Exhibit 10.4
Wayne Savings 401(k) Retirement Plan
Non-Standardized 401(k) Profit Sharing Plan
ADOPTION AGREEMENT FOR
EMPLOYEE BENEFIT COMPLIANCE SERVICES, INC. REGIONAL PROTOTYPE
NON-STANDARDIZED 401 (K) PROFIT SHARING
PLAN AND TRUST
The undersigned Employer adopts Employee Benefit Compliance Services, Inc.
Regional Prototype Prototype Non-Standardized 401 (k) Profit Sharing Plan and
Trust and elects the following provisions:
CAUTION: Failure to properly fill out this Adoption Agreement may result in
disqualification of the Plan.
EMPLOYER INFORMATION
(An amendment to the Adoption Agreement is not needed solely to reflect a change
in the information in this Employer Information Section.)
1. EMPLOYER'S NAME, ADDRESS AND TELEPHONE NUMBER
Name: Wayne Savings Community Bank
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Address: 151 North Market Street
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Street
Wooster Ohio 44691
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City State Zip
Telephone: (330) 264-5767
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2. EMPLOYER'S TAXPAYER IDENTIFICATION NUMBER 34-0606020
3. TYPE OF ENTITY
a. [X] Corporation (including Tax-exempt or Non-profit Corporation)
b. [ ] Professional Service Corporation
c. [ ] S Corporation
d. [ ] Limited Liability Company that is taxed as:
1. [ ] a partnership or sole proprietorship
2. [ ] a Corporation
3. [ ] an S Corporation
e. [ ] Sole Proprietorship
f. [ ] Partnership (including Limited Liability)
g. [ ] Other:__________________________________________________________
AND, the Employer is a member of (select all that apply):
h. [X] a controlled group
i. [ ] an affiliated service group
4. EMPLOYER FISCAL YEAR means the 12 consecutive month period:
Beginning on April 1st (e.g., January 1st)
--------------------------
month day
and ending on March 31st
--------------------------
month day
PLAN INFORMATION
(An amendment to the Adoption Agreement is not needed solely to reflect a change
in the information in Questions 9. through 11.)
5. PLAN NAME:
Wayne Savings 401 (k) Retirement Plan
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6. EFFECTIVE DATE
a. [ ] This is a new Plan effective as of ________ (hereinafter called
the "Effective Date").
b. [ ] This is an amendment and restatement of a previously established
qualified plan of the Employer which was originally effective _______
(hereinafter called the "Effective Date"). The effective date of this
amendment and restatement is
c. [X] FOR GUST RESTATEMENTS: This is an amendment and restatement of a
previously established qualified plan of the Employer to bring the
Plan into compliance with GUST (GATT, USERRA, SBJPA and TRA `97). The
original Plan effective date was April 1, 1998 (hereinafter called the
"Effective Date"). Except as specifically provided in the Plan, the
effective date of this amendment and restatement is March 1, 2002.
(May enter a restatement date that is the first day of the current
Plan Year. The Plan contains appropriate retroactive effective dates
with respect to provisions for the appropriate laws.)
7. PLAN YEAR means the 12 consecutive month period:
Beginning on January 1st (e.g., January 1st)
--------------------------
month day
and ending on December 31st
--------------------------
month day
EXCEPT that there will be a Short Plan Year:
a. [X] N/A
b. [ ] beginning on _________________________ (e.g., July 1, 2000)
month day year
and ending on _________________________
month day year
8. VALUATION DATE means:
a. [X] Every day that the Trustee, any transfer agent appointed by the
Trustee or the Employer, and any stock exchange used by such agent are
open for business (daily valuation).
b. [ ] The last day of each Plan Year.
c. [ ] The last day of each Plan Year half (semi-annual).
d. [ ] The last day of each Plan Year quarter.
e. [ ] Other (specify day or dates): (must be at least once each Plan
Year).
9. PLAN NUMBER assigned by the Employer
a. [ ] 001
b. [ ] 002
c. [X] 003
d. [ ] Other: __________________________________________________________
10. TRUSTEES:
a. [X] Individual Trustee(s) who serve as discretionary Trustee(s) over
assets not subject to control by a corporate Trustee.
Name(s) Title(s)
Charles F. Finn
-------------------------- ------------------------------------
Michael C. Anderson
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Address and Telephone number
1. [X] Use Employer address and telephone number.
2. [ ] Use address and telephone number below:
Address: __________________________________________________________________
Street
______________________________ ___________ _________
City State Zip
Telephone:_____________________________
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b. [ ] Corporate Trustee
Name: ________________________________________________________________
Address: _____________________________________________________________
Street
_________________________ ___________ _________
City State Zip
Telephone:_________________________
AND, the corporate Trustee shall serve as:
1. [ ] a directed (nondiscretionary) Trustee over all Plan assets
except for the following:
_________________________________________________________________
2. [ ] a discretionary Trustee over all Plan assets except for the
following:
_________________________________________________________________
AND, shall a separate trust agreement be used with this Plan?
c. [ ] Yes
d. [X] No
NOTE: If Yes is selected, an executed copy of the trust agreement
between the Trustee and the Employer must be attached to
this Plan. The Plan and trust agreement will be read and
construed together. The responsibilities, rights and powers
of the Trustee shall be those specked in the trust agreement.
11. PLAN ADMINISTRATOR'S NAME, ADDRESS AND TELEPHONE NUMBER:
(If none is named, the Employer will become the Administrator.)
Address and Telephone number
a. [X] Use Employer address and telephone number.
b. [ ] Use address and telephone number below:
Name: _________________________________________________________________
Address: _________________________________________________________________
Street
_____________________________ ___________ _________
City State Zip
Telephone:_____________________________
12. CONSTRUCTION OF PLAN
This Plan shall be governed by the laws of the state or commonwealth where
the Employer's (or, in the case of a corporate Trustee, such Trustee's)
principal place of business is located unless another state or commonwealth
is specified:
______________________________________________________
ELIGIBILITY REQUIREMENTS
13. ELIGIBLE EMPLOYEES (Plan Section 1.18)
FOR ALL PURPOSES OF THE PLAN (EXCEPT AS ELECTED IN d. or e. BELOW FOR
EMPLOYER CONTRIBUTIONS) means all Employees (including Leased Employees)
EXCEPT:
NOTE: If different exclusions apply to Elective Deferrals than to other
Employer contributions, complete this part a.-b. for the Elective
Deferral component of the Plan.
a. [ ] N/A. No exclusions
b. [X] The following are excluded, except that if b.3. is selected, such
Employees will be included (select all that apply)
1. [X] Union Employees (as defined in Plan Section 1.18).
2. [X] Non-resident aliens (as defined in Plan Section 1.18).
3. [ ] Employees who became Employees as the result of a "Code
Section 410(b)(6)(C) transaction" (as defined in Plan
Section 1.18).
4. [ ] Salaried Employees
5. [ ] Highly Compensated Employees
6. [ ] Leased Employees
7. [ ] Other: ________________________________________________
HOWEVER, different exclusions will apply (select c. OR d. and/or e.):
c. [X] N/A. The options elected in a.-b. above apply for all purposes of
the Plan.
d. [ ] For purposes of all Employer contributions (other than Elective
Deferrals and matching contributions)...
e. [ ] For purposes of Employer matching contributions...
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Non-Standardized 401(k) Profit Sharing Plan
IF d. OR e. IS SELECTED, the following exclusions apply for such purposes
(select f. or g.):
f. [ ] N/A. No exclusions,
g. [ ] The following are excluded, except that if g.3. is selected, such
Employees will be included (select all that apply):
1. [X] Union Employees (as defined in Plan Section 1.18).
2. [X] Non-resident aliens (as defined in Plan Section 1.18).
3. [ ] Employees who became Employees as the result of a "Code
Section 410(b)(6)(C) transaction" (as defined in Plan Section
1.18).
4. [ ] Salaried Employees
5. [ ] Highly Compensated Employees
6. [ ] Leased Employees
7. [ ] Other: _____________________________________________________
14. THE FOLLOWING AFFILIATED EMPLOYER (Plan Section 1.6) will adopt this Plan
as a Participating Employer (if there is more than one, or if Affiliated
Employers adopt this Plan after the date the Adoption Agreement is
executed, attach a list to this Adoption Agreement of such Affiliated
Employers including their names, addresses, taxpayer identification numbers
and types of entities):
NOTE:Employees of an Affiliated Employer that does not adopt this Adoption
Agreement as a Participating Employer shall not be Eligible Employees.
This Plan could violate the Code Section 410(b) coverage rules if all
Affiliated Employers do not adopt the Plan.
a. [ ] N/A
b. [X] Name of First Affiliated Employer: Village Savings Bank, F.S.B.
Address: 1265 S. Main Street
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Street
North Canton Ohio 44720
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City State Zip
Telephone: (330) 494-5262
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Taxpayer Identification Number: 34-1865412
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AND, the Affiliated Employer is:
c. [X] Corporation (including Tax-exempt, Non-profit or Professional
Service Corporation)
d. [ ] S Corporation
e. [ ] Limited Liability Company that is taxed as:
1. [ ] a partnership or sole proprietorship
2. [ ] a Corporation
3. [ ] an S Corporation
f. [ ] Sole Proprietorship
g. [ ] Partnership (including Limited Liability)
h. [ ] Other: __________________________________________________________
15. CONDITIONS OF ELIGIBILITY (Plan Section 3.1)
Any Eligible Employee will be eligible to participate in the Plan upon
satisfaction of the following:
NOTE: If the Year(s) of Service selected is or includes a fractional
year, an Employee will not be required to complete any specified
number of Hours of Service to receive credit for such fractional
year. If expressed in months of service, an Employee will not be
required to complete any specified number of Hours of Service in
a particular month, unless elected in b.4. or i.4. below.
ELIGIBILITY FOR ALL PURPOSES OF THE PLAN (EXCEPT AS ELECTED IN e.-k. BELOW
FOR EMPLOYER CONTRIBUTIONS) (select a. or all that apply of b., c., and
d.):
NOTE: If different conditions apply to Elective Deferrals than to other
Employer contributions, complete this part a.-d. for the Elective
Deferral component of the Plan.
a. [ ] No age or service required. (Go to e.-g. below)
b. [X] Completion of the following service requirement which is based on
Years of Service (or Periods of Service if the Elapsed Time Method is
elected):
1. [X] No service requirement
2. [ ] 1/2 Year of Service or Period of Service
3. [ ] 1 Year of Service or Period of Service
4. [ ] ________ (not to exceed 1,000) Hours of Service within
_________ (not to exceed 12) months from the Eligible
Employee's employment commencement date. If an Employee does
not complete the stated Hours of Service during the
specified time period, the Employee is subject to the Year
of Service requirement in b.3. above.
5. [ ] Other: ________________________________________________
(may not exceed one (1) Year of Service or Period of
Service)
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c. [X] Attainment of age:
1. [ ] No age requirement
2. [ ] 20 1/2
3. [X] 21
4. [ ] Other: __________ (may not exceed 21)
d. [ ] The service and/or age requirements specified above shall be
waived with respect to any Eligible Employee who was employed on
__________________ and such Eligible Employee shall enter the Plan as
of such date.
The requirements to be waived are (select one or both):
1. [ ] service requirement (will let part-time Eligible
Employees in Plan)
2. [ ] age requirement
HOWEVER, DIFFERENT ELIGIBILITY CONDITIONS WILL APPLY (select e. OR f.
and/or g.):
e. [ ] N/A. The options elected in a.-d. above apply for all purposes of
the Plan.
f. [ ] For purposes of all Employer contributions (other than Elective
Deferrals and matching contributions)...
g. [X] For purposes of Employer matching contributions...
If f. OR g. IS SELECTED, the following eligibility conditions apply for
such purposes:
h. [ ] No age or service requirements
i. [X] Completion of the following service requirement which is based on
Years of Service (or Periods of Service if the Elapsed Time Method is
elected):
1. [ ] No service requirement
2. [ ] 1/2 Year of Service or Period of Service
3. [X] 1 Year of Service or Period of Service
4. [ ] _______ (not to exceed 1,000) Hours of Service within
_________ (not to exceed 12) months from the Eligible Employee's
employment commencement date. If an Employee does not complete
the stated Hours of Service during the specified time period, the
Employee is subject to the Year of Service requirement in 0.
above.
5. [ ] 1 1/2 Years of Service or Periods of Service
6. [ ] 2 Years of Service or Periods of Service
7. [ ] Other: (may not exceed two (2) Years of Service or Periods of
Service)
NOTE: If more than one (1) Year of Service is elected 100% immediate
vesting is required.
j. [X] Attainment of age:
1. [ ] No age requirement
2. [ ] 20 1/2
3. [X] 21
4. [ ] Other: (may not exceed 21)
k. [ ] The service and/or age requirements specified above shall be
waived with respect to any Eligible Employee who was employed on
___________ and such Eligible Employee shall enter the Plan as of such
date.
The requirements to be waived are (select one or both):
1. [ ] service requirement (will let part-time Eligible Employees in
Plan)
2. [ ] age requirement
16. EFFECTIVE DATE OF PARTICIPATION (Plan Section 3.2)
An Eligible Employee who has satisfied the eligibility requirements will
become a Participant for all purposes of the Plan (except as elected in
g.-p. below for Employer contributions):
NOTE: If different entry dates apply to Elective Deferrals than to other
Employer contributions, complete this part a.-f. for the Elective Deferral
component of the Plan.
a. [ ] the day on which such requirements are satisfied.
b. [ ] the first day of the month coinciding with or next following the
date on which such requirements are satisfied.
c. [X] the first day of the Plan Year quarter coinciding with or next
following the date on which such requirements are satisfied.
d. [ ] the earlier of the first day of the seventh month or the first day
of the Plan Year coinciding with or next following the date on which
such requirements are satisfied.
e. [ ] the first day of the Plan Year next following the date on which
such requirements are satisfied. (Eligibility must be 1/2 Year of
Service (or Period of Service) or less and age must be 20 1/2 or
less.)
f. [ ] other: provided that an Eligible Employee who has satisfied the
maximum age (21) and service requirements (one (1) Year or Period of
Service) and who is otherwise entitled to participate, shall commence
participation no later than the earlier of (a) 6 months after such
requirements are satisfied, or (b) the first day of the first Plan
Year after such requirements are satisfied, unless the Employee
separates from service before such participation date.
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HOWEVER, different entry dates will apply (select g. OR h. and/or i.):
g. [X] N/A. The options elected in a.-f. above apply for all purposes of
the Plan.
h. [ ] For purposes of all Employer contributions (other than Elective
Deferrals and matching contributions)...
i. [ ] For purposes of Employer matching contributions...
IF h. OR i. IS SELECTED, the following entry dates apply for such purposes
(select one):
j. [ ] the first day of the month coinciding with or next following the
date on which such requirements are satisfied.
k. [ ] the first day of the Plan Year quarter coinciding with or next
following the date on which such requirements are satisfied.
l. [ ] the first day of the Plan Year in which such requirements are
satisfied.
m. [ ] the first day of the Plan Year in which such requirements are
satisfied, if such requirements are satisfied in the first 6 months of
the Plan Year, or as of the first day of the next succeeding Plan Year
if such requirements are satisfied in the last 6 months of the Plan
Year.
n. [ ] the earlier of the first day of the seventh month or the first day
of the Plan Year coinciding with or next following the date on which
such requirements are satisfied.
o. [ ] the first day of the Plan Year next following the date on which
such requirements are satisfied. (Eligibility must be 1/2 (or 1 1/2 if
100% immediate Vesting is selected) Year of Service (or Period of
Service) or less and age must be 20 1/2 or less.)
p. [ ] other: provided that an Eligible Employee who has satisfied the
maximum age (21) and service requirements (one (1) Year or Period of
Service (or more than one (1) year if full and immediate vesting)) and
who is otherwise entitled to participate, shall commence participation
no later than the earlier of (a) 6 months after such requirements are
satisfied, or (b) the first day of the first Plan Year after such
requirements are satisfied, unless the Employee separates from service
before such participation date.
SERVICE
17. RECOGNITION OF SERVICE WITH PREDECESSOR EMPLOYER (Plan Sections 1.57 and
1.85)
a. [X] No service with a predecessor Employer shall be recognized.
b. [ ] Service with ___________ will be recognized except as follows
(select 1. or all that apply of 2. through 4.):
1. [ ] N/A, no limitations.
2. [ ] service will only be recognized for vesting purposes.
3. [ ] service will only be recognized for eligibility
purposes.
4. [ ] service prior to _____________ will not be recognized.
NOTE: If the predecessor Employer maintained this qualified Plan,
then Years of Service (and/or Periods of Service) with such
predecessor Employer shall be recognized pursuant to Plan
Sections 1.57 and 1.85 and b.1. will apply.
18. SERVICE CREDITING METHOD (Plan Sections 1.57 and 1.85)
NOTE: If no elections are made in this Section, then the Hours of Service
Method will be used and the provisions set forth in the definition of
Year of Service in Plan Section 1.85 will apply.
ELAPSED TIME METHOD shall be used for the following purposes (select all
that apply):
a. [X] N/A. Plan only uses the Hours of Service Method.
b. [ ] all purposes. (If selected, skip to Question 19.)
c. [ ] eligibility to participate.
d. [ ] vesting.
e. [ ] sharing in allocations or contributions.
HOURS OF SERVICE METHOD shall be used for the following purposes (select
all that apply):
f. [ ] N/A. Plan only uses the Elapsed Time Method.
g. [X] eligibility to participate in the Plan. The eligibility
computation period after the initial eligibility computation period
shall...
1. [X] shift to the Plan Year after the initial computation
period.
2. [ ] be based on the date an Employee first performs an Hour
of Service (initial computation period) and subsequent
computation periods shall be based on each anniversary date
thereof.
h. [X] vesting. The vesting computation period shall be...
1. [X] the Plan Year.
2. [ ] the date an Employee first performs an Hour of Service
and each anniversary thereof.
i. [X] sharing in allocations or contributions (the computation period
shall be the Plan Year).
AND, IF THE HOURS OF SERVICE METHOD IS BEING USED, the Hours of Service
will be determined on the basis of the method selected below. Only one
method may be selected. The method selected below will be applied to
(select j. or k.):
j. [X] all Employees.
k. [ ] salaried Employees only (for hourly Employees, actual Hours of
Service will be used).
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ON THE BASIS OF:
l. [X] actual hours for which an Employee is paid or entitled to payment.
m. [ ] days worked. An Employee will be credited with ten (10) Hours of
Service if under the Plan such Employee would be credited with at
least one (1) Hour of Service during the day.
n. [ ] weeks worked. An Employee will be credited with forty-five (45)
Hours of Service if under the Plan such Employee would be credited
with at least one (1) Hour of Service during the week.
o. [ ] semi-monthly payroll periods worked. An Employee will be credited
with ninety-five (95) Hours of Service if under the Plan such Employee
would be credited with at least one (1) Hour of Service during the
semi-monthly payroll period.
p. [ ] months worked. An Employee will be credited with one hundred
ninety (190) Hours of Service if under the Plan such Employee would be
credited with at least one (1) Hour of Service during the month.
AND, a Year of Service means the applicable computation period during which
an Employee has completed at least:
q. [X] 1,000 (may not be more than 1,000) Hours of Service (if left
blank, the Plan will use 1,000 Hours of Service).
VESTING
19. VESTING OF PARTICIPANT'S INTEREST (Plan Section 6.4(b))
Vesting for Employer Contributions (except as otherwise elected in j. - q.
below for matching contributions). The vesting schedule, based on a
Participant's Years of Service (or Periods of Service if the Elapsed Time
Method is elected), shall be as follows:
a. [ ] 100% upon entering Plan. (Required if eligibility requirement is
greater than one (1) Year of Service or Period of Service.)
b. [ ] 3 Year Cliff: c. [ ] 5 Year Cliff:
0-2 years 0% 0-4 years 0%
3 years 100% 5 years 100%
d. [X] 6 Year Graded: e. [ ] 4 Year Graded:
0-1 year 0% 1 year 25%
2 years 20% 2 years 50%
3 years 40% 3 years 75%
4 years 60% 4 years 100%
5 years 80%
6 years 100%
f. [ ] 5 Year Graded: g. [ ] 7 Year Graded:
1 year 20% 0-2 years 0%
2 years 40% 3 years 20%
3 years 60% 4 years 40%
4 years 80% 5 years 60%
5 years 100% 6 years 80%
7 years 100%
h. [ ] Other - Must be at least as liberal as either c. or g. above.
Service Percentage
_______ _______
_______ _______
_______ _______
_______ _______
_______ _______
_______ _______
_______ _______
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VESTING FOR EMPLOYER MATCHING CONTRIBUTIONS
The vesting schedule for Employer matching contributions, based on a
Participant's Years of Service (or Periods of Service if the Elapsed Time
Method is elected) shall be as follows:
i. [X] N/A. There are no matching contributions subject to a vesting
schedule OR the schedule in a.-h. above shall also apply to matching
contributions.
j. [ ] 100% upon entering Plan. (Required if eligibility requirement is
greater than one (1) Year of Service or Period of Service.)
k. [ ] 3 Year Cliff
l. [ ] 5 Year Cliff
m. [ ] 6 Year Graded
n. [ ] 4 Year Graded
o. [ ] 5 Year Graded
p. [ ] 7 Year Graded
q. [ ] Other - Must be at least as liberal as either l. or p. above.
Service Percentage
_______ _______
_______ _______
_______ _______
_______ _______
_______ _______
_______ _______
_______ _______
20. FOR AMENDED PLANS (Plan Section 5.9(g))
If the vesting schedule has been amended to a less favorable schedule,
enter the pre-amended schedule below:
a. [X] Vesting schedule has not been amended, amended schedule is more
favorable in all years or prior schedule was immediate 100% vesting.
b. [ ] Pre-amended schedule:
Service Percentage
_______ _______
_______ _______
_______ _______
_______ _______
_______ _______
_______ _______
_______ _______
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21. TOP HEAVY VESTING (Plan Section 6.4(c))
If this Plan becomes a Top Heavy Plan, the following vesting schedule,
based on number of Years of Service (or Periods of Service if the Elapsed
Time Method is elected), shall apply and shall be treated as a Plan
amendment pursuant to this Plan. Once effective, this schedule shall also
apply to any contributions made before the Plan became a Top Heavy Plan and
shall continue to apply if the Plan ceases to be a Top Heavy Plan unless an
amendment is made to change the vesting schedule.
a. [X] N/A (the regular vesting schedule already satisfies one of the
minimum top heavy schedules).
b. [ ] 6 Year Graded:
0-1 year 0%
2 years 20%
3 years 40%
4 years 60%
5 years 80%
6 years 100%
c. [ ] 3 Year Cliff:
0-2 years 0%
3 years 100%
d. [ ] Other - Must be at least as liberal as either b. or c. above.
Service Percentage
_______ _______
_______ _______
_______ _______
_______ _______
_______ _______
_______ _______
_______ _______
NOTE: This Section does not apply to the account balances of any
Participant who does not have an Hour of Service after the Plan has
initially become top heavy. Such Participant's Account balance
attributable to Employer contributions and Forfeitures will be
determined without regard to this Section.
22. EXCLUDED VESTING SERVICE
a. [X] No exclusions.
b. [ ] Service prior to the Effective Date of the Plan or a predecessor
plan.
c. [ ] Service prior to the time an Employee has attained age 18.
23. VESTING FOR DEATH AND TOTAL AND PERMANENT DISABILITY
Regardless of the vesting schedule, Participants shall become fully Vested
upon (select a. or all that apply of b. and c.)
a. [ ] N/A. Apply, vesting schedule, or all contributions to the Plan are
fully Vested.
b. [X] Death.
c. [X] Total and Permanent Disability.
24. NORMAL RETIREMENT AGE ("NRA") (Plan Section 1.45) means the:
a. [X] date of a Participant's 65th birthday (not to exceed 65th).
b. [ ] later of a Participant's ____ birthday (not to exceed 65th) or the
_____ (not to exceed 5th) anniversary of the first day of the Plan
Year in which participation in the Plan commenced.
25. NORMAL RETIREMENT DATE (Plan Section 1.46) means the:
a. [ ] Participant's "NRA".
OR (select one)
b. [X] first day of the month coinciding with or next following the
Participant's "NRA".
c. [ ] first day of the month nearest the Participant's "NRA".
d. [ ] Anniversary Date coinciding with or next following the
Participant's "NRA".
e. [ ] Anniversary Date nearest the Participant's "NRA".
26. EARLY RETIREMENT DATE (Plan Section 1.15) means the:
a. [X] No Early Retirement provision provided.
b. [ ] date on which a Participant...
c. [ ] first day of the month coinciding with or next following the date
on which a Participant...
d. [ ] Anniversary Date coinciding with or next following the date on
which a Participant...
AND, if b., c., or d. is selected...
e. [ ] attains age ______.
f. [ ] attains age ______ and completes at least ______ Years of Service
(or Periods of Service) for vesting purposes.
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AND, if b., c. or d. is selected, shall a Participant become fully Vested
upon attainment of the Early Retirement Date?
g. [ ] Yes
h. [ ] No
COMPENSATION
27. COMPENSATION (Plan Section 1.11) with respect to any Participant means:
a. [X] Wages, tips and other compensation on Form W-2.
b. [ ] Section 3401 (a) wages (wages for withholding purposes).
c. [ ] 415 safe-harbor compensation.
COMPENSATION shall be based on the following determination period:
d. [X] the Plan Year.
e. [ ] the Fiscal Year coinciding with or ending within the Plan Year.
f. [ ] the calendar year coinciding with or ending within the Plan Year.
NOTE: The Limitation Year for Code Section 415 purposes shall be the same
as the determination period for Compensation unless an alternative
period is specified: ________________________ (must be a consecutive
twelve month period).
ADJUSTMENTS TO COMPENSATION
g. [ ] N/A. No adjustments.
h. [X] Compensation shall be adjusted by: (select all that apply)
1. [X] including compensation which is not currently includible
in the Participant's gross income by reason of the
application of Code Sections 125 (cafeteria plan), 132(f)(4)
(qualified transportation fringe), 402(e)(3) (401 (k) plan),
402(h)(1)(B) (simplified employee pension plan), 414(h)
(employer pickup contributions under a governmental plan),
403(b) (tax sheltered annuity) or 457(b) (eligible deferred
compensation plan).
2. [ ] excluding reimbursements or other expense allowances,
fringe benefits (cash or non-cash), moving expenses,
deferred compensation (other than deferrals specified in 1.
above) and welfare benefits.
3. [X] excluding Compensation paid during the determination
period while not a Participant in the component of the Plan
for which the definition is being used.
4. [ ] excluding overtime.
5. [ ] excluding bonuses.
6. [ ] excluding commissions.
7. [ ] other: ________________________________________________
NOTE:Options 4., 5., 6. or 7. may not be selected if an
integrated allocation formula is selected (i.e., if 33.f. is
selected). In addition, if 4., 5., 6., or 7. is selected,
the definition of Compensation could violate the
nondiscrimination rules.
HOWEVER, FOR SALARY DEFERRAL AND MATCHING PURPOSES Compensation shall be
adjusted by (for such purposes, the Plan automatically includes Elective
Deferrals and other amounts in h.1. above):
i. [X] N/A. No adjustments or same adjustments as in above.
j. [ ] Compensation shall be adjusted by: (select all that apply)
1. [ ] excluding reimbursements or other expense allowances,
fringe benefits (cash or non-cash), moving expenses,
deferred compensation (other than deferrals specified in
h.1. above) and welfare benefits.
2. [ ] excluding Compensation paid during the determination
period while not a Participant in the component of the Plan
for which the definition is being used.
3. [ ] excluding overtime
4. [ ] excluding bonuses
5. [ ] excluding commissions
6. [ ] other: ________________________________________________
CONTRIBUTIONS AND ALLOCATIONS
28. SALARY REDUCTION ARRANGEMENT - ELECTIVE DEFERRALS (Plan Section 12.2) Each
Participant may elect to have Compensation deferred by:
a. [ ] _____%.
b. [ ] up to _____%.
c. [X] from 1 % to 50 %.
d. [ ] up to the maximum percentage allowable not to exceed the limits of
Code Sections 401(k), 402(g), 404 and 415.
10
AND, Participants who are Highly Compensated Employees determined as of the
beginning of a Plan Year may only elect to defer Compensation by:
e. [X] Same limits as specified above.
f. [ ] The percentage equal to the deferral limit in effect under Code
Section 402(g)(3) for the calendar year that begins with or within the
Plan Year divided by the annual compensation limit in effect for the
Plan Year under Code Section 401(a)(17).
MAY PARTICIPANTS make a special salary deferral election with respect to
bonuses?
g. [ ] No.
h. [X] Yes, a Participant may elect to defer up to 100 % of any bonus.
----
PARTICIPANTS MAY commence salary deferrals on the effective date of
participation and on each payroll period (must be at least once each
calendar year).
Participants may modify salary deferral elections:
1. [X] As of each payroll period
2. [ ] On the first day of the month
3. [ ] On the first day of each Plan Year quarter
4. [ ] On the first day of the Plan Year or the first day of
the 7th month of the Plan Year
5. [ ] Other: (must be at least once each calendar year)
AUTOMATIC ELECTION: Shall Participants who do not affirmatively elect to
receive cash or have a specified amount contributed to the Plan
automatically have Compensation deferred?
i. [X] No.
j. [ ] Yes, by _____% of Compensation.
SHALL THERE BE a special effective date for the salary deferral component
of the Plan?
k. [X] No.
1. [ ] Yes, the effective date of the salary deferral component of the
Plan is __________ (enter month day, year).
29. SIMPLE 401(k) PLAN ELECTION (Plan Section 13.1) Shall the simple 401 (k)
provisions of Article XIII apply?
a. [X] No. The simple 401 (k) provisions will not apply.
b. [ ] Yes. The simple 401(k) provisions will apply.
30. 401(k) SAFE HARBOR PROVISIONS (Plan Section 12.8)
Will the ADP and/or ACP test safe harbor provisions be used? (select a., b.
or c.)
a. [X] No. (If selected, skip to Question 31.)
b. [ ] Yes, but only the ADP (and NOT the ACP) Test Safe Harbor
provisions will be used.
c. [ ] Yes, both the ADP and ACP Test Safe Harbor provisions will be
used.
IF c. is selected, does the Plan permit matching contributions in
addition to any safe harbor contributions elected in d. or e.
below?
1. [ ] No or N/A. Any matching contributions, other than any
Safe Harbor Matching Contributions elected in d. below, will
be suspended in any Plan Year in which the safe harbor
provisions are used.
2. [ ] Yes, the Employer may make matching contributions in
addition to any Safe Harbor Matching contributions elected
in d. below. (If elected, complete the provisions of the
Adoption Agreement relating to matching contributions (i.e.,
Questions 31. and 32.) that will apply in addition to any
elections made in d. below. NOTE: Regardless of any election
made in Question 31., the Plan automatically provides that
only Elective Deferrals up to 6% of Compensation are taken
into account in applying the match set forth in that
Question and that the maximum discretionary matching
contribution that may be made on behalf of any Participant
is 4% of Compensation.)
11
THE EMPLOYER WILL MAKE THE FOLLOWING ADP TEST SAFE HARBOR CONTRIBUTION FOR
THE PLAN YEAR:
NOTE:The ACP Test Safe Harbor is automatically satisfied if the only
matching contribution made to the Plan is either (1) a Basic Matching
Contribution or (2) an Enhanced Matching Contribution that does not
provide a match on Elective Deferrals in excess of 6% of Compensation.
d. [ ] Safe Harbor Matching Contribution (select 1. or 2. AND 3.)
1. [ ] Basic Matching Contribution. The Employer will make
Matching Contributions to the account of each "Eligible
Participant' in an amount equal to the sum of 100% of the
amount of the Participant's Elective Deferrals that do not
exceed 3% of the Participant's Compensation, plus 50% of the
amount of the Participant's Elective Deferrals that exceed
3% of the Participant's Compensation but do not exceed 5% of
the Participant's Compensation.
2. [ ] Enhanced Matching Contribution. The Employer will make
Matching Contributions to the account of each "Eligible
Participant" in an amount equal to the sum of:
a. [ ] _______ % (may not be less than 100%) of the
Participant's Elective Deferrals that do not exceed
_____% (if over 6% or if left blank, the ACP test will
still apply) of the Participant's Compensation, plus
b. [ ] _______% of the Participant's Elective Deferrals
that exceed ______% of the Participant's Compensation
but do not exceed ______% (if over 6% or if left blank,
the AC P test will still apply) of the Participant's
Compensation.
NOTE:a. and b. must be completed so that, at any rate of
Elective Deferrals, the matching contribution is at
least equal to the matching contribution receivable if
the Employer were making Basic Matching Contributions,
but the rate of match cannot increase as deferrals
increase. For example, if a. is completed to provide a
match equal to 100% of deferrals up to 4% of
Compensation, then b. need not be completed.
3. [ ] The safe harbor matching contribution will be determined
on the following basis (and Compensation for such purpose
will be based on the applicable period):
a. [ ] the entire Plan Year.
b. [ ] each payroll period.
c. [ ] all payroll periods ending with or within each
month.
d. [ ] all payroll periods ending with or within the Plan
Year quarter.
e. [ ] Nonelective Safe Harbor Contributions (select one)
1. [ ] The Employer will make a Safe Harbor Nonelective
Contribution to the account of each "Eligible Participant"
in an amount equal to ____% (may not be less than 3%) of the
Employee's Compensation for the Plan Year.
2. [ ] The Employer will make a Safe Harbor Nonelective
Contribution to another defined contribution plan maintained
by the Employer (specify the name of the other plan):
FOR PURPOSES OF THE ADP Test Safe Harbor contribution, the term "Eligible
Participant" means any Participant who is eligible to make Elective
Deferrals with the following exclusions:
f. [ ] Highly Compensated Employees.
g. [ ] Employees who have not satisfied the greatest minimum age and
service conditions permitted under Code Section 410(a).
h. [ ] Other: ___________________________________________________________
(must be a category that could be excluded under the permissive or
mandatory disaggregation rules of Regulations 1.401(k)-1(b)(3) and
1.401(m)-1(b)(3)).
SPECIAL EFFECTIVE DATE OF ADP AND ACP TEST SAFE HARBOR PROVISIONS
i. [ ] N/A. The safe harbor provisions are effective as of the later of
the Effective Date of this Plan or, if this is an amendment or
restatement, the effective date of the amendment or restatement.
j. [ ] The ADP and ACP Test Safe Harbor provisions are effective for the
Plan Year beginning: _______________________________________ (enter
the first day of the Plan Year for which the provisions are (or, for
GUST updates, were) effective and, if necessary, enter any other
special effective dates that apply with respect to the provisions).
12
31. FORMULA FOR DETERMINING EMPLOYER MATCHING CONTRIBUTIONS (Plan Section
12.1(a)(2))
NOTE:Regardless of any election below, if the ACP test safe harbor is being
used (i.e., Question 30.c. is selected), then the Plan automatically
provides that only Elective Deferrals up to 6% of Compensation are
taken into account in applying the match set forth below and that the
maximum discretionary matching contribution that may be made on behalf
of any Participant is 4% of Compensation.
a. [ ] N/A. There will not be any matching contributions (Skip to
Question 33).
b. [X] The Employer ... (select 1. or 2.)
1. [X] may make matching contributions equal to a discretionary
percentage, to be determined by the Employer, of the
Participant's Elective Deferrals.
2. [ ] will make matching contributions equal to ______% (e.g.,
50) of the Participant's Elective Deferrals, plus:
a. [ ] N/A.
b. [ ] an additional discretionary percentage, to be
determined by the Employer.
AND, in determining the matching contribution above, only
Elective Deferrals up to the percentage or dollar amount
specified below will be matched: (select 3. and/or 4. OR 5.)
3. [X] 4 % of a Participant's Compensation.
--
4. [ ] $___________.
5. [ ] a discretionary percentage of a Participant's
Compensation or a discretionary dollar amount, the
percentage or dollar amount to be determined by the Employer
on a uniform basis to all Participants.
c. [ ] The Employer may make matching contributions equal to a
discretionary percentage, to be determined by the Employer, of each
tier, to be determined by the Employer, of the Participant's Elective
Deferrals.
d. [ ] The Employer will make matching contributions equal to the sum of
_____% of the portion of the Participant's Elective Deferrals which do
not exceed _____% of the Participant's Compensation or $________ plus
_____% of the portion of the Participant's Elective Deferrals which
exceed _____% of the Participant's Compensation or $________, but does
not exceed _____% of the Participant's Compensation or $_____________.
NOTE:If c. or d. above is elected, the Plan may violate the Code Section
401(a)(4) nondiscrimination requirements if the rate of matching
contributions increases as a Participant's Elective Deferrals or Years
of Service (or Periods of Service) increase.
PERIOD OF DETERMINING MATCHING CONTRIBUTIONS Matching contributions will be
determined on the following basis (and any Compensation or dollar
limitation used in determining the match will be based on the applicable
period):
e. [X] the entire Plan Year.
f. [ ] each payroll period.
g. [ ] all payroll periods ending within each month.
h. [ ] all payroll periods ending with or within the Plan Year quarter.
THE MATCHING CONTRIBUTION MADE ON BEHALF OF ANY PARTICIPANT for any Plan
Year will not exceed:
i. [X] N/A.
j. [ ] $___________________.
MATCHING CONTRIBUTIONS WILL BE MADE ON BEHALF OF:
k. [X] all Participants.
l. [ ] only Non-Highly Compensated Employees.
SHALL THE MATCHING CONTRIBUTIONS BE QUALIFIED MATCHING CONTRIBUTIONS?
m. [ ] Yes. If elected, ALL matching contributions will be fully Vested
and will be subject to restrictions on withdrawals. In addition,
Qualified Matching Contributions may be used in either the ADP or ACP
test.
n. [X] No.
32. ONLY PARTICIPANTS WHO SATISFY THE FOLLOWING CONDITIONS WILL BE ELIGIBLE TO
SHARE IN THE ALLOCATION OF MATCHING CONTRIBUTIONS:
REQUIREMENTS FOR PARTICIPANTS WHO ARE ACTIVELY EMPLOYED AT THE END OF THE
PLAN YEAR.
a. [ ] N/A.
b. [X] No service requirement.
c. [ ] A Participant must complete a Year of Service (or Period of
Service if the Elapsed Time Method is elected). (Could cause Plan to
violate coverage requirements under Code Section 410(b).)
d. [ ] A Participant must complete at least ___________ (may not be more
than 1,000) Hours of Service during the Plan Year. (Could cause the
Plan to violate coverage requirements under Code Section 410(b).)
13
REQUIREMENTS FOR PARTICIPANTS WHO ARE NOT ACTIVELY EMPLOYED AT THE END OF
THE PLAN YEAR (except as otherwise provided in i. through k. below).
e. [ ] A Participant must complete more than _____ Hours of Service (not
more than 500) (or _____ months of service (not more than three (3))
if the Elapsed Time Method is elected).
f. [ ] A Participant must complete a Year of Service (or Period of
Service if the Elapsed Time Method is elected). (Could cause the Plan
to violate coverage requirements under Code Section 410(b).)
g. [ ] Participants will NOT share in such allocations, regardless of
service. (Could cause the Plan to violate coverage requirements under
Code Section 410(b).)
h. [X] Participants will share in such allocations, regardless of
service.
PARTICIPANTS WHO ARE NOT ACTIVELY EMPLOYED AT THE END OF THE PLAN YEAR due
to the following shall be eligible to share in the allocation of matching
contributions regardless of the above conditions (select all that apply):
i. [X] Death.
j. [X] Total and Permanent Disability.
k. [X] Early or Normal Retirement.
AND, if 32.c., d., f., or g. is selected, shall the 410(b) ratio percentage
fail safe provisions apply (Plan Section 12.3(f))?
l. [ ] No or N/A.
m. [X] Yes (If selected, the Plan must satisfy the ratio percentage test
of Code Section 410(b).)
33. FORMULA FOR DETERMINING EMPLOYER'S PROFIT SHARING CONTRIBUTION (Plan
Section 12.1(a)(3)) (d. may be selected in addition to b. or c.)
a. [X] N/A. No Employer Profit Sharing Contributions may be made (other
than top heavy minimum contributions) (Skip to Question 34.)
b. [ ] Discretionary, to be determined by the Employer, not limited to
current or accumulated Net Profits.
c. [ ] Discretionary, to be determined by the Employer, out of current or
accumulated Net Profits.
d. [ ] Prevailing Wage Contribution. The Employer will make a Prevailing
Wage Contribution on behalf of each Participant who performs services
subject to the Service Contract Act, Davis-Bacon Act or similar
Federal, State, or Municipal Prevailing Wage statutes. The Prevailing
Wage Contribution shall be an amount equal to the balance of the
fringe benefit payment for health and welfare for each Participant
(after deducting the cost of cash differential payments for the
Participant) based on the hourly contribution rate for the
Participant's employment classification, as designated on Schedule A
as attached to this Adoption Agreement. Notwithstanding anything in
the Plan to the contrary, the Prevailing Wage Contribution shall be
fully Vested. Furthermore, the Prevailing Wage Contribution shall not
be subject to any age or service requirements set forth in Question
15. nor to any service or employment conditions set forth in Question
35.
AND, if d. is selected, is the Prevailing Wage Contribution considered
a Qualified Non-Elective Contribution?
1. [ ] Yes.
2. [ ] No.
AND, if d. is selected, shall the amounts allocated on behalf of a
Participant for a Plan Year pursuant to e. or f. below be reduced
(offset) by the Prevailing Wage Contribution made on behalf of such
Participant for the Plan Year under this Plan?
3. [ ] No (If selected, then the Prevailing Wage Contribution will
be added to amounts allocated pursuant to e. or f. below.)
4. [ ] Yes.
14
CONTRIBUTION ALLOCATIONS
If b. or c. above is selected, the Employer's discretionary profit sharing
contribution for a Plan Year will be allocated as follows:
e. [ ] NON-INTEGRATED ALLOCATION
1. [ ] In the same ratio as each Participant's Compensation
bears to the total of such Compensation of all Participants.
2. [ ] In the same dollar amount to all Participants (per
capita).
3. [ ] In the same dollar amount per Hour of Service completed
by each Participant.
4. [ ] In the same proportion that each Participant's points
bears to the total of such points of all Participants. A
Participant's points with respect to any Plan Year shall be
computed as follows (select all that apply):
a. [ ] point(s) shall be allocated for each Year of
Service (or Period of Service if the Elapsed Time
Method is elected). However, the maximum Years of
Service (or Periods of Service) taken into account
shall not exceed ________ (leave blank if no limit on
service applies).
b. [ ] point(s) shall be allocated for each full $________
(may not exceed $200) of Compensation.
c. [ ] point(s) shall be allocated for each year of age as
of the end of the Plan Year.
f. [ ] INTEGRATED ALLOCATION
In accordance with Plan Section 4.3(b)(2) based on a
Participant's Compensation in excess of:
1. [ ] The Taxable Wage Base.
2. [ ] % (not to exceed 100%) of the Taxable Wage Base. (See
Note below)
3. [ ] 80% of the Taxable Wage Base plus $1.00.
4. [ ] $__________ (not greater than the Taxable Wage Base).
(See Note below)
NOTE:The integration percentage of 5.7% shall be reduced to:
1. 4.3% if 2. or 4. above is more than 20% and less than
or equal to 80% of the Taxable Wage Base.
2. 5.4% if 3. is elected or if 2. or 4. above is more than
80% of the Taxable Wage Base.
34. QUALIFIED NON-ELECTIVE CONTRIBUTIONS (Plan Section 12.1(a)(4))
NOTE:Regardless of any election made in this Question, the Plan
automatically permits Qualified Non-Elective Contributions to correct
a failed ADP or ACP test.
a. [X] N/A. There will be no additional Qualified Non-Elective
Contributions except as otherwise provided in the Plan.
b. [ ] The Employer will make a Qualified Non-Elective Contribution equal
to _____% of the total Compensation of those Participants eligible to
share in the allocations.
c. [ ] The Employer may make a Qualified Non-Elective Contribution in an
amount to be determined by the Employer, to be allocated in proportion
to the Compensation of those Participants eligible to share in the
allocations.
d. [ ] The Employer may make a Qualified Non-Elective Contribution in an
amount to be determined by the Employer, to be allocated equally to
all Participants eligible to share in the allocations (per capita).
AND, if b., c., or d. is selected, the Qualified Non-Elective Contributions
above will be made on behalf of:
e. [ ] all Participants.
f. [ ] only Non-Highly Compensated Employees.
35. REQUIREMENTS TO SHARE IN ALLOCATIONS OF EMPLOYER DISCRETIONARY PROFIT
SHARING CONTRIBUTION, QUALIFIED NON-ELECTIVE CONTRIBUTIONS (other than
Qualified Non-Elective Contributions under Plan Sections 12.5(c) and
12.7(g)) AND FORFEITURES
a. [X] N/A. Plan does not permit such contributions.
b. [ ] Requirements for Participants who are actively employed at the end
of the Plan Year.
1. [ ] No service requirement.
2. [ ] A Participant must complete a Year of Service (or Period of
Service if the Elapsed Time Method is elected). (Could cause Plan
to violate coverage requirements under Code Section 410(b).)
3. [ ] A Participant must complete at least (may not be more than
1,000) Hours of Service during the Plan Year. (Could cause the
Plan to violate coverage requirements under Code Section 410(b).)
REQUIREMENTS FOR PARTICIPANTS WHO ARE NOT ACTIVELY EMPLOYED AT THE END OF
THE PLAN YEAR (except as otherwise provided in g. through i. below).
c. [ ] A Participant must complete more than _____ Hours of Service (not
more than 500) (or _____ months of service (not more than three (3))
if the Elapsed Time Method is elected).
d. [ ] A Participant must complete a Year of Service (or Period of
Service if the Elapsed Time Method is elected). (Could cause Plan to
violate coverage requirements under Code Section 410(b).)
e. [ ] Participants will NOT share in such allocations, regardless of
service. (Could cause Plan to violate coverage requirements under Code
Section 410(b).)
f. [ ] Participants will share in such allocations, regardless of
service.
15
PARTICIPANTS WHO ARE NOT ACTIVELY EMPLOYED AT THE END OF THE PLAN YEAR due
to the following will be eligible to share in the allocations regardless of
the above conditions (select all that apply):
g. [ ] Death.
h. [ ] Total and Permanent Disability.
i. [ ] Early or Normal Retirement.
AND, if 35.b.2, b.3, d. or e. is selected, shall the 410(b) ratio
percentage fail safe provisions apply (Plan Section 12.3(f))?
j. [ ] No or N/A.
k. [ ] Yes (If selected, the Plan must satisfy the ratio percentage test
of Code Section 410(b)).
36. FORFEITURES (Plan Sections 1.27 and 4.3(e))
Except as provided in Plan Section 1.27, a Forfeiture will occur (if no
election is made, a. will apply):
a. [X] as of the earlier of (1) the last day of the Plan Year in which
the Former Participant incurs five (5) consecutive 1-Year Breaks in
Service, or (2) the distribution of the entire Vested portion of the
Participant's Account.
b. [ ] as of the last day of the Plan Year in which the Former
Participant incurs five (5) consecutive 1-Year Breaks in Service.
Will Forfeitures first be used to pay any administrative expenses?
c. [ ] Yes.
d. [X] No.
AND, EXCEPT as otherwise provided below with respect to Forfeitures
attributable to matching contributions, any remaining Forfeitures will
be...
e. [ ] added to any Employer discretionary contribution.
f. [ ] used to reduce any Employer contribution.
g. [ ] added to any Employer matching contribution and allocated as an
additional matching contribution.
h. [ ] allocated to all Participants eligible to share in the allocations
in the same proportion that each Participant's Compensation for the
Plan Year bears to the Compensation of all Participants for such year.
FORFEITURES OF MATCHING CONTRIBUTIONS WILL BE...
i. [ ] N/A. Same as above or no matching contributions.
j. [X] used to reduce the Employer's matching contribution.
k. [ ] added to any Employer matching contribution and allocated as an
additional matching contribution.
1. [ ] added to any Employer discretionary profit sharing contribution.
m. [ ] allocated to all Participants eligible to share in the matching
allocations (regardless of whether a Participant elected any salary
reductions) in proportion to each such Participant's Compensation for
the year.
n. [ ] allocated to all Non-Highly Compensated Employees eligible to
share in the matching allocations (regardless of whether a Participant
elected any salary reductions) in proportion to each such
Participant's Compensation for the year.
37. ALLOCATIONS OF EARNINGS (Plan Section 4.3(c))
Allocations of earnings with respect to amounts which are not subject to
Participant directed investments and which are contributed to the Plan
after the previous Valuation Date will be determined...
a. [X] N/A. All assets in the Plan are subject to Participant investment
direction.
b. [ ] by using a weighted average based on the amount of time that has
passed between the date a contribution or distribution was made and
the date of the prior Valuation Date.
c. [ ] by treating one-half of all such contributions as being a part of
the Participant's nonsegregated account balance as of the previous
Valuation Date.
d. [ ] by using the method specified in Plan Section 4.3(c) (balance
forward method).
e. [ ] other: __________________________________________________________
(must be a definite predetermined formula that is not based on
Compensation and that satisfies the nondiscrimination requirements of
Regulation 1.401(a)(4)-4 and is applied uniformly to all
Participants).
