Amendment No. 4
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Donegal Mutual Insurance Company
401(K) Plan ("Plan")
EGTRRA AMENDMENT
In accordance with Section 8.1 of the Plan, the Plan is amended as follows:
Preamble. This amendment is intended as good faith compliance with the
requirements of EGTRRA and is to be construed in accordance with EGTRRA and the
guidance issued thereunder. Except as otherwise expressly provided, this
amendment is effective as of the first day of the first Plan Year beginning
after December 31, 2001. This amendment supercedes the provisions of the Plan to
extent they are inconsistent with the provisions of this amendment.
1. Section 3.4(b), Limitation on Contributions.
(b) Maximum Annual Addition. Except to the extent permitted under
Section 8 of this amendment and Section 414(v) of the Code, if applicable, the
annual addition that may be contributed or allocated to a Participant's account
under the Plan for any limitation year, shall not exceed the lesser of:
1. $40,000.00 as adjusted for increases in the cost of living under
Section 415(d) of the Code, or
2. 100% of the Participant's compensation, within the meaning of
Section 415(c)(3) of the Code, for the limitation year.
2. Section 1.1(d)(1), Increase in Compensation Limit.
(1) The annual compensation of each Participant taken into account in
determining allocations for any Plan Year beginning after December 31, 2001,
shall not exceed $200,000.00, as adjusted for cost of living increases in
accordance with Section 401(a)(17)(B) of the Code. Annual compensation means
compensation during the Plan Year or such other consecutive 12 month period over
which compensation is otherwise determined hereunder. A cost of living
adjustment in effect for a calendar year applies to the annual compensation for
the determination period that begins with or within such calendar year.
3. Modification of Top-Heavy Rules.
Article IX - Top Heavy Provisions and Definitions.
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9.1(d). Key employee. Key employee means any employee or former employee
(including any deceased employee) who at any time during the Plan Year that
includes the determination date was an officer of the Employer having annual
compensation greater than
$130,000.00 (as adjusted under Section 416(i)(1) of the Code for Plan Years
beginning after December 31, 2002), a 5-percent owner of the Employer, or a
1-percent owner of the Employer having annual compensation of more than
$150,000.00. For this purpose, annual compensation means compensation within the
meaning of Section 415(c)(3) of the Code. The determination of who is a key
employee will be made in accordance with Section 4169(i)(1) of the Code and the
applicable regulations and other guidance of general applicability issued
thereunder.
9.1(i). Determination of present values and amounts. This Section 9.1(i)
shall apply for purposes of determining the present values of accrued benefits
and the amounts of account balances of employees as of the determination date.
(a) Distributions during year ending on the determination date.
The present value of accrued benefits and the amounts of account balances of an
employee as of the determination date shall be increased by the distributions
made with respect to the employee under the Plan and any plan aggregated with
the Plan under Section 416(g)(2) of the Code during the 1-year period ending on
the determination date. The preceding sentence shall also apply to distributions
under a terminated Plan which, had it not been terminated, would have been
aggregated with the plan under Section 416(g)(2)(A)(i) of the Code. In the case
of a distribution made for a reason other than separation from service, death,
or disability, this provision shall be applied by substituting 5-year period for
1-year period.
(b) Employees not performing services during year ending on the
determination date. The accrued benefits and accounts of any individual who has
not performed services for the Employer during the 1-year period ending on the
determination date shall not be taken into account.
9.7 Minimum benefits.
(a) Matching contributions. Employer matching contributions
shall be taken into account for purposes of satisfying the minimum contribution
requirements of Section 416(c)(2) of the Code and the Plan. The preceding
sentence shall apply with respect to matching contributions under the Plan or,
if the Plan provides that the minimum contribution requirement shall be met in
another plan, such other plan. Employer matching contributions that are used to
satisfy the minimum contribution requirements shall be treated as matching
contributions for purposes of the actual contribution percentage test and other
requirements of Section 401(m) of the Code.
(b) The minimum contribution requirements of Section
416(c)(2) of the Code shall be met in this Plan.
