employee with the largest Contribution Percentage Amounts
taken into account in calculating the ACP test for the year in which the
excess arose, beginning with the Highly Compensated Employee with the
largest amount of such Contribution Percentage Amounts and continuing in
descending order until all the Excess Aggregate Contributions have been
allocated. For purposes of the preceding sentence, the "largest amount" is
determined after distribution of any Excess Aggregate Contributions. If such
Excess Aggregate Contributions are distributed more than 2 1/2 months after
the last day of the Plan Year in which such Excess Aggregate Contributions
arose, a 10 percent excise tax will be imposed on the Employer maintaining
the Plan with respect to those amounts.
B. Determination of Income or Loss - Excess Aggregate Contributions shall be
adjusted for any income or loss up to the last day of the Plan Year. The
income or loss allocable to Excess Aggregate Contributions allocated to each
Participant is equal to the income or loss allocable to the Participant's
Nondeductible Employee Contribution account, Matching Contribution account
(if any, and if all amounts therein are not used in the ADP test) and, if
applicable Qualified Nonelective Contribution account and Elective Deferral
account for the Plan Year multiplied by a fraction, the numerator of which
is such Participant's Excess Aggregate Contributions for the year and the
denominator is the Participant's Individual Account balance(s) attributable
to Contribution Percentage Amounts without regard to any income or loss
occurring during such Plan Year. Notwithstanding the preceding sentence, the
Plan Administrator may compute the income or loss allocable to Excess
Aggregate Contributions in the manner described in Section 7.02(B) of the
Plan (i.e., the usual manner used by the Plan for allocating income or loss
to Participants' Individual Accounts or any reasonable method), provided
such method is used consistently for all Participants and for all corrective
distributions under the Plan for the Plan Year.
C. Accounting for Excess Aggregate Contributions - Excess Aggregate
Contributions allocated to a Participant shall be forfeited, if forfeitable
or distributed on a pro rata basis from the Participant's Nondeductible
Employee Contribution account, Matching Contribution account, and Qualified
Matching Contribution account (and, if applicable, the Participant's
Qualified Nonelective Contribution account or Elective Deferral account, or
both).
5.18 RECHARACTERIZATION
Provided the Plan allows Participants to make Nondeductible Employee
Contributions, a Participant may elect to treat all or a portion of an Excess
Contribution allocated to him or her as an amount distributed to the
Participant and then contributed by the Participant to the Plan.
Recharacterized amounts will remain nonforfeitable and subject to the same
distribution requirements as Elective Deferrals. Amounts may not be
recharacterized by a Highly Compensated Employee to the extent that such amount
in combination with other Nondeductible Employee Contributions made by that
Employee would exceed any stated limit under the Plan on Nondeductible Employee
Contributions.
Recharacterization must occur no later than 2 1/2 months after the last day of
the Plan Year in which such Excess Contributions arose and is deemed to occur
no earlier than the date the last Highly Compensated Employee is informed
(either in writing or in any other form permitted under rules promulgated by
the IRS and DOL) of the amount recharacterized and the consequences thereof.
Recharacterized amounts will be taxable to the Participant for the
Participant's tax year in which the Participant would have received them in
cash.
5.19 LOANS TO PARTICIPANTS
If the Adoption Agreement so indicates, a Participant may receive a loan from
the Fund, subject to the following rules
A. Loans shall be made available to all Participants on a reasonably equivalent
basis. Notwithstanding the foregoing, loans shall not be available to
Participants who cease to be employed by the Employer, unless such
Participants are parties-in-interest as defined under Section 3(14) of
ERISA.
B. Loans shall not be made available to Highly Compensated Employees in an
amount greater than the amount made available to other Employees.
54
C. Loans must be adequately secured and bear a reasonable interest rate.
D. No Participant loan shall exceed 50 percent of the Present Value of the
Vested portion of a Participant's Individual Account.
E. A Participant must obtain the consent of his or her Spouse, if any, to the
use of the Individual Account as security for the loan. Spousal consent
shall be obtained no earlier than the beginning of the go day period that
ends on the date on which the loan is to be so secured. The consent must be
in writing (or any other form permitted by the IRS and DOL), must
acknowledge the effect of the loan, and must be witnessed by a plan
representative or notary public. Such consent shall thereafter be binding
with respect to the consenting Spouse or any subsequent Spouse with respect
to that loan. A new consent shall be required if the Individual Account is
used for renegotiation, extension, renewal, or other revision of the loan.
Notwithstanding the foregoing, no spousal consent is necessary if, at the
time the loan is secured, no consent would be required for a distribution
under Section 417(a)(2)(B) of the Code. In addition, spousal consent is not
required if the Plan or the Participant is not subject to Section 401(a)
(ii) of the Code at the time the Individual Account is used as security, or
if the total Individual Account subject to the security is less than or
equal to $5,000.
F. In the event of default, foreclosure on the note and attachment of security
will not occur until a distributable event occurs in the Plan.
G. No loans wilt be made to any shareholder-employee or Owner Employee. For
purposes of this requirement, a shareholder employee means an employee or
officer of an electing small business (Subchapter S) corporation who owns
(or is considered as owning within the meaning of Section 318(a)(1) of the
Code), on any day during the taxable year of such corporation, more than
five percent of the outstanding stock of the corporation. If a valid spousal
consent has been obtained in accordance with Section 5.13(E) of the Plan,
then, notwithstanding any other provisions of this Plan, the portion of the
Participant's Vested Individual Account used as a security interest held by
the Plan by reason of a loan out standing to the Participant shall be taken
into account for purposes of determining the amount of the Individual
Account payable at the time of death or distribution, but only if the
reduction is used as repayment of the loan. If less than 100 percent of the
Participant's Vested Individual Account (determined without regard to the
preceding sentence) is payable to the surviving Spouse, then the Individual
Account shall be adjusted by first reducing the Vested Individual Account by
the amount of the security used as repayment of the loan, and then
determining the benefit payable to the surviving Spouse.
To avoid taxation to the Participant, no loan to any Participant can be made
to the extent that such loan when added to the outstanding balance of all
other loans to the Participant would exceed the lesser of (a) $50,000
reduced by the excess (if any) of the highest outstanding balance of loans
during the one year period ending on the day before the loan is made, over
the outstanding balance of loans from the Plan on the date the loan is made,
or (b) 50 percent of the Present Value of the nonforfeitable Individual
Account of the Participant. For the purpose of the above limitation, all
loans from all plans of the Employer and other members of a group of
employers described in Sections 414(b), 414(c), and 414(m) of the Code are
aggregated. Furthermore, any loan shall by its terms require that repayment
(principal and interest) be amortized in level payments, not less frequently
than quarterly, over a period not extending beyond five years from the date
of the loan, unless such loan is used to acquire a dwelling unit which,
within a reasonable time (determined at the time the loan is made), will be
used as the principal residence of the Participant. Notwithstanding the
foregoing, a Participant will suspend his or her loan repayments under this
Plan as permitted under Section 414(U)(4) of the Code. An assignment or
pledge of any portion of the Participant's interest in the Plan and a loan,
pledge, or assignment with respect to any insurance contract purchased under
the Plan, will be treated as a loan under this paragraph.
The Plan Administrator shall administer the loan program in accordance with
specific rules that are documented either in writing or in such other format
as permitted by the IRS and the DOL. Such rules shall include, at a minimum,
the following 1. the identity of the person or positions authorized to
administer the Participant loan program; 2. the procedure for applying for
loans; 3. the basis on which loans wilt be approved or denied; 4.
limitations (if any) on the types and amounts of loans offered; 5. the
procedure under the program for determining a reasonable rate of interest;
6. the types of collateral which may secure a Participant loan; and 7. the
events constituting default and the steps that will be taken to preserve
Plan assets in the event of such default.
55
SECTION SIX: DEFINITIONS
Unless modified in Section Six of the Adoption Agreement, words and phrases
used in the Plan with initial capital letters shall, for the purpose of this
Plan, have the meanings set forth in the portion of the Basic Plan Document
titled "Definitions" unless the context indicates that other meanings are
intended.
SECTION SEVEN: MISCELLANEOUS
7.01 THE FUND
A. Establishment and Maintenance
By adopting this Plan, the Employer establishes the Fund which shall consist
of the assets of the Plan held by the Trustee (or Custodian, if applicable)
pursuant to Section Eight. Assets within the Fund may be pooled on behalf of
all Participants, earmarked on behalf of each Participant or be a
combination of pooled and earmarked assets. To the extent that assets are
earmarked for a particular Participant, they wilt be held in a Separate Fund
for that Participant.
No part of the corpus or income of the Fund may be used for, or diverted to,
purposes other than for the exclusive benefit of Participants or their
Beneficiaries. The Fund will be valued each Valuation Date at fair market
value.
B. Division Of Fund Into Investment Funds
The Employer may direct the Trustee (or Custodian, if applicable) to divide
and redivide the Fund into one or more Investment Funds. Such Investment
Funds may include, but not be limited to, Investment Funds representing the
assets under the control of an investment manager pursuant to Section
7.22(C) of the Plan and Investment Funds representing investment options
available for individual direction by Participants pursuant to Section
7.22(B) Of the Plan. Upon each division or redivision, the Employer may
specify the part of the Fund to be allocated to each such Investment Fund
and the terms and conditions, if any, under which the assets in such
Investment Fund shall be invested.
7.02 INDIVIDUAL ACCOUNTS
A. Establishment and Maintenance
The Plan Administrator shall establish and maintain an Individual Account in
the name of each Participant to reflect the total value of his or her
interest in the Fund (including but not limited to Employer Contributions
and earnings thereon). Each Individual Account established hereunder shall
consist of such subaccounts as may be needed for each Participant,
including:
1.a subaccount to reflect Employer Contributions and Forfeitures allocated
on behalf of a Participant;
2.a subaccount to reflect a Participant's rollover contributions;
3.a subaccount to reflect a Participant's transfer contributions;
4.a subaccount to reflect a Participant's Nondeductible Employee
Contributions; and
5.a subaccount to reflect a Participant's Elective Deferrals. The Plan
Administrator may establish additional accounts as it may deem necessary
for the proper administration of the Plan, including, but not limited to,
a suspense account for Forfeitures as required pursuant to Section 4.01(C)
or (D) of the Plan. If this Plan is funded by individual contracts that
provide a Participant's benefit under the Plan, such individual contracts
shall constitute the Participant's Individual Account. If this Plan is
funded by group contracts, under the group annuity or group insurance
contract, premiums or other consideration received by the insurance
company must be allocated to Participants' Individual Accounts under
the Plan.
B. Valuation Of Individual Accounts
1. Where all or a portion of the assets of a Participant's Individual
Account are invested in a Separate Fund for the Participant, then the
value of that portion of such Participant's Individual Account at any
relevant time equals the sum of the fair market values of the assets in
such Separate Fund, less any applicable charges or penalties.
2. The fair market value of the remainder of each Individual Account is
determined in the following manner:
a. Separate Fund - First, the portion of the Individual Account invested
in each Investment Fund as of the previous Valuation Date is
determined. Each such portion is reduced by any withdrawal made
from the
56
applicable Investment Fund to or for the benefit of a Participant or
the Participant's Beneficiary, further reduced by any amounts
forfeited by the Participant pursuant to Section 4.01(C) or (D) of the
Plan, and further reduced by any transfer to another Investment Fund
since the previous Valuation Date, and is increased by any amount
transferred from another Investment Fund since the previous Valuation
Date. The resulting amounts are the net Individual Account portions
invested in the Investment Funds.
b. No Separate Fund - Second, the net Individual Account portions
invested in each Investment Fund are adjusted upwards or downwards,
pro rata (i.e., ratio of each net Individual Account portion to the
sum of all net Individual Account portions) so that the sum of all the
net Individual Account portions invested in an Investment Fund will
equal the then fair market value of the Investment Fund.
Notwithstanding the previous sentence, for the first Plan Year only,
the net Individual Account portions shall be the sum of all
contributions made to each Participant's Individual Account during
the first Plan Year.
c. Allocations -Third, any contributions to the Plan and Forfeitures are
allocated in accordance with the appropriate allocation provisions of
Section Three of the Plan. For purposes of Section Seven of the Plan,
contributions made by the Employer for any Plan Year but after that
Plan Year will be considered to have been made on the last day of that
Plan Year regardless of when paid to the Trustee (or Custodian, if
applicable).
Amounts contributed between Valuation Dates will not be credited with
investment gains or losses until the next following Valuation Date.
d. Aggregation of Portions - Finally, the portions of the Individual
Account invested in each Investment Fund (determined in accordance
with (a), (b) and (c) above) are added together.
C. Modification Of Method For Valuing Individual Accounts - If necessary or
appropriate, the Plan Administrator may establish different or additional
procedures (which shall be uniform and nondiscriminatory) for determining
the fair market value of the Individual Accounts including, but not limited
to, valuation on a daily basis pursuant to the number of shares of each
permissible investment held on behalf of a Participant.
7.03 POWERS AND DUTIES OF THE PLAN ADMINISTRATOR
A. The Plan Administrator may, by appointment, allocate the duties of the Plan
Administrator among several individuals or entities. Such appointments shall
not be effective until the party designated accepts such appointment in
writing.
B. The Plan Administrator shall have the authority to control and manage the
operation and administration of the Plan. The Plan Administrator shall
administer the Plan for the exclusive benefit of the Participants and their
Beneficiaries in accordance with the specific terms of the Plan.
C. The Plan Administrator shall be charged with the duties of the general
administration of the Plan, including, but not limited to, the following:
1. To determine all questions of interpretation or policy in a manner
consistent with the Plan's documents and the Plan Administrator's
construction or determination in good faith shall be conclusive and
binding on all persons except as otherwise provided herein or by law. Any
interpretation or construction shall be done in a nondiscriminatory
manner and shall be consistent with the intent that the Plan shall
continue to be deemed a qualified plan under the terms of Section 401(a)
of the Code, as amended from time-to-time, and shall comply with the
terms of ERISA, as amended from time-to-time;
2. To determine all questions relating to the eligibility of Employees to
become or remain Participants hereunder;
3. To compute the amounts necessary or desirable to be contributed to the
Plan;
4. To compute the amount and kind of benefits to which a Participant or
Beneficiary shall be entitled under the Plan and to direct the Trustee
(or Custodian, if applicable) with respect to all disbursements under the
Plan, and, when requested by the Trustee (or Custodian, if applicable),
to furnish the Trustee (or Custodian, if applicable) with instructions,
in writing, on matters pertaining to the Plan and the Trustee (or
Custodian, if applicable) may rely and act thereon;
5. To maintain all records necessary for the administration of the Plan;
6. To be responsible for preparing and filing such disclosures and tax forms
as may be required from time-to-time by the Secretary of Labor or the
Secretary of the Treasury;
57
7. To furnish each Employee, Participant or Beneficiary such notices,
information and reports under such circumstances as may be required by
law;
8. To periodically review the performance of each Fiduciary and all other
relevant parties to ensure such individuals' obligations under the Plan
are performed in a manner that is acceptable under the Plan and
applicable law; and
9. To furnish a statement to each Participant or Beneficiary no later than
270 days after the close of each Plan Year, indicating the Individual
Account balances of such Participant as of the last Valuation Date in
such Plan Year.