38. LIMITATIONS ON ALLOCATIONS (Plan Section 4.4) If any Participant is covered
under another qualified defined contribution plan maintained by the
Employer, other than a Master or Prototype Plan, or if the Employer
maintains a welfare benefit fund, as defined in Code Section 419(e), or an
individual medical account, as defined in Code Section 415(1)(2), under
which amounts are treated as Annual Additions with respect to any
Participant in this Plan:
a. [ ] N/A. The Employer does not maintain another qualified defined
contribution plan.
b. [X] The provisions of Plan Section 4.4(b) will apply as if the other
plan were a Master or Prototype Plan.
c. [ ] Specify the method under which the plans will limit total Annual
Additions to the Maximum Permissible Amount, and will properly reduce
any Excess Amounts, in a manner that precludes Employer discretion:
______________________________________________________________________
16
DISTRIBUTIONS
39. FORM OF DISTRIBUTIONS (Plan Sections 6.5 and 6.6) Distributions under the
Plan may be made in (select all that apply)...
a. [X] lump-sums.
b. [X] substantially equal installments.
c. [ ] partial withdrawals provided the minimum withdrawal is
$_______________.
AND, pursuant to Plan Section 6.12,
d. [X] no annuities are allowed (Plan Section 6.12(b) will apply and the
joint and survivor rules of Code Sections 401(a)(11) and 417 will not
apply to the Plan).
AND, if this is an amendment that is eliminating annuities, then
an annuity form of payment is not available with respect to
distributions that have an Annuity Starting Date beginning on or
after:
1. [ ] N/A
2. [ ] (may not be a retroactive date), except that regardless
of the date entered, the amendment will not be effective
prior to the time set forth in Plan Section 6.1(e).
e. [ ] annuities are allowed as the normal form of distribution (Plan
Section 6.12 will not apply and the joint and survivor rules of Code
Sections 401(a)(11) and 417 will automatically apply). If elected, the
PreRetirement Survivor Annuity (minimum spouse's death benefit) will
be equal to:
1. [ ] 100% of Participant's interest in the Plan.
2. [ ] 50% of Participant's interest in the Plan.
3. [ ] ______% (may not be less than 50%) of a Participant's
interest in the Plan.
AND, the normal form of the Qualified Joint and Survivor Annuity will
be a joint and 50% survivor annuity unless otherwise elected below:
4. [ ] N/A.
5. [ ] Joint and 100% survivor annuity.
6. [ ] Joint and 75% survivor annuity.
7. [ ] Joint and 66 2/3% survivor annuity.
NOTE:If only a portion of the Plan assets may be distributed in an annuity
form of payment, then select d. AND e. and the assets subject to the
joint and survivor annuity provisions will be those assets
attributable to (specify): ________________ (e.g., the money purchase
pension plan that was merged into this Plan).
AND, distributions may be made in...
f. [ ] cash only (except for insurance or annuity contracts).
g. [X] cash or property.
40. CONDITIONS FOR DISTRIBUTIONS UPON TERMINATION OF EMPLOYMENT
Distributions upon termination of employment pursuant to Plan Section
6.4(a) of the Plan will not be made unless the following conditions have
been satisfied:
a. [ ] No distributions may be made until a Participant has reached Early
or Normal Retirement Date.
b. [X] Distributions may be made as soon as administratively feasible at
the Participant's election.
c. [ ] The Participant has incurred _____ 1-Year Break(s) in Service (or
Period(s) of Severance if the Elapsed Time Method is elected).
d. [ ] Distributions may be made at the Participant's election as soon as
administratively feasible after the Plan Year coincident with or next
following termination of employment.
e. [ ] Distributions may be made at the Participant's election as soon as
administratively feasible after the Plan Year quarter coincident with
or next following termination of employment.
f. [ ] Distributions may be made at the Participant's election as soon as
administratively feasible after the Valuation Date coincident with or
next following termination of employment.
g. [ ] Distributions may be made at the Participant's election as soon as
administratively feasible months following termination of employment.
h. [ ] Other: __________________________________________________________
(must be objective conditions which are ascertainable and are not
subject to Employer discretion except as otherwise permitted in
Regulation 1.411(d)-4 and may not exceed the limits of Code Section
401(a)(14) as set forth in Plan Section 6.7).
41. INVOLUNTARY DISTRIBUTIONS
Will involuntary distributions of amounts less than $5,000 be made in
accordance with the provisions of Sections 6.4, 6.5 and 6.6?
a. [X] Yes
b. [ ] No
17
42. MINIMUM DISTRIBUTION TRANSITIONAL RULES (Plan Section 6.5(e))
NOTE:This Section does not apply to (1) a new Plan or (2) an amendment or
restatement of an existing Plan that never contained the provisions of
Code Section 401(a)(9) as in effect prior to the amendments made by
the Small Business Job Protection Act of 1996 (SBJPA).
The "required beginning date" for a Participant who is not a "five percent
(5%) owner" is:
a. [ ] N/A. (This is a new Plan or this Plan has never included the
pre-SBJPA provisions.)
b. [ ] April 1st of the calendar year following the year in which the
Participant attains age 70 1/2. (The preSBJPA rules will continue to
apply.)
c. [X] April 1st of the calendar year following the later of the year in
which the Participant attains age 70 1/2 or retires (the post-SBJPA
rules), with the following exceptions (select one or both and if no
election is made, both will apply effective as of January 1, 1996):
1. [ ] A Participant who was already receiving required minimum
distributions under the pre-SBJPA rules as of ________________
(not earlier than January 1, 1996) may elect to stop receiving
distributions and have them recommence in accordance with the
post-SBJPA rules. Upon the recommencement of distributions, if
the Plan permits annuities as a form of distribution then the
following will apply:
a. [ ] N/A. Annuity distributions are not permitted.
b. [ ] Upon the recommencement of distributions, the original
Annuity Starting Date will be retained.
c. [ ] Upon the recommencement of distributions, a new Annuity
Starting Date is created.
2. [X] A Participant who had not begun receiving required minimum
distributions as of April 1. 1998 (not earlier than January 1,
1996) may elect to defer commencement of distributions until
retirement. The option to defer the commencement of distributions
(i.e., to elect to receive in-service distributions upon
attainment of age 70 1/2) will apply to all such Participants
unless the option below is elected:
a. [X] N/A.
b. [ ] The in-service distribution option is eliminated with
respect to Participants who attain age 70 1/2 in or after
the calendar year that begins after the later of (1)
December 31, 1998, or (2) the adoption date of the amendment
and restatement to bring the Plan into compliance with
SBJPA. (This option may only be elected if the amendment to
eliminate the in-service distribution is adopted no later
than the last day of the remedial amendment period that
applies to the Plan for changes under SBJPA.)
43. DISTRIBUTIONS UPON DEATH (Plan Section 6.6(h))
Distributions upon the death of a Participant prior to receiving any
benefits shall...
a. [X] be made pursuant to the election of the Participant or
beneficiary.
b. [ ] begin within 1 year of death for a designated beneficiary and be
payable over the life (or over a period not exceeding the life
expectancy) of such beneficiary, except that if the beneficiary is the
Participant's spouse, begin prior to December 31st of the year in
which the Participant would have attained age 701/2.
c. [ ] be made within 5 (or if lesser ____) years of death for all
beneficiaries.
d. [ ] be made within 5 (or if lesser ____) years of death for all
beneficiaries, except that if the beneficiary is the Participant's
spouse, begin prior to December 31st of the year in which the
Participant would have attained age 70 1/2 and be payable over the
life (or over a period not exceeding the life expectancy) of such
surviving spouse.
44. HARDSHIP DISTRIBUTIONS (Plan Sections 6.11 and/or 12.9)
a. [ ] No hardship distributions are permitted.
b. [X] Hardship distributions are permitted from the following accounts
(select all that apply):
1. [X] All accounts.
2. [ ] Participant's Elective Deferral Account.
3. [ ] Participant's Account attributable to Employer matching
contributions.
4. [ ] Participant's Account attributable to Employer profit sharing
contributions.
5. [ ] Participant's Rollover Account.
6. [ ] Participant's Transfer Account.
7. [ ] Participant's Voluntary Contribution Account.
NOTE:Distributions from a Participant's Elective Deferral Account are
limited to the portion of such account attributable to such
Participant's Elective Deferrals (and earnings attributable thereto up
to December 31, 1988). Hardship distributions are not permitted from a
Participant's Qualified Non-Elective Account (including any 401(k)
Safe Harbor Contributions) or Qualified Matching Contribution Account.
AND, shall the safe harbor hardship rules of Plan Section 12.9 apply to
distributions made from all accounts? (Note: The safe harbor hardship rules
automatically apply to hardship distributions of Elective Deferrals.)
c. [ ] No or N/A. The provisions of Plan Section 6.11 apply to hardship
distributions from all accounts other than a Participant's Elective
Deferral Account.
d. [X] Yes. The provisions of Plan Section 12.9 apply to all hardship
distributions.
18
AND, are distributions restricted to those accounts in which a Participant
is fully Vested?
e. [X] Yes, distributions may only be made from accounts which are fully
Vested.
f. [ ] No. (If elected, the fraction at Plan Section 6.5(h) shall apply
in determining vesting of the portion of the account balance not
withdrawn).
AND, the minimum hardship distribution shall be...
g. [X] N/A. There is no minimum.
h. [ ] $__________ (may not exceed $1,000).
45. IN-SERVICE DISTRIBUTIONS (Plan Section 6.10)
a. [ ] In-service distributions may not be made (except as otherwise
elected for Hardship Distributions).
b. [X] In-service distributions may be made to a Participant who has not
separated from service provided any of the following conditions have
been satisfied (select all that apply):
1. [X] the Participant has attained age 59 1/2 .
2. [ ] the Participant has reached Normal Retirement Age.
3. [ ] the Participant has been a Participant in the Plan for at
least _____ years (may not be less than five (5)).
4. [ ] the amounts being distributed have accumulated in the Plan
for at least two (2) years.
AND, in-service distributions are permitted from the following accounts
(select all that apply):
c. [X] All accounts.
d. [ ] Participant's Elective Deferral Account.
e. [ ] Qualified Matching Contribution Account and portion of
Participant's Account attributable to Employer matching contributions.
f. [ ] Participant's Account attributable to Employer profit sharing
contributions.
g. [ ] Qualified Non-Elective Contribution Account.
h. [ ] Participant's Rollover Account.
i. [ ] Participant's Transfer Account.
j. [ ] Participant's Voluntary Contribution Account.
NOTE:Distributions from a Participant's Elective Deferral Account,
Qualified Matching Contribution Account and Qualified Non-Elective
Account (including 401 (k) Safe Harbor Contributions) are subject to
restrictions and generally may not be distributed prior to age 59 1/2.
AND, are distributions restricted to those accounts in which a Participant
is fully Vested?
k. [X] Yes, distributions may only be made from accounts which are fully
Vested.
l. [ ] No. (If elected, the fraction at Plan Section 6.5(h) will apply in
determining vesting of the portion of the account balance not
withdrawn.)
AND, the minimum distribution shall be...
m. [X] N/A. There is no minimum.
n. [ ] $___________ (may not exceed $1,000).
NONDISCRIMINATION TESTING
46. HIGHLY COMPENSATED EMPLOYEE (Plan Section 1.31)
NOTE:If this is a GUST restatement, complete the questions in this Section
retroactively to the first Plan Year beginning after 1996.
Top-Paid Group Election. Will the top-paid group election be made? (The
election made below for the latest year will continue to apply to
subsequent Plan Years unless a different election is made.)
a. [X] Yes, for the Plan Year beginning in: 1998 .
-----
b. [ ] No, for the Plan Year beginning in: _______.
Calendar Year Data Election. Will the calendar year data election be used?
(The election made below for the latest year will continue to apply to
subsequent Plan Years unless a different election is made.)
c. [ ] Yes, for the Plan Year beginning in: ________.
d. [X] No, for the Plan Year beginning in: 1998 .
47. ADP AND ACP TESTS (Plan Sections 12.4 and 12.6). The ADP ratio and ACP
ratio for Non-Highly Compensated Employees will be based on the following.
The election made below for the latest year will continue to apply to
subsequent Plan Years unless the Plan is amended to a different election.
a. [ ] N/A. This Plan satisfies the ADP Test Safe Harbor rules and there
are no contributions subject to an ACID test or for all Plan Years
beginning in or after the Effective Date of the Plan or, in the case
of an amendment and restatement, for all Plan Years to which the
amendment and restatement relates.
b. [X] PRIOR YEAR TESTING: The prior year ratio will be used for the Plan
Year beginning in 2002 . (Note: If this election is made for the first
year the Code Section 401 (k) or 401 (m) feature is added to this Plan
(unless this Plan is a successor plan), the amount taken into account
as the ADP and ACP of Non-Highly Compensated Employees for the
preceding Plan Year will be 3%.)
c. [ ] CURRENT YEAR TESTING: The current year ratio will be used for the
Plan Year beginning in _____________.
19
NOTE:In any Plan Year where the ADP Test Safe Harbor is being used but not
the ACP Test Safe Harbor, then c. above must be used if an ACP test
applies for such Plan Year.
TOP HEAVY REQUIREMENTS
48. TOP HEAVY DUPLICATIONS (Plan Section 4.3(i)): When a Non-Key Employee is a
Participant in this Plan and a Defined Benefit Plan maintained by the
Employer, indicate which method shall be utilized to avoid duplication of
top heavy minimum benefits: (If b., c., d. or e. is elected, f. must be
completed.)
a. [ ] N/A. The Employer does not maintain a Defined Benefit Plan. (Go to
next Question)
b. [ ] The full top heavy minimum will be provided in each plan (if
selected, Plan Section 4.3(i) shall not apply).
c. [X] 5% defined contribution minimum.
d. [ ] 2% defined benefit minimum.
e. [ ] Specify the method under which the Plans will provide top heavy
minimum benefits for Non-Key Employees that will preclude Employer
discretion and avoid inadvertent omissions:
______________________________________________________________________
NOTE:If c., d., or e. is selected and the Defined Benefit Plan and this
Plan do not benefit the same Participants, the uniformity requirement
of the Section 401(a)(4) Regulations may be violated.
AND, the "Present Value of Accrued Benefit" (Plan Section 9.2) for Top
Heavy purposes shall be based on...
f. [X] Interest Rate: As specified in the definition of Actuarial
------------------------------------------------
Equivalent for determining Lump Sum Benefits in the Defined Benefit
----------------------------------------------------------------------
Plan
----
Mortality Table: As specified in the definition of Actuarial
--------------------------------------------------
Equivalent for determining Lump Sum benefits in the Defined Benefit
----------------------------------------------------------------------
Plan
----------------------------------------------------------------------
49. TOP HEAVY DUPLICATIONS (Plan Section 4.3(f)): When a Non-Key Employee is a
Participant in this Plan and another defined contribution plan maintained
by the Employer, indicate which method shall be utilized to avoid
duplication of top heavy minimum benefits:
a. [ ] N/A. The Employer does not maintain another qualified defined
contribution plan.
b. [ ] The full top heavy minimum will be provided in each plan.
c. [ ] A minimum, non-integrated contribution of 3% of each Non-Key
Employee's 415 Compensation shall be provided in the Money Purchase
Plan (or other plan subject to Code Section 412).
d. [X] Specify the method under which the Plans will provide top heavy
minimum benefits for Non-Key Employees that will preclude Employer
discretion and avoid inadvertent omissions, including any adjustments
required under Code Section 415:
Participants entitled to a top heavy minimum benefit will receive a
----------------------------------------------------------------------
minimum, non-integrated contribution of 3% in the Wayne Savings
----------------------------------------------------------------------
Community Bank Employee Stock Ownership plan if they are Participants
----------------------------------------------------------------------
in that Plan. Participants who do not participate in another defined
----------------------------------------------------------------------
contribution plan maintained by the Employer will receive a top heavy
----------------------------------------------------------------------
minimum benefit in this Plan.
----------------------------------------------------------------------
NOTE:If c. or d. is selected and both plans do not benefit the same
Participants, the uniformity requirement of the Section 401(a)(4)
Regulations may be violated.
MISCELLANEOUS
50. LOANS TO PARTICIPANTS (Plan Section 7.6)
a. [ ] Loans are not permitted.
b. [X] Loans are permitted.
IF loans are permitted (select all that apply)...
c. [X] loans will be treated as a Participant directed investment.
d. [X] loans will only be made for hardship or financial necessity.
e. [X] the minimum loan will be $ 1,000.00 (may not exceed $1,000).
f. [X] a Participant may only have one 1 (e.g., one (1)) loan(s)
outstanding at any time.
g. [X] all outstanding loan balances will become due and payable in their
entirety upon the occurrence of a distributable event (other than
satisfaction of the conditions for an in-service distribution).
h. [X] loans will only be permitted from the following accounts (select
all that apply):
1. [X] All accounts.
2. [ ] Participant's Elective Deferral Account.
3. [ ] Qualified Matching Contribution Account and/or portion of
Participant's Account attributable to Employer matching
contributions.
4. [ ] Participant's Account attributable to Employer profit sharing
contributions.
5. [ ] Qualified Non-Elective Contribution Account.
6. [ ] Participant's Rollover Account.
7. [ ] Participant's Transfer Account.
8. [ ] Participant's Voluntary Contribution Account.
NOTE: Department of Labor Regulations require the adoption of a
separate written loan program setting forth the requirements outlined
in Plan Section 7.6.
20
51. DIRECTED INVESTMENT ACCOUNTS (Plan Section 4.10)
a. [ ] Participant directed investments are not permitted.
b. [X] Participant directed investments are permitted for the following
accounts (select all that apply):
1. [X] All accounts.
2. [ ] Participant's Elective Deferral Account.
3. [ ] Qualified Matching Contribution Account and/or portion of
Participant's Account attributable to Employer matching
contributions.
4. [ ] Participant's Profit Sharing Account.
5. [ ] Qualified Non-Elective Contribution Account.
6. [ ] Participant's Rollover Account.
7. [ ] Participant's Transfer Account.
8. [ ] Participant's Voluntary Contribution Account.
9. [ ] Other:
AND, is it intended that the Plan comply with Act Section 404(c) with
respect to the accounts subject to Participant investment direction?
c. [ ] No.
d. [X] Yes
AND, will voting rights on directed investments be passed through to
Participants?
e. [ ] No. Employer stock is not an alternative OR Plan is not intended
to comply with Act Section 404(c).
f. [X] Yes, for Employer stock only.
g. [ ] Yes, for all investments.
52. ROLLOVERS (Plan Section 4.6)
a. [ ] Rollovers will not be accepted by this Plan.
b. [X] Rollovers will be accepted by this Plan.
AND, if b. is elected, rollovers may be accepted...
c. [X] from any Eligible Employee, even if not a Participant.
d. [ ] from Participants only.
AND, distributions from a Participant's Rollover Account may be made...
e. [X] at any time.
f. [ ] only when the Participant is otherwise entitled to a distribution
under the Plan.
53. AFTER-TAX VOLUNTARY EMPLOYEE CONTRIBUTIONS (Plan Section 4.8)
a. [X] After-tax voluntary Employee contributions will not be allowed.
b. [ ] After-tax voluntary Employee contributions will be allowed.
54. LIFE INSURANCE (Plan Section 7.5)
a. [X] Life insurance may not be purchased.
b. [ ] Life insurance may be purchased at the option of the
Administrator.
c. [ ] Life insurance may be purchased at the option of the Participant.
AND, if b. or c. is elected, the purchase of initial or additional life
insurance will be subject to the following limitations (select all that
apply):
d. [ ] N/A, no limitations.
e. [ ] each initial Contract will have a minimum face amount of $
f. [ ] each additional Contract will have a minimum face amount of $
g. [ ] the Participant has completed ____ Years of Service (or Periods of
Service).
h. [ ] the Participant has completed ____ Years of Service (or Periods of
Service) while a Participant in the Plan.
i. [ ] the Participant is under age ______ on the Contract issue date.
j. [ ] the maximum amount of all Contracts on behalf of a Participant may
not exceed $_________.
k. [ ] the maximum face amount of any life insurance Contract will be
$__________.
GUST TRANSITION RULES
The following questions only apply if this is a GUST restatement (i.e.,
Question 6.c. is selected). If this is not a GUST restatement, then this
Plan will not be considered an individually designed plan merely because
the following questions are deleted from the Adoption Agreement.
21
55. COMPENSATION The family aggregation rules of Code Section 401(a)(17) as in
effect under Code Section 414(q)(6) prior to the enactment of SBJPA do not
apply to this Plan effective as of:
a. [X] The first day of the first Plan Year beginning after 1996.
b. [ ] (may not be prior to the first day of the first Plan Year
beginning in 1997 and may not be later than the first day of the Plan
Year following the Plan Year in which this GUST restatement is
adopted).
NOTE:If family aggregation continued to apply after 1996, the Plan is not
a safe harbor plan for Code Section 401(a)(4) purposes and the
Employer may not rely on the opinion letter issued by the Internal
Revenue Service that this Plan is qualified under Code Section 401.
56. LIMITATION ON ALLOCATIONS AND TOP HEAVY RULES
If any Participant is a Participant in this Plan and a qualified defined
benefit plan maintained by the Employer, then the limitations of Code
Section 415(e) as in effect under Code Section 414(q)(6) prior to the
enactment of SBJPA do not apply to this Plan effective with respect to
Limitation Years beginning on or after:
a. [ ] N/A. The Employer does not maintain, and has never maintained, a
qualified defined benefit plan OR the provisions of Code Section
415(e) have already been removed from this Plan.
b. [X] January 1. 2000 (may not be prior to the first Limitation Year
beginning in 2000 and may not be later than the first Limitation Year
beginning after the Limitation Year in which this GUST restatement is
adopted).
NOTE:If the Code Section 415(e) limits continued to apply to Limitation
Years beginning after 1999, the Plan is not a safe harbor plan for
Code Section 401(a)(4) purposes and the Employer may not rely on the
opinion letter issued by the Internal Revenue Service that this Plan
is qualified under Code Section 401.
AND, if b. is selected with a date that is later than the effective date of
this GUST restatement, then with respect to the Limitation Year in which
this restatement is adopted, if any Participant is a Participant in this
Plan and a qualified defined benefit plan maintained by the Employer,
specify the method under which the plans involved will provide top heavy
minimum benefits for Non-Key Employees and will satisfy the limitations of
Code Section 415(e) in a manner that precludes Employer discretion:
c. [ ] N/A. The effective date of the GUST restatement is the date the
provisions of Code Section 415(e) no longer apply to this Plan.
d. [ ] __________________________________________________________________
NOTE:If the top heavy minimum benefit is only provided in one plan and the
Defined Benefit Plan and this Plan do not benefit the same
Participants, the uniformity requirement of the Section 401(a)(4)
Regulations may be violated.
57. INVOLUNTARY DISTRIBUTIONS
If the Plan provides for involuntary distributions (i.e., 41.a. is elected)
then the increase in the involuntary amount threshold from $3,500 to $5,000
became effective with respect to distributions made on or after:
a. [ ] N/A. The plan doesn't provide for involuntary distributions less
than $5,000.
b. [X] August 6, 1997, or if later ______________ (leave blank if not
applicable).
58. MINIMUM DISTRIBUTIONS
The proposed Code Section 401(a)(9) Regulations issued in January 2001
apply with respect to distributions under the Plan made on or after January
1, 2001, unless a later date is specified below:
a. [ ] N/A.
b. [X] January 1, 2002 (may be any date in 2001 or the first day of any
----------------
calendar year after 2001).
AND, if b. is selected, for years prior to the date specified above, life
expectancies for minimum distributions required pursuant to Code Section
401(a)(9) shall...
c. [ ] be recalculated at the Participant's election.
d. [X] be recalculated.
e. [ ] not be recalculated.
59. ADP AND ACP TESTS. For Plan Years beginning in and prior to the Plan Year
in which the restatement is adopted, the following will apply:
ADP TEST:
a. [X] PRIOR YEAR TESTING: The prior year ratio will be used for the Plan
Year beginning in the year specified below. (If this election is made
for the first year the Code Section 401 (k) feature is added to this
Plan (unless this Plan is a successor plan), the amount taken into
account as the ADP of Non-Highly Compensated Employees for the
preceding Plan Year will be 3%.)
1. [ ] 1997 2. [ ] 1998 3. [X] 1999 4. [ ] 2000 5. [X] 2001
b. [X] CURRENT YEAR TESTING: The current year ratio will be used for the
Plan Year beginning in:
1. [ ] 1997 2. [X] 1998 3. [ ] 1999 4. [X] 2000 5. [ ] ______
22
ACP TEST:
c. [ ] N/A.
d. [X] PRIOR YEAR TESTING: The prior year ratio will be used for the Plan
Year beginning in the year specified below. (If this election is made
for the first year the Code Section 401 (m) feature is added to this
Plan (unless this Plan is a successor plan), the amount taken into
account as the ACP of Non-Highly Compensated Employees for the
preceding Plan Year will be 3%.)
1. [ ] 1997 2. [ ] 1998 3. [X] 1999 4. [ ] 2000 5. [X] 2001
e. [X] CURRENT YEAR TESTING: The current year ratio will be used for the
Plan Year beginning in:
1. [ ] 1997 2. [X] 1998 3. [ ] 1999 4. [X] 2000 5. [ ] ______
23
The adopting Employer may rely on an opinion letter issued by the Internal
Revenue Service as evidence that the plan is qualified under Code Section 401
only to the extent provided in Announcement 2001-77, 2001-30 I. R. B.
The Employer may not rely on the opinion letter in certain other circumstances
or with respect to certain qualification requirements, which are specified in
the opinion letter issued with respect to the plan and in Announcement 2001-77.
In order to have reliance in such circumstances or with respect to such
qualification requirements, application for a determination letter must be made
to Employee Plans Determinations of the Internal Revenue Service.
This Adoption Agreement may be used only in conjunction with basic Plan
document. This Adoption Agreement and the basic Plan document shall together be
known as Employee Benefit Compliance Services, Inc. Regional Prototype Prototype
Non-Standardized 401 (k) Profit Sharing Plan and Trust.
The adoption of this Plan, its qualification by the IRS, and the related tax
consequences are the responsibility of the Employer and its independent tax and
legal advisors.
Employee Benefit Compliance Services, Inc. will notify the Employer of any
amendments made to the Plan or of the discontinuance or abandonment of the Plan.
Furthermore, in order to be eligible to receive such notification, we agree to
notify Employee Benefit Compliance Services, Inc. of any change in address.
This Plan may not be used, and shall not be deemed to be a Prototype Plan,
unless an authorized representative of Employee Benefit Compliance Services,
Inc. has acknowledged the use of the Plan. Such acknowledgment is for
administerial purposes only. It acknowledges that the Employer is using the Plan
but does not represent that this Plan, including the choices selected on the
Adoption Agreement, has been reviewed by a representative of the sponsor or
constitutes a qualified retirement plan.
Employee Benefit Compliance Services, Inc.
By: /s/ Gerrit C. Kuechle
------------------------------------------------
With regard to any questions regarding the provisions of the Plan, adoption of
the Plan, or the effect of an opinion letter from the IRS, call or write (this
information must be completed by the sponsor of this Plan or its designated
representative):
Name: Gerrit C. Kuechle
-----------------------------------------------------------------------
Address: 20325 Center Ride Road
-----------------------------------------------------------------------
Cleveland Ohio 44116
-----------------------------------------------------------------------
Telephone: (440) 333-0222
---------------------------------------------------------------------
24
The Employer and Trustee hereby cause this Plan to be executed on January 23,
2003 .
Furthermore, this Plan may not be used unless acknowledged by Employee Benefit
Compliance Services, Inc. or its authorized representative.
EMPLOYER:
Wayne Savings Community Bank
By: /s/ Michael C. Anderson
-------------------------------------------------
[ ] The signature of the Trustee appears on a separate trust agreement
attached to the Plan,
or
/s/ Charles F. Finn
------------------------------------------------
TRUSTEE
/s/ Michael C. Anderson
------------------------------------------------
TRUSTEE
PARTICIPATING EMPLOYER - VILLAGE SAVINGS BANK, F.S.B.
By: [signed]
------------------------------------------------
EGTRRA
AMENDMENT TO THE
WAYNE SAVINGS 401(K) RETIREMENT PLAN
EGTRRA - Employer
ARTICLE I
PREAMBLE
1.1 Adoption and effective date of amendment. This amendment of the plan is
------------------------------------------
adopted to reflect certain provisions of the Economic Growth and Tax Relief
Reconciliation Act of 2001 ("EGTRRA"). This 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, this amendment shall be effective as of the first day of the
first plan year beginning after December 31, 2001.
1.2 Supersession of inconsistent provisions. This amendment shall supersede the
---------------------------------------
provisions of the plan to the extent those provisions are inconsistent with
the provisions of this amendment.
ARTICLE II
ADOPTION AGREEMENT ELECTIONS
- --------------------------------------------------------------------------------
The questions in this Article II only need to be completed in order to override
the default provisions set forth below. If all of the default provisions will
apply, then these questions should be skipped.
Unless the employer elects otherwise in this Article II, the following defaults
apply:
1) The vesting schedule for matching contributions will be a 6 year graded
schedule (if the plan currently has a graded schedule that does not satisfy
EGTRRA) or a 3 year cliff schedule (if the plan currently has a cliff
schedule that does not satisfy EGTRRA), and such schedule will apply to all
matching contributions (even those made prior to 2002).
2) Rollovers are automatically excluded in determining whether the $5,000
threshold has been exceeded for automatic cash-outs (if the plan is not
subject to the qualified joint and survivor annuity rules and provides for
automatic cash-outs). This is applied to all participants regardless of
when the distributable event occurred.
3) The suspension period after a hardship distribution is made will be 6
months and this will only apply to hardship distributions made after 2001.
4) Catch-up contributions will be allowed.
5) For target benefit plans, the increased compensation limit of $200,000 will
be applied retroactively (i.e., to years prior to 2002).
- --------------------------------------------------------------------------------
2.1 Vesting Schedule for Matching Contributions
If there are matching contributions subject to a vesting schedule that does
not satisfy EGTRRA, then unless otherwise elected below, for participants
who complete an hour of service in a plan year beginning after December 31,
2001, the following vesting schedule will apply to all matching
contributions subject to a vesting schedule:
If the plan has a graded vesting schedule (i.e., the vesting schedule
includes a vested percentage that is more than 0% and less than 100%) the
following will apply:
Years of vesting service Nonforfeitable percentage
2 20%
3 40%
4 60%
5 80%
6 100%
If the plan does not have a graded vesting schedule, then matching
contributions will be nonforfeitable upon the completion of 3 years of
vesting service.
In lieu of the above vesting schedule, the employer elects the following
schedule:
a. [ ] 3 year cliff (a participant's accrued benefit derived from
employer matching contributions shall be nonforfeitable upon the
participant's completion of three years of vesting service).
b. [ ] 6 year graded schedule (20% after 2 years of vesting service and
an additional 20% for each year thereafter).
c. [ ] Other (must be at least as liberal as a. or the b. above):
Years of vesting service Nonforfeitable percentage
--------- --------%
--------- --------%
--------- --------%
--------- --------%
--------- --------%
1
The vesting schedule set forth herein shall only apply to participants who
complete an hour of service in a plan year beginning after December 31,
2001, and, unless the option below is elected, shall apply to all matching
contributions subject to a vesting schedule.
d. [ ] The vesting schedule will only apply to matching contributions
made in plan years beginning after December 31, 2001 (the prior
schedule will apply to matching contributions made in prior plan
years).
2.2 Exclusion of Rollovers In Application of Involuntary Cash-out Provisions
(for profit sharing and 401(k) plans only). If the plan is not subject to
the qualified joint and survivor annuity rules and includes involuntary
cashout provisions, then unless one of the options below is elected,
effective for distributions made after December 31, 2001, rollover
contributions will be excluded in determining the value of the
participant's nonforfeitable account balance for purposes of the plan's
involuntary cash-out rules.
a. [ ] Rollover contributions will not be excluded.
b. [x] Rollover contributions will be excluded only with respect to
distributions made after December 31, 2001. (Enter a date no earlier
than December 31, 2001.)
c. [ ] Rollover contributions will only be excluded with respect to
participants who separated from service after ______________. (Enter a
date. The date may be earlier than December 31, 2001.)
2.3 Suspension period of hardship distributions. If the plan provides for
hardship distributions upon satisfaction of the safe harbor (deemed)
standards as set forth in Treas. Reg. Section 1.401 (k)-1(d)(2)(iv), then,
unless the option below is elected, the suspension period following a
hardship distribution shall only apply to hardship distributions made after
December 31, 2001.
[ ] With regard to hardship distributions made during 2001, a
participant shall be prohibited from making elective deferrals and
employee contributions under this and all other plans until the later
of January 1, 2002, or 6 months after receipt of the distribution.
2.4 Catch-up contributions (for 401 (k) profit sharing plans only): The plan
permits catch-up contributions (Article VI) unless the option below is
elected.
[ ] The plan does not permit catch-up contributions to be made.
ARTICLE III
VESTING OF MATCHING CONTRIBUTIONS
3.1 Applicability. This Article shall apply to participants who complete an
-------------
Hour of Service after December 31, 2001, with respect to accrued benefits
derived from employer matching contributions made in plan years beginning
after December 31, 2001. Unless otherwise elected by the employer in
Section 2.1 above, this Article shall also apply to all such participants
with respect to accrued benefits derived from employer matching
contributions made in plan years beginning prior to January 1, 2002.
3.2 Vesting schedule. A participant's accrued benefit derived from employer
-----------------
matching contributions shall vest as provided in Section 2.1 of this
amendment.
ARTICLE IV
INVOLUNTARY CASH-OUTS
4.1 Applicability and effective date. If the plan provides for involuntary
----------------------------------
cash-outs of amounts less than $5,000, then unless otherwise elected in
Section 2.2 of this amendment, this Article shall apply for distributions
made after December 31, 2001, and shall apply to all participants. However,
regardless of the preceding, this Article shall not apply if the plan is
subject to the qualified joint and survivor annuity requirements of
Sections 401(a)(11) and 417 of the Code.
4.2 Rollovers disregarded in determining value of account balance for
---------------------------------------------------------------------------
involuntary distributions. For purposes of the Sections of the plan that
--------------------------
provide for the involuntary distribution of vested accrued benefits of
$5,000 or less, the value of a participant's nonforfeitable account balance
shall be determined without regard to that portion of the account balance
that is attributable to rollover contributions (and earnings allocable
thereto) within the meaning of Sections 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 nonforfeitable account balance as so determined is $5,000 or
less, then the plan shall immediately distribute the participant's entire
nonforfeitable account balance.
ARTICLE V
HARDSHIP DISTRIBUTIONS
5.1 Applicability and effective date. If the plan provides for hardship
-----------------------------------
distributions upon satisfaction of the safe harbor (deemed) standards as
set forth in Treas. Reg. Section 1.401 (k)-1(d)(2)(iv), then this Article
shall apply for calendar years beginning after 2001.
5.2 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
employee contributions under this and all other plans of the employer for 6
months after receipt of the distribution. Furthermore, if elected by the
employer in Section 2.3 of this amendment, 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 employee
2
contributions under this and all other plans until the later of January 1,
2002, or 6 months after receipt of the distribution.
ARTICLE VI
CATCH-UP CONTRIBUTIONS
Catch-up Contributions. Unless otherwise elected in Section 2.4 of this
- -----------------------
amendment, all employees who are eligible to make elective deferrals under this
plan and who have attained age 50 before the close of the plan year shall be
eligible to make catch-up contributions in accordance with, and subject to the
limitations of, Section 414(v) of the Code. Such catch-up contributions shall
not be taken into account for purposes of the provisions of the plan
implementing the required limitations of Sections 402(8) 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.
ARTICLE VII
INCREASE IN COMPENSATION LIMIT
Increase in Compensation Limit. The annual compensation of each participant
- -------------------------------
taken into account in determining allocations for any plan year beginning after
December 31, 2001, 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 during the plan year or such other consecutive
12-month period over which compensation is otherwise determined under the plan
(the determination period). If this is a target benefit plan, then except as
otherwise elected in Section 2.5 of this amendment, for purposes of determining
benefit accruals in a plan year beginning after December 31, 2001, compensation
for any prior determination period shall be limited to $200,000. 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.
ARTICLE VIII
PLAN LOANS
Plan loans for owner-employees or shareholder-employees. If the plan permits
- ----------------------------------------------------------
loans to be made to participants, then effective for plan loans made after
December 31, 2001, plan provisions prohibiting loans to any owner-employee or
shareholder-employee shall cease to apply.
ARTICLE IX
LIMITATIONS ON CONTRIBUTIONS (IRC SECTION 415 LIMITS)
9.1 Effective date. This Section shall be effective for limitation years
---------------
beginning after December 31, 2001.
9.2 Maximum annual addition. Except to the extent permitted under Article VI of
-----------------------
this amendment and Section 414(v) of the Code, if applicable, the annual
addition that may be contributed or allocated to a participant's 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 the
meaning of Section 401 (h) or Section 419A(f)(2) of the Code) which is
otherwise treated as an annual addition.
ARTICLE X
MODIFICATION OF TOP-HEAVY RULES
10.1 Effective date. This Article 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 benefits requirements of Section 416(c) of the Code
for such years. This Article amends the top-heavy provisions of the plan.
10.2 Determination of top-heavy status.
---------------------------------
10.2.1 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
5-percent owner of the employer, or a 1-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.
3
10.2.2 Determination of present values and amounts. This Section 10.2.2 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.
a. Distributions during year ending on the determination date. The
----------------------------------------------------------------
present values of accrued benefits and the amounts of account balances
of an employee as of the determination date shall be increased by the
distributions made with respect to the employee under the plan and any
plan aggregated with the plan under Section 416(g)(2) of the Code
during the 1-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 "5-year period" for "1-year period."
b. Employees not performing services during year ending on the
----------------------------------------------------------------------
determination date. The accrued benefits and accounts of any
--------------------
individual who has not performed services for the employer during the
1-year period ending on the determination date shall not be taken into
account.
10.3 Minimum benefits.
----------------
10.3.1 Matching contributions. Employer 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. Employer matching contributions that
are used to satisfy the minimum contribution requirements shall be treated
as matching contributions for purposes of the actual contribution
percentage test and other requirements of Section 401(m) of the Code.
10.3.2 Contributions under other plans. The employer may provide, in an addendum
-------------------------------
to this amendment, 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). The addendum 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.
ARTICLE XI
DIRECT ROLLOVERS
11.1 Effective date. This Article shall apply to distributions made after
---------------
December 31, 2001.
11.2 Modification of definition of eligible retirement plan. For purposes of the
------------------------------------------------------
direct rollover provisions of the plan, 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, or 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 relation order, as
defined in Section 414(p) of the Code.
11.3 Modification of definition of eligible rollover distribution to exclude
---------------------------------------------------------------------------
hardship distributions. For purposes of the direct rollover provisions of
-----------------------
the plan, any amount that is distributed on account of hardship shall not
be an eligible rollover distribution and the distributee may not elect to
have any portion of such a distribution paid directly to an eligible
retirement plan.
11.4 Modification of definition of eligible rollover distribution to include
---------------------------------------------------------------------------
after-tax employee contributions. For purposes of the direct rollover
----------------------------------
provisions in the plan, a portion of a distribution shall not fail to be an
eligible rollover distribution merely because the portion consists of
after-tax 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.
ARTICLE XII
ROLLOVERS FROM OTHER PLANS
Rollovers from other plans. The employer, operationally and on a
- --------------------------------
nondiscriminatory basis, may limit the source of rollover contributions that may
be accepted by this plan.
ARTICLE XIII
REPEAL OF MULTIPLE USE TEST
Repeal of Multiple Use Test. The multiple use test described in Treasury
- -----------------------------
Regulation Section 1.401(m)-2 and the plan shall not apply for plan years
beginning after December 31, 2001.
4
ARTICLE XIV
ELECTIVE DEFERRALS
14.1 Elective Deferrals - 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 Article
VI of this amendment and Section 414(v) of the Code, if applicable.
14.2 Maximum Salary Reduction Contributions for SIMPLE plans. If this is a
------------------------------------------------------------
SIMPLE 401(k) plan, then except to the extent permitted under Article VI of
this amendment and Section 414(v) of the Code, if applicable, the maximum
salary reduction contribution that can be made to this plan is the amount
determined under Section 408(p)(2)(A)(ii) of the Code for the calendar
year.
ARTICLE XV
SAFE HARBOR PLAN PROVISIONS
Modification of Top-Heavy Rules. The top-heavy requirements of Section 416 of
- --------------------------------
the Code and the plan shall not apply in any year beginning after December 31,
2001, 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.
ARTICLE XVI
DISTRIBUTION UPON SEVERANCE OF EMPLOYMENT
16.1 Effective date. This Article shall apply for distributions and transactions
--------------
made after December 31, 2001, regardless of when the severance of
employment occurred.
16.2 New distributable event. A participant's elective deferrals, qualified
-------------------------
nonelective contributions, qualified matching contributions, and earnings
attributable to these 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 may be distributed.
This amendment has been executed this 10th day of January, 2003.
---- -------
Name of Employer: Wayne Savings Community Bank
----------------------------
By: /s/ Michael C. Anderson
-----------------------
EMPLOYER
Name of Plan: Wayne Savings 401(k) Retirement Plan
------------------------------------
5
EMPLOYEE BENEFIT COMPLIANCE SERVICES, INC.
DEFINED CONTRIBUTION PROTOTYPE PLAN AND TRUST
Defined Contribution Prototype Plan
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE II
ADMINISTRATION
2.1 POWERS AND RESPONSIBILITIES OF THE EMPLOYER...........................12
2.2 DESIGNATION OF ADMINISTRATIVE AUTHORITY...............................12
2.3 ALLOCATION AND DELEGATION OF RESPONSIBILITIES.........................13
2.4 POWERS AND DUTIES OF THE ADMINISTRATOR................................13
2.5 RECORDS AND REPORTS...................................................14
2.6 APPOINTMENT OF ADVISERS...............................................14
2.7 INFORMATION FROM EMPLOYER.............................................14
2.8 PAYMENT OF EXPENSES...................................................14
2.9 MAJORITY ACTIONS......................................................14
2.10 CLAIMS PROCEDURE......................................................14
2.11 CLAIMS REVIEW PROCEDURE...............................................15
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY.............................................15
3.2 EFFECTIVE DATE OF PARTICIPATION.......................................15
3.3 DETERMINATION OF ELIGIBILITY..........................................15
3.4 TERMINATION OF ELIGIBILITY............................................16
3.5 REHIRED EMPLOYEES AND BREAKS IN SERVICE...............................16
3.6 ELECTION NOT TO PARTICIPATE...........................................16
3.7 CONTROL OF ENTITIES BY OWNER-EMPLOYEE.................................17
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION.......................17
4.2 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION............................17
4.3 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS..................17
4.4 MAXIMUM ANNUAL ADDITIONS..............................................21
4.5 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS.............................25
4.6 ROLLOVERS.............................................................25
4.7 PLAN-TO-PLAN TRANSFERS FROM QUALIFIED PLANS...........................26
4.8 VOLUNTARY EMPLOYEE CONTRIBUTIONS......................................27
4.9 QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTIONS............................27
4.10 DIRECTED INVESTMENT ACCOUNT...........................................27
4.11 INTEGRATION IN MORE THAN ONE PLAN.....................................29
4.12 QUALIFIED MILITARY SERVICE............................................29
i
ARTICLE V
VALUATIONS
5.1 VALUATION OF THE TRUST FUND...........................................29
5.2 METHOD OF VALUATION...................................................29
ARTICLE VI
DETERMINATION AND DISTRIBUTION OF BENEFITS
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT.............................29
6.2 DETERMINATION OF BENEFITS UPON DEATH..................................30
6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY......................31
6.4 DETERMINATION OF BENEFITS UPON TERMINATION............................31
6.5 DISTRIBUTION OF BENEFITS..............................................32
6.6 DISTRIBUTION OF BENEFITS UPON DEATH...................................36
6.7 TIME OF DISTRIBUTION..................................................39
6.8 DISTRIBUTION FOR MINOR OR INCOMPETENT BENEFICIARY.....................39
6.9 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN........................39
6.10 IN-SERVICE DISTRIBUTION...............................................39
6.11 ADVANCE DISTRIBUTION FOR HARDSHIP.....................................39
6.12 SPECIAL RULE FOR CERTAIN PROFIT SHARING PLANS.........................40
6.13 QUALIFIED DOMESTIC RELATIONS ORDER DISTRIBUTION.......................40
6.14 DIRECT ROLLOVERS......................................................40
6.15 TRANSFER OF ASSETS FROM A MONEY PURCHASE PLAN.........................41
6.16 ELECTIVE TRANSFERS OF BENEFITS TO OTHER PLANS.........................41
ARTICLE VII
TRUSTEE AND CUSTODIAN
7.1 BASIC RESPONSIBILITIES OF THE TRUSTEE.................................42
7.2 INVESTMENT POWERS AND DUTIES OF DISCRETIONARY TRUSTEE.................43
7.3 INVESTMENT POWERS AND DUTIES OF NONDISCRETIONARY TRUSTEE..............45
7.4 POWERS AND DUTIES OF CUSTODIAN........................................46
7.5 LIFE INSURANCE........................................................46
7.6 LOANS TO PARTICIPANTS.................................................47
7.7 MAJORITY ACTIONS......................................................48
7.8 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES.........................48
7.9 ANNUAL REPORT OF THE TRUSTEE..........................................48
7.10 AUDIT.................................................................48
7.11 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE........................49
7.12 TRANSFER OF INTEREST..................................................49
7.13 TRUSTEE INDEMNIFICATION...............................................49
7.14 EMPLOYER SECURITIES AND REAL PROPERTY.................................49
ARTICLE VIII
AMENDMENT, TERMINATION AND MERGERS
8.1 AMENDMENT.............................................................50
8.2 TERMINATION...........................................................50
ii
8.3 MERGER, CONSOLIDATION OR TRANSFER OF ASSETS...........................51
ARTICLE IX
TOP HEAVY PROVISIONS
9.1 TOP HEAVY PLAN REQUIREMENTS...........................................51
9.2 DETERMINATION OF TOP HEAVY STATUS.....................................51
ARTICLE X
MISCELLANEOUS
10.1 EMPLOYER ADOPTIONS....................................................52
10.2 PARTICIPANT'S RIGHTS..................................................52
10.3 ALIENATION............................................................52
10.4 CONSTRUCTION OF PLAN..................................................53
10.5 GENDER AND NUMBER.....................................................53
10.6 LEGAL ACTION..........................................................53
10.7 PROHIBITION AGAINST DIVERSION OF FUNDS................................53
10.8 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE............................54
10.9 INSURER'S PROTECTIVE CLAUSE...........................................54
10.10 RECEIPT AND RELEASE FOR PAYMENTS......................................54
10.11 ACTION BY THE EMPLOYER................................................54
10.12 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY....................54
10.13 HEADINGS..............................................................54
10.14 APPROVAL BY INTERNAL REVENUE SERVICE..................................54
10.15 UNIFORMITY............................................................55
10.16 PAYMENT OF BENEFITS...................................................55
ARTICLE XI
PARTICIPATING EMPLOYERS
11.1 ELECTION TO BECOME A PARTICIPATING EMPLOYER...........................55
11.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS...............................55
11.3 DESIGNATION OF AGENT..................................................55
11.4 EMPLOYEE TRANSFERS....................................................55
11.5 PARTICIPATING EMPLOYER'S CONTRIBUTION AND FORFEITURES.................55
11.6 AMENDMENT.............................................................56
11.7 DISCONTINUANCE OF PARTICIPATION.......................................56
11.8 ADMINISTRATOR'S AUTHORITY.............................................56
11.9 PARTICIPATING EMPLOYER CONTRIBUTION FOR AFFILIATE.....................56
ARTICLE XII
CASH OR DEFERRED PROVISIONS
12.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION.......................56
12.2 PARTICIPANT'S SALARY REDUCTION ELECTION...............................57
12.3 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS..................59
12.4 ACTUAL DEFERRAL PERCENTAGE TESTS......................................60
12.5 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS........................62
12.6 ACTUAL CONTRIBUTION PERCENTAGE TESTS..................................64
iii
12.7 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE TESTS....................66
12.8 SAFE HARBOR PROVISIONS................................................68
12.9 ADVANCE DISTRIBUTION FOR HARDSHIP.....................................70
ARTICLE XIII
SIMPLE 401(K) PROVISIONS
13.1 SIMPLE 401(k) PROVISIONS..............................................71
13.2 DEFINITIONS...........................................................71
13.3 CONTRIBUTIONS.........................................................71
13.4 ELECTION AND NOTICE REQUIREMENTS......................................72
13.5 VESTING REQUIREMENTS..................................................72
13.6 TOP-HEAVY RULES.......................................................72
13.7 NONDISCRIMINATION TESTS...............................................72
iv
ARTICLE I
DEFINITIONS
As used in this Plan, the following words and phrases shall have the
meanings set forth herein unless a different meaning is clearly required by the
context:
1.1 "ACP" means the "Actual Contribution Percentage" determined
pursuant to Section 12.6(e).
