EX-4.1 2 crr-ex41_37.htm EX-4.1 crr-ex41_37.htm

Exhibit 4.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

DEFINED CONTRIBUTION PROTOTYPE PLAN AND TRUST AGREEMENT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Defined Contribution Plan

 

TABLE OF CONTENTS

 

 

 

 

ARTICLE I, DEFINITIONS

1.01

Account

1

1.02

Account Balance or Accrued Benefit

1

1.03

Accounting Date

1

1.04

Adoption Agreement

1

1.05

Advisory Letter

1

1.06

Annuity Contract

1

1.07

Appendix

2

1.08

[Reserved]

2

1.09

Beneficiary

2

1.10

Code

2

1.11

Compensation

2

1.12

Contribution Types

5

1.13

Defined Contribution Plan

5

1.14

Defined Benefit Plan

5

1.15

Differential Wage Payment

5

1.16

Disability

5

1.17

Designated IRA Contribution

5

1.18

DOL

5

1.19

Earnings

5

1.20

Effective Date

5

1.21

Elective Deferrals

5

1.22

Employee

5

1.23

Employee Contribution and DECs

7

1.24

Employer

7

1.25

Employer Contribution

8

1.26

Entry Date

8

1.27

EPCRS

8

1.28

ERISA

8

1.29

401(k) Plan

8

1.30

401(m) Plan

8

1.31

HEART Act

8

1.32

Hour of Service

8

1.33

IRS

9

1.34

Limitation Year

9

1.35

Matching Contribution

9

1.36

Money Purchase Pension Plan/Money Purchase Pension Contribution

10

1.37

Named Fiduciary

10

1.38

Nonelective Contribution

10

1.39

Opinion Letter

10

1.40

Paid Time Off Plan

10

1.41

Participant

10

1.42

Plan

10

1.43

Plan Administrator

10

1.44

Plan Year

11

1.45

Practitioner

11

1.46

Predecessor Employer/Predecessor Plan

11

1.47

Prevailing Wage Contract/Contribution

11

1.48

Profit Sharing Plan

11

1.49

Protected Benefit

11

1.50

Prototype Plan/Master Plan (M&P Plan)

11

1.51

QDRO

11

1.52

Qualified Military Service

11

1.53

Qualified Reservist Distribution (QRD)

11

1.54

Restated Plan

11

1.55

Rollover Contribution

11

1.56

Safe Harbor Contribution

11

1.57

Salary Reduction Agreement

11

1.58

Separation from Service/Severance from Employment

12

1.59

Service

12

1.60

SIMPLE Contribution

12

1.61

Sponsor

12

1.62

Successor Plan

12

1.63

Taxable Year

12

1.64

Transfer

12

1.65

Trust

12

1.66

Trust Fund

12

1.67

Trustee/Custodian

13

1.68

USERRA

13

1.69

Valuation Date

13

1.70

Vested

13

1.71

Volume Submitter Plan

13

 

 

 

ARTICLE II, ELIGIBILITY AND PARTICIPATION

2.01

Eligibility

14

2.02

Application of Service Conditions

14

2.03

Break in Service - Participation

15

2.04

Participation upon Re-employment

16

2.05

Change in Employment Status

16

2.06

Participation Opt-Out

16

 

 

 

ARTICLE III, PLAN CONTRIBUTIONS AND FORFEITURES

3.01

Contribution Types

17

3.02

Elective Deferrals

17

3.03

Matching Contributions

22

3.04

Nonelective/Employer Contributions

23

3.05

Safe Harbor 401(k) Contributions

27

3.06

Allocation Conditions

32

3.07

Forfeiture Allocation

33

3.08

Rollover Contributions

34

3.09

Employee Contributions

36

3.10

SIMPLE 401(k) Contributions

36

3.11

USERRA/HEART ACT Contributions

37

3.12

Designated IRA Contributions

38

3.13

Deductible Employee Contributions (DECs)

40

 

 

 

ARTICLE IV, LIMITATIONS AND TESTING

4.01

Annual Additions Limit

41

4.02

Annual Additions Limit Code §415 Aggregated Plans

41

4.03

Disposition of Excess Annual Additions

42

4.04

No Combined DCP/DBP Limitation

42

4.05

Definitions: Sections 4.01-4.04

42

4.06

Annual Testing Elections

44

4.07

Testing Based On Benefits

45

4.08

Amendment To Pass Testing

46

4.09

Application Of Compensation Limit

46

4.10

401(k) (Or Other Plan) Testing

46

4.11

Definitions: Sections 4.06-4.10

52

 

 

 

ARTICLE V, VESTING

5.01

Normal/Early Retirement Age

54

5.02

Participant Death or Disability

54

5.03

Vesting Schedule

54

5.04

Cash-Out Distribution/Possible Restoration

55

5.05

Year of Service - Vesting

57

5.06

Break in Service and Forfeiture Break in Service - Vesting

57

5.07

Forfeiture Occurs

58

5.08

Amendment to Vesting Schedule

58

5.09

Employee Contributions

58

 

 

 

 

© 2014 The Prudential Insurance Company of America or its suppliers

1

Defined Contribution Plan

 

 

ARTICLE VI, DISTRIBUTIONS

6.01

Timing of Distribution

59

6.02

Required Minimum Distributions

63

6.03

Post-Separation (Severance), Lifetime RMD, and Beneficiary Distribution Methods

65

6.04

Annuity Distributions to Participants and to Surviving Spouses

67

6.05

QDRO Distributions

69

6.06

Defaulted Loan - Timing of Offset

70

6.07

Hardship Distribution

70

6.08

Direct Rollover of Eligible Rollover Distributions

71

6.09

Replacement of $5,000 Amount

73

6.10

TEFRA Elections

73

6.11

Deemed Severance Distributions

73

 

 

 

ARTICLE VII, ADMINISTRATIVE PROVISIONS

7.01

Employer Administrative Provisions

74

7.02

Plan Administrator

74

7.03

Direction of Investment

75

7.04

Account Administration, Valuation and Expenses

76

7.05

Participant Administrative Provisions

79

7.06

Plan Loans

81

7.07

Lost Participants

82

7.08

Plan Correction

83

7.09

Prototype/Volume Submitter Plan Status

83

7.10

Plan Communications, Interpretation, and Construction

83

7.11

Divestment of Employer Securities

84

 

 

 

ARTICLE VIII, TRUSTEE AND CUSTODIAN, POWERS AND DUTIES

8.01

Acceptance

86

8.02

Investment Powers and Duties

86

8.03

Named Fiduciary

89

8.04

Form of Distribution (Cash or Property)

89

8.05

Trustee/Custodian Fees and Expenses

89

8.06

Third Party Reliance

90

8.07

Appointment of Ancillary Trustee or Independent Fiduciary

90

8.08

Resignation and Removal

90

8.09

Investment In Group Trust Fund

91

8.10

Combining Trusts of Employer's Plans

91

8.11

Amendment/Substitution of Trust

91

8.12

Cross-Pay Provision

91

 

 

 

ARTICLE IX, PROVISIONS RELATING TO INSURANCE AND INSURANCE COMPANY

9.01

Insurance Benefit

92

9.02

Limitations On Coverage

92

9.03

Disposition of Life Insurance Protection

92

9.04

Dividends

92

9.05

Limitations On Insurance Company Duties

93

9.06

Records/Information

93

9.07

Conflict With Plan

93

9.08

Appendix B Override

93

9.09

Definitions

93

 

 

 

ARTICLE X, TOP-HEAVY PROVISIONS

10.01

Determination of Top-Heavy Status

94

10.02

Top-Heavy Minimum Allocation

94

10.03

Plan Which Will Satisfy Top-Heavy

94

10.04

Top-Heavy Vesting

95

10.05

Safe Harbor/SIMPLE Plan Exemption

95

10.06

Definitions

95

 

 

 

ARTICLE XI, EXCLUSIVE BENEFIT, AMENDMENT, AND TERMINATION

11.01

Exclusive Benefit

98

11.02

Amendment by Employer

98

11.03

Amendment by Prototype Sponsor/Volume Submitter Practitioner

99

11.04

Frozen Plan/Discontinuance of Contributions

99

11.05

Plan Termination

100

11.06

Merger/Direct Transfer

101

 

 

 

ARTICLE XII, MULTIPLE EMPLOYER PLAN

12.01

Election/Overriding Effect

102

12.02

Definitions

102

12.03

Participating Employer Elections

102

12.04

HCE Status

102

12.05

Testing

102

12.06

Top-Heavy

103

12.07

Compensation

103

12.08

Service

103

12.09

Required Minimum Distributions

103

12.10

Cooperation and Indemnification

103

12.11

Involuntary Termination

104

12.12

Voluntary Termination

104

 

 

 

© 2014 The Prudential Insurance Company of America or its suppliers

2


Defined Contribution Plan

 

DEFINITIONS

MASTER LIST

 

 

Account. 1.01

 

Account Balance. 1.02

 

Accounting Date. 1.03

 

Accrued Benefit. 1.02

 

ACA. 3.02(B)(1)

 

ACP Limit. 4.10(C)(1)

 

ACP Participant. 4.11(A)

 

ACR (actual contribution ratio). 4.10(C)(5)(a)

 

Actual Method. 1.32(A)(1)

 

Actuarial Factor. 3.04(B)(5)(b)

 

Additional Matching Contribution. 1.35(G), 3.05(F)(1)

 

Ad-Hoc. 6.03(A)(6)

 

Administrative Checklist. 7.02(C)(2)

 

Adoption Agreement. 1.04

 

ADP Limit. 4.10(B)(1)

 

ADP Participant. 4.11(B)

 

ADR (actual deferral ratio). 4.10(B)(4)(a)

 

Advisory Letter. 1.05

 

Aggregate Contributions. 4.10(C)(2)

 

Allocable Income. 4.11(C)

 

Alternative Annuity. 1.06(B), 6.03(A)(5)

 

Alternative Defined Contribution Plan. 11.05(F)(1)

 

Alternative (general) 415 Compensation. 1.11(B)(4)

 

Anniversary Year. 2.02(C)(3)

 

Annual Additions. 4.05(A)

 

Annual Additions Limit. 4.05(B)

 

Annuity Contract. 1.06

 

Annuity Starting Date. 1.06(A), 6.01(A)(2)(h)

 

Appendix. 1.07

Applicable Contribution Rate. 4.10(D)(1)(b)

 

Applicable Defined Contribution Plan. 7.11(A)(1)

 

Applicable Individual/Deferrals. 7.11(B)(1)

 

Applicable Individual/Employer Contributions. 7.11(C)(1)

 

Applicable Percentage. 6.04(A)(8)(b)

 

Associated Matching Contribution. 3.07(A)(1)(b)

 

Automatic Contribution Arrangement (ACA). 3.02(B)(1)

 

Automatic Deferral. 1.21(C), 3.02(B)(4)(a)

 

Automatic Deferral Percentage/Increases. 3.02(B)(4)(b)

 

Automatic Rollover. 6.08(D)

 

Basic Matching Contribution. 1.35(E), 3.05(E)(4)

 

Beneficiary. 1.09

 

Benefit Factor. 3.04(B)(5)(a)

 

Break in Service. 1.32(A)(3)(i), 2.03(A), 5.06(A)

 

Cash or Deferred Arrangement (CODA). 3.02(C)

 

Cash-Out Distribution. 5.04(A)(2)

 

Catch-Up Deferral. 1.21(D), 3.02(D)(2)

 

Catch-Up Eligible Participant. 3.02(D)(1)

 

Cessation of Affiliation. 4.05(C)

 

Client Organization (“CO”). 12.02(D)(1)

 

Code. 1.10

 

Code §415 Aggregated Plan. 4.05(D)

 

Code §415 Compensation. 1.11(B)(3), 4.05(F)

 

Code §3401(a) Wages. 1.11(B)(2)

 

Collective Bargaining Employees. 1.22(D)(1)

 

Combined Plans Limitation. 4.05(E)

 

Compensation. 1.11, 1.22(E)(3), 3.01(B), 3.02(A)(2), 3.02(B)(4)(c), 3.02(C), 3.05(C), 3.10(C), 3.11(C), 3.12(C)(4)(c), 4.05(F), 4.07(D), 4.07(E), 4.11(D), 10.06(A)

 

Compensation Dollar Limit. 1.11(E)

 

© 2014 The Prudential Insurance Company of America or its suppliers

1

Defined Contribution Plan

 

Contract(s). 9.09(A)

 

Contrary Election. 3.02(B)(4)(d)

 

Contrary Election Effective Date. 3.02(B)(4)(e)

 

Contribution Types. 1.12

 

Cross-Over Date. 4.06(C)(1)(c)

 

Current Year Testing. 4.11(E)

 

Custodian. 1.67

 

DCD. 6.02(E)(3)

 

DCY. 6.02(E)(2)

 

Deductible Employee Contributions (DECs). 1.23, 3.13

 

Deemed Disability Compensation. 1.11(K)

 

Deemed 125 Compensation. 1.11(C)

 

Defined Benefit Plan. 1.14

 

Defined Contribution Plan. 1.13

 

Designated Beneficiary. 1.09(A), 6.02(E)(1)

 

Designated IRA Contribution. 1.17

 

Determination Date. 10.06(B)

 

Determination (look-back) Period. 10.06( C )

 

Differential Wage Payment. 1.15

 

 

Direct Rollover. 6.08(F)(1)

 

Disability. 1.16

 

Discretionary Matching Contribution. 1.35(B)

 

Discretionary Nonelective Contribution. 1.38(B)

 

Distribution Requiring Consent. 6.01(A)(2)(a)

 

Dividends. 9.09(B)

 

DOL. 1.18

 

EACA. 3.02(B)(2)

 

EACA Effective Date. 3.02(B)(2)(a)(i)

 

Early Retirement Age. 5.01

 

Earned Income. 1.11(J)

 

Earnings. 1.19

 

Effective Date. 1.20

 

Elapsed Time Method. 1.32(A)(3)

 

Elective Deferrals. 1.21

 

Elective Deferral Limit. 4.10(A)(1)

 

Elective Transfer. 11.06(E)(1)

 

Eligible Automatic Contribution Arrangement (EACA). 3.02(B)(2)

 

Eligible Employee. 1.22(C)

 

Eligible Retirement Plan. 6.08(F)(2)

 

Eligible Rollover Distribution. 6.08(F)(3)

 

Eligibility Computation Period. 2.02(C)(1)

 

Employee. 1.22, 12.02(A)

 

Employee Contribution. 1.23

 

Employer. 1.24, 4.05(G), 10.06(D)

 

Employer Contribution. 1.25

 

Employment Commencement Date. 2.02(C)(4)

 

Enhanced Matching Contribution. 1.35(F), 3.05(E)(6)

 

Entry Date. 1.26, 2.02(D)(1)

 

EPCRS. 1.27

 

Equivalency Method. 1.32(A)(2)

 

ERISA. 1.28

 

ERISA Fee Recapture Account. 7.04(D)(1)

 

Excess Aggregate Contributions. 4.10(C)(3)

 

Excess Amount. 4.05(H)

 

Excess Contributions. 4.10(B)(2)

 

Excess Deferral. 4.10(A)(2)

 

Excluded Compensation. 1.11(G)

 

Excluded Employee. 1.22(D)

 

Exempt Participants. 6.04(G)(1)

 

Fixed Matching Contribution. 1.35(A)

 

 

© 2014 The Prudential Insurance Company of America or its suppliers

2

Defined Contribution Plan

 

Fixed Nonelective Contribution. 1.38(A)

 

Forfeiture Break in Service. 5.06(B)

 

Formerly Affiliated Plan. 4.05(I)

 

Frozen Plan. 1.42(B)

 

401(k) Plan. 1.29

 

401(m) Plan. 1.30

 

Gap Period. 4.11(F)

 

Gateway Contribution. 4.07(A)(1)

 

HCE. 1.22(E)

 

HCE Group. 4.10(B)(4))(b), 4.10(C)(5)(b), 4.11(G)

 

HEART Act. 1.31

 

Highest Allocation Rate. 4.07(E)(1)

 

Highest Contribution Rate. 10.06(E)

 

Hour of Service. 1.32

 

Includible Employees. 4.06(C)(1)(a)

 

Individual Beneficiary. 1.09(B)

 

Individual Retirement Plan (IRA). 6.08(F)(4)

 

Initial Eligibility Computation Period. 2.02(C)(2)

 

In-Plan Roth Rollover Contribution. 1.55(A)

 

In-Plan Roth Rollover Contribution Account. 1.55(B)

 

In-Service Distribution. 6.01(C)(1)

 

Installments. 6.03(A)(4)

 

Insurable Participant. 9.09(C)

 

Investment Manager(s). 7.02(C)(8)

 

IRA. 6.08(F)(4)

 

IRS. 1.33

 

Issuing Company. 9.09(D)

 

JLT. 6.02(E)(4)

 

Key Employee. 10.06(F)

 

Lead Employer. 1.24(B), 12.02(B)

 

Leased Employee. 1.22(B)

Life Annuity. 6.04(A)(4)

 

Life Expectancy. 6.02(E)(5)

 

Limitation Year. 1.34, 4.05(J)

 

Lump –Sum. 6.03(A)(3)

 

M&P Plan. 1.50

 

Mandatory Distribution. 6.01(A)(1)(a)

 

Mass Submitter. 11.03(A)

 

Master Plan. 1.50

 

Matching Contribution. 1.35

 

Matching Rate. 4.10(D)(2)(b)

 

Modified AGI. 3.12(C)(4)(b)

 

Money Purchase Pension Contribution. 1.36

 

Money Purchase Pension Plan. 1.36

 

Multiple Employer Plan. 1.42(A)

 

Named Fiduciary. 1.37, 8.03(A)

 

NHCE. 1.22(F)

 

NHCE Group. 4.10(B)(4)(b), 4.10(C)(5)(b), 4.11(H)

 

Non-cash Compensation. 1.11(G)

 

Nonelective Contribution. 1.38

 

Nonelective Transfer. 11.06(D)

 

Non-Key Employee. 10.06(G)

 

Nonresident Aliens. 1.22(D)(2)

 

Nonstandardized Plan. 1.04(A)

 

Nontransferable Annuity. 1.06(C)

 

Normal Retirement Age. 5.01

 

Operational QMAC. 3.03(C)(2)

 

Operational QNEC. 3.04(C)(2)

 

Opinion Letter. 1.39

 

Otherwise Excludible Employees. 4.06(C)(1)(a)

 

Paid Time Off Plan. 1.40

 

Partially-Vested Participant. 5.04(A)(1)

 

© 2014 The Prudential Insurance Company of America or its suppliers

3

Defined Contribution Plan

 

Participant. 1.41, 10.06(H)

 

Participant-Directed Accounts. 7.04(A)(2)(b)

 

Participant’s RMD Account Balance. 6.02(E)(6)

 

Participating Compensation. 1.11(H)(1)

 

Participating Employer. 1.24(D), 12.02(C)

 

Participation Agreement. 1.04(C)

 

Part-Time/Temporary/Seasonal Employees. 1.22(D)(4)

 

PEO. 12.02(D)

 

Period of Severance. 1.32(A)(3)(ii)

 

Permissive Aggregation Group. 10.06(I)

 

Plan. 1.42

 

Plan Administrator. 1.43

 

Plan Designated QMAC. 3.03(C)(1)

 

Plan Designated QNEC. 3.04(C)(1)

 

Plan Year. 1.44

 

Plan Year Compensation. 1.11(H)(2)

 

Pooled Accounts. 7.04(A)(2)(a)

 

Post-Severance Compensation. 1.11(I)

 

Practitioner. 1.45

 

Predecessor Employer. 1.46(A), 4.05(K)

 

Predecessor Employer Service. 1.59(B)

 

Predecessor Plan. 1.46(B)

 

Predecessor Plan Service. 1.59(B)

 

Pre-Entry Compensation. 1.11(H)

 

Pre-Tax Deferral. 1.21(A)

 

Prevailing Wage Contract/Contribution. 1.47

 

Prior Year Testing. 4.11(I)

 

Professional Employer Organization (PEO). 12.02(D)

Profit Sharing Plan. 1.48

Protected Benefit. 1.49

Prototype Plan/Master Plan (M&P Plan). 1.50

Publicly Traded Securities. 7.11(A)(2)

 

QACA. 3.02(B)(3)

 

QACA Basic Matching Contribution. 1.35(H), 3.05(E)(5)

 

QACA Effective Date. 3.02(B)(3)(a)(i)

 

QDRO. 1.51

 

QJSA. 1.06(D), 6.04(A)(1),6.04(A)(2)

 

QMAC. 1.35(C)

 

QNEC. 1.38(C)

 

QOSA. 1.06(F), 6.04(A)(8)(a)

 

QPSA. 1.06(E), 6.04(B)(1)

 

QRD. 1.53, 6.01(C)(4)(b)(iii)

 

QTA. 11.05(B)(1)

 

Qualified Automatic Contribution Arrangement (QACA). 3.02(B)(3)

 

Qualified Military Service. 1.52

 

Qualified Optional Survivor Annuity (QOSA). 1.06(F), 6.04(A)(8)(a)

 

Qualified Preretirement Survivor Annuity (QPSA). 1.06(E), 6.04(B)(1)

 

Qualified Reservist Distribution (QRD). 1.53, 6.01(C)(4)(b)(iii)

 

Qualified Termination Administrator (QTA). 11.05(B)(1)

 

RBD. 6.02(E)(7)

 

Reclassified Employees. 1.22(D)(3)

 

Re-Employment Commencement Date. 2.02(C)(4)

 

Regular Matching Contribution. 1.35(D)

 

Related Employer. 1.24(C)

 

Related Employer Service. 1.59(A)

 

Related Group. 1.24(C)

 

Representative Contribution Rate. 4.10(D)(1)(a)

 

Representative Matching Rate. 4.10(D)(2)(a)

 

Required Aggregation Group. 10.06(J)

 

Restated Plan. 1.54

 

Restorative Payment. 4.05(L)

 

© 2014 The Prudential Insurance Company of America or its suppliers

4

Defined Contribution Plan

 

Restricted 401(k) Accounts. 6.01(C)(4)(b)(ii)

 

Restricted Pension Accounts. 6.01(C)(4)(c)(ii)

 

RMD. 6.02(E)(8)

 

Rollover Contribution. 1.55

 

Roth Deferral. 1.21(B)

 

Safe Harbor Contribution. 1.56, 3.05(E)(2), 3.05(E)(3)

 

Safe Harbor 401(k) Plan. 1.29(B)

 

Safe Harbor Matching Contribution. 1.35(J), 3.05(E)(3)

 

Safe Harbor Nonelective Contribution. 1.38(E), 3.05(E)(2)

 

Salary Reduction Agreement. 1.57

 

Segregated Accounts. 7.04(A)(2)(c)

 

Self-Employed Individual. 1.22(A)

 

Separation from Service. 1.58

 

Service. 1.59

 

Severance from Employment. 1.58

 

Signatory Employer. 1.24(A)

 

SIMPLE Contribution. 1.60, 3.10(E)(1)

 

SIMPLE 401(k) Plan. 1.29(C)

 

SIMPLE Matching Contribution. 1.35(I), 3.10(E)(1)

 

SIMPLE Nonelective Contribution. 1.38(D), 3.10(E)(1)

 

SLT. 6.02(E)(9)

 

Sponsor. 1.61

 

Spouse. 7.05(A)(5)

 

Standardized Plan. 1.04(A)

 

Subsequent Eligibility Computation Period. 2.02(C)(5)

 

Successor Plan. 1.62

 

Survivor Annuity. 6.04(A)(4)

 

Taxable Wage Base. 3.04((B)(2)(c)

 

Taxable Year. 1.63

 

Testing Year. 4.11(J)

 

Top-Heavy Minimum Allocation. 10.06(L)

 

Top-Heavy Ratio. 10.06(K)

Traditional 401(k) Plan. 1.29(A)

 

Transfer. 1.64

 

Trust. 1.65

 

Trust Fund. 1.66

 

Trustee. 1.67

 

ULT. 6.02(E)(10)

 

USERRA. 1.68

 

Valuation Date. 1.69, 7.04(B)(2)

 

Valuation Period. 7.04(B)(3)

 

VCY. 6.02(E)(11)

 

Vested/Vesting. 1.70

 

Vesting Computation Period. 5.05(B)

 

Volume Submitter Plan. 1.71

 

W-2 Wages. 1.11(B)(1)

 

Worksite Employee. 12.02(D)(2)

 

Year of Service. 1.32(A)(3)(iii), 2.02(A), 5.05(A)

 

0% Vested Participant. 5.04(C)(1)

 

 

 

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THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

DEFINED CONTRIBUTION PROTOTYPE PLAN AND TRUST AGREEMENT

BASIC PLAN DOCUMENT #11

 

The Prudential Insurance Company of America, in its capacity as Prototype Plan Sponsor or as Volume Submitter Practitioner, establishes this Prototype Plan or this Volume Submitter Plan intended to conform to and qualify under §401 and §501 of the Internal Revenue Code of 1986, as amended. An Employer establishes a Plan and Trust under this Prototype Plan or this Volume Submitter Plan by executing an Adoption Agreement.

 

ARTICLE I

DEFINITIONS

 

 

1.01 Account.  Account  means  the  separate  Account(s) which the Plan Administrator or the Trustee maintains under the Plan for a Participant.

 

1.02 Account  Balance   or   Accrued   Benefit.   Account Balance or Accrued Benefit means the amount of a Participant's Account(s) as of any relevant date derived from Plan contributions and from Earnings.

 

1.03 Accounting  Date.  Accounting  Date  means  the  last day of the Plan Year. The Plan Administrator will allocate Employer  Contributions  and  forfeitures  for  a  particular  Plan Year as of the Accounting Date of that Plan Year, and on such other dates, if any, as the Plan Administrator determines, consistent with the Plan's allocation conditions and other provisions.

 

1.04 Adoption  Agreement.  Adoption  Agreement  means the document executed by each Employer adopting this Plan. References to Adoption Agreement within this basic plan document are to the Adoption Agreement as completed and executed by a particular Employer unless the context clearly indicates otherwise. An adopting Employer's Adoption Agreement and this basic plan document together constitute a single Plan and Trust of the Employer. Each elective provision of the Adoption Agreement corresponds (by its parenthetical section reference) to the section of the Plan which grants the election.  All  "Section"  references  within  an  Adoption Agreement are to the basic plan document. All "Election" references within an Adoption Agreement are Adoption Agreement references. The Employer or Plan Administrator to facilitate Plan administration or to generate written policies or forms for use with the Plan may maintain one or more administrative checklists as an attachment to the Adoption Agreement or otherwise. Any such checklists are not part of the Plan.

 

(A)  Prototype/Standardized Plan or Nonstandardized Plan. Each Adoption Agreement offered under this Prototype Plan is either a Standardized Plan or a Nonstandardized Plan, as identified  in  that  Adoption  Agreement,  under  Rev.  Proc. 2011-41 §§4.09 and 4.10. The provisions of this Plan apply in the same manner to Nonstandardized Plans and to Standardized Plans unless otherwise specified. If the Employer maintains its Plan pursuant to a Nonstandardized Adoption Agreement or a Standardized Adoption Agreement, the Plan is a Prototype Plan and all provisions in this basic plan which expressly or by their context refer to a "Volume Submitter Plan" are not applicable.

 

(B) Volume Submitter Adoption Agreement. A Volume Submitter Adoption Agreement for purposes of this Volume Submitter Plan is subject to the same provisions as apply to a

Nonstandardized Plan, except as the Plan or Volume Submitter Adoption Agreement otherwise indicates. If the Employer maintains its Plan pursuant to a Volume Submitter Adoption Agreement, the Plan is a Volume Submitter Plan and all provisions in this basic plan which expressly or by their context refer to a "Prototype Plan" are not applicable.

 

(C)  Participation Agreement. Participation Agreement, in the case  of  a  Standardized  Plan means  the  Adoption  Agreement page or pages executed by one or more Related Employers to become a Participating Employer. In the case of a Nonstandardized or Volume Submitter Plan, Participation Agreement means the Adoption Agreement page or pages executed by one or more Related Employers or, in the case of a Multiple Employer Plan, by one or more Employers which are not Related Employers (see Section 12.02(C)) to become a Participating Employer.

 

1.05 Advisory  Letter.  Advisory  Letter  means  an  IRS issued  letter  as  to  the  acceptability  in  form  of  a  Volume Submitter  Plan  as  defined  in  Section  13.03  of  Rev.  Proc. 2005-16.

 

1.06 Annuity   Contract.   Annuity   Contract   means   an annuity contract that the Trustee purchases with the Participant's Vested Account Balance. An Annuity Contract includes a QJSA, a QOSA, a QPSA and an Alternative Annuity. If the Plan Administrator elects or is required to provide an Annuity Contract, such annuity must be a Nontransferable Annuity and otherwise must comply with the Plan terms.

 

(A) Annuity Starting Date. A Participant's Annuity Starting Date means the first day of the first period for which the Plan pays an amount as an annuity or in any other form.

 

(B)  Alternative Annuity. See Section 6.03(A)(5).

 

(C) Nontransferable   Annuity.   Nontransferable   Annuity means an Annuity Contract which by its terms provides that it may not be sold, assigned, discounted, pledged as collateral for a loan or security for the performance of an obligation or for any purpose to any person other than the insurance company. If the Plan distributes an Annuity Contract, the Annuity Contract must be a Nontransferable Annuity.

