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Exhibit 4.1(a)
DEFINED CONTRIBUTION PLAN
AND TRUST/CUSTODIAL ACCOUNT
SPONSORED BY
DIVERSIFIED INVESTMENT ADVISORS, INC.
BASIC PLAN DOCUMENT #01
(C)1998 MCKAY HOCHMAN CO., INC. JANUARY 13, 1999
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THIS DOCUMENT IS COPYRIGHTED UNDER THE LAWS OF THE UNITED STATES. ITS USE,
DUPLICATION OR REPRODUCTION, INCLUDING THE USE OF ELECTRONIC MEANS, IS
PROHIBITED BY LAW WITHOUT THE EXPRESS CONSENT OF THE AUTHOR.
TABLE OF CONTENTS
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PARAGRAPH PAGE
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ARTICLE I
DEFINITIONS
1.1 Actual Contribution Percentage 1
1.2 Actual Deferral Percentage 1
1.3 Adoption Agreement 2
1.4 Aggregate Limit 2
1.5 Allocation Date(s) 2
1.6 Annual Additions 2
1.7 Annuity Starting Date 3
1.8 Applicable Calendar Year 3
1.9 Applicable Life Expectancy 3
1.10 Average Contribution Percentage (ACP) 3
1.11 Average Deferral Percentage (ADP) 3
1.12 Break In Service 3
1.13 Code 3
1.14 Compensation 3
1.15 Custodian 6
1.16 Defined Benefit Plan 6
1.17 Defined Benefit (Plan) Fraction 6
1.18 Defined Contribution Dollar Limitation 6
1.19 Defined Contribution Plan 6
1.20 Defined Contribution (Plan) Fraction 6
1.21 Designated Beneficiary 6
1.22 Direct Rollover 7
1.23 Disability 7
1.24 Distribution Calendar Year 7
1.25 Early Retirement Age 7
1.26 Early Retirement Date 7
1.27 Earned Income 7
1.28 Effective Date 7
1.29 Election Period 7
1.30 Elapsed Time 7
1.31 Elective Deferral 7
1.32 Eligible Participant 7
1.33 Eligible Retirement Plan 8
1.34 Eligible Rollover Distribution 8
1.35 Employee 8
1.36 Employer 8
1.37 Entry Date 8
1.38 ERISA 8
1.39 Excess Aggregate Contributions 9
1.40 Excess Amount 9
1.41 Excess Contribution 9
1.42 Excess Elective Deferrals 9
1.43 First Distribution Calendar Year 9
1.44 Hardship 9
1.45 Highest Average Compensation 9
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1.46 Highly Compensated Employee 9
1.47 Hour Of Service 10
1.48 Integration Level 11
1.49 Key Employee 11
1.50 Leased Employee 11
1.51 Limitation Year 11
1.52 Master Or Prototype Plan 11
1.53 Matching Contribution 11
1.54 Maximum Permissible Amount 12
1.55 Net Profit 12
1.56 Normal Retirement Age 12
1.57 Normal Retirement Date 12
1.58 Owner-Employee 12
1.59 Paired Plans 12
1.60 Participant 12
1.61 Participant's Benefit 12
1.62 Period Of Severance 12
1.63 Permissive Aggregation Group 13
1.64 Plan 13
1.65 Plan Administrator 13
1.66 Plan Year 13
1.67 Present Value 13
1.68 Prior Plan Year 13
1.69 Prior Safe-Harbor Plan 13
1.70 Projected Annual Benefit 13
1.71 Projected Participation 13
1.72 Qualified Domestic Relations Order 14
1.73 Qualified Early Retirement Age 14
1.74 Qualified Joint And Survivor Annuity 14
1.75 Qualified Matching Contributions ("QMACs") 14
1.76 Qualified Non-Elective Contributions ("QNECs") 14
1.77 Qualified Plan 14
1.78 Qualified Voluntary Contribution 14
1.79 Required Aggregation Group 15
1.80 Required Beginning Date 15
1.81 Required Contributions 15
1.82 Rollover Contribution 15
1.83 Salary Deferral Agreement 15
1.84 Savings Incentive Match Plan For Employees (SIMPLE) 15
1.85 Self-Employed Individual 15
1.86 Service 15
1.87 Service Provider 15
1.88 Shareholder Employee 15
1.89 Simplified Employee Pension Plan 15
1.90 Sponsor 15
1.91 Spouse 15
1.92 Super Top-Heavy Plan 15
1.93 Taxable Wage Base 16
1.94 Top-Heavy Determination Date 16
1.95 Top-Heavy Plan 16
1.96 Top-Heavy Ratio 16
1.97 Top-Paid Group 17
1.98 Transfer Contribution 17
1.99 Trust 17
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1100 Trustee 17
1.101 USERRA 17
1.1002 Valuation Date 17
1.1003 Vested Account Balance 18
1.1004 Voluntary Contribution 18
1.1005 Welfare Benefit Fund 18
1.1006 Year Of Service 18
ARTICLE II
ELIGIBILITY REQUIREMENTS
2.1 Participation 19
2.2 Change In Classification Of Employment 19
2.3 Computation Period 19
2.4 Employment Rights 19
2.5 Service With Controlled Groups 20
2.6 Leased Employees 20
2.7 Thrift Plans 20
2.8 Target Benefit Plans 20
2.9 Waiver Of Participation 20
2.10 Omission of Eligible Employee 21
2.11 Inclusion of Ineligible Employee 21
ARTICLE III
EMPLOYER CONTRIBUTIONS
3.1 Contribution Amount 22
3.2 Expenses And Fees 22
3.3 Responsibility For Contributions 22
3.4 Return Of Contributions 22
3.5 Merger Of Assets From Another Plan 22
3.6 Contribution Amount For A Target Benefit Plan 23
ARTICLE IV
EMPLOYEE CONTRIBUTIONS
4.1 Voluntary Contributions 25
4.2 Qualified Voluntary Contributions 25
4.3 Rollover Contribution 25
4.4 Elective Transfer Contributions 25
4.5 Trustee-To-Trustee Transfer Contribution 26
4.6 Elective Deferrals 26
4.7 Automatic Enrollment 27
4.8 Required Contributions 27
4.9 Make-Up Contributions Under USERRA 27
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ARTICLE V
PARTICIPANT ACCOUNTS
5.1 Separate Accounts 28
5.2 Allocation Date 28
5.3 Allocations To Participant Accounts 28
5.4 Allocating Employer Contributions 29
5.5 Allocating Investment Earnings And Losses 29
5.6 Allocation Adjustments 31
5.7 Participant Statements 31
5.8 Changes In Method Of Valuing Participants' Accounts 31
ARTICLE VI
RETIREMENT BENEFITS AND DISTRIBUTIONS
6.1 Normal Retirement Benefits 32
6.2 Early Retirement Benefits 32
6.3 Benefits On Termination Of Employment 32
6.4 Restrictions On Immediate Distributions 33
6.5 Normal And Optional Forms Of Payment 34
6.6 Commencement Of Benefits 34
6.7 Claims Procedures 34
6.8 In-Service Withdrawals 35
6.9 Hardship Withdrawals 36
6.10 Direct Rollover Of Benefits 37
6.11 Participant's Notice 37
6.12 Assets Transferred From Money Purchase Pension Plans 38
6.13 Assets Transferred From A Code Section 401(k) Plan 38
ARTICLE VII
DISTRIBUTION REQUIREMENTS
7.1 Joint And Survivor Annuity Requirements 39
7.2 Minimum Distribution Requirements 39
7.3 Limits On Distribution Periods 39
7.4 Required Distributions On Or After The
Required Beginning Date 39
7.5 Required Beginning Date 40
7.6 Election Under Tax Equity And Fiscal Responsibility Act
Of 1982 40
7.7 Designation Of Beneficiary 41
7.8 No Beneficiary 41
7.9 Distribution Beginning Before Death 41
7.10 Distribution Beginning After Death 42
7.11 Distribution Of Excess Elective Deferrals 42
7.12 Distributions Of Excess Contributions 43
7.13 Distribution Of Excess Aggregate Contributions 43
7.14 Distributions To Minors And Individuals
Who Are Legally Incompetent 44
7.15 Unclaimed Benefits 44
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ARTICLE VIII
JOINT AND SURVIVOR ANNUITY REQUIREMENTS
8.1 Applicability Of Provisions 45
8.2 Payment Of Qualified Joint And Survivor Annuity 45
8.3 Payment Of Qualified Pre-Retirement Survivor Annuity 45
8.4 Qualified Election 45
8.5 Notice Requirements For Qualified
Joint And Survivor Annuity 46
8.6 Notice Requirements For Qualified
Pre-Retirement Survivor Annuity 46
8.7 Special Safe-Harbor Exception For
Certain Profit-Sharing Plans 47
8.8 Transitional Joint And Survivor Annuity Rules 47
8.9 Automatic Joint And Survivor Annuity
And Early Survivor Annuity 48
8.10 Annuity Contracts 48
ARTICLE IX
VESTING
9.1 Employee Contributions 49
9.2 Employer Contributions 49
9.3 Computation Period 49
9.4 Requalification Prior To Five Consecutive
One-Year Breaks In Service 49
9.5 Requalification After Five Consecutive
One-Year Breaks In Service 49
9.6 Calculating Vested Interest 49
9.7 Forfeitures 50
9.8 Amendment Of Vesting Schedule 50
9.9 Service With Controlled Groups 50
9.10 Compliance With Uniformed Service Employment And
Reemployment Rights Act Of 1994 50
ARTICLE X
LIMITATIONS ON ALLOCATIONS
10.1 Participation In This Plan Only 51
10.2 Disposition Of Excess Annual Additions 51
10.3 Participation In Multiple Defined Contribution Plans 52
10.4 Disposition Of Excess Annual Additions Under Two Plans 52
10.5 Limitations On Benefits 52
10.6 Participation In This Plan And A Defined
Benefit Plan 53
ARTICLE XI
ANTIDISCRIMINATION TESTING
11.1 General Testing Requirements 54
11.2 Testing Limitations 54
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11.3 Calculation And Distribution Of Excess Contributions
And Excess Aggregate Contributions 55
11.4 Qualified Non-Elective And/Or Matching Contributions 55
11.5 Special Rules Relating To Application Of The ADP Test 56
11.6 Recharacterization 56
11.7 Special Rules Relating To Application Of The ACP Test 56
11.8 General Safe-Harbor Rules 58
11.9 Required Restrictions On Safe-Harbor Contributions 59
11.10 ACP Test Safe-Harbor 59
11.11 Safe-Harbor Notice Requirement 59
11.12 Safe-Harbor Short Plan Years 60
11.13 Satisfying Safe-Harbor Contribution Requirements
Under Another Defined Contribution Plan 60
11.14 Single Use Of Safe-Harbor Contributions 61
ARTICLE XII
ADMINISTRATION
12.1 Plan Administrator 62
12.2 Trustee 62
12.3 Custodian 63
12.4 Administrative Fees And Expenses 64
12.5 Limitation On Liability And Indemnification 64
12.6 Provisions Relating To Individual Trustees 66
12.7 Persons Serving As Plan Administrator 67
ARTICLE XIII
TRUST FUND/CUSTODIAL ACCOUNT
13.1 The Trust 68
13.2 Control Of Plan Assets 68
13.3 Exclusive Benefit Rules 68
13.4 Assignment And Alienation Of Benefits 68
13.5 Determination Of Qualified Domestic
Relations Order (QDRO) 68
ARTICLE XIV
INVESTMENTS
14.1 Fiduciary Standards 70
14.2 Funding Arrangement 70
14.3 Investment Alternatives Of The Trustee 70
14.4 Investment Alternatives Of The Custodian 72
14.5 Participant Loans 72
14.6 Insurance Policies 73
14.7 Allocation Of Investment Responsibility 75
14.8 Prohibited Transactions 76
14.9 Participant Investment Direction 76
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ARTICLE XV
TOP-HEAVY PROVISIONS
15.1 Applicability Of Rules 78
15.2 Minimum Contribution 78
15.3 Minimum Vesting 79
15.4 Limitations On Allocations 79
15.5 Use Of Safe-Harbor Contributions To Satisfy
Top-Heavy Contribution Rules 79
ARTICLE XVI
AMENDMENT AND TERMINATION
16.1 Amendment By Sponsor 80
16.2 Amendment By Employer 80
16.3 Amendment And Restatement Process 80
16.4 Protected Benefits 80
16.5 Plan Termination 80
16.6 Distribution Restrictions Under A Code Section 401(k) Plan 81
16.7 Qualification Of Employer's Plan 81
16.8 Mergers And Consolidations 81
16.9 Resignation And Removal 81
16.10 Qualification Of Prototype 82
ARTICLE XVII
GOVERNING LAW
17.1 Governing Law 83
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PROTOTYPE DEFINED CONTRIBUTION PLAN AND TRUST/CUSTODIAL ACCOUNT
SPONSORED BY
DIVERSIFIED INVESTMENT ADVISORS, INC.
The Sponsor hereby establishes this Prototype Plan and Trust/Custodial Account
for use by its clients who wish to adopt a qualified retirement plan. Any Plan
and Trust/Custodial Account established hereunder shall be administered for the
exclusive benefit of Participants and their beneficiaries under the following
terms and conditions:
ARTICLE I
DEFINITIONS
1.1 ACTUAL CONTRIBUTION PERCENTAGE The ratio (expressed as a percentage and
calculated separately for each Participant) of:
(a) the Participant's Contribution Percentage Amounts [as defined
at (c)-(f)] for the Current Plan Year, or for non-Highly
Compensated Employees the Prior Plan Year, unless otherwise
elected in the Adoption Agreement, to
(b) the Participant's Compensation for such Plan Year. Unless
otherwise specified in the Adoption Agreement, Compensation
will only include amounts for the period during which the
Employee was eligible to participate.
Contribution amounts on behalf of any Participant shall include:
(c) the amount of Employee Voluntary Contributions, Matching
Contributions, and Qualified Matching Contributions (to the
extent not taken into account for purposes of the ADP test)
made under the Plan on behalf of the Participant for the Plan
Year,
(d) forfeitures of Excess Aggregate Contributions or Matching
Contributions allocated to the Participant's account which
shall be taken into account in the year in which such
forfeiture is allocated,
(e) at the election of the Employer, Qualified Non-Elective
Contributions, and
(f) the Employer may elect to use Elective Deferrals in the
Contribution Percentage Amounts as long as the ADP test 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.
Contribution amounts shall not include Matching Contributions, whether or not
Qualified, that are forfeited either to correct Excess Aggregate Contributions,
or because the contributions to which they relate are Excess Deferrals, Excess
Contributions, or Excess Aggregate Contributions.
1.2 ACTUAL DEFERRAL PERCENTAGE The ratio (expressed as a percentage and
calculated separately for each Participant) of:
(a) the amount of Employer contributions actually contributed to
the Trust on behalf of each Participant for the Current Plan
Year or for non-Highly Compensated Employees for the Prior
Plan Year, unless otherwise specified in the Adoption
Agreement, to
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(b) the Participant's Compensation for such Plan Year. Unless
otherwise specified in the Adoption Agreement, Compensation
will only include amounts received for the period during which
the Employee was eligible to participate.
Employer contributions on behalf of any Participant shall include:
(c) any Elective Deferrals made pursuant to the Participant's
deferral election, including Excess Elective Deferrals, but
excluding Elective Deferrals that are either taken into
account in the Contribution Percentage test (provided the ADP
test is satisfied both with and without exclusion of these
Elective Deferrals) or are returned as excess Annual
Additions, and
(d) at the election of the Employer, Qualified Non-Elective
Contributions and Qualified Matching Contributions.
For purposes of computing Actual Deferral Percentages, an eligible Employee who
fails to make Elective Deferrals shall be treated as a Participant on whose
behalf no Elective Deferrals are made.
1.3 ADOPTION AGREEMENT The document attached to this Plan by which an Employer
elects the terms and conditions of a qualified retirement plan and
trust/custodial account under this Prototype Plan and Trust/Custodial Account.
1.4 AGGREGATE LIMIT The sum of:
(a) 125% of the greater of the ADP of the non-Highly Compensated
Employees or the ACP of non-Highly Compensated Employees under
the Plan subject to Code Section 401(m) for the Current Plan
Year or the Prior Plan Year, as elected by the Employer in the
Adoption Agreement, and
(b) the lesser of 200% or two percent plus the lesser of such ADP
or ACP.
For purposes of determining the ADP and ACP for the non-Highly Compensated
Employees, the Current Plan Year will be used in calculating the Aggregate
Limit, unless the Employer has elected in the Adoption Agreement, to use the
Prior Plan Year.
For purposes of determining the ADP and ACP for the non-Highly Compensated
Employees, the Prior Plan Year will be used in calculating the Aggregate Limit,
unless the Employer has elected in the Adoption Agreement to use the Current
Plan Year.
Alternatively, the Aggregate Limit can be determined by substituting "the lesser
of 200% or two percent plus" for "125% of" in (a) above, and substituting "125%
of" for "the lesser of 200% or two percent plus" in (b) above.
1.5 ALLOCATION DATE(S) The date or dates on which Participant recordkeeping
accounts are adjusted to reflect account activity including but not limited to
contributions, loans, distributions, Hardship withdrawals as well as earnings
activity including but not limited to income, capital gains or market
fluctuations in accordance with Article V hereof. Unless specified otherwise in
the Adoption Agreement, all allocations for a particular Plan Year will be made
as of the Valuation Date of that Plan Year.
1.6 ANNUAL ADDITIONS The sum of the following amounts credited to a
Participant's account for the Limitation Year:
(a) Employer contributions (under Article III) ,
(b) Employee contributions (under Article IV),
(c) forfeitures,
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(d) Employer allocations under a Simplified Employee Pension Plan,
as Employee contributions under a grandfathered SARSEP are not
considered annual additions under Code Section 415(c)(2).
(e) amounts allocated after March 31, 1984 to an individual
medical account as defined in Code Section 415(l)(2), which is
part of a pension or annuity plan maintained by the Employer
(these amounts are treated as Annual Additions to a Defined
Contribution Plan though they arise under a Defined Benefit
Plan), and
(f) amounts derived from contributions paid or accrued after 1985,
in taxable years ending after 1985, which are either
attributable to post-retirement medical benefits allocated to
the account of a Key Employee or to a Welfare Benefit Fund
maintained by the Employer. For purposes of this paragraph, an
Employee is a Key Employee if he or she meets the requirements
of paragraph 1.49 at any time during the Plan Year or any
preceding Plan Year. Welfare Benefit Fund is defined at
paragraph 1.105.
Employee and Employer make-up contributions under USERRA received during the
current Limitation Year shall be treated as Annual Additions with respect to the
Limitation Year to which the make-up contributions are attributable. Excess
Amounts applied in a Limitation Year to reduce Employer contributions will be
considered Annual Additions for such Limitation Year, pursuant to the provisions
of Article X.
1.7 ANNUITY STARTING DATE The first day of the first period for which an amount
is paid as an annuity or in any other form.
1.8 APPLICABLE CALENDAR YEAR The First Distribution Calendar Year, and in the
event of the recalculation of life expectancy, such succeeding calendar year. If
payments commence in accordance with paragraph 7.4(d) before the Required
Beginning Date, the Applicable Calendar Year is the year such payments commence.
If distribution is in the form of an immediate annuity purchased after the
Participant's death with the Participant's remaining interest, the Applicable
Calendar Year is the year of purchase.
1.9 APPLICABLE LIFE EXPECTANCY The life expectancy or joint and last survivor
expectancy calculated using the attained age of the Participant or Designated
Beneficiary as of the Participant's or Designated Beneficiary's birthday in the
Applicable Calendar Year, reduced by one for each calendar year which has
elapsed since the date life expectancy was first calculated. If life expectancy
is being recalculated, the Applicable Life Expectancy shall be the life
expectancy as so recalculated. The life expectancy of a non-Spouse Beneficiary
may not be recalculated.
1.10 AVERAGE CONTRIBUTION PERCENTAGE (ACP) The average of the Contribution
Percentages for each Highly Compensated Employee determined for the Current Plan
Year and for each non-Highly Compensated Employee determined for the Prior Plan
Year, unless the Current Plan Year is selected in the Adoption Agreement.
1.11 AVERAGE DEFERRAL PERCENTAGE (ADP) The average of the Actual Deferral
Percentages for each Highly Compensated Employee determined for the Current Plan
Year and for each non-Highly Compensated Employee determined for the Prior Plan
Year, unless the Current Plan Year is selected in the Adoption Agreement.
1.12 BREAK IN SERVICE A 12-consecutive month period during which an Employee
fails to complete more than 500 Hours of Service, if the Hours of Service method
is used to determine a Year of Service or a period of severance of at least 12
consecutive months if the Elapsed Time Method is being used to determine a Year
of Service.
1.13 CODE The Internal Revenue Code of 1986, including any amendments thereto.
1.14 COMPENSATION The Employer may select one of the following three safe-harbor
definitions of Compensation in the Adoption Agreement. The definition of
Compensation for Employers who adopt standardized plans and plans that provide
permitted disparity, (other than the CODA portion of these plans), Target
Benefit Plans and, in determining top-heavy minimum must use one of the three
safe-harbor definitions of Compensation. In a
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Nonstandardized Adoption Agreement, the Employer can modify the definition of
Compensation provided that such definition, as modified, satisfies the
provisions of Code Sections 414(s) and 401(a)(4). Compensation will also include
Compensation by the Employer through another individual or entity under the
provisions of Code Sections 3121 and 3306.
(a) CODE SECTION 3401(a) WAGES - All remuneration received by an
Employee for services performed for the Employer which are
subject to Federal income tax withholding at the source.
Unless elected otherwise in the Adoption Agreement,
Compensation shall include any amount deferred under a salary
reduction agreement which is not includible in the gross
income of a Participant under Code Section 125 in connection
with a cafeteria plan, Code Section 402(e)(3) in connection
with a cash or deferred plan, Code Section 402(h)(1)(B) in
connection with a Simplified Employee Pension Plan, and Code
Section 403(b) in connection with a tax-sheltered annuity
plan. Wages are 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)].
(b) CODE SECTIONS 6041, 6051 AND 6052 REPORTABLE WAGES - All
remuneration received by an Employee for services performed
for the Employer which are required to be reported on Form
W-2. Unless otherwise elected in the Adoption Agreement,
Compensation shall include any amount deferred under a salary
reduction agreement which is not includible in the gross
income of a Participant under Code Section 125 in connection
with a cafeteria plan, Code Section 402(e)(3) in connection
with a cash or deferred plan, Code Section 402(h)(1)(B) in
connection with a Simplified Employee Pension Plan, and Code
Section 403(b) in connection with a tax-sheltered annuity
plan. A Participant's wages includes remuneration defined at
subparagraph (a) above and all other remuneration paid 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. Such amount must be 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) CODE SECTION 415 COMPENSATION - A Participant's Earned Income,
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. Compensation includes, but is not limited to,
commissions paid salesmen, 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 Section 1.62-2(c)]. Compensation
excludes the following:
(1) for Plan Years beginning before January 1, 1998,
Employer contributions, made under the terms of a
salary deferral agreement between an Employee and the
Employer, to a plan of deferred compensation which
are not includible in the Employee's gross income for
the taxable year in which contributed. Such
contributions shall include any amount deferred under
Code Section 125 in connection with a cafeteria plan,
Code Section 402(e)(3) in connection with a cash or
deferred plan, Code Section 402(h)(1)(B) in
connection with a Simplified Employee Pension Plan,
Code Section 457 Plan and Code Section 403(b) in
connection with a tax-sheltered annuity plan;
(2) distributions received from a plan of deferred
compensation;
(3) amounts realized from the exercise of a non-qualified
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;
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(4) amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock
option; and
(5) amounts deferred by an Employee under the terms of a
non-qualified deferred compensation plan;
NOTE: Unless otherwise specified by the Employer in the Adoption Agreement,
Compensation shall be determined as provided in Code Section 3401(a) [paragraph
(a) above].
EXCLUSIONS FROM COMPENSATION A Participant's Compensation shall be determined in
accordance with paragraph (a), (b) or (c) above and shall not exclude any item
of income unless provided in the basic definition or elected by the Employer in
the Adoption Agreement.
ANNUAL ADDITIONS AND TOP-HEAVY RULES For purposes of Article X and XV,
Compensation shall be Code Section 415 Compensation as described in paragraph
1.14(c). For Plan Years beginning before January 1, 1998, Compensation excludes
amounts deferred under a plan of deferred Compensation as described at paragraph
1.14(c)(1). For Plan Years beginning after December 31, 1997, Compensation
includes amounts deferred under a plan of deferred compensation as described at
paragraph 1.14(c)(1). For purposes of applying the limitations of Article IX,
Compensation for a Limitation Year is the Compensation actually paid or made
available during such Limitation Year. Notwithstanding the preceding sentence,
Compensation with respect to a Participant in a Defined Contribution Plan who is
permanently and totally disabled [as defined in Code Section 22(e)(3)] is the
Compensation such Participant would have received for the Limitation Year if the
Participant had been paid at the rate of Compensation paid immediately before
becoming permanently and totally disabled; for Limitation Years beginning before
January 1, 1997, but not for Limitation Years beginning after December 31, 1996,
such imputed Compensation for the disabled Participant may be taken into account
only if the Participant is not a Highly Compensated Employee (defined at
paragraph 1.46 of the Plan) and contributions made on behalf of such Participant
are nonforfeitable when made.
HIGHLY COMPENSATED AND KEY EMPLOYEES For purposes of paragraphs 1.46 and 1.49,
Compensation shall be Code Section 415 Compensation as described in paragraph
1.14(c). Such definition shall include any amount deferred under Code Section
125 in connection with a cafeteria plan, Code Section 402(e)(3) in connection
with a cash or deferred plan, Code Section 402(h)(1)(B) in connection with a
Simplified Employee Pension Plan, Code Section 402(k) in connection with a
Savings Incentive Match Plan for Employees and Code Section 403(b) in connection
with a tax-sheltered annuity plan. The Employer if elected in the Adoption
Agreement, may limit Compensation considered for purposes of the Plan.
COMPUTATION PERIOD The Plan Year while eligible to participate shall be the
computation period for purposes of determining a Participant's Compensation,
unless the Employer selects a different computation period in the Adoption
Agreement.
LIMITATION ON COMPENSATION The annual Compensation of each Participant which may
be taken into account for determining all benefits provided under the Plan for
any year shall not exceed the limitation as imposed by Code Section 401(a)(17),
as adjusted under Code Section 401(a)(17)(B). If a Plan has a Plan Year that
contains fewer than 12 calendar months, the annual Compensation limit for that
period is an amount equal to the limitation as imposed by Code Section
401(a)(17) as adjusted for the calendar year in which the Compensation period
begins, multiplied by a fraction, the numerator of which is the number of full
months in the short Plan Year and the denominator of which is 12.
USERRA For purposes of Employee and Employer make-up contributions, Compensation
during the period of military service shall be deemed to be the Compensation the
Employee would have received during such period if the Employee were not in
qualified military service, based on the rate of pay the Employee would have
received from the Employer but for the absence due to military leave. If the
Compensation the Employee would have received during the leave is not reasonably
certain, Compensation will be equal to the Employee's average Compensation from
the Employer during the 12-month period immediately preceding the military leave
or, if shorter, the Employee's actual period of employment with the Employer.
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1.15 CUSTODIAN The institution or institutions and any successors or assigns
thereto, appointed by the Employer to hold the assets of the Trust as provided
at paragraph 12.3 hereof.
1.16 DEFINED BENEFIT PLAN A plan under which a Participant's benefit is
determined by a formula contained in the plan and no individual accounts are
maintained for Participants.
1.17 DEFINED BENEFIT (PLAN) FRACTION For Limitation Years beginning before
January 1, 2000, a fraction, the numerator of which is the sum of the
Participant's Projected Annual Benefits under all the Defined Benefit Plans
(whether or not terminated) maintained by the Employer, and the denominator of
which is the lesser of 125% of the dollar limitation determined for the
Limitation Year under Code Sections 415(b) and (d) or 140% of the Highest
Average Compensation, including any adjustments under Code Section 415(b).
TRANSITIONAL RULE If an Employee was a Participant as of the first day of the
first Limitation Year beginning after 1986, in one or more Defined Benefit Plans
maintained by the Employer which were in existence on May 6, 1986, the
denominator of this fraction will not be less than 125% of the sum of the annual
benefits under such plans which the Participant had accrued as of the close of
the last Limitation Year beginning before 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 1987.
1.18 DEFINED CONTRIBUTION DOLLAR LIMITATION Thirty thousand dollars ($30,000) as
adjusted by the Secretary of the Treasury for increases in the cost-of-living.
Such increases will be in multiples of five thousand dollars ($5,000).
1.19 DEFINED CONTRIBUTION PLAN A plan under which individual accounts are
maintained for each Participant to which all contributions, forfeitures,
investment income and gains or losses, and expenses are credited or deducted. A
Participant's benefit under such plan is based solely on the fair market value
of his or her account balance.
1.20 DEFINED CONTRIBUTION (PLAN) FRACTION For Limitation Years beginning before
January 1, 2000, a fraction, the numerator of which is the sum of the Annual
Additions to the Participant's account under all the Defined Contribution Plans
(whether or not terminated) maintained by the Employer for the current and all
prior Limitation Years (including the Annual Additions attributable to the
Participant's nondeductible Employee contributions to all Defined Benefit Plans,
whether or not terminated, maintained by the Employer, and the Annual Additions
attributable to all Welfare Benefit Funds as defined in paragraph 1.105,
individual medical accounts as defined in Code Section 415(l)(2) and Simplified
Employee Pension Plans as defined in paragraph 1.89, maintained by the
Employer), and the denominator of which is the sum of the maximum aggregate
amounts for the current and all prior Limitation Years of service with the
Employer (regardless of whether a Defined Contribution Plan was maintained by
the Employer). The maximum aggregate amount in the Limitation Year is the lesser
of 125% of the dollar limitation determined under Code Sections 415(b) and (d)
in effect under Code Section 415(c)(1)(A) or 35% of the Participant's
Compensation for such year.
TRANSITIONAL RULE If an Employee was a Participant as of the end of the first
day of the first Limitation Year beginning after 1986, in one or more Defined
Contribution Plans maintained by the Employer which were in existence on May 6,
1986, the numerator of this fraction will be adjusted if the sum of this
fraction and the Defined Benefit Fraction would otherwise exceed 1.0 under the
terms of this Plan. Under the adjustment, an amount equal to the product of the
excess of the sum of the fractions over 1.0 multiplied by 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 1987, and
disregarding any changes in the terms and conditions of the Plan made after May
6, 1986, but using the Code Section 415 limitation applicable to the first
Limitation Year beginning on or after January 1, 1987. The Annual Addition for
any Limitation Year beginning before 1987, shall not be re-computed to treat all
Employee contributions as Annual Additions.
1.21 DESIGNATED BENEFICIARY The individual, trust or other entity who is
designated as the beneficiary of a Participant's account under the Plan in
accordance with Code Section 401(a)(9) and the regulations thereunder.
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1.22 DIRECT ROLLOVER A payment by the Plan to an Eligible Retirement Plan
specified by the Participant.
1.23 DISABILITY Unless the Employer has elected a different definition in the
Adoption Agreement, an illness or injury of a potentially permanent nature,
expected to last for a continuous period of not less than 12 months, certified
by a physician selected by or satisfactory to the Employer, which prevents the
Employee from engaging in any occupation for wage or profit for which the
Employee is reasonably fitted by training, education or experience.
1.24 DISTRIBUTION CALENDAR YEAR A calendar year for which a minimum distribution
is required.
1.25 EARLY RETIREMENT AGE The age set by the Employer in the Adoption Agreement
(but not less than 55), which is the earliest age at which a Participant may
retire and receive his or her benefits under the Plan.
1.26 EARLY RETIREMENT DATE The date on which the Participant involved has
satisfied the age and Service requirements so specified in the Adoption
Agreements.
1.27 EARNED INCOME Net earnings from self-employment in the trade or business
with respect to which the Plan is established, determined without regard to
items not included in gross income and the deductions allocable to such items,
provided that personal services of the individual are a material
income-producing factor. Earned Income shall be reduced by contributions made by
an Employer to a qualified plan to the extent deductible under Code Section 404.