1.2 "Act" means the Employee Retirement Income Security Act of 1974, as
it may be amended from time to time.
1.3 "ADP" means the "Actual Deferral Percentage" determined pursuant to
Section 12.4(e).
1.4 "Administrator" means the Employer unless another person or entity
has been designated by the Employer pursuant to Section 2.2 to administer the
Plan on behalf of the Employer.
1.5 "Adoption Agreement" means the separate agreement which is executed
by the Employer and sets forth the elective provisions of this Plan and Trust as
specified by the Employer.
1.6 "Affiliated Employer" means any corporation which is a member of a
controlled group of corporations (as defined in Code Section 414(b)) which
includes the Employer, any trade or business (whether or not incorporated) which
is under common control (as defined in Code Section 414(c)) with the Employer;
any organization (whether or not incorporated) which is a member of an
affiliated service group (as defined in Code Section 414(m)) which includes the
Employer; and any other entity required to be aggregated with the Employer
pursuant to Regulations under Code Section 414(o).
1.7 "Anniversary Date" means the last day of the Plan Year.
1.8 "Annuity Starting Date" means, with respect to any Participant, the
first day of the first period for which an amount is paid as an annuity, or, in
the case of a benefit not payable in the form of an annuity, the first day on
which all events have occurred which entitles the Participant to such benefit.
1.9 "Beneficiary" means the person (or entity) to whom all or a portion
of a deceased Participant's interest in the Plan is payable, subject to the
restrictions of Sections 6.2 and 6.6.
1.10 "Code" means the Internal Revenue Code of 1986, as amended.
1.11 "Compensation" with respect to any Participant means one of the
following as elected in the Adoption Agreement:
(a) Information required to be reported under Code Sections
6041, 6051 and 6052 (Wages, tips and other compensation as reported on
Form W-2). Compensation means wages, within the meaning of Code Section
3401 (a), 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 Code Sections 6041(d), 6051(a)(3) and 6052. Compensation must be
determined without regard to any rules under Code 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 Code Section 3401(a)(2)).
(b) Code Section 3401(a) Wages. Compensation means an
Employee's wages within the meaning of Code Section 3401 (a) 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 Code Section
3401(a)(2)).
(c) 415 Safe-Harbor Compensation. Compensation means 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 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 Regulation
1.62-2(c))), and excluding the following:
(1) 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 excludable from the Employee's
gross income, or any distributions from a plan of deferred
compensation;
1
(2) 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;
(3) Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option;
and
(4) Other amounts which receive 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 Code Section 403(b) (whether or not the
contributions are actually excludable from the gross income of
the Employee).
However, Compensation for any Self-Employed Individual shall
be equal to Earned Income. Compensation shall include only that Compensation
which is actually paid to the Participant during the determination period.
Except as otherwise provided in this Plan, the determination period shall be the
period elected by the Employer in the Adoption Agreement. If the Employer makes
no election, the determination period shall be the Plan Year.
Notwithstanding the above, if elected in the Adoption
Agreement, Compensation shall include all of the following types of elective
contributions and all of the following types of deferred compensation:
(a) Elective contributions that are made by the Employer on
behalf of a Participant that are not includible in gross income under
Code Sections 125, 402(e)(3), 402(h)(1)(B), 403(b), and for Plan Years
beginning on or after January 1, 2001 (or as of a date no earlier than
January l, 1998, as specified in an addendum to the Adoption Agreement),
132(f)(4);
(b) Compensation deferred under an eligible deferred
compensation plan within the meaning of Code Section 457(b); and
(c) Employee contributions (under governmental plans)
described in Code Section 414(h)(2) that are picked up by the employing
unit and thus are treated as Employer contributions.
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 Code Section 415(d), 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 l, 1990.
For Plan Years beginning on or after January 1, 1994,
Compensation in excess of $150,000 (or such other amount provided in the Code)
shall be disregarded for all purposes other than for purposes of salary deferral
elections. Such amount shall be adjusted by the Commissioner for increases in
the cost-of-living in accordance with Code Section 401(a)(17)(B).
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 twelve (I2) months, the $150,000 annual Compensation
limit will be multiplied by a fraction, the numerator of which is the number of
months in the determination period, and the denominator of which is twelve (12).
If Compensation for any prior determination period is taken
into account in determining a Participant's allocations for the current Plan
Year, 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.
Notwithstanding the foregoing, except as otherwise elected in
a non-standardized Adoption Agreement, the family member aggregation rules of
Code Sections 401(a)(17) and 414(q)(6) as in effect prior to the enactment of
the Small Business Job Protection Act of 1996 shall not apply to this Plan
effective with respect to Plan Years beginning after December 31, 1996.
If, in the Adoption Agreement, the Employer elects to exclude
a class of Employees from the Plan, then Compensation for any Employee who
becomes eligible or ceases to be eligible to participate during a determination
period shall only include Compensation while the Employee is an Eligible
Employee.
If, in connection with the adoption of any amendment, the
definition of Compensation has been modified, then, except as otherwise provided
herein, for Plan Years prior to the Plan Year which includes the adoption date
of such amendment, Compensation means compensation determined pursuant to the
terms of the Plan then in effect.
1.12 "Contract" or "Policy" means any life insurance policy, retirement
income policy, or annuity contract (group or individual) issued by the Insurer.
In the event of any conflict between the terms of this Plan and the terms of any
contract purchased hereunder, the Plan provisions shall control.
2
1.13 "Designated Investment Alternative" means a specific investment
identified by name by the Employer (or such other Fiduciary who has been given
the authority to select investment options) as an available investment under the
Plan to which Plan assets may be invested by the Trustee pursuant to the
investment direction of a Participant.
1.14 "Directed Investment Option" means a Designated Investment
Alternative and any other investment permitted by the Plan and the Participant
Direction Procedures to which Plan assets may be invested pursuant to the
investment direction of a Participant.
1.15 "Early Retirement Date" means the date specified in the Adoption
Agreement on which a Participant or Former Participant has satisfied the
requirements specified in the Adoption Agreement (Early Retirement Age). If
elected in the Adoption Agreement, a Participant shall become fully Vested upon
satisfying such requirements if the Participant is still employed at the Early
Retirement Age.
A Former Participant who separates from service after
satisfying any service requirement but before satisfying the age requirement for
Early Retirement Age and who thereafter reaches the age requirement contained
herein shall be entitled to receive benefits under this Plan (other than any
accelerated vesting and allocations of Employer Contributions) as though the
requirements for Early Retirement Age had been satisfied.
1.16 "Earned Income" means the net earnings from self-employment in the
trade or business with respect to which the Plan is established, for which the
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 made by the Employer to a qualified plan to the extent deductible
under Code Section 404. In addition, net earnings shall be determined with
regard to the deduction allowed to the taxpayer by Code Section 164(f), for
taxable years beginning after December 31, 1989.
1.17 "Elective Deferrals" means the Employer's contributions to the
Plan that are made pursuant to a Participant's deferral election pursuant to
Section 12.2, excluding any such amounts distributed as "excess annual
additions" pursuant to Section 4.5. Elective Deferrals shall be subject to the
requirements of Sections 12.2(b) and 12.2(c) and shall, except as otherwise
provided herein, be required to satisfy the nondiscrimination requirements of
Regulation 1.401(k)-1(b)(2), the provisions of which are specifically
incorporated herein by reference.
1.18 "Eligible Employee" means any Eligible Employee as elected in the
Adoption Agreement and as provided herein. With respect to a non-standardized
Adoption Agreement an individual shall not be an "Eligible Employee" if such
individual is not reported on the payroll records of the Employer as a common
law employee. In particular, it is expressly intended that individuals not
treated as common law employees by the Employer on its payroll records are not
"Eligible Employees" and are excluded from Plan participation even if a court or
administrative agency determines that such individuals are common law employees
and not independent contractors. Furthermore, with respect to a non-standardized
Adoption Agreement, Employees of an Affiliated Employer will not be treated as
"Eligible Employees" prior to the date the Affiliated Employer adopts the Plan
as a Participating Employer.
Except as otherwise provided in this paragraph, if the
Employer does not elect in the Adoption Agreement to include Employees who
became Employees as the result of a "Code Section 410(b)(6)(C) transaction,"
then such Employees will only be "Eligible Employees" after the expiration of
the transition 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
"Code Section 410(b)(6)(C) transaction" is an asset or stock acquisition,
merger, or similar transaction involving a change in the Employer of the
Employees of a trade or business that is subject to the special rules set forth
in Code Section 410(b)(6)(C). However, regardless of any election made in the
Adoption Agreement, if a separate entity becomes an Affiliate Employer as the
result of a "Code Section 410(b)(6)(C) transaction," then Employees of such
separate entity will not be treated as "Eligible Employees" prior to the date
the entity adopts the Plan as a Participating Employer or, with respect to a
standardized Adoption Agreement, if earlier, the expiration of the transition
period set forth above.
If, in the Adoption Agreement, the Employer elects to
exclude union employees, then Employees whose employment is governed by a
collective bargaining agreement between the Employer and "employee
representatives" under which retirement benefits were the subject of good faith
bargaining and if two percent (2%) or less of the Employees covered pursuant to
that agreement are professionals as defined in Regulation 1.410(b)-9, shall not
be eligible to participate in this Plan. 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.
If, in the Adoption Agreement, the Employer elects to
exclude non-resident aliens, then Employees who are non-resident aliens (within
the meaning of Code Section 7701(b)(1)(B)) who received no earned income (within
the meaning of Code Section 911(d)(2)) from the Employer which constitutes
income from sources within the United States (within the meaning of Code Section
861(a)(3)) shall not be eligible to participate in this Plan.
1.19 "Employee" means any person who is employed by the Employer. The
term "Employee" shall also include any person who is an employee of an
Affiliated Employer and any Leased Employee deemed to be an Employee as provided
in Code Section 414(n) or (o).
3
1.20 "Employer" means the entity specified in the Adoption Agreement,
any successor which shall maintain this Plan and any predecessor which has
maintained this Plan. In addition, unless the context means otherwise, the term
"Employer" shall include any Participating Employer (as defined in Section 11.1)
which shall adopt this Plan.
1.21 "Excess Aggregate Contributions" means, with respect to any Plan
Year, the excess of:
(a) The aggregate "Contribution Percentage Amounts" (as
defined in Section 12.6) actually made on behalf of Highly Compensated
Participants for such Plan Year and taken into account in computing the
numerator of the ACP, over
(b) The maximum "Contribution Percentage Amounts" permitted by
the ACP test in Section 12.6 (determined by reducing contributions made
on behalf of Highly Compensated Participants in order of their
"Contribution Percentages" beginning with the highest of such
percentages).
Such determination shall be made after first taking into
account corrections of any Excess Deferrals pursuant to Section 12.2 and then
taking into account adjustments of any Excess Contributions pursuant to Section
12.5.
1.22 "Excess Compensation" means, with respect to a Plan that is
integrated with Social Security (permitted disparity), a Participant's
Compensation which is in excess of the integration level elected in the Adoption
Agreement.
However, if Compensation is based on less than a twelve (12)
month determination period, Excess Compensation shall be determined by reducing
the integration level by a fraction, the numerator of which is the number of
full months in the short period and the denominator of which is twelve (12).
1.23 "Excess Contributions" means, with respect to any Plan Year, the
excess of:
(a) The aggregate amount of Employer contributions actually
made on behalf of Highly Compensated Participants for such Plan Year
and taken into account in computing the numerator of the ADP, over
(b) The maximum amount of such contributions permitted by the
ADP test in Section 12.4 (determined by hypothetically reducing
contributions made on behalf of Highly Compensated Participants in
order of the actual deferral ratios, beginning with the highest of such
ratios).
In determining the amount of Excess Contributions to be
distributed and/or recharacterized with respect to an affected Highly
Compensated Participant as determined herein, such amount shall be reduced by
any Excess Deferrals previously distributed to such affected Highly Compensated
Participant for the Participant's taxable year ending with or within such Plan
Year.
1.24 "Excess Deferrals" means, with respect to any taxable year of a
Participant, those elective deferrals (within the meaning of Code Section
402(8)) that are includible in the Participant's gross income under Code Section
402(g) to the extent such Participant's elective deferrals for the taxable year
exceed the dollar limitation under such Code Section. Excess Deferrals shall be
treated as an "Annual Addition" pursuant to Section 4.4 when contributed to the
Plan unless distributed to the affected Participant not later than the first
April 15th following the close of the Participant's taxable year in which the
Excess Deferral was made. Additionally, for purposes of Sections 4.3(f) and 9.2.
Excess Deferrals shall continue to be treated as Employer contributions even if
distributed pursuant to Section 12.2(e). However, Excess Deferrals of Non-Highly
Compensated Participants are not taken into account for purposes of Section
12.4.
1.25 "Fiduciary" means any person who (a) exercises any discretionary
authority or discretionary control respecting management of the Plan or
exercises any authority or control respecting management or disposition of its
assets, (b) renders investment advice for a fee or other compensation, direct or
indirect, with respect to any monies or other property of the Plan or has any
authority or responsibility to do so, or (c) has any discretionary authority or
discretionary responsibility in the administration of the Plan.
1.26 "Fiscal Year" means the Employer's accounting year.
1.27 "Forfeiture" means, with respect to a Former Participant who has
severed employment, that portion of the Participant's Account that is not
Vested. Unless otherwise elected in the Adoption Agreement, Forfeitures occur
pursuant to (a) below.
(a) A Forfeiture will occur on the earlier of:
(1) The last day of the Plan Year in which a Former
Participant who has severed employment with the Employer
incurs five (5) consecutive 1-Year Breaks in Service, or
(2) The distribution of the entire Vested portion of
the Participant's Account of a Former Participant who has
severed employment with the Employer. For purposes of this
provision, if the Former Participant has
4
a Vested benefit of zero, then such Former Participant shall
be deemed to have received a distribution of such Vested
benefit as of the year in which the severance of employment
occurs.
(b) If elected in the Adoption Agreement, a Forfeiture will
occur as of the last day of the Plan Year in which the Former
Participant incurs five (5) 1-Year Breaks in Service.
Regardless of the preceding provisions, if a Former
Participant is eligible to share in the allocation of Employer contributions or
Forfeitures in the year in which the Forfeiture would otherwise occur, then the
Forfeiture will not occur until the end of the first Plan Year for which the
Former Participant is not eligible to share in the allocation of Employer
contributions or Forfeitures. Furthermore, the term "Forfeiture" shall also
include amounts deemed to be Forfeitures pursuant to any other provision of this
Plan.
1.28 "Former Participant" means a person who has been a Participant,
but who has ceased to be a Participant for any reason.
1.29 "414(s) Compensation" means any definition of compensation that
satisfies the nondiscrimination requirements of Code Section 414(s) and the
Regulations thereunder. The period for determining 414(s) Compensation must be
either the Plan Year or the calendar year ending with or within the Plan Year.
An Employer may further limit the period taken into account to that part of the
Plan Year or calendar year in which an Employee was a Participant in the
component of the Plan being tested. The period used to determine 414(s)
Compensation must be applied uniformly to all Participants for the Plan Year.
1.30 "415 Compensation" means, with respect to any Participant, such
Participant's (a) Wages, tips and other compensation on Form W-2, (b) Section
3401(a) wages or (c) 415 safe-harbor compensation as elected in the Adoption
Agreement for purposes of Compensation, 415 Compensation shall be based on the
full Limitation Year regardless of when participation in the Plan commences.
Furthermore, regardless of any election made in the Adoption Agreement with
respect to Limitation Years beginning after December 31, 1997, 415 Compensation
shall include any elective deferral (as defined in Code Section 402(g)(3)) and
any amount which is contributed or deferred by the Employer at the election of
the Participant and which is not includible in the gross income of the
Participant by reason of Code Section 125, 457, and, for Limitation Years
beginning on or after January 1, 2001 (or as of a date no earlier than January
1, 1998, as specified in an addendum to the Adoption Agreement), 132(f)(4). For
Limitation Years beginning prior to January 1, 1998, 415 Compensation shall
exclude such amounts.
Except as otherwise provided herein, if in connection with
the adoption of any amendment, the definition of 415 Compensation has been
modified, then for Plan Years prior to the Plan Year which includes the adoption
date of such amendment, 415 Compensation means compensation determined pursuant
to the terms of the Plan then in effect.
1.31 "Highly Compensated Employee" means, effective for Plan Years
beginning after December 31, 1996, an Employee described in Code Section 414(q)
and the Regulations thereunder, and generally means any Employee who:
(a) was a "five percent (5%) owner" as defined in Section
1.37(c) at any time during the "determination year" or the "look-back
year"; or
(b) for the "look-back year" had 415 Compensation from the
Employer in excess of $80,000 and, if elected in the Adoption
Agreement, was in the Top-Paid Group for the "look-back year." The
$80,000 amount is adjusted at the same time and in the same manner as
under Code Section 415(d), except that the base period is the calendar
quarter ending September 30, 1996.
The "determination year" means the Plan Year for which testing
is being performed and the "look-back year" means the immediately preceding
twelve (12) month period. However, if the calendar year data election is made in
the Adoption Agreement, for purposes of (b) above, the "look-back year" shall be
the calendar year beginning within the twelve (12) month period immediately
preceding the "determination year." Notwithstanding the preceding sentence, if
the calendar year data election is effective with respect to a Plan Year
beginning in 1997, then for such Plan Year the "look-back year" shall be the
calendar year ending with or within the Plan Year for which testing is being
performed, and the "determination year" shall be the period of time, if any,
which extends beyond the "look-back year" and ends on the last day of the Plan
Year for which testing is being performed.
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 Regulation 1.414(q)-1T, A-4 and
IRS Notice 97-45 (or any superseding guidance).
In determining whether an employee is a Highly Compensated
Employee for a Plan Year beginning in 1997, the amendments to Code Section
414(q) stated above are treated as having been in effect for years beginning in
1996.
For purposes of this Section, for Plan Years beginning prior
to January 1, 1998, the determination of 415 Compensation shall be made by
including amounts that would otherwise be excluded from a Participant's gross
income by reason of the application of Code Sections 125, 402(e)(3),
402(h)(1)(B) and, for Plan Years beginning on or after January 1, 2001 (or as of
a date, no earlier than January 1, 1998, as specified in an addendum to the
Adoption Agreement), 132(f)(4), and, in the case of Employer contributions made
pursuant to a salary reduction agreement, Code Section 403(b).
5
In determining who is a Highly Compensated Employee, Employees
who are non-resident aliens and who received no earned income (within the
meaning of Code Section 911 (d)) from the Employer constituting United States
source income within the meaning of Code Section 861(a)(3) shall not be treated
as Employees. Additionally, all Affiliated Employers shall be taken into account
as a single employer and Leased Employees within the meaning of Code Sections
414(n)(2) and 414(o)(2) shall be considered Employees unless such Leased
Employees are covered by a plan described in Code Section 414(n)(5) and are not
covered in any qualified plan maintained by the Employer. The exclusion of
Leased Employees for this purpose shall be applied on a uniform and consistent
basis for all of the Employer's retirement plans,
1.32 "Highly Compensated Participant" means any Highly Compensated
Employee who is eligible to participate in the component of the Plan being
tested.
1.33 "Hour of Service" means (1) each hour for which an Employee is
directly or indirectly compensated or entitled to compensation by the Employer
for the performance of duties during the applicable computation period (these
hours will be credited to the Employee for the computation period in which the
duties are performed); (2) each hour for which an Employee is directly or
indirectly compensated or entitled to compensation by the Employer (irrespective
of whether the employment relationship has terminated) for reasons other than
performance of duties (such as vacation, holidays, sickness, incapacity
(including disability), jury duty, lay-off, military duty or leave of absence)
during the applicable computation period (these hours will be calculated and
credited pursuant to Department of Labor regulation 2530.200b-2 which is
incorporated herein by reference); (3) each hour for which back pay is awarded
or agreed to by the Employer without regard to mitigation of damages (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). The same Hours of Service shall
not be credited both under (1) or (2), as the case may be, and under (3).
Notwithstanding (2) above, (i) no more than 501 Hours of
Service are required to be credited to an Employee on account of any single
continuous period during which the Employee performs no duties (whether or not
such period occurs in a single computation period); (ii) an hour for which an
Employee is directly or indirectly paid, or entitled to payment, on account of a
period during which no duties are performed is not required to be credited to
the Employee if such payment is made or due under a plan maintained solely for
the purpose of complying with applicable workers' compensation, or unemployment
compensation or disability insurance laws; and (iii) Hours of Service are not
required to be credited for a payment which solely reimburses an Employee for
medical or medically related expenses incurred by the Employee. Furthermore, for
purposes of (2) above, a payment shall be deemed to be made by or due from the
Employer regardless of whether such payment is made by or due from the Employer
directly, or indirectly through, among others, a trust fund, or insurer to which
the Employer contributes or pays premiums and regardless of whether
contributions made or due to the trust fund, insurer, or other entity are for
the benefit of particular Employees or are on behalf of a group of Employees in
the aggregate.
Hours of Service will be credited for employment with all
Affiliated Employers and for any individual considered to be a Leased Employee
pursuant to Code Section 414(n) or 414(o) and the Regulations thereunder.
Furthermore, the provisions of Department of Labor regulations 2530.200b-2(b)
and (c) are incorporated herein by reference.
Hours of Service will be determined on the basis of the method
elected in the Adoption Agreement.
1.34 "Insurer" means any legal reserve insurance company which has
issued or shall issue one or more Contracts or Policies under the Plan.
1.35 "Investment Manager" means a Fiduciary as described in Act Section
3(38).
1.36 "Joint and Survivor Annuity" means an annuity for the life of a
Participant with a survivor annuity for the life of the Participant's spouse
which is not less than fifty percent (50%), nor more than one-hundred percent
(100%) of the amount of the annuity payable during the joint lives of the
Participant and the Participant's spouse which can be purchased with the
Participant's Vested interest in the Plan reduced by any outstanding loan
balances pursuant to Section 7.6.
1.37 "Key Employee" means an Employee as defined in Code Section 416(i)
and the Regulations thereunder. Generally, any Employee or former Employee (as
well as each of such Employee's or former Employee's Beneficiaries) is
considered a Key Employee if, the individual at any time during the Plan Year
that contains the "Determination Date" (as defined in Section 9.2(c)) or any of
the preceding four (4) Plan Years, has been included in one of the following
categories:
(a) an officer of the Employer (as that term is defined within
the meaning of the Regulations under Code Section 416) having annual
415 Compensation greater than fifty percent (50%) of the amount in
effect under Code Section 415(b)(1)(A) for any such Plan Year;
(b) one of the ten Employees having annual 415 Compensation
from the Employer for a Plan Year greater than the dollar limitation in
effect under Code Section 415(c)(1)(A) for the calendar year in which
such Plan Year ends and owning (or considered as owning within the
meaning of Code Section 318) both more than one-half percent (1/2%)
interest and the largest interests in the Employer;
6
(c) a "five percent (5%) owner" of the Employer, "Five percent
(5%) owner" means any person who owns (or is considered as owning
within the meaning of Code Section 318) more than five percent (5%) of
the value of the outstanding stock of the Employer or stock possessing
more than five percent (5%) of the total combined voting power of all
stock of the Employer or, in the case of an unincorporated business,
any person who owns more than five percent (5%) of the capital or
profits interest in the Employer; and
(d) a "one percent (1%) owner" of the Employer having annual
415 Compensation from the Employer of more than $150,000. "One percent
(1%) owner" means any person who owns (or is considered as owning
within the meaning of Code Section 318) more than one percent (1%) of
the value of the outstanding stock of the Employer or stock possessing
more than one percent (1%) of the total combined voting power of all
stock of the Employer or, in the case of an unincorporated business,
any person who owns more than one percent (1%) of the capital or
profits interest in the Employer.
In determining percentage ownership hereunder, employers that
would otherwise be aggregated under Code Sections 414(b), (c), (m) and (o) shall
be treated as separate employers. In determining whether all individual has 415
Compensation of more than $150,000, 415 Compensation from each employer required
to be aggregated under Code Sections 414(b), (c), (m) and (o) shall be taken
into account. Furthermore, for purposes of this Section, for Plan Years
beginning prior to January 1, 1998, the determination of 415 Compensation shall
be made by including amounts that would otherwise be excluded from a
Participant's gross income by reason of the application of Code Sections 125,
402(e)(3), 402(h)(1)(B) and, for Plan Years beginning on or after January 1,
2001 (or as of a date, no earlier than January 1, 1998, as specified in an
addendum to the Adoption Agreement), 132(f)(4), and, in the case of Employer
contributions made pursuant to a salary reduction agreement, Code Section
403(b).
1.38 "Late Retirement Date" means the date of, or the first day of the
month or the Anniversary Date coinciding with or next following, whichever
corresponds to the election in the Adoption Agreement for the Normal Retirement
Date, a Participant's actual retirement after having reached the Normal
Retirement Date.
1.39 "Leased Employee" means, effective with respect to 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 or entity ("leasing organization"), has performed services
for the recipient (or for the recipient and related persons determined in
accordance with Code Section 414(n)(6)) 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. Furthermore, Compensation for a Leased Employee shall
only include Compensation from the leasing organization that is attributable to
services performed for the recipient Employer.
A Leased Employee shall not be considered an employee of the
recipient Employer if: (a) such employee is covered by a money purchase pension
plan providing: (1) a nonintegrated employer contribution rate of at least ten
percent (10%) of compensation, as defined in Code Section 415(c)(3), but for
Plan Years beginning prior to January 1, 1998, including amounts contributed
pursuant to a salary reduction agreement which are excludable from the
employee's gross income under Code Sections 125, 402(e)(3), 402(h)(1)(B),
403(b), or for Plan Years beginning on or after January 1, 2001 (or as of a
date, no earlier than January 1, 1998, as specified in an addendum to the
Adoption Agreement), 132(f)(4), (2) immediate participation, and (3) full and
immediate vesting; and (b) leased employees do not constitute more than twenty
percent (20%) of the recipient Employer's nonhighly compensated workforce.
1.40 "Limitation Year" means the determination period used to determine
Compensation. However, the Employer may elect a different Limitation Year in the
Adoption Agreement or by adopting a written resolution to such effect. All
qualified plans maintained by the Employer must use the same Limitation Year.
Furthermore, unless there is a change to a new Limitation Year, the Limitation
Year will be a twelve (12) consecutive month period. In the case of an initial
Limitation Year, the Limitation Year will be the twelve (12) consecutive month
period ending on the last day of the period specified in the Adoption Agreement
(or written resolution). If the Limitation Year is amended to a different twelve
(12) consecutive month period, the new "Limitation Year" must begin on a date
within the "Limitation Year" in which the amendment is made.
1.41 "Net Profit" means, with respect to any Fiscal Year, the
Employer's net income or profit for such Fiscal Year determined upon the basis
of the Employer's books of account in accordance with generally accepted
accounting principles, without any reduction for taxes based upon income, or for
contributions made by the Employer to this Plan and any other qualified plan.
1.42 "Non-Elective Contribution" means the Employer's contributions to
the Plan other than Elective Deferrals, any Qualified Non-Elective Contributions
and any Qualified Matching Contributions. Employer matching contributions which
are not Qualified Matching Contributions shall be considered a Non-Elective
Contribution for purposes of the Plan.
1.43 "Non-Highly Compensated Participant" means any Participant who is
not a Highly Compensated Employee. However, if pursuant to Sections 12.4 or 12.6
the prior year testing method is used to calculate the ADP or the ACP, a
Non-Highly Compensated Participant shall be determined using the definition of
Highly Compensated Employee in effect for the preceding Plan Year.
7
1.44 "Non-Key Employee" means any Employee or former Employee (and such
Employee's or former Employee's Beneficiaries) who is not, and has never been, a
key Employee.
1.45 "Normal Retirement Age" means the age elected in the Adoption
Agreement at which time a Participant's Account shall be nonforfeitable (if the
Participant is employed by the Employer on or after that date).
1.46 "Normal Retirement Date" means the date elected in the Adoption
Agreement.
1.47 "1-Year Break in Service" means, if the Hour of Service Method is
elected in the Adoption Agreement, the applicable computation period during
which an Employee or former Employee has not completed more than 500 Hours of
Service. Further, solely for the purpose of determining whether an Employee has
incurred a 1-Year Break in Service, Hours of Service shall be recognized for
"authorized leaves of absence" and "maternity and paternity leaves of absence."
For this purpose, Hours of Service shall be credited for the computation period
in which the absence from work begins, only if credit therefore is necessary to
prevent the Employee from incurring a 1-Year Break in Service, or in any other
case in the immediately following computation period. The Hours of Service
credited for a "maternity or paternity leave of absence" shall be those which
would normally have been credited but for such absence, or in any case in which
the Administrator is unable to determine such hours normally credited, eight (8)
Hours of Service per day. The total Hours of Service required to be credited for
a "maternity or paternity leave of absence" shall not exceed the number of Hours
of Service needed to prevent the Employee from incurring a 1-Year Break in
Service.
"Authorized leave of absence" means an unpaid, temporary
cessation from active employment with the Employer pursuant to an established
nondiscriminatory policy, whether occasioned by illness, military service, or
any other reason.
A "maternity or paternity leave of absence" means an absence
from work for any period by reason of the Employee's pregnancy, birth of the
Employee's child, placement of a child with the Employee in connection with the
adoption of such child, or any absence for the purpose of caring for such child
for a period immediately following such birth or placement.
If the Elapsed Time Method is elected in the Adoption
Agreement, a "1-Year Break in Service" means a twelve (12) consecutive month
period beginning on the severance from service date or any anniversary thereof
and ending on the next succeeding anniversary of such date, provided, however,
that the Employee or former Employee does not perform an Hour of Service for the
Employer during such twelve (12) consecutive month period.
1.48 "Owner-Employee" means a sole proprietor who owns the entire
interest in the Employer or a partner (or member in the case of a limited
liability company treated as a partnership or sole proprietorship for federal
income tax purposes) who owns more than ten percent (100) of either the capital
interest or the profits interest in the Employer and who receives income for
personal services from the Employer.
1.49 "Participant" means any Eligible Employee who has satisfied the
requirements of Section 3.2 and has not for any reason become ineligible to
participate further in the Plan.
1.50 "Participant Directed Account" means that portion of a
Participant's interest in the Plan with respect to which the Participant has
directed the investment in accordance with the Participant Direction Procedures.
1.51 "Participant Direction Procedures" means such instructions,
guidelines or policies, the terms of which are incorporated herein, as shall be
established pursuant to Section 4.10 and observed by the Administrator and
applied and provided to Participants who have Participant Directed Accounts.
1.52 "Participant's Account" means the account established and
maintained by the Administrator for each Participant with respect to such
Participant's total interest under the Plan resulting from (a) the Employer's
contributions in the case of a Profit Sharing Plan or Money Purchase Plan, and
(b) the Employer's Non-Elective Contributions in the case of a 401(k) Profit
Sharing Plan. Separate accountings shall be maintained with respect to that
portion of a Participant's Account attributable to Employer matching
contributions and to Employer discretionary contributions made pursuant to
Section 12.1(a)(3).
1.53 "Participant's Combined Account" means the total aggregate amount
of a Participant's interest under the Plan resulting from Employer contributions
(including Elective Deferrals).
1.54 "Participant's Elective Deferral Account" means the account
established and maintained by the Administrator for each Participant with
respect to such Participant's total interest in the Plan resulting from Elective
Deferrals. Amounts in the Participant's Elective Deferral Account are
nonforfeitable when made and are subject to the distribution restrictions of
Section 12.2(c).
1.55 "Participant's Rollover Account" means the account established and
maintained by the Administrator for each Participant with respect to such
Participant's interest in the Plan resulting from amounts transferred from
another qualified plan or "conduit" Individual Retirement Account in accordance
with Section 4.6.
8
1.56 "Participant's Transfer Account" means the account established and
maintained by the Administrator for each Participant with respect to the total
interest in the Plan resulting from amounts transferred to this Plan from a
direct plan-toplan transfer in accordance with Section 4.7.
1.57 "Period of Service" means the aggregate of all periods commencing
with an Employee's first day of employment or reemployment with the Employer or
an Affiliated Employer and ending on the first day of a Period of Severance. The
first day of employment or reemployment is the first day the Employee performs
an Hour of Service. An Employee will also receive partial credit for any Period
of Severance of less than twelve (12) consecutive months. Fractional periods of
a year will be expressed in terms of days.
Periods of Service with any Affiliated Employer shall be
recognized. Furthermore, Periods of Service with any predecessor employer that
maintained this Plan shall be recognized. Periods of Service with any other
predecessor employer shall be recognized as elected in the Adoption Agreement.
In determining Periods of Service for purposes of vesting
under the Plan, Periods of Service will be excluded as elected in the Adoption
Agreement and as specified in Section 3.5.
In the event the method of crediting service is amended from
the Hour of Service Method to the Elapsed Time Method an Employee will receive
credit for a Period of Service consisting of:
(a) A number of years equal to the number of Years of Service
credited to the Employee before the computation period during which the
amendment occurs; and
(b) The greater of (1) the Periods of Service that would be
credited to the Employee under the Elapsed Time Method for service
during the entire computation period in which the transfer occurs or
(2) the service taken into account under the Hour of Service Method as
of the date of the amendment.
In addition, the Employee will receive credit for service
subsequent to the amendment commencing on the day after the last day of the
computation period in which the transfer occurs.
1.58 "Period of Severance" means a continuous period of time during
which an Employee is not employed by the Employer. Such period begins on the
date the Employee retires, quits or is discharged, or if earlier, the twelve
(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 twelve (12) consecutive month period
beginning on the first anniversary of the first day of such absence shall not
constitute a one year Period of Severance. For purposes of this paragraph, an
absence from work for "maternity or paternity" reasons means an absence (a) by
reason of the pregnancy of the individual, (b) by reason of the birth of a child
of the individual, (c) by reason of the placement of a child with the individual
in connection with the adoption of such child by such individual, or (d) for
purposes of caring for such child for a period beginning immediately following
such birth or placement.
1.59 "Plan" means this instrument (hereinafter referred to as Employee
Benefit Compliance Services, Inc. Defined Contribution Prototype Plan and Trust
Basic Plan Document #01) and the Adoption Agreement as adopted by the Employer,
including all amendments thereto and any addendum which is specifically
permitted pursuant to the terms of the Plan.
1.60 "Plan Year" means the Plan's accounting year as specified in the
Adoption Agreement. Unless there is a Short Plan Year, the Plan Year will be a
twelve-consecutive month period.
1.61 "Pre-Retirement Survivor Annuity" means an immediate annuity for
the life of a Participant's spouse, the payments under which must be equal to
the benefit which can be provided with the percentage, as specified in the
Adoption Agreement, of the Participant's Vested interest in the Plan as of the
date of death. If no election is made in the Adoption Agreement, the percentage
shall be equal to fifty percent (50%). Furthermore, if less than one hundred
percent (100%) of the Participant's Vested interest in the Plan is used to
provide the Pre-Retirement Survivor Annuity, a proportionate share of each of
the Participant's accounts shall be used to provide the Pre-Retirement Survivor
Annuity.
1.62 "Qualified Matching Contribution" means any Employer matching
contributions that are made pursuant to Sections 12.1(a)(2) if elected in the
Adoption Agreement, 12.5 and 12.7.
1.63 "Qualified Matching Contribution Account" means the account
established hereunder to which Qualified Matching Contributions are allocated.
Amounts in the Qualified Matching Contribution Account are nonforfeitable when
made and are subject to the distribution restrictions of Section 12.2(c).
1.64 "Qualified Non-Elective Contribution" means the Employer's
contributions to the Plan that are made pursuant to Sections 12.1(a)(4) if
elected in the Adoption Agreement, 12.5 and 12.7.
9
1.65 "Qualified Non-Elective Contribution Account" means the account
established hereunder to which Qualified Non-Elective Contributions are
allocated. Amounts in the Qualified Non-Elective Contribution Account are
nonforfeitable when made and are subject to the distribution restrictions of
Section 12.2(c).
1.66 "Qualified Voluntary Employee Contribution Account" means the
account established hereunder to which a Participant's tax deductible qualified
voluntary employee contributions made pursuant to Section 4.9 are allocated.
1.67 "Regulation" means the Income Tax Regulations as promulgated by
the Secretary of the Treasury or a delegate of the Secretary of the Treasury,
and as amended from time to time.
1.68 "Retired Participant" means a person who has been a Participant,
but who has become entitled to retirement benefits under the Plan.
1.69 "Retirement Date" means the date as of which a Participant retires
for reasons other than Total and Permanent Disability, regardless of whether
such retirement occurs on a Participant's Normal Retirement Date, Early
Retirement Date or Late Retirement Date (see Section 6.1).
1.70 "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 and also an individual who would have had Earned Income but for the
fact that the trade or business had no net profits for the taxable year. A
Self-Employed Individual shall be treated as an Employee.
1.71 "Shareholder-Employee" means a Participant who owns (or is deemed
to own pursuant to Code Section 318(a)(1)) more than five percent (5%) of the
Employer's outstanding capital stock during any year in which the Employer
elected to be taxed as a Small Business Corporation (S Corporation) under the
applicable Code sections relating to Small Business Corporations.
1.72 "Short Plan Year" means, if specified in the Adoption Agreement, a
Plan Year of less than a twelve (12) month period. If there is a Short Plan
Year, the following rules shall apply in the administration of this Plan. In
determining whether an Employee has completed a Year of Service (or Period of
Service if the Elapsed Time Method is used) for benefit accrual purposes in the
Short Plan Year, the number of the Hours of Service (or months of service if the
Elapsed Time Method is used) required shall be proportionately reduced based on
the number of days for months) in the Short Plan Year. The determination of
whether an Employee has completed a Year of Service (or Period of Service) for
vesting and eligibility purposes shall be made in accordance with Department of
Labor regulation 2530.203-2(c). In addition, if this Plan is integrated with
Social Security, then the integration level shall be proportionately reduced
based on the number of months in the Short Plan Year.
1.73 "Super Top Heavy Plan" means a plan which would be a Top Heavy
Plan if sixty percent (60%) is replaced with ninety percent (90%) in Section
9.2(a). However, effective as of the first Plan Year beginning after December
31, 1999, no Plan shall be considered a Super Top Heavy Plan.
1.74 "Taxable Wage Base" means, with respect to any Plan Year, the
contribution and benefit base under Section 230 of the Social Security Act at
the beginning of such Plan Year.
1.75 "Terminated Participant" means a person who has been a
Participant, but whose employment has been terminated other than by death, Total
and Permanent Disability or retirement.
1.76 "Top Heavy Plan" means a plan described in Section 9.2(a).
1.77 "Top Heavy Plan Year" means a Plan Year commencing after December
31, 1983, during which the Plan is a Top Heavy Plan.
1.78 "Top-Paid Group" shall be determined pursuant to Code Section
414(q) and the Regulations thereunder and generally means the top twenty percent
(20%) of Employees who performed services for the Employer during the applicable
year, ranked according to the amount of 415 Compensation received from the
Employer during such year. All Affiliated Employers shall be taken into account
as a single employer, and Leased Employees shall be treated as Employees if
required pursuant to Code Section 414(n) or (o). Employees who are non-resident
aliens who received no earned income (within the meaning of Code Section 911
(d)(2)) from the Employer constituting United States source income within the
meaning of Code Section 861(a)(3) shall not be treated as Employees.
Furthermore, for the purpose of determining the number of active Employees in
any year, the following additional Employees may also be excluded, however, such
Employees shall still be considered for the purpose of identifying the
particular Employees in the Top-Paid Group:
(a) Employees with less than six (6) months of service;
(b) Employees who normally work less than 17 1/2 hours per
week;
(c) Employees who normally work less than six (6) months
during a year; and
(d) Employees who have not yet attained age twenty-one (21).
10
In addition, if ninety percent (90%) or more of the Employees
of the Employer are covered under agreements the Secretary of Labor finds to be
collective bargaining agreements between Employee representatives and the
Employer, and the Plan covers only Employees who are not covered under such
agreements, then Employees covered by such agreements shall be excluded from
both the total number of active Employees as well as from the identification of
particular Employees in the TopPaid Group.
The foregoing exclusions set forth in this Section shall be
applied on a uniform and consistent basis for all purposes for which the Code
Section 414(q) definition is applicable. Furthermore, in applying such
exclusions, the Employer may substitute any lesser service, hours or age.
1.79 "Total and Permanent 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
twelve (12) months. The disability of a Participant shall be determined by a
licensed physician chosen by the Administrator. However, if the condition
constitutes total disability under the federal Social Security Acts, the
Administrator may rely upon such determination that the Participant is Totally
and Permanently Disabled for the purposes of this Plan. The determination shall
be applied uniformly to all Participants.
1.80 "Trustee" means the person or entity named in the Adoption
Agreement, or any successors thereto.
If the sponsor of this prototype is a bank, savings and loan,
trust company, credit union or similar institution, a person or entity other
than the prototype sponsor (or its affiliates or subsidiaries) may not serve as
Trustee without the written consent of the sponsor.
1.81 "Trust Fund" means the assets of the Plan and Trust as the same
shall exist from time to time.
1.82 "Valuation Date" means the date or dates specified in the Adoption
Agreement. Regardless of any election to the contrary, the Valuation Date shall
include the Anniversary Date and may include any other date or dates deemed
necessary or appropriate by the Administrator for the valuation of Participants'
Accounts during the Plan Year, which may include any day that the Trustee, any
transfer agent appointed by the Trustee or the Employer, or any stock exchange
used by such agent, are open for business.
1.83 "Vested" means the nonforfeitable portion of any account
maintained on behalf of a Participant.
1.84 "Voluntary Contribution Account" means the account established and
maintained by the Administrator for each Participant with respect to such
Participant's total interest in the Plan resulting from the Participant's
after-tax voluntary Employee contributions made pursuant to Section 4.7.
Amounts recharacterized as after-tax voluntary Employee
contributions pursuant to Section 12.5 shall remain subject to the limitations
of Section 12.2. Therefore, a separate accounting shall be maintained with
respect to that portion of the Voluntary Contribution Account attributable to
after-tax voluntary Employee contributions made pursuant to Section 4.8.
1.85 "Year of Service" means the computation period of twelve (12)
consecutive months, herein set forth, and during which an Employee has completed
at least 1,000 Hours of Service (unless a lower number of Hours of Service is
specified in the Adoption Agreement).
For purposes of eligibility for participation, the initial
computation period shall begin with the date on which the Employee first
performs an Hour of Service (employment commencement date). The initial
computation period beginning after a 1-Year Break in Service shall be measured
from the date on which an Employee again performs an Hour of Service. Unless
otherwise elected in the Adoption Agreement, the succeeding computation periods
shall begin on the anniversary of the Employee's employment commencement date.
However, unless otherwise elected in the Adoption Agreement, if one (1) Year of
Service or less is required as a condition of eligibility, then the computation
period after the initial computation period shall shift to the current Plan Year
which includes the anniversary of the date on which the Employee first performed
an Hour of Service, and subsequent computation periods shall be the Plan Year.
If there is a shift to the Plan Year, an Employee who is credited with the
number of Hours of Service to be credited with a Year of Service in both the
initial eligibility computation period and the first Plan Year which commences
prior to the first anniversary of the Employee's initial eligibility computation
period will be credited with two (2) Years of Service for purposes of
eligibility to participate.
If two (2) Years of Service are required as a condition of
eligibility, a Participant will only have completed two (2) Years of Service for
eligibility purposes upon completing two (2) consecutive Years of Service
without an intervening 1Year Break-in-Service.
For vesting purposes, and all other purposes not specifically
addressed in this Section, the computation period shall be the period elected in
the Adoption Agreement. If no election is made in the Adoption Agreement, the
computation period shall be the Plan Year.
11
In determining Years of Service for purposes of vesting under
the Plan, Years of Service will be excluded as elected in the Adoption Agreement
and as specified in Section 3.5.
Years of Service and 1-Year Breaks in Service for eligibility
purposes will be measured on the same eligibility computation period. Years of
Service and 1-Year Breaks in Service for vesting purposes will be measured on
the same vesting computation period.
Years of Service with any Affiliated Employer shall be
recognized. Furthermore, Years of Service with any predecessor employer that
maintained this Plan shall be recognized. Years of Service with any other
predecessor employer shall be recognized as elected in the Adoption Agreement.
In the event the method of crediting service is amended from
the Elapsed Time Method to the Hour of Service Method, an Employee will receive
credit for Years of Service equal to:
(a) The number of Years of Service equal to the number of
1-year Periods of Service credited to the Employee as of the date of
the amendment; and
(b) In the computation period which includes the date of the
amendment, a number of Hours of Service (using the Hours of Service
equivalency method elected in the Adoption Agreement) to any fractional
part of a year credited to the Employee under this Section as of the
date of the amendment.
ARTICLE II
ADMINISTRATION
2.1 POWERS AND RESPONSIBILITIES OF THE EMPLOYER
(a) In addition to the general powers and responsibilities
otherwise provided for in this Plan, the Employer shall be empowered to
appoint and remove the Trustee and the Administrator from time to time
as it deems necessary for the proper administration of the Plan to
ensure that the Plan is being operated for the exclusive benefit of the
Participants and their Beneficiaries in accordance with the terms of
the Plan, the Code, and the Act. The Employer may appoint counsel,
specialists, advisers, agents (including any nonfiduciary agent) and
other persons as the Employer deems necessary or desirable in
connection with the exercise of its fiduciary duties under this Plan.
The Employer may compensate such agents or advisers from the assets of
the Plan as fiduciary expenses (but not including any business
(settlor) expenses of the Employer), to the extent not paid by the
Employer.
(b) The Employer shall establish a "funding policy and
method," i.e., it shall determine whether the Plan has a short run need
for liquidity (e.g., to pay benefits) or whether liquidity is a
long-run goal and investment growth (and stability of same) is a more
current need, or shall appoint a qualified person to do so. If the
Trustee has discretionary authority, the Employer or its delegate shall
communicate such needs and goals to the Trustee, who shall coordinate
such Plan needs with its investment policy. The communication of such a
"funding policy and method" shall not, however, constitute a directive
to the Trustee as to the investment of the Trust Funds. Such "funding
policy and method" shall be consistent with the objectives of this Plan
and with the requirements of Title 1 of the Act.
(c) The Employer may appoint, at its option, an Investment
Manager, investment adviser, or other agent to provide direction to the
Trustee with respect to any or all of the Plan assets. Such appointment
shall be given by the Employer in writing in a form acceptable to the
Trustee and shall specifically identify the Plan assets with respect to
which the Investment Manager or other agent shall have the authority to
direct the investment.
(d) The Employer shall periodically review the performance of
any Fiduciary or other person to whom duties have been delegated or
allocated by it under the provisions of this Plan or pursuant to
procedures established hereunder. This requirement may be satisfied by
formal periodic review by the Employer or by a qualified person
specifically designated by the Employer, through day-to-day conduct and
evaluation, or through other appropriate ways.
2.2 DESIGNATION OF ADMINISTRATIVE AUTHORITY
The Employer may appoint one or more Administrators. If the
Employer does not appoint an Administrator, the Employer will be the
Administrator. Any person, including, but not limited to, the Employees of the
Employer, shall be eligible to serve as an Administrator. Any person so
appointed shall signify acceptance by filing written acceptance with the
Employer. An Administrator may resign by delivering a written resignation to the
Employer or be removed by the Employer by delivery of written notice of removal,
to take effect at a date specified therein, or upon delivery to the
Administrator if no date is specified. Upon the resignation or removal of an
Administrator, the Employer may designate in writing a successor to this
position.
12
2.3 ALLOCATION AND DELEGATION OF RESPONSIBILITIES
If more than one person is appointed as Administrator, the
responsibilities of each Administrator may be specified by the Employer and
accepted in writing by each Administrator. In the event that no such delegation
is made by the Employer, the Administrators may allocate the responsibilities
among themselves, in which event the Administrators shall notify the Employer
and the Trustee in writing of such action and specify the responsibilities of
each Administrator. The Trustee thereafter shall accept and rely upon any
documents executed by the appropriate Administrator until such time as the
Employer or the Administrators file with the Trustee a written revocation of
such designation.