 

(D)  QJSA. See Sections 6.04(A)(1) and (2).

 

(E)  QPSA. See Section 6.04(B)(1).

 

(F)  QOSA. See Section 6.04(A)(8)(a).

 

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1.07 Appendix. Appendix means one of the Appendices to an Adoption Agreement designated as "A", "B", "C", or "D" which are expressly authorized by the Plan and as part of the Plan, are covered by the Advisory Letter or Opinion Letter.

1.08 [RESERVED]

 

1.09 Beneficiary. Beneficiary means a person designated by a Participant, a Beneficiary or by the Plan who is or may become entitled to a benefit under the Plan. A Beneficiary who becomes entitled to a benefit under the Plan remains a Beneficiary under the Plan until the Trustee has fully distributed to the Beneficiary his/her Plan benefit. A Beneficiary's right to (and the Plan Administrator's or a Trustee's duty to provide to the Beneficiary) information or data concerning the Plan does not arise until the Beneficiary first becomes entitled to receive a benefit under the Plan.

 

(A)  Designated Beneficiary. Designated Beneficiary means a Beneficiary described in Section 6.02(E)(1).

 

(B)  Individual  Beneficiary.  Individual  Beneficiary  means  a Beneficiary who is an individual.

 

1.10 Code. Code means the Internal Revenue Code of 1986, as amended and includes applicable Treasury regulations.

 

1.11 Compensation.

 

(A)  Uses   and   Context.   Any   reference   in   the   Plan   to Compensation is a reference to the definition in this Section 1.11, unless the Plan reference, or the Employer in its Adoption Agreement,   modifies   this   definition.   Except   as   the   Plan otherwise specifically provides, the Plan Administrator will take into account only Compensation actually paid during (or as permitted under the Code, paid for) the relevant period. A Compensation payment includes Compensation paid by the Employer through another person under the common paymaster provisions  in  Code  §§3121  and  3306.  In  the  case  of  a Self-Employed Individual, Compensation means Earned Income as defined in Section 1.11(J). However, if the Plan must use an equivalent alternative compensation amount (pursuant to Treas. Reg. §1.414(s)-1(g)(1)(i)) in performing nondiscrimination testing relating to Matching Contributions, Nonelective Contributions and other Employer Contributions (excluding Elective Deferrals), the Plan Administrator may limit the Compensation of such Self-Employed Individual to such equivalent alternative compensation amount. The Employer in its  Adoption  Agreement  may  elect  to  allocate  contributions based on Compensation within a specified 12 month period which ends within a Plan Year.

 

(B)  Base Definitions and Modifications. The Employer in its Adoption Agreement must elect one of the following base definitions  of  Compensation:  W-2  Wages,  Code  §3401(a) Wages, or 415 Compensation. The Employer may elect a different base definition as to different Contribution Types. The Employer in its Adoption Agreement may specify any modifications thereto, for purposes of contribution allocations under  Article  III.  If  the  Employer  fails  to  elect  one  of  the above-referenced definitions, the Employer is deemed to have elected the W-2 Wages definition.

 

(1)  W-2 Wages. W-2 Wages means wages for federal income  tax  withholding  purposes,  as  defined  under  Code §3401(a), plus all other payments to an Employee in the course of the Employer's trade or business, for which the Employer must  furnish  the  Employee  a  written  statement  under  Code §§6041, 6051, and 6052, but determined without regard to any rules that limit the remuneration included in wages based on the nature  or  location  of  the  employment  or  services  performed (such   as   the   exception   for   agricultural   labor   in   Code §3401(a)(2)). The Employer in Appendix B may elect to exclude from W-2 Compensation certain Employer paid or reimbursed moving expenses as described therein.

 

(2) Code  §3401(a)  Wages  (income  tax  wage withholding). Code §3401(a) Wages means wages within the meaning of Code §3401(a) for the purposes of income tax withholding at the source, but determined without regard to any rules that limit the remuneration included in wages based on the nature or the location of the employment or the services performed (such as the exception for agricultural labor in Code §3401(a)(2)).

 

(3) Code  §415  Compensation  (current  income definition/simplified    compensation    under    Treas.    Reg. §1.415(c)-2(d)(2)).   Code   §415   Compensation   means   the Employee's wages, salaries, fees for professional service 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  includible  in  gross income (including, but not limited to, commissions paid to salespersons, compensation for services on the basis of a percentage of profits, commissions on insurance premiums, tips, bonuses, fringe benefits and reimbursements or other expense allowances under a nonaccountable plan as described in Treas. Reg. §1.62-2(c)).

 

Code §415 Compensation does not include:

 

(a) Deferred compensation/SEP/SIMPLE. Employer contributions (other than Elective Deferrals) to a plan of deferred compensation (including a simplified employee pension plan under Code §408(k) or to a simple retirement account under Code §408(p)) to the extent the contributions are not  included  in  the  gross  income  of  the  Employee  for  the Taxable Year in which contributed, and any distributions from a plan of deferred compensation (whether or not qualified), regardless of whether such amounts are includible in the gross income of the Employee when distributed.

 

(b) Option exercise. Amounts realized from the exercise of a non-qualified stock option (an option other than a statutory option under Treas. Reg. §1.421-1(b)), or when restricted stock or other property held by an Employee either becomes  freely  transferable  or  is  no  longer  subject  to  a substantial risk of forfeiture under Code §83.

 

(c)   Sale of option stock. Amounts realized from the sale, exchange or other disposition of stock acquired under a statutory stock option as defined under Treas. Reg. §1.421-1(b).

 

 

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(d) Other  amounts  that  receive  special  tax benefits. Other amounts that receive special tax benefits, such as premiums for group term life insurance (but only to the extent that the premiums are not includible in the gross income of the Employee  and  are  not  salary  reduction  amounts  under  Code §125).

(e)   Other similar items. Other items of remuneration which are similar to any of the items in Sections 1.11(B)(3)(a) through (d).

 

(4) Alternative (general) 415 Compensation. The Employer in Appendix B may elect to apply the 415 definition of Compensation in Treas. Reg. §1.415(c)-2(a). Under this definition,   Compensation   means   as   defined   in   Section 1.11(B)(3) but with the addition of: (a) amounts described in Code §§104(a)(3), 105(a), or 105(h) but only to the extent that these amounts are includible in Employee's gross income; (b) amounts paid or reimbursed by the Employer for moving expenses incurred by the Employee, but only to the extent that at the time of payment it is reasonable to believe these amounts are not deductible by the Employee under Code §217; (c) the value of a nonstatutory option (an option other than a statutory option under Treas. Reg. §1.421-1(b)) granted by the Employer to an Employee, but only to the extent that the value of the option is includible in the Employee's gross income for the Taxable Year of the grant; (d) the amount includible in the Employee's gross income upon the Employee's making of an election under Code §83(b); and (e) amounts that are includible in the Employee's gross income under Code §409A or Code §457(f)(1)(A) or because the amounts are constructively received by the Participant. [Note if the Plan's definition of Compensation is W-2 Wages or Code §3401(a) Wages, then Compensation already includes the amounts described in clause (e).]

 

(C) Deemed 125 Compensation. Deemed 125 Compensation means, in the case of any definition of Compensation which includes a reference to Code §125, amounts under a Code §125 plan of the Employer that are not available to a Participant in cash in lieu of group health coverage, because the Participant is unable to certify that he/she has other health coverage. Compensation under this Section 1.11 does not include Deemed 125 Compensation, unless the Employer in Appendix B elects to include Deemed 125 Compensation under this Section 1.11.

 

(D) Elective Deferrals. Compensation under Section 1.11 includes Elective Deferrals unless the Employer in its Adoption Agreement elects to exclude Elective Deferrals. In addition, for purposes of making Elective Deferrals, Compensation means as defined in Section 1.11 and as the Employer elects in its Adoption Agreement.

 

(E)  Compensation Dollar Limitation. For any Plan Year, the Plan Administrator in allocating contributions under Article III or in testing the Plan for nondiscrimination, cannot take into account more than $200,000 (or such larger amount as the Commissioner of Internal Revenue may prescribe pursuant to an adjustment made in the same manner as under Code §415(d)) of any Participant's Compensation. Notwithstanding the foregoing, an Employee under a 401(k) Plan may make Elective Deferrals with respect to Compensation which exceeds the Plan Year Compensation limitation, provided such Elective Deferrals otherwise   satisfy   the   Elective   Deferral   Limit   and   other

applicable Plan limitations. In applying any Plan limitation on the amount of Matching Contributions or any Plan limit on Elective Deferrals which are subject to Matching Contributions, where  such  limits  are  expressed  as  a  percentage  of Compensation, the Plan Administrator may apply the Compensation limit under this Section 1.11(E) annually, even if the  Matching  Contribution  formula  is  applied  on  a  per  pay period basis or is applied over any other time interval which is less than the full Plan Year or the Plan Administrator may pro rate the Compensation limit.

 

(F)  Nondiscrimination. For purposes of determining whether the Plan discriminates in favor of HCEs, Compensation means as the Plan Administrator operationally determines provided that any such nondiscrimination testing definition which the Plan Administrator applies must satisfy Code §414(s) and the regulations thereunder. For this purpose the Plan Administrator may, but is not required, to apply for nondiscrimination testing purposes the Plan's allocation definition of Compensation under this Section 1.11 or Annual Additions Limit definition of Compensation under Section 4.05(B). The Employer's election in its Adoption Agreement relating to Pre-Entry Compensation for allocation purposes (to limit Compensation to Participating Compensation or to include Plan Year Compensation) is nondiscriminatory.

 

(G) Excluded Compensation. Excluded Compensation means such Compensation as the Employer in its Adoption Agreement elects to exclude for purposes of this Section 1.11. Regardless of the definition of Compensation selected in the Adoption Agreement, the Plan Administrator may adopt a uniform policy for  purposes  of  determining  the  amount  of  a  Participant's elective deferrals of excluding Non-cash Compensation. For purposes  of  this  Section  1.11(G),  Non-cash  Compensation means tips, fringe benefits, and other items of Compensation not regularly paid in cash or cash equivalents, or for which the Employer does not or may not have the ability to withhold Elective Deferrals in cash for the purpose of transmitting the Elective Deferrals to the Plan pursuant to the Participant's Deferral  Election.  Additionally,  the  Employer  may,  on  a uniform and nondiscriminatory basis, provide different deferral elections for different items of Compensation (e.g., a separate deferral election for bonuses), and may exclude for purposes of calculating elective deferrals one or more items of irregular pay (e.g., car allowance).

 

(H)  Pre-Entry Compensation. The Employer in its Adoption Agreement for allocation purposes must elect Participating Compensation or Plan Year Compensation as to some or all Contribution Types.

 

(1) Participating Compensation. Participating Compensation for purposes of this Section 1.11 means Compensation only for the period during the Plan Year in which the Participant is a Participant in the overall Plan, or under the plan resulting from disaggregation under the OEE or EP rules under Section 4.06(C)(1), or as to a Contribution Type as applicable. If the Employer in its Adoption Agreement elects Participating Compensation, the Employer will elect whether to apply the election to all Contribution Types or only to particular Contribution Type(s).

 

(2)   Plan Year Compensation. Plan Year Compensation for purposes of this Section 1.11 means Compensation for a Plan

 

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Year, including Compensation for any period prior to the Participant's   Entry   Date   in   the   overall   Plan  or   as   to   a Contribution Type as applicable. If the Employer in its Adoption Agreement elects Plan Year Compensation, the Employer will elect whether to apply the election to all Contribution Types or only to particular Contribution Type(s).

 

(I)  Post-Severance Compensation. Compensation includes Post-Severance Compensation to the extent the Employer elects in its Adoption Agreement or as the Plan otherwise provides. Post-Severance Compensation is Compensation paid after a Participant's Severance from Employment from the Employer, as further described in this Section 1.11(I). In the absence of an election to the contrary by an Employer in its Adoption Agreement, Post-Severance Compensation includes any and all regular pay, leave cash-outs, and deferred compensation paid within the time period described in Section 1.11(I)(1), and excludes salary continuation for military service and for disabled Participants, all as defined below. An Employer in its Adoption Agreement may elect to exclude any or all of regular pay, leave cash-outs, or deferred compensation paid within the time period described in Section 1.11(I)(1), and may also elect to include salary continuation for military service and/or for disabled Participants. Any other payment paid after Severance from Employment that is not described in this Section 1.11(I) is not Compensation even if payment is made within the time period described  below.  Post-Severance  Compensation  does  not include     severance     pay,     parachute     payments     under Code §280G(b)(2) or payments under a nonqualified unfunded deferred compensation plan unless the payments would have been paid at that time without regard to Severance from Employment.

 

(1) Timing.  Post-Severance  Compensation  includes regular pay, leave cash-outs, or deferred compensation only to the extent the Employer pays such amounts by the later of 2 1/2 months after Severance from Employment or by the end of the Limitation Year that includes the date of such Severance from Employment.

 

(a)   Regular pay. Regular pay means the payment of regular Compensation for services during the Participant’s regular working hours, or Compensation for services outside the Participant's regular working hours (such as overtime or shift differential), commissions, bonuses, or other similar payments, but only if the payment would have been paid to the Participant prior to a severance from employment if the Participant had continued in employment with the Employer.

 

(b) Leave  cash-outs.  Leave  cash-outs  means payments for unused accrued bona fide sick, vacation, or other leave, but only if the Employee would have been able to use the leave if employment had continued and if Compensation would have included those amounts if they were paid prior to the Participant's severance from employment.

 

(c)   Deferred compensation. As used in this Section 1.11(I), deferred compensation means the payment of deferred compensation pursuant to an unfunded deferred compensation plan,   if   Compensation   would  have   included   the   deferred compensation if it had been paid prior to the Participant's Severance from Employment, but only if the payment would have been paid at the same time if the Participant had continued in

employment with the Employer and only to the extent that the payment is includible in the Participant's gross income.

 

(2) Salary continuation for military service. Salary continuation   for   military   service   means   payments   to   an individual who does not currently perform services for the Employer by reason of Qualified Military Service to the extent those payments do not exceed the amounts the individual would have  received  if  the  individual  had  continued  to  perform services for the Employer rather than entering Qualified Military Service. However, for Plan Years beginning after December 31, 2008, this paragraph (2) will not apply to Differential Wage Payments, which instead are subject to Section 1.11(L).

 

(3) Salary  continuation  for  disabled  Participants. Salary continuation for disabled Participants means Compensation paid to a Participant who is permanently and totally disabled (as defined in Code §22(e)(3)). This Section 1.11(I)(3) will apply, as the Employer elects in its Adoption Agreement, either just to NHCEs (who are NHCEs immediately prior to becoming disabled) or to all Participants for a fixed or determinable period specified in the Adoption Agreement.

 

(J)   Earned Income. Earned Income means net earnings from self-employment in the trade or business with respect to which the Employer  has  established  the  Plan,  provided  personal services   of   the   Self-Employed   Individual   are   a   material income-producing factor. Earned Income also includes gains and earnings (other than capital gain) from the sale or licensing of property (other than goodwill) by the individual who created that property, even if those gains would not ordinarily be considered net earnings from self-employment. The Plan Administrator  will  determine  net  earnings  without  regard  to items excluded from gross income and the deductions allocable to those items. The Plan Administrator will determine net earnings after the deduction allowed to the Self-Employed Individual for all contributions made by the Employer to a qualified   plan   and   after   the   deduction   allowed   to   the Self-Employed     Individual     under     Code  §164(f) for self-employment taxes.

 

(K) Deemed Disability Compensation. The Plan does not include    Deemed    Disability    Compensation    under    Code §415(c)(3)(C)  unless  the  Employer  in  Appendix  B  elects  to include  Deemed  Disability  Compensation  under  this  Section 1.11(K). Deemed Disability Compensation is the Compensation the   Participant  would   have   received   for   the  year   if   the Participant were paid at the same rate as applied immediately prior to the Participant becoming permanently and totally disabled (as   defined   in   Code §22(e)(3))   if   such   deemed compensation is greater than actual Compensation as determined without regard to this Section 1.11(K). This Section 1.11(K) applies only if the affected Participant is an NHCE immediately prior to becoming disabled (or the Appendix B election provides for the continuation of contributions on behalf of all such disabled participants for a fixed or determinable period) and all contributions made with respect to Compensation under this Section 1.11(K) are immediately Vested.

 

(L) Differential Wage Payments. Unless the Employer otherwise elects in Appendix B, for Plan Years beginning after December 31, 2008, the Plan will treat Differential Wage Payments as Compensation for all Plan contribution and benefit purposes.

 

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1.12 Contribution Types. Contribution Types means the contribution types required or permitted under the Plan as the Employer elects in its Adoption Agreement.

 

1.13 Defined  Contribution  Plan.  Defined  Contribution Plan means a retirement plan which provides for an individual account for each Participant and for benefits based solely on the amount  contributed  to  the  Participant's  Account,  and  on  any Earnings, expenses, and forfeitures which  the  Plan Administrator may allocate to such Participant's Account.

 

1.14 Defined Benefit Plan. Defined Benefit Plan means a retirement plan which does not provide for individual accounts for Employer contributions and which provides for payment of determinable benefits in accordance with the plan's formula.

 

1.15 Differential   Wage   Payment.   Differential   Wage Payment means differential wage payment as defined by Code §3401(h)(2).

 

1.16 Disability. Except as otherwise provided in the Plan, Disability means, as the Employer elects in its Adoption Agreement, the basic Plan definition or an alternative definition, as defined below. A Participant who incurs a Disability is "disabled."

 

(A) Basic Plan Definition. Disability means the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve months. The permanence and degree of such impairment must be supported by medical evidence.

 

(B)  Alternative  Definition.  The  Employer  in  its  Adoption Agreement may specify any alternative definition of Disability.

 

(C)  Administration. For purposes of this Plan, a Participant is disabled on the date the Plan Administrator determines the Participant satisfies the definition of Disability. The Plan Administrator may require a Participant to submit to a physical examination in order to confirm the Participant's Disability. The Plan Administrator will apply the provisions of this Section 1.16 in a nondiscriminatory, consistent, and uniform manner.

 

1.17 Designated   IRA   Contribution.   Designated   IRA Contribution means a Participant's IRA contribution to the Plan made in accordance with the Adoption Agreement.

 

1.18 DOL. DOL means the U.S. Department of Labor.

 

1.19 Earnings. Earnings means the net income, gain or loss earned by a particular Account, by the Trust, or with respect to a contribution or to a distribution, as the context requires.

 

1.20 Effective Date. The Effective Date of this Plan is the date the Employer elects in its Adoption Agreement, but not earlier than January 1, 2007. The provisions of Sections 4.01 through 4.05 apply to Limitation Years commencing on or after July 1, 2007. However, as to a particular provision or action taken by any party pursuant to the Plan (such as a Plan amendment or termination, or the giving of any notice), a different Effective

Date may apply such as the basic plan document may provide, as the Employer may elect in its Adoption Agreement, in a Participation Agreement or in an Appendix,  or  as  indicated  in  any  other  document  which evidences the action taken. Throughout the Plan, there are many provisions which have their own effective date (such as that described in the second sentence of this Section), which may be earlier than the Restatement Effective Date. If the Employer in its Adoption Agreement indicates that this plan is a Restated Plan,  and  the  Plan  is  a  PPA  Restatement,  then  the  earlier effective date applies. If the Plan is not a PPA Restatement, then the earlier effective date does not apply, and the provisions are effective on the Restatement Effective Date, or such other date as may apply pursuant to an Appendix or other document.

 

1.21 Elective  Deferrals.  Elective  Deferrals  means a Participant's Pre-Tax Deferrals, Roth Deferrals, Automatic Deferrals and, as the context requires, Catch-Up Deferrals under the Plan, and which the Employer contributes to the Plan at the Participant's election (or automatically) in lieu of cash compensation. As to other plans, as may be relevant to the Plan, Elective Deferrals means amounts excludible from the Employee's gross   income   under   Code   §§125,   132(f)(4), 402(e)(3), 402(h)(1)(B), 403(b), 408(p) or 457(b), and includes amounts included in the Employee's gross income under Code §402A, and contributed by the Employer, at the Employee's election,  to  a  cafeteria  plan,  a qualified  transportation  fringe benefit plan, a 401(k) plan, a SARSEP, a tax-sheltered annuity, a SIMPLE plan or a Code §457(b) plan.

 

(A) Pre-Tax Deferral. Pre-Tax Deferral means an Elective Deferral (including a Catch-Up Deferral or an Automatic Deferral) which is not subject to income tax when made.

 

(B)  Roth Deferral. Roth Deferral means an Elective Deferral (including a Catch-Up Deferral or an Automatic Deferral) which a Participant irrevocably designates as a Roth Deferral under Code §402A at the time of deferral and which is subject to income tax when made to the Plan. In the case of an Automatic Deferral, see Section 3.02(B).

 

(C)  Automatic Deferral. See Section 3.02(B)(4)(a).

 

(D)  Catch-Up Deferral. See Section 3.02(D)(2).

 

1.22 Employee.   Employee   means   any   common   law employee, Self-Employed Individual, Leased Employee or other person the Code treats as an employee of the Employer for purposes  of  the  Employer's  qualified  plan.  An  Employee  is either an Eligible Employee or an Excluded Employee. An Employee is either an HCE or an NHCE.

 

(A) Self-Employed  Individual.  Self-Employed  Individual means an individual who has Earned Income (or who would have  had  Earned  Income  but  for  the  fact  that  the  trade  or business did not have net profits) for the Taxable Year from the trade or business for which the Plan is established.

 

(B)  Leased Employee. Leased Employee means an individual (who otherwise is not an Employee of the Employer) who, pursuant to an agreement between the Employer and any other person (the "leasing organization"), has performed services for

 

© 2014 The Prudential Insurance Company of America or its suppliers

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the Employer (or for the Employer and any persons related to the Employer within the meaning of Code §144(a)(3)) on a substantially full-time basis for at least one year and who performs such services under primary direction or control of the Employer within the meaning of Code §414(n)(2). Except as described in Section 1.22(B)(1), a Leased Employee is an Employee for purposes of the Plan. However, under a Nonstandardized Plan or under a Volume Submitter Plan, a Leased Employee is an Excluded Employee unless the Employer in Appendix B elects not to treat Leased Employees as Excluded Employees as to any or all Contribution Types. "Compensation" in the case of an out-sourced worker who is an Employee or a Leased  Employee  includes  Compensation  from  the  leasing organization which is attributable to services performed for the Employer.

 

(1) Safe Harbor Plan Exception. A Leased Employee is not an Employee for Plan purposes if the leasing organization covers the employee in a safe harbor plan and, prior to application of this safe harbor plan exception, 20% or fewer of the NHCEs, excluding those NHCEs who do not satisfy the "substantially full-time" standard of Code §414(n)(2)(B), are Leased Employees. A safe harbor plan is a Money Purchase Pension Plan providing immediate participation, full and immediate vesting, and a nonintegrated contribution formula equal to at least 10% of the employee's compensation, without regard to employment by the leasing organization on a specified date. The safe harbor plan must determine the 10% contribution on the basis of compensation as defined in Code §415(c)(3) including Elective Deferrals.

 

(2) Other Requirements. The Plan Administrator must apply  this  Section  1.22  in  a  manner  consistent  with  Code §§414(n)  and  414(o)  and  the  regulations  issued  under  those Code sections. The Plan Administrator for 415 testing under Article IV, for satisfaction of the Top-Heavy Minimum Allocation under Article X will treat contributions or benefits provided to a Leased Employee under a plan of the leasing organization, and which are attributable to services performed by the Leased Employee for the Employer, as provided by the Employer. However, the Employer will not offset (reduce) contributions to this Plan by such contributions or benefits provided  to  the  Leased  Employee  under  the  leasing organization's plan unless the Employer in Appendix B elects to do so.

 

(C) Eligible  Employee.  Eligible  Employee  means  an Employee other than an Excluded Employee.

 

(D)  Excluded Employee. Excluded Employee means, as the Plan provides or as the Employer elects in its Adoption Agreement, any Employee, or class or group of Employees, not eligible to  participate in  the  Plan,  or as  to any  Contribution Type, as the context requires. The Employer may not impose a maximum age in defining Excluded Employees.

 

(1)  Collective Bargaining Employees. If the Employer elects in its Adoption Agreement to exclude Collective Bargaining Employees from eligibility to participate, the exclusion applies to any Employee included in a unit of Employees covered by an agreement which the Secretary of Labor finds to be a collective bargaining agreement between employee representatives and one or more employers if: (a)

retirement benefits were the subject of good faith bargaining; and (b) two percent or fewer of the employees covered by the agreement  are  "professional  employees"  as  defined  in  Treas. Reg. §1.410(b)-9, unless the collective bargaining agreement requires the Employee to be included within the Plan. The term "employee representatives" does not include any organization more than half the members of which are owners, officers, or executives of the Employer.

 

(2) Nonresident Aliens. If the Employer elects in its Adoption Agreement to exclude Nonresident Aliens from eligibility  to  participate,  the  exclusion  applies  to  any Nonresident Alien Employee who does not receive any earned income,  as  defined  in  Code  §911(d)(2),  from  the  Employer which constitutes United States source income, as defined in Code §861(a)(3).

 

(3) Reclassified Employees. A Reclassified Employee under a Nonstandardized Plan or a Volume Submitter Plan is an Excluded Employee unless the Employer in Appendix B elects: (a) to include all Reclassified Employees as Eligible Employees; (b) to include one or more categories of Reclassified Employees as Eligible Employees; or (c) to include Reclassified Employees (or one or more groups of Reclassified Employees) as Eligible Employees  as  to  one  or  more  Contribution  Types.  A Reclassified  Employee  is  any  person  the  Employer  does  not treat  as  a  common  law  employee  or  as  a  self-employed individual  (including,  but  not  limited  to,  independent contractors, persons the Employer pays outside of its payroll system and out-sourced workers) for federal income tax withholding purposes under Code §3401(a), irrespective of whether there is a binding determination that the individual is an Employee    or    a    Leased    Employee    of    the    Employer. Self-Employed Individuals are not Reclassified Employees.

 

(4) Part-Time/Temporary/Seasonal Employees. The Employer in its Adoption Agreement may elect to exclude any Employees  who  it  defines  in  the  Adoption  Agreement  as "part-time," "temporary" or "seasonal" based on their regularly scheduled Service being less than a specified number of Hours of Service during a relevant Eligibility Computation Period. Notwithstanding  any  such  exclusion,  if  the  Part-Time, Temporary or Seasonal Excluded Employee actually completes at least 1,000 Hours of Service in the relevant Eligibility Computation Period, the affected Excluded Employee is no longer an Excluded Employee and will enter the Plan on the next Entry Date following completion of the Eligibility Computation Period in which he/she completed 1,000 Hours of Service, provided the Employee is employed by the Employer on that Entry Date.

 

(E)  HCE. HCE means a  highly compensated  Employee, defined under Code §414(q) as an Employee who satisfies one of Sections 1.22(E)(1) or (2) below.

 

(1)   More  than  5%  owner.  During  the  Plan  Year  or during the preceding Plan Year, the Employee is a more than 5% owner of the Employer (applying the constructive ownership rules of Code §318 as modified by Code §416(i)(1)(B)(iii)(I), and applying the principles of Code §318 as modified by Code

§416(i)(1)(B)(iii)(I), for an unincorporated entity).

 

 

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(2)   Compensation Threshold. During the preceding Plan Year (or in the case of a short Plan Year, the immediately preceding 12 month period) the Employee had Compensation in excess of $80,000 (as adjusted for the relevant year by the Commissioner of Internal Revenue at the same time and in the same manner as under Code §415(d), except that the base period is the calendar quarter ending September 30, 1996) and, if the Employer under its Adoption Agreement makes the top-paid group   election,   was   part   of  the   top-paid  20%   group   of Employees (based on Compensation for the preceding Plan Year).

 

(3)   Compensation   Definition.   For   purposes   of   this Section 1.22(E), "Compensation" means Compensation as defined in Section 4.05(F).

 

(4)   Top-paid Group and Calendar Year Data. The Plan Administrator must make the determination of who is an HCE, including the determinations of the number and identity of the top-paid 20% group, consistent with Code §414(q) and regulations issued under that Code section. The Employer in its Adoption Agreement may make a calendar year data election to determine  the  HCEs  for  the  Plan  Year,  as  prescribed  by Treasury regulations or by other guidance published in the Internal Revenue Bulletin. A calendar year data election must apply to all plans of the Employer which reference the HCE definition in Code §414(q). For purposes of this Section 1.22(E), if the current Plan Year is the first year of the Plan, then the term "preceding Plan Year" means the 12-consecutive month period immediately preceding the current Plan Year.

 

(5) Highly  compensated  former  employee.  The determination of highly compensated former employee status and the rules applicable thereto are determined in accordance with Temporary Reg. §1.414(q)-1T, A-4 and Notice 97-45.

 

(F)  NHCE. NHCE means a nonhighly compensated employee, which is any Employee who is not an HCE.

 

(G) Differential   Wage   Payment   recipient.  For   years beginning after December 31, 2008, an individual receiving a Differential Wage Payment from the Employer is treated as an Employee of the Employer.

 

1.23 Employee   Contribution   and   DECs.   Employee Contribution means a Participant's after-tax contribution to the Trust and which the Participant designates as an Employee Contribution at the time of contribution. An Elective Deferral (Pre-Tax   or   Roth)   is   not   an   Employee   Contribution.   A deductible employee contribution (DEC) means certain pre-1987 contributions described in Section 3.13.

