Police Officer and Firefighter Retirement Plan
Requirements for Retirement Benefits
Forms of Pension: Pre-Retirement Death
Amendment and Termination of Plan
1.1 Background . The Board of Trustees (the “Board”) of The Trustees of Purdue University pursuant to existing statutory authority, desires to provide certain supplemental pension benefits, as described below, to police officers and firefighters employed by Purdue University, which together with Related Plans, will provide total benefits more comparable to and competitive with benefits available to municipal fire and police personnel in Indiana. The Plan, containing the provisions set forth hereunder was established to be effective as of July 1, 1990.
Wherever used herein, the following terms have the meanings set forth below, unless a different meaning is clearly required by the context.
2.1 Actuarial Equivalent means a benefit which is of equal value to a benefit or benefits otherwise payable in a different form under the Plan, based on the Teachers Insurance and Annuity Association's individual annuity payout rates (including dividends and applicable to benefits arising from current premiums) in effect at the time benefit payments commence. The Administrator may adopt tables of actuarial adjustments based on such rates for purposes of determining Actuarial Equivalent benefits.
2.2 Actuary means an individual appointed by the Administrator, who has been enrolled by the Joint Board for the Enrollment of Actuaries or a firm having one or more such enrolled actuaries on its staff.
2.3 Administrator means the Director of Human Resources of the Employer or another person appointed as Administrator by the Board of Trustees.
2.4 Beneficiary means the person or persons designated by a Participant pursuant to Section 9.4 to receive any benefits payable under the Plan upon the death of the Participant (or upon the death of the Participant's surviving spouse or of a predecessor Beneficiary).
2.5 Board of Trustees means the Board of Trustees of the Employer or the officers of the Employer who have the authority generally given to a board of trustees.
2.6 Break Year means, for any Computation Period which ends prior to the first day of a Computation Period beginning on or after July 1, 2002, with respect to any Employee, a Computation Period during which the Employee has not completed more than five hundred Hours of Service as an Eligible Employee. For any Computation Period which begins on or after July 1, 2002 Break Year means, with respect to any Employee, a Computation Period in which the Employee is not credited with a Year of Creditable Service with respect to Years of Service for Vesting.
2.7 Code means the Internal Revenue Code of 1986, as amended from time to time. Reference to any section or subsection of the Code includes reference to any comparable or succeeding provisions of any legislation which amends, supplements or replaces such section or subsection.
2.8 Computation Period means, with respect to any Employee, a 12-consecutive-month period commencing with his Employment Commencement Date or any anniversary thereof.
2.9 Early Retirement Date means, with respect to any Participant, the first day of the month coinciding with or next following the date on which the Participant attains age fifty-five (55) and has completed at least ten (10) Years of Service for Vesting.
2.10 Effective Date means July 1, 1990.
2.11 Eligible Employee means an Employee (other than a leased employee (as defined in Section 414 (n) (2) of the Code)) who is a full-time police officer of the Employer employed at the West Lafayette, North Central, Fort Wayne and Calumet campuses, or who is a full-time firefighter employed at the West Lafayette campus. For purposes of this paragraph, “full-time” means an Employee who is regularly scheduled to perform at least 40 Hours of Service per week.
Notwithstanding the preceding paragraph, an Employee who was hired prior to the Effective Date and who elects, on or before the Effective Date, not to make Participant Contributions to the Plan, pursuant to Section 5.2, is not an Eligible Employee. If an Employee who was hired prior to the Effective Date elects not to make Participant Contributions to the Plan in accordance with the preceding sentence, he cannot subsequently make an election to become an Eligible Employee.
2.12 Employee means an individual employed by the Employer, excluding any leased employee who performs services for the Employer. For this purpose a leased employee means any person (other than an employee of the recipient) who pursuant to an agreement between the recipient and any other person (“leasing organization”) has performed services for the recipient (or for the recipient and related persons determined in accordance with section 414(n)(6) of the Code) on a substantially full-time basis for a period of at least one year, and such services are of a type historically performed by employees in the business field of the recipient employer.
2.13 Employer means The Trustees of Purdue University, the statutory governing body of the nonprofit higher educational institution organized under the laws of the State of Indiana, known as Purdue University.
2.14 Employment Commencement Date means, with respect to any Employee, the date on which he first performs an Hour of Service or, in the case of an Employee who has a Substantial Break, the date on which he first performs an Hour of Service after such Substantial Break.
2.15 ERISA means the Employee Retirement Income Security Act of 1977, as from time to time amended, and any successor statute or statutes of similar import.
2.16 Final Salary means the base salary of the Employer's first class police officer, in effect at the campus of the Employer for which the Participant is employed at such time that an Eligible Employee ceases to be an Eligible Employee. In no event shall Final Salary in any Plan Year exceed Code section 401(a)(17) limitations then in effect.
2.17 Hour of Service means, with respect to any employee,
(a) Each hour for which the Employee is paid or entitled to payment for the performance of duties for the Employer, each such hour to be credited to the Employer for the Computation Period in which the duties were performed;
(b) Each hour for which the Employee is directly or indirectly paid or entitled to payment by the Employer (including payments made or due from a trust fund or insurer to which the Employer contributes or pays premiums) on account of a period of time during which no duties are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity, disability, layoff, jury duty, or Employer approved leave of absence, each such hour to be credited to the Employee for the Computation Period in which such period of time occurs, subject to the following rules:
(i) No more than 501 Hours of Service shall be credited under this paragraph (b) to the Employee on account of any single continuous period during which the Employee performs no duties;
(ii) If the period during which the Employee performs no duties falls within two or more Computation Periods, and if the payment made on account of such period is not calculated on the basis of units of time, the Hours of Service credited with respect to such period shall be allocated between not more than the first two such Computation Periods on any reasonable basis consistently applied with respect to similarly situated Employees;
In crediting Hours of Service to an Employee under paragraph (b) above because of payments made or due on account of a period during which the Employee performs no duties, (1) if such payments are calculated on the basis of units of time, such as hours, days, weeks, or months, the number of Hours of Service to be credited shall be the number of the Employee's regularly scheduled working hours normally included in such units of time, and (2) if such payments are not calculated on the basis of units of time, the number of Hours of Service to be credited shall be equal to the lessor of (A) the amount of the payments divided by the Employee's most recent hourly rate of compensation, or (B) the number of regularly scheduled working hours would normally be included in the period of time on account of which such payments are made.
For purposes of the preceding sentence, the most recent hourly rate of compensation of an Employee whose compensation is not based on an hourly rate shall be (I) the amount determined by dividing the Employee's most recent rate of compensation for other specified periods of time (such as days, weeks, months or years) by the number of the Employee's regularly scheduled working hours normally included in such periods of time, or (II) if the Employee's compensation is not based on a fixed rate for specified periods of time, the minimum hourly wage established from time to time under the Fair Labor Standards Act of 1938. For all purposes of this paragraph, if an Employee has no regular working schedule, he shall be deemed to have a regular working schedule which is the same as the regular working schedule of his job classification. Hours of Service will be credited for employment with other members of an affiliated service group (under section 401(m), a controlled group of trade or business under common control (under section 414(c)), of which the Employer is a member and any other entity required to be aggregated with the Employer pursuant to section 414(o).
2.18 Insurance Company means any legal reserve life insurance company qualified to do business in a state.
2.19 Insurance Company Contract means the annuity or other contract or contracts, if any, issued by the Insurance Company to the Trustee or the Employer to provide all or any part of the benefit under the Plan.
2.20 Normal Retirement Date means, with respect to any Participant, the first day of the month coinciding with or next following the date on which the Participant attains age fifty-five (55) and has completed at least twenty (20) Years of Service for Accrual, or, if later, the first day of the month coinciding with or next following the date on which the Participant actually retires.
2.21 Participant means any individual who participates, or who has previously participated in the Plan in accordance with Section 4 hereof.
2.22 PERF Benefit means, with respect to any Participant who at any time participated in the Public Employees Retirement Fund (“PERF”) maintained by the Employer for certain of its staff Employees, the annual retirement benefit purchased by contributions of the Employer during such time the participant is an Eligible Employee (including any time period prior to the Effective Date for which the Participant receives credit for years of Service for Accrual and excluding employee-financed annuity benefits derived from contributions made by the Participant prior to July 1, 1984 and from contributions made by the Employer under Code Section 414(h)) under such program. For purposes of the preceding sentence, the term “retirement benefit” means a benefit commencing at the same time as the Participant's benefit under the Plan (or at such later time when a Participant first becomes eligible to receive a pension benefit under PERF) and payable under the “normal retirement option” as defined under PERF, regardless of whether such benefit is actually received by the Participant.
2.23 Plan means the Purdue University Pension Plan for Police Officers and Firefighters as set forth herein, together with any and all amendments and supplements hereto.
2.24 Plan Year means any twelve-month period ending on June 30.
2.25 Related Plan means any defined benefit or defined contribution plan, other than the Plan, maintained by the Employer in which Participants participate.
2.26 Substantial Break means, in the case of an Employee who has completed less than ten (10) Years of Service for Vesting, one or more consecutive Break Years the number of which equals or exceeds the number of his/her Years of Service prior to such Break Years. Such number of Years of Service for Vesting prior to such Break Years will be deemed not to include any Years of Service for Vesting disregarded under the preceding sentence by reason of any prior Substantial Break.