2.4 POWERS AND DUTIES OF THE ADMINISTRATOR
The primary responsibility of the Administrator is to
administer the Plan for the exclusive benefit of the Participants and their
Beneficiaries, subject to the specific terms of the Plan. The Administrator
shall administer the Plan in accordance with its terms and shall have the power
and discretion to construe the terms of the Plan and determine all questions
arising in connection with the administration, interpretation, and application
of the Plan. Benefits under this Plan will be paid only if the Administrator
decides in its discretion that the applicant is entitled to them. Any such
determination by the Administrator shall be conclusive and binding upon all
persons. The Administrator may establish procedures, correct any defect, supply
any information, 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; provided, however, that any procedure, discretionary act, interpretation
or construction shall be done in a nondiscriminatory manner based upon uniform
principles consistently applied and shall be consistent with the intent that the
Plan continue to be deemed a qualified plan under the terms of Code Section
401(a), and shall comply with the terms of the Act and all regulations issued
pursuant thereto. The Administrator shall have all powers necessary or
appropriate to accomplish its duties under this Plan.
The Administrator shall be charged with the duties of the
general administration of the Plan and the powers necessary to carry out such
duties as set forth under the terms of the Plan, including, but not limited to,
the following:
(a) the discretion to determine all questions relating to the
eligibility of an Employee to participate or remain a Participant
hereunder and to receive benefits under the Plan;
(b) the authority to review and settle all claims against the
Plan, including claims where the settlement amount cannot be calculated
or is not calculated in accordance with the Plan's benefit formula.
This authority specifically permits the Administrator to settle, in
compromise fashion, disputed claims for benefits and any other disputed
claims made against the Plan;
(c) to compute, certify, and direct the Trustee with respect
to the amount and the kind of benefits to which any Participant shall
be entitled hereunder;
(d) to authorize and direct the Trustee with respect to all
discretionary or otherwise directed disbursements from the Trust Fund;
(e) to maintain all necessary records for the administration
of the Plan;
(f) to interpret the provisions of the Plan and to make and
publish such rules for regulation of the Plan that are consistent with
the terms hereof;
(g) to determine the size and type of any Contract to be
purchased from any Insurer, and to designate the Insurer from which
such Contract shall be purchased;
(h) to compute and certify to the Employer and to the Trustee
from time to time the sums of money necessary or desirable to be
contributed to the Plan;
(i) to consult with the Employer and the Trustee regarding the
short and long-term liquidity needs of the Plan in order that the
Trustee can exercise any investment discretion (if the Trustee has such
discretion), in a manner designed to accomplish specific objectives;
(j) to prepare and implement a procedure for notifying
Participants and Beneficiaries of their rights to elect Joint and
Survivor Annuities and Pre-Retirement Survivor Annuities if required by
the Plan, Code and Regulations thereunder;
(k) to assist Participants regarding their rights, benefits,
or elections available under the Plan;
(1) to act as the named Fiduciary responsible for
communicating with Participants as needed to maintain Plan compliance
with Act Section 404(c) (if the Employer intends to comply with Act
Section 404(c)) including, but not limited to, the receipt and
transmission of Participants' directions as to the investment of their
accounts under the Plan and the formation of policies, rules, and
procedures pursuant to which Participants may give investment
instructions with respect to the investment of their accounts; and
13
(m) to determine the validity of, and take appropriate action
with respect to, any qualified domestic relations order received by it.
2.5 RECORDS AND REPORTS
The Administrator shall keep a record of all actions taken and
shall keep all other books of account, records, and other data that may be
necessary for proper administration of the Plan and shall be responsible for
supplying all information and reports to the Internal Revenue Service,
Department of Labor, Participants, Beneficiaries and others as required by law.
2.6 APPOINTMENT OF ADVISERS
The Administrator may appoint counsel, specialists, advisers,
agents (including nonfiduciary agents) and other persons as the Administrator
deems necessary or desirable in connection with the administration of this Plan,
including but not limited to agents and advisers to assist with the
administration and management of the Plan, and thereby to provide, among such
other duties as the Administrator may appoint, assistance with maintaining Plan
records and the providing of investment information to the Plan's investment
fiduciaries and, if applicable, to Plan Participants.
2.7 INFORMATION FROM EMPLOYER
The Employer shall supply full and timely information to the
Administrator on all pertinent facts as the Administrator may require in order
to perform its functions hereunder and the Administrator shall advise the
Trustee of such of the foregoing facts as may be pertinent to the Trustee's
duties under the Plan. The Administrator may rely upon such information as is
supplied by the Employer and shall have no duty or responsibility to verify such
information.
2.8 PAYMENT OF EXPENSES
All expenses of administration may be paid out of the Trust
Fund unless paid by the Employer. Such expenses shall include any expenses
incident to the functioning of the Administrator, or any person or persons
retained or appointed by any Named Fiduciary incident to the exercise of their
duties under the Plan, including, but not limited to, fees of accountants,
counsel, Investment Managers, agents (including nonfiduciarv agents) appointed
for the purpose of assisting the Administrator or Trustee in carrying out the
instructions of Participants as to the directed investment of their accounts (if
permitted) and other specialists and their agents, the costs of any bonds
required pursuant to Act Section 412, and other costs of administering the Plan.
Until paid, the expenses shall constitute a liability of the Trust Fund.
2.9 MAJORITY ACTIONS
Except where there has been an allocation and delegation of
administrative authority pursuant to Section 2.3. if there is more than one
Administrator, then they shall act by a majority of their number, but may
authorize one or more of them to sign all papers on their behalf.
2.10 CLAIMS PROCEDURE
Claims for benefits under the Plan may be filed in writing
with the Administrator. Written notice of the disposition of a claim shall be
furnished to the claimant within ninety (90) days after the application is
filed, or such period as is required by applicable law or Department of Labor
regulation. In the event the claim is denied, the reasons for the denial shall
be specifically set forth in the notice in language calculated to be understood
by the claimant, pertinent provisions of the Plan shall be cited, and, where
appropriate, an explanation as to how the claimant can perfect the claim will be
provided. In addition, the claimant shall be furnished with an explanation of
the Plan's claims review procedure.
14
2.11 CLAIMS REVIEW PROCEDURE
Any Employee, former Employee, or Beneficiary of either, who
has been denied a benefit by a decision of the Administrator pursuant to Section
2.10 shall be entitled to request the Administrator to give further
consideration to the claim by filing with the Administrator a written request
for a hearing. Such request, together with a written statement of the reasons
why the claimant believes such claim should be allowed, shall be filed with the
Administrator no later than sixty (60) days after receipt of the written
notification provided for in Section 2.10. The Administrator shall then conduct
a hearing within the next sixty (60) days, at which the claimant may be
represented by an attorney or any other representative of such claimant's
choosing and expense and at which the claimant shall have an opportunity to
submit written and oral evidence and arguments in support of the claim. At the
hearing (or prior thereto upon five (5) business days written notice to the
Administrator) the claimant or the claimant's representative shall have an
opportunity to review all documents in the possession of the Administrator which
are pertinent to the claim at issue and its disallowance. Either the claimant or
the Administrator may cause a court reporter to attend the hearing and record
the proceedings. In such event, a complete written transcript of the proceedings
shall be furnished to both parties by the court reporter. The full expense of
any such court reporter and such transcripts shall be borne by the party causing
the court reporter to attend the hearing. A final decision as to the allowance
of the claim shall be made by the Administrator within sixty (60) days of
receipt of the appeal (unless there has been an extension of sixty (60) days due
to special circumstances, provided the delay and the special circumstances
occasioning it are communicated to the claimant within the sixty (60) day
period). Such communication shall be written in a manner calculated to be
understood by the claimant and shall include specific reasons for the decision
and specific references to the pertinent Plan provisions on which the decision
is based. Notwithstanding the preceding, to the extent any of the time periods
specified in this Section are amended by law or Department of Labor regulation,
then the time frames specified herein shall automatically be changed in
accordance with such law or regulation.
If the Administrator, pursuant to the claims review procedure,
makes a final written determination denying a Participant's or Beneficiary's
benefit claim, then in order to preserve the claim, the Participant or
Beneficiary must file an action with respect to the denied claim not later than
one hundred eighty (180) days following the date of the Administrator's final
determination.
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY
Any Eligible Employee shall be eligible to participate
hereunder on the date such Employee has satisfied the conditions of eligibility
elected in the Adoption Agreement.
3.2 EFFECTIVE DATE OF PARTICIPATION
An Eligible Employee who has satisfied the conditions of
eligibility pursuant to Section 3.1 shall become a Participant effective as of
the date elected in the Adoption Agreement. If said Employee is not employed on
such date, but is reemployed before a 1-Year Break in Service has occurred, then
such Employee shall become a Participant on the date of reemployment or, if
later, the date that the Employee would have otherwise entered the Plan had the
Employee not terminated employment.
Unless specifically provided otherwise in the Adoption
Agreement, an Eligible Employee who satisfies the Plan's eligibility requirement
conditions by reason of recognition of service with a predecessor employer will
become a Participant as of the day the Plan credits service with a predecessor
employer or, if later, the date the Employee would have otherwise entered the
Plan had the service with the predecessor employer been service with the
Employer.
If an Employee, who has satisfied the Plan's eligibility
requirements and would otherwise have become a Participant, shall go from a
classification of a noneligible Employee to an Eligible Employee, such Employee
shall become a Participant on the date such Employee becomes an Eligible
Employee or, if later, the date that the Employee would have otherwise entered
the Plan had the Employee always been an Eligible Employee.
If an Employee, who has satisfied the Plan's eligibility
requirements and would otherwise become a Participant, shall go from a
classification of an Eligible Employee to a noneligible class of Employees, such
Employee shall become a Participant in the Plan on the date such Employee again
becomes an Eligible Employee, or, if later, the date that the Employee would
have otherwise entered the Plan had the Employee always been an Eligible
Employee. However, if such Employee incurs a 1-Year Break in Service,
eligibility will be determined under the Break in Service rules set forth in
Section 3.5.
3.3 DETERMINATION OF ELIGIBILITY
The Administrator shall determine the eligibility of each
Employee for participation in the Plan based upon information furnished by the
Employer. Such determination shall be conclusive and binding upon all persons,
as long as the same is made pursuant to the Plan and the Act. Such determination
shall be subject to review pursuant to Section 2.11.
15
3.4 TERMINATION OF ELIGIBILITY
In the event a Participant shall go from a classification of
an Eligible Employee to an ineligible Employee, such Former Participant shall
continue to vest in the Plan for each Year of Service (or Period of Service, if
the Elapsed Time Method is used) completed while an ineligible Employee, until
such time as the Participant's Account is forfeited or distributed pursuant to
the terms of the Plan. Additionally, the Former Participant's interest in the
Plan shall continue to share in the earnings of the Trust Fund in the same
manner as Participants.
3.5 REHIRED EMPLOYEES AND BREAKS IN SERVICE
(a) If any Participant becomes a Former Participant due to
severance from employment with the Employer and is reemployed by the
Employer before a 1-Year Break in Service occurs, the Former
Participant shall become a Participant as of the reemployment date.
(b) If any Participant becomes a Former Participant due to
severance from employment with the Employer and is reemployed after a
1-Year Break in Service has occurred, Years of Service (or Periods of
Service if the Elapsed Time Method is being used) shall include Years
of Service (or Periods of Service if the Elapsed Time Method is being
used) prior to the 1-Year Break in Service subject to the following
rules:
(1) In the case of a Former Participant who under the
Plan does not have a nonforfeitable right to any interest in
the Plan resulting from Employer contributions, Years of
Service (or Periods of Service) before a period of 1-Year
Breaks in Service will not be taken into account if the number
of consecutive 1-Year Breaks in Service equals or exceeds the
greater of (A) five (5) or (B) the aggregate number of
pre-break Years of Service (or Periods of Service). Such
aggregate number of Years of Service (or Periods of Service)
will not include any Years of Service (or Periods of Service)
disregarded under the preceding sentence by reason of prior
1-Year Breaks in Service.
(2) A Former Participant who has not had Years of
Service for Periods of Service) before a 1-Year Break in
Service disregarded pursuant to (l) above, shall participate
in the Plan as of the date of reemployment, or if later, as of
the date the Former Participant would otherwise enter the Plan
pursuant to Sections 3.1 and 3.2 taking into account all
service not disregarded.
(c) After a Former Participant who has severed employment with
the Employer incurs five (5) consecutive 1-Year Breaks in Service, the
Vested portion of such Former Participant's Account attributable to
pre-break service shall not be increased as a result of post-break
service. In such case, separate accounts will be maintained as follows:
(1) one account for nonforfeitable benefits
attributable to pre-break service; and
(2) one account representing the Participant's
Employer-derived account balance in the Plan attributable to
post-break service.
(d) If any Participant becomes a Former Participant due to
severance of employment with the Employer and is reemployed by the
Employer before five (5) consecutive 1-Year Breaks in Service, and such
Former Participant had received a distribution of the entire Vested
interest prior to reemployment, then the forfeited account shall be
reinstated only if the Former Participant repays the full amount which
had been distributed. Such repayment must be made before the earlier of
five (5) years after the first date on which the Participant is
subsequently reemployed by the Employer or the close of the first
period of five (5) consecutive 1-Year Breaks in Service commencing
after the distribution. If a distribution occurs for any reason other
than a severance of employment, the time for repayment may not end
earlier than five (5) years after the date of distribution. In the
event the Former Participant does repay the full amount distributed,
the undistributed forfeited portion of the Participant's Account must
be restored in full, unadjusted by any gains or losses occurring
subsequent to the Valuation Date preceding the distribution. The source
for such reinstatement may be Forfeitures occurring during the Plan
Year. If such source is insufficient, then the Employer will contribute
an amount which is sufficient to restore the Participant's Account,
provided, however, that if a discretionary contribution is made for
such year, such contribution will first be applied to restore any such
accounts and the remainder shall be allocated in accordance with the
terms of the Plan. If a non-Vested Former Participant was deemed to
have received a distribution and such Former Participant is reemployed
by the Employer before five (5) consecutive 1-Year Breaks in Service,
then such Participant will be deemed to have repaid the deemed
distribution as of the date of reemployment.
3.6 ELECTION NOT TO PARTICIPATE
An Employee may, subject to the approval of the Employer,
elect voluntarily not to participate in the Plan. The election not to
participate must be irrevocable and communicated to the Employer, in writing,
within a reasonable period of time before the beginning of the first Plan Year.
For standardized Plans, a Participant or an Eligible Employee may not elect not
to participate.
16
3.7 CONTROL OF ENTITIES BY OWNER-EMPLOYEE
Effective with respect to Plan Years beginning after December
31, 1996, if this Plan provides contributions or benefits for one or more
Owner-Employees, the contributions on behalf of any Owner-Employee shall be made
only with respect to the Earned Income for such Owner-Employee which is derived
from the trade or business with respect to which such Plan is established.
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION
(a) For a Money Purchase Plan:
(1) The Employer will make contributions on the
following basis. On behalf of each Participant eligible to
share in allocations, for each year of such Participant's
participation in this Plan, the Employer will contribute the
amount elected in the Adoption Agreement. All contributions by
the Employer will be made in cash. In the event a funding
waiver is obtained, this Plan shall be deemed to be an
individually designed plan.
(2) Notwithstanding the foregoing, with respect to an
Employer which is not a tax-exempt entity, the Employer's
contribution for any Fiscal Year shall not exceed the maximum
amount allowable as a deduction to the Employer under the
provisions of Code Section 404. However, to the extent
necessary to provide the top heavy minimum allocations, the
Employer shall make a contribution even if it exceeds the
amount that is deductible under Code Section 404.
(b) For a Profit Sharing Plan:
(1) For each Plan Year, the Employer may (or will in
the case of a Prevailing Wage contribution) contribute to the
Plan such amount as elected by the Employer in the Adoption
Agreement.
(2) Additionally, the Employer will contribute to the
Plan the amount necessary, if any, to provide the top heavy
minimum allocations, even if it exceeds current or accumulated
Net Profit or the amount that is deductible under Code Section
404.
4.2 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION
Unless otherwise provided by contract or law, the Employer may
make its contribution to the Plan for a particular Plan Year at such time as the
Employer, in its sole discretion, determines. If the Employer makes a
contribution for a particular Plan Year after the close of that Plan Year, the
Employer will designate to the Administrator the Plan Year for which the
Employer is making its contribution.
4.3 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS
(a) The Administrator shall establish and maintain an account
in the name of each Participant to which the Administrator shall credit
as of each Anniversary Date, or other Valuation Date, all amounts
allocated to each such Participant as set forth herein.
(b) The Employer shall provide the Administrator with all
information required by the Administrator to make a proper allocation
of the Employer's contribution, if any, for each Plan Year. Within a
reasonable period of time after the date of receipt by the
Administrator of such information, the Administrator shall allocate any
contributions as follows:
(1) For a Money Purchase Plan (other than a Money
Purchase Plan which is integrated by allocation):
(i) The Employer's contribution shall be
allocated to each Participant's Account in the manner
set forth in Section 4.1 herein and as specified in
the Adoption Agreement.
(ii) However, regardless of the preceding, a
Participant shall only be eligible to share in the
allocations of the Employer's contribution for the
year if the conditions set forth in the Adoption
Agreement are satisfied, unless a top heavy
contribution is required pursuant to Section 4.3(f).
If no election is made in the Adoption Agreement,
then a Participant shall be eligible to share in the
allocation of the Employer's contribution for the
year if the Participant completes more than five
hundred (500) Hours of Service (or three (3) Months
of Service if the Elapsed Time method is chosen in
the Adoption Agreement) during the Plan Year or who
is employed on the last day of the Plan Year.
Furthermore, with respect to a non-standardized
Adoption Agreement, regardless of any election in the
Adoption Agreement to the contrary, for the Plan Year
in which this Plan terminates, a Participant shall
only be eligible to share in the allocation of the
Employer's contributions for the
17
Plan Year if the Participant is employed at the end
of the Plan Year and has completed a Year of Service
(or Period of Service if the Elapsed Time Method is
elected).
(2) For an integrated Profit Sharing Plan allocation
or a Money Purchase Plan which is integrated by allocation:
(i) Except as provided in Section 4.3(f) for
top heavy purposes and subject to the "Overall
Permitted Disparity Limits," the Employer's
contribution shall be allocated to each Participant's
Account in a dollar amount equal to 5.7% of the sum
of each Participant's Compensation plus Excess
Compensation. If the Employer does not contribute
such amount for all Participants, each Participant
will be allocated a share of the contribution in the
same proportion that each such Participant's
Compensation plus Excess Compensation for the Plan
Year bears to the total Compensation plus the total
Excess Compensation of all Participants for that
year. However, in the case of any Participant who has
exceeded the "Cumulative Permitted Disparity Limit,"
the allocation set forth in this paragraph shall be
based on such Participant's Compensation rather than
Compensation plus Excess Compensation.
Regardless of the preceding, 4.3% shall be
substituted for 5.7% above if Excess Compensation is
based on more than 20% and less than or equal to 80%
of the Taxable Wage Base. If Excess Compensation is
based on less than 100% and more than 80% of the
Taxable Wage Base, then 5.4% shall be substituted for
5.7% above.
(ii) The balance of the Employer's
contribution over the amount allocated above, if any,
shall be allocated to each Participant's Account in
the same proportion that each such Participant's
Compensation for the Year bears to the total
Compensation of all Participants for such year.
(iii) However, regardless of the preceding,
a Participant shall only be eligible to share in the
allocations of the Employers Contribution for the
year if the conditions set forth in the Adoption
Agreement are satisfied, unless a contribution is
required pursuant to Section 4.3(f). If no election
is made in the Adoption Agreement, then a Participant
shall be eligible to share in the allocation of the
Employer's contribution for the year if the
Participant completes more than five hundred (500)
Hours of Service for three (3) Months of Service if
the Elapsed Time method is chosen in the Adoption
Agreement) during the Plan Year or who is employed on
the last day of the Plan Year. Furthermore, with
respect to a non-standardized Adoption Agreement,
regardless of any election in the Adoption Agreement
to the contrary, for the Plan Year in which this Plan
terminates, a Participant shall only be eligible to
share in the allocation of the Employer's
contributions for the Plan Year if the Participant is
employed at the end of the Plan Year and has
completed a Year of Service (or Period of Service if
the Elapsed Time Method is elected).
(3) For a Profit Sharing Plan with a non-integrated
allocation formula or a Prevailing Wage contribution:
(i) The Employer's contribution shall be
allocated to each Participant's Account in accordance
with the allocation method elected in the Adoption
Agreement.
(ii) However, regardless of the preceding, a
Participant shall only be eligible to share in the
allocations of the Employer's contribution for the
year if the conditions set forth in the Adoption
Agreement are satisfied, unless a top heavy
contribution is required pursuant to Section 4.3(f).
If no election is made in the Adoption Agreement,
then a Participant shall be eligible to share in the
allocation of the Employer's contribution for the
year if the Participant completes more than five
hundred (500) Hours of Service (or three (3) Months
of Service if the Elapsed Time method is chosen in
the Adoption Agreement) during the Plan Year or who
is employed on the last day of the Plan Year.
Furthermore, with respect to a non-standardized
Adoption Agreement, regardless of any election in the
Adoption Agreement to the contrary, for the Plan Year
in which this Plan terminates, a Participant shall
only be eligible to share in the allocation of the
Employer's contributions for the Plan Year if the
Participant is employed at the end of the Plan Year
and has completed a Year of Service (or Period of
Service if the Elapsed Time Method is elected).
(4) "Overall Permitted Disparity Limits":
"Annual Overall Permitted Disparity Limit":
Notwithstanding the preceding paragraphs, if in any
Plan Year this Plan "benefits" any Participant who
"benefits" under another qualified plan or simplified
employee pension, as defined in Code Section 408(k),
maintained by the Employer that either provides for
or imputes permitted disparity (integrates), then
such plans will be considered to be one plan and will
be considered to comply with the permitted disparity
rules if the extent of the permitted disparity of all
such plans does not exceed 100%. For purposes of the
preceding sentence, the extent of the permitted
disparity of a plan is the ratio, expressed as a
percentage, which the actual benefits, benefit rate,
offset rate, or employer contribution rate, whatever
is applicable
18
under the Plan, bears to the limitation under Code
Section 401(1) applicable to such Plan.
Notwithstanding the foregoing, if the Employer
maintains two or more standardized paired plans, only
one plan may provide for permitted disparity.
"Cumulative Permitted Disparity Limit": With
respect to a Participant who "benefits" or "has
benefited" under a defined benefit or target benefit
plan of the Employer, effective for Plan Years
beginning on or after January 1, 1994, the cumulative
permitted disparity limit for the Participant is
thirty five (35) total cumulative permitted disparity
years. Total cumulative permitted disparity years
means the number of years credited to the Participant
for allocation or accrual purposes under the Plan,
any other qualified plan or simplified employee
pension plan (whether or not terminated) ever
maintained by the Employer, while such plan either
provides for or imputes permitted disparity. 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 which neither provides
for nor imputes permitted disparity for any year
beginning on or after January 1, 1994, then such
Participant has no cumulative disparity limit.
For purposes of this Section, "benefiting" means
benefiting under the Plan for any Plan Year during
which a Participant received or is deemed to receive
an allocation in accordance with Regulation
1.410(b)-3(a).
(c) Except as otherwise elected in the Adoption Agreement or
as provided in Section 4.10 with respect to Participant Directed
Accounts, as of each Valuation Date, before allocation of any Employer
contributions and Forfeitures, any earnings or losses (net appreciation
or net depreciation) of the Trust Fund (exclusive of assets segregated
for distribution) shall be allocated in the same proportion that each
Participant's and Former Participant's nonsegregated accounts bear to
the total of all Participants' and Former Participants' nonsegregated
accounts as of such date. If any nonsegregated account of a Participant
has been distributed prior to the Valuation Date subsequent to a
Participant's termination of employment, no earnings or losses shall be
credited to such account.
(d) Participants' Accounts shall be debited for any insurance
or annuity premiums paid, if any, and credited with any dividends or
interest received on Contracts.
(e) On or before each Anniversary Date, any amounts which
became Forfeitures since the last Anniversary Date may be made
available to reinstate previously forfeited account balances of Former
Participants, if any, in accordance with Section 3.5(d) or used to
satisfy any contribution that may be required pursuant to Section 6.9.
The remaining Forfeitures, if any, shall be treated in accordance with
the Adoption Agreement. If no election is made in the Adoption
Agreement, any remaining Forfeitures will be used to reduce any future
Employer contributions under the Plan. However, if the Plan provides
for an integrated allocation, then any remaining Forfeitures will be
added to the Employer's contributions under the Plan. Regardless of the
preceding sentences, in the event the allocation of Forfeitures
provided herein shall cause the "Annual Additions" (as defined in
Section 4.4) to any Participant's Account to exceed the amount
allowable by the Code, an adjustment shall be made in accordance with
Section 4.5. Except, however, a Participant shall only be eligible to
share in the allocations of Forfeitures for the year if the conditions
set forth in the Adoption Agreement are satisfied, unless a top heavy
contribution is required pursuant to Section 4.3(f). If no election is
made in the Adoption Agreement, then a Participant shall be eligible to
share in the allocation of the Employer's contribution for the year if
the Participant completes more than five hundred (500) Hours of Service
(or three (3) Months of Service if the Elapsed Time method is chosen in
the Adoption Agreement) during the Plan Year or who is employed on the
last day of the Plan Year.
(f) Minimum Allocations Required for Top Heavy Plan Years:
Notwithstanding the foregoing, for any Top Heavy Plan Year, the sum of
the Employer's contributions and Forfeitures allocated to the
Participant's Combined Account of each Non-Key Employee shall be equal
to at least three percent (3%) of such Non-Key Employee's 415
Compensation (reduced by contributions and forfeitures, if any,
allocated to each Non-Key Employee in any defined contribution plan
included with this Plan in a "required aggregation group" (as defined
in Section 9.2(f)). However, if (i) the sum of the Employer's
contributions and Forfeitures allocated to the Participant's Combined
Account of each Key Employee for such Top Heavy Plan Year is less than
three percent (3%) of each Key Employee's 415 Compensation and (ii)
this Plan is not required to be included in a "required aggregation
group" (as defined in Section 9.2(f)) to enable a defined benefit plan
to meet the requirements of Code Section 401(a)(4) or 410, the sum of
the Employer's contributions and Forfeitures allocated to the
Participant's Combined Account of each Non-Key Employee shall be equal
to the largest percentage allocated to the Participant's Combined
Account of any Key Employee.
However, for each Non-Key Employee who is a
Participant in a paired Profit Sharing Plan or 401(k) Profit Sharing
Plan and a paired Money Purchase Plan, the minimum three percent (3%)
allocation specified above shall be provided in the Money Purchase
Plan.
19
If this is an integrated Plan, then for any Top Heavy
Plan Year the Employer's contribution shall be allocated as follows and
shall still be required to satisfy the other provisions of this
subsection:
(1) An amount equal to three percent (3%) multiplied
by each Participant's Compensation for the Plan Year shall be
allocated to each Participant's Account. If the Employer does
not contribute such amount for all Participants, the amount
shall be allocated to each Participant's Account in the same
proportion that such Participant's total Compensation for the
Plan Year bears to the total Compensation of all Participants
for such year.
(2) The balance of the Employer's contribution over
the amount allocated under subparagraph (1) hereof shall be
allocated to each Participant's Account in a dollar amount
equal to three percent (3%) multiplied by a Participant's
Excess Compensation. If the Employer does not contribute such
amount for all Participants, each Participant will be
allocated a share of the contribution in the same proportion
that such Participant's Excess Compensation bears to the total
Excess Compensation of all Participants for that year. For
purposes of this paragraph, in the case of any Participant who
has exceeded the cumulative permitted disparity limit
described in Section 4.3(b)(4), such Participant's total
Compensation will be taken into account.
(3) The balance of the Employer's contribution over
the amount allocated under subparagraph (2) hereof shall be
allocated to each Participant's Account in a dollar amount
equal to 2.7%r multiplied by the sum of each Participant's
total Compensation plus Excess Compensation. If the Employer
does not contribute such amount for all Participants, each
Participant will be allocated a share of the contribution in
the same proportion that such Participant's total Compensation
plus Excess Compensation for the Plan Year bears to the total
Compensation plus Excess Compensation of all Participants for
that year. For purposes of this paragraph, in the case of any
Participant who has exceeded the cumulative permitted
disparity limit described in Section 43(b)(4), such
Participant's total Compensation rather than Compensation plus
Excess Compensation will be taken into account.
Regardless of the preceding, 1.3% shall be substituted for
2.7% above if Excess Compensation is based on more than 20%
and less than or equal to 80% of the Taxable Wage Base. If
Excess Compensation is based on less than 100% and more than
80% of the Taxable Wage Base, then 2.4%r shall be substituted
for 2.7% above.
(4) The balance of the Employer's contributions over
the amount allocated above, if any, shall be allocated to each
Participant's Account in the same proportion that such
Participant's total Compensation for the Plan Year bears to
the total Compensation of all Participants for such year.
For each Non-Key Employee who is a Participant in
this Plan and another non-paired defined contribution plan maintained
by the Employer, the minimum three percent (3%) allocation specified
above shall be provided as specified in the Adoption Agreement.
(g) For purposes of the minimum allocations set forth above,
the percentage allocated to the Participant's Combined Account of any
Key Employee shall be equal to the ratio of the sum of the Employer's
contributions and Forfeitures allocated on behalf of such Key Employee
divided by the 415 Compensation for such Key Employee.
(h) For any Top Heavy Plan Year, the minimum allocations set
forth in this Section shall be allocated to the Participant's Combined
Account of all Non-Key Employees who are Participants and who are
employed by the Employer on the last day of the Plan Year, including
Non-Key Employees who have (1) failed to complete a Year of Service; or
(2) declined to make mandatory contributions (if required) or, in the
case of a cash or deferred arrangement, Elective Deferrals to the Plan.
(i) Notwithstanding anything herein to the contrary, in any
Plan Year in which the Employer maintains both this Plan and a defined
benefit pension plan included in a "required aggregation group" (as
defined in Section 9.2(f)) which is top heavy, the Employer will not be
required (unless otherwise elected in the Adoption Agreement) to
provide a Non-Key Employee with both the full separate minimum defined
benefit plan benefit and the full separate defined contribution plan
allocations. In such case, the top heavy minimum benefits will be
provided as elected in the Adoption Agreement and, if applicable, as
follows:
(l) If the 5% defined contribution minimum is elected
in the Adoption Agreement:
(i) The requirements of Section 9.1 will
apply except that each Non-Key Employee who is a
Participant in the Profit Sharing Plan or Money
Purchase Plan and who is also a Participant in the
Defined Benefit Plan will receive a minimum
allocation of five percent (5%) of such Participant's
415 Compensation from the applicable defined
contribution plan(s).
(ii) For each Non-Key Employee who is a
Participant only in the Defined Benefit Plan the
Employer will provide a minimum non-integrated
benefit equal to two percent (2%) of such
20
Participant's highest five (5) consecutive year
average 415 Compensation for each Year of Service
while a participant in the plan, in which the Plan is
top heavy, not to exceed ten (10).
(iii) For each Non-Key Employee who is a
Participant only in this defined contribution plan,
the Employer will provide a minimum allocation equal
to three percent (3%) of such Participant's 415
Compensation.
(2) If the 2% defined benefit minimum is elected in
the Adoption Agreement, then for each Non-Key Employee who is
a Participant only in the defined benefit plan, the Employer
will provide a minimum non-integrated benefit equal to two
percent (2%) of such Participant's highest five (5)
consecutive year average of 415 Compensation for each Year of
Service while a participant in the plan, in which the Plan is
top heavy, not to exceed ten (10).
(j) For the purposes of this Section, 415 Compensation will be
limited to the same dollar limitations set forth in Section 1.11
adjusted in such manner as permitted under Code Section 415(d).
(k) Notwithstanding anything in this Section to the contrary,
all information necessary to properly reflect a given transaction may
not be available until after the date specified herein for processing
such transaction, in which case the transaction will be reflected when
such information is received and processed. Subject to express limits
that may be imposed under the Code, the processing of any contribution,
distribution or other transaction may be delayed for any legitimate
business reason (including, but not limited to, failure of systems or
computer programs, failure of the means of the transmission of data,
force majeure, the failure of a service provider to timely receive
values or prices, and correction for errors or omissions or the errors
or omissions of any service provider). The processing date of a
transaction will be binding for all purposes of the Plan.
(l) Notwithstanding anything in this Section to the contrary,
the provisions of this subsection apply for any Plan Year if, in the
non-standardized Adoption Agreement, the Employer elected to apply the
410(b) ratio percentage failsafe provisions and the Plan fails to
satisfy the "ratio percentage test" due to a last day of the Plan Year
allocation condition or an Hours of Service (or months of service)
allocation condition. A plan satisfies the "ratio percentage test" if,
on the last day of the Plan Year, the "benefiting ratio" of the
Non-Highly Compensated Employees who are "includible" is at least 70%
of the "benefiting ratio" of the Highly Compensated Employees who are
"includible." The "benefiting ratio" of the Non-Highly Compensated
Employees is the number of "includible" NonHighly Compensated Employees
"benefiting" under the Plan divided by the number of "includible"
Employees who are Non-Highly Compensated Employees. The "benefiting
ratio" of the Highly Compensated Employees is the number of Highly
Compensated Employees "benefiting" under the Plan divided by the number
of "includible" Highly Compensated Employees, "includible" Employees
are all Employees other than: (1) those Employees excluded from
participating in the plan for the entire Plan Year by reason of the
collective bargaining unit exclusion or the nonresident alien exclusion
described in the Code or by reason of the age and service requirements
of Article III: and (2) any Employee who incurs a separation from
service during the Plan Year and fails to complete at least 501 Hours
of Service (or three (3) months of service if the Elapsed Time Method
is being used) during such Plan Year.
For purposes of this subsection, an Employee is
"benefiting" under the Plan on a particular date if, under the Plan,
the Employee is entitled to an Employer contribution or an allocation
of Forfeitures for the Plan Year.
If this subsection applies, then the Administrator
will suspend the allocation conditions for the "includible" Non-Highly
Compensated Employees who are Participants, beginning first with the
"includible" Employees employed by the Employer on the last day of the
Plan Year, then the "includible" Employees who have the latest
separation from service during the Plan Year, and continuing to suspend
the allocation conditions for each "includible" Employee who incurred
an earlier separation from service, from the latest to the earliest
separation from service date, until the Plan satisfies the "ratio
percentage test" for the Plan Year. If two or more "includible"
Employees have a separation from service on the same day, then the
Administrator will suspend the allocation conditions for all such
"includible" Employees, irrespective of whether the Plan can satisfy
the "ratio percentage test" by accruing benefits for fewer than all
such "includible" Employees. If the Plan for any Plan Year suspends the
allocation conditions for an "includible" Employee, then that Employee
will share in the allocation for that Plan Year of the Employer
contribution and Forfeitures, if any, without regard to whether the
Employee has satisfied the other allocation conditions set forth in
this Section.
4.4 MAXIMUM ANNUAL ADDITIONS
(a)(1) If a Participant does not participate in, and has never
participated in another qualified plan maintained by the Employer, or a
welfare benefit fund (as defined in Code Section 419(e)) maintained by
the Employer, or an individual medical account (as defined in Code
Section 415(1)(2)) maintained by the Employer, or a simplified employee
pension (as defined in Code Section 408(k)) maintained by the Employer
which provides "Annual Additions," the amount of "Annual Additions"
which may be credited to the Participant's accounts for any Limitation
Year shall 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 accounts would cause the "Annual Additions" for the
Limitation Year to exceed the "Maximum Permissible Amount," the amount
contributed or allocated will be reduced so that the "Annual Additions"
for the Limitation Year will equal the
21
"Maximum Permissible Amount," and any amount in excess of the "Maximum
Permissible Amount" which would have been allocated to such Participant
may be allocated to other Participants.
(2) Prior to determining the Participant's actual 415
Compensation for the Limitation Year, the Employer may
determine the "Maximum Permissible Amount" for a Participant
on the basis of a reasonable estimation of the Participant's
415 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 such Limitation Year shall be determined on the basis of
the Participant's actual 415 Compensation for such Limitation
Year.
(b)(1) This subsection applies if, in addition to this Plan, a
Participant is covered under another qualified defined contribution
plan maintained by the Employer that is a "Master or Prototype Plan," a
welfare benefit fund (as defined in Code Section 419(e)) maintained by
the Employer, an individual medical account (as defined in Code Section
415(1)(2)) maintained by the Employer, or a simplified employee pension
(as defined in Code Section 408(k)) maintained by the Employer, which
provides "Annual Additions," during any Limitation Year. The "Annual
Additions" which may be credited to a Participant's accounts under this
Plan for any such Limitation Year shall not exceed the "Maximum
Permissible Amount" reduced by the "Annual Additions" credited to a
Participant's accounts under the other plans and welfare benefit funds,
individual medical accounts, and simplified employee pensions for the
same Limitation Year. If the "Annual Additions" with respect to the
Participant under other defined contribution plans and welfare benefit
funds 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 accounts 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 welfare benefit
funds for the Limitation Year will equal the "Maximum Permissible
Amount," and any amount in excess of the "Maximum Permissible Amount"
which would have been allocated to such Participant may be allocated to
other Participants. If the "Annual Additions" with respect to the
Participant under such other defined contribution plans, welfare
benefit funds, individual medical accounts and simplified employee
pensions in the aggregate are equal to or greater than the "Maximum
Permissible Amount," no amount will be contributed or allocated to the
Participant's account under this Plan for the Limitation Year.
(2) Prior to determining the Participant's actual 415
Compensation for the Limitation Year, the Employer may
determine the "Maximum Permissible Amount" for a Participant
on the basis of a reasonable estimation of the Participant's
415 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 415 Compensation for the Limitation Year.
(4) If, pursuant to Section 4.4(b)(2) or Section 4.5,
a Participant's "Annual Additions" under this Plan and such
other plans would result in an "Excess Amount" for a
Limitation Year, the "Excess Amount" will be deemed to consist
of the "Annual Additions" last allocated, except that "Annual
Additions" attributable to a simplified employee pension will
be deemed to have been allocated first, followed by "Annual
Additions" to a welfare benefit fund or individual medical
account, and then by "Annual Additions" to a plan subject to
Code Section 412, regardless of the actual allocation date.
(5) If an "Excess Amount" was allocated to a
Participant on an allocation date of this Plan which coincides
with an allocation date of another plan, the "Excess Amount"
attributed to this Plan will be the product of:
(i) the total "Excess Amount" allocated as
of such date, times
(ii) the ratio of (1) the "Annual Additions"
allocated to the Participant for the Limitation Year
as of such date under this Plan to (2) the total
"Annual Additions" allocated to the Participant for
the Limitation Year as of such date under this and
all the other qualified defined contribution plans.
(6) Any "Excess Amount" attributed to this Plan will
be disposed of in the manner described in Section 4.5.
(c) If the Participant is covered under another qualified
defined contribution plan maintained by the Employer which is not a
"Master or Prototype Plan," "Annual Additions" which may be credited to
the Participant's Combined Account under this Plan for any Limitation
Year will be limited in accordance with Section 4.4(b), unless the
Employer provides other limitations in the Adoption Agreement.
(d) For any Limitation Year beginning prior to the date the
Code Section 415(e) limits are repealed with respect to this Plan (as
specified in the Adoption Agreement for the GUST transitional rules),
if the Employer
22
maintains, or at any time maintained, a qualified defined benefit plan
covering any Participant in this Plan, then the sum of the
Participant's "Defined Benefit Plan Fraction" and "Defined Contribution
Plan Fraction" may not exceed 1.0. In such event, the rate of accrual
in the defined benefit plan will be reduced to the extent necessary so
that the sum of the "Defined Contribution Fraction" and "Defined
Benefit Fraction" will equal 1.0. However, in the Adoption Agreement
the Employer may specify an alternative method under which the plans
involved will satisfy the limitations of Code Section 415(e), including
increased top heavy minimum benefits so that the combined limitation is
1.25 rather than 1.0.
(e) For purposes of applying the limitations of Code Section
415, the transfer of funds from one qualified plan to another is not an
"Annual Addition." In addition, the following are not Employee
contributions for the purposes of Section 4.4(f)(1)(b): (1) rollover
contributions (as defined in Code Sections 402(c), 403(a)(4), 403(b)(8)
and 408(d)(3)); (2) repayments of loans made to a Participant from the
Plan; (3) repayments of distributions received by an Employee pursuant
to Code Section 411 (a)(7)(B) (cash-outs); (4) repayments of
distributions received by an Employee pursuant to Code Section
411(a)(3)(D) (mandatory contributions); and (5) Employee contributions
to a simplified employee pension excludable from gross income under
Code Section 408(k)(6).
(f) For purposes of this Section, the following terms shall be
defined as follows:
(1) "Annual Additions" means the sum credited to a
Participant's accounts for any Limitation Year of (a) Employer
contributions, (b) Employee contributions (except as provided
below), (c) forfeitures, (d) amounts allocated, after March
31, 1984, to an individual medical account, as defined in Code
Section 415(1)(2), which is part of a pension or annuity plan
maintained by the Employer, (e) 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 Code Section
419A(d)(3)) under a welfare benefit fund (as defined in Code
Section 419(e)) maintained by the Employer and (f) allocations
under a simplified employee pension. Except, however, the
Compensation percentage limitation referred to in paragraph
(f)(9)(ii) shall not apply to: (1) any contribution for
medical benefits (within the meaning of Code Section
419A(f)(2)) after separation from service which is otherwise
treated as an "Annual Addition," or (2) any amount otherwise
treated as an "Annual Addition" under Code Section 415(1)(1).
Notwithstanding the foregoing, for Limitation Years beginning
prior to January 1, 1987, only that portion of Employee
contributions equal to the lesser of Employee contributions in
excess of six percent (6%) of 415 Compensation or one-half of
Employee contributions shall be considered an "Annual
Addition."
For this purpose, any Excess Amount applied
under Section 4.5 in the Limitation Year to reduce Employer
contributions shall be considered "Annual Additions" for such
Limitation Year.
(2) "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 one hundred twenty-five
percent (125%) of the dollar limitation determined for the
Limitation Year under Code Sections 415(b)(1)(A) as adjusted
by Code Section 415(d) or one hundred forty percent (140%) of
the "Highest Average Compensation" including any adjustments
under Code Section 415(b).
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 one hundred twenty-five percent
(125%) of the sum of the annual benefits under such plans
which the Participant had accrued as of the end 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 Code Section 415 for all
Limitation Years beginning before January 1, 1987.
Notwithstanding the foregoing, for any Top
Heavy Plan Year, one hundred percent (100%) shall be
substituted for one hundred twenty-five percent (125%) unless
the extra top heavy minimum allocation or benefit is being
made pursuant to the Employer's specification in the Adoption
Agreement. However, for any Plan Year in which this Plan is a
Super Top Heavy Plan, one hundred percent (100%) shall always
be substituted for one hundred twenty-five percent (125%).
(3) Defined Contribution Dollar Limitation means
$30,000 as adjusted under Code Section 415(d).
(4) Defined Contribution Fraction means a fraction,
the numerator of which is the sum of the "Annual Additions" to
the Participant's accounts under all the defined contribution
plans (whether or not terminated) maintained by the Employer
for the current and all prior "Limitation Years," (including
the "Annual Additions" attributable to the Participant's
nondeductible voluntary employee contributions to any defined
benefit plans, whether or not terminated, maintained by the
Employer and the "Annual Additions" attributable to all
welfare benefit funds (as defined in Code Section 419(e)),
individual medical accounts (as defined in Code Section
415(1)(2)), and simplified employee pensions (as defined in
Code Section 408(k)) maintained by the Employer), and the
denominator of which is the sum of the "Maximum Aggregate
23
Amounts" for the current and all prior Limitation Years in
which the Employee had 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 one hundred twenty-five percent (125%) of the
dollar limitation determined under Code Section 415(c)(1)(A)
as adjusted by Code Section 415(d) or thirty-five percent
(35%) of the Participant's 415 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 5, 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
Code Section 415 limitation applicable to the first Limitation
Year beginning on or after January 1, 1987.
For Limitation Years beginning prior to
January I, 1987, the "Annual Additions" shall not be
recomputed to treat all Employee contributions as "Annual
Additions."
Notwithstanding the foregoing, for any Top
Heavy Plan Year, one hundred percent (100%) shall be
substituted for one hundred twenty-five percent (125%) unless
the extra top heavy minimum allocation or benefit is being
made pursuant to the Employers specification in the Adoption
Agreement. However, for any Plan Year in which this Plan is a
Super Top Heavy Plan, one hundred percent (100%) shall always
be substituted for one hundred twenty-five percent (125%).
(5) "Employer" means the Employer that adopts this
Plan and all Affiliated Employers, except that for purposes of
this Section, the determination of whether an entity is an
Affiliated Employer shall be made by applying Code Section
415(h).
(6) "Excess Amount" means the excess of the
Participant's "Annual Additions" for the Limitation Year over
the "Maximum Permissible Amount."
(7) "Highest Average Compensation" means the average
Compensation for the three (3) consecutive Years of Service
with the Employer while a Participant in the Plan that
produces the highest average. A Year of Service with the
Employer is the twelve (12) consecutive month period ending on
the last day of the Limitation Year.
(8) "Master or Prototype Plan" means a plan the form
of which is the subject of a favorable opinion letter from the
Internal Revenue Service.
(9) "Maximum Permissible Amount" means the maximum
Annual Addition that may be contributed or allocated to a
Participant's accounts under the Plan for any "Limitation
Year," which shall not exceed the lesser of:
(i) the "Defined Contribution Dollar
Limitation;" or
(ii) twenty-five percent (25%) of the
Participant's 415 Compensation for the "Limitation
Year."
The Compensation Limitation referred to in
(ii) shall not apply to any contribution for medical
benefits (within the meaning of Code Sections 401(h)
or 419A(f)(2)) which is otherwise treated as an
"Annual Addition."
If a short Limitation Year is created
because of an amendment changing the Limitation Year
to a different twelve (12) consecutive month period,
the "Maximum Permissible Amount" will not exceed the
"Defined Contribution Dollar Limitation" multiplied
by a fraction, the numerator of which is the number
of months in the short Limitation Year and the
denominator of which is twelve (12).
(10) "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:
(i) the Participant will continue employment
until Normal Retirement Age (or current age, if
later); and
24
(ii) the Participant's 415 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.
For purposes of this subsection, "straight life annuity" means
an annuity that is payable in equal installments for the life
of the Participant that terminates upon the Participant's
death.
(g) Notwithstanding anything contained in this Section to the
contrary, the limitations, adjustments and other requirements
prescribed in this Section shall at all times comply with the
provisions of Code Section 415 and the Regulations thereunder.
4.5 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS
Allocation of "Annual Additions" (as defined in Section 4.4)
to a Participant's Combined Account for a Limitation Year generally will cease
once the limits of Section 4.4 have been reached for such Limitation Year.
However, if as a result of the allocation of Forfeitures, a reasonable error in
estimating a Participant's annual 415 Compensation, a reasonable error in
determining the amount of elective deferrals (within the meaning of Code Section
402(g)(3)) that may be made with respect to any Participant under the limits of
Section 4.4, or other facts and circumstances to which Regulation 1.415-6(b)(6)
shall be applicable, the "Annual Additions" under this Plan would cause the
maximum provided in Section 4.4 to be exceeded, the "Excess Amount" will be
disposed of in one of the following manners, as uniformly determined by the Plan
Administrator for all Participants similarly situated:
(a) Any after-tax voluntary Employee contributions (plus
attributable gains), to the extent they would reduce the Excess Amount,
will be distributed to the Participant;
(b) If, after the application of subparagraph (a), an "Excess
Amount" still exists, any unmatched Elective Deferrals (and for
Limitation Years beginning after December 31, 1995, any gains
attributable to such Elective Deferrals), to the extent they would
reduce the Excess Amount, will be distributed to the Participant;
(c) To the extent necessary, matched Elective Deferrals and
Employer matching contributions will be proportionately reduced from
the Participant's Account. The Elective Deferrals (and for Limitation
Years beginning after December 31, 1995, any gains attributable to such
Elective Deferrals) will be distributed to the Participant and the
Employer matching contributions (and for Limitation Years beginning
after December 31, 1995, any gains attributable to such matching
contributions) will be used to reduce the Employer's contributions in
the next LimitationYear;
(d) If, after the application of subparagraphs (a), (b) and
(c), an "Excess Amount" still exists, and the Participant is covered by
the Plan at the end of the Limitation Year, the "Excess Amount" in the
Participant's Account will be used to reduce Employer contributions
(including any allocation of Forfeitures) for such Participant in the
next Limitation Year, and each succeeding Limitation Year if necessary;
(e) If, after the application of subparagraphs (a), (b) and
(c), an "Excess Amount" still exists, and the Participant is not
covered by the Plan at the end of a Limitation Year, the "Excess
Amount" will be held unallocated in a suspense account. The suspense
account will be applied to reduce future Employer contributions
(including allocation of any Forfeitures) for all remaining
Participants in the next Limitation Year, and each succeeding
Limitation Year if necessary; and
(f) If a suspense account is in existence at any time during a
Limitation Year pursuant to this Section, no investment gains and
losses shall be allocated to such suspense account. 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' Accounts before any Employer contributions
or any Employee contributions may be made to the Plan for that
Limitation Year. Except as provided in (a), (b) and (c) above, "Excess
Amounts" may not be distributed to Participants or Former Participants.
