UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-8
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REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
DELTA AND PINE LAND COMPANY
(Exact name of Registrant as specified in its charter)
Delaware 62-1040440
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
One Cotton Row
Scott, Mississippi 38772
(Address of Principal Executive Offices including zip code)
DELTA AND PINE LAND COMPANY DEFINED CONTRIBUTION PLAN
(Full title of the plan)
Kenneth M. Avery
Vice President of Finance and Treasurer
One Cotton Row
Scott, MS 38772
(662) 742-4000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copy to:
Sam D. Chafetz, Esq.
Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
165 Madison Avenue
Memphis, TN 38103
(901) 577-2148
CALCULATION OF REGISTRATION FEE
------------------------------------------ --------------- --------------------- -------------------- -------------
Proposed maximum Proposed maximum Amount of
Amount to be offering aggregate offering registration
Title of securities to be registered registered (1) price per share (2) price (2) fee
------------------------------------------ ---------------- --------------------- -------------------- -------------
Common stock, par value $0.10 per share 1,000,000 shares $29.77 $29,770,000 $3,186
------------------------------------------ ---------------- --------------------- -------------------- -------------
In addition, pursuant to Rule 416(c) under the Securities Act of 1933, as
amended, this Registration Statement also covers an indeterminate amount of
interests to be offered or sold pursuant to the plan.
(1) Includes an indeterminate number of additional shares that may be
necessary to adjust the number of shares reserved for issuance pursuant to
the plan as a result of any future stock split, stock dividend or similar
adjustment of the Registrant's outstanding Common Stock.
(2) Estimated solely for the purpose of calculating the registration fee
and, pursuant to paragraphs (c) and (h) of Rule 457, based upon the average
of the high and low prices of such common stock on the New York Stock
Exchange on March 29, 2006, as reported on the Yahoo! Finance web
site.
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The documents containing the information specified in Part I of this
Registration Statement on Form S-8 will be sent or given to the participants in
the plan as specified under Rule 428(b)(1) under the Securities Act of 1933, as
amended (the "Securities Act"). Such documents are not required to be, and are
not being, filed by Delta and Pine Land Company (the "Company") with the
Securities and Exchange Commission (the "Commission"), either as part of this
Registration Statement or as prospectuses or prospectus supplements pursuant to
Rule 424 under the Securities Act. Such documents, together with the documents
incorporated by reference herein pursuant to Item 3 of Part II of this
Registration Statement on Form S-8, constitute a prospectus that meets the
requirements of Section 10(a) of the Securities Act.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents By Reference.
The Company has filed the following document(s) with the Commission and
incorporates them herein by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
August 31, 2005, filed with the Commission on November 14, 2005.
2. The Company's Quarterly Report on Form 10-Q for the fiscal quarter ended
November 30, 2005, filed on January 9, 2006; and the Company's Current
Reports on Form 8-K, filed on November 2, 2005, December 6, 2005, December
12, 2005 and January 6, 2006 and April 4,2006.
3. The description of the Company's Common Stock contained in its
Registration Statement on Form 8-A filed with the Commission on May 18,
1993, and amended by Amendment No. 1 to the Registration Statement on Form
8-A filed with the Commission on June 24, 1993.
All reports and other documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing of a
post-effective amendment indicating that all securities offered hereby have been
sold or deregistering all securities then remaining unsold shall be deemed to be
incorporated herein by reference and to be a part hereof from the date of the
filing of such reports and documents.
Any statement contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes of
this Registration Statement to the extent that a statement contained herein or
in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Registration Statement.
The Company will provide, without charge, to each plan participant a copy of the
documents incorporated by reference in Item 3 of Part II of this registration
statement, upon written or oral request. Further, we will provide plan
participants, without charge, upon written or oral request, other documents
required to be delivered pursuant to Commission Rule 428(b). Telephone and
written requests should be directed to Delta and Pine Land Company, Attn:
Kenneth M. Avery, Vice President of Finance and Treasurer, One Cotton Row,
Scott, Mississippi 38772, (662) 742-4000.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
The legality of the common stock offered hereby has been opined by Baker,
Donelson, Bearman, Caldwell & Berkowitz, PC, counsel for the Company ("Baker
Donelson"), 165 Madison Avenue, Suite 2000, Memphis, Tennessee 38103. Baker
Donelson was not employed on a contingent basis for its opinion, did not receive
a substantial interest, directly or indirectly, in the Company, or any parent or
subsidiary and was not and is not connected with the Registrant as a promoter,
managing underwriter, voting trustee, director, officer or employee.
Item 6. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law (the "DGCL") provides that,
among other things, a corporation may indemnify directors and officers as well
as other employees and agents of the corporation against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement in connection
with specified actions, suits or proceedings, whether civil, criminal,
administrative or investigative (other than action by or in the right of the
corporation, a "derivative action"), if they acted in good faith and in a manner
they reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. A similar standard is
applicable in the case of derivative actions, except that indemnification only
extends to expenses (including attorneys' fees) incurred in connection with the
defense or settlement of such actions, and the statute requires court approval
before there can be any indemnification where the person seeking indemnification
has been found liable to the corporation. The statute provides that it is not
exclusive of other indemnification that may be granted by a corporation's
bylaws, disinterested director vote, stockholder vote, agreement or otherwise.
Section 102(b)(7) of the DGCL permits a corporation to provide in its
certificate of incorporation that a director of such corporation shall not be
personally liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duties as a director, except for liability (i) for any
transaction from which the director derives an improper personal benefit, (ii)
for acts or omissions not in good faith or that involve intentional misconduct
or a knowing violation of law, (iii) under Section 174 of the DGCL (certain
illegal distributions) or (iv) for any breach of a director's duty of loyalty to
the company or its stockholders. The Ninth Article of Restated Certificate of
Incorporation of the Company includes such a provision.
The Ninth Article of Restated Certificate of Incorporation of the Company
provides:
A. A director of the Company shall not be personally liable to the Company or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Company or its stockholders, (ii) for acts or omissions not in
good faith or which involved intentional misconduct or a knowing violation of
law, (iii) for any transaction from which the director derived an improper
personal benefit, or (iv) under Section 174 of the DGCL. If the DGCL is amended
to authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the Company shall be
eliminated or limited to the fullest extent permitted by the DGCL, as so
amended. Any repeal or modification of this Section A by the stockholders of the
Company shall not adversely affect any right or protection of a director of the
Company existing at the time of such repeal or modification.
B. (1) Each person who was or is made a party or is threatened to be made a
party to or is involved in any action, suit, or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "proceeding"), by
reason of the fact that he or she or a person of whom he or she is the legal
representative is or was a director, officer or employee of the Company or is or
was serving at the request of the Company as a director, officer, employee,
agent or in any other capacity of another corporation or of a partnership, joint
venture, trust or other enterprise, including service with respect to employee
benefit plans, whether the basis of such proceeding is alleged action in an
official capacity as a director, officer, employee or agent or in any other
capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the Company to the fullest extent authorized by
the DGCL as the same exists or may hereafter be amended (but, in the case of any
such amendment, only to the extent that such amendment permits the Company to
provide broader indemnification rights than said law permitted the Company to
provide prior to such amendment), against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid or to be paid in settlement) reasonably incurred or suffered by
such person in connection therewith if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful, and
such indemnification shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of his or
her heirs, executors and administrators; provided, further, that except as
provided in paragraph (2) of this Section B with respect to proceedings seeking
to enforce rights to indemnification, the corporation shall indemnify any such
person only if such proceeding (or part thereof) was authorized by the Board of
Directors of the Company by a majority vote of a quorum of the directors who
were not parties to such action, suit or proceeding, or if such quorum is not
obtainable, by the stockholders. The right to indemnification conferred in this
Section B shall be a contract right and shall include the right to be paid by
the Company and the expenses incurred in defending any such proceeding in
advance of its final disposition; provided, however, that if the DGCL requires,
the payment of such expenses incurred by a director or officer in his or her
capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding, shall be made only upon delivery to
the Company of an undertaking by or on behalf of such director or officer, to
repay all amounts so advanced if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under this Section B or
otherwise.
(2) If a claim under paragraph (1) of this Section B is not paid in full by the
Company within thirty days after a written claim has been received by the
Company, the claimant may at any time thereafter bring suit against the Company
to recover the unpaid amount of the claim and, if successful in whole or in
part, the claimant shall be entitled to be paid also the expense of prosecuting
such claim. It shall be a defense to any such action (other than an action
brought to enforce a claim for expenses incurred in defending any proceeding in
advance of its final disposition where the required undertaking, if any is
required, has been tendered to the Company) that the claimant has not met the
standards of conduct which make it permissible under the DGCL for the Company to
indemnify the claimant for the amount claimed, but the burden of proving such
defense shall be on the Company. Neither the failure of the Company (including
its Board of Directors, independent legal counsel or stockholders) to have made
a determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the DGCL, nor an actual
determination by the Company (including its Board of Directors, independent
legal counsel or stockholders) that the claimant has not met such applicable
standard of conduct shall be a defense to the action or create a presumption
that the claimant has not met the applicable standard of conduct.
(3) The right to indemnification and the payment of expenses incurred in
defending a proceeding in advance of its final disposition conferred in this
Section B shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, provision of the certificate of
incorporation, By-Law, agreement, vote of stockholders or disinterested
directors or otherwise.
(4) The Company may maintain insurance, at its expense, to protect itself and
any director, officer, employee or agent of the Company or another corporation,
partnership, joint venture, trust or other enterprise against any expense,
liability or loss, whether or not the Company would have the power to indemnify
such person against such expense, liability or loss under the DGCL.
(5) The Company may, to the extent authorized from time to time by the Board of
Directors, grant rights to indemnification, and rights to be paid by the Company
the expenses incurred in defending any proceeding in advance of its final
disposition, to any agent of the Company to the fullest extent of the provisions
of this Section B with respect to the indemnification and advancement of
expenses of directors, officers, and employees of the Company.
The Company has liability insurance policies in effect that cover certain claims
against any officer or director of the Company by reason of certain breaches of
duty, neglect, errors or omissions committed by such person in his or her
capacity as an officer or director.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
Exhibit Description
4.1 Delta and Pine Land Company Defined Contribution Plan.
4.2 Certificate of Designation, Convertible Preferred Stock of Delta and
Pine Land Company.*
4.3 Specimen Certificate representing the Common Stock, par value $0.10 per
share.**
4.4 Rights Agreement, dated as of August 13, 1996, between Delta and Pine
Land Company and Harris Trust and Savings Bank, including the form of Right
Certificate and related form of Election to Purchase as Exhibit A and the
Summary of Rights to Purchase Preferred Shares as Exhibit B.***
4.5 Amendment No. 1 to the Rights Agreement dated May 8, 1998, by and
between Delta and Pine Land Company and the Harris Trust and Savings
Bank.****
4.6 Amendment No. 2 to the Rights Agreement dated May 8, 1998 by and
between Delta and Pine Land Company and the Harris Trust and Savings
Bank.*****
4.7 Certificate of Designations of the rights and privileges of the shares
of junior participating preferred stock created on August 13, 1996, to be
filed pursuant to Section 151 of the Delaware General Corporation Law.***
5.1 Opinion of Baker, Donelson, Bearman, Caldwell & Berkowitz, PC as to the
legality of the shares being registered.
23.1 Consent of KPMG LLP.
23.2 Consent of Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
(included in Exhibit 5.1 to the Registration Statement.).
24.1 Power of Attorney (included with signatures).
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* Incorporated by reference to the Company's Current Report on Form 8-K,
filed with the Commission on February 19, 1996.
** Incorporated by reference to the Company's Annual Report on Form 10-K
for the year ended August 31, 2004, filed with the Commission on November
15, 2004. *** Incorporated by reference to the Company's Registration
Statement on Form 8-A, filed with the Commission on September 3, 1996.
**** Incorporated by reference to the Company's Current Report on Form 8-K,
filed with the Commission on May 14, 1998.
***** Incorporated by reference to the Company's Annual Report on form 10-K
for the year ended August 31, 1998, filed with the Commission on November
24, 1998.
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to the Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of the securities offered would not exceed what was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of a
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20 percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement
or any material change to such information in this registration
statement;
provided, however, that sections (a)(1)(i) and (a)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished
to the Commission by the Registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 (the "Exchange Act") that are
incorporated by reference in this registration statement;
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination
of this offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in this registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit, or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in City of Scott, State of Mississippi, on this 4th day of April,
2006.
DELTA AND PINE LAND COMPANY.
By: /s/ Kenneth M. Avery
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Vice President of Finance and Treasurer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned officers and directors of
Delta and Pine Land Company, a Delaware corporation, hereby constitute and
appoint Kenneth M. Avery the true and lawful agent and attorney-in-fact, with
all power of substitution and resubstitution, to sign for the undersigned, in
their respective names as officers and directors of the corporation, one or more
registration statements on Form S-8 (or other appropriate form) to be filed with
the Securities and Exchange Commission, Washington, D.C., under the Securities
Act of 1933, as amended, and any amendment or supplement to such registration
statement, relating to the Defined Contribution Plan; hereby ratifying and
confirming all acts taken by such agent and attorney-in-fact as herein
authorized.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed by the following persons in the
capacities indicated, and as of the date first written above.
Signature Title
/s/ Jon E. M. Jacoby Chairman of the Board
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Jon E. M. Jacoby
/s/ W. Thomas Jagodinski President, Chief Executive Officer and Director
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W. Thomas Jagodinski (Principal Executive Officer)
/s/ Kenneth M. Avery Vice President of Finance and Treasurer
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Kenneth M. Avery (Principal Financial Officer)
/s/ F. Murray Robinson Vice Chairman and Director
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F. Murray Robinson
/s/ Stanley P. Roth Vice Chairman and Director
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Stanley P. Roth
/s/ Nam-Hai Chua Director
---------------------------------------
Nam-Hai Chua
/s/ Joseph M. Murphy Director
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Joseph M. Murphy
/s/ Rudi E. Scheidt Director
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Rudi E. Scheidt
Exhibit 4.1
DELTA AND PINE LAND COMPANY DEFINED CONTRIBUTION PLAN
Wells Fargo Bank Texas, N.A., in its capacity as Prototype Plan Sponsor,
establishes this Prototype Plan intended to conform to and qualify under ss.401
and ss.501 of the Internal Revenue Code of 1986, as amended. An Employer
establishes a Plan and Trust under this Prototype Plan by executing an Adoption
Agreement. If the Employer adopts this Plan as a restated Plan in substitution
for, and in amendment of, an existing plan, the provisions of this Plan, as a
restated Plan, apply solely to an Employee whose employment with the Employer
terminates on or after the restated Effective Date of the Plan. If an Employee's
employment with the Employer terminates prior to the restated Effective Date,
that Employee is entitled to benefits under the Plan as the Plan existed on the
date of the Employee's termination of employment.
ARTICLE I
DEFINITIONS
1.01 "Account" means the separate Account(s) which the Plan Administrator or the
Trustee maintains under the Plan for a Participant.
1.02 "Account Balance" or "Accrued Benefit" means the amount standing in a
Participant's Account(s) as of any date derived from Employer contributions and
from Participant contributions, if any.
1.03 "Accounting Date" means the last day of the Plan Year. The Plan
Administrator will allocate Employer contributions and forfeitures for a
particular Plan Year as of the Accounting Date of that Plan Year, and on such
other dates, if any, as the Plan Administrator determines, consistent with the
Plan's allocation conditions and other provisions.
1.04 "Adoption Agreement" means the document executed by each Employer adopting
this Plan. References to Adoption Agreement within this basic plan document are
to the Adoption Agreement as completed and executed by a particular Employer
unless the context clearly indicates otherwise. An adopting Employer's Adoption
Agreement and this basic plan document together constitute a single Plan and
Trust of the Employer. Each elective provision of the Adoption Agreement
corresponds (by its parenthetical section reference) to the section of the Plan
which grants the election. Each Adoption Agreement offered under this Plan is
either a Nonstandardized Plan or a Standardized Plan, as identified in that
Adoption Agreement. The provisions of this Plan apply in the same manner to
Nonstandardized Plans and to Standardized Plans unless otherwise specified. All
section references within an Adoption Agreement are Adoption Agreement section
references unless the context clearly indicates otherwise.
1.05 "Beneficiary" means a person designated by a Participant or by the Plan who
is or may become entitled to a benefit under the Plan. A Beneficiary who becomes
entitled to a benefit under the Plan remains a Beneficiary under the Plan until
the Trustee has fully distributed to the Beneficiary his/her Plan benefit. A
Beneficiary's right to (and the Plan Administrator's or a Trustee's duty to
provide to the Beneficiary) information or data concerning the Plan does not
arise until the Beneficiary first becomes entitled to receive a benefit under
the Plan.
1.06 "Code" means the Internal Revenue Code of 1986, as amended and includes
applicable Treasury regulations.
1.07 "Compensation" means a Participant's W-2 wages, Code ss.3401(a) wages, or
415 compensation except, in the case of a Self-Employed Individual, Compensation
means Earned Income as defined in Section 1.09. The Employer in its Adoption
Agreement must specify which definition of Compensation (Section 1.07(A), (B) or
(C)) applies under the Plan and any modifications thereto, for purposes of
contribution allocations under Article III. Any reference in the Plan to
Compensation is a reference to the definition in this Section 1.07, unless the
Plan reference, or the Employer in its Adoption Agreement, modifies this
definition. The Plan Administrator will take into account only Compensation
actually paid during (or as permitted under the Code, paid for) the relevant
period. A Compensation payment includes Compensation paid by the Employer
through another person under the common paymaster provisions in Code ss.ss.3121
and 3306. Compensation, unless otherwise specified in the Adoption Agreement,
does not include any form of remuneration (including severance pay and vacation
pay) paid to the Participant after the Participant incurs a Separation from
Service.
(A) W-2 Wages. W-2 wages means wages for federal income tax withholding
purposes, as defined under Code ss.3401(a), plus all other payments to an
Employee in the course of the Employer's trade or business, for which the
Employer must furnish the Employee a written statement under Code ss.ss.6041,
6051 and 6052, but determined without regard to any rules that limit the
remuneration included in wages based on the nature or location of the employment
or services performed (such as the exception for agricultural labor in Code
ss.3401(a)(2)).
(B) Code ss.3401(a) Wages. Code ss.3401(a) wages means wages within the meaning
of Code ss.3401(a) for the purposes of income tax withholding at the source, but
determined without regard to any rules that limit the remuneration included in
wages based on the nature or the location of the employment or the services
performed (such as the exception for agricultural labor in Code ss.3401(a)(2)).
(C) Code ss.415 Compensation (current income definition). Code ss.415
compensation means the Employee's wages, salaries, fees for professional service
and other amounts received for personal services actually rendered in the course
of employment with the Employer maintaining the Plan to the extent that the
amounts are includible in gross income (including, but not limited to,
commissions paid salespersons, compensation for services on the basis of a
percentage of profits, commissions on insurance premiums, tips, bonuses, fringe
benefits and reimbursements or other expense allowances under a nonaccountable
plan as described in Treas. Reg. ss.1.62-2(c)).
Code ss.415 compensation does not include:
(a) Employer contributions to a plan of deferred compensation to the extent
the contributions are not included in the gross income of the Employee for
the taxable year in which contributed, Employer contributions on behalf of
an Employee to a Simplified Employee Pension Plan to the extent such
contributions are excludible from the Employee's gross income, and any
distributions from a plan of deferred compensation, regardless of whether
such amounts are includible in the gross income of the Employee when
distributed.
(b) Amounts realized from the exercise of a non-qualified stock option, or
when restricted stock (or property) held by an Employee either becomes
freely transferable or is no longer subject to a substantial risk of
forfeiture.
(c) Amounts realized from the sale, exchange or other disposition of stock
acquired under a stock option described in Part II, Subchapter D, Chapter
1, Subtitle A of the Code.
(d) Other amounts which receive special tax benefits, such as premiums for
group term life insurance (but only to the extent that the premiums are not
includible in the gross income of the Employee), or contributions made by
an Employer (whether or not under a salary reduction agreement) toward the
purchase of an annuity contract described in Code ss.403(b) (whether or not
the contributions are excludible from the gross income of the Employee).
(D) Elective Contributions. Compensation under Sections 1.07(A), 1.07(B)
and 1.07(C) includes Elective Contributions unless the Employer in its
Adoption Agreement elects to exclude Elective Contributions. "Elective
Contributions" are amounts excludible from the Employee's gross income
under Code ss.ss.125, 132(f)(4), 402(e)(3), 402(h)(2), 403(b), 408(p) or
457, and contributed by the Employer, at the Employee's election, to a
cafeteria plan, a qualified transportation fringe benefit plan, a 401(k)
arrangement, a SARSEP, a tax-sheltered annuity, a SIMPLE plan or a Code
ss.457 plan. Notwithstanding the preceding sentence, amounts described in
ss.132(f)(4) are not Elective Contributions until Plan Years beginning on
or after January 1, 2001, unless the Plan Administrator operationally has
included such amounts effective as of an earlier Plan Year beginning no
earlier than January 1, 1998.
(E) Compensation Dollar Limitation. For any Plan Year, the Plan
Administrator in allocating contributions under Article III or in testing
the Plan for nondiscrimination, cannot take into account more than $150,000
(or such larger or smaller amount as the Commissioner of Internal Revenue
may prescribe) of any Participant's Compensation. Notwithstanding the
foregoing, an Employee under a 401(k) arrangement may make elective
deferrals with respect to Compensation which exceeds the Plan Year
Compensation limitation, provided such deferrals otherwise satisfy Code
ss.402(g) and other applicable limitations.
(F) Nondiscrimination. For purposes of determining whether the Plan
discriminates in favor of Highly Compensated Employees, Compensation means
Compensation as defined in this Section 1.07, except: (1) the Employer
annually may elect operationally to include or to exclude Elective
Contributions, irrespective of the Employer's election in its Adoption
Agreement regarding Elective Contributions; and (2) the Plan Administrator
will disregard any elections made in the "modifications to Compensation
definition" section of Adoption Agreement Section 1.07. The Employer's
election described in clause (1) must be consistent and uniform with
respect to all Employees and all plans of the Employer for any particular
Plan Year. The Employer, irrespective of clause (2), may elect to exclude
from this nondiscrimination definition of Compensation any items of
Compensation excludible under Code ss.414(s) and the applicable Treasury
regulations, provided such adjusted definition conforms to the
nondiscrimination requirements of those regulations. Furthermore, for
nondiscrimination purposes, including the computation of an Employee's
actual deferral percentage ("ADP") or actual contribution percentage
("ACP"), the Plan Administrator may limit Compensation taken into account
to Compensation received only for the portion of the Plan Year in which the
Employee was a Participant and only for the portion of the Plan Year in
which the Plan or the 401(k) arrangement was in effect.
1.08 "Disability" means the Participant, because of a physical or mental
disability, will be unable to perform the duties of his/her customary position
of employment (or is unable to engage in any substantial gainful activity) for
an indefinite period which the Plan Administrator considers will be of long
continued duration. A Participant also is disabled if he/she incurs the
permanent loss or loss of use of a member or function of the body, or is
permanently disfigured, and incurs a Separation from Service. A Participant is
disabled on the date the Plan Administrator determines the Participant satisfies
the definition of Disability. The Plan Administrator may require a Participant
to submit to a physical examination in order to confirm Disability. The Plan
Administrator will apply the provisions of this Section 1.08 in a
nondiscriminatory, consistent and uniform manner. The Employer may provide an
alternative definition of Disability in an Addendum to its Adoption Agreement.
1.09 "Earned Income" means net earnings from self-employment in the trade or
business with respect to which the Employer has established the Plan, provided
personal services of the Self-Employed Individual are a material income
producing factor. The Plan Administrator will determine net earnings without
regard to items excluded from gross income and the deductions allocable to those
items. The Plan Administrator will determine net earnings after the deduction
allowed to the Self-Employed Individual for all contributions made by the
Employer to a qualified plan and after the deduction allowed to the
Self-Employed Individual under Code ss.164(f) for self-employment taxes.
1.10 "Effective Date" of this Plan is the date specified in the Adoption
Agreement unless otherwise for a specified purpose provided within this basic
plan document or within (as part of the Adoption Agreement) a Participation
Agreement, an Addendum, or within Appendices A or B.
1.11 "Employee" means any common law employee, Self-Employed Individual, Leased
Employee or other person the Code treats as an employee of the Employer for
purposes of the Employer's qualified plan. The Employer in its Adoption
Agreement must elect or specify any Employee, or class of Employees, not
eligible to participate in the Plan (an "excluded Employee").
(A) Collective Bargaining Employees. If the Employer elects in its Adoption
Agreement to exclude collective bargaining Employees from eligibility to
participate, the exclusion applies to any Employee included in a unit of
Employees covered by an agreement which the Secretary of Labor finds to be a
collective bargaining agreement between employee representatives and one or more
employers, if: (1) retirement benefits were the subject of good faith
bargaining; and (2) two percent or less of the employees covered by the
agreement are "professionals" as defined in Treas. Reg. ss.1.410(b)-9, unless
the collective bargaining agreement requires the Employee to be included within
the Plan. The term "employee representatives" does not include any organization
more than half the members of which are owners, officers, or executives of the
Employer.
(B) Nonresident Aliens. If the Employer elects in its Adoption Agreement to
exclude nonresident aliens from eligibility to participate, the exclusion
applies to any nonresident alien Employee who does not receive any earned
income, as defined in Code ss.911(d)(2), from the Employer which constitutes
United States source income, as defined in Code ss.861(a)(3).
(C) Reclassified Employees. If the Employer elects in its Adoption Agreement to
exclude reclassified Employees from eligibility to participate, the exclusion
applies to any person the Employer does not treat as an Employee (including, but
not limited to, independent contractors, persons the Employer pays outside of
its payroll system and out-sourced workers) for federal income tax withholding
purposes under Code ss.3401(a), but for whom there is a binding determination
the individual is an Employee or a Leased Employee of the Employer.
1.12 "Employer" means each employer who establishes a Plan under this Prototype
Plan by executing an Adoption Agreement and includes to the extent described in
Section 1.26 a Related Employer and a Participating Employer. The Employer for
purposes of acting as Plan Administrator, making Plan amendments, terminating
the Plan or performing other ERISA settlor functions, means the signatory
Employer to the Adoption Agreement Execution Page and does not include any
Related Employer or Participating Employer.
1.13 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and includes applicable Department of Labor regulations.
1.14 "Highly Compensated Employee" means an Employee who:
(a) during the Plan Year or during the preceding Plan Year, is a more than
5% owner of the Employer (applying the constructive ownership rules of Code
ss.318, and applying the principles of Code ss.318, for an unincorporated
entity); or
(b) during the preceding Plan Year had Compensation in excess of $80,000
(as adjusted by the Commissioner of Internal Revenue for the relevant year)
and, if the Employer under its Adoption Agreement Appendices A or B, makes
the top-paid group election, was part of the top-paid 20% group of
Employees (based on Compensation for the preceding Plan Year).
For purposes of this Section 1.14, "Compensation" means Compensation as defined
in Section 1.07, except any exclusions from Compensation the Employer elects in
Adoption Agreement Section 1.07 do not apply, and Compensation specifically
includes Elective Contributions. The Plan Administrator must make the
determination of who is a Highly Compensated Employee, including the
determinations of the number and identity of the top-paid 20% group, consistent
with Code ss.414(q) and regulations issued under that Code section. The Employer
in its Adoption Agreement Appendices A or B may make a calendar year data
election to determine the Highly Compensated Employees for the Plan Year, as
prescribed by Treasury regulations or by other guidance published in the
Internal Revenue Bulletin. A calendar year data election must apply to all plans
of the Employer which reference the highly compensated employee definition in
Code ss.414(q). For purposes of this Section 1.14, if the current Plan Year is
the first year of the Plan, then the term "preceding Plan Year" means the
12-consecutive month period immediately preceding the current Plan Year.
1.15 "Hour of Service" means:
(a) Each Hour of Service for which the Employer, either directly or
indirectly, pays an Employee, or for which the Employee is entitled to
payment, for the performance of duties. The Plan Administrator credits
Hours of Service under this Paragraph (a) to the Employee for the
computation period in which the Employee performs the duties, irrespective
of when paid;
(b) Each Hour of Service for back pay, irrespective of mitigation of
damages, to which the Employer has agreed or for which the Employee has
received an award. The Plan Administrator credits Hours of Service under
this Paragraph (b) to the Employee for the computation period(s) to which
the award or the agreement pertains rather than for the computation period
in which the award, agreement or payment is made; and
(c) Each Hour of Service for which the Employer, either directly or
indirectly, pays an Employee, or for which the Employee is entitled to
payment (irrespective of whether the employment relationship is
terminated), for reasons other than for the performance of duties during a
computation period, such as leave of absence, vacation, holiday, sick
leave, illness, incapacity (including disability), layoff, jury duty or
military duty. The Plan Administrator will credit no more than 501 Hours of
Service under this Paragraph (c) to an Employee on account of any single
continuous period during which the Employee does not perform any duties
(whether or not such period occurs during a single computation period). The
Plan Administrator credits Hours of Service under this Paragraph (c) in
accordance with the rules of paragraphs (b) and (c) of Labor Reg.
ss.2530.200b-2, which the Plan, by this reference, specifically
incorporates in full within this Paragraph (c).
The Plan Administrator will not credit an Hour of Service under more than one of
the above Paragraphs (a), (b) or (c). A computation period for purposes of this
Section 1.15 is the Plan Year, Year of Service period, Break in Service period
or other period, as determined under the Plan provision for which the Plan
Administrator is measuring an Employee's Hours of Service. The Plan
Administrator will resolve any ambiguity with respect to the crediting of an
Hour of Service in favor of the Employee.
(A) Method of Crediting Hours of Service. The Employer must elect in its
Adoption Agreement the method the Plan Administrator will use in crediting an
Employee with Hours of Service and the purpose for which the elected method will
apply.
(B) Actual Method. Under the Actual Method as determined from records, an
Employee receives credit for Hours of Service for hours worked and hours for
which the Employer makes payment or for which payment is due from the Employer.
(C) Equivalency Method. Under an Equivalency Method, for each equivalency period
for which the Plan Administrator would credit the Employee with at least one
Hour of Service, the Plan Administrator will credit the Employee with: (i) 10
Hours of Service for a daily equivalency; (ii) 45 Hours of Service for a weekly
equivalency; (iii) 95 Hours of Service for a semimonthly payroll period
equivalency; and (iv) 190 Hours of Service for a monthly equivalency.
(D) Elapsed Time Method. Under the Elapsed Time Method, an Employee receives
credit for Service for the aggregate of all time periods (regardless of the
Employee's actual Hours of Service) commencing with the Employee's Employment
Commencement Date, or with his/her Reemployment Commencement Date, and ending on
the date a Break in Service begins. An Employee's Employment Commencement Date
or his/her Re-employment Commencement Date begins on the first day he/she
performs an Hour of Service following employment or re-employment. In applying
the Elapsed Time Method, the Plan Administrator will credit an Employee's
Service for any Period of Severance of less than 12-consecutive months and will
express fractional periods of Service in days.
Under the Elapsed Time Method, a Break in Service is a Period of Severance of at
least 12 consecutive months. A Period of Severance is a continuous period of
time during which the Employee is not employed by the Employer. The continuous
period begins on the date the Employee retires, quits, is discharged, or dies or
if earlier, the first 12-month anniversary of the date on which the Employee
otherwise is absent from Service for any other reason (including disability,
vacation, leave of absence, layoff, etc.). In the case of an Employee who is
absent from work for maternity or paternity reasons, the 12-consecutive month
period beginning on the first anniversary of the first date the Employee is
otherwise absent from Service does not constitute a Break in Service.
(E) Maternity/Paternity Leave/Family and Medical Leave Act. Solely for purposes
of determining whether an Employee incurs a Break in Service under any provision
of this Plan, the Plan Administrator must credit Hours of Service during the
Employee's unpaid absence period: (i) due to maternity or paternity leave; or
(ii) as required under the Family and Medical Leave Act. An Employee is on
maternity or paternity leave if the Employee's absence is due to the Employee's
pregnancy, the birth of the Employee's child, the placement with the Employee of
an adopted child, or the care of the Employee's child immediately following the
child's birth or placement. The Plan Administrator credits Hours of Service
under this Section 1.15(E) on the basis of the number of Hours of Service for
which the Employee normally would receive credit or, if the Plan Administrator
cannot determine the number of Hours of Service the Employee would receive
credit for, on the basis of 8 hours per day during the absence period. The Plan
Administrator will credit only the number (not exceeding 501) of Hours of
Service necessary to prevent an Employee's Break in Service. The Plan
Administrator credits all Hours of Service described in this Section 1.15(E) to
the computation period in which the absence period begins or, if the Employee
does not need these Hours of Service to prevent a Break in Service in the
computation period in which his/her absence period begins, the Plan
Administrator credits these Hours of Service to the immediately following
computation period.
(F) Qualified Military Service. Hour of Service also includes any Service the
Plan must credit for contributions and benefits in order to satisfy the
crediting of Service requirements of Code ss.414(u). The provisions of this
Section 1.15(F) apply beginning December 12, 1994, or if the Employer's Plan is
effective after that date, as of the Plan's Effective Date.
1.16 "Leased Employee" means an individual (who otherwise is not an Employee of
the Employer) who, pursuant to an agreement between the Employer and any other
person, has performed services for the Employer (or for the Employer and any
persons related to the Employer within the meaning of Code ss.144(a)(3)) on a
substantially full time basis for at least one year and who performs such
services under primary direction or control of the Employer within the meaning
of Code ss.414(n)(2). Except as described in Section 1.16(A), a Leased Employee
is an Employee for purposes of the Plan. If a Leased Employee is an Employee,
"Compensation" includes Compensation from the leasing organization which is
attributable to services performed for the Employer.
(A) Safe Harbor Plan Exception. A Leased Employee is not an Employee if the
leasing organization covers the employee in a safe harbor plan and, prior to
application of this safe harbor plan exception, 20% or less of the Employer's
Employees (other than Highly Compensated Employees) are Leased Employees. A safe
harbor plan is a money purchase pension plan providing immediate participation,
full and immediate vesting, and a nonintegrated contribution formula equal to at
least 10% of the employee's compensation, without regard to employment by the
leasing organization on a specified date. The safe harbor plan must determine
the 10% contribution on the basis of compensation as defined in Code
ss.415(c)(3) including Elective Contributions.
(B) Other Requirements. The Plan Administrator must apply this Section 1.16 in a
manner consistent with Code ss.ss.414(n) and 414(o) and the regulations issued
under those Code sections. If a Participant is a Leased Employee covered by a
plan maintained by the leasing organization, the Plan Administrator will
determine the allocation of Employer contributions and Participant forfeitures
on behalf of the Participant under the Employer's Plan without taking into
account the Leased Employee's allocation, if any, under the leasing
organization's plan.
1.17 "Nonhighly Compensated Employee" means any Employee who is not a Highly
Compensated Employee.
1.18 "Nontransferable Annuity" means an annuity contract which by its terms
provides that it may not be sold, assigned, discounted, pledged as collateral
for a loan or security for the performance of an obligation or for any purpose
to any person other than the insurance company. If the Plan distributes an
annuity contract, the contract must be a Nontransferable Annuity.
1.19 "Paired Plans" means the Employer has adopted two Standardized Plan
Adoption Agreements offered with this Prototype Plan, one Adoption Agreement
being a Paired Profit Sharing Plan and one Adoption Agreement being a Paired
Pension Plan. A Paired Profit Sharing Plan may include a 401(k) arrangement. A
Paired Pension Plan must be a money purchase pension plan, defined benefit plan
or a target benefit pension plan. Paired Plans must be the subject of a
favorable opinion letter issued by the National Office of the Internal Revenue
Service. If an Employer adopts paired plans, only one of the plans may provide
for permitted disparity.
1.20 "Participant" means an eligible Employee who becomes a Participant in
accordance with the provisions of Section 2.01. An eligible Employee means an
Employee who is not an excluded Employee under Adoption Agreement Section 1.11.
1.21 "Plan" means the retirement plan established or continued by the Employer
in the form of this Prototype Plan, including the Adoption Agreement under which
the Employer has elected to establish this Plan. The Employer must designate the
name of the Plan in its Adoption Agreement. An Employer may execute more than
one Adoption Agreement offered under this Plan, each of which will constitute a
separate Plan and Trust established or continued by that Employer. The Plan and
the Trust created by each adopting Employer is a separate Plan and a separate
Trust, independent from the plan and the trust of any other employer adopting
this Prototype Plan. All section references within this basic plan document are
Plan section references unless the context clearly indicates otherwise. The Plan
includes any Addendum or Appendix permitted by the basic plan document or by the
Employer's Adoption Agreement and which the Employer attaches to its Adoption
Agreement. An Addendum must correspond by section reference to the section of
the basic plan document or Adoption Agreement permitting the Addendum.
1.22 "Plan Administrator" means the Employer unless the Employer designates
another person or persons to hold the position of Plan Administrator. Any
person(s) the Employer appoints as Plan Administrator may or may not be
Participants in the Plan. In addition to its other duties, the Plan
Administrator has full responsibility for the Plan's compliance with the
reporting and disclosure rules under ERISA.
1.23 "Plan Entry Date" means the date(s) the Employer elects in Adoption
Agreement Section 2.01.
1.24 "Plan Year" means the consecutive month period the Employer specifies in
its Adoption Agreement. The Employer also must specify in its Adoption Agreement
the "Limitation Year" applicable to the limitations on allocations described in
Article III. If the Employer maintains Paired Plans, each Plan must have the
same Plan Year.
1.25 "Protected Benefit" means any accrued benefit described in Treas. Reg.
ss.1.411(d)-4, including any optional form of benefit provided under the Plan
which may not (except in accordance with such Regulations) be reduced,
eliminated or made subject to Employer discretion.
