EXHIBIT 10.5
ANNUAL REVIEW AND
ACTUARIAL VALUATION
THE BANK OF GLEN BURNIE
PENSION PLAN
as of
January 1, 1996
TABLE OF CONTENTS
INTRODUCTION AND HIGHLIGHTS PAGE
COVER LETTER..........................................................1-2
EXECUTIVE SUMMARY.....................................................3-4
ASSET INFORMATION
INVESTMENT FUND STATEMENT AND
SUMMARY OF ASSETS................................................... 5-6
VALUATION RESULTS
CALCULATION OF THE UNFUNDED
ACTUARIAL LIABILITY AND NORMAL COST.............................. 7
SCHEDULE OF REQUIRED AMORTIZATIONS FOR
FUNDING STANDARD ACCOUNT......................................... 8
SCHEDULE OF 10 YEAR AMORTIZATION BASES.............................. 9
CALCULATION OF THE FULL FUNDING LIMITATION.......................... 10-11
DEVELOPMENT OF THE CONTRIBUTION RANGE
FOR FUNDING PURPOSES............................................. 12
DEVELOPMENT OF QUARTERLY CONTRIBUTION............................... 13
FUNDING STANDARD ACCOUNT............................................ 14
ACCOUNTING INFORMATION
INFORMATION REQUIRED UNDER FASB #35................................. 15
INFORMATION REQUIRED UNDER FASB #87................................. 16-17
BASIS OF VALUATION
ACTUARIAL BASIS..................................................... 18-19
SUMMARY OF PLAN PROVISIONS.......................................... 20-25
SUMMARY OF EMPLOYEE DATA............................................
February 29, 1996
Retirement Plan Committee
The Bank of Glen Burnie
P.O. Box 70
Glen Burnie, Maryland 21060-0070
Re: The Bank of Glen Burnie Pension Plan -
Annual Review and Actuarial Valuation
Dear Committee Members:
This report presents the results of the annual review and actuarial valuation of
The Bank of Glen Burnie Pension Plan prepared for the 1996 Plan Year and sets
forth the contribution required for the plan year ending December 31, 1996.
The valuation was performed on the basis of employee census data submitted by
The Bank of Glen Burnie and upon investment fund data submitted by the Trustee,
First National Bank of Maryland.
Turner Pension Consultants, LLC has been retained by The Bank of Glen Burnie to
perform this valuation on behalf of plan participants. The report has been
prepared in accordance with generally accepted actuarial principles and
practices. The actuarial assumptions that have been used are reasonably related
to the experience of the plan and to reasonable expectations and represent the
enrolled actuary's best estimate of anticipated experience under the plan.
This report reflects the following:
- The minimum funding requirement for 1996 increased from
$113,263 (4.7% of prior year's compensation) to $120,824 (4.6%
of prior year's compensation).
- No quarterly contributions are required for the 1996 plan
year.
- The maximum deductible contribution for fiscal year ending
December 31, 1996 is $233,910 (8.9% of prior year's
compensation) compared to $223,043 (9.2% of prior year's
compensation) for the previous year. To be deductible, the
contribution must be deposited prior to the due date of the
Bank's federal tax return.
- As was the case in the past, the Bank of Glen Burnie Pension
Plan is not "top-heavy" for plan year beginning January 1,
1996.
1
- On September 18, 1995, the Bank of Glen Burnie purchased a
branch of First Union Bank. The employees of this branch
(Eberhardt, Fitzpatrick, Knopp, Sutton and Youngbar) have
received credit for benefit accrual from September 18, 1995.
They have received eligibility and vesting credit from their
date of hire with First Union.
After you have had an opportunity to review this report, please call if you have
any questions or wish to review and discuss the valuation.