2.27 TIAA Benefit means, with respect to any Participant who at any time participated in the Teachers Insurance and Annuity Association – Fund (“TIAA”) retirement program maintained by the Employer for certain of its faculty and professional Employees, the annual retirement benefit purchased by contributions of the Employer during such time the Participant is an Eligible Employee (including any time period prior to the Effective Date for which the Participant receives credit for Years of Service for Accrual and excluding contributions made by the Employer under a salary reduction agreement with such person) under such program.
For purposes of the preceding sentence, the term “retirement benefit” means a pension payable to the Participant during his lifetime, the first payment to be due on the date of commencement of his benefits under the Plan and the last payment to be due on the first day of the calendar month in which his death occurs, and in the event the Participant's death occurs within sixty months from the date benefit payments under the Plan commenced, payment to the Participant's Beneficiary will continue in amounts equal to the amount payable to the Participant prior to his death, the last payment to be due on the first day of the sixtieth (60th) calendar month following the commencement of payments to the Participant. The retirement benefit described in the preceding sentence shall constitute the annual retirement benefit for purposes of this Section 2.27 regardless of whether such benefit is actually received by the Participant.
In determining the amount of such yearly retirement benefit, it will be assumed that all CREF accumulations are transferred to TIAA immediately prior to the date that benefits are assumed to commence. Such benefit will also reflect the TIAA payout annuity rates then in effect, including dividends based on the level benefit payment method.
2.28 Totally and Permanently Disabled, for purposes of the Plan, a Participant is deemed to be Totally and Permanently Disabled if he has met the requirements for total and permanent disability under the Group Long-Term Disability Plan maintained by the Employer.
2.29 Trust means the trust or trusts, if any, established under an agreement or agreements between the Employer and the Trustee.
2.30 Trust Fund means the property held in trust by the Trustee at the time of reference for the benefit of Participants and their Beneficiaries.
2.31 Trustee means the trustee or trustees of the Trust and any duly appointed successor trustee or trustee.
2.32 Year of Service for Accrual means, with respect to an Eligible Employee who is in a classification of employment in which full-time Employees work forty (40) hours per week, a Computation Period during which the Eligible Employee completes 2,080 or more Hours of Service, subject to the following special rules:
(i) An Employee described in above who completed 1,000 or more Hours of Service, but less than 2,080 Hours of Service as an Eligible Employee, during a Computation Period will be credited with a fraction of a Year of Service for Accrual, the numerator of which fraction is the number of Hours of Service completed by such Employee as an Eligible Employee during such Computation Period and the denominator of which fraction is 2,080;
(ii) If an Employee ceases to be an Eligible Employee on a date other than the last day of a Computation Period, or if an Employee who has ceased to be an Eligible Employee and who thereafter has had a Break Year becomes an Eligible Employee once again on a date other than the first day of a Computation Period, and in either such case the number of Hours of Service he completes in such Computation Period is less than 1,000, he will be credited with a fraction of a Year of Service for Accrual whose numerator is his number of Hours of Service completed as an Eligible Employee in such Computation Period divided by 2,080; or
(iii) If a non-vested Employee has a Substantial Break, any Year of Service for Accrual before such Substantial Break will be disregarded.
(iv) If an Employee ceases to be an Eligible Employee and elects to receive a return of his Participant Contributions plus earnings, as outlined under Section 8.1, and subsequently becomes an Eligible Employee, all Years of Service for Accrual before such termination of eligibility will be disregarded, unless the full amount of the Participant Contributions plus interest received by the Participant plus interest credited at an effective annual rate to be designated by the Administrator, is paid back to the Plan within twelve (12) months from the date the Employee regains eligibility status. The period for which such interest is due is equal to the period between the date on which the Participant received such payment from the Plan and the date on which the Participant repays to the Plan the Participant Contributions plus interest.
(v) If an Employee ceases to be an Employee prior to the Effective Date and is not re-employed on or after the Effective Date, all Years of Service for Accrual before such termination of eligibility will be disregarded.
(vi) If an Employee ceases to be an Eligible Employee on or before the Effective Date and later becomes an Eligible Employee after the Effective Date, all Years of Service for Accrual credited before such termination of eligibility will be disregarded.
(vii) Notwithstanding anything contained in this Section to the contrary, for Computation Periods which begin on or after the first day of the Plan Year beginning on July 1, 2002 an Eligible Employee shall be credited with one Year of Service for Accrual for each Year of Creditable Service and an Eligible Employee shall be credited with a fraction of a Year of Service for Accrual for any period which is less than a Year of Creditable Service to extent provided for in subsection (viii) below or Section 2.34(b), and no Years of Service for Accrual shall be credited to an Eligible Employee for the completion of Hours of Service beginning with such Computation Period.
(viii) If an Employee ceases to be an Eligible Employee on a date other than the last day of a Computation Period or if an Employee who has ceased to be an Eligible Employee and who thereafter has had a Break Year becomes an Eligible Employeeonce again on a date other than the first day of a Computation Period, and in either such case, the Eligible Employee with respect to such Computation Period shall not complete a Year of Creditable Service, he will be credited with a fraction of a Year of Service for Accrual, the numerator of which fraction is the number of months of continuous employment as an Eligible Employee within the Computation Period (as determined by Section 2.34(b) and the denominator of which is twelve.
2.33 Year of Service for Vesting means, with respect to any Eligible Employee, a Computation Period during which he has completed 1,000 or more Hours of Service, subject to the following special rules:
(i) If a non-vested Employee has a Substantial Break, any Year of Service for Vesting before such Substantial Break will be disregarded.
(ii) If an Eligible Employee ceases to be an Eligible Employee prior to the Effective Date and is not re-employed on or after the Effective Date all Years of Service for Vesting will be disregarded.
(iii) If an Eligible Employee ceases to be an Eligible Employee on or before the Effective Date and later becomes an Eligible Employee after the Effective Date, all Years of Service for Vesting prior to termination of eligibility will be disregarded.
(iv) Notwithstanding anything contained in this Section to the contrary, for Computation Periods which begin on or after the first dayof the Plan Year beginning on July 1, 2002 an Eligible Employee shall be credited with one Year of Service for Vesting for each Year of Creditable Service, and no Years of Service for Vesting shall be credited to an Eligible Employee for the completion of Hours of Service beginning with such Computation Period.
2.34 Year of Creditable Service
(a) For Plan Years beginning July 1, 2002 a “Year of Creditable Service” with respect to Years of Service for Vesting means a period of twelve months continuous employment as an Eligible Employee during a Computation Period. For purposes of this subsection (a), a period of twelve month continuous employment shall include any period within the Computation Period where Leave of Absence Service is credited to the Eligible Employee. Leave of Absence Service shall consist of the following:
(i) any period within the Computation Period during which the Eligible Employee is on a paid leave of absence from the Employer. This shall include, brief absences during which no duties are performed due to vacation, holiday, illness, or jury duty;
(ii) any period within the Computation Period, but not in excess of an aggregate of six months during a Plan Year, during which no duties are performed as a result of an Employer-approved unpaid leave of absence for the Eligible Employee.
Notwithstanding anything contained in the preceding sentence to the contrary, Years of Service for Vesting shall also be credited in the event of a Total Disability under Section 7.3(a) or as required under Section 12.4.
(b) For Plan Years beginning July 1, 2002 a Year of Creditable Service with respect to Years of Service for Accrual shall mean a period of twelve months continuous employment as an Eligible Employee during a Computation Period. For purposes of this subsection (b) a period of continuous employment shall include any period within the Computation Period where Leave of Absence Service is credited to the Eligible Employee. Leave of Absence Service shall consist of the following:
(i) any period within the Computation Period during which the Eligible Employee is on a paid leave of absence from the Employer. This shall include brief absences during which no duties are performed due to vacation, holiday, illness, or jury duty;
(ii) any period within the Computation Period, but not in excess of an aggregate six months during a Plan Year, during which no duties are performed as a result of an Employer-approved unpaid leave of absence for the Eligible Employee.
Notwithstanding anything contained in the preceding sentence to the contrary, Years of Service for Accrual shall also be credited in the event of a Total Disability under Section 7.3(a) or as required under Section 12.4.
3.1 Administrator. The Plan will be administered by the Administrator, who will be the Director of Human Resources of the Employer or another person appointed as Administrator by the Board of Trustees.
3.2 Powers The Administrator will have full power to administer the Plan in all of its details. The Administrator shall have the authority to control and manage the operation and administration of the plan, except that the administrator will have no authority over the investment of the Trust Fund or the assets held under the Insurance Company Contract. For this purpose the Administrator's power will include, but will not be limited to, the following authority:
(a) To make and enforce such rules and regulations as he deems necessary or proper for the efficient administration of the Plan, including the establishment of a claims procedure;
(b) To interpret the Plan, his interpretation thereof in good faith to be final and conclusive on all persons claiming benefits under the Plan ;
(c) To decide all questions concerning the Plan and the eligibility of any person to participate in the Plan in accordance with Section 4.3;
(d) To compute the amount of benefits which will be payable to any Participant or other person in accordance with the provisions of the Plan, and to determine the person or persons to whom such benefits will be paid:
(e) To authorize the payment of benefits;
(f) To appoint such agents, counsel, accountants, consultants and actuaries as may be required to assist in administering the Plan; and
(g) To allocate and delegate his fiduciary responsibilities under the Plan, any such allocation or designation to be by written instrument.