D. The Plan Administrator shall have all of the powers necessary or appropriate
to accomplish his or her duties under the Plan, including, but not limited
to, the following:
1. To appoint and retain such persons as may be necessary to carry out the
functions of the Plan Administrator;
2. To appoint and retain counsel, specialists or other persons as the Plan
Administrator deems necessary or advisable in the administration of the
Plan;
3. To resolve all questions of administration of the Plan;
4. To establish such uniform and nondiscriminatory rules which it deems
necessary to carry out the terms of the Plan;
5. To make any adjustments in a uniform and nondiscriminatory manner which
it deems necessary to correct any arithmetical or accounting errors which
may have been made for any Plan Year; and
6. To correct any defect, supply any omission or reconcile any inconsistency
in such manner and to such extent as shall be deemed necessary or
advisable to carry out the purpose of the Plan.
7. If the Plan permits a form of distribution other than a lump sum, and a
Participant elects such form of distribution, the Plan Administrator may
place that Participant's Individual Account into a segregated Investment
Fund for the purpose of maintaining the necessary liquidity to provide
benefit installments on a periodic basis.
7.04 EXPENSES AND COMPENSATION
All reasonable expenses of administration including, but not limited to, those
involved in retaining necessary professional assistance may be paid from the
assets of the Fund. Alternatively, the Employer may, in its discretion, pay any
or all such expenses. Pursuant to uniform and nondiscriminatory rules that the
Plan Administrator may establish from time-to-time, administrative expenses and
expenses unique to a particular Participant may be charged to a Participant's
Individual Account (subject to rules promulgated by the IRS and the DOL) or the
Plan Administrator may allow Participants to pay such fees outside of the Plan.
The Employer shall furnish the Plan Administrator with such clerical and other
assistance as the Plan Administrator may need in the performance of his or her
duties.
7.05 INFORMATION FROM EMPLOYER
To enable the Plan Administrator to perform his or her duties, the Employer
shall supply complete, accurate and timely information to the Plan
Administrator (or his or her designated agents) on all matters relating to the
Compensation of all Participants; their regular employment; retirement, death,
Disability or Termination of Employment; and such other pertinent facts as the
Plan Administrator (or his or her agents) may require. The Plan Administrator
shall advise the Trustee (or Custodian, if applicable) of such of the foregoing
facts as may be pertinent to the Trustee's (or Custodian's) duties under the
Plan. The Plan Administrator (or his or her agents) is entitled to rely on such
information as is supplied by the Employer and shall have no duty or
responsibility to verify such information.
7.06 PLAN AMENDMENTS
A. Right Of Prototype Sponsor To Amend The Plan Or Terminate Sponsorship
1. The Employer, by adopting the Plan, expressly delegates to the Prototype
Sponsor the power, but not the duty, to amend the Plan without any
further action or consent of the Employer as the Prototype Sponsor deems
either necessary for the purpose of adjusting the Plan to comply with all
laws and regulations governing pension or profit sharing plans or
desirable to the extent consistent with such laws and regulations.
Specifically, it is understood that the amendments may be made
unilaterally by the Prototype Sponsor. However, it shall be understood
that the Prototype Sponsor shall be under no obligation to amend the Plan
documents and the
58
Employer expressly waives any rights or claims against the Prototype
Sponsor for not exercising this power to amend. For purposes of Prototype
Sponsor amendments, the mass submitter shall be recognized as the agent
of the Prototype Sponsor. If the Prototype Sponsor does not adopt the
amendments made by the mass submitter, it will no longer be identical to
or a minor modifier of the mass submitter plan and will be considered an
individually designed plan.
2. An amendment by the Prototype Sponsor shall be accomplished by giving
notice (either in writing or in any other form permitted under rules
promulgated by the IRS and DOL) to the Adopting Employer of the amendment
to be made. The notice shall set forth the text of such amendment and the
date such amendment is to be effective. Such amendment shall take effect
unless within the 30 day period after such notice is provided, or within
such shorter period as the notice may specify, the Adopting Employer
gives the Prototype Sponsor written notice of refusal to consent to the
amendment. Such written notice of refusal shall have the effect of
withdrawing the Plan as a prototype plan and shall cause the Plan to be
considered an individually designed plan. The right of the Prototype
Sponsor to cause the Plan to be amended shall terminate should the Plan
cease to conform as a prototype plan as provided in this or any other
section.
3. In addition to the amendment rights described above, the Prototype
Sponsor shall have the right to terminate its sponsorship of this Plan
by providing notice (either in writing or in any other form permitted
under rules promulgated by the IRS and DOL) to the Adopting Employer of
such termination. Such termination of sponsorship shall have the effect
of withdrawing the Plan as a prototype plan and shall cause the Plan to
be considered an individually designed plan. The Prototype Sponsor shall
have the right to terminate its sponsorship of this Plan regardless of
whether the Prototype Sponsor has terminated sponsorship with respect to
other employers adopting its prototype Plan.
B. Right Of Adopting Employer To Amend The Plan - The Adopting Employer may 1.
change options previously selected in the Adoption Agreement; 2. add
overriding language in the Adoption Agreement when such language is
necessary to satisfy Section 415 or Section 416 of the Code because of the
required aggregation of multiple plans; and 3. add certain model. amendments
published by the IRS which specifically provide that their adoption will not
cause the Plan to be treated as individually designed. An Adopting Employer
that amends the Plan for any other reason, including a waiver of the minimum
funding requirement under Section 412(d) of the Code, will no longer
participate in this prototype plan and will be considered to have an
individually designed plan. An Adopting Employer who wishes to amend the
Plan shall document the amendment in writing, executed by a duty authorized
officer of the Adopting Employer. If the amendment is in the form of a
restated Adoption Agreement, the amendment shall become effective on the
date provided on the Adoption Agreement. Any other amendment shall become
effective as described therein upon execution by the Adopting Employer and,
if appropriate, the Trustee (or Custodian, if applicable). A copy of a
restated Adoption Agreement or other amendment must be provided to the
Prototype Sponsor and the Trustee (or Custodian, if applicable) prior to the
effective date of the amendment. The Adopting Employer further reserves the
right to replace the Plan in its entirety by adopting another retirement
plan which the Adopting Employer designates as a replacement plan.
C. Limitation On Power To Amend - No amendment to the Plan shall be effective
to the extent that it has the effect of decreasing a Participant's accrued
benefit. Notwithstanding the preceding sentence, a Participant's Individual
Account may be reduced to the extent permitted under Section 412(C)(8) of
the Code. For purposes of this paragraph, a plan amendment which has the
effect of decreasing a Participant's Individual Account with respect to
benefits attributable to service before the amendment shall be treated as
reducing an accrued benefit. Where this Plan document is being adopted to
amend another plan that contains a protected benefit not provided for in
this document, the Employer may attach a supplement to the Adoption
Agreement that describes such protected benefit which shall become part of
the Plan. No amendment to the Plan shall be effective to eliminate or
restrict an optional form of benefit. The preceding sentence shall not apply
to a Plan amendment that eliminates or restricts the ability of a
Participant to receive payment of his or her Individual Account under a
particular optional form of benefit if the amendment satisfies the
conditions in (1) and (2) below:
(1)The amendment provides a single-sum distribution form that is otherwise
identical to the optional form of benefit eliminated or restricted. For
purposes of this condition (1), a single-sum distribution form is
otherwise identical only if it is identical in all respects to the
eliminated or restricted optional form of benefit (or would be identical
except that it provides greater rights to the Participant) except with
respect to the timing of payments after commencement.
59
(2)The amendment is not effective unless the amendment provides that the
amendment shall not apply to any distribution with an annuity starting
date earlier than the earlier of; (i) the 90th day after the date the
Participant receiving the distribution has been furnished a summary that
reflects the amendment and that satisfies the ERISA requirements at
Section 2520.104b-3 of the DOL Regulations relating a summary of material
modifications or (ii) the first day of the second Plan Year following the
Plan Year in which the amendment is adopted.
D. Amendment Of Vesting Schedule - If the vesting schedule of the Plan is
amended, in the case of an Employee who is a Participant as of the later of
the date such amendment is adopted or the date it becomes effective, the
Vested percentage (determined as of such date) of such Employee's Individual
Account derived from Employer Contributions will not be less than the
percentage computed under the Plan as of that date without regard to such
amendment. Furthermore, if the Plan's vesting schedule is amended, or the
Plan is amended in any way that directly or indirectly affects the
computation of the Participant's Vested percentage, or if the Plan is deemed
amended by an automatic change to or from a top-heavy vesting schedule, each
Participant with at least three Years of Vesting Service with the Employer
may elect, within the time set forth below, to have the Vested percentage
computed under the Plan without regard to such amendment.
For Participants who do not have at least one Hour of Service in any Plan
Year beginning after December 31, 1988, the preceding sentence shall be
applied by substituting "Five Years of Vesting Service" for "three Years of
Vesting Service" where such language appears. The period during which the
election may be made shall commence with the date the amendment is adopted
or deemed to be made and shall end the later of
1.60 days after the amendment is adopted;
2.60 days after the amendment becomes effective; or
3.60 days after the Participant is issued a notice (either in writing or in
any other form permitted under rules promulgated by the IRS and DOL) of
the amendment by the Employer or Plan Administrator.
E. Amendment of Trust Provisions - Notwithstanding anything in this Plan to the
contrary, the trust provisions of this Plan may be amended in accordance
with Section 5.11 of IRS Revenue Procedure 2000-20 or any subsequent
guidance provided by the IRS, so as not to be considered an individually
designed plan. Amendments to the trust provisions shall be agreed upon, in
writing, by the Trustee and the Adopting Employer.
7.07 PLAN MERGER OR CONSOLIDATION
In the case of any merger or consolidation of the Plan with, or transfer of
assets or liabilities of such Plan to, any other plan, each Participant shall
be entitled to receive benefits immediately after the merger, consolidation, or
transfer (if the Plan had then terminated) which are equal to or greater than
the benefits he or she would have been entitled to receive immediately before
the merger, consolidation, or transfer (if the Plan had then terminated). The
Trustee (or Custodian, if applicable) has the authority to enter into merger
agreements or agreements to directly transfer the assets of this Plan but only
if such agreements are made with trustees or custodians of other retirement
plans described in Section 401(a) of the Code or such other plans permitted by
laws or regulations.
7.08 PERMANENCY
The Employer expects to continue this Plan and make the necessary contributions
thereto indefinitely, but such continuance and payment is not assumed as a
contractual obligation. Neither the Adoption Agreement nor the Plan nor any
amendment or modification thereof nor the making of contributions hereunder
shall be construed as giving any Participant or any person whomsoever any legal
or equitable right against the Employer, the Trustee (or Custodian, if
applicable), the Plan Administrator or the Prototype Sponsor except as
specifically provided herein, or as provided by law.
7.09 METHOD AND PROCEDURE FOR TERMINATION
The Plan may be terminated by the Adopting Employer at any time by appropriate
action of its managing body. Such termination shall be effective on the date
specified by the Adopting Employer. The Plan shall terminate, if required by
either the IRS or the DOL, if the Adopting Employer shall be dissolved or
terminated. Written notice of the termination and effective date thereof shall
be given to the Trustee (or Custodian, if applicable), Plan Administrator,
Prototype Sponsor, Participants and Beneficiaries of deceased Participants, and
the required filings (such as the Form 5500 series and others) must be made
with the IRS and any other regulatory body as required by current laws and
regulations. Until
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all of the assets have been distributed from the Fund, the
Adopting Employer must keep the Plan in compliance with current laws and
regulations by (a) making appropriate amendments to the Plan and (b) taking
such other measures as may be required.
7.10 CONTINUANCE OF PLAN BY SUCCESSOR EMPLOYER
Notwithstanding the preceding Section 7.09 of the Plan, a successor of the
Adopting Employer may continue the Plan and be substituted in the place of the
present Adopting Employer. The successor and the present Adopting Employer (or,
if deceased, the executor of the estate of a deceased Self-Employed Individual
who was the Adopting Employer) must execute a written instrument authorizing
such substitution and the successor shall amend the Plan in accordance with
Section 7.06 of the Plan.
7.11 FAILURE OF PLAN QUALIFICATION
If the Plan fails to retain its qualified status, the Plan wilt no longer be
considered to be part of a prototype plan, and such Employer can no longer
participate under this prototype. In such event, the Plan will be considered an
individually designed plan.
7.12 GOVERNING LAWS AND PROVISIONS
To the extent such taws are not preempted by federal taw, the terms and
conditions of this Plan shall be governed by the laws of the state in which the
Prototype Sponsor is located, unless otherwise agreed to in writing by the
Prototype Sponsor and the Employer. In the event of any conflict between the
provisions of this Basic Plan Document and provisions of the Adoption
Agreement, the summary plan description, or any related documents, the Basic
Plan Document will control.
7.13 STATE COMMUNITY PROPERTY LAWS
The terms and conditions of this Plan shall be applicable without regard to the
community property laws of any state.
7.14 HEADINGS
The headings of the Plan have been inserted for convenience of reference only
and are to be ignored in any construction of the provisions hereof.
7.15 GENDER AND NUMBER
Whenever any words are used herein in the masculine gender they shall be
construed as though they were also used in the feminine gender in all cases
where they would so apply, and whenever any words are used herein in the
singular form they shall be construed as though they were also used in the
plural form in all cases where they would so apply.
7.16 STANDARD OF FIDUCIARY CONDUCT
The Employer, Plan Administrator, Trustee and any other Fiduciary under this
Plan shall discharge their duties with respect to this Plan solely in the
interests of Participants and their Beneficiaries, and with the care, skill,
prudence and diligence under the circumstances then prevailing that a prudent
man acting in like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims. No Fiduciary
shall cause the Plan to engage in any transaction known as a "prohibited
transaction" under either the Code or ERISA.
7.17 GENERAL UNDERTAKING OF ALL PARTIES
All parties to this Plan and all persons claiming any interest whatsoever
hereunder agree to perform any and all acts and execute any and all documents
and papers which may be necessary or desirable for the carrying out of this
Plan and any of its provisions.