Respectfully Submitted,
TURNER PENSION CONSULTANTS, LLC
Deborah G. Turner
Director
Pension Consulting Services
Richard M. Skidmore
Senior Plan Administrator
2
THE BANK OF GLEN BURNIE
PENSION PLAN
EXECUTIVE SUMMARY
January 1, 1995 January 1, 1996 % Change
--------------- --------------- --------
Participant Information
Number of Participants:
Active 102 112
Retired 15 16
Terminated Vested 13 10
--- ---
Total 130 138 6.2%
Annual Compensation of Active
Participants (Prior Year) 2,411,791 2,617,791 8.5%
Average Annual Compensation of
Active Participants (Prior Year) 23,645 23,373 (1.2%)
Asset Information
Market Value 2,767,215 3,399,653 22.9%
Actuarial Asset Value 2,810,109 3,271,643 16.4%
Cost Value 2,853,002 3,143,634 10.2%
Funding Information
Normal Cost 173,634 183,696 5.8%
Funding Standard Account
Credit Balance 107,196 110,257 2.9%
Contribution Range for Payment at the
End of the Plan Year:
Maximum Deductible Deposit 223,043 233,910 4.9%
As a % of Proper Year's Compensation 9.2% 8.9%
Minimum Funding Requirement 113,263 120,824 6.7%
As a % of Proper Year's Compensation 4.7% 4.6%
Accounting Information
3
THE BANK OF GLEN BURNIE
PENSION PLAN
EXECUTIVE SUMMARY
(continued)
January 1, 1995 January 1, 1996 % Change
--------------- --------------- --------
Accounting Information
FASB #35 Value of Accumulated Plan
Benefits:
Vested 2,167,522 2,364,935 9.1%
Non-Vested 54,938 68,766 25.2%
Total 2,222,460 2,433,701 9.5%
Interest Rate 8.0% 8.0%
FASB #87 Pension Expense 222,281 225,728 1.6%
Fiscal Year Ending 12/31/95 12/31/96
Discount Rate 8.5% 8.5%
Long Term Rate 8.5% 8.5%
4
THE BANK OF GLEN BURNIE
PENSION PLAN
INVESTMENT FUND STATEMENT
AS OF DECEMBER 31, 1995
Market Value of Fund as of January 1, 1995 $2,767,214.90*
Receipts
Employer Contribution for 1995 Plan $223,043.00
Year
Reimbursement of Trustees Fees 0.00
Rebate of Investment Advisory Fee 15,251.00
Interest and Dividends 219,142.87
Realized Gain/(Loss) 7,477.57
Unrealized Gain/(Loss) 341,806.86
Receipts from MONY 2,461.68
--------
Total Receipts $809,182.98
Benefit Payments (including Federal $170,653.30
tax withheld)
Trustee Fees 6,091.38
--------
Total Disbursement $176,744.68
Excess of Receipts over $ 632,438.30
Disbursements
Market Value of Fund as of $3,399,653.20*
December 31, 1995
* Asset value non-inclusive of Mutual Of New York contract value.
5
THE BANK OF GLEN BURNIE
PENSION PLAN
SUMMARY OF ASSETS
AS OF DECEMBER 31, 1995
Cost Value Market Value
---------- ------------
Cash Equivalents $ 97,918.75 3.11%$ 97,918.75 2.88%
Accrued Income 26,557.57 0.84% 26,557.57 0.78%
Contribution Receivable 0.00 0.00% 0.00 0.00%
Equity Investments 2,836,679.72 90.24% 3,074,018.96 90.42%
Fixed Income Investments 182,477.57 5.81% 201,157.92 5.92%
------------- -------------
Total Assets $3,143,633.61 100.00% $3,399,653.20 100.00%
------------- -------------
Actuarial Value of Assets
(Average of Costs and
Market Values) $3,271.643
----------
Asset value non-inclusive of MONY contract value.