 

1.24 Employer. Employer means each  Signatory Employer, Lead Employer, Related Employer, and Participating Employer as the Plan indicates or as the context requires.

 

(A) Signatory Employer. The Signatory Employer is the Employer who establishes a Plan under this Prototype Plan or under this Volume Submitter Plan by executing an Adoption Agreement. The Employer for purposes of acting as Plan Administrator, making Plan amendments, restating the Plan, terminating   the   Plan   or   performing   other   ERISA   settlor functions, means the Signatory Employer and does not include

any Related Employer or Participating Employer. The Signatory Employer also may terminate the participation in the Plan of any Participating Employer upon written notice. The Signatory Employer will provide such notice not less than 30 days prior to the date of termination unless the Signatory  Employer determines that the interest of Plan Participants requires earlier termination. See Article XII if the Plan is a Volume Submitter Plan and is a Multiple Employer Plan.

 

(B) Lead Employer. Lead Employer means the Signatory Employer under a plan which is a Multiple Employer Plan. See Section 12.02(B).

 

(C)  Related Group/Related Employer. A Related Group is a controlled group of corporations (as defined in Code §414(b)), trades or businesses (whether or not incorporated) which are under  common  control  (as  defined  in  Code  §414(c)),  an affiliated  service  group  (as  defined  in  Code  §414(m))  or  an arrangement otherwise described in Code §414(o). Each Employer/member of the Related Group is a Related Employer. The term "Employer" includes every Related Employer for purposes of crediting Service and Hours of Service, determining Years of Service and Breaks in Service under Articles II and V, determining Separation from Service, applying the coverage test under Code §410(b), applying the Annual Additions Limit and nondiscrimination testing in Article IV, applying the top-heavy rules and the minimum allocation requirements of Article X, applying the definitions of Employee, HCE, Compensation (except as the Employer may elect in its Adoption Agreement relating to allocations) and Leased Employee, applying the safe harbor 401(k) provisions of Article III, applying the SIMPLE 401(k) provisions of Article III, applying the ESOP exception under Section 7.11(A)(1)(a), and for any other purpose the Code or the Plan require.

 

(D)  Participating Employer. Participating Employer means a Related  Employer  (to  the  Signatory  Employer  or  another Related Employer) which signs the Execution Page of the Adoption Agreement or a Participation Agreement to the Adoption Agreement. Only a Participating Employer (or Employees thereof) may contribute to the Plan. A Participating Employer is an Employer for all purposes of the Plan except as provided in Sections 1.24(A) or (B).

 

(1) Standardized/Nonstandardized Plan.  If  the Employer's Plan is a Standardized Plan, all Employees of the Employer or of any Related Employer, are Eligible Employees, irrespective  of  whether  the  Related  Employer  directly employing the Employee is a Participating Employer. Notwithstanding  the  immediately   preceding  sentence, individuals who become Employees of a Related Employer as a result of a transaction described in Code §410(b)(6)(C) are Excluded Employees during the Plan Year in which such transaction occurs and in the following Plan Year, unless the Related Employer which employs such Employees becomes during such period a Participating Employer by executing a Participation Agreement to the Adoption Agreement; or the Plan benefits or coverage change significantly during the transition period resulting in the termination of the transition period. If the Plan is a Nonstandardized Plan, the Employees of a Related Employer are Excluded Employees unless the Related Employer is a Participating Employer.

 

 

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(2)   Volume   Submitter/Multiple   Employer   Plan.   If Article XII applies, a Participating Employer includes an unrelated Employer who executes a Participation Agreement. See Section 12.02(C).

 

1.25 Employer   Contribution.   Employer   Contribution means a Nonelective Contribution, a Matching Contribution, an Elective Deferral, a Prevailing Wage Contribution, or a Money Purchase Pension Contribution, as the context may require.

 

1.26 Entry   Date.   Entry   Date   means   the   date(s)   the Employer elects in its Adoption Agreement upon which an Eligible Employee who has satisfied the Plan's eligibility conditions and who remains employed by the Employer on the Entry Date, commences participation in the Plan or in a part of the Plan.

 

1.27 EPCRS.  EPCRS  means  the  IRS's  Employee  Plans Compliance Resolution System for resolving plan defects, or any successor program.

 

1.28 ERISA.  ERISA  means  the  Employee  Retirement Income Security Act of 1974, as amended, and includes applicable DOL regulations.

 

1.29 401(k) Plan. 401(k) Plan means the 401(k) Plan the Employer establishes under a 401(k) Plan Adoption Agreement. The Plan as the Employer elects under its 401(k) Adoption Agreement may be a Traditional 401(k) Plan, a Safe Harbor 401(k) Plan or a SIMPLE 401(k) Plan. A 401(k) Plan is also a Profit Sharing Plan for purposes of applying the Plan terms, except as to Elective Deferrals, Matching Contributions or otherwise where the Plan specifies provisions which apply either to such Contribution Types or to the overall Plan on account of its status as a 401(k) Plan.

 

(A)  Traditional 401(k) Plan. A Traditional 401(k) Plan is a 401(k)  Plan  under  which  Elective  Deferrals  are  subject  to nondiscrimination testing under the ADP test and any Matching Contributions and Employee Contributions also are subject to nondiscrimination testing under the ACP test.

 

(B)  Safe Harbor 401(k) Plan. A Safe Harbor 401(k) Plan is a 401(k) Plan under which Elective Deferrals are not subject to nondiscrimination testing under the ADP test because the Plan satisfies the ADP test safe harbor. Any Matching Contributions are subject to the ACP test unless the Plan also satisfies the ACP test safe harbor. Any Employee Contributions are subject to the ACP test.

 

(C)  SIMPLE 401(k) Plan. A SIMPLE 401(k) Plan is a 401(k) Plan which satisfies the contribution and other requirements in Section  3.10  and  which  is  not  subject  to  nondiscrimination testing or certain other requirements as provided in Section 3.10.

 

1.30 401(m) Plan. 401(m) Plan means the 401(m) plan, if any, the Employer establishes under its Adoption Agreement. The definitions under Sections 1.29(A), (B), and (C) also apply as to a 401(m) Plan.

 

1.31 HEART Act. HEART Act means the Heroes Earnings Assistance and Relief Tax Act of 2008, as amended.

1.32 Hour of Service. Hour of Service means:

 

(i)    Paid and duties. Each Hour of Service for which the Employer, either directly or indirectly, pays an Employee, or for which the Employee is entitled to payment, for the performance of duties. The Plan Administrator credits Hours of Service under this Paragraph (i) to the Employee for the computation period in which the Employee performs the duties, irrespective of when paid;

 

(ii)   Back pay. Each Hour of Service for back pay, irrespective of mitigation of damages, to which the Employer has agreed or for which the Employee has received an award. The Plan Administrator credits Hours of Service under this  Paragraph  (ii)  to  the  Employee  for  the  computation period(s) to which the award or the agreement pertains rather than for the computation period in which the award, agreement or payment is made; and

 

(iii) Payment but no duties. Each Hour of Service for which the Employer, either directly or indirectly, pays an Employee, or for which the Employee is entitled to payment (irrespective of whether the employment relationship is terminated), for reasons other than for the performance of duties during a computation period, such as leave of absence, vacation, holiday, sick leave, illness, incapacity (including disability), layoff, jury duty or military duty. The Plan Administrator will credit no more than 501 Hours of Service under this Paragraph (iii) to an Employee on account of any single continuous period during  which  the  Employee  does  not  perform  any  duties (whether or not such period occurs during a single computation period). The Plan Administrator credits Hours of Service under this Paragraph (iii) in accordance with the rules of paragraphs (b) and (c) of Labor Reg. §2530.200b-2, which the Plan, by this reference, specifically incorporates in full within this Paragraph  (iii).

 

(iv) Crediting  and  computation.  The  Plan Administrator will not credit an Hour of Service under more than one of the above Paragraphs (i), (ii) or (iii). A computation period for purposes of this Section 1.32 is the Plan Year, Year of Service period, Break in Service period or other period, as determined under the Plan provision for which the Plan Administrator is measuring an Employee's Hours of Service. The Plan Administrator will resolve any ambiguity with respect to the crediting of an Hour of Service in favor of the Employee.

 

(A)  Method of Crediting Hours of Service. The Employer must elect in its Adoption Agreement the method the Plan Administrator will use in crediting an Employee with Hours of Service  and  the  purpose  for  which  the  elected  method  will apply.

 

(1) Actual Method.  Under the Actual Method as determined from records, an Employee receives credit for Hours of Service for hours worked and hours for which the Employer makes payment or for which payment is due from the Employer.

 

(2)   Equivalency Method. Under an Equivalency Method, for each equivalency period for which the Plan Administrator would credit the Employee with at least one Hour of Service, the Plan Administrator will credit the Employee with: (a) 10 Hours of

 

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Service for a daily equivalency; (b) 45 Hours of Service for a weekly equivalency; (c) 95 Hours of Service for a semi-monthly payroll period equivalency; and (d) 190 Hours of Service for a monthly equivalency.

 

(3) Elapsed Time Method. Under the Elapsed Time Method, an Employee receives credit for Service for the aggregate  of  all  time  periods  (regardless  of  the  Employee's actual Hours of Service) commencing with the Employee's Employment     Commencement  Date,  or  with his/her Re-Employment Commencement Date, and ending on the date a Break  in  Service  begins  in  accordance  with  Treas.  Reg. §1.410(a)-7. See Section 2.02(C)(4). In applying the Elapsed Time Method, the Plan Administrator will credit an Employee's Service for any Period of Severance of less than 12-consecutive months and will express fractional periods of Service in days.

 

(i)   Elapsed Time - Break in Service. Under the Elapsed Time Method, a Break in Service is a Period of Severance of at least 12 consecutive months. In the case of an Employee who is absent from work for maternity or paternity reasons, the 12-consecutive month period beginning on the first anniversary of the first date the Employee is otherwise absent from Service does not constitute a Break in Service.

 

(ii)   Elapsed Time - Period of Severance. A Period of Severance is a continuous period of time during which the Employee is not employed by the Employer. The continuous period begins on the date the Employee retires, quits, is discharged, or dies or if earlier, the first 12-month anniversary of the  date  on  which  the  Employee  otherwise  is  absent  from Service  for  any  other  reason  (including  disability,  vacation, leave of absence, layoff, etc.).

 

(iii) Elapsed Time - Year of Service. For purposes of any plan provision which refers to Year of Service and does not specifically reference the Elapsed Time Method, the plan will credit a Participant with a Year of Service for each 1-year period of service or 365 days of service, as described in Treas. Reg. §1.410(a)-7, as modified by relevant elections in the Adoption Agreement.

 

(B) Maternity/Paternity Leave/Family and Medical Leave Act. Solely for purposes of determining whether an Employee incurs a Break in Service under any provision of this Plan, the Plan Administrator must credit Hours of Service during the Employee's unpaid absence period: (1) due to maternity or paternity leave; or (2) as required under the Family and Medical Leave Act. An Employee is on maternity or paternity leave if the Employee's absence is due to the Employee's pregnancy, the birth of the Employee's child, the placement with the Employee of an adopted child, or the care of the Employee's child immediately following the child's birth or placement. The Plan Administrator  credits  Hours  of  Service  under  this  Section 1.32(B) on the basis of the number of Hours of Service for which the Employee normally would receive credit or, if the Plan Administrator cannot determine the number of Hours of Service the Employee would receive credit for, on the basis of 8 hours per day during the absence period. The Plan Administrator will credit only the number (not exceeding 501) of Hours of Service necessary to prevent an Employee's Break in Service. The Plan Administrator credits all Hours of Service described in this Section 1.32(B) to the computation period in which the absence period begins or, if

the Employee does not need these Hours  of  Service  to  prevent  a  Break  in  Service  in  the computation period in which his/her absence period begins, the Plan Administrator credits these Hours of Service to the immediately following computation period.

 

(C)  Qualified Military Service. Hour of Service also includes any Service the Plan must credit for eligibility, vesting, contributions and benefits in order to satisfy the crediting of Service requirements of Code §414(u).

 

1.33 IRS. IRS means the Internal Revenue Service.

 

1.34 Limitation  Year. Limitation Year  means  the consecutive month period the Employer specifies in its Adoption Agreement as applicable to allocations under Article IV. If the Employer elects the same Plan Year and Limitation Year, the Limitation Year is always a 12-consecutive month period even if the Plan Year is a short period, unless the short Plan Year results from an amendment, in which case, the Limitation Year also is a short year. If the Employer amends the Limitation Year to a different 12-consecutive month period, the new Limitation Year must begin on a date within the Limitation Year for which the Employer makes the amendment, creating a short Limitation Year.

 

1.35 Matching    Contribution.    Matching    Contribution means a fixed or discretionary contribution the Employer makes on account of Elective Deferrals under a 401(k) Plan or on account of Employee Contributions. Matching contributions also include  Participant  forfeitures  allocated  on  account  of  such Elective Deferrals or Employee Contributions.

 

(A) Fixed    Matching    Contribution.    Fixed    Matching Contribution means a Matching Contribution which the Employer, subject to satisfaction of allocation conditions, if any, must make pursuant to a formula in the Adoption Agreement. Under the formula, the Employer contributes a specified percentage or dollar amount on behalf of a Participant based on that Participant's Elective Deferrals or Employee Contributions eligible for a match.

 

(B) Discretionary Matching  Contribution.  Discretionary Matching Contribution means a Matching Contribution which the Employer in its sole discretion elects to make to the Plan. The  Employer  retains  discretion  over  the  Discretionary Matching Contribution rate or amount, the limit(s) on Elective Deferrals or Employee Contributions subject to match, the per Participant match allocation limit(s), the Participants who will receive the allocation, and the time period applicable to any matching formula(s) (collectively, the "matching formula"), except as the Employer otherwise elects in its Adoption Agreement.

 

(C) QMAC. QMAC means a qualified matching contribution which is 100% Vested at all times and which is subject to the distribution restrictions described in Section 6.01(C)(4)(b). Any Matching Contributions allocated to a Participant's QMAC Account under the Plan automatically satisfy and are subject to the QMAC definition. See Section 3.07(A)(7) for a limitation on the source of QMACs.

 

 

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(D) Regular Matching Contribution. A Regular Matching Contribution is a Matching Contribution which is not a QMAC, a Safe Harbor Matching Contribution or an Additional Matching Contribution.

 

(E)  Basic Matching Contribution. See Section 3.05(E)(4).

 

(F) Enhanced Matching  Contribution.  See  Section 3.05(E)(6).

 

(G) Additional  Matching  Contribution.  See  Section 3.05(F)(1).

 

(H) QACA Basic Matching Contribution. See Section 3.05(E)(5).

 

(I)   SIMPLE Matching Contribution. See Section 3.10(E)(1).

 

(J)   Safe Harbor  Matching  Contribution.  See  Section

3.05(E)(3).

 

1.36 Money Purchase  Pension Plan/Money Purchase Pension  Contribution.   Money   Purchase  Pension Plan means the Money Purchase Pension Plan the Employer establishes under a Money Purchase Pension Plan Adoption Agreement. The Employer Contribution to its Money Purchase Pension Plan is a Money Purchase Pension Contribution. The Employer will make its Money Purchase Pension Contribution as  the  Employer  elects  in  its  Adoption  Agreement.  As  the context requires, Money Purchase Pension Plan also includes a target benefit plan.

 

1.37 Named  Fiduciary.  The  Named  Fiduciary  is  the Employer. The Employer in writing also may designate the Plan Administrator (if the Plan Administrator is not the Employer) and other persons as additional Named Fiduciaries. See Section 8.03. If the Plan is a restated Plan and under the prior plan document a different Named Fiduciary is in place, this Section 1.37 becomes effective on the date the Employer executes this restated  Plan  unless  the  Employer  designates  otherwise  in writing.

 

1.38 Nonelective Contribution. Nonelective Contribution means a fixed or discretionary Employer Contribution which is not a Matching Contribution or a Money Purchase Pension Contribution.

 

(A) Fixed  Nonelective  Contribution.  Fixed  Nonelective Contribution means a Nonelective Contribution which the Employer, subject to satisfaction of allocation conditions, if any, must make pursuant to a formula (based on Compensation of Participants who will receive an allocation of the contributions or otherwise) in the Adoption Agreement. See 3.04(A)(2).

 

(B) Discretionary Nonelective Contribution. Discretionary Nonelective Contribution means a Nonelective Contribution which the Employer in its sole discretion elects to make to the Plan. See 3.04(A)(1).

 

(C)  QNEC. QNEC means a qualified nonelective contribution which is 100% Vested at all times and which is subject to the distribution restrictions described in Section 6.01(C)(4)(b). Any Nonelective Contributions allocated to a Participant's QNEC Account under the Plan automatically satisfy and are subject to

the QNEC definition. See Section 3.07(A)(7) for a limitation on the source of QNECs.

 

(D) SIMPLE Nonelective Contribution. See Section 3.10(E)(1).

 

(E) Safe  Harbor  Nonelective  Contribution.  See  Section 3.05(E)(2).

 

1.39 Opinion Letter. Opinion Letter means an IRS issued letter as to the acceptability of the form of a Prototype Plan as defined in Section 4.06 of Rev. Proc. 2011-49.

 

1.40 Paid Time Off Plan. A Paid Time Off Plan is any plan or similar arrangement under which the Employer provides to Employees vacation, sick or other leave for which the Employer pays the Employee, and agrees to compensate the Employee for part or all of the unused leave.

 

1.41 Participant. Participant means an Eligible Employee who becomes a Participant in the Plan or as to any Contribution Type as the context requires, in accordance with the provisions of Section 2.01.

 

1.42 Plan. Plan means the retirement plan established or continued by the Employer in the form of this Prototype Plan or Volume  Submitter  Plan,  including  the  Adoption  Agreement under which the Employer has elected to establish this Plan. The Employer must designate the name of the Plan in its Adoption Agreement. An Employer may execute more than one Adoption Agreement offered under this Plan, each of which will constitute a separate Plan and Trust established or continued by that Employer.   All   section   references   within   this   basic   plan document are Plan section references unless the context clearly indicates otherwise. The Plan includes any Appendix permitted by  the  basic  plan  document  or  by  the  Employer's  Adoption Agreement and which the Employer attaches to its Adoption Agreement.

 

(A) Multiple  Employer  Plan  (Article  XII).  Multiple Employer Plan means a Plan in which at least one Employer which is not a Related Employer participates. This Plan may be a Multiple Employer Plan only if maintained on a Nonstandardized  Adoption  Agreement  or  on  a  Volume Submitter Adoption Agreement. Article XII of the Plan applies to a Multiple Employer Plan, but otherwise does not apply to the Plan.

 

(B)  Frozen Plan. See Section 3.01(J).

 

1.43 Plan Administrator. Plan Administrator means the Employer unless the Employer designates another person or persons  to  hold  the  position  of  Plan  Administrator.  Any person(s) the Employer appoints as Plan Administrator may or may  not be Participants in the Plan. In addition to its other duties,  the  Plan  Administrator  has  full  responsibility  for  the Plan's compliance with the reporting and disclosure rules under ERISA. If the Employer is the Plan Administrator, any requirement under the Plan for communication between the Employer and the Plan Administrator automatically is deemed satisfied, and the Employer has discretion to determine the manner of documenting any decision deemed to be communicated under this provision.

 

 

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1.44 Plan Year. Plan Year means the consecutive month period the Employer specifies in its Adoption Agreement.

 

1.45 Practitioner. Practitioner means the sponsor as to its Employer clients of the Volume Submitter Plan and as defined in Section 13.05 of Rev. Proc. 2011-49.

 

1.46 Predecessor Employer/Predecessor Plan.

 

(A) Predecessor Employer. A Predecessor Employer is an employer that previously employed one or more of the Employees.

 

(B)  Predecessor Plan. A Predecessor Plan is a Code §401(a) or §403(a)  qualified  plan  the  Employer  terminated  within  the five-year   period   beginning   before   or   after  the  Employer establishes this  Plan,  as described in Treas. Reg. §1.411(a)-5(b)(3)(v)(B).

 

1.47 Prevailing Wage Contract/Contribution. Prevailing Wage Contract means a contract under which Employees are performing services subject to the Davis-Bacon Act, the McNamara-O'Hara Contract Service Act or any other federal, state or municipal prevailing wage law. A Prevailing Wage Contribution is a contribution the Employer makes to the Plan in accordance  with  a  Prevailing  Wage  Contract.  A  Prevailing Wage Contribution is treated as a Nonelective Contribution or other Employer Contribution except as the Plan otherwise provides.

 

1.48 Profit Sharing Plan. Profit Sharing Plan means the Profit Sharing Plan the Employer establishes under a Profit Sharing Plan Adoption Agreement.

 

1.49 Protected   Benefit.   Protected   Benefit   means   any accrued benefit described in Treas. Reg. §1.411(d)-4, including any optional form of benefit provided under the Plan which may not (except in accordance with such regulations) be reduced, eliminated or made subject to Employer discretion.

 

1.50 Prototype Plan/Master Plan (M&P Plan). Prototype Plan means as described in Section 4.02 of Rev. Proc. 2011-49 or in any successor thereto under which each adopting Employer establishes a separate Trust. This Plan is not a Master Plan as described in Section 4.01 of Rev. Proc. 2011-49 under which unrelated adopting employers participate in a single funding medium (trust or custodial account). However, the Plan could be a Master Trust under DOL Reg. §2525.103-2(e). A Prototype Plan or a Master Plan must have an Opinion Letter as described in Section 4.06 of Rev. Proc. 2011-49.

 

1.51 QDRO. QDRO means a qualified domestic relations order under Code §414(p).

 

1.52 Qualified  Military  Service.  Qualified  Military Service  means  qualified  military  service  as  defined  in  Code §414(u)(5). Notwithstanding any provision in the Plan to the contrary, as to Qualified Military Service, the Plan will credit Service   under   Section   1.32(C),   the   Employer   will   make contributions to the Plan and the Plan will provide benefits in accordance with Code §414(u).

 

1.53 Qualified Reservist Distribution (QRD). See Section 6.01(C)(4)(b)(iii).

 

1.54 Restated  Plan.  A  Restated  Plan  means  a  plan  the Employer adopts in substitution for, and in amendment of, an existing plan, as the Employer elects in its Adoption Agreement. If a Participant incurs a Separation from Service or Severance from Employment before the Employer executes the Adoption Agreement as a Restated Plan, the provisions of the Restated Plan  do  not  apply  to  the  Participant  unless  he/she  has  an Account  Balance  as  of  the  execution  date  or  unless  the Employer rehires the Participant.

 

1.55 Rollover   Contribution.   A   Rollover   Contribution means an amount of cash or property (including a participant loan from another plan) which the Code permits an Eligible Employee or Participant to transfer directly or indirectly to this Plan  from  another  Eligible  Retirement  Plan  (or  vice  versa) within   the   meaning   of   Code   §402(c)(8)(B)   and   Section 6.08(F)(2), except that a 401(k) Plan may  permit an In-Plan Roth Rollover Contribution as provided in Section 3.08(E). A Rollover Contribution will be made to the Plan and not to a Designated IRA within the Plan under Section 3.12, if any.

 

(A) In-Plan Roth Rollover Contribution. An In-Plan Roth Rollover Contribution means a Rollover Contribution to the Plan that consists of a distribution from a Participant's Plan Account, other than a Roth Deferral Account, that the Participant rolls over to the Participant's In-Plan Roth Rollover Contribution Account  in  the  Plan,  in  accordance  with  Code  §402(c)(4). In-Plan Roth Rollover Contributions will be subject to the Plan rules related to Roth Deferral Accounts, subject to preservation of Protected Benefits in accordance with clause (c) of Section 3.08(E)(4).

 

(B) In-Plan   Roth   Rollover   Contribution   Account.   An In-Plan Roth Rollover Contribution Account is a sub-account the Plan Administrator establishes for the purpose of separately accounting for a Participant's Rollover Contributions attributable to the Participant's In-Plan Roth Rollover Contributions. The Plan Administrator has authority to establish such a sub-account, and to the extent necessary, may establish sub-accounts based on the source of the In-Plan Roth Rollover Contribution. The Plan Administrator will administer an In-Plan Roth Rollover Contribution Account in accordance with Applicable Law and the Plan provisions.

 

1.56 Safe Harbor Contribution. Safe Harbor Contribution means a Safe Harbor Nonelective Contribution or a Safe Harbor Matching Contribution as the Employer elects in its Adoption Agreement. See Sections 3.05(E)(2) and (3).

 

1.57 Salary Reduction Agreement. A Salary  Reduction Agreement means a Participant's written election to make Elective Deferrals to the Plan (including a Contrary Election under Section 3.02(B)(4)(d)), made on the form the Plan Administrator provides for this purpose.

(A)  Effective Date. A Salary Reduction Agreement may not be effective earlier than the following date which occurs last: (1) under Article II, the Participant's Entry Date or, in the case of a re-hired  Employee,  his/her  re-participation date;  (2)  the execution date of the Salary Reduction Agreement; (3) the date

 

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the Employer adopts the 401(k) Plan; or (4) the Effective Date of the 401(k) Plan (or Elective Deferral provision within the Plan). Subject to the foregoing limitations, a Participant’s Salary Reduction Agreement will be effective for the first pay period that is within an administratively reasonable period after the date the Plan Administrator receives the Agreement, unless the Participant specifies a later effective date.

 

(B)  Compensation.   A   Salary   Reduction   Agreement   must specify the dollar amount of Compensation or the percentage of Compensation the Participant wishes to defer. The Salary Reduction Agreement: (1) applies only to Compensation for Elective Deferral allocation as the Employer elects in its Adoption  Agreement  and  which  becomes  currently  available after the effective date of the Salary Reduction Agreement; and (2) applies to all or to such Elective Deferral Compensation as the Salary Reduction Agreement indicates, including any Participant elections made in the Salary Reduction Agreement.

 

(C) Additional Rules. The Plan Administrator in the Plan's Salary Reduction Agreement form, or in a Salary Reduction Agreement policy will specify additional rules and restrictions applicable to a Participant's Salary Reduction Agreement, including   but   not   limited   to  those   regarding   the   timing, frequency and mechanics of changing or revoking a Salary Reduction Agreement. Any such rules and restrictions must be consistent with the Plan. The Plan Administrator may provide more than one Salary Reduction Agreement form for use in specific situations.

 

1.58 Separation  from  Service/Severance   from Employment. Separation from Service means an event after which the Employee no longer has an employment relationship with the Employer maintaining this Plan or with a Related Employer. The Plan applies Separation from Service for all purposes except as otherwise provided. For purposes of distribution of Restricted 401(k) Accounts, the application of Post-Severance Compensation and top-heavy look-back period distributions,  the  plan  will apply  the  definition  of  Severance from Employment under EGTRRA §646 (as modified for Code

§415  purposes  in  applying  the  parent-subsidiary  controlled group rules).

 

1.59 Service.  Service  means  any  period  of  time  the Employee  is  in  the  employ  of  the  Employer,  including  any period the Employee is on an unpaid leave of absence authorized by the Employer under a uniform, nondiscriminatory policy applicable to all Employees.

 

(A)  Related Employer Service. See Section 1.24(C).

 

(B)  Predecessor Employer/Plan Service. See Section 1.46. If the Employer maintains (by adoption, plan merger or Transfer) the plan of a Predecessor Employer, service of the Employee with the Predecessor Employer is Service with the Employer. If the Employer maintained a Predecessor Plan, for purposes of vesting Service, the Plan Administrator must count service credited to any Employee covered under the Predecessor Plan. If the Employer in its Adoption Agreement elects to disregard vesting Service prior to the time that the Employer maintained the Plan, the Plan Administrator will treat a Predecessor Plan as the Plan for purposes of such election.

 

(C) Elective Service Crediting. If the Employer does not maintain the plan of a Predecessor Employer, the Plan does not credit Service with the Predecessor Employer, unless the Employer in its Adoption Agreement (or in a Participation Agreement, if applicable) elects to credit designated Predecessor Employer Service and specifies the purposes for which the Plan will credit service with that Predecessor Employer. Unless the Employer under its Adoption Agreement provides for this purpose specific Entry Dates, an Employee who satisfies the Plan's eligibility condition(s) by reason of the crediting of predecessor service will enter the Plan in accordance with the provisions of Article II as if the Employee were a re-employed Employee on the first day the Plan credits predecessor service.

 

(D) Standardized  Plan.  If  the  Employer's  Plan  is  a Standardized Plan, the Plan limits the elective crediting of past Predecessor Employer Service to the period which does not exceed 5 years immediately preceding the year in which an amendment crediting such service becomes effective, such credit must be granted to all Employees on a reasonably uniform basis, and  the  crediting  must  otherwise  comply  with  Treas.  Reg. §1.401(a)(4)-5(a)(3).

 

1.60 SIMPLE Contribution. SIMPLE Contribution means a SIMPLE Nonelective Contribution or a SIMPLE Matching Contribution. See Section 3.10(E).

 

1.61 Sponsor. Sponsor means the sponsor of this Prototype Plan  as  to  the  Sponsor's  adopting  Employer  clients  and  as defined in Section 4.07 of Rev. Proc. 2011-49.

 

1.62 Successor  Plan.  Successor  Plan  means  a  plan  in which at least 50% of the Eligible Employees for the first Plan Year were eligible under a cash or deferred arrangement maintained by the Employer in the prior year, as described in Treas. Reg. §1.401k-2(c)(2)(iii).