3.3 Examination of records The Administrator will make available to each Participant such of his records as pertain to such Participant, for examination at reasonable times during normal business hours.
3.4 Nondiscriminatory exercise of authority Whenever, in the administration of the plan, any discretionary action by the Administrator is required, the Administrator shall exercise his authority in a nondiscriminatory manner so that all persons similarly situated will receive substantially the same treatment.
3.5 Reliance on tables, etc In administering the Plan, the Administrator will be entitled to the extent permitted by law to rely conclusively on all tables, valuations, certificates, opinions and reports which are furnished by any actuary, accountant, counsel, Insurance Company, Trustee or other expert who is employed or engaged by the Administrator or by the Employer in connection with the Plan.
3.6 Indemnification of Administrator The Employer agrees to indemnify and to defend to the fullest extent permitted by law the Administrator (including any person who formerly served as Administrator) against all liabilities, damages, costs and expenses (including attorneys' fees and amounts paid in settlement of any claims approved by the Employer) occasioned by any act or omission to act in connection with the plan, if such act or omission is in good faith.
4.1 Commencement of participation Each Employee will become a Participant on the first of the month coinciding with or next following the date he becomes an Eligible Employee.
4.2 Duration of Participation A Participant will continue to be a Participant as long as he remains an Eligible Employee or is entitled to receive a benefit under the Plan and will cease to be a Participant when he is neither an Eligible Employee nor entitled to receive such benefit. If a Participant ceases to be an Eligible Employee, his Years of Service for Accrual, Years of Service for Vesting and Final Salary will be determined as of the date on which he ceases to be an Eligible Employee and will not change thereafter unless he once again becomes an Eligible Employee.
4.3 Questions as to Eligibility Decided by Administrator Any questions arising as to eligibility to participate in the Plan will be decided by the Administrator, after a hearing if requested by the Employee concerned. The Administrator's determination in such cases will be final, subject to the right of the Employee to have such determination reviewed under the review procedure provided for in Section 3.2 (a).
4.4 Reemployment of Participant If a Participant ceases to be an Employee and thereafter returns to the employ of the Employer as an Employee prior to his Normal Retirement Date, then (a) any pension under the Plan being paid to him will be suspended during his period of reemployment, and (b) any Beneficiary designation which the Participant may have previously made under Section 9 will become void and of no effect upon such reemployment. If such Participant returns to the employ of the Employer as an Eligible Employee prior to his Normal Retirement Date, he will be reinstated as an active Participant as of the date on which he first performs an Hour of Service after his reemployment. Upon the subsequent termination of employment of such reinstated Participant, any Years of Service completed during such period of reemployment will be taken into account in computing his benefits under Section 7 or 8. The amount of pension otherwise payable to the Participant at the time of his later retirement will be reduced by the Actuarial Equivalent of any benefits previously received by him under the Plan.
Section 5. Contributions, Forfeitures
5.1 Employer ContributionsThe Employer will make contributions under the Insurance Company Contract and/or to the Trust from time to time in accordance with the provisions of Section 10. At no time prior to the satisfaction of all liabilities under the Plan with respect to Participants and their surviving spouses and Beneficiaries will any amounts held under the Insurance Company Contract or any part of the corpus or income of the Trust be used for, or diverted to, any purposes other than for the exclusive benefit of Participants and their surviving spouses and Beneficiaries and for the payment of expenses of administering the Plan.
5.2 Participant Contributions Each Participant will make contributions to the Plan by salary deductions through the Employer's payroll system in amounts equal to three (3) percent of the base salary of a first class police officer in effect on the campus of the Employer for which the Participant is employed. The Employer will forward these contributions under the Insurance Company Contract and/or to the Trust within a reasonable time following each payroll period. Effective as of January 1, 1995 Required Participant Plan Contributions are designated “pick-up” by Purdue University so as not to be included in the Participant's gross income for federal tax purposes as provided by Code Section 414(h)(2). Participant Contributions otherwise required by this Section shall be waived during any period of an Employer-approved unpaid leave of absence.
5.3 Benefits limited to amounts held under Insurance Company Contract and assets of Trust Fund. Except as otherwise provided by law, each Participant or other person who claims the right to any payment under the Plan is entitled to look only to the Insurance Company Contract and/or the Trust Fund for such payment. Except as otherwise provided by law, no liability for the payment of benefits under the Plan not provided by the Insurance Company Contract and/or the Trust Fund will be imposed upon the Employer or any of its Employees, or upon the Administrator, or upon the Insurance Company or the Trustee.
5.4 Rollovers. Participants are not permitted to contribute an eligible rollover distribution as described in Code section 402 (c) (4) to the Plan.
5.5 Forfeitures. Forfeitures under the Plan will be applied to reduce the Employer's contributions and will not be applied to increase the benefits of any person hereunder prior to termination of the Plan or complete discontinuance of contributions by the Employer.
Section 6. Requirements for Retirement Benefits
6.1 Normal Retirement. Any participant who retires on his Normal Retirement Date will have a non-forfeitable right to his Normal Retirement Benefit and will be entitled to receive a benefit, commencing on his Normal Retirement Date, in the amount specified in either Section 7.1 or 7.5.
6.2 Early Retirement. Any Participant who has attained age fifty-five (55) but has not reached his Normal Retirement Date and who has completed at least ten (10) Years of Service for Vesting may retire on the first day of any month thereafter. In the event of such early retirement, the Participant will be entitled to a benefit commencing on the first day of any month following such early retirement in the amount specified in either Section 7.2 or 7.5.
Section 7. Amount of Retirement Benefits
7.1 Normal Retirement Benefit. Subject to the provisions of Sections 7.3, 9.1 and 9.2 and Section 12, the yearly amount of pension to be payable in monthly installments to each Participant who retires on his Normal Retirement Date will be equal to: (a) minus (b) and/or (c) (whichever applies), as follows:
(a) Fifty percent (50%) of the Final Salary in effect on a Participant's Normal Retirement Date for any Participant who retires after having completed twenty (20) Years of Service. For each additional Year of Service in excess of twenty (20) years, an additional two percent (2%) will be added. In no event, however, is the annual amount to exceed seventy-four percent (74%) of the Final Salary in effect on a Participant's Normal Retirement Date.
(b) The yearly PERF Benefit determined on the date of termination from the Plan and based upon benefits payable upon the earliest date when benefits can commence under PERF (but not before the actual date when benefits commence under the Plan).
(c) The yearly TIAA-CREF Benefit determined as of the actual date when benefits commence under the Plan.
7.2 Early Retirement Benefit. The yearly amount of pension to be payable in monthly installments to each Participant who retires early in accordance with Section 6.2 above, commencing on the first day of any month prior to his Normal Retirement Date will be equal to the amount computed under Section 7.1 above, except that 7.1 (a) is to be replaced in its entirety to read as follows: (a) 2.5% of the Final Salary in effect on the date the Participant is no longer an Eligible Employee under the Plan multiplied by each Year of Service for Accrual.
7.3 Disability Retirement Benefit
(a) Service. If an Eligible Employee terminates employment because of a Total Disability, as defined in Section 2.28, he shall continue to be credited with Years of Service for Vesting and Years of Service for Accrual during the period from such termination of employment to the earlier of the cessation of his Total Disability or attainment of his Early Retirement Date. In the event of disability, Years of Service shall not exceed the greater of actual Years of Service prior to disability or 20.
(b) Benefit. An Eligible Employee who becomes Totally and Permanently Disabled and who, after the termination of employment because of his Total and Permanent Disability and prior to his Early Retirement Date does not again become an Eligible Employee, shall receive a yearly amount of pension to be payable in monthly installments commencing as of the first day of the month coincident with or next following the day on which he attains his Early Retirement Date computed as provided in Section 7.2 except that such Participant's Final Salary shall be determined as of the date of his termination of employment because of his Total and Permanent Disability.
7.4 Adjustment for Cost of Living Increases. Upon receiving benefit payments pursuant to Section 7.1, 7.2, 7.3 and 9.5, benefits provided by this Plan will be adjusted annually for cost of living increases or decreases. The cost of living adjustments will be effective on the first day of each Plan Year. The adjustments are based upon the changes incurred to the Consumer Price Index during the twelve (12) month period ending on the preceding April 30. However, in no event will adjustments for cost of living exceed three percent (3%).
7.5 Alternate Lump-Sum Benefit. Upon meeting the requirements for retirement benefits, as outlined under Sections 6.1 and 6.2, a Participant may elect to receive a single lump-sum payment, in lieu of the benefits outlined under Sections 7.1, 7.2 and 7.3, equal to the total value of his Participant Contributions plus interest credited at an effective annual rate of interest as designated by the Administrator on the first day of each Plan Year.
An election under this Section 7.5 must be in writing and must be filed with the Administrator at least thirty (30) days prior to the date the lump-sum payment is to be made.