1.26 "Related Group"/"Related Employer" A Related Group is a controlled group of
corporations (as defined in Code ss.414(b)), trades or businesses (whether or
not incorporated) which are under common control (as defined in Code ss.414(c)),
an affiliated service group (as defined in Code ss.414(m)) or an arrangement
otherwise described in Code ss.414(o). Each Employer/member of the Related Group
is a Related Employer. The term "Employer" includes every Related Employer for
purposes of crediting Service and Hours of Service, determining Years of Service
and Breaks in Service under Articles II and V, determining Separation from
Service, applying the Coverage Test under Section 3.06(E), applying the
limitations on allocations in Part 2 of Article III, applying the top-heavy
rules and the minimum allocation requirements of Article XII, applying the
definitions of Employee, Highly Compensated Employee, Compensation and Leased
Employee, applying the safe harbor 401(k) provisions of Section 14.02(D),
applying the SIMPLE 401(k) provisions of Section 14.02(E) and for any other
purpose the Code or the Plan require.
(A) Participating Employer. An Employer may contribute to the Plan only by being
a signatory to the Execution Page of the Adoption Agreement or to a
Participation Agreement to the Adoption Agreement. If a Related Employer
executes a Participation Agreement to the Adoption Agreement, the Related
Employer is a Participating Employer. A Participating Employer is an Employer
for all purposes of the Plan except as provided in Section 1.12.
(B) Standardized/Nonstandardized Plan. If the Employer's Plan is a Standardized
Plan, all Employees of the Employer or of any Related Employer, are eligible to
participate in the Plan, irrespective of whether the Related Employer directly
employing the Employee is a Participating Employer. Notwithstanding the
immediately preceding sentence, individuals who become Employees of a Related
Employer as a result of a transaction described in Code ss.410(b)(6)(C) are not
eligible to participate in the Plan during the Plan Year in which such
transaction occurs nor in the following Plan Year, unless the Related Employer
which employs such Employees becomes during such period a Participating
Employer, by executing a Participation Agreement to the Adoption Agreement. If
the Plan is a Nonstandardized Plan, the Employees of a Related Employer are not
eligible to participate in the Plan unless the Related Employer is a
Participating Employer.
1.27 "Self-Employed Individual"/ "Owner- Employee"/"Shareholder-Employee"
"Self-Employed Individual" means an individual who has Earned Income (or who
would have had Earned Income but for the fact that the trade or business did not
have net profits) for the taxable year from the trade or business for which the
Plan is established. "Owner-Employee" means a Self-Employed Individual who is
the sole proprietor in the case of a sole proprietorship. If the Employer is a
partnership, or a limited liability company taxed for federal income tax
purposes as a partnership, "Owner-Employee" means a Self-Employed Individual who
is a partner or member and owns more than 10% of either the capital or the
profits interest of the partnership or of the limited liability company.
"Shareholder-Employee" means an employee or officer of an "S" corporation who
owns (or is considered as owning under Code ss.318(a)(1)) more than 5% of the
outstanding stock of the corporation on any day of the corporation's taxable
year.
1.28 "Separation from Service" means an event after which the Employee no longer
has an employment relationship with the Employer maintaining this Plan or with a
Related Employer.
1.29 "Service" means any period of time the Employee is in the employ of the
Employer, including any period the Employee is on an unpaid leave of absence
authorized by the Employer under a uniform, nondiscriminatory policy applicable
to all Employees.
1.30 "Service with a Predecessor Employer" If the Employer maintains the plan of
a predecessor employer, service of the Employee with the predecessor employer is
Service with the Employer. If the Employer does not maintain the plan of a
predecessor employer, the Plan does not credit service with the predecessor
employer, unless the Employer in its Adoption Agreement (or in a Participation
Agreement, if applicable) elects to credit designated predecessor employer
service and specifies the purposes for which the Plan will credit service with
that predecessor employer.
Unless the Employer under its Adoption Agreement Section 2.01 provides for this
purpose specific Plan Entry Dates, an Employee who satisfies the Plan's
eligibility condition(s) by reason of the crediting of predecessor service will
enter the Plan in accordance with the provisions of Section 2.04 as if the
Employee were a re-employed Employee on the first day the Plan credits
predecessor service.
1.31 "Trust" means the separate Trust created under the Plan.
1.32 "Trust Fund" means all property of every kind acquired by the Plan and held
by the Trust, other than incidental benefit insurance contracts.
1.33 "Trustee" means the person or persons who as Trustee execute the Adoption
Agreement, or any successor in office who in writing accepts the position of
Trustee. The Employer must designate in its Adoption Agreement whether the
Trustee will administer the Trust as a discretionary Trustee or as a
nondiscretionary Trustee. If a person acts as a discretionary Trustee, the
Employer also may appoint a Custodian. See Article X. If the Prototype Plan
Sponsor is a bank, savings and loan association, credit union, mutual fund,
insurance company, or other institution qualified to serve as Trustee, a person
other than the Prototype Plan Sponsor (or its affiliate) may not serve as
Trustee or as Custodian of the Plan without the written consent of the Prototype
Plan Sponsor.
1.34 "Vested" means a Participant or a Beneficiary has an unconditional claim,
legally enforceable against the Plan, to the Participant's Account Balance or
Accrued Benefit.
ARTICLE II
ELIGIBILITY AND PARTICIPATION
2.01 ELIGIBILITY. Each eligible Employee becomes a Participant in the Plan in
accordance with the eligibility provisions the Employer elects in its Adoption
Agreement. If this Plan is a restated Plan, each Employee who was a Participant
in the Plan on the day before the restated Effective Date continues as a
Participant in the restated Plan, irrespective of whether he/she satisfies the
eligibility conditions of the restated Plan, unless the Employer provides
otherwise in its Adoption Agreement. If the Employer contributes to the Plan
under a Davis-Bacon contract, except as the contract provides, the Employer's
Adoption Agreement elections imposing age and service eligibility conditions do
not apply with respect to an Employee performing Davis-Bacon contract Service.
2.02 AGE AND SERVICE CONDITIONS. For purposes of an Employee's participation in
the Plan, the Plan: (1) may not impose an age condition exceeding age 21; and
(2) takes into account all of the Employee's Years of Service with the Employer,
except as provided in Section 2.03. "Year of Service" for purposes of an
Employee's participation in the Plan, means a 12- consecutive month eligibility
computation period during which the Employee completes the number of Hours of
Service (not exceeding 1,000) the Employer specifies in its Adoption Agreement.
The initial eligibility computation period is the first 12-consecutive month
period measured from the Employee's Employment Commencement Date. The Plan
measures succeeding 12-consecutive month eligibility computation periods in
accordance with the Employer's election in its Adoption Agreement. If the
Employer elects to measure subsequent periods on a Plan Year basis, an Employee
who receives credit for the required number of Hours of Service during the
initial eligibility computation period and also during the first applicable Plan
Year receives credit for two Years of Service under Article II. "Employment
Commencement Date" means the date on which the Employee first performs an Hour
of Service for the Employer.
If the Employer under Adoption Agreement Section 2.01 elects an alternative
Service condition to one Year of Service or two Years of Service, the Employer
must elect in the Adoption Agreement the Hour of Service and any other
requirement(s), if any, after the Employee completes one Hour of Service. Under
any alternative Service condition election, the Plan may not require an Employee
to complete more than one Year of Service (1,000 Hours of Service in
12-consecutive months) or two Years of Service if applicable.
If the Employer in its Adoption Agreement elects to apply the Equivalency Method
or the Elapsed Time Method in applying the Plan's eligibility Service condition,
the Plan Administrator will credit Service in accordance with Sections 1.15(D)
and (D).
2.03 BREAK IN SERVICE - PARTICIPATION. An Employee incurs a "Break in Service"
if during any applicable 12-consecutive month period he/she does not complete
more than 500 Hours of Service with the Employer. The "12-consecutive month
period" under this Section 2.03 is the same 12-consecutive month period for
which the Plan measures a "Year of Service" under Section 2.02. If the Plan
applies the Elapsed Time Method of crediting Service under Section 1.15(D), a
Participant incurs a "Break in Service" if the Participant has a Period of
Severance of at least 12 consecutive months.
(A) Two Year Eligibility. If the Employer under Adoption Agreement Section 2.01
elects a two Years of Service condition for eligibility purposes, an Employee
who incurs a one year Break in Service prior to completing two Years of Service
is a new Employee on the date he/she first performs an Hour of Service for the
Employer after the Break in Service, and the Employee establishes a new
Employment Commencement Date for purposes of the initial eligibility computation
period under Section 2.02.
(B) One Year Hold-Out Rule. The Employer must elect in its Adoption Agreement
whether to apply the one year hold-out rule under Code ss.410(a)(5)(C). Under
this rule, a Participant will incur a suspension of participation in the Plan
after incurring a one year Break in Service and the Plan disregards a
Participant's Service completed prior to a Break in Service until the
Participant completes one Year of Service following the Break in Service. The
Plan suspends the Participant's participation in the Plan as of the first day of
the Plan Year following the Plan Year in which the Participant incurs the Break
in Service. If the Participant completes one Year of Service following his/her
Break in Service, the Plan restores that Participant's pre-Break Service (and
the Participant resumes active participation in the Plan) retroactively to the
first day of the computation period in which the Participant first completes one
Year of Service following his/her Break in Service. The initial computation
period under this Section 2.03(B) is the 12-consecutive month period measured
from the date the Participant first receives credit for an Hour of Service
following the one year Break in Service. The Plan measures any subsequent
computation periods, if necessary, in a manner consistent with the Employer's
eligibility computation period election in Adoption Agreement Section 2.02. If
the Employer elects to apply the one year hold-out rule, the Employer also must
elect in its Adoption Agreement whether to limit application of the rule only to
a Participant who has incurred a Separation from Service.
The Plan Administrator also will apply the one-year hold out rule, if
applicable, to an Employee who satisfies the Plan's eligibility conditions but
who incurs a Separation from Service and a one year Break in Service prior to
becoming a Participant.
This Section 2.03(B) does not affect a Participant's vesting credit under
Article V and, during a suspension period, the Participant's Account continues
to share fully in Trust Fund allocations under Article IX. Furthermore, the Plan
Administrator in applying this Section 2.03(B) does not restore any Service
disregarded under the Break in Service rule of Section 2.03(A).
(C) No Application to 401(k) Arrangement. If the Plan includes a 401(k)
arrangement and the Employer in its Adoption Agreement elects to apply the
Section 2.03(B) one year hold-out rule, the Plan Administrator will apply the
provisions of Section 2.04 to the deferral contributions portion of the Plan
without regard to Section 2.03(B).
(D) No Rule of Parity - Participation. For purposes of Plan participation, the
Plan does not apply the "rule of parity" under Code ss.410(a)(5)(D).
2.04 PARTICIPATION UPON RE-EMPLOYMENT. A Participant who incurs a Separation
from Service will re-enter the Plan as a Participant on the date of his/her
re-employment with the Employer, subject to the one year hold-out rule, if
applicable, under Section 2.03(B). An Employee who satisfies the Plan's
eligibility conditions but who incurs a Separation from Service prior to
becoming a Participant will become a Participant on the later of the Plan Entry
Date on which he/she would have entered the Plan had he/she not incurred a
Separation from Service or the date of his/her re-employment, subject to the one
year hold-out rule, if applicable, under Section 2.03(B). Any Employee who
incurs a Separation from Service prior to satisfying the Plan's eligibility
conditions becomes a Participant in accordance with Adoption Agreement Section
2.01.
2.05 CHANGE IN EMPLOYMENT STATUS. The Employer in its Adoption Agreement Section
1.11 may elect to exclude certain Employees from Plan participation ("excluded
Employees"). If a Participant has not incurred a Separation from Service but
becomes an excluded Employee, during the period of exclusion the excluded
Employee will not share in the allocation of any Employer contributions or
Participant forfeitures, and may not make deferral contributions if the Plan
includes a 401(k) arrangement, with respect to Compensation paid to the excluded
Employee during the period of exclusion. However, during such period of
exclusion, the Participant, without regard to employment classification,
continues to receive credit for vesting under Article V for each included Year
of Service and the Participant's Account continues to share fully in Trust Fund
allocations under Article IX. If a Participant who becomes an excluded Employee
subsequently resumes status as an eligible Employee, the Participant will
participate in the Plan immediately upon resuming eligible status, subject to
the one year hold-out rule, if applicable, under Section 2.03(B).
If an excluded Employee who is not a Participant becomes an eligible Employee,
he/she will participate immediately in the Plan if he/she has satisfied the
eligibility conditions of Adoption Agreement Section 2.01 and would have been a
Participant had he/she not been an excluded Employee during his/her period of
Service. Furthermore, the excluded Employee receives credit for vesting under
Article V for each included vesting Year of Service notwithstanding the
Employee's excluded Employee status.
2.06 ELECTION NOT TO PARTICIPATE. If the Plan is a Standardized Plan, the Plan
does not permit an otherwise eligible Employee nor any Participant to elect not
to participate in the Plan ("opt-out"). If the Plan is a Nonstandardized Plan,
the Employer in its Adoption Agreement must elect whether any eligible Employee
may elect irrevocably to opt-out. The Employee prior to his/her Plan Entry Date
must file an opt-out election in writing with the Plan Administrator on a form
provided by the Plan Administrator for this purpose.
ARTICLE III
EMPLOYER CONTRIBUTIONS AND FORFEITURES
Part 1. Amount of Employer Contributions and Plan Allocations: Sections 3.01
through 3.06
3.01 EMPLOYER CONTRIBUTIONS.
(A) Amount and Types of Contribution. The Employer in its Adoption Agreement
will elect the amount and type(s) of Employer Plan contribution(s). The Employer
will not make a contribution to the Trust for any Plan Year to the extent the
contribution would exceed the Participants' Maximum Permissible Amounts. Unless
otherwise provided in an Addendum to its Adoption Agreement, the Employer need
not have net profits to make a contribution under the Plan. If the Employer's
Plan is a money purchase pension plan and the Employer also maintains a defined
benefit pension plan, notwithstanding the money purchase pension plan formula in
the Employer's Adoption Agreement, the Employer's required contribution to its
money purchase pension plan for a Plan Year is limited to the amount which the
Employer may deduct under Code ss.404(a)(7). If the Employer under Code
ss.404(a)(7) must reduce its money purchase pension plan contribution, the Plan
Administrator will reduce each Participant's allocation in the same ratio as the
reduced total Employer contribution bears to the original (unreduced) Employer
contribution.
(B) Form of Contribution/Related Employer. Subject to the consent of the
Trustee, the Employer may make its contribution in property instead of cash,
provided the contribution of property is not a prohibited transaction under the
Code or under ERISA. Unless the Employer in its Adoption Agreement makes a
contrary election, the Plan Administrator will allocate all Employer
contributions and forfeitures without regard to which contributing Related
Employer directly employs the affected Participants.
(C) Time of Payment of Contribution. The Employer may pay its contribution for
any Plan Year in one or more installments without interest. Unless otherwise
required by contract, by the Code or by ERISA, the Employer may make its
contribution to the Plan for a particular Plan Year at such time(s) as the
Employer in its sole discretion determines. If the Employer makes a contribution
for a particular Plan Year after the close of that Plan Year, the Employer will
designate in writing to the Trustee the Plan Year for which the Employer is
making its contribution.
(D) Return of Employer Contribution. The Employer contributes to the Plan on the
condition its contribution is not due to a mistake of fact and the Internal
Revenue Service will not disallow the deduction of the Employer's contribution.
The Trustee, upon written request from the Employer, must return to the Employer
the amount of the Employer's contribution made by the Employer by mistake of
fact or the amount of the Employer's contribution disallowed as a deduction
under Code ss.404. The Trustee will not return any portion of the Employer's
contribution under the provisions of this Section 3.01(D) more than one year
after:
(1) The Employer made the contribution by mistake of fact; or
(2) The disallowance of the contribution as a deduction, and then, only to
the extent of the disallowance.
The Trustee will not increase the amount of the Employer contribution returnable
under this Section 3.01(D) for any earnings attributable to the contribution,
but the Trustee will decrease the Employer contribution returnable for any
losses attributable to the contribution. The Trustee may require the Employer to
furnish the Trustee whatever evidence the Trustee deems necessary to enable the
Trustee to confirm the amount the Employer has requested be returned, is
properly returnable under ERISA.
3.02 DEFERRAL CONTRIBUTIONS. If the Plan includes a 401(k) arrangement, the
Employer in its Adoption Agreement must elect the Plan limitations and
restrictions, if any, which apply to deferral contributions or to cash or
deferred contributions, if applicable. Under Adoption Agreement Section 3.02,
for purposes of applying any Plan limit the Employer has elected on deferral
contributions, the Employer must elect to take into account the Employee's
entire Plan Year Compensation or to limit Compensation to the portion of the
Plan Year in which the Employee actually is a Participant.
3.03 MATCHING CONTRIBUTIONS. If the Plan includes a 401(k) arrangement, the
Employer in its Adoption Agreement must elect the type(s) of matching
contributions, the time period applicable to any matching contribution formula,
and as applicable, the amount of matching contributions and the Plan limitations
and restrictions, if any, which apply to matching contributions.
3.04 EMPLOYER CONTRIBUTION ALLOCATION.
(A) Method of Allocation. The Employer in its Adoption Agreement must specify,
subject to this Section 3.04, the manner of allocating Employer contributions to
the Trust. For purposes of this Section 3.04, Employer contributions include as
applicable, the Employer's nonelective contributions, money purchase pension and
target benefit contributions, but do not include deferral contributions or,
except under Section 3.04(B), matching contributions.
(B) Compensation Taken into Account. The Employer in its Adoption Agreement
Section 1.07 must specify the Compensation the Plan Administrator is to take
into account in allocating an Employer contribution to a Participant's Account.
For the Plan Year in which the Employee first becomes a Participant in the Plan
(or in any portion of the Plan), the Employer may elect to take into account the
Employee's entire Plan Year Compensation or to limit Compensation to the portion
of the Plan Year in which the Employee actually is a Participant. For all other
Plan Years, the Plan Administrator will take into account only the Compensation
determined for the portion of the Plan Year in which the Employee actually is a
Participant. The Plan Administrator must take into account the Employee's entire
Compensation for the Plan Year to determine whether the Plan satisfies the
top-heavy minimum allocation requirements of Article XII. The Employer, in its
Adoption Agreement, may elect to measure Compensation for allocating its
Employer contribution for a Plan Year on the basis of a specified period other
than the Plan Year.
(C) Top-Heavy Minimum Allocation. Unless the Employer in an Addendum to its
Adoption Agreement elects to satisfy any top-heavy minimum allocation
requirement in another plan (not maintained under this basic plan document), the
Employer in this Plan must satisfy the top-heavy requirements of Article XII.
(D) Allocation Conditions. Subject to any restoration allocation required under
the Plan, the Plan Administrator will allocate and credit Employer contributions
to the Account of each Participant who satisfies the allocation conditions of
Section 3.06.
(E) Alternative Allocation Formulas. The Plan Administrator will allocate
Employer contributions for the Plan Year or other applicable period in
accordance with the allocation formula the Employer elects in its Adoption
Agreement. The Plan Administrator, in allocating under any allocation formula
which is based in whole or in part on Compensation, only will take into account
Compensation of those Participants entitled to an allocation.
The Employer in its Adoption Agreement must elect, one or more as applicable of
the following allocation formulas:
(1) Nonintegrated (pro rata) allocation formula. The Plan Administrator will
allocate the Employer contributions for a Plan Year in the same ratio that each
Participant's Compensation for the Plan Year bears to the total Compensation of
all Participants for the Plan Year.
(2) Two-tiered permitted disparity allocation formula. Under the first tier, the
Plan Administrator will allocate the Employer contributions for a Plan Year in
the same ratio that each Participant's Compensation plus Excess Compensation (as
defined in Adoption Agreement Section 3.04) for the Plan Year bears to the total
Compensation plus Excess Compensation of all Participants for the Plan Year. The
allocation under this first tier, as a percentage of each Participant's
Compensation plus Excess Compensation, must not exceed the applicable percentage
(5.7%, 5.4% or 4.3%) listed under Section 3.04(D)(4).
Under the second tier, the Plan Administrator will allocate any remaining
Employer contributions for a Plan Year in the same ratio that each Participant's
Compensation for the Plan Year bears to the total Compensation of all
Participants for the Plan Year.
(3) Four-tiered permitted disparity allocation formula. Under the first tier,
the Plan Administrator will allocate the Employer contributions for a Plan Year
in the same ratio that each Participant's Compensation for the Plan Year bears
to the total Compensation of all Participants for the Plan Year, but not
exceeding 3% of each Participant's Compensation. Solely for purposes of this
first tier allocation, a "Participant" means, in addition to any Participant who
satisfies the allocation conditions of Section 3.06 for the Plan Year, any other
Participant entitled to a top-heavy minimum allocation under the Plan. Under the
second tier, the Plan Administrator will allocate the Employer contributions for
a Plan Year in the same ratio that each Participant's Excess Compensation (as
defined in Adoption Agreement Section 3.04) for the Plan Year bears to the total
Excess Compensation of all Participants for the Plan Year, but not exceeding 3%
of each Participant's Excess Compensation.
Under the third tier, the Plan Administrator will allocate the Employer
contributions for a Plan Year in the same ratio that each Participant's
Compensation plus Excess Compensation for the Plan Year bears to the total
Compensation plus Excess Compensation of all Participants for the Plan Year. The
allocation under this third tier, as a percentage of each Participant's
Compensation plus Excess Compensation, must not exceed the applicable percentage
(2.7%, 2.4% or 1.3%) listed under Section 3.04(D)(4).
Under the fourth tier, the Plan Administrator will allocate any remaining
Employer contributions for a Plan Year, in the same ratio that each
Participant's Compensation for the Plan Year bears to the total Compensation of
all Participants for the Plan Year.
(4) Maximum disparity table. For purposes of the permitted disparity allocation
formulas under this Section 3.04, the applicable percentage is:
Integration level % Applicable % Applicable %
of taxable for 2-tiered for 4-tiered
wage base formula formula
--------------------------------- ----------------- ----------------
100% 5.7% 2.7%
More than 80% but less than 5.4% 2.4%
100%
More than 20% (but not less 4.3% 1.3%
than $10,001) and not more
than 80%
20% (or $10,000, if greater) 5.7% 2.7%
or less
(5) Overall permitted disparity limits.
(i) Annual overall permitted disparity limit. Notwithstanding Sections
3.04(D)(2) and (3), for any Plan Year the Plan benefits any Participant who
benefits under another qualified plan or under a simplified employee pension
plan (as defined in Code ss.408(k)) maintained by the Employer that provides for
permitted disparity (or imputes disparity), the Plan Administrator will allocate
Employer contributions to the Account of each Participant in the same ratio that
each Participant's Compensation bears to the total Compensation of all
Participants for the Plan Year.
(ii) Cumulative permitted disparity limit. Effective for Plan Years beginning
after December 31, 1994, the cumulative permitted disparity limit for a
Participant is 35 total cumulative permitted disparity years. "Total cumulative
permitted disparity years" means the number of years credited to the Participant
for allocation or accrual purposes under the Plan, any other qualified plan or
simplified employee pension plan (whether or not terminated) ever maintained by
the Employer. For purposes of determining the Participant's cumulative permitted
disparity limit, the Plan Administrator will treat all years ending in the same
calendar year as the same year. If the Participant has not benefited under a
defined benefit plan or under a target benefit plan of the Employer for any year
beginning after December 31, 1993, the Participant does not have a cumulative
permitted disparity limit.
For purposes of this Section 3.04(D)(5), a Participant "benefits" under the Plan
for any Plan Year during which the Participant receives, or is deemed to
receive, a contribution allocation in accordance with Treas. Reg.
ss.1.410(b)-3(a).
(6) Uniform points allocation formula. The Plan Administrator will allocate the
Employer contributions for a Plan Year in the same ratio that each Participant's
points (as elected in Adoption Agreement Section 3.04) bear to the total points
of all Participants for the Plan Year.
(7) Incorporation of contribution formula. The Plan Administrator will allocate
the Employer's contributions for a Plan Year in accordance with the contribution
formula the Employer has elected under Section 3.01.
(8) Target benefit allocation formula. The Plan Administrator will allocate the
Employer contributions for a Plan Year as provided in the Employer's target
benefit Adoption Agreement.
(9) Davis-Bacon contract allocation formula. The Plan Administrator will
allocate the Employer contributions for a Plan Year in accordance with the
applicable Davis-Bacon contract pursuant to which the Employer has made its
contributions for the Plan Year. The Employer's contributions will take into
account each Participant's hourly rate, employment category, employment
classification and such other factors the Davis-Bacon contract may specify. For
purposes of the Plan, "Davis-Bacon contract" includes a contract under any state
prevailing wage law.
(F) Qualified Nonelective Contributions. The Employer operationally may
designate all or any portion of its nonelective contributions as a qualified
nonelective contribution. The Employer, to facilitate the Plan Administrator's
correction of test failures under Sections 14.08, 14.09 and 14.10, also may make
qualified nonelective contributions to the Plan irrespective of whether the
Employer in its Adoption Agreement has elected to provide nonelective
contributions. The Employer in its Adoption Agreement must elect whether the
Plan Administrator will allocate the Employer contributions designated as a
qualified nonelective contribution to all Participants or solely to Nonhighly
Compensated Employee Participants. The Employer operationally must elect whether
the Plan Administrator will allocate qualified nonelective contributions: (1) to
eligible Participants pro rata in relation to Compensation; (2) to eligible
Participants in the same amount without regard to Compensation (flat dollar); or
(3) under the reverse allocation or other similar method. Under the reverse
allocation method, the Plan Administrator, subject to Section 3.06, will
allocate a qualified nonelective contribution first to the Nonhighly Compensated
Employee Participant(s) with the lowest Compensation for the Plan Year not
exceeding the Maximum Permissible Amount for each Participant, with any
remaining amounts allocated to the next highest paid Nonhighly Compensated
Employee Participant(s) not exceeding his/her Maximum Permissible Amount and
continuing in this manner until the Plan Administrator has fully allocated the
qualified nonelective contribution.
(G) Qualified Replacement Plan. The Employer may establish or maintain this Plan
as a qualified replacement plan as described in Code ss.4980 under which the
Plan may receive a transfer from a terminating qualified plan the Employer also
maintains. The Plan Administrator will credit the transferred amounts to a
suspense account under the Plan and thereafter the Plan Administrator will
allocate the transferred amounts under this Section 3.04(G) in the same manner
as the Plan Administrator allocates Employer nonelective contributions, unless
the Employer specifies in an Addendum to its Adoption Agreement: (1) to apply
such transferred amounts to the Plan's administrative expenses; or (2) if the
Plan includes a 401(k) arrangement, the Employer in its Addendum designates such
transferred amounts as matching contributions.
3.05 FORFEITURE ALLOCATION. The amount of a Participant's Account forfeited
under the Plan is a Participant forfeiture. The Plan Administrator, subject to
Section 3.06, will allocate Participant forfeitures at the time and in the
manner the Employer specifies in its Adoption Agreement. The Plan Administrator
will continue to hold the undistributed, non-Vested portion of the Account of a
Participant who has separated from Service solely for his/her benefit until a
forfeiture occurs at the time specified in Section 5.09 or if applicable, until
the time specified in Section 9.11. Except as provided under Section 5.04, a
Participant will not share in the allocation of a forfeiture of any portion of
his/her Account. If the Plan includes a 401(k) arrangement, the Plan
Administrator first will determine if a Participant's forfeitures are
attributable to nonelective or to matching contributions, and the Plan
Administrator then will allocate the forfeitures in the manner the Employer has
elected in its Adoption Agreement. If the Employer elects to allocate
forfeitures to reduce nonelective or matching contributions and the forfeitures
exceed the amount of the contribution to which the Plan Administrator will apply
the forfeitures, the Plan Administrator will allocate the remaining forfeitures
as an additional discretionary nonelective or discretionary matching
contribution or the Plan Administrator will apply the forfeitures to the
Employer's nonelective or matching contribution in the succeeding Plan Year. A
Participant's forfeiture is attributable to matching contributions if the
forfeiture is: (1) a non-Vested matching Account forfeited in accordance with
Section 5.09 or, if applicable, Section 9.11; (2) a non-Vested excess aggregate
contribution (adjusted for earnings) forfeited in correcting for
nondiscrimination failures under Section 14.09 or Section 14.10; or (3) an
"associated matching contribution," which includes any Vested or non-Vested
matching contribution (adjusted for earnings) made with respect to elective
deferrals or Employee contributions the Plan Administrator distributes in
correction of Code ss.402(g), Code ss.415 or nondiscrimination failures under
Sections 14.07, 14.08, 14.09 or 14.10. An Employee forfeits an associated
matching contribution unless the matching contribution is a Vested excess
aggregate contribution distributed in accordance with Sections 14.09 or 14.10.
3.06 ALLOCATION CONDITIONS. The Plan Administrator will determine the allocation
conditions which apply to Employer contributions (including matching
contributions) and Participant forfeitures on the basis of the Plan Year (or on
any other basis representing a reasonable division of the Plan Year) in
accordance with the Employer's elections in its Adoption Agreement. A
Participant does not accrue an Employer contribution with respect to a Plan Year
or other applicable period until the Participant satisfies the allocation
conditions described in this Section 3.06. The Plan under a 401(k) arrangement
may not impose any allocation conditions with respect to deferral contributions,
safe harbor contributions or SIMPLE contributions.
(A) Hours of Service Requirement. Except as required to satisfy the top-heavy
minimum allocation requirement of Article XII, the Plan Administrator will not
allocate any portion of an Employer contribution for a Plan Year to any
Participant's Account if the Participant does not complete the applicable
minimum Hours of Service or consecutive calendar days of employment requirement
the Employer specifies in its Adoption Agreement for the relevant period. The
Employer in its Standardized Adoption Agreement must elect whether to require a
Participant to complete during a Plan Year 501 Hours of Service or to be
employed for at least 91 consecutive calendar days under the Elapsed Time
Method, to share in the allocation of Employer contributions for that Plan Year
where the Participant is not employed by the Employer on the Accounting Date of
that Plan Year, including the Plan Year in which the Employer terminates the
Plan.
(B) "Last Day" Employment Requirement. If the Plan is a Standardized Plan, a
Participant who is employed by the Employer on the Accounting Date of a Plan
Year will share in the allocation of Employer contributions for that Plan Year
without regard to the Participant's Hours of Service completed during that Plan
Year. If the Plan is a Nonstandardized Plan, the Employer must specify in its
Adoption Agreement whether the Participant will benefit under the Plan if the
Participant is not employed by the Employer on the Accounting Date of the Plan
Year or other specified date. If the Plan is a Nonstandardized money purchase
Plan or target benefit Plan, the Plan conditions Employer contribution
allocations on a Participant's employment with the Employer on the last day of
the Plan Year for the Plan Year in which the Employer terminates the Plan.
(C) Death, Disability or Normal Retirement Age. Unless the Employer otherwise
elects in its Adoption Agreement, any allocation condition elected under
Adoption Agreement Section 3.06 does not apply for a Plan Year if a Participant
incurs a Separation from Service during the Plan Year on account of the
Participant's death, Disability or attainment of Normal Retirement Age in the
current Plan Year or on account of the Participant's Disability or attainment of
Normal Retirement Age in a prior Plan Year.
(D) Other Conditions. In allocating Employer contributions under the Plan, the
Plan Administrator will not apply any other conditions except those the Employer
elects in its Adoption Agreement or otherwise as the Plan may require.
(E) Suspension of Allocation Conditions Under a Nonstandardized Plan. The
suspension provisions of this Section 3.06(E) do not apply unless the Employer
elects in its Nonstandardized Adoption Agreement to apply them. If Section
3.06(E) applies, the Plan suspends for a Plan Year the Adoption Agreement
Section 3.06 allocation conditions if the Plan fails in that Plan Year to
satisfy coverage under the Ratio Percentage Test, unless in an Addendum to its
Adoption Agreement, the Employer specifies the Plan Administrator will apply
this Section 3.06(E) using the Average Benefit Percentage Test described in Code
ss.410(b)(2). A Plan satisfies coverage under the Ratio Percentage Test if, on
the last day of the Plan Year, the Plan's benefiting ratio of the Nonhighly
Compensated Includible Employees is at least 70% of the benefiting ratio of the
Highly Compensated Includible Employees.
The benefiting ratio of the Nonhighly Compensated Includible Employees is the
number of Nonhighly Compensated Includible Employees benefiting under the Plan
over the number of the Includible Employees who are Nonhighly Compensated
Employees. "Includible" Employees are all Employees other than: (1) those
Employees excluded from participating in the Plan for the entire Plan Year by
reason of the collective bargaining unit or the nonresident alien exclusions
under Code ss.410(b)(3) or by reason of the age and service requirements of
Article II; and (2) those Employees who incur a Separation from Service during
the Plan Year and for the Plan Year fail to complete more than 500 Hours of
Service or at least 91 consecutive calendar days under the Elapsed Time Method.
For purposes of coverage, an Employee is benefiting under the Plan on a
particular date if, under Section 3.04 of the Plan, he/she is entitled to an
Employer contribution or to a Participant forfeiture allocation for the Plan
Year.
If this Section 3.06(E) applies for a Plan Year, the Plan Administrator will
suspend the allocation conditions for the Nonhighly Compensated Includible
Employees who are Participants, beginning first with the Includible Employee(s)
employed by the Employer on the last day of the Plan Year, then the Includible
Employee(s) who have the latest Separation from Service during the Plan Year,
and continuing to suspend the allocation conditions for each Includible Employee
who incurred an earlier Separation from Service, from the latest to the earliest
Separation from Service date, until the Plan satisfies coverage for the Plan
Year. If two or more Includible Employees have a Separation from Service on the
same day, the Plan Administrator will suspend the allocation conditions for all
such Includible Employees, irrespective of whether the Plan can satisfy coverage
by accruing benefits for fewer than all such Includible Employees. If the Plan
for any Plan Year suspends the allocation conditions for an Includible Employee,
that Employee will share in the allocation for that Plan Year of the Employer
contribution and Participant forfeitures, if any, without regard to whether
he/she has satisfied the allocation conditions of this Section 3.06.
If the Plan includes Employer matching contributions subject to ACP testing,
this Section 3.06(E) applies separately to the Code ss.401(m) portion of the
Plan.
Part 2. Limitations On Allocations: Sections 3.07 through 3.18
[Note: Sections 3.07 through 3.10 apply only to Participants in this Plan who do
not participate, and who have never participated, in another qualified plan,
individual medical account (as defined in Code ss.415(l)(2)), simplified
employee pension plan (as defined in Code ss.408(k)) or welfare benefit fund (as
defined in Code ss.419(e)) maintained by the Employer, which provides an Annual
Addition.]
3.07 ANNUAL ADDITIONS LIMITATION. The amount of Annual Additions which the Plan
Administrator may allocate under this Plan to a Participant's Account for a
Limitation Year may not exceed the Maximum Permissible Amount. If the Annual
Additions the Plan Administrator otherwise would allocate under the Plan to a
Participant's Account would for the Limitation Year exceed the Maximum
Permissible Amount, the Plan Administrator will not allocate the Excess Amount,
but will instead take any reasonable, uniform and nondiscriminatory action the
Plan Administrator determines necessary to avoid allocation of an Excess Amount.
Such actions include, but are not limited to, those described in this Section
3.07. If the Plan includes a 401(k) arrangement, the Plan Administrator may
apply this Section 3.07 in a manner which maximizes the allocation to a
Participant of Employer contributions (exclusive of the Participant's deferral
contributions). Notwithstanding any contrary Plan provision, the Plan
Administrator, for the Limitation Year, may: (1) suspend or limit a
Participant's additional Employee contributions or deferral contributions; (2)
notify the Employer to reduce the Employer's future Plan contribution(s) as
necessary to avoid allocation to a Participant of an Excess Amount; or (3)
suspend or limit the allocation to a Participant of any Employer contribution
previously made to the Plan (exclusive of deferral contributions) or of any
Participant forfeiture. If an allocation of Employer contributions previously
made (excluding a Participant's deferral contributions) or of Participant
forfeitures would result in an Excess Amount to a Participant's Account, the
Plan Administrator will allocate the Excess Amount to the remaining Participants
who are eligible for an allocation of Employer contributions for the Plan Year
in which the Limitation Year ends. The Plan Administrator will make this
allocation in accordance with the Plan's allocation method as if the Participant
whose Account otherwise would receive the Excess Amount, is not eligible for an
allocation of Employer contributions. If the Plan Administrator allocates to a
Participant an Excess Amount, Plan Administrator must dispose of the Excess
Amount in accordance with Section 3.10 (relating to certain "reasonable errors"
and allocation of forfeitures) or, if Section 3.10 does not apply, the Plan
Administrator will dispose of the Excess Amount under Section 9.12.
3.08 ESTIMATING COMPENSATION. Prior to the determination of the Participant's
actual Compensation for a Limitation Year, the Plan Administrator may determine
the Maximum Permissible Amount on the basis of the Participant's estimated
annual Compensation for such Limitation Year. The Plan Administrator must make
this determination on a reasonable and uniform basis for all Participants
similarly situated. The Plan Administrator must reduce the allocation of any
Employer contributions (including any allocation of forfeitures) based on
estimated annual Compensation by any Excess Amounts carried over from prior
Limitation Years.
3.09 DETERMINATION BASED ON ACTUAL COMPENSATION. As soon as is administratively
feasible after the end of the Limitation Year, the Plan Administrator will
determine the Maximum Permissible Amount for the Limitation Year on the basis of
the Participant's actual Compensation for such Limitation Year.
3.10 DISPOSITION OF ALLOCATED EXCESS AMOUNT. If, because of a reasonable error
in estimating a Participant's actual Limitation Year Compensation, because of
the allocation of forfeitures, because of a reasonable error in determining a
Participant's deferral contributions or because of any other facts and
circumstances the Internal Revenue Service ("Revenue Service") considers to
constitute reasonable error, a Participant receives an allocation of an Excess
Amount for a Limitation Year, the Plan Administrator will dispose of such Excess
Amount as follows:
(a) The Plan Administrator first will return to the Participant any
Employee contributions (adjusted for earnings) and then any Participant
deferral contributions (adjusted for earnings) to the extent necessary to
reduce or eliminate the Excess Amount.