7.18 AGREEMENT BINDS HEIRS, ETC.
This Plan shall be binding upon the heirs, executors, administrators,
successors and assigns, as those terms shall apply to any and all parties
hereto, present and future.
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7.19 DETERMINATION OF TOP-HEAVY STATUS
A. In General
Except as provided in Section 7.19(B) of the Plan, for any Plan Year
beginning after December 31,1983, this Plan is a Top-Heavy Plan if any of
the following conditions exist:
1. If the top-heavy ratio for this Plan exceeds 60 percent and this Plan is
not part of any Required Aggregation Group or Permissive Aggregation
Group of plans;
2. If this Plan is part of a Required Aggregation Group of plans but not
part of a Permissive Aggregation Group and the top-heavy ratio for the
group of plans exceeds 60 percent;
3. If this Plan is a part of a Required Aggregation Group and part of a
Permissive Aggregation Group of plans and the top-heavy ratio for the
Permissive Aggregation Group exceeds 60 percent.
B. Top-Heavy Ratio
1. If the Employer maintains one or more defined contribution plans
(including any simplified employee pension plan) and the Employer has not
maintained any defined benefit plan which during the five-year period
ending on the Determination Date(s) has or has had accrued benefits, the
top-heavy ratio for this Plan alone or for the Required or Permissive
Aggregation Group as appropriate is a fraction, the numerator of which is
the sum of the account balances of all Key Employees as of the
Determination Date(s) (including any part of any account balance
distributed in the five-year period ending on the Determination Date(s)),
and the denominator of which is the sum of all account balances
(including any part of any account balance distributed in the five-year
period ending on the Determination Date(s)), both computed in accordance
with Section 416 of the Code and the regulations thereunder. Both the
numerator and the denominator of the top-heavy ratio are increased to
reflect any contribution not actually made as of the Determination Date,
but which is required to be taken into account on that date under Section
416 of the Code and the regulations thereunder.
2. If the Employer maintains one or more defined contribution plans
(including any simplified employee pension plan) and the Employer
maintains or has maintained one or more defined benefit plans which
during the five-year period ending on the Determination Date(s) has or
has had any accrued benefits, the top-heavy ratio for any Required or
Permissive Aggregation Group, as appropriate, is a fraction, the
numerator of which is the sum of account balances under the aggregated
defined contribution plan or plans for all Key Employees, determined in
accordance with 1. above, and the Present Value of accrued benefits under
the aggregated defined benefit plan or plans for all Key Employees as of
the Determination Date(s), and the denominator of which is the sum of the
account balances under the aggregated defined contribution plan or plans
for all Participants, determined in accordance with 1. above, and the
Present Value of accrued benefits under the defined benefit plan or plans
for all Participants as of the Determination Date(s), all determined in
accordance with Section 416 of the Code and the regulations thereunder.
The accrued benefits under a defined benefit plan in both the numerator
and denominator of the top-heavy ratio are increased for any distribution
of an accrued benefit made in the five-year period ending on the
Determination Date.
3. For purposes of 1. and 2. above, the value of account balances and the
Present Value of accrued benefits will be determined as of the most
recent Valuation Date that falls within or ends with the 12-month period
ending on the Determination Date, except as provided in Section 416 of
the Code and the regulations thereunder for the first and second plan
years of a defined benefit plan. The account balances and accrued
benefits of a Participant (a) who is not a Key Employee but who was a Key
Employee in a Prior Year, or (b) who has not been credited with at least
one Hour of Service with any employer maintaining the plan at any time
during the five-year period ending on the Determination Date will be
disregarded. The calculation of the top-heavy ratio, and the extent to
which distributions, rollovers, and transfers are taken into account will
be made in accordance with Section 416 of the Code and the regulations
thereunder. Deductible employee contributions will not be taken into
account for purposes of computing the top-heavy ratio. When aggregating
plans the value of account balances and accrued benefits will be
calculated with reference to the Determination Dates that fall within
the same calendar year. The accrued benefit of a Participant other than a
Key Employee shall be determined under (a) the method, if any, that
uniformly applies for accrual purposes under all defined benefit plans
maintained by the Employer, or (b) if there is no such method, as if such
benefit accrued not more rapidly than the slowest accrual rate permitted
under the fractional rule of Section 411(b)(1)(C) of the Code.
62
C. SIMPLE 401(k) PI an Exception
Notwithstanding Section 7.19(A) of the Plan above, the Plan is not treated as
a Top-Heavy Plan under Section 416 of the Code for any Year for which an
Eligible Employer maintains this Plan as a SIMPLE 401(k) Plan.
7.20 INALIENABILITY OF BENEFITS
No benefit or interest available hereunder will be subject to assignment or
alienation, either voluntarily or involuntarily. The preceding sentence shall
not apply to judgements and settlements described in Section 401(a)(13) (C) of
the Code and Section 206(d)(4) of ERISA. Such sentence shall apply to the
creation, assignment, or recognition of a right to any benefit payable with
respect to a Participant pursuant to a Domestic Relations Order, unless such
order is determined to be a Qualified Domestic Relations Order, as defined in
the Definitions Section of the Plan.
Generally, a Domestic Relations Order cannot be a Qualified Domestic Relations
Order until January 1, 1985. However, in the case of a Domestic Relations Order
entered before such date, the Plan Administrator:
(1)shall treat such order as a Qualified Domestic Relations Order if such
Plan Administrator is paying benefits pursuant to such order on such
date, and
(2)may treat any other such order entered before such date as a Qualified
Domestic Relations Order even if such order does not meet the
requirements of Section 414(p) of the Code. Notwithstanding any provision
of the Plan to the contrary, a distribution to an Alternate Payee under a
Qualified Domestic Relations Order shall be permitted even if the
Participant affected by such order is not otherwise entitled to a
distribution, and even if such Participant has not attained the earliest
retirement age as defined in Section 414(p) of the Code.
7.21 BONDING
Every Fiduciary and every person who handles funds or other property of the
Plan shall be bonded in accordance with Section 412 of ERISA and the
regulations thereunder for purposes of protecting the Plan against loss by
reason of acts of fraud or dishonesty on the part of the person, group or
class, alone or in connivance with others, to be covered by such bond. The
amount of the bond shall be fixed at the beginning of each Plan Year and shall
not be less than 10 percent of the amount of funds handled. The amount of funds
handled shall be determined by the funds handled the previous Plan Year or, if
none, the amount of funds estimated, in accordance with rules provided by the
Secretary of Labor, to be handled during the current Plan Year. Notwithstanding
the foregoing, no bond shall be less than $1,000 nor more than $500,000 except
that the Secretary of Labor shall have the right to prescribe an amount in
excess of $500,000.
7.22 INVESTMENT AUTHORITY
A. Plan Investments
Except as provided in Section 7.22(B) of the Plan (relating to individual
direction of investments by Participants), the Adopting Employer, not the
Trustee (or Custodian, if applicable), shall have exclusive management and
control over the investment of the Fund into any permitted investment. The
Adopting Employer shall be responsible for establishing a funding policy
statement on behalf of the Plan and shall provide a copy of such funding
policy statement to the Trustee (or Custodian, if applicable).
Notwithstanding the foregoing, if the Trustee is designated as a
Discretionary Trustee on the Adoption Agreement, the Trustee may enter into
an agreement with the Adopting Employer whereby the Trustee will manage the
investment of all or a portion of the Fund. Any such agreement shall be in
writing and set forth such matters as the Discretionary Trustee deems
necessary or desirable.
B. Direction Of Investments By Participants Unless otherwise indicated in the
Adoption Agreement, each Participant shall have the responsibility for
directing the Trustee (or Custodian, if applicable) regarding the investment
of all or part of his or her Individual Account. If all of the requirements
of Section 404 of ERISA are satisfied, then to the extent so directed, the
Adopting Employer, Plan Administrator, Trustee (or Custodian, if applicable)
and all other Fiduciaries are relieved of their Fiduciary responsibility
under Section 404 of ERISA, provided that it shall be the Adopting
Employer's responsibility to direct the Trustee (or Custodian, if
applicable) as to permissible investments into which Participants may direct
their individual investments. The Plan Administrator shall direct that a
Separate Fund be established in the name of each Participant who directs the
investment of part or all of his or her Individual Account. Each Separate
Fund shall be charged or credited (as appropriate) with the earnings, gains,
losses or expenses attributable to such Separate Fund. No Fiduciary shall be
liable for any loss that results
63
from a Participant's individual direction.
The assets subject to individual direction shall not be invested in
collectibles as that term is defined in Section 408(m) of the Code.
The Plan Administrator shall establish such uniform and nondiscriminatory
rules relating to individual direction as it deems necessary or advisable
including, but not limited to, rules describing (1) which portions of
Participants' Individual Accounts can be individually directed; (2) the
frequency of investment changes; (3) the forms and procedures for making
investment changes; and (4) the effect of a Participant's failure to make a
valid direction.
The Plan Administrator may, in a uniform and nondiscriminatory manner, limit
the available investments for Participants' individual direction to certain
specified investment options (including, but not limited to, certain mutual
funds, investment contracts, deposit accounts and group trusts). The Plan
Administrator may permit, in a uniform and nondiscriminatory manner, a
Beneficiary of a deceased Participant or the Alternate Payee under a
Qualified Domestic Relations Order to individually direct in accordance with
this Section 7.22(B) of the Plan.
C. Investment Managers
1. Definition of Investment Manager -The Adopting Employer may appoint one
or more investment managers to make investment decisions with respect to
all or a portion of the Fund. The investment manager shall be any firm or
individual registered as an investment adviser under the Investment
Advisers Act of 1940, a bank as defined in said Act or an insurance
company qualified under the laws of more than one state to perform
services consisting of the management, acquisition or disposition of any
assets of the Plan.
2. Investment Manager's Authority - A separate Investment Fund shall be
established representing the assets of the Fund invested at the direction
of the investment manager. The investment manager so appointed shall
direct the Trustee (or Custodian, if applicable ) with respect to the
investment of such Investment Fund. The investments which may be acquired
at the direction of the investment manager are those described in Section
7.22(D) of the Plan.
3. Written Agreement - The appointment of any investment manager shall be by
written agreement between the Adopting Employer and the investment
manager and a copy of such agreement (and any modification or termination
thereof) must be given to the Trustee (or Custodian, if applicable). The
agreement shall set forth, among other matters, the effective date of the
investment manager's appointment and an acknowledgment by the investment
manager that it is a Fiduciary of the Plan under ERISA.
4. Concerning the Trustee (or Custodian, if applicable) - Written notice of
each appointment of an investment manager shall be given to the Trustee
(or Custodian, if applicable) in advance of the effective date of such
appointment. Such notice shall specify which portion of the Fund will
constitute the Investment Fund subject to the investment manager's
direction. The Trustee (or Custodian, if applicable) shall comply with
the investment direction given to it by the investment manager and will
not be liable for any loss which may result by reason of any action (or
inaction) it takes at the direction of the investment manager.
D. Permissible Investments
The Trustee or Custodian may, subject to the funding policy statement
provided by the Adopting Employer, invest the assets of the Plan in property
of any character, real or personal, including, but not limited to the
following: stocks, including shares of open-end investment companies (mutual
funds); bonds; notes; debentures; options; limited partnership interests;
mortgages; real estate or any interests therein; unit investment trusts;
Treasury Bills, and other U.S. Government obligations; common trust funds,
combined investment trusts, collective trust funds or commingled funds
maintained by a bank or similar financial organization (whether or not the
Trustee hereunder); savings accounts, certificates of deposit, demand or
time deposits or money market accounts of a bank or similar financial
organization (whether or not the Trustee hereunder); annuity contracts; life
insurance policies; or in such other investments as is deemed proper without
regard to investments authorized by statute or rule of law governing the
investment of trust funds but with regard to ERISA and this Plan.
Notwithstanding the preceding sentence, the Prototype Sponsor may, as a
condition of making the Plan available to the Adopting Employer, limit the
types of property in which the assets of the Plan may be invested. The list
of permissible investment options shall be further limited in accordance
with any applicable law, regulations or other restrictions applicable to the
Trustee or Custodian. If the Trustee (or Custodian, if applicable) invests
all or any portion of the Fund pursuant to written instructions provided by
the Adopting Employer (including an investment manager appointed by the
Adopting Employer pursuant to Section 7.22(C) of the Plan) or any
Participant pursuant to Section 7.22(B) of the Plan, the
64
Trustee (or
Custodian, if applicable) will be deemed to have invested pursuant to the
Adopting Employer's funding policy statement.
E. Matters Relating To Insurance
1. Unless prohibited by the Plan Sponsor pursuant to Section 7.22(D) of the
Plan, a life insurance contract may be purchased on behalf of a
Participant. No life insurance contract may be purchased unless the
insured under the contract is the Participant or, where this Plan is a
profit sharing or 401(k) plan, the Participant's Spouse or another
individual in whom the Participant has an insurable interest. If a life
insurance contract is to be purchased for a Participant, the aggregate
premium for certain life insurance for each Participant must be less than
a certain percentage of the aggregate Employer Contributions and
Forfeitures allocated to a Participant's Individual Account at any
particular time as follows.
a. Ordinary Life Insurance - For purposes of these incidental insurance
provisions, ordinary life insurance contracts are contracts with both
nondecreasing death benefits and nonincreasing premiums. If such
contracts are purchased, less than 50 percent of the aggregate
Employer Contributions and Forfeitures allocated to any Participant's
Individual Account will be used to pay the premiums attributable to
them.
b. Term and Universal Life Insurance - No more than 25 percent of the
aggregate Employer Contributions and Forfeitures allocated to any
Participant's Individual Account will be used to pay the premiums on
term life insurance contracts, universal life insurance contracts, and
all other life insurance contracts which are not ordinary life.
c. Combination -The sum of 50 percent of the ordinary life insurance
premiums and all other life insurance premiums will not exceed 25
percent of the aggregate Employer Contributions and Forfeitures
allocated to any Participant's Individual Account. If this Plan is a
profit sharing plan, the above incidental benefits limits do not apply
to life insurance contracts purchased by an Employee who has been a
Participant in the Plan for five or more years or purchased with
Employer Contributions and Forfeitures that have been in the
Participant's Individual Account for at least two full Plan Years,
measured from the date such contributions were allocated. For purposes
of this Section 7.22(E)(1) of the Plan, rollover and transfer
contributions shall be considered Employer Contributions, and
therefore may be used to pay contract premiums. No part of the
Deductible Employee Contribution account will be used to purchase life
insurance.