 

1.63 Taxable Year. Taxable Year means the taxable year of a Participant or of the Employer as the context requires.

 

1.64 Transfer. Transfer means the Trustee's movement of Plan assets from the Plan to another plan (or vice versa) directly as between the trustees and not by means of a distribution. A Transfer may be an Elective Transfer or a Nonelective Transfer. See Section 11.06. A Direct Rollover under Section 6.08(F)(1) is not a Transfer.

 

1.65 Trust. Trust means the separate Trust created under the Plan.

 

1.66 Trust Fund. Trust Fund means all property of every kind acquired by the Plan and held by the Trust, other than incidental benefit insurance contracts.

 

1.67 Trustee/Custodian. Trustee or Custodian means the person or persons who as Trustee or Custodian execute the Adoption Agreement (or other Trust or Custodial Agreement in substitution of the provisions in Article VIII as applicable), or any successor in office who in writing accepts the position of Trustee or Custodian. The Employer must designate in its Adoption Agreement whether the Trustee will administer the Trust as a

 

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discretionary Trustee or as a nondiscretionary Trustee. See Article VIII. If the Sponsor or Practitioner is a bank, savings and loan association, credit union, mutual fund, insurance company, or other institution qualified to serve as Trustee, a person other than the Sponsor or Practitioner (or its affiliate) may not serve as Trustee or as Custodian of the Plan without the written consent of the Sponsor or Practitioner.

 

1.68 USERRA.   USERRA   means   the   Uniformed   Services Employment and Reemployment Rights Act of 1994, as amended.

 

1.69 Valuation  Date.  Valuation  Date  means  the Accounting Date, such additional dates as the Employer in its

Adoption Agreement may elect, and any other date that the Plan Administrator designates for the valuation of the Trust Fund.

1.70 Vested. Vested means a Participant or a Beneficiary has an unconditional claim, legally enforceable against the Plan, to the Participant's Account Balance or Accrued Benefit or to a portion thereof if not 100% Vested. Vesting means the degree to which a Participant is Vested in one or more Accounts.

 

1.71 Volume  Submitter  Plan.  Volume  Submitter  Plan means as described in Section 13.01 of Rev. Proc. 2011-49 or in any successor thereto. A Volume Submitter Plan must have an Advisory  Letter as described in Section 13.03 of Rev. Proc.

2011-49.

 

 

 

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ARTICLE II

ELIGIBILITY AND PARTICIPATION

 

 

2.01 ELIGIBILITY.  Each  Eligible  Employee  becomes  a Participant in the Plan in accordance with the eligibility conditions the Employer elects in its Adoption Agreement. The Employer may elect different age and service conditions for different Contribution Types under the Plan.

 

(A)  Maximum Age and Years of Service. For purposes of an Eligible Employee's participation in the Plan, the Plan may not impose an age condition exceeding age 21 and may not require completion of more than one Year of Service, except under Section 2.02(E).

 

(B) New Plan. Any Eligible Employee who has satisfied the Plan's eligibility conditions and who has reached his/her Entry Date as of the Effective Date is eligible to participate as of the Effective Date, assuming the Employer continues to employ the Employee on that date. Any other Eligible Employee becomes eligible to participate: (1) upon satisfaction of the eligibility conditions and reaching his/her Entry Date; or (2) upon reaching his/her Entry Date if such Employee had already satisfied the eligibility conditions prior to the Effective Date.

 

(C)  Restated  Plan.  If  this  Plan  is  a  Restated  Plan,  each Employee who was a Participant in the Plan on the day before the restated Effective Date continues as a Participant in the Restated Plan, irrespective of whether he/she satisfies the eligibility conditions of the Restated Plan, unless the Employer provides otherwise in its Adoption Agreement.

 

(D) Prevailing Wage Contribution. If the Employer makes Prevailing Wage Contributions to the Plan, no minimum age or service conditions apply to an Eligible Employee's eligibility to receive Prevailing Wage Contributions under the Plan. The Employer's Adoption Agreement elections imposing age and service eligibility conditions apply to such an Employee as to non-Prevailing Wage Contributions under the Plan.

 

(E)  Special Eligibility Effective Date (Dual Eligibility). The Employer in its Adoption Agreement may elect to provide a special Effective Date for the Plan's eligibility conditions, with the effect that such conditions may apply only to Employees who are employed by the Employer after a specified date.

 

2.02 APPLICATION  OF  SERVICE  CONDITIONS.  The Plan Administrator will apply this Section 2.02 in administering the Plan's eligibility service condition(s), if any.

 

(A) Definition of Year of Service. A Year of Service for purposes of an Employee's participation in the Plan, means the applicable   Eligibility   Computation   Period   under   Section 2.02(C), during which the Employee completes the number of Hours of Service (not exceeding 1,000) the Employer specifies in its Adoption Agreement, without regard to whether the Employer continues to employ the Employee during the entire Eligibility Computation Period.

 

(B) Counting  Years  of  Service.  For  purposes  of  an Employee's participation in the Plan, the Plan counts all of an Employee's  Years  of  Service,  except  as  provided  in  Section 2.03.

(C)  Initial and Subsequent Eligibility Computation Periods. If the Plan requires one Year of Service for eligibility and an Employee does not complete one Year of Service during the Initial Eligibility Computation Period, the Plan measures Subsequent Eligibility Computation Periods in accordance with the Employer's election in its Adoption Agreement. If the Plan measures Subsequent Eligibility Computation Periods on a Plan Year basis, an Employee who receives credit for the required number of Hours of Service during the Initial Eligibility Computation Period and also during the first applicable Plan Year receives credit for two Years of Service under Article II.

 

(1)  Definition of Eligibility Computation Period. An Eligibility  Computation  Period  is  a  12-consecutive  month period.

 

(2)   Definition of Initial Eligibility Computation Period. The Initial Eligibility Computation Period is the Employee's Anniversary Year which begins on the Employee's Employment Commencement Date.

 

(3) Definition of Anniversary Year. An Employee's Anniversary Year is the 12-consecutive month period beginning on the Employee's Employment Commencement Date or beginning on anniversaries thereof.

 

(4) Definitions  of  Employment  Commencement Date/Re-Employment Commencement Date. An Employee's Employment Commencement Date is the date on which the Employee first performs an Hour of Service for the Employer. An  Employee's  Re-Employment  Commencement  Date  is  the date on which the Employee first performs an Hour of Service for the Employer after the Employer re-employs the Employee.

 

(5)  Definition of Subsequent Eligibility Computation Period. A Subsequent Eligibility Computation Period is any Eligibility Computation Period after the Initial Eligibility Computation Period, as the Employer elects in its Adoption Agreement.

 

(D)  Entry  Date.  The  Employer  in  its  Adoption  Agreement elects the Entry Date(s) and elects whether such Entry Date(s) are retroactive, coincident with or next following an Employee's satisfaction of the Plan's eligibility conditions. The Employer may  elect  to  apply  different  Entry  Dates  to  different Contribution Types.

 

(1)   Definition of Entry Date. See Section 1.26.

 

(2)   Maximum  delay  in  participation.  An  Entry  Date may not result in an Eligible Employee who has satisfied the Plan's eligibility conditions being held out of Plan participation longer than six months, or if earlier, the first day of the next Plan Year, following completion of the Code §410(a) maximum eligibility requirements.

 

(3)   Prevailing  Wage  Contributions.  If  the  Employer makes Prevailing Wage Contributions to the Plan, an Eligible Employee's Entry Date with regard to such contributions is the

 

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Employee's Employment Commencement Date. The Employer's Adoption Agreement elections regarding Entry Dates apply to such an Employee as to non-Prevailing Wage Contributions under the Plan.

 

(E) Alternative Service Conditions. The Employer in its Adoption Agreement may elect to impose for eligibility a condition of less than one Year of Service or of more than one Year of Service, but not exceeding two Years of Service. If the Employer elects an alternative Service condition to one Year of Service or two Years of Service, the Employer must elect in its Adoption Agreement the Hour of Service and other requirement(s), if any, after the Employee completes one Hour of Service. Under any alternative Service condition election, the Plan may not require an Employee to complete more than one Year of Service (1,000 Hours of Service in 12-consecutive months) or two Years of Service if applicable.

 

(1)   Vesting  requirement.  If  the  Employer  elects  to impose more than a one Year of Service eligibility condition, the Plan Administrator must apply 100% vesting on any Employer Contributions (and the resulting Accounts) subject to that eligibility condition.

 

(2) One Year of Service maximum for specified Contributions. The Plan may not require more than one Year of Service for eligibility for an Eligible Employee to make Elective Deferrals, to receive Safe Harbor Contributions or to receive SIMPLE Contributions.

 

(F) Equivalency or Elapsed Time. If the Employer in its Adoption Agreement elects to apply the Equivalency Method or the Elapsed Time Method in applying the Plan's eligibility Service condition, the Plan Administrator will credit Service in accordance with Sections 1.32(A)(2) and (3).

 

2.03 BREAK IN SERVICE - PARTICIPATION. The Plan Administrator  will  apply  this  Section  2.03  if  any  Break  in Service rule applies for eligibility under the Plan.

 

(A)  Definition  of  Break  in  Service.  For  purposes  of  this Article II, an Employee incurs a Break in Service if during any applicable Eligibility Computation Period he/she does not complete more than 500 Hours of Service with the Employer. The Eligibility Computation Period under this Section 2.03(A) is the same as the Eligibility Computation Period the Plan uses to measure  a  Year  of  Service  under  Section  2.02.  If  the  Plan applies the Elapsed Time Method of crediting Service under Section 1.32(A)(3), a Participant incurs a Break in Service if the Participant has a Period of Severance of at least 12 consecutive months.

 

(B)  Two Year Eligibility. If the Employer under the Adoption Agreement elects a two Years of Service eligibility condition, an Employee who incurs a one year Break in Service prior to completing two Years of Service: (1) is a new Employee on the date he/she first performs an Hour of Service for the Employer after   the   Break   in   Service;   (2)   the   Plan   disregards   the Employee's Service prior to the Break in Service; and (3) the Employee establishes a new Employment Commencement Date for purposes of the Initial Eligibility Computation Period under Section 2.02(C).

(C)  One Year Hold-Out Rule-Participation. The Employer in its Adoption Agreement must elect whether to apply the "one year hold-out" rule under Code §410(a)(5)(C). Under this rule, a Participant will incur a suspension of participation in the Plan after incurring a one year Break in Service and the Plan disregards a Participant's Service completed prior to a Break in Service until the Participant completes one Year of Service following the Break in Service. The Plan suspends the Participant's participation in the Plan as of the first day of the Eligibility Computation Period following the Eligibility Computation Period in which the Participant incurs the Break in Service.

 

(1)   Completion of one Year of Service. If a Participant completes one Year of Service following his/her Break in Service, the Plan restores the Participant's pre-break Service and the Participant resumes active participation in the Plan retroactively  to  the  first  day  of  the  Eligibility  Computation Period in which the Participant first completes one Year of Service following his/her Break in Service.

 

(2) Eligibility   Computation   Period.   The   Plan Administrator   measures   the   Initial   Eligibility   Computation period under this Section 2.03(C) from the date the Participant first receives credit for an Hour of Service following the one year Break in Service. The Plan Administrator measures any Subsequent Eligibility Computation Periods, if necessary, in a manner consistent with the Employer's Eligibility Computation Period   election   in   its   Adoption   Agreement,   using   the Re-Employment Commencement Date in determining the Anniversary Year if applicable.

 

(3) Election  to  limit  application  to  separated Employees.  If  the  Employer  elects  to  apply  the  one  year hold-out rule, the Employer also may elect in its Adoption Agreement to limit application of the rule only to a Participant who has incurred a Separation from Service.

 

(4)   Application to Employee who did not enter. The Plan Administrator also will apply the one year hold-out rule, if applicable, to an Employee who satisfies the Plan's eligibility conditions, but who incurs a Separation from Service and a one year Break in Service prior to becoming a Participant.

 

(5)   No  effect  on  vesting  or  Earnings.  This  Section 2.03(C)  does  not  affect  a  Participant's  vesting  credit  under Article V and, during a suspension period, the Participant's Account continues to share fully in Earnings under Article VII.

 

(6)   No restoration under two year break rule. The Plan Administrator in applying this Section 2.03(C) does not restore any Service disregarded under the Break in Service rule of Section 2.03(B).

 

(7)   No application to Elective Deferrals in 401(k) Plan. If the Plan is a 401(k) Plan and the Employer in its Adoption Agreement elects to apply the Section 2.03(C) one year hold-out rule, the Plan Administrator will not apply such provisions to the Elective Deferral portion of the Plan.

(8) USERRA.  An  Employee  who  has  completed Qualified Military Service and who the Employer has rehired

 

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under USERRA, does not incur a Break in Service under the Plan by reason of the period of such Qualified Military Service.

 

(D) Rule of Parity - Participation. For purposes of Plan participation, the Plan does not apply the "rule of parity" under Code §410(a)(5)(D), unless the Employer in Appendix B elects to apply the rule of parity.

 

2.04 PARTICIPATION UPON RE-EMPLOYMENT.

 

(A) Rehired Participant/Immediate Re-Entry. A Participant who incurs a Separation from Service will re-enter the Plan as a Participant on his/her Re-Employment Commencement Date (provided he/she is not an Excluded Employee), subject to any Break in Service rule, if applicable, under Section 2.03.

 

(B) Rehired  Eligible  Employee  Who  Had  Satisfied Eligibility. An Eligible Employee who satisfies the Plan's eligibility conditions, but who incurs a Separation from Service prior to becoming a Participant, subject to any Break in Service rule, if applicable, under Section 2.03, will become a Participant on the later of: (1) the Entry Date on which he/she would have entered the Plan had he/she not incurred a Separation from Service; or (2) his/her Re-Employment Commencement Date.

 

(C) Rehired Eligible Employee Who Had Not Satisfied Eligibility. An Eligible Employee who incurs a Separation from Service prior to satisfying the Plan's eligibility conditions becomes a Participant in accordance with the Employer's Adoption Agreement elections. The Plan Administrator, for purposes of applying any shift in the Eligibility Computation Period, takes into account the Employee's prior Service and the Employee is not treated as a new hire.

 

2.05 CHANGE IN  EMPLOYMENT  STATUS. The Plan Administrator will apply this Section 2.05 if the Employer in its Adoption Agreement elected to exclude any Employees as Excluded Employees.

 

(A) Participant Becomes an Excluded Employee. If a Participant has not incurred a Separation from Service but becomes an Excluded Employee (as to any or all Contribution Types), during the period of exclusion the Excluded Employee: (i) will not share in the allocation of the applicable Employer Contributions (including a Top-Heavy Minimum Allocation under Section 10.02 if the Employee is excluded as to all Contribution Types) or Participant forfeitures, based on Compensation paid to the Excluded Employee during the period of exclusion; (ii) may not make Employee Contributions, Rollover Contributions or Designated IRA Contributions; and (iii)  if  the  Plan  is  a  401(k)  Plan  and  the  Participant  is  an Excluded Employee as to Elective Deferrals, may not make Elective Deferrals as to Compensation paid to the Excluded Employee during the period of exclusion.

 

(1)   Vesting, accrual, Break in Service and Earnings. A Participant who becomes an Excluded Employee under this Section 2.05(A) continues: (a) to receive Service credit for vesting under Article V for each included vesting Year of Service; (b) to receive Service credit for applying any allocation conditions under Section 3.06 as to Employer Contributions accruing for any non-excluded period and as to Contribution Types for which the Participant is not an Excluded Employee; (c) to receive Service credit in applying the Break in Service rules; and (d) to share fully in Earnings under Article VII.

 

(2) Resumption of Eligible Employee status. If a Participant who becomes an Excluded Employee subsequently resumes status as an Eligible Employee, the Participant will participate  in  the  Plan  immediately  upon  resuming  eligible status, subject to the Break in Service rules, if applicable, under Section 2.03.

 

(B) Excluded Employee Becomes Eligible. If an Excluded Employee who is not a Participant becomes an Eligible Employee, he/she will participate immediately in the Plan if he/she has satisfied the Plan's eligibility conditions and would have been a Participant had he/she not been an Excluded Employee during his/her period of Service. An Excluded Employee receives Service credit for eligibility, for allocation conditions under Section 3.06 (but the Plan disregards Compensation  paid  while  excluded)  and  for  vesting  under Article V for each included vesting Year of Service, notwithstanding the Employee's Excluded Employee status.

 

2.06 PARTICIPATION OPT-OUT.

 

(A)  Volume   Submitter   Plan.   If   the   Plan   is   a   Volume Submitter Plan, the Plan Administrator may elect to permit an Eligible Employee to elect irrevocably to not participate in the Plan (to "opt-out"). The Eligible Employee prior to his/her Entry Date and prior to first becoming eligible under any plan of the Employer as described in Code §219(g)(5)(A), including terminated plans, must file an opt-out election in writing with the  Plan  Administrator  on  a  form  the  Plan  Administrator provides for this purpose. An Employee's election not to participate, pursuant to this Section 2.06(A), includes his/her right to make Elective Deferrals, Employee Contributions, Rollover Contributions or Designated IRA Contributions, unless the Plan Administrator's opt-out form permits an Eligible Employee to opt-out of specified Contribution Types prior to becoming eligible to participate in such Contribution Type. A Participant's   mere   failure   to   make   Elective   Deferrals   or Employee Contributions is not an opt-out under this Section 2.06(A).

 

(B)  Prototype Plan. If the Plan is a Prototype Plan, the Plan does not permit an otherwise Eligible Employee or any Participant to elect to opt-out. However, if the Plan is a Nonstandardized Plan, an Eligible Employee may opt-out in accordance with Section 2.06(A) provided: (1) the Plan terms as in  effect  prior  to  restatement  under  this  Plan  permitted  the opt-out; and (2) the Employee executes the opt-out prior to the date of the Employer's execution of this Plan as a Restated Plan.

 

 

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ARTICLE III

PLAN CONTRIBUTIONS AND FORFEITURES

 

 

3.01 CONTRIBUTION   TYPES.   The   Employer   in   its Adoption Agreement will elect the Contribution Type(s) and any formulas, allocation methods, conditions and limitations applicable thereto, except where the Plan expressly reserves discretion to the Employer or to the Plan Administrator.

 

(A)  Application of Limits. The Employer's contribution to the Trust for any Plan Year is subject to Article IV limits and other Plan limits.

 

(B) Compensation   for   Allocations/Limit.   The   Plan Administrator will allocate all Employer Contributions and Elective  Deferrals  based  on  the  definition  of  Compensation under Section 1.11 the Employer elects in its Adoption Agreement for a particular Contribution Type. The Plan Administrator in allocating such contributions must limit each Participant's Compensation to the amount described in Section 1.11(E).

 

(C)  Allocation   Conditions.   The   Plan   Administrator   will allocate Employer Contributions only to those Participants who satisfy the Plan's allocation conditions under Section 3.06, if any, for the Contribution Type being allocated.

 

(D) Top-Heavy. If the Plan is top-heavy, the Employer will satisfy the Top-Heavy Minimum Allocation requirements in accordance with Article X.

 

(E) Net Profit Not Required. The Employer need not have net profits to make a contribution under the Plan, unless the Employer in its Adoption Agreement specifies a fixed formula based on net profits.

 

(F) Form of Contribution.  Subject  to  the  consent  of  the Trustee  under  Article  VIII,  the  Employer  may  make discretionary Employer Contributions to a Profit Sharing Plan, to a 401(k) Plan or to a 401(m) Plan (excluding Elective Deferrals or Employee Contributions) in the form of unencumbered  property  instead  of  cash,  provided  the contribution of property is not a prohibited transaction. The Employer may not make contributions in the form of property to its Money Purchase Pension Plan.

 

(G) Time of Payment of Contribution. The Employer may pay to the Trust its Employer Contributions for any Plan Year in one or more installments, without interest. Unless otherwise required by applicable contract, the Employer may make an Employer Contribution to the Plan for a particular Plan Year at such time(s) as the Employer in its sole discretion determines. If the Employer makes a contribution for a particular Plan Year after the close of that Plan Year, the Employer will designate to the Plan Administrator and to the Trustee the Plan Year for which the Employer is making the Employer Contribution. The Plan Administrator will allocate the contribution accordingly.

 

(H) Return of Employer Contribution. The  Employer contributes to the Plan on the condition its contribution is not due to a mistake of fact and the IRS will not disallow the deduction of the Employer Contribution.

 

(1) Request  for  contribution  return/timing.  The Trustee, upon written request from the Employer, must return to the Employer the amount of the Employer Contribution made by the Employer by mistake of fact or the amount of the Employer Contribution disallowed as a deduction under Code §404. The Trustee will not return any portion of the Employer Contribution under the provisions of this Section 3.01(H) more than one year after: (a) the Employer made the contribution by mistake of fact; or (b) the IRS's disallowance of the contribution as a deduction, and then, only to the extent of the disallowance.

 

(2) Earnings. The Trustee will not increase the amount of the Employer Contribution returnable under this Section 3.01(H) for any Earnings increases attributable to the contribution, but the Trustee will decrease the Employer Contribution returnable for any Earnings losses attributable thereto.

 

(3) Evidence. The Trustee may require the Employer to furnish the Trustee whatever evidence the Trustee deems necessary to enable the Trustee to confirm the amount the Employer has requested be returned is properly returnable.

 

(I)   Money Purchase Pension and Defined Benefit Plans. If the Employer's Plan is a Money Purchase Pension Plan and the Employer also maintains a defined benefit pension plan, notwithstanding the Money Purchase Pension Contribution formula in the Employer's Adoption Agreement, the Employer's required contribution to its Money Purchase Pension Plan for a Plan Year is limited to the amount which the Employer may deduct  under  Code  §404(a)(7).  If  the  Employer  under  Code

§404(a)(7) must reduce its Money Purchase Pension Plan contribution, the Plan Administrator will allocate the reduced contribution amount in accordance with the Plan's allocation formula.

 

(J)   Frozen Plan. The Employer in its Adoption Agreement may elect to treat the Plan as a Frozen Plan. Under a Frozen Plan, the Employer and the Participants will not make any contributions to the Plan. A Frozen Plan remains subject to all qualification and reporting requirements except as the Plan provisions (other than those relating to ongoing permitted or required contributions) continue in effect until the Employer terminates the Plan. An Eligible Employee will not become a Participant in a Frozen Plan.

 

3.02 ELECTIVE DEFERRALS. If the Plan is a 401(k) Plan and the Employer in its Adoption Agreement elects to permit Elective Deferrals, the Plan Administrator will apply the provisions   of   this   Section   3.02.   A   Participant's   Elective Deferrals   will   be   made   pursuant   to   a   Salary   Reduction Agreement   unless   the   Employer   elects   in   its   Adoption Agreement to apply the Automatic Deferral provision under Section 3.02(B) or the CODA provision under Section 3.02(C). A   Participant's   Elective   Deferrals   may   include   the   cash equivalent of the Participant's unused paid time off that the Participant otherwise may elect to receive in cash under the Employer's Paid Time Off Plan, if any, if such cash equivalent otherwise satisfies the Plan's definition of Compensation for purposes of Elective Deferrals (including following Severance from Employment). The Plan will treat any Elective Deferrals Elective Deferrals for all purposes under the Plan.

 

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(A) Limitations.  Except  as  described  below  regarding Catch-Up Deferrals, the Employer in its Adoption Agreement must elect the Plan limitations, if any, which apply to Elective Deferrals  (or  separately  to  Pre-Tax  Deferrals  or  to  Roth Deferrals, if applicable). Such Plan limitations are in addition to those mandatory limitations imposed under Article IV. In applying any such additional Plan limitation, the Plan Administrator will take into account the Compensation for Elective Deferral purposes the Employer elects in the Adoption Agreement. The Plan Administrator in the Salary Reduction Agreement form or in a Salary Reduction Agreement policy (see Section 1.57(C)) may specify additional rules and restrictions applicable to Salary Reduction Agreements, including those applicable to a deferral of a Participant's unused paid time off, under the Employer's Paid Time Off Plan, if applicable. The Employer in a SIMPLE 401(k) Plan may not impose any Plan limit  on  Elective  Deferrals  except  as  provided  under  Code §408(p). See Section 3.05(C)(2) regarding limits on Elective Deferrals under a safe harbor plan. Unless otherwise provided on the Salary Reduction form or in the Salary Reduction Agreement  policy,  the  termination  of  a  Participant’s employment with the Employer automatically revokes the Participant’s Salary Reduction Agreement with regard to periods after the Participant is rehired.

 

(1)   Plan  Administrator  discretion  if  no  stated  Plan limit. The Employer may elect a Plan limit in its Adoption Agreement, but if the Employer does not so elect, the Plan Administrator may establish or change a Plan limit on Elective Deferrals from time to time by providing notice to the Participants. Any such limit change made during a Plan Year applies only prospectively and applies until the Plan Administrator changes or revokes the limit.

 

(2)   Compensation from which Deferrals may be made. Participants may not make Elective Deferrals from amounts that are not Code §415 Compensation under Section 4.05(F). In addition, a Participant may not make Elective Deferrals from amounts which are not Compensation under Section 1.11, even if 415 Compensation is more inclusive. In determining Compensation from which a Participant may make Elective Deferrals, the Compensation dollar limitation described in Section 1.11(E) does not apply.

 

(B) Automatic Deferrals. The Employer in its Adoption Agreement  will  elect  whether  to  apply  or  not  apply  the Automatic Deferral provisions. The Employer may elect the Automatic Deferral provisions under a Section 3.02(B)(1) (ACA), a Section 3.02(B)(2) (EACA), or a Section 3.02(B)(3) (QACA). If the QACA provisions apply, the safe harbor provisions of Section 3.05(J) and EACA provisions of Section 3.02(B)(2)   also   apply.   The   Plan   Administrator   will   treat Automatic Deferrals as Elective Deferrals for all purposes under the Plan, including application of limitations, nondiscrimination testing and distributions. If the Employer in its Adoption Agreement has elected to permit Roth Deferrals, Automatic Deferrals   are   Pre-Tax   Deferrals   unless   the   Employer   in Appendix B elects otherwise.

 

(1)   Automatic  Contribution  Arrangement  (ACA).  If the Employer elects in its Adoption Agreement, the Employer maintains  a  Plan  with  Automatic  Deferral  provisions  as  an Automatic Contribution Arrangement ("ACA"), effective as of

the date the Employer elects in the Adoption Agreement, and the provisions of this Section 3.02(B)(1) will apply.

(a)   Participants subject to ACA. The Employer in its Adoption Agreement will elect which Participants are subject to the ACA Automatic Deferral on the Effective Date thereof, including some or all current Participants and those Employees who become Participants after the ACA Effective Date.

 

(b)   Effect of Contrary Election. A Participant who makes a Contrary Election is not subject to Automatic Deferral or to any scheduled increases thereto.  A Participant’s Contrary Election   continues   in   effect   until   the   Participant subsequently changes  his/her  Salary  Reduction  Agreement  or the Contrary Election expires or is revoked, and upon revocation or expiration of a Contrary Election the Participant is thereafter subject to Automatic Deferral or to any scheduled increases thereto.

 

(2) Eligible Automatic Contribution Arrangement. (EACA). If the Employer elects in its Adoption Agreement, the Employer maintains a Plan with Automatic Deferral provisions as an Eligible Automatic Contribution Arrangement (EACA), effective as of the date the Employer elects in its Adoption Agreement (but not earlier than Plan Years beginning after December 31,   2007)   and   the   provisions   of   this   Section 3.02(B)(2) will apply.

 

(a)   Participants subject to EACA. The Employer in its Adoption Agreement will elect which Participants are subject to the EACA Automatic Deferral on the Effective Date thereof which may include some or all current Participants or may be limited to those Employees who become Participants after the EACA Effective Date.

 

(i)    EACA  Effective  Date.  EACA  Effective Date means the date on which the EACA goes into effect, either as to the overall Plan or as to an individual Participant as the context requires. An EACA becomes effective as to the Plan as of the date the Employer elects in its Adoption Agreement. A Participant's EACA Effective Date is as soon as practicable after the Participant is subject to Automatic Deferrals under the EACA, consistent with the objective of affording the Participant a reasonable period of time after receipt of the EACA notice to make a Contrary Election (and, if applicable, an investment election).

 

(b)   Uniformity. The Automatic Deferral Percentage must be a uniform percentage of Compensation. However, the Plan does not violate the uniform Automatic Deferral Percentage merely because the Plan applies any of the following provisions:

 

(i)  Years of participation. The Automatic Deferral Percentage varies based on the number of Plan Years (or portions of years) the Participant has participated in the Plan while the Plan has applied EACA provisions;

 

(ii) No   reduction   from   prior   default percentage. The Employer elects in the Adoption Agreement not to apply Automatic Deferrals to a Participant whose Elective deferrals immediately prior to the EACA's Effective Date were higher than the Automatic Deferral Percentage; the Automatic Deferral amount so as not to exceed the limits of Code

 

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§§401(a)(17), 402(g) (determined without regard to Age 50 Catch-Up Deferrals), or 415;

(iv)  No deferrals during hardship suspension. The  Plan  does  not  apply  the  Automatic  Deferral  during  the period of suspension, under the Plan's hardship distribution provisions, of Participant's right to make Elective Deferrals to the Plan following a hardship distribution; or

 

(v) Disaggregated groups. The Plan applies different Automatic Deferral Percentages to different groups if the    groups    can    be    disaggregated    under    Treas.    Reg. §1.401(k)-1(b)(4).

