SUMMARY PLAN DESCRIPTION
FOR
NITTANY BANK 401(K) PROFIT SHARING PLAN
o o o
Created by Meridian Benefits Administration
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Note: Neither this summary nor any of its provisions forms the basis or terms of
a contract between you and Nittany Bank. If there is any inconsistency between
the Plan as described in this Summary Plan Description and the Plan document
itself, the terms of the Plan document will govern.
I. INTRODUCTION
Nittany Bank has sponsored the Nittany Bank 401(k) Profit Sharing Plan
to recognize the efforts its employees have made to its success and to reward
them for their loyal service. This Plan is a type usually called a "401(k)
Plan," and is by far the most popular type of retirement plan to be made
available in recent years. In fact, this is the same type of plan frequently
discussed by financial advisors in the media and elsewhere as being one of the
most flexible retirement plans available to employees.
This booklet is designed to answer basic questions about the plan.
Although this document is a thorough overview of the plan, for detailed
questions please refer to the plan document or contact the Plan's Administrator;
Meridian Benefits Administration. A copy of your plan document is on file at the
Nittany Bank office and may be read by you, your beneficiary, or your legal
representatives at any reasonable time.
II. DESCRIPTION OF PLAN BENEFITS AND REQUIREMENTS
A. TERMS/DEFINITIONS
Certain words and terms used in this Summary have special meanings.
Many of these terms are defined in this section, while others are explained in
the text of the Summary. To assist you in identifying these terms within the
text, they are capitalized.
1. Beneficiary - Your designated Beneficiary is the person you name
to receive your benefit distribution in the event of your death.
If you are married, you will need written consent from your
spouse to name someone other than your spouse as your
Beneficiary.
2. Break in Service - A Break in Service occurs if you complete less
than 501 Hours of Service with the Employer during a Plan Year.
3. Compensation -Compensation is the total compensation paid to you
by the Employer during any portion of a Plan Year during which
you were a Plan Participant. The maximum allowable compensation
for purposes of plan participation is $200,000 (indexed annually)
for any plan year.
4. Covered Compensation - Compensation after you have become a
participant in the Plan.
5. Elective Deferrals - Contributions made to the Plan by the
Employer at the election of the Participant in lieu of cash
Compensation that are made pursuant to a salary reduction
agreement.
6. Hours of Service - Each hour for which you are paid or entitled
to be paid by the Employer. In addition, uncompensated authorized
leaves of absence that do not exceed two years, military leave
while your reemployment rights are protected by law, and absences
from work for maternity or paternity reasons may be credited as
Hours of Service for the purpose of determining whether you had a
Break in Service.
7. Matching Contributions - Contributions made to the Plan by the
Employer by reason of the Participant's Elective Deferrals.
8. Participant - A participant is an employee who has met the
requirements for participating in this Plan, and whose account
has been neither completely forfeited nor distributed.
9. Plan Year - The Plan Year is the 12-month period ending on
December 31.
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10. Trust - The Trust is a fund maintained by the Trustee for the
investment of Plan assets, including the amount in your account.
B. PLAN ELIGIBILITY/PARTICIPATION DATE
You will be eligible to participate in the plan after you have met the
following requirements:
o You have completed ninety (90) days of service.
o You have attained 21 years of age.
After you become eligible, you will enter the Plan immediately. Upon
entry you will need to make your deferral election. If you decide not to start
making contributions to the Plan when you are first eligible to do so, you may
decide to start making contribution at any time thereafter.
Once you become a Participant, you will remain a Participant as long as
you do not incur a Break in Service. If you do incur a Break in Service, and are
later re-employed by the Employer, you will be reinstated as a Participant and
any previous Hours of Service will be reinstated as of the date of your
re-employment.
C. INDIVIDUAL ACCOUNTS
A separate account will be maintained for you within the Plan. This
account will be further divided into sub-accounts, which will be credited with
the different types of contributions that are described in the next section. The
sub-accounts that will be maintained for you are as follows:
1. Elective Deferral Sub-Account - This sub-account will be credited with
your elective deferral contributions, any distributions from this
sub-account, and earnings and losses attributable.