6
THE BANK OF GLEN BURNIE
PENSION PLAN
CALCULATION OF THE UNFUNDED
ACTUARIAL LIABILITY
AS OF JANUARY 1, 1996
(1) Unfunded Actuarial Liability as of 01/01/95 $179,750
(2) Plus: Normal Cost 173,634
(3) Plus: Interest on (1) and (2) at 8% 28,269
(4) Less: Contributions Paid or Accrued 223,043
(5) Less: Interest on Contributions Paid 477
-------
(6) Unfunded Actuarial Liability as of 01/01/96 158,133
CALCULATION OF THE NORMAL COST
AS OF JANUARY 1, 1996
(1) Actuarial Present Value of Future Benefits: $5,431,333
(2) Less: Actuarial Value of Assets 3,271,643
(3) Less: Unfunded Actuarial Liability 158,133
(4) Actuarial Present Value of Future Normal Costs 2,001,557
[(1) - (2) - (3)]
(5) Actuarial Present Value of Future Compensation 31,401,300
(6) Normal Cost Accrual Rate [(4)/(5)]
(% of Projected Annual Compensation) 6.37%
(7) Projected Annual Compensation of Active Participants 2,883,769
----------
(8) Normal Cost [(6) x (7)] $ 183,696
7
THE BANK OF GLEN BURNIE
PENSION PLAN
SCHEDULE OF REQUIRED AMORTIZATIONS FOR
FUNDING STANDARD ACCOUNT
AS OF JANUARY 1, 1996
Plan Year
Date Payment Last Initial Scheduled Years
Charges Established Period Payment Amount Balance Remaining Payment
- ------- ----------- ------ ------- ------ ------- --------- -------
Initial Unfunded Accrued Liability 01/01/77 30 2006 $111,232 $ 68,903 11 $ 8,937
Change in Actuarial Assumptions
and Plan Amendment 01/01/84 30 2013 9,057 7,579 18 749
Plan Amendment 01/01/85 30 2014 3,487 2,994 19 288
Plan Amendment 01/01/88 30 2117 45,369 41,285 22 3,748
Change in Actuarial Assumptions 01/01/88 10 1997 16,318 4,375 2 2,273
Plan Amendment 01/01/89 30 2018 3,259 3,015 23 269
Plan Amendment 01/01/91 30 2020 94,061 89,330 25 7,749
Plan Amendment 01/01/93 30 2021 383 370 26 31
Change in Actuarial Assumptions 01/01/93 10 2002 139,094 107,922 7 19,194
-------- -------- ---- --------
Total Charges $422,260 $325,773 $ 43,238
======== ======== ========
Credits
Plan Amendment 01/01/94 30 2023 $ 58,391 $ 57,318 28 $ 4,803
-------- -------- --------
Total Credits $ 58,391 $ 57,318 $ 4,803
======== ======== ========
Net Amortization Payment on January 1, 1996 $ 38,435
========
8
THE BANK OF GLEN BURNIE
PENSION PLAN
10-YEAR AMORTIZATION BASES FOR THE TAXABLE YEAR
ENDING DECEMBER 31, 1996
Date Initial Prior 01/01/96 Limited
Charges Established Amount Payment Balance Adjustment
- ------- ----------- ------ ------- ------- ----------
Change in Actuarial Assumptions and
Plan Amendment 01/01/84 $ 9,057 $ 0 $ 0 $ 0
Plan Amendment 01/01/85 3,487 0 0 0
Plan Amendment 01/01/88 45,369 6,913 16,805 6,316
Change in Actuarial Assumptions 01/01/88 16,318 2,455 6,130 2,243
Plan Amendment 01/01/89 3,259 483 1,553 441
Plan Amendment 01/01/91 94,061 13,898 64,138 12,698
Plan Amendment 01/01/92 383 57 297 52
Change in Actuarial Assumptions 01/01/93 139,094 21,008 119,100 19,194
-------- -------- -------- --------
Total Charges $311,028 $ 44,814 $208,023 $ 40,944
======== ======== ======== ========
Credits
Plan Amendment 01/01/94 $ 58,391 $ 8,819 $ 49,890 $ 8,057
-------- -------- -------- --------
Total Credits $ 58,391 $ 8,819 $ 49,890 $ 8,057
======== ======== ======== ========
Net Amortization Payment on January 1 $ 35,995 $158,133 $ 32,887
Interest to December 31 $ 2,631
Net Amortization Payment on December 31 $ 35,518
9
THE BANK OF GLEN BURNIE
PENSION PLAN
CALCULATION OF THE FULL FUNDING LIMITATION
FOR THE PLAN YEAR ENDING DECEMBER 31, 1996
The maximum deductible contribution permitted under a defined benefit
plan is subject to two special "full funding limitation" tests which measure the
funded status of the plan.