Net earnings shall be determined taking into account the deduction for one-half
of self-employment taxes allowed to the taxpayer under Code Section 164(f), to
the extent deductible.
1.28 EFFECTIVE DATE The date on which the Employer's Plan or amendment to such
Plan becomes effective. For amendments reflecting statutory and regulatory
changes contained in the Uruguay Round Agreements Act of the General Agreement
on Tariffs and Trade ("GATT"), the Uniform Services Employment and Reemployment
Rights Act of 1994 (USERRA) effective December 12, 1996, the Small Business Job
Protection Act of 1996 (SBJPA), the Taxpayer Relief Act of 1997 (TRA'97), the
Effective Date will be the earlier of the date upon which such amendment is
first administratively applied or the first day of the Plan Year following the
date of adoption of such amendment.
1.29 ELECTION PERIOD The period which begins on the first day of the Plan Year
in which the Participant attains age 35 and ends on the date of the
Participant's death. If a Participant separates from Service prior to the first
day of the Plan Year in which age 35 is attained, the Election Period shall
begin on the date of separation, with respect to the account balance as of the
date of separation.
1.30 ELAPSED TIME A method of determining an Employee's entitlement under the
Plan with respect to eligibility to participate, as well as vesting which is not
based on the Employee's completion of a specified number of Hours of Service
during a consecutive twelve month period, but rather with reference to the total
period of time which elapses during which the Employee is employed by the
Employer maintaining the Plan.
1.31 ELECTIVE DEFERRAL Employer contributions made to the Plan at the election
of the Participant, in lieu of cash Compensation pursuant to a Salary Deferral
Agreement or other deferral mechanism. With respect to any taxable year, a
Participant's Elective Deferral is the sum of all Employer contributions made on
behalf of such Participant pursuant to an election to defer under any qualified
cash or deferred arrangement as described in Code Section 401(k), any Simplified
Employee Pension Plan with a cash or deferred arrangement as described in Code
Section 402(h)(1)(B), any SIMPLE as described in Code Section 401(k)(11) or
Individual Retirement Account arrangement as described in Code Sections
401(k)(11)(A) or 408(p), any eligible deferred compensation plan under Code
Section 457, any plan as described under Code Section 501(c)(18), and any
Employer contributions made on behalf of a Participant for the purchase of an
annuity contract under Code Section 403(b) pursuant to a Salary Deferral
Agreement. Elective Deferrals shall not include any deferrals properly
distributed as excess Annual Additions.
1.32 ELIGIBLE PARTICIPANT An Employee who is eligible to make a Voluntary
Contribution or an Elective Deferral (if the Employer takes such contributions
into account in the calculation of the Contribution Percentage), or to receive a
Matching Contribution (including forfeitures) or a Qualified Matching
Contribution. If an Employee contribution or Elective Deferral is required as a
condition of participation in the Plan, any Employee who would be
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a Participant in the Plan if such Employee made such a contribution shall be
treated as an Eligible Participant even though no Employee contributions or
Elective Deferrals are made.
1.33 ELIGIBLE RETIREMENT PLAN An individual retirement account (IRA) as
described in Code Section 408(a), an individual retirement annuity (IRA) as
described in Code Section 408(b), an annuity plan as described in Code Section
403(a), or a qualified trust as described in Code Section 401(a), which accepts
Eligible Rollover Distributions. However, in the case of an Eligible Rollover
Distribution to a surviving Spouse, an Eligible Retirement Plan is an individual
retirement account or individual retirement annuity.
1.34 ELIGIBLE ROLLOVER DISTRIBUTION An Eligible Rollover Distribution is any
distribution of all or any portion of the balance to the credit of the
Participant except that an Eligible Rollover Distribution does not include:
(a) any distribution that is one of a series of substantially
equal periodic payments made not less frequently than annually
for the life (or life expectancy) of the Participant or the
joint lives (or joint life expectancies) of the Participant
and the Participant's Designated Beneficiary, or for a
specified period of ten years or more,
(b) any distribution to the extent such distribution is required
under Code Section 401(a)(9),
(c) the portion of any distribution that would not be includible
in gross income if paid to the Participant (determined without
regard to the exclusion for net unrealized appreciation with
respect to Employer securities), and
(d) Hardship Withdrawals under Code Section 401(k)(2)(B)(i)(IV) or
excess amounts which are returned to a Participant in
accordance with paragraph 10.2.
1.35 EMPLOYEE A person employed by the Employer (including Self-Employed
Individuals and partners), all Employees of a member of an affiliated service
group [as defined in Code Section 414(m)], all Employees of a controlled group
of corporations [as defined in Code Section 414(b)], all Employees of any
incorporated or unincorporated trade or business which is under common control
[as defined in Code Section 414(c)], leased Employees [as defined in Code
Section 414(n)], and any Employee required to be aggregated by Code Section
414(o). All such Employees shall be treated as employed by a single Employer.
With respect to any Standardized Plan, Leased Employees [as defined in Code
Section 414(n)] shall be Employees except as otherwise provided in this
paragraph. With respect to any Nonstandardized Plan, unless otherwise indicated
in the Adoption Agreement, Leased Employees shall be Employees for purposes of
participation in the Plan. An exclusion of Leased Employees is only available if
the Leased Employees do not constitute more than 20% of the recipient Employer's
non-highly compensated work force, and the Employer complies with the
requirements as outlined in paragraph 2.6, and so elects in the Adoption
Agreement.
1.36 EMPLOYER The Self-Employed Individual, partnership, corporation or other
organization which adopts this Plan including any entity that succeeds the
Employer and adopts this Plan. For purposes of Article X, Limitations on
Allocations, Employer shall mean the Employer that adopts this Plan, and all
members of a controlled group of corporations [as defined in Code Section 414(b)
as modified by Code Section 415(h)], all commonly controlled trades or
businesses [as defined in Code Section 414(c) as modified by Code Section
415(h)] or affiliated service groups [as defined in Code Section 414(m)] of
which the adopting Employer is a part, and any other entity required to be
aggregated with the Employer pursuant to regulations under Code Section 414(o).
1.37 ENTRY DATE The date as of which an Employee who has satisfied the Plan's
eligibility requirements enters or reenters the Plan, as defined in the Adoption
Agreement.
1.38 ERISA The Employee Retirement Income Security Act of 1974, as amended.
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1.39 EXCESS AGGREGATE CONTRIBUTIONS The excess, with respect to any Plan Year,
of:
(a) the aggregate Contribution Percentage Amounts taken into
account in computing the numerator of the Contribution
Percentage actually made on behalf of Highly Compensated
Employees for such Plan Year, over
(b) the maximum Contribution Percentage Amounts permitted by the
ACP test determined in accordance with Article XI hereof.
Such determination shall be made after first determining Excess Elective
Deferrals pursuant to paragraph 1.42 and then determining Excess Contributions
pursuant to paragraph 1.41.
1.40 EXCESS AMOUNT The excess of the Participant's Annual Additions for the
Limitation Year over the Maximum Permissible Amount.
1.41 EXCESS CONTRIBUTION With respect to any Plan Year, the excess of:
(a) the aggregate amount of Employer contributions actually taken
into account in computing the ADP of Highly Compensated
Employees for such Plan Year, over
(b) the maximum amount of such contributions permitted by the ADP
test determined in accordance with Article XI hereof.
1.42 EXCESS ELECTIVE DEFERRALS Those Elective Deferrals that are includible in a
Participant's gross income under Code Section 402(g) to the extent such
Participant's Elective Deferrals for a taxable year exceed the dollar limitation
under such Code Section. Excess Elective Deferrals shall be treated as Annual
Additions under the Plan, unless such amounts are distributed no later than the
first April 15th following the close of the Participant's taxable year.
1.43 FIRST DISTRIBUTION CALENDAR YEAR For distributions beginning before the
Participant's death, the First Distribution Calendar Year is the calendar year
immediately preceding the calendar year which contains the Participant's
Required Beginning Date. For distributions beginning after the Participant's
death, the First Distribution Calendar Year is the calendar year in which
distributions are required to begin pursuant to paragraph 7.10.
1.44 HARDSHIP An immediate and heavy financial need of the Employee where such
Employee lacks other available resources to satisfy such financial need.
1.45 HIGHEST AVERAGE COMPENSATION For Limitation Years beginning before January
1, 2000, the average Compensation for the three consecutive Years of Service
with the Employer that produces the highest average. A Year of Service with the
Employer is the 12-consecutive month period defined in the Adoption Agreement,
or, if not indicated in the Adoption Agreement, as defined in paragraph 1.106.
1.46 HIGHLY COMPENSATED EMPLOYEE Effective for years after December 31, 1996,
the term Highly Compensated Employee means any Employee who: (1) is a more than
5% owner at any time during the year or preceding year, or (2) for the preceding
year had Compensation from the Employer in excess of $80,000 and if the Employer
so elects in the Adoption Agreement, is in the Top-Paid Group for the preceding
year. The $80,000 amount is adjusted at the same time and in the same manner as
under Code Section 415(d), except that the base period is the calendar quarter
ending September 30, 1996.
For the determination of Highly Compensated Employee the applicable year of the
Plan for which a determination is being made is called a determination year and
the preceding 12-month period is called a look-back year.
A Highly Compensated former Employee is based on the rules applicable to
determining Highly Compensated Employee status in effect for that determination
year, in accordance with Section 1.414(q)-1T, A-4 of the temporary Income Tax
Regulations and Notice 97-75.
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In determining whether an Employee is a Highly Compensated Employee for years
beginning in 1997, the amendments to Code Section 414(q) stated above are
treated as having been in effect for years beginning in 1996. In order to be
effective, a Top-Paid Group election or calendar year data election must apply
consistently to all plans of the Employer that begin with or within the same
calendar year.
1.47 HOUR OF SERVICE
(a) Unless otherwise specified in the Adoption Agreement, each
hour for which an Employee is paid, or entitled to payment,
for the performance of duties for the Employer. These hours
shall be credited to the Employee for the computation period
in which the duties are performed, and
(b) each hour for which an Employee is paid, or entitled to
payment, by the Employer on account of a period of time during
which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation,
holiday, illness, incapacity (including disability), layoff,
jury duty, military duty or leave of absence. No more than 501
Hours of Service shall be credited under this paragraph for
any single continuous period (whether or not such period
occurs in a single computation period). Hours under this
paragraph shall be calculated and credited pursuant to Section
2530.200b-2 of the Department of Labor Regulations which are
incorporated herein by this reference, and
(c) each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer. The
same Hours of Service shall not be credited both under
paragraph (a) or paragraph (b), as the case may be, and under
this paragraph (c). These hours shall 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.
(d) Hours of Service shall be credited for employment with the
Employer and with other members of an affiliated service group
[as defined in Code Section 414(m)], a controlled group of
corporations [as defined in Code Section 414(b)], or a group
of trades or businesses under common control [as defined in
Code Section 414(c)] of which the adopting Employer is a
member, and any other entity required to be aggregated with
the Employer pursuant to Code Section 414(o) and the
regulations thereunder. Hours of Service shall also be
credited for any individual considered an Employee for
purposes of this Plan under Code Section 414(n) or Code
Section 414(o) and the regulations thereunder.
(e) Solely for purposes of determining whether a Break in Service,
as defined in paragraph 1.12, for participation and vesting
purposes has occurred in a computation period, an individual
who is absent from work for maternity or paternity reasons
shall receive credit for the Hours of Service which would
otherwise have been credited to such individual but for such
absence, or in any case in which such hours cannot be
determined, 8 Hours of Service per day of such absence. For
purposes of this paragraph, an absence from work for maternity
or paternity reasons means an absence by reason of the
pregnancy of the individual, by reason of a birth of a child
of the individual, by reason of the placement of a child with
the individual in connection with the adoption of such child
by such individual, or for purposes of caring for such child
for a period beginning immediately following such birth or
placement. The Hours of Service credited under this paragraph
shall be credited in the computation period in which the
absence begins if the crediting is necessary to prevent a
Break in Service in that period, or in all other cases, in the
following computation period. No more than 501 hours will be
credited under this paragraph.
(f) Hours of Service shall be determined under an Hours Counting
Method or an Elapsed Time Method as selected by the Employer
on the Adoption Agreement. If no selection is made actual
Hours will be used.
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1.48 INTEGRATION LEVEL The amount of Compensation specified in the Adoption
Agreement at or below which the rate of contributions or benefits (expressed in
each case as a percentage of such Compensation) provided under the Plan is less
than the rate of contributions or benefits (expressed in each case as a
percentage of such Compensation) provided under the Plan with respect to
Compensation above such level. The Adoption Agreement must specify an
Integration Level in effect for the Plan Year for each Participant and no
Integration Level in effect for a particular year may exceed the contribution
and benefit base ("Taxable Wage Base") under Section 230 [Code Section
3121(a)(1)] of the Social Security Act in effect on the first day of the Plan
Year. If the Plan uses Compensation based on the period of the Participant's
participation, then the integration level must be prorated for a Participant's
short Plan Year.
1.49 KEY EMPLOYEE Any Employee or former Employee (and the beneficiaries of such
Employee) who at any time during the determination period was:
(a) an officer of the Employer if such individual's annual
Compensation exceeds 50% of the dollar limitation under Code
Section 415(b)(1)(A) the defined benefit maximum annual
benefit,
(b) an owner or an individual considered an owner under Code
Section 318 of one of the ten largest interests in the
Employer if such individual's Compensation exceeds 100% of the
dollar limitation under Code Section 415(c)(1)(A),
(c) a more than 5% owner of the Employer, or
(d) a one-percent owner of the Employer who has an annual
Compensation of more than $150,000.
The determination period is the Plan Year containing the Top-Heavy Determination
Date and the four preceding Plan Years. The determination of Key Employee status
will be made in accordance with Code Section 416(i)(1) and the regulations
thereunder.
1.50 LEASED EMPLOYEE Effective December 12, 1994, any person (other than an
Employee of the recipient) who, pursuant to an agreement between the recipient
and any other person ("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 the primary direction or
control of the recipient Employer. If a Leased Employee is treated as an
Employee by reason of this paragraph 1.50, "Compensation" includes Compensation
from the leasing organization which is attributable to services performed for
the Employer.
1.51 LIMITATION YEAR The calendar year or such other 12-consecutive month period
designated by the Employer in the Adoption Agreement for purposes of determining
the maximum Annual Additions to a Participant's account. All qualified plans
maintained by the Employer must use the same Limitation Year. If the Limitation
Year is amended to a different 12-consecutive month period, the new Limitation
Year must begin on a date within the Limitation Year in which the amendment is
made. If no designation is made on the Adoption Agreement, the Limitation Year
will automatically default to the Plan Year.
1.52 MASTER OR PROTOTYPE PLAN A plan, the form of which is the subject of a
favorable opinion letter from the Internal Revenue Service.
1.53 MATCHING CONTRIBUTION An Employer contribution made to this or any other
Defined Contribution Plan on behalf of a Participant on account of an Employee
Voluntary Contribution made by such Participant, or on account of a
Participant's Elective Deferral or required after-tax contribution made by such
Participant under a plan maintained by the Employer.
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1.54 MAXIMUM PERMISSIBLE AMOUNT The maximum Annual Additions 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) the Defined Contribution Dollar Limitation, or
(b) 25% of the Participant's Compensation for the Limitation Year.
The Compensation limitation referred to in (b) shall not apply to any
contribution for medical benefits [within the meaning of Code Section 401(h) or
Code Section 419A(f)(2)] which is otherwise treated as an Annual Addition under
Code Section 415(l)(1) or 419(d)(2). If a short Limitation Year is created
because of an amendment changing the Limitation Year to a different
12-consecutive month period, the Maximum Permissible Amount will not exceed the
Defined Contribution Dollar Limitation multiplied by a fraction, the numerator
of which is the number of months in the short Limitation Year and the
denominator of which is 12.
1.55 NET PROFIT Unless the Employer has elected a different definition in the
Nonstandardized Adoption Agreement, the current and accumulated operating
earnings of the Employer after Federal and state income taxes, excluding
nonrecurring or unusual items of income, and before contributions to this and
any other qualified plan of the Employer.
1.56 NORMAL RETIREMENT AGE The age, set by the Employer in the Adoption
Agreement, not to exceed age 65, at which a Participant may retire and is
eligible to receive his or her benefits under the Plan.
1.57 NORMAL RETIREMENT DATE The date on which the Participant involved attains
his Normal Retirement Age.
1.58 OWNER-EMPLOYEE A sole proprietor or a partner owning more than 10% of
either the capital or profits interest of the partnership.
1.59 PAIRED PLANS Two or more plans maintained by the Sponsor designed so that a
single or any combination of plans adopted by an Employer will meet the
antidiscrimination rules, the contribution and benefit limitations, and the
Top-Heavy provisions of the Code.
1.60 PARTICIPANT An Employee who has met the eligibility requirements and is
participating in the Plan.
1.61 PARTICIPANT'S BENEFIT With respect to required distributions pursuant to
paragraph 7.4, the account balance as of the last Valuation Date in the calendar
year immediately preceding the Distribution Calendar Year increased by the
amount of any contributions or forfeitures allocated to the account balance as
of the dates in the calendar year after the Valuation Date and decreased by
distributions made in the calendar year after the Valuation Date. A special
exception exists for the second Distribution Calendar Year. For purposes of this
paragraph, if any portion of the minimum distribution for the First Distribution
Calendar Year is made in the second Distribution Calendar Year on or before the
Required Beginning Date, the amount of the minimum distribution made in the
second Distribution Calendar Year shall be treated as if it had been made in the
immediately preceding Distribution Calendar Year.
1.62 PERIOD OF SEVERANCE For Plans using Elapsed Time for purposes of crediting
Service:
(a) a Break in Service shall mean a Period of Severance of at
least 12 months;
(b) a Period of Severance is a continuous period of time during
which the Employee is not employed by the Employer;
(c) a Period of Severance begins on the date the Employee retires,
quits, or is discharged, or if earlier, the 12 month
anniversary of the date on which the Employee was otherwise
first absent from Service.
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1.63 PERMISSIVE AGGREGATION GROUP 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.
1.64 PLAN The Employer's retirement plan as embodied herein and in the Adoption
Agreement, as may be amended from time to time.
1.65 PLAN ADMINISTRATOR The Employer or individual or entity appointed by the
Employer to administer the Plan as provided at paragraph 12.1 hereof.
1.66 PLAN YEAR The 12-consecutive month period designated by the Employer in the
Adoption Agreement.
1.67 PRESENT VALUE The actuarial equivalent of a Participant's accrued benefit
under a Defined Benefit Plan maintained by the Employer expressed in the form of
a lump sum. Actuarial equivalence shall be based on reasonable interest and
mortality assumptions determined in accordance with the Top-Heavy provisions of
the respective plan. Present Value is used for the purposes of the Top-Heavy
test and the determination with respect thereto.
1.68 PRIOR PLAN YEAR The Plan Year immediately preceding the Current Plan Year.
If elected in the Adoption Agreement, the Average Deferral Percentage and
Average Contribution Percentage determined for non-Highly Compensated Employees
for the Prior Plan Year will be used in the antidiscrimination test for the
Current Plan Year to determine the maximum Average Deferral Percentage and
Average Contribution Percentage for Highly Compensated Employees in the Current
Plan Year.
1.69 PRIOR SAFE-HARBOR PLAN A Plan that:
(a) was adopted and in effect on September 19, 1991,
(b) which on that date contained a stated benefit formula
applicable to Target Benefit Plans that took into account
Service prior to that date, and
(c) satisfied the applicable nondiscrimination requirements for
Target Benefit Plans for those prior years. For purposes of
determining whether a plan satisfies the applicable
nondiscrimination requirements for Target Benefit Plans for
Plan Years beginning before January 1, 1994, no amendments
after September 19, 1991, other than amendments necessary to
satisfy Code Section 401(l), will be taken into account.
1.70 PROJECTED ANNUAL BENEFIT For Limitation Years beginning before January 1,
2000, the annual retirement benefit (adjusted to an actuarial 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 a Defined Benefit Plan or
plans, assuming:
(a) the Participant will continue employment until Normal
Retirement Age under the Plan (or current age, if later), and
(b) the Participant's Compensation for the current Limitation Year
and all other relevant factors used to determine benefits
under the Plan will remain constant for all future Limitation
Years.
1.71 PROJECTED PARTICIPATION For purposes of determining a Participant's stated
Benefit, a Participant's years of Projected Participation under the Plan is the
sum of (a) and (b), where
(a) is the number of years during which the Participant benefited
under this Plan beginning with the latest of:
(1) the first Plan Year in which the Participant
benefited under the Plan,
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22
(2) the first Plan Year taken into account in the stated
benefit formula, and
(3) any Plan Year immediately following a Plan Year in
which the Plan did not satisfy the safe-harbor for
target benefit plans in Regulations Section
1.401(a)(4)-8(b)(3), and ending with the last day of
the current Plan Year, and
(b) is the number of years if any, subsequent to the current Plan
Year through the end of the Plan Year in which the Participant
attains Normal Retirement Age.
For purposes of this definition of years of Projected Participation, if this
Plan is a Prior Safe-Harbor Plan, the Plan is deemed to satisfy the safe-harbor
for Target Benefit Plans in Regulations Section 1.401(a)(4)-8(b)(3) and a
Participant is treated as benefiting under the Plan in any Plan Year beginning
prior to January 1, 1994.
1.72 QUALIFIED DOMESTIC RELATIONS ORDER A Qualified Domestic Relations Order
(QDRO) is a signed domestic relations order issued by a state court or agency
which creates, recognizes or assigns to an alternate payee(s) the right to
receive all or part of a Participant's plan benefit and which meets the
requirements of Code Section 414(p). An alternate payee is a Spouse, former
Spouse, child, or other dependent who is treated as a beneficiary under the Plan
as a result of the QDRO. The earliest date for payment of a QDRO to an alternate
payee, is the date upon which the order is deemed qualified.
1.73 QUALIFIED EARLY RETIREMENT AGE For purposes of paragraph 8.9, Qualified
Early Retirement Age is the latest of:
(a) the earliest date under the Plan on which the Participant may
elect to receive retirement benefits, or
(b) the first day of the 120th month beginning before the
Participant reaches Normal Retirement Age, or
(c) the date the Participant begins participation.
1.74 QUALIFIED JOINT AND SURVIVOR ANNUITY An immediate annuity for the life of
the Participant with a survivor annuity for the life of the Participant's Spouse
which is at least one-half of but not more than the amount of the annuity
payable during the joint lives of the Participant and the Participant's Spouse.
The exact amount of the survivor annuity is to be specified by the Employer in
the Adoption Agreement. If not designated by the Employer, the survivor annuity
will be one-half of the amount paid to the Participant during his or her
lifetime. The Qualified Joint and Survivor Annuity will be the amount of benefit
which can be provided by the Participant's Vested Account Balance.
1.75 QUALIFIED MATCHING CONTRIBUTIONS ("QMACS") Matching Contributions which,
when made are subject to the distribution and nonforfeitability requirements
under Code Section 401(k).
1.76 QUALIFIED NON-ELECTIVE CONTRIBUTIONS ("QNECS") Contributions (other than
Matching Contributions or Qualified Matching Contributions) made by the Employer
and allocated to Participants' accounts that the Participants may not elect to
receive in cash until distributed from the Plan, that are nonforfeitable when
made, and that are distributable only in accordance with the distribution
provisions that are applicable to Elective Deferrals and Qualified Matching
Contributions.
1.77 QUALIFIED PLAN Any pension, profit-sharing, stock bonus, or other plan
which meets the requirements of Code Section 401 and includes a trust exempt
from tax under Code Section 501(a) or any annuity plan described in Code Section
403(a).
1.78 QUALIFIED VOLUNTARY CONTRIBUTION A tax-deductible Voluntary Employee
Contribution which was permitted to be made for the tax years 1982 through 1986.
This type of contribution is no longer permitted to be made by a Participant.
This Plan shall accept such type of contribution if made in a prior Plan and
will open up on behalf of the Participant an appropriate recordkeeping account.
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1.79 REQUIRED AGGREGATION GROUP A group of plans including:
(a) each Qualified Plan of the Employer in which at least one Key
Employee participates or participated at any time during the
determination period (regardless of whether the plan has
terminated), and
(b) any other Qualified Plan of the Employer which enables a plan
described in (a) to meet the requirements of Code Sections
401(a)(4) or 410.
1.80 REQUIRED BEGINNING DATE The date on which a Participant is required to take
his or her first minimum distribution under the Plan. The rules are set forth at
paragraph 7.5.
1.81 REQUIRED CONTRIBUTIONS Employee after-tax contributions required as a
condition of participation in the Plan.
1.82 ROLLOVER CONTRIBUTION A contribution made by a Participant of an amount
distributed to such Participant from another Qualified Plan in accordance with
Code Sections 402(a)(5), (6), and (7).
1.83 SALARY DEFERRAL AGREEMENT An agreement between the Employer and a
participating Employee where the Employee authorizes the Employer to withhold a
specified percentage or dollar amount of his or her Compensation for deposit to
the Plan on behalf of such Employee.
1.84 SAVINGS INCENTIVE MATCH PLAN FOR EMPLOYEES (SIMPLE) A plan adopted under
Code Section 401(k)(11) or 408(p) under which eligible Employees are permitted
to make Elective Deferrals to a qualified plan or Individual Retirement Account.
1.85 SELF-EMPLOYED INDIVIDUAL An individual who has Earned Income for the
taxable year from the trade or business for which the Plan is established
including an individual who would have had Earned Income but for the fact that
the trade or business had no Net Profit for the taxable year.
1.86 SERVICE The period of current or prior employment with the Employer
including any imputed period of employment which must be counted under USERRA.
If the Employer maintains a plan of a predecessor employer, service for such
predecessor shall be treated as Service for the Employer. Service is determined
under an Hours Counting Method or Elapsed Time Method as selected by the
Employer in the Adoption Agreement.
1.87 SERVICE PROVIDER The individual or entity who may be retained by the Plan
Administrator on behalf of the Plan to provide specified administrative services
to the Plan.
1.88 SHAREHOLDER EMPLOYEE An Employee or officer who owns [or is considered as
owning within the meaning of Code Section 318(a)(1)], on any day during the
taxable year of an electing small business corporation (S Corporation), more
than 5% of such corporation's outstanding stock.
1.89 SIMPLIFIED EMPLOYEE PENSION PLAN A plan under which the Employer makes
contributions for eligible Employees pursuant to a written formula.
Contributions are made to an Individual Retirement Account which meets the
requirements of Code Section 408(k).
1.90 SPONSOR The institution and any of its affiliates or any successor or
assigns thereto identified in the Adoption Agreement who makes this Prototype
Plan and Trust/Custodial Account document available to adopting Employers.
1.91 SPOUSE The individual to whom a Participant is married, or was married in
the case of a deceased Participant who was married at the time of his or her
death. A former Spouse will be treated in the same manner as a Spouse to the
extent provided under a Qualified Domestic Relations Order as described in Code
Section 414(p).
1.92 SUPER TOP-HEAVY PLAN A Plan described at paragraph 1.95 under which the
Top-Heavy Ratio exceeds 90%.
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1.93 TAXABLE WAGE BASE For plans with an allocation formula which takes into
account the Employer's contribution under the Federal Insurance Contributions
Act (FICA), the contribution and benefit base in effect under the Social
Security Act (Code Section 203) at the beginning of the Plan Year.
1.94 TOP-HEAVY DETERMINATION DATE For the first Plan Year of the Plan, the last
day of that year. For any Plan Year subsequent to the first Plan Year, the last
day of the preceding Plan Year.
1.95 TOP-HEAVY PLAN For any Plan Year, the Employer's Plan is Top-Heavy if any
of the following conditions exist:
(a) if the Top-Heavy Ratio for the Employer's Plan exceeds 60% and
this Plan is not part of any Required Aggregation Group or
Permissive Aggregation Group of plans.
(b) if the Employer's Plan is a part of a Required Aggregation
Group of plans but not part of a Permissive Aggregation Group
and the Top-Heavy Ratio for the group of plans exceeds 60%.
(c) if the Employer's Plan is a part of a Required Aggregation
Group and part of a Permissive Aggregation Group of plans and
the Top-Heavy Ratio for the Permissive Aggregation Group
exceeds 60%.
1.96 TOP-HEAVY RATIO
(a) If the Employer maintains one or more Defined Contribution
plans (including any Simplified Employee Pension Plan) and the
Employer has not maintained any Defined Benefit Plan which
during the five-year period ending on the Determination
Date(s) has or has had accrued benefits, the Top-Heavy Ratio
for this Plan alone, or for the Required or Permissive
Aggregation Group as appropriate, is a fraction,
(1) the numerator of which is the sum of the account
balances of all Key Employees as of the Determination
Date(s) [including any part of any account balance
distributed in the 5-year period ending on the
Determination Date(s)], and
(2) the denominator of which is the sum of all account
balances [including any part of any account balance
distributed in the five-year period ending on the
Determination Date(s)], both computed in accordance
with 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.
(b) If the Employer maintains one or more Defined Contribution
Plans (including any Simplified Employee Pension Plan) and the
Employer maintains or has maintained one or more Defined
Benefit Plans which during the five-year period ending on the
Determination Date(s) has or has had any accrued benefits, the
Top-Heavy Ratio for any Required or Permissive Aggregation
Group, as appropriate, is a fraction, the numerator of which
is the sum of account balances under the aggregated Defined
Contribution Plan or Plans for all Key Employees, determined
in accordance with (a) above, and the Present Value of accrued
benefits under the aggregated Defined Benefit Plan or Plans
for all Key Employees as of the Determination Date(s), and the
denominator of which is the sum of the account balances under
the aggregated Defined Contribution Plan or Plans for all
Participants, determined in accordance with (a) above, and the
Present Value of accrued benefits under the Defined Benefit
Plan or Plans for all Participants as of the Determination
Date(s), all determined in accordance with 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 Ratio are increased for any distribution of an
accrued benefit made in the five-year period ending on the
Determination Date.
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25
(c) For purposes of (a) and (b) 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 who is not a Key Employee but who
was a Key Employee in a prior year, or who has not been
credited with at least one Hour of Service with any Employer
maintaining the Plan at any time during the five-year period
ending on the Determination Date, will be disregarded. The
calculation of the Top-Heavy Ratio, and the extent to which
distributions, rollovers, and transfers are taken into account
will be made in accordance with Code Section 416 and the
regulations thereunder. Qualified Voluntary 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 the method, if any, that uniformly applies for accrual
purposes under all Defined Benefit Plans maintained by the
Employer, or 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).
1.97 TOP-PAID GROUP The group consisting of the top 20% of Employees when ranked
on the basis of Compensation paid during such year. For purposes of determining
the number of Employees in the group (but not who is in it), Employees
identified in (a) through (d) may be excluded and Employees identified in (e)
through (f) shall be excluded:
(a) Employees who have not completed 6 months of Service by the
end of the year;
(b) Employees who normally work less than 17 1/2hours per week by
the end of the year;
(c) Employees who normally work not more than 6 months during any
year;
(d) Employees who have not attained age 21 by the end of the year;
(e) Employees included in a collective bargaining unit, covered by
an agreement between Employee representatives and the
Employer, where retirement benefits were the subject of good
faith bargaining, if they constitute at least 90% of the
Employer's workforce and the Plan covers only non-union
Employees; and
(f) Employees who are nonresident aliens and who receive no Earned
Income which constitutes income from sources within the United
States.
1.98 TRANSFER CONTRIBUTION A non-taxable transfer of a Participant's benefit
directly from a Qualified Plan to this Plan. This type of transfer does not
constitute constructive receipt of plan assets.
1.99 TRUST The assets of the Plan held by or in the name of the Trustee or
Custodian.
1.100 TRUSTEE The Trustee (who may be the Sponsor or an affiliate) named in the
Adoption Agreement, if any, or its successor serving from time to time.
1.101 USERRA The Uniform Services Employment and Reemployment Rights Act of
1994, as amended effective August 5, 1996.
1.102 VALUATION DATE The last day of the Plan Year and such other date(s) as
specified in the Adoption Agreement on which the fair market value of Plan
assets is determined. The Trustee and/or Custodian must also value the Trust
Fund on such other Valuation Dates as directed by the Plan Administrator or as
elected by the Employer in the Adoption Agreement.