7.6 General limitations on benefits.
(a) The purpose of this Section 7.6 is to set forth the benefits limitation requirements of Code section 415 as applicable to a governmental plan within the meaning of Code section 414(d). This Plan shall operate in accordance with this Section 7.6 at all times, and the provisions hereof shall override any other provisions of the Plan to the extent necessary to prevent Code section 415 limits from being exceeded with respect to any Participant.
(b) This section 7.6(b) applies regardless of whether any Participant is or has ever been a participant in another qualified plan maintained by the Employer. If any Participant is or has been a participant in another qualified plan maintained by the Employer, or a welfare benefit fund as defined in section 419(e) of the Code, maintained by the Employer, under which amounts attributable to post-retirement medical benefits are allocable to separate accounts of key employees (as defined in Code section 419(A)(d)(3)) or an individual medical account, as defined in (a) section 415(1)(2) of the Code, which provides an annual addition as defined in section 7.6(e)(1), section 7.6(c) is also applicable to that Participant's benefits.
(1) The annual benefit otherwise payable to a Participant at any time will not exceed the Maximum Permissible Benefit. If the benefit the Participant would otherwise accrue in a limitation year would produce an annual benefit in excess of the Maximum Permissible Benefit, the rate of accrual will be reduced so that the annual benefit does not exceed the Maximum Permissible Benefit.
(2) If a Participant has made voluntary employee contributions under the terms of this Plan, or mandatory employee contributions as defined in section 411(c)(2)(C) of the Code the amount of such contributions is treated as an annual addition to a qualified defined contribution plan for purposes of section 7.6(b)(1) and section 7.6(c)(2).
(c) This section 7.6(c) applies if any Participant is covered or has ever been covered, by another plan maintained by the Employer, including a qualified plan, or a welfare benefit fund maintained by the employer (as defined in Code section 419(e)) under which amounts attributable to post-retirement medical benefits are allocated to separate accounts of key employees (as defined in Code section 419(A)(d)(3)), or an individual medical account, as defined in section 415(1)(2) of the Code which provides an annual addition as described in section 7.6(e)(1).
(1) If the Participant is, or has ever been, covered under more than one defined benefit plan maintained by the Employer, the sum of the Participant's annual benefits from all such plans may not exceed the Maximum Permissible Benefit. If any reduction of the Participant's annual benefit is required to satisfy the limitations of this subsection, the amount of the necessary reduction will be applied in equal proportions against his annual benefit under the Plan and under each other plan described in this Section 7.6(c)(1).
(2) If the Employer maintains, or at any time maintained, one or more qualified defined contribution plans covering any Participant in this Plan, including a welfare benefit fund maintained by the Employer (as defined in Code section 419(e)) under which amounts attributable to post-retirement medical benefits are allocated to separate accounts of key employees (as defined in Code section 419(A)(d)(3)), or an individual medical account as defined in section 415(1)(2) of the Code, the sum of the Participant's defined contribution plan fraction and defined benefit plan fraction will not exceed 1.0 in any limitation year and the annual benefit to which a Participant is entitled at any time under the Plan when aggregated with his annual benefit (if any) under each other plan described in this Section 7.6(c)(2), will not, in any limitation year, be in excess of his annual benefit. If any reduction of the Participant's annual benefit is required to satisfy the limitation of this subsection, the amount of the necessary reduction will be applied in equal proportions against his annual benefit under the Plan and under each other plan described in this Section 7.6(c)(2).
Effective for Limitation Years beginning on and after January 1, 2000 the multiple plan benefit limitations under Code section 415(e) are eliminated, however benefit increases resulting from the repeal of Code section 415(e) will be provided to all current and former Participants (with benefits limited by Code section 415(e)) who have an accrued benefit under the Plan immediately before the first day of the first Limitation Year beginning in 2000.
(d) In the case of an individual who was a Participant in one or more defined benefit plans of the Employer as of the first day of the first Limitation Year beginning after December 31, 1994, the application of the limitations of this Section 7.6 shall not cause the Maximum Permissible Benefit for such individual under all such defined benefit plans to be less than the individual's Retirement Protection Act of 1994 (RPA '94) Old-Law Benefit. The preceding sentence applies only if the defined benefit plans met the requirements of section 415 of the Code, on December 7, 1994.
(e) Definitions. For purposes of this section,
(1) Annual additions means the sum of the following amounts credited to a Participant's account for the limitation
(i) employer contributions;
(ii) employee contributions,
(iii) forfeitures, and
(iv) Amounts allocated after March 31, 1984 to an individual medical account, as defined in section 415(1)(2) of the Code, which is part of a pension or annuity plan maintained by the employer are treated as annual additions to a defined contribution plan. Also, amounts derived from contributions paid or accrued after December 31, 1985, in taxable years ending after such date, which are attributable to post-retirement medical benefits allocated to the separate account of a key employee, as defined in section (i) 419A(d)(3) of the Code, are treated as annual additions to a defined contribution plan.
(2) Annual benefit means a retirement benefit under a plan which is payable annually in the form of a straight life annuity. Except as provided below, a benefit payable to a form other than a straight life annuity must be adjusted to an actuarially straight life annuity before applying the limitations of this Section. The interest rate assumption used to determine actuarial equivalence will be the greater of the interest rate specified in Section 2.1 of this Plan or five percent (5%). The applicable mortality table specified in section 2.1 of this Plan shall also be used to determine actuarial equivalence. The annual benefit does not include any benefits attributable to employee contributions or rollover contributions, or the assets transferred from a qualified plan that was not maintained by the Employer. No actuarial adjustment to the benefit is required for (a) the value of a qualified joint and survivor annuity, (b) the value of benefits that are not directly related to retirement benefits (such as the qualified disability benefit, pre-retirement death benefits, and post-retirement medical benefits), and (c) the value of post-retirement cost-of-living (1) increases made in accordance with section 415(d) of the Code and section 1.415-3(c)(2)(iii) of the Income Tax Regulations.
(3) Compensation means the Participant's wages, salaries, and fees for professional services and other amounts received (without regard to whether or not an amount is paid in cash) for personal services actually rendered in the course of employment with the employer maintaining the plan to the extent that the amounts are includable in gross income (including, but not limited to, commissions paid salesmen, compensation for service on the basis of a percentage of profits, commissions on insurance premiums, tips bonuses, fringe benefits, reimbursements, and expense allowances), and excluding the following:
(i) Employer contributions to a plan of deferred compensation which are not includable in the employee's gross income for the taxable year in which contributed, or employer contributions under a simplified employee pension plan to the extent such contributions are deductible by the employee, or any distributions from a plan of deferred compensation;
(ii) Amounts realized from the exercise of a nonqualified stock option, or when restricted stock (or property) held by the employee either becomes freely transferable or is no longer subject to a substantial risk of forfeiture;
(iii) Amounts realized from the sale, exchange or other disposition of stock acquired under a qualified stock option; and
(iv) Other amounts which received special tax benefits, or contributions made by the employer (whether or not under a salary reduction agreement) towards the purchase of an annuity described in section 403(b) of the Internal Revenue Code (whether or not the amounts are actually excludible from the gross income of the employee).
For limitation years beginning after December 31, 1991, for purposes of applying the limitations of this Section, compensation for a limitation year is the compensation actually paid or includable in gross income during such limitation year.
For limitation years beginning after December 31, 1997 compensation paid or made available during such limitation year shall include any elective deferral (as defined in Code section 402(g)(3)), and any amount which is contributed or deferred by the Employer at the election of the Employee and which is not includible in the gross income of the Employee by reason of Code section 125 or 457. For limitation years beginning after December 31, 2000, Compensation shall also include any elective amounts that are not includible in the gross income of the Employee by reason of Code section 132 (f)(4).
(4) Current accrued benefit means a Participant's accrued benefit under the Plan, determined as if the Participant had separated from service as of the close of the last limitation year beginning before January 1, 1987, when expressed as an annual benefit within the meaning of 415(b)(2) of the Code. In determining the amount of a Participant's current accrued benefit, the following shall be disregarded:
(i) any change in the terms and conditions of the plan after May 5, 1986; and
(ii) any cost of living adjustments occurring after May 5, 1986.
(5) Defined Benefit Compensation Limitation: one hundred percent (100%) of a Participant's High Three-Year Average Compensation, payable in the form of a straight life annuity. In the case of a Participant who has separated from service, the Defined Benefit Compensation Limitation applicable to the participant will be automatically adjusted by multiplying such limitation by the cost-of-living adjustment factor prescribed by the Secretary of the Treasury under Code section 415(d) in such manner as the Secretary of the Treasury shall prescribe. The adjusted compensation limit will apply to the Limitation Years ending with or within the calendar year of the date of adjustment.
(6) Defined Benefit Dollar Limitation means $90,000. The $90,000 limitation above will be automatically adjusted effective January 1, of each year under Code section 415(d) in such a manner as the Secretary of the Treasury shall prescribe and payable in the form of a straight life annuity. The new limitation will apply to limitation years ending within the calendar year of the date of the adjustment.
(7) Defined Benefit Plan Fraction: A fraction, the numerator of which is the sum of the Participant's projected annual benefits under all the defined benefit plans (whether or not terminated) maintained by the Employer, and the denominator of which is the lesser of 125 percent of the dollar limitation applicable to the Participant or 140 percent the Defined Benefit Compensation Limitation applicable to the Participant, both adjusted as necessary in accordance with Section 7.6(e)(12) below.