(b) If, after the application of Paragraph (a), an Excess Amount still
exists and the Plan covers the Participant at the end of the Limitation
Year, the Plan Administrator then will use the Excess Amount(s) to reduce
future Employer contributions (including any allocation of forfeitures)
under the Plan for the next Limitation Year and for each succeeding
Limitation Year, as is necessary, for the Participant. If the Employer's
Plan is a profit sharing plan, a Participant who is a Highly Compensated
Employee may elect to limit his/her Compensation for allocation purposes to
the extent necessary to reduce his/her allocation for the Limitation Year
to the Maximum Permissible Amount and to eliminate the Excess Amount.
(c) If, after the application of Paragraph (a), an Excess Amount still
exists and the Plan does not cover the Participant at the end of the
Limitation Year, the Plan Administrator then will hold the Excess Amount
unallocated in a suspense account. The Plan Administrator will apply the
suspense account to reduce Employer Contributions (including the allocation
of forfeitures) for all remaining Participants in the next Limitation Year,
and in each succeeding Limitation Year if necessary. Neither the Employer
nor any Employee may contribute to the Plan for any Limitation Year in
which the Plan is unable to allocate fully a suspense account maintained
pursuant to this Paragraph (c). Amounts held unallocated in a suspense
account will not share in any allocation of Trust Fund net income, gain or
loss.
(d) The Plan Administrator under Paragraphs (b) or (c) will not distribute
any Excess Amount(s) to Participants or to former Participants.
[Note: Sections 3.11 through 3.15 apply only to Participants who, in addition to
this Plan, participate in one or more M&P defined contribution plans (including
Paired Plans), welfare benefit funds (as defined in Code ss.419(e)), individual
medical accounts (as defined in Code ss.415(l)(2), or simplified employee
pension plans (as defined in Code ss.408(k)) maintained by the Employer and
which provide an Annual Addition during the Limitation Year (collectively "Code
ss.415 aggregated plans").]
3.11 COMBINED PLANS ANNUAL ADDITIONS LIMITATION. The amount of Annual Additions
which the Plan Administrator may allocate under this Plan to a Participant's
Account for a Limitation Year may not exceed the Maximum Permissible Amount,
reduced by the sum of any Annual Additions allocated to the Participant's
accounts for the same Limitation Year under the Code ss.415 aggregated plans. If
the amount the Employer otherwise would allocate to the Participant's Account
under this Plan would cause the Annual Additions for the Limitation Year to
exceed this Section 3.11 combined plans limitation, the Employer will reduce the
amount of its allocation to that Participant's Account in the manner described
in Section 3.07, so the Annual Additions under all of the Code ss.415 aggregated
plans for the Limitation Year will equal the Maximum Permissible Amount. If the
Plan Administrator allocates to a Participant an amount attributed to this Plan
under Section 3.14 which exceeds this Section 3.11 combined plans limitation,
the Plan Administrator must dispose of the Excess Amount in accordance with
Section 3.15 (relating to certain "reasonable errors" and allocation of
forfeitures) or, if Section 3.15 does not apply, the Plan Administrator will
dispose of the Excess Amount under Section 9.12.
3.12 ESTIMATING COMPENSATION. Prior to the determination of the Participant's
actual Compensation for the Limitation Year, the Plan Administrator may
determine the Section 3.11 combined plans limitation on the basis of the
Participant's estimated annual Compensation for such Limitation Year. The Plan
Administrator will make this determination on a reasonable and uniform basis for
all Participants similarly situated. The Plan Administrator must reduce the
allocation of any Employer contribution (including the allocation of Participant
forfeitures) based on estimated annual Compensation by any Excess Amounts
carried over from prior years.
3.13 DETERMINATION BASED ON ACTUAL COMPENSATION. As soon as is administratively
feasible after the end of the Limitation Year, the Plan Administrator will
determine the Section 3.11 combined plans limitation on the basis of the
Participant's actual Compensation for such Limitation Year.
3.14 ORDERING OF ANNUAL ADDITION ALLOCATIONS. If, because of a reasonable error
in estimating a Participant's actual Limitation Year Compensation, because of
the allocation of forfeitures, because of a reasonable error in determining a
Participant's deferral contributions or because of any other facts and
circumstances the Revenue Service considers to constitute reasonable error, a
Participant's Annual Additions under this Plan and the Code ss.415 aggregated
plans result in an Excess Amount, such Excess Amount will consist of the Amounts
last allocated. The Plan Administrator will determine the Amounts last allocated
by treating the Annual Additions attributable to a simplified employee pension
as allocated first, followed by allocation to a welfare benefit fund or
individual medical account, irrespective of the actual allocation date. If the
Plan Administrator allocates an Excess Amount to a Participant on an allocation
date of this Plan which coincides with an allocation date of another plan,
unless the Employer specifies otherwise in an Addendum to its Adoption
Agreement, the Excess Amount attributed to this Plan will equal the product of:
(a) the total Excess Amount allocated as of such date, multiplied by
(b) the ratio of (i) the Annual Additions allocated to the Participant as
of such date for the Limitation Year under the Plan to (ii) the total
Annual Additions allocated to the Participant as of such date for the
Limitation Year under this Plan and the Code ss.415 aggregated plans.
3.15 DISPOSITION OF ALLOCATED EXCESS AMOUNT ATTRIBUTABLE TO PLAN. The Plan
Administrator will dispose of any allocated Excess Amounts described in and
attributed to this Plan under Section 3.14 as provided in Section 3.10 or, as
applicable under Section 9.12.
[Note: Section 3.16 applies only to Participants who, in addition to this Plan,
participate in one or more qualified defined contribution plans maintained by
the Employer during the Limitation Year, but which are not M&P plans described
in Sections 3.11 through 3.15.]
3.16 OTHER DEFINED CONTRIBUTION PLANS LIMITATION. If a Participant is a
participant in another defined contribution plan maintained by the Employer, but
which plan is not an M&P plan described in Sections 3.11 through 3.15, the Plan
Administrator must limit the allocation to the Participant of Annual Additions
under this Plan as provided in Sections 3.11 through 3.15, as though the other
defined contribution plan were an M&P plan, unless the Employer specifies
otherwise in an Addendum to its Adoption Agreement.
3.17 DEFINED BENEFIT PLAN LIMITATION. If the Employer maintains a defined
benefit plan, or has ever maintained a defined benefit plan which the Employer
has terminated, then the sum of the defined benefit plan fraction and the
defined contribution plan fraction for any Participant for any Limitation Year
beginning before January 1, 2000, must not exceed 1.0. The 1.0 limitation of the
immediately preceding sentence does not apply for Limitation Years beginning
after December 31, 1999, unless the Employer in Appendix B to its Adoption
Agreement specifies a later effective date. To the extent necessary to satisfy
the 1.0 limitation, if the Employer still maintains the defined benefit plan as
an active plan, the Employer in its Adoption Agreement Appendix B will elect
whether to reduce the Participant's projected annual benefit under the defined
benefit plan under which the Participant participates, or to reduce its
contribution or allocation on behalf of the Participant to the defined
contribution plan(s) under which the Participant participates. If the Employer
has frozen or terminated the defined benefit plan, the Employer will reduce its
contribution or allocation on behalf of the Participant to the defined
contribution plan(s) under which the Participant participates. The Employer must
provide in Appendix B to its Adoption Agreement the manner in which the Plan
will satisfy the top-heavy requirements of Code ss.416 after taking into account
the existence (or prior maintenance) of the defined benefit plan.
3.18 DEFINITIONS - ARTICLE III. For purposes of Article III:
(a) "Annual Additions" means the sum of the following amounts allocated to
a Participant's Account for a Limitation Year: (i) all Employer
contributions (including Participant deferral contributions); (ii) all
forfeitures; (iii) all Employee contributions; (iv) Excess Amounts
reapplied to reduce Employer contributions under Section 3.10 or Section
3.15; (v) amounts allocated after March 31, 1984, to an individual medical
account (as defined in Code ss.415(l)(2)) included as part of a pension or
annuity plan maintained by the Employer; (vi) contributions paid or accrued
after December 31, 1985, for taxable years ending after December 31, 1985,
attributable to post-retirement medical benefits allocated to the separate
account of a key-employee (as defined in Code ss.419A(d)(3)) under a
welfare benefit fund (as defined in Code ss.419(e)) maintained by the
Employer; (vii) amounts allocated under a Simplified Employee Pension Plan;
and (viii) corrected excess contributions described in Code ss.401(k) and
corrected excess aggregate contributions described in Code ss.401(m).
Excess deferrals described in Code ss.402(g), which the Plan Administrator
corrects by distribution by April 15 of the following calendar year, are
not Annual Additions.
(b) "Compensation" for purposes of applying the limitations of Part 2 of
this Article III, means Compensation as defined in Section 1.07, except,
for Limitation Years beginning after December 31, 1997, Compensation
includes Elective Contributions, irrespective of whether the Employer has
elected to include these amounts as Compensation under Section 1.07 of its
Adoption Agreement and any exclusion the Employer has elected in Section
1.07 of the Adoption Agreement does not apply.
(c) "Employer" means the Employer and any Related Employer. Solely for
purposes of applying the limitations of Part 2 of this Article III, the
Plan Administrator will determine Related Employer by modifying Code
ss.ss.414(b) and (c) in accordance with Code ss.415(h).
(d) "Excess Amount" means the excess of the Participant's Annual Additions
for the Limitation Year over the Maximum Permissible Amount.
(e) "Limitation Year" means the period the Employer elects in its Adoption
Agreement Section 1.24. All qualified plans of the Employer must use the
same Limitation Year. If the Employer amends the Limitation Year to a
different 12-consecutive month period, the new Limitation Year must begin
on a date within the Limitation Year for which the Employer makes the
amendment, creating a short Limitation Year.
(f) "M&P Plan" means a prototype plan the form of which is the subject of a
favorable opinion letter (or prior to Revenue Procedure 2000-20, a
favorable notification or favorable opinion letter) from the Revenue
Service.
(g) "Maximum Permissible Amount" means the lesser of: (i) $30,000 (or, if
greater, the $30,000 amount as adjusted under Code ss.415(d)), or (ii) 25%
of the Participant's Compensation for the Limitation Year. If there is a
short Limitation Year because of a change in Limitation Year, the Plan
Administrator will multiply the $30,000 (or adjusted) limitation by the
following fraction:
Number of months in the short Limitation Year
12
The 25% limitation does not apply to any contribution for medical benefits
within the meaning of Code ss.401(h) or Code ss.419A(f)(2) which otherwise is an
Annual Addition.
(h) "Defined contribution plan" means a retirement plan which provides for an
individual account for each participant and for benefits based solely on the
amount contributed to the participant's account, and any income, expenses, gains
and losses, and any forfeitures of accounts of other participants which the plan
may allocate to such participant's account. The Plan Administrator must treat
all defined contribution plans (whether or not terminated) maintained by the
Employer as a single plan. Solely for purposes of the limitations of Part 2 of
this Article III, employee contributions made to a defined benefit plan
maintained by the Employer is a separate defined contribution plan. The Plan
Administrator also will treat as a defined contribution plan an individual
medical account (as defined in Code ss.415(l)(2)) included as part of a defined
benefit plan maintained by the Employer and, for taxable years ending after
December 31, 1985, a welfare benefit fund under Code ss.419(e) maintained by the
Employer to the extent there are post-retirement medical benefits allocated to
the separate account of a key employee (as defined in Code ss.419A(d)(3)).
(i) "Defined benefit plan" means a retirement plan which does not provide for
individual accounts for Employer contributions. All defined benefit plans
(whether or not terminated) maintained by the Employer are a single plan.
[Note: The definitions in Paragraphs (j), (k) and (l) apply only if the
limitation described in Section 3.17 applies to the Plan.]
(j) "Defined benefit plan fraction" means the following fraction:
Projected annual benefit of the Participant under the defined benefit plan(s)
--------------------------------------------------------------------------------
The lesser of: (i) 125% (subject to the "100% limitation" in Paragraph (l)) of
the dollar limitation in effect under Code ss.415(b)(1)(A) for the Limitation
Year, or (ii) 140% of the Participant's average Compensation for his/her high
three (3) consecutive Years of Service
To determine the denominator of this fraction, the Plan Administrator will make
any adjustment required under Code ss.415(b) and will determine a Year of
Service, unless the Employer provides otherwise in an Addendum to its Adoption
Agreement, as a Plan Year in which the Employee completed at least 1,000 Hours
of Service. The "projected annual benefit" is the annual retirement benefit
(adjusted to an actuarially equivalent straight life annuity if the defined
benefit plan expresses such benefit in a form other than a straight life annuity
or qualified joint and survivor annuity) of the Participant under the terms of
the defined benefit plan on the assumptions he/she continues employment until
his/her normal retirement age (or current age, if later) as stated in the
defined benefit plan, his/her compensation continues at the same rate as in
effect in the Limitation Year under consideration until the date of his/her
normal retirement age and all other relevant factors used to determine benefits
under the defined benefit plan remain constant as of the current Limitation Year
for all future Limitation Years.
Current Accrued Benefit. If the Participant accrued benefits in one or more
defined benefit plans maintained by the Employer which were in existence on May
6, 1986, the dollar limitation used in the denominator of this fraction will not
be less than the Participant's Current Accrued Benefit. A Participant's Current
Accrued Benefit is the sum of the annual benefits under such defined benefit
plans which the Participant had accrued as of the end of the 1986 Limitation
Year (the last Limitation Year beginning before January 1, 1987), determined
without regard to any change in the terms or conditions of the defined benefit
plan made after May 5, 1986, and without regard to any cost of living adjustment
occurring after May 5, 1986. This Current Accrued Benefit rule applies only if
the defined benefit plans individually and in the aggregate satisfied the
requirements of Code ss.415 as in effect at the end of the 1986 Limitation Year.
(k) "Defined contribution plan fraction" means the following fraction:
The sum, as of the close of the Limitation Year, of the Annual Additions for all
Limitation Years to the Participant's Account under the defined contribution
plan(s)
--------------------------------------------------------------------------------
The sum of the lesser of the following amounts determined for the Limitation
Year and for each prior Limitation Year of service with the Employer: (i) 125%
(subject to the "100% limitation" in Paragraph (l)) of the dollar limitation in
effect under Code ss.415(c)(1)(A) for the Limitation Year (determined without
regard to the special dollar limitations for employee stock ownership plans), or
(ii) 35% of the Participant's Compensation for the Limitation Year
For purposes of determining the defined contribution plan fraction, the Plan
Administrator will not recompute Annual Additions in Limitation Years beginning
prior to January 1, 1987, to treat all Employee contributions as Annual
Additions. If the Plan satisfied Code ss.415 for Limitation Years beginning
prior to January 1, 1987, the Plan Administrator will redetermine the defined
contribution plan fraction and the defined benefit plan fraction as of the end
of the 1986 Limitation Year, in accordance with this Section 3.18. If the sum of
the redetermined fractions exceeds 1.0, the Plan Administrator will subtract
permanently from the numerator of the defined contribution plan fraction an
amount equal to the product of: (1) the excess of the sum of the fractions over
1.0, times (2) the denominator of the defined contribution plan fraction. In
making the adjustment, the Plan Administrator must disregard any accrued benefit
under the defined benefit plan which is in excess of the Current Accrued
Benefit. This Plan continues any transitional rules applicable to the
determination of the defined contribution plan fraction under the Plan as of the
end of the 1986 Limitation Year.
(l) "100% limitation" means the limitation in Code ss.416(h) which applies
if the plan is top-heavy. If the 100% limitation applies, the Plan
Administrator must determine the denominator of the defined benefit plan
fraction and the denominator of the defined contribution plan fraction by
substituting 100% for 125%. If this Plan is a Standardized Plan, the 100%
limitation applies in all Limitation Years, unless the Employer specifies
otherwise in an Addendum to its Adoption Agreement. If the Employer
overrides the 100% limitation under a Standardized Plan, the Employer must
specify in its Addendum the manner in which the Plan satisfies the extra
minimum benefit requirement of Code ss.416(h) and the 100% limitation must
continue to apply if the Plan's top-heavy ratio exceeds 90%. If this Plan
is a Nonstandardized Plan, the 100% limitation applies only if: (i) the
Plan's top-heavy ratio exceeds 90%; or (ii) the Plan's top-heavy ratio is
greater than 60%, and the Employer does not specify in its Adoption
Agreement to provide extra minimum benefits which satisfy Code
ss.416(h)(2).
ARTICLE IV
PARTICIPANT CONTRIBUTIONS
4.01 PARTICIPANT CONTRIBUTIONS. For purposes of this Article IV, Participant
contributions means all Employee contributions described in Section 4.02,
deductible Participant contributions described in Section 4.03 ("DECs") and
rollover contributions described Section 4.04.
4.02 EMPLOYEE CONTRIBUTIONS. An Employee contribution is a nondeductible
contribution which a Participant makes to the Trust as permitted under this
Section 4.02. A deferral contribution made by a Participant under a 401(k)
arrangement is not an Employee contribution. Employee contributions must satisfy
the nondiscrimination requirements of Code ss.401(m). See Section 14.09. An
Employer must elect in its Adoption Agreement whether to permit Employee
contributions. If the Employer elects to permit Employee contributions, the
Employer also must specify in its Adoption Agreement any conditions or
limitations which may apply to Employee contributions. If the Employer permits
Employee contributions, the Employer operationally will determine if a
Participant will make Employee contributions through payroll deduction or by
other means.
The Employer must elect in its Adoption Agreement whether the Employer will make
matching contributions with respect to any Employee contributions and any
conditions or limitations which may apply to those matching contributions. Any
matching contribution must satisfy the nondiscrimination requirements of Code
ss.401(m). See Section 14.09.
4.03 DECs. A DEC is a deductible Participant contribution made to the Plan for a
taxable year commencing prior to 1987. If a Participant has made DECs to the
Plan, the Plan Administrator must maintain a separate Account for the
Participant's DECs as adjusted for earnings, including DECs which are part of a
rollover contribution described in Section 4.04. The DECs Account is part of the
Participant's Account for all purposes of the Plan, except for purposes of
determining the top-heavy ratio under Article XII. The Plan Administrator may
not use a Participant's DECs Account to purchase life insurance on the
Participant's behalf.
4.04 ROLLOVER CONTRIBUTIONS. A rollover contribution is an amount of cash or
property which the Code permits an eligible Employee or Participant to transfer
directly or indirectly to this Plan from another qualified plan. A rollover
contribution excludes Employee contributions, as adjusted for earnings. An
Employer operationally and on a nondiscriminatory basis, may elect to permit or
not to permit rollover contributions to this Plan or may elect to limit an
eligible Employee's right or a Participant's right to make a rollover
contribution. If an Employer permits rollover contributions, any Participant (or
as applicable, any eligible Employee), with the Employer's written consent and
after filing with the Trustee the form prescribed by the Plan Administrator, may
make a rollover contribution to the Trust. Before accepting a rollover
contribution, the Trustee may require a Participant (or eligible Employee) to
furnish satisfactory evidence the proposed transfer is in fact a "rollover
contribution" which the Code permits an employee to make to a qualified plan.
The Trustee, in its sole discretion, may decline to accept a rollover
contribution of property which could: (1) generate unrelated business taxable
income; (2) create difficulty or undue expense in storage, safekeeping or
valuation; or (3) create other practical problems for the Trust. A rollover
contribution is not an Annual Addition under Part 2 of Article III.
If an eligible Employee makes a rollover contribution to the Trust prior to
satisfying the Plan's eligibility conditions, the Plan Administrator and Trustee
must treat the Employee as a limited Participant (as described in Rev. Rul.
96-48 or in any successor ruling). A limited Participant does not share in the
Plan's allocation of Employer contributions nor Participant forfeitures and may
not make deferral contributions if the Plan includes a 401(k) arrangement until
he/she actually becomes a Participant in the Plan. If a limited Participant has
a Separation from Service prior to becoming a Participant in the Plan, the
Trustee will distribute his/her rollover contributions Account to him/her in
accordance with Article VI as if it were an Employer contributions Account.
4.05 PARTICIPANT CONTRIBUTIONS - VESTING. A Participant's Participant
contributions Account is, at all times, 100% Vested.
4.06 PARTICIPANT CONTRIBUTIONS - DISTRIBUTION. Subject to any contrary Employer
election in its Adoption Agreement Appendix A, an Employee, after attaining age
70 1/2 may elect to receive distribution prior to Separation from Service
("in-service distribution") of all or any part of his/her Participant
contributions Account. The Employer in its Adoption Agreement Section 6.01 must
elect the additional in-service distribution election rights, if any, a
Participant has with respect to his/her Participant contributions Account. For
purposes of the Employer's Adoption Agreement elections regarding in-service
distribution of Participant contributions, a Participant's Employee
contributions also includes DECs. A Participant will not incur a forfeiture of
any Account under the Plan solely as a result of the distribution of his/her
Participant contributions. The Trustee, following a Participant's Separation
from Service, will distribute to the Participant his/her Participant
contributions Account in accordance with Article VI in the same manner as the
Trustee distributes the Participant's Employer contributions Account.
4.07 PARTICIPANT CONTRIBUTIONS - INVESTMENT AND ACCOUNTING. The Plan
Administrator must maintain a separate Account in the name of each Participant
to reflect his/her Participant contributions (including, if applicable, the
different types of Participant contributions), as adjusted for earnings. The
Trustee will invest all Participant contributions as part of the Trust Fund.
ARTICLE V
VESTING
5.01 NORMAL/EARLY RETIREMENT AGE. The Employer in its Adoption Agreement must
specify the Plan's Normal Retirement Age. An Employer in its Adoption Agreement
may specify an Early Retirement Age. A Participant's Account Balance derived
from Employer contributions is 100% Vested upon and after his/her attaining
Normal Retirement Age (or if applicable, Early Retirement Age) if the
Participant is employed by the Employer on or after that date.
5.02 PARTICIPANT DEATH OR DISABILITY. Unless the Employer elects otherwise in
its Adoption Agreement, a Participant's Account Balance derived from Employer
contributions is 100% Vested if the Participant's Separation from Service is a
result of his/her death or his/her Disability.
5.03 VESTING SCHEDULE. Except as provided in Sections 5.01 and 5.02, for each
Year of Service as described in Section 5.06, a Participant's Vested percentage
of his/her Account Balance derived from Employer contributions equals the
percentage under the vesting schedule the Employer has elected in its Adoption
Agreement.
For purposes of Adoption Agreement Section 5.03, "6-year graded," "3-year
cliff," "7-year graded" or "5-year cliff" means an Employee's Vested percentage,
based on each included Year of Service, under the following applicable schedule:
6-year graded 7-year graded
0-1 year / 0% 0-2 years / 0%
2 years / 20% 3 years / 20%
3 years / 40% 4 years / 40%
4 years / 60% 5 years / 60%
5 years / 80% 6 years / 80%
6 years / 100% 7 years / 100%
3-year cliff 5-year cliff
0-2 years / 0% 0-4 years / 0%
3 years / 100% 5 years / 100%
(A) "Grossed-Up" Vesting Formula. If the Trustee makes a distribution (other
than a cash-out distribution described in Section 5.04) to a partially-Vested
Participant, and the Participant has not incurred a Forfeiture Break in Service
at the relevant time, the provisions of this Section 5.03(A) apply to the
Participant's Account Balance. At any relevant time following the distribution,
the Plan Administrator will determine the Participant's Vested Account Balance
derived from Employer contributions in accordance with the following formula:
P(AB + D) - D. To apply this formula, "P" is the Participant's current vesting
percentage at the relevant time, "AB" is the Participant's Employer-derived
Account Balance at the relevant time and "D" is the amount of the earlier
distribution. If, under a restated Plan, the Plan has made distribution to a
partially-Vested Participant prior to its restated Effective Date and is unable
to apply the cash-out provisions of Section 5.04 to that prior distribution,
this special vesting formula also applies to that Participant's remaining
Account Balance. The Employer, in an Addendum to its Adoption Agreement, may
elect to modify this formula to read as follows: P(AB + (R x D)) - (R x D). For
purposes of this alternative formula, "R" is the ratio of "AB" to the
Participant's Employer-derived Account Balance immediately following the earlier
distribution.
(B) Special Vesting Elections. The Employer in its Adoption Agreement may elect
other specified vesting provisions which are consistent with Code ss.411 and
applicable Treasury regulations.
5.04 CASH-OUT DISTRIBUTIONS TO PARTIALLY-VESTED PARTICIPANTS/ RESTORATION OF
FORFEITED ACCOUNT BALANCE. If, pursuant to Article VI, a partially-Vested
Participant receives a cash-out distribution before he/she incurs a Forfeiture
Break in Service, the Participant will incur an immediate forfeiture of the
non-Vested portion of his/her Account Balance. If a partially-Vested
Participant's Account is entitled to an allocation of Employer contributions or
Participant forfeitures for the Plan Year in which he/she otherwise would incur
a forfeiture by reason of a cash-out distribution, the Plan Administrator will
apply the cash-out forfeiture rule as if the partially-Vested Participant
received a cash-out distribution on the first day of the immediately following
Plan Year. A partially-Vested Participant is a Participant whose Vested
percentage determined under Section 5.03 is more than 0% but is less than 100%.
A cash-out distribution is a distribution to the Participant (whether
involuntary or with required consent as described in Article VI), of his/her
entire Vested Account Balance due to the Participant's Separation from Service.
(A) Forfeiture Restoration and Conditions for Restoration. A partially-Vested
Participant re-employed by the Employer after receiving a cash-out distribution
of the Vested percentage of his/her Account Balance may repay to the Trust the
entire amount of the cash-out distribution attributable to Employer
contributions without any adjustment for gains and losses, unless the
Participant no longer has a right to restoration under this Section 5.04(A). If
a re-employed Participant repays his/her cash-out distribution, the Plan
Administrator, subject to the conditions of this Section 5.04(A), must restore
the Participant's Account Balance attributable to Employer contributions to the
same dollar amount as the dollar amount of his/her Account Balance on the
Accounting Date, or other valuation date, immediately preceding the date of the
cash-out distribution, unadjusted for any gains or losses occurring subsequent
to that Accounting Date, or other valuation date. Restoration of the
Participant's Account Balance includes restoration of all Protected Benefits
with respect to that restored Account Balance, in accordance with applicable
Treasury regulations. The Plan Administrator will not restore a re-employed
Participant's Account Balance under this Section 5.04 (A) if:
(1) 5 years have elapsed since the Participant's first re-employment date with
the Employer following the cash-out distribution;
(2) The Participant is not in the Employer's Service on the date the Participant
repays his/her cash-out distribution; or
(3) The Participant has incurred a Forfeiture Break in Service. This condition
also applies if the Participant makes repayment within the Plan Year in which
he/she incurs the Forfeiture Break in Service and that Forfeiture Break in
Service would result in a complete forfeiture of the amount the Plan
Administrator otherwise would restore.
(B) Time and Method of Forfeiture Restoration. If none of the conditions in
Section 5.04(A) preventing restoration of the Participant's Account Balance
applies, the Plan Administrator will restore the Participant's Account Balance
as of the Plan Year Accounting Date coincident with or immediately following the
repayment. To restore the Participant's Account Balance, the Plan Administrator,
to the extent necessary, will allocate to the Participant's Account:
(1) First, the amount, if any, of Participant forfeitures the Plan Administrator
otherwise would allocate under Section 3.05;
(2) Second, the amount, if any, of the Trust Fund net income or gain for the
Plan Year; and
(3) Third, the Employer contribution for the Plan Year to the extent made under
a discretionary formula. In an Addendum to its Adoption Agreement, the Employer
may eliminate as a means of restoration any of the amounts described in clauses
(1), (2) and (3) or may change the order of priority of these amounts. To the
extent the amounts described in clauses (1), (2) and (3) are insufficient to
enable the Plan Administrator to make the required restoration, the Employer
must contribute, without regard to any requirement or condition of Article III,
the additional amount necessary to enable the Plan Administrator to make the
required restoration. If, for a particular Plan Year, the Plan Administrator
must restore the Account Balance of more than one re-employed Participant, the
Plan Administrator will make the restoration allocations from the amounts
described in clauses (1), (2) and (3) to each such Participant's Account in the
same proportion that a Participant's restored amount for the Plan Year bears to
the restored amount for the Plan Year of all re-employed Participants. A
cash-out restoration allocation is not an Annual Addition under Part 2 of
Article III.
(C) Deemed Cash-out of 0% Vested Participant. Except as the Employer may provide
in an Addendum to its Adoption Agreement, the deemed cash-out rule of this
Section 5.04(C) applies to any 0% Vested Participant. A "0% Vested Participant"
is a Participant whose Account Balance derived from Employer contributions is
entirely forfeitable at the time of his/her Separation from Service. If a 0%
Vested Participant's Account is not entitled to an allocation of Employer
contributions for the Plan Year in which the Participant has a Separation from
Service, the Plan Administrator will apply the deemed cash-out rule as if the 0%
Vested Participant received a cash-out distribution on the date of the
Participant's Separation from Service. If a 0% Vested Participant's Account is
entitled to an allocation of Employer contributions or Participant forfeitures
for the Plan Year in which the Participant has a Separation from Service, the
Plan Administrator will apply the deemed cash-out rule as if the 0% Vested
Participant received a cash-out distribution on the first day of the first Plan
Year beginning after his/her Separation from Service. For purposes of applying
the restoration provisions of this Section 5.04, the Plan Administrator will
treat a reemployed 0% Vested Participant as repaying his/her cash-out
"distribution" on the date of the Participant's re-employment with the Employer.
5.05 ACCOUNTING FOR CASH-OUT REPAYMENT. As soon as is administratively
practicable, the Plan Administrator will credit to the Participant's Account the
cash-out amount a Participant has repaid to the Plan. Pending the restoration of
the Participant's Account Balance, the Plan Administrator under Section 9.08(B)
may direct the Trustee to place the Participant's cash-out repayment in a
temporary segregated investment Account. Unless the cash-out repayment qualifies
as a Participant rollover contribution, the Plan Administrator will direct the
Trustee to repay to the Participant as soon as is administratively practicable,
the full amount of the Participant's cash-out repayment if the Plan
Administrator determines any of the conditions of Section 5.04(A) prevents
restoration as of the applicable Accounting Date, notwithstanding the
Participant's repayment.
5.06 YEAR OF SERVICE - VESTING. For purposes of determining a Participant's
vesting under Section 5.03, "Year of Service" means the 12-consecutive month
vesting computation period the Employer elects in its Adoption Agreement during
which an Employee completes the number of Hours of Service (not exceeding 1,000)
specified in the Adoption Agreement or, if the Plan applies the Elapsed Time
Method of crediting Vesting Service, the vesting computation period for which
the Employee receives credit for a Year of Service under the Service crediting
rules of Section 1.15(D). A Year of Service includes any Year of Service
completed prior to the Effective Date of the Plan, except as provided in Section
5.08.
5.07 BREAK IN SERVICE AND FORFEITURE BREAK IN SERVICE - VESTING. For purposes of
this Article V, a Participant incurs a "Break in Service" if during any vesting
computation period he/she does not complete more than 500 Hours of Service or,
if the Plan applies the Elapsed Time Method of crediting Service, the
Participant has a Period of Severance of at least 12 consecutive months. If,
pursuant to Section 5.06, the Plan does not require more than 500 Hours of
Service to receive credit for a Year of Service, a Participant incurs a Break in
Service in a vesting computation period in which he/she fails to complete a Year
of Service. A Participant incurs a Forfeiture Break in Service when he/she
incurs 5 consecutive Breaks in Service. The Plan does not apply the Break in
Service (one year hold-out) rule for vesting under Code ss.411(a)(6)(B).
Therefore, an Employee need not complete a Year of Service after a Break in
Service before the Plan takes into account the Employee's otherwise includible
pre-Break Years of Service under this Article V.
5.08 INCLUDED YEARS OF SERVICE - VESTING. For purposes of determining "Years of
Service" under Section 5.06, the Plan takes into account all Years of Service an
Employee completes with the Employer except:
(a) For the sole purpose of determining a Participant's Vested percentage
of his/her Account Balance derived from Employer contributions which
accrued for his/her benefit prior to a Forfeiture Break in Service or
receipt of a cash-out distribution, the Plan disregards any Year of Service
after the Participant first incurs a Forfeiture Break in Service or
receives a cash-out distribution (except where the Plan Administrator
restores the Participant's Account under Section 5.04(A)).
(b) Consistent with Code ss.411(a)(4), any Year of Service the Employer
elects to exclude under its Adoption Agreement.
5.09 FORFEITURE OCCURS. A Participant's forfeiture of his/her non-Vested Account
Balance derived from Employer contributions occurs under the Plan on the earlier
of:
(a) The last day of the vesting computation period in which the Participant
first incurs a Forfeiture Break in Service; or
(b) The date the Participant receives a cash-out distribution.
The Plan Administrator determines the percentage of a Participant's Account
Balance forfeiture, if any, under this Section 5.09 solely by reference to the
vesting schedule the Employer elected in its Adoption Agreement. A Participant
does not forfeit any portion of his/her Account Balance for any other reason or
cause except as expressly provided by this Section 5.09 or as provided under
Section 9.11.
5.10 RULE OF PARITY - VESTING. The Employer may elect in its Adoption Agreement
to apply the "rule of parity" under Code ss.411(a)(6)(D) for purposes of
determining vesting Years of Service. Under the rule of parity, the Plan
Administrator excludes a Participant's Years of Service before a Break in
Service if: (a) the number of the Participant's consecutive Breaks in Service
equals or exceeds 5; and (b) the Participant is 0% Vested in his/her Account
Balance derived from Employer contributions at the time he/she has the Breaks in
Service.
5.11 AMENDMENT TO VESTING SCHEDULE. The Employer under Section 13.02 may amend
the Plan's vesting schedule(s) under Section 5.03 at any time. However, the Plan
Administrator will not apply the amended vesting schedule to reduce any
Participant's existing Vested percentage (determined on the later of the date
the Employer adopts the amendment, or the date the amendment becomes effective)
in the Participant's existing and future Account Balance attributable to
Employer contributions, to a percentage less than the Vested percentage computed
under the Plan without regard to the amendment. Furthermore, an amended vesting
schedule will apply to a Participant only if the Participant receives credit for
at least one Hour of Service after the new vesting schedule becomes effective.
If the Employer amends the Plan's vesting schedule, each Participant having
completed at least 3 Years of Service (as described in Section 5.06) with the
Employer prior to the expiration of the election period described below, may
irrevocably elect to have the Plan Administrator determine the Vested percentage
of his/her Account Balance without regard to the amendment. The Participant must
file his/her election with the Plan Administrator within 60 days of the latest
of: (a) the Employer's adoption of the amendment; (b) the effective date of the
amendment; or (c) the Participant's receipt of a copy of the amendment. The Plan
Administrator, as soon as practicable, must forward a true copy of any amendment
to the vesting schedule to each affected Participant, together with a written
explanation of the effect of the amendment, the appropriate form upon which the
Participant may make an election to remain under the pre-amendment vesting
schedule and notice of the time within which the Participant must make an
election to remain under the preamendment vesting schedule. The election
described in this Section 5.11 does not apply to a Participant if the amended
vesting schedule provides for vesting at least as rapid at any time as the
vesting schedule in effect prior to the amendment. For purposes of this Section
5.11, an amendment to the vesting schedule includes any Plan amendment which
directly or indirectly affects the computation of the Vested percentage of a
Participant's Account Balance. Furthermore, any shift in the Plan's vesting
schedule under Article XII, due to a change in the Plan's top-heavy status, is
an amendment to the vesting schedule for purposes of this Section 5.11.
5.12 DEFERRAL CONTRIBUTIONS TAKEN INTO ACCOUNT. If the Plan includes a 401(k)
arrangement, the vesting rules described in Article V must take into account a
Participant's deferral contributions for purposes of determining: (1) if a
Participant's distribution is of his/her entire Vested Account balance as
required for a cash-out distribution under Section 5.04; (2) if a Participant
repays the entire amount of a prior cash-out distribution so the Participant is
entitled to restoration under Section 5.04(A); and (3) if a Participant is 0%
vested under Section 5.04(C) and under Section 5.10.
ARTICLE VI
DISTRIBUTIONS
6.01 TIMING OF DISTRIBUTION. The Plan Administrator will direct the Trustee to
commence distribution of a Participant's Vested Account Balance in accordance
with this Section 6.01 upon the Participant's Separation from Service for any
reason, or if the Participant exercises an in-Service distribution right under
the Plan. The Trustee may make Plan distributions on any administratively
practicable date during the Plan Year, consistent with the Employer's elections
in its Adoption Agreement.
(A) Distribution upon Separation from Service (other than death).
(1) Participant's Vested Account Balance not exceeding $5,000. Upon the
Participant's Separation from Service for any reason other than death, the Plan
Administrator (without any requirement of Participant or spousal consent) will
direct the Trustee to distribute the Participant's Vested Account Balance
(determined in accordance with Section 6.01(A)(6)) not exceeding $5,000 in a
lump sum (without regard to Section 6.04), at the time specified in the Adoption
Agreement, but in no event later than the 60th day following the close of the
Plan Year in which the later of the following events occur: (a) the Participant
attains Normal Retirement Age; or (b) the Participant Separates from Service.
(2) Participant's Vested Account Balance exceeds $5,000. Upon the Participant's
Separation from Service for any reason other than death, the Plan Administrator,
subject to the Participant's election to postpone distribution under this
Section 6.01(A)(2) and the consent requirements of Section 6.01(A)(5), will
direct the Trustee to commence distribution of the Participant's Vested Account
Balance (determined in accordance with Section 6.01(A)(6)) exceeding $5,000, at
the time specified in the Adoption Agreement and in a form under Section 6.03
elected by the Participant. Any election under this Section 6.01(A)(2) is
subject to the requirements of Section 6.02 and of Section 6.04.