 

(c)   EACA notice. The Plan Administrator annually will provide a notice to each Covered Employee a reasonable period prior to each Plan Year the Employer maintains the Plan as an EACA ("EACA Plan Year").

 

(i) Deemed reasonable notice/new Participant.  The  Plan  Administrator  is  deemed  to  provide timely  notice  if  the  Plan  Administrator  provides  the  EACA notice at least 30 days and not more than 90 days prior to the beginning of the EACA Plan Year.

 

(ii)   Mid-year notice/new Participant or Plan. If:   (A)   an  Employee   becomes   eligible  to  make   Elective Deferrals in the Plan during an EACA Plan Year but after the Plan Administrator has provided the annual EACA notice for that Plan Year; or (B) the Employer adopts mid-year a new Plan as a EACA, the Plan Administrator must provide the EACA notice no later than the date the Employee becomes eligible to make Elective Deferrals. However, if it is not practicable for the Plan Administrator to provide the notice on or before the date an Employee becomes a Participant, then the notice nonetheless will be treated as provided timely if the Plan Administrator provides the notice as soon as practicable after that date and the Employee is permitted to elect to defer from all types of Compensation that may be deferred under the Plan earned beginning on that date.

 

(iii) Content. The EACA notice must provide comprehensive information regarding the Participants' rights and obligations under the Plan and must be written in a manner calculated to be understood by the average Participant.

 

(d)  EACA permissible withdrawal. The Employer will elect in its Adoption Agreement whether a Participant who has Automatic Deferrals under the EACA may elect to withdraw all the Automatic Deferrals (and allocable earnings) under the provisions of this Section 3.02(B)(2)(d). Any distribution made pursuant to this Section will be processed in accordance with normal distribution provisions of the Plan.

 

(i)  Amount.  If  a  Participant  elects  a permissible withdrawal under this Section 3.02(B)(2)(d), then the Plan must make a distribution equal to the amount (and only the amount) of the Automatic Deferrals made under the EACA (adjusted for Earnings to the date of the distribution).The Plan may account separately for Automatic Deferrals, in which case the Plan will distribute the entire Account. If the Plan does not account separately for the Automatic Deferrals, then the Plan must  determine  Earnings  in  the  same  manner  applied  to

determine Allocable Income to the refund of Excess Contributions under Section 4.11(C)(2)(a).

 

(ii) Fees. Notwithstanding Section 3.02(B)(2)(d)(i), the Plan Administrator may reduce the permissible  distribution  amount  by  any  generally  applicable fees. However, the Plan may not charge a greater fee for distribution under this Section 3.02(B)(2)(d)(ii), than applies to other distributions. The Plan Administrator may adopt a policy regarding charging such fees consistent with this paragraph.

 

(iii) Timing.  The  Participant  may  make  an election to withdraw the Automatic Deferrals under the EACA no later than 90 days, or such shorter period as the Employer specifies in its Adoption Agreement (but not less than 30 days), after the date of the first Automatic Deferral under the EACA. For this purpose, the date of the first Automatic Deferral is the date that the Compensation subject to the Automatic Deferral otherwise would have been includible in the Participant's gross income. For purposes of the preceding sentence, EACAs under the  Plan  are  aggregated,  except  that  the  mandatory disaggregation rules of Code §410(b) apply. In addition, a Participant's withdrawal right is not restricted due to the Participant making a Contrary Election during the 90-day period (or shorter period as the Employer specifies in its Adoption Agreement).

 

(iv) Rehired  Employees.  For  purposes  of Section 3.02(B)(2)(d)(iii), the Plan will treat an Employee who for an entire Plan Year did not have contributions made pursuant to a default election under the EACA as having not had such contributions for any prior Plan Year as well.

 

(v)  Effective date of the actual withdrawal election. The effective date of the permissible withdrawal will be as soon as practicable, but in no event later than the earlier of: (A) the pay date of the second payroll period beginning after the Participant makes the election; or (B) the first pay date that occurs at least 30 days after the Participant makes the election. The election also will be deemed to be the Participant's Contrary Election to have no Elective Deferrals made to the Plan. However, the Participant may subsequently make a deferral election hereunder.

 

(vi)  Related Matching Contributions. The Plan Administrator will not take into account any deferrals withdrawn pursuant to this Section 3.02(B)(2)(d) in computing and allocating Matching Contributions. If the Employer already has allocated Matching Contributions to the Participant's account with respect to Elective Deferrals being withdrawn pursuant to this Section, the Plan must forfeit the Matching Contributions, as adjusted for Earnings.

 

(vii) Treatment of withdrawals. With regard to Elective    Deferrals    withdrawn    pursuant    to    this    Section 3.02(B)(2)(d): (A) the Plan Administrator will disregard such deferrals in the ADP test (if applicable) under Section 4.10(B); (B) the Plan Administrator will disregard such Deferrals for purposes of the Elective Deferral Limit under Section 4.10(A); and   (C)   such   Deferrals   are   not   subject   to   the   consent requirements of Code §§401(a)(11) or 417. The Plan Administrator will disregard any Matching Contributions

 

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forfeited under Section 3.02(B)(2)(d)(vi) in the ACP test (if applicable) under Section 4.10(C).

 

(e)   Effect of Contrary Election/Covered Employee status. A Participant who makes a Contrary Election is not subject to Automatic Deferral or to any scheduled increases thereto.  A Participant’s Contrary Election continues in effect until   the   Participant   subsequently changes   his/her   Salary Reduction Agreement or the Contrary Election expires or is revoked,  and  upon  revocation  or  expiration  of  a  Contrary Election the Participant is thereafter subject to Automatic Deferral or to any scheduled increases thereto.

 

(i)    Covered Employee. A Covered Employee is a Participant who is subject to the EACA. The Employer in its Adoption Agreement will elect whether a Participant who makes a Contrary Election is a Covered Employee. A Covered Employee must receive the annual EACA notice even though the Participant's Contrary Election remains in effect. In addition, a Covered Employee who revokes his/her Contrary Election or whose Contrary Election expires, is thereafter immediately subject to the EACA Automatic Deferral.

 

(3) Qualified Automatic Contribution Arrangement (QACA). If the Employer elects in its Adoption Agreement, the Employer maintains a Plan with Automatic Deferral provisions as a Qualified Automatic Contribution Arrangement (QACA), effective as of the date the Employer elects in it Adoption Agreement (but not earlier than Plan Years beginning after December   31,   2007)   and   the   provisions   of   this   Section 3.02(B)(3) and of Section 3.05(J) will apply. If this Plan is a QACA, then the Employer may elect in its Adoption Agreement to provide EACA permissible withdrawals, as described in Section 3.02(B)(2)(d).

 

(a)   Participants subject to QACA. The Employer in its Adoption Agreement will elect which Participants are subject to the QACA Automatic Deferral on the Effective Date thereof including some or all current Participants and those Employees who become Participants after the QACA Effective Date. The Employer must elect to apply the QACA Automatic Deferral at least to those Participants as of the QACA Effective Date who do not have in effect a Salary Reduction Agreement and may also elect to apply the QACA Automatic Deferral to such Participants who have an existing Salary Reduction Agreement in effect as provided in the Adoption Agreement.

 

(i)    QACA  Effective  Date.  QACA  Effective Date means the date on which the QACA goes into effect, either as to the overall Plan or as to an individual Participant as the context requires. A QACA becomes effective as to the Plan as of the date the Employer elects in its Adoption Agreement. A Participant's QACA Effective Date is as soon as practicable after the Participant is subject to Automatic Deferrals under the QACA, consistent with the objective of affording the Participant a reasonable period of time after receipt of the QACA notice to make a Contrary Election (and, if applicable, an investment election). However, in no event will the Automatic Deferral be effective later than the earlier of: (1) the pay date for the second payroll period that begins after the date the QACA safe harbor notice (described in Section 3.05(H)(5)) is provided to the Employee, or (2) the first pay date that occurs at least 30 days after the QACA safe harbor notice is provided to the Employee.

(b)   QACA Automatic Deferral Percentage. Except as provided in Section 3.02(B)(3)(c) (relating to uniformity requirements), the Plan must apply to all Participants subject to the  QACA  as  described  in  Section  3.02(B)(3)(a),  a  uniform Automatic Deferral Percentage, as a percentage of each Participant's Compensation, which does not exceed 10%, and which is at least the following minimum amount:

 

(i) Initial period. 3% for the period that begins when the Participant first has contributions made pursuant to a default election under the QACA and ends on the last day of the following Plan Year;

 

(ii)  Third  Plan  Year.  4%  for  the  third  Plan Year of the Participant's participation in the QACA;

 

(iii) Fourth Plan Year. 5% for the fourth Plan Year of the Participant's participation in the QACA; and

 

(iv)  Fifth and later Plan Years. 6% for the fifth Plan Year of the Participant's participation in the QACA and for each subsequent Plan Year.

 

For purposes of this Section 3.02(B)(3)(b), the Plan will treat a Participant who for an entire Plan Year did not have Automatic Deferral  contributions  made  under  the  QACA  as  not  having made such contributions for any prior Plan Year.

 

(c)  Uniformity.  The  uniformity  provisions  of Section 3.02(B)(2)(b) applicable to an EACA, also apply to a QACA.

 

(d)   QACA  Notice.  See  Section  3.05(H)(5)  as  to QACA notice provisions.

 

(e)   Effect of Contrary Election and termination of Election. A Participant's Contrary Election continues in effect until a Participant modifies or revokes the Election, or until the Election expires. A Participant who revokes his/her Contrary Election or whose Contrary Election expires, is thereafter immediately subject to the QACA Automatic Deferral.

 

(4)  Automatic Contribution Definitions. The following definitions apply to all Automatic Contribution Arrangements under this Section 3.02(B):

 

(a)   Automatic Deferral. An Automatic Deferral is an Elective Deferral that results from the operation of Section 3.02(B)(1), Section 3.02(B)(2) or Section 3.02(B)(3). Under the Automatic Deferral, the Employer automatically will reduce by the     Automatic     Deferral     Percentage     or    Amount     the Compensation  of  each  Participant  subject  to  the  Automatic Deferral, except those Participants who timely make a Contrary Election.

 

(b)   Automatic Deferral Percentage/Increases. The Automatic Deferral Percentage is the percentage of Automatic Deferral which the Employer elects in its Adoption Agreement including any scheduled increase to the Automatic Deferral Percentage  which  the  Employer  may  elect.  If  a  Participant subject to the Automatic Deferral elected, before the Effective Date of the Automatic Deferral, to defer an amount which is less

 

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than  the  Automatic  Deferral  Percentage  the  Employer  has elected in its Adoption Agreement, the Automatic Deferral Percentage includes only the incremental percentage amount necessary to increase the Participant's Elective Deferral to equal the Automatic Deferral Percentage, including any scheduled increases thereto. See Section 3.02(B)(3)(b) as to the QACA required Automatic Deferral Percentage. determining the amount of Automatic Deferrals by applying the Automatic Deferral Percentage means Compensation for purposes of allocating Elective Deferrals under the Plan. For Plan Years beginning on or after January 1, 2010, Compensation must   be   nondiscriminatory   Compensation   as   described   in Section 1.11(F); provided that the Employer in its Adoption Agreement may not elect to limit NHCE Compensation to a specified dollar amount.

 

(d) Contrary Election. A Contrary Election is a Participant's election made after the ACA, EACA or QACA Effective Date not to defer any Compensation or to defer an amount which is more or less than the Automatic Deferral Percentage (including a Participant’s election made before such effective date under the Plan’s prior automatic deferral arrangement, if applicable).

 

(e) Contrary   Election   Effective   Date.   A Participant's Contrary Election generally is effective as of the first payroll period which follows the payroll period in which the Participant makes the Contrary Election. However, a Participant may make a Contrary Election which is effective: (i) for the first payroll period in which he/she becomes a Participant if the Participant  makes  a  Contrary  Election  within  a  reasonable period following the Participant's Entry Date and before the Compensation to which the Election applies becomes currently available; or (ii) for the first payroll period following the Effective  Date  of  the  Automatic  Deferral,  if  the  Participant makes a Contrary Election not later than the Effective Date of the Automatic Deferral.

 

(C)  Cash or Deferred Arrangement (CODA). The Employer in its Adoption Agreement may elect to apply the CODA provisions of this Section 3.02(C). Under a CODA, a Participant may elect to receive in cash his/her proportionate share of the Employer's cash or deferred contribution, in accordance with the Employer's Adoption Agreement election. A Participant's proportionate share of the Employer's cash or deferred contribution is the percentage of the total cash or deferred contribution which bears the same ratio that the Participant's Compensation for the Plan Year bears to the total Compensation of   all   Participants   for   the   Plan   Year.   For   purposes   of determining each Participant's proportionate share of the cash or deferred contribution, a Participant's Compensation is his/her Compensation for Nonelective Contribution allocations (unless the Employer elects otherwise in its Adoption Agreement) as determined under Section 1.11, excluding any effect the proportionate share may have on the Participant's Compensation for the Plan Year. The Plan Administrator will determine the proportionate share prior to the Employer's actual contribution to the Trust, to provide the Participants with the opportunity to file cash elections. The Employer will pay directly to the Participant the portion of his/her proportionate share the Participant has elected to receive in cash.

 

(D)  Catch-Up Deferrals. Unless the Employer otherwise elects in its Adoption Agreement, the Plan permits Catch-Up Eligible

Participants to make Catch-Up Deferrals to the Plan under this Section 3.02(D).

 

(1)   Definition  of  Catch-Up  Eligible  Participant.  A Catch-Up Eligible Participant is a Participant who is eligible to make Elective Deferrals and who has attained at least age 50 or who will attain age 50 before the end of the Taxable Year in which he/she will make a Catch-Up Deferral. A Participant who dies or who incurs a Separation from Service before actually attaining age 50 in such Taxable Year is a Catch-Up Eligible Participant.

 

(2)   Definition   of   Catch-Up   Deferral.   A   Catch-Up Deferral   is   an   Elective   Deferral   by   a   Catch-up   Eligible Participant and which exceeds: (a) a Plan limit on Elective Deferrals under Section 3.02(A); (b) the Annual Additions Limit under Section 4.05(B); (c) the Elective Deferral Limit under Section 4.10(A); or (d) the ADP Limit under Section 4.10(B).

 

(3)   Limit   on   Catch-Up   Deferrals.   A   Participant's Catch-Up  Deferrals  for  a  Taxable  Year  may  not  exceed  the lesser of: (a) 100% of the Participant's Compensation for the Taxable Year when added to the Participant's other Elective Deferrals; or (b) the Catch-Up Deferral dollar limit in effect for the Taxable Year ($5,000 for 2006).

 

(4)   Adjustment after 2006. After the 2006 Taxable Year, the Secretary of the Treasury will adjust the Catch-Up Deferral dollar limit in multiples of $500 under Code §414(v)(2)(C).

 

(5) Treatment  of  Catch-Up  Deferrals.  Catch-Up Deferrals are not: (a) subject to the Annual Additions Limit under Section 4.05(B); (b) subject to the Elective Deferral Limit under Section 4.10(A); (c) included in a Participant's ADR in calculating the Plan's ADP under Section 4.10(B); or (d) taken into account in determining the Highest Contribution Rate under Section 10.06(E). Catch-Up Deferrals are taken into account in determining   the   Plan's   Top-Heavy   Ratio   under   Section 10.06(K). Otherwise, Catch-Up Deferrals are treated as other Elective Deferrals.

 

(6)   Universal   availability.   If   the   Employer   permits Catch-Up Deferrals to its Plan, the right of all Catch-Up Eligible Participants to make Catch-Up Deferrals must satisfy the universal availability requirement of Treas. Reg. §1.414(v)-1(e). If the Employer maintains more than one applicable plan within the meaning of Treas. Reg. §1.414(v)-1(g)(1), and any of the applicable plans permit Catch-Up Deferrals, then any Catch-up Eligible Participant in any such plans must be permitted to have the same effective opportunity to make the same dollar amount of Catch-Up Deferrals. Any Plan-imposed limit on total Elective Deferrals including Catch-Up Deferrals may not be less than 75% of a Participant's gross Compensation.

 

(E)  Roth Deferrals. The Employer in its 401(k) Plan Adoption Agreement may elect to permit Roth Deferrals. The Employer must also elect to permit Pre-Tax Deferrals if the Employer elects to permit Roth Deferrals. The Plan Administrator will administer  Roth  Deferrals  in  accordance  with  this  Section 3.02(E).

 

(1) Treatment   of   Roth   Deferrals.   The   Plan Administrator will treat Roth Deferrals as Elective Deferrals for

 

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all purposes of the Plan, except where the Plan indicates otherwise.

 

(2)  Separate accounting. The Plan Administrator will establish a Roth Deferral Account for each Participant who makes any Roth Deferrals and Earnings thereon in accordance with Section 7.04(A)(1). The Plan Administrator will establish a Pre-Tax Account and Earnings thereon for each Participant who makes  any  Pre-Tax  Deferrals  in  accordance  with  Section Deferrals and Earnings thereon (allocated on a reasonable and consistent basis) to a Participant's Roth Deferral Account.

 

(3)   No re-classification. An Elective Deferral contributed to the Plan either as a Pre-Tax Deferral or as a Roth Deferral may not be re-classified as the other type of Elective Deferral; provided, however that a Pre-Tax Deferral may be converted to a Roth Deferral by means of an In-Plan Roth Rollover under Section 3.08(E).

 

(F)  Elective  Deferrals  as  Employer  Contributions.  Where the context requires under the Plan, Elective Deferrals are Employer Contributions except: (1) under Section 3.04 relating to allocation of Employer Contributions; (2) under Section 3.06 relating to allocation conditions; and (3) under Section 5.03 relating to vesting.

 

(G) Automatic Escalation. The Employer in its Adoption Agreement will elect whether to apply the Automatic Escalation provisions of this Section 3.02(G) to Salary Reduction Agreements.  Such provisions shall apply to affirmative deferral elections and will not apply to participants for whom the Employer  is  withholding  Automatic  Deferrals  under  Section 3.02(B).  In its Adoption Agreement, the Employer will specify the Participants to whom automatic escalation applies, the amount by which the Elective Deferrals will increase, and the timing of the increase.

 

3.03 MATCHING  CONTRIBUTIONS.  If  the  Employer elects in its Adoption Agreement to provide for Matching Contributions (or if Section 3.03(C)(2) applies), the Plan Administrator will apply the provisions of this Section 3.03.

 

(A)  Matching  Formula:  Type,  Rate/Amount,  Limitations and Time Period. Except as provided in Section 3.03(C)(2), the Employer in its Adoption Agreement must elect the type(s) of Matching Contributions (Fixed or Discretionary Matching Contributions), and as applicable, the Matching Contribution rate(s)/amount(s), the limit(s) on Elective Deferrals or Employee Contributions subject to match, the limit(s) on the amount of Matching Contributions, and the time period the Plan Administrator will apply in the computation of any Matching Contributions. If the Employer in its Adoption Agreement elects to apply any limit on Matching Contributions based on pay periods or on any other time period which is less than the Plan Year, the Plan Administrator will determine the limits in accordance with the time period specified and will not take into account  any  other  Compensation  or  Elective  Deferrals  not within  the  applicable  time  period,  even  in  the  case  of  a Participant who becomes eligible for the match mid-Plan Year and regardless of the Employer's election as to Pre-Entry Compensation.  If  the  Employer  in  its  Adoption  Agreement elects to use "Participating Compensation" for Matching Contributions,   the   Plan   Administrator   will   take   Elective

Deferrals  into  account  in  computing  Matching  Contributions only if the Elective Deferrals were made after the Participant became eligible for the match. An Employee becomes "eligible for the match" when the Employee becomes a Participant in the Matching Contribution portion of the plan.

 

(1) Fixed  Match.  The  Employer  in  its  Adoption Agreement may elect to make a Fixed Matching Contribution to the Plan under one or more formulas.

 

(a) Allocation. The Employer may contribute on a Participant's   behalf   under   a   Fixed   Matching   Contribution formula only to the extent that the Participant makes Elective Deferrals or Employee Contributions which are subject to the formula and if the Participant satisfies the allocation conditions for Fixed Matching Contributions, if any, the Employer elects in its Adoption Agreement.

 

(2)   Discretionary Match. The Employer in its Adoption Agreement may elect to make a Discretionary Matching Contribution to the Plan.

 

(a)  Allocation. To the extent the Employer makes Discretionary Matching Contributions, the Plan Administrator will allocate the Discretionary Matching Contributions to the Account of each Participant entitled to the match under the Employer's discretionary matching allocation formula and who satisfies the allocation conditions for Discretionary Matching Contributions, if any, the Employer elects in its Adoption Agreement. The Employer under a Discretionary Matching Contribution retains discretion over the amount of its Matching Contributions, and, except as the Employer otherwise elects in its Adoption Agreement, the Employer also retains discretion over the matching formula. See Section 1.35(B).

 

(3)   Roth Deferrals. Unless the Employer elects otherwise in its Adoption Agreement, the Employer's Matching Contributions apply in the same manner to Roth Deferrals as they apply to Pre-Tax Deferrals.

 

(4)   Contribution timing. Except as described in Section 3.05 regarding a Safe Harbor 401(k) Plan, the time period that the Employer elects for computing its Matching Contributions does  not  require  that  the  Employer  actually  contribute  the Matching Contribution at any particular time. As to Matching Contribution    timing    and    the    ACP    test,    see    Section 4.10(C)(5)(e)(iii).

 

(5) Participating Employers.  If any  Participating Employers contribute Matching Contributions to the Plan, the Employer in its Adoption Agreement must elect: (a) whether each Participating Employer will be subject to the same or different Matching Contribution formulas than the Signatory Employer; and (b) whether the Plan Administrator will allocate Matching Contributions only to Participants directly employed by the contributing Employer or to all Participants regardless of which Employer contributes or how much any Employer contributes. The allocation of Matching Contributions under this Section 3.03(A)(5) also applies to the allocation of any forfeiture attributable to Matching Contributions and which the Plan allocates to Participants.

 

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(B)  Regular Matching Contributions. If the Employer in its Adoption Agreement elects to make Matching Contributions, such contributions are Regular Matching Contributions unless: (i) the Employer in its Adoption Agreement elects to treat some or  all  Matching  Contributions  as  a  Plan-Designated  QMAC under Section 3.03(C)(1); or (ii) the Employer makes an Operational QMAC under Section 3.03(C)(2).

 

(1) Separate Account. The Plan Administrator will establish a separate Regular Matching Contribution Account for each Participant who receives an allocation of Regular Matching Contributions in accordance with Section 7.04(A)(1).

 

(C)  QMAC. The provisions of this Section 3.03(C) apply to QMAC contributions.

 

(1)   Plan-Designated QMAC. The Employer in its 401(k) Plan Adoption Agreement will elect whether or not to treat some or all Matching Contributions as a QMAC ("Plan-Designated QMAC"). If the Employer elects any Plan-Designated QMAC, the Employer in its Adoption Agreement will elect whether to allocate the QMAC to all Participants or only to NHCE Participants.    The    Plan    Administrator    will    allocate    a Plan-Designated QMAC only to those Participants who have satisfied eligibility conditions under Article II to receive Matching Contributions (or if applicable, to receive QMACs) and who have satisfied any allocation conditions under Section 3.06 the Employer has elected in the Adoption Agreement as applicable to QMACs.

 

(2)   Operational QMAC. The Employer, to facilitate the Plan  Administrator's correction of  test  failures  under  Section 4.10, (or to lessen the degree of such failures), but only if the Plan  is  using  Current  Year  Testing,  also  may  make Discretionary Matching Contributions as QMACs to the Plan ("Operational QMAC"), irrespective of whether the Employer in its Adoption Agreement has elected to provide for any Matching Contributions or Plan-Designated QMACs. The Plan Administrator, in its discretion, will allocate the Operational QMAC, but will limit the allocation of any Operational QMAC only to some or all NHCEs who are ADP Participants or ACP Participants under Sections 4.11(A) and (B). The Plan Administrator may allocate an Operational QMAC to any such NHCE Participants who are eligible to make (and who actually make)  Elective  Deferrals  or  Employee  Contributions  even  if such Participants have not satisfied any eligibility conditions under Article II applicable to Matching Contributions (including QMACs) or have not satisfied any allocation conditions under Section 3.06 applicable to Matching Contributions (or to QMACs). Where the Plan Administrator disaggregates the Plan for coverage and for nondiscrimination testing under the "otherwise  excludible  employees"  rule  described  in  Section 4.06(C), the Plan Administrator also may limit the QMAC allocation to those NHCEs in any disaggregated plan which actually is subject to ADP and ACP testing (because there are HCEs in that disaggregated plan).

 

(3) Separate Account. The Plan Administrator will establish a separate QMAC Account for each Participant who receives an allocation of QMACs in accordance with Section 7.04(A)(1).

 

(D)  Matching  Catch-Up  Deferrals.  The  Employer  in  its 401(k) Plan Adoption Agreement must elect whether or not to

match  any  Catch-Up  Deferrals if  the  Plan  permits  Catch-Up Deferrals. The Employer's election to match Catch-Up Deferrals will  apply  to  all  Matching  Contributions  or  will  specify  the Fixed Matching Contributions or Discretionary Matching Contributions  which  apply  to  the  Catch-Up  Deferrals. Regardless of the Employer's Adoption Agreement election, in a Safe Harbor 401(k) Plan, the Plan will apply the Basic Matching Contribution or Enhanced Matching Contribution to Catch-Up Deferrals and if the Plan will satisfy the ACP test safe harbor under Section 3.05(G), the Employer will apply any Additional Matching Contribution to Catch-Up Deferrals.

 

(E) Targeting  Limitations.  Matching  Contributions,  for nondiscrimination testing purposes, are subject to the targeting limitations in Section 4.10(D). The Employer will not make an Operational QMAC in an amount which exceeds the targeting limitations.

 

3.04 NONELECTIVE/EMPLOYER CONTRIBUTIONS. If the Employer elects to provide for Nonelective Contributions to a Profit Sharing Plan or 401(k) Plan (or if Section 3.04(C)(2) applies), or the Plan is a Money Purchase Pension Plan, the Plan Administrator will apply the provisions of this Section 3.04.

 

(A) Amount and Type. The Employer in its Adoption Agreement must elect the type and amount of Nonelective Contributions or other Employer Contributions.

 

(1) Discretionary  Nonelective  Contribution.  The Employer in its Adoption Agreement may elect to make Discretionary Nonelective Contributions.

 

(2) Fixed    Nonelective    or    other    Employer Contributions. The Employer in its Adoption Agreement may elect to make Fixed Nonelective Contributions or Money Purchase  Pension  Plan  Contributions.  The  Employer  must specify the time period to which any fixed contribution formula will apply (which is deemed to be the Plan Year if the Employer does not so specify) and must elect the allocation method which may  be  the  same  as  the  contribution  formula  or  may  be  a different allocation method under Section 3.04(B).

 

(a) Cash value of unused paid time off. The Employer in its Adoption Agreement may elect to make a Fixed Nonelective Contribution on behalf of each Participant who participates in the Employer's Paid Time Off Plan. Under this provision,   provided  such   amounts   are   Compensation   for purposes of Nonelective Contributions (including Post-Severance Compensation as applicable), the Employer will make a Nonelective Contribution in an amount equal to the cash equivalent of each Participant's unused paid time off, as the Employer determines such amount, at the end of the Plan Year or other period determined by the Employer on a uniform and nondiscriminatory basis. The contributions described in this Section 3.04(A)(2)(a) are Fixed Nonelective Contributions for all purposes under the Plan, including the allocation conditions described in Section 3.06(B) and (C), and the Vesting provisions described in Section 5.03.

 

(3)   Prevailing Wage Contribution. The Employer in its Nonstandardized Plan or Volume Submitter Plan may elect to make fixed Employer Contributions pursuant to a Prevailing Wage Contract. In such event, the Employer's Prevailing Wage

 

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Contributions will be made in accordance with the Prevailing Wage Contract, based on hourly rate, employment category, employment  classification  and  such  other  factors  as  such contract  specifies.  The  Employer  in  its  Adoption  Agreement must elect whether to offset the Employer Contributions (which are not Prevailing Wage Contributions) to this Plan or to another Employer plan, by the amount of the Participant's Prevailing Wage Contributions. To offset any Employer Contribution, the Prevailing  Wage  Contribution  must  comply  with  any distribution restriction under Section 6.01(C)(4) otherwise applicable to the Employer Contribution being offset and the Plan Administrator must account for the Prevailing Wage Contribution accordingly. See Section 5.03(E) regarding vesting of Prevailing Wage Contributions.

 

(4) Participating Employers. If any  Participating Employers contribute Nonelective Contributions or other Employer  Contributions  to  the  Plan,  the  Employer  in  its Adoption Agreement must elect: (a) whether each Participating Employer will be subject to the same or different Nonelective/Employer   Contribution   formulas  under   Section 3.04(A) and allocation methods under Section 3.04(B) than the Signatory Employer; and (b) whether, under Section 3.04(B), the Plan Administrator will allocate Nonelective/Employer Contributions only to Participants directly employed by the contributing Employer or to all Participants regardless of which Employer contributes or how much any Employer contributes. The  allocation  of  Nonelective/Employer  Contributions  under this Section 3.04(A)(4) also applies to the allocation of any forfeiture  attributable  to  Nonelective/Employer  Contributions and which the Plan allocates to Participants.

