EMPLOYEE BENEFIT PLANS

Defined Contribution Plan

The Company’s defined contribution plan covers all employees. Employees are eligible to participate as of the first day of the month following 30 days of service. Participants can make basic contributions up to 50 percent of their annual salary subject to Internal Revenue Service limits. The Company matches participants’ contributions at the rate of 200 percent of the first 3 percent of each participant’s total basic contribution based on the participant’s total annual salary. The Company’s contribution to the qualified defined contribution plans was $10,450, $9,969 and $7,204 for the years ended December 31, 2013, 2012 and 2011, respectively.

Defined Benefit and Post Retiree Medical Plans

The Company sponsors a noncontributory defined benefit pension plan (the “Qualified Plan”) with a policy to fund pension liabilities in accordance with the limits imposed by the Employee Retirement Income Security Act of 1974 (“ERISA”) and Federal income tax laws. In addition, the Company sponsors a supplemental pension plan covering certain employees, which provides incremental payments that would have been payable from the Company’s principal pension plan, were it not for limitations imposed by income tax regulations. The funded status is measured as the difference between plan assets at fair value and the projected benefit obligation which is to be recognized in the balance sheet. The plan assets and benefit obligations are measured as of the balance sheet date.

The non-union Delaware City employees and all Paulsboro and Toledo employees became eligible to participate in the Company’s defined benefit plans as of the respective acquisition dates. The union Delaware City employees became eligible to participate in the Company’s defined benefit plans upon commencement of normal operations. The Company did not assume any of the employees’ pension liability accrued prior to the respective acquisitions.

The Company formed the Post Retirement Medical Plan on December 31, 2010 to provide health care coverage continuation from date of retirement to age 65 for qualifying employees associated with the Paulsboro acquisition. The Company credited the qualifying employees with their prior service under Valero which resulted in the recognition of a liability for the projected benefit obligation. The Post Retirement Medical Plan was amended during 2013 to include all corporate employees.

The changes in the benefit obligation, the changes in fair value of plan assets, and the funded status of the Company’s Pension and Post Retirement Medical Plans as of and for the years ended December 31, 2013 and 2012 were as follows:



	Pension Plans						Post Retirement Medical Plan
	2013			2012			2013			2012
Change in benefit obligation:
Benefit obligation at beginning of year	$	30,215		$	11,409		$	9,730		$	8,912
Service cost	14,794			11,437			726			633
Interest cost	992			502			334			395
Plan amendments	—			—			(860		)	—
Benefit payments	(663		)	(48		)	(51		)	(21		)
Actuarial loss (gain)	8,012			6,916			(1,654		)	(189		)
Projected benefit obligation at end of year	$	53,350		$	30,215		$	8,225		$	9,730
Change in plan assets:
Fair value of plan assets at beginning of year	$	10,232		$	4,758		$	—		$	—
Actual return on plan assets	33			422			—			—
Benefits paid	(663		)	(48		)	(51		)	(21		)
Employer contributions	15,448			5,100			51			21
Fair value of plan assets at end of year	$	25,050		$	10,232		$	—		$	—
Reconciliation of funded status:
Fair value of plan assets at end of year	$	25,050		$	10,232		$	—		$	—
Less benefit obligations at end of year	53,350			30,215			8,225			9,730
Funded status at end of year	$	(28,300	)	$	(19,983	)	$	(8,225	)	$	(9,730	)

The accumulated benefit obligations for the Company’s Pension Plans exceed the fair value of the assets of those plans at December 31, 2013 and 2012. The accumulated benefit obligation for the defined benefit plans approximated $45,005 and $24,555 at December 31, 2013 and 2012, respectively.

Benefit payments, which reflect expected future services, that the Company expects to pay are as follows for the years ended December 31:



	Pension Benefits		Post Retirement Medical Plan
2014	$	6,493	$	176
2015	3,758		278
2016	4,922		329
2017	7,123		445
2018	9,161		528
Years 2019-2024	58,480		4,330

The Company’s funding policy for its defined benefit plans is to contribute amounts sufficient to meet legal funding requirements, plus any additional amounts that may be appropriate considering the funded status of the plans, tax consequences, the cash flow generated by the Company and other factors. The Company plans to contribute approximately $15,500 to the Company’s Pension Plans during 2014.