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1.103 VESTED ACCOUNT BALANCE The aggregate value of the Participant's Vested
Account Balances derived from Employer and Employee contributions (including
Rollovers), whether vested before or upon death, including the proceeds of
insurance contracts, if any, on the Participant's life. The provisions of
Article VIII shall apply to a Participant who is vested in amounts attributable
to Employer contributions, Employee contributions (or both) at the time of death
or distribution.
1.104 VOLUNTARY CONTRIBUTION An after-tax Employee contribution made to the Plan
by or on behalf of a Participant.
1.105 WELFARE BENEFIT FUND Any fund that is part of a plan of the Employer, or
has the effect of a plan, through which the Employer provides welfare benefits
to Employees or their beneficiaries. For these purposes, Welfare Benefit means
any benefit other than those with respect to which Code Section 83(h) (relating
to transfers of property in connection with the performance of services), Code
Section 404 (relating to deductions for contributions to an Employees' trust or
annuity and Compensation under a deferred payment plan), Code Section 404A
(relating to certain foreign deferred compensation plans) apply. A "Fund" for
purposes of this paragraph, is any social club, voluntary employee benefit
association, supplemental unemployment benefit trust or qualified group legal
service organization described in Code Section 501(c)(7), (9), (17) or (20); any
trust, corporation, or other organization not exempt from income tax, or to the
extent provided in regulations, any account held for an Employer by any person.
1.106 YEAR OF SERVICE
(a) HOURS OF SERVICE METHOD - A 12-consecutive month period during
which an Employee is credited with not less than 1,000 (or
such lesser number as specified by the Employer in the
Adoption Agreement) Hours of Service.
(b) ELAPSED TIME METHOD - For purposes of determining either an
Employee's initial or continued eligibility to participate in
the Plan, or the nonforfeitable interest in the Participant's
account balance derived from Employer contributions, an
Employee will receive credit for the aggregate of all time
period(s) worked commencing with the Employee's first day of
employment or reemployment and ending on the date a Break in
Service begins. The first day of employment or reemployment is
the first day the Employee performs an Hour of Service for the
Employer. An Employee will also receive credit for any Period
of Severance of less than 12 consecutive months. Fractional
periods of a year will be expressed in terms of days.
Each Employee will share in Employer contributions for the
period beginning on the date the Employee commences
participation under the Plan and ending on the date on which
such Employee terminates employment with the Employer or is no
longer a member of an eligible class of Employees.
An Employer adopting the Elapsed Time Method is required to
credit periods of Service and, under the Service spanning
rules, certain periods of severance of 12 months or less.
Under the first Service spanning rule, if an Employee severs
from Service as a result of resignation, discharge or
retirement and then returns to Service within 12 months, the
Period of Severance is required to be taken into account. A
situation may arise in which an Employee is absent from
Service for any reason other than resignation, discharge,
retirement or death and during the absence a resignation,
discharge or retirement occurs. The second Service spanning
rule provides that, under such circumstances, the Plan is
required to take into account the period of time between the
severance from Service date (i.e., the date of resignation,
discharge or retirement) and the first anniversary of the date
on which the Employee was first absent, if the Employee
returns to Service on or before such first anniversary date.
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ARTICLE II
ELIGIBILITY REQUIREMENTS
2.1 PARTICIPATION
(a) Employees who meet the eligibility requirements in the
Adoption Agreement on the Effective Date of the Plan shall
become Participants as of the Effective Date of the Plan. If
elected in the Adoption Agreement, all Employees employed on
the Effective Date of the Plan may participate, even if they
have not satisfied the Plan's specified eligibility
requirements. Employees hired after the Effective Date of the
Plan, upon meeting the eligibility requirements, shall become
Participants on the Entry Date selected in the Adoption
Agreement. The Employee must satisfy the eligibility
requirements specified in the Adoption Agreement and be
employed on the Entry Date to become a Participant in the
Plan.
(b) Under a Nonstandardized Plan, in the event that an Employee
has satisfied the eligibility requirements, but is not
employed on the next Entry Date, such Employee will become a
Participant upon his or her rehire, if such individual is
rehired before incurring a Break In Service or Period of
Severance. If such individual incurs a Break in Service or
Period of Severance before his or her rehire, such individual
will be treated as a new Employee and will have to requalify
under the Plan's eligibility requirements. In the event an
Employee who is not a member of the eligible class of
Employees becomes a member of the eligible class, such
Employee shall participate immediately if such Employee has
satisfied the minimum age and Service requirements and would
have previously become a Participant had he or she been in the
eligible class. A former Participant will be eligible to
authorize Elective Deferrals and may make other Employee
contributions as permitted under the Plan as of the first
payroll period beginning after his or her date of rehire. A
former Participant shall again become a Participant with
respect to Employer related contributions on the next Entry
Date following the date on which the individual is rehired.
However, for purposes of Employer related contributions
determined after the Participant's Entry Date, Compensation
and Service shall be considered from his or her date of
rehire.
2.2 CHANGE IN CLASSIFICATION OF EMPLOYMENT In the event a Participant becomes
ineligible to participate because he or she is no longer a member of an eligible
class of Employees as elected by the Employer in the Adoption Agreement, such
Employee shall participate upon his or her return to an eligible class of
Employees. For this purpose, a Participant's Compensation and Service shall be
considered from the date of change. A former Participant must be eligible to
begin Elective Deferrals and/or other Employee contributions as of the first
payroll period beginning after the date of change of classification.
2.3 COMPUTATION PERIOD To determine Years of Service and Breaks in Service for
purposes of eligibility under the Hours of Service Method, the 12-consecutive
month period shall commence on the date on which an Employee first performs an
Hour of Service for the Employer, and each anniversary thereof. If however, the
eligibility period specified in the Adoption Agreement is one year or less and
the Employee fails to complete the hours requirement during his or her first
employment year, the second and succeeding 12-consecutive month periods shall
commence on the first day of the Plan Year beginning prior to the anniversary of
the date the Employee first performed an Hour of Service regardless of whether
the Employee is entitled to be credited with 1,000 (or such lesser number as
specified by the Employer in the Adoption Agreement) Hours of Service during his
or her first employment year.
2.4 EMPLOYMENT RIGHTS Participation in the Plan shall not confer upon a
Participant any employment rights, nor shall it interfere with the Employer's
right to terminate the employment of any Employee at any time.
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2.5 SERVICE WITH CONTROLLED GROUPS All Years of Service with other members of a
controlled group of corporations [as defined in Code Section 414(b)], trades or
businesses under common control [as defined in Code Section 414(c)], or members
of an affiliated service group [as defined in Code Section 414(m)] shall be
credited for purposes of determining an Employee's eligibility to participate.
2.6 LEASED EMPLOYEES A leased Employee, with respect to a Standardized Plan,
shall be treated as an Employee of the recipient Employer. Contributions or
benefits provided by the leasing organization which are attributable to services
performed for the recipient Employer shall be treated as provided by the
recipient Employer.
However, a Leased Employee shall not be considered an Employee of the recipient
if such Employee is covered by a money purchase pension plan sponsored by the
leasing organization providing:
(a) a non-integrated Employer contribution rate of at least 10% of
Compensation, [as defined in Code Section 415(c)(3) but
including amounts contributed by the Employer pursuant to a
salary reduction agreement, which are excludable from the
Employee's gross income under a cafeteria plan covered by Code
Section 125, a cash or deferred profit-sharing plan under Code
Section 401(k), a Simplified Employee Pension Plan under Code
Section 402(h)(1)(B) and a tax-sheltered annuity under Code
Section 403(b)],
(b) immediate participation, and
(c) full and immediate vesting.
This exclusion is only available if Leased Employees do not constitute more than
20% of the recipient's non-Highly Compensated work force.
The Plan Administrator must apply this paragraph 2.6 consistent with Code
Sections 414(n) and 414(o) and the regulations issued thereunder.
The Employer must specify in the Adoption Agreement the manner in which the Plan
will determine the allocation of Employer contributions and Participant
forfeitures on behalf of a Participant if the Participant is a Leased Employee
covered by a plan maintained by the leasing organization.
2.7 THRIFT PLANS If the Employer makes an election in the Adoption Agreement to
require Employee after-tax contributions to participate in this Plan, the
Employer shall notify each eligible Employee in writing of his or her
eligibility for participation at least 30 days prior to the appropriate Entry
Date. The Employee shall indicate his or her intention to join the Plan by
authorizing the Employer to withhold a percentage of his or her Compensation as
provided in the Plan. Such authorization shall be returned to the Employer at
least 10 days prior to the Employee's Entry Date. The Employee may decline
participation by so indicating on the enrollment form or by failure to return
the enrollment form to the Employer prior to the Employee's Entry Date. If the
Employee declines to participate, such Employee shall be given the opportunity
to join the Plan on any subsequent Entry Date.
2.8 TARGET BENEFIT PLANS If the Employer elects, they may establish a Target
Benefit Plan by executing either the Standardized or Nonstandardized Target
Benefit Plan Adoption Agreement. The Employer shall notify each eligible
Employee in writing of his or her eligibility for participation at least 30 days
prior to the appropriate Entry Date. The Employer will make contributions for
each participating Employee in level annual contributions which will fund the
Participant's target benefit at the Plan's Normal Retirement Age.
2.9 WAIVER OF PARTICIPATION In a Standardized Plan, it is not permitted for an
otherwise eligible Employee or Participant to elect not to participate in the
Plan. In a Nonstandardized Plans, an Employer may treat Employees who waive
participation in the Plan as a nondiscriminatory class of Employees who are
ineligible to participate therein by making the proper designation in the
Adoption Agreement. In a Nonstandardized Money Purchase Plan, such waivers must
not constitute cash or deferred arrangements [within the meaning of Code Section
401(k)] or they shall be ineffective. A waiver shall not be considered a cash or
deferred arrangement if it is irrevocable, applies to all Plans maintained by
the Employer, and is made prior to the date on which the Employee is first
eligible to participate in the Plan of the Employer. The Plan Administrator
shall establish uniform and
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Basic DC Plan Document #01 January 13, 1999
29
nondiscriminatory procedures as it deems necessary to carry out this provision
including but not limited to, rules prescribing the timing and filing of
elections not to participate.
An Employee or Participant continues to earn credit for each year of Eligibility
Service or Vesting Service he or she completes and his or her account (if any)
will share in the gains or losses of the Trust during the periods he or she
elects not to participate.
2.10 OMISSION OF ELIGIBLE EMPLOYEE If, in any Plan Year, and Employee who should
be included as a Participant in the Plan is erroneously omitted and discovery of
such omission is not made until after a contribution by his Employer for the
year has been made, the Employer shall make a subsequent contribution, if
necessary after the application of Section 4.3(e), so that the omitted Employee
receives a total amount which the said Employee would have received had he not
been omitted. Such contribution shall be made regardless of whether or not it is
deductible in whole or in part in any taxable year under applicable provisions
of the Code.
2.11 INCLUSION OF INELIGIBLE EMPLOYEE If, in any Plan Year, any person who
should not have been included as a Participant in the Plan is erroneously
included and discovery of such incorrect inclusion is not made until after a
contribution for the year has been made, the Employer shall not be entitled to
recover the contribution made with respect to such contribution. In such event,
the amount contributed with respect to the ineligible person shall constitute a
Forfeiture for the Plan Year in which the discovery is made.
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Basic DC Plan Document #01 January 13, 1999
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ARTICLE III
EMPLOYER CONTRIBUTIONS
3.1 CONTRIBUTION AMOUNT
(a) For all Plans other than Target Benefit Plans, the Employer
will make periodic contributions to the Plan in accordance
with the formula or formulas selected in the Adoption
Agreement.
(b) The Employer shall also make Matching, Top-Heavy Plan minimum
contributions and any other Employer contribution for the
benefit of Participants who are covered by USERRA. Employer
Matching Contributions under USERRA shall be made with respect
to the Plan Year for which the Participant exercises his or
her right to make-up Elective Deferrals and/or other Employee
contributions for prior years. Top-Heavy minimum contributions
and other Employer contributions for USERRA-protected Service
shall be made during the Plan Year in which the individual
returns to employment with the Employer. Employer
contributions required under USERRA are not increased or
decreased with respect to Plan investment earnings for the
period to which such contributions relate. The Employer's
contribution for any Plan Year shall be subject to the
limitations on allocations contained in Article X.
3.2 EXPENSES AND FEES The Employer may reimburse the Plan for all expenses and
fees incurred in the administration of the Plan or Trust and paid from the
assets of the Plan. Such expenses shall include, but shall not be limited to,
fees for professional services, recordkeeping services, printing and postage.
Brokerage commissions may not be reimbursed. If such expenses and fees are not
paid from the Plan, the Employer may pay such expenses and fees directly.
Reimbursement of any Plan fees will be considered Employer contributions subject
to Code Sections 404 and 415.
3.3 RESPONSIBILITY FOR CONTRIBUTIONS Neither the Trustee nor the Sponsor nor the
Custodian shall be required to determine if the Employer has made a contribution
or if the amount contributed from its general assets is in accordance with the
Adoption Agreement or the Code. The Employer shall have sole responsibility in
this regard. The Trustee shall be accountable solely for contributions actually
received within the limits of Article X.
3.4 RETURN OF CONTRIBUTIONS Contributions made to the Plan by the Employer shall
be irrevocable except as provided below:
(a) Any contribution forwarded to the Trustee or Custodian due to
a mistake of fact, provided that the contribution is returned
to the Employer within one year of the date of the
contribution.
(b) In the event that the Commissioner of Internal Revenue
determines that the Plan is not initially qualified under the
Internal Revenue Code, any contribution dependent on the
initial qualification by the Employer must be returned to the
Employer within one year after the date the initial
qualification is denied, but only if the application for the
qualification is made by the time prescribed by law for filing
the Employer's return for the taxable year in which the Plan
is adopted, or such later date as the Secretary of the
Treasury may prescribe.
(c) Contributions forwarded to the Trustee or Custodian are
presumed to be deductible and are conditioned on their
deductibility. Contributions which are determined by the
Internal Revenue Service to not be deductible will be returned
to the Employer.
3.5 MERGER OF ASSETS FROM ANOTHER PLAN The Employer may in its sole discretion
direct the Trustee to accept assets from another Defined Contribution Plan, or
to transfer assets to another Defined Contribution Plan, provided that such
transfer satisfies the requirements of Code Section 414(l) and the regulations
thereunder. Except with respect to elective transfers under Code Section
411(d)(6), all benefits which are protected under Code Section 411(d)(6) shall
be preserved in the Plan accepting the transfer. The Employer shall have the
right to refuse to
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Basic DC Plan Document #01 January 13, 1999
31
accept or transfer assets for any reason. The Trustee shall have the right to
refuse to accept an in-kind transfer of assets. Nothing in this paragraph 3.5
shall give the Trustee the right to refuse to make a direct transfer of an
Eligible Rollover Distribution if requested to do so by a Participant in
accordance with paragraph 4.4.
3.6 CONTRIBUTION AMOUNT FOR A TARGET BENEFIT PLAN The Employer's annual
contribution to a Target Benefit Plan shall be determined by a stated benefit
formula and corresponding factor tables contained in the Adoption Agreement and
shall be allocated to Participants as indicated in paragraph 5.3. This
notwithstanding, the Employer's contribution for any Plan Year shall be subject
to the limitations on allocations contained in Article X and shall not be less
than the minimum contribution required at Article XV for Top-Heavy Plans. The
annual Employer contribution necessary to fund the stated benefit with respect
to a Participant will be determined each year as follows:
(a) STEP 1: PRESENT VALUE OF BENEFIT - If the Participant has not
yet reached Normal Retirement Age, calculate the present value
of the stated benefit by multiplying the stated benefit by the
factor that is the product of (i) the applicable factor in
Table I (if attained age is less than 65) or Table IA (if
attained age is greater than or equal to 65), multiplied by
(ii) the applicable factor in Table III. If the Participant is
at or beyond Normal Retirement Age, calculate the present
value of the stated benefit by multiplying the stated benefit
by the factor in Table IV corresponding to that Normal
Retirement Age.
(b) STEP 2: THEORETICAL RESERVE - The Theoretical Reserve is
determined according to (1) and (2) below:
(1) Initial Theoretical Reserve. A Participant's
Theoretical Reserve as of the last day of the
Participant's first year of projected participation
(year 1) is zero. However, if this Plan is a Prior
Safe-Harbor Plan with a stated benefit formula that
takes into account Plan Years prior to the first Plan
Year and this Plan satisfies the safe-harbor in
Regulations Section 1.401(a)(4)-8(b)(3)(C), the
Initial Theoretical Reserve is determined as follows:
(i) Calculate as of the last day of the Plan
Year immediately preceding year 1, the
present value of the stated benefit using
the actuarial assumptions, the provisions of
the Plan, and the Participant's Compensation
as of such date. For a Participant who is
beyond Normal Retirement Age during year 1,
the stated benefit will be determined using
the actuarial assumptions, the provisions of
the Plan, and the Participant's Compensation
as of such date, except that the straight
life annuity factor used in that
determination will be the factor applicable
for the Participant's Normal Retirement Age.
(ii) Calculate as of the last day of the Plan
Year immediately preceding year 1 the
present value of future Employer
contributions, i.e., the contributions due
each Plan Year using the actuarial
assumptions, the provisions of the Plan,
(disregarding those provisions of the Plan
providing for the limitations of Code
Section 415 or the minimum contributions
under Code Section 416), and the
Participant's Compensation as of such date,
beginning with year 1 through the end of the
Plan Year in which the Participant attains
Normal Retirement Age.
(iii) Subtract the amount determined in (ii) from
the amount determined in (i).
(2) Accumulate the Initial Theoretical Reserve determined
in (1) and the Employer contribution (as limited by
Code Section 415, without regard to any required
minimum contributions under Code Section 416) for
each Plan Year beginning in year 1 up through the
last day of the current Plan Year (excluding
contributions, if any, for the current Plan Year)
using the Plan's interest assumption in effect for
each such year. In any Plan Year following the Plan
Year in which the Participant attains Normal
Retirement Age, the accumulation is calculated
assuming an interest rate of 0%.
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Basic DC Plan Document #01 January 13, 1999
32
For purposes of determining the level of annual Employer
contribution necessary to fund the stated benefit, the
calculations in a (1) and (2) above will be made as of the
last day of each Plan Year, on the basis of the Participant's
age on the Participant's last birthday, using the interest
rate in effect on the last day of the prior year.
(c) STEP 3: UNFUNDED AMOUNT - The excess, if any, of the amount
determined in Step 1 over the amount determined in Step 2.
(d) STEP 4: CONTRIBUTION - Amortize the result in Step 3 by
multiplying it by the applicable factor from Table II. For the
Plan Year in which the Participant attains Normal Retirement
Age and for any subsequent Plan Year, the applicable factor is
1.0.
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Basic DC Plan Document #01 January 13, 1999
33
ARTICLE IV
EMPLOYEE CONTRIBUTIONS
4.1 VOLUNTARY CONTRIBUTIONS A Participant may make Voluntary Contributions to
the Plan established hereunder if so elected by the Employer in the Adoption
Agreement. Such contributions must be made in a uniform and nondiscriminatory
manner. Such contributions are subject to the limitations on Annual Additions
and are subject to antidiscrimination testing. Under any Plan which can be
established hereunder and if permitted by the Plan's Loan Policy Document, an
Employee may repay with after-tax dollars a defaulted loan and may buy-back
amounts previously forfeited even if Voluntary Contributions are not permitted
in the Plan. These amounts shall not be treated as contributions and shall not
be subject to the limitations on Annual Additions or ACP testing.
4.2 QUALIFIED VOLUNTARY CONTRIBUTIONS A Participant may no longer make Qualified
Voluntary Contributions to the Plan. Amounts already contributed may remain in
the Plan until distributed to the Participant. Such amounts will be maintained
in a separate account which will be nonforfeitable at all times. The account
will share in the gains and losses of the Trust in the same manner as described
at paragraph 5.5 of the Plan. No part of the Qualified Voluntary Contribution
account will be used to purchase life insurance. Subject to Article VIII, Joint
and Survivor Annuity Requirements (if applicable), the Participant may withdraw
any part of the Qualified Voluntary Contribution account by making a written
application to the Plan Administrator.
4.3 ROLLOVER CONTRIBUTIONS Unless elected otherwise in the Adoption Agreement, a
Participant/Employee may make a Rollover Contribution to a Defined Contribution
Plan established hereunder of all or any part of an amount distributed or
distributable to him or her from a Qualified Plan or an Individual Retirement
Account (IRA) qualified under Code Section 408 where the IRA was used as a
conduit from a Qualified Plan provided:
(a) the amount distributed to the Participant/Employee is
deposited to the Plan no later than the sixtieth day after
such distribution was received by the Participant/Employee,
(b) the amount distributed is not one of a series of substantially
equal periodic payments made for the life (or life expectancy)
of the Participant or the joint lives (or joint life
expectancies) of the Participant and the Participant's
Designated Beneficiary, or for a specified period of ten years
or more,
(c) the amount distributed is not a required minimum distribution
required under Code Section 401(a)(9),
(d) if the amount distributed included property, such property is
rolled over only upon the Trustee/Custodian's approval, or if
sold, the proceeds of such property may be rolled over,
(e) the amount distributed would otherwise be includible in gross
income (determined without regard to the exclusion for net
unrealized appreciation with respect to Employer securities),
and
(f) the amount rolled over does not include any amounts
contributed on an after-tax basis by the Participant to the
Qualified Plan.
The Plan Administrator shall be held solely responsible for determining the tax
free status of any Rollover Contribution made to this Plan, and the
Trustee/Custodian shall have no responsibility for any such determination.
4.4 ELECTIVE TRANSFER CONTRIBUTIONS
(a) Unless elected otherwise in the Adoption Agreement, a
Participant or an Employee may arrange for the direct transfer
of his or her entire benefit from a Qualified Plan to this
Plan. Such transfer shall be made in cash and/or in-kind. The
Employer and/or the Trustee/Custodian shall have the right to
refuse to accept a transfer in-kind if such assets do not
comply operationally, would result
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Basic DC Plan Document #01 January 13, 1999
34
in a prohibited transaction, are not readily marketable or are
not compatible with the Employer's investment policy
objectives. For accounting and recordkeeping purposes,
Transfer Contributions shall be treated in the same manner as
Rollover Contributions.
(b) An Employer maintaining a Safe-Harbor Profit Sharing Plan in
accordance with the provisions of paragraph 8.7, acting in a
nondiscriminatory manner, may in its sole discretion refuse to
allow transfer contributions to its profit-sharing plan, if
such contributions are directly or indirectly being
transferred from a Defined Benefit Plan, a money purchase plan
(including a Target Benefit Plan), a stock bonus plan, or
another profit-sharing plan which would otherwise provide for
a life annuity form of payment to the Participant.
(c) In the event the Employer accepts a Transfer Contribution from
a Plan in which the Participant/Employee was directing the
investment of his or her account, the Employer may, if the
Employer determines that it is appropriate and not in
violation of the nondiscrimination rules under Regulation
Section 1.401(a)(4)-4, permit the Employee to continue to
direct his or her investments in accordance with paragraph
14.9 with respect only to such Transfer Contribution.
4.5 TRUSTEE-TO-TRUSTEE TRANSFER CONTRIBUTION
(a) The Employer may arrange for the direct transfer of a
Participant's benefit from a Qualified Plan to this Plan. For
accounting and recordkeeping purposes, Transfer Contributions
shall be treated in the same manner as Rollover Contributions.
(b) In the event the Employer accepts a Transfer Contribution from
a Plan in which the Participant/Employee was directing the
investments of his or her account, the Employer may, if
appropriate and not in violation of the nondiscrimination
rules under Regulation Section 1.401(a)(4)-4, permit the
Employee to continue to direct his or her investments in
accordance with paragraph 14.9 with respect only to such
Transfer Contribution.
(c) 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 voluntary
Employee contributions).
4.6 ELECTIVE DEFERRALS
(a) A Participant may enter into a Salary Deferral Agreement with
the Employer authorizing the Employer to withhold a portion of
such Participant's Compensation not to exceed the dollar limit
under Code Section 402(g), as adjusted under Code Section
415(d), for the Applicable Calendar Year, or the percentage of
Compensation specified in the Adoption Agreement. Any such
contribution shall be credited to the Employee's Elective
Deferral account. A Participant may terminate deferrals at any
time and may amend his or her Salary Deferral Agreement to
increase or decrease the deferral percentage as provided in
the Adoption Agreement. The Participant shall notify the Plan
Administrator of any change in his or her deferral election in
writing or in such other form as permitted by the Plan
Administrator. The Employer may, notwithstanding any limit to
the contrary, in the Adoption Agreement, limit the maximum
deferral percentage for Highly Compensated Employees by the
issuance of advance notice to such Employees. If a Participant
terminates his or her agreement, such Participant shall be
permitted to put a new Salary Deferral Agreement into effect
as provided in the Adoption Agreement. The Employer may also
amend or terminate said agreement on written notice to the
Participant, if required to maintain the qualified status of
the Plan.
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Basic DC Plan Document #01 January 13, 1999
35
(b) If a Participant has not authorized the Employer to withhold
the maximum annual deferral amount pursuant to Code Section
402(g) and desires to increase the total amount withheld for a
Plan Year, the Participant may authorize the Employer to
withhold a supplemental amount up to 100% of his or her
Compensation for one or more pay periods, if allowed and
approved by the Employer. In no event may the amounts withheld
under the Salary Deferral Agreement plus the supplemental
withholding exceed the lesser of 25% of a Participant's
Compensation for such Plan Year or any other limitation
elected in the Adoption Agreement by the Employer.
(c) Elective Deferrals shall be deposited as soon as
administratively feasible after being withheld from the
Participant's pay, but in no event later than 15 business days
after the end of the month during which they were withheld.
4.7 AUTOMATIC ENROLLMENT If the Employer so elects in the Adoption Agreement,
each Employee eligible under the Employer's Code Section 401(k) cash or deferred
arrangement shall automatically become a Participant in the Plan as of the first
Entry Date after satisfying the Plan's eligibility requirements. Any Elective
Deferrals contributed to the Plan on behalf of an Employee pursuant to this
provision shall be invested in the investment fund indicated in the Adoption
Agreement until such time as other investment elections are received by the
Employee. Such Employee may elect not to defer Compensation, or to change the
amount of Compensation that will be deferred by filing a written notice with the
Plan Administrator stating their election. Prior to an Employee's automatic
enrollment becoming effective, the Plan Administrator will provide such Employee
with appropriate guidance as to the procedures then in effect, for the Employee
to make the alternative elections referenced above. Each Employee deferring
Compensation pursuant to this paragraph shall be deemed to have consented to an
Elective Deferral contribution in the amount specified by the Employer in the
Adoption Agreement unless he/she has filed an election to the contrary with the
Plan Administrator pursuant to the Plan's administrative procedures.
4.8 REQUIRED CONTRIBUTIONS If the Employer so elects in the Adoption Agreement,
each eligible Participant shall be required to make Employee after-tax
contributions to the Plan. Such contributions shall be withheld from the
Employee's Compensation and shall be transmitted by the Employer to the
Trustee/Custodian as agreed between the Employer and the Trustee/Custodian. A
Participant may discontinue participation or change his or her contribution
percentage as provided in the Adoption Agreement. If a Participant discontinues
his or her contributions, such Participant may not again authorize such
contributions until a change election is permitted in the Adoption Agreement. A
Participant may voluntarily change his or her contribution percentage as
provided in the Adoption Agreement. The Employer may reduce a Participant's
deferral percentage if required to satisfy the ACP test.
4.9 MAKE-UP CONTRIBUTIONS UNDER USERRA A Participant who has the right to
make-up Elective Deferrals, Voluntary Contributions and/or Required
Contributions under USERRA shall be permitted to increase his or her deferral
election with respect to a make-up year without regard to any provision limiting
contributions for such Plan Year. Make-up contributions shall be limited to the
maximum amount permitted under the Plan and the statutory limitations applicable
with respect to the make-up year. Employee-related make-up contributions must be
made within the time period beginning on the date of reemployment and continuing
for the lesser of five years or three times the period of military service.
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Basic DC Plan Document #01 January 13, 1999
36
ARTICLE V
PARTICIPANT ACCOUNTS
5.1 SEPARATE ACCOUNTS The Plan Administrator or individual or institution
appointed by the Plan Administrator shall establish a separate recordkeeping
account for each Participant showing the fair market value of his or her Plan
benefits. Each Participant's account shall be separated for recordkeeping
purposes into the following sub-accounts:
(a) Employer contributions:
(1) Matching Contributions
(2) Qualified Matching Contributions
(3) Qualified Non-Elective Contributions
(4) Discretionary Contributions
(b) Employee contributions:
(1) Voluntary Contributions
(2) Qualified Voluntary Contributions
(3) Elective Deferrals
(4) Required Contributions
(5) Rollover and Transfer Contributions
5.2 ALLOCATION DATE Individual Participant recordkeeping accounts are updated in
accordance with paragraph hereof as of each Allocation or Valuation Date or such
other date as elected by the Employer in the Adoption Agreement. Plan
Administrators utilizing a daily valuation system for Participant recordkeeping
purposes shall process for any contributions, distributions, investment income
or loss, investment transactions (including a purchase or sale of an investment
alternative) and any other transactions which affect a Participant on a daily
basis or when a transaction occurs. Plan Administrators utilizing a balance
forward valuation system for Participant recordkeeping purposes will process
contributions, distributions, investment income or loss, investment transactions
(including a purchase or sale of an investment alternative) and any other
transactions at the Plan level on the Allocation or Valuation Date specified in
the Adoption Agreement. Individual Participant recordkeeping accounts will be
updated within the allocation period on the date or dates determined by the Plan
Administrator with respect to contributions and distributions. Investment
earnings will be allocated at the end of the allocation period. Any other
transactions which affect Participant accounts will be posted or allocated to
individual Participant accounts on the next following Allocation Date unless the
Plan Administrator elects, in a uniform and nondiscriminatory manner, to
allocate such transactions as they occur. The Employer may elect to utilize a
daily valuation system for a portion of the Plan and a balance forward valuation
system for the balance of the Plan.
5.3 ALLOCATIONS TO PARTICIPANT ACCOUNTS As of each Allocation or Valuation Date
elected by the Employer in the Adoption Agreement and/or on any date within the
allocation period selected by the Employer, each Participant's account shall be
adjusted to reflect:
(a) the Participant's share of the Employer's contribution and
forfeitures as determined in the Adoption Agreement,
(b) any Employee contributions,
(c) any repayment of amounts previously distributed to a
Participant upon a separation from Service and repaid by the
Participant since the last Allocation or Valuation Date, and
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Basic DC Plan Document #01 January 13, 1999
37
(d) the Participant's proportionate share of any investment
earnings and increase in the fair market value of the Trust
since the last Allocation Date.
The Employer shall deduct from each account:
(e) any withdrawals or payments made from the Participant's
account since the last Allocation Date,
(f) the Participant's proportionate share of any decrease in the
fair market value of the Trust since the last Allocation Date,
and
(g) the Participant's proportionate share of any fees and expenses
paid from the Plan.
5.4 ALLOCATING EMPLOYER CONTRIBUTIONS
(a) The Employer's contribution shall be allocated to Participants
in accordance with the allocation formula selected by the
Employer in the Adoption Agreement and the minimum
contribution for Top-Heavy Plans. Employer contributions shall
be allocated to all Participants eligible to receive a
contribution as provided in the Adoption Agreement.
(b) Notwithstanding any provision of this Plan to the contrary,
Participants will accrue the right to share in allocations of
Employer contributions with respect to periods of qualified
military service as provided in Code Section 414(u).
(c) Unless otherwise specified in the Adoption Agreement, at the
end of each Plan Year the Plan Administrator shall not
redetermine any Matching Contribution for each Participant
based on his or her eligible annual Compensation. If
specifically selected in the Adoption Agreement, any
Participant for whom any Matching Contribution has not been
sufficiently made in accordance with the Matching Contribution
formula elected by the Employer shall receive an additional
Matching Contribution so that the total annual deferrals
reflected as a percentage of eligible annual Compensation are
matched in accordance with the formula elected by the
Employer.
5.5 ALLOCATING INVESTMENT EARNINGS AND LOSSES
(a) DAILY VALUATION SYSTEM - Account balances are adjusted to
reflect actual income received and investment gains and losses
based on the closing price of Plan assets as determined on the
most recent day securities were traded on the New York Stock
Exchange or any other securities market. Investment earnings
are determined separately for each investment alternative
offered under the Plan.