Notwithstanding the above, if the Participant was a participant as of the first day of the first limitation year beginning after December 31, 1986, in one or more defined benefit plans maintained by the Employer which were in existence on May 6, 1986, the denominator of this fraction will not be less than 125 percent of the sum of the annual benefits under such plans which the participant had accrued as of the close of the last limitation year beginning before January 1, 1987, disregarding any changes in the terms and conditions of the plans after May 5, 1986. The preceding sentence applies only if the defined benefit plans individually and in the aggregate satisfied the requirements of section 415 for all limitation years beginning before January 1, 1987.
(8) Defined Contribution Plan Fraction means a fraction, the numerator of which is the sum of the annual additions to the Participant's account under all the defined contribution plans (whether or not terminated) maintained by the Employer for the current and all prior limitation years, (including the annual additions attributable to the Participant's voluntary employee contributions or mandatory employee contributions as defined in Code Section 411(c)(2)(C) to this and all other defined benefit plans (whether or not terminated) maintained by the Employer, and the annual additions attributable to all welfare benefit funds maintained by the Employer (as defined in Code section 419(e)) under which amounts attributable to post-retirement medical benefits are allocated to separate accounts of key employees (as defined in Code section 419(A)(d)(3)), or individual medical accounts, as defined in section 415(1)(2) of the Code, maintained by the Employer), and the denominator of which is the sum of the maximum aggregate amounts for the current and all prior limitation years of the Participant's service with the Employer (regardless of whether a defined contribution plan was maintained by the Employer). The maximum aggregate amount in any limitation year is the lesser of (1) 125 percent of the Defined Contribution Dollar Limitation or (2) 35 percent (1.4 x 25 percent) of the Participant's Compensation for such year.
If the Employee was a participant as of the first day of the first limitation year beginning after December 31, 1986, in one or more defined contribution plans maintained by the Employer which were in existence on May 6, 1986, the numerator of this fraction will be adjusted if the sum of this fraction and the Defined Benefit Plan fraction would otherwise exceed 1.0 under the terms of this Plan. Under the adjustment, an amount equal to the product of (1) the excess of the sum of the fractions over 1.0 times (2) the denominator of this fraction, will be permanently subtracted from the numerator of this fraction. The adjustment is calculated using the fractions as they would be computed as of the end of the last limitation year beginning before January 1, 1987, and disregarding any changes in the terms and conditions of the plans made after May 5, 1986, but using the section 415 limitation applicable to the first limitation year beginning on or after January 1, 1987.
The annual addition for any limitation year beginning before January 1, 1987, shall not be recomputed to treat all employee contributions as annual additions.
(9) Employer means for purposes of this section, employer shall mean the employer that adopts this plan, and all members of a controlled group of corporations, (as defined in section 414(b) of the Code, as modified by section 415(h)), all commonly controlled trades or businesses (as defined in section 414(c) as modified by section 415(h)), or affiliated service groups (as defined in section 414(m)) of which the Employer is a part, and any other entity required to be aggregated with the Employer pursuant to section 414(o) of the Code.
(10) High Three-Year Average Compensation means that average compensation for the three consecutive years of service with the Employer that produces the highest average. A year of service with the employer is the 12-consecutive month period defined in Section 2.33 of the Plan.
(11) Limitation year means the Plan Year. All qualified plans maintained by the Employer must use the same limitation year. If the limitation year is amended to a different 12-consecutive month period, the new limitation year must begin on a date within the limitation year in which the amendment is made.
(12) Maximum Permissible Benefit means the lesser of the Defined Benefit Dollar Limitation or Defined Benefit Compensation Limitation, both adjusted where required as provided below. Since the Plan is a governmental plan within the meaning of Code section 414(d) for the first limitation year beginning after December 31, 1994 the Maximum Permissible Benefit means the Defined Benefit Dollar Limitation as adjusted below, and the Defined Benefit Compensation Limitation shall not apply.
(i) If the Participant has less than 10 years of participation in the Plan, the Defined Benefit Dollar Limitation is reduced by one-tenth for each year of participation (or part thereof) less than ten. To the extent provided in regulations or in other guidance issued by the Internal Revenue Service, the preceding sentence shall be applied separately with respect to each change in the benefit structure of the plan. If the Participant has less than ten years of service with the Employer, the Defined Benefit Compensation is reduced by one-tenth for each year of service (or part thereof) less than ten. Where a Defined Benefit Plan Fraction is calculated, the adjustments of this subsection shall be applied in the denominator of the defined benefit fraction based upon years of service. For purposes of computing the Defined Benefit Plan Fraction only, years of service shall include future years commencing before the Participant's normal retirement age. Such future years of service shall include the year that contains the date the Participant reaches normal retirement age, only if it can be reasonably anticipated that the Participant will receive a year of service for such year, or the year which the Participant terminates employment, if earlier.
(ii) If the benefit of a Participant commences prior to age 62, the Defined Benefit Dollar Limitation shall be the actuarial equivalent of an annual benefit payable in the form of a straight life annuity that is the actuarial equivalent of the Defined Benefit Dollar Limitation for age 62, reduced for each month by which benefits commence before the month in which the Participant attains age 62. Effective for Limitation Years beginning on or after January 1, 1995 the Defined Benefit Dollar Limitation applicable to an age prior to age 62 is determined as the lesser of the actuarial equivalent of the Defined Benefit Dollar Limitation for age 62 computed using the interest rate and mortality table specified in Section 2.1 of the Plan, and the actuarial equivalent of the Defined Benefit Dollar Limitation for age 62 computed using a five percent (5%) interest rate and the applicable mortality table as defined in Section 2.1 of the Plan. Any decrease in the Defined Benefit Dollar Limitation determined in accordance with this subsection (ii) shall not reflect the mortality decrement to the extent that benefits will not be forfeited upon the death of a Participant. Since the Plan is a governmental plan within the meaning of Code section 414(d) the actuarial reduction under this subsection (ii) shall not reduce the Defined Benefit Dollar Limitation below (i) $75,000 if the benefit begins at or after age 55 or (ii) if the benefit begins before age 55, the Actuarial Equivalent of the $75,000 limitation for age 55.
(iii) Notwithstanding anything contained in section (ii) above to the contrary, for limitation years beginning on or after January 1, 1997 neither the adjustment made in subsection (ii) above nor any adjustments otherwise required under Code section 415(b)(2)(C) shall apply to Participants who are Qualified Participants within the meaning of Code section 415(b)(2)(H).
(iv) If the benefit of a Participant commences after age 65 the Defined Benefit Dollar Limitation applicable to the Participant at the later age is the annual benefit payable in the form of a straight life annuity commencing at the later age that is actuarially equivalent to the Defined Benefit Dollar Limitation applicable to the Participant (adjusted under subsection (i) above, if necessary) at age 65. Effective for limitation years beginning on or after January 1, 1995, the actuarial equivalent of the Defined Benefit Dollar Limitation at age 65 is determined as the lesser of the actuarial equivalent of the Defined Benefit Dollar Limitation at age 65 computed using the interest rate and mortality table specified in Section 2.1 of the Plan, and the actuarial equivalent of the Defined Benefit Dollar Limitation at age 65 using a five percent (5%) interest rate assumption and the applicable mortality assumption as defined in Section 2.1 of the Plan. For these purposes, mortality between 65 and the age at which benefits commence must be ignored.
(v) Notwithstanding anything else in this section to the contrary, the benefit otherwise accrued or payable to a Participant under this Plan shall be deemed not to exceed the Maximum Permissible Benefit if:
(i) the retirement benefits payable for a plan year under any form of benefit with respect to such Participant under this Plan and under all other defined benefit plans (regardless of whether terminated) ever maintained by the Employer do not exceed $1,000 multiplied by the Participant's number of years of service or parts thereof (not to exceed 10) with the Employer, and
(ii) the Employer has not at any time maintained a defined contribution plan, a welfare benefit fund which amounts attributable to post-retirement medical benefits are allocated to separate accounts of key employees (as defined in Code section 419(A)(d)(3)), or an individual medical account in which the Participant participated (for these purposes, employee contributions, whether voluntary or involuntary, under a defined benefit plan are not treated as a separate defined contribution plan).
(13) Projected annual benefit means the annual benefit as defined in section 7.6(e)(2), to which the Participant would be entitled under the terms of the Plan assuming:
(i) the Participant will continue employment until normal retirement age under the plan (or current age, if later), and
(ii) the Participant's compensation for the current limitation year and all other relevant factors used to determine benefits under the plan will remain constant for all future limitation years.
(14) RPA '94 Final Implementation Date: The first day of the first limitation year beginning on or after January 1, 2000.
(15) RPA '94 Freeze Date: The last day prior to the first day of the first limitation year beginning on or after January 1, 2000.
(16) RPA '94 Old-Law Benefit: The Participant's accrued benefit under the terms of the Plan as of the RPA '94 Freeze Date for the annuity starting date and optional form and taking into account the limitations of Code section 415, as in effect on December 7, 1994, including the participation requirements under Code section 415(b)(5). If, at any date after the RPA '94 Freeze Date, the Participant's total Plan benefit, before the application of Code section 415, is less than the Participant's RPA '94 Old-Law Benefit, the RPA '94 Old-Law Benefit will be reduced to a benefit equal to the Participant's total Plan benefit. The use of a different interest rate and mortality table may not increase a Participant's RPA '94 Old-Law Benefit to an amount greater than such benefit as of the RPA '94 Freeze Date.