2. Any dividends or credits earned on insurance contracts for a Participant
shall be allocated to such Participant's Individual Account derived from
Employer Contributions for whose benefit the contract is held.
3. Subject to Section 5.13 of the Plan, the contracts on a Participant's
life will be converted to cash or an annuity or distributed to the
Participant upon separation from service with the Employer. In addition,
contracts on the joint lives of a Participant and another person may not
be maintained under this Plan if such Participant ceases to have an
insurable interest in such other person.
4. The Trustee (or Custodian, if applicable) shall apply for and will be the
owner of any insurance contract(s) purchased under the terms of this
Plan. The insurance contract(s) must provide that proceeds will be
payable to the Trustee (or Custodian, if applicable). However, the
Trustee (or Custodian, if applicable) shall be required to pay over
all proceeds of the contract(s) to the Participant's designated
Beneficiary in accordance with the distribution provisions of this
Plan. A Participant's Spouse will be the designated Beneficiary of the
proceeds in all circumstances unless a Qualified Election has been made
in accordance with Section 5.13 of the Plan. Under no circumstances shall
the Fund retain any part of the proceeds. In the event of any conflict
between the terms of this Plan and the terms of any insurance contract
purchased hereunder, the Plan provisions shall control.
5. The Plan Administrator may direct the Trustee (or Custodian, if
applicable) to sell and distribute insurance or annuity contracts to a
Participant (or other party as may be permitted) in accordance with
applicable law or regulations.
6. Notwithstanding any other provision herein, and except as may be
otherwise provided by ERISA, the Employer shall indemnify and hold
harmless the insurer, its officers, directors, employees, agents, heirs,
executors, successors and assigns, from and against any and all
liabilities, damages, judgments, settlements, losses, costs, charges, or
expenses (including legal expenses) at any time arising out of or
incurred in connection with any action taken by such parties in the
performance of their duties with respect to this Plan, unless there has
been a final adjudication of gross negligence or willful misconduct in
the performance of such duties. Further, except as may be otherwise
provided by ERISA, the Employer will indemnify the insurer from any
liability, claim or
65
expense (including legal expense) which the insurer shall incur by
reason of or which results, in whole or in part, from the reliance of the
insurer on the facts and other directions and elections the Employer
communicates or fails to communicate.
7.23 PROCEDURES AND OTHER MATTERS REGARDING DOMESTIC RELATIONS ORDERS
A. To the extent provided in any Qualified Domestic Relations Order, the former
Spouse of a Participant shall be treated as a surviving Spouse of such
Participant for purposes of any benefit payable in the form of either a
Qualified Joint and Survivor Annuity or Qualified Preretirement Survivor
Annuity.
B. The Plan shall not be treated as failing to meet the requirements of the
Code which prohibit payment of benefits before the Participant's Termination
of Employment with the Employer solely by reason of payments to an Alternate
Payee pursuant to a Qualified Domestic Relations Order.
C. In the case of any Domestic Relations Order received by the Plan
1. the Plan Administrator shall promptly notify the Participant and any
other Alternate Payee of the receipt of such order and the Plan's
procedure for determining the qualified status of Domestic Relations
Orders, and
2. within a reasonable period after receipt of such order, the Plan
Administrator shall determine whether such order is a Qualified Domestic
Relations Order and notify the Participant and each Alternate Payee of
such determination.
The Plan Administrator shall establish reasonable procedures to determine
the qualified status of Domestic Relations Orders and to administer
distributions under such qualified orders.
D. During any period in which the issue of whether a Domestic Relations Order
is a Qualified Domestic Relations Order is being determined by the Plan
Administrator, by a court of competent jurisdiction, or otherwise, the Plan
Administrator shall segregate in a separate account in the Plan or in an
escrow account the amounts which would have been payable to the Alternate
Payee during such period if the order had been determined to be a Qualified
Domestic Relations Order. If within 18 months the order or modification
thereof is determined to be a Qualified Domestic Relations Order, the Plan
Administrator shall pay the segregated amounts (plus any interest thereon)
to the person or persons entitled thereto. If within 18 months either 1. it
is determined that the order is not a Qualified Domestic Relations Order, or
2. the issue as to whether such order is a Qualified Domestic Relations
Order is not resolved, then the Plan Administrator shall pay the segregated
amounts (plus any interest thereon) to the person or persons who would have
been entitled to such amounts if there had been no order. Any determination
that an order is a Qualified Domestic Relations Order which is made after
the close of the 18-month period shall be applied prospectively only.
7.24 INDEMNIFICATION OF PROTOTYPE SPONSOR
Notwithstanding any other provision herein, and except as may be otherwise
provided by ERISA, the Employer shall indemnify and hold harmless the Prototype
Sponsor, its officers, directors, employees, agents, heirs, executors,
successors and assigns, from and against any and all liabilities, damages,
judgments, settlements, losses, costs, charges, or expenses (including legal
expenses) at any time arising out of or incurred in connection with any action
taken by such parties in the performance of their duties with respect to this
Plan, unless there has been a final adjudication of gross negligence or willful
misconduct in the performance of such duties. Further, except as may be
otherwise provided by ERISA, the Employer will indemnify the Prototype Sponsor
from any liability, claim or expense (including legal expense) which the
Prototype Sponsor shall incur by reason of or which results, in whole or in
part, from the reliance of the Prototype Sponsor on the facts and other
directions and elections the Employer communicates or fails to communicate.
7.25 MILITARY SERVICE
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 Code effective December 12,
1994.
66
SECTION EIGHT: TRUSTEE AND CUSTODIAN
8.01 FINANCIAL ORGANIZATION AS CUSTODIAN
This Section 8.01 applies where a financial organization has indicated in the
Adoption Agreement that it will serve, with respect to this Plan, as Custodian.
The Custodian shall have no discretionary authority with respect to the
management of the Plan or the Fund but wilt act only as directed by the entity
or individual who has such authority.
A. Responsibilities of the Custodian - The responsibilities of the Custodian
shall be limited to the following. The Custodian's responsibilities may be
further limited by the Plan Trustee(s), if applicable.
1. To receive Plan contributions and to hold, invest and reinvest the Fund
as authorized by the Adopting Employer or its designee without
distinction between principal and interest; provided, however, that
nothing in this Plan shall require the Custodian to maintain physical
custody of stock certificates (or other indicia of ownership of any type
of asset) representing assets within the Fund;
2. To maintain accurate records of contributions, earnings, withdrawals and
other information the Custodian deems relevant with respect to the Plan;
3. To make disbursements from the Fund to Participants or Beneficiaries upon
the proper authorization of the Plan Administrator; and
4. To furnish to the Plan Administrator a statement which reflects the value
of the investments in the custody of the Custodian as of the end of each
Plan Year and as of any other times as the Custodian and Plan
Administrator may agree.
B. Powers of the Custodian Except as otherwise provided in this Plan, the
Custodian shall have the power, but not the duty, to take any action with
respect to the Fund which it deems necessary or advisable to discharge its
responsibilities under this Plan including, but not limited to, the
following powers:
1. To invest all or a portion of the Fund (including idle cash balances) in
time deposits, savings accounts, money market accounts or similar
investments bearing a reasonable rate of interest in the Custodian's own
savings department or the savings department of another financial
organization;
2. To vote upon any stocks, bonds, or other securities; to give general or
special proxies or powers of attorney with or without power of
substitution; to exercise any conversion privileges or subscription
rights and to make any payments incidental thereto; to oppose, or to
consent to, or otherwise participate in, corporate reorganizations or
other changes affecting corporate securities, and to pay any assessment
or charges in connection therewith; and generally to exercise any of the
powers of an owner with respect to stocks, bonds, securities or other
property;
3. To hold securities or other property of the Fund in its own name, in the
name of its nominee or in bearer form; and
4. To make, execute, acknowledge, and deliver any and all documents of
transfer and conveyance and any and all other instruments that may be
necessary or appropriate to carry out the powers herein granted.
8.02 TRUSTEE
This Section 8.02 applies where either a financial organization or one or more
individuals has indicated in the Adoption Agreement that it will serve as
Trustee with respect to all or a portion of the assets of the Fund.
A. Responsibilities of the Trustee - The responsibilities of the Trustee shall
be limited to the following duties:
1. To receive Plan contributions and to hold, invest and reinvest the
portion of the Fund for which it serves as Trustee, as authorized by
the Employer or its designee, without distinction between principal and
interest; provided, however, that nothing in this Plan shall require
the Trustee to maintain physical custody of stock certificates (or
other indicia of ownership) representing assets within the Fund;
2. To maintain accurate records of contributions, earnings, withdrawals and
other information the Trustee deems relevant with respect to the Plan;
3. To make disbursements from the portion of the Fund for which it serves as
Trustee to Participants or Beneficiaries upon the proper authorization of
the Plan Administrator; and
4. To furnish to the Plan Administrator a statement which reflects the value
of the investments in the custody of the Trustee as of the end of each
Plan Year and as of any other times as the Trustee and Plan Administrator
may agree.
67
B. Powers of the Trustee Except as otherwise provided in this Plan, the Trustee
shall have the power, but not the duty, to take any action with respect to
the portion of the Fund for which it serves as Trustee which it deems
necessary or advisable to discharge its responsibilities under this Plan
including, but not limited to, the following powers:
1. To hold any securities or other property of the Fund in its own name, in
the name of its nominee or in bearer form;
2. To purchase or subscribe for securities issued, or real property owned,
by the Employer or any trade or business under common control with the
Employer but only if the prudent investment and diversification
requirements of ERISA are satisfied;
3. To sell, exchange, convey, transfer or otherwise dispose of any
securities or other property held by the Trustee, by private contract
or at public auction. No person dealing with the Trustee shall be bound
to see to the application of the purchase money or to inquire into the
validity, expediency, or propriety of any such sale or other disposition,
with or without advertisement;
4. To vote upon any stocks, bonds, or other securities; to give general or
special proxies or powers of attorney with or without power of
substitution; to exercise any conversion privileges or subscription
rights and to make any payments incidental thereto; to oppose, or to
consent to, or otherwise participate in, corporate reorganizations or
other changes affecting corporate securities, and to delegate
discretionary powers, and to pay any assessments or charges in connection
therewith; and generally to exercise any of the powers of an owner with
respect to stocks, bonds, securities or other property;
5. To invest any part or all of the Fund (including idle cash balances) in
certificates of deposit, demand or time deposits, savings accounts, money
market accounts or similar investments of the Trustee (if the Trustee is
a bank or similar financial organization), the Prototype Sponsor or any
affiliate of such Trustee or Prototype Sponsor, which bear a reasonable
rate of interest;
6. To provide sweep services without the receipt by the Trustee of
additional compensation or other consideration (other than reimbursement
of direct expenses property and actually incurred in the performance of
such services);
7. To hold in the form of cash for distribution or investment such portion
of the Fund as, at any time and from time-to-time, the Trustee shall deem
prudent and deposit such cash in interest bearing or noninterest bearing
accounts;
8. To make, execute, acknowledge, and deliver any and all documents of
transfer and conveyance and any and all other instruments that may be
necessary or appropriate to carry out the powers herein granted;
9. To settle, compromise, or submit to arbitration any claims, debts, or
damages due or owing to or from the Plan, to commence or defend suits or
legal or administrative proceedings, and to represent the Plan in all
suits and legal and administrative proceedings;
10. To employ suitable agents and counsel, to contract with agents to
perform administrative and recordkeeping duties and to pay their
reasonable expenses, fees and compensation, and such agent or counsel
may or may not be agent or counsel for the Employer;
11. To cause any part or all of the Fund, without limitation as to amount,
to be commingled with the funds of other trusts (including trusts for
qualified employee benefit plans) by causing such money to be invested
as a part of any pooled, common, collective or commingled trust fund
(including any such fund described in the Adoption Agreement) heretofore
or hereafter created by any Trustee (if the Trustee is a bank), by the
Prototype Sponsor, by any affiliate bank of such a Trustee or by such a
Trustee or the Prototype Sponsor, or by such an affiliate in
participation with others; the instrument or instruments establishing
such trust fund or funds, as amended, being made part of this Plan and
trust so long as any portion of the Fund shall be invested through the
medium thereof; and
12. Generally to do all such acts, execute all such instruments, initiate
such proceedings, and exercise all such rights and privileges with
relation to property constituting the Fund as if the Trustee were the
absolute owner thereof.
8.03 COMPENSATION AND EXPENSES
The Trustee (or Custodian, if applicable) shall receive such reasonable
compensation as may be agreed upon by the Trustee (or Custodian, if applicable)
and the Adopting Employer. The Trustee (or Custodian, if applicable) shall be
68
entitled to reimbursement by the Employer for all proper expenses incurred in
carrying out his or her duties under this Plan, including reasonable legal,
accounting and actuarial expenses. If not paid by the Employer, such
compensation and expenses may be charged against the Fund. Notwithstanding the
foregoing, a Participant shall not be entitled to compensation even if he or
she serves in the capacity as a Trustee (or Custodian, if applicable).
All taxes of any kind that may be levied or assessed under existing or future
laws upon, or in respect of, the Fund or the income thereof shall be paid from
the Fund.
8.04 NO OBLIGATION TO QUESTION DATA
The Employer shall furnish the Trustee (or Custodian, if applicable) and Plan
Administrator the information which each party deems necessary for the
administration of the Plan including, but not limited to, changes in a
Participant's status, eligibility, mailing addresses and other such data as may
be required. The Trustee (or Custodian, if applicable) and Plan Administrator
shall be entitled to act on such information as is supplied them and shall have
no duty or responsibility to further verify or question such information.
8.05 RESIGNATION
Any person serving as Trustee or Custodian may resign at any time by giving 30
days advance written notice to the Adopting Employer. The resignation shall
become effective 30 days after receipt of such notice unless a shorter period
is agreed upon.
The Adopting Employer may remove any Trustee (or Custodian, if applicable) at
any time by giving written notice to such Trustee (or Custodian, if applicable)
and such removal shall be effective 30 days after receipt of such notice unless
a shorter period is agreed upon. The Adopting Employer shall have the power to
appoint a successor Trustee (or Custodian, if applicable). In the event the
Trustee (or Custodian, if applicable) is removed, resigns, dies or becomes
incapacitated and the Adopting Employer will not or cannot appoint a successor
Trustee (or Custodian, if applicable) within a reasonable period of time
thereafter, a majority of Participants in the Plan shall have the authority to
appoint a successor Trustee (or Custodian, if applicable). If a majority of
Participants either do not appoint a new Trustee (or Custodian, if applicable)
within a reasonable period of time (determined by the Prototype Sponsor in its
complete and sole discretion) or request the Prototype Sponsor to appoint a new
Trustee (or Custodian, if applicable), the Prototype Sponsor shall have the
authority to appoint a successor Trustee (or Custodian, if applicable).