4.6 ROLLOVERS
(a) If elected in the Adoption Agreement and with the consent
of the Administrator, the Plan may accept a "rollover," provided the
"rollover" will not jeopardize the tax-exempt status of the Plan or
create adverse tax consequences for the Employer. The amounts rolled
over shall be set up in a separate account herein referred to as a
"Participant's Rollover Account." Such account shall be fully Vested at
all times and shall not be subject to forfeiture for any reason. For
purposes of this Section, the term Participant shall include any
Eligible Employee who is not yet a Participant, if, pursuant to the
Adoption Agreement, "rollovers" are permitted to be accepted from
Eligible Employees. In addition, for purposes of this Section the term
Participant shall also include former Employees if the Employer and
Administrator consent to accept "rollovers" of distributions made to
former Employees from any plan of the Employer.
(b) Amounts in a Participant's Rollover Account shall be held
by the Trustee pursuant to the provisions of this Plan and may not be
withdrawn by, or distributed to the Participant, in whole or in part,
except as elected in the Adoption Agreement and subsection (c) below.
The Trustee shall have no duty or responsibility to inquire as to the
25
propriety of the amount, value or type of assets transferred, nor to
conduct any due diligence with respect to such assets; provided,
however, that such assets are otherwise eligible to be held by the
Trustee under the terms of this Plan.
(c) At Normal Retirement Date, or such other date when the
Participant or Eligible Employee or such Participant's or Eligible
Employee's Beneficiary shall be entitled to receive benefits, the
Participants Rollover Account shall be used to provide additional
benefits to the Participant or the Participant's Beneficiary. Any
distribution of amounts held in a Participant's Rollover Account shall
be made in a manner which is consistent with and satisfies the
provisions of Sections 6.5 and 6.6, including, but not limited to, all
notice and consent requirements of Code Sections 411(a)(11) and 417 and
the Regulations thereunder. Furthermore, such amounts shall be
considered to be part of a Participant's benefit in determining whether
an involuntary cash-out of benefits may be made without Participant
consent.
(d) The Administrator may direct that rollovers made after a
Valuation Date be segregated into a separate account for each
Participant until such time as the allocations pursuant to this Plan
have been made, at which time they may remain segregated, invested as
part of the general Trust Fund or, if elected in the Adoption
Agreement, directed by the Participant.
(e) For purposes of this Section, the term "qualified plan"
shall mean any tax qualified plan under Code Section 401(a), or any
other plans from which distributions are eligible to be rolled over
into this Plan pursuant to the Code. The term "rollover" means: (i)
amounts transferred to this Plan in a direct rollover made pursuant to
Code Section 401(a)(31) from another "qualified plan"; (ii)
distributions received by an Employee from other "qualified plans"
which are eligible for tax-free rollover to a "qualified plan" and
which are transferred by the Employee to this Plan within sixty (60)
days following receipt thereof; (iii) amounts transferred to this Plan
from a conduit individual retirement account provided that the conduit
individual retirement account has no assets other than assets which (A)
were previously distributed to the Employee by another "qualified plan"
(B) were eligible for tax-free rollover to a "qualified plan" and (C)
were deposited in such conduit individual retirement account within
sixty (60) days of receipt thereof; (iv) amounts distributed to the
Employee from a conduit individual retirement account meeting the
requirements of clause (iii) above, and transferred by the Employee to
this Plan within sixty (60) days of receipt thereof from such conduit
individual retirement account; and (v) any other amounts which are
eligible to be rolled over to this Plan pursuant to the Code.
(f) Prior to accepting any "rollovers" to which this Section
applies, the Administrator may require the Employee to establish (by
providing opinion of counsel or otherwise) that the amounts to be
rolled over to this Plan meet the requirements of this Section.
4.7 PLAN-TO-PLAN TRANSFERS FROM QUALIFIED PLANS
(a) With the consent of the Administrator, amounts may be
transferred (within the meaning of Code Section 414(1)) to this Plan
from other tax qualified plans under Code Section 401(a), provided the
plan from which such funds are transferred permits the transfer to be
made and the transfer will not jeopardize the tax-exempt status of the
Plan or Trust or create adverse tax consequences for the Employer.
Prior to accepting any transfers to which this Section applies, the
Administrator may require an opinion of counsel that the amounts to be
transferred meet the requirements of this Section. The amounts
transferred shall be set up in a separate account herein referred to as
a "Participant's Transfer Account." Furthermore, for Vesting purposes,
the Participant's Transfer Account shall be treated as a separate
"Participant's Account."
(b) Amounts in a Participant's Transfer Account shall be held
by the Trustee pursuant to the provisions of this Plan and may not be
withdrawn by, or distributed to the Participant, in whole or in part,
except as elected in the Adoption Agreement and subsection (d) below,
provided the restrictions of subsection (c) below and Section 6.15 are
satisfied. The Trustee shall have no duty or responsibility to inquire
as to the propriety of the amount, value or type of assets transferred,
nor to conduct any due diligence with respect to such assets; provided,
however, that such assets are otherwise eligible to be held by the
Trustee under the terms of this Plan.
(c) Except as permitted by Regulations (including Regulation
1.411 (d)-4), amounts attributable to elective contributions (as
defined in Regulation 1.401(k)-1(g)(3)), including amounts treated as
elective contributions, which are transferred from another qualified
plan in a plan-to-plan transfer (other than a direct rollover) shall be
subject to the distribution limitations provided for in Regulation
1.401(k)-1(d).
(d) At Normal Retirement Date, or such other date when the
Participant or the Participant's Beneficiary shall be entitled to
receive benefits, the Participant's Transfer Account shall be used to
provide additional benefits to the Participant or the Participant's
Beneficiary. Any distribution of amounts held in a Participant's
Transfer Account shall be made in a manner which is consistent with and
satisfies the provisions of Sections 6.5 and 6.6, including, but not
limited to, all notice and consent requirements of Code Sections
411(a)(11) and 417 and the Regulations thereunder. Furthermore, such
amounts shall be considered to be part of a Participant's benefit in
determining whether an involuntary cash-out of benefits may be made
without Participant consent.
(e) The Administrator may direct that Employee transfers made
after a Valuation Date be segregated into a separate account for each
Participant until such time as the allocations pursuant to this Plan
have been made, at
26
which time they may remain segregated, invested as part of the general
Trust Fund or, if elected in the Adoption Agreement, directed by the
Participant.
(f) Notwithstanding anything herein to the contrary, a
transfer directly to this Plan from another qualified plan (or a
transaction having the effect of such a transfer) shall only be
permitted if it will not result in the elimination or reduction of any
"Section 411 (d)(6) protected benefit" as described in Section 8.1(e).
4.8 VOLUNTARY EMPLOYEE CONTRIBUTIONS
(a) Except as provided in subsection 4.8(b) below, this Plan
will not accept after-tax voluntary Employee contributions. If this is
an amendment to a Plan that had previously allowed after-tax voluntary
Employee contributions, then this Plan will not accept after-tax
voluntary Employee contributions for Plan Years beginning after the
Plan Year in which this Plan is adopted by the Employer.
(b) For 401(k) Plans, if elected in the Adoption Agreement,
each Participant who is eligible to make Elective Deferrals may, in
accordance with nondiscriminatory procedures established by the
Administrator, elect to make after-tax voluntary Employee contributions
to this Plan. Such contributions must generally be paid to the Trustee
within a reasonable period of time after being received by the
Employer.
(c) The balance in each Participant's Voluntary Contribution
Account shall be fully Vested at all times and shall not be subject to
Forfeiture for any reason.
(d) A Participant may elect at any time to withdraw after-tax
voluntary Employee contributions from such Participant's Voluntary
Contribution Account and the actual earnings thereon in a manner which
is consistent with and satisfies the provisions of Section 6.5,
including, but not limited to, all notice and consent requirements of
Code Sections 411(a)(11) and 417 and the Regulations thereunder. If the
Administrator maintains sub-accounts with respect to after-tax
voluntary Employee contributions (and earnings thereon) which were made
on or before a specified date, a Participant shall be permitted to
designate which sub-account shall be the source for the withdrawal.
Forfeitures of Employer contributions shall not occur solely as a
result of an Employee's withdrawal of after-tax voluntary Employee
contributions.
In the event a Participant has received a hardship
distribution pursuant to Regulation 1.401(k)-1(d)(2) (iii)(B) from any
plan maintained by the Employer, then the Participant shall be barred
from making any after-tax voluntary Employee contributions for a period
of twelve (l2) months after receipt of the hardship distribution.
(e) At Normal Retirement Date, or such other date when the
Participant or the Participant's Beneficiary is entitled to receive
benefits, the Participant's Voluntary Contribution Account shall be
used to provide additional benefits to the Participant or the
Participant's Beneficiary.
(f) To the extent a Participant has previously made mandatory
Employee contributions under prior provisions of this Plan, such
contributions will be treated as after-tax voluntary Employee
contributions.
4.9 QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTIONS
(a) If this is an amendment to a Plan that previously
permitted deductible voluntary Employee contributions, then each
Participant who made "Qualified Voluntary Employee Contributions"
within the meaning of Code Section 219(e)(2) as it existed prior to the
enactment of the Tax Reform Act of 1986, shall have such contributions
held in a separate Qualified Voluntary Employee Contribution Account
which shall be fully Vested at all times. Such contributions, however,
shall not be permitted for taxable years beginning after December 31,
1986.
(b) A Participant may, upon written request delivered to the
Administrator, make withdrawals from such Participant's Qualified
Voluntary Employee Contribution Account. Any distribution shall be made
in a manner which is consistent with and satisfies the provisions of
Section 6.5, including, but not limited to, all notice and consent
requirements of Code Sections 411(a)(11) and 417 and the Regulations
thereunder.
(c) At Normal Retirement Date, or such other date when the
Participant or the Participant's Beneficiary is entitled to receive
benefits, the Qualified Voluntary Employee Contribution Account shall
be used to provide additional benefits to the Participant or the
Participant's Beneficiary.
4.10 DIRECTED INVESTMENT ACCOUNT
(a) If elected in the Adoption Agreement, all Participants may
direct the Trustee as to the investment of all or a portion of their
individual account balances as set forth in the Adoption Agreement and
within limits set by the Employer. Participants may direct the Trustee,
in writing (or in such other form which is acceptable to the Trustee),
to invest their accounts in specific assets, specific funds or other
investments permitted under the Plan and the Participant Direction
Procedures. That portion of the account of any Participant that is
subject to investment direction of such Participant will be considered
a Participant Directed Account.
27
(b) The Administrator will establish a Participant Direction
Procedure, to be applied in a uniform and nondiscriminatory manner,
setting forth the permissible investment options under this Section,
how often changes between investments may be made, and any other
limitations and provisions that the Administrator may impose on a
Participant's right to direct investments.
(c) The Administrator may, in its discretion, include or
exclude by amendment or other action from the Participant Direction
Procedures such instructions, guidelines or policies as it deems
necessary or appropriate to ensure proper administration of the Plan,
and may interpret the same accordingly.
(d) As of each Valuation Date, all Participant Directed
Accounts shall be charged or credited with the net earnings, gains,
losses and expenses as well as any appreciation or depreciation in the
market value using publicly listed fair market values when available or
appropriate as follows:
(1) to the extent the assets in a Participant
Directed Account are accounted for as pooled assets or
investments, the allocation of earnings, gains and losses of
each Participant's Account shall be based upon the total
amount of funds so invested in a manner proportionate to the
Participant's share of such pooled investment; and
(2) to the extent the assets in a Participant
Directed Account are accounted for as segregated assets, the
allocation of earnings, gains on and losses from such assets
shall be made on a separate and distinct basis.
(e) Investment directions will be processed as soon as
administratively practicable after proper investment directions are
received from the Participant. No guarantee is made by the Plan,
Employer, Administrator or Trustee that investment directions will be
processed on a daily basis, and no guarantee is made in any respect
regarding the processing time of an investment direction.
Notwithstanding any other provision of the Plan, the Employer,
Administrator or Trustee reserves the right to not value an investment
option on any given Valuation Date for any reason deemed appropriate by
the Employer, Administrator or Trustee. Furthermore, the processing of
any investment transaction may be delayed for any legitimate business
reason (including, but not limited to, failure of systems or computer
programs, failure of the means of the transmission of data, force
majeure, the failure of a service provider to timely receive values or
prices, and correction for errors or omissions or the errors or
omissions of any service provider). The processing date of a
transaction will be binding for all purposes of the Plan and considered
the applicable Valuation Date for an investment transaction.
(f) If the Employer has elected in the Adoption Agreement that
it intends to operate any portion of this Plan as an Act Section 404(c)
plan, the Participant Direction Procedures should provide an
explanation of the circumstances under which Participants and their
Beneficiaries may give investment instructions, including but not
limited to, the following.
(1) the conveyance of instructions by the
Participants and their Beneficiaries to invest Participant
Directed Accounts in a Directed Investment Option;
(2) the name, address and phone number of the
Fiduciary (and, if applicable, the person or persons
designated by the Fiduciary to act on its behalf) responsible
for providing information to the Participant or a Beneficiary
upon request relating to the Directed Investment Options;
(3) applicable restrictions on transfers to and from
any Designated Investment Alternative;
(4) any restrictions on the exercise of voting,
tender and similar rights related to a Directed Investment
Option by the Participants or their Beneficiaries;
(5) a description of any transaction fees and
expenses which affect the balances in Participant Directed
Accounts in connection with the purchase or sale of a Directed
Investment Option; and
(6) general procedures for the dissemination of
investment and other information relating to the Designated
Investment Alternatives as deemed necessary or appropriate,
including but not limited to a description of the following:
(i) the investment vehicles available under
the Plan, including specific information regarding
any Designated Investment Alternative;
(ii) any designated Investment Managers; and
(iii) a description of the additional
information that may be obtained upon request from
the Fiduciary designated to provide such information.
28
(g) With respect to those assets in a Participant's Directed
Account, the Participant or Beneficiary shall direct the Trustee with
regard to any voting, tender and similar rights associated with the
ownership of such assets (hereinafter referred to as the "Stock
Rights") as follows based on the election made in the Adoption
Agreement;
(1) each Participant or Beneficiary shall direct the
Trustee to vote or otherwise exercise such Stock Rights in
accordance with the provisions, conditions and terms of any
such Stock Rights;
(2) such directions shall be provided to the Trustee
by the Participant or Beneficiary in accordance with the
procedure as established by the Administrator and the Trustee
shall vote or otherwise exercise such Stock Rights with
respect to which it has received directions to do so under
this Section; and
(3) to the extent to which a Participant or
Beneficiary does not instruct the Trustee to vote or otherwise
exercise such Stock Rights, such Participants or Beneficiaries
shall be deemed to have directed the Trustee that such Stock
Rights remain nonvoted and unexercised.
(h) Any information regarding investments available under the
Plan, to the extent not required to be described in the Participant
Direction Procedures, may be provided to Participants in one or more
documents (or in any other form, including, but not limited to,
electronic media) which are separate from the Participant Direction
Procedures and are not thereby incorporated by reference into this
Plan.
4.11 INTEGRATION IN MORE THAN ONE PLAN
If the Employer maintains qualified retirement plans that
provide for permitted disparity (integration), the provisions of Section
4.3(b)(4) will apply. Furthermore, if the Employer maintains two or more
standardized paired plans, only one plan may provide for permitted disparity.
4.12 QUALIFIED MILITARY SERVICE
Notwithstanding any provisions of this Plan to the contrary,
effective as of the later of December 12, 1994, or the Effective Date of the
Plan, contributions, benefits and service credit with respect to qualified
military service will be provided in accordance with Code Section 414(u).
Furthermore, loan repayments may be suspended under this Plan as permitted under
Code Section 414(u)(4).
ARTICLE V
VALUATIONS
5.1 VALUATION OF THE TRUST FUND
The Administrator shall direct the Trustee, as of each
Valuation Date to determine the net worth of the assets comprising the Trust
Fund as it exists on the Valuation Date. In determining such net worth, the
Trustee shall value the assets comprising the Trust Fund at their fair market
value (or their contractual value in the case of a Contract or Policy) as of the
Valuation Date and may deduct all expenses for which the Trustee has not yet
been paid by the Employer or the Trust Fund. The Trustee may update the value of
any shares held in a Participant Directed Account by reference to the number of
shares held on behalf of the Participant, priced at the market value as of the
Valuation Date.
5.2 METHOD OF VALUATION
In determining the fair market value of securities held in the
Trust Fund which are listed on a registered stock exchange, the Administrator
shall direct the Trustee to value the same at the prices they were last traded
on such exchange preceding the close of business on the Valuation Date. If such
securities were not traded on the Valuation Date, or if the exchange on which
they are traded was not open for business on the Valuation Date, then the
securities shall be valued at the prices at which they were last traded prior to
the Valuation Date. Any unlisted security held in the Trust Fund shall be valued
at its bid price next preceding the close of business on the Valuation Date,
which bid price shall be obtained from a registered broker or an investment
banker. In determining the fair market value of assets other than securities for
which trading or bid prices can be obtained, the Trustee may appraise such
assets itself, or in its discretion, employ one or more appraisers for that
purpose and rely on the values established by such appraiser or appraisers.
ARTICLE VI
DETERMINATION AND DISTRIBUTION OF BENEFITS
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT
Every Participant may terminate employment with the Employer
and retire for purposes hereof on the Participant's Normal Retirement Date or
Early Retirement Date. However, a Participant may postpone the termination of
employment with the Employer to a later date, in which event the participation
of such Participant in the Plan, including the right to receive allocations
pursuant to Section 4.3, shall continue until such Participant's Retirement
Date. Upon a Participant's Retirement Date, or if elected in the Adoption
Agreement, the attainment of Normal Retirement Date without termination of
29
employment with the Employer, or as soon thereafter as is practicable, the
Administrator shall direct the distribution, at the election of the Participant,
of the Participant's entire Vested interest in the Plan in accordance with
Section 6.5.
6.2 DETERMINATION OF BENEFITS UPON DEATH
(a) Upon the death of a Participant before the Participant's
Retirement Date or other termination of employment, all amounts
credited to such Participant's Combined Account shall, if elected in
the Adoption Agreement, become fully Vested. The Administrator shall
direct, in accordance with the provisions of Sections 6.6 and 6.7, the
distribution of the deceased Participant's Vested accounts to the
Participant's Beneficiary.
(b) Upon the death of a Former Participant, the Administrator
shall direct, in accordance with the provisions of Sections 6.6 and
6.7, the distribution of any remaining Vested amounts credited to the
accounts of such deceased Former Participant to such Former
Participant's Beneficiary.
(c) The Administrator may require such proper proof of death
and such evidence of the right of any person to receive payment of the
value of the account of a deceased Participant or Former Participant as
the Administrator may deem desirable. The Administrator's determination
of death and of the right of any person to receive payment shall be
conclusive.
(d) Unless otherwise elected in the manner prescribed in
Section 6.6, the Beneficiary of the Pre-Retirement Survivor Annuity
shall be the Participant's surviving spouse. Except, however, the
Participant may designate a Beneficiary other than the spouse for the
Pre-Retirement Survivor Annuity if:
(1) the Participant and the Participant's spouse have
validly waived the Pre-Retirement Survivor Annuity in the
manner prescribed in Section 6.6, and the spouse has waived
the right to be the Participant's Beneficiary,
(2) the Participant is legally separated or has been
abandoned (within the meaning of local law) and the
Participant has a court order to such effect (and there is no
"qualified domestic relations order" as defined in Code
Section 414(p) which provides otherwise),
(3) the Participant has no spouse, or
(4) the spouse cannot be located.
In such event, the designation of a Beneficiary shall
be made on a form satisfactory to the Administrator. A Participant may
at any time revoke a designation of a Beneficiary or change a
Beneficiary by filing written (or in such other form as permitted by
the IRS) notice of such revocation or change with the Administrator.
However, the Participant's spouse must again consent in writing (or in
such other form as permitted by the IRS) to any change in Beneficiary
unless the original consent acknowledged that the spouse had the right
to limit consent only to a specific Beneficiary and that the spouse
voluntarily elected to relinquish such right.
(e) A Participant may, at any time, designate a Beneficiary
for death benefits, if any, payable under the Plan that are in excess
of the Pre-Retirement Survivor Annuity without the waiver or consent of
the Participant's spouse. In the event no valid designation of
Beneficiary exists, or if the Beneficiary is not alive at the time of
the Participant's death, the death benefit will be paid in the
following order of priority, unless the Employer specifies a different
order of priority in an addendum to the Adoption Agreement, to:
(1) The Participant's surviving spouse;
(2) The Participant's children, including adopted
children, per stirpes;
(3) The Participant's surviving parents, in equal
shares; or
(4) The Participant's estate.
If the Beneficiary does not predecease the Participant, but dies prior
to distribution of the death benefit, the death benefit will be paid to
the Beneficiary's estate.
(f) Notwithstanding anything in this Section to the contrary,
if a Participant has designated the spouse as a Beneficiary, then a
divorce decree or a legal separation that relates to such spouse shall
revoke the Participant's designation of the spouse as a Beneficiary
unless the decree or a qualified domestic relations order (within the
meaning of Code Section 414(p)) provides otherwise or a subsequent
Beneficiary designation is made.
(g) If the Plan provides an insured death benefit and a
Participant dies before any insurance coverage to which the Participant
is entitled under the Plan is effected, the death benefit from such
insurance coverage shall be limited to the premium which was or
otherwise would have been used for such purpose.
30
(h) In the event of any conflict between the terms of this
Plan and the terms of any Contract issued hereunder, the Plan
provisions shall control.
6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY
In the event of a Participant's Total and Permanent Disability
prior to the Participant's Retirement Date or other termination of employment,
all amounts credited to such Participant's Combined Account shall, if elected in
the Adoption Agreement, become fully Vested. In the event of a Participant's
Total and Permanent Disability, the Administrator, in accordance with the
provisions of Sections 6.5 and 6.7, shall direct the distribution to such
Participant of the entire Vested interest in the Plan.
6.4 DETERMINATION OF BENEFITS UPON TERMINATION
(a) If a Participant's employment with the Employer is
terminated for any reason other than death, Total and Permanent
Disability, or retirement, then such Participant shall be entitled to
such benefits as are provided herein.
Distribution of the funds due to a Terminated
Participant shall be made on the occurrence of an event which would
result in the distribution had the Terminated Participant remained in
the employ of the Employer (upon the Participant's death, Total and
Permanent Disability, Early or Normal Retirement). However, at the
election of the Participant, the Administrator shall direct that the
entire Vested portion of the Terminated Participant's Combined Account
be payable to such Terminated Participant provided the conditions, if
any, set forth in the Adoption Agreement have been satisfied. Any
distribution under this paragraph shall be made in a manner which is
consistent with and satisfies the provisions of Section 6.5, including
but not limited to, all notice and consent requirements of Code
Sections 411(a)(11) and 417 and the Regulations thereunder.
Regardless of whether distributions in kind are
permitted, in the event the amount of the Vested portion of the
Terminated Participant's Combined Account equals or exceeds the fair
market value of any insurance Contracts, the Trustee, when so directed
by the Administrator and agreed to by the Terminated Participant, shall
assign, transfer, and set over to such Terminated Participant all
Contracts on such Terminated Participant's life in such form or with
such endorsements, so that the settlement options and forms of payment
are consistent with the provisions of Section 6.5. In the event that
the Terminated Participant's Vested portion does not at least equal the
fair market value of the Contracts, if any, the Terminated Participant
may pay over to the Trustee the sum needed to make the distribution
equal to the value of the Contracts being assigned or transferred, or
the Trustee, pursuant to the Participant's election, may borrow the
cash value of the Contracts from the Insurer so that the value of the
Contracts is equal to the Vested portion of the Terminated
Participant's Combined Account and then assign the Contracts to the
Terminated Participant.
Notwithstanding the above, unless otherwise elected
in the Adoption Agreement, if the value of a Terminated Participant's
Vested benefit derived from Employer and Employee contributions does
not exceed $5,000 (or, $3,500 for distributions made prior to the later
of the first day of the first Plan Year beginning on or after August 5,
1997, or the date specified in the Adoption Agreement) the
Administrator shall direct that the entire Vested benefit be paid to
such Participant in a single lump-sum without regard to the consent of
the Participant or the Participant's spouse. A Participant's Vested
benefit shall not include Qualified Voluntary Employee Contributions
within the meaning of Code Section 72(o)(5)(B) for Plan Years beginning
prior to January I, 1989. Furthermore, the determination of whether the
$5,000 (or, if applicable, $3,500) threshold has been exceeded is
generally based on the value of the Vested benefit as of the Valuation
Date preceding the date of the distribution. However, if the "lookback
rule" applies, the applicable threshold is deemed to be exceeded if the
Vested benefit exceeded the applicable threshold at the time of any
prior distribution. The "lookback rule" generally applies to all
distributions made prior to March 22, 1999. With respect to
distributions made on or after March 22, 1999, the "lookback rule"
applies if either (1) the provisions of Section 6.12 do not apply or
(2) a Participant has begun to receive distributions pursuant to an
optional form of benefit under which at least one scheduled periodic
distribution has not yet been made, and if the value of the
Participant's benefit, determined at the time of the first distribution
under that optional form of benefit exceeded the applicable threshold.
However, the Plan does not fail to satisfy the requirements of this
paragraph if, prior to the adoption of this Prototype Plan, the
"lookback rule" was applied to all distributions. Notwithstanding the
preceding, the "lookback rule" will not apply to any distributions made
on or after October 17, 2000.
(b) The Vested portion of any Participant's Account shall be a
percentage of such Participant's Account determined on the basis of the
Participant's number of Years of Service (or Periods of Service if the
Elapsed Time Method is elected) according to the vesting schedule
specified in the Adoption Agreement. However, a Participant's entire
interest in the Plan shall be non-forfeitable upon the Participant's
Normal Retirement Age (if the Participant is employed by the Employer
on or after such date).
(c) For any Top Heavy Plan Year, the minimum top heavy vesting
schedule elected by the Employer in the Adoption Agreement will
automatically apply to the Plan. The minimum top heavy vesting schedule
applies to all benefits within the meaning of Code Section 411(a)(7)
except those attributable to Employee contributions, including benefits
accrued before the effective date of Code Section 416 and benefits
accrued before the Plan became top heavy. Further, no decrease in a
Participant's Vested percentage shall occur in the event the Plan's
status as top heavy changes for any Plan Year. However, this Section
does not apply to the account balances of any Employee who does not
31
have an Hour of Service after the Plan has initially become top heavy
and the Vested percentage of such Employee's Participant's Account
shall be determined without regard to this Section 6.4(c).
If in any subsequent Plan Year the Plan ceases to be
a Top Heavy Plan, then unless a specific Plan amendment is made to
provide otherwise, the Administrator will continue to use the vesting
schedule in effect while the Plan was a Top Heavy Plan.
(d) Upon the complete discontinuance of the Employer's
contributions to the Plan (if this is a profit sharing plan) or upon
any full or partial termination of the Plan, all amounts then credited
to the account of any affected Participant shall become 100% Vested and
shall not thereafter be subject to Forfeiture.
(e) If this is an amended or restated Plan, then
notwithstanding the vesting schedule specified in the Adoption
Agreement, the Vested percentage of a Participant's Account shall not
be less than the Vested percentage attained as of the later of the
effective date or adoption date of this amendment and restatement. The
computation of a Participant's nonforfeitable percentage of such
Participant's interest in the Plan shall not be reduced as the result
of any direct or indirect amendment to this Article, or due to changes
in the Plan's status as a Top Heavy Plan. Furthermore, if the Plans
vesting schedule is amended, then the amended schedule will only apply
to those Participants who complete an Hour of Service after the
effective date of the amendment.
(f) If the Plan's vesting schedule is amended, or if the Plan
is amended in any way that directly or indirectly affects the
computation of the Participant's nonforfeitable percentage or if the
Plan is deemed amended by an automatic change to a top heavy vesting
schedule, then each Participant with at least three (3) Years of
Service (or Periods of Service if the Elapsed Time Method is elected)
as of the expiration date of the election period may elect to have such
Participant's nonforfeitable percentage computed under the Plan without
regard to such amendment or change. If a Participant fails to make such
election, then such Participant shall be subject to the new vesting
schedule. The Participant's election period shall commence on the
adoption date of the amendment and shall end sixty (60) days after the
latest of:
(1) the adoption date of the amendment;
(2) the effective date of the amendment; or
(3) the date the Participant receives written notice of the
amendment from the Employer or Administrator.
(g) In determining Years of Service or Periods of Service for
purposes of vesting under the Plan, Years of Service or Periods of
Service shall be excluded as elected in the Adoption Agreement.
6.5 DISTRIBUTION OF BENEFITS
(a)(1) Unless otherwise elected as provided below, a
Participant who is married on the Annuity Starting Date and who does
not die before the Annuity Starting Date shall receive the value of all
Plan benefits in the form of a Joint and Survivor Annuity. The Joint
and Survivor Annuity is an annuity that commences immediately and shall
be equal in value to a single life annuity. Such joint and survivor
benefits following the Participant's death shall continue to the spouse
during the spouse's lifetime at a rate equal to either fifty percent
(50%), seventy-five percent (75%) (or, sixty-six and two-thirds percent
(66 2/3%) if the Insurer used to provide the annuity does not offer a
joint and seventy-five percent (75%) annuity), or one hundred percent
(100%) of the rate at which such benefits were payable to the
Participant. Unless otherwise elected in the Adoption Agreement, a
joint and fifty percent (50%) survivor annuity shall be considered the
designated qualified Joint and Survivor Annuity and the normal form of
payment for the purposes of this Plan. However, the Participant may,
without spousal consent, elect an alternative Joint and Survivor
Annuity, which alternative shall be equal in value to the designated
qualified Joint and Survivor Annuity. An unmarried Participant shall
receive the value of such Participant's benefit in the form of a life
annuity. Such unmarried Participant, however, may elect to waive the
life annuity. The election must comply with the provisions of this
Section as if it were an election to waive the Joint and Survivor
Annuity by a married Participant, but without fulfilling the spousal
consent requirement. The Participant may elect to have any annuity
provided for in this Section distributed upon the attainment of the
"earliest retirement age" under the Plan. The "earliest retirement age"
is the earliest date on which, under the Plan, the Participant could
elect to receive retirement benefits.
(2) Any election to waive the Joint and Survivor
Annuity must be made by the Participant in writing (or in such
other form as permitted by the IRS) during the election period
and be consented to in writing (or in such other form as
permitted by the IRS) by the Participant's spouse. If the
spouse is legally incompetent to give consent, the spouse's
legal guardian, even if such guardian is the Participant, may
give consent. Such election shall designate a Beneficiary (or
a form of benefits) that may not be changed without spousal
consent (unless the consent of the spouse expressly permits
designations by the Participant without the requirement of
further consent by the spouse). Such spouse's consent shall be
irrevocable and must acknowledge the effect of such election
and be witnessed by a Plan representative or a notary public.
Such consent shall not be required if it is established to the
satisfaction of the Administrator that the required consent
cannot be obtained because there is no spouse, the spouse
cannot be located, or other circumstances that may be
32
prescribed by Regulations. The election made by the
Participant and consented to by such Participant's spouse may
be revoked by the Participant in writing (or in such other
form as permitted by the IRS) without the consent of the
spouse at any time during the election period. A revocation of
a prior election shall cause the Participant's benefits to be
distributed as a Joint and Survivor Annuity. The number of
revocations shall not be limited. Any new election must comply
with the requirements of this paragraph. A former spouse's
waiver shall not be binding on a new spouse.
(3) The election period to waive the Joint and
Survivor Annuity shall be the ninety (90) day period ending on
the Annuity Starting Date.
(4) For purposes of this Section, spouse or surviving
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 as
described in Code Section 414(p).
(5) With regard to the election, except as otherwise
provided herein, the Administrator shall provide to the
Participant no less than thirty (30) days and no more than
ninety (90) days before the Annuity Starting Date a written
(or such other form as permitted by the IRS) explanation of:
(i) the terms and conditions of the Joint
and Survivor Annuity,
(ii) the Participant's right to make and the
effect of an election to waive the Joint and Survivor
Annuity,
(iii) the right of the Participant's spouse
to consent to any election to waive the Joint and
Survivor Annuity, and
(iv) the right of the Participant to revoke such
election, and the effect of such revocation.
(6) Any distribution provided for in this Section
made on or after December 31, 1996, may commence less than
thirty (30) days after the notice required by Code Section
417(a)(3) is given provided the following requirements are
satisfied:
(i) the Administrator clearly informs the
Participant that the Participant has a right to a
period of thirty (30) days after receiving the notice
to consider whether to waive the Joint and Survivor
Annuity and to elect (with spousal consent) a form of
distribution other than a Joint and Survivor Annuity;
(ii) 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 (7) day period
that begins the day after the explanation of the
Joint and Survivor Annuity is provided to the
Participant;
(iii) the Annuity Starting Date is after the
time that the explanation of the Joint and Survivor
Annuity is provided to the Participant. However, the
Annuity Starting Date may be before the date that any
affirmative distribution election is made by the
Participant and before the date that the distribution
is permitted to commence under (iv) below; and
(iv) distribution in accordance with the
affirmative election does not commence before the
expiration of the seven (7) day period that begins
the day after the explanation of the Joint and
Survivor Annuity is provided to the Participant.
(b) In the event a married Participant duly elects pursuant to
paragraph (a)(2) above not to receive the benefit in the form of a
Joint and Survivor Annuity, or if such Participant is not married, in
the form of a life annuity, the Administrator, pursuant to the election
of the Participant, shall direct the distribution to a Participant or
Beneficiary any amount to which the Participant or Beneficiary is
entitled under the Plan in one or more of the following methods which
are permitted pursuant to the Adoption Agreement:
(1) One lump-sum payment in cash or in property that
is allocated to the accounts of the Participant at the time of
the distribution;
(2) Partial withdrawals;
(3) Payments over a period certain in monthly,
quarterly, semiannual, or annual cash installments. In order
to provide such installment payments, the Administrator may
(A) segregate the aggregate amount thereof in a separate,
federally insured savings account, certificate of deposit in a
bank or savings and loan association, money market certificate
or other liquid short-term security or (B) purchase a
nontransferable annuity contract for a term certain (with no
life contingencies) providing for such payment. The period
over
33
which such payment is to be made shall not extend beyond the
Participant's life expectancy (or the life expectancy of the
Participant and the Participant's designated Beneficiary);
(4) Purchase of or providing an annuity. However,
such annuity may not be in any form that will provide for
payments over a period extending beyond either the life of the
Participant (or the lives of the Participant and the
Participant's designated Beneficiary) or the life expectancy
of the Participant for the life expectancy of the Participant
and the Participant's designated Beneficiary).
(c) Benefits may not be paid without the Participant's and the
Participant's spouse's consent if the present value of the
Participant's Joint and Survivor Annuity derived from Employer and
Employee contributions exceeds, or has ever exceeded, $5,000 (or
$3,500, for distributions made prior to the later of the first day of
the first Plan Year beginning after August 5, 1997, or the date
specified in the Adoption Agreement) and the benefit is "immediately
distributable." However, spousal consent is not required if the
distribution will made in the form a Qualified Joint and Survivor
Annuity and the benefit is "immediately distributable." A benefit is
"immediately distributable" if any part of the benefit could be
distributed to the Participant (or surviving spouse) before the
Participant attains (or would have attained if not deceased) the later
of the Participant's Normal Retirement Age or age 62.
If the value of the Participant's benefit derived from
Employer and Employee contributions does not exceed, and has never
exceeded at the time of any prior distribution, $5,000 (or, if
applicable, $3,500), then the Administrator will distribute such
benefit in a lump-sum without such Participant's consent. No
distribution may be made under the preceding sentence after the Annuity
Starting Date unless the Participant and the Participant's spouse
consent in writing (or in such other form as permitted by the IRS) to
such distribution. Any consent required under this paragraph must be
obtained not more than ninety (90) days before commencement of the
distribution and shall be made in a manner consistent with Section
6.5(a)(2). Notwithstanding the preceding, the "lookback rule" (which
provides that if the present value at the time of a prior distribution
exceeded the applicable dollar threshold, then the present value at any
subsequent time is deemed to exceed the threshold) will not apply to
any distributions made on or after October 17, 2000.
(d) The following rules will apply with respect to the consent
requirements set forth in subsection (c):
(1) No consent shall be valid unless the Participant
has received a general description of the material features
and an explanation of the relative values of the optional
forms of benefit available under the Plan that would satisfy
the notice requirements of Code Section 417;
(2) The Participant must be informed of the right to
defer receipt of the distribution. If a Participant fails to
consent, it shall be deemed an election to defer the
commencement of payment of any benefit. However, any election
to defer the receipt of benefits shall not apply with respect
to distributions that are required under Section 6.5(e);
(3) Notice of the rights specified under this
paragraph shall be provided no less than thirty (30) days and
no more than ninety (90) days before the Annuity Starting
Date;
(4) Written (or such other form as permitted by the
IRS) consent of the Participant to the distribution must not
be made before the Participant receives the notice and must
not be made more than ninety (90) days before the Annuity
Starting Date; and
(5) No consent shall be valid if a significant
detriment is imposed under the Plan on any Participant who
does not consent to the distribution.
(e) Notwithstanding any provision in the Plan to the contrary,
for Plan Years beginning after December 31, 1996, the distribution of a
Participant's benefits, whether under the Plan or through the purchase
of an annuity Contract, shall be made in accordance with the following
requirements and shall otherwise comply with Code Section 401(a)(9) and
the Regulations thereunder (including Regulation 1.401(a)(9)-2):
(1) A Participant's benefits will be distributed or
must begin to be distributed not later than the Participant's
"required beginning date." Alternatively, distributions to a
Participant must begin no later than the Participant's
"required beginning date" and must be made over the life of
the Participant (or the lives of the Participant and the
Participant's designated Beneficiary) or the life expectancy
of the Participant (or the life expectancies of the
Participant and the Participant's designated Beneficiary) in
accordance with Regulations. However, if the distribution is
to be in the form of a joint and survivor annuity or single
life annuity, then distributions must begin no later than the
"required beginning date" and must be made over the life of
the Participant (or the lives of the Participant and the
Participant's designated Beneficiary) in accordance with
Regulations.
(2) The "required beginning date" for a Participant
who is a "five percent (5%) owner" with respect to the Plan
Year ending in the calendar year in which such Participant
attains age 70 1/2 means April 1st of the calendar year
following the calendar year in which the Participant attains
age 70 1/2. Once distributions have
34
begun to a "five percent (5%) owner" under this subsection,
they must continue to be distributed, even if the Participant
ceases to be a "five percent (5%) owner" in a subsequent year.
(3) The "required beginning date" for a Participant
other than a "five percent (5%) owner" means, unless the
Employer has elected to continue the pre-SBJPA rules in the
Adoption Agreement, April 1st of the calendar year following
the later of the calendar year in which the Participant
attains age 70 1/2 or the calendar year in which the
Participant retires.
(4) If the election is made to continue the pre-SBJPA
rules, then except as provided below, the "required beginning
date" is April 1st of the calendar year following the calendar
year in which a Participant attains age 70 1/2.
(i) However, the "required beginning date"
for a Participant who had attained age 70 1/2 before
January 1, 1988, and was not a five percent (5%)
owner (within the meaning of Code Section 416) at any
time during the Plan Year ending with or within the
calendar year in which the Participant attained age
66 1/2or any subsequent Plan Year, is April 1st of
the calendar year following the calendar in which the
Participant retires.
(ii) Notwithstanding (i) above, the
"required beginning date" for a Participant who was a
five percent (5%) owner (within the meaning of Code
Section 416) at any time during the five (5) Plan
Year period ending in the calendar year in which the
Participant attained age 70 1/2 is April 1st of the
calendar year in which the Participant attained age
70 1/2. In the case of a Participant who became a
five percent (5%) owner during any Plan Year after
the calendar year in which the Participant attained
age 70 1/2, the "required beginning date" is April
1st of the calendar year following the calendar year
in which such subsequent Plan Year ends.
(5) If this is an amendment or restatement of a plan
that contained the pre-SBJPA rules and an election is made to
use the post-SBJPA rules, then the transition rules elected in
the Adoption Agreement will apply.
(6) Except as otherwise provided herein, "five
percent (5%) owner" means, for purposes of this Section, a
Participant who is a five percent (5%) owner as defined in
Code Section 416 at any time during the Plan Year ending with
or within the calendar year in which such owner attains age 70
1/2.
(7) Distributions to a Participant and such
Participant's Beneficiaries will only be made in accordance
with the incidental death benefit requirements of Code Section
401(a)(9)(G) and the Regulations thereunder.
(8) For purposes of this Section, the life expectancy
of a Participant and/or a Participant's spouse (other than in
the case of a life annuity) shall or shall not be redetetmined
annually as elected in the Adoption Agreement and in
accordance with Regulations. If the Participant or the
Participant's spouse may elect, pursuant to the Adoption
Agreement, to have life expectancies recalculated, then the
election, once made shall be irrevocable. If no election is
made by the time distributions must commence, then the life
expectancy of the Participant and the Participant's spouse
shall not be subject to recalculation. Life expectancy and
joint and last survivor life expectancy shall be computed
using the return multiples in Tables V and VI of Regulation
Section 1.72-9.
(9) With respect to distributions under the Plan made
for calendar years beginning on or after January 1, 2001, or
if later, the date specified in the Adoption Agreement, the
Plan will apply the minimum distribution requirements of Code
Section 401(a)(9) in accordance with the Regulations under
section 401(a)(9) that were proposed on January 17, 2001,
notwithstanding any provision of the Plan to the contrary.
This amendment 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
as may be specified in guidance published by the Internal
Revenue Service.
However, if the date specified in the Adoption Agreement is a
date in 2001 other than January l, 2001, then with respect to
distributions under the Plan made on or after such date for
calendar years beginning on or after January 1, 2001, the Plan
will apply the minimum distribution requirements of Code
Section 401(a)(9) in accordance with the Regulations under
section 401(a)(9) that were proposed on January 17, 2001,
notwithstanding any provision of the Plan to the contrary. If
the total amount of required minimum distributions made to a
participant for 2001 prior to the specified date are equal to
or greater than the amount of required minimum distributions
determined under the 2001 Proposed Regulations, then no
additional distributions are required for such participant for
2001 on or after such date. If the total amount of required
minimum distributions made to a participant for 2001 prior to
the specified date are less than the amount determined under
the 2001 Proposed Regulations, then the amount of required
minimum distributions for 2001 on or after such date will be
determined so that the total amount of required minimum
distributions for 2001 is the amount determined under the 2001
Proposed Regulations. This amendment 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 as may be specified in guidance published by
the Internal Revenue Service.
35
(f) All annuity Contracts under this Plan shall be
non-transferable when distributed. Furthermore, the terms of any
annuity Contract purchased and distributed to a Participant or spouse
shall comply with all of the requirements of this Plan.
(g) Subject to the spouse's right of consent afforded under
the Plan, the restrictions imposed by this Section shall not apply if a
Participant has, prior to January 1, 1984, made a written designation
to have retirement benefits paid in an alternative method acceptable
under Code Section 401 (a) as in effect prior to the enactment of the
Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA).
(h) If a distribution is made to a Participant who has not
severed employment and who is not fully Vested in the Participant's
Account, and the Participant may increase the Vested percentage in such
account, then at any relevant time the Participant's Vested portion of
the account will be equal to an amount ("X") determined by the formula:
X equals P (AB plus D) - D
For purposes of applying the formula: P is the Vested
percentage at the relevant time, AB is the account balance at the
relevant time, D is the amount of distribution, and the relevant time
is the time at which, under the Plan, the Vested percentage in the
account cannot increase.
However, the Employer may attach an addendum to the
Adoption Agreement to provide that a separate account shall be
established for the Participant's interest in the Plan as of the time
of the distribution, and at any relevant time the Participant's Vested
portion of the separate account will be equal to an amount determined
as follows: P (AB plus (R x D)) - (R x D) where R is the ratio of the
account balance at the relevant time to the account balance after
distribution and the other terms have the same meaning as in the
preceding paragraph. Any amendment to change the formula in accordance
with the preceding sentence shall not be considered an amendment which
causes this Plan to become an individually designed Plan.
(i) If this is a Plan amendment that eliminates or restricts
the ability of a Participant to receive payment of the Participant's
interest in the Plan under a particular optional form of benefit, then
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 Act
requirements at 29 CFR 2520. 104b-3 relating to 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.
6.6 DISTRIBUTION OF BENEFITS UPON DEATH
(a) Unless otherwise elected as provided below, a Vested
Participant who dies before the Annuity Starting Date and who has a
surviving spouse shall have the Pre-Retirement Survivor Annuity paid to
the surviving spouse. The Participant's spouse may direct that payment
of the Pre-Retirement Survivor Annuity commence within a reasonable
period after the Participant's death. If the spouse does not so direct,
payment of such benefit will commence at the time the Participant would
have attained the later of Normal Retirement Age or age 62. However,
the spouse may elect a later commencement date. Any distribution to the
Participant's spouse shall be subject to the rules specified, in
Section 6.6(h).
(b) Any election to waive the Pre-Retirement Survivor Annuity
before the Participant's death must be made by the Participant in
writing (or in such other form as permitted by the IRS) during the
election period and shall require the spouse's irrevocable consent in
the same manner provided for in Section 6.5(a)(2). Further, the
spouse's consent must acknowledge the specific nonspouse Beneficiary.
Notwithstanding the foregoing, the nonspouse Beneficiary need not be
acknowledged, provided the consent of the spouse acknowledges that the
spouse has the right to limit consent only to a specific Beneficiary
and that the spouse voluntarily elects to relinquish such right.
(c) The election period to waive the Pre-Retirement Survivor
Annuity shall begin on the first day of the Plan Year in which the
Participant attains age 35 and end on the date of the Participant's
death. An earlier waiver (with spousal consent) may be made provided a
written (or such other form as permitted by the IRS) explanation of the
Pre-Retirement Survivor Annuity is given to the Participant and such
waiver becomes invalid at the beginning of the Plan Year in which the
Participant turns age 35. In the event a Participant separates from
service prior to the beginning of the election period, the election
period shall begin on the date of such separation from service.
(d) With regard to the election, the Administrator shall
provide each Participant within the applicable election period, with
respect to such Participant (and consistent with Regulations), a
written (or such other form as permitted by the IRS) explanation of the
Pre-Retirement Survivor Annuity containing comparable information to
that required pursuant to Section 6.5(a)(5). For the purposes of this
paragraph, the term "applicable period" means, with respect to a
Participant, whichever of the following periods ends last:
(1) 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;
36
(2) A reasonable period after the individual becomes
a Participant;
(3) A reasonable period ending after the Plan no
longer fully subsidizes the cost of the Pre-Retirement
Survivor Annuity with respect to the Participant; or
(4) A reasonable period ending after Code Section
401(a)(11) applies to the Participant.
For purposes of applying this subsection, a
reasonable period ending after the enumerated events described in (2),
(3) and (4) is the end of the two (2) year period beginning one (1)
year prior to the date the applicable event occurs, and ending one (1)
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 (2) year period beginning one (1) year prior
to separation and ending one (1) year after separation. If such a
Participant thereafter returns to employment with the Employer, the
applicable period for such Participant shall be redetermined.
(e) The Pre-Retirement Survivor Annuity provided for in this
Section shall apply only to Participants who are credited with an Hour
of Service on or after August 23, 1984. Former Participants who are not
credited with an Hour of Service on or after August 23, 1984, shall be
provided with rights to the Pre-Retirement Survivor Annuity in
accordance with Section 303(e)(2) of the Retirement Equity Act of 1984.
(f) If the value of the Pre-Retirement Survivor Annuity
derived from Employer and Employee contributions does not exceed, and
has never exceeded at the time of any prior distribution, $5,000 (or,
$3,500 for distributions made prior to the later of the first day of
the first Plan Year beginning after August 5, 1997, or the date
specified in the Adoption Agreement) the Administrator shall direct the
distribution of such amount to the Participant's spouse as soon as
practicable. No distribution may be made under the preceding sentence
after the Annuity Starting Date unless the spouse consents in writing
(or in such other form as permitted by the IRS). If the value exceeds,
or has ever exceeded at the time of any prior distribution, $5,000 (or,
if applicable, $3,500), an immediate distribution of the entire amount
may be made to the surviving spouse, provided such surviving spouse
consents in writing (or in such other form as permitted by the IRS) to
such distribution. Any consent required under this paragraph must be
obtained not more than ninety (90) days before commencement of the
distribution and shall be made in a manner consistent with Section
6.5(a)(2). Notwithstanding the preceding, the "lookback rule" (which
provides that if the present value at the time of a prior distribution
exceeded the applicable dollar threshold, then the present value at any
subsequent time is deemed to exceed the threshold) will not apply to
any distributions made on or after October 17, 2000.