(17) Year of participation means the Participant shall be credited with a year of participation (computed to fractional parts of a year) for each accrual computation period for which the following conditions are met: (1) The Participant is credited with at least the number of hours of service for benefit accrual purposes, required under the terms of the plan in order to accrue a benefit for the accrual computation period, and (2) the Participant is included as a Participant under the eligibility provisions of the plan for at least one day of the accrual computation period. If these two conditions are met, the portion of a year of participation credited to the Participant shall equal the amount of benefit accrual service credited to the participant shall equal the amount of benefit accrual service credited to the participant for such accrual computation period. A Participant who is permanently and totally disabled within the meaning of section 415(c)(3)(C)(i) of the Code for an accrual computation period shall receive a year of participation with respect to that period, the plan must be established no later than the last day of such accrual computation period. In no event will more than one year of participation be credited for any 12-month period.
(f) Transition Rule
For Participants with RPA '94 Old-Law Benefits, for purposes of determining whether a Participant's benefits exceeds the limitations of this Section 7.6 after the RPA '94 Freeze Date a Participant's total annual benefit under the Plan is determined, and this benefit must not exceed the Maximum Permissible Benefit applicable to the Participant. Where a Participant's benefit must be adjusted to an actuarially equivalent annual benefit, an annual benefit equivalent to the Participant's total benefit is calculated as described in Section 7.6(e)(2). In any event, the Participant will receive no less than the Participant's RPA '94 Old-Law Benefit. For purposes of determining that a Participant receives no less than the Participant's RPA '94 Old-Law Benefit, the limitation applicable to the Participant's RPA '94 Old-Law Benefit (old-law limitation) is determined, and the Participant may receive the RPA '94 Old-Law Benefit to the extent it does not exceed such old-law limitation.
8.1 Vested benefit commencing prior to Normal Retirement Date . A Participant who ceases to be an Eligible Employee and who at the time has completed at least ten (10) but less than twenty (20) Years of Service for Vesting, but has not satisfied the requirements for benefits described in Section 6.2 above, will receive on the first day of the following month after the attainment of age 55, an annual amount of vested benefit to be payable in monthly installments equal to his Early Retirement Benefit or the benefit provided under Section 7.5 in lieu of the Early Retirement Benefit.
A Participant who ceases to be an Eligible Employee and who at the time has completed at least twenty (20) Years of Service for Vesting, but has not satisfied the requirements for benefits described in Section 6.1 above, will receive on the first day of the following month after the attainment of age 55, an annual amount of vested benefit to be payable in monthly installments equal to his Normal Retirement Benefit or the benefit provided under Section 7.5 in lieu of the Normal Retirement benefit.
A Participant who ceases to be an Eligible Employee and who at the time has completed less than ten (10) Years of Service for Vesting, is not eligible to receive any retirement benefit under the Plan pursuant to Section 7.1 or 7.2. However, a Participant who ceases to be an Eligible Employee with less than ten (10) Years of Service for Vesting is eligible to receive the total value of his Participant Contributions plus interest credited at an effective annual rate of interest as designated by the Administrator on the first day of each Plan Year.
Section 9. Forms of Pension; Pre-Retirement Death Benefit
9.1 Normal form of pension for single Participants. Except as otherwise provided in Section 9.2, the normal form of pension payable under the Plan to a Participant is a pension payable monthly to the Participant during his lifetime, the first payment to be due on the date of the commencement of his benefits under the Plan and the last payment to be due on the first day of the calendar month in which his death occurs. In the event that a Participant's death occurs within sixty (60) months from the date benefit payments under the Plan commenced, payments to the Beneficiary(ies) will continue in amounts equal to the amount payable to the Participant prior to his death, the last payment to be due on the first day of the sixtieth (60th) calendar month following the commencement of payments to the Participant. In lieu of continued monthly payments, the Beneficiary may elect to receive the Actuarial Equivalent present value of the remaining payments as a single lump-sum payment. For purposes of this Section 9, the term “pension” includes any pension or vested benefit provided under the Plan.
9.2 Normal form of pension for married Participants. The normal form of pension payable under the Plan to a Participant who is married on the date of commencement of his benefits and who has not made an election under Section 9.3 below, will be a joint and survivor annuity form under which a pension equal in amount to, and payable for the same period of time as, the pension described in Section 9.1 above will be payable monthly to the Participant and following his death sixty percent (60%) of such pension will be payable monthly, commencing with the first day of the month next following the month in which the Participant's death occurs, to the person to whom the Participant was married on the date of commencement of benefits to the Participant, such amount to be payable through the first day of the month in which the death of such person occurs. If the person to whom a survivor pension is payable under this Section 9.2 dies after the date of commencement of benefits to the Participant and while the Participant is alive, the Participant will continue to receive during his remaining lifetime the same amount of pension payable to him under this Section 9.2 during the joint lifetimes of the Participant and such person.
In the event that both the Participant and the person to whom a survivor pension is payable die with sixty (60) months from the date benefit payments under the Plan commenced, payments to the Beneficiary(ies) will continue in amounts equal to the amount payable to the person to whom a survivor pension is payable, the last payment to be due on the first day of the sixtieth (60th) calendar month following the commencement of payments to the Participant. In lieu of continued monthly payments, the Beneficiary may elect to receive the Actuarial Equivalent present value of the remaining payments as a single lump-sum payment.
9.3 Election not to take joint and survivor annuity. A married Participant may elect not to take the joint and survivor annuity described in Section 9.2, any such election to be made on a form provided by the Administrator.
9.4 Optional forms of pension.
(a) Available forms. In lieu of the form of pension payable under Section 9.1 or Section 9.2, a Participant may, subject to Section 9.3 and the conditions hereinafter set forth, elect a benefit payable in any optional form (which form shall be the Actuarial Equivalent of the normal form of pension described in Section 9.1 and 9.2, however, in no event will a benefit payable under an optional form be greater than the normal form under Sections 9.1 and 9.2, as applicable to the Participant) which is approved by the Administrator, including without limitation (but only if so approved) a single life option, a single life with period certain option, a joint and survivor option, and a joint and survivor with period certain option. Under any such optional form of benefit, the amount of the benefit payable to the Participant at the time benefits commence must be greater than the then value of the benefit payable to any Beneficiary or Beneficiaries other than his spouse. Benefits will not be payable underany such optional form to a Participant's surviving spouse or other Beneficiary if the Participant dies before commencing to receive benefits under such optional form.
(b) Administrative provisions. An election under this Section 9.4 must be in writing and must be filed with the Administrator at least thirty (30) days prior to the date on which pension payments are to begin. Subject to the requirement of Section 9.3 that any election made thereunder may be revoked during the election period described in Section 9.4, once an election of an optional form of benefit has been made and accepted by the Administrator it cannot, without the consent of the Administrator, be changed or rescinded within thirty (30) days prior to the date on which pension payments are to begin. Such consent will be given only in accordance with rules of uniform application to all Participant similarly situated.
(c) Designation of Beneficiary. A Participant may designate a Beneficiary or Beneficiaries or may change any prior designation of a Beneficiary or Beneficiaries by filing written notice thereof with the Administrator on a form acceptable to the Administrator. The Beneficiary or Beneficiaries so designated will be entitled to receive any amounts payable under the Plan in the event of the Participant's death. If the Participant fails to designate a Beneficiary in respect of any amount payable upon the death of the Participant, or if no Beneficiary so designated survives the Participant, the amount so payable will be paid to the Participant's surviving spouse, or if there is no surviving spouse, to the Participant's issue per stirpes, or if there is neither surviving spouse nor issue, to the Participant's estate.
9.5 Pre-Retirement Death Benefit. If a Participant dies prior to his Early Retirement Date, there is no benefit payable under the Plan pursuant to Section 7.1, 7.2 or 7.5.
If a single Participant dies on or after the date on which he has satisfied the age and service requirements of Section 6.2, and before receiving any pension payments under the Plan, his Beneficiaries will be entitled to receive, in a lump-sum, the greater of the present value of the lifetime monthly pension that the Participant would have received if the Participant's pension had commenced on the day before the day of his death with the single life annuity form described in Section 9.1 in effect, or the total of the deceased Participant's Participant Contributions plus interest at an effective annual rate to be designated by the Administrator.
If a married Participant dies on or after the date on which he has satisfied the age and service requirements of Section 6.2, and before receiving any pension payments under the Plan, his surviving spouse will be entitled to receive a lifetime monthly pension equal to the survivor pension the spouse would have received if the Participant's pension had commenced on the day before the day of his death with the joint and survivor annuity form described in Section 9.2 in effect. In lieu of this benefit, a surviving spouse may elect to receive, in a lump sum, an amount equal to the total value of the Participant's Participant Contributions plus interest credited at an effective annual rate to be designated by the Administrator.
9.6 Special rules concerning reemployment. The provisions of this Section 9 will be subject to the special rules set forth in Section 4.4 concerning reemployment of Participants.