A Participant eligible to make an election under this Section 6.01(A)(2) may
elect to postpone distribution beyond the time the Employer has elected in its
Adoption Agreement, to any specified date including, but not beyond the
Participant's Required Beginning Date, unless the Employer, in its Adoption
Agreement, specifically limits a Participant's right to postpone distribution of
his/her Account Balance to the later of the date the Participant attains age 62
or Normal Retirement Age. The Plan Administrator will reapply the notice and
consent requirements of Section 6.01(A)(4) and Section 6.01(A)(5) to any
distribution postponed under this Section 6.01(A)(2). In the absence of a
Participant's consent and distribution election (as described in Section
6.01(A)(5)) or in the absence of the Participant's election to postpone
distribution prior to his/her annuity starting date, the Plan Administrator,
consistent with the Employer's elections in its Adoption Agreement, will treat
the Participant as having elected to postpone his/her distribution until the
60th day following the close of the Plan Year in which the latest of the
following events occurs: (a) the Participant attains Normal Retirement Age; (b)
the Participant attains age 62; or (c) the Participant Separates from Service.
At the applicable date, the Plan Administrator then will direct the Trustee to
distribute the Participant's Vested Account Balance in a lump sum (or, if
applicable, the annuity form of distribution required under Section 6.04).
(3) Disability. If the Participant's Separation from Service is because of
his/her Disability, the Plan Administrator will direct the Trustee to pay the
Participant's Vested Account Balance in the same manner as if the Participant
had incurred a Separation from Service without Disability.
(4) Distribution notice/annuity starting date. At least 30 days and not more
than 90 days prior to the Participant's annuity starting date, the Plan
Administrator must provide a written notice (or a summary notice as permitted
under Treasury regulations) to a Participant who is eligible to make an election
under Section 6.01(A)(2) ("distribution notice"). The distribution notice must
explain the optional forms of benefit in the Plan, including the material
features and relative values of those options, and the Participant's right to
postpone distribution until the applicable date described in Section 6.01(A)(2).
For all purposes of this Article VI, the term "annuity starting date" means the
first day of the first period for which the Plan pays an amount as an annuity or
in any other form but in no event is the "annuity starting date" earlier than a
Participant's Separation from Service.
(5) Consent requirements/Participant distribution election. A Participant must
consent, in writing, following receipt of the distribution notice, to any
distribution under this Section 6.01, if at the time of the distribution to the
Participant, the Participant's Vested Account Balance exceeds $5,000 and the
Participant has not attained the later of Normal Retirement Age or age 62.
Accounts which are distributable prior to the foregoing applicable age are
"immediately distributable." Furthermore, the Participant's spouse also must
consent, in writing, to any distribution, for which Section 6.04 requires the
spouse's consent. The Participant may reconsider his/her distribution election
at any time prior to the annuity starting date and elect to commence
distribution as of any other distribution date permitted under the Plan or under
the Adoption Agreement. A Participant may elect to receive distribution at any
administratively practicable time which is earlier than 30 days following the
Participant's receipt of the distribution notice, by waiving in writing the
balance of the 30 days. However, if the requirements of Section 6.04 apply, the
Participant may not elect to commence distribution less than 7 days following
the Participant's receipt of the distribution notice. The consent requirements
of this Section 6.01(A)(5) do not apply with respect to defaulted loans
described in Section 10.03(E).
(6) Determination of Vested Account Balance. For purposes of the consent
requirements under this Article VI, the Plan Administrator determines a
Participant's Vested Account Balance as of the most recent valuation date
immediately prior to the distribution date, and takes into account the
Participant's entire Account, including deferral contributions. The Plan
Administrator in determining the Participant's Vested Account Balance at the
relevant time, will disregard a Participant's Vested Account Balance existing on
any prior date, except as the Code otherwise may require.
(7) Consent to cash-out/forfeiture. If a Participant is partially-Vested in
his/her Account Balance, a Participant's election under Section 6.01(A)(2) to
receive distribution prior to the Participant's incurring a Forfeiture Break in
Service, must be in the form of a cash-out distribution as defined in Section
5.04.
(8) Return to employment. A Participant may not receive a distribution by reason
of Separation from Service, or continue any installment distribution based on a
prior Separation from Service, if, prior to the time the Trustee actually makes
the distribution, the Participant returns to employment with the Employer.
(B) Distribution upon Death. In the event of the Participant's Separation from
Service on account of death, the Plan Administrator will direct the Trustee, in
accordance with this Section 6.01(B) and subject to Section 6.02(D), to
distribute to the Participant's Beneficiary the Participant's Vested Account
Balance remaining in the Trust at the time of the Participant's death. The Plan
Administrator, subject to the requirements of Sections 6.04 and 6.02(D) or to a
Beneficiary's written election (if authorized by the next paragraph of this
Section 6.01(B)), must direct the Trustee to distribute or commence distribution
of the deceased Participant's Vested Account Balance, as soon as
administratively practicable following the Participant's death or, if later, the
date on which the Plan Administrator receives notification of, or otherwise
confirms, the Participant's death. If the Participant's Vested Account Balance
determined in accordance with Section 6.01(A)(6) does not exceed $5,000, the
Trustee will distribute the balance in a lump sum without regard to Section
6.04. If the Participant's Vested Account Balance exceeds $5,000, the Trustee
will distribute the balance subject to Section 6.02(D).
If the Participant's death benefit is payable in full to the Participant's
surviving spouse, the surviving spouse may elect distribution at any time and in
any form (except a joint and survivor annuity) the Plan would permit a
Participant to elect upon Separation from Service. The Participant, on a form
prescribed by the Plan Administrator, may (subject to the requirements of
Section 6.04) elect the payment method or the payment term or both, which will
apply to any Beneficiary, including his/her surviving spouse. The Participant's
election may limit any Beneficiary's right to increase the frequency or the
amount of any payments. Any payment term elected by the Participant must not
exceed the payment term the Code otherwise would permit the Beneficiary to elect
upon the Participant's death.
(C) In-Service Distribution. The Employer must elect in its Adoption Agreement
the distribution election rights, if any, a Participant has prior to his/her
Separation from Service ("in-service distribution"). Subject to any contrary
Employer election in Appendix A to its Adoption Agreement, a Participant upon
attaining age 70 1/2, until he/she incurs a Separation from Service, has a
continuing election to receive all or any portion of his/her Account Balance,
including Employer contributions and Participant contributions. If the Employer
elects in its Adoption Agreement additional in-service distribution of any
Employer contribution (including deferral contributions), the Employer in its
Adoption Agreement must specify events or conditions, if any, applicable to such
in-service distributions. For special requirements regarding hardship
distributions, see Section 6.09. The Employer also must elect in its Adoption
Agreement the additional in-service distribution rights, if any, a Participant
has with respect to Participant contributions as defined in Section 4.01. If a
Participant receives an in-service distribution as to a partially-Vested
Account, and the Participant has not incurred a Forfeiture Break in Service, the
Plan Administrator will apply the vesting provisions of Section 5.03(A).
A Participant must make any permitted in-service distribution election under
this Section 6.01(C) in writing and on a form prescribed by the Plan
Administrator which specifies the percentage or dollar amount of the
distribution and the Participant's Plan Account (Employer contributions or
Participant contributions and type) to which the election applies. If the Plan
permits in-service distributions, a Participant only may elect to receive one
in-service distribution per Plan Year under this Section 6.01(C) unless the
election form prescribed by the Plan Administrator provides for more frequent
distributions. The Trustee, as directed by the Plan Administrator and subject to
Sections 6.01(A)(4), 6.01(A)(5) and 6.04, will distribute the amount(s) a
Participant elects in single sum, as soon as administratively practicable after
the Participant files his/her in-service distribution election with the Plan
Administrator. The Trustee will distribute the Participant's remaining Account
Balance in accordance with the other provisions of this Article VI.
The Trustee, prior to a Participant's Normal Retirement Age or Disability may
not make any in-service distribution to the Participant with respect to his/her
Account Balance attributable to assets (including post-transfer earnings on
those assets) and liabilities transferred, within the meaning of Code ss.414(l),
to a profit sharing plan from a money purchase pension plan or from a target
benefit plan qualified under Code ss.401(a) (other than any portion of those
assets and liabilities attributable to Employee contributions).
6.02 REQUIRED MINIMUM DISTRIBUTIONS.
(A) Priority of Required Minimum Distribution. If any distribution under this
Article VI (by Plan provision or by Participant election or nonelection), would
commence later than the Participant's required beginning date ("RBD"), the Plan
Administrator instead must direct the Trustee to make distribution on the
Participant's RBD, subject only to the TEFRA election, if applicable, under
Section 6.11. The Employer in its Adoption Agreement Appendix B may elect to
apply a special effective date to the RBD definition or may elect in Appendix A
to continue to apply the RBD definition in effect prior to 1997 ("pre-SBJPA
RBD"). The Employer in its Adoption Agreement also may elect to require
distribution earlier than the RBD.
(1) RBD - more than 5% owner. A Participant's RBD is the April 1 following the
close of the calendar year in which the Participant attains age 70 1/2 if the
Participant is a more than 5% owner (as defined in Code ss.416) with respect to
the Plan Year ending in that calendar year. If a Participant is a more than 5%
owner at the close of the relevant calendar year, the Participant may not
discontinue required minimum distributions notwithstanding the Participant's
subsequent change in ownership status.
(2) RBD - non 5% owners. If the Participant is not a more than 5% owner, his/her
RBD is the April 1 following the close of the calendar year in which the
Participant incurs a Separation from Service or, if later, the April 1 following
the close of the calendar year in which the Participant attains age 70 1/2. If a
Participant is not a more than 5% owner, his/her pre-SBJPA RBD (if applicable)
is April 1 following the close of the calendar year in which the Participant
attains age 70 1/2.
(3) Form of distribution. The Trustee will make a required minimum distribution
at the Participant's RBD in a lump sum (or, if applicable, the annuity form of
distribution required under Section 6.04) unless the Participant, pursuant to
the provisions of this Article VI, makes a valid election to receive an
alternative form of payment.
(B) Participant Transitional Elections.
(1) Election to discontinue distributions. A Participant who: (a) is not a more
than 5% owner; (b) had attained age 70 1/2 prior to 1997; (c) had commenced
prior to 1997 required minimum distributions under the pre- SBJPA RBD; and (d)
has not incurred a Separation from Service, has a continuing election to
discontinue receiving distributions from the Plan (which previously were
required minimum distributions under the Plan). A Participant who makes an
election under this Section 6.02(B)(1) must establish a new annuity starting
date when he/she recommences payment of his/her Account Balance under the Plan.
A married Participant who is subject to Section 6.04 must obtain spousal
consent: (a) to discontinue his/her distributions under this Section 6.04(B)(1)
if distributions are in QJSA form; and (b) to recommence benefits in a form
other than a QJSA. A Participant may not make any election under this Section
6.02(B)(1) which is inconsistent with any QDRO applicable to the Participant's
Account.
(2) Election to postpone distributions. A Participant who: (a) is not a more
than 5% owner; and (b) attained age 70 1/2 after 1996 (or who attained age 70
1/2 in 1996, but who had not commenced his/her required minimum distributions in
1996) may elect under this Section 6.02(B)(2) to postpone distribution of
required minimum distributions until the Participant's RBD established under
Section 6.02(A). If the Participant attained age 70 1/2 in 1996, he/she must
have elected under this Section 6.02(B)(2) to postpone distributions by December
31, 1997. If the Participant attained age 70 1/2 after 1996, he/she must make
the election to postpone distribution under this Section 6.01(B)(2) not later
than April 1 of the calendar year following the year in which the Participant
attains age 70 1/2.
(3) Election requirements. All Participant elections made under this Section
6.01(B) are subject to and must be consistent with the Employer's RBD elections
in its Adoption Agreement Appendices A and B. A Participant makes his/her
election under this Section 6.02(B) in writing on a form prescribed by the Plan
Administrator.
(C) Minimum Distribution Requirements for Participants. The Plan Administrator
may not direct the Trustee to distribute the Participant's Vested Account
Balance, nor may the Participant elect to have the Trustee distribute his/her
Vested Account Balance, under a method of payment which, as of the Participant's
RBD, does not satisfy the minimum distribution requirements under Code
ss.401(a)(9) and the applicable Treasury regulations.
(1) Calculation of amount. The required minimum distribution for a calendar year
("distribution calendar year") equals the Participant's Vested Account Balance
as of the latest valuation date preceding the beginning of the distribution
calendar year (such valuation date being within the "valuation calendar year")
divided by the Participant's life expectancy or, if applicable, the joint and
last survivor expectancy of the Participant and his/her designated Beneficiary
(as determined under Article VIII, subject to the requirements of Code
ss.401(a)(9)). The Plan Administrator will increase the Participant's Vested
Account Balance, as determined on the relevant valuation date, for contributions
or forfeitures allocated after the valuation date and by December 31 of the
valuation calendar year, and will decrease the valuation by distributions made
after the valuation date and by December 31 of the valuation calendar year. For
purposes of this valuation, any portion of the required minimum distribution for
the first distribution calendar year made after the close of that year is a
distribution occurring in that first distribution calendar year.
(2) Recalculation. In computing a required minimum distribution, the Plan
Administrator must use the unisex life expectancy multiples under Treas. Reg.
ss.1.72-9. The Plan Administrator, only upon the Participant's timely election,
will compute the required minimum distribution for a distribution calendar year
subsequent to the first distribution calendar year by redetermining
("recalculation" of) the Participant's life expectancy or the Participant's and
spouse designated Beneficiary's life expectancies as elected. However, the Plan
Administrator may not redetermine the joint life and last survivor expectancy of
the Participant and a nonspouse designated Beneficiary in a manner which takes
into account any adjustment to a life expectancy other than the Participant's
life expectancy. A Participant must elect recalculation under this Section
6.02(C)(2) in writing and on a form the Plan Administrator prescribes, not later
than the Participant's RBD.
(3) Minimum distribution incidental benefit (MDIB). If the Participant's spouse
is not his/her designated Beneficiary, a method of payment to the Participant
(whether by Participant election or by Plan Administrator direction) must
satisfy the MDIB requirement under Code ss.401(a)(9) for distributions made on
or after the Participant's RBD and before the Participant's death. To satisfy
the MDIB requirement, the Plan Administrator will compute the Participant's
required minimum distribution by substituting the applicable MDIB divisor for
the applicable life expectancy factor, if the MDIB divisor is a lesser number.
Following the Participant's death, the Plan Administrator will compute the
minimum distribution required by Section 6.02(D) solely on the basis of the
applicable life expectancy factor and will disregard the MDIB factor.
(4) Payment due date. The required minimum distribution for the first
distribution calendar year is due by the Participant's RBD. The required minimum
distribution for each subsequent distribution calendar year, including the
calendar year in which the Participant's RBD occurs, is due by December 31 of
that year.
(5) Nontransferable annuity. If the Participant receives distribution in the
form of a Nontransferable Annuity, the distribution satisfies this Section
6.02(C) if the contract complies with the requirements of Code ss.401(a)(9).
(D) Minimum Distribution Requirements for Beneficiaries. The method of
distribution to the Participant's Beneficiary must satisfy Code ss.401(a)(9).
(1) Death after RBD. If the Participant's death occurs after his/her RBD (or
earlier, if the Participant had commenced an irrevocable annuity pursuant to
Section 6.04), the Trustee must distribute the Participant's remaining benefit
to the Beneficiary at least as rapidly as under the method in effect for the
Participant, determined without regard to the MDIB requirements of Section
6.02(C)(3).
(2) Death prior to RBD. If the Participant's death occurs prior to his/her RBD
(and the Participant had not commenced an irrevocable annuity pursuant to
Section 6.04), the method of payment to the Beneficiary, subject to Section
6.04, must provide for completion of payment to the Beneficiary over a period
not exceeding: (a) 5 years after the date of the Participant's death; or (b) if
the Beneficiary is a designated Beneficiary, the designated Beneficiary's life
expectancy. A designated Beneficiary is a Beneficiary designated by the
Participant or determined under Section 8.02. The Plan Administrator may not
direct payment of the Participant's Vested Account Balance over a period
described in clause (b) unless the Trustee will commence payment to the
designated Beneficiary no later than the December 31 following the close of the
calendar year in which the Participant's death occurred or, if later, and the
designated Beneficiary is the Participant's surviving spouse, December 31 of the
calendar year in which the Participant would have attained age 70 1/2.
If the Trustee will make distribution in accordance with clause (b) of this
Section 6.02(D)(2), the minimum distribution for a distribution calendar year
equals the Participant's Vested Account Balance as of the latest valuation date
preceding the beginning of the distribution calendar year divided by the
designated Beneficiary's life expectancy. The Plan Administrator must use the
unisex life expectancy multiples under Treas. Reg. ss.1.72-9 for purposes of
applying this Section 6.02(D).
(3) Recalculation. The Plan Administrator, only upon the Participant's election
(under Section 6.02(C)(2)) or the Participant's surviving spouse designated
Beneficiary's election, will recalculate the life expectancy of the
Participant's surviving spouse not more frequently than annually. However, the
Plan Administrator may not recalculate the life expectancy of a nonspouse
designated Beneficiary after the Trustee commences payment to the designated
Beneficiary. The Plan Administrator will apply this Section 6.02(D) by treating
any amount paid to the Participant's child, which becomes payable to the
Participant's surviving spouse upon the child's attaining the age of majority,
as paid to the Participant's surviving spouse. A surviving spouse designated
Beneficiary must elect recalculation under this ss.6.02(D)(3) in writing and on
a form the Plan Administrator prescribes not later than the last day of the
spouse's first distribution year.
(4) Beneficiary election. If the Participant under Section 6.01(B) had not
elected the payment method or payment term, the Participant's Beneficiary must
elect the method of distribution no later than the date specified above upon
which the Trustee must commence distribution to the Beneficiary. If the
Beneficiary fails to elect timely a distribution method, the Plan Administrator
must commence distribution within the time required for a Participant who dies
without a designated Beneficiary.
(E) Model Amendment. The employer in Appendix B to its Adoption Agreement may
elect to apply the following IRS Model Amendment:
With respect to distributions under the Plan made on or after the effective date
the Employer specifies in Appendix B to its Adoption Agreement, for calendar
years beginning on or after January 1, 2001, the Plan will apply the minimum
distribution requirements of section 401(a)(9) of the Internal Revenue Code in
accordance with the regulations under section 401(a)(9) that were proposed on
January 17, 2001, (the "2001 Proposed Regulations"), notwithstanding any
provision of the Plan to the contrary. If the total amount of required minimum
distributions made to a Participant for 2001 prior to the Appendix B effective
date are equal to or greater than the amount of required minimum distributions
determined under the 2001 Proposed Regulations, then no additional distributions
are required for such Participant for 2001 on or after such date. If the total
amount of required minimum distributions made to a Participant for 2001 prior to
the Appendix B effective date are less than the amount determined under the 2001
Proposed Regulations, then the amount of required minimum distributions for 2001
on or after such date will be determined so that the total amount of required
minimum distributions for 2001 is the amount determined under the 2001 Proposed
Regulations. This amendment shall continue in effect until the last calendar
year beginning before the effective date of final regulations under section
401(a)(9) or such other date as may be published by the Internal Revenue
Service.
6.03 METHOD OF DISTRIBUTION. Subject to any contrary requirements imposed by
Sections 6.01 (including 6.01(C) regarding in-service distributions), 6.02 or
6.04, a Participant or a Beneficiary may elect distribution under one, or any
combination, of the following methods: (a) by payment in a lump sum; or (b) by
payment in monthly, quarterly or annual installments over a fixed reasonable
period of time, not exceeding the life expectancy of the Participant, or the
joint life and last survivor expectancy of the Participant and his/her
designated Beneficiary. The Employer may elect in its Adoption Agreement to
modify the methods of payment available under this Section 6.03. If the
Employer's Plan is a restated Plan, the Employer in its Adoption Agreement and
in accordance with Treas. Reg. ss.1.411(d)-4, may elect to eliminate from the
prior Plan certain Protected Benefits. If the Employer elects or is required to
provide an annuity, the annuity must: (1) be a Nontransferable Annuity; and (2)
otherwise comply with the Plan terms.
The distribution options permitted under this Section 6.03 are available only if
the Participant's Vested Account Balance, as determined under Section
6.01(A)(6), exceeds $5,000. To facilitate installment payments under this
Article VI, the Plan Administrator under Section 9.08(B) may direct the Trustee
to segregate all or any part of the Participant's Account Balance in a
segregated investment Account. Under an installment distribution, the
Participant or the Beneficiary, at any time, may elect to accelerate the payment
of all, or any portion, of the Participant's unpaid Vested Account Balance.
Pending final accounting for a valuation date, the Plan Administrator may make a
partial distribution to a Participant who has incurred a Separation from Service
or to a Beneficiary.
6.04 ANNUITY DISTRIBUTIONS TO PARTICIPANTS AND TO SURVIVING SPOUSES.
(A) Qualified Joint and Survivor Annuity (QJSA). The Plan Administrator must
direct the Trustee to distribute a married or unmarried Participant's Vested
Account Balance in the form of a QJSA, unless the Participant, and spouse if the
Participant is married, waive the QJSA in accordance with Section 6.05. If, as
of the annuity starting date, the Participant is married (even if the
Participant has not been married throughout the one year period ending on the
annuity starting date), a QJSA is an immediate annuity which is purchasable with
the Participant's Vested Account Balance and which provides a life annuity for
the Participant and a survivor annuity payable for the remaining life of the
Participant's surviving spouse equal to 50% of the amount of the annuity payable
during the life of the Participant. If, as of the annuity starting date, the
Participant is not married, a QJSA is an immediate life annuity for the
Participant which is purchasable with the Participant's Vested Account Balance.
A life annuity means an annuity payable in equal installments for the life of
the Participant that terminates upon the Participant's death.
(B) Qualified Preretirement Survivor Annuity (QPSA). If a married Participant
dies prior to his/her annuity starting date, the Plan Administrator will direct
the Trustee to distribute a portion of the Participant's Vested Account Balance
to the Participant's surviving spouse in the form of a QPSA, unless: (1) the
Participant has a valid waiver election (as described in Section 6.06) in
effect; or (2) the Participant and his/her spouse were not married throughout
the one year period ending on the date of the Participant's death. The Employer
in an Addendum to its Adoption Agreement may elect not to apply the one year of
marriage requirement in clause (2). A QPSA is an annuity which is purchasable
with 50% of the Participant's Vested Account Balance (determined as of the date
of the Participant's death) and which is payable for the life of the
Participant's surviving spouse. The value of the QPSA is attributable to
Employer contributions and to Participant contributions in the same proportion
as the Participant's Vested Account Balance is attributable to those
contributions. The portion of the Participant's Vested Account Balance not
payable as a QPSA is payable to the Participant's Beneficiary, in accordance
with the remaining provisions of this Article VI.
(C) Surviving Spouse Elections. If the Participant's Vested Account Balance
which the Trustee would apply to purchase the QPSA exceeds $5,000, the
Participant's surviving spouse may elect to have the Trustee commence payment of
the QPSA at any time following the date of the Participant's death, but not
later than the mandatory distribution periods described in Section 6.02, and may
elect any of the forms of payment described in Section 6.03, in lieu of the
QPSA. In the absence of an election by the surviving spouse, the Plan
Administrator must direct the Trustee to distribute the QPSA on the earliest
administratively practicable date following the close of the Plan Year in which
the latest of the following events occurs: (1) the Participant's death; (2) the
date the Plan Administrator receives notification of or otherwise confirms the
Participant's death; (3) the date the Participant would have attained Normal
Retirement Age; or (4) the date the Participant would have attained age 62.
(D) Effect of Waiver. If the Participant has in effect a valid waiver election
regarding the QJSA or the QPSA, the Plan Administrator must direct the Trustee
to distribute the Participant's Vested Account Balance in accordance with
Sections 6.01, 6.02 and 6.03.
(E) Loan Offset. The Plan Administrator will reduce the Participant's Vested
Account Balance by any security interest (pursuant to any offset rights
authorized by Section 10.03(E)) held by the Plan by reason of a Participant
loan, to determine the value of the Participant's Vested Account Balance
distributable in the form of a QJSA or QPSA, provided the loan satisfied the
spousal consent requirement described in Section 10.03(E).
(F) Effect of QDRO. For purposes of applying this Article VI, a former spouse
(in lieu of the Participant's current spouse) is the Participant's spouse or
surviving spouse to the extent provided under a QDRO described in Section 6.07.
The provisions of this Section 6.04, and of Sections 6.05 and 6.06, apply
separately to the portion of the Participant's Vested Account Balance subject to
a QDRO and to the portion of the Participant's Vested Account Balance not
subject to the QDRO.
(G) Vested Account Balance Not Exceeding $5,000. The Trustee must distribute in
a lump sum, a Participant's Vested Account Balance which the Trustee otherwise
under Section 6.04 would apply to provide a QJSA or QPSA benefit, where the
Participant's Vested Account Balance determined under Section 6.01(A)(6) does
not exceed $5,000.
(H) Profit Sharing Plan Exception. If this Plan is a profit sharing plan, the
Employer in its Adoption Agreement must elect the extent to which the preceding
provisions of Section 6.04 apply. The Employer may elect to exempt from the
provisions of Section 6.04, all Participants ("Exempt Participants") except the
following Participants to whom Section 6.04 must be applied: (1) a Participant
as respects whom the Plan is a direct or indirect transferee from a plan subject
to the Code ss.417 requirements and the Plan received the transfer after
December 31, 1984, unless the transfer is an elective transfer described in
Section 13.07; (2) a Participant who elects a life annuity distribution (if
Section 13.02 of the Plan requires the Plan to provide a life annuity
distribution option); and (3) a Participant whose benefits under a defined
benefit plan maintained by the Employer are offset by benefits provided under
this Plan. If the Employer elects to apply this Section 6.04 to all
Participants, the preceding provisions of this Section 6.04 apply to all
Participants without regard to the limitations of this Section 6.04(H). Sections
6.05 and 6.06 only apply to Participants to whom the provisions of this Section
6.04 apply.
6.05 WAIVER ELECTION - QJSA. At least 30 days and not more than 90 days before
the Participant's annuity starting date, the Plan Administrator must provide the
Participant a written explanation of the terms and conditions of the QJSA, the
Participant's right to make, and the effect of, an election to waive the QJSA
benefit, the rights of the Participant's spouse regarding the waiver election
and the Participant's right to make, and the effect of, a revocation of a waiver
election ("QJSA notice"). The Plan does not limit the number of times the
Participant may revoke a waiver of the QJSA or make a new waiver during the
election period. The Participant (and his/her spouse, if the Participant is
married), may revoke an election to receive a particular form of benefit at any
time until the annuity starting date.
A married Participant's QJSA waiver election is not valid unless: (a) the
Participant's spouse (to whom the survivor annuity is payable under the QJSA),
after the Participant has received the QJSA notice, has consented in writing to
the waiver election, the spouse's consent acknowledges the effect of the
election, and a notary public or the Plan Administrator (or his/her
representative) witnesses the spouse's consent; (b) the spouse consents to the
alternative form of payment designated by the Participant or to any change in
that designated form of payment; and (c) unless the spouse is the Participant's
sole primary Beneficiary, the spouse consents to the Participant's Beneficiary
designation or to any change in the Participant's Beneficiary designation. The
spouse's consent to a waiver of the QJSA is irrevocable, unless the Participant
revokes the waiver election. The spouse may execute a blanket consent to the
Participant's future payment form election or Beneficiary designation, if the
spouse acknowledges the right to limit his/her consent to a specific designation
but, in writing, waives that right.
The Plan Administrator will accept as valid a waiver election which does not
satisfy the spousal consent requirements if the Plan Administrator establishes
the Participant does not have a spouse, the Plan Administrator is not able to
locate the Participant's spouse, the Participant is legally separated or has
been abandoned (within the meaning of applicable state law) and the Participant
has a court order to that effect, or other circumstances exist under which the
Secretary of the Treasury will excuse the spousal consent requirement. If the
Participant's spouse is legally incompetent to give consent, the spouse's legal
guardian (even if the guardian is the Participant) may give consent.
6.06 WAIVER ELECTION - QPSA. The Plan Administrator must provide a written
explanation of the QPSA to each married Participant ("QPSA notice"), within the
following period which ends last: (1) the period beginning on the first day of
the Plan Year in which the Participant attains age 32 and ending on the last day
of the Plan Year in which the Participant attains age 34; (2) a reasonable
period after an Employee becomes a Participant; (3) a reasonable period after
Section 6.04 of the Plan becomes applicable to the Participant; or (4) a
reasonable period after the Plan no longer satisfies the requirements for a
fully subsidized benefit. A "reasonable period" described in clauses (2), (3)
and (4) is the period beginning one year before and ending one year after the
applicable event. If the Participant separates from Service before attaining age
35, clauses (1), (2), (3) and (4) do not apply and the Plan Administrator must
provide the QPSA notice within the period beginning one year before and ending
one year after the Separation from Service. The QPSA notice must describe, in a
manner consistent with Treasury regulations, the terms and conditions of the
QPSA and of the waiver of the QPSA, comparable to the QJSA notice required under
Section 6.05. The Plan does not limit the number of times the Participant may
revoke a waiver of the QPSA or make a new waiver during the election period. The
election period for waiver of the QPSA ends on the date of the Participant's
death.
A Participant's QPSA waiver election is not valid unless: (a) the Participant
makes the waiver election after the Participant has received the QPSA notice and
no earlier than the first day of the Plan Year in which he/she attains age 35;
and (b) the Participant's spouse (to whom the QPSA is payable) satisfies or is
excused from the consent requirements as described in Section 6.05, except the
spouse need not consent to the form of benefit payable to the designated
Beneficiary. The spouse's consent to the waiver of the QPSA is irrevocable,
unless the Participant revokes the waiver election. The spouse also may execute
a blanket consent as described in Section 6.05. Irrespective of the time of
election requirement described in clause (a), if the Participant separates from
Service prior to the first day of the Plan Year in which he/she attains age 35,
the Plan Administrator will accept a waiver election as respects the
Participant's Account Balance attributable to his/her Service prior to his/her
Separation from Service.
Furthermore, if a Participant who has not separated from Service makes a valid
waiver election, except for the timing requirement of clause (a), the Plan
Administrator will accept that election as valid, but only until the first day
of the Plan Year in which the Participant attains age 35.
6.07 DISTRIBUTIONS UNDER QUALIFIED DOMESTIC RELATIONS ORDERS (QDRO).
Notwithstanding any other provision of this Plan, the Trustee, in accordance
with the direction of the Plan Administrator, must comply with the provisions of
a QDRO, as defined in Code ss.414(p), which is issued with respect to the Plan.
This Plan specifically permits distribution to an alternate payee under a QDRO
at any time, irrespective of whether the Participant has attained his/her
earliest retirement age (as defined under Code ss.414(p)) under the Plan. A
distribution to an alternate payee prior to the Participant's attainment of
earliest retirement age is available only if: (1) the QDRO specifies
distribution at that time or permits an agreement between the Plan and the
alternate payee to authorize an earlier distribution; and (2) if the present
value of the alternate payee's benefits under the Plan exceeds $5,000, and the
QDRO requires, the alternate payee consents to any distribution occurring prior
to the Participant's attainment of earliest retirement age. Nothing in this
Section 6.07 gives a Participant a right to receive distribution at a time the
Plan otherwise does not permit nor does Section 6.07 authorize the alternate
payee to receive a form of payment the Plan does not permit.
The Plan Administrator must establish reasonable procedures to determine the
qualified status of a domestic relations order. Upon receiving a domestic
relations order, the Plan Administrator promptly will notify the Participant and
any alternate payee named in the order, in writing, of the receipt of the order
and the Plan's procedures for determining the qualified status of the order.
Within a reasonable period of time after receiving the domestic relations order,
the Plan Administrator must determine the qualified status of the order and must
notify the Participant and each alternate payee, in writing, of the Plan
Administrator's determination. The Plan Administrator must provide notice under
this paragraph by mailing to the individual's address specified in the domestic
relations order, or in a manner consistent with DOL regulations.
If any portion of the Participant's Vested Account Balance is payable under the
domestic relations order during the period the Plan Administrator is making its
determination of the qualified status of the domestic relations order, the Plan
Administrator must maintain a separate accounting of the amounts payable. If the
Plan Administrator determines the order is a QDRO within 18 months of the date
amounts first are payable following receipt of the domestic relations order, the
Plan Administrator will direct the Trustee to distribute the payable amounts in
accordance with the QDRO. If the Plan Administrator does not make its
determination of the qualified status of the order within the 18-month
determination period, the Plan Administrator will direct the Trustee to
distribute the payable amounts in the manner the Plan would distribute if the
order did not exist and will apply the order prospectively if the Plan
Administrator later determines the order is a QDRO.
To the extent it is not inconsistent with the provisions of the QDRO, the Plan
Administrator under Section 9.08(B) may direct the Trustee to segregate the QDRO
amount in a segregated investment account. The Trustee will make any payments or
distributions required under this Section 6.07 by separate benefit checks or
other separate distribution to the alternate payee(s).
6.08 DEFAULTED LOAN - TIMING OF OFFSET. If a Participant or a Beneficiary
defaults on a Plan loan, the Plan Administrator will determine the timing of the
reduction (offset) of the Participant's Vested Account Balance in accordance
with this Section 6.08 and the Plan Administrator's loan policy. If, under the
loan policy a loan default also is a distributable event under the Plan, the
Trustee, at the time of the loan default, will offset the Participant's Vested
Account Balance by the lesser of the amount in default (including accrued
interest) or the Plan's security interest in that Vested Account Balance. If the
loan is from a money purchase pension plan or from a target benefit plan and the
loan default is a distributable event under the loan policy, the Trustee will
offset the Participant's Account Balance in the manner described above, only if
the Participant has incurred a Separation from Service or has attained Normal
Retirement Age. If the loan is under a 401(k) arrangement, to the extent the
loan is attributable to the Participant's deferral contributions Account,
qualified matching contributions Account, qualified nonelective contributions
Account or safe harbor contributions Account, the Trustee will not offset the
Participant's Vested Account Balance unless the Participant has incurred a
Separation from Service or unless the Participant has attained age 59 1/2.
6.09 HARDSHIP DISTRIBUTION. For purposes of this Plan, unless the Employer in
its Adoption Agreement Section 6.01 elects otherwise, a hardship distribution is
a distribution on account of one or more of the following immediate and heavy
financial needs: (1) expenses for medical care described in Code ss.213(d)
incurred by the Participant, by the Participant's spouse, or by any of the
Participant's dependents, or necessary to obtain such medical care; (2) costs
directly related to the purchase (excluding mortgage payments) of a principal
residence of the Participant; (3) payment of post-secondary education tuition
and related educational fees (including room and board), for the next 12-month
period, for the Participant, for the Participant's spouse, or for any of the
Participant's dependents (as defined in Code ss.152); (4) payments necessary to
prevent the eviction of the Participant from his/her principal residence or the
foreclosure on the mortgage of the Participant's principal residence; or (5) any
need the Revenue Service prescribes in a revenue ruling, notice or other
document of general applicability which satisfies the safe harbor definition of
hardship under Treas. Reg. ss.1.401(k)-1(d)(2)(iv)(A). See Section 14.11(A) if a
hardship distribution is from a Participant's elective deferral Account in a
401(k) arrangement. The Employer in its Adoption Agreement Section 6.01 may
elect to apply Section 14.11(A) to all Plan hardship distributions. If the Plan
permits a hardship distribution from more than one Account type, the Plan
Administrator may determine any ordering of a Participant's hardship
distribution from the hardship distribution eligible Accounts.
6.10 DIRECT ROLLOVER OF ELIGIBLE ROLLOVER DISTRIBUTIONS.
(A) Participant Election. A Participant (including for this purpose, a former
Employee) may elect, at the time and in the manner prescribed by the Plan
Administrator, to have any portion of his/her eligible rollover distribution
from the Plan paid directly to an eligible retirement plan specified by the
Participant in a direct rollover election. For purposes of this Section 6.10, a
Participant includes as to their respective interests, a Participant's surviving
spouse and the Participant's spouse or former spouse who is an alternate payee
under a QDRO.
(B) Rollover and Withholding Notice. At least 30 days and not more than 90 days
prior to the Trustee's distribution of an eligible rollover distribution, the
Plan Administrator must provide a written notice (including a summary notice as
permitted under applicable Treasury regulations) explaining to the distributee
the rollover option, the applicability of mandatory 20% federal withholding to
any amount not directly rolled over, and the recipient's right to roll over
within 60 days after the date of receipt of the distribution ("rollover
notice"). If applicable, the rollover notice also must explain the availability
of income averaging and the exclusion of net unrealized appreciation. A
recipient of an eligible rollover distribution (whether he/she elects a direct
rollover or elects to receive the distribution), also may elect to receive
distribution at any administratively practicable time which is earlier than 30
days (but not less than 7 days if Section 6.04 applies) following receipt of the
rollover notice.
(C) Default rollover. The Plan Administrator, in the case of a Participant who
does not respond timely to the notice described in Section 6.10(B), may make a
direct rollover of the Participant's Account (as described in Revenue Ruling
2000-36 or in any successor guidance) in lieu of distributing the Participant's
Account.
(D) Definitions. The following definitions apply to this Section 6.10:
(1) 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 an eligible rollover distribution does not include: (a) any
distribution which is one of a series of substantially equal periodic payments
(not less frequently than annually) 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; (b) any Code ss.401(a)(9) required minimum
distribution; (c) the portion of any distribution which is not includible in
gross income (determined without regard to the exclusion of net unrealized
appreciation with respect to employer securities); (d) any hardship distribution
made after December 31, 1998, from a Participant's deferral contributions
Account (except where the Participant also satisfies a non-hardship distribution
event described in Section 14.03(d)); and (e) any distribution which otherwise
would be an eligible rollover distribution, but where the total distributions to
the Participant during that calendar year are reasonably expected to be less
than $200.
(2) Eligible retirement plan. An eligible retirement plan is an individual
retirement account described in Code ss.408(a), an individual retirement annuity
described in Code ss.408(b), an annuity plan described in Code ss.403(a), or a
qualified trust described in Code ss.401(a), which accepts the Participant's or
alternate payee's eligible rollover distribution. However, in the case of an
eligible rollover distribution to the surviving spouse, an eligible retirement
plan is either an individual retirement account or individual retirement
annuity.