(g) Death benefits may be paid to a Participant's Beneficiary
in one of the following optional forms of benefits subject to the rules
specified in Section 6.6(h) and the elections made in the Adoption
Agreement. Such optional forms of distributions may be elected by the
Participant in the event there is an election to waive the
Pre-Retirement Survivor Annuity, and for any death benefits in excess
of the Pre-Retirement Survivor Annuity. However, if no optional form of
distribution was elected by the Participant prior to death, then the
Participant's Beneficiary may elect the form of distribution:
(1) One lump-sum payment in cash or in property that
is allocated to the accounts of the Participant at the time of
the distribution.
(2) Partial withdrawals.
(3) Payment in monthly, quarterly, semi-annual, or
annual cash installments over a period to be determined by the
Participant or the Participant's Beneficiary. In order to
provide such installment payments, the Administrator may (A)
segregate the aggregate amount thereof in a separate,
federally insured savings account, certificate of deposit in a
bank or savings and loan association, money market certificate
or other liquid short-term security or (B) purchase a
nontransferable annuity contract for a term certain (with no
life contingencies) providing for such payment. After periodic
installments commence, the Beneficiary shall have the right to
reduce the period over which such periodic installments shall
be made, and the cash amount of such periodic installments
shall be adjusted accordingly.
(4) In the form of an annuity over the life
expectancy of the Beneficiary.
(5) If death benefits in excess of the Pre-Retirement
Survivor Annuity are to be paid to the surviving spouse, such
benefits may be paid pursuant to (1), (2) or (3) above, or
used to purchase an annuity so as to increase the payments
made pursuant to the Pre-Retirement Survivor Annuity.
(h) Notwithstanding any provision in the Plan to the contrary,
distributions upon the death of a Participant shall be made in
accordance with the following requirements and shall otherwise comply
with Code Section 401(a)(9) and the Regulations thereunder.
(1) If it is determined, pursuant to Regulations,
that the distribution of a Participant's interest has begun
and the Participant dies before the entire interest has been
distributed, the remaining portion of such
37
interest shall be distributed at least as rapidly as under the
method of distribution elected pursuant to Section 6.5 as of
the date of death.
(2) If a Participant dies before receiving any
distributions of the interest in the Plan or before
distributions are deemed to have begun pursuant to
Regulations, then the death benefit shall be distributed to
the Participant's Beneficiaries in accordance with the
following rules subject to the elections made in the Adoption
Agreement and subsections 6.6(h)(3) and 6.6(i) below:
(i) The entire death benefit shall be
distributed to the Participant's Beneficiaries by
December 31st of the calendar year in which the fifth
anniversary of the Participant's death occurs;
(ii) The 5-year distribution requirement of
(i) above shall not apply to any portion of the
deceased Participant's interest which is payable to
or for the benefit of a designated Beneficiary. In
such event, such portion shall be distributed over
the life of such designated Beneficiary (or over a
period not extending beyond the life expectancy of
such designated Beneficiary) provided such
distribution begins not later than December 31st of
the calendar year immediately following the calendar
year in which the Participant died (or such later
date as may be prescribed by Regulations);
(iii) However, in the event the
Participant's spouse (determined as of the date of
the Participant's death) is the designated
Beneficiary, the provisions of (ii) above shall apply
except that the requirement that distributions
commence within one year of the Participant's death
shall not apply. In lieu thereof, distributions must
commence on or before the later of: (1) December 31st
of the calendar year immediately following the
calendar year in which the Participant died: or (2)
December 31st of the calendar year in which the
Participant would have attained age 70 1/2. If the
surviving spouse dies before distributions to such
spouse begin, then the 5-year distribution
requirement of this Section shall apply as if the
spouse was the Participant.
(3) Notwithstanding subparagraph (2) above, or any
elections made in the Adoption Agreement, if a Participant's
death benefits are to be paid in the form of a Pre-Retirement
Survivor Annuity, then distributions to the Participant's
surviving spouse must commence on or before the later of: (1)
December 31st of the calendar year immediately following the
calendar year in which the Participant died, or (2) December
31st of the calendar year in which the Participant would have
attained age 70 1/2.
(i) For purposes of Section 6.6(h)(2), the election by a
designated Beneficiary to be excepted from the 5-year distribution
requirement (if permitted in the Adoption Agreement) must be made no
later than December 31st of the calendar year following the calendar
year of the Participant's death. Except, however, with respect to a
designated Beneficiary who is the Participant's surviving spouse, the
election must be made by the earlier of: (1) December 31st of the
calendar year immediately following the calendar year in which the
Participant died or, if later, December 31st of the calendar year in
which the Participant would have attained age 70 1/2; or (2) December
31st of the calendar year which contains the fifth anniversary of the
date of the Participant's death. An election by a designated
Beneficiary must be in writing (or in such other form as permitted by
the IRS) and shall be irrevocable as of the last day of the election
period stated herein. In the absence of an election by the Participant
or a designated Beneficiary, the 5-year distribution requirement shall
apply.
(j) For purposes of this Section, the life expectancy of a
Participant and a Participant's spouse (other than in the case of a
life annuity) shall or shall not be redetermined annually as elected in
the Adoption Agreement and in accordance with Regulations. If the
Participant may elect, pursuant to the Adoption Agreement, to have life
expectancies recalculated, then the election, once made shall be
irrevocable. If no election is made by the time distributions must
commence, then the life expectancy of the Participant and the
Participant's spouse shall not be subject to recalculation. Life
expectancy and joint and last survivor life expectancy shall be
computed using the return multiples in Tables V and VI of Regulation
Section 1.72-9.
(k) For purposes of this Section, 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.
(l) In the event that less than one hundred percent (100%) of
a Participant's interest in the Plan is distributed to such
Participant's spouse, the portion of the distribution attributable to
the Participant's Voluntary Contribution Account shall be in the same
proportion that the Participant's Voluntary Contribution Account bears
to the Participant's total interest in the Plan.
(m) Subject to the spouse's right of consent afforded under
the Plan, the restrictions imposed by this Section shall not apply if a
Participant has, prior to January 1, 1984, made a written designation
to have death benefits paid in an alternative method acceptable under
Code Section 401 (a) as in effect prior to the enactment of the Tax
Equity and Fiscal Responsibility Act of 1982 (TEFRA).
38
6.7 TIME OF DISTRIBUTION
Except as limited by Sections 6.5 and 6.6, whenever a
distribution is to be made, or a series of payments are to commence, the
distribution or series of payments may be made or begun on such date or as soon
thereafter as is practicable. However, unless a Former Participant elects in
writing to defer the receipt of benefits (such election may not result in a
death benefit that is more than incidental), the payment of benefits shall begin
not later than the sixtieth (60th) day after the close of the Plan Year in which
the latest of the following events occurs: (a) the date on which the Participant
attains the earlier of age 65 or the Normal Retirement Age specified herein; (b)
the tenth (10th) anniversary of the year in which the Participant commenced
participation in the Plan; or (c) the date the Participant terminates service
with the Employer.
Notwithstanding the foregoing, the failure of a Participant
and, if applicable, the Participant's spouse, to consent to a distribution that
is "immediately distributable" (within the meaning of Section 6.5(d)), shall be
deemed to be an election to defer the commencement of payment of any benefit
sufficient to satisfy this Section.
6.8 DISTRIBUTION FOR MINOR OR INCOMPETENT BENEFICIARY
In the event a distribution is to be made to a minor or
incompetent Beneficiary, then the Administrator may direct that such
distribution be paid to the legal guardian, or if none in the case of a minor
Beneficiary, to a parent of such Beneficiary, or to the custodian for such
Beneficiary under the Uniform Gift to Minors Act or Gift to Minors Act, if such
is permitted by the laws of the state in which said Beneficiary resides. Such a
payment to the legal guardian, custodian or parent of a minor or incompetent
Beneficiary shall fully discharge the Trustee, Employer, and Plan from further
liability on account thereof.
6.9 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN
In the event that all, or any portion, of the distribution
payable to a Participant or Beneficiary hereunder shall, at the later of the
Participant's attainment of age 62 or Normal Retirement Age, remain unpaid
solely by reason of the inability of the Administrator, after sending a
registered letter, return receipt requested, to the last known address, and
after further diligent effort, to ascertain the whereabouts of such Participant
or Beneficiary, the amount so distributable shall be treated as a Forfeiture
pursuant to the Plan. Notwithstanding the foregoing, if the value of a
Participant's Vested benefit derived from Employer and Employee contributions
does not exceed $5,000, then the amount distributable may be treated as a
Forfeiture at the time it is determined that the whereabouts of the Participant
or the Participant's Beneficiary can not be ascertained. In the event a
Participant or Beneficiary is located subsequent to the Forfeiture, such benefit
shall be restored, first from Forfeitures, if any, and then from an additional
Employer contribution, if necessary. Upon Plan termination, the portion of the
distributable amount that is an "eligible rollover distribution" as defined in
Plan Section 6.14(b)(1) may be paid directly to an individual retirement account
described in Code Section 408(a) or an individual retirement annuity described
in Code Section 408(b). However, regardless of the preceding, a benefit that is
lost by reason of escheat under applicable state law is not treated as a
Forfeiture for purposes of this Section nor as an impermissible forfeiture under
the Code.
6.10 IN-SERVICE DISTRIBUTION
For Profit Sharing Plans and 401(k) Profit Sharing Plans, if
elected in the Adoption Agreement, at such time as the conditions set forth in
the Adoption Agreement have been satisfied, then the Administrator, at the
election of a Participant who has not severed employment with the Employer,
shall direct the distribution of up to the entire Vested amount then credited to
the accounts as elected in the Adoption Agreement maintained on behalf of such
Participant. In the event that the Administrator makes such a distribution, the
Participant shall continue to be eligible to participate in time Plan on the
same basis as any other Employee. Any distribution made pursuant to this Section
shall be made in a manner consistent with Section 6.5, including, but not
limited to, all notice and consent requirements of Code Sections 411 (a)(11) and
417 and the Regulations thereunder. Furthermore, if an in-service distribution
is permitted from more than one account type, the Administrator may determine
any ordering of a Participant's in-service distribution from such accounts.
6.11 ADVANCE DISTRIBUTION FOR HARDSHIP
(a) For Profit Sharing Plans and 401 (k) Plans (except to the
extent Section 12.9 applies), if elected in the Adoption Agreement, the
Administrator, at the election of the Participant, shall direct the
distribution to any Participant in any one Plan Year up to the lesser
of 100% of the Vested interest of the Participant's Combined Account
valued as of the last Valuation Date or the amount necessary to satisfy
the immediate and heavy financial need of the Participant. Any
distribution made pursuant to this Section shall be deemed to be made
as of the first day of the Plan Year or, if later, the Valuation Date
immediately preceding the date of distribution, and the account from
which the distribution is made shall be reduced accordingly. Withdrawal
under this Section shall be authorized only if the distribution is for
an immediate and heavy financial need. The Administrator will determine
whether there is an immediate and heavy financial need based on the
facts and circumstances. An immediate and heavy financial need
includes, but is not limited to, a distribution for one of the
following:
(1) Medical expenses described in Code Section 213(d) incurred
by the Participant, the Participant's spouse, or any of the
Participant's dependents (as defined in Code Section 152) or
necessary for these persons to obtain medical care as
described in Code Section 213(d);
39
(2) Costs directly related to the purchase (excluding mortgage
payments) of a principal residence for the Participant;
(3) Funeral expenses for a member of the Participant's family;
(4) Payment of tuition, related educational fees, and room and
board expenses, for the next twelve (12) months of post-
secondary education for the Participant, the Participant's
spouse, children, or dependents (as defined in Code
Section 152); or
(5) Payments necessary to prevent the eviction of the
Participant from the Participant's principal residence or
foreclosure on the mortgage on that residence.
(b) If elected in the Adoption Agreement, no distribution
shall be made pursuant to this Section from the Participant's Account
until such Account has become fully Vested. Furthermore, if a hardship
distribution is permitted from more than one account type, the
Administrator may determine any ordering of a Participant's hardship
distribution from such accounts.
(c) Any distribution made pursuant to this Section shall be
made in a manner which is consistent with and satisfies the provisions
of Section 6.5, including, but not limited to, all notice and consent
requirements of Code Sections 411(a)(11) and 417 and the Regulations
thereunder.
6.12 SPECIAL RULE FOR CERTAIN PROFIT SHARING PLANS
(a) The provisions of this Section apply to a Participant in a
Profit Sharing Plan or 401(k) Profit Sharing Plan to the extent elected
in the Adoption Agreement.
(b) If an election is made to not offer life annuities is a
form of distribution, then a Participant shall be prohibited from
electing benefits in the form of a life annuity and the Joint and
Survivor Annuity provisions of Section 6.5 shall not apply.
(c) Notwithstanding anything in Sections 6.2 and 6.6 to the
contrary, upon the death of a Participant, the automatic form of
distribution will be a lump-sum rather than a Qualified Pre-Retirement
Survivor Annuity. Furthermore, the Participant's spouse will be the
Beneficiary of the Participant's entire Vested interest in the Plan
unless an election is made to waive the spouse as Beneficiary. The other
provisions in Section 6.2 shall be applied by treating the death benefit
in this subsection as though it is a Qualified Pre-Retirement Survivor
Annuity.
(d) Except to the extent otherwise provided in this Section,
the provisions of Sections 6.2, 6.5 and 6.6 regarding spousal consent
shall be inoperative with respect to this Plan.
(e) If a distribution is one to which Code Sections 401(a)(11)
and 417 do not apply, such distribution may commence less than thirty
(30) days after the notice required under Regulation 1.411 (a)-11 (c) is
given, provided that:
(1) the Plan Administrator clearly informs the Participant
that the Participant has a right to a period of at least
thirty (30) days after the notice to consider the decision of
whether or not to elect a distribution (and, if applicable, a
particular distribution option), and
(2) the Participant, after receiving the notice, affirmatively
elects a distribution.
6.13 QUALIFIED DOMESTIC RELATIONS ORDER DISTRIBUTION
All rights and benefits, including elections, provided to a
Participant in this Plan shall be subject to the rights afforded to any
"alternate payee" under a "qualified domestic relations order." Furthermore, a
distribution to an "alternate payee" shall be permitted if such distribution is
authorized by a "qualified domestic relations order," even if the affected
Participant has not reached the "earliest retirement age" under the Plan. For
the purposes of this Section, "alternate payee," "qualified domestic relations
order" and "earliest retirement age" shall have the meanings set forth under
Code Section 414(p).
6.14 DIRECT ROLLOVERS
(a) Notwithstanding any provision of the Plan to the contrary
that would otherwise limit a "distributee's" election under this
Section, a "distributee" may elect, at the time and in the manner
prescribed by the Administrator to have any portion of an "eligible
rollover distribution" that is equal to at least $500 paid directly to
an "eligible retirement plan" specified by the "distributee" in a
"direct rollover."
40
(b) For purposes of this Section, the following definitions
shall apply:
(1) An "eligible rollover distribution" means any distribution
described in Code Section 402(c)(4) and generally includes any
distribution of all or any portion of the balance to the
credit of the distributes, except that an "eligible rollover
distribution" does not include: any distribution that is one
of a series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life
expectancy) of the "distributee" or the joint lives (or joint
life expectancies) of the "distributee" and the
"distributee's" designated beneficiary, or for a specified
period of ten (10) years or more; any distribution to the
extent such distribution is required under Code Section
401(a)(9); the portion of any other distribution(s) that is
not includible in gross income (determined without regard to
the exclusion for net unrealized appreciation with respect to
employer securities); for distributions made after December
31, 1998, any hardship distribution described in Code Section
401(k)(2)(B)(i)(IV); and any other distribution reasonably
expected to total less than $200 during a year.
(2) An "eligible retirement plan" is an individual retirement
account described in Code Section 408(a), an individual
retirement annuity described in Code Section 408(b), an
annuity plan described in Code Section 403(a), or a qualified
plan described in Code Section 401(a), that accepts the
"distributee'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.
(3) A "distributee" includes an Employee or former Employee.
In addition, the Employee's or former Employee's surviving
spouse and the Employee's or former Employee's spouse or
former spouse who is the alternate payee under a qualified
domestic relations order, as defined in Code Section 414(p),
are distributees with regard to the interest of the spouse or
former spouse.
(4) A "direct rollover" is a payment by the Plan to the
"eligible retirement plan" specified by the "distributee."
6.15 TRANSFER OF ASSETS FROM A MONEY PURCHASE PLAN
(a) This Section shall be effective as of the following date:
(1) for Plans not entitled to extended reliance as described
in Revenue Ruling 94-76, the first day of the first Plan Year
beginning on or after December 12, 1994, or if later, 90 days
after December 12, 1994; or
(2) for Plans entitled to extended reliance as described in
Revenue Ruling 94-76, as of the first day of the first Plan
Year following the Plan Year in which the extended reliance
period applicable to the Plan ends. However, in the event of a
transfer of assets to the Plan from a money purchase plan that
occurs after the date of the most recent determination letter,
the effective date of the amendment shall be the date
immediately preceding the date of such transfer of assets.
(b) Notwithstanding any provision of this Plan to the
contrary, to the extent that any optional form of benefit under this
Plan permits a distribution prior to the Employee's retirement, death,
disability, or severance from employment, and prior to Plan
termination, the optional form of benefit is not available with respect
to benefits attributable to assets (including the post-transfer
earnings thereon) and liabilities that are transferred, within the
meaning of Code Section 414(1), to this Plan from a money purchase
pension plan qualified under Code Section 401 (a) (other than any
portion of those assets and liabilities attributable to after-tax
voluntary Employee contributions or to a direct or indirect rollover
contribution).
6.16 ELECTIVE TRANSFERS OF BENEFITS TO OTHER PLANS
(a) If a voluntary, fully-informed election is made by a
Participant, then if the conditions set forth herein are satisfied, a
Participant's entire benefit may be transferred between qualified plans
(other than any direct rollover described in Q&A-3 of Regulation
1.401(a)(31)-1). As an alternative to the transfer, the Participant may
elect to retain the Participant's "Section 411(d)(6) protected
benefits" under the Plan (or, if the plan is terminating, to receive
any optional form of benefit for which the Participant is eligible
under the plan as required by Code Section 411(d)(6)). A transfer
between qualified plans may only be made pursuant to this subsection if
the following additional requirements are met:
(i) The transfer occurs at a time at which the
participant's benefits are distributable. A
Participant's benefits are distributable on a
particular date if, on that date, the Participant is
eligible, under the terms of the Plan, to receive an
immediate distribution of these benefits (e.g., in
the form of an immediately commencing annuity) from
that plan under provisions of the plan not
inconsistent with Code Section 401(a);
(ii) For transfers that occur on or after January 1,
2002, the transfer occurs at a time at which the
Participant is not eligible to receive an immediate
distribution of the participant's entire
41
nonforfeitable accrued benefit in a single-sum
distribution that would consist entirely of an
eligible rollover distribution within the meaning of
Code Section 401(a)(31)(C);
(iii) The participant is fully Vested in the
transferred benefit in the transferee plan;
(iv) In the case of a transfer from a defined
contribution plan to a defined benefit plan, the
defined benefit plan provides a minimum benefit, for
each Participant whose benefits are transferred,
equal to the benefit, expressed as an annuity payable
at normal retirement age, that is derived solely on
the basis of the amount transferred with respect to
such Participant; and
(v) The amount of the benefit transferred, together
with the amount of any contemporaneous Code Section
401(a)(31) direct rollover to the transferee plan,
equals the Participant's entire nonforfeitable
accrued benefit under the Plan.
(b) If a voluntary, fully-informed election is made by a
Participant, then if the conditions set forth herein are satisfied, a
Participant's entire benefit may be transferred between qualified
defined contribution plans (other than any direct rollover described in
Q&A-3 of Regulation 1.401(a)(31)-1). As an alternative to the transfer,
the Participant may elect to retain the Participant's "Section
411(d)(6) protected benefits" under the Plan (or, if the plan is
terminating, to receive any optional form of benefit for which the
Participant is eligible under the plan as required by Code Section
411(d)(6)). A transfer between qualified plans may only be made
pursuant to this subsection if the following additional requirements
are met:
(i) To the extent the benefits are transferred from a
money purchase pension plan, the transferee plan must
be a money purchase pension plan. To the extent the
benefits being transferred are part of a qualified
cash or deferred arrangement under Code Section
401(k), the benefits must be transferred to a
qualified cash or deferred arrangement under Code
Section 401(k). Benefits transferred from a
profit-sharing plan other than from a qualified cash
or deferred arrangement, or from a stock bonus plan
other than an employee stock ownership plan, may be
transferred to any type of defined contribution plan;
and
(ii) The transfer must be made either in connection
with an asset or stock acquisition, merger, or other
similar transaction involving a change in employer of
the employees of a trade or business (i.e., an
acquisition or disposition within the meaning of
Regulation 1.410(b)-2(f)) or in connection with the
Participant's change in employment status to an
employment status with respect to which the
Participant is not entitled to additional allocations
under the Plan.
ARTICLE VII
TRUSTEE AND CUSTODIAN
7.1 BASIC RESPONSIBILITIES OF THE TRUSTEE
(a) The provisions of this Article, other than Section 7.6,
shall not apply to this Plan if a separate trust agreement is being
used as specified in the Adoption Agreement.
(b) The Trustee is accountable to the Employer for the funds
contributed to the Plan by the Employer, but the Trustee does not have
any duty to see that the contributions received comply with the
provisions of the Plan. The Trustee is not obligated to collect any
contributions from the Employer, nor is it under a duty to see that
funds deposited with it are deposited in accordance with the provisions
of the Plan.
(c) The Trustee will credit and distribute the Trust Fund as
directed by the Administrator. The Trustee is not obligated to inquire
as to whether any payee or distributee is entitled to any payment or
whether the distribution is proper or within the terms of the Plan, or
whether the manner of making any payment or distribution is proper. The
Trustee is accountable only to the Administrator for any payment or
distribution made by it in good faith on the order or direction of the
Administrator.
(d) In the event that the Trustee shall be directed by a
Participant (pursuant to the Participant Direction Procedures if the
Plan permits Participant directed investments), the Employer, or an
Investment Manager or other agent appointed by the Employer with
respect to the investment of any or all Plan assets, the Trustee shall
have no liability with respect to the investment of such assets, but
shall be responsible only to execute such investment instructions as so
directed.
(1) The Trustee shall be entitled to rely fully on the written
(or other form acceptable to the Administrator and the
Trustee, including but not limited to, voice recorded)
instructions of a Participant (pursuant to the Participant
Direction Procedures), the Employer, or any Fiduciary or
nonfiduciary agent of the Employer, in the discharge of such
duties, and shall not be liable for any loss or other
liability resulting from such direction (or lack of direction)
of the investment of any part of the Plan assets.
42
(2) The Trustee may delegate the duty of executing such
instructions to any nonfiduciarv agent, which may be an
affiliate of the Trustee or any Plan representative.
(3) The Trustee may refuse to comply with any direction from
the Participant in the event the Trustee, in its sole and
absolute discretion, deems such direction improper by virtue
of applicable law. The Trustee shall not be responsible or
liable for any loss or expense that may result from the
Trustee's refusal or failure to comply with any direction from
the Participant.
(4) Any costs and expenses related to compliance with the
Participant's directions shall be borne by the Participant's
Directed Account, unless paid by the Employer.
(5) Notwithstanding anything herein above to the contrary, the
Trustee shall not invest any portion of a Participant's
Directed Account in "collectibles" within the meaning of Code
Section 408(m).
(e) The Trustee will maintain records of receipts and
disbursements and furnish to the Employer and/or Administrator for each
Plan Year a written annual report pursuant to Section 7.9.
(f) The Trustee may employ a bank or trust company pursuant to
the terms of its usual and customary bank agency agreement, under which
the duties of such bank or trust company shall be of a custodial,
clerical and record-keeping nature.
(g) The Trustee may employ and pay from the Trust Fund
reasonable compensation to agents, attorneys, accountants and other
persons to advise the Trustee as in its opinion may be necessary. The
Trustee may delegate to any agent, attorney, accountant or other person
selected by it any non-Trustee power or duty vested in it by the Plan,
and the Trustee may act or refrain from acting on the advice or opinion
of any such person.
7.2 INVESTMENT POWERS AND DUTIES OF DISCRETIONARY TRUSTEE
(a) This Section applies if the Employer, in the Adoption
Agreement or as otherwise agreed upon by the Employer and the Trustee,
designates the Trustee to administer all or a portion of the trust as a
discretionary Trustee. If so designated, then the Trustee has the
discretion and authority to invest, manage, and control those Plan
assets except, however, with respect to those assets which are subject
to the investment direction of a Participant (if Participant directed
investments are permitted), or an Investment Manager, the
Administrator, or other agent appointed by the Employer. The exercise
of any investment discretion hereunder shall be consistent with the
"funding policy and method" determined by the Employer.
(b) The Trustee shall, except as otherwise provided in this
Plan, invest and reinvest the Trust Fund to keep the Trust Fund
invested without distinction between principal and income and in such
securities or property, real or personal, wherever situated, as the
Trustee shall deem advisable, including, but not limited to, common or
preferred stocks, open-end or closed-end mutual funds, bonds and other
evidences of indebtedness or ownership, and real estate or any interest
therein. The Trustee shall at all times in making investments of the
Trust Fund consider, among other factors, the short and long-term
financial needs of the Plan on the basis of information furnished by
the Employer. In making such investments, the Trustee shall not be
restricted to securities or other property of the character expressly
authorized by the applicable law for trust investments; however, the
Trustee shall give due regard to any limitations imposed by the Code or
the Act so that at all times this Plan may qualify as a qualified Plan
and Trust.
(c) The Trustee, in addition to all powers and authorities
under common law, statutory authority, including the Act, and other
provisions of this Plan, shall have the following powers and
authorities to be exercised in the Trustee's sole discretion:
(1) To purchase, or subscribe for, any securities or other
property and to retain the same. In conjunction with the
purchase of securities, margin accounts may be opened and
maintained;
(2) To sell, exchange, convey, transfer, grant options to
purchase, 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;
(3) 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, subscription rights or other options, 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. However, the Trustee shall not vote proxies
relating to securities for which it has not been assigned full
investment management responsibilities. In those cases where
another party has such investment authority or discretion, the
Trustee will deliver all proxies to said party who will then
have full responsibility for voting those proxies;
43
(4) To cause any securities or other property to be registered
in the Trustee's own name, in the name of one or more of the
Trustee's nominees, in a clearing corporation, in a
depository, or in book entry form or in bearer form, but the
books and records of the Trustee shall at all times show that
all such investments are part of the Trust Fund;
(5) To invest in a common, collective, or pooled trust fund
(the provisions of which are incorporated herein by reference)
maintained by any Trustee (or any affiliate of such Trustee)
hereunder pursuant to Revenue Ruling 81-100, all or such part
of the Trust Fund as the Trustee may deem advisable, and the
part of the Trust Fund so transferred shall be subject to all
the terms and provisions of the common, collective, or pooled
trust fund which contemplate the commingling for investment
purposes of such trust assets with trust assets of other
trusts. The name of the trust fund may be specified in an
addendum to the Adoption Agreement. The Trustee may withdraw
from such common, collective, or pooled trust fund all or such
part of the Trust Fund as the Trustee may deem advisable;
(6) To borrow or raise money for the purposes of the Plan in
such amount, and upon such terms and conditions, as the
Trustee shall deem advisable; and for any sum so borrowed, to
issue a promissory note as Trustee, and to secure the
repayment thereof by pledging all, or any part, of the Trust
Fund; and no person lending money to the Trustee shall be
bound to see to the application of the money lent or to
inquire into the validity, expediency, or propriety of any
borrowing;
(7) To accept and retain for such time as it may deem
advisable any securities or other property received or
acquired by it as Trustee hereunder, whether or not such
securities or other property would normally be purchased as
investments hereunder;
(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 and to pay their
reasonable expenses and compensation, and such agents or
counsel may or may not be an agent or counsel for the
Employer;
(11) To apply for and procure from the Insurer as an
investment of the Trust Fund any annuity or other Contracts
(on the life of any Participant, or in the case of a Profit
Sharing Plan (including a 401 (k) plan), on the life of any
person in whom a Participant has an insurable interest, or on
the joint lives of a Participant and any person in whom the
Participant has an insurable interest) as the Administrator
shall deem proper; to exercise, at any time or from time to
time, whatever rights and privileges may be granted under such
annuity, or other Contracts; to collect, receive, and settle
for the proceeds of all such annuity, or other Contracts as
and when entitled to do so under the provisions thereof;
(12) To invest funds of the Trust in time deposits or savings
accounts bearing a reasonable rate of interest or in cash or
cash balances without liability for interest thereon,
including the specific authority to invest in any type of
deposit of the Trustee (or of a financial institution related
to the Trustee);
(13) To invest in Treasury Bills and other forms of United
States government obligations;
(14) To sell, purchase and acquire put or call options if the
options are traded on and purchased through a national
securities exchange registered under the Securities Exchange
Act of 1934, as amended, or, if the options are not traded on
a national securities exchange, are guaranteed by a member
firm of the New York Stock Exchange regardless of whether such
options are covered;
(15) To deposit monies in federally insured savings accounts
or certificates of deposit in banks or savings and loan
associations including the specific authority to make deposit
into any savings accounts or certificates of deposit of the
Trustee (or a financial institution related to the Trustee);
(16) To pool all or any of the Trust Fund, from time to time,
with assets belonging to any other qualified employee pension
benefit trust created by the Employer or any Affiliated
Employer, and to commingle such assets and make joint or
common investments and carry joint accounts on behalf of this
Plan and Trust and such other trust or trusts, allocating
undivided shares or interests in such investments or accounts
or any pooled assets of the two or more trusts in accordance
with their respective interests; and
(17) To do all such acts and exercise all such rights and
privileges, although not specifically mentioned herein, as the
Trustee may deem necessary to carry out the purposes of the
Plan.
44
7.3 INVESTMENT POWERS AND DUTIES OF NONDISCRETIONARY TRUSTEE
(a) This Section applies if the Employer, in the Adoption
Agreement or as otherwise agreed upon by the Employer and the Trustee,
designates the Trustee to administer all or a portion of the trust as a
nondiscretionary Trustee. If so designated, then the Trustee shall have
no discretionary authority to invest, manage, or control those Plan
assets, but must act solely as a directed Trustee of those Plan assets.
A nondiscretionary Trustee, as directed Trustee of the Plan funds it
holds, is authorized and empowered, by way of limitation, with the
powers, rights and duties set forth herein and in Section 7.14, each of
which the nondiscretionary Trustee exercises solely as directed Trustee
in accordance with the direction of the party which has the authority
to manage and control the investment of the Plan assets. If no
directions are provided to the Trustee, the Employer will provide
necessary direction. Furthermore, the Employer and the nondiscretionary
Trustee may, in writing, limit the powers of the nondiscretionary
Trustee to any combination of powers listed within this Section.
(b) The Trustee, in addition to all powers and authorities
under common law, statutory authority including the Act, and other
provisions of this Plan, shall have the following powers and
authorities:
(1) To invest the assets, without distinction between
principal and income, in securities or property, real or
personal, wherever situated, including, but not limited to,
common or preferred stocks, open-end or closed-end mutual
funds, bonds and other evidences of indebtedness or ownership,
and real estate or any interest therein. In making such
investments, the Trustee shall not be restricted to securities
or other property of the character expressly authorized by the
applicable law for trust investments; however, the Trustee
shall give due regard to any limitations imposed by the Code
or the Act so that at all times this Plan may qualify as a
qualified Plan and Trust;
(2) To purchase, or subscribe for, any securities or other
property and to retain the same. In conjunction with the
purchase of securities, margin accounts may be opened and
maintained;
(3) To sell, exchange, convey, transfer, grant options to
purchase, 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) At the direction of the party which has the authority or
discretion, 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, subscription rights or other
options, 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 powers, and 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 cause any securities or other property to be registered
in the Trustee's own name, in the name of one or more of the
Trustee's nominees, in a clearing corporation, in a
depository, or in book entry form or in bearer form, but the
books and records of the Trustee shall at all times show that
all such investments are part of the Trust Fund;
(6) To invest in a common, collective, or pooled trust fund
(the provisions of which are incorporated herein by reference)
maintained by any Trustee (or any affiliate of such Trustee)
hereunder pursuant to Revenue Ruling 81-100, all or such part
of the Trust Fund as the party which has the authority to
manage and control the investment of the assets shall deem
advisable, and the part of the Trust Fund so transferred shall
be subject to all the terms and provisions of the common,
collective, or pooled trust fund which contemplate the
commingling for investment purposes of such trust assets with
trust assets of other trusts. The name of the trust fund may
be specified in an addendum to the Adoption Agreement;
(7) To borrow or raise money for the purposes of the Plan in
such amount, and upon such terms and conditions, as the
Trustee shall deem advisable; and for any sum so borrowed, to
issue a promissory note as Trustee, and to secure the
repayment thereof by pledging all, or any part, of the Trust
Fund; and no person lending money to the Trustee shall be
bound to see to the application of the money lent or to
inquire into the validity, expediency, or propriety of any
borrowing;
(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 and to pay their
reasonable expenses and compensation, and such agent or
counsel may or may not be an agent or counsel for the
Employer;
45
(11) To apply for and procure from the Insurer as an
investment of the Trust Fund any annuity or other Contracts
(on the life of any Participant, or in the case of a Profit
Sharing Plan (including a 401 (k) plan), on the life of any
person in whom a Participant has an insurable interest, or on
the joint lives of a Participant and any person in whom the
Participant has an insurable interest) as the Administrator
shall deem proper; to exercise, at the direction of the person
with the authority to do so, whatever rights and privileges
may be granted under such annuity or other Contracts; to
collect, receive, and settle for the proceeds of all such
annuity or other Contracts as and when entitled to do so under
the provisions thereof;
(12) To invest funds of the Trust in time deposits or savings
accounts bearing a reasonable rate of interest or in cash or
cash balances without liability for interest thereon,
including the specific authority to invest in any type of
deposit of the Trustee for of a financial institution related
to the Trustee);
(13) To invest in Treasury Bills and other forms of United
States government obligations;
(14) To sell, purchase and acquire put or call options if the
options are traded on and purchased through a national
securities exchange registered under the Securities Exchange
Act of 1934, as amended, or, if the options are not traded on
a national securities exchange, are guaranteed by a member
firm of the New York Stock Exchange regardless of whether such
options are covered;
(15) To deposit monies in federally insured savings accounts
or certificates of deposit in banks or savings and loan
associations including the specific authority to make deposit
into any savings accounts or certificates of deposit of the
Trustee (or a financial institution related to the Trustee);
and
(16) To pool all or any of the Trust Fund, from time to time,
with assets belonging to any other qualified employee pension
benefit trust created by the Employer or any Affiliated
Employer, and to commingle such assets and make joint or
common investments and carry joint accounts on behalf of this
Plan and such other trust or trusts, allocating undivided
shares or interests in such investments or accounts or any
pooled assets of the two or more trusts in accordance with
their respective interests.
7.4 POWERS AND DUTIES OF CUSTODIAN
If there is a discretionary Trustee, the Employer may appoint
a custodian. A custodian has the same powers, rights and duties as a
nondiscretionary Trustee. Any reference in the Plan to a Trustee also is a
reference to a custodian unless the context of the Plan indicates otherwise. A
limitation of the Trustee's liability by Plan provision also acts as a
limitation of the custodian's liability. Any action taken by the custodian at
the discretionary Trustee's direction satisfies any provision in the Plan
referring to the Trustee taking that action. The resignation or removal of the
custodian shall be made in accordance with Section 7.11 as though the custodian
were a Trustee.
7.5 LIFE INSURANCE
(a) The Trustee, at the direction of the Administrator and
pursuant to instructions from the individual designated in the Adoption
Agreement for such purpose and subject to the conditions set forth in
the Adoption Agreement, shall ratably apply for, own, and pay all
premiums on Contracts on the lives of the Participants or, in the case
of Profit Sharing Plan (including a 401(k) plan), on the life of any
person in whom the Participant has an insurable interest or on the
joint lives of a Participant and any person in whom the Participant has
an insurable interest. Any initial or additional Contract purchased on
behalf of a Participant shall have a face amount of not less than
$1,000, the amount set forth in the Adoption Agreement, or the
limitation of the Insurer, whichever is greater. If a life insurance
Contract is to be purchased for a Participant or Former Participant,
then the aggregate premium for ordinary life insurance for each
Participant or Former Participant must be less than 50% of the
aggregate contributions and Forfeitures allocated to the Participant's
or Former Participant's Combined Account. For purposes of this
limitation, ordinary life insurance Contracts are Contracts with both
non-decreasing death benefits and non-increasing premiums. If term
insurance or universal life insurance is purchased, then the aggregate
premium must be 25% or less of the aggregate contributions and
Forfeitures allocated to the Participant's or Former Participant's
Combined Account. If both term insurance and ordinary life insurance
are purchased, then the premium for term insurance plus one-half of the
premium for ordinary life insurance may not in the aggregate exceed 25%
of the aggregate Employer contributions and Forfeitures allocated to
the Participant's or Former Participant's Combined Account.
Notwithstanding the preceding, the limitations imposed herein with
respect to the purchase of life insurance shall not apply, in the case
of a Profit Sharing Plan (including a 401(k) plan), to the portion of
the Participant's Account that has accumulated for at least two (2)
Plan Years or to the entire Participant's Account if the Participant
has been a Participant in the Plan for at least five (5) years. Amounts
transferred to this Plan in accordance with Section 4.6(e)(ii), (iii)
or (v) and a Participant's or Former Participant's Voluntary
Contribution Account may be used to purchase Contracts without
limitation.
(b) The Trustee must distribute the Contracts to the
Participant or Former Participant or convert the entire value of the
Contracts at or before retirement into cash or provide for a periodic
income so that no portion of such value may be used to continue life
insurance protection beyond commencement of benefits. Furthermore, if a
Contract is purchased on the joint lives of the Participant and another
person and such other person predeceases the Participant, then the
Contract may not be maintained under this Plan.
46
(c) Notwithstanding anything herein above to the contrary,
amounts credited to a Participant's Qualified Voluntary Employee
Contribution Account pursuant to Section 4.9, shall not be applied to
the purchase of life insurance Contracts. Furthermore, no life
insurance Contracts shall be required to be obtained on an individual's
life if, for any reason (other than the nonpayment of premiums) the
Insurer will not issue a Contract on such individual's life.
(d) The Trustee will be the owner of any life insurance
Contract purchased under the terms of this Plan. The Contract must
provide that the proceeds will be payable to the Trustee; however, the
Trustee shall be required to pay over all proceeds of the Contract to
the Participant's designated Beneficiary in accordance with the
distribution provisions of Article VI. A Participant's spouse will be
the designated Beneficiary pursuant to Section 6.2, unless a qualified
election has been made in accordance with Sections 6.5 and 6.6 of the
Plan, if applicable. Under no circumstances shall the Trust retain any
part of the proceeds that are in excess of the cash surrender value
immediately prior to death. However, the Trustee shall not pay the
proceeds in a method that would violate the requirements of the
Retirement Equity Act of 1984, as stated in Article VI of the Plan, or
Code Section 401(a)(9) and the Regulations thereunder. 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.
7.6 LOANS TO PARTICIPANTS
(a) If specified in the Adoption Agreement, the Trustee (or
the Administrator if the Trustee is a nondiscretionary Trustee or if
loans are treated as Participant directed investments pursuant to the
Adoption Agreement) may, in the Trustee's (or, if applicable, the
Administrator's) sole discretion, make loans to Participants or
Beneficiaries under the following circumstances: (1) loans shall be
made available to all Participants and Beneficiaries on a reasonably
equivalent basis; (2) loans shall not be made available to Highly
Compensated Employees in an amount greater than the amount made
available to other Participants; (3) loans shall bear a reasonable
rate of interest; (4) loans shall be adequately secured; and (5) loans
shall provide for periodic repayment over a reasonable period of time.
Furthermore, no Participant loan shall exceed the Participant's Vested
interest in the Plan.
(b) Loans shall not be made to any Shareholder-Employee or
Owner-Employee (including an Owner Employee's family members as
defined in Code Section 267(c)(4)) unless an exemption for such loan
is obtained pursuant to Act Section 408 or such loan would otherwise
not be a prohibited transaction pursuant to Code Section 4975 and Act
Section 408.
(c) An assignment or pledge of any portion of a Participant's
interest in the Plan and a loan, pledge, or assignment with respect to
any insurance Contract purchased under the Plan, shall be treated as a
loan under this Section.
(d) If the Vested interest of a Participant is used to secure
any loan made pursuant to this Section, then the written (or such
other form as permitted by the IRS) consent of the Participant's
spouse shall be required in a manner consistent with Section 6.5(a),
provided the spousal consent requirements of such Section apply to the
Plan. Such consent must be obtained within the 90-day period prior to
the date the loan is made. Any security interest held by the Plan by
reason of an outstanding loan to the Participant or Former Participant
shall be taken into account in determining the amount of the death
benefit or Pre-Retirement Survivor Annuity. However, unless the loan
program established pursuant to this Section provides otherwise, no
spousal consent shall be required under this paragraph if the total
interest subject to the security is not in excess of $5,000 (or,
$3,500 effective for loans made prior to the later of the first day of
the first Plan Year beginning after August 5, 1997, or the date
specified in the Adoption Agreement).
(e) The Administrator shall be authorized to establish a
participant loan program to provide for loans under the Plan. The loan
program shall be established in accordance with Department of Labor
Regulation Section 2550.408(b)-1(d)(2) providing for loans by the Plan
to parties-in-interest under said Plan, such as Participants or
Beneficiaries. In order for the Administrator to implement such loan
program, a separate written document forming a part of this Plan must
be adopted, which document shall specifically include, but need not be
limited to, the following:
(1) the identity of the person or positions authorized to
administer the Participant loan program;
(2) a procedure for applying for loans;
(3) the basis on which loans will 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 such default.
47
(f) Notwithstanding anything in this Plan to the contrary, if
a Participant or Beneficiary defaults on a loan made pursuant to this
Section that is secured by the Participant's interest in the Plan,
then a Participant's interest may be offset by the amount subject to
the security to the extent there is a distributable event permitted by
the Code or Regulations.
(g) Notwithstanding anything in this Section to the contrary,
if this is an amendment and restatement of an existing Plan, any loans
made prior to the date this amendment and restatement is adopted shall
be subject to the terms of the Plan in effect at the time such loan was
made.
7.7 MAJORITY ACTIONS
Except where there has been an allocation and delegation of
powers, if there shall be more than one Trustee, they shall act by a majority of
their number, but may authorize one or more of them to sign papers on their
behalf.
7.8 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES
The Trustee shall be paid such reasonable compensation as set
forth in the Trustee's fee schedule (if the Trustee has such a schedule) or as
agreed upon in writing by the Employer and the Trustee. However, an individual
serving as Trustee who already receives full-time compensation from the Employer
shall not receive compensation from this Plan. In addition, the Trustee shall be
reimbursed for any reasonable expenses, including reasonable counsel fees
incurred by it as Trustee. Such compensation and expenses shall be paid from the
Trust Fund unless paid or advanced by the Employer. All taxes of any kind
whatsoever that may be levied or assessed under existing or future laws upon, or
in respect of, the Trust Fund or the income thereof, shall be paid from the
Trust Fund.
7.9 ANNUAL REPORT OF THE TRUSTEE
(a) Within a reasonable period of time after the later of the
Anniversary Date or receipt of the Employers contribution for each Plan
Year, the Trustee, or its agent, shall furnish to the Employer and
Administrator a written statement of account with respect to the Plan
Year for which such contribution was made setting forth:
(1) the net income, or loss, of the Trust Fund;
(2) the gains, or losses, realized by the Trust Fund upon
sales or other disposition of the assets;
(3) the increase, or decrease, in the value of the Trust Fund;
(4) all payments and distributions made from the Trust Fund;
and
(5) such further information as the Trustee and/or
Administrator deems appropriate.
(b) The Employer, promptly upon its receipt of each such
statement of account, shall acknowledge receipt thereof in writing and
advise the Trustee and/or Administrator of its approval or disapproval
thereof. Failure by the Employer to disapprove any such statement of
account within thirty (30) days after its receipt thereof shall be
deemed an approval thereof. The approval by the Employer of any
statement of account shall be binding on the Employer and the Trustee
as to all matters contained in the statement to the same extent as if
the account of the Trustee had been settled by judgment or decree in an
action for a judicial settlement of its account in a court of competent
jurisdiction in which the Trustee, the Employer and all persons having
or claiming an interest in the Plan were parties. However, nothing
contained in this Section shall deprive the Trustee of its right to
have its accounts judicially settled if the Trustee so desires.
7.10 AUDIT
(a) If an audit of the Plan's records shall be required by the
Act and the regulations thereunder for any Plan Year, the Administrator
shall engage on behalf of all Participants an independent qualified
public accountant for that purpose. Such accountant shall, after an
audit of the books and records of the Plan in accordance with generally
accepted auditing standards, within a reasonable period after the close
of the Plan Year, furnish to the Administrator and the Trustee a report
of the audit setting forth the accountant's opinion as to whether any
statements, schedules or lists, that are required by Act Section 103 or
the Secretary of Labor to be filed with the Plan's annual report, are
presented fairly in conformity with generally accepted accounting
principles applied consistently.
(b) All auditing and accounting fees shall be an expense of
and may, at the election of the Employer, be paid from the Trust Fund.
(c) If some or all of the information necessary to enable the
Administrator to comply with Act Section 103 is maintained by a bank,
insurance company, or similar institution, regulated, supervised, and
subject to periodic examination by a state or federal agency, then it
shall transmit and certify the accuracy of that information to the
48
Administrator as provided in Act Section 103(b) within one hundred
twenty (120) days after the end of the Plan Year or such other date as
may be prescribed under regulations of the Secretary of Labor.
7.11 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE
(a) Unless otherwise agreed to by both the Trustee and the
Employer, a Trustee may resign at any time by delivering to the
Employer, at least thirty (30) days before its effective date, a
written notice of resignation.
(b) Unless otherwise agreed to by both the Trustee and the
Employer, the Employer may remove a Trustee at any time by delivering
to the Trustee, at least thirty (30) days before its effective date, a
written notice of such Trustee's removal.
(c) Upon the death, resignation, incapacity, or removal of any
Trustee, a successor may be appointed by the Employer, and such
successor, upon accepting such appointment in writing and delivering
same to the Employer, shall, without further act, become vested with
all the powers and responsibilities of the predecessor as if such
successor had been originally named as a Trustee herein. Until such a
successor is appointed, any remaining Trustee or Trustees shall have
full authority to act under the terms of the Plan.
(d) The Employer may designate one or more successors prior to
the death, resignation, incapacity, or removal of a Trustee. In the
event a successor is so designated by the Employer and accepts such
designation, the successor shall, without further act, become vested
with all the powers and responsibilities of the predecessor as if such
successor had been originally named as Trustee herein immediately upon
the death, resignation, incapacity, or removal of the predecessor.
(e) Whenever any Trustee hereunder ceases to serve as such,
the Trustee shall furnish to the Employer and Administrator a written
statement of account with respect to the portion of the Plan Year
during which the individual or entity served as Trustee. This statement
shall be either (i) included as part of the annual statement of account
for the Plan Year required under Section 7.9 or (ii) set forth in a
special statement. Any such special statement of account should be
rendered to the Employer no later than the due date of the annual
statement of account for the Plan Year. The procedures set forth in
Section 7.9 for the approval by the Employer of annual statements of
account shall apply to any special statement of account rendered
hereunder and approval by the Employer of any such special statement in
the manner provided in Section 7.9 shall have the same effect upon the
statement as the Employer's approval of an annual statement of account.
No successor to the Trustee shall have any duty or responsibility to
investigate the acts or transactions of any predecessor who has
rendered all statements of account required by Section 7.9 and this
subparagraph.
7.12 TRANSFER OF INTEREST
Notwithstanding any other provision contained in this Plan,
the Trustee at the direction of the Administrator shall transfer the interest,
if any, of a Participant to another trust forming part of a pension, profit
sharing, or stock bonus plan that meets the requirements of Code Section 401(a),
provided that the trust to which such transfers are made permits the transfer to
be made.
7.13 TRUSTEE INDEMNIFICATION
The Employer agrees to indemnify and hold harmless the
Trustee against any and all claims, losses, damages, expenses and liabilities
the Trustee may incur in the exercise and performance of the Trustee's powers
and duties hereunder, unless the same are determined to be due to gross
negligence or willful misconduct.