9.7 Distribution of lump sum benefits. Notwithstanding any provision contained herein to the contrary for distributions payable beginning on or after July 1, 2002, if the Actuarial Equivalent lump sum value of a benefit payable under this Section 9 does not exceed $5,000, such benefit may, in the discretion of the Administrator, be paid at any time on or prior to the date such benefit would otherwise commence under the Plan in a lump sum payment of Actuarial Equivalent value. For distributions payable prior to July 1, 2002 if the Actuarial Equivalent lump sum value of a benefit payable under Section 9.5 at any time does not exceed $3,500 such benefit may, in the discretion of the Administrator, be paid at any time on or prior to the date such benefit would otherwise commence under the Plan in a lump sum payment of Actuarial Equivalent value.
9.8 Section 401(a)(9) Distribution Requirements
(a)(1) The requirements of this Section 9.8 shall apply to any distribution of a Participant's interest and will take precedence over any inconsistent provision of this Plan.
(2) All distributions required under this Article 9 shall be determined and made in accordance with the proposed regulations under section 401(a)(9) of the Code, including the minimum distribution incidental benefit requirement of section 1.401(a)(9) – 2 of the proposed regulations.
(3) With respect to distributions made 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 Code in accordance with the regulations under Section 401(a)(9) that were proposed on January 17, 2001, notwithstanding any provisions of the Plan to the contrary. This provision shall continue in effect until the end of the last calendar year beginning before the effective date of final regulations under Section 401(a))9) or such other date as may be specified in guidance published by the Internal Revenue Service.
(b) Required Beginning Date. The entire interest of a Participant must be distributed or begin to be distributed no later than the Participant's required beginning date.
(c) Limits on Distribution Periods. As of the first distribution calendar year, distributions, if not made in a single-sum, may only be made over one of the following periods (or a combination thereof):
(1) the life of the Participant,
(2) the life of the Participant and a designated beneficiary,
(3) a period certain not extending beyond the life expectancy of the Participant, or
(4) a period certain not extending beyond the joint and last survivor expectancy of the Participant and a designated beneficiary.
(d) Determination of amount to be distributed each year.
(1) If the Participant's interest is to be paid in the form of annuity distributions under the Plan, payments under the annuity shall satisfy the following requirements:
(i) the annuity distributions must be paid in periodic payments made at intervals not longer than one year;
(ii) the distribution period must be over a life (or lives) or over a period certain not longer than a life expectancy (or joint life and last survivor expectancy) described in section 401(a)(9)(A)(ii) or section 401(a)(9)(B)(iii) of the Code, whichever is applicable;
(iii) the live expectancy (or joint and last survivor expectancy) for purposes of determining the period certain shall be determined without recalculation of life expectancy;
(iv) once payments have begun over a period certain, the period certain may not be lengthened even if the period certain is shorter than the maximum permitted;
(v) payments must either be nonincreasing or increase only as follows:
(A) with any percentage increase in a specified and generally recognized cost-of-living index;
(B) to the extent of the reduction to the amount of the Participant's payment to provide for a survivor benefit upon death, but only if the beneficiary whose life was being used to determine the distribution period described in subsection (c) above dies and the payments continue otherwise in accordance with that section over the life of the Participant;
(C) to provide cash refunds of employee contributions upon the Participant's death; or
(D) because of an increase in benefits under the Plan.
(vi) If the annuity is a life annuity (or a life annuity with a period certain not exceeding 20 years), the amount which must be distributed on or before the Participant's required beginning date (or, in the case of distributions after the death of the Participant, the date distributions are required to begin pursuant to subsection (e) below) shall be the payment which is required for one payment interval. The second payment need not be made until the end of the next payment interval even if that payment interval ends in the next calendar year. Payment intervals are the periods for which payments are received, e.g., bimonthly, monthly, semi-annually, or annually. If the annuity is a period certain annuity without a life contingency (or is a life annuity with a period certain exceeding 20 years) periodic payments for each distribution calendar year shall be combined and treated as an annual amount. The amount which must be distributed by the Participant's required beginning date (or, in the case of distributions after the death of the Participant, the date distributions are required to begin pursuant to subsection (e) below) is the annual amount for the first distribution calendar year. The annual amount for other distribution calendar years, including the annual amount for the calendar year in which the Participant's required beginning date (or the date distributions are required to begin pursuant to subsection (e) below occurs, must be distributed on or before December 31 of the calendar year for which the distribution is required.
(2) Annuities purchased after December 31, 1988, are subject to the following additional conditions:
(i) Unless the Participant's spouse is the designated beneficiary, if the Participant's interest is being distributed in the form of a period certain annuity without a life contingency, the period certain as of the beginning of the first distribution calendar year may not exceed the applicable period determined using the table set forth in Q&A A-5 of section 1.401(a)(9) – 2 of the proposed regulations.
(ii) If the Participant's interest is being distributed in the form of a joint and survivor annuity for the joint lives of the Participant and a nonspouse beneficiary, annuity payments to be made on or after the Participant's required beginning date to the designated beneficiary after the Participant's death must not at any time exceed the applicable percentage of the annuity payment for such period that would have been payable to the Participant using the table set forth in Q&A A-6 of section 1.401(a)(9) –2 of the proposed regulations.
(iii) If the form of distribution is an annuity made in accordance with this subsection (d), any additional benefits accruing to the Participant after his or her required beginning date shall be distributed as a separate and identifiable component of the annuity beginning with the first payment interval ending in the calendar year immediately following the calendar year in which such amount accrues.
(iv) Any part of the Participant's interest which is in the form of an individual account shall be distributed in a manner satisfying the requirements of section 401(a)(9) of the Code and the proposed regulations thereunder.
(e) Death Distribution Provisions.
(1) Distribution beginning before death. If the Participant dies after distribution of his or her interest has begun, the remaining portion of such interest will continue to be distributed at least as rapidly as under the method of distribution being used prior to the Participant's death.
(2) Distribution beginning after death. If the Participant dies before distribution of his or her interest begins, distribution of the Participant's entire interest shall be completed by December 31 of the calendar year containing the fifth anniversary of the Participant's death except to the extent that an election is made to receive distributions in accordance with (I) or (ii) below:
(i) if any portion of the Participant's interest is payable to a designated beneficiary, distributions may be made over the life or over a period certain not greater than the life expectancy of the designated beneficiary commencing on or before December 31 of the calendar year immediately following the calendar year in which the Participant died;
(ii) if the designated beneficiary is the Participant's surviving spouse, the date distributions are required to begin in accordance with (i) above shall not be earlier than the later of (1) December 31 of the calendar year immediately following the calendar year in which the participant died and (2) December 31 of the calendar year in which the Participant would have attained age 70 ½. If the Participant has not made an election pursuant to this subsection ( e)(2) by the time of his or her death, the Participant's designated beneficiary must elect the method of distribution no later than the earlier of (1) December 31 of the calendar year in which distributions would be required to begin under this subsection, or (2) December 31 of the calendar year which contains the fifth anniversary of the date of death of the Participant. If the Participant has no designated beneficiary, or if the designated beneficiary does not elect a method of distribution, distribution of the Participant's entire interest must be completed by December 31 of the calendar year containing the fifth anniversary of the Participant's death.
(3) For purposes of subsection (e)(2) above, if the surviving spouse dies after the Participant, but before payments to such spouse begin, the provisions of subsection (e)(2), with the exception of subsection (e)(2)(ii) therein, shall be applied as if the surviving spouse were the Participant.
(4) For purposes of this subsection (e), any amount paid to a child of the Participant will be treated as if it had been paid to the surviving spouse if the amount becomes payable to the surviving spouse when the child reaches the age of majority.
(5) For the purposes of this subsection (e), distribution of a Participant's interest is considered to begin on the Participant's required beginning date (or, if subsection (e)(3) above is applicable, the date distribution is required to begin to the surviving spouse pursuant to subsection (e)(2) above). If distribution in the form of an annuity described in subsection (d)(2)(i) above irrevocable commences to the Participant before the required beginning date, the date distribution is considered to begin is the date distribution actually commences.
(f) Definitions
(1) Designated beneficiary. The individual who is designated as the beneficiary under the Plan in accordance with section 401(a)(9) of the Code and the regulations thereunder.
(2) Distribution calendar year. A calendar year for which a minimum distribution is required. For distributions beginning before the Participant's death, the first distribution calendar year is the calendar year immediately preceding the calendar year which contains the Participant's required beginning date. For distributions beginning after the Participant's death, the first distribution calendar year is the calendar year in which distributions are required to begin pursuant to subsection (e) above.
(3) Life expectancy. The life expectancy (or joint and last survivor expectancy) calculated using the attained age of the Participant (or designated beneficiary) as of the Participant's (or designated beneficiary's) birthday in the applicable calendar year. The applicable calendar year shall be the first distribution calendar year. If annuity payments commence before the required beginning date, the applicable calendar year is the year such payments commence. Life expectancy and joint and last survivor expectancy are computed by use of the expected return multiples in Tables V and VI of section 1.72-9 of the Income Tax Regulations.
(4) Required beginning date. The required beginning date of a Participant is the later of the first day of April of the calendar year following the calendar year in which the Participant retires.