(3) Direct rollover. A direct rollover is a payment by the Plan to the eligible
retirement plan specified by the distributee.
6.11 TEFRA ELECTIONS. Notwithstanding the provisions of Sections 6.01, 6.02 and
6.03, if the Participant (or Beneficiary) signed a written distribution
designation prior to January 1, 1984, ("TEFRA election") the Plan Administrator
must direct the Trustee to distribute the Participant's Vested Account Balance
in accordance with that election, subject however, to the survivor annuity
requirements, if applicable, of Sections 6.04, 6.05 and 6.06. This Section 6.11
does not apply to a TEFRA election, and the Plan Administrator will not comply
with that election, if any of the following applies: (1) the elected method of
distribution would have disqualified the Plan under Code ss.401(a)(9) as in
effect on December 31, 1983; (2) the Participant did not have an Account Balance
as of December 31, 1983; (3) the election does not specify the timing and form
of the distribution and the death Beneficiaries (in order of priority); (4) the
substitution of a Beneficiary modifies the distribution payment period; or, (5)
the Participant (or Beneficiary) modifies or revokes the election. In the event
of a revocation, the Trustee must distribute, no later than December 31 of the
calendar year following the year of revocation, the amount which the Participant
would have received under Section 6.02 if the distribution designation had not
been in effect or, if the Beneficiary revokes the distribution designation, the
amount which the Beneficiary would have received under Section 6.02 if the
distribution designation had not been in effect. The Plan Administrator will
apply this Section 6.11 to rollovers and transfers in accordance with Part J of
the Code ss.401(a)(9) Treasury regulations.
ARTICLE VII
EMPLOYER ADMINISTRATIVE PROVISIONS
7.01 INFORMATION TO PLAN ADMINISTRATOR. The Employer must supply current
information to the Plan Administrator as to the name, date of birth, date of
employment, Compensation, leaves of absence, Years of Service and date of
Separation from Service of each Employee who is, or who will be eligible to
become, a Participant under the Plan, together with any other information which
the Plan Administrator considers necessary to administer properly the Plan. The
Employer's records as to the current information the Employer furnishes to the
Plan Administrator are conclusive as to all persons.
7.02 NO RESPONSIBILITY FOR OTHERS. Except as required under ERISA, the Employer
has no responsibility or obligation under the Plan to Employees, Participants or
Beneficiaries for any act (unless the Employer also serves in such capacities)
required of the Plan Administrator, the Trustee, the Custodian, or of any other
service provider to the Plan.
7.03 INDEMNITY OF CERTAIN FIDUCIARIES. The Employer will indemnify, defend and
hold harmless the Plan Administrator from and against any and all loss resulting
from liability to which the Plan Administrator may be subjected by reason of any
act or omission (except willful misconduct or gross negligence) in its official
capacities in the administration of this Trust or Plan or both, including
attorneys' fees and all other expenses reasonably incurred in the Plan
Administrator's defense, in case the Employer fails to provide such defense. The
indemnification provisions of this Section 7.03 do not relieve the Plan
Administrator from any liability the Plan Administrator may have under ERISA for
breach of a fiduciary duty. Furthermore, the Plan Administrator and the Employer
may execute a written agreement further delineating the indemnification
agreement of this Section 7.03, provided the agreement is consistent with and
does not violate ERISA. The indemnification provisions of this Section 7.03
extend to any Trustee, third party administrator, Custodian or other Plan
service provider solely to the extent provided by a written agreement executed
by such persons and the Employer.
7.04 EMPLOYER DIRECTION OF INVESTMENT. The Employer has the right to direct the
Trustee with respect to the investment and re-investment of assets comprising
the Trust Fund only if and to the extent the Trustee consents in writing to
permit such direction.
7.05 EVIDENCE. Anyone including the Employer, required to give data, statements
or other information relevant under the terms of the Plan ("evidence") may do so
by certificate, affidavit, document or other form which the person to act in
reliance may consider pertinent, reliable and genuine, and to have been signed,
made or presented by the proper party or parties. The Plan Administrator and the
Trustee are protected fully in acting and relying upon any evidence described
under the immediately preceding sentence.
7.06 PLAN CONTRIBUTIONS. The Employer is solely responsible to determine the
proper amount of any Employer contribution it makes to the Plan and for the
timely deposit to the Trust of the Employer's Plan contributions.
7.07 EMPLOYER ACTION. The Employer must take any action under the Plan in
accordance with applicable Plan provisions and with proper authority such that
the action is valid and under applicable law and is binding upon the Employer.
7.08 FIDUCIARIES NOT INSURERS. The Trustee, the Plan Administrator and the
Employer in no way guarantee the Trust Fund from loss or depreciation. The
Employer does not guarantee the payment of any money which may be or becomes due
to any person from the Trust Fund. The liability of the Employer, the Plan
Administrator and the Trustee to make any payment from the Trust Fund at any
time and all times is limited to the then available assets of the Trust.
7.09 PLAN TERMS BINDING. The Plan is binding upon the Employer, Trustee, Plan
Administrator, Custodian (and all other service providers to the Plan), upon
Participants, Beneficiaries and all other persons entitled to benefits, and upon
the successors and assigns of the foregoing persons.
7.10 WORD USAGE. Words used in the masculine also apply to the feminine where
applicable, and wherever the context of the Plan dictates, the plural includes
the singular and the singular includes the plural. Titles of Plan and Adoption
Agreement sections are for reference only.
7.11 STATE LAW. The law of the state of the Employer's principal place of
business will determine all questions arising with respect to the provisions of
the Plan, except to the extent superseded by ERISA or other federal law. The
Employer in an Addendum to its Adoption Agreement and subject to applicable law,
may elect to apply the law of another state.
7.12 PROTOTYPE PLAN STATUS. If the Plan fails initially to qualify or to
maintain qualification or if the Employer makes any amendment or modification to
a provision of the Plan (other than a proper completion of an elective provision
under the Adoption Agreement or the attachment of an Addendum authorized by the
Plan or by the Adoption Agreement), the Employer no longer may participate under
this Prototype Plan. The Employer also may not participate (or continue to
participate) in this Prototype Plan if the Trustee or Custodian does not have
the written consent of the Prototype Plan Sponsor required under Section 1.33 to
serve in the capacity of Trustee or Custodian. If the Employer is not entitled
to participate under this Prototype Plan, the Plan is an individually-designed
plan and the reliance procedures specified in the applicable Adoption Agreement
no longer apply.
7.13 EMPLOYMENT NOT GUARANTEED. Nothing contained in this Plan, or with respect
to the establishment of the Trust, or any modification or any amendment to the
Plan or Trust, or in the creation of any Account, or with respect to the payment
of any benefit, gives any Employee, Participant or any Beneficiary any right to
employment or to continued employment by the Employer, or any legal or equitable
right against the Employer, the Trustee, the Plan Administrator or any employee
or agent thereof, except as expressly provided by the Plan, the Trust, ERISA or
other applicable law.
ARTICLE VIII
PARTICIPANT ADMINISTRATIVE PROVISIONS
8.01 BENEFICIARY DESIGNATION. A Participant from time to time may designate, in
writing, any person(s) (including a trust or other entity), contingently or
successively, to whom the Trustee will pay the Participant's Vested Account
Balance (including any life insurance proceeds payable to the Participant's
Account) in the event of death. A Participant also may designate the form and
method of payment of his/her Account. The Plan Administrator will prescribe the
form for the Participant's written designation of Beneficiary and, upon the
Participant's filing the form with the Plan Administrator, the form effectively
revokes all designations filed prior to that date by the same Participant. A
divorce decree, or a decree of legal separation, revokes the Participant's
designation, if any, of his/her spouse as his/her Beneficiary under the Plan
unless: (1) the decree or a QDRO provides otherwise; or (2) the Employer
provides otherwise in an Addendum to its Adoption Agreement. The foregoing
revocation provision (if applicable) applies only with respect to a Participant
whose divorce or legal separation becomes effective on or following the date the
Employer executes this Plan, unless the Employer in its Adoption Agreement
specifies a different effective date.
(A) Coordination with Survivor Annuity Requirements. If Section 6.04 applies to
the Participant, this Section 8.01 does not impose any special spousal consent
requirements on the Participant's Beneficiary designation unless the Participant
waives the QJSA or QPSA benefit. If the Participant waives the QJSA or QPSA
benefit without spousal consent to the Participant's Beneficiary designation:
(1) any waiver of the QJSA or of the QPSA is not valid; and (2) if the
Participant dies prior to his/her annuity starting date, the Participant's
Beneficiary designation will apply only to the portion of the death benefit
which is not payable as a QPSA. Regarding clause (2), if the Participant's
surviving spouse is a primary Beneficiary under the Participant's Beneficiary
designation, the Trustee will satisfy the spouse's interest in the Participant's
death benefit first from the portion which is payable as a QPSA.
(B) Profit Sharing Plan Exception. If the Plan is a profit sharing plan, the
Beneficiary designation of a married Exempt Participant, as described in Section
6.04(H), is not valid unless the Participant's spouse consents (in a manner
described in Section 6.05) to the Beneficiary designation. The spousal consent
requirement in this Section 8.01(B) does not apply if the Participant's spouse
is the Participant's sole primary Beneficiary, or if the Exempt Participant and
his/her spouse are not married throughout the one-year period ending on the date
of the Participant's death.
(C) Incapacity of Beneficiary. If, in the opinion of the Plan Administrator, a
Beneficiary is not able to care for his/her affairs because of a mental
condition, physical condition or by reason of age, the Plan Administrator will
apply the provisions of Section 10.09.
8.02 NO BENEFICIARY DESIGNATION/DEATH OF BENEFICIARY. If a Participant fails to
name a Beneficiary in accordance with Section 8.01, or if the Beneficiary named
by a Participant predeceases the Participant, then the Trustee will pay the
Participant's Vested Account Balance in accordance with Section 6.03 in the
following order of priority (unless the Employer specifies a different order of
priority in an Addendum to its Adoption Agreement), to:
(a) The Participant's surviving spouse (without regard to the one-year
marriage rule of Sections 6.04(B) and 8.01(B); and if no surviving spouse
to
(b) The Participant's children (including adopted children), in equal
shares by right of representation (one share for each surviving child and
one share for each child who predeceases the Participant with living
descendents); and if none to
(c) The Participant's surviving parents, in equal shares; and if none to
(d) The Participant's estate.
If the Beneficiary survives the Participant, but dies prior to distribution of
the Participant's entire Vested Account Balance, the Trustee will pay the
remaining Vested Account Balance to the Beneficiary's estate unless: (1) the
Participant's Beneficiary designation provides otherwise; (2) the Beneficiary
has properly designated a beneficiary; or (3) the Employer provides otherwise in
an Addendum to its Adoption Agreement. A Beneficiary only may designate a
beneficiary for the Participant's Account Balance remaining at the Beneficiary's
death, if the Participant has not previously designated a successive contingent
beneficiary and the Beneficiary's designation otherwise complies with the Plan
terms. If the Plan is a profit sharing plan, and the Plan includes Exempt
Participants, the Employer may not specify a different order of priority in an
Addendum unless the Participant's surviving spouse will be the sole primary
Beneficiary in the different order of priority. The Plan Administrator will
direct the Trustee as to the method and to whom the Trustee will make payment
under this Section 8.02.
8.03 ASSIGNMENT OR ALIENATION. Except as provided in Code ss.414(p) relating to
QDROs and in Code ss.401(a)(13) relating to certain voluntary, revocable
assignments, judgments and settlements, neither a Participant nor a Beneficiary
may anticipate, assign or alienate (either at law or in equity) any benefit
provided under the Plan, and the Trustee will not recognize any such
anticipation, assignment or alienation. Furthermore, except as provided by Code
ss.401(a)(13) or other applicable law, a benefit under the Plan is not subject
to attachment, garnishment, levy, execution or other legal or equitable process.
8.04 INFORMATION AVAILABLE. Any Participant or Beneficiary may examine copies of
the Plan description, latest annual report, any bargaining agreement, this Plan
and Trust, and any contract or any other instrument which relates to the
establishment or administration of the Plan or Trust. The Plan Administrator
will maintain all of the items listed in this Section 8.04 in its office, or in
such other place or places as it may designate from time to time in order to
comply with the regulations issued under ERISA, for examination during
reasonable business hours. Upon the written request of a Participant or a
Beneficiary, the Plan Administrator must furnish the Participant or Beneficiary
with a copy of any item listed in this Section 8.04. The Plan Administrator may
make a reasonable copying charge to the requesting person.
8.05 CLAIMS PROCEDURE FOR DENIAL OF BENEFITS. A Participant or a Beneficiary may
file with the Plan Administrator a written claim for benefits, if the
Participant or the Beneficiary disputes the Plan Administrator's determination
regarding the Participant's or Beneficiary's Plan benefit. However, the Plan
will distribute only such Plan benefits to Participants or Beneficiaries as the
Plan Administrator in its discretion determines a Participant or Beneficiary is
entitled to. The Plan Administrator will maintain a separate written document as
part of (or which accompanies) the Plan's summary plan description explaining
the Plan's claims procedure. This Section 8.05 specifically incorporates the
written claims procedure as from time to time published by the Plan
Administrator as a part of the Plan. If the Plan Administrator pursuant to the
Plan's written claims procedure makes a final written determination denying a
Participant's or Beneficiary's benefit claim, the Participant or Beneficiary to
preserve the claim must file an action with respect to the denied claim not
later than 180 days following the date of the Plan Administrator's final
determination.
8.06 PARTICIPANT DIRECTION OF INVESTMENT. A Participant's direction of the
investment of his/her Account is subject to the provisions of this Section 8.06.
For purposes of this Section 8.06, a Participant shall also include a
Beneficiary where the Beneficiary has succeeded to the Participant's Account and
the Plan affords the Beneficiary the same self-direction or loan rights as a
Participant.
(A) Trustee Authorization and Procedures. A Participant has the right to direct
the Trustee with respect to the investment or re-investment of the assets
comprising the Participant's individual Account only if the Trustee consents in
writing to permit such direction. If the Trustee consents to Participant
direction of investment, the Trustee only will accept direction from each
Participant on a written direction of investment form the Plan Administrator
provides for this purpose. The Trustee, or with the Trustee's consent, the Plan
Administrator, may establish written procedures relating to Participant
direction of investment under this Section 8.06, including procedures or
conditions for electronic transfers or for changes in investments by
Participants. The Plan Administrator will maintain, or direct the Trustee to
maintain, an appropriate individual investment Account to the extent a
Participant's Account is subject to Participant self-direction.
(B) ERISA ss.404(c). No Plan fiduciary (including the Employer and Trustee) is
liable for any loss or for any breach resulting from a Participant's direction
of the investment of any part of his/her directed Account to the extent the
Participant's exercise of his/her right to direct the investment of his/her
Account satisfies the requirements of ERISA ss.404(c).
(C) Participant Loans. The Plan Administrator, to the extent provided in a
written loan policy adopted under Section 9.04, will treat a Plan loan made to a
Participant as a Participant direction of investment under this Section 8.06,
even if the Plan otherwise does not permit a Participant to direct his/her
Account investments. Where a loan is treated as a directed investment, the
borrowing Participant's Account alone shares in any interest paid on the loan,
and it alone bears any expense or loss it incurs in connection with the loan.
The Trustee may retain any principal or interest paid on the borrowing
Participant's loan in a segregated Account (as described in Section 9.08(B)) on
behalf of the borrowing Participant until the Trustee (or the Named Fiduciary,
in the case of a nondiscretionary Trustee) deems it appropriate to add the loan
payments to the Participant's Account under the Plan.
(D) Collectibles. If the Trustee consents to Participant direction of investment
of his/her Account, any post-December 31, 1981, investment by a Participant's
directed Account in collectibles (as defined by Code ss.408(m)) is a deemed
distribution to the Participant for Federal income tax purposes.
ARTICLE IX
PLAN ADMINISTRATOR
9.01 COMPENSATION AND EXPENSES. The Plan Administrator (and any individuals
serving as Plan Administrator) will serve without compensation for services as
such, but the Employer will pay all expenses of the Plan Administrator, except
to the extent the Trustee properly pays for such expenses, pursuant to Article
X.
9.02 RESIGNATION AND REMOVAL. If the Employer appoints one or more persons to
serve as Plan Administrator, such person(s) shall serve until they resign by
written notice to the Employer or until the Employer removes them by written
notice. In case of a vacancy in the position of Plan Administrator, the Employer
will exercise any and all of the powers, authority, duties and discretion
conferred upon the Plan Administrator pending the filling of the vacancy.
9.03 GENERAL POWERS AND DUTIES. The Plan Administrator has the following general
powers and duties which are in addition to those the Plan otherwise accords to
the Plan Administrator:
(a) To determine the rights of eligibility of an Employee to participate in
the Plan, all factual questions that arise in the course of administering
the Plan, the value of a Participant's Account Balance (based on the value
of the Trust assets, as determined by the Trustee) and the Vested
percentage of each Participant's Account Balance;
(b) To adopt rules of procedure and regulations necessary for the proper
and efficient administration of the Plan, provided the rules are not
inconsistent with the terms of the Plan, the Code, ERISA or other
applicable law;
(c) To construe and enforce the terms of the Plan and the rules and
regulations the Plan Administrator adopts, including interpretation of the
basic plan document, the Adoption Agreement and any document related to the
Plan's operation;
(d) To direct the Trustee regarding the crediting and distribution of the
Trust Fund and to direct the Trustee to conduct interim valuations under
Section 10.15;
(e) To review and render decisions regarding a claim for (or denial of a
claim for) a benefit under the Plan;
(f) To furnish the Employer with information which the Employer may require
for tax or other purposes;
(g) To engage the service of agents whom the Plan Administrator may deem
advisable to assist it with the performance of its duties;
(h) To engage the services of an Investment Manager or Managers (as defined
in ERISA ss.3(38)), each of whom will have full power and authority to
manage, acquire or dispose (or direct the Trustee with respect to
acquisition or disposition) of any Plan asset under such Manager's control;
(i) To make any other determinations and undertake any other actions the
Plan Administrator believes are necessary or appropriate for the
administration of the Plan; and
(j) To establish and maintain a funding standard account and to make
credits and charges to the account to the extent required by and in
accordance with the provisions of the Code.
The Plan Administrator must exercise all of its powers, duties and discretion
under the Plan in a uniform and nondiscriminatory manner. The Plan Administrator
shall have total and complete discretion to interpret and construe the Plan and
to determine all questions arising in the administration, interpretation and
application of the Plan. Any determination the Plan Administrator makes under
the Plan is final and binding upon any affected person.
9.04 PLAN LOANS. The Plan Administrator may, in its sole discretion, in
accordance with Section 10.03(E) establish, amend or terminate from time to
time, a nondiscriminatory policy which the Trustee must observe in making Plan
loans, if any, to Participants and to Beneficiaries. If the Plan Administrator
adopts a loan policy, the loan policy must be a written document and must
include: (1) the identity of the person or positions authorized to administer
the participant loan program; (2) the procedure for applying for a loan; (3) the
criteria for approving or denying a loan; (4) the limitations, if any, on the
types and amounts of loans available; (5) the procedure for determining a
reasonable rate of interest; (6) the types of collateral which may secure the
loan; and (7) the events constituting default and the steps the Plan will take
to preserve Plan assets in the event of default. A loan policy the Plan
Administrator adopts under this Section 9.04 is part of the Plan, except that
the Plan Administrator may amend or terminate the policy without regard to
Section 13.02.
9.05 FUNDING POLICY. The Plan Administrator will review, not less often than
annually, all pertinent Employee information and Plan data in order to establish
the funding policy of the Plan and to determine the appropriate methods of
carrying out the Plan's objectives. The Plan Administrator must communicate
periodically, as it deems appropriate, to the Trustee and to any Plan Investment
Manager the Plan's short-term and long-term financial needs for the coordination
of the Plan's investment policy with Plan financial requirements.
9.06 INDIVIDUAL ACCOUNTS. The Plan Administrator will maintain, or direct the
Trustee to maintain, a separate Account, or multiple Accounts, in the name of
each Participant to reflect the Participant's Account Balance under the Plan.
(A) Forfeitures. If a Participant re-enters the Plan subsequent to his/her
having a Forfeiture Break in Service, the Plan Administrator, or the Trustee,
must maintain a separate Account for the Participant's pre-Forfeiture Break in
Service Account Balance and a separate Account for his post-Forfeiture Break in
Service Account Balance, unless the Participant's entire Account Balance under
the Plan is 100% Vested.
If the Plan is subject to Participant direction of investment under Section
8.06, the Plan Administrator may maintain, or may direct the Trustee to
maintain, a separate temporary forfeiture Account in the name of the Plan to
account for Participant forfeitures which occur during the Plan Year. The
Trustee will direct the investment of any separate temporary forfeiture Account.
As of each Accounting Date, or interim valuation date, if applicable, the Plan
Administrator will allocate the net income, gain or loss from the temporary
forfeiture Account, if any, to the Accounts of the Participants in accordance
with the provisions of Section 9.08.
(B) Net Income, Gain or Loss. The Plan Administrator will make its allocations
of net income, gain or loss or request the Trustee to make its allocations, to
the Accounts of the Participants in accordance with the provisions of Section
9.08. The Plan Administrator may direct the Trustee under Section 9.08(B) to
maintain a temporary segregated investment Account in the name of a Participant
to prevent a distortion of income, gain or loss allocations. The Plan
Administrator must maintain records of its activities.
9.07 VALUE OF PARTICIPANT'S ACCOUNT BALANCE. If any or all Plan investment
accounts are pooled, each Participant's Account has an undivided interest in the
assets comprising the pooled account. In a pooled account, the value of each
Participant's Account Balance consists of that proportion of the net worth (at
fair market value) of the Trust Fund which the net credit balance in his/her
Account (exclusive of the cash value of incidental benefit insurance contracts)
bears to the total net credit balance in the Accounts (exclusive of the cash
value of the incidental benefit insurance contracts) of all Participants plus
the cash surrender value of any incidental benefit insurance contracts held by
the Trustee on the Participant's life. If any or all Plan investment accounts
are Participant directed, the directing Participant's Account Balance is
comprised of the assets held within the Account and the value of the Account is
the fair market value of such assets. For purposes of a distribution under the
Plan, the value of a Participant's Account Balance is its value as of the
valuation date immediately preceding the date of the distribution.
9.08 ALLOCATION AND DISTRIBUTION OF NET INCOME, GAIN OR LOSS. This Section 9.08
applies solely to the allocation of net income, gain or loss of the Trust Fund.
The Plan Administrator will allocate Employer contributions and Participant
forfeitures, if any, in accordance with Article III.
A "valuation date" under this Plan is each: (1) Accounting Date; (2) valuation
date the Employer elects in its Adoption Agreement Section 10.15; or (3)
valuation date the Plan Administrator establishes under Section 9.03. The
Employer in its Adoption Agreement Section 10.15 or the Plan Administrator may
elect alternative valuation dates for the different Account types which the Plan
Administrator maintains under the Plan. As of each valuation date, the Plan
Administrator must adjust Accounts to reflect net income, gain or loss since the
last valuation date. The valuation period is the period beginning on the day
after the last valuation date and ending on the current valuation date.
The Plan Administrator will allocate net income, gain or loss to the Participant
Accounts in accordance with the daily valuation method, balance forward method,
weighted average method, or other method the Employer elects under its Adoption
Agreement. The Employer in its Adoption Agreement may elect alternative methods
under which the Plan Administrator will allocate the net income, gain or loss to
the different Account types which the Plan Administrator maintains under the
Plan. If the Employer in its Adoption Agreement elects to apply a weighted
average allocation method, the Plan Administrator will treat a weighted portion
of the applicable contributions as if includible in the Participant's Account as
of the beginning of the valuation period. The weighted portion is a fraction,
the numerator of which is the number of months in the valuation period,
excluding each month in the valuation period which begins prior to the
contribution date of the applicable contributions, and the denominator of which
is the number of months in the valuation period. The Employer in its Adoption
Agreement may elect to substitute a weighting period other than months for
purposes of this weighted average allocation. If the Employer in its Adoption
Agreement elects to apply the daily valuation method, the Plan Administrator
will allocate the net income, gain or loss on each day of the Plan Year for
which Plan assets are valued on an established market and the Trustee is
conducting business. If the Employer in its Adoption Agreement elects to apply
the balance forward method, the Plan Administrator first will adjust the
Participant Accounts, as those Accounts stood at the beginning of the current
valuation period, by reducing the Accounts for any forfeitures arising under the
Plan, for amounts charged during the valuation period to the Accounts in
accordance with Section 9.10 (relating to distributions and to loan disbursement
payments) and Section 11.01 (relating to insurance premiums), and for the cash
value of incidental benefit insurance contracts. The Plan Administrator then,
subject to the restoration allocation requirements of the Plan, will allocate
the net income, gain or loss pro rata to the adjusted Participant Accounts. The
allocable net income, gain or loss is the net income (or net loss), including
the increase or decrease in the fair market value of assets, since the last
valuation date.
(A) Trust Fund (Pooled) Investment Accounts. A pooled investment account is an
Account which is not a segregated investment Account or an individual investment
Account.
(B) Segregated Investment Accounts. A segregated investment Account receives all
income it earns and bears all expense or loss it incurs. Pursuant to the Plan
Administrator's direction, the Trustee may establish for a Participant a
segregated investment Account to prevent a distortion of Plan income, gain or
loss allocations or for such other purposes as the Plan Administrator may
direct. The Trustee will invest the assets of a segregated investment Account
consistent with such purposes. As of each valuation date, the Plan Administrator
must reduce a segregated Account for any forfeiture arising under Section 5.09
after the Plan Administrator has made all other allocations, changes or
adjustments to the Account for the valuation period.
(C) Individual (Directed) Investment Accounts. An individual investment Account
is an Account which is subject to Participant or Beneficiary self-direction
under Section 8.06. An individual investment Account receives all income it
earns and bears all expense or loss it incurs. As of each valuation date, the
Plan Administrator must reduce an individual Account for any forfeiture arising
from Section 5.09 after the Plan Administrator has made all other allocations,
changes or adjustment to the Account for the valuation period.
(D) Code ss.415 Excess Amounts. An Excess Amount or suspense account described
in Part 2 of Article III does not share in the allocation of net income, gain or
loss described in this Section 9.08.
(E) Interest Adjustment. Any distribution (other than a distribution from a
segregated or individual Account) made to a Participant or Beneficiary more than
90 days after the most recent valuation date may include interest on the amount
of the distribution as an expense of the Trust Fund. The interest, if any,
accrues from such valuation date to the date of the distribution at the rate the
Employer specifies in its Adoption Agreement.
(F) Contributions Prior to Accrual. If the Employer in its Adoption Agreement
elects to impose one or more allocation conditions under Section 3.06 and the
Employer contributes to the Plan amounts which at the time of the contribution
have not accrued under the Plan terms ("preaccrual contributions"), the Trustee
will hold the preaccrual contributions in the Trust and will invest such
contributions as the Trustee determines, pending accrual and allocation to
Participant Accounts. When the Plan Administrator allocates to Participants who
have satisfied the Plan's allocation conditions the Employer's pre-accrual
contributions, the Plan Administrator also will allocate the net income, gain or
loss thereon pro rata in relation to each Participant's share of the pre-accrual
contribution.
9.09 INDIVIDUAL STATEMENT. As soon as practicable after the Accounting Date of
each Plan Year, but within the time prescribed by ERISA and the regulations
under ERISA, the Plan Administrator will deliver to each Participant (and to
each Beneficiary) a statement reflecting the condition of his/her Account
Balance in the Trust as of that date and such other information ERISA requires
be furnished the Participant or the Beneficiary. No Participant, except the Plan
Administrator, has the right to inspect the records reflecting the Account of
any other Participant.
9.10 ACCOUNT CHARGED. The Plan Administrator will charge a Participant's Account
for all distributions made from that Account to the Participant, to his/her
Beneficiary or to an alternate payee, including a disbursement payment for a
Participant loan. The Plan Administrator, except as prohibited by the Code or
ERISA, also will charge a Participant's Account for any reasonable
administrative expenses incurred by the Plan directly related to that Account.
9.11 LOST PARTICIPANTS. If the Plan Administrator is unable to locate any
Participant or Beneficiary whose Account becomes distributable under Article VI
or under Section 13.06 (a "lost Participant"), the Plan Administrator will apply
the provisions of this Section 9.11.
(A) Attempt to Locate. The Plan Administrator will use one or more of the
following methods to attempt to locate a lost Participant: (1) provide a
distribution notice to the lost Participant at his/her last known address by
certified or registered mail; (2) use of the IRS letter forwarding program under
Rev. Proc. 94-22; (3) use of a commercial locator service, the internet or other
general search method; or (4) use of the Social Security Administration search
program.
(B) Failure to Locate. If a lost Participant remains unlocated for 6 months
following the date of the Plan Administrator first attempts to locate the lost
Participant using one or more of the methods described in Section 9.11(A), the
Plan Administrator may forfeit the lost Participant's Account. If the Plan
Administrator will forfeit the lost Participant's Account, the forfeiture occurs
at the end of the above-described 6 month period and the Plan Administrator will
allocate the forfeiture in accordance with Section 3.05. If a lost Participant
whose Account was forfeited thereafter at any time but before the Plan has been
terminated makes a claim for his/her forfeited Account, the Plan Administrator
will restore the forfeited Account to the same dollar amount as the amount
forfeited, unadjusted for net income, gains or losses occurring subsequent to
the forfeiture. The Plan Administrator will make the restoration in the Plan
Year in which the lost Participant makes the claim, first from the amount, if
any, of Participant forfeitures the Plan Administrator otherwise would allocate
for the Plan Year, then from the amount, if any, of Trust net income or gain for
the Plan Year and last from the amount or additional amount the Employer
contributes to the Plan for the Plan Year. The Plan Administrator will
distribute the restored Account to the lost Participant not later than 60 days
after the close of the Plan Year in which the Plan Administrator restores the
forfeited Account. The Plan Administrator under this Section 9.11(B) will
forfeit the entire Account of the lost Participant, including deferral
contributions and Participant contributions.
(C) Nonexclusivity and Uniformity. The provisions of Section 9.11 are intended
to provide permissible but not exclusive means for the Plan Administrator to
administer the Accounts of lost Participants. The Plan Administrator may utilize
any other reasonable method to locate lost Participants and to administer the
Accounts of lost Participants, including the default rollover under Section
6.10(C) and such other methods as the Revenue Service or the U.S. Department of
Labor ("DOL") may in the future specify. The Plan Administrator will apply
Section 9.11 in a reasonable, uniform and nondiscriminatory manner, but may in
determining a specific course of action as to a particular Account, reasonably
take into account differing circumstances such as the amount of a lost
Participant's Account, the expense in attempting to locate a lost Participant,
the Plan Administrator's ability to establish and the expense of establishing a
rollover IRA, and other factors. The Plan Administrator may charge to the
Account of a lost Participant the reasonable expenses incurred under this
Section 9.11 and which are associated with the lost Participant's Account.
9.12 PLAN CORRECTION. The Plan Administrator in conjunction with the Employer
may undertake such correction of Plan errors as the Plan Administrator deems
necessary, including correction to preserve tax qualification of the Plan under
Code ss.401(a) or to correct a fiduciary breach under ERISA. Without limiting
the Plan Administrator's authority under the prior sentence, the Plan
Administrator, as it determines to be reasonable and appropriate, may undertake
correction of Plan document, operational, demographic and employer eligibility
failures under a method described in the Plan or under the Employee Plans
Compliance Resolution System ("EPCRS") or any successor program to EPCRS. The
Plan Administrator, as it determines to be reasonable and appropriate, also may
undertake or assist the appropriate fiduciary or plan official in undertaking
correction of a fiduciary breach, including correction under the Voluntary
Fiduciary Correction Program ("VFC") or any successor program to VFC. If the
Plan includes a 401(k) arrangement, the Plan Administrator to correct an
operational error may require the Trustee to distribute from the Plan elective
deferrals or vested matching contributions, including earnings, where such
amounts result from an operational error other than a failure of Code ss.415,
Code ss.402(g), a failure of the ADP or ACP tests, or a failure of the multiple
use limitation.
9.13 NO RESPONSIBILITY FOR OTHERS. Except as required under ERISA, the Plan
Administrator has no responsibility or obligation under the Plan to Participants
or Beneficiaries for any act (unless the Plan Administrator also serves in such
capacities) required of the Employer, the Trustee, the Custodian or of any other
service provider to the Plan. The Plan Administrator is not responsible to
collect any required plan contribution or to determine the correctness or
deductibility or any Employer contribution. The Plan Administrator in
administering the Plan is entitled to, but is not required to rely upon,
information which a Participant, Beneficiary, Trustee, Custodian, the Employer,
a Plan service provider or representatives thereof provide to the Plan
Administrator.
9.14 NOTICE, DESIGNATION, ELECTION, CONSENT AND WAIVER. All notices under the
Plan and all Participant or Beneficiary designations, elections, consents or
waivers must be in writing and made in a form the Plan Administrator specifies
or otherwise approves. To the extent permitted by Treasury regulations or other
applicable guidance, any Plan notice, election, consent or waiver may be
transmitted electronically. Any person entitled to notice under the Plan may
waive the notice or shorten the notice period except as otherwise required by
the Code or ERISA.
ARTICLE X
TRUSTEE AND CUSTODIAN, POWERS AND DUTIES
10.01 ACCEPTANCE. The Trustee accepts the Trust created under the Plan and
agrees to perform the obligations imposed. The Trustee must provide bond for the
faithful performance of its duties under the Trust to the extent required by
ERISA.
10.02 RECEIPT OF CONTRIBUTIONS. The Trustee is accountable to the Employer for
the Plan contributions made by the Employer, but the Trustee does not have any
duty to ensure that the contributions received comply with the provisions of the
Plan. The Trustee is not obliged to collect any contributions from the Employer,
nor is the Trustee obliged to ensure that funds deposited with it are deposited
according to the provisions of the Plan.
10.03 INVESTMENT POWERS.
(A) Discretionary Trustee Designation. If the Employer, in its Adoption
Agreement, designates the Trustee to administer the Trust as a
discretionary Trustee, then the Trustee has full discretion and authority
with regard to the investment of the Trust Fund, except with respect to a
Plan asset under the control or the direction of a properly appointed
Investment Manager or with respect to a Plan asset properly subject to
Employer, or to Participant direction of investment. The Trustee must
coordinate its investment policy with Plan financial needs as communicated
to it by the Plan Administrator. The Trustee is authorized and empowered,
but not by way of limitation, with the following powers, rights and duties:
(a) To invest consistent with and subject to applicable law any part
or all of the Trust Fund in any common or preferred stocks, open-end
or closed-end mutual funds (including proprietary funds), put and call
options traded on a national exchange, United States retirement plan
bonds, corporate bonds, debentures, convertible debentures, commercial
paper, U.S. Treasury bills, U.S. Treasury notes and other direct or
indirect obligations of the United States Government or its agencies,
improved or unimproved real estate situated in the United States,
limited partnerships, insurance contracts of any type, mortgages,
notes or other property of any kind, real or personal, to buy or sell
options on common stock on a nationally recognized exchange with or
without holding the underlying common stock, to open and to maintain
margin accounts, to engage in short sales, to buy and sell
commodities, commodity options and contracts for the future delivery
of commodities, and to make any other investments the Trustee deems
appropriate, as a prudent person would do under like circumstances
with due regard for the purposes of this Plan. Any investment made or
retained by the Trustee in good faith is proper but must be of a kind
constituting a diversification considered by law suitable for trust
investments.
(b) To retain in cash so much of the Trust Fund as it may deem
advisable to satisfy liquidity needs of the Plan and to deposit any
cash held in the Trust Fund in a bank account at reasonable interest.
(c) To invest, if the Trustee is a bank or similar financial
institution supervised by the United States or by a state, in any type
of deposit of the Trustee (or of a bank related to the Trustee within
the meaning of Code ss.414(b)) at a reasonable rate of interest or in
a common trust fund, as described in Code ss.584, or in a collective
investment fund, the provisions of which govern the investment of such
assets and which the Plan incorporates by this reference, which the
Trustee (or its affiliate, as defined in Code ss.1504) maintains
exclusively for the collective investment of money contributed by the
bank (or the affiliate) in its capacity as trustee and which conforms
to the rules of the Comptroller of the Currency.
(d) To manage, sell, contract to sell, grant options to purchase,
convey, exchange, transfer, abandon, improve, repair, insure, lease
for any term even though commencing in the future or extending beyond
the term of the Trust, and otherwise deal with all property, real or
personal, in such manner, for such considerations and on such terms
and conditions as the Trustee decides.
(e) To credit and distribute the Trust Fund as directed by the Plan
Administrator. The Trustee is not obliged to inquire as to whether any
payee or distributee is entitled to any payment or whether the
distribution is proper or within the terms of the Plan, or as to the
manner of making any payment or distribution. The Trustee is
accountable only to the Plan Administrator for any payment or
distribution made by it in good faith on the order or direction of the
Plan Administrator.
(f) To borrow money, to assume indebtedness, extend mortgages and
encumber by mortgage or pledge.
(g) To compromise, contest, arbitrate or abandon claims and demands,
in the Trustee's discretion.
(h) To have with respect to the Trust all of the rights of an
individual owner, including the power to exercise any and all voting
rights associated with Trust assets, to give proxies, to participate
in any voting trusts, mergers, consolidations or liquidations, to
tender shares and to exercise or sell stock subscriptions or
conversion rights.
(i) To lease for oil, gas and other mineral purposes and to create
mineral severances by grant or reservation; to pool or unitize
interests in oil, gas and other minerals; and to enter into operating
agreements and to execute division and transfer orders.
(j) To hold any securities or other property in the name of the
Trustee or its nominee, with depositories or agent depositories or in
another form as it may deem best, with or without disclosing the trust
relationship.
(k) To perform any and all other acts in its judgment necessary or
appropriate for the proper and advantageous management, investment and
distribution of the Trust.
(l) To retain any funds or property subject to any dispute without
liability for the payment of interest, and to decline to make payment
or delivery of the funds or property until a court of competent
jurisdiction makes final adjudication.