(1) The value of a Participant's account invested in a
mutual fund will equal the value of a share in such
fund multiplied by the number of shares credited to
the Participant's account.
(2) In the case of any pooled investment vehicle, gains
or losses on the pooled investment vehicle will be
allocated among the Participant's accounts in
proportion to the value of each Participants's
account invested in that investment vehicle
immediately prior to the allocation date, and the
gain or loss attributed to each investment vehicle
will be credited to or charged against the
Participant's account. Alternatively, the Plan
Administrator or his designate may establish unit
values for each pooled investment vehicle offered
under the Plan in accordance with uniform procedures
established by the Plan Administrator for this
purpose. The value of the portion of a Participant's
account invested in a pooled investment vehicle will
equal the value of a unit in such investment vehicle
multiplied by the number of units credited to the
account.
(3) In the case of any investment that is held
specifically for a Participant's account, any gain or
loss on such investment will be charged or credited
to that Participant's account.
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Basic DC Plan Document #01 January 13, 1999
38
If Participant investment direction is not offered, each
Participant's account shall be credited with its proportionate
share of the income and investment gains or losses of the
Trust for the day or period since securities were last traded
on a national securities market or valued.
Any investment gain or loss of the Trust that is not directly
attributable to the investment of the account of any
Participant (including, for example, any "float" earned on the
disbursement account established for the Plan and not treated
as part of the compensation of the Trustee/Custodian or paying
agent for the Plan, and any 12b-1 or similar fees paid to the
Plan) will be applied to pay administrative expenses of the
Plan, with any excess remaining at the close of the Plan Year
being allocated among the Participant's accounts in accordance
with the procedure established by the Plan Administrator for
this purpose.
(b) BALANCE FORWARD VALUATION SYSTEM - Account balances are
adjusted to reflect actual income and investment gains and
losses from the period beginning on the day following the last
Allocation Date and ending on the current Allocation or
Valuation Date. Each Participant's account shall receive a
proportionate share of the actual income and investment gains
and losses during the period. The value of accounts for
allocation purposes shall be based on the value of all active
Participant accounts (other than accounts with segregated
investments) as of the last Allocation or Valuation Date less
withdrawals, distributions and expenses plus any contributions
including Elective Deferrals if any, paid from the Trust since
the last Allocation or Valuation Date. Investment earnings
shall be credited to all Participant accounts having a balance
on the Allocation or Valuation Date regardless of the vested
status of such account and regardless of the Participant's
employment status. The Plan Administrator shall also have the
right to adopt an alternative procedure for allocating income
and investment gains and losses provided that such alternative
procedure is uniform and does not discriminate in favor of
Highly Compensated Employees. Any change in procedure shall be
effective as of the next following Allocation Date or
Valuation Date or such other date as agreed to by the Employer
and the Plan Administrator. Accounts with segregated
investments shall receive only the income or loss on such
segregated investments. Investment earnings are determined
separately for each investment alternative offered under the
Plan.
(1) The value of a Participant's account invested in a
mutual fund will equal the value of a share in such
fund multiplied by the number of shares credited to
the Participant's account.
(2) In the case of any pooled investment vehicle, gains
or losses on the pooled investment vehicle will be
allocated among the Participant's accounts in
proportion to the value of each Participants's
account invested in that investment vehicle
immediately prior to the Allocation or Valuation
Date, and the gain or loss attributed to each
investment vehicle will be credited to or charged
against the Participant's account. Alternatively, the
Plan Administrator or his designate may establish
unit values for each pooled investment vehicle
offered under the Plan in accordance with uniform
procedures established by the Plan Administrator for
this purpose. The value of the portion of a
Participant's account invested in a pooled investment
vehicle will equal the value of a unit in such
investment vehicle multiplied by the number of units
credited to the account.
(3) In the case of any investment that is held
specifically for a Participant's account, any gain or
loss on such investment will be charged or credited
to that Participant's account.
If Participant investment direction is not offered, each
Participant's account shall be credited with its proportionate
share of the income and investment gains or losses of the
Trust for the day or period since securities were last traded
on a national securities market or valued.
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Basic DC Plan Document #01 January 13, 1999
39
Any investment gain or loss of the Trust that is not directly
attributable to the investment of the Account of any
Participant (including, for example, any "float" earned on the
disbursement account established for the Plan and not treated
as part of the compensation of the Trustee or paying agent for
the Plan, and any 12b-1 or similar fees paid to the Plan) will
be applied to pay administrative expenses of the Plan, with
any excess remaining at the close of the Plan Year being
allocated among the Participant's accounts in accordance with
the procedure established by the Plan Administrator for this
purpose.
5.6 ALLOCATION ADJUSTMENTS The Plan Administrator or his designate, if
applicable, shall have the right to redetermine the value of Participant
accounts if a previous allocation was performed incorrectly. Such
redetermination shall be made without regard to the reason for the incorrect
allocation. Such reasons may include, but are not limited to, incorrect
contribution or Employee information provided by the Employer or representative
of the Employer, incorrect valuation of Plan assets, incorrect determination of
investment income and gains or losses, improper interpretation of the Plan's
allocation formulas or procedures, erroneous omission of Top-Heavy minimum
contributions and failure to transmit, receive or interpret amendments to the
allocation formulas, methods or procedures. Subject to express limits that may
be imposed under the Code, the Plan Administrator reserves the right to delay
the processing of any contribution, distribution or other transaction for any
legitimate business reason (including, but not limited to, failure of systems or
computer programs, failure of means of transmission of data, force majeure, the
failure of any service provider to timely receive values or prices, or to
correct for its errors omissions or the errors or omissions of any service
provider). After having made any necessary adjustments, the Plan Administrator
or his designate, if applicable, shall issue either revised or adjusted
statements to Participants with an explanation of the allocation adjustments.
5.7 PARTICIPANT STATEMENTS The Plan Administrator shall prepare a statement for
each Participant not less than annually as of the close of the Plan Year.
Statements may be prepared more frequently as agreed between the Plan
Administrator and the Recordkeeper or other entity responsible for the
maintenance of Plan records or for valuing Plan assets. Each statement shall
show the additions to and subtractions from the Participant's account for the
period since the last such statement and shall show the fair market value of the
Participant's account as of the current statement date.
5.8 CHANGES IN METHOD OF VALUING PARTICIPANTS' ACCOUNTS If necessary or
appropriate, the Plan Administrator may establish different or additional
uniform and nondiscriminatory procedures for determining the fair market value
of Participant's accounts under the Plan.
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Basic DC Plan Document #01 January 13, 1999
40
ARTICLE VI
RETIREMENT BENEFITS AND DISTRIBUTIONS
6.1 NORMAL RETIREMENT BENEFITS A Participant shall be entitled to receive the
balance held in his or her account upon attaining Normal Retirement Age or at
such earlier dates as the provisions of this Article VI may permit. If a
Participant elects to continue working past his or her Normal Retirement Age, he
or she will continue as an active Participant. Unless the Employer elects
otherwise in the Adoption Agreement, distribution shall be made to such
Participant at his or her request prior to his or her actual retirement.
Settlement shall be made in the normal form, or if elected, in one of the
optional forms of payment provided below.
6.2 EARLY RETIREMENT BENEFITS An Early Retirement benefit may be available if
elected in the Adoption Agreement to individuals who meet the age and Service
requirements specified in the Adoption Agreement. An individual who meets the
Early Retirement Age requirements will become fully vested, regardless of any
vesting schedule which otherwise might apply. If a Participant separates from
Service with a nonforfeitable benefit before satisfying the age requirements,
but after having satisfied the Service requirement, the Participant will be
entitled to elect an Early Retirement benefit upon satisfaction of the age
requirement.
6.3 BENEFITS ON TERMINATION OF EMPLOYMENT
(a) If a Participant terminates employment prior to Normal
Retirement Age, such Participant shall be entitled to receive
the vested balance held in his or her account payable at
Normal Retirement Age in the normal form, or if elected, in
one of the other forms of payment provided hereunder. If
applicable, the Early Retirement benefit provisions may be
elected. Notwithstanding the preceding, a former Participant
may, if allowed in the Adoption Agreement, make application to
the Employer requesting early payment of any deferred vested
and nonforfeitable benefit due.
(b) If a Participant terminates employment, and the value of the
Participant's Vested Account Balance derived from Employer and
Employee contributions is not greater than $5,000, the Plan
Administrator may require the Participant to receive a lump
sum distribution of the value of the entire vested portion of
such account balance and the nonvested portion will be treated
as a forfeiture. The Plan Administrator shall continue to
follow a consistent and nondiscriminatory policy, as may be
established, regarding immediate cash-outs of Vested Account
Balances.
(c) For purposes of this Article, if the value of a Participant's
Vested Account Balance is zero, the Participant shall be
deemed to have received a distribution of such Vested Account
Balance immediately following termination. If the Participant
is reemployed prior to incurring five consecutive one-year
Breaks in Service, he or she will be deemed to have
immediately repaid such distribution. Notwithstanding the
above, if the Employer maintains or has maintained a policy of
not distributing any amounts until the Participant's Normal
Retirement Age, the Employer can continue to uniformly apply
such policy.
(d) If a Participant terminates employment with a Vested Account
Balance derived from Employer and Employee contributions in
excess of $5,000, and elects (with his or her Spouse's
consent, if required) to receive 100% of the value of his or
her Vested Account Balance in a lump sum, the nonvested
portion will be treated as a forfeiture. The Participant (and
his or her Spouse, if required) must consent to any
distribution when the Vested Account Balance described above
exceeds $5,000.
(e) If a Participant who is not 100% vested receives or is deemed
to receive a distribution pursuant to this paragraph and
resumes employment covered under this Plan, the Participant
shall have the right to repay to the Plan the full amount of
the distribution attributable to both Employer contributions
and Elective Deferrals on or before the earlier of the date
that the Participant incurs five consecutive one-year Breaks
in Service following the date of distribution or five years
after
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Basic DC Plan Document #01 January 13, 1999
41
the first date on which the Participant is subsequently
reemployed. In such event, the Participant's account shall be
restored to the value thereof at the time the distribution was
made. The account may be further increased by the Plan's
income and investment gains and/or losses on the undistributed
amount from the date of the distribution to the date of
repayment.
(f) A Participant shall have the option to postpone payment of his
or her Plan benefits until his or her Required Beginning Date
if the Participant's Vested Account Balance derived from
Employer and Employee contributions is not greater than
$5,000. Any balance in a Participant's account resulting from
his or her Employee contributions listed at paragraph 5.1(b)
hereof not previously withdrawn, if any, may be withdrawn by
the Participant immediately following separation from Service.
(g) If a Participant ceases to be an active Employee as a result
of a Disability, such Participant shall have the right to make
an application for a disability retirement benefit payment.
The Participant's account balance will be deemed "immediately
distributable" as set forth in paragraph 6.4, and will be
fully vested pursuant to paragraph 9.2.
6.4 RESTRICTIONS ON IMMEDIATE DISTRIBUTIONS
(a) An account balance is immediately distributable if any part of
the account balance could be distributed to the Participant
(or Surviving Spouse) before the Participant attains (or would
have attained if not deceased) the later of the Normal
Retirement Age or age 62.
(b) If the value of a Participant's Vested Account Balance derived
from Employer and Employee contributions exceeds $5,000, and
the account balance is immediately distributable, the
Participant and his or her Spouse (or where either the
Participant or the Spouse has died, the survivor) must consent
to any distribution of such account balance. The consent of
the Participant and the Spouse shall be obtained in writing by
the Plan Administrator within the 90-day period ending on the
Annuity Starting Date, which is the first day of the first
period for which an amount is paid as an annuity or any other
form. The Plan Administrator shall notify the Participant and
the Participant's Spouse of the right to defer any
distribution until the Participant's account balance is no
longer immediately distributable. Such notification shall
include a general description of the material features, and an
explanation of the relative values of, the optional forms of
benefit available under the Plan in a manner that would
satisfy the notice requirements of Code Section 417(a)(3), and
shall be provided no less than 30 days and no more than 90
days prior to the Annuity Starting date.
If the distribution is one to which Code Sections 401(a)(11)
and 417 do not apply, such distributions may commence less
than 30 days after the notice required under Regulation
Section 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 30 days after receiving the notice
to consider the decision of whether or not to elect a
distribution (and, if applicable, a particular
distribution option), and
(2) the Participant after receiving the notice,
affirmatively elects a distribution. If a
distribution is one to which Code Section 417 does
apply, the distribution may commence less than 30
days, but not less than 7 days after the notice
required under Regulation Section 1.411(a)-11-(c) is
given, provided that the conditions of sub-paragraphs
(1) and (2) above are satisfied with regard to both
the Participant and the Participant's Spouse.
(c) Notwithstanding the foregoing, only the Participant need
consent to the commencement of a distribution in the form of a
Qualified Joint and Survivor Annuity while the account balance
is immediately distributable. Furthermore, if payment in the
form of a Qualified Joint and Survivor Annuity is not required
with respect to the Participant pursuant to paragraph 8.7 of
the Plan, only the Participant need consent to the
distribution of an account balance that is immediately
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Basic DC Plan Document #01 January 13, 1999
42
distributable. Neither the consent of the Participant nor the
Participant's Spouse shall be required to the extent that a
distribution is required to satisfy Code Section 401(a)(9) or
Code Section 415 or constitutes Excess Deferrals, Excess
Contributions or Excess Aggregate Contributions. In addition,
upon termination of this Plan if the Plan does not offer an
annuity option (purchased from a commercial provider), the
Participant's account balance may, without the Participant's
consent, be distributed to the Participant or transferred to
another Defined Contribution Plan [other than an employee
stock ownership plan as defined in Code Section 4975(e)(7)]
within the same controlled group.
6.5 NORMAL AND OPTIONAL FORMS OF PAYMENT The normal form of payment for a
profit-sharing plan satisfying the requirements of paragraph 8.7 hereof shall be
a lump sum with no option for annuity payments. For all other plans, the normal
form of payment hereunder is the normal form of payment indicated in the
Adoption Agreement. A Participant whose Vested Account Balance derived from
Employer and Employee contributions exceeds $5,000 shall (with the consent of
his or her Spouse) have the right to receive his or her benefit in a lump sum or
in installments if permitted in the Adoption Agreement. Installment payments
need not be equal or substantially equal until such time as the individual
reaches his or her Required Beginning Date. Installment payments which are
intended to be equal or substantially equal can be made monthly, quarterly,
semi-annually or annually based on any period not extending beyond the Joint and
Survivor life expectancy of the Participant and his or her Designated
Beneficiary.
Benefits payable in the form of a lump sum may be distributed in cash or in-kind
at the Participant's request. In-kind distributions are only available with
respect to assets which can be distributed in-kind. Benefits payable in the form
of installments shall be paid in cash.
The normal form of payment shall be automatic, unless the Participant files a
written request with the Employer prior to the date on which the benefit is
automatically payable, electing another option available under the Plan. No
amendment to the Plan may eliminate one of the optional distribution forms
described above.
6.6 COMMENCEMENT OF BENEFITS
(a) Unless the Participant elects otherwise, distribution of
benefits will begin no later than the 60th day after the close
of the Plan Year in which the latest of the following events
occurs:
(1) the Participant attains age 65 (or Normal Retirement
Age if earlier),
(2) the 10th anniversary of the year in which the
Participant commenced participation in the Plan, or
(3) the Participant terminates Service with the Employer.
(b) Notwithstanding the foregoing, the failure of a Participant
and Spouse (if necessary) to consent to a distribution while a
benefit is immediately distributable within the meaning of
paragraph 6.4 hereof, shall be deemed an election to defer
commencement of payment of any benefit sufficient to satisfy
this paragraph.
6.7 CLAIMS PROCEDURES Upon retirement, death, severance of employment, or any
and all types of claims regarding benefits under the Plan, the Participant or
his or her representative may make application to the Employer requesting
payment of benefits due and the manner of payment. If no application for
benefits is made, the Employer shall automatically pay any vested benefit due
hereunder in the normal form at the time prescribed at paragraph 6.6. If an
application for benefits is made, the Employer shall accept, deny, or modify
such request and shall notify the Participant in writing setting forth the
response of the Employer and in the case of a denial or modification the
Employer shall:
(a) state the specific reason or reasons for the denial,
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Basic DC Plan Document #01 January 13, 1999
43
(b) provide specific reference to pertinent Plan provisions on
which the denial or modification is based,
(c) provide a description of any additional material or
information necessary for the Participant or his
representative to perfect the claim and an explanation of why
such material or information is necessary, and
(d) explain the Plan's claim review procedure as contained in this
Plan.
In the event the request is rejected or modified, the Participant or his or her
representative may within 60 days following receipt by the Participant or
representative of such rejection or modification, submit a written request for
review by the Employer of its initial decision. Within 60 days following such
request for review (120 days if extraordinary circumstances exist), the Employer
shall render its final decision in writing to the Participant or representative
stating specific reasons for such decision. If the Participant or representative
is not satisfied with the Employer's final decision, the Participant or
representative can institute an action in a Federal court of competent
jurisdiction; for this purpose, process would be served on the Employer.
6.8 IN-SERVICE WITHDRAWALS
(a) EMPLOYEE CONTRIBUTIONS - An Employee may withdraw all or any
part of the fair market value of his or her contributions as
described in Article IV, other than Elective Deferrals, upon
request to the Plan Administrator. Employee Rollover and
Transfer Contributions may be withdrawn at any time, unless
indicated otherwise in the Adoption Agreement. Paragraph (b)
below details the requirements for withdrawal of Elective
Deferrals. Such request shall be in accordance with the
procedures established by the Plan Administrator. A
Participant may withdraw all or any part of the fair market
value of his or her pre-1987 Voluntary Contributions with or
without withdrawing the earnings attributable thereto.
Post-1986 Voluntary Contributions may only be withdrawn along
with a portion of the earnings thereon. The amount of the
earnings to be withdrawn is determined by using the formula:
DA [1-(V / V+E)], where DA is the distribution amount, V is
the amount of Voluntary Contributions and V+E is the amount of
Voluntary Contributions plus the earnings attributable
thereto. The aggregate value of the Participant's Vested
Account Balances derived from Employer and Employee
contributions (including rollovers), whether vested before or
upon death, includes the proceeds of insurance contracts, if
any, on the Participant's life. The provisions of this article
shall apply to a Participant who is vested in amounts
attributable to Employer contributions, Employee contributions
(or both) at the time of death or distribution.
(b) EMPLOYER CONTRIBUTIONS - Money purchase pension plans and
Target Benefit Plans may not allow in-service withdrawals. If
specified in the Adoption Agreement, a Participant in a
profit-sharing plan is eligible to withdraw all or any part of
the fair market value of his or her vested Employer
contributions plus the investment earnings thereon as of the
previous Allocation or Valuation Date. Such request shall be
made in accordance with the procedures established by the Plan
Administrator. An in-service withdrawal shall not be eligible
for redeposit to the Trust. A withdrawal under this paragraph
shall not prohibit such Participant from sharing in any future
Employer contribution he or she would otherwise be eligible to
share in. Subject to Article VIII, Joint and Survivor Annuity
Requirements (if applicable), a Participant may withdraw any
part of his or her Qualified Voluntary Contribution account by
making application to the Plan Administrator. A request to
withdraw amounts pursuant to this paragraph must be consented
to by the Participant's Spouse unless the Plan satisfies the
safe-harbor under paragraph 8.7 hereof. Spousal consent, if
required, shall comply with the requirements of paragraph 6.4
relating to immediate distributions. Elective Deferrals,
Qualified Non-Elective Contributions, and Qualified Matching
Contributions, and income allocable to each, are not
distributable to a Participant earlier than upon separation
from Service, death, or Disability. Such amounts may also be
distributed upon:
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Basic DC Plan Document #01 January 13, 1999
44
(1) termination of the Plan without the establishment of
another Defined Contribution Plan other than an
employee stock ownership plan [as defined in Code
Sections 4975(e)(7)] or a Simplified Employee Pension
Plan [as defined in Code Section 408(k)], or SIMPLE
IRA plan [as defined in Code Section 408(p)],
(2) the disposition by a corporation to an unrelated
corporation of substantially all of the assets
[within the meaning of Code Section 409(d)(2)] used
in a trade or business of such corporation if such
corporation continues to maintain this Plan after the
disposition, but only with respect to Employees who
continue employment with the corporation acquiring
such assets,
(3) the disposition by a corporation to an unrelated
entity of such corporation's interest in a subsidiary
[within the meaning of Code Section 409(d)(3)] if
such corporation continues to maintain this Plan, but
only with respect to Employees who continue
employment with such subsidiary, or
(4) the attainment of age 59 1/2.
(c) Notwithstanding any provisions of the Plan to the contrary, to
the extent that any optional form of benefit under this Plan
permits a distribution prior to the Participant's retirement,
death, Disability, or separation from Service, and prior to
Plan termination, the optional form of benefits 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(l), to this Plan from a money purchase plan qualified
under Code Section 401(a) (other that any portion of those
assets and liabilities attributable to Voluntary Employee
Contributions).
(d) PARTIALLY VESTED PARTICIPANTS - If a distribution is made at a
time when a Participant has a nonforfeitable right to less
than 100% of the account balance derived from Employer
contributions and the Participant may increase the
nonforfeitable percentage in the account:
(1) a separate account will be established for the
Participant's interest in the Plan as of the time of
the distribution, and
(2) at any relevant time the Participant's nonforfeitable
portion of the separate account will be equal to an
amount ("X") determined by the formula:
X = P [AB + (R x D)] - (R x D)
For purposes of applying the formula: "P" is the
nonforfeitable percentage at the relevant time, "AB" is the
account balance at the relevant time, "D" is the amount of the
distribution and "R" is the ratio of the account balance at
the relevant time to the account balance after distribution.
6.9 HARDSHIP WITHDRAWALS If elected in the Adoption Agreement, a Participant may
request a Hardship withdrawal as provided in this paragraph. Hardship
withdrawals are subject to the spousal consent requirements contained in Code
Sections 401(a)(11) and 417. Such request shall be made in accordance with
procedures adopted by the Plan Administrator who shall have sole authority to
authorize a Hardship withdrawal pursuant to the following rules.
(a) ADMINISTRATIVE REQUIREMENTS
(1) The Participant must have obtained all distributions,
other than Hardship distributions, and all nontaxable
loans under all plans maintained by the Employer.
(2) The Participant's Elective Deferrals, Voluntary
Contributions and Required Contributions will be
suspended for all plans maintained by the Employer
(other than benefits under Code Section 125 plans)
for twelve months after the receipt of the Hardship
distribution,
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Basic DC Plan Document #01 January 13, 1999
45
(3) The distribution is not in excess of the amount of
the immediate and heavy financial need described at
paragraph (b) including amounts necessary to pay any
Federal, state or local income taxes or penalties
reasonably anticipated to result from the
distribution.
(4) All plans maintained by the Employer provide that a
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 taxable year, less the amount of such
Participant's Elective Deferrals for the taxable year
during which the Hardship distribution was received.
(b) EXCLUSIVE REASONS FOR HARDSHIP WITHDRAWAL
(1) Expenses incurred or necessary for medical care,
[described in Code Section 213(d)] of the
Participant, his or her Spouse, children and other
dependents,
(2) Costs directly related to the purchase (excluding
mortgage payments) of the principal residence of the
Participant,
(3) Payment of tuition and related education expenses
(including but not limited to expenses associated
with room and board) for the next twelve (12) months
of post-secondary education for the Participant, his
or her Spouse, children or other dependents,
(4) The need to prevent eviction of the Participant from
or a foreclosure on the mortgage of, the
Participant's principal residence.
(c) ORDER OF DISTRIBUTION - If a request for Hardship withdrawal
is approved by the Plan Administrator, funds shall be
withdrawn from the following contribution types in the order
which follows unless provided otherwise by administrative
procedure:
(1) Elective Deferrals.
(2) Investment earnings on Elective Deferrals allocated
as of the last day of the Plan Year ending before
July 1, 1989.
And, if elected in the Adoption Agreement:
(3) Fully vested Employer related contributions plus the
investment earnings thereon.
(4) Qualified Matching Contributions and Qualified
Non-Elective Contributions to the extent that they
were credited to the Participant's account as of the
last day of the Plan Year ending prior to December
31, 1988.
6.10 DIRECT ROLLOVER OF BENEFITS Notwithstanding any provision of the Plan to
the contrary that would otherwise limit a Participant's election under this
paragraph, for distributions made on or after January 1, 1993, a Participant may
elect, at the time and in the manner prescribed by the Plan Administrator, to
have any portion of an Eligible Rollover Distribution paid directly to an
Eligible Retirement Plan or Individual Retirement Account specified by the
Participant in a Direct Rollover. Any portion of a distribution which is not
paid directly to an Eligible Retirement Plan or Individual Retirement Account
shall be distributed to the Participant. For purposes of this paragraph, a
surviving Spouse or a Spouse or former Spouse who is an alternate payee under a
Qualified Domestic Relations Order as defined in Code Section 414(p), will be
permitted to elect to have any Eligible Rollover Distribution paid directly to
an Individual Retirement Account (IRA) or an individual retirement annuity (IRA)
or to another Qualified Plan in which the alternate payee is a participant.
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Basic DC Plan Document #01 January 13, 1999
46
6.11 PARTICIPANT'S NOTICE In the event that a Participant's benefit becomes
payable under Plan terms or if a Participant requests distribution of his or her
benefit, the Plan Administrator shall provide such Participant with a notice
regarding distribution of such benefit. The notice shall describe any Plan
related information regarding the distribution including the Joint and Survivor
Annuity requirements provided at paragraph 8.5, if applicable, the normal and
optional forms of payment provided at paragraph 6.5, and the information
required in connection with an Eligible Rollover Distribution. Information in
connection with an Eligible Rollover Distribution shall include the right to
have the funds transferred directly to another Qualified Plan or Individual
Retirement Account, the income tax withholding requirements, the rollover rules
with respect to amounts distributed to the Participant, and the general tax
rules which apply to such distributions. Such notice shall be provided to the
Participant within the time period prescribed at paragraph 8.5 hereof or, if the
safe-harbor provisions of paragraph 8.7 are applicable, not less than 30 days
prior to the Annuity Starting Date, subject to a waiver period of a lesser
number of days if elected by the Participant and if applicable, their Spouse.
6.12 ASSETS TRANSFERRED FROM MONEY PURCHASE PENSION PLANS 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 associated post-transfer
earnings) and liabilities that are transferred, within the meaning of Code
Section 414(l), 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 Voluntary Employee Contributions).
6.13 ASSETS TRANSFERRED FROM A CODE SECTION 401(K) PLAN If the Plan receives a
direct transfer (by merger or otherwise) of Elective Deferrals (or amounts
treated as Elective Deferrals) under a Plan with a Code Section 401(k)
arrangement, the distribution restrictions of Code Sections 401(k)(2) and
401(k)(10) continue to apply to those transferred Elective Deferrals.
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Basic DC Plan Document #01 January 13, 1999
47
ARTICLE VII
DISTRIBUTION REQUIREMENTS
7.1 JOINT AND SURVIVOR ANNUITY REQUIREMENTS All distributions made under the
terms of this Plan must comply with the provisions of Article VIII including, if
applicable, the safe-harbor provisions thereunder.
7.2 MINIMUM DISTRIBUTION REQUIREMENTS All distributions required under this
Article shall be determined and made in accordance with the minimum distribution
requirements of Code Section 401(a)(9) and the regulations issued thereunder,
including the minimum distribution incidental benefit rules found at Regulations
Section 1.401(a)(9)-2. The entire interest of a Participant must be distributed
or begin to be distributed no later than the Participant's Required Beginning
Date. Life expectancy and joint and last survivor life expectancies are computed
by using the expected return multiples found in Tables V and VI of Regulations
Section 1.72-9.
7.3 LIMITS ON DISTRIBUTION PERIODS As of the First Distribution Calendar Year,
distributions, if not made in a single sum, may only be made over one of the
following periods (or a combination thereof):
(a) the life of the Participant,
(b) the life of the Participant and a Designated Beneficiary,
(c) a period certain not extending beyond the life expectancy of
the Participant, or
(d) a period certain not extending beyond the joint and last
survivor life expectancy of the Participant and a Designated
Beneficiary.
7.4 REQUIRED DISTRIBUTIONS ON OR AFTER THE REQUIRED BEGINNING DATE
(a) If a Participant's Benefit is to be distributed over (i) a
period not extending beyond the life expectancy of the
Participant or the joint life and last survivor expectancy of
the Participant and the Participant's Designated Beneficiary
or (ii) a period not extending beyond the life expectancy of
the Designated Beneficiary, the amount required to be
distributed for each calendar year, beginning with
distributions for the First Distribution Calendar Year, must
at least equal the sum obtained by dividing the Participant's
Benefit by the Applicable Life Expectancy.
(b) For calendar years beginning after 1988, the amount to be
distributed each year beginning with distributions for the
First Distribution Calendar Year, shall not be less than the
quotient obtained by dividing the Participant's Benefit by the
lesser of (i) the Applicable Life Expectancy or (ii) if the
Participant's Spouse is not the Designated Beneficiary, the
applicable divisor determined from the table set forth in
Q&A-4 of Regulations Section 1.401(a)(9)-2. Distributions
after the death of the Participant shall be distributed using
the Applicable Life Expectancy as the relevant divisor without
regard to Regulations Section 1.401(a)(9)-2.
(c) The minimum distribution required for the Participant's First
Distribution Calendar Year must be made on or before the
Participant's Required Beginning Date. The minimum
distribution for other calendar years, including the minimum
distribution for the Distribution Calendar Year in which the
Participant's Required Beginning Date occurs, must be made on
or before December 31 of that Distribution Calendar Year.
(d) If the Participant's Benefit is distributed in the form of an
annuity, distributions thereunder shall be made in accordance
with the requirements of Code Section 401(a)(9) and the
Regulations thereunder.
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Basic DC Plan Document #01 January 13, 1999
48
(e) For purposes of determining the amount of the required
distribution for each Distribution Calendar Year, the account
balance to be used is the account balance determined as of the
last Valuation Date preceding the Distribution Calendar Year.
This balance will be increased by the amount of any
contributions or forfeitures allocated to the account balance
after the Valuation Date in such preceding calendar year. Such
balance will also be decreased by distributions made after the
Valuation Date in such preceding Calendar Year.
(f) For purposes of subparagraph 7.4(f), if any portion of the
minimum distribution for the First Distribution Calendar Year
is made in the second Distribution Calendar Year on or before
the Required Beginning Date, the amount of the minimum
distribution made in the second Distribution Calendar Year
shall be treated as if it had been made in the immediately
preceding Distribution Calendar Year.
7.5 REQUIRED BEGINNING DATE
(a) PARTICIPANTS OTHER THAN 5% OWNERS - The Required Beginning
Date is the later of the first day of April of the calendar
year following the calendar year in which the Participant
attains age 70 1/2 or the first day of April of the calendar
year following the calendar year in which the Participant
terminates employment with the Employer.
(b) PARTICIPANTS WHO ARE 5% OWNERS - The Required Beginning Date
is the first day of April of the calendar year following the
calendar year in which the Participant attains age 70 1/2. A
Participant is treated as a 5% owner for purposes of this
paragraph if such Participant is a 5% owner as defined in Code
Section 416(i) (determined without regard to whether the Plan
is Top-Heavy) at any time during the Plan Year ending with or
within the calendar year in which such owner attains age 66
1/2or any subsequent Plan Year. Once distributions have begun
to a 5% owner under this paragraph, they must continue to be
distributed even if the Participant ceases to be a 5% owner in
a subsequent year.
(c) TRANSITIONAL RULES:
(1) Any Participant, other than a 5% owner, attaining age
70 1/2 in years after 1995 may elect by April 1 of
the calendar year following the year in which the
Participant attained age 70 1/2, or by December 31,
1997 in the case of a Participant attaining age 70
1/2 in 1996, to defer distributions until the
calendar year following the calendar year in which
the Participant retires. If no such election is made,
the Participant will begin receiving distributions by
the April 1 of the calendar year following the year
in which the Participant attained age 70 1/2, or by
December 31, 1997 in the case of a Participant
attaining age 70 1/2 in 1996.