2. Matching Contributions Sub-Account - This sub-account will be credited
with your share of the Employer's matching contributions, any
distributions and the earnings and losses attributable.
3. Trustee Transfer and Rollover Sub-Accounts - These sub-accounts will
be credited with any rollover contributions or transfer contributions
you may make to the Plan, any distributions from the sub-account, and
the earnings and losses attributable to the sub-account.
4. Profit Sharing Sub-Account - This sub-account will be credited with
your share of the Employer's profit sharing contribution, any
distributions and the earnings and losses attributable.
D. CONTRIBUTIONS
1. Employee Contributions - The Employee can make the following types of
contributions. These contributions will be allocated to the
appropriate sub-account within your account, as follows:
a. Elective Deferrals - A participant may elect to defer from 2% to
15% of his compensation or other non-regular compensation that
would otherwise be payable to him. Elective Deferrals will be
made through the direct reduction of compensation in each payroll
period during which the election is in effect. Participants may
change the amounts designated to be deducted in accordance with
the Plan provisions.
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b. Rollover Contributions and Direct Transfers - If you have
participated in other pension or profit sharing plans, you will
be permitted to make a rollover contribution to the Plan of
certain amounts you may receive from those other plans.
2. Employer Contributions - The Employer will make the following types of
contributions. These contributions will be allocated to the
appropriate sub-accounts within your account:
a. Matching Contributions - The Employer will make Matching
Contributions each Plan Year in accordance with the following
contribution formula:
Contributions will be made in a discretionary percentage, to be
determined by the Employer, of the Participant's salary
reductions. No employer match will be made to a participant until
after the Employee has completed a Year of Service (1,000 hours)
and then the match will begin on the payroll next following the
Participant's anniversary of their date of employment.
b. Profit Sharing Contribution - Profit Sharing Contributions shall
be made at the discretion of the Employer. Any contributions will
be allocated on a ratio basis of eligible compensation.
E. INVESTMENTS
Another key question is how the money in your account is invested. The
brief answer is that to a large extent the investment decisions are up to you.
Specifically, you make the investment decisions with respect to both your own
contributions and the Employer's Profit Sharing and Matching Contributions (and
the investment earnings on all of them) from a series of investments offered by
Vanguard and T. Rowe Price.
VANGUARD 500 INDEX FUND - The 500 portfolio tracks the performance of the
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Standard & Poor 500 Composite Stock Price Index, which emphasizes stocks of
large U.S. companies and seeks long-term growth of capital and income from
dividends.
VANGUARD EXPLORER FUND - The Fund seeks long-term growth of capital and is
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intended for investors with a long-term investment horizon (at least five
years).
VANGUARD WINDSOR II FUND - This fund uses a value-oriented strategy to seek
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long-term growth of capital and income, as well as current income from
dividends. The Fund emphasizes dividend paying stocks that are believed by its
advisers to be undervalued by the market. There is a low income volatility and
an average market risk for this Fund.
VANGUARD U.S. GROWTH - U.S. Growth seeks to provide long-term growth in capital.
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This objective is fundamental, which means that it cannot be changed unless a
majority of shareholders vote to do so.
VANGUARD INTERNATIONAL GROWTH FUND - The Fund seeks long-term growth of capital
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and is intended for investors seeking to further diversify a portfolio of U. S.
securities and with a long-term investment horizon (at least five years).
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VANGUARD INTERMEDIATE CORPORATE BOND FUND - The Fund seeks a high level of
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interest income and is intended for investors seeking a high and relatively
stable level of interest income and a bond investment to balance the risks of a
portfolio containing stocks.
VANGUARD PRIME MONEY MARKET FUND - The Fund seeks high income and a stable share
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price of $1.00 and is intended for investors seeking liquidity (the ability to
convert assets to cash).
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND - The Fund seeks long-term growth of
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capital. The Fund invests at least 65% of its total assets in common stocks of
companies expected by T. Rowe Price to benefit from the development, advancement
and use of science and technology.
Your investment percentages may be changed at any time, but not more
frequently than once a calendar quarter to be received by the plan administrator
prior to the beginning of the quarter. Any of the trustees have the necessary
forms to make this change. You may also automatically move your invested assets
at any time between these various funds.