(m) To file all information and tax returns required of the Trustee.
(n) To furnish to the Employer and to the Plan Administrator an annual
statement of account showing the condition of the Trust Fund and all
investments, receipts, disbursements and other transactions effected
by the Trustee during the Plan Year covered by the statement and also
stating the assets of the Trust held at the end of the Plan Year,
which accounts are conclusive on all persons, including the Employer
and the Plan Administrator, except as to any act or transaction
concerning which the Employer of the Plan Administrator files with the
Trustee written exceptions or objections within 90 days after the
receipt of the accounts or for which ERISA authorizes a longer period
within which to object.
(o) To begin, maintain or defend any litigation necessary in
connection with the administration of the Plan, except the Trustee is
not obliged nor required to do so unless indemnified to its
satisfaction.
(B) Nondiscretionary Trustee Designation/ Appointment of Custodian. If the
Employer, in its Adoption Agreement, designates the Trustee to administer
the Trust as a nondiscretionary Trustee, then the Trustee will not have any
discretion or authority with regard to the investment of the Trust Fund,
but must act solely as a directed trustee of the funds contributed to it. A
nondiscretionary Trustee, as directed trustee of the funds held by it under
the Plan, is authorized and empowered, by way of limitation, with the
following powers, rights and duties, each of which the nondiscretionary
Trustee exercises solely as directed trustee in accordance with the written
direction of the Named Fiduciary (except to the extent a Plan asset is
subject to the control and the management of a properly appointed
Investment Manager or subject to Employer or Participant direction of
investment):
(a) To invest any part or all of the Trust Fund in any common or
preferred stocks, open-end or closed-end mutual funds (including
proprietary funds), put and call options traded on a national
exchange, United States retirement plan bonds, corporate bonds,
debentures, convertible debentures, commercial paper, U.S. Treasury
bills, U.S. Treasury notes and other direct or indirect obligations of
the United States Government or its agencies, improved or unimproved
real estate situated in the United States, limited partnerships,
insurance contracts of any type, mortgages, notes or other property of
any kind, real or personal, to buy or sell options on common stock on
a nationally recognized options exchange with or without holding the
underlying common stock, to open and to maintain margin accounts, to
engage in short sales, to buy and sell commodities, commodity options
and contracts for the future delivery of commodities, and to make any
other investments the Named Fiduciary deems appropriate.
(b) To retain in cash so much of the Trust Fund as the Named Fiduciary
may direct in writing to satisfy liquidity needs of the Plan and to
deposit any cash held in the Trust Fund in a bank account at
reasonable interest.
(c) To invest, if the Trustee is a bank or similar financial
institution supervised by the United States or by a State, in any type
of deposit of the Trustee (or of a bank related to the Trustee within
the meaning of Code ss.414(b)) at a reasonable rate of interest or in
a common trust fund, as described in Code ss.584, or in a collective
investment fund, the provisions of which govern the investment of such
assets and which the Plan incorporates by this reference, which the
Trustee (or its affiliate, as defined in Code ss.1504) maintains
exclusively for the collective investment of money contributed by the
bank (or the affiliate) in its capacity as trustee and which conforms
to the rules of the Comptroller of the Currency.
(d) To sell, contract to sell, grant options to purchase, convey,
exchange, transfer, abandon, improve, repair, insure, lease for any
term even though commencing in the future or extending beyond the term
of the Trust, and otherwise deal with all property, real or personal,
in such manner, for such considerations and on such terms and
conditions as the Named Fiduciary directs in writing.
(e) To credit and distribute the Trust Fund as directed by the Plan
Administrator. The Trustee is not obliged to inquire as to whether any
payee or distributee is entitled to any payment or whether the
distribution is proper or within the terms of the Plan, or as to the
manner of making any payment or distribution. The Trustee is
accountable only to the Plan Administrator for any payment or
distribution made by it in good faith on the order or the direction of
the Plan Administrator.
(f) To borrow money, to assume indebtedness, extend mortgages and
encumber by mortgage or pledge in accordance with and at the written
direction of the Named Fiduciary.
(g) To have with respect to the Trust all of the rights of an
individual owner, including the power to exercise any and all voting
rights associated with Trust assets, to give proxies, to participate
in any voting trusts, mergers, consolidations or liquidations, to
tender shares and to exercise or sell stock subscriptions or
conversion rights, provided the exercise of any such powers is in
accordance with and at the written direction of the Named Fiduciary.
(h) To lease for oil, gas and other mineral purposes and to create
mineral severances by grant or reservation; to pool or unitize
interests in oil, gas and other minerals; and to enter into operating
agreements and to execute division and transfer orders, provided the
exercise of any such powers is in accordance with and at the written
direction of the Named Fiduciary.
(i) To hold any securities or other property in the name of the
nondiscretionary Trustee or its nominee, with depositories or agent
depositories or in another form as the Named Fiduciary may direct in
writing, with or without disclosing the custodial relationship.
(j) To retain any funds or property subject to any dispute without
liability for the payment of interest, and to decline to make payment
or delivery of the funds or property until a court of competent
jurisdiction makes final adjudication.
(k) To file all information and tax returns required of the Trustee.
(l) To furnish to the Named Fiduciary, the Employer and the Plan
Administrator an annual statement of account showing the condition of
the Trust Fund and all investments, receipts, disbursements and other
transactions effected by the nondiscretionary Trustee during the Plan
Year covered by the statement and also stating the assets of the Trust
held at the end of the Plan Year, which accounts are conclusive on all
persons, including the Named Fiduciary, the Employer and the Plan
Administrator, except as to any act or transaction concerning which
the Named Fiduciary, the Employer or the Plan Administrator files with
the nondiscretionary Trustee written exceptions or objections within
90 days after the receipt of the accounts or for which ERISA
authorizes a longer period within which to object.
(m) To begin, maintain or defend any litigation necessary in
connection with the administration of the Plan, except the Trustee is
not obliged nor required to do so unless indemnified to its
satisfaction.
Appointment of Custodian. The Employer may appoint a Custodian under the Plan,
the acceptance by the Custodian indicated on the execution page of the Adoption
Agreement. If the Employer appoints a Custodian, the Plan must have a
discretionary Trustee, as described in Section 10.03(A). A Custodian has the
same powers, rights and duties as a nondiscretionary Trustee, as described in
this Section 10.03(B). The Custodian accepts the terms of the Plan and Trust by
executing the Adoption Agreement. Any reference in the Plan to a Trustee also is
a reference to a Custodian where the context of the Plan dictates. A limitation
of the Trustee's liability by Plan provision also acts as a limitation of the
Custodian's liability. Any action taken by the Custodian at the discretionary
Trustee's direction satisfies any provision in the Plan referring to the
Trustee's taking that action.
Modification of Powers/Limited Responsibility. The Employer and the
nondiscretionary Trustee (or the Custodian), in writing, may limit the powers of
the Custodian or the nondiscretionary Trustee to any combination of powers
listed within this Section 10.03(B). If there is a Custodian or a
nondiscretionary Trustee under the Plan, then the Employer, in adopting this
Plan acknowledges the Custodian or the nondiscretionary Trustee does not have
any discretion with respect to the investment or the re-investment of the Trust
Fund and the Custodian or the nondiscretionary Trustee is acting solely as a
custodian or as a directed trustee with respect to the assets comprising the
Trust Fund.
(C) Limitation of Powers of Certain Custodians. If a Custodian is a bank which,
under its governing state law, does not possess trust powers, then Paragraphs
(a), (c) as it relates to common trust funds or collective investment funds,
(d), (f), (g) and (h) of Section 10.03(B), Section 10.17 and Article XI do not
apply to that bank and that bank only has the power and the authority to
exercise the remaining powers, rights and duties under Section 10.03(B).
(D) Named Fiduciary/Limitation of Liability of Nondiscretionary Trustee or
Custodian. The Named Fiduciary under the Plan has the sole responsibility for
the management and the control of the Trust Fund, except with respect to a Plan
asset under the control or the direction of a properly appointed Investment
Manager or with respect to a Plan asset properly subject to Participant or
Employer direction of investment. If the Employer appoints a discretionary
Trustee, the Named Fiduciary is the discretionary Trustee. If the Employer
appoints a Custodian, the Named Fiduciary is the discretionary Trustee. Under a
nondiscretionary Trustee designation, unless the Employer designates in writing
another person or persons to serve as Named Fiduciary, the Named Fiduciary under
the Plan is the president of a corporate Employer, the managing partner of a
partnership Employer, the managing member of a limited liability company
Employer or the sole proprietor, as appropriate. The Named Fiduciary will
exercise its management and control of the Trust Fund through its written
direction to the nondiscretionary Trustee or to the Custodian, whichever applies
to the Plan.
The nondiscretionary Trustee or the Custodian does not have any duty to review
or to make recommendations regarding investments made at the written direction
of the Named Fiduciary. The nondiscretionary Trustee or the Custodian must
retain any investment obtained at the written direction of the Named Fiduciary
until further directed in writing by the Named Fiduciary to dispose of such
investment. The nondiscretionary Trustee or the Custodian is not liable in any
manner or for any reason for making, retaining or disposing of any investment
pursuant to any written direction of the Named Fiduciary. The Employer will
indemnify, defend and hold the nondiscretionary Trustee or the Custodian
harmless from any damages, costs or expenses, including reasonable attorneys'
fees, which the nondiscretionary Trustee or the Custodian may incur as a result
of any claim asserted against the nondiscretionary Trustee, the Custodian or the
Trust arising out of the nondiscretionary Trustee's or Custodian's full and
timely compliance with any written direction of the Named Fiduciary.
(E) Participant Loans. This Section 10.03(E) specifically authorizes the Trustee
to make loans on a nondiscriminatory basis to a Participant or to a Beneficiary
in accordance with the loan policy established by the Plan Administrator,
provided: (1) the loan policy satisfies the requirements of Section 9.04; (2)
loans are available to all Participants and Beneficiaries on a reasonably
equivalent basis and are not available in a greater amount for Highly
Compensated Employees than for Nonhighly Compensated Employees; (3) any loan is
adequately secured and bears a reasonable rate of interest; (4) the loan
provides for repayment within a specified time (however, the loan policy may
suspend loan payments pursuant to Code ss.414(u)(4)) or otherwise in accordance
with applicable Treasury Regulations); (5) the default provisions of the note
permit offset of the Participant's Vested Account Balance only at the time when
the Participant has a distributable event under the Plan, but without regard to
whether the Participant consents to distribution as otherwise may be required
under Section 6.01(A)(5); (6) the amount of the loan does not exceed (at the
time the Plan extends the loan) the present value of the Participant's Vested
Account Balance; and (7) the loan otherwise conforms to the exemption provided
by Code ss.4975(d)(1). The loan policy may provide a Participant's loan default
is a distributable event with respect to the defaulted amount, irrespective of
whether the Participant otherwise has incurred a distributable event at the time
of default, except as to amounts which the Participant used to secure his/her
loan which remain subject to distribution restrictions under Section 14.11 or
are money purchase pension plan or target benefit plan balances which may not be
distributed in-service at the time of default. If the joint and survivor
requirements of Article VI apply to the Participant, the Participant may not
pledge any portion of his/her Account Balance as security for a loan unless,
within the 90 day period ending on the date the pledge becomes effective, the
Participant's spouse, if any, consents (in a manner described in Section 6.05
other than the requirement relating to the consent of a subsequent spouse) to
the security or, by separate consent, to an increase in the amount of security.
A Participant who is an Owner-Employee (including other persons described in
Code ss.4975(f)(6)), or who is a Shareholder-Employee may not receive a loan
from the Plan, unless he/she has obtained a prohibited transaction exemption
from the DOL.
(F) Investment in Qualifying Employer Securities and Qualifying Employer Real
Property. The Trustee (or as applicable, Investment Manager, Employer or
Participant) may invest in qualifying Employer securities or in qualifying
Employer real property, as defined in and as limited by ERISA. If the Employer's
Plan is a profit sharing plan, the aggregate investments in qualifying Employer
securities and in qualifying Employer real property may exceed 10% of the value
of Plan assets, unless the Employer elects in its Adoption Agreement to restrict
such investments to 10% (or to some other percentage which is less than 100%).
Notwithstanding the foregoing, except where permitted under ERISA ss.407(b)(2),
if the Plan includes a 401(k) arrangement, a participant's Deferral
Contributions Account accumulated in Plan Years beginning after December 31,
1998, including earnings thereon, may not be invested more than 10% in
qualifying employer securities and qualifying employer real property, unless
such investments are directed by the Participant or the Participant's
Beneficiary.
(G) Modifications to or Substitution of Trust. The Employer in its Standardized
Adoption Agreement may not amend any provision of Article X (or any other
provision of the Plan related to the Trust) except to specify the Trust year,
the names of the Plan, the Employer, the Trustee, the Custodian, the Plan
Administrator, other fiduciaries or the name of any pooled trust in which the
Trust will participate. The Employer in its Nonstandardized Adoption Agreement,
in addition to the foregoing amendments, may amend or override the
administrative provisions of Article X (or any other provision of the Plan
related to the Trust), including provisions relating to Trust investment and
Trustee duties. Any such amendment: (1) must not conflict with any other
provisions of the Plan (except as expressly are intended to override an existing
Trust provision); (2) must not cause the Plan to violate Code ss.401(a); and (3)
must be made in accordance with Rev. Proc. 2000-20 or any successor thereto. The
Employer using either a Standardized or Nonstandardized Adoption Agreement to
establish its Plan, subject to the conditions (1), (2) and (3) described above,
may elect to substitute in place of Article X and the remaining trust provisions
of the basic plan document, any other trust or custodial account agreement. All
Section 10.03(G) Trust modifications or substitutions are subject to Section
13.02 and require the written consent or signature of the Trustee.
(H) Cofiduciary Liability. Each fiduciary under the Plan is responsible solely
for his/her or its own acts or omissions. A fiduciary does not have any
liability for another fiduciary's breach of fiduciary responsibility with
respect to the Plan and the Trust unless the fiduciary: (1) participates
knowingly in or undertakes to conceal the breach; (2) has actual knowledge of
the breach and fails to take reasonable remedial action to remedy the breach; or
(3) through negligence in performing his/her or its own specific fiduciary
responsibilities that give rise to fiduciary status, the fiduciary has enabled
the other fiduciary to commit a breach of the latter's fiduciary responsibility.
10.04 RECORDS AND STATEMENTS. The records of the Trustee pertaining to the Plan
must be open to the inspection of the Plan Administrator and the Employer at all
reasonable times and may be audited from time to time by any person or persons
as the Employer or Plan Administrator may specify in writing. The Trustee must
furnish the Plan Administrator with whatever information relating to the Trust
Fund the Plan Administrator considers necessary to perform its duties as Plan
Administrator.
10.05 FEES AND EXPENSES FROM FUND. A Trustee or a Custodian will receive
reasonable compensation as may be agreed upon from time to time between the
Employer and the Trustee or the Custodian. No person who is receiving full pay
from the Employer may receive compensation (except for reimbursement of Plan
expenses) for services as Trustee or as Custodian. The Trustee will pay from the
Trust Fund all fees and reasonable expenses incurred by the Plan, to the extent
such fees and expenses are for the ordinary and necessary administration and
operation of the Plan and are not "settlor expenses" as determined by the DOL
unless the Employer pays such fees and expenses. Any fee or expense paid,
directly or indirectly, by the Employer is not an Employer contribution to the
Plan, provided the fee or the expense relates to the ordinary and necessary
administration of the Trust Fund.
10.06 PARTIES TO LITIGATION. Except as otherwise provided by ERISA, a
Participant or a Beneficiary is not a necessary party or required to receive
notice of process in any court proceeding involving the Plan, the Trust Fund or
any fiduciary of the Plan. Any final judgment entered in any such proceeding
will be binding upon the Employer, the Plan Administrator, the Trustee,
Custodian, Participants and Beneficiaries and upon their successors and assigns.
10.07 PROFESSIONAL AGENTS. The Trustee may employ and pay from the Trust Fund
reasonable compensation to agents, attorneys, accountants and other persons to
advise the Trustee as in its opinion may be necessary. The Trustee reasonably
may delegate to any agent, attorney, accountant or other person selected by it
any non-Trustee power or duty vested in it by the Plan, and the Trustee may
reasonably act or refrain from acting on the advice or opinion of any agent,
attorney, accountant or other person so selected.
10.08 DISTRIBUTION OF CASH OR PROPERTY. The Trustee will make Plan distributions
in the form of cash except where: (1) the required form of distribution is a
QJSA or QPSA which has not been waived; (2) the Plan is a restated Plan and
under the prior Plan, distribution in the form of property ("in-kind
distribution") is a Protected Benefit (3) the Plan Administrator adopts a
written policy which provides for in-kind distribution; or (4) the Employer is
terminating the Plan, and in the reasonable judgment of the Trustee, some or all
Plan assets may not within a reasonable time for making final distribution of
Plan assets, be liquidated to cash or may not be so liquidated without undue
loss in value. The Plan Administrator's policy under clause (3) may restrict
in-kind distributions to certain types of Trust investments or specify any other
reasonable and nondiscriminatory condition or restriction applicable to in-kind
distributions. Under clause (4), the Trustee will make Plan termination
distributions to Participants and Beneficiaries in cash, in-kind or in a
combination of these forms, in a reasonable and nondiscriminatory manner which
may take into account the preferences of the distributees. All in-kind
distributions will be made based on the current fair market value of the
property, as determined by the Trustee.
10.09 PARTICIPANT OR BENEFICIARY INCAPACITATED. If, in the opinion of the Plan
Administrator or of the Trustee, a Participant or Beneficiary entitled to a Plan
distribution is not able to care for his/her affairs because of a mental
condition, a physical condition, or by reason of age, at the direction of the
Plan Administrator the Trustee may make the distribution to the Participant's or
Beneficiary's guardian, conservator, trustee, custodian (including under a
Uniform Transfers or Gifts to Minors Act) or to his/her attorney-in-fact or to
other legal representative upon furnishing evidence of such status satisfactory
to the Plan Administrator and to the Trustee. The Plan Administrator and the
Trustee do not have any liability with respect to payments so made and neither
the Plan Administrator nor the Trustee has any duty to make inquiry as to the
competence of any person entitled to receive payments under the Plan.
10.10 DISTRIBUTION DIRECTIONS. The Trustee must promptly notify the Plan
Administrator of any unclaimed Plan distribution and then dispose of the
distribution in accordance with the Plan Administrator's subsequent direction.
10.11 THIRD PARTY RELIANCE. A person dealing with the Trustee is not obligated
to see to the proper application of any money paid or property delivered to the
Trustee, or to inquire whether the Trustee has acted pursuant to any of the
terms of the Plan. Each person dealing with the Trustee may act upon any notice,
request or representation in writing by the Trustee, or by the Trustee's duly
authorized agent, and is not liable to any person in so acting. The certificate
of the Trustee that it is acting in accordance with the Plan is conclusive in
favor of any person relying on the certificate.
10.12 MULTIPLE TRUSTEES. If more than two persons act as Trustee, a decision of
the majority of such persons controls with respect to any decision regarding the
administration or the investment of the Trust Fund or of any portion of the
Trust Fund with respect to which such persons act as Trustee. If there is more
than one Trustee, the Trustees jointly will manage and control the assets of the
Trust Fund. However, the Trustees may allocate among themselves specific
responsibilities or obligations or may authorize one or more of them, either
individually or in concert, to exercise any or all of the powers granted to the
Trustee under Article X. In addition, the signature of only one Trustee is
necessary to effect any transaction on behalf of the Trust.
10.13 RESIGNATION AND REMOVAL. The Trustee or the Custodian may resign its
position by giving written notice to the Employer and to the Plan Administrator.
The Trustee's notice must specify the effective date of the Trustee's
resignation, which date must be at least 30 days following the date of the
Trustee's notice, unless the Employer consents in writing to shorter notice.
The Employer may remove a Trustee or a Custodian by giving written notice to the
effected party. The Employer's notice must specify the effective date of removal
which date must be at least 30 days following the date of the Employer's notice,
except where the Employer reasonably determines a shorter notice period or
immediate removal is necessary to protect Plan assets.
In the event of the resignation or the removal of a Trustee, where no other
Trustee continues to service, the Employer must appoint a successor Trustee if
it intends to continue the Plan. If two or more persons hold the position of
Trustee, in the event of the removal of one such person, during any period the
selection of a replacement is pending, or during any period such person is
unable to serve for any reason, the remaining person or persons will act as the
Trustee. If the Employer fails to appoint a successor Trustee as of the
effective date of the Trustee resignation or removal and no other Trustee
remains, the Trustee will treat the Employer as having appointed itself as
Trustee and as having filed the Employer's acceptance of appointment as
successor Trustee with the former Trustee. If state law prohibits the Employer
from serving as successor Trustee, the appointed successor Trustee is the
president of a corporate Employer, the managing partner of a partnership
Employer, the managing member of a limited liability company Employer or the
sole proprietor, as appropriate. If the Employer removes and does not replace a
Custodian, the discretionary Trustee will assume possession of Plan assets held
by the former Custodian.
10.14 SUCCESSOR TRUSTEE ACCEPTANCE. Each successor Trustee succeeds its
predecessor Trustee by accepting in writing its appointment as successor Trustee
and by filing the acceptance with the former Trustee and the Plan Administrator
without the signing or filing of any further statement. The resigning or removed
Trustee, upon receipt of acceptance in writing of the Trust by the successor
Trustee, must execute all documents and do all acts necessary to vest the title
of record in any successor Trustee. Each successor Trustee has and enjoys all of
the powers, both discretionary and ministerial, conferred under the Plan upon
its predecessor. A successor Trustee is not personally liable for any act or
failure to act of any predecessor Trustee, except as required under ERISA. With
the approval of the Employer and the Plan Administrator, a successor Trustee,
with respect to the Plan, may accept the account rendered and the property
delivered to it by a predecessor Trustee without liability.
10.15 VALUATION OF TRUST. The Trustee must value the Trust Fund as of each
Accounting Date to determine the fair market value of each Participant's Account
Balance in the Trust. The Trustee also must value the Trust Fund on such other
valuation dates as directed in writing by the Plan Administrator or as the
Adoption Agreement may require.
10.16 LIMITATION ON LIABILITY - IF INVESTMENT MANAGER, ANCILLARY TRUSTEE OR
INDEPENDENT FIDUCIARY APPOINTED. The Trustee is not liable for the acts or
omissions of any Investment Manager the Plan Administrator may appoint, nor is
the Trustee under any obligation to invest or otherwise to manage any asset of
the Trust Fund which is subject to the management of a properly appointed
Investment Manager. The Plan Administrator, the Trustee and any properly
appointed Investment Manager may execute a written agreement as a part of this
Plan delineating the duties, responsibilities and liabilities of the Investment
Manager with respect to any part of the Trust Fund under the control of the
Investment Manager.
The limitation on liability described in this Section 10.16 also applies to the
acts or omissions of any ancillary trustee or independent fiduciary properly
appointed under Section 10.18. However, if a discretionary Trustee, pursuant to
the delegation described in Section 10.18, appoints an ancillary trustee, the
discretionary Trustee is responsible for the periodic review of the ancillary
trustee's actions and must exercise its delegated authority in accordance with
the terms of the Plan and in a manner consistent with ERISA. The Employer, the
discretionary Trustee and an ancillary trustee may execute a written agreement
as a part of this Plan delineating any indemnification agreement among the
parties.
10.17 INVESTMENT IN GROUP TRUST FUND. The Employer, by adopting this Plan,
specifically authorizes the Trustee to invest all or any portion of the assets
comprising the Trust Fund in any group trust fund which at the time of the
investment provides for the pooling of the assets of plans qualified under Code
ss.401(a). This authorization applies solely to a group trust fund exempt from
taxation under Code ss.501(a) and the trust agreement of which satisfies the
requirements of Revenue Ruling 81-100, or any successor thereto. The provisions
of the group trust fund agreement, as amended from time to time, are by this
reference incorporated within this Plan and Trust. The provisions of the group
trust fund will govern any investment of Plan assets in that fund. The Employer
must specify in an Addendum to its Adoption Agreement the group trust fund(s) to
which this authorization applies.
If the Trustee is acting as a nondiscretionary Trustee, the investment in the
group trust fund is available only in accordance with a proper direction, by the
Named Fiduciary, in accordance with Section 10.03(B). Pursuant to Paragraph (c)
of Section 10.03(A), a Trustee has the authority to invest in certain common
trust funds and collective investment funds without the need for the authorizing
Addendum described in this Section 10.17. Furthermore, at the Employer's
direction, the Trustee, for collective investment purposes, may combine into one
trust fund the Trust created under this Plan with the trust created under any
other qualified retirement plan the Employer maintains. However, the Trustee
must maintain separate records of account for the assets of each Trust in order
to reflect properly each Participant's Account Balance under the qualified plans
in which he/she is a participant.
10.18 APPOINTMENT OF ANCILLARY TRUSTEE OR INDEPENDENT FIDUCIARY. The Employer,
in writing, may appoint any qualified person in any state to act as ancillary
trustee with respect to a designated portion of the Trust Fund, subject to any
consent required under Section 1.33. An ancillary trustee must acknowledge in
writing its acceptance of the terms and conditions of its appointment as
ancillary trustee and its fiduciary status under ERISA. The ancillary trustee
has the rights, powers, duties and discretion as the Employer may delegate,
subject to any limitations or directions specified in the agreement appointing
the ancillary trustee and to the terms of the Plan or of ERISA. The investment
powers delegated to the ancillary trustee may include any investment powers
available under Section 10.03. The delegated investment powers may include the
right to invest any portion of the assets of the Trust Fund in a common trust
fund, as described in Code ss.584, or in any collective investment fund, the
provisions of which govern the investment of such assets and which the Plan
incorporates by this reference, but only if the ancillary trustee is a bank or
similar financial institution supervised by the United States or by a state and
the ancillary trustee (or its affiliate, as defined in Code ss.1504) maintains
the common trust fund or collective investment fund exclusively for the
collective investment of money contributed by the ancillary trustee (or its
affiliate) in a trustee capacity and which conforms to the rules of the
Comptroller of the Currency. The Employer also may appoint as an ancillary
trustee, the trustee of any group trust fund designated for investment pursuant
to the provisions of Section 10.17.
The ancillary trustee may resign its position and the Employer may remove an
ancillary trustee as provided in Section 10.13 regarding resignation and removal
of the Trustee or Custodian. In the event of such resignation or removal, the
Employer may appoint another ancillary trustee or may return the assets to the
control and management of the Trustee. The Employer may delegate its
responsibilities under this Section 10.18 to a discretionary Trustee under the
Plan, but not to a nondiscretionary Trustee or to a Custodian, subject to the
acceptance by the discretionary Trustee of that delegation.
If the DOL requires engagement of an independent fiduciary to have control or
management of all or a portion of the Trust Fund, the Employer will appoint such
independent fiduciary, as directed by the DOL. The independent fiduciary will
have the duties, responsibilities and powers prescribed by the DOL and will
exercise those duties, responsibilities and powers in accordance with the terms,
restrictions and conditions established by the DOL and, to the extent not
inconsistent with ERISA, the terms of the Plan. The independent fiduciary must
accept its appointment in writing and must acknowledge its status as a fiduciary
of the Plan.
ARTICLE XI
PROVISIONS RELATING TO INSURANCE AND INSURANCE COMPANY
11.01 INSURANCE BENEFIT. The Employer may elect to provide incidental life
insurance benefits for insurable Participants who consent to life insurance
benefits by executing the appropriate insurance company application form. The
Trustee will not purchase any incidental life insurance benefit for any
Participant prior to a contribution allocation to the Participant's Account. At
an insured Participant's written direction, the Trustee will use all or any
portion of the Participant's Employee contributions, if any, to pay insurance
premiums covering the Participant's life. This Section 11.01 also authorizes
(except if the Plan is a money purchase pension plan) the purchase of life
insurance, for the benefit of the Participant, on the life of a family member of
the Participant or on any person in whom the Participant has an insurable
interest. However, if the policy is on the joint lives of the Participant and
another person, the Trustee may not maintain that policy if the other person
predeceases the Participant.
The Employer will direct the Trustee as to the insurance company and insurance
agent through which the Trustee is to purchase the insurance contracts, the
amount of the coverage and the applicable dividend plan. Each application for a
policy, and the policies themselves, must designate the Trustee as sole owner,
with the right reserved to the Trustee to exercise any right or option contained
in the policies, subject to the terms and provisions of this Plan. The Trustee
must be the named beneficiary for the Account of the insured Participant.
Proceeds of insurance contracts paid to the Participant's Account under this
Article XI are subject to the distribution requirements of Article VI. The
Trustee will not retain any such proceeds for the benefit of the Trust.
The Trustee will charge the premiums on any incidental benefit insurance
contract covering the life of a Participant against the Account of that
Participant and will treat the insurance contract as a directed investment of
the Participant's Account, even if the Plan otherwise does not permit a
Participant to direct the investment of his/her own Account. The Trustee will
hold all incidental benefit insurance contracts issued under the Plan as assets
of the Trust created and maintained under the Plan.
(A) Incidental insurance benefits. The aggregate of life insurance premiums paid
for the benefit of a Participant, at all times, may not exceed the following
percentages of the aggregate of the Employer's contributions (including Deferral
Contributions and forfeitures) allocated to any Participant's Account: (i) 49%
in the case of the purchase of ordinary life insurance contracts; or (ii) 25% in
the case of the purchase of term life insurance or universal life insurance
contracts. If the Trustee purchases a combination of ordinary life insurance
contract(s) and term life insurance or universal life insurance contract(s),
then the sum of one-half of the premiums paid for the ordinary life insurance
contract(s) and the premiums paid for the term life insurance or universal life
insurance contract(s) may not exceed 25% of the Employer contributions allocated
to any Participant's Account.
(B) Exception for certain profit sharing plans. If the Plan is a profit sharing
plan, the incidental insurance benefits requirement does not apply to the Plan
if the Plan purchases life insurance benefits only from Employer contributions
accumulated in the Participant's Account for at least two years (measured from
the allocation date).
(C) Exception for other amounts. The incidental insurance benefits requirement
does not apply to life insurance purchased with Employee contributions, rollover
contributions, or earnings on Employer contributions.
11.02 LIMITATION ON LIFE INSURANCE PROTECTION. The Trustee will not continue any
life insurance protection for any Participant beyond his/her annuity starting
date as defined in Section 6.01(A)(4). If the Trustee holds any incidental
benefit insurance contract(s) for the benefit of a Participant when he/she
terminates his/her employment (other than by reason of death), the Trustee must
proceed as follows:
(a) If the entire cash value of the contract(s) is Vested in the
terminating Participant, or if the contract(s) will not have any cash value
at the end of the policy year in which Separation from Service occurs, the
Trustee will transfer the contract(s) to the Participant endorsed so as to
vest in the transferee all right, title and interest to the contract(s),
free and clear of the Trust; subject however, to restrictions as to
surrender or payment of benefits as the issuing insurance company may
permit and as the Plan Administrator directs;
(b) If only part of the cash value of the contract(s) is Vested in the
terminating Participant, the Trustee, to the extent the Participant's
interest in the cash value of the contract(s) is not Vested, may adjust the
Participant's interest in the value of his/her Account attributable to
Trust assets other than incidental benefit insurance contracts and proceed
as in (a), or the Trustee must effect a loan from the issuing insurance
company on the sole security of the contract(s) for an amount equal to the
difference between the cash value of the contract(s) at the end of the
policy year in which termination of employment occurs and the amount of the
cash value that is Vested in the terminating Participant, and the Trustee
must transfer the contract(s) endorsed so as to vest in the transferee all
right, title and interest to the contract(s), free and clear of the Trust;
subject however, to the restrictions as to surrender or payment of benefits
as the issuing insurance company may permit and the Plan Administrator
directs;
(c) If no part of the cash value of the contract(s) is Vested in the
terminating Participant, the Trustee must surrender the contract(s) for
cash proceeds as may be available.
In accordance with the written direction of the Plan Administrator, the Trustee
will make any transfer of contract(s) under this Section 11.02 on the
Participant's annuity starting date (or as soon as administratively practicable
after that date). The Trustee may not transfer any contract under this Section
11.02 which contains a method of payment not specifically authorized by Article
VI or which fails to comply with the joint and survivor annuity requirements, if
applicable, of Article VI. In this regard, the Trustee either must convert such
a contract to cash and distribute the cash instead of the contract, or before
making the transfer, must require the issuing company to delete the unauthorized
method of payment option from the contract.
11.03 DEFINITIONS. For purposes of this Article XI:
(a) "Policy" means an ordinary life, term life or universal life insurance
contract issued by an insurer on the life of a Participant.
(b) "Issuing insurance company" is any life insurance company which has
issued a policy upon application by the Trustee under the terms of this
Plan.
(c) "Contract" or "Contracts" means a policy of insurance. In the event of
any conflict between the provisions of this Plan and the terms of any
contract or policy of insurance issued in accordance with this Article XI,
the provisions of the Plan control.
(d) "Insurable Participant" means a Participant to whom an insurance
company, upon an application being submitted in accordance with the Plan,
will issue insurance coverage, either as a standard risk or as a risk in an
extra mortality classification.
11.04 DIVIDEND PLAN. The dividend plan is premium reduction unless the Plan
Administrator directs the Trustee to the contrary. The Trustee must use all
dividends for a contract to purchase insurance benefits or additional insurance
benefits for the Participant on whose life the insurance company has issued the
contract. Furthermore, the Trustee must arrange, where possible, for all
policies issued on the lives of Participants under the Plan to have the same
premium due date and all ordinary life insurance contracts to contain guaranteed
cash values with as uniform basic options as are possible to obtain. The term
"dividends" includes policy dividends, refunds of premiums and other credits.
11.05 INSURANCE COMPANY NOT A PARTY TO AGREEMENT. No insurance company, solely
in its capacity as an issuing insurance company, is a party to this Plan nor is
the company responsible for its validity.
11.06 NO RESPONSIBILITY FOR OTHERS. Except as required by ERISA, an issuing
insurance company has no responsibility or obligation under the Plan to
Participants or Beneficiaries for any act (unless the insurance company also
serves in such capacities) required of the Employer, the Plan Administrator, the
Trustee, the Custodian or any other service provider to the Plan. No insurance
company, solely in its capacity as an issuing insurance company, need examine
the terms of this Plan. For the purpose of making application to an insurance
company and in the exercise of any right or option contained in any policy, the
insurance company may rely upon the signature of the Trustee and is held
harmless and completely discharged in acting at the direction and authorization
of the Trustee. An insurance company is discharged from all liability for any
amount paid to the Trustee or paid in accordance with the direction of the
Trustee, and is not obliged to see to the distribution or further application of
any moneys the insurance company so pays.
11.07 DUTIES OF INSURANCE COMPANY. Each insurance company must keep such
records, make such identification of contracts, funds and accounts within funds,
and supply such information as may be necessary for the proper administration of
the Plan under which it is carrying insurance benefits.
Note: The provisions of this Article XI are not applicable, and the Plan may not
invest in insurance contracts, if a Custodian signatory to the Adoption
Agreement is a bank which does not have trust powers from its governing state
banking authority.
ARTICLE XII
TOP-HEAVY PROVISIONS
12.01 DETERMINATION OF TOP-HEAVY STATUS. If this Plan is the only qualified plan
maintained by the Employer, the Plan is top-heavy for a Plan Year if the
top-heavy ratio as of the Determination Date exceeds 60%. The top-heavy ratio is
a fraction, the numerator of which is the sum of the Account Balances of all Key
Employees as of the Determination Date and the denominator of which is a similar
sum determined for all Employees.
The Plan Administrator must include in the top-heavy ratio, as part of the
Account Balances, any contribution not made as of the Determination Date but
includible under Code ss.416 and the applicable Treasury regulations, and
distributions made within the Determination Period. The Plan Administrator must
calculate the top-heavy ratio by disregarding the Account Balance (and
distributions, if any, of the Account Balance) of any Non-Key Employee who was
formerly a Key Employee, and by disregarding the Account Balance (including
distributions, if any, of the Account Balance) of an individual who has not
received credit for at least one Hour of Service with the Employer during the
Determination Period. The Plan Administrator must calculate the top-heavy ratio,
including the extent to which it must take into account distributions, rollovers
and transfers, in accordance with Code ss.416 and the regulations under that
Code section.
If the Employer maintains other qualified plans (including a simplified employee
pension plan), or maintained another such plan now terminated, this Plan is
top-heavy only if it is part of the Required Aggregation Group, and the
top-heavy ratio for the Required Aggregation Group and for the Permissive
Aggregation Group, if any, each exceeds 60%. The Plan Administrator will
calculate the top-heavy ratio in the same manner as required by the first two
paragraphs of this Section 12.01, taking into account all plans within the
Aggregation Group. To the extent the Plan Administrator must take into account
distributions to a Participant, the Plan Administrator must include
distributions from a terminated plan which would have been part of the Required
Aggregation Group if it were in existence on the Determination Date. The Plan
Administrator will calculate the present value of accrued benefits under defined
benefit plans or the account balances under simplified employee pension plans
included within the group in accordance with the terms of those plans, Code
ss.416 and the regulations under that Code section.
If a Participant in a defined benefit plan is a Non-Key Employee, the Plan
Administrator will determine his/her accrued benefit under the accrual method,
if any, which is applicable uniformly to all defined benefit plans maintained by
the Employer or, if there is no uniform method, in accordance with the slowest
accrual rate permitted under the fractional rule accrual method described in
Code ss.411(b)(1)(C). If the Employer maintains a defined benefit plan, the Plan
Administrator will use the actuarial assumptions (interest and mortality only)
stated in that plan to calculate the present value of benefits from that defined
benefit plan. If an aggregated plan does not have a valuation date coinciding
with the Determination Date, the Plan Administrator must value the Account
Balance in the aggregated plan as of the most recent valuation date falling
within the twelve-month period ending on the Determination Date, except as Code
ss.416 and applicable Treasury regulations require for the first and for the
second plan year of a defined benefit plan. The Plan Administrator will
calculate the top-heavy ratio with reference to the Determination Dates that
fall within the same calendar year. The top-heavy provisions of the Plan apply
only for Plan Years in which Code ss.416 requires application of the top-heavy
rules.