(2) Any Participant, other than a 5% owner, attaining age
70 1/2 in years prior to 1997 may elect to stop
distributions and recommence by the April 1 of the
calendar year following the year in which the
Participant retires. In such event, the minimum
distribution to such Participant shall be determined
based upon the highest attained age of the individual
and, if applicable, his or her Designated Beneficiary
in the year during which distributions are to
commence.
7.6 ELECTION UNDER TAX EQUITY AND FISCAL RESPONSIBILITY ACT OF 1982
(a) Notwithstanding the other requirements of this Article and
subject to the requirements of Article VIII, Joint and
Survivor Annuity Requirements, distribution on behalf of any
Employee, including a 5% owner, may be made in accordance with
all of the following requirements, regardless of when such
distribution commences:
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Basic DC Plan Document #01 January 13, 1999
49
(1) the distribution by the Trust is one which would not
have disqualified such Trust under Code Section
401(a)(9) as in effect prior to amendment by the
Deficit Reduction Act of 1984,
(2) the distribution is in accordance with a method of
distribution designated by the Employee whose
interest in the Trust is being distributed or, if the
Employee is deceased, by a beneficiary of such
Employee,
(3) such designation was in writing, was signed by the
Employee or the beneficiary, and was made before
1984,
(4) the Employee had accrued a benefit under the Plan as
of December 31, 1983,
(5) the method of distribution designated by the Employee
or the beneficiary specifies the time at which
distribution will commence, the period over which
distributions will be made, and in the case of any
distribution upon the Employee's death, the
beneficiaries of the Employee listed in order of
priority.
(b) A distribution upon death will not be covered by this
transitional rule unless the information in the designation
contains the required information described above with respect
to the distributions to be made upon the death of the
Employee.
(c) For any distribution which commences before 1984, but
continues after 1983, the Employee or the beneficiary to whom
such distribution is being made, will be presumed to have
designated the method of distribution under which the
distribution is being made, if the method of distribution was
specified in writing and the distribution satisfies the
requirements in subparagraphs (a)(1) through (5) above.
(d) If a designation is revoked, any subsequent distribution must
satisfy the requirements of Code Section 401(a)(9) and the
regulations thereunder. If a designation is revoked subsequent
to the date distributions are required to begin, the Plan must
distribute by the end of the calendar year following the
calendar year in which the revocation occurs the total amount
not yet distributed which would have been required to have
been distributed to satisfy Code Section 401(a)(9) and the
regulations thereunder, but for the Section 242(b)(2) election
of the Tax Equity and Fiscal Responsibility Act of 1982. For
calendar years beginning after 1988, such distributions must
meet the minimum distribution incidental benefit requirements
in Section 1.401(a)(9)-2 of the Income Tax Regulations. Any
changes in the designation will be considered to be a
revocation of the designation. However, the mere substitution
or addition of another beneficiary (one not named in the
designation) under the designation will not be considered to
be a revocation of the designation, so long as such
substitution or addition does not alter the period over which
distributions are to be made under the designation, directly
or indirectly (for example, by altering the relevant measuring
life). In the case in which an amount is transferred or rolled
over from one plan to another plan, the rules in Q&A J-2 and
Q&A J-3 of the regulations shall apply.
7.7 DESIGNATION OF BENEFICIARY Each Participant shall file a written designation
of beneficiary with the Employer upon qualifying for participation in this Plan.
Such designation shall remain in force until revoked by the Participant by
filing a new beneficiary designation form with the Employer. Under a
profit-sharing plan satisfying the requirements of paragraph 8.7, the Designated
Beneficiary shall be the Participant's Surviving Spouse, if any, unless such
Spouse properly consents otherwise.
7.8 NO BENEFICIARY Any portion of the amount payable hereunder which is not
disposed of because of the Participant's or former Participant's failure to
designate a beneficiary, or because all of the Designated Beneficiaries
predeceased the Participant, shall be paid to his or her Spouse. If the
Participant had no Spouse at the time of death, payment shall be made to his or
her estate in a lump sum.
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Basic DC Plan Document #01 January 13, 1999
50
7.9 DISTRIBUTION BEGINNING BEFORE DEATH This paragraph is applicable only after
the Participant's Required Beginning Date as defined in paragraph 7.5. If the
Participant dies after distribution of his or her interest has begun, the
remaining portion of such interest will continue to be distributed at least as
rapidly as under the method of distribution being used prior to the
Participant's death.
7.10 DISTRIBUTION BEGINNING AFTER DEATH This paragraph is applicable before the
Participant's Required Beginning Date as defined in paragraph 7.5, even if
distributions have commenced from the Plan. If the Participant dies before
distribution of his or her interest begins, distribution of the Participant's
entire interest shall be completed by December 31 of the calendar year
containing the fifth anniversary of the Participant's death, except to the
extent that an election is made to receive distributions in accordance with (a)
or (b) below:
(a) if any portion of the Participant's interest is payable to a
Designated Beneficiary, distributions may be made over the
life or over a period certain not greater than the life
expectancy of the Designated Beneficiary commencing on or
before December 31 of the calendar year immediately following
the calendar year in which the Participant died;
(b) if the Designated Beneficiary is the Participant's Surviving
Spouse, the date distributions are required to begin in
accordance with (a) above shall not be earlier than the later
of (i) December 31 of the calendar year immediately following
the calendar year in which the Participant died or (ii)
December 31 of the calendar year in which the Participant
would have attained age 70 1/2.
If the Participant has not made an election pursuant to this paragraph 7.10 by
the time of his or her death, the Participant's Designated Beneficiary must
elect the method of distribution no later than the earlier of (i) December 31 of
the calendar year in which distributions would be required to begin under this
section, or (ii) December 31 of the calendar year which contains the fifth
anniversary of the date of death of the Participant. If the Participant has no
Designated Beneficiary, or if the Designated Beneficiary does not elect a method
of distribution, then distribution of the Participant's entire interest must be
completed by December 31 of the calendar year containing the fifth anniversary
of the Participant's death. If the Surviving Spouse dies after the Participant
but before payments to such Spouse begin, the provisions of this paragraph with
the exception of subparagraph (b) herein, shall be applied as if the Surviving
Spouse were the Participant. For the purposes of this paragraph and paragraph
7.9, distribution of a Participant's interest is considered to begin on the
Participant's Required Beginning Date (or, if the preceding sentence is
applicable, the date distribution is required to begin to the Surviving Spouse).
If distribution in the form of an annuity described in paragraph 7.4(e)
irrevocably commences to the Participant before the Required Beginning Date, the
date distribution is considered to begin is the date distribution actually
commences.
7.11 DISTRIBUTION OF EXCESS ELECTIVE DEFERRALS
(a) No Participant shall be permitted to defer under this Plan
with respect to a calendar year more than the maximum dollar
amount permitted under Code Section 402(g), as indexed, for
such calendar year. If a Participant defers more than the
maximum allowed due to mistake of fact, such Excess Elective
Deferrals shall be distributed to the Participant no later
than April 15 following the calendar year to which the excess
is attributable. If an individual who participates in this
Plan and in another plan which permits Elective Deferrals,
defers more than the Code Section 402(g) maximum, such
individual shall have the right to notify one or both plans by
March 1 of the calendar year following the year to which the
excess is attributable requesting a distribution of the Excess
Elective Deferral. A Participant is deemed to notify the Plan
Administrator of any Excess Elective Deferrals that arise by
taking into account only those Elective Deferrals made to the
Plan of the Employer. If distribution is requested, the
applicable plan(s) shall make distribution of the excess no
later than April 15 following the calendar year to which the
excess is attributable. Excess Elective Deferrals which are
distributed on a timely basis shall not be considered Annual
Additions for the Limitation Year during which such amounts
are deferred.
(b) Excess Elective Deferrals shall be adjusted for any income or
loss up to the end of the taxable year during which such
excess was deferred. In addition, Excess Elective Deferrals
shall be
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51
adjusted for gap income for period between the end of the Plan
Year and the actual date of distribution of the Excess. Income
or loss, including gap income, will be calculated under any
reasonable method consistently followed for all Participants,
used to calculate investment earnings and losses.
(c) The amount a Participant receives as a distribution of his or
her Excess Elective Deferrals is includible in income with
respect to the taxable year to which the excess is
attributable. Any income attributable to the Excess Elective
Deferrals as determined in (b) above shall be includible in
income with respect to the taxable year the excess is
distributed.
7.12 DISTRIBUTIONS OF EXCESS CONTRIBUTIONS
(a) Excess Contributions plus any income and minus any loss
allocable thereto, shall be distributed to affected
Participants no later than the last day of the Plan Year
following the Plan Year to which the Excess Contributions are
attributable. If such Excess Contributions are distributed
more than 2 1/2 months after the last day of the Plan Year to
which the Excess Contributions are attributable, a 10% excise
tax will be imposed on the Employer maintaining the Plan with
respect to the principal amount of the excess.
(b) Excess Contributions shall be treated as Annual Additions with
respect to the Plan Year to which such excess is attributable.
(c) Excess Contributions shall be adjusted for any income or loss
up to the end of the Plan Year to which such excess is
attributable. The income or loss allocable to Excess
Contributions is based on the amounts included in the ADP Test
for the applicable Plan Year. Income or loss will be
calculated under any reasonable method used to calculate
investment earnings and losses. Such method shall be
consistently followed for all Participants.
(d) Excess Contributions shall be distributed from the
Participant's Elective Deferral account and Qualified Matching
Contribution account (if applicable) in proportion to the
Participant's Elective Deferrals and Qualified Matching
Contributions (to the extent used in the ADP test) for the
test year. Excess Contributions shall be distributed from the
Participant's Qualified Non-Elective Contribution account only
to the extent that such Excess Contributions exceed the
Participant's Elective Deferrals and Qualified Matching
Contributions for the applicable test year.
7.13 DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS
(a) Excess Aggregate Contributions including any income or loss
allocable thereto, shall be forfeited, if forfeitable, or if
not forfeitable, distributed to affected Participants no later
than the last day of the Plan Year following the Plan Year to
which the Excess Aggregate Contributions are attributable. If
such Excess Aggregate Contributions are distributed more than
2 1/2 months after the last day of the Plan Year to which the
Excess Contributions are attributable, a 10% excise tax will
be imposed on the Employer maintaining the Plan with respect
to the principal amount of the excess.
(b) Excess Aggregate Contributions shall be treated as Annual
Additions with respect to the Plan Year to which such excess
is attributable.
(c) Excess Aggregate Contributions shall be adjusted for any
income or loss up to the end of the Plan Year to which such
excess is attributable. The income or loss allocable to Excess
Aggregate Contributions is based on the amounts included in
the ACP test for the applicable Plan Year. Income or loss will
be calculated under any reasonable method used to calculate
investment earnings and losses. Such method shall be
consistently followed for all Participants.
(d) Excess Aggregate Contributions shall be forfeited if such
amount is not vested. If vested, such excess shall be
distributed, in any hierarchy, from the Participant's
Voluntary Contribution account and, if applicable, the
Participant's Qualified Non-Elective Contribution account,
Matching Contribution account, Qualified Matching Contribution
account, and/or Elective Deferral account.
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7.14 DISTRIBUTIONS TO MINORS AND INDIVIDUALS WHO ARE LEGALLY INCOMPETENT
Benefits payable to either a minor or an individual who has been declared
legally incompetent shall be paid, at the direction of the Plan Administrator,
to the parent, guardian or other individual including the conservator appointed
under applicable state law for the benefit of said minor or incompetent.
7.15 UNCLAIMED BENEFITS
(a) The Plan Administrator shall notify Participants or
beneficiaries by certified or registered mail to his or her
last known address of record with the Employer when their
benefits become distributable as provided at paragraph 6.11
hereof. If a Participant does not respond to the notice within
90 days of the date of the notice, the Plan Administrator may
take reasonable steps to locate the Participant including, but
not limited to, requesting assistance from the Employer,
Employees, Social Security Administration and/or the Internal
Revenue Service.
(b) If the Participant cannot be located after a period of twelve
months, or such other period determined in a uniform and
nondiscriminatory manner by the Plan Administrator, the Plan
Administrator may treat the benefit as a forfeiture pursuant
to paragraph 9.7. The forfeitures provisions of this paragraph
7.15(b) apply only to the Participant's or beneficiary's
account balance which is less than $5,000. If the Employer
does not make a contribution for the Plan Year during which
the forfeiture takes place, such amount shall first be applied
to pay Plan expenses and, if there are no such expenses, shall
then be allocated to eligible Participant accounts as if the
amount were the Employer's contribution for such Plan Year.
(c) If a Participant or Designated Beneficiary later makes a claim
for such benefit, the Plan Administrator shall validate such
claim and provide the Participant or Designated Beneficiary
with all notices and other information necessary for the
Participant or Designated Beneficiary to perfect the claim. If
the claim for benefits is validated by the Plan Administrator,
the Participant's account balance shall be restored to the
benefit amount treated as a forfeiture. Such benefit shall not
be adjusted for investment earnings or losses during the
period beginning on the date of forfeiture and ending on the
date of restoration. The funds necessary to restore the
Participant's account will first be taken from amounts
eligible for reallocation or other disposition as forfeitures
with respect to the Plan Year. If such funds do not exist or
if such funds are insufficient, the Employer will make a
contribution prior to the date on which the benefit is payable
to restore such Participant's account. Such benefit shall be
paid or commence to be paid in the same manner as if the
benefit was eligible for distribution on the date the claim
for benefit is validated.
(d) The Plan Administrator shall follow the same procedure in
locating and subsequently treating as a forfeiture the benefit
of a Participant whose benefit has been properly paid under
Plan terms but where the Participant or Designated Beneficiary
has not negotiated the benefit check(s).
(e) Alternatively, if the Participant's account balance is less
than $5,000, the Plan Administrator may remit the entire
amount to the Internal Revenue Service as federal tax
withholding.
(f) If the Participant's account balance is over $5,000, the Plan
Administrator after using all reasonable measures to locate
the Participant or Designated Beneficiary, consistent with the
procedures specified above, all applicable laws, regulations
and other pronouncements under ERISA, may use any reasonable
procedure to dispose of distributable Plan assets including
but not limited to any of the following: (i) establishing an
IRA in the name of the Participant or Designated Beneficiary
with any institution, (ii) purchasing an annuity contract in
the name of the Participant or Designated Beneficiary with the
assets attributable to them in the Trust, or (iii)
establishing a bank account for and in the name of the
Participant or Designated Beneficiary.
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53
ARTICLE VIII
JOINT AND SURVIVOR ANNUITY REQUIREMENTS
8.1 APPLICABILITY OF PROVISIONS The provisions of this Article shall apply to
any Participant who is credited with at least one Hour of Service with the
Employer on or after August 23, 1984 and such other Participants as provided in
paragraph 8.8.
8.2 PAYMENT OF QUALIFIED JOINT AND SURVIVOR ANNUITY Unless an optional form of
benefit is selected pursuant to a Qualified Election within the 90-day period
ending on the Annuity Starting Date, a Participant's Vested Account Balance will
be paid in the form of a Qualified Joint and Survivor Annuity. For this purpose,
a Qualified Joint and Survivor Annuity with respect to an unmarried
Participant's Vested Account Balance will be paid in the form of a life annuity.
The Participant may elect to have such annuity distributed upon attainment of
the Early Retirement Age under the Plan.
8.3 PAYMENT OF QUALIFIED PRE-RETIREMENT SURVIVOR ANNUITY Unless an optional form
of benefit has been selected within the Election Period pursuant to a Qualified
Election, if a Participant dies before benefits have commenced then the
Participant's Vested Account Balance shall be paid in the form of a life annuity
for the life of the surviving Spouse. The surviving Spouse may elect to have
such annuity distributed within a reasonable period after the Participant's
death. If no election has been made within the Election Period prior to the
Participant's death, the surviving Spouse shall have the right to select an
optional form of benefit after the Participant's death. Such election will only
be permitted if the surviving Spouse is provided with a notice similar to that
required under paragraph 8.5 except that the notice will be modified to explain
a life annuity rather than a Qualified Joint and Survivor Annuity.
A Participant who does not meet the age 35 requirement set forth in the Election
Period as of the end of any current Plan Year may make a special qualified
election to waive the Qualified Pre-Retirement Survivor Annuity for the period
beginning on the date of such election and ending on the first day of the Plan
Year in which the Participant will attain age 35. Such election shall not be
valid unless the Participant receives a written explanation of the Qualified
Pre-Retirement Survivor Annuity in such terms as are comparable to the
explanation required under paragraph 8.5. Qualified Pre-Retirement Survivor
Annuity coverage will be automatically reinstated as of the first day of the
Plan Year in which the Participant attains age 35. Any new waiver on or after
such date shall be subject to the full requirements of this Article.
8.4 QUALIFIED ELECTION A Qualified Election is an election to either waive a
Qualified Joint and Survivor Annuity or a Qualified Pre-Retirement Survivor
Annuity. Any such election shall not be effective unless:
(a) the Participant's Spouse consents in writing to the election,
(b) the election designates a specific beneficiary, including any
class of beneficiaries or any contingent beneficiaries, which
may not be changed without spousal consent or the Spouse
expressly permits designations by the Participant without any
further spousal consent,
(c) the Spouse's consent acknowledges the effect of the election,
and
(d) the Spouse's consent is witnessed by a Plan representative or
notary public.
A Participant's waiver of the Qualified Joint and Survivor Annuity shall not be
effective unless the election designates a form of benefit payment which may not
be changed without spousal consent or the Spouse expressly permits designations
by the Participant without any further spousal consent. If it is established to
the satisfaction of the Plan Administrator that the Participant is unmarried or
that the Spouse cannot be located, a waiver will be deemed a Qualified Election.
Any consent by a Spouse obtained under this provision (or establishment that the
consent of a Spouse cannot be obtained) shall be effective only with respect to
such Spouse. A consent that permits designations by the Participant without any
requirement of further consent by such Spouse must acknowledge that
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54
the Spouse has the right to limit consent to a specific beneficiary, and a
specific form of benefit where applicable, and that the Spouse voluntarily
elects to relinquish either or both of such rights. A revocation of a prior
waiver may be made by a Participant without the consent of the Spouse at any
time before the commencement of benefits. The number of revocations shall not be
limited. No consent obtained under this provision shall be valid unless the
Participant has received notice as provided in paragraphs 8.5 and 8.6 below.
8.5 NOTICE REQUIREMENTS FOR QUALIFIED JOINT AND SURVIVOR ANNUITY In the case of
a Qualified Joint and Survivor Annuity, the Plan Administrator shall, no less
than 30 days, and no more than 90 days prior to the Annuity Starting date,
provide each Participant a written explanation of:
(a) the terms and conditions of a Qualified Joint and Survivor
Annuity,
(b) the Participant's right to make and the effect of an election
to waive the Qualified Joint and Survivor Annuity form of
benefit,
(c) the rights of a Participant's Spouse, and
(d) the right to make, and the effect of, a revocation of a
previous election to waive the Qualified Joint and Survivor
Annuity.
The Participant and the Participant's Spouse may consent to waiving the minimum
30 day notice period described above and may receive notice no less than 7 days
prior to the Annuity Starting Date, provided that:
(e) the Plan Administrator clearly informs the Participant and the
Participant's Spouse that they have a right to a period of at
least 30 days after receiving the notice to consider the
decision of whether or not to elect a distribution (and, if
applicable a particular distribution option), and
(f) the Participant and the Participant's Spouse, after receiving
the notice, affirmatively elect a distribution.
8.6 NOTICE REQUIREMENTS FOR QUALIFIED PRE-RETIREMENT SURVIVOR ANNUITY In the
case of a Qualified Pre-Retirement Survivor Annuity as described in paragraph
8.3, the Plan Administrator shall provide each Participant within the applicable
period for such Participant a written explanation of the Qualified
Pre-Retirement Survivor Annuity in such terms and in such manner as would be
comparable to the explanation provided for meeting the requirements of paragraph
8.5 applicable to a Qualified Joint and Survivor Annuity. The applicable period
for a Participant is whichever of the following periods ends at the latest date:
(a) the period beginning with the first day of the Plan Year in
which the Participant attains age 32 and ending with the close
of the Plan Year preceding the Plan Year in which the
Participant attains age 35,
(b) a reasonable period ending after the individual becomes a
Participant,
(c) a reasonable period ending after this Article first applies to
the Participant. Notwithstanding the foregoing, notice must be
provided within a reasonable period ending after separation
from Service in the case of a Participant who separates from
Service before attaining age 35.
For purposes of applying the preceding paragraph, a reasonable period ending
after the events described in (b) and (c) is the end of the two-year period
beginning one year prior to the date the applicable event occurs, and ending one
year after that date. In the case of a Participant who separates from Service
before the Plan Year in which age 35 is attained, notice shall be provided
within the two-year period beginning one year prior to separation and ending one
year after separation. If such a Participant subsequently returns to employment
with the Employer, the applicable period for such Participant shall be
redetermined.
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8.7 SPECIAL SAFE-HARBOR EXCEPTION FOR CERTAIN PROFIT-SHARING PLANS
(a) This paragraph shall apply to a Participant in a
profit-sharing plan, and to any distribution made on or after
the first day of the first Plan Year beginning after 1988,
from or under a separate account attributable solely to
Qualified Voluntary Contributions, as maintained on behalf of
a Participant in a money purchase pension plan or Target
Benefit Plan, if the following conditions are satisfied:
(1) the Participant does not or cannot elect payments in
the form of a life annuity, and
(2) on the death of a Participant, the Participant's
Vested Account Balance will be paid to the
Participant's Surviving Spouse, but if there is no
Surviving Spouse, or if the Surviving Spouse has
consented in a manner conforming to a Qualified
Election, then to the Participant's Designated
Beneficiary.
The surviving Spouse may elect to have distribution of the
Vested Account Balance commence within the 90-day period
following the date of the Participant's death. The account
balance shall be adjusted for gains or losses occurring after
the Participant's death in accordance with the provisions of
the Plan governing the adjustment of account balances for
other types of distributions.
(b) These safe-harbor rules shall not be applicable to a
Participant in a profit-sharing plan if the Plan is the
recipient of a merger of assets from a plan which was subject
to the survivor annuity requirements of Code Section
401(a)(11) and Code Section 417, and would therefore have a
Qualified Joint and Survivor Annuity as its normal form of
benefit, unless separate accounts or separate accounting was
monitored for the assets of the merged plan.
(c) The Participant may waive the spousal death benefit described
in this paragraph at any time provided that no such waiver
shall be effective unless it satisfies the conditions
(described in paragraph 8.4) that would apply to the
Participant's waiver of the Qualified Pre-Retirement Survivor
Annuity.
(d) If this paragraph 8.7 is operative, then all other provisions
of this Article VIII other than paragraph 8.8 are inoperative.
8.8 TRANSITIONAL JOINT AND SURVIVOR ANNUITY RULES Special transitional rules
apply to Participants who were not receiving benefits on August 23, 1984.
(a) Any living Participant not receiving benefits on August 23,
1984, who would otherwise not receive the benefits prescribed
by the previous paragraphs of this Article, must be given the
opportunity to elect to have the prior paragraphs of this
Article apply if such Participant is credited with at least
one Hour of Service under this Plan or a predecessor Plan in a
Plan Year beginning on or after January 1, 1976 and such
Participant had at least 10 Years of Service for vesting
purposes when he or she separated from Service.
(b) Any living Participant not receiving benefits on August 23,
1984, who was credited with at least one Hour of Service under
this Plan or a predecessor plan on or after September 2, 1974,
and who is not otherwise credited with any Service in a Plan
Year beginning on or after January 1, 1976, must be given the
opportunity to have his or her benefits paid in accordance
with paragraph 8.9.
(c) The respective opportunities to elect [as described in (a) and
(b) above] must be afforded to the appropriate Participants
during the period commencing on August 23, 1984 and ending on
the date benefits would otherwise commence to said
Participants.
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8.9 AUTOMATIC JOINT AND SURVIVOR ANNUITY AND EARLY SURVIVOR ANNUITY Any
Participant who has elected pursuant to paragraph 8.8(b) and any Participant who
does not elect under paragraph 8.8(a) or who meets the requirements of paragraph
8.8(a), except that such Participant does not have at least 10 years of vesting
Service when he or she separates from Service, shall have his or her benefits
distributed in accordance with all of the following requirements if benefits
would have been payable in the form of a life annuity.
(a) AUTOMATIC JOINT AND SURVIVOR ANNUITY - If benefits in the form
of a life annuity become payable to a married Participant who:
(1) begins to receive payments under the Plan on or after
Normal Retirement Age, or
(2) dies on or after Normal Retirement Age while still
working for the Employer, or
(3) begins to receive payments on or after the Qualified
Early Retirement Age, or
(4) separates from Service on or after attaining Normal
Retirement Age (or the Qualified Early Retirement
Age) and after satisfying the eligibility
requirements for the payment of benefits under the
Plan and thereafter dies before beginning to receive
such benefits.
Such benefits will be received under this Plan in the form of
a Qualified Joint and Survivor Annuity, unless the Participant
has elected otherwise during the Election Period. The Election
Period must begin at least 6 months before the Participant
attains Qualified Early Retirement Age and end not more than
90 days before the commencement of benefits. Any election will
be in writing and may be changed by the Participant at any
time.
(b) ELECTION OF EARLY SURVIVOR ANNUITY - A Participant who is
employed after attaining the Qualified Early Retirement Age
will be given the opportunity to elect, during the Election
Period, to have a survivor annuity payable on death. If the
Participant elects the survivor annuity, payments under such
annuity must not be less than the payments which would have
been made to the Spouse under the Qualified Joint and Survivor
Annuity if the Participant had retired on the day before his
or her death. Any election under this provision will be in
writing and may be changed by the Participant at any time. The
Election Period begins on the later of:
(1) the 90th day before the Participant attains the
Qualified Early Retirement Age, or
(2) the date on which participation begins, and ends on
the date the Participant terminates employment.
8.10 ANNUITY CONTRACTS Any annuity contract distributed under this Plan must be
nontransferable. The terms of any annuity contract purchased and distributed by
the Plan to a Participant or Spouse shall comply with the requirements of this
Plan.
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ARTICLE IX
VESTING
9.1 EMPLOYEE CONTRIBUTIONS A Participant shall always have a 100% vested and
nonforfeitable interest in his or her Elective Deferrals, Voluntary
Contributions, Qualified Voluntary Contributions, Required Contributions,
Qualified Non-Elective Contributions, Safe Harbor Contributions, Qualified
Matching Contributions, Rollover Contributions, and Transfer Contributions plus
the earnings thereon. No forfeiture of Employer related contributions (including
any minimum contributions made under paragraph 15.2) will occur solely as a
result of an Employee's withdrawal of any Employee contributions.
9.2 EMPLOYER CONTRIBUTIONS A Participant shall acquire a vested and
nonforfeitable interest in his or her account attributable to Employer
contributions in accordance with the table selected in the Adoption Agreement,
provided that if a Participant is not already fully vested, he or she shall
become so upon attaining Normal Retirement Age, Early Retirement Age, on death
prior to normal retirement (provided the Participant has not terminated
employment prior to death), on retirement due to Disability, or on termination
of the Plan.
9.3 COMPUTATION PERIOD The computation period for purposes of determining Years
of Service and Breaks in Service for purposes of computing a Participant's
nonforfeitable right to his or her account balance derived from Employer
contributions shall be determined by the Employer in the Adoption Agreement. In
the event a former Participant with no vested interest in his or her Employer
contribution account requalifies for participation in the Plan after incurring a
Break in Service, such Participant shall be credited for vesting with all
pre-break and post-break Service.
9.4 REQUALIFICATION PRIOR TO FIVE CONSECUTIVE ONE-YEAR BREAKS IN SERVICE Subject
to Article VI, the account balance of a Participant who is re-employed prior to
incurring five consecutive one-year Breaks in Service shall consist of any
undistributed amount in his or her account as of the date of re-employment plus
any future contributions added to such account plus the investment earnings on
the account. The Vested Account Balance of such Participant shall be determined
by multiplying the Participant's account balance (adjusted to include any
distribution or redeposit made under paragraph 6.3) by such Participant's vested
percentage. All Service of the Participant, both prior to and following the
break, shall be counted when computing the Participant's vested percentage.
9.5 REQUALIFICATION AFTER FIVE CONSECUTIVE ONE-YEAR BREAKS IN SERVICE Subject to
Article VI, if a Participant was not fully vested prior to termination of
employment and is re-employed after incurring five consecutive one-year Breaks
in Service, a new account shall be established for such Participant to separate
his or her deferred vested and nonforfeitable account, if any, from the account
to which new allocations will be made. The Participant's deferred account to the
extent remaining shall be fully vested and shall continue to share in earnings
and losses of the Trust. When computing the Participant's vested portion of the
new account, all pre-break and post-break Service shall be counted. However,
notwithstanding this provision, no such former Participant who has had five
consecutive one-year Breaks in Service shall acquire a larger vested and
nonforfeitable interest in his or her prior account balance as a result of
requalification hereunder.
9.6 CALCULATING VESTED INTEREST A Participant's vested and nonforfeitable
interest shall be calculated by multiplying the fair market value of his or her
account attributable to Employer contributions on the Valuation Date concurrent
with or preceding distribution by the decimal equivalent of the vested
percentage as of his or her termination date. The amount attributable to
Employer contributions for purposes of the calculation includes amounts
previously paid out pursuant to paragraph 6.3 and not repaid. The Participant's
vested and nonforfeitable interest, once calculated above, shall be reduced to
reflect those amounts previously paid out to the Participant and not repaid by
the Participant. The Participant's vested and nonforfeitable interest so
determined shall continue to share in the investment earnings and any increase
or decrease in the fair market value of the Trust up to the Valuation Date
preceding or coinciding with payment.
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9.7 FORFEITURES Any balance in the account of a Participant who has separated
from Service to which he or she is not entitled under the foregoing provisions,
shall be forfeited and applied as provided in the Adoption Agreement. The
reallocation or other disposition of a nonvested benefit will occur and be
applied as provided in the Adoption Agreement While awaiting reallocation or
other disposition, the Plan Administrator or his designate, if applicable, shall
have the right to leave the nonvested benefit in the Participant's account or
may transfer the nonvested benefit to a forfeiture holding account. Amounts held
in a forfeiture suspense account may share in any increase or decrease in fair
market value of the assets of the Trust in accordance with Article V of the
Plan. Such determination shall be made by the Plan Administrator or his
designate, if applicable. For purposes of this paragraph, if the value of a
Participant's Vested Account Balance is zero, the Participant shall be deemed to
have received a distribution of such Vested Account Balance. A Highly
Compensated Employee's Matching Contributions may be forfeited, even if vested,
if the contributions to which they relate are Excess Deferrals, Excess
Contributions or Excess Aggregate Contributions. Benefits with respect to
Participants who cannot be located as provided at paragraph 7.15 hereof will be
treated in the same manner as a forfeiture.
9.8 AMENDMENT OF VESTING SCHEDULE No amendment to the Plan shall have the effect
of decreasing a Participant's vested interest determined without regard to such
amendment as of the later of the date such amendment is adopted or the date it
becomes effective. Further, if the vesting schedule of the Plan is amended, or
the Plan is amended in any way that directly or indirectly affects the
computation of any Participant's nonforfeitable percentage or if the Plan is
deemed amended by an automatic change to or from a Top-Heavy vesting schedule,
each Participant with at least three Years of Service with the Employer may
elect, during the election period defined herein, to have his or her
nonforfeitable percentage computed under the Plan without regard to such
amendment. For Participants who do not have at least one Hour of Service in any
Plan Year beginning after 1988, the preceding sentence shall be applied by
substituting "five Years of Service" for "three Years of Service" where such
language appears. The period during which the election may be made shall
commence with the date the amendment is adopted and shall end on the later of:
(a) 60 days after the amendment is adopted,
(b) 60 days after the amendment becomes effective, or
(c) 60 days after the Participant is issued written notice of the
amendment by the Employer or the Trustee.
If the Trustee notifies the Participants involved, the Plan may be charged for
the costs thereof.
No amendment to the Plan shall be effective to the extent that it has the effect
of decreasing a Participant's accrued benefit. Notwithstanding the preceding
sentence, a Participant's account balance may be reduced to the extent permitted
under Code Section 412(c)(8) relating to financial hardships. For purposes of
this paragraph, a Plan amendment which has the effect of decreasing a
Participant's account balance or eliminating an optional form of benefit, with
respect to benefits attributable to Service before the amendment, shall be
treated as reducing an accrued benefit.