9.9 Eligible Rollover Distribution Made On Or After January 1, 1993.
(a) This Section 9.9 applies to distributions made on or after January 1, 1993. Notwithstanding any provision of the plan to the contrary that would otherwise limit a distributee's election under this Article, a distributee may elect, at the time and in the manner prescribed by the Administrator, to have any portion of an eligible rollover distribution that is equal to at least $500 paid directly to an eligible retirement plan specified by the distributee in a direct rollover.
(b) Definitions.
(1) Eligible rollover distribution: An eligible rollover distribution is any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee's designated beneficiary, or for a specified period of ten years or more; and distribution to the extent such distribution is required under section 401(a)(9) of the Code; and the portion of any distribution that is not includable in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities); and any other distribution(s) that is reasonably expected to total less than $200 during a year.
(2) Eligible retirement plan: An eligible retirement plan is an individual retirement account described in section 408(a) of the Code, an individual retirement annuity described in section 408(b) of the Code, an annuity plan described in section 403(a) of the Code, or a (1) qualified trust described in section 401(a) of the Code, that accepts the distributee's eligible rollover distribution. However, in the case of an eligible rollover distribution to the surviving spouse, an eligible retirement plan is an individual retirement account or individual retirement annuity.
(3) Distributee: A distributee includes an employee or former employee. In addition, the employee's or former employee's surviving spouse and the employee's or former employee's spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in section 414(p) of the Code, are distributees with regard to the interest of the spouse or former spouse:
(4) Direct rollover: A direct rollover is a payment by the Plan to the eligible retirement plan specified by the distributee.
Section 10. Funding of the Plan
10.1 Maintenance of the Insurance Company Contract and Trust Fund. The Plan will be funded through either or both an Insurance Company Contract and/or a Trust Fund, both of which shall be maintained for the exclusive benefit of all persons entitled to benefits under the Plan, and shall be used to pay benefits to such persons, or to pay expenses of administration of the Plan, to the extent not paid by the Employer. Except as otherwise provided in Section 11.2, in no event will the Employer receive any amounts under the Insurance Company Contract or from the Trust Fund.
10.2 Actuarial valuations. From time to time, the Administrator will cause the liabilities of the Plan to be evaluated by an Actuary.
10.3 Funding policy and method. The Administrator will periodically determine the short-run and long-run financial needs of the Plan and will communicate these needs to the Employer and to the Insurance Company and the Trustee. On the basis of such reports and the actuarial valuations provided for in Section 10.2, the Employer will establish a funding policy and method consistent with the objectives of the Plan and will make contributions under the Plan in such amounts and at such times as may be required by such funding policy.
Section 11. Amendment and Termination of Plan.
11.1 Amendment of Plan. The Employer hopes and expects to continue the Plan in effect, but necessarily reserves the right to amend the Plan in any respect and at any time and from time to time by a written instrument signed by any officer of the Employer authorized to sign by a vote of the Board of Trustees providing for such amendment (any such amendment to take effect retroactively if the Employer so provides) or to terminate the Plan. No such action by the Employer will operate to recapture for the Employer any contributions previously made by it under the Plan, or any income or gains therefrom, prior to the satisfaction of all liabilities for benefits hereunder. Except as may be considered by the Employer necessary or desirable to permit the Plan to meet any legal requirements (including without limitation any provisions of the Code) required to be complied with in order that income arising from assets held under the Insurance Company Contract and/or the Trust may be tax-exempt, no such action by the Employer will affect adversely in any way any vested rights theretofore acquired under the Plan.
11.2 Termination or partial termination of the Plan. In the event of the termination or partial termination of the Plan, the interest of all affected Participants to benefits accrued to the date of such termination or partial termination, to the extent then funded, will become fully vested and non-forfeitable. In the event of the termination of the Plan, amounts held under the Insurance Company Contract and the Trust will, after the payment of any expenses, taxes or proper charges of the Insurance Company and the Trustee, be allocated among the Participants and their spouses and Beneficiaries, if any, in the order of precedence set forth in Section 4044 (a) of ERISA and the regulations promulgated thereunder; provided, however, if any funds remain after the satisfaction of all liabilities under the Plan and arising out of any variations between actual and expected Plan experience, such remaining funds will be delivered over and paid to the Employer.
In order to provide for distribution of the amounts allocated in accordance with the immediately preceding paragraph, the Employer may direct that the Insurance Company Contract and/or the Trustee (a) continue the Insurance Company Contract and/or the Trust Fund in existence or (b) purchase specified annuity contracts, or (c) carry out any specified combination of the foregoing; provided, however, that the Employer, upon finding that it is not practicable or desirable in the circumstances to direct any of the foregoing with respect to some or all of the Participants or other persons concerned, may provide for the distribution of a part or all of the assets held under the Insurance Company Contract and/or the Trust otherwise than through the continuance of the Insurance Company Contract or the Trust Fund or through the purchase of annuity contracts with respect to such Participants or other persons.
12.1 Communication to Participants. The Plan will be communicated to all Participants by the Employer promptly after the Plan is adopted.
12.2 Limitation of rights. Neither the establishment of the Plan and the Trust, nor any amendment thereof, nor the creation of any fund or account, nor the payment of any benefits, will be construed as giving to any Participant or other person any legal or equitable right against the Employer, the Administrator, the Insurance Company or the Trustee, except as provided herein; and in no event will the terms of employment or service of any Participant be modified or in any way be affected hereby. It is a condition of the Plan, and each Participant expressly agrees by his participation herein, that each Participant will look solely to the assets held under the Insurance Company Contract or the Trust for the payment of any benefit to which he is entitled under the Plan.
12.3 Non-alienability of benefits. The benefits provided hereunder, will not be subject to alienation, assignment, garnishment, attachment, execution or levy of any kind, and any attempt to cause such benefits to be so subjected will not be recognized, except to the extent as may be required by law or by Section 12.5 below .
12.4 USSERA Compliance. Notwithstanding any provision of this Plan to the contrary, contributions, benefits and service credits with respect to qualified military service will be provided in accordance with section 414(u) of the Code.
12.5 Payment under domestic relations orders. Notwithstanding any provisions of the Plan to the contrary, if a court enters any judgment, decree or order (including approval of a property settlement agreement) which relates to the provision of child support, alimony payments or marital property rights to a spouse, former spouse, child or other dependent of a Participant, which is made pursuant to a state domestic relations law (including a community properly law) and which creates or recognizes the existence of an alternate payee's right to, or assigns to an alternate payee the right to, receive all or a portion of the benefits payable under the Plan with respect to such Participant then such benefits shall be paid in accordance with the applicable requirements of such judgment, decree or order provided such judgment, decree or order either is entered after December 31, 1984 and constitutes a “qualified domestic relations order” within the meaning of Section 414 (p) of the Code or is entered prior to January 1, 1985 and the Administrator elects, in its sole discretion, to make payment in accordance with the applicable requirement of such judgment, decree or order.
12.6 Annual Compensation Limitation. In addition to other applicable limitations set forth in the Plan, and notwithstanding any other provisions of the Plan to the contrary, for Plan Years beginning on or after January 1, 1994, the annual compensation limit of each Participant taken into account for determining all benefits provided under the Plan for any determination period shall not exceed $150,000 as adjusted for the cost-of-living in accordance with Code section 401(a)(17)(B). The cost-of-living adjustment in effect for a calendar year applies to any determination period beginning in such calendar year. Compensation is defined as wages within the meaning of Code section 3401(a), and all other payments of compensation to an Employee by the Employer (in the course of the Employer's trade or business) for which the Employer is required to furnish the Employee a written statement under Code sections 6041(d), 6051(a)(3) and 6052. Compensation must be determined without regard to any rules in Code section 3402(a) that limit the renumeration included in wages based on the nature or location of the employment or the services performed. Compensation shall include only that compensation which is actually paid to the Participant during the determination period. The determination period shall be the Plan Year. For Plan Years prior to July 1, 2001 Compensation shall not include any amount which is contributed by the Employer pursuant to a salary reduction agreement and which is not includible in the gross income of the Employee under Code sections 125, 402(e)(3), 402(h) or 403(b).
For Plan Years beginning on and after July 1, 2001 Compensation shall not include elective amounts that are not includible in the gross income of the Employee under Code sections 125, 132 (f)(4), 402 (e)(3), 402 (h) or 403 (b).
If Compensation for any prior determination period is taken into account in determining a Participant's benefits for the current Plan Year, the compensation for such prior determination period is subject to the applicable compensation limit in effect for that prior period. For this purpose, in determining benefits in Plan Years beginning on or after January 1, 1989, the annual compensation limit in effect for determination periods beginning before that date is $200,000. In addition, in determining benefits in plan years beginning on or after January 1, 1994, the annual compensation limit in effect for determination periods beginning before that date is $150,000.
12.7 Payments to minors and incompetents. If the Administrator received evidence satisfactory to it that any person entitled to receive any benefit payments under the Plan is, at the time when such benefit payments are payable, a minor or physically or mentally incompetent to receive such benefit and to give a valid release therefore, and that another individual or an institution is then maintaining or has custody of such person, and that no guardian or other representative of the estate of such person has been duly appointed, the Administrator may authorize payment of such benefit otherwise payable to such person or such other individual or institution, and the release of such other individual or institution will be valid and complete discharge for the payment of such benefit.
12.8 Gender. Whenever used herein, a pronoun or adjective in the masculine gender includes the feminine gender unless the context clearly indicates otherwise.