F. VESTING
Vesting refers to the non-forfeitable interest you have in each of your
sub-accounts. In other words, your vested interest in your account is the amount
you will receive when your account is distributed to you.
You will always have 100% vested and non-forfeitable interest in the
amounts you have in your Trustee Transfer and Rollover Sub-Accounts and your
Elective Deferral Sub-Account.
You will earn a vested interest in your Profit Sharing Contribution and
Matching Contribution Sub-Accounts in accordance with the following schedule:
Years of Service Vested Percentage
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0 0%
1 20 %
2 40 %
3 60 %
4 80 %
5 100 %
For example, if you are employed for five (5) years, you will be
entitled to the entire amount in your Profit Sharing Contribution and Matching
Contribution Sub-Accounts.
You will have a 100% vested and non-forfeitable interest in your Profit
Sharing Contribution and Matching Contribution Sub-Accounts in the event you
reach your retirement date, you die, or become disabled.
G. FORFEITURES
Forfeitures occur when you terminate employment before becoming fully
vested in your account, as explained in the section on "Vesting." Effective for
the first Plan Year beginning after 1984, any
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portion of your account that is not vested will be forfeited as of the last day
of the Plan Year in which your fifth (5th) consecutive Break in Service occurs.
Forfeited amounts will not be reinstated, even if you return to service with the
Employer. Such forfeitures shall reduce the otherwise determined Employer
contributions for the Plan Year.
H. DISTRIBUTIONS OF BENEFITS
1. Eligibility for Distribution - You will be entitled to receive a
distribution of the vested amounts in your account upon
occurrence of any of the following:
o Your termination of employment with the Employer for any
reason.
o Your total and permanent disability.
o Your death.
o Termination of the Plan.
o Your attainment of normal retirement age of 65.
o Your election of early retirement and attainment of your
early retirement date, which is the first day of the month
coincident with or next following the date you reach age 55
and have completed six (6) years of service.
2. Timing of Distributions - You will begin receiving benefit
distributions in accordance with the following:
o Generally, benefit distributions will commence not later
than 60 days after the end of the Plan Year in which you
become eligible to receive benefits.
o In the event of your death, your spouse, if your are
married, will generally be entitled to receive your benefit
distribution. If you are unmarried, or if your spouse has
given written consent, your designated Beneficiary will
receive your benefit distribution. If you have no spouse or
designated Beneficiary, your benefit distribution will go to
your estate.
o The law requires that a Participant who owns more than 5% of
the Employer must start to receive benefits no later than
April 1 of the year following the year in which he or she
reaches age 70 1/2; whether or not retired. A non-owner may
postpone distribution of benefits until actual retirement
even if after age 70 1/2.
o If you attain age 70 1/2 before January 1, 1988, special
rules apply to your distributions.
o If you wish to receive benefit distributions before
attaining age 59 1/2, you may be subject to a penalty tax,
and you must notify the Plan Administrator in writing that
you are aware of the consequences of this tax.
3. Form of Distribution - Your benefit will automatically be
distributed in the form of a lump-sum payment of cash.
4. Direct Rollover - You may elect in accordance with instructions
from the Plan Administrator to have any portion of an eligible
rollover distribution paid directly to an eligible retirement
plan. For purposes of this provision, an eligible rollover
distribution is any distribution of all or any portion of the
balance to your credit, excluding any distribution that is one of
a series of substantially equal periodic payments made for your
life or life expectancy or for the joint lives or life
expectancies of you and your designated beneficiary or for a
specified period of ten years or more or any distribution
required under Section 401(a)(9) of the Code or any
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portion of the distribution not includible in gross income. An
eligible retirement plan is an individual retirement account, an
individual retirement annuity or an annuity plan; but for an
eligible rollover distribution to a surviving spouse, only an
individual retirement account or individual retirement annuity
will qualify as an eligible retirement plan. I. INVESTMENT OF
PLAN ASSETS
All contributions made to the Plan are kept in the Trust. A separate
account, including all of the sub-accounts described in the section on
"Participant Accounts," is maintained for you within that Trust. The assets of
the Trust are invested as follows:
o All of the assets of the Trust are invested in shares or other
investments offered by the Sponsor.
o You shall direct the Plan Administrator to invest the amounts in the
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following sub-account in specified investments offered by the Sponsor.
o The amounts in your Elective Deferral Sub-Account.
o The amounts in your Trustee Transfer and Rollover Sub-Accounts.
o The amounts in your Matching Contribution Sub-Account.
o The amounts in your Profit Sharing Contribution Sub-Account.