9.9 SERVICE WITH CONTROLLED GROUPS All Years of Service with other members of a
controlled group of corporations [as defined in Code Section 414(b)], trades or
businesses under common control [as defined in Code Section 414(c)], or members
of an affiliated service group [as defined in Code Section 414(m)] shall be
considered for purposes of determining a Participant's nonforfeitable
percentage.
9.10 COMPLIANCE WITH UNIFORMED SERVICE EMPLOYMENT AND REEMPLOYMENT RIGHTS ACT OF
1994 Notwithstanding any provision of this Plan to the contrary, Years of
vesting Service will be credited to Participants with respect to periods of
qualified military service as provided in Code Section 414(u).
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Basic DC Plan Document #01 January 13, 1999
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ARTICLE X
LIMITATIONS ON ALLOCATIONS
10.1 PARTICIPATION IN THIS PLAN ONLY If the Participant does not participate in
and has never participated in another qualified plan, a Welfare Benefit Fund,
individual medical account as defined in Code Section 415(l)(2), or a Simplified
Employee Pension Plan maintained by the adopting Employer, which provides an
Annual Addition, the amount of Annual Additions which may be credited to the
Participant's account for any Limitation Year will not exceed the lesser of the
Maximum Permissible Amount or any other limitation contained in this Plan. If
the Employer contribution that would otherwise be contributed or allocated to
the Participant's account would cause the Annual Additions for the Limitation
Year to exceed the Maximum Permissible Amount, the amount contributed or
allocated will be reduced so that the Annual Additions for the Limitation Year
will equal the Maximum Permissible Amount. Prior to determining the
Participant's actual Compensation for the Limitation Year, the Employer may
determine the Maximum Permissible Amount for a Participant on the basis of a
reasonable estimate of the Participant's Compensation for the Limitation Year,
uniformly determined for all Participants similarly situated. As soon as is
administratively feasible after the end of the Limitation Year, the Maximum
Permissible Amount for the Limitation Year will be determined on the basis of
the Participant's actual Compensation for the Limitation Year.
10.2 DISPOSITION OF EXCESS ANNUAL ADDITIONS If there is an Excess Amount due to
an error in estimating a Participant's Compensation for a Limitation Year under
paragraph 10.1 or as a result of the allocation of forfeitures there is an
Excess Amount, the excess will be distributed to the affected Participant in the
order which follows:
(a) Any unmatched voluntary Employee contributions (with any gains
thereon), to the extent they would reduce the excess, will be
returned to the Participant.
(b) Any unmatched Elective Deferrals (with any gains thereon) to
the extent they would reduce the Excess Amount, will be
returned to the Participants;
(c) Any matched voluntary Employee contributions (with any gains
thereon), to the extent they would reduce the Excess Amount,
will be returned to the Participants. Simultaneously, any
Employer matching contributions (with any gains thereon) that
relate to these voluntary contributions, to the extent they
would reduce the excess, will be treated as follows: if the
Participant is covered by the Plan at the end of the
Limitation Year, such excess amount in the Participant's
Account will be used to reduce Employer contributions for such
Participant in the next Limitation Year, and succeeding
Limitation Years, as necessary. If the Participant is not
covered by the Plan at the end of the Limitation Year, such
excess will be held unallocated in a suspense account and used
to reduce Employer contributions for the next Limitation Year
(and succeeding Limitation Years, as necessary) for all of the
remaining Participants in the Plan;
(d) Any matched Elective Deferrals (with any gains thereon), to
the extent they would reduce the Excess Amount, will be
returned to the Participant. Simultaneously, any Employer
matching contributions (with any gains thereon) that relate to
these Elective Contributions, to the extent they would reduce
the excess, will be treated in accordance with the same
procedure which is applied to the Employer matching
contributions (and gains thereon) under the preceding
subparagraph (c).
(e) If, after the application of subparagraphs (a), (b), (c) and
(d), an excess still exists, and the Participant is covered by
the Plan at the end of the Limitation Year, the excess in the
Participant's Account will be used to reduce Employer
contributions for such Participant in the next Limitation
Year, and each succeeding Limitation Year, as necessary;
(f) If, after the application of subparagraphs (a), (b), (c), and
(d), an excess still exists, and the Participant is not
covered by the Plan at the end of the Limitation Year, the
excess will be held unallocated in a suspense account and used
to reduce Employer contributions for the next Limitation Year
(and succeeding Limitation Years, as necessary) for all of the
remaining Participants in the Plan.
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10.3 PARTICIPATION IN MULTIPLE DEFINED CONTRIBUTION PLANS The Annual Additions
which may be credited to a Participant's account under this Plan for any
Limitation Year will not exceed the Maximum Permissible Amount. With respect to
this Plan, the Maximum Permissible Amount is reduced by the Annual Additions
credited to a Participant's account under the other qualified Master or
Prototype Defined Contribution Plans, Welfare Benefit Funds, individual medical
accounts, as defined in Code Section 415(l)(2), and Simplified Employee Pension
Plans maintained by the Employer, which provide an Annual Addition for the same
Limitation Year. If the Annual Additions with respect to the Participant under
other Defined Contribution Plans, Welfare Benefit Funds, individual medical
accounts and Simplified Employee Pension Plans maintained by the Employer are
less than the Maximum Permissible Amount and the Employer contribution that
would otherwise be contributed or allocated to the Participant's account under
this Plan would cause the Annual Additions for the Limitation Year to exceed
this limitation, the amount contributed or allocated under this Plan will be
reduced so that the Annual Additions under all such plans and funds for the
Limitation Year will equal the Maximum Permissible Amount. If the Annual
Additions with respect to the Participant under such other Defined Contribution
Plans and Welfare Benefit Funds 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. Prior to
determining the Participant's actual Compensation for the Limitation Year, the
Employer may determine the Maximum Permissible Amount for a Participant in the
manner described in paragraph 10.1. As soon as administratively feasible after
the end of the Limitation Year, the Maximum Permissible Amount for the
Limitation Year will be determined on the basis of the Participant's actual
Compensation for the Limitation Year. 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 account under this Plan for any Limitation Year will be limited in
accordance with this paragraph as though the other plan were a Master or
Prototype Plan unless the Employer specifies other limitations in the Adoption
Agreement.
10.4 DISPOSITION OF EXCESS ANNUAL ADDITIONS UNDER TWO PLANS If a Participant's
Annual Additions under this Plan and such other plans would result in an Excess
Amount for a Limitation Year due to an error in estimating a Participant's
Compensation for a Limitation Year under paragraph 10.3 or as a result of
forfeitures, 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 Plan will be
deemed to have been allocated first and then Annual Additions to a Welfare
Benefit Fund or individual medical account as defined in Code Section 415(l)(2)
will be deemed to have been allocated next regardless of the actual allocation
date. 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:
(a) the total Excess Amount allocated as of such date, times
(b) 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 Master or
Prototype Defined Contribution Plans.
Any Excess Amount attributed to this Plan will be disposed of in the manner
described in paragraph 10.2.
10.5 LIMITATIONS ON BENEFITS For any Limitation Year beginning before January 1,
2000, the sum of a Participant's Defined Benefit Plan Fraction and Defined
Contribution Plan Fraction will not exceed 1.0. For any Limitation Year
beginning before January 1, 2000 during which the Plan is Top-Heavy, the Defined
Benefit and Defined Contribution Plan Fractions shall be calculated in
accordance with Code Section 416(h). The Annual Additions which may be credited
to the Participant's account under this Plan for any Limitation Year will be
limited in accordance with the provisions attached to the Adoption Agreement.
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10.6 PARTICIPATION IN THIS PLAN AND A DEFINED BENEFIT PLAN If the Employer
maintains, or at any time maintained, a qualified Defined Benefit Plan (other
than Paired Plan #02001, #02002, #02003, #02004) covering any Participant in
this Plan, the sum of the Participant's Defined Benefit Plan Fraction and
Defined Contribution Plan Fraction will not exceed 1.0 in any Limitation Year.
For any Plan Year during which the Plan is Top-Heavy, the Defined Benefit and
Defined Contribution Plan Fractions shall be calculated in accordance with Code
Section 416(h). The Annual Additions which may be credited to the Participant's
account under this Plan for any Limitation Year will be limited in accordance
with the Adoption Agreement.
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ARTICLE XI
ANTIDISCRIMINATION TESTING
11.1 GENERAL TESTING REQUIREMENTS With respect to each Plan Year, an Employer's
Plan which offers a Code Section 401(k) cash or deferred arrangement and any
contributions made thereunder must satisfy the Average Deferral Percentage Test
(ADP Test) and, if applicable, the Average Contribution Percentage Test (ACP
Test). Under each of these tests, the Average Deferral Percentage and Average
Contribution Percentage for Highly Compensated Employees may not exceed the
Average Deferral Percentage and Average Contribution Percentage for non-Highly
Compensated Employees by more than the amount permitted by application of the
basic limit or the alternative limit. These limits are described at paragraph
11.2 hereof. If the Average Deferral Percentage or Average Contribution
Percentage for Highly Compensated Employees exceeds the basic limit or the
alternative limit, the applicable average for Highly Compensated Employees must
be reduced to the maximum permitted under the most liberal limit. The reduction
in the average is determined in accordance with paragraph 11.3 hereof.
The Employer may elect to make an additional Qualified Non-Elective Contribution
(QNEC) and/or a Qualified Matching Contribution (QMAC) for non-Highly
Compensated Employees to increase their Average Deferral Percentage and/or
Average Contribution Percentage to the point where the Plan satisfies the ADP
and/or the ACP Test. These qualified contributions are described at paragraph
11.4 hereof.
If the Plan can only satisfy the ADP Test and the ACP Test by application of the
alternative limit, the Plan must apply the aggregate limit as described at
paragraph 11.2 hereof. If the Plan fails to satisfy the aggregate limit, the
Employer must either make correcting distributions to affected Highly
Compensated Employees or make QNEC and/or QMAC contributions for non-Highly
Compensated Employees. The Employer may instead elect to make an additional
Qualified Non-Elective contribution (QNEC) and/or Qualified Matching
Contribution (QMAC) to increase the Average Deferral Percentage and/or Average
Contribution Percentage of non-Highly Compensated Employees to the point where
the Plan satisfies the ADP and/or ACP Test. The Employer may allocate correcting
distributions and/or qualified contributions between amounts included in the ADP
Test or the ACP Test.
11.2 TESTING LIMITATIONS
(a) PRIOR YEAR TESTING - The Actual Deferral Percentage
(hereinafter "ADP") for a Plan Year for Participants who are
Highly Compensated Employees for each Plan Year and the prior
year's ADP for Participants who were non-Highly Compensated
Employees for the prior Plan Year must satisfy one of the
following tests:
(1) The ADP for a Plan Year for Participants who are
Highly Compensated Employees for the Plan Year shall
not exceed the prior year's ADP for Participants who
were non-Highly Compensated Employees for the prior
Plan Year multiplied by 1.25: or
(2) The ADP for a Plan Year for Participants who are
Highly Compensated Employees for the Plan Year shall
not exceed the prior year's ADP for Participants who
were non-Highly Compensated Employees for the prior
Plan Year multiplied by 2.0, provided that the ADP
for Participants who are Highly Compensated Employees
does not exceed the ADP for Participants who were
non-Highly Compensated Employees in the prior Plan
Year by more than 2 percentage points.
For the first Plan Year in a Plan which permits a
Participant to make Elective Deferrals and is not a
successor Plan, for purposes of the foregoing tests,
the prior year's non-Highly Compensated Employees'
ADP shall be 3% or the actual ADP if greater, unless
the Employer has elected in the Adoption Agreement to
use the Plan Year's ADP for these Participants.
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(b) CURRENT YEAR TESTING - If elected by the Employer in the
Adoption Agreement, the ADP tests in 1 and 2, above, will be
applied by comparing the current Plan Year's ADP for
Participants who are Highly Compensated Employees with the
current Plan Year's ADP for Participants who are non-Highly
Compensated Employees. Once made, this election can only be
undone if the Plan meets the requirements for changing to
prior year testing set forth in Notice 98-1 (or superseding
guidance).
11.3 CALCULATION AND DISTRIBUTION OF EXCESS CONTRIBUTIONS AND EXCESS AGGREGATE
CONTRIBUTIONS
(a) REDUCING THE AVERAGE FOR HIGHLY COMPENSATED EMPLOYEES - The
Average Deferral Percentage and/or Average Contribution
Percentage for Highly Compensated Employees is reduced to the
maximum allowed by the applicable limit at paragraph 11.2. The
average is reduced on a step-by-step leveling basis beginning
by reducing the Actual Deferral Percentage or the Actual
Contribution Percentage for the Highly Compensated Employee
with the highest percentage until the average is reduced to
the maximum allowed or until the Actual Deferral Percentage or
Actual Contribution Percentage for such Highly Compensated
Employee is lowered to that of the Highly Compensated Employee
with the next highest percentage. This process continues until
the Average Deferral Percentage and/or the Average
Contribution Percentage is lowered to the maximum allowed for
the Plan Year. The excess dollar amount attributable to each
affected Highly Compensated Employee is then totaled for
purposes of correcting distributions determined at paragraph
(b) below.
(b) CORRECTING DISTRIBUTIONS TO HIGHLY COMPENSATED EMPLOYEES -The
total amount to be distributed as determined under paragraph
(a) is allocated to Highly Compensated Employees on the basis
of the dollar amount included for such Employee in the
numerator of the Actual Deferral Percentage or the Actual
Contribution Percentage, as applicable. The distribution for
each affected Highly Compensated Employee is determined on a
leveling basis similar to that described at paragraph (a)
except that the process is based on dollars rather than
percentages. Excess Contributions are allocated to the Highly
Compensated Employees with the largest amount of Employer
contributions taken into account in calculating the Average
Deferral Percentage or Average Contribution Percentage test
for the year in which the excess arose, beginning with the
Highly Compensated Employee with the largest amount of such
Employer contributions and continuing in descending order
until all the Excess Contributions have been allocated. For
purposes of the preceding sentence, the "largest amount" is
determined after distribution of any Excess Contribution.
After correcting distributions are allocated, it is not
necessary to recompute the Highly Compensated Employee
averages to determine if they satisfy the ADP Test and/or the
ACP Test. Distributions of Excess Contributions and Excess
Aggregate Contributions are to be made in accordance with
paragraphs 7.12 and 7.13 hereof.
11.4 QUALIFIED NON-ELECTIVE AND/OR MATCHING CONTRIBUTIONS The Employer may make
a QNEC or QMAC for any or all non-Highly Compensated Employees to increase the
Average Deferral Percentage and/or Average Contribution Percentage to the point
where the Plan passes the ADP Test and/or the ACP Test. The following rules
apply with respect to such contributions:
(a) A QNEC or QMAC used in the ADP Test may not also be included
in the ACP Test.
(b) If the Employer elects to test on the basis of current year
data, QNECs and/or QMACs must be made and credited to
Participant accounts not later than the last day of the
12-consecutive month period following the end of the Plan Year
being tested.
(c) If the Employer elects to test on the basis of prior year data
for non-Highly Compensated Employees, QNECs and/or QMACs for
such Employees must be contributed not later than the last day
of the Plan Year being tested.
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64
11.5 SPECIAL RULES RELATING TO APPLICATION OF THE ADP TEST A Participant is a
Highly Compensated Employee for a particular Plan Year if he or she meets the
definition of a Highly Compensated Employee in effect for that Plan Year.
Similarly, a Participant is a non-Highly Compensated Employee for a particular
Plan Year if he or she does not meet the definition of a Highly Compensated
Employee in effect for that Plan Year.
(a) The Actual Deferral Percentage for any Participant who is a
Highly Compensated Employee 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 his or her accounts
under two 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. If a Highly Compensated Employee participates in
two or more cash or deferred arrangements that have different
Plan Years, all cash or deferred arrangements ending with or
within the same calendar year shall be treated as a single
arrangement. Notwithstanding the foregoing, certain plans
shall be treated as separate if mandatorily disaggregated
under regulations under Code Section 401(k).
(b) In the event that this Plan satisfies the requirements of Code
Sections 401(k), 401(a)(4), or 410(b) only if aggregated with
one or more other plans, or if one or more other plans satisfy
the requirements of such Code Sections only if aggregated with
this Plan, then this section shall be applied by determining
the Actual Deferral Percentage of Employees as if all such
plans were a single plan. Any adjustments to the non-Highly
Compensated Employee ADP for the prior year will be made in
accordance with 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.
(c) The Employer shall maintain records sufficient to demonstrate
satisfaction of the ADP test and the amount of Qualified
Non-Elective Contributions or Qualified Matching
Contributions, or both, used in such test.
(d) The determination and treatment of the Actual Deferral
Percentage amounts of any Participant shall satisfy such other
requirements as may be prescribed by the Secretary of the
Treasury.
(e) Solely for the first Plan Year to which paragraph 11.1
applies, the Employer can elect in the Adoption Agreement to
determine the ADP of the non-Highly Compensated Employees to
be the actual ADP determined for the first Plan Year or 3%.
(f) For purposes of determining the ADP test, Elective Deferrals,
Qualified Non-Elective Contributions and Qualified Matching
Contributions must be made before the end of the 12-month
period immediately following the Plan Year to which the
contributions relate.
11.6 RECHARACTERIZATION If the Employer allows for Voluntary Contributions in
the Adoption Agreement, a Participant may treat his or her Excess Contributions
as an amount distributed to the Participant and then contributed by the
Participant to the Plan. Recharacterized amounts will remain nonforfeitable and
subject to the same distribution requirements as Elective Deferrals. Amounts may
not be recharacterized by a Highly Compensated Employee to the extent that such
amount in combination with other Employee contributions made by that Employee
would exceed any stated limit under the Plan on Voluntary Contributions.
Recharacterization must occur no later than two and one-half months after the
last day of the Plan Year in which such Excess Contributions arose and is deemed
to occur no earlier than the date the last Highly Compensated Employee is
informed in writing of the amount recharacterized and the consequences thereof.
Recharacterized amounts will be taxable to the Participant for the Participant's
tax year in which the Participant would have received them in cash.
11.7 SPECIAL RULES RELATING TO APPLICATION OF THE ACP TEST Employee
contributions and Matching Contributions must meet the nondiscrimination
requirements of Code Section 401(a)(4) and the Average Contribution Percentage
(hereinafter ACP) test of Code Section 401(m). If Employee contributions
(including any
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Basic DC Plan Document #01 January 13, 1999
65
Elective Deferrals recharacterized as Voluntary Contributions) or Matching
Contributions are made in connection with a cash or deferred arrangement, the
ACP is in addition to the ADP under Code Section 401(k). Qualified Matching
Contributions and Qualified Non-Elective Contributions used to satisfy the ADP
test may not be used to satisfy the ACP test.
(a) PRIOR YEAR TESTING - The ACP for a Plan Year for Participants
who are Highly Compensated Employees for each Plan Year and
the prior year's ACP for Participants who were non-Highly
Compensated Employees for the prior Plan Year must satisfy one
of the following tests
(1) The ACP for a Plan Year for Participants who are
Highly Compensated Employees for the Plan Year shall
not exceed the prior year's ACP for Participant's who
were non-Highly Compensated Employees for the prior
Plan Year multiplied by 1.25; or
(2) The ACP for a Plan Year for Participants who are
Highly Compensated Employees for the Plan Year shall
not exceed the prior year's ACP for Participants who
were non-Highly Compensated Employees for the prior
Plan Year multiplied by 2, provided that the ACP for
Participants who are Highly Compensated Employees
does not exceed the ACP for Participants who were
non-Highly Compensated Employees in the prior Plan
Year by more than 2 percentage points.
For the first Plan Year, if this Plan permits any Participant
to make Employee contributions, provides for Matching
Contributions or both, and this is not a successor Plan, for
purposes of the foregoing tests, the prior year's non-Highly
Compensated Employee's ACP shall be 3% unless the Employer has
elected in the Adoption Agreement to use the Plan Year's ACP
for these Participants.
(b) CURRENT YEAR TESTING - If elected by the Employer in the
Adoption Agreement, the ACP tests in 1 and 2, above, will be
applied by comparing the current Plan Year's ACP for
Participants who are Highly Compensated Employees with the
current Plan Year's ACP for Participants who are non-Highly
Compensated Employees. Once made, this election can only be
undone if the Plan meets the requirements for changing to
prior year testing set forth in Notice 98-1 (or superseding
guidance).
(c) A Participant is a Highly Compensated Employee for a
particular Plan Year if he or she meets the definition of a
Highly Compensated Employee in effect for that Plan Year.
Similarly, a Participant is a non-Highly Compensated Employee
for a particular Plan Year if he or she does not meet the
definition of Highly Compensated Employee in effect for that
Plan Year.
(d) If one or more Highly Compensated Employees participate in
both a cash or deferred arrangement and a plan subject to the
ACP test maintained by the Employer and the sum of the ADP and
ACP of those Highly Compensated Employees subject to either or
both tests exceeds the Aggregate Limit, then the ADP or ACP of
those Highly Compensated Employees who also participate in a
cash or deferred arrangement will be reduced in accordance
with paragraph 11.3 so that the limit is not exceeded. The
amount by which each Highly Compensated Employee's
Contribution Percentage Amounts is reduced shall be treated as
an Excess Aggregate Contribution. The ADP and ACP of the
Highly Compensated Employees are determined after any
corrections required to meet the ADP and ACP tests and are
deemed to be the maximum permitted under such tests for the
Plan Year. Multiple use does not occur if either the ADP and
ACP of the Highly Compensated Employee does not exceed 1.25
multiplied by the ADP and ACP of the non-Highly Compensated
Employees.
(e) For purposes of this Article, the Contribution Percentage for
any Participant who is a Highly Compensated Employee and who
is eligible to have Contribution Percentage Amounts allocated
to his or her account under two or more plans described in
Code Section 401(a) or arrangements described in Code Section
401(k) that are maintained by the Employer, shall be
determined as if the total of such Contribution Percentage
Amounts was made under each plan. If a Highly
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66
Compensated Employee participates in two or more cash or
deferred arrangements that have different Plan Years, all cash
or deferred arrangements ending with or within the same
calendar year shall be treated as a single arrangement.
Notwithstanding the foregoing, certain plans shall be treated
as separate if mandatory disaggregation under the Regulations
issued under Code Section 401(k) apply.
(f) 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 Code Sections only if aggregated with
this Plan, then this section shall be applied by determining
the Contribution Percentage of Employees as if all such plans
were a single plan. Any adjustments to the non-Highly
Compensated Employee ACP for the prior year will be made in
accordance with 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(m) only if the aggregated
plans have the same Plan Year and use the same ACP testing
method.
(g) For purposes of determining the Contribution Percentage test,
Employee contributions are considered to have been made in the
Plan Year in which contributed to the Plan. Matching
Contributions and Qualified Non-Elective Contributions will be
considered made for a Plan Year if made no later than the end
of the twelve-month period beginning on the day after the
close of the Plan Year.
(h) The Employer shall maintain records sufficient to demonstrate
satisfaction of the ACP test and the amount of Qualified
Non-Elective Contributions or Qualified Matching
Contributions, or both, used in such test.
(i) The determination and treatment of the Contribution Percentage
of any Participant shall satisfy such other requirements as
may be prescribed by the Secretary of the Treasury.
(j) Solely for the first Plan Year to which paragraph 11.1
applies, the Employer can elect in the Adoption Agreement to
determine the ACP of the non-Highly Compensated Employees to
be the actual ACP determined for the first Plan Year or 3%.
11.8 GENERAL SAFE-HARBOR RULES Notwithstanding the preceding provisions of this
Article XI, for Plan Years beginning in 1999 and later, an Employer's Plan which
offers a Code Section 401(k) cash or deferred arrangement may automatically
satisfy the ADP Test and the ACP Test for the Plan Year by satisfying the
following Safe-Harbor Contribution and notice requirements as authorized in IRS
Notice 98-52.
The Employer may elect in the Adoption Agreement either to make a Safe-Harbor
Non-Elective Contribution on behalf of each non-Highly Compensated Employee who
is eligible to participate in the Plan equal to at least 3% of the Employee's
Compensation, or to make a Safe-Harbor Matching Contribution on behalf of each
non-Highly Compensated Employee who is eligible to participate in the Plan and
who is making Elective Deferrals. Said Safe-Harbor Matching Contribution shall
be made, under the Basic Matching Formula or an Enhanced Matching Formula as
described below.
(a) BASIC MATCHING CONTRIBUTION FORMULA - The Basic Matching
formula provides a Matching Contribution on behalf of each
eligible non-Highly Compensated Employee who is making
Elective Deferrals to the Plan in an amount equal to (1) 100%
of the amount of the Employee's Elective Deferrals that do not
exceed 3% of the Employee's Compensation and 50% of the amount
of the Employee's Elective Deferrals that exceed 3% of the
Employee's Compensation but do not exceed 5% of the Employee's
Compensation. A Plan satisfying the ADP Safe-Harbor using the
Basic Matching Formula automatically satisfies the ACP test
with regard to Matching Contributions, if no other Matching
Contribution is made under the Plan.
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(b) ENHANCED MATCHING FORMULA - The Enhanced Matching Formula
provides Matching Contributions on behalf of each eligible
non-Highly Compensated Employee who is making Elective
Deferrals to the Plan under a formula, that, at any rate of
Elective Deferrals, provides an aggregate amount of Matching
Contributions at least equal to the aggregate amount of
Matching Contributions that would have been provided under the
Basic Matching Formula. In no event shall the aggregate amount
of Matching Contributions under an Enhanced Matching Formula
exceed 6% of an eligible Employee's Compensation. Under the
Enhanced Matching Formula, the rate of Matching Contributions
may not increase as a Participant's rate of Elective Deferrals
increase. A Plan satisfying the ADP Safe-Harbor using the
Enhanced Matching Formula under which Matching Contributions
made with respect to Elective Deferrals are not made in excess
of 6% of the eligible Employee's Compensation automatically
satisfies the ACP test with regard to Matching Contributions,
if no other Matching Contribution is made under the Plan.
(c) LIMITATION ON MATCHING CONTRIBUTIONS TO HIGHLY COMPENSATED
EMPLOYEES - The Matching Contribution requirement will not be
satisfied if, at any rate of Elective Deferrals, the rate of
Matching Contributions that would apply with respect to any
Highly Compensated Employee who is making Elective Deferrals
under the Plan is greater than the rate of Matching
Contributions that would apply with respect to any non-Highly
Compensated Employee who is making Elective Deferrals to the
Plan and who has the same rate of Elective Deferrals.
11.9 REQUIRED RESTRICTIONS ON SAFE-HARBOR CONTRIBUTIONS For the purposes of this
section, Safe-Harbor Matching Contributions and Safe-Harbor Non-Elective
Contributions are Matching and Non-Elective Contributions respectively, that are
(1) nonforfeitable within the meaning of Treasury Regulation Section
1.401(k)-1(c), (2) are available to all eligible employees, (3) are subject to
the withdrawal restrictions of Code Section 401(k)(2)(B) and Treasury Regulation
Section 1.401(k)-1(d), and (4) are used to satisfy the Safe-Harbor Contribution
requirements. Pursuant to Code Section 401(k)(2)(B) and Treasury Regulation
Section 1.401(k)-1(d), such contributions (and earnings thereon) must not be
distributable earlier than separation from Service, death, Disability, an event
described in Code Section 401(k)(10), or in the case of a profit-sharing or
stock bonus plan, the attainment of age 59 1/2. Pursuant to Code Section
401(k)(2)(B) and Treasury Regulation Section 1.401(k)-1(d)(2)(ii), said
contributions shall not be eligible for distribution for reasons of Hardship. A
Plan electing to use either of the Safe-Harbor Matching Contribution provisions
shall not require that an Employee eligible to receive a Safe-Harbor
Non-Elective Contribution or a Matching Contribution be employed on the last day
of the Plan Year.
11.10 ACP TEST SAFE-HARBOR The Employer maintaining a Defined Contribution Plan
that makes Matching Contributions on Required or Voluntary Employee
Contributions may elect in the Adoption Agreement to make a Safe-Harbor Matching
Contribution in order to satisfy the ACP Test Safe-Harbor. In order to comply
with the ACP Test Safe-Harbor, the following requirements shall be satisfied:
(a) The Matching Contribution elected in the Adoption Agreement
shall not be made with respect to Required or Voluntary
Contributions in excess of 6% of the eligible Employee's
Compensation.
(b) The rate of Matching Contribution shall not increase as the
rate of Required or Voluntary Contributions or the rate of
Elective Deferrals increases.
(c) At any rate of Required or Voluntary Contributions, the rate
of Matching Contributions that would apply with respect to any
Highly Compensated Employee who is making such contributions
under the Plan may not exceed the rate of Matching
Contributions that would apply with respect to any non-Highly
Compensated Employee who is making Required or Voluntary
Contributions to the Plan and who has the same rate of such
contributions.
For Plan Years beginning after December 31, 1999, a discretionary Matching
Contribution that exceeds a dollar amount equal to 4% of an eligible Employee's
Compensation shall not satisfy the ACP Test Safe-Harbor.
11.11 SAFE-HARBOR NOTICE REQUIREMENT The notice requirement is satisfied if each
Employee who has satisfied the Plan's requirements for participation is given
written notice of the Employee's rights and obligations under the
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Plan and the notice provided to the Employee satisfies the content requirement
and the timing requirement mandated under IRS Notice 98-52.
(a) CONTENT OF THE NOTICE - The notice shall be sufficiently
accurate and comprehensive to inform the Employee of the
Employee's rights and obligations under the Plan and written
in a manner calculated to be understood by the average
Employee eligible to participate in the Plan. Said notice
shall accurately describe: (i) the Safe-Harbor Matching or
Non-Elective Contribution Formula elected by the Plan
(including a description of the levels of Matching
Contributions, if any, available under the Plan); (ii) any
other contributions under the Plan (including the potential
for discretionary Matching Contributions) and the conditions
under which such contributions are made; (iii) the Plan to
which the Safe-Harbor Contributions will be made (if different
than the Plan containing the cash or deferred arrangement);
(iv) the type and amount of Compensation that may be deferred
under the Plan; (v) how to make cash or deferred elections,
including any administrative requirements that apply to such
elections; (vi) the periods available under the Plan for
making cash or deferred elections; and (vii) withdrawals and
vesting provisions applicable to contributions under the Plan.
For a Plan adopting the safe-harbor provisions for a Plan Year
that begins before January 1, 2000, a notice will not fail to
satisfy the content requirement for that Plan Year merely
because the notice does not include all of the items listed
above, provided that the notice satisfies a reasonable good
faith interpretation of the notice requirements under Code
Sections 401(k)(12) and 401(m)(11).
(b) TIMING OF THE NOTICE - If the notice is provided to eligible
Employees within a reasonable period before the beginning of
the Plan Year (or in the year an Employee becomes eligible
within a reasonable period before the Employee becomes
eligible), the Plan shall satisfy the safe-harbor notice
requirements. Notwithstanding the foregoing general rule, a
notice shall be deemed to be provided in timely manner if said
notice is provided to each Employee who is eligible to
participate in the Plan for the Plan Year at least 30 days
(and no more than 90 days) before the beginning of the Plan
Year. If an Employee does not receive the foregoing notice
because he or she only becomes eligible to participate in the
Plan after the 90th day before the beginning of the Plan Year,
the requirement to give said notice will be satisfied if the
notice is provided not more than 90 days before the Employee
becomes eligible to participate, but in no event later than
the date the Employee becomes eligible. The preceding sentence
shall apply in the case of any Employee eligible for the first
Plan Year in which an Employee becomes eligible under an
existing Code Section 401(k) cash or deferred arrangement.
(c) SPECIAL TRANSITION RULE FOR PLAN YEARS BEGINNING ON OR BEFORE
APRIL 1, 1999 - The notice requirement described in this
paragraph satisfies the timing requirement for that Plan Year
(with respect to an existing Code Section 401(k) Plan or a
newly established one) if the notice is given on or before
March 1, 1999. In order to satisfy the ADP or ACP Test
Safe-Harbor for the Plan Year, a Plan that is using the
transition relief provided must still satisfy the otherwise
applicable requirements of IRS Notice 98-52 with respect to
the entire Plan Year.