7.14 EMPLOYER SECURITIES AND REAL PROPERTY
The Trustee shall be empowered to acquire and hold "qualifying
Employer securities" and "qualifying Employer real property," as those terms are
defined in the Act. However, no more than one hundred percent (100% in the case
of a Profit Sharing Plan or 401(k) Plan, or ten percent (10%)), in the case of a
Money Purchase Plan, of the fair market value of all the assets in the Trust
Fund may be invested in "qualifying Employer securities" and "qualifying
Employer real property."
Notwithstanding the preceding, for Plan Years beginning
after December 31, 1998, if the Plan does not permit Participants to direct the
investment of their Participants' Elective Deferral Accounts, then the Trustee
shall only be permitted to acquire or hold "qualifying Employer securities" and
"qualifying Employer real property" to the extent permitted under Act Section
407.
49
ARTICLE VIII
AMENDMENT, TERMINATION AND MERGERS
8.1 AMENDMENT
(a) The Employer shall have the right at any time to amend
this Plan subject to the limitations of this Section. However, any
amendment that affects the rights, duties or responsibilities of the
Trustee or Administrator may only be made with the Trustee's or
Administrator's written consent. Any such amendment shall become
effective as provided therein upon its execution. The Trustee shall not
be required to execute any such amendment unless the amendment affects
the duties of the Trustee hereunder.
(b) The Employer may (1) change the choice of options in the
Adoption Agreement; (2) add any addendum to the Adoption Agreement that
is specifically permitted pursuant to the terms of the Plan; (3) add
overriding language to the Adoption Agreement when such language is
necessary to satisfy Code Sections 415 or 416 because of the required
aggregation of multiple plans; and (4) add certain model amendments
published by the Internal Revenue Service which specifically provide
that their adoption will not cause the Plan to be treated as an
individually designed plan. An Employer that amends the Plan for any
other reason, including a waiver of the minimum funding requirement
under Code Section 412(d), will no longer participate in this Prototype
Plan and this Plan will be considered to be an individually designed
plan. Notwithstanding the preceding, the attachment to the Adoption
Agreement of any addendum specifically authorized by the Plan or a list
of any "Section 411(d)(6) protected benefits" which must be preserved
shall not be considered an amendment to the Plan.
(c) The Employer expressly delegates authority to the sponsor
of this Prototype Plan, the right to amend each Employers Plan by
submitting a copy of the amendment to each Employer who has adopted
this Prototype Plan, after first having received a ruling or favorable
determination from the Internal Revenue Service that the Prototype Plan
as amended qualifies under Code Section 401(a) and the Act (unless a
ruling or determination is not required by the IRS). For purposes of
this Section, the mass submitter shall be recognized as the agent of
the sponsor. If the sponsor does not adopt any amendment made by the
mass submitter it will no longer be identical to, or a minor modifier
of, the mass submitter plan.
(d) No amendment to the Plan shall be effective if it
authorizes or permits any part of the Trust Fund (other than such part
as is required to pay taxes and administration expenses) to be used for
or diverted to any purpose other than for the exclusive benefit of the
Participants or their Beneficiaries or estates, or causes any reduction
in the amount credited to the account of any Participant; or causes or
permits any portion of the Trust Fund to revert to or become property
of the Employer.
(e) Except as permitted by Regulations (including Regulation
1.411(d)-4) or other IRS guidance, no Plan amendment or transaction
having the effect of a Plan amendment (such as a merger, plan transfer
or similar transaction) shall be effective if it eliminates or reduces
any "Section 411 (d)(6) protected benefit" or adds or modifies
conditions relating to "Section 411 (d)(6) protected benefits" which
results in a further restriction on such benefits unless such "Section
411 (d)(6) protected benefits" are preserved with respect to benefits
accrued as of the later of the adoption date or effective date of the
amendment. "Section 411 (d)(6) protected benefits" are benefits
described in Code Section 411(d)(6)(A), early retirement benefits and
retirement-type subsidies, and optional forms of benefit. A Plan
amendment that eliminates or restricts the ability of a Participant to
receive payment of the Participant's interest in the Plan under a
particular optional form of benefit will be permissible 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.
(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 ninetieth (90th) day after the date the
Participant receiving the distribution has been furnished a
summary that reflects the amendment and that satisfies the Act
requirements at 29 CFR 2520.104b3 (relating to 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.
8.2 TERMINATION
(a) The Employer shall have the right at any time to terminate
the Plan by delivering to the Trustee and Administrator written notice
of such termination, Upon any full or partial termination, all amounts
credited to the affected Participants' Combined Accounts shall become
100% Vested and shall not thereafter be subject to forfeiture, and all
unallocated amounts, including Forfeitures, shall be allocated to the
accounts of all Participants in accordance with the provisions hereof.
50
(b) Upon the full termination of the Plan, the Employer shall
direct the distribution of the assets to Participants in a manner that
is consistent with and satisfies the provisions of Section 6.5.
Distributions to a Participant shall be made in cash (or in property if
permitted in the Adoption Agreement) or through the purchase of
irrevocable nontransferable deferred commitments from the Insurer.
Except as permitted by Regulations, the termination of the Plan shall
not result in the reduction of "Section 411 (d)(6) protected benefits"
as described in Section 8.1(e).
8.3 MERGER, CONSOLIDATION OR TRANSFER OF ASSETS
This Plan may be merged or consolidated with, or its assets
and/or liabilities may be transferred to any other plan only if the benefits
which would be received by a Participant of this Plan, in the event of a
termination of the plan immediately after such transfer, merger or
consolidation, are at least equal to the benefits the Participant would have
received if the Plan had terminated immediately before the transfer, merger or
consolidation and such transfer, merger or consolidation does not otherwise
result in the elimination or reduction of any "Section 411(d)(6) protected
benefits" as described in Section 8.1(e).
ARTICLE IX
TOP HEAVY PROVISIONS
9.1 TOP HEAVY PLAN REQUIREMENTS
Notwithstanding anything in this Plan to the contrary, for any
Top Heavy Plan Year, the Plan shall provide the special vesting requirements of
Code Section 416(b) pursuant to Section 6.4 of the Plan and the special minimum
allocation requirements of Code Section 416(c) pursuant to Section 4.3(f) of the
Plan. Except as otherwise provided in the Plan, the minimum allocation shall be
an Employer Non-Elective Contribution and, if no vesting schedule has been
selected in the Adoption Agreement, shall be subject to the 6 Year Graded
vesting schedule described in the Adoption Agreement.
9.2 DETERMINATION OF TOP HEAVY STATUS
(a) This Plan shall be a Top Heavy Plan for any plan year
beginning after December 31, 1983, if any of the following conditions
exists:
(1) if the "top heavy ratio" for this Plan exceeds sixty
percent (60%) and this Plan is not part of any "required
aggregation group" or "permissive aggregation group;"
(2) if this Plan is a part of a "required aggregation group"
but not part of a "permissive aggregation group" and the "top
heavy ratio" for the group of plans exceeds sixty percent
(60%); or
(3) if this Plan is a part of a "required aggregation group"
and part of a "permissive aggregation group" and the "top
heavy ratio" for the "permissive aggregation group" exceeds
sixty percent (60%).
(b) "Top heavy ratio" means, with respect to a "determination
date":
(1) If the Employer maintains one or more defined contribution
plans (including any simplified employee pension plan (as
defined in Code Section 408(k))) and the Employer has not
maintained any defined benefit plan which during the 5-year
period ending on the "determination date" has or has had
accrued benefits, the top heavy ratio for this plan alone or
for the "required aggregation group" 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" (including any part
of any account balance distributed in the 5-year period ending
on the "determination date"), and the denominator of which is
the sum of all account balances (including any part of any
account balance distributed in the 5-year period ending on the
"determination date"), both computed in accordance with Code
Section 416 and the Regulations thereunder. Both the numerator
and 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 Code Section 416 and the
Regulations thereunder.
(2) If the Employer maintains one or more defined contribution
plans (including any simplified employee pension plan) and the
Employer maintains or has maintained one or more defined
benefit plans which during the 5-year period ending on the
"determination date" has or has had any accrued benefits, the
top heavy ratio for any "required aggregation group" 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," 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," all determined in
accordance with Code Section 416 and the Regulations
thereunder. The accrued benefits under a defined benefit plan
in both the numerator and denominator of the top heavy
51
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 Code Section 416
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 (i) who is not a Key
Employee but who was a Key Employee in a prior year, or (ii)
who has not been credited with at least one Hour of Service
with any Employer maintaining the plan at any time during the
5-year period ending on the "determination date" will be
disregarded. The calculation of the top heavy ratio, and the
extent to which distributions, rollovers, and transfers are
taken into account will be made in accordance with Code
Section 416 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 (i) the method, if any, that
uniformly applies for accrual purposes under all defined
benefit plans maintained by the employer, or (ii) 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 Code Section 411(b)(1)(C).
(c) "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 Plan Year.
(d) "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 Code
Sections 401(a)(4) and 410.
(e) "Present value" means the present value based only on the
interest and mortality rates specified in the Adoption Agreement.
(f) "Required aggregation group" means: (1) 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 (2) any other qualified plan of
the Employer which enables a plan described in (1) to meet the
requirements of Code Sections 40l(a)(4) or 410.
(g) "Valuation date" means the date elected by the Employer in
the Adoption Agreement as of which account balances or accrued benefits
are valued for purposes of calculating the "top heavy ratio."
ARTICLE X
MISCELLANEOUS
10.1 EMPLOYER ADOPTIONS
(a) Any organization may become the Employer hereunder by
executing the Adoption Agreement in a form satisfactory to the Trustee,
and it shall provide such additional information as the Trustee may
require. The consent of the Trustee to act as such shall be signified
by its execution of the Adoption Agreement or a separate agreement
(including, if elected in the Adoption Agreement, a separate trust
agreement).
(b) Except as otherwise provided in this Plan, the affiliation
of the Employer and the participation of its Participants shall be
separate and apart from that of any other employer and its participants
hereunder.
10.2 PARTICIPANT'S RIGHTS
This Plan shall not be deemed to constitute a contract between
the Employer and any Participant or to be a consideration or an inducement for
the employment of any Participant or Employee. Nothing contained in this Plan
shall be deemed to give any Participant or Employee the right to be retained in
the service of the Employer or to interfere with the right of the Employer to
discharge any Participant or Employee at any time regardless of the effect which
such discharge shall have upon the Employee as a Participant of this Plan.
10.3 ALIENATION
(a) Subject to the exceptions provided below and as otherwise
permitted by the Code and the Act, no benefit which shall be payable to
any person (including a Participant or the Participant's Beneficiary)
shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, or charge, and any attempt
to anticipate, alienate, sell, transfer, assign, pledge, encumber, or
charge the same shall be void; and no such benefit shall in any manner
be liable for, or subject to, the debts, contracts, liabilities,
engagements, or torts of any such person, nor shall it be subject to
52
attachment or legal process for or against such person, and the same
shall not be recognized except to such extent as may be required by
law.
(b) Subsection (a) shall not apply to the extent a Participant
or Beneficiary is indebted to the Plan by reason of a loan made
pursuant to Section 7.6. At the time a distribution is to be made to or
for a Participant's or Beneficiary's benefit, such portion of the
amount to be distributed as shall equal such indebtedness shall be paid
to the Plan, to apply against or discharge such indebtedness. Prior to
malting a payment, however, the Participant or Beneficiary must be
given notice by the Administrator that such indebtedness is to be so
paid in whole or part from the Participant's interest in the Plan. If
the Participant or Beneficiary does not agree that the indebtedness is
a valid claim against the Participant's interest in the Plan, the
Participant or Beneficiary shall be entitled to a review of the
validity of the claim in accordance with procedures provided in
Sections 2.10 and 2.11.
(c) Subsection (a) shall not apply to a "qualified domestic
relations order" defined in Code Section 414(p), and those other
domestic relations orders permitted to be so treated by the
Administrator under the provisions of the Retirement Equity Act of
1984. The Administrator shall establish a written procedure to
determine the qualified status of domestic relations orders and to
administer distributions under such qualified orders. Further, to the
extent provided under a "qualified domestic relations order," a former
spouse of a Participant shall be treated as the spouse or surviving
spouse for all purposes under the Plan.
(d) Notwithstanding any provision of this Section to the
contrary, an offset to a Participant's accrued benefit against an
amount that the Participant is ordered or required to pay the Plan with
respect to a judgment, order, or decree issued, or a settlement entered
into, on or after August 5, 1997, shall be permitted in accordance with
Code Sections 401(a)(13)(C) and (D).
10.4 CONSTRUCTION OF PLAN
This Plan and Trust shall be construed and enforced according
to the Code, the Act and the laws of the state or commonwealth in which the
Employers (or if there is a corporate Trustee, the Trustee's) principal office
is located (unless otherwise designated in the Adoption Agreement), other than
its laws respecting choice of law, to the extent not pre-empted by the Act.
10.5 GENDER AND NUMBER
Wherever any words are used herein in the masculine, feminine
or neuter sender, they shall be construed as though they were also used in
another gender in all cases where they would so apply, and whenever any words
are used herein in the singular or plural form, they shall be construed as
though they were also used in the other form in all cases where they would so
apply.
10.6 LEGAL ACTION
In the event any claim, suit, or proceeding is brought
regarding the Trust and/or Plan established hereunder to which the Trustee, the
Employer or the Administrator may be a party, and such claim, suit, or
proceeding is resolved in favor of the Trustee, the Employer or the
Administrator, they shall be entitled to be reimbursed from the Trust Fund for
any and all costs, attorney's fees, and other expenses pertaining thereto
incurred by them for which they shall have become liable.
10.7 PROHIBITION AGAINST DIVERSION OF FUNDS
(a) Except as provided below and otherwise specifically
permitted by law, it shall be impossible by operation of the Plan or of
the Trust, by termination of either, by power of revocation or
amendment, by the happening of any contingency, by collateral
arrangement or by any other means, for any part of the corpus or income
of any Trust Fund maintained pursuant to the Plan or any funds
contributed thereto to be used for, or diverted to, purposes other than
the exclusive benefit of Participants, Former Participants, or their
Beneficiaries.
(b) In the event the Employer shall make a contribution under
a mistake of fact pursuant to Act Section 403(c)(2)(A), the Employer
may demand repayment of such contribution at any time within one (1)
year following the time of payment and the Trustee shall return such
amount to the Employer within the one (1) year period. Earnings of the
Plan attributable to the contributions may not be returned to the
Employer but any losses attributable thereto must reduce the amount so
returned.
(c) Except as specifically stated in the Plan, any
contribution made by the Employer to the Plan (if the Employer is not
tax-exempt) is conditioned upon the deductibility of the contribution
by the Employer under the Code and, to the extent any such deduction is
disallowed, the Employer may, within one (1) year following a final
determination of the disallowance, whether by agreement with the
internal Revenue Service or by final decision of a court of competent
jurisdiction, demand repayment of such disallowed contribution and the
Trustee shall return such contribution within one (1) year following
the disallowance. Earnings of the Plan attributable to the contribution
may not be returned to the Employer, but any losses attributable
thereto must reduce the amount so returned.
53
10.8 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE
The Employer, Administrator and Trustee, and their successors,
shall not be responsible for the validity of any Contract issued hereunder or
for the failure on the part of the Insurer to make payments provided by any such
Contract, or for the action of any person which may delay payment or render a
Contract null and void or unenforceable in whole or in part.
10.9 INSURER'S PROTECTIVE CLAUSE
Except as otherwise agreed upon in writing between the
Employer and the Insurer, an Insurer which issues any Contracts hereunder shall
not have any responsibility for the validity of this Plan or for the tax or
legal aspects of this Plan. The Insurer shall be protected and held harmless in
acting in accordance with any written direction of the Administrator or Trustee,
and shall have no duty to see to the application of any funds paid to the
Trustee, nor be required to question any actions directed by the Administrator
or Trustee. Regardless of any provision of this Plan, the Insurer shall not be
required to take or permit any action or allow any benefit or privilege contrary
to the terms of any Contract which it issues hereunder, or the rules of the
Insurer.
10.10 RECEIPT AND RELEASE FOR PAYMENTS
Any payment to any Participant, the Participant's legal
representative, Beneficiary, or to any guardian or committee appointed for such
Participant or Beneficiary in accordance with the provisions of this Plan,
shall, to the extent thereof, be in full satisfaction of all claims hereunder
against the Trustee and the Employer.
10.11 ACTION BY THE EMPLOYER
Whenever the Employer under the terms of the Plan is permitted
or required to do or perform any act or matter or thing, it shall be done and
performed by a person duly authorized by its legally constituted authority.
10.12 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY
The "named Fiduciaries" of this Plan are (1) the Employer,
(2) the Administrator, (3) the Trustee (if the Trustee has discretionary
authority as elected in the Adoption Agreement or as otherwise agreed upon by
the Employer and the Trustee), and (4) any Investment Manager appointed
hereunder. The named Fiduciaries shall have only those specific powers, duties,
responsibilities, and obligations as are specifically given them under the Plan
including, but not limited to, any agreement allocating or delegating their
responsibilities, the terms of which are incorporated herein by reference. In
general, the Employer shall have the sole responsibility for making the
contributions provided for under the Plan; and shall have the sole authority to
appoint and remove the Trustee and the Administrator; to formulate the Plan's
"funding policy and method"; and to amend the elective provisions of the
Adoption Agreement or terminate, in whole or in part, the Plan. The
Administrator shall have the sole responsibility for the administration of the
Plan, which responsibility is specifically described in the Plan. If the Trustee
has discretionary authority, it shall have the sole responsibility of management
of the assets held under the Trust, except those assets, the management of which
has been assigned to an Investment Manager or Administrator, who shall be solely
responsible for the management of the assets assigned to it, all as specifically
provided in the Plan. Each named Fiduciary warrants that any directions given,
information furnished, or action taken by it shall be in accordance with the
provisions of the Plan, authorizing or providing for such direction, information
or action. Furthermore, each named Fiduciary may rely upon any such direction,
information or action of another named Fiduciary as being proper, under the
Plan, and is not required under the Plan to inquire, into the propriety of any
such direction, information or action. It is intended under the Plan that each
named Fiduciary shall be responsible for the proper exercise of its own powers,
duties, responsibilities and obligations under the Plan. No named Fiduciary
shall guarantee the Trust Fund in any manner against investment loss or
depreciation in asset value. Any person or group may serve in more than one
Fiduciary capacity.
10.13 HEADINGS
The headings and subheadings of this Plan have been inserted
for convenience of reference and are to be ignored in any construction of the
provisions hereof.
10.14 APPROVAL BY INTERNAL REVENUE SERVICE
Notwithstanding anything herein to the contrary, if, pursuant
to a timely application filed by or on behalf of the Plan, the Commissioner of
the Internal Revenue Service or the Commissioner's delegate should determine
that the Plan does not initially qualify as a tax-exempt plan under Code
Sections 401 and 501, and such determination is not contested, or if contested,
is finally upheld, then if the Plan is a new plan, it shall be void ab initio
and all amounts contributed to the Plan, by the Employer, less expenses paid,
shall be returned within one (1) year and the Plan shall terminate, and the
Trustee shall be discharged from all further obligations. If the
disqualification relates to a Plan amendment, then the Plan shall operate as if
it had not been amended. If the Employer's Plan fails to attain or retain
qualification, such Plan will no longer participate in this prototype plan and
will be considered an individually designed plan.
54
10.15 UNIFORMITY
All provisions of this Plan shall be interpreted and applied
in a uniform, nondiscriminatory manner.
10.16 PAYMENT OF BENEFITS
Except as otherwise provided in the Plan, benefits under this
Plan shall be paid, subject to Sections 6.10, 6.11 and 12.9, only upon death,
Total and Permanent Disability, normal or early retirement, termination of
employment, or termination of the Plan.
ARTICLE XI
PARTICIPATING EMPLOYERS
11.1 ELECTION TO BECOME A PARTICIPATING EMPLOYER
Notwithstanding anything herein to the contrary, with the
consent of the Employer and Trustee, any Affiliated Employer may adopt the
Employer's Plan and all of the provisions hereof, and participate herein and be
known as a Participating Employer, by a properly executed document evidencing
said intent and will of such Participating Employer. Regardless of the
preceding, an entity that ceases to be an Affiliated Employer may continue to be
a Participating Employer through the end of the transition period for certain
dispositions set forth in Code Section 410(b)(6)(C). In the event a
Participating Employer is not an Affiliated Employer and the transition period
in the preceding sentence, if applicable, has expired, then this Plan will be
considered an individually designed plan.
11.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS
(a) Each Participating Employer shall be required to select
the same Adoption Agreement provisions as those selected by the
Employer other than the Plan Year, the Fiscal Year, and such other
items that must, by necessity, vary among employers.
(b) The Trustee may, but shall not be required to, commingle,
hold and invest as one Trust Fund all contributions made by
Participating Employers, as well as all increments thereof. However,
the assets of the Plan shall, on an ongoing basis, be available to pay
benefits to all Participants and Beneficiaries under the Plan without
regard to the Employer or Participating Employer who contributed such
assets.
(c) Unless the Employer otherwise directs, any expenses of the
Plan which are to be paid by the Employer or borne by the Trust Fund
shall be paid by each Participating Employer in the same proportion
that the total amount standing to the credit of all Participants
employed by such Employer bears to the total standing to the credit of
all Participants.
11.3 DESIGNATION OF AGENT
Each Participating Employer shall be deemed to be a part of
this Plan; provided, however, that with respect to all of its relations with the
Trustee and Administrator for purposes of this Plan, each Participating Employer
shall be deemed to have designated irrevocably the Employer as its agent. Unless
the context of the Plan clearly indicates otherwise, the word "Employer" shall
be deemed to include each Participating Employer as related to its adoption of
the Plan.
11.4 EMPLOYEE TRANSFERS
In the event an Employee is transferred between Participating
Employers, accumulated service and eligibility shall be carried with the
Employee involved. No such transfer shall effect a termination of employment
hereunder, and the Participating Employer to which the Employee is transferred
shall thereupon become obligated hereunder with respect to such Employee in the
same manner as was the Participating Employer from whom the Employee was
transferred.
11.5 PARTICIPATING EMPLOYER'S CONTRIBUTION AND FORFEITURES
Any contribution or Forfeiture subject to allocation during
each Plan Year shall be allocated among all Participants of all Participating
Employers in accordance with the provisions of this Plan. However, if a
Participating Employer is not an Affiliated Employer (due to the transition rule
for certain dispositions set forth in Code Section 410(b)(6)(C)) then any
contributions made by such Participating Employer will only be allocated among
the Participants eligible to share of the Participating Employer. On the basis
of the information furnished by the Administrator, the Trustee may keep separate
books and records concerning the affairs of each Participating Employer
hereunder and as to the accounts and credits of the Employees of each
Participating Employer. The Trustee may, but need not, register Contracts so as
to evidence that a particular Participating Employer is the interested Employer
hereunder, but in the event of an Employee transfer from one Participating
Employer to another, the employing Participating Employer shall immediately
notify the Trustee thereof.
55
11.6 AMENDMENT
Amendment of this Plan by the Employer at any time when there
shall be a Participating Employer that is an Affiliated Employer hereunder shall
only be by the written action of each and every Participating Employer and with
the consent of the Trustee where such consent is necessary in accordance with
the terms of this Plan.
11.7 DISCONTINUANCE OF PARTICIPATION
Except in the case of a standardized Plan, any Participating
Employer that is an Affiliated Employer shall be permitted to discontinue or
revoke its participation in the Plan at any time. At the time of any such
discontinuance or revocation, satisfactory evidence thereof and of any
applicable conditions imposed shall be delivered to the Trustee. The Trustee
shall thereafter transfer, deliver and assign Contracts and other Trust Fund
assets allocable to the Participants of such Participating Employer to such new
trustee or custodian as shall have been designated by such Participating
Employer, in the event that it has established a separate qualified retirement
plan for its employees provided, however, that no such transfer shall be made if
the result is the elimination or reduction of any "Section 411(d)(6) protected
benefits" as described in Section 8.1(e). If no successor is designated, the
Trustee shall retain such assets for the Employees of said Participating
Employer pursuant to the provisions of Article VII hereof. In no such event
shall any part of the corpus or income of the Trust Fund as it relates to such
Participating Employer be used for or diverted to purposes other than for the
exclusive benefit of the employees of such Participating Employer.
11.8 ADMINISTRATOR'S AUTHORITY
The Administrator shall have authority to make any and all
necessary rules or regulations, binding upon all Participating Employers and all
Participants, to effectuate the purpose of this Article.
11.9 PARTICIPATING EMPLOYER CONTRIBUTION FOR AFFILIATE
If any Participating Employer is prevented in whole or in part
from making a contribution which it would otherwise have made under the Plan by
reason of having no current or accumulated earnings or profits, or because such
earnings or profits are less than the contribution which it would otherwise have
made, then, pursuant to Code Section 404(a)(3)(B), so much of the contribution
which such Participating Employer was so prevented from making may be made, for
the benefit of the participating employees of such Participating Employer, by
other Participating Employers who are members of the same affiliated group
within the meaning of Code Section 1504 to the extent of their current or
accumulated earnings or profits, except that such contribution by each such
other Participating Employer shall be limited to the proportion of its total
current and accumulated earnings or profits remaining after adjustment for its
contribution to the Plan made without regard to this paragraph which the total
prevented contribution bears to the total current and accumulated earnings or
profits of all the Participating Employers remaining after adjustment for all
contributions made to the Plan without regard to this paragraph.
A Participating Employer on behalf of whose employees a
contribution is made under this paragraph shall not be required to reimburse the
contributing Participating Employers.
ARTICLE XII
CASH OR DEFERRED PROVISIONS
Except as specifically provided elsewhere in this Plan, the
provisions of this Article shall apply with respect to any 401(k) Profit Sharing
Plan regardless of any provisions in the Plan to the contrary.
12.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION
(a) For each Plan Year, the Employer will (or may with respect
to any discretionary contributions) contribute to the Plan:
(1) The amount of the total salary reduction elections of all
Participants made pursuant to Section 12.2(a), which amount
shall be deemed Elective Deferrals; plus
(2) If elected in the Adoption Agreement, a matching
contribution equal to the percentage, if any, specified in the
Adoption Agreement of the Elective Deferrals of each
Participant eligible to share in the allocations of the
matching contribution, which amount shall be deemed an
Employer's matching contribution or Qualified Matching
Contribution as elected in the Adoption Agreement; plus
(3) If elected in the Adoption Agreement, a Prevailing Wage
Contribution or a discretionary amount determined each year by
the Employer, which amount if any, shall be deemed an
Employer's Non-Elective Contribution; plus
(4) If elected in the Adoption Agreement, a Qualified
Non-Elective Contribution.
56
(b) Notwithstanding the foregoing, if the Employer is not a
tax-exempt entity, then the Employer's contributions for any Fiscal
Year may generally not exceed the maximum amount allowable as a
deduction to the Employer under the provisions of Code Section 404.
However, to the extent necessary to provide the top heavy minimum
allocations, the Employer shall make a contribution even if it exceeds
current or accumulated Net Profit or the amount that is deductible
under Code Section 404. All contributions by the Employer shall be made
in cash or in such property as is acceptable to the Trustee.
12.2 PARTICIPANT'S SALARY REDUCTION ELECTION
(a) Each Participant may elect to defer a portion of
Compensation which would have been received in the Plan Year, but for
the salary reduction election, subject to the limitations of this
Section and the Adoption Agreement. A salary reduction election (or
modification of an earlier election) may not be made with respect to
Compensation which is currently available on or before the date the
Participant executed such election, or if later, the later of the date
the Employer adopts this cash or deferred arrangement or the date such
arrangement first became effective. Any elections made pursuant to this
Section shall become effective as soon as is administratively feasible.
If the automatic election option is elected in the Adoption Agreement,
then in the event a Participant fails to make a deferral election and
does not affirmatively elect to receive cash, such Participant shall be
deemed to have made a deferral election equal to the percentage of
Compensation set forth in the Adoption Agreement. The automatic
election may, in accordance with procedures established by the
Administrator, be applied to all Participants or to Eligible Employees
who become Participants after a certain date. For purposes of this
Section, the annual dollar limitation of Code Section 401(a)(17)
($150,000 as adjusted) shall not apply.
Additionally, if elected in the Adoption Agreement,
each Participant may elect to defer a different percentage or amount of
any cash bonus to be paid by the Employer during the Plan Year. A
deferral election may not be made with respect to cash bonuses which
are currently available on or before the date the Participant executes
such election.
The amount by which Compensation and/or cash bonuses
are reduced shall be that Participant's Elective Deferrals and shall be
treated as an Employer contribution and allocated to that Participant's
Elective Deferral Account.
Once made, a Participant's election to reduce
Compensation shall remain in effect until modified or terminated.
Modifications may be made as specified in the Adoption Agreement, and
terminations may be made at any time. Any modification or termination
of an election will become effective as soon as is administratively
feasible.
(b) The balance in each Participant's Elective Deferral
Account, Qualified Matching Contribution Account and Qualified
Non-Elective Contribution Account shall be fully Vested at all times
and, except as otherwise provided herein, shall not be subject to
Forfeiture for any reason.
(c) Amounts held in a Participant's Elective Deferral Account,
Qualified Matching Contribution Account and Qualified Non-Elective
Account may only be distributable as provided in (4), (5) or (6) below
or as provided under the other provisions of this Plan, but in no event
prior to the earlier of the following events or any other events
permitted by the Code or Regulations:
(1) the Participant's separation from service, Total and
Permanent Disability, or death;
(2) the Participant's attainment of age 59 1/2;
(3) the proven financial hardship of the Participant, subject
to the limitations of Section 12.9;
(4) the termination of the Plan without the existence at the
time of Plan termination of another defined contribution plan
or the establishment of a successor defined contribution plan
by the Employer or an Affiliated Employer within the period
ending twelve months after distribution of all assets, from
the Plan maintained by the Employer. For this purpose, a
defined contribution does not include an employee stock
ownership plan (as defined in Code Section 4975(e)(7) or 409),
a simplified employee pension plan (as defined in Code Section
408(k)), or a SIMPLE individual retirement account plan (as
defined in Code Section 408(p));
(5) the date of the sale by the Employer to an entity that is
not an Affiliated Employer of substantially all of the assets
(within the meaning of Code Section 404(d)(2)) with respect to
a Participant who continues employment with the corporation
acquiring such assets; or
(6) the date of the sale by the Employer or an Affiliated
Employer of its interest in a subsidiary (within the meaning
of Code Section 409(d)(3)) to an entity that is not an
Affiliated Employer with respect to a Participant who
continues employment with such subsidiary.
Distributions that are made because of (4), (5), or (6) above
must be made in a lump-sum.
57
(d) A Participant's "elective deferrals" made under this Plan
and all other plans, contracts or arrangements of the Employer
maintaining this Plan during any calendar year shall not exceed the
dollar limitation imposed by Code Section 402(g), as in effect at the
beginning of such calendar year. This dollar limitation shall be
adjusted annually pursuant to the method provided in Code Section
415(d) in accordance with Regulations. For this purpose, "elective
deferrals" means, with respect to a calendar year, 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 Code Section 401(k), any salary reduction simplified
employee pension (as defined in Code Section 408(k)(6)), any SIMPLE IRA
plan described in Code Section 408(p), any eligible deferred
compensation plan under Code Section 457, any plans described under
Code Section 501(c)(18), and any Employer contributions made on the
behalf of a Participant for the purchase of an annuity contract under
Code Section 403(b) pursuant to a salary reduction agreement. "Elective
deferrals" shall not include any deferrals properly distributed as
excess "Annual Additions" pursuant to Section 4.5.
(e) If a Participant has Excess Deferrals for a taxable year,
the Participant may, not later than March 1st following the close of
such taxable year, notify the Administrator in writing of such excess
and request that the Participant's Elective Deferrals under this Plan
be reduced by an amount specified by the Participant. In such event,
the Administrator shall direct the distribution of such excess amount
(and any "Income" allocable to such excess amount) to the Participant
not later than the first April 15th following the close of the
Participant's taxable year. Any distribution of less than the entire
amount of Excess Deferrals and "Income" shall be treated as a pro rata
distribution of Excess Deferrals and "Income." The amount distributed
shall not exceed the Participant's Elective Deferrals under the Plan
for the taxable year. Any distribution on or before the last day of the
Participant's taxable year must satisfy each of the following
conditions:
(1) the Participant shall designate the distribution as Excess
Deferrals;
(2) the distribution must be made after the date on which the
Plan received the Excess Deferrals; and
(3) the Plan must designate the distribution as a distribution
of Excess Deferrals.
Regardless of the preceding, if a Participant has
Excess Deferrals solely from elective deferrals made under this Plan or
any other plan maintained by the Employer, a Participant will be deemed
to have notified the Administrator of such excess amount and the
Administrator shall direct the distribution of such Excess Deferrals in
a manner consistent with the provisions of this subsection.
Any distribution made pursuant to this subsection
shall be made first from unmatched Elective Deferrals and, thereafter,
from Elective Deferrals which are matched. Matching contributions which
relate to Excess Deferrals that are distributed pursuant to this
Section 12.2(e) shall be treated as a Forfeiture to the extent required
pursuant to Code Section 401(a)(4) and the Regulations thereunder.
For the purpose of this subsection, "Income" means the amount
of income or loss allocable to a Participant's Excess Deferrals, which
amount shall be allocated in the same manner as income or losses are
allocated pursuant to Section 43(c). However, "Income" for the period
between the end of the taxable year of the Participant and the date of
the distribution (the "gap period") is not required to be distributed.
(f) Notwithstanding the preceding, a Participant's Excess
Deferrals shall be reduced, but not below zero, by any distribution
and/or recharacterization of Excess Deferrals pursuant to Section
12.5(a) for the Plan Year beginning with or within the taxable year of
the Participant.
(g) In the event a Participant has received a hardship
distribution pursuant to Regulation 1.401(k)-I(d)(2)(iii)(B) from any
other plan maintained by the Employer or from the Participant's
Elective Deferral Account pursuant to Section 12.9, then such
Participant shall not be permitted to elect to have Elective Deferrals
contributed to the Plan for a period of twelve (12) months following
the receipt of the distribution. Furthermore, the dollar limitation
under Code Section 402(g) shall be reduced, with respect to the
Participant's taxable year following the taxable year in which the
hardship distribution was made by the amount of such Participant's
Elective Deferrals, if any, made pursuant to this Plan (and any other
plan maintained by the Employer) for the taxable year of the hardship
distribution.
(h) At Normal Retirement Date, or such other date when the
Participant shall be entitled to receive benefits, the fair market
value of the Participant's Elective Deferral Account shall be used to
provide benefits to the Participant or the Participant's Beneficiary.
(i) If during a Plan Year, it is projected that the aggregate
amount of Elective Deferrals to be allocated to all Highly Compensated
Participants under this Plan would cause the Plan to fail the tests set
forth in Section 12.4, then the Administrator may automatically reduce
the deferral amount of affected Highly Compensated Participants,
beginning with the Highly Compensated Participant who has the highest
actual deferral ratio until it is anticipated the Plan will pass the
tests or until the actual deferral ratio equals the actual deferral
ratio of the Highly Compensated Participant having the next highest
actual deferral ratio. This process may continue until it is
anticipated that the Plan
58
will satisfy one of the tests set forth in Section 12.4. Alternatively,
the Employer may specify a maximum percentage of Compensation that may
be deferred by Highly Compensated Participants.
(j) The Employer and the Administrator shall establish
procedures necessary to implement the salary reduction elections
provided for herein. Such procedures may contain limits on salary
deferral elections such as limiting elections to whole percentages of
Compensation or to equal dollar amounts per pay period that an election
is in effect.
12.3 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS
(a) The Administrator shall establish and maintain an account
in the name of each Participant to which the Administrator shall credit
as of each Anniversary Date, or other Valuation Date, all amounts
allocated to each such Participant as set forth herein.
(b) The Employer shall provide the Administrator with all
information required by the Administrator to make a proper allocation
of Employer contributions for each Plan Year. Within a reasonable
period of time after the date of receipt by the Administrator of such
information, the Administrator shall allocate contributions as follows:
(1) With respect to Elective Deferrals made pursuant to
Section 12.1(a)(1), to each Participant's Elective Deferral
Account in an amount equal to each such Participant's Elective
Deferrals for the year.
(2) With respect to the Employer's matching contribution made
pursuant to Section 12.1(a)(2), to each Participant's Account,
or Participant's Qualified Matching Contribution Account, as
elected in the Adoption Agreement in accordance with Section
12.1(a)(2).
Except, however, in order to be entitled to receive any
Employer matching contribution, a Participant must satisfy the
conditions for sharing in the Employer matching contribution
as set forth in the Adoption Agreement. Furthermore,
regardless of any election in the Adoption Agreement to the
contrary, for the Plan Year in which this Plan terminates, a
Participant shall only be eligible to share in the allocation
of the Employer's contributions for the Plan Year if the
Participant is employed at the end of the Plan Year and has
completed a Year of Service for Period of Service if the
Elapsed Time Method is elected).
(3) With respect to the Employer's Non-Elective Contribution
made pursuant to Section 12.1(a)(3), to each Participant's
Account in accordance with the provisions of Section 4.3(b)(2)
or (3) whichever is applicable.
(4) With respect to the Employers Qualified Non-Elective
Contribution made pursuant to Section 12.1(a)(4), to each
Participant's (excluding Highly Compensated Employees, if
elected in the Adoption Agreement) Qualified Non-Elective
Contribution Account in accordance with the Adoption
Agreement.
(c) Notwithstanding anything in the Plan to the contrary, in
determining whether a Non-Key Employee has received the required
minimum allocation pursuant to Section 4.3(f) such Non-Key Employee's
Elective Deferrals and matching contributions used to satisfy the ADP
tests in Section 12.4 or the ACP tests in Section 12.6 shall not be
taken into account.
(d) Notwithstanding anything herein to the contrary,
Participants who terminated employment during the Plan Year shall share
in the salary deferral contributions made by the Employer for the year
of termination without regard to the Hours of Service credited.
(e) Notwithstanding anything herein to the contrary (other
than Sections 4.3(f) and 12.3(f)), Participants shall only share in the
allocations of the Employer's matching contribution made pursuant to
Section 12.1(a)(2), the Employer's Non-Elective Contributions made
pursuant to Section 12.1(a)(3), the Employers Qualified Non-Elective
Contribution made pursuant to Section 12.1(a)(4), and Forfeitures as
provided in the Adoption Agreement. If no election is made in the
Adoption Agreement, then a Participant shall be eligible to share in
the allocation of the Employer's contribution for the year if the
Participant completes more than 500 Hours of Service (or three (3)
Months of Service if the Elapsed Time method is chosen in the Adoption
Agreement) during the Plan Year or who is employed on the last day of
the Plan Year. Furthermore, regardless of any election in the Adoption
Agreement to the contrary, for the Plan Year in which this Plan
terminates, a Participant shall only be eligible to share in the
allocation of the Employer's contributions for the Plan Year if the
Participant is employed at the end of the Plan Year and has completed a
Year of Service (or Period of Service if the Elapsed Time Method is
elected).
(f) Notwithstanding anything in this Section to the contrary,
the provisions of this subsection apply for any Plan Year if, in the
non-standardized Adoption Agreement, the Employer elected to apply the
410(b) ratio percentage failsafe provisions and the Plan fails to
satisfy the "ratio percentage test" due to a last day of the Plan Year
allocation condition or an Hours of Service (or months of service)
allocation condition. A plan satisfies the "ratio percentage test" if,
on the last day of the Plan Year, the "benefiting ratio" of the
Non-Highly Compensated Employees who are "includible" is at least 70%
of the "benefiting ratio" of the Highly Compensated Employees who are
"includible." The "benefiting ratio" of the Non-Highly Compensated
59
Employees is the number of "includible" Non- Highly Compensated
Employees "benefiting" under the Plan divided by the number of
"includible" Employees who are Non-Highly Compensated Employees. The
"benefiting ratio" of the Highly Compensated Employees is the number of
Highly Compensated Employees "benefiting" under the Plan divided by the
number of "includible" Highly Compensated Employees. "Includible"
Employees are all Employees other than: (1) those Employees excluded
from participating in the plan for the entire Plan Year by reason of
the collective bargaining unit exclusion or the nonresident alien
exclusion described in the Code or by reason of the age and service
requirements of Article III; and (2) any Employee who incurs a
separation from service during the Plan Year and fails to complete at
least 501 Hours of Service (or three (3) months of service if the
Elapsed Time Method is being used) during such Plan Year.
For purposes of this subsection, an Employee is
"benefiting" under the Plan on a particular date if, under the Plan,
the Employee is entitled to an Employer contribution or an allocation
of Forfeitures for the Plan Year.
If this subsection applies, then the Administrator
will suspend the allocation conditions for the "includible" Non-Highly
Compensated Employees who are Participants, beginning first with the
"includible" Employees employed by the Employer on the last day of the
Plan Year, then the "includible" Employees who have the latest
separation from service during the Plan Year, and continuing to suspend
the allocation conditions for each "includible" Employee who incurred
an earlier separation from service, from the latest to the earliest
separation from service date, until the Plan satisfies the "ratio
percentage test" for the Plan Year. If two or more "includible"
Employees have a separation from service on the same day, then the
Administrator will suspend the allocation conditions for all such
"includible" Employees, irrespective of whether the Plan can satisfy
the "ratio percentage test" by accruing benefits for fewer than all
such "includible" Employees. If the Plan for any Plan Year suspends the
allocation conditions for an "includible" Employee, then that Employee
will share in the allocation for that Plan Year of the Employer
contribution and Forfeitures, if any, without regard to whether the
Employee has satisfied the other allocation conditions set forth in
this Section.
If the Plan includes Employer matching contributions subject
to ACP testing, this subsection applies separately to the Code Section
401 (m) portion of the Plan.
12.4 ACTUAL DEFERRAL PERCENTAGE TESTS
(a) Except as otherwise provided herein, this subsection
applies if the Prior Year Testing method is elected in the Adoption
Agreement. The "Actual Deferral Percentage" (hereinafter "ADP") for a
Plan Year for Participants who are Highly Compensated Employees
(hereinafter "HCEs") for each Plan Year and the prior year's ADP for
Participants who were Non-Highly Compensated Employees (hereinafter
"NHCEs") for the prior Plan Year must satisfy one of the following
tests:
(1) The ADP for a Plan Year for Participants who are HCEs for
the Plan Year shall not exceed the prior year's ADP for
Participants who were NHCEs for the prior Plan Year multiplied
by 1.25; or
(2) The ADP for a Plan Year for Participants who are HCEs for
the Plan Year shall not exceed the prior year's ADP for
Participants who were NHCEs for the prior Plan Year multiplied
by 2.0, provided that the ADP for Participants who are HCEs
does not exceed the prior year's ADP for Participants who were
NHCEs in the prior Plan Year by more than two (2) percentage
points.
Notwithstanding the above, for purposes of applying the
foregoing tests with respect to the first Plan Year in which
the Plan permits any Participant to make Elective Deferrals,
the ADP for the prior year's NHCEs shall be deemed to be three
percent (3% unless the Employer has elected in the Adoption
Agreement to use the current Plan Year's ADP for these
Participants. However, the provisions of this paragraph may
not be used if the Plan is a successor plan or is otherwise
prohibited from using such provisions pursuant to IRS Notice
98-1 (or superseding guidance).
(b) Notwithstanding the foregoing, if the Current Year Testing
method is elected in the Adoption Agreement, the ADP tests in (a)(1)
and (a)(2), above shall be applied by comparing the current Plan Year's
ADP for Participants who are HCEs with the current Plan Year's ADP
(rather than the prior Plan Years ADP) for Participants who are NHCEs
for the current Plan Year. Once made, this election can only be changed
if the Plan meets the requirements for changing to the Prior Year
Testing method set forth in IRS Notice 98-1 (or superseding guidance).
Furthermore, this Plan must use the same testing method for both the
ADP and ACP tests for Plan Years beginning on or after the date the
Employer adopts its GUST restated plan.
(c) This subsection applies to prevent the multiple use of the
test set forth in subsection (a)(2) above. Any HCE eligible to make
Elective Deferrals pursuant to Section 12.2 and to make after-tax
voluntary Employee contributions or to receive matching contributions
under this Plan or under any other plan maintained by the Employer or
an Affiliated Employer, shall have either the actual deferral ratio
adjusted in the manner described in Section 12.5 or the actual
contribution ratio adjusted in the manner described in Section 12.7 so
that the "Aggregate Limit" is not exceeded pursuant to Regulation
1.401(m)-2. The amounts in excess of the "Aggregate Limit" shall be
treated as either an Excess Contribution or an Excess Aggregate
Contribution. The ADP and ACP of the HCEs are determined after any
corrections required to meet the ADP and ACP tests and are deemed to be
60
the maximum permitted under such tests for the Plan Year. Multiple use
does not occur if either the ADP or ACP of the HCEs does not exceed
1.25 multiplied by the ADP and ACP of the NHCEs.
"Aggregate Limit" means the sum of (i) 125 percent of
the greater of the ADP of the NHCEs for the prior Plan Year or the ACP
of such NHCEs under the plan subject to Code Section 401(m) for the
Plan Year beginning with or within the prior Plan Year of the cash or
deferred arrangement and (ii) the lesser of 200% or two (2) plus the
lesser of such ADP or ACP. "Lesser" is substituted for "greater" in (i)
above, and "greater" is substituted for "lesser" after "two (2) plus
the" in (ii) above if it would result in a larger Aggregate Limit. 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 NHCEs ADP and ACP for that Plan Year, instead
of the prior Plan Year, is used.
(d) A Participant is an HCE for a particular Plan Year if the
Participant meets the definition of an HCE in effect for that Plan
Year. Similarly, a Participant is an NHCE for a particular Plan Year if
the Participant does not meet the definition of an HCE in effect for
that Plan Year.
(e) For the purposes of this Section and Section 12.5, ADP
means, for a specific group of Participants for a Plan Year, the
average of the ratios (calculated separately for each Participant in
such group) of (1) the amount of Employer contributions actually paid
over to the Plan on behalf of such Participant for the Plan Year to (2)
the Participant's 414(s) Compensation for such Plan Year. Employer
contributions on behalf of any participant shall include: (1) any
Elective Deferrals made pursuant to the Participant's deferral election
(including Excess Deferrals of HCEs), but excluding (i) Excess
Deferrals of NHCEs that arise solely from Elective Deferrals made under
the plan or plans of this Employer and (ii) Elective Deferrals that are
taken into account in the ACP tests set forth in Section 12.6 (provided
the ADP test is satisfied both with and without exclusion of these
Elective Deferrals); and (2) at the election of the Employer, Qualified
Non-Elective Contributions and Qualified Matching Contributions to the
extent such contributions are not used to satisfy the ACP test.
The actual deferral ratio for each Participant and
the ADP for each group shall be calculated to the nearest one-hundredth
of one percent. Elective Deferrals allocated to each Highly Compensated
Participant's Elective Deferral Account shall not be reduced by Excess
Deferrals to the extent such excess amounts are made under this Plan or
any other plan maintained by the Employer.
(f) For purposes of this Section and Section 12.5, a Highly
Compensated Participant and a Non-Highly Compensated Participant shall
include any Employee eligible to make salary deferrals pursuant to
Section 12.2 for the Plan Year. Such Participants who fail to make
Elective Deferrals shall be treated for ADP purposes as Participants on
whose behalf no Elective Deferrals are made.
(g) In the event this Plan satisfies the requirements of Code
Sections 401(a)(4), 401(k), or 410(b) 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 ADP of
Employees as if all such plans were a single plan. Any adjustments to
the NHCE ADP for the prior year will be made in accordance with IRS
Notice 98-1 and any superseding guidance, unless the Employer has
elected in the Adoption Agreement to use the Current Year Testing
method. Plans may be aggregated in order to satisfy Code Section 401(k)
only if they have the same Plan Year and use the same ADP testing
method.
(h) The ADP for any Participant who is an HCE for the Plan
Year and who is eligible to have Elective Deferrals (and Qualified
Non-Elective Contributions or Qualified Matching Contributions, or
both, if treated as Elective Deferrals for purposes of the ADP test)
allocated to such Participant's accounts under two (2) or more
arrangements described in Code Section 401(k), that are maintained by
the Employer, shall be determined as if such Elective Deferrals (and,
if applicable, such Qualified Non-Elective Contributions or Qualified
Matching Contributions, or both) were made under a single arrangement
for purposes of determining such HCE's actual deferral ratio. However,
if the cash or deferred arrangements have different Plan Years, this
paragraph shall be applied by treating all cash or deferred
arrangements ending with or within the same calendar year as a single
arrangement. Notwithstanding the foregoing, certain plans shall be
treated as separate if mandatorily disaggregated under Regulations
under Code Section 401.
(i) For purposes of determining the ADP and the amount of
Excess Contributions pursuant to Section 12.5, only Elective Deferrals,
Qualified Non-Elective Contributions and Qualified Matching
Contributions contributed to the Plan prior to the end of the twelve
(12) month period immediately following the Plan Year to which the
contributions relate shall be considered.