J. WITHDRAWALS
You may make the following type of withdrawal from your account.
Generally, by notifying the Plan Administrator in writing at least thirty days
prior to the date of withdrawal.
In the event of an imminent and heavy financial need due to the
foreclosure upon or eviction from a primary residence, or the educational or
medical expenses of you or a member of your immediate family, you will be
permitted to make a hardship withdrawal of amounts credited to your Account.
Such withdrawals can be made only after exhausting all other reasonable sources
of funds, such as distributions and nontaxable loans, from all of the employer's
plans. The amount withdrawn cannot be greater than the amount of the immediate
and heavy financial need.
III. CLAIMS PROCEDURE
You or your Beneficiary may file a written claim for benefits under
this Plan with the Plan Administrator at any time. If your claim is denied to
any extent by the Plan Administrator, a written notification must be sent to you
within 90 days. If you choose to appeal the decision, a request for review must
be made in writing to the Plan Administrator within 60 days of receipt of
written notification of the denial. Within 60 days after the appeal is filed, or
within 120 days, if there are special circumstances involved, the Plan
Administrator will issue a written decision.
If you have exhausted your remedies under the claims procedure, you may
contest the decision of the Plan Administrator only by bringing suit in a court
of law. Your suit must be brought within one year from the date the Plan
Administrator notifies you of its decision on appeal.
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IV. CHANGES TO THE PLAN
A. AMENDMENT OF THE PLAN
The Employer, together with the sponsor, reserves the right to amend
the Plan at any time by action of its Board of Directors. You will be kept
informed of any material amendments to the Plan by updates to this Summary Plan
Description.
B. TERMINATION OF THE PLAN
The Employer intends to continue this Plan indefinitely. However, the
Employer reserves the right to terminate the Plan at any time. If a termination
takes place, or if the Employer discontinues making contributions to the Plan,
you will have a 100% vested and non-forfeitable interest in all of the amounts
in your account. These amounts may be distributed to you at that time, or may be
distributed in accordance with the benefit distribution rules.
C. MERGER, CONSOLIDATION OR TRANSFER OF THE PLAN
In the event of the merger, consolidation or transfer of assets or
liabilities of the Plan to any other plan, your benefits will not be decreased
from what they would have been prior to such an event.
V. NON-APPLICATION OF PBGC GUARANTEES
Because this Plan is a defined contribution plan, the benefits you will
receive are exempt from and not insured by the Pension Benefit Guarantee
Corporation.
VI. ERISA RIGHTS
As a participant in the Plan, you are entitled to certain rights and
protections under the Employee Retirement Income Security Act of 1974 (ERISA).
ERISA provides that all Plan Participants shall be entitled to:
o Examine, without charge, at the Plan Administrator's office and at
other specified locations, all Plan documents, including insurance
contracts, affecting the individual making the request, and copies of
all documents filed by the Plan with the U.S. Department of Labor,
such as detailed annual reports and Plan descriptions.
o Obtain copies of all Plan documents and other Plan information upon
written request to the Plan Administrator. The Plan Administrator may
make a reasonable charge for the copies.
o Receive a summary of the Plan's annual financial report. The Plan
Administrator is required by law to furnish each Participant with a
copy of this summary annual report.
o Obtain a statement of the total value of your account under the Plan
and your vested (non-forfeitable) portion of this account. This
statement must be requested in writing and is not required to be given
more than once a year. The Plan will provide the statement free of
charge.
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In addition to creating rights for Plan participants, ERISA imposes
duties upon the people who are responsible for the operation of the Plan. These
people who operate your plan, called "fiduciaries" of the Plan, have a duty to
do so prudently and in the interest of you and other Plan Participants and
Beneficiaries. No one, including your Employer, or any other person, may fire
you or otherwise discriminate against you in any way to prevent you from
obtaining a benefit under this Plan or exercising your rights under ERISA. If
your claim for a benefit is denied in whole or in part, you must receive a
written explanation of the reason for the denial. You have the right to have the
Plan reviewed and reconsider your claim.