12.02 DEFINITIONS. For purposes of applying the top-heavy provisions of the
Plan:
(a) "Compensation" means Compensation as determined under Section 3.18(b)
for Code ss.415 purposes and includes Compensation for the entire Plan
Year.
(b) "Determination Date" means for any Plan Year, the Accounting Date of
the preceding Plan Year or, in the case of the first Plan Year of the Plan,
the Accounting Date of that Plan Year.
(c) "Determination Period" means the 5-year period ending on the
Determination Date.
(d) "Employer" means the Employer that adopts this Plan and any Related
Employer.
(e) "Key Employee" means, as of any Determination Date, any Employee or
former Employee (or Beneficiary of such Employee) who, at any time during
the Determination Period: (i) has Compensation in excess of 50% of the
dollar amount prescribed in Code ss.415(b)(1)(A) (relating to defined
benefit plans) and is an officer of the Employer; (ii) has Compensation in
excess of the dollar amount prescribed in Code ss.415(c)(1)(A) (relating to
defined contribution plans), owns a more than 1/2% interest in the Employer
and is one of the Employees owning the ten largest interests in the
Employer; (iii) is a more than 5% owner of the Employer; or (iv) is a more
than 1% owner of the Employer and has Compensation of more than $150,000.
The constructive ownership rules of Code ss.318 (or the principles of that
Code section, in the case of an unincorporated Employer,) will apply to
determine ownership in the Employer. The number of officers taken into
account under clause (i) will not exceed the greater of 3 or 10% of the
total number (after application of the Code ss.414(q) exclusions) of
Employees, but no more than 50 officers. The Plan Administrator will make
the determination of who is a Key Employee in accordance with Code
ss.416(i)(1) and the regulations under that Code section.
(f) "Non-Key Employee" means an Employee who does not meet the definition
of Key Employee.
(g) "Participant" means any Employee otherwise eligible to participate in
the Plan but who is not entitled to receive any allocation under the Plan
(or would have received a lesser allocation) for the Plan Year because of
his/her Compensation level or because of his/her failure: (i) to make
elective deferrals under a 401(k) arrangement; (ii) to make Employee
contributions; or (iii) to complete 1,000 Hours of Service or any other
service requirement the Employer specifies in its Adoption Agreement as a
condition to receive an allocation except for employment on the last day of
the Plan Year.
(h) "Permissive Aggregation Group" means the Required Aggregation Group
plus any other qualified plans maintained by the Employer, but only if such
group would satisfy in the aggregate the nondiscrimination requirements of
Code ss.401(a)(4) and the coverage requirements of Code ss.410. The Plan
Administrator will determine the Permissive Aggregation Group.
(i) "Required Aggregation Group" means: (i) each qualified plan of the
Employer in which at least one Key Employee participates or participated at
any time during the Determination Period (including terminated plans); and
(ii) any other qualified plan of the Employer which enables a plan
described in clause (i) to meet the requirements of Code ss.401(a)(4) or of
Code ss.410.
12.03 TOP-HEAVY MINIMUM ALLOCATION. The top-heavy minimum allocation requirement
applies to the Plan only in a Plan Year for which the Plan is top-heavy. If the
Plan is top-heavy in any Plan Year:
(a) Each Non-Key Employee who is a Participant (as described in Section
12.02(g)) and employed by the Employer on the last day of the Plan Year
will receive a top-heavy minimum allocation for that Plan Year.
(b) The top-heavy minimum allocation is equal to the lesser of 3% of the
Non-Key Employee's Compensation for the Plan Year or the highest
contribution rate for the Plan Year made on behalf of any Key Employee.
However, if a defined benefit plan maintained by the Employer which
benefits a Key Employee depends on this Plan to satisfy the
nondiscrimination rules of Code ss.401(a)(4) or the coverage rules of Code
ss.410 (or another plan benefiting the Key Employee so depends on such
defined benefit plan), the top-heavy minimum allocation is 3% of the
Non-Key Employee's Compensation regardless of the contribution rate for the
Key Employees.
(c) If, for a Plan Year, there are no allocations of Employer contributions
or of forfeitures for any Key Employee, the Plan does not require any
top-heavy minimum allocation for the Plan Year, unless a top-heavy minimum
allocation applies because of the maintenance by the Employer of more than
one plan.
12.04 DETERMINING TOP-HEAVY CONTRIBUTION RATES. In determining under Section
12.03(b) the highest contribution rate for any Key Employee, the Plan
Administrator takes into account all Employer contributions (including deferral
contributions and including matching contributions but not including Employer
contributions to Social Security) and forfeitures allocated to the Participant's
Account for the Plan Year, divided by his/her Compensation for the entire Plan
Year. For purposes of satisfying the Employer's top-heavy minimum allocation
requirement, the Plan Administrator disregards the elective deferrals and
matching contributions allocated to a Non-Key Employee's Account in determining
the Non-Key Employee's contribution rate. However, the Plan Administrator
operationally may include in the contribution rate of a Non-Key Employee any
matching contributions not necessary to satisfy the nondiscrimination
requirements of Code ss.401(k) or of Code ss.401(m).
To determine a Participant's contribution rate, the Plan Administrator must
treat all qualified top-heavy defined contribution plans maintained by the
Employer (or by any Related Employer) as a single plan.
12.05 PLAN WHICH WILL SATISFY TOP-HEAVY. The Plan will satisfy the top-heavy
minimum allocation requirement in accordance with the following requirements:
(a) If the Employer makes the top-heavy minimum allocation to this Plan,
the Employer will make any necessary additional contribution to this Plan.
The Plan Administrator first will allocate the Employer contributions (and
Participant forfeitures, if any) for the Plan Year in accordance with the
provisions of Adoption Agreement Section 3.04. The Employer then will
contribute an additional amount for the Account of any Participant entitled
under Section 12.03 to a top-heavy minimum allocation and whose
contribution rate for the Plan Year, under this Plan and any other plan
aggregated under Section 12.02, is less than the top-heavy minimum
allocation. The additional amount is the amount necessary to increase the
Participant's contribution rate to the top-heavy minimum allocation. The
Plan Administrator will allocate the additional contribution to the Account
of the Participant on whose behalf the Employer makes the contribution.
(b) If the Employer makes the top-heavy minimum allocation under another
plan, this Plan does not provide the top-heavy minimum allocation and the
Plan Administrator will allocate the annual Employer contributions (and
Participant forfeitures) under the Plan solely in accordance with the
allocation method selected under Adoption Agreement Section 3.04.
12.06 TOP-HEAVY VESTING. If the Plan is topheavy and the Employer in its
Adoption Agreement does not elect immediate vesting, the Employer must elect a
topheavy (or modified top-heavy) vesting schedule. The specified top-heavy
vesting schedule applies to the Plan's first top-heavy Plan Year and to all
subsequent Plan Years, except as the Employer otherwise elects in its Adoption
Agreement. If the Employer elects in its Adoption Agreement to apply the
specified top-heavy vesting schedule only in Plan Years in which the Plan is
top-heavy, any change in the Plan's vesting schedule resulting from this
election is subject to Section 5.11.
ARTICLE XIII
EXCLUSIVE BENEFIT, AMENDMENT, TERMINATION
13.01 EXCLUSIVE BENEFIT. Except as provided under Article III, the Employer does
not have any beneficial interest in any asset of the Trust Fund and no part of
any asset in the Trust Fund may ever revert to or be repaid to the Employer,
either directly or indirectly; nor, prior to the satisfaction of all liabilities
with respect to the Participants and their Beneficiaries under the Plan, may any
part of the corpus or income of the Trust Fund, or any asset of the Trust Fund,
be (at any time) used for, or diverted to, purposes other than the exclusive
benefit of the Participants or their Beneficiaries and for defraying reasonable
expenses of administering the Plan.
However, if the Commissioner of Internal Revenue, upon the Employer's
application for initial approval of this Plan, determines the Trust created
under the Plan is not a qualified trust exempt from Federal income tax, then
(and only then) the Trustee, upon written notice from the Employer, will return
the Employer's contributions (and the earnings thereon) to the Employer. The
immediately preceding sentence applies only if the Employer makes the
application for the determination by the time prescribed by law for filing the
Employer's tax return for the taxable year in which the Employer adopted the
Plan, or by such later date as the Internal Revenue Service may prescribe. The
Trustee must make the return of the Employer contribution under this Section
13.01 within one year of a final disposition of the Employer's request for
initial approval of the Plan. The Employer's Plan and Trust will terminate upon
the Trustee's return of the Employer's contributions.
13.02 AMENDMENT BY EMPLOYER. The Employer, consistent with this Section 13.02
and other applicable Plan provisions, has the right, at any time:
(a) To amend the elective provisions of the Adoption Agreement in any
manner it deems necessary or advisable;
(b) To add overriding language in the Adoption Agreement to satisfy Code
ss.ss.415 or 416 because of the required aggregation of multiple plans; and
(c) To add model amendments published by the Revenue Service (the adoption
of which the Revenue Service provides will not cause the Plan to be
individually designed).
(A) Amendment Formalities. The Employer must make all Plan amendments in writing
by means of substituted Adoption Agreement pages or by restatement of the
Adoption Agreement. The Employer (and Trustee if the Trustee's written consent
to the amendment is required under Section 10.03(G)), must execute a new
Adoption Agreement Execution Page each time the Employer amends the Plan. Each
amendment must specify the date as of which the amendment is either
retroactively or prospectively effective. See Section 7.12 for the effect of
certain amendments adopted by the Employer which will result in the Employer's
Plan losing Prototype Plan status.
(B) Impermissible Amendment/Protected Benefits. An amendment may not authorize
or permit any of the Trust Fund (other than the part required to pay taxes and
reasonable administration expenses) to be used for or diverted to purposes other
than for the exclusive benefit of the Participants or their Beneficiaries or
estates. An amendment may not cause or permit any portion of the Trust Fund to
revert to or become a property of the Employer. Furthermore, the Employer may
not make any amendment which affects the rights, duties or responsibilities of
the Trustee or of the Plan Administrator without the written consent of the
affected Trustee or the Plan Administrator.
An amendment (including the adoption of this Plan as a restatement of an
existing plan) may not decrease a Participant's Account Balance, except to the
extent permitted under Code ss.412(c)(8), and except as provided in Treasury
regulations, may not reduce or eliminate Protected Benefits determined
immediately prior to the adoption date (or, if later, the effective date) of the
amendment. An amendment reduces or eliminates Protected Benefits if the
amendment has the effect of either (1) eliminating or reducing an early
retirement benefit or a retirement-type subsidy (as defined in Treasury
regulations), or (2) except as provided by Treasury regulations, eliminating an
optional form of benefit.
The Plan Administrator must disregard an amendment to the extent application of
the amendment would fail to satisfy this Section 13.02(B). If the Plan
Administrator must disregard an amendment because the amendment would violate
clause (1) or clause (2), the Plan Administrator must maintain a schedule of the
early retirement option or other optional forms of benefit the Plan must
continue for the affected Participants.
13.03 AMENDMENT BY PROTOTYPE PLAN SPONSOR. The Prototype Plan Sponsor (or the
mass submitter, as agent of the Prototype Plan Sponsor), without the Employer's
consent, may amend the Plan and Trust, from time to time, in order to conform
the Plan and Trust to any requirement for qualification of the Plan and Trust
under the Internal Revenue Code. The Prototype Plan Sponsor may not amend the
Plan in any manner which would modify any election made by the Employer under
the Plan without the Employer's written consent. Furthermore, the Prototype Plan
Sponsor may not amend the Plan in any manner which would violate the
proscriptions of Section 13.02(B). If the Prototype Plan Sponsor does not adopt
the amendments made by the mass submitter, it will no longer be the sponsor of
an identical or minor modifier Prototype Plan of the mass submitter.
13.04 PLAN TERMINATION OR SUSPENSION. The Employer subject to Section 13.02(B)
and by proper Employer action has the right, at any time, to suspend or
discontinue its contributions under the Plan and thereafter to continue to
maintain the Plan (subject to such suspension or discontinuance) until the
Employer terminates the Plan. The Employer subject to Section 13.02(B) and by
proper Employer action has the right, at any time, to terminate this Plan and
the Trust created and maintained under the Plan. The Plan will terminate upon
the first to occur of the following:
(a) The date terminated by proper action of the Employer; or
(b) The dissolution or merger of the Employer, unless a successor makes
provision to continue the Plan, in which event the successor must
substitute itself as the Employer under this Plan. Any termination of the
Plan resulting from this Paragraph (b) is not effective until compliance
with any applicable notice requirements under ERISA.
13.05 FULL VESTING ON TERMINATION. Upon either full or partial termination of
the Plan, or, if applicable, upon complete discontinuance of profit sharing plan
contributions to the Plan, an affected Participant's right to his/her Account
Balance is 100% Vested, irrespective of the Vested percentage which otherwise
would apply under Article V.
13.06 POST TERMINATION PROCEDURE AND DISTRIBUTION.
(A) General Procedure. Upon termination of the Plan, the distribution provisions
of Article VI remain operative, with the following exceptions:
(1) if the Participant's Vested Account Balance does not exceed $5,000 (or
exceeds $5,000 but is not "immediately distributable" in accordance with Section
6.01(A)(5)), the Plan Administrator will direct the Trustee to distribute in
cash (subject to Section 10.08) the Participant's Vested Account Balance to
him/her in lump sum as soon as administratively practicable after the Plan
terminates; and
(2) if the present value of the Participant's Vested Account Balance exceeds
$5,000 and is immediately distributable, the Participant or the Beneficiary, may
elect to have the Trustee commence distribution in cash (subject to Section
10.08) of his/her Vested Account Balance in a lump sum as soon as
administratively practicable after the Plan terminates. If a Participant with
consent rights under this paragraph (2) does not elect an immediate lump sum
distribution with spousal consent if required, to liquidate the Trust, the Plan
Administrator will purchase a deferred annuity contract for each Participant
which protects the Participant's distribution rights under the Plan.
(B) Profit Sharing Plan. If the Plan is a profit sharing plan, in lieu of
applying Section 13.06(A) and the distribution provisions of Article VI, the
Plan Administrator will direct the Trustee to distribute in cash (subject to
Section 10.08) each Participant's Vested Account Balance, in lump sum, as soon
as administratively practicable after the termination of the Plan, irrespective
of the Participant's Vested Account Balance, the Participant's age and whether
the Participant consents to that distribution. This paragraph does not apply if:
(1) the Plan at termination provides an annuity option which is a Protected
Benefit and which the Employer may not eliminate by Plan amendment; or (2) as of
the period between the Plan termination date and the final distribution of
assets, the Employer maintains any other defined contribution plan (other than
an ESOP). The Employer, in an Addendum to its Adoption Agreement, may elect not
to have this paragraph apply.
(C) Distribution restrictions under Code ss.401(k). If the Plan includes a
401(k) arrangement or if the Plan holds transferred assets described in Section
13.07 such that in either case, the distribution restrictions of Sections
14.03(d) and 14.11 apply, a Participant's restricted balances are distributable
on account of Plan termination, as described in this Section 13.06, only if: (a)
the Employer does not maintain a successor plan and the Plan Administrator
distributes the Participant's entire Vested Account Balance in a lump sum; or
(b) the Participant otherwise is entitled under the Plan to a distribution of
his/her Vested Account Balance.
A successor plan under clause (b) is a defined contribution plan (other than an
ESOP) 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. However, a plan is not a successor plan if less
than 2% of the Employees eligible to participate in the terminating Plan are
eligible to participate (beginning 12 months prior to and ending 12 months after
the Plan's termination date) in the potential successor plan.
(D) "Lost Participants." If the Plan Administrator is unable to locate any
Participant or Beneficiary whose Account becomes distributable upon Plan
termination, the Plan Administrator will apply Section 9.11 except Section
9.11(B) does not apply.
(E) Continuing Trust Provisions. The Trust will continue until the Trustee in
accordance with the direction of the Plan Administrator has distributed all of
the benefits under the Plan. On each valuation date, the Plan Administrator will
credit any part of a Participant's Account Balance retained in the Trust with
its share of the Trust net income, gains or losses. Upon termination of the
Plan, the amount, if any, in a suspense account under Article III will revert to
the Employer, subject to the conditions of the Treasury regulations permitting
such a reversion. A resolution or an amendment to discontinue all future benefit
accrual but otherwise to continue maintenance of this Plan, is not a termination
for purposes of this Section 13.06.
13.07 MERGER/DIRECT TRANSFER. The Trustee possesses the specific authority to
enter into merger agreements or direct transfer of assets agreements with the
trustees of other retirement plans described in Code ss.401(a), including an
elective transfer, and to accept the direct transfer of plan assets, or to
transfer plan assets, as a party to any such agreement. Except as provided in
Section 13.07(A), the Trustee may not consent to, or be a party to, any merger
or consolidation with another plan, or to a transfer of assets or liabilities to
another plan (or from the other plan to this Plan), unless immediately after the
merger, consolidation or transfer, the surviving plan provides each Participant
a benefit equal to or greater than the benefit each Participant would have
received had the transferring plan terminated immediately before the merger or
the consolidation or the transfer. The Trustee will hold, administer and
distribute the transferred assets as a part of the Trust Fund and the Trustee
must maintain a separate Employer contribution Account for the benefit of the
Employee on whose behalf the Trustee accepted the transfer in order to reflect
the value of the transferred assets.
The Trustee may accept a direct transfer of plan assets on behalf of an Employee
prior to the date the Employee satisfies the Plan's eligibility conditions. If
the Trustee accepts such a direct transfer of plan assets, the Plan
Administrator and the Trustee must treat the Employee as a limited Participant
as described in Section 4.04.
Sections 13.07(A) and (B) are effective for elective transfers made on or
following September 6, 2000. Under an elective transfer which is made pursuant
to Section 13.07(A) or (B), the Protected Benefits in the transferring plan are
not required to be preserved under Section 13.02(B), except as provided in
Section 13.07(B).
(A) Distributable Event Elective Transfer. The Trustee may consent to, or be a
party to, a merger, consolidation or transfer of assets with another qualified
plan in accordance with this Section 13.07(A).
A transfer between qualified plans is a distributable event elective transfer
if: (1) the Participant has a right to immediate distribution from the
transferor plan; (2) the transfer is voluntary, under a fully informed election
by the Participant; (3) the Participant has an alternative that retains his/her
Protected Benefits (including an option to leave his/her benefit in the
transferor plan, if that plan is not terminating); (4) the transferor plan
satisfies applicable consent and joint and survivor annuity requirements of the
Code; (5) the amount transferred, together with the amount of any
contemporaneous direct rollover of the Participant's remaining Vested Account
Balance, constitutes the Participant's entire Vested Account Balance; (6) the
Participant has a 100% Vested interest in the transferred benefit in the
transferee plan; and (7) if the transfer is from this Plan to a defined benefit
plan, the transferee plan provides a benefit for the affected Participant equal
to the benefit (expressed as an annuity payable at normal retirement age)
derived solely with respect to the transferred assets.
An elective transfer under this Section 13.07(A) may occur between qualified
plans of any type. Any direct transfer of assets from a defined benefit plan to
this Plan which does not satisfy the requirements of this Section 13.07(A)
renders the Plan individually-designed. See Section 7.12.
Commencing January 1, 2002, the Trustee may not undertake an elective transfer
of a Participant's Account under this Section 13.07(A) if the Participant is
eligible to receive an immediate distribution of his/her entire Vested Account
Balance which would consist entirely of an eligible rollover distribution as
described in Section 6.10(D).
(B) Transaction/Employment Change Elective Transfer. The Trustee may consent to,
or be a party to, a merger, consolidation or transfer of assets with another
qualified defined contribution plan in accordance with this Section 13.07(B).
A transfer is a transaction or employment change transfer irrespective of
whether the Participant has a right to an immediate distribution from the
transferor plan provided: (1) the transfer satisfies requirements (2) and (3) of
Section 13.07(A); (2) the transfer only may occur as between plans described in
applicable Treasury regulations; (3) the transfer must occur in connection with
a merger, asset or stock acquisition, or change in employment resulting in the
participant's loss of right to additional allocations in the transferor plan or
in such other circumstances as described in applicable Treasury regulations; (4)
the transfer must consist of the Participant's entire Vested and non-Vested
Account Balance within the transferor plan; and (5) the transferee plan must
protect the QJSA and QPSA benefits (if any) in the transferor plan.
(C) Other Transfers. Any transfer which is not an elective transfer under
Sections 13.07(A) or 13.07(B) and which includes Protected Benefits is subject
to Section 13.02(B). The trustee of the transferee plan in receipt of assets
which are Protected Benefits must preserve the Protected Benefits in accordance
with applicable Treasury regulations. If the transferor plan contains a 401(k)
arrangement with restricted balances as described in Section 14.11, such
balances remain subject in the transferee plan to the distribution restrictions
described in Section 14.03(d). Any transfer under this Section 13.07(C) from a
defined benefit plan to this Plan must be in the form of the transfer of a paid
up individual annuity contract which guarantees the payment of benefits in
accordance with the transferor plan. Notwithstanding any Plan language to the
contrary, if this Plan is a target benefit or money purchase pension plan, and
the Trustee merges or the Employer converts by amendment the Plan into another
type of defined contribution plan, the Employer operationally may elect whether
to vest immediately the Participants' Account Balances.
ARTICLE XIV
CODE SECTION 401(k) AND CODE SECTION 401(m) ARRANGEMENTS
14.01 APPLICATION. This Article XIV applies to the Plan only if the Employer is
maintaining its Plan under a Code ss.401(k) Adoption Agreement.
14.02 401(k) ARRANGEMENT. The Employer under Article III of its Adoption
Agreement will elect the terms of the 401(k) arrangement as described in Code
ss.401(k)(2), if any, under the Plan. If the Plan is a Standardized Plan, the
401(k) arrangement must be a salary reduction arrangement. If the Plan is a
Nonstandardized Plan, the 401(k) arrangement may be a salary reduction
arrangement or a cash or deferred arrangement, or both.
(A) Salary Reduction Arrangement. If the Employer in its Adoption Agreement
Section 3.01 elects a salary reduction arrangement, a Participant (or an
Employee in anticipation of becoming a Participant) may file a salary reduction
agreement with the Plan Administrator. The salary reduction agreement may not be
effective earlier than the following date which occurs last: (1) the
Participant's Plan Entry Date (or, in the case of a reemployed Employee, his/her
re-participation date under Article II); (2) the execution date of the
Participant's salary reduction agreement; (3) the date the Employer adopts the
401(k) arrangement by executing the Adoption Agreement; or (4) the effective
date of the 401(k) arrangement, as specified in the Adoption Agreement.
A salary reduction agreement must specify the dollar amount of Compensation or
percentage of Compensation the Participant wishes to defer. The salary reduction
agreement will apply only to Compensation which becomes currently available to
the Participant after the effective date of the salary reduction agreement. The
Employer will apply a salary reduction election to the Participant's
Compensation as determined under Section 1.07 (and to increases in such
Compensation) unless the Participant elects in his/her salary reduction
agreement to limit the reduction to certain Compensation. The Plan Administrator
in the Plan's salary reduction agreement form, subject to the Plan terms and
applicable Revenue Service guidance, will specify additional rules and
restrictions applicable to a Participant's salary reduction agreement.
(B) Cash or Deferred Arrangement. If the Employer in its Adoption Agreement
Section 3.02 elects a cash or deferred arrangement, a Participant may elect to
make a cash election against his/her proportionate share of the Employer's cash
or deferred contribution, in accordance with the Employer's Adoption Agreement
elections. A Participant's proportionate share of the Employer's cash or
deferred contribution is the percentage of the total cash or deferred
contribution which bears the same ratio that the Participant's Compensation for
the Plan Year bears to the total Compensation of all Participants for the Plan
Year. For purposes of determining each Participant's proportionate share of the
cash or deferred contribution, a Participant's Compensation is his/her
Compensation as determined under Section 1.07, excluding any effect the
proportionate share may have on the Participant's Compensation for the Plan
Year. The Plan Administrator will determine the proportionate share prior to the
Employer's actual contribution to the Trust, to provide the Participants the
opportunity to file cash elections. The Employer will pay directly to the
Participant the portion of his/her proportionate share the Participant has
elected to receive in cash.
(C) Negative Election. The Employer in its Adoption Agreement may elect to apply
prospectively to its Plan the negative election provisions of this Section
14.02(C). Under a negative election, the Employer automatically will reduce the
Compensation of each Participant who is not deferring an amount at least equal
to the negative election amount, by the required election amount, except those
Participants who timely make a contrary election under Section 14.02(C)(1).
Participants deferring an amount equal to or greater than the negative election
amount are not subject to the Plan's negative election provisions. Amounts
deferred under negative election are treated as elective deferrals for all
purposes under the Plan. An Employer in its Adoption Agreement must elect
whether the negative election applies to all Participants as of the effective
date of the negative election or only to Employees whose Plan Entry Date is on
or following the effective date of the negative election.
(1) Participant's contrary election. A Participant may at any time elect not to
defer any Compensation or to defer an amount which is less than the negative
election amount ("contrary election"). A Participant's contrary election
generally is effective as of the first payroll period for the month which
follows the Participant's contrary election. However, a Participant may make a
contrary election which is effective: (1) for the first payroll period in which
he/she becomes a Participant if the Participant makes a contrary election within
a reasonable period following the Participant's Entry Date and before the
Compensation to which the election applies becomes currently available; or (2)
for the first payroll period following the effective date of the Employer's
adoption of the negative election, if the Participant makes contrary election
not later than the effective date of the negative election. A Participant's
contrary election continues in effect until the Participant subsequently changes
his/her Salary Reduction Agreement.
(2) Negative election notice. If the Employer in its Adoption Agreement adopts
the negative election provision, the Plan Administrator must provide a notice to
each Eligible Employee which explains the effect of the negative election and a
Participant's right to make a contrary election, including the procedure and
timing applicable to the contrary election. The Plan Administrator must provide
the notice to an Eligible Employee a reasonable period prior to that Employee's
commencement of participation in the Plan subject to the negative election. A
Plan Administrator also must notify annually those Participants then subject to
the negative election of the existing negative election deferral percentage and
the Participant's right to make a contrary election, including the procedure and
timing applicable to the contrary election.
(D) Safe Harbor 401(k) Plan. The Employer in its Adoption Agreement may elect to
apply to its Plan the safe harbor provisions of this Section 14.02(D). Except as
otherwise provided in this Plan, in the Code or in other applicable guidance, an
Employer must elect the safe harbor plan provisions of this Section 14.02(D) and
must satisfy the applicable notice requirements prior to the beginning of the
Plan Year to which the safe harbor provisions apply. In addition, except as
otherwise indicated, the electing Employer must apply the safe harbor provisions
for the entire safe harbor Plan Year, including any short Plan Year. The
provisions of this Section 14.02(D) apply to an electing Employer
notwithstanding any contrary provision of the Plan and all other remaining Plan
terms continue to apply to the Employer's safe harbor plan. An Employer which
elects and operationally satisfies the safe harbor provisions of this Section
14.02(D) is not subject to the nondiscrimination provisions of Section 14.08
(ADP test). An electing Employer which provides additional matching
contributions as described in Section 14.02(D)(3) is subject to the
nondiscrimination provisions of Section 14.09 (ACP test), unless the additional
matching contributions satisfy the ACP test safe harbor described in Section
14.02(D)(3).
(1) Safe Harbor - Compensation. For purposes of this Section 14.02(D),
Compensation is limited as described in Section 1.07(E) and for purposes of
allocating the Employer's safe harbor contribution and safe harbor matching
contribution, the Employer must elect under its Adoption Agreement a
nondiscriminatory definition of Compensation as described in Section 1.07(F). An
Employer in its Adoption Agreement also may elect to limit the amount of
Compensation which is subject to deferral to any reasonable definition which:
(a) permits a Participant to receive the maximum matching contribution, if any,
available under the Plan; or (b) limits deferrals under the Plan to a whole
percentage or dollar amount.
(2) Safe Harbor Contributions/ADP test safe harbor. An Employer which elects
under this Section 14.02(D) to apply the safe harbor provisions, must make a
contribution to the Plan which will satisfy the ADP test safe harbor ("safe
harbor contribution"). The Employer in its Adoption Agreement must elect whether
the Employer will make its safe harbor contribution in the form of: (a) a safe
harbor nonelective contribution; (b) a basic matching contribution; or (c) an
enhanced matching contribution. A safe harbor nonelective contribution is a
fixed nonelective contribution in an amount the Employer elects in its Adoption
Agreement and must equal at least 3% of each Participant's Compensation. A basic
matching contribution is a fixed matching contribution equal to 100% of a
Participant's elective deferrals which do not exceed 3% of Compensation, plus
50% of elective deferrals which exceed 3%, but which do not exceed 5% of
Compensation. An enhanced matching contribution is a fixed matching contribution
made in accordance with any formula the Employer elects in its Adoption
Agreement under which, at any rate of elective deferrals, a Participant receives
a matching contribution which is at least equal to the match the Participant
would receive under the basic matching contribution formula and under which the
rate of match does not increase as the rate of deferrals increases. Under a
basic or enhanced safe harbor match, a Highly Compensated Employee may not
receive a greater rate of match than any Nonhighly Compensated Employee. The
Employer in its Adoption Agreement must elect the applicable time period for
computing the Employer's safe harbor basic or enhanced matching contributions.
The Plan Administrator must allocate the Employer's safe harbor contribution
without regard to the Section 3.06 allocation conditions, but the Plan
Administrator will not allocate a safe harbor contribution where the allocation
would exceed a Participant's Code ss.ss.415 or 402(g) limitation or where the
Participant is suspended from making deferrals under Section 14.11(A)(1). The
Plan Administrator must allocate the safe harbor contribution to all
Participants unless the Employer in an Addendum to its Adoption Agreement elects
to limit the safe harbor allocation to Nonhighly Compensated Employees. A
Participant's Account Balance attributable to safe harbor contributions at all
times 100% Vested and subject to the distribution restrictions described in
Section 14.03(d). An Employer's safe harbor contribution is not subject to
nondiscrimination testing under Section 14.08 (ADP test) and if the safe harbor
contribution is in the form of a basic matching contribution, it is not subject
to nondiscrimination testing under Section 14.09 (ACP test). The Employer in its
Adoption Agreement must elect whether to satisfy the ACP test safe harbor
Section 14.02(D)(3)(a) amount limitation with respect to the Employer's enhanced
matching contributions or to test, using current year testing, its enhanced
matching contributions under Section 14.09 (ACP test).
An Employer electing Section 14.02(D) which in its Adoption Agreement also
elects to apply permitted disparity in allocating the Employer's nonelective
contributions, may not include within the permitted disparity formula
allocation, any of the Employer's safe harbor contributions. An Employer in its
Adoption Agreement may elect to make the safe harbor contribution to another
defined contribution plan maintained by the Employer provided: (i) the Employer
maintains its safe harbor 401(k) Plan using a Nonstandardized 401(k) Adoption
Agreement; or (ii) the Employer makes its safe harbor contribution to another
defined contribution plan paired with the Employer's safe harbor 401(k) Plan.
(3) Additional Matching Contributions/ACP test safe harbor. An Employer which
satisfies the ADP test safe harbor under Section 14.02(D)(2), in its Adoption
Agreement may elect to make matching contributions to the Plan which are in
addition to the Employer's safe harbor contributions and which the Employer does
not use to satisfy the ADP test safe harbor ("additional matching
contributions"). The Employer in its Adoption Agreement must elect whether to
subject the additional matching contributions to the ACP test safe harbor
requirements of this Section 14.02(D)(3), or for the Plan Administrator to test,
using current year testing, the additional matching contributions for
nondiscrimination under Section 14.09 (ACP test). Under the ACP test safe
harbor: (a) the Employer may not make matching contributions with respect to a
Participant's deferral contributions which exceed 6% of Plan Year Compensation;
(b) the amount of any discretionary matching contribution allocated to any
Participant in Plan Years commencing after 1999 may not exceed 4% of the
Participant's Plan Year Compensation; (c) the rate of matching contributions may
not increase as the rate of deferrals increases; and (d) subject to application
of any Section 3.06 allocation conditions, a Highly Compensated Employee may not
receive a greater rate of match than any Nonhighly Compensated Employee. The
Employer must elect in its Adoption Agreement the vesting schedule, allocation
conditions and distribution provisions applicable to the Employer's additional
matching contributions described in this Section 14.02(D)(3). If the Employer in
its Adoption Agreement has elected to permit Employee contributions under the
Plan: (i) any Employee contributions do not satisfy the ACP test safe harbor and
the Plan Administrator must test the Employee contributions under Section 14.09
(ACP test) using current year testing; and (ii) if the Employer in its Adoption
Agreement elects to match the Employee contributions, the Plan Administrator in
applying the 6% amount limit in clause (a) must aggregate a Participant's
deferral contribution and Employee contributions which are subject to the 6%
limit.
(4) Safe Harbor notice. The Plan Administrator annually must provide a safe
harbor notice to each Participant a reasonable period prior to each Plan Year
for which the Employer in its Adoption Agreement has elected to apply the safe
harbor provisions. For this purpose, the Plan Administrator is deemed to provide
timely notice if the Plan Administrator provides the safe harbor notice at least
30 days and not more than 90 days prior to the beginning of the safe harbor Plan
Year. The safe harbor notice must provide comprehensive information regarding
the Participants' rights and obligations under the Plan and must be written in a
manner calculated to be understood by the average Participant. If an Employee
becomes eligible to participate in the Plan after the Plan Administrator has
provided the annual safe harbor notice, the Plan Administrator must provide the
safe harbor notice no later than the Employee's Plan Entry Date. A Participant
may make or modify a salary reduction agreement under the Employer's safe harbor
401(k) Plan for 30 days following receipt of the safe harbor notice, or if
greater, for the period the Plan Administrator specifies in the salary reduction
agreement.
(5) Mid-year changes in safe harbor status. The Employer may amend its 401(k)
Plan during any Plan Year to become a safe harbor plan under this Section
14.02(D) for that Plan Year, provided: (a) the Plan then is using current year
testing; (b) the Employer amends the Plan to add the safe harbor provisions not
later than 30 days prior to the end of the Plan Year and to apply the safe
harbor provisions for the entire Plan Year; (c) the Employer elects to satisfy
the safe harbor contribution requirement using the safe harbor nonelective
contribution; and (d) the Plan Administrator provides a notice to Participants
prior to the beginning of the Plan Year for which the safe harbor amendment may
become effective, that the Employer later may amend the Plan to a safe harbor
plan for that Plan Year using the safe harbor nonelective contribution and if
the Employer so amends the Plan, the Plan Administrator will provide a
supplemental notice to Participants at least 30 days prior to the end of that
Plan Year informing Participants of the amendment. The Plan Administrator then
must timely provide any supplemental notice required under this Section
14.02(D)(5). Except as otherwise specified, the Participant notices described in
this Section 14.02(D)(5) also must satisfy the requirements applicable to safe
harbor notices under Section 14.02(D)(4).
The Employer may amend its safe harbor 401(k) Plan during a Plan Year to reduce
or eliminate prospectively, any safe harbor contribution which is a basic
matching or enhanced matching contribution (under Section 14.02(D)(2)) provided:
(i) the Plan Administrator provides a notice to the Participants which explains
the effect of the amendment, specifies the amendment's effective date and
informs Participants they will have a reasonable opportunity to modify their
salary reduction agreements, and if applicable, Employee contributions; (ii)
Participants have a reasonable opportunity and period prior to the effective
date of the amendment to modify their salary reduction agreements, and if
applicable, Employee contributions; and (iii) the amendment is not effective
earlier than the later of: (a) 30 days after the Plan Administrator gives notice
of the amendment; or (b) the date the Employer adopts the amendment. An Employer
which amends its safe harbor Plan to eliminate or reduce the safe harbor
matching contribution under this Section 14.02(D)(5), or which terminates the
Plan under Section 13.04 effective during the Plan Year, must continue to apply
all of the safe harbor requirements of this Section 14.02(D) until the amendment
or termination becomes effective and also must apply for the entire Plan Year,
using current year testing, the nondiscrimination test under Section 14.08 (ADP
test), and if applicable, the nondiscrimination test under Section 14.09 (ACP
test).
An Employer maintaining a profit sharing plan, stock bonus plan or pre-ERISA
money purchase pension plan may during a Plan Year amend prospectively its Plan
to become a safe harbor 401(k) plan provided: (a) the Employer's Plan is not a
successor plan as described in Notice 98-1 or any subsequent applicable
guidance; (b) the 401(k) arrangement is in effect for at least 3 months during
the Plan Year; (c) the Plan Administrator provides the safe harbor notice
described in Section 14.02(D)(4) a reasonable time prior to and not later than
the effective date of the amendment; and (d) the Plan satisfies commencing on
the effective date of the amendment, all of the safe harbor requirements of this
Section 14.02(D).
(E) SIMPLE 401(k) Plan. The Employer in its Standardized Code ss.401(k) Adoption
Agreement may elect to apply prospectively to its Plan the SIMPLE 401(k)
provisions of this Section 14.02(E) if: (1) the Plan Year is the calendar year;
(2) the Employer (including Related Employers under Section 1.26) has no more
than 100 Employees who received Compensation of at least $5,000 in the
immediately preceding calendar year; and (3) the Employer does not maintain any
other plan as described in Code ss.219(g)(5), with respect to which
contributions were made or benefits were accrued for Service by an eligible
Employee in the Plan Year to which the SIMPLE 401(k) provisions apply. If an
electing Employer fails for any subsequent calendar year to satisfy all of the
foregoing requirements, including where the Employer is involved in an
acquisition, disposition or similar transaction under which the Employer
satisfies Code ss.410(b)(6)(C)(1), the Employer remains eligible to maintain the
SIMPLE 401(k) Plan for two additional calendar years following the last year in
which the Employer satisfied the requirements. The provisions of this Section
14.02(E) apply to an electing Employer notwithstanding any contrary provision in
the Plan.