The first test limits the deductible contribution to an amount needed
to fully fund the expected accrued liability by the end of the year. The accrued
liability projected to the end of the year is a function of the actuarial cost
method being used to determine plan contributions and is computed using the
valuation interest rate of 8%. It will usually exceed the true liability for
benefits accrued under the plan since it reflects any pre-funding of benefits
which the actuarial cost method may generate. One such example of pre-funding is
the recognition of expected future salary increases in determining current
contribution levels. The application of this test is as follows:
(1) Actuarial Accrued Liability as of 1/1/96 $3,424,053
(2) Entry Age Normal Cost for 1996 219,684
(3) Interest on (1) and (2) at 8% 291,499
(4) Expected Pension Payments during 1996 132,800
(5) Interest on (4) at 8% 5,755
--------
(6) Expected Accrued Liability on 12/31/96 3,796,861
(1)+(2)+(3)-(4)-(5)
(7) Lesser of Actuarial Asset Value or Market
Value of Assets as of 1/1/96 3,271,643
(8) Expected Earnings from (7) at 8% 261,731
(9) Expected Distributions during 1996 132,800
(10) Expected Earnings on (9) at 8% 5,755
(11) Expected Assets on 12/31/96
(7)+(8)-(9)-(10) 3,394,819
(12) Full Funding Limitation (6)-(11) $ 402,042
10
THE BANK OF GLEN BURNIE
PENSION PLAN
CALCULATION OF THE FULL FUNDING LIMITATION
FOR THE PLAN YEAR ENDING DECEMBER 31, 1996
(continued)
The second test limits the deductible contribution to an amount needed
to increase plan assets to 150% of the "current liability". The "current
liability" is the actual value of benefits accumulated as of the valuation date.
The interest rate used to compute the "current liability" must also fall within
an allowable range which is based on a weighted average of the rates of interest
on 30 year Treasury securities over the preceding four years. The rate selected
for the current year was 7.5 %. This test is shown below:
(13) Current Liability as of 1/1/96
(including benefits accruing during year) $2,803,455
(14) Interest on (13) at 7.5% 210,259
(15) Expected Pension Payments during 1996 132,800
(16) Interest on (15) at 7.5% 5,395
(17) Expected Current Liability on 12/31/96
(13)+(14)-(15)-(16) $2,875,519
(18) 150% Expected Current Liability 4,313,279
(19) Expected Assets on 12/31/96 from (11) 3,394,819
(20) 150% Full Funding Limitation (18)-(19) $918,460
The combined result of these two tests is as follows:
(21) Full Funding Limitation as of 12/31/96
Lesser of (12) or (20) $402,042
11
THE BANK OF GLEN BURNIE
PENSION PLAN
DEVELOPMENT OF THE CONTRIBUTION RANGE
FOR FUNDING PURPOSES
Minimum Funding Requirement
for the Plan Year Beginning January 1, 1996
(a) Normal Cost $ 183,696
(b) Net Amortization Charges to the
Funding Standard Account 38,435
(c) Funding Standard Account Credit Balance 110,257
(d) Full Funding Limitation 402,042
(e) Minimum Required Contribution Payable at
the End of the Plan Year = [(a)+(b)-(c)]
x 1.08, not to exceed (d) 120,824
Maximum Deductible Contribution
for the Employer Fiscal Year Ending December 31, 1996
(a) Normal Cost $ 183,696
(b) Net Amortization Charges for Maximum
Deduction Purposes with Interest to the
end of the Fiscal Year 35,518
(c) Interest on Normal Cost to the end
of the Fiscal Year (a) x 8% 14,696
(d) Maximum Amortization Contribution =
(a)+(b)+(c) 233,910
(e) Full Funding Limitation 402,042
(f) Minimum Required Contribution Payable
at the End of the Plan Year 120,824
(g) Maximum Deductible Contribution = lesser of
(d) or (e), but not less than (f) 233,910
12
THE BANK OF GLEN BURNIE
PENSION PLAN
DEVELOPMENT OF QUARTERLY CONTRIBUTION REQUIREMENT
(a) Current Liability as of 1/1/95 $2,371,131
(b) Actuarial Value of Assets
as of 1/1/95 2,810,109
(c) Funded Current Liability
Percentage as of 1/1/95
(b)/(a) 119%
Since (c) is at least 100%, no quarterly contributions are required for 1996.
13
THE BANK OF GLEN BURNIE
PENSION PLAN
FUNDING STANDARD ACCOUNT
FOR THE PLAN YEAR ENDED
DECEMBER 31, 1995
ERISA requires that each defined benefit pension plan meet or exceed
certain minimum funding standards in order to enhance the security of each
employee's benefits. The device by which it is determined whether the standards
are met is the "funding standard account".
Any excess of credits over charges is a credit balance which is carried
forward and may be used to reduce future funding requirements. Any excess of
charges over credits is a funding deficiency which is subject to the excise tax
penalties prescribed by ERISA.