Upon such resignation or removal, if the resigning or removed Trustee (or
Custodian, if applicable) is the sole Trustee (or Custodian, if applicable), he
or she shall transfer all of the assets of the Fund then held by such Trustee
(or Custodian, if applicable) as expeditiously as possible to the successor
Trustee (or Custodian, if applicable) after paying or reserving such reasonable
amount as he or she shall deem necessary to provide for the expense in the
settlement of the accounts and the amount of any compensation due him or her
and any sums chargeable against the Fund for which he or she may be liable. If
the Funds as reserved are not sufficient for such purpose, then he or she shall
be entitled to reimbursement from the successor Trustee (or Custodian, if
applicable) out of the assets in the successor Trustee's (or Custodian's, if
applicable) hands under this Plan. If the amount reserved shall be in excess of
the amount actually needed, the former Trustee (or Custodian, if applicable)
shall return such excess to the successor Trustee (or Custodian, if
applicable).
Upon receipt of the transferred assets, the successor Trustee (or Custodian, if
applicable) shall thereupon succeed to all of the powers and responsibilities
given to the Trustee (or Custodian, if applicable) by this Plan.
The resigning or removed Trustee (or Custodian, if applicable) shall render an
accounting to the Employer and unless objected to by the Employer within 30
days of its receipt, the accounting shall be deemed to have been approved and
the resigning or removed Trustee (or Custodian, if applicable), shall be
released and discharged as to all matters set forth in the accounting. Where a
financial organization is serving as Trustee (or Custodian, if applicable) and
it is merged with or bought by another organization (or comes under the control
of any federal or state agency), that organization shall serve as the successor
Trustee (or Custodian, if applicable) of this Plan, but only if it is the type
of organization that can so serve under applicable law. Where the Trustee or
Custodian is serving as a nonbank trustee or custodian pursuant to Section
1.408-2(e) of the Income Tax Regulations, the Adopting Employer wilt appoint a
successor Trustee (or Custodian, if applicable) upon notification by the
Commissioner of Internal Revenue that such substitution is required because the
Trustee (or Custodian, if applicable) has failed to comply with the
requirements of Section 1.408-2(e) of the Income Tax Regulations or is not
keeping such records or making such returns or rendering such statements as are
required by forms or regulations.
69
8.06 DEGREE OF CARE - LIMITATIONS OF LIABILITY
The Trustee (or Custodian, if applicable) shall not be liable for any losses
incurred by the Fund by any direction to invest communicated by the Adopting
Employer, Plan Administrator, investment manager appointed pursuant to Section
7.22(C) of the Plan or any Participant or Beneficiary. The Trustee (or
Custodian, if applicable) shall be under no liability for distributions made or
other action taken or not taken at the written direction of the Plan
Administrator. It is specifically understood that the Trustee (or Custodian, if
applicable) shall have no duty or responsibility with respect to the
determination of matters pertaining to the eligibility of any Employee to
become a Participant or remain a Participant hereunder, the amount of benefit
to which a Participant or Beneficiary shall be entitled to receive hereunder,
whether a distribution to Participant or Beneficiary is appropriate under the
terms of the Plan or the size and type of any policy to be purchased from any
insurer for any Participant hereunder or similar matters; it being understood
that all such responsibilities under the Plan are vested in the Plan
Administrator.
8.07 INDEMNIFICATION OF TRUSTEE AND CUSTODIAN
Notwithstanding any other provision herein, and except as may be otherwise
provided by ERISA, the Employer shall indemnify and hold harmless each Trustee
and Custodian and its officers, directors, employees, agents, heirs, executors,
successors and assigns, from and against any and all liabilities, damages,
judgments, settlements, losses, costs, charges, or expenses (including legal
expenses) at any time arising out of or incurred in connection with any action
taken by such parties in the performance of their duties with respect to this
Plan, unless there has been a final adjudication of gross negligence or willful
misconduct in the performance of such duties.
Further, except as may be otherwise provided by ERISA, the Employer will
indemnify each Trustee and Custodian from any liability, claim or expense
(including legal expense) which the Trustee or Custodian shall incur by reason
of or which results, in whole or in part, from the reliance of the Trustee or
Custodian on the facts and other directions and elections the Employer
communicates or fails to communicate.
SECTION NINE: ADOPTING EMPLOYER SIGNATURE
This Section Nine of the Plan Adoption Agreement must contain the signature of
an authorized representative of the Adopting Employer evidencing the Employer's
agreement to be bound by the terms of the Basic Plan Document, Adoption
Agreement and, if applicable, separate trust agreement.
70
DELAWARE INVESTMENTS
BASIC PLAN DOCUMENT
AMENDMENT
This amendment of the Plan (hereinafter referred to as "the Amendment") is
comprised of this Basic Plan Document Amendment and the corresponding Adoption
Agreement Amendment and is adopted to reflect certain provisions of the
Economic Growth and Tax Relief Reconciliation Act of 2001 ("EGTRRA"). The
Amendment is intended as good faith compliance with the requirements of EGTRRA
and is to be construed in accordance with EGTRRA and guidance issued
thereunder. Except as otherwise provided, the Amendment shall be effective as
of the first day of the first Plan Year beginning after December 31, 2001. The
Amendment shall supersede the provisions of the Plan to the extent those
provisions are inconsistent with the provisions of the Amendment.
Note: Section numbers used below correspond to the Basic Plan Document Sections
to which the Amendment provisions relate.
DEFINITIONS
CATCH-UP CONTRIBUTIONS: Catch-up Contributions means Elective Deferrals made to
the Plan pursuant to Section 3 of the Amendment, Section 414(v) of the Code at
the applicable regulations and other guidance of general applicability issued
thereunder. Unless otherwise indicated in the Adoption Agreement Amendment,
Catch-up Contributions shall be subject to the Matching Contribution formula
specified in the Adoption Agreement.
COMPENSATION: The annual Compensation of each Participant taken into account in
determining allocations, shall not exceed $200,000, as adjusted for cost-of-
living increases in accordance with Section 401(a)(17)(B) of the Code. Annual
Compensation means Compensation paid during the Plan Year or such other
consecutive 1-month period over which Compensation is otherwise determined
under the Plan (the Determination Period). The cost-of-living adjustment in
effect for a calendar year applies to annual Compensation for the Determination
Period that begins with or within such calendar year.
Effective Date: This section shall be effective for any Plan Year beginning
after December 31, 2001.
To the extent a plan change in the definition of compensation to exclude Pre-
Entry Date Compensation is considered a cutback in benefits and in violation of
IRC {section}411(d)(6), the change will not be effective until the beginning of
the next plan year.
KEY EMPLOYEE: Key Employee means any Employee or former Employee (including any
deceased Employee) who at any time during the Plan Year that includes the
Determination Date was an officer of the Employer having annual Compensation
greater than $130,000 (as adjusted under Section 416(i)(1) of the Code for Plan
Years beginning after December 31, 2002), a five-percent owner of the Employer,
or a one-percent owner of the Employer having annual Compensation of more than
$ 150,000. For this purpose, annual Compensation means Compensation within the
meaning of Section 415(c)(3) of the Code. The determination of who is a Key
Employee will be made in accordance with Section 416(i)(1) of the Code and the
applicable regulations and other guidance of general applicability issued
thereunder.
Effective Date: This section shall apply for purposes of determining whether
the Plan is a Top-Heavy Plan under Section 416(g) of the Code for Plan Years
beginning after December 31, 2001, and whether the Plan satisfies the minimum
benefit requirements of Section 416(c) of the Code for such years. This section
amends Section 7.19 of the Plan.
ELIGIBLE RETIREMENT PLAN: For purposes of the Direct Rollover provisions of the
Plan, the definition of an Eligible Retirement Plan shall also mean an annuity
contract described in Section 403(b) of the Code and an eligible plan under
Section 457(b) of the Code which is maintained by a state, political
subdivision of a state, any agency or instrumentality of a state or political
subdivision of a state and which agrees to separately account for amounts
transferred into such plan from this Plan The definition of Eligible Retirement
Plan shall also apply in the case of a distribution to a Surviving Spouse, or
to a Spouse or former Spouse who is the Alternate Payee under a Qualified
Domestic Relations Order, as defined in Section 414(p) of the Code.
Effective Date: This section shall apply to distributions made after December
31, 2001.
ELIGIBLE ROLLOVER DISTRIBUTIONS: For purposes of the Direct Rollover provisions
of the Plan, any amount that is distributed on account of hardship shall not be
included in the definition of an Eligible Rollover Distribution and the
Recipient may not elect to have any portion of such a distribution paid
directly to an Eligible Retirement Plan.
For purposes of the Direct Rollover provisions of the Plan, a portion of a
distribution shall not fail to be an Eligible Rollover Distribution merely
because the portion consists of Nondeductible Employee Contributions which are
not includible in gross income. However, such portion may be transferred only
to an individual retirement account or annuity described in Section 408(a) or
(b) of the Code, or to a qualified defined contribution plan described in
Section 401(a) or 403(a) of the Code that agrees to separately account for
amounts so transferred, including separately accounting for the portion of such
distribution which is includible in gross income and the portion of such
distribution which is not so includible.
Effective Date: This section shall apply to distributions made after December
31, 2001.
SECTION 3: CONTRIBUTIONS
PART A. LIMITATIONS ON CONTRIBUTIONS:
Except to the extent permitted under Section 3 of the Amendment and
Section 414(v) of the Code, if applicable, the Annual Addition may
be contributed or allocated to a Participant's Individual Account
under the Plan for any Limitation Year shall not exceed the lesser
of
(a)$40,000, as adjusted for increases in the cost-of-living under
Section 415(d) of the Code, or
(b)100 percent of the Participant's Compensation, within the
meaning of Section 415(c)(3) of the Code, for the Limitation
Year.
The compensation limit referred to in (b) shall not apply to any
contribution for medical benefits after separation from service
(within meaning of Section 401(h) or Section 419A(f)(2) of the
Code) which is otherwise treated as an Annual Addition.
Effective Date: This section shall be effective for Limitation
Years beginning after December 31, 2001.
PART B. ROLLOVERS FROM OTHER PLANS:
If rollover contributions are otherwise permitted under the Plan,
the Plan will accept Participant rollover contributions and/or
Direct Rollovers of distributions made after December 31, 2001,
from the types of plans specified in the Adoption Agreement
Amendment.
Applicability and Effective Date: This section shall apply if
elected by the Employer in the Adoption Agreement Amendment and
shall be effective as specified in the Adoption Agreement
Amendment.
PART C. REPEAL OF MULTIPLE USE TEST:
The multiple use test described in Treasury Regulation Section
1.401(m)-2 and Section 3.14(B)(2) of the Plan shall not apply.
Effective Date: This section shall apply for Plan Years beginning
after December 31, 2001.
PART D. ELECTIVE DEFERRALS: GENERAL CONTRIBUTION LIMITATION:
No Participant shall be permitted to have Elective Deferrals made
under this Plan, or any other qualified plan maintained by the
Employer during any taxable year, in excess of the dollar
limitation contained in Section 402(g) of the Code in effect for
such taxable year, except to the extent permitted under Section 3
of the Amendment and Section 414(v) of the Code, if applicable.
PART E. SIMPLE 401(K) ELECTIVE DEFERRALS: CONTRIBUTION LIMITATION:
Except to the extent permitted under Section 3, Part F of the
Adoption Agreement Amendment and Section 414(v) of the Code, if
applicable the maximum Elective Deferral contribution that can be
made to this Plan is the amount determined under Section
408(p)(2)(A)(ii) of the Code for the Year.
PART F. CATCH-UP CONTRIBUTIONS:
All Employees who are eligible to make Elective Deferrals under
this Plan and who have attained age 50 before the close of the
Calendar 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
required limitations of Sections 402(g) and 415 of the Code. 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), 401(k)(12), 410(b), or 416 of the Code, as applicable,
by reason of the making of such Catch-up Contributions.
Applicability and Effective Date: This section shall apply if
elected by the Employer in the Adoption Agreement Amendment and
shall be effective as specified in the Adoption Agreement
Amendment.
PART G. SUSPENSION PERIOD FOLLOWING HARDSHIP DISTRIBUTION:
A Participant who receives a distribution of Elective Deferrals
after December 31, 2001, on account of hardship shall be prohibited
from making Elective Deferrals and Nondeductible Employee
Contributions under this and all other plans of the Employer for
six months after receipt of the distribution. A Participant who
receives a distribution of Elective Deferrals in calendar year 2001
on account of hardship shall be prohibited from making Elective
Deferrals and Nondeductible Employee Contributions under this and
all other plans of the Employer for the period specified by the
Employer in the Adoption Agreement Amendment.
SECTION 4: VESTING AND FORFEITURES
PART A. VESTING OF MATCHING CONTRIBUTIONS:
A Participant's Individual Account derived from Matching
Contributions shall vest as provided by the Employer in the
Adoption Agreement Amendment. If the vesting schedule for Matching
Contributions in either Option two or Option four of the Adoption
Agreement Amendment is elected, the election in Section 7.06(D) of
the Plan shall apply.
Effective Date: This section shall apply to Participants with
accrued benefits derived from Matching Contributions who complete
an Hour Service under the Plan in a Plan Year beginning after
December 31, 2001. If elected by the Employer in the Adoption
Agreement Amendment, this section shall also apply to all other
Participants with accrued benefits derived from Employer Matching
Contributions.
To the extent a change in the use of forfeitures from Allocation to
Participants or Qualifying Participants to reduce Employer
Contribution is considered a cutback in benefits in violation of
IRC {section}411(d)(6), the change will not be effective until the
beginning of the next plan year.
PART B. ROLLOVERS DISREGARDED IN INVOLUNTARY CASH-OUTS:
For purposes of Section 4.01(C) of the Plan, the value of a
Participant's Vested Individual Account shall be determined without
regard to the portion of the Individual Account that is
attributable to rollover contributions (and earnings allocable
thereto) within the meaning of Section 402(c), 403(a)(4),
403(b)(8), 408(d)(3)(A)(ii), and 457(e)(16) of the Code. If the
value of the Participant's Vested Individual Account as so
determined is $5,000 or less, the Plan shall immediately distribute
the Participant's entire Vested Individual Account.
Applicability and Effective Date: This section shall apply if
elected by the Employer in the Adoption Agreement Amendment and
shall be effective as specified in the Adoption Agreement
Amendment.