(j) Notwithstanding anything in this Section to the contrary,
the provisions of this Section and Section 12.5 may be applied
separately (or will be applied separately to the extent required by
Regulations) to each "plan" within the meaning of Regulation
1.401(k)-1(g)(11). Furthermore, for Plan Years beginning after December
31, 1998, the provisions of Code Section 401(k)(3)(F) may be used to
exclude from consideration all Non-Highly Compensated Employees who
have not satisfied the minimum age and service requirements of Code
Section 410(a)(1)(A).
61
12.5 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS
(a) In the event (or, with respect to subsection (c) when the
Prior Year Testing method is being used, if it is anticipated) that for
Plan Years beginning after December 31, 1996, the Plan does not satisfy
one of the tests set forth in Section 12.4, the Administrator shall
adjust Excess Contributions or the Employer shall make contributions
pursuant to the options set forth below or any combination thereof.
However, if the Prior Year testing method is being used and it is
anticipated that the Plan might not satisfy one of such tests, then the
Employer may make contributions pursuant to the options set forth in
subsection (c) below.
(b) On or before the fifteenth day of the third month
following the end of each Plan fear, but in no event later than the
close of the following Plan Year, the Highly Compensated Participant
allocated the largest amount of Elective Deferrals shall have a portion
of such Elective Deferrals (and "Income" allocable to such amounts)
distributed (and/or, at the Participant's election, recharacterized as
a after-tax voluntary Employee contribution pursuant to Section 4.8)
until the total amount of Excess Contributions has been distributed, or
until the amount of the Participant's Elective Deferrals equals the
Elective Deferrals of the Highly Compensated Participant having the
next largest amount of Elective Deferrals allocated. This process shall
continue until the total amount of Excess Contributions has been
distributed. Any distribution and/or recharacterization of Excess
Contributions shall be made in the following order:
(1) With respect to the distribution of Excess Contributions,
such distribution:
(i) may be postponed but not later than the close of
the Plan Year following the Plan Year to which they
are allocable;
(ii) shall be made first from unmatched Elective
Deferrals and, thereafter, simultaneously from
Elective Deferrals which are matched and matching
contributions which relate to such Elective
Deferrals. Matching contributions which relate to
Excess Contributions shall be forfeited unless the
related matching contribution is distributed as an
Excess Aggregate Contribution pursuant to Section
12.7;
(iii) shall be adjusted for "Income"; and
(iv) shall be designated by the Employer as a
distribution of Excess Contributions (and "Income").
(2) With respect to the recharacterization of Excess
Contributions pursuant to (a) above, such recharacterized
amounts:
(i) shall be deemed to have occurred on the date on
which the last of those Highly Compensated
Participants with Excess Contributions to be
recharacterized is notified of the recharacterization
and the tax consequences of such recharacterization;
(ii) shall not exceed the amount of Elective
Deferrals on behalf of any Highly Compensated
Participant for any Plan Year;
(iii) shall be treated as after-tax voluntary
Employee contributions for purposes of Code Section
40l(a)(4) and Regulation 1.401(k)-1(b). However, for
purposes of Sections 4.3(f) and 9.2 (top heavy
rules), recharacterized Excess Contributions continue
to be treated as Employer contributions that are
Elective Deferrals. Excess Contributions (and
"Income" attributable to such amounts)
recharacterized as after-tax voluntary Employee
contributions shall continue to be nonforfeitable and
subject to the same distribution rules provided for
in Section 12.2(c); and
(iv) are not permitted if the amount recharacterized
plus after-tax voluntary Employee contributions
actually made by such Highly Compensated Participant,
exceed the maximum amount of after-tax voluntary
Employee contributions (determined prior to
application of Section 12.6) that such Highly
Compensated Participant is permitted to make under
the Plan in the absence of recharacterization.
(3) Any distribution and/or recharacterization of less than
the entire amount of Excess Contributions shall be treated as
a pro rata distribution and/or recharacterization of Excess
Contributions and "Income."
(4) For the purpose of this Section, "Income" means the income
or losses allocable to Excess Contributions, which amount
shall be allocated at the same time and in the same manner as
income or losses are allocated pursuant to Section 43(c).
However, "Income" for the period between the end of the Plan
Year and the date of the distribution (the "gap period") is
not required to be distributed.
(5) Excess Contributions shall be treated as Employer
contributions for purposes of Code Sections 404 and 415 even
if distributed from the Plan.
62
(c) Notwithstanding the above, within twelve (12) months after
the end of the Plan Year (or, if the Prior Year Testing method is used,
within twelve (12) months after the end of the prior Plan Year), the
Employer may make a special Qualified Non-Elective Contribution or
Qualified Matching Contribution in accordance with one of the following
provisions which contribution shall be allocated to the Qualified
Non-Elective Contribution Account or Qualified Matching Contribution
Account of each Non-Highly Compensated Participant eligible to share in
the allocation in accordance with such provision. The Employer shall
provide the Administrator with written notification of the amount of
the contribution being made and to which provision it relates.
(1) A Qualified Non-Elective Contribution may be made on
behalf of Non-Highly Compensated Participants in an amount
sufficient to satisfy (or to prevent an anticipated failure
of) one of the tests set forth in Section 12.4. Such
contribution shall be allocated in the same proportion that
each Non-Highly Compensated Participant's 414(s) Compensation
for the year (or prior year if the Prior Year Testing method
is being used) bears to the total 414(s) Compensation of all
Non-Highly Compensated Participants for such year.
(2) A Qualified Non-Elective Contribution may be made on
behalf of Non-Highly Compensated Participants in an amount
sufficient to satisfy (or to prevent an anticipated failure
of) one of the tests set forth in Section 12.4. Such
contribution shall be allocated in the same proportion that
each Non-Highly Compensated Participant's 414(s) Compensation
for the year (or prior year if the Prior Year Testing method
is being used) bears to the total 414(s) Compensation of all
Non-Highly Compensated Participants for such year. However,
for purposes of this contribution, Non-Highly Compensated
Participants who are not employed at the end of the Plan Year
(or at the end of the prior Plan Year if the Prior Year
Testing method is being used) and, if this is a standardized
Plan, who have not completed more than 500 Hours of Service
(or three (3) consecutive calendar months if the Elapsed Time
Method is selected in the Adoption Agreement) during such Plan
Year, shall not be eligible to share in the allocation and
shall be disregarded.
(3) A Qualified Non-Elective Contribution may be made on
behalf of Non-Highly Compensated Participants in an amount
sufficient to satisfy (or to prevent an anticipated failure
of) one of the tests set forth in Section 12.4. Such
contribution shall be allocated in equal amounts (per capita).
(4) A Qualified Non-Elective Contribution may be made on
behalf of Non-Highly Compensated Participants in an amount
sufficient to satisfy (or to prevent an anticipated failure
of) one of the tests set forth in Section 12.4, Such
contribution shall be allocated in equal amounts (per capita).
However, for purposes of this contribution, Non-Highly
Compensated Participants who are not employed at the end of
the Plan Year (or at the end of the prior Plan Year if the
Prior Year Testing method is being used) and, if this is a
standardized Plan, who have not completed more than 500 Hours
of Service (or three (3) consecutive calendar months if the
Elapsed Time Method is selected in the Adoption Agreement)
during such Plan Year, shall not be eligible to share in the
allocation and shall be disregarded.
(5) A Qualified Non-Elective Contribution may be made on
behalf of Non-Highly Compensated Participants in an amount
sufficient to satisfy (or to prevent an anticipated failure
of) one of the tests set forth in Section 12.4. Such
contribution shall be allocated to the Qualified Non-Elective
Contribution Account of the Non-Highly Compensated Participant
having the lowest 414(s) Compensation, until one of the tests
set forth in Section 12.4 is satisfied (or is anticipated to
be satisfied), or until such Non-Highly Compensated
Participant has received the maximum "Annual Addition"
pursuant to Section 4.4. This process shall continue until one
of the tests set forth in Section 12.4 is satisfied (or is
anticipated to be satisfied).
(6) A Qualified Non-Elective Contribution may be made on
behalf of Non-Highly Compensated Participants in an amount
sufficient to satisfy (or to prevent an anticipated failure
of) one of the tests set forth in Section 12.4. Such
contribution shall be allocated to the Qualified Non-Elective
Contribution Account of the Non-Highly Compensated Participant
having the lowest 414(s) Compensation, until one of the tests
set forth in Section 12.4 is satisfied (or is anticipated to
be satisfied), or until such Non-Highly Compensated
Participant has received the maximum "Annual Addition"
pursuant to Section 4.4. This process shall continue until one
of the tests set forth in Section 12.4 is satisfied (or is
anticipated to be satisfied). However, for purposes of this
contribution, Non-Highly Compensated Participants who are not
employed at the end of the Plan Year (or at the end of the
prior Plan Year if the Prior Year Testing method is being
used) and, if this is a standardized Plan, who have not
completed more than 500 Hours of Service (or three (3)
consecutive calendar months if the Elapsed Time Method is
selected in the Adoption Agreement) during such Plan Year,
shall not be eligible to share in the allocation and shall be
disregarded.
(7) A Qualified Matching Contribution may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to
satisfy (or to prevent an anticipated failure of) one of the
tests set forth in Section 12.4. Such contribution shall be
allocated to the Qualified Matching Contribution Account of
each Non-Highly Compensated Participant in the same proportion
that each Non-Highly Compensated Participant's Elective
Deferrals for the year bears to the total Elective Deferrals
of all Non-Highly Compensated Participants.
63
(8) A Qualified Matching Contribution may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to
satisfy (or to prevent an anticipated failure of) one of the
tests set forth in Section 12.4. Such contribution shall be
allocated to the Qualified Matching Contribution Account of
each Non-Highly Compensated Participant in the same proportion
that each Non-Highly Compensated Participant's Elective
Deferrals for the year bears to the total Elective Deferrals
of all Non-Highly Compensated Participants. However, for
purposes of this contribution, Non-Highly Compensated
Participants who are not employed at the end of the Plan Year
(or at the end of the prior Plan Year if the Prior Year
Testing method is being used) and, if this is a standardized
Plan, who have not completed more than 500 Hours of Service
` for three (3) consecutive calendar months if the Elapsed Time
Method is selected in the Adoption Agreement) during such Plan
Year, shall not be eligible to share in the allocation and
shall be disregarded.
(9) A Qualified Matching Contribution may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to
satisfy (or to prevent an anticipated failure of) one of the
tests set forth in Section 12.4. Such contribution shall be
allocated to the Qualified Matching Contribution Account of
the Non-Highly Compensated Participant having the lowest
Elective Deferrals until one of the tests set forth in Section
12.4 is satisfied (or is anticipated to be satisfied), or
until such Non-Highly Compensated Participant has received the
maximum "Annual Addition" pursuant to Section 4.4. This
process shall continue until one of the tests set forth in
Section 12.4 is satisfied for is anticipated to be satisfied).
(10) A Qualified Matching Contribution may be made on behalf
of Non-Highly Compensated Participants in an amount sufficient
to satisfy (or to prevent an anticipated failure of) one of
the tests set forth in Section 12.4. Such contribution shall
be allocated to the Qualified Matching Contribution Account of
the Non-Highly Compensated Participant having the lowest
Elective Deferrals until one of the tests set forth in Section
12.4 is satisfied (or is anticipated to be satisfied), or
until such Non-Highly Compensated Participant has received the
maximum "Annual Addition" pursuant to Section 4.4. This
process shall continue until one of the tests set forth in
Section 12.4 is satisfied (or is anticipated to be satisfied).
However, for purposes of this contribution, Non-Highly
Compensated Participants who are not employed at the end of
the Plan Year (or at the end of the prior Plan Year if the
Prior Year Testing method is being used) and, if this is a
standardized Plan, who have not completed more than 500 Hours
of Service (or three (3) consecutive calendar months if the
Elapsed Time Method is selected in the Adoption Agreement)
during such Plan Year, shall not be eligible to share in the
allocation and shall be disregarded.
(d) Any Excess Contributions (and "Income") which are
distributed on or after 2 1/2 months after the end of the Plan Year
shall be subject to the ten percent (10%) Employer excise tax imposed
by Code Section 4979.
12.6 ACTUAL CONTRIBUTION PERCENTAGE TESTS
(a) Except as otherwise provided herein, this subsection
applies if the Prior Year Testing method is elected in the Adoption
Agreement. The "Actual Contribution Percentage" (hereinafter "ACP")
for Participants who are Highly Compensated Employees (hereinafter
"HCES") for each Plan Year and the prior year's ACP for Participants
who were Non-Highly Compensated Employees (hereinafter "NHCEs") for the
prior Plan Year must satisfy one of the following tests:
(1) The ACP for a Plan Year for Participants who are HCES for
the Plan Year shall not exceed the prior year's ACP for
Participants who were NHCEs for the prior Plan Year multiplied
by l.25; or
(2) The ACP for a Plan Year for Participants who are HCES for
the Plan Year shall not exceed the prior year's ACP for
Participants who were NHCEs for the prior Plan Year multiplied
by 2.0, provided that the ACP for Participants who are HCES
does not exceed the prior year's ACP for Participants who were
NHCEs in the prior Plan Year by more than two (2) percentage
points.
Notwithstanding the above, for purposes of applying the
foregoing tests with respect to the first Plan Year in which
the Plan permits any Participant to make Employee
contributions, provides for matching contributions, or both,
the ACP for the prior year's NHCEs shall be deemed to be three
percent (3%) unless the Employer has elected in the Adoption
Agreement to use the current Plan Year's ACP for these
Participants. However, the provisions of this paragraph may
not be used if the Plan is a successor plan or is otherwise
prohibited from using such provisions pursuant to IRS Notice
98-1 (or superseding guidance).
(b) Notwithstanding the preceding, if the Current Year Testing
method is elected in the Adoption Agreement, the ACP tests in (a)(1)
and (a)(2), above shall be applied by comparing the current Plan Year's
ACP for Participants who are HCES with the current Plan Year's ACP
(rather than the prior Plan Year's ACP) for Participants who are NHCEs
for the current Plan Year. Once made, this election can only be changed
if the Plan meets the requirements for changing to the Prior Year
Testing method set forth in IRS Notice 98-1 (or superseding guidance).
Furthermore, this Plan must use the same testing method for both the
ADP and ACP tests for Plan Years beginning on or after the date the
Employer adopts its GUST restated plan.
64
(c) This subsection applies to prevent the multiple use of the
test set forth in subsection (a)(2) above. Any HCE eligible to make
Elective Deferrals pursuant to Section 12.2 and to make after-tax
voluntary Employee contributions or to receive matching contributions
under this Plan or under any other plan maintained by the Employer or
an Affiliated Employer, shall have either the actual deferral ratio
adjusted in the manner described in Section 12.5 or the actual
contribution ratio reduced in the manner described in Section 12.7 so
that the "Aggregate Limit" is not exceeded pursuant to Regulation
1.401(m)-2. The amounts in excess of the "Aggregate Limit" shall be
treated as either an Excess Contribution or an Excess Aggregate
Contribution. The ADP and ACP of the HCEs are determined after any
corrections required to meet the ADP and ACP tests and are deemed to be
the maximum permitted under such test for the Plan Year. Multiple use
does not occur if either the ADP or ACP of the HCEs does not exceed
1.25 multiplied by the ADP and ACP of the NHCEs.
"Aggregate Limit" means the sum of (i) 125 percent of the greater of
the ADP of the NHCEs for the Plan Year or the ACP of such NHCEs under
the plan subject to Code Section 401(m) for the Plan Year beginning
with or within the prior Plan Year of the cash or deferred arrangement
and (ii) the lesser of 200% or two plus the lesser of such ADP or ACP.
"Lesser" is substituted for "greater" in (i) above, and "greater" is
substituted for "lesser" after "two plus the" in (ii) above if it would
result in a larger Aggregate Limit. 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 NHCEs
ADP and ACP for that Plan Year, instead of the prior Plan Year, is
used.
(d) A Participant is a Highly Compensated Employee for a
particular Plan Year if the Participant 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 the Participant does not meet the definition of a Highly
Compensated Employee in effect for that Plan Year.
(e) For the purposes of this Section and Section 12.7, ACP for
a specific group of Participants for a Plan Year means the average of
the "Contribution Percentages" (calculated separately for each
Participant in such group). For this purpose, "Contribution Percentage"
means the ratio (expressed as a percentage) of the Participant's
"Contribution Percentage Amounts" to the Participant's 414(s)
Compensation. The actual contribution ratio for each Participant and
the ACP for each group, shall be calculated to the nearest
one-hundredth of one percent of the Participant's 414(s) Compensation.
(f) "Contribution Percentage Amounts" means the sum of (i)
after-tax voluntary Employee contributions, (ii) Employer "Matching
Contributions" made pursuant to Section 12.1(a)(2) (including Qualified
Matching Contributions to the extent such Qualified Matching
Contributions are not used to satisfy the tests set forth in Section
12.4), (iii) Excess Contributions recharacterized as nondeductible
voluntary Employee contributions pursuant to Section 12.5, and (iv)
Qualified Non-Elective Contributions (to the extent not used to satisfy
the tests set forth in Section 12.4). However, "Contribution Percentage
Amounts" shall not include "Matching Contributions" that are forfeited
either to correct Excess Aggregate Contributions or due to Code Section
401(a)(4) and the Regulations thereunder because the contributions to
which they relate are Excess Deferrals, Excess Contributions, or Excess
Aggregate Contributions. In addition, "Contribution Percentage Amounts"
may include Elective Deferrals provided the ADP test in Section 12.4 is
met before the Elective Deferrals are used in the ACP test and
continues to be met following the exclusion of those Elective Deferrals
that are used to meet the ACP test.
(g) For purposes of determining the ACP and the amount of
Excess Aggregate Contributions pursuant to Section 12.7, only Employer
"Matching Contributions" (excluding "Matching Contributions" forfeited
or distributed pursuant to Section 12.2(e), 12.5(b), or 12.7(b))
contributed to the Plan prior to the end of the succeeding Plan Year
shall be considered. In addition, the Administrator may elect to take
into account, with respect to Employees eligible to have Employer
"Matching Contributions" made pursuant to Section 12.1(a)(2) or
after-tax voluntary Employee contributions made pursuant to Section 4.7
allocated to their accounts, elective deferrals (as defined in
Regulation 1.402(g)-1(b)) and qualified non-elective contributions (as
defined in Code Section 401 (m)(4)(C) contributed to any plan
maintained by the Employer. Such elective deferrals and qualified
non-elective contributions shall be treated as Employer matching
contributions subject to Regulation 1.401(m)-1(b)(2) which is
incorporated herein by reference. The Plan Year must be the same as the
plan year of the plan to which the elective deferrals and the qualified
non-elective contributions are made.
(h) In the event that this Plan satisfies the requirements of
Code Sections 401(a)(4), 401(m), or 410(b) 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 ACP of
Employees as if all such plans were a single plan. Plans may be
aggregated in order to satisfy Code section 401 (m) only if they have
the same Plan Year.
Any adjustments to the NHCE ACP for the prior year
will be made in accordance with IRS Notice 98-1 and any superseding
guidance, unless the Employer has elected in the Adoption Agreement to
use the Current Year Testing method. Plans may be aggregated in order
to satisfy Code Section 401(k) only if they have the same Plan Year and
use the same ACP testing method.
(i) For the purposes of this Section, if an HCE is a
Participant under two (2) or more plans (other than an employee stock
ownership plan as defined in Code Section 4975(e)(7)) which are
maintained by the Employer or an Affiliated Employer to which "Matching
Contributions," nondeductible voluntary Employee contributions, or
both, are made, all such contributions on behalf of such HCE shall be
aggregated for purposes of determining such HCP's actual contribution
ratio. However, if the plans have different plan years, this paragraph
shall be applied by treating all plans ending with or within the same
calendar year as a single plan.
65
(j) For purposes of this Section and Section 12.7, a Highly
Compensated Participant and a Non-Highly Compensated Participant shall
include any Employee eligible to have "Matching Contributions" made
pursuant to Section 12.1(a)(2) (whether or not a deferral election was
made or suspended pursuant to Section 12.2(g)) allocated to such
Participant's account for the Plan Year or to make salary deferrals
pursuant to Section 12.2 (if the Employer uses salary deferrals to
satisfy the provisions of this Section) or after-tax voluntary Employee
contributions pursuant to Section 4.7 (whether or not nondeductible
voluntary Employee contributions are made) allocated to the
Participant's account for the Plan Year.
(k) For purposes of this Section and Section 12.7, "Matching
Contribution" means an Employer contribution made to the Plan, or to a
contract described in Code Section 403(b), on behalf of a Participant
on account of a nondeductible voluntary Employee contribution made by
such Participant, or on account of a Participant's elective deferrals
under a plan maintained by the Employer.
(l) For purposes of determining the ACP and the amount of
Excess Aggregate Contributions pursuant to Section 12.7, only Elective
Deferrals, Qualified Non-Elective Contributions, "Matching
Contributions" and Qualified Matching Contributions contributed to the
Plan prior to the end of the twelve (12) month period immediately
following the Plan Year to which the contributions relate shall be
considered.
(m) Notwithstanding anything in this Section to the contrary,
the provisions of this Section and Section 12.7 may be applied
separately (or will be applied separately to the extent required by
Regulations) to each "plan" within the meaning of Regulation
1.401(k)-1(g)(11). Furthermore, for Plan Years beginning after December
31, 1998, the provisions of Code Section 401(k)(3)(F) may be used to
exclude from consideration all Non-Highly Compensated Employees who
have not satisfied the minimum age and service requirements of Code
Section 410(a)(1)(A).
12.7 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE TESTS
(a) In the event (or, with respect to subsection (g) below
when the Prior Year Testing method is being used, if it is anticipated)
that for Plan Years beginning after December 31, 1996, the Plan does
not satisfy one of the tests set forth in Section 12.6, the
Administrator shall adjust Excess Aggregate Contributions or the
Employer shall make contributions pursuant to the options set forth
below or any combination thereof. However, if the Prior Year testing
method is being used and it is anticipated that the Plan might not
satisfy one of such tests, then the Employer may make contributions
pursuant to the options set forth in subsection (c) below.
(b) On or before the fifteenth day of the third month
following the end of the Plan Year, but in no event later than the
close of the following Plan Year the Highly Compensated Participant
having the largest allocation of "Contribution Percentage Amounts"
shall have a portion of such "Contribution Percentage Amounts" (and
"Income" allocable to such amounts) distributed or, if non-Vested,
Forfeited (including "Income" allocable to such Forfeitures) until the
total amount of Excess Aggregate Contributions has been distributed, or
until the amount of the Participant's "Contribution Percentage Amounts"
equals the "Contribution Percentage Amounts" of the Highly Compensated
Participant having the next largest amount of "Contribution Percentage
Amounts." This process shall continue until the total amount of Excess
Aggregate Contributions has been distributed or forfeited. Any
distribution and/or Forfeiture of "Contribution Percentage Amounts"
shall be made in the following order:
(1) Employer matching contributions distributed and/or
forfeited pursuant to Section 12.5(b)(1);
(2) After-tax voluntary Employee contributions including
Excess Contributions recharacterized as after-tax voluntary Employee
contributions pursuant to Section 12.5(b)(2);
(3) Remaining Employer matching contributions.
(c) Any distribution or Forfeiture of less than the entire
amount of Excess Aggregate Contributions (and "Income") shall be
treated as a pro rata distribution of Excess Aggregate Contributions
and "Income." Distribution of Excess Aggregate Contributions shall be
designated by the Employer as a distribution of Excess Aggregate
Contributions (and "Income"). Forfeitures of Excess Aggregate
Contributions shall be treated in accordance with Section 4.3. However,
no such Forfeiture may be allocated to a Highly Compensated Participant
whose contributions are reduced pursuant to this Section.
(d) For the purpose of this Section, "Income" means the income
or losses allocable to Excess Aggregate Contributions, which amount
shall be allocated at the same time and in the same manner as income or
losses are allocated pursuant to Section 4.3(c). However, "Income" for
the period between the end of the Plan Year and the date of the
distribution (the "gap period") is not required to be distributed.
66
(e) Excess Aggregate Contributions attributable to amounts
other than nondeductible voluntary Employee contributions, including
forfeited matching contributions, shall be treated as Employer
contributions for purposes of Code Sections 404 and 415 even if
distributed from the Plan.
(f) The determination of the amount of Excess Aggregate
Contributions with respect to any Plan Year shall be made after first
determining the Excess Contributions, if any, to be treated as
nondeductible voluntary Employee contributions due to
recharacterization for the plan year of any other qualified cash or
deferred arrangement (as defined in Code Section 401(k)) maintained by
the Employer that ends with or within the Plan Year or which are
treated as after-tax voluntary Employee contributions due to
recharacterization pursuant to Section 12.5.
(g) Notwithstanding the above, within twelve (12) months after
the end of the Plan Year (or, if the Prior Year Testing method is used,
within twelve (l2) months after the end of the prior Plan Year), the
Employer may make a special Qualified Non-Elective Contribution or
Qualified Matching Contribution in accordance with one of the following
provisions which contribution shall be allocated to the Qualified
Non-Elective Contribution Account or Qualified Matching Contribution
Account of each Non-Highly Compensated eligible to share in the
allocation in accordance with such provision. The Employer shall
provide the Administrator with written notification of the amount of
the contribution being made and for which provision it is being made
pursuant to:
(1) A Qualified Non-Elective Contribution may be made on
behalf of Non-Highly Compensated Participants in an amount
sufficient to satisfy (or to prevent an anticipated failure
of) one of the tests set forth in Section 12.6. Such
contribution shall be allocated in the same proportion that
each Non-Highly Compensated Participant's 414(s) Compensation
for the year (or prior year if the Prior Year Testing method
is being used) bears to the total 414(s) Compensation of all
Non-Highly Compensated Participants for such year.
(2) A Qualified Non-Elective Contribution may be made on
behalf of Non-Highly Compensated Participants in an amount
sufficient to satisfy (or to prevent an anticipated failure
of) one of the tests set forth in Section 12.6. Such
contribution shall be allocated in the same proportion that
each Non-Highly Compensated Participant's 414(s) Compensation
for the year (or prior year if the Prior Year Testing method
is being used) bears to the total 414(s) Compensation of all
Non-Highly Compensated Participants for such year. However,
for purposes of this contribution, Non-Highly Compensated
Participants who are not employed at the end of the Plan Year
(or at the end of the prior Plan Year if the Prior Year
Testing method is being used) and, if this is a standardized
Plan, who have not completed more than 500 Hours of Service
(or three (3) consecutive calendar months if the Elapsed Time
Method is selected in the Adoption Agreement) during such Plan
Year, shall not be eligible to share in the allocation and
shall be disregarded.
(3) A Qualified Non-Elective Contribution may be made on
behalf of Non-Highly Compensated Participants in an amount
sufficient to satisfy (or to prevent an anticipated failure
of) one of the tests set forth in Section 12.6. Such
contribution shall be allocated in equal amounts (per capita).
(4) A Qualified Non-Elective Contribution may be made on
behalf of Non-Highly Compensated Participants in an amount
sufficient to satisfy (or to prevent an anticipated failure
of) one of the tests set forth in Section 12.6. Such
contribution shall be allocated in equal amounts (per capita).
However, for purposes of this contribution, Non-Highly
Compensated Participants who are not employed at the end of
the Plan Year (or at the end of the prior Plan Year if the
Prior Year Testing method is being used) and, if this is a
standardized Plan, who have not completed more than 500 Hours
of Service (or three (3) consecutive calendar months if the
Elapsed Time Method is selected in the Adoption Agreement)
during such Plan Year, shall not be eligible to share in the
allocation and shall be disregarded.
(5) A Qualified Non-Elective Contribution may be made on
behalf of Non-Highly Compensated Participants in an amount
sufficient to satisfy (or to prevent an anticipated failure
of) one of the tests set forth in Section 12.6. Such
contribution shall be allocated to the Qualified Non-Elective
Contribution Account of the Non-Highly Compensated Participant
having the lowest 414(s) Compensation, until one of the tests
set forth in Section 12.6 is satisfied (or is anticipated to
be satisfied), or until such Non-Highly Compensated
Participant has received the maximum "Annual Addition"
pursuant to Section 4.4. This process shall continue until one
of the tests set forth in Section 12.6 is satisfied (or is
anticipated to be satisfied).
(6) A Qualified Non-Elective Contribution may be made on
behalf of Non-Highly Compensated Participants in an amount
sufficient to satisfy (or to prevent an anticipated failure
of) one of the tests set forth in Section 12.6. Such
contribution shall be allocated to the Qualified Non-Elective
Contribution Account of the Non-Highly Compensated Participant
having the lowest 414(s) Compensation, until one of the tests
set forth in Section 12.6 is satisfied (or is anticipated to
be satisfied), or until such Non-Highly Compensated
Participant has received the maximum "Annual Addition"
pursuant to Section 4.4. This process shall continue until one
of the tests set forth in Section 12.6 is satisfied (or is
anticipated to be satisfied). However, for purposes of this
contribution, Non-Highly Compensated Employees who are not
employed at the end of the Plan Year (or at the end of the
prior Plan Year if the Prior Year Testing method is being
used) and, if this is a standardized Plan, who have not
completed more than 500 Hours of Service (or three (3)
67
consecutive calendar months if the Elapsed Time Method is
selected in the Adoption Agreement) during such Plan Year,
shall not be eligible to share in the allocation and shall be
disregarded.
(7) A "Matching Contribution" may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to
satisfy (or to prevent an anticipated failure of) one of the
tests set forth in Section 12.6. Such contribution shall be
allocated on behalf of each Non-Highly Compensated Participant
in the same proportion that each Non-Highly Compensated
Participant's Elective Deferrals for the year bears to the
total Elective Deferrals of all Non-Highly Compensated
Participants. The Employer shall designate, at the time the
contribution is made, whether the contribution made pursuant
to this provision shall be a Qualified Matching Contribution
allocated to a Participant's Qualified Matching Contribution
Account or an Employer NonElective Contribution allocated to a
Participant's Non-Elective Account.
(8) A "Matching Contribution" may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to
satisfy (or to prevent an anticipated failure of) one of the
tests set forth in Section 12.6. Such contribution shall be
allocated on behalf of each Non-Highly Compensated Participant
in the same proportion that each Non-Highly Compensated
Participant's Elective Deferrals for the year bears to the
total Elective Deferrals of all Non-Highly Compensated
Participants. The Employer shall designate, at the time the
contribution is made, whether the contribution made pursuant
to this provision shall be a Qualified Matching Contribution
allocated to a Participant's Qualified Matching Contribution
Account or an Employer NonElective Contribution allocated to a
Participant's Non-Elective Account. However, for purposes of
this contribution, Non-Highly Compensated Participants who are
not employed at the end of the Plan Year (or at the end of the
prior Plan Year if the Prior Year Testing method is being
used) and, if this is a standardized Plan, who have not
completed more than 500 Hours of Service (or three (3)
consecutive calendar months if the Elapsed Time Method is
selected in the Adoption Agreement) during such Plan Year,
shall not be eligible to share in the allocation and shall be
disregarded.
(9) A "Matching Contribution" may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to
satisfy (or to prevent an anticipated failure of) one of the
tests set forth in Section 12.4. Such contribution shall be
allocated on behalf of the Non-Highly Compensated Participant
having the lowest Elective Deferrals until one of the tests
set forth in Section 12.4 is satisfied (or is anticipated to
be satisfied), or until such Non-Highly Compensated
Participant has received the maximum "Annual Addition"
pursuant to Section 4.4. This process shall continue until one
of the tests set forth in Section 12.4 is satisfied (or is
anticipated to be satisfied). The Employer shall designate, at
the time the contribution is made, whether the contribution
made pursuant to this provision shall be a Qualified Matching
Contribution allocated to a Participant's Qualified Matching
Contribution Account or an Employer Non-Elective Contribution
allocated to a Participant's Non-Elective Account.
(10) A "Matching Contribution" may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to
satisfy (or to prevent an anticipated failure of) one of the
tests set forth in Section 12.4. Such contribution shall be
allocated on behalf of the Non-Highly Compensated Participant
having the lowest Elective Deferrals until one of the tests
set forth in Section 12.4 is satisfied (or is anticipated to
be satisfied), or until such Non-Highly Compensated
Participant has received the maximum "Annual Addition"
pursuant to Section 4.4. This process shall continue until one
of the tests set forth in Section 12.4 is satisfied (or is
anticipated to be satisfied). The Employer shall designate, at
the time the contribution is made, whether the contribution
made pursuant to this provision shall be a Qualified Matching
Contribution allocated to a Participant's Qualified Matching
Contribution Account or an Employer Non-Elective Contribution
allocated to a Participant's Non-Elective Account. However,
for purposes of this contribution, Non-Highly Compensated
Participants who are not employed at the end of the Plan Year
(or at the end of the prior Plan Year if the Prior Year
Testing method is being used) and, if this is a standardized
Plan, who have not completed more than 500 Hours of Service
(or three (3) consecutive calendar months if the Elapsed
Time Method is selected in the Adoption Agreement) during such
Plan Year, shall not be eligible to share in the allocation
and shall be disregarded,
(h) Any Excess Aggregate Contributions (and "Income") which
are distributed on or after 2 1/2 months after the end of the Plan Year
shall be subject to the ten percent (10%) Employer excise tax imposed
by Code Section 4979.
12.8 SAFE HARBOR PROVISIONS
(a) The provisions of this Section will apply if the Employer
has elected, in the Adoption Agreement, to use the "ADP Test Safe
Harbor" or "ACP Test Safe Harbor." If the Employer has elected to use
the "ADP Test Safe Harbor" for a Plan Year, then the provisions
relating to the ADP test described in Section 12.4 and in Code Section
401(k)(3) do not apply for such Plan Year. In addition, if the Employer
has also elected to use the "ACP Test Safe Harbor" for a Plan Year,
then the provisions relating to the ACP test described in Section 12.6
and in Code Section 401(m)(2) do not apply for such Plan Year.
Furthermore, to the extent any other provision of the Plan is
inconsistent with the provisions of this Section, the provisions of
this Section will govern.
68
(b) For purposes of this Section, the following definitions
apply:
(1) "ACP Test Safe Harbor" means the method described in
subsection (c) below for satisfying the ACP test of Code
Section 401(m)(2).
(2) "ACP Test Safe Harbor Matching Contributions" means
"Matching Contributions" described in subsection (d)(1).
(3) "ADP Test Safe Harbor" means the method described in
subsection (c) for satisfying the ADP test of Code Section
401(k)(3).
(4) "ADP Test Safe Harbor Contributions" means "Matching
Contributions" and nonelective contributions described in
subsection (c)(1) below.
(5) "Compensation" means Compensation as defined in Section
1.11, except, for purposes of this Section, no dollar limit,
other than the limit imposed by Code Section 401(a)(17),
applies to the Compensation of a Non-Highly Compensated
Employee. However, solely for purposes of determining the
Compensation subject to a Participant's deferral election, 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
Regulation 1.414(s)-1(d)(2) 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.
(6) "Eligible Participant" means a Participant who is eligible
to make Elective Deferrals under the Plan for any part of the
Plan Year (or who would he eligible to make Elective Deferrals
but for a suspension due to a hardship distribution described
in Section 12.9 or to statutory limitations, such as Code
Sections 402(g) and 415) and who is not excluded as an
"Eligible Participant" under the 401(k) Safe Harbor elections
in the Adoption Agreement.
(7) "Matching Contributions" means contributions made by the
Employer on account of an "Eligible Participant's" Elective
Deferrals.
(c) The provisions of this subsection apply for purposes of
satisfying the "ADP Test Safe Harbor."
(1) The "ADP Test Safe Harbor Contribution" is the
contribution elected by the Employer in the Adoption Agreement
to be used to satisfy the "ADP Test Safe Harbor." However, if
no contribution is elected in the Adoption Agreement, the
Employer will contribute to the Plan for the Plan Year a
"Basic Matching Contribution" on behalf of each "Eligible
Employee." The "Basic Matching Contribution" is equal to (i)
one hundred percent (100%) of the amount of an "Eligible
Participant's" Elective Deferrals that do not exceed three
percent (3%) of the Participant's "Compensation" for the Plan
Year, plus (ii) fifty percent (50%) of the amount of the
Participant's Elective Deferrals that exceed three percent
(3%) of the Participant's "Compensation" but do not exceed
five percent (5%) of the Participant's "Compensation."
(2) Except as provided in subsection (e) below, for purposes
of the Plan, a Basic Matching Contribution or an Enhanced
Matching Contribution will be treated as a Qualified Matching
Contribution and a Nonelective Safe Harbor Contribution will
be treated as a Qualified Non-Elective Contribution.
Accordingly, the "ADP Test Safe Harbor Contribution" will be
fully Vested and subject to the distribution restrictions set
forth in Section 12.2(c) (i.e., may generally not be
distributed earlier than separation from service, death,
disability, an event described in Section 401(k)(1), or, in
case of a profit sharing plan, the attainment of age 59 1/2.
In addition, such contributions must satisfy the "ADP Test
Safe Harbor" without regard to permitted disparity under Code
Section 401(1).
(3) At least thirty (30) days, but not more than ninety (90)
days, before the beginning of the Plan Year, the Employer will
provide each "Eligible Participant" a comprehensive notice of
the Participant's rights and obligations under the Plan,
written in a manner calculated to be understood by the average
Participant. However, 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 ninety (90) days before the Employee
becomes eligible but not later than the date the Employee
becomes eligible.
(4) In addition to any other election periods provided under
the Plan, each "Eligible Participant" may make or modify a
deferral election during the thirty (30) day period
immediately following receipt of the notice described in
subsection (3) above. Furthermore, if the "ADP Test Safe
Harbor" is a "Matching Contribution" each "Eligible Employee"
must be permitted to elect sufficient Elective Deferrals to
receive the maximum amount of "Matching Contributions"
available to the Participant under the Plan."
(d) The provisions of this subsection apply if the Employer
has elected to satisfy the "ACP Test Safe Harbor."
69
(1) In addition to the "ADP Test Safe Harbor Contributions,"
the Employer will make any "Matching Contributions" in
accordance with elections made in the Adoption Agreement. Such
additional "Matching Contributions" will be considered "ACP
Test Safe Harbor Matching Contributions."
(2) Notwithstanding any election in the Adoption Agreement to
the contrary, an "Eligible Participant's" Elective Deferrals
in excess of six percent (6%) of "Compensation" may not be
taken into account in applying "ACP Test Safe Harbor Matching
Contributions." In addition, effective with respect to Plan
Years beginning after December 31, 1999, any portion of an
"ACP Test Safe Harbor Matching Contribution" attributable to a
discretionary "Matching Contribution" may not exceed four
percent (4%) of an "Eligible Participant's" "Compensation."
(e) The Plan is required to satisfy the ACP test of Code
Section 401(m)(2), using the current year testing method, if the Plan
permits after-tax voluntary Employee contributions or if matching
contributions that do not satisfy the "ACP Test Safe Harbor" may be
made to the Plan. In such event, only "ADP Test Safe Harbor
Contributions" or "ACP Test Safe Harbor Contributions" that exceed the
amount needed to satisfy the "ADP Test Harbor" or "ACP Test Safe
Harbor" (if the Employer has elected to use the "ACP Test Safe Harbor")
may be treated as Qualified Nonelective Contributions or Qualified
Matching Contributions in applying the ACP test. In addition in
applying the ACP test elective contributions may not treated as
matching contributions under Code Section 401(m)(3). Furthermore, in
applying the ACP test, the Employer may elect to disregard with respect
to all "Eligible Participants" (1) all "Matching Contributions" if the
only "Matching Contributions" made to the Plan satisfy the "ADP Test
Safe Harbor Contribution" (the "Basic Matching Contribution" or the
"Enhanced Matching Contribution") and (2) if the "ACP Test Safe Harbor"
is satisfied, "Matching Contributions" that do not exceed four percent
(4%) of each Participant's "Compensation."
12.9 ADVANCE DISTRIBUTION FOR HARDSHIP
(a) The Administrator, at the election of a Participant, shall
direct the Trustee to distribute to the Participant in any one Plan
Year up to the lesser of (1) 100% of the accounts as elected in the
Adoption Agreement valued as of the last Valuation Date or (2) the
amount necessary to satisfy the immediate and heavy financial need of
the Participant. Any distribution made pursuant to this Section shall
be deemed to be made as of the first day of the Plan Year or, if later,
the Valuation Date immediately preceding the date of distribution, and
the account from which the distribution is made shall be reduced
accordingly. Withdrawal under this Section shall be authorized only if
the distribution is for one of the following or any other item
permitted under Regulation 1.401(k)-1(d)(2)(iv):
(1) Medical expenses described in Code Section 213(d) incurred
by the Participant, the Participant's spouse, or any of the
Participant's dependents (as defined in Code Section 152) or
necessary for these persons to obtain medical care as
described in Code Section 213(d);
(2) Costs directly related to the purchase (excluding mortgage
payments) of a principal residence for the Participant;
(3) Payment of tuition and related educational fees, and room
and board expenses, for the next twelve (12) months of
post-secondary education for the Participant, the
Participant's spouse, children, or dependents (as defined in
Code Section 152); or
(4) Payments necessary to prevent the eviction of the
Participant from the Participant's principal residence or
foreclosure on the mortgage on that residence.
(b) No distribution shall be made pursuant to this Section
unless the Administrator, based upon the Participant's representation
and such other facts as are known to the Administrator, determines that
all of the following conditions are satisfied:
(1) The distribution is not in excess of the amount of the
immediate and heavy financial need of the Participant
(including any amounts necessary to pay any federal, state, or
local taxes or penalties reasonably anticipated to result from
the distribution);
(2) The Participant has obtained all distributions, other than
hardship distributions, and all nontaxable loans currently
available under all plans maintained by the Employer (to the
extent the loan would not increase the hardship);
(3) The Plan, and all other plans maintained by the Employer,
provide that the Participant's elective deferrals and
nondeductible voluntary Employee contributions will be
suspended for at least twelve (12) months after receipt of the
hardship distribution; and
(4) The Plan, and all other plans maintained by the Employer,
provide that the Participant may not make elective deferrals
for the Participant's taxable year immediately following the
taxable year of the hardship distribution in excess of the
applicable limit under Code Section 402(g) for such next
taxable year less the amount of such Participant's elective
deferrals for the taxable year of the hardship distribution.
70
(c) Notwithstanding the above, distributions from the
Participant's Elective Deferral Account, Qualified Matching
Contribution Account and Qualified Non-Elective Account pursuant to
this Section shall be limited solely to the Participant's Elective
Deferrals and any income attributable thereto credited to the
Participant's Elective Deferral Account as of December 31, 1988.
Furthermore, if a hardship distribution is permitted from more than one
account type, the Administrator may determine any ordering of a
Participant's hardship distribution from such accounts.
(d) Any distribution made pursuant to this Section shall be
made in a manner which is consistent with and satisfies the provisions
of Section 6.5, including, but not limited to, all notice and consent
requirements of Code Sections 411(a)(11) and 417 and the Regulations
thereunder.
ARTICLE XIII
SIMPLE 401(K) PROVISIONS
13.1 SIMPLE 401(k) PROVISIONS
(a) If elected in the Adoption Agreement, this Plan is
intended to be a SIMPLE 401(k) plan which satisfies the requirements
of Code Sections 401(k)(11) and 401(m)(10):
(b) The provisions of this Article apply for a "year" only if
the following conditions are met:
(1) The Employer adopting this Plan is an "eligible employer."
An "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." In applying the preceding sentence, all
employees of an Affiliated Employer are taken into account.
An "eligible employer" that has elected to use the SIMPLE
401(k) provisions but fails to be an "eligible employer" for
any subsequent "year," is treated as an "eligible employer"
for the two (2) "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 Code Section 410(b)(6)(C)(i) are satisfied.
(2) No contributions are made, or benefits accrued for
services during the "year," on behalf of any "eligible
employee" under any other plan, contract, pension, or trust
described in Code Section 219(g)(5)(A) or (B), maintained by
the Employer.
(c) To the extent that any other provision of the Plan is
inconsistent with the provisions of this Article, the provisions of
this Article govern.
13.2 DEFINITIONS
(a) "Compensation" means, for purposes of this Article, the
sum of the wages, tips, and other compensation from the Employer
subject to federal income tax withholding (as described in Code Section
6051(a)(3)) and the Employee's salary reduction contributions made
under this or any other 401(k) plan, and, if applicable, elective
deferrals under a Code Section 408(p) SIMPLE plan, a SARSEP, or a Code
Section 403(b) annuity contract and compensation deferred under a Code
Section 457 plan, required to be reported by the Employer on Form W-2
(as described in Code Section 6051(a)(8)). For self-employed
individuals, "compensation" means net earnings from self-employment
determined under Code Section 1402(a) 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
Code Section 401(a)(17) apply to the "compensation" under this Article.
(b) "Eligible employee" means, for purposes of this Article,
any Participant who is entitled to make elective deferrals described in
Code Section 402(g) under the terms of the Plan.
(c) "Year" means the calendar year.
13.3 CONTRIBUTIONS
(a) Salary Reduction Contributions
(1) Each "eligible employee" may make a salary reduction
election to have "compensation" reduced for the "year" in any
amount selected by the Employee subject to the limitation in
subsection (c) below. The Employer will make a salary
reduction contribution to the Plan, as an Elective Deferral,
in the amount by which the Employee's "compensation" has been
reduced.
71
(2) The total salary reduction contribution for the "year"
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.
(b) Other Contributions
(1) Matching Contributions. Unless (2) below is elected, each
"year" the Employer will make a matching contribution to the
Plan on behalf of each Employee who makes a salary reduction
election under Section 13.3(a). The amount of the matching
contribution will be equal to the Employee's salary reduction
contribution up to a limit of three percent (3%) of the
Employee's "compensation" for the full "year."
(2) Nonelective Contributions. For any "year," instead of a
matching contribution, the Employer may elect to contribute a
nonelective contribution of two percent (2%) of "compensation"
for the "year" for each "eligible employee" who received at
least $5,000 of "compensation" from the Employer for the
"year."
(c) Limitation on Other Contributions
No Employer or Employee contributions may be made to this Plan
for the "year" other than salary reduction contributions
described in Section 13.3(a): matching or nonelective
contributions described in Section 13.3(b) and rollover
contributions described in Regulation Section 1.402(c)-2,
Q&A-1(a). Furthermore, the provisions of Section 4.4 which
implement the limitations of Code Section 415 apply to
contributions made pursuant to this Section.
13.4 ELECTION AND NOTICE REQUIREMENTS
(a) Election Period
(1) In addition to any other election periods provided under
the Plan, each "eligible employee" may make or modify a salary
reduction election during the 60-day period immediately
preceding each January 1st.
(2) For the "year" an Employee becomes eligible to make salary
reduction contributions under this Article, the 60-day
election period requirement of subsection (a)(1) is deemed
satisfied if the Employee may make or modify a salary
reduction election during a 60-day period that includes either
the date the Employee becomes eligible or the day before.
(3) Each "eligible employee" may terminate a salary reduction
election at any time during the "year."
(b) Notice Requirements
(1) The Employer will notify each "eligible employee" prior to
the 60-day election period described in Section 13.4(a) that a
salary reduction election or a modification to a prior
election may be made during that period.
(2) The notification described in (1) above will indicate
whether the Employer will provide a matching contribution
described in Section 13.3(b)(1) or a two percent (2%)
nonelective contribution described in section 13.3(b)(2).
13.5 VESTING REQUIREMENTS
All benefits attributable to contributions made pursuant to
this Article are nonforfeitable at all times, and all previous contributions
made under the Plan are nonforfeitable as of the beginning of the Plan Year that
the 401 (k) SIMPLE provisions apply.
13.6 TOP-HEAVY RULES
The Plan is not treated as a top heavy plan under Code Section
416 for any year for which the provisions of this Article are effective and
satisfied.
13.7 NONDISCRIMINATION TESTS
The Plan is treated as meeting the requirements of Code
Sections 401(k)(3)(A)(ii) and 401(m)(2) for any "year" for which the provisions
of this Article are effective and satisfied. Accordingly, Sections 12.4, 12.5,
12.6 and 12.7 shall not apply to the Plan.
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AMENDMENT TO
DEFINED CONTRIBUTION PLAN AND TRUST
Effective with respect to Employers adopting this prototype plan on or
after July 1, 2002, Section 7.1 (a) of the Plan is amended in its entirety to
read as follows:
(a) The provisions of this Article, other than Section 7.6,
shall not apply to this Plan if a separate trust agreement, that has
been approved by the Internal Revenue Service for use with this Plan,
is being used.
Pursuant to Section 8.1 (c) of the Plan, the mass submitter of the
prototype plan has made this amendment (as evidenced by the submission of the
amendment to the Internal Revenue Service for inclusion with the mass submitter
prototype plan) on behalf of minor modifier sponsors that received opinion
letters prior to March 1, 2002, and all identical sponsors of the mass submitter
prototype plan.
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