The operation of the funding standard account for the plan year ended
December 31, 1995 is shown below:
Charges
Prior Year Funding Deficiency $ 0
Normal Cost 173,634
Amortization Charges (Balance
beginning of year $344,881) 43,238
Interest 17,350
Interest on Late Quarterly
Contributions 0
--------
Total Charges $234,222
Credits
Prior Year Credit Balance 107,196
Employer Contribution 223,043
Amortization Credits (Balance
beginning of year $57,875) 4,803
Interest 9,437
-------
Total Credits $344,479
Credit Balance $110,257
14
INFORMATION REQUIRED UNDER FASB #35
ACCOUNTING AND REPORTING
FOR DEFINED BENEFIT PLANS
1. The most recent valuation was performed as of January 1, 1996.
2. The actuarial present value of accumulated plan benefits as of 12/31/95
is shown below:
Vested Benefits
Participants currently receiving payments $1,180,021
Other participants 1,184,914
Total vested benefits 2,364,935
Nonvested Benefits 68,766
----------
Total actuarial present value of accumulated
plan benefits $2,433,701
3. The plan had net assets available for benefits as of 12/31/95
(excluding MONY contracts) of $3,399,653.
4. An interest rate of 8% was used to determine the actuarial present
value of accumulated plan benefits as of December 31, 1994 and December
31, 1995.
5. Changes in the actuarial present value of accumulated plan benefits
during the past year are shown below:
Actuarial present value of accumulated
plan benefits as of 12/31/94 $2,222,460
Increase/(decrease) during the year attributable to:
Benefits accumulated (including gains and losses) $ 208,925
Interest 170,508
Benefits paid (168,192)
Net increase/(decrease) 211,241
----------
Actuarial present value of accumulated
plan benefits as of 12/31/95 $2,433,701
15
INFORMATION REQUIRED UNDER FASB #87
EMPLOYERS' ACCOUNTING FOR PENSION PLANS
1. The pension expense for employer fiscal year ending
December 31, 1996 is as follows:
Service Cost $208,566
Interest Cost 286,590
Expected return on assets (282,856)
Net amortization and deferral 13,428
-------
Net periodic pension cost $225,728
Note: The net periodic pension cost shown above may
change if a significant event occurs prior to
the end of the period, such as a plan amendment,
which would require an additional measurement.
2. The components of the net amortization and deferral charge are as follows:
Amortization of unrecognized net obligation/
(asset) at transition $(12,169)
Amortization of unrecognized prior service cost 25,597
Amortization of unrecognized net (gain)/loss 0
--------
Net amortization and deferral $13,428
3. A reconciliation of the Plan's funded position is as follows:
12/31/95 1/1/96
-------- ------
Actuarial present value of benefit obligations:
Vested benefit obligation $2,183,088 $2,222,897
---------- ----------
Accumulated benefit obligation 2,246,454 2,286,079
---------- ----------
Projected benefit obligation 3,365,078 3,443,582
Plan assets at fair value 3,399,653 3,399,653
---------- ----------
Projected benefit obligation (in excess of)
or lesser than Plan assets 34,575 (43,929)
Unrecognized net (gain) or loss (6,440) 72,064
Unrecognized prior service cost 199,924 199,924
Unrecognized net obligation or (asset) (73,012) (73,012)
at transition ------ ------
Prepaid or (accrued) pension cost $155,047 $155,047
------- -------
16
INFORMATION REQUIRED UNDER FASB #87
EMPLOYERS' ACCOUNTING FOR PENSION PLANS
(continued)
4. The significant assumptions used to determine the net pension expense
for the current period are as follows:
Discount Rate 8.5%
Long Term Rate 8.5%
Salary Growth Rate 6.5%
5. The initial obligation or (asset) at transition is being amortized over
a period of 13 years from January 1, 1989 which represents the average
future service of employees expected to receive benefits under the plan
computed as of that date.
6. Unrecognized (gains) or losses which exceed 10% of the greater of plan
assets at fair value or the projected benefit obligation are amortized
over the average future service of employees expected to receive
benefits under the plan computed as of the applicable measurement date.
7. The unrecognized prior service cost arising January 1, 1991 is being
amortized over 12.810683 years. This is the average future years of
service for employees expected to receive benefits as of that date.
8. The measurement date used to determine pension expense and disclosure
information is December 31.