11.12 SAFE-HARBOR SHORT PLAN YEARS A Plan will fail to satisfy the ADP Test
Safe-Harbor or the ACP Test Safe-Harbor for a Plan Year unless (i) the Plan Year
is 12 months in duration or (ii) in the case of the first Plan Year of a newly
established Plan (other than a successor plan), the Plan Year is at least 3
months in duration (or any shorter period in the case of a newly established
Employer that establishes the Plan as soon as administratively feasible after
the Employer came into existence).
11.13 SATISFYING SAFE-HARBOR CONTRIBUTION REQUIREMENTS UNDER ANOTHER DEFINED
CONTRIBUTION PLAN
(a) GENERAL REQUIREMENTS - A Safe-Harbor Matching or Non-Elective
Contribution may be made to this Plan or to another Defined
Contribution Plan maintained by the Employer that satisfies
Code Sections 401(a) or 403(a). The Employer electing this
option shall do so by identifying the Plan that makes the
Safe-Harbor Contribution in the Adoption Agreement. If the
Safe-Harbor Contributions are made to another Defined
Contribution Plan, the Safe-Harbor Contribution requirements
must be satisfied in the same manner as if the contributions
were being made to this Plan. A Safe-Harbor Contribution made
to another Defined Contribution Plan shall not satisfy this
Safe-Harbor unless each Employee eligible to participate in
this Plan is eligible to participate in the other Defined
Contribution Plan under the same terms and conditions.
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(b) SAME PLAN YEAR REQUIREMENT - In order to satisfy the
Safe-Harbor Contribution requirements, this Plan and the other
Defined Contribution Plan to which the Safe-Harbor
Contribution is to be made must have the same Plan Year.
(c) TRANSITION RULE FOR THE 1999 PLAN YEAR - For Plan Years of
Plans containing a cash or deferred arrangement beginning
before January 1, 2000 a contribution used to satisfy the
Safe-Harbor Contribution requirements for a cash or deferred
arrangement may also be made to another Defined Contribution
Plan that does not have the same Plan Year as the Plan
maintaining the cash or deferred arrangement. Under this
provision, the Safe-Harbor Contribution must be allocated as
of a date within the Plan Year of the Plan containing the cash
or deferred arrangement and must be made no later than 12
months after the close of that Plan Year. In order for
Safe-Harbor Contributions to be made to another Defined
Contribution Plan, it is not necessary that the other plan be
capable of being aggregated with the plan containing the cash
or deferred arrangement for purposes of Code Section 410(b).
Notwithstanding Treasury Regulation Section 1.410(b)-7(c)(2)
and 54.4975-11(e) a contribution to an employee stock
ownership plan (ESOP) may be used to satisfy the Safe-Harbor
Contribution requirements for a cash or deferred arrangement
that is not part of the ESOP.
11.14 SINGLE USE OF SAFE-HARBOR CONTRIBUTIONS Safe-Harbor Matching or
Non-Elective Contributions cannot be used to satisfy the Safe-Harbor
Contribution requirements with respect to more than one Plan.
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ARTICLE XII
ADMINISTRATION
12.1 PLAN ADMINISTRATOR The Employer shall be the named fiduciary and serve as
Plan Administrator unless an individual or other entity (excluding the Trustee
or Custodian as the case may be, unless they are the Employer sponsoring the
Plan) is named to serve in such capacity. The Plan Administrator may appoint or
allocate the duties of the Plan Administrator among several individuals or
entities. The Plan Administrator's duties shall include:
(a) appointing the Plan's attorney, accountant, Recordkeeper,
actuary, Trustee, Custodian, investment manager, or any other
party needed to administer the Plan,
(b) directing the appropriate party with respect to payments from
the Trust,
(c) communicating with Employees regarding their participation and
benefits under the Plan, including the administration of all
claims procedures,
(d) maintaining all necessary records for the administration of
the Plan and filing any returns and reports with the Internal
Revenue Service, Department of Labor, or any other
governmental agency,
(e) reviewing and approving any financial reports, investment
reviews, or other reports prepared by any party appointed by
the Employer under paragraph (a),
(f) establishing a funding policy and investment objectives
consistent with the purposes of the Plan and the Employee
Retirement Income Security Act of 1974,
(g) construing and resolving any question of Plan interpretation
and questions of fact. The Plan Administrator's interpretation
of Plan provisions and resolution of questions of facts
including eligibility and benefits under the Plan, is final,
and unless it can be shown to be arbitrary and capricious will
not be subject to "de novo" review;
(h) monitoring the activities of the Trustee and the performance
of and making changes when necessary to the portfolio of the
Plan,
(i) obtaining a legal determination of the qualified status of all
domestic relations orders and complying with the requirements
of the law with regard thereto, and
(j) ensuring that any and all loans made by the Plan are in
compliance with the requirements of the Internal Revenue Code
and the regulations issued thereunder, and the regulations
issued by the Department of Labor.
12.2 TRUSTEE Unless the Employer retains investment management responsibility or
delegates investment management responsibility to an investment manager or to
Plan Participants with respect to all or a portion of the Plan's assets, the
Trustee shall be responsible for the investment management of the Trust.
(a) As investment manager, the Trustee shall invest the Trust in
accordance with the Plan's investment policy statement and the
investment alternatives permitted at paragraph 14.3 hereof.
The Trustee shall also perform custodial functions described
at paragraph 12.3 hereof for the Trust with respect to Plan
assets over which the Trustee has investment management
responsibility. The Trustee may also perform custodial
functions for the Trust with respect to Plan assets the
Trustee does not manage, to the extent agreed to between the
Trustee and the Employer, if the Trustee is appointed
Custodian for some or all of such assets in accordance with
the terms of the Plan. The Trustee may execute any additional
documents as required which shall be treated as an addendum to
this Basic Plan Document #01. No such agreement may conflict
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with any provision of this Basic Plan Document #01. In
addition, any provision of such an agreement which would
jeopardize the tax-qualified status of the Plan and Trust
shall be null and void. The Trustee's administrative duties
shall be limited to those agreed to between the parties. The
Employer or his designate shall be responsible for other
administrative duties required under the Plan or by applicable
law.
(b) Within 90 days following the close of each Plan Year, or at
such other times as may be agreed to between the Employer and
the Trustee, and within 90 days following its removal or
resignation, the Trustee shall file with the Employer a report
of that part of the Trust under the investment management of
the Trustee during such year or from the end of the preceding
Plan Year to the date of removal or resignation. Such report
shall include a statement of receipts and disbursements , the
net income, or loss of the Trust, the gains or losses realized
by the Trust upon sale or other disposition of the assets, the
increase, or decrease, in the value of the Trust, all payments
and distributions made from the Trust since the date of its
last report and shall contain a schedule of assets listing the
fair market value of investments held in the Trust as of the
end of the Plan Year or the date of removal or resignation, as
applicable. The fair market value of investments for which
there is a ready market shall be determined using the most
recent price quoted on a national or other recognized
securities exchange or over- the-counter market. The fair
market value of illiquid investments shall be obtained by a
valuation performed by an independent appraiser appointed by
the Trustee for this purpose. His determination shall be
final. The Employer shall review the Trustee's report and
notify the Trustee in the event of its disapproval of the
report within 90 days, providing the Trustee with a written
description of the items in question. The Trustee shall have
60 days to provide the Employer with a written explanation of
the items in question. If the Employer again disapproves, the
Trustee shall have the right to file its report in a court of
competent jurisdiction for audit and adjudication. In the
event the Employer fails to file a written objection to the
Trustee's report within the 90 day period following receipt of
the report, the Employer shall be deemed to have approved the
report. In such case, the Trustee shall be released and
discharged with respect to all matters contained in the
report.
12.3 CUSTODIAN The Custodian shall be responsible for the holding and
safekeeping of all or a portion of the Plan's assets. If elected by the
Employer, all or any portion of the Plan's assets may be held by one or more
Custodian(s), appointed under this Plan. Such separate assets shall be held
pursuant to the terms of a separate custodial agreement with such Custodian. The
separate custodial agreement shall be treated as an addendum to this Basic Plan
Document #01 and, as such, may not conflict with any provision of this Basic
Plan Document #01. In addition, any provision of a separate custodial agreement
which would jeopardize the tax qualified status of this Plan and Trust shall be
null and void. In addition to the holding and safekeeping of Plan assets, the
Custodian's duties shall include:
(a) receiving contributions under the terms of the Plan, but not
determining the amount or enforcing the payment thereof,
(b) making distributions from the Plan in accordance with
instructions received from the Plan Administrator or an
authorized representative of the Employer,
(c) keeping accurate records reflecting its administration of the
Trust and making such records, statements and reports
available to the Employer for review and audit at such times
as agreed to between the Custodian and the Employer, and
(d) employing such agents, attorneys or other professionals as the
Employer may deem necessary or advisable in the performance of
its duties.
The Custodian's duties shall be limited to those as agreed to between the
Employer and the Custodian. The Employer shall be responsible for any other
administrative duties required under the Plan or by applicable law.
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12.4 ADMINISTRATIVE FEES AND EXPENSES All reasonable fees, charges and expenses
incurred by the Trustee or the Custodian in connection with the administration
of the Trust and all reasonable fees, charges and expenses incurred by the Plan
Administrator in connection with the administration of the Plan (including such
reasonable compensation to the Trustee/Custodian and the Plan Administrator as
may be agreed upon from time to time between the Employer, the Trustee/Custodian
or the Employer and Plan Administrator) and fees for legal services rendered to
the Trustee/Custodian or Plan Administrator shall be paid from the Plan unless:
(a) The payment of such expense would constitute a "prohibited
transaction" within the meaning of ERISA Section 406 or Code
Section 4975.
(b) The Employer actually pays such expenses directly. Any and all
reasonable additional administrative expenses incurred to
effect investment directives made by the Participants and by
each Designated Beneficiary under this Plan shall be paid by
the Trust and as determined by the Employer shall either be
charged (in accordance with such reasonable nondiscriminatory
rules as the Employer deems appropriate under the
circumstances) to the account of the individual issuing such
directive, or treated as a general expense of the Trust.
Notwithstanding the foregoing, nothing in this section shall
prevent the Employer from paying such administrative expenses
directly.
(c) All transaction related expenses incurred to effect a specific
investment for a Participant directed account (such as
brokerage commissions and other transaction related expenses),
shall, as determined by the Employer, either be paid from or
otherwise be charged directly to the account of the
Participant providing such direction or treated as a general
expense of the Trust.
(d) If there are insufficient liquid assets of the Trust to cover
the fees of the Trustee or the Employer then assets of the
Trust shall be liquidated to the extent necessary to cover
fees.
(e) Notwithstanding the foregoing, no compensation other than
reimbursement for expenses incurred shall be paid to a Plan
Administrator who is the Employer or Employee of the Employer.
(f) In the event any part of the Plan becomes subject to tax, all
taxes incurred will be paid from the Plan at the direction of
the Plan Administrator.
12.5 LIMITATION ON LIABILITY AND INDEMNIFICATION
(a) The Trustee shall have the authority and discretion to manage
and govern the Plan to the extent provided in this instrument,
but does not guarantee the Plan in any manner against
investment loss or depreciation in asset value, or guarantee
the adequacy of the Trust to meet and discharge all or any
liabilities of the Plan.
(b) The Trustee shall not be liable for the making, retention or
sale of any investment or reinvestment made by it, as herein
provided, or for any loss to, or diminution of the Trust, or
for any other loss or damage which may result from the
discharge of its duties hereunder except to the extent it is
judicially determined such loss or damage is attributable to
the Trustee/Custodian's breach of its duties hereunder or
under ERISA.
(c) An institution acting as a nondiscretionary Trustee shall have
no discretion or investment management responsibility and
shall only be responsible to perform the functions described
at paragraph 12.3 hereof. The Custodian or Trustee (whether
nondiscretionary or discretionary) has no responsibility with
respect to Plan investments and does not guarantee the
adequacy of the Trust to meet and discharge any or all
liabilities associated with the Plan.
(d) The Employer warrants that all directions issued to the
Trustee or Custodian by it or the Plan Administrator will be
in accordance with the terms of the Plan and not contrary to
the provisions of the Employee Retirement Income Security Act
of 1974, as amended, and the regulations issued thereunder.
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(e) Neither the Trustee nor the Custodian shall be answerable for
any action taken pursuant to any direction, consent,
certificate, or other paper or document in the belief that the
same is genuine. All directions by the Employer, Participant,
the Plan Administrator or an investment manager shall be in
writing, shall be given orally and promptly confirmed in
writing in accordance with reasonable procedures developed
with the Trustee/Custodian or shall be made pursuant to
pre-approved communication procedures to which the Employer,
Participant or Plan Administrator or an investment manager has
consented to in writing. The Employer shall deliver to the
Trustee and Custodian written notification identifying the
individual or individuals authorized to act for the Plan and
shall deliver specimens of their signatures to the
Trustee/Custodian.
(f) The duties and obligations of the Trustee and the Custodian
shall be limited to those expressly imposed by this instrument
or subsequently agreed upon by the parties in writing.
Responsibility for administrative duties required under the
Plan or applicable law not expressly imposed upon or agreed to
by the Trustee or the Custodian, shall rest solely with the
Employer.
(g) The Trustee and the Custodian shall be indemnified and saved
harmless by the Employer from and against any and all
liabilities to which the Trustee or the Custodian may be
subjected, including all expenses reasonably incurred in its
defense, except any liability judicially determined to result
directly from the Trustee's or Custodian's negligence for any
action or failure to act resulting from compliance with the
instructions of the Employer, Plan Participants, investment
manager, the Employees or agents of the Employer, the Plan
Administrator, or any other fiduciary to the Plan, and for any
liability arising from the actions or non-actions of any
predecessor Trustee, Custodian or fiduciary under the Plan.
(h) Neither the Trustee nor the Custodian shall be responsible in
any way for the application of any payments it is directed to
make or for the adequacy of the Trust to meet and discharge
any and all liabilities under the Plan.
(i) The Employer shall indemnify the Trustee/Custodian against,
and agrees to hold the Trustee/Custodian harmless from, all
liabilities and claims including attorney's fees and expenses
in defending against such liabilities and claims against the
Trustee/Custodian, arising from the Trustee's performance of
its duties under this Article unless such liability or claim
results from the gross negligence, willful misconduct, or
failure to satisfy the standard of conduct found paragraph
14.1 herein of the Trustee/Custodian, or where the
Trustee/Custodian is found to have breached its duties under
the Article, or Part 4 of Title I of ERISA by a final judgment
of a court of competent jurisdiction. The Employer also shall
indemnify the Trustee/Custodian against and agrees to hold the
Trustee/Custodian harmless from all liabilities and claims
against the Trustee/Custodian including attorney's fees and
other expenses in defending against such liabilities or
claims, arising from any actions or breach or responsibility
by any party other than the Trustee/Custodian, including
without limitation by specification any acts of a prior
Trustee or of another Trustee or Custodian appointed by the
Employer.
Anything in the prior paragraph to the contrary
notwithstanding, the Employer expressly agrees to indemnify
the Trustee/Custodian against any liability or claim
(including attorney's fees and expenses in defending against
such liabilities or claims) arising as a result of any act
taken or failure to act, in accordance with the directions
from the Employer, Plan Administrator, investment manager,
Participant, or by a designee specified by the Employer,
directly or transmitted by a designated service provider to
the Plan and without limitation by specification.
(j) The Trustee/Custodian will take all reasonable steps to assure
the security of any data received from the Employer in
connection with services provided to the Plan. The Employer
will be responsible for retaining duplicate copies of any such
data or materials it forwards to the Trustee/Custodian and for
taking all other reasonable and necessary precautions in event
such data or materials are lost or destroyed, regardless of
cause, or in the event reprocessing is needed for any reason.
The Trustee/Custodian will maintain records in connection with
the performance of
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services hereunder for the applicable period as required by
law, or if no period is required, for such period as is
reasonable under the law.
(k) The Trustee/Custodian shall not be responsible for damages,
defaults or delays in performance caused by acts of God,
governmental authority, fire, telephone system outages and
similar occurrences, as long as the Trustee/Custodian is
diligently attempting to correct the cause of the default or
delay.
(l) No waiver of any breach of this Article shall constitute a
waiver of any other breach, whether of the same or any other
covenant, term or condition. The subsequent performance of any
of the terms, covenants and conditions of this Agreement shall
not constitute a waiver of any preceding breach, nor shall any
delay or omission of any party's exercise of any rights
arising from any default effect or impair the party's rights
as to the same or future default.
(m) The Trustee/Custodian shall not be responsible in any way for
any actions taken, or failure to act by a prior
Trustee/Custodian under a prior document. The Employer shall
indemnify and hold harmless the Trustee/Custodian for such
prior Trustee/Custodian acts or inaction for any periods
applicable, including periods for which the Trustee/Custodian
must restate the Plan retroactively to comply with any tax law
or regulations thereunder.
(n) A fiduciary with respect to the Plan shall not be liable for a
breach of fiduciary responsibility of another fiduciary with
respect to the Plan except to the extent that:
(1) it participates knowingly in, or knowingly undertakes
to conceal, an act or omission of such other
fiduciary, knowing such act or omission is a breach;
(2) by its failure to comply with Section 404(a)(1) of
the Employee Retirement Income Security Act of 1974
in the administration of its specific
responsibilities which give rise to its status as a
fiduciary, it has enabled such other fiduciary to
commit a breach; or
(3) it has knowledge of a breach by such other fiduciary,
unless it makes reasonable efforts under the
circumstances to remedy the breach.
(o) If the assets of the Plan are held by two or more Trustees,
each Trustee will use reasonable care to prevent a co-Trustee
from committing a breach of duty under the Employee Retirement
Income Security Act of 1974, as amended, and they shall
jointly manage and control the assets of the Plan; provided,
however, that such co-Trustee shall be authorized to allocate
specific responsibilities, obligations or duties among the
co-Trustees pursuant to a written agreement. If co-Trustees do
enter into such an agreement, then a Trustee to whom certain
responsibilities, obligations or duties have not been
allocated shall not be liable either individually or as
Trustee for any loss resulting to the Plan arising from the
acts or omissions on the part of another Trustee to which such
responsibilities, obligations or duties have been allocated.
12.6 PROVISIONS RELATING TO INDIVIDUAL TRUSTEES
(a) Notwithstanding any other provisions of the document to the
contrary, the provisions of this paragraph shall apply if one
or more individuals are named as Trustee(s) in the Adoption
Agreement and shall not apply to any institutional Trustee
named in the Adoption Agreement.
(b) If there shall be more than one Trustee, they shall act by a
majority of their number, unless they unanimously decide that
one or more of them may act on the matter or category of
matters involved without the approval of the others and they
may authorize one or more of them to sign documents on their
behalf.
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(c) Any person may rely, without having to make further inquiry,
upon instructions appearing to be genuine instructions from
any individual serving as Trustee as being the will, intent
and action of all individuals so serving if no allocation of
duties has been made.
(d) The Trustee shall be paid such reasonable compensation for
services as shall from time to time be agreed upon in writing
by the Employer and the Trustee, provided that an individual
serving as Trustee who already receives full-time Compensation
from the Employer shall not receive compensation for serving
as such from the Plan.
12.7 PERSONS SERVING AS PLAN ADMINISTRATOR If the Employer is no longer in
existence, and the Plan does not specify the person to take an action or
otherwise serve in the place of the Employer, in connection with the operation
of the Plan, the Plan Administrator shall so act or serve, but if there is no
person serving as Plan Administrator, the Employer shall then be the Plan
Administrator or designate a successor Plan Administrator. If the Employer has
died if a sole proprietorship, dissolved if a corporation, or terminated if a
partnership, a successor shall be designated in writing by a majority of the
Participants for whom accounts not yet fully distributed are then in the Plan. A
majority of the legally competent Designated Beneficiaries of a deceased
Participant then entitled to receive benefits may exercise the deceased
Participant's rights to participate in that designation and shall be considered
for that purpose to be one Participant, in the Participant's place.
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ARTICLE XIII
TRUST FUND/CUSTODIAL ACCOUNT
13.1 THE TRUST The Trust shall consist of all money and property received under
Article III and Article IV of the Plan and Trust/Custodial Account document
increased by any income on or increment in such assets and decreased by any
investment loss, expense, benefit payment, withdrawal or other distribution. The
Trustee shall hold the Trust, without distinction between principal and income.
The Trust shall be administered in accordance with the provisions of this
document.
13.2 CONTROL OF PLAN ASSETS The assets of the Trust or evidence of ownership
shall be held by the Trustee and/or the Custodian under the terms of the Plan
and Trust/Custodial Account. If the assets represent amounts transferred from
another Trustee or Custodian under a former plan, the Trustee and/or Custodian
named hereunder shall not be responsible for any actions of the prior fiduciary
including the propriety of any investment decision made by the prior
Trustee/Custodian under any prior plan. Such review shall be the responsibility
of the Employer.
13.3 EXCLUSIVE BENEFIT RULES No part of the Trust shall be used for, or diverted
to, purposes other than for the exclusive benefit of Participants, former
Participants with a vested interest, and the beneficiary or beneficiaries of
deceased Participants having a vested interest in the Plan at death.
13.4 ASSIGNMENT AND ALIENATION OF BENEFITS Except as provided in paragraphs 13.5
or 14.5, no right or claim to, or interest in, any part of the Plan, or any
payment from the Plan, shall be assignable, transferable, or subject to sale,
mortgage, pledge, hypothecation, commutation, anticipation, garnishment,
attachment, execution, or levy of any kind. The Trustee shall not recognize any
attempt to assign, transfer, sell, mortgage, pledge, hypothecate, commute, or
anticipate the same, except to the extent required by law. The preceding
sentences shall also apply to the creation, assignment, or recognition of a
right to any benefit payable with respect to a Participant pursuant to a
domestic relations order, unless such order is determined to be a Qualified
Domestic Relations Order, as defined in Code Section 414(p), or any domestic
relations order entered before January 1, 1985 which the Plan's attorney and
Plan Administrator deem to be qualified.
13.5 DETERMINATION OF QUALIFIED DOMESTIC RELATIONS ORDER (QDRO) A domestic
relations order shall specifically state all of the following in order to be
deemed a Qualified Domestic Relations Order ("QDRO"):
(a) The name, social security number and last known mailing
address (if any) of the Participant and of each alternate
payee covered by the QDRO. However, if the QDRO does not
specify the current mailing address of the alternate payee,
but the Plan Administrator has independent knowledge of that
address, the QDRO will still be valid.
(b) The dollar amount or percentage of the Participant's benefit
to be paid by the Plan to each alternate payee, or the manner
in which the amount or percentage will be determined.
(c) The number of payments or period for which the order applies.
(d) The specific Plan (by name) to which the domestic relations
order applies.
The domestic relations order shall not be deemed a QDRO if it requires the Plan
to provide:
(e) any type or form of benefit, or any option not already
provided for in the Plan;
(f) increased benefits, or benefits in excess of the Participant's
vested rights;
(g) payment of a benefit earlier than allowed by the Plan's
earliest retirement provisions or, in the case of a
profit-sharing plan, prior to the first date on which an
in-service withdrawal is allowed; or
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(h) payment of benefits to an alternate payee which are required
to be paid to another alternate payee under another QDRO.
Promptly, upon receipt of a domestic relations order ("Order") which may or may
not be "qualified", the Plan Administrator shall notify the Participant and any
alternate payee(s) named in the Order of such receipt, and include a copy of
this paragraph. The Plan Administrator shall establish written procedures to
establish the qualified status of a domestic relations order, which may include
forwarding the Order to the Plan's legal counsel for an opinion as to whether or
not the Order is in fact "qualified" as defined in Code Section 414(p). Within a
reasonable time after receipt of the Order, not to exceed 60 days, the Plan's
legal counsel shall make a determination as to its "qualified" status and the
Participant and any alternate payee(s) shall be promptly notified in writing of
the determination.
If the "qualified" status of the Order is in question, there will be a delay in
any payout to any payee including the Participant, until the status is resolved.
In such event, the Plan Administrator shall segregate the amount that would have
been payable to the alternate payee(s) if the Order had been deemed a QDRO. If
the Order is not qualified, or the status is not resolved (for example, it has
been sent back to the Court for clarification or modification) within 18 months
beginning with the date the first payment would have to be made under the Order,
the Plan Administrator shall pay the segregated amounts plus interest to the
person(s) who would have been entitled to the benefits had there been no Order.
If a determination as to the qualified status of the Order is made after the
18-month period described above, then the Order shall only be applied on a
prospective basis. If the Order is determined to be a QDRO, the Participant and
alternate payee(s) shall again be notified promptly after such determination.
Once an Order is deemed a QDRO, the Plan Administrator shall pay to the
alternate payee(s) all the amounts due under the QDRO, including segregated
amounts plus earnings, if any, which may have accrued during a dispute as to the
Order's qualification.
The QDRO retirement age with regard to the Participant against whom the order is
entered shall be the date the order is determined to be qualified. This will
only allow payouts to alternate payee(s) and not the Participant.
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ARTICLE XIV
INVESTMENTS
14.1 FIDUCIARY STANDARDS The Trustee shall invest and reinvest principal and
income of the Trust in accordance with the funding policy and investment
objectives established by the Employer, provided that:
(a) such investments are prudent under the Employee Retirement
Income Security Act of 1974, as amended, and the regulations
thereunder,
(b) such investments are sufficiently diversified to minimize the
risk of large losses,
(c) such investments are made in accordance with the provisions of
this Plan and Trust/Custodial Account document, and
(d) such investments are made with the care, skill, prudence and
diligence under the circumstances then prevailing that a
prudent man, acting in a like capacity and familiar with such
matters would use in the conduct of an enterprise of a like
character with like aims.
14.2 FUNDING ARRANGEMENT The Employer shall, in the Adoption Agreement, appoint
a Trustee who may be the Sponsor (or an affiliate) of this document or an
individual(s) to serve as Trustee of the Plan. The Employer shall also have the
right, but no requirement, to appoint a Custodian to have custody of the Trust
Fund. Such appointment shall be made in the Adoption Agreement. The Employer may
execute a separate trust or custodial agreement outlining the Trustee's or
Custodian's duties and responsibilities which shall be incorporated and made
part of this Plan and Trust/Custodial Account document. Such ancillary agreement
may not conflict with any provision of this Trust/ Custodial Account document.
Any provision which would jeopardize the tax-qualified status of this Plan and
Trust/Custodial Account shall be null and void. If the Sponsor is not named
Trustee, the Sponsor will serve as Custodian under the Plan as provided at
paragraph 14.4 herein. The Trustee shall invest the Trust in any of the
investment alternatives under paragraph 14.3. If a Custodian is appointed, the
Trust shall be invested in accordance with paragraph 14.4.
14.3 INVESTMENT ALTERNATIVES OF THE TRUSTEE The Trustee shall implement an
investment program based on the Employer's investment policy statement,
investment objectives and the Employee Retirement Income Security Act of 1974,
as amended. In addition to powers given by law, the Trustee may:
(a) invest the Trust in any form of property, including common and
preferred stocks, exchange-traded covered put and call
options, bonds, money market instruments, mutual funds
(including funds for which the Sponsor, Trustee or its
affiliates receive Compensation for providing investment
advisory, custody, transfer agency or other services), savings
accounts, certificates of deposit, securities issued by the
U.S. government or by governmental agencies, insurance
policies and contracts, or in any other property, real or
personal, having a ready market, including securities issued
by the Trustee and/or affiliates of the Trustee as permitted
by law. The Trustee may invest in time deposits (including, if
applicable, its own or those of affiliates) which bear a
reasonable interest rate. No portion of any Qualified
Voluntary Contribution, or the earnings thereon, may be
invested in life insurance contracts or, as with any
Participant-directed investment, in tangible personal property
characterized by the IRS as a collectible;
(b) invest any assets of the Trust in a group or collective trust
established to permit the pooling of funds of separate pension
and profit-sharing trusts, provided the Internal Revenue
Service has ruled such group or collective trust to be
qualified under Code Section 401(a) and exempt under Code
Section 501(a) (or the applicable corresponding provision of
any other Revenue Act) or to any other common, collective, or
commingled trust fund which has been or may hereafter be
established and maintained by the Trustee, affiliate(s) of the
Trustee, the Custodian or investment manager. Such commingling
of assets of the Trust with assets of other qualified trusts
is
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specifically authorized, and to the extent of the investment
of the Trust in such a group or collective trust, the terms of
the instrument establishing the group or collective trust
shall be a part hereof as though set forth herein. The
Employer expressly understands and agrees that any such
collective fund may provide for the lending of its securities
by the collective fund trustee and that such collective fund's
trustee will receive compensation from such collective fund
for the lending of securities that is separate from any
compensation of the Trustee hereunder, or any compensation of
the collective fund trustee for the management of such
collective fund;
(c) invest up to 100% of the Trust in the common stock, debt
obligations, or any other security issued by the Employer or
by an affiliate of the Employer within the limitations
provided under Sections 406, 407, and 408 of the Employee
Retirement Income Security Act of 1974, as amended, and
further provided that such investment does not constitute a
prohibited transaction under Code Section 4975. Any such
investment in Employer securities shall only be made upon
written direction of the Employer who shall be solely
responsible for the propriety of such investment. Additional
directives regarding the purchase, sale, retention or valuing
of such securities may be addressed in an investment
management or trust agreement which may be an attachment to
this document. If there are any conflicts between this
document and the above referenced agreements, this document
shall govern;
(d) hold cash uninvested and deposit same with any banking or
savings institution, including its own banking department or
banking department of an affiliate;
(e) join in or oppose the reorganization, recapitalization,
consolidation, sale or merger of corporations or properties,
including those in which it or its affiliates are interested
as Trustee, upon such terms as it deems advisable;
(f) hold investments in nominee or bearer form;
(g) exercise all ownership rights including the voting of proxies
and the exercise of tender offers but only with respect to
assets over which the Trustee has investment management
responsibility and specifically excluding any securities
described in 14.3(c); and
(h) to apply for and procure from an insurance company as an
investment of the Trust such annuity, or other contracts on
the life of any Participant as the Plan 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.
(i) With respect to the voting of, or in the event of any tender
or other offer with respect to shares of Employer securities
held in the Trust, the Trustee/Custodian shall follow the
direction of each Participant with respect to the shares
allocated to the account of each Participant. With respect to
shares which are not allocated or for which no Participant
direction has been received ("non-directed shares"):
(1) As to the voting of "non-directed shares" on an item
determined by the Trustee/Custodian to be an
extraordinary item, or with respect to a tender
offer, the "non-directed shares" shall be voted or
tendered as determined by an investment manager, or
independent fiduciary selected for this purpose by
the Employer or if such selection is not timely made,
by the Trustee.
(2) With respect to the voting of "non-directed shares"
on any item not an extraordinary item, the
Trustee/Custodian shall vote these shares in the same
proportion as shares for which direction was
received.
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(3) The Employer shall be responsible for preparing and
distributing all required prospectuses for Employer
securities and making such materials available to
Plan Participants.
14.4 INVESTMENT ALTERNATIVES OF THE CUSTODIAN
(a) The Custodian shall hold any and all assets received from the
Trustee or its agents. If the Custodian holds title to Plan
assets and such ownership requires action on the part of the
registered owner, such action will be taken by the Custodian
only upon receipt of specific instructions from the Trustee or
its designated agents. Proxies shall be voted by or pursuant
to the express direction of the Trustee or authorized agent of
the Trustee. As Custodian, the Sponsor shall not give any
investment advice, including any opinion on the prudence of
directed investments. The Employer and Trustee and the agents
thereof assume all responsibility for adherence to fiduciary
standards under the Employee Retirement Income Security Act of
1974, as amended, and the regulations thereunder.
(b) Where the Sponsor serves as Custodian, the Trust shall only be
invested in investment alternatives the Custodian makes
available in the ordinary course of business. The investment
alternatives may be limited by the Custodian under applicable
Federal or state laws, including but not limited to savings
accounts, savings certificates or in other savings instruments
offered by the Sponsor or its affiliates. Such investments
shall be made at the direction of the Employer or Trustee(s)
and the Custodian shall have no responsibility for the
propriety of such investments.