 

(B) Method of Allocation. The Employer in its Adoption Agreement must specify the method of allocating Nonelective Contributions or other Employer Contributions to the Trust. The Plan Administrator will apply this Section 3.04(B) by including in the allocation only those Participants who have satisfied the Plan's   allocation   conditions   under   Section   3.06,   if   any, applicable to the contribution. The Plan Administrator, in allocating a contribution under any allocation formula which is based  in  whole  or  in  part  on  Compensation,  will  take  into account  Compensation  under  Section  1.11  as  the  Employer elects in its Adoption Agreement and only will take into account the Compensation of the Participants entitled to an allocation. In addition, if the Employer has elected in its Adoption Agreement to define allocation Compensation over a time period which is less than a full Plan Year, the Plan Administrator will apply the allocation methods in this Section 3.04(B) based on Participant Compensation within the relevant time period.

 

(1)  Pro rata allocation formula. The Employer in its Adoption Agreement may elect a pro rata allocation formula. Under a pro rata allocation formula, the Plan Administrator will allocate the Employer Contributions for a Plan Year in the same ratio that each Participant's Compensation for the Plan Year (or other applicable period) bears to the total Compensation of all Participants for the Plan Year (or other applicable period).

 

(2) Permitted  disparity  allocation  formula.  The Employer in its Adoption Agreement may elect a two-tiered or a four-tiered permitted disparity formula, providing allocations described in (a) or (b) below, respectively. The Employer also may  elect  a  two-

tiered  permitted  disparity  formula  which changes to four-tiered in any Plan Year in which the Plan is top-heavy.

 

(a)   Two-tiered.

 

(i)  Tier one. Under the first tier, the Plan Administrator will allocate the Employer Contributions for a Plan Year in the same ratio that each Participant's Compensation plus Excess Compensation (as the Employer defines that term in its Adoption Agreement) for the Plan Year bears to the total Compensation plus Excess Compensation of all Participants for the Plan Year. The allocation under this first tier, as a percentage of each Participant's Compensation plus Excess Compensation, must  not  exceed  the  applicable  percentage  (5.7%,  5.4%,  or 4.3%) listed under Section 3.04(B)(2)(c).

 

(ii)  Tier two. Under the second tier, the Plan Administrator will allocate any remaining Employer Contributions for a Plan Year in the same ratio that each Participant's Compensation for the Plan Year bears to the total Compensation of all Participants for the Plan Year.

 

(b)   Four-tiered.

 

(i)  Tier one. Under the first tier, the Plan Administrator will allocate the Employer Contributions for a Plan Year in the same ratio that each Participant's Compensation for the Plan Year bears to the total Compensation of all Participants for the Plan Year, but not exceeding 3% of each Participant's Compensation. Solely for purposes of this first tier allocation, a "Participant" means, in addition to any Participant who satisfies the allocation conditions of Section 3.06 for the Plan Year, any other Participant entitled to a Top-Heavy Minimum Allocation.

 

(ii)  Tier two. Under the second tier, the Plan Administrator will allocate the Employer Contributions for a Plan Year in the same ratio that each Participant's Excess Compensation  (as   the  Employer  defines  that  term  in  its Adoption Agreement) for the Plan Year bears to the total Excess Compensation of all Participants for the Plan Year, but not exceeding 3% of each Participant's Excess Compensation.

 

(iii) Tier three. Under the third tier, the Plan Administrator will allocate the Employer Contributions for a Plan Year in the same ratio that each Participant's Compensation plus Excess Compensation for the Plan Year bears to the total Compensation plus Excess Compensation of all Participants for the  Plan  Year.  The  allocation  under  this  third  tier,  as  a percentage of each Participant's Compensation plus Excess Compensation,  must  not  exceed  the  applicable  percentage (2.7%, 2.4%, or 1.3%) listed under Section 3.04(B)(2)(c).

 

(iv) Tier four. Under the fourth tier, the Plan Administrator will allocate any remaining Employer Contributions for a Plan Year in the same ratio that each Participant's Compensation for the Plan Year bears to the total Compensation of all Participants for the Plan Year.

 

 

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Defined Contribution Plan

 

 

(c)   Maximum disparity table. For purposes of the permitted  disparity  allocation  formulas  under  this  Section 3.04(B)(2), the applicable percentage is:

 

Integration level %

 

Applicable % for

Applicable % for

of    Taxable    Wage

 

2-tiered formula

4-tiered formula

Base

 

 

 

 

 

 

 

100%

 

5.7%

2.7%

 

 

 

 

More than 80% but less than 100%

 

5.4%

2.4%

 

 

 

 

More than 20% (but not less than $10,001) and not more than 80%

 

4.3%

1.3%

 

 

 

 

20% (or $10,000, if greater) or less

 

5.7%

2.7%

 

For this purpose, the Taxable Wage Base is the contribution and benefit base under Section 230 of the Social Security Act in effect at the beginning of the Plan Year.  The integration level is the uniform amount specified in the Employer’s Adoption Agreement.

 

(d)   Overall permitted disparity limits.

 

(i)   Annual overall permitted disparity limit. Notwithstanding Sections 3.04(B)(2)(a) and (b), for any Plan Year  the  Plan  benefits  any  Participant  who  benefits  under another qualified plan or under a simplified employee pension plan (as defined in Code §408(k)) maintained by the Employer that provides for permitted disparity (or imputes disparity), the Plan Administrator will allocate Employer Contributions to the Account of each Participant in the same ratio that each Participant's Compensation bears to the total Compensation of all Participants for the Plan Year.

 

(ii) Cumulative permitted disparity limit. Effective for Plan Years beginning after December 31, 1994, the cumulative permitted disparity limit for a Participant is 35 total cumulative  permitted  disparity  years.  "Total  cumulative permitted disparity years" means the number of years credited to the Participant for allocation or accrual purposes under the Plan, any other qualified plan or simplified employee pension plan (whether or not terminated) ever maintained by the Employer. For purposes of determining the Participant's cumulative permitted disparity limit, the Plan Administrator will treat all years ending in the same calendar year as the same year. If the Participant has not benefited under a Defined Benefit Plan or under a target benefit plan of the Employer for any year beginning after December 31, 1993, the Participant does not have a cumulative permitted disparity limit.

 

For  purposes  of  this  Section  3.04(B)(2)(d),  a Participant "benefits" under a plan for any Plan Year during which the Participant receives, or is deemed to receive, a contribution  allocation   in accordance   with   Treas.  Reg. §1.410(b)-3(a).

 

(e)   Pro-ration of integration level. In the event that the Plan Year is less than 12 months and the Plan Administrator will allocate the Employer Contribution based on Compensation for the short Plan Year, the Plan Administrator will pro rate the integration level based on the number of months in the short Plan Year. The Plan Administrator will not pro rate the integration level in the case of: (i) a Participant who participates in the Plan for less than the entire 12 month Plan Year and whose allocation is based on Participating Compensation; (ii) a new Plan established mid-Plan Year, but with an Effective Date which is as of the beginning of the Plan Year; or (iii) a terminating Plan which bases allocations on Compensation through the effective date of the termination, but where the Plan Year continues for the balance of the full 12 month Plan Year.

 

(3)   Classifications allocation formula. The Employer in its Nonstandardized Plan or Volume Submitter Plan may elect to specify classifications of Participants to whom the Plan Administrator will allocate any Employer Contribution.

 

(a)   Classifications.  The  Employer  may   elect  to specify any number of classifications and a classification may consist of any number of Participants. The Employer also may elect to put each Participant in his/her own classification.

 

(b) Allocation of  contribution  within classifications. The Plan Administrator will apportion the Employer Contribution for a Plan Year to the classifications as the Employer designates in writing at the time that the Employer makes the contribution. If there is more than one Participant in a classification, the Plan Administrator will allocate the Employer Contribution for the Plan Year within each classification as the Employer elects in its Adoption Agreement which may be: (i) in the same ratio that each Participant's Compensation for the Plan Year bears to the total Plan Year Compensation for all Participants within the same classification (pro rata); or (ii) the same dollar amount to each Participant within a classification.

 

(c)  Shifting  classifications  within  the  Plan Year. If a Participant during a Plan Year shifts from one classification to another, the Plan Administrator will apportion the Participant's allocation for each classification pro rata based on the Participant's Compensation for the part of the Plan Year the Participant was a member of the classification, unless the Employer in Appendix B: (i) specifies apportionment based on the number of months or days a Participant spends in a classification; or (ii) elects that the Employer in a nondiscriminatory manner will direct the Plan Administrator as to which classification the Participant will participate in during that entire Plan Year.

 

(4)   Super-integrated allocation formula. The Employer in its Volume Submitter Plan may elect a super-integrated allocation formula. The Plan Administrator will allocate the Employer Contribution for the Plan Year in accordance with the tiers of priority that the Employer elects in its Adoption Agreement. The Plan Administrator will not allocate to the tier with the next lower priority until the Employer has contributed an amount sufficient to maximize the allocation under the immediately preceding tier.

 

(5)  Age-based allocation formula. The Employer in its Nonstandardized Plan or Volume Submitter Plan may elect an

 

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age-based allocation formula. The Plan Administrator will allocate  the Employer  Contribution  for  the  Plan  Year  in  the same ratio that each Participant's Benefit Factor for the Plan Year bears to the sum of the Benefit Factors of all Participants for the Plan Year. As such, the total employer contribution will be allocated to each Participant sharing in the allocation such that the equivalent benefit accrual rate for each such Participant is identical.

 

(a) Definition of Benefit Factor. A Participant's Benefit Factor is his/her Compensation for the Plan Year multiplied by the Participant's Actuarial Factor.

 

(b)  Definition of Actuarial Factor. A Participant's Actuarial Factor is the factor that the Plan Administrator establishes based on the interest rate and mortality table the Employer elects in its Adoption Agreement. If the Employer elects to use the UP-1984 table, a Participant's Actuarial Factor is  the  factor  in  Table  I  of  Appendix  D  to  the  Adoption Agreement or is the product of the factors in Tables I and II of Appendix D to the Adoption Agreement if the Plan's Normal Retirement Age is not age 65. If the Employer in its Adoption Agreement elects to use a table other than the UP-1984 table, the Plan  Administrator  will  determine  a  Participant's  Actuarial Factor  in  accordance  with  the  designated  table  (which  the Employer will attach to the Adoption Agreement as a substituted Appendix D) and the Adoption Agreement elected interest rate.

 

(6)   Uniform points allocation formula. The Employer in its Nonstandardized Plan or Volume Submitter Plan may elect a uniform points allocation formula. The Plan Administrator will allocate any Employer Contribution for a Plan Year in the same ratio that each Participant's points bear to the total points of all Participants   for   the   Plan   Year.   The   Plan   Administrator determines a Participant's points in accordance with the Employer's Adoption Agreement elections under which the Employer will elect to define points based on Years of Service, Compensation and/or age.

 

(7) Incorporation of fixed or Prevailing Wage Contribution formula. The Employer in its Adoption Agreement may elect to allocate Employer Contributions in accordance   with   the   Plan's   fixed   Employer   Contribution formula. In such event, the Plan Administrator will allocate the Employer Contributions for a Plan Year in accordance with the Fixed Nonelective or other Employer Contribution formula or in accordance with the Prevailing Wage Contribution formula the Employer has elected under Sections 3.04(A)(2) or (3).

 

(8) Money Purchase allocation formula. The Plan Administrator will allocate the Employer Contributions for a Plan Year to its Money Purchase Pension Plan as provided in the Employer's Adoption Agreement.

 

(C)  QNEC. The provisions of this Section 3.04(C) apply to QNEC contributions.

 

(1)   Plan-Designated QNEC. The Employer in its 401(k) Plan Adoption Agreement will elect whether or not to treat some or all Nonelective Contributions as a QNEC ("Plan-Designated QNEC"). If the Employer elects any Plan-Designated QNECs, the Employer in its Adoption Agreement will elect whether to

allocate a Plan-Designated QNEC to all Participants or only to NHCE Participants and the Employer in its Adoption Agreement also must elect a QNEC allocation method as follows: (a) pro rata in relation to Compensation; (b) in the same dollar amount without regard to Compensation (flat dollar); (c) under the reverse allocation method; or (d) under any other method subject to the testing limitations of Section 3.04(C)(5). The Plan Administrator   will   allocate   a   QNEC   under   this   Section

3.04(C)(1) only to those Participants who have satisfied eligibility conditions under Article II to receive Nonelective Contributions (or if applicable, to QNECs) and who have satisfied any allocation conditions under Section 3.06 the Employer has elected in the Adoption Agreement as applicable to QNECs.

 

(2)   Operational QNEC. The Employer, to facilitate the Plan  Administrator's correction of  test  failures  under  Section 4.10, (or to lessen the degree of such failures), but only if the Plan  is  using  Current  Year  Testing,  also  may  make Discretionary Nonelective Contributions as QNECs to the Plan ("Operational QNEC"), irrespective of whether the Employer in its Adoption Agreement has elected to provide for any Nonelective Contributions or Plan-Designated QNECs. The Plan Administrator, in its discretion, will allocate the Operational QNEC, but will limit the allocation of any Operational QNEC only   to   some   or   all   NHCE   Participants   who   are   ADP Participants  or ACP  Participants  under  Sections  4.11(A)  and (B). The Plan Administrator operationally must elect whether to allocate an Operational QNEC to NHCE ADP Participants: (a) pro rata in relation to Compensation; (b) in the same dollar amount without regard to Compensation (flat dollar); (c) under the reverse allocation method; or (d) under any other method; provided, that any QNEC allocation is subject to the limitations of Section 3.04(C)(5). The Plan Administrator may allocate an Operational  QNEC  to  any  NHCE  ADP  or  ACP  Participants even if such Participants have not satisfied any eligibility conditions under Article II applicable to Nonelective Contributions (including QNECs) or have not satisfied any allocation conditions under Section 3.06 applicable to Nonelective Contributions (or to QNECs). Where the Plan Administrator disaggregates the Plan for coverage and for nondiscrimination testing under the "otherwise excludible employees" rule described in Section 4.06(C), the Plan Administrator also may limit the QNEC allocation to those NHCEs in any disaggregated "plan" which actually is subject to ADP and ACP testing (because there are HCEs in that disaggregated plan), The Employer may designate all or any part of its Prevailing Wage Contribution as a QNEC, provided that the Prevailing Wage Contribution qualifies as a QNEC.

 

(3)   Reverse QNEC allocation. Under the reverse QNEC allocation method, the Plan Administrator (subject to Section 3.06 if applicable), will allocate a QNEC first to the NHCE Participant(s) with the lowest Compensation for the Plan Year in an amount not exceeding the Annual Additions Limit for each Participant, with any remaining amounts allocated to the next highest paid NHCE Participant(s) not exceeding his/her Annual Additions Limit and continuing in this manner until the Plan Administrator has fully allocated the QNEC.

 

(4) Separate Account. The Plan Administrator will establish a separate QNEC Account for each Participant who receives an allocation of QNECs in accordance with Section 7.04(A)(1).

 

 

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(5)   Anti-conditioning and targeting. The Employer in its Adoption Agreement and the Plan Administrator in operation may  not  condition  the  allocation  of  any  QNEC  under  this Section 3.04(C), on whether a Participant has made Elective Deferrals. The nondiscrimination testing of QNECs also is subject to the targeting limitations of Section 4.10(D). The Employer will not make an Operational QNEC in an amount which exceeds the targeting limitations.

 

(6)  Standardized Plan limitation. The Employer in its Standardized Plan may not elect a reverse QNEC allocation method or any similar QNEC allocation method even if such allocation would comply with Section 3.04(C)(5).

 

(D)  Qualified Replacement Plan. The Employer may establish or  maintain  this  Plan  as  a  qualified  replacement  plan  as described in Code §4980 under which the Plan may receive a Transfer from a terminating qualified plan the Employer also maintains. The Plan Administrator will credit the transferred amounts to a suspense account under the Plan and thereafter the Plan Administrator will allocate the transferred amounts under this Section 3.04(D) in the same manner as the Plan Administrator allocates Employer Nonelective Contributions.

 

3.05 SAFE  HARBOR  401(k)  CONTRIBUTIONS.  The Employer in its 401(k) Plan Adoption Agreement may elect to apply to its Plan the safe harbor provisions of this Section 3.05.

 

(A)  Prior Election and Notice/12 Month Plan Year. Except as otherwise provided in this Plan an Employer: (i) prior to beginning of the Plan Year to which the safe harbor provisions apply, must elect the safe harbor plan provisions of this Section 3.05; (ii) prior to the beginning of the Plan Year to which the safe harbor provisions apply, must satisfy the applicable notice requirements; and (iii) must apply the safe harbor provisions for the entire 12 month safe harbor Plan Year.

 

(1)   Short Plan Year. An Employer's Plan may be a Safe Harbor 401(k) Plan in a short Plan Year: (a) as provided in Sections 3.05(I)(3) or (5), relating to the initial safe harbor Plan Year; (b) if the Employer creates a short Plan Year by changing its Plan Year, provided that the Employer maintains the Plan as a Safe Harbor 401(k) Plan in the Plan Years both before and after   the   short   Plan   Year   as   described   in   Treas.   Reg. §1.401(k)-3(e)(3); or (c) if the short Plan Year is the result of the Employer's termination of the Plan under Section 3.05(I)(6).

 

(B)  Effect/Remaining Terms/Testing Status. The provisions of this Section 3.05 apply to an electing Employer notwithstanding any contrary provision of the Plan and all other remaining Plan terms continue to apply to the Employer's Safe Harbor  401(k)  Plan.  An  Employer  which  elects  and operationally satisfies the safe harbor provisions of this Section 3.05  is  not  subject  to  the  nondiscrimination  provisions  of Section 4.10(B) (ADP test). An electing Employer which provides for an Enhanced Matching Contribution under Section 3.05(E)(6)  or  for  Additional  Matching  Contributions  under Section 3.05(F) is subject to the nondiscrimination provisions of Section 4.10(C) (ACP test), unless the Employer elects in its Adoption   Agreement   to  apply   the   ACP   test   safe   harbor described in Section 3.05(G). If the Plan is a Safe Harbor 401(k) Plan, for purposes of testing in future (non-safe harbor) Plan Years, the Plan in the safe harbor Plan Year is deemed to be using Current Year Testing as to the

ADP test and is deemed to be using Current Year Testing for the ACP test if the Plan in the safe harbor Plan Year satisfies the ACP test safe harbor. If a Safe Harbor 401(k) Plan is subject to Sections 3.05(I)(1) or (2), the Plan in such Plan Year is deemed to be using Current Year Testing for both the ADP and ACP tests.

 

(C) Compensation for Allocation. In allocating Safe Harbor Contributions   and   Additional   Matching   Contributions   that satisfy the ACP test safe harbor under Section 3.05(G) and for Elective   Deferral   allocation   under   this   Section   3.05,   the following provisions apply:

 

(1)   Safe Harbor and Additional Matching allocation. For purposes of allocating the Employer's Safe Harbor Contributions and ACP test safe harbor Additional Matching Contributions, if any, Compensation is limited as described in Section 1.11(E) and Employer must elect under its Adoption Agreement a nondiscriminatory definition of Compensation as described in Section 1.11(F). The Employer in its Adoption Agreement may not elect to limit NHCE Compensation to a specified  dollar  amount,  except  as  required  under  Section 1.11(E).

 

(2)  Deferral allocation. An Employer in its Adoption Agreement may elect to limit the type of Compensation from which a Participant may make an Elective Deferral to any reasonable definition. The Employer in its Adoption Agreement also may elect to limit the amount of a Participant's Elective Deferrals to a whole percentage of Compensation or to a whole dollar amount, provided each Eligible NHCE Participant may make Elective Deferrals in an amount sufficient to receive the maximum Matching Contribution, if any, available under the Plan and may defer any lesser amount. However, a Participant may not make Elective Deferrals in the event that the Participant is suspended from doing so under Section 6.07(A)(2), relating to hardship distributions or to the extent that the allocation would exceed  a  Participant's  Annual  Additions  Limit  in  Section 4.05(B) or the maximum Deferral Limit in Section 4.10(A). If the Plan permits Roth Deferrals in addition to Pre-Tax Deferrals, Elective Deferrals for purposes of Section 3.05 includes both Roth Deferrals and Pre-Tax Deferrals.

 

(D) "Early"  Elective  Deferrals/Delay  of  Safe  Harbor Contribution. If the Employer in its Adoption Agreement elects any   age   and   service   eligibility   requirements   for   Elective Deferrals that are less than age 21 and one Year of Service (with one Year of Service being defined as completion of 1,000 Hours of Service during the relevant Eligibility Computation Period), the Employer in its Adoption Agreement may elect to apply the OEE rule described in Section 4.06(C) to the Safe Harbor Contributions. If the Employer so elects, then (1) Only those Participants who are Includible Employees will receive the Safe Harbor Contributions; (2) the disaggregated plan which covers the Includible Employees is a Safe Harbor 401(k) Plan under this Section 3.05; (3) the Plan Administrator will perform the ADP (and ACP) tests as necessary for the disaggregated plan which covers the Otherwise Excludible Employees, as provided in  Section   4.06(B)(1).   If   the   Employer   in   its   Adoption Agreement has elected "Participating Compensation" for allocating Nonelective Contributions or Matching Contributions (as applicable), the Plan Administrator, in allocating the Safe Harbor Contribution for the Plan Year in which a Participant crosses over to the Includible Employees group, will count

 

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Compensation and Elective Deferrals only on and following the Cross-Over  Date.  See  Section  4.06(C)  for  the  definitions  of "OEE rule," "Includible Employees," "Otherwise Excludible Employees," and "Cross-Over Date." Nothing in this Section 3.05(D) affects the obligation of the Employer under Article X in the event that the Plan is top-heavy, to provide a Top-Heavy Minimum   Allocation   for   Non-Key   Employee   Participants. Under this Section 3.05(D), eligibility for Additional Matching Contributions and for Nonelective Contributions which are not Safe Harbor Nonelective Contributions is controlled by the Employer's Adoption Agreement elections and is not necessarily limited to age 21 and one Year of Service as is the case for Safe Harbor Contributions. However, as to ACP test safe harbor treatment for Additional Matching Contributions, see Section 3.05(F)(2).

 

(E)  Safe Harbor Contributions/ADP Test Safe Harbor. An Employer which elects under this Section 3.05(E) to apply the safe harbor provisions, must satisfy the ADP test safe harbor contribution requirement under either Code §401(k)(12) or Code §401(k)(13) by making a Safe Harbor Contribution to the Plan. Except as otherwise provided in this Section 3.05, the Employer must make its Safe Harbor Contributions (and any Additional Matching Contributions which will satisfy the ACP test safe harbor), no later than twelve months after the end of the Plan Year to which such contributions are allocated. If the Employer satisfies this Section 3.05(E) and the remaining applicable provisions of Section 3.05, Elective Deferrals are not subject to nondiscrimination testing under Section 4.10(B) (ADP test). The Employer  in  its  Adoption  Agreement  may  elect  to  apply forfeitures toward satisfaction of the Employer's required Safe Harbor Contribution.

 

(1)  Definition of Safe Harbor Contribution. A Safe Harbor Contribution is a Safe Harbor Nonelective Contribution or a Safe Harbor Matching Contribution as the Employer elects in its Adoption Agreement and includes a QACA Safe Harbor Contribution.

 

(2) Definition    of    Safe    Harbor    Nonelective Contribution. A Safe Harbor Nonelective Contribution is a Fixed  Nonelective  Contribution  in  an  amount  the  Employer elects in its Adoption Agreement, which must equal at least 3% of each Participant's Compensation unless the Employer elects to limit Safe Harbor Nonelective Contributions to NHCEs under Section 3.05(E)(9) or unless Section 3.05(D) applies. A Safe Harbor Nonelective Contribution is a QNEC, except that the Employer  in  its  Adoption  Agreement  may  elect  to  apply  a QACA vesting schedule to a Safe Harbor Nonelective Contribution the Employer makes to a QACA.

 

(3)   Definition of Safe Harbor Matching Contribution. A Safe Harbor Matching Contribution is a Basic Matching Contribution, a QACA Basic Matching Contribution, or an Enhanced  Matching  Contribution.  Under  a  Safe  Harbor Matching Contribution an HCE may not receive a greater rate of match at any level of Elective Deferrals than any NHCE. A Safe Harbor Matching Contribution is a QMAC, except that the Employer  in  its  Adoption  Agreement  may  elect  to  apply  a QACA vesting schedule to a QACA Basic Matching Contribution or to an Enhanced Matching Contribution the Employer makes to a QACA.

 

(4)   Definition of Basic Matching Contribution. A Basic Matching Contribution is a Fixed Matching Contribution equal to  100%  of  a  Participant's  Elective  Deferrals  which  do  not exceed 3% of Compensation, plus 50% of Elective Deferrals which exceed 3%, but do not exceed 5% of Compensation.

 

(5)   Definition of QACA Basic Matching Contribution. A QACA Basic Matching Contribution is a Fixed Matching Contribution equal to 100% of a Participant's Elective Deferrals which do not exceed 1% of Compensation, plus 50% of Elective Deferrals which exceed 1%, but do not exceed 6% of Compensation.

 

(6)   Definition of Enhanced Matching Contribution. An Enhanced Matching Contribution is a Fixed Matching Contribution   made   in   accordance   with   any   formula   the Employer elects in its Adoption Agreement under which: (a) at any rate of Elective Deferrals, a Participant receives a Matching Contribution which is at least equal to the match the Participant would receive under the Basic Matching Contribution formula or under the QACA Basic Matching Contribution formula, as applicable; and (b) the rate of match does not increase as the rate of Elective Deferrals increases.

 

(7)   Time   period   for   computing/contributing   Safe Harbor Matching Contribution.

 

(a) Computation. The Employer in its Adoption Agreement must elect the applicable time period for computing the Employer's Safe Harbor Matching Contributions. If the Employer fails to so elect, the Employer is deemed to have

elected to compute its Safe Harbor Matching Contribution based on the Plan Year.

 

(b)   Contribution deadline. If the Employer elects to compute its Safe Harbor Matching Contribution based on a time period which is less than the Plan Year, the Employer must contribute the Safe Harbor Matching Contributions to the Plan no later than the end of the Plan Year quarter which follows the quarter in which the Elective Deferral that gave rise to the Safe Harbor Matching Contribution was made. If the Employer fails to  contribute  by  the  foregoing  deadline,  the  Employer  will correct the operational failure by contributing the Safe Harbor Matching Contribution as soon as is possible and also will contribute Earnings on the Contribution. See Section 7.08. If the time period for computing the Safe Harbor Matching Contribution is the Plan Year, the Employer must contribute the Safe Harbor Matching Contribution to the Plan no later than twelve months after the end of the Plan Year to which the Safe Harbor Contribution is allocated.

 

(8)   No  allocation  conditions.  The  Plan  Administrator must allocate the Employer's Safe Harbor Contribution without regard to the Section 3.06 allocation conditions, if any, the Employer has elected as to non-Safe Harbor Contributions.

 

(9)   NHCEs must receive allocation; further election of allocation group. Subject to Section 3.05(D), the Plan Administrator must allocate the Safe Harbor Contribution to NHCE Participants, which for purposes of Section 3.05 means NHCEs who are eligible to make Elective Deferrals. The Employer in its Adoption Agreement, must elect whether to

 

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allocate Safe Harbor Contributions: (a) to all Participants; (b) only to NHCE Participants; or (c) to NHCE Participants and to designated HCE Participants. The Employer in its Adoption Agreement also may elect to exclude Collective Bargaining Employees from the allocation of Safe Harbor Contributions.

 

(10) 100%       vesting/distribution       restrictions.       A Participant's Account Balance attributable to Safe Harbor Contributions: (a) at all times is 100% Vested, unless the Employer maintains a QACA and elects in its Adoption Agreement to apply a QACA vesting schedule; and (b) is subject to    the    distribution    restrictions    described    in    Section

6.01(C)(4)(b).

 

(11) Possible application of ACP test. If the Plan's sole Matching Contribution is a Basic Matching Contribution or a QACA Basic Matching Contribution, the Basic Matching Contribution or QACA Basic Matching Contribution is not subject to nondiscrimination testing under Section 4.10(C) (ACP test). The Employer in its Adoption Agreement must elect whether to satisfy the ACP test safe harbor amount limitations under Section 3.05(G) with respect to the Employer's Enhanced Matching Contributions or to test its Enhanced Matching Contributions under Section 4.10(C) (ACP test). The Employer in its Adoption Agreement may elect to test Enhanced Matching Contributions using Current Year Testing or Prior Year Testing.

 

(12) Application to other allocations/testing. Except as the Employer otherwise elects in Appendix B and as described below as to permitted disparity, any Safe Harbor Nonelective Contributions   will   be   applied   toward   (offset)   any   other allocation to a Participant of a non-Safe Harbor Nonelective Contribution. An Employer electing to apply the general nondiscrimination test under Section 4.06(C), may include Safe Harbor Nonelective Contributions in applying the general test. An Employer which has elected in its Adoption Agreement to apply permitted disparity in allocating the Employer's Nonelective Contributions made in addition to Safe Harbor Nonelective Contributions may not include within the permitted disparity formula allocation any of the Employer's Safe Harbor Nonelective Contributions.