17
THE BANK OF GLEN BURNIE
PENSION PLAN
ACTUARIAL BASIS
Valuation of Liabilities
A. Description of Actuarial Cost Method
This valuation was performed using the frozen entry age actuarial cost
method (frozen initial liability method). Under this method, the
contribution equals the sum of the amount necessary to amortize the
frozen actuarial liabilities over a period of years and the normal cost
of the plan.
The frozen actuarial liability as of January 1, 1977 was equal to the
actuarial accrued liability on that date as determined under the entry
age normal actuarial cost method. Additional liability bases were
created since then due to changes in assumptions and plan amendments.
In the absence of any further changes in plan benefits or actuarial
assumptions, these frozen actuarial liabilities will remain unchanged
in future valuations. However in the future, as contributions are made
to amortize the frozen actuarial liabilities, the unfunded frozen
actuarial liabilities will decrease until they reach zero.
The normal cost is calculated in the aggregate (i.e. the actuarial
present values of projected benefits and future compensation are
totaled for all participants before the normal cost is calculated).
The normal cost accrual rate for the current group of participants
should remain approximately level from year to year. Changes in the
characteristics of the group due to new entrants, differences between
actuarial assumptions and actual experience, changes in actuarial
assumptions, and changes in plan provisions will lead to changes in the
normal cost accrual rate.
B. Actuarial Assumptions
Interest
For Funding Purposes 8% compounded annually. The current
liability used to determine the full funding
limitation was based on a 7.5% rate.
For Purposes of FASB #35 8% compounded annually.
For Purposes of FASB #87 8.5% discount rate
8.5% long term rate
18
THE BANK OF GLEN BURNIE
PENSION PLAN
Salary Increases 6.5% per year. The ratio of a
participant's salary at normal
retirement date to his salary at
selected ages is as follows:
Age 25 40 55
Ratio 12.42 4.83 1.88
Social Security Projected in accordance with the
escalator provisions of the 1977
Social Security Amendments:
Wage Base and Earnings Indexing
Increment 5.50%
Consumer Price Index Incremen 4.50%
Mortality 1983 Group Annuity Mortality Table.
Withdrawal Table T-5 of the Actuary's Pension
Handbook with a 5-year setback for
female rate; representative rates
are:
Age 25 40 55
Male 7.72% 5.15% .94%
Female 7.94% 6.28% 2.56%
Retirement Age All participants are assumed to
retire on their normal retirement
date.
New Entrants None assumed.
Excluded Employees No participants are excluded from
the valuation.
Rehire of Terminated
Employees No rehire of terminated employees
assumed.
Expenses Plan administrative expenses are
assumed to be paid by the employer
outside the trust.
Asset Valuation Average of cost and market values.
In no event will the actuarial value
of assets be less than 80% nor more
than 120% of market value.
The assumptions have not changed since the previous valuation.
19
THE BANK OF GLEN BURNIE
PENSION PLAN
SUMMARY OF PLAN PROVISIONS
GENERAL
TYPE OF PLAN Defined Benefit Pension Plan
PLAN SPONSOR The Bank of Glen Burnie
PLAN ADMINISTRATOR Retirement Plan Committee
TRUSTEE First National Bank of MD.
IDENTIFICATION NUMBERS
EMPLOYER 52-0575023
ADMINISTRATOR 52-1078472
TRUST 52-0057503
PLAN 001
EFFECTIVE DATE OF PLAN October 15, 1959.
EFFECTIVE DATE OF MOST
RECENT AMENDMENT January 1, 1994.
ENTRY DATE January 1.
VALUATION DATE January 1.
PLAN YEAR January 1 through December 31.
FISCAL YEAR December 31.
20
THE BANK OF GLEN BURNIE
PENSION PLAN
DEFINITIONS
COMPENSATION Total compensation paid or
accrued for the plan year
exclusive of overtime or
bonuses. Amounts in excess
of $150,000 not considered
for years prior to 1994.
Beginning in 1995, the
maximum compensation limit
will increase by a
cost-of-living adjustment.
AVERAGE COMPENSATION Average of highest five consecutive
years of compensation out of the
last ten years.
COVERED COMPENSATION The 35-year average of the Social
Security Taxable Wage Bases ending
with the year in which the
participant reaches Social Security
Normal Retirement Age.
SOCIAL SECURITY NORMAL Year of Birth Age
RETIREMENT AGE ------------- ---
Prior to 1/1/38 65
1/1/38 - 12/31/54 66
On or after 1/1/55 67
YEAR OF SERVICE Plan year during which an employee
completes at least 1,000 hours of
service.