4. Direct Rollovers of Plan Distribution.
A. Modification of Definitions. For purposes of the direct roll over
provisions in Section 3.5, an eligible retirement plan shall also mean an
annuity contract described in Section 403(b) or 457(b) of the Code an ineligible
plan under Section 457(b) of the Code which is maintained by a state, political
subdivision of a state, or any agency or
instrumentality of a state or a political subdivision thereof which agrees to
separately account for amounts transferred into such plan from this Plan. The
definition of eligible retirement plan shall also apply in the case of a
distribution to a surviving spouse or to a spouse or former spouse who is the
alternate payee under a qualified domestic relations order as defined in Section
414(p) of the Code.
B. Any amount that is distributed on account of hardship shall not be an
eligible rollover distribution and the distributee may not elect to have any
portion of such distribution paid directly to an eligible retirement plan.
5. Rollovers from other plans.
A. Direct rollovers. Pursuant to Section 3.3, the Plan will accept
Participant rollover contributions and direct rollover of an eligible
distribution from
(i) A qualified plan described in Section 401(a) or 403(a) of the
Code, excluding after tax employee contributions.
(ii) An annuity contract described in Section 403(b) of the Code,
excluding after tax employee contributions.
(iii) An eligible plan under Section 457(b) of the Code which is
maintained by a state, political subdivision of the state or any agency or
instrumentality of a state or political subdivision of a state.
(iv) A participant rollover contribution of the portion of the
distribution from an individual retirement account or annuity described in
Section 408(a) or 408(b) of the Code that is eligible to be rolled over and
would otherwise be includable in gross income.
B. Rollovers disregarded in involuntary cash outs. The value of a
Participant's non-forfeitable account balance shall be determined without regard
to that portion of the account balance that is attributable to rollover
contributions (and earnings allocable thereto) within the meaning of Sections
402(c), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii) and 457(e)(16) of the Code. If
the value of the Participant's nonforfeitable account balance as so determined
is $5,000.00 or less, the Plan shall immediately distribute the participant's
entire nonforfeitable account balance.
6. Repeal of multiple use test. The multiple use test described in Treasury
Regulation Section 1.401(m)-2 shall not apply to Plan Years beginning after
December 31, 2001.
7. Elective deferrals - contribution limitation. No Participant shall be
permitted to have Elective Deferrals under this Plan or any other qualified plan
maintained by the Employer during any taxable year in excess of the dollar
limitation contained in Section 402(g) of the Code in effect for such taxable
year, except to the extent permitted under Section 8 of this amendment (catch up
contribution).
8. Catch-up contributions. All employees who are eligible to make Elective
Deferrals hereunder and who have attained age 50 before the close of the Plan
Year shall be eligible to make catch-up contributions in accordance with, and
subject to the limitation of, Section 414(v) of the Code. Such catch-up
contributions shall not be taken into account for purposes of the provisions of
this Plan implementing the required limitations of Sections 402(g) and 415 of
the Code. This Plan shall not be treated as failing to satisfy the provisions of
the Plan implementing the requirements of Sections 401(k)(3), 401(k)(11),
401(k)(12), 410(b) or 416 of the Code as applicable, by reason of the making of
such catch-up contributions.
9. Suspension period following hardship distributions. A Participant who
receives a distribution of Elective Deferrals after December 31, 2001 on account
of hardship shall be prohibited from making Elective Deferrals under this and
all other plans maintained by the Employer for 6 months after receipt of the
distribution. A Participant who receives a distribution of Elective Deferrals in
calendar year 2001 on account of hardship shall be prohibited from making
Elective Deferrals and employee contributions under this Plan and all other
plans maintained by the Employer for 6 months after the receipt of the
distribution or until January 2, 2002, if later.
10. Distribution upon severance of employment. A Participant's Elective
Deferrals, qualified non-elective contributions, qualified matching
contributions and earning attributable thereto shall be distributed on account
of the Participant's severance from employment. However, such distribution shall
be subject to the other provisions of this Plan regarding distributions, other
than provisions that require a separation from service before such amounts may
be distributed. This Section shall apply to a Participant's severance from
employment occurring after December 31, 2001.
In Witness Whereof, the Employer has caused its duly authorized officers to
execute this amendment as of the day and year first above written.
Donegal Mutual Insurance Company
By: /s/ Donald H. Nikolaus
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Donald H. Nikolaus
Attest:
/s/ Ralph G. Spontak
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Ralph G. Spontak, Secretary
[Corporate Seal]