 

(13) Contribution to another plan. An Employer in its Adoption Agreement may elect to make the Safe Harbor Contribution to another Defined Contribution Plan the Employer maintains provided: (a) this Plan and the other plan have the same Plan Years; (b) each Participant eligible for Safe Harbor Contributions under this Plan is eligible to participate in the other plan; and (c) the other plan provides that 100% vesting and the distribution restrictions under Section 6.01(C)(4)(b) apply to the Safe Harbor Contribution Account maintained within the other plan. An Employer cannot apply any Safe Harbor Contributions to satisfy the 401(k) safe harbor requirements in more than one plan.

 

(F)  Additional Matching Contributions. The Employer in its Adoption Agreement may elect to make Additional Matching Contributions to its safe harbor Plan under this Section 3.05(F).

 

(1)  Definition of Additional Matching Contributions. Additional Matching Contributions are Fixed or Discretionary Matching Contributions ("Fixed Additional Matching Contributions" or "Discretionary Additional Matching

Contributions") the Employer makes to its Safe Harbor 401(k) Plan (including a Safe Harbor 401(k) Plan the Employer elected into during the Plan Year under Section 3.05(I)(1)) and are not Safe Harbor Matching Contributions. Additional Matching Contributions are in addition to whatever type of Safe Harbor Contributions the Employer makes to satisfy the ADP test safe harbor under Section 3.05(E). If the Employer under Section 3.05(I)(1) does not elect into the safe harbor as of a Plan Year, any   Matching   Contributions   for   that   Plan   Year   are   not Additional Matching Contributions and as such cannot qualify for the ACP test safe harbor.

 

(2)   Safe harbor or testing. The Employer in its Adoption Agreement   must   elect   whether   to   subject   the   Additional Matching  Contributions  to  the  ACP  test  safe  harbor requirements of Section 3.05(G), or for the Plan Administrator to test the Additional Matching Contributions (and any Safe Harbor Matching Contribution) for nondiscrimination under Section 4.10(C) (ACP test). The Employer in its Adoption Agreement may elect to test Additional Matching Contributions (and  any  Safe  Harbor  Matching  Contribution)  using  Current Year Testing or Prior Year Testing. See Section 3.05(I)(1)(a) with  regard  to  ACP  testing  Matching  Contributions  in connection with the maybe notice.

 

(3) Eligibility, vesting, allocation conditions and distributions. The Employer must elect in its Adoption Agreement  the  eligibility  conditions,  vesting  schedule, allocation conditions and distribution provisions applicable to the Employer's Additional Matching Contributions. To satisfy the ACP test safe harbor under Section 3.05(G), any allocation conditions the Employer otherwise elects in its Adoption Agreement do not apply to Additional Matching Contributions. However, regardless of whether the Employer elects to treat the Additional Matching Contributions as being subject to the ACP test safe harbor, the Employer may elect: (a) to apply a vesting schedule to the Additional Matching Contributions; and (b) to treat the Additional Matching Contributions Account as not subject    to    the    distribution    restrictions    under    Section 6.01(C)(4)(b). If the Employer wishes to apply the ACP test safe harbor  to  Additional  Matching  Contributions,  the  Employer must not elect eligibility conditions applicable to the Additional Matching Contribution which exceed age 21 and one Year of Service and the Employer must elect eligibility conditions which are the same as it elects for the Safe Harbor Contribution.

 

(4)   Time period for computing/contributing Additional Matching Contributions.

 

(a) Computation. The Employer in its Adoption Agreement must elect the applicable time period for computing the Employer's Additional Matching Contributions. If the Employer fails to so elect, the Employer is deemed to have elected to compute its Additional Matching Contribution based on the Plan Year.

 

(b)   Contribution deadline. This Section 3.05(F)(4)(b) applies if the Employer in its Adoption Agreement elects to apply the ACP test safe harbor under Section 3.05(G) to its Additional Matching Contributions. If the Employer elects to compute its Additional Matching Contribution based on a time period which is less than the Plan Year, the Employer must contribute the Additional Matching Contributions to the Plan no later than the

 

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end of the Plan Year quarter which follows the quarter in which the Elective Deferral that gave rise to the Additional Matching Contribution was made. If the Employer fails to contribute by the foregoing deadline, the Employer will correct the operational failure by contributing the Additional Matching Contribution as soon as is possible and will also contribute Earnings on the Contribution. See Section 7.08. If the Employer elects to apply the ACP test safe harbor and elects the Plan Year as the time period for computing the Additional Matching Contribution, the Employer must contribute the Additional  Matching  Contribution  to  the  Plan  no  later  than twelve months after the end of the Plan Year to which the Additional Matching Contribution is allocated.

 

(G) ACP test safe harbor. The Employer in its Adoption Agreement will elect whether (i) to apply the amount limitations under this Section 3.05(G) in order to comply with the ACP test safe harbor as described in this Section 3.05(G); or (ii) the Plan Administrator must test all Matching Contributions under the ACP test unless the Plan's only Matching Contribution is a Basic Matching  Contribution  or  a  QACA  Basic  Matching Contribution. If the Employer elects to test, the Employer also will elect whether to perform the ACP test using Current Year or Prior Year Testing.

 

(1)   Amount limitations. Under the ACP test safe harbor: (a) the Employer may not make Matching Contributions as to a Participant's Elective Deferrals which exceed 6% of the Participant's Plan Year Compensation; (b) the amount of any Discretionary Additional Matching Contribution allocated to any Participant may not exceed 4% of the Participant's Plan Year Compensation; (c) the rate of Matching Contributions may not increase as the rate of Elective Deferrals increases; and (d) an HCE may not receive a rate of match greater than any NHCE (taking    into    account    HCE    aggregation    under    Section 4.10(C)(6)).

 

(2)   No partial ACP test safe harbor. If the Employer's Plan has more than one Matching Contribution formula, each Matching Contribution formula must satisfy the ACP test safe harbor or the Plan Administrator must test all of the Employer's Matching Contributions together under Section 4.10(C) (ACP test).

 

(3) Employee Contributions. If the Employer in its Adoption Agreement has elected to permit Employee Contributions under the Plan: (a) any Employee Contributions do not satisfy the ACP test safe harbor and the Plan Administrator must test the Employee Contributions under Section 4.10(C) (ACP test) using Current Year Testing unless the Employer elects in its Adoption Agreement to apply Prior Year   Testing;   and   (b)   if   the   Employer   in   its   Adoption Agreement elects to match the Employee Contributions, the Plan Administrator  in  applying  the  6%  amount  limit  in  Section 3.05(G)(1) must aggregate a Participant's Elective Deferrals and Employee Contributions which are subject to the 6% limit.

 

(H)  Safe Harbor Notice. The Plan Administrator must provide a safe harbor notice to each Participant a reasonable period prior to each Plan Year for which the Employer in its Adoption Agreement has elected to apply the safe harbor provisions.

 

(1)   Deemed reasonable notice. The Plan Administrator is deemed to provide timely notice if the Plan Administrator provides the safe harbor notice at least 30 days and not more than 90 days prior to the beginning of the safe harbor Plan Year.

 

(2)   Mid-year notice/new Participant or Plan. If: (a) an Employee becomes eligible to participate in the Plan during a safe harbor Plan Year, but after the Plan Administrator has provided the annual safe harbor notice for that Plan Year; (b) the Employer adopts mid-year a new Safe Harbor 401(k) Plan; or (c) the Employer amends mid-year its existing Profit Sharing Plan to add a 401(k) feature and also elects safe harbor status, the Plan Administrator must provide the safe harbor notice a reasonable period (with 90 days being deemed reasonable) prior to and no later than the Employee's Entry Date. However, if it is not practicable for the Plan Administrator to provide the notice on or before the date an Employee becomes a Participant, then the Plan nonetheless will treat the notice as provided timely if the Plan Administrator provides the notice as soon as practicable after that date and the Participant is permitted to elect to defer from all types of Compensation that may be deferred under the Plan earned beginning on that date.

 

(3) Content. The safe harbor notice must provide comprehensive information regarding the Participants' rights and obligations under the Plan and must be written in a manner calculated to be understood by the average Participant. The Plan Administrator's notice must satisfy the content requirements of Treas. Reg. §1.401(k)-3(d).

 

(4)   Election following notice. A Participant may make or modify  a  Salary  Reduction  Agreement  under  the  Employer's Safe Harbor 401(k) Plan for 30 days following receipt of the safe harbor notice, or if greater, for the period the Plan Administrator specifies in the Salary Reduction Agreement.

 

(5)   Additional QACA notice requirements. If the Plan is a QACA, in addition to the other requirements of this Section 3.05(H),  the  Employer  must  provide  the  initial  QACA  safe harbor  notice  sufficiently  early  so  that  a  Participant  has  a reasonable period after receiving the notice and before the first Automatic Deferral (see Section 3.02(B)(3)(a)(i)) to make a Contrary Election and, as applicable, to make an election as to the investment of his/her Account. In addition, the notice will state: (a) the Automatic Deferral Percentage that will apply in absence of the Participant's Contrary Election; (b) the Participant's right under a Contrary Election to elect not to have any Automatic Deferral made on the Participant's behalf or to elect to make Elective Deferrals in a different amount or percentage of Compensation; and (c) how the Plan will invest the Automatic Deferrals in the event that the Plan permits Participant-Directed  Accounts,  and  the  Participant  does  not make an investment election.

 

(I)   Mid-Year Changes in Safe Harbor Status.

 

(1) Contingent ("maybe") notice and supplemental notice-delayed election of Safe Harbor Nonelective Contributions. The Employer during any Plan Year may elect for its Plan to become a Safe Harbor 401(k) Plan under this Section 3.05(I)(1) for that Plan Year, provided: (i) the Plan is using Current Year Testing; (ii) the Employer elects to satisfy the Safe Harbor Contribution requirement using the Safe Harbor

 

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Nonelective Contribution; (iii) the Employer amends the Plan to add such Safe Harbor Contribution not later than 30 days prior to the end of the Plan Year, computed with regard to the entire Plan Year; and (iv) the Plan Administrator provides a notice ("maybe notice") to Participants prior to the beginning of the Plan Year for which the safe harbor amendment may become effective, that the Employer later may elect to become a Safe Harbor 401(k) Plan for that Plan Year using the Safe Harbor Nonelective Contribution and that if the Employer does so, the Plan Administrator will provide a supplemental notice to Participants at least 30 days prior to the end of that Plan Year informing Participants of the Employer's election to provide the Safe Harbor Nonelective Contribution for that Plan Year. The Employer elects into the safe harbor by timely giving the supplemental notice and by amending the Plan as described above and thereby elects not to be subject to the ADP test, regardless of the Employer's Adoption Agreement Elections. Except as otherwise specified, the Participant notices described in this Section 3.05(I)(1) also must satisfy the requirements applicable to safe harbor notices under Section 3.05(H).

 

(a)   Effect on Additional Matching Contributions. If  the  Employer  gives  a  maybe  notice  under  this  Section 3.05(I)(1), and then gives the supplemental notice electing into the ADP  test  safe  harbor  for  the  Plan  Year,  any  Additional Matching  Contribution  the  Employer  elects  in  its  Adoption Agreement will be subject to the ACP test safe harbor regardless of the Employer's Adoption Agreement Elections, unless one or more Matching Contributions, as described in the Adoption Agreement, fails to satisfy the limitations of Sections 3.05(G)(1) and (2). If the Employer does not give a supplemental notice, or any Matching Contribution fails to satisfy such limitations, any Matching Contributions are not Additional Matching Contributions in that Plan Year and the Plan Administrator will test  all  such  Matching  Contributions  under  Section  4.10(C) (ACP test) using Current Year Testing.

 

(2)  Exiting Safe Harbor Contributions. The Employer may amend its Safe Harbor 401(k) Plan during a Plan Year to reduce or eliminate prospectively, any or all Safe Harbor Matching Contributions or Additional Matching Contributions, or Safe Harbor Nonelective Contributions, provided: (a) the Plan Administrator  provides  a  notice  to  the  Participants  which explains the effect of the amendment, specifies the amendment's Effective Date and informs Participants they will have a reasonable opportunity to modify their Salary Reduction Agreements, and if applicable, Employee Contributions; (b) Participants have a reasonable opportunity and period prior to the Effective Date of the amendment to modify their Salary Reduction Agreements, and if applicable, Employee Contributions; (c) the amendment is not effective earlier than the later of: (i) 30 days after the Plan Administrator gives notice of the amendment; or (ii) the date the Employer adopts the amendment  and  (d)  the  employer  otherwise  complies  with Treas.   Reg.   1.401(k)-3(g)   and,   if  applicable,   Treas.   Reg. §1.401(m)-3(h). An Employer which amends its Safe Harbor 401(k) Plan to eliminate or reduce any Matching Contribution or the Nonelective Contribution under this Section 3.05(I)(2), effective during the Plan Year, must continue to apply all of the safe   harbor   requirements   of   this   Section   3.05   until   the amendment becomes effective and also must apply for the entire Plan Year, using Current Year Testing, the nondiscrimination test under Section 4.10(B) (ADP test) and the nondiscrimination test

under Section 4.10(C) (ACP test). However, any Employer which  eliminates  only  an  Additional  Matching  Contribution does not need to test under the ADP test provided that the Plan still satisfies the ADP test safe harbor.

 

(3)  Amendment of non-401(k) Plan into safe harbor status.  An  Employer  maintaining  a  Profit  Sharing  Plan  or pre-ERISA Money Purchase Pension Plan, during a Plan Year, may  amend  prospectively  its  Plan  to  become  a  Safe  Harbor 401(k) Plan provided: (a) the Employer's Plan is not a Successor Plan; (b) the Participants may make Elective Deferrals for at least 3 months during the Plan Year; (c) the Plan Administrator provides the safe harbor notice described in Section 3.05(H) a reasonable time prior to and not later than the Effective Date of the 401(k) arrangement; and (d) the Plan commencing on the Effective Date of the amendment (or such earlier date as the Employer will specify in its Adoption Agreement), satisfies all of the safe harbor requirements of this Section 3.05.

 

(4)  Amendment to add Roth Deferrals or Beneficiary Hardship Distributions. The Employer during any Plan Year may   amend   its   Safe   Harbor   401(k)   Plan   to:   (a)   permit Participants  to  make  Roth  Deferrals,  as  defined  in  Section 1.21(B),   and   subject   to   Section   3.02(E)   and   other   Plan provisions as applicable; or (b) to add a Beneficiary hardship distribution provision under Section 6.07(H).

 

(5)   New Plan/new Employer. An Employer (including a new Employer) may establish a new Safe Harbor 401(k) Plan which is not a Successor Plan, provided; (a) the Plan Year is at least 3 months long; (b) the Plan Administrator provides the safe harbor notice described in Section 3.05(H) a reasonable time prior to and not later than the Effective Date of the Plan; and (c) the Plan commencing on the Effective Date of the Plan satisfies all of the safe harbor requirements of this Section 3.05. If the Employer is new, the Plan Year may be less than 3 months provided the Plan is in effect as soon after the Employer is established as it is administratively feasible for the Employer to establish the Plan.

 

(6)   Plan  termination.  An  Employer  may  terminate  its Safe Harbor 401(k) Plan mid-Plan Year in accordance with Article XI and this Section 3.05(I)(6).

 

(a)   Acquisition/disposition or substantial business hardship. If the Employer terminates its Safe Harbor 401(k) Plan resulting in a short Plan Year, and the termination is on account of an acquisition or disposition transaction described in Code §410(b)(6)(C), or if termination is on account the Employer's substantial business hardship, within the meaning of Code §412(c), the Plan remains a Safe Harbor 401(k) Plan for the short Plan Year provided that the Employer satisfies this Section 3.05 through the Effective Date of the Plan termination.

 

(b)   Other termination. If the Employer terminates its  Safe  Harbor  401(k)  Plan  for  any  reason  other  than  as described in Section 3.05(I)(6)(a), and the termination results in a short Plan Year, the Employer must conduct the termination under the provisions of Section 3.05(I)(2), except that the Employer need not provide Participants with the right to change their Salary Reduction Agreements.

 

(J) Qualified   Automatic   Contribution   Arrangement (QACA). If the Employer under Section 3.02(B)(3) elects in its

 

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Adoption  Agreement  to  apply  the  QACA  provisions,  this Section 3.05(J) also applies. Except as modified in this Section 3.05(J), the safe harbor provisions of this Section 3.05 apply to the QACA.

 

(1)   QACA Safe Harbor Contributions. The Employer will provide Safe Harbor Contributions as specified in its Adoption   Agreement   to   the   Participants   specified   in   the Adoption Agreement. Compensation for purposes of allocating QACA Safe Harbor Contributions means as described in Section 3.05(C)(1).

 

(2)  Vesting and Distributions. A Participant's Account Balance attributable to QACA Safe Harbor Contributions is subject to: (a) vesting as the Employer elects in its Adoption Agreement; and (b) the distribution restrictions under Section 6.01(C)(4)(b) that apply to Safe Harbor Contributions.

 

3.06 ALLOCATION CONDITIONS. The Employer in its Adoption Agreement will elect the allocation conditions, if any, which the Plan Administrator will apply in allocating Employer Contributions (except for those contributions described below) and in allocating forfeitures allocated as an Employer Contribution under the Plan.

 

(A)  Contributions Not Subject to Allocation Conditions. The Employer may not elect to impose any allocation conditions on: (1) Elective Deferrals; (2) Safe Harbor Contributions; (3) Additional  Matching  Contributions  to  which  the  Employer elects to apply the ACP test safe harbor; (4) Employee Contributions; (5) Rollover Contributions; (6) Designated IRA Contributions; (7) SIMPLE Contributions; or (8) Prevailing Wage Contributions. The Plan Administrator also may elect under Sections 3.03(C)(2) and 3.04(C)(2), not to apply to any Operational QMAC or Operational QNEC any allocation conditions otherwise applicable to Matching Contributions (including QMACs) or to Nonelective Contributions (including QNECs).

 

(B)  Conditions. The Employer in its Adoption Agreement may elect to impose allocation conditions based on Hours of Service or employment at a specified time (or both), in accordance with this  Section  3.06(B).  The  Employer  may  elect  to  impose different  allocation  conditions  to  different  Employer Contribution  Types  under  the  Plan.  A  Participant  does  not accrue an Employer Contribution or forfeiture allocated as an Employer Contribution with respect to a Plan Year or other applicable period, until the Participant satisfies the allocation conditions for that Employer Contribution Type.

 

(1)   Hours of Service requirement. Except as required to satisfy the Top-Heavy Minimum Allocation, the Plan Administrator will not allocate any portion of an Employer Contribution for a Plan Year to any Participant's Account if the Participant does not complete the applicable minimum Hours of Service (or consecutive calendar days of employment under the Elapsed Time Method) requirement the Employer specifies in its Adoption Agreement for the relevant period.

 

(a) 1,000  HOS  in  Plan  Year/other  HOS requirement. The Employer in its Nonstandardized Plan or Volume Submitter Plan may elect to require a Participant to

complete: (i) 1,000 Hours of Service during the Plan Year (or to be employed for at least 182 consecutive calendar days under the Elapsed Time Method); (ii) a specified number of Hours of Service during the Plan Year which is less than 1,000 Hours of Service; or (iii) a specified number of Hours of Service within the time period the Employer elects in its Adoption Agreement, but not exceeding 1,000 Hours of Service in a Plan Year.

 

(b) 501  HOS/terminees.  The  Employer  in  its Adoption Agreement may elect to require a Participant to complete during a Plan Year 501 Hours of Service (or to be employed for at least 91 consecutive calendar days under the Elapsed Time Method) to share in the allocation of Employer Contributions for that Plan Year where the Participant is not employed by the Employer on the last day of that Plan Year, including the Plan Year in which the Employer terminates the Plan.

 

(c)  Short Plan Year or allocation period. This Section 3.06(B)(1)(c) applies to any Plan Year or to any other allocation time period under the Adoption Agreement which is less than 12 months, where in either case, the Employer creates a short allocation period on account of a Plan amendment, the termination of the Plan or the adoption of the Plan with an initial short Plan Year. In the case of any short allocation period, the Plan Administrator will prorate any Hour of Service requirement based on the number of days in the short allocation period divided by the number of days in the normal allocation period, using 365 days in the case of Plan Year allocation period. The Employer in Appendix B may elect not to pro-rate Hours of Service in any short allocation period or to apply a monthly pro-ration method.

 

(2)   Last day requirement.

 

(a)   Standardized Plan. If the Plan is a Standardized Plan, a Participant who is employed by the Employer on the last day of a Plan Year will share in the allocation of Employer Contributions for that Plan Year without regard to the Participant's Hours of Service completed during that Plan Year.

 

(b)   Nonstandardized or Volume Submitter Plan. The Employer in its Nonstandardized Plan or Volume Submitter Plan may elect to require a Participant to be employed by the Employer on the last day of the Plan Year or other specified period or on a specified date. If the Plan is a Nonstandardized or Volume Submitter Money Purchase Pension Plan, the Plan expressly  conditions  Employer  Contribution  allocations  on  a Participant's employment with the Employer on the last day of the  Plan  Year  for  the  Plan  Year  in  which  the  Employer terminates or freezes the Plan, even if the Employer in its Adoption  Agreement  did  not  elect the  "last  day  of  the  Plan Year" allocation condition.

 

(C)  Time Period. The Employer in its Adoption Agreement will elect the time period to which the Plan Administrator will apply any allocation condition. The Employer may elect to apply the same time period to all Contribution Types or to elect a different time period based on Contribution Type.

 

(D)  Death, Disability or Retirement Age. The Employer in its Adoption Agreement will elect whether any elected allocation condition applies or is waived for a Plan Year if a Participant

 

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incurs  a  Separation  from  Service  during  the  Plan  Year  on account of the Participant's death, Disability or attainment of Normal Retirement Age or Early Retirement Age in the current Plan Year or on account of the Participant's Disability or attainment of Normal Retirement Age or Early Retirement Age in a prior Plan Year. The Employer's election may be based on Contribution Type or may apply to all Contribution Types.

 

(E) No   Other   Conditions.   In   allocating   Employer Contributions under the Plan, the Plan Administrator will not apply any other allocation conditions except those the Employer elects in its Adoption Agreement or otherwise as the Plan may require.

 

(F) Suspension    of    Allocation    Conditions    in    a Nonstandardized or Volume Submitter Plan. The Employer in its Nonstandardized Plan or Volume Submitter Plan will elect whether  to  apply  the  suspension  provisions  of  this  Section 3.06(F). If: (i) Section 3.06(F) applies; (ii) the Plan (or any component part of the Plan) in any Plan Year must perform coverage testing; and (iii) the Plan (or component part of the Plan) fails to satisfy coverage under the ratio percentage test under Treas. Reg. §1.410(b)-2(b)(2), the Plan suspends for that Plan Year any Plan (or component part of the Plan) allocation conditions in accordance with this Section 3.06(F). If the Plan Administrator must perform coverage testing, the Administrator will apply testing separately as required to each component part of the Plan after applying the aggregation and disaggregation rules under Treas. Reg. §§1.410(b)-6 and -7.

 

(1)   No average benefit test. If the Employer elects to apply this Section 3.06(F), the Plan Administrator may not apply the average benefit test under Treas. Reg. §1.410(b)-2(b)(3), to determine satisfaction of coverage or to correct a coverage failure, as to the Plan or to the component part of the Plan to which this Section 3.06(F) applies, unless the Plan or component still fails coverage after application of this Section 3.06(F). The restriction in this Section 3.06(F)(1) does not apply as to application of the average benefit test in performing nondiscrimination testing.

 

(2)   Methodology.  If  this  Section  3.06(F)  applies  for  a Plan Year, the Plan Administrator, in the manner described herein, will suspend the allocation conditions for the NHCEs who are included in the coverage test and who are Participants in the Plan (or component part of the Plan) but who are not benefiting  thereunder  (within  the  meaning  of  Treas.  Reg. §1.410(b)-3), such that enough additional NHCEs are benefiting under the Plan (or component part of the Plan) to pass coverage under the ratio percentage test. The ordering of suspension of allocation conditions is in the following priority tiers and if more than one NHCE in any priority tier satisfies the conditions for suspension (but all are not needed to benefit to pass coverage), the Plan Administrator will apply the suspension beginning first with the NHCE(s) in that suspension tier with the lowest Compensation during the Plan Year:

 

(a) Last day. Those NHCE(s) employed by the Employer on the last day of the Plan Year, without regard to the number of Hours of Service in the Plan Year. If necessary to pass coverage, the Plan Administrator then will apply Section 3.06(F)(2)(b).

 

(b)   Latest  Separation.  Those  NHCE(s)  who  have the latest Separation from Service date during the Plan Year, without regard to the number of Hours of Service in the Plan Year. If necessary to pass coverage, the Plan Administrator then will apply Section 3.06(F)(2)(c).

(c)   Most Hours of Service (more than 500). Those NHCE(s) with the greatest number of Hours of Service during the Plan Year but who have more than 500 Hours of Service.

 

(3)   Appendix B. The Employer in Appendix B may elect a different order of the suspension tiers, may elect to use Hours of Service (in lieu of Compensation) as a tiebreaker within any tier or may elect additional or other suspension tiers which are objective and not subject to Employer discretion.

 

(4)   Separate Application to Nonelective and Matching. If applicable under the Plan, the Employer in its Adoption Agreement will elect whether to apply this Section 3.06(F): (a) to  both  Nonelective  Contributions  and  to  Matching Contributions if both components fail the ratio percentage test; (b) only to Nonelective Contributions if this component fails the ratio percentage test; or (c) only to Matching Contributions if this component fails the ratio percentage test.

 

(G) Conditions  Apply  to  Re-Hired  Employees.  If  a Participant incurs a Separation from Service and subsequently is re-hired and resumes participation in the same Plan Year as the Separation from Service or in any subsequent Plan Year, the allocation conditions under this Section 3.06, if any, continue to apply to the re-hired Employee/Participant in the Plan Year in which he/she is re-hired, unless the Employer elects otherwise in Appendix B.

 

3.07 FORFEITURE  ALLOCATION.  The  amount  of  a Participant's Account forfeited under the Plan is a Participant forfeiture.  The Employer may direct the Administrator to use Forfeitures to reinstate previously forfeited Account balances of Participants,  if  any,  in  accordance  with  Section  5.07,  or  to satisfy any contribution that may be required pursuant to Section 7.07.

 

(A) Allocation Method. The Employer in its Adoption Agreement must specify the method or methods the Plan Administrator will apply to allocate forfeitures. If the Employer elects more than one method, unless the Employer designates a specific ordering in its Adoption Agreement, the Plan Administrator may allocate the forfeitures by applying one or more of such elected methods in any order as the Plan Administrator operationally may determine, until the forfeitures are fully allocated to the applicable forfeiture allocation Plan Year.

 

(1)   401(k) forfeiture source. If the Plan is a 401(k) Plan, the Employer in its Adoption Agreement may elect a different allocation method based on the forfeiture source (from Nonelective Contributions or from Matching Contributions) or may elect to apply the same allocation method to all forfeitures.

 

(a) Attributable to Matching. A Participant's forfeiture is attributable to Matching Contributions if the forfeiture is: (i) from the non-Vested portion of a Matching

 

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Contribution Account forfeited in accordance with Section 5.07 or, if applicable, Section 7.07; (ii) a non-Vested Excess Aggregate Contribution (including Allocable Income) forfeited in  correcting  for  nondiscrimination  failures  under  Section

4.10(C); or (iii) an Associated Matching Contribution.

 

(b) Definition  of  Associated  Matching Contribution. An Associated Matching Contribution includes any Vested or non-Vested Matching Contribution (including Allocable Income) made as to Elective Deferrals or Employee Contributions the Plan Administrator distributes under Section 4.02(E) (Excess Amount), Section 4.10(A) (Excess Deferrals), Section  4.10(B)  (ADP  test),  Section  4.10(C)  (ACP  test)  or Section 7.08 relating to Plan correction.

 

(c)  Forfeiture  or  distribution  of  Associated Match. An Employee forfeits an Associated Matching Contribution unless the Matching Contribution is a Vested Excess Aggregate Contribution distributed in accordance with Section  4.10(C)  (ACP  test).  A  forfeiture  under  this  Section 3.07(A)(1)(c)  occurs  in  the  Plan  Year  following  the  Testing Year (unless the Employer in Appendix B elects that the forfeiture occurs in the Testing Year) and the forfeiture is allocated in the Plan Year described in Section 3.07(B). See Section 3.07(B)(1) as to nondiscrimination testing of allocated forfeitures.  In  the  event  of  correction  under  Section  7.08 resulting in forfeiture of Associated Matching Contributions, the forfeiture occurs in the Plan Year of correction.

 

(2)   Application of "reduce" option/excess forfeitures. If the Employer elects to allocate forfeitures to reduce Nonelective or Matching Contributions and the allocable forfeitures for the forfeiture allocation Plan Year described in Section  3.07(B)  exceed  the  amount  of  the  applicable contribution for that Plan Year to which the Plan Administrator would apply the forfeitures (or there are no applicable contributions  under  the  Plan),  the  Plan  Administrator  will allocate  the  remaining  forfeitures  in  the  forfeiture  allocation Plan Year. In such event, the Plan Administrator will allocate the remaining forfeitures to pay Plan expenses, as an additional Discretionary Nonelective Contribution or as a Discretionary Matching Contribution, as the Plan Administrator determines.