ELIGIBILITY AND PARTICIPATION
ELIGIBILITY REQUIREMENTS Minimum age: 20-1/2;
Maximum age: none;
Service requirement: Six months;
Must be nonunion.
RE-HIRES Enter immediately if prior
participant except if not
vested and pre-break
service is less than the
length of break in which
case, treated as new
employee. If not prior
participant, must meet
eligibility requirements,
for which purpose,
pre-termination service
counted.
21
THE BANK OF GLEN BURNIE
PENSION PLAN
FUNDING OF PLAN
CONTRIBUTIONS Company contributions: Amount
required to meet annual funding
standards of IRS, as determined by
plan actuary.
Participant contributions: None
required but allowed, up to 10% of
annual compensation to all plans for
all years in plan (subject to
non-discrimination test for highly
compensated employees).
PLAN BENEFITS
LOAN PROVISIONS None.
ROLLOVER CONTRIBUTIONS Not Permitted.
FORFEITURES Used to reduce employer
contributions.
NORMAL RETIREMENT Eligibility at
termination of employment BENEFIT
after age 65.
Formula: 2% of average compensation
plus .65% of average compensation in
excess of covered compensation, all
multiplied by years of service up to
20 years.
Benefit computed as life annuity.
Benefit reduced by MONY paid up
annuity.
22
THE BANK OF GLEN BURNIE
PENSION PLAN
EARLY RETIREMENT BENEFITS Eligibility after participant
completes ten years of service and
reaches age 55.
Formula: Normal retirement benefit
computed using years of service and
average compensation at termination
of employment. Actuarial reduction
for early payment. Benefit is
reduced by 1/144th for each month
during the first five years, and
1/288th for each month during the
next five years, with actuarial
reduction thereafter, for early
payment.
DEFERRED RETIREMENT Benefits deferred to actual
BENEFITS retirement and increased for
deferred payment beyond age 65.
Increase for later payment equal to
the greater of the benefit
calculated at normal retirement date
and actuarially increased to actual
retirement, or benefit calculated at
actual retirement date with
continued credit for salary
increases and service beyond age 65.
DISABILITY BENEFITS Eligibility upon total and permanent
disability.
Commencement of benefits at
cessation of long term disability
benefits.
Formula: Benefits computed in same
manner as early retirement benefits.
TERMINATION OF
EMPLOYMENT BENEFITS Vesting Schedule:
Percent
Years of Service Vested
---------------- ------
Less than 5 years 0%
5 or more years 100%
23
THE BANK OF GLEN BURNIE
PENSION PLAN
TERMINATION OF Service prior to break in service is
EMPLOYMENT BENEFITS (cont.) excluded where participant is
re-employed after a break in service
exceeding the length of prior
service (but only where not vested).
Benefit commencement date: Normal
retirement date, unless the value of
the benefit is less than $10,000 in
which case, a lump sum is paid;
however, participant approval
required for deferral past age 55 if
ten years of service completed at
termination of employment.
DEATH BENEFITS If death occurs after becoming
vested, surviving spouse entitled to
50% of amount payable to participant
under joint and 50% survivor option
determined as of date of death.
If death occurs after normal
retirement date but before benefit
commenced, surviving spouse or other
named beneficiary entitled to full
value of accrued benefit determined
as of date of death.
PAYMENT OF BENEFITS
JOINT AND SURVIVOR BENEFITS Normal form of benefit unless
participant elects otherwise.
Benefit is the actuarial equivalent
of the normal form of benefit (life
only). Applies to all married
participants at benefit commencement
date.
OTHER OPTIONS Range of options are available: lump
sum (if value is under $10,000),
installment payments, and annuity
options.
Benefit option payments based on
UP84 at 8%.
24
THE BANK OF GLEN BURNIE
PENSION PLAN
TOP HEAVY PROVISIONS
(Apply only if Plan becomes top-heavy)
NORMAL RETIREMENT Minimum Benefit: 2% of compensation
BENEFITS multiplied by top-heavy years of service to a
maximum of 10 years.
TERMINATION OF EMPLOYMENT Vesting Schedule:
Percent
Years of Service Vested
---------------- ------
Less than 2 years 0%
2 years 20%
3 years 40%
4 years 60%
5 years or more 100%
25