SECTION 5: DISTRIBUTIONS AND LOANS TO PARTICIPANTS
PART A. PLAN LOANS FOR OWNER-EMPLOYEES AND SHAREHOLDER-EMPLOYEES:
Plan provisions prohibiting loans to any Owner-Employee or
shareholder-employee shall cease to apply.
Effective Date: This section shall be effective for Plan loans made
after December 31, 2001.
PART B. DISTRIBUTION UPON SEVERANCE FROM EMPLOYMENT:
A Participant's Elective Deferrals, Qualified Nonelective
Contributions, Qualified Matching Contributions, and earnings
attributable to the contributions shall be distributed on account
of the Participant's severance from employment. However, such a
distribution shall be subject to the other provisions of the Plan
regarding distributions, other than provisions that require a
separation from service before such amounts shall be distributed.
Applicability and Effective Date: This section shall apply if
elected by the Employer in the Adoption Agreement Amendment and
shall apply for distributions and severances from employment
occurring after the dates specified in the Adoption Agreement
Amendment.
SECTION 7: MISCELLANEOUS
PART A. TOP-HEAVY RULES: PRESENT VALUE
This paragraph shall apply for purposes of determining the Present
Values of accrued benefits and the amounts of account balances of
Employees as of the Determination Date. The Present Values of
accrued benefits and the amounts of account balances of an Employee
as 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
the one-year period ending on the Determination Date. The preceding
sentence shall also apply to distributions under a terminated plan
which, had it 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 by
substituting "five-year period" for "one-year period." The accrued
benefits and accounts of any individual who has not performed
services for the Employer during the one-year period ending on the
Determination Date shall not be taken into account.
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, such other plan. Matching Contributions
that are used to satisfy the minimum contribution requirements
shall be treated as Matching Contributions for purposes of the
Average Contribution Percentage test and other requirements of
Section 401(m) of the Code.
The Employer may provide in the Adoption Agreement that the minimum
benefit requirement shall be met in another plan (including another
plan that consists solely of a cash or deferred arrangement which
meets the requirements of Section 401(k)(12) of the Code and
Matching Contributions with respect to which the requirements of
Section 401(m)(11) of the Code are met.
Effective Date: This section shall apply for purposes of
determining whether the Plan is a Top-Heavy Plan under Section
416(g) of the Code for Plan Years beginning after December 31,
2001, and whether the Plan satisfies the minimum benefit
requirements of Section 416(c) of the Code for such years. This
section amends Section 7.19 of the Plan.
PART B. TOP-HEAVY RULES: SAFE HARBOR CODA
The top-heavy requirements of Section 416 of the Code and Section
7.19 of the Plan shall not apply in any year in which the Plan
consists solely of a cash or deferred arrangement which meets the
requirements of Section 401(k)(12) of the Code and Matching
Contributions with respect to which the requirements of Section
401(m)(11) of the Code are met.
Effective Date: This section shall apply for years beginning after
December 31, 2001.
ECONOMIC GROWTH AND TAX RELIEF RECONCILIATION ACT OF 2001
(EGTRRA)
SUMMARY OF MATERIAL MODIFICATIONS
Name of Adopting Employer: Peoples State Bank
Name of Plan: Peoples State Bank Profit Sharing 401(k) Plan
Plan Sequence Number: 002
The purpose of this document is to update your Summary Plan Description (SPD)
regarding several provisions. This document is very important and should be
maintained with your SPD. Unless otherwise noted, the effective date of the
amendment is the first day of the first Plan Year beginning after December 31,
2001.
The following definitions shall be added to the SPD:
CATCH-UP CONTRIBUTIONS
Additional Elective Deferrals, not to exceed the applicable dollar amount for a
given year, made under this Plan by Participants who attain age 50 before the
close of the Plan Year.
DIRECT ROLLOVER
A way of rolling over an Eligible Rollover Distribution from a qualified plan
directly to an Eligible Retirement Plan thereby avoiding federal income tax
withholding.
ELIGIBLE RETIREMENT PLAN
An eligible 457(b) plan maintained by a state governmental entity, a
Traditional IRA, a qualified retirement plan, a qualified annuity plan and a
403(b) plan.
ELIGIBLE ROLLOVER DISTRIBUTION
Any distribution to your credit that does not include the following: any
distribution that is one of a series of substantially equal periodic payments;
required minimum distributions; and hardship distributions. In addition, an
Eligible Rollover Distribution includes a Direct Rollover of Nondeductible
Employee Contributions made to a Traditional IRA or qualified retirement plan,
if those amounts are separately accounted for in the receiving plan.
In addition to the above definitions, your SPD shall be amended to include the
following:
ROLLOVER CONTRIBUTIONS
Your plan will accept direct and indirect rollovers of Eligible Rollover
Distributions from the following:
1. * A qualified plan described in Section 401(a) or 403(a) of the Code,
including Nondeductible Employee Contributions.
2. * An annuity contract described in Section 403(b) of the Code,
excluding Nondeductible Employee Contributions.
3. * An eligible plan under Section 457(b) of the Code which is
maintained by a state, political subdivision of a state, or any agency
or instrumentality of a state or political subdivision of a state.
CATCH-UP CONTRIBUTIONS
All Employees who are eligible to make Elective Deferrals under your Plan and
who have attained age 50 before the end of the calendar year are eligible to
make Catch-up contributions, not to exceed the applicable dollar amount for the
year ($1,000 for 2002, $2,000 for 2003, $3,000 for 2004, $4,000 for 2005,
$5,000 for 2006). In addition, certain limits, as required by law, must be met
prior to being eligible to make a Catch-up contribution. See your Plan
Administrator for additional information.
MATCHING CONTRIBUTIONS AND CATCH-UP CONTRIBUTIONS
Your plan may provide for Employer Matching contributions. If so, Catch-up
contributions will be matched.
DISTRIBUTIONS DUE TO FINANCIAL HARDSHIP
Your plan may allow you to take Elective Deferrals out of the Plan if you have
a financial hardship. Your Elective Deferrals (and Nondeductible Employee
Contributions, if applicable) will be suspended for 6 months after receipt of a
hardship distribution. If you receive a hardship distribution of Elective
Deferrals in calendar year 2001, you are prohibited from making Elective
Deferrals (and Nondeductible Employee Contributions, if applicable) for 6
months after receipt of the hardship distribution or until January 1, 2002, if
later.
BOARD RESOLUTION
A meeting of the Board of Directors of Peoples State Bank, herein referenced to
as "Corporation," was held on the 18th day of August , 2001 in accordance with
the Corporation's bylaws. The Directors approved the amendment and restatement
of the Peoples State Bank Profit Sharing 401(k) Plan (the "Plan") for the
benefit of the Corporation's employees.
The following resolutions were offered, seconded and unanimously adopted.
BE IT RESOLVED that the Corporation amended and restated the Plan effective
October 1, 2003;
BE IT FURTHER RESOLVED, that the officers of the Corporation be authorized and
directed to execute any and all documents and do any and all acts which may be
necessary in connection with the adoption, amendment, restatement maintenance
and/or ongoing funding of the Plan;
BE IT FURTHER RESOLVED, that, effective October 1, 2003, Dave Kopperud, Dave
Svacina, and Todd Toppen shall be removed as trustees under the Plan and the
directed trustee under the Plan shall be the following: Delaware Management
Trust Company; and
BE IT FURTHER RESOLVED, that the officers of the Corporation be authorized and
directed to retain any service providers they believe are necessary or
desirable in connection with the Plan.
CERTIFICATION
I, the undersigned, Exec. Vice President (title) of the Corporation do certify
that the foregoing is true, exact, and correct copy of a resolution adopted at
lawfully held meeting of the Corporation's Board of Directors on the 18th day
of August, 2003.
(Signed) DAVID A. SVACINA
David A. Svacina
(Title) Executive Vice President
DELAWARE INVESTMENTS
ADOPTION AGREEMENT AMENDMENT
This amendment of the Plan (hereinafter referred to as "the Amendment") is
comprised of this Adoption Agreement Amendment and the corresponding Basic Plan
Document Amendment and is adopted to reflect certain provisions of the Economic
Growth and Tax Relief Reconciliation Act of 2001 ("EGTRRA"). The Amendment is
intended as good faith compliance with the requirements of EGTRRA and is to be
construed in accordance with EGTRRA and guidance issued thereunder. Except as
otherwise provided, the Amendment shall be effective as of the first day of the
first Plan Year beginning after December 31, 2001. The Amendment shall
supersede the provisions of the Plan to the extent those provisions are
inconsistent with the provisions of the Amendment.
Employer Information
Name of Adopting Employer: Peoples State Bank
Name of Plan: Peoples State Bank Profit Sharing 401(k) Plan
Plan Sequence Number: 002
NOTE: Section numbers used below correspond to the Adoption Agreement sections
to which the Amendment provisions relate.
SECTION THREE: CONTRIBUTIONS
PART A. DIRECT ROLLOVERS
The Plan will accept Direct Rollovers of Eligible Rollover Distributions
from (select any that apply)
1. A qualified plan described in Section 401(a) or 403(a) of the Code,
excluding Nondeductible Employee Contributions.
2.X A qualified plan described in Section 401(a) or 403(a) of the Code,
including Nondeductible Employee Contributions.
3.X An annuity contract described in Section 403(b) of the Code,
excluding Nondeductible Employee Contributions.
4.X An eligible plan under Section 457(b) of the Code which is
maintained by a state, political subdivision of a state, or any
agency or instrumentality of a state or political subdivision of a
state.
PART B. INDIRECT ROLLOVERS
The Plan will accept indirect rollovers of Eligible Rollover
Distributions from (select any that apply)
1.X A qualified plan described in Section 401(a) or 403(a) of the Code.
2.X An annuity contract described in Section 403(b) of the Code.
3.X An eligible plan under Section 457(b) of the Code which is
maintained by a state, political subdivision of a state, or any
agency or instrumentality of a state or political subdivision of a
state.
PART C. ROLLOVER CONTRIBUTIONS FROM IRAS
Will the Plan accept rollover contributions of the portion of a
distribution from an individual retirement account or annuity described
in Section 408(a) or 408(b) of the Code that is eligible to be rolled
over and would otherwise be includible in gross income (select one)?
OPTION 1:X Yes.
OPTION 2: No.
NOTE: If no option is selected, Option 1 shall be deemed to be selected.
PART D. EFFECTIVE DATE OF DIRECT ROLLOVER, INDIRECT ROLLOVER, AND ROLLOVER
CONTRIBUTIONS FROM IRAS (complete if one or more boxes are selected
in either Parts A or B above or if Option 1 is selected in Part C
above)
Section 3, Part B of the Basic Plan Document Amendment shall be effective
1/1/2002 (enter a date no earlier than January 1, 2002.)
PART E. MODIFICATION OF TOP-HEAVY RULES
THE MINIMUM BENEFITS FOR EMPLOYEES ALSO COVERED UNDER ANOTHER PLAN
The Employer should describe below the extent, if any, to which the top-
heavy minimum benefit requirement of Section 416(c) of the Code and
Section 3.01(E) of the Plan shall be met in another plan. This should
include the name of the other plan, the minimum benefit that will be
provided under such other plan, and the Employees who will receive the
minimum benefit under such other plan.
_______________________________________________________________________________
_______________________________________________________________________________
PART F. CATCH-UP CONTRIBUTIONS
Will Employees be permitted to make catch-up contributions pursuant to
Section 3, Part F of the Basic Plan Document Amendment (select one)?
OPTION 1.X Yes, after 12/31/2001 (enter December 31, 2001 or a later
date)
OPTION 2. No.
NOTE: If no option is selected, Option 1 shall be deemed to be selected.
PART G. MATCHING CONTRIBUTIONS AND CATCH-UP CONTRIBUTIONS
Will Matching Contributions be made, in accordance with the Matching
Contribution formula specified in the Adoption Agreement, with regard to
Catch-up Contributions (select one)?
OPTION 1: X Yes.
OPTION 2: No.
NOTE: If no option is selected, Option 1 shall be deemed to be selected.
PART H. SUSPENSION OF ELECTIVE DEFERRALS FOLLOWING HARDSHIP DISTRIBUTION
The following transition rule shall apply to Participants who received
distributions of Elective Deferrals during the 2001 calendar year (select
one).
OPTION 1: X A Participant who receives a distribution of Elective
Deferrals in calendar year 2001 on account of hardship
shall be prohibited from making Elective Deferrals and
Nondeductible Employee Contributions under this and all other
plans of the Employer for six months after receipt of the
distribution or until January 1, 2002, if later.
OPTION 2: A Participant who receives a distribution of Elective
Deferrals in calendar year 2001 on account of hardship shall
be prohibited from making Elective Deferrals and
Nondeductible Employee Contributions under this and all other
plans of the Employer for the period specified in the
provisions of the Plan relating to suspension of Elective
Deferrals that were in effect prior to this Amendment.
NOTE: If no option is selected, Option 1 shall be deemed to be selected.
SECTION FOUR: VESTING AND FORFEITURES
PART A. PARTICIPANTS SUBJECT TO EGTRRA VESTING SCHEDULES
The provisions of Section Four of the Basic Plan Document Amendment shall
apply to
OPTION 1: The Vesting Schedule for Matching Contributions described in
Part B below will apply only to Matching Contributions made
for Plan Years beginning on or after December 31, 2001. The
Vesting Schedule chosen in Section Four of the Adoption
Agreement shall continue to apply to Matching Contributions
made for Plan Years beginning prior to January 1, 2002.
OPTION 2: X Not applicable. The vesting schedule in the Adoption
Agreement complies with EGTRRA. (Do not complete the
remainder of Section Four. Go to Section Five.)
PART B. VESTING SCHEDULE FOR MATCHING CONTRIBUTIONS AND/OR PROFIT SHARING
CONTRIBUTIONS
(Select one vesting schedule according to Part A of this section, if
applicable.)
YEARS OF VESTED PERCENTAGE
VESTING SERVICE
Option 1 Option 2 Option 3 Option 4 (Complete if Chosen)
Less than One 0% 0% 100% _________ %
1 0% 0% 100% _________ %
2 0% 20% 100% _________ % (not less than 20%)
3 100% 40% 100% _________ % (not less than 40%)
4 100% 60% 100% _________ % (not less than 60%)
5 100% 80% 100% _________ % (not less than 80%)
6 100% 100% 100% _________ % (not less than 100%)
7 100% 100% 100% _________ % (not less than 100%)
NOTE: If no option is selected, Option 3 shall be deemed to be selected.
SECTION FIVE: DISTRIBUTIONS AND LOANS
PART A. ROLLOVERS DISREGARDED IN INVOLUNTARY CASH-OUTS.