Under ERISA, there are steps you can take to enforce the above rights.
For instance, if you request materials from the Plan and do not receive them
within 30 days, you may file suit in a federal court. In such a case, the court
may require the Plan Administrator to provide the materials and pay you up to
$100 a day until you receive the materials unless the materials were not sent
because of reasons beyond the control of the Plan Administrator. If you have a
claim for benefits which is denied or ignored, in whole or in part, you may file
suit in a federal court. If it should happen that the Plan fiduciaries misuse
the Plan's money, or if you are discriminated against for asserting your rights,
you may seek assistance from the U.S. Department of Labor, or you may file suit
in a federal court. The court will decide who should pay court costs and legal
fees. If you lose, the court may order you to pay these costs and fees, for
example, if it finds your claim is frivolous. If you have any questions about
your Plan, you should contact the Plan Administrator. If you have any questions
about this statement or about your rights under ERISA, you should contact the
nearest Area Office of the U.S. Labor-Management Services Administration,
Department of Labor.
VII. ADDITIONAL INFORMATION
1. The legal name of the Plan is the Nittany Bank 401(k) Profit Sharing Plan.
This type of plan is technically known as a 401(k) Profit Sharing Plan.
2. The employer identification number and plan number assigned to the plan
are:
EIN: 25-1829587 PN: 001
3. The effective date of the Plan was January 1, 1999.
4. The Plan's records are maintained on a calendar year basis. This is known
as the Plan Year. The Plan Year begins on January 1 and ends on December
31. The valuation date for the Plan, on which final year end allocations
are made, is December 31 of each year.
5. Your contributions, and your Employer's contributions, to your Plan will be
held and invested by the Trustees of the Plan. The Plan and its trust are
governed by, and subject to, the laws of the Commonwealth of Pennsylvania.
6. The sponsoring employer's name, address and employer identification number
are:
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Nittany Bank
1276 North Atherton Street
State College, PA 16801
EIN: 25-1819902
7. The employer has retained a professional administrator (called a contract
administrator) to administer the Plan. The contract administrator is:
Meridian Benefits Administration
2603 East College Avenue
State College, PA 16801
Phone: (814) 235-2350 Fax: (814) 235-2356
Your Plan's administrator keeps the records for the Plan and is legally
responsible for the administration of the Plan.
8. The Trustees under the Plan are:
John E. Arrington
Richard C. Barrickman
David Z. Richards, Jr.
The principal place of business of the Trustees is:
c/o Nittany Bank
1276 North Atherton Street
State College, PA 16801
9. The investment companies used for funding the benefits under the Plan are:
The Vanguard Group
Vanguard Group Retirement Plan Unit
Post Office Box 1103
Valley Forge, PA 19482
T. Rowe Price Investment Services, Inc.
100 East Pratt Street
Baltimore, MD 21202
10. The name and address of the person designated for service of legal process
on the Plan is:
Harvey Pasternack, Esq.
Pasternack & Associates
2603 East College Avenue
State College, PA 16801
Service of legal process may also be made upon the Trustees.
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11. Benefits provided by your Plan are NOT insured by the Pension Benefit
Guaranty Corporation (PBGC) under Title IV of Employee Retirement Income
Security Act of 1974, as amended, (ERISA), because the insurance provisions
under ERISA are not applicable to your Plan.
12. The date of this Summary Plan Description is July 22, 2003.
FOR FURTHER INFORMATION
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As noted above, this booklet is a simplified summary of the actual plan
provisions. While we tried to cover all of the key provisions, you may find that
you have questions not covered in the booklet or would like further information
or clarification regarding a particular issue, or you may wish to discuss your
own personal situation as it pertains to the Plan. In any of these events,
please feel free to contact the plan administrator, namely:
Meridian Benefits Administration
2603 East College Avenue
State College, PA 16801
Phone: (814) 235-2350 Fax: (814) 235-2356
Contact: William Culp