(1) SIMPLE - Compensation. For purposes of this Section 14.02(E), Compensation
is limited as described in Section 1.07(E) and: (a) in the case of an Employee,
means W-2 wages but increased by the Employee's elective deferrals under a
401(k) arrangement, SIMPLE IRA, SARSEP or 403(b) annuity; and (b) in the case of
a Self Employed Individual, means Earned Income determined without regard to
contributions made to this Plan.
(2) Participant deferral contributions. Each eligible Employee may enter into a
salary reduction agreement to make deferral contributions into the SIMPLE 401(k)
Plan in an amount not exceeding $6,000 per calendar year, or such other amount
as in effect under Code ss.408(p)(2)(E). A Participant may elect to make
deferral contributions or modify a salary reduction agreement at any time in
accordance with the Plan Administrator's SIMPLE 401(k) salary reduction
agreement form, but must be provided at least 60 days prior to the beginning of
each SIMPLE Plan Year or commencement of participation for this purpose. A
Participant also may at any time terminate prospectively, his/her salary
reduction agreement applicable to the Employer's SIMPLE 401(k) Plan.
(3) Employer SIMPLE 401(k) contributions. An Employer which elects under this
Section 14.02(E) to apply the SIMPLE 401(k) provisions, annually must make a
SIMPLE 401(k) contribution to the Plan as described in this Section 14.02(E)(3).
The Employer operationally must elect whether the Employer will contribute: (1)
a matching contribution equal to each Participant's deferral contributions but
not exceeding 3% of Plan Year Compensation or such lower percentage as the
Employer may elect under Code ss.408(p)(2)(C)(ii)(II); or (2) a nonelective
contribution equal to 2% of Plan Year Compensation for each Participant whose
Compensation is at least $5,000. The Employer in its Adoption Agreement may not
elect to apply any Section 3.06 allocation conditions to the Plan
Administrator's allocation of Employer SIMPLE contributions.
(4) SIMPLE 401(k) notice. The Plan Administrator must provide notice to each
Participant a reasonable period of time before the 60th day prior to the
beginning of each SIMPLE 401(k) Plan Year, describing the Participant's deferral
election rights and the Employer's matching or nonelective contributions which
the Employer will make for the Plan Year described in the notice.
(5) Application of remaining Plan provisions. All contributions to the SIMPLE
401(k) Plan are Annual Additions subject to the limitations set forth in Article
III. No contributions other than those described in this Section 14.02(E) or
rollover contributions described in Section 4.04 may be made to the SIMPLE
401(k) Plan. All contributions to the SIMPLE 401(k) Plan are 100% Vested at all
times and in the event of a conversion of a non SIMPLE Plan into a SIMPLE 401(k)
Plan, all Account Balances in existence on the first day of the Plan Year to
which the SIMPLE 401(k) provisions apply, become 100% Vested. A SIMPLE 401(k)
Plan is not subject to nondiscrimination testing under Section 14.08 (ADP test)
or Section 14.09 (ACP test) of the Plan and is not subject to the top heavy
provisions of Article XII. Except as otherwise described in this Section
14.03(E), if an Employer has elected in its Adoption Agreement to apply the
SIMPLE 401(k) provisions of this Section 14.03(E), the Plan Administrator will
apply the remaining Plan provisions to Employer's Plan.
(F) Election not to participate. A Participant's or Employee's election not to
participate, pursuant to Section 2.06, includes his/her right to enter into a
salary reduction agreement or to share in the allocation of a cash or deferred
contribution.
14.03 DEFINITIONS. For purposes of this Article XIV:
(a) "Compensation" means, except as otherwise provided in this Article XIV,
Compensation as defined for nondiscrimination purposes in Section 1.07(F).
(b) "Current year testing" means for purposes of the ADP test described in
Section 14.08 and the ACP test described in Section 14.09, the use of data
from the testing year in determining the ADP or ADP for the Nonhighly
Compensated Group.
(c) "Deferral contributions" are salary reduction contributions and cash or
deferred contributions the Employer contributes to the Trust on behalf of
an eligible Employee, irrespective of whether, in the case of cash or
deferred contributions, the contribution is at the election of the
Employee. For salary reduction contributions, the terms "deferral
contributions" and "elective deferrals" have the same meaning.
(d) "Distribution restrictions" means the Employee may not receive a
distribution of the restricted balances described in Section 14.11 (nor
earnings on those contributions) except in the event of: (1) the
Participant's death, Disability, Separation from Service (which for
purposes of this Section 14.03(d), means as the Plan Administrator
determines under applicable Revenue Service guidance, including the "same
desk" rule and Revenue Ruling 2000-27 with respect to certain asset sale
transactions) or attainment of age 59 1/2, (2) financial hardship
satisfying Section 14.11(A), (3) Plan termination, without establishment of
a successor defined contribution plan (other than an ESOP), (4) a sale by a
corporate Employer of substantially all of the assets (within the meaning
of Code ss.409(d)(2)) used in a trade or business of the Employer, to
another corporation, but only to an Employee who continues employment with
the corporation acquiring those assets, or (5) a sale by a corporate
Employer of its interest in a subsidiary (within the meaning of Code
ss.409(d)(3)), but only to an Employee who continues employment with the
subsidiary. A distribution described in clauses (3), (4) or (5) must be a
lump sum distribution, and otherwise must satisfy Code ss.401(k)(10).
(e) "Elective deferrals" are all salary reduction contributions and that
portion of any cash or deferred contribution which the Employer contributes
to the Plan at the election of an eligible Employee. Any portion of a cash
or deferred contribution contributed to the Trust because of the Employee's
failure to make a cash election is an elective deferral. However, any
portion of a cash or deferred contribution over which the Employee does not
have a cash election is not an elective deferral. Elective deferrals do not
include amounts which have become currently available to the Employee prior
to the election nor amounts designated as an Employee contribution at the
time of deferral or contribution. Elective deferrals are 100% vested at all
times.
(f) "Eligible Employee" means, for purposes of the ADP test described in
Section 14.08, an Employee who is eligible to enter into a salary reduction
agreement for all or any portion of the Plan Year, irrespective of whether
he/she actually enters into such an agreement, and a Participant who is
eligible for an allocation of the Employer's cash or deferred contribution
for the Plan Year. For purposes of the ACP test described in Section 14.09,
an eligible Employee is a Participant who is eligible to receive an
allocation of matching contributions (or would be eligible if he/she made
the type of contributions necessary to receive an allocation of matching
contributions) and a Participant who is eligible to make Employee
contributions, irrespective of whether he/she actually makes Employee
contributions. An Employee continues to be an eligible Employee during a
period the Plan suspends the Employee's right to make elective deferrals or
Employee contributions following a hardship distribution.
(g) "Employee contributions" are nondeductible contributions made by a
Participant and designated, at the time of contribution, as an Employee
contribution. Elective deferrals and deferral contributions are not
Employee contributions. Employee contributions are subject to Article IV.
(h) "Highly Compensated Employee" means an eligible Employee who satisfies
the definition in Section 1.14 of the Plan.
(i) "Highly Compensated Group" means the group of eligible Employees who
are Highly Compensated Employees for the Plan Year.
(j) "Matching contributions" are contributions made by the Employer on
account of elective deferrals under a 401(k) arrangement or on account of
Employee contributions. Matching contributions also include Participant
forfeitures allocated on account of such elective deferrals or Employee
contributions.
(k) "Nonelective contributions" are contributions made by the Employer
which are not subject to a deferral election by an Employee and which are
not matching contributions.
(l) "Nonhighly Compensated Employee" means an eligible Employee who is not
a Highly Compensated Employee.
(m) "Nonhighly Compensated Group" means the group of eligible Employees who
are Nonhighly Compensated Employees for the Plan Year.
(n) "Prior year testing" means for purposes of the ADP test described in
Section 14.08 and the ACP test described in Section 14.09, the use of data
from the Plan Year immediately prior to the testing year in determining the
ADP or ACP for the Nonhighly Compensated Group.
(o) "Qualified matching contributions" are matching contributions which are
100% Vested at all times and which are subject to the distribution
restrictions described in Section 14.03(d). Matching contributions are not
100% Vested at all times if the Employee has a 100% Vested interest because
of his/her Years of Service taken into account under a vesting schedule.
Any matching contributions allocated to a Participant's qualified matching
contributions Account under the Plan automatically satisfy and are subject
to the definition of qualified matching contributions.
(p) "Qualified nonelective contributions" are nonelective contributions
which are 100% Vested at all times and which are subject to the
distribution restrictions described in Section 14.03(d). Nonelective
contributions are not 100% Vested at all times if the Employee has a 100%
Vested interest because of his/her Years of Service taken into account
under a vesting schedule. Any nonelective contributions allocated to a
Participant's qualified nonelective contributions Account under the Plan
automatically satisfy and are subject to the definition of qualified
nonelective contributions.
(q) "Regular matching contributions" are matching contributions which are
not qualified matching contributions.
(r) "Safe harbor contributions" are Employer nonelective or matching
contributions which the Plan Administrator applies to satisfy the ADP test
safe harbor under Code ss.401(k)(12)(B) or (C) and which are 100% Vested at
all times and subject to the distribution restrictions described in Section
14.03(d). Safe harbor contributions are not 100% Vested at all times if the
Employee has a 100% Vested interest because of his/her Years of Service
taken into account under a vesting schedule. Any nonelective contributions
allocated to a Participant's safe harbor contributions Account,
automatically satisfy and are subject to the definition of safe harbor
contributions.
(s) "Salary reduction agreement" is a written election by a Participant to
make salary reduction contributions as described in Section 14.02(A).
(t) "Salary reduction contributions" mean Employer contributions elected by
a Participant to be made from the Participant's Compensation pursuant to a
salary reduction agreement and which the Plan Administrator must allocate
to the electing Participant's Account.
(u) "Testing year" means for purposes of the ADP test described in Section
14.08 and the ACP test described in Section 14.09, the Plan Year for which
the ADP or ACP test is being performed.
14.04 MATCHING CONTRIBUTIONS/ EMPLOYEE CONTRIBUTIONS. The Employer in Adoption
Agreement Section 3.01 may elect to provide matching contributions. The Employer
in Adoption Agreement Section 4.02 also may elect to permit a Participant to
make Employee contributions.
14.05 DEFERRAL DEPOSIT TIMING/EMPLOYER CONTRIBUTION STATUS. The Employer must
make salary reduction contributions to the Trust after withholding the
corresponding Compensation from the Participant at the earliest date on which
the contributions can reasonably be segregated from the Employer's general
assets. Furthermore, the Employer must make to the Trust salary reduction
contributions, cash or deferred contributions, matching contributions (including
qualified matching contributions), qualified nonelective contributions, safe
harbor contributions and SIMPLE contributions no later than the time prescribed
by the Code or ERISA. Salary reduction contributions and cash or deferred
contributions are Employer contributions for all purposes under this Plan,
except to the extent the Code prohibits the use of these contributions to
satisfy the qualification requirements of the Code.
14.06 SPECIAL ACCOUNTING AND ALLOCATION PROVISIONS. To make allocations under
the Plan, the Plan Administrator must establish for each Participant, consistent
with the Employer's elections under its Adoption Agreement, a deferral
contributions Account, a nonelective contributions Account, a qualified matching
contributions Account, a regular matching contributions Account, a qualified
nonelective contributions Account, a safe harbor contributions Account and a
SIMPLE contributions account.
(A) Deferral contributions. The Plan Administrator will allocate to each
Participant's deferral contributions Account the amount of deferral
contributions the Employer makes to the Trust on behalf of the Participant. The
Plan Administrator will make this allocation as of the last day of each Plan
Year or more frequently as it may determine to be appropriate and consistent
with the Plan terms, including those providing for allocation of net income,
gain or loss.
(B) Matching contributions. The Plan Administrator will allocate the Employer's
matching contributions as of the last day of each Plan Year or more frequently
as the Plan Administrator may determine to be appropriate and consistent with
the Plan terms, including those providing for allocation of net income, gain or
loss. The Plan Administrator may not allocate any fixed or discretionary
matching contributions with respect to deferral contributions that are excess
deferrals under Section 14.07. For this purpose: (a) excess deferrals relate
first to deferral contributions for the Plan Year not otherwise eligible for a
matching contribution; and (b) if the Plan Year is not a calendar year, the
excess deferrals for a Plan Year are the last elective deferrals made for a
calendar year. The Plan Administrator may not allocate a matching contribution
to a Participant's Account to the extent the matching contribution exceeds the
Participant's Annual Additions limitation in Part 2 of Article III. The
provisions of Section 3.05 govern the treatment of any matching contribution the
Plan Administrator allocates contrary to this Section 14.06(B), and the Plan
Administrator will compute a Participant's ACP under Section 14.09 by
disregarding the forfeiture.
(1) Fixed match. To the extent the Employer makes matching contributions under a
fixed matching contribution formula set forth in the Employer's Adoption
Agreement, the Plan Administrator will allocate the matching contribution to the
Account of the Participant on whose behalf the Employer makes that contribution.
A fixed matching contribution formula is a formula under which the Employer
contributes a specified percentage or dollar amount on behalf of a Participant
based on that Participant's deferral contributions or Employee contributions
eligible for a match. The Employer may contribute on a Participant's behalf
under a specific matching contribution formula only if the Participant satisfies
the allocation conditions for matching contributions, if any, the Employer
elects in Adoption Agreement Section 3.06. The Employer in its Adoption
Agreement may elect whether the Plan Administrator will allocate a fixed
matching contribution as a qualified matching contribution or as a regular
matching contribution.
(2) Discretionary match. To the extent the Employer makes matching contributions
under a discretionary formula, the Plan Administrator will allocate the
discretionary matching contributions to the Account of each Participant who
satisfies the allocation conditions, if any, for matching contributions the
Employer elects in Adoption Agreement Section 3.06. The allocation of
discretionary matching contributions to a Participant's Account is in the same
proportion that each Participant's deferral contributions bear to the total
deferral contributions of all Participants. If the discretionary formula is a
tiered formula, the Plan Administrator will make this allocation separately with
respect to each tier of deferral contributions, allocating in such manner the
amount of the matching contributions made with respect to that tier. The
Employer operationally may direct the Plan Administrator to allocate any
discretionary match as a regular matching contribution or as a qualified
matching contribution.
(3) Match on deferrals and Employee contributions. If the matching contribution
formula applies both to deferral contributions and to Employee contributions,
the matching contributions apply first to deferral contributions.
(C) Qualified nonelective contributions. If the Employer operationally
designates a nonelective contribution to be a qualified nonelective contribution
for the Plan Year, the Plan Administrator will allocate that qualified
nonelective contribution to the qualified nonelective contributions Account of
each Participant eligible for an allocation of that designated contribution, as
the Employer elects in Adoption Agreement Section 3.04.
(D) Nonelective contributions. If the Employer makes a nonelective contribution
for the Plan Year which the Employer does not designate as a qualified
nonelective contribution, the Plan Administrator will allocate the nonelective
contribution in accordance with Adoption Agreement Section 3.04. For purposes of
the nondiscrimination tests described in Sections 14.08 (ADP test), 14.09 (ACP
test) and 14.10 (multiple use limitation), the Plan Administrator may treat
nonelective contributions allocated under this Section 14.06(D) as qualified
nonelective contributions, if the contributions otherwise satisfy the definition
of qualified nonelective contributions. The Employer, to facilitate the Plan
Administrator's correction of test failures under Sections 14.08, 14.09 and
14.10, also may make qualified nonelective contributions to the Plan
irrespective of whether the Employer in its Adoption Agreement has elected to
provide nonelective contributions.
(E) Safe harbor contributions. If the Employer elects under Section 14.02(D) to
apply the safe harbor provisions to the Plan, the Employer will allocate the
safe harbor contributions to the safe harbor contributions Account of each
Participant unless the Employer in an Addendum to its Adoption Agreement elects
to limit safe harbor allocations to Nonhighly Compensated Employees.
(F) SIMPLE 401(k) Plan contributions. If the Employer elects under Section
14.02(E) to apply the SIMPLE 401(k) provisions to the Plan, the Employer will
allocate the SIMPLE contributions to the SIMPLE contributions Account of
Participants eligible to receive an allocation of the Employer's SIMPLE
contribution (including Participants who make deferral contributions), as
specified in Section 14.02(E).
14.07 ANNUAL ELECTIVE DEFERRAL LIMITATION.
(A) Annual Elective Deferral Limitation. An Employee's elective deferrals for a
calendar year may not exceed the Code ss.402(g) limitation ("402(g)
limitation"). The 402(g) limitation is the greater of $7,000 or the adjusted
amount determined by the Secretary of the Treasury. If, pursuant to a salary
reduction agreement or pursuant to a cash or deferral election, the Employer
determines the Employee's elective deferrals to the Plan for a calendar year
would exceed the 402(g) limitation, the Employer will suspend the Employee's
salary reduction agreement, if any, until the following January 1 and pay in
cash the portion of a deferral election which would result in the Employee's
elective deferrals for the calendar year exceeding the 402(g) limitation. If the
Plan Administrator determines an Employee's elective deferrals already
contributed to the Plan for a calendar year exceed the 402(g) limitation, the
Plan Administrator will distribute the amount in excess of the 402(g) limitation
(the "excess deferral"), as adjusted for allocable income under Section
14.07(C), no later than April 15 of the following calendar year. If the Plan
Administrator distributes the excess deferral by the appropriate April 15, the
excess deferral is not an Annual Addition under Article III, and the Plan
Administrator may make the distribution irrespective of any other provision
under this Plan or under the Code. The Plan Administrator will reduce the amount
of excess deferrals for a calendar year distributable to the Employee by the
amount of excess contributions (as determined in Section 14.08), if any,
previously distributed to the Employee for the Plan Year beginning in that
calendar year. Elective deferrals distributed to an Employee as excess Annual
Additions in accordance with Article III are not taken into account under the
Employee's 402(g) limitation.
(B) More than One Plan. If an Employee participates in another plan subject to
the 402(g) limitation under which he/she makes elective deferrals pursuant to a
401(k) arrangement, elective deferrals under a SARSEP, elective contributions
under a SIMPLE IRA or salary reduction contributions to a tax-sheltered annuity
(irrespective of whether the Employer maintains the other plan), the Employee
may provide to the Plan Administrator a written claim for excess deferrals made
to the Plan for a calendar year. The Employee must submit the claim no later
than the March 1 following the close of the particular calendar year and the
claim must specify the amount of the Employee's elective deferrals under this
Plan which are excess deferrals. If the Plan Administrator receives a timely
claim, it will distribute the excess deferral (as adjusted for allocable income)
the Employee has assigned to this Plan, in accordance with the distribution
procedure described in Section 14.07(A).
(C) Allocable Income. For purposes of making a distribution of excess deferrals
pursuant to this Section 14.07, allocable income means net income or net loss
allocable to the excess deferrals for the calendar year (but not beyond the
calendar year) in which the Employee made the excess deferral, determined in a
manner which is uniform, nondiscriminatory and reasonably reflective of the
manner used by the Plan Administrator to allocate income to Participants'
Accounts.
14.08 ACTUAL DEFERRAL PERCENTAGE (ADP) TEST. For each Plan Year, the Plan
Administrator must determine whether the Plan's 401(k) arrangement satisfies
either of the following ADP tests:
(i) The ADP for the Highly Compensated Group does not exceed 1.25 times the ADP
of the Nonhighly Compensated Group; or
(ii) The ADP for the Highly Compensated Group does not exceed the ADP for the
Nonhighly Compensated Group by more than two percentage points (or the lesser
percentage permitted by the multiple use limitation in Section 14.10) and the
ADP for the Highly Compensated Group is not more than twice the ADP for the
Nonhighly Compensated Group.
(A) Calculation of ADP. The ADP for a group is the average of the separate
deferral percentages calculated for each eligible Employee who is a member of
that group. An eligible Employee's deferral percentage for a Plan Year is the
ratio of the eligible Employee's deferral contributions for the Plan Year to the
Employee's Compensation for the Plan Year. In determining the ADP, the Plan
Administrator must include any Highly Compensated Employee's excess deferrals,
as described in Section 14.07(A), to this Plan or to any other Plan of the
Employer and the Plan Administrator will disregard any Nonhighly Compensated
Employee's excess deferrals. The Plan Administrator operationally may include in
the ADP test, qualified nonelective contributions and qualified matching
contributions the Plan Administrator does not use in the ACP test. The Plan
Administrator, under prior year testing, may include qualified nonelective
contributions or qualified matching contributions in determining the Nonhighly
Compensated Employee ADP only if the Employer makes such contribution to the
Plan by the end of the testing year and the Plan Administrator allocates the
contribution to the prior Plan Year. In determining whether the Plan's 401(k)
arrangement satisfies either ADP test, the Plan Administrator will use prior
year testing, unless the Employer in Adoption Agreement Appendices A or B elects
to use current year testing. An Employer may not change from current year
testing to prior year testing except as provided in the Code or in other
applicable guidance. For the first Plan Year the Employer permits elective
deferrals and the Plan is not a successor plan (as provided in the Code or in
other applicable guidance), under prior year testing, the prior year ADP for the
Nonhighly Compensated Group is 3% unless the Employer in an Addendum to its
Adoption Agreement elects to use the actual first year ADP for the Nonhighly
Compensated Group.
(B) Special aggregation rule for Highly Compensated Employees. To determine the
deferral percentage of any Highly Compensated Employee, the Plan Administrator
must take into account any elective deferrals made by the Highly Compensated
Employee under any other 401(k) arrangement maintained by the Employer, unless
the elective deferrals are to an ESOP. If the plans containing the 401(k)
arrangements have different plan years, the Plan Administrator will determine
the combined deferral contributions on the basis of the plan years ending in the
same calendar year.
(C) Aggregation of certain 401(k) arrangements. If the Employer treats two or
more plans as a single plan for coverage or nondiscrimination purposes, the
Employer must combine the 401(k) arrangements under such plans to determine
whether the plans satisfy the ADP test. This aggregation rule applies to the ADP
determination for all eligible Employees, irrespective of whether an eligible
Employee is a Highly Compensated Employee or a Nonhighly Compensated Employee.
An Employer may aggregate 401(k) arrangements under this Section 14.08(C) only
if the plans have the same plan years and use the same testing method. An
Employer may not aggregate an ESOP (or the ESOP portion of a plan) with a
non-ESOP plan (or non-ESOP portion of a plan). If the Employer aggregating
401(k) arrangements under this Section 14.08(C) is using prior year testing, the
Plan Administrator must adjust the Nonhighly Compensated Group ADP for the prior
year as provided in the Code or in other applicable guidance.
(D) Characterization of excess contributions. If, pursuant to this Section
14.08, the Plan Administrator has elected to include qualified matching
contributions in the ADP test, the excess contributions are attributable
proportionately to deferral contributions and to qualified matching
contributions allocated on the basis of those deferral contributions. The Plan
Administrator will reduce the amount of excess contributions for a Plan Year
distributable to a Highly Compensated Employee by the amount of excess deferrals
(as determined in Section 14.07), if any, previously distributed to that
Employee for the Employee's taxable year ending in that Plan Year.
(E) Distribution of excess contributions. If the Plan Administrator determines
the Plan fails to satisfy the ADP test for a Plan Year, the Trustee, as directed
by the Plan Administrator, must distribute the excess contributions, as adjusted
for allocable income under Section 14.08(F), during the next Plan Year. However,
the Employer may incur an excise tax with respect to the amount of excess
contributions for a Plan Year not distributed to the appropriate Highly
Compensated Employees during the first 2 1/2 months of that next Plan Year. The
excess contributions are the amount of deferral contributions made by the Highly
Compensated Employees which causes the Plan to fail the ADP test. The Plan
Administrator will determine the total amount of the excess contributions to the
Plan by starting with the Highly Compensated Employee(s) who has the greatest
deferral percentage, reducing his/her deferral percentage (but not below the
next highest deferral percentage), then, if necessary, reducing the deferral
percentage of the Highly Compensated Employee(s) at the next highest deferral
percentage level, including the deferral percentage of the Highly Compensated
Employee(s) whose deferral percentage the Plan Administrator already has reduced
(but not below the next highest deferral percentage), and continuing in this
manner until the ADP for the Highly Compensated Group satisfies the ADP test.
After the Plan Administrator has determined the total excess contribution
amount, the Trustee, as directed by the Plan Administrator, then will distribute
to each Highly Compensated Employee his/her respective share of the excess
contributions. The Plan Administrator will determine each Highly Compensated
Employee's share of excess contributions by starting with the Highly Compensated
Employee(s) who has the highest dollar amount of elective deferrals, reducing
his/her elective deferrals (but not below the next highest dollar amount of
elective deferrals), then, if necessary, reducing the elective deferrals of the
Highly Compensated Employee(s) at the next highest dollar amount of elective
deferrals including the elective deferrals of the Highly Compensated Employee(s)
whose elective deferrals the Plan Administrator already has reduced (but not
below the next highest dollar amount of elective deferrals), and continuing in
this manner until the Trustee has distributed all excess contributions.
(F) Allocable income. To determine the amount of the corrective distribution
required under this Section 14.08, the Plan Administrator must calculate the
allocable income for the Plan Year (but not beyond the Plan Year) in which the
excess contributions arose. "Allocable income" means net income or net loss. To
calculate allocable income for the Plan Year, the Plan Administrator will use a
uniform and nondiscriminatory method which reasonably reflects the manner used
by the Plan Administrator to allocate income to Participants' Accounts.
14.09 ACTUAL CONTRIBUTION PERCENTAGE (ACP) TEST. For each Plan Year, the Plan
Administrator must determine whether the annual Employer matching contributions
(other than qualified matching contributions used in the ADP test under Section
14.08), if any, and the Employee contributions, if any, satisfy either of the
following ACP tests:
(i) The ACP for the Highly Compensated Group does not exceed 1.25 times the ACP
of the Nonhighly Compensated Group; or
(ii) The ACP for the Highly Compensated Group does not exceed the ACP for the
Nonhighly Compensated Group by more than two percentage points (or the lesser
percentage permitted by the multiple use limitation in Section 14.10) and the
ACP for the Highly Compensated Group is not more than twice the ACP for the
Nonhighly Compensated Group.
(A) Calculation of ACP. The ACP for a group is the average of the separate
contribution percentages calculated for each eligible Employee who is a member
of that group. An eligible Employee's contribution percentage for a Plan Year is
the ratio of the eligible Employee's aggregate contributions for the Plan Year
to the Employee's Compensation for the Plan Year. "Aggregate contributions" are
Employer matching contributions (other than qualified matching contributions
used in the ADP test under Section 14.08) and Employee contributions (as defined
in Section 14.03). The Plan Administrator operationally may include in the ACP
test, qualified nonelective contributions and elective deferrals not used in the
ADP test. The Plan Administrator, under prior year testing, may include
qualified nonelective contributions or qualified matching contributions in
determining the Nonhighly Compensated Employee ACP only if the Employer makes
such contribution to the Plan by the end of the testing year and the Plan
Administrator allocates the contribution to the prior Plan Year. In determining
whether the Plan satisfies either ACP test, the Plan Administrator will use
prior year testing, unless the Employer in Appendix A to its Adoption Agreement
elects to use the current year testing. An Employer may not change from current
year testing to prior year testing except as provided in the Code or in other
applicable guidance. For the first Plan Year the Plan permits matching
contributions or Employee contributions and the Plan is not a successor plan (as
defined in the Code or in other applicable guidance), under prior year testing,
the prior year ACP for the Nonhighly Compensated Group is 3% unless the Employer
in an Addendum to its Adoption Agreement elects to use the actual first year ACP
for the Nonhighly Compensated Group.
(B) Special aggregation rule for Highly Compensated Employees. To determine the
contribution percentage of any Highly Compensated Employee, the aggregate
contributions taken into account must include any matching contributions (other
than qualified matching contributions used in the ADP test) and any Employee
contributions made on his/her behalf to any other plan maintained by the
Employer, unless the other plan is an ESOP. If the plans have different plan
years, the Plan Administrator will determine the combined aggregate
contributions on the basis of the plan years ending in the same calendar year.
(C) Aggregation of certain 401(m) arrangements. If the Employer treats two or
more plans as a single for coverage or nondiscrimination purposes, the Employer
must combine the 401(m) arrangements under such plans to determine whether the
plans satisfy the ACP test. This aggregation rule applies to the ACP
determination for all eligible Employees, irrespective of whether an eligible
Employee is a Highly Compensated Employee or a Nonhighly Compensated Employee.
An Employer may aggregate 401(m) arrangements under this Section 14.09(C) if
where the plans have the same plan year and use the same testing method. An
Employer may not aggregate an ESOP (or the ESOP portion of a plan) with a
non-ESOP plan (or non-ESOP portion of a plan). If the Employer aggregating
401(m) arrangements under this Section 14.09(C) is using prior year testing, the
Plan Administrator must adjust the Nonhighly Compensated Group ACP for the prior
year as provided in the Code or in other applicable guidance.
(D) Distribution of excess aggregate contributions. The Plan Administrator will
determine excess aggregate contributions after determining excess deferrals
under Section 14.07 and excess contributions under Section 14.08. If the Plan
Administrator determines the Plan fails to satisfy the ACP test for a Plan Year,
the Trustee, as directed by the Plan Administrator, must distribute the Vested
excess aggregate contributions, as adjusted for allocable income, during the
next Plan Year. However, the Employer may incur an excise tax with respect to
the amount of excess aggregate contributions for a Plan Year not distributed to
the appropriate Highly Compensated Employees during the first 2 1/2 months of
that next Plan Year. The excess aggregate contributions are the amount of
aggregate contributions allocated on behalf of the Highly Compensated Employees
which causes the Plan to fail the ACP test. The Plan Administrator will
determine the total amount of the excess aggregate contributions by starting
with the Highly Compensated Employee(s) who has the greatest contribution
percentage, reducing his/her contribution percentage (but not below the next
highest contribution percentage), then, if necessary, reducing the contribution
percentage of the Highly Compensated Employee(s) at the next highest
contribution percentage level, including the contribution percentage of the
Highly Compensated Employee(s) whose contribution percentage the Plan
Administrator already has reduced (but not below the next highest contribution
percentage), and continuing in this manner until the ACP for the Highly
Compensated Group satisfies the ACP test.
After the Plan Administrator has determined the total excess aggregate
contribution amount, the Trustee, as directed by the Plan Administrator, then
will distribute (to the extent Vested) to each Highly Compensated Employee
his/her respective share of the excess aggregate contributions. The Plan
Administrator will determine each Highly Compensated Employee's share of excess
aggregate contributions by starting with the Highly Compensated Employee(s) who
has the highest dollar amount of aggregate contributions, reducing the amount of
his/her aggregate contributions (but not below the next highest dollar amount of
the aggregate contributions), then, if necessary, reducing the amount of
aggregate contributions of the Highly Compensated Employee(s) at the next
highest dollar amount of aggregate contributions, including the aggregate
contributions of the Highly Compensated Employee(s) whose aggregate
contributions the Plan Administrator already has reduced (but not below the next
highest dollar amount of aggregate contributions), and continuing in this manner
until the Trustee has distributed all excess aggregate contributions.
(E) Allocable income. To determine the amount of the corrective distribution
required under this Section 14.09, the Plan Administrator must calculate the
allocable income for the Plan Year (but not beyond the Plan Year) in which the
excess aggregate contributions arose. "Allocable income" means net income or net
loss. The Plan Administrator will determine allocable income in the same manner
as described in Section 14.08(F) for excess contributions.
(F) Characterization of excess aggregate contributions. The Plan Administrator
will treat a Highly Compensated Employee's allocable share of excess aggregate
contributions in the following priority: (1) first as attributable to his/her
Employee contributions, if any; (2) then as matching contributions allocable
with respect to excess contributions determined under the ADP test described in
Section 14.08; (3) then on a pro rata basis to matching contributions and to the
deferral contributions relating to those matching contributions which the Plan
Administrator has included in the ACP test; and (4) last to qualified
nonelective contributions used in the ACP test. To the extent the Highly
Compensated Employee's excess aggregate contributions are attributable to
matching contributions, and he/she is not 100% Vested in his/her Account Balance
attributable to matching contributions, the Plan Administrator will distribute
only the Vested portion and forfeit the nonVested portion. The Vested portion of
the Highly Compensated Employee's excess aggregate contributions attributable to
Employer matching contributions is the total amount of such excess aggregate
contributions (as adjusted for allocable income) multiplied by his/her Vested
percentage (determined as of the last day of the Plan Year for which the
Employer made the matching contribution).
14.10 MULTIPLE USE LIMITATION. If at least one Highly Compensated Employee is
includible in the ADP test under Section 14.08 and in the ACP test under Section
14.09, the sum of the Highly Compensated Group's ADP and ACP may not exceed the
multiple use limitation.
The multiple use limitation is the sum of (i) and (ii):
(i) 125% of the greater of: (a) the ADP of the Nonhighly Compensated Group for
the prior Plan Year; or (b) the ACP of the Nonhighly Compensated Group for the
Plan Year beginning with or within the prior Plan Year of the 401(k)
arrangement.
(ii) 2% plus the lesser of (i)(a) or (i)(b), but no more than twice the lesser
of (i)(a) or (i)(b).
The Plan Administrator, in lieu of determining the multiple use limitation as
the sum of (i) and (ii), may elect to determine the multiple use limitation as
the sum of (iii) and (iv):
(iii)125% of the lesser of: (a) the ADP of the Nonhighly Compensated Group for
the prior Plan Year; or (b) the ACP of the Nonhighly Compensated Group for the
Plan Year beginning with or within the prior Plan Year of the 401(k)
arrangement.
(iv) 2% plus the greater of (iii)(a) or (iii)(b), but no more than twice the
greater of (iii)(a) or (iii)(b).
If the Employer has elected in its Adoption Agreement to use current year
testing, the multiple use limitation is calculated using the Nonhighly
Compensated Group's current Plan Year data. The Plan Administrator will
determine whether the Plan satisfies the multiple use limitation after applying
the ADP test under Section 14.08 and the ACP test under Section 14.09 and using
the deemed maximum corrected ADP and ACP percentages in the event the Plan
failed either or both tests. If, after applying this Section 14.10, the Plan
Administrator determines the Plan has failed to satisfy the multiple use
limitation, the Plan Administrator will correct the failure by treating the
excess amount as excess contributions under Section 14.08 or as excess aggregate
contributions under Section 14.09, as the Plan Administrator determines in its
sole discretion. This Section 14.10 does not apply unless, prior to application
of the multiple use limitation, the ADP and the ACP of the Highly Compensated
Group each exceeds 125% of the respective percentages for the Nonhighly
Compensated Group.
14.11 DISTRIBUTION RESTRICTIONS. The Employer in Adoption Agreement Section 6.01
must elect the distribution events permitted under the Plan. The distribution
events applicable to the Participant's deferral contributions Account, qualified
nonelective contributions Account, qualified matching contributions Account and
safe harbor contributions Account (collectively, "restricted balances") must
satisfy the distribution restrictions described in Section 14.03(d).
(A) Hardship Distributions from Deferral Contributions Account. The Employer
must elect in Adoption Agreement Section 6.01 whether a Participant may receive
hardship distribution (as defined in Section 6.09) from his/her deferral
contributions Account prior to the Participant's Separation from Service. A
hardship distribution from the deferral contributions Account also must satisfy
the requirements of this Section 14.11(A). A hardship distribution option may
not apply to a Participant's qualified nonelective contributions Account,
qualified matching contributions Account, nor to his/her safe harbor
contributions Account except as provided in Paragraph (2).
(1) Restrictions. The following restrictions apply to a Participant who receives
a hardship distribution from his/her deferral contributions Account: (a) the
Participant may not make elective deferrals or Employee contributions to the
Plan for the 12-month period following the date of his/her hardship
distribution; (b) the distribution may not exceed the amount of the
Participant's immediate and heavy financial need (including any amounts
necessary to pay any federal, state or local income taxes or penalties
reasonably anticipated to result from the distribution); (c) the Participant
must have obtained all distributions, other than hardship distributions, and all
nontaxable loans (determined at the time of the loan) currently available under
this Plan and all other qualified plans maintained by the Employer; and (d) the
Participant must limit elective deferrals under this Plan and under any other
qualified plan maintained by the Employer, for the Participant's taxable year
immediately following the taxable year of the hardship distribution, to the
402(g) limitation (as described in Section 14.07), reduced by the amount of the
Participant's elective deferrals made in the taxable year of the hardship
distribution. The suspension of elective deferrals and Employee contributions
described in clause (a) also must apply to all other qualified plans and to all
nonqualified plans of deferred compensation maintained by the Employer, other
than any mandatory employee contribution portion of a defined benefit plan,
including stock option, stock purchase and other similar plans, but not
including health or welfare benefit plans (other than the cash or deferred
arrangement portion of a cafeteria plan). The Plan Administrator, absent actual
contrary knowledge, may rely on a Participant's written representation that the
distribution is on account of hardship (as defined in Section 6.09) and also
satisfies clause (b). In addition, clause (c) regarding loans does not apply if
the loan to the Participant would increase the Participant's hardship need.
(2) Earnings. A hardship distribution may not include earnings on an Employee's
elective deferrals credited after December 31, 1988. Qualified matching
contributions and qualified nonelective contributions, and any earnings on such
contributions, credited as of December 31, 1988, are subject to withdrawal for a
hardship distribution only if the Employer in an Addendum to its Adoption
Agreement elects to permit such withdrawals. The Addendum may modify the
December 31, 1988, date for purposes of determining credited amounts, provided
the date is not later than the end of the last Plan Year ending before July 1,
1989.
(B) Distributions after Separation from Service.
Following the Participant's Separation from Service, the distribution events
applicable to the Participant apply equally to all of the Participant's
Accounts.
SPECIAL ALLOCATION AND VALUATION RULES. If the 401(k) arrangement provides for
salary reduction contributions, if the Plan accepts Employee contributions, or
if the Plan allocates matching contributions as of any date other than the last
day of the Plan Year, the Employer in Adoption Agreement Sections 9.08 and 10.15
must elect the method the Plan Administrator will apply to allocate net income,
gain or loss to such contributions made during the Plan Year and any alternative
valuation dates for the different Account types which the Plan Administrator
maintains under the Plan.