Will rollover contributions be included in determining the value of a
Participant's Vested Individual Account for purposes of the Plan's
involuntary cash-out rules (select one)?
OPTION 1: X Yes
OPTION 2: No
If the Employer selected Option 2, the election shall apply with respect
to distributions made after ____________ (ENTER A DATE NO EARLIER THAN
DECEMBER 31, 2001) with respect to Participants who separated from
service after ____________ (ENTER A DATE (MAY BE EARLIER THAN DECEMBER
31, 2001.))
NOTE: If no option is selected, Option 2 shall be deemed to be selected
PART B. DISTRIBUTION UPON SEVERANCE FROM EMPLOYMENT.
Will Section 5, Part B of the Basic Plan Document Amendment apply?
OPTION 1: X Yes, regardless of when the severance from employment
occurred.
OPTION 2: Yes, for severances from employment occurring (enter date.)
after _________.
OPTION 3: No.
If either Option 1 or Option 2 is selected, such provisions shall apply
to distributions occurring after 12/31/2001 (ENTER A DATE NO EARLIER THAN
DECEMBER 31, 2001.)
NOTE: IF NO OPTION IS SELECTED, OPTION 1 SHALL BE DEEMED TO BE SELECTED.
SIGNATURE OF TRUSTEE(S)
Name of Trustee: Delaware Management Trust Company
Address: 2005 Market Street, 5th Floor, Philadelphia, PA 19103
Telephone: 800-362-7500
Signature _________________________ Title Trust Officer________________
Name of Trustee__________________________________________________________
Address__________________________________________________________________
Telephone________________________________________________________________
Signature _____________________________________ Title__________________
SIGNATURE OF EMPLOYER
1. I ACKNOWLEDGE THAT I HAVE RELIED UPON MY OWN ADVISORS REGARDING THE
COMPLETION OF THIS AMENDMENT AND THE LEGAL AND TAX IMPLICATIONS OF
AMENDING THIS PLAN;
2. I UNDERSTAND THAT MY FAILURE TO PROPERLY COMPLETE THIS AMENDMENT MAY
RESULT IN DISQUALIFICATION OF THE PLAN; AND
3. I HAVE RECEIVED A COPY OF THIS AMENDMENT.
Signature of Adopting Employer______________________ Date Signed_____________
Type Name __________________________________________ Title __________________
NOTE: In order to obtain reliance with respect to plan qualification, the
Employer may be required to apply to the Employee Plans Determinations of the
Internal Revenue Service for a determination letter.
FLEXIBLE 401(K) PLAN
NONSTANDARDIZED SAFE HARBOR ADOPTION AGREEMENT
EMPLOYER INFORMATION
NAME OF ADOPTING EMPLOYER: Peoples State Bank
ADDRESS: 1905 W. Stewart Avenue, P.O. Box 1686
CITY: Wausau STATE: WI ZIP: 54401
TELEPHONE: 715-842-2191 ADOPTING EMPLOYER'S FEDERAL TAX IDENTIFICATION NUMBER:
39-0987942
NAME OF PLAN: Peoples State Bank Profit Sharing 401(k) Plan
PLAN SEQUENCE: Number 002 ADOPTING EMPLOYER'S FISCAL YEAR END (SPECIFY MONTH
AND DAY): 12/31
TYPE OF BUSINESS: C Corporation
SECTION ONE: EFFECTIVE DATES
Complete Part A or B
PART B. RESTATEMENT DATE
This is an amendment and restatement of an existing qualified plan (a
Prior Plan).
The Prior Plan was initially effective on 10/01/1989
The Effective Date of this restatement is 10/01/2003
SECTION TWO: ELIGIBILITY
Complete Parts A and B
PART A. AGE AND YEARS OF ELIGIBILITY SERVICE REQUIREMENT
1. EMPLOYER PROFIT SHARING CONTRIBUTIONS
AGE REQUIREMENT. An Employee will be eligible to become a
Participant in the Plan for purposes of receiving an allocation of
any Employer Profit Sharing Contribution made pursuant to Section
Three of the Adoption Agreement after attaining age 21 (no more
than 21).
YEARS OF ELIGIBILITY SERVICE REQUIREMENT. An Employee will be
eligible to become a Participant in the Plan for purposes of
receiving an allocation of any Employer Profit Sharing Contribution
made pursuant to Section Three of the Adoption Agreement after
completing 1 (enter 0, 1, 2 or any fraction less than 2) Years of
Eligibility Service.
2. ELECTIVE DEFERRALS
AGE REQUIREMENT. An Employee will be eligible to become a
Contributing Participant (and thus be eligible to make Elective
Deferrals) after attaining age 21 (no more than 21).
YEARS OF ELIGIBILITY SERVICE REQUIREMENT. An Employee will be
eligible to become a Contributing Participant in the Plan (and thus
be eligible to make Elective Deferrals) after completing 1 (enter
0, 1 or any fraction less than 1) Years of Eligibility Service.
3. MATCHING CONTRIBUTIONS
AGE REQUIREMENT. If Matching Contributions (or Qualified Matching
Contributions, if applicable) will be made to the Plan, a
Contributing Participant will be eligible to receive Matching
Contributions (or Qualified Matching Contributions, if applicable)
after attaining age 21 (no more than 21).
YEARS OF ELIGIBILITY SERVICE REQUIREMENT. If Matching Contributions
(or Qualified Matching Contributions, if applicable) will be made
to the Plan, a Contributing Participant will be eligible to
Page 2 of 11
receive Matching Contributions (or Qualified Matching
Contributions, if applicable) after completing 1 (enter 0, 1, 2 or
any fraction less than 2) Years of Eligibility Service
PART B. UNIVERSAL ELIGIBILITY CRITERIA
1. EMPLOYEES EMPLOYED AS OF EFFECTIVE DATE
Will an Employee employed as of the Effective Date of this Plan who
has not otherwise met the requirements of Part A above be
considered to have met those requirements as of the Effective Date
(select one)?
OPTION 2: No.
2. EXCLUSION OF CERTAIN CLASSES OF EMPLOYEES
An Employee will be eligible to become Participant in the Plan
unless such Employee is (select any that apply):
C. Employees who became Employees as the result of a transaction
under Section 4 1 0(b)(6)(C) of the Code. Such Employees will be
excluded during the period beginning on the date of the
transaction and ending on the last day of the first Plan Year
beginning after the date of die transaction. A transaction under
Section 410(b)(6)(C) of the Code is an asset or stock
acquisition, merger, or similar transaction involving a change
in the employer of the employees of a trade or business.
F. Incorrectly determined to be other than an Employee of the
Employer (i.e., an independent contractor).
3. HOURS REQUIRED FOR ELIGIBILITY PURPOSES
A. 1000 Hours of Service (no more than 1, 000) shall be required to
constitute a Year of Eligibility Service.
B. 500 Hours of Service (no more than 500 but less than the number
specified in item 3(a), above) must be exceeded to avoid a Break
in Eligibility Service.
4. ENTRY DATES
The Entry Dates for participation shall be (select one):
OPTION 2: Other (specify) - the first do of the Plan Year and the
first day of the fourth, seventh or tenth month of the
Plan Year.
SECTION THREE: CONTRIBUTIONS
Complete Parts A through H
PART A. EMPLOYER PROFIT SHARING CONTRIBUTIONS
1. CONTRIBUTION FORMULA (select one)
OPTION 1: Discretionary Formula. For each Plan Year the Employer
will contribute an amount to be determined from year to
year.
2. ALLOCATION FORMULA (select one):
OPTION 1: Pro Raft Formula. Employer Profit Sharing Contributions
shall be allocated to the Individual Accounts of
Qualifying Participants in the ratio that each Qualifying
Participant's Compensation for the Plan Year bears to the
total Compensation of all Qualifying Participants for the
Plan Year.
3. QUALIFYING PARTICIPANTS
A Participant will be a Qualifying Participant and thus entitled to
share in the Employer Profit Sharing Contribution for any Plan Year
only if the Participant is a Participant who satisfies all of the
eligibility requirements in Section Two of the Adoption Agreement
regarding Employer Profit Sharing Contributions on at least one day
of such Plan Year and satisfies the following additional conditions
(select one or more):
Page 3 of 11
OPTION 2: Hours of Service Requirement. The Participant completes
At least 1000 (not more than 1000) Hours of Service
during the Plan Year. However, this condition will be
waived for the following reason(s) (select at least one):
The Participant's Death.
The Participant's Termination of Employment after having
incurred a Disability.
The Participant's Termination of Employment after having
reached Normal Retirement Age.
OPTION 3: Last Day Requirement. The Participant is an Employee of
the Employer on the last day of the Plan Year. However,
this condition will be waived for the following reason(s)
(select at least one):
The Participants Death.
The Participant's Termination of Employment after having
incurred a Disability.
The Participant's Termination of Employment after having
reached Normal Retirement Age.
4. CONTRIBUTIONS TO DISABLED PARTICIPANTS
Will a Participant who has incurred a Disability be entitled to an
Employer Profit Sharing Contribution pursuant to Section 3.01(B)(1)
of the Plan (select one)?
OPTION 2: No.
5. ONE-TIME IRREVOCABLE ELECTIONS
May an Employee make a one-time irrevocable election, as described
in Section 3.02 of the Plan, upon first becoming eligible to
participate in the Plan to have the Employer make Employer Profit
Sharing Contributions to the Plan on such Employee's behalf (select
one)?
OPTION 2: No.
PART B. ELECTIVE DEFERRALS
1. AUTHORIZATION OF ELECTIVE DEFERRALS
Will Elective Deferrals be permitted under this Plan (select one)?
OPTION 1: Yes.
2. LIMITS ON ELECTIVE DEFERRALS
If Elective Deferrals are permitted under the Plan, a Contributing
Participant may elect under a salary reduction agreement to have
his or her Compensation reduced by an amount as described below
(select one):
OPTION 1: An amount equal to a percentage of the Contributing
Participant's Compensation from 1 percent to 50 percent
in increments of 1 percent.
3. SEPARATE DEFERRAL ELECTION FOR BONUSES
Instead of or in addition to making Elective Deferrals through
payroll deduction, may a Contributing Participant be permitted to
make a separate deferral election to contribute to the Plan, as an
Elective Deferral, part or all of a bonus rather than receive such
bonus in cash (select one)?
OPTION 2: No.
4. CLAIMING EXCESS ELECTIVE DEFERRALS
A Participant who claims Excess Elective Deferrals for the
preceding calendar year must submit his or her claim in writing to
the Plan Administrator by (select one):
OPTION 1: March 1
5. AUTOMATIC ELECTIVE DEFERRALS
A. AUTHORIZATION OF AUTOMATIC ELECTIVE DEFERRALS
If an Employee who has met the eligibility requirements set
forth in Section Two, Part B of the Adoption Agreement fails
to provide the Employer a salary reduction agreement, will a
Page 4 of 11
portion of such eligible Employee's Compensation be
automatically withheld and contributed to the Plan as an
Elective Deferral (select one)?
OPTION 2: No.
PART C. MATCHING CONTRIBUTIONS
1. AUTHORIZATION OF MATCHING CONTRIBUTIONS
Will the Employer make Matching Contributions to the Plan on behalf
of a Qualifying Contributing Participant (select one)?
OPTION 1: Yes, but only with respect to a Contributing
Participant's Elective Deferrals.
2. MATCHING CONTRIBUTION FORMULA
If the Employer will make Matching Contributions, then the amount
of such Matching Contributions made on behalf of a Qualifying
Contributing Participant each Plan Year shall be (select one):
OPTION 1: An amount equal to 50 percent of such Contributing
Participant's Elective Deferral (and/or Nondeductible
Employee Contribution, if applicable) which does not
exceed 6 percent of the Contributing Participant's
Compensation.
4. QUALIFYING CONTRIBUTING PARTICIPANTS
A Contributing Participant who satisfies the eligibility
requirements described in Section Two of the Adoption Agreement
regarding Elective Deferrals and Matching Contributions will be a
Qualifying Contributing Participant and thus entitled to share in
Matching Contributions for any Plan Year only if the Participant is
a Contributing Participant and satisfies the following additional
conditions (select one or more):
OPTION 1: No Additional Conditions.
PART D. QUALIFIED NONELECTIVE CONTRIBUTIONS
1. QUALIFIED NONELECTIVE CONTRIBUTION FORMULA
For each Plan Year, the Employer may contribute an amount to be
determined from year to year.
2. ALLOCATION OF QUALIFIED NONELECTIVE CONTRIBUTIONS
Allocation of Qualified Nonelective Contributions to Participants
entitled thereto shall be made (select one):
OPTION 1: In the ratio which each non-Highly Compensated Employee
Participant's Compensation for the applicable Plan Year
bears to the total Compensation of all non-Highly
Compensated Employee Participants for such Plan Year.
PART F. SAFE HARBOR CODA CONTRIBUTIONS
A Plan intending to satisfy the requirements of Sections 401(k)(12) and
401(m)(11) of the Code generally must satisfy such requirements,
including the notice requirement, for the entire Plan Year. See Notice
98-52, 1998-46 I.R.B. 16, Notice 2000-3, 2000-4 I.R.B. 413, and Rev.
Proc. 2000-20, 2000-6 I.R.B. 553, for more information.
1. APPLICATION OF SAFE HARBOR CODA
Will the safe harbor CODA provisions of Section 3.15 of the Plan
apply (select one)?
OPTION 2: No.
PART G. OTHER CONTRIBUTIONS
1. ROLLOVER CONTRIBUTIONS
May an Employee make rollover contributions to the Plan pursuant to
Section 3.03 of the Plan (select one)?
OPTION 3: Yes, but only after becoming a Participant.
Page 5 of 11
2. TRANSFER CONTRIBUTIONS
May an Employee make transfer contributions to the Plan pursuant to
Section 3.04 of the Plan (select one)?
OPTION 3: Yes, but only after becoming a Participant.
3. NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS
May an Employee make Nondeductible Employee Contributions pursuant
to Section 3.08 of the Plan (select one)?
OPTION 2: No.
4. PARTICIPANTS ENTITLED TO RECEIVE MINIMUM ALLOCATION
Any minimum allocation required pursuant to Section 3.01 (E) of the
Plan shall be allocated to the Individual Accounts of (select one):
OPTION 1: Participants who are non-Key Employees.
5. TOP-HEAVY RATIO
For purposes of establishing the Present Value of benefits under a
defined benefit plan to compute the top-heavy ratio as described in
Section 7.19(B) of the Plan, any benefit shall be discounted only
for mortality and interest based on the following (select one):
OPTION 1: Not applicable because the Employer has not maintained a
defined benefit plan.