14.5 PARTICIPANT LOANS If permitted by the Employer in the Adoption Agreement, a
Plan Participant and Beneficiaries may make application to the Employer
requesting a loan from the Trust. The Employer shall have the sole right to
approve or deny a Participant's application provided that loans shall be made
available to all Participants on a reasonably equivalent basis. Loans shall not
be made available to Highly Compensated Employees in an amount greater than the
amount made available to other Employees. Any loan granted under the Plan shall
be made in accordance with the terms of a loan policy adopted by the Employer
and shall be subject to the following rules to the extent such rules are not
inconsistent with such loan policy:
(a) No loan, when aggregated with any outstanding Participant
loan(s), shall exceed the lesser of (i) $50,000 reduced by the
excess, if any, of the highest outstanding balance of all
loans on any day during the one year period ending on the day
before the loan is made, over the outstanding balance of loans
from the Plan on the date the loan is made or (ii) one-half of
the fair market value of a Participant's Vested Account
Balance consisting of Employer contributions, Voluntary
Contributions, and Rollover Contributions. If the
Participant's Vested Account Balance is $20,000 or less, the
maximum loan shall not exceed the lesser of $10,000 or 100% of
the Participant's Vested Account Balance. For the purpose of
the above limitation, all loans from all plans of the Employer
and other members of a group of employers described in Code
Sections 414(b), 414(c), and 414(m) are aggregated. An
assignment or pledge of any portion of the Participant's
interest in the Plan and a loan, pledge, or assignment with
respect to any insurance contract purchased under the Plan,
will be treated as a loan under this paragraph.
(b) All applications must be in accordance with procedures adopted
by the Employer.
(c) Any loan shall bear interest at a rate reasonable at the time
of application, considering the purpose of the loan and the
rate being charged by representative commercial banks in the
local area for a similar loan unless the Employer sets forth a
different method for determining loan interest rates in its
loan procedures. The loan agreement shall also provide that
the payment of principal and interest be amortized in level
payments not less frequently than quarterly.
(d) The term of such loan shall not exceed five years except in
the case of a loan for the purpose of acquiring any house,
apartment, condominium, or mobile home which is used or is to
be used within a reasonable time as the principal residence of
the Participant. The term of such loan shall
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81
be determined by the Employer considering the maturity dates
quoted by representative commercial banks in the local area
for a similar loan.
(e) The principal and interest paid by a Participant on his or her
loan shall be credited to the Trust in the same manner as for
any other Plan investment. If elected in the Adoption
Agreement, loans may be treated as segregated investments of
the individual Participants. This provision is not available
if its election will result in discrimination in operation of
the Plan.
(f) If a Participant's loan request is approved by the Employer,
it shall be evidenced by a note, loan agreement, and
assignment of 50% of his or her interest in the Trust as
collateral for the loan. The Participant, except in the case
of a profit-sharing plan satisfying the requirements of
paragraph 8.7 must obtain the consent of his or her Spouse, if
any, within the 90-day period before the time his or her
account balance is used as security for the loan. A new
consent is required if the account balance is used for any
renegotiation, extension, renewal or other revision of the
loan, including an increase in the loan amount. The consent
must be written, must acknowledge the effect of the loan, and
must be witnessed by a Plan representative or notary public.
Such consent shall subsequently be binding with respect to the
consenting Spouse or any subsequent Spouse.
(g) If a valid Spousal consent has been obtained, then,
notwithstanding any other provision of this Plan, the portion
of the Participant's Vested Account Balance used as a security
interest held by the Plan by reason of a loan outstanding to
the Participant shall be taken into account for purposes of
determining the amount of the account balance payable at the
time of death or distribution, but only if the reduction is
used as repayment of the loan. If less than 100% of the
Participant's Vested Account Balance (determined without
regard to the preceding sentence) is payable to the surviving
Spouse, then the account balance shall be adjusted by first
reducing the Vested Account Balance by the amount of the
security used as repayment of the loan, and then determining
the benefit payable to the surviving Spouse.
(h) The Plan Administrator may require additional collateral in
order to adequately secure the loan.
(i) Any loan made hereunder shall be subject to the provisions of
a loan agreement, promissory note, security agreement, payroll
withholding authorization and, if applicable, financial
disclosure. Such documentation may contain additional loan
terms and conditions not specifically itemized in this section
provided that such terms and conditions do not conflict with
this section. Such additional terms and conditions may
include, but are not limited to, procedures regarding default,
a grace period for missed payments and acceleration of a
loan's maturity date on specific events such as termination of
employment.
(j) No loans will be made to Owner-Employees or Shareholder
Employees, unless the Employer obtains a prohibited
transaction exemption from the Department of Labor.
(k) If the Plan permits loans to Participants, the Trustee may
appoint the Employer as its agent, and if the Employer accepts
such appointment, agrees to hold all notes and other evidence
of any loans to Participants. The Employer shall hold such
notes and evidence under such conditions of safekeeping as is
prudent as required by ERISA. The Trustee may account for all
loans in the aggregate so that all Participant loans will be
shown collectively as a single asset of the Plan.
(l) Unless elected otherwise in the Adoption Agreement, loan
payments will be suspended under this Plan as permitted under
Code Section 414(u).
14.6 INSURANCE POLICIES If agreed upon by the Trustee and permitted by the
Employer in the Adoption Agreement, Employees may elect the purchase of life
insurance policies under the Plan. If elected, the maximum annual premium for a
whole life policy shall be less than 50% of the aggregate Employer contributions
allocated to the account of a Participant. For profit-sharing plans, the 50%
test need only be applied against Employer contributions allocated in the last
two years. Whole life policies are policies with both fixed death benefits and
fixed premiums. The maximum annual premium for term contracts or universal life
policies and all other policies
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82
which are not whole life shall not exceed 25% of aggregate Employer
contributions allocated to the profit-sharing account of a Participant in the
last two years. The 25% test need only be applied against Employer contributions
allocated in the last two years. The maximum annual premiums for a Participant
with both a whole life and a term contract or universal life policies shall be
limited to one-half of the whole life premium plus the term premium, but shall
not exceed 25% of the aggregate Employer contributions allocated to the account
of a Participant, subject to the two year rule for profit-sharing plans. Any
policies purchased under this Plan shall be held subject to the following rules:
(a) The Trustee shall be applicant and owner and named beneficiary
of any policies issued hereunder.
(b) All policies or contracts purchased hereunder, shall be
endorsed as nontransferable, and must provide that proceeds
will be payable to the Trustee; however, the Trustee shall be
required to pay all proceeds of the contracts to the
Participant's Designated Beneficiary in accordance with the
distribution provisions of this Plan. Under no circumstances
shall the Trust retain any part of the proceeds.
(c) The Employer/Plan Administrator shall select the insurance
company and the policy. The Employer/Plan Administrator will
direct the Trustee as to the purchase of the insurance
contract. Such direction shall include but not be limited to
the term, price and the insurance company from which the
policy should be purchased.
(d) The Trustee must be the named beneficiary on any policy to
receive the proceeds of the contract after settlement is
received by the Trustee. Such designation shall remain in
force, until revoked by the Participant, by filing a new
beneficiary form with the Trustee. A Participant's Spouse will
be the Designated Beneficiary of the proceeds in all
circumstances unless a Qualified Election has been made in
accordance with paragraph 8.4. The beneficiary of a deceased
Participant shall receive, in addition to the proceeds of the
Participant's policy or policies, the amount credited to such
Participant's investment account.
(e) A Participant who is uninsurable or insurable at substandard
rates, may elect to receive a reduced amount of insurance, if
available, or may waive the purchase of any insurance.
(f) All dividends or other returns received on any policy
purchased shall be applied to reduce the next premium due on
such policy, or if no further premium is due, such amount
shall be credited to the Trust as part of the account of the
Participant for whom the policy is held.
(g) If Employer contributions are inadequate to pay all premiums
on all insurance policies, the Trustee may, at the option of
the Employer, utilize other amounts remaining in each
Participant's account to pay the premiums on his or her
respective policy or policies, allow the policies to lapse,
reduce the policies to a level at which they may be
maintained, or borrow against the policies on a prorated
basis, provided that the borrowing does not discriminate in
favor of the policies on the lives of Highly Compensated
Employees.
(h) On retirement or termination of employment of a Participant,
termination of the Plan, or the contract would but for the
sale, be surrendered by the Plan, the Employer shall direct
the Trustee to surrender the Participant's policy and credit
the proceeds to his or her account for distribution under the
terms of the Plan. However, before so doing, the Trustee shall
first offer to transfer ownership of the policy to the
Participant. Prior to such transfer, the Participant may elect
to make payment to the Trust of the cash value of the policy.
Such payment shall be credited to the Participant's account
for distribution under the terms of the Plan. All
distributions resulting from the application of this paragraph
shall be subject to the Joint and Survivor Annuity Rules of
Article VIII, if applicable.
(i) The Employer shall be solely responsible to ensure the
insurance provisions are administered properly and that if
there is any conflict between the provisions of this Plan and
any insurance contracts issued, the terms of this Plan will
control.
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(j) Notwithstanding the above, in profit-sharing plans, the
limitations imposed herein with respect to the purchase of
life insurance shall not apply to any Participant who has
participated in this Plan for five (5) or more years or to the
portion of a Participant's Vested Account Balance, that would
be eligible for withdrawal under paragraph 6.8 whether or not
in-service withdrawals are actually allowed under this Plan,
that has accumulated for at least two (2) Plan Years. In
addition, under such Plans, a Participant may, subject to the
limitations set forth in this subsection, elect to have keyman
life insurance purchased on the life of any Participant who is
considered essential to the success of the Employer's
business. In such case, the proceeds of such a life insurance
contract in excess of such contract's cash value as of the
date of death of such insured shall be paid to the
beneficiaries named with respect to such contract. Death
benefits, including those in the previous sentence, payable
from a life insurance contract shall be paid in accordance
with paragraph 8.7, if this Plan meets the safe-harbor
provisions in that paragraph, or in accordance with paragraph
8.2 or 8.3, whichever may be applicable. The cash value of the
contract shall be added to the Participant's Vested Account
Balance.
14.7 ALLOCATION OF INVESTMENT RESPONSIBILITY
(a) In the Adoption Agreement, the Employer shall elect to direct
Plan investments or to allocate investment management
authority to the Trustee, an independent investment manager
under ERISA, or to Participants. The Employer is the named
fiduciary for investment purposes if the Employer directs
investments pursuant to this paragraph. If an investment
manager is named, such entity or individual must be registered
as an investment manager under the Investment Advisors Act of
1940 or under applicable state law, be a bank as defined in
said Act or an insurance company qualified under the laws of
more than one state to perform investment management services.
An investment manager shall acknowledge in writing its
appointment and fiduciary status hereunder and shall agree to
comply with all applicable provisions of this Plan and
Trust/Custodial Account. A copy of the investment management
agreement (and any modifications or termination thereof) must
be given to the Trustee or Custodian. Written notice of each
appointment of an investment manager shall be given to the
Trustee/Custodian in advance of the effective date of the
appointment. Such notice shall specify what portion of the
Trust will be subject to the investment manager's discretion.
(b) The Employer may also enter into any other ancillary agreement
with the Sponsor, Trustee, Custodian or investment manager as
may be necessary to clarify each of those party's duties and
responsibilities. Such agreement shall pertain to Plan assets
held by the separate Trustee and shall be incorporated and
made part of this Plan and Trust/Custodial Account document.
In such event, the Trustee and the ancillary Trustee shall
have no liability with respect to assets held by the other as
permitted by Section 405(b)(1)(B) of ERISA. Such ancillary
agreement may not conflict with any investment or other
provision contained herein. Any language which is in conflict
with the provisions of this Trust/Custodial Account or which
would jeopardize the tax qualified status of this Plan and
Trust/Custodial Account shall be null and void. The Employer
may allocate investment management responsibility to more than
one party. In such event, each of the investment managers
shall only be responsible for that part of the Trust Fund
which is under their investment management.
(c) The Employer shall advise the Trustee in writing regarding the
retention of investment powers. The appointment of an
investment manager will be given in accordance with paragraph
12.5(e) herein, or the delegation of investment powers to the
Trustee. The Employer is a named fiduciary for investment
management purposes if the Employer directs investments
pursuant to this paragraph. Any investment directive under
this Plan shall be made in writing or such other form as
agreed to by the Employer, Trustee and investment manager. In
the absence of such directive, cash shall be automatically
invested in such investment or investments as the Employer or
other fiduciary shall select from the investments the
Trustee/Custodian makes available for that purpose unless and
until the person or persons responsible for giving directions
directs otherwise. Such automatic investment shall be made at
regular intervals and pursuant to procedures provided by the
Trustee/Custodian (which procedures may without limitation,
provide for more frequent
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84
intervals only if uninvested balances exceed a stated amount).
Absent a contrary direction in accordance with the preceding
provisions of this paragraph 14.7(c), such instructions
regarding the delegation of investment responsibility shall
remain in force until revoked or amended in writing. The
Trustee shall not be responsible for the propriety of any
directed investment made and shall not be required to consult
with or advise the Employer regarding the investment quality
of any directed investment held hereunder. If the Employer
fails to designate an investment manager, the Trustee shall
have full investment management authority. If the Employer
does not issue investment directions with regard to specific
assets held in the Trust, the Trustee shall have authority to
invest those assets in the Trust in its sole discretion. While
the Employer may direct the Trustee with respect to Plan
investments, the Employer may not:
(1) borrow from the Plan or pledge any of the assets of
the Plan as security for a loan,
(2) buy property or assets from or sell property or
assets to the Plan,
(3) charge any fee for services rendered to the Plan, or
(4) receive any services from the Plan on a preferential
basis.
14.8 PROHIBITED TRANSACTIONS The Trustee, Custodian, Employer, investment
manager or Participant shall not knowingly enter into any transaction, engage in
any activity, or direct the purchase or acquisition of any investment with
respect to the Plan which would constitute a prohibited transaction under ERISA
or the Internal Revenue Code. The Trustee or Custodian shall not receive
investment advisory or other fees from a registered investment company (a mutual
fund) which duplicates other investment management fees charged by the Trustee
for investment management services. Such fees may be received by the Trustee
where there is no duplication of fees and the Trustee provides complete
disclosure to the Employer as an independent fiduciary under the Plan. The
Trustee or Custodian shall be permitted to receive fees from a regulated
investment company (a mutual fund) if the Trustee or Custodian has made a good
faith determination that the receipt of such fees is not a prohibited
transaction pursuant to any guidance issued by the Department of Labor from time
to time. A nondiscretionary Trustee is permitted to accept fees from a
registered investment company for services provided in connection with the
administration (other than fees received as investment advisor) or distribution
of mutual fund shares. The receipt of such fees is subject to full disclosure to
the Employer as an independent fiduciary. A nondiscretionary Trustee is one who
has no investment management responsibility or discretion over any part of the
Trust. The Custodian may accept such fees, as it never has discretion or
investment management responsibility over any part of the Trust.
14.9 PARTICIPANT INVESTMENT DIRECTION If elected by the Employer in the Adoption
Agreement, Participants shall be given the option to direct the investment of
such part of their account balances as specified in the Adoption Agreement. The
investment vehicles available from time to time shall be selected by the
Employer or the Employer's designated fiduciary, independent of the Trustee, who
shall be responsible for reviewing the performance of such investments. The
following administrative procedures shall apply to the administration of
specific investment vehicles selected by the Employer:
(a) The program shall be administered by the Plan Administrator or
other party appointed by the Employer.
(b) At the time an Employee becomes eligible for the Plan, he or
she shall complete an investment designation stating the
percentage of his or her contributions to be invested in the
available alternatives.
(c) A Participant may change his or her election with respect to
future contributions by notifying the Employer, Trustee or
other service provider, as they shall mutually agree, in
accordance with the procedures established by the Plan
Administrator.
(d) A Participant may elect to transfer all or part of his or her
balance from one investment alternative to another by
notifying the Employer in accordance with the procedures
established by the Plan Administrator.
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(e) The Employer or other service provider to the Plan, when
transmitting contributions shall be responsible for providing
the Trustee with investment directives setting forth the
necessary information so that the Trustee can purchase the
proper amount of each investment alternative available under
the Plan.
(f) Except as otherwise provided in the Plan, neither the Trustee,
nor the Employer, nor any fiduciary of the Plan shall be
liable to the Participant or any of his or her beneficiaries
for any loss resulting from action taken at the direction of
the Participant. All fiduciaries of the Plan shall be relieved
of their fiduciary liability with respect to the Participant
directing his or her investments pursuant to ERISA Section
404(c) if elected by the Employer on the Adoption Agreement.
(g) The Employer may, in a uniform and nondiscriminatory manner
limit the available investments in the Plan. The Employer
shall specify that Participants are permitted to direct
investments in accordance with the alternatives specified at
paragraph 14.3 hereof or may restrict investments to specific
investment alternatives selected by the Employer (including
but not limited to, certain mutual funds, investment
contracts, collective funds or deposit accounts). If
investments outside the alternatives selected by the Employer
are permitted, Participants may not direct that investments be
made in collectibles, other than U.S. Government or state
issued gold and silver coins. The Employer may permit, in a
uniform and nondiscriminatory manner, a beneficiary of a
deceased Participant or alternate payee under a Qualified
Domestic Relations Order [as defined in Code Section 414(p)]
to individually direct their account in accordance with this
section.
(h) Investment directions will be processed as soon as
administratively practicable after proper investment
directions are received from the Participant. The Employer,
Plan Administrator, Trustee and/or Custodian cannot provide
any guarantee that investment directions will be processed on
a daily basis (if a daily valuation Plan), or provide a
guarantee in any respect as to the processing time of an
investment direction. The Employer, Plan Administrator,
Trustee and/or Custodian reserves the right not to value an
investment alternative or a Participant's account on any given
Valuation Date for any reason deemed appropriate by the
Employer or Plan Administrator. The Employer, Plan
Administrator and Trustee and/or Custodian further reserves
the right to delay the processing of any investment
transaction 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, to correct its errors or omissions or the
errors or omissions of any service provider).
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ARTICLE XV
TOP-HEAVY PROVISIONS
15.1 APPLICABILITY OF RULES If the Plan is or becomes Top-Heavy in any Plan Year
beginning after 1983, the provisions of this Article will supersede any
conflicting provisions in the Plan or Adoption Agreement.
15.2 MINIMUM CONTRIBUTION Notwithstanding any other provision in the Employer's
Plan, for any Plan Year in which the Plan is Top-Heavy or Super Top-Heavy, the
aggregate Employer contributions and forfeitures allocated on behalf of any
Participant (without regard to any Social Security contribution) under this Plan
and any other Defined Contribution Plan of the Employer shall be determined as
follows:
(a) When the Employer maintains one Plan or a combination of
Paired or non-paired Defined Contribution Plans and no Defined
Benefit Plans which are Top-Heavy or Super Top-Heavy, the
Employer will contribute the lesser of 3% of such
Participant's Compensation or the largest percentage of the
Employer contributions and forfeitures, as a percentage of the
Key Employee's Compensation, up to a maximum permitted under
Code Section 401(a)(17), as indexed, allocated on behalf of
any Key Employee for that year.
(b) Minimum Top-Heavy Contributions for Paired Defined
Contribution and Defined Benefit Plans where the Plans are not
Super Top-Heavy:
(1) If an Employee participates in Paired Defined
Contribution Plan #01001, #01002, #01005, #01006,
#01011, #01013 or #01015 and also participates in
Paired Defined Benefit Plan #02001or #02002, the
Employer shall provide a minimum non-integrated
benefit of 3% of the highest year average
Compensation for each non-Key Employee who
participates in such Defined Benefit Plan, not to
exceed a cumulative accrued benefit of 30%.
(2) If an Employee participates in Paired Defined
Contribution Plan #01001, #01002, #01005, #01006,
#01011, #01013 or #01015, but does not participate in
Paired Defined Benefit Plan #02001 or #02002, the
Employer shall make a minimum non-integrated
allocation of Employer contributions and forfeitures
(in the aggregate under all Defined Contribution
Plans) of 4% of each eligible Participant's Top-Heavy
Compensation.
(c) Minimum Top-Heavy Contributions for Paired Defined
Contribution and Defined Benefit Plans where the Plans are
Super Top-Heavy:
(1) If an Employee participates in Defined Contribution
Plan #01001, #01002, #01005, #01006, #01011, #01013
or #01105 and in Paired Defined Benefit Plan #02001
or #02002, the Employer shall provide a minimum
non-integrated benefit of 2% of the highest
5-consecutive year average Compensation for each
non-Key Employee who participates in such Defined
Benefit Plan, not to exceed a cumulative accrued
benefit of 20%.
(2) If an Employee participates in Defined Contribution
Plan #01001, #01002, #01005, #01006, #01011, #01013
or #01015, but does not participate in Paired Defined
Benefit Plan #02001 or #02002, the minimum
contribution requirements at 15.2(b)(2) shall apply
except that the minimum non-integrated allocation
percentage shall be 3% instead of 4%.
(d) If the Employer maintains or maintained a Defined Benefit
Plan, which is not paired, the provisions of the "Limitations
on Allocations" section of the Adoption Agreement shall apply.
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(e) Each Participant who is employed by the Employer on the last
day of the Plan Year shall be entitled to receive an
allocation of the Employer's minimum contribution for such
Plan Year. The minimum allocation applies even though under
other Plan provisions the Participant would not otherwise be
entitled to receive an allocation, or would have received a
lesser allocation for the year because the Participant fails
to make required contributions to the Plan, the Participant's
Compensation is less than a stated amount, or the Participant
fails to complete 1,000 Hours of Service (or such lesser
number designated by the Employer in the Adoption Agreement)
during the Plan Year. A Paired profit-sharing Plan designated
to provide the minimum Top-Heavy contribution must do so
regardless of profits. An Employer may make the minimum
Top-Heavy contribution available to all Participants or just
non-Key Employees.
The Top-Heavy minimum contribution does not apply to any Participant to the
extent the Participant is covered under any other plan(s) of the Employer and
the Employer has provided in the Adoption Agreement that the minimum allocation
or benefit requirements applicable to this Plan will be satisfied in the other
plan(s).
If a Key Employee makes an Elective Deferral or has an allocation of Matching
Contributions credited to his or her account, a Top-Heavy minimum will be
required for non-Key Employees who are Participants. For purposes of satisfying
the minimum contribution requirement, Elective Deferrals and Matching
Contributions are not taken into account.
15.3 MINIMUM VESTING For any Plan Year during which this Plan is Top-Heavy, the
minimum vesting schedule elected by the Employer in the Adoption Agreement will
automatically apply to the Plan. If the vesting schedule selected by the
Employer in the Adoption Agreement is less liberal than the allowable schedule,
the schedule will automatically shift to one which satisfies the Top-Heavy
minimum. If the vesting schedule under the Employer's Plan shifts in or out of
the Top-Heavy schedule for any Plan Year, such shift is an amendment to the
vesting schedule and the election in paragraph 9.8 of the Plan applies. The
minimum vesting schedule applies to all accrued 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. No reduction in vested
benefits may occur in the event the Plan's status as Top-Heavy changes for any
Plan Year. This paragraph does not apply to the account balances of any Employee
who does not have one Hour of Service after the Plan initially becomes Top-Heavy
and such Employee's account balance attributable to Employer contributions and
forfeitures will be determined without regard to this paragraph.
15.4 LIMITATIONS ON ALLOCATIONS In any Plan Year beginning prior to January 1,
2000, in which the Top-Heavy Ratio exceeds 90% (i.e., the Plan becomes Super
Top-Heavy), the denominators of the Defined Benefit Fraction and Defined
Contribution Fraction shall be computed using 100% of the dollar limitation
instead of 125%.
15.5 USE OF SAFE-HARBOR CONTRIBUTIONS TO SATISFY TOP-HEAVY CONTRIBUTION RULES If
elected in the Adoption Agreement, a 3% Safe-Harbor Non-Elective Contribution
allocated to all eligible Employees may be used to satisfy the minimum
contribution requirement for a Top-Heavy Plan. A Safe-Harbor Matching
Contribution may not be used to satisfy the minimum contribution requirement for
a Top-Heavy Plan.
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ARTICLE XVI
AMENDMENT AND TERMINATION
16.1 AMENDMENT BY SPONSOR The Sponsor may amend any or all provisions of this
Plan and Trust at any time without obtaining the approval or consent of any
Employer which has adopted this Plan and Trust provided that no amendment shall
authorize or permit any part of the corpus or income of the Plan to be used for
or diverted to purposes other than for the exclusive benefit of Participants and
their beneficiaries, or eliminate an optional form of distribution. In the case
of a mass-submitted plan, the mass-submitter shall amend the Plan on behalf of
the Sponsor.
16.2 AMENDMENT BY EMPLOYER The Employer may amend any option in the Adoption
Agreement, and may include language as permitted in the Adoption Agreement to
satisfy Code Section 415, or to avoid duplication of minimums under Code Section
416 because of the required aggregation of multiple plans. The Employer may also
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 for which the Employer must obtain a separate
determination letter. If the Employer amends the Plan and Trust other than as
provided above, the Employer's Plan shall no longer participate in this
Prototype Plan and will be considered an individually designed Plan. In such
event, all references to the institution as Sponsor shall be deemed null and
void.
16.3 AMENDMENT AND RESTATEMENT PROCESS When amending or restating the Plan, the
Employer must complete Section number II in the Adoption Agreement. If the
Employer is merely amending the Plan, and Section number II(B) is completed, the
Employer need not complete sections not effected by such amendment. It only need
complete the sections in the Adoption Agreement which are being amended, insert
the date of the amendment of Section number II, and enter the date on the space
provided on each page of the Adoption Agreement. All such changed pages will
then be retained with the remainder of the Adoption Agreement, which together
will form the Plan and Trust/Custodial Account document.
16.4 PROTECTED BENEFITS An amendment (including the adoption of this Plan as a
restatement of an existing plan) may not decrease a Participant's accrued
benefit, except to the extent permitted under Code Section 412(c)(8), and may
not reduce or eliminate a Code Section 411(d)(6) protected benefit determined
immediately prior to the adoption date, or if later, the Effective Date of the
amendment. Where this Plan is being adopted to amend another plan that contains
a protected benefit not provided for in this document, the Employer may attach
Schedule B to the Adoption Agreement that describes such protected benefit which
shall become part of the Plan.
16.5 PLAN TERMINATION The Employer shall have the right to terminate its Plan
upon 60 days notice in writing to the Trustee. If the Plan is terminated,
partially terminated, or if there is a complete discontinuance of contributions
under a profit-sharing plan maintained by the Employer, all amounts credited to
the accounts of Participants shall vest and become nonforfeitable. In the event
of a partial termination, only those who are affected by such partial
termination shall be fully vested. In the event of termination, the Plan
Administrator shall direct the Trustee or the Custodian as applicable with
respect to the distribution of accounts to or for the exclusive benefit of
Participants or their beneficiaries. Such distribution shall be made directly to
Participants or, at the direction of the Participant, may be transferred
directly to another Eligible Retirement Plan or Individual Retirement Account.
In the absence of an election by a Participant who has received notice from the
Plan Administrator under paragraph 6.11, the Plan Administrator may direct the
Trustee or Custodian to transfer the Participant's benefit to another Defined
Contribution Plan maintained by the Employer, other than an employee stock
ownership plan. If the Employer does not maintain another Defined Contribution
Plan, the Plan Administrator may direct the Trustee or Custodian to transfer the
Participant's benefit to an Individual Retirement Account with an institution
selected by the Plan Administrator, or make a distribution pursuant to paragraph
7.15. Prior to making any distribution, the Plan Administrator shall establish
in a manner acceptable to the Trustee or Custodian, that the Plan has received a
favorable determination letter from the Internal Revenue Service approving the
Plan termination and authorizing the distribution of benefits to Plan
Participants. In the absence of such determination letter, the Trustee or
Custodian may agree to make distributions to Participants if the applicable
requirements, if any, of the Employee Retirement Income Security Act of 1974 and
the Internal Revenue Code governing the termination of employee benefit plans,
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89
have been or are being, complied with, or that appropriate authorizations,
waivers, exemptions, or variances have been, or are being obtained.
16.6 DISTRIBUTION RESTRICTIONS UNDER A CODE SECTION 401(K) PLAN If the
Employer's Plan includes a Code Section 401(k) arrangement or if transferred
assets described in paragraph 6.13 are subject to the distribution restrictions
of Code Sections 401(k)(2) and 401(k)(10), the special distribution provisions
of this paragraph apply. The portion of the Participant's nonforfeitable Accrued
Benefit attributable to Elective Deferrals (or to amounts treated under the Code
Section 401(k) arrangement as Elective Deferrals) is not distributable on
account of Plan termination, as described in this paragraph, unless:
(a) the Participant otherwise is entitled under the Plan to a
distribution of that portion of this nonforfeitable Accrued
Benefit, or,
(b) the Plan termination occurs without the establishment of a
successor Plan. A successor Plan under clause (b) is a Defined
Contribution Plan (other than an employee stock ownership
plan) maintained by the Employer (or by a related Employer) at
the time of the termination of the Plan or within the period
ending twelve months after the final distribution of assets. A
distribution made after March 31, 1988, pursuant to clause
(b), must be part of a lump sum distribution to the
Participant of his nonforfeitable Accrued Benefit.
16.7 QUALIFICATION OF EMPLOYER'S PLAN If the adopting Employer fails to obtain
or retain Internal Revenue Service qualification, such Employer's Plan shall no
longer participate in this Prototype Plan and will be considered an individually
designed plan.
16.8 MERGERS AND CONSOLIDATIONS
(a) In the case of any merger or consolidation of the Employer's
Plan with, or transfer of assets or liabilities of the
Employer's Plan to, any other plan, Participants in the
Employer's Plan shall be entitled to receive benefits
immediately after the merger, consolidation, or transfer which
are equal to or greater than the benefits they would have been
entitled to receive immediately before the merger,
consolidation, or transfer if the Plan had then terminated.
(b) Any corporation into which the Trustee, Custodian or any
successor thereto may be merged or with which it may be
consolidated, or any corporation resulting from any merger or
consolidation to which the Trustee, Custodian or any successor
thereto may be a party, or any corporation to which all or
substantially all the business of the Trustee, Custodian or
any successor thereto may be transferred, shall automatically
be the successor without the filing of any instrument or
performance of any further act, before any court.
16.9 RESIGNATION AND REMOVAL The Trustee or the Custodian may resign by written
notice to the Employer which shall be effective 90 days after delivery. The
Employer may discontinue its participation in this Prototype Plan and Trust
effective upon 90 days written notice to the Sponsor. In such event the Employer
shall, prior to the effective date thereof, amend the Plan to eliminate any
reference to this Prototype Plan and Trust and appoint a successor trustee or
custodian. The Trustee or Custodian shall deliver the Trust to its successor on
the effective date of the resignation or removal, or as soon thereafter as
practicable, provided that this shall not waive any lien the Trustee or the
Custodian may have upon the Trust for its compensation or expenses. Following
the effective date of the notice of termination, the Trustee shall have no
further responsibility for providing services to the Employer or the Plan. If
the Employer fails to amend the Plan and appoint a successor trustee or
custodian within the said 60 days, or such longer period as the Trustee or
Custodian may specify in writing, the Plan shall be deemed individually designed
and the Employer shall be deemed the successor trustee or custodian as the case
may be. In such event, the Sponsor may continue to hold custody of the assets of
the Plan until such time as appropriate arrangements have been made for the
security of the Plan assets, but upon notification thereof to Plan Participants,
shall no longer have any responsibility for the investment of Plan assets.
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16.10 QUALIFICATION OF PROTOTYPE The Sponsor intends that this Prototype Plan
will meet the requirements of the Code as a qualified Prototype Retirement Plan
and Trust. Should the Commissioner of Internal Revenue or any delegate of the
Commissioner at any time determine that the Plan and Trust fails to meet the
requirements of the Code, the Sponsor will amend the Plan and Trust as necessary
to maintain its qualified status.
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ARTICLE XVII
GOVERNING LAW
17.1 GOVERNING LAW Construction, validity and administration of the Prototype
Plan and Trust and any Employer Plan and Trust adopted under the terms of this
Prototype document and accompanying Adoption Agreement, shall be governed by
Federal law to the extent applicable and to the extent not applicable by the
laws of the State or Commonwealth in which the principal office of the Prototype
Sponsor or its affiliate which is designated as Trustee or Custodian in the
Adoption Agreement is located.
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