 

(3) Plan expenses. If the Employer in its Adoption Agreement elects to apply forfeitures to the payment of Plan expenses  under  Section  7.04(C),  the  Employer  must  elect  at least one additional allocation method so that if the Plan Administrator elects to first apply the forfeitures to the payment of Plan expenses, and the forfeitures exceed the Plan's expenses, the  Plan  Administrator  will  apply  any  remaining  forfeitures under the additional method the Employer has elected in its Adoption Agreement. The Plan Administrator may elect not to apply forfeitures to the payment of Plan expenses which are allocated   to   specific   Participant   accounts   under   Section 7.04(C)(2)(b).

 

(4) Safe harbor-top-heavy exempt fail-safe. If the Employer has a Safe Harbor 401(k) Plan which otherwise qualifies for exemption from the top-heavy requirements of Article X, the Employer in its Adoption Agreement may elect to limit the allocation of all Plan forfeitures in such a manner as to avoid inadvertent application of the top-heavy requirements on account  of  a  forfeiture  allocation.  If  the  Employer  in  its

Adoption Agreement elects this "fail-safe" provision, the Plan Administrator will allocate forfeitures in the following order of priority: (a) first to reduce Safe Harbor Contributions to the extent permitted by Section 3.07(A)(7); (b) then to reduce Fixed Additional  Matching  Contributions  if  any,  which  satisfy  the ACP test safe harbor under Section 3.05(G); and (c) then as Discretionary Additional Matching Contributions which satisfy the  ACP  test  safe  harbor  (without  regard  to  whether  the Employer in its Adoption Agreement has elected Discretionary Additional Matching Contributions). Notwithstanding the ordering rule of the preceding sentence, the Plan Administrator, either before or after applying the ordering rule, or any tier thereunder, may elect to allocate any forfeitures to pay Plan expenses. If the Employer elects to allocate forfeitures under this Section  3.07(A)(4),  the  Plan  Administrator  will  apply  this Section 3.07(A)(4) regardless of whether the Employer in any Plan Year actually satisfies all conditions necessary for the Plan to be top-heavy exempt. The Employer in Appendix B may elect to alter the forfeiture allocation ordering rules of this Section 3.07(A)(4).

 

(5)   No  allocation  to  Elective  Deferral  Accounts.  The Plan Administrator will not allocate forfeitures to any Participant's Elective Deferral Account, including his/her Roth Deferral Account.

 

(6)   Allocation under classifications. If the Employer in its Adoption Agreement has elected to allocate its Nonelective Contributions based on classifications of Participants, the Plan Administrator will allocate any forfeitures which under the Plan are allocated as additional Nonelective Contributions: (a) first to each classification pro rata in relation to the Employer's Nonelective Contribution to that classification for the forfeiture allocation Plan Year described in Section 3.07(B); and (b) second, the total amount of forfeitures allocated to each classification under (a) are allocated in the same manner as are the Nonelective Contributions to be allocated to that classification.

 

(7)   Limitation  on  forfeiture  uses.  Effective  for  plan years beginning after the adoption of the 2010 Cumulative List (Notice 2010-90) restatement, forfeitures cannot be used as QNECs, QMACs, Elective Deferrals, or Safe Harbor Contributions   (Code   §401(k)(12))   other  than   QACA   Safe Harbor Contributions (Code §401(k)(13)). However, forfeitures can be used to reduce Fixed Additional Matching Contributions which satisfy the ACP test safe harbor or as Discretionary Additional Matching Contributions.

 

(B) Timing (forfeiture allocation Plan Year). The Plan Administrator will allocate Participant forfeitures (including the Earnings thereon) no later than the last day of the Plan Year following the Plan Year in which the forfeiture occurs. See Sections 3.07(A)(1)(c), 5.07 and 7.07 as to when a forfeiture occurs. If the Employer in its Adoption Agreement elects to apply forfeitures to the payment of Plan expenses, the Plan Administrator,   consistent   with   this   election,   may   apply forfeitures to pay Plan expenses which the Plan incurs in the forfeiture  allocation  Plan  Year,  but  which  the  Plan Administrator pays within a reasonable time after the end of the forfeiture allocation Plan Year.

 

(1)   401(k) Plans/allocation timing and re-testing. If the Plan is a 401(k) Plan, the Employer may elect different

 

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allocation timing based on the forfeiture source (from Nonelective Contributions or from Matching Contributions) or may elect to apply the same allocation timing to all forfeitures. If the 401(k) Plan is subject to the ACP test and allocates any forfeiture as a Matching Contribution, the following re-testing rules apply. If, under the Plan, the Plan Administrator will allocate the forfeiture in the same Plan Year in which the forfeiture occurs and the Plan Administrator runs the ACP test before the forfeiture allocation occurs, the Plan Administrator will not re-run the ACP test for the forfeiture allocation Plan Year. If the Plan Administrator allocates the forfeiture in the Plan Year which follows the Plan Year in which the forfeiture occurs, the Plan Administrator will include the allocated forfeiture in the ACP test for the forfeiture allocation Plan Year. If  the  Plan  allocates  any  forfeiture  as  a  Nonelective Contribution,  the  allocation,  in  the  forfeiture  allocation  Plan Year, is subject to any nondiscrimination testing which applies to Nonelective Contributions for that Plan Year.

 

(2)   Contribution amount and timing not relevant. The forfeiture allocation timing rules in this Section 3.07(B) apply irrespective of when the Employer makes its Employer Contribution for the forfeiture allocation Plan Year, and irrespective of whether the Employer makes an Employer Contribution for that Plan Year.

 

(C) Administration  of   Account  Pending/Incurring Forfeiture. The Plan Administrator will continue to hold the undistributed,  non-Vested  portion  of  the  Account  of  a Participant who has incurred a Separation from Service solely for his/her benefit until a forfeiture occurs at the time specified in  Section  5.07  or  if  applicable,  until  the  time  specified  in Section 7.07.

 

(D) Participant Does Not Share in Own Forfeiture. A Participant will not share in the allocation of a forfeiture of any portion of his/her Account, even if the Participant otherwise is entitled to an allocation of Employer Contributions and forfeitures in the forfeiture allocation Plan Year described in Section 3.07(B). If the forfeiting Participant is entitled to an allocation of Employer Contributions and forfeitures in the forfeiture allocation Plan Year, the Plan Administrator only will allocate to the Participant a share of the allocable forfeitures attributable to other forfeiting Participants.

 

(E)  Plan  Merger.  In  the  event  that  the  Employer  merges another plan into this Plan, and does not fully vest upon merger the participant accounts in the merging plan, the Plan Administrator will allocate any post-merger forfeitures attributable to the merging plan in accordance with the Employer's elections in its Adoption Agreement. The Employer may elect to limit any such forfeiture allocation only to those Participants who were also participants in the merged plan, but in the absence of such an election, all Participants who have satisfied any applicable allocation conditions under Section 3.06 will share in the forfeiture allocation. Administrator  will  apply  this  Section  3.08  in  administering Rollover Contributions to the Plan, if any.

 

(A) Policy  Regarding  Rollover  Acceptance.  The  Plan Administrator, operationally (except as to In-Plan Roth Rollover Contributions  under  Section  3.08(E))  and  on  a nondiscriminatory basis, may elect to permit or not to permit Rollover Contributions to this Plan or may elect to limit an

Eligible Employee's right or a Participant's right to make a Rollover Contribution. The Plan Administrator also may adopt, amend or terminate any policy regarding the Plan's acceptance of Rollover Contributions. If the Employer in its Adoption Agreement elects to permit In-Plan Roth Rollover Contributions, the Plan Administrator will administer In-Plan Roth Rollover Contributions in accordance with Section 3.08(E) and the Employer's Adoption Agreement elections.

 

(1)  Rollover documentation. If the Plan Administrator permits  Rollover  Contributions,  any  Participant  (or  as applicable,  any  Eligible  Employee),  with  the  Plan Administrator's written consent and after filing with the Plan Administrator the form prescribed by the Plan Administrator, may   make   a  Rollover   Contribution   to   the  Trust.   Before accepting a Rollover Contribution, the Plan Administrator may require a Participant (or Eligible Employee) to furnish satisfactory evidence the proposed transfer is in fact a "rollover contribution" which the Code permits an employee to make to a qualified plan.

 

(2)   Declination/related expense. The Plan Administrator, in its sole discretion in a nondiscriminatory manner, may decline to accept a Rollover Contribution of property which could: (a) generate unrelated business taxable income; (b) create difficulty or undue expense in storage, safekeeping or valuation; or (c) create other practical problems for the Plan or Trust. The Plan Administrator also may accept the Rollover Contribution on condition  that  the  Participant's  or  Employee's  Account  is charged with all expenses associated therewith.

 

(B)  Limited Testing. A Rollover Contribution is not an Annual Addition under Section 4.05(A) and is not subject to nondiscrimination testing except as a "right or feature" within the meaning of Treas. Reg. §1.401(a)(4)-4.

 

(C)  Pre-Participation  Rollovers.  If  an  Eligible  Employee makes a Rollover Contribution to the Trust prior to satisfying the Plan's eligibility conditions or prior to reaching his/her Entry Date,  the  Plan  Administrator  and  Trustee  must  treat  the Employee as a limited Participant (as described in Rev. Rul. 96-48). A limited Participant does not share in the Plan's allocation of Employer Contributions nor Participant forfeitures and may not make Elective Deferrals if the Plan is a 401(k) Plan, until he/she actually becomes a Participant in the Plan. If a limited Participant has a Separation from Service prior to becoming a Participant in the Plan, the Trustee will distribute his/her  Rollover  Contributions  Account  to  him/her  in accordance with Section 6.01(A).

 

(D) May  Include  Employee  Contributions  and  Roth Deferrals. A Rollover Contribution may include Employee Contributions and Roth Deferrals made to another plan, as adjusted for Earnings. In the case of Employee Contributions: (1) such amounts must be directly rolled over into this Plan from another plan which is qualified under Code §401(a); and (2) the Plan must account separately for the Rollover Contribution, including the Employee Contribution and the Earnings thereon. In the case of Roth Deferrals: (1) such amounts must be directly rolled over into this Plan from another plan which is qualified under Code §401(a) or from a 403(b) plan; (2) the Plan must account separately for the Rollover Contribution, including the Roth Deferrals and the Earnings thereon; and (3) as to rollovers

 

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which occur on or after April 30, 2007, this Plan must be a 401(k) Plan which permits Roth Deferrals.

 

(E)  In-Plan Roth Rollover Contributions.

 

(1) Employer Election. The Employer in its 401(k) Adoption  Agreement  in  which  the  Employer  has  elected  to permit  Roth  Deferrals  also  will  elect  whether  to  permit  an In-Plan Roth Rollover Contribution in accordance with this Section 3.08(E). If the Employer elects to permit such contributions, the Employer in its Adoption Agreement will specify the Effective Date thereof which may not be earlier than distributions made after September 27, 2010.

 

(2) Eligibility  for  Distribution  and  Rollover.  A Participant must be eligible for a distribution from the affected Account in order to roll over the distribution to an In-Plan Roth Rollover Account. A Participant may not make an In-Plan Roth Rollover Contribution with regard to an amount which is not an Eligible Rollover Distribution.

 

(a)   Parties   eligible   to   elect.   For   purposes   of eligibility for an In-Plan Roth Rollover, the Plan will treat a Participant's surviving spouse Beneficiary or alternate payee spouse or alternate payee former spouse as a Participant, unless the Employer in Appendix B limits to Employees the right to elect an In-Plan Roth Rollover. A non-spouse Beneficiary may not make an In-Plan Roth Rollover.

 

(b)   Distribution  from  partially  Vested  account. In-Plan Roth Rollovers are permitted only from Vested amounts allocated to a qualifying source but may be made from partially Vested Accounts unless the Employer elects otherwise in Appendix B. If a distribution is made to a Participant who has not incurred a Severance from Employment and who is not fully Vested in the Participant's Account from which the In-Plan Roth Rollover Contribution is to be made, and the Participant may increase the Vested percentage in such Account, then at any relevant time Section 5.03(C) will apply to determine the Participant's Vested portion of the Account.

 

(3)   Form and Source of Rollover.

 

(a)   Direct   Rollover.   An   In-Plan   Roth   Rollover Contribution may be made only by a Direct Rollover.

 

(b)   Account  source.  A  Participant  may  make  an In-Plan Roth Rollover from any account (other than a Roth account) unless the Employer otherwise elects in Appendix B. Also see Section 6.01(C)(7).

 

(c)  Cash or in-kind. The Plan Administrator may permit an In-Plan Roth Rollover Contribution either by converting to cash any  non-cash investments prior to rolling over the Participant's distribution election amount to the In-Plan Roth Rollover Account, or by rolling over the Participant's current investments to the In-Plan Roth Rollover Account. A plan  loan  so  transferred  without  changing  the  repayment schedule is not treated as a new loan.

 

(4) No   Rollover   or   Distribution   Treatment. Notwithstanding any other Plan provision, an In-Plan Roth

Rollover   Contribution   is   not  a   Rollover   Contribution   for purposes of the Plan. Accordingly: (a) if the Employer in its Adoption Agreement has elected $5,000 as the Plan limit on Mandatory Distributions, the Plan Administrator will take into account amounts attributable to an In-Plan Roth Rollover Contribution, in determining if the $5,000 limit is exceeded, regardless of the Employer's election as to whether to count Rollover Contributions for this purpose; (b) no spousal consent is required for a Participant to elect to make an In-Plan Roth Rollover Contribution; (c) Protected Benefits with respect to the amounts subject to the In-Plan Roth Rollover are preserved; and (d) mandatory 20% federal income tax withholding does not apply to the In-Plan Roth Rollover Contribution.

 

3.09 EMPLOYEE CONTRIBUTIONS. An Employer must elect in its Adoption Agreement whether to permit Employee Contributions. If the Employer elects to permit Employee Contributions, the Employer also must specify in its Adoption Agreement any limitations which apply to Employee Contributions. If the Employer permits Employee Contributions, the Plan Administrator operationally will determine if a Participant will make Employee Contributions through payroll deduction or by other means.

 

(A) Testing.  Employee  Contributions  must  satisfy  the nondiscrimination requirements of Section 4.10(C) (ACP test).

 

(B)  Matching. The Employer in its Adoption Agreement must elect whether the Employer will make Matching Contributions as to any Employee Contributions and, as applicable, the matching formula. Any Matching Contribution must satisfy the nondiscrimination requirements of Section 4.10(C) (ACP test), unless the Matching Contributions satisfy the ACP test safe harbor under a Safe Harbor 401(k) Plan.

 

3.10 SIMPLE 401(k) CONTRIBUTIONS. The Employer in its Adoption Agreement may elect to apply to its Plan the SIMPLE 401(k) provisions of this Section 3.10 if the Employer is eligible under Section 3.10(B). The provisions of this Section 3.10   apply   to   an   electing   Employer   notwithstanding   any contrary provision in the Plan.

 

(A)  Plan Year. An Employer electing to apply this Section 3.10 must have a 12 month calendar year Plan Year except that in the case of an Employer adopting a new SIMPLE 401(k) Plan, the Employer must adopt the Plan no later than October 1 with a calendar year Plan Year of at least 3 months.

 

(B)  Eligible Employer. An Employer may elect to apply this Section 3.10 if: (i) the Plan Year is the calendar year; (ii) the Employer (including Related Employers under Section 1.24(C)) has no more than 100 Employees who received Compensation of at least $5,000 in the immediately preceding calendar year; and (iii) the Employer (including Related Employers under Section 1.24(C)) does not maintain any other plan as described in Code §219(g)(5), to which contributions were made or under which   benefits   were   accrued   for   Service   by   an   Eligible Employee in the Plan Year to which the SIMPLE 401(k) provisions apply.

 

(1) Loss of eligible employer status. If an electing Employer fails for any subsequent calendar year to satisfy all of the Section 3.10(B) requirements, including where the Employer

 

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is involved in an acquisition, disposition or similar transaction under which the Employer satisfies Code §410(b)(6)(C)(i), the Employer remains eligible to maintain the SIMPLE 401(k) Plan for  two  additional  calendar  years  following  the  last  year  in which the Employer satisfied the requirements.

 

(C) Compensation.  For  purposes  of  this  Section  3.10, Compensation is limited as described in Section 1.11(E) and: (1) in the case of an Employee, means Code §3401(a) Wages but increased by the Employee's Elective Deferrals under this Plan or  any  other  401(k)  arrangement,  SIMPLE  IRA,  SARSEP, 403(b) annuity or 457 plan of the Employer; and (2) in the case of  a  Self-Employed  Individual,  means  Earned  Income determined by disregarding contributions made to this Plan.

 

(D)  Participant  Elective  Deferrals.  Each  Participant  may enter into a Salary Reduction Agreement to make Elective Deferrals in each calendar year to the SIMPLE 401(k) Plan in accordance with this Section 3.10(D).

 

(1)   Amount   Table.   A   Participant's   annual   Elective Deferrals may not exceed the amount as in effect under Code §408(p)(2)(E) ($10,000 in 2005) under which Treasury adjusts the limit in $500 increments.

 

(2) Catch-Ups.  If  the  Employer  in  its  Adoption Agreement elects to permit Catch-Up Deferrals, a Catch-Up Eligible Participant also may make Catch-Up Deferrals to the SIMPLE 401(k) Plan in accordance with Section 3.02(D).

 

(3)  Election timing. A Participant may elect to make Elective Deferrals or to modify a Salary Reduction Agreement at any time in accordance with the Plan Administrator's SIMPLE 401(k) Plan Salary Reduction Agreement form, but the form must be provided at least 60 days prior to the beginning of each SIMPLE Plan Year or at least 60 days prior to commencement of participation for the Participant to make or modify his/her Salary Reduction Agreement. A Participant also may at any time terminate prospectively his/her Salary Reduction Agreement applicable to the Employer's SIMPLE 401(k) Plan.

 

(E)  Employer SIMPLE 401(k) contributions. An Employer which elects to apply this Section 3.10 must make an annual SIMPLE Contribution to the Plan as described in this Section 3.10(E). The Employer operationally must elect for each SIMPLE Plan Year which type of SIMPLE Contribution the Employer will make.

 

(1)  Definition of SIMPLE Contribution. A SIMPLE Contribution is one of the following Employer Contribution types: (a) a SIMPLE Matching Contribution equal to 100% of each Participant's Elective Deferrals but not exceeding 3% of Plan Year Compensation or such lower percentage as the Employer may elect under Code §408(p)(2)(C)(ii)(II); or (b) a SIMPLE Nonelective Contribution equal to 2% of Plan Year Compensation for each Participant whose Compensation is at least $5,000.

 

(F) SIMPLE 401(k) notice. The Plan Administrator must provide a notice to each Participant a reasonable period of time before the 60th day prior to the beginning of each SIMPLE 401(k) Plan Year, describing the Participant's Elective Deferral

rights  and  the  Employer's  SIMPLE  Contributions  which  the Employer will make for the Plan Year described in the notice.

 

(G)  Application of remaining Plan provisions.

 

(1)   Annual Additions. All contributions to the SIMPLE 401(k) Plan are Annual Additions under Section 4.05(A) and subject to the Annual Additions Limit.

 

(2)   No   allocation   conditions.   The   Employer   in   its Adoption Agreement may not elect to apply any Section 3.06 allocation conditions to the Plan Administrator's allocation of SIMPLE Contributions.

 

(3)   No other contributions. No contributions other than those described in this Section 3.10 or Rollover Contributions described in Section 3.08 may be made to the SIMPLE 401(k) Plan.

 

(4) Vesting. All SIMPLE Contributions and Accounts attributable thereto are 100% Vested at all times and in the event of a conversion of a non-SIMPLE 401(k) Plan into a SIMPLE 401(k) Plan, all Account Balances in existence on the first day of the Plan Year to which the SIMPLE 401(k) provisions apply, become 100% Vested.

 

(5)   No  nondiscrimination  testing.  A  SIMPLE  401(k) Plan is not subject to nondiscrimination testing under Section 4.10(B) (ADP test) or Section 4.10(C) (ACP test) of the Plan.

 

(6)   No top-heavy. A SIMPLE 401(k) Plan is not subject to the top-heavy provisions of Article X.

 

(7) Remaining  Plan  terms.  Except  as  otherwise described in this Section 3.10, if an Employer has elected in its Adoption Agreement to apply the SIMPLE 401(k) provisions of this  Section  3.10,  the  Plan  Administrator  will  apply  the remaining Plan provisions to the Employer's Plan.

 

3.11 USERRA/HEART ACT CONTRIBUTIONS.

 

(A)  Application.  This  Section  3.11  applies  to  an  Employee who: (1) has completed Qualified Military Service under USERRA; (2) the Employer has rehired under USERRA; and (3) is a Participant entitled to make-up contributions under Code §414(u). This Section 3.11 also applies to an Employee who dies or   becomes   disabled   while   performing   Qualified   Military Service, as provided in Sections 3.11(K) and 3.11(L) and the Employer's Adoption Agreement elections.

 

(B)  Employer Contributions. The Employer will make-up any Employer Contribution the Employer would have made and which the Plan Administrator would have allocated to the Participant's Account had the Participant remained employed by the Employer during the period of Qualified Military Service.

 

(C)  Compensation. For purposes of this Section 3.11, the Plan Administrator will determine an effected Participant's Compensation as follows. A Participant during his/her period of Qualified Military Service is deemed to receive Compensation equal to that which the Participant would have received had he/she remained employed by the Employer, based on the

 

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Participant's rate of pay that would have been in effect for the Participant during the period of Qualified Military Service. If the Compensation during such period would have been uncertain, the Plan Administrator will use the Participant's actual average Compensation for the 12 month period immediately preceding the period of Qualified Military Service, or if less, for the period of employment.

 

(D) Elective Deferrals/Employee Contributions. If the Plan provided for Elective Deferrals or for Employee Contributions during a Participant's period of Qualified Military Service, the Plan Administrator must allow a Participant under this Section 3.11   to   make   up   such   Elective   Deferrals   or   Employee Contributions to his/her Account. The Participant may make up the maximum amount of Elective Deferrals or Employee Contributions which he/she under the Plan terms would have been able to contribute during the period of Qualified Military Service (less any such amounts the Participant actually contributed during such period) and the Participant must be permitted to contribute any lesser amount as the Plan would have permitted. The Participant must make up any contribution under    this    Section    3.11(D)    commencing    on    his/her Re-Employment Commencement Date and not later than 5 years following reemployment (or if less, a period equal to 3 times the length of the Participant's Qualified Military Service triggering such make-up contribution).

 

(E)  Matching Contributions. The Employer will make-up any Matching Contribution that the Employer would have made and which the Plan Administrator would have allocated to the Participant's Account during the period of Qualified Military Service,  but  based  on  any  make-up  Elective  Deferrals  or make-up Employee Contributions that the Participant makes under Section 3.11(D).

 

(F) Limitations/Testing. Any contribution made under this Section 3.11 does not cause the Plan to violate and is not subject to testing under: (1) nondiscrimination requirements including under Code §401(a)(4), the ADP test, the ACP test, the safe harbor 401(k) rules or the SIMPLE 401(k) rules; (2) top-heavy requirements  under  Article  X;  or  (3)  coverage  under  Code §410(b).  Contributions  under  this  Section  3.11  are  Annual Additions  and  are  tested  under  Section  4.10(A)  (Elective Deferral Limit) in the year to which such contributions are allocated, but not in the year in which such contributions are made.

 

(1) Differential   Wage   Payments.   Effective   for Differential Wage Payments made after December 31, 2008, the Plan is not treated as failing to meet the requirements of any provision described in this Section 3.11(F) by reason of any contribution or benefit which is based on a Differential Wage Payment. The preceding sentence applies only if all Employees performing service in the uniformed services described in Code §3401(h)(2)(A) are entitled to receive Differential Wage Payments on reasonably equivalent terms and, if eligible to participate in a retirement plan maintained by the Employer, to make contributions based on the payments on reasonably equivalent terms (taking into account Code §§410(b)(3), (4), and (5)). The Plan Administrator operationally may determine, for purposes of any provision described in this Section 3.11(F), whether to take into account any Elective Deferrals, and if

applicable, any Matching Contributions, attributable to Differential Wage Payments.

 

(G) No  Earnings.  A  Participant  receiving  any  make-up contribution under this Section 3.11 is not entitled to an allocation of any Earnings on any such contribution prior to the time  that  the  Employer  actually  makes  the  contribution  (or timely deposits the Participant's own make-up Elective Deferrals or Employee Contributions) to the Trust.

 

(H) No Forfeitures. A Participant receiving any make-up allocation under this Section 3.11 is not entitled to an allocation of any forfeitures allocated during the Participant's period of Qualified Military Service.

 

(I)   Allocation Conditions. For purposes of applying any Plan allocation conditions under Section 3.06, the Plan Administrator will treat any period of Qualified Military Service as Service.

 

(J)   HEART  Act  Death  Benefits.  In  the  case  of  a  death occurring on or after January 1, 2007, if a Participant dies while performing Qualified Military Service, the Participant's Beneficiary is entitled to any additional benefits (other than benefit accruals relating to the period of Qualified Military Service) provided under the Plan as if the Participant had resumed employment and then terminated employment on account of death. Moreover, the Plan will credit the Participant's Qualified Military Service as service for vesting purposes, as though  the  Participant  had  resumed  employment  under USERRA immediately prior to the Participant's death.

 

(K)  HEART Act Continued Benefit Accrual. This Section 3.11(K)  does  not  apply  unless  the  Employer in  Appendix B elects to apply such provisions. If this Section 3.11(K) applies, then effective as of the date specified in Appendix B, for benefit accrual purposes, the Plan treats an individual who dies or becomes disabled while performing Qualified Military Service with respect to the Employer as if the individual had resumed employment in accordance with the individual's reemployment rights under USERRA, on the day preceding death or Disability (as the case may be) and terminated employment on the actual date of death or Disability.

 

(1)   Determination of benefits. The Plan will determine the amount of Employee Contributions and the amount of Elective Deferrals of an individual treated as reemployed under this Section 3.11(K) for purposes of applying paragraph Code §414(u)(8)(C) on the basis of the individual's average actual

Employee Contributions or Elective Deferrals for the lesser of: (a) the 12-month period of service with the Employer immediately prior to Qualified Military Service; or (b) the actual length of continuous service with the Employer.

 

3.12 DESIGNATED IRA CONTRIBUTIONS. The Employer in its Adoption Agreement may elect to permit Participants to make Designated IRA Contributions to its Plan. Designated IRA Contributions are subject to the provisions of this Section 3.12.

 

(A) Effective Date. The Employer may elect in its Adoption Agreement  to  apply  the  Designated  IRA  Contribution provisions. The Employer may accept Designated IRA

 

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Contributions during such Plan Year only if the Employer elects to  apply  the  provisions  of  this  Section  3.12  (or  otherwise adopted a good faith amendment under Code §408(q)), prior to the Plan Year for which the Designated IRA Contribution provisions will apply.

 

(B)  Traditional or Roth IRA. The Employer in its Adoption Agreement may elect to treat Designated IRA Contributions as traditional IRA contributions, as Roth IRA contributions or as consisting of either type, at the Participant's election.

 

(C) Account or Annuity. The Employer in its Adoption Agreement  may  elect  to  establish  Accounts  to  receive Designated IRA Contributions either as individual retirement accounts, as individual retirement annuities or as consisting of either type, at the Participant's election.

 

(1)   Trustee   or   Custodian.   A   trustee   or   custodian satisfying the requirements of Code §408(a)(2) must hold Designated IRA Contributions Accounts. If the Trustee holding the Designated IRA Contribution assets is a non-bank trustee, the Trustee, upon receipt of notice from the Commissioner of Internal  Revenue  that  substitution  is  required  because  the Trustee has failed to comply with the requirements of Treas. Reg. §1.408-2(e), will substitute another trustee in its place.

 

(2)  Additional IRA requirements. All Designated IRA Contributions: (a) must be made in cash; (b) are subject to the IRA contribution limit under Code §408(a)(1) ($5,000 in 2008), including cost-of-living adjustments after 2011 in $500 increments under Code §219(b)(5)(C) and as to Catch-Up Eligible Participants to the IRA Catch-Up limit of $1,000 beginning in 2006; and (c) must be 100% Vested.

 

(3) Not  for  deposit  of  SEP  or  SIMPLE  IRA amounts/no Rollover Contributions. An Employer which maintains   a   SEP   or   a   SIMPLE   IRA   may   not   deposit contributions under these arrangements to the Designated IRA Contribution Accounts under this Section 3.12. A Participant may not make a Rollover Contribution to his/her Designated IRA Contribution Account.

 

(4)   Designated Roth IRA Contributions.

 

(a)   Contribution Limit. A Participant's contribution to the Designated Roth IRA and to all other Roth IRAs for a Taxable Year may not exceed the lesser of the amount described in Section 3.12(C)(2) or the Participant's Compensation under Section 3.12(C)(4)(c). However, if (i) and/or (ii) below apply, the maximum (non-rollover) contribution that can be made to all the Participant's Roth IRAs (including to this Designated Roth IRA which must be a non-Rollover Contribution) for a Taxable Year is the smaller amount determined under (i) or (ii).

 

(i)    General.   The   maximum   contribution   is phased out ratably between certain levels of modified adjusted gross    income    ("modified    AGI,"    defined    in    Section 3.12(C)(4)(b)) as follows:

 

Filing

Status

Full

Contribution

Phase-out

Range

No

Contribution

 

 

 

 

Single/

Head of

Household

$95,000

or less

$95,000-

$110,000

$110,000 or

more

 

 

 

 

Joint/Qualifying

Widow(er)

$150,000

or less