6. MINIMUM ALLOCATION OR BENEFIT
For any Plan Year with respect to which this Plan is a Top-Heavy
Plan, any minimum allocation required pursuant to Section 3.01(E)
of the Plan shall be made (select one):
OPTION 1: To this Plan.
PART H. ADP AND ACP TESTING ALTERNATIVES
CURRENT YEAR TESTING METHOD
The testing method used for purposes of the ADP and ACP tests under this
Plan shall be (select one):
OPTION 1: Prior Year Testing Method.
SECTION FOUR: VESTING AND FORFEITURES
Complete Parts A through G
PART A. VESTING SCHEDULE FOR EMPLOYER PROFIT SHARING CONTRIBUTIONS AND MATCHING
CONTRIBUTIONS
A Participant shall become Vested in his or her Individual Account
derived from Employer Profit Sharing Contributions and Matching
Contributions, if applicable, made pursuant to Section Three of the
Adoption Agreement as follows (select one vesting schedule for Employer
Profit Sharing Contributions and one vesting schedule for Matching
Contributions, if applicable).
1. CURRENT VESTING SCHEDULE
YEARS OF
VESTING VESTED PERCENTAGE
SERVICE
Less than One 0%
1 0%
2 20%
3 40%
4 60%
5 80%
6 100%
7 100%
Page 6 of 11
PART B. TOP-HEAVY VESTING SCHEDULE
Pursuant to Section 4.01 (B) of the Plan, the vesting schedule that will
apply when this Plan is a Top-Heavy Plan (unless the Plan's regular
vesting schedule provides for more rapid vesting) shall be (select one):
OPTION 1: 6 Year Graded.
PART C. HOURS REQUIRED FOR VESTING PURPOSES
1. 1000 Hours of Service (no more than 1,000) shall be required to
constitute a Year of Vesting Service.
2. 500 Hours of Service (no more than 500 but less than the number
specified in this Section Four, Part C, item 1, above) must be
exceeded to avoid
a Break in Vesting Service.
PART E. ALLOCATION OF FORFEITURES OF EMPLOYER PROFIT SHARING CONTRIBUTIONS
Forfeitures shall be (select one):
OPTION 1: Allocated to the individual Accounts of the Participants
specified below in the manner described in Section 3.01(B) of
the Plan (for Employer Profit Sharing Contributions).
The Participants entitled to receive allocations of such
Forfeitures shall be (select one):
SUBOPTION (A): Qualifying Participants.
PART F. ALLOCATION OF FORFEITURES OF MATCHING CONTRIBUTIONS
Forfeitures of Matching Contributions shall be (select one):
OPTION 1: Allocated, after all other Forfeitures under the Plan, to each
Participant's Individual Account in the ratio which each
Participant's Compensation for the Plan Year bears to the total
Compensation of all Participants for such Plan Year.
The Participants entitled to receive allocations of such
Forfeitures shall be (select one):
SUBOPTION (A): Qualifying Contributing Participants.
PART G. ALLOCATION OF FORFEITURES OF EXCESS AGGREGATE CONTRIBUTIONS
Forfeitures of Excess Aggregate Contributions shall be (select one):
OPTION 2: Applied to reduce Employer Contributions.
SECTION FIVE: DISTRIBUTIONS AND LOANS
Complete Parts A through C
PART A. DISTRIBUTABLE EVENTS (Answer each of the following items.)
1. TERMINATION OF EMPLOYMENT BEFORE NORMAL RETIREMENT AGE
May a Participant who has not reached Normal Retirement Age request
a distribution from the Plan upon Termination of Employment (select
one)?
OPTION 1: Yes.
2. DISABILITY
May a Participant who has incurred a Disability request a
distribution from the Plan (select one)?
OPTION 1: Yes.
3. ATTAINMENT OF NORMAL RETIREMENT AGE
May a Participant who has attained Normal Retirement Age but has
not incurred a Termination of Employment request a distribution
from the Plan (select one)?
OPTION 1: Yes.
4. ATTAINMENT OF AGE 59%
May a Participant who has attained age 59 1/2 request a
distribution from the Plan of that portion of the Participant's
Individual Account attributable to the following types of
contributions while still employed by the Employer (select one)?
Employer Profit Sharing Contributions and Matching Contributions
Page 7 of 11
OPTION 2: Yes, but only with respect to a Participant who is 100
percent Vested in his or her Individual Account
attributable to the type of contribution that will be
withdrawn.
Elective Deferrals
OPTION 1: Yes.
5. IN-SERVICE WITHDRAWALS OF EMPLOYER PROFIT SHARING CONTRIBUTIONS AND
MATCHING CONTRIBUTIONS
May a Participant request a distribution from die Plan of that
portion of the Participant's Individual Account attributable to
Employer Profit Sharing Contributions and Matching Contributions
(if applicable) pursuant to Section 5.01(A)(4) of the Plan (select
one)?
OPTION 5: No.
6. WITHDRAWALS OF ROLLOVER CONTRIBUTIONS
May an Employee request a distribution of his or her rollover
contributions at any time?
OPTION 1: Yes.
7. WITHDRAWALS OF TRANSFER CONTRIBUTIONS
May an Employee request a distribution of his Or her transfer
contributions at any time?
OPTION 1: Yes.
8. HARDSHIP WITHDRAWALS OF ELECTIVE DEFERRALS
May a Participant request a distribution of his or her Elective
Deferrals on account of hardship pursuant to Section 5.01 (A)(6) of
the Plan?
OPTION 1: Yes.
9. LOANS
May a Participant request a loan pursuant to Section 5.19 of the
Plan?
OPTION 1: Yes.
PART B. FORM OF DISTRIBUTION (Answer each of the following items.)
1. LUMP SUM
May a Participant request a distribution of the Vested portion of
his or her Individual Account in a lump sum, subject to Section
5.02(C) of the Plan (select one)?
OPTION 1: Yes.
2. INSTALLMENT PAYMENTS
May a Participant request a distribution of the Vested portion of
his or her Individual Account over a period not to exceed the life
expectancy of the Participant or the joint and last survivor life
expectancy of the Participant and his or her designated
Beneficiary, subject to Section 5.02(C) of the Plan (select one)?
OPTION 1: Yes.
3. ANNUITY CONTRACTS
May a Participant apply the Vested portion of his or her Individual
Account toward the purchase of an annuity contract, subject to
Section 5.02(C) of the Plan (select one)?
OPTION 1: Yes.
4. INVOLUNTARY CASHOUTS
An Eligible Rollover Distribution that exceeds $1,000 but does not
exceed $5,000 will be paid in the following manner pursuant to
Sections 5.02 and 5.04 of the Plan (select one):
OPTION 1: a single sum.
Page 8 of 11
PART C. RETIREMENT EQUITY ACT SAFE HARBOR
Will the safe harbor provisions of Section 5.13 (E) of die Plan apply
(select one)?
OPTION 2: No.
SURVIVOR ANNUITY PERCENTAGE (Complete only if Option 2 is selected.)
The survivor annuity portion of the Qualified Joint and Survivor Annuity
shall be a percentage equal to 50 percent (at least 50 percent but no
more than 100 percent) of the amount paid to the Participant prior to his
or her death.
SECTION SIX: DEFINITIONS
Complete Parts A through O
PART A. PLAN YEAR MEANS
OPTION 2: The calendar year.
PART B. LIMITATION YEAR MEANS
OPTION 1: The Plan Year.
PART C. HOURS OF SERVICE EQUIVALENCIES
Service will be determined on the basis of (select one):
OPTION 5: Months worked. An Employee will be credited with 190 Hours of
Service if under the definition of Hours of Service such
Employee would be credited with at least one Hour of Service
during the month.
PART D. ELAPSED TIME METHOD
In lieu of tracking Hours of Service of Employees, will the elapsed time
method described under the definition of Hours of Service be used (select
one)?
OPTION 1: No.
PART E. GENERAL DEFINITION OF COMPENSATION
Compensation will mean all of each Participant's (select one):
OPTION 1: W-2 wages.
PART F. DETERMINATION PERIOD
Compensation shall be determined over the following applicable period
(select one):
OPTION 1: The Plan Year.
PART G. ELECTIVE DEFERRALS AND COMPENSATION
Compensation shall include Employer Contributions made pursuant to a
salary reduction agreement which are not includible in the gross income
of the Employee under Sections 125, 132(f)(4), 402(e)(3), 402(h)(1)(B)
and 403(b) of the Code (select one):
OPTION 1: Yes.
PART H. PRE-ENTRY DATE COMPENSATION
Unless a different definition of Compensation is required by either the
Code or ERISA, for the Plan Year in which an Employee enters the Plan,
the Employee's Compensation which shall be taken into account for
purposes of the Plan shall be (select one):
OPTION 1: The Employee's Compensation only from the Entry Date,
applicable to the particular type of contribution, on which the
Employee became a Participant in the Plan.
PART J. NORMAL RETIREMENT AGE
The Normal Retirement Age under the Plan shall be (select and complete
one):
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OPTION 1: Age 62 (not to exceed 65 or such later age as may be allowed
under Section 411(a)(8) of the Code).
PART K. EARLY RETIREMENT AGE
The Early Retirement Age under the Plan shall be (select one):
OPTION 1: An Early Retirement Age is not applicable under the Plan.
PART L. VALUATION DATE
The Plan Valuation Date shall be (select one):
OPTION 1: Daily.
PART M. HIGHLY COMPENSATED EMPLOYEE
1. TOP PAID GROUP ELECTION
For purposes of determining who is a Highly Compensated Employee
under the Plan, the top paid group election shall apply (select
one).
OPTION 2: No.
2. CALENDAR YEAR DATA ELECTION:
For purposes of determining who is a Highly Compensated Employee
(other than a five percent owner) under the Plan, the calendar year
data election shall apply (select one).
OPTION 1: Yes.
PART N. DISABILITY
For purposes of this Plan, Disability shall mean (select one):
OPTION 1: The inability to engage in any substantial, gainful activity by
reason of any medically determinable physical or mental
impairment that can be expected to result in death or which has
lasted or can be expected to last for a continuous period of
not less than 12 months.
PART O. ELIGIBILITY COMPUTATION PERIOD
An Employee's Eligibility Computation Periods subsequent to his or her
initial Eligibility Computation Period shall be (select one):
OPTION 2: The Plan Year commencing with the Plan Year beginning during
his or her initial Eligibility Computation Period.
SECTION SEVEN: MISCELLANEOUS
Complete Parts A and B
PART A. PARTICIPANT DIRECTION
Will Participants be responsible for directing the investment of their
Plan assets pursuant to Section 7.22(B) of the Plan (select one)?
OPTION 1: Yes.
PART B. PERMISSIBLE INVESTMENTS
The assets of the Plan shall be invested only in those investments
described below (to be completed by the Prototype Sponsor): Those
investments made available to the Plan by the Prototype Sponsor and as
selected by die Employer from time to time.
SECTION EIGHT: TRUSTEE AND CUSTODIAN
Complete Parts A and B (as applicable)
PART B. TRUSTEE (This Part B must generally be completed unless the Plan covers
one or more Self-Employed Individuals or satisfies another exception
under Section 403(b) of ERISA. Select one)
OPTION 1: Financial Organization as Trustee
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The Trustee of this Plan shall be a: Directed Trustee
NAME OF TRUSTEE: Delaware Management Trust Company
ADDRESS: 2005 Market Street, 5th Floor, Philadelphia, PA 19103
TELEPHONE: 800-362-7500
SECTION NINE: EMPLOYER SIGNATURE
Important: Please read before signing
PROTOTYPE SPONSOR
NAME OF PROTOTYPE SPONSOR: Retirement Financial Services, Inc.
ADDRESS: 2005 Market Street 5th Floor, Philadelphia, PA 19103
TELEPHONE: 800-362-7500
X Check here if there is an attachment(s) that applies to this Plan (If the
box is checked, please describe the attachment(s) below.)
EGTRRA Model Amendment; Amendment #1 to the Peoples State Bank Profit Sharing
401(k) Plan
SECTION TEN: REMEDIAL AMENDMENT PERIOD PLAN ADMINISTRATION
Complete Section 10 only if the Plan is being restated to comply with GUST
PART D. REQUIRED MINIMUM DISTRIBUTION
1. REQUIRED BEGINNING DATE. Effective the first day of the 1997 (enter
year) Plan Year, the definition of Required Beginning Date with
respect to this Plan was amended to (select one):
OPTION 3: the later of the April I of the calendar year following
the calendar year in which the Participant attains age 70
1/2 or retires except that distributions to a five-percent
owner must commence by the April I of the calendar year
following the calendar year in which the Participant
attains age 70 1/2.
2. TRANSITION RULES. To facilitate the amendment to the definition of
Required Beginning Date, one or more of the following options must
be selected if Option 3, item 1, above was selected. Option 3,
below, must be selected to the extent that there would have been an
elimination of a preretirement age 70 1/2 distribution option for
Employees older than those listed in item 1 above.
OPTION 1: Any Participant who attained age 70 1/2 in years after
1995 was permitted to defer distributions until the
calendar year following the calendar year in which the
Participant retired.
OPTION 2: Any Participant attaining age 70 1/2 in years prior to
1997 was permitted to stop distributions and recommence
by the April 1 of the calendar year following the year in
which the Participant retires. With respect to such
Participants, there is (select one):
SUBOPTION (A):a new annuity starting date upon
recommencement,
OPTION 3: The preretirement age 70 1/2 distribution option was only
eliminated with respect to Employees who reached age
70 1/2 in or after a calendar year that begins after the
later of December 31, 1998, or the adoption date of this
amendment.
3. CALCULATIONS. For purposes of determining a Participant's required
minimum distribution, in what calendar year did the Employer adopt
the 2001 proposed regulations under Section 401(a)(9) of the Code?
2001
PART E. ANNUAL ADDITIONS TESTING
The 1.0 test described in Section 415(e) of the Code did not apply for
Plan Years beginning on or after January 1, 2000. In addition, the Plan
did not apply the rule requiring adjustment of the $30,000 annual
additions limit to one-fourth of the defined benefit limit for Plan Years
beginning on or after January 1, 1995.
Page 11 of 11
PART F. FAMILY AGGREGATION
The family aggregation rules with respect to coverage and
nondiscrimination tests and allocations of Employer Contributions to the
Plan did not apply for Plan Years beginning on or after January 1, 1997.
PART G. COMPENSATION
The definition of Compensation with respect to annual additions testing
under Section 415 of the Code was amended to gross Compensation for Plan
Years beginning on or after January 1, 1998.