The components of net periodic benefit cost were as follows for the years ended December 31, 2013, 2012 and 2011:



	Pension Benefits									Post Retirement Medical Plan
	2013			2012			2011			2013		2012		2011
Components of net period benefit cost:
Service cost	$	14,794		$	11,437		$	8,678		$	726	$	633	$	540
Interest cost	992			502			140			334		395		381
Expected return on plan assets	(550		)	(323		)	(38		)	—		—		—
Amortization of prior service cost	11			11			11			—		—		—
Amortization of actuarial loss	421			30			56			—		—		—
Net periodic benefit cost	$	15,668		$	11,657		$	8,847		$	1,060	$	1,028	$	921

The pre-tax amounts recognized in other comprehensive income (loss) for the years ended December 31, 2013, 2012 and 2011 were as follows:



	Pension Benefits									Post Retirement Medical Plan
	2013			2012			2011			2013			2012			2011
Prior service costs (credits)	$	—		$	—		$	—		$	(860	)	$	—		$	—
Net actuarial loss (gain)	8,235			6,817			661			(1,654		)	(189		)	738
Amortization of losses and prior service cost	(432		)	(41		)	(67		)	—			—			—
Total changes in other comprehensive loss (income)	$	7,803		$	6,776		$	594		$	(2,514	)	$	(189	)	$	738

The pre-tax amounts in accumulated other comprehensive loss as of December 31, 2013 and 2012 that have not yet been recognized as components of net periodic costs were as follows:



	Pension Benefits						Post Retirement Medical Plan
	2013			2012			2013		2012
Prior service (costs) credits	$	(92	)	$	(103	)	$	860	$	—
Net actuarial (loss) gain	(16,419		)	(8,306		)	1,126		(528		)
Total	$	(16,511	)	$	(8,409	)	$	1,986	$	(528	)

The following pre-tax amounts included in accumulated other comprehensive loss as of December 31, 2013 are expected to be recognized as components of net period benefit cost during the year ended December 31, 2014:



	Pension Benefits		Post Retirement Medical Plan
Amortization of prior service costs (credits)	$	11	$	(81	)
Amortization of net actuarial loss (gain)	889		(21		)
Total	$	900	$	(102	)

The weighted average assumptions used to determine the benefit obligations as of December 31, 2013 and 2012 were as follows:



	Pension Benefits				Post Retirement Medical Plan
	2013		2012		2013		2012
Discount rate	4.55	%	3.45	%	4.55	%	3.45	%
Rate of compensation increase	4.64	%	4	%	—		—

The discount rate assumptions used to determine the defined benefit and Post Retirement Medical plans obligations as of December 31, 2013 and 2012 were based on the Mercer Yield Curve. The Mercer Yield Curve is developed from a portfolio of high-quality investment grade bonds. To determine the discount rate, each year’s projected cash flow for the defined benefit and Post Retirement Medical plans is discounted at a spot (zero-coupon) rate appropriate for that maturity; the discount rate is the single equivalent rate that produces the same discounted present value.

The weighted average assumptions used to determine the net periodic benefit costs for the years ended December 31, 2013, 2012 and 2011 were as follows:



	Pension Benefits						Post Retirement Medical Plan
	2013		2012		2011		2013		2012		2011
Discount rate	3.45	%	4.45	%	5.25	%	3.45	%	4.45	%	5.25	%
Expected long-term rate of return on plan assets	3.50	%	4.25	%	4.25	%	—		—		—
Rate of compensation increase	4	%	4	%	4	%	—		—		—

The assumed health care cost trend rates as of December 31, 2013 and 2012 were as follows:



	Post Retirement Medical Plan
	2013		2012
Health care cost trend rate assumed for next year	6.8	%	7.0	%
Rate to which the cost trend rate was assumed to decline (the ultimate trend rate)	4.5	%	4.5	%
Year that the rate reached the ultimate trend rate	2027		2027

Assumed health care costs trend rates have a significant effect on the amounts reported for retiree health care plans. A one percentage-point change in assumed health care costs trend rates would have the following effects on the medical postretirement benefits:



	1% Increase		1% Decrease
Effect on total of service and interest cost components	$	159	$	(135	)
Effect on accumulated postretirement benefit obligation	907		(794		)

The tables below present the fair values of the assets of the Company’s Qualified Plan as of December 31, 2013 and 2012 by level of fair value hierarchy. Assets categorized in Level 1 of the hierarchy are measured at fair value using a market approach based on published net asset values of mutual funds. As noted above, the Company’s post retirement medical plan is funded on a pay-as-you-go basis and has no assets.



	Fair Value Measurements Using Quoted Prices in Active Markets (Level 1)
	December 31,
	2013		2012
Equities:
Domestic equities	$	7,603	$	—
Developed international equities	3,685		—
Emerging market equities	1,775		—
Global low volatility equities	2,132		—
Fixed-income	9,855		—
Government securities:
Vanguard Intermediate-Term Treasury Fund	—		10,232
Cash and cash equivalents	—		—
Total	$	25,050	$	10,232

The Company’s investment strategy for its Qualified Plan is to achieve a reasonable return on assets that supports the plan’s interest credit rating, subject to a moderate level of portfolio risk that provides liquidity. Consistent with these financial objectives as of December 31, 2013, the plan's target allocations for plan assets are 60% invested in equity securities and 40% fixed income investments. Equity securities include international stocks and a blend of U.S. growth and value stocks of various sizes of capitalization. Fixed income securities include bonds and notes issued by the U.S. government and its agencies, corporate bonds, and mortgage-backed securities. The aggregate asset allocation is reviewed on an annual basis.

The overall expected long-term rate of return on plan assets for the Qualified Plan is based on the Company’s view of long-term